As filed with the Securities and Exchange Commission on October 23, 1996
Registration No. 2-93214
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 [ ]
POST-EFFECTIVE AMENDMENT NO. 30 [X]
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY [ ]
ACT OF 1940
AMENDMENT NO. 31 [X]
-----------------------------
COREFUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
680 East Swedesford Road
Wayne, PA 19087
(Address of Principal Executive Offices)
Registrant's Telephone Number: 1-(800)355-CORE
JAMES W. JENNINGS, ESQUIRE
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103
(Name and Address of Agent for Service)
-----------------------------
It is proposed that this filing will become effective on November 1, 1996 after
filing pursuant to paragraph (b) of Rule 485.
The Registrant has registered an indefinite number of its Common Shares under
the Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company
Act of 1940. The Registrant filed a Rule 24f-2 notice covering the fiscal year
ended June 30, 1996 on August 28,1996.
===============================================================================
<PAGE>
CROSS REFERENCE SHEET
October 23, 1996
Prospectus
Form N-1A Item No. Caption
- ------------------ --------
PART A - Institutional Shares: Growth Equity Fund, Core Equity Fund, Special
Equity Fund, Equity Index Fund, International Growth Fund, Balanced Fund,
Short-Intermediate Bond Fund, Bond Fund, Short Term Income Fund, Government
Income Fund,Intermediate Municipal Bond Fund, Pennsylvania Municipal Bond Fund,
New Jersey Municipal Bond Fund, Global Bond Fund, Cash Reserve,Treasury Reserve
and Tax-Free Reserve Portfolios
<TABLE>
<S> <C> <C>
Item 1. Cover Page ................................................ Cover Page
Item 2. Synopsis .................................................. Transaction and
Operating Expense
Tables
Item 3. Condensed Financial Information............................ Financial Highlights
Item 4. General Description of Registrant.......................... Cover Page; Highlights;
Investment Objectives;
Investment Restrictions;
General Information
Item 5. Management of the Fund..................................... Cover Page; Management;
General Information;
Back Cover
Item 5A. Management Discussions
of Fund Performance ....................................... Disclosure in Annual
and Semi-Annual Reports
Item 6. Capital Stock and Other Securities......................... Cover Page;
Distributions; Taxes;
Description of Shares;
General Information; How
to Purchase and Redeem
Shares
Item 7. Purchase of Securities Being Offered...................... Valuation of Shares; How
to Purchase and Redeem
Shares
Item 8. Redemption or Repurchase .................................. How to Purchase and
Redeem Shares
Item 9. Pending Legal Proceedings.................................. *
PART A - Individual Shares: Growth Equity Fund,
Core Equity Fund, Special Equity Fund,
International Growth Fund, Balanced Fund
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prospectus
Form N-1A Item No. Caption
- ------------------ ---------
<S> <C> <C>
Short-Intermediate Bond Fund, Bond
Fund, Short Term Income Fund, Government
Income Fund, Intermediate Municipal
Bond Fund, Pennsylvania Municipal
Bond Fund, New Jersey Municipal Bond
Fund, Global Bond Fund, Cash Reserve,
Treasury Reserve and Tax-Free Reserve
Portfolios
Item 1. Cover Page ................................................. Cover Page
Item 2. Synopsis ................................................... Transaction and
Operating Expense
Tables
Item 3. Condensed Financial Information............................. Financial Highlights
Item 4. General Description of Registrant........................... Cover Page; Highlights;
Investment Objectives;
Investment Restrictions;
General Information
Item 5. Management of the Fund...................................... Cover Page; Management;
General Information;
Back Cover
Item 5A. Management Discussions
of Fund Performance ....................................... Disclosure in Annual
and Semi-Annual Reports
Item 6. Capital Stock and Other Securities......................... Cover Page;
Distributions; Taxes;
Description of Shares;
General Information;
Opening an Account and
Purchasing Shares;
Selling Shares
Item 7. Purchase of Securities Being Offered....................... Valuation of Shares;
Opening an Account and
Purchasing Shares;
Exchanging Shares
Item 8. Redemption or Repurchase ................................... Selling Shares;
Redeeming Shares
Item 9. Pending Legal Proceedings................................... *
PART A - Elite Money Market Funds: Elite
Cash Reserve (formerly Fiduciary Reserve),
Elite Government Reserve, Elite Treasury
Reserve (formerly Fiduciary Treasury Reserve)
and Elite Tax-Free Reserve (formerly
Fiduciary Tax-Free Reserve) Portfolios
Item 1. Cover Page ................................................. Cover Page
Item 2. Synopsis ................................................... Transaction and
Operating Expense
Tables
Item 3. Condensed Financial Information............................. Financial Highlights
Item 4. General Description of Registrant........................... Cover Page; Highlights;
Investment Objectives;
Investment Restrictions;
General Information
Item 5. Management of the Fund...................................... Cover Page; Management;
General Information;
Back Cover
Item 5A. Management Discussions
of Fund Performance ........................................ Disclosure In Annual and
Semi-Annual Reports
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Item 6. Capital Stock and Other Securities......................... Cover Page;
Distributions; Taxes;
Description of Shares;
General Information;
Opening an Account and
Purchasing Shares;
Selling Shares
Item 7. Purchase of Securities Being Offered........................ Valuation of Shares;
Opening an Account and
Purchasing Shares;
Exchanging Shares
Item 8. Redemption or Repurchase ................................... Selling Shares;
Redeeming Shares
Item 9. Pending Legal Proceedings................................... *
Part B
Item 10. Cover Page................................................. Cover Page
Item 11. Table of Contents.......................................... Table of Contents
Item 12. General Information and History............................ The Fund
Item 13. Investment Objectives and Investment
Policies................................................... Objective and
Policies
Item 14. Management of the Registrant............................... Directors
and Officers; the
Investment Adviser,
Manager and Distributor
Item 15. Control Persons and Principal
Holders of Securities...................................... Principal Holders of
Securities
Item 16. Investment Advisory and Other
Services................................................... The Investment Adviser,
Administrator and
Distributor
Item 17. Brokerage Allocation and Other
Practices.................................................. Portfolio Transactions
Item 18. Capital Stock and Other
Securities................................................. Description of Shares
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered................................ Included in Part A
Item 20. Tax Status................................................. Included in Part A
Item 21. Underwriters............................................... *
Item 22. Calculation of Performance Data............................ Yield
Item 23. Financial Statements....................................... Financial Statements
</TABLE>
Part C
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C of this Registration Statement.
- ------------
* Omitted since the answer is negative or the Item is inapplicable.
<PAGE>
COREFUND(R)
FAMILY OF MUTUAL FUNDS
PROSPECTUS
COREFUNDS, INC.
NOVEMBER 1, 1996
INSTITUTIONAL SHARES
================================================================================
CoreFunds, Inc. is an open-end management investment company
presently offering shares in twenty-three diversified and non-diversified
portfolios that offer a variety of investment opportunities. These portfolios
are managed by CoreStates Investment Advisers, Inc. This Prospectus relates to
Class Y Shares in seventeen portfolios, including equity, fixed income, and
money market portfolios (the "Funds").
- --------------------------------------------------------------------------------
This Prospectus gives you information about the Funds that you
should be aware of before investing. Additional information about the Funds,
contained in a Statement of Additional Information dated November 1, 1996, has
been filed with the Securities and Exchange Commission. It is incorporated in
this Prospectus by reference. To obtain a copy without charge, call or write:
CoreFunds, Inc.
680 East Swedesford Road
Wayne, PA 19087
1-800-355-CORE
KEEP THIS PROSPECTUS FOR FUTURE REFERENCE.
- --------------------------------------------------------------------------------
SHARES IN THE FUNDS ARE NOT OBLIGATIONS, DEPOSITS, OR ACCOUNTS OF, OR GUARANTEED
OR ENDORSED BY, CORESTATES BANK, N.A., THE PARENT CORPORATION OF EACH FUND'S
INVESTMENT ADVISER, OR ANY OF ITS AFFILIATES. SUCH SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF PRINCIPAL. AN INVESTMENT IN THE CASH RESERVE, TREASURY RESERVE AND/OR
TAX-FREE RESERVE IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT, AND
THERE CAN BE NO ASSURANCE THAT THESE FUNDS WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
================================================================================
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS /X/ COREFUND
<TABLE>
<S> <C>
Transaction and Operating
Expense Tables...................................... 3
Financial Highlights.................................. 7
Highlights............................................ 12
</TABLE>
_____________________ FUNDAMENTALS OF MUTUAL FUND INVESTING ____________________
<TABLE>
<S> <C>
Types of investment vehicles.......................... 15
How to invest in stocks, bonds, and money market
instruments......................................... 17
Developing your investment strategy................... 22
</TABLE>
___________________________ INFORMATION ON THE FUNDS ___________________________
<TABLE>
<S> <C>
Investment Objectives of the Funds.................... 26
Equity Funds..................................... 26
Fixed Income Funds............................... 26
Money Market Funds............................... 27
Investment Policies................................... 27
Equity Funds..................................... 27
Fixed Income Funds............................... 32
Money Market Funds............................... 36
Other Investment Practices
of the Funds.................................. 37
Types of Securities in Which the Funds Invest......... 44
Equity Funds..................................... 44
Taxable Fixed Income Funds....................... 45
Taxable Money Market Funds....................... 47
Tax-Free Fixed Income and Money
Market Funds.................................. 48
Temporary Investments............................ 50
Investment Restrictions............................... 51
Investor Considerations............................... 53
Investment Suitability........................... 53
Investment Risks................................. 55
Distributions......................................... 58
Taxes................................................. 59
Valuation of Shares................................... 62
Net Asset Value.................................. 62
Portfolio Pricing................................ 63
Management............................................ 64
Investment Adviser, Sub-Advisers................. 64
Fund Managers.................................... 66
Administrator.................................... 69
Distributor...................................... 69
Performance Information............................... 70
Total Return and Yield........................... 70
In General....................................... 71
How to Purchase and Redeem Shares..................... 72
Purchase of Shares............................... 72
Redemption of Shares............................. 73
Description of Shares................................. 73
General Information................................... 74
Description of Ratings................................ 75
Description of Municipal and Corporate Bond
Ratings....................................... 75
Description of Municipal
Note Ratings.................................. 76
</TABLE>
No person is authorized by CoreFunds, Inc. to give any
information or make any representation other than those
contained in this Prospectus or in other printed or written
material issued by CoreFunds, Inc., and you should not rely
on any other information or representation.
- ----
2 Table of Contents
<PAGE>
- --------------------------------------------------------------------------------
TRANSACTION AND OPERATING EXPENSE TABLES /X/ COREFUND
The purpose of the following tables is to help you understand the various costs
and expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in Class Y Shares of the Funds.
THE INFORMATION CONTAINED IN THE TABLES SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<TABLE>
<CAPTION>
------------ ------------- ------------- ------------- ---------------------
GROWTH CORE SPECIAL EQUITY INTERNATIONAL
Equity Funds EQUITY EQUITY(5) EQUITY INDEX GROWTH
- ------------ ------------ ------------- ------------- ------------- ---------------------
<S> <C> <C> <C> <C> <C>
Class Y Shares
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases none none none none none
Maximum Sales Load Imposed on
Reinvested Dividends none none none none none
Deferred Sales Load none none none none none
Redemption Fee none none none none none
Exchange Fee none none none none none
ANNUAL FUND OPERATING EXPENSES*
(as a percentage of net assets):
Investment Advisory Fees After Fee
Waivers(1) .75% .74% .83% .15% .80%
12b-1 Fees none none none none none
Other Expenses(2) .21% .26% .22% .22% .36%
Net Annual Fund Operating Expenses(3) .96% 1.00% 1.06% .37% 1.16%
EXAMPLE
You would pay the following
expenses on a $1,000
investment, assuming (1) a 5% 1 year $ 10 $ 10 $ 11 $ 4 $ 12
annual return and (2) 3 years 31 32 34 12 37
redemption at the end of each 5 years 53 55 58 21 64
time period.(4) 10 years 118 122 129 47 141
<CAPTION>
-----------------
Equity Funds BALANCED
- ------------ -----------------
<S> <C>
Class Y Shares
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases none
Maximum Sales Load Imposed on
Reinvested Dividends none
Deferred Sales Load none
Redemption Fee none
Exchange Fee none
ANNUAL FUND OPERATING EXPENSES
(as a percentage of net assets):
Investment Advisory Fees After Fee
Waivers(1) .58%
12b-1 Fees none
Other Expenses(2) .22%
Net Annual Fund Operating Expenses(3) .80%
EXAMPLE
You would pay the following
expenses on a $1,000
investment, assuming (1) a 5% $ 8
annual return and (2) 26
redemption at the end of each 47
time period.(4) 99
</TABLE>
- --------------------------------------------------------------------------------
* Fees shown reflect current fees.
(1) Absent voluntary waivers, the Adviser's investment advisory fees are
calculated at the annual rate of .75%, .74%, 1.50%, .40%, .80%, and .70% of
the average net assets of Growth Equity Fund, Core Equity Fund, Special
Equity Fund, Equity Index Fund, International Growth Fund, and Balanced
Fund, respectively.
(2) Includes (among others) administrative, custodial, legal and auditing fees.
Absent voluntary waivers, the Administrator's fee is calculated at the
annual rate of .25% of each Fund's average net assets.
(3) The Adviser and the Administrator have voluntarily waived a portion of their
fees in order to assist the Funds in maintaining a competitive expense
ratio. The expense ratios noted herein are net of investment advisory and
administrative fee waivers expected to be in effect during the fiscal period
ending June 30, 1997. Absent any fee waivers, such expense ratios would have
been 1.05%, 1.04%, 1.80%, 0.70%, 1.25% and 1.01% for Growth Equity Fund,
Core Equity Fund, Special Equity Fund, Equity Index Fund, International
Growth Fund and Balanced Fund, respectively. The service providers of all
the Funds have been voluntarily waiving a portion of their fees since
inception. However, these providers may change this waiver so that a Fund's
expense ratio will approach the contractually mandated ratio.
(4) Absent the voluntary waiver of fees by the Adviser and Administrator, the
amounts for this example, for one year, three years, five years and ten
years, would be $11, $33, $58 and $128 for Growth Equity Fund; $11, $33, $57
and $127 for Core Equity Fund; $18, $57, $97, and $212 for Special Equity
Fund; $7, $22, $39 and $87 for Equity Index Fund; $13, $40, $69 and $151 for
International Growth Fund; and $10, $32, $56 and $124 for Balanced Fund.
(5) Prior to the date of this Prospectus, this Fund's name was Equity Fund.
----
Transaction and Operating Expense Tables 3
<PAGE>
- --------------------------------------------------------------------------------
TRANSACTION AND OPERATING EXPENSE TABLES (CONTINUED)
<TABLE>
<CAPTION>
---------------- ---------- -------------- --------------- ----------------
SHORT-
INTERMEDIATE SHORT TERM GOVERNMENT INTERMEDIATE
Fixed Income Funds BOND BOND INCOME INCOME MUNICIPAL BOND
- ------------------ ---------------- ---------- -------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Class Y Shares
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases none none none none none
Maximum Sales Load Imposed on
Reinvested Dividends none none none none none
Deferred Sales Load none none none none none
Redemption Fee none none none none none
Exchange Fee none none none none none
ANNUAL FUND OPERATING EXPENSES*
(as a percentage of net assets):
Investment Advisory Fees After Fee
Waivers(1) .29% .35% .25% .47% .07%
12b-1 Fees none none none none none
Other Expenses(2) .22% .21% .22% .27% .52%
Net Annual Fund Operating Expenses(3) .51% .56% .47% .74% .59%
EXAMPLE
You would pay the following
expenses on a $1,000 investment, 1 year $ 5 $ 6 $ 5 $ 8 $ 6
assuming (1) a 5% annual return 3 years 16 18 15 24 19
and (2) redemption at the end 5 years 29 31 26 41 33
of each time period.(4) 10 years 64 70 59 92 74
</TABLE>
- --------------------------------------------------------------------------------
* Fees shown reflect current fees.
(1) Absent voluntary waivers, the Adviser's investment advisory fees are
calculated at the annual rate of .50%, .74%, .74%, .50% and .50% of the
average net assets of Short-Intermediate Bond Fund, Bond Fund, Short Term
Income Fund, Government Income Fund and Intermediate Municipal Bond Fund,
respectively.
(2) Includes (among others) administrative, legal, auditing and printing fees.
Absent voluntary waivers, the Administrator's fee is calculated at the
annual rate of .25% of each Fund's average net assets.
(3) The Adviser and the Administrator have voluntarily waived a portion of their
fees in order to assist the Funds in maintaining a competitive expense
ratio. The expense ratios noted herein are net of investment advisory and
administrative fee waivers expected to be in effect during the fiscal period
ending June 30, 1997. Absent fee waivers, such expense ratios would have
been 0.80%, 1.04%, 1.05%, 0.84% and 1.21% for Short-Intermediate Bond Fund,
Bond Fund, Short Term Income Fund, Government Income Fund and Intermediate
Municipal Bond Fund, respectively. The service providers of all the Funds
have been waiving all or a portion of their fees since inception. However,
these providers may change the waiver so that a Fund's expense ratio will
approach the contractually mandated ratio.
(4) Absent the voluntary waiver of fees by the Adviser and the Administrator,
the amounts in this Example, for one year, three years, five years and ten
years, would be $8, $26, $44 and $99 for Short Intermediate Bond Fund; $11,
$33, $57 and $127 for Bond Fund; $11, $33, $58 and $128 for Short-Term
Income Fund; $9, $27, $47 and $104 for Government Income Fund; and $11, $35,
$61 and $135 for Intermediate Municipal Bond Fund.
- -----
4 Transaction and Operating Expense Tables
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
<TABLE>
<CAPTION>
------------------- ----------------- ---------
PENNSYLVANIA NEW JERSEY
MUNICIPAL MUNICIPAL GLOBAL
Fixed Income Funds BOND BOND BOND
- ------------------ ------------------- ----------------- ---------
<S> <C> <C> <C> <C>
Class Y Shares
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases none none none
Maximum Sales Load Imposed on Reinvested Dividends none none none
Deferred Sales Load none none none
Redemption Fee none none none
Exchange Fee none none none
ANNUAL FUND OPERATING EXPENSES*
(as a percentage of net assets):
Investment Advisory Fees After Fee Waivers(1) 0% 0% .50%
12b-1 Fees none none none
Other Expenses(2) .08% .13% .34%
Net Annual Fund Operating Expenses(3) .08% .13% .84%
EXAMPLE
You would pay the following
expenses on a $1,000 investment, 1 year $ 1 $ 1 $ 9
assuming (1) a 5% annual return 3 years 3 4 27
and (2) redemption at the end 5 years 5 7 47
of each time period.(4) 10 years 10 17 104
</TABLE>
- --------------------------------------------------------------------------------
* Fees shown reflect current fees.
(1) Absent voluntary waivers, the Adviser's investment advisory fees are
calculated at the annual rate of .50%, .50% and .60% of the average net
assets of Pennsylvania Municipal Bond Fund, New Jersey Municipal Bond Fund
and Global Bond Fund, respectively.
(2) Includes (among others) administrative, legal, auditing and printing fees.
Absent voluntary waivers, the Administrator's fee is calculated at the
annual rate of .25% of each Fund's average net assets.
(3) The Adviser and the Administrator have voluntarily waived a portion of their
fees in order to assist the Funds in maintaining a competitive expense
ratio. The expense ratios noted herein are net of investment advisory and
administrative fee waivers expected to be in effect during the fiscal period
ending June 30, 1997. Absent fee waivers, such expense ratios would have
been 0.83%, 0.88% and 1.03% for Pennsylvania Municipal Bond Fund, New Jersey
Municipal Bond Fund and Global Bond Fund, respectively. The service
providers of all the Funds have been waiving all or a portion of their fees
since inception. However, these providers may change the waiver so that a
Fund's expense ratio will approach the contractually mandated ratio.
(4) Absent the voluntary fee waiver of the Adviser and the Administrator, the
amounts in this Example, for one year, three years, five years and ten
years, would be $8, $26, $46, and $103 for Pennsylvania Municipal Bond Fund;
$9, $28, $49, and $108 for New Jersey Municipal Bond Fund; and $11, $33,
$57, and $126 for Global Bond Fund.
Transaction and Operating Expense Tables ----
5
<PAGE>
- --------------------------------------------------------------------------------
TRANSACTION AND OPERATING EXPENSE TABLES (CONTINUED) /X/ COREFUND
<TABLE>
<CAPTION>
------------- ------------- -------------
CASH TREASURY TAX-FREE
Money Market Funds RESERVE RESERVE RESERVE
- ------------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
Class Y Shares
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases none none none
Maximum Sales Load Imposed on Reinvested
Dividends none none none
Deferred Sales Load none none none
Redemption Fee none none none
Exchange Fee none none none
ANNUAL FUND OPERATING EXPENSES*
(as a percentage of net assets):
Investment Advisory Fees After Fee Waivers(1) .30% .30% .30%
12b-1 Fees none none none
Other Expenses(2) .21% .21% .21%
Net Annual Fund Operating Expenses(3) .51% .51% .51%
EXAMPLE
You would pay the following
expenses on a $1,000 investment, 1 year $ 5 $ 5 $ 5
assuming (1) a 5% annual return 3 years 16 16 16
and (2) redemption at the end 5 years 29 29 29
of each time period.(4) 10 years 64 64 64
</TABLE>
- --------------------------------------------------------------------------------
* Fees shown reflect current fees.
(1) Absent voluntary waivers, the Adviser's investment advisory fees are
calculated at the annual rate of .40%, .40%, and .40% of the average net
assets of Cash Reserve, Treasury Reserve, and Tax-Free Reserve,
respectively.
(2) Includes (among others) administrative, legal, auditing, and printing fees.
Absent voluntary waivers, the Administrator's fee is calculated at the
annual rate of .25% of each Fund's average net assets.
(3) The Adviser and the Administrator have voluntarily waived a portion of their
fees in order to assist the Funds in maintaining a competitive expense
ratio. The expense ratios noted herein are net of investment advisory and
administrative fee waivers expected to be in effect during the fiscal period
ended June 30, 1997. Absent any fee waivers, such expense ratios would have
been 0.70%, 0.70% and 0.70%, for Cash Reserve, Treasury Reserve, and
Tax-Free Reserve, respectively. The service providers of all the Funds have
been waiving all or a portion of their fees since inception. However, these
providers may change the waiver so that a Fund's expense ratio will approach
the contractually mandated ratio.
(4) Absent the voluntary fee waiver of the Adviser and the Administrator, the
amounts in this Example, for one year, three years, five years and ten
years, would be $7, $22, $39 and $87 for Cash Reserve; $7, $22, $39 and $87
for Treasury Reserve; $7, $22, $39 and $87 for Tax-Free Reserve.
- -----
6 Transaction and Operating Expense Tables
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS /X/ COREFUND
The tables that follow present information about the investment results of
the shares of the Funds. The financial highlights for each of the Growth Equity
Fund, Core Equity Fund, Special Equity Fund, Equity Index Fund, International
Growth Fund, Balanced Fund, Government Income Fund, Short Term Income Fund,
Short-Intermediate Bond Fund, Bond Fund, Intermediate Municipal Bond Fund,
Global Bond Fund, Pennsylvania Municipal Bond Fund, New Jersey Municipal Bond
Fund, Cash Reserve Fund, Treasury Reserve Fund and Tax-Free Reserve Fund have
been audited by Ernst & Young LLP, independent auditors, whose report thereon
appears in CoreFunds' annual report which accompanies the Statement of
Additional Information. The financial highlights for each of the Core Equity
Fund, Special Equity Fund, Bond Fund and Short Term Income Fund for the period
ended October 31, 1990 through October 31, 1995 were audited by Coopers &
Lybrand LLP, independent auditors. The annual report for the Funds is available
to shareholders at no charge by calling CoreFunds at 1-800-355-CORE.
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED JUNE 30,
Equity Funds
______________
<TABLE>
<CAPTION>
Realized
and Net
Unrealized Assets,
Net Asset Net Gains Dividends Distribution End of Ratio of
Value, Net or (Losses) from Net from Net Asset Period Expenses to
Beginning Investment on Investment Capital Value End Total (000 Average Net
of Period Income Securities Income Gains of Period Return(8) omitted) Assets
----------- ----------- ----------- ----------- ----------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------
GROWTH EQUITY
- -------------
CLASS Y (INSTITUTIONAL)**
1996 $11.18 $0.08 $ 3.36 $(0.08) $(0.35) $14.19 31.36% $120,073 0.89%
1995 9.11 0.08 2.07 (0.08) -- 11.18 23.71 91,345 0.76
1994 9.95 0.05 (0.84) (0.05) -- 9.11 (8.01) 64,877 0.69
1993 8.74 0.08 1.21 (0.08) -- 9.95 14.76 63,777 0.43
1992(1) 10.00 0.05 (1.26) (0.05) -- 8.74 (12.05)+ 33,418 0.14
CLASS A (INDIVIDUAL)**
1996 $11.17 $0.05 $ 3.35 $(0.05) $(0.35) $14.17 31.00% $ 3,162 1.14%
1995 9.10 0.06 2.07 (0.06) -- 11.17 23.44 2,043 1.01
1994 9.95 0.04 (0.85) (0.04) -- 9.10 (8.13) 1,730 0.94
1993(2) 9.80 0.03 0.15 (0.03) -- 9.95 1.80+ 5,224 0.80
- --------------
CORE EQUITY(9)
- --------------
CLASS Y (INSTITUTIONAL)*
1996 $17.07 $0.14 $ 1.49 $(0.14) $(1.30) $17.26 19.24% $414,824 0.97%
1995 15.00 0.19 2.87 (0.19) (0.80) 17.07 22.00 78,352 1.05
CLASS A (INDIVIDUAL)*
1996 $17.08 $0.12 $ 1.49 $(0.11) $(1.30) $17.28 19.11% $ 11,178 1.22%
1995 15.00 0.18 2.87 (0.17) (0.80) 17.08 21.99 6.591 1.34
PRIOR CLASS
1994 $15.39 $0.11 $ 0.22 $(0.11) $(0.61) $15.00 2.21% $ 50,128 1.49%
1993 13.93 0.14 1.89 (0.14) (0.43) 15.39 14.90 45,677 1.20
1992 13.08 0.19 1.02 (0.19) (0.17) 13.93 9.27 28,103 0.92
1991 8.95 0.26 4.13 (0.26) -- 13.08 49.37 12.830 0.54
1990(3) 10.00 0.14 (1.05) (0.14) -- 8.95 (9.22) 5,982 0.65
- -----------------
SPECIAL EQUITY(9)
- -----------------
CLASS Y (INSTITUTIONAL)*
1996 $11.42 $0.07 $ 2.13 $(0.07) $(1.69) $11.86 22.27% $ 63,680 0.34%
1995 9.37 0.12 2.12 (0.12) (0.07) 11.42 24.44 57,396 0.32
CLASS A (INDIVIDUAL)*
1996 $11.42 $0.08 $ 2.11 $(0.07) $(1.69) $11.85 22.14% $ 1,144 0.37%
1995 9.37 0.12 2.12 (0.12) (0.07) 11.42 24.44 7.34 0.27
PRIOR CLASS
1994(4) $10.00 $0.06 $ (0.63) $(0.06) $ -- $ 9.37 (5.72)% $ 10,069 0.15%
<CAPTION>
Ratio of Ratio of
Expenses to Net Income
Ratio of Average Net to Average
Net Income Assets Net Assets Portfolio Average
to Average (Excluding (Excluding Turnover Commission
Net Assets Waivers) Waivers) Rate*** Rate(10)
----------- ----------- ---------- ----------- -----------
- -------------
GROWTH EQUITY
- -------------
CLASS Y (INSTITUTIONAL)**
1996 0.64% 1.05% 0.48% 81% $0.0601
1995 0.84 1.10 0.50 113 --
1994 0.48 1.11 0.06 127 --
1993 0.85 1.11 0.17 103 --
1992(1) 1.38 1.12 0.40 66 --
CLASS A (INDIVIDUAL)**
1996 0.40% 1.30% 0.23% 81% $0.0601
1995 0.59 1.35 0.25 113 --
1994 0.23 1.36 (0.19) 127 --
1993(2) 0.39 1.48 (0.29) 103 --
- --------------
CORE EQUITY(9)
- --------------
CLASS Y (INSTITUTIONAL)*
1996 1.15% 1.01% 1.11% 114% $0.0636
1995 1.44 1.10 1.44 119 --
CLASS A (INDIVIDUAL)*
1996 0.89% 1.26% 0.85% 114% $0.0636
1995 1.23 1.53 1.04 119 --
PRIOR CLASS
1994 0.75% 1.51% 0.73% 35% --
1993 0.94 1.41 0.73 24 --
1992 1.47 1.23 1.17 39 --
1991 2.30 1.48 1.36 68 --
1990(3) 2.29 1.59 1.35 43 --
- -----------------
SPECIAL EQUITY(9)
- -----------------
CLASS Y (INSTITUTIONAL)*
1996 0.94% 1.79% (0.51)% 72% $0.0539
1995 1.14 1.97% (0.51) 129 --
CLASS A (INDIVIDUAL)*
1996 0.91% 1.82% (0.55)% 72% $0.0539
1995 1.29 2.24 (0.68) 129 --
PRIOR CLASS
1994(4) 1.06% 2.10% (0.89)% 39% --
</TABLE>
Financial Highlights ----
7
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED JUNE 30, (CONTINUED)
Equity Funds (continued)
______________
<TABLE>
<CAPTION>
Realized
and Net Net Assets,
Net Asset Unrealized Dividends Distribution Asset End of Ratio of
Value, Net Net Gains from Net from Value Period Expenses
Beginning Investment or (Losses) Investment Capital End of Total (000 to Average
of Period Income on Securities Income Gains Period Return(8) omitted) Net Assets
----------- ----------- ------------ ----------- --------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------
EQUITY INDEX
- ------------
CLASS Y**
1996 $23.79 $0.51 $ 5.47 $(0.51) $(0.79) $28.47 25.69% $166,350 0.35%
1995 20.54 0.52 4.24 (0.52) (0.99) 23.79 24.45 112,553 0.37
1994 20.97 0.55 (0.43) (0.55) -- 20.54 0.55 72,552 0.35
1993 19.22 0.52 1.84 (0.52) (0.09) 20.97 12.39 50,551 0.49
1992 18.46 0.52 1.80 (0.48) (1.08) 19.22 12.59 20,166 0.57
1991(5) 19.48 0.03 (0.94) (0.02) (0.09) 18.46 (4.64)+ 12,117 0.97
- --------------------
INTERNATIONAL GROWTH
- --------------------
CLASS Y (INSTITUTIONAL)**
1996 $12.29 $0.16 $ 1.86 $(0.28) $(0.06) $13.97 16.72% $139,275 1.14%
1995 13.18 0.12 (0.17) (0.04) (0.80) 12.29 (0.21) 110,838 1.05
1994 11.71 0.12 1.78 (0.12) (0.31) 13.18 16.28 108,911 0.99
1993 10.52 0.10 1.16 (0.07) -- 11.71 12.06 61,655 0.99
1992 10.10 0.17 0.31 -- (0.06) 10.52 4.90 42,594 0.96
1991 10.75 0.19 (0.44) (0.27) (0.13) 10.10 (2.71) 20,582 0.99
1990(6) 10.00 0.11 0.86 (0.09) (0.13) 10.75 9.74+ 13,513 1.22
CLASS A (INDIVIDUAL)**
1996 $12.27 $0.11 $ 1.89 $(0.25) $(0.06) $13.96 16.54% $ 2,138 1.39%
1995 13.17 0.09 (0.17) (0.02) (0.80) 12.27 (0.48) 1,943 1.30
1994 11.71 0.06 1.82 (0.11) (0.31) 13.17 16.08 2,019 1.24
1993(12) 10.07 0.05 1.59 -- -- 11.71 16.29+ 344 1.15
- --------
BALANCED
- --------
CLASS Y (INSTITUTIONAL)**
1996 $11.06 $0.33 $ 1.68 $(0.33) $(0.15) $12.59 18.41% $102,515 0.81%
1995 9.88 0.35 1.21 (0.35) (0.03) 11.06 16.21 61,092 0.73
1994 10.39 0.35 (0.51) (0.35) -- 9.88 (1.62) 42,429 0.62
1993(2) 10.00 0.16 0.39 (0.16) -- 10.39 5.52+ 29,434 0.45
CLASS A (INDIVIDUAL)**
1996 $11.06 $0.30 $ 1.68 $(0.30) $(0.15) $12.59 18.13% $ 3,188 1.06%
1995 9.89 0.34 1.19 (0.33) (0.03) 11.06 15.84 2,344 0.98
1994 10.38 0.31 (0.49) (0.31) -- 9.89 (1.86) 2,222 0.87
1993(7) 10.00 0.16 0.38 (0.16) -- 10.38 2.50+ 701 0.55
<CAPTION>
Ratio of Ratio of
Expenses to Net Income
Ratio of Average Net to Average
Net Income Assets Net Assets Portfolio Average
to Average (Excluding (Excluding Turnover Commission
Net Assets Waivers) Waivers) Rate*** Rate(10)
----------- ----------- ----------- ----------- -----------
- ------------
EQUITY INDEX
- ------------
CLASS Y**
1996 1.94% 0.71% 1.59% 13% $0.0641
1995 2.48 0.76 2.09 27 --
1994 2.63 0.75 2.23 13 --
1993 2.82 0.88 2.43 4 --
1992 2.66 1.06 2.17 27 --
1991(5) 1.79 1.20 1.56 -- --
- ---------------------
INTERNATIONAL GROWTH
- ---------------------
CLASS Y (Institutional)**
1996 1.05% 1.25% 0.94% 41% $0.0270
1995 0.98 1.19 0.84 59 --
1994 0.23 1.18 0.04 67 --
1993 1.22 1.28 0.93 59 --
1992 1.67 1.40 1.23 87 --
1991 1.80 1.56 1.23 49 --
1990(6) 2.57 1.99 1.80 20 --
CLASS A (Individual)**
1996 0.80% 1.50% 0.69% 41% $0.0270
1995 0.73 1.44 0.59 59 --
1994 0.05 1.43 (0.14) 67 --
1993(2) 1.51 1.44 1.22 59 --
- ---------
BALANCED
- ---------
CLASS Y (Institutional)**
1996 2.79% 1.03% 2.57% 74% $0.0621
1995 3.51 1.07 3.17 46 --
1994 3.46 1.08 3.00 56 --
1993(2) 3.38 1.39 2.45 21 --
CLASS A (Individual)**
1996 2.53% 1.27% 2.32% 74% $0.0621
1995 3.27 1.32 2.93 46 --
1994 3.21 1.33 2.75 56 --
1993(7) 5.76 1.48 4.83 21 --
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
* On February 21, 1995 the shares of the Funds were redesignated as either Retail or Institutional shares. For the year
ended October 31, 1995, the Financial Highlights' ratios of expenses, net investment income, total return, and the per
share investment activities and distributions are presented on a basis whereby the Fund's net investment income,
expenses, and distributions for the period November 1, 1994 through February 20, 1995 were allocated to each class of
shares based upon the relative net assets of each class of shares as of February 21, 1995 and the results combined
therewith the results of operations and distributions for each applicable class for the period February 21, 1995 through
October 31, 1995. Additionally, on April 15 & 22, 1996 the Conestoga Equity and Special Equity Funds were acquired by
CoreFunds, Inc.; at which time the Institutional Class of shares of these Funds were exchanged for Class Y shares and the
Retail Class of these Funds were exchanged for Class A shares.
** On April 22, 1996 the Series A shares of each fund were redesignated Class Y and the Series B shares of each fund were
redesignated Class A.
*** For 1996, transactions relating to the merger were excluded from the calculation of the Portfolio Turnover Rate.
+ This figure has not been annualized.
(1) Commenced operations February 3, 1992. Unless otherwise noted, all ratios for the period have been annualized.
(2) Commenced operations January 4, 1993. Unless otherwise noted, all ratios for the period have been annualized.
(3) Commenced operations Februrary 28, 1990. Unless otherwise noted, all ratios for the period have been annualized.
(4) Commenced operations March 15, 1994. Unless otherwise noted, all ratios for the period have been annualized.
(5) Commenced operations June 1, 1991. Unless otherwise noted, all ratios for the period have been annualized.
(6) Commenced operations February 12, 1990. Unless otherwise noted, all ratios for the period have been annualized.
(7) Commenced operations March 16, 1993. Unless otherwise noted, all ratios for the period have been annualized.
(8) Total return does not reflect applicable sales load. Additionally total return for Class Y & Class A for the Equity &
Special Equity Funds for 1996 are for an eight month period ended June 30, 1996.
(9) The per share amount for these Funds for 1996 represents the period from November 1, 1995 to June 30, 1996. All prior
years are for the periods November 1 to October 31.
(10) Average commission rate paid per share for security purchases and sales during the period. Presentation of the rate is
only required for fiscal years beginning after September 1, 1995.
</TABLE>
- ----
8 Financial Highlights
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED JUNE 30, (CONTINUED)
Fixed Income Funds
- ------------------
<TABLE>
<CAPTION>
Realized
and Net
Unrealized Assets,
Net Asset Net Gains Dividends Distributions End of
Value, Net or (Losses) from Net from Net Asset Period
Beginning Investment on Investment Capital Value, End Total (000
of Period Income Securities Income Gains of Period Return(10) omitted)
----------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
- -----------------
GOVERNMENT INCOME
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS Y (INSTITUTIONAL)**
1996 $ 9.83 $0.61 $(0.21) $(0.61) $ ___ $ 9.62 4.09% $13,943
1995 9.52 0.62 0.31 (0.62) ___ 9.83 10.26 11,305
1994 10.18 0.50 (0.62) (0.50) (0.04) 9.52 (1.34) 9,089
1993(1) 10.00 0.13 0.18 (0.13) -- 10.18 3.12+ 6,323
CLASS A (INDIVIDUAL)**
1996 $ 9.84 $0.58 $(0.22) $(0.58) $ ___ $ 9.62 3.73% $ 1,287
1995 9.51 0.61 0.33 (0.61) ___ 9.84 10.23 1,374
1994 10.17 0.47 (0.62) (0.47) (0.04) 9.51 (1.57) 1,536
1993(2) 10.00 0.07 0.17 (0.07) -- 10.17 1.71+ 201
</TABLE>
<TABLE>
<CAPTION>
Ratio of Ratio of
Expenses to Net Income
Ratio of Ratio of Average Net to Average
Expenses to Net Income Assets Net Assets Portfolio
Average Net to Average (Excluding (Excluding Turnover
Assets Net Assets Waivers) Waivers) Rate***
----------- ----------- ----------- ----------- -----------
CLASS Y (INSTITUTIONAL)**
<S> <C> <C> <C> <C> <C>
1996 0.64% 6.17% 0.89% 5.92% 131%
1995 0.59 6.53 0.98 6.14 368%
1994 0.50 4.93 1.00 4.43 157
1993(1) 0.44 5.41 1.10 4.75 93
CLASS A (INDIVIDUAL)**
1996 0.88% 5.93% 1.14% 5.67% 131%
1995 0.85 6.25 1.24 5.86 368
1994 0.75 4.68 1.25 4.18 157
1993(2) 0.63 5.35 1.29 4.69 93
</TABLE>
<TABLE>
<CAPTION>
Realized
and Net
Unrealized Assets,
Net Asset Net Gains Dividends Distributions End of
Value, Net or (Losses) from Net from Net Asset Period
Beginning Investment on Investment Capital Value, End Total (000
of Period Income Securities Income Gains of Period Return(10) omitted)
----------- ----------- ----------- ----------- ----------- ----------- ---------- ---------
- --------
BOND(11)
- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS Y (INSTITUTIONAL)*
1996 $10.55 $0.43 $(0.30) $(0.45) $(0.08) $10.15 1.23% $198,605
1995 9.81 0.61 0.71 (0.58) -- 10.55 13.87 194,442
CLASS A (INDIVIDUAL)*
1996 $10.56 $0.44 $(0.33) $(0.44) $(0.08) $10.15 0.98% $ 1,273
1995 9.81 0.60 0.72 (0.57) -- 10.56 13.83 1,373
PRIOR CLASS
1994 $11.18 $0.53 $(1.04) $(0.52) $(0.34) $ 9.81 (4.75)% $ 23,377
1993 10.89 0.56 0.54 (0.56) (0.25) 11.18 10.63 27,346
1992 10.65 0.70 0.32 (0.68) (0.10) 10.89 0.82 15,180
1991 9.96 0.78 0.69 (0.78) -- 10.65 15.16 7,255
1990(3) 10.00 0.50 (0.04) (0.50) -- 9.96 4.64+ 4.593
</TABLE>
<TABLE>
<CAPTION>
Ratio of Ratio of
Expenses to Net Income
Ratio of Ratio of Average Net to Average
Expenses to Net Income Assets Net Assets Portfolio
Average Net to Average (Excluding (Excluding Turnover
Assets Net Assets Waivers) Waivers) Rate***
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CLASS Y
1996 0.55% 6.28% 0.97% 5.86% 190%
1995 0.71 6.09 1.12 5.68 352
CLASS A (INDIVIDUAL)*
1996 0.80% 6.02% 1.22% 5.61% 190%
1995 0.97 6.02 1.44 5.55 352
PRIOR CLASS
1994 1.01% 5.07% 1.60% 4.48% 232%
1993 0.88 5.16 1.49 4.55 158
1992 0.46 6.78 1.24 6.01 99%
1991 0.47 7.71 1.41 6.78 47
1990(3) 0.68 7.75 1.62 6.81 23
</TABLE>
<TABLE>
<CAPTION>
Realized
and Net
Unrealized Assets,
Net Asset Net Gains Dividends Distributions End of
Value, Net or (Losses) from Net from Net Asset Period
Beginning Investment on Investment Capital Value, End Total (000
of Period Income Securities Income Gains of Period Return(10) omitted)
----------- ----------- ----------- ----------- ----------- ----------- ---------- ---------
- ---------------------
SHORT TERM INCOME(11)
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS Y (INSTITUTIONAL)*
1996 $10.05 $0.36 $(0.08) $(0.38) $(0.01) $ 9.94 2.78% $30,132
1995(4) 10.00 0.25 0.03 (0.23) -- 10.05 2.87+ 36,099
CLASS A (INDIVIDUAL)*
1996 $10.04 $0.35 $(0.10) $(0.35) $(0.01) $ 9.93 2.55% $ 1
1995(5) 10.01 0.23 0.02 (0.22) -- 10.04 2.57+ 11
</TABLE>
<TABLE>
<CAPTION>
Ratio of Ratio of
Expenses to Net Income
Ratio of Ratio of Average Net to Average
Expenses to Net Income Assets Net Assets Portfolio
Average Net to Average (Excluding (Excluding Turnover
Assets Net Assets Waivers) Waivers) Rate***
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CLASS Y (INSTITUTIONAL)
1996 0.51% 5.31% 1.03% 4.79% 102%
1995(4) 0.63 5.43 1.08 4.98 40
CLASS A (INDIVIDUAL)*
1996 0.76% 5.05% 1.25% 4.56% 102%
1995(5) 0.88 5.05 1.33 4.60 40
</TABLE>
<TABLE>
<CAPTION>
Realized
and Net
Unrealized Assets,
Net Asset Net Gains Dividends Distributions End of
Value, Net or (Losses) from Net from Net Asset Period
Beginning Investment on Investment Capital Value, End Total (000
of Period Income Securities Income Gains of Period Return(10) omitted)
----------- ----------- ----------- ----------- ----------- ----------- ---------- ---------
- -----------------------
SHORT-INTERMEDIATE BOND
- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS Y (INSTITUTIONAL)**
1996 $ 9.84 $0.57 $(0.08) $(0.57) $ ___ $ 9.76 5.05% $159,841
1995 9.63 0.53 0.21 (0.53) ___ 9.84 8.22 55,128
1994 10.18 0.43 (0.53) (0.43) (0.02) 9.63 (0.32) 48,379
1993 10.01 0.47 0.31 (0.47) (0.14) 10.18 7.90 44,692
1992(6) 10.00 0.23 0.01 (0.23) -- 10.01 2.49+ 22,623
CLASS A (INDIVIDUAL)**
1996 $ 9.84 $0.54 $(0.08) $(0.54) $ ___ $ 9.76 4.79% $ 3,062
1995 9.63 0.54 0.20 (0.53) ___ 9.84 7.95 1,961
1994 10.18 0.41 (0.53) (0.41) (0.02) 9.63 (0.56) 9,365
1993(2) 10.01 0.20 0.17 (0.20) -- 10.18 3.95+ 5,752
</TABLE>
<TABLE>
<CAPTION>
Ratio of Ratio of
Expenses to Net Income
Ratio of Ratio of Average Net to Average
Expenses to Net Income Assets Net Assets Portfolio
Average Net to Average (Excluding (Excluding Turnover
Assets Net Assets Waivers) Waivers) Rate***
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CLASS Y (INSTITUTIONAL)
1996 0.55% 5.80% 0.81% 5.54% 257%
1995 0.60 5.76 0.84 5.52 405
1994 0.58 4.30 0.86 4.02 299
1993 0.42 4.62 0.86 4.18 188
1992(6) 0.11 5.73 0.84 5.00 51
CLASS A (INDIVIDUAL)**
1996 0.81% 5.51% 1.06% 5.27% 257%
1995 0.85 5.27 1.09 5.03 405
1994 0.83 4.05 1.11 3.77 299
1993(2) 0.75 3.78 1.19 3.34 188
</TABLE>
Financial Highlights ----
9
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED JUNE 30, (CONTINUED)
Fixed Income Funds (continued)
- ------------------
<TABLE>
<CAPTION>
Realized
and Net
Unrealized Assets,
Net Asset Net Gains Dividends Distribution End of
Value, Net or (Losses) from Net from Net Asset Period
Beginning Investment on Investment Capital Value End Total (000
of Period Income Securities Income Gains of Period Return(10) omitted)
----------- ----------- ----------- ----------- ----------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------
INTERMEDIATE MUNICIPAL BOND
- ---------------------------
CLASS Y (INSTITUTIONAL)**
1996 $ 9.83 $0.37 $ 0.09 $(0.37) $ ___ $ 9.92 4.74% $ 403
1995 9.68 0.38 0.15 (0.38) -- 9.83 5.58 365
1994 10.09 0.39 (0.41) (0.39) -- 9.68 (0.27) 1,088
1993(7) 10.00 0.04 0.09 (0.04) -- 10.09 1.33+ 2,009
CLASS A (INDIVIDUAL)**
1996 $ 9.83 $0.35 $ 0.09 $(0.35) $ ___ $ 9.92 4.48% $1,015
1995 9.67 0.35 0.16 (0.35) -- 9.83 5.42 1,027
1994 10.08 0.37 (0.41) (0.37) -- 9.67 (0.52) 1,311
1993(2) 10.00 0.03 0.08 (0.03) -- 10.08 1.19+ 166
</TABLE>
<TABLE>
<CAPTION>
Ratio of Ratio of
Expenses to Net Income
Ratio of Ratio of Average Net to Average
Expenses to Net Income Assets Net Assets Portfolio
Average Net to Average (Excluding (Excluding Turnover
Assets Net Assets Waivers) Waivers) Rate***
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CLASS Y (INSTITUTIONAL)
1996 0.81% 3.73% 1.31% 3.23% 10%
1995 0.82 3.91 1.26 3.47 9
1994 0.63 3.91 1.17 3.37 43
1993(7) 0.58 2.74 1.45 1.87 10
CLASS A (INDIVIDUAL)
1996 1.08% 3.47% 1.61% 2.94% 10%
1995 1.08 3.65 1.52 3.21 9
1994 0.88 3.66 1.42 3.12 43
1993(2) 0.81 2.51 1.68 1.64 10
</TABLE>
<TABLE>
<CAPTION>
Realized
and Net
Unrealized Assets,
Net Asset Net Gains Dividends Distribution End of
Value, Net or (Losses) from Net from Net Asset Period
Beginning Investment on Investment Capital Value End Total (000
of Period Income Securities Income Gains of Period Return(10) omitted)
----------- ----------- ----------- ----------- ----------- ----------- ---------- ---------
- -----------
GLOBAL BOND
- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS Y (INSTITUTIONAL)**
1996 $ 9.62 $0.47 $ 0.30 $(0.69) $ ___ $9.70 8.00% $32,998
1995 9.06 0.62 0.24 (0.30) -- 9.62 9.70 26,898
1994(8) 10.00 0.25 (1.15) (0.04) -- 9.06 (9.00)+ 24,957
CLASS A (INDIVIDUAL)**
1996 $ 9.61 $0.61 $ 0.12 $(0.66) $ ___ $9.68 7.74% $ 152
1995 9.04 0.61 0.24 (0.28) -- 9.61 9.57 170
1994(8) 10.00 0.19 (1.11) (0.04) -- 9.04 (9.22)+ 167
</TABLE>
<TABLE>
<CAPTION>
Ratio of Ratio of
Expenses to Net Income
Ratio of Ratio of Average Net to Average
Expenses to Net Income Assets Net Assets Portfolio
Average Net to Average (Excluding (Excluding Turnover
Assets Net Assets Waivers) Waivers) Rate***
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CLASS Y (INSTITUTIONAL)**
1996 0.71% 5.81% 0.95% 5.57% 67%
1995 0.64 6.84 1.03 6.45 133
1994(8) 0.73 5.04 1.12 4.65 161
CLASS A (INDIVIDUAL)**
1996 0.96% 5.56% 1.20% 5.32% 67%
1995 0.89 6.59 1.28 6.20 133
1994(8) 0.98 4.79 1.37 4.40 161
</TABLE>
<TABLE>
<CAPTION>
Realized
and Net
Unrealized Assets,
Net Asset Net Gains Dividends Distribution End of
Value, Net or (Losses) from Net from Net Asset Period
Beginning Investment on Investment Capital Value End Total (000
of Period Income Securities Income Gains of Period Return(10) omitted)
----------- ----------- ----------- ----------- ----------- ----------- ---------- ---------
- ---------------------------
PENNSYLVANIA MUNICIPAL BOND
- ---------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS Y (INSTITUTIONAL)**
1996 $10.16 $0.55 $ 0.06 $(0.55) $ ___ $10.22 6.02% $8,864
1995 9.95 0.51 0.21 (0.51) -- 10.16 7.50 2,272
1994(9) 10.00 0.06 (0.05) (0.06) -- 9.95 0.14+ 434
CLASS A (INDIVIDUAL)**
1996 $10.16 $0.52 $ 0.06 $(0.52) $ ___ $10.22 5.76% $ 994
1995 9.95 0.49 0.21 (0.49) -- 10.16 7.25 317
1994(9) 10.00 0.06 (0.05) (0.06) -- 9.95 0.09+ 163
</TABLE>
<TABLE>
<CAPTION>
Ratio of Ratio of
Expenses to Net Income
Ratio of Ratio of Average Net to Average
Expenses to Net Income Assets Net Assets Portfolio
Average Net to Average (Excluding (Excluding Turnover
Assets Net Assets Waivers) Waivers) Rate***
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CLASS Y (INSTITUTIONAL)
1996 0.21% 5.25% 0.96% 4.50% 92%
1995 0.39 5.26 1.14 4.51 18
1994(9) 0.42 5.09 1.17 4.34 3
CLASS A (INDIVIDUAL)**
1996 0.46% 4.93% 1.21% 4.18% 92%
1995 0.64 4.95 1.39 4.20 18
1994(9) 0.67 4.84 1.42 4.09 3
</TABLE>
<TABLE>
<CAPTION>
Realized
and Net
Unrealized Assets,
Net Asset Net Gains Dividends Distribution End of
Value, Net or (Losses) from Net from Net Asset Period
Beginning Investment on Investment Capital Value End Total (000
of Period Income Securities Income Gains of Period Return(10) omitted)
----------- ----------- ----------- ----------- ----------- ----------- ---------- ---------
- -------------------------
NEW JERSEY MUNICIPAL BOND
- -------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS Y (INSTITUTIONAL)**
1996 $10.12 $0.51 $(0.02) $(0.51) $(0.06) $10.08 5.28% $1,317
1995 9.94 0.52 0.18 (0.52) -- 10.12 7.25 1,550
1994(9) 10.00 0.06 (0.06) (0.06) -- 9.94 0.01+ 1,432
CLASS A (INDIVIDUAL)**
1996 $10.12 $0.48 $(0.01) $(0.48) $(0.06) $10.07 4.93% $ 304
1995 9.95 0.49 0.17 (0.49) -- 10.12 6.84 24
1994(9) 10.00 0.06 (0.05) (0.06) -- 9.95 0.08+ 2
</TABLE>
<TABLE>
<CAPTION>
Ratio of Ratio of
Expenses to Net Income
Ratio of Ratio of Average Net to Average
Expenses to Net Income Assets Net Assets Portfolio
Average Net to Average (Excluding (Excluding Turnover
Assets Net Assets Waivers) Waivers) Rate***
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CLASS Y (INSTITUTIONAL)**
1996 0.37% 4.93% 1.12% 4.18% 21%
1995 0.42 5.21 1.17 4.46 32
1994(9) 0.43 5.07 1.35 4.15 13
CLASS A (INDIVIDUAL)**
1996 0.60% 4.65% 1.35% 3.90% 21%
1995 0.68 4.97 1.44 4.21 32
1994(9) 0.68 4.82 1.60 3.90 13
</TABLE>
- --------------------------------------------------------------------------------
* On February 21, 1995 the shares of the Funds were redesignated as either
Retail or Institutional shares. For the year ended October 31, 1995, the
Financial Highlights' ratios of expenses, net investment income, total
return, and the per share investment activities and distributions are
presented on a basis whereby the Fund's net investment income, expenses, and
distributions for the period November 1, 1994 through February 20, 1995 were
allocated to each class of shares based upon the relative net assets of each
class of shares as of February 21, 1995 and the results combined therewith
the results of operations and distributions for each applicable class for
the period February 21, 1995 through October 31, 1995. Additionally, on
April 22, 1996 the Conestoga Short-Term Income and Bond Funds were acquired
by CoreFunds, Inc. at which time the Institutional Class of shares of these
Funds were redesignated Class Y and the Retail Class of these Funds were
redesignated Class A.
** On April 22, 1996 the Series A shares of each fund, excluding the Short Term
Income and Bond Funds, were redesignated Class Y and the Series B shares of
each fund, excluding the Short Term Income and Bond Funds, were redesignated
Class A.
*** For 1996 transactions relating to the merger were excluded from the
calculation of the Portfolio Turnover Rate.
+ This figure has not been annualized.
1 Commenced operations April 1, 1993. Unless otherwise noted, all ratios for
the period have been annualized.
2 Commenced operations January 4, 1993. Unless otherwise noted, all ratios for
the period have been annualized.
3 Commenced operations February 28, 1990. Unless otherwise noted, all ratios
for the period have been annualized.
4 Commenced operations May 15, 1995. Unless otherwise noted, all ratios for
the period have been annualized.
5 Commenced operations May 17, 1995. Unless otherwise noted, all ratios for
the period have been annualized.
6 Commenced operations February 3, 1992. Unless otherwise noted, all ratios
for the period have been annualized.
7 Commenced operations May 3, 1993. Unless otherwise noted, all ratios for the
period have been annualized.
8 Commenced operations December 15, 1993. Unless otherwise noted, all ratios
for the period have been annualized.
9 Commenced operations May 16, 1994. Unless otherwise noted, all ratios for
the period have been annualized.
10 Total return does not reflect the sales load charged on the Class A shares.
Additionally, total return for Class Y & Class A for the Short Term Income
and Bond Funds for 1996 are for the eight month period ended June 30, 1996.
11 The per share amount for these Funds for 1996 represents the period from
November 1, 1995 to June 30, 1996. All prior years are for the periods
November 1 to October 31.
- ----
10 Financial Highlights
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED JUNE 30, (CONTINUED)
Money Market Funds
- ------------------
<TABLE>
<CAPTION>
Net
Net Asset Dividends Net Assets Ratio of Ratio of
Value Net from Net Asset Value End of Expenses to Net Income
Beginning Investment Investment End of Total Period Average Net to Average
of Period Income Income Period Return (000) Assets Net Assets
----------- ----------- ----------- ----------- ----------- --------- ------------- -----------
- ------------
CASH RESERVE
- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS Y (INSTITUTIONAL)*
1996 $ 1.00 $ 0.05 $ (0.05) $ 1.00 5.26% $ 790,211 0.50% 5.09%
1995 1.00 0.05 (0.05) 1.00 5.15 510,341 0.48 5.04
1994 1.00 0.03 (0.03) 1.00 3.00 505,273 0.47 2.95
1993 1.00 0.03 (0.03) 1.00 2.99 460,832 0.46 2.97
1992 1.00 0.05 (0.05) 1.00 4.83 568,672 0.38 4.68
1991 1.00 0.07 (0.07) 1.00 7.28 473,187 0.37 6.94
1990 1.00 0.08 (0.08) 1.00 8.65 316,290 0.34 8.28
1989 1.00 0.09 (0.09) 1.00 8.87 186,151 0.37 8.62
1988 1.00 0.07 (0.07) 1.00 6.70 82,399 0.55 6.54
1987 1.00 0.06 (0.06) 1.00 5.85 35,054 0.54 5.60
CLASS C (INDIVIDUAL)*
1996 $ 1.00 $ 0.05 $ (0.05) $ 1.00 5.00% $ 19,736 0.75% 4.86%
1995 1.00 0.05 (0.05) 1.00 4.89 17,583 0.73 4.86
1994 1.00 0.03 (0.03) 1.00 2.74 11,451 0.72 2.70
1993(1) 1.00 0.01 (0.01) 1.00 1.23+ 15,330 0.76 2.52
- ----------------
TREASURY RESERVE
- ----------------
CLASS Y (INSTITUTIONAL)*
1996 $ 1.00 $ 0.05 $ (0.05) $ 1.00 5.20% $ 892,562 0.50% 5.02%
1995 1.00 0.05 (0.05) 1.00 4.98 479,206 0.48 4.91
1994 1.00 0.03 (0.03) 1.00 2.91 484,974 0.48 2.87
1993 1.00 0.03 (0.03) 1.00 2.96 446,788 0.46 2.89
1992 1.00 0.05 (0.05) 1.00 4.73 444,388 0.38 4.58
1991 1.00 0.07 (0.07) 1.00 7.11 427,439 0.37 6.80
1990 1.00 0.08 (0.08) 1.00 8.38 270,524 0.37 8.03
1989(2) 1.00 0.06 (0.06) 1.00 4.66+ 220,479 0.20 9.26
CLASS C (INDIVIDUAL)*
1996 $ 1.00 $ 0.05 $ (0.05) $ 1.00 4.94% $ 19,386 0.75% 4.81%
1995 1.00 0.05 (0.05) 1.00 4.72 21,612 0.73 4.81
1994 1.00 0.03 (0.03) 1.00 2.65 7,573 0.73 2.62
1993(1) 1.00 0.01 (0.01) 1.00 1.21+ 7,672 0.75 2.46
- ----------------
TAX-FREE RESERVE
- ----------------
CLASS Y (INSTITUTIONAL)*
1996 $ 1.00 $ 0.03 $ (0.03) $ 1.00 3.20% $ 104,196 0.48% 3.14%
1995 1.00 0.03 (0.03) 1.00 3.12 62,756 0.48 3.09
1994 1.00 0.02 (0.02) 1.00 2.03 79,384 0.49 2.00
1993 1.00 0.02 (0.02) 1.00 2.23 72,255 0.51 2.20
1992 1.00 0.03 (0.03) 1.00 3.56 80,147 0.37 3.39
1991(3) 1.00 0.01 (0.01) 1.00 1.07+ 42,573 0.06 4.20
CLASS C (INDIVIDUAL)*
1996 $ 1.00 $ 0.03 $ (0.03) $ 1.00 2.95% $ 2,850 0.73% 2.94%
1995 1.00 0.03 (0.03) 1.00 2.86 1,524 0.73 2.80
1994 1.00 0.02 (0.02) 1.00 1.78 2,708 0.74 1.75
1993(1) 1.00 0.01 (0.01) 1.00 0.85+ 1,795 0.76 1.71
</TABLE>
Ratio of Ratio of
Expenses to Net Income
Average Net to Average
Assets Net Assets
(Excluding (Excluding
Waivers) Waivers)
------------- -----------
- ------------
CASH RESERVE
- ------------
CLASS Y (INSTITUTIONAL)*
1996 0.78% 4.81%
1995 0.85 4.67
1994 0.85 2.57
1993 0.85 2.58
1992 0.82 4.24
1991 0.82 6.49
1990 0.80 7.82
1989 0.90 8.05
1988 1.14 5.96
1987 1.01 5.13
CLASS C (INDIVIDUAL)*
1996 1.03% 4.58%
1995 1.10 4.49
1994 1.10 2.32
1993(1) 1.15 2.13
- ----------------
TREASURY RESERVE
- ----------------
CLASS Y (INSTITUTIONAL)*
1996 0.77% 4.75%
1995 0.85 4.54
1994 0.86 2.49
1993 0.85 2.50
1992 0.82 4.14
1991 0.82 6.35
1990 0.84 7.56
1989(2) 0.84 8.62
CLASS C (INDIVIDUAL)*
1996 1.03% 4.53%
1995 1.10 4.44
1994 1.11 2.24
1993(1) 1.14 2.07
- ----------------
TAX-FREE RESERVE
- ----------------
CLASS Y (INSTITUTIONAL)*
1996 0.76% 2.86%
1995 0.85 2.72
1994 0.87 1.62
1993 0.89 1.82
1992 0.88 2.88
1991(3) 0.81 3.45
CLASS C (INDIVIDUAL)*
1996 1.02% 2.65%
1995 1.10 2.43
1994 1.12 1.37
1993(1) 1.14 1.33
- --------------------------------------------------------------------------------
* On April 22, 1996, Series A shares were redesignated Class Y and Series B
shares were redesignated Class C.
+ Returns are for the period indicated and have not been annualized.
1 Commenced operations January 4, 1993. Ratios for the period have been
annualized.
2 Commenced operations November 21, 1988. Ratios for the period have been
annualized.
3 Commenced operations April 16, 1991. Ratios for the period have been
annualized.
Financial Highlights ----
11
<PAGE>
- --------------------------------------------------------------------------------
HIGHLIGHTS
<TABLE>
<S> <C>
COREFUNDS CoreFunds, Inc. ('CoreFunds') is an open-end management investment company presently offering shares
in twenty diversified and non-diversified portfolios. This Prospectus offers Class Y Shares of
seventeen portfolios. Class Y Shares are primarily offered to various types of institutional
investors, which may include CoreStates Bank and its affiliate and corresponding banks, for the
investment of their own funds or for funds for which they serve in a fiduciary, agency or custodial
capacity. The shares offered in this Prospectus are not subject to a sales load or 12b-1 charges.
Materials relating to Class A and Class C Shares of the Funds may be obtained by calling
1-800-355-CORE or by writing to CoreFunds, Inc., 680 E. Swedesford Road, Wayne PA 19087. Prior to the
date of this Prospectus, all Class A Shares were known as Series B -- Individual for all portfolios
other than Money Market Funds; Class C Shares were known as Series B -- Individual for the Money
Market Funds; and Class Y Shares were known as Series A -- Institutional. CoreFunds has changed their
designation to conform to the standard designations suggested by the Investment Company Institute.
- --------------------------------------------------------------------------------------------------------------------------------
FUNDAMENTALS OF MUTUAL This section will assist you in appreciating investments generally. It describes the three basic types
FUND INVESTING of investments--stocks, bonds, and money market investments-- as well as mutual funds which employ one
or more of these instruments. The various types of mutual funds available and the advantages of mutual
fund investing are also discussed.
PAGE 15
- --------------------------------------------------------------------------------------------------------------------------------
MULTIPLE PORTFOLIOS Investors may choose to invest in any of the seventeen funds of CoreFunds offered in this Prospectus.
EQUITY FUNDS FIXED INCOME FUNDS MONEY MARKET FUNDS
Growth Equity Fund Short-Intermediate Bond Cash Reserve
Core Equity Fund Fund Treasury Reserve
Special Equity Fund Bond Fund Tax-Free Reserve
Equity Index Fund Short Term Income Fund
International Growth Fund Government Income Fund
Balanced Fund Intermediate Municipal
Bond Fund
Pennsylvania Municipal
Bond Fund
New Jersey Municipal Bond
Fund
Global Bond Fund
PAGE 26
- --------------------------------------------------------------------------------------------------------------------------------
RISK CHARACTERISTICS Investment in the Funds involves a number of risks, including possible loss of principal. The Funds
differ significantly in terms of specific risks. Certain risk factors applicable to the Funds are
described below.
EQUITY FUNDS
The Equity Funds are subject to market risk and fund risk. Market risk is the possibility that stock
prices in general will decline over short or even extended periods of time. Stock markets tend to be
cyclical, with periods when stock prices generally rise and periods when stock prices generally
decline. Fund risk is the
</TABLE>
- ----
12 Highlights
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
possibility that a Fund's performance during a specific period
may not meet or exceed that of the stock market as a whole.
Therefore, investors should consider their holdings in equity
mutual funds to be long-term investments.
In addition to market and fund risks, International
Growth Fund is also subject to foreign market and currency
risk. Investments in foreign stock markets can be as volatile,
if not more volatile, than investments in U.S. markets.
Currency risk is the risk that changes in foreign exchange
rates will affect, favorably or unfavorably, the value of
foreign securities held by the Fund.
FIXED INCOME FUNDS
Securities held by the Fixed Income Funds may be subject to
several types of investment risk, including market risk,
credit risk, and call risk. With respect to these Funds,
market risk (or interest rate risk) is the potential for a
decline in the price of fixed income securities due to rising
interest rates. Credit risk is the possibility that a bond
issuer will be unable to make timely payments of either
principal or interest. Call risk (or income risk) relates to
corporate bonds during periods of falling interest rates, and
involves the possibility that securities with high interest
rates will be prepaid (or 'called') by the issuer prior to
maturity. Such an event would require a Fund to invest the
resulting proceeds elsewhere, at generally lower interest
rates, which would cause fluctuations in the Fund's net
income.
Short-Intermediate Bond Fund, Bond Fund and Short Term
Income Fund may also be exposed to event risk, the possibility
that corporate fixed income securities held by these Funds may
suffer a substantial decline in credit quality and market
value due to a corporate restructuring. While event risk may
be high for certain corporate securities held by these Funds,
event risk in the aggregate should be low because of the
Funds' diversified holdings.
An investment in either the Pennsylvania Municipal Bond
Fund or the New Jersey Municipal Bond Fund involves special
risk considerations. The concentration of investments in
Pennsylvania municipal securities by the Pennsylvania
Municipal Bond Fund and the concentration of investments in
New Jersey municipal securities by the New Jersey Municipal
Bond Fund raises certain investment considerations, including
the possibility that changes in the economic condition and
governmental policies of either state or its municipalities
could adversely affect the value of the corresponding Fund and
the portfolio securities held by it.
Global Bond Fund is also subject to foreign market and
currency risks, as discussed above.
MONEY MARKET FUNDS
Securities held by Cash Reserve and Treasury Reserve may be
subject, on a limited basis, to credit risk. The credit risk
of a money market investment portfolio is similar to that of a
fixed income portfolio.
Securities held by Tax-Free Reserve may be subject, on a
limited basis, to several types of investment risk, including
market risk (or interest rate risk), credit risk and call risk
(or income risk).
PAGE 55
- --------------------------------------------------------------------------------
Highlights ----
13
<PAGE>
- --------------------------------------------------------------------------------
HIGHLIGHTS (CONTINUED) /X/ COREFUND
<TABLE>
<S> <C>
INVESTMENT CoreStates Investment Advisers, Inc. ('CoreStates Advisers') serves as the investment adviser for
ADVISER each Fund. The International Growth Fund and Global Bond Fund also retain investment sub-advisers.
CoreStates Advisers has extensive experience in the management of money market, tax-free, fixed
income, equity, and international investments. It currently manages discretionary and
non-discretionary client security portfolios with a total aggregate market value exceeding $16
billion, for individuals, corporations, institutions and municipalities.
PAGE 64
- ------------------------------------------------------------------------------------------------------------------------------
DIVIDEND Shareholders of a Fund are entitled to dividends and distributions arising from the net investment
POLICY income and capital gains, if any, earned on investments held by the Fund.
PAGE 58
- ------------------------------------------------------------------------------------------------------------------------------
TAXES The sale or redemption of shares of a mutual fund is a taxable event to the selling or redeeming
shareholder. In addition, any receipt of dividends which represent capital gain distributions will
be subject to federal and state income taxes. However, receipt of other dividends will generally not
be subject to federal income taxes. Ordinary dividends also will be subject to state income taxes,
except as to Pennsylvania residents for the Pennsylvania Municipal Bond Fund and New Jersey
residents for the New Jersey Municipal Bond Fund. There will be no federal income tax consequences
to shareholders as a result of the Merger of the Conestoga Funds into the CoreFunds family of mutual
funds. Shareholders of the Conestoga portfolios will recognize no gain or loss on receipt of shares
of the CoreFunds portfolio and shareholders of the CoreFunds portfolios will have no tax consequences
as a result of the Merger.
PAGE 59
- ------------------------------------------------------------------------------------------------------------------------------
PURCHASING Institutional investors may acquire Class Y Shares of the Funds for their own account or as a record
SHARES holder on behalf of fiduciary, agency or custody accounts by placing orders with the Funds'
distributor. The minimum initial investment is $1,000,000 for each Fund which amount may be waived
at the discretion of the distributor. However, the minimum initial investment amount for retail
investors investing in Equity Index Fund is $500. There is no minimum for subsequent investments.
PAGE 72
- ------------------------------------------------------------------------------------------------------------------------------
SELLING With respect to shares held by institutional investors on behalf of their customer accounts, all or
SHARES part of the shares beneficially owned by a customer may be redeemed in accordance with instructions
and limitations pertaining to their account at the institution. The share price of each Fund except
for the Money Market Funds is expected to fluctuate and may, at redemption, be more or less than at
the time of initial purchase.
PAGE 73
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----
14 Highlights
<PAGE>
- --------------------------------------------------------------------------------
FUNDAMENTALS OF MUTUAL FUND INVESTING /X/ COREFUND
AN INTRODUCTORY GUIDE FOR INVESTORS
This section is devoted to those who are unfamiliar or uncomfortable with the
concepts of mutual fund investing, as well as those who are interested in
developing a coordinated strategy which can help them reach their financial
goals.
It describes the three basic types of investment vehicles - stocks, bonds,
and money market instruments - as well as mutual funds which employ one or more
of these investments.
Of course, no guide alone can help you determine how or when to invest.
That's why we recommend that you work closely with an investment representative
to develop a solid program which is designed specifically for your goals and
risk tolerance.
- --------------------------------------------------------------------------------
/X/
PART I: TYPES OF INVESTMENT VEHICLES
For details on how each of these instruments is used in mutual funds, please see
the section entitled, "What types of mutual funds are available?"
The three most popular types of investments are stocks, bonds, and money market
instruments. The following is an introduction to what they are and how they
work.
WHAT IS A STOCK?
Also known as equities, stocks represent an ownership position in a business
entity, such as a company or corporation. Each share of stock represents a
proportionate "share" of ownership in the business entity. As a result, stocks
offer individual investors the opportunity to take part in the economic future
of business.
Stocks are bought and sold on the open market, through a variety of stock
exchanges in the U.S. and around the world. This system allows any individual to
purchase and sell shares through stock brokers, who are licensed to participate
in the exchange.
The price for a share of stock is established by an "auction" system, in
which the broker for the buyer negotiates with the broker for the seller. When
the demand for a stock is low, its price will most likely fall; when demand is
high, the stock's price will most likely rise.
Because each share of stock represents a share in the company's earnings,
one of the most common factors affecting the price of the stock is the direction
of the company's earnings. In theory, the more a company earns, or is expected
to earn, the higher the price of its shares.
However, a number of other factors can cause a stock's price to go up or
down, including events which will positively or negatively affect the company's
future, changes in the overall economy, changes in the mood of the market, and
the market's perceptions of the company or its stock.
ALSO SEE: "Equity Mutual Funds" and "What are balanced funds?"
----
Fundamentals 15
<PAGE>
- --------------------------------------------------------------------------------
FUNDAMENTALS OF MUTUAL FUND INVESTING (CONTINUED)
For definitions of investment terms, please see the glossary following this
section.
WHAT IS A BOND?
When a corporation, government or government agency needs money for a certain
project, it often borrows money by issuing bonds to investors. So, in the
simplest terms, a bond is an IOU. The investor who purchases a bond is acting as
the lender.
Rather than offering an ownership share in business, as stocks do, bonds
are simply an agreement to repay the investor the amount loaned, also known as
principal, on a certain date. In addition, the issuer commits to making periodic
fixed interest payments to the lender until the loan is repaid.
When the bond is issued by a state or municipality, the interest paid to
investors is generally free of federal income taxes.
Like stocks, bonds are also traded in the open market. The value of a bond
can fluctuate due to changing market conditions. For example, when interest
rates in the market fall, the prices of bonds tend to rise. On the other hand,
when interest rates rise, the value of bonds falls.
Generally, the longer the maturity of a bond, the higher its yield and the
greater its price volatility. The shorter the maturity, the lower the yield and
the greater its price stability.
ALSO SEE: "Fixed Income Mutual Funds"
- --------------------------------------------------------------------------------
Price of the
same bond if
Price of a 7% the yield
coupon bond increases to 8%
Years to now trading to to keep pace with Percent change
maturity yield 7% rising interest rates in price
- --------------------------------------------------------------------------------
1 year $100.00 $99.06 -0.94%
3 years $100.00 $97.38 -2.62%
10 years $100.00 $93.20 -6.80%
30 years $100.00 $88.69 -11.31%
- --------------------------------------------------------------------------------
During times when overall interest rates are falling, fixed-income investors
generally enjoy higher prices for their bonds. Conversely, rising interest rates
tend to reduce the value of bonds. Longer maturity bonds experience a greater
change in price, as shown above.
WHAT IS A MONEY MARKET INSTRUMENT?
Simply put, money market instruments are short-term bonds, with maturities
typically ranging from overnight to 13 months. They pay investors a rate of
interest which is generally lower than that of longer-term bonds.
Money market securities are issued by a number of sources, including the
U.S. Government, its agencies and large, reputable banks and corporations.
Money market instruments are generally quite stable, due to their short
maturities. Therefore, they are chosen by investors who wish to maintain the
safety of their investment.
ALSO SEE: "Money Market Mutual Funds"
- ----
16 Fundamentals
<PAGE>
- --------------------------------------------------------------------------------
X/ COREFUND
PART II: HOW TO INVEST IN STOCKS, BONDS, AND MONEY MARKET INSTRUMENTS
Now that you've reviewed the basic types of investment vehicles available,
here's a discussion of how mutual funds can help you invest in stocks, bonds,
and money market securities.
WHAT IS A MUTUAL FUND?
Simply defined, a mutual fund pools the money of many investors and invests it
toward a specific goal, such as stability of principal, regular income, or
long-term growth. The fund's professional managers choose investments that, in
their judgment, will help the fund achieve its goal. As an investor, you share
in the fund's gains, losses, income, and expenses on a proportional basis.
An equity fund pools its money to purchase stocks, a fixed-income fund
purchases bonds, and a money market fund purchases short-term debt instruments.
ADVANTAGES OF MUTUAL FUND INVESTING.
While many investors enjoy excellent results by purchasing individual stocks or
bonds, most investors find that mutual funds offer a more viable alternative,
for the following reasons:
PROFESSIONAL MANAGEMENT: With individual securities, you or your broker
must do the extensive research necessary to choose from among the thousands of
securities available. With mutual funds, you enjoy having a professional money
manager uncover opportunities and research them to make sure the investment is
appropriate for the needs of the fund.
LOW COSTS: With mutual funds, trading costs are modest because they are
shared by all investors in the fund.
DIVERSIFICATION: When investing, it's important to not put all your eggs in
one basket, so that you will be protected against an excessive loss in any one
investment. But only the wealthiest investors can afford to purchase the wide
range of individual securities to achieve true diversification. With mutual
funds, however, you can enjoy immediate diversification with even a very limited
amount of money, because investment risk is spread over many different
securities for greater stability and safety of your investment.
LIQUIDITY: With individual securities, it can sometimes be difficult to
redeem your investment due to market conditions and other factors. Mutual fund
shares, however, are easily redeemed at their current market value.
- --------------------------------------------------------------------------------
WHAT TYPES OF MUTUAL FUNDS ARE AVAILABLE?
The three basic categories of mutual funds are as follows:
EQUITY (STOCK) MUTUAL FUNDS A stock fund consists of selected securities
traded on the stock market. The fund changes in value as the prices of the
stocks in the fund change. Although these funds tend to rise or fall in price
more than other types of mutual funds, they have traditionally rewarded
investors with higher returns over the long run.
----
Fundamentals 17
<PAGE>
- --------------------------------------------------------------------------------
FUNDAMENTALS OF MUTUAL FUND INVESTING (CONTINUED)
FIXED INCOME (BOND) MUTUAL FUNDS A fixed income fund is a mutual fund which
invests in a pool of bonds. Bonds generally pay a fixed rate of interest. While
fixed income mutual funds buy bonds, it's important to note that the income paid
by a bond fund will fluctuate as individual securities are added to or
subtracted from the pool.
In addition, fixed income funds are subject to changes in net asset value
due to changing market conditions. Like individual bonds, fixed income funds
will tend to increase in value during times of decreasing interest rates, and
will generally decrease in value when interest rates rise.
There are a wide range of fixed-income funds to choose from, each with its
own investment objectives. These objectives range from stability of principal,
to maximum yield, to tax-free income.
MONEY MARKET FUNDS Of the basic mutual fund categories, money market funds
are managed to maintain the greatest stability of principal. They are managed to
maintain a value of $1 per share.
Money market funds invest in short-term money market securities, such as
U.S. Treasury Bills, certificates of deposit from large banks, and commercial
paper. Because the interest rates paid on these securities fluctuate with market
conditions, the yield for money market funds will also change.
- --------------------------------------------------------------------------------
WHAT ARE TAX-FREE FUNDS?
Tax-free funds, which include both fixed income (bond) and money market funds,
invest in securities which are issued by state, county, and local governments
and their agencies. The proceeds from these securities are used to finance a
variety of public-works projects, such as the building of roads, schools, and
sewers.
Under current tax laws, the interest paid to investors in these securities
is generally exempt from Federal income taxes. Therefore, they are frequently
purchased by investors who wish to shelter their investment income from taxes.
However, Congress from time to time reviews this aspect of the tax code and may
at any time repeal the exemption on any or all of these securities. If this were
to occur, it would have a negative impact on any affected securities, as well as
the mutual funds in which they were held.
- --------------------------------------------------------------------------------
It's Easy to Compare Tax-Free and Taxable Yields:
Tax-Free Yield
_____________ = Taxable Yield
1 - Tax Rate
- --------------------------------------------------------------------------------
- ----
18 Fundamentals
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
WHAT ARE BALANCED FUNDS?
In addition to the types of mutual funds already described, there are also funds
which blend investments in stock, bond, and money market securities.
These are commonly known as balanced funds.
The returns for balanced funds are typically greater than those of bond and
money market funds, but lower than those of pure stock funds. Investing in all
three types of securities means the value of your principal should fluctuate
less than it would in a stock or bond fund alone.
Typically, the fund's professional manager has the flexibility to change
the investment mix based on current economic conditions.
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COMPARING THE PERFORMANCE OF STOCK, BOND, AND MONEY MARKET INVESTMENTS
In order to balance risks and rewards, it's helpful to see how stocks, bonds,
and money market investments have performed over time.
Mutual fund performance is stated in terms of total return. The total
return of a mutual fund or any other investment consists of the combination of
capital appreciation (or loss) and investment income.
Capital appreciation (or loss) is a change in the market value. Income is
made up of dividends earned on stocks, and interest paid on bonds or money
market investments. In general, stocks have the highest total return, because
over long periods of time they have achieved the greatest capital appreciation.
Bonds have provided the greatest income or interest, but because their
prices are more stable they have less potential than stocks for capital
appreciation. Therefore, they have a lower total return potential over time than
stocks.
Of course, past returns are no guarantee of future results. But historical
data tells a story which surprises many investors.
As the chart on the following page shows, for the forty-year period between
January 1956 and December 1995, stocks have averaged annual returns of 10.8%,
while long-term bonds have averaged 6.4%, intermediate-term bonds have averaged
7.0%, and money market instruments have averaged 5.7%. During this same period,
inflation averaged 4.5%. Therefore, bonds and money market investments actually
delivered very little growth in excess of inflation.
Stocks, on the other hand, averaged more than double the rate of inflation.
What about the price fluctuations? Well, it's true that stocks do fluctuate -
and probably always will. But as the accompanying chart shows, stocks have
consistently rewarded long-term investors.
Since money market funds are managed to have a constant $1 share price,
their total return consists only of the interest earned on their investments.
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Fundamentals 19
<PAGE>
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FUNDAMENTALS OF MUTUAL FUND INVESTING (CONTINUED)
GROWTH OF $1,000
(Historical Performance
of Stocks, Bonds and Cash)
Dollars in Thousands
$60
$50
$40
$30
$20
$10
$ 0
Large Long-Term Intermediate-Term
Year Stocks Gov't Bonds Inflation TBills Gov't Bonds
1956 1.4 1.04 1.03 0.93 0.99
1957 1.25 1.07 1.06 1 1.07
1958 1.79 1.09 1.08 0.94 1.05
1959 2.01 1.12 1.1 0.92 1.05
1960 2.02 1.15 1.12 1.05 1.17
1961 2.56 1.18 1.12 1.06 1.19
1962 2.34 1.21 1.14 1.13 1.26
1963 2.87 1.25 1.16 1.14 1.28
1964 3.35 1.29 1.17 1.18 1.33
1965 3.77 1.34 1.19 1.19 1.35
1967 3.39 1.4 1.23 1.23 1.41
1968 4.2 1.46 1.27 1.12 1.42
1969 4.66 1.54 1.33 1.12 1.49
1970 4.27 1.64 1.41 1.06 1.48
1971 4.44 1.75 1.49 1.19 1.73
1972 5.07 1.82 1.54 1.35 1.88
1973 6.04 1.89 1.59 1.42 1.97
1974 5.15 2.02 1.73 1.41 2.07
1975 3.79 2.19 1.94 1.47 2.18
1976 5.19 2.31 2.08 1.6 2.35
1977 6.43 2.43 2.18 1.87 2.66
1978 5.97 2.56 2.32 1.86 2.69
1979 6.36 2.74 2.53 1.84 2.79
1980 7.53 3.02 2.87 1.82 2.9
1981 9.97 3.36 3.23 1.74 3.02
1982 9.48 3.86 3.51 1.78 3.3
1983 11.51 4.26 3.65 2.49 4.26
1984 14.1 4.64 3.79 2.51 4.58
1985 14.99 5.09 3.94 2.9 5.22
1986 19.82 5.48 4.09 3.8 6.28
1987 23.48 5.82 4.14 4.73 7.23
1988 24.7 6.14 4.32 4.6 7.44
1989 28.85 6.53 4.51 5.04 7.89
1990 37.94 7.08 4.72 5.96 8.94
1991 36.73 7.63 5 6.33 9.81
1992 47.93 8.06 5.16 7.55 11.33
1993 51.62 8.34 5.31 8.15 12.14
1994 56.78 8.58 5.45 9.64 13.51
1995 57.52 8.92 5.6 .89 12.81
1996 60.01 9.21 5.7 11.86 15.06
$60,013
$15,062
$11,862
$ 9,289
$ 5,719
This chart shows how the major types of investments have performed over the past
40 years. More stable money market investments have produced the lowest annual
returns, while stocks have produced the greatest growth even though their value
fluctuates more.
HISTORICAL ANNUALIZED RETURN
(January 1956-December 1995)
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Stocks 10.8%
Long-Term Government Bonds 6.4
Intermediate-Term Government Bonds 7.0
Cash 5.7
Inflation 4.5
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Assumptions for the table and charts shown on this page: Returns based on
historical performance, which is no guarantee of future results. Stock returns
represent total return of the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500 Index"). Fixed income, or bonds, is composed of
intermediate- and long-term Government Bonds. Cash represents 30-day Treasury
Bills. Source: SEI Financial Services Company.
RANGE OF STOCK RATES
OF RETURN FOR ONE- AND
FIVE-YEAR ROLLING PERIODS
(1956-1995)
Percent
50
40
30
20
10
0
- -10
- -20
- -30
- --------------------------------------------------------------------------------
Annual Returns Rolling Five-Year Periods
- --------------------------------------------------------------------------------
95th Percentile 37.2% 17.9%
5th Percentile -10.9% 1.4%
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Many individuals are concerned about the risks associated with investing in
stocks. Many do not realize, however, that despite the fluctuation of annual
returns, investors who held stocks for a full five years historically earned a
positive return in more than ninety five percent of the cases. Best and worst
case scenarios presented in this illustration represent the fifth and ninety-
fifth percentile of the historical return distribution. Source: SEI Financial
Services Company.
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20 Fundamentals
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WHAT ARE INTERNATIONAL FUNDS?
International funds invest primarily in stock, bond and money market securities
issued by corporations, governments and banks worldwide.
International equity funds invest in the equity (stock) securities of
companies based outside the United States. Today, international markets account
for over 62% of the world's equity capitalization, as measured by the Morgan
Stanley World Index in February, 1996. This indicates that many investment
opportunities now exist globally. Likewise, international bond funds may invest
in government and corporate debt obligations from around the world with the aim
of providing income and the potential for capital appreciation. Investing in
international equity (stock) and fixed income (bond) funds provides investors
with a way to participate in a diversified portfolio of many international
securities of many countries.
GROWTH OF $1,000
(Performance of International
and Domestic Stocks)
Dollars in Thousands
$25
$20
$15
$10
$ 5
$ 0
Year MSCI EAFE S&P 500
1976 1.4223 1.6985
1977 1.6986 1.5762
1978 2.2812 1.6803
1979 2.4222 1.9894
1980 3.014 2.634
1981 2.9829 2.505
1982 2.9573 3.041
1983 3.6851 3.7252
1984 3.9749 3.9599
1985 6.2296 5.235
1986 10.586 6.2035
1987 13.226 6.5291
1988 17.007 7.6225
1989 18.843 10.024
1990 14.473 9.7028
1991 16.281 12.662
1992 14.352 13.637
1993 19.08 15.001
1994 20.618 15.196
1995 15.229 16.775
$16,775
$15,229
Growth of $1,000 in international and domestic stocks. MSCI EAFE (the Morgan
Stanley Capital International Europe Australia and Far East Index) represents
the growth of an investment in international stocks, and the S&P 500 Index
indicates an investment in domestic stocks.
A COMPARISON OF FOREIGN
GOV'T BOND RETURN PERFORMANCE 1995
Dollars in Thousands
30
25
20
15
10
5
0
Japan 9.57%
U.K. 15.62%
Australia 14.94%
France 27.69%
Canada 23.45%
U.S. 18.30%
Germany 25.91%
Source: SEI Financial Services Company
Although investing internationally can reward investors (see graphs above),
there is an added dimension to the risks involved in investing in domestic
securities. Currency fluctuations in the countries in which international stock
and bond securities are issued can negatively impact the value of these
securities, as well as the mutual funds in which they are held.
----
Fundamentals 21
<PAGE>
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FUNDAMENTALS OF MUTUAL FUND INVESTING (CONTINUED)
/X/
PART III:
DEVELOPING YOUR INVESTMENT STRATEGY
Now that you have a basic understanding of the investments available to you,
let's look at how these investments can be used to help you achieve your goals.
Everyone, whatever their income level, has financial goals. Perhaps yours
include a comfortable retirement, education for your children or grandchildren,
a new home, or simply the accumulation of wealth.
Whatever your personal goals, the best way to achieve them is to take
control of your financial future. And one of the best ways to do that is through
a coordinated program of saving and investing.
Saving money provides the foundation for reaching your goals, while
investing builds on that foundation by using the money you save to make even
more money.
Mutual funds provide one of the most convenient and rewarding means of
saving and investing.
Mutual funds are particularly well-suited to long-term goals such as
education and retirement, because they offer a convenient way to invest
regularly in a diversified portfolio of securities.
Once you've decided to use mutual funds to help reach your goals, here are
some very simple steps to follow:
STEP 1: SET WELL-DEFINED GOALS.
Whether you're investing for retirement, education, wealth accumulation, or
regular income, start by determining how much you will need to satisfy your
goals. When making this assessment, you may want to seek the guidance of an
investment professional. Also take into account the effects of inflation, which
historically has reduced purchasing power by an average of 4.5% per year.
Short-term goals will require a greater initial investment and a more
conservative investment approach. Longer-term goals will require a smaller
initial investment and a more aggressive approach, including investments in
stock and bond funds which are expected to yield higher returns over the long
run.
Once you determine your primary and secondary goals, you'll then need to
calculate how soon you will need your money.
STEP 2: ESTABLISH YOUR TIME HORIZON.
For each of your goals, determine how soon you will need the money you're
investing. If it's a shorter-term goal, such as a new home in a few years,
you'll want investments that offer fairly predictable results in a short time.
If it is a longer-term goal, such as education for young children, you can plan
for longer-term results. Accordingly, the type of investments you choose for
retirement will depend on whether your retirement is a few years away, or a few
decades.
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22 Fundamentals
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STEP 3: UNDERSTAND THE REAL RISKS.
Most people think of an investment as "risky" or "safe" based only on how much
the value of their principal can fluctuate. But in the long run, there is more
to risk than whether your principal goes up or down. It's just as important to
consider the following risks:
THE RISK OF INFLATION. To achieve any real increase in your wealth, your
investment return must outstrip inflation, or you may end up actually losing
purchasing power in the long run. To beat inflation, consider investing some of
your money where values and return are not fixed, but grow with the economy.
Experience shows that stock-based investments such as equity mutual funds offer
this type of performance potential.
THE RISK OF NOT REACHING YOUR GOAL. Another potential risk that many
investors tend to overlook is the risk that an investment strategy will not
enable them to reach their goal. To properly assess this risk, you first need to
define your goals, and then strike a balance between the risk of principal
volatility and the risk of failing to reach your goals.
For example, statistics show that at age 70 you can expect to live another
20 years. To achieve the many years of comfortable retirement you want, you must
have the discipline to set aside enough money during your working years and
invest it wisely.
STEP 4: DECIDE ON AN INVESTMENT MIX.
When you are selecting specific investments, choose those which offer the
greatest potential for reaching your short-term and long-term goals, and which
are within your risk tolerance.
Many investors find that they are most comfortable with a mix of
investments, including stocks, bonds, and money market funds. This approach
offers the advantage of not putting all your eggs in one basket, and also allows
you to enjoy the distinct advantages of each type of investment.
If you use this approach, known as "asset allocation", the key is deciding
how much to allocate to each type of investment. To make this decision easier,
you can select a balanced fund, which combines stock, bond, and money market
investments under the guidance of professional investment managers.
As this chart below suggests, bonds and money markets fluctuate less in the
short term, and there is less chance of experiencing a loss. History has shown,
however, that the longer you stay invested, the more stocks have provided a
higher return, with a decreasing potential for loss.
----
Fundamentals 23
<PAGE>
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FUNDAMENTALS OF MUTUAL FUND INVESTING (CONTINUED)
REDUCTION OF
RISK OVER TIME
Average Annual Return
50% 40 30 20 10 0 -10 -20 -30
1 Year 5 Years 10 Years 20 Yesrs
43.36 40.36 29.10 14.71 13.31
20.40 21.62 16.98 11.12 10.06
17.59 15.56 13.13 9.17 8.67
14.59 10.45 9.85 7.72 6.36
The longer you hold any particular asset class (stocks, bonds, money market
instruments), the less the variation in return. While stocks have fluctuated
in value much more than other investments, they have also delivered higher
returns over the long run. In addition, the longer an investor remains invested
in stocks, the less the chance there is for a capital loss. The best- and worst-
case scenarios presented in this illustration represent the absolute highest and
lowest returns from January 1956 to 1995. Source: Based on historical data on
the S&P 500 Index, intermediate- and long-term Government bonds, and 30-day
Treasury Bills for rolling one-, five-, 10-, and 20-year periods between 1956
and 1995. Past results do not guarantee future performance.
Stocks 43.4 -26.5
Long-Term Bonds 40.36 -9.18
Intermediate-Term Bonds 29.1 -5.14
Cash 14.7 1.5
Inflation 13.3 0.4
Stocks 20.4 -2.36
Long-Term Bonds 21.62 -2.14
Intermediate-Term Bonds 16.98 0.96
Cash 11.12 2.33
Inflation 10.06 1.24
Stocks 17.59 1.24
Long-Term Bonds 15.56 1.13
Intermediate-Term Bonds 13.13 2.92
Cash 9.17 2.58
Inflation 8.67 1.57
Stocks 14.58 6.53
Long-Term Bonds 10.45 1.94
Intermediate-Term Bonds 9.85 3.98
Cash 7.72 4
Inflation 6.36 3.37
STEP 5: GET STARTED.
Don't make the mistake of waiting until tomorrow. With mutual funds, you don't
need a large investment to start your program. All it takes is a small amount of
money, and a strong desire to reach your goals.
For full details on how the principles of mutual fund investing can work
for you, please contact your investment representative.
STEP 6: BE DISCIPLINED.
Once you have a good strategy, stay with it. Avoid sudden changes in reaction to
temporary market trends. Remember, you're interested in long-term performance.
In mutual fund investing, particularly with equity funds, one of the surest
ways to maximize the value of your investment is through a regular program of
monthly contributions. By adding to your account each month, you'll be
purchasing shares during both "up" markets and "down" markets. This technique,
known as "dollar cost averaging", has been shown to yield optimum results over
the long run.
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24 Fundamentals
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/X/ COREFUND
<PAGE>
GLOSSARY OF KEY INVESTMENT TERMS
CAPITAL GAIN: The profit made from the sale of securities due to an increase
in share value.
CURRENT YIELD: The income paid annually on mutual fund shares, expressed as a
percentage of the current price per share.
DISTRIBUTION: Payment of capital gains to shareholders of a mutual fund. For
tax purposes, distributions are separate from interest income or dividends.
DOLLAR COST AVERAGING: Investing a fixed dollar amount at regular intervals over
a long period of time to reduce the average cost per share of a mutual fund.
INCOME DIVIDENDS: Regular payments from mutual funds to their shareholders, made
up of dividends, interest, and short-term capital gains earned from the fund's
portfolio of securities. May be distributed annually, bi-annually, quarterly, or
monthly, with operating expenses deducted.
MATURITY: The date on which the issuer is scheduled to return the amount
borrowed to the lender, or investor.
MUNICIPAL BOND: A debt obligation issued by a city, state, or municipality.
Interest from these bonds is generally exempt from federal income tax.
NET ASSET VALUE: The dollar value of one share of a mutual fund. This value is
generally calculated once each day, and is the price at which the fund will
redeem its shares from investors.
PRINCIPAL, OR PAR VALUE: Also known as face value, this is the amount loaned
to the issuer of a bond.
PROSPECTUS: A booklet distributed by the issuer of a security or mutual fund, in
compliance with SEC regulations. A mutual fund prospectus must include the
fund's investment objectives, all expenses and fees including management and
sales fees, a description of shareholder services offered, and information on
how to buy shares.
REDEMPTION PRICE: Also known as "bid price", this is the price at which mutual
funds buy back their shares. It is usually the net asset price of the fund.
TOTAL RETURN: The combined return of capital appreciation and income (interest
and dividends) that an investment earns. (See page 70).
----
Fundamentals 25
<PAGE>
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COREFUND FAMILY OF MUTUAL FUNDS
EQUITY FUNDS
(Stocks)
GROWTH EQUITY FUND seeks capital growth by investing primarily in the equity
securities of companies believed by management to show the potential for growth
of earnings over time.
CORE EQUITY FUND seeks capital growth by investing principally in a diversified
portfolio of common stocks of companies with large, medium or small
capitalizations.
SPECIAL EQUITY FUND seeks capital growth by investing principally in a
diversified portfolio of common stocks of domestic companies expected to
experience growth in earnings and price.
EQUITY INDEX FUND seeks to track the price and yield performance of the Standard
& Poor's 500 Composite Stock Price Index.
INTERNATIONAL GROWTH FUND seeks long-term capital appreciation by investing
primarily in equity securities of companies located outside the United States.
BALANCED FUND seeks to provide total return while preserving capital by
investing in a combination of common stocks and fixed income securities.
FIXED INCOME FUNDS
(Bonds)
SHORT-INTERMEDIATE BOND FUND seeks income through investment in a diversified
portfolio of intermediate term, fixed income obligations with an expected
average weighted maturity of two to five years.
BOND FUND seeks to maximize long-term total return by investing principally in a
diversified portfolio of debt securities.
SHORT TERM INCOME FUND seeks to obtain consistent current income with relative
stability of principal by investing principally in a diversified portfolio of
investment grade debt securities.
GOVERNMENT INCOME FUND seeks to provide current income while preserving
principal value and maintaining liquidity by investing exclusively in securities
of the United States government and its agencies.
INTERMEDIATE MUNICIPAL BOND FUND seeks a high level of income generally exempt
from federal income taxes by investing at least 80% of its assets in tax-exempt
municipal securities.
PENNSYLVANIA MUNICIPAL BOND FUND seeks to provide a high rate of current income
that is exempt from both federal income taxes and (for Pennsylvania residents)
Pennsylvania state income taxes. The Fund invests primarily in highly-rated,
long-term municipal bonds issued by state, county, and local agencies within the
Commonwealth of Pennsylvania.
There is no assurance that the Funds will achieve their respective objectives.
<PAGE>
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/X/ COREFUND
NEW JERSEY MUNICIPAL BOND FUND seeks to provide a high rate of current income
that is exempt from both federal income taxes and (for New Jersey residents) New
Jersey state income taxes. The Fund invests primarily in highly-rated, long-term
municipal bonds issued by state, county, and local agencies within the State of
New Jersey.
GLOBAL BOND FUND seeks to provide capital appreciation and current income
through investment primarily in fixed income securities of United States and
foreign issuers denominated in United States dollars and in other currencies.
MONEY MARKET FUNDS
CASH RESERVE seeks to obtain maximum current income consistent with the
preservation of principal and maintenance of liquidity by investing in a
diversified portfolio of money market instruments of the highest quality,
including a broad range of U.S. dollar-denominated government, bank, and
commercial paper obligations.
TREASURY RESERVE seeks to provide current interest income, liquidity and safety
of principal by investing in direct obligations of the U.S. Treasury and
repurchase agreements relating to such obligations.
TAX-FREE RESERVE seeks a high level of income exempt from federal income taxes
through investment of at least 80% of its total assets in tax-free securities.
There is no assurance that the Funds will achieve their respective objectives.
<PAGE>
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INFORMATION ON THE FUNDS
/X/
INVESTMENT
OBJECTIVES
OF THE FUNDS
The descriptions that follow are designed to help you choose the Fund that best
fits your investment objectives. The objectives of each Fund are fundamental and
may only be changed by the affirmative vote of a majority of the outstanding
shares of such Fund. You may want to pursue more than one objective by investing
in more than one of these Funds.
As investment adviser of each Fund, CoreStates Advisers manages each
Fund's portfolio of investments in a manner which it believes will best
accomplish the Fund's stated objective. However, there can be no assurance that
a Fund will meet its objective.
EQUITY FUNDS ___________________________________________________________________
GROWTH EQUITY FUND Growth Equity Fund's investment objective is to provide
growth of capital and an increasing flow of dividends from the diversified
portfolio of common stocks comprising the Fund.
CORE EQUITY FUND Core Equity Fund's investment objective is to provide capital
appreciation and income, in excess of stock market indices such as the S&P 500
Index, as measured over a period of time.
SPECIAL EQUITY FUND Special Equity Fund's investment objective is to seek
capital growth by investing principally in a diversified portfolio of common
stocks.
EQUITY INDEX FUND Equity Index Fund's investment objective is to provide its
shareholders with investment results that achieve price and yield performance
similar to the S&P 500 Index, thereby tracking with reasonable accuracy the
performance of the stock market as a whole.
INTERNATIONAL GROWTH FUND International Growth Fund's investment objective is to
provide its shareholders with long-term capital appreciation, consistent with
reasonable risk, by investing primarily in a diversified portfolio of equity
securities of companies located outside the United States.
BALANCED FUND Balanced Fund's investment objective is to provide total return
while preserving capital. This Fund pursues its objective by investing in a
combination of common stocks and fixed income securities. Under normal
conditions, Balanced Fund will invest a minimum of 25% of its assets in senior
fixed income securities and between 30% and 70% of its assets in common stocks.
FIXED INCOME FUNDS _____________________________________________________________
SHORT-INTERMEDIATE BOND FUND Short-Intermediate Bond Fund's investment objective
is to provide a moderate level of current income consistent with conservation of
capital, by investing substantially all of its assets in a diversified portfolio
of intermediate-term, fixed income obligations which will have an expected
average weighted maturity of two to five years.
BOND FUND Bond Fund's investment objective is to seek to maximize long-term
total return by investing principally in a diversified portfolio of debt
securities.
SHORT TERM INCOME FUND Short Term Income Fund's investment objective is to seek
consistent current income with relative stability of principal by investing
principally in a diversified portfolio of investment grade debt securities.
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26 Investment Objectives
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/X/ COREFUND
GOVERNMENT INCOME FUND Government Income Fund's investment objective is to
provide current income while preserving principal value and maintaining
liquidity.
INTERMEDIATE MUNICIPAL BOND FUND Intermediate Municipal Bond Fund's investment
objective is to seek the highest level of income exempt from federal income
taxes that can be obtained, consistent with the preservation of capital, from a
diversified portfolio of high quality, intermediate-term municipal securities.
This Fund has a fundamental policy to invest, under normal circumstances, at
least 80% of its assets in municipal securities the interest of which is exempt
from federal income taxes, based on opinions from bond counsel for the issuers.
PENNSYLVANIA MUNICIPAL BOND FUND Pennsylvania Municipal Bond Fund seeks current
income exempt from federal and Pennsylvania income taxation with preservation of
capital by investing primarily in a non-diversified portfolio of municipal
securities.
NEW JERSEY MUNICIPAL BOND FUND New Jersey Municipal Bond Fund seeks current
income exempt from federal and New Jersey income taxation with preservation of
capital by investing primarily in a non-diversified portfolio of municipal
securities.
GLOBAL BOND FUND Global Bond Fund's investment objective is to provide capital
appreciation and current income through investment primarily in fixed income
securities of United States and foreign issuers denominated in United States
dollars and in other currencies.
MONEY MARKET FUNDS _____________________________________________________________
CASH RESERVE Cash Reserve's investment objective is to provide as high a level
of current income as is consistent with liquidity and relative stability of
principal.
TREASURY RESERVE Treasury Reserve's investment objective is to provide current
interest income, liquidity and safety of principal.
TAX-FREE RESERVE Tax-Free Reserve's investment objective is to provide as high a
level of current interest income that is exempt from federal income taxes as is
consistent with liquidity and relative stability of principal. This Fund
intends, under normal market conditions, to invest at least 80% of its assets in
tax-free securities.
/X/
INVESTMENT
POLICIES
The policies which the Funds follow to achieve their investment objectives are
described below. These are non-fundamental policies which may be changed without
a shareholder vote.
Descriptions of the securities in which the Funds invest are contained
below in 'Types of Securities in Which the Funds Invest.'
EQUITY FUNDS ___________________________________________________________________
The CoreFund Equity Funds cover a range of investment styles. CoreStates
Advisers, specialists in the management of growth portfolios, manages the Growth
Equity, Core Equity, Special Equity, Equity Index and Balanced Funds. CoreStates
Advisers has selected Martin Currie, Inc. ('Martin Currie') and Aberdeen Fund
Managers, Inc. ('Aberdeen Managers') to each manage a portion of the
International Growth Fund. These firms are specialists in their investment
styles.
GROWTH EQUITY FUND Growth Equity Fund strives to provide a return in excess of
stock market indices such as the Russell 1000 Index and the S&P 500 Index.
Growth Equity Fund pursues its investment objective by investing primarily in
common stocks, preferred stocks, convertible securities, and other equity
securities of companies
----
Investment Policies 27
<PAGE>
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INFORMATION ON THE FUNDS (CONTINUED)
which CoreStates Advisers believes show the potential for growth of earnings
over time. Stock selection is guided by a top-down approach that places heavy
emphasis on fundamental research to uncover companies with proven earnings
growth records, high reinvestment rates, high returns on equity, and strong
balance sheets showing low debt to total capital. The adviser makes qualitative
judgments on such elements as the company's competitive position, the quality of
its management and the potential for future growth.
This Fund intends, under normal market conditions, to hold at least 75% of
its total assets in the equity securities described above. Over the long term,
continued earnings growth tends to lead to both higher dividends and capital
appreciation.
CORE EQUITY FUND The Core Equity Fund pursues its investment objective by
investing principally in a diversified portfolio of common stocks of companies
with large, medium or small capitalizations. The Core Equity Fund will normally
invest at least 80% of the value of its total assets in common stocks. The Fund
may also invest up to 20% of the value of its total assets in securities
convertible into common stocks, preferred stocks, corporate bonds, notes,
warrants, and short-term obligations (with maturities of 18 months or less) such
as commercial paper (including variable amount master demand notes), banker's
acceptances, certificates of deposit, repurchase agreements, obligations issued
or guaranteed by the U.S. Government or its agencies or instrumentalities, and
demand and time deposits of domestic and foreign banks and savings and loan
associations. During temporary defensive periods, the Fund has the ability to
hold up to 100% of its total assets in short-term obligations including domestic
bank certificates of deposit, banker's acceptances and repurchase agreements
secured by U.S. Government securities.
Stocks held by the Core Equity Fund may be listed on a national securities
exchange or may be unlisted securities with an established over-the-counter
market. CoreStates Advisers has developed a quantitative process which evaluates
stocks in a number of ways, including the ratios of market price to book value,
recent changes in market price, return on equity, price to earnings ratios,
dividend paying abilities, and liquidity. CoreStates Advisers believes that its
quantitative approach reduces subjectivity in the stock selection process.
Equity securities such as those in which the Core Equity Fund may invest
are more volatile and carry more risk than some other forms of investment.
Depending upon the performance of the Fund's investments, the net asset value
per share of the Fund may decrease instead of increase.
SPECIAL EQUITY FUND The investment objective of the Special Equity Fund is to
seek capital growth by investing principally in a diversified portfolio of
common stocks. The Special Equity Fund will normally invest in common stocks of
domestic companies that CoreStates Advisers expect will experience growth in
earnings and price. The Special Equity Fund will invest primarily in equity
securities, including common stocks, both debt securities and preferred stocks
convertible into common stocks and foreign securities and sponsored and
unsponsored American Depositary Receipts ('ADRs'), European Depositary Receipts
('EDRs') and Global Depositary Receipts ('GDRs'). The Fund may also purchase
securities convertible into common stocks, preferred stocks, notes, warrants,
and, for daily cash management purposes, short-term obligations (with maturities
of 18 months or less) such as commercial paper (including variable amount
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master demand notes), banker's acceptances, certificates of deposit, repurchase
agreements, obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, and demand and time deposits of domestic and
foreign banks and savings and loan associations. During temporary defensive
periods, the Fund has the ability to hold up to 100% of its total assets in
short-term obligations, including domestic bank certificates of deposit,
banker's acceptances and repurchase agreements secured by U.S. Government
securities. CoreStates Advisers' quantitative process described above under 'The
Core Equity Fund' will be utilized for the Special Equity Fund.
Many of the companies in which the Special Equity Fund invests will be
small and medium capitalized companies. Small capitalized companies are those
organizations with 'stock market capitalizations' between $100 million and $1
billion and medium capitalized companies are those organizations with stock
market capitalizations between $1 billion and $5 billion. 'Stock market
capitalizations' means the total number of common shares outstanding multiplied
by the market price per share.
The Special Equity Fund will normally purchase the securities of small and
medium capitalized companies across a wide range of industry sectors. These
securities may be traded over-the-counter or listed on an exchange and may or
may not pay dividends. Small and medium capitalized companies may be more
vulnerable than larger, more established organizations to adverse business or
economic developments. In particular, small capitalized companies may have
limited product lines, markets and financial resources and may be dependent upon
a relatively small management group. Accordingly, equity securities such as
those in which the Fund may invest are more volatile and carry more risk than
some other forms of investment. Depending upon the performance of the Fund's
investments, the net asset value per Share of the Fund may decrease instead of
increase.
EQUITY INDEX FUND Equity Index Fund intends, under normal market conditions, to
hold at least 90% of its total assets in equity securities that as a group
reflect a composite of those represented in the S&P 500 Index. To mirror and
confine the holdings to relatively large, well-known companies within the S&P
500 Index, CoreStates Advisers utilizes a computer model that closely monitors
industry weightings of the S&P 500 Index. While common stocks represented in the
S&P 500 Index are the primary securities utilized to achieve Equity Index Fund's
objective, CoreStates Advisers may also invest in other types of securities,
consistent with the objective and policies described herein. Equity Index Fund
is not sponsored by nor affiliated with Standard & Poor's Corporation ('S&P').
The S&P 500 Index consists of 500 common stocks, most of which are listed
on the New York Stock Exchange. In choosing the 500 stocks which are included in
the S&P 500 Index, S&P considers market values and industry diversification.
Most of the stocks in the S&P 500 Index are issued by companies which are among
the largest, in terms of the aggregate market value of their outstanding stock,
measured by the market price per share multiplied by the number of shares
outstanding. Stocks that are not among the five hundred largest are included in
the S&P 500 Index for diversification purposes.
Traditional methods of mutual fund investment management typically involve
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Investment Policies 29
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INFORMATION ON THE FUNDS (CONTINUED)
frequent changes in a portfolio of securities on the basis of economic,
financial, and market analyses. Index funds such as Equity Index Fund are not
managed in this manner, however. Instead, CoreStates Advisers only purchases and
sells securities with respect to the Fund in an attempt to duplicate the total
return of the S&P 500 Index, taking into account redemptions, sales of
additional Fund shares, and other adjustments as described below.
Consistent with its investment objective, Equity Index Fund's investment
portfolio will at any time consist of common stocks of as many issuers listed in
the S&P 500 Index as is feasible, consistent with the policies stated herein.
Accordingly, the Fund invests in both dividend-paying and non-dividend-paying
securities that are not included in the S&P 500 Index. While Equity Index Fund
may own about 350 names, the largest 50 companies within the S&P 500 Index
generally represent nearly 85% of the value of the S&P 500 Index, and the
largest 200 companies represent nearly 95%. The number of companies owned by the
Fund is determined in an effort to minimize the impact of transaction costs and
balance these costs with tracking error.
Generally, Equity Index Fund only trades securities to reflect changes in
the S&P 500 Index, to carry out appropriate rebalancing for diversification
purposes, or to more closely track the return of the S&P 500 Index. This Fund
invests in equity securities that, as a group, reflect the composite performance
of the S&P 500 Index based on a computer-based financial model that tracks the
performance of the various stocks in the S&P 500 Index. As the Fund grows in
total assets, its portfolio may eventually include all 500 stocks in the S&P 500
Index. This decision would be made by CoreStates Advisers, based on its
financial model.
Although CoreStates Advisers does not screen securities for investment by
this Fund by traditional methods of financial and market analyses, it monitors
the Fund's investments with a view toward removing stocks of companies which
exhibit extreme financial distress or which may impair for any reason the Fund's
ability to achieve its investment objective. Therefore, an investor
participating in the Fund bears the risk of such adverse market conditions. The
Fund expects that its return will match the S&P 500 Index, prior to the
deduction of brokerage and other transaction costs, other Fund expenses, and
tracking errors.
Common stocks purchased by the Fund are initially selected in accordance
with their market capitalizations. Market capitalization is calculated by
multiplying the market price of an issuer's stock by the number of outstanding
shares of its common stock. The issues selected for this Fund are then ranked
and weighted according to their respective market capitalizations. The weighted
market capitalization of each issuer selected is determined by dividing the
issuer's market capitalization by the total market capitalizations of all
issuers listed.
The industry sector diversification of the issuers selected for inclusion
in Equity Index Fund according to their weighted market capitalizations is then
compared with the industry sector diversification of the issuers of all common
stocks publicly traded in the United States.
CoreStates Advisers will include in the Fund certain 'balancing
securities,' which are common stocks of companies with smaller market
capitalizations which are added to complete the portfolio to provide broad
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30 Investment Policies
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/X/ COREFUND
industry representation. As indicated, 'balancing securities' are issued by
issuers whose market capitalizations are such that they would not otherwise be
eligible for inclusion in the Fund, and replace the securities of issuers in
over-represented sectors in the fund.
INTERNATIONAL GROWTH FUND International Growth Fund pursues its investment
objective by investing in foreign equity securities which offer favorable
prospects for capital return. This Fund seeks to diversify its assets by
investing in appreciation-oriented equity securities of companies located
outside the United States, which may include, but not be limited to, Australia,
Canada, France, Hong Kong, Japan, Mexico, Singapore, Sweden, Switzerland,
Germany, the Netherlands, and the United Kingdom. In general,
'appreciation-oriented' securities are equity securities of companies that
CoreStates Advisers and the sub-advisers, Martin Currie and Aberdeen Managers,
believe have the greatest potential for long-term growth, and which exhibit
operating characteristics that may enable such companies to compete successfully
in their marketplace.
International Growth Fund offers increased diversification through
investment in foreign markets. This Fund's advisers believe that both the
selection of individual securities and the allocation of International Growth
Fund's assets across foreign markets are important in managing an international
equity fund. Most foreign equity securities are purchased in over-the-counter
markets or on stock exchanges located in the countries in which the respective
principal offices of the issuers of the various securities are located. Under
normal market conditions, International Growth Fund will invest an aggregate of
at least 65% of its total assets in the equity securities of at least three
different countries.
In determining the distribution of International Growth Fund's investments
among various countries and geographic regions, the advisers consider many
factors, such as: prospects for relative economic growth between countries;
government policies affecting business conditions; outlook for local currency;
and the range of available, attractive investment opportunities. For the
selection of securities, the advisers' criteria includes: earnings growth;
return on capital; quality of management; cash flow; and strength of balance
sheet.
While foreign stocks are the primary securities utilized to achieve
International Growth Fund's objective, the advisers may also invest in other
types of foreign equity securities, consistent with the objective and policies
described herein.
The net asset value of this Fund will fluctuate, and investments are
expected to yield little, if any, current income.
BALANCED FUND In managing Balanced Fund, CoreStates Advisers uses a balanced
portfolio philosophy which combines separate equity, fixed income, and asset
allocation strategies. This produces a portfolio of stocks of companies
exhibiting growth in revenues and earnings and strong balance sheet
characteristics. All of the common stocks in which Balanced Fund invests are
traded on registered exchanges or in the 'over-the-counter' market.
The fixed income strategy values bonds using historical yield
differentials. U.S. Government securities and corporate bonds are used
exclusively to implement Balanced
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Investment Policies 31
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INFORMATION ON THE FUNDS (CONTINUED)
Fund's fixed income strategy. The asset allocation strategy shifts the
stock-fixed income-money market instrument mix based on the investment adviser's
judgment of the relative attractiveness of these markets and securities given
its view of economic conditions, the level of interest rates, and the outlook
for corporate profits. The strategy uses present and historical economic and
market data to reach these conclusions.
Balanced Fund seeks strong total return in all market conditions, with a
special emphasis on minimizing interim declines during falling equity markets.
Long-term growth is pursued through equity holdings, and current income through
fixed income securities and common stock dividends.
The strategy focuses on controlling downside risk, both through holdings
in relatively high-dividend-yielding stocks and convertible securities, and
through diversification between stocks and bonds. To employ this strategy, the
Fund's adviser uses present and historical economic and market data.
This Fund will, under normal conditions, invest between 30% and 70% of
total assets in common stocks, depending on the investment adviser's assessment
of market conditions. When CoreStates Advisers believes that equity markets are
overvalued, the common stock exposure will be at the low end of this range.
CoreStates Advisers expects that equity exposure will average 60% over time.
Balanced Fund may also invest in U.S. dollar denominated securities of foreign
issuers (including American Depositary Receipts that are traded on registered
exchanges or listed on NASDAQ).
FIXED INCOME FUNDS _____________________________________________________________
CoreFund Fixed Income Funds employ an investment process that attempts to manage
large swings in interest rates within the maturity parameters of each Fund to
reduce an investor's risk of principal. Significant effort is put forth to
identify value along the yield curve, taking into account the economic outlook,
fiscal and monetary policies, and the inflation trend. Developments that can
significantly impact the supply and demand of securities within the various
sectors of the bond market are also carefully considered. By identifying these
opportunities, and acting upon them in a timely manner, the Funds' advisers seek
to enhance overall value.
SHORT-INTERMEDIATE BOND FUND This Fund pursues its investment objective by
investing primarily in corporate debt securities such as bonds and commercial
paper, as well as securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. The Fund intends, under normal market conditions,
to invest at least 65% of its total assets in bonds and 35% or less in other
fixed income securities.
Short-Intermediate Bond Fund maintains a maximum average maturity of no
more than five years, pursuant to a fundamental policy of the Fund. By
maintaining an average maturity of not more than five years, CoreStates Advisers
expects the Fund's net asset value to be relatively stable while providing
higher income than money market funds.
Should a security held by this Fund be downgraded below the minimum
required ratings, CoreStates Advisers will reassess the creditworthiness of the
security and will consider such an event in determining whether the Fund should
continue to hold the security in question. Securities that are unrated at the
time of purchase may only be purchased by the Fund if they are determined by
CoreStates Advisers to be of comparable quality to securities rated BBB or
better (investment-grade securities) as set forth in 'Types of Securities in
Which the Funds Invest.'
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See 'Description of Ratings' in this Prospectus and the 'Appendix' to the
Statement of Additional Information for a description of applicable ratings.
BOND FUND The investment objective of the Bond Fund is to seek to maximize long-
term total return by investing principally in a diversified portfolio of debt
securities. The Bond Fund will normally invest at least 80% of the value of its
total assets in debt securities of all types. Debt securities include domestic
and foreign bonds, debentures, notes, equipment lease and trust certificates,
asset-backed and mortgage-backed securities, and obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities.
A portion of the Fund also may from time to time be invested in first
mortgage loans and participation certificates in pools of mortgages issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, preferred
stocks, convertible debt securities, common stock obtained upon the conversion
or exchange of such securities, and short-term money market instruments.
Securities in which the Fund invests may have warrants or options attached. The
Fund anticipates investing no more than 5% of its net assets in below Investment
Grade debt securities.
SHORT TERM INCOME FUND The investment objective of the Short Term Income Fund is
to seek consistent current income with relative stability of principal by
investing principally in a diversified portfolio of investment grade debt
securities. Under normal conditions, the Fund's portfolio securities will have
maximum expected or remaining maturities of three years or less. The Fund will
normally have an average dollar weighted portfolio maturity of approximately one
year.
The Fund will invest principally in debt securities, including bonds,
debentures, notes, equipment lease and trust certificates, asset-backed and
mortgage-backed securities, and obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities. The Fund may invest up to 35%
of its total assets in U.S. dollar denominated international debt securities for
which the primary trading market is in the United States ('Yankee Bonds').
GOVERNMENT INCOME FUND Government Income Fund invests exclusively in obligations
issued or guaranteed as to principal and interest by the agencies and
instrumentalities of the U.S. Government and repurchase agreements involving any
of such obligations. Although there are no restrictions on maturity, Government
Income Fund generally strives to maintain an average maturity of about seven
years. This Fund intends to invest at least 65% of its total assets in
instruments issued or guaranteed as to principal and interest by the agencies
and instrumentalities of the U.S. Government and mortgage-backed securities.
INTERMEDIATE MUNICIPAL BOND FUND Intermediate Municipal Bond Fund invests
substantially all of its assets in a diversified portfolio consisting of
intermediate-term obligations issued by or on behalf of states, territories and
possessions of the United States, the District of Columbia and their political
subdivisions, agencies, instrumentalities and authorities, the interest on
which, in the opinion of counsel to the issuer, is exempt from federal income
tax. The municipal securities in which this Fund invests are described in 'Types
of Securities in Which the Funds Invest.'
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Investment Policies 33
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INFORMATION ON THE FUNDS (CONTINUED)
Although CoreStates Advisers has no present intention of doing so, up to
20% of all assets in this Fund can be invested in taxable debt securities for
defensive purposes or when sufficient tax-exempt securities considered
appropriate by CoreStates Advisers are not available for purchase.
Intermediate Municipal Bond Fund will maintain an average weighted
maturity of three to ten years. However, when the investment adviser determines
that market conditions so warrant, the Fund can maintain an average weighted
maturity of less than three years. CoreStates Advisers may, at times, elect to
adjust the average maturity upwards, between seven and ten years, in order to
pick up incremental yield, while avoiding the risks associated with long-term
bonds.
PENNSYLVANIA MUNICIPAL BOND FUND At least 80% of this Fund's assets will be
invested in municipal securities, the interest on which is exempt from federal
income tax. Under normal circumstances, at least 65% of the Fund's assets will
be invested in municipal securities, the interest on which is exempt from
Pennsylvania personal income tax ('Pennsylvania Municipal Securities').
This Fund will primarily purchase (i) municipal bonds rated in one of the
three highest rating categories; (ii) municipal notes rated in one of the two
highest rating categories; (iii) commercial paper rated in one of the two
highest short-term categories; or (iv) any of the foregoing determined by
CoreStates Advisers to be of comparable quality at the time of investment.
However, CoreStates Advisers has discretion to invest up to 20% of the Fund's
assets in municipal bonds rated BBB by Standard & Poor's Corporation ('S&P') or
Baa by Moody's Investors Service, Inc. ('Moody's'). See 'Description of
Ratings.'
Pennsylvania Municipal Bond Fund will invest more than 25% of its net
assets in municipal securities whose issuers are located in Pennsylvania. This
Fund may also invest up to 20% of its assets in Taxable Obligations. Taxable
Obligations may include obligations issued or guaranteed by the U.S. Government
or its agencies or instrumentalities, certificates of deposit and demand and
time deposits of domestic banks and savings and loan associations, bankers'
acceptances issued by domestic banks, commercial paper issued by U.S.
corporations (including variable amount master demand notes) meeting the Fund's
quality standards, and securities subject to Federal Alternative Minimum Tax.
Pennsylvania Municipal Bond Fund may also hold a portion of its assets in
cash. To the extent that the Fund's assets are invested in cash, they will not
be invested so as to meet such Fund's investment objective. There are no
restrictions on the average maturity of Pennsylvania Municipal Bond Fund or the
maturity of a single instrument.
Pennsylvania Municipal Bond Fund is a non-diversified investment portfolio
which means that more than 5% of its assets may be invested in each of one or
more issuers. Since a relatively high percentage of assets of the Fund may be
invested in the obligations of a limited number of issuers, the value of the
shares of the Fund may be more susceptible to any single economic, political or
regulatory occurrence than the shares of a diversified investment portfolio
would be. The Fund intends to satisfy the diversification requirements necessary
to comply with Subchapter M of the Internal Revenue Code of 1986, as amended
(the 'Code'). In part, Subchapter M requires that, at the close of each quarter
of the taxable year, those issues which represent more than 5% of the Fund's
assets be limited in aggregate to 50% of the
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/X/ COREFUND
Fund and that no one issue exceed 25% of the Fund's total assets.
NEW JERSEY MUNICIPAL BOND FUND At least 80% of this Fund's assets will be
invested in municipal securities, the interest on which is exempt from federal
income tax. Under normal circumstances, at least 65% of the Fund's assets will
be invested in municipal securities, the interest on which is exempt from New
Jersey personal income tax ('New Jersey Municipal Securities').
This Fund will primarily purchase (i) municipal bonds rated in one of the
three highest rating categories; (ii) municipal notes rated in one of the two
highest rating categories; (iii) commercial paper rated in one of the two
highest short-term categories; or (iv) any of the foregoing determined by
CoreStates Advisers to be of comparable quality at the time of investment.
However, CoreStates Advisers has discretion to invest up to 20% of the Fund's
assets in municipal bonds rated BBB or better by S&P or Baa or better by
Moody's. See 'Description of Ratings.'
New Jersey Municipal Bond Fund will invest more than 25% of its net assets
in municipal securities whose issuers are located in New Jersey. This Fund may
also invest up to 20% of its assets in Taxable Obligations, as described above.
New Jersey Municipal Bond Fund may also hold a portion of its assets in
cash. To the extent that the Fund's assets are invested in cash, they will not
be invested so as to meet such Fund's investment objective. There are no
restrictions on the average maturity of New Jersey Municipal Bond Fund or the
maturity of a single instrument.
New Jersey Municipal Bond Fund is a non-diversified investment portfolio,
as described above. The Fund intends to satisfy the diversification requirements
necessary to comply with Subchapter M of the Code.
GLOBAL BOND FUND Global Bond Fund will invest, under normal circumstances, at
least 65% of its total assets in high quality fixed income securities or debt
obligations of foreign or domestic government entities, corporations or
supranational agencies. The Fund will invest in at least three supranational
agencies or countries. Supranational agencies will include, but not be limited
to, the International Bank of Reconstruction and Development, the InterAmerican
Development Bank, and the Asian Development Bank. Countries will include, but
not be limited to, Austria, Australia, Belgium, Canada, Denmark, Finland,
France, Germany, Ireland, Italy, Japan, Luxembourg, the Netherlands, New
Zealand, Norway, Spain, Sweden, Switzerland, the United Kingdom, and the United
States. Although this Fund will concentrate its investments in the developed
countries listed above, it may invest up to 5% of its assets in similar
securities or debt obligations that are denominated in the currencies of
developing countries and that are of comparable quality to such securities and
debt obligations at the time of purchase as determined by CoreStates Advisers
and the sub-adviser, AnalyticoTSA International, Inc. ('Analytic').
Global Bond Fund is a non-diversified investment portfolio, as described
above. The Fund intends to satisfy the diversification requirements necessary to
comply with Subchapter M of the Code.
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Investment Policies 35
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INFORMATION ON THE FUNDS (CONTINUED)
Global Bond Fund will strive to take maximum advantage of financial and
economic developments and currency fluctuations. All of its investments will be
in quality securities denominated in various currencies, including the European
Currency Unit, and will be rated in one of the highest four rating categories by
a nationally recognized statistical rating agency or of comparable quality at
the time of purchase as determined by the advisers or sub-advisers.
There are no restrictions on the average maturity of Global Bond Fund or
the maturity of any single instrument. Maturities may vary widely depending on
the advisers' assessment of interest rate trends and other economic and market
factors. In the event a security owned by Global Bond Fund is downgraded below
rating categories discussed above, the advisers will review the situation and
take appropriate action with regard to the security.
MONEY MARKET FUNDS _____________________________________________________________
Investments by money market funds such as Cash Reserve, Treasury Reserve and
Tax-Free Reserve are subject to limitations imposed under regulations adopted by
the Securities and Exchange Commission (the 'SEC'). These regulations generally
require money market funds to acquire only U.S. dollar denominated obligations
maturing in 397 days or less, although securities subject to repurchase
agreements, securities with optional and mandatory tender provisions, variable
rate demand obligations and certain other securities may bear longer maturities.
Money market funds also must maintain a dollar-weighted average portfolio
maturity of 90 days or less.
In addition, money market funds may acquire only obligations that
represent minimal credit risks and that are 'eligible securities' which means
they are (i) rated, at the time of investment, by at least two nationally
recognized statistical rating organizations (one if it is the only organization
rating such obligation) in the highest short-term rating category or, if
unrated, determined to be of comparable quality (a 'first tier security'), or
(ii) rated according to the foregoing criteria in the second highest short-term
rating category, or, if unrated, determined to be of comparable quality (a
'second tier security'). A security is not considered to be unrated if its
issuer has outstanding obligations of comparable priority and security that have
a short-term rating. CoreStates Advisers will determine that an obligation
presents minimal credit risks or that unrated instruments are of comparable
quality in accordance with guidelines established by CoreFunds' Board of
Directors. The Directors must also approve or ratify the acquisition of unrated
securities or securities rated by only one rating organization. Investments in
second tier securities are subject to the further constraints that (i) no more
than 5% of a Fund's assets may be invested in such securities in the aggregate,
and (ii) any investment in such securities of one issuer is limited to the
greater of 1% of the Fund's total assets or $1 million. In addition, a Fund may
only invest up to 25% of its total assets in the first tier securities of a
single issuer for three business days.
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CASH RESERVE Cash Reserve intends to achieve its objective by investing in a
diversified portfolio of money market instruments of the highest quality,
including a broad range of U.S. dollar-denominated government, bank, and
commercial paper obligations. By investing only in high quality money market
instruments with remaining maturities of 13 months or less, Cash Reserve strives
to capture the highest yield possible within safety, compliance, and liquidity
parameters.
TREASURY RESERVE Treasury Reserve intends to invest in direct obligations of the
U.S. Treasury, such as bills, bonds, and notes and separately traded interest
and principal component parts of such obligations that are transferable through
the Federal book-entry system known as Separately Traded Registered Investment
and Principal Securities ('STRIPS') and in repurchase agreements relating to
direct U.S. Treasury obligations.
TAX-FREE RESERVE Tax-Free Reserve invests substantially all of its assets in a
diversified portfolio consisting of short-term obligations issued by or on
behalf of states, territories and possessions of the United States, the District
of Columbia and their political subdivisions, agencies, instrumentalities and
authorities, the interest on which, in the opinion of counsel to the issuer, is
exempt from federal income tax. The municipal securities in which this Fund
invests are described in 'Types of Securities in Which the Funds Invest.' In
managing Tax-Free Reserve, the investment adviser uses a strategy that aims to
take advantage of key seasonal supply and demand factors that govern short-term
rates.
Although CoreStates Advisers has no present intention of doing so, up to
20% of all assets in this Fund can be invested in taxable debt securities for
defensive purposes or when sufficient tax-exempt securities considered
appropriate by CoreStates Advisers are not available for purchase.
OTHER INVESTMENT PRACTICES OF THE FUNDS ________________________________________
In addition to the investments described above, the Funds may engage in a number
of additional investment practices, as discussed below:
REPURCHASE AGREEMENTS-- All Funds
Under certain circumstances, the Funds may enter into repurchase agreements with
respect to portfolio securities. Under the terms of a repurchase agreement, a
Fund purchases securities ('collateral') from financial institutions such as
banks and broker-dealers ('seller') which are deemed to be creditworthy under
guidelines approved by the Fund's management, subject to the seller's agreement
to repurchase them at a mutually agreed-upon date and price. The repurchase
price generally equals the price paid by the Fund plus interest negotiated on
the basis of current short-term rates (which may be more or less than the rate
on the underlying portfolio securities). The seller under a repurchase agreement
is required to maintain the value of the collateral held pursuant to the
agreement at not less than 100% of the repurchase price, and securities subject
to repurchase agreements are held by CoreFunds' custodian in the Federal Reserve
book-entry system. Default by the seller could, however, expose a Fund to loss
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Investment Policies 37
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INFORMATION ON THE FUNDS (CONTINUED)
in the event of adverse market action or delay in connection with the
disposition of the underlying securities. Repurchase agreements are considered
to be loans by a Fund under the Investment Company Act of 1940 (the 'Investment
Company Act').
REVERSE REPURCHASE AGREEMENTS--
All Funds
Each of the Funds may borrow funds for temporary purposes by entering into
reverse repurchase agreements. Pursuant to such agreements, a Fund would sell
portfolio securities to financial institutions such as banks and broker-dealers,
and agree to repurchase them at a mutually agreed-upon date and price. A Fund
enters into reverse repurchase agreements only to avoid otherwise selling
securities during unfavorable market conditions to meet redemptions. At the time
the Fund enters into a reverse repurchase agreement, it places in a segregated
custodial account liquid assets such as U.S. Government securities or other
liquid high-grade debt securities having a value equal to the repurchase price
(including accrued interest), and will subsequently monitor the account to
ensure that such equivalent value is maintained. Reverse repurchase agreements
involve the risk that the market value of the securities sold by a Fund may
decline below the price at which it is obligated to repurchase the securities.
Reverse repurchase agreements are considered to be borrowings by a Fund under
the Investment Company Act.
OTHER INVESTMENT COMPANIES--
All Funds
The Funds may invest in the securities of other investment companies. Such
shares will be purchased by the Funds within the limits prescribed by the
Investment Company Act. Such investments will be limited to amounts not in
excess of 5% of a Fund's total assets at the time of purchase.
PUT TRANSACTIONS-- Intermediate Municipal Bond Fund, Short-Intermediate Bond
Fund, Pennsylvania Municipal Bond Fund, New Jersey Municipal Bond Fund, Global
Bond Fund,
Tax-Free Reserve
These Funds may purchase securities subject to a put. A 'put' feature permits a
Fund to sell a security at a fixed price prior to maturity. The underlying
municipal securities subject to a put may be sold at any time at the market
rates. However, unless the put was an integral part of the security as
originally issued, it may not be marketable or assignable; therefore, the put
would only have value to the Fund. In certain cases a premium may be paid for
put features. A premium paid will have the effect of reducing the yield
otherwise payable on the underlying security. The purpose of engaging in
transactions involving puts is to maintain flexibility and liquidity to permit
the Fund to meet redemption requests and remain as fully invested as possible in
municipal securities. These Funds will limit their put transactions to
institutions which their advisers believe present minimal credit risk.
There is no limit to the percentage of portfolio securities that each Fund
may purchase subject to a put, but the amount paid directly or indirectly for
puts which are not integral parts of the security as originally issued held in
the Fund will not exceed 1/2 of 1% of the value of the total assets of the Fund
calculated immediately after any such put is acquired.
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38 Investment Policies
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WHEN-ISSUED SECURITIES--
Core Equity Fund, Special Equity Fund, Fixed Income Funds, Tax-Free Reserve
These Funds may purchase securities on a 'when-issued' basis. When-issued
securities are subject to settlement on a future date. The interest rate
realized on these securities is fixed as of the purchase date and no interest
accrues to the Fund before settlement. These securities are subject to market
fluctuation due to changes in market interest rates and will have the effect of
leveraging a Fund's assets. Each Fund will establish one or more segregated
accounts with the custodian and will maintain liquid assets in such accounts in
an amount at least equal to the value of its commitments to purchase when-issued
securities.
MUNICIPAL LEASE OBLIGATIONS--
Intermediate Municipal Bond Fund, Pennsylvania Municipal Bond Fund,
New Jersey Municipal Bond Fund, Tax-Free Reserve
Municipal lease obligations are issued by a state or local government or
authority to acquire land and a wide variety of equipment and facilities. These
obligations typically are not fully backed by the municipality's credit, and
their interest may become taxable if the lease is assigned. If funds are not
appropriated for the following year's lease payments, the lease may terminate,
with the possibility of default on the lease obligation and significant loss to
a Fund. Certificates of participation in municipal lease obligations or
installment sales contracts entitle the holder to a proportionate interest in
the lease-purchase payments made.
FOREIGN CURRENCY TRANSACTIONS--
International Growth Fund and
Global Bond Fund
The value of the assets of the Fund as measured in U.S. dollars may be affected
favorably or unfavorably by changes in foreign currency exchange rates and
exchange control regulations, and the Fund may incur costs in connection with
conversions between various currencies. The Fund will conduct its foreign
currency exchange transactions either on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign currency exchange market, or through forward
contracts to purchase or sell foreign currencies. A forward foreign currency
exchange contract ('forward currency contracts') involves an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. These forward currency contracts are
traded directly between currency traders (usually large commercial banks) and
their customers. The Fund may enter into forward currency contracts in order to
hedge against adverse movements in exchange rates between currencies.
For example, when the Fund enters into a contract for the purchase or sale
of a security denominated in a foreign currency, it may want to establish the
U.S. dollar cost or proceeds, as the case may be. By entering into a forward
currency contract in U.S. dollars for the purchase or sale of the amount of
foreign currency involved in an underlying security transaction, the Fund can
help to protect itself from a possible
----
Investment Policies 39
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INFORMATION ON THE FUNDS (CONTINUED)
loss between trade and settlement dates resulting from an adverse change in the
relationship between the U.S. dollar and such foreign currency. Additionally,
for example, when the Fund believes that a foreign currency may suffer a
substantial decline against the U.S. dollar, it may enter into a forward
currency sale contract to sell an amount of that foreign currency approximating
the value of some or all of the Fund's portfolio securities or other assets
denominated in such foreign currency or when the Fund believes that the U.S.
dollar may suffer a substantial decline against a foreign currency, it may enter
into a forward currency purchase contract to buy that foreign currency for a
fixed U.S. dollar amount. However, these contracts tend to limit potential gains
which might result from positive changes in currency relationships. The Fund may
also hedge its foreign currency exchange rate risk by engaging in currency
financial futures and options transactions. The forecasting of short-term
currency market movement is extremely difficult and whether short-term hedging
strategies would be successful is highly uncertain.
FORWARD CURRENCY CONTRACTS--
International Growth Fund, Global Bond Fund
International Growth Fund and Global Bond Fund may enter into forward foreign
currency exchange contracts in order to protect against uncertainty in the level
of future foreign exchange rates in the purchase and sale of investment
securities. These Funds will not enter into such contracts for speculative
purposes.
A forward foreign currency exchange contract is an obligation to purchase
or sell a specific currency at a future date, which may be any fixed number of
days from the date of the contract agreed upon by the parties, at a price set at
the time of the contract. In addition, International Growth Fund and Global Bond
Fund may be required by the counter-party to segregate certain assets when
entering into such contracts, in order to complete the settlement transactions
in the future. The contracts may be bought or sold in amounts up to 100% of
exposure to protect a Fund to a limited extent against adverse changes in
exchange rates between foreign currencies and the U.S. dollar. Such contracts,
which protect the value of a Fund's investment securities against a decline in
the value of currency, do not eliminate fluctuations in the underlying prices of
the securities. They simply establish an exchange rate at a future date. Also,
although such contracts tend to minimize the risk of loss due to a decline in
the value of a hedged currency, at the same time they tend to limit any
potential gain that might be realized should the value of such foreign currency
increase.
FUTURES CONTRACTS OR OPTIONS TRANSACTIONS--
International Growth Fund, Global Bond Fund, Core Equity Fund and Special
Equity Fund
International Growth Fund and Global Bond Fund may purchase futures contracts
and may purchase, sell, and write options on securities (including puts and
calls) to a limited extent. Specifically, these Funds may purchase futures
contracts provided that not more than 5% of its total assets are acquired as a
futures contract; in addition, such Funds may purchase futures contracts or
enter into options transactions only to the extent that obligations under such
contracts or transactions represent not more than 20% of its total assets.
International Growth Fund and Global Bond Fund do not intend to use options on
futures contracts. The risk of loss from investing in futures contracts is
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40 Investment Policies
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/X/ COREFUND
potentially unlimited based largely on whether the advisers of these Funds
correctly assess the direction of stock prices.
The Equity Fund and Special Equity Fund may purchase and write options on
securities. These Funds will only engage in covered options transactions
(options on securities owned by the Funds) as deemed appropriate by CoreStates
Advisers. Each Fund may purchase options in an amount not exceeding 5% of its
total assets. Under normal conditions, it is not expected that the underlying
value of portfolio securities subject to options transactions would exceed 50%
of the net assets of a Fund.
Futures contracts or options transactions may be used for several reasons:
to maintain cash reserves while remaining fully invested; to facilitate trading;
to reduce transactions costs; or to seek higher investment returns when such
contract is priced more attractively than the underlying equity security or
index. The Funds may not use futures contracts or options transactions to
leverage their net assets, or for speculative purposes.
For example, in order to remain fully invested in stocks while maintaining
liquidity to meet potential shareholder redemptions, the Funds may invest a
portion of their assets in futures contracts or options transactions as
applicable. Because futures contracts only require a small marginal deposit and
options contracts a small premium payment, these Funds would then be able to
maintain a cash reserve for potential redemptions, while at the same time
remaining fully exposed to markets. Also, because transaction costs of futures
and options may be lower than the costs of investing in securities directly, it
is expected that the use of futures contracts and options transactions may
reduce the total transaction costs of such Funds.
The primary risks associated with the use of futures and options are
(i) imperfect correlation between the changes in market value of the securities
held by a Fund and the prices of futures and options and (ii) possible lack of a
liquid secondary market for a futures contract and the resulting inability to
close a futures position prior to its maturity date. The risk of imperfect
correlation will be minimized by investing only in those contracts whose
behavior is expected to resemble that of a Fund's underlying securities. The
risk that these Funds will be unable to close out an outstanding futures and/or
options position will be minimized by entering into such transactions on a
national exchange with an active and liquid secondary market. In addition,
although these Funds will not use futures and/or options contracts for
speculative purposes, there is the risk that the advisers of these Funds could
be incorrect in their assessment of the direction of stock prices.
DERIVATIVES--
Derivatives are securities that derive their value from other securities. The
following are considered derivative securities: options on futures, futures,
options (e.g., puts and calls), swap agreements, mortgage-backed securities
(CMDs, REMICs, IOs, and POs), when-issued securities and forward commitments,
floating and variable rate securities, convertible securities, 'stripped' U.S.
Treasury securities (e.g., Receipts and STRIPS), privately-issued stripped
securities (e.g., TGRs, TRs, and CATs). See elsewhere
----
Investment Policies 41
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INFORMATION ON THE FUNDS (CONTINUED)
in 'Other Investment Practices of the Funds' for discussion of these various
instruments, and see 'Types of Securities in which the Funds Invest' for more
information about any investment policies and limitations applicable to their
use.
ILLIQUID SECURITIES-- All Funds
The Funds may invest up to 10% of their assets in illiquid securities except for
the Equity Fund, Special Equity Fund, Balanced Fund, Bond Fund, Short Term
Income Fund, Government Income Fund, Intermediate Municipal Bond Fund,
Pennsylvania Municipal Bond Fund, New Jersey Municipal Bond Fund and Global Bond
Fund which may invest up to 15% of their assets in illiquid securities. Under
the supervision of CoreFunds' Board of Directors, each Fund's advisers determine
the liquidity of the Fund's investments. The absence of a trading market can
make it difficult to ascertain a market value for illiquid investments.
Disposing of illiquid investments may involve time-consuming negotiations and
legal expenses, and it may be difficult or impossible for a Fund to sell them
promptly at an acceptable price.
LENDING OF SECURITIES-- All Funds
The Funds may lend their portfolio securities to qualified brokers, dealers,
banks, and other financial institutions for the purpose of realizing additional
net investment income through the receipt of interest on the loan. Each Fund may
lend portfolio securities with a value of up to 33 1/3% of its total assets.
Such loans may be terminated at any time. These Funds will receive cash, letters
of credit, government or government agency securities as collateral in an amount
equal to at least 100% of the current market value of the loaned securities plus
accrued interest. Cash collateral received by the Funds will be invested in
short-term debt securities.
These Funds will retain most rights of beneficial ownership including
dividends, interest or other distributions on the loaned securities. Voting
rights pass with the lending. The Funds will call loans to vote proxies if a
material issue affecting the investment is to be voted upon. Loans will be made
only to borrowers deemed by CoreStates Advisers to be of good standing.
Such loans would involve risk of delay in receiving additional collateral
in the event the value of the collateral decreased below the value of the
securities loaned, or risk of delay in recovering the securities loaned or even
loss of rights in the collateral should the borrower of the securities fail
financially.
SWAPS-- Global Bond Fund
Global Bond Fund may enter into interest rate swaps, currency swaps and other
types of swap agreements such as caps, collars and floors as a way of managing
its exposure to different types of investments. In a typical interest rate swap,
one party agrees to make regular payments equal to a floating interest rate
times a 'notional principal amount,' in return for payments equal to a fixed
rate times the same amount, for a specific period of time. If a swap agreement
provides for payment in different currencies, the parties might agree to
exchange the notional principal amount as well. Swaps may also depend on other
prices or rates, such as the value of an index or mortgage prepayment rates. In
a typical cap or floor agreement, one party agrees to make payments only under
specified circumstances, usually in return for payment of a fee by the other
party. For example, the buyer of an interest rate cap obtains the right to
receive payments to the extent that a specific interest rate exceeds an
agreed-upon level, while the seller of an interest rate floor is obligated to
make payments to the extent
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42 Investment Policies
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/X/ COREFUND
that a specified interest rate falls below an agreed-upon level. An interest
rate collar combines elements of buying a cap and selling a floor.
Swap agreements will tend to shift the Global Bond Fund's investment
exposure from one type of investment to another. For example, if this Fund
agrees to exchange payments in U.S. dollars for receipts in foreign currency,
the swap agreement would tend to increase the Fund's exposure to foreign
currency and interest rates. Caps and floors have an effect similar to buying or
writing options. Depending on how they are used, swap agreements may increase or
decrease the overall volatility of the Global Bond Fund's investments and its
share price and yield.
Swap agreements are sophisticated hedging instruments that typically
involve a small investment of cash relative to the magnitude of risks assumed.
As a result, swaps can be highly volatile and have a considerable impact on a
Fund's performance. Swap agreements are subject to risks related to the
counterparty's ability to perform, and may decline in value if the
counterparty's creditworthiness deteriorates. A Fund may also suffer losses if
it is unable to terminate outstanding swap agreements or reduce their exposure
through offsetting transactions. Any obligation Global Bond Fund may have under
these types of arrangements will be covered by setting aside liquid assets in a
segregated account. Global Bond Fund will enter into swaps only with
counterparties deemed creditworthy by its advisers.
FOREIGN SECURITIES --
Special Equity Fund, International Growth Fund, Balanced Fund, Global Bond Fund,
Bond Fund
The Special Equity, International Growth, Balanced Global Bond and Bond Funds
may invest in securities of foreign issuers. The Funds may also invest in
securities issued by foreign branches of U.S. banks and foreign banks, in
Canadian commercial paper, and in Europaper (U.S. dollar-denominated commercial
paper of a foreign issuer).
Investment in securities of foreign issuers involves certain risks not
ordinarily associated with investments in securities of domestic issuers. Such
risks include fluctuations in foreign exchange rates, difficulties in predicting
international trade patterns, political, social and economic instability in the
country of the issuer, foreign trading practices (including higher trading
commissions, custodial charges and delayed settlements), foreign withholding and
income taxation, the possible establishment of exchange controls or the adoption
of other foreign governmental restrictions (which may adversely affect the
payment of principal and interest), difficulty in obtaining and enforcing
judgments against foreign issuers, and the possible imposition of exchange
controls or other foreign governmental laws or restrictions. With respect to
certain countries, there is also the possibility of expropriation of assets,
nationalization of assets, limits on removal of currency or other assets,
confiscatory taxation, political or social instability or diplomatic
developments which could adversely affect investments in those countries.
Foreign companies generally are not subject to uniform accounting,
auditing and
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Investment Policies 43
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INFORMATION ON THE FUNDS (CONTINUED)
financial reporting standards comparable to those applicable to U.S. domestic
companies. There is generally less government regulation of securities
exchanges, brokers and listed companies abroad than in the U.S. Confiscatory
taxation or diplomatic developments could also affect investment in those
countries. In addition, foreign branches of U.S. banks, foreign banks and
foreign issuers may be subject to less stringent reserve requirements and to
different accounting, auditing, reporting and recordkeeping standards than those
applicable to domestic branches of U.S. banks and U.S. domestic issuers.
AMERICAN DEPOSITARY RECEIPTS ('ADRS'), EUROPEAN DEPOSITARY RECEIPTS ('EDRS') and
Global Depositary Receipts ("GDRs") -- Special Equity Fund, Balanced Fund and
International Growth Fund ADRs are securities, typically issued by a U.S.
financial institution (a 'depositary'), that evidence ownership interests in a
security or a pool of securities issued by a foreign issuer and deposited with
the depositary. ADRs include American Depositary Shares and New York Shares.
EDRs are securities, typically issued by a non-U.S. financial institution, that
evidence ownership interests in a security or a pool of securities issued by
either a U.S. or foreign issuer. GDRs are issued globally and evidence a similar
ownership arrangement. As is the case with ADRs, both EDRs and GDRs include
Depositary Shares. Generally, ADRs are designed for trading in the U.S.
securities market, EDRs are designed for trading in European securities markets
and GDRs are designed for trading in non-U.S. securities markets. ADRs, EDRs and
GDRs may be available for investment through 'sponsored' or 'unsponsored'
facilities. A sponsored facility is established jointly by the issuer of the
security underlying the receipt and a depositary, whereas and unsponsored
facility may be established by a depositary without participation by the issuer
of the receipt's underlying security. Holders of an unsponsored depositary
receipt generally bear all the costs of the unsponsored facility. The depositary
of an unsponsored facility frequently is under no obligation to distribute
shareholder communications received from the issuer of the deposited security or
to pass through to the holders of the receipts voting rights with respect to the
deposited securities.
/X/
TYPES OF
SECURITIES IN
WHICH THE
FUNDS
INVEST
The various types of securities in which the Funds invest are described below.
EQUITY FUNDS ___________________________________________________________________
GROWTH EQUITY FUND
CORE EQUITY FUND
SPECIAL EQUITY FUND
EQUITY INDEX FUND
INTERNATIONAL GROWTH FUND
The types of equity securities in which these Funds invest generally include
common stocks, preferred stocks and convertible securities.
BALANCED FUND In addition to equity securities, Balanced Fund may invest in
fixed income securities. The fixed income securities in which this Fund will
invest consist of bonds, debentures, notes and similar obligations or
instruments which constitute a security and evidence indebtedness, including
U.S. Government obligations, mortgage-backed securities and bank obligations (as
described below). Balanced Fund may also invest in corporate bonds which are
rated, at time of purchase, BBB or higher by S&P or Moody's.
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TAXABLE FIXED INCOME FUNDS _____________________________________________________
SHORT-INTERMEDIATE BOND FUND
BOND FUND
SHORT TERM INCOME FUND
The various types of securities which may be purchased by these Funds include
the following:
U.S. Government Obligations--
1. U.S. Treasury Securities--includes bills, notes, bonds, and other debt
securities issued by the U.S. Treasury. These are direct obligations of the U.S.
Government and are supported by the full faith and credit of the United States.
They differ mainly in interest rates, maturities, and dates of issue.
2. U.S. Government Agency Securities--issued or guaranteed by U.S.
Government-sponsored instrumentalities and federal agencies. These include
obligations supported by the right of the issuer to borrow from the Treasury,
such as those of the Export-Import Bank of the United States; obligations
supported by the discretionary authority of the U.S. Treasury to purchase the
agency's obligations, such as those of the Federal National Mortgage Association
('FNMA'); and obligations supported only by the credit of the agency or
instrumentality, such as those of the Student Loan Marketing Association
('SLMA'). However, no assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored instrumentalities if it
is not obligated to do so by law.
Bank Obligations--
1. Certificates of Deposit-negotiable certificates representing a
commercial bank's obligation to repay funds deposited with it, earning specified
rates of interest over given periods.
2. Bankers' Acceptances-negotiable drafts or bills of exchange, normally
drawn by an importer or exporter to pay for specific merchandise, which are
'accepted' by a bank; meaning, in effect, that the bank unconditionally agrees
to pay the face value of the instrument upon maturity.
Each of Short-Intermediate Bond Fund and Intermediate Municipal Bond Fund,
as well as Balanced Fund, will limit its purchases of bank obligations to those
of domestic branches of U.S. banks having total assets at the time of purchase
of $1 billion or more as shown on their last published financial statements at
the time of investment.
Mortgage-Backed Securities--
These securities may be issued or guaranteed by U.S. Government agencies, such
as the Government National Mortgage Association ('GNMA'), FNMA, or the Federal
Home Loan Mortgage Corporation ('FHLMC'), or may be privately-issued. GNMA
mortgage-backed certificates are mortgage-backed securities of the modified
pass-through type, which means that both interest and principal payments
(including prepayments) are passed through monthly to the holder of the
certificate. The National Housing Act provides that the full faith and credit of
the United States is pledged to the timely payment of principal and interest by
GNMA of amounts due on these GNMA certificates. Each GNMA certificate evidences
an interest in a specific pool of mortgage loans insured by the Federal Housing
Administration or the Farmers Home Administration or guaranteed by the Veterans
Administration. FNMA, a federally chartered and stockholder-owned
----
Types of Securities 45
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INFORMATION ON THE FUNDS (CONTINUED)
corporation, issues pass-through certificates which are guaranteed as to
principal and interest by FNMA. FHLMC, a corporate instrumentality of the United
States, issues participation certificates which represent an interest in
mortgages held in FHLMC's portfolio. FHLMC guarantees the timely payment of
interest and the ultimate collection of principal. Securities issued or
guaranteed by FNMA and FHLMC are not backed by the full faith and credit of the
United States. There can be no assurance that the United States Government would
provide financial support to FNMA or FHLMC if necessary in the future.
Mortgage-backed securities also include collateralized mortgage
obligations ('CMOs') or real estate mortgage investment conduits ('REMICs'), a
type of CMO. CMOs or REMICs are mortgage pass-throughs issued in multiple
classes. In a CMO, a series of bonds or certificates are usually issued in
multiple classes. Each class of CMOs is issued with a specific fixed or floating
coupon rate and has a stated maturity or final distribution date. Principal
prepayments on the underlying mortgage assets may cause the CMOs to be retired
substantially earlier than their stated maturities or final distribution dates,
resulting in a loss of all or part of any premium paid. Interest typically is
paid or accrues on all classes of the CMOs on a monthly, quarterly or semiannual
basis. The principal of and interest on the underlying mortgage assets may be
allocated among the several classes of a series of a CMO in a variety of ways.
In a common structure, payments of principal, including any principal payments,
on the underlying mortgage assets are applied to the classes of the series of a
CMO in the order of their respective stated maturities or final distribution
dates, so that no payment of principal will be made on any class of CMOs until
all other classes having an earlier stated maturity or final distribution date
have been paid in full.
Privately-issued mortgage-backed securities will be readily marketable and
rated at the time of purchase in the two highest rating categories assigned by a
Rating Organization. For a description of rating symbols see the Appendix to the
Statement of Additional Information.
Asset-backed Securities--
Asset-backed securities consist of securities secured by company receivables,
truck and auto loans, leases and credit card receivables. These issues are
normally traded over-the-counter and typically have a short-intermediate
maturity structure depending on the paydown characteristics of the underlying
financial assets which are passed through to the security holder.
The Funds will invest only in privately-issued asset-backed securities,
which are readily marketable and rated at the time of purchase in the two
highest rating categories assigned by a Rating Organization. For a description
of rating symbols see the Appendix to the Statement of Additional Information.
Corporate Securities--
Corporate securities include corporate bonds, convertible and non-convertible
debt securities, and preferred stocks, as well as commercial paper. Corporate
securities in which these Funds may invest must satisfy certain minimum ratings
at the time of purchase by Moody's or S&P. Corporate bonds must be of investment
grade quality (BBB or better) as rated by S&P or Moody's.
GOVERNMENT INCOME FUND Government Income Fund may invest in U.S. Government
obligations and mortgage-backed securities, and asset-backed securities, as
defined above.
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GLOBAL BOND FUND Global Bond Fund may invest in fixed income or debt obligations
issued or guaranteed by the U.S. Government or a foreign government, or by one
of its agencies, authorities, instrumentalities or political subdivisions; fixed
income or debt obligations issued or guaranteed by supranational entities; and
corporate securities and bank obligations, as described above.
TAXABLE MONEY MARKET FUNDS _____________________________________________________
CASH RESERVE The various types of securities invested in by Cash Reserve include
U.S. Government obligations, bank obligations, and asset-backed securities, as
described above.
With respect to U.S. Government obligations, in addition to bills, notes
and bonds issued by U.S. government agencies, Cash Reserve may invest in STRIPS
as defined previously in 'Investment Policies-Treasury Reserve.' STRIPS may be
sold as zero coupon securities, which means that they are sold at a substantial
discount and redeemed at face value at their maturity date without interim cash
payments of interest or principal. This discount is amortized over the life of
the security, and such amortization will constitute the income earned on the
security for both accounting and tax purposes. See also 'Taxes.'
With respect to bank obligations, in addition to certificates of deposit
and bankers' acceptances, Cash Reserve may invest in foreign securities and time
deposits. Time deposits are non-negotiable deposits in a banking institution
earning a specified interest rate over a given period of time. Such deposits
cannot be withdrawn before the date specified at the time of deposit.
With respect to asset-backed securities, the asset-backed securities in
which Cash Reserve invests must have final maturities of 13 months or less.
Cash Reserve may also invest in the following types of securities:
Commercial Paper--
Commercial paper are short-term promissory notes issued by corporations,
including variable amount master demand notes, having short-term ratings at the
time of purchase of 'Prime-1' by Moody's and/or 'A-1' or better by S&P.
Variable amount master demand notes in which Cash Reserve may invest are
unsecured demand notes that permit the indebtedness thereunder to vary and
provide for periodic adjustments in the interest rate according to the terms of
the instrument. The rate of interest on such notes is generally based upon the
interest rates for commercial paper issued by the master demand note issuer. The
rate will be adjusted automatically at periodic intervals which normally will
not exceed 31 days but may extend longer. Because master demand notes are direct
lending arrangements between such Fund and the issuer, they are not normally
traded. Although there is no secondary market in the notes, the Fund may demand
payment of principal and accrued interest at any time. While the notes are not
typically rated by credit rating agencies, issuers of variable amount master
demand notes (which are normally manufacturing, retail, financial, and other
business concerns) must satisfy the same criteria as set forth above for issuers
of commercial paper. CoreStates Advisers will consider the earning power, cash
flow, and other liquidity ratios of the issuers of such notes and will
continuously monitor their financial status to meet payment on demand.
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Types of Securities 47
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INFORMATION ON THE FUNDS (CONTINUED)
Receipts--
Receipts are interests in separately traded interest and principal component
parts of U.S. Treasury obligations that are issued by banks or brokerage firms
and are created by depositing U.S. Treasury obligations into a special account
at a custodian bank. The custodian holds the interest and principal payments for
the benefit of the registered owners of the certificates or receipts. The
custodian arranges for the issuance of the certificates or receipts evidencing
ownership and maintains the register. Receipts include 'Treasury Receipts'
('TR'S'), 'Treasury Investment Growth Receipts' ('TIGR'S'), and 'Certificates of
Accrual on Treasury Securities' ('CATS').
TREASURY RESERVE Treasury Reserve may invest in U.S. Treasury obligations, such
as bills, notes, and bonds, and separately traded interest and principal
component parts of such obligations, such as STRIPS. Treasury Reserve may also
invest in repurchase agreements fully collateralized by U.S. Treasury
obligations.
TAX-FREE FIXED INCOME AND MONEY MARKET FUNDS ___________________________________
INTERMEDIATE MUNICIPAL BOND FUND
PENNSYLVANIA MUNICIPAL BOND FUND
NEW JERSEY MUNICIPAL BOND FUND
TAX-FREE RESERVE These Funds will invest in municipal securities. The two
principal classifications of municipal securities which may be held by these
Funds are 'general obligation' securities and 'revenue' securities. These are
discussed below, along with other municipal securities in which these Funds may
invest.
1. General Obligation Securities
'General obligation' securities are secured by the issuer's pledge of its full
faith, credit, and taxing power for the payment of principal and interest.
2. Revenue Securities
'Revenue' securities are payable only from the revenues derived from a
particular facility or class of facilities or, in some cases, from the proceeds
of a special excise tax or another specific revenue source such as the user of
the facility being financed. Industrial development and pollution control bonds
held by these Funds are in most cases revenue securities and are not payable
from the unrestricted revenues of the issuer. Consequently, the credit quality
of such revenue bonds is usually directly related to the credit standing of the
corporate user of the facility involved.
3. Moral Obligation Bonds
The portfolios of these Funds may also include 'moral obligation' bonds, which
are normally issued by special-purpose public authorities. If the issuer of
moral obligation bonds is unable to meet its debt service obligations from
current revenues, it may draw on a reserve fund, the restoration of which is a
moral commitment but not a legal obligation of the state or municipality which
created the issuer.
4. Variable Rate Demand Obligations
Municipal securities purchased by these Funds may include 'variable rate demand
obligations,' which are tax-exempt obligations upon which interest is payable at
a floating or variable rate. While there may be no active secondary market with
respect to a particular variable rate demand obligation purchased by such Funds,
they normally may demand payment of the principal of and accrued interest on the
obligation upon not more than seven days' notice and may resell the obligation
at any time to a third party. The absence of any active secondary market,
however, could make it difficult for such
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48 Types of Securities
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/X/ COREFUND
Funds to dispose of a variable rate demand obligation if the issuer defaulted on
its payment obligation, and it could, for this or other reasons, suffer a loss
to the extent of the default.
5. When-Issued Securities
These Funds may purchase municipal securities on a 'when-issued' basis, as
described in 'Other Investment Practices of the Funds.' Each Fund expects that
commitments to purchase when-issued securities will not exceed 25% of the value
of its total assets, absent unusual market conditions, and does not intend to
purchase when-issued securities for speculative purposes, but only in
furtherance of its investment objective. Because each Fund will set aside cash
or liquid assets to satisfy its purchase commitments in the manner described,
its liquidity and ability to manage its portfolio might be affected in the event
its commitments to purchase when-issued securities should ever exceed 25% of the
value of its total assets.
PENNSYLVANIA MUNICIPAL SECURITIES
In managing the portfolios of Intermediate Municipal Bond Fund and Tax-Free
Reserve, CoreStates Advisers intends to invest, when possible, such Funds'
assets in Pennsylvania Municipal Securities, provided the investment is
consistent with the Funds' investment objectives and policies and their status
as diversified investment companies. Because of the relatively limited number of
Pennsylvania municipal issuers and the restricted supply of outstanding
municipal securities issued by them that meet the Funds' investment criteria,
CoreStates Advisers cannot predict precisely what percentage of each Fund's
portfolio will be invested in such issuers.
Except as stated above with respect to Pennsylvania Municipal Securities,
CoreStates Advisers does not intend on a regular basis to invest more than 25%
of either Fund's total assets in (i) municipal securities whose issuers are in
the same state, (ii) municipal securities, the interest on which is paid solely
from revenues of similar projects, and (iii) industrial development bonds,
although it may do so from time to time. To the extent such Funds' assets are so
concentrated, they would be subject to the peculiar risks presented by the laws
and economic conditions relating to such states, projects, and bonds to a
greater extent than it would be if its assets were not so concentrated.
AMT OBLIGATIONS
While Intermediate Municipal Bond Fund and Tax-Free Reserve are permitted to
purchase 'private activity bonds' that are subject to the Alternative Minimum
Tax (the 'AMT') imposed by Section 55 of the Code, these Funds do not currently
hold or anticipate purchasing such bonds. If they did so, however, a portion of
the dividends received would be subject to the AMT. The purchase of such bonds
by these Funds could have a material effect on the AMT liability of their
investors, and hence these Funds do not intend to invest any portion of their
assets in such bonds.
Corporate shareholders, however, should note that all exempt-interest
dividends are includable in the computation of 'adjusted current earnings' for
AMT purposes, regardless of when the bonds from which they are derived were
issued or whether they are derived from 'private activity bonds.' Accordingly,
corporate shareholders should consult their tax advisers regarding the impact
that holding
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Types of Securities 49
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INFORMATION ON THE FUNDS (CONTINUED)
shares of these Funds would have on their own AMT liability.
TEMPORARY INVESTMENTS __________________________________________________________
On occasion, a Fund may be unable to achieve its investment objective due to
market conditions. Under such circumstances, a Fund is permitted to make certain
temporary investments which deviate from the investment policies described
above. Such investments may be used to invest uncommitted cash balances, to
maintain liquidity to meet shareholder redemptions, or to take a temporary
defensive position against potential or serious stock market declines. The
temporary investments the Funds are permitted to make under such circumstances
are described below.
GROWTH EQUITY FUND
CORE EQUITY FUND
SPECIAL EQUITY FUND
EQUITY INDEX FUND
INTERNATIONAL GROWTH FUND
Although these Funds normally seek to remain fully invested in equity
securities, they may invest all or a portion of their assets temporarily in
certain short-term and fixed income vehicles, in accordance with the investment
restrictions described herein. Money market instruments, such as commercial
paper, and fixed income securities, such as bonds, must be assigned, or
determined by the advisers to be equal to, certain minimum ratings in each
category by either Moody's or S&P at the time of purchase by a Fund. Temporary
investments may include the following:
Money Market Instruments
U.S. Government Obligations
Fixed Income Securities
Repurchase Agreements
BALANCED FUND Although Balanced Fund normally seeks to remain fully invested in
a combination of equity, fixed income, and money market securities, when
CoreStates Advisers determines that market conditions warrant, it may invest up
to 100% of its assets in money market instruments, including securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities,
repurchase agreements, certificates of deposit and bankers' acceptances issued
by banks or savings and loan associations having net assets of at least $500
million as of the end of their most recent fiscal year, and commercial paper
rated, at time of purchase, in the top two categories by a national rating
agency or determined to be of comparable quality by the investment adviser at
time of purchase, and other long- and short-term debt instruments which are
rated A or higher at time of purchase, and may hold a portion of its assets in
cash reserves.
PENNSYLVANIA MUNICIPAL BOND FUND
NEW JERSEY MUNICIPAL BOND FUND
Each of these Funds may increase its investment in Taxable Obligations to over
20% of its total assets if suitable tax-exempt obligations are unavailable or
for temporary defensive purposes.
GLOBAL BOND FUND For temporary defensive purposes, when the advisers determine
that market conditions warrant, Global Bond Fund may invest up to 100% of its
assets in U.S. dollar-denominated fixed income securities or debt obligations
and the following domestic and foreign money market instruments: government
obligations, certificates of deposit, bankers' acceptances, time deposits,
commercial paper, short-term corporate debt issues and repurchase agreements.
This Fund may hold a portion of its assets in cash for liquidity purposes.
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50 Types of Securities
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TAX-FREE RESERVE Tax-Free Reserve may hold uninvested cash reserves which do not
earn income (pending investment) during temporary defensive periods or if, in
the opinion of CoreStates Advisers, suitable tax-exempt obligations are
unavailable. There is no percentage limitation on the amount of assets which may
be held uninvested. In addition, such Fund may invest from time to time, to the
extent consistent with its investment objective, a portion of its assets on a
temporary basis or for temporary defensive purposes in short-term money market
instruments, the income from which is subject to federal income tax.
Temporary investments will generally not exceed 20% of the total assets of
Tax-Free Reserve except when made for temporary defensive purposes, and may
include obligations of the U.S. Government or its agencies or instrumentalities;
debt securities (including taxable commercial paper) of issuers having been
assigned, at the time of purchase, the highest short-term rating of either
Moody's or S&P; certificates of deposit or bankers' acceptances of domestic
branches of U.S. Banks with total assets at the time of purchase of $1 billion
or more; repurchase agreements with respect to such obligations; or reverse
repurchase agreements.
/X/
INVESTMENT
RESTRICTIONS
Investment policies of the Funds that are not fundamental may be changed by the
Board of Directors without shareholder approval, provided such changes are
deemed to be consistent with a Fund's objective and in the best interests of its
shareholders. However, the investment objectives of each Fund, along with the
restrictions and limitations described herein and in the Statement of Additional
Information, are fundamental and may be changed only by the affirmative vote of
a majority of the outstanding shares of such Fund. See 'Description of Shares.'
A FUND MAY NOT:
1. Make loans, except that each Fund may purchase or hold certain debt
instruments, engage in lending of portfolio securities, in accordance with its
policies and limitations, and enter into repurchase agreements, in accordance
with its policies and limitations.
2. Borrow money or issue senior securities, except that each Fund may
borrow from banks and enter into reverse repurchase agreements for temporary
purposes in amounts not to exceed 10% of the value of its total assets at the
time of such borrowing; or mortgage, pledge or hypothecate any assets, except in
connection with any such borrowing and in amounts not in excess of the lesser of
the dollar amounts borrowed or 10% of the value of its total assets at the time
of such borrowing. A Fund will not purchase any securities while its borrowings
(including reverse repurchase agreements) are outstanding.
3. Invest more than 10% of its total assets in illiquid securities,
including repurchase agreements maturing in more than seven days or the lending
of securities which provide for settlement more than seven days after notice.
This fundamental restriction does not apply to Balanced Fund, Government Income
Fund, Intermediate Municipal Bond Fund, Pennsylvania Municipal Bond Fund, New
Jersey Municipal Bond Fund, Global Bond Fund, Core Equity Fund, Equity Index
Fund, Special Equity
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Investment Restrictions 51
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INFORMATION ON THE FUNDS (CONTINUED)
Fund, Bond Fund or Short Term Income Fund. These Funds, as a matter of non-
fundamental investment policy, may invest up to 15% of their assets in illiquid
securities.
4. Purchase securities of any one issuer (other than obligations issued or
guaranteed as to principal and interest by the U.S. Government, its agencies or
instrumentalities) if, immediately after such purchase, more than 5% of the
value of the Fund's total assets would be invested in such issuer or hold more
than 10% of the outstanding voting securities of such issuer, except that up to
25% of the value of the Fund's total assets may be invested without regard to
such 5% limitation. With respect to the Fixed Income Funds and Cash Reserve,
however, there is no limit to the percentage of assets that may be invested in
U.S. Treasury bills and notes, or other obligations issued or guaranteed by the
U.S. Government or its agencies or instrumentalities. With respect to Global
Bond Fund, there is no limit to the percentage of assets that may be invested in
securities issued by foreign governments. This restriction does not apply to
Pennsylvania Municipal Bond Fund, New Jersey Municipal Bond Fund, Global Bond
Fund or Treasury Reserve.
5. Invest 25% or more of its total assets in any one industry. For
purposes of this limitation, wholly-owned finance companies will be considered
to be in the industries of their parents if their activities are primarily
related to financing the activities of their parents, and utilities will be
divided according to their services-for example, gas, gas transmission, electric
and gas, electric, and telephone will each be considered a separate industry.
This restriction does not apply to Treasury Reserve.
With respect to Intermediate Municipal Bond Fund, Pennsylvania Municipal
Bond Fund, New Jersey Municipal Bond Fund and Tax-Free Reserve, this limitation
does not apply to investments in tax-exempt securities issued by governments or
political sub-divisions of governments.
With respect to Global Bond Fund, there is no limitation with respect to
obligations issued by the U.S. Government, foreign governments, or supranational
agencies.
With respect to Cash Reserve, there is no limitation with respect to
obligations issued or guaranteed by the U.S. Government or its
instrumentalities.
EQUITY FUNDS In addition, an Equity Fund may not purchase securities of any one
issuer (other than obligations issued or guaranteed
as to principal and interest by the U.S. Government, its agencies or
instrumentalities) if, as a result thereof, more than 10% of the voting
securities of such issuer would be held by the Fund.
TREASURY RESERVE In addition, Treasury Reserve may not purchase securities other
than direct obligations of the U.S. Treasury, such as Treasury bills and notes,
none of which may be subject to repurchase agreements.
PORTFOLIO TURNOVER It is not a policy of the Funds to purchase or sell
securities for trading purposes. However, the advisers manage the Funds without
regard generally to restrictions on portfolio turnover, except those imposed by
provisions of the federal tax laws regarding short-term trading. Generally, the
Funds will not trade for short-term profits, but when circumstances warrant,
investments may be sold without regard to the length of time held. It is
expected that the Equity Funds' annual portfolio turnover rates will not exceed
100%. A 100% rate of turnover would occur, for example, if all of a portfolio's
securities are replaced within a one year period. With
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52 Investment Restrictions
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/X/ COREFUND
respect to the Fixed Income Funds, the annual portfolio turnover rate may exceed
100% due to changes in portfolio duration, yield curve strategy or commitments
to forward delivery mortgage-backed securities. With the exception of Global
Bond Fund, however, it is expected that the annual turnover rate for the Fixed
Income Funds will not exceed 250%.
High rates of portfolio turnover necessarily result in correspondingly
heavier brokerage and portfolio trading costs which are paid by a Fund. Trading
in fixed income securities does not generally involve the payment of brokerage
commissions, but does involve indirect transaction costs. In addition to
portfolio trading costs, higher rates of portfolio turnover may result in the
realization of capital gains. As a general rule, net gains are distributed to
shareholders and will be taxable at ordinary income tax rates, for federal
income tax purposes, regardless of long- or short-term capital gains status. See
'Distributions' and 'Taxes' for more information on taxation. The tables set
forth in 'Financial Highlights' present the Funds' historical portfolio turnover
rates.
/X/
INVESTOR
CONSIDERATIONS
INVESTMENT SUITABILITY _________________________________________________________
EQUITY FUNDS
The Equity Funds are appropriate for investors seeking long-term growth.
Historically, equities have provided significantly higher returns than fixed
income and money market instruments, yet subject the investor to greater price
fluctuation. The CoreFund Equity Funds offer a range of growth and risk
characteristics, incorporating high grade domestic and international securities.
Growth Equity Fund
Core Equity Fund
Special Equity Fund
These Funds are appropriate for investors who are seeking long-term income and
capital appreciation, and who do not need to earn current income from their
investments in a Fund. They are suited to those investors who are willing to
hold their investments over a long horizon in anticipation of the returns that
common stocks may provide. Because these Funds invest in equity securities,
investors should be able to tolerate fluctuations in the principal value of
their investment. Investors should be cognizant of the inherent volatility in
the stock market, and the investment risks discussed below; and understand that
all investments carry a risk factor.
Equity Index Fund
Equity Index Fund is suitable for those who want to participate in the equity
market's superior long-term performance without the near-term commitment and
risks associated with choosing a particular investment style which may or may
not be out of favor during any period of time. Investors generally can expect
returns in line with the S&P 500 Index, which is tracked closely by the Fund.
Balanced Fund
Balanced Fund is appropriate for investors who seek to capture the interest
income of bonds and the capital appreciation of stocks while reducing risk
through diversification among these securities.
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Investor Considerations 53
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INFORMATION ON THE FUNDS (CONTINUED)
International Growth Fund
International Growth Fund is appropriate for investors who are seeking long-term
capital appreciation, and who do not need to earn current income from their
investment in a Fund. International Growth Fund is suited to those investors who
are willing to hold their investment over a long horizon in anticipation of the
returns that foreign stocks may provide. Because the Fund invests in foreign
equity securities, investors should be able to tolerate fluctuations in the
principal value of their investment. Investors should be cognizant of the unique
risks of international investing, including their exposure to currency
fluctuations; and understand that all investments carry a risk factor.
Under the multiple manager structure, CoreStates Advisers has general
oversight responsibility for the investment advisory services provided to the
Fund by Martin Currie and Aberdeen Managers. CoreStates Advisers is also
responsible for managing the allocation of assets among the Fund's sub-advisers.
Accordingly, each sub-adviser will be responsible for the day-to-day investment
management of all or a discrete portion of the assets of the Fund. 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 may not comply with certain regulatory and tax
requirements.
FIXED INCOME FUNDS
These Funds are appropriate for investors seeking an investment vehicle that
offers a higher level of current income with low to moderate share price
fluctuations. These Funds differ primarily by their average maturity, credit
quality, and tax status.
Short-Intermediate Bond Fund will purchase U.S. Government and corporate
securities rated A or better and is expected to have an average maturity of no
more than five years.
The Bond Fund will normally invest in domestic and foreign corporate debt
securities, U.S. government securities, mortgage-backed securities and
asset-backed securities, without limitation to the average maturity of the Fund.
Short Term Income Fund will invest in a diversified portfolio of
investment-grade debt securities, including corporate debt securities and U.S.
government securities, having an expected or remaining maturity of three years
or less. The Fund is expected to have an average dollar-weighted maturity of
approximately one year.
Government Income Fund will invest only in obligations issued or
guaranteed by the U.S. Government and its agencies. There is no limit to the
average maturity so it is appropriate for investors who seek a higher level of
current income than that which is generally possible with money market funds,
and who can tolerate moderate fluctuations in principal value.
Intermediate Municipal Bond Fund is for investors seeking income exempt
from federal income taxes, generally investors in a high income tax bracket.
This Fund will only purchase securities rated A or better and is expected to
have an average maturity of three to ten years.
Pennsylvania Municipal Bond Fund is appropriate generally for investors
seeking an investment vehicle that offers a higher level of current income
exempt from federal income taxes and (as to Pennsylvania residents) Pennsylvania
income taxes, with low to moderate share price fluctuations.
New Jersey Municipal Bond Fund is appropriate generally for investors
seeking an
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54 Investor Considerations
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/X/ COREFUND
investment vehicle that offers a higher level of current income exempt from
federal income taxes and (as to New Jersey residents) New Jersey income taxes,
with low to moderate share price fluctuations.
Global Bond Fund is suitable for long-term investors who are looking for
both income and capital appreciation from a portfolio of fixed income securities
denominated in U.S. and foreign currencies. Because the value of the securities
will fluctuate with changes in interest rates and relative currency values,
investors must be willing to invest their money over a longer time horizon in
anticipation of the returns afforded by a diversified portfolio of U.S. and
foreign bonds.
MONEY MARKET FUNDS
As each of these Funds is designed and managed to maintain a stable price per
share of $1.00, they provide liquidity and a high degree of safety for investors
who are unable to tolerate fluctuations in the principal value of their
investments.
Cash Reserve is appropriate for investors who are seeking an investment
vehicle that provides current interest income at competitive rates of return.
By investing in direct obligations of the U.S. Treasury, Treasury Reserve
affords an extra margin of protection for investors for whom a high degree of
safety is a primary concern. Treasury Reserve is considered to be the most
secure of the Money Market Funds. This Fund is appropriate for investors who are
seeking an investment vehicle that provides current interest income at
competitive rates of return.
Tax-Free Reserve is appropriate for conservative investors in higher-level
federal income tax brackets who may benefit from an investment that offers
current interest income that is at least 80% free of federal income taxes.
Therefore, investors contemplating the purchase of this Fund should first
consider their 'taxable equivalent yield.' This is the comparison between the
tax-exempt yield from Tax-Free Reserve and the equivalent yield from a taxable
investment, using a calculation that takes into account the investor's current
tax bracket. Tax-Free Reserve's current taxable equivalent yield may be obtained
by contacting its distributor.
INVESTMENT RISKS _______________________________________________________________
The Funds differ significantly in terms of risk. Because of the concerns listed
below, a Fund should not be considered a complete investment program. Most
investors should maintain diversified holdings of securities with different risk
characteristics-including common stocks, bonds and different types of money
market instruments. Investors may also wish to complement an investment in a
Fund with other portfolios offered by CoreFunds.
EQUITY FUNDS
The Equity Funds are subject to market risk and fund risk. Market risk is the
possibility that stock prices in general will decline over short or even
extended periods of time. Stock markets tend to be cyclical, with periods when
stock prices generally rise and periods when stock prices generally decline.
Fund risk is the possibility that a Fund's performance during a specific period
may not meet or exceed that of the stock market as a whole. Therefore, investors
should consider their holdings in equity mutual funds to be long-term
investments. In addition to the risks noted above for all equity funds, the
following equity funds are
----
Investor Considerations 55
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INFORMATION ON THE FUNDS (CONTINUED)
also subject to additional risks as described below.
Balanced Fund
With respect to Balanced Fund, the market value of fixed income securities bears
an inverse relationship to changes in market interest rates. Moreover, changes
by recognized rating agencies in the ratings of any fixed income security and in
the ability of an issuer to make payments of interest and principal may also
affect the market value of these securities. Each of these factors will cause
the net asset value of shares of Balanced Fund to fluctuate over time.
In addition, mortgage-backed securities are subject to prepayment of the
underlying mortgages. During periods of declining interest rates, pre-payment of
mortgages underlying these securities can be expected to accelerate. When the
mortgage-backed securities held by a Fund are prepaid, the Fund must reinvest
the proceeds in securities, the yield of which reflects prevailing interest
rates, which may be lower than the yield on the prepaid securities. Thus,
mortgage-backed securities may not be an effective means of locking in long-term
interest rates for Balanced Fund.
International Growth Fund
In addition to market and fund risk, International Growth Fund is also subject
to currency risk. Currency risk is the risk that changes in foreign exchange
rates will affect, favorably or unfavorably, the value of foreign securities
held by the Fund. In a period when the U.S. dollar generally rises against
foreign currencies, the returns on foreign stocks for U.S. investors will
usually be diminished. By contrast, in a period when the U.S. dollar generally
declines, the returns on foreign stocks will usually be enhanced. In addition,
investments in foreign stock markets can be as volatile, if not more volatile,
than investments in U.S. markets.
Investors should also recognize that investing in foreign companies
involves certain special considerations which are not typically associated with
investing in U.S. companies. Since the stocks of foreign companies are
frequently denominated in foreign currencies, and since this Fund may
temporarily hold uninvested reserves in bank deposits in foreign currencies, its
portfolio will be affected favorably or unfavorably by changes in currency rates
and in exchange control regulations, and may incur costs in connection with
conversions between various currencies. The investment policies of International
Growth Fund permit it to enter into forward foreign currency exchange contracts
in order to hedge its holdings and commitments against changes in the level of
future currency rates. Such contracts involve an obligation to purchase or sell
a specific currency at a future date at a price set at the time of the contract.
In addition, as foreign companies are not generally subject to uniform
accounting, auditing, and financial reporting standards and practices comparable
to those applicable to domestic companies, there may be less publicly available
information about certain foreign companies than about domestic companies.
Securities of some foreign companies are generally less liquid and more volatile
than securities of comparable domestic companies. There is generally less
government supervision and regulation of stock exchanges, brokers, and listed
companies than in the U.S. In addition, with respect to certain foreign
countries, there is the possibility of expropriation or confiscatory taxation,
political or social instability, or diplomatic developments which could affect
U.S. investments in those countries.
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56 Investor Considerations
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/X/ COREFUND
Although International Growth Fund will endeavor to achieve the most
favorable execution costs in its portfolio transactions, fixed commissions on
many foreign stock exchanges are generally higher than negotiated commissions on
U.S. exchanges. Moreover, transactions executed on foreign exchanges may be
subject to longer settlement periods than transactions executed on U.S.
exchanges. In addition, it is expected that the expenses for custodial
arrangements of the Fund's foreign securities will be somewhat greater than
typical expenses for custodial arrangements for handling U.S. securities of
equal value.
Certain foreign governments levy withholding taxes against dividend and
interest income. Although in some countries a portion of these taxes are
recoverable, the non-recovered portion of foreign withholding taxes will reduce
the income received from the companies comprising International Growth Fund's
portfolio. However, these foreign withholding taxes are not expected to have a
significant impact since this Fund's investment objective is to seek long-term
capital appreciation and any income should be considered incidental.
International Growth Fund attempts to reduce international investment
risks by diversifying among as many foreign economies and currencies as
possible. This includes investments in both developed and selected emerging
markets. In addition, the International Growth Fund offers its shareholders the
ability to diversify their equity investments to reduce the risk of having such
investments affected solely by political and economic events in one country.
FIXED INCOME FUNDS
Securities held by the Fixed Income Funds may be subject to several types of
investment risk, including market risk, credit risk, and call risk. With respect
to these Funds, market risk (or interest rate risk) is the potential for a
decline in the price of fixed income securities due to rising interest rates.
Market risk will be greater for longer term securities than for shorter term
securities. Credit risk is the possibility that a bond issuer will be unable to
make timely payments of either principal or interest. Call risk (or income risk)
relates to corporate bonds during periods of falling interest rates, and
involves the possibility that securities with high interest rates will be
prepaid (or 'called') by the issuer prior to maturity. Such an event would
require a Fund to invest the resulting proceeds elsewhere, at generally lower
interest rates, which would cause fluctuations in the Fund's net income.
Short-Intermediate Bond Fund, Bond Fund and Short Term Income Fund may
also be exposed to event risk, the possibility that corporate fixed income
securities held by these Funds may suffer a substantial decline in credit
quality and market value due to a corporate restructuring. Corporate
restructurings (mergers, leveraged buyouts, takeovers or similar events) are
often financed by a significant expansion of corporate debt. As a result, the
credit quality and market value of a firm's existing debt securities may decline
significantly. While event risk may be high for certain corporate securities
held by these Funds, event risk in the aggregate should be low because of the
Funds' diversified holdings.
The Bond Fund, Short Term Income Fund and Government Income Fund may all
acquire mortgage-backed and asset-
----
Investor Considerations 57
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INFORMATION ON THE FUNDS (CONTINUED)
backed securities, and therefore, may be subject to the risks associated with
these securities, which are described above.
The concentration of investments in Pennsylvania Municipal Securities by
the Pennsylvania Municipal Bond Fund raises special investment considerations.
In particular, changes in the economic condition and governmental policies of
the Commonwealth of Pennsylvania and its municipalities could adversely affect
the value of the Fund and the portfolio securities held by it. Rising medical
assistance costs, a slow rate of economic recovery, increased costs of union
contracts, rising unemployment and the potential negative impact of pending
litigation may place increased pressures on the tax resources of the
Commonwealth and its municipalities. See 'Special Risk Factors-Pennsylvania
Municipal Securities' in the Statement of Additional Information for further
discussion of the risks associated with Pennsylvania Municipal Securities.
The concentration of investments in New Jersey Municipal Securities by the
New Jersey Municipal Bond Fund raises special investment considerations that are
discussed under the caption 'Special Risk Factors-New Jersey Municipal
Securities' in the Statement of Additional Information. In particular, changes
in economic conditions and governmental policies of the State of New Jersey and
its municipalities could adversely affect the value of the Fund and the
portfolio securities held by it.
Global Bond Fund is also subject to currency risk and other risks
associated with investing in the securities of foreign companies, as described
above with respect to International Growth Fund.
MONEY MARKET FUNDS
Securities held by Cash Reserve and Treasury Reserve may be subject, on a
limited basis, to credit risk. The credit risk of an investment portfolio is a
function of its underlying securities, and in general, securities of somewhat
lower credit quality provide correspondingly higher yields.
Securities held by Tax-Free Reserve may be subject, on a limited basis, to
several types of investment risk, including market risk (or interest rate risk),
credit risk and call risk (or income risk).
/X/
DISTRIBUTIONS
Shareholders of each Fund are entitled to dividends and distributions arising
from the net investment income and capital gains, if any, earned on investments
held by such Fund. Class Y Shares of the Money Market Funds begin earning
dividends on the business day on which the purchase order for the shares is
executed and continue to earn dividends through, and including, the day before
the redemption order for such shares is executed. Class Y Shares of the Fixed
Income Funds begin earning dividends on the business day following the day on
which the purchase order for the shares is executed and continue to earn
dividends through, and including, the day on which the redemption order for such
shares is executed.
Dividends are paid in the form of additional Class Y Shares of a Fund
unless a shareholder selects one of the following options on the Account
Application Form: Cash Dividend Option-to receive dividends in cash and capital
gains distributions in additional shares of the Fund at net asset value; All
Cash Option-to receive both dividends and capital gains distributions in cash.
In the absence of either of these selections on the Account Application Form,
each purchase of shares is made upon the condition and understanding that the
Fund's agent is automatically appointed to receive the dividends and
distributions upon all shares in
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58 Distributions
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/X/ COREFUND
the shareholder's account and to reinvest them in full and fractional shares of
the Fund at the net asset value in effect at the close of business on the
reinvestment date. Dividends and distributions are automatically paid in cash
(along with any redemption proceeds) not later than seven business days after a
shareholder closes an account with the Fund.
The dividends from Class Y Shares are normally higher than those of Class
A or Class C Shares because of the distribution and incremental transfer agent
expenses charged to Class A or Class C Shares.
The Funds maintain different dividend and capital gain distributions
policies. These are:
EQUITY FUNDS
Growth Equity Fund
Core Equity Fund
Special Equity Fund
Equity Index Fund
Balanced Fund
Dividends from the net investment income of each of these Funds are declared and
paid to shareholders on a quarterly basis. Distributions of any capital gains
will be made at least annually.
International Growth Fund
The net investment income of this Fund is periodically declared and paid as a
dividend. Distributions of any capital gains will be made at least annually.
FIXED INCOME FUNDS
MONEY MARKET FUNDS
The net investment income of each of these Funds except Global Bond Fund is
declared daily as a dividend to its shareholders and paid monthly. Global Bond
Fund will distribute its net investment income in the form of quarterly
dividends. Capital gains distributions, if any, will be made by the Fixed Income
Funds and Money Market Funds at least annually.
If any capital gains are realized from the sale of underlying securities,
the Funds normally distribute such gains with the last dividend for the calendar
year.
In all Funds except the Money Market Funds, undistributed net investment
income is included in the Fund's net assets for the purpose of calculating net
asset value per share. Therefore, on the 'ex-dividend' date, the net asset value
per share excludes the dividend (i.e., is reduced by the per share amount of the
dividend). Dividends paid shortly after the purchase of shares by an investor,
although in effect a return of capital, are taxable as ordinary income.
/X/
TAXES
The following is only a brief summary of some of the important tax
considerations generally affecting the Funds and their shareholders. No attempt
has been made to present a detailed explanation of the federal, state or local
income tax treatment of the Funds or their shareholders, and this discussion is
not intended as a substitute for careful tax planning. Potential investors in
the Funds are urged to consult their tax advisers with specific reference to
their own tax situations.
The following summary is based on current tax laws and regulations which
may be changed by legislative, judicial or administrative action.
ALL FUNDS
Each Fund is treated as a separate entity for federal income tax purposes and is
not combined with any of CoreFunds' other portfolios. Each Fund intends to
qualify for
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Taxes 59
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INFORMATION ON THE FUNDS (CONTINUED)
the favorable tax treatment afforded a 'regulated investment company' under the
Code. This requires, among other things, that a Fund distribute to its
shareholders at least 90% of its net investment income. Provided a Fund meets
this 90% distribution and other requirements, it will be relieved of federal
income tax on that part of its net investment income and any net capital gains
(the excess of net long-term capital gain over net short-term capital loss)
distributed to shareholders.
Whether paid in cash or in additional shares, dividends attributable to a
Fund's net investment income (including ordinary income and net short-term
capital gains), including any dividends attributable to taxable net investment
income of Tax-Free Reserve or Intermediate Municipal Bond Fund, will be taxable
to shareholders as ordinary income. Capital gains distributions of all Funds
will be taxable as long-term capital gain, regardless of how long a shareholder
has held shares.
Dividends declared by a Fund in October, November, or December of any year
and payable to shareholders of record on a date in such a month will be deemed
to have been paid by the Fund and received by the shareholders on December 31 of
that year, if paid by the Fund during the following January.
INTERNATIONAL GROWTH FUND
GLOBAL BOND FUND
International Growth Fund and Global Bond Fund will receive dividends and
interest paid by foreign issuers which are frequently subject to withholding
taxes by foreign governments. Provided that more than 50% of the value of the
total assets of either International Growth Fund or Global Bond Fund at the
close of any taxable year consists of equity or debt securities of foreign
corporations, such Fund may elect (for U.S. federal income tax purposes) to
treat each shareholder as having additional income equal to a proportionate
amount of such foreign taxes paid by the Fund and as having directly paid such
foreign taxes. In addition, if a Fund makes such an election, shareholders will
be treated as having directly earned a portion of the Fund's gross income from
foreign sources. The Fund will make such an election only if it deems it to be
in the best interests of its shareholders and will notify shareholders
accordingly.
TAX-FREE RESERVE
INTERMEDIATE MUNICIPAL BOND FUND
PENNSYLVANIA MUNICIPAL BOND FUND
NEW JERSEY MUNICIPAL BOND FUND
Each of these Funds expects to qualify to pay exempt-interest dividends to its
shareholders by satisfying the Code's requirement that at the close of each
quarter of its taxable year, at least 50% of the value of its total assets
consists of obligations the interest on which is exempt from regular federal
income tax. Tax-exempt interest dividends may generally be treated by such
Fund's shareholders as items of income excludible from their gross income under
the Code unless, under the circumstances applicable to the particular
shareholder, exclusion would be disallowed. Exempt-interest dividends may also
have certain collateral federal income tax consequences, including Alternative
Minimum Tax consequences.
Current federal tax law limits the types and volume of bonds qualifying
for the federal income tax exemption of interest, which may have an effect on
the ability of these Funds to purchase sufficient amounts of tax-exempt
securities to satisfy the Code's requirements for the payment of
'exempt-interest' dividends.
Interest on indebtedness incurred or continued by a shareholder in order
to
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60 Taxes
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/X/ COREFUND
purchase or carry shares of these Funds is not deductible for federal income tax
purposes. Furthermore, these Funds may not be an appropriate investment for
persons (including corporations and other business entities) who are
'substantial users' (or persons related to 'substantial users') of facilities
financed by industrial development or private activity bonds. Such persons
should consult their tax advisers before purchasing shares. A 'substantial user'
is defined generally to include 'certain persons' who regularly use in their
trade or business a part of a facility financed from the proceeds of such bonds.
Except as noted below, tax-exempt interest dividends and other
distributions paid by these Funds may be taxable to investors as dividend income
under state or local law even though a substantial portion of such distributions
may be derived from interest on tax-exempt obligations which, if received
directly, would be exempt from such income taxes.
CASH RESERVE
TREASURY RESERVE
TAX-FREE RESERVE
With respect to investments in STRIPS and Receipts which are sold at original
issue discount and thus do not make periodic cash interest payments, a Fund will
be required to include as part of its current income the imputed interest on
such obligations even though the Fund has not received any interest payments on
such obligations during that period. Because each Fund distributes all of its
net investment income to its shareholders, a Fund may have to sell portfolio
securities to distribute such imputed income, which may occur at a time when the
investment adviser would not have chosen to sell such securities and which may
result in a taxable gain or loss.
PENNSYLVANIA TAX CONSIDERATIONS
For purposes of the Pennsylvania Personal Income Tax and the Philadelphia School
District Investment Net Income Tax, distributions which are attributable to
interest received by the Pennsylvania Municipal Bond Fund from its investments
in Pennsylvania Municipal Securities or in direct obligations of the United
States, its territories and certain of its agencies and instrumentalities
('Federal Securities'), including obligations issued by U.S. possessions, are
not taxable. Distributions by the Fund to a Pennsylvania resident that are
attributable to most other sources may be subject to the Pennsylvania Personal
Income Tax and (for residents of Philadelphia) to the Philadelphia School
District Investment Net Income Tax.
Shares of the Pennsylvania Municipal Bond Fund are exempt from
Pennsylvania county personal property taxes to the extent that the Fund's
portfolio consists of Pennsylvania Municipal Securities and Federal Securities,
including obligations issued by U.S. possessions.
To the extent that gain on the disposition of a share represents gain
realized on Pennsylvania Municipal Securities held by the Pennsylvania Municipal
Bond Fund, such gain may be subject to the Pennsylvania Personal Income Tax and
the School District Tax, except that gain realized with respect to a share held
for more than six months is not subject to the School District Tax.
NEW JERSEY TAX CONSIDERATIONS
Investors of the New Jersey Municipal Bond Fund will not be subject to the New
Jersey Gross Income Tax on distributions from the
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Taxes 61
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INFORMATION ON THE FUNDS (CONTINUED)
Fund attributable to interest income from (and net gain, if any, from the
disposition of) New Jersey Municipal Securities or Federal Securities held by
the Fund, either when received by the Fund or when credited or distributed to
the investors, provided that the Fund meets the requirements for a qualified
investment fund by: (i) maintaining its registration as a registered investment
company; (ii) investing at least 80% of the aggregate principal amount of the
Fund's investments, excluding cash and cash items, in New Jersey Municipal
Securities or Federal Securities; and (iii) investing 100% of its assets in
interest-bearing obligations, discount obligations, and cash, including
receivables.
For New Jersey Gross Income Tax purposes, net income or gains and
distributions derived from investments in other than New Jersey Municipal
Securities and Federal Securities, and distributions from net realized capital
gains in respect of such investments, will be taxable.
Gain on the disposition of shares of this Fund is not subject to New
Jersey Gross Income Tax, provided that the Fund meets the requirements for a
qualified investment fund set forth above.
BACK-UP WITHHOLDING
Generally, the Funds are required to withhold 31% of ordinary income dividends,
capital gains distributions, and redemptions paid to shareholders who have not
complied with IRS taxpayer identification regulations and in certain other
circumstances. Shareholders who are not otherwise subject to back-up withholding
may avoid this withholding requirement by certifying on the Account Application
Form their proper Social Security or Taxpayer Identification Number and
certifying that they are not subject to back-up withholding.
IN GENERAL
The sale or redemption of shares of a mutual fund is a taxable event to the
selling or redeeming shareholder. Gains or losses (if any) may also be realized
from an ordinary redemption of shares, as described herein, or on a telephone
exchange among the CoreFunds portfolios.
In the opinion of counsel, shares of the Funds are exempt from current
Pennsylvania Personal Property Taxes.
Shareholders will be advised at least annually as to the federal income
tax status of distributions made during the year. See the Statement of
Additional Information for further information regarding taxes.
/X/
VALUATION OF SHARES
NET ASSET VALUE ________________________________________________________________
EQUITY FUNDS
FIXED INCOME FUNDS
The shares of these Funds will fluctuate in value as a result of changes in the
value of their portfolio investments. Shares in the Funds will realize capital
gains or losses as portfolio investments are sold above or below costs,
respectively.
The net asset value per share of these Funds for purposes of pricing
purchase and redemption orders is normally determined as of 4:00 p.m. (Eastern
time) (the 'valuation time') on each business day of the Funds. A 'business day'
of a Fund is a day on which the New York Stock Exchange is open for trading, and
any other day (other than a day on which no shares of the Fund are tendered for
redemption and no order to purchase any shares is received) during which there
is a sufficient degree of trading in securities or instruments held by the Fund
such that the
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62 Valuation of Shares
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/X/ COREFUND
Fund's net asset value per share might be materially affected. Net asset value
per share is calculated by dividing the value of all of the Fund's portfolio
securities and other assets, less liabilities, by the number of outstanding
shares of the Fund at the time of the valuation. The result (adjusted to the
nearest cent) is the net asset value per share.
MONEY MARKET FUNDS The net asset value per share of each of these Funds for
purposes of pricing purchase and redemption orders is normally determined as of
12:00 noon (Eastern time) on each business day of the Funds. These Funds are
managed to maintain a stable price per share of $1.00.
PORTFOLIO PRICING ______________________________________________________________
Portfolio securities which are traded both over-the-counter and on a national
securities exchange are valued according to the broadest and most representative
market. When securities exchange valuations are used, the valuation will be the
latest sale price on such exchange on such business day or, if there is no such
reported sale, the current bid price. Other assets and securities for which no
quotations are readily available will be valued in a manner determined in good
faith by the Board of Directors to reflect their fair market value.
INTERNATIONAL GROWTH FUND
GLOBAL BOND FUND
Securities listed on a foreign exchange are valued at the most recent closing
price available before the time when assets are valued. All prices of listed
securities are taken from the exchange where the security is primarily traded.
Securities regularly traded in the over-the-counter market for which market
quotations are readily available will be valued at the current bid price.
Securities may be valued on the basis of prices provided by a pricing service
when such prices are believed to reflect the fair market value of such
securities. Other assets and securities for which no quotations are readily
available will be valued in a manner determined in good faith by the Board of
Directors to reflect their fair market value.
FIXED INCOME FUNDS Portfolio securities which are traded both over-the-counter
and on a national securities exchange are valued according to the broadest and
most representative market, and it is expected that for bonds, and other fixed
income securities, this would ordinarily be the over-the-counter market.
Valuation of such securities is the currently quoted bid price on each business
day. When securities exchange valuations are used, the valuation will be the
latest sale price on such exchange on such business day or, if there is no such
reported sale, the current bid price. Short-term investments (if any) are stated
at cost, which approximates market value. Other assets and securities for which
no quotations are readily available will be valued in a manner determined in
good faith by the Board of Directors to reflect their fair market value.
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Valuation of Shares 63
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INFORMATION ON THE FUNDS (CONTINUED)
Bonds and other fixed income securities may be valued on the basis of
prices provided by a pricing service when such prices are believed to reflect
the fair market value of such securities. The prices provided by a pricing
service take into account a variety of factors in determining fair market value.
Even though the market prices of intermediate-term, fixed income
securities tend to be relatively stable, the prices of such securities vary
inversely with changes in interest rates and are therefore subject to market
price fluctuations. The longer maturity a bond has, the greater the potential
for fluctuations in prices.
MONEY MARKET FUNDS The assets in the Money Market Funds are valued based upon
the amortized cost method, pursuant to rules promulgated under the Investment
Company Act. Under this method of valuation, the value of a Fund's shares
normally will not change in response to fluctuating interest rates. In
connection with its use of this valuation method, however, each Fund monitors
the deviation between the amortized cost value of its assets and their market
value (which can be expected to vary inversely with changes in prevailing
interest rates). Although each Fund seeks, through its use of amortized cost
valuation, to maintain its net asset value per share at $1.00, there can be no
assurance that the net asset value will not vary.
/X/
MANAGEMENT
The business and affairs of each Fund are managed under the direction of
CoreFunds' Board of Directors.
INVESTMENT ADVISER,
SUB-ADVISERS ___________________________________________________________________
CoreStates Advisers has overall responsibility for portfolio management for each
of the Funds. CoreStates Advisers is a wholly-owned subsidiary of CoreStates
Bank, itself a wholly-owned subsidiary of CoreStates Corp. CoreStates Corp,
based in Philadelphia, Pennsylvania, is one of the 20 largest bank holding
companies in the United States, and leads the region in investing corporate
cash. CoreStates Corp currently has over $45 billion in assets and discretionary
management over $30 billion in customer accounts through a variety of banking
activities at over 600 domestic and foreign locations.
CoreStates Advisers is an adviser registered under the Investment Advisers
Act of 1940. It performs most investment management and advisory functions for
the trust departments of CoreStates Corp's banking subsidiaries, related
investment advisory, research, trading, and fund management functions, and also
provides similar services to customers unrelated to CoreStates Corp. CoreStates
Advisers currently manages discretionary and nondiscretionary client security
portfolios with a total aggregate market value of over $16 billion, for
individuals, corporations, institutions, and municipalities. As a result of the
merger of CoreStates Corp and Meridian Bancorp, Inc. In April 1996, Meridian
Investment Company ('MIC') is now a wholly-owned subsidiary of CoreStates Corp
and an affiliate of Corestates Advisers. Certain employees of MIC perform
investment management and advisory functions for the Funds under the overall
authority of CoreStates Advisers. CoreStates Advisers has extensive experience
in the management of money market, tax-free, fixed income, equity, and
international investments.
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64 Management
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/X/ COREFUND
CoreStates Advisers has principal offices at 1500 Market Street, P.O. Box 7558,
Philadelphia, PA 19102.
As investment adviser, CoreStates Advisers manages the investment
portfolio of each Fund, makes decisions with respect to and places orders for
all purchases and sales of a Fund's portfolio securities, and maintains certain
records relating to such purchases and sales. CoreStates Advisers pays all
expenses incurred by it in connection with its investment advisory activities,
other than the cost of securities (including any brokerage commissions)
purchased for the Funds and the cost of obtaining market quotations for
portfolio securities held by the Funds.
CoreStates Advisers has delegated some of its portfolio management
functions with respect to the International Growth Fund to Martin Currie and
Aberdeen Managers and with respect to Global Bond Fund to Analytic pursuant to
separate Sub-Advisory Agreements between CoreStates Advisers and each of Martin
Currie, Aberdeen Managers and Analytic.
Martin Currie, Inc., a New York corporation located in Edinburgh,
Scotland, is a wholly-owned subsidiary of Martin Currie, Ltd., which is owned
principally by its full-time working executives. Founded in 1881, Martin Currie
is one of Scotland's largest independent investment management groups. Martin
Currie, Inc. was set up in order to provide foreign investment advisory services
to U.S. taxable and tax exempt funds seeking diversification into international
markets. Although Martin Currie has had extensive experience in managing a
variety of international equity investment companies, International Growth Fund
was the first U.S. registered investment company for which Martin Currie has
acted in an investment advisory capacity. Martin Currie has principal offices at
Saltire Court, 20 Castle Terrace, Edinburgh EH 2ES, Scotland.
Aberdeen Managers, a Delaware corporation located in Ft. Lauderdale,
Florida, is wholly owned by Aberdeen Trust PLC, a publicly held U.K. based
corporation. A subsidiary of CoreStates Financial Corp. owns approximately 14%
of Aberdeen Trust. Aberdeen Trust was formed in 1876 and has been managing
investment funds since 1986. It formed Aberdeen Managers in 1995 and it provides
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 33394.
Analytic is a specialist manager of fixed income securities and cash for
institutional investors. Alpha Global Fixed Income Managers, Inc. ('Alpha
Global'), the predecessor investment sub-adviser to the Global Bond Fund,
recently changed its name to AnalyticoTSA International, Inc. and is in the
process of merging with AnalyticoTSA Global Asset Management, Inc. Alpha Global,
based in London, England and Analytic, whose combined assets under management
currently exceed $2.4 billion are wholly-owned subsidiaries of United Asset
Management Corporation of Boston, Massachusetts whose total assets under
management exceed $160 billion. Analytic is a member of the Investment
Management Regulatory Organization, one of the regulatory bodies approved by the
U.K. Government, and its activities are regulated accordingly. Analytic is
located at 25/28
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Management 65
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INFORMATION ON THE FUNDS (CONTINUED)
Old Burlington Street, London WIX 1LB, England.
As sub-advisers to International Growth Fund and Global Bond Fund, Martin
Currie and Aberdeen Managers, and Analytic manage the investment portfolio of
their respective Funds, make decisions with respect to and place orders for the
majority of the purchases and sales of such Fund's portfolio securities, and
maintain certain records relating to such purchases and sales. Martin Currie and
Aberdeen Managers, and Analytic pay all expenses incurred by them in connection
with their sub-advisory activities, other than the cost of securities (including
any brokerage commissions) purchased for a Fund and the cost of obtaining market
quotations for portfolio securities held by a Fund.
ADVISORY FEES
For the services provided and expenses assumed as investment adviser of each
Fund, CoreStates Advisers is entitled to receive an annual fee from each of the
Funds, computed daily and paid monthly, at the annual rate of .40% of the
average daily net assets of Equity Index Fund; .74% of the average daily net
assets of Equity Fund; .75% of the average daily net assets of Growth Equity
Fund; .80% of the average daily net assets of International Growth Fund; 1.50%
of the average daily net assets of Special Equity Fund; .70% of the average
daily net assets of Balanced Fund; .74% of the average daily net assets of the
Bond Fund and the Short Term Income Fund, respectively; .60% of the average
daily net assets of Global Bond Fund; .50% of the average daily net assets of
Short-Intermediate Bond Fund, Intermediate Municipal Bond Fund, Government
Income Fund, Pennsylvania Municipal Bond Fund and New Jersey Municipal Bond
Fund, respectively; and .40% of the average daily net asset of Treasury Reserve,
Cash Reserve, and Tax-Free Reserve, respectively. CoreStates Advisers may, from
time to time and at its discretion, voluntarily waive all or a portion of its
investment advisory fees in order to assist the Funds in maintaining competitive
expense ratios.
For the services provided as sub-advisers to the International Growth
Fund, Martin Currie and Aberdeen Managers are each entitled to receive a fee
from CoreStates Advisers, computed daily and paid monthly, at the annual rate of
.50% and .375%, respectively, of such portion of the Fund's assets managed. For
the services provided as Global Bond Fund's sub-adviser, Analytic is entitled to
receive a fee from CoreStates Advisers, computed daily and paid monthly, at the
annual rate of .30% of such Fund's average net assets.
FUND MANAGERS __________________________________________________________________
The following individuals are primarily responsible for managing the investment
portfolios of the Funds:
GROWTH EQUITY FUND Timothy R. Stives is a Senior Managing Director of CoreStates
Advisers and manages the Growth Equity Fund. Prior to joining CoreStates
Advisers, Mr. Stives was Vice President of Chancellor Capital Management. Prior
to joining Chancellor, he was a securities analyst and portfolio manager with
CitiCorp. Mr. Stives has been managing growth stock portfolios, including
corporate and public pension fund portfolios, since 1988. Mr. Stives holds an
M.B.A from Rutgers University and a B.A. from Pennsylvania State University.
CORE EQUITY AND SPECIAL EQUITY FUNDS Joseph E. Stocke, CFA, is a Senior Managing
Director of CoreStates Advisers and manages the Core Equity and Special Equity
Funds. He
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66 Management
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/X/ COREFUND
is also a Senior Investment Manager/Equities with Meridian Investment Company,
an affiliate of CoreStates Advisers, for which he has been since 1983. Mr.
Stocke began his investment career in 1982 and obtained his B.S. in Economics
attending The Wharton School, and University of Pennsylvania and completed
graduate courses at New York University. Mr. Stocke has been part of Meridian's
Equity Unit Committee overseeing the Equity Fund and the Special Equity Fund
since their inception.
EQUITY INDEX FUND Lary Aasheim, C.F.A., a Vice President of CoreStates Advisers,
is portfolio manager of Equity Index Fund. In addition, he is a securities
analyst with responsibility for the technology and telecommunications equipment
industries, paper, forest products and building material industries. Prior to
joining CoreStates Advisers in 1990, Mr. Aasheim worked as an analyst at First
Fidelity Bank/Fidelity Bank, First Pennsylvania Bank and Bear Stearns in New
York. He received his B.S. degree in Economics from The Wharton School,
University of Pennsylvania. He also has earned his CFA from the Institute of
Chartered Financial Analysts.
INTERNATIONAL GROWTH FUND Michael J. Gibson, a Vice President of Martin
Currie, is the lead director of an investment team responsible for managing
International Growth Fund. Mr. Gibson has 24 years experience of portfolio
investment in international stock markets. A graduate of the University of
Oxford, England, he spent seven years as an investment manager with British
Investment Trust in Edinburgh and a further four years with The Bank of Scotland
in the same capacity. He joined Martin Currie in 1983 where he worked initially
in the North American investment team and was then made responsible for the
firm's investments in Continental Europe. Following three years in that client
services team, he joined the North American team in 1996. He is also a member of
Martin Currie's global asset allocation committee.
Bev Hendry, Chief Executive Officer of Aberdeen Fund Managers Inc., is the
lead director of an investment team responsible for managing the International
Growth Fund. A graduate of the University of Aberdeen he qualified as a
chartered accountant before joining Aberdeen Trust in 1987. He was responsible
for starting up their mutual fund division which now has over $1.3 billion under
management and was appointed a director of the parent company in 1991. Aberdeen
now manages over $6 billion of funds and has offices in London, Singapore and
Fort Lauderdale in addition to their headquarters in Scotland.
BALANCED FUND Steve Dalton, a Vice President of CoreStates Advisers, is
portfolio manager of the Balanced Fund. Mr. Dalton has been a senior portfolio
manager of balanced portfolios since 1986 and a member of the Equity Policy
Committee since 1990. Since 1988 he has been responsible for management of
CoreStates' oldest commingled trust, the CoreStates Balanced Trust. In addition,
Mr. Dalton has managed balanced portfolios for employee benefit customers for
the last seven years, and has been a securities analyst responsible for coverage
of the health care, pharmaceutical, entertainment and broadcasting industries
since joining CoreStates in 1984. Prior to that, he was employed by Girard Bank
as a security analyst. He received a B.S. degree in Psychology from Cornell.
SHORT-INTERMEDIATE BOND FUND Craig A. Moyer, CFA, a Senior Managing Director of
CoreStates Advisers, is portfolio manager of
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Management 67
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INFORMATION ON THE FUNDS (CONTINUED)
the Short-Intermediate Bond Fund. Mr. Moyer is also a Senior Investment
Manager/Fixed Income with Meridian Investment Company, an affiliate of
CoreStates Advisers, for which he has been since 1977. He began his investment
career in 1974 and obtained his B.A. from Pennsylvania State University.
GOVERNMENT INCOME FUND William T. Lawrence, a Vice President of CoreStates
Advisers, is portfolio manager for the Government Income Fund. Mr. Lawrence is
also involved in specialized fixed income products including GIC and Mortgage
Backed Securities. Prior to joining CoreStates Advisers, he was Vice President,
Fixed Income Sales for First Boston Corp. He has an M.B.A. in Finance from the
Wharton School and a B.A. in Economics and English from Bucknell University.
BOND FUND Leslie M. Varrelman is a Vice President of CoreStates Advisers. She is
also Vice President and Fixed Income Manager with Meridian Investment Company,
an affiliate of CoreStates Advisers for which she has been since January 1994.
Prior to her position with Meridian, Ms. Varrelman was Vice President of
CoreStates Advisers where she managed the commingled fixed income funds and
managed the Limited Maturity Products area. Ms. Varrelman obtained her B.S. in
Business Administration from Juniata College in 1981. Ms. Varrelman is directly
responsible for management of the Bond Fund.
SHORT TERM INCOME FUND Cathy L. Rahab is an Assistant Vice President of
CoreStates Advisers. She is also an Assistant Vice President and Portfolio
Manager with Meridian Investment Company. Ms. Rahab began her investment career
in 1986 and obtained her B.S. in Business Administration from Villanova
University. Ms. Rahab joined the Fixed Income Unit in July of 1994. Ms. Rahab is
directly responsible for management of the Short Term Income Fund.
INTERMEDIATE MUNICIPAL BOND FUND
PENNSYLVANIA MUNICIPAL BOND FUND
NEW JERSEY MUNICIPAL BOND FUND
Joseph R. Baxter manages these Funds. Mr. Baxter, a Vice President of CoreStates
Advisers, is head of the Tax-Advantaged unit at CoreStates Advisers. He is
directly responsible for management of the CoreStates Pennsylvania Tax Exempt
Common Trust Fund. Mr. Baxter graduated from LaSalle University with a Bachelor
of Science Degree majoring in Finance and Marketing. In June 1980, he joined a
stock brokerage firm, Elkins & Co., in an operations capacity and came to
Philadelphia National Bank in May 1982 as an operations supervisor. In October
1984, he joined the Investment Management Division as a corporate cash manager
and in 1986 assumed responsibility for the tax exempt common trust funds.
GLOBAL BOND FUND George McNeill, Managing Director of Analytic, is portfolio
manager for Global Bond Fund. Together with United Asset Management Corporation
of Boston, Mr. McNeill founded Alpha Global which has merged with Analytic and
has overall responsibility for its operations. After graduating from Edinburgh
University with degrees in Political Economy and Economic History, he joined the
investment department of Scottish Equitable Life Assurance Society. He then
joined Wallace Brothers Bank where he spent nine years, including seven years as
a Director with principal responsibility for the bank's fixed income
investments. Since 1977, he has worked as Managing Director of the investment
management operating company of Gillett Brothers, and for eight years as
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68 Management
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/X/ COREFUND
Managing Director of Reserve Asset Managers, a specialist fixed income manager.
In 1989 Mr. McNeill joined Axe-Houghton, Ltd., the London subsidiary of USF&G
Corporation, as Director and Chairman of the Investment Strategy Committee.
CASH RESERVE John Ackler, Investment Officer, is responsible for the management
of Cash Reserve. He is also responsible for the management of the CoreStates
Liquidity Fund as well as numerous individually managed fixed income funds. In
1992, Mr. Ackler joined CoreStates as an internal auditor and transferred to
CoreStates Advisers in August of 1993. He graduated Summa Cum Laude from the
Philadelphia College of Textiles and Sciences with a B.S. in Finance and
Economics, and is currently an M.B.A. candidate at Lehigh University.
TREASURY RESERVE Ronald R. Brasten, a Senior Investment Officer of CoreStates
Advisers, manages Treasury Reserve. He also manages the CoreFund Fiduciary
Treasury Reserve and has investment responsibility for individually managed
corporate and personal accounts. After receiving his B.S. in Accounting from
Drexel University, Mr. Brasten joined the Financial Division of CoreStates in
1984. In 1986, he transferred to the Asset and Liability group as an ALCO
analyst. Mr. Brasten joined CoreStates Advisers in August 1989.
TAX-FREE RESERVE Folu Abiona, Senior Investment Officer, is portfolio manager of
the Tax-Free Reserve portfolio. Ms. Abiona also manages the Fiduciary Tax-Free
Reserve portfolio. She joined CoreStates Advisers in 1985 and became fixed
income portfolio manager in 1990. Prior to that, she was a mutual fund
administrator with CoreStates' Institutional Custody Division. She holds an
M.B.A. from Temple University and B.Sc. from the University of Ife, Nigeria.
ADMINISTRATOR __________________________________________________________________
SEI Fund Resources ('SFR' or the 'Administrator'), with principal offices at 680
East Swedesford Road, Wayne, PA 19087, acts as each Fund's administrator. For
its administrative services, SFR is entitled to receive a fee from each Fund,
computed daily and paid monthly, at the annual rate of .25% of such Fund's
average daily net assets. As Administrator, SFR generally assists in the Funds'
administration and operations. Boston Financial Data Services ('BFDS'), a
subsidiary of State Street Bank and Trust Company located at 225 Franklin
Street, Boston, MA 02110, serves as each Fund's transfer agent (the 'Transfer
Agent') and dividend paying agent.
DISTRIBUTOR ____________________________________________________________________
SEI Financial Services Company ('SFS' or the 'Distributor'), with principal
offices at 680 East Swedesford Road, Wayne, PA 19087, serves as each Fund's
distributor pursuant to a Distribution Agreement which applies to Class Y, Class
A and Class C Shares. Class A and Class C Shares are also subject to a separate
distribution plan (the 'Distribution Plan') approved by the Board of Directors
on April 13, 1992. The Distribution Plan provides that CoreFunds will pay the
Distributor an annual fee, calculated on an average daily net basis and paid
monthly, of up to .25% of the average daily net assets of Class A or Class C
Shares of each Fund. The Distributor may use this fee as compensation for its
distribution-
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Management 69
<PAGE>
- --------------------------------------------------------------------------------
INFORMATION ON THE FUNDS (CONTINUED)
related services or to compensate Participating Broker/Dealers and Shareholder
Servicing Agents for performing distribution-related or shareholder services.
The services provided by Participating Broker/Dealers or Shareholder
Servicing Agents may include establishing and maintaining customer accounts and
records; aggregating and processing purchase and redemption requests from
customers and placing net purchase and redemption orders with the Distributor;
automatically investing customer account cash balances; providing periodic
statements to customers; arranging for bank wires; answering routine customer
inquiries concerning their investments; assisting customers in changing dividend
options, account designations and addresses; performing sub-accounting
functions; processing dividend payments on behalf of customers; forwarding
certain shareholder communications from the Funds to customers; and providing
other similar services.
Persons selling Class A or Class C Shares will receive different
compensation with respect to Class A or Class C Shares than Class Y Shares.
EXPENSES CoreFunds allocates expenses attributable to each Fund in compliance
with Rule 18f-3 under the Investment Company Act. The Funds' expenses are
accrued daily and are deducted from total income before dividends are paid.
Except as noted herein and in the Statement of Additional Information, the
Funds' service contractors bear all expenses incurred in connection with the
performance of their services on behalf of the Funds. Similarly, the Funds bear
the expenses incurred in their operations.
GLASS-STEAGALL ACT CoreStates Corp and its banking subsidiaries are permitted to
perform the services contemplated by the investment advisory agreements with the
Funds and to engage in certain activities in connection with the investment of
their customer accounts in Class Y or Class A Shares of the Funds without
violating the federal banking law commonly referred to as the Glass-Steagall
Act, or other applicable banking laws or regulations. Future changes to any of
these laws or regulations or administrative or judicial interpretations of such
laws or regulations, however, could prevent or restrict CoreStates Corp (and its
banking subsidiaries) from performing such services. If CoreStates Advisers was
thereby prohibited from serving as investment adviser to the Funds, the Board of
Directors would promptly seek to retain another qualified investment adviser for
the Funds.
In addition, certain state securities laws may require banks and other
institutional investors purchasing shares on behalf of their customers in such
states to register as dealers pursuant to state law.
/X/
PERFORMANCE
INFORMATION
TOTAL RETURN AND YIELD _________________________________________________________
From time to time, in advertisements or reports to shareholders, the performance
of the Funds may be quoted and compared to that of other mutual funds with
similar investment objectives and to relevant indices.
The Funds may calculate their performance on a total return basis for
various periods. The total return basis combines principal changes, income
dividends, and capital gains distributions paid during the period. Principal
changes are based on the difference between the beginning and closing net asset
values for the period and assume reinvestment of income dividends and capital
gains distributions paid during the period. The Funds may calculate their
performance for
- ----
70 Performance Information
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
periods since commencement of operations and for calendar or fiscal year periods
(including multiple years). See 'Total Return' in the Statement of Additional
Information.
FIXED INCOME FUNDS
MONEY MARKET FUNDS
In addition to quoting total return, the Fixed Income Funds and Money Market
Funds may advertise 'yield' and 'effective yield.' Both yield figures are based
on historical earnings and are not intended to indicate future performance. The
'yield' of a Fund refers to the income generated by an investment in the Fund
over a 30-day period (which period will be stated in the advertisement). This
income is then 'annualized.' That is, the amount of income generated by the
investment during that month is assumed to be generated each month over a
12-month period and is shown as a percentage of the investment. The 'effective
yield' is calculated similarly but, when annualized, the income earned by an
investment in the Fund is assumed to be reinvested. The 'effective yield' will
be slightly higher than the 'yield' because of the compounding effect of this
assumed reinvestment. See 'Yields' in the Statement of Additional Information.
Intermediate Municipal Bond Fund, Pennsylvania Municipal Bond Fund, New
Jersey Municipal Bond Fund and Tax-Free Reserve may also advertise their
'taxable equivalent yield,' which is calculated by taking into account the
investor's current tax bracket. This is the yield an investor would need to earn
from a taxable investment in order to realize an 'after-tax' benefit equal to
the tax-free yield provided by the Fund.
IN GENERAL _____________________________________________________________________
With the exception of Equity Index Fund, the Funds will include performance data
for Class Y and Class A or Class C, as appropriate, in any advertisement or
information including performance data of the Funds. Total return and
performance data concerning Class A Shares will reflect the sales charge and
distribution and incremental transfer agent expenses borne exclusively by Class
A Shares. Total return and performance data concerning Class C Shares will
reflect the distribution and incremental of transfer agent expenses borne
exclusively by Class C Shares.
The performance of any investment will generally reflect market conditions,
portfolio quality and maturity, type of investment, and operating expenses. Each
Fund's performance will fluctuate and is not necessarily representative of
future results. A Fund's performance would be favorably affected by any
investment advisory fee waivers on the part of CoreStates Advisers. Shareholders
will receive unaudited semi-annual reports describing the Funds' investment
operations and annual financial statements audited by independent auditors.
EXPENSE RATIOS OF INTERNATIONAL GROWTH FUND AND GLOBAL BOND FUND Investors
should understand that the expense ratios of International Growth Fund and
Global Bond Fund can be expected to be higher than the expense ratios of funds
that invest only in domestic securities, since the cost of maintaining the
custody of foreign securities and the rate of advisory fees relating to foreign
portfolios are generally higher.
----
Performance Information 71
<PAGE>
- --------------------------------------------------------------------------------
INFORMATION ON THE FUNDS (CONTINUED)
/X/
HOW TO
PURCHASE
AND REDEEM
SHARES
PURCHASE OF SHARES _____________________________________________________________
Shares of the Funds are sold on a continuous basis by the Distributor with
principal offices located at 680 East Swedesford Road, Wayne, Pennsylvania
19087. Shares may also be purchased through CoreStates Securities Corp.
Institutional investors may acquire Class Y Shares of a Fund for their own
account or as a record owner on behalf of fiduciary, agency, or custody accounts
by placing orders with the Distributor. Purchases may be made on any business
day of the Fund at the net asset value per share (see 'Valuation of Shares')
next determined after receipt by the Fund of an order to purchase shares. Shares
of the Funds are offered only to residents of states in which the shares are
eligible for purchase.
An order received before the valuation time on any business day will be
executed on the date of receipt at the net asset value determined as of the
valuation time on such date so long as federal funds are transmitted or
delivered to the Fund's custodian by close of business on the next business day
(or, in the case of the Money Market Funds, by the close of business on the same
business day). An order received after the valuation time on any business day
will be executed on the next business day of the Fund at the net asset value
determined on such date.
Funds should be wired to CORESTATES PHIL, Philadelphia, PA ABA #031000011,
for credit to COREFUNDS-A/C #0169-0541. The wire instructions must also include
the account number. Before wiring any funds however, an investor must call
CoreFund's Investor Services at 1-800-355-CORE in order to confirm the wire
instructions for the Transfer Agent, State Street Bank and Trust Company. An
order to purchase shares by federal funds wire will be deemed to have been
received by a Fund on the business day that investors notify SEI Financial
Management Corporation by 12:00 p.m. (Eastern time) of their intentions to wire
money provided that federal funds are received by the custodian on the following
business day.
The minimum investment amount is $1,000,000 for the initial purchase of
shares by an investor which amount may be waived at the discretion of the
Distributor. However, the minimum initial investment amount for retail investors
investing in Equity Index Fund is $500. There is no minimum for subsequent
investments.
The Funds reserve the right to reject any order for the purchase of their
shares in whole or in part.
Every shareholder of record will receive a confirmation of each new share
transaction with a Fund, which will also show the total number of shares being
held in safekeeping by the Transfer Agent for the account of the shareholder.
Shareholders may rely on these statements in lieu of certificates. Certificates
representing shares of the Funds will not be issued.
Beneficial ownership of shares held of record by institutional investors
on behalf of their customers will be recorded by the institutions and reflected
in the regular account statements provided by them to their customers.
- ----
72 How to Purchase and Redeem Shares
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
REDEMPTION OF SHARES ___________________________________________________________
Class Y Shares may ordinarily be redeemed in accordance with the procedures
described below.
With respect to shares held by institutional investors on behalf of their
customer accounts, all or part of the shares beneficially owned by a customer
may be redeemed in accordance with instructions and limitations pertaining to
their account at the institution.
Shareholders who desire to redeem Class Y Shares of a Fund must place
their redemption orders with CoreFund's Investor Services for the Transfer
Agent, State Street Bank and Trust Company, prior to 4:00 p.m. (Eastern Time) on
any business day (12:00 p.m. for the Money Market Funds). Payment will be made
the next business day after proper receipt by the Transfer Agent by transfer of
federal funds. Otherwise, the redemption order will be effective the next
business day.
The Funds intend to pay cash for all shares redeemed but under abnormal
conditions which make payment in cash unwise, the Funds may make payment wholly
or partly in portfolio securities at their then market value equal to the
redemption price. In such cases, a shareholder may incur brokerage costs in
converting such securities to cash.
/X/
DESCRIPTION
OF SHARES
CoreFunds has set up the following twenty-one portfolios: Growth Equity, Core
Equity, Special Equity, Equity Index, International Growth, Balanced, Short
Intermediate Bond, Bond, Short-Term Income, Government Income, Intermediate
Municipal Bond, Pennsylvania Municipal Bond, New Jersey Municipal Bond and
Global Bond. CoreFunds offers two classes of shares of each portfolio except for
Equity Index Fund, Cash Reserve, Tax-Free Reserve, Treasury Reserve, Elite Cash
Reserve, Elite Government Reserve, Elite Treasury Reserve, and Elite Tax-Free
Reserve. In total, CoreFunds presently offers shares in twenty different
portfolios. CoreFunds may in the future create one or more additional
portfolios, or one or more Classes A and C Shares -- Individual classes of
shares within a portfolio and shares of the Elite Money Market Funds are offered
in separate prospectuses. This Prospectus solely relates to the Class Y Shares
- -- Institutional.
Class A Shares differ from Class Y Shares in that Class A Shares are
subject to a sales load and distribution and transfer agent expenses for certain
additional shareholder services they receive. Class C Shares also differ from
Class Y Shares in that Class C Shares are subject to distribution and transfer
agent expenses for certain additional shareholder services, but unlike Class A
Shares, are not subject to a sales load. Class A and Class C Shares also have
voting rights which Class Y Shares do not, in connection with the Distribution
Plan affecting Class A or Class C Shares. In addition, the distribution and
transfer agent expenses charged to Class A and Class C Shares result in Class A
and Class C Shares having different dividends and performance results from Class
Y Shares. In addition, the minimum initial investment for Class Y Shares is
substantially higher than that required for Class A and Class C Shares with the
exception of the Equity Index Fund.
----
Description of Shares 73
<PAGE>
- --------------------------------------------------------------------------------
INFORMATION ON THE FUNDS (CONTINUED)
THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION INCORPORATED
HEREIN RELATE PRIMARILY TO CLASS Y SHARES OF THE FUNDS AND DESCRIBE ONLY THE
INVESTMENT OBJECTIVE AND POLICIES, OPERATIONS, CONTRACTS, AND OTHER MATTERS
RELATING TO SUCH SHARES. INVESTORS WISHING TO OBTAIN SIMILAR INFORMATION
REGARDING OTHER COREFUND PORTFOLIOS MAY OBTAIN PROSPECTUSES DESCRIBING SUCH
PORTFOLIOS BY CONTACTING THE DISTRIBUTOR AT 1-800-355-CORE.
Except for differences between classes of shares of CoreFunds' portfolios
pertaining to distribution costs, incremental transfer agency fees and any other
incremental expenses identified that should be properly allocated to a class,
each share in each Fund represents an equal proportionate interest in that Fund
with each other share of the same Fund and is entitled to such dividends and
distributions out of the income earned on the assets belonging to such Fund as
are declared in the discretion of the Board of Directors.
CoreFunds' shareholders are entitled to one vote for each full share held,
and fractional votes for fractional shares held, and will vote in the aggregate
and not by portfolio or class except as otherwise expressly required by law or
when the Board of Directors determines that the matter to be voted upon affects
only the interests of the shareholders of a particular portfolio or class. See
the Statement of Additional Information under 'Description of Shares' for
examples where the Investment Company Act requires voting by portfolio or class.
Voting rights are not cumulative and, accordingly, the holders of more than 50%
of the aggregate number of shares of all of the Funds may elect all of the
directors if they choose to do so and, in such event, the holders of the
remaining shares would not be able to elect any person or persons to the Board
of Directors.
As used in this Prospectus, a 'vote of a majority of the outstanding
shares' of a Fund means the affirmative vote of the lesser of (a) more than 50%
of the outstanding shares of a Fund, or (b) at least 67% of the shares of a Fund
present at a meeting at which the holders of more than 50% of the outstanding
shares of such Fund are represented in person or by proxy.
/X/
GENERAL
INFORMATION
In accordance with the Maryland General Corporation Law, CoreFunds is not
required to hold annual meetings of shareholders unless the Investment Company
Act requires the shareholders to elect members of the Board of Directors.
However, a meeting of shareholders may be called for any purpose upon the
written request of the holders of at least 10% of the outstanding shares of
CoreFunds, or of a Fund with respect to matters affecting only such Fund.
As used in this Prospectus, 'assets belonging to the Fund' means the
consideration received by CoreFunds upon the issuance or sale of shares in a
Fund, together with all income, earnings, profits and proceeds derived from the
investment thereof, including any proceeds from the sale, exchange or
liquidation of such investments, and any funds or payments derived from any
reinvestment of such proceeds, and a portion of any general assets of CoreFunds
not belonging to that Fund or CoreFunds' other portfolios. Assets belonging to a
Fund are charged with the direct liabilities in respect of that Fund and with a
share of the general liabilities of
- ----
74 General Information
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
CoreFunds allocated in proportion to the relative asset values of each of
CoreFunds' portfolios at the time the expense or liability is incurred. The
management of CoreFunds makes determinations with respect to a Fund as to
liabilities when they are incurred and as to assets when they are acquired. Such
determinations are reviewed and approved annually by the Board of Directors and
are conclusive.
/X/
DESCRIPTION
OF RATINGS
DESCRIPTION OF MUNICIPAL AND
CORPORATE BOND RATINGS _________________________________________________________
Bonds rated AAA have the highest rating S&P assigns to a debt obligation. Such a
rating indicates an extremely strong capacity to pay principal and interest.
Bonds rated AA also qualify as high-quality debt obligations. Capacity to pay
principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
Debt rated A by S&P has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
Bonds which are rated Aaa by Moody's are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as 'gilt edge.' Interest payments are protected by a large, or an exceptionally
stable, margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues. Bonds rated Aa by
Moody's are judged by Moody's to be of high quality by all standards. Together
with bonds rated Aaa, they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
Bonds which are rated A by Moody's possess many favorable investment
attributes and are to be considered as upper-medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Bonds which are rated Baa by Moody's are considered as medium-grade
obligations (i.e., they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Bonds rated AAA by Fitch are judged by Fitch to be strictly high grade,
broadly marketable, suitable for investment by trustees and fiduciary
institutions liable to only slight market fluctuation other than through changes
----
Description of Ratings 75
<PAGE>
- --------------------------------------------------------------------------------
INFORMATION ON THE FUNDS (CONTINUED) /X/ COREFUND
in the money rate. The prime feature of an AAA bond is a showing of earnings
several times or many times interest requirements, with such stability of
applicable earnings that safety is beyond reasonable question whatever changes
occur in conditions. Bonds rated AA by Fitch are judged by Fitch to be of safety
virtually beyond question and are readily salable, whose merits are not unlike
those of the AAA class, but whose margin of safety is less strikingly broad. The
issue may be the obligation of a small company, strongly secured but influenced
as to rating by the lesser financial power of the enterprise and more local type
market.
Bonds rated Duff-1 are judged by Duff to be of the highest credit quality
with negligible risk factors, only slightly more than U.S. Treasury debt. Bonds
rated Duff-2, 3 and 4 are judged by Duff to be of high credit quality with
strong protection factors. Risk is modest but may vary slightly from time to
time because of economic conditions.
Obligations rated AAA by IBCA have the lowest expectation of investment
risk. Capacity for timely repayment of principal and interest is substantial,
such that adverse changes in business, economic or financial conditions are
unlikely to increase investment risk significantly. Obligations for which there
is a very low expectation of investment risk are rated AA by IBCA. Capacity for
timely repayment of principal and interest is substantial. Adverse changes in
business, economic or financial conditions may increase investment risk albeit
not very significantly.
DESCRIPTION OF MUNICIPAL NOTE RATINGS __________________________________________
Moody's highest rating for state and municipal and other short-term notes is
MIG-1 and VMIG-1. Short-term municipal securities rated MIG-1 or VMIG-1 are of
the best quality. They have strong protection from established cash flows of
funds for their servicing or from established and broad-based access to the
market for refinancing or both. Short-term municipal securities rated MIG-2 or
VMIG-2 are of high quality. Margins of protection are ample although not so
large as in the preceding group.
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in 3 years or less will likely receive a note rating.
Notes maturing beyond 3 years will most likely receive a long-term debt rating.
The following criteria will be used in making that assessment.
/ / Amortization schedule (the larger the final maturity relative to other
maturities, the more likely it will be treated as a note).
/ / Source of Payment (the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note).
S&P NOTE RATING SYMBOLS ARE AS FOLLOWS:
SP-1 Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be given a
plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
- ----
76 Description of Ratings
<PAGE>
NOTES
<PAGE>
CoreFunds, Inc.
DIRECTORS
Emil J. Mikity, Chairman
George H. Strong
Erin Anderson
Cheryl H. Wade
Thomas J. Taylor
OFFICERS
David G. Lee, President
James W. Jennings, Secretary
INVESTMENT ADVISER
CoreStates Investment Advisers, Inc.
Philadelphia, PA 19101
ADMINISTRATOR
SEI Fund Resources
Wayne, PA 19087
DISTRIBUTOR
SEI Financial Services Company
Wayne, PA 19087
LEGAL COUNSEL
Morgan, Lewis &Bockius LLP
Philadelphia, PA 19103
AUDITORS
Ernst &Young LLP
Philadelphia, PA 19103
For current performance, purchase, redemption and
other information, call 1-800-355-CORE (2673)
COR-F-045-04
CORESTATES
CORESTATES
INVESTMENT ADVISERS
COREFUNDS
FAMILY OF MUTUAL FUNDS
Institutional Shares
Prospectus
November 1, 1996
<PAGE>
COREFUND(R)
FAMILY OF
MUTUAL FUNDS
Prospectus
CoreFunds, Inc.
November 1, 1996
Individual Shares
================================================================================
CoreFunds, Inc. is an open-end management investment company
presently offering shares in twenty diversified and non-diversified portfolios
that offer a variety of investment opportunities. These portfolios are managed
by CoreStates Investment Advisers, Inc. This Prospectus relates to Class A and
Class C Shares in seventeen portfolios, including equity, fixed income, balanced
and money market portfolios (the "Funds").
- --------------------------------------------------------------------------------
This Prospectus gives you information about the Funds that you
should be aware of before investing. Additional information about the Funds,
contained in a Statement of Additional Information dated November 1, 1996, has
been filed with the Securities and Exchange Commission. It is incorporated in
this Prospectus by reference. To obtain a copy without charge, call or write:
CoreFunds, Inc.
680 East Swedesford Road
Wayne, PA 19087
1-800-355-CORE
KEEP THIS PROSPECTUS FOR FUTURE REFERENCE.
- --------------------------------------------------------------------------------
SHARES IN THE FUNDS ARE NOT OBLIGATIONS, DEPOSITS, OR ACCOUNTS OF, OR GUARANTEED
OR ENDORSED BY, CORESTATES BANK, N.A., THE PARENT CORPORATION OF EACH FUND'S
INVESTMENT ADVISER, OR ANY OF ITS AFFILIATES. SUCH SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF PRINCIPAL. AN INVESTMENT IN THE CASH RESERVE, TREASURY RESERVE AND/OR
TAX-FREE RESERVE IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT, AND
THERE CAN BE NO ASSURANCE THAT THESE FUNDS WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
================================================================================
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS /X/ COREFUND
Transaction and Operating Expense Tables............. 3
Financial Highlights................................. 7
Highlights........................................... 12
- ---------------------FUNDAMENTALS OF MUTUAL FUND INVESTING----------------------
Types of investment vehicles......................... 16
How to invest in stocks, bonds, and money market
instruments....................................... 18
Developing your investment strategy.................. 23
- ----------------------------INFORMATION ON THE FUNDS----------------------------
Investment Objectives of the Funds................... 27
Equity Funds....................................... 27
Fixed Income Funds................................. 27
Money Market Funds................................. 28
Investment Policies.................................. 28
Equity Funds....................................... 28
Fixed Income Funds................................. 33
Money Market Funds................................. 37
Other Investment Practices of the Funds............ 38
Types of Securities in Which the Funds Invest........ 45
Equity Funds....................................... 45
Taxable Fixed Income Funds......................... 46
Taxable Money Market Funds......................... 48
Tax-Free Fixed Income and Money Market Funds....... 49
Temporary Investments.............................. 51
Investment Restrictions.............................. 52
Investor Considerations.............................. 54
Investment Suitability............................. 54
Investment Risks................................... 56
Distributions........................................ 59
Taxes................................................ 60
Valuation of Shares.................................. 64
Net Asset Value.................................... 64
Portfolio Pricing.................................. 64
Management........................................... 65
Investment Adviser, Sub-Advisers................... 65
Fund Managers...................................... 68
Administrator...................................... 70
Distributor........................................ 71
Performance Information.............................. 72
Total Return and Yield............................. 72
In General......................................... 72
Description of Shares................................ 73
General Information.................................. 74
Description of Ratings............................... 75
Description of Municipal and Corporate Bond
Ratings......................................... 75
Description of Municipal Note
Ratings......................................... 76
- ---------------------------SHAREHOLDER SERVICES GUIDE---------------------------
Opening an Account and Purchasing
Shares............................................ 77
Selling Your Shares.................................. 82
Exchanging Shares.................................... 85
<TABLE>
<S> <C> <C>
No person is authorized by CoreFunds, Inc. to give any
information or make any representation other than those
contained in this Prospectus or in other printed or written
- ---- material issued by CoreFunds, Inc., and you should not rely
2 Table of Contents on any other information or representation.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
TRANSACTION AND OPERATING EXPENSE TABLES /X/ COREFUND
The purpose of the following tables is to help you understand the various costs
and expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in Class A and/or Class C Shares of the Funds.
THE INFORMATION CONTAINED IN THE TABLES SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<TABLE>
<CAPTION>
--------- --------- --------- -------- ----------------
GROWTH CORE SPECIAL EQUITY INTERNATIONAL
Equity Funds EQUITY EQUITY(6) EQUITY INDEX GROWTH
- ------------ --------- --------- --------- -------- ----------------
<S> <C> <C> <C> <C> <C>
Class A Shares
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases 5.50% 5.50% 5.50% 5.50% 5.50%
Maximum Sales Load Imposed on
Reinvested Dividends none none none none none
Deferred Sales Load none none none none none
Redemption Fee none none none none none
Exchange Fee none none none none none
ANNUAL FUND OPERATING EXPENSES*
(as a percentage of net assets):
Investment Advisory Fees After
Fee Waivers(1) .75% .74% .83% .15% .80%
12b-1 Fees(2) .25% .25% .25% .00% .25%
Other Expenses(3) .21% .26% .23% .22% .36%
Net Annual Fund Operating
Expenses(4) 1.21% 1.25% 1.31% .37% 1.41%
EXAMPLE
You would pay the following
expenses on a $1,000
investment, assuming (1) 1 year $ 67 $ 67 $ 68 $59 $ 69
a 5% annual return 3 years 91 92 74 66 97
and (2) redemption at the end 5 years 118 120 123 75 128
of each time period.(5) 10 years 194 198 204 99 215
<CAPTION>
-----------
Equity Funds BALANCED
- -------------- -----------
Class A Shares
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases 5.50%
Maximum Sales Load Imposed on
Reinvested Dividends none
Deferred Sales Load none
Redemption Fee none
Exchange Fee none
ANNUAL FUND OPERATING EXPENSES
(as a percentage of net assets):
Investment Advisory Fees After
Fee Waivers(1) .58%
12b-1 Fees(2) .25%
Other Expenses(3) .22%
Net Annual Fund Operating
Expenses(4) 1.05%
EXAMPLE
You would pay the following
expenses on a $1,000
investment, assuming (1) $ 65
a 5% annual return 87
and (2) redemption at the end 110
of each time period.(5) 176
</TABLE>
- --------------------------------------------------------------------------------
* Fees shown reflect current fees.
(1) Absent voluntary waivers, the Adviser's investment advisory fees are
calculated at the annual rate of .75%, .74%, 1.50%, .40%, .80%, and .70% of
the average net assets of Growth Equity Fund, Core Equity Fund, Special
Equity Fund, Equity Index, International Growth Fund, and Balanced Fund,
respectively.
(2) Note that long-term shareholders may pay more than the economic equivalent
of the maximum front-end load (6.25%) permitted by the Rules of Fair
Practice of the National Association of Securities Dealers.
(3) Includes (among others) administrative, legal, auditing and printing fees.
Absent voluntary waivers, the Administrator's fee is calculated at the
annual rate of .25% of each Fund's average net assets.
(4) The Adviser Administrator and the Distributor have voluntarily waived a
portion of their fees in order to assist the Funds in maintaining a
competitive expense ratio. The expense ratios noted herein are net of
investment advisory and administrative fee waivers expected to be in effect
during the fiscal period ending June 30, 1997. Absent any fee waivers, such
expense ratios would have been 1.30%, 1.29%, 2.05%, 0.70%, 1.50% and 1.26%
for Growth Equity Fund, Core Equity Fund, Special Equity Fund, Equity Index
Fund, International Growth Fund and Balanced Fund, respectively. The service
providers of all the Funds have been waiving all or a portion of their fees
since inception. However, these providers may change the waiver so that a
Fund's expense ratio will approach the contractually mandated ratio.
(5) Absent the voluntary fee waiver of the Adviser and the Administrator, the
amounts in this Example, for one year, three years, five years and ten
years, would be $68, $94, $122 and $203 for Growth Equity Fund; $67, $94,
$122 and $202 for Core Equity Fund; $75, $116, $159 and $280 for Special
Equity Fund; $62, $76, $92 and $137 for Equity Index Fund; $69, $100, $132
and $224 for International Growth Fund; and $67, $93, $120, and $199 for
Balanced Fund.
(6) This Fund was formerly known as the Equity Fund.
----
Transaction and Operating Expense Tables 3
<PAGE>
- --------------------------------------------------------------------------------
TRANSACTION AND OPERATING EXPENSE TABLES (CONTINUED)
<TABLE>
<CAPTION>
---------------- ----------- ----------- -----------------
SHORT- SHORT
INTERMEDIATE TERM GOVERNMENT
Fixed Income Funds BOND BOND INCOME INCOME
---------------- ----------- ----------- -----------------
<S> <C> <C> <C> <C>
Class A Shares
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases 3.25% 4.75% 3.25% 3.25%
Maximum Sales Load Imposed on
Reinvested Dividends none none none none
Deferred Sales Load none none none none
Redemption Fee none none none none
Exchange Fee none none none none
ANNUAL FUND OPERATING EXPENSES*
(as a percentage of net assets):
Investment Advisory Fees After
Fee Waivers(1) .29% .35% .25% .47%
12b-1 Fees(2) .25% .25% .25% .25%
Other Expenses(3) .22% .21% .22% .27%
Net Annual Fund Operating
Expenses(4) .76% .81% .72% .99%
EXAMPLE
You would pay the following
expenses on a $1,000 investment, 1 year $ 40 $ 55 $ 40 $ 42
assuming (1) a 5% annual return 3 years 56 72 55 63
and (2) redemption at the end 5 years 73 90 71 85
of each time period.(5) 10 years 124 143 119 150
<CAPTION>
-------------------
INTERMEDIATE
Fixed Income Funds MUNICIPAL BOND
-------------------
<S> <C>
Class A Shares
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases 3.25%
Maximum Sales Load Imposed on
Reinvested Dividends none
Deferred Sales Load none
Redemption Fee none
Exchange Fee none
ANNUAL FUND OPERATING EXPENSES*
(as a percentage of net assets):
Investment Advisory Fees After
Fee Waivers(1) .07%
12b-1 Fees(2) .25%
Other Expenses(3) .52%
Net Annual Fund Operating
Expenses(4) .84%
EXAMPLE
You would pay the following
expenses on a $1,000 investment, $ 41
assuming (1) a 5% annual return 58
and (2) redemption at the end 78
of each time period.(5) 133
</TABLE>
- --------------------------------------------------------------------------------
* Fees shown reflect current fees.
(1) Absent voluntary waivers, the Adviser's investment advisory fees are
calculated at the annual rate of .50%, .74%, .74%, .50% and .50% of the
average net assets of Short Intermediate Bond Fund, Bond Fund, Short-Term
Income Fund, Government Income Fund and Intermediate Municipal Bond Fund,
respectively.
(2) Note that long-term shareholders may pay more than the economic equivalent
of the maximum front-end load (6.25%) permitted by the Rules of Fair
Practice of the National Association of Securities Dealers.
(3) Includes (among others) administrative, legal, auditing and printing fees.
Absent voluntary waivers, the Administrator's fee is calculated at the
annual rate of .25% of each Fund's average net assets.
(4) The Adviser and the Administrator have voluntarily waived a portion of their
fees in order to assist the Funds in maintaining a competitive expense
ratio. The expense ratios noted herein are net of investment advisory and
administrative fee waivers expected to be in effect during the fiscal period
ending June 30, 1997. Absent fee waivers, such expense ratios would have
been 1.05%, 1.29%, 1.30%, 1.09% and 0.99% for Short-Intermediate Bond Fund,
Bond Fund, Short Term Income Fund, Government Income Fund and Intermediate
Municipal Bond Fund, respectively. The service providers of all the Funds
have been waiving all or a portion of their fees since inception. However,
these providers may change the waiver so that a Fund's expense ratio will
approach the contractually mandated ratio.
(5) Absent the voluntary fee waiver of the Adviser and the Administrator, the
amounts in this Example, for one year, three years, five years and ten
years, would be $43, $65, $89 and $157 for Short Intermediate Bond Fund;
$60, $86, $115 and $196 for Bond Fund; $45, $72, $101 and $184 for
Short-Term Income Fund; $43, $66, $91, and $161 for Government Income Fund;
and $42, $63, $85, and $150 for Intermediate Municipal Bond Fund.
- ----
4 Transaction and Operating Expense Tables
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
<TABLE>
<S> <C> <C> <C>
---------------- ------------- --------
PENNSYLVANIA NEW JERSEY
MUNICIPAL MUNICIPAL GLOBAL
Fixed Income Funds BOND BOND BOND
- ------------------ ---------------- ------------- --------
Class A Shares
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases 4.75% 4.75% 4.75%
Maximum Sales Load Imposed on Reinvested Dividends none none none
Deferred Sales Load none none none
Redemption Fee none none none
Exchange Fee none none none
ANNUAL FUND OPERATING EXPENSES*
(as a percentage of net assets):
Investment Advisory Fees After Fee Waivers(1) .00% .00% .50%
12b-1 Fees(2) .25% .25% .25%
Other Expenses(3) .08% .13% .34%
Net Annual Fund Operating Expenses(4) .33% .38% 1.09%
EXAMPLE
You would pay the following
expenses on a $1,000 investment, 1 year $51 $51 $ 58
assuming (1) a 5% annual return 3 years 58 59 81
and (2) redemption at the end 5 years 65 68 105
of each time period.(5) 10 years 87 93 174
</TABLE>
- --------------------------------------------------------------------------------
* Fees shown reflect current fees.
(1) Absent voluntary waivers, the Adviser's investment advisory fees are
calculated at the annual rate of .50%, .50% and .60% of the average net
assets of Pennsylvania Municipal Bond Fund, New Jersey Municipal Bond Fund
and Global Bond Fund, respectively.
(2) Note that long-term shareholders may pay more than the economic equivalent
of the maximum front-end load (6.25%) permitted by the Rules of Fair
Practice of the National Association of Securities Dealers.
(3) Includes (among others) administrative, legal, auditing and printing fees.
Absent voluntary waivers, the Administrator's fee is calculated at the
annual rate of .25% of each Fund's average net assets.
(4) The Adviser and the Administrator have voluntarily waived a portion of their
fees in order to assist the Funds in maintaining a competitive expense
ratio. The expense ratios noted herein are net of investment advisory and
administrative fee waivers expected to be in effect during the fiscal period
ending June 30, 1997. Absent fee waivers, such expense ratios would have
been 1.08%, 1.13% and 1.28% for Pennsylvania Municipal Bond Fund, New Jersey
Municipal Bond Fund and Global Bond Fund, respectively. The service
providers of all the Funds have been waiving all or a portion of their fees
since inception. However, these providers may change the waiver so that a
Fund's expense ratio will approach the contractually mandated ratio.
(5) Absent the voluntary fee waiver of the Adviser and the Administrator, the
amounts in this Example, for one year, three years, five years and ten
years, would be $58, $80, $104, and $173 for Pennsylvania Municipal Bond
Fund; $58, $82, $107, and $178 for New Jersey Municipal Bond Fund; and $60,
$86, $114, and $195 for Global Bond Fund.
----
Transaction and Operating Expense Tables 5
<PAGE>
- --------------------------------------------------------------------------------
TRANSACTION AND OPERATING EXPENSE TABLES (continued)
<TABLE>
<S> <C> <C> <C>
------------- --------------- ---------------
TREASURY TAX-FREE
Money Market Funds CASH RESERVE RESERVE RESERVE
- ----------------------- ------------- --------------- ---------------
Class C Shares
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases none none none
Maximum Sales Load Imposed on Reinvested
Dividends none none none
Deferred Sales Load none none none
Redemption Fee none none none
Exchange Fee none none none
ANNUAL FUND OPERATING EXPENSES*
(as a percentage of net assets):
Investment Advisory Fees After Fee Waivers(1) .30% .30% .30%
12b-1 Fees(2) .25% .25% .25%
Other Expenses(3) .21% .21% .21%
Net Annual Fund Operating Expenses(4) .76% .76% .76%
EXAMPLE
You would pay the following
expenses on a $1,000 investment, 1 year $ 8 $ 8 $ 8
assuming (1) a 5% annual return 3 years 24 24 24
and (2) redemption at the end 5 years 42 42 42
of each time period.(5) 10 years 94 94 94
</TABLE>
- --------------------------------------------------------------------------------
* Fees shown reflect current fees.
(1) Absent voluntary waivers, the Adviser's investment advisory fees are
calculated at the annual rate of .40%, .40%, and .40% of the average net
assets of Cash Reserve, Treasury Reserve, and Tax-Free Reserve,
respectively.
(2) Note that long-term shareholders may pay more than the economic equivalent
of the maximum front-end load (6.25%) permitted by the Rules of Fair
Practice of the National Association of Securities Dealers.
(3) Includes (among others) administrative, legal, auditing, and printing fees.
Absent voluntary waivers, the Administrator's fee is calculated at the
annual rate of .25% of each Fund's average net assets.
(4) The Adviser and the Administrator have voluntarily waived a portion of their
fees in order to assist the Funds in maintaining a competitive expense
ratio. The expense ratios noted herein are net of investment advisory and
administrative fee waivers expected to be in effect during the fiscal period
ending June 30, 1996. Absent any fee waivers, such expense ratios would have
been .95%, .95%, and .95% for Cash Reserve, Treasury Reserve, and Tax-Free
Reserve, respectively. The service providers of all the Funds have been
waiving all or a portion of their fees since inception. However, these
providers may change the waiver so that a Fund's expense ratio will approach
the contractually mandated ratio.
(5) Absent the voluntary fee waiver of the Adviser and the Administrator, the
amounts in this Example, for one year, three years, five years and ten
years, would be $10, $30, $53 and $117 for Cash Reserve; $10, $30, $53, and
$117 for Treasury Reserve; and $10, $30, $53 and $117 for Tax-Free Reserve.
- ----
6 Transaction and Operating Expense Tables
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS /X/ COREFUND
The tables that follow present information about the investment results of
the shares of the Funds. The financial highlights for each of the Growth Equity
Fund, Core Equity Fund, Special Equity Fund, International Growth Fund, Equity
Index Fund, Balanced Fund, Government Income Fund, Short Term Income Fund,
Short-Intermediate Bond Fund, Bond Fund, Intermediate Municipal Bond Fund,
Global Bond Fund, Pennsylvania Municipal Bond Fund, New Jersey Municipal Bond
Fund, Cash Reserve, Treasury Reserve and Tax-Free Reserve have been audited by
Ernst & Young LLP, independent auditors, whose report thereon appears in
CoreFunds' annual report which accompanies the Statement of Additional
Information. The financial highlights for each of the Core Equity Fund, Special
Equity Fund, Bond Fund and Short Term Income Fund for the period ended
October 31, 1990 through October 31, 1995 were audited by Coopers & Lybrand LLP,
independent auditors. The annual report for the Funds is available to
shareholders at no charge by calling CoreFunds at 1-800-355-CORE.
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED JUNE 30,
Equity Funds
- ------------
<TABLE>
<CAPTION>
Realized
and Net
Unrealized Assets,
Net Asset Net Gains Dividends Distributions End of Ratio of
Value, Net or (Losses) from Net from Net Asset Period Expenses to
Beginning Investment on Investment Capital Value End Total (000 Average Net
of Period Income Securities Income Gains of Period Return(8) omitted) Assets
----------- ----------- ----------- ----------- ----------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------
GROWTH EQUITY
- -------------
CLASS Y (INSTITUTIONAL)**
1996 $11.18 $0.08 $ 3.36 $(0.08) $(0.35) $14.19 31.36% $120,073 0.89%
1995 9.11 0.08 2.07 (0.08) -- 11.18 23.71 91,345 0.76
1994 9.95 0.05 (0.84) (0.05) -- 9.11 (8.01) 64,877 0.69
1993 8.74 0.08 1.21 (0.08) -- 9.95 14.76 63,777 0.43
1992(1) 10.00 0.05 (1.26) (0.05) -- 8.74 (12.05)+ 33,418 0.14
CLASS A (INDIVIDUAL)**
1996 $11.17 $0.05 $ 3.35 $(0.05) $(0.35) $14.17 31.00% $ 3,162 1.14%
1995 9.10 0.06 2.07 (0.06) -- 11.17 23.44 2,043 1.01
1994 9.95 0.04 (0.85) (0.04) -- 9.10 (8.13) 1,730 0.94
1993(2) 9.80 0.03 0.15 (0.03) -- 9.95 1.80+ 5,224 0.80
- --------------
CORE EQUITY(9)
- --------------
CLASS Y (INSTITUTIONAL)*
1996 $17.07 $0.14 $ 1.49 $(0.14) $(1.30) $17.26 19.24% $414,824 0.97%
1995 15.00 0.19 2.87 (0.19) (0.80) 17.07 22.00 378,352 1.05
CLASS A (INDIVIDUAL)*
1996 $17.08 $0.12 $ 1.49 $(0.11) $(1.30) $17.28 19.11% $ 11,178 1.22%
1995 15.00 0.18 2.87 (0.17) (0.80) 17.08 21.94 6,591 1.34
PRIOR CLASS
1994 $15.39 $0.11 $ 0.22 $(0.11) $(0.61) $15.00 2.21% $ 50,128 1.49%
1993 13.93 0.14 1.89 (0.14) (0.43) 15.39 14.90 45,677 1.20
1992 13.08 0.19 1.02 (0.19) (0.17) 13.93 9.27 28,103 0.92
1991 8.95 0.26 4.13 (0.26) -- 13.08 49.37 12,830 0.54
1990(3) 10.00 0.14 (1.05) (0.14) -- 8.95 (9.22) 5,982 0.65
- -----------------
SPECIAL EQUITY(9)
- -----------------
CLASS Y (INSTITUTIONAL)*
1996 $11.42 $0.07 $ 2.13 $(0.07) $(1.69) $11.86 22.27% $ 63,680 0.34%
1995 9.37 0.12 2.12 $(0.12) (0.07) 11.42 24.44 57,396 0.32
CLASS A (INDIVIDUAL)*
1996 $11.42 $0.08 $ 2.11 $(0.07) $(1.69) $11.85 22.14% $ 1,144 0.37%
1995 9.37 0.12 2.12 (0.12) (0.07) 11.42 24.44 734 0.27
PRIOR CLASS
1994(4) $10.00 $0.06 $ (0.63) $(0.06) $ -- $ 9.37 (5.72)% $ 10,069 0.15%
<CAPTION>
Ratio of Ratio of
Expenses to Net Income
Ratio of Average Net to Average
Net Income Assets Net Assets Portfolio Average
to Average (Excluding (Excluding Turnover Commission
Net Assets Waivers) Waivers) Rate*** Rate(10)
----------- ----------- ----------- ----------- -----------
- -------------
GROWTH EQUITY
- -------------
CLASS Y (INSTITUTIONAL)**
1996 0.64% 1.05% 0.48% 81% 0.0601
1995 0.84 1.10 0.50 113 --
1994 0.48 1.11 0.06 127 --
1993 0.85 1.11 0.17 103 --
1992(1) 1.38 1.12 0.40 66 --
CLASS A (INDIVIDUAL)**
1996 0.40% 1.30% 0.23% 81% 0.0601
1995 0.59 1.35 0.25 113 --
1994 0.23 1.36 (0.19) 127 --
1993(2) 0.39 1.48 (0.29) 103 --
- --------------
CORE EQUITY(9)
- --------------
CLASS Y (INSTITUTIONAL)*
1996 1.15% 1.01% 1.11% 114% 0.0636
1995 1.44 1.10 1.44 119 --
CLASS A (INDIVIDUAL)*
1996 0.89% 1.26% 0.85% 114% 0.0636
1995 1.23 1.53 1.04 119 --
PRIOR CLASS
1994 0.75% 1.51% 0.73% 35% --
1993 0.94 1.41 0.73 24 --
1992 1.47 1.23 1.17 39 --
1991 2.30 1.48 1.36 68 --
1990(3) 2.29 1.59 1.35 43 --
- -----------------
SPECIAL EQUITY(9)
- -----------------
CLASS Y (INSTITUTIONAL)*
1996 0.94% 1.79% (0.51)% 72% 0.0539
1995 1.14 1.97 (0.51) 129 --
CLASS A (INDIVIDUAL)*
1996 0.91% 1.82% (0.55)% 72% 0.0539
1995 1.29 2.24 (0.68) 129 --
PRIOR CLASS
1994(4) 1.06% 2.10% (0.89)% 39% --
</TABLE>
Financial Highlights ----
7
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED JUNE 30, (CONTINUED)
Equity Funds (continued)
- ------------
<TABLE>
<CAPTION>
Realized
and Net
Unrealized Assets,
Net Asset Net Gains Dividends Distributions End of Ratio of
Value, Net or (Losses) from Net from Net Asset Period Expenses to
Beginning Investment on Investment Capital Value End Total (000 Average Net
of Period Income Securities Income Gains of Period Return(8) omitted) Assets
----------- ----------- ----------- ----------- ----------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------
EQUITY INDEX
- ------------
CLASS Y**
1996 $23.79 $0.51 $ 5.47 $(0.51) $(0.79) $28.47 25.69% $166,350 0.35%
1995 20.54 0.52 4.24 (0.52) (0.99) 23.79 24.45 112,533 0.37
1994 20.97 0.55 (0.43) (0.55) -- 20.54 0.55 72,552 0.35
1993 19.22 0.52 1.84 (0.52) (0.09) 20.97 12.39 50,551 0.49
1992 18.46 0.52 1.80 (0.48) (1.08) 19.22 12.59 20,166 0.57
1991(5) 19.48 0.03 (0.94) (0.02) (0.09) 18.46 (4.64)+ 12,117 0.97
- --------------------
INTERNATIONAL GROWTH
- --------------------
CLASS Y (INSTITUTIONAL)**
1996 $12.29 $0.16 $ 1.86 $(0.28) $(0.06) $13.97 16.72% $139,275 1.14%
1995 13.18 0.12 (0.17) (0.04) (0.80) 12.29 (0.21) 110,838 1.05
1994 11.71 0.12 1.78 (0.12) (0.31) 13.18 16.28 108,911 0.99
1993 10.52 0.10 1.16 (0.07) -- 11.71 12.06 61,655 0.99
1992 10.10 0.17 0.31 -- (0.06) 10.52 4.90 42,594 0.96
1991 10.75 0.19 (0.44) (0.27) (0.13) 10.10 (2.71) 20,582 0.99
1990(6) 10.00 0.11 0.86 (0.09) (0.13) 10.75 9.74+ 13,513 1.22
CLASS A (INDIVIDUAL)**
1996 $12.27 $0.11 $ 1.89 $(0.25) $(0.06) $13.96 16.54% $ 2,138 1.39%
1995 13.17 0.09 (0.17) (0.02) (0.80) 12.27 (0.48) 1,943 1.30
1994 11.71 0.06 1.82 (0.11) (0.31) 13.17 16.08 2,019 1.24
1993(2) 10.07 0.05 1.59 -- -- 11.71 16.29+ 344 1.15
- --------
BALANCED
- --------
CLASS Y (INSTITUTIONAL)**
1996 $11.06 $0.33 $ 1.68 $(0.33) $(0.15) $12.59 18.41% $102,515 0.81%
1995 9.88 0.35 1.21 (0.35) (0.03) 11.06 16.21 61,092 0.73
1994 10.39 0.35 (0.51) (0.35) -- 9.88 (1.62) 42,429 0.62
1993(2) 10.00 0.16 0.39 (0.16) -- 10.39 5.52+ 29,434 0.45
CLASS A (INDIVIDUAL)**
1996 $11.06 $0.30 $ 1.68 $(0.30) $(0.15) $12.59 18.13% $ 3,188 1.06%
1995 9.89 0.34 1.19 (0.33) (0.03) 11.06 15.84 2,344 0.98
1994 10.38 0.31 (0.49) (0.31) -- 9.89 (1.86) 2,222 0.87
1993(7) 10.00 0.16 0.38 (0.16) -- 10.38 2.50+ 701 0.55
<CAPTION>
Ratio of Ratio of
Expenses to Net Income
Ratio of Average Net to Average
Net Income Assets Net Assets Portfolio Average
to Average (Excluding (Excluding Turnover Commission
Net Assets Waivers) Waivers) Rate*** Rate(10)
----------- ----------- ----------- ----------- -------------
- ------------
EQUITY INDEX
- ------------
CLASS Y**
1996 1.94% 0.71% 1.59% 13% 0.0641
1995 2.48 0.76 2.09 27 --
1994 2.63 0.75 2.23 13 --
1993 2.82 0.88 2.43 4 --
1992 2.66 1.06 2.17 27 --
1991(5) 1.79 1.20 1.56 -- --
- --------------------
INTERNATIONAL GROWTH
- --------------------
CLASS Y (INSTITUTIONAL)**
1996 1.05% 1.25% 0.94% 41% 0.0270
1995 0.98 1.19 0.84 59 --
1994 0.23 1.18 0.04 67 --
1993 1.22 1.28 0.93 59 --
1992 1.67 1.40 1.23 87 --
1991 1.80 1.56 1.23 49 --
1990(6) 2.57 1.99 1.80 20 --
CLASS A (INDIVIDUAL)**
1996 0.80% 1.50% 0.69% 41% 0.0270
1995 0.73 1.44 0.59 59 --
1994 0.05 1.43 (0.14) 67 --
1993(2) 1.51 1.44 1.22 59 --
- --------
BALANCED
- --------
CLASS Y (INSTITUTIONAL)**
1996 2.79% 1.03% 2.57% 74% 0.0621
1995 3.51 1.07 3.17 46 --
1994 3.46 1.08 3.00 56 --
1993(2) 3.38 1.39 2.45 21 --
CLASS A (INDIVIDUAL)**
1996 2.53% 1.27% 2.32% 74% 0.0621
1995 3.27 1.32 2.93 46 --
1994 3.21 1.33 2.75 56 --
1993(7) 5.76 1.48 4.83 21 --
</TABLE>
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
* On February 21, 1995 the share of the Funds were redesignated as either Retail or Institutional shares. For the year
ended October 31, 1995, the Financial Highlights' ratios of expenses, net investment income, total return, and the per
share investment activities and distributions are presented on a basis whereby the Fund's net investment income,
expenses, and distributions for the period November 1, 1994 through February 20, 1995 were allocated to each class of
shares based upon the relative net assets of each class of shares as of February 21, 1995 and the results combined
therewith the results of operations and distributions for each applicable class for the period February 21, 1995 through
October 31, 1995. Additionally, on April 15 & 22, 1996 the Conestoga Equity and Special Equity Funds were acquired by
CoreFunds, Inc.; at which time the Institutional Class of these Funds were exchanged for Class A shares.
** On April 22, 1996 the Series A shares of each fund were redesignated Class Y and the Series B shares for each fund were
redesignated Class A.
*** For 1996, transactions relating to the merger were excluded from the calculation of the Portfolio Turnover Rate.
+ This figure has not been annualized.
(1) Commenced operations February 3, 1992. Unless otherwise noted, all ratios for the period have been annualized.
(2) Commenced operations January 4, 1993. Unless otherwise noted, all ratios for the period have been annualized.
(3) Commenced operations Februrary 28, 1990. Unless otherwise noted, all ratios for the period have been annualized.
(4) Commenced operations March 15, 1994. Unless otherwise noted, all ratios for the period have been annualized.
(5) Commenced operations June 1, 1991. Unless otherwise noted, all ratios for the period have been annualized.
(6) Commenced operations February 12, 1990. Unless otherwise noted, all ratios for the period have been annualized.
(7) Commenced operations March 16, 1993. Unless otherwise noted, all ratios for the period have been annualized.
(8) Total return does not reflect applicable sales load. Additionally total return for Class Y & Class A for the Equity &
Special Equity Funds for 1996 are for an eight month period ended June 30, 1996.
(9) The per share amount for these Funds for 1996 represents the period from November 1, 1995 to June 30, 1996. All prior
years are for the periods November 1 to October 31.
(10) Average commission rate paid per share for security purchases and sales during the period. Presentation of the rate is
only required for fiscal years beginning after September 1, 1995.
</TABLE>
- ----
8 Financial Highlights
- -------------------------------------------------------------------------------
/X/ COREFUND
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED JUNE 30, (CONTINUED)
Fixed Income Funds
- ------------------
<TABLE>
<CAPTION>
Realized
and Net
Unrealized Assets,
Net Asset Net Gains Dividends Distributions End of
Value, Net or (Losses) from Net from Net Asset Period
Beginning Investment on Investment Capital Value, End Total (000
of Period Income Securities Income Gains of Period Return(10) omitted)
----------- ----------- ----------- ----------- ----------- ----------- ---------- ---------
- -----------------
GOVERNMENT INCOME
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS Y (INSTITUTIONAL)**
1996 $ 9.83 $0.61 $(0.21) $(0.61) $ -- $ 9.62 4.09% $ 13,943
1995 9.52 0.62 0.31 (0.62) -- 9.83 10.26 11,305
1994 10.18 0.50 (0.62) (0.50) (0.04) 9.52 (1.34) 9,089
1993(1) 10.00 0.13 0.18 (0.13) -- 10.18 3.12+ 6,323
CLASS A (INDIVIDUAL)**
1996 $ 9.84 $0.58 $(0.22) $(0.58) $ -- $ 9.62 3.73% $ 1,287
1995 9.51 0.61 0.33 (0.61) -- 9.84 10.23 1,374
1994 10.17 0.47 (0.62) (0.47) (0.04) 9.51 (1.57) 1,536
1993(2) 10.00 0.07 0.17 (0.07) -- 10.17 1.71+ 201
- --------
BOND(11)
- --------
CLASS Y (INSTITUTIONAL)*
1996 $10.55 $0.43 $(0.30) $(0.45) $(0.08) $10.15 1.23% $198,605
1995 9.81 0.61 0.71 (0.58) -- 10.55 13.87% 194,442
CLASS A (INDIVIDUAL)*
1996 $10.56 $0.44 $(0.33) $(0.44) $(0.08) $10.15 0.98% $ 1,273
1995 9.81 0.60 0.72 (0.57) -- 10.56 13.83 1,373
PRIOR CLASS
1994 $11.18 $0.53 $(1.04) $(0.52) $(0.34) $ 9.81 (4.75)% $ 23,377
1993 10.89 0.56 0.54 (0.56) (0.25) 11.18 10.63 27,346
1992 10.65 0.70 0.32 (0.68) (0.10) 10.89 9.82 15,180
1991 9.96 0.78 0.69 (0.78) -- 10.65 15.16 7,255
1990(3) 10.00 0.50 (0.04) (0.50) -- 9.96 4.64+ 4,593
- ---------------------
SHORT TERM INCOME(11)
- ---------------------
CLASS Y (INSTITUTIONAL)*
1996 $10.05 $0.36 $(0.08) $(0.38) $(0.01) $ 9.94 2.78% $ 30,132
1995(4) 10.00 0.25 0.03 (0.23) -- 10.05 2.87+ 36,059
CLASS A (INDIVIDUAL)*
1996 $10.04 $0.35 $(0.10) $(0.35) $(0.01) $ 9.93 2.55% $ 1
1995(5) 10.01 0.23 0.02 (0.22) -- 10.04 2.57+ 11
- -----------------------
SHORT-INTERMEDIATE BOND
- -----------------------
CLASS Y (INSTITUTIONAL)**
1996 $ 9.84 $0.57 $(0.08) $(0.57) $ -- $ 9.76 5.05% $159,841
1995 9.63 0.53 0.21 (0.53) -- 9.84 8.22 55,128
1994 10.18 0.43 (0.53) (0.43) (0.02) 9.63 (0.32) 48,379
1993 10.01 0.47 0.31 (0.47) (0.14) 10.18 7.90 44,692
1992(6) 10.00 0.23 0.01 (0.23) -- 10.01 2.49+ 22,623
CLASS A (INDIVIDUAL)**
1996 $ 9.84 $0.54 $(0.08) $(0.54) $ -- $ 9.76 4.79% $ 3,062
1995 9.63 0.54 0.20 (0.53) -- 9.84 7.95 1,961
1994 10.18 0.41 (0.53) (0.41) (0.02) 9.63 (0.56) 9,365
1993(2) 10.01 0.20 0.17 (0.20) -- 10.18 3.95+ 5,752
<CAPTION>
Ratio of Ratio of
Expenses to Net Income
Ratio of Ratio of Average Net to Average
Expenses to Net Income Assets Net Assets Portfolio
Average Net to Average (Excluding (Excluding Turnover
Assets Net Assets Waivers) Waivers) Rate***
----------- ----------- ----------- ----------- -----------
- -----------------
GOVERNMENT INCOME
- -----------------
CLASS Y (INSTITUTIONAL)**
<S> <C> <C> <C> <C> <C>
1996 0.64% 6.17% 0.89% 5.92% 131%
1995 0.59 6.53 0.98 6.14 368
1994 0.50 4.93 1.00 4.43 157
1993(1) 0.44 5.41 1.10 4.75 93
CLASS A (INDIVIDUAL)**
1996 0.88% 5.93% 1.14% 5.67% 131%
1995 0.85 6.25 1.24% 5.86 368
1994 0.75 4.68 1.25 4.18 157
1993(2) 0.63 5.35 1.29 4.69 93
- --------
BOND(11)
- --------
CLASS Y (INSTITUTIONAL)*
1996 0.55% 6.28% 0.97% 5.86% 190%
1995 0.71 6.09 1.12 5.68 352
CLASS A (INDIVIDUAL)*
1996 0.80% 6.02% 1.22% 5.61% 190%
1995 0.97 6.02 1.44 5.55 352
PRIOR CLASS
1994 1.01% 5.07% 1.60% 4.48% 232%
1993 0.88 5.16 1.49 4.55 158
1992 0.46 6.78 1.24 6.01 99
1991 0.47 7.71 1.41 6.78 47
1990(3) 0.68 7.75 1.62 6.81 23
- ---------------------
SHORT TERM INCOME(11)
- ---------------------
CLASS Y (INSTITUTIONAL)*
1996 0.51% 5.31% 1.03% 4.79% 102%
1995(4) 0.63 5.43 1.08 4.98 40
CLASS A (INDIVIDUAL)*
1996 0.76% 5.05% 1.25% 4.56% 102%
1995(5) 0.88 5.05 1.33 4.60 40
- -----------------------
SHORT-INTERMEDIATE BOND
- -----------------------
CLASS Y (INSTITUTIONAL)**
1996 0.55% 5.80% 0.81% 5.54% 257%
1995 0.60 5.76 0.84 5.52 405
1994 0.58 4.30 0.86 4.02 299
1993 0.42 4.62 0.86 4.18 188
1992(6) 0.11 5.73 0.84 5.00 51
CLASS A (INDIVIDUAL)**
1996 0.81% 5.51% 1.06% 5.27% 257%
1995 0.85 5.27 1.09 5.03 405
1994 0.83 4.05 1.11 3.77 299
1993(2) 0.75 3.78 1.19 3.34 188
</TABLE>
----
Financial Highlights 9
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED JUNE 30, (CONTINUED)
Fixed Income Funds (continued)
- ------------------
<TABLE>
Realized
and Net
Unrealized Assets,
Net Asset Net Gains Dividends Distributions End of Ratio of
Value, Net or (Losses) from Net from Net Asset Period Expenses to
Beginning Investment on Investment Capital Value End Total (000 Average Net
of Period Income Securities Income Gains of Period Return(10) omitted) Assets
----------- ----------- ----------- ----------- ----------- ----------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------
INTERMEDIATE MUNICIPAL BOND
- ---------------------------
CLASS Y (INSTITUTIONAL)**
1996 $ 9.83 $0.37 $ 0.09 $(0.37) $ -- $ 9.92 4.74% $ 403 0.81%
1995 9.68 0.38 0.15 (0.38) -- 9.83 5.58 365 0.82
1994 10.09 0.39 (0.41) (0.39) -- 9.68 (0.27) 1,088 0.63
1993(7) 10.00 0.04 0.09 (0.04) -- 10.09 1.33+ 2,009 0.58
CLASS A (INDIVIDUAL)**
1996 $ 9.83 $0.35 $ 0.09 $(0.35) $ -- $ 9.92 4.48% $ 1,015 1.08%
1995 9.67 0.35 0.16 (0.35) -- 9.83 5.42 1,027 1.08
1994 10.08 0.37 (0.41) (0.37) -- 9.67 (0.52) 1,311 0.88
1993(7) 10.00 0.03 0.08 (0.03) -- 10.08 1.19+ 166 0.81
- -----------
GLOBAL BOND
- -----------
CLASS Y (INSTITUTIONAL)**
1996 $ 9.62 $0.47 $ 0.30 $(0.69) $ -- $ 9.70 8.00% $32,998 0.71%
1995 9.06 0.62 0.24 (0.30) -- 9.62 9.70 26,898 0.64
1994(8) 10.00 0.25 (1.15) (0.04) -- 9.06 (9.00)+ 24,957 0.73
CLASS A (INDIVIDUAL)**
1996 $ 9.61 $0.61 $ 0.12 $(0.66) $ -- $ 9.68 7.74% $ 152 0.96%
1995 9.04 0.61 0.24 (0.28) -- 9.61 9.57 170 0.89
1994(8) 10.00 0.19 (1.11) (0.04) -- 9.04 (9.22)+ 167 0.98
- ---------------------------
PENNSYLVANIA MUNICIPAL BOND
- ---------------------------
CLASS Y (INSTITUTIONAL)**
1996 $10.16 $0.55 $ 0.06 $(0.55) $ -- $10.22 6.02% $ 8,864 0.21%
1995 9.95 0.51 0.21 (0.51) -- 10.16 7.50 2,272 0.39
1994(9) 10.00 0.06 (0.05) (0.06) -- 9.95 0.14+ 434 0.42
CLASS A (INDIVIDUAL)**
1996 $10.16 $0.52 $ 0.06 $(0.52) $ -- $10.22 5.76% $ 994 0.46%
1995 9.95 0.49 0.21 (0.49) -- 10.16 7.25 317 0.64
1994(9) 10.00 0.06 (0.05) (0.06) -- 9.95 0.09+ 163 0.67
- -------------------------
NEW JERSEY MUNICIPAL BOND
- -------------------------
CLASS Y (INSTITUTIONAL)**
1996 $10.12 $0.51 $(0.02) $(0.51) $(0.06) $10.08 5.28% $ 1,317 0.37%
1995 9.94 0.52 0.18 (0.52) -- 10.12 7.25 1,550 0.42
1994(9) 10.00 0.06 (0.06) (0.06) -- 9.94 0.01+ 1,432 0.43
CLASS A (INDIVIDUAL)**
1996 $10.12 $0.48 $(0.01) $(0.48) $(0.06) $10.07 4.93% $ 304 0.60%
1995 9.95 0.49 0.17 (0.49) -- 10.12 6.84 24 0.68
1994(9) 10.00 0.06 (0.05) (0.06) -- 9.95 0.08+ 2 0.68
<CAPTION>
Ratio of Ratio of
Expenses to Net Income
Ratio of Average Net to Average
Net Income Assets Net Assets Portfolio
to Average (Excluding (Excluding Turnover
Net Assets Waivers) Waivers) Rate***
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
- ---------------------------
INTERMEDIATE MUNICIPAL BOND
- ---------------------------
CLASS Y (INSTITUTIONAL)**
1996 3.73% 1.31% 3.23% 10%
1995 3.91 1.26 3.47 9
1994 3.91 1.17 3.37 43
1993(7) 2.74 1.45 1.87 10
CLASS A (INDIVIDUAL
1996 3.47% 1.61% 2.94% 10%
1995 3.65 1.52 3.21 9
1994 3.66 1.42 3.12 43
1993(7) 2.51 1.68 1.64 10
- -----------
GLOBAL BOND
- -----------
CLASS Y (INSTITUTIONAL)**
1996 5.81% 0.95% 5.57% 67%
1995 6.84 1.03 6.45 133
1994(8) 5.04 1.12 4.65 161
CLASS A
(INDIVIDUAL)**
1996 5.56% 1.20% 5.32% 67%
1995 6.59 1.28 6.20 133
1994(8) 4.79 1.37 4.40 161
- ---------------------------
PENNSYLVANIA MUNICIPAL BOND
- ---------------------------
CLASS Y (INSTITUTIONAL)**
1996 5.25% 0.96% 4.50% 92%
1995 5.26 1.14 4.51 18
1994(9) 5.09 1.17 4.34 3
CLASS A (INDIVIDUAL
1996 4.93% 1.21% 4.18% 92%
1995 4.95 1.39 4.20 18
1994(9) 4.84 1.42 4.09 3
- -------------------------
NEW JERSEY MUNICIPAL BOND
- -------------------------
CLASS Y (INSTITUTIONAL)**
1996 4.93% 1.12% 4.18% 21%
1995 5.21 1.17 4.46 32
1994(9) 5.07 1.35 4.15 13
CLASS A (INDIVIDUAL
1996 4.65% 1.35% 3.90% 21%
1995 4.97 1.44 4.21 32
1994(9) 4.82 1.60 3.90 13
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
* On February 21, 1995 the shares of the Funds were redesignated as either Retail or Institutional shares. For the year ended
October 31, 1995, the Financial Highlights' ratios of expenses, net investment income, total return, and the per share
investment activities and distributions are presented on a basis whereby the Fund's net investment income, expenses, and
distributions for the period November 1, 1994 through February 20, 1995 were allocated to each class of shares based upon the
relative net assets of each class of shares as of February 21, 1995 and the results combined therewith the results of
operations and distributions for each applicable class for the period February 21, 1995 through October 31, 1995.
Additionally, On April 22, 1996 the Conestoga Short-Term Income and Bond Funds were acquired by CoreFunds, Inc. at which time
the Institutional Class of shares of these Funds were redesignated Class Y and the Retail Class of these Funds were
redesignated Class A.
** On April 22, 1996 the Series A shares of each fund, excluding the Short Term Income and Bond Funds, were redesignated Class Y
and the Series B shares of each fund, excluding the Short Term Income and Bond Funds, were redesignated Class A.
*** For 1996 transactions relating to the merger were excluded from the calculation of the Portfolio Turnover Rate.
+ This figure has not been annualized.
(1) Commenced operations April 1, 1993. Unless otherwise noted, all ratios for the period have been annualized.
(2) Commenced operations January 4, 1993. Unless otherwise noted, all ratios for the period have been annualized.
(3) Commenced operations February 28, 1990. Unless otherwise noted, all ratios for the period have been annualized.
(4) Commenced operations May 15, 1995. Unless otherwise noted, all ratios for the period have been annualized.
(5) Commenced operations May 17, 1995. Unless otherwise noted, all ratios for the period have been annualized.
(6) Commenced operations February 3, 1992. Unless otherwise noted, all ratios for the period have been annualized.
(7) Commenced operations May 3, 1993. Unless otherwise noted, all ratios for the period have been annualized.
(8) Commenced operations December 15, 1993. Unless otherwise noted, all ratios for the period have been annualized.
(9) Commenced operations May 16, 1994. Unless otherwise noted, all ratios for the period have been annualized.
(10) Total return does not reflect the sales load charged on the Class A shares. Additionally, total return for Class Y & Class A
for the Short Term Income and Bond Funds for 1996 are for the eight month period ended June 30, 1996.
(11) The per share amount for these Funds for 1996 represents the period from November 1, 1995 to June 30, 1996. All prior years
are for the periods November 1 to October 31.
</TABLE>
- ----
10 Financial Highlights
<PAGE>
- -------------------------------------------------------------------------------
/X/ COREFUND
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED JUNE 30,
Money Market Funds
- ------------------
<TABLE>
Net
Assets
Net Asset Dividends Net End of Ratio of Ratio of
Value Net from Net Asset Value Period Expenses to Net Income
Beginning Investment Investment End of Total (000 Average Net to Average
of Period Income Income Period Return omitted) Assets Net Assets
----------- ----------- ----------- ----------- ----------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------
CASH RESERVE
- ------------
CLASS Y (INSTITUTIONAL)*
1996 $1.00 $0.05 $(0.05) $1.00 5.26% $790,211 0.50% 5.09%
1995 1.00 0.05 (0.05) 1.00 5.15 510,341 0.48 5.04
1994 1.00 0.03 (0.03) 1.00 3.00 505,273 0.47 2.95
1993 1.00 0.03 (0.03) 1.00 2.99 460,832 0.46 2.97
1992 1.00 0.05 (0.05) 1.00 4.83 568,672 0.38 4.68
1991 1.00 0.07 (0.07) 1.00 7.28 473,187 0.37 6.94
1990 1.00 0.08 (0.08) 1.00 8.65 316,290 0.34 8.28
1989 1.00 0.09 (0.09) 1.00 8.87 186,151 0.37 8.62
1988 1.00 0.07 (0.07) 1.00 6.70 82,399 0.55 6.54
1987 1.00 0.06 (0.06) 1.00 5.85 35,054 0.54 5.60
CLASS C (INDIVIDUAL)*
1996 $1.00 $0.05 $(0.05) $1.00 5.00% $ 19,736 0.75% 4.86%
1995 1.00 0.05 (0.05) 1.00 4.89 17,583 0.73 4.86
1994 1.00 0.03 (0.03) 1.00 2.74 11,451 0.72 2.70
1993(1) 1.00 0.01 (0.01) 1.00 1.23+ 15,330 0.76 2.52
- ----------------
TREASURY RESERVE
- ----------------
CLASS Y (INSTITUTIONAL)*
1996 $1.00 $0.05 $(0.05) $1.00 5.20% $892,562 0.50% 5.02%
1995 1.00 0.05 (0.05) 1.00 4.98 479,206 0.48 4.91
1994 1.00 0.03 (0.03) 1.00 2.91 484,974 0.48 2.87
1993 1.00 0.03 (0.03) 1.00 2.96 446,788 0.46 2.89
1992 1.00 0.05 (0.05) 1.00 4.73 444,388 0.38 4.58
1991 1.00 0.07 (0.07) 1.00 7.11 427,439 0.37 6.80
1990 1.00 0.08 (0.08) 1.00 8.38 270,524 0.37 8.03
1989(2) 1.00 0.06 (0.06) 1.00 4.66+ 220,479 0.20 9.26
CLASS C (INDIVIDUAL)*
1996 $1.00 $0.05 $(0.05) $1.00 4.94% $ 19,386 0.75% 4.81%
1995 1.00 0.05 (0.05) 1.00 4.72 21,612 0.73 4.81
1994 1.00 0.03 (0.03) 1.00 2.65 7,573 0.73 2.62
1993(1) 1.00 0.01 (0.01) 1.00 1.21+ 7,672 0.75 2.46
- ----------------
TAX-FREE RESERVE
- ----------------
CLASS Y (INSTITUTIONAL)*
1996 $1.00 $0.03 $(0.03) $1.00 3.20% $104,196 0.48% 3.14%
1995 1.00 0.03 (0.03) 1.00 3.12 62,756 0.48 3.09
1994 1.00 0.02 (0.02) 1.00 2.03 79,384 0.49 2.00
1993 1.00 0.02 (0.02) 1.00 2.23 72,255 0.51 2.20
1992 1.00 0.03 (0.03) 1.00 3.56 80,147 0.37 3.39
1991(3) 1.00 0.01 (0.01) 1.00 1.07+ 42,573 0.06 4.20
CLASS C (INDIVIDUAL)*
1996 $1.00 $0.03 $(0.03) $1.00 2.95% $ 2,850 0.73% 2.94%
1995 1.00 0.03 (0.03) 1.00 2.86 1,524 0.73 2.80
1994 1.00 0.02 (0.02) 1.00 1.78 2,708 0.74 1.75
1993(1) 1.00 0.01 (0.01) 1.00 0.85+ 1,795 0.76 1.71
<CAPTION>
Ratio of Ratio of Net
Expenses to Income to
Average Net Average Net
Assets Assets
(Excluding (Excluding
Waivers) Waivers)
------------- -------------
<S> <C> <C>
- ------------
CASH RESERVE
- ------------
CLASS Y (INSTITUTIONAL)*
1996 0.78% 4.81%
1995 0.85 4.67
1994 0.85 2.57
1993 0.85 2.58
1992 0.82 4.24
1991 0.82 6.49
1990 0.80 7.82
1989 0.90 8.05
1988 1.14 5.96
1987 1.01 5.13
CLASS C (INDIVIDUAL)*
1996 1.03% 4.58%
1995 1.10 4.49
1994 1.10 2.32
1993(1) 1.15 2.13
- ----------------
TREASURY RESERVE
- ----------------
CLASS Y (INSTITUTIONAL)*
1996 0.77% 4.75%
1995 0.85 4.54
1994 0.86 2.49
1993 0.85 2.50
1992 0.82 4.14
1991 0.82 6.35
1990 0.84 7.56
1989(2) 0.84 8.62
CLASS C (INDIVIDUAL)
1996 1.03% 4.53%
1995 1.10 4.44
1994 1.11 2.24
1993(1) 1.14 2.07
- ----------------
TAX-FREE RESERVE
- ----------------
CLASS Y (INSTITUTIONAL)*
1996 0.76% 2.86%
1995 0.85 2.72
1994 0.87 1.62
1993 0.89 1.82
1992 0.88 2.88
1991(3) 0.81 3.45
CLASS C (INDIVIDUAL)
1996 1.02% 2.65%
1995 1.10 2.43
1994 1.12 1.37
1993(1) 1.14 1.33
</TABLE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
* On April 22, 1996, Series A shares were redesignated Class Y and Series B shares were redesignated Class C.
+ Returns are for the period indicated and have not been annualized.
(1) Commenced operations January 4, 1993. Ratios for this period have been annualized.
(2) Commenced operations November 21, 1988. Ratios for this period have been annualized.
(3) Commenced operations on April 16, 1991. Ratios for this period have been annualized.
</TABLE>
Financial Highlights ----
11
<PAGE>
- --------------------------------------------------------------------------------
HIGHLIGHTS /X/ COREFUND
<TABLE>
<S> <C>
COREFUNDS CoreFunds, Inc. ('CoreFunds') is an open-end management investment company presently offering shares
in twenty diversified and non-diversified portfolios. This Prospectus offers Class A of the Equity
and Fixed Income Funds and Class C Shares of the Money Market Funds. Class A and Class C Shares are
primarily offered to the general public as well as various types of institutional investors, which
may include CoreStates Bank and its affiliate and corresponding banks, for the investment of their
own funds or for funds for which they serve in a fiduciary, agency or custodial capacity. Investors
may also include shareholders of other investment companies which are advised by a Fund's adviser or
sub-adviser, and whose assets a Fund acquires in a tax-free reorganization, who propose to become
shareholders of the Fund as a result of such reorganization. Investors purchasing A and C Shares will
normally be those who desire certain additional shareholder services from certain security
broker/dealers and financial institutions which have entered into shareholder servicing agreements
with the Funds' distributor. Materials relating to Class Y Shares of the Funds may be obtained by
calling 1-800-355-CORE or by writing to CoreFunds, Inc., 680 East Swedesford Road, Wayne, PA 19087.
Prior to the date of this Prospectus, all Class A Shares were known as Series B -- Individual for all
portfolios other than Money Market Funds; Class C Shares were known as Series B -- Individual for the
Money Market Funds; and Class Y Shares were known as Series A -- Institutional. CoreFunds has changed
these designations to conform to the standard designations suggested by the Investment Company
Institute.
- -------------------------------------------------------------------------------------------------------------------------------
FUNDAMENTALS OF MUTUAL This section will assist you in appreciating investments generally. It describes the three basic
FUND INVESTING types of investment vehicles--stocks, bonds, and money market instruments--as well as mutual funds
which employ one or more of these instruments. The various types of mutual funds available and the
advantages of mutual fund investing are discussed.
PAGE 16
- -------------------------------------------------------------------------------------------------------------------------------
MULTIPLE PORTFOLIOS Investors may choose to invest in any of the seventeen funds of CoreFunds offered in this Prospectus.
EQUITY FUNDS FIXED INCOME FUNDS MONEY MARKET FUNDS
Growth Equity Fund Short-Intermediate Bond Fund Cash Reserve
Core Equity Fund Bond Fund Treasury Reserve
Special Equity Fund Short Term Income Fund Tax-Free Reserve
Equity Index Fund Government Income Fund
International Growth Fund Intermediate Municipal
Balanced Fund Bond Fund
Pennsylvania Municipal
Bond Fund
New Jersey Municipal
Bond Fund
Global Bond Fund
PAGE 27
</TABLE>
- ----
12 Highlights
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
<TABLE>
<S> <C>
RISK Investment in the Funds involves a number of risks, including possible loss of principal. The Funds
CHARACTER- differ significantly in terms of specific risks. Certain risk factors applicable to the Funds are
ISTICS described below.
EQUITY FUNDS
The Equity Funds are subject to market risk and fund risk. Market risk is the possibility that stock
prices in general will decline over short or even extended periods of time. Stock markets tend to be
cyclical, with periods when stock prices generally rise and periods when stock prices generally
decline. Fund risk is the possibility that a Fund's performance during a specific period may not meet
or exceed that of the stock market as a whole. Investors should consider their holdings in equity
mutual funds to be long-term investments.
In addition to market and fund risks, International Growth Fund is subject to foreign market and
currency risk. Investments in foreign stock markets can be as volatile, if not more volatile, than
investments in U.S. markets. Currency risk is the risk that changes in foreign exchange rates will
affect, favorably or unfavorably, the value of foreign securities held by the Fund.
FIXED INCOME FUNDS
Securities held by the Fixed Income Funds may be subject to several types of investment risk,
including market risk, credit risk, and call risk. With respect to these Funds, market risk (or
interest rate risk) is the potential for a decline in the price of fixed-income securities due to
rising interest rates. Credit risk is the possibility that a bond issuer will be unable to make
timely payments of either principal or interest. Call risk (or income risk) relates to corporate and
municipal bonds during periods of falling interest rates, and involves the possibility that
securities with high interest rates will be prepaid (or 'called') by the issuer prior to maturity.
Such an event would require a Fund to invest the resulting proceeds elsewhere, at generally lower
interest rates, which would cause fluctuations in the Fund's net income.
Short-Intermediate Bond Fund, Bond Fund and Short Term Income Fund may also be exposed to event
risk, the possibility that corporate fixed income securities held by these Funds may suffer a substantial
decline in credit quality and market value due to a corporate restructuring, such as an acquisition.
While event risk may be high for certain corporate securities held by these Funds, event risk in the
aggregate should be low because of the Funds' diversified holdings.
An investment in either the Pennsylvania Municipal Bond Fund or the New Jersey Municipal Bond
Fund involves special risk considerations. The concentration of investments in Pennsylvania municipal
securities by the Pennsylvania Municipal Bond Fund and the concentration of investments in
</TABLE>
----
Highlights 13
<PAGE>
- --------------------------------------------------------------------------------
HIGHLIGHTS (continued)
<TABLE>
<S> <C>
New Jersey municipal securities by the New Jersey Municipal Bond Fund raises certain investment
considerations, including the possibility that changes in the economic condition and
governmental policies of either state or its municipalities could adversely affect the value
of the corresponding Fund and the portfolio securities held by it.
Global Bond Fund is also subject to foreign market and currency risks, as described above.
MONEY MARKET FUNDS
Securities held by Cash Reserve and Treasury Reserve may be subject, on a limited basis, to credit
risk. The credit risk of a money market investment portfolio is similar to that of a fixed income
portfolio.
Securities held by Tax-Free Reserve may be subject, on a limited basis, to several types of
investment risk, including market risk (or interest rate risk), credit risk and call risk (or income
risk).
PAGE 57
- ------------------------------------------------------------------------------------------------------------------------------
INVESTMENT CoreStates Investment Advisers, Inc. ('CoreStates Advisers') serves as the investment adviser for
ADVISER each Fund. The International Growth Fund and Global Bond Fund also retain investment sub-advisers.
CoreStates Advisers has extensive experience in the management of money market, tax-free, fixed
income, equity, and international investments. It currently manages discretionary and
non-discretionary client security portfolios with a total aggregate market value exceeding $16
billion, for individuals, corporations, institutions and municipalities.
PAGE 65
- ------------------------------------------------------------------------------------------------------------------------------
DIVIDEND Shareholders of a Fund are entitled to dividends and distributions arising from the net investment
POLICY income and capital gains, if any, earned on investments held by the Fund.
PAGE 60
- ------------------------------------------------------------------------------------------------------------------------------
TAXES The sale or redemption of shares of a mutual fund is a taxable event to the selling or redeeming
shareholder. In addition, any receipt of dividends which represent capital gain distributions will
be subject to federal and state income taxes. However, receipt of other dividends will generally not
be subject to federal income taxes. Ordinary dividends also will be subject to state income taxes,
except as to Pennsylvania residents for the Pennsylvania Municipal Bond Fund and New Jersey
residents for the New Jersey Municipal Bond Fund.
There will be no federal income tax consequences to shareholders as a result of the Merger of
the Conestoga Funds into the CoreFund family of mutual funds. Shareholders of the Conestoga portfolios
will recognize no gain or loss on receipt of shares of the CoreFunds portfolio and shareholders of
the CoreFunds portfolio will have no tax consequences as a result of the Merger.
PAGE 61
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----
14 Highlights
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
<TABLE>
<S> <C>
PURCHASING You may purchase shares by mail, wire or exchange from another account or Fund. The minimum initial
SHARES investment is $500 for each Fund. A maximum sales charge of 5.50%, 4.75%, or 3.25% is imposed on
Class A Shares of each Fund at the time of purchase for amounts less than $50,000 declining to 0%
for amounts of $1 million or more. There is no minimum for subsequent investments. There is also no
minimum initial investment for automatic investment plans.
From time to time, CoreFunds may waive each Fund's sales load for those investors purchasing
shares through advertisements placed in local newspapers and magazines. The advertisements will
detail the procedure for purchasing Fund shares without the imposition of the sales load, including
but not limited to, the duration of the offer.
PAGE 75
- ------------------------------------------------------------------------------------------------------------------------------
SELLING You may redeem or sell shares of each Fund by mail or telephone. You may also redeem shares of the
SHARES Money Market Funds by check. There is no charge for redemptions, except for wire withdrawals which
are subject to the transfer agent's then-current wire fee. Your bank may also impose a fee upon
receipt of a wire. The share price of each Fund except for the Money Market Funds is expected to
fluctuate, and may, at redemption, be more or less than at the time of initial purchase.
PAGE 79
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SERVICES FOR CoreFunds offers checkwriting services (minimum $250) on the Money Market Funds for easy access to
SHAREHOLDERS your account balances.
CoreFunds also offers additional services including automatic investment and systematic
withdrawal plans.
PAGE 75
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</TABLE>
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Highlights 15
<PAGE>
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FUNDAMENTALS OF MUTUAL FUND INVESTING
AN INTRODUCTORY
GUIDE FOR
INVESTORS
This section is devoted to those who are unfamiliar or uncomfortable with the
concepts of mutual fund investing, as well as those who are interested in
developing a coordinated strategy which can help them reach their financial
goals.
It describes the three basic types of investment vehicles -- stocks, bonds,
and money market instruments -- as well as mutual funds which employ one or more
of these investments.
Of course, no guide alone can help you determine how or when to invest.
That's why we recommend that you work closely with an investment representative
to develop a solid program which is designed specifically for your goals and
risk tolerance.
- --------------------------------------------------------------------------------
/X/
PART I:
TYPES OF
INVESTMENT
VEHICLES
For details on how
each of these instruments
is used in mutual funds,
please see the section
entitled, "What types
of mutual funds are
available?"
The three most popular types of investments are stocks, bonds, and money market
instruments. The following is an introduction to what they are and how they
work.
WHAT IS A STOCK?
Also known as equities, stocks represent an ownership position in a business
entity, such as a company or corporation. Each share of stock represents a
proportionate "share" of ownership in the business entity. As a result, stocks
offer individual investors the opportunity to take part in the economic future
of business.
Stocks are bought and sold on the open market, through a variety of stock
exchanges in the U.S. and around the world. This system allows any individual to
purchase and sell shares through stock brokers, who are licensed to participate
in the exchange.
The price for a share of stock is established by an "auction" system, in
which the broker for the buyer negotiates with the broker for the seller. When
the demand for a stock is low, its price will most likely fall; when demand is
high, the stock's price will most likely rise.
Because each share of stock represents a share in the company's earnings,
one of the most common factors affecting the price of the stock is the direction
of the company's earnings. In theory, the more a company earns, or is expected
to earn, the higher the price of its shares.
However, a number of other factors can cause a stock's price to go up or
down, including events which will positively or negatively affect the company's
future, changes in the overall economy, changes in the mood of the market, and
the market's perceptions of the company or its stock.
ALSO SEE: "Equity
Mutual Funds" and
"What are balanced
funds?"
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16 Fundamentals
<PAGE>
For definitions of
investment terms,
please see the
glossary following
this section.
WHAT IS A BOND?
When a corporation, government or government agency needs money for a certain
project, it often borrows money by issuing bonds to investors. So, in the
simplest terms, a bond is an IOU. The investor who purchases a bond is acting as
the lender.
Rather than offering an ownership share in business, as stocks do, bonds
are simply an agreement to repay the investor the amount loaned, also known as
principal, on a certain date. In addition, the issuer commits to making periodic
fixed interest payments to the lender until the loan is repaid.
When the bond is issued by a state or municipality, the interest paid to
investors is generally free of federal income taxes.
Like stocks, bonds are also traded in the open market. The value of a bond
can fluctuate due to changing market conditions. For example, when interest
rates in the market fall, the prices of bonds tend to rise. On the other hand,
when interest rates rise, the value of bonds falls.
Generally, the longer the maturity of a bond, the higher its yield and the
greater its price volatility. The shorter the maturity, the lower the yield and
the greater its price stability.
ALSO SEE: "Fixed
Income Mutual
Funds"
- --------------------------------------------------------------------------------
Price of the
same bond if
Price of a 7% the yield
coupon bond increases to 8%
Years to now trading to to keep pace with Percent change
maturity yield 7% rising interest rates in price
- --------------------------------------------------------------------------------
1 year $100.00 $99.06 -0.94%
3 years 100.00 $97.38 -2.62%
10 years 100.00 $93.20 -6.80%
30 years 100.00 $88.69 -11.31%
- --------------------------------------------------------------------------------
During times when overall interest rates are falling, fixed-income investors
generally enjoy higher prices for their bonds. Conversely, rising interest rates
tend to reduce the value of bonds. Longer maturity bonds experience a greater
change in price, as shown above.
WHAT IS A MONEY MARKET INSTRUMENT?
Simply put, money market instruments are short-term bonds, with maturities
typically ranging from overnight to 13 months. They pay investors a rate of
interest which is generally lower than that of longer-term bonds.
Money market securities are issued by a number of sources, including the
U.S. Government, its agencies and large, reputable banks and corporations.
Money market instruments are generally quite stable, due to their short
maturities. Therefore, they are chosen by investors who wish to maintain the
safety of their investment.
ALSO SEE: "Money
Market Mutual
Funds"
----
Fundamentals 17
<PAGE>
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FUNDAMENTALS OF MUTUAL FUND INVESTING (continued)
/X/
PART II:
HOW TO
INVEST IN
STOCKS,
BONDS, AND
MONEY MARKET
INSTRUMENTS
Now that you've reviewed the basic types of investment vehicles available,
here's a discussion of how mutual funds can help you invest in stocks, bonds,
and money market securities.
WHAT IS A MUTUAL FUND?
Simply defined, a mutual fund pools the money of many investors and invests it
toward a specific goal, such as stability of principal, regular income, or
long-term growth. The fund's professional managers choose investments that, in
their judgment, will help the fund achieve its goal. As an investor, you share
in the fund's gains, losses, income, and expenses on a proportional basis.
An equity fund pools its money to purchase stocks, a fixed-income fund
purchases bonds, and a money market fund purchases short-term debt instruments.
ADVANTAGES OF MUTUAL FUND INVESTING.
While many investors enjoy excellent results by purchasing individual stocks or
bonds, most investors find that mutual funds offer a more viable alternative,
for the following reasons:
PROFESSIONAL MANAGEMENT: With individual securities, you or your broker
must do the extensive research necessary to choose from among the thousands of
securities available. With mutual funds, you enjoy having a professional money
manager uncover opportunities and research them to make sure the investment is
appropriate for the needs of the fund.
LOW COSTS: With mutual funds, trading costs are modest because they are
shared by all investors in the fund.
DIVERSIFICATION: When investing, it's important to not put all your eggs in
one basket, so that you will be protected against an excessive loss in any one
investment. But only the wealthiest investors can afford to purchase the wide
range of individual securities to achieve true diversification. With mutual
funds, however, you can enjoy immediate diversification with even a very limited
amount of money, because investment risk is spread over many different
securities for greater stability and safety of your investment.
LIQUIDITY: With individual securities, it can sometimes be difficult to
redeem your investment due to market conditions and other factors. Mutual fund
shares, however, are easily redeemed at their current market value.
- --------------------------------------------------------------------------------
WHAT TYPES
OF MUTUAL
FUNDS ARE
AVAILABLE?
The three basic categories of mutual funds are as follows:
EQUITY (STOCK) MUTUAL FUNDS A stock fund consists of selected securities
traded on the stock market. The fund changes in value as the prices of the
stocks in the fund change. Although these funds tend to rise or fall in price
more than other types of mutual funds, they have traditionally rewarded
investors with higher returns over the long run.
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18 Fundamentals
<PAGE>
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/X/ COREFUND
FIXED INCOME (BOND) MUTUAL FUNDS A fixed income fund is a mutual fund which
invests in a pool of bonds. Bonds generally pay a fixed rate of interest. While
fixed income mutual funds buy bonds, it's important to note that the income paid
by a bond fund will fluctuate as individual securities are added to or
subtracted from the pool.
In addition, fixed income funds are subject to changes in net asset value
due to changing market conditions. Like individual bonds, fixed income funds
will tend to increase in value during times of decreasing interest rates, and
will generally decrease in value when interest rates rise.
There are a wide range of fixed-income funds to choose from, each with its
own investment objectives. These objectives range from stability of principal,
to maximum yield, to tax-free income.
MONEY MARKET FUNDS Of the basic mutual fund categories, money market funds
are managed to maintain the greatest stability of principal. They are managed to
maintain a value of $1 per share.
Money market funds invest in short-term money market securities, such as
U.S. Treasury Bills, certificates of deposit from large banks, and commercial
paper. Because the interest rates paid on these securities fluctuate with market
conditions, the yield for money market funds will also change.
- --------------------------------------------------------------------------------
WHAT ARE
TAX-FREE
FUNDS?
Tax-free funds, which include both fixed income (bond) and money market funds,
invest in securities which are issued by state, county, and local governments
and their agencies. The proceeds from these securities are used to finance a
variety of public-works projects, such as the building of roads, schools, and
sewers.
Under current tax laws, the interest paid to investors in these securities
is generally exempt from Federal income taxes. Therefore, they are frequently
purchased by investors who wish to shelter their investment income from taxes.
However, Congress from time to time reviews this aspect of the tax code and may
at any time repeal the exemption on any or all of these securities. If this were
to occur, it would have a negative impact on any affected securities, as well as
the mutual funds in which they were held.
- --------------------------------------------------------------------------------
It's Easy to Compare Tax-Free and Taxable Yields:
Tax-Free Yield
_____________ = Taxable Yield
1 - Tax Rate
- --------------------------------------------------------------------------------
----
Fundamentals 19
<PAGE>
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FUNDAMENTALS OF MUTUAL FUND INVESTING (continued)
WHAT ARE
BALANCED
FUNDS?
In addition to the types of mutual funds already described, there are also funds
which blend investments in stock, bond, and money market securities. These are
commonly known as balanced funds.
The returns for balanced funds are typically greater than those of bond and
money market funds, but lower than those of pure stock funds. Investing in all
three types of securities means the value of your principal should fluctuate
less than it would in a stock or bond fund alone.
Typically, the fund's professional manager has the flexibility to change
the investment mix based on current economic conditions.
- --------------------------------------------------------------------------------
COMPARING THE
PERFORMANCE OF
STOCK, BOND, AND
MONEY MARKET
INVESTMENTS
In order to balance risks and rewards, it's helpful to see how stocks, bonds,
and money market investments have performed over time.
Mutual fund performance is stated in terms of total return. The total
return of a mutual fund or any other investment consists of the combination of
capital appreciation (or loss) and investment income.
Capital appreciation (or loss) is a change in the market value. Income is
made up of dividends earned on stocks, and interest paid on bonds or money
market investments. In general, stocks have the highest total return, because
over long periods of time they have achieved the greatest capital appreciation.
Bonds have provided the greatest income or interest, but because their
prices are more stable they have less potential than stocks for capital
appreciation. Therefore, they have a lower total return potential over time than
stocks.
Of course, past returns are no guarantee of future results. But historical
data tells a story which surprises many investors.
As the chart on the following page shows, for the forty-year period between
January 1956 and December 1995, stocks have averaged annual returns of 10.8%,
while long-term bonds have averaged 6.4%, intermediate-term bonds have averaged
7.0%, and money market instruments have averaged 5.7%. During this same period,
inflation averaged 4.5%. Therefore, bonds and money market investments actually
delivered very little growth in excess of inflation.
Stocks, on the other hand, averaged more than double the rate of inflation.
What about the price fluctuations? Well, it's true that stocks do fluctuate --
and probably always will. But as the accompanying chart shows, stocks have
consistently rewarded long-term investors.
Since money market funds are managed to have a constant $1 share price,
their total return consists only of the interest earned on their investments.
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20 Fundamentals
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
GROWTH
OF $1,000
(Historical
Performance
of Stocks,
Bonds and
Cash)
Dollars in Thousands
$60
$50
$40
$30
$20
$10
$ 0
$60,013
$15,062
$11,862
$ 9,289
$ 5,719
Large Long-Term Intermediate-Term
Year Stock Gov't Bonds Inflation TBill Gov't Bonds
1956 1.4 1.04 1.03 0.93 0.99
1957 1.25 1.07 1.06 1.0 1.07
1958 1.79 1.09 1.08 0.94 1.05
1959 2.01 1.12 1.1 0.92 1.05
1960 2.02 1.15 1.12 1.05 1.17
1961 2.56 1.18 1.12 1.06 1.19
1962 2.34 1.21 1.14 1.13 1.26
1963 2.87 1.25 1.16 1.14 1.28
1964 3.35 1.29 1.17 1.18 1.33
1965 3.77 1.34 1.19 1.19 1.35
1967 3.39 1.4 1.23 1.23 1.41
1968 4.2 1.46 1.27 1.12 1.42
1969 4.66 1.54 1.33 1.12 1.49
1970 4.27 1.64 1.41 1.06 1.48
1971 4.44 1.75 1.49 1.19 1.73
1972 5.07 1.82 1.54 1.35 1.88
1973 6.04 1.89 1.59 1.42 1.97
1974 5.15 2.02 1.73 1.41 2.07
1975 3.79 2.19 1.94 1.47 2.18
1976 5.19 2.31 2.08 1.6 2.35
1977 6.43 2.43 2.18 1.87 2.66
1978 5.97 2.56 2.32 1.86 2.69
1979 6.36 2.74 2.53 1.84 2.79
1980 7.53 3.02 2.87 1.82 2.9
1981 9.97 3.36 3.23 1.74 3.02
1982 9.48 3.86 3.51 1.78 3.3
1983 11.51 4.26 3.65 2.49 4.26
1984 14.1 4.64 3.79 2.51 4.58
1985 14.99 5.09 3.94 2.9 5.22
1986 19.82 5.48 4.09 3.8 6.28
1987 23.48 5.82 4.14 4.73 7.23
1988 24.7 6.14 4.32 4.6 7.44
1989 28.85 6.53 4.51 5.04 7.89
1990 37.94 7.08 4.72 5.96 8.94
1991 36.73 7.63 5.0 6.33 9.81
1992 47.93 8.06 5.16 7.55 11.33
1993 51.62 8.34 5.31 8.15 12.14
1994 56.78 8.58 5.45 9.64 13.51
1995 57.52 8.92 5.6 .89 12.81
1996 60.01 9.21 5.7 11.86 15.06
This chart shows how the major types of investments have performed over the past
40 years. More stable money market investments have produced the lowest annual
returns, while stocks have produced the greatest growth even though their value
fluctuates more.
HISTORICAL
ANNUALIZED
RETURN
(January 1956-
December 1995)
Stocks 10.8%
Long-Term Government Bonds 6.4
Intermediate-Term Government Bonds 7.0
Cash 5.7
Inflation 4.5
Assumptions for the table and charts shown on this page: Returns based on
historical performance, which is no guarantee of future results. Stock returns
represent total return of the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500 Index"). Fixed income, or bonds, is composed of
intermediate- and long-term Government Bonds. Cash represents 30-day Treasury
Bills. Source: SEI Financial Services Company.
RANGE
OF STOCK
RATES OF RETURN
FOR ONE-
AND FIVE-YEAR
ROLLING
PERIODS
(1956-1995)
Percent
Annual Returns Rolling Five-Year Periods
95th Percentile 37.2% 17.9%
5th Percentile -10.9% 1.4%
Many individuals are concerned about the risks associated with investing in
stocks. Many do not realize, however, that despite the fluctuation of annual
returns, investors who held stocks for a full five years historically earned a
positive return in more than ninety-five percent of the cases. Best and worst
case scenarios presented in this illustration represent the fifth and ninety-
fifth percentile of the historical return distribution. Source: SEI Financial
Services Company.
----
Fundamentals 21
<PAGE>
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FUNDAMENTALS OF MUTUAL FUND INVESTING (continued)
WHAT ARE
INTERNATIONAL
FUNDS?
International funds invest primarily in stock, bond and money market securities
issued by corporations, governments and banks worldwide.
International equity funds invest in the equity (stock) securities of
companies based outside the United States. Today, international markets account
for over 62% of the world's equity capitalization, as measured by the Morgan
Stanley World Index in February, 1996. This indicates that many investment
opportunities now exist globally. Likewise, international bond funds may invest
in government and corporate debt obligations from around the world with the aim
of providing income and the potential for capital appreciation. Investing in
international equity (stock) and fixed income (bond) funds provides investors
with a way to participate in a diversified portfolio of many international
securities of many countries.
GROWTH
OF $1,000
(Performance
of International
and Domestic
Stocks)
Dollars in Thousands
$25
$20
$15
$10
$ 5
$ 0
$16,775
$15,229
Year MSCI EAFE S&P 500
1976 1.4223 1.6985
1977 1.6986 1.5762
1978 2.2812 1.6803
1979 2.4222 1.9894
1980 3.014 2.634
1981 2.9829 2.505
1982 2.9573 3.041
1983 3.6851 3.7252
1984 3.9749 3.9599
1985 6.2296 5.235
1986 10.586 6.2035
1987 13.226 6.5291
1988 17.007 7.6225
1989 18.843 10.024
1990 14.473 9.7028
1991 16.281 12.662
1992 14.352 13.637
1993 19.08 15.001
1994 20.618 15.196
1995 15.220 16.775
Growth of $1,000 in international and domestic stocks. MSCI EAFE (the Morgan
Stanley Capital International Europe Australia and Far East Index) represents
the growth of an investment in international stocks, and the S&P 500 Index
indicates an investment in domestic stocks.
A COMPARISON
OF FOREIGN
GOV'T BOND
RETURN
PERFORMANCE
1995
30
25
20
15
10
5
0
A COMPARISON OF
FOREIGN GOV'T BOND
RETURN PERFORMANCE
1994
Total Return in U.S. Dollars
Japan 9.57
U.K. 15.62
Australia 14.94
France 27.69
Canada 23.45
U.S. 18.30
Germany 25.91
SOURCE: SEI FINANCIAL SERVICES COMPANY
Although investing internationally can reward investors (see graphs above),
there is an added dimension to the risks involved in investing in domestic
securities. Currency fluctuations in the countries in which international stock
and bond securities are issued can negatively impact the value of these
securities, as well as the mutual funds in which they are held.
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22 Fundamentals
<PAGE>
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/X/ COREFUND
/X/
PART III:
DEVELOPING
YOUR
INVESTMENT
STRATEGY
Now that you have a basic understanding of the investments available to you,
let's look at how these investments can be used to help you achieve your goals.
Everyone, whatever their income level, has financial goals. Perhaps yours
include a comfortable retirement, education for your children or grandchildren,
a new home, or simply the accumulation of wealth.
Whatever your personal goals, the best way to achieve them is to take
control of your financial future. And one of the best ways to do that is through
a coordinated program of saving and investing.
Saving money provides the foundation for reaching your goals, while
investing builds on that foundation by using the money you save to make even
more money.
Mutual funds provide one of the most convenient and rewarding means of
saving and investing.
Mutual funds are particularly well-suited to long-term goals such as
education and retirement, because they offer a convenient way to invest
regularly in a diversified portfolio of securities.
Once you've decided to use mutual funds to help reach your goals, here are
some very simple steps to follow:
STEP 1: SET WELL-DEFINED GOALS.
Whether you're investing for retirement, education, wealth accumulation, or
regular income, start by determining how much you will need to satisfy your
goals. When making this assessment, you may want to seek the guidance of an
investment professional. Also take into account the effects of inflation, which
historically has reduced purchasing power by an average of 4.5% per year.
Short-term goals will require a greater initial investment and a more
conservative investment approach. Longer-term goals will require a smaller
initial investment and a more aggressive approach, including investments in
stock and bond funds which are expected to yield higher returns over the long
run.
Once you determine your primary and secondary goals, you'll then need to
calculate how soon you will need your money.
STEP 2: ESTABLISH YOUR TIME HORIZON.
For each of your goals, determine how soon you will need the money you're
investing. If it's a shorter-term goal, such as a new home in a few years,
you'll want investments that offer fairly predictable results in a short time.
If it is a longer-term goal, such as education for young children, you can plan
for longer-term results. Accordingly, the type of investments you choose for
retirement will depend on whether your retirement is a few years away, or a few
decades.
----
Fundamentals 23
<PAGE>
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FUNDAMENTALS OF MUTUAL FUND INVESTING (continued)
STEP 3: UNDERSTAND THE REAL RISKS.
Most people think of an investment as "risky" or "safe" based only on how much
the value of their principal can fluctuate. But in the long run, there is more
to risk than whether your principal goes up or down. It's just as important to
consider the following risks:
THE RISK OF INFLATION. To achieve any real increase in your wealth, your
investment return must outstrip inflation, or you may end up actually losing
purchasing power in the long run. To beat inflation, consider investing some of
your money where values and return are not fixed, but grow with the economy.
Experience shows that stock-based investments such as equity mutual funds offer
this type of performance potential.
THE RISK OF NOT REACHING YOUR GOAL. Another potential risk that many
investors tend to overlook is the risk that an investment strategy will not
enable them to reach their goal. To properly assess this risk, you first need to
define your goals, and then strike a balance between the risk of principal
volatility and the risk of failing to reach your goals.
For example, statistics show that at age 70 you can expect to live another
20 years. To achieve the many years of comfortable retirement you want, you must
have the discipline to set aside enough money during your working years and
invest it wisely.
STEP 4: DECIDE ON AN INVESTMENT MIX.
When you are selecting specific investments, choose those which offer the
greatest potential for reaching your short-term and long-term goals, and which
are within your risk tolerance.
Many investors find that they are most comfortable with a mix of
investments, including stocks, bonds, and money market funds. This approach
offers the advantage of not putting all your eggs in one basket, and also allows
you to enjoy the distinct advantages of each type of investment.
If you use this approach, known as "asset allocation", the key is deciding
how much to allocate to each type of investment. To make this decision easier,
you can select a balanced fund, which combines stock, bond, and money market
investments under the guidance of professional investment managers.
As this chart below suggests, bonds and money markets fluctuate less in the
short term, and there is less chance of experiencing a loss. History has shown,
however, that the longer you stay invested, the more stocks have provided a
higher return, with a decreasing potential for loss.
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24 Fundamentals
- --------------------------------------------------------------------------------
/X/ COREFUND
Reduction of
Risk
Over
Time
Average Annual Return
50%
40
30 1 Year
20 5 Years
10 10 Years
0 20 Years
- -10
- -20
- -30
Stocks 43.4 -26.5
Long Term Bonds 40.36 -9.18
Intermediate-Term Bonds 29.1 -5.14
Cash 14.7 1.5
Inflation 13.3 0.4
Stocks 20.4 -2.36
Long Term Bonds 21.62 -2.14
Intermediate-Term Bonds 16.98 0.96
Cash 11.12 2.33
Inflation 10.06 1.24
Stocks 17.59 1.24
Long Term Bonds 15.56 1.13
Intermediate-Term Bonds 13.13 2.92
Cash 9.17 2.58
Inflation 8.67 1.57
Stocks 14.58 6.53
Long Term Bonds 10.45 1.94
Intermediate-Term Bonds 9.85 3.98
Cash 7.72 4.0
Inflation 6.36 3.37
The longer you hold any particular asset class (stocks, bonds, money market
instruments), the less the variation in return. While stocks have fluctuated
in value much more than other investments, they have also delivered higher
returns over the long run. In addition, the longer an investor remains invested
in stocks, the less the chance there is for a capital loss. The best- and
worst-cause scenarios presented in this illustration represent the absolute
highest and lowest returns from January 1956 to 1995. Source: Based on
historical data on the S&P 500 Index, intermediate- and long-term Government
bonds, and 30-Day Treasury Bills for rolling one-, five-, 10-, and 20-year
periods between 1956 and 1995. Past results do not guarantee future performance.
STEP 5: GET STARTED.
Don't make the mistake of waiting until tomorrow. With mutual funds, you don't
need a large investment to start your program. All it takes is a small amount of
money, and a strong desire to reach your goals.
For full details on how the principles of mutual fund investing can work
for you, please contact your investment representative.
STEP 6: BE DISCIPLINED.
Once you have a good strategy, stay with it. Avoid sudden changes in reaction to
temporary market trends. Remember, you're interested in long-term performance.
In mutual fund investing, particularly with equity funds, one of the surest
ways to maximize the value of your investment is through a regular program of
monthly contributions. By adding to your account each month, you'll be
purchasing shares during both "up" markets and "down" markets. This technique,
known as "dollar cost averaging", has been shown to yield optimum results over
the long run.
----
Fundamentals 25
<PAGE>
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FUNDAMENTALS OF MUTUAL FUND INVESTING (continued)
GLOSSARY
OF KEY
INVESTMENT TERMS
CAPITAL GAIN: The profit made from the sale of securities due to an increase
in share value.
CURRENT YIELD: The income paid annually on mutual fund shares, expressed as a
percentage of the current price per share.
DISTRIBUTION: Payment of capital gains to shareholders of a mutual fund. For
tax purposes, distributions are separate from interest income or dividends.
DOLLAR COST AVERAGING: Investing a fixed dollar amount at regular intervals over
a long period of time to reduce the average cost per share of a mutual fund.
INCOME DIVIDENDS: Regular payments from mutual funds to their shareholders, made
up of dividends, interest, and short-term capital gains earned from the fund's
portfolio of securities. May be distributed annually, bi-annually, quarterly, or
monthly, with operating expenses deducted.
MATURITY: The date on which the issuer is scheduled to return the amount
borrowed to the lender, or investor.
MUNICIPAL BOND: A debt obligation issued by a city, state, or municipality.
Interest from these bonds is generally exempt from federal income tax.
NET ASSET VALUE: The dollar value of one share of a mutual fund. This value is
generally calculated at least once each day, and is the price at which the fund
will redeem its shares from investors.
PRINCIPAL, OR PAR VALUE: Also known as face value, this is the amount loaned
to the issuer of a bond.
PROSPECTUS: A booklet distributed by the issuer of a security or mutual fund, in
compliance with SEC regulations. A mutual fund prospectus must include the
fund's investment objectives, all expenses and fees including management and
sales fees, a description of shareholder services offered, and information on
how to buy shares.
REDEMPTION PRICE: Also known as "bid price", this is the price at which mutual
funds buy back their shares. It is usually the net asset price of the fund.
TOTAL RETURN: The combined return of capital appreciation and income (interest
and dividends) that an investment earns. (See page 72).
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26 Fundamentals
<PAGE>
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COREFUND FAMILY OF MUTUAL FUNDS
EQUITY
FUNDS
(Stocks)
GROWTH EQUITY FUND seeks capital growth by investing primarily in the equity
securities of companies believed by management to show the potential for growth
of earnings over time.
CORE EQUITY FUND seeks capital growth by investing principally in a diversified
portfolio of common stocks of companies with large, medium or small
capitalizations.
SPECIAL EQUITY FUND seeks capital growth by investing principally in a
diversified portfolio of common stocks of domestic companies expected to
experience growth in earnings and price.
EQUITY INDEX FUND seeks to track the price and yield performance of the Standard
& Poor's 500 Composite Stock Price Index.
INTERNATIONAL GROWTH FUND seeks long-term capital appreciation by investing
primarily in equity securities of companies located outside the United States.
BALANCED FUND seeks to provide total return while preserving capital by
investing in a combination of common stocks and fixed income securities.
FIXED
INCOME
FUNDS
(Bonds)
SHORT-INTERMEDIATE BOND FUND seeks income through investment in a diversified
portfolio of intermediate term, fixed income obligations with an expected
average weighted maturity of two to five years.
BOND FUND seeks to maximize long-term total return by investing principally in a
diversified portfolio of debt securities.
SHORT TERM INCOME FUND seeks to obtain consistent current income with relative
stability of principal by investing principally in a diversified portfolio of
investment grade debt securities.
GOVERNMENT INCOME FUND seeks to provide current income while preserving
principal value and maintaining liquidity by investing exclusively in securities
of the United States government and its agencies.
INTERMEDIATE MUNICIPAL BOND FUND seeks a high level of income generally exempt
from federal income taxes by investing at least 80% of its assets in tax-exempt
municipal securities.
PENNSYLVANIA MUNICIPAL BOND FUND seeks to provide a high rate of current income
that is exempt from both federal income taxes and (for Pennsylvania residents)
Pennsylvania state income taxes. The Fund invests primarily in highly-rated,
long-term municipal bonds issued by state, county, and local agencies within the
Commonwealth of Pennsylvania.
There is no assurance that the Funds will achieve their respective objectives.
<PAGE>
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/X/ COREFUND
NEW JERSEY MUNICIPAL BOND FUND seeks to provide a high rate of current income
that is exempt from both federal income taxes and (for New Jersey residents) New
Jersey state income taxes. The Fund invests primarily in highly-rated, long-term
municipal bonds issued by state, county, and local agencies within the State of
New Jersey.
GLOBAL BOND FUND seeks to provide capital appreciation and current income
through investment primarily in fixed income securities of United States and
foreign issuers denominated in United States dollars and in other currencies.
MONEY
MARKET
FUNDS
CASH RESERVE seeks to obtain maximum current income consistent with the
preservation of principal and maintenance of liquidity by investing in a
diversified portfolio of money market instruments of the highest quality,
including a broad range of U.S. dollar-denominated government, bank, and
commercial paper obligations.
TREASURY RESERVE seeks to provide current interest income, liquidity and safety
of principal by investing in direct obligations of the U.S. Treasury and
repurchase agreements relating to such obligations.
TAX-FREE RESERVE seeks a high level of income exempt from federal income taxes
through investment of at least 80% of its total assets in tax-free securities.
There is no assurance that the Funds will achieve their respective objectives.
<PAGE>
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INFORMATION ON THE FUNDS /X/ COREFUND
/X/
INVESTMENT
OBJECTIVES
OF THE FUNDS
The descriptions that follow are designed to help you choose the Fund that best
fits your investment objectives. The objectives of each Fund are fundamental and
may only be changed by the affirmative vote of a majority of the outstanding
shares of such Fund. You may want to pursue more than one objective by investing
in more than one of these Funds.
As investment adviser of each Fund, CoreStates Advisers manages each
Fund's portfolio of investments in a manner which it believes will best
accomplish the Fund's stated objective. However, there can be no assurance that
a Fund will meet its objective.
EQUITY FUNDS ___________________________________________________________________
GROWTH EQUITY FUND Growth Equity Fund's investment objective is to provide
growth of capital and an increasing flow of dividends from the diversified
portfolio of common stocks comprising the Fund.
CORE EQUITY FUND Core Equity Fund's investment objective is to provide capital
appreciation and income, in excess of stock market indices such as the S&P 500
Index, as measured over a period of time.
SPECIAL EQUITY FUND Special Equity Fund's investment objective is to seek
capital growth by investing principally in a diversified portfolio of common
stocks.
EQUITY INDEX FUND Equity Index Fund's investment objective is to provide its
shareholders with investment results that achieve price and yield performance
similar to the S&P 500 Index, thereby tracking with reasonable accuracy the
performance of the stock market as a whole.
INTERNATIONAL GROWTH FUND International Growth Fund's investment objective is to
provide its shareholders with long-term capital appreciation, consistent with
reasonable risk, by investing primarily in a diversified portfolio of equity
securities of companies located outside the United States.
BALANCED FUND Balanced Fund's investment objective is to provide total return
while preserving capital. This Fund pursues its objective by investing in a
combination of common stocks and fixed income securities. Under normal
conditions, Balanced Fund will invest a minimum of 25% of its assets in senior
fixed income securities and between 30% and 70% of its assets in common stocks.
FIXED INCOME FUNDS _____________________________________________________________
SHORT-INTERMEDIATE BOND FUND Short-Intermediate Bond Fund's investment objective
is to provide a moderate level of current income consistent with conservation of
capital, by investing substantially all of its assets in a diversified portfolio
of intermediate-term, fixed income obligations which will have an expected
average weighted maturity of two to five years.
BOND FUND Bond Fund's investment objective is to seek to maximize long-term
total return by investing principally in a diversified portfolio of debt
securities.
SHORT TERM INCOME FUND Short Term Income Fund's investment objective is to seek
consistent current income with relative stability of principal by investing
principally in a diversified portfolio of investment grade debt securities.
----
Investment Objectives 27
<PAGE>
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INFORMATION ON THE FUNDS (continued)
GOVERNMENT INCOME FUND Government Income Fund's investment objective is to
provide current income while preserving principal value and maintaining
liquidity.
INTERMEDIATE MUNICIPAL BOND FUND Intermediate Municipal Bond Fund's investment
objective is to seek the highest level of income exempt from federal income
taxes that can be obtained, consistent with the preservation of capital, from a
diversified portfolio of high quality, intermediate-term municipal securities.
This Fund has a fundamental policy to invest, under normal circumstances, at
least 80% of its assets in municipal securities the interest of which is exempt
from federal income taxes, based on opinions from bond counsel for the issuers.
PENNSYLVANIA MUNICIPAL BOND FUND Pennsylvania Municipal Bond Fund seeks current
income exempt from federal and Pennsylvania income taxation with preservation of
capital by investing primarily in a non-diversified portfolio of municipal
securities.
NEW JERSEY MUNICIPAL BOND FUND New Jersey Municipal Bond Fund seeks current
income exempt from federal and New Jersey income taxation with preservation of
capital by investing primarily in a non-diversified portfolio of municipal
securities.
GLOBAL BOND FUND Global Bond Fund's investment objective is to provide capital
appreciation and current income through investment primarily in fixed income
securities of United States and foreign issuers denominated in United States
dollars and in other currencies.
MONEY MARKET FUNDS _____________________________________________________________
CASH RESERVE Cash Reserve's investment objective is to provide as high a level
of current income as is consistent with liquidity and relative stability of
principal.
TREASURY RESERVE Treasury Reserve's investment objective is to provide current
interest income, liquidity and safety of principal.
TAX-FREE RESERVE Tax-Free Reserve's investment objective is to provide as high a
level of current interest income that is exempt from federal income taxes as is
consistent with liquidity and relative stability of principal. This Fund
intends, under normal market conditions, to invest at least 80% of its assets in
tax-free securities.
/X/
INVESTMENT
POLICIES
The policies which the Funds follow to achieve their investment objectives are
described below. These are non-fundamental policies which may be changed without
a shareholder vote.
Descriptions of the securities in which the Funds invest are contained
below in 'Types of Securities in Which the Funds Invest.'
EQUITY FUNDS ___________________________________________________________________
The CoreFund Equity Funds cover a range of investment styles. CoreStates
Advisers, specialists in the management of growth portfolios, manages the Growth
Equity, Core Equity, Equity Index, Special Equity and Balanced Funds. CoreStates
Advisers has selected Martin Currie, Inc., ('Martin Currie') and Aberdeen Fund
Managers, Inc. ('Aberdeeen Managers') to manage the
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28 Investment Policies
<PAGE>
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/X/ COREFUND
International Growth Fund. These firms are specialists in their investment
styles.
GROWTH EQUITY FUND Growth Equity Fund strives to provide a return in excess of
stock market indices such as the Russell 1000 Index and the S&P 500 Index.
Growth Equity Fund pursues its investment objective by investing primarily in
common stocks, preferred stocks, convertible securities, and other equity
securities of companies which CoreStates Advisers believes show the potential
for growth of earnings over time. Stock selection is guided by a top-down
approach that places heavy emphasis on fundamental research to uncover companies
with proven earnings growth records, high reinvestment rates, high returns on
equity, and strong balance sheets showing low debt to total capital. The adviser
makes qualitative judgments on such elements as the company's competitive
position, the quality of its management and the potential for future growth.
This Fund intends, under normal market conditions, to hold at least 75% of
its total assets in the equity securities described above. Over the long term,
continued earnings growth tends to lead to both higher dividends and capital
appreciation.
CORE EQUITY FUND The Core Equity Fund pursues its investment objective by
investing principally in a diversified portfolio of common stocks of companies
with large, medium or small capitalizations. The Core Equity Fund will normally
invest at least 80% of the value of its total assets in common stocks. The Fund
may also invest up to 20% of the value of its total assets in securities
convertible into common stocks, preferred stocks, corporate bonds, notes,
warrants, and short-term obligations (with maturities of 18 months or less) such
as commercial paper (including variable amount master demand notes), banker's
acceptances, certificates of deposit, repurchase agreements, obligations issued
or guaranteed by the U.S. Government or its agencies or instrumentalities, and
demand and time deposits of domestic and foreign banks and savings and loan
associations. During temporary defensive periods, the Fund has the ability to
hold up to 100% of its total assets in short-term obligations including domestic
bank certificates of deposit, banker's acceptances and repurchase agreements
secured by U.S. Government securities.
Stocks held by the Core Equity Fund may be listed on a national securities
exchange or may be unlisted securities with an established over-the-counter
market. CoreStates Advisers has developed a quantitative process which evaluates
stocks in a number of ways, including the ratios of market price to book value,
recent changes in market price, return on equity, price to earnings ratios,
dividend paying abilities, and liquidity. CoreStates Advisers believes that its
quantitative approach reduces subjectivity in the stock selection process.
Equity securities such as those in which the Core Equity Fund may invest
are more volatile and carry more risk than some other forms of investment.
Depending upon the performance of the Fund's investments, the net asset value
per share of the Fund may decrease instead of increase.
SPECIAL EQUITY FUND The investment objective of the Special Equity Fund is to
seek capital growth by investing principally in a diversified portfolio of
common stocks. The Special Equity Fund will normally
----
Investment Policies 29
<PAGE>
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INFORMATION ON THE FUNDS (continued)
invest in common stocks of domestic companies that CoreStates Advisers expect
will experience growth in earnings and price. The Special Equity Fund will
invest primarily in equity securities, including common stocks, both debt
securities and preferred stocks convertible into common stocks, foreign
securities and sponsored and unsponsored American Depositary Receipts ('ADRs'),
European Depositary Receipts ('EDRs') and Global Depositary Receipts ('GDRs').
The Fund may also purchase securities convertible into common stocks, preferred
stocks, notes, warrants, and, for daily cash management purposes, short-term
obligations (with maturities of 18 months or less) such as commercial paper
(including variable amount master demand notes), banker's acceptances,
certificates of deposit, repurchase agreements, obligations issued or guaranteed
by the U.S. Government or its agencies or instrumentalities, and demand and time
deposits of domestic and foreign banks and savings and loan associations. During
temporary defensive periods, the Fund has the ability to hold up to 100% of its
total assets in short-term obligations, including domestic bank certificates of
deposit, banker's acceptances and repurchase agreements secured by U.S.
Government securities. CoreStates Advisers' quantitative process described above
under 'The Core Equity Fund' will be utilized for the Special Equity Fund.
Many of the companies in which the Special Equity Fund invests will be
small and medium capitalized companies. Small capitalized companies are those
organizations with 'stock market capitalizations' between $100 million and $1
billion and medium capitalized companies are those organizations with stock
market capitalizations between $1 billion and $5 billion. 'Stock market
capitalizations' means the total number of common shares outstanding multiplied
by the market price per share.
The Special Equity Fund will normally purchase the securities of small and
medium capitalized companies across a wide range of industry sectors. These
securities may be traded over-the-counter or listed on an exchange and may or
may not pay dividends. Small and medium capitalized companies may be more
vulnerable than larger, more established organizations to adverse business or
economic developments. In particular, small capitalized companies may have
limited product lines, markets and financial resources and may be dependent upon
a relatively small management group. Accordingly, equity securities such as
those in which the Fund may invest are more volatile and carry more risk than
some other forms of investment. Depending upon the performance of the Fund's
investments, the net asset value per share of the Fund may decrease instead of
increase.
EQUITY INDEX FUND Equity Index Fund intends, under normal market conditions, to
hold at least 90% of its total assets in equity securities that as a group
reflect a composite of those represented in the S&P 500 Index. To mirror and
confine the holdings to relatively large, well-known companies within the S&P
500 Index, CoreStates Advisers utilizes a computer model that closely monitors
industry weightings of the S&P 500 Index. While common stocks represented in the
S&P 500 Index are the primary securities utilized to achieve Equity Index Fund's
objective, CoreStates Advisers may also invest in other types of securities,
consistent with the objective and policies described herein. Equity Index Fund
is not sponsored by nor affiliated with Standard & Poor's Corporation ('S&P').
The S&P 500 Index consists of 500 common stocks, most of which are listed
on the New York Stock Exchange. In choosing the 500 stocks which are included in
the
- ----
30 Investment Policies
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
S&P 500 Index, S&P considers market values and industry diversification. Most of
the stocks in the S&P 500 Index are issued by companies which are among the
largest, in terms of the aggregate market value of their outstanding stock,
measured by the market price per share multiplied by the number of shares
outstanding. Stocks that are not among the five hundred largest are included in
the S&P 500 Index for diversification purposes.
Traditional methods of mutual fund investment management typically involve
frequent changes in a portfolio of securities on the basis of economic,
financial, and market analyses. Index funds such as Equity Index Fund are not
managed in this manner, however. Instead, CoreStates Advisers only purchases and
sells securities with respect to the Fund in an attempt to duplicate the total
return of the S&P 500 Index, taking into account redemptions, sales of
additional Fund shares, and other adjustments as described below.
Consistent with its investment objective, Equity Index Fund's investment
portfolio will at any time consist of common stocks of as many issuers listed in
the S&P 500 Index as is feasible, consistent with the policies stated herein.
Accordingly, the Fund invests in both dividend-paying and non-dividend-paying
securities that are not included in the S&P 500 Index. While Equity Index Fund
may own about 350 names, the largest 50 companies within the S&P 500 Index
generally represent nearly 85% of the value of the S&P 500 Index, and the
largest 200 companies represent nearly 95%. The number of companies owned by the
Fund is determined in an effort to minimize the impact of transaction costs and
balance these costs with tracking error.
Generally, Equity Index Fund only trades securities to reflect changes in
the S&P 500 Index, to carry out appropriate rebalancing for diversification
purposes, or to more closely track the return of the S&P 500 Index. This Fund
invests in equity securities that, as a group, reflect the composite performance
of the S&P 500 Index based on a computer-based financial model that tracks the
performance of the various stocks in the S&P 500 Index. As the Fund grows in
total assets, its portfolio may eventually include all 500 stocks in the S&P 500
Index. This decision would be made by CoreStates Advisers, based on its
financial model.
Although CoreStates Advisers does not screen securities for investment by
this Fund by traditional methods of financial and market analyses, it monitors
the Fund's investments with a view toward removing stocks of companies which
exhibit extreme financial distress or which may impair for any reason the Fund's
ability to achieve its investment objective. Therefore, an investor
participating in the Fund bears the risk of such adverse market conditions. The
Fund expects that its return will match the S&P 500 Index, prior to the
deduction of brokerage and other transaction costs, other Fund expenses, and
tracking errors.
Common stocks purchased by the Fund are initially selected in accordance
with their market capitalizations. Market capitalization is calculated by
multiplying the market price of an issuer's stock by the number of outstanding
shares of its common stock. The issues selected for this Fund are then ranked
and weighted according to their respective market
----
Investment Policies 31
<PAGE>
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INFORMATION ON THE FUNDS (CONTINUED)
capitalizations. The weighted market capitalization of each issuer selected is
determined by dividing the issuer's market capitalization by the total market
capitalizations of all issuers listed.
The industry sector diversification of the issuers selected for inclusion
in Equity Index Fund according to their weighted market capitalizations is then
compared with the industry sector diversification of the issuers of all common
stocks publicly traded in the United States.
CoreStates Advisers will include in the Fund certain 'balancing
securities,' which are common stocks of companies with smaller market
capitalizations which are added to complete the portfolio to provide broad
industry representation. As indicated, 'balancing securities' are issued by
issuers whose market capitalizations are such that they would not otherwise be
eligible for inclusion in the Fund, and replace the securities of issuers in
over-represented sectors in the fund.
INTERNATIONAL GROWTH FUND International Growth Fund pursues its investment
objective by investing in foreign equity securities which offer favorable
prospects for capital return. This Fund seeks to diversify its assets by
investing in appreciation-oriented equity securities of companies located
outside the United States, which may include, but not be limited to, Australia,
Canada, France, Hong Kong, Japan, Mexico, Singapore, Sweden, Switzerland,
Germany, the Netherlands, and the United Kingdom. In general,
'appreciation-oriented' securities are equity securities of companies that
CoreStates Advisers, as well as Martin Currie and Aberdeen Managers, the
sub-advisers, believe have the greatest potential for long-term growth, and
which exhibit operating characteristics that may enable such companies to
compete successfully in their marketplace.
International Growth Fund offers increased diversification through
investment in foreign markets. This Fund's advisers believe that both the
selection of individual securities and the allocation of International Growth
Fund's assets across foreign markets are important in managing an international
equity fund. Most foreign equity securities are purchased in over-the-counter
markets or on stock exchanges located in the countries in which the respective
principal offices of the issuers of the various securities are located. Under
normal market conditions, International Growth Fund will invest an aggregate of
at least 65% of its total assets in the equity securities of at least three
different countries.
In determining the distribution of International Growth Fund's investments
among various countries and geographic regions, the advisers consider many
factors, such as: prospects for relative economic growth between countries;
government policies affecting business conditions; outlook for local currency;
and the range of available, attractive investment opportunities. For the
selection of securities, the advisers' criteria includes: earnings growth;
return on capital; quality of management; cash flow; and strength of balance
sheet.
While foreign stocks are the primary securities utilized to achieve
International Growth Fund's objective, the advisers may also invest in other
types of foreign equity securities, consistent with the objective and policies
described herein.
The net asset value of this Fund will fluctuate, and investments are
expected to yield little, if any, current income.
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32 Investment Policies
<PAGE>
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/X/ COREFUND
BALANCED FUND In managing Balanced Fund, CoreStates Advisers uses a balanced
portfolio philosophy which combines separate equity, fixed income, and asset
allocation strategies. This produces a portfolio of stocks of companies
exhibiting growth in revenues and earnings and strong balance sheet
characteristics. All of the common stocks in which Balanced Fund invests are
traded on registered exchanges or in the 'over-the-counter' market.
The fixed income strategy values bonds using historical yield
differentials. U.S. Government securities and corporate bonds are used
exclusively to implement Balanced Fund's fixed income strategy. The asset
allocation strategy shifts the stock-fixed income-money market instrument mix
based on the investment adviser's judgment of the relative attractiveness of
these markets and securities given its view of economic conditions, the level of
interest rates, and the outlook for corporate profits. The strategy uses present
and historical economic and market data to reach these conclusions.
Balanced Fund seeks strong total return in all market conditions, with a
special emphasis on minimizing interim declines during falling equity markets.
Long-term growth is pursued through equity holdings, and current income through
fixed income securities and common stock dividends.
The strategy focuses on controlling downside risk, both through holdings
in relatively high-dividend-yielding stocks and convertible securities, and
through diversification between stocks and bonds.
To employ this strategy, the Fund's adviser uses present and historical
economic and market data.
This Fund will, under normal conditions, invest between 30% and 70% of
total assets in common stocks, depending on the investment adviser's assessment
of market conditions. When CoreStates Advisers believes that equity markets are
overvalued, the common stock exposure will be at the low end of this range.
CoreStates Advisers expects that equity exposure will average 60% over time.
Balanced Fund may also invest in U.S. dollar denominated securities of foreign
issuers (including American Depositary Receipts that are traded on registered
exchanges or listed on NASDAQ).
FIXED INCOME FUNDS _____________________________________________________________
CoreFund Fixed Income Funds employ an investment process that attempts to manage
large swings in interest rates within the maturity parameters of each Fund to
reduce an investor's risk of principal. Significant effort is put forth to
identify value along the yield curve, taking into account the economic outlook,
fiscal and monetary policies, and inflation trend. Developments that can
significantly impact the supply and demand of securities within the various
sectors of the bond market are also carefully considered. By identifying these
opportunities, and acting upon them in a timely manner, the Funds' advisers seek
to enhance overall value.
SHORT-INTERMEDIATE BOND FUND This Fund pursues its investment objective by
investing primarily in corporate debt securities such as bonds and commercial
paper, as well as securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. The Fund intends, under normal market conditions,
to
----
Investment Policies 33
<PAGE>
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INFORMATION ON THE FUNDS (continued)
invest at least 65% of its total assets in bonds and 35% or less in other fixed
income securities.
Short-Intermediate Bond Fund maintains a maximum average maturity of no
more than five years, pursuant to a fundamental investment policy of the Fund.
By maintaining an average maturity of not more than five years, CoreStates
Advisers expects the Fund's net asset value to be relatively stable while
providing higher income than money market funds.
Should a security held by this Fund be downgraded below the minimum
required ratings, CoreStates Advisers will reassess the creditworthiness of the
security and will consider such an event in determining whether the Fund should
continue to hold the security in question. Securities that are unrated at the
time of purchase may only be purchased by the Fund if they are determined by
CoreStates Advisers to be of comparable quality to securities rated BBB or
better (investment-grade securities) as set forth in 'Types of Securities in
Which the Funds Invest.' See 'Description of Ratings' in this Prospectus and the
'Appendix' to the Statement of Additional Information for a description of
applicable ratings.
BOND FUND The investment objective of the Bond Fund is to seek to maximize
long-term total return by investing principally in a diversified portfolio of
debt securities. The Bond Fund will normally invest at least 80% of the value of
its total assets in debt securities of all types. Debt securities include
domestic and foreign bonds, debentures, notes, equipment lease and trust
certificates, asset-backed and mortgage-backed securities, and obligations
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities.
A portion of the Fund also may from time to time be invested in first
mortgage loans and participation certificates in pools of mortgages issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, preferred
stocks, convertible debt securities, common stock obtained upon the conversion
or exchange of such securities, and short-term money market instruments.
Securities in which the Fund invests may have warrants or options attached. The
Fund anticipates investing no more than 5% of its net assets in below Investment
Grade debt securities.
SHORT TERM INCOME FUND The investment objective of the Short Term Income Fund is
to seek consistent current income with relative stability of principal by
investing principally in a diversified portfolio of investment grade debt
securities. Under normal conditions, the Fund's portfolio securities will have
maximum expected or remaining maturities of three years or less. The Fund will
normally have an average dollar weighted Portfolio maturity of approximately one
year.
The Fund will invest principally in debt securities, including bonds,
debentures, notes, equipment lease and trust certificates, asset-backed and
mortgage-backed securities, and obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities. The Fund may invest up to 35%
of its total assets in U.S. dollar denominated international debt securities for
which the primary trading market is in the United States ('Yankee Bonds').
GOVERNMENT INCOME FUND Government Income Fund invests exclusively in obligations
issued or guaranteed as to principal and interest by the agencies and
instrumentalities of the U.S. Government and repurchase agreements involving any
of such obligations.
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34 Investment Policies
<PAGE>
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/X/ COREFUND
Although there are no restrictions on maturity, Government Income Fund generally
strives to maintain an average maturity of about seven years. This Fund intends
to invest at least 65% of its total assets in instruments issued or guaranteed
as to principal and interest by the agencies and instrumentalities of the U.S.
Government and mortgage-backed securities.
INTERMEDIATE MUNICIPAL BOND FUND Intermediate Municipal Bond Fund invests
substantially all of its assets in a diversified portfolio consisting of
intermediate-term obligations issued by or on behalf of states, territories and
possessions of the United States, the District of Columbia and their political
subdivisions, agencies, instrumentalities and authorities, the interest on
which, in the opinion of counsel to the issuer, is exempt from federal income
tax. The municipal securities in which this Fund invests are described in 'Types
of Securities in Which the Funds Invest.'
Although CoreStates Advisers has no present intention of doing so, up to
20% of all assets in this Fund can be invested in taxable debt securities for
defensive purposes or when sufficient tax-exempt securities considered
appropriate by CoreStates Advisers are not available for purchase.
Intermediate Municipal Bond Fund will maintain an average weighted
maturity of three to ten years. However, when the investment adviser determines
that market conditions so warrant, the Fund can maintain an average weighted
maturity of less than three years. CoreStates Advisers may, at times, elect to
adjust the average maturity upwards, between seven and ten years, in order to
pick up incremental yield, while avoiding the risks associated with long-term
bonds.
PENNSYLVANIA MUNICIPAL BOND FUND At least 80% of this Fund's assets will be
invested in municipal securities, the interest on which is exempt from federal
income tax. Under normal circumstances, at least 65% of the Fund's assets will
be invested in municipal securities, the interest on which is exempt from
Pennsylvania personal income tax ('Pennsylvania Municipal Securities').
This Fund will primarily purchase (i) municipal bonds rated in one of the
three highest rating categories; (ii) municipal notes rated in one of the two
highest rating categories; (iii) commercial paper rated in one of the two
highest short-term categories; or (iv) any of the foregoing determined by
CoreStates Advisers to be of comparable quality at the time of investment.
However, CoreStates Advisers has discretion to invest up to 20% of the Fund's
assets in municipal bonds rated BBB by Standard & Poor's Corporation ('S&P') or
Baa by Moody's Investors Service, Inc. ('Moody's'). See 'Description of
Ratings.'
Pennsylvania Municipal Bond Fund will invest more than 25% of its net
assets in municipal securities whose issuers are located in Pennsylvania. This
Fund may also invest up to 20% of its assets in Taxable Obligations. Taxable
Obligations may include obligations issued or guaranteed by the U.S. Government
or its agencies or instrumentalities, certificates of deposit and demand and
time deposits of domestic banks and savings and loan associations, bankers'
acceptances issued by domestic banks, commercial paper issued by U.S.
corporations (including variable amount master demand notes) meeting the Fund's
----
Investment Policies 35
<PAGE>
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INFORMATION ON THE FUNDS (continued)
quality standards, and securities subject to Federal Alternative Minimum Tax.
Pennsylvania Municipal Bond Fund may also hold a portion of its assets in
cash. To the extent that the Fund's assets are invested in cash, they will not
be invested so as to meet such Fund's investment objective. There are no
restrictions on the average maturity of Pennsylvania Municipal Bond Fund or the
maturity of a single instrument.
Pennsylvania Municipal Bond Fund is a non-diversified investment portfolio
which means that more than 5% of its assets may be invested in each of one or
more issuers. Since a relatively high percentage of assets of the Fund may be
invested in the obligations of a limited number of issuers, the value of the
shares of the Fund may be more susceptible to any single economic, political or
regulatory occurrence than the shares of a diversified investment portfolio
would be. The Fund intends to satisfy the diversification requirements necessary
to comply with Subchapter M of the Internal Revenue Code of 1986, as amended
(the 'Code'). In part, Subchapter M requires that, at the close of each quarter
of the taxable year, those issues which represent more than 5% of the Fund's
assets be limited in aggregate to 50% of the Fund and that no one issue exceed
25% of the Fund's total assets.
NEW JERSEY MUNICIPAL BOND FUND At least 80% of this Fund's assets will be
invested in municipal securities, the interest on which is exempt from federal
income tax. Under normal circumstances, at least 65% of the Fund's assets will
be invested in municipal securities, the interest on which is exempt from New
Jersey personal income tax ('New Jersey Municipal Securities').
This Fund will primarily purchase (i) municipal bonds rated in one of the
three highest rating categories; (ii) municipal notes rated in one of the two
highest rating categories; (iii) commercial paper rated in one of the two
highest short-term categories; or (iv) any of the foregoing determined by
CoreStates Advisers to be of comparable quality at the time of investment.
However, CoreStates Advisers has discretion to invest up to 20% of the Fund's
assets in municipal bonds rated BBB or better by S&P or Baa or better by
Moody's. See 'Description of Ratings.'
New Jersey Municipal Bond Fund will invest more than 25% of its net assets
in municipal securities whose issuers are located in New Jersey. This Fund may
also invest up to 20% of its assets in Taxable Obligations, as described above.
New Jersey Municipal Bond Fund may also hold a portion of its assets in
cash. To the extent that the Fund's assets are invested in cash, they will not
be invested so as to meet such Fund's investment objective. There are no
restrictions on the average maturity of New Jersey Municipal Bond Fund or the
maturity of a single instrument.
New Jersey Municipal Bond Fund is a non-diversified investment portfolio,
as described above. The Fund intends to satisfy the diversification requirements
necessary to comply with Subchapter M of the Code.
GLOBAL BOND FUND Global Bond Fund will invest, under normal circumstances, at
least 65% of its total assets in high quality fixed income securities or debt
obligations of foreign or domestic government entities, corporations or
supranational agencies. The Fund will invest in at least three supranational
agencies or countries. Supranational agencies will include, but not be limited
to, the International Bank of Reconstruction and Development, the InterAmerican
Development
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36 Investment Policies
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/X/ COREFUND
Bank, and the Asian Development Bank. Countries will include, but not be limited
to, Austria, Australia, Belgium, Canada, Denmark, Finland, France, Germany,
Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Spain,
Sweden, Switzerland, the United Kingdom and the United States. Although this
Fund will concentrate its investments in the developed countries listed above,
it may invest up to 5% of its assets in similar securities or debt obligations
that are denominated in the currencies of developing countries and that are of
comparable quality to such securities and debt obligations at the time of
purchase as determined by CoreStates Advisers and the sub-adviser, AnalyticoTSA
International, Inc. ('Analytic').
Global Bond Fund is a non-diversified investment portfolio, as described
above. The Fund intends to satisfy the diversification requirements necessary to
comply with Subchapter M of the Code.
This Fund will strive to take maximum advantage of financial and economic
developments and currency fluctuations. All of its investments will be in
quality securities denominated in various currencies, including the European
Currency Unit, and will be rated in one of the highest four rating categories by
a nationally recognized statistical rating agency or of comparable quality at
the time of purchase as determined by the advisers or sub-advisers.
There are no restrictions on the average maturity of Global Bond Fund or
the maturity of any single instrument. Maturities may vary widely depending on
the advisers' assessment of interest rate trends and other economic and market
factors. In the event a security owned by Global Bond Fund is downgraded below
rating categories discussed above, the advisers will review the situation and
take appropriate action with regard to the security.
MONEY MARKET FUNDS _____________________________________________________________
Investments by money market funds such as Cash Reserve, Treasury Reserve and
Tax-Free Reserve are subject to limitations imposed under regulations adopted by
the Securities and Exchange Commission (the 'SEC'). These regulations generally
require money market funds to acquire only U.S. dollar denominated obligations
maturing in 397 days or less, although securities subject to repurchase
agreements, securities with optional and mandatory tender provisions, variable
rate demand obligations and certain other securities may bear longer maturities.
Money market funds also must maintain a dollar-weighted average portfolio
maturity of 90 days or less.
In addition, money market funds may acquire only obligations that
represent minimal credit risks and that are 'eligible securities' which means
they are (i) rated, at the time of investment, by at least two nationally
recognized statistical rating organizations (one if it is the only organization
rating such obligation) in the highest short-term rating category or, if
unrated, determined to be of comparable quality (a 'first tier security'), or
(ii) rated according to the foregoing criteria in the second highest short-term
rating category, or, if unrated, determined to be of comparable quality (a
'second tier security'). A security is not considered to be unrated if its
issuer has outstanding obligations of comparable priority and security that have
a short-term rating.
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Investment Policies 37
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INFORMATION ON THE FUNDS (continued)
CoreStates Advisers will determine that an obligation presents minimal credit
risks or that unrated instruments are of comparable quality in accordance with
guidelines established by CoreFunds' Board of Directors. The Directors must also
approve or ratify the acquisition of unrated securities or securities rated by
only one rating organization. Investments in second tier securities are subject
to the further constraints that (i) no more than 5% of a Fund's assets may be
invested in such securities in the aggregate, and (ii) any investment in such
securities of one issuer is limited to the greater of 1% of the Fund's total
assets or $1 million. In addition, a Fund may only invest up to 25% of its total
assets in the first tier securities of a single issuer for three business days.
CASH RESERVE Cash Reserve intends to achieve its investment objective by
investing in a diversified portfolio of money market instruments of the highest
quality, including a broad range of U.S. dollar-denominated government, bank,
and commercial paper obligations. By investing only in high quality money market
instruments with remaining maturities of 13 months or less, Cash Reserve strives
to capture the highest yield possible within safety, compliance, and liquidity
parameters.
TREASURY RESERVE Treasury Reserve intends to achieve its investment objective by
investing in direct obligations of the U.S. Treasury, such as bills, bonds, and
notes and separately traded interest and principal component parts of such
obligations that are transferable through the Federal book-entry system, known
as Separately Traded Registered Investment and Principal Securities ('STRIPS'),
and in repurchase agreements relating to direct U.S. Treasury obligations.
TAX-FREE RESERVE Tax-Free Reserve invests substantially all of its assets in a
diversified portfolio consisting of short-term obligations issued by or on
behalf of states, territories and possessions of the United States, the District
of Columbia and their political subdivisions, agencies, instrumentalities and
authorities, the interest on which, in the opinion of counsel to the issuer, is
exempt from federal income tax. The municipal securities in which this Fund
invests are described in 'Types of Securities in Which the Funds Invest.' In
managing Tax-Free Reserve, the investment adviser uses a strategy that aims to
take advantage of key seasonal supply and demand factors that govern short-term
rates.
Although CoreStates Advisers has no present intention of doing so, up to
20% of all assets in this Fund can be invested in taxable debt securities for
defensive purposes or when sufficient tax-exempt securities considered
appropriate by CoreStates Advisers are not available for purchase.
OTHER INVESTMENT PRACTICES OF THE FUNDS ________________________________________
In addition to the investments described above, the Funds may engage in a number
of additional investment practices, as discussed below:
REPURCHASE AGREEMENTS-- All Funds
Under certain circumstances, the Funds may enter into repurchase agreements with
respect to portfolio securities. Under the terms of a repurchase agreement, a
Fund purchases securities ('collateral') from financial institutions such as
banks and broker-dealers ('seller') which are deemed to be creditworthy under
guidelines approved by the Fund's management, subject to the seller's agreement
to repurchase them at a mutually agreed-upon
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38 Investment Policies
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date and price. The repurchase price generally equals the price paid by the Fund
plus interest negotiated on the basis of current short-term rates (which may be
more or less than the rate on the underlying portfolio securities). The seller
under a repurchase agreement is required to maintain the value of the collateral
held pursuant to the agreement at not less than 100% of the repurchase price,
and securities subject to repurchase agreements are held by CoreFunds' custodian
in the Federal Reserve book-entry system. Default by the seller could, however,
expose a Fund to loss in the event of adverse market action or delay in
connection with the disposition of the underlying securities. Repurchase
agreements are considered to be loans by a Fund under the Investment Company Act
of 1940 (the 'Investment Company Act').
REVERSE REPURCHASE AGREEMENTS--
All Funds
Each of the Funds may borrow funds for temporary purposes by entering into
reverse repurchase agreements. Pursuant to such agreements, a Fund would sell
portfolio securities to financial institutions such as banks and broker-dealers,
and agree to repurchase them at a mutually agreed-upon date and price. A Fund
enters into reverse repurchase agreements only to avoid otherwise selling
securities during unfavorable market conditions to meet redemptions. At the time
the Fund enters into a reverse repurchase agreement, it places in a segregated
custodial account liquid assets such as U.S. Government securities or other
liquid high-grade debt securities having a value equal to the repurchase price
(including accrued interest), and will subsequently monitor the account to
ensure that such equivalent value is maintained. Reverse repurchase agreements
involve the risk that the market value of the securities sold by a Fund may
decline below the price at which it is obligated to repurchase the securities.
Reverse repurchase agreements are considered to be borrowings by a Fund under
the Investment Company Act.
OTHER INVESTMENT COMPANIES--All Funds
The Funds may invest in the securities of other investment companies. Such
shares will be purchased by the Funds within the limits prescribed by the
Investment Company Act. Such investments will be limited to amounts not in
excess of 5% of a Fund's total assets at the time of purchase.
PUT TRANSACTIONS--Intermediate Municipal Bond Fund, Short-Intermediate Bond
Fund, Pennsylvania Municipal Bond Fund, New Jersey Municipal Bond Fund, Global
Bond Fund, Tax-Free Reserve
These Funds may purchase securities subject to a put. A 'put' feature permits a
Fund to sell a security at a fixed price prior to maturity. The underlying
municipal securities subject to a put may be sold at any time at the market
rates. However, unless the put was an integral part of the security as
originally issued, it may not be marketable or assignable; therefore, the put
would only have value to the Fund. In certain cases a premium may be paid for
put features. A premium paid will have the effect of reducing the yield
otherwise receivable on the underlying security. The purpose of engaging in
transactions involving puts is to maintain flexibility and liquidity to permit
these Funds to meet redemption requests and remain as fully invested as possible
in municipal securities. These Funds will limit their put transactions
----
Investment Policies 39
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INFORMATION ON THE FUNDS (continued)
to institutions which their advisers believe present minimal credit risk.
There is no limit to the percentage of portfolio securities that each Fund
may purchase subject to a put, but the amount paid directly or indirectly for
puts which are not integral parts of the security as originally issued held in
such Fund will not exceed 1/2 of 1% of the value of the total assets of the Fund
calculated immediately after any such put is acquired.
WHEN-ISSUED SECURITIES--Core Equity Fund, Special Equity Fund, Fixed Income
Funds, Tax-Free Reserve
These Funds may purchase securities on a 'when-issued' basis. When-issued
securities are subject to settlement on a future date. The interest rate
realized on these securities is fixed as of the purchase date and no interest
accrues to the Fund before settlement. These securities are subject to market
fluctuation due to changes in market interest rates and will have the effect of
leveraging a Fund's assets. Each Fund will establish one or more segregated
accounts with the custodian and will maintain liquid assets in such accounts in
an amount at least equal to the value of its commitments to purchase when-issued
securities.
MUNICIPAL LEASE OBLIGATIONS--
Intermediate Municipal Bond Fund, Pennsylvania Municipal Bond Fund, New Jersey
Municipal Bond Fund, Tax-Free Reserve
Municipal lease obligations are issued by a state or local government or
authority to acquire land and a wide variety of equipment and facilities. These
obligations typically are not fully backed by the municipality's credit, and
their interest may become taxable if the lease is assigned. If funds are not
appropriated for the following year's lease payments, the lease may terminate,
with the possibility of default on the lease obligation and significant loss to
a Fund. Certificates of participation in municipal lease obligations or
installment sales contracts entitle the holder to a proportionate interest in
the lease-purchase payments made.
FOREIGN CURRENCY TRANSACTIONS--
International Growth Fund and Global Bond Fund
The value of the assets of the Fund as measured in U.S. dollars may be affected
favorably or unfavorably by changes in foreign currency exchange rates and
exchange control regulations, and the Fund may incur costs in connection with
conversions between various currencies. The Fund will conduct its foreign
currency exchange transactions either on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign currency exchange market, or through forward
contracts to purchase or sell foreign currencies. A forward foreign currency
exchange contract ('forward currency contracts') involves an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. These forward currency contracts are
traded directly between currency traders (usually large commercial banks) and
their customers. The Fund may enter into forward currency contracts in order to
hedge against adverse movements in exchange rates between currencies.
For example, when the Fund enters into a contract for the purchase or sale
of a security denominated in a foreign currency, it may want to establish the
U.S, dollar cost or proceeds, as the case may be. By entering
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/X/ COREFUND
into a forward currency contract in U.S. dollars for the purchase or sale of the
amount of foreign currency involved in an underlying security transaction, the
Fund can help to protect itself from a possible loss between trade and
settlement dates resulting from an adverse change in the relationship between
the U.S. dollar and such foreign currency. Additionally, for example, when the
Fund believes that a foreign currency may suffer a substantial decline against
the U.S. dollar, it may enter into a forward currency sale contract to sell an
amount of that foreign currency approximating the value of some or all of the
Fund's portfolio securities or other assets denominated in such foreign currency
or when the Fund believes that the U.S. dollar may suffer a substantial decline
against a foreign currency, it may enter into a forward currency purchase
contract to buy that foreign currency for a fixed U.S. dollar amount. However,
these contracts tend to limit potential gains which might result from positive
changes in currency relationships. The Fund may also hedge its foreign currency
exchange rate risk by engaging in currency financial futures and options
transactions. The forecasting of short-term currency market movement is
extremely difficult and whether short-term hedging strategies would be
successful is highly uncertain.
FORWARD CURRENCY CONTRACTS--
International Growth Fund, Global Bond Fund
International Growth Fund and Global Bond Fund may enter into forward foreign
currency exchange contracts in order to protect against uncertainty in the level
of future foreign exchange rates in the purchase and sale of investment
securities. These Funds will not enter into such contracts for speculative
purposes.
A forward foreign currency exchange contract is an obligation to purchase
or sell a specific currency at a future date, which may be any fixed number of
days from the date of the contract agreed upon by the parties, at a price set at
the time of the contract. In addition, International Growth Fund and Global Bond
Fund may be required by the counterparty to segregate certain assets when
entering into such contracts, in order to complete the settlement transactions
in the future. The contracts may be bought or sold in amounts up to 100% of
exposure to protect a Fund to a limited extent against adverse changes in
exchange rates between foreign currencies and the U.S. dollar. Such contracts,
which protect the value of a Fund's investment securities against a decline in
the value of currency, do not eliminate fluctuations in the underlying prices of
the securities. They simply establish an exchange rate at a future date. Also,
although such contracts tend to minimize the risk of loss due to a decline in
the value of a hedged currency, at the same time they tend to limit any
potential gain that might be realized should the value of such foreign currency
increase.
FUTURES CONTRACTS OR OPTIONS TRANSACTIONS--International Growth Fund, Global
Bond Fund, Core Equity Fund and Special Equity Fund
International Growth Fund and Global Bond Fund may purchase futures contracts
and may purchase, sell, and write options on securities (including puts and
calls) to a limited extent. Specifically, these Funds may purchase futures
contracts provided that not
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Investment Policies 41
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INFORMATION ON THE FUNDS (CONTINUED)
more than 5% of its total assets are acquired as a futures contract; in
addition, such Funds may purchase futures contracts or enter into options
transactions only to the extent that obligations under such contracts or
transactions represent not more than 20% of its total assets. International
Growth Fund and Global Bond Fund do not intend to use options on futures
contracts. The risk of loss from investing in futures contracts is potentially
unlimited based largely on whether the advisers of these Funds correctly assess
the direction of stock prices.
The Equity Fund and Special Equity Fund may purchase and write options on
securities. These funds will only engage in covered options transactions
(options on securities owned by the Funds) as deemed appropriate by CoreStates
Advisers. Each Fund may purchase options in an amount not exceeding 5% of its
total assets. Under normal conditions, it is not expected that the underlying
value of portfolio securities subject to options transactions would exceed 50%
of the net assets of a Fund.
Futures contracts or options transactions may be used for several reasons:
to maintain cash reserves while remaining fully invested; to facilitate trading;
to reduce transactions costs; or to seek higher investment returns when such
contract is priced more attractively than the underlying equity security or
index. The Funds may not use futures contracts or options transactions to
leverage their net assets or, for speculative purposes.
For example, in order to remain fully invested in stocks while maintaining
liquidity to meet potential shareholder redemptions, the Funds may invest a
portion of their assets in futures contracts or options transactions as
applicable. Because futures contracts only require a small marginal deposit and
options contracts a small premium payment, these Funds would then be able to
maintain a cash reserve for potential redemptions, while at the same time
remaining fully exposed to markets. Also, because transaction costs of futures
and options may be lower than the costs of investing in securities directly, it
is expected that the use of futures contracts and options transactions may
reduce the total transaction costs of such Funds.
The primary risks associated with the use of futures and options are (i)
imperfect correlation between the changes in market value of the securities held
by a Fund and the prices of futures and options, and (ii) possible lack of a
liquid secondary market for a futures contract and the resulting inability to
close a futures position prior to its maturity date. The risk of imperfect
correlation will be minimized by investing only in those contracts whose
behavior is expected to resemble that of a Fund's underlying securities. The
risk that the Funds will be unable to close out an outstanding futures and/or
options position will be minimized by entering into such transactions on a
national exchange with an active and liquid secondary market. In addition,
although these Funds will not use futures and/or options contracts for
speculative purposes, there is the risk that the advisers of these Funds could
be incorrect in their assessment of the direction of stock prices.
DERIVATIVES--
Derivatives are securities that derive their value from other securities. The
following are considered derivative securities: options on futures, futures,
options (e.g., puts and calls), swap agreements, mortgage-backed securities
(CMDs, REMICs, IOs, and POs), when-issued securities and forward commitments,
floating
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/X/ COREFUND
and variable rate securities, convertible securities, 'stripped' U.S. Treasury
securities (e.g., Receipts and STRIPS), privately-issued stripped securities
(e.g., TGRs, TRs, and CATs). See elsewhere in 'Other Investment Practices of the
Funds' for discussion of these various instruments, and see 'Types of Securities
in which the Funds Invest' for more information about any investment policies
and limitations applicable to their use.
ILLIQUID SECURITIES--All Funds
The Funds may invest up to 10% of their assets in illiquid securities except for
the CoreFund Special Equity Fund, Balanced Fund, Bond Fund, Short Term Income
Fund, Government Income Fund, Intermediate Municipal Bond Fund, Pennsylvania
Municipal Bond Fund, New Jersey Municipal Bond Fund, and Global Bond Fund which
may invest up to 15% of their assets in illiquid securities. Under the
supervision of CoreFunds' Board of Directors, each Fund's advisers determine the
liquidity of the Fund's investments. The absence of a trading market can make it
difficult to ascertain a market value for illiquid investments. Disposing of
illiquid investments may involve time-consuming negotiations and legal expenses,
and it may be difficult or impossible for a Fund to sell them promptly at an
acceptable price.
LENDING OF SECURITIES--All Funds
The Funds may lend their portfolio securities to qualified brokers, dealers,
banks, and other financial institutions for the purpose of realizing additional
net investment income through the receipt of interest on the loan. Each Fund may
lend portfolio securities with a value of up to 33 1/3% of its total assets.
Such loans may be terminated at any time. These Funds will receive cash, letters
of credit, government or government agency securities as collateral in an amount
equal to at least 100% of the current market value of the loaned securities plus
accrued interest. Cash collateral received by the Funds will be invested in
short-term debt securities.
These Funds will retain most rights of beneficial ownership including
dividends, interest or other distributions on the loaned securities. Voting
rights pass with the lending. The Funds will call loans to vote proxies if a
material issue affecting the investment is to be voted upon. Loans will be made
only to borrowers deemed by CoreStates Advisers to be of good standing.
Such loans would involve risk of delay in receiving additional collateral
in the event the value of the collateral decreased below the value of the
securities loaned, or risk of delay in recovering the securities loaned or even
loss of rights in the collateral should the borrower of the securities fail
financially.
SWAPS--Global Bond Fund
Global Bond Fund may enter into interest rate swaps, currency swaps and other
types of swap agreements such as caps, collars and floors as a way of managing
its exposure to different types of investments. In a typical interest rate swap,
one party agrees to make regular payments equal to a floating interest rate
times a 'notional principal amount,' in return for payments equal to a fixed
rate times the same amount, for a specific period of time. If a swap agreement
provides for payment in different currencies, the parties might agree to
exchange the notional principal amount as well. Swaps may also depend on other
prices or rates, such as the value of an index or mortgage prepayment
rates. In a
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Investment Policies 43
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INFORMATION ON THE FUNDS (continued)
typical cap or floor agreement, one party agrees to make payments only under
specified circumstances, usually in return for payment of a fee by the other
party. For example, the buyer of an interest rate cap obtains the right to
receive payments to the extent that a specific interest rate exceeds an
agreed-upon level, while the seller of an interest rate floor is obligated to
make payments to the extent that a specified interest rate falls below an
agreed-upon level. An interest rate collar combines elements of buying a cap and
selling a floor.
Swap agreements will tend to shift the Global Bond Fund's investment
exposure from one type of investment to another. For example, if this Fund
agrees to exchange payments in U.S. dollars for receipts in foreign currency,
the swap agreement would tend to increase the Fund's exposure to foreign
currency and interest rates. Caps and floors have an effect similar to buying or
writing options. Depending on how they are used, swap agreements may increase or
decrease the overall volatility of Global Bond Fund's investments and its share
price and yield.
Swap agreements are sophisticated hedging instruments that typically
involve a small investment of cash relative to the magnitude of risks assumed.
As a result, swaps can be highly volatile and have a considerable impact on a
Fund's performance. Swap agreements are subject to risks related to the
counterparty's ability to perform, and may decline in value if the
counterparty's creditworthiness deteriorates. A Fund may also suffer losses if
it is unable to terminate outstanding swap agreements or reduce their exposure
through offsetting transactions. Any obligation a Fund may have under these
types of arrangements will be covered by setting aside liquid assets in a
segregated account. Global Bond Fund will enter into swaps only with
counterparties deemed creditworthy by its advisers.
FOREIGN SECURITIES--Special Equity Fund, International Growth Fund, Balanced
Fund, Global Bond Fund, Bond Fund
The Special Equity, International Growth, Balanced, Global Bond and Bond Funds
may invest in securities of foreign issuers. The Funds may also invest in
securities issued by foreign branches of U.S. banks and foreign banks, in
Canadian commercial paper, and in Europaper (U.S. dollar-denominated commercial
paper of a foreign issuer).
Investment in securities of foreign issuers involves certain risks not
ordinarily associated with investments in securities of domestic issuers. Such
risks include fluctuations in foreign exchange rates, difficulties in predicting
international trade patterns, political, social and economic instability in the
country of the issuer, foreign trading practices (including higher trading
commissions, custodial charges and delayed settlements), foreign withholding and
income taxation, the possible establishment of exchange controls or the adoption
of other foreign governmental restrictions (which may adversely affect the
payment of principal and interest), difficulty in obtaining and enforcing
judgments against foreign issuers, and the possible imposition of exchange
controls or other foreign governmental laws or restrictions. With respect to
certain countries, there is also the possibility of expropriation of assets,
nationalization of assets, limits on removal of currency or other assets,
confiscatory taxation, political or social instability or diplomatic
developments which could adversely affect investments in those countries.
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Foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards comparable to those applicable to
U.S. domestic companies. There is generally less government regulation of
securities exchanges, brokers and listed companies abroad than in the U.S.
Confiscatory taxation or diplomatic developments could also affect investment in
those countries. In addition, foreign branches of U.S. banks, foreign banks and
foreign issuers may be subject to less stringent reserve requirements and to
different accounting, auditing, reporting and recordkeeping standards than those
applicable to domestic branches of U.S. banks and U.S. domestic issuers.
AMERICAN DEPOSITARY RECEIPTS ('ADRS'), EUROPEAN DEPOSITARY RECEIPTS ('EDRS') and
Global Depositary Receipts ('GDRs')--Special Equity Fund, Balanced Fund and
International Growth Fund ADRs are securities, typically issued by a U.S.
financial institution (a 'depositary'), that evidence ownership interests in a
security or a pool of securities issued by a foreign issuer and deposited with
the depositary. ADRs include American Depositary Shares and New York Shares.
EDRs are securities, typically issued by a non-U.S. financial institution, that
evidence ownership interests in a security or a pool of securities issued by
either a U.S. or foreign issuer. GDRs are issued globally and evidence a similar
ownership arrangement. As is the case with ADRs, both EDRs and GDRs include
Depositary Shares. Generally, ADRs are designed for trading in the U.S.
securities market, EDRs are designed for trading in European securities markets
and GDRs are designed for trading in non-U.S. securities markets. ADRs, EDRs and
GDRs may be available for investment through 'sponsored' or 'unsponsored'
facilities. A sponsored facility is established jointly by the issuer of the
security underlying the receipt and a depositary, whereas and unsponsored
facility may be established by a depositary without participation by the issuer
of the receipt's underlying security. Holders of an unsponsored depositary
receipt generally bear all the costs of the unsponsored facility. The depositary
of an unsponsored facility frequently is under no obligation to distribute
shareholder communications received from the issuer of the deposited security or
to pass through to the holders of the receipts voting rights with respect to the
deposited securities.
/X/
TYPES OF
SECURITIES IN
WHICH THE
FUNDS INVEST
The various types of securities in which the Funds invest are described below.
EQUITY FUNDS ___________________________________________________________________
GROWTH EQUITY FUND
CORE EQUITY FUND
SPECIAL EQUITY FUND
EQUITY INDEX FUND
INTERNATIONAL GROWTH FUND
The types of equity securities in which these Funds invest generally include
common stocks, preferred stocks and convertible securities.
BALANCED FUND In addition to equity securities, Balanced Fund may invest in
fixed income securities. The fixed income securities in which this Fund will
invest consist of bonds, debentures, notes and similar obligations or
instruments which constitute a security and evidence indebtedness, including
U.S. Government obligations, mortgage-backed securities and
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Types of Securities 45
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INFORMATION ON THE FUNDS (continued)
bank obligations (as described below). Balanced Fund may also invest in
corporate bonds which are rated, at time of purchase, BBB or higher by S&P or
Moody's.
TAXABLE FIXED INCOME FUNDS _____________________________________________________
SHORT-INTERMEDIATE BOND FUND
BOND FUND
SHORT TERM INCOME FUND
The various types of securities which may be purchased by these Funds include
the following:
U.S. Government Obligations--
1. U.S. Treasury Securities-includes bills, notes, bonds, and other debt
securities issued by the U.S. Treasury. These are direct obligations of the U.S.
Government and are supported by the full faith and credit of the United States.
They differ mainly in interest rates, maturities, and dates of issue.
2. U.S. Government Agency Securities-issued or guaranteed by U.S.
Government-sponsored instrumentalities and federal agencies. These include
obligations supported by the right of the issuer to borrow from the Treasury,
such as those of the Export-Import Bank of the United States; obligations
supported by the discretionary authority of the U.S. Treasury to purchase the
agency's obligations, such as those of the Federal National Mortgage Association
('FNMA'); and obligations supported only by the credit of the agency or
instrumentality, such as those of the Student Loan Marketing Association
('SLMA'). However, no assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored instrumentalities if it
is not obligated to do so by law.
Bank Obligations--
1. Certificates of Deposit--negotiable certificates representing a
commercial bank's obligation to repay funds deposited with it, earning specified
rates of interest over given periods.
2. Bankers' Acceptances--negotiable drafts or bills of exchange, normally
drawn by an importer or exporter to pay for specific merchandise, which are
'accepted' by a bank; meaning, in effect, that the bank unconditionally agrees
to pay the face value of the instrument upon maturity.
Each of Short-Intermediate Bond Fund and Intermediate Municipal Bond Fund,
as well as Balanced Fund, will limit its purchases of bank obligations to those
of domestic branches of U.S. banks having total assets at the time of purchase
of $1 billion or more as shown on their last published financial statements at
the time of investment.
Mortgage-Backed Securities--
These securities may be issued or guaranteed by U.S. Government agencies, such
as the Government National Mortgage Association ('GNMA'), FNMA, or the Federal
Home Loan Mortgage Corporation ('FHLMC'), or may be privately-issued. GNMA
mortgage-backed certificates are mortgage-backed securities of the modified
pass-through type, which means that both interest and principal payments
(including prepayments) are passed through monthly to the holder of the
certificate. The National Housing Act provides that the full faith and credit of
the United States is pledged to the timely payment of principal and interest by
GNMA of amounts due on these GNMA certificates. Each GNMA certificate evidences
an interest in a specific pool of mortgage loans insured by the Federal Housing
Administration or the Farmers Home Administration or guaranteed by the Veterans
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46 Types of Securities
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/X/ COREFUND
Administration. FNMA, a federally chartered and stockholder-owned corporation,
issues pass-through certificates which are guaranteed as to principal and
interest by FNMA. FHLMC, a corporate instrumentality of the United States,
issues participation certificates which represent an interest in mortgages held
in FHLMC's portfolio. FHLMC guarantees the timely payment of interest and the
ultimate collection of principal. Securities issued or guaranteed by FNMA and
FHLMC are not backed by the full faith and credit of the United States. There
can be no assurance that the United States Government would provide financial
support to FNMA or FHLMC if necessary in the future.
Mortgage-backed securities also include collateralized mortgage
obligations ('CMOs') or real estate mortgage investment conduits ('REMICs'), a
type of CMO. CMOs or REMICS are mortgage pass-throughs issued in multiple
classes. In a CMO, a series of bonds or certificates are usually issued in
multiple classes. Each class of CMOs is issued with a specific fixed or floating
coupon rate and has a stated maturity or final distribution date. Principal
prepayments on the underlying mortgage assets may cause the CMOs to be retired
substantially earlier than their stated maturities or final distribution dates,
resulting in a loss of all or part of any premium paid. Interest typically is
paid or accrues on all classes of the CMOs on a monthly, quarterly or semiannual
basis.
The principal of and interest on the underlying mortgage assets may be
allocated among the several classes of a series of a CMO in a variety of ways.
In a common structure, payments of principal, including any principal payments,
on the underlying mortgage assets are applied to the classes of the series of a
CMO in the order of their respective stated maturities or final distribution
dates, so that no payment of principal will be made on any class of CMOs until
all other classes having an earlier stated maturity or final distribution date
have been paid in full.
Privately-issued mortgage-backed securities will be readily marketable and
rated at the time of purchase in the two highest rating categories assigned by a
Rating Organization. For a description of rating symbols see the Appendix to the
Statement of Additional Information.
Asset-backed Securities--
Asset-backed securities consist of securities secured by company receivables,
truck and auto loans, leases and credit card receivables. These issues are
normally traded over-the-counter and typically have a short-intermediate
maturity structure depending on the paydown characteristics of the underlying
financial assets which are passed through to the security holder.
The Funds will invest only in privately-issued asset-backed securities,
which are readily marketable and rated at the time of purchase in the two
highest rating categories assigned by a Rating Organization. For a description
of rating symbols see the Appendix to the Statement of Additional Information.
Corporate Securities--
Corporate securities include corporate bonds, convertible and non-convertible
debt securities, and preferred stocks, as well as commercial paper. Corporate
securities in which these Funds may invest must satisfy certain minimum ratings
at the time of purchase by Moody's or S&P. Corporate
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Types of Securities 47
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INFORMATION ON THE FUNDS (continued)
bonds must be of investment grade quality (BBB or better) as rated by S&P or
Moody's.
GOVERNMENT INCOME FUND Government Income Fund may invest in U.S. Government
obligations and mortgage-backed securities, as defined above.
GLOBAL BOND FUND Global Bond Fund may invest in fixed income or debt obligations
issued or guaranteed by the U.S. Government or a foreign government, or by one
of its agencies, authorities, instrumentalities or political subdivisions; fixed
income or debt obligations issued or guaranteed by supranational entities; and
corporate securities and bank obligations, as described above.
TAXABLE MONEY MARKET FUNDS _____________________________________________________
CASH RESERVE The various types of securities invested in by Cash Reserve include
U.S. Government obligations, bank obligations, and asset-backed securities, as
described above.
With respect to U.S. Government obligations, in addition to bills, notes
and bonds issued by U.S. Government agencies, Cash Reserve may invest in STRIPS
as defined previously in 'Investment Policies-Treasury Reserve.' STRIPS may be
sold as zero coupon securities, which means that they are sold at a substantial
discount and redeemed at face value at their maturity date without interim cash
payments of interest or principal. This discount is amortized over the life of
the security, and such amortization will constitute the income earned on the
security for both accounting and tax purposes. See also 'Taxes.'
With respect to bank obligations, in addition to certificates of deposit
and bankers' acceptances, Cash Reserve may invest in foreign securities and time
deposits. Time deposits are non-negotiable deposits in a banking institution
earning a specified interest rate over a given period of time. Such deposits
cannot be withdrawn before the date specified at the time of deposit.
With respect to asset-backed securities, Cash Reserve may invest only in
asset-backed securities having final maturity dates of 13 months or less.
Cash Reserve may also invest in the following types of securities:
Commercial Paper--
Commercial paper are short-term promissory notes issued by corporations,
including variable amount master demand notes, having short-term ratings at the
time of purchase of 'Prime-1' by Moody's and/or 'A-1' or better by S&P.
Variable amount master demand notes in which Cash Reserve may invest are
unsecured demand notes that permit the indebtedness thereunder to vary and
provide for periodic adjustments in the interest rate according to the terms of
the instrument. The rate of interest on such notes is generally based upon the
interest rates for commercial paper issued by the master demand note issuer. The
rate will be adjusted automatically at periodic intervals which normally will
not exceed 31 days but may extend longer. Because master demand notes are direct
lending arrangements between such Fund and the issuer, they are not normally
traded. Although there is no secondary market in the notes, the Fund may demand
payment of principal and accrued interest at any time. While the notes are not
typically rated by credit rating agencies, issuers of variable amount master
demand notes (which are normally manufacturing, retail, financial, and other
business concerns) must satisfy the same criteria as set forth above for issuers
of commercial paper. CoreStates Advisers will consider the earning power, cash
flow, and other liquidity ratios of
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48 Types of Securities
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the issuers of such notes and will continuously monitor their financial status
to meet payment on demand.
Receipts--
Receipts are interests in separately traded interest and principal component
parts of U.S. Treasury obligations that are issued by banks or brokerage firms
and are created by depositing U.S. Treasury obligations into a special account
at a custodian bank. The custodian holds the interest and principal payments for
the benefit of the registered owners of the certificates or receipts. The
custodian arranges for the issuance of the certificates or receipts evidencing
ownership and maintains the register. Receipts include 'Treasury Receipts'
('TR'S'), 'Treasury Investment Growth Receipts' ('TIGR'S'), and 'Certificates of
Accrual on Treasury Securities' ('CATS').
TREASURY RESERVE Treasury Reserve may invest in U.S. Treasury obligations, such
as bills, notes and bonds, and in separately traded interest and principal
component parts of such obligations, such as STRIPS. Treasury Reserve may also
invest in repurchase agreements fully collateralized by U.S. Treasury
obligations.
TAX-FREE FIXED INCOME AND MONEY MARKET FUNDS ___________________________________
INTERMEDIATE MUNICIPAL BOND FUND
PENNSYLVANIA MUNICIPAL BOND FUND
NEW JERSEY MUNICIPAL BOND FUND
TAX-FREE RESERVE These Funds will invest in municipal securities. The two
principal classifications of municipal securities which may be held by these
Funds are 'general obligation' securities and 'revenue' securities. These are
discussed below, along with other municipal securities in which these Funds may
invest.
1. General Obligation Securities
'General obligation' securities are secured by the issuer's pledge of its full
faith, credit, and taxing power for the payment of principal and interest.
2. Revenue Securities
'Revenue' securities are payable only from the revenues derived from a
particular facility or class of facilities or, in some cases, from the proceeds
of a special excise tax or another specific revenue source such as the user of
the facility being financed. Industrial development and pollution control bonds
held by these Funds are in most cases revenue securities and are not payable
from the unrestricted revenues of the issuer. Consequently, the credit quality
of such revenue bonds is usually directly related to the credit standing of the
corporate user of the facility involved.
3. Moral Obligation Bonds
The portfolios of these Funds may also include 'moral obligation' bonds, which
are normally issued by special-purpose public authorities. If the issuer of
moral obligation bonds is unable to meet its debt service obligations from
current revenues, it may draw on a reserve fund, the restoration of which is a
moral commitment but not a legal obligation of the state or municipality which
created the issuer.
4. Variable Rate Demand Obligations
Municipal securities purchased by these Funds may include 'variable rate demand
obligations,' which are tax-exempt obligations upon which interest is payable at
a floating or variable rate. While there may be no active secondary market with
----
Types of Securities 49
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INFORMATION ON THE FUNDS (CONTINUED)
respect to a particular variable rate demand obligation purchased by such Funds,
they normally may demand payment of the principal of and accrued interest on the
obligation upon not more than seven days' notice and may resell the obligation
at any time to a third party. The absence of any active secondary market,
however, could make it difficult for such Funds to dispose of a variable rate
demand obligation if the issuer defaulted on its payment obligation, and they
could, for this or other reasons, suffer a loss to the extent of the default.
5. When-Issued Securities
These Funds may purchase municipal securities on a 'when-issued' basis, as
described in 'Other Investment Practices of the Funds.' Each Fund expects that
commitments to purchase when-issued securities will not exceed 25% of the value
of its total assets, absent unusual market conditions, and does not intend to
purchase when-issued securities for speculative purposes, but only in
furtherance of its investment objective. Because each Fund will set aside cash
or liquid assets to satisfy its purchase commitments in the manner described,
its liquidity and ability to manage its portfolio might be affected in the event
its commitments to purchase when-issued securities should ever exceed 25% of the
value of its total assets.
PENNSYLVANIA MUNICIPAL SECURITIES
In managing the portfolios of Intermediate Municipal Bond Fund and Tax-Free
Reserve, CoreStates Advisers intends to invest, when possible, such Funds'
assets in Pennsylvania Municipal Securities, provided the investment is
consistent with the Funds' investment objectives and policies and their status
as diversified investment companies. Because of the relatively limited number of
Pennsylvania municipal issuers and the restricted supply of outstanding
municipal securities issued by them that meet the Funds' investment criteria,
CoreStates Advisers cannot predict precisely what percentage of each Fund's
portfolio will be invested in such issuers.
Except as stated above with respect to Pennsylvania Municipal Securities,
CoreStates Advisers does not intend on a regular basis to invest more than 25%
of either Intermediate Municipal Bond Fund's or Tax-Free Reserve's total assets
in (i) municipal securities whose issuers are in the same state, (ii) municipal
securities, the interest on which is paid solely from revenues of similar
projects, and (iii) industrial development bonds, although it may do so from
time to time. To the extent such Funds' assets are so concentrated, they would
be subject to the peculiar risks presented by the laws and economic conditions
relating to such states, projects, and bonds to a greater extent than it would
be if its assets were not so concentrated.
AMT OBLIGATIONS
While Intermediate Municipal Bond Fund and Tax-Free Reserve are permitted to
purchase 'private activity bonds' that are subject to the Alternative Minimum
Tax (the 'AMT') imposed by Section 55 of the Code, these Funds do not currently
hold or anticipate purchasing such bonds. If they did so, however, a portion of
the dividends received would be subject to the AMT. The purchase of such bonds
by these Funds could have a material effect on the AMT liability of their
investors, and hence these Funds do not intend to invest any portion of their
assets in such bonds.
Corporate shareholders, however, should note that all exempt-interest
dividends are includable in the computation of 'adjusted current earnings' for
AMT purposes,
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50 Types of Securities
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/X/ COREFUND
regardless of when the bonds from which they are derived were issued or whether
they are derived from 'private activity bonds.' Accordingly, corporate
shareholders should consult their tax advisers regarding the impact that holding
shares of these Funds would have on their own AMT liability.
TEMPORARY INVESTMENTS __________________________________________________________
On occasion, a Fund may be unable to achieve its investment objective due to
market conditions. Under such circumstances, a Fund is permitted to make certain
temporary investments which deviate from the investment policies described
above. Such investments may be used to invest uncommitted cash balances, to
maintain liquidity to meet shareholder redemptions, or to take a temporary
defensive position against potential or serious stock market declines. The
temporary investments the Funds are permitted to make under such circumstances
are described below.
GROWTH EQUITY FUND
CORE EQUITY FUND
SPECIAL EQUITY FUND
EQUITY INDEX FUND
INTERNATIONAL GROWTH FUND
Although these Funds normally seek to remain fully invested in equity
securities, they may invest all or a portion of their assets temporarily in
certain short-term and fixed income vehicles, in accordance with the investment
restrictions described herein. Money market instruments, such as commercial
paper, and fixed income securities, such as bonds, must be assigned, or
determined by the advisers to be equal to, certain minimum ratings in each
category by either Moody's or S&P at the time of purchase by a Fund. Temporary
investments may include the following:
Money Market Instruments
U.S. Government Obligations
Fixed Income Securities
Repurchase Agreements
BALANCED FUND Although Balanced Fund normally seeks to remain fully invested in
a combination of equity, fixed income, and money market securities, when
CoreStates Advisers determines that market conditions warrant, it may invest up
to 100% of its assets in money market instruments, including securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities,
repurchase agreements, certificates of deposit and bankers' acceptances issued
by banks or savings and loan associations having net assets of at least $500
million as of the end of their most recent fiscal year, and commercial paper
rated, at time of purchase, in the top two categories by a national rating
agency or determined to be of comparable quality by the investment adviser at
time of purchase, and other long- and short-term debt instruments which are
rated A or higher at time of purchase, and may hold a portion of its assets in
cash reserves.
PENNSYLVANIA MUNICIPAL BOND FUND
NEW JERSEY MUNICIPAL BOND FUND
Each of the Funds may increase its investment in Taxable Obligations to over 20%
of its total assets if suitable tax-exempt obligations are unavailable or for
temporary defensive purposes.
GLOBAL BOND FUND For temporary defensive purposes, when the advisers determine
that market conditions warrant, Global Bond Fund may invest up to 100% of its
assets in
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Types of Securities 51
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INFORMATION ON THE FUNDS (continued)
U.S. dollar-denominated fixed income securities or debt obligations and the
following domestic and foreign money market instruments: government obligations,
certificates of deposit, bankers' acceptances, time deposits, commercial paper,
short-term corporate debt issues and repurchase agreements. This Fund may hold a
portion of its assets in cash for liquidity purposes.
TAX-FREE RESERVE Tax-Free Reserve may hold uninvested cash reserves which do not
earn income (pending investment) during temporary defensive periods or if, in
the opinion of CoreStates Advisers, suitable tax-exempt obligations are
unavailable. There is no percentage limitation on the amount of assets which may
be held uninvested. In addition, such Fund may invest from time to time, to the
extent consistent with its investment objective, a portion of its assets on a
temporary basis or for temporary defensive purposes in short-term money market
instruments, the income from which is subject to federal income tax.
Temporary investments will generally not exceed 20% of the total assets of
Tax-Free Reserve except when made for temporary defensive purposes, and may
include obligations of the U.S. Government or its agencies or instrumentalities;
debt securities (including taxable commercial paper) of issuers having been
assigned, at the time of purchase, the highest short-term rating of either
Moody's or S&P; certificates of deposit or bankers' acceptances of domestic
branches of U.S. banks with total assets at the time of purchase of $1 billion
or more; repurchase agreements with respect to such obligations; or reverse
repurchase agreements.
/X/
INVESTMENT
RESTRICTIONS
Investment policies of the Funds that are not fundamental may be changed by the
Board of Directors without shareholder approval, provided such changes are
deemed to be consistent with a Fund's objective and in the best interests of its
shareholders. However, the investment objectives of each Fund, along with the
restrictions and limitations described herein and in the Statement of Additional
Information, are fundamental and may be changed only by the affirmative vote of
a majority of the outstanding shares of such Fund. See 'Description of Shares.'
A FUND MAY NOT:
1. Make loans, except that each Fund may purchase or hold certain debt
instruments, engage in lending of portfolio securities, in accordance with its
policies and limitations, and enter into repurchase agreements, in accordance
with its policies and limitations.
2. Borrow money or issue senior securities, except that each Fund may
borrow from banks and enter into reverse repurchase agreements for temporary
purposes in amounts not to exceed 10% of the value of its total assets at the
time of such borrowing; or mortgage, pledge or hypothecate any assets, except in
connection with any such borrowing and in amounts not in excess of the lesser of
the dollar amounts borrowed or 10% of the value of its total assets at the time
of such borrowing. A Fund will not purchase any securities while its borrowings
(including reverse repurchase agreements) are outstanding.
3. Invest more than 10% of its total assets in illiquid securities,
including
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52 Investment Restrictions
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/X/ COREFUND
repurchase agreements maturing in more than seven days or the lending of
securities which provide for settlement more than seven days after notice. This
fundamental restriction does not apply to Balanced Fund, Government Income Fund,
Intermediate Municipal Bond Fund, Pennsylvania Municipal Bond Fund, New Jersey
Municipal Bond Fund, Global Bond Fund, Core Equity Fund, Equity Index Fund,
Special Equity Fund, Bond Fund, and Short Term Income Fund. These Funds, as a
matter of non-fundamental investment policy, may invest up to 15% of their
assets in illiquid securities.
4. Purchase securities of any one issuer (other than obligations issued or
guaranteed as to principal and interest by the U.S. Government, its agencies or
instrumentalities) if, immediately after such purchase, more than 5% of the
value of the Fund's total assets would be invested in such issuer or hold more
than 10% of the outstanding voting securities of such issuer, except that up to
25% of the value of the Fund's total assets may be invested without regard to
such 5% limitation. With respect to the Fixed Income Funds and Cash Reserve,
however, there is no limit to the percentage of assets that may be invested in
U.S. Treasury bills and notes, or other obligations issued or guaranteed by the
U.S. Government or its agencies or instrumentalities. With respect to Global
Bond Fund, there is no limit to the percentage of assets that may be invested in
securities issued by foreign governments. This restriction does not apply to
Pennsylvania Municipal Bond Fund, New Jersey Municipal Bond Fund, Global Bond
Fund or Treasury Reserve.
5. Invest 25% or more of its total assets in any one industry. For
purposes of this limitation, wholly-owned finance companies will be considered
to be in the industries of their parents if their activities are primarily
related to financing the activities of their parents, and utilities will be
divided according to their services--for example, gas, gas transmission,
electric and gas, electric, and telephone will each be considered a separate
industry. This restriction does not apply to Treasury Reserve.
With respect to Intermediate Municipal Bond Fund, Pennsylvania Municipal
Bond Fund, New Jersey Municipal Bond Fund and Tax-Free Reserve, this limitation
does not apply to investments in tax-exempt securities issued by governments or
political sub-divisions of governments.
With respect to Global Bond Fund, there is no limitation with respect to
obligations issued by the U.S. Government, by foreign governments, or by
supranational agencies.
With respect to Cash Reserve, there is no limitation with respect to
obligations issued or guaranteed by the U.S. Government or its
instrumentalities.
EQUITY FUNDS In addition, an Equity Fund may not purchase the securities of any
one issuer (other than obligations issued or guaranteed as to principal and
interest by the U.S. Government, its agencies or instrumentalities) if, as a
result thereof, more than 10% of the voting securities of such issuer would be
held by the Fund.
TREASURY RESERVE In addition, Treasury Reserve may not purchase securities other
than direct obligations of the U.S. Treasury, such as Treasury bills and notes,
none of which may be subject to repurchase agreements.
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Investment Restrictions 53
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INFORMATION ON THE FUNDS (continued)
PORTFOLIO TURNOVER It is not a policy of the Funds to purchase or sell
securities for trading purposes. However, the advisers manage the Funds without
regard generally to restrictions on portfolio turnover, except those imposed by
provisions of the federal tax laws regarding short-term trading. Generally, the
Funds will not trade for short-term profits, but when circumstances warrant,
investments may be sold without regard to the length of time held. It is
expected that the Equity Funds' annual portfolio turnover rates will not exceed
100%. A 100% rate of turnover would occur, for example, if all of a portfolio's
securities are replaced within a one year period. With respect to the Fixed
Income Funds, the annual portfolio turnover rate may exceed 100% due to changes
in portfolio duration, yield curve strategy or commitments to forward delivery
mortgage-backed securities. With the exception of Global Bond Fund, however, it
is expected that the annual turnover rate for the Fixed Income Funds will not
exceed 250%.
High rates of portfolio turnover necessarily result in correspondingly
heavier brokerage and portfolio trading costs which are paid by a Fund. Trading
in fixed income securities does not generally involve the payment of brokerage
commissions, but does involve indirect transaction costs. In addition to
portfolio trading costs, higher rates of portfolio turnover may result in the
realization of capital gains. As a general rule, net gains are distributed to
shareholders and will be taxable at ordinary income tax rates, for federal
income tax purposes, regardless of long- or short-term capital gains status. See
'Distributions' and 'Taxes' for more information on taxation. The tables set
forth in 'Financial Highlights' present the Funds' historical portfolio turnover
rates.
/X/
INVESTOR
CONSIDERATIONS
INVESTMENT SUITABILITY _________________________________________________________
EQUITY FUNDS
The Equity Funds are appropriate for investors seeking long-term growth.
Historically, equities have provided significantly higher returns than fixed
income and money market instruments, yet subject the investor to greater price
fluctuation. The CoreFund Equity Funds offer a range of growth and risk
characteristics, incorporating high grade domestic and international securities.
Growth Equity Fund
Core Equity Fund
Special Equity Fund
These Funds are appropriate for investors who are seeking long-term income and
capital appreciation, and who do not need to earn current income from their
investments in a Fund. They are suited to those investors who are willing to
hold their investments over a long horizon in anticipation of the returns that
common stocks may provide. Because these Funds invest in equity securities,
investors should be able to tolerate fluctuations in the principal value of
their investment. Investors should be cognizant of the inherent volatility in
the stock market, and the investment risks discussed below; and understand that
all investments carry a risk factor.
Equity Index Fund
Equity Index Fund is suitable for those who want to participate in the equity
market's superior long-term performance without the near-term commitment and
risks associated with choosing a particular investment style which may or may
not be out of favor during any period of time. Investors generally can
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54 Investor Considerations
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expect returns in line with the S&P 500 Index, which is tracked closely by the
Fund.
Balanced Fund
Balanced Fund is appropriate for investors who seek to capture the interest
income of bonds and the capital appreciation of stocks while reducing risk
through diversification among these securities.
International Growth Fund
International Growth Fund is appropriate for investors who are seeking long-term
capital appreciation, and who do not need to earn current income from their
investment in a Fund. International Growth Fund is suited to those investors who
are willing to hold their investment over a long horizon in anticipation of the
returns that foreign stocks may provide. Because the Fund invests in foreign
equity securities, investors should be able to tolerate fluctuations in the
principal value of their investment. Investors should be cognizant of the unique
risks of international investing, including their exposure to currency
fluctuations; and understand that all investments carry a risk factor.
Under the multiple manager structure, CoreStates Advisers has general
oversight responsibility for the investment advisory services provided to the
Fund by Martin Currie and Aberdeen Managers. CoreStates Advisers is also
responsible for managing the allocation of assets among the Fund's sub-advisers.
Accordingly, each sub-adviser will be responsible for the day-to-day investment
management of all or a discrete portion of the assets of the Fund. 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 may not comply with certain regulatory and tax
requirements.
FIXED INCOME FUNDS
These Funds are appropriate for investors seeking an investment vehicle that
offers a higher level of current income with low to moderate share price
fluctuations. These Funds differ primarily by their average maturity, credit
quality, and tax status.
Short-Intermediate Bond Fund will purchase U.S. Government and corporate
securities rated A or better and is expected to have an average maturity of no
more than five years.
The Bond Fund will normally invest in domestic and foreign corporate debt
securities, U.S. government securities, mortgage-backed securities and
asset-backed securities, without limitation to the average maturity of the Fund.
Short Term Income Fund will invest in a diversified portfolio of
investment-grade debt securities, including corporate debt securities and U.S.
government securities, having an expected or remaining maturity of three years
or less. The Fund is expected to have an average dollar-weighted maturity of
approximately one year.
Government Income Fund will invest only in obligations issued or
guaranteed by the U.S. Government and its agencies. There is no limit to the
average maturity so it is appropriate for investors who seek a higher level of
current income than that which is generally possible with money market funds,
and who can tolerate moderate fluctuations in principal value.
Intermediate Municipal Bond Fund is for investors seeking income exempt
from federal income taxes, generally investors in
----
Investor Considerations 55
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INFORMATION ON THE FUNDS (CONTINUED)
a high income tax bracket. This Fund will only purchase securities rated A or
better and is expected to have an average maturity of three to ten years.
Pennsylvania Municipal Bond Fund is appropriate generally for investors
seeking an investment vehicle that offers a higher level of current income
exempt from federal income taxes and (as to Pennsylvania residents) Pennsylvania
income taxes, with low to moderate share price fluctuations.
New Jersey Municipal Bond Fund is appropriate generally for investors
seeking an investment vehicle that offers a higher level of current income
exempt from federal income taxes and (as to New Jersey residents) New Jersey
income taxes, with low to moderate share price fluctuations.
Global Bond Fund is suitable for long-term investors who are looking for
both income and capital appreciation from a portfolio of fixed income securities
denominated in U.S. and foreign currencies. Because the value of the securities
will fluctuate with changes in interest rates and relative currency values,
investors must be willing to invest their money over a longer time horizon in
anticipation of the returns afforded by a diversified portfolio of U.S. and
foreign bonds.
MONEY MARKET FUNDS
As each of these Funds is designed and managed to maintain a stable price per
share of $1.00, they provide liquidity and a high degree of safety for investors
who are unable to tolerate fluctuations in the principal value of their
investments.
Cash Reserve is appropriate for investors who are seeking an investment
vehicle that provides current interest income at competitive rates of return.
By investing in direct obligations of the U.S. Treasury, Treasury Reserve
affords an extra margin of protection for investors for whom a high degree of
safety is a primary concern. Treasury Reserve is considered to be the most
secure of the Money Market Funds. This Fund is appropriate for investors who are
seeking an investment vehicle that provides current interest income at
competitive rates of return. Tax-Free Reserve is appropriate for conservative
investors in higher-level federal income tax brackets who may benefit from an
investment that offers current interest income that is at least 80% free of
federal income taxes. Therefore, investors contemplating the purchase of this
Fund should first consider their 'taxable equivalent yield.' This is the
comparison between the tax-exempt yield from Tax-Free Reserve and the equivalent
yield from a taxable investment, using a calculation that takes into account the
investor's current tax bracket. Tax-Free Reserve's current taxable equivalent
yield may be obtained by contacting its distributor.
INVESTMENT RISKS _______________________________________________________________
The Funds differ significantly in terms of risk. Because of the concerns listed
below, a Fund should not be considered a complete investment program. Most
investors should maintain diversified holdings of securities with different risk
characteristics--including common stocks, bonds and different types of money
market instruments. Investors may also wish to complement an investment in a
Fund with other portfolios offered by CoreFunds.
EQUITY FUNDS
The Equity Funds are subject to market risk and fund risk. Market risk is the
possibility that stock prices in general will decline over short or even
extended periods of time. Stock markets tend to be cyclical, with periods when
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56 Investor Considerations
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stock prices generally rise and periods when stock prices generally decline.
Fund risk is the possibility that a Fund's performance during a specific period
may not meet or exceed that of the stock market as a whole. Therefore, investors
should consider their holdings in equity mutual funds to be long-term
investments. In addition to the risks noted above for all equity funds, the
following equity funds are also subject to additional risks as described below.
Balanced Fund
With respect to Balanced Fund, the market value of fixed income securities bears
an inverse relationship to changes in market interest rates. Moreover, changes
by recognized rating agencies in the ratings of any fixed income security and in
the ability of an issuer to make payments of interest and principal may also
affect the market value of these securities. Each of these factors will cause
the net asset value of shares of Balanced Fund to fluctuate over time.
In addition, mortgage-backed securities are subject to prepayment of the
underlying mortgages. During periods of declining interest rates, pre-payment of
mortgages underlying these securities can be expected to accelerate. When the
mortgage-backed securities held by a Fund are prepaid, the Fund must reinvest
the proceeds in securities, the yield of which reflects prevailing interest
rates, which may be lower than the yield on the prepaid securities. Thus,
mortgage-backed securities may not be an effective means of locking in long-term
interest rates for Balanced Fund.
International Growth Fund
In addition to market and fund risk, International Growth Fund is also subject
to currency risk. Currency risk is the risk that changes in foreign exchange
rates will affect, favorably or unfavorably, the value of foreign securities
held by the Fund. In a period when the U.S. dollar generally rises against
foreign currencies, the returns on foreign stocks for U.S. investors will
usually be diminished. By contrast, in a period when the U.S. dollar generally
declines, the returns on foreign stocks will usually be enhanced. In addition,
investments in foreign stock markets can be as volatile, if not more volatile,
than investments in U.S. markets.
Investors should also recognize that investing in foreign companies
involves certain special considerations which are not typically associated with
investing in U.S. companies. Since the stocks of foreign companies are
frequently denominated in foreign currencies, and since this Fund may
temporarily hold uninvested reserves in bank deposits in foreign currencies, its
portfolio will be affected favorably or unfavorably by changes in currency rates
and in exchange control regulations, and may incur costs in connection with
conversions between various currencies. The investment policies of International
Growth Fund permit it to enter into forward foreign currency exchange contracts
in order to hedge its holdings and commitments against changes in the level of
future currency rates. Such contracts involve an obligation to purchase or sell
a specific currency at a future date at a price set at the time of the contract.
In addition, as foreign companies are not generally subject to uniform
accounting, auditing, and financial reporting standards and practices comparable
to those applicable to domestic companies, there
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Investor Considerations 57
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INFORMATION ON THE FUNDS (continued)
may be less publicly available information about certain foreign companies than
about domestic companies. Securities of some foreign companies are generally
less liquid and more volatile than securities of comparable domestic companies.
There is generally less government supervision and regulation of stock
exchanges, brokers, and listed companies than in the U.S. In addition, with
respect to certain foreign countries, there is the possibility of expropriation
or confiscatory taxation, political or social instability, or diplomatic
developments which could affect U.S. investments in those countries.
Although International Growth Fund will endeavor to achieve the most
favorable execution costs in its portfolio transactions, fixed commissions on
many foreign stock exchanges are generally higher than negotiated commissions on
U.S. exchanges. Moreover, transactions executed on foreign exchanges may be
subject to longer settlement periods than transactions executed on U.S.
exchanges. In addition, it is expected that the expenses for custodial
arrangements of the Fund's foreign securities will be somewhat greater than
typical expenses for custodial arrangements for handling U.S. securities of
equal value.
Certain foreign governments levy withholding taxes against dividend and
interest income. Although in some countries a portion of these taxes are
recoverable, the non-recovered portion of foreign withholding taxes will reduce
the income received from the companies comprising International Growth Fund's
portfolio. However, these foreign withholding taxes are not expected to have a
significant impact since this Fund's investment objective is to seek long-term
capital appreciation and any income should be considered incidental.
International Growth Fund attempts to reduce international investment
risks by diversifying among as many foreign economies and currencies as
possible. This includes investments in both developed and selected emerging
markets. In addition, the International Growth Fund offers its shareholders the
ability to diversify their equity investments to reduce the risk of having such
investments affected solely by political and economic events in one country.
FIXED INCOME FUNDS
Securities held by the Fixed Income Funds may be subject to several types of
investment risk, including market risk, credit risk, and call risk. With respect
to these Funds, market risk (or interest rate risk) is the potential for a
decline in the price of fixed income securities due to rising interest rates.
Market risk will be greater for longer term securities than for shorter term
securities. Credit risk is the possibility that a bond issuer will be unable to
make timely payments of either principal or interest. Call risk (or income risk)
relates to corporate bonds during periods of falling interest rates, and
involves the possibility that securities with high interest rates will be
prepaid (or 'called') by the issuer prior to maturity. Such an event would
require a Fund to invest the resulting proceeds elsewhere, at generally lower
interest rates, which would cause fluctuations in the Fund's net income.
Short-Intermediate Bond Fund, Bond Fund and Short Term Income Fund may
also be exposed to event risk, the possibility that corporate fixed income
securities held by these Funds may suffer a substantial decline in credit
quality and market value due to a corporate restructuring. Corporate
restructurings (mergers, leveraged buyouts, takeovers or similar events) are
often financed by a significant expansion of corporate debt.
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58 Investor Considerations
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As a result, the credit quality and market value of a firm's existing debt
securities may decline significantly. While event risk may be high for certain
corporate securities held by these Funds, event risk in the aggregate should be
low because of the Funds' diversified holdings.
The Bond Fund, Short Term Income Fund and Government Income Fund may all
acquire mortgage-backed and asset-backed securities, and therefore, may be
subject to the risks associated with these securities, which are described
above.
The concentration of investments in Pennsylvania Municipal Securities by
the Pennsylvania Municipal Bond Fund raises special investment considerations.
In particular, changes in the economic condition and governmental policies of
the Commonwealth of Pennsylvania and its municipalities could adversely affect
the value of the Fund and the portfolio securities held by it. Rising medical
assistance costs, a slow rate of economic recovery, increased costs of union
contracts, rising unemployment and the potential negative impact of pending
litigation may place increased pressures on the tax resources of the
Commonwealth and its municipalities. See 'Special Risk Factors--Pennsylvania
Municipal Securities' in the Statement of Additional Information for further
discussion of the risks associated with Pennsylvania Municipal Securities.
The concentration of investments in New Jersey Municipal Securities by the
New Jersey Municipal Bond Fund raises special investment considerations that are
discussed under the caption 'Special Risk Factors--New Jersey Municipal
Securities' in the Statement of Additional Information. In particular, changes
in economic conditions and governmental policies of the State of New Jersey and
its municipalities could adversely affect the value of the Fund and the
portfolio securities held by it.
Global Bond Fund is also subject to currency risk and other risks
associated with investing in the securities of foreign companies, as described
above with respect to International Growth Fund.
MONEY MARKET FUNDS
Securities held by Cash Reserve and Treasury Reserve may be subject, on a
limited basis, to credit risk. The credit risk of an investment portfolio is a
function of its underlying securities, and in general, securities of somewhat
lower credit quality provide correspondingly higher yields.
Securities held by Tax-Free Reserve may be subject, on a limited basis, to
several types of investment risk, including market risk (or interest rate risk),
credit risk and call risk (or income risk).
/X/
DISTRIBUTIONS
Shareholders of each Fund are entitled to dividends and distributions arising
from the net investment income and capital gains, if any, earned on investments
held by such Fund. Class C Shares of the Money Market Funds begin earning
dividends on the business day on which the purchase order for the shares is
executed and continue to earn dividends through, and including, the day before
the redemption order for such shares is executed. Class A Shares of the Fixed
Income Funds begin earning dividends on the business day following the day on
which the purchase order for the shares is executed and continue to earn
dividends through, and including, the day
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Distributions 59
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INFORMATION ON THE FUNDS (continued)
on which the redemption order for such shares is executed.
Dividends are paid in the form of additional Class A and Class C Shares of
a Fund unless a shareholder selects one of the following options on the Account
Application Form: Cash Dividend Option--to receive dividends in cash and capital
gains distributions in additional shares of the Fund at net asset value; All
Cash Option--to receive both dividends and capital gains distributions in cash.
In the absence of either of these selections on the Account Application Form,
each purchase of shares is made upon the condition and understanding that the
Fund's agent is automatically appointed to receive the dividends and
distributions upon all shares in the shareholder's account and to reinvest them
in full and fractional shares of the Fund at the net asset value in effect at
the close of business on the reinvestment date. Dividends and distributions are
automatically paid in cash (along with any redemption proceeds) not later than
seven business days after a shareholder closes an account with the Fund.
The dividends from Class Y Shares are normally higher than those of Class
A or Class C Shares because of the distribution and incremental transfer agent
expenses charged to Class A or Class C Shares.
The Funds maintain different dividend and capital gain distributions
policies. These are:
EQUITY FUNDS
Growth Equity Fund
Core Equity Fund
Special Equity Fund
Equity Index Fund
Balanced Fund
Dividends from the net investment income of each of these Funds are declared and
paid to shareholders on a quarterly basis. Distributions of any capital gains
will be made at least annually.
International Growth Fund
The net investment income of this Fund is periodically declared and paid as a
dividend. Distributions of any capital gains will be made at least annually.
FIXED INCOME FUNDS
MONEY MARKET FUNDS
The net investment income of each of these Funds except Global Bond Fund is
declared daily as a dividend to its shareholders and paid monthly. Global Bond
Fund will distribute its net investment income in the form of quarterly
dividends. Capital gains distributions, if any, will be made by the Fixed Income
Funds and Money Market Funds at least annually.
If any capital gains are realized from the sale of underlying securities,
the Funds normally distribute such gains with the last dividend for the calendar
year.
In all Funds except the Money Market Funds, undistributed net investment
income is included in the Fund's net assets for the purpose of calculating net
asset value per share. Therefore, on the 'ex-dividend' date, the net asset value
per share excludes the dividend (i.e., is reduced by the per share amount of the
dividend). Dividends paid shortly after the purchase of shares by an investor,
although in effect a return of capital, are taxable as ordinary income.
/X/
TAXES
The following is only a brief summary of some of the important tax
considerations generally affecting the Funds and their shareholders. No attempt
has been made to present a detailed explanation of the federal, state or local
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60 Taxes
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income tax treatment of the Funds or their shareholders, and this discussion is
not intended as a substitute for careful tax planning. Potential investors in
the Funds are urged to consult their tax advisers with specific reference to
their own tax situations.
The following summary is based on current tax laws and regulations, which
may be changed by legislative, judicial or administrative action.
ALL FUNDS
Each Fund is treated as a separate entity for federal income tax purposes and is
not combined with any of CoreFunds' other portfolios. Each Fund intends to
qualify for the favorable tax treatment afforded a 'regulated investment
company' under the Code. This requires, among other things, that a Fund
distribute to its shareholders at least 90% of its net investment income.
Provided a Fund meets this 90% distribution and certain other requirements, it
will be relieved of federal income tax on that part of its net investment income
and any net capital gains (the excess of net long-term capital gain over net
short-term capital loss) distributed to shareholders.
Whether paid in cash or in additional shares, dividends attributable to a
Fund's net investment income (including ordinary income and net short-term
capital gains), including any dividends attributable to taxable net investment
income of Tax-Free Reserve or Intermediate Municipal Bond Fund, will be taxable
to shareholders as ordinary income. Capital gains distributions of all Funds
will be taxable as long-term capital gain, regardless of how long a shareholder
has held shares.
Dividends declared by a Fund in October, November, or December of any year
and payable to shareholders of record on a date in such a month will be deemed
to have been paid by the Fund and received by the shareholders on December 31 of
that year, if paid by the Fund during the following January.
INTERNATIONAL GROWTH FUND
GLOBAL BOND FUND
International Growth Fund and Global Bond Fund will receive dividends and
interest paid by foreign issuers which are frequently subject to withholding
taxes by foreign governments. Provided that more than 50% of the value of the
total assets of either International Growth Fund or Global Bond Fund at the
close of any taxable year consists of equity or debt securities of foreign
corporations, such Fund may elect (for U.S. federal income tax purposes) to
treat each shareholder as having additional income equal to a proportionate
amount of such foreign taxes paid by the Fund and as having directly paid such
foreign taxes. In addition, if a Fund makes such an election, shareholders will
be treated as having directly earned a portion of the Fund's gross income from
foreign sources. The Fund will make such an election only if it deems it to be
in the best interests of its shareholders and will notify shareholders
accordingly.
TAX-FREE RESERVE
INTERMEDIATE MUNICIPAL BOND FUND
PENNSYLVANIA MUNICIPAL BOND FUND
NEW JERSEY MUNICIPAL BOND FUND
Each of these Funds expects to qualify to pay exempt-interest dividends to its
shareholders by satisfying the Code's requirement that at the close of each
quarter of its taxable year, at least 50% of
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Taxes 61
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INFORMATION ON THE FUNDS (continued)
the value of its total assets consists of obligations the interest on which is
exempt from regular federal income tax. Tax-exempt interest dividends may
generally be treated by such Fund's shareholders as items of income excludible
from their gross income under the Code unless, under the circumstances
applicable to the particular shareholder, exclusion would be disallowed. Exempt-
interest dividends may also have certain collateral federal income tax
consequences, including Alternative Minimum Tax consequences. Current federal
tax law limits the types and volume of bonds qualifying for the federal income
tax exemption of interest, which may have an effect on the ability of these
Funds to purchase sufficient amounts of tax-exempt securities to satisfy the
Code's requirements for the payment of 'exempt-interest' dividends.
Interest on indebtedness incurred or continued by a shareholder in order
to purchase or carry shares of these Funds is not deductible for federal income
tax purposes. Furthermore, these Funds may not be an appropriate investment for
persons (including corporations and other business entities) who are
'substantial users' (or persons related to 'substantial users') of facilities
financed by industrial development or private activity bonds. Such persons
should consult their tax advisers before purchasing shares. A 'substantial user'
is defined generally to include 'certain persons' who regularly use in their
trade or business a part of a facility financed from the proceeds of such bonds.
Except as noted below, tax-exempt interest dividends and other
distributions paid by these Funds may be taxable to investors as dividend income
under state or local law even though a substantial portion of such distributions
may be derived from interest on tax-exempt obligations which, if received
directly, would be exempt from such income taxes.
CASH RESERVE
TREASURY RESERVE
TAX-FREE RESERVE
With respect to investments in STRIPS and Receipts which are sold at original
issue discount and thus do not make periodic cash interest payments, a Fund will
be required to include as part of its current income the imputed interest on
such obligations even though the Fund has not received any interest payments on
such obligations during that period. Because each Fund distributes all of its
net investment income to its shareholders, a Fund may have to sell portfolio
securities to distribute such imputed income, which may occur at a time when the
investment adviser would not have chosen to sell such securities and which may
result in a taxable gain or loss.
PENNSYLVANIA TAX CONSIDERATIONS
For purposes of the Pennsylvania Personal Income Tax and the Philadelphia School
District Investment Net Income Tax, distributions which are attributable to
interest received by the Pennsylvania Municipal Bond Fund from its investments
in Pennsylvania Municipal Securities or in direct obligations of the United
States, its territories and certain of its agencies and instrumentalities
('Federal Securities'), including obligations issued by U.S. possessions, are
not taxable. Distributions by the Fund to a Pennsylvania resident that are
attributable to most other sources may be subject to the Pennsylvania Personal
Income Tax and (for residents of Philadelphia) to the Philadelphia School
District Investment Net Income Tax.
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62 Taxes
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Shares of the Pennsylvania Municipal Bond Fund are exempt from
Pennsylvania county personal property taxes to the extent that the Fund's
portfolio consists of Pennsylvania Municipal Securities and Federal Securities,
including obligations issued by U.S. possessions.
To the extent that gain on the disposition of a share represents gain
realized on Pennsylvania Municipal Securities held by the Pennsylvania Municipal
Bond Fund, such gain may be subject to the Pennsylvania Personal Income Tax and
the School District Tax, except that gain realized with respect to a share held
for more than six months is not subject to the School District Tax.
NEW JERSEY TAX CONSIDERATIONS
Investors of the New Jersey Municipal Bond Fund will not be subject to the New
Jersey Gross Income Tax on distributions from the Fund attributable to interest
income from (and net gain, if any, from the disposition of) New Jersey Municipal
Securities or Federal Securities held by the Fund, either when received by the
Fund or when credited or distributed to the investors, provided that the Fund
meets the requirements for a qualified investment fund by: (i) maintaining its
registration as a registered investment company; (ii) investing at least 80% of
the aggregate principal amount of the Fund's investments, excluding cash and
cash items, in New Jersey Municipal Securities or Federal Securities; and (iii)
investing 100% of its assets in interest-bearing obligations, discount
obligations, and cash, including receivables.
For New Jersey Gross Income Tax purposes, net income or gains and
distributions derived from investments in other than New Jersey Municipal
Securities and Federal Securities, and distributions from net realized capital
gains in respect of such investments, will be taxable.
Gain on the disposition of shares of this Fund is not subject to New
Jersey Gross Income Tax, provided that the Fund meets the requirements for a
qualified investment fund set forth above.
BACK-UP WITHHOLDING
Generally, the Funds are required to withhold 31% of ordinary income dividends,
capital gains distributions, and redemptions paid to shareholders who have not
complied with IRS taxpayer identification regulations and in certain other
circumstances. Shareholders who are not otherwise subject to back-up withholding
may avoid this withholding requirement by certifying on the Account Application
Form their proper Social Security or Taxpayer Identification Number and
certifying that they are not subject to back-up withholding.
IN GENERAL
The sale or redemption of shares of a mutual fund is a taxable event to the
selling or redeeming shareholder. Gains or losses (if any) may also be realized
from an ordinary redemption of shares, as described herein, or on a telephone
exchange among the CoreFunds portfolios.
In the opinion of counsel, shares of the Funds are exempt from current
Pennsylvania Personal Property Taxes.
Shareholders will be advised at least annually as to the federal income
tax status of distributions made during the year. See the Statement of
Additional Information for further information regarding taxes.
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Taxes 63
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INFORMATION ON THE FUNDS (continued)
/X/
VALUATION OF SHARES
NET ASSET VALUE ________________________________________________________________
EQUITY FUNDS
FIXED INCOME FUNDS
The shares of these Funds will fluctuate in value as a result of changes in the
value of their portfolio investments. Shares in the Funds will realize capital
gains or losses as portfolio investments are sold above or below costs,
respectively.
The net asset value per share of these Funds for purposes of pricing
purchase and redemption orders is normally determined as of 4:00 p.m. (Eastern
time) (the 'Valuation Time') on each business day of the Funds. A 'business day'
of a Fund is a day on which the New York Stock Exchange is open for trading, and
any other day (other than a day on which no shares of the Fund are tendered for
redemption and no order to purchase any shares is received) during which there
is a sufficient degree of trading in securities or instruments held by the Fund
such that the Fund's net asset value per share might be materially affected. Net
asset value per share is calculated by dividing the value of all of the Fund's
portfolio securities and other assets, less liabilities, by the number of
outstanding shares of the Fund at the time of the valuation. The result
(adjusted to the nearest cent) is the net asset value per share.
MONEY MARKET FUNDS The net asset value per share of each of these Funds for
purposes of pricing purchase and redemption orders is normally determined as of
12:00 noon (Eastern time) on each business day of the Funds. These Funds are
managed to maintain a stable price per share of $1.00.
PORTFOLIO PRICING ______________________________________________________________
Portfolio securities which are traded both over-the-counter and on a national
securities exchange are valued according to the broadest and most representative
market. When securities exchange valuations are used, the valuation will be the
latest sale price on such exchange on such business day or, if there is no such
reported sale, the current bid price. Other assets and securities for which no
quotations are readily available will be valued in a manner determined in good
faith by the Board of Directors to reflect their fair market value.
INTERNATIONAL GROWTH FUND
GLOBAL BOND FUND
Securities listed on a foreign exchange are valued at the most recent closing
price available before the time when assets are valued. All prices of listed
securities are taken from the exchange where the security is primarily traded.
Securities regularly traded in the over-the-counter market for which market
quotations are readily available will be valued at the current bid price.
Securities may be valued on the basis of prices provided by a pricing service
when such prices are believed to reflect the fair market value of such
securities. Other assets and securities for which no quotations are readily
available will be valued in a manner determined in good faith by the Board of
Directors to reflect their fair market value.
In addition, all assets and liabilities initially expressed in foreign
currencies will be translated into U.S. dollars at the bid price of such
currencies against U.S. dollars last quoted by a major bank or by a broker. If
such quotations are not available as of the close of the Exchange, the rate of
exchange will be determined in accordance with the
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64 Valuation of Shares
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/X/ COREFUND
policies established in good faith by the Board of Directors.
FIXED INCOME FUNDS Portfolio securities which are traded both over-the-counter
and on a national securities exchange are valued according to the broadest and
most representative market, and it is expected that for bonds, and other fixed
income securities, this would ordinarily be the over-the-counter market.
Valuation of such securities is the currently quoted bid price on each business
day. When securities exchange valuations are used, the valuation will be the
latest sale price on such exchange on such business day or, if there is no such
reported sale, the current bid price. Short-term investments (if any) are stated
at cost, which approximates market value. Other assets and securities for which
no quotations are readily available will be valued in a manner determined in
good faith by the Board of Directors to reflect their fair market value.
Bonds and other fixed income securities may be valued on the basis of
prices provided by a pricing service when such prices are believed to reflect
the fair market value of such securities. The prices provided by a pricing
service take into account a variety of factors in determining fair market value.
Even though the market prices of intermediate-term, fixed income
securities tend to be relatively stable, the prices of such securities vary
inversely with changes in interest rates and are therefore subject to market
price fluctuations. The longer maturity a bond has, the greater the potential
for fluctuations in prices.
MONEY MARKET FUNDS The assets in the Money Market Funds are valued based upon
the amortized cost method, based on rules promulgated under the Investment
Company Act. Under this method of valuation, the value of a Fund's shares
normally will not change in response to fluctuating interest rates. In
connection with its use of this valuation method, however, each Fund monitors
the deviation between the amortized cost value of its assets and their market
value (which can be expected to vary inversely with changes in prevailing
interest rates). Although each Fund seeks, through its use of amortized cost
valuation, to maintain its net asset value per share at $1.00, there can be no
assurance that the net asset value will not vary.
/X/
MANAGEMENT
The business and affairs of each Fund are managed under the direction of
CoreFunds' Board of Directors.
INVESTMENT ADVISER,
SUB-ADVISERS ___________________________________________________________________
CoreStates Advisers has overall responsibility for portfolio management for each
of the Funds. CoreStates Advisers is a wholly-owned subsidiary of CoreStates
Bank, itself a wholly-owned subsidiary of CoreStates Financial Corp ('CoreStates
Corp'). CoreStates Corp, based in Philadelphia, Pennsylvania, is one of the 20
largest bank holding companies in the United States, and leads the region in
investing corporate cash. CoreStates Corp currently has over $45 billion in
assets and discretionary management over $30 billion in customer accounts
through a variety of banking activities at over 600 domestic and foreign
locations.
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Management 65
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INFORMATION ON THE FUNDS (continued)
CoreStates Advisers is an adviser registered under the Investment Advisers
Act of 1940. It performs most investment management and advisory functions for
the trust departments of CoreStates Corp's banking subsidiaries, related
investment advisory, research, trading, and fund management functions, and also
provides similar services to customers unrelated to CoreStates Corp. CoreStates
Advisers currently manages discretionary and nondiscretionary client security
portfolios with a total aggregate market value of over $16 billion, for
individuals, corporations, institutions, and municipalities. As a result of the
merger of CoreStates Corp and Meridian Bancorp, Inc. in April 1996, Meridian
Investment Company ('MIC') is now a wholly-owned subsidiary of CoreStates Corp
and an affiliate of CoreStates Advisers. Certain employees of MIC perform
investment management and advisory functions for the Funds under the overall
authority of CoreStates Advisers. CoreStates Advisers has extensive experience
in the management of money market, tax-free, fixed income, equity, and
international investments. CoreStates Advisers principal offices are located at
1500 Market Street, P.O. Box 7558, Philadelphia, PA 19102.
As investment adviser, CoreStates Advisers manages the investment
portfolio of each Fund, makes decisions with respect to and places orders for
all purchases and sales of a Fund's portfolio securities, and maintains certain
records relating to such purchases and sales. CoreStates Advisers pays all
expenses incurred by it in connection with its investment advisory activities,
other than the cost of securities (including any brokerage commissions)
purchased for the Funds and the cost of obtaining market quotations for
portfolio securities held by the Funds.
CoreStates Advisers has delegated some of its portfolio management
functions with respect to International Growth Fund to Martin Currie and
Aberdeen Managers, and with respect to Global Bond Fund to Analytic pursuant to
separate Sub-Advisory Agreements between CoreStates Advisers and each of Martin
Currie, Aberdeen Managers and Analytic.
Martin Currie, Inc., a New York corporation located in Edinburgh,
Scotland, is a wholly-owned subsidiary of Martin Currie, Ltd., which is owned
principally by its full-time working executives. Founded in 1881, Martin Currie
is one of Scotland's largest independent investment management groups. Martin
Currie Inc. was set up in order to provide foreign investment advisory services
to U.S. taxable and tax exempt funds seeking diversification into international
markets. Although Martin Currie has had extensive experience in managing a
variety of international equity investment companies, International Growth Fund
was the first U.S. registered investment company for which Martin Currie has
acted in an investment advisory capacity. Martin Currie is located at Saltire
Court, 20 Castle Terrace, Edinburgh EH 2ES, Scotland.
Aberdeen Managers, a Delaware corporation located in Ft. Lauderdale,
Florida is wholly owned by Aberdeen Trust PLC, a publicly held U.K. based
corporation. A subsidiary of CoreStates Financial Corp. owns approximately 14%
of Aberdeen Trust. Aberdeen Trust was formed in 1876 and has been managing
investment funds since 1986. It formed Aberdeen Managers in 1995 and it provides
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
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66 Management
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/X/ COREFUND
which Aberdeen Managers has acted in an investment advisory capacity. Aberdeen
Managers is located at Nations Bank Tower, 22nd Floor, Ft. Lauderdale, Florida
33394.
Analytic is a specialist manager of fixed income securities and cash for
institutional investors. Alpha Global Fixed Income Managers, Inc. ('Alpha
Global'), the predecessor investment sub-adviser to the Global Bond Fund,
recently changed its name to AnalyticoTSA International, Inc. and is in the
process of merging with AnalyticoTSA Global Asset Management, Inc. Alpha Global,
based in London, England, and Analytic, whose combined assets under management
currently exceed $2.4 billion are wholly-owned subsidiaries of United Asset
Management Corporation of Boston, Massachusetts whose total assets under
management exceed $160 billion. Analytic 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. Analytic is located
at 25/28 Old Burlington Street, London WIX 1LB, England.
As sub-advisers to International Growth Fund and Global Bond Fund, Martin
Currie and Aberdeen Managers, and Analytic manage the investment portfolio of
their respective Funds, make decisions with respect to and place orders for the
majority of the purchases and sales of such Fund's portfolio securities, and
maintain certain records relating to such purchases and sales. Martin Currie and
Aberdeen Managers, and Analytic pay all expenses incurred by them in connection
with their sub-advisory activities, other than the cost of securities (including
any brokerage commissions) purchased for a Fund and the cost of obtaining market
quotations for portfolio securities held by a Fund.
ADVISORY FEES
For the services provided and expenses assumed as investment adviser of each
Fund, CoreStates Advisers is entitled to receive an annual fee from each of the
Funds, computed daily and paid monthly, at the annual rate of .40% of the
average daily net assets of Equity Index Fund; .74% of the average daily net
assets of Equity Fund; .75% of the average daily net assets of Growth Equity
Fund; .80% of the average daily net assets of International Growth Fund; 1.50%
of the average daily net assets of Special Equity Funds; .70% of the average
daily net assets of Balanced Fund; .74% of the average daily net assets of the
Bond Fund and Short Term Income Fund, respectively; .60% of the average daily
net assets of Global Bond Fund; .50% of the average daily net assets of Short-
Intermediate Bond Fund, Intermediate Municipal Bond Fund, Government Income
Fund, Pennsylvania Municipal Bond Fund and New Jersey Municipal Bond Fund,
respectively; and .40% of the average daily net asset of Treasury Reserve, Cash
Reserve, and Tax-Free Reserve, respectively. CoreStates Advisers may, from time
to time and at its discretion, voluntarily waive all or a portion of its
investment advisory fees in order to assist the Funds in maintaining competitive
expense ratios.
For the services provided as sub-advisors to the International Growth
Fund, Martin Currie and Aberdeen Managers are each entitled to receive a fee
from CoreStates Advisers, computed daily and paid monthly, at the annual rate of
.50% and .375%, respectively, of such portion of the Fund's assets managed. For
the services
----
Management 67
<PAGE>
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INFORMATION ON THE FUNDS (continued)
provided as Global Bond Fund's sub-adviser, Analytic is entitled to receive a
fee from CoreStates Advisers, computed daily and paid monthly, at the annual
rate of .30% of such Fund's average net assets.
FUND MANAGERS __________________________________________________________________
The following individuals are primarily responsible for managing the investment
portfolios of the Funds:
GROWTH EQUITY FUND Timothy R. Stives is a Senior Managing Director of CoreStates
Advisers and manages the Growth Equity Fund. Prior to joining CoreStates
Advisers, Mr. Stives was Vice President of Chancellor Capital Management. Prior
to joining Chancellor, he was a securities analyst and portfolio manager with
CitiCorp. Mr. Stives has managed growth stock portfolios, including corporate
and public pension fund portfolios, since 1988. Mr. Stives holds an M.B.A. from
Rutgers University and a B.A. from Pennsylvania State University.
CORE EQUITY AND SPECIAL EQUITY FUNDS Joseph E. Stocke, CFA, is a Senior Managing
Director of CoreStates Advisers and manages the Core Equity and Special Equity
Funds. He is also a Senior Investment Manager/Equities with Meridian Investment
Company, an affiliate of CoreStates Advisers for which he has been since 1983.
Mr. Stocke began his investment career in 1982 and obtained his B.S. in
Economics attending The Wharton School, and University of Pennsylvania and
completed graduate courses at New York University. Mr. Stocke has been part of
Meridian's Equity Unit Committee overseeing the Equity Fund and the Special
Equity Fund since their inception.
EQUITY INDEX FUND Lary Aasheim, C.F.A., a Vice President of CoreStates Advisers,
is portfolio manager of Equity Index Fund. In addition, he is a securities
analyst with responsibility for the technology and telecommunications equipment
industries, paper, forest products and building material industries. Prior to
joining CoreStates Advisers in 1990, Mr. Aasheim worked as an analyst at First
Fidelity Bank/Fidelity Bank, First Pennsylvania Bank and Bear Stearns in New
York. He received his B.S. degree in Economics from The Wharton School,
University of Pennsylvania. He also has earned his CFA from the Institute of
Chartered Financial Analysts.
INTERNATIONAL GROWTH FUND Michael J. Gibson, a Vice President of
Martin Currie, is the lead director of an investment team responsible for
managing International Growth Fund. Mr. Gibson has 24 years experience of
portfolio investment in international stock markets. A graduate of the
University of Oxford, England, he spent seven years as an investment manager
with British Investment Trust in Edinburgh and a further four years with The
Bank of Scotland in the same capacity. He joined Martin Currie in 1983 where he
worked initially in the North American investment team and was then made
responsible for the firm's investments in Continental Europe. Following three
years in that client services team, he joined the North American team in 1996.
He is also a member of Martin Currie's global asset allocation committee.
Bev Hendry, Chief Executive Officer of Aberdeen Fund Managers Inc., is the
lead director of an investment team responsible for managing the International
Growth Fund. A graduate of the University of Aberdeen he qualified as a
chartered accountant before joining Aberdeen Trust in 1987. He was responsible
for starting up their mutual fund division which now has over $1.3 billion under
management and was appointed a director of the parent company in 1991. Aberdeen
now manages over $6 billion of funds and has offices in London, Singapore and
Fort Lauderdale in addition to their headquarters in Scotland.
- ----
68 Management
<PAGE>
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/X/ COREFUND
BALANCED FUND Steve Dalton, a Vice President of CoreStates Advisers, is
portfolio manager of the Balanced Fund. Mr. Dalton has been a senior portfolio
manager of balanced portfolios since 1986 and a member of the Equity Policy
Committee since 1990. Since 1988 he has been responsible for management of
CoreStates' oldest commingled trust, the CoreStates Balanced Trust. In addition,
Mr. Dalton has managed balanced portfolios for employee benefit customers for
the last seven years, and has been a securities analyst responsible for coverage
of the health care, pharmaceutical, entertainment and broadcasting industries
since joining CoreStates in 1984. Prior to that, he was employed by Girard Bank
as a security analyst. He received a B.S. degree in Psychology from Cornell.
SHORT-INTERMEDIATE BOND FUND
Craig A. Moyer, CFA, a Senior Managing Director of CoreStates Advisers, is
Portfolio Manager of the Short-Intermediate Bond Fund. Mr. Moyer is also a
Senior Investment Manager/Fixed Income with Meridian Investment Company, an
affiliate of CoreStates Advisers, for which he has been since 1977. He began his
investment career in 1974 and obtained his B.A. from Pennsylvania State
University.
GOVERNMENT INCOME FUND
William T. Lawrence, a Vice President of CoreStates Advisers, is portfolio
manager for the Government Income Fund. Mr. Lawrence is also involved in
specialized fixed income products including GIC and Mortgage Backed Securities.
Prior to joining CoreStates Advisers, he was Vice President, Fixed Income Sales
for First Boston Corp. He has an M.B.A. in Finance from the Wharton School and a
B.A. in Economics and English from Bucknell University.
BOND FUND Leslie M. Varrelman is a Vice President of CoreStates Advisers. She is
also a Vice President and Fixed Income Manager with Meridian Investment Company,
an affiliate of CoreStates Advisers, for which she has been since January 1994.
Prior to her position with Meridian, Ms. Varrelman was Vice President of
CoreStates Investment Advisers where she managed the commingled fixed income
funds and managed the Limited Maturity Products area. Ms. Varrelman obtained her
B.S. in Business Administration from Juniata College in 1981. Ms. Varrelman is
directly responsible for management of the Bond Fund.
SHORT TERM INCOME FUND Cathy L. Rahab is an Assistant Vice President of
CoreStates Advisers. She is also an Assistant Vice President and Portfolio
Manager with Meridian Investment Company. Ms. Rahab began her investment career
in 1986 and obtained her B.S. in Business Administration from Villanova
University. Ms. Rahab joined the Fixed Income Unit of Meridian in 1994. Ms.
Rahab is directly responsible for management of the Short Term Income Fund.
INTERMEDIATE MUNICIPAL BOND FUND
PENNSYLVANIA MUNICIPAL BOND FUND
NEW JERSEY MUNICIPAL BOND FUND
Joseph R. Baxter manages these Funds. Mr. Baxter, a Vice President of CoreStates
Advisers, is head of the Tax-Advantaged unit at CoreStates Advisers. He is
directly responsible for management of the CoreStates Pennsylvania Tax Exempt
Common Trust Fund. Mr. Baxter graduated from LaSalle University with a Bachelor
of
----
Management 69
<PAGE>
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INFORMATION ON THE FUNDS (continued)
Science Degree majoring in Finance and Marketing. In June 1980, he joined a
stock brokerage firm, Elkins & Co., in an operations capacity and came to
Philadelphia National Bank in May 1982 as an operations supervisor. In October
1984, he joined the Investment Management Division as a corporate cash manager
and in 1986 assumed responsibility for the tax exempt common trust funds.
GLOBAL BOND FUND George McNeill, Managing Director of Analytic, is portfolio
manager for Global Bond Fund. After graduating from Edinburgh University with
degrees in Political Economy and Economic History, he joined the investment
department of Scottish Equitable Life Assurance Society. He then joined Wallace
Brothers Bank where he spent nine years, including seven years as a Director
with principal responsibility for the bank's fixed income investments. Since
1977, he has worked as Managing Director of the investment management operating
company of Gillett Brothers, and for eight years as Managing Director of Reserve
Asset Managers, a specialist fixed income manager. In 1989 Mr. McNeill 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, Mr. McNeill founded Alpha Global which has
merged with Analytic.
CASH RESERVE John Ackler, Investment Officer, is responsible for the management
of Cash Reserve. He is also responsible for the management of the CoreStates
Liquidity Fund as well as numerous individually managed fixed income funds. In
1992, Mr. Ackler joined CoreStates as an internal auditor and transferred to
CoreStates Advisers in August of 1993. He graduated Summa Cum Laude from the
Philadelphia College of Textiles and Sciences with a B.S. in Finance and
Economics and is currently an M.B.A. candidate at Lehigh University.
TREASURY RESERVE Ronald R. Brasten, a Senior Investment Officer of CoreStates
Advisers, manages Treasury Reserve. He also manages the CoreFund Fiduciary
Treasury Reserve and has investment responsibility for individually managed
corporate and personal accounts. After receiving his B.S. in Accounting from
Drexel University, Mr. Brasten joined the Financial Division of CoreStates in
1984. In 1986, he transferred to the Asset and Liability group as an ALCO
analyst. Mr. Brasten joined CoreStates Advisers in August 1989.
TAX-FREE RESERVE Folu Abiona, Senior Investment Officer, is portfolio manager of
the Tax-Free Reserve portfolio. Ms. Abiona also manages the Fiduciary Tax-Free
Reserve portfolio. She joined CoreStates Advisers in 1985 and became fixed
income portfolio manager in 1990. Prior to that, she was a mutual fund
administrator with CoreStates' Institutional Custody Division. Ms. Abiona holds
an M.B.A. from Temple University and B.Sc. from the University of Ife, Nigeria.
ADMINISTRATOR __________________________________________________________________
SEI Fund Resources ('SFR' or the 'Administrator'), with principal offices at 680
East Swedesford Road, Wayne, PA 19087, acts as each Fund's administrator. For
its administrative services, SFR is entitled to receive a fee from each Fund,
computed daily and paid monthly, at the annual rate of .25% of such Fund's
average daily net assets. As Administrator, SFR generally assists in the Funds'
administration and operations. Boston
- ----
70 Management
<PAGE>
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/X/ COREFUND
Financial Data Services ('BFDS'), a subsidiary of State Street Bank and Trust
Company located at 225 Franklin Street, Boston, MA 02110, serves as each Fund's
transfer agent (the 'Transfer Agent') and dividend paying agent.
DISTRIBUTOR ____________________________________________________________________
SEI Financial Services Company ('SFS' or the 'Distributor'), with principal
offices at 680 East Swedesford Road, Wayne, PA 19087, serves as each Fund's
distributor pursuant to a Distribution Agreement which applies to Class Y, Class
A and Class C Shares. Class A and Class C Shares are also subject to a separate
distribution plan (the 'Distribution Plan') approved by the Board of Directors
on April 23, 1992. The Distribution Plan provides that CoreFunds will pay the
Distributor an annual fee, calculated on an average daily net basis and paid
monthly, of up to .25% of the average daily net assets of Class A or Class C
Shares of each Fund. The Distributor may use this fee as compensation for its
distribution-related services or to compensate Participating Broker/Dealers and
Shareholder Servicing Agents for performing distribution-related or shareholder
services.
The services provided by Participating Broker/Dealers or Shareholder
Servicing Agents may include establishing and maintaining customer accounts and
records; aggregating and processing purchase and redemption requests from
customers and placing net purchase and redemption orders with the Distributor;
automatically investing customer account cash balances; providing periodic
statements to customers; arranging for bank wires; answering routine customer
inquires concerning their investments; assisting customers in changing dividend
options, account designations and addresses; performing sub-accounting
functions; processing dividend payments on behalf of customers; forwarding
certain shareholder communications from the Funds to customers; and providing
other similar services.
With respect to the Money Market Funds, the Distributor may, from time to
time and at its own expense, provide promotional incentives, in the form of cash
or other compensation, to certain financial institutions whose representatives
have sold or are expected to sell significant amounts of the shares of these
Funds.
Persons selling Class A or Class C Shares will receive different
compensation with respect to Class A or Class C Shares than Class Y Shares.
EXPENSES CoreFunds allocates expenses attributable to each Fund in compliance
with Rule 18f-3 under the Investment Company Act. The Funds' expenses are
accrued daily and are deducted from total income before dividends are paid.
Except as noted herein and in the Statement of Additional Information, the
Funds' service contractors bear all expenses incurred in connection with the
performance of their services on behalf of the Fund. Similarly, the Funds bear
the expenses incurred in their operations.
GLASS-STEAGALL ACT CoreStates Corp and its banking subsidiaries are permitted to
perform the services contemplated by the investment advisory agreements with the
Funds and to engage in certain activities in connection with the investment of
their customer accounts in Class A or Class C Shares of the Funds without
violating the federal banking law commonly referred to as the Glass-Steagall
Act, or other applicable banking laws or regulations. Future changes to any of
these laws or regulations or
----
Management 71
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INFORMATION ON THE FUNDS (continued)
administrative or judicial interpretations of such laws or regulations, however,
could prevent or restrict CoreStates Corp (and its banking subsidiaries) from
performing such services. If CoreStates Advisers were thereby prohibited from
serving as investment adviser to the Funds, the Board of Directors would
promptly seek to retain another qualified investment adviser for the Funds.
In addition, certain state securities laws may require banks and other
institutional investors purchasing shares on behalf of their customers in such
states to register as dealers pursuant to state law.
/X/
PERFORMANCE
INFORMATION
TOTAL RETURN AND YIELD _________________________________________________________
From time to time, in advertisements or reports to shareholders, the performance
of the Funds may be quoted and compared to that of other mutual funds with
similar investment objectives and to relevant indices.
The Funds may calculate their performance on a total return basis for
various periods. The total return basis combines principal changes, income
dividends, and capital gains distributions paid during the period. Principal
changes are based on the difference between the beginning and closing net asset
values for the period and assume reinvestment of income dividends and capital
gains distributions paid during the period. The Funds may calculate their
performance for periods since commencement of operations and for calendar or
fiscal year periods (including multiple years). See 'Total Return' in the
Statement of Additional Information.
FIXED INCOME FUNDS
MONEY MARKET FUNDS
In addition to quoting total return, the Fixed Income Funds and Money Market
Funds may advertise 'yield' and 'effective yield.' Both yield figures are based
on historical earnings and are not intended to indicate future performance. The
'yield' of a Fund refers to the income generated by an investment in the Fund
over a 30-day period (which period will be stated in the advertisement). This
income is then 'annualized.' That is, the amount of income generated by the
investment during that month is assumed to be generated each month over a
12-month period and is shown as a percentage of the investment. The 'effective
yield' is calculated similarly but, when annualized, the income earned by an
investment in the Fund is assumed to be reinvested. The 'effective yield' will
be slightly higher than the 'yield' because of the compounding effect of this
assumed reinvestment. See 'Yields' in the Statement of Additional Information.
Intermediate Municipal Bond Fund, Pennsylvania Municipal Bond Fund, New
Jersey Municipal Bond Fund and Tax-Free Reserve may also advertise their
'taxable equivalent yield,' which is calculated by taking into account the
investor's current tax bracket. This is the yield an investor would need to earn
from a taxable investment in order to realize an 'after-tax' benefit equal to
the tax-free yield provided by the Fund.
IN GENERAL _____________________________________________________________________
The Funds will include performance data for
Class Y and Class A or Class C, as appropriate,
in any advertisement or information including
performance data of the Funds. Total return and performance data concerning
Class A Shares will reflect the sales charge and
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72 Performance Information
<PAGE>
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/X/ COREFUND
distribution and incremental transfer agent expenses borne exclusively by Class
A Shares. Total return and performance data concerning Class C Shares will
reflect the distribution and incremental transfer agent expenses borne
exclusively by Class C Shares.
The performance of any investment will generally reflect market
conditions, portfolio quality and maturity, type of investment, and operating
expenses. Each Fund's performance will fluctuate and is not necessarily
representative of future results. A Fund's performance would be favorably
affected by any investment advisory fee waivers on the part of CoreStates
Advisers. Shareholders will receive unaudited semi-annual reports describing the
Funds' investment operations and annual financial statements audited by
independent auditors.
EXPENSE RATIOS OF INTERNATIONAL GROWTH FUND AND GLOBAL BOND FUND Investors
should understand that the expense ratios of International Growth Fund and
Global Bond Fund can be expected to be higher than the expense ratios of funds
that invest only in domestic securities, since the cost of maintaining the
custody of foreign securities and the rate of advisory fees relating to foreign
portfolios are generally higher.
/X/
DESCRIPTION
OF SHARES
CoreFunds has set up the following twenty-one portfolios: Growth Equity, Core
Equity, Special Equity, Equity Index, International Growth, Balanced,
Short-Intermediate Bond, Bond, Short Term Income, Government Income,
Intermediate Municipal Bond, Pennsylvania Municipal Bond, New Jersey Municipal
Bond and Global Bond. In addition, CoreFunds has also set up Class C Shares
representing the Cash Reserve, Treasury Reserve, Tax-Free Reserve, Elite Cash
Reserve, Elite Government Reserve, Elite Treasury Reserve and Elite Tax-Free
Reserve Portfolios. CoreFunds offers two classes of shares of each portfolio
except for Equity Index Fund. In total, CoreFunds presently offers shares in
twenty different portfolios. CoreFunds may in the future create one or more
additional portfolios, or one or more classes of shares within a portfolio.
Class Y Shares -- Institutional and Shares of the Elite Money Market Funds are
offered in separate prospectuses. This Prospectus solely relates to Classes A
and C Shares -- Individual.
Class A Shares differ from Class Y Shares in that Class A Shares are
subject to a sales load and distribution and transfer agent expenses for certain
additional shareholder services they receive. Class C Shares also differ from
Class Y Shares in that Class C Shares are subject to distribution and transfer
agent expense for certain additional shareholder services, but unlike Class A
Shares, are not subject to a sales load. Class A and Class C Shares also have
voting rights which Class Y Shares do not, in connection with the Distribution
Plan affecting Class A and Class C Shares. The distribution and transfer agent
expenses charged to Class A and Class C Shares result in having different
dividends and performance results from Class Y Shares. In addition, the minimum
initial investment for Class Y Shares is substantially higher than that required
for Class A and Class C
----
Description of Shares 73
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INFORMATION ON THE FUNDS (continued)
Shares, with the exception of the Equity Index Fund.
THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION INCORPORATED
HEREIN RELATE PRIMARILY TO CLASS A AND CLASS C SHARES OF THE FUNDS AND DESCRIBE
ONLY THE INVESTMENT OBJECTIVE AND POLICIES, OPERATIONS, CONTRACTS, AND OTHER
MATTERS RELATING TO SUCH SHARES. INVESTORS WISHING TO OBTAIN SIMILAR INFORMATION
REGARDING OTHER COREFUND PORTFOLIOS MAY OBTAIN PROSPECTUSES DESCRIBING SUCH
PORTFOLIOS BY CONTACTING THE DISTRIBUTOR AT 1-800-355-CORE.
Except for differences between classes of shares of some of CoreFunds'
portfolios pertaining to distribution costs, incremental transfer agency fees
and any other incremental expenses identified that should be properly allocated
to a class, each share in each Fund represents an equal proportionate interest
in that Fund with each other share of the same Fund and is entitled to such
dividends and distributions out of the income earned on the assets belonging to
such Fund as are declared in the discretion of the Board of Directors.
CoreFunds' shareholders are entitled to one vote for each full share held,
and fractional votes for fractional shares held, and will vote in the aggregate
and not by portfolio or class except as otherwise expressly required by law or
when the Board of Directors determines that the matter to be voted upon affects
only the interests of the shareholders of a particular portfolio or class. See
the Statement of Additional Information under 'Description of Shares' for
examples where the Investment Company Act requires voting by portfolio or class.
Voting rights are not cumulative and, accordingly, the holders of more than 50%
of the aggregate number of shares of all of the Funds may elect all of the
directors if they choose to do so and, in such event, the holders of the
remaining shares would not be able to elect any person or persons to the Board
of Directors.
As used in this Prospectus, a 'vote of a majority of the outstanding
shares' of a Fund means the affirmative vote of the lesser of (a) more than 50%
of the outstanding shares of a Fund, or (b) at least 67% of the shares of a Fund
present at a meeting at which the holders of more than 50% of the outstanding
shares of such Fund are represented in person or by proxy.
/X/
GENERAL
INFORMATION
In accordance with the Maryland General Corporation Law, CoreFunds is not
required to hold annual meetings of shareholders unless the Investment Company
Act requires the shareholders to elect members of the Board of Directors.
However, a meeting of shareholders may be called for any purpose upon the
written request of the holders of at least 10% of the outstanding shares of
CoreFunds, or of a Fund with respect to matters affecting only such Fund.
As used in this Prospectus, 'assets belonging to the Fund' means the
consideration received by CoreFunds upon the issuance or sale of shares in a
Fund, together with all income, earnings, profits and proceeds derived from the
investment thereof, including any proceeds from the sale, exchange or
liquidation of such investments, and any funds or CoreFunds' other portfolios.
Assets belonging to a Fund are charged with the
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74 General Information
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/X/ COREFUND
direct liabilities in respect of that Fund and with a share of the general
liabilities of CoreFunds allocated in proportion to the relative asset values of
each of CoreFunds' portfolios at the time the expense or liability is incurred.
The management of CoreFunds makes determinations with respect to a Fund as to
liabilities when they are incurred and as to assets when they are acquired. Such
determinations are reviewed and approved annually by the Board of Directors and
are conclusive.
/X/
DESCRIPTION
OF RATINGS
DESCRIPTION OF MUNICIPAL AND
CORPORATE BOND RATINGS _________________________________________________________
Bonds rated AAA have the highest rating S&P assigns to a debt obligation. Such a
rating indicates an extremely strong capacity to pay principal and interest.
Bonds rated AA also qualify as high-quality debt obligations. Capacity to pay
principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
Debt rated A by S&P has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
Bonds which are rated Aaa by Moody's are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as 'gilt edge.' Interest payments are protected by a large, or an exceptionally
stable, margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues. Bonds rated Aa by
Moody's are judged by Moody's to be of high quality by all standards. Together
with bonds rated Aaa, they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
Bonds which are rated A by Moody's possess many favorable investment
attributes and are to be considered as upper-medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Bonds which are rated Baa by Moody's are considered as medium-grade
obligations (i.e., they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
----
Description of Ratings 75
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INFORMATION ON THE FUNDS (CONTINUED)
characteristics and in fact have speculative characteristics as well.
Bonds rated AAA by Fitch are judged by Fitch to be strictly high grade,
broadly marketable, suitable for investment by trustees and fiduciary
institutions liable to only slight market fluctuation other than through changes
in the money rate. The prime feature of an AAA bond is a showing of earnings
several times or many times interest requirements, with such stability of
applicable earnings that safety is beyond reasonable question whatever changes
occur in conditions. Bonds rated AA by Fitch are judged by Fitch to be of safety
virtually beyond question and are readily salable, whose merits are not unlike
those of the AAA class, but whose margin of safety is less strikingly broad. The
issue may be the obligation of a small company, strongly secured but influenced
as to rating by the lesser financial power of the enterprise and more local type
market.
Bonds rated Duff-1 are judged by Duff to be of the highest credit quality
with negligible risk factors, only slightly more than U.S. Treasury debt. Bonds
rated Duff-2, 3 and 4 are judged by Duff to be of high credit quality with
strong protection factors. Risk is modest but may vary slightly from time to
time because of economic conditions.
Obligations rated AAA by IBCA have the lowest expectation of investment
risk. Capacity for timely repayment of principal and interest is substantial,
such that adverse changes in business, economic or financial conditions are
unlikely to increase investment risk significantly. Obligations for which there
is a very low expectation of investment risk are rated AA by IBCA. Capacity for
timely repayment of principal and interest is substantial. Adverse changes in
business, economic or financial conditions may increase investment risk albeit
not very significantly.
DESCRIPTION OF MUNICIPAL NOTE RATINGS __________________________________________
Moody's highest rating for state and municipal and other short-term notes is
MIG-1 and VMIG-1. Short-term municipal securities rated MIG-1 or VMIG-1 are of
the best quality. They have strong protection from established cash flows of
funds for their servicing or from established and broad-based access to the
market for refinancing or both. Short-term municipal securities rated MIG-2 or
VMIG-2 are of high quality. Margins of protection are ample although not so
large as in the preceding group.
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in 3 years or less will likely receive a note rating.
Notes maturing beyond 3 years will most likely receive a long-term debt rating.
The following criteria will be used in making that assessment.
/X/ Amortization schedule (the larger the final maturity relative to other
maturities, the more likely it will be treated as a note).
/X/ Source of Payment (the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note).
S&P NOTE RATING SYMBOLS ARE AS FOLLOWS:
SP-1 Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be given a
plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
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76 Description of Ratings
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SHAREHOLDER SERVICES GUIDE /X/ COREFUND
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OPENING AN To open a new account, either by mail or by wire, simply complete and return an Account
ACCOUNT AND Application Form. Your purchase must be equal to or greater than the $500 minimum initial
PURCHASING investment requirement for each Fund. A sales charge will be imposed at the time of purchase. See
SHARES the Sales Charge chart detailed below. There is a $50 per month minimum investment requirement
for Automatic Investment Plans. Shares of the Funds are only offered to residents of states in
which the shares are eligible for purchase. If you need assistance with the Account Application
Form or have any questions about the Funds, please call 1-800-355-CORE.
From time to time, CoreFunds may waive each Fund's sales load for those investors purchasing
shares through advertisements placed in local newspapers and magazines. The advertisements will
detail the procedure for purchasing Fund shares without the imposition of the sales load,
including but not limited to, the duration of the offer.
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<S> <C> <C>
PURCHASING NEW ACCOUNT ADDITIONAL INVESTMENTS TO EXISTING ACCOUNTS
BY MAIL: All purchases made by check should be in U.S. Mail your check with the return stub from your
Complete and sign the dollars and made payable to CoreFunds, or in confirmation or statement to:
enclosed Account the case of a retirement account, the
Application Form. custodian or trustee. Third party checks will
not be accepted.
Mail the Account Application Form and a check
payable to CoreFunds, Inc. (Fund name) in at
least the minimum initial purchase amount to:
COREFUNDS, INC.,
P.O. BOX 470
WAYNE, PA 19087-0470
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<S> <C>
PURCHASING CORESTATES PHIL,
BY WIRE: Philadelphia, PA
Money should be wired ABA 031000011,
to: for credit to
COREFUNDS
A/C 0169-0541
ACCOUNT NUMBER
BEFORE WIRING: The wire instructions must include the investor's account number. An order to purchase shares by
Please contact Federal Funds wire will be deemed to have been received on the business day of the wire, provided
CoreFunds Investor that investors notify CoreFunds Investor Services at 1-800-355-CORE by 12:00 p.m. (Eastern Time)
Services of their intentions to wire money.
(1-800-355-CORE)
-------------------------------------------------------------------------------------------------
PURCHASING You may open an account or purchase additional shares by making an exchange from an existing
BY CoreFunds account. Call CoreFunds Investor Services at 1-800-355-CORE. For further information
EXCHANGE: regarding exchanges, please refer to page 85.
(from a CoreFund
account)
</TABLE>
----
Shareholder Services 77
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES GUIDE (CONTINUED)
<TABLE>
<S> <C>
AUTOMATIC A shareholder or prospective shareholder may arrange for periodic investments in a Fund through
INVESTMENT automatic deductions by ACH from a checking account by completing the appropriate section on the
PLAN application or the account change form. There is no minimum initial investment amount for AIPs;
however, the minimum pre-authorized investment amount is $50 per month per account. An
Application Form or account change form may be obtained by calling 1-800-355-CORE.
-------------------------------------------------------------------------------------------------
SYSTEMATIC Corefunds offers a Systematic Withdrawal Plan which may be used by shareholders who wish to
WITHDRAWAL receive regular distributions from their account. Upon commencement of the SWP, the account must
PLAN have a current value of $5,000 or more. Shareholders may elect to receive automatic payments via
check or ACH of $50 or more on a monthly, quarterly, semi-annual, or annual basis. Automatic
withdrawals are normally processed on the 25th day of the applicable month or, if such day is not
a business day, on the previous business day, and are paid promptly thereafter. To arrange a SWP,
complete the appropriate section on the application or the account change form. Either of these
forms may be obtained by calling 1-800-355-CORE. Shareholders should realize that if withdrawals
exceed income dividends, their invested principal in the account will be depleted. Thus,
depending upon the frequency and amounts of the withdrawal payments and/or any fluctuations in
the net asset value per share, their original investment could be exhausted entirely. To
participate in the SWP, shareholders must have their dividends automatically reinvested.
Shareholders may change or cancel the SWP at any time, upon written notice to CoreFunds Investor
Services or the Transfer Agent.
-------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
EXECUTION OF An order received before 4:00 p.m. for an Equity or Fixed Income Fund, or prior to 12:00 p.m. for
ORDERS a Money Market Fund, on any business day, and in accordance with the procedures described below,
will be executed on the date of receipt at the net asset value determined as of 4:00 p.m. (12:00
p.m. for a money market fund) on such date, plus any applicable sales charge. An order received
after 4:00 p.m. on any business day for an Equity or Fixed Income Fund, or after 12:00 p.m. for a
Money Market Fund, will be executed on the next business day of the Fund. An order is deemed to
be received when received by the Transfer Agent and the execution of purchase orders by the
Transfer Agent will be delayed for the period of time that the order is in transit from CoreFunds
Investor Service to the Transfer Agent. Special procedures may be established by a Fund to
expedite the receipt of orders from institutional investors. Institutional investors purchasing
or
</TABLE>
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78 Shareholder Services
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
<PAGE>
<TABLE>
<S> <C>
holding shares on behalf of their customers are responsible for the transmission of purchase and
redemption orders (and the delivery of funds) to a Fund on a timely basis. The Funds strongly
recommend that investors of substantial amounts use Federal Funds to purchase shares. Every
shareholder of record will receive a confirmation of each new share transaction with a Fund, which
will show the total number of shares being held in safekeeping by the Transfer Agent for the account
of the shareholder. Shareholders may rely on these statements in lieu of certificates. Beneficial
ownership of shares held of record by institutional investors on behalf of their customers will be
recorded by the institutions and reflected in the regular account statements provided by them to
their customers.
----------------------------------------------------------------------------------------------------
SALES The sales charges for Class A Shares are as follows:
CHARGES
</TABLE>
<TABLE>
<CAPTION>
CLASS A SHARES OF THE EQUITY FUNDS AND BALANCED FUND
SALES CHARGE AS
SALES CHARGE AS A PERCENTAGE OF
AMOUNT OF A PERCENTAGE OF NET AMOUNT BROKER-DEALER
TRANSACTION OFFERING PRICE INVESTED REALLOWANCE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 ..................... 5.50% 5.82% 5.00%
$50,000 but less than $100,000 ........ 4.75% 4.99% 4.25%
$100,000 but less than $250,000 ....... 3.75% 3.90% 3.25%
$250,000 but less than $500,000 ....... 2.75% 2.83% 2.25%
$500,000 but less than $1,000,000 ..... 1.75% 1.78% 1.25%
$1,000,000 and over ................... 0% 0% 0%
- ----------------------------------------------------------------------------------------------------------
CLASS A SHARES OF THE BOND, PENNSYLVANIA MUNICIPAL BOND,
NEW JERSEY MUNICIPAL BOND AND GLOBAL BOND FUNDS
SALES CHARGE AS
SALES CHARGE AS A PERCENTAGE OF
AMOUNT OF A PERCENTAGE OF NET AMOUNT BROKER-DEALER
TRANSACTION OFFERING PRICE INVESTED REALLOWANCE
- ----------------------------------------------------------------------------------------------------------
Less than $50,000 ..................... 4.75% 4.99% 4.25%
$50,000 but less than $100,000 ........ 4.25% 4.44% 3.75%
$100,000 but less than $250,000 ....... 3.25% 3.36% 2.75%
$250,000 but less than $500,000 ....... 2.25% 2.30% 1.75%
$500,000 but less than $1,000,000 ..... 1.75% 1.78% 1.25%
$1,000,000 and over ................... 0% 0% 0%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
----
Shareholder Services 79
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES GUIDE (CONTINUED)
<TABLE>
<CAPTION>
CLASS A SHARES OF THE SHORT-INTERMEDIATE BOND, SHORT TERM INCOME,
GOVERNMENT INCOME AND INTERMEDIATE MUNICIPAL BOND FUNDS
SALES CHARGE AS
SALES CHARGE AS A PERCENTAGE OF
AMOUNT OF A PERCENTAGE OF NET AMOUNT BROKER-DEALER
TRANSACTION OFFERING PRICE INVESTED REALLOWANCE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 ..................... 3.25% 3.36% 2.75%
$50,000 but less than $100,000 ........ 3.00% 3.09% 2.50%
$100,000 but less than $250,000 ....... 2.75% 2.83% 2.25%
$250,000 but less than $500,000 ....... 2.00% 2.04% 1.50%
$500,000 but less than $1,000,000 ..... 1.25% 1.27% 0.75%
$1,000,000 and over ................... 0% 0% 0%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
The Reallowances shown in the above table apply to sales through financial institutions. Under
certain circumstances, the Distributor may use its own funds to compensate financial institutions in
amounts that are additional to the reallowances shown in the table. In addition, the Distributor
may, from time to time and at its own expense, provide promotional incentives, in the form of cash
or other compensation, to certain financial institutions whose representatives have sold or are
expected to sell significant amounts of the shares of a Fund.
Brokers, dealers, or financial institutions that receive a reallowance of 100% of the sales charge
may be considered underwriters for purposes of the federal securities laws.
The following classes of shareholders will be exempted from paying any sales charge: (a) employees
(including members of their families and significant others) of CoreStates Corp, Martin
Currie, Alpha Global, Aberdeen Managers and their affiliates and those persons engaged in the sale
and distribution of CoreFunds; (b) employees of the Administrator and Distributor; (c) Directors and
officers of CoreFunds; (d) EdVantage customers; (e) Individual Retirement Account rollovers from
qualified employee benefit plans, Keogh plans, and Simplified Employee Benefit plans, and Simplified
Employee Benefit Plans where CoreStates Corp or its affiliate serves as trustee or investment
manager; (f) any retirement plan qualified under Section 401(a) of the Code or any other
non-qualified benefit plan; (g) any participant-directed retirement plan qualified under Section
401(a) of the Code or any participant-directed non-qualified defined compensation plan described in
Section 457 of the Code; and (h) persons purchasing shares directly through a payroll deduction
program administered by CoreStates Corp or its affiliates. In addition, the initial sales
</TABLE>
- ----
80 Shareholder Services
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
<TABLE>
<S> <C>
charge will be waived for (a) investors who are transferring shares from another investment company
which has a broker/dealer relationship with CoreFunds for which they have already paid a sales
charge since October 26, 1992, (b) customers converting from CoreStates Personal Financial Services
Asset Allocation Program (CorePath) to Class A and Class C Shares of a Fund and (c) shareholders who
have purchased shares of a mutual fund through an asset allocation program offered by a company
which has been acquired by CoreStates Financial Corp, and who wish to transfer those shares to Class
A and Class C Shares of a Fund. Subsequent investments in the Funds by these investors will be
subject to the applicable sales charge. In addition, the Distributor may, in its own discretion,
waive sales charges on future purchases of Fund shares for certain classes of investors.
</TABLE>
<TABLE>
<S> <C>
The sales charge will not apply to purchases made through reinvested dividends and distributions.
The sales charge also will not apply to exchanges between portfolios of CoreFunds to the extent that
a shareholder has credit for previously paid sales charges on purchases of any of the portfolios of
CoreFunds.
1. RIGHT OF ACCUMULATION
A shareholder who purchases additional Class A and Class C Shares may obtain a 'Right of
Accumulation.' This Right allows an investor to combine the current purchase of Class A and Class C
Shares with the total market value or net investment, whichever is higher, of all shares held of any
portfolio of CoreFunds which assesses a sales charge. To obtain the reduced sales charge through a
Right of Accumulation, the shareholder must provide the Distributor, either directly or through
CoreStates Securities Corp or a Participating Broker/Dealer, as applicable, with sufficient
information to verify that the shareholder has such a right. CoreFunds may amend or terminate this
Right of Accumulation at any time as to subsequent purchases.
2. LETTER OF INTENT
An investor may also obtain the reduced sales charge shown above by executing a 'Letter of Intent'
which states the investor's intention to invest not less than $100,000 within a 13 month period in
Class A and Class C Shares. Each purchase under a Letter of Intent will be made at the offering
price applicable at the time of such purchase to the full amount indicated on the Letter of Intent.
The Letter of Intent may apply to purchases made up to ninety days before the date of the Letter.
Any redemptions made during the 13 month period will be subtracted from the amount of purchases in
determining whether the terms of the Letter of Intent have been met. During the term of the Letter
of Intent, the Transfer Agent will hold Class A and Class C Shares representing 5% of the specified
amount in escrow for payment of a higher sales charge if the full amount specified is not purchased.
The escrowed shares will be released when the full amount specified has been purchased. If the full
amount specified is not purchased within the 13 month period, the investor will be required to
</TABLE>
----
Shareholder Services 81
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES GUIDE (CONTINUED)
<TABLE>
<S> <C>
pay an amount equal to the difference in the dollar amount of sales charge actually paid and the
amount of sales charge the investor would have had to pay on his or her aggregate purchases if the
total of such purchases had been made at a single time. See 'Terms and Conditions' included in the
Letter of Intent. An investor who wishes to enter into a Letter of Intent in conjunction with an
investment in Class A and Class C Shares should complete the appropriate section of the application
or contact the Distributor, CoreStates Securities Corp or a Participating Broker/Dealer.
- ------------------------------------------------------------------------------------------------------------------------------
SELLNG YOUR You may withdraw any portion of the funds in your account by redeeming shares at any time. You may
SHARES initiate a request by writing or by telephoning. Your redemption proceeds may be sent via mail, wire
or ACH. With respect to shares held by institutional investors on behalf of their customers'
accounts, however, all or part of the shares beneficially owned by a customer must be redeemed in
accordance with instructions and limitations pertaining to their account at the institution.
----------------------------------------------------------------------------------------------------
REDEMPTION A written request for redemption must be received by the Transfer Agent in order to constitute a
BY MAIL: valid tender for redemption by mail. requests should be mailed to:
COREFUNDS, INC.
P.O. BOX 470
WAYNE, PA 19087-0470
The Transfer Agent may require that the signature on the written request be guaranteed by a
commercial bank or by a member firm of a domestic stock exchange. Signature guarantees will be
required if: (a) the redemption request is an amount in excess of $25,000; (b) redemption proceeds
are to be sent to a name and/or address that differs from the registered name or address of record;
or (c) a transfer of registration is requested. Otherwise, written redemption requests by mail may
be accepted without a signature guarantee.
----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
REDEMPTION Shareholders wishing to make redemptions by telephone must provide the information requested in the
BY Account Application form. Thereafter, telephone redemption requests may be made by calling CoreFunds
TELEPHONE: Investor Services at 1-800-355-CORE. Payment for telephone redemptions will normally be transmitted
on the next business day following receipt of a valid request for redemption. You may have the
proceeds sent to you either by mail or wire.
</TABLE>
- ----
82 Shareholders Services
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
<TABLE>
<S> <C> <C>
BY WIRE: Shareholders of record may have their telephone redemption requests paid by a direct
wire to a domestic commercial bank account previously designated by the shareholder
on the Account Application Form. The Transfer Agent may deduct its then-current wire
fee from the proceeds for wire redemptions. As of the date of this Prospectus, such
fee was $10.00 for each wire redemption. There is no minimum for telephone
redemptions paid by wire.
BY MAIL: Redemption proceeds may be paid by a check mailed to the name and address in which
the shareholder's account is registered with a Fund. There is no minimum for
telephone redemptions paid by check.
Shareholders may not close their accounts by telephone.
------------------------------------------------------------------------------------------------------
REDEMPTION The Money Market Funds will provide shareholders of record, upon request to CoreFunds Investor
BY CHECK: Services or the Transfer Agent and without charge, with checks drawn on these Funds that will clear
Money Market Funds only through CoreStates Bank of Delaware, N.A. (the 'Clearing Bank'). Shareholders will be required to sign
signature cards and will be subject to any applicable rules and regulations of the Clearing Bank
relating to such check redemption privileges. Banks, corporations, trusts, and other organizations
should contact the Funds before submitting signature cards, since corporate resolutions or other
supporting documents may be required before the checkwriting privilege may be used.
Checks drawn on the Money Market Funds may be made payable to the order of any payee in an amount of
$250 or more. Shareholders should be aware that, as is the case with regular bank checks, certain
banks may not provide cash at the time of deposit, but will wait until they have received payment from
the Clearing Bank. When a check is presented to the Clearing Bank for payment, subject to a Fund's
acceptance of the check, the Clearing Bank, as agent, causes the Fund to redeem, at the net asset
value next determined after such presentation, a sufficient number of full and fractional shares in
the shareholder's account with the Fund to cover the amount of the check. Checks will be returned by
the Clearing Bank if there are insufficient shares to meet the withdrawal amount. Shareholders of
record wishing to use this method of redemption should check the appropriate box in the Account
Application form, fill out the signature card available from CoreFunds Investor Services, and mail the
complete Form and signature card to CoreFunds, Inc., P.O. Box 470,
</TABLE>
----
Shareholder Services 83
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES GUIDE (continued)
<TABLE>
<S> <C>
Wayne, PA 19087-0470. There is no charge for the clearance of any checks, although the Clearing Bank
will impose its customary overdraft fee in connection with returning any checks as to which there are
insufficient shares to meet the withdrawal amount. As of the date of this Prospectus, the overdraft
fee is $20.00.
Cancelled checks will ordinarily not be returned to the shareholder, although a shareholder may obtain
copies of cancelled checks drawn on the Funds by requesting them in writing from CoreFunds Investor
Services.
------------------------------------------------------------------------------------------------------
REDEMPTION You may sell shares of the Fund by making an exchange into another CoreFunds account. For more
BY information, please see below.
EXCHANGE:
------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
IMPORTANT / / Shareholders should be careful that fluctuations in the net asset value per share of a Fund
REDEMPTION have not caused the value of their account to fall below the amount of the intended redemption.
INFORMATION:
/ / Redemption orders for the Fixed Income and Equity Funds are executed at the net asset value per
share at 4:00 p.m. that day if received by 4:00 p.m. that day. Redemption orders for the Money
Market Funds are executed at the net asset value per share at 12:00 p.m. that day if received
by 12:00 p.m. that day. An order is deemed to be received when received by the Transfer Agent
and the execution of redemption orders by the Transfer Agent will be delayed for the period of
time that the redemption order is in transit from SEI Financial Management Corporation to the
Transfer Agent. Except as stated in the following paragraph, payment to shareholders for
redeemed shares will be made not later than seven business days after receipt by the Transfer
Agent of the request for redemption, absent extraordinary circumstances. However, to the
largest extent possible, the Funds will try to honor requests from shareholders for next-day
payment, if such payment would be consistent with a Fund's need for liquidity and stability.
/ / Shareholders should note that payment for the redemption of shares which were purchased by
check may not be made until a Fund can verify that the payment for such purchase has been, or
will be, collected, which may take up to ten calendar days after the date of purchase. The
Funds intend to pay cash for all shares redeemed, but under abnormal conditions which make
payment in cash unwise, a Fund may make payment wholly or partly in 'readily marketable'
portfolio securities at their then market value equal to the redemption price. In such cases,
a shareholder may incur brokerage costs in converting such securities to cash.
</TABLE>
- ----
84 Shareholder Services
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
<TABLE>
<S> <C>
MINIMUM Because of the relatively high cost of handling small investments, the Funds reserve the right to
ACCOUNT redeem, at net asset value, the shares of any shareholder whose account decreases to a value of less
BALANCE than $500. Accordingly, a shareholder making redemptions from a Fund may be subject to such
REQUIREMENT involuntary redemption. A shareholder will not be subject to such involuntary redemption if the
value of the shareholder's account falls below $500 solely because of market action. Before a Fund
redeems such shares and sends the proceeds to the shareholder, the shareholder will be given notice
that the value of the shares in the account is less than the minimum amount and will be allowed
sixty days to make an additional investment in an amount which will increase the value of the
account to at least $500.
- ------------------------------------------------------------------------------------------------------------------------------
EXCHANGING Shares of a Fund held by a shareholder of record may be exchanged for shares in any of CoreFunds'
SHARES other retail portfolios. Shareholders wishing to use this telephone exchange privilege must check
EXCHANGING the appropriate box on the Account Application Form or on the account change form. Exchange requests
BY should be directed to CoreFunds Investor Services at 1-800-355-CORE. Telephone exchange privileges
TELEPHONE: are only available in states where exchanges from one CoreFunds portfolio to another can lawfully be
Call CoreFunds made.
Investor Services
(1-800-355-CORE) The Fund undertakes to amend the section entitled 'Exchanging Shares Exchanging by Telephone' by
adding the following language: Redemption orders may be placed by telephone. Neither the Fund nor
the Transfer Agent will be responsible for any loss, liability, cost or expense for acting upon wire
instructions or upon telephone instructions that it reasonably believes to be genuine. The Fund and
the Transfer Agent will each employ reasonable procedures to confirm that instructions communicated
by telephone are genuine. To ensure the authenticity of redemption or exchange instructions received
by telephone, the Transfer Agent examines each shareholder request by verifying the account number
and/or tax identification number at the time such request is made. The Transfer Agent subsequently
sends confirmations of both exchange sales and exchange purchases to the shareholder for
verification. If reasonable procedures are not employed, the Fund and the Transfer Agent may be
liable for any losses due to unauthorized or fraudulent telephone transactions.
----------------------------------------------------------------------------------------------------
</TABLE>
----
Shareholder Services 85
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES GUIDE (continued)
<TABLE>
<S> <C>
EXECUTION OF Telephone exchange requests received prior to 4:00 p.m. for an Equity or Fixed Income Fund, or prior
EXCHANGE to 12:00 p.m. for a Money Market Fund, on any business day will be processed on the date of receipt.
REQUESTS 'Processing' a telephone exchange request means that shares in the fund from which the shareholder
is making an exchange will be redeemed at the net asset value per share determined as of 4:00 p.m.
(12:00 p.m. for a Money Market Fund) on the date of receipt. Purchases of shares of the fund into
which the shareholder is making an exchange will be effected on the same business day, at such other
fund's net asset value per share determined as of 4:00 p.m. (12:00 p.m. for a Money Market Fund) on
such business day. Telephone exchange requests received after 4:00 p.m. for an Equity or Fixed
Income Fund, or after 12:00 p.m. for a Money Market Fund, will be processed on the next business day
in the manner described above. CoreFunds will not be responsible for the authenticity of redemption
or exchange instructions received by telephone and the investor will bear the risk of loss. To
ensure the authenticity of such instructions, the Transfer Agent examines each shareholder request
by verifying the shareholder account number and/or tax identification number at the time such
request is made. The Transfer Agent subsequently sends confirmations of both exchange sales and
exchange purchases to the shareholder for verification.
----------------------------------------------------------------------------------------------------
IMPORTANT Before you make an exchange, you should consider the following:
EXCHANGE
INFORMATION / / Shareholders may not exchange into a series of a portfolio for which they would not have been
initially eligible, and investors who exchange into any portfolio which imposes a sales charge
may be subject to such sales charge, if applicable and not previously paid.
/ / Shareholders should consider the investment objective, policies, and restrictions of the Fund
into which the shareholder is making an exchange, as set forth in the applicable prospectus. A
copy of the prospectus for any of the CoreFunds portfolios may be obtained by calling
1-800-355-CORE.
/ / Any telephone exchange must satisfy the requirements relating to the minimum initial investment
amounts of the Fund involved.
/ / The Company reserves the right to reject any telephone exchange request and to modify or
terminate the exchange privilege at any time, upon sixty days' written notice to Shareholders.
/ / Telephone exchanges may be subject to limitations as to amount or frequency, and to other
restrictions that may be established from time to time to ensure that such exchanges do not
disadvantage any Fund or its shareholders. There are no such limitations or restrictions in
effect as of the date hereof. Shareholders may obtain the terms of any such limitations or
restrictions, which may be revised at any time, from SEI Financial Management Corporation.
----------------------------------------------------------------------------------------------------
</TABLE>
- ----
86 Shareholder Services
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
<TABLE>
<S> <C>
TAXES For federal income tax purposes, an exchange between Funds is a taxable event and, accordingly, a
capital gain or loss may be realized. Before making a telephone exchange request, shareholders
should consult a tax or other financial adviser to determine whether the redemption of shares of one
Fund or investment in shares of another Fund would be appropriate.
----------------------------------------------------------------------------------------------------
</TABLE>
----
Shareholder Services 87
<PAGE>
NOTES
<PAGE>
/X/
COREFUND(R)
FAMILY OF
MUTUAL FUNDS
COREFUNDS, INC.
/X/
DIRECTORS
Emil J. Mikity, Chairman
George H. Strong
Erin Anderson
Cheryl H. Wade
Timothy J. Taylor
OFFICERS
David G. Lee, President
James W. Jennings, Secretary
INVESTMENT ADVISER
CoreStates Investment Advisers, Inc.
Philadelphia, PA 19101
ADMINISTRATOR
SEI Fund Resources
Wayne, PA 19087
DISTRIBUTOR
SEI Financial Services Company
Wayne, PA 19087
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
Philadelphia, PA 19103
AUDITORS
Ernst & Young LLP
Philadelphia, PA 19103
Investment Adviser
COREFUNDS
FAMILY OF MUTUAL FUNDS
[LOGO]
CORESTATES
INVESTMENT ADVISERS
For current performance, purchase, redemption and
other information, call 1-800-355-CORE (2673)
9513 (11/95)
COR-F-046-05
Individual Shares
Prospectus
November 1, 1996
<PAGE>
/X/
COREFUND(R)
Prospectus
CoreFunds, Inc.
November 1, 1996
Elite Money Market Funds
Class Y and Class C Shares
================================================================================
CoreFunds, Inc. is an open-end management investment company
presently offering two different classes of shares in twenty diversified and
non-diversified portfolios that offer a variety of investment opportunities.
These portfolios are managed by CoreStates Investment Advisers, Inc.
("CoreStates Advisers"). This Prospectus relates to Class Y and Class C shares
in four Elite money market portfolios (the "Elite Funds").
- --------------------------------------------------------------------------------
This Prospectus gives you information about the Elite Funds that you
should be aware of before investing. Additional information about the Funds,
contained in a Statement of Additional Information dated November 1, 1996, has
been filed with the Securities and Exchange Commission. It is incorporated in
this Prospectus by reference. To obtain a copy without charge, call or write:
CoreFunds, Inc.
680 East Swedesford Road
Wayne, PA 19087
1-800-355-CORE
KEEP THIS PROSPECTUS FOR FUTURE REFERENCE.
- --------------------------------------------------------------------------------
SHARES IN THE FUNDS ARE NOT OBLIGATIONS, DEPOSITS, OR ACCOUNTS OF, OR GUARANTEED
OR ENDORSED BY, CORESTATES BANK, N.A., THE PARENT CORPORATION OF EACH FUND'S
INVESTMENT ADVISER. SUCH SHARES ARE ALSO NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. AN
INVESTMENT IN THE FUNDS IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT EITHER OF THESE FUNDS WILL BE
ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
================================================================================
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS /X/ COREFUND
<TABLE>
<S> <C>
Transaction and Operating Expense Table................ 3 Financial Highlights.................................... 5
</TABLE>
- ----------------------------INFORMATION ON THE FUNDS----------------------------
<TABLE>
<S> <C>
Investment Objectives of the Funds..................... 6 Investment Adviser...................................19
Investment Policies.................................... 6 Fund Managers........................................20
Other Investment Practices of the Administrator........................................20
Funds............................................... 7 Distributor..........................................21
Types of Securities in Which the Funds Expenses.............................................21
Invest.............................................. 9 Glass-Steagall Act...................................21
Investment Restrictions................................13 Performance Information.................................22
Investor Considerations................................15 Total Return and Yield...............................22
Investment Suitability..............................15 In General...........................................22
Investment Risks....................................15 Description of Shares...................................23
Distributions..........................................16 General Information.....................................24
Taxes..................................................16 Description of Ratings..................................24
Valuation of Shares....................................18 Description of Municipal and Corporate
Net Asset Value.....................................18 Bond Ratings.........................................24
Portfolio Pricing...................................18 Description of Municipal Note
Management.............................................19 Ratings..............................................26
</TABLE>
- ----------------------------SHAREHOLDER SERVICES GUIDE--------------------------
<TABLE>
<S> <C>
Opening an Account and Selling Your Shares.....................................29
Purchasing Shares...................................27 Exchanging Shares.......................................32
</TABLE>
<TABLE>
<S> <C> <C>
No person is authorized by CoreFunds, Inc. to give any
information or make any representation other than those
contained in this Prospectus or in other printed or written
- ---- material issued by CoreFunds, Inc., and you should not rely
2 Table of Contents on any other information or representation.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
TRANSACTION AND OPERATING EXPENSE TABLE /X/ COREFUND
The purpose of the following tables is to help you understand the various costs
and expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in Class Y or Class C shares of the Funds.
THE INFORMATION CONTAINED IN THE TABLES SHOULD NOT BE CONSIDERED A
REPRESENTATION OF FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS THAN
THOSE SHOWN.
<TABLE>
<CAPTION>
--------- ----------- ---------- ----------
ELITE ELITE ELITE ELITE
CASH GOVERNMENT TREASURY TAX-FREE
RESERVE RESERVE RESERVE RESERVE
--------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Class Y Shares
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases........................ none none none none
Maximum Sales Load Imposed on Reinvested Dividends............. none none none none
Deferred Sales Load............................................ none none none none
Redemption Fee................................................. none none none none
Exchange Fee................................................... none none none none
ANNUAL FUND OPERATING EXPENSES*
(as a percentage of net assets):
Investment Advisory Fees After Fee Waivers(1).................... .00% .00% .00% .00%
12b-1 Fees..................................................... none none none none
Other Expenses(2).............................................. .16% .16% .16% .16%
Net Annual Fund Operating Expenses(3)............................ .16% .16% .16% .16%
EXAMPLE
You would pay the following 1 year $2 $2 $2 $2
expenses on a $1,000 investment, 3 year 5 5 5 5
assuming (1) a 5% annual return 5 year 9 9 9 9
and (2) redemption at the end 10 year 20 20 20 20
of each time period.(4)
</TABLE>
- --------------------------------------------------------------------------------
* Fees shown reflect current fees.
(1) Absent voluntary waivers, the Adviser's investment advisory fees are
calculated at the annual rate of .20% of the average net assets of each
Fund.
(2) Includes (among others) administrative, legal, auditing, and printing fees.
Absent voluntary waivers, the Administrator's fee is calculated at the
annual rate of .25% of each Fund's average net assets.
(3) The Adviser and the Administrator have voluntarily waived a portion of their
fees in order to assist the Funds in maintaining a competitive expense
ratio. The expense ratios noted herein are net of investment advisory and
administrative fee waivers expected to be in effect during the fiscal period
ending June 30, 1997. Absent any fee waivers, such expense ratios would be
.49%, .53%, .55% and .51% for Elite Cash Reserve, Elite Government Reserve,
Elite Treasury Reserve and Elite Tax-Free Reserve, respectively.
(4) Absent the voluntary fee waiver of the Adviser and the Administrator, the
amounts in this Example, for one, three, five and ten years, would be $5,
$16, $27 and $62 for Elite Cash Reserve, $5 and $17 for Elite Government
Reserve, $6, $18, $31 and $69 for Elite Treasury Reserve and $5, $16, $29
and $64 for Elite Tax-Free Reserve.
----
Transaction and Operating Expense Tables 3
<PAGE>
- --------------------------------------------------------------------------------
TRANSACTION AND OPERATING EXPENSE TABLES (continued)
<TABLE>
<CAPTION>
--------- -------------- ---------- ----------
ELITE ELITE ELITE ELITE
CASH GOVERNMENT TREASURY TAX-FREE
Class C Shares RESERVE RESERVE RESERVE RESERVE
--------- -------------- ---------- ----------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases........................ none none none none
Maximum Sales Load Imposed on Reinvested Dividends............. none none none none
Deferred Sales Load............................................ none none none none
Redemption Fee................................................. none none none none
Exchange Fee................................................... none none none none
ANNUAL FUND OPERATING EXPENSES*
(as a percentage of net assets):
Investment Advisory Fees After Fee Waivers(1).................... .00% .00% .00% .00%
12b-1 Fees....................................................... .25% .25% .25% .25%
Other Expenses(2)................................................ .16% .16% .16% .16%
Net Annual Fund Operating Expenses(3)............................ .41% .41% .41% .41%
EXAMPLE
You would pay the following 1 year $4 $4 $4 $4
expenses on a $1,000 investment, 3 year 13 13 13 13
assuming (1) a 5% annual return 5 year 23 23 23 23
and (2) redemption at the end 10 year 52 52 52 52
of each time period.(4)
</TABLE>
- --------------------------------------------------------------------------------
* Fees shown reflect current fees.
(1) Absent voluntary waivers, the Adviser's investment advisory fees are
calculated at the annual rate of .20% of the average net assets of each
Fund.
(2) Includes (among others) administrative, legal, auditing, and printing fees.
Absent voluntary waivers, the Administrator's fee is calculated at the
annual rate of .25% of each Fund's average net assets.
(3) The Adviser and the Administrator have voluntarily waived a portion of their
fees in order to assist the Funds in maintaining a competitive expense
ratio. The expense ratios noted herein are net of investment advisory and
administrative fee waivers expected to be in effect during the fiscal period
ending June 30, 1997. Absent any fee waivers, such expense ratios would be
.74%, .78%, .80% and .76% for Elite Cash Reserve, Elite Government Reserve,
Elite Treasury Reserve and Elite Tax-Free Reserve, respectively.
(4) Absent the voluntary fee waiver of the Adviser and the Administrator, the
amounts in this Example, for one, three, five and ten years, would be $8,
$24, $41 and $92 for Elite Cash Reserve, $8 and $25 for Elite Government
Reserve, $8, $26, $44 and $99 for Elite Treasury Reserve and $8, $24, $42
and $94 for Elite Tax-Free Reserve.
- -----
4 Transaction and Operating Expense Tables
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS /X/ COREFUND
The tables that follow present information about the investment results of
the Class Y shares of the Elite Cash Reserve, Elite Treasury Reserve and Elite
Tax-Free Reserve Funds (formerly the 'Fiduciary Funds'). The Elite Government
Reserve has not yet commenced operations. In addition, the Class C shares for
each of the Funds have not yet been introduced. The financial highlights for
each of the Elite Cash Reserve, Elite Treasury Reserve and Elite Tax-Free
Reserve have been audited by Ernst & Young LLP, independent auditors, whose
report thereon appears in CoreFunds' annual report which accompanies the
Statement of Additional Information. The annual report for the Funds is
available to shareholders at no charge by calling CoreFunds at 1-800-355-CORE.
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED JUNE 30,
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Net
Assets
Net Asset Dividends End of Ratio of
Value, Net from Net Net Asset Period Expenses to
Beginning Investment Investment Value, End Total (thousands Average Net
Year of Period Income Income of Period Return omitted) Assets
- ---- ----------- ----------- ----------- ----------- --------- --------- -----------
- ------------------
ELITE CASH RESERVE
- ------------------
(FORMERLY FIDUCIARY RESERVE)
CLASS Y
1996.................................... $1.00 0.05 (0.05) $1.00 5.62% $384,446 0.15%
1995.................................... $1.00 0.05 (0.05) $1.00 5.46% $406,597 0.17%
1994.................................... $1.00 0.03 (0.03) $1.00 3.31% $382,814 0.16%
1993.................................... $1.00 0.03 (0.03) $1.00 3.29% $424,363 0.17%
1992.................................... $1.00 0.05 (0.05) $1.00 5.04% $416,945 0.18%
1991.................................... $1.00 0.07 (0.07) $1.00 7.49% $453,947 0.15%
1990(1)................................. $1.00 0.08 (0.08) $1.00 8.03%+ $232,091 0.13%
- ----------------------
ELITE TREASURY RESERVE
- ----------------------
(FORMERLY FIDUCIARY TREASURY RESERVE)
CLASS Y
1996.................................... $1.00 0.05 (0.05) $1.00 5.54% $ 24,498 0.19%
1995.................................... $1.00 0.05 (0.05) $1.00 5.24% $ 18,396 0.23%
1994.................................... $1.00 0.03 (0.03) $1.00 3.10% $ 20,363 0.28%
1993.................................... $1.00 0.03 (0.03) $1.00 3.17% $ 27,614 0.18%
1992(2)................................. $1.00 0.02 (0.02) $1.00 2.00%+ $ 49,328 0.05%
- ----------------------
ELITE TAX-FREE RESERVE
- ----------------------
(FORMERLY FIDUCIARY TAX-FREE RESERVE)
CLASS Y
1996.................................... $1.00 0.03 (0.03) $1.00 3.51% $ 86,477 0.16%
1995.................................... $1.00 0.03 (0.03) $1.00 3.41% $ 72,593 0.19%
1994.................................... $1.00 0.02 (0.02) $1.00 2.32% $ 78,219 0.17%
1993.................................... $1.00 0.02 (0.02) $1.00 2.48% $ 48,424 0.19%
1992(3)................................. $1.00 0.02 (0.02) $1.00 1.50%+ $ 66,158 0.17%
<CAPTION>
Ratio of Ratio of
Expenses to Net Income
Ratio of Average Net to Average
Net Income Assets Net Assets
to Average (Excluding (Excluding
Year Net Assets Waivers) Waivers)
- ---- ----------- ----------- -----------
- ------------------
ELITE CASH RESERVE
- ------------------
(FORMERLY FIDUCIARY RESERVE)
CLASS Y
1996.................................... 5.46% 0.76% 4.85%
1995.................................... 5.35% 0.81% 4.71%
1994.................................... 3.24% 0.84% 2.56%
1993.................................... 3.25% 0.81% 2.61%
1992.................................... 4.96% 0.83% 4.31%
1991.................................... 7.05% 0.80% 6.40%
1990(1)................................. 8.42% 0.83% 7.72%
- ----------------------
ELITE TREASURY RESERVE
- ----------------------
(FORMERLY FIDUCIARY TREASURY RESERVE)
CLASS Y
1996.................................... 5.39% 0.80% 4.78%
1995.................................... 5.09% 0.87% 4.45%
1994.................................... 3.03% 0.91% 2.40%
1993.................................... 3.19% 0.85% 2.52%
1992(2)................................. 3.95% 0.80% 3.20%
- ----------------------
ELITE TAX-FREE RESERVE
- ----------------------
(FORMERLY FIDUCIARY TAX-FREE RESERVE)
CLASS Y
1996.................................... 3.44% 0.76% 2.84%
1995.................................... 3.37% 0.83% 2.73%
1994.................................... 2.29% 0.82% 1.64%
1993.................................... 2.45% 0.83% 1.81%
1992(3)................................. 3.00% 0.89% 2.28%
</TABLE>
- ------------------
+ Returns shown are for the period indicated and have not been annualized.
(1) The Elite Cash Reserve (formerly the Fiduciary Reserve) commenced operations
on August 7, 1989. Ratios for this period have been annualized.
(2) The Elite Treasury Reserve (formerly the Fiduciary Treasury Reserve)
commenced operations on December 10, 1991. Ratios for this period have been
annualized.
(3) The Elite Tax-Free Reserve (formerly the Fiduciary Tax-Free Reserve)
commenced operations on November 19, 1991. Ratios for this period have been
annualized.
----
Financial Highlights 5
<PAGE>
- --------------------------------------------------------------------------------
INFORMATION ON THE FUNDS
/X/
INVESTMENT
OBJECTIVES
OF THE FUNDS
The descriptions that follow are designed to help you choose the Elite Fund that
best fits your investment objectives. The objectives of each Elite Fund are
fundamental and may only be changed by the affirmative vote of a majority of the
outstanding shares of such Fund. You may want to pursue more than one objective
by investing in other portfolios offered by CoreFunds.
As investment adviser of each Fund, CoreStates Advisers manages each
Fund's portfolio of investments in a manner which it believes will best
accomplish the Fund's stated objective. However, there can be no assurance that
a Fund will meet its objective.
CASH RESERVE The investment objective of CoreFund Elite Cash Reserve ('Cash
Reserve') is to provide as high a level of current interest as is consistent
with liquidity and relative stability of principal.
GOVERNMENT RESERVE The investment objective of CoreFund Elite Government Reserve
('Government Reserve') is to provide current interest income, liquidity and
safety of principal.
TREASURY RESERVE The investment objective of CoreFund Elite Treasury Reserve
('Treasury Reserve') is to provide current interest income, liquidity and safety
of principal.
TAX-FREE RESERVE The investment objective of CoreFund Elite Tax-Free Reserve is
to provide current interest income that is exempt from federal income taxes as
is consistent with liquidity and relative stability of principal.
/X/
INVESTMENT
POLICIES
The policies which the Funds follow to achieve their investment objectives are
described below. These are non-fundamental policies which may be changed without
a shareholder vote.
Descriptions of the securities in which the Funds invest are contained
below in 'Types of Securities in Which the Funds Invest.'
ALL FUNDS Investments by money market funds such as the Funds are subject to
limitations imposed under regulations adopted by the Securities and Exchange
Commission (the 'SEC'). These regulations generally require money market funds
to acquire only U.S. dollar denominated obligations maturing in 397 days or
less, although securities subject to repurchase agreements, securities with
optional and mandatory tender provisions, variable rate demand obligations and
certain other securities may bear longer maturities. Money market funds also
must maintain a dollar-weighted average portfolio maturity of 90 days or less.
In addition, money market funds may acquire only obligations that
represent minimal credit risks and that are 'eligible securities' which means
they are (i) rated, at the time of investment, by at least two nationally
recognized statistical rating organizations (one if it is the only organization
rating such obligation) in the highest short-term rating category or, if
unrated, determined to be of comparable quality (a 'first tier security'), or
(ii) rated according to the foregoing criteria in the
- ----
6 Investment Objectives
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
second highest short-term rating category, or, if unrated, determined to be of
comparable quality (a 'second tier security'). A security is not considered to
be unrated if its issuer has outstanding obligations of comparable priority and
security that have a short-term rating. CoreStates Advisers will determine that
an obligation presents minimal credit risks or that unrated instruments are of
comparable quality in accordance with guidelines established by CoreFunds' Board
of Directors. The Directors must also approve or ratify the acquisition of
unrated securities or securities rated by only one rating organization.
Investments in second tier securities are subject to the further constraints
that (i) no more than 5% of a Fund's assets may be invested in such securities
in the aggregate, and (ii) any investment in such securities of one issuer is
limited to the greater of 1% of the Fund's total assets or $1 million. In
addition, a Fund may only invest up to 25% of its total assets in the first tier
securities of a single issuer for three business days.
CASH RESERVE Cash Reserve intends to achieve its objective by investing in a
diversified portfolio of money market instruments of the highest quality,
including a broad range of U.S. dollar-denominated government, bank, and
commercial paper obligations.
GOVERNMENT RESERVE Government Reserve invests in U.S. Treasury obligations,
obligations issued or guaranteed as to principal and interest by the agencies or
instrumentalities of the U.S. government, and repurchase agreements involving
such obligations.
TREASURY RESERVE Treasury Reserve intends to invest in direct obligations of the
U.S. Treasury, such as bills, bonds, and notes, and in separately traded
interest and principal component parts of such obligations that are transferable
through the Federal book-entry system known as Separately Traded Registered
Investment and Principal Securities ('STRIPS') and in repurchase agreements
relating to direct U.S. Treasury obligations.
TAX-FREE RESERVE Tax-Free Reserve invests substantially all of its assets in a
diversified portfolio consisting of short-term obligations issued by or on
behalf of states, territories and possessions of the United States, the District
of Columbia and their political subdivisions, agencies, instrumentalities and
authorities, the interest on which, in the opinion of counsel to the issuer, is
exempt from federal income tax.
Under normal circumstances, the Fund intends to invest at least 80% of its
assets in tax-free securities. Although CoreStates Advisers has no present
intention of doing so, up to 20% of all assets in this Fund can be invested in
taxable debt securities for defensive purposes or when sufficient tax-exempt
securities considered appropriate by CoreStates Advisers are not available for
purchase.
OTHER INVESTMENT PRACTICES OF
THE FUNDS_______________________________________________________________________
In addition to the investments described above, the Funds may engage in a number
of additional investment practices, as discussed below:
REPURCHASE AGREEMENTS--All Funds
Under certain circumstances, the Funds may enter into repurchase agreements with
respect to portfolio securities. Under the terms of a repurchase agreement, a
Fund purchases securities ('collateral') from financial institutions such as
banks and
----
Investment Policies 7
<PAGE>
- --------------------------------------------------------------------------------
INFORMATION ON THE FUNDS (continued)
broker-dealers ('seller') which are deemed to be creditworthy under guidelines
approved by the Fund's management, subject to the seller's agreement to
repurchase them at a mutually agreed-upon date and price. The repurchase price
generally equals the price paid by the Fund plus interest negotiated on the
basis of current short-term rates (which may be more or less than the rate on
the underlying portfolio securities). The seller under a repurchase agreement is
required to maintain the value of the collateral held pursuant to the agreement
at not less than 100% of the repurchase price, and securities subject to
repurchase agreements are held by CoreFunds' custodian in the Federal Reserve
book-entry system. Default by the seller could, however, expose a Fund to loss
in the event of adverse market action or delay in connection with the
disposition of the underlying securities. Repurchase agreements are considered
to be loans by a Fund under the Investment Company Act of 1940, as amended (the
'Investment Company Act').
OTHER INVESTMENT COMPANIES--
All Funds
The Funds may invest in the securities of other investment companies. Such
shares will be purchased by the Funds within the limits prescribed by the
Investment Company Act and applicable state law. Such investments will be
limited to amounts not in excess of 5% of a Fund's total assets at the time of
purchase.
REVERSE REPURCHASE AGREEMENTS--
Elite Cash Reserve, Elite Government Reserve and Elite Tax-Free Reserve
Each of the Funds may borrow funds for temporary purposes by entering into
reverse repurchase agreements. Pursuant to such agreements, a Fund would sell
portfolio securities to financial institutions such as banks and broker-dealers,
and agree to repurchase them at a mutually agreed-upon date and price. A Fund
enters into reverse repurchase agreements only to avoid otherwise selling
securities during unfavorable market conditions to meet redemptions. At the time
the Fund enters into a reverse repurchase agreement, it places in a segregated
custodial account liquid assets such as U.S. Government securities or other
liquid high-grade debt securities having a value equal to the repurchase price
(including accrued interest), and will subsequently monitor the account to
ensure that such equivalent value is maintained. Reverse repurchase agreements
involve the risk that the market value of the securities sold by a Fund may
decline below the price at which it is obligated to repurchase the securities.
Reverse repurchase agreements are considered to be borrowings by a Fund under
the Investment Company Act.
LENDING OF SECURITIES--All Funds
The Funds may lend their portfolio securities to qualified brokers, dealers,
banks, and other financial institutions for the purpose of realizing additional
net investment income through the receipt of interest on the loan. Each Fund may
lend portfolio securities with a value of up to 33 1/3% of its total assets.
Such loans may be terminated at any time. These Funds will receive cash, letters
of credit, government or government agency securities as collateral in an amount
equal to at least 100% of the current market value of the loaned securities plus
accrued interest. Cash collateral received by the Funds will be invested in
short-term debt securities.
These Funds will retain most rights of beneficial ownership including
dividends, interest or other distributions on the loaned securities. Voting
rights pass with the lending. The Funds will call loans to vote
- ----
8 Investment Policies
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
proxies if a material issue affecting the investment is to be voted upon. Loans
will be made only to borrowers deemed by CoreStates Advisers to be of good
standing.
Such loans would involve risk of delay in receiving additional collateral
in the event the value of the collateral decreased below the value of the
securities loaned, or risk of delay in recovering the securities loaned or even
loss of rights in the collateral should the borrower of the securities fail
financially.
/X/
TYPES OF
SECURITIES IN
WHICH THE
FUNDS
INVEST
CASH RESERVE The various types of securities invested in by Cash Reserve include
the following:
U.S. Government Obligations--
1. U.S. Treasury Securities--includes bills, notes, bonds, and other debt
securities issued by the U.S. Treasury. These are direct obligations of the U.S.
Government and are supported by the full faith and credit of the United States.
They differ mainly in interest rates, maturities, and dates of issue.
2. U.S. Government Agency Securities-- issued or guaranteed by U.S.
government-sponsored instrumentalities and federal agencies. These include
obligations supported by the right of the issuer to borrow from the Treasury,
such as those of the Export-Import Bank of the United States; obligations
supported by the discretionary authority of the U.S. Treasury to purchase the
agency's obligations, such as those of the Federal National Mortgage Association
('FNMA'); and obligations supported only by the credit of the agency or
instrumentality, such as those of the Student Loan Marketing Association
('SLMA'). However, no assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored instrumentalities if it
is not obligated to do so by law.
With respect to U.S. Government obligations, in addition to bills, notes
and bonds issued by U.S. Government Agencies, Cash Reserve may invest in STRIPS
as defined above in 'Investment Policies-Treasury Reserve.' STRIPS may be sold
as zero coupon securities, which means that they are sold at a substantial
discount and redeemed at face value at their maturity date without interim cash
payments of interest or principal. This discount is amortized over the life of
the security, and such amortization will constitute the income earned on the
security for both accounting and tax purposes. Because of these features, STRIPS
may be subject to greater interest rate volatility than interest-paying U.S.
Treasury obligations. See also 'Taxes.'
Bank Obligations--
1. Certificates of Deposit--negotiable certificates representing a
commercial bank's obligation to repay funds deposited with it, earning specified
rates of interest over given periods.
2. Bankers' Acceptances--negotiable drafts or bills of exchange, normally
drawn by an importer or exporter to pay for specific merchandise, which are
'accepted' by a bank; meaning, in effect, that the bank unconditionally agrees
to pay the face value of the instrument upon maturity.
With respect to bank obligations, in addition to certificates of deposit
and bankers' acceptances, Cash Reserve may invest in foreign securities and time
deposits.
----
Types of Securities 9
<PAGE>
- --------------------------------------------------------------------------------
INFORMATION ON THE FUNDS (continued)
Time deposits are non-negotiable deposits in a banking institution earning a
specified interest rate over a given period of time. Such deposits cannot be
withdrawn before the date specified at the time of deposit.
Asset-backed securities--
Asset-backed securities consist of securities secured by company
receivables, truck and auto loans, leases and credit card receivables. These
issues are normally traded over-the-counter and typically have a short-
intermediate maturity structure depending on the paydown characteristics of the
underlying financial assets which are passed through to the security holder.
With respect to asset-backed securities, the asset-backed securities in
which Cash Reserve invests must have final maturities of 13 months or less.
Commercial Paper--
Commercial paper are short-term promissory notes issued by corporations,
including variable amount master demand notes, having short-term ratings at the
time of purchase of 'Prime-1' by Moody's Investors Service, Inc. ('Moody's')
and/or 'A-1' or better by Standard & Poor's Corporation ('S&P').
Variable amount master demand notes in which Cash Reserve may invest are
unsecured demand notes that permit the indebtedness thereunder to vary and
provide for periodic adjustments in the interest rate according to the terms of
the instrument. The rate of interest on such notes is generally based upon the
interest rates for commercial paper issued by the master demand note issuer. The
rate will be adjusted automatically at periodic intervals which normally will
not exceed 31 days but may extend longer. Because master demand notes are direct
lending arrangements between such Fund and the issuer, they are not normally
traded. Although there is no secondary market in the notes, the Fund may demand
payment of principal and accrued interest at any time. While the notes are not
typically rated by credit rating agencies, issuers of variable amount master
demand notes (which are normally manufacturing, retail, financial, and other
business concerns) must satisfy the same criteria as set forth above for issuers
of commercial paper. CoreStates Advisers will consider the earning power, cash
flow, and other liquidity ratios of the issuers of such notes and will
continuously monitor their financial status to meet payment on demand.
Receipts--
Receipts are interests in separately traded interest and principal
component parts of U.S. Treasury obligations that are issued by banks or
brokerage firms and are created by depositing U.S. Treasury obligations into a
special account at a custodian bank. The custodian holds the interest and
principal payments for the benefit of the registered owners of the certificates
or receipts. The custodian arranges for the issuance of the certificates or
receipts evidencing ownership and maintains the register. Receipts include
'Treasury Receipts' ('TR'S'), 'Treasury Investment Growth Receipts' ('TIGR'S'),
and 'Certificates of Accrual on Treasury Securities' ('CATS').
GOVERNMENT RESERVE Government Reserve will invest in U.S. Government
Obligations, including U.S. Treasury Securities and U.S. Government Agency
Securities. Government Reserve may also invest in STRIPS.
TREASURY RESERVE Treasury Reserve will invest in U.S. Treasury obligations, such
as bills, notes, and bonds, and separately traded
- ----
10 Types of Securities
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
Interest and principal component parts of such obligations, such as STRIPS.
Treasury Reserve may also invest in repurchase agreements fully collaterized by
U.S. Treasury obligations.
TAX-FREE RESERVE Tax-Free Reserve will invest in municipal securities which
include, but are not limited to, general obligation bonds and notes, bond and/or
grant anticipation notes, construction loan notes, revenue bonds and notes, tax
and/or revenue anticipation notes, tax-exempt commercial paper and variable rate
demand obligations. The two principal classifications of municipal securities
which may be held by this Fund are 'general obligation' securities and 'revenue'
securities. These are discussed below, along with other municipal securities in
which this Fund may invest.
1. General Obligation Securities
'General obligation' securities are secured by the issuer's pledge of its
full faith, credit, and taxing power for the payment of principal and interest.
2. Revenue Securities
'Revenue' securities are payable only from the revenues derived from a
particular facility or class of facilities or, in some cases, from the proceeds
of a special excise tax or another specific revenue source such as the user of
the facility being financed. Industrial development and pollution control bonds
held by these Funds are in most cases revenue securities and are not payable
from the unrestricted revenues of the issuer. Consequently, the credit quality
of such revenue bonds is usually directly related to the credit standing of the
corporate user of the facility involved.
3. Moral Obligation Bonds
The portfolio of Tax-Free Reserve may also include 'moral obligation'
bonds, which are normally issued by special-purpose public authorities. If the
issuer of moral obligation bonds is unable to meet its debt service obligations
from current revenues, it may draw on a reserve fund, the restoration of which
is a moral commitment but not a legal obligation of the state or municipality
which created the issuer.
4. Variable Rate Demand Obligations
Municipal Securities purchased by Tax-Free Reserve may include 'variable
rate demand obligations,' which are tax-exempt obligations upon which interest
is payable at a floating or variable rate. While there may be no active
secondary market with respect to a particular variable rate demand obligation
purchased by the Fund, it normally may demand payment of the principal of and
accrued interest on the obligation upon not more than seven days' notice and may
resell the obligation at any time to a third party. The absence of any active
secondary market, however, could make it difficult for Tax-Free Reserve to
dispose of a variable rate demand obligation if the issuer defaulted on its
payment obligation, and it could, for this or other reasons, suffer a loss to
the extent of the default.
5. When-issued Securities
Tax-Free Reserve may purchase municipal securities on a 'when-issued'
basis (as described in 'Other Investment Practices of the Funds'). This Fund
expects that commitments to purchase when-issued securities will not exceed 25%
of the value of its total assets, absent unusual market conditions, and does not
intend to purchase when-issued securities for speculative purposes, but only in
furtherance of its investment objective. Because the Fund will set aside cash or
liquid assets to satisfy its purchase commitments in the manner described, its
liquidity and ability to manage
----
Types of Securities 11
<PAGE>
- --------------------------------------------------------------------------------
INFORMATION ON THE FUNDS (continued)
its portfolio might be affected in the event its commitments to purchase
when-issued securities should ever exceed 25% of the value of its total assets.
CREDIT RATINGS
Municipal securities, in which Tax-Free Reserve invests will be determined by
CoreStates Advisers to present miminal credit risks, pursuant to guidelines
approved by the Board of Directors. Such securities, at the time of purchase,
must be rated in the highest short-term rating category of Moody's and/or S&P.
Therefore, rated municipal securities purchased by the Fund must meet or exceed
the ratings set forth below:
MINIMUM RATINGS
Moody's S&P
--------- -------
Notes 'MIG-1' 'SP-1'
Tax-Exempt Commercial Paper 'Prime-1' 'A-1'
Variable Rate
Demand Obligations 'VMIG-1' 'A-1'
Securities that have no short-term ratings at the time of purchase must be
determined to be of comparable quality by CoreStates Advisers, pursuant to
guidelines approved by the Board of Directors, or must be issued by an issuer
having comparable short-term securities outstanding that satisfy the above
rating criteria. To the extent that the ratings accorded by Moody's or S&P may
change as a result of changes in their rating systems, Tax-Free Reserve will
attempt to use comparable ratings as standards for its investments, in
accordance with the investment policies contained herein. Where necessary to
ensure that an instrument meets, or is of comparable quality to, such Fund's
rating criteria, it will require that the issuer's obligations to pay the
principal of, and the interest on, the instrument be backed by insurance or by
an unconditional bank letter or line of credit, guarantee, or commitment to
lend.
In such event, the underlying guarantee must be deemed by CoreStates
Advisers to present minimal credit risks. See the 'Appendix' to the Statement of
Additional Information for a description of applicable ratings.
Opinions relating to the validity of Municipal Securities and to the
exemption of interest thereon from federal income tax are rendered by bond
counsel to the respective issuers at the time of issuance. Neither the Fund nor
CoreStates Advisers will review the proceedings relating to the issuance of
Municipal Securities or the basis for such opinions.
From time to time, proposals have been introduced in Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on Municipal Securities. There can be no assurance that the current
federal income tax treatment accorded an investment in the Fund will not be
adversely affected by changes to statutes, regulations, rulings or judicial
precedents upon which such Federal Tax treatment is based. In the event of the
enactment of such legislation, which might materially affect the availability of
Municipal Securities for investment by the Fund and hence the value of the
Fund's portfolio, the Fund would re-evaluate its investment objective and
policies and consider changes in its structure or possible dissolution.
PENNSYLVANIA MUNICIPAL SECURITIES
In managing the Fund's portfolio, CoreStates Advisers intends to invest, when
possible, the Fund's assets in tax-exempt obligations issued by the Commonwealth
of Pennsylvania and its political subdivisions ('Pennsylvania Municipal
Securities'),
- ----
12 Types of Securities
<PAGE>
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/X/ COREFUND
provided the investment is consistent with the Fund's investment objective and
policies and its status as a diversified investment company. Because of the
relatively limited number of Pennsylvania municipal issuers and restricted
supply of outstanding Municipal Securities issued by them that meet the Fund's
investment criteria, CoreStates Advisers cannot predict precisely what
percentage of the Fund's portfolio will be invested in such issuers.
Except as stated above with respect to Pennsylvania Municipal Securities,
CoreStates Advisers does not intend on a regular basis to invest more than 25%
of the Fund's total assets in (i) Municipal Securities whose issuers are in the
same state, (ii) Municipal Securities, the interest on which is paid solely from
revenues of similar projects, and (iii) industrial development bonds, although
it may do so from time to time. To the extent the Fund's assets are so
concentrated, the Fund would be subject to the peculiar risks presented by the
laws and economic conditions relating to such states, projects, and bonds to a
greater extent than it would be if its assets were not so concentrated.
TEMPORARY INVESTMENTS
The Fund may hold uninvested cash reserves which do not earn income (pending
investment) during temporary defensive periods or if, in the opinion of
CoreStates Advisers, suitable tax-exempt obligations are unavailable. There is
no percentage limitation on the amount of assets which may be held uninvested.
In addition, the Fund may invest from time to time, to the extent consistent
with its investment objective, a portion of its assets on a temporary basis or
for temporary defensive purposes in short-term money market instruments
('Temporary Investments'), the income from which is subject to federal
income tax.
Temporary Investments will generally not exceed 20% of the total assets of
the Fund except when made for temporary defensive purposes, and may include
obligations of the United States Government or its agencies or
instrumentalities; debt securities (including taxable commercial paper) of
issuers having been assigned, at the time of purchase, the highest quality
rating of either Moody's or S&P; certificates of deposit or bankers' acceptances
of domestic branches of U.S. banks with total assets at the time of purchase of
$1 billion or more; repurchase agreements with respect to such obligations; or
reverse repurchase agreements.
Under the Investment Company Act of 1940, as amended (the 'Investment
Company Act'), repurchase agreements are considered to be loans by the Fund and
conversely, reverse repurchase agreements are considered to be borrowings by the
Fund. See the Statement of Additional Information for further discussion
regarding Temporary Investments.
/X/
INVESTMENT
RESTRICTIONS
Investment policies of the Funds that are not fundamental may be changed by the
Board of Directors without shareholder approval, provided such changes are
deemed to be consistent with a Fund's objective and in the best interests of its
shareholders. However, the investment objectives of each Fund, along with the
restrictions and limitations described herein and in the Statement of Additional
Information, are fundamental and may be changed only by the affirmative vote
----
Investment Restrictions 13
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INFORMATION ON THE FUNDS (continued)
of a majority of the outstanding shares of such Fund. See 'Description of
Shares.'
A FUND MAY NOT:
1. Make loans, except that each Fund may purchase or hold certain debt
instruments, enter into repurchase agreements and lend its portfolio securities,
in accordance with its policies and limitations.
2. Borrow money or issue senior securities, except that each Fund may
borrow from banks and enter into reverse repurchase agreements for temporary
purposes in amounts not to exceed 10% of the value of its total assets at the
time of such borrowing; or mortgage, pledge or hypothecate any assets, except in
connection with any such borrowing and in amounts not in excess of the lesser of
the dollar amounts borrowed or 10% of the value of its total assets at the time
of such borrowing. A Fund will not purchase any securities while its borrowings
(including reverse repurchase agreements) are outstanding.
3. Purchase securities of any one issuer (other than obligations issued or
guaranteed as to principal and interest by the U.S. Government, its agencies or
instrumentalities) if, immediately after such purchase, more than 5% of the
value of the Fund's total assets would be invested in such issuer, except that
up to 25% of the value of the Fund's total assets may be invested without regard
to such 5% limitation. With respect to Cash Reserve, however, there is no limit
to the percentage of assets that may be invested in U.S. Treasury bills and
notes, or other obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities.
4. Invest 25% or more of its total assets in any one industry. For
purposes of this limitation, wholly-owned finance companies will be considered
to be in the industries of their parents if their activities are primarily
related to financing the activities of their parents, and utilities will be
divided according to their services--for example, gas, gas transmission,
electric and gas, electric, and telephone will each be considered a separate
industry. With respect to Cash Reserve, Government Reserve and Treasury Reserve,
there is no limitation with respect to its investment in obligations issued or
guaranteed by the U.S. Government or its instrumentalities. With respect to
Tax-Free Reserve, there is no limitation with respect to: (a) obligations issued
by any state, territory or possession of the United States, the District of
Columbia or any of their authorities, agencies, instrumentalities or political
subdivisions; (b) obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities; (c) domestic bank certificates of deposit and
bankers' acceptances; or (d) repurchase agreements secured by any of the
foregoing obligations.
PORTFOLIO TURNOVER It is not a policy of the Funds to purchase or sell
securities for trading purposes. However, CoreStates Advisers manages the Funds
without regard generally to restrictions on portfolio turnover, except those
imposed by provisions of the federal tax laws regarding short-term trading.
Generally, the Funds will not trade for short-term profits, but when
circumstances warrant, investments may be sold without regard to the length of
time held.
High rates of portfolio turnover necessarily result in correspondingly
heavily brokerage and portfolio trading costs which are paid by a Fund. Trading
in fixed income securities does not generally involve the payment of brokerage
commissions, but does involve indirect transaction costs. In addition
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14 Investment Restrictions
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/X/ COREFUND
to portfolio trading costs, higher rates of portfolio turnover may result in the
realization of capital gains. As a general rule, net gains are distributed to
shareholders and will be taxable at ordinary income tax rates, for federal
income tax purposes, regardless of long- or short-term capital gains status. See
'Distributions' and 'Taxes' for more information on taxation.
/X/
INVESTOR
CONSIDERATIONS
INVESTMENT SUITABILITY _________________________________________________________
As each of these Funds is designed and managed to maintain a stable price per
share of $1.00, they provide liquidity and a high degree of safety for investors
who are unable to tolerate fluctuations in the principal value of their
investments.
Cash Reserve is appropriate for investors who are seeking an investment
vehicle that provides current interest income at competitive rates of return.
Government Reserve, by investing only in direct obligations of the U.S.
Government, and in U.S. Government Agency securities, is suitable for investors
seeking current income with a higher degree of safety afforded by U.S.
Government and Agency securities.
Treasury Reserve, because it is restricted to direct obligations of the
U.S. Government, is suitable for investors for whom a high degree of safety is a
primary concern. This Fund is considered to be the most secure of the Funds and
is appropriate for investors seeking current income and the highest degree of
safety.
Tax-Free Reserve is appropriate for conservative investors in higher-level
federal income tax brackets who may benefit from an investment that offers
current interest income that is at least 80% free of federal income taxes.
Therefore, investors contemplating the purchase of this Fund should first
consider their 'taxable equivalent yield.' This is the comparison between the
tax-exempt yield from Tax-Free Reserve and the equivalent yield from a taxable
investment, using a calculation that takes into account the investor's current
tax bracket. Tax-Free Reserve's current taxable equivalent yield may be obtained
by contacting its distributor.
INVESTMENT RISKS _______________________________________________________________
While each of the Funds will attempt to maintain a stable net asset value of
$1.00 per share, there is no guarantee that any Fund will be able to do so. The
Funds are neither insured nor guaranteed by the U.S. Government.
Securities held by Cash Reserve, Government Reserve and Treasury Reserve
may be subject, on a limited basis, to credit risk. Credit risk is the
possibility that an issuer of securities held in a Fund's investment portfolio
will be unable to make timely payments of either principal or interest. The
credit risk of an investment portfolio is a function of its underlying
securities, and in general, securities of somewhat lower credit quality provide
correspondingly higher yields.
Securities held by Tax-Free Reserve may be subject, on a limited basis, to
several types of investment risk, including market risk (or interest rate risk),
credit risk and call risk (or income risk). Market risk is the potential for a
decline in the price of fixed-income securities due to rising interest rates.
Call risk relates to municipal bonds during periods of falling interest rates
and involves the possibility that securities with high interest rates will be
prepaid (or 'called') by
----
Investor Considerations 15
<PAGE>
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INFORMATION ON THE FUNDS (continued)
the issuer prior to maturity. Such an event would require such Fund to invest
the resulting proceeds elsewhere, at generally lower interest rates, which would
cause fluctuations in its net income.
Because of the concerns listed above, a Fund should not be considered a
complete investment program. Most investors should maintain diversified holdings
of securities with different risk characteristics--including common stocks,
bonds and different types of money market instruments. Investors may also wish
to complement an investment in a Fund with other portfolios offered by
CoreFunds.
Investors should understand, however, that while all investments carry a
risk factor, the exposure of the Funds to investment risk will generally be very
low, as a result of their diversification and the high-quality and short-term
maturity of their investment portfolios.
/X/
DISTRIBUTIONS
Shareholders of each Fund are entitled to dividends and distributions arising
from the net investment income and capital gains, if any, earned on investments
held by such Fund. Shares of the Funds begin earning dividends on the business
day on which the purchase order for the shares is executed and continue to earn
dividends through, and including, the day before the redemption order for such
shares is executed.
Dividends are paid in the form of additional shares of a Fund unless a
shareholder selects one of the following options on the Account Application
Form: Cash Dividend Option--to receive dividends in cash and capital gains
distributions in additional shares of the Fund at net asset value; All Cash
Option--to receive both dividends and capital gains distributions in cash. In
the absence of either of these selections on the Account Application Form, each
purchase of shares is made upon the condition and understanding that the Fund's
agent is automatically appointed to receive the dividends and distributions upon
all shares in the shareholder's account and to reinvest them in full and
fractional shares of the Fund at the net asset value in effect at the close of
business on the reinvestment date. Dividends and distributions are automatically
paid in cash (along with any redemption proceeds) not later than seven business
days after a shareholder closes an account with the Fund.
The net investment income of each of the Funds is declared daily as a
dividend to its shareholders and paid monthly. Capital gains distributions, if
any, will be made by the Funds at least annually.
If any capital gains are realized from the sale of underlying securities,
the Funds normally distribute such gains with the last dividend for the calendar
year.
/X/
TAXES
The following is only a brief summary of some of the important federal income
tax considerations generally affecting the Funds and their shareholders. No
attempt has been made to present a detailed explanation of the federal, state or
local income tax treatment of the Funds or their shareholders, and this
discussion is not intended as a substitute for careful tax planning. Potential
investors in the Funds are urged to consult their tax advisers with specific
reference to their own tax situations.
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16 Distributions
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/X/ COREFUND
The following summary is based on current tax laws and regulations which
may be changed by legislative, judicial or administrative action.
ALL FUNDS
Each Fund is treated as a separate entity for federal income tax purposes and is
not combined with any of CoreFunds' other portfolios. Each Fund intends to
qualify for the favorable tax treatment afforded a 'regulated investment
company' under the Code. This requires, among other things, that a Fund
distribute to its shareholders at least 90% of its net investment income.
Provided a Fund meets this 90% distribution and certain other requirements, it
will be relieved of federal income tax on that part of its net investment income
and any net capital gains (the excess of net long-term capital gain over net
short-term capital loss) distributed to shareholders.
Whether paid in cash or in additional shares, dividends attributable to a
Fund's net investment income (including ordinary income and net short-term
capital gains, if any) will be taxable to shareholders as ordinary income.
Capital gains distributions of all Funds will be taxable as long-term capital
gain, regardless of how long a shareholder has held shares.
Dividends declared by a Fund in October, November, or December of any year
and payable to shareholders of record on a date in such a month will be deemed
to have been paid by the Fund and received by the shareholders on December 31 of
that year, if paid by the Fund during the following January.
TAX-FREE RESERVE
Current federal tax law limits the types and volume of bonds qualifying for the
federal income tax exemption of interest, which may have an effect on the
ability of Tax-Free Reserve to purchase sufficient amounts of tax-exempt
securities to satisfy the Code's requirements for the payment of 'exempt-
interest' dividends.
Interest on indebtedness incurred or continued by a shareholder in order
to purchase or carry shares of this Fund is not deductible for federal income
tax purposes. Furthermore, this Fund may not be an appropriate investment for
persons (including corporations and other business entities) who are
'substantial users' (or persons related to 'substantial users') of facilities
financed by industrial development private activity bonds. Such persons should
consult their tax advisers before purchasing shares. A 'substantial user' is
defined generally to include 'certain persons' who regularly use in their trade
or business a part of a facility financed from the proceeds of such bonds.
Tax-Free Reserve expects to qualify to pay exempt-interest dividends to
its shareholders by satisfying the Code's requirement that at the close of each
quarter of its taxable year, at least 50% of the value of its total assets
consists of obligations the interest on which is exempt from regular federal
income tax. Tax-exempt interest dividends may generally be treated by such
Fund's shareholders as items of income excludible from their gross income under
the Code unless, under the circumstances applicable to the particular
shareholder, exclusion would be disallowed. Exempt-interest dividends may also
have certain collateral federal income tax consequences, including Alternative
Minimum Tax Consquences.
Except as noted below, tax-exempt interest dividends and other
distributions
----
Taxes 17
<PAGE>
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INFORMATION ON THE FUNDS (continued)
paid by Tax-Free Reserve may be taxable to investors as dividend income under
state or local law even though a substantial portion of such distributions may
be derived from interest on tax-exempt obligations which, if received directly,
would be exempt from such income taxes.
STRIPS
With respect to investments in STRIPS and Receipts which are sold at original
issue discount and thus do not make periodic cash interest payments, a Fund will
be required to include as part of its current income the imputed interest on
such obligations even though the Fund has not received any interest payments on
such obligations during that period. Because each Fund distributes all of its
net investment income to its shareholders, a Fund may have to sell portfolio
securities to distribute such imputed income, which may occur at a time when the
investment adviser would not have chosen to sell such securities and which may
result in a taxable gain or loss.
BACK-UP WITHHOLDING
Generally, the Funds are required to withhold 31% of ordinary income dividends,
capital gains distributions, and redemptions paid to shareholders who have not
complied with IRS taxpayer identification regulations and in certain other
circumstances. Shareholders who are not otherwise subject to back-up withholding
may avoid this withholding requirement by certifying on the Account Application
Form their proper Social Security or Taxpayer Identification Number and
certifying that they are not subject to back-up withholding.
IN GENERAL
The sale or redemption of shares of a mutual fund is a taxable event to the
selling or redeeming shareholder. Gains or losses (if any) may also be realized
from an ordinary redemption of shares, as described herein, or on a telephone
exchange among the CoreFunds portfolios.
In the opinion of counsel, shares of the Funds are exempt from current
Pennsylvania Personal Property Taxes.
Shareholders will be advised at least annually as to the federal income
tax status of distributions made during the year. See the Statement of
Additional Information for further information regarding taxes.
/X/
VALUATION OF
SHARES
NET ASSET VALUE ________________________________________________________________
The net asset value per share of each of the Funds for purposes of pricing
purchase and redemption orders is normally determined as of 4:00 p.m. (Eastern
standard time) on each business day of the Funds. A 'business day' of a Fund is
a day on which the New York Stock Exchange is open for trading, and any other
day (other than a day on which no shares of the Fund are tendered for redemption
and no order to purchase any shares is received) during which there is a
sufficient degree of trading in securities or instruments held by the Fund such
that the Fund's net asset value per share might be materially affected. The
Funds are managed to maintain a stable price per share of $1.00.
PORTFOLIO PRICING ______________________________________________________________
Portfolio securities which are traded both over-the-counter and on a national
securities exchange are valued according to the broadest and most representative
market. When securities exchange valuations are used, the valuation will be the
latest sale price on such exchange on such business day
- ----
18 Valuation of Shares
<PAGE>
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/X/ COREFUND
or, if there is no such reported sale, the current bid price. Other assets and
securities for which no quotations are readily available will be valued in a
manner determined in good faith by the Board of Directors to reflect their fair
market value.
The assets in the Funds are valued based upon the amortized cost method,
pursuant to rules promulgated under the Investment Company Act. Under this
method of valuation, the value of a Fund's shares normally will not change in
response to fluctuating interest rates. In connection with its use of this
valuation method, however, each Fund monitors the deviation between the
amortized cost value of its assets and their market value (which can be expected
to vary inversely with changes in prevailing interest rates). Although each Fund
seeks, through its use of amortized cost valuation, to maintain its net asset
value per share at $1.00, there can be no assurance that the net asset value
will not vary.
/X/
MANAGEMENT
The business and affairs of each Fund are managed under the direction of
CoreFunds' Board of Directors.
INVESTMENT ADVISER _____________________________________________________________
CoreStates Advisers has overall responsibility for portfolio management for each
of the Funds. CoreStates Advisers is a wholly-owned subsidiary of CoreStates
Bank, itself a wholly-owned subsidiary of CoreStates Financial Corp ('CoreStates
Corp'). CoreStates Corp, based in Philadelphia, Pennsylvania, is one of the 20
largest bank holding companies in the United States, and leads the region in
investing corporate cash. CoreStates Corp currently has over $45 billion in
assets and discretionary management over $30 billion in customer accounts
through a variety of banking activities at over 600 domestic and foreign
locations.
CoreStates Advisers is an adviser registered under the Investment Advisers
Act of 1940. It performs most investment management and advisory functions for
the trust departments of CoreStates Corp's banking subsidiaries, related
investment advisory, research, trading, and fund management functions, and also
provides similar services to customers unrelated to CoreStates Corp. CoreStates
Advisers currently manages discretionary and nondiscretionary client security
portfolios with a total aggregate market value of over $16 billion, for
individuals, corporations, institutions, and municipalities. CoreStates Advisers
has extensive experience in the management of money market, tax-free, fixed
income, equity, and international investments. CoreStates Advisers principal
offices are located at 1500 Market Street, P.O. Box 7558, Philadelphia, PA
19102.
As investment adviser, CoreStates Advisers manages the investment
portfolio of each Fund, makes decisions with respect to and places orders for
all purchases and sales of a Fund's portfolio securities, and maintains certain
records relating to such purchases and sales. CoreStates Advisers pays all
expenses incurred by it in connection with its investment advisory activities,
other than the cost of securities (including any brokerage commissions)
purchased for the Funds and the cost of obtaining market quotations for
portfolio securities held by the Funds.
----
Management 19
<PAGE>
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INFORMATION ON THE FUNDS (continued)
ADVISORY FEES
For the services provided and expenses assumed as investment adviser of each
Fund, CoreStates Advisers is entitled to receive an annual fee from each Fund,
computed daily and paid monthly, at the annual rate of .20% of the average daily
net assets of such Fund. CoreStates Advisers may, from to time and at its
discretion, voluntarily waive all or a portion of its investment advisory fees
in order to assist the Funds in maintaining competitive expense ratios.
FUND MANAGERS __________________________________________________________________
The following individuals are primarily responsible for managing the Elite
Funds:
ELITE CASH RESERVE
Joyce Ann Lotkowski, Investment Officer, is portfolio manager of the Elite Cash
Reserve. She is a fixed income portfolio manager responsible for individually
managed corporate trust accounts. Mrs. Lotkowski joined CoreStates Advisers in
1982 as a portfolio manager. She joined the Philadelphia National Bank in 1978
in the CPA and Government Request Department and in 1980 transferred to the
Corporate Trust Department.
ELITE GOVERNMENT RESERVE
ELITE TREASURY RESERVE
Ronald R. Brasten, Senior Investment Officer, is portfolio manager of the Elite
Government and Elite Treasury Reserve. He also manages the CoreFund Treasury
Reserve and has investment responsibility for individually managed corporate and
personal accounts. After receiving his B.S. in Accounting from Drexel
University, Mr. Brasten joined the Financial Division of CoreStates in 1984. In
1986, he transferred to the Asset and Liability group as an ALCO analyst. Mr.
Brasten joined CoreStates Advisers in August 1989.
ELITE TAX-FREE RESERVE
Folu Abiona, Senior Investment Officer, is portfolio manager of the Elite
Tax-Free Reserve. Ms. Abiona is also portfolio manager of the Tax-Free Reserve
portfolio. She joined CoreStates in 1985 and became fixed income portfolio
manager in 1990. Prior to that, she was mutual fund administrator with
CoreStates' Institutional Custody Division. Ms. Abiona holds an M.B.A. from
Temple University and a B.Sc. from University of lfe, Nigeria.
ADMINISTRATOR __________________________________________________________________
SEI Fund Resources ('SFR' or the 'Administrator'), with principal offices at 680
East Swedesford Road, Wayne, PA 19087, acts as each Fund's administrator. For
its administrative services, SFR is entitled to receive a fee from each Fund,
computed daily and paid monthly, at the annual rate of .25% of such Fund's
average daily net assets. As Administrator, SFR generally assists in each Fund's
administration and operations. State Street Bank and Trust Company located at
225 Franklin Street, Boston, MA 02110, serves as each Fund's transfer agent (the
'Transfer Agent') and dividend paying agent.
- ----
20 Management
<PAGE>
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/X/ COREFUND
DISTRIBUTOR ____________________________________________________________________
SEI Financial Services Company ('SFS' or the 'Distributor'), with principal
offices at 680 East Swedesford Road, Wayne, PA 19087, serves as each Fund's
distributor pursuant to a Distribution Agreement which applies to Class Y and
Class C Shares of each Fund. Class C Shares are also subject to a separate
distribution plan (the 'Distribution Plan') approved by the Board of Directors
on April 13, 1992. The Distribution Plan provides that CoreFunds will pay the
Distributor an annual fee, calculated on an average daily net basis and paid
monthly, of up to .25% of the average daily net assets of Class C Shares of each
Fund. The Distributor may use this fee as compensation for its
distribution-related services or to compensate Participating Broker/Dealers and
Shareholder Servicing Agents for performing distribution-related or shareholder
services.
The services provided by Participating Broker/Dealers or Shareholder
Servicing Agents may include establishing and maintaining customer accounts and
records; aggregating and processing purchase and redemption requests from
customers and placing net purchase and redemption orders with the Distributor;
automatically investing customer account cash balances; providing periodic
statements to customers; arranging for bank wires; answering routine customer
inquiries concerning their investments; assisting customers in changing dividend
options, account designations and addresses; performing sub-accounting
functions; processing dividend payments on behalf of customers; forwarding
certain shareholder communications from the Funds to customers; and providing
other similar services.
With respect to the Funds, the Distributor may, from time to time and at
its own expense, provide promotional incentives, in the form of cash or other
compensation, to certain financial institutions whose representatives have sold
or are expected to sell significant amounts of the shares of these Funds.
Compensation received by persons selling Class C Shares will be different
than the compensation received by those persons selling Class Y Shares.
EXPENSES _______________________________________________________________________
CoreFunds allocates expenses attributable to each Fund in compliance with Rule
18f-3 under the Investment Company Act. The Funds' expenses are accrued daily
and are deducted from total income before dividends are paid. Except as noted
herein and in the Statement of Additional Information, the Funds' service
contractors bear all expenses incurred in connection with the performance of
their services on behalf of the Funds. Similarly, the Funds bear the expenses
incurred in their operations.
GLASS-STEAGALL ACT _____________________________________________________________
CoreStates Corp and its banking subsidiaries are permitted to perform the
services contemplated by the investment advisory agreements with the Funds and
to engage in certain activities in connection with the investment of their
customer accounts in shares of the Funds without violating the federal banking
law commonly referred to as the Glass-Steagall Act, or other applicable banking
laws or regulations. Future changes to any of these laws or regulations or
administrative or judicial interpretations of such laws or regulations, however,
could prevent or restrict CoreStates Corp (and its banking subsidiaries) from
performing such services. If CoreStates Advisers was thereby prohibited from
serving as investment adviser to the Funds, the Board of Directors would
----
Management 21
<PAGE>
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INFORMATION ON THE FUNDS (continued)
promptly seek to retain another qualified investment adviser for the Funds.
In addition, certain state securities laws may require banks and other
institutional investors purchasing shares on behalf of their customers in such
states to register as dealers pursuant to state law.
/X/
PERFORMANCE
INFORMATION
TOTAL RETURN AND YIELD _________________________________________________________
From time to time, in advertisements or reports to shareholders, the performance
of the Funds may be quoted and compared to that of other mutual funds with
similar investment objectives and to relevant indices.
The Funds may calculate their performance on a total return basis for
various periods. The total return basis combines principal changes, income
dividends, and capital gains distributions paid during the period. Principal
changes are based on the difference between the beginning and closing net asset
values for the period and assume reinvestment of income dividends and capital
gains distributions paid during the period. The Funds may calculate their
performance for periods since commencement of operations and for calendar or
fiscal year periods (including multiple years). See 'Total Return' in the
Statement of Additional Information.
In addition to quoting total return, the Funds may advertise 'yield' and
'effective yield.' Both yield figures are based on historical earnings and are
not intended to indicate future performance. The 'yield' of a Fund refers to the
income generated by an investment in the Fund over a 30-day period (which period
will be stated in the advertisement). This income is then 'annualized.' That is,
the amount of income generated by the investment during that month is assumed to
be generated each month over a 12-month period and is shown as a percentage of
the investment. The 'effective yield' is calculated similarly but, when
annualized, the income earned by an investment in the Fund is assumed to be
reinvested. The 'effective yield' will be slightly higher than the 'yield'
because of the compounding effect of this assumed reinvestment. See 'Yields' in
the Statement of Additional Information.
The Tax-Free Reserve may also advertise its 'taxable equivalent yield,'
which is calculated by taking into account the investor's current tax bracket.
This is the yield an investor would need to earn from a taxable investment in
order to realize an 'after-tax' benefit equal to the tax-free yield provided by
the Fund.
IN GENERAL _____________________________________________________________________
The performance of any investment will generally reflect market conditions,
portfolio quality and maturity, type of investment, and operating expenses. Each
Fund's performance will fluctuate and is not necessarily representative of
future results. A Fund's performance would be favorably affected by any
investment advisory fee waivers on the part of CoreStates Advisers. Shareholders
will receive unaudited semi-annual reports describing the Funds' investment
operations and annual financial statements audited by independent auditors.
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22 Performance Information
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/X/ COREFUND
/X/
DESCRIPTION
OF SHARES
CoreFunds has set up the following twenty-one portfolios: Growth Equity, Core
Equity, Special Equity, Equity Index, International Growth, Balanced, Bond,
Short-Intermediate Bond, Short Term Income, Government Income, Intermediate
Municipal Bond, Pennsylvania Municipal Bond, New Jersey Municipal Bond, Global
Bond, Cash Reserve, Treasury Reserve, Tax-Free Reserve, Elite Cash Reserve,
Elite Government Reserve, Elite Treasury Reserve and Elite Tax-Free Reserve.
CoreFunds may in the future create one or more additional portfolios, or one or
more classes of shares within a portfolio. Shares of portfolios other than the
Elite Funds are offered in separate prospectuses.
CoreFunds offers two classes of each portfolio. Class Y Shares are
primarily offered to various types of institutional investors. Class A and Class
C Shares are offered to the general public as well as to various types of
institutional investors. Class A Shares differ from Class Y Shares in that Class
A Shares are subject to a sales load and distribution and transfer agent
expenses for certain additional shareholder services they receive. Class C
Shares also differ from Class Y Shares in that Class C Shares are subject to
distribution and transfer agent expense for certain additional shareholder
services, but unlike Class A Shares, are not subject to a sales load. Class A
and Class C Shares also have voting rights which Class Y Shares do not, in
connection with the Distribution Plan affecting Classes A and C Shares. The
distribution and transfer agent expenses charged Classes A and C Shares result
in Classes A and C Shares having different dividends and performance results
from Class Y Shares. In addition, the minimum initial investment for Class Y
Shares is substantially higher than that required for Classes A and C Shares.
THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION INCORPORATED
HEREIN RELATE PRIMARILY TO SHARES OF THE FUNDS AND DESCRIBE ONLY THE INVESTMENT
OBJECTIVE AND POLICIES, OPERATIONS, CONTRACTS, AND OTHER MATTERS RELATING TO
SUCH SHARES. INVESTORS WISHING TO OBTAIN SIMILAR INFORMATION REGARDING OTHER
COREFUNDS PORTFOLIOS MAY OBTAIN PROSPECTUSES DESCRIBING SUCH PORTFOLIOS BY
CONTACTING THE DISTRIBUTOR AT 1-800-355-CORE.
Except for differences between classes of shares of some of CoreFunds'
portfolios pertaining to distribution costs, incremental transfer agency fees
and any other incremental expenses identified that should be properly allocated
to a class, each share in each portfolio represents an equal proportionate
interest in that portfolio with each other share of the same portfolio and is
entitled to such dividends and distributions out of the income earned on the
assets belonging to such portfolio as are declared in the discretion of the
Board of Directors.
CoreFunds' shareholders are entitled to one vote for each full share held,
and fractional votes for fractional shares held, and will vote in the aggregate
and not by portfolio or class except as otherwise expressly required by law or
when the Board of Directors determines that the matter to be voted upon affects
only the interests of the shareholders of a particular portfolio or class. See
the Statement of Additional Information under 'Description of Shares' for
examples
----
Description of Shares 23
<PAGE>
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INFORMATION ON THE FUNDS (continued)
where the Investment Company Act requires voting by portfolio or class. Voting
rights are not cumulative and, accordingly, the holders of more than 50% of the
aggregate number of shares of all of the portfolios of CoreFunds may elect all
of the directors if they choose to do so and, in such event, the holders of the
remaining shares would not be able to elect any person or persons to the Board
of Directors.
As used in this Prospectus, a 'vote of a majority of the outstanding
shares' of a Fund means the affirmative vote of the lesser of (a) more than 50%
of the outstanding shares of a Fund, or (b) at least 67% of the shares of a Fund
present at a meeting at which the holders of more than 50% of the outstanding
shares of such Fund are represented in person or by proxy.
/x/
GENERAL
INFORMATION
In accordance with the Maryland General Corporation Law, CoreFunds is not
required to hold annual meetings of shareholders unless the Investment Company
Act requires the shareholders to elect members of the Board of Directors.
However, a meeting of shareholders may be called for any purpose upon the
written request of the holders of at least 10% of the outstanding shares of
CoreFunds, or of a Fund with respect to matters affecting only such Fund.
As used in this Prospectus, 'assets belonging to the Fund' means the
consideration received by CoreFunds upon the issuance or sale of shares in a
Fund, together with all income, earnings, profits and proceeds derived from the
investment thereof, including any proceeds from the sale, exchange or
liquidation of such investments, and any funds or payments derived from any
reinvestment of such proceeds, and a portion of any general assets of CoreFunds
not belonging to that Fund or CoreFunds' other portfolios. Assets belonging to a
Fund are charged with the direct liabilities in respect of that Fund and with a
share of the general liabilities of CoreFunds allocated in proportion to the
relative asset values of each of CoreFunds' portfolios at the time the expense
or liability is incurred. The management of CoreFunds makes determinations with
respect to a Fund as to liabilities when they are incurred and as to assets when
they are acquired. Such determinations are reviewed and approved annually by the
Board of Directors and are conclusive.
/X/
DESCRIPTION
OF RATINGS
DESCRIPTION OF MUNICIPAL AND
CORPORATE BOND RATINGS _________________________________________________________
Bonds rated AAA have the highest rating S&P assigns to a debt obligation. Such a
rating indicates an extremely strong capacity to pay principal and interest.
Bonds rated AA also qualify as high-quality debt obligations. Capacity to pay
principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
Debt rated A by S&P has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse
- ----
24 General Information
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in this category
than in higher rated categories.
Bonds which are rated Aaa by Moody's are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as 'gilt edge.' Interest payments are protected by a large, or an exceptionally
stable, margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues. Bonds rated Aa by
Moody's are judged by Moody's to be of high quality by all standards. Together
with bonds rated Aaa, they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
Bonds which are rated A by Moody's possess many favorable investment
attributes and are to be considered as upper-medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Bonds which are rated Baa by Moody's are considered as medium-grade
obligations (i.e., they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Bonds rated AAA by Fitch are judged by Fitch to be strictly high grade,
broadly marketable, suitable for investment by trustees and fiduciary
institutions liable to only slight market fluctuation other than through changes
in the money rate. The prime feature of an AAA bond is a showing of earnings
several times or many times interest requirements, with such stability of
applicable earnings that safety is beyond reasonable question whatever changes
occur in conditions. Bonds rated AA by Fitch are judged by Fitch to be of safety
virtually beyond question and are readily salable, whose merits are not unlike
those of the AAA class, but whose margin of safety is less strikingly broad. The
issue may be the obligation of a small company, strongly secured but influenced
as to rating by the lesser financial power of the enterprise and more local type
market.
Bonds rated Duff-1 are judged by Duff to be of the highest credit quality
with negligible risk factors, only slightly more than U.S. Treasury debt. Bonds
rated Duff-2, 3 and 4 are judged by Duff to be of high credit quality with
strong protection factors. Risk is modest but may vary slightly from time to
time because of economic conditions.
Obligations rated AAA by IBCA have the lowest expectation of investment
risk. Capacity for timely repayment of principal and interest is substantial,
such that adverse changes in business, economic or financial conditions are
unlikely to increase investment risk significantly. Obligations for which there
is a very low expectation of investment risk are rated AA by IBCA.
----
Description of Ratings 25
<PAGE>
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INFORMATION ON THE FUNDS (continued)
Capacity for timely repayment of principal and interest is substantial. Adverse
changes in business, economic or financial conditions may increase investment
risk albeit not very significantly.
DESCRIPTION OF MUNICIPAL NOTE
RATINGS ________________________________________________________________________
Moody's highest rating for state and municipal and other short-term notes is
MIG-1 and VMIG-1. Short-term municipal securities rated MIG-1 or VMIG-1 are of
the best quality. They have strong protection from established cash flows of
funds for their servicing or from established and broad-based access to the
market for refinancing or both. Short-term municipal securities rated MIG-2 or
VMIG-2 are of high quality. Margins of protection are ample although not so
large as in the preceding group.
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in 3 years or less will likely receive a note rating.
Notes maturing beyond 3 years will most likely receive a long-term debt rating.
The following criteria will be used in making that assessment.
/ / Amortization schedule (the larger the final maturity relative to other
maturities, the more likely it will be treated as a note).
/ / Source of Payment (the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note).
S&P NOTE RATING SYMBOLS ARE AS FOLLOWS:
SP-1 Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be given a
plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
- ----
26 Description of Ratings
<PAGE>
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SHAREHOLDER SERVICES GUIDE /X/ COREFUND
<TABLE>
<S> <C>
OPENING AN ACCOUNT AND To open a new account, either by mail or by wire, simply complete and return an Account
PURCHASING SHARES Application Form. Your purchase must be equal to or greater than the $1,000,000 minimum initial
investment requirement and the $500 minimum initial investment requirement for Class Y Shares and
Class C shares, respectively, for each Fund. There is a $50 per month minimum initial investment
requirement for Automatic Investment Plans. Shares of the Funds are only offered to residents of
states in which the shares are eligible for purchase. If you need assistance with the Account
Application Form or have any questions about the Funds, please call 1-800-355-CORE.
-------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
PURCHASING NEW ACCOUNT ADDITIONAL INVESTMENTS TO EXISTING
BY MAIL: All purchases made by check should be in U.S. ACCOUNTS
Complete and sign the dollars and made payable to CoreFunds, or in the Mail your check with the return stub from
enclosed Account case of a retirement account, the custodian or your confirmation or statement to:
Application Form. trustee. Third party checks will not be accepted.
Mail the Account Application Form and a check
payable to CoreFunds, Inc. (Fund name) in at least
the minimum initial purchase amount to:
COREFUNDS, INC.,
P.O. BOX 470
WAYNE, PA 19087-0470
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</TABLE>
<TABLE>
<S> <C> <C>
PURCHASING CORESTATES PHIL, for credit to
BY WIRE: Philadelphia, PA COREFUNDS
Money should be wired ABA 031000011, A/C 0169-0541
to: ACCOUNT NUMBER
</TABLE>
<TABLE>
<S> <C>
BEFORE WIRING: The wire instructions must include the investor's account number. An order to purchase shares by
Please contact Federal Funds wire will be deemed to have been received on the business day of the wire, provided
CoreFunds Investor that investors notify CoreFunds Investor Services at 1-800-355-CORE by 12:00 p.m. (Eastern Time)
Services of their intentions to wire money.
(1-800-355-CORE)
-------------------------------------------------------------------------------------------------
PURCHASING You may open an account or purchase additional shares by making an exchange from an existing
BY CoreFunds account. Call CoreFunds Investor Services at 1-800-355-CORE. For further information
EXCHANGE: regarding exchanges, please refer to page 32.
(from a CoreFund
account)
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</TABLE>
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Shareholder Services 27
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES GUIDE (continued)
<TABLE>
<S> <C>
AUTOMATIC INVESTMENT A shareholder or prospective shareholder may arrange for periodic investments in a fund through
PLAN automatic deductions by ACH from a checking account by completing the appropriate section on the
application or the account change form. There is no minimum initial investment amount for AIPs;
however, the minimum pre-authorized investment amount is $50 per month per account. An
Application Form or account change form may be obtained by calling 1-800-355-CORE.
-------------------------------------------------------------------------------------------------
SYSTEMATIC WITHDRAWAL CoreFunds offers a systematic withdrawal plan which may be used by shareholders who wish to
PLAN receive regular distributions from their account. Upon commencement of the SWP, the account must
have a current value of $5,000 or more. Shareholders may elect to receive automatic payments via
check or ACH of $50 or more on a monthly, quarterly, semi-annual, or annual basis. Automatic
withdrawals are normally processed on the 25th day of the applicable month or, if such day is not
a business day, on the previous business day, and are paid promptly thereafter. To arrange a SWP,
complete the appropriate section on the application or the account change form. Either of these
forms may be obtained by calling 1-800-355-CORE. Shareholders should realize that if withdrawals
exceed income dividends, their invested principal in the account will be depleted. Thus,
depending upon the frequency and amounts of the withdrawal payments and/or any fluctuations in
the net asset value per share, their original investment could be exhausted entirely. To
participate in the SWP, shareholders must have their dividends automatically reinvested.
Shareholders may change or cancel the SWP at any time, upon written notice to CoreFunds Investor
Services or the Transfer Agent.
-------------------------------------------------------------------------------------------------
EXECUTION OF ORDERS An order received prior to 12:00 p.m. for any of the Funds, on any business day, and in
accordance with the procedures described below, will be executed on the date of receipt at the
net asset value determined as of 12:00 p.m. on such date, plus any applicable sales charge. An
order received after 12:00 p.m. on any business day will be executed on the next business day of
the Fund. An order is deemed to be received when received by the Transfer Agent and the execution
of purchase orders by the transfer agent will be delayed for the period of time that the order is
in transit from CoreFunds Investor Service to the Transfer Agent. Special procedures may be
established by a fund to expedite the receipt of orders from institutional investors.
Institutional investors purchasing or holding shares on behalf
</TABLE>
<PAGE>
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28 Shareholder Services
- --------------------------------------------------------------------------------
/X/ COREFUND
<TABLE>
<S> <C>
of their customers are responsible for the transmission of purchase and redemption orders (and the
delivery of funds) to a Fund on a timely basis. The Funds strongly recommend that investors of
substantial amounts use Federal Funds to purchase shares. Every shareholder of record will receive a
confirmation of each new share transaction with a Fund, which will show the total number of shares
being held in safekeeping by the Transfer Agent for the account of the shareholder. Shareholders may
rely on these statements in lieu of certificates. Beneficial ownership of shares held of record by
institutional investors on behalf of their customers will be recorded by the institutions and
reflected in the regular account statements provided by them to their customers.
- ------------------------------------------------------------------------------------------------------------------------------
SELLING YOUR You may withdraw any portion of the funds in your account by redeeming shares at any time. You may
SHARES initiate a request by writing or by telephoning. Your redemption proceeds may be sent via mail, wire
or ACH. With respect to shares held by institutional investors on behalf of their customers'
accounts, however, all or part of the shares beneficially owned by a customer must be redeemed in
accordance with instructions and limitations pertaining to their account at the institution.
----------------------------------------------------------------------------------------------------
REDEMPTION A written request for redemption must be received by the Transfer Agent in order to constitute a
BY MAIL: valid tender for redemption by mail. Requests should be mailed to:
COREFUNDS, INC.
P.O. BOX 470
WAYNE, PA 19087-0470
The Transfer Agent may require that the signature on the written request be guaranteed by a
commercial bank or by a member firm of a domestic stock exchange. Signature guarantees will be
required if: (a) the redemption request is an amount in excess of $25,000; (b) redemption proceeds
are to be sent to a name and/or address that differs from the registered name or address of record;
or (c) a transfer of registration is requested. Otherwise, written redemption requests by mail may
be accepted without a signature guarantee.
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</TABLE>
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Shareholder Services 29
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES GUIDE (continued)
<TABLE>
<S> <C>
REDEMPTION Shareholders wishing to make redemptions by telephone must provide the information requested in the
BY Account Application form. Thereafter, telephone redemption requests may be made by calling CoreFunds
TELEPHONE: Investor Services at 1-800-355-CORE. Payment for telephone redemptions will normally be transmitted
on the next business day following receipt of a valid request for redemption. You may have the
proceeds sent to you either by mail or wire.
</TABLE>
<TABLE>
<S> <C> <C>
BY WIRE: Shareholders of record may have their telephone redemption requests paid by a direct
wire to a domestic commercial bank account previously designated by the shareholder
on the Account Application Form. The Transfer Agent may deduct its then-current wire
fee from the proceeds for wire redemptions. As of the date of this Prospectus, such
fee was $10.00 for each wire redemption. There is no minimum for telephone
redemptions paid by wire.
BY MAIL: Redemption proceeds may be paid by a check mailed to the name and address in which
the shareholder's account is registered with a Fund. There is no minimum for
telephone redemptions paid by check.
Shareholders may not close their accounts by telephone.
------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
REDEMPTION The Funds will provide shareholders of record, upon request to CoreFunds Investor Services or the
BY CHECK: Transfer Agent and without charge, with checks drawn on these Funds that will clear through CoreStates
Bank of Delaware, N.A. (the 'Clearing Bank'). Shareholders will be required to sign signature cards
and will be subject to any applicable rules and regulations of the Clearing Bank relating to such
check redemption privileges. Banks, corporations, trusts, and other organizations should contact the
Funds before submitting signature cards, since corporate resolutions or other supporting documents may
be required before the checkwriting privilege may be used.
Checks drawn on the Funds may be made payable to the order of any payee in an amount of $250 or more.
Shareholders should be aware that, as is the case with regular bank checks, certain banks may not
provide cash at the time of deposit, but will wait until they have received payment from the Clearing
Bank. When a check is presented to the Clearing Bank for payment, subject to a Fund's acceptance of
the check, the Clearing Bank, as agent, causes the Fund to redeem, at the net asset value next
determined after such presentation, a sufficient number of full and fractional shares in the
shareholder's account with the Fund to cover the amount of the check. Checks will be returned by the
Clearing Bank if there are insufficient shares to meet the withdrawal amount.
</TABLE>
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30 Shareholder Services
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
<TABLE>
<S> <C>
Shareholders of record wishing to use this method of redemption should check the appropriate box in
the Account Application form, fill out the signature card available from CoreFunds Investor
Services, and mail the complete Form and signature card to CoreFunds, Inc., P.O. Box 470, Wayne, PA
19087-0470. There is no charge for the clearance of any checks, although the Clearing Bank will
impose its customary overdraft fee in connection with returning any checks as to which there are
insufficient shares to meet the withdrawal amount. As of the date of this Prospectus, the overdraft
fee is $20.00.
Cancelled checks will ordinarily not be returned to the shareholder, although a shareholder may
obtain copies of cancelled checks drawn on the Funds by requesting them in writing from CoreFunds
Investor Services.
----------------------------------------------------------------------------------------------------
REDEMPTION You may sell shares of the Funds by making an exchange into another CoreFunds account. For more
BY information, please see below.
EXCHANGE:
----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
IMPORTANT / / Shareholders should be careful that transactions in Fund shares have not caused the value of
REDEMPTION their account to fall below the amount of the intended redemption.
INFORMATION:
/ / Redemption orders for the Funds are executed at the net asset value per share at 12:00 p.m.
that day if received by 12:00 p.m. that day. An order is deemed to be received when received by
the Transfer Agent and the execution of redemption orders by the Transfer Agent will be delayed
for the period of time that the redemption order is in transit from SEI Fund Resources to the
Transfer Agent. Except as stated in the following paragraph, payment to shareholders for
redeemed shares will be made not later than seven business days after receipt by the Transfer
Agent of the request for redemption, absent extraordinary circumstances. However, to the
largest extent possible, the Funds will try to honor requests from shareholders for next-day
payment, if such payment would be consistent with a Fund's need for liquidity and stability.
/ / Shareholders should note that payment for the redemption of shares which were purchased by
check may not be made until a Fund can verify that the payment for such purchase has been, or
will be, collected, which may take up to ten calendar days after the date of purchase. The
Funds intend to pay cash for all shares redeemed, but under abnormal conditions which make
payment in cash unwise, a Fund may make payment wholly or partly in 'readily marketable'
portfolio securities at their then market value equal to the redemption price. In such cases, a
shareholder may incur brokerage costs in converting such securities to cash.
----------------------------------------------------------------------------------------------------------
</TABLE>
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Shareholder Services 31
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES GUIDE (continued)
<TABLE>
<S> <C>
MINIMUM Because of the relatively high cost of handling small investments, the Funds reserve the right to
ACCOUNT redeem, at net asset value, the shares of any shareholder whose account decreases to a value of less
BALANCE than $500. Accordingly, a shareholder making redemptions from a Fund may be subject to such
REQUIREMENT involuntary redemption. A shareholder will not be subject to such involuntary redemption if the
value of the shareholder's account falls below $500 solely because of market action. Before a Fund
redeems such shares and sends the proceeds to the shareholder, the shareholder will be given notice
that the value of the shares in the account is less than the minimum amount and will be allowed
sixty days to make an additional investment in an amount which will increase the value of the
account to at least $500.
- ------------------------------------------------------------------------------------------------------------------------------
EXCHANGING Shares of a Fund held by a shareholder of record may be exchanged for shares in any of CoreFunds'
SHARES other retail portfolios. Shareholders wishing to use this telephone exchange privilege must check
EXCHANGING the appropriate box on the Account Application Form or on the account change form. Exchange requests
BY should be directed to CoreFunds Investor Services at 1-800-355-CORE. Telephone exchange privileges
TELEPHONE: are only available in states where exchanges from one CoreFunds portfolio to another can lawfully be
Call CoreFunds made.
Investor Services Redemption orders may be placed by telephone. Neither the Fund nor the Transfer Agent will be
(1-800-355-CORE) responsible for any loss, liability, cost or expense for acting upon wire instructions or upon
telephone instructions that it reasonably believes to be genuine. The Fund and the Transfer Agent
will each employ reasonable procedures to confirm that instructions communicated by telephone are
genuine. To ensure the authenticity of redemption or exchange instructions received by telephone,
the Transfer Agent examines each shareholder request by verifying the account number and/or tax
identification number at the time such request is made. The Transfer Agent subsequently sends
confirmations of both exchange sales and exchange purchases to the shareholder for verification. If
reasonable procedures are not employed, the Fund and the Transfer Agent may be liable for any losses
due to unauthorized or fraudulent telephone transactions.
</TABLE>
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32 Shareholder Services
<PAGE>
- --------------------------------------------------------------------------------
/X/ COREFUND
<TABLE>
<S> <C>
EXECUTION OF Telephone exchange requests received prior to 12:00 p.m. for a Fund, on any business day will be
EXCHANGE processed on the date of receipt. 'Processing' a telephone exchange request means that shares in the
REQUESTS fund from which the shareholder is making an exchange will be redeemed at the net asset value per
share determined as of 12:00 p.m. for a Fund on the date of receipt. Purchases of shares of the fund
into which the shareholder is making an exchange will be effected on the same business day, at such
other fund's net asset value per share determined as of 4:00 p.m. for an Equity or Fixed Income Fund
(12:00 p.m. for a Money Market Fund) on such business day. Telephone exchange requests received
after 12:00 p.m. for a Fund, will be processed on the next business day in the manner described
above. CoreFunds will not be responsible for the authenticity of redemption or exchange instructions
received by telephone and the investor will bear the risk of loss. To ensure the authenticity of
such instructions, the Transfer Agent examines each shareholder request by verifying the shareholder
account number and/or tax identification number at the time such request is made. The Transfer Agent
subsequently sends confirmations of both exchange sales and exchange purchases to the shareholder
for verification.
----------------------------------------------------------------------------------------------------
IMPORTANT Before you make an exchange, you should consider the following:
EXCHANGE / / Shareholders may not exchange into a series of a portfolio for which they would not have been
INFORMATION initially eligible, and investors who exchange into any portfolio which imposes a sales charge
may be subject to such sales charge, if applicable and not previously paid.
/ / Shareholders should consider the investment objective, policies, and restrictions of the Fund
into which the shareholder is making an exchange, as set forth in the applicable prospectus. A
copy of the prospectus for any of the CoreFunds portfolios may be obtained by calling
1-800-355-CORE.
/ / Any telephone exchange must satisfy the requirements relating to the minimum initial investment
amounts of the Fund involved.
/ / The Company reserves the right to reject any telephone exchange request and to modify or
terminate the exchange privilege at any time, upon sixty days' written notice to Shareholders.
</TABLE>
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Shareholder Services 33
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES GUIDE (continued)
<TABLE>
<S> <C>
/ / Telephone exchanges may be subject to limitations as to amount or frequency, and to other
restrictions that may be established from time to time to ensure that such exchanges do not
disadvantage any Fund or its shareholders. There are no such limitations or restrictions in
effect as of the date hereof. Shareholders may obtain the terms of any such limitations or
restrictions, which may be revised at any time, from SEI Fund Resources.
----------------------------------------------------------------------------------------------------
TAXES For federal income tax purposes, an exchange between Funds is a taxable event and, accordingly, a
capital gain or loss may be realized. Before making a telephone exchange request, shareholders
should consult a tax or other financial adviser to determine whether the redemption of shares of one
Fund or investment in shares of another Fund would be appropriate.
----------------------------------------------------------------------------------------------------
</TABLE>
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34 Shareholder Services
<PAGE>
NOTES
<PAGE>
/X/
COREFUND(R)
COREFUNDS, INC.
/X/
DIRECTORS
Emil J. Mikity, Chairman
George H. Strong
Erin Anderson
Cheryl H. Wade
Thomas J. Taylor
OFFICERS
David G. Lee, President
James W. Jennings, Secretary
INVESTMENT ADVISER
CoreStates Investment Advisers, Inc.
Philadelphia, PA 19101
ADMINISTRATOR
SEI Fund Resources
Wayne, PA 19087
DISTRIBUTOR
SEI Financial Services Company
Wayne, PA 19087
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
Philadelphia, PA 19103
AUDITORS
Ernst & Young LLP
Philadelphia, PA 19103
Investment Adviser
[LOGO]
CORESTATES
CORESTATES
INVESTMENT ADVISERS
For current performance, purchase, redemption and
other information, call 1-800-355-CORE (2673)
COR-F-051-02
Class Y and Class C Shares
Prospectus
November 1, 1996
/X/
Elite Cash Reserve
Elite Government Reserve
Elite Treasury Reserve
Elite Tax-Free Reserve
<PAGE>
COREFUNDS, INC.
Statement of Additional Information
Dated November 1, 1996
TABLE OF CONTENTS
THE COMPANY................................................................. 2
ADDITIONAL INVESTMENT POLICIES.............................................. 3
ADDITIONAL INVESTMENT RESTRICTIONS.......................................... 23
TEMPORARY INVESTMENTS....................................................... 28
SPECIAL CONSIDERATIONS...................................................... 29
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION.............................. 30
NET ASSET VALUE............................................................. 31
DIVIDENDS................................................................... 32
TOTAL RETURN................................................................ 33
YIELDS...................................................................... 36
ADDITIONAL INFORMATION CONCERNING TAXES..................................... 39
DESCRIPTION OF SHARES....................................................... 42
DIRECTORS AND OFFICERS...................................................... 44
PRINCIPAL HOLDERS OF SECURITIES............................................. 46
INVESTMENT ADVISER.......................................................... 58
SUB-ADVISERS................................................................ 60
PORTFOLIO TRANSACTIONS...................................................... 62
ADMINISTRATOR............................................................... 64
DISTRIBUTOR................................................................. 65
CUSTODIAN AND TRANSFER AGENT................................................ 67
EXPENSES.................................................................... 67
LEGAL COUNSEL............................................................... 68
MISCELLANEOUS............................................................... 68
APPENDIX.................................................................... 69
FINANCIAL STATEMENTS........................................................ 72
This Statement of Additional Information is meant to be read in
conjunction with the applicable Prospectuses for the Portfolios offered by
CoreFunds, Inc. dated November 1, 1996 and is incorporated by reference in its
entirety into those Prospectuses. Because this Statement of Additional
Information is not itself a Prospectus, no investment in shares of any Portfolio
should be made solely upon the information contained herein. Copies of the
Prospectuses for the Portfolios may be obtained by writing CoreFunds, Inc. at
680 East Swedesford Road, Wayne, Pennsylvania 19087, or by telephoning
1-800-355-CORE.
<PAGE>
THE COMPANY
CoreFunds, Inc. (the "Company") is an open-end management investment
company presently offering shares in twenty diversified and non-diversified
portfolios (the "Fund" or "Funds"). The Company is authorized to offer separate
series of shares of beneficial interest (the "Shares") of each Fund.
Shareholders may purchase Shares through three separate classes, Class Y, Class
A and Class C, which provide for variations in distribution costs, transfer
agent fees, voting rights, and dividends. Except for these differences between
Class Y, Class A and Class C Shares, each Share of each Fund represents an equal
proportionate interest in that Fund. See "Description of Shares."
The Funds
The information disclosed herein relates to all of the Funds, and all
of the Classes of Shares of the Funds, unless otherwise noted. Sections that are
particular to a certain Fund will be so referenced, or the Funds may be grouped
according to types of investment, as illustrated below.
Equity Funds: Taxable Money Market Funds:
- Growth Equity Fund - Cash Reserve
- Core Equity Fund - Treasury Reserve
- Equity Index Fund - Elite Cash Reserve
- International Growth Fund - Elite Government Reserve*
- Balanced Fund - Elite Treasury Reserve
- Special Equity Fund
Fixed Income Funds: Tax-Exempt Money Market Funds:
- Short-Intermediate Bond Fund - Tax-Free Reserve
- Bond Fund - Elite Tax-Free Reserve
- Short Term Income Fund
- Government Income Fund
- Intermediate Municipal Bond Fund
- Pennsylvania Municipal Bond Fund
- New Jersey Municipal Bond Fund
- Global Bond Fund
- ----------
* This Fund has not yet commenced operations
Sale of Shares
Class Y Shares in the Funds are sold primarily to various types of
institutional investors, which may include CoreStates Bank, N.A. and its
affiliates and corresponding banks, for the investment of their own funds or
funds for which they serve in a fiduciary, agency, or custodial capacity.
Class A and Class C Shares in the Funds are offered to the general
public as well as to various types of institutional investors, which may include
CoreStates Bank, N.A. and its affiliates and corresponding banks, for the
investment of their own funds or funds for which they serve in a fiduciary,
agency, or custodial capacity. Investors may also include shareholders of other
investment companies which are advised by a Fund's adviser or sub-adviser, and
whose assets a Fund acquires in a tax-free reorganization, who propose to become
shareholders of the Fund as a result of such reorganization.
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ADDITIONAL INVESTMENT POLICIES
In General
The following policies supplement the investment objectives and
policies described in the Prospectuses for the Funds set forth below.
- Tax-Exempt Money Market Funds -
- Intermediate Municipal Bond Fund -
- Pennsylvania Municipal Bond Fund -
- New Jersey Municipal Bond Fund -
Municipal Securities
Municipal securities include debt obligations issued by or on behalf of
governmental entities or public authorities to obtain funds for various
purposes, including the construction of a wide range of public and privately-
operated facilities; the refunding of outstanding obligations; the payment of
general operating expenses; and the extension of loans to public institutions
and facilities.
There are, of course, variations in the quality of municipal securities
both within a particular classification and between classifications, and the
yields on municipal securities depend upon a variety of factors, including
general money market conditions, the financial condition of the issuer, general
conditions of the municipal bond market, the size of a particular offering, the
maturity of the obligation, and the rating of the issue. The ratings of Moody's
Investors Service, Inc. ("Moody's") and Standard & Poor's Corporation ("S&P")
described in the Prospectuses and the "Appendix" to this Statement of Additional
Information represent their opinions as to the quality of municipal securities.
It should be emphasized, however, that ratings are general and are not absolute
standards of quality, and municipal securities with the same maturity, interest
rate and rating may have different yields, while municipal securities of the
same maturity and interest rate with different ratings may have the same yield.
Subsequent to purchase by a Fund, an issue of municipal securities may cease to
be rated or its rating may be reduced below the minimum rating required for
purchase by the Fund. As Investment Adviser, CoreStates Investment Advisers,
Inc. ("CoreStates Advisers") will consider such an event in determining whether
a Fund should continue to hold the obligation.
The payment of principal and interest on most municipal securities
purchased by a Fund will depend upon the ability of the issuers to meet their
obligations. An issuer's obligations to make payments on its municipal
securities are subject to the provisions of bankruptcy, insolvency and other
laws affecting the rights and remedies of creditors, such as the Federal
Bankruptcy Code, and laws, if any, which may be enacted by federal or state
legislatures extending the time for payment of principal or interest, or both,
or imposing other constraints upon enforcement of such obligations or upon the
ability of municipalities to levy taxes. The power or ability of an issuer to
meet its obligations for the payment of interest on, and principal of, its
municipal securities may be materially adversely affected by litigation or other
conditions. For purposes of the investment limitations described in this
Statement of Additional Information and the Prospectuses, the District of
Columbia, each state, each of their political subdivisions, agencies,
instrumentalities and authorities and each multi-state agency of which a state
is a member is considered to be an "issuer." Further, the non-governmental user
of facilities financed by industrial development bonds is considered to be an
"issuer." With respect to those municipal securities that are supported by a
bank guarantee or other credit facility, the bank or other institution (or
governmental agency) providing the guarantee or credit facility may also be
considered to be an "issuer" in connection with the guarantee or facility.
Among other types of municipal securities, the Funds may purchase
short-term general obligation notes, tax anticipation notes, bond anticipation
notes, revenue anticipation notes, tax-exempt commercial paper, construction
loan notes and other forms of short-term loans. Such instruments are issued with
a short-term maturity in anticipation of the
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receipt of tax funds, the proceeds of bond placements, or other revenues. In
addition, these Funds may invest in other types of tax-exempt instruments such
as municipal bonds, industrial development bonds and pollution control bonds,
provided (for the Tax-Exempt Money Market Funds) they have remaining maturities
of 397 days or less at the time of purchase.
Special Risk Factors - Pennsylvania Municipal Securities
The following information as to certain Pennsylvania risk factors has
been provided in view of the policy of concentrating in Pennsylvania Municipal
Securities by the Pennsylvania Municipal Bond Fund. This information constitutes
only a brief summary, does not purport to be a complete description of
Pennsylvania risk factors and is principally drawn from official statements
relating to securities offerings of the Commonwealth of Pennsylvania that have
come to the attention of the Pennsylvania Municipal Bond Fund and were available
as of the date of this Statement of Additional Information. The Fund has not
independently verified any of this information but is not aware of any fact
which would render such information inaccurate.
General. Pennsylvania has historically been dependent on heavy industry
although recent declines in the coal, steel and railroad industries have led to
diversification of the Commonwealth's economy. Recent sources of economic growth
in Pennsylvania are in the service sector, including trade, medical and health
services, education and financial institutions. Agriculture continues to be an
important component of the Commonwealth's economic structure, with nearly
one-third of the Commonwealth's total land area devoted to cropland, pasture and
farm woodlands.
In 1995, the population of Pennsylvania was 12.07 million people.
According to the U.S. Bureau of the Census, Pennsylvania experienced a slight
increase from the 1986 estimate of 11.78 million. Pennsylvania has a high
proportion of persons 65 or older. The Commonwealth is highly urbanized, with
79% of the 1990 census population residing in metropolitan statistical areas.
The cities of Philadelphia and Pittsburgh, the Commonwealth's largest
metropolitan statistical areas, together comprise approximately 44% of the
Commonwealth's total population.
Pennsylvania's average annual unemployment rate remained below the
national average between 1986 and 1990. Slower economic growth caused the rate
to rise to 6.9% in 1991 and 7.5% in 1992. The resumption of faster economic
growth resulted in a decrease in the Commonwealth's unemployment rate to 7.0
percent in 1993. Seasonally adjusted data for March 1996, the most recent month
for which data is available, shows an unemployment rate of 5.6%, the same rate
as that for the United States.
Financial Accounting. Pennsylvania utilizes the fund method of
accounting and over 150 funds have been established for the purpose of recording
receipts and disbursements, of which the General Fund is the largest. Most of
the operating and administrative expenses are payable from the General Fund. The
Motor License Fund is a special revenue fund that receives tax and fee revenues
relating to motor fuels and vehicles (except one-half cent per gallon of the
liquid fuels tax which is deposited in the Liquid Fuels Tax Fund for
distribution to local municipalities) and all such revenues are required to be
used for highway purposes. Other special revenue funds have been established to
receive specified revenues appropriated to specific departments, boards and/or
commissions. Such funds include the Game, Fish, Boat, Banking Department, Milk
Marketing, State Farm Products Show, State Racing and State Lottery Funds. The
General Fund, all special revenue funds, the Debt Service Funds and the Capital
Project Funds combine to form the Governmental Fund Types.
Enterprise funds are maintained for departments or programs operated
like private enterprises. The largest of the Enterprise funds is the State
Stores Fund, which is used for the receipts and disbursements of the
Commonwealth's liquor store system. Sale and distribution of all liquor within
Pennsylvania is a government enterprise.
Financial information for the funds is maintained on a budgetary basis
of accounting ("Budgetary"). Since 1984, the Commonwealth has also prepared
financial statements in accordance with generally accepted accounting principles
("GAAP"). The GAAP statements have been audited jointly by the Auditor General
of the Commonwealth
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and an independent public accounting firm. The Budgetary information is adjusted
at fiscal year end to reflect appropriate accruals for financial reporting in
conformity with GAAP. The Commonwealth maintains a June 30th fiscal year end.
The Constitution of Pennsylvania provides that operating budget
appropriations may not exceed the actual and estimated revenues and available
surplus in the fiscal year for which funds are appropriated. Annual budgets are
enacted for the General Fund and for certain special revenue funds which
represent the majority of expenditures of the Commonwealth.
Revenues and Expenditures. Pennsylvania's Governmental Fund Types
receive over 57% of their revenues from taxes levied by the Commonwealth.
Interest earnings, licenses and fees, lottery ticket sales, liquor store
profits, miscellaneous revenues, augmentations and federal government grants
supply the balance of the receipts to these funds. Revenues not required to be
deposited in another fund are deposited in the General Fund. The major tax
sources for the General Fund are the 6% sales and use tax (34.1% of General Fund
revenues in fiscal 1995), the 2.8% personal income tax (31.3% of General Fund
revenues in fiscal 1995) and the 9.99% corporate net income tax (11.7% of
General Fund revenues in fiscal 1995). Tax and fee proceeds relating to motor
fuels and vehicles are constitutionally dedicated to highway purposes and are
deposited into the Motor License Fund. The major sources of revenue for the
Motor License Fund include the liquid fuels tax, the oil company franchise tax,
aviation taxes and revenues from fees levied on heavy trucks. These revenues are
restricted to the repair and construction of highway bridges and aviation
programs. Lottery ticket sales revenues are deposited in the State Lottery Fund
and are reserved by statute for programs to benefit senior citizens.
Pennsylvania's major expenditures include funding for education ($6.7
billion of fiscal 1995 expenditures, the projected $6.9 billion of the fiscal
1996 budget and the proposed almost $7.0 billion of the fiscal 1997 budget) and
public health and human services ($12.4 billion of fiscal 1995 expenditures, the
projected $13.1 billion of the fiscal 1996 budget and the proposed decreases of
the fiscal 1997 $12.9 billion budget).
Governmental Fund Types: Financial Condition/Results of Operations
(GAAP Basis). Reduced revenue growth and increased expenses contributed to
negative unreserved-undesignated fund balances of the Governmental Fund Types at
the end of the 1990 and 1991 fiscal years, largely due to operating deficits in
the General Fund and State Lottery Fund during those years. Actions taken during
fiscal 1992 to bring the General Fund back into balance, including tax increases
and expenditure restraints, resulted in a $1.1 billion reduction to the
unreserved-undesignated fund deficit for combined Governmental Fund Types and a
return to a positive fund balance. The fund balance for the governmental fund
types, as restated, has increased during the 1993, 1994 and 1995 fiscal years.
At June 30, 1995, the fund balance totaled $1,927.6 million including an
unreserved-undesignated fund balance of $104.8 million.
General Fund: Financial Condition/Results of Operations.
Five Year Overview (GAAP Basis). For the five year period fiscal 1991
through fiscal 1995, total revenues and other sources rose at a 9.1 percent
average annual rate while total expenditures and other uses grew by 7.4 percent
annually. Over two-thirds of the increase in total revenues and other sources
during this period occurred during fiscal 1992 when a $2.7 billion tax increase
was enacted to address a fiscal 1991 budget deficit and to fund increased
expenditures for fiscal 1992. For the four year period fiscal 1992 through
fiscal 1995, total revenues and other sources increased at an annual average of
3.3 percent, less than one-half the rate of increase for the five year period
beginning with fiscal 1991. This slower rate of growth was due, in part, to tax
rate reductions and other tax law revisions that restrained the growth of tax
receipts for fiscal years 1993, 1994 and 1995.
Expenditures and other uses followed a pattern similar to that for
revenues, although with smaller growth rates, during the fiscal 1991 through
fiscal 1995 period. Program areas having the largest increase in costs for the
fiscal 1991 to fiscal 1995 period were for protection of persons and property,
due to an expansion of state prisons, and for public health and welfare, due to
rising caseloads, program utilization and increased prices. Recently, efforts to
restrain the
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rapid expansion of public health and welfare program costs have resulted in
expenditure increases at or below the total rate of increase for total
expenditures in each fiscal year. For the period fiscal 1992 through fiscal
1995, public health and welfare costs increased by an average annual rate of 3.5
percent, well below the 5.2 percent average for total expenditures and other
uses during the same period.
During fiscal 1992 enactment of over $2.7 billion in General Fund tax
increases and implementation of expenditure control initiatives have helped the
General Fund balance return to a surplus at June 30, 1992, of $87.5 million. The
actions taken to increase revenues and restrain expenditure growth were
necessary to offset the effects on General Fund finances of a period of slow
economic growth including a national economic recession. The recession caused
tax revenues during fiscal 1991 to be below the amount received during fiscal
1990 while spending, particularly for public health and welfare programs to
support needy individuals, increased by over 21%. Public health and welfare
expenditures continued their rapid increase with a 23.9% increase during fiscal
1992 as caseloads and costs continued upward. Some of these increased costs were
met through the use of pooled financing techniques that use private
contributions and intergovernmental transfers to substitute for state funds
match for federal governmental grants-in-aid. Debt service expenditures
escalated as the amount of tax anticipation note borrowing increased in response
to the fiscal pressures brought about by slow economic growth and the recession.
Fiscal 1992 Financial Results (GAAP Basis). During fiscal 1992, the
General Fund recorded a $1.1 billion operating surplus. This operating surplus
was achieved through legislated tax rate increases and tax base broadening
measures enacted in August 1991, and by controlling expenditures through
numerous cost reduction measures implemented during the fiscal year. As a result
of the operating surplus, the General Fund balance increased to $87.5 million at
June 30, 1992.
Fiscal 1993 Financial Results (GAAP Basis). The fund balance of the
General Fund increased by $611.4 million during the fiscal year, led by an
increase in the unreserved balance of $576.8 million over the prior fiscal year
balance. At June 30, 1993, the fund balance totaled $698.9 million and the
unreserved-undesignated balance totaled $64.4 million.
Fiscal 1994 Budget (GAAP Basis). The fund balance of the General Fund
increased by $194.0 million due largely to an increased reserve for encumbrances
and an increase in other designated funds. The fund balance for June 30, 1994,
was restated for the fiscal 1995 financial statements. That restatement totaled
$116.7 million to recognize previously unreported revenues and expenditures for
fiscal 1994. The fund balance for June 30, 1994, as restated, was $776.3 million
and the unreserved-undesignated balance totaled $79.1 million. A continuing
recovery of the Commonwealth's financial condition from the effects of the
national economic recession of 1990 and 1991 is demonstrated by this increase in
the balance and a return to a positive unreserved-undesignated balance. For the
third consecutive fiscal year the increase in the unreserved-undesignated
balance exceeded the increase recorded in the budgetary basis unappropriated
surplus during the fiscal year.
Fiscal 1995 Budget (GAAP Basis). Revenues and other sources totaled
$23,771.6 million, an increase of $1,135.0 million (0.5 percent) over the prior
fiscal year. The largest increase was $817.9 million in taxes which represents a
5.6 percent increase over taxes in the prior fiscal year. Expenditures and other
uses rose by $1,364.1 million to $23,821.4 million, an increase over the prior
fiscal year of 6.1 percent. Consequently, an operating deficit of $49.8 million
was recorded for the fiscal year and led to a decline in fund balance to $688.3
million at June 30, 1995. Two items predominately contributed to the fund
balance decline. First, a more comprehensive procedure was used for fiscal 1995
to compute the liabilities for certain public welfare programs leading to an
increase for the year-end accruals. Second, a change to the methodology to
calculate the year-end accrual for corporate tax payables increased the tax
refund liability by $72 million for the 1995 fiscal year when compared to the
previous fiscal year.
Proposed Fiscal 1996 Budget (Budgetary Basis). The approved fiscal 1996
budget provides for $16,165.7 million inappropriations from commonwealth funds,
an increase of 2.7 percent over appropriations, including supplemental
appropriations, for fiscal 1995. The budget includes a reform of the
state-funded public assistance
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program that added certain categories of eligibility to the program but also
limited the availability of such assistance to other eligible persons. Education
subsidies to local school districts were increased by $132.2 million to continue
the increased funding for the poorest school districts in the state.
The fiscal 1996 budget is based on anticipated commonwealth revenues,
net of enacted tax changes, of $16,268.7 million, an increase over actual fiscal
1995 commonwealth revenues of 0.3 percent. Excluding the estimated effects of
the tax changes enacted in 1994 and 1995, commonwealth revenues for fiscal 1996
are estimated to increase by approximately 2.9 percent. The fiscal 1996 revenue
estimate is base on a forecast of the national economy for gross domestic
product growth to slow from 4.1 percent in 1994 to an average annual rate for
1995 of 2.4 percent and then to 1.3 percent in 1996.
Tax changes enacted with the fiscal 1996 budget totaled a net reduction
of $282.9 million, representing an approximate 1.7 percent of base revenues. The
largest dollar value changes were in the corporate net income tax where the
scheduled 1997 reduction of the tax rate to 9.99 percent was accelerated to the
1995 tax year; a double-weighting was provided for the sales factor of the
corporate net income apportionment calculation; and the maximum annual allowance
for the net operating loss deduction was increased from $500 thousand to $1
million. The fiscal 1996 cost of these corporate income tax changes is estimated
to be $210.8 million representing approximately 75 percent of the fiscal year's
tax reduction. Other major components of the tax reduction include a $12.1
million decrease for the capital stock and franchise tax from an increase in the
basic exemption; $24.7 million from the repeal of the tax on annuities; and
$27.9 million from an acceleration of the scheduled phase-out of the inheritance
tax on transfers of certain property to a surviving spouse. A 90 day amnesty
program was also authorized in the tax bill. The amnesty program was available
to taxpayers from October 1995 through January 1996. Tax and interest revenues
received from the tax amnesty program after payment of administration costs were
credited to the appropriate fund. Receipts credited to the General Fund in
excess of $67 million, plus any shortfall in delinquent tax collections below
those in fiscal 1995, are to be deposited into a restricted account in the
General Fund for later distribution.
Increases in authorized spending for fiscal 1996 emphasize education.
Appropriations for the basic subsidy for public schools were increased $143
million representing a 4.4 percent increase. This increase reversed a four-year
trend of a declining budget share for education. A limited program to permit
certain residents to choose the school district or private school to provide
their children's education was funded in the budget, but enabling legislation
for the program has yet to be enacted. The budget also contemplates several
changes to certain public welfare programs. The enacted budget also included
most of the Governor's proposed consolidation and elimination of several
organizations and or appropriations. The consolidated programs were absorbed
within existing organizations. Savings of $5.2 million are anticipated to result
from these consolidations and eliminations.
Revised estimates for the fiscal 1996 budget were included in the
Governor's February 1996 submission of his fiscal 1997 budget proposal.
Supplemental appropriations funding needs were recommended totaling $54.2
million, representing 0.3 percent of approved appropriations for fiscal 1996.
The majority of the supplemental appropriations are for the Department of
Corrections to meet the additional operational costs arising from a larger
inmate population than budgeted, and for the Department of Education to meet
local school subsidy costs which were underestimated in the adopted budget. All
anticipated supplemental appropriation needs for the Department of Public
Welfare are expected to be met from a re-allocation of appropriation authority
within the Department. Funding for the requested supplemental appropriations
will be provided by appropriation lapses anticipated during the fiscal year.
Appropriation lapses totaling $50 million from prior fiscal years'
appropriations and $90 million from current fiscal year appropriations are
expected. The $140 million total appropriation lapses estimated for fiscal 1996
compares to actual appropriation lapses totaling $205 million and $194 million
during fiscal 1995 and fiscal 1994 respectively. The General Assembly has not
yet approved the requested supplemental appropriations.
Commonwealth revenues for fiscal 1996 are anticipated to be $2.5
million (less than 0.1 percent) over the official estimate of revenues for the
fiscal year. Within the revised estimate, receipts from the corporate net income
tax
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and interest earnings are anticipated to exceed the official estimate while
receipts from the sales and use tax, the personal income tax and the gross
receipts tax are anticipated to fall below their official estimate levels.
Fiscal 1997 Proposed Budget: In February 1996, the Governor presented
his proposed fiscal 1997 budget to the General Assembly. Proposed appropriations
from General Fund commonwealth revenues totals $16,189.9 million, a reduction
from the estimated $16,219.9 million (including proposed supplemental
appropriations) for fiscal 1996. The proposed reductions represents a decline of
approximately 0.2 percent in appropriations from the prior fiscal year. Revenue
receipts are estimated to increase by $403.9 million, or 2.5 percent, over
anticipated receipts for fiscal 1996. The anticipated increased revenues,
together with the projected $140 million of appropriation lapses during fiscal
1996 and the proposed draw-down of approximately $95 million of surplus provide
the funding sources for the proposed budget. The proposed drawdown of the fiscal
1996 unappropriated surplus produces a projected 1997 fiscal year end surplus of
under $5 million, without any consideration of possible appropriation lapses for
fiscal 1997.
The decline in appropriation authority over the prior fiscal year in
the proposed budget relies on several program changes. The largest changes
proposed are $329 million of cost containment efforts in public health and
welfare programs. The largest savings are generated by proposed changes in
eligibility criteria. Savings of $249 million are projected from the elimination
of medical assistance benefits for able-bodied adult without children and $40
million from tightened standards of employability for those collecting benefits.
Other proposed changes, including changes contained in proposed federal welfare
reform measures, provide an additional $39 million of budgetary savings. Program
reductions are also planned for the residential portion of the mental
health/mental retardation program that could involve a limited number of staff
cuts at state institutions. The budget also relies on certain provisions of
proposed federal welfare reforms. In particular, an increase in the proportion
of federal funding for medical assistance is assumed which is anticipated to
provide $261.8 million of additional federal funds and a commensurate reduction
in required state funds. Other significant cost restraints include reductions to
appropriations for the state-aided colleges and universities and no increases
for the state-related colleges and universities. Funds for basic education
programs to local school districts are proposed to increase slightly. The
largest increase, $33.3 million, is proposed for an initiative to improve the
use of technology in learning. A restructuring of the economic development
programs and incentives of the Commonwealth are also proposed to combine and
improve the delivery of such programs. A proposed securitization of current
loans held by the Sunny Day Fund is budgeted to provide a portion of the initial
capitalization for the realigned programs. The current trend of escalating costs
of the corrections program continues in this budget. An amount of $80.3 million
is included to meet the increased costs of the rising prison population.
The proposed fiscal 1997 budget includes tax reductions totaling $60.2
million. Included in the proposed reductions are a 0.25 mill reduction to the
tax rate for the capital stock and franchise taxes, an exemption of certain
computer services from the sales and use tax, and a $1,000 per job tax credit
for newly created jobs. All require legislative enactment.
The General Assembly is considering the Governor's proposed budget in
committee deliberations and floor action on implementing legislation. The
various legislative bills required to implement the proposed budget have begun
to move through the legislative process. However, legislation enacting medical
assistance program changes estimated in the proposed budget to produce
approximately $249 million in savings was approved by the Senate but rejected by
the House of Representatives. Delay in the enactment of the proposed changes
beyond March 1996 will impede timely implementation of the proposed changes and,
in the absence of other budgetary measures, result in higher spending than
anticipated in the proposed fiscal 1997 budget. Appropriations committees of the
General Assembly are considering 1997 fiscal year budget appropriations, and
upon committee approval of appropriation bills, will be considered by each
house. The General Assembly may change, eliminate or add amounts and items to
the proposed budget submitted by the Governor and there can be no assurance that
the budget, as proposed by the Governor will be enacted into law.
Commonwealth Debt. Current constitutional provisions permit
Pennsylvania to issue the following types of debt: (i) debt to suppress
insurrection or rehabilitate areas affected by disaster, (ii) electorate
approved debt, (iii) debt for capital projects subject to an aggregate debt
limit of 1.75 times the annual average tax revenues of the preceding five
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fiscal years, (iv) tax anticipation notes payable in the fiscal year of
issuance. All debt except tax anticipation notes must be amortized in
substantial and regular amounts.
General obligation debt totaled $5,045.4 million at June 30, 1995, a
decrease of $30.4 million from June 30, 1994. Over the 10-year period ended June
30, 1995, total outstanding general obligation debt increased at an annual rate
of 1.1% and for the five years ended June 30, 1994, at an annual rate of 1.7%.
All outstanding general obligation bonds of the Commonwealth are rated AA- by
Standard and Poor's Corporation, A1 by Moody's Investors Service, and AA- by
Fitch Investors Service. The ratings reflect only the views of the rating
agencies.
Pennsylvania engages in short-term borrowing to fund expenses within a
fiscal year through the sale of tax anticipation notes which must mature within
the fiscal year of issuance. The principal amount issued, when added to that
already outstanding, may not exceed in aggregate 20% of the revenues estimated
to accrue to the appropriate fund in the fiscal year. The Commonwealth is not
permitted to fund deficits between fiscal years with any form of debt. All
year-end deficit balances must be funded within the succeeding fiscal year's
budget. Pennsylvania issued a total of $500.0 million of tax anticipation notes
for the account of the General Fund in fiscal 1996, all of which matured on June
30, 1996, and will be paid from fiscal 1996 General Fund receipts.
Pending the issuance of bonds, Pennsylvania may issue bond anticipation
notes subject to the applicable statutory and constitutional limitations
generally imposed on bonds. The term of such borrowings may not exceed three
years. Currently, there are no bond anticipation notes outstanding.
State-related Obligations. Certain state-created agencies have
statutory authorization to incur debt for which no legislation providing for
state appropriations to pay debt service thereon is required. The debt of these
agencies is supported by assets of, or revenues derived from, the various
projects financed and the debt of such agencies is not an obligation of
Pennsylvania although some of the agencies are indirectly dependent on
Commonwealth appropriations. In addition, Pennsylvania may choose to take action
to financially assist these organizations. The following agencies had debt
currently outstanding as of December 31, 1995: Delaware River Joint Toll Bridge
Commission ($55.1 million), Delaware River Port Authority ($185.5 million),
Pennsylvania Economic Development Financing Authority ($1,050.8 million),
Pennsylvania Energy Development Authority ($121.0 million), Pennsylvania Higher
Education Assistance Agency ($1,408.8 million), Pennsylvania Higher Educational
Facilities Authority ($2,115.1 million), Pennsylvania Industrial Development
Authority ($344.8 million), Pennsylvania Infrastructure Investment Authority
($213.1 million), Pennsylvania Turnpike Commission ($1,228.7 million),
Philadelphia Regional Port Authority ($62.6 million) and the State Public School
Building Authority ($316.2 million). In addition, the Governor is statutorily
required to place in the budget of the Commonwealth an amount sufficient to make
up any deficiency in the capital reserve fund created for, or to avoid default
on, bonds issued by the Pennsylvania Housing Finance Agency ($2,164.8 million of
revenue bonds outstanding as of December 31, 1995), and an amount of funds
sufficient to alleviate any deficiency that may arise in the debt service
reserve fund for bonds issued by The Hospitals and Higher Education Facilities
Authority of Philadelphia ($1.49 million of the loan principal was outstanding
as of December 31, 1995). The budget as finally adopted by the legislation may
or may not include the amounts requested by the Governor.
Litigation. Certain litigation is pending against the Commonwealth that
could adversely affect the ability of the Commonwealth to pay debt service on
its obligations, including suits relating to the following matters: (a)
approximately 3,500 suits are pending against the Commonwealth pursuant to the
General Assembly's 1978 approval of a limited waiver of sovereign immunity which
permits recovery of damages for any loss up to $250,000 per person and
$1,000,000 per accident ($32.0 million appropriated from the Motor License Fund
in fiscal 1994 has been decreased to $27.0 million for fiscal 1995; (b) the ACLU
filed suit in April 1990 in federal court demanding additional funding for child
welfare services (no available estimates of potential liability), which the
Commonwealth then sought dismissal based on, among other things, the settlement
in a similar Commonwealth court action that provided for more funding in fiscal
1991 as well as a commitment to pay to counties $30.0 million over 5 years (on
April 12, 1993, the court dismissed all claims except for the constitutional
claims of some of the plaintiffs and two Americans with Disabilities Act
claims). The district court has since denied the ACLU's motion for class
certification. The parties have stipulated
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to a judgment against the plaintiffs in order for plaintiffs to appeal the
denial of class certification to the Third Circuit. In December of 1994, the
third Circuit reversed Judge Kelly's ruling, finding that he erred in refusing
to certify the class. Consistent with the Third Circuit's ruling, the District
Court recently certified the class, and the parties have resumed discovery; (c)
in 1987, the Supreme Court of Pennsylvania held that the statutory scheme for
county funding of the judicial system was in conflict with the Pennsylvania
Constitution but stayed judgment pending enactment by the legislature of funding
consistent with the opinion (the legislature has yet to consider legislation
implementing the judgment); (d) several banks have filed suit against the
Commonwealth contesting the constitutionality of a 1989 law imposing a bank
shares tax on banking institutions. Pursuant to a Settlement Agreement dated as
of April 2, 1995, the Commonwealth agreed to enter a credit in favor of Fidelity
in the amount of $4,100,000 in settlement of the constitutional and
non-constitutional issues including interest. Pursuant to a separate Settlement
Agreement dated as of April 21, 1995, the Commonwealth settled with the
intervening banks, referred to as "New Banks." As part of the settlement, the
Commonwealth agreed neither to assesses nor attempt to recoup any new bank tax
credits which had been granted or taken by any of the intervening banks; (e) in
November 1990, the ACLU brought a class action suit on behalf of the inmates in
thirteen Commonwealth correctional institutions challenging confinement
conditions and including a variety of other allegations. On August 1, 1994, the
parties submitted a proposed settlement agreement to the Court for its review.
The Court held hearings on the proposed Settlement Agreement in December 1994.
The Court approved the Settlement Agreement with a January 17, 1995 Memorandum.
On February 3, 1995, the Commonwealth paid $1.3 million in attorney's fees to
the plaintiffs' attorneys in accordance with the Agreement. The remaining
$100,000 in attorneys' fees will be paid upon dismissal of the preliminary
injunction relating to certain health issues. The parties are currently
complying with monitoring provisions outlined in the Agreement. The monitoring
phase will expire on January 6, 1998; (f) in 1991, a consortium of public
interest law firms filed a class action suit alleging that the Commonwealth had
failed to comply with the 1989 federal mandate with respect to certain services
for Medicaid-eligible children under the age of 21. In July 1994, the Court
denied the plaintiffs' request to proceed as a class action and dismissed five
of the eighteen plaintiff organizations from the case. The parties have reached
a tentative settlement agreement which they have submitted to the court for
approval; (g) litigation has been filed in both state and federal court by an
association of rural and small schools and several individual school districts
and parents challenging the constitutionality of the Commonwealth's system for
funding local school districts -- the federal case has been stayed pending
resolution of the state case and the state case is in the pre-trial discovery
stage. The trial has not yet been scheduled. Following a status conference among
counsel, Judge Pellegrini issued an Order, dated May 30, 1996, to consider,
inter alia, the report of the Governor's Commission on Public School Finance and
the course of future proceedings including trial; (h) The Pennsylvania Medical
Society sued the Commonwealth for payment of the full Medicare co-pay and
deductible for outpatient services to medical assistance clients who are also
eligible for Medicare. The Commonwealth received a favorable decision in the
United Stated District Court but the Pennsylvania Medical Society appealed the
decision and won a reversal in the United States Third Circuit Court. After
similarly unfavorable decisions by every other appellate court that addressed
the issue, the Commonwealth implemented a new payment system effective January
23, 1995. Preliminary estimated costs to the Commonwealth are approximately $50
million per year; and (i) On November 11, 1993, the Commonwealth of
Pennsylvania, Department of Transportation and Envirotest/Synterra Partners
("Envirotest"), a partnership, entered into a "Contract for Centralized
Emissions Inspection Facilities." Thereafter, Envirotest acquired certain land
and constructed approximately 85 automobile emissions inspection facilities
throughout various regions of the Commonwealth. By Act of the General Assembly
in October 1994 (Act No. 1994-95), the program was suspended and the Department
of Transportation was prohibited from expending funds to implement the program.
On December 15, 1995, Envirotest Systems Corporation, Envirotest Partners
(successor to Envirotest/Synterra Partners) and the Commonwealth of Pennsylvania
entered into a Settlement Agreement pursuant to which the parties settled all
claims which Envirotest might have had against the Commonwealth arising from the
suspension of the emissions testing program. Under the Agreement, Envirotest is
to receive $145 million, with interest at 6% per annum, payable $25 million in
1995, $40 million each in 1996, 1997, and 1998. An additional $15 million may be
required to be paid in 1998, depending upon the results of property liquidations
by Envirotest.
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Philadelphia. (For the fiscal year ending June 30, 1991, Philadelphia
experienced a cumulative General Fund balance deficit of $153.5 million. The
audit findings for the fiscal year ending June 30, 1992 place the cumulative
General Fund balance deficit at $224.9 million.)
Legislation providing for the establishment of the Pennsylvania
Intergovernmental Cooperation Authority ("PICA") to assist Philadelphia in
remedying fiscal emergencies was enacted by the General Assembly and approved by
the Governor in June 1991. PICA is designed to provide assistance through the
issuance of funding debt and to make factual findings and recommendations to the
assisted city concerning its budgetary and fiscal affairs. At this time,
Philadelphia is operating under a five year fiscal plan approved by PICA on
April 17, 1995.
To date, PICA has issued $1,418,680,000 of its Special Tax Revenue
Bonds. This financial assistance has included the refunding of certain city
general obligation bonds, funding of capital projects and the liquidation of the
Cumulative General Fund balance deficit as of June 30, 1992, of $224.9 million.
The audited General Fund balance of the city as of June 30, 1995, showed a
surplus of approximately $80.5 million, up from approximately $1.54 million as
of June 30, 1994.
No further bonds are to be issued by PICA for the purpose of financing
a capital project or deficit as the authority for such bond sales expired
December 31, 1994. PICA's authority to issue debt for the purpose of financing a
cash flow deficit expires on December 31, 1996.
Special Risk Factors - New Jersey Municipal Securities
The following summary is based upon the most recent information
available as of the date of this Statement of Additional Information.
New Jersey Municipal Securities and Special Considerations Relating
Thereto. The concentration of investments in New Jersey Municipal Securities by
the New Jersey Municipal Bond Fund raises special investment considerations. In
particular, changes in the economic condition and governmental policies of the
State of New Jersey or its municipalities could adversely affect the value of
this Fund and the securities held by it.
The following information is based on official statements relating to
securities offerings of the State of New Jersey (the "State") and various local
agencies that have come to the Fund's attention and available as of the date of
this Statement of Additional Information. The New Jersey Municipal Bond Fund has
not independently verified any of the information contained in the official
statement but is not aware of any fact which would render such information
inaccurate.
General. New Jersey is located at the center of the Middle Atlantic
region which extends from Boston to Washington, and which includes over
one-fifth of the country's population. The extensive facilities of the Port
Authority of New York and New Jersey, the Delaware River Port Authority and the
South Jersey Port Corporation across the Delaware River from Philadelphia
augment the air, land and water transportation complex which has influenced much
of the State's economy. This central location in the northeastern corridor, the
transportation and port facilities and proximity to New York City make the State
an attractive location for corporate headquarters and international business
offices. A number of Fortune Magazine's top 500 companies maintain headquarters
or major facilities in New Jersey, and many foreign-owned firms have located
facilities in the State.
The State's economic base is diversified, consisting of a variety of
manufacturing, construction and service industries, supplemented by rural areas
with selective commercial agriculture. New Jersey has the Atlantic sea-shore on
the east and lakes and mountains in the north and northwest, which provide
recreation for residents as well as for out-of-state visitors. In 1976, voters
approved casino gambling for Atlantic City, which has become an important State
tourist attraction.
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New Jersey is the ninth largest state in population and the fifth
smallest in land area. It is the most densely populated state in the United
States with an average of 1,062 persons per square mile. New Jersey's population
grew rapidly in the years following World War II, before slowing to an annual
rate of .27% in the 1970's. Between 1980 and 1990, the annual growth rate was
.49% and between 1990 and 1994 accelerated to .52%. While this rate of growth is
less than that for the United States, it compares favorably with other Middle
Atlantic States.
After enjoying an extraordinary boom during the mid-1980's, New Jersey,
as well as the rest of the Northeast, slipped into a slowdown well before the
onset of the national recession, which began in July 1990. By the beginning of
the national recession, construction activity had already been declining in New
Jersey for nearly two years. The onset of recession caused an acceleration of
New Jersey's job losses in construction and manufacturing, as well as an
employment downturn in such previously growing sectors as wholesale trade,
retail trade, finance, utilities and trucking and warehousing.
Reflecting the downturn, the rate of unemployment in the State rose
from a peacetime low of 3.6% during the first quarter of 1989 to a recessionary
peak of 8.4% during 1992. Since then, the unemployment rate fell to an average
of 6.4% during the first ten months of 1995. The average annualized unemployment
rate remained at 6.4% for the fourth quarter of 1995.
Financial Accounting. The State prepares its financial statements on a
"modified accrual" basis utilizing the fund method of accounting. Accordingly,
the State prepares separate statements for the General Fund, Special Revenue
Funds, Debt Service Funds, Capital Project Funds, Trust and Agency Funds,
Component Units-Authorities Funds, College and University Funds, General Fixed
Asset Account Group and its General Long-Term Debt Account Group and its
component units.
The General Fund is the fund into which all State revenues not
otherwise restricted by statute are deposited and from which appropriations are
made. The largest part of the total financial operations of the State is
accounted for in the General Fund. Revenues received from taxes and unrestricted
by statute, most federal revenue and certain miscellaneous revenue items are
recorded in the General Fund. The appropriations act provides the basic
framework for the operation of the General Fund.
Special Revenue Funds are used to account for resources legally
restricted to expenditure for specified purposes. Special Revenue Funds include
the Casino Control Fund, the Casino Revenue Fund, the Gubernatorial Elections
Fund and the Property Tax Relief Fund. Other Special Revenue Funds have been
created which are either reported ultimately in the General Fund or are created
to hold revenues derived from private sources.
Debt Service Funds are used to account for the accumulation of
resources for, and the payment of, principal and redemption premium, if any, of,
and interest on, general obligation bonds. Capital Project Funds are used to
account for financial resources to be used for the acquisition or construction
of major State capital facilities. Trust and Agency Funds are used to account
for assets held in a trust capacity or as an agent for individuals, private
organizations, other governments and/or other funds. The General Fixed Asset
Account Group accounts for the State's fixed assets acquired or constructed for
general governmental purposes. The General Long-Term Debt Account Group accounts
for the unmatured general long-term liabilities of the State.
Component Unit-Authorities account for operations where the intent of
the State is that the cost of providing goods or services to the general public
on a continuing basis be financed or recovered primarily through user charges,
or where periodic measurement of the results of operations is appropriate for
capital maintenance, public policy, management control or accountability. The
College and University Funds account for the operations of Rutgers, the State
University, the University of Medicine and Dentistry of New Jersey, the New
Jersey Institute of Technology, and the nine State colleges including their
foundations and associations, in accordance with existing authoritative
accounting and reporting principles applicable to universities and hospitals.
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The State operates on a fiscal year beginning July 1 and ending June
30. The State Constitution provides that all monies for the support of State
government and all other State purposes, as far as can be ascertained or
reasonably foreseen, must be provided for in one general appropriation law
covering one and the same fiscal year. No general appropriations law or other
law appropriating money for any State purpose shall be enacted if the amount of
money appropriated therein, together with all other prior appropriations made
for the same fiscal year, exceeds the total amount of revenue on hand and
anticipated to be available for such fiscal year, as certified by the Governor.
During the course of the fiscal year, the Governor may take steps to
reduce State expenditures if it appears that revenues have fallen below those
originally anticipated. There are additional means by which the Governor may
ensure that the State does not incur a deficit. No supplemental appropriation
may be enacted after adoption of an appropriations act except where there are
sufficient revenues on hand or anticipated, as certified by the Governor, to
meet such appropriation.
Financial Results and Projections.
Revenues. Estimated receipts from State taxes and revenues are
forecasts based on the best information available at the time of such forecasts.
The principal taxes in New Jersey are the Sales and Use Tax, the Gross Income
Tax, and the Corporation Business Tax. The fiscal year 1996 Appropriation Act
forecasts Sales and Use Tax collections of $4,356 million, a 5.5% increase over
receipts estimated for fiscal year 1995; Gross Income Tax collections of $4,580
million, a 9.0% increase over receipts estimated in the revised estimates for
fiscal year 1995; and Corporation Business Tax collections of $1,145 million, a
8.6% increase over receipts estimated in the revised estimates for fiscal year
1995. Changes in economic activity in the State and the nation, consumption of
durable goods, corporate financial performance and other factors that are
difficult to predict may result in actual collections being more or less than
forecasted.
Appropriations. The State appropriated approximately $14,737
million for fiscal year 1993 and $15,492 million for fiscal year 1994. Estimated
appropriations for fiscal years 1995 and 1996 total $15,528 million and $15,995
million, respectively. Of the estimated $15,995 million appropriated in fiscal
year 1995 from the General Fund, the Property Tax Relief Fund, the Casino
Control Fund, the Casino Revenue Fund, and the Gubernatorial Elections Fund,
$6,423.5 million (40.2%) is appropriated for State aid to local governments,
$3,708 million (23.2%) is appropriated for grants-in-aid (payments to
individuals or public or private agencies for benefits to which a recipient is
entitled to by law, or for the provision of services on behalf of the State),
$5,179.6 million (32.4%) for direct State services, $466.3 million (2.9%) for
debt service on State general obligation bonds and $443.9 million (2.9%) for
capital construction.
Fund Balances. The undesignated Fund balances are available
for appropriations in succeeding fiscal years. There have been positive Fund
balances in the General Fund at the end of each year since the State
Constitution was adopted in 1947. Total ending Fund balances for fiscal years
1992, 1993 and 1994 were $836.2 million, $1,149.6 million and $1,264.6 million,
respectively. General Fund balances accounted for $1.4 million, and $760.8
million and $937.4 million of the total ending Fund balances in fiscal years
1992, 1993 and 1994, respectively. Total ending Fund balances are estimated to
be $965.7 million for the fiscal year 1995, of which the General Fund balance is
expected to account for $926.0 million. The estimates for fiscal year 1995 are
preliminary and are subject to change upon completion of the State's year end
audit. The estimates for Total and General Fund balances for the fiscal year
ended 1995 are $549.3 million and $563 million, respectively. The estimates for
fiscal 1996 reflect amounts contained in the Fiscal Year 1996 Appropriations Act
and Supplemental Appropriations enacted through September 1, 1993. It should be
noted that an adverse determination in certain litigation in which the State is
a party would have a significant impact on fiscal 1995 and subsequent fiscal
year fund balances (see "Litigation" section).
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Indebtedness of the State.
General Obligation Bonds. The primary method for State
financing of capital projects is through the sale of the general obligation
bonds of the State. These bonds are backed by the full faith and credit of the
State. State tax revenues and certain other fees are pledged to meet the
principal payments, interest payments and if provided, redemption premium
payments, if any, required to fully pay the bonds. As of June 30, 1995, the
outstanding general obligation bonded indebtedness of the State was
approximately $3.7 billion. The amount provided by the General Fund to the Debt
Service Fund for interest and principal payments for the fiscal year ended June
30, 1995 was $103.5 million. This is reflected in the Statement of Revenues,
Expenditures and Changes in Fund Balances as a Transfer to other funds in the
General Fund and a Transfer from other funds in the Debt Service Fund.
Tax and Revenue Anticipation Notes. In fiscal year 1992 the
State initiated a program under which it issued tax and revenue anticipation
notes to aid in providing effective cash flow management to fund balances which
occur in the collection and disbursement of the General Fund and Property Tax
Relief Fund revenues. There are presently no tax and revenue anticipation notes
outstanding. It is anticipated that this program will be continued in Fiscal
Year 1997. Such tax and revenue anticipation notes do not constitute a general
obligation of the State or a debt or liability within the meaning of the State
Constitution. These notes constitute special obligations of the State payable
solely from moneys on deposit in the General Fund and the Property Tax Relief
Fund and legally available for such payment.
State Related Obligations.
Lease Financing. The State has entered into a number of leases
relating to the financing of certain real property and equipment. Lease
financing obligations outstanding as of December 31, 1992 totaled $804.8
million.
State Supported School and County College Bonds. Legislation
provides for future appropriations for State Aid to local school districts equal
to debt service on a maximum principal amount of $280.0 million of bonds issued
by such local school districts for construction and renovation of school
facilities and for State Aid to counties equal to debt service on up to $80.0
million of bonds issued by counties for construction of county college
facilities. The State Legislature is not legally bound to make such future
appropriations, but has done so to date on all outstanding obligations issued
under these laws. As of December 31, 1995, the maximum amount of $280.0 million
of school district bonds has been approved for State support. Bonds or notes in
the amount of $274.1 million have been issued by local school districts, of
which $240.6 million have been retired and $33.4 million are still outstanding.
As of June 30, 1995, $32.8 million of county college bonds or notes are
outstanding. In addition to these acts, there is legislation which establishes a
school bond reserve within the constitutionally dedicated fund for the Support
of Free Public Schools.
Moral Obligation Financing. The authorizing legislation for
certain State entities provides for specific budgetary procedures with respect
to certain obligations issued by such entities. Pursuant to such legislation, a
designated official is required to certify any deficiency in a debt service
reserve fund maintained to meet payments of principal of and interest on the
obligations, and a State appropriation in the amount of the deficiency is to be
made. However, the State Legislature is not legally bound to make such an
appropriation. Bonds issued pursuant to authorizing legislation of this type are
sometimes referred to as "moral obligation" bonds. There is no statutory
limitation on the amount of moral obligation bonds which may be issued by
eligible State entities. The State has periodically provided the South Jersey
Port Corporation with funds to cover all debt service and property tax
requirements when earned revenues are anticipated to be insufficient to cover
these obligations. All other entities with moral obligation bonds are expected
to generate revenues sufficient to cover debt service requirements thereon. As
of June 30, 1995, outstanding moral obligation indebtedness totalled $735.9
million, with an approximate maximum annual debt service Subject to Moral
Obligation of $67.9 million.
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New Jersey Transportation Trust Fund Authority. In July 1984,
the State created the New Jersey Transportation Trust Authority (the
"Authority"), an instrumentality of the State organized and existing under the
New Jersey Transportation Trust Fund Authority Act of 1984, as amended (the
"Act") for the purpose of funding a portion of the State's share of the cost of
improvements to the State's transportation system. Pursuant to the Act, the
Authority, the State Treasurer and the Commissioner of Transportation executed a
contract (the "Contract") which provides for the payment of certain amounts
prescribed to the Authority. The payment of all such amounts is subject to and
dependent upon appropriations being made by the State Legislature and there is
no requirement that the Legislature make such appropriations. On May 30, 1995,
the State Legislature amended the New Jersey Transportation Trust Fund Act of
1984 to provide, among other things, for (i) the funding of transportation
projects through June 30, 2000, (ii) the issuance of debt in an aggregate
principal amount in excess of the statutory debt limitation in effect prior to
the enactment of the 1995 Amendments, (iii) an increase in the amount of
revenues available to the Authority and (iv) broadening the scope of
transportation projects.
Pursuant to the Act, the principal amount of the Authority's
bonds, notes or other obligations which may be issued in any fiscal year
generally may not exceed $7.0 million plus amounts carried over from prior
fiscal years. These bonds are special obligations of the Authority payable from
the payments made by the State pursuant to the Contract.
Economic Recovery Fund Bonds. Legislation enacted during 1992
by the State authorizes the New Jersey Economic Development Authority ("NJEDA")
to issue bonds for various economic development purposes. Pursuant to that
legislation, NJEDA and the State Treasurer have entered into an agreement (the
"ERF Contract") through which NJEDA has agreed to undertake the financing of
certain projects and the State Treasurer has agreed to credit to the Economic
Recovery Fund from the General Fund amounts equivalent to payments due to the
State under an agreement with the Port Authority of New York and New Jersey. The
payment of all amounts under the ERF Contract is subject to and dependent upon
appropriations being made by the State Legislature. On June 1, 1994, NJEDA
issued $705.3 million in Economic Recovery Fund Bonds.
Miscellaneous. Other State related obligations include bonds
of the New Jersey Sports and Exposition Authority. Amounts outstanding as of
June 30, 1995 totaled $615.1 million for this organization.
State Employees. The State, as a public employer, is covered by the New
Jersey Public Employer-Employee Relations Act, as amended, which guarantees
public employees the right to negotiate collectively through employee
organizations certified or recognized as the exclusive collective negotiations
representatives for units of public employees found to be appropriate for
collective negotiations purposes. Approximately 64,500 employees are paid
through the State payroll system. Of the 64,500 employees, 56,800 are
represented by certified or recognized exclusive majority representatives and
are organized into various negotiation units. The State is conducting
negotiations for successor agreement with various negotiation units affecting
approximately 54,400 employees. The current agreement expired on June 30, 1994.
Negotiations have commenced with three units of State Police employees,
representing approximately 2,400 Troopers, Sergeants and Lieutenants whose
three-year contract expired on June 30, 1996. [Their agreements call for a 4%
wage increase effective June 24, 1995. The fiscal year 1996 budget is expected
to reduce the workforce through attrition, voluntary furlough and layoff of
state employees during the fiscal year.]???
Counties and Municipalities. The Local Budget Law imposes specific
budgetary procedures upon counties and municipalities ("local units"). Every
local unit must adopt an operating budget which is balanced on a cash basis, and
items of revenue and appropriation must be examined by the Director of the
Division (the "Director"). This process ensures that every municipality and
county annually adopts a budget balanced on a cash basis, within limitations on
appropriations or tax levies, respectively, and making adequate provision for
principal of and interest on indebtedness falling due in the fiscal year,
deferred charges and other statutory expenditure requirements. The director also
oversees changes to local budgets after adoption as permitted by law, and
enforces regulations pertaining to execution of adopted budgets and financial
administration. In addition to the exercise of regulatory and oversight
functions, the Division
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offers expert technical assistance to local units in all aspects of financial
administration, including revenue collection and cash management procedures,
contracting procedures, debt management and administrative analysis.
State law also regulates the issuance of debt by local units. The Local
Budget Law limits the amount of tax anticipation notes that may be issued by
local units and requires the repayment of such notes within 120 days of the end
of the fiscal year (six months in the case of the counties) in which they were
issued. The Local Bond Law governs the issuance of bonds and notes by the local
units. No local unit is permitted to issue bonds for the payment of current
expenses (other than Fiscal Year Adjustment bonds). Local units may not issue
bonds to pay outstanding bonds, except for refunding purposes, and then only
with the approval of the Local Finance Board. Local units may issue bond
anticipation notes for temporary periods not exceeding in the aggregate
approximately ten years from the date of first issue. The debt that any local
unit may authorize is limited to a percentage of its equalized valuation basis,
which is the average of the equalized value of all taxable real property and
improvements within the geographic boundaries of the local unit, as annually
determined by the Director of the Division of Taxation, for each of the three
most recent years.
State law authorizes State officials to supervise fiscal administration
in any municipality which is in default on its obligations or upon the
occurrence of certain other events. State officials are authorized to continue
such supervision for as long as any of the conditions exist and until the
municipality operates for a fiscal year without incurring a cash deficit.
School Districts. New Jersey's school districts operate under the same
comprehensive review and regulation as do its counties and municipalities.
Certain exceptions and differences are provided, but the State supervision of
school finance closely parallels that of local governments.
Litigation. Certain litigation is pending or threatened in which the
State has the potential for either a significant loss of revenue or a
significant unanticipated expenditure, including suits relating to the following
matters:
(a) Several cases are pending in the State courts challenging the
methods by which the State Department of Human Services shares with
county governments the maintenance recoveries and costs for residents
in State psychiatric hospitals and residential facilities for the
developmentally disabled.
(b) Suits have been initiated by various counties in the State seeking
the return of moneys paid by the counties since 1980 for the
maintenance of Medicaid or Medicare eligible residents of institutions
for the developmentally disabled. In March 1994, the State Superior
Court ruled that the counties were entitled to credits for payments
made since 1989. In February 1995 all but one county had resolved its
cost-sharing disputes with the State. One county has filed for
administrative review to contest the State's calculation of the
credits.
(c) A class action on behalf of all New Jersey long-term care
facilities avers that the State has implemented unreasonably low
Medicaid payment rates. A final decision in favor of the plaintiffs
could require the State to make substantial expenditures. A plaintiffs'
motion for a preliminary injunction was denied on May 25, 1995, and
that denial is being appealed to the Third Circuit.
(d) Litigation is pending challenging various portions of the State's
Fair Automobile Insurance Reform Act of 1990, which substantially
altered the State's statutory scheme governing private passenger
automobile insurance.
(e) At any given time, there are various numbers of claims and cases
pending against the State, its agencies and employees seeking recovery
of damages paid out of a fund created pursuant to the State's Tort
Claims Act. The State is unable to estimate its exposure for these
claims and cases. An independent study estimated an aggregate potential
exposure of $50 million for tort claims pending as of January 1, 1982.
It is estimated that
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were a similar study made of claims currently pending, the amount of
such estimated exposure would be somewhat higher.
(f) At any given time, there are various claims of contract and other
claims against the State, and State agencies including environmental
claims arising from the alleged disposal of hazardous waste. The State
is unable to estimate its exposure for these claims.
(g) At any given time, there are various numbers of claims and cases
pending against the University of Medicine and Dentistry ("University")
and its employees seeking recovery of damages that are paid out of the
Self Insurance Reserve Fund created pursuant to the State's Tort Claims
Act. An independent study estimated an aggregate potential exposure of
$82.5 million for claims pending as of December 31, 1995. In addition,
various other claims are pending against the University seeking damages
or other relief which, if granted, would require the expenditure of
funds (amount not estimated).
(h) An individual plaintiff filed a suit against two members of the New
Jersey Bureau of Securities alleging various causes of action for
defamation, injury to reputation, abuse of process and improper
disclosure of private facts. The State was granted a Motion for Summary
Judgment on January 11, 1995. Plaintiff filed an appeal and the State
has responded. On June 12, 1996, the Appellate Division affirmed the
dismissal. The time to appeal the matter on certification to the
Supreme Court has passed.
(i) Fifteen counties have filed suits against various State agencies
and employees, seeking a portion of $412 million in federal funding the
State received for disproportionate share hospital payments made to
county psychiatric facilities. The State contends that it does not have
to share the federal funding because it already paid the counties their
portion of disproportionate share hospital payments. The court heard
oral argument on May 30, 1996. On July 15, 1996, in a unanimous
decision of the Appellate Division, the court affirmed the
Commissioner's decision not to share the federal funds with the
counties. Additionally, the court held that it could not provide
equitable relief to the counties because the Legislature chose not to
direct the Commissioner to share the funds and therefore separation of
powers precluded the relief.
(j) In October 1993, a suit was filed against the Governor and various
State Commissioners alleging violations of numerous laws allegedly
resulting from the existence of chromium contamination in the
State-owned Liberty Park in Jersey City. No immediate relief was
sought, but injunctive and monetary relief was asked for. The
complaints were amended and the plaintiffs filed another suit seeking
cessation of all construction and penalties against the transporter of
soil to the park. The cases have been consolidated and referred to
mediation. The State intends to vigorously defend these suits.
(k) Various labor unions filed suit on October 17, 1994, challenging
State legislation dealing with the funding of several public employee
pension funds. The suit alleges, among other things, that certain
provisions of the legislation violate the contract, due process and
taking clauses of the United States and New Jersey Constitutions, and
that the changes constitute a breach of the States fiduciary duty to
two of the pension systems. Plaintiffs seek to permanently enjoin the
State from administering the changes. An adverse determination in this
matter would have a significant impact on the State's fiscal 1996
budget. The State has filed motions to dismiss and for summary
judgment. Discovery is proceeding in this matter.
(l) A case has been filed in federal district court seeking injunctive
relief and damages in excess of $19 million from the State's Department
of Environmental Protection and several of its officers based on
alleged violations of the Commerce Clause and Contracts Clause of the
U.S. Constitution. The State intends to vigorously defend this action.
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(m) A complaint was filed in Tax Court on March 23, 1994 against the
State and certain of its officials challenging the constitutionality of
waste licensure renewal fees collected by the Department of
Environmental Protection. The State is unable to estimate its exposure
for this claim and intends to defend this suit vigorously.
Additional Information on Investment Practices
1. Variable Rate Demand Obligations. Variable rate demand obligations
held by the Tax-Exempt Money Market, Intermediate Municipal Bond, Pennsylvania
Municipal Bond and New Jersey Municipal Bond Funds may have maturities of more
than 397 days, provided (i) the Funds are entitled to the payment of principal
and accrued interest at specified intervals not exceeding 397 days and upon not
more than 30 days' notice, or (ii) the rate of interest on such obligations is
adjusted automatically at periodic intervals, which normally will not exceed 31
days but may extend up to 397 days. This 397 day limit does not apply to the
Intermediate Municipal Bond Fund.
2. When-Issued Securities. The Fixed Income and Tax-Exempt Money Market
Funds may purchase municipal securities on a "when-issued" basis (i.e., for
delivery beyond the normal settlement date at a stated price and yield). When a
Fund agrees to purchase when-issued securities, the Company's Custodian will set
aside cash or high quality liquid portfolio securities equal to the amount of
the commitment in a separate account. The Fund may be required subsequently to
place additional assets in the separate account in order to ensure that the
value of the account remains equal to the amount of the Fund's commitment.
Therefore, it may be expected that the Fund's net assets will fluctuate to a
greater degree when they set aside portfolio securities to cover such purchase
commitments than when they set aside cash. In addition, because a Fund will set
aside cash or liquid assets to satisfy its purchase commitments in the manner
described, the Fund's liquidity and ability to manage its investment portfolios
might be affected in the event its commitments to purchase when-issued
securities ever exceeded 25% of the value of its total assets. CoreStates
Advisers intends, however, to take reasonable precautions in connection with the
Tax-Free Money Market Funds' investment practices with respect to when-issued
securities to avoid any adverse effect on a Fund's policy of maintaining a net
asset value per Share at $1.00.
When acquiring when-issued securities for a Fund, CoreStates Advisers
will assess such factors as the stability or instability of prevailing interest
rates, the amount and period of a Fund's commitment with respect to the
when-issued securities being acquired, the interest rate to be paid on those
securities, and the length of a Fund's average weighted portfolio maturity at
the time.
When a Fund engages in when-issued transactions, it relies upon the
seller to consummate the trade. Failure of the seller to do so may result in a
Fund incurring a loss or missing an opportunity to obtain a price considered to
be advantageous.
- Short-Intermediate Bond Fund -
- Elite Government Reserve -
- Short Term Income Fund -
- Government Income Fund -
- Bond Fund -
GNMAs
These Funds may invest in securities issued by the Government National
Mortgage Association ("GNMA"), a wholly-owned U.S. Government corporation which
guarantees the timely payment of principal and interest. Obligations of GNMA are
backed by the full faith and credit of the U.S. Government. The market value and
interest yield of GNMA securities can vary due to market interest rate
fluctuations and early prepayments of underlying mortgages. These securities
represent ownership in a pool of federally insured mortgage loans. GNMA
certificates consist of underlying mortgages with a maximum maturity of 30
years. However, due to scheduled and unscheduled principal payments, GNMA
certificates have a shorter average maturity and, therefore, less principal
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volatility than a comparable 30-year bond. Since prepayment rates vary widely,
it is not possible to accurately predict the average maturity of a particular
GNMA pool. The scheduled monthly interest and principal payments relating to
mortgages in the pool will be "passed through" to investors. GNMA securities
differ from conventional bonds in that principal is paid back to the certificate
holders over the life of the loan rather than at maturity. As a result, there
will be monthly scheduled payments of principal and interest. In addition, there
may be unscheduled principal payments representing prepayments on the underlying
mortgages. Although GNMA certificates may offer yields higher than those
available from other types of U.S. Government securities, GNMA certificates may
be less effective than other types of securities as a means of "locking in"
attractive long-term rates because of the prepayment feature. For instance, when
interest rates decline, the value of a GNMA certificate likely will not rise as
much as comparable debt securities due to the prepayment feature. In addition,
these prepayments can cause the price of a GNMA certificate originally purchased
at a premium to decline in price to its par value, which may result in a loss.
- Intermediate Municipal Bond Fund -
- Short Intermediate Bond Fund -
- Global Bond Fund -
- Short-Term Income Fund-
- Pennsylvania Municipal Bond Fund -
- New Jersey Municipal Bond Fund -
- Tax-Free Reserve -
Puts
Intermediate Municipal Bond Fund, Short-Intermediate Bond Fund, Global Bond
Fund, Short Term Income Fund, Pennsylvania Municipal Bond Fund, New Jersey
Municipal Bond Fund and Tax-Free Reserve, reserve the right to engage in put
transactions. CoreStates Advisers has the authority to purchase securities at a
price which would result in a yield to maturity lower than that generally
offered by the seller at the time of purchase when a Fund can simultaneously
acquire the right to sell the securities back to the seller, the issuer, or a
third party (the "writer") at an agreed-upon price at any time during a stated
period or on a certain date. Such a right is generally denoted as a "standby
commitment" or a "put." The purpose of engaging in transactions involving puts
is to maintain flexibility and liquidity and to permit each Fund to meet
redemptions and remain as fully invested as possible. The right to put the
securities depends on the writer's ability to pay for the securities at the time
the put is exercised. Each Fund would limit its put transactions to institutions
which its adviser believes present minimal credit risks, and the adviser would
use its best efforts to initially determine and continue to monitor the
financial strength of the sellers of the options by evaluating their financial
statements and such other information as is available in the marketplace. It
may, however, be difficult to monitor the financial strength of the writers
because adequate current financial information may not be available. In the
event that any writer is unable to honor a put for financial reasons, each Fund
would be general creditor (i.e. on a parity with all other unsecured creditors)
of the writer. Furthermore, particular provisions of the contract between the
Fund and the writer may excuse the writer from repurchasing the securities; for
example, a change in the published rating of the underlying securities or any
similar event that has an adverse effect on the issuer's credit or a provision
in the contract that the put will not be exercised except in certain special
cases, for example, to maintain portfolio liquidity. The Fund could, however, at
any time, sell the underlying portfolio security in the open market or wait
until the portfolio security matures, at which time it should realize the full
par value of the security.
The securities purchased subject to a put may be sold to third persons
at any time, even though the put is outstanding, but the put itself, unless it
is an integral part of the security as originally issued, may not be marketable
or otherwise assignable. Therefore, the put would have value only to the Fund.
Sale of the securities to third parties or a lapse of time with the put
unexercised may terminate the right to put the securities. Prior to the
expiration of any put option, the Fund could seek to negotiate terms for the
extension of such option. If such a renewal cannot be
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negotiated on terms satisfactory to the Fund, the Fund could, of course, sell
the security. The maturity of the underlying security will generally be
different from that of the put. There will not be a limit to the percentage of
portfolio securities that the Funds may purchase subject to a put, but the
amount paid directly or indirectly for premiums on all puts outstanding will not
exceed 2% of the value of the total assets of such Fund calculated immediately
after any such put is acquired. For the purpose of determining the "maturity" of
securities purchased subject to an option to put, and for purposes of
determining the dollar-weighted average maturity of a Fund including such
securities, the Company will consider the "maturity" to be the first date on
which it has the right to demand payment from the writer of the put although the
final maturity of the security is later than such date.
- Core Equity Fund -
- Special Equity Fund -
- International Growth Fund -
- Growth Equity Fund -
Convertible Securities
Some securities purchased by these Funds (usually bonds, debentures or
preferred stock) may have a conversion or exchange feature. This allows the
holder to exchange the security for another class of security (usually common
stock) according to the specific terms and conditions of the issue. The interest
or dividend rate may be lower than the market rate on a comparable
non-convertible security, but the market value of the convertible security will
rise if the common stock price rises sufficiently. The value of a security is
also affected by prevailing interest rates, the credit quality of the issuer,
and any put or call provisions. "Conversion parity" is the price at which common
stock has the same value as bonds that are convertible into that stock. The
holder of a convertible bond will usually not exercise the exchange privilege
until the market price of the common stock reaches conversion parity.
- Core Equity Fund -
- Special Equity Fund -
- International Growth Fund -
- Global Bond Fund -
Futures and Options
As stated in the Prospectuses relating to these Funds, International
Growth Fund and Global Bond Fund may purchase futures contracts and purchase or
sell options on securities for, among other things, the purposes of hedging
against market risks related to the Fund's Portfolio securities, remaining fully
invested, and reducing transaction costs and currency fluctuations. In addition,
as stated in the Prospectus, Core Equity Fund and Special Equity Fund may
purchase or sell options on securities on a hedged and unhedged basis for, among
other things, hedging against market risks, to remain fully invested, reduce
transaction costs and increase income.
Futures. Futures contracts provide for the future sale by one party and
purchase by another party of a specified amount of a specific security at a
specified future time and at a specified price. Futures contracts which are
standardized as to maturity date and underlying financial instruments are traded
on national futures exchanges. Although futures contracts by their terms call
for actual delivery or acceptance of the underlying securities, in most cases
the contracts are closed out before the settlement date without the making or
taking of delivery. Closing out an open futures position is done by taking an
opposite position ("buying" a contract which has previously been "sold,"
"selling" a contract previously purchased) in an identical contract to terminate
the position. Brokerage commissions are incurred when a futures contract is
bought or sold.
Futures traders are required to make a good faith margin deposit in
cash or government securities with a broker or custodian to initiate and
maintain open positions in futures contracts. A margin deposit is intended to
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<PAGE>
assure completion of the contract (delivery or acceptance of the underlying
security) if it is not terminated prior to the specified delivery date. Minimal
initial margin requirements are established by the futures exchange and may be
changed. Brokers may establish deposit requirements which are higher than the
exchange minimums.
After a futures contract position is opened, the value of the contract
is marked to market daily. If the futures contract price changes to the extent
that the margin on deposit does not satisfy margin requirements, payment of an
additional "variation" margin will be required. Conversely, change in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to and
from the futures broker for as long as the contract remains open. These Funds
expect to earn interest income on its margin deposits.
Traders in futures contracts may be broadly classified as either
"hedgers" or "speculators." Hedgers use the futures markets primarily to offset
unfavorable changes in the value of securities otherwise held for investment
purposes or expected to be acquired by them. Speculators are less inclined to
own the securities underlying the futures contracts which they trade, and use
futures contracts with the expectation of realizing profits from fluctuations in
the market value of the underlying securities.
Regulations of the Commodity Futures Trading Commission ("CFTC") permit
the use of future transactions for bona fide hedging purposes without regard to
the percentage of assets committed to futures margin and options premiums. In
addition, CFTC regulations also allow funds to employ futures transactions for
other "non-hedging" purposes to the extent that aggregate initial futures
margins and options premiums do not exceed 5% of total assets. The International
Growth and Global Bond Funds will only sell futures contracts to protect
securities they own against price declines or purchase contracts to protect
against an increase in the price of securities intended for purchase.
The use of such futures contracts is an effective way in which the
International Growth and Global Bond Funds may control the exposure of its
income to market fluctuations. While these Funds may incur commission expenses
in both opening and closing out futures positions, these costs are lower than
transaction costs incurred in the purchase and sale of U.S. Government
securities.
Options. The Core Equity, Special Equity, International Growth and
Global Bond Funds may also buy and sell put and call options with respect to
securities. Different uses of options have different risk and return
characteristics. Generally, purchasing put options and writing call options are
strategies designed to protect against falling securities prices and can limit
potential gains if prices rise. Purchasing call options and writing put options
are strategies whose returns tend to rise and fall together with securities
prices and can cause losses if prices fall. If securities prices remain
unchanged over time option writing strategies tend to be profitable, while
option buying strategies tend to decline in value.
These Fund's may write (i.e. sell) covered put and call options with
respect to the Fund's portfolio securities. By writing a call option, a Fund
becomes obligated during the term of the option to deliver the securities
underlying the option upon payment of the exercise price if the option is
exercised. By writing a put option, a Fund becomes obligated during the term of
the option to purchase the securities underlying the option at the exercise
price if the option is exercised.
"Writing" options means that so long as a Fund is obligated as the
writer of a call option, it will cover the underlying securities subject to the
option (or comparable securities satisfying the cover requirements of securities
exchanges). Apart from owning the underlying security, a Fund will be considered
"covered" with respect to a put option, if it deposits and maintains with its
custodian liquid assets having a value equal to or greater than the exercise
price of the option.
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<PAGE>
Through the writing of call or put options, a Fund may obtain a greater
current return than would be realized on the underlying securities alone. The
Funds receive premiums from writing call or put options, which they retain
whether or not the options are exercised. By writing a call option, a Fund might
lose the potential for gain on the underlying security while the option is open,
and by writing a put option a Fund might become obligated to purchase the
underlying security for more than its current market price upon exercise.
The Fund may purchase put options in order to protect portfolio
holdings in an underlying security against a decline in the market value of such
holdings. Such protection is provided during the life of the put because a Fund
may sell the underlying security at the put exercise price, regardless of a
decline in the underlying security's market price. Any loss to a Fund is limited
to the premium paid for, and transaction costs paid in connection with, the put
plus the initial excess, if any, of the market price of the underlying security
over the exercise price. However, if the market price of such security
increases, the profit a Fund realizes on the sale of the security will be
reduced by the premium paid for the put option less any amount for which the put
is sold.
A Fund may wish to protect certain portfolio securities against a
decline in market value at a time when no put options on those particular
securities are available for purchase. The Fund may therefore purchase a put
option on securities other than those it wishes to protect even though it does
not hold such other securities in its portfolio. While the Fund will only
purchase put option on securities where, in the opinion of the Adviser, changes
in the value of the put option should generally offset changes in the value of
the securities to be hedged, the correlation will be less than in transactions
in which the Funds purchase put options on underlying securities they own.
The Funds may also purchase call options. During the life of the call
option, the Fund may buy the underlying security at the call exercise price
regardless of any increase in the underlying security's market price. In order
for a call option to be profitable, the market price of the underlying security
must rise sufficiently above the exercise price to cover the premium and
transaction costs. By using call options in this manner, a Fund will reduce any
profit it might have realized had it bought the underlying security at the time
it purchased the call option by the premium paid for the call option and by
transaction costs.
The securities exchanges have established limitations governing the
maximum number of options which may be written or held by an investor or group
of investors acting in concert. These position limits may restrict a Fund's
ability to purchase or sell options on a particular security. Similarly, the
securities exchanges have also established limitations governing the maximum
number of options which may be exercised by an investor or group of investors
acting as concert. It is possible that with respect to a Fund, the Fund and
other clients of the Adviser or any Sub-Adviser, may be considered to be a group
of investors acting in concert. Thus, the number of options which a Fund may
hold or write may be affected by the options transactions of other investment
advisory clients of the Adviser or of any Sub-Advisers.
Forward Currency Contracts
Forward currency contracts involve an obligation to purchase or sell a
specified currency at a future date at a price set at the time of the contract.
Forward currency contracts do not eliminate fluctuations in the values of
portfolio securities but, rather, allow International Growth Fund and Global
Bond Fund to establish a rate of exchange for a future point in time.
When entering into a forward currency contract for the purchase or sale
of a security in a foreign currency, these Funds may enter into a contract for
the amount of the purchase or sale price to protect against variations between
the date the security is purchased or sold and the date on which payment is made
or received, in the value of the foreign currency relative to the U.S. dollar or
other foreign currency.
Also, when the advisers anticipate that a particular foreign currency
may decline substantially relative to the U.S. dollar or other leading
currencies, in order to reduce risk, International Growth Fund and Global Bond
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<PAGE>
Fund may enter into a contract to sell, for a fixed amount, the amount of
foreign currency approximating the value of its securities denominated in such
foreign currency. With respect to any such forward currency contract, it will
not generally be possible to match precisely the amount covered by that contract
and the value of the securities involved due to changes in the values of such
securities resulting from market movements between the date the contract is
entered into and the date it matures. In addition, while forward currency
contracts may offer protection from losses resulting from declines in value of a
particular foreign currency, they also limit potential gains which might result
from increases in the value of such currency. International Growth Fund and
Global Bond Fund will also incur costs in connection with forward currency
contracts and conversions of foreign currencies into U.S. dollars.
ADDITIONAL INVESTMENT RESTRICTIONS
In General
The Prospectuses relating to the Funds list certain investment
restrictions that may be changed only by a vote of a majority of the outstanding
Shares of each Fund, as defined in the Prospectuses. The additional investment
limitations and restrictions listed herein supplement those contained in the
applicable Prospectuses. Except as otherwise indicated, these limitations and
restrictions may be changed only by such a shareholder vote.
The percentage limitations noted will apply at the time of the purchase
of a security and shall not be considered violated unless an excess or
deficiency occurs or exists immediately after and as a result of a purchase of
such security.
Additional Fundamental Investment Limitations and Restrictions
- Equity Funds -
The following policies are applicable to the Equity Funds, except International
Growth Fund, which is subject only to Restrictions #5, #7, #8 and #10. In
addition, the Core Equity and Special Equity Funds are not subject to
Restriction #4.
An Equity Fund may not:
1. Purchase securities on margin, sell securities short, or
participate on a joint or joint and several basis in any
securities trading account.
2. Purchase or sell commodities, commodity contracts (including
futures contracts), oil, gas or mineral exploration or
development programs, or real estate (although investments in
marketable securities of companies engaged in such activities
are not hereby precluded).
3. Purchase securities of other investment companies, except as
they may be acquired as part of a merger, consolidation,
reorganization, acquisition of assets, or where otherwise
permitted by the Investment Company Act of 1940.
4. Write or purchase options, including puts, calls, straddles,
spreads, or any combination thereof.
5. Invest in any issuer for purposes of exercising control or
management.
6. Purchase securities with legal or contractual restrictions.
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<PAGE>
7. Purchase or retain securities of any issuer, if the Officers
or Directors of the Company or its investment adviser owning
beneficially more than one-half of 1% of the securities of
such issuer together own beneficially more than 5% of such
securities.
8. Invest more than 10% of its total assets in the securities of
issuers which together with any predecessors have a record of
less than three years continuous operation.
9. Underwrite the securities of other issuers, except to the
extent that the purchase of debt obligations directly from an
issuer thereof, in accordance with an Equity Fund's investment
objective, policies, and restrictions, may be deemed to be an
underwriting.
10. Purchase any securities which would cause 25% or more of its
total assets at the time of purchase to be invested in the
securities of one or more issuers conducting their principal
business activities in the same industry.
- Fixed Income Funds -
The following policies are applicable to the Fixed Income Funds.
A Fixed Income Fund may not:
1. Purchase securities on margin, sell securities short, or
participate on a joint or joint and several basis in any
securities trading account.
2. Purchase or sell commodities, commodity contracts (including
futures contracts), oil, gas or mineral exploration or
development programs, or real estate (although investments in
marketable securities of companies engaged in such activities
are not hereby precluded), except that the Global Bond Fund
may engage in future contracts.
3. Purchase securities of other investment companies, except as
they may be acquired as part of a merger, consolidation,
reorganization, acquisition of assets, or where otherwise
permitted by the Investment Company Act.
4. Write or purchase options, including puts, calls, straddles,
spreads, or any combination thereof, except that Government
Income Fund, Intermediate Municipal Bond Fund, Global Bond
Fund, Pennsylvania Municipal Bond Fund and New Jersey
Municipal Bond Fund may engage in put transactions.
5. Buy common stocks or voting securities.
6. Invest in any issuer for purposes of exercising control or
management.
7. With respect to the Short Intermediate Bond Fund, purchase
securities with legal or contractual restrictions.
8. Invest more than 10% of its total assets in the securities of
issuers which together with any predecessors have a record of
less than three years continuous operation.
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<PAGE>
9. Purchase or retain securities of any issuer, if the Officers
or Directors of the Company or its investment adviser owning
beneficially more than one-half of 1% of the securities of
such issuer together own beneficially more than 5% of such
securities.
10. Underwrite the securities of other issuers, except to the
extent that the purchase of debt obligations directly from an
issuer thereof, in accordance with a Fixed Income Fund's
investment objective, policies, and restrictions, may be
deemed to be an underwriting.
- Taxable Money Market Funds -
The following policies are applicable to the Company's Taxable Money Market
Funds.
A Taxable Money Market Fund may not:
1. Purchase securities on margin, sell securities short, or
participate on a joint or joint and several basis in any
securities trading account.
2. Purchase or sell commodities, commodity contracts (including
futures contracts), oil, gas or mineral exploration or
development programs, or real estate (although investments in
marketable securities of companies engaged in such activities
are not hereby precluded).
3. Purchase securities of other investment companies, except as
they may be acquired as part of a merger, consolidation,
reorganization, acquisition of assets, or where otherwise
permitted by the Investment Company Act.
4. Write or purchase options, including puts, calls, straddles,
spreads, or any combination thereof.
5. Buy common stocks or voting securities, or state, municipal or
industrial revenue bonds.
6. Invest in any issuer for purposes of exercising control or
management.
7. Purchase securities with legal or contractual restrictions.
8. Invest more than 10% of its total assets in the securities of
issuers which together with any predecessors have a record of
less than three years continuous operation.
9. Purchase or retain securities of any issuer, if the Officers
or Directors of the Company or its investment adviser owning
beneficially more than one-half of 1% of the securities of
such issuer together own beneficially more than 5% of such
securities.
10. Underwrite the securities of other issuers, except to the
extent that the purchase of debt obligations directly from an
issuer thereof, in accordance with a taxable Money Market
Fund's investment objective, policies, and restrictions, may
be deemed to be an underwriting.
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<PAGE>
- Tax-Exempt Money Market Funds -
The following policies are applicable to the Company's Tax-Exempt Money Market
Funds.
A Tax-Exempt Money Market Fund may not:
1. Invest less than 80% of its total assets in securities, the
interest on which is exempt from federal income tax, except
during temporary defensive periods.
2. Purchase or sell commodities, commodity contracts (including
futures contracts), oil, gas or mineral exploration or
development programs, or real estate (although investments in
marketable securities of companies engaged in such activities
are not hereby precluded).
3. Purchase the securities of any one issuer if, as a result
thereof, more than 5% of the value of its total assets would
be invested in the securities of such issuer, except that this
5% limitation does not apply to securities issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities; provided, however, that the Fund may invest
up to 25% of its total assets without regard to this
restriction as permitted by applicable law.
For purposes of this limitation, a security is considered to
be issued by the governmental entity (or entities) whose
assets and revenues back the security, or, with respect to an
industrial development bond that is backed only by the assets
and revenues of a non-governmental user, such non-governmental
user. The guarantor of a guaranteed security may also be
considered to be an issuer in connection with such guarantee,
except that a guarantee of a security shall not be deemed to
be a security issued by the guarantor when the value of all
securities issued or guaranteed by the guarantor, and owned by
a Tax- Exempt Money Market Fund, does not exceed 10% of the
value of the Fund's total assets.
4. Purchase securities on margin, sell securities short, or
participate on a joint or joint and several basis in any
securities trading account.
5. Purchase securities of other investment companies, except as
they may be acquired as part of a merger, consolidation,
reorganization, acquisition of assets, or where otherwise
permitted by the Investment Company Act.
6. Write or purchase options, including puts, calls, straddles,
spreads, or any combination thereof.
7. Buy common stocks or voting securities.
8. Invest more than 10% of its total assets in the securities of
issuers which together with any predecessors have a record of
less than three years continuous operation.
9. Invest in any issuer for purposes of exercising control or
management.
10. Purchase securities with legal or contractual restrictions.
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<PAGE>
11. Purchase or retain securities of any issuer, if the Officers
or Directors of the Company or the Fund's investment adviser
or sub-adviser owning beneficially more than one-half of 1% of
the securities of such issuer together own beneficially more
than 5% of such securities.
12. Underwrite the securities of other issuers, except to the
extent that the purchase of debt obligations directly from an
issuer thereof, in accordance with a Tax-Exempt Money Market
Fund's investment objective, policies, and restrictions, may
be deemed to be an underwriting.
Non-Fundamental Investment Limitations
The following are non-fundamental investment restrictions that may be
changed by a majority of the Board of Directors.
- All Funds -
1. With regard to Restriction #2 for each Fund, all Funds have a
non-fundamental investment limitation which precludes
investments in oil, gas, or other mineral leases, as well as
investments in real estate limited partnerships, except for
readily marketable interests in real estate investment trusts.
2. Notwithstanding the language in Restriction #8 for each Fund,
each Fund currently has no intention of investing more than 5%
of its total assets in the securities of issuers which
together with any predecessors have a record of less than
three years continuous operation.
- Equity Funds -
An Equity Fund's investments in warrants, valued at the lower of cost
or market value, may not exceed 5% of the value of its net assets. Warrants
included within this amount may be warrants that are not listed on the New York
Stock Exchange or the American Stock Exchange; provided that the amount of such
warrants shall not exceed 2% of the value of an Equity Fund's net assets.
- Core Equity Fund -
- Special Equity Fund -
- Bond Fund -
- Balanced Fund -
- Short Term Income Fund -
- Government Income Fund -
- Intermediate Municipal Bond Fund -
- Global Bond Fund -
- Pennsylvania Municipal Bond Fund -
- New Jersey Municipal Bond Fund -
Each of the above Funds may not knowingly invest more than 15% of its
total assets in illiquid securities, including repurchase agreements providing
for settlement more than seven days after notice.
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TEMPORARY INVESTMENTS
In General
As stated in the Prospectuses relating to the Equity Funds and
Tax-Exempt Money Market Funds, these Funds may invest a portion of their assets
in certain "Temporary Investments." Short-term taxable investments which these
Funds may utilize include fixed-income securities (such as bonds) and/or money
market instruments (such as Treasury bills, certificates of deposit, commercial
paper, and repurchase agreements).
Generally, the Equity and Tax-Exempt Money Market Funds' use of such
Temporary Investments is subject to certain minimum ratings by Moody's and/or
S&P. These Funds may utilize Temporary Investments that are not rated by either
agency if, in the opinion of their investment adviser, they are determined to be
of comparable investment quality. See the "Appendix" to this Statement of
Additional Information for a description of applicable ratings.
-Equity Funds -
- Tax-Exempt Money Market Funds -
1. Money Market Instruments. Short-term money market instruments issued
in the U.S. (or abroad with respect to International Growth Fund) in which the
Equity and Tax-Exempt Money Market Funds may invest temporary cash balances
include bankers' acceptances, certificates of deposit, and commercial paper.
Bankers' acceptances are negotiable drafts or bills of exchange normally drawn
by an importer or exporter to pay for specific merchandise which are "accepted"
by a bank; meaning, in effect, that the bank unconditionally agrees to pay the
face value of the instrument upon maturity. A certificate of deposit is a
negotiable certificate issued against funds deposited in a commercial bank for a
definite period of time and earning a specified return. Commercial paper
consists of unsecured short-term promissory notes issued by corporations and
must be rated at least A-1 by S&P or Prime-1 by Moody's.
Except for International Growth Fund, the Funds will limit their
purchases of bank obligations to those of domestic branches of U.S. banks having
total assets at the time of purchase of $1 billion or more.
2. Government Obligations. The Equity and Tax-Exempt Money Market Funds
may invest in obligations issued or guaranteed by the U.S. Government or its
agencies and instrumentalities. U.S. Treasury bills and notes and obligations of
certain agencies and instrumentalities of the U.S. Government, such as the
Government National Mortgage Association, are supported by the full faith and
credit of the United States; others, such as those of the Export-Import Bank of
the United States, are supported by the right of the issuer to borrow from the
Treasury; others, such as those of the Federal National Mortgage Association,
are supported by the discretionary authority of the U.S. Treasury to purchase
the agency's obligations; still others, such as those of the Student Loan
Marketing Association, are supported only by the credit of the agency or
instrumentality. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored instrumentalities if it
is not obligated to do so by law.
In addition, International Growth Fund may invest in the obligations of
foreign governments or foreign governmental agencies deemed to be creditworthy
under guidelines approved by the Company's management. Such investments may
include securities issued by supranational organizations, such as the European
Economic Community and the World Bank, which are chartered to promote economic
development and are supported by various governments and governmental entities.
3. Repurchase Agreements. The Equity and Tax-Exempt Money Market
Funds may enter into repurchase agreements with respect to portfolio securities.
Under the terms of a repurchase agreement, a Fund purchases securities
("collateral") from financial institutions such as banks and broker-dealers
("seller") which are
B-28
<PAGE>
deemed to be creditworthy under guidelines approved by the Funds' management,
subject to the seller's agreement to repurchase them at a mutually agreed-upon
date and price. The repurchase price generally equals the price paid by a Fund
(plus interest) negotiated on the basis of current short-term rates (which may
be more or less than the rate on the underlying portfolio securities). The
seller under a repurchase agreement is required to maintain the value of the
collateral held pursuant to the agreement at not less than 100% of the
repurchase price, and securities subject to repurchase agreements are held by
the Custodian in the Federal Reserve's book-entry system. Default by the seller
would, however, expose a Fund to possible loss because of adverse market action
or delay in connection with the disposition of the underlying securities.
Repurchase agreements are considered to be loans by the Funds under the
Investment Company Act.
4. Reverse Repurchase Agreements. The Equity and Tax-Exempt Money
Market Funds may borrow funds for temporary purposes by entering into reverse
repurchase agreements. Pursuant to such agreements, a Fund would sell portfolio
securities to financial institutions such as banks and broker-dealers, and agree
to repurchase them at a mutually agreed-upon date and price. A Fund enters into
reverse repurchase agreements only to avoid otherwise selling securities during
unfavorable market conditions to meet redemptions. At the time a Fund enters
into a reverse repurchase agreement, it places in a segregated custodial account
liquid assets such as U.S. Government securities or liquid debt securities rated
in the highest rating category and having a value equal to the repurchase price
(including accrued interest), and will subsequently monitor the account to
ensure that such equivalent value is maintained. Reverse repurchase agreements
involve the risk that the market value of the securities sold by a Fund may
decline below the price at which it is obligated to repurchase the securities.
Reverse repurchase agreements are considered to be borrowings by the Funds under
the Investment Company Act.
5. Fixed-Income Securities. The Equity Funds may make short-term
investments in investment-grade fixed-income debt securities (such as bonds and
notes) issued by banks, corporations, and the U.S. Government or governmental
entities. The Equity Funds anticipate that their investments in investment-grade
debt securities will be generally in those with the most active trading markets.
See the attached Appendix for a description of investment-grade securities
ratings.
In addition, International Growth Fund may invest in fixed-income
investment-grade debt securities of foreign governments or foreign governmental
entities. See the attached Appendix for a description of investment-grade
securities ratings.
SPECIAL CONSIDERATIONS
- Equity Funds -
Common Stocks
An investment in shares of the Equity Funds should be made with an
understanding of the risks which an investment in common stocks entails,
including the risk that the financial condition of the issuers of securities
held by an Equity Fund or the general condition of the stock markets may worsen,
and the value of the securities held by the Fund and, therefore, the value of
the Fund's shares may decline.
The rights of holders of common stocks to receive payments from the
issuers of such common stocks are generally inferior to those of creditors, or
holders of preferred stocks of such issuers. Holders of common stocks of the
type held by the Equity Funds have a right to receive dividends only when and
if, and in the amounts, declared by the issuer's board of directors, and have a
right to participate in amounts available for distribution by the issuer upon
liquidation only after all other claims on the issuer have been paid or provided
for. By contrast, holders of preferred stocks generally have the right to
receive dividends at a fixed rate when and as declared by the issuer's board of
directors, frequently on a cumulative basis, but do not participate in other
amounts available for distribution by the issuing corporation. Common stocks do
not represent a secured obligation of the issuer and
B-29
<PAGE>
therefore do not offer an assurance of income or provide the same degree of
protection of capital as do debt securities. The issuance of additional debt
securities or preferred stock will create prior claims for payment of principal,
interest, and dividends, which could adversely affect the ability and
inclination of the issuer to declare or pay dividends on its common stock, or
the rights of holders of common stock with respect to assets of the issuer upon
liquidation or bankruptcy. The value of common stocks is subject to market
fluctuations for as long as the common stocks remain outstanding. Thus, the
value of such securities held by the Equity Funds may be expected to fluctuate.
- Tax-Exempt Money Market Funds -
- Intermediate Municipal Bond Fund -
- Pennsylvania Municipal Bond Fund -
- New Jersey Municipal Bond Fund -
Municipal Securities
From time to time, proposals have been introduced in Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on municipal securities, and the Funds cannot predict what legislation
relating to municipal securities, if any, may be introduced in Congress in the
future. It may be noted, however, that the Treasury Department has in the past
proposed, as a part of general tax reform, to limit the exemption for state and
local bonds to those issued for governmental purposes. Such proposals, if
enacted, might materially adversely affect the availability of municipal
securities for investment by the Funds and hence the value of their portfolios.
In such an event, the Funds would re-evaluate their investment objectives and
policies and consider changes in their structure or possible dissolution.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
- All Funds -
The various types of customer accounts maintained by institutional
investors which may be used to purchase shares of the Funds include: Qualified
Individual Retirement and Keogh Plan Accounts (for non-tax-exempt Funds); trust
accounts; managed agency accounts; custodial accounts; and various other
depository accounts. Investors purchasing Fund shares may include officers,
directors, or employees of CoreStates Corp or its affiliated and subsidiary
banks.
A Fund may suspend the right of redemption or postpone the date of
payment for Shares during any period when: (a) trading on the New York Stock
Exchange (the "Exchange") is restricted by applicable rules and regulations of
the Securities and Exchange Commission; (b) the Exchange is closed for other
than customary weekend and holiday closings; (c) the Securities and Exchange
Commission has by order permitted such suspension; or (d) an emergency exists as
determined by the Securities and Exchange Commission. Upon the occurrence of any
of the foregoing conditions, a Fund may also suspend or postpone the recordation
of the transfer of its shares.
In addition, a Fund may compel the redemption of, reject any order for,
or refuse to give effect on the Fund's books to the transfer of, its Shares in
an effort to prevent personal holding company status within the meaning of the
Internal Revenue Code of 1986, as amended (the "Code"). A Fund may also make
payment for redemption in portfolio securities if it appears appropriate to do
so in light of the Fund's responsibilities under the Investment Company Act. See
"Net Asset Value."
B-30
<PAGE>
Rights of Accumulation
In calculating the sales charge rates applicable to current purchases
of Class A Shares of the Fixed Income and Equity Funds by a "single purchaser,"
the Company will cumulate current purchases at the offering price with total
market value or net investment, whichever is higher, of Class A Shares which are
sold subject to a sales charge ("Eligible Funds").
The term "single purchaser" refers to (i) an individual; (ii) an
individual and spouse purchasing shares of an Eligible Fund for their own
account or for trust or custodial accounts for their minor children; or (iii) a
fiduciary purchasing for any one trust, estate or fiduciary account, including
employee benefit plans created under Sections 401 or 457 of the Code, including
related plans of the same employer. To be entitled to a reduced sales charge
based upon shares already owned, the investor must ask the Distributor for such
reduction at the time of purchase and provide the account number(s) of the
investor, the investor and spouse, and their children (under age 21), and give
the ages of such children. The Funds may amend or terminate this Right of
Accumulation at any time as to subsequent purchases.
Letter of Intent
The reduced sales charges described in the Prospectus for Class A
Shares are also applicable to the aggregate amount of purchases made by any such
purchaser previously enumerated within a 13-month period pursuant to a written
Letter of Intent provided by the Distributor, and not legally binding on the
signer or a Fund which provides for the holding in escrow by the Administrator
of 5% of the total amount intended to be purchased until such purchase is
completed within the 13-month period. A Letter of Intent may be dated to include
shares purchased up to 90 days prior to the date the Letter is signed. The
13-month period begins on the date of the earliest purchase. If the intended
investment is not completed, the purchaser will be asked to pay an amount equal
to the difference between the sales charge on the shares purchased at the
reduced rate and the sales charge otherwise applicable to the total shares
purchased. If such payment is not made within 20 days following the expiration
of the 13-month period, the Administrator will surrender an appropriate number
of the escrowed shares for redemption in order to realize the difference. Such
purchasers may include the market value of all their shares of the Fund, and of
any of the other Funds, previously purchased and still held as of the date of
their Letter of Intent toward the completion of such Letter.
NET ASSET VALUE
- Taxable Money Market Funds -
- Tax-Exempt Money Market Funds -
Rule 2a-7
Each Money Market Fund has elected to use the amortized cost method of
valuation pursuant to Rule 2a-7 under the Investment Company Act. This involves
valuing an instrument at its cost initially and thereafter assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. This method
may result in periods during which the value of an instrument, as determined by
amortized cost, is higher or lower than the price a Money Market Fund would
receive if it sold the instrument. The value of securities held by the Money
Market Funds can be expected to vary inversely with changes in prevailing
interest rates.
Pursuant to Rule 2a-7, as amended, each Money Market Fund will maintain
a dollar-weighted average portfolio maturity appropriate to its objective of
maintaining a stable net asset value per share, provided that a
B-31
<PAGE>
Money Market Fund will neither purchase any security with a remaining maturity
of more than 397 days (securities subject to repurchase agreements and certain
other securities may bear longer maturities) nor maintain a dollar-weighted
average portfolio maturity which exceeds 90 days.
In addition, each Money Market Fund may acquire only U.S.
dollar-denominated obligations that present minimal credit risks and that are
"First Tier Securities" at the time of investment. First Tier Securities are
those that are rated in the highest rating category by at least two nationally
recognized security rating organizations ("NRSROs") or by one if it is the only
NRSRO rating such obligation or, if unrated, determined to be of comparable
quality. A security is deemed to be rated if the issuer has any security
outstanding of comparable priority and security which has received a short-term
rating by an NRSRO. CoreStates Advisers will determine that an obligation
presents minimal credit risks or that unrated investments are of comparable
quality, in accordance with guidelines established by CoreFunds' Board of
Directors. However, with respect to the Taxable Money Market Funds, the Board of
Directors must approve or ratify the purchase of any unrated obligations or
obligations rated by only one NRSRO.
CoreFunds' Board of Directors has also undertaken to establish
procedures reasonably designed, taking into account current market conditions
and a Money Market Fund's investment objective, to stabilize such Fund's net
asset value per share for purposes of sales and redemptions at $1.00. These
procedures include review by the Board of Directors, at such intervals as it
deems appropriate, to determine the extent, if any, to which a Money Market
Fund's net asset value per share calculated by using available market quotations
deviates from $1.00 per share. In the event such deviation exceeds one-half of
one percent, the Rule requires that the Board promptly consider what action, if
any, should be initiated. If the Board believes that the extent of any deviation
from a Money Market Fund's $1.00 amortized cost price per share may result in
material dilution or other unfair results to new or existing investors, it will
take such steps as it considers appropriate to eliminate or reduce to the extent
reasonably practicable any such dilution or unfair results. These steps may
include: selling portfolio instruments prior to maturity; shortening the average
portfolio maturity; withholding or reducing dividends; or redeeming shares in
kind.
DIVIDENDS
- Equity Funds -
The policy of the Growth Equity, Core Equity, Special Equity, Equity
Index and Balanced Funds is to generally declare and distribute dividends from
their net investment income on a quarterly basis. Distributions of any net
realized long-term capital gains will be made at least annually.
The policy of the International Growth Fund is to generally declare and
distribute dividends from its net investment income periodically. Distributions
of any net realized capital gains will be made at least annually.
The shareholders of the Equity Funds have the privilege of reinvesting
both income dividends and capital gains distributions, if any, in additional
full or fractional shares of the respective Funds at the net asset value in
effect on the reinvestment date. The Company's management believes that most
investors will wish to take advantage of this privilege. The Equity Funds have,
therefore, made arrangements with the Transfer Agent to have all income
dividends and capital gains distributions declared by each Fund automatically
reinvested in the account of each shareholder. At any time, a shareholder may
request in writing to the Company or with the Transfer Agent to have subsequent
dividends and/or distributions paid in cash. In the absence of such a written
request, each purchase of shares of an Equity Fund is made upon the condition
and understanding that the Transfer Agent is automatically appointed to receive
the dividends and distributions upon all Shares in the shareholder's account and
to reinvest them in full and fractional shares of the Fund at the net asset
value in effect at the close of business on the reinvestment date.
B-32
<PAGE>
Any dividend or capital gains distribution received by a shareholder
shortly after the purchase of shares of an Equity Fund may have the effect of
reducing the per share net asset value of such Shares by the amount of the
dividend or distribution. Furthermore, such a dividend or distribution, although
in effect a return of capital, may be subject to income taxes.
- Fixed-Income Funds -
The policy of the Short Intermediate Bond, Bond, Short-Term Income,
Government Income, Intermediate Municipal Bond, Pennsylvania Municipal Bond and
New Jersey Municipal Bond Funds is to generally declare their net investment
income on a daily basis and to make distributions to shareholders in the form of
monthly dividends. The policy of Global Bond Fund is to distribute its net
investment income in the form of quarterly dividends.
Net income for dividend purposes includes (i) interest and dividends
accrued and discount earned on the Funds' assets (including both original issue
and market discount), less (ii) amortization of any premium on such assets and
accrued expenses directly attributable to the Funds, and the general expenses
(e.g., legal, auditing, and Directors' fees) of the Company prorated to each
portfolio on the basis of its relative net assets. Realized and unrealized gains
and losses on portfolio securities are reflected in fluctuations in net asset
value. Net realized long-term capital gains (if any) are distributed at least
annually.
- Taxable Money Market Funds -
- Tax-Exempt Money Market Funds -
The policy of the Money Market Funds is to generally declare their net
investment income on a daily basis and to make distributions to shareholders in
the form of monthly dividends.
Net income for dividend purposes includes (i) interest and dividends
accrued (whether taxable or tax-exempt) and discount earned on a Money Market
Fund's assets (including both original issue and market discount), less
(ii) amortization of any premium on such assets and accrued expenses directly
attributable to a Fund, and the general expenses (e.g., legal, auditing, and
Directors' fees) of the Company prorated to each Fund on the basis of its
relative net assets. Capital gains dividends (if any) would be calculated
separately and distributed to shareholders on an annual basis.
TOTAL RETURN
- Equity Funds -
- Fixed-Income Funds -
In General
From time to time, the Funds may advertise total return on an "average
annual total return" basis and on an "aggregate total return" basis for various
periods. Average annual total return reflects the average annual percentage
change in the value of an investment in a Fund over the particular measuring
period. Aggregate total return reflects the cumulative percentage change in
value over the measuring period. Aggregate total return is computed according to
a formula prescribed by the SEC. The formula can be expressed as follows: P (1 +
T)(n) = ERV, where P = a hypothetical initial payment of $1,000; T = average
annual total return; n = number of years; and ERV = ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the designated time period
as of the end of such period or the life of the fund. The formula for
calculating aggregate total return can be expressed as (ERV/P)-1.
The calculation of total return assumes reinvestment of all dividends
and capital gain distribution on the reinvestment dates during the period and
that the entire investment is redeemed at the end of the period. In
B-33
<PAGE>
addition the maximum sales charge for each Fund is deducted from the initial
$1000 payment. Total return may also be shown without giving effect to any sales
charges.
The Funds' performance may from time to time be compared to other
mutual funds tracked by mutual fund rating services (such as Lipper Analytical
Services) or financial and business publications and periodicals, broad groups
of comparable mutual funds, unmanaged indices which may assume investment of
dividends but generally do not reflect deductions for administrative and
management costs or to other investment alternatives. The Funds may quote
Morningstar, Inc., a service that ranks mutual funds on the basis of
risk-adjusted performance. The Funds may quote Ibbotson Associates of Chicago,
Illinois, which provides historical returns of the capitals markets in the U.S.
The Funds may use long term performance of these capital markets to demonstrate
general long-term risk vs. reward scenarios and could include the value of a
hypothetical investment in any of the capital markets. The Funds may also quote
financial and business publications and periodicals as they relate to fund
management, investment philosophy, and investment techniques.
The Funds may quote various measures of volatility and benchmark correlation in
advertising and may compare these measures to those of other funds. Measures of
volatility attempt to compare historical share price fluctuations or total
returns to a benchmark while measures of benchmark correlation indicate how
valid a comparative benchmark might be. Measures of volatility and correlation
are calculated using averages of historical data and cannot be calculated
precisely.
Performance
The performance results listed below refer to results on Class Y Shares
and Class A Shares (where applicable) of the Funds.
<TABLE>
<CAPTION>
Average Annual Total Return
--------------------------------------------------------------------
Since
Fund Class One Year Five Year Ten Year Inception
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Equity Index Fund Y 25.69% 14.76% 12.42% 12.42%
------------------------------------------------------------------------------------------
A ** ** ** **
- --------------------------------------------------------------------------------------------------------------------
Core Equity Fund Y 27.88% 16.17% ** 15.81%
------------------------------------------------------------------------------------------
A without Load 27.78% 16.13% ** 15.78%
------------------------------------------------------------------------------------------
A with Load 23.61% 15.37% ** 15.17%
- --------------------------------------------------------------------------------------------------------------------
Special Equity Fund Y 36.21% ** ** 17.04%
------------------------------------------------------------------------------------------
A without Load 36.05% ** ** 16.98%
------------------------------------------------------------------------------------------
A with Load 31.58% ** ** 15.29%
- --------------------------------------------------------------------------------------------------------------------
Growth Equity Fund Y 31.36% ** ** 9.79%
------------------------------------------------------------------------------------------
A without Load 31.00% ** ** 12.61%
------------------------------------------------------------------------------------------
A with Load 26.69% ** ** 11.54%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
B-34
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return
-------------------------------------------------------------------
Since
Fund Class One Year Five Year Ten Year Inception
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
International Growth Y 16.72% 9.75% ** 8.68%
Fund ------------------------------------------------------------------------------------------
A without Load 16.54% 9.62% ** 8.58%
------------------------------------------------------------------------------------------
A with Load 12.77% 8.90% ** 8.01%
- -------------------------------------------------------------------------------------------------------------------
Balanced Fund Y 18.41% ** ** 10.77%
-----------------------------------------------------------------------------------------
A without Load 18.13% ** ** 10.20%
-----------------------------------------------------------------------------------------
A with Load 14.31% ** ** 9.09%
- -------------------------------------------------------------------------------------------------------------------
Short-Intermediate Y 5.05% ** ** 5.26%
Bond Fund -----------------------------------------------------------------------------------------
A without Load 4.79% ** ** 4.60%
-----------------------------------------------------------------------------------------
A with Load 1.39% ** ** 3.60%
- -------------------------------------------------------------------------------------------------------------------
Bond Fund Y 4.38% 7.34% ** 7.78%
-----------------------------------------------------------------------------------------
A without Load 4.01% 7.28% ** 7.73%
-----------------------------------------------------------------------------------------
A with Load 0.64% 6.57% ** 7.16%
- -------------------------------------------------------------------------------------------------------------------
Short Term Income Y 4.86% ** ** 5.07%
Fund -----------------------------------------------------------------------------------------
A without Load 4.55% ** ** 4.61%
-----------------------------------------------------------------------------------------
A with Load 1.12% ** ** 1.54%
- -------------------------------------------------------------------------------------------------------------------
Government Income Y 4.09% ** ** 4.91%
Fund -----------------------------------------------------------------------------------------
A without Load 3.73% ** ** 4.38%
-----------------------------------------------------------------------------------------
A with Load 0.36 ** ** 3.29%
- -------------------------------------------------------------------------------------------------------------------
Intermediate Y 4.74% ** ** 3.58%
Municipal Bond Fund -----------------------------------------------------------------------------------------
A without Load 4.48% ** ** 3.32%
-----------------------------------------------------------------------------------------
A with Load 1.09% ** ** 2.23%
- -------------------------------------------------------------------------------------------------------------------
Pennsylvania Y 6.02% ** ** 6.42%
Municipal Bond Fund ------------------------------------------------------------------------------------------
A without Load 5.76% ** ** 6.16%
------------------------------------------------------------------------------------------
A with Load 2.33% ** ** 4.50%
- -------------------------------------------------------------------------------------------------------------------
New Jersey Y 5.28% ** ** 5.89%
Municipal Bond Fund ------------------------------------------------------------------------------------------
A without Load 4.93% ** ** 5.57%
------------------------------------------------------------------------------------------
A with Load 1.52% ** ** 3.92%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
B-35
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return
-------------------------------------------------------------------
Since
Fund Class One Year Five Year Ten Year Inception
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Global Bond Fund Y 8.00% ** ** 3.05%
- -------------------------------------------------------------------------------------------------------------------
A without Load 7.74% ** ** 2.77%
------------------------------------------------------------------------------------------
A with Load 4.27% ** ** 1.42%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
** Not in operation during period
YIELDS
- Taxable Money Market Funds -
- Tax-Exempt Money Market Funds -
In General
From time to time, the Funds may advertise their "current yield" and
"effective compound yield". Both yield figures are based on historical earnings
and are not intended to indicate future performance. The "yield" of the Funds
refers to the income generated by an investment in a Fund over a seven-day
period (which period will be stated in the advertisement). This income is then
"annualized". That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in a Fund is
assumed to be reinvested. The "effective yield" will be slightly higher than the
"yield" because of the compounding effect of this assumed reinvestment.
Current or Seven-Day Yield
The current yield of the Funds will be calculated daily based upon the
seven days ending on the date of calculation ("base period"). The yield is
computed by determining the net change (exclusive of capital changes) in the
value of a hypothetical pre-existing shareholder account having a balance of one
share at the beginning of the period, subtracting a hypothetical charge
reflecting deductions from shareholder accounts, and dividing such net change by
the value of the account at the beginning of the same period to obtain the base
period return and multiplying the result by (365/7). Realized and unrealized
gains and losses are not included in the calculation of the yield. The effective
compound yield of the Funds is determined by computing the net change, exclusive
of capital changes, in the value of a hypothetical pre-existing account having a
balance of one share at the beginning of the period, subtracting a hypothetical
charge reflecting deductions from shareholder accounts, and dividing the
difference by the value of the account at the beginning of the base period to
obtain the base period return, and then compounding the base period return by
adding 1, raising the sum to a power equal to 365 divided by 7, and subtracting
1 from the result, according to the following formula: Effective Yield = (Base
Period Return + 1) 365/7) - 1. The current and the effective yields reflect the
reinvestment of net income earned daily on portfolio assets.
The Tax-Exempt Money Market Funds may also calculate its tax equivalent yield as
described below under "Taxable Equivalent Yield".
B-36
<PAGE>
Taxable Equivalent Yield
For a Tax-Exempt Money Market Fund, the taxable equivalent yield is
determined by dividing that portion of the Fund's yield which is tax-exempt by
one minus a stated federal income tax rate and adding the product to that
portion, if any, of the Fund's yield that is not tax-exempt (Tax equivalent
yields assume the payment of federal income taxes at a rate of 39.6%).
The resulting yield is what an investor generally would need to earn
from a taxable investment in order to realize an "after-tax" benefit equal to
the tax-free yield provided by a Tax-Exempt Money Market Fund.
For the 7-day period ended June 30, 1996, the Money Market Funds'
current, effective and tax-equivalent yields were as follows:
<TABLE>
<CAPTION>
Fund Class Current Yield Effective Yield Tax-Equivalent Yield
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Treasury Reserve Y 4.84% 4.95% N/A
----------------------------------------------------------------------------------
C 4.59% 4.69% N/A
- ---------------------------------------------------------------------------------------------------------------------
Cash Reserve Y 4.88% 5.00% N/A
-----------------------------------------------------------------------------------
C 4.63% 4.73% N/A
- ---------------------------------------------------------------------------------------------------------------------
Tax-Free Reserve Y 3.06% 3.10% 5.07%
-----------------------------------------------------------------------------------
C 2.81% 2.85% 4.65%
- ---------------------------------------------------------------------------------------------------------------------
Elite Cash Reserve Y 5.22% 5.36% N/A
-----------------------------------------------------------------------------------
C -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Elite Treasury Reserve Y 5.18% 5.32% N/A
-----------------------------------------------------------------------------------
C -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Elite Tax-Free Reserve Y 3.32% 3.37% 5.50%
-----------------------------------------------------------------------------------
C -- -- --
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
- Equity Funds-
-Fixed Income Funds -
Thirty-day Yield
The Equity and Fixed Income Funds may advertise a 30-day yield. These
figures will be based on historical earnings and are not intended to indicate
future performance. The yield of these Funds refers to the annualized income
generated by an investment in the Funds over a specified 30-day period. The
yield is
B-37
<PAGE>
calculated by assuming that the income generated by the investment during that
period generated each period over one year and is shown as a percentage of the
investment. In particular, yield will be calculated according to the following
formula:
Yield = 2[(A-B + 1)6 - 1]
---------
CxD
Where: A = dividends and interest earned during the period
B = expenses accrued for the period
(net of reimbursements)
C = the average daily number of shares outstanding during the
period that were entitled to receive dividends
D = net asset value per share on the last day of the period
Yields are one basis upon which investors may compare the Funds with other
funds; however, yields of other funds and other investment vehicles may not be
comparable because of the factors set forth above and differences in the methods
used in valuing portfolio instruments.
The yield of these Funds fluctuates, and the annualization of a week's dividend
is not a representation by the Company as to what an investment in the Fund will
actually yield in the future. Actual yields will depend on such variables as
asset quality, average asset maturity, the type of instruments the Fund invests
in, changes in interest rates on money market instruments, changes in the
expenses of the Fund and other factors.
Taxable Equivalent Yield
The tax equivalent yield for the Intermediate Municipal Bond,
Pennsylvania Municipal Bond and New Jersey Municipal Bond Funds is computed by
dividing that portion of the Fund's yield which is tax-exempt by one minus a
stated federal and/or state income tax rate and adding the product to that
portion, if any, of the Fund's yield that is not tax-exempt. (Tax equivalent
yields assume the payment of federal income taxes at a rate of 39.6% and, if
applicable, New Jersey income taxes at a rate of 6.5% and Pennsylvania income
taxes at a rate of 2.8%).
The resulting yield is what an investor generally would need to earn
from a taxable investment in order to realize an "after-tax" benefit equal to
the tax-free yield provided by the Fund.
For the 30-day period ended June 30, 1996, the yields on the Funds, other than
the Money Market Funds, were as follows:
<TABLE>
<CAPTION>
Fund Class SEC 30-Day Yield Tax Equivalent Yield
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth Equity Y .40% N/A
------------------------------------------------------------------
A .15% N/A
- -------------------------------------------------------------------------------------------------------
Core Equity Y 1.15% N/A
------------------------------------------------------------------
A .87% N/A
- -------------------------------------------------------------------------------------------------------
Special Equity Y 1.03% N/A
------------------------------------------------------------------
A .75% N/A
- -------------------------------------------------------------------------------------------------------
Equity Index Y 1.81% N/A
------------------------------------------------------------------
A ---- ----
- -------------------------------------------------------------------------------------------------------
International Growth Y ---- ----
------------------------------------------------------------------
A ---- ----
- -------------------------------------------------------------------------------------------------------
</TABLE>
B-38
<PAGE>
<TABLE>
<CAPTION>
Fund Class SEC 30-Day Yield Tax Equivalent Yield
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balanced Y 2.90% N/A
------------------------------------------------------------------
A 2.57% N/A
- -------------------------------------------------------------------------------------------------------
Short-Intermediate Bond Y 4.10% N/A
------------------------------------------------------------------
A 3.73% N/A
- -------------------------------------------------------------------------------------------------------
Bond Y 6.63% N/A
------------------------------------------------------------------
A 6.15% N/A
- -------------------------------------------------------------------------------------------------------
Short-Term Income Y 5.69% N/A
------------------------------------------------------------------
A 5.28% N/A
- -------------------------------------------------------------------------------------------------------
Government Income Y 6.51% N/A
------------------------------------------------------------------
A 6.05% N/A
- -------------------------------------------------------------------------------------------------------
Intermediate Municipal Y 6.30% 10.43%
Bond ------------------------------------------------------------------
A 5.81% 9.62%
- -------------------------------------------------------------------------------------------------------
Pennsylvania Municipal Y 5.26% 8.71%
Bond ------------------------------------------------------------------
A 4.50% 7.45%
- -------------------------------------------------------------------------------------------------------
New Jersey Municipal Y 4.28% 7.09%
Bond ------------------------------------------------------------------
A 3.91% 6.47%
- -------------------------------------------------------------------------------------------------------
Global Bond Y 6.19% N/A
------------------------------------------------------------------
A 5.74% N/A
- -------------------------------------------------------------------------------------------------------
</TABLE>
ADDITIONAL INFORMATION CONCERNING TAXES
- All Funds -
The following is only a summary of certain additional tax
considerations generally affecting the Funds and their shareholders that are not
described in the Funds' prospectuses. No attempt is made to present a detailed
explanation of the tax treatment of the Funds or their shareholders and the
discussion here and in the Funds' prospectuses is not intended as a substitute
for careful tax planning.
The following discussion of federal income tax consequences is based on
the Code and the regulations issued thereunder as in effect on the date of this
Statement of Additional Information. New legislation, as well as administrative
changes or court decisions, may significantly change the conclusions expressed
herein, and may have a retroactive effect with respect to the transactions
contemplated herein.
In General
The Company's policy is to distribute as dividends substantially all of
its net investment company income (whether taxable or tax-exempt) and any net
realized long-term capital gains to shareholders each year.
Information as to the tax status of distributions to shareholders will
be furnished at least annually by each Fund. Investors considering purchasing
shares of any Fund should consult competent tax counsel regarding the state and
local, as well as federal, tax consequences before investing.
B-39
<PAGE>
Tax Status of the Funds
Each Fund is treated as a separate entity for federal income tax
purposes and is not combined with the Company's other Funds. Each Fund intends
to qualify in its current taxable year as a "regulated investment company"
("RIC") under Subchapter M of the Code so that it will be relieved of federal
income tax on that part of its income that is distributed to shareholders. In
order to qualify as a RIC, each Fund must distribute dividends each year equal
to at least the aggregate of (i) 90% of its tax-exempt interest income, net of
certain deductions, and (ii) 90% of its investment company taxable income, if
any. In addition, each Fund must meet numerous tests regarding derivation of
gross income and diversification of assets.
Specifically, a Fund must meet two income requirements. First it must
derive at least 90% of its gross income each taxable year from certain specified
investment sources, such as dividends, interest, and gains from the sale of
stock or securities. Second, a Fund must derive less than 30% of its gross
income each taxable year from the sale or other disposition of stocks or
securities held for less than three months. In addition, each Fund must
diversify its assets such that at the close of each fiscal quarter of the Fund's
taxable year, at least 50% of the value of its assets is made up of cash and
cash items, U.S. government securities, securities of other RICs, and certain
other securities, such "other" securities being limited with respect to each
issuer to an amount not greater than 10% of the outstanding voting securities of
such issuer and not more than 5% of the value of the Fund's assets. Finally, at
the close of each fiscal quarter of the Fund's taxable year, no more than 25% of
the value of its assets may be invested in the securities (other than U.S.
government securities and securities of other RICs) of any one issuer or of two
or more issuers which the Fund controls and which are engaged in the same,
similar, or related trades or businesses.
While none of the Money Market or Fixed Income Funds expect to realize
any net capital gains (the excess of net long-term capital gains over net
short-term capital losses), any Fund that does realize such gains will
distribute them at least annually. A Fund will have no tax liability with
respect to distributed gains and the distributions will be taxable to Fund
shareholders as long-term capital gains, regardless of how long a shareholder
has held Fund shares. Such distributions will be designated as capital gains
dividends in a written notice mailed by each Fund to shareholders not later than
sixty days after the close of the Fund's taxable year.
If a shareholder recognizes a loss on the disposition of shares held
six months or less with respect to which the shareholder has received a capital
gains distribution, the loss will be treated as a long-term capital loss to the
extent of the amount of the capital gains distributions received.
A non-deductible, 4% federal excise tax will be imposed on any
regulated investment company that does not distribute to investors in each
calendar year an amount equal to (i) 98% of its calendar year ordinary income,
(ii) 98% of its capital gain net income (the excess of short- and long-term
capital gain over short- and long-term capital loss) for the one-year period
ending October 31, and (iii) 100% of any undistributed ordinary income or
capital gain net income from the prior year. Each Fund intends to declare and
pay dividends and any capital gains distributions so as to avoid imposition of
the federal excise tax.
If for any taxable year a Fund does not qualify for the special tax
treatment afforded to RICS, all of the taxable income of that Fund will be
subject to federal income tax at regular corporate rates (without any deduction
for distributions to Fund shareholders). In such event, all dividend
distributions made by the Fund (whether or not derived from tax-exempt interest)
would be taxable to shareholders to the extent of the Fund's earnings and
profits, and such dividend distributions would be eligible for the
dividends-received deduction for corporate shareholders.
B-40
<PAGE>
- Tax-Exempt Money Market Funds -
- Intermediate Municipal Bond Fund -
- Pennsylvania Municipal Bond Fund -
- New Jersey Municipal Bond Fund -
As described herein and in the Prospectuses relating to the Tax-Exempt
Money Market Funds, Intermediate Municipal Bond Fund, Pennsylvania Municipal
Bond Fund, and New Jersey Municipal Bond Fund, each of these Funds is designed
to provide investors with current tax-exempt interest income and is not intended
to constitute a balanced investment program. Shares of the Tax-Exempt Funds
would not be suitable for tax-exempt shareholders and plans, since such
shareholders and plans would not gain any additional benefit from the Funds'
dividends being tax-exempt.
In addition, the Funds may not be appropriate investments for entities
which are "substantial users" (or related to substantial users) of facilities
financed by "private activity bonds" or industrial development bonds. For these
purposes, the term "substantial user" is defined under U.S. Treasury Regulations
to include a non-exempt person who regularly uses a part of such facilities in a
trade or business.
Each Fund intends to qualify to pay "exempt-interest dividends" to its
shareholders by satisfying the Code's requirement that at the close of each
quarter of its taxable year at least 50% of the value of its total assets
consists of securities the interest on which is exempt from federal income tax.
Current federal tax law limits the types and volume of bonds qualifying for
federal income tax exemption of interest, which may have an effect on the
ability of the funds to purchase sufficient amounts of tax-exempt securities to
satisfy this requirement. Exempt interest dividends are excludable from
shareholders' gross income for regular federal income tax purposes but may have
collateral federal income tax consequences. Exempt-interest dividends may be
subject to the alternative minimum tax (the "AMT") imposed by Section 55 of the
Code or the environmental tax (the "Environmental Tax") imposed by Section 59A
of the Code. The AMT is imposed at a rate of up to 28% in the case of
non-corporate taxpayers and at the rate of 20% in the case of corporate
taxpayers, to the extent it exceeds the taxpayer's regular tax liability. The
Environmental Tax is imposed at the rate of 0.12% and applies only to corporate
taxpayers. The AMT and the Environmental Tax may be affected by the receipt of
exempt-interest dividends in two circumstances. First, exempt-interest dividends
derived from certain "private activity bonds" issued after August 7, 1986 will
generally be an item of tax preference for both corporate and non-corporate
taxpayers. Second, exempt-interest dividends, regardless of when the bonds from
which they are derived were issued or whether they are derived from private
activity bonds, will be included in a corporate shareholder's "adjusted current
earnings," as defined in Section 56(g) of the Code, in calculating the
corporation's alternative minimum taxable income for purposes of determining the
AMT and the Environmental Tax.
The deduction otherwise allowable to property and casualty insurance
companies for "losses incurred" will be reduced by an amount equal to a portion
of exempt-interest dividends received or accrued during any taxable year.
Foreign corporations engaged in a trade or business in the United States will be
subject to a "branch profits tax" on their "dividend equivalent amount" for the
taxable year, which will include exempt-interest dividends. Certain Subchapter S
corporations may also be subject to taxes on their "passive investment income,"
which could include exempt-interest dividends. Up to 85 percent of the Social
Security benefits or railroad retirement benefits received by an individual
during any taxable year will be included in the gross income of such individual
if the individual's modified adjusted gross income (which includes
exempt-interest dividends) plus one-half of the Social Security benefits or
railroad retirement benefits received by such individual during that taxable
year exceeds the base amount described in Section 86 of the Code.
Issuers of bonds purchased by a Fund (or the beneficiary of such bonds)
may have made certain representations or covenants in connection with the
issuance of such bonds to satisfy certain requirements of the Code that must be
satisfied subsequent to the issuance of such bonds. Shareholders should be aware
that exempt- interest dividends may become subject to federal income taxation
retroactively to the date of issuance of the bonds
B-41
<PAGE>
to which such dividends are attributable if such representations are determined
to have been inaccurate or if the issuers (or the beneficiary) of the bonds fail
to comply with certain covenants made at that time.
The percentage of total dividends paid by each Fund with respect to
any taxable year which qualifies as federal exempt-interest dividends will be
the same for all shareholders receiving dividends during such year. Interest on
indebtedness incurred by a shareholder to purchase or carry Fund shares will
generally not be deductible for federal income tax purposes. Any loss on the
sale or exchange of shares held for six months or less will be disallowed to the
extent of any exempt-interest dividends received by the selling shareholder with
respect to such shares.
In addition, while each of these Funds will seek to invest
substantially all of its assets in tax-exempt obligations (except on a temporary
basis or for temporary defensive periods), any investment company taxable income
earned by a Fund will be distributed. In general, a Fund's investment company
taxable income would include interest income received from Temporary Investments
(as defined herein), plus any net short-term capital gains realized by the Fund,
subject to certain adjustments and excluding net long-term capital gains for the
taxable year over the net short-term capital losses, if any, for such year ("net
capital gains"). To the extent such income is distributed by a Fund (whether in
cash or additional Shares), it will generally be taxable to shareholders as
ordinary income. Additionally, any net capital gains distributed to shareholders
will be taxable to shareholders as long-term capital gains, regardless of how
long a shareholder has held Fund shares.
DESCRIPTION OF SHARES
- All Funds -
The Company's Articles of Incorporation authorize the Board of
Directors to issue up to 30 billion full and fractional shares of Common Stock.
The Company presently consists of twenty-one portfolios, each having an
institutional class of shares (Class Y) and an individual class of shares (Class
A or Class C), as listed below:
Class of Shares # of Shares Fund
- --------------- ----------- ----
Class Y 1 billion Cash Reserve
Class C 1 billion Cash Reserve
Class Y 1.25 billion Treasury Reserve
Class C 1.25 billion Treasury Reserve
Class Y 50 million Equity Fund
Class A 50 million Equity Fund
Class Y 25 million International
Growth Fund
Class A 25 million International
Growth Fund
Class Y 500 million Equity Index Fund
Class A 500 million Equity Index Fund
Class Y 100 million Growth Equity Fund
Class A 100 million Growth Equity Fund
B-42
<PAGE>
Class of Shares # of Shares Fund
- --------------- ----------- ----
Class Y 100 million Short-Intermediate
Bond Fund
Class A 100 million Short-Intermediate
Bond Fund
Class Y 250 million Tax-Free Reserve
Class C 250 million Tax-Free Reserve
Class Y 100 million Balanced Fund
Class A 100 million Balanced Fund
Class Y 100 million Government Income Fund
Class A 100 million Government Income Fund
Class Y 100 million Intermediate Municipal Bond Fund
Class A 100 million Intermediate Municipal Bond Fund
Class Y 25 million Global Bond Fund
Class A 25 million Global Bond Fund
Class Y 100 million Pennsylvania Municipal Bond Fund
Class A 100 million Pennsylvania Municipal Bond Fund
Class Y 100 million New Jersey Municipal Bond Fund
Class A 100 million New Jersey Municipal Bond Fund
Class Y 750 million Elite Cash Reserve
Class C 750 million Elite Cash Reserve
Class Y 250 million Elite Treasury Reserve
Class C 250 million Elite Treasury Reserve
Class Y 1 billion Elite Government Reserve
Class C 1 billion Elite Government Reserve
Class Y 250 million Elite Tax-Free Reserve
Class C 250 million Elite Tax-Free Reserve
Class Y 1 billion Special Equity Fund
Class A 1 billion Special Equity Fund
Class Y 1 billion Bond Fund
Class A 1 billion Bond Fund
Class Y 1 billion Short Term Income Fund
Class A 1 billion Short Term Income Fund
B-43
<PAGE>
Previously, Class A Shares and Class C Shares were known as Series B
Shares while Class Y Shares were known as Series A Shares. CoreFunds has changed
their designation to conform to the standard designations suggested by the
Investment Company Institute.
The Board of Directors may classify or reclassify any authorized but
unissued shares of the Company into one or more additional portfolios or series
of shares within a portfolio.
Shares have no subscription or pre-emptive rights and only such
conversion or exchange rights as the Board may grant in its discretion. When
issued for payment as described in the Prospectuses relating to the Funds and in
this Statement of Additional Information, a Fund's shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of the Company,
shares of each Fund are entitled to receive the assets available for
distribution belonging to the Fund, and a proportionate distribution, based upon
the relative asset values of the Fund and the Company's other portfolios, of any
general assets not belonging to any particular Fund which are available for
distribution.
Rule 18f-2 under the Investment Company Act provides that any matter
required to be submitted to the holders of the outstanding voting securities of
an investment company such as the Company shall not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of the Fund affected by the matter. A Fund is affected by a
matter unless it is clear that the interests of each Fund in the matter are
identical or that the matter does not affect any interest of the Fund. Under
Rule 18f-2, the approval of an investment advisory agreement or any change in a
fundamental investment policy would be effectively acted upon with respect to a
Fund only if approved by a majority of the outstanding shares of such Fund. In
the case of a Rule 12b-1 distribution plan, approval by a series would be
effectively acted upon only if approved by a majority of the outstanding shares
of the series of a Fund having such a distribution plan. However, Rule 18f-2
also provides that the ratification of independent auditors, the approval of
principal underwriting contracts, and the election of Directors may be
effectively acted upon by shareholders of the Company voting together without
regard to class or series.
Notwithstanding any provision of Maryland law requiring a greater vote
of the Company's shares (or of any class voting as a class) in connection with
any corporate action, unless otherwise provided by law (for example, by Rule
18f-2) or by the Company's Articles of Incorporation, the Company may take or
authorize such action upon the favorable vote of the holders of more than 50% of
the outstanding Common Stock of all of the Funds (voting together without regard
to class or series).
DIRECTORS AND OFFICERS
- All Funds -
The names and general background information of the Company's Directors
and Executive Officers are set forth below:
ERIN ANDERSON (6/10/55) - Director - Professor of Marketing, INSEAD,
Fountainebleu, France since 1994; Associate Professor of Marketing, The
Wharton School of the University of Pennsylvania, 1981- 1994.
EMIL J. MIKITY (8/31/28) - Director - Retired; Senior Vice President
Investments, Atochem North America, 1979-1989.
B-44
<PAGE>
GEORGE H. STRONG (7/15/26) - Director - Financial Consultant since
1985; Director and Senior Vice President, Universal Health Services,
Inc., 1979-1984.
THOMAS J. TAYLOR (1/26/39) - Director - Consultant; Chairman, Conestoga
Funds since 1995 and a Trustee 1990-1995; Trustee of Community Heritage
Fund since 1993.
CHERYL H. WADE (11/7/47) - Director - Associate General Secretary and
Treasurer, American Baptist Churches since 1993; Treasurer, the
Ministers and Missionaries Benefit Board, American Baptist Churches,
1990-1993.
DAVID LEE (4/16/52) - President, Chief Executive Officer - Senior Vice
President of the Administrator and Distributor since 1993; Vice
President of the Administrator and Distributor since 1991; President,
GW Sierra Trust Funds prior to 1991.
JAMES W. JENNINGS (1/15/37) - Secretary - Partner of the law firm of
Morgan, Lewis & Bockius LLP since 1970.
KEVIN P. ROBINS (4/15/61) - Vice President, Assistant Secretary -
Senior Vice President and General Counsel of SEI Corporation and the
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 (10/18/53) - Vice President, Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and Distributor
since 1983.
KATE STANTON (11/18/58) - Vice President, Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and Distributor
since 1994. Associate, Morgan, Lewis & Bockius LLP (law firm) before
1994.
TODD CIPPERMAN (2/14/66) - Vice President, Assistant Secretary - Mr.
Cipperman has been Vice President and Assistant Secretary of SEI
Corporation since November 1995. From 1994 to May 1995, Mr. Cipperman
was an Associate with Dewey Ballentine. Prior to 1994, Mr. Cipperman
was an Associate with Winston & Strawn.
MARC H. CAHN (6/19/57) - Vice President, Assistant Secretary - Mr. Cahn
has been Vice President and Assistant Secretary of SEI Corporation
since July 1996. From 1995 to 1996, Mr. Cahn served as Special Counsel
to Barclays Bank. Prior to 1995, he was counsel for First Fidelity
Bancorporation; Associate, Morgan, Lewis & Bockius LLP (law firm) prior
thereto.
JOSEPH M. LYDON (9/27/59) - Vice President - Mr. Lydon has been
Director of Business Administration-Fund Resources, a division of SEI
Corporation since November 1995. From 1989 to April 1995, Mr. Lydon was
Vice President of Fund Group. Vice President of the Advisor - Dreman
Value Management, L.P. and President of Dreman Financial Services, Inc.
STEPHEN G. MEYER (7/12/65) - Controller - CPA - 1995 to Present.
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.
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, 1996, the Company paid a total of $143,000
B-45
<PAGE>
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.
The following Compensation table shows aggregate compensation paid to
each of the Fund's Directors by the Fund and the Fund Complex respectively, for
the year ended June 30, 1996.
COMPENSATION TABLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5)
Name of Aggregate Pension or Estimated Total Compensation
Person, Compensation Retirement Annual From Registrant
Position From Registrant Benefits Accrued Benefits and Fund Complex
for the fiscal as Part of Fund Upon Paid to Directors
year ended Expenses Retirement for the fiscal year
June 30, 1996 ended June 30, 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Erin Anderson, $28,600 0 0 $28,600
Director
Emil J. Mikity, $28,600 0 0 $28,600
Director
George H. Strong, $28,600 0 0 $28,600
Director
Thomas J. Taylor, $28,600 0 0 $28,600
Director
Cheryl H. Wade, $28,600 0 0 $28,600
Director
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
PRINCIPAL HOLDERS OF SECURITIES
- Growth Equity Fund -
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding Class Y Shares of Growth Equity Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Patterson & Co. 8,208,282.8530 94.56%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
</TABLE>
B-46
<PAGE>
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding Class A Shares of Growth Equity Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Patterson & Co. 25,999.8970 11.10%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
</TABLE>
- Core Equity Fund -
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding Class Y Shares of Core Equity Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Patterson & Co. 22,144,239.4120 91.95%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
</TABLE>
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding Class A Shares of Core Equity Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
National Financial Services Corp. 156,470.1210 24.14%
For Exclusive Use of our Customers
200 Liberty Street, 4th Fl.
One World Financial Center
New York, NY 10008-3908
</TABLE>
- Special Equity Fund -
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding Class Y Shares of Special Equity Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Patterson & Co. 5,166,082.0530 95.22%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
</TABLE>
B-47
<PAGE>
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding Class A Shares of the Special Equity Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
NFSC 23,470.7680 22.45%
One World Financial Center
P.O. Box 3908
Church Street Station
New York, NY 10008-3908
State Street Bank 5,436.5610 5.20%
and Trust Company
for the IRA Rollover of
Bernard J. Daney
121 Park Lane
Wilmington, DE 19807-2129
</TABLE>
- Equity Index Fund -
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding Class Y Shares of the Equity Index Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Patterson & Co. 5,338,357.2250 87.25%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
</TABLE>
- International Growth Fund -
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding Class Y Shares of International Growth Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Patterson & Co. 9,381,105.0170 97.33%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
</TABLE>
B-48
<PAGE>
As of September 23, 1996, the following accounts were holders of record
of 5% or more of the outstanding Class A Shares of International Growth Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Mark E. Stalnecker & 13,948.2330 9.20%
Susan M. Stalnecker JTTEN
9 Briarcrest Drive
Wallingford, PA 19086-6710
</TABLE>
- Balanced Fund -
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding Class Y Shares of Balanced Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Patterson & Co. 8,196,476.3280 96.02%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
</TABLE>
- Short-Intermediate Bond Fund -
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding Class Y Shares of Short-Intermediate Bond Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Patterson & Co. 15,080,846.9590 90.86%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
</TABLE>
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding Class A Shares of Short-Intermediate Bond Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
National Financial Services Corp. 32,560.9640 10.61%
For Exclusive Use of our Customers
200 Liberty St., 4th Fl.
One World Financial Center
New York, NY 10281-1003
</TABLE>
B-49
<PAGE>
- Bond Fund -
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding Class Y Shares of Bond Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Patterson & Co. 19,092,222.6580 97.33%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
</TABLE>
As of September 23, 1996, the following accounts were holders of record
of 5% or more of the outstanding Class A Shares of Bond Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
NFSC 22,049.3610 17.87%
One World Financial Center
P.O. Box 3908
Church Street Station
New York, NY 10008-3908
Meridian Trust Company 9,697.3150 7.88%
for IRA Rollover of
Shiras E. Holmes
8761 W. Barkhurst Drive
Pittsburgh, PA 15237-4183
CoreStates Bank NA 7,231.8640 5.86%
Cust for the Rollover IRA of
Jane M. Rodel
926 Avenue B
Langhorne, PA 19047-3805
</TABLE>
- Intermediate Municipal Bond Fund -
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding Class Y Shares of Intermediate Municipal Bond
Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Patterson & Co. 63,130.5510 94.78%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
</TABLE>
B-50
<PAGE>
As of September 23, 1996, the following accounts were holders of record
of 5% or more of the outstanding Class A Shares of Intermediate Municipal Bond
Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ---------------- ------------------
<S> <C> <C>
Joseph T. Oprocha & 6,944.9460 7.47%
Theresa E. Oprocha JTTEN
107 Snyder Avenue
Philadelphia, PA 19148
Frank B. Holst & 5,885.5480 6.33%
E. Joan Holst JTTEN
2218 Oak Terrace
Lansdale, PA 19446
Thomas Glenn 5,512.8650 5.93%
827 North 63rd Street
Philadelphia, PA 19151
Joanne V. Palestini & 5,878.1310 6.33%
Joseph F. Palestini ITTEN
753 Manatawa Avenue
Philadelphia, PA 19128
National Financial Services Corp. 5,040.2780 5.42%
For Exclusive Use of Our Customers
200 Liberty Street, 4th Floor
1 World Financial Center
New York, NY 10281
Irene Sungaila 5,129.4170 5.52%
5214 Burton Street
Philadelphia, PA 19124
</TABLE>
- Short Term Income Fund -
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding Class Y Shares of Short Term Income Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Patterson & Co. 2,499,479.5560 84.35%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
</TABLE>
B-51
<PAGE>
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Meridian Trust Co. TTEE 454,770.0440 15.35%
FBO Knauf Fiber Glass GMBH
Attn. Kathleen M. Szmborski
501 Washington Street
Reading, PA 19601-3416
</TABLE>
As of September 23, 1996, the following accounts were holders of record
of 5% or more of the outstanding Class A Shares of Short Term Income Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
CoreStates Bank NA 8,612.9130 98.60%
Cust for the Rollover IRA of
John M. Ennis
206 Emerald Avenue
Reading, PA 19606-1450
</TABLE>
- Government Income Fund -
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding Class Y Shares of Government Income Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Patterson & Co. 1,871,902.5340 99.20%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
</TABLE>
As of September 23, 1996, the following accounts were holders of record
of 5% or more of the outstanding Class A Shares of Government Income Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Jean Taxin 8,400.3320 6.49%
5005 Woodbine Avenue
Philadelphia, PA 19131
CoreStates Bank NA C/F IRS 7,499.9820 5.79%
of Donald A. Fleck
32 Summit Circle
Churchville, PA 18966
</TABLE>
- Pennsylvania Municipal Bond Fund -
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding Class Y Shares of Pennsylvania Municipal Bond
Fund:
B-52
<PAGE>
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Dr. Vernon F. Alibert & 180,742.9970 19.31%
Dolores V. Alibert
1420 Conchester Highway
Boothwyn, PA 19061
Patterson & Co. 712,494.5100 76.13%
PNB Personal Trust Acctg
P.O. Box 7829
Philadelphia, PA 19101
</TABLE>
As of September 23, 1996, the following accounts were holders of record
of 5% or more of the outstanding Class A Shares of Pennsylvania Municipal Bond
Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
National Financial Services Corp. 17,758.9520 21.43%
For The Benefit of Our Customers
One World Financial Center
P.O. Box 3908
Church Street Station
New York, NY 10008-3908
George W. Grosz 4,644.0030 5.60%
Dorothy M. Grosz JT WROS
533 S. Waterloo Rd.
Devon, PA 19333-1729
Lee B. Kirts 4,323.8420 5.22%
Celine Kirts JJ WROS
451 Knightsbridge LN
Hatfield, PA 19440-3603
</TABLE>
- New Jersey Municipal Bond Fund -
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding Class Y Shares of New Jersey Municipal Bond
Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Patterson & Co. 123,813.7170 98.97%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
</TABLE>
B-53
<PAGE>
As of September 23, 1996, the following accounts were holders of record
of 5% or more of the outstanding Class A Shares of New Jersey Municipal Bond
Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Nathan J. Bershanoff 8,072.9160 29.46%
5251 Garden Avenue
Pennsauken, NJ 08109
Mary Manchur & 2,404.7250 8.77%
Jean Kent JTTEN
19 Thatchers Road
Frenchtown, NJ 08225
Almira E. Brinser & 2,287.6660 8.35%
Everett L. Brinser JTTEN
802 Chestnut Avenue
Laurel Springs, NJ 08021
Deborah L. Brett 2,091.9310 7.63%
Randall P. Brett JTTEN
7 Sherman Court
Plainsboro, NJ 08536-2332
Andria Hildebrand 1,930.9480 7.05%
Wilfred C. Hildebrand JTTEN
211 S. Main Street
Pennington, NJ 08534
Valerie A. Kern 1,674.5140 6.11%
Helmut O. Kern JTTEN
5 Trinity Pl.
Jackson, N.J. 08527-1821
Francis L. Bates 1,926.6110 7.03%
P.O. Box 250
Port Norris, NJ 08349-0250
Joyce H. Ongradi 1,453.8770 5.31%
116 Ingleside Ave.
Pennington, NJ 08534-3101
Joseph Gizelbach 2,901.3540 10.59%
Adelaide C. Gizelbach JTTEN
14 Winding Way Rd.
Stratford, NJ 08084-1914
</TABLE>
B-54
<PAGE>
- Cash Reserve -
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding Class Y Shares of Cash Reserve:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Patterson & Co. 777,597,413.7000 91.58%
P.O. Box 7618 FC9-1-17
Attn: Jim Quinlan
Philadelphia, PA 19101-7618
</TABLE>
- Treasury Reserve -
As of April 16, 1996, the following accounts were holders of record of
5% or more of the outstanding Class Y Shares of:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Patterson & Co. 565,615,651.4600 62.88%
P.O. Box 7618 FC9-1-17
Attn: Jim Quinlan
Philadelphia, PA 19101-7618
The Bank of New York 96,814,774.2200 10.76%
One Wall Street, 5th Floor/STIF
New York, NY 10286-0001
First Union National Bank 82,296,885.0000 9.15%
401 S. Tryon St., 3rd Floor
Charlotte, NC 28202-1911
</TABLE>
As of September 23, 1996, the following accounts were holders of record
of 5% or more of the outstanding Class C Shares of Treasury Reserve:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Patterson & Co. 9,904,355.3100 62.60%
P.O. Box 7618 FC9-1-17
Attn: Jim Quinlan
Philadelphia, PA 19101-7618
Kessler & Cohen 938,769.7700 5.93%
Attn: Stewart Cohen
1705 Two Penn Center
JFK Blvd./15th St.
Philadelphia, PA 19102
</TABLE>
B-55
<PAGE>
- Tax-Free Reserve -
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding Class Y Shares of Tax-Free Reserve:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Patterson & Co. 107,822,967.7500 94.08%
P.O. Box 7618 FC9-1-17
Attn: Jim Quinlan
Philadelphia, PA 19101
</TABLE>
As of September 23, 1996, the following accounts were holders of record
of 5% or more of the outstanding Class C Shares of Tax-Free Reserve:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Richard E. Meyers 988,189.5800 26.96%
Donna I. Meyers, JT TEN
517 Monroe Rd.
Merion, PA 19066-1017
Marietta E. Williams 236,050.0200 6.44%
RD2 Box 141
Elverson, PA 19520-9435
Elizabeth R. Cabine POA 200,078.00 5.46%
Eleanor P. Jester
2135 Concord Pike
Wilmington, DE 19803-2906
Gregory J. Blazic 199,412.2800 5.44%
Lellus L. Blazic JT TEN
P.O. Box 603 Country Club Road
Valley Forge, PA 19482-0603
Philip J. Harvey 196,943.7000 5.37%
2 Flyway Drive
Newton Square, PA 19073-3008
</TABLE>
- Elite Cash Reserve (formerly Fiduciary Reserve) -
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding shares of Elite Cash Reserve:
B-56
<PAGE>
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Patterson & Co. 391,765,240.5000 100%
P.O. Box 7618 FC9-1-17
Attn: Jim Quinlan
Philadelphia, PA 19101
</TABLE>
- Elite Treasury Reserve (formerly Fiduciary Treasury Reserve) -
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding shares of Elite Treasury Reserve:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Patterson & Co. 25,509,460.0500 100%
P.O. Box 7618 FC9-1-17
Attn: Jim Quinlan
Philadelphia, PA 19101
</TABLE>
- Elite Tax-Free Reserve (formerly Fiduciary Tax-Free Reserve) -
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding shares of Elite Tax-Free Reserve:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Patterson & Co. 99,768,072.3200 100%
P.O. Box 7618 FC9-1-17
Attn: Jim Quinlan
Philadelphia, PA 19101
</TABLE>
- Global Bond Fund -
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding Class Y Shares of Global Bond Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
Patterson & Co. 3,314,876.7150 96.67%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
</TABLE>
B-57
<PAGE>
As of September 23, 1996, the following account was a holder of record
of 5% or more of the outstanding Class A Shares of Global Bond Fund:
<TABLE>
<CAPTION>
Amount of Record Percent of Total
Name Ownership Shares Outstanding
---- ----------------- ------------------
<S> <C> <C>
CoreStates Bank N.A. C/F IRA of 5,827.3890 35.82%
A. Gilbert Heebner
2 Etienne Arbordeau
Berwyn Baptist Road
Devon, PA 19333
James W. Jennings 4,598.5230 28.27%
2000 One Logan Square
Philadelphia, PA 19103
CoreStates Bank NA C/F IRA of 2,716.3990 16.70%
Allen Luke
17 Bennett Court
East Brunswick, NJ 08816
</TABLE>
INVESTMENT ADVISER
- All Funds -
CoreStates Investment Advisers, Inc. ("CoreStates Advisers"), a
wholly-owned subsidiary of CoreStates Bank, N.A. ("CoreStates Bank"), itself a
wholly-owned subsidiary of CoreStates Financial Corp ("CoreStates Corp"), is the
Company's investment adviser.
The services provided and the expenses assumed by CoreStates Advisers
as investment adviser, as well as the fees payable to it, are described in the
Funds' Prospectuses.
CoreStates Corp is a bank holding company registered under the Bank
Holding Company Act. CoreStates Corp is engaged through its principal
subsidiaries, CoreStates Bank and New Jersey National Bank (national banking
associations), and Hamilton Bank, in commercial, international and consumer
banking, and in providing trust services. CoreStates Corp, through other direct
and indirect subsidiaries also provides consumer financing, factoring,
commercial financing, and financial advisory services. The principal executive
offices of CoreStates Corp are located at 1500 Market Street, Philadelphia,
Pennsylvania 19102.
In April 1996, CoreStates Corp acquired Meridian Bancorp. Pursuant to
this acquisition, CoreFunds merged the Conestoga Fund portfolios into CoreFunds
Family of Mutual Funds. In particular, the Conestoga Cash Management, Tax-Free,
U.S. Treasury Securities, Equity, Intermediate Income, Pennsylvania Tax-Free
Bond, Balanced and International Equity Funds were merged into existing
comparable CoreFunds portfolios with the successor entity remaining the
CoreFunds portfolio. In addition, the Conestoga Special Equity, Bond and Short
Term Income Funds were merged into newly-created CoreFunds shell portfolios in
order to continue that operation. The shareholders of each of the CoreFunds'
portfolios approved new investment advisory agreements with CoreStates Advisors
as well as new investment sub-advisory agreements with all existing sub-advisors
to the Funds. In connection with the International Growth Fund, shareholders
also approved the addition of Aberdeen Fund Managers, Inc. ("Aberdeen Managers")
as an investment sub-advisor within the contract of a multiple manager system.
B-58
<PAGE>
The Investment Advisory Agreements
The Investment Advisory Agreements between each Fund and CoreStates
Advisers provide that CoreStates Advisers shall not be liable for any error of
judgment or mistake of law or for any loss suffered by a Fund in connection with
its performance under the respective Investment Advisory Agreements, 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 CoreStates Advisers in the performance
of its duties, or from reckless disregard by it of its duties and obligations
thereunder.
Unless sooner terminated, the Investment Advisory Agreements will
remain in effect from year to year if such continuance is approved at least
annually by CoreFunds' Board of Directors, or by vote of a majority of the
outstanding shares of each Fund (as defined in the Prospectuses), and by a
majority of the Directors who are not parties to the Investment Advisory
Agreements or interested persons (as defined in the Investment Company Act) of
any party to the Investment Advisory Agreements, by vote cast in person at a
meeting called for such purpose. The Investment Advisory Agreements are
terminable at any time on sixty days' written notice without penalty by the
Directors, by vote of a majority of the outstanding shares of the respective
Funds, or by CoreStates Advisers. The Investment Advisory Agreements also
terminate automatically in the event of their assignment, as defined in the
Investment Company Act.
Investment Advisory Fees
For the fiscal years ended June 30, 1994, 1995 and 1996, the Funds paid the
following investment advisory fees to CoreStates:
<TABLE>
<CAPTION>
Advisory Fees Paid Advisory Fees Waived
-------------------------------------- --------------------------------------
1994 1995 1996 1994 1995 1996
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Growth Equity Fund $320,583 $386,678 $728,921 $248,000 $193,333 $84,312
- --------------------------------------------------------------------------------------------------------------------
Core Equity Fund 121,274 199,645 1,973,776 44,569 51,162 0
- --------------------------------------------------------------------------------------------------------------------
Special Equity Fund * * 25,955 * * 573,349
- --------------------------------------------------------------------------------------------------------------------
Equity Index Fund 73,135 85,692 182,967 219,716 259,535 365,435
- --------------------------------------------------------------------------------------------------------------------
International Growth 664,153 861,592 964,647 85,107 57,439 20,021
- --------------------------------------------------------------------------------------------------------------------
Balanced Fund 134,678 240,853 441,222 145,819 133,801 106,546
- --------------------------------------------------------------------------------------------------------------------
Short-Intermediate
Bond Fund 183,014 203,083 267,327 106,631 87,019 137,169
- --------------------------------------------------------------------------------------------------------------------
Bond Fund * * 457,043 * * 509,285
- --------------------------------------------------------------------------------------------------------------------
Short Term Income
Fund * * 55,281 * * 108,344
- --------------------------------------------------------------------------------------------------------------------
Intermediate Municipal
Bond Fund 1,899 2,752 871 11,626 6,425 5,571
- --------------------------------------------------------------------------------------------------------------------
Governmental Income
Fund 10,608 22,528 49,103 38,912 33,796 23,318
- --------------------------------------------------------------------------------------------------------------------
Pennsylvania
Municipal Bond Fund 0 0 0 361 10,956 22,299
- --------------------------------------------------------------------------------------------------------------------
New Jersey Municipal
Bond Fund 0 0 0 788 8,045 7,888
- --------------------------------------------------------------------------------------------------------------------
Global Bond Fund 41,845 77,740 145,856 41,845 77,729 45,157
- --------------------------------------------------------------------------------------------------------------------
Cash Reserve 1,182,826 1,196,254 1,825,668 1,505,298 1,522,489 1,236,846
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
B-59
<PAGE>
<TABLE>
<CAPTION>
Advisory Fees Paid Advisory Fees Waived
-------------------------------------- --------------------------------------
1994 1995 1996 1994 1995 1996
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Treasury Reserve 1,067,724 1,039,138 1,694,725 1,358,926 1,322,599 1,101,807
- --------------------------------------------------------------------------------------------------------------------
Tax-Free Reserve 197,246 172,635 208,997 252,250 219,739 134,575
- --------------------------------------------------------------------------------------------------------------------
Elite Cash Reserve** 0 0 0 104,101 109,215 103,043
- --------------------------------------------------------------------------------------------------------------------
Elite Treasury
Reserve ** 0 0 0 2,179,755 2,011,375 1,975,514
- --------------------------------------------------------------------------------------------------------------------
Elite Tax-Free
Reserve** 0 0 0 409,628 424,166 436,921
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------
* Not in operation during such period.
** Formerly the Fiduciary Reserve, Fiduciary Treasury Reserve and Fiduciary
Tax-Free Reserve, respectively.
SUB-ADVISERS
- International Growth Fund -
Martin Currie, Inc. ("Martin Currie"), a subsidiary of Martin Currie,
Ltd., and Aberdeen Fund Managers, Inc. ("Aberdeen Managers") a subsidiary of
Aberdeen Trust, PLC, are the International Growth Fund's sub-advisers.
Martin Currie, Ltd., through its various subsidiaries, performs various
investment advisory services for a number of open- and closed-end mutual funds,
investment trusts, unit trusts, offshore funds, pension funds, foundations,
charities and individual accounts. The Group's current assets under management
total over $7.5 billion. The Martin Currie offices are located in Saltire Court,
20 Castle Terrace, Edinburgh, Scotland.
Aberdeen Trust PLC performs various investment advisory services for a
number of Investment Trusts, Unit Trusts, Institutional Funds and Individual
Clients. Current assets under management total over $4 billion. The Aberdeen
Trust PLC offices are located at 10 Queens Terrace, Aberdeen AB9 1QJ Scotland
and Aberdeen Managers officers are located at Nations Bank Tower, 22nd Floor,
Ft. Lauderdale, Florida 33396.
The services provided and the expenses assumed by Martin Currie and
Aberdeen Managers as sub-advisers, as well as the fees payable to them, are
described in the Prospectuses relating to International Growth Fund.
The International Growth Sub-Advisory Agreement
The International Growth Sub-Advisory Agreement between CoreStates
Advisers and Martin Currie provides that Martin Currie shall not be liable for
any error of judgment or mistake of law or for any loss suffered by
International Growth Fund in connection with its performance under this
Sub-Advisory Agreement, except a loss resulting from a breach of fiduciary duty
with respect to the receipt of compensation for services or loss resulting from
willful misfeasance, bad faith or gross negligence on the part of Martin Currie
in the performance of its duties, or from reckless disregard by it of its duties
and obligations thereunder.
Unless sooner terminated, the International Growth Sub-Advisory
Agreement will remain in effect from year to year if such continuance is
approved at least annually by CoreFunds' Board of Directors, or by vote of a
majority of the outstanding shares of International Growth Fund (as defined in
the Prospectuses), and by a majority of the Directors who are not parties to
this Sub-Advisory Agreement or interested persons (as defined in the Investment
Company Act) of any party to this Sub-Advisory Agreement, by vote cast in person
at a meeting called
B-60
<PAGE>
for such purpose. The International Growth Sub-Advisory Agreement is terminable
at any time on sixty days' written notice without penalty by the Directors, by
vote of a majority of the outstanding shares of the Fund, by CoreStates
Advisers, or by Martin Currie. The International Growth Sub-Advisory Agreement
also terminates automatically in the event of its assignment, as defined in the
Investment Company Act.
The International Growth Sub-Advisory Agreement between CoreStates
Advisers and Aberdeen Managers provides that Aberdeen Managers shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
International Growth Fund in connection with its performance under this
Sub-Advisory Agreement, except a loss resulting from a breach of fiduciary duty
with respect to the receipt of compensation for services or loss resulting from
willful misfeasance, bad faith or gross negligence on the part of Aberdeen
Managers in the performance of its duties, or from reckless disregard by it of
its duties and obligations thereunder.
Unless sooner terminated, the International Growth Sub-Advisory
Agreement will remain in effect from year to year if such continuance is
approved at least annually by CoreFunds' Board of Directors, or by vote of a
majority of the outstanding shares of International Growth Fund (as defined in
the Prospectuses), and by a majority of the Directors who are not parties to
this Sub-Advisory Agreement or interested persons (as defined in the Investment
Company Act) of any party to this Sub-Advisory Agreement, by vote cast in person
at a meeting called for such purpose. The International Growth Sub-Advisory
Agreement is terminable at any time on sixty days' written notice without
penalty by the Directors, by vote of a majority of the outstanding shares of the
Fund, by CoreStates Advisers, or by Aberdeen Managers. The International Growth
Sub-Advisory Agreement also terminates automatically in the event of its
assignment, as defined in the Investment Company Act.
- Global Bond Fund -
Analytic*TSA International, Inc. ("Analytic") is the sub-adviser to
the Global Bond Fund.
Analytic 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. Analytic 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.
The Global Bond Sub-Advisory Agreement
The Global Bond Sub-Advisory Agreement between CoreStates Advisers and
Analytic provides that Analytic shall not be liable for any error of judgment or
mistake of law or for any loss suffered by Global Bond Fund in connection with
its performance under this Sub-Advisory Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or loss resulting from willful misfeasance, bad faith or gross
negligence on the part of Analytic in the performance of its duties, or from
reckless disregard by it of its duties and obligations thereunder.
Unless sooner terminated, the Global Bond Sub-Advisory Agreement will
remain in effect from year to year if such continuance is approved at least
annually by CoreFunds' Board of Directors, or by vote of a majority of the
outstanding shares of Global Bond Fund (as defined in the Prospectuses), and by
a majority of the Directors who are not parties to this Sub-Advisory Agreement
or interested persons (as defined in the Investment Company Act) of any party to
this Sub-Advisory Agreement, by vote cast in person at a meeting called for such
purpose. The Global Bond Sub-Advisory Agreement is terminable at any time on
sixty days' written notice without penalty by the Directors, by vote of a
majority of the outstanding shares of the Fund, by CoreStates Advisers, or by
Analytic. The
B-61
<PAGE>
Global Bond Sub-Advisory Agreement also terminates automatically in the event of
its assignment, as defined in the Investment Company Act.
PORTFOLIO TRANSACTIONS
- All Funds -
In General
Pursuant to the Funds' respective advisory agreements, CoreStates
Advisers and/or the sub-advisers with regard to the International Growth and
Global Bond Funds (collectively, the "Advisers") determine which securities are
to be sold and purchased by each Fund and which brokers are to be eligible to
execute the portfolio transactions. Fund securities are normally purchased
directly from the issuer or from an underwriter or market maker for the
securities. Purchases from underwriters of certain portfolio securities include
a commission or concession paid by the issuer to the underwriter and purchases
from dealers serving as market makers may include the spread between the bid and
asked price. While the Advisers generally seeks competitive spreads or
commissions, each Fund may not necessarily pay the lowest spread or commission
available on each transaction for reasons discussed below.
Allocation of security transactions, including their frequency, to
various dealers is determined by the Advisers in their best judgment and in a
manner deemed fair and reasonable to shareholders. The primary consideration is
the prompt execution of orders in an effective manner at the most favorable
price. Subject to this consideration, broker/dealers who provide supplemental
investment research to the Advisers may receive orders for transactions by a
Fund, although consideration of such supplemental investment research is not
applicable with respect to Equity Index Fund. Information so received is in
addition to and not in lieu of services required to be performed by the
Advisers, nor would the receipt of such information reduce the Advisers' fees.
Such information may be useful to the Advisers in serving the Funds as well as
their other clients, and conversely, supplemental information obtained by the
placement of business of other clients may be useful to the Advisers in carrying
out their respective obligations to the Funds. In addition, the Funds may direct
commission business to one or more designated broker/dealers, including the
Distributor or an affiliate of the Adviser, in connection with such
broker/dealer's payment of certain of the Fund's expenses.
A Fund will not acquire portfolio securities issued by, make savings
deposits in, or enter into repurchase or reverse repurchase agreements with the
Advisers, the Administrator, the Distributor, or their affiliates, and will not
give preference to any correspondents of the Advisers with respect to such
transactions, securities, savings deposits, repurchase agreements, and reverse
repurchase agreements. However, a Fund may, on a non-preferential basis, enter
into such transactions with institutional investors who purchase shares of a
Fund on behalf of their customers. However, absent exemptive relief, a Fund will
not engage in such activities if prohibited from doing so by Section 17(a) of
the Investment Company Act.
Investment decisions for each Fund are made independently from those
for any other investment portfolios or accounts ("accounts") managed by the
Advisers. Such accounts may also invest in the same securities as a Fund. When a
purchase or sale of the same security is made at substantially the same time on
behalf of a Fund and another account, the transaction will be averaged as to
price, and available investments allocated as to amount, in a manner which the
Advisers believe to be equitable to the Fund and such other account. In some
instances, this investment procedure may adversely affect the price paid or
received by a Fund or the size of the position obtained or sold by the Fund. To
the extent permitted by law, the Advisers may aggregate the securities to be
sold or purchased for a Fund with those to be sold or purchased for other
accounts in order to obtain the best execution.
As provided by their respective Agreements, in making investment
recommendations for a Fund, the Advisers will not inquire or take into
consideration whether the issuer of securities proposed for purchase or sale by
a Fund is another commercial customer of any of the Advisers and, in dealing
with their other commercial
B-62
<PAGE>
customers, the Advisers will not inquire or take into consideration whether
securities of those customers are held by a Fund.
It is expected that the Funds may execute brokerage or other agency
transactions through the Distributor, a registered broker-dealer, or an
affiliate of the Adviser for a commission in conformity with the Investment
Company Act, the Securities Exchange Act of 1934 and rules promulgated by the
Securities and Exchange Commission. Under these provisions, the Distributor is
permitted to receive and retain compensation for effecting portfolio
transactions for the Funds on an exchange if a written contract is in effect
between the Distributor and the Company expressly permitting the Distributor to
receive and retain such compensation. These rules further require that
commissions paid to the Distributor by the Company for exchange transactions not
exceed "usual and customary" brokerage commissions. The rules define "usual and
customary" commissions to include amounts which are "reasonable and fair
compared to the commission, fee or other remuneration received or to be received
by other brokers in connection with comparable transactions involving similar
securities being purchased or sold on a securities exchange during a comparable
period of time." In addition, the Company may direct commission business to one
or more designated broker/dealers in connection with such broker/dealer's
provision of services to the Company or payment of certain Company expenses
(e.g., custody, pricing and professional fees). The Directors, including those
who are not "interested persons" of the Company, have adopted procedures for
evaluating the reasonableness of commissions paid to the Distributor and will
review these procedures periodically.
In addition, the Tax-Exempt Funds and Intermediate Municipal Bond Fund
may participate, if and when practicable, in bidding for the purchase of
municipal securities directly from an issuer in order to take advantage of the
lower purchase price available to members of a bidding group. The Funds will
engage in this practice, however, only when CoreStates Advisers, in its sole
discretion, believes such practice to be in the best interests of these Funds.
Brokerage Commissions
For the fiscal year ended June 30, 1996, the Funds paid the following brokerage
commissions:
Fund Brokerage Commissions
---- ---------------------
Growth Equity Fund $170,726
Core Equity Fund $1,422,984
Special Equity Fund $218,638
Equity Index Fund $91,443
International Growth Fund $351,779
Balanced Fund $100,170
Portfolio Turnover
It is not a policy of the Funds to purchase or sell securities for
trading purposes. However, the Advisers manage the Funds without regard
generally to restrictions on portfolio turnover, except those imposed by
provisions of the federal tax laws regarding short-term trading. Generally, the
Funds will not trade for short-term profits, but when circumstances warrant,
investments may be sold without regard to the length of time held. It is
expected that the Equity Funds' annual portfolio turnover rates will not exceed
100%. A 100% turnover rate would occur, for example, if all of a portfolio's
securities are replaced within a one year period. With respect to the Fixed
Income
B-63
<PAGE>
Funds, the annual portfolio turnover rate may exceed 100% due to changes in
portfolio duration, yield curve strategy or commitments to forward delivery
mortgage-backed securities. The portfolio turnover rate for the Global Bond Fund
during its first year of operation could be as high as 400%. With the exception
of Global Bond, however, it is expected that the annual turnover rate for the
Fixed Income Funds will not exceed 250%.
High rates of portfolio turnover necessarily result in correspondingly
heavier brokerage and portfolio trading costs which are paid by a Fund. Trading
in fixed income securities does not generally involve the payment of brokerage
commissions, but does involve indirect transaction costs. In addition to
portfolio trading costs, higher rates of portfolio turnover may result in the
realization of capital gains. As a general rule, net gains are distributed to
shareholders and will be taxable at ordinary income tax rates, for federal
income tax purposes, regardless of long- or short-term capital gains status. See
"Distributions" and "Taxes" for more information on taxation. The tables set
forth in "Financial Highlights" present the Fund's historical portfolio turnover
rates.
ADMINISTRATOR
- All Funds -
SEI Fund Resources ("SFR" or "Administrator") generally assists in
supervising the operation of the Funds pursuant to an Administration Agreement.
The respective fees payable to the Administrator are described in the Funds'
Prospectuses.
The Administration Agreement
Under the terms of the Administration Agreement, the Administrator
provides the Company with administrative services (other than investment
advisory services) including all regulatory reporting, necessary office space,
equipment, personnel, and facilities.
The Administration Agreement provides that the Administrator shall not
be liable for any error of judgment or mistake of law or for any loss suffered
by the Company in connection with the matters to which the Administration
Agreement relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence on the part of the Administrator in the performance of its
duties or from reckless disregard by it of its duties and obligations
thereunder.
The Administrator, a Delaware business trust, has its principal
business offices at 680 East Swedesford Road, Wayne, PA 19087-1658. SFR, a
wholly-owned subsidiary of SEI Corporation ("SEI"), is the owner of all
beneficial interest in the Administrator. SEI, its subsidiaries, and the
Administrator are leading providers of funds evaluation services, trust
accounting systems, and brokerage and information services to financial
institutions, institutional investors and money managers. The Administrator also
serves as administrator to the following other mutual funds: The Achievement
Funds Trust, The Advisors' Inner Circle Fund, The Arbor Fund, ARK Funds, Bishop
Street Funds, CrestFunds, Inc., CUFUND, First American Funds, Inc., First
American Investment Funds, Inc., FMB Funds, Inc., Marquis Funds(R), Monitor
Funds, Morgan Grenfell Investment Trust, The PBHG Funds, Inc., The Pillar Funds,
Rembrandt Funds(R), 1784 Funds, Stepstone Funds, STI Classic Funds, STI Classic
Variable Trust, and Turner Funds.
B-64
<PAGE>
Administration Fees
<TABLE>
<CAPTION>
Administrative Fees Paid Administrative Fees Waived
------------------------------------- ---------------------------------------
1994 1995 1996 1994 1995 1996
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Growth Equity Fund $116,502 $123,731 $173,479 $ 73,176 $ 69,600 $97,589
- ------------------------------------------------------------------------------------------------------------------------
Core Equity Fund 34,108 53,535 424,851 21,186 30,067 100,744
- ------------------------------------------------------------------------------------------------------------------------
Special Equity Fund * * 70,780 * * 7,265
- ------------------------------------------------------------------------------------------------------------------------
Equity Index Fund 112,341 137,868 219,368 70,393 77,861 123,395
- ------------------------------------------------------------------------------------------------------------------------
International Growth Fund 144,204 183,805 196,933 89,940 103,392 110,774
- ------------------------------------------------------------------------------------------------------------------------
Balanced Fund 62,159 85,636 130,685 38,369 48,169 64,801
- ------------------------------------------------------------------------------------------------------------------------
Short-Intermediate Bond
Fund 89,032 92,840 128,526 55,791 52,211 73,722
- ------------------------------------------------------------------------------------------------------------------------
Bond Fund * * 217,319 * * 34,028
- ------------------------------------------------------------------------------------------ -----------------------------
Short Term Income Fund * * 36,257 * * 5,897
- ------------------------------------------------------------------------------------------------------------------------
Government Income Fund 14,856 18,024 23,175 9,904 10,139 13,035
- ------------------------------------------------------------------------------------------------------------------------
Intermediate Municipal
Bond Fund 2,665 2,937 2,058 3,994 1,652 1,158
- ------------------------------------------------------------------------------------------------------------------------
Pennsylvania Municipal
Bond Fund 0 0 0 180 5,478 11,150
- ------------------------------------------------------------------------------------------------------------------------
New Jersey Municipal
Bond Fund 0 0 0 394 4,023 3,944
- ------------------------------------------------------------------------------------------------------------------------
Global Bond Fund 21,878 41,460 51,101 12,993 23,318 28,488
- ------------------------------------------------------------------------------------------------------------------------
Treasury Reserve 745,911 755,724 966,980 467,414 425,121 536,353
- ------------------------------------------------------------------------------------------------------------------------
Cash Reserve 825,937 869,998 1,035,263 518,125 489,371 582,385
- ------------------------------------------------------------------------------------------------------------------------
Tax Free Reserve 137,980 125,548 110,075 86,767 70,639 76,537
- ------------------------------------------------------------------------------------------------------------------------
Elite Treasury Reserve** 22,988 24,029 22,923 29,256 30,578 28,626
- ------------------------------------------------------------------------------------------------------------------------
Elite Cash Reserve** 479,759 442,499 457,125 610,315 563,185 532,139
- ------------------------------------------------------------------------------------------------------------------------
Elite Tax-Free Reserve** 90,162 93,316 100,007 114,765 118,767 118,626
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------
* Not in operation during period.
** Formerly the Fiduciary Reserve, Fiduciary Treasury Reserve and Fiduciary
Tax-Free Reserve, respectively.
DISTRIBUTOR
- All Funds -
SEI Financial Services Company (the "Distributor") acts as Distributor
of the Company's shares pursuant to a Distribution Agreement. Shares of each
Fund are sold on a continuous basis by the Distributor as agent, although the
Distributor is not obliged to sell any particular amount of shares. The
Distributor is a broker-dealer registered with the SEC, and is a member of the
National Association of Securities Dealers, Inc. As Distributor, the Distributor
pays the cost of printing and distributing prospectuses to persons who are not
shareholders of a Fund (excluding preparation and printing expenses necessary
for the continued registration of the Funds' shares) and of preparing, printing,
and distributing all sales literature. No compensation is payable by the Company
to the Distributor for its distribution services pursuant to the Distribution
Agreement.
The Company has adopted a Distribution Plan (the "Plan") for those
Funds offering Class A and Class C Shares. The Plan provides for the payment by
the Company to the Distributor of up to .25% of the average daily net assets of
each Class A and Class C Shares to which the Plan is applicable. The Distributor
is authorized to use this fee as compensation for its distribution-related
services and as service payments to certain securities broker/dealers and
financial institutions which enter into shareholder servicing agreements or
broker agreements (collectively, the
B-65
<PAGE>
"Service Agreements") with the Distributor. Pursuant to the Service Agreements,
the securities broker/dealers and financial institutions will provide
shareholder servicing administrative services, including such services as:
(i) establishing and maintaining customer accounts and records; (ii) aggregating
and processing purchase and redemption requests from customers and placing net
purchase and redemption orders with the Distributor; (iii) automatically
investing customer account cash balances; (iv) providing periodic statements to
their customers; (v) arranging for bank wires; (vi) answering routine customer
inquiries concerning their investments in the Shares offered in connection with
this 12b-1 Plan and related distribution agreement; (vii) assisting customers in
changing dividend options, account designations and addresses; (viii) performing
sub-accounting functions; (ix) processing dividend payments from the Funds on
behalf of customers; (x) forwarding certain shareholder communications from the
Funds (such as proxies, Shareholder reports and dividend, distribution and tax
notices) to customers; and (xi) providing such other similar services as may be
reasonably requested to the extent they are permitted to do so under applicable
statutes, rules or regulations. The actual fee paid to a securities
broker/dealer or financial institution will be based upon the extent and quality
of the services provided.
Continuance of the Plan must be approved annually by shareholders or by
a majority of the Directors of the Company and by a majority of the Directors
who are not interested persons (as defined in the Investment Company Act) and
who have no direct or indirect financial interest in the operation of the Plan
or in any agreement relating to the Plan (the "Qualified Directors"). The Plan
requires that quarterly reports of such expenditures be furnished to and
reviewed by the Directors. The Plan may not be amended to materially increase
the amount which may be spent thereunder without approval by a majority of the
outstanding shares of the affected Fund series. All material amendments of the
Plan require approval by a majority of the Directors of the Company and the
Qualified Directors.
For the fiscal year ended June 30, 1996, the distributor received
distribution fees (which amount solely represents sales expenses) on the
following Funds:
Funds Class Amount Received
----- ----- ---------------
Growth Equity Fund A $6,154
Core Equity Fund A 14,524
Special Equity Fund A 203
International Growth Fund A 5,111
Balanced Fund A 6,744
Short-Intermediate Bond Fund A 5,560
Bond Fund A 2,227
Short Term Income Fund A 11
Government Income Fund A 3,299
Intermediate Municipal Bond Fund A 2,536
Pennsylvania Municipal Bond Fund A 510
New Jersey Municipal Bond Fund A 284
Global Bond Fund A 423
Cash Reserve C 47,230
Treasury Reserve C 51,148
Tax-Free Reserve C 4,718
B-66
<PAGE>
CUSTODIAN AND TRANSFER AGENT
- All Funds -
Custodian Agreement
Cash and securities owned by each Fund are held by CoreStates Bank as
the Company's Custodian pursuant to a Custodian Agreement. Under the Custodian
Agreement, CoreStates Bank (i) holds each Fund's securities and cash items,
(ii) makes receipts and disbursements of money on behalf of each Fund,
(iii) collects and receives all income and other payments and distributions on
account of the Funds' securities, and (iv) performs other related services.
CoreStates Bank may, in its discretion and at its own expense, open and maintain
a sub-custody account or employ a sub-custodian on behalf of the Funds investing
exclusively in the United States and may, with the Fund's Board approval and at
the expense of the Funds, employ sub-custodians on behalf of the Funds who
invest in foreign countries provided that CoreStates Bank shall remain liable
for the performance of all of its duties under the Custodian Agreement.
Transfer Agency Agreement
State Street Bank and Trust Company (the "Transfer Agent") provides
each Fund with transfer agency, dividend disbursing, custodial services for
certain retirement plans, agency services in connection with certain other
activities and accounting services under the terms of the Transfer Agency and
Service Agreement. Under this Agreements, the Transfer Agent has agreed to
(i) issue and redeem shares of each Fund, (ii) forward dividends and
distributions to shareholders, (iii) maintain each Fund's books of original
entry, (iv) maintain shareholder accounts, (v) compute the Funds' net asset
value per share and calculate the Funds' net income, and (vi) perform other
related services.
Fees
For the services provided under the retail Transfer Agency Agreement,
the Transfer Agent may receive fees from each Fund. Such fees are based upon
relative asset values and shareholder accounts, and may include certain
transaction charges and out-of-pocket expenses.
EXPENSES
- All Funds -
Except as noted herein and in the Funds' Prospectuses, each Fund's
service contractors bear all expenses incurred in connection with the
performance of their services. Similarly, the Funds bear the expenses incurred
in their own operations. Expenses borne by the Funds include taxes (including
preparation of returns), interest, brokerage fees and commissions, if any, fees
of the Company's Directors, SEC fees, state securities qualification fees
(including preparation of filings), costs of preparing and printing prospectuses
for regulatory purposes and for distribution to current Fund shareholders,
charges of the Custodian and the Transfer Agent, outside auditing and legal
expenses, investment advisory and administrative fees, certain insurance
premiums, costs of maintenance of the Funds' existence, costs of shareholder
reports and shareholder meetings, and any extraordinary expenses incurred in the
Funds' operations.
The aggregate rates of the investment advisory, sub-advisory, and
administrative fees payable to the Advisers and the Distributor are not subject
to reduction as the Funds' net assets increase. However, if total expenses borne
by a Fund in any fiscal year exceed expense limitations imposed by applicable
state securities
B-67
<PAGE>
regulations, the Adviser(s) and the Distributor will reimburse the Fund by the
amount of such excess in proportion to their respective fees.
Certain of each Fund's expenses may be reduced because the regulations
in various states where Fund Shares may be qualified for sale impose limitations
on the annual expense ratio of a Fund. For example, under California law, a
Fund's aggregate annual expenses (excluding brokerage commissions, interest,
taxes, and extraordinary expenses such as legal claims, liabilities, litigation
costs and indemnification related thereto) may not exceed 2.5% of the first $30
million of its average daily net assets; 2.0% of the next $70 million of average
daily net assets; and 1.5% of average daily net assets in excess of $100
million. The Funds may also seek to qualify their Shares in other jurisdictions
which impose expense limitations.
To the Company's knowledge, as of the date hereof, there are no state
expense limitations applicable to any Fund. Any future expense reimbursements
required to be paid by the Advisers and the Distributor would be estimated daily
and reconciled and paid on a monthly basis.
LEGAL COUNSEL
- All Funds -
Morgan, Lewis & Bockius LLP (of which Mr. Jennings, Secretary of the
Company, is a partner), 2000 One Logan Square, Philadelphia, Pennsylvania 19103,
is counsel to the Company and has passed upon certain matters in connection with
these offerings. From time to time, Morgan, Lewis & Bockius LLP has rendered
legal services to the Administrator, Distributor and CoreStates Corp.
MISCELLANEOUS
- All Funds -
The Company is registered with the SEC as a management investment
company. Such registration does not involve supervision by the Commission of the
management or policies of any Fund.
The Funds' Prospectuses and this Statement of Additional Information
omit certain of the information contained in the Company's Registration
Statement filed with the Securities and Exchange Commission. Copies of such
information may be obtained from the Commission upon payment of the prescribed
fee.
The Funds' Prospectuses and this Statement of Additional Information do
not constitute an offering of the securities herein described in any state in
which such offering may not lawfully be made. No salesman, dealer, or other
person is authorized to give any information or make any representation other
than those contained in the Prospectuses and this Statement of Additional
Information.
B-68
<PAGE>
APPENDIX
- All Funds -
Rated Investments
Bonds
Excerpts from Moody's Investors Service, Inc. ("Moody's") descriptions
of its three highest bond ratings:
"Aaa": Bonds which are rated "Aaa" are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
"Aa": Bonds which are rated "Aa" are judged to be of high quality by
all standards. Together with the "Aaa" group they comprise what are generally
known as "high-grade" bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in "Aaa" securities, fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat larger than in "Aaa"
securities.
"A": Bonds which are rated "A" possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
"Baa": Bonds which are rated "Baa" are considered medium-grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Modifiers 1, 2, or 3: Moody's applies numerical modifiers with respect
to bonds rated "Aa" or "A". The modifier 1 indicates that the bond being rated
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates that the bond ranks in the
lower end of its generic rating category.
Excerpts from Standard & Poor's Corporation ("S&P") descriptions of its
three highest bond ratings:
"AAA": Debt rated "AAA" has the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely strong.
"AA": Debt rated "AA" has a very strong capacity to pay interest and
repay principal and differs from the highest rated issues only in small degree.
"A": Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
"BBB": Debt rated "BBB" has an adequate capacity to pay interest and
repay principal. Whereas such issues normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are
B-69
<PAGE>
more likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher-rated categories.
Plus (+) or Minus (-): To provide more detailed indications of credit
quality, the "AA" or "A" ratings may be modified by the addition of a plus (+)
or minus (-) sign to show relative standing within these major rating
categories.
Notes
The following summarizes the highest ratings assigned by Moody's to
municipal notes and variable rate demand obligations:
"MIG-1/VMIG-1": Obligations bearing these designations are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support, or demonstrated broad-based access to the market for
refinancing.
The following summarizes the two highest ratings assigned by S&P to
municipal notes:
"SP-1": This is the highest rating assigned by S&P to municipal notes
and indicates very strong or strong capacity to pay interest and repay
principal. Those issues determined to possess overwhelming safety
characteristics are given a plus (+) designation.
"SP-2": Issues of this rating display a satisfactory capacity to pay
interest and repay principal, although to a lesser degree than "SP-1" issues.
Commercial Paper
Commercial paper ratings of Moody's are current assessments of the
ability of issuers to repay punctually senior debt obligations which have an
original maturity of no more than one year.
"Prime-1": The rating "Prime-1", or "P-1", is the highest commercial
paper rating assigned by Moody's. These issues (or related supporting
institutions) are considered to have a superior capacity for repayment of
short-term debt obligations.
"Prime-2": The rating "Prime-2", or "P-2", indicates that the issues
(or related supporting institutions) have a strong capacity for repayment of
short-term debt obligations. This will normally be evidenced by many of the
characteristics of "Prime-1" rated issues, but to a lesser degree. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
Commercial paper ratings of S&P are current assessments of the
likelihood of timely payment of debt having an original maturity of no more than
365 days.
"A-1": This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted "A-1+."
"A-2": This rating indicates that capacity for timely payment is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1." Among other types of municipal securities, the Funds
may purchase short-term general obligation notes, tax anticipation notes, bond
anticipation notes, revenue anticipation notes, tax-exempt commercial paper,
construction loan notes and other forms of short-term loans. Such instruments
are issued with a short-term maturity in
B-70
<PAGE>
anticipation of the receipt of tax funds, the proceeds of bond placements, or
other revenues. In addition, these Funds may invest in other types of tax-exempt
instruments such as municipal bonds, industrial development bonds and pollution
control bonds, provided (for the Tax-Exempt Money Market Funds) they have
remaining maturities of 397 days or less at the time of purchase.
B-71
<PAGE>
FINANCIAL STATEMENTS
- All Funds -
The Company's Financial Statements for the fiscal year ended June 30,
1996, including notes thereto and the report of Ernst & Young LLP thereon, are
herein incorporated by reference. A copy of the 1996 Annual Report must
accompany the delivery of this Statement of Additional Information.
B-72
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements: See Statement of Additional
Information.
(b) Exhibits:
(1) (a) Articles of Incorporation dated
September 11, 1984 originally filed as
Exhibit (1) of Registrant's Registration
Statement on Form N-1A, filed with the
Securities and Exchange Commission on
September 11, 1984 are filed herewith.
(b) Articles of Amendment dated March 29, 1985
to Articles of Incorporation dated September
11, 1984 originally filed as Exhibit (1)(b)
of Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on May 22, 1985 are filed
herewith.
(c) Articles Supplementary dated March 29, 1985
to Articles of Incorporation dated September
11, 1984 originally filed as Exhibit (1)(c)
of Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on May 22, 1985 are filed
herewith.
(d) Articles of Amendment dated June 30, 1987 to
Articles of Incorporation dated September
11, 1984 originally filed as Exhibit (1)(d)
of Post-Effective Amendment No. 5 to the
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on October 30, 1987 are filed
herewith.
(e) Articles Supplementary dated March 30, 1989
to Articles of Incorporation dated September
11, 1984 originally filed as Exhibit (1)(e)
of Post-Effective Amendment No. 8 to the
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on April 3, 1989 are filed
herewith.
(f) Articles Supplementary dated December 18,
1990 to Registrant's Articles of
Incorporation dated September 11, 1984
originally filed as Exhibit (1)(f) of
Post-Effective Amendment No. 11 to the
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on January 24, 1991 are filed
herewith.
(g) Articles Supplementary dated September 3,
1991 to Registrant's Articles of
Incorporation dated September 11, 1984
originally filed
C-1
<PAGE>
as Exhibit (1)(g) of Post-Effective
Amendment No. 12 to the Registrant's
Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission
on October 31, 1991 are filed herewith.
(h) Articles Supplementary dated December 18,
1992 to Registrant's Articles of
Incorporation dated September 11, 1984
originally filed as Exhibit (1)(h) of
Post-Effective Amendment No. 15 to the
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on June 30, 1993 are filed
herewith.
(i) Articles Supplementary dated June 26, 1992
to Registrant's Articles of Incorporation
dated September 11, 1984 originally filed as
Exhibit (1)(i) of Post-Effective Amendment
No. 16 to the Registrant's Registration
Statement on Form N-1A, filed with the
Securities and Exchange Commission on August
27, 1993 are filed herewith.
(j) Articles Supplementary dated September 25,
1992 to Registrant's Articles of
Incorporation dated September 11, 1984
originally filed as Exhibit (1)(j) of
Post-Effective Amendment No. 16 to the
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on August 27, 1993 are filed
herewith.
(k) Articles Supplementary dated November 8,
1993 to Registrant's Articles of
Incorporation dated September 11, 1984
originally filed as Exhibit (1)(j) of
Post-Effective Amendment No. 17 to the
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on December 30, 1993 are filed
herewith.
(l) Articles of Transfer dated November 23, 1993
originally filed as Exhibit (1)(k) of
Post-Effective Amendment No. 17 to the
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on December 30, 1993 are filed
herewith.
(m) Articles Supplementary dated December 15,
1993 to Registrant's Articles of
Incorporation dated September 11, 1984
originally filed as Exhibit (1)(l) of
Post-Effective Amendment No. 17 to the
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on December 30, 1993 are filed
herewith.
C-2
<PAGE>
(n) Articles Supplementary dated April 14, 1994
to Registrant's Articles of Incorporation
dated September 11, 1984 originally filed as
Exhibit (1)(m) of Post-Effective Amendment
No. 21 to the Registrant's Registration
Statement on Form N-1A, filed with the
Securities and Exchange Commission on
October 28, 1994 are filed herewith.
(o) Articles of Amendment dated March 6, 1996 to
Registrant's Articles of Incorporation dated
September 11, 1984, are incorporated by
reference to Exhibit (1)(n) of
Post-Effective Amendment No. 27 to
Registrant's Registration Statement on Form
N-1A as filed with the Securities and
Exchange Commission on May 14, 1996.
(p) Articles Supplementary dated March 29, 1996
to Registratant's Articles of Incorporation
dated September 11, 1984, are incorporated
by reference to Exhibit (1)(o) of
Post-Effective Amendment No. 27 to
Registrant's Registration Statement on Form
N-1A as filed with the Securities and
Exchange Commission on May 14, 1996.
(q) Certificate of Correction dated April 30,
1996 to Registrant's Articles Supplementary
dated March 29, 1996 are filed herewith.
(r) Certificate of Correction dated July 31,
1996 to Registrant's Articles Supplementary
dated March 29, 1996 are filed herewith.
(s) Articles Supplementary dated July 31, 1996
to Registrant's Articles of Incorporation
dated September 11, 1984 are filed herewith.
(t) Articles Supplementary dated August 12, 1996
to Registrant's Articles of Incorporation
dated September 11, 1984 are filed herewith.
(u) Articles of Amendment dated August 12, 1996
to Registrant's Articles of Incorporation
dated September 11, 1984 are filed herewith.
(2) (a) By-Laws as approved and adopted by
Registrant's Board of Directors originally
filed as Exhibit (2) of Registrant's
Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission
on September 11, 1984 are filed herewith.
(b) By-Laws as amended, restated and adopted by
Registrant's Board of Directors on September
8, 1987 originally filed as Exhibit (2) of
C-3
<PAGE>
Post-Effective Amendment No. 7 to the
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on September 9, 1988 are filed
herewith.
(c) By-Laws as amended, restated and adopted by
Registrant's Board of Directors on September
3, 1991 originally filed as Exhibit (2) of
Post-Effective Amendment No. 12 to the
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on October 31, 1991, are filed
herewith.
(3) None.
(4) (a) Specimen certificate for Class A Common
Stock is incorporated herein by reference to
Exhibit (4)(a) of Post-Effective Amendment
No. 7 to Registrant's Registration Statement
on Form N-1A, as filed with the Securities
and Exchange Commission on September 9,
1988.
(b) Specimen certificate for Class B Common
Stock is incorporated herein by reference to
Exhibit (4)(b) of Post-Effective Amendment
No. 7 to Registrant's Registration Statement
on Form N-1A, as filed with the Securities
and Exchange Commission on September 9,
1988.
(c) Specimen certificate for Class C Common
Stock is incorporated herein by reference to
Exhibit (4)(c) of Post-Effective Amendment
No. 10 to Registrant's Registration
Statement on Form N-1A, as filed with the
Securities and Exchange Commission on
October 29, 1990.
(d) Specimen certificate for Class D Common
Stock is incorporated herein by reference to
Exhibit (4)(d) of Post-Effective Amendment
No. 10 to Registrant's Registration
Statement on Form N-1A, as filed with the
Securities and Exchange Commission on
October 29, 1990.
(e) Specimen certificate for Class E Common
Stock is incorporated herein by reference to
Exhibit (4)(e) of Post-Effective Amendment
No. 10 to Registrant's Registration
Statement on Form N-1A, as filed with the
Securities and Exchange Commission on
October 29, 1990.
(f) Specimen copy of share certificate for
Class F Common Stock is incorporated by
reference to Exhibit (4)(f) of
Post-Effective Amendment No. 12 to
Registrant's Registration Statement on Form
C-4
<PAGE>
N-1A, as filed with the Securities and
Exchange Commission on October 31, 1991.
(g) Specimen copy of share certificate for Class
G Common Stock is incorporated by reference
to Exhibit (4)(g) of Post-Effective
Amendment No. 12 to Registrant's
Registration Statement on Form N-1A, as
filed with the Securities and Exchange
Commission on October 31, 1991.
(h) Specimen copy of share certificate for Class
H Common Stock is incorporated by reference
to Exhibit (4)(h) of Post-Effective
Amendment No. 12 to Registrant's
Registration Statement on Form N-1A, as
filed with the Securities and Exchange
Commission on October 31, 1991.
(i) Specimen copy of share certificate for Class
I Common Stock is incorporated by reference
to Exhibit (4)(i) of Post-Effective
Amendment No. 12 to Registrant's
Registration Statement on Form N-1A, as
filed with the Securities and Exchange
Commission on October 31, 1991.
(j) Specimen copy of share certificate for Class
J Common Stock is incorporated by reference
to Exhibit (4)(j) of Post-Effective
Amendment No. 12 to Registrant's
Registration Statement on Form N-1A, as
filed with the Securities and Exchange
Commission on October 31, 1991.
(k) Specimen copy of share certificate for Class
K Common Stock is incorporated by reference
to Exhibit (4)(k) of Post-Effective
Amendment No. 12 to Registrant's
Registration Statement on Form N-1A, as
filed with the Securities and Exchange
Commission on October 31, 1991.
(5) (a) Investment Advisory Agreement between
Registrant and New Jersey National Bank
dated August 2, 1985 originally filed as
Exhibit (5) of Pre-Effective Amendment No. 1
to Registrant's Registration Statement on
Form N-1A, filed with the Securities and
Exchange Commission on May 22, 1985, is
filed herewith.
(b) Investment Advisory Agreement between
Registrant and CoreStates Investment
Advisers, Inc. dated June 23, 1987
originally filed as Exhibit (5)(b) of
Post-Effective Amendment No. 5 to the
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on October 30, 1987, is filed
herewith.
C-5
<PAGE>
(c) Investment Advisory Agreement between
Registrant and CoreStates Investment
Advisers, Inc. dated December 5, 1989 with
respect to CoreFund International Growth
Fund originally filed as Exhibit (5)(c) of
Post-Effective Amendment No. 9 to the
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on September 1, 1989, is filed
herewith.
(d) Investment Advisory Agreement between
Registrant and CoreStates Investment
Advisers, Inc. dated December 5, 1989 with
respect to CoreFund Equity Fund originally
filed as Exhibit (5)(d) of Post-Effective
Amendment No. 9 to the Registrant's
Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission
on September 1, 1989, is filed herewith.
(e) Sub-Investment Advisory Agreement between
Registrant and Cashman, Farrell and
Associates dated December 5, 1989 originally
filed as Exhibit (5)(e) of Post-Effective
Amendment No. 9 to the Registrant's
Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission
on September 1, 1989, is filed herewith.
(f) Sub-Investment Advisory Agreement between
Registrant and Martin Currie, Inc. dated
December 5, 1989 originally filed as Exhibit
(5)(f) of Post-Effective Amendment No. 9 to
the Registrant's Registration Statement on
Form N-1A, filed with the Securities and
Exchange Commission on September 1, 1989, is
filed herewith.
(g) Proposed Investment Advisory Agreement
between Registrant and CoreStates Investment
Advisers, Inc. with respect to CoreFund
Equity Index Fund dated March 25, 1991
originally filed as Exhibit (5)(g) of
Post-Effective Amendment No. 11 to the
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on January 24, 1991, is filed
herewith.
(h) Proposed Investment Advisory Agreement
between Registrant and CoreStates Investment
Advisers, Inc. with respect to CoreFund
Growth Equity Fund dated March 25,
1991 originally filed as Exhibit (5)(h) of
Post-Effective Amendment No. 11 to the
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on January 24, 1991, is filed
herewith.
(i) Proposed Investment Advisory Agreement
between Registrant and CoreStates Investment
Advisers, Inc. with respect to CoreFund
C-6
<PAGE>
Short Intermediate Bond Fund dated March 25,
1991 originally filed as Exhibit (5)(i) of
Post-Effective Amendment No. 11 to the
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on January 24, 1991, is filed
herewith.
(j) Proposed Investment Advisory Agreement
between Registrant and CoreStates Investment
Advisers, Inc. with respect to CoreFund
Fiduciary Tax-Free Reserve dated March 25,
1991 originally filed as Exhibit (5)(j) of
Post-Effective Amendment No. 11 to the
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on January 24, 1991, is filed
herewith.
(k) Proposed Investment Advisory Agreement
between Registrant and CoreStates Investment
Advisers, Inc. with respect to CoreFund
Tax-Free Reserve dated March 25, 1991
originally filed as Exhibit (5)(k) of
Post-Effective Amendment No. 11 to the
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on January 24, 1991, is filed
herewith.
(l) Proposed Investment Advisory Agreement
between Registrant and CoreStates Investment
Advisers, Inc. with respect to CoreFund
Fiduciary Treasury Reserve dated March 25,
1991 originally filed as Exhibit (5)(k) of
Post-Effective Amendment No. 11 to the
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on January 24, 1991, is filed
herewith.
(m) Investment Advisory Agreement between
Registrant and CoreStates Investment
Advisers, Inc. with respect to CoreFund
Balanced Fund dated September 15, 1992
originally filed as Exhibit (5)(m) of
Post-Effective Amendment No. 15 to the
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on June 30, 1993, is filed
herewith.
(n) Proposed Investment Advisory Agreement
between Registrant and CoreStates Investment
Advisers, Inc. with respect to CoreFund
Government Income Fund dated March 25, 1991
is incorporated herein by reference to
Exhibit (5)(k) of Post-Effective Amendment
No. 11 to the Registrant's Registration
Statement on Form N-1A, as filed with the
Securities and Exchange Commission on
January 24, 1991.
C-7
<PAGE>
(o) Proposed Investment Advisory Agreement
between Registrant and CoreStates Investment
Advisers, Inc. with respect to CoreFund
Intermediate-Term Municipal Fund dated March
25, 1991 is incorporated herein by reference
to Exhibit (5)(k) of Post-Effective
Amendment No. 11 to the Registrant's
Registration Statement on Form N-1A, as
filed with the Securities and Exchange
Commission on January 24, 1991.
(p) Investment Advisory Agreement between
Registrant and CoreStates Investment
Advisers, Inc. with respect to CoreFund
Global Bond Fund dated March 25, 1991 is
incorporated herein by reference to Exhibit
(5)(k) of Post-Effective Amendment No. 11
to Registrant's Registration Statement on
Form N-1A, as filed with the Securities and
Exchange Commission on January 24, 1991.
(q) Sub-Advisory Agreement between CoreStates
Investment Advisers, Inc. and Alpha Global
Fixed Income Managers, Inc. with respect to
Global Bond Fund dated December 15, 1993
originally filed as Exhibit (5)(q) of
Post-Effective Amendment No. 17 to
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on December 30, 1993, is filed
herewith.
(r) Investment Advisory Agreement between
Registrant and CoreStates Investment
Advisers, Inc. with respect to Pennsylvania
Municipal Bond Fund dated March 25, 1991 is
incorporated herein by reference to Exhibit
(5)(i) of Post-Effective Amendment No. 11
to the Registrant's Registration Statement
on Form N-1A, as filed with Securities and
Exchange Commission on January 24, 1991.
(s) Investment Advisory Agreement between
Registrant and CoreStates Investment
Advisers, Inc. with respect to New Jersey
Municipal Bond Fund dated March 25, 1991 is
incorporated herein by reference to Exhibit
(5)(i) of Post-Effective Amendment No. 11
to the Registrant's Registration Statement
on Form N-1A, as filed with the Securities
and Exchange Commission on January 24, 1991.
(t) Investment Advisory Agreement between
Registrant and CoreStates Investment
Advisers, Inc. with respect to CoreFund
Elite Cash Reserve, CoreFund Elite
Government Reserve and CoreFund Elite
Treasury Reserve dated June 21, 1994
originally filed as Exhibit (5)(t) of
Post-Effective Amendment No. 21 to the
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on October 28, 1994, is filed
herewith.
C-8
<PAGE>
(u) Proposed Investment Advisory Agreement
between Registrant and CoreStates Investment
Advisers, Inc. with respect to CoreFund
Special Equity Fund, CoreFund Bond Fund and
CoreFund Short-Term Income Fund is
incorporated herein by reference to Exhibit
(5)(u) of Post-Effective Amendment No. 24 to
Registrant's Registration Statement on Form
N-1A, as filed with the Securities and
Exchange Commission on January 2, 1996.
(v) Form of Investment Advisory Agreement
between Registrant and CoreStates Investment
Advisers, Inc. with respect to all Funds
dated April 12, 1996 is filed herewith.
(w) Sub-Advisory Agreement between CoreStates
Investment Advisers, Inc. and Alpha Global
Fixed Income Managers, Inc. dated April 12,
1996 with respect to the Global Bond Fund is
filed herewith.
(x) Sub-Investment Advisory Agreement between
CoreStates Investment Advisers, Inc. and
Martin Currie, Inc. dated April 12, 1996
with respect to the International Growth
Fund is filed herewith.
(y) Sub-Investment Advisory Agreement between
CoreStates Investment Advisers, Inc. and
Aberdeen Fund Managers, Inc. dated April 12,
1996 with respect to the International
Growth Fund is filed herewith.
(6) (a) Distribution Agreement between Registrant
and Fairfield Group, Inc. dated August 2,
1985 originally filed as Exhibit (6) of Pre-
Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission
on May 22, 1985, is filed herewith.
(b) Distribution Agreement between Registrant
and SEI Financial Services Company
originally filed as Exhibit (6)(b) of Post-
Effective Amendment No. 14 to Registrant's
Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission
on August 31, 1992, is filed herewith.
(7) None.
(8) (a) Custodian Agreement between Registrant and
First Pennsylvania Bank N.A. dated July 24,
1985 originally filed as Exhibit (8) of Pre-
Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission
on August 1, 1985, is filed herewith.
C-9
<PAGE>
(b) Custodian Agreement between Registrant and
Philadelphia National Bank dated May 20,
1987 originally filed as Exhibit (8)(b) of
Post-Effective Amendment No. 5 to the
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on October 30, 1987, is filed
herewith.
(c) Custodian Agreement between Registrant and
CoreStates Bank, N.A. dated June 2, 1995, is
incorporated by reference to Exhibit (8)(c)
of Post-Effective Amendment No. 27 to
Registrant's Registration Statement on Form
N-1A as filed with the Securities and
Exchange Commission on May 14, 1996.
(9) (a) Amended Administration Agreement between
Registrant and Fairfield Group, Inc. dated
March 6, 1990 originally filed as
Exhibit 9(a) of Post-Effective Amendment
No. 12 to Registrant's Registration
Statement on Form N-1A, filed with the
Securities and Exchange Commission on
October 31, 1991, is filed herewith.
(b) Transfer Agency Agreement between Registrant
and First Pennsylvania Bank n.a. dated July
24, 1985 originally filed as Exhibit (9)(b)
of Pre-Effective Amendment No. 2, to
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on August 1, 1985, is filed
herewith.
(c) Amended Transfer Agency Agreement between
First Pennsylvania Bank n.a. and Fund/Plan
Services, Inc., dated December 31, 1985
originally filed as Exhibit (9)(c) of
Post-Effective Amendment No. 1 to
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on February 5, 1986, is filed
herewith.
(d) Retail Transfer Agency Agreement between
Registrant and SEI Financial Management
Corporation originally filed as
Exhibit (9)(d) of Post-Effective Amendment
No. 14 to Registrant's Registration
Statement on Form N-1A, filed with the
Securities and Exchange Commission on August
31, 1992, is filed herewith.
(e) Administration Agreement between Registrant
and SEI Financial Management Corporation
dated October 30, 1992, as amended dated
June 1, 1995, originally filed as Exhibit
(9)(e) of Post-Effective Amendment No. 15
to Registrant's Registration Statement on
Form N-1A, filed with the Securities and
Exchange Commission on June 30, 1993, is
filed herewith.
(f) Transfer Agent and Shareholder Services
Agreement between Registrant and SEI
Financial Management Corporation dated
C-10
<PAGE>
March 4, 1993 originally filed as Exhibit
(9)(f) of Post-Effective Amendment No. 15
to Registrant's Registration Statement on
Form N-1A, filed with the Securities and
Exchange Commission on June 30, 1993, are
filed herewith.
(g) Transfer Agent Agreement between the
Registrant and State Street Bank and Trust
Company dated November 16, 1995, is
incorporated by reference to Exhibit (9)(g)
of Post-Effective Amendment No. 27 to
Registrant's Registration Statement on Form
N-1A as filed with the Securities and
exchange Commission on May 14, 1996.
(10) Opinion and consent of Morgan, Lewis &
Bockius LLP, filed under Rule 24f-2 as part
of Registrant's Rule 24f-2 Notice.
(11) (a) Consent of Ernst & Young LLP is filed
herewith.
(b) Consent of Coopers & Lybrand LLP is filed
herewith.
(12) Financial Statements and Auditor's Report
as found in the CoreFunds, Inc. 1996 Annual
Report to Shareholders are filed herewith.
(13) Purchase Agreement dated July 24, 1985
between Registrant and Fairfield Group, Inc.
originally filed as Exhibit (13) of
Pre-Effective Amendment No. 2 to
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on August 1, 1985 is filed
herewith.
(14) None.
(15) None.
(16) (a) Schedules for computation of performance
quotations provided in response to Item 22
of the Registration Statement originally
filed as Exhibit 16 of Post-Effective
Amendment No. 12 to Registrant's
Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission
on October 31, 1991 are filed herewith.
(b) Schedules of computation of performance are
filed herewith.
(18) Rule 18f-3 Plan originally filed as Exhibit
18 of Post-Effective Amendment No. 23 to the
Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on October 27, 1995 is filed
herewith.
C-11
<PAGE>
(24) (a) Powers of Attorney for Mr. Emil J. Mikity,
Mr. George H. Strong, and Professor Erin
Anderson, Directors of Registrant, and David
G. Lee, President of Registrant originally
filed as Exhibit (24) of Post-Effective
Amendment No. 21 to the Registrant's
Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission
on October 28, 1994 are filed herewith.
(b) Powers of Attorney for Mr. Carmen Romeo,
Treasurer and Assistant Secretary of
Registrant, and Ms. Jean Young, Controller
of Registrant originally filed as Exhibit
(24)(b) of Post-Effective Amendment No. 22
to the Registrant's Registration Statement
on Form N-1A, filed with the Securities and
Exchange Commission on November 15, 1994 are
filed herewith.
(c) Powers of Attorney for Cheryl H. Wade and
Thomas J. Taylor are incorporated herein by
reference to Exhibit 24(c) of Post-Effective
Amendment No. 28 to the Registrant's
Registration Statement on Form N-1A, as
filed with the Securities and Exchange
Commission on July 12, 1996.
(27) Financial Data Schedules filed herewith.
Item 25. Persons Controlled by or under Common Control with
Registrant
None.
Item 26. Number of Holders of Securities
As of October 17, 1996 the number of record holders of each
class of securities of the Registrant was:
Title of Class Number of Record Holders
-------------- ------------------------
Cash Reserve-Class Y 536
Cash Reserve-Class C 990
Treasury Reserve-Class Y 289
Treasury Reserve-Class C 295
Elite Cash Reserve-Class Y 6
Elite Tax-Free Reserve-Class Y 6
Tax-Free Reserve-Class Y 29
Tax-Free Reserve-Class C 108
Elite Treasury Reserve - Class Y 6
Short-Intermediate Bond Fund-Class Y 45
Short-Intermediate Bond Fund-Class A 305
C-12
<PAGE>
Title of Class Number of Record Holders
-------------- ------------------------
Bond Fund-Class Y 11
Bond Fund-Class A 290
Short Term Income Fund-Class Y 11
Short Term Income Fund-Class A 23
Core Equity Fund-Class Y 51
Core Equity Fund-Class A 1,505
Special Equity Fund-Class Y 11
Special Equity Fund-Class A 337
International Growth Fund-Class Y 26
International Growth Fund-Class A 362
Equity Index Fund-Class Y 1,466
Growth Equity Fund-Class Y 58
Growth Equity Fund-Class A 420
Balanced Fund-Class Y 30
Balanced Fund-Class A 407
Government Income Fund-Class Y 18
Government Income Fund-Class A 110
Intermediate Municipal Bond Fund-Class Y 11
Intermediate Municipal Bond Fund-Class A 63
Global Bond Fund-Class Y 11
Global Bond Fund-Class A 20
Pennsylvania Municipal Bond Fund-Class Y 9
Pennsylvania Municipal Bond Fund-Class A 67
New Jersey Municipal Bond Fund-Class Y 11
New Jersey Municipal Bond Fund-Class A 20
Item 27. Indemnification
Article VII, Section 3 of the Registrant's Articles of
Incorporation, incorporated by reference as Exhibit (1)
hereto, and Article VI, Section 2 of Registrant's ByLaws,
filed as Exhibit (2) hereto, provide for the indemnification
of Registrant's directors and officers. Indemnification of
the Registrant's principal underwriter, custodian, and
transfer agent is provided for, respectively, in Section
1.11 of the Distribution Agreement, incorporated by
reference as Exhibit (6) hereto, Sections 3, 18, and 19 of
the Custodian Agreement, incorporated by reference as
Exhibit (8)(b) hereto, and Sections 14, 37, and 38 of the
Transfer Agency Agreement, incorporated by reference as
Exhibit (9)(b) hereto. Registrant has obtained from a major
insurance carrier a directors' and officers' liability
policy covering certain types of errors and omissions. In no
event will Registrant indemnify any of its directors,
officers, employees, its investment adviser or principal
underwriter against any liability to which such person would
otherwise be subject by reason of his willful misfeasance,
bad faith, or gross negligence in the performance of his
duties as director, officer, employee, investment adviser,
or principal underwriter, or by reason of his reckless
disregard of the duties involved in the conduct of his
office or under the advisory or underwriting agreement with
Registrant. Registrant will comply with Rule 484 under the
C-13
<PAGE>
Securities Act of 1933 and Release 11330 under the
Investment Company Act of 1940 in connection with any
indemnification.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors,
officers, and controlling persons of Registrant pursuant to
the foregoing provisions, or otherwise, Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such
liabilities (other than the payment by Registrant of
expenses incurred or paid by a director, officer, or
controlling person of Registrant in the successful defense
of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with
the securities being registered, Registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by
it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
CoreStates Investment Advisers, Inc. ("CoreStates Advisers")
is a subsidiary of CoreStates Bank, N.A., which is itself a
subsidiary of CoreStates Financial Corp. CoreStates
Financial Corp is a bank holding company registered under
the Bank Holding Company Act. CoreStates Financial Corp is
engaged through its principal subsidiaries, CoreStates Bank,
N.A., a national banking association, and Hamilton Bank, a
Pennsylvania banking institution, in commercial,
international and consumer banking and in providing trust
services. CoreStates Financial Corp through other direct and
indirect subsidiaries also provides consumer financing,
factoring and commercial financing and financing advisory
services. As of ____________ , 1996, CoreStates Financial
Corp had total assets of over $_______________ (pro forma).
The principal executive office of CoreStates Financial Corp
is located at Broad and Chestnut Streets, Philadelphia,
Pennsylvania 19101. To the knowledge of Registrant, none of
the directors or officers of CoreStates Advisers except
those set forth below, is or has been, at any time during
the past two calendar years, engaged in any other business,
profession, vocation, or employment of a substantial nature,
except that certain directors and officers of CoreStates
Advisers also hold various positions with, and engage in
business for, CoreStates Advisers, or its subsidiaries. Set
forth below are the names and principal businesses of the
directors and certain of the senior executive officers of
CoreStates Advisers who are engaged in any other business,
profession, vocation, or employment of a substantial nature.
C-14
<PAGE>
Item 29. Principal Underwriters:
(a) Furnish the name of each investment company (other than the Registrant)
for which each principal underwriter currently distributing the
securities of the Registrant also acts as a principal underwriter,
distributor or investment adviser.
Registrant's distributor, SEI Financial Services Company ("SFS"), acts
as distributor for:
SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
SEI International Trust August 30, 1988
Stepstone Funds January 30, 1991
The Advisors' Inner Circle Fund November 14, 1991
The Pillar Funds February 28, 1992
CUFUND May 1, 1992
STI Classic Funds May 29, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
1784 Funds(R) June 1, 1993
The PBHG Funds, Inc. July 16, 1993
Marquis Funds(R) August 17, 1993
Morgan Grenfell Investment Trust January 3, 1994
The Achievement Funds Trust December 27, 1994
Bishop Street Funds January 27, 1995
CrestFunds, Inc. March 1, 1995
STI Classic Variable Trust August 18, 1995
ARK Funds November 1, 1995
Monitor Funds January 11, 1996
FMB Funds, Inc. March 1, 1996
SEI Asset Allocation Trust April 1, 1996
Turner Funds April 30, 1996
SEI Institutional Investments Trust June 14, 1996
First American Strategy Funds, Inc. October 1, 1996
SFS provides numerous financial services to investment managers,
pension plan sponsors, and bank trust departments. These services
include portfolio evaluation, performance measurement and consulting
services ("Funds Evaluation") and automated execution, clearing and
settlement of securities transactions ("MarketLink").
(b) Furnish the information required by the following table with respect to
each director, officer or partner of each principal underwriter named
in the answer to Item 21 of Part B.
C-15
<PAGE>
Unless otherwise noted, the business address of each director or
officer is 680 East Swedesford Road, Wayne, PA 19087.
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ------------------- ---------------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman & Chief Executive Officer --
Henry H. Greer Director, President & Chief Operating Officer --
Carmen V. Romeo Director, Executive Vice President & Treasurer --
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President,
President-Investment Services Division --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Jerome Hickey Senior Vice President --
Larry Hutchison Senior Vice President --
David G. Lee Senior Vice President President
William Madden Senior Vice President --
Jack May Vice President --
A. Keith McDowell Senior Vice President --
Dennis J. McGonigle Senior Vice President --
Hartland J. McKeown Senior Vice President --
Barbara J. Moore Senior Vice President --
James V. Morris Senior Vice President --
Steven Onofrio Senior Vice President --
Kevin P. Robins Senior Vice President, General Counsel & Secretary Vice President &
Assistant Secretary
Robert Wagner Senior Vice President --
Patrick K. Walsh Senior Vice President --
Kenneth Zimmer Senior Vice President --
Robert Aller Vice President --
Marc H. Cahn Vice President & Assistant Secretary --
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant Secretary Vice President &
Assistant Secretary
Robert Crudup Vice President & Managing Director --
Ed Daly Vice President --
Jeff Drennen Vice President --
Mick Duncan Vice President & Team Leader --
Vic Galef Vice President & Managing Director --
Kathy Heilig Vice President --
Michael Kantor Vice President --
Samuel King Vice President --
Kim Kirk Vice President & Managing Director --
Donald H. Korytowski Vice President --
John Krzeminski Vice President & Managing Director --
Robert S. Ludwig Vice President & Team Leader --
Vicki Malloy Vice President & Team Leader --
Carolyn McLaurin Vice President & Managing Director --
W. Kelso Morrill Vice President --
Barbara A. Nugent Vice President & Assistant Secretary --
Sandra K. Orlow Vice President & Assistant Secretary Vice President &
Assistant Secretary
Donald Pepin Vice President & Managing Director --
</TABLE>
C-16
<PAGE>
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ------------------- ---------------------
<S> <C> <C>
Larry Pokora Vice President --
Kim Rainey Vice President --
Paul Sachs Vice President --
Mark Samuels Vice President & Managing Director --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President & Assistant Secretary Vice President &
Assistant Secretary
Wayne M. Withrow Vice President & Managing Director --
William Zawaski Vice President --
James Dougherty Director of Brokerage Services --
</TABLE>
Item 30. Location of Accounts and Records
(1) CoreStates Investment Advisers, Inc., PNB Building, Broad and
Chestnut Streets, Philadelphia, PA 19101 (records relating to its
functions as investment adviser).
(2) SEI Fund Resources, 680 E. Swedesford Road, Wayne, PA 19087
(records relating to its function as administrator).
(3) SEI Financial Services Corporation, 680 E. Swedesford Road,
Wayne, PA 19087 (records relating to its function as
distributor).
(4) CoreStates Bank, N.A., 510 Walnut Street Mail Stop FC 1-9-7-2,
Philadelphia, PA 19106 (records relating to its functions as
custodian).
(5) State Street Bank and Trust Company, 225 Franklin Street, Boston,
MA 02110 (records relating to its functions as transfer agent).
(6) Morgan, Lewis & Bockius LLP, 2000 One Logan Square,
Philadelphia, PA 19103 (Articles of Incorporation, By-Laws,
and Minute Books).
Item 31. Management Services
None.
Item 32. Undertakings
Registrant hereby undertakes that whenever shareholders meeting the
requirements of Section 16(c) of the Investment Company Act of 1940
inform the Board of Directors of their desire to communicate with
shareholders of the Registrant, the Directors will inform such
shareholders as to the approximate number of shareholders of record and
the approximate costs of mailing or afford said shareholders access to a
list of shareholders.
C-17
<PAGE>
Registrant undertakes to hold a meeting of shareholders for the purpose of
voting upon the questions of removal of a Director(s) when requested in
writing to do so by the holders of at least 10% of Registrant's
outstanding shares and in connections with such Investment Company Act of
1940 relating to shareholder communications.
Registrant undertakes to furnish each prospective person to whom a
prospectus will be delivered with a copy of the Registrant's latest annual
report to shareholders, when such annual report is issued containing
information called for by Item 5A of Form N-1A, upon request and without
charge.
C-18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
("1933 Act"), and the Investment Company Act of 1940, as amended, the Registrant
certifies that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the 1933 Act and has duly
caused this Post-Effective Amendment No. 30 to Registration Statement No.
2-93214 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Wayne, Commonwealth of Pennsylvania on the 21st day
of October, 1996.
COREFUNDS, INC.
/s/ David G. Lee
----------------------------------
David G. Lee
President
ATTEST: /s/ Stephen G. Meyer
------------------------------
Stephen G. Meyer
Controller
Pursuant to the requirements of the 1933 Act, this Post-Effective Amendment No.
30 to the Registration Statement has been signed below by the following persons
in the capacities and on the date(s) indicated.
<TABLE>
<S> <C> <C>
/s/ David G. Lee President & Chief October 21, 1996
- -------------------------- Executive Officer
David G. Lee
* Director October 21, 1996
- --------------------------
Erin Anderson
* Director October 21, 1996
- --------------------------
Emil J. Mikity
* Director October 21, 1996
- --------------------------
George H. Strong
* Director October 21, 1996
- --------------------------
Cheryl H. Wade
* Director October 21, 1996
- --------------------------
Thomas J. Taylor
/s/ Stephen G. Meyer Controller October 21, 1996
- --------------------------
Stephen G. Meyer
* Treasurer & October 21, 1996
- --------------------------- Assistant Secretary
Carmen V. Romeo
*By: /s/ David G. Lee
----------------------
David G. Lee
Attorney-in-Fact
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibit
- ----------- ----------------------
1(a) Articles of Incorporation dated September 11, 1984
originally filed as Exhibit (1) of Registrant's
Registration Statement on Form N-1A, filed with the
Securities and Exchange Commission on September 11, 1984
are filed herewith.
1(b) Articles of Amendment dated March 29, 1985 to Articles
of Incorporation dated September 11, 1984 originally
filed as Exhibit (1)(b) of Pre-Effective Amendment No. 1
to Registrant's Registration Statement on Form N-1A,
filed with the Securities and Exchange Commission on May
22, 1985 are filed herewith.
1(c) Articles Supplementary dated March 29, 1985 to Articles
of Incorporation dated September 11, 1984 originally
filed as Exhibit (1)(c) of Pre-Effective Amendment No. 1
to Registrant's Registration Statement on Form N-1A,
filed with the Securities and Exchange Commission on May
22, 1985 are filed herewith.
1(d) Articles of Amendment dated June 22, 1987 to Articles of
Incorporation dated September 11, 1984 originally filed
as Exhibit (1)(d) of Post-Effective Amendment No. 5 to
the Registrant's Registration Statement on Form N-1A,
filed with the Securities and Exchange Commission on
October 30, 1987 are filed herewith.
1(e) Articles Supplementary dated March 30, 1989 to Articles
of Incorporation dated September 11, 1984 originally
filed as Exhibit (1)(e) of Post-Effective Amendment No.
8 to the Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange Commission
on April 3, 1989 are filed herewith.
1(f) Articles Supplementary dated December 18, 1990 to
Registrant's Articles of Incorporation dated September
11, 1984 originally filed as Exhibit (1)(f) of
Post-Effective Amendment No. 11 to the Registrant's
Registration Statement on Form N-1A, filed with the
Securities and Exchange Commission on January 24, 1991
are filed herewith.
1(g) Articles Supplementary dated September 3, 1991 to
Registrant's Articles of Incorporation dated September
11, 1984 originally filed as Exhibit (1)(g) of
Post-Effective Amendment No. 12 to the Registrant's
Registration Statement on Form N-1A, filed with the
Securities and Exchange Commission on October 31, 1991
are filed herewith.
1(h) Articles Supplementary dated December 16, 1992 to
Registrant's Articles of Incorporation dated September
11, 1984 originally filed as Exhibit (1)(h) of
Post-Effective Amendment No. 15 to the Registrant's
Registration Statement on Form N-1A, filed with the
Securities and Exchange Commission on June 30, 1993 are
filed herewith.
<PAGE>
Exhibit No. Description of Exhibit
- ----------- ----------------------
1(i) Articles Supplementary dated June 25, 1992 to
Registrant's Articles of Incorporation dated September
11, 1984 originally filed as Exhibit (1)(i) of
Post-Effective Amendment No. 16 to the Registrant's
Registration Statement on Form N-1A, filed with the
Securities and Exchange Commission on August 27, 1993
are filed herewith.
1(j) Articles Supplementary dated September 25, 1992 to
Registrant's Articles of Incorporation dated September
11, 1984 originally filed as Exhibit (1)(j) of
Post-Effective Amendment No. 16 to the Registrant's
Registration Statement on Form N-1A, filed with the
Securities and Exchange Commission on August 27, 1993
are filed herewith.
1(k) Articles Supplementary dated October 31, 1993 to
Registrant's Articles of Incorporation dated September
11, 1984 originally filed as Exhibit (1)(j) of
Post-Effective Amendment No. 17 to the Registrant's
Registration Statement on Form N-1A, filed with the
Securities and Exchange Commission on December 30, 1993
are filed herewith.
1(l) Articles of Transfer dated November 19, 1993 originally
filed as Exhibit (1)(k) of Post-Effective Amendment
No. 17 to the Registrant's Registration Statement on
Form N-1A, filed with the Securities and Exchange
Commission on December 30, 1993 are filed herewith.
1(m) Articles Supplementary dated December 10, 1993 to
Registrant's Articles of Incorporation dated September
11, 1984 originally filed as Exhibit (1)(l) of
Post-Effective Amendment No. 17 to the Registrant's
Registration Statement on Form N-1A, filed with the
Securities and Exchange Commission on December 30, 1993
are filed herewith.
1(n) Articles Supplementary dated April 8, 1994 to
Registrant's Articles of Incorporation dated September
11, 1984 originally filed as Exhibit (1)(m) of
Post-Effective Amendment No. 21 to the Registrant's
Registration Statement on Form N-1A, filed with the
Securities and Exchange Commission on October 28, 1994
are filed herewith.
1(q) Certificate of Correction dated April 30, 1996 to
Registrant's Articles Supplementary dated March 29,
1996 are filed herewith.
<PAGE>
Exhibit No. Description of Exhibit
- ----------- ----------------------
1(r) Certificate of Correction dated July 31, 1996 to
Registrant's Articles Supplementary dated March 29,
1996 are filed herewith.
1(s) Articles Supplementary dated July 31, 1996 to
Registrant's Articles of Incorporation dated September
11, 1984 are filed herewith.
1(t) Articles Supplementary dated August 12, 1996 to
Registrant's Articles of Incorporation dated September
11, 1984 are filed herewith.
1(u) Articles of Amendment dated August 12, 1996 to
Registrant's Articles of Incorporation dated September
11, 1984 are filed herewith.
2(a) By-Laws as approved and adopted by Registrant's Board of
Directors originally filed as Exhibit (2) of
Registrant's Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission on September
11, 1984 are filed herewith.
2(b) By-Laws as amended, restated and adopted by Registrant's
Board of Directors on September 8, 1987 originally filed
as Exhibit (2) of Post-Effective Amendment No. 7 to the
Registrant's Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission on September
9, 1988 are filed herewith.
2(c) By-Laws as amended, restated and adopted by Registrant's
Board of Directors on September 3, 1991 originally filed
as Exhibit (2) of Post-Effective Amendment No. 12 to the
Registrant's Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission on October
31, 1991, are filed herewith.
5(a) Investment Advisory Agreement between Registrant and New
Jersey National Bank dated August 2, 1985 originally
filed as Exhibit (5) of Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission on May 22,
1985, is filed herewith.
5(b) Investment Advisory Agreement between Registrant and
CoreStates Investment Advisers, Inc. dated June 23, 1987
originally filed as Exhibit (5)(b) of Post-Effective
Amendment No. 5 to the Registrant's Registration
Statement on Form N-1A, filed with the Securities and
Exchange Commission on October 30, 1987, is filed
herewith.
5(c) Investment Advisory Agreement between Registrant and
CoreStates Investment Advisers, Inc. dated December 5,
1989 with respect to CoreFund International Growth Fund
originally filed as Exhibit (5)(c) of Post-Effective
Amendment No. 9 to the Registrant's Registration
Statement on Form N-1A, filed with the Securities and
Exchange Commission on September 1, 1989, is filed
herewith.
<PAGE>
Exhibit No. Description of Exhibit
- ----------- ----------------------
5(d) Investment Advisory Agreement between Registrant and
CoreStates Investment Advisers, Inc. dated December 5,
1989 with respect to CoreFund Equity Fund originally
filed as Exhibit (5)(d) of Post-Effective Amendment No.
9 to the Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange Commission
on September 1, 1989, is filed herewith.
5(e) Sub-Investment Advisory Agreement between Registrant and
Cashman, Farrell and Associates dated December 5, 1989
originally filed as Exhibit (5)(e) of Post-Effective
Amendment No. 9 to the Registrant's Registration
Statement on Form N-1A, filed with the Securities and
Exchange Commission on September 1, 1989, is filed
herewith.
5(f) Sub-Investment Advisory Agreement between Registrant and
Martin Currie, Inc. dated December 5, 1989 originally
filed as Exhibit (5)(f) of Post-Effective Amendment No.
9 to the Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange Commission
on September 1, 1989, is filed herewith.
5(g) Proposed Investment Advisory Agreement between
Registrant and CoreStates Investment Advisers, Inc. with
respect to CoreFund Equity Index Fund dated March 25,
1991 originally filed as Exhibit (5)(g) of
Post-Effective Amendment No. 11 to the Registrant's
Registration Statement on Form N-1A, filed with the
Securities and Exchange Commission on January 24, 1991,
is filed herewith.
5(h) Proposed Investment Advisory Agreement between
Registrant and CoreStates Investment Advisers, Inc. with
respect to CoreFund Growth Equity Fund dated March 25,
1991 originally filed as Exhibit (5)(h) of
Post-Effective Amendment No. 11 to the Registrant's
Registration Statement on Form N-1A, filed with the
Securities and Exchange Commission on January 24, 1991,
is filed herewith.
5(i) Proposed Investment Advisory Agreement between
Registrant and CoreStates Investment Advisers, Inc. with
respect to CoreFund Short Intermediate Bond Fund dated
March 25, 1991 originally filed as Exhibit (5)(i) of
Post-Effective Amendment No. 11 to the Registrant's
Registration Statement on Form N-1A, filed with the
Securities and Exchange Commission on January 24, 1991,
is filed herewith.
5(j) Proposed Investment Advisory Agreement between
Registrant and CoreStates Investment Advisers, Inc. with
respect to CoreFund Fiduciary Tax-Free Reserve dated
March 25, 1991 originally filed as Exhibit (5)(j) of
Post-Effective Amendment No. 11 to the Registrant's
Registration Statement on Form N-1A, filed with the
Securities and Exchange Commission on January 24, 1991,
is filed herewith.
<PAGE>
Exhibit No. Description of Exhibit
- ----------- ----------------------
5(k) Proposed Investment Advisory Agreement between
Registrant and CoreStates Investment Advisers, Inc. with
respect to CoreFund Tax-Free Reserve dated March 25,
1991 originally filed as Exhibit (5)(k) of
Post-Effective Amendment No. 11 to the Registrant's
Registration Statement on Form N-1A, filed with the
Securities and Exchange Commission on January 24, 1991,
is filed herewith.
5(l) Proposed Investment Advisory Agreement between
Registrant and CoreStates Investment Advisers, Inc. with
respect to CoreFund Fiduciary Treasury Reserve dated
March 25, 1991 originally filed as Exhibit (5)(k) of
Post-Effective Amendment No. 11 to the Registrant's
Registration Statement on Form N-1A, filed with the
Securities and Exchange Commission on January 24, 1991,
is filed herewith.
5(m) Investment Advisory Agreement between Registrant and
CoreStates Investment Advisers, Inc. with respect to
CoreFund Balanced Fund dated September 15, 1992
originally filed as Exhibit (5)(m) of Post-Effective
Amendment No. 15 to the Registrant's Registration
Statement on Form N-1A, filed with the Securities and
Exchange Commission on June 30, 1993, is filed herewith.
5(n) Proposed Investment Advisory Agreement between
Registrant and CoreStates Investment Advisers, Inc. with
respect to CoreFund Government Income Fund dated March
25, 1991 is incorporated herein by reference to Exhibit
(5)(k) of Post-Effective Amendment No. 11 to the
Registrant's Registration Statement on Form N-1A, as
filed with the Securities and Exchange Commission on
January 24, 1991.
5(o) Proposed Investment Advisory Agreement between
Registrant and CoreStates Investment Advisers, Inc. with
respect to CoreFund Intermediate-Term Municipal Fund
dated March 25, 1991 is incorporated herein by reference
to Exhibit (5)(k) of Post-Effective Amendment No. 11 to
the Registrant's Registration Statement on Form N-1A, as
filed with the Securities and Exchange Commission on
January 24, 1991.
5(p) Investment Advisory Agreement between Registrant and
CoreStates Investment Advisers, Inc. with respect to
CoreFund Global Bond Fund dated March 25, 1991 is
incorporated herein by reference to Exhibit (5)(k) of
Post-Effective Amendment No. 11 to Registrant's
Registration Statement on Form N-1A, as filed with the
Securities and Exchange Commission on January 24, 1991.
5(q) Sub-Advisory Agreement between CoreStates Investment
Advisers, Inc. and Alpha Global Fixed Income Managers,
Inc. with respect to Global Bond Fund dated December 15,
1993 originally filed as Exhibit (5)(q) of
Post-Effective Amendment No. 17 to Registrant's
Registration Statement on Form N-1A, filed with the
Securities and Exchange Commission on December 30, 1993,
is filed herewith.
<PAGE>
Exhibit No. Description of Exhibit
- ----------- ----------------------
5(r) Investment Advisory Agreement between Registrant and
CoreStates Investment Advisers, Inc. with respect to
Pennsylvania Municipal Bond Fund dated March 25, 1991 is
incorporated herein by reference to Exhibit (5)(i) of
Post-Effective Amendment No. 11 to the Registrant's
Registration Statement on Form N-1A, as filed with
Securities and Exchange Commission on January 24, 1991.
5(s) Investment Advisory Agreement between Registrant and
CoreStates Investment Advisers, Inc. with respect to New
Jersey Municipal Bond Fund dated March 25, 1991 is
incorporated herein by reference to Exhibit (5)(i) of
Post-Effective Amendment No. 11 to the Registrant's
Registration Statement on Form N-1A, as filed with the
Securities and Exchange Commission on January 24, 1991.
5(t) Investment Advisory Agreement between Registrant and
CoreStates Investment Advisers, Inc. with respect to
CoreFund Elite Cash Reserve, CoreFund Elite Government
Reserve and CoreFund Elite Treasury Reserve dated June
21, 1994 originally filed as Exhibit (5)(t) of
Post-Effective Amendment No. 21 to the Registrant's
Registration Statement on Form N-1A, filed with the
Securities and Exchange Commission on October 28, 1994,
is filed herewith.
5(v) Form of Investment Advisory Agreement between Registrant
and CoreStates Investment Advisers, Inc. with respect to
all Funds dated April 12, 1996 is filed herewith.
5(w) Sub-Advisory Agreement between CoreStates Investment
Advisers, Inc. and Alpha Global Fixed Income Managers,
Inc. dated April 12, 1996 with respect to the Global
Bond Fund is filed herewith.
5(x) Sub-Investment Advisory Agreement between CoreStates
Investment Advisers, Inc. and Martin Currie, Inc. dated
April 12, 1996 with respect to the International Growth
Fund is filed herewith.
5(y) Sub-Investment Advisory Agreement between CoreStates
Investment Advisers, Inc. and Aberdeen Fund Managers,
Inc. dated April 12, 1996 with respect to the
International Growth Fund is filed herewith.
6(a) Distribution Agreement between Registrant and Fairfield
Group, Inc. dated August 2, 1985 originally filed as
Exhibit (6) of Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission on May 22,
1985, is filed herewith.
6(b) Distribution Agreement between Registrant and SEI
Financial Services Company originally filed as Exhibit
(6)(b) of Post-Effective Amendment No. 14 to
Registrant's Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission on August
31, 1992, is filed herewith.
<PAGE>
Exhibit No. Description of Exhibit
- ----------- ----------------------
8(a) Custodian Agreement between Registrant and First
Pennsylvania Bank N.A. dated July 24, 1985 originally
filed as Exhibit (8) of Pre-Effective Amendment No. 2 to
Registrant's Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission on August 1,
1985, is filed herewith.
8(b) Custodian Agreement between Registrant and Philadelphia
National Bank dated May 20, 1987 originally filed as
Exhibit (8)(b) of Post-Effective Amendment No. 5 to the
Registrant's Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission on October
30, 1987, is filed herewith.
9(a) Amended Administration Agreement between Registrant and
Fairfield Group, Inc. dated March 6, 1990 originally
filed as Exhibit (9)(a) of Post-Effective Amendment No.
12 to Registrant's Registration Statement on Form N-1A,
filed with the Securities and Exchange Commission on
October 31, 1991, is filed herewith.
9(b) Transfer Agency Agreement between Registrant and First
Pennsylvania Bank n.a. dated July 24, 1985 originally
filed as Exhibit (9)(b) of Pre-Effective Amendment No.
2, to Registrant's Registration Statement on Form N-1A,
filed with the Securities and Exchange Commission on
August 1, 1985, is filed herewith.
9(c) Amended Transfer Agency Agreement between First
Pennsylvania Bank n.a. and Fund/Plan Services, Inc.,
dated December 31, 1985 originally filed as
Exhibit (9)(c) of Post-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission on
February 5, 1986, is filed herewith.
9(d) Retail Transfer Agency Agreement between Registrant and
SEI Financial Management Corporation originally filed as
Exhibit (9)(d) of Post-Effective Amendment No. 14 to
Registrant's Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission on August
31, 1992, is filed herewith.
9(e) Administration Agreement between Registrant and SEI
Financial Management Corporation dated October 30, 1992,
as amended dated June 1, 1995, originally filed as
Exhibit (9)(e) of Post-Effective Amendment No. 15 to
Registrant's Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission on June 30,
1993, is filed herewith.
9(f) Transfer Agent and Shareholder Services Agreement
between Registrant and SEI Financial Management
Corporation dated March 4, 1993 originally filed as
Exhibit (9)(f) of Post-Effective Amendment No. 15 to
Registrant's Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission on June 30,
1993, are filed herewith.
<PAGE>
Exhibit No. Description of Exhibit
- ----------- ----------------------
11(a) Consent of Ernst & Young LLP is filed herewith.
11(b) Consent of Coopers & Lybrand LLP is filed herewith.
12 Financial Statements and Auditor's Report as found in
the CoreFunds, Inc. 1996 Annual Report to Shareholders
are filed herewith.
13 Purchase Agreement dated July 24, 1985 between
Registrant and Fairfield Group, Inc. originally filed as
Exhibit (13) of Pre-Effective Amendment No. 2 to
Registrant's Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission on August 1,
1985 is filed herewith.
16(a) Schedules for computation of performance quotations
provided in response to Item 22 of the Registration
Statement originally filed as Exhibit 16 of
Post-Effective Amendment No. 12 to Registrant's
Registration Statement on Form N-1A, filed with the
Securities and Exchange Commission on October 31, 1991
are filed herewith.
16(b) Schedules of computation of performance are filed
herewith.
18 Rule 18f-3 Plan originally filed as Exhibit 18 of
Post-Effective Amendment No. 23 to the Registrant's
Registration Statement on Form N-1A, filed with the
Securities and Exchange Commission on October 27, 1995
is filed herewith.
24(a) Powers of Attorney for Mr. Emil J. Mikity, Mr. George H.
Strong, and Professor Erin Anderson, Directors of
Registrant, and David G. Lee, President of Registrant
originally filed as Exhibit (24) of Post-Effective
Amendment No. 21 to the Registrant's Registration
Statement on Form N-1A, filed with the Securities and
Exchange Commission on October 28, 1994 are filed
herewith.
24(b) Powers of Attorney for Mr. Carmen Romeo, Treasurer and
Assistant Secretary of Registrant, and Ms. Jean Young,
Controller of Registrant originally filed as Exhibit
(24)(b) of Post-Effective Amendment No. 22 to the
Registrant's Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission on November
15, 1994 are filed herewith.
27 Financial Data Schedules filed herewith.
ARTICLES OF INCORPORATION
OF
OMNI CASH RESERVE FUND, INC.
* * * *
ARTICLE I
THE UNDERSIGNED, Martin E. Lybecker, whose post office address is Suite
500, 1752 N. Street, N.W., Washington, D.C. 20036, being at least eighteen years
of age, does hereby act as incorporator, under and by virtue of the General Laws
of the State of Maryland authorizing the formation of corporations and with the
intention of forming a corporation.
ARTICLE II
The name of the Corporation is:
OMNI CASH RESERVE FUND, INC.
ARTICLE III
The purpose for which the Corporation is formed is to act as an open-end
diversified management investment company under the Investment Company Act of
1940.
ARTICLE IV
The Corporation is expressly empowered as follows:
(1) To hold, invest and reinvest its assets in securities and other
investments or to hold part or all of its assets in cash.
(2) To issue and sell shares of its capital stock in such amounts and on
such terms and conditions and for such purposes and for such amount or kind of
consideration as may now or hereafter be permitted by law.
(3) To redeem, purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue or cancel (all without the vote or consent of the stockholders
of the Corporation) shares of its capital stock, in any manner and to the extent
now or hereafter permitted by law and by the Charter of the Corporation.
(4) To enter into a written contract or contracts with any person or
persons providing for a delegation of the management of all or part of the
Corporation's securities portfolio(s) and also for the delegation of the
performance of various administrative or corporate functions, subject to
the
<PAGE>
direction of the Board of Directors. Any such contract or contracts may be made
with any person even though such person may be an officer, other employee,
director or stockholder of this Corporation or a corporation, partnership, trust
or association in which any such officer, other employee, director or
stockholder may be interested.
(5) To enter into a written contract or contracts appointing one or more
distributors or agents or both for the sale of the shares of the Corporation on
such terms and conditions as the Board of Directors of this Corporation may deem
reasonable and proper, and to allow such person or persons a commission on the
sale of such shares. Any such contract or contracts may be made with any person
even though such person may be an officer, other employee, director or
stockholder of this Corporation or a corporation, partnership, trust or
association in which any such officer, other employee, director or stockholder
may be interested.
(6) To enter into a written contract or contracts employing such
custodian or custodians for the shares, such dividend disbursing agent or
agents, and such transfer agent or agents and registrar or registrars for its
shares, on such terms and conditions as the Board of Directors of this
Corporation may deem reasonable and proper for the conduct of the affairs of the
Corporation, and to pay the fees and disbursements of such custodians, dividend
disbursing agents, transfer agents, and registrars out of the income and/or any
other property of the Corporation. Notwithstanding any other provisions of these
Articles of Incorporation or the By-Laws of the Corporation, the Board of
Directors may cause any or all of the property of the Corporation to be
transferred to, or to be acquired and held in the name of, a custodian so
appointed or any nominee or nominees of this Corporation or nominee or nominees
of such custodian satisfactory to the Board of Directors.
(7) To employ the same person, partnership (general or limited),
association, trust or corporation in any multiple capacity under Sections (4),
(5) and (6) of this Article, who may receive compensation from the Corporation
in as many capacities in which such person, partnership (general or limited),
association, trust or corporation shall serve the Corporation.
(8) To do any and all such further acts or things and to exercise any
and all such further powers or rights as may be necessary, incidental,
relative, conducive, appropriate or desirable for the accomplishment, carrying
out or attainment of the purposes stated in Article III thereof.
The Corporation shall be authorized to exercise and enjoy all of the
powers, rights and privileges granted to, or conferred upon, corporations by the
General Laws of the State of Maryland now or hereafter in force, and the
enumeration of the foregoing shall not be deemed to exclude any powers, rights
or privileges so granted or conferred.
2
<PAGE>
ARTICLE V
The post office address of the principal office of the Corporation in
the State of Maryland is c/o The Corporation Trust Incorporated, 32 South
Street, Baltimore, Maryland 21202. The name of the resident agent of the
Corporation in this State is The Corporation Trust Incorporated, a corporation
of thiS State, and the post office address of the resident agent is 32 South
Street, Baltimore, Maryland 21202.
ARTICLE IV
(1) The total number of shares of capital stock which the Corporation
shall have authority to issue is Two Billion (2,000,000,000) shares, of the par
value of One Mill ($0.001) per share and of the aggregate par value of Two
Million Dollars ($2,000,000), all of which Two Billion (2,000,000,000) shares
are designated Common Stock.
(2) The Corporation may issue shares of any class or series in
fractional denominations to the same extent as whole shares. Any fractional
share shall carry proportionately all the rights of a whole share of the same
class or series, excepting any right to receive a certificate evidencing such
fractional share, but including, without limitation, the right to vote and the
right to receive dividends.
(3) All persons who shall acquire stock in the Corporation shall acquire
the same subject to the provisions of the Charter and the By-laws of the
Corporation.
(4) The Board of Directors shall have authority by resolution to
classify and reclassify any authorized but unissued shares of capital stock from
time to time by setting or changing in any one or more respects the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications or terms to the provisions of Sections 5, 6, and 7
of this Article IV and applicable law. The power of the Board of Directors to
classify or reclassify the shares of capital stock shall include, without
limitation, authority to classify or reclassify any such stock into a class or
classes of capital stock and to divide and classify shares of any class into one
or more series of such class, by determining, fixing or altering one or more of
the following:
(i) The distinctive designation of such class or series;
provided that, unless otherwise prohibited by the terms of such class or
series, the number of shares of any class or series may be decreased by
the Board of Directors in connection with any classification or
reclassification of unissued shares and the number of shares of any
class or series which have been redeemed, purchased or otherwise
acquired by the Corporation shall remain part of the authorized capital
stock and be subject to classification and reclassification as provided
herein.
(ii) Whether or not and, if so, the rates, amounts and times at
which, and the conditions under which, dividends shall be payable on
shares of such class or series.
3
<PAGE>
(iii) Whether or not shares of such class or series shall have
voting rights, in addition to any voting rights provided by law and, if
so, the terms of such voting rights.
(iv) The rights of the holders of shares of such class or series
upon the liquidation, dissolution or winding up of the affairs of, or
upon any distribution of the assets of, the Corporation.
(v) Any other rights, restrictions, including restrictions on
transferability, and qualifications of shares of such class or series,
not inconsistent with law and the Charter of the Corporation.
(5) All consideration received by the Corporation for the issue or sale
of stock of any class, together with all income, earnings, profits and proceeds
thereof, including any proceeds derived from the sale, exchange or liquidation
thereof, and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall irrevocably belong to the class
of shares of stock with respect to which such assets, payments, or funds were
received by the Corporation for all purposes, and shall be subject only to the
rights of creditors, and shall be so handled upon the books of account of the
Corporation. Such assets, income, earnings, profits and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation thereof,
any assets derived from any reinvestment of such proceeds in whatever form, and
a portion of any general assets of the Corporation not belonging to a particular
class, are herein referred to as "assets belonging to" such class.
(6) In the event of the liquidation or dissolution of the Corporation,
stockholders of each class shall be entitled to receive, as a class, out of the
assets of the Corporation available for distribution to stockholders, but other
than general assets not belonging to any particular class of stock, the assets
belonging to such class, such assets to be distributed among such stockholders
in proportion to the number of shares of such class held by them and recorded on
the books of the Corporation. In the event that there are any general assets not
belonging to any particular class of stock and available for distribution,
distribution of such assets shall be made to the holders of stock of all classes
in proportion to the asset value of the respective classes determined as
hereinafter provided.
(7) The assets belonging to any class of stock shall be charged with the
liabilities in respect of such class, and shall also be charged with such
class's share of the general liabilities of the Corporation, in proportion to
the asset value of the respective classes determined as hereinafter provided.
The determination of the Board of Directors shall be conclusive as to the amount
of such liabilities, including the amount of accrued expenses and reserves; as
to any allocation of the same expenses and reserves; as to any allocation of the
same to a given class; and as to whether the same, or any general assets of the
Corporation, are allocable to one or more classes. The liabilities so allocated
to a class are herein referred to as "liabilities belonging to" such class.
4
<PAGE>
ARTICLE VII
(l) The number of directors of the Corporation shall be five (5), which
number may be increased or decreased pursuant to the By-laws of the Corporation
but shall never be less than three (3), unless there is no stock of the
Corporation outstanding, in which case the number of directors of the
Corporation may be less than three (3) but shall not be less than one (l). The
names of the directors who shall act until the first annual meeting of
stockholders or until their successors are duly elected and qualified are:
Francis J. Bruzda and Richard B. Seidel.
(2) No holder of stock of the Corporation shall, as such holder, have
any right to purchase or subscribe for any shares of the capital stock of the
Corporation or any other security of the Corporation which it may issue or sell
(whether out of the number of shares authorized by the Charter, or out of any
shares of the capital stock of the Corporation acquired by it after the issue
thereof or otherwise) other than such right, if any, as the Board of Directors,
in its discretion, may determine.
(3) Each director and each officer of the Corporation shall be
indemnified by the Corporation to the full extent permitted by the General Laws
of the State of Maryland and the Investment Company Act of 1940, now or
hereafter in force, including advances of related expenses.
ARTICLE VIII
(1) To the extent that the Corporation has funds or other property
legally available therefor, each holder of shares of capital stock of the
Corporation shall be entitled to require the Corporation to redeem all or any
part of the shares of capital stock of the Corporation standing in the name of
such holder on the books of the Corporation, and all shares of capital stock
issued by the Corporation shall be subject to redemption by the Corporation, at
the redemption price of such shares as in effect from time to time as may
be determined by the Board of Directors of the Corporation in accordance with
the provisions hereof, subject to the right of the Board of Directors of the
Corporation to suspend the right of redemption of shares of capital stock of the
Corporation or postpone the date of payment of such redemption price in
accordance with the provisions of applicable law, and the Corporation shall have
the right at any time to redeem the shares owned by any holder of capital stock
of the Corporation (i) if such redemption is, in the opinion of the Board of
Directors of the Corporation, desirable in order to prevent the Corporation from
being deemed a "personal holding company" within the meaning of the Internal
Revenue Code of 1954, as amended, (ii) if the value of such shares in the
account maintained by the Corporation or its transfer agent for any class of
stock is less than $1,000.00; provided, however, that each stockholder shall be
notified that the value of his account is less than $1,000.00 and allowed sixty
days to make additional purchases of shares before such redemption is processed
by the Corporation, or (iii) if the net income with respect to any particular
class of shares should be negative or it should otherwise be appropriate to
carry out the Corporation's responsibilities under the Investment Company Act of
1940, in each case subject to such further terms and conditions as the Board of
Directors of the Corporation may from time to time adopt. The redemption price
-5-
<PAGE>
of shares of capital stock of the Corporation shall, except as otherwise
provided in this section, be the net asset value thereof as determined by the
Board of Directors of the Corporation from time to time in accordance with the
provisions of applicable law, less such redemption fee or other charge, if any,
as may be fixed by resolution of the Board of Directors of the Corporation.
Payment of the redemption price shall be made in cash by the Corporation at such
time and in such manner as may be determined from time to time by the Board of
Directors of the Corporation unless, in the opinion of the Board of Directors,
which shall be conclusive, conditions exist which make payment wholly in cash
unwise or undesirable; in such event the Corporation may make payment wholly or
partly by securities or other property included in the assets belonging or
allocable to the class of the shares redemption of which is being sought, the
value of which shall be determined as provided herein.
(2) Each holder of any class of stock of the Corporation who surrenders
his certificate in good delivery form to the Corporation or, if the shares in
question are not represented by certificates, who delivers to the Corporation a
written request in good order signed by the stockholder, shall, to the extent
permitted by the By-Laws or by resolution of the Board of Directors, be entitled
to convert the shares in question, on the basis hereinafter set forth, into
shares of stock of any class of the Corporation. The Corporation shall determine
the net asset value, as provided herein, of the shares to be converted and may
deduct therefrom a conversion cost, in an amount determined within the
discretion of the Board of Directors. Within five (5) business days after such
surrender and payment of any conversion cost, the Corporation shall issue to the
stockholder such number of shares of stock of the class desired as, taken at the
net asset value thereof determined as provided herein in the same manner and at
the same time as that of the shares surrendered, shall equal the net asset value
of the shares surrendered, less any conversion cost as aforesaid. Any amount
representing a fraction of a share may be paid in cash at the option of the
Corporation. Any conversion cost may be paid and/or assigned by the Corporation
to the underwriter and/or to any other agency, as it may elect.
ARTICLE IX
Any determination made in good faith, so far as accounting matters are
involved, in accordance with accepted accounting practices by or pursuant to the
direction of the Board of Directors, as to the amount of assets, obligations or
liabilities of the Corporation, as to the amount of net income of the
Corporation from dividends and interest for any period or amounts at any time
legally available for the payments of dividends, as to the amount of any
reserves or charges set up and the propriety thereof, as to the time of or
purpose for creating reserves or as to the use, alteration or cancellation of
any reserves or charges (whether or not any obligation or liability for which
such reserves or charges shall have been created shall have been paid or
discharged or shall be then or thereafter required to be paid or discharged), as
to the value of any security owned by the Corporation or as to any other matters
relating to the issuance, sale, redemption or other acquisition or disposition
of securities or shares of capital stock of the Corporation, and any reasonable
-6-
<PAGE>
determination made in good faith by the Board of Directors as to whether any
transaction constitutes a purchase of securities on "margin," a sale of
securities "short," or an underwriting of the sale of, or a participation in
any underwriting or selling group in connection with the public distribution of,
any securities, shall be final and conclusive, and shall be binding upon the
Corporation and all holders of its capital stock, past, present and future, and
shares of the capital stock of the Corporation are issued and sold on the
condition and understanding, evidenced by the purchase of shares of capital
stock or acceptance of share certificates, that any and all such determinations
shall be binding as aforesaid. No provision of the Charter of the Corporation
shall be effective to (i) require a waiver of compliance with any provision of
the Securities Act of 1933, as amended, or the Investment Company Act of 1940,
as amended, or of any valid rule, regulation or order of the Securities and
Exchange Commission thereunder or (ii) protect or purport to protect any
director or officer of the Corporation against any liability to the Corporation
or its security holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
ARTICLE X
The duration of the Corporation shall be perpetual.
ARTICLE XI
(1) The Corporation reserves the right from time to time to make any
amendments to its Charter which may now or hereafter be authorized by law,
including any amendments changing the terms or contract rights, as expressly set
forth in its Charter, of any of its outstanding stock by classification,
reclassification or otherwise, but no such amendment which changes such terms or
contract rights of any of its outstanding stock shall be valid unless such
amendment shall have been authorized by not less than a majority of the
aggregate number of the votes entitled to be cast thereon by a vote at a
meeting.
(2) Notwithstanding any provision of the General Laws of the State of
Maryland requiring any action to be taken or authorized by the affirmative vote
of the holders of a designated proportion of the votes of all classes or of any
class of stock of the Corporation, such action shall be effective and valid if
taken or authorized by the affirmative vote of the holders of a majority of the
total number of shares outstanding and entitled to vote thereon, except as
otherwise provided herein.
(3) So long as permitted by Maryland law, the books of the Corporation
may be kept outside of the State of Maryland at such place or places as may be
designated from time to time by the Board of Directors or in the By-Laws of the
Corporation.
(4) In furtherance, and not in limitation, of the Powers conferred by
the laws of the State of Maryland, the Board of Directors is expressly
authorized:
7
<PAGE>
(i) To make, alter or repeal the By-Laws of the Corporation,
except where such power is reserved by the By-Laws to the stockholders,
and except as otherwise required by the Investment Company Act of 1940.
(ii) From time to time to determine whether and to what extent
and at what times and places and under what conditions and regulations
the books and accounts of the Corporation, or any of them other than the
stock ledger, shall be open to the inspection of the stockholders, and
no stockholder shall have any right to inspect any account or book or
document of the Corporation, except as conferred by law or authorized by
resolution of the Board of Directors or of the stockholders.
(iii) Without the assent or vote of the stockholders, to
authorize the issuance from time to time of shares of the stock of any
class of the Corporation, whether now or hereafter authorized, and
securities convertible into shares of its stock of any class or classes,
whether now or hereafter authorized, for such consideration as the Board
of Directors may deem advisable.
{iv) Without the assent or vote of the stockholders, to
authorize and issue obligations of the Corporation, secured and
unsecured, as the Board of Directors may determine, and to authorize and
cause to be executed mortgages and liens upon the property of the
Corporation, real or personal.
(v) To determine in accordance with generally accepted
accounting principles and practices what constitutes net profits,
earnings, surplus or net assets in excess of capital, and to determine
what accounting periods shall be used by the Corporation for any
purpose, whether annual or any other period, including daily; to set
apart out of any funds of the Corporation such reserves for such
purposes as it shall determine and to abolish the same; to declare and
pay any dividends and distributions in cash, securities of other
property from surplus or any funds legally available therefor, at such
intervals (which may be as frequently as daily) or on such other
periodic basis, as it shall determine; to declare such dividends or
distributions by means of a formula or other method of determination, at
meetings held less frequently than the frequency of the effectiveness of
such declarations; to establish payment dates for dividends or any other
diatributions on any basis, including dates occurring less frequently
than the effectiveness of declarations thereof; and to provide for the
payment of declared dividends on a date earlier or later than the
specified payment date in the case of stockholders of the Corporation
redeeming their entire ownership of shares of any class of the
Corporation.
(vi) In addition to the powers and authorities granted herein
and by statute expressly conferred upon it, the Board of Directors is
authorized to exercise all such powers and do all such acts and things
as may be exercised or done by the Corporation, subject, nevertheless,
to the provisions of Maryland law, this Charter and the By-Laws of the
Corporation.
-8-
<PAGE>
IN WITNESS WHEREOF, the undersigned incorporator of OMNI CASH RESERVE
FUND, INC. hereby executes the foregoing Articles of Incorporation and
acknowledges the same to be his act and further acknowledges that, to the best
of his knowledge, the matters and facts set forth therein are true in all
material respects under the penalties of perjury.
Dated the 10th day of September, 1984.
/s/ Martin E. Lybecker
-----------------------
Martin E. Lybecker
WITNESS:
/s/ Michael L. Gassmann
- ------------------------
Michael L. Gassmann
-9-
<PAGE>
DISTRICT OF COLUMBIA:
I HEREBY CERTIFY THAT on the 10th day of September, 1984, before me, a
Notary Public of the District of Columbia as aforesaid, personally appeared
Martin E. Lybecker, who acknowledged the foregoing Articles of Incorporation to
be his act.
WITNESS my hand and Notarial Seal.
/s/ Mary E. Higgins
------------------------
Mary E. Higgins
Notary Public
My Commission Expires:
August 14, 1989
- -------------------------
-10-
ARTICLES OF AMENDMENT
OMNI CASH RESERVE FUND, INC., a corporation organized under the laws of
the State of Maryland, having its principal office in Maryland at c/o The
Corporation Trust Incorporated, 32 South Street, Baltimore, MD 21202
(hereinafter the "Corporation"), does hereby certify to the State Department of
Assessments and Taxation that:
FIRST: The Articles of Incorporation of the Corporation are hereby
amended by striking in its entirety ARTICLE II thereof and by inserting in lieu
thereof the following:
ARTICLE II
The name of the Corporation is:
RED OAK CASH RESERVE FUND, INC.
SECOND: The foregoing amendment was approved pursuant to Section
2-408(c) of the Code of Maryland (Corporations and Associations) by the entire
board of directors of the Corporation by unanimous written consent dated
December 12, 1984; and no stock entitled to be voted on the matter was
outstanding or subscribed for at the time of approval.
IN WITNESS WHEREOF, Omni Cash Reserve Fund, Inc. has caused these
presents to be signed in its name and on its behalf by its President and its
corporate seal to be hereunder affixed and attested by its Secretary on this
29th day of March, 1985, and its President acknowledges that these Articles of
Amendment are the act and deed of Omni Cash Reserve Fund, Inc., and under
penalty of perjury, that the matters in fact set forth herein with respect to
authorization and approval are true in all material respects to the best of his
knowledge, information and belief.
SEAL ATTEST: OMNI CASH RESERVE FUND, INC.
(SEAL)
/s/ Jeffrey A. Dalke By: /s/ Francis J. Bruzda
- ---------------------------- ----------------------------
Secretary Frances J. Bruzda
President
RED OAK CASH RESERVE FUND, INC.
ARTICLES SUPPLEMENTARY
RED OAK CASH RESERVE FUND, INC. (the "Fund"), a corporation organized
under the laws of the State of Maryland, does hereby file for record with the
State Department of Assessments and Taxation of Maryland the following Articles
Supplementary to its Articles of Incorporation:
FIRST: Pursuant to the authority contained in Article VI of the Articles
of Incorporation of the Fund, one billion (1,000,000,000) of the two billion
(2,000,000,000) authorized, unissued, and unclassified shares of the Fund of the
par value of one mill ($.001) per share and of the aggregate par value of one
million dollars ($1,000,000) were classified as Class A Common Stock by
unanimous vote of the board of directors of the Fund at a meeting duly called,
at which a quorum was present, on November 7, 1984.
SECOND: Pursuant to the authority contained in Article VI of the
Articles of Incorporation of the Fund, the remaining one billion (1,000,000,000)
of the two billion (2,000,000,000) authorized and unissued shares of the Fund of
the par value of one mill ($.001) per share and of the aggregate par value of
one million dollars ($1,000,000) were classified as Class B Common Stock by
unanimous vote of the board of directors of the Fund at a meeting duly called,
at which a quorum was present, on November 7, 1984.
THIRD: Each share of Class A Common Stock and Class B Common Stock shall
have all the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption that are set forth in the Fund's Articles of
Incorporation with respect to its shares of capital stock.
IN WITNESS WHEREOF, Red Oak Cash Reserve Fund, Inc. has caused these
presents to be signed in its name and on its behalf by its President and its
corporate seal to be hereunder affixed and attested by its Secretary on this
29th day of March, 1985, and its President acknowledges that these Articles
Supplementary are the act and deed of Red Oak Cash Reserve Fund, Inc. and, under
penalty of perjury, that the matters and facts set forth herein with respect to
authorization and approval are true in all material respects to the best of his
knowledge, information and belief.
ATTEST: RED OAK CASH RESERVE FUND, INC.
(SEAL)
/s/ Jeffrey A. Dalke By: /s/ Francis J. Bruzda
- ---------------------------- ----------------------------
Secretary Francis J. Bruzda
President
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
RED OAK CASH RESERVE FUND, INC.
RED OAK CASH RESERVE FUND, INC., a corporation organized under the laws
of the State of Maryland, having its principal office in Maryland, c/o The
Corporation Trust Incorporated, 32 South Street, Baltimore, MD 21202
(hereinafter the "Corporation"), does hereby certify to the State Department of
Assessments and Taxation that:
FIRST: Pursuant to Section 2-604 of the Maryland General Corporation
Law, The Articles of Incorporation of the Corporation are hereby amended by
striking in its entirety Article II thereof and by inserting in lieu thereof the
following:
ARTICLE II
The name of the Corporation is:
CoreFunds, Inc.
SECOND: The foregoing amendment was unanimously approved at the special
meeting of the board of directors of the Corporation on April 20, 1987; the
outstanding shares entitled to vote on the matter approved the foregoing
amendment at the special meeting of shareholders held on June 22, 1987.
IN WITNESS WHEREOF, RED OAK CASH RESERVE FUND, INC. has caused this
instrument to be signed in its name and on its behalf by its President and its
corporate seal to be hereunto affixed and attested by its Secretary on this 22nd
day of June, 1987.
RED OAK CASH RESERVE FUND, INC.
By: /s/ Francis J. Bruzda
[SEAL] --------------------------
Francis J. Bruzda
President
ATTEST:
/s/ James W. Jennings
- ------------------------------
James W. Jennings, Secretary
<PAGE>
CERTIFICATE
THE UNDERSIGNED, President of RED OAK CASH RESERVE FUND, INC., who
executed on behalf of said Corporation the attached Articles of Amendment to
Articles of Incorporation of said Corporation, of which this certificate is made
a part, hereby acknowledges, in the name and on behalf of said Corporation, the
attached Articles of Amendment to be the corporate act of said Corporation, and
certifies that to the best of his knowledge, information and belief the matters
and facts set forth in the attached Articles of Amendment with respect to
authorization and approval are true in all material respects, under the
penalties for perjury.
By: /s/ Francis J. Bruzda
--------------------------
Francis J. Bruzda, President
Date: June 22, 1987
COREFUNDS, INC.
ARTICLES SUPPLEMENTARY
COREFUNDS, INC. (the "Corporation"), formerly named Red Oak Cash
Reserve Fund, Inc., a corporation organized under the laws of the State of
Maryland, does hereby file for record with the State Department of Assessments
and Taxation of Maryland the following Articles Supplementary to its Articles of
Incorporation:
FIRST: The Corporation is registered as an open-end Company under the
Investment Company Act of 1940. As hereinafter set forth, the Corporation has
decreased the number of authorized shares of two classes of the Corporation's
capital stock and has classified its authorized, unissued and unclassified
capital stock, in accordance with Section 2-105(c) of the Maryland General
Corporation Law and under authority contained in the Articles of Incorporation
of the Corporation.
SECOND: Immediately before the decreases and classifications hereinafter
set forth, the Corporation had authority to issue two billion (2,000,000,000)
shares of the Corporation of the par value of one mill ($.001) per share and of
the aggregate par value of two million dollars ($2,000,000), of which one
billion (1,000,000,000) were classified as Class A Common Stock and one billion
(1,000,000,000) were classified as Class B Common Stock.
THIRD: Pursuant to the authority contained in Section 2-105(c) of the
Maryland General Corporation Law, the Board of Directors of the Corporation, by
resolutions adopted by unanimous consent on March 30, 1989, decreased the
aggregate number of shares of Class A Common Stock of the Corporation of the par
value of one mill ($.001) per share from one billion (1,000,000,000) to five
hundred million (500,000,000).
FOURTH: Pursuant to the authority contained in Section 2-105(c) of the
Maryland General Corporation Law, the Board of Directors of the Corporation by
resolutions adopted by unanimous consent on March 30, 1989, decreased the
aggregate number of shares of Class B Common Stock of the Corporation of the par
value of one mill ($.001) per share from one billion (1,000,000,000) to five
hundred million (500,000,000).
FIFTH: Immediately after the decreases set forth in Articles Third and
Fourth of these Articles Supplementary, there were one billion (1,000,000,000)
authorized, unissued and unclassified shares of the Corporation of the par value
of one mill ($.001) per share.
<PAGE>
SIXTH: Pursuant to the authority contained in Article VI of the Articles
of Incorporation of the Corporation, the Board of Directors of the Corporation
by resolutions adopted by unanimous consent on March 30, 1989, classified five
hundred million (500,000,000) of the authorized, unissued and unclassified
shares of the Corporation as Class C Common Stock of the par value of one mill
($.001) per share.
SEVENTH: Pursuant to the authority contained in Article VI of the
Articles of Incorporation of the Corporation, the Board of Directors of the
Corporation by resolutions adopted by unanimous consent on March 30, 1989,
classified twenty-five million (25,000,000) of the authorized, unissued and
unclassified shares of the Corporation as Class D Common Stock of the par value
of one mill ($.001) per share.
EIGHTH: Pursuant to the authority contained in Article VI of the
Articles of Incorporation of the Corporation, the Board of Directors of the
Corporation by resolutions adopted by unanimous consent on March 30, 1989,
classified twenty-five million (25,000,000) of the authorized, unissued and
unclassified shares of the Corporation as Class E Common Stock of the par value
of one mill ($.001) per share.
NINTH: Each share of Class A Common Stock, Class B Common Stock, Class C
Common Stock, Class D Common Stock and Class E Common Stock shall have all the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption that are set forth in the Corporation's Articles of Incorporation
with respect to its shares of capital stock.
TENTH: Immediately after the decreases and classifications hereinbefore
set forth and upon filing for record these Articles Supplementary, the
Corporation has authority to issue two billion (2,000,000,000) shares of the
Corporation of the par value of one mill ($.001) per share and of the aggregate
par value of two million dollars ($2,000,000), of which five hundred million
(500,000,000) are classified as Class A Common Stock, five hundred million
(500,000,000) are classified as Class B Common Stock, five hundred million
(500,000,000) are classified as Class C Common Stock, twenty-five million
(25,000,000) are classified as Class D Common Stock, twenty-five million
(25,000,000) are classified as Class E Common Stock and four hundred fifty
million (450,000,000) are unclassified.
<PAGE>
IN WITNESS WHEREOF, COREFUNDS, INC. has caused these presents to be
signed in its name and on its behalf by its President and its corporate seal to
be hereunto affixed and attested by its Secretary on this 30th day of March,
1989.
COREFUNDS, INC.
ARTICLES SUPPLEMENTARY
COREFUNDS, INC. (the "Corporation"), formerly named Red Oak Cash Reserve
Fund, Inc., a corporation organized under the laws of the State of Maryland,
does hereby file for record with the State Department of Assessments and
Taxation of Maryland the following Articles Supplementary to its Articles of
Incorporation:
FIRST: The Corporation is registered as an open-end investment company
under the Investment Company Act of 1940. As hereinafter set forth, the
Corporation has increased the number of authorized shares of the Corporation's
capital stock and has classified its authorized, unissued and unclassified
capital stock, in accordance with Section 2-105(c) of the Maryland General
Corporation Law and under authority contained in the Articles of Incorporation
of the Corporation.
SECOND: Immediately before the increase and classifications hereinafter
set forth, the Corporation had authority to issue two billion (2,000,000,000)
shares of common stock of the par value of one mill ($.001) per share and of the
aggregate par value of two million dollars ($2,000,000), of which five hundred
million (500,000,000) were classified as Class A Common Stock, five hundred
million (500,000,000) were classified as Class B Common Stock, five hundred
million (500,000,000) were classified as Class C Common Stock, twenty-five
million (25,000,000) were classified as Class D Common Stock and twenty-five
million (25,000,000) were classified as Class E Common Stock.
THIRD: Pursuant to the authority contained in Section 2-105(c) of the
Maryland General Corporation Law, the Board of Directors of the Corporation, by
resolutions adopted at a meeting held on December 18, 1990, the aggregate number
of shares of common stock that the Fund has authority to issue shall be
increased from two billion (2,000,000,000) to five billion (5,000,000,000), with
an aggregate par value of five million dollars ($5,000,000);
FOURTH: Immediately after the increase set forth in Article Third of
these Articles Supplementary, there were four billion four hundred fifty million
(4,450,000,000) authorized, unissued and unclassified shares of the Corporation
of the par value of one mill ($.001) per share.
FIFTH: Pursuant to the authority contained in Article VI of the Articles
of Incorporation of the Fund, the Board of Directors of the Corporation, by
resolutions adopted at
<PAGE>
a meeting held on December 18, 1990, classified five hundred million
(500,000,000) of the authorized, unissued and unclassified shares of the
Corporation as Class F Common Stock of the par value of one mill ($.001) per
share;
SIXTH: Pursuant to the authority contained in Article VI of the Articles
of Incorporation of the Fund, the Board of Directors of the Corporation, by
resolutions adopted at a meeting held on December 18, 1990, classified one
hundred million (100,000,000) of the authorized, unissued and unclassified
shares of the Corporation as Class G Common Stock of the par value of one mill
($.001) per share;
SEVENTH: Pursuant to the authority contained in Article VI of the
Articles of Incorporation of the Fund, the Board of Directors of the
Corporation, by resolutions adopted at a meeting held on December 18, 1990,
classified one hundred million (100,000,000) of the authorized, unissued and
unclassified shares of the Corporation as Class H Common Stock of the par value
of one mill ($.001) per share;
EIGHTH: Pursuant to the authority contained in Article VI of the
Articles of Incorporation of the Fund, the Board of Directors of the
Corporation, by resolutions adopted at a meeting held on December 18, 1990,
classified two hundred fifty million (250,000,000) of the authorized, unissued
and unclassified shares of the Corporation as Class I Common Stock of the par
value of one mill ($.001) per share;
NINTH: Pursuant to the authority contained in Article VI of the Articles
of Incorporation of the Fund, the Board of Directors of the Corporation, by
resolutions adopted at a meeting held on December 18, 1990, classified two
hundred fifty million (250,000,000) of the authorized, unissued and unclassified
shares of the Corporation as Class J Common Stock of the par value of one mill
($.001) per share;
TENTH: Pursuant to the authority contained in Article VI of the Articles
of Incorporation of the Fund, the Board of Directors of the Corporation, by
resolutions adopted at a meeting held on December 18, 1990, classified two
hundred fifty million (250,000,000) of the authorized, unissued and unclassified
shares of the Corporation as Class K Common Stock of the par value of one mill
($.001) per share;
ELEVENTH: Each share of Class A Common Stock, Class B Common Stock,
Class C Common Stock, Class D Common Stock, Class E Common Stock, Class F Common
Stock, Class G Common Stock, Class H Common Stock, Class I Common Stock, Class J
Common Stock and Class K Common Stock shall have all the preferences, conversion
and other rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption
2
<PAGE>
that are set forth in the Corporation's Articles of Incorporation with respect
to its shares of capital stock; and
TWELFTH: Immediately after the increase and classifications hereinbefore
set forth and upon filing for record these Articles Supplementary, the
Corporation has authority to issue five billion (5,000,000,000) shares of the
Corporation of the par value of one mill ($.001) per share and of the aggregate
par value of five million dollars ($5,000,000), of which five hundred million
(500,000,000) are classified as Class A Common Stock, five hundred million
(500,000,000) are classified as Class B Common Stock, five hundred million
(500,000,000) are classified as Class C Common Stock, twenty-five million
(25,000,000) are classified as Class D Common Stock, twenty-five million
(25,000,000) are classified as Class E Common Stock, five hundred million
(500,000,000) are classified as Class F Common Stock, one hundred million
(100,000,000) are classified as Class G Common Stock, one hundred million
(100,000,000) are classified as Class H Common Stock, two hundred fifty million
(250,000,000) are classified as Class I Common Stock, two hundred fifty million
(250,000,000) are classified as Class J Common Stock, two hundred fifty million
(250,000,000) are classified as Class K Common Stock, and three billion
(3,000,000,000) are unclassified.
IN WITNESS WHEREOF, COREFUNDS, INC. has caused these presents to be
signed in its name and on its behalf by its President and its corporate seal to
be hereunto affixed and attested by its Secretary as of the 18th day of
December, 1990.
COREFUNDS, INC.
By: /s/ Francis J. Bruzda
[SEAL] --------------------------
Francis J. Bruzda,
President
ATTEST:
/s/ James W. Jennings
- ------------------------------
James W. Jennings
Secretary
3
<PAGE>
COREFUNDS, INC.
By: /s/ Francis J. Bruzda
[SEAL] --------------------------
Its President
ATTEST:
/s/ James W. Jennings
- ------------------------------
Secretary
COREFUNDS, INC.
ARTICLES SUPPLEMENTARY
COREFUNDS, INC. (the "Corporation"), formerly named Red oak Cash Reserve
Fund, Inc., a corporation organized under the laws of the State of Maryland,
does hereby file for record with the State Department of Assessments and
Taxation of Maryland the following Articles Supplementary to its Articles of
Incorporation:
FIRST: The Corporation is registered as an open-end investment company
under the Investment Company Act of 1940. As hereinafter set forth, the
Corporation has classified its authorized, unissued and unclassified capital
stock in accordance with Section 2-105(c) of the Maryland General Corporation
Law and under authority contained in the Articles of Incorporation of the
Corporation.
SECOND: Immediately before the classifications hereinafter set forth,
the Corporation had authority to issue five billion (5,000,000,000) shares of
the Corporation of the par value of one mill ($.001) per share and of the
aggregate par value of five million dollars ($5,000,000), of which five hundred
million (500,000,000) were classified as Class A Common Stock, five hundred
million (500,000,000) were classified as Class B Common Stock, five hundred
million (500,000,000) were classified as Class C Common Stock, twenty-five
million (25,000,000) were classified as Class D Common Stock, twenty-five
million (25,000,000) were classified as Class E Common Stock, five hundred
million (500,000,000) were classified as Class F Common Stock, one hundred
million (100,000,000) were classified as Class G Common Stock, one hundred
million (100,000 000) were classified as Class H Common Stock, two hundred fifty
million (250,000 000) were classified as Class I Common Stock, two hundred fifty
million (250,000,000 were classified as Class J Common Stock, two hundred fifty
million (250,000,000) were classified as Class K Common Stock, and two billion
(2,000,000,000) were unclassified.
THIRD: Pursuant to the authority contained in Article VI of the Articles
of Incorporation of the Fund, the Board of Directors of the Corporation, by
resolutions adopted at a meeting held on September 3, 1991, classified five
hundred million (500,000,000) of the authorized, unissued and unclassified
shares of the Corporation as Class A Common Stock of the par value of one mill
($.001) per share;
FOURTH: Pursuant to the authority contained in Article VI of the
Articles of Incorporation of the Fund, the Board of Directors of the
Corporation, by resolutions adopted at a meeting held on September 3, 1991,
classified five hundred million (500,000,000) of the authorized, unissued and
unclassified shares of the Corporation as Class B Common Stock of the par value
of one mill ($.001) per share;
<PAGE>
FIFTH: Each share of Class A Common Stock, Class B Common Stock, Class C
Common Stock, Class D Common Stock, Class E Common Stock, Class F Common Stock,
Class G Common Stock, Class H Common Stock, Class I Common Stock, Class J Common
Stock and Class K Common Stock shall have all the preferences, conversion and
other rights, voting powers, restrictions limitations as to dividends,
qualifications, and terra end conditions of redemption that are set forth in the
Corporation's Articles of Incorporation with respect to its shares of capital
stock: and
SIXTH: Immediately after the classifications hereinbefore set forth and
upon filing for record these Articles Supplementary, the Corporation has
authority to issue five billion (5,000,000,000) shares of the Corporation of the
par value of one mill ($.001) per share and of the aggregate par value of five
million dollars ($5,000,000), of which one billion (1,000,000,000) are
classified as Class A Common Stock, one billion (1,000,000,000) are classified
as Class B Common Stock, five hundred million (500,000,000) are classified as
Class C Common Stock, twenty-five million (25,000,000) are classified as Class D
Common Stock, twenty-five million (25,000,000) are classified as Class E Common
Stock, five hundred million (500,000,000) are classified as Class F Common
Stock, one hundred million (100,000,000) are classified as Class G Common Stock,
one hundred million (100,000,000) are classified as Class H Common Stock, two
hundred fifty million (250,000,000) are classified as Class I Common Stock, two
hundred fifty million (250,000,000) are classified as Class J Common Stock, two
hundred fifty million (250,000,000) are classified as Class K Common Stock, and
one billion (1,000,000,000) are unclassified.
IN WITNESS WHEREOF, COREFUNDS, INC. has caused these presents to be
signed in its name and on its behalf by its President and its corporate seal to
be hereunto affixed and attested by its Secretary as of the 3rd day of
September, 1991.
COREFUNDS, INC.
By: /s/ Francis J. Bruzda
-------------------------
Francis J. Bruzda, President
[Seal]
Attest:
/s/ James W. Jennings
- ---------------------
James W. Jennings,
Secretary
<PAGE>
THE UNDERSIGNED, President of COREFUNDS, INC., who executed on behalf of
said corporation the foregoing Articles Supplementary to the Charter, of which
this certificate is made a part, hereby acknowledges, in the name and on behalf
of said corporation, the foregoing Articles Supplementary to the Charter to be
the corporate act of said corporation and further certifies that, to the best of
his knowledge, information and belief, the matters and facts set forth therein
with respect to the approval thereof are true in all material respects, under
the penalties of perjury.
By: /s/ Francis J. Bruzda
-------------------------
Francis J. Bruzda
President
COREFUNDS, INC.
ARTICLES SUPPLEMENTARY
COREFUNDS, INC. (the 'Corporation'), formerly named Red Oak Cash Reserve
Fund, Inc., a corporation organized under the laws of the State of Maryland
does hereby file for record with the State Department of Assessments and
Taxation of Maryland the following Articles Supplementary to its Articles of
Incorporation:
FIRST: The Corporation is registered as an open-end investment company
under the Investment Company Act of 1940. As hereinafter set forth, the
Corporation has classified its authorized, unissued and unclassified capital
stock in accordance with Section 2-105(c) of the Maryland General Corporation
Law and under authority contained in the Articles of Incorporation of the
Corporation.
SECOND: Immediately before the increase and classification hereinbefore
set forth and upon filing for record these Articles Supplementary, the
Corporation has authority to issue ten billion (10,000,000,000) shares of the
Corporation of the par value of one mill ($.001) per share and of the aggregate
par value of ten million dollars ($10,000,000), of which one billion
(1,000,000,000) are classified as Class A Common Stock, one billion
(1,000,000,000) are classified as Class A Common Stock, Series B, one billion
(1,000,000,000) are classified as Class B Common Stock, one billion
(1,000,000,000) are classified as Class B Common Stock, Series B, five hundred
million (500,000,000) are classified as Class C Common Stock, twenty-five
million (25,000,000) are classified as Class D Common Stock, twenty-five million
(25,000,000) are classified as Class D Common Stock, Series B, twenty-five
million (25,000,000) are classified as Class E Common Stock, five hundred
million (500,000,000) are classified as Class F Common Stock, one hundred
million (100,000,000) are classified as Class G Common Stock, one hundred
million (100,000,000) are classified as Class G Common Stock, Series B, one
hundred million (100,000,000) are classified as Class H Common Stock, one
hundred million (100,000,000) are classified as Class H Common Stock, Series B,
two hundred fifty million (250,000,000) are classified as Class I Common Stock,
two hundred fifty million (250,000,000) are classified as Class J Common Stock,
two hundred fifty million (250,000,000) are classified as Class J Common Stock
Series B, two hundred fifty million (250,000,000) are classified as Class K
Common Stock, one hundred million (100,000,000) are classified as Class L Common
Stock, one hundred million (100,000,000) are classified as Class L Common Stock,
Series B, one hundred million (100,000,000) are classified as Class M Common
Stock, one hundred million (100,000,000) are classified as Class M Common Stock,
Series B, one hundred million (100,000,000) are classified as Class N Common
Stock, one hundred million (100,000,000) are classified as Class N Common Stock,
Series B and two billion nine hundred twenty-five million (2,925,000,000) are
unclassified.
<PAGE>
THIRD: Pursuant to the authority contained in Section 2-105(c) of the
Maryland General Corporation Law, the Board of Directors of the Corporation by a
resolution adopted at a meeting held on December 16, 1992, increased the
aggregate number of shares of Class C Common Stock of the Corporation of the par
value of one mill ($.001) per share from five hundred million (500,000,000) to
seven hundred fifty million (750,000,000).
FOURTH: Pursuant to the authority contained in Article VI of the
Articles of Incorporation of the Corporation, the Board of Directors of the
Corporation, by a resolution adopted at a meeting held on December 16, 1992,
classified twenty-five million (25,000,000) of the authorized, unissued and
unclassified shares of the Corporation as Class E Common Stock, Series B of the
par value of one mill ($.001) per share.
FIFTH: Each share of Class A Common Stock, Class A Common Stock, Series
B, Class B Common Stock, Class B Common Stock, Series B, Class C Common Stock,
Class D Common Stock, Class D Common Stock, Series B, Class E Common Stock,
Class E Common Stock, Series B, Class F Common Stock, Class G Common Stock,
Class G Common Stock, Series B, Class H Common Stock, Class H Common Stock
Series B, Class I Common Stock, Class J Common Stock, Class J Common Stock
Series B, Class K Common Stock, Class L Common Stock, Class L Common Stock,
Series B, Class M Common Stock, Class M Common Stock, Series B, Class N Common
Stock and class N Common Stock, Series B, shall have all the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption that are set
forth in the Corporation's Articles of Incorporation with respect to its shares
of capital stock.
SIXTH: For any class or series that adopts a rule 12b-1 plan pursuant to
the Investment Company Act of 1940, expenses related to the distribution of, and
other identified expenses that should properly be allocated to, the shares of
such particular class or series of capital stock may be charged to and borne
solely by such class or series and the bearing of expenses solely by that class
or series of capital stock may be appropriately reflected (in a manner
determined by the Board of Directors) and cause differences in the net asset
value attributable to, and the dividend, redemption and liquidation rights of,
the shares of each such class or series of capital stock.
<PAGE>
SEVENTH: Immediately after the increase and classification hereinbefore
set forth and upon filing for record these Articles Supplementary, the
Corporation has authority to issue ten billion (10,000,000,000) shares of the
Corporation of the par value of one mill ($.001) per share and of the aggregate
par value of ten million dollars ($10,000,000), of which one billion
(1,000,000,000) are classified as Class A Common Stock, one billion
(1,000,000,000) are classified as Class A Common Stock, Series B, one billion
(1,000,000,000) are classified as Class B Common Stock, one billion
(1,000,000,000) are classified as Class B Common Stock, Series B, seven hundred
fifty million (750,000,000) are classified as Class C Common Stock, twenty-five
million (25,000,000) are classified as Class D Common Stock, twenty-five million
(25,000,000) are classified as Class D Common Stock, Series B, twenty-five
million (25,000,000) are classified as Class E Common Stock, twenty-five million
(25,000,000) are classified as Class E Common Stock, Series B, five hundred
million (500,000,000) are classified as Class F Common Stock, one hundred
million (100,000,000) are classified as Class G Common Stock, one hundred
million (100,000,000) are classified as Class G Common Stock, Series B, one
hundred million (100,000,000) are classified as Class H Common Stock, one
hundred million (100,000,000) are classified as Class H Common Stock, Series B,
two hundred fifty million (250,000,000) are classified as Class I Common Stock,
two hundred fifty million (250,000,000) are classified as Class J Common Stock,
two hundred fifty million (250,000,000) are classified as Class J Common Stock,
Series B, two hundred fifty million (250,000,000) are classified as Class K
Common Stock, one hundred million (100,000,000) are classified as Class L Common
Stock, one hundred million (100,000,000) are classified as Class L Common Stock,
Series B, one hundred million (100,000,000) are classified as Class M Common
Stock, one hundred million (100,000,000) are classified as Class M Common Stock,
Series B, one hundred million (100,000,000) are classified as Class N Common
Stock, one hundred million (100,000,000) are classified as Class N Common Stock,
Series B, and two billion sex hundred fifty million (2,650,000,000) are
unclassified.
EIGHTH: The aforesaid action by the Board of Directors of the
Corporation was taken pursuant to authority and power contained in the Articles
of Incorporation of the Corporation.
<PAGE>
IN WITNESS WHEREOF, COREFUNDS, INC. has caused those presents to be
signed in its name and on its behalf by its President and its corporate seal to
be hereunto affixed and attested by its Secretary as of the 16th day of
December, 1992.
COREFUNDS, INC.
By: /s/ Robert A. Nesher
-------------------------------
Robert A. Nesher, President
[Seal]
Attest:
/s/ James W. Jennings
- --------------------------------
James W. Jennings, Secretary
<PAGE>
THE UNDERSIGNED, President of COREFUNDS, INC., who executed on behalf of
said corporation the foregoing Articles Supplementary to the Charter, of which
this certificate is made a part, hereby acknowledges, in the name and on behalf
of said corporation, the foregoing Articles Supplementary to the Charter to be
the corporate act of said corporation and further certifies that, to the best of
his knowledge, information and belief, the matters and facts set forth therein
with respect to the approval thereof are true in all material respects, under
the penalties of perjury.
/s/ Robert A. Nesher
---------------------------
Robert A. Nesher,
President
COREFUNDS, INC.
ARTICLES SUPPLEMENTARY
COREFUNDS, INC. (the 'Corporation'), formerly named Red Oak Cash Reserve
Fund, Inc., a corporation organized under the laws of the State of Maryland,
does hereby file for record with the State Department of Assessments and
Taxation of Maryland the following Articles Supplementary to its Articles of
Incorporation:
FIRST: The Corporation is registered as an open-end investment company
under the Investment Company Act of 1940. As hereinafter set forth, the
Corporation has classified its authorized, unissued and unclassified capital
stock in accordance with Section 2-105(c) of the Maryland General Corporation
Law and under authority contained in the Articles of Incorporation of the
Corporation.
SECOND: Immediately before the increase and classifications hereinafter
set forth, the Corporation had authority to issue five billion (5,000,000,000)
shares of the Corporation of the par value of one mill ($.001) per share and of
the aggregate par value of five million dollars ($5,000,000), of which one
billion (1,000,000,000) were classified as Class A Common Stock, one billion
(1,000,000,000) were classified as Class B Common Stock, five hundred million
(500,000,000) were classified as Class C Common Stock, twenty-five million
(25,000,000) were classified as Class D Common Stock, twenty-five million
(25,000,000) were classified as Class E Common Stock, five hundred million
(500,000,000) were classified as Class F Common Stock, one hundred million
(100,000,000) were classified as Class G Common Stock, one hundred million
(100,000,000) were classified as Class H Common Stock two hundred fifty million
(250,000,000) were classified as Class I Common Stock two hundred fifty million
(250,000,000) were classified as Class J Common Stock, two hundred fifty million
(250,000,000) were classified as Class K Common Stock, and one billion
(1,000,000,000) were unclassified.
THIRD: Pursuant to the authority contained in Section 2-105(c) of the
Maryland General Corporation Law, the Board of Directors of the Corporation, by
a resolution adopted at a meeting held on April 13, 1992, approved an increase
in the aggregate number of shares of common stock that the Corporation has to
issue from five billion (5,000,000,000) of the par value of one mill ($.001) to
ten billion (10,000,000,000) of the par value of one mill ($.001), with an
aggregate par value of ten million dollars ($10,000,000).
FOURTH: Pursuant to the authority contained in Article VI of the
Articles of Incorporation of the Corporation, the Board of Directors of the
Corporation, by a resolution adopted at a meeting held on April 13, 1992,
<PAGE>
classified one billion (1,000,000,000) of the authorized, unissued and
unclassified shares of the Corporation as Class A Common Stock, Series B of the
par value of one mill ($.001) per share.
FIFTH: Pursuant to the authority contained in Article VI of the Articles
of Incorporation of the Corporation, the Board of Directors of the Corporation,
by a resolution adopted at a meeting held on April 13, 1992, classified one
billion (1,000,000,000) of the authorized, unissued and unclassified shares of
the Corporation as Class B Common Stock, Series B of the par value of one mill
($.001) per share.
SIXTH: Pursuant to the authority contained in Article VI of the Articles
of Incorporation of the Corporation, the Board of Directors of the Corporation,
by a resolution adopted at a meeting held on April 13, 1992, classified
twenty-five million (25,000,000) of the authorized, unissued and unclassified
shares of the Corporation as Class D Common Stock, Series B of the par value of
one mill ($.001) per share.
SEVENTH: Pursuant to the authority contained in Article VI of the
Articles of Incorporation of the Corporation, the Board of Directors of the
Corporation, by a resolution adopted at a meeting held on April 13, 1992,
classified one hundred million (100,000,000) of the authorized, unissued and
unclassified shares of the Corporation as Class G Common Stock, Series B of the
par value of one mill ($.001) per share.
EIGHTH: Pursuant to the authority contained in Article VI of the
Articles of Incorporation of the Corporation, the Board of Directors of the
Corporation, by a resolution adopted at a meeting held on April 13, 1992,
classified one hundred million (100,000,000) of the authorized, unissued and
unclassified shares of the Corporation as Class H Common Stock, Series B of the
par value of one mill ($.001) per share.
NINTH: Pursuant to the authority contained in Article VI of the Articles
of Incorporation of the Corporation, the Board of Directors of the Corporation
by a resolution adopted at a meeting held on April 13, 1992, classified two
hundred fifty million (250,000,000) of the authorized, unissued and unclassified
shares of the Corporation as Class J Common Stock, Series B of the par value of
one mill ($.001) per share.
TENTH: For any class or series that adopts a rule 12b-1 plan pursuant to
the Investment Company Act of 1940, expenses related to the distribution of, and
other identified expenses that should properly be allocated to, the shares of
such particular class or series of capital stock may be charged to and borne
solely by such class or series and the bearing of expenses solely by that class
<PAGE>
or series of capital stock may be appropriately reflected (in a manner
determined by the Board of Directors) and cause differences in the net asset
value attributable to, and the dividend, redemption and liquidation rights of,
the shares of each such class or series of capital stock.
ELEVENTH: Immediately after the increases and classifications
hereinbefore set forth and upon filing for record these Articles Supplementary,
the Corporation has authority to issue ten billion (10,000,000,000) shares of
the Corporation of the par value of one mill ($.001) per share and of the
aggregate par value of ten million dollars ($l0,000,000), of which one billion
(1,000,000,000) are classified as Class A Common Stock, one billion
(1,000,000,000) are classified as Class A Common Stock, Series B, one billion
(1,000,000,000) are classified as Class B Common Stock, one billion
(1,000,000,000) are classified as Class B Common Stock, Series B, five hundred
million (500,000,000) are classified as Class C Common Stock, twenty-five
million (25,000,000) are classified as Class D Common Stock, twenty-five million
(25,000,000) are classified as Class D Common Stock, Series B, twenty-five
million (25,000,000) are classified as Class E Common Stock, five hundred
million (500,000,000) are classified as Class F Common Stock, one hundred
million (100,000,000) are classified as Class G Common Stock, one hundred
million are classified as Class G Common Stock, Series B, one hundred million
(100,000,000) are classified as Class H Common Stock, one hundred million
(100,000,000) are classified as Class H Common Stock, Series B, two hundred
fifty million (250,000,000) are classified as Class I Common Stock, two hundred
fifty million (250,000,000) are classified as Class J Common Stock, two hundred
fifty million (250,000,000) are classified as Class J Common Stock, Series B,
two hundred fifty million (250,000,000) are classified as Class K Common Stock,
and three billion five hundred twenty-five million (3,525,000,000) are
unclassified.
<PAGE>
TWELFTH: The aforesaid action by the Board of Directors of the
Corporation was taken pursuant to authority and power contained in the Articles
of Incorporation of the Corporation.
IN WITNESS WHEREOF, COREFUNDS, INC. has caused these presents to be
signed in its name and on its behalf by its President and its corporate seal to
be hereunto affixed and attested by its Secretary as of the 25th day of June,
1992.
COREFUNDS, INC.
By: /s/ Francis J. Bruzda
--------------------------------
Francis J. Bruzda, President
[Seal]
Attest:
/s/ James W. Jennings
- ----------------------------
James W. Jennings, Secretary
<PAGE>
THE UNDERSIGNED, President of COREFUNDS, INC., who executed on behalf of
said corporation the foregoing Articles Supplementary to the Charter, of which
this certificate is made a part, hereby acknowledges, in the name and on behalf
of said corporation, the foregoing Articles Supplementary to the Charter to be
the corporate act of said corporation and further certifies that, to the best of
his knowledge, information and belief, the matters and facts set forth therein
with respect to the approval thereof are true in all material respects, under
the penalties of perjury.
COREFUNDS, INC.
By: /s/ Francis J. Bruzda
-----------------------------------
Francis J. Bruzda
President
COREFUNDS, INC.
ARTICLES SUPPLEMENTARY
COREFUNDS, INC. (the "Corporation"), formerly named Red Oak Cash Reserve
Fund, Inc., a corporation organized under the laws of the State of Maryland,
does hereby file for record with the State Department of Assessments and
Taxation of Maryland the following Articles Supplementary to its Articles of
Incorporation:
FIRST: The Corporation is registered as an open-end investment company
under the Investment Company Act of 1940. As hereinafter set forth, the
Corporation has classified its authorized, unissued and unclassified capital
stock in accordance with Section 2-105(c) of the Maryland General Corporation
Law and under authority contained in the Articles of Incorporation of the
Corporation.
SECOND: Immediately before the classifications hereinbefore set forth
and upon filing for record these Articles Supplementary, the Corporation had
authority to issue ten billion (10,000,000,000) shares of the Corporation of the
par value of one mill ($.001) per share and of the aggregate par value of ten
million dollars ($10,000,000), of which one billion (1,000,000,000) were
classified as Class A Common Stock, one billion (1,000,000,000) were classified
as Class A Common Stock, Series B, one billion (1,000,000,000) were classified
as Class B Common Stock, one billion (1,000,000,000) were classified as Class B
Common Stock, Series B, five hundred million (500,000,000) were classified as
Class C Common Stock, twenty-five million (25,000,000) were classified as Class
D Common Stock, twenty-five million (25,000,000) were classified as Class D
Common Stock, Series B, twenty-five million (25,000,000) were classified as
Class E Common Stock, five hundred million (500,000,000) were classified as
Class F Common Stock, one hundred million (100,000,000) were classified as Class
G Common Stock, one hundred million were classified as Class G Common Stock,
Series B, one hundred million (100,000,000) were classified as Class H Common
Stock, one hundred million (100,000,000) were classified as Class H Common
Stock, Series B, two hundred fifty million (250,000,000) were classified as
Class I Common Stock, two hundred fifty million (250,000,000) were classified as
Class J Common Stock, two hundred fifty million (250,000,000) were classified as
Class J Common Stock, Series B, two hundred fifty million (250,000,000) were
classified as Class K Common Stock, and three billion five hundred twenty-five
million (3,525,000,000) were unclassified.
THIRD: Pursuant to the authority contained in Article VI of the
Articles of Incorporation of the Corporation, the Board of Directors of the
Corporation, by a resolution adopted at a meeting held on September 15, 1992,
classified one hundred
<PAGE>
million (100,000,000) of the authorized, unissued and unclassified shares of
the Corporation as Class L Common Stock of the par value of one mill ($.001) per
share.
FOURTH: Pursuant to the authority contained in Article VI of the
Articles of Incorporation of the Corporation, the Board of Directors of the
Corporation, by a resolution adopted at a meeting held on September 15, 1992
classified one hundred million (100,000,000) of the authorized, unissued and
unclassified shares of the Corporation as Class L Common Stock, Series B of the
par value of one mill ($.001) per share.
FIFTH: Pursuant to the authority contained in Article VI of the Articles
of Incorporation of the Corporation, the Board of Directors of the Corporation,
by a resolution adopted at a meeting held on September 15, 1992, classified one
hundred million (100,000,000) of the authorized, unissued and unclassified
shares of the Corporation as Class M Common Stock of the par value of one mill
($.001) per share,
SIXTH: Pursuant to the authority contained in Article VI of the Articles
of Incorporation of the Corporation, the Board of Directors of the Corporation
by a resolution adopted at a meeting held on September 15, 1992, classified one
hundred million (100,000,000) of the authorized, unissued and unclassified
shares of the Corporation as Class M Common Stock, Series B of the par value of
one mill ($.001) per share.
SEVENTH: Pursuant to the authority contained in Article VI of the
Articles of Incorporation of the Corporation, the Board of Directors of the
Corporation, by a resolution adopted at a meeting held on September 15, 1992,
classified one hundred million (100,000,000) of the authorized, unissued and
unclassified shares of the Corporation as Class N Common Stock of the par value
of one mill ($.001) per share.
EIGHTH: Pursuant to the authority contained in Article VI of the
Articles of Incorporation of the Corporation, the Board of Directors of the
Corporation, by a resolution adopted at a meeting held on September 15, 1992,
classified one hundred million (100,000,000) of the authorized, unissued and
unclassified shares of the Corporation as Class N Common Stock, Series B of the
par value of one mill ($.001) per share.
NINTH: Each share of Class A Common Stock, Class A Common Stock, Series
B, Class B Common Stock, Class B Common Stock, Series B, Class C Common Stock
Class D Common Stock, Class D Common Stock, Series B, Class E Common Stock,
Class F Common Stock, Class G Common Stock, Class G Common Stock, Series B,
Class H Common Stock, Class H Common Stock, Series B, Class I Common Stock,
Class J Common Stock, Class J Common Stock, Series B, Class K Common Stock,
Class L Common Stock, Class L Common
<PAGE>
Stock, Class L Common Stock, Series B, Class M Common Stock, Class M Common
Stock, Series B, Class N Common Stock and Class N Common Stock, Series B, shall
have all the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption that are set forth in the Corporation's Articles of
Incorporation with respect to its shares of capital stock.
TENTH: Immediately after the classifications hereinbefore set forth and
upon filing for record these Articles Supplementary, the Corporation has
authority to issue ten billion (10,000,000,000) shares of the Corporation of the
par value of one mill ($.001) per share and of the aggregate par value of ten
million dollars ($10,000,000), of which one billion (1,000,000,000) are
classified as Class A Common Stock, one billion (1,000,000,000) are classified
as Class A Common Stock, Series B, one billion (1,000,000,000) are classified as
Class B Common Stock, one billion (1,000,000,000) are classified as Class B
Common Stock, Series B, five hundred million (500,000,000) are classified as
Class C Common Stock, twenty-five million (25,000,000) are classified as Class D
Common Stock, twenty-five million (25,000,000) are classified as Class D Common
Stock, Series B, twenty-five million (25,000,000) are classified as Class E
Common Stock, five hundred million (500,000,000) are classified as Class F
Common Stock, one hundred million (100,000,000) are classified as Class G Common
Stock, one hundred million are classified as Class G Common Stock, Series B, one
hundred million (100,000,000) are classified as Class H Common Stock one
hundred million (100,000,000) are classified as Class H Common Stock, Series B
two hundred fifty million (250,000,000) are classified as Class I Common Stock
two hundred fifty million (250,000,000) are classified as Class J Common Stock,
two hundred fifty million (250,000,000) are classified as Class J Common Stock,
Series B, two hundred fifty million (250,000,000) are classified as Class K
Common Stock, one hundred million (100,000,000) are classified as Class L Common
Stock, one hundred million (100,000,000) are classified as Class L Common Stock,
Series B, one hundred million (100,000,000) are classified as Class M Common
Stock, one hundred million (100,000,000) are classified as Class M Common Stock,
Series B, one hundred million (100,000,000) are classified as Class N Common
Stock, one hundred million (100,000,000) are classified as Class N Common Stock,
Series B and two billion nine hundred twenty-five million (2,925,000,000) are
unclassified.
ELEVENTH: The aforesaid action by the Board of Directors of the
Corporation was taken pursuant to authority and power contained in the Articles
of Incorporation of the Corporation.
<PAGE>
IN WITNESS WHEREOF, COREFUNDS, INC. has caused these presents to be
signed in its name and on its behalf by its President and its corporate seal to
be hereunto affixed and attested by its Secretary as of the 25th day of
September, 1992.
COREFUNDS, INC.
By: /s/ FRANCIS J. BRUZDA
-----------------------------
Francis J. Bruzda, President
[SEAL]
Attest:
By: /s/ JAMES W. JENNINGS
-----------------------------
James W. Jennings, Secretary
<PAGE>
COREFUNDS, INC.
ARTICLES SUPPLEMENTARY
COREFUNDS, INC. (the "Corporation"), formerly named Red Oak Cash Reserve
Fund, Inc., a corporation organized under the laws of the State of Maryland,
does hereby file for record with the State Department of Assessments and
Taxation of Maryland the following Articles Supplementary to its Articles of
Incorporation:
FIRST: The Corporation is registered as an open-end investment company
under the Investment Company Act of 1940. As hereinafter set forth, the
Corporation has classified its authorized, unissued and unclassified capital
stock in accordance with Section 2-105(c) of the Maryland General Corporation
Law and under authority contained in the Articles of Incorporation of the
Corporation.
SECOND: Immediately before the increase and classification hereinbefore
set forth and upon filing for record these Articles Supplementary, the
Corporation has authority to issue ten billion (10,000,000,000) shares of the
Corporation the par value of one mill ($.001) per share and of the aggregate par
value of ten million dollars ($10,000,000), of which one billion (1,000,000,000)
are classified as Class A Common Stock, one billion (1,000,000,000) are
classified as Class A Common Stock, Series B, one billion (1,000,000,000) are
classified as Class B Common Stock, one billion (1,000,000,000) are classified
as Class B Common Stock, Series B, seven hundred fifty million (750,000,000) are
classified as Class C Common Stock, twenty-five million (25,000,000) are
classified as Class D Common Stock, twenty-five million (25,000,000) are
classified as Class D Common Stock, Series B, twenty-five million (25,000,000)
are classified as Class E Common Stock, twenty-five million (25,000,000) are
classified as Class E Common Stock, Series B, five hundred million (500,000,000)
are classified as Class F Common Stock, one hundred million (100,000,000) are
classified as Class G Common Stock, one hundred million (100,000,000) are
classified as Class G Common Stock, Series B, one hundred million (100,000,000)
are classified as Class H Common Stock, one hundred million (100,000,000) are
classified as Class H Common Stock, Series B, two hundred fifty million
(250,000,000) are classified as Class I Common Stock, two hundred fifty million
(250,000,000) are classified as Class J Common Stock, two hundred fifty million
(250,000,000) are classified as Class J Common Stock, Series B, two hundred
fifty million (250,000,000) are classified as Class K Common Stock, one hundred
million (100,000,000) are classified as Class L Common Stock, one hundred
million (100,000,000) are classified as Class L Common Stock, Series B, one
hundred million (100,000,000) are classified as Class M Common Stock, one
hundred million (100,000,000) are classified as Class M Common Stock, Series B,
one hundred million (100,000,000) are classified as Class N Common Stock, one
hundred million (100,000,000) are classified as Class N Common Stock, Series B
and two billion six hundred fifty million (2,650,000,000) are unclassified.
2
<PAGE>
THIRD: Pursuant to the authority contained in Article VI of the Articles
of Incorporation of the Corporation, the Board of Directors of the Corporation,
by a resolution adopted at a meeting held on September 9, 1993, classified
twenty-five million (25,000,000) of the authorized, unissued and unclassified
shares of the Corporation as Class O Common Stock, of the par value of one mill
($.001) per share.
FOURTH: Pursuant to the authority contained in Article VI of the
Articles of Incorporation of the Corporation, the Board of Directors of the
Corporation, by a resolution adopted at a meeting held on September 9, 1993,
classified twenty-five million (25,000,000) of the authorized, unissued and
unclassified shares of the Corporation as Class O Common Stock, Series B of the
par value of one mill ($.001) per share.
FIFTH: Each share of Class A Common Stock, Class A Common Stock, Series
B, Class B Common Stock, Class B Common Stock, Series B, Class C Common Stock,
Class D Common Stock, Class D Common Stock, Series B, Class E Common Stock,
Class E Common Stock, Series B, Class F Common Stock, Class G Common Stock,
Class G Common Stock, Series B, Class H Common Stock, Class H Common Stock,
Series B, Class I Common Stock, Class J Common Stock, Class J Common Stock,
Series B, Class K Common Stock, Class L Common Stock, Class L Common Stock;
Series B, Class M Common Stock, Class M Common Stock, Series B, Class N Common
Stock and Class N Common Stock, Series B, Class O Common Stock, Class O Common
Stock, Series B, shall have all the preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption that are set forth in the Corporation's
Articles of Incorporation with respect to its shares of capital stock.
SIXTH: For any class or series that adopts a rule 12b-1 plan pursuant to
the Investment Company Act of 1940, expenses related to the distribution of, and
other identified expenses that should properly be allocated to, the shares of
such particular class or series of capital stock may be charged to and borne
solely by such class or series and the bearing of expenses solely by that class
or series of capital stock may be appropriately reflected (in a manner
determined by the Board of Directors) and cause differences in the net asset
value attributable to, and the dividend, redemption and liquidation rights of,
the shares of each such class or series of capital stock.
SEVENTH: Immediately after the increase and classification hereinbefore
set forth and upon filing for record these Articles Supplementary, the
Corporation has authority to issue ten billion (10,000,000,000) shares of the
Corporation of the par value of one mill ($.001) per share and of the aggregate
par value of ten million dollars ($10,000,000), of which one billion
(1,000,000,000) are classified as Class A Common Stock, one billion
(1,000,000,000) are classified as Class A Common Stock, Series B, one billion
(1,000,000,000) are classified as Class B Common Stock, one billion
(1,000,000,000) are classified as Class B Common Stock, Series B, seven hundred
fifty million (750,000,000) are classified as Class C Common Stock, twenty-five
million (25,000,000) are classified as Class D Common Stock, twenty-five million
(25,000,000) are classified as Class D Common Stock, Series B, twenty-five
million (25,000,000) are classified as Class E Common Stock, twenty-five million
(25,000,000) are classified as Class E Common Stock, Series B, five hundred
million (500,000,000) are classified as Class F Common Stock, one hundred
million (100,000,000) are classified as Class G Common Stock, one hundred
million (100,000,000) are classified as Class G Common Stock, Series B, one
hundred million (100,000,000) are classified as Class H Common Stock, one
hundred million (100,000,000) are classified as Class H Common Stock, Series B,
two hundred fifty million (250,000,000) are classified as Class I Common Stock,
two hundred fifty million (250,000,000) are classified as Class J Common Stock,
two hundred fifty million (250,000,000) are classified as Class J Common Stock,
Series B, two hundred fifty million (250,000,000) are classified as Class K
Common Stock, one hundred million (100,000,000) are classified as Class L Common
Stock, one hundred million (100,000,000) are classified as Class L Common Stock,
Series B, one hundred million (100,000,000) are classified as Class M Common
Stock, one hundred million (100,000,000) are classified as Class M Common Stock,
Series B, one hundred million (100,000,000) are classified as Class N Common
Stock, one hundred million (100,000,000) are classified as Class N Common Stock,
Series B, twenty-five million (25,000,000) are classified as Class O Common
Stock, twenty-five million (25,000,000) are classified as Class O Common Stock,
Series B and two billion six hundred million (2,600,000,000) are unclassified.
EIGHTH: The aforesaid action by the Board of Directors of the
Corporation was taken pursuant to authority and power contained in the Articles
of Incorporation of the Corporation.
3
<PAGE>
IN WITNESS WHEREOF, COREFUNDS, INC. has caused these presents to be
signed in its name and on its behalf by its President and its corporate seal to
be hereunto affixed and attested by its Secretary as of the 31st day of October,
1993.
COREFUNDS, INC.
By: /s/ Robert A. Nesher
-----------------------------------
Robert A. Nesher, President
[SEAL]
Attest:
/s/ James W. Jennings
- --------------------------------
James W. Jennings, Secretary
4
<PAGE>
THE UNDERSIGNED, President of COREFUNDS, INC., who executed on behalf of
said corporation the foregoing Articles Supplementary to the Charter, of which
this certificate is made a part, hereby acknowledges, in the name and on behalf
of said corporation, the foregoing Articles Supplementary to the Charter to be
the corporate act of said corporation and further certifies that, to the best of
his knowledge, information and belief, the matters and facts set forth therein
with respect to the approval thereof are true in all material respects, under
the penalties of perjury.
/s/ Robert A. Nesher
--------------------------------
Robert A. Nesher
President
5
<PAGE>
ARTICLES OF TRANSFER
Capstone Cashman Farrell Value Fund, Inc. (the "Transferor"), a Maryland
corporation having its principal office at 1100 Milam Street, Suite 3500,
Houston, Texas, and CoreFunds, Inc., a Maryland corporation having its principal
place of business at 680 East Swedesford Road, Wayne, Pennsylvania 19087, on
behalf of its portfolio, CoreFund Value Equity Fund (the "Transferee"), hereby
certify to the Department of Assessments and Taxation of the State of Maryland
that:
FIRST: The Transferor hereby agrees to transfer all or substantially all
of its assets to the Transferee.
SECOND: Said transaction shall consist of the following: (i) the
transfer by the Transferor to the Transferee of all or substantially all of its
assets in exchange solely for consideration consisting of Series B shares of the
Transferee's common stock, par value $.001 per share; (ii) the assumption by the
Transferee of all liabilities of the Transferor; (iii) the pro rata distribution
of shares of the Transferee's common stock to the Transferor's shareholders in
complete liquidation of Transferor; and (iv) the subsequent termination of the
Transferor.
THIRD: The number of full and fractional shares of common stock of the
Transferee to be issued to the Transferor's shareholders will be determined by
dividing the value of the Transferor's net assets as of 4:00 p.m. Eastern Time
on November 26, 1993, (the "Closing Date") by the net asset value of one share
of the Transferee's shares of common stock as of 4:00 p.m. on the Closing Date.
<PAGE>
FOURTH: The assets of the Transferor to be acquired by the Transferee
pursuant to the transaction shall consist of all property owned by the
Transferor including, without limitation, all cash, cash equivalents,
securities, claims and receivables (including dividend and interest receivables)
owned by the Transferor, and any deferred or prepaid expenses shown as an asset
on the books of the Transferor as of the close of business on the Closing Date,
and all good will, all other intangible property and all books and records
belonging to the Transferor.
FIFTH: Neither the Transferor nor the Transferee has a principal office
in the State of Maryland. Neither the Transferor nor the Transferee owns any
interest in land in the State of Maryland.
SIXTH: The terms and conditions of the subject transaction have been
advised, authorized and approved by the board of directors and stockholders of
the Transferor and by the board of directors of CoreFunds, Inc. on behalf of the
Transferee in the manner required by their respective charters and in accordance
with the laws of the State of Maryland, as follows:
-2-
<PAGE>
(a) The Board of Directors of CoreFunds, Inc., on behalf of the
Transferee, at a meeting held September 9, 1993, unanimously adopted resolutions
declaring that the terms and conditions of the transaction described herein were
advisable.
(b) The Board of Directors of the Transferor, at a meeting held July 16,
1993, unanimously adopted resolutions declaring that the terms and conditions of
the transaction described herein were advisable and directing that the
transaction be submitted for consideration by stockholders.
(c) The holders of a majority of the outstanding shares of the
Transferor voted to approve the transaction at a meeting held November 2, 1993,
as required by the Transferor's Articles of Incorporation and applicable
Maryland law.
SEVENTH: Upon acceptance for record of these Articles, the transfer is
to be effective at 5:00 p.m. on November 26, 1993.
-3-
<PAGE>
IN WITNESS WHEREOF: Capstone Cashman Farrell Value Fund, Inc. has caused
these presents to be signed in its name and on its behalf by its President and
attested to by its Vice President on November 19, 1993, and CoreFunds, Inc., on
behalf of CoreFund Value Equity Fund, has caused these presents to be signed in
its name and on its behalf by its President and attested to by its Vice
President on November 19, 1993.
-4-
<PAGE>
IN WITNESS WHEREOF, these Articles of Transfer have been executed by or
on behalf of each party on November 19, 1993. Each person executing these
Articles of Transfer on behalf of the Transferor and Transferee acknowledges
them to be the act of the entity on behalf of which he has executed them and
certifies, under the penalties of perjury, that to the best of his or her
knowledge, information and belief, all matters and facts set forth herein with
respect to the authorization and approval of these Articles are true in all
material respects, under penalties of perjury.
ATTEST: CAPSTONE CASHMAN FARRELL VALUE
FUND, INC.
By: /s/ Gerald T. Hofmann By: /s/ James S. Jondan
--------------------------------- ---------------------------------
Name: Gerald T. Hofmann Name: James S. Jondan
------------------------------- -------------------------------
Title: Vice President and Title: President
Assistant Secretary ------------------------------
-------------------------------
ATTEST: COREFUNDS, INC.
on behalf of CoreFund Value Equity
Fund
By: /s/ Ann T. Toll By: /s/ Robert A. Nesher
- ------------------------------------- ---------------------------------
Name: Ann T. Toll Name: Robert A. Nesher
-------------------------------- -------------------------------
Title: Assistant Secretary Title: President
------------------------------- ------------------------------
By: /s/ T. M. Messina
----------------------------------
Name: T. M. Messina
--------------------------------
Title: Vice President
--------------------------------
COREFUNDS, INC.
ARTICLES SUPPLEMENTARY
COREFUNDS, INC. (the "Corporation"), formerly named Red Oak Cash Reserve
Fund, Inc., a corporation organized under the laws of the State of Maryland,
does hereby file for record with the State Department of Assessments and
Taxation of Maryland the following Articles Supplementary to its Articles of
Incorporation:
FIRST: The Corporation is registered as an open-end investment company
under the Investment Company Act of 1940. As hereinafter set forth, the
Corporation has classified its authorized, unissued and unclassified capital
stock in accordance with Section 2-l05(c) of the Maryland General Corporation
Law and under authority contained in the Articles of Incorporation of the
Corporation.
SECOND: Immediately before the increase and classification hereinbefore
set forth and upon filing for record these Articles Supplementary, the
Corporation has authority to issue ten billion (10,000,000,000) shares of the
Corporation of the par value of one mill ($.001) per share and of the aggregate
par value of ten million dollars ($10,000,000), of which one billion
(1,000,000,000) are classified as Class A Common Stock, one billion
(1,000,000,000) are classified as Class A Common Stock, Series B, one billion
(1,000,000,000) are classified as Class B Common Stock, one billion
(1,000,000,000) are classified as Class B Common Stock, Series B, seven hundred
fifty million (750,000,000) are classified as Class C Common Stock, twenty-five
million (25,000,000) are classified as Class D Common Stock, twenty-five million
(25,000,000) are classified as Class D Common Stock, Series B, twenty-five
million (25,000,000) are classified as Class E Common Stock, twenty-five million
(25,000,000) are classified as Class E Common Stock, Series B, five hundred
million (500,000,000) are classified as Class F Common Stock, one hundred
million (100,000,000) are classified as Class G Common Stock, one hundred
million (100,000,000) are classified as Class G Common Stock, Series B, one
hundred million (100,000,000) are classified as Class H Common Stock, one
hundred million (100,000,000) are classified as Class H Common Stock, Series B,
two hundred fifty million (250,000,000) are classified as Class I Common Stock,
two hundred fifty million (250,000,000) are classified as Class J Common Stock,
two hundred fifty million (250,000,000) are classified as Class J Common Stock,
Series B, two hundred fifty million (250,000,000) are classified as Class K
Common Stock, one hundred million (100,000,000) are classified as Class L Common
Stock, one hundred million (100,000,000) are classified as Class L Common Stock,
Series B, one hundred million (100,000,000) are classified as Class M Common
Stock, one hundred million (100,000,000) are classified as Class M Common Stock,
Series B, one hundred million (100,000,000) are classified as
<PAGE>
Class N Common Stock, one hundred million (100,000,000) are classified as Class
N Common Stock, Series B, twenty-five million (25,000,000) are classified as
Class O Common Stock, twenty-five million (25,000,000) are classified as Class O
Common Stock, Series B and two billion six hundred million (2,600,000,000) are
unclassified.
THIRD: Pursuant to the authority contained in Article VI of the Articles
of Incorporation of the Corporation, the Board of Directors of the Corporation,
by a resolution adopted at a meeting held on December 2, 1993, classified one
hundred million (100,000,000) of the authorized, unissued and unclassified
shares of the Corporation as Class P Common Stock, of the par value of one mill
($.001) per share.
FOURTH: Pursuant to the authority contained in Article VI of the
Articles of Incorporation of the Corporation, the Board of Directors of the
Corporation, by a resolution adopted at a meeting held on December 2, 1993,
classified one hundred million (100,000,000) of the authorized, unissued and
unclassified shares of the Corporation as Class P Common Stock, Series B of the
par value of one mill ($.001) per share.
FIFTH: Pursuant to the authority contained in Article VI of the Articles
of Incorporation of the Corporation, the Board of Directors of the Corporation,
by a resolution adopted at a meeting held on December 2, 1993, classified one
hundred million (100,000,000) of the authorized, unissued and unclassified
shares of the Corporation as Class P Common Stock, Series C of the par value of
one mill ($.001) per share.
SIXTH: Pursuant to the authority contained in Article VI of the Articles
of Incorporation of the Corporation, the Board of Directors of the Corporation,
by a resolution adopted at a meeting held on December 2, 1993, classified one
hundred million (100,000,000) of the authorized, unissued and unclassified
shares of the Corporation as Class Q Common Stock, of the par value of one mill
($.001) per share.
SEVENTH: Pursuant to the authority contained in Article VI of the
Articles of Incorporation of the Corporation, the Board of Directors of the
Corporation, by a resolution adopted at a meeting held on December 2, 1993,
classified one hundred million (100,000,000) of the authorized, unissued and
unclassified shares of the Corporation as Class Q Common Stock, Series B of the
par value of one mill ($.001) per share.
EIGHTH: Pursuant to the authority contained in Article VI of the
Articles of Incorporation of the Corporation, the Board of Directors of the
Corporation, by a resolution adopted at a meeting held on December 2, 1993,
classified one hundred million (100,000,000) of the authorized, unissued and
2
<PAGE>
unclassified shares of the Corporation as Class Q Common Stock, Series C of the
par value of one mill ($.001) per share.
NINTH: Each share of Class A Common Stock, Class A Common Stock, Series
B, Class B Common Stock, Class B Common Stock, Series B, Class C Common Stock,
Class D Common Stock, Class D Common Stock, Series B, Class E Common Stock,
Class E Common Stock, Series B, Class F Common Stock, Class G Common Stock,
Class G Common Stock, Series B, Class H Common Stock, Class H Common Stock,
Series B, Class I Common Stock, Class J Common Stock, Class J Common Stock,
Series B, Class K Common Stock, Class L Common Stock, Class L Common Stock,
Series B, Class M Common Stock, Class M Common Stock, Series B, Class N Common
Stock, Class N Common Stock, Series B, Class O Common Stock, Class O Common
Stock, Series B, Class P Common Stock, Class P Common Stock, Series B, Class P
Common Stock, Series C, Class Q Common Stock, Class Q Common Stock, Series B,
and Class Q Common Stock, Series C, shall have all the preferences, conversion
and other rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption that are set forth in the
Corporation's Articles of Incorporation with respect to its shares of capital
stock.
TENTH: For any class or series that adopts a rule 12b-1 plan pursuant to
the Investment Company Act of 1940, expenses related to the distribution of, and
other identified expenses that should properly be allocated to, the shares of
such particular class or series of capital stock may be charged to and borne
solely by such class or series and the bearing of expenses solely by that class
or series of capital stock may be appropriately reflected (in a manner
determined by the Board of Directors) and cause differences in the net asset
value attributable to, and the dividend, redemption and liquidation rights of,
the shares of each such class or series of capital stock.
ELEVENTH: Immediately after the increase and classification hereinbefore
set forth and upon filing for record these Articles Supplementary, the
Corporation has authority to issue ten billion (10,000,000,000) shares of the
Corporation of the par value of one mill ($.001) per share and of the aggregate
par value of ten million dollars ($10,000,000), of which one billion
(1,000,000,000) are classified as Class A Common Stock, one billion
(1,000,000,000) are classified as Class A Common Stock, Series B, one billion
(1,000,000,000) are classified as Class B Common Stock, one billion
(1,000,000,000) are classified as Class B Common Stock, Series B, seven hundred
fifty million (750,000,000) are classified as Class C Common Stock, twenty-five
million (25,000,000) are classified as Class D Common Stock, twenty-five million
(25,000,000) are classified as Class D Common Stock, Series B, twenty-five
million (25,000,000) are classified
3
<PAGE>
as Class E Common Stock, twenty-five million (25,000,000) are classified as
Class E Common Stock, Series B, five hundred million (500,000,000) are
classified as Class F Common Stock, one hundred million (100,000,000) are
classified as Class G Common Stock, one hundred million (100,000,000) are
classified as Class G Common Stock, Series B, one hundred million (100,000,000)
are classified as Class H Common Stock, one hundred million (100,000,000) are
classified as Class H Common Stock, Series B, two hundred fifty million
(250,000,000) are classified as Class I Common Stock, two hundred fifty million
(250,000,000) are classified as Class J Common Stock, two hundred fifty million
(250,000,000) are classified as Class J Common Stock, Series B, two hundred
fifty million (250,000,000) are classified as Class K Common Stock, one hundred
million (100,000,000) are classified as Class L Common Stock, one hundred
million (100,000,000) are classified as Class L Common Stock, Series B, one
hundred million (100,000,000) are classified as Class M Common Stock, one
hundred million (100,000,000) are classified as Class M Common Stock, Series B,
one hundred million (100,000,000) are classified as Class N Common Stock, one
hundred million (100,000,000) are classified as Class N Common Stock, Series B,
twenty-five million (25,000,000) are classified as Class O Common Stock,
twenty-five million (25,000,000) are classified as Class O Common Stock, Series
B, one hundred million (100,000,000) are classified as Class P Common Stock, one
hundred million (100,000,000) are classified as Class P Common Stock, Series B,
one hundred million (100,000,000) are classified as Class P Common Stock, Series
C, one hundred million (100,000,000) are classified as Class Q Common Stock, one
hundred million (100,000,000) are classified as Class Q Common Stock, Series B,
one hundred million (100,000,000) are classified as Class Q Common Stock, Series
C and two billion (2,000,000,000) are unclassified.
TWELFTH: The aforesaid action by the Board of Directors of the
Corporation was taken pursuant to authority and power contained in the Articles
of Incorporation of the Corporation.
4
<PAGE>
IN WITNESS WHEREOF, COREFUNDS, INC. has caused these presents to be
signed in its name and on its behalf by its President and its corporate seal to
be hereunto affixed and attested by its Secretary as of the 10th day of
December, 1993.
COREFUNDS, INC.
By: /s/ Robert A. Nesher
--------------------------------
Robert A. Nesher
President
[SEAL]
Attest:
/s/ James W. Jennings
- ------------------------------
James W. Jennings
Secretary
5
<PAGE>
THE UNDERSIGNED, President of COREFUNDS, INC., who executed on behalf
of said corporation the foregoing Articles Supplementary to the Charter, of
which this certificate is made a part, hereby acknowledges, in the name and on
behalf of said corporation, the foregoing Articles Supplementary to the Charter
to be the corporate act of said corporation and further certifies that, to the
best of his knowledge, information and belief, the matters and facts set forth
therein with respect to the approval thereof are true in all material respects,
under the penalties of perjury.
By: /s/ Robert A. Nesher
--------------------------------
Robert A. Nesher
President
6
<PAGE>
COREFUNDS, INC.
ARTICLES SUPPLEMENTARY
COREFUNDS, INC. (the "Corporation"), formerly named Red Oak Cash
Reserve Fund, Inc., a corporation organized under the laws of the State of
Maryland, does hereby file for record with the State Department of Assessments
and Taxation of Maryland the following Articles Supplementary to its Articles of
Incorporation:
FIRST: The Corporation is registered as an open-end investment company
under the Investment Company Act of 1940. As hereinafter set forth, the
Corporation has classified its authorized, unissued and unclassified capital
stock in accordance with Section 2-105(c) of the Maryland General Corporation
Law and under authority contained in the Articles of Incorporation of the
Corporation.
SECOND: Immediately before the increase and classification hereinbefore
set forth and upon filing for record these Articles Supplementary, the
Corporation has authority to issue ten billion (10,000,000,000) shares of the
Corporation of the par value of one mill ($.001) per share and of the aggregate
par value of ten million dollars ($10,000,000), of which one billion
(1,000,000,000) are classified as Class A Common Stock, one billion
(1,000,000,000) are classified as Class A Common Stock, Series B, one billion
(1,000,000,000) are classified as Class B Common Stock, one billion
(1,000,000,000) are classified as Class B Common Stock, Series B, seven hundred
fifty million (750,000,000) are classified as Class C Common Stock, twenty-five
million (25,000,000) are classified as Class D Common Stock, twenty-five million
(25,000,000) are classified as Class D Common Stock, Series B, twenty-five
million (25,000,000) are classified, as Class E Common Stock, twenty-five
million (25,000,000) are classified as Class E Common Stock, Series B, five
hundred million (500,000,000) are classified as Class F Common Stock, one
hundred million (100,000,000) are classified as Class G Common Stock, one
hundred million (100,000,000) are classified as Class G Common Stock, Series B,
one hundred million (l00,000,000) are classified as Class H Common Stock, one
hundred million (100,000,000) are classified as Class H Common Stock, Series B,
two hundred fifty million (250,000,000) are classified as Class I Common Stock,
two hundred fifty million (250,000,000) are classified as Class J Common Stock,
two hundred fifty million (250,000,000) are classified as Class J Common Stock,
Series B, two hundred fifty million (250,000,000) are classified as Class K
Common Stock, one hundred million (100,000,000) are classified as Class L Common
Stock, one hundred million (100,000,000) are classified as Class L Common Stock,
Series B, one hundred million (100,000,000) are classified as Class M Common
Stock, one hundred million (100,000,000) are classified as Class M Common Stock,
Series B, one hundred million (100,000,000) are classified as
<PAGE>
Class N Common Stock, one hundred million (100,000,000) are classified as Class
N Common Stock, Series B, twenty-five million (25,000,000) are classified as
Class O Common Stock, twenty-five million (25,000,000) are classified as Class O
Common Stock, Series B, one hundred million (100,000,000) are classified as
Class P Common Stock, one hundred million (100,000,000) are classified as Class
P Common Stock, Series B, one hundred million (100,000,000) are classified as
Class P Common Stock, Series C, one hundred million (100,000,000) are classified
as Class Q Common Stock, one hundred million (100,000,000) are classified as
Class Q Common Stock, Series B, one hundred million (100,000,000) are classified
as Class Q Common Stock, Series C and two billion (2,000,000,000) are
unclassified.
THIRD: Pursuant to the authority contained in Section 2-105(c) of the
Maryland General Corporation Law, the Board of Directors of the Corporation, by
a resolution adopted at a meeting held on March 10, 1994, approved an increase
in the aggregate number of shares of common stock that the Corporation has to
issue from ten billion (10,000,000,000) of the par value of one mill ($.001) to
twenty billion (20,000,000,000) of the par value of one mill ($.001), with an
aggregate par value of twenty million dollars ($20,000,000).
FOURTH: Pursuant to the authority contained in Article VI of the
Articles of Incorporation of the Corporation, the Board of Directors of the
Corporation, by a resolution adopted at a meeting held on March 10, 1994,
classified one billion (1,000,000,000) of the authorized, unissued and
unclassified shares of the Corporation as Class R Common Stock, of the par value
of one mill ($.001) per share.
FIFTH: Pursuant to the authority contained in Article VI of the Articles
of Incorporation of the Corporation, the Board of Directors of the Corporation,
by a resolution adopted at a meeting held on March 10, 1994, classified one
billion (1,000,000,000) of the authorized, unissued and unclassified shares of
the Corporation as Class S Common Stock, of the par value of one mill ($.001)
per share.
SIXTH: Pursuant to the authority contained in Article VI of the Articles
of Incorporation of the Corporation, the Board of Directors of the Corporation,
by a resolution adopted at a meeting held on March 10, 1994, classified one
billion (1,000,000,000) of the authorized, unissued and unclassified shares of
the Corporation as Class T Common Stock, of the par value of one mill ($.001)
per share.
SEVENTH: Pursuant to the authority contained in Article VI of the
Articles of Incorporation of the Corporation, the Board of Directors of the
Corporation, by a resolution adopted at a meeting held on March 10, 1994,
classified one
2
<PAGE>
billion (1,000,000,000) of the authorized, unissued and unclassified shares of
the Corporation as Class U Common Stock, of the par value of one mill ($.001)
per share.
EIGHTH: Each share of Class A Common Stock, Class A Common Stock, Series
B, Class B Common Stock, Class B Common Stock, Series B, Class C Common Stock,
Class D Common Stock, Class D Common Stock, Series B, Class E Common Stock,
Class E Common Stock, Series B, Class F Common Stock, Class G Common Stock,
Class G Common Stock, Series B, Class H Common Stock, Class H Common Stock,
Series B, Class I Common Stock, Class J Common Stock, Class J Common Stock,
Series B, Class K Common Stock, Class L Common Stock, Class L Common Stock,
Series B, Class M Common Stock, Class M Common Stock, Series B, Class N Common
Stock, Class N Common Stock, Series B, Class O Common Stock, Class O Common
Stock, Series B, Class P Common Stock, Class P Common Stock, Series B, Class P
Common Stock, Series C, Class Q Common Stock, Class Q Common Stock, Series B,
Class Q Common Stock, Series C, Class R Common Stock, Class S Common Stock,
Class T Common Stock and Class U Common Stock shall have all the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption that are set
forth in the Corporation's Articles of Incorporation with respect to its shares
of capital stock.
NINTH: For any class or series that adopts a rule 12b-1 plan pursuant to
the Investment Company Act of 1940, expenses related to the distribution of, and
other identified expenses that should properly be allocated to, the shares of
such particular class or series of capital stock may be charged to and borne
solely by such class or series and the bearing of expenses solely by that class
or series of capital stock may be appropriately reflected (in a manner
determined by the Board of Directors) and cause differences in the net asset
value attributable to, and the dividend, redemption and liquidation rights of,
the shares of each such class or series of capital stock.
TENTH: Immediately after the increase and classification hereinbefore
set forth and upon filing for record these Articles Supplementary, the
Corporation has authority to issue twenty billion (20,000,000,000) shares of the
Corporation of the par value of one mill ($.001) per share and of the aggregate
par value of ten million dollars ($10,000,000), of which one billion
(1,000,000,000) are classified as Class A Common Stock, one billion
(1,000,000,000) are classified as Class A Common Stock, Series B, one billion
(1,000,000,000) are classified as Class B Common Stock, one billion
(1,000,000,000) are classified as Class B Common Stock, Series B, seven hundred
fifty million (750,000,000) are classified as Class C Common Stock, twenty-five
million (25,000,000) are classified as Class D
3
<PAGE>
Common Stock, twenty-five million (25,000,000) are classified as Class D Common
Stock, Series B, twenty-five million (25,000,000) are classified as Class E
Common Stock, twenty-five million (25,000,000) are classified as Class E Common
Stock, Series B, five hundred million (500,000,000) are classified as Class F
Common Stock, one hundred million (100,000,000) are classified as Class G Common
Stock, one hundred million (100,000,000) are classified as Class G Common Stock,
Series B, one hundred million (100,000,000) are classified as Class H Common
Stock, one hundred million (100,000,000) are classified as Class H Common Stock,
Series B, two hundred fifty million (250,000,000) are classified as Class I
Common Stock, two hundred fifty million (250,000,000) are classified as Class J
Common Stock, two hundred fifty million (250,000,000) are classified as Class J
Common Stock, Series B, two hundred fifty million (250,000,000) are classified
as Class K Common Stock, one hundred million (100,000,000) are classified as
Class L Common Stock, one hundred million (100,000,000) are classified as Class
L Common Stock, Series B, one hundred million (100,000,000) are classified as
Class M Common Stock, one hundred million (100,000,000) are classified as Class
M Common Stock, Series B, one hundred million (100,000,000) are classified as
Class N Common Stock, one hundred million (100,000,000) are classified as Class
N Common Stock, Series B, twenty-five million (25,000,000) are classified as
Class O Common Stock, twenty-five million (25,000,000) are classified as Class O
Common Stock, Series B, one hundred million (100,000,000) are classified as
Class P Common Stock, one hundred million (100,000,000) are classified as Class
P Common Stock, Series B, one hundred million (100,000,000) are classified as
Class P Common Stock, Series C, one hundred million (100,000,000) are classified
as Class Q Common Stock, one hundred million (100,000,000) are classified as
Class Q Common Stock, Series B, one hundred million (100,000,000) are classified
as Class Q Common Stock, Series C, one billion (1,000,000,000) are classified as
Class R Common Stock, one billion (1,000,000,000) are classified as Class S
Common Stock, one billion (1,000,000,000) are classified as Class T Common
Stock, one billion (1,000,000,000) are classified as Class U Common Stock and
eight billion (8,000,000,000) are unclassified.
ELEVENTH: The aforesaid action by the Board of Directors of the
Corporation was taken pursuant to authority and power contained in the Articles
of Incorporation of the Corporation.
4
<PAGE>
IN WITNESS WHEREOF, COREFUNDS, INC. has caused these presents to be
signed in its name and on its behalf by its President and its corporate seal to
be hereunto affixed and attested by its Secretary as of the 8th day of April,
1994.
COREFUNDS, INC.
By: /s/ Robert A. Nesher
--------------------------------
Robert A. Nesher
President
[SEAL]
Attest:
/s/ James W. Jennings
- ------------------------------
James W. Jennings
Secretary
5
<PAGE>
THE UNDERSIGNED, President of COREFUNDS , INC., who executed on behalf
of said corporation the foregoing Articles Supplementary to the Charter, of
which this certificate is made a part, hereby acknowledges, in the name and on
behalf of said corporation, the foregoing Articles Supplementary to the Charter
to be the corporate act of said corporation and further certifies that, to the
best of his knowledge, information and belief, the matters and facts set forth
therein with respect to the approval thereof are true in all material respects,
under the penalties of perjury.
By: /s/ Robert A. Nesher
--------------------------------
Robert A. Nesher
President
6
COREFUNDS, INC.
CERTIFICATE OF CORRECTION
COREFUNDS, INC. (the "Corporation"), formerly named "Red Oak
Cash Reserve Fund, Inc.," a corporation organized under the laws of the State of
Maryland, in accordance with Section 1-207 of the Maryland General Corporation
Law, does hereby file for record with the State Department of Assessments and
Taxation of Maryland, the following Certificate of Correction:
FIRST, The title of the document filed by the Corporation to
be corrected is CoreFunds, Inc. Articles Supplementary filed with the State
Department of Assessments and Taxation on March 29, 1996 at 12:29 p.m.
SECOND, The provision in the Articles Supplementary as
previously filed on March 29, 1996 states as follows:
SIXTEENTH: Immediately after the increase and classification
hereinbefore set forth and upon filing for record these
Articles Supplementary, the Corporation has authority to issue
thirty billion (30,000,000,000) shares of the Corporation of
the par value of one mill ($.001) per share and of the
aggregate par value of thirty million dollars ($30,000,000),
of which one billion (1,000,000,000) are classified as Cash
Reserve Class Y, one billion (1,000,000,000) are classified as
Cash Reserve Class C, one billion two hundred fifty million
(1,250,000,000) are classified as Treasury Reserve Class Y,
one billion two hundred fifty million (1,250,000,000) are
classified as Treasury Reserve Class C, seven hundred fifty
million (750,000,000) are classified as Fiduciary Reserve
Class Y, fifty million (50,000,000) are classified as Equity
Fund Class Y, fifty million (50,000,000) are classified as
Equity Fund Class A, twenty-five million (25,000,000) are
classified as International Growth Fund Class Y, twenty-five
million (25,000,000) are classified as International Growth
Fund Class Y, five hundred million (500,000,000) are
classified as Equity Index Fund Class Y, one hundred million
(100,000,000) are classified as Growth Equity Fund Class Y,
one hundred million (100,000,000) are classified as Growth
Equity Fund Class A, one hundred million (100,000,000) are
classified as Short Intermediate Bond Fund Class Y, one
hundred million (100,000,000) are classified as Short
Intermediate Bond Fund Class A, two
<PAGE>
hundred fifty million (250,000,000) are classified as
Fiduciary Tax-Free Class Y, two hundred fifty million
(250,000,000) are classified as Tax-Free Reserve Class Y, two
hundred fifty million (250,000,000) are classified as Tax-Free
Reserve Class A, two hundred fifty million (250,000,000) are
classified as Fiduciary Treasury Reserve Class Y, one hundred
million (100,000,000) are classified as Balanced Fund Class Y,
one hundred million (100,000,000) are classified as Balanced
Fund Class A, one hundred million (100,000,000) are classified
as Government Income Fund Class Y, one hundred million
(100,000,000) are classified as Government Income Fund Class
A, one hundred million (100,000,000) are classified as
Intermediate Municipal Bond Fund Class Y, one hundred million
(100,000,000) are classified as Intermediate Municipal Bond
Fund Class A, twenty-five million (25,000,000) are classified
as Global Bond Fund Class Y, twenty-five million (25,000,000)
are classified as Global Bond Fund Class A, one hundred
million (100,000,000) are classified as Pennsylvania Municipal
Bond Fund Class Y, one hundred million (100,000,000) are
classified as Pennsylvania Municipal Bond Fund Class A, one
hundred million (100,000,000) as classified as Class P Common
Stock, Series C, one hundred million (100,000,000) are
classified as New Jersey Municipal Bond Fund Class Y, one
hundred million (100,000,000) are classified as New Jersey
Municipal Bond Fund Class A, one hundred million (100,000,000)
are classified as Class Q Common Stock, Series C, one billion
(1,000,000,000) are classified as Elite Cash Reserve Class Y,
one billion (1,000,000,000) are classified as Elite Government
Reserve Class Y, one billion (1,000,000,000) are classified as
Elite Treasury Reserve Class Y, one billion (1,000,000,000)
are classified as Class U Common Stock, one billion
(1,000,000,000) are classified as Special Equity Fund Class Y,
one billion (1,000,000,000) are classified as Special Equity
Fund Class A, one billion (1,000,000,000) are classified as
Short-Term Income Fund Class Y, one billion (1,000,000,000)
are classified as Short-Term Income Fund Class Y, one billion
(1,000,000,000) are classified as Short-Term Income Fund Class
A, one billion (1,000,000,000) are classified as Bond Fund
Class Y, one billion (1,000,000,000) are classified as
Short-Term Income Fund Class A and eleven billion four hundred
fifty million (11,450,000,000) are unclassified.
THIRD, The provision in the Articles Supplementary filed on
March 29, 1996 as corrected by this Certificate of Correction is stated as
follows:
SIXTEENTH: Immediately after the increase and classification
hereinbefore set forth and upon filing for record these
Articles Supplementary, the Corporation has authority to issue
thirty billion (30,000,000,000) shares of the Corporation of
the par value of one mill ($.001) per share and of the
aggregate par value of thirty million dollars ($30,000,000),
of which one billion
2
<PAGE>
(1,000,000,000) are classified as Cash Reserve Class Y, one
billion (1,000,000,000) are classified as Cash Reserve Class
C, one billion two hundred fifty million (1,250,000,000) are
classified as Treasury Reserve Class Y, one billion two
hundred fifty million (1,250,000,000) are classified as
Treasury Reserve Class C, seven hundred fifty million
(750,000,000) are classified as Fiduciary Reserve Class Y,
fifty million (50,000,000) are classified as Equity Fund Class
Y, fifty million (50,000,000) are classified as Equity Fund
Class A, twenty-five million (25,000,000) are classified as
International Growth Fund Class Y, twenty-five million
(25,000,000) are classified as International Growth Fund Class
Y, five hundred million (500,000,000) are classified as Equity
Index Fund Class Y, one hundred million (100,000,000) are
classified as Growth Equity Fund Class Y, one hundred million
(100,000,000) are classified as Growth Equity Fund Class A,
one hundred million (100,000,000) are classified as Short
Intermediate Bond Fund Class Y, one hundred million
(100,000,000) are classified as Short Intermediate Bond Fund
Class A, two hundred fifty million (250,000,000) are
classified as Fiduciary Tax-Free Class Y, two hundred fifty
million (250,000,000) are classified as Tax-Free Reserve Class
Y, two hundred fifty million (250,000,000) are classified as
Tax-Free Reserve Class A, two hundred fifty million
(250,000,000) are classified as Fiduciary Treasury Reserve
Class Y, one hundred million (100,000,000) are classified as
Balanced Fund Class Y, one hundred million (100,000,000) are
classified as Balanced Fund Class A, one hundred million
(100,000,000) are classified as Government Income Fund Class
Y, one hundred million (100,000,000) are classified as
Government Income Fund Class A, one hundred million
(100,000,000) are classified as Intermediate Municipal Bond
Fund Class Y, one hundred million (100,000,000) are classified
as Intermediate Municipal Bond Fund Class A, twenty-five
million (25,000,000) are classified as Global Bond Fund Class
Y, twenty-five million (25,000,000) are classified as Global
Bond Fund Class A, one hundred million (100,000,000) are
classified as Pennsylvania Municipal Bond Fund Class Y, one
hundred million (100,000,000) are classified as Pennsylvania
Municipal Bond Fund Class A, one hundred million (100,000,000)
as classified as Class P Common Stock, Series C, one hundred
million (100,000,000) are classified as New Jersey Municipal
Bond Fund Class Y, one hundred million (100,000,000) are
classified as New Jersey Municipal Bond Fund Class A, one
hundred million (100,000,000) are classified as Class Q Common
Stock, Series C, one billion (1,000,000,000) are classified as
Elite Cash Reserve Class Y, one billion (1,000,000,000) are
classified as Elite Government Reserve Class Y, one billion
(1,000,000,000) are classified as Elite Treasury Reserve Class
Y, one billion (1,000,000,000) are classified as Class U
Common Stock, one billion (1,000,000,000) are classified as
Special Equity Fund Class Y, one billion (1,000,000,000) are
classified as Special Equity Fund Class A, one billion
(1,000,000,000) are classified as Short-Term Income Fund Class
Y, one billion
3
<PAGE>
(1,000,000,000) are classified as Short-Term Income Fund Class
A, one billion (1,000,000,000) are classified as Bond Fund
Class Y, one billion (1,000,000,000) are classified as Bond
Fund Class A and eleven billion four hundred fifty million
(11,450,000,000) are unclassified.
IN WITNESS WHEREOF, COREFUNDS, INC. has caused these presents
to be signed in its name and on its behalf by its President and its corporate
seal to be hereunto affixed and attested by its Secretary as of the 30th day
of April, 1996.
COREFUNDS, INC.
By: /s/ David G. Lee
---------------------------------
President
[SEAL]
Attest:
/s/ James W. Jennings
- -----------------------------------
Secretary
4
<PAGE>
THE UNDERSIGNED, President of COREFUNDS, INC., who executed on
behalf of said corporation the foregoing Certificate of Correction to the
Charter, of which this certificate is made a part, hereby acknowledges, in the
name and on behalf of said corporation, the foregoing Certificate of Correction
to the Charter to be the corporate act of said corporation and further certifies
that, to the best of his knowledge, information and belief, the matters and
facts set forth therein are true in all material respects, under the penalties
of perjury.
/s/ David G. Lee
----------------------------------
President
5
COREFUNDS, INC.
CERTIFICATE OF CORRECTION
COREFUNDS, INC. (the "Corporation"), formerly named "Red Oak
Cash Reserve Fund, Inc.," a corporation organized under the laws of the State of
Maryland, in accordance with Section 1-207 of the Maryland General Corporation
Law, does hereby file for record with the State Department of Assessments and
Taxation of Maryland, the following Certificate of Correction:
FIRST, The title of the document filed by the Corporation to
be corrected is CoreFunds, Inc. Articles Supplementary filed with the State
Department of Assessments and Taxation on March 29, 1996 at 12:29 p.m.
SECOND, The provision in the Articles Supplementary as
previously filed on March 29, 1996 states as follows:
SIXTEENTH: Immediately after the increase and classification
hereinbefore set forth and upon filing for record these
Articles Supplementary, the Corporation has authority to issue
thirty billion (30,000,000,000) shares of the Corporation of
the par value of one mill ($.001) per share and of the
aggregate par value of thirty million dollars ($30,000,000),
of which one billion (1,000,000,000) are classified as Cash
Reserve Class Y, one billion (1,000,000,000) are classified as
Cash Reserve Class C, one billion two hundred fifty million
(1,250,000,000) are classified as Treasury Reserve Class Y,
one billion two hundred fifty million (1,250,000,000) are
classified as Treasury Reserve Class C, seven hundred fifty
million (750,000,000) are classified as Fiduciary Reserve
Class Y, fifty million (50,000,000) are classified as Equity
Fund Class Y, fifty million (50,000,000) are classified as
Equity Fund Class A, twenty-five million (25,000,000) are
classified as International Growth Fund Class Y, twenty-five
million (25,000,000) are classified as International Growth
Fund Class Y, five hundred million (500,000,000) are
classified as Equity Index Fund Class Y, one hundred million
(100,000,000) are classified as Growth Equity Fund Class Y,
one hundred million (100,000,000) are classified as Growth
Equity Fund Class A, one hundred million (100,000,000) are
classified as Short Intermediate Bond Fund Class Y, one
hundred million (100,000,000) are classified as Short
Intermediate Bond Fund Class A, two hundred fifty million
(250,000,000) are classified as Fiduciary Tax-Free Class Y,
two hundred fifty million (250,000,000) are classified as
Tax-Free
<PAGE>
Reserve Class Y, two hundred fifty million (250,000,000) are
classified as Tax-Free Reserve Class A, two hundred fifty
million (250,000,000) are classified as Fiduciary Treasury
Reserve Class Y, one hundred million (100,000,000) are
classified as Balanced Fund Class Y, one hundred million
(100,000,000) are classified as Balanced Fund Class A, one
hundred million (100,000,000) are classified as Government
Income Fund Class Y, one hundred million (100,000,000) are
classified as Government Income Fund Class A, one hundred
million (100,000,000) are classified as Intermediate Municipal
Bond Fund Class Y, one hundred million (100,000,000) are
classified as Intermediate Municipal Bond Fund Class A,
twenty-five million (25,000,000) are classified as Global Bond
Fund Class Y, twenty-five million (25,000,000) are classified
as Global Bond Fund Class A, one hundred million (100,000,000)
are classified as Pennsylvania Municipal Bond Fund Class Y,
one hundred million (100,000,000) are classified as
Pennsylvania Municipal Bond Fund Class A, one hundred million
(100,000,000) are classified as Class P Common Stock,
Series C, one hundred million (100,000,000) are classified as
New Jersey Municipal Bond Fund Class Y, one hundred million
(100,000,000) are classified as New Jersey Municipal Bond Fund
Class A, one hundred million (100,000,000) are classified as
Class Q Common Stock, Series C, one billion (1,000,000,000)
are classified as Elite Cash Reserve Class Y, one billion
(1,000,000,000) are classified as Elite Government Reserve
Class Y, one billion (1,000,000,000) are classified as Elite
Treasury Reserve Class Y, one billion (1,000,000,000) are
classified as Class U Common Stock, one billion
(1,000,000,000) are classified as Special Equity Fund Class Y,
one billion (1,000,000,000) are classified as Special Equity
Fund Class A, one billion (1,000,000,000) are classified as
Short-Term Income Fund Class Y, one billion (1,000,000,000)
are classified as Short-Term Income Fund Class Y, one billion
(1,000,000,000) are classified as Short-Term Income Fund Class
A, one billion (1,000,000,000) are classified as Bond Fund
Class Y, one billion (1,000,000,000) are classified as
Short-Term Income Fund Class A and eleven billion four hundred
fifty million (11,450,000,000) are unclassified.
THIRD, The provision in the Articles Supplementary filed on
March 29, 1996 as corrected by this Certificate of Correction is stated as
follows:
SIXTEENTH: Immediately after the increase and classification
hereinbefore set forth and upon filing for record these
Articles Supplementary, the Corporation has authority to issue
thirty billion (30,000,000,000) shares of the Corporation of
the par value of one mill ($.001) per share and of the
aggregate par value of thirty million dollars ($30,000,000),
of which one billion (1,000,000,000) are classified as Cash
Reserve Class Y, one billion (1,000,000,000) are classified as
Cash Reserve Class C, one billion two hundred fifty million
(1,250,000,000) are classified as Treasury Reserve Class Y,
one billion two hundred fifty million
2
<PAGE>
(1,250,000,000) are classified as Treasury Reserve Class C,
seven hundred fifty million (750,000,000) are classified as
Fiduciary Reserve Class Y, fifty million (50,000,000) are
classified as Equity Fund Class Y, fifty million (50,000,000)
are classified as Equity Fund Class A, twenty-five million
(25,000,000) are classified as International Growth Fund Class
Y, twenty-five million (25,000,000) are classified as
International Growth Fund Class A, five hundred million
(500,000,000) are classified as Equity Index Fund Class Y, one
hundred million (100,000,000) are classified as Growth Equity
Fund Class Y, one hundred million (100,000,000) are classified
as Growth Equity Fund Class A, one hundred million
(100,000,000) are classified as Short Intermediate Bond Fund
Class Y, one hundred million (100,000,000) are classified as
Short Intermediate Bond Fund Class A, two hundred fifty
million (250,000,000) are classified as Fiduciary Tax-Free
Reserve Class Y, two hundred fifty million (250,000,000) are
classified as Tax-Free Reserve Class Y, two hundred fifty
million (250,000,000) are classified as Tax-Free Reserve Class
C, two hundred fifty million (250,000,000) are classified as
Fiduciary Treasury Reserve Class Y, one hundred million
(100,000,000) are classified as Balanced Fund Class Y, one
hundred million (100,000,000) are classified as Balanced Fund
Class A, one hundred million (100,000,000) are classified as
Government Income Fund Class Y, one hundred million
(100,000,000) are classified as Government Income Fund Class
A, one hundred million (100,000,000) are classified as
Intermediate Municipal Bond Fund Class Y, one hundred million
(100,000,000) are classified as Intermediate Municipal Bond
Fund Class A, twenty-five million (25,000,000) are classified
as Global Bond Fund Class Y, twenty-five million (25,000,000)
are classified as Global Bond Fund Class A, one hundred
million (100,000,000) are classified as Pennsylvania Municipal
Bond Fund Class Y, one hundred million (100,000,000) are
classified as Pennsylvania Municipal Bond Fund Class A, one
hundred million (100,000,000) are classified as Class P Common
Stock, Series C, one hundred million (100,000,000) are
classified as New Jersey Municipal Bond Fund Class Y, one
hundred million (100,000,000) are classified as New Jersey
Municipal Bond Fund Class A, one hundred million (100,000,000)
are classified as Class Q Common Stock, Series C, one billion
(1,000,000,000) are classified as Elite Cash Reserve Class Y,
one billion (1,000,000,000) are classified as Elite Government
Reserve Class Y, one billion (1,000,000,000) are classified as
Elite Treasury Reserve Class Y, one billion (1,000,000,000)
are classified as Class U Common Stock, one billion
(1,000,000,000) are classified as Special Equity Fund Class Y,
one billion (1,000,000,000) are classified as Special Equity
Fund Class A, one billion (1,000,000,000) are classified as
Short-Term Income Fund Class Y, one billion (1,000,000,000)
are classified as Short-Term Income Fund Class A, one billion
(1,000,000,000) are classified as Bond Fund Class Y, one
billion (1,000,000,000) are classified as Bond Fund Class A
and eleven billion four hundred fifty million (11,450,000,000)
are unclassified.
3
<PAGE>
IN WITNESS WHEREOF, COREFUNDS, INC. has caused these presents
to be signed in its name and on its behalf by its President and its corporate
seal to be hereunto affixed and attested by its Secretary as of the 31st day of
July, 1996.
COREFUNDS, INC.
By:/s/ David G. Lee
------------------------
President
[SEAL]
Attest:
/s/ James W. Jennings
- ---------------------
Secretary
4
<PAGE>
THE UNDERSIGNED, President of COREFUNDS, INC., who executed on
behalf of said corporation the foregoing Certificate of Correction to the
Charter, of which this certificate is made a part, hereby acknowledges, in the
name and on behalf of said corporation, the foregoing Certificate of Correction
to the Charter to be the corporate act of said corporation and further certifies
that, to the best of his knowledge, information and belief, the matters and
facts set forth therein are true in all material respects, under the penalties
of perjury.
/s/ David G. Lee
------------------------
President
5
<PAGE>
COREFUNDS, INC.
ARTICLES SUPPLEMENTARY
COREFUNDS, INC. (the "Corporation"), formerly named Red Oak
Cash Reserve Fund, Inc., a corporation organized under the laws of the State of
Maryland, does hereby file for record with the State Department of Assessments
and Taxation of Maryland the following Articles Supplementary to its Articles of
Incorporation:
FIRST: The Corporation is registered as an open-end investment
company under the Investment Company Act of 1940. As hereinafter set forth, the
Corporation has reclassified its authorized, unissued and classified capital
stock in accordance with Section 2-208 of the Maryland General Corporation Law
and under authority contained in the Articles of Incorporation of the
Corporation and has classified its authorized, unissued and unclassified capital
stock in accordance with Section 2-105(c) of the Maryland General Corporation
Law and under authority contained in the Articles of Incorporation of the
Corporation.
SECOND: Immediately before the reclassification and
classification hereinbefore set forth and upon filing for record these Articles
Supplementary, the Corporation had authority to issue thirty billion
(30,000,000,000) shares of the Corporation of the par value of one mill ($.0001)
per share and of the aggregate par value of thirty million dollars
($30,000,000), of which one billion (1,000,000,000) are classified as Cash
Reserve Class Y, one billion (1,000,000,000) are classified as Cash Reserve
Class C, one billion two hundred fifty million (1,250,000,000) are classified as
Treasury Reserve Class Y, one billion two hundred fifty million (1,250,000,000)
are classified as Treasury Reserve Class C, seven hundred fifty million
(750,000,000) are classified as Fiduciary Reserve Class Y, fifty million
(50,000,000) are classified as Equity Fund Class Y, fifty million (50,000,000)
are classified as Equity Fund Class A, twenty-five million (25,000,000) are
classified as International Growth Fund Class Y, twenty-five million
(25,000,000) are classified as International Growth Fund Class A, five hundred
million (500,000,000) are classified as Equity Index Fund Class Y, one hundred
million (100,000,000) are classified as Growth Equity Fund Class Y, one hundred
million (100,000,000) are classified as Growth Equity Fund Class A, one hundred
million (100,000,000) are classified as Short Intermediate Bond Fund Class Y,
one hundred million (100,000,000) are classified as Short Intermediate Bond Fund
Class A, two hundred fifty million (250,000,000) are classified as Fiduciary
Tax-Free Reserve Class Y, two hundred fifty million (250,000,000) are classified
as Tax-Free Reserve Class Y, two hundred fifty million (250,000,000) are
classified as Tax-Free Reserve Class C, two hundred fifty million (250,000,000)
are classified as Fiduciary Treasury Reserve Class Y, one hundred million
<PAGE>
(100,000,000) are classified as Balanced Fund Class Y, one hundred million
(100,000,000) are classified as Balanced Fund Class A, one hundred million
(100,000,000) are classified as Government Income Fund Class Y, one hundred
million (100,000,000) are classified as Government Income Fund Class A, one
hundred million (100,000,000) are classified as Intermediate Municipal Bond Fund
Class Y, one hundred million (100,000,000) are classified as Intermediate
Municipal Bond Fund Class A, twenty-five million (25,000,000) are classified as
Global Bond Fund Class Y, twenty-five million (25,000,000) are classified
as Global Bond Fund Class A, one hundred million (100,000,000) are classified as
Pennsylvania Municipal Bond Fund Class Y, one hundred million (100,000,000) are
classified as Pennsylvania Municipal Bond Fund Class A, one hundred million
(100,000,000) are classified as Class P Common Stock, Series C, one hundred
million (100,000,000) are classified as New Jersey Municipal Bond Fund Class Y,
one hundred million (100,000,000) are classified as New Jersey Municipal Bond
Fund Class A, one hundred million (100,000,000) are classified as Class Q Common
Stock, Series C, one billion (1,000,000,000) are classified as Elite Cash
Reserve Class Y, one billion (1,000,000,000) are classified as Elite Government
Reserve Class Y, one billion (1,000,000,000) are classified as Elite Treasury
Reserve Class Y, one billion (1,000,000,000) are classified as Class U Common
Stock, one billion (1,000,000,000) are classified as Special Equity Fund Class
Y, one billion (1,000,000,000) are classified as Special Equity Fund Class A,
one billion (1,000,000,000) are classified as Short-Term Income Fund Class Y,
one billion (1,000,000,000) are classified as Short-Term Income Fund Class A,
one billion (1,000,000,000) are classified as Bond Fund Class Y, one billion
(1,000,000,000) are classified as Bond Fund Class A and eleven billion four
hundred fifty million (11,450,000,000) are unclassified.
THIRD: Pursuant to the authority contained in Section 2-208 of
the Maryland General Corporation Law and Article VI of the Articles of
Incorporation of the Corporation, the Board of Directors of the Corporation, by
a resolution adopted at a meeting held on September 7, 1995, reclassified one
billion (1,000,000,000) of the authorized, unissued and classified shares of the
Class U Common Stock as unclassified shares.
FOURTH: Pursuant to the authority contained in Section 2-208
of the Maryland General Corporation Law and Article VI of the Articles of
Incorporation of the Corporation, the Board of Directors of the Corporation, by
a resolution adopted at a meeting held on September 7, 1995, reclassified one
hundred million (100,000,000) of the authorized, unissued and classified shares
of the Class P Common Stock, Series C as unclassified shares.
FIFTH: Pursuant to the authority contained in Section 2-208 of
the Maryland General Corporation Law and Article VI of the Articles of
Incorporation of the Corporation, the Board of Directors of the Corporation, by
a resolution adopted at a meeting held on September 7, 1995, reclassified one
hundred million (100,000,000) of the authorized, unissued and classified shares
of the Class Q Common Stock, Series C as unclassified shares.
2
<PAGE>
SIXTH: Pursuant to the authority contained in Article VI of
the Articles of Incorporation of the Corporation, the Board of Directors of the
Corporation by a resolution adopted at a meeting held on June 6, 1996,
classified five hundred million (500,000,000) of the authorized, unissued and
unclassified shares of the Corporation as Equity Index Fund Class A, of the par
value of one mill ($.0001) per share.
SEVENTH: Each share of Cash Reserve Class Y, Cash Reserve
Class C, Treasury Reserve Class Y, Treasury Reserve Class C, Fiduciary Reserve
Class Y, Equity Fund Class Y, Equity Fund Class A, International Growth Fund
Class Y, International Growth Fund Class A, Equity Index Fund Class Y, Equity
Index Fund Class A, Growth Equity Fund Class Y, Growth Equity Fund Class A,
Short Intermediate Bond Fund Class Y, Short Intermediate Bond Fund Class A,
Fiduciary Tax-Free Reserve Class Y, Tax-Free Reserve Class Y, Tax-Free Reserve
Class C, Fiduciary Treasury Reserve Class Y, Balanced Fund Class Y, Balanced
Fund Class A, Government Income Fund Class Y, Government Income Fund Class A,
Intermediate Municipal Bond Fund Class Y, Intermediate Municipal Bond Fund
Class A, Global Bond Fund Class Y, Global Bond Fund Class A, Pennsylvania
Municipal Bond Fund Class Y, Pennsylvania Municipal Bond Fund Class A,
New Jersey Municipal Bond Fund Class Y, New Jersey Municipal Bond Fund Class A,
Elite Cash Reserve Class Y, Elite Government Reserve Class Y, Elite Treasury
Reserve Class Y, Special Equity Fund Class Y, Special Equity Class A, Short-Term
Income Fund Y, Short-Term Income Fund A, Bond Fund Class Y and Bond Fund Class A
shall have all the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption that are set forth in the Corporation's Articles of
Incorporation with respect to its shares of capital stock.
EIGHTH: For any class or series that adopts a rule 12b-1 plan
pursuant to the Investment Company Act of 1940, expenses related to the
distribution of, and other identified expenses that should properly be allocated
to, the shares of such particular class or series of capital stock may be
charged to and borne solely by such class or series and the bearing of expenses
solely by that class or series of capital stock may be appropriately reflected
(in a manner determined by the Board of Directors) and cause differences in the
net asset value attributable to, and the dividend, redemption and liquidation
rights of, the shares of each such class or series of capital stock.
NINTH: Immediately after the reclassification and
classification hereinbefore set forth and upon filing for record these Articles
Supplementary, the Corporation has authority to issue thirty billion
(30,000,000,000) shares of the Corporation of the par value of one mill ($.0001)
per share and of the aggregate par value of thirty million dollars
($30,000,000), of which one billion (1,000,000,000) are classified as Cash
Reserve Class Y, one billion (1,000,000,000) are classified as Cash Reserve
Class C, one billion two hundred fifty million (1,250,000,000) are classified as
Treasury Reserve Class Y, one billion two hundred fifty million (1,250,000,000)
are classified as Treasury Reserve Class C, seven hundred fifty million
(750,000,000) are classified as Fiduciary Reserve Class Y, fifty million
3
<PAGE>
(50,000,000) are classified as Equity Fund Class Y, fifty million (50,000,000)
are classified as Equity Fund Class A, twenty-five million (25,000,000) are
classified as International Growth Fund Class Y, twenty-five million
(25,000,000) are classified as International Growth Fund Class A, five hundred
million (500,000,000) are classified as Equity Index Fund Class Y, five hundred
million (500,000,000) are classified as Equity Index Fund Class A, one hundred
million (100,000,000) are classified as Growth Equity Fund Class Y, one hundred
million (100,000,000) are classified as Growth Equity Fund Class A, one hundred
million (100,000,000) are classified as Short Intermediate Bond Fund Class Y,
one hundred million (100,000,000) are classified as Short Intermediate Bond Fund
Class A, two hundred fifty million (250,000,000) are classified as Fiduciary
Tax-Free Reserve Class Y, two hundred fifty million (250,000,000) are classified
as Tax-Free Reserve Class Y, two hundred fifty million (250,000,000) are
classified as Tax-Free Reserve Class C, two hundred fifty million (250,000,000)
are classified as Fiduciary Treasury Reserve Class Y, one hundred million
(100,000,000) are classified as Balanced Fund Class Y, one hundred million
(100,000,000) are classified as Balanced Fund Class A, one hundred million
(100,000,000) are classified as Government Income Fund Class Y, one hundred
million (100,000,000) are classified as Government Income Fund Class A, one
hundred million (100,000,000) are classified as Intermediate Municipal Bond Fund
Class Y, one hundred million (100,000,000) are classified as Intermediate
Municipal Bond Fund Class A, twenty-five million (25,000,000) are classified as
Global Bond Fund Class Y, twenty-five million (25,000,000) are classified as
Global Bond Fund Class A, one hundred million (100,000,000) are classified as
Pennsylvania Municipal Bond Fund Class Y, one hundred million (100,000,000) are
classified as Pennsylvania Municipal Bond Fund Class A, one hundred million
(100,000,000) are classified as New Jersey Municipal Bond Fund Class Y, one
hundred million (100,000,000) are classified as New Jersey Municipal Bond Fund
Class A, one billion (1,000,000,000) are classified as Elite Cash Reserve Class
Y, one billion (1,000,000,000) are classified as Elite Government Reserve Class
Y, one billion (1,000,000,000) are classified as Elite Treasury Reserve Class Y,
one billion (1,000,000,000) are classified as Special Equity Fund Class Y, one
billion (1,000,000,000) are classified as Special Equity Fund Class A, one
billion (1,000,000,000) are classified as Short-Term Income Fund Class Y, one
billion (1,000,000,000) are classified as Short-Term Income Fund Class A, one
billion (1,000,000,000) are classified as Bond Fund Class Y, one billion
(1,000,000,000) are classified as Bond Fund Class A and twelve billion one
hundred fifty million (12,150,000,000) are unclassified.
TENTH: The aforesaid action by the Board of Directors of the
Corporation was taken pursuant to authority and power contained in the Articles
of Incorporation of the Corporation.
4
<PAGE>
IN WITNESS WHEREOF, COREFUNDS, INC. has caused these presents
to be signed in its name and on its behalf by its President and its corporate
seal to be hereunto affixed and attested by its Secretary as of the 31st day of
July, 1996.
COREFUNDS, INC.
By: /s/ David G. Lee
----------------
President
[SEAL]
Attest:
/s/ James W. Jennings
- ---------------------
Secretary
5
<PAGE>
THE UNDERSIGNED, President of COREFUNDS, INC., who executed on
behalf of said corporation the foregoing Articles Supplementary to the Charter,
of which this certificate is made a part, hereby acknowledges, in the name and
on behalf of said corporation, the foregoing Articles Supplementary to the
Charter to be the corporate act of said corporation and further certifies that,
to the best of his knowledge, information and belief, the matters and facts set
forth therein with respect to the approval thereof are true in all material
respects, under the penalties of perjury.
/s/ David G. Lee
----------------
President
6
COREFUNDS, INC.
ARTICLES SUPPLEMENTARY
COREFUNDS, INC. (the "Corporation"), formerly named Red Oak
Cash Reserve Fund, Inc., a corporation organized under the laws of the State of
Maryland, does hereby file for record with the State Department of Assessments
and Taxation of Maryland the following Articles Supplementary to its Articles of
Incorporation:
FIRST: The Corporation is registered as an open-end investment
company under the Investment Company Act of 1940. As hereinafter set forth, the
Corporation has reclassified its authorized, unissued and classified capital
stock in accordance with Section 2-208 of the Maryland General Corporation Law
and under authority contained in the Articles of Incorporation of the
Corporation and has classified its authorized, unissued and unclassified capital
stock in accordance with Section 2-105(c) of the Maryland General Corporation
Law and under authority contained in the Articles of Incorporation of the
Corporation.
SECOND: Immediately after the reclassification and
classification hereinbefore set forth and upon filing for record these Articles
Supplementary, the Corporation has authority to issue thirty billion
(30,000,000,000) shares of the Corporation of the par value of one mill ($.0001)
per share and of the aggregate par value of thirty million dollars
($30,000,000), of which one billion (1,000,000,000) are classified as Cash
Reserve Class Y, one billion (1,000,000,000) are classified as Cash Reserve
Class C, one billion two hundred fifty million (1,250,000,000) are classified as
Treasury Reserve Class Y, one billion two hundred fifty million (1,250,000,000)
are classified as Treasury Reserve Class C, seven hundred fifty million
(750,000,000) are classified as Fiduciary Reserve Class Y, fifty million
(50,000,000) are classified as Equity Fund Class Y, fifty million (50,000,000)
are classified as Equity Fund Class A, twenty-five million (25,000,000) are
classified as International Growth Fund Class Y, twenty-five million
(25,000,000) are classified as International Growth Fund Class A, five hundred
million (500,000,000) are classified as Equity Index Fund Class Y, five hundred
million (500,000,000) are classified as Equity Index Fund Class A, one hundred
million (100,000,000) are classified as Growth Equity Fund Class Y, one hundred
million (100,000,000) are classified as Growth Equity Fund Class A, one hundred
million (100,000,000) are classified as Short Intermediate Bond Fund Class Y,
one hundred million (100,000,000) are classified as Short Intermediate Bond Fund
Class A, two hundred fifty million (250,000,000) are classified as Fiduciary
Tax-Free Reserve Class Y, two hundred fifty million (250,000,000) are classified
as Tax-Free Reserve Class Y, two hundred fifty million
<PAGE>
(250,000,000) are classified as Tax-Free Reserve Class C, two hundred fifty
million (250,000,000) are classified as Fiduciary Treasury Reserve Class Y, one
hundred million (100,000,000) are classified as Balanced Fund Class Y, one
hundred million (100,000,000) are classified as Balanced Fund Class A, one
hundred million (100,000,000) are classified as Government Income Fund Class Y,
one hundred million (100,000,000) are classified as Government Income Fund
Class A, one hundred million (100,000,000) are classified as Intermediate
Municipal Bond Fund Class Y, one hundred million (100,000,000) are classified as
Intermediate Municipal Bond Fund Class A, twenty-five million (25,000,000) are
classified as Global Bond Fund Class Y, twenty-five million (25,000,000)
are classified as Global Bond Fund Class A, one hundred million (100,000,000)
are classified as Pennsylvania Municipal Bond Fund Class Y, one hundred million
(100,000,000) are classified as Pennsylvania Municipal Bond Fund Class A, one
hundred million (100,000,000) are classified as New Jersey Municipal Bond Fund
Class Y, one hundred million (100,000,000) are classified as New Jersey
Municipal Bond Fund Class A, one billion (1,000,000,000) are classified as Elite
Cash Reserve Class Y, one billion (1,000,000,000) are classified as Elite
Government Reserve Class Y, one billion (1,000,000,000) are classified as Elite
Treasury Reserve Class Y, one billion (1,000,000,000) are classified as Special
Equity Fund Class Y, one billion (1,000,000,000) are classified as
Special Equity Fund Class A, one billion (1,000,000,000) are classified as
Short-Term Income Fund Class Y, one billion (1,000,000,000) are classified as
Short-Term Income Fund Class A, one billion (1,000,000,000) are classified
as Bond Fund Class Y, one billion (1,000,000,000) are classified as Bond Fund
Class A and twelve billion one hundred fifty million (12,150,000,000) are
unclassified.
THIRD: Pursuant to the authority contained in Section 2-208 of
the Maryland General Corporation Law and Article VI of the Articles of
Incorporation of the Corporation, the Board of Directors of the Corporation, by
a resolution adopted at a meeting held on September 7, 1995, reclassified one
billion (1,000,000,000) of the authorized, unissued and classified shares of the
Elite Cash Reserve Class Y of the Corporation as unclassified shares.
FOURTH: Pursuant to the authority contained in Section 2-208
of the Maryland General Corporation Law and Article VI of the Articles of
Incorporation of the Corporation, the Board of Directors of the Corporation, by
a resolution adopted at a meeting held on September 7, 1995, reclassified one
billion (1,000,000,000) of the authorized, unissued and classified shares of the
Elite Treasury Reserve Class Y of the Corporation as unclassified shares.
FIFTH: Pursuant to the authority contained in Article VI of
the Articles of Incorporation of the Corporation, the Board of Directors of the
Corporation, by a resolution adopted at a meeting held on September 7, 1995,
classified seven hundred fifty million (750,000,000) of the authorized, unissued
and unclassified shares of the Corporation as Fiduciary Reserve Class C, of the
par value of one mill ($.0001) per share.
SIXTH: Pursuant to the authority contained in Article VI of
the Articles of Incorporation of the Corporation, the Board of Directors of the
Corporation, by a resolution adopted at a meeting held on September 7, 1995,
classified one billion (1,000,000,000) of the authorized, unissued and
unclassified shares of the Corporation as Elite Government Reserve Class C, of
the par value of one mill ($.0001) per share.
2
<PAGE>
SEVENTH: Pursuant to the authority contained in Article VI of
the Articles of Incorporation of the Corporation, the Board of Directors of the
Corporation, by a resolution adopted at a meeting held on September 7, 1995,
classified two hundred fifty million (250,000,000) of the authorized, unissued
and unclassified shares of the Corporation as Fiduciary Treasury Reserve
Class C, of the par value of one mill ($.0001) per share.
EIGHTH: Pursuant to the authority contained in Article VI of
the Articles of Incorporation of the Corporation, the Board of Directors of the
Corporation, by a resolution adopted at a meeting held on September 7, 1995,
classified two hundred fifty million (250,000,000) of the authorized, unissued
and unclassified shares of the Corporation as Fiduciary Tax-Free Reserve
Class C, of the par value of one mill ($.0001) per share.
NINTH: Each share of Cash Reserve Class Y, Cash Reserve
Class C, Treasury Reserve Class Y, Treasury Reserve Class C, Fiduciary Reserve
Class Y, Fiduciary Reserve Class C, Equity Fund Class Y, Equity Fund Class A,
International Growth Fund Class Y, International Growth Fund Class A, Equity
Index Fund Class Y, Equity Index Fund Class A, Growth Equity Fund Class Y,
Growth Equity Fund Class A, Short Intermediate Bond Fund Class Y, Short
Intermediate Bond Fund Class A, Fiduciary Tax-Free Reserve Class Y, Fiduciary
Tax-Free Reserve Class C, Tax-Free Reserve Class Y, Tax-Free Reserve Class C,
Fiduciary Treasury Reserve Class Y, Fiduciary Treasury Reserve Class C, Balanced
Fund Class Y, Balanced Fund Class A, Government Income Fund Class Y, Government
Income Fund Class A, Intermediate Municipal Bond Fund Class Y, Intermediate
Municipal Bond Fund Class A, Global Bond Fund Class Y, Global Bond Fund Class A,
Pennsylvania Municipal Bond Fund Class Y, Pennsylvania Municipal Bond Fund
Class A, New Jersey Municipal Bond Fund Class Y, New Jersey Municipal Bond Fund
Class A, Elite Government Reserve Class Y, Elite Government Reserve Class C,
Special Equity Fund Class Y, Special Equity Class A, Short-Term Income Fund Y,
Short-Term Income Fund A, Bond Fund Class Y and Bond Fund Class A shall have all
the preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption that are set forth in the Corporation's Articles of Incorporation
with respect to its shares of capital stock.
TENTH: For any class or series that adopts a rule 12b-1 plan
pursuant to the Investment Company Act of 1940, expenses related to the
distribution of, and other identified expenses that should properly be allocated
to, the shares of such particular class or series of capital stock may be
charged to and borne solely by such class or series and the bearing of expenses
solely by that class or series of capital stock may be appropriately
3
<PAGE>
reflected (in a manner determined by the Board of Directors) and cause
differences in the net asset value attributable to, and the dividend, redemption
and liquidation rights of, the shares of each such class or series of capital
stock.
ELEVENTH: Immediately after the reclassification and
classification hereinbefore set forth and upon filing for record these Articles
Supplementary, the Corporation has authority to issue thirty billion
(30,000,000,000) shares of the Corporation of the par value of one mill ($.0001)
per share and of the aggregate par value of thirty million dollars
($30,000,000), of which one billion (1,000,000,000) are classified as Cash
Reserve Class Y, one billion (1,000,000,000) are classified as Cash Reserve
Class C, one billion two hundred fifty million (1,250,000,000) are classified as
Treasury Reserve Class Y, one billion two hundred fifty million (1,250,000,000)
are classified as Treasury Reserve Class C, seven hundred fifty million
(750,000,000) are classified as Fiduciary Reserve Class Y, seven hundred fifty
million (750,000,000) are classified as Fiduciary Reserve Class C, fifty million
(50,000,000) are classified as Equity Fund Class Y, fifty million (50,000,000)
are classified as Equity Fund Class A, twenty-five million (25,000,000) are
classified as International Growth Fund Class Y, twenty-five million
(25,000,000) are classified as International Growth Fund Class A, five hundred
million (500,000,000) are classified as Equity Index Fund Class Y, five
hundred million (500,000,000) are classified as Equity Index Fund Class A, one
hundred million (100,000,000) are classified as Growth Equity Fund Class Y,
one hundred million (100,000,000) are classified as Growth Equity Fund Class A,
one hundred million (100,000,000) are classified as Short Intermediate Bond Fund
Class Y, one hundred million (100,000,000) are classified as Short Intermediate
Bond Fund Class A, two hundred fifty million (250,000,000) are classified as
Fiduciary Tax-Free Reserve Class Y, two hundred fifty million (250,000,000) are
classified as Fiduciary Tax-Free Reserve Class C, two hundred fifty million
(250,000,000) are classified as Tax-Free Reserve Class Y, two hundred fifty
million (250,000,000) are classified as Tax-Free Reserve Class C, two hundred
fifty million (250,000,000) are classified as Fiduciary Treasury Reserve
Class Y, two hundred fifty million (250,000,000) are classified as Fiduciary
Treasury Reserve Class C, one hundred million (100,000,000) are classified as
Balanced Fund Class Y, one hundred million (100,000,000) are classified as
Balanced Fund Class A, one hundred million (100,000,000) are classified as
Government Income Fund Class Y, one hundred million (100,000,000) are classified
as Government Income Fund Class A, one hundred million (100,000,000) are
classified as Intermediate Municipal Bond Fund Class Y, one hundred million
(100,000,000) are classified as Intermediate Municipal Bond Fund Class A,
twenty-five million (25,000,000) are classified as Global Bond Fund Class Y,
twenty-five million (25,000,000) are classified as Global Bond Fund Class A, one
hundred million (100,000,000) are classified as Pennsylvania Municipal Bond Fund
Class Y, one hundred million (100,000,000) are classified as Pennsylvania
Municipal Bond Fund Class A, one hundred million (100,000,000) are classified as
New Jersey Municipal Bond Fund Class Y, one hundred million (100,000,000) are
classified as New Jersey Municipal Bond Fund Class A, one billion
(1,000,000,000) are classified as Elite Government Reserve Class Y, one billion
(1,000,000,000) are classified as Elite Government Reserve Class C, one billion
(1,000,000,000) are classified as Special Equity Fund Class Y, one billion
(1,000,000,000) are classified as Special Equity Fund Class A, one billion
(1,000,000,000) are classified as Short-Term Income Fund Class Y, one billion
(1,000,000,000) are classified as Short-Term Income Fund Class A, one billion
(1,000,000,000) are classified as Bond Fund Class Y, one billion (1,000,000,000)
are classified as Bond Fund Class A and eleven billion nine hundred million
(11,900,000,000) are unclassified.
4
<PAGE>
TWELFTH: The aforesaid action by the Board of Directors of the
Corporation was taken pursuant to authority and power contained in the Articles
of Incorporation of the Corporation.
5
<PAGE>
IN WITNESS WHEREOF, COREFUNDS, INC. has caused these presents
to be signed in its name and on its behalf by its President and its corporate
seal to be hereunto affixed and attested by its Secretary as of the 12th day of
August, 1996.
COREFUNDS, INC.
By: /s/ David G. Lee
----------------
President
[SEAL]
Attest:
/s/ James W. Jennings
- ---------------------
Secretary
6
<PAGE>
THE UNDERSIGNED, President of COREFUNDS, INC., who executed on
behalf of said corporation the foregoing Articles Supplementary to the Charter,
of which this certificate is made a part, hereby acknowledges, in the name and
on behalf of said corporation, the foregoing Articles Supplementary to the
Charter to be the corporate act of said corporation and further certifies that,
to the best of his knowledge, information and belief, the matters and facts set
forth therein with respect to the approval thereof are true in all material
respects, under the penalties of perjury.
/s/ David G. Lee
----------------
President
7
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
COREFUNDS, INC.
COREFUNDS, INC. (the "Corporation"), formerly named Red Oak
Cash Reserve Fund, Inc., a corporation organized under the laws of the State of
Maryland, having its principal place of business at 680 East Swedesford Road,
Wayne, Pennsylvania 19087, does hereby certify to the State Department of
Assessments and Taxation of Maryland that:
FIRST: The Corporation is registered as an open-end investment
company under the Investment Company Act of 1940. As hereinafter set forth, the
Corporation has classified its authorized, unissued and unclassified capital
stock in accordance with Section 2-105(c) of the Maryland General Corporation
Law and under authority contained in the Articles of Incorporation of the
Corporation.
SECOND: Pursuant to the authority contained in Section
2-605(a)(4) of the Maryland General Corporation Law and under authority
contained in Article VI of the Articles of Incorporation, the Board of Directors
by a resolution adopted at a meeting held on September 7, 1995, voted to change
the name of its series of common stock from Fiduciary Reserve Class Y, Fiduciary
Reserve Class C, Fiduciary Treasury Reserve Class Y, Fiduciary Treasury Reserve
Class C, Fiduciary Tax-Free Reserve Class Y and Fiduciary Tax-Free Reserve Class
C to Elite Cash Reserve Class Y, Elite Cash Reserve Class C, Elite Treasury
Reserve Class Y, Elite Treasury Reserve Class C, Elite Tax-Free Reserve Class Y
and Elite Tax-Free Reserve Class C.
THIRD: Pursuant to the requirements of Section 2-607 of the
Maryland General Corporation Law, the Board of Directors has determined to file
of record these Articles of Amendment, which Amendment is limited to a change
expressly permitted by Section 2-605 of the Maryland General Corporation Law,
and was approved by a majority of the Board without action by shareholders, and
that such Amendment is solely for the purpose of changing the name of the
Corporation's series of common stock.
FOURTH: The Articles of Incorporation of the Corporation are
hereby amended by changing the Corporation's series of common stock set forth in
Article VI of the Articles of Incorporation, as supplemented, as follows:
Fiduciary Reserve Class Y shall be designated Elite Cash Reserve Class
Y; Fiduciary Reserve Class C shall be designated Elite Cash Reserve
Class C; Fiduciary Treasury
<PAGE>
Reserve Class Y shall be designated Elite Treasury Reserve Class Y;
Fiduciary Treasury Reserve Class C shall be designated Elite Treasury
Reserve Class C; Fiduciary Tax-Free Reserve Class Y shall be designated
Elite Tax-Free Reserve Class Y; and Fiduciary Tax-Free Reserve Class C
shall be designated Elite Tax-Free Reserve Class C.
FIFTH: As so redesignated each share of Cash Reserve Class Y,
Cash Reserve Class C, Treasury Reserve Class Y, Treasury Reserve Class C, Elite
Reserve Class Y, Elite Reserve Class C, Equity Fund Class Y, Equity Fund Class
A, International Growth Fund Class Y, International Growth Fund Class A, Equity
Index Fund Class Y, Equity Index Fund Class A, Growth Equity Fund Class Y,
Growth Equity Fund Class A, Short Intermediate Bond Fund Class Y, Short
Intermediate Bond Fund Class A, Elite Tax-Free Reserve Class Y, Elite Tax-Free
Reserve Class C, Tax-Free Reserve Class Y, Tax-Free Reserve Class C, Elite
Treasury Reserve Class Y, Elite Treasury Reserve Class C, Balanced Fund Class Y,
Balanced Fund Class A, Government Income Fund Class Y, Government Income Fund
Class A, Intermediate Municipal Bond Fund Class Y, Intermediate Municipal Bond
Fund Class A, Global Bond Fund Class Y, Global Bond Fund Class A, Pennsylvania
Municipal Bond Fund Class Y, Pennsylvania Municipal Bond Fund Class A, New
Jersey Municipal Bond Fund Class Y, New Jersey Municipal Bond Fund Class A,
Elite Government Reserve Class Y, Elite Government Reserve Class C, Special
Equity Fund Class Y, Special Equity Fund Class A, Short-Term Income Fund Class
Y, Short-Term Income Fund Class A, Bond Fund Class Y and Bond Fund Class A shall
have all the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption that are set forth in the Corporation's Articles of
Incorporation with respect to its shares of capital stock.
SIXTH: The officers of the Corporation be, and each of them
hereby is, authorized and empowered to execute and deliver any and all
documents, instruments, papers and writings, including but not limited to these
Articles of Amendment to be filed with the State Department of Assessments and
Taxation of Maryland and to do any and all other acts in the name of the
Corporation, or on its behalf, as may be necessary or desirable in connection
with the furtherance of the foregoing resolutions.
SEVENTH: The aforesaid action by the Board of Directors of the
Corporation was taken pursuant to authority and power contained in the Articles
of Incorporation of the Corporation.
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IN WITNESS WHEREOF, COREFUNDS, INC. has caused these presents
to be signed in its name and on its behalf by its President and its corporate
seal to be hereunto affixed and attested by its Secretary as of the 12th day of
August, 1996.
COREFUNDS, INC.
By: /s/ David G. Lee
---------------
President
[SEAL]
Attest:
/s/ James W. Jennings
- ---------------------
Secretary
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THE UNDERSIGNED, President of COREFUNDS, INC., who executed on
behalf of said corporation the foregoing Articles of Amendment to the Charter,
of which this certificate is made a part, hereby acknowledges, in the name and
on behalf of said corporation, the foregoing Articles of Amendment to the
Charter to be the corporate act of said corporation and further certifies that,
to the best of his knowledge, information and belief, the matters and facts set
forth therein with respect to the approval thereof are true in all material
respects, under the penalties of perjury.
/s/ David G. Lee
----------------
President
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OMNI CASH RESERVE FUND, INC.
BY-LAWS
ARTICLE I
STOCKHOLDERS
SECTION 1. Annual Meetings. The annual meeting of the stockholders of
the Corporation shall be held at the registered office of the Corporation, or at
such other place, within or without the State of Maryland, as may be determined
by the Board of Directors and as shall be designated in the notice of said
meeting, on such day during the month of [ ] and at such time as
shall be specified by the Board of Directors for the purpose of electing
directors and for the transaction of such other business as may properly be
brought before the meeting.
SECTION 2. Special Meetings. Special meetings of the stockholders for
any purpose or purposes, unless otherwise prescribed by statute or by the
Charter, may be held at any place, within or without the State of Maryland, and
may be called at any time by the Board of Directors or by the President, and
shall be called by the President or Secretary at the request in writing of a
majority of the Board or at the request in writing of stockholders entitled to
cast at least twenty-five (25) percent of the votes entitled to be cast at such
meeting. Such request shall state the purpose or purposes of the proposed
meeting.
SECTION 3. Notice of Meetings and Stockholder List. Written or printed
notice of the purpose or purposes and of the time and place of every meeting of
the stockholders shall be given by the Secretary of the Corporation to each
stockholder of record entitled to vote at the meeting, by placing such notice in
the mail at least ten days, but not more than ninety (90) days, and in any event
within the period prescribed by law, prior to the date named for the meeting
addressed to each stockholder at his address appearing on the books of the
Corporation or supplied by him to the Corporation for the purpose of notice. The
notice of every meeting of stockholders may be accompanied by a form of proxy
approved by the Board of Directors in favor of such actions or persons as the
Board of Directors may select.
At least five (5) days prior to each meeting of stockholders, the
officer or agent having charge of the share transfer books of the Corporation
shall make a complete list of stockholders entitled to vote at such meeting, in
alphabetical order with the address of and the number of shares held by each
stockholder.
SECTION 4. Record Date. The Board of Directors may fix a date not more
than ninety (90) days preceding the date of any meeting of stockholders, or the
date fixed for the payment of any dividend, or the date of the allotment of
rights or the date when any change or conversion or exchange of shares shall go
into effect, as a record date for the determination of stockholders entitled to
notice of, or to vote at, any such meeting (or any adjournment thereof) or
entitled to receive payment of any dividend, or to receive such allotment of
rights, or to exercise such
<PAGE>
rights, as the case may be. In such case, only stockholders of record at the
close of business on the date so fixed shall be entitled to vote, to receive
notice or receive rights, or to exercise rights, notwithstanding any subsequent
transfer on the books of the Corporation. The Board of Directors shall not close
the books of the Corporation against transfers of shares during the whole or any
part of such period. In the case of a meeting of stockholders, the record date
shall be fixed not less than ten (10) days prior to the date of the meeting.
SECTION 5. Quorum and Stockholder Action. Except as otherwise provided
by statute or by the Charter, the presence in person or by proxy of stockholders
of the Corporation entitled to cast at least a majority of the votes to be cast
shall constitute a quorum at each meeting of the stockholders, and all questions
shall be decided by majority vote of the shares so represented in person or by
proxy at the meeting and entitled to vote. In the absence of a quorum, the
stockholders present in person or by proxy, by majority vote and without notice
other than by announcement, may adjourn the meeting from time to time as
provided in Section 7 of this Article I until a quorum shall attend. The
stockholders present at any duly organized meeting may continue to do business
until adjournment, notwithstanding the withdrawal of enough stockholders to
leave less than a quorum.
SECTION 6. Organization. At every meeting of the stockholders, the
Chairman of the Board, if one has been selected and is present or, if not, the
President, or in the absence of the Chairman of the Board and the President, a
Vice President, or in the absence of the Chairman of the Board, the President
and all the Vice Presidents, a chairman chosen by the stockholders, shall act as
chairman; and the Secretary, or in his absence, an Assistant Secretary, or in
the absence of the Secretary and all the Assistant Secretaries, a person
appointed by the chairman, shall act as secretary.
SECTION 7. Adjournment. Any meeting of the stockholders may be adjourned
from time to time, without notice other than by announcement at the meeting at
which such adjournment is taken, and at any such adjourned meeting at which a
quorum shall be present any action may be taken that could have been taken at
the meeting originally called; provided that the meeting may not be adjourned to
a date more than the number of days after the original record date for the
meeting permitted by law, and if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the adjourned meeting.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. Election and Powers. The number of directors shall be fixed
from time to time by resolution of the Board of Directors adopted by a majority
of the directors then in office; provided, however, that the number of directors
shall in no event be less than three nor more than fifteen, unless there is no
stock of the Corporation outstanding, in which case the number of directors may
be less than three but shall not be less
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than one. The business affairs and property of the Corporation shall be managed
by the Board of Directors which may exercise all such powers of the Corporation
and do all such lawful acts and things as are not by statute or by the Charter
or by these By-Laws required to be exercised or done by the stockholders. The
members of the Board of Directors shall be elected by the stockholders at their
annual meeting and each Director shall hold office until the annual meeting next
after his election and until his successor shall have been duly chosen and
qualified, until he shall have resigned, or until he shall have been removed as
provided in Section 10 hereof.
SECTION 2. Regular Meetings. Regular meetings of the Board of Directors
may be held without notice on such dates as the Board may from time to time
determine.
SECTION 3. Special Meetings. Special meetings of the Board of Directors
shall be held whenever called by the Chairman of the Board, President or by a
majority of the directors either in writing or by vote at a meeting.
SECTION 4. Notice of Special Meetings. Notice of the place, day and hour
of every special meeting shall be delivered personally to each director or
mailed, telegraphed or cabled to his address on the books of the Corporation at
least one day before the meeting. It shall not be requisite to the validity of
any meeting of the Board of Directors that notice thereof shall have been given
to any director who is present thereat, or, if absent, waives notice thereof in
writing filed with the records of the meeting either before or after the holding
thereof.
SECTION 5. Place of Meetings. The Board of Directors may hold its
regular and special meetings at such place or places within or without the State
of Maryland as the Board may from time to time determine.
SECTION 6. Quorum and Board Action. Except as otherwise provided by
statute or by the Charter: (a) one-third (1/3) of the members of the Board of
Directors then in office, but not less than two directors if the number of
directors then in office shall be three or more, shall be necessary to
constitute a quorum for the transaction of business at every meeting of the
Board; (b) the action of a majority of the directors present at a meeting at
which a quorum is present shall be the action of the Board; and (c) if at any
meeting there be less than a quorum present, a majority of those present may
adjourn the meeting from time to time, but not for a period greater than thirty
(30) days at any one time, without notice other than by announcement at the
meeting, until a quorum shall attend. At any such adjourned meeting at which a
quorum shall be present, any business may be transacted which might have been
transacted at the meeting as originally scheduled.
SECTION 7. Chairman. The Board of Directors may at any time appoint one
of its members as Chairman of the Board, who shall serve at the pleasure of the
Board and who shall perform and execute such duties and powers as may be
conferred upon or assigned to him by the Board or these By-Laws, but who shall
not by reason of performing and executing these duties and powers be deemed an
officer or employee of the Corporation.
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SECTION 8. Organization. At every meeting of the Board of Directors, the
Chairman of the Board, if one has been selected and is present, and, if not, the
President, or in the absence of the Chairman of the Board and the President, a
Vice President, or in the absence of the Chairman of the Board, the President
and all the Vice Presidents, a chairman chosen by a majority of the directors
present, shall preside; and the Secretary, or in his absence, an Assistant
Secretary, or in the absence of the Secretary and all the Assistant Secretaries,
a person appointed by the chairman, shall act as secretary.
SECTION 9. Vacancies. Any vacancy occurring by reason of any increase in
the number of directors may be filled by a majority of the entire Board of
Directors. Any vacancy occurring for any other cause may be filled by a majority
of the remaining members of the Board of Directors, whether or not these members
constitute a quorum under Section 6 of this Article. Any vacancy occurring by
reason of removal of a director may be filled by the stockholders. Any director
chosen to fill a vacancy shall hold office until the next annual meeting of
stockholders and until his successor shall have been duly elected and qualified.
SECTION 10. Removal. At any meeting of the stockholders called for that
purpose, any director may, by vote of stockholders entitled to cast a majority
of the votes, be removed from office, with or without cause, and another may be
elected in the place of the person so removed, to serve for the remainder of his
term.
SECTION 11. Resignations. Any director may resign at any time by giving
written notice to the Board of Directors, the President or the Secretary. Any
such resignation shall take effect at the time of the receipt of such notice or
at any later time specified therein; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
SECTION 12. Committees. The Board of Directors may, by resolution passed
by a majority of the entire Board, designate one or more committees of the
Board, each consisting of two (2) or more directors. To the extent provided in
such resolution, and permitted by law, such committee or committees shall have
and may exercise the powers of the Board of Directors in the management of the
business and affairs of the Corporation and may authorize the seal of the
Corporation to be affixed to all papers which may require it. Such committee or
committees shall have such name or names and such rules with respect to what
shall constitute a quorum as may be determined from time to time by resolution
adopted by the Board of Directors. Each committee shall keep regular minutes of
its meetings and report the same to the Board of Directors when required. The
members of a committee present at any meeting, whether or not they constitute a
quorum, may appoint a director to act in the place of an absent member.
SECTION 13. Telephone Conference. Members of the Board of Directors or
any committee thereof may participate in a meeting of the Board or such
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other
at the same time, and participation by such means shall constitute presence in
person at the meeting.
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SECTION 14. Compensation of Directors. Any director, whether or not he
is a salaried officer, employee or agent of the Corporation, may be compensated
for his services as director or as a member of a committee, or as Chairman of
the Board or chairman of a committee, and in addition may be reimbursed for
transportation and other expenses, all in such manner and amounts as the
directors may from time to time determine.
ARTICLE III
OFFICERS
SECTION 1. Number. The officers of the Corporation shall be a President,
a Secretary, and a Treasurer, and may include one or more Vice Presidents, one
or more Assistant Secretaries, one or more Assistant Treasurers, and such other
officers as the Board of Directors may from time to time determine. Any officer
may hold more than one office in the Corporation, except that an officer may not
serve concurrently as both the President and a Vice President.
SECTION 2. Election and Term of Office. The officers of the Corporation
shall be elected by the Board of Directors and, subject to earlier termination
of office, each officer shall hold office for one year and until his successor
shall have been elected and qualified.
SECTION 3. Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors, the President, or the Secretary of the
Corporation. Any such resignation shall take effect at the date of the receipt
of such notice or at any later time specified therein; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 4. Removal. If the Board of Directors in its judgment finds that
the best interests of the Corporation will be served, the Board may remove any
officer of the Corporation at any time.
SECTION 5. President. The President shall be the chief executive officer
of the Corporation and shall have general supervision over the business and
operations of the Corporation, subject, however, to the control of the Board of
Directors. He, or such persons as he shall designate, shall sign, execute,
acknowledge, verify, deliver and accept, in the name of the Corporation, deeds,
mortgages, bonds, contracts and other instruments authorized by the Board of
Directors, except in the case where the signing, execution, acknowledgement,
verification, delivery or acceptance thereof shall be delegated by the Board to
some other officer or agent of the Corporation; and, in general, he shall have
general executive powers as well as other powers and duties as from time to time
may be conferred upon or assigned to him by the Board.
SECTION 6. The Vice Presidents. In the absence or disability of the
President, or when so directed by the President, any Vice President designated
by the Board of Directors may perform any or all of the duties of the President,
and, when so acting, shall have all the powers of, and be subject to all the
restrictions upon, the President; provided, however, that no Vice President
shall act as a member of or as chairman of any
5
<PAGE>
committee of which the President is a member or chairman by designation of
ex-officio, except when designated by the Board. Each Vice President shall
perform such other duties as from time to time may be conferred upon or assigned
to him by the Board or the President.
SECTION 7. The Secretary. The Secretary shall record all the votes of
the stockholders and of the directors and the minutes of the meetings of the
stockholders and of the Board of Directors in a book or books to be kept for
that purpose; he shall see that notices of meetings of the stockholders and the
Board of Directors are given and that all records and reports are properly kept
and filed by the Corporation as required by law; he shall be the custodian of
the seal of the Corporation and shall see that it is affixed to all documents to
be executed on behalf of the Corporation under its seal, provided that in lieu
of affixing the corporate seal to any document, it shall be sufficient to meet
the requirements of any law, rule or regulation relating to a corporate seal to
affix the word "(SEAL)" adjacent to the signature of the authorized officer of
the Corporation; and, in general, he shall perform all duties incident to the
office of Secretary, and such other duties as from time to time may be conferred
upon or assigned to him by the Board or the President.
SECTION 8. Assistant Secretaries. In the absence or disability of the
Secretary, or when so directed by the Secretary, any Assistant Secretary may
perform any or all of the duties of the Secretary, and, when so acting, shall
have all the powers of, and be subject to all restrictions upon, the Secretary.
Each Assistant Secretary shall perform such other duties as from time to time
may be conferred upon or assigned to him by the Board of Directors, the
President or the Secretary.
SECTION 9. The Treasurer. Subject to the provisions of any contract
which may be entered into with any custodian pursuant to authority granted by
the Board of Directors, the Treasurer shall have charge of all receipts and
disbursements of the Corporation and shall have or provide for the custody of
its funds and securities; he shall have full authority to receive and give
receipts for all money due and payable to the Corporation, and to endorse
checks, drafts and warrants, in its name and on its behalf, and to give full
discharge for the same; he shall deposit all funds of the Corporation, except
such as may be required for current use, in such banks or other places of
deposit as the Board of Directors may from time to time designate; and, in
general, he shall perform all duties incident to the office of Treasurer and
such other duties as from time to time may be conferred upon or assigned to him
by the Board or the President.
SECTION 10. Assistant Treasurers. In the absence or disability of the
Treasurer, or when so directed by the Treasurer, any Assistant Treasurer may
perform any or all of the duties of the Treasurer, and, when so acting, shall
have all the powers of, and be subject to all the restrictions upon, the
Treasurer. Each Assistant Treasurer shall perform all such other duties as from
time to time may be conferred upon or assigned to him by the Board of Directors,
the President or the Treasurer.
SECTION 11. Compensation of Officers. The compensation of all officers
shall be fixed from time to time by the Board of Directors, or any committee or
officer authorized by the Board so to do. No officer shall be
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precluded from receiving such compensation by reason of the fact that he is
also a director of the Corporation.
ARTICLE IV
STOCK
SECTION 1. Certificates. Each stockholder shall be entitled upon written
request to a stock certificate or certificates, certifying the number and kind
of full shares owned by him, signed by the President, a Vice President or the
Chairman of the Board and countersigned by the Secretary, an Assistant
Secretary, the Treasurer or an Assistant Treasurer, which signatures may be
either manual or facsimile signatures, and sealed with the seal of the
Corporation, which seal may be either facsimile or any other form of seal. Stock
certificates shall be in such form, not inconsistent with law or with the
Charter, as shall be approved by the Board of Directors.
SECTION 2. Transfer of Shares. Transfers of shares shall be made on the
books of the Corporation at the direction of the person named on the
Corporation's books or named in the certificate or certificates for such shares
(if issued), or by his attorney lawfully constituted in writing, upon surrender
of such certificate or certificates (if issued) properly endorsed, together with
a proper request for redemption, to the Corporation's transfer agent, with such
evidence of the authenticity of such transfer, authorization and such other
matters as the Corporation or its agents may reasonably require, and subject to
such other reasonable terms and conditions as may be required by the Corporation
or its agents; or, if the Board of Directors shall by resolution so provide,
transfer of shares may be made in any other manner provided by law.
SECTION 3. Transfer Agents and Registrars. The Corporation may have one
or more Transfer Agents and one or more Registrars of its stock, whose
respective duties the Board of Directors may, from time to time, define. No
certificate of stock shall be valid until countersigned by a Transfer Agent, if
the Corporation shall have a Transfer Agent, or until registered by a Registrar,
if the Corporation shall have a Registrar. The duties of Transfer Agent and
Registrar may be combined.
SECTION 4. Mutilated, Lost or Destroyed Certificates. The Board of
Directors, by standing resolution or by resolutions with respect to particular
cases, may authorize the issue of a new stock certificate in lieu of any stock
certificate lost, destroyed or mutilated, upon such terms and conditions as the
Board may direct. The Board may in its discretion refuse to issue such a new
certificate, unless ordered to do so by a court of competent jurisdiction.
SECTION 5. Stock Ledgers. The Corporation shall not be required to keep
original or duplicate stock ledgers at its registered office in the City of
Baltimore, Maryland, but stock ledgers shall be kept at the respective offices
of the Transfer Agents of the Corporation's capital stock.
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ARTICLE V
SEAL
The seal of the Corporation shall be in such form as the Board of
Directors shall prescribe.
ARTICLE VI
SUNDRY PROVISIONS
SECTION 1. Amendments. (a) By Stockholders. By-Laws may be adopted,
altered, amended or repealed in the manner provided in Section 5 of Article I
hereof at any annual or special meeting of the stockholders.
(b) By Directors. By-Laws may be adopted, altered, amended or
repealed in the manner provided in Section 6 of Article II hereof by the Board
of Directors at any regular or special meeting of the Board.
SECTION 2. Indemnification of Directors and Officers.
(a) Indemnification. Any person who was or is a party or is threatened to be
made a party in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is a current or former director or officer of the Corporation,
or is or was serving while a director or officer of the Corporation at the
request of the Corporation as a director, officer, partner, trustee, employee,
agent or fiduciary of another corporation, partnership, joint venture, trust,
enterprise or employee benefit plan, shall be indemnified by the Corporation
against judgments, penalties, fines, excise taxes, settlements and reasonable
expenses (including attorney's fees) actually incurred by such person in
connection with such action, suit or proceeding to the full extent permissible
under the General Laws of the State of Maryland and the Investment Company Act
of 1940, as such statutes are now or hereafter in force, except that such
indemnity shall not protect any such person against any liability to the
Corporation or any stockholder thereof to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
(b) Advances. Any current or former director or officer of the
Corporation claiming indemnification within the scope of this Section 2 shall be
entitled to advances from the Corporation for payment of the reasonable expenses
incurred by him in connection with proceedings to which he is a party in the
manner and to the full extent permissible under the General Laws of the State of
Maryland and the Investment Company Act of 1940, as such statutes are now or
hereafter in force.
(c) Procedure. On the request of any current or former director or
officer requesting indemnification or an advance under this Section 2, the Board
of Directors shall determine, or cause to be determined, in a manner consistent
with the General Laws of the State of Maryland and the Investment Company Act of
1940, as such statutes are now or hereafter in force, whether the standards
required by this Section 2 have been met.
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(d) Other Rights. The indemnification provided by this Section 2
shall not be deemed exclusive of any other right, in respect of indemnification
or otherwise, to which those seeking such indemnification may be entitled under
any insurance or other agreement, vote of shareholders or disinterested
directors or otherwise, both as to action by a director or officer of the
Corporation in his official capacity and as to action by such person in another
capacity while holding such office or position, and shall continue as to a
person who has ceased to be a director or officer and shall inure to the benefit
of the heirs, executors and administrators of such a person.
COREFUNDS, INC.
BY-LAWS
ARTICLE I
STOCKHOLDERS
SECTION 1. Annual Meetings. The annual meeting of the stockholders of
the Corporation shall be held on such date and at such time as shall be set by
appropriate resolution of the Board of Directors for the purpose of selecting
Directors, and for transaction of such other business as may properly be brought
before the meeting; provided, however, that no such annual meeting shall be
required in any year in which none of the following is required to be acted on
by stockholders under the Investment Company Act of 1940: (a) election of
directors; (b) approval of the investment advisory agreement; (c) ratification
of the selection of independent public accountants; and (d) approval of a
distribution agreement.
SECTION 2. Special Meetings. Special meetings of the stockholders for
any purpose or purposes, unless otherwise prescribed by statute or by the
Charter, may be held at any place, within or without the State of Maryland, and
may be called at any time by the Board of Directors or by the President, and
shall be called by the President or Secretary at the request in writing of a
majority of the Board or at the request in writing of stockholders entitled to
cast at least twenty-five (25) percent of the votes entitled to be cast at such
meeting. Such request shall state the purpose or purposes of the proposed
meeting.
SECTION 3. Notice of Meetings and Stockholder List. Written or printed
notice of the purpose or purposes and of the time and place of every meeting of
the stockholders shall be given by the Secretary of the Corporation to each
stockholder of record entitled to vote at the meeting, by placing such notice in
the mail at least ten days, but not more than ninety (90) days, and in any event
within the period prescribed by law, prior to the date named for the meeting
addressed to each stockholder at his address appearing on the books of the
Corporation or supplied by him to the Corporation for the purpose of notice. The
notice of every meeting of stockholders may be accompanied by a form of proxy
approved by the Board of Directors in favor of such actions or persons as the
Board of Directors may select.
At least five (5) days prior to each meeting of stockholders, the
officer or agent having charge of the share transfer books of the Corporation
shall make a complete list of
<PAGE>
stockholders entitled to vote at such meeting, in alphabetical order with the
address of and the number of shares held by each stockholder.
SECTION 4. Record Date. The Board of Directors may fix a date not more
than ninety (90) days preceding the date of any meeting of stockholders, or the
date fixed for the payment of any dividend, or the date of the allotment of
rights or the date when any change or conversion or exchange of shares shall go
into effect, as a record date for the determination of stockholders entitled to
notice of, or to vote at, any such meeting (or any adjournment thereof) or
entitled to receive payment of any dividend, or to receive such allotment of
rights, or to exercise such rights, as the case may be. In such case, only
stockholders of record at the close of business on the date so fixed shall be
entitled to vote, to receive notice or receive rights, or to exercise rights,
notwithstanding any subsequent transfer on the books of the Corporation. The
Board of Directors shall not close the books of the Corporation against
transfers of shares during the whole or any part of such period. In the case of
a meeting of stockholders, the record date shall be fixed not less than ten (10)
days prior to the date of the meeting.
SECTION 5. Quorum and Stockholder Action. Except as otherwise provided
by statute or by the Charter, the presence in person or by proxy of stockholders
of the Corporation entitled to cast at least a majority of the votes to be cast
shall constitute a quorum at each meeting of the stockholders, and all questions
shall be decided by majority vote of the shares so represented in person or by
proxy at the meeting and entitled to vote. In the absence of a quorum, the
stockholders present in person or by proxy, by majority vote and without notice
other than by announcement, may adjourn the meeting from time to time as
provided in Section 7 of this Article I until a quorum shall attend. The
stockholders present at any duly organized meeting may continue to do business
until adjournment, notwithstanding the withdrawal of enough stockholders to
leave less than a quorum.
SECTION 6. Organization. At every meeting of the stockholders, the
Chairman of the Board, if one has been selected and is present or, if not, the
President, or in the absence of the Chairman of the Board and the President, a
Vice President, or in the absence of the Chairman of the Board, the President
and all the Vice Presidents, a chairman chosen by the stockholders, shall act as
chairman; and the Secretary, or in his absence, an Assistant Secretary, or in
the absence of the Secretary and all the Assistant Secretaries, a person
appointed by the chairman, shall act as secretary.
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SECTION 7. Adjournment. Any meeting of the stockholders may be adjourned
from time to time, without notice other than by announcement at the meeting at
which such adjournment is taken, and at any such adjourned meeting at which a
quorum shall be present any action may be taken that could have been taken at
the meeting originally called; provided that the meeting may not be adjourned to
a date more than the number of days after the original record date for the
meeting permitted by law, and if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the adjourned meeting.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. Election and Powers. The number of directors shall be fixed
from time to time by resolution of the Board of Directors adopted by a majority
of the directors then in office; provided, however, that the number of directors
shall in no event be less than three nor more than fifteen, unless there is no
stock of the Corporation outstanding, in which case the number of directors may
be less than three but shall not be less than one. The business affairs and
property of the Corporation shall be managed by the Board of Directors which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Charter or by these By-Laws required to
be exercised or done by the stockholders. The members of the Board of Directors
shall be elected by the stockholders at their annual meeting and each Director
shall hold office until the annual meeting next after his election and until his
successor shall have been duly chosen and qualified, until he shall have
resigned, or until he shall have been removed as provided in Section 10 hereof.
SECTION 2. Regular Meetings. Regular meetings of the Board of Directors
may be held without notice on such dates as the Board may from time to time
determine.
SECTION 3. Special Meetings. Special meetings of the Board of Directors
shall be held whenever called by the Chairman of the Board, President or by a
majority of the directors either in writing or by vote at a meeting.
SECTION 4. Notice of Special Meetings. Notice of the place, day and hour
of every special meeting shall be delivered personally to each director or
mailed, telegraphed or cabled to his address on the books of the Corporation at
least one day before the meeting. It shall not be requisite to the
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validity of any meeting of the Board of Directors that notice thereof shall
have been given to any director who is present thereat, or, if absent, waives
notice thereof in writing filed with the records of the meeting either before or
after the holding thereof.
SECTION 5. Place of Meetings. The Board of Directors may hold its
regular and special meetings at such place or places within or without the State
of Maryland as the Board may from time to time determine.
SECTION 6. Quorum and Board Action. Except as otherwise provided by
statute or by the Charter: (a) one-third (1/3) of the members of the Board of
Directors then in office, but in no case less than two (2) directors, shall be
necessary to constitute a quorum for the transaction of business at every
meeting of the Board; (b) the action of a majority of the directors present at a
meeting at which a quorum is present shall be the action of the Board; and
(c) if at any meeting there be less than a quorum present, a majority of those
present may adjourn the meeting from time to time, but not for a period greater
than thirty (30) days at any one time, without notice other than by announcement
at the meeting, until a quorum shall attend. At any such adjourned meeting at
which a quorum shall be present, any business may be transacted which might have
been transacted at the meeting as originally scheduled.
SECTION 7. Chairman. The Board of Directors may at any time appoint one
of its members as Chairman of the Board, who shall serve at the pleasure of the
Board and who shall perform and execute such duties and powers as may be
conferred upon or assigned to him by the Board or these By-Laws, but who shall
not by reason of performing and executing these duties and powers be deemed an
officer or employee of the Corporation.
SECTION 8. Organization. At every meeting of the Board of Directors, the
Chairman of the Board, if one has been selected and is present, and, if not, the
President, or in the absence of the Chairman of the Board and the President, a
Vice President, or in the absence of the Chairman of the Board, the President
and all the Vice Presidents, a chairman chosen by a majority of the directors
present, shall preside; and the Secretary, or in his absence, an Assistant
Secretary, or in the absence of the Secretary and all the Assistant Secretaries,
a person appointed by the chairman, shall act as secretary.
SECTION 9. Vacancies. Any vacancy occurring by reason of any increase in
the number of directors may be filled by a majority of the entire Board of
Directors. Any vacancy occurring for any other cause may be filled by a majority
of the
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remaining members of the Board of Directors, whether or not these members
constitute a quorum under Section 6 of this Article. Any vacancy occurring by
reason of removal of a director may be filled by the stockholders. Any director
chosen to fill a vacancy shall hold office until the next annual meeting of
stockholders and until his successor shall have been duly elected and qualified.
SECTION 10. Removal. At any meeting of the stockholders called for that
purpose, any director may, by vote of stockholders entitled to cast a majority
of the votes, be removed from office, with or without cause, and another may be
elected in the place of the person so removed, to serve for the remainder of his
term.
SECTION 11. Resignations. Any director may resign at any time by giving
written notice to the Board of Directors, the President or the Secretary. Any
such resignation shall take effect at the time of the receipt of such notice or
at any later time specified therein; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
SECTION 12. Committees. The Board of Directors may, by resolution passed
by a majority of the entire Board, designate one or more committees of the
Board, each consisting of two (2) or more directors. To the extent provided in
such resolution, and permitted by law, such committee or committees shall have
and may exercise the powers of the Board of Directors in the management of the
business and affairs of the Corporation and may authorize the seal of the
Corporation to be affixed to all papers which may require it. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors. Each committee shall keep
regular minutes of its meetings and report the same to the Board of Directors
when required. The members of a committee present at any meeting, whether or not
they constitute a quorum, may appoint a director to act in the place of an
absent member.
SECTION 13. Telephone Conference. Members of the Board of Directors or
any committee thereof may participate in a meeting of the Board or such
committee by means of a conference telephone or similar communications equipment
by means of which a11 persons participating in the meeting can hear each other
at the same time, and participation by such means shall constitute presence in
person at the meeting.
SECTION 14. Compensation of Directors. Any director, whether or not he
is a salaried officer, employee or agent of the Corporation, may be compensated
for his services as director or
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as a member of a committee, or as Chairman of the Board or chairman of a
committee, and in addition may be reimbursed for transportation and other
expenses, all in such manner and amounts as the directors may from time to time
determine.
ARTICLE III
OFFICERS
SECTION 1. Number. The officers of the Corporation shall be a President,
a Secretary, and a Treasurer, and may include one or more Vice Presidents, one
or more Assistant Secretaries, one or more Assistant Treasurers, and such other
officers as the Board of Directors may from time to time determine. Any officer
may hold more than one office in the Corporation, except that an officer may not
serve concurrently as both the President and a Vice President.
SECTION 2. Election and Term of Office. The officers of the Corporation
shall be elected by the Board of Directors and, subject to earlier termination
of office, each officer shall hold office for one year and until his successor
shall have been elected and qualified.
SECTION 3. Resignations. Any officer may resign at any time by givlag
written notice to the Board of Directors, the President, or the Secretary of the
Corporation. Any such resignation shall take effect at the date of the receipt
of such notice or at any later time specified therein; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 4. Removal. If the Board of Directors in its judgment finds that
the best interests of the Corporation will be served, the Board may remove any
officer of the Corporation at any time.
SECTION 5. President. The President shall be the chief executive officer
of the Corporation and shall have general supervision over the business and
operations of the Corporation, subject, however, to the control of the Board of
Directors. He, or such persons as he shall designate, shall sign, execute,
acknowledge, verify, deliver and accept, in the name of the Corporation, deeds,
mortgages, bonds, contracts and other instruments authorized by the Board of
Directors, except in the case where the signing, execution, acknowledgement,
verification, delivery or acceptance thereof shall be delegated by the Board to
some other officer or agent of the Corporation; and, in general, he shall have
general executive powers as well as other powers and duties as from time to time
may be conferred upon or assigned to him by the Board.
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SECTION 6. The Vice Presidents. In the absence or disability of the
President, or when so directed by the President, any Vice President designated
by the Board of Directors may perform any or all of the duties of the President,
and, when so acting, shall have all the powers of, and be subject to all the
restrictions upon, the President; provided, however, that no Vice President
shall act as a member of or as chairman of any committee of which the President
is a member or chairman by designation of ex-officio, except when designated by
the Board. Each Vice President shall perform such other duties as from time to
time may be conferred upon or assigned to him by the Board or the President.
SECTION 7. The Secretary. The Secretary shall record all the votes of
the stockholders and of the directors and the minutes of the meetings of the
stockholders and of the Board of Directors in a book or books to be kept for
that purpose; he shall see that notices of meetings of the stockholders and the
Board of Directors are given and that all records and reports are properly kept
and filed by the Corporation as required by law; he shall be the custodian of
the seal of the Corporation and shall see that it is affixed to all documents to
be executed on behalf of the Corporation under its seal, provided that in lieu
of affixing the corporate seal to any document, it shall be sufficient to meet
the requirements of any law, rules or regulation relating to a corporate seal to
affix the word ("SEAL") adjacent to the signature of the authorized officer of
the Corporation; and, in general, he shall perform all duties incident to the
office of Secretary, and such other duties as from time to time may be conferred
upon or assigned to him by the Board or the President.
SECTION 8. Assistant Secretaries. In the absence or disability of the
Secretary, or when so directed by the Secretary, any Assistant Secretary may
perform any or all of the duties of the Secretary, and, when so acting, shall
have all the powers of, and be subject to all restrictions upon, the Secretary.
Each Assistant Secretary shall perform such other duties as from time to time
may be conferred upon or assigned to him by the Board of Directors, the
President or the Secretary.
SECTION 9. The Treasurer. Subject to the provisions of any contract
which may be entered into with any custodian pursuant to authority granted by
the Board of Directors, the Treasurer shall have charge of all receipts and
disbursements of the Corporation and shall have or provide for the custody of
its funds and securities; he shall have full authority to receive and give
receipts for all money due and payable to the Corporation, and to endorse
checks, drafts and warrants, in its name and on its behalf, and to give full
discharge for the same; he shall
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deposit all funds of the Corporation, except such as may be required for current
use, in such banks or other places of deposit as the Board of Directors may from
time to time designate; and, in general, he shall perform all duties incident to
the office of Treasurer and such other duties as from time to time may be
conferred upon or assigned to him by the Board or the President.
SECTION 10. Assistant Treasurers. In the absence or disability of the
Treasurer, or when so directed by the Treasurer, any Assistant Treasurer may
perform any or all of the duties of the Treasurer, and, when so acting, shall
have all the powers of, and be subject to all the restrictions upon, the
Treasurer. Each Assistant Treasurer shall perform all such other duties as from
time to time may be conferred upon or assigned to him by the Board of Directors,
the President or the Treasurer.
SECTION 11. Compensation of Officers. The compensation of all officers
shall be fixed from time to time by the Board of Directors, or any committee or
officer authorized by the Board so to do. No officer shall be precluded from
receiving such compensation by reason of the fact that he is also a director of
the Corporation.
ARTICLE IV
STOCK
SECTION 1. Certificates. Each stockholder shall be entitled, upon
written request, to a stock certificate or certificates, certifying the number
and kind of full shares owned by him, signed by the President, a Vice President
or the Chairman of the Board and countersigned by the Secretary, an Assistant
Secretary, the Treasurer or an Assistant Treasurer, which signatures may be
either manual or facsimile signatures, and sealed with the seal of the
Corporation, which seal may be either facsimile or any other form of seal. Stock
certificates shall be in such form, not inconsistent with law or with the
Charter, as shall be approved by the Board of Directors.
SECTION 2. Transfers of Shares. Transfers of shares shall be made on the
books of the Corporation at the direction of the person named on the
Corporation's books or named in the certificate or certificates for such shares
(if issued, or by his attorney lawfully constituted in writing, upon surrender
of such certificate or certificates (if issued) properly endorsed, together with
a proper request for redemption, to the Corporation's transfer agent, with such
evidence of the authenticity of such transfer, authorization and such other
matters as the Corporation or its agents may reasonably require,
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and subject to such other reasonable terms and conditions as may be required by
the Corporation or its agents; or, if the Board of Directors shall by resolution
so provide, transfer of shares may be made in any other manner provided by law.
SECTION 3. Transfer Agents and Registrars. The Corporation may have one
or more Transfer Agents and one or more Registrars of its stock, whose
respective duties the Board of Directors may, from time to time, define. No
certificate of stock shall be valid until countersigned by a Transfer Agent, if
the Corporation shall have a Transfer Agent, or until registered by a Registrar,
if the Corporation shall have a Registrar. The duties of Transfer Agent and
Registrar may be combined.
SECTION 4. Mutilated, Lost or Destroyed Certificates. The Board of
Directors, by standing resolution or by resolutions with respect to particular
cases, may authorize the issue of a new stock certificate in lieu of any stock
certificate lost, destroyed or mutilated, upon such terms and conditions as the
Board may direct. The Board may in its discretion refuse to issue such a new
certificate, unless ordered to do so by a court of competent jurisdiction.
SECTION 5. Stock Ledgers. The Corporation shall not be required to keep
original or duplicate stock ledgers at its registered office in the City of
Baltimore, Maryland, but stock ledgers shall be kept at the respective offices
of the Transfer Agents of the Corporation's capital stock.
ARTICLE V
SEAL
The seal of the Corporation shall be in such form as the Board of
Directors shall prescribe.
ARTICLE VI
SUNDRY PROVISIONS
SECTION 1. Amendments. (a) By Stockholders. By-Laws may be adopted,
altered, amended or repealed in the manner provided in Section 5 of article I
hereof at any annual or special meeting of the stockholders.
(b) By Directors. By-Laws may be adopted, altered, amended or repealed
in the manner provided in Section 6 of Article II hereof by the Board of
Directors at any regular or special meeting of the Board.
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SECTION 2. Indemnification of Directors and Officers. (a)
Indemnification. Any person who was or is a party or is threatened to be made a
party in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is a current or former director or officer of the Corporation,
or is or was serving while a director or officer of the Corporation at the
request of the Corporation as a director, officer, partner, trustee, employee,
agent or fiduciary of another corporation, partnership, joint venture, trust,
enterprise or employee benefit plan, shall be indemnified by the Corporation
against judgments, penalties, fines, excise taxes, settlements and reasonable
expenses (including attorney's fees) actually incurred by such person in
connection with such action, suit or proceeding to the full extent permissible
under the General Laws of the State of Maryland and the Investment Company Act
of 1940, as such statutes are now or hereafter in force, except that such
indemnity shall not protect any such person against any liability to the
Corporation or any stockholder thereof to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
(b) Advances. Any current or former director or officer of the
Corporation claiming indemnification within the scope of this Section 2 shall be
entitled to advances from the Corporation for payment of the reasonable expenses
incurred by him in connection with proceedings to which he is a party in the
manner and to the full extent permissible under the General Laws of the State of
Maryland and the Investment Company Act of 1940, as such statutes are now or
hereafter in force.
(c) Procedure. On the request of any current or former director or
officer requesting indemnification or an advance under this Section 2, the Board
of Directors shall determine, or cause to be determined, in a manner consistent
with the General Laws of the State of Maryland and the Investment Company Act of
1940, as such statutes are now or hereafter in force, whether the standards
required by this Section 2 have been met.
(d) Other Rights. The indemnification provided by this Section 2 shall
not be deemed exclusive of any other right, in respect of indemnification or
otherwise, to which those seeking such indemnification may be entitled under any
insurance or other agreement, vote of shareholders or disinterested directors or
otherwise, both as to action by a director or officer of the Corporation in his
official capacity and as to action by such person in another capacity while
holding such office or position, and shall continue as to a person who has
ceased to be a director or officer and shall inure to the benefit of the heirs,
executors and administrators of such a person.
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COREFUNDS, INC.
BY-LAWS
(As Amended September 3, 1991)
ARTICLE I
STOCKHOLDERS
SECTION 1. Annual Meetings. An annual meeting of the stockholders of the
Corporation shall not be required to be held in any year in which stockholders
are not required to elect directors under the Investment Company Act of 1940
(the "1940 Act"). If the Corporation is required by the 1940 Act to hold a
meeting to elect directors, the meeting shall be designated as the Annual
Meeting of stockholders for that year and shall be held within 120 days after
the occurrence of an event requiring the election of directors. The Board of
Directors may, in its discretion, hold a meeting to be designated as the Annual
Meeting of stockholders on a date within the thirty-one day period, September 15
through October 15, in any year where an election of directors by stockholders
is not required under the 1940 Act. The date of an Annual Meeting shall be set
by appropriate resolution of the Board of Directors, and stockholders shall vote
on the election of directors and transact any other business as may be properly
brought before the Annual Meeting.
SECTION 2. Special Meetings. Special meetings of the stockholders for
any purpose or purposes, unless otherwise prescribed by statute or by the
Charter, may be held at any place, within or without the State of Maryland, and
may be called at any time by the Board of Directors or by the President, and
shall be called by the President or Secretary at the request in writing of a
majority of the Board or at the request in writing of stockholders entitled to
cast at least ten (10) percent of the votes entitled to be cast at such meeting.
Such request shall state the purpose or purposes of the proposed meeting.
SECTION 3. Notice of Meetings and Stockholder List. Written or printed
notice of the purpose or purposes and of the time and place of every meeting of
the stockholders shall be given by the Secretary of the Corporation to each
stockholder of record entitled to vote at the meeting, by placing such notice in
the mail at least ten days, but not more than ninety (90) days, and in any event
within the period prescribed by law, prior to the date named for the meeting
addressed to each stockholder at his address appearing on the books of the
Corporation or supplied by him to the corporation for the purpose of notice. The
notice of every meeting of stockholders may be accompanied by a form of proxy
approved by the Board of Directors in favor of such actions or persons as the
Board of Directors may select.
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At least five (5) days prior to each meeting of stockholders, the
officer or agent having charge of the share transfer books of the Corporation
shall make a complete list of stockholders entitled to vote at such meeting, in
alphabetical order with the address of and the number of shares held by each
stockholder.
SECTION 4. Record Date. The Board of Directors may fix a date not more
than ninety (90) days preceding the date of any meeting of stockholders or the
date fixed for the payment of any dividend, or the date of the allotment of
rights or the date when any change or conversion or exchange of shares shall go
into effect, as a record date for the determination of stockholders entitled to
notice of, or to vote at, any such meeting or any adjournment thereof, or
entitled to receive payment of any dividend, or to receive such allotment of
rights, or to exercise such rights, as the case may be. In such case, only
stockholders of record at the close of business on the date so fixed shall be
entitled to vote, to receive notice or receive rights, or to exercise rights,
notwithstanding any subsequent transfer on the books of the Corporation. The
Board of Directors shall not close the books of the Corporation against
transfers of shares during the whole or any part of such period. In the case of
a meeting of stockholders, the record date shall be fixed not less than ten (10)
days prior to the date of the meeting.
SECTION 5. Ouorum and Stockholder Action. Except as otherwise provided
by statute or by the Charter, the presence in person or by proxy of stockholders
of the Corporation entitled to cast at least a majority of the votes to be cast
shall constitute a quorum at each meeting of the stockholders, and all questions
shall be decided by majority vote of the shares so represented in person or by
proxy at the meeting and entitled to vote. In the case of a quorum, the
stockholders present in person or by proxy, by majority vote and without notice
other than by announcement, may adjourn the meeting from time to time as
provided in Section 7 of this Article I until a quorum shall attend. The
stockholders present at any duly organized meeting may continue to do business
until adjournment, notwithstanding the withdrawal of enough stockholders to
leave less than a quorum.
SECTION 6. Organization. At every meeting of the stockholders, the
Chairman of the Board, if one has been selected and is present or, if not, the
President, or in the absence of the Chairman of the Board, and the President, a
Vice President, or in the absence of the Chairman of the Board, the President
and all the Vice Presidents, a Chairman chosen by the stockholders, shall act as
Chairman and the Secretary, or in his absence, an Assistant Secretary, or in the
absence of the Secretary and all the Assistant Secretaries, a person appointed
by the Chairman, shall act as Secretary.
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SECTION 7. Adjournment. Any meeting of the stockholders may be adjourned
from time to time, without notice other than by announcement at the meeting at
which such adjournment is taken, and at any such adjourned meeting at which
quorum shall be present any action may be taken that could have been taken at
the meeting originally called; provided that the meeting may not be adjourned to
a date more than the number of days after the original record date for the
meeting permitted by law, and if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the adjourned meeting.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. Election and Powers. The number of directors shall be fixed
from time to time by resolution of the Board of Directors adopted by a majority
of the directors then in office; provided, however, that the number of directors
shall in no event be less than three nor more than fifteen, unless there is no
stock of the Corporation outstanding, in which case the number of directors may
be less than three but shall not be less than one. The business affairs and
property of the Corporation shall be managed by the Board of Directors which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Charter or by these By-Laws required to
be exercised or done by the stockholders. The members of the Board of Directors
shall be elected by the stockholders at their annual meeting and each Director
shall hold office until the annual meeting next after his election and until his
successor shall have been duly chosen and qualified, until he shall have
resigned, or until he shall have been removed as provided in Section 10 hereof.
SECTION 2. Regular Meetings. Regular meetings of the Board of Directors
may be held without notice on such dates as the Board may from time to time
determine.
SECTION 3. Special Meetings. Special meetings of the Board of Directors
shall be held whenever called by the Chairman of the Board, President or by a
majority of the Directors either in writing or by vote at a meeting.
SECTION 4. Notice of Special Meetings. Notice of the place, day and hour
of every special meeting shall be delivered personally to each Director or
mailed, telegraphed or cabled to his address on the books of the Corporation at
least one day before the meeting. It shall not be requisite to the validity of
any meeting of the Board of Directors that notice thereof shall have been given
to any Director who is present thereat, or, if
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absent, waives notice thereof in writing filed with the records of the meeting
either before or after the holding thereof.
SECTION 5. Place of Meetings. The Board of Directors may hold its
regular and special meetings at such place or places within or without the State
of Maryland as the Board may from time to time determine.
SECTION 6. Ouorum and Board Action. Except as otherwise provided by
statute or by the Charter: (a) one-third (1/3) of the members of the Board of
Directors then in office, but in no case less than two (2) directors, shall be
necessary to constitute a forum for the transaction of business at every meeting
of the Board; (b) the action of a majority of the directors present at a meeting
at which a quorum is present shall be the action of the Board; and (c) if at any
meeting there be less than a quorum present, a majority of those present may
adjourn the meeting from time to time, but not for a period greater than thirty
(30) days at any one time, without notice other than by announcement at the
meeting, until a quorum shall attend any such adjourned meeting at which a
quorum shall be present, any business may be transacted which might have been
transacted at the meeting as originally scheduled.
SECTION 7. Chairman. The Board of Directors may at any time appoint one
of its members as Chairman of the Board, shall serve at the pleasure of the
Board and who shall perform and execute such duties and powers as may be
conferred upon or assigned to him by the Board or these By-Laws, but who shall
not by reason of performing and executing these duties and powers be deemed an
officer or employee of the corporation.
SECTION 8. Organization. At every meeting of the Board of Directors, the
Chairman of the Board, if one has been selected and is present, and, if not, the
President, or in the absence of the Chairman of the Board and the President, a
Vice President, or in the absence of the Chairman of the Board, the President
and all the Vice Presidents, a Chairman chosen by a majority of the Directors
present, shall preside; and the Secretary, or in his absence, an Assistant
Secretary, or in the absence of the Secretary and all the Assistant Secretaries,
a person appointed by the Chairman, shall act as secretary.
SECTION 9. Vacancies. Any vacancy occurring by reason of any increase in
the number of directors may be filled by a majority of the entire Board of
Directors. Any vacancy occurring for any other cause may be filled by a majority
of the remaining members of the Board of Directors, whether or not these members
constitute a quorum under Section 6 of this Article. Any vacancy occurring by
reason of removal of a director may be filled by the stockholders. Any director
chosen to fill a vacancy shall hold office until the next annual meeting of
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stockholders and until his successor shall have been duly elected and qualified.
SECTION 10. Removal. At any meeting of the stockholders called for that
purpose, any director may, by vote of stockholders entitled to cast a majority
of the votes, be removed from office, with or without cause, and another may be
elected in the place of the person so removed, to serve for the remainder of his
term.
SECTION 11. Resignations. Any director may resign at any time by giving
written notice to the Board of Directors, the President or the Secretary. Any
such resignation shall take effect at the time of the receipt of such notice or
at any later time specified therein; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
SECTION 12. Committees. The Board of Directors may, by resolution passed
by a majority of the entire Board, designate one or more committees of the
Board, each consisting of two (2) or more directors. To the extent provided in
such resolution, and permitted by law, such committee or committees shall have
and may exercise the powers of the Board of Directors in the management of the
business and affairs of the Corporation and may authorize the seal of the
corporation to be affixed to all papers which may require it. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors. Each committee shall keep
regular minutes of its meetings and report the same to the Board of Directors
when required. The members of a committee present at any meeting, whether or not
they constitute a quorum, may appoint a director to act in the place of an
absent member.
SECTION 13. Telephone Conference. Members of the Board of Directors or
any committee thereof may participate in a meeting of the Board or such
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other
at the same time, and participation by such means shall constitute presence in
person at the meeting.
SECTION 14. Compensation of Directors. Any director, whether or not he
is a salaried officer, employee or agent of the Corporation, may be compensated
for his services as director or as a member of a committee, or as Chairman of
the Board or chairman of a committee, and in addition may be reimbursed for
transportation and other expenses, all in such manner and amounts as the
directors may from time to time determine.
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ARTICLE III
OFFICERS
SECTION 1. Number. The officers of the Corporation shall be a President,
a Secretary, and a Treasurer, and may include one or more Vice Presidents, one
or more Assistant Secretaries, one or more Assistant Treasurers, and such other
officers as the Board of Directors may from time to time determine. Any officer
may hold more than one office in the Corporation, except that an officer may not
serve concurrently as both the President and a Vice President.
SECTION 2. Election and Term of Office. The officers of the Corporation
shall be elected by the Board of Directors and, subject to earlier termination
of office, each officer shall hold office for one year and until his successor
shall have been elected and qualified.
SECTION 3. Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors, the President, or the Secretary of the
Corporation. Any such resignation shall take effect at the date of the receipt
of such notice or at any later time specified therein; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 4. Removal. If the Board of Directors in its judgment finds that
the best interests of the Corporation will be served, the Board may remove any
officer of the Corporation at any time.
SECTION 5. President. The President shall be the chief executive officer
of the Corporation and shall have general supervision over the business and
operations of the Corporation, subject, however, to the control of the Board of
Directors. He, or such persons as he shall designate, shall sign, execute,
acknowledge, verify, deliver and accept, in the name of the Corporation, deeds,
mortgages, bonds, contracts and other instruments--authorized by the Board of
Directors, except in the case where the signing, execution, acknowledgement,
verification, delivery or acceptance thereof shall be delegated by the Board to
some other officer or agent of the Corporation; and, in general, he shall have
general executive powers as well as other powers and duties as from time to time
may be conferred upon or assigned to him by the Board.
SECTION 6. The Vice Presidents. In the absence or disability of the
President, or when so directed by the President, any Vice President designated
by the Board of Directors may perform any or all of the duties of the President,
and, when so acting, shall have all the powers of, and be subject to all the
restrictions upon, the President; provided, however,
6
<PAGE>
that no Vice President shall act as a member of or as chairman of any committee
of which the President is a member or chairman by designation of ex-officio,
except when designated by the Board. Each Vice President shall perform such
other duties as from time to time may be conferred upon or assigned to him by
the Board or the President.
SECTION 7. The Secretary. The Secretary shall record all the votes of
the stockholders and of the directors and the minutes of the meetings of the
stockholders and of the Board of Directors in a book or books to be kept for
that purpose; he shall see that notices of meetings of the stockholders and the
Board of Directors are given and that all records and reports are properly kept
and filed by the Corporation as required by law; he shall be the custodian of
the seal of the Corporation and shall see that it is affixed to all documents to
be executed on behalf of the Corporation under its seal, provided that in lieu
of affixing the corporate seal to any document, it shall be sufficient to meet
the requirements of any law, rules or regulation relating to a corporate seal to
affix the word "(SEAL)" adjacent to the signature of the authorized officer of
the Corporation; and, in general, he shall perform all duties incident to the
office of Secretary, and such other duties as from time to time may be conferred
upon or assigned to him by the Board or the President.
SECTION 8. Assistant Secretaries. In the absence or disability of the
Secretary, or when so directed by the Secretary, any Assistant Secretary may
perform any or all of the duties of the Secretary, and, when so acting, shall
have all the power of, and be subject to all restrictions upon, the Secretary.
Each Assistant Secretary shall perform such other duties as from time to time
may be conferred upon or assigned to him by the Board of Directors, the
President or the Secretary.
SECTION 9. The Treasurer. Subject to the provisions of any contract
which may be entered into with any custodian pursuant to authority granted by
the Board of Directors, the Treasurer shall have charge of all receipts and
disbursements of the Corporation and shall have or provide for the custody of
its funds and securities; he shall have full authority to receive and give
receipts for all money due and payable to the Corporation, and to endorse
checks, drafts and warrants, in its name and on its behalf, and to give full
discharge for the same; he shall deposit all funds of the corporation, except
such as may be required for current use, in such banks or other places of
deposit as the Board of Directors may from time to time designate; and, in
general, he shall perform all duties incident to the office of Treasurer and
such other duties as from time to time may be conferred upon or assigned to him
by the Board or the President.
7
<PAGE>
SECTION 10. Assistant Treasurers. In the absence or disability of the
Treasurer, or when so directed by the Treasurer, any Assistant Treasurer may
perform any or all of the duties of the Treasurer, and, when so acting, shall
have all the powers of, and be subject to all the restrictions upon, the
Treasurer. Each Assistant Treasurer shall perform all such other duties as from
time to time may be conferred upon or assigned to him by the Board of Directors,
the President or the Treasurer.
SECTION 11. Compensation of Officers. The compensation of all officers
shall be fixed from time to time by the Board of Directors, or any committee or
officer authorized by the Board so to do. No officer shall be precluded from
receiving such compensation by reason of the fact that he is also a director of
the Corporation.
ARTICLE IV
STOCK
SECTION 1. Certificates. Each stockholder shall be entitled, upon
written request, to a stock certificate or certificates, certifying the number
and kind of full shares held by him, signed by the President, a Vice President
or the Chairman of the Board and countersigned by the Secretary, an Assistant
Secretary, the Treasurer or an Assistant Treasurer, which signatures may be
either manual or facsimile signatures, and sealed with the seal of the
corporation, which seal may be either facsimile or any other form of seal. Stock
certificates shall be in such form, not inconsistent with law or with the
charter, as shall be approved by the Board of Directors.
SECTION 2. Transfer of Shares. Transfers of shares shall be made on the
books of the Corporation at the direction of the person named on the
corporation's books or named in the certificate or certificates for such shares
(if issued, or by his attorney) lawfully constituted in writing, upon surrender
of such certificate or certificates (if issued) properly endorsed, together with
a proper request for redemption, to the corporation's transfer agent, with such
evidence of the authenticity of such transfer, authorization and such other
matters as the Corporation or its agents may reasonably require, and subject to
such other reasonable terms and conditions as may be required by the Corporation
or its agents; or, if the Board of Directors shall by resolution so provide,
transfer of shares may be made in any other manner provided by law.
SECTION 3. Transfer Agents and Registrars. The Corporation may have one
or more Transfer Agents and one or more Registrars of its stock, whose
respective duties the Board of Directors may, from time to time, define. No
certificate of stock shall be valid until countersigned by a Transfer Agent, if
8
<PAGE>
the Corporation shall have a Transfer Agent, or until registered by a
Registrar, if the Corporation shall have a Registrar. The duties of Transfer
Agent and Registrar may be combined.
SECTION 4. Mutilated. Lost or Destroyed Certificates. The Board of
Directors, by standing resolution or by resolutions with respect to particular
cases, may authorize the issue of a new stock certificate in lieu of any stock
certificate lost, destroyed or mutilated, upon such terms and conditions as the
Board may direct. The Board may in its discretion refuse to issue such a new
certificate, unless ordered to do so by a court of competent jurisdiction.
SECTION 5. Stock Ledgers. The Corporation shall not be required to keep
original or duplicate stock ledgers at its registered office in the City of
Baltimore, Maryland, but stock ledgers shall be kept at the respective offices
of the Transfer Agents of the Corporation's capital stock.
ARTICLE V
SEAL
The seal of the Corporation shall be in such form as the Board of
Directors shall prescribe.
ARTICLE VI
SUNDRY PROVISIONS
SECTION 1. Amendments. (a) By Stockholders. By-Laws may be adopted,
altered, amended or repealed in the manner provided in Section 5 of Article I
hereof at any annual or special meeting of the stockholders.
(b) By Directors. By-Laws may be adopted, altered, ended or
repealed in the manner provided in Section 6 of Article II hereof by the Board
of Directors at any regular or special meeting of the Board.
SECTION 2. Indemnification of Directors and Officers.
(a) Indemnification. Any person who was or is a party or is threatened to be
made a party in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is a current or former director or officer of the Corporation,
or is or was serving while a director or officer of the Corporation at the
request of the Corporation as a director, officer, partner, trustee, employee,
agent or fiduciary of another corporation, partnership, joint venture, trust,
enterprise or employee benefit plan, shall be indemnified by the Corporation
against judgments, penalties, fines, excise taxes,
9
<PAGE>
settlements and reasonable expenses (including attorney's fees) actually
incurred by such person in connection with such action, suit or proceeding to
the full extent permissible under the General Laws of the State of Maryland and
the Investment Company Act of 1940, as such statutes are now or hereafter in
force, except that such indemnity shall not protect any such person against any
liability to the Corporation or any stockholder thereof to which such person
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
(b) Advances. Any current or former director or officer of the
Corporation claiming indemnification within the scope of this Section 2 shall be
entitled to advances from the Corporation for payment of the reasonable expenses
incurred by him in connection with proceedings to which he is a party in the
manner and to the full extent permissible under the General Laws of the State of
Maryland and the Investment Company Act of 1940, if such statutes are now or
hereafter in force.
(c) Procedure. On the request of any current or former director or
officer requesting indemnification or an advance under this Section 2, the Board
of Directors shall determine, or cause to be determined, in a manner consistent
with the General Laws of the State of Maryland and the Investment Company Act of
1940, as such statutes are now or hereafter in force, whether the standards
required by this Section 2 have been met.
(d) Other Rights. The indemnification provided by this Section 2
shall not be deemed exclusive of any other right, in respect of indemnification
or otherwise, to which those seeking such indemnification may be entitled under
any insurance or other agreement, vote of shareholders or disinterested
directors or otherwise, both as to action by a director or officer of the
Corporation in his official capacity and as to action by such person in another
capacity while holding such office or position, and shall continue as to a
person who has ceased to be a director or officer and shall inure to the benefit
of the heirs, executors and administrators of such a person.
10
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of August 2, 1985 between RED OAK CASH RESERVE FUND,
INC., a corporation (herein called the "Fund"), and JERSEY NATIONAL BANK, a
national banking association with its principal offices in Ewing Township, New
Jersey (hereinafter the "Investment Adviser").
WHEREAS, 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 desires to retain the Investment Adviser to furnish
investment advisory services to the Fund, 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 Fund hereby appoints the Investment Adviser to act
------------
as investment adviser to the Fund 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.
<PAGE>
2. Delivery of Documents. The Fund has furnished the Investment Adviser
----------------------
with copies properly certified or authenticated of each of the following:
(a) the Fund's Articles of Incorporation, as filed with the
Secretary of State of Maryland on September 11, 1984, and all amendments
thereto (such Articles, as presently in effect and as they shall from
time to time be amended or supplemented, are herein called the "Articles
of Incorporation");
(b) the Fund's By-Laws and amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are
herein called the "By-Laws");
(c) resolutions of the Fund's Board of Directors authorizing the
appointment of the Investment Adviser and approving this Agreement;
(d) the Fund's Notification of Registration on Form N-8A under the
1940 Act as filed with the Securities and Exchange Commission on
September 11, 1984 and all amendments thereto;
(e) the Fund's Registration Statement on Form N-1A under the
Securities Act of 1933 as amended ("1933 Act") (File No. 2-93214) and
under the 1940 Act as filed with the Securities and Exchange Commission
and all amendments thereto; and
- 2 -
<PAGE>
(f) the Fund's most recent Prospectus and Statement of Additional
Information (such Prospectus and Statement of Additional Information, as
presently in effect and all amendments and supplements thereto, are
herein called the "Prospectus").
The Fund 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 Fund's Board of
-----------
Directors, the Investment Adviser will provide a continuous investment program
for the Fund, including investment research and management with respect to all
securities and investments and cash equivalents held by the Fund. The Investment
Adviser will determine from time to time what securities and other investments
will be purchased, retained, or sold by the Fund. The Investment 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 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 Fund
shares or make loans to the Fund;
- 3 -
<PAGE>
(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 Investment Adviser will be the prompt execution of orders in an
effective manner at the most favorable price. Subject to this
consideration, brokers or dealers who provide supplemental research to
the Investment Adviser may receive orders for transactions with the
Fund. In no instance will portfolio securities be purchased from or sold
to Fairfield Group, Inc., New Jersey National Bank, or any affiliated
person of either the Fund, Fairfield Group, Inc., or New Jersey National
Bank;
(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 Investment
Adviser may be exposed to civil or criminal
- 4 -
<PAGE>
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 maintain its policy and practice of conducting its Trust
Division independently of its Commercial Division. In making investment
recommendations for the Fund, Trust Division personnel will not inquire
or take into consideration whether the issuers of securities proposed
for purchase or sale for the Fund's account are customers of the
Commercial Division. In dealing with commercial customers, the
Commercial Division will not inquire or take into consideration whether
securities of those customers are held by the Fund;
(g) 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
Investment Adviser hereunder, and (ii) market quotations of portfolio
securities held by the Fund;
(h) 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
(i) 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.
- 5 -
<PAGE>
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 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
Investment Adviser further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1
under the 1940 Act.
6. Expenses. During the term of this Agreement, the Investment Adviser
---------
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the 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 the initial public sale
of shares of the Fund, the Fund will pay the Investment Adviser and the
Investment Adviser will accept as full compensation therefor a fee, computed
daily and paid monthly, at an annual rate of .50% of the Fund's average daily
net assets; provided, however, that if the total expenses
------------------
- 6 -
<PAGE>
borne by the Fund in any fiscal year of the Fund exceed any expense limitations
imposed by applicable state securities laws or regulations, the Investment
Adviser will reimburse the Fund 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 Fairfield Group, Inc. pursuant to an Administration
Agreement between it and the Fund. The Investment Adviser's obligation to
reimburse the Fund hereunder is limited in any fiscal year of the Fund 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 Fund 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 Fund 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 Fund 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 Fund or to the public,
which in any way refer to or describe the Investment Adviser or which include
any tradenames, trademarks, or logos of the Investment Adviser or any affiliate
of the Investment Adviser. The Fund 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
- 7 -
<PAGE>
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 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 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
-------------------------
August 2, 1985, 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 June
30, 1987. 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 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
- 8 -
<PAGE>
Board of Directors or by vote of a majority of the Fund'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. 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.
12. 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.
- 9 -
<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.
RED OAK CASH RESERVE FUND, INC.
By /s/ FRANCIS J. BRUZDA
-------------------------------------
NEW JERSEY NATIONAL BANK
By /s/ WILLIAM F. BEDLE
-------------------------------------
- 10 -
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of June 23, 1987 between COREFUNDS, INC., a Maryland
corporation (herein called "the Fund"), and CORESTATES INVESTMENT ADVISERS,
INC., a Pennsylvania corporation (hereinafter the "Investment Adviser").
WHEREAS, 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 desires to retain the Investment Adviser to furnish
investment advisory services to the Fund, 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 Fund hereby appoints the Investment Adviser to act
as investment adviser to the Fund 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 Fund's Articles of Incorporation, as filed with the Secretary of
State of Maryland on September 11, 1984, and all amendments thereto (such
Articles, as presently in effect and as they shall from time to time be amended
or supplemented, are herein called the "Articles of Incorporation");
(b) the Fund's By-Laws and amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are herein
called the "By-Laws");
(c) resolutions of the Fund's Board of Directors authorizing the
appointment of the Investment Adviser and approving this Agreement;
(d) the Fund's Notification of Registration on Form N-8A under the 1940
Act as filed with the Securities and Exchange Commission on September 11, 1984
and all amendments thereto;
(e) the Fund's Registration Statement on Form N-1A under the Securities
Act of 1933 as amended ("1933 Act") (File No. 2-93214) and under the 1940 Act as
filed with the Securities and Exchange Commission and all amendments thereto;
and
<PAGE>
(f) the Fund's most recent Prospectus and Statement of Additional
Information (such Prospectus and Statement of Additional Information, as
presently in effect and all amendments and supplements thereto, are herein
called the "Prospectus").
The Fund 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 Fund's Board of
Directors, the Investment Adviser will provide a continuous investment program
for the Fund, including investment research and management with respect to all
securities and investments and cash equivalents held by the Fund. The Investment
Adviser will determine from time to time what securities and other investments
will be purchased, retained, or sold by the Fund. The Investment 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 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 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 Investment
Adviser will be the prompt execution of orders in an effective manner at the
most favorable price. Subject to this consideration, brokers or dealers who
provide supplemental research to the Investment Adviser may receive orders for
transactions with the 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;
-2-
<PAGE>
(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
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 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 Investment 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 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 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
Investment Adviser further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the
-3-
<PAGE>
records required to be maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement, the Investment Adviser
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the 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 the initial public sale
of shares of the Fund, the Fund will pay the Investment Adviser and the
Investment Adviser will accept as full compensation therefor a fee, computed
daily and paid monthly, at an annual rate of .50% of the Fund's average daily
net assets; provided, however, that if the total expenses borne by the Fund in
any fiscal year of the Fund exceed any expense limitations imposed by applicable
state securities laws or regulations, the Investment Adviser will reimburse the
Fund 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
Fairfield Group, Inc. pursuant to an Administration Agreement between it and the
Fund. The Investment Adviser's obligation to reimburse the Fund hereunder is
limited in any fiscal year of the Fund 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 Fund 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 Fund 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 Fund 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 Fund or to the public,
which in any way refer to or describe the Investment Adviser or which include
any tradenames, trademarks, or logos of the Investment Adviser or any affiliate
of the Investment Adviser. The Fund 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.
-4-
<PAGE>
9. Limitation of Liability. The Investment Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the 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 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 June
23, 1987, 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 June 23, 1989.
Thereafter, if not terminated, this Agreement shall continue in effect for
successive periods of twelve months, each ending on June 23 each year, provided
such continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Fund's Board of Directors who are not parties
to this Agreement or interested persons of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval, and
(b) by the Fund's Board of Directors or by vote of a majority of the Fund's
outstanding voting securities. Notwithstanding the foregoing, this Agreement may
be terminated at any time on sixty days' written notice, without the payment of
any penalty, by the Fund (by vote of the Fund's Board of Directors or by vote of
a majority of the Fund's outstanding voting securities) 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 Fund hereby agrees that it will eliminate from its corporate name
any references to the name "CoreFunds." The Fund 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 Fund's outstanding voting
securities.
-5-
<PAGE>
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.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
COREFUNDS, INC.
By /s/ FRANCIS J. BRUZDA
-----------------------------------
CORESTATES INVESTMENT ADVISERS, INC.
By /s/ DUNG VUKHAC
-----------------------------------
INVESTMENT ADVISORY AGREEMENT
[INTERNATIONAL GROWTH FUND]
AGREEMENT made as of December 5, 1989 between COREFUNDS, INC., a
Maryland corporation (hereinafter the "Fund"), and CORESTATES INVESTMENT
ADVISERS, INC., a Pennsylvania corporation (hereinafter the 'Investment
Adviser').
WHEREAS, 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 Fund desires to retain the Investment Adviser to furnish
investment advisory services to the Fund and certain of 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 Fund hereby appoints the Investment Adviser to act
as investment adviser to the Fund 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 Fund's Articles of Incorporation, as filed with the Secretary of
State of Maryland on September 11, 1984, and all amendments thereto (such
Articles, as presently in effect and as they shall from time to time be amended
or supplemented, are herein called the 'Articles of Incorporation');
(b) the Fund's By-Laws and amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are herein
called the "By-Laws");
(c) resolutions of the Fund's Board of Directors authorizing the
appointment of the Investment Adviser and approving this Agreement;
(d) the Fund's Notification of Registration on Form N-8A under the 1940
Act as filed with the Securities and Exchange Commission on September 11, 1984
and all amendments thereto;
<PAGE>
(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 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 Fund's Board of
Directors, the Investment Adviser will provide a continuous investment program
for certain portfolios of the Fund, including investment guidelines and
management with respect to all securities and investments and cash equivalents
held by the International Growth 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 Investment Adviser will
determine from time to time what securities and other investments will be
purchased, retained, or sold by the Fund. The Investment 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. Notwithstanding the foregoing, the
Investment Adviser may from time to time, subject to the approval and
supervision of the Fund's Board of Directors, retain a person or persons
satisfactory to the Fund ("Sub-Adviser") to provide sub-investment advisory
services in accordance with the Fund's investment objective, policies and
restrictions as stated in the Fund's Prospectus and resolutions of the Fund's
Board of Directors. The Sub-Adviser shall agree to comply with all provisions
applicable to the Investment Adviser hereunder. If the Investment Adviser
retains a Sub-Adviser, the Fund shall have no responsibility to pay the
Sub-Adviser, any such compensation to be paid by the Investment Adviser from the
amount paid to it pursuant to Section 7 of this Agreement.
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 Fund
shares or make loans to the Fund;
-2-
<PAGE>
(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 Investment
Adviser will be the prompt execution of orders in an effective manner at the
most favorable price. Subject to this consideration, brokers or dealers who
provide supplemental research to the Investment Adviser may receive orders for
transactions with the 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
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 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 Investment 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 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.
-3-
<PAGE>
5. Books and Records. In compliance with the requirements of Rule 3la-3
under the 1940 Act, the Investment 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
Investment Adviser further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1
under the 1940 Act.
6. Expenses. During the term of this Agreement, the Investment Adviser
will pay all expenses incurred by it in connection with its activities under
this Agreement (including the fees of the Sub-Adviser, if any) 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 Fund
will pay the Investment Adviser and the Investment Adviser will accept as full
compensation therefor a fee, computed daily and paid monthly, at an annual rate
of .80% of the Portfolios' average daily net assets; provided, however, that if
the total expenses borne by the Fund in any fiscal year of the Fund exceed any
expense limitations imposed by applicable state securities laws or regulations,
the Investment Adviser will reimburse the Fund 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 Fairfield Group, Inc. pursuant to an
Administration Agreement between it and the Fund. The Investment Adviser's
obligation to reimburse the Fund hereunder is limited in any fiscal year of the
Fund 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 Fund 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 Fund 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 Fund 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 Fund 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 Fund further agrees that it shall not use or
distribute any such material if the Investment Adviser
-4-
<PAGE>
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 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 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 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 June
23, 1991. Thereafter, if not terminated, this Agreement shall continue in effect
for successive periods of twelve months, each ending on June 23 each year,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Fund's Board of Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Fund's Board of Directors or by vote of a majority of the Fund's
outstanding voting securities. Notwithstanding the foregoing, this Agreement may
be terminated at any time on sixty days' written notice, without the payment of
any penalty, by the Fund (by vote of the Fund's Board of Directors or by vote of
a majority of the Fund's outstanding voting securities) 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 Fund hereby agrees that it will eliminate from its corporate name
any references to the name "CoreFunds." The Fund 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
-5-
<PAGE>
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.
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. Thin 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.
COREFUNDS, INC.
By /s/ FRANCIS J. BRUZDA
----------------------------------
Name:
---------------------------
Title:
---------------------------
CORESTATES INVESTMENT ADVISERS, INC.
By /s/ PAUL FINNEGAN
----------------------------------
Name:
---------------------------
Title:
---------------------------
INVESTMENT ADVISORY AGREEMENT
[VALUE EQUITY FUND]
AGREEMENT made as of December 5, 1989 between COREFUNDS, INC., a
Maryland corporation (hereinafter the "Fund"), and CORESTATES INVESTMENT
ADVISERS, INC., a Pennsylvania corporation (hereinafter the "Investment
Adviser").
WHEREAS, 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 Fund desires to retain the Investment Adviser to furnish
investment advisory services to the Fund and certain of 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 Fund hereby appoints the Investment Adviser to act
as investment adviser to the Fund 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 Fund's Articles of Incorporation, as filed with the Secretary of
State of Maryland on September 11, 1984, and all amendments thereto (such
Articles, as presently in effect and as they shall from time to time be amended
or supplemented, are herein called the "Articles of Incorporation");
(b) the Fund's By-Laws and amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are herein
called the "By-Laws");
(c) resolutions of the Fund's Board of Directors authorizing the
appointment of the Investment Adviser and approving this Agreement;
<PAGE>
(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 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 Fund's Board of
Directors, the Investment Adviser will provide a continuous investment program
for certain portfolios of the Fund, including investment guidelines and
management with respect to all securities and investments and cash equivalents
held by the Value Equity 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 Investment Adviser will
determine from time to time what securities and other investments will be
purchased, retained, or sold by the Fund. The Investment 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. Notwithstanding the foregoing, the
Investment Adviser may from time to time, subject to the approval and
supervision of the Fund's Board of Directors, retain a person or persons
satisfactory to the Fund ("Sub-Adviser") to provide sub-investment advisory
services in accordance with the Fund's investment objective, policies and
restrictions as stated in the Fund's Prospectus and resolutions of the Fund's
Board of Directors. The Sub-Adviser shall agree to comply with all provisions
applicable to the Investment Adviser hereunder. If the Investment Adviser
retains a Sub-Adviser, the Fund shall have no responsibility to pay the
Sub-Adviser, any such compensation to be paid by the Investment Adviser from the
amount paid to it pursuant to Section 7 of this Agreement.
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;
-2-
<PAGE>
(b) will not make loans to any person to purchase or carry the Fund
shares or make loans to the Fund;
(c) will place orders pursuant to its investment determinations for the
Fund either directly with the issuer or with any broker or dealer. In placing
orders with brokers and dealers the primary consideration of the Investment
Adviser will be the prompt execution of orders in an effective manner at the
most favorable price. Subject to this consideration, brokers or dealers who
provide supplemental research to the Investment Adviser may receive orders for
transactions with the 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
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 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 Investment 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 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.
-3-
<PAGE>
5. Books and Records. In compliance with the requirements of Rule 3la-3
under the 1940 Act, the Investment 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
Investment Adviser further agrees to preserve for the periods prescribed by Rule
3la-2 under the 1940 Act the records required to be maintained by Rule 3la-1
under the 1940 Act.
6. Expenses. During the term of this Agreement, the Investment Adviser
will pay all expenses incurred by it in connection with its activities under
this Agreement (including the fees of the Sub-Adviser, if any) 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 Fund
will pay the Investment Adviser and the Investment Adviser will accept as full
compensation therefor a fee, computed daily and paid monthly, at an annual rate
of .75% of the Portfolios' average daily net assets; provided, however, that if
the total expenses borne by the Fund in any fiscal year of the Fund exceed any
expense limitations imposed by applicable state securities laws or regulations,
the Investment Adviser will reimburse the Fund 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 Fairfield Group, Inc. pursuant to an
Administration Agreement between it and the Fund. The Investment Adviser's
obligation to reimburse the Fund hereunder is limited in any fiscal year of the
Fund 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 Fund 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 Fund 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 Fund 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 Fund 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 Fund further agrees that it shall not use
-4-
<PAGE>
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 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 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 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 June
23, 1991. Thereafter, if not terminated, this Agreement shall continue in effect
for successive periods of twelve months, each ending on June 23 each year,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Fund's Board of Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Fund's Board of Directors or by vote of a majority of the Fund's
outstanding voting securities. Notwithstanding the foregoing, this Agreement may
be terminated at any time on sixty days' written notice, without the payment of
any penalty, by the Fund (by vote of the Fund's Board of Directors or by vote of
a majority of the Fund's outstanding voting securities) 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 Fund hereby agrees that it will eliminate from its corporate name
any references to the name "CoreFunds." The Fund 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
-5-
<PAGE>
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.
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.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
COREFUNDS, INC.
By /s/ FRANCIS J. BRUZDA
----------------------------------
Name:
---------------------------
Title:
---------------------------
CORESTATES INVESTMENT ADVISERS, INC.
By /s/ PAUL FINNEGAN
----------------------------------
Name:
---------------------------
Title:
---------------------------
INVESTMENT ADVISORY AGREEMENT
[SUB-ADVISER-VALUE EQUITY FUND]
AGREEMENT made as of December 5, 1989 between CORESTATES INVESTMENT
ADVISERS, INC., a Pennsylvania corporation (hereinafter the "Investment
Adviser"), and CASHMAN, FARRELL AND ASSOCIATES (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 December 5, 1989, 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 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 sub-investment adviser to the Fund for the period and on the terms set
forth in this Agreement. The Sub-Adviser accepts such appointment and agrees to
furnish the services herein set forth for the compensation herein provided.
2. Delivery of Documents. The Fund or the Investment Adviser has
furnished the Sub-Adviser with copies properly certified or authenticated of
each of the following:
(a) the Fund's Articles of Incorporation, as filed with the Secretary of
State of Maryland on September 11, 1984, and all amendments thereto (such
Articles, as presently in effect and as they shall from time to time be amended
or supplemented, are herein called the "Articles of Incorporation");
(b) the Fund's By-Laws and amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are herein
called the "By-Laws");
<PAGE>
(c) resolutions of the Fund's Board of Directors authorizing the
appointment of the Investment Adviser and approvinq 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 certain portfolios of the Fund, including investment
research and management with respect to all securities and investments and cash
equivalents held by the Value Equity Portfolio of the Fund and such other
portfolios (hereinafter collectively, the "Portfolios") offered by the Fund and
identified by the Fund as appropriate to use a sub-investment adviser. The
Sub-Adviser will determine from time to time what securities and other
investments will be purchased, retained, or sold by the Fund. The Sub-Adviser
will provide the services under this Agreement in accordance with the Fund's
investment objective, policies, and restrictions as stated in the Prospectus and
resolutions of the Fund's Board of Directors. The Sub-Adviser acknowledges and
agrees that the Fund shall have no responsibility to pay the Sub-Adviser, and
that any compensation to be paid to the Sub-Adviser shall be paid by the
Investment Adviser pursuant to Section 7 of this Agreement.
The Sub-Adviser further agrees that it:
(a) will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission and will in addition conduct its activities
under this Agreement in accordance with any regulations of the Comptroller of
the Currency pertaining to the investment advisory activities of national banks;
(b) will not make loans to any person to purchase or carry the
Fund shares or make loans to the Fund;
-2-
<PAGE>
(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-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
-3-
<PAGE>
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-l 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 Portfolios' 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 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 June
23, 1991. Thereafter, if not terminated, this Agreement shall continue in effect
for successive periods of twelve months, each ending on June 23 each year,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Fund's Board of Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Fund's Board of Directors or by vote of a majority of the Fund's
outstanding voting securities. Notwithstanding the foregoing, this Agreement may
be terminated at any time on sixty days' written notice, without the payment of
any penalty, by the Fund (by vote of the Fund's Board of Directors or by vote of
a majority of the Fund's outstanding voting securities), by the
-4-
<PAGE>
Investment Adviser or by the Sub-Advisor. This Agreement wi11 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, waive,
discharge or termination is sought. No amendment of this Agreement shall be
effective until approved by vote of a majortiy 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: /s/ Paul Finnegan
-----------------------------------
Name:
-----------------------------
Title:
-----------------------------
CASHMAN, FARRELL AND ASSOCIATES
By: /s/ Daniel Cashman
-----------------------------------
Name:
-----------------------------
Title: Partner
-----------------------------
INVESTMENT ADVISORY AGREEMENT
[SUB-ADVISER-INTERNATIONAL GROWTH FUND]
AGREEMENT made as of December 5, 1989 between CORESTATES INVESTMENT
ADVISERS, INC., a Pennsylvania corporation (hereinafter the "Investment
Adviser"), and MARTIN CURRIE, INC., 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 December 5, 1989, 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 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 sub-investment adviser to the Fund for the period and on the terms set
forth in this Agreement. The Sub-Adviser accepts such appointment and agrees to
furnish the services herein set forth for the compensation herein provided.
2. Delivery of Documents. The Fund or the Investment Adviser has
furnished the Sub-Adviser with copies properly certified or authenticated of
each of the following:
(a) the Fund's Articles of Incorporation, as filed with the Secretary of
State of Maryland on September 11, 1984, and all amendments thereto (such
Articles, as presently in effect and as they shall from time to time be amended
or supplemented, are herein called the "Articles of Incorporation");
<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 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. 293214) 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 certain portfolios of the Fund, including investment
research and management with respect to all securities and investments and cash
equivalents held by the International Growth Portfolio of the Fund and such
other portfolios (hereinafter collectively, the "Portfolios") offered by the
Fund and identified by the Fund as appropriate to use a sub-investment adviser.
The Sub-Adviser will determine from time to time what securities and other
investments will be purchased, retained, or sold by the Fund. The Sub-Adviser
will provide the services under this Agreement in accordance with the Fund's
investment objective, policies, and restrictions as stated in the Prospectus and
resolutions of the Fund's Board of Directors. The Sub-Adviser acknowledges and
agrees that the Fund shall have no responsibility to pay the Sub-Adviser, and
that any compensation to be paid to the Sub-Adviser shall be paid by the
Investment Adviser pursuant to Section 7 of this Agreement.
The Sub-Adviser further agrees that it:
(a) will conform with all applicable Rules and Regulation. 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;
-2-
<PAGE>
(b) will not make loans to any person to purchase or carry the Fund
shares or make loans to the Fund;
(c) will place orders pursuant to its investment determinations for the
Fund either directly with the issuer or with any broker or dealer. In placing
orders with brokers and dealers the primary consideration of the Sub-Adviser
will be the prompt execution of orders in an effective manner at the most
favorable price. Subject to this consideration, brokers or dealers who provide
supplemental research to the Sub-Adviser may receive orders for transactions
with the Fund. In no instance will portfolio securities be purchased from or
sold to 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-Adviser
shall be free to furnish similar services to others so long as its services
under this Agreement are not impaired thereby.
-3-
<PAGE>
5. Books and Records. In compliance with the requirements of Rule 3la-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 Portfolios' 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 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 June
23, 1991. Thereafter, if not terminated, this Agreement shall continue in effect
for successive periods of twelve months, each ending on June 23 each year,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Fund's Board of Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Fund's Board of Directors or by vote of a majority of the Fund's
outstanding voting securities. Notwithstanding the foregoing, this Agreement may
be terminated at any time on sixty
-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 Adviser or by the Sub-Adviser.
This Agreement will immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested persons" 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, 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 cause this instrument to be
executed by their officers designated below as of the day and year first above
written.
CORESTATES INVESTMENT ADVISERS, INC.
By /s/ PAUL FINNEGAN
----------------------------------
Name:
---------------------------
Title:
---------------------------
MARTIN CURRIE, INC.
By /s/ MARIANNE L. HAY
----------------------------------
Name: Marianne L. Hay
---------------------------
Title:
---------------------------
INVESTMENT ADVISORY AGREEMENT
[EQUITY INDEX FUND]
AGREEMENT made as of March 25, 1991 between COREFUNDS, INC., a Maryland
corporation (hereinafter the "Fund"), and CORESTATES INVESTMENT ADVISERS, INC.,
a Pennsylvania corporation (hereinafter the "Investment Adviser").
WHEREAS, 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 Fund desires to retain the Investment Adviser to furnish
investment advisory services to the Fund and certain of 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 Fund hereby appoints the Investment Adviser to act
as investment adviser to the Fund 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 Fund's Articles of Incorporation, as filed with the Secretary of
State of Maryland on September 11, 1984, and all amendments thereto (such
Articles, as presently in effect and as they shall from time to time be amended
or supplemented, are herein called the "Articles of Incorporation");
(b) the Fund's By-Laws and amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are herein
called the "By-Laws");
(c) resolutions of the Fund's Board of Directors authorizing the
appointment of the Investment Adviser and approving this Agreement;
<PAGE>
(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 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 Fund's Board of
Directors, the Investment Adviser will provide a continuous investment program
for certain portfolios of the Fund, including investment guidelines and
management with respect to all securities and investments and cash equivalents
held by the Equity Index Fund and such other portfolios (hereinafter
collectively, the "Portfolios") offered by the Fund and identified by the Fund
as appropriate. The Investment Adviser will determine from time to time what
securities and other investments will be purchased, retained, or sold by the
Fund. The Investment 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 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 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 Investment
Adviser will be the prompt execution of orders in an effective manner at the
most favorable price. Subject to this consideration, brokers or dealers who
provide supplemental research to the Investment Adviser may receive orders for
transactions with the Fund. In no instance will portfolio securities be
purchased from or sold to Fairfield Group, Inc., CoreStates Financial Corp, or
-2-
<PAGE>
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
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 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 Investment 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 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 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
Investment Adviser further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1
under the 1940 Act.
6. Expenses. During the term of this Agreement, the Investment Adviser
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the
-3-
<PAGE>
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 Fund
will pay the Investment Adviser and the Investment Adviser will accept as full
compensation therefor a fee, computed daily and paid monthly, at an annual rate
of .40% of the Portfolios' average daily net assets; provided, however, that if
the total expenses borne by the Fund in any fiscal year of the Fund exceed any
expense limitations imposed by applicable state securities laws or regulations,
the Investment Adviser will reimburse the Fund 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 Fairfield Group, Inc. pursuant to an
Administration Agreement between it and the Fund. The Investment Adviser's
obligation to reimburse the Fund hereunder is limited in any fiscal year of the
Fund 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 Fund 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 Fund 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 Loco. The Fund 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 Fund 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 Fund 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 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 Investment Adviser in the performance of its
duties or from
-4-
<PAGE>
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 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 June
23, 1992. Thereafter, if not terminated, this Agreement shall continue in effect
for successive periods of twelve months, each ending on June 23 each year,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Fund's Board of Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Fund's Board of Directors or by vote of a majority of the Fund's
outstanding voting securities. Notwithstanding the foregoing, this Agreement may
be terminated at any time on sixty days' written notice, without the payment of
any penalty, by the Fund (by vote of the Fund's Board of Directors or by vote of
a majority of the Fund's outstanding voting securities) 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 Fund hereby agrees that it will eliminate from its corporate name
any references to the name "CoreFunds." The Fund 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 Fund's outstanding voting
securities.
13. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule, or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Pennsylvania law.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
COREFUNDS, INC.
By: /s/ Francis J. Bruzda
------------------------------------
CORESTATES INVESTMENT ADVISERS, INC.
By: /s/ Richard J. Lindsay
------------------------------------
INVESTMENT ADVISORY AGREEMENT
[GROWTH EQUITY FUND]
AGREEMENT made as of March 25, 1991 between COREFUNDS, INC., a Maryland
corporation (hereinafter the "Fund"), and CORESTATES INVESTMENT ADVISERS, INC.,
a Pennsylvania corporation (hereinafter the "Investment Adviser").
WHEREAS, 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 Fund desires to retain the Investment Adviser to furnish
investment advisory services to the Fund and certain of 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 Fund hereby appoints the Investment Adviser to act
as investment adviser to the Fund 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 Fund's Articles of Incorporation, as filed with the Secretary of
State of Maryland on September 11, 1984, and all amendments thereto (such
Articles, as presently in effect and as they shall from time to time be amended
or supplemented, are herein called the "Articles of Incorporation");
(b) the Fund's By-Laws and amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are herein
called the "By-Laws");
(c) resolutions of the Fund's Board of Directors authorizing the
appointment of the Investment Adviser and approving this Agreement;
<PAGE>
(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 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 Fund's Board of
Directors, the Investment Adviser will provide a continuous investment program
for certain portfolios of the Fund, including investment guidelines and
management with respect to all securities and investments and cash equivalents
held by the Growth Equity Fund and such other portfolios (hereinafter
collectively, the "Portfolios") offered by the Fund and identified by the Fund
as appropriate. The Investment Adviser will determine from time to time what
securities and other investments will be purchased, retained, or sold by the
Fund. The Investment 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 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 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 Investment
Adviser will be the prompt execution of orders in an effective manner at the
most favorable price. Subject to this consideration, brokers or dealers who
provide supplemental research to the Investment Adviser may receive orders for
transactions with the Fund. In no instance will portfolio securities be
purchased from or sold to Fairfield Group, Inc., CoreStates Financial Corp, or
any
-2-
<PAGE>
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
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 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 Investment 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 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 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
Investment Adviser further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1
under the 1940 Act.
6. Expenses. During the term of this Agreement, the Investment Adviser
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the
-3-
<PAGE>
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 Fund
will pay the Investment Adviser and the Investment Adviser will accept as full
compensation therefore a fee, computed daily and paid monthly, at an annual rate
of .75% of the Portfolios' average daily net assets; provided, however, that if
the total expenses borne by the Fund in any fiscal year of the Fund exceed any
expense limitations imposed by applicable state securities laws or regulations,
the Investment Adviser will reimburse the Fund 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 Fairfield Group, Inc. pursuant to an
Administration Agreement between it and the Fund. The Investment Adviser's
obligation to reimburse the Fund hereunder is limited in any fiscal year of the
Fund 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 Fund 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 Fund 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 Fund 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 , sales literature, advertisements, and other material
prepared for distribution to shareholders of the Fund 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 Fund 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 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 Investment Adviser in the performance of its
duties or from
-4-
<PAGE>
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 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 June
23, 1992. Thereafter, if not terminated, this Agreement shall continue in effect
for successive periods of twelve months, each ending on June 23 each year,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Fund's Board of Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Fund's Board of Directors or by vote of a majority of the Fund's
outstanding voting securities. Notwithstanding the foregoing, this Agreement may
be terminated at any time on sixty days' written notice, without the payment of
any penalty, by the Fund (by vote of the Fund's Board of Directors or by vote of
a majority of the Fund's outstanding voting securities) 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 Fund hereby agrees that it will eliminate from its corporate name
any references to the name "CoreFunds." The Fund 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 Fund's outstanding voting
securities.
13. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule, or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Pennsylvania law.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
COREFUNDS, INC.
By: /s/ Francis J. Bruzda
-----------------------
CORESTATES INVESTMENT ADVISERS, INC.
By: /s/ Richard J. Lindsay
-------------------------
INVESTMENT ADVISORY AGREEMENT
[INTERMEDIATE BOND FUND]
AGREEMENT made as of March 25, 1991 between COREFUNDS, INC., a Maryland
corporation (hereinafter the "Fund"), and CORESTATES INVESTMENT ADVISERS, INC.,
a Pennsylvania corporation (hereinafter the "Investment Adviser").
WHEREAS, 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 Fund desires to retain the Investment Adviser to furnish
investment advisory services to the Fund and certain of 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 Fund hereby appoints the Investment Adviser to act
as investment adviser to the Fund 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 Fund's Articles of Incorporation, as filed with the Secretary of
State of Maryland on September 11, 1984, and all amendments thereto (such
Articles, as presently in effect and as they shall from time to time be amended
or supplemented, are herein called the "Articles of Incorporation");
(b) the Fund's By-Laws and amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are herein
called the "By-Laws");
(c) resolutions of the Fund's Board of Directors authorizing the
appointment of the Investment Adviser and approving this Agreement;
<PAGE>
(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 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 Fund's Board of
Directors, the Investment Adviser will provide a continuous investment program
for certain portfolios of the Fund, including investment guidelines and
management with respect to all securities and investments and cash equivalents
held by the Intermediate Bond Fund and such other portfolios (hereinafter
collectively, the "Portfolios") offered by the Fund and identified by the Fund
as appropriate. The Investment Adviser will determine from time to time what
securities and other investments will be purchased, retained, or sold by the
Fund. The Investment 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 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 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 Investment
Adviser will be the prompt execution of orders in an effective manner at the
most favorable price. Subject to this consideration, brokers or dealers who
provide supplemental research to the Investment Adviser may receive orders for
transactions with the Fund. In no instance will portfolio securities be
purchased from or sold to Fairfield Group, Inc., CoreStates Financial Corp, or
any
<PAGE>
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
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 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 Investment 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 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 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
Investment Adviser further agrees to preserve for the periods prescribed by Rule
3la-2 under the 1940 Act the records required to be maintained by Rule 31a-1
under the 1940 Act.
6. Expenses. During the term of this Agreement, the Investment Adviser
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the
<PAGE>
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 Fund
will pay the Investment Adviser and the Investment Adviser will accept as full
compensation therefore a fee, computed daily and paid monthly, at an annual rate
of .50% of the Portfolios' average daily net assets; provided, however, that if
the total expenses borne by the Fund in any fiscal year of the Fund exceed any
expense limitations imposed by applicable state securities laws or regulations,
the Investment Adviser will reimburse the Fund 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 Fairfield Group, Inc. pursuant to an
Administration Agreement between it and the Fund. The Investment Adviser's
obligation to reimburse the Fund hereunder is limited in any fiscal year of the
Fund 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 Fund 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 Fund 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 Fund 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 Fund 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 Fund 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 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 Investment Adviser in the performance of its
duties or from
<PAGE>
reckless disregard by it of its obligations and duties under this Agreement.
l0. 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 June
23, 1992. Thereafter, if not terminated, this Agreement shall continue in effect
for successive periods of twelve months, each ending on June 23 each year,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Fund's Board of Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Fund's Board of Directors or by vote of a majority of the Fund's
outstanding voting securities. Notwithstanding the foregoing, this Agreement may
be terminated at any time on sixty days' written notice, without the payment of
any penalty, by the Fund (by vote of the Fund's Board of Directors or by vote of
a majority of the Fund's outstanding voting securities) 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 Fund hereby agrees that it will eliminate from its corporate name
any references to the name "CoreFunds." The Fund 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 Fund'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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
COREFUNDS, INC.
By /s/ Francis J. Bruzda
-----------------------
Francis J. Bruzda
CORESTATES INVESTMENT ADVISERS, INC.
By /s/ Richard J. Lindsay
-------------------------
Richard J. Lindsay
INVESTMENT ADVISORY AGREEMENT
[TAX-FREE RESERVE FUND]
AGREEMENT made as of March 25, 1991 between COREFUNDS, INC., a Maryland
corporation (hereinafter the "Fund"), and CORESTATES INVESTMENT ADVISERS, INC.,
a Pennsylvania corporation (hereinafter the "Investment Adviser").
WHEREAS, 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 Fund desires to retain the Investment Adviser to furnish
investment advisory services to the Fund and certain of 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 Fund hereby appoints the Investment Adviser to act
as investment adviser to the Fund 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 Fund's Articles of Incorporation, as filed with the Secretary of
State of Maryland on September 11, 1984, and all amendments thereto (such
Articles, as presently in effect and as they shall from time to time be amended
or supplemented, are herein called the "Articles of Incorporation");
(b) the Fund's By-Laws and amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are herein
called the "By-Laws");
(c) resolutions of the Fund's Board of Directors authorizing the
appointment of the Investment Adviser and approving this Agreement;
<PAGE>
(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 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 Fund's Board of
Directors, the Investment Adviser will provide a continuous investment program
for certain portfolios of the Fund, including investment guidelines and
management with respect to all securities and investments and cash equivalents
held by the Tax-Free Reserve Fund and such other portfolios (hereinafter
collectively, the "Portfolios") offered by the Fund and identified by the Fund
as appropriate. The Investment Adviser will determine from time to time what
securities and other investments will be purchased, retained, or sold by the
Fund. The Investment 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 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 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 Investment
Adviser will be the prompt execution of orders in an effective manner at the
most favorable price. Subject to this consideration, brokers or dealers who
provide supplemental research to the Investment Adviser may receive orders for
transactions with the Fund. In no instance will portfolio securities be
purchased from or sold to Fairfield Group, Inc., CoreStates Financial Corp, or
any
<PAGE>
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
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 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 Investment 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 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 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
Investment Adviser further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1
under the 1940 Act.
6. Expenses. During the term of this Agreement, the Investment Adviser
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the
<PAGE>
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 Fund
will pay the Investment Adviser and the Investment Adviser will accept as full
compensation therefor a fee, computed daily and paid monthly, at an annual rate
of .50% of the Portfolios' average daily net assets; provided, however, that if
the total expenses borne by the Fund in any fiscal year of the Fund exceed any
expense limitations imposed by applicable state securities laws or regulations,
the Investment Adviser will reimburse the Fund 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 Fairfield Group, Inc. pursuant to an
Administration Agreement between it and the Fund. The Investment Adviser's
obligation to reimburse the Fund hereunder is limited in any fiscal year of the
Fund 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 Fund 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 Fund 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 Fund 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 Fund 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 Fund 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 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 Investment Adviser in the performance of its
duties or from
<PAGE>
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 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 June
23, 1992. Thereafter, if not terminated, this Agreement shall continue in effect
for successive periods of twelve months, each ending on June 23 each year,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Fund's Board of Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Fund's Board of Directors or by vote of a majority of the Fund's
outstanding voting securities. Notwithstanding the foregoing, this Agreement may
be terminated at any time on sixty days' written notice, without the payment of
any penalty, by the Fund (by vote of the Fund's Board of Directors or by vote of
a majority of the Fund's outstanding voting securities) 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 Fund hereby agrees that it will eliminate from its corporate name
any references to the name "CoreFunds." The Fund 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 Fund'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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
COREFUNDS, INC.
By /s/ Francis J. Bruzda
-------------------------
Francis J. Bruzda
CORESTATES INVESTMENT ADVISERS, INC.
By /s/ Richard J. Lindsay
--------------------------
Richard J. Lindsay
INVESTMENT ADVISORY AGREEMENT
[FIDUCIARY TAX-FREE RESERVE FUND]
AGREEMENT made as of March 25, 1991 between COREFUNDS, INC., a Maryland
corporation (hereinafter the "Fund"), and CORESTATES INVESTMENT ADVISERS, INC.,
a Pennsylvania corporation (hereinafter the "Investment Adviser").
WHEREAS, 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 Fund desires to retain the Investment Adviser to furnish
investment advisory services to the Fund and certain of 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 Fund hereby appoints the Investment Adviser to act
as investment adviser to the Fund 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 Fund's Articles of Incorporation, as filed with the Secretary of
State of Maryland on September 11, 1984, and all amendments thereto (such
Articles, as presently in effect and as they shall from time to time be amended
or supplemented, are herein called the "Articles of Incorporation");
(b) the Fund's By-Laws and amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are herein
called the "By-Laws");
(c) resolutions of the Fund's Board of Directors authorizing the
appointment of the Investment Adviser and approving this Agreement;
<PAGE>
(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 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 Fund's Board of
Directors, the Investment Adviser will provide a continuous investment program
for certain portfolios of the Fund, including investment guidelines and
management with respect to all securities and investments and cash equivalents
held by the Fiduciary Tax-Free Reserve Fund and such other portfolios
(hereinafter collectively, the "Portfolios") offered by the Fund and identified
by the Fund as appropriate. The Investment Adviser will determine from time to
time what securities and other investments will be purchased, retained, or sold
by the Fund. The Investment 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 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 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 Investment
Adviser will be the prompt execution of orders in an effective manner at the
most favorable price. Subject to this consideration, brokers or dealers who
provide supplemental research to the Investment Adviser may receive orders for
transactions with the Fund. In no instance will portfolio securities be
purchased from or sold to Fairfield Group, Inc., CoreStates Financial Corp, or
any
<PAGE>
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
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 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 Investment 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 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 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
Investment Adviser further agrees to preserve for the periods prescribed by Rule
3la-2 under the 1940 Act the records required to be maintained by Rule 31a-1
under the 1940 Act.
6. Expenses. During the term of this Agreement, the Investment Adviser
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the
<PAGE>
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. The Fund and the Investment Adviser expressly agree
that the Investment Adviser shall receive no compensation for its services or
reimbursement for its expenses from the Fund in connection with this Agreement.
8. Use of Investment Adviser's Name and Logo. The Fund 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 Fund 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 Fund 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 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 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 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 June
23, 1992. Thereafter, if not terminated, this Agreement shall continue in effect
for successive periods of twelve months, each ending on June 23 each year,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Fund's Board of Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Fund's Board of Directors or by vote of a majority of the Fund's
outstanding voting securities. Notwithstanding the foregoing, this Agreement may
be terminated at any time on sixty days' written notice, without the payment of
any penalty, by the
<PAGE>
Fund (by vote of the Fund's Board of Directors or by vote of a majority of the
Fund'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 Fund hereby agrees that it will eliminate from its corporate name
any references to the name "CoreFunds." The Fund 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 Fund'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.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
COREFUNDS, INC.
By /s/ Francis J. Bruzda
-------------------------
Francis J. Bruzda
CORESTATES INVESTMENT ADVISERS, INC.
By /s/ Richard J. Lindsay
--------------------------
Richard J. Lindsay
INVESTMENT ADVISORY AGREEMENT
[FIDUCIARY TREASURY RESERVE FUND]
AGREEMENT made as of March 25, 1991 between COREFUNDS, INC., a Maryland
corporation (hereinafter the "Fund"), and CORESTATES INVESTMENT ADVISERS, INC.,
a Pennsylvania corporation (hereinafter the "Investment Adviser").
WHEREAS, 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 Fund desires to retain the Investment Adviser to furnish
investment advisory services to the Fund and certain of 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 Fund hereby appoints the Investment Adviser to act
as investment adviser to the Fund 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 Fund's Articles of Incorporation, as filed with the Secretary of
State of Maryland on September 11, 1984, and all amendments thereto (such
Articles, as presently in effect and as they shall from time to time be amended
or supplemented, are herein called the "Articles of Incorporation");
(b) the Fund's By-Laws and amendments thereto (such ByLaws, 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;
<PAGE>
(d) the Fund's Notification of Registration on Form N8A 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 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 Fund's Board of
Directors, the Investment Adviser will provide a continuous investment program
for certain portfolios of the Fund, including investment guidelines and
management with respect to all securities and investments and cash equivalents
held by the Fiduciary Treasury Reserve Fund and such other portfolios
(hereinafter collectively, the "Portfolios") offered by the Fund and identified
by the Fund as appropriate. The Investment Adviser will determine from time to
time what securities and other investments will be purchased, retained, or sold
by the Fund. The Investment 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 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 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 Investment
Adviser will be the prompt execution of orders in an effective manner at the
most favorable price. Subject to this consideration, brokers or dealers who
provide supplemental research to the Investment Adviser may receive orders for
transactions with the Fund. In no instance will portfolio securities be
purchased from or sold to Fairfield Group, Inc., CoreStates Financial Corp, or
any
<PAGE>
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
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 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 Investment 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 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 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
Investment Adviser further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1
under the 1940 Act.
6. Expenses. During the term of this Agreement, the Investment Adviser
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the
<PAGE>
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. The Fund and the Investment Adviser expressly agree
that the Investment Adviser shall receive no compensation for its services or
reimbursement for its expenses from the Fund in connection with this Agreement.
8. Use of Investment Adviser's Name and Logo. The Fund 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 Fund 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 Fund 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 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 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 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 June
23, 1992. Thereafter, if not terminated, this Agreement shall continue in effect
for successive periods of twelve months, each ending on June 23 each year,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Fund's Board of Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Fund's Board of Directors or by vote of a majority of the Fund's
outstanding voting securities. Notwithstanding the foregoing, this Agreement may
be terminated at any time on sixty days' written notice, without the payment of
any penalty, by the
<PAGE>
Fund (by vote of the Fund's Board of Directors or by vote of a majority of the
Fund'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 Fund hereby agrees that it will eliminate from its corporate name
any references to the name "CoreFunds." The Fund 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 Fund'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.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
COREFUNDS, INC.
By /s/ Francis J. Bruzda
-------------------------
Francis J. Bruzda
CORESTATES INVESTMENT ADVISERS, INC.
By /s/ Richard J. Lindsay
--------------------------
Richard J. Lindsay
INVESTMENT ADVISORY AGREEMENT
[BALANCED FUND]
AGREEMENT made as of September 15, 1992 between COREFUNDS, INC., a
Maryland corporation (hereinafter the "Fund"), and CORESTATES INVESTMENT
ADVISERS, INC., a Pennsylvania corporation (hereinafter the "Investment
Adviser").
WHEREAS, 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 Fund desires to retain the Investment Adviser to furnish
investment advisory services to the Fund and certain of 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 Fund hereby appoints the Investment Adviser to act
------------
as investment adviser to the Fund 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 Fund's Articles of Incorporation, as filed with the Secretary of
State of Maryland on September 11, 1984, and all amendments thereto (such
Articles, as presently in effect and as they shall from time to time be amended
or supplemented, are herein called the "Articles of Incorporation");
(b) the Fund's By-Laws and amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are herein
called the "By-Laws");
(c) resolutions of the Fund's Board of Directors authorizing the
appointment of the Investment Adviser and approving this Agreement;
<PAGE>
(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 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 Fund's Board of
-----------
Directors, the Investment Adviser will provide a continuous investment program
for certain portfolios of the Fund, including investment guidelines and
management with respect to all securities and investments and cash equivalents
held by the Balanced Fund and such other portfolios (hereinafter collectively,
the "Portfolios") offered by the Fund and identified by the Fund as appropriate.
The Investment Adviser will determine from time to time what securities and
other investments will be purchased, retained, or sold by the Fund. The
Investment 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 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 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 Investment
Adviser will be the prompt execution of orders in an effective manner at the
most favorable price. Subject to this consideration, brokers or dealers who
provide supplemental research to the Investment Adviser may receive orders for
transactions with the Fund. In no instance will portfolio securities be
purchased from or sold to Fairfield Group, Inc., CoreStates Financial Corp, or
any
<PAGE>
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
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 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 Investment 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 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 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
Investment Adviser further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1
under the 1940 Act.
6. Expenses. During the term of this Agreement, the Investment Adviser
---------
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the
<PAGE>
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 Fund
will pay the Investment Adviser and the Investment Adviser will accept as full
compensation therefor a fee, computed daily and paid monthly, at an annual rate
--------
of .70% of the Portfolios' average daily net assets; provided, however, that if
------------------
the total expenses borne by the Fund in any fiscal year of the Fund exceed any
expense limitations imposed by applicable state securities laws or regulations,
the Investment Adviser will reimburse the Fund 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 Fairfield Group, Inc. pursuant to an
Administration Agreement between it and the Fund. The Investment Adviser's
obligation to reimburse the Fund hereunder is limited in any fiscal year of the
Fund 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 Fund 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 Fund 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 Fund 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 Fund 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 Fund 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 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 Investment Adviser in the performance of its
duties or from
<PAGE>
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 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 June
23, 1994. Thereafter, if not terminated, this Agreement shall continue in effect
for successive periods of twelve months, each ending on June 23 each year,
provided such continuance is specifically approved at least annually (a) by the
- --------
vote of a majority of those members of the Fund's Board of Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Fund's Board of Directors or by vote of a majority of the Fund's
outstanding voting securities. Notwithstanding the foregoing, this Agreement may
be terminated at any time on sixty days' written notice, without the payment of
any penalty, by the Fund (by vote of the Fund's Board of Directors or by vote of
a majority of the Fund's outstanding voting securities) 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 Fund hereby agrees that it will eliminate from its corporate name
any references to the name "CoreFunds." The Fund 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 Fund'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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
COREFUNDS, INC.
By /s/ James W. Jennings
-------------------------
Name: James W. Jennings
Title: Secretary
CORESTATES INVESTMENT ADVISERS, INC.
By /s/ Richard J. Lindsay
--------------------------
Name: Richard J. Lindsay
Title: Managing Director
SUB-ADVISORY AGREEMENT
[GLOBAL BOND FUND]
AGREEMENT made as of December 15, 1993, 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 March 25, 1991, with the Fund, pursuant to which the
Investment Adviser provides investment advisory services to the Fund and certain
of its portfolios; and
WHEREAS, the Investment Adviser wishes to have the Sub-Adviser act as
the sub-investment adviser to the Global Bond Fund and as such to provide the
Investment Adviser with investment advisory services, including investment
management, investment research and investment recommendations, and the
Sub-Adviser is willing to provide such services;
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Investment Adviser hereby appoints the Sub-Adviser
to act as sub-investment adviser to the Global Bond Fund for the period and on
the terms set forth in this Agreement. The Sub-Adviser accepts such appointment
and agrees to furnish the services herein set forth for the compensation herein
provided.
2. Delivery of Documents. The Fund or the Investment Adviser has
furnished the Sub-Adviser with copies properly certified or authenticated of
each of the following:
(a) the Fund's Articles of Incorporation, as filed with the Secretary
of State of Maryland on September 11, 1994, and all amendments thereto (such
Articles, as presently in effect and as they shall from time to time be amended
or supplemented, are herein called the "Articles of Incorporation");
(b) the Fund's By-Laws and amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are herein
called the "By-Laws");
<PAGE>
(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 objectives,
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;
<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.
<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 expenses 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 June 30, 1995. 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
<PAGE>
vote of a majority of the Fund's outstanding voting securities. Notwithstanding
the foregoing, this Agreement may be terminated at any time on sixty days'
written notice, without the payment of any penalty, by the Fund (by vote of the
Fund's Board of Directors or by vote of a majority of the Fund's outstanding
voting securities), by the Investment Adviser or by the Sub-Adviser. This
Agreement will immediately terminate in the event of its assignment. As used in
this Agreement, the terms "majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the meanings assigned to such
terms in the 1940 Act.
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged, or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement shall be
effective until approved 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,
status, 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: /s/ Richard J. Lindsay
-----------------------------------
Name: Richard J. Lindsay
------------------------------
Date:
------------------------------
ALPHA GLOBAL FIXED INCOME MANAGERS, INC.
By: /s/ George Robertson McNeill
------------------------------------
Name: George Robertson McNeill
-------------------------------
Title: President & Chief Executive
Officer
------------------------------
INVESTMENT ADVISORY AGREEMENT
[ELITE CASH RESERVE]
[ELITE GOVERNMENT RESERVE]
[ELITE TREASURY RESERVE]
AGREEMENT made as of June 21, 1994 between COREFUNDS, INC., a Maryland
corporation (hereinafter the "Fund"), and CORESTATES INVESTMENT ADVISERS, INC.,
a Pennsylvania corporation (hereinafter the "Investment Adviser").
WHEREAS, 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 Fund desires to retain the Investment Adviser to furnish
investment advisory services to the Fund and certain of 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 Fund hereby appoints the Investment Adviser to act
------------
as investment adviser to the Fund 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 Fund's Articles of Incorporation, as filed with the Secretary of
State of Maryland on September 11, 1984, and all amendments thereto (such
Articles, as presently in effect and as they shall from time to time be amended
or supplemented, are herein called the "Articles of Incorporation");
(b) the Fund's By-Laws and amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are herein
called the "By-Laws");
(c) resolutions of the Fund's Board of Directors authorizing the
appointment of the Investment Adviser and approving this Agreement;
<PAGE>
(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 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 Fund 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 Fund's Board of
-----------
Directors, the Investment Adviser will provide a continuous investment program
for certain portfolios of the Fund, including investment guidelines and
management with respect to all securities and investments and cash equivalents
held by Elite Cash Reserve, Elite Government Reserve and Elite Treasury Reserve
and such other portfolios (hereinafter collectively, the "Portfolios") offered
by the Fund and identified by the Fund as appropriate. The Investment Adviser
will determine from time to time what securities and other investments will be
purchased, retained, or sold by the Fund. The Investment Adviser will provide
the services under this Agreement in accordance with the Fund's investment
objective, policies, and restrictions as stated in the Prospectuses and
resolutions of the Fund'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 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 Investment
Adviser will be the prompt execution of orders in an effective manner at the
<PAGE>
most favorable price. Subject to this consideration, brokers or dealers who
provide supplemental research to the Investment Adviser may receive orders for
transactions with the Fund. 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 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
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 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 Investment 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 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 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
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.
<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 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 Fund
will pay the Investment Adviser and the Investment Adviser will accept as full
compensation therefor a fee, computed daily and paid monthly, at an annual rate
of .20% of the Portfolios' average daily net assets; provided, however, that if
------------------
the total expenses borne by the Fund in any fiscal year of the Fund exceed any
expense limitations imposed by applicable state securities laws or regulations,
the Investment Adviser will reimburse the Fund 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 Fund. The Investment
Adviser's obligation to reimburse the Fund hereunder is limited in any fiscal
year of the Fund 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 Fund 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 Fund 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 Fund 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 Fund 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 Fund 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 Fund
in connection with the performance of this Agreement, except a loss resulting
from a
<PAGE>
breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith, or gross
negligence on the part of the Investment Adviser in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement.
10. Duration and Termination. This Agreement will become effective as of
-------------------------
the date first above written, provided that it shall have been approved by 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 June
30, 1995. 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 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) 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 as 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 Fund hereby agrees that it will eliminate from its corporate name
any references to the name "CoreFunds." The Fund 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 Fund'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
<PAGE>
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.
COREFUNDS, INC.
By /s/ James W. Jennings
---------------------------
Secretary
CORESTATES INVESTMENT ADVISERS, INC.
By /s/ Richard J. Lindsay
---------------------------
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of April 12, 1996 between COREFUNDS, INC.,
a Maryland corporation (hereinafter the "Company"), and CORESTATES INVESTMENT
ADVISERS, INC., a Pennsylvania corporation (hereinafter the "Investment
Adviser").
WHEREAS, the Company is registered as an open-end,
diversified, management investment company under the Investment Company Act of
1940, as amended ("1940 Act"); and
WHEREAS, the Company is authorized to issue shares of Common
Stock in separate classes representing shares in separate portfolios of
securities and other assets; and
WHEREAS, the Company desires to retain the Investment Adviser
to furnish investment advisory services to the Company and its portfolios, and
the Investment Adviser is willing to so furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Company hereby appoints the Investment
Adviser to act as investment adviser to the portfolios of the Company for the
period and on the terms set forth in this Agreement. The Investment Adviser
accepts such appointment and agrees to furnish the services herein set forth for
the compensation herein provided.
2. Delivery of Documents. The Fund has furnished the
Investment Adviser with copies properly certified or authenticated of each of
the following:
(a) the Company's Articles of Incorporation, as filed with
the Secretary of State of Maryland on September 11, 1984, and all amendments
thereto (such Articles, as presently in effect and as they shall from time to
time be amended or supplemented, are herein called the "Articles of
Incorporation");
(b) the Company's By-Laws and amendments thereto (such
ByLaws, 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;
-1-
<PAGE>
(d) the Company's Notification of Registration on Form N-8A
under the 1940 Act as filed with the Securities and Exchange Commission on
September 11, 1984 and all amendments thereto;
(e) the Company's Registration Statement on Form N-1A under
the Securities Act of 1933, as amended ("1933 Act") (File No. 2-93214) and under
the 1940 Act as filed with the Securities and Exchange Commission and all
amendments thereto; and
(f) the Company's most recent Prospectuses and Statement of
Additional Information (such Prospectuses and Statement of Additional
Information, as presently in effect and all amendments and supplements thereto,
are herein called the "Prospectuses").
The Company will furnish the Investment Adviser from time to
time with copies of all amendments of or supplements to the foregoing.
3. Management. Subject to the supervision of the Company's
Board of Directors, the Investment Adviser will provide a continuous investment
program for each portfolio of the Company, including investment guidelines and
management with respect to all securities and investments and cash equivalents
held by the existing portfolios and such other portfolios (hereinafter
collectively, the "Portfolios") offered by the Company and identified by the
Company as appropriate. The Investment Adviser will determine from time to time
what securities and other investments will be purchased, retained, or sold by
the Company. The Investment Adviser will provide the services under this
Agreement in accordance with the Company's investment objective, policies, and
restrictions as stated in the Prospectuses and resolutions of the Company's
Board of Directors.
The Investment Adviser further agrees that it:
(a) will conform with all applicable Rules and Regulations
of the Securities and Exchange Commission and will in addition conduct its
activities under this Agreement in accordance with any regulations of the
Comptroller of the Currency pertaining to the investment advisory activities of
national banks;
(b) will not make loans to any person to purchase or carry
the Company's shares or make loans to the Company;
(c) will place orders pursuant to its investment
determinations for the Company on behalf of its portfolios either directly with
the issuer or with any broker or dealer. In placing orders with brokers and
dealers the primary consideration of the Investment Adviser will be the prompt
execution of orders in an effective manner at the most favorable price. Subject
to this consideration, brokers or dealers who provide supplemental research to
the Investment Adviser may receive orders for transactions with the Company. In
no instance
-2-
<PAGE>
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.
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
-3-
<PAGE>
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 Investment Adviser in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.
-4-
<PAGE>
10. Duration and Termination. This Agreement will become
effective as of the date first above written, provided that it shall have been
approved by shareholders of the respective Portfolios of the Company in
accordance with the requirements under the 1940 Act, and, unless sooner
terminated as provided herein, shall continue in effect until April 15, 1998.
Thereafter, If not terminated, this Agreement shall continue in effect for
successive periods of twelve months, each ending on [June 30] each year,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Portfolio's Board of Directors who
are not parties to this Agreement or interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Portfolio's Board of Directors or by vote of a majority
of the Portfolio's outstanding voting securities. Notwithstanding the foregoing,
this Agreement may be terminated at any time on sixty days written notice,
without the payment of any penalty, by the Company (by vote of the Board of
Directors or by vote of a majority of the Portfolio's outstanding voting
securities) or by the Investment Adviser. This Agreement will immediately
terminate in the event of its assignment. (As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested persons" and
"assignment" shall have the same meaning of such terms in the 1940 Act.)
11. Name Protection After Termination. In the event this
Agreement is terminated by either party or upon written notice from the
Investment Adviser at any time, the Company hereby agrees that it will eliminate
from its corporate name any references to the name "CoreFunds." The Company
shall have the nonexclusive use of the name "CoreFunds" in whole or in part so
long as this Agreement is effective or until such notice is given.
12. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged, or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. No amendment of this
Agreement shall be effective until approved by vote of a majority of the
Portfolio's outstanding voting securities.
13. Miscellaneous. The captions in this Agreement are included
for convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule, or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Pennsylvania law.
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.
-5-
<PAGE>
COREFUNDS, INC.
/s/ Richard J. Shoch
--------------------------------
Richard J. Shoch
Vice President
CORESTATES INVESTMENT ADVISERS, INC.
/s/ Mark Stalnecker
--------------------------------
Mark Stalnecker
President
-6-
<PAGE>
APPENDIX A
Advisory Fee as a Percentage
Portfolio of average daily net assets
- --------- ----------------------------
Growth Equity Fund .75%
Equity Fund .74%
Special Equity Fund 1.50%
Equity Index Fund .40%
International Growth Fund .80%
Balanced Fund .70%
Short-Intermediate Bond Fund .50%
Bond Fund .74%
Short Term Income Fund .74%
Government Income Fund .50%
Intermediate Municipal Bond Fund .50%
Pennsylvania Municipal Bond Fund .50%
New Jersey Municipal Bond Fund .50%
Global Bond Fund .60%
Cash Reserve .40%
Treasury Reserve .40%
Tax-Free Reserve .40%
Fiduciary Reserve .50%
Fiduciary Treasury Reserve .20%
Fiduciary Tax-Free Reserve .20%
Elite Cash Reserve .20%
Elite Government Reserve .20%
Elite Treasury Reserve .20%
===============================================================================
-7-
SUB-ADVISORY AGREEMENT
[GLOBAL BOND FUND]
AGREEMENT made as of April 12, 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 April __, 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");
-1-
<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;
-2-
<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.
-3-
<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 April __, 1998. 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 this Agreement, the terms "majority of the
outstanding voting
-4-
<PAGE>
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.
-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.
CORESTATES INVESTMENT ADVISERS, INC.
/s/ Mark Stalnecker
-----------------------------------------
Mark Stalnecker
Title: Chairman
ALPHA GLOBAL FIXED INCOME MANAGERS, INC.
/s/ G.R. McNeill
-----------------------------------------
G.R. McNeill
Title: President and Chief Executive Officer
-6-
SUB-INVESTMENT ADVISORY AGREEMENT
[INTERNATIONAL GROWTH FUND]
AGREEMENT made as of April 12, 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 April 12, 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 SubAdviser
act as a sub-investment adviser for a portion of the assets of the Fund's
International Growth Portfolio and as such to provide the Investment Adviser
with investment advisory services, including investment management, investment
research and investment recommendations, and the Sub-Adviser is willing to
provide such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Investment Adviser hereby appoints the
Sub-Adviser to act as a sub-investment adviser to the Fund for the period and on
the terms set forth in this Agreement. The Sub-Adviser accepts such appointment
and agrees to furnish the services herein set forth for the compensation herein
provided.
2. Delivery of Documents. The Fund or the Investment Adviser
has furnished the Sub-Adviser with copies properly certified or authenticated of
each of the following:
(a) the Fund's Articles of Incorporation, as filed with the
Secretary of State of Maryland on September 11, 1984, and all amendments thereto
(such Articles, as presently in effect and as they shall from time to time be
amended or supplemented, are herein called the "Articles of Incorporation");
<PAGE>
(b) the Fund's By-Laws and amendments thereto (such
By-Laws, as presently in affect and as they shall from time to time be amended,
are herein called the "ByLaws");
(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 SubAdviser will provide a
continuous investment program for a portion of the assets of the International
Growth Portfolio of the Fund, as determined by the Investment Adviser, including
investment research and management with respect to that portion of securities
and investments and cash equivalents managed by the Sub- Adviser for the
International Growth Portfolio of the Fund and such other portfolios
(hereinafter collectively, the "Portfolios") offered by the Fund and identified
by the Fund as appropriate to use a sub-investment adviser. The Sub-Adviser will
determine from time to time what securities and other investments will be
purchased, retained, or sold by the Fund. The Sub-Adviser will provide the
services under this Agreement in accordance with the Fund's investment
objective, policies, and restrictions as stated in the Prospectus and
resolutions of the Fund's Board of Directors. The Sub-Adviser acknowledges and
agrees that the Fund shall have no responsibility to pay the Sub-Adviser, and
that any compensation to be paid to the Sub-Adviser shall be paid by the
Investment Adviser pursuant to Section 7 of this Agreement.
The Sub-Adviser further agrees that it:
(a) will conform with all applicable Rules and Regulations
of the Securities and Exchange Commission and will in addition conduct its
activities under this Agreement in accordance with any regulations of the
Comptroller of the Currency pertaining to the investment advisory activities of
national banks;
-2-
<PAGE>
(b) will not make loans to any person to purchase or carry
the Fund shares or make loans to the Fund;
(c) will place orders pursuant to its investment
determinations for the Fund either directly with the issuer or with any broker
or dealer. In placing orders with brokers and dealers the primary consideration
of the Sub-Adviser will be the prompt execution of orders in an effective manner
at the most favorable price. Subject to this consideration, brokers or dealers
who provide supplemental research to the Sub-Adviser may receive orders for
transactions with the Fund. In no instance will portfolio securities be
purchased from or sold to 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-Adviser shall be free to furnish similar services to others so long as its
services under this Agreement are not impaired thereby.
-3-
<PAGE>
5. Books and Records. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, the Sub-Adviser hereby agrees that all records
which it maintains for the Fund are the property of the Fund and further agrees
to surrender promptly to the Fund any of such records upon the Fund's request.
The Sub-Adviser further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1
under the 1940 Act.
6. Expenses. During the term of this Agreement, the
Sub-Adviser will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities (including
brokerage commissions, if any) purchased for the Fund and the cost of obtaining
market quotations of portfolio securities held by the Fund.
7. Compensation. For the services provided and the expenses
assumed pursuant to this Agreement, effective as of the date of this Agreement,
the Investment Adviser will pay the SubAdviser 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 April __, 1998. Thereafter, if not terminated, this Agreement
shall continue in effect for successive periods of twelve months, each ending on
April __ 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 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
-4-
<PAGE>
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.
/s/ Mark Stalnecker
------------------------------------
Mark Stalnecker
Title: Chairman
MARTIN CURRIE, INC.
/s/ Michael J. Gibson
------------------------------------
Michael J. Gibson
Title: Vice President
-5-
SUB-INVESTMENT ADVISORY AGREEMENT
[INTERNATIONAL GROWTH FUND]
AGREEMENT made as of April 12, 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 April__, 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 SubAdviser
act as a sub-investment adviser for a portion of the assets of the Fund's
International Growth Portfolio and as such to provide the Investment Adviser
with investment advisory services, including investment management, investment
research and investment recommendations, and the Sub- Adviser is willing to
provide such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Investment Adviser hereby appoints the
Sub-Adviser to act as a sub-investment adviser to the Fund for the period and on
the terms set forth in this Agreement. The Sub-Adviser accepts such appointment
and agrees to furnish the services herein set forth for the compensation herein
provided.
2. Delivery of Documents. The Fund or the Investment Adviser
has furnished the Sub-Adviser with copies properly certified or authenticated of
each of the following:
(a) the Fund's Articles of Incorporation, as filed with the
Secretary of State of Maryland on September 11, 1984, and all amendments thereto
(such Articles, as presently
1
<PAGE>
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 "ByLaws");
(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 SubAdviser 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 SubAdviser and the Sub-Adviser will accept
as full compensation therefor a fee, computed daily and paid monthly, at an
annual rate of .375% of the portion of the Portfolio's average daily net assets
allocated to such Sub-Adviser. The Sub-Adviser may from time to time and at its
discretion voluntarily waive all or a portion of its sub-advisory fees in order
to assist the Fund in maintaining a competitive expense ratio.
8. Limitation of Liability. The Sub-Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of the Sub-Adviser in the performance of
its duties or from reckless disregard by it of its obligations and duties under
this Agreement.
9. Duration and Termination. This Agreement will become
effective as of the date first above written, 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 April __, 1998. Thereafter, if not terminated, this Agreement
shall continue in effect for successive periods of twelve months, each ending on
April __ 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
4
<PAGE>
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.
/s/ Mark Stalnecker
------------------------------------
Mark Stalnecker
Title: Chairman
ABERDEEN FUND MANAGERS, INC.
/s/ Bev Hendry
------------------------------------
Bev Hendry
Title: CEO
5
DISTRIBUTION AGREEMENT
AUGUST 2, 1985
Fairfield Group, Inc.
232 Lakeside Drive
Horsham, PA 19044
Gentlemen:
This is to confirm that, in consideration of the agreements hereinafter
contained, the undersigned, Red Oak Cash Reserve Fund, Inc. ("the Fund"), a
Maryland corporation, has agreed that Fairfield Group, Inc. ("Fairfield") shall
be, for the period of this Agreement, the distributor of shares of common stock
("Common Shares") of the Fund.
1. Services as Distributor.
1.1 Fairfield will act as agent for the distribution of the Common
Shares covered by the registration statement and prospectus then in effect under
the Securities Act of 1933.
1.2 Fairfield agrees to use appropriate efforts to solicit orders for
the sale of the Common Shares and will undertake such advertising and promotion
as it believes reasonable in connection with such solicitation. The Fund
understands that Fairfield is the distributor, and may in the future be the
distributor, of the shares of several investment companies ("Companies")
including Companies having investment objectives similar to those of the Fund.
The Fund further understands that investors and potential investors in the Fund
may invest in shares of such other Companies. The Fund agrees that Fairfield's
duties to such Companies shall
<PAGE>
not be deemed in conflict with its duties to the Fund under this paragraph 1.2.
Fairfield shall, at its own expense, finance appropriate activities
which it deems reasonable which are primarily intended to result in the sale of
the Common Shares, including, but not limited to, advertising, compensation of
underwriters, dealers, and sales personnel, the printing and mailing of
prospectuses to other than current shareholders, and the printing and mailing of
sales literature; provided, however, that Fairfield agrees that it shall furnish
to the Fund's 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 Fund or to the public,
which in any way refer to or describe the investment adviser or which include
any tradenames, trademarks, or logos of the investment adviser or any affiliate
of the investment adviser. Fairfield 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 it.
1.3 All activities by Fairfield and its agents and employees as
distributor of the Common Shares shall comply with all applicable laws, rules,
and regulations, including, without limitation, all rules and regulations made
or adopted by the Securities and Exchange
<PAGE>
Commission or any securities association registered under the Securities
Exchange Act of 1934.
1.4 Fairfield will provide one or more persons, during normal business
hours, to respond to telephone questions with respect to the Fund.
1.5 Fairfield will transmit any orders received by it for purchase or
redemption of the Common Shares to the Fund's transfer agent and custodian.
1.6 Whenever in their judgment such action is warranted by unusual
market, economic, or political conditions, or by abnormal circumstances of any
kind, the Fund's officers may decline to accept any orders for, or make any
sales of, the Common Shares until such time as those officers deem it advisable
to accept such orders and to make such sales.
1.7 Fairfield will act only on its own behalf as principal if it chooses
to enter into selling agreements with selected dealers or others.
1.8 The Fund agrees at its own expense to execute any and all documents
and to furnish any and all information and otherwise to take all actions that
may be reasonably necessary in connection with the qualification of the Common
Shares for sale in such states as Fairfield may designate.
<PAGE>
1.9 The Fund shall furnish from time to time, for use in connection with
the sale of the Common Shares, such information with respect to the Fund and the
Common Shares as Fairfield may reasonably request; and the Fund warrants that
the statements contained in any such information shall fairly show or represent
what they purport to show or represent. The Fund shall also furnish Fairfield
upon request with: (a) unaudited semiannual statements of the Fund's books and
accounts prepared by the Fund, (b) quarterly earnings statements prepared by the
Fund, (c) a monthly itemized list of the securities in each Portfolio of the
Fund, (d) monthly balance sheets as soon as practicable after the end of each
month, and (e) from time to time such additional information regarding the
Fund's financial condition as Fairfield may reasonably request.
1.10 The Fund represents to Fairfield that all registration statements
and prospectuses filed by the Fund with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, with respect to the Common Shares
have been carefully prepared in conformity with the requirements of said Act and
rules and regulations of the Securities and Exchange Commission thereunder. As
used in this agreement the terms "registration statement" and "prospectus" shall
mean any registration statement and prospectus filed with the Securities and
Exchange Commission and any amendments and supplements thereto which at any time
shall have been filed with the same Commission. The Fund represents and warrants
to Fairfield that any registration statement and prospectus, when such
registration statement becomes effective, will contain all statements required
to be stated therein in conformity with said Act and the rules and regulations
of said Commission; that all statements of fact
<PAGE>
contained in any such registration statement and prospectus will be true and
correct when such registration statement becomes effective; and that neither any
registration statement nor any prospectus when such registration statement
becomes effective will include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading to a purchaser of the Common Shares. The Fund
may but shall not be obligated to propose from time to time such amendment or
amendments to any registration statement and such supplement or supplements to
any prospectus as, in the light of future developments, may, in the opinion of
the Fund's counsel, be necessary or advisable. If the Fund shall not propose
such amendment or amendments and/or supplement or supplements within fifteen
days after receipt by the Fund of a written request from Fairfield to do so,
Fairfield may, at its option, terminate this agreement. The Fund shall not file
any amendment to any registration statement or supplement to any prospectus
without giving Fairfield reasonable notice thereof in advance; provided,
however, that nothing contained in this agreement shall in any way limit the
Fund's right to file at any time such amendments to any registration statement
and/or supplements to any prospectus, of whatever character, as the Fund may
deem advisable, such right being in all respects absolute and unconditional.
1.11 The Fund authorizes Fairfield and dealers to use any prospectus in
the form furnished from time to time in connection with the sale of the Common
Shares. The Fund agrees to indemnify, defend, and hold Fairfield, its several
officers and directors, and any person who controls Fairfield within the meaning
of Section 15 of the Securities Act of 1933,
<PAGE>
as amended, free and harmless from and against any and all claims, demands,
liabilities, and expenses (including the cost of investigating or defending such
claims, demands, or liabilities and any counsel fees incurred in connection
therewith) which Fairfield, its officers and directors, or any such controlling
person, may incur under the Securities Act of 1933, as amended, or under common
law or otherwise, arising out of or based upon any untrue statement, or alleged
untrue statement, of a material fact contained in any registration statement or
any prospectus or arising out of or based upon any omission, or alleged
omission, to state a material fact required to be stated in either any
registration statement or any prospectus or necessary to make the statements in
either thereof not misleading; provided, however, that the Fund's agreement to
indemnify Fairfield, its officers or directors, and any such controlling person
shall not be deemed to cover any claims, demands, liabilities, or expenses
arising out of any statements or representations as are contained in any
prospectus and in such financial and other statements as are furnished in
writing to the Fund by Fairfield and used in the answers to any of the items of
the registration statement or in the corresponding statements made in the
prospectus, or arising out of or based upon any omission or alleged omission to
state a material fact in connection with the giving of such information required
to be stated in such answers or necessary to make the answers not misleading;
and further provided that the Fund's agreement to indemnify Fairfield and the
Fund's representations and warranties hereinbefore set forth in paragraph 1.10
shall not be deemed to cover any liability to the Fund or its shareholders to
which Fairfield would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of its duties, or by reason of
Fairfield's
<PAGE>
reckless disregard of its obligations and duties under this agreement. The
Fund's agreement to indemnify Fairfield, its officers and directors, and any
such controlling person, as aforesaid, is expressly conditioned upon the Fund's
being notified of any action brought against Fairfield, its officers or
directors, or any such controlling person, such notification to be given by
letter or by telegram addressed to the Fund at its principal office in Horsham,
Pennsylvania and sent to the Fund by the person against whom such action is
brought, within 10 days after the summons or other first legal process shall
have been served. The failure to so notify the Fund of any such action shall not
relieve the Fund from any liability which the Fund may have to the person
against whom such action is brought by reason of any such untrue, or allegedly
untrue, statement or omission, or alleged omission, otherwise than on account of
the Fund's indemnity agreement contained in this paragraph 1.11. The Fund will
be entitled to assume the defense of any suit brought to enforce any such claim,
demand, or liability, but, in such case, such defense shall be conducted by
counsel of good standing chosen by the Fund and approved by Fairfield, which
approval shall not unreasonably be withheld. In the event the Fund elects to
assume the defense of any such suit and retain counsel of good standing approved
by Fairfield, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case the Fund
does not elect to assume the defense of any such suit, or in case Fairfield
reasonably does not approve of counsel chosen by the Fund, the Fund will
reimburse Fairfield, its officers and directors, or the controlling person or
persons named as defendant or defendants in such suit, for the fees and expenses
of any counsel retained by Fairfield or them. The Fund's indemnification
agreement contained in this paragraph
<PAGE>
1.11 and the Fund's representations and warranties in this agreement shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of Fairfield, its officers and directors, or any
controlling person, and shall survive the delivery of any Common Shares. This
agreement of indemnity will inure exclusively to Fairfield's benefit, to the
benefit of its several officers and directors, and their respective estates, and
to the benefit of the controlling persons and their successors. The Fund agrees
promptly to notify Fairfield of the commencement of any litigation or
proceedings against the Fund or any of its officers or directors in connection
with the issue and sale of any Common Shares.
1.12 Fairfield agrees to indemnify, defend, and hold the Fund, its
several officers and directors, and any person who controls the Fund within the
meaning of Section 15 of the Securities Act of 1933, as amended, free and
harmless from and against any and all claims, demands, liabilities, and expenses
(including the costs of investigating or defending such claims, demands, or
liabilities and any counsel fees incurred in connection therewith) which the
Fund, its officers or directors, or any such controlling person, may incur under
the Securities Act of 1933, as amended, or under common law or otherwise, but
only to the extent that such liability or expense incurred by the Fund, its
officers or directors, or such controlling person resulting from such claims or
demands, shall arise out of or be based upon any untrue, or alleged untrue,
statement of a material fact contained in information furnished in writing by
Fairfield to the Fund and used in the answers to any of the items of the
registration statement or in the corresponding statements made in the
<PAGE>
prospectus, or shall arise out of or be based upon any omission, or alleged
omission, to state a material fact in connection with such information furnished
in writing by Fairfield to the Fund required to be stated in such answers or
necessary to make such information not misleading. Fairfield's agreement to
indemnify the Fund, its officers and directors, and any such controlling person,
as aforesaid, is expressly conditioned upon Fairfield's being notified of any
action brought against the Fund, its officers or directors, or any such
controlling person, such notification to be given by letter or telegram
addressed to Fairfield at its principal office in Horsham, Pennsylvania, and
sent to Fairfield by the person against whom such action is brought, within 10
days after the summons or other first legal process shall have been served.
Fairfield shall have the right of first control of the defense of such action,
with counsel of its own choosing, satisfactory to the Fund, if such action is
based solely upon such alleged misstatement or omission on Fairfield's part, and
in any other event the Fund, its officers or directors, or such controlling
person shall each have the right to participate in the defense or preparation of
the defense of any such action. The failure so to notify Fairfield of any such
action shall not relieve Fairfield from any liability which Fairfield may have
to the Fund, its officers or directors, or to such controlling person by reason
of any such untrue or alleged untrue statement, or omission or alleged omission,
otherwise than on account of Fairfield's indemnity agreement contained in this
paragraph 1.12.
1.13 No Common Shares shall be offered by either Fairfield or the Fund
under any of the provisions of this agreement and no orders for the purchase or
sale of Common Shares hereunder shall be accepted by the
<PAGE>
Fund if and so long as the effectiveness of the registration statement then in
effect or any necessary amendments thereto shall be suspended under any of the
provisions of the Securities Act of 1933, as amended, or if and so long as a
current prospectus as required by Section 10(b)(2) of said Act, as amended, is
not on file with the Securities and Exchange Commission; provided, however, that
nothing contained in this paragraph 1.13 shall in any way restrict or have an
application to or bearing upon the Fund's obligation to repurchase Common Shares
from any shareholder in accordance with the provisions of the Fund's prospectus
or Articles of Incorporation.
1.14 The Fund agrees to advise Fairfield as soon as reasonably
practicable by a notice in writing delivered to Fairfield or its counsel:
(a) of any request by the Securities and Exchange Commission for
amendments to the registration statement or prospectus then in effect or for
additional information;
(b) in the event of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of the registration
statement or prospectus then in effect or the initiation by service of process
on the Fund of any proceeding for that purpose;
(c) of the happening of any event that makes untrue any statement of a
material fact made in the registration statement or prospectus then in effect or
which requires the making of a
<PAGE>
change in such registration statement or prospectus in order to make the
statements therein not misleading; and
(d) of all action of the Securities and Exchange Commission with respect
to any amendment to any registration statement or prospectus which may from time
to time be filed with the Securities and Exchange Commission.
For purposes of this section, informal requests by or acts of the staff
of the Securities and Exchange Commission shall not be deemed actions of or
requests by the Securities and Exchange Commission.
1.15 Fairfield agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Fund all records and other
information relative to the Fund and its prior, present, or potential
shareholders, and not to 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 Fairfield 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. Fairfield shall provide such information to the Fund's
other service providers at such time or times and in such form or forms as the
Fund may reasonably request.
<PAGE>
1.16 This agreement shall be governed by the laws of the Commonwealth of
Pennsylvania.
2. Term.
This agreement shall become effective August 2, 1985, and, unless sooner
terminated as provided herein, shall continue until June 30, 1987 and thereafter
shall continue automatically for successive annual periods ending on June 30 of
each year, provided such continuance is specifically approved at least annually
by (i) the Fund's Board of Directors or (ii) by a vote of a majority (as defined
in the Investment Company Act of 1940) of the Fund's outstanding voting
securities; provided that, in either event, the continuance is also approved by
the majority of the Fund's directors who are not parties to the agreement or
interested persons (as defined in the Investment Company Act of 1940) of any
party to this agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This agreement is terminable without
penalty, on not less than sixty days' notice, by the Fund's Board of Directors,
by vote of a majority (as defined in the Investment Company Act of 1940) of the
Fund's outstanding voting securities, or by Fairfield. This agreement will also
terminate automatically in the event of its assignment (as defined in the
Investment Company Act of 1940).
Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance hereof at the place below indicated,
whereupon it shall become a binding agreement between us.
<PAGE>
Yours very truly,
RED OAK CASH RESERVE FUND, INC.
By /s/ Francis J. Bruzda
-------------------------
Francis J. Bruzda
Accepted:
FAIRFIELD GROUP, INC.
By /s/ Richard B. Seidel
--------------------------
Richard B. Seidel
Authorized Officer
DISTRIBUTION AGREEMENT
CoreFunds, Inc.
THIS AGREEMENT is made as of this 30th day of October, 1992, between
CoreFunds, Inc. (the "Company"), a Maryland corporation and SEI Financial
Services Company (the "Distributor"), a Pennsylvania corporation.
WHEREAS, the Trust is registered as an investment company with the
Securities and Exchange Commission ("SEC") under the Investment Company Act of
1940, as amended ("1940 Act"), and its Shares are registered with the SEC under
the Securities Act of 1933, as amended ("1933 Act"); and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the Company and Distributor hereby agree as follows:
ARTICLE 1. Sale of Shares. The Company grants to the Distributor the
---------------
exclusive right to sell Shares of the Company at the net asset value per Share
in accordance with the current prospectus, as agent and on behalf of the
Company, during the term of this Agreement and subject to the registration
requirements of the 1933 Act, the rules and regulations of the SEC and the laws
governing the sale of securities in the various states ("Blue Sky Laws").
ARTICLE 2. Solicitation of Sales. In consideration of these rights
----------------------
granted to the Distributor, the Distributor agrees to use all reasonable
efforts, consistent with its other business, in connection with the distribution
of Shares of the Company; provided, however, that the Distributor shall not be
prevented from entering into like arrangements with other issuers. The
provisions of this paragraph do not obligate the Distributor to register as a
broker or dealer under the Blue Sky Laws of any jurisdiction when it determines
it would be uneconomical for it to do so or to maintain its registration in any
jurisdiction in which it is now registered nor obligate the Distributor to sell
any particular number of Shares.
ARTICLE 3. Authorized Representations. The Distributor is not authorized
---------------------------
by the Company to give any information or to make any representations other than
those contained in the current registration statements and prospectuses of the
Company filed with the SEC or contained in Shareholder reports or other material
that may be prepared by or on behalf of the Company for the Distributor's use.
The Distributor may prepare and distribute sales literature and other material
as it may deem appropriate, provided that such literature and materials have
been approved by the Company prior to their use.
<PAGE>
ARTICLE 4. Registration of Shares. The Company agrees that it will take
-----------------------
all action necessary to register Shares under the federal and state securities
laws so that there will be available for sale the number of Shares the
Distributor may reasonably be expected to sell and to pay all fees associated
with said registration. The Company shall make available to the Distributor such
number of copies of its currently effective prospectus and statement of
additional information as the Distributor may reasonably request. The Company
shall furnish to the Distributor copies of all information, financial statements
and other papers which the Distributor may reasonably request for use in
connection with the distribution of Shares of the Company.
ARTICLE 5. Compensation. The Distributor will not receive compensation
-------------
for distribution of Series A shares of the Company. As compensation for the
services performed and the expenses assumed under this Agreement relative to
Series B shares, and to the extent provided in the Company's annual budget under
its retail series Distribution Plan adopted in accordance with Rule 12b-1 under
the Investment Company Act of 1940, the Company shall pay the Distributor
compensation in the amount of .25% of the average daily net assets of Series B
shares. This compensation may be utilized by the Distributor for (i) the cost of
preparing and printing prospectuses and statements of additional information,
reports to Shareholders, sales literature and other materials for potential
investors in Series B, (ii) advertising Series B, and (iii) expenses incurred in
connection with the distribution of Series B shares.
ARTICLE 6. Indemnification of Distributor. The Company agrees to
-------------------------------
indemnify and hold harmless the Distributor and each of its directors and
officers and each person, if any, who controls the Distributor within the
meaning of Section 15 of the 1933 Act against any loss, liability, claim,
damages or expense (including the reasonable cost of investigating or defending
any alleged loss, liability, claim, damages, or expense and reasonable counsel
fees and disbursements incurred in connection therewith), arising by reason of
any person acquiring any Shares, based upon the ground that the registration
statement, prospectus, Shareholder reports or other information filed or made
public by the Company (as from time to time amended) included an untrue
statement of a material fact or omitted to state a material fact required to be
stated or necessary in order to make the statements made not misleading.
However, the Company does not agree to indemnify the Distributor or hold it
harmless to the extent that the statements or omission was made in reliance
upon, and in conformity with, information furnished to the Company by or on
behalf of the Distributor.
In no case (i) is the indemnity of the Company to be deemed to protect
the Distributor against any liability to the Company or its Shareholders to
which the Distributor or such person otherwise would be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
under this Agreement, or (ii) is the Company to be liable to the Distributor
under the indemnity agreement contained in this paragraph with respect to any
claim made against the Distributor or any person indemnified unless the
Distributor or other person shall have notified the Company in writing of the
claim within a reasonable time after
<PAGE>
the summons or other first written notification giving information of the
nature of the claim shall have been served upon the Distributor or such other
person (or after the Distributor or the person shall have received notice of
service on any designated agent). However, failure to notify the Company of any
claim shall not relieve the Company from any liability which it may have to the
Distributor or any person against whom such action is brought otherwise than on
account of its indemnity agreement contained in this paragraph.
The Company shall be entitled to participate at its own expense in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce any claims subject to this indemnity provision. If the Company elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by the Company and satisfactory to the indemnified defendants in the suit
whose approval shall not be unreasonably withheld. In the event that the Company
elects to assume the defense of any suit and retain counsel, the indemnified
defendants shall bear the fees and expenses of any additional counsel retained
by them. If the Company does not elect to assume the defense of a suit, it will
reimburse the indemnified defendants for the reasonable fees and expenses of any
counsel retained by the indemnified defendants.
The Company agrees to notify the Distributor promptly of the
commencement of any litigation or proceedings against it or any of its officers
or Directors in connection with the issuance or sale of any of its Shares.
ARTICLE 7. Indemnification of Company. The Distributor covenants and
---------------------------
agrees that it will indemnify and hold harmless the Company and each of its
Directors and officers and each person, if any, who controls the Company within
the meaning of Section 15 of the Act, against any loss, liability, damages,
claim or expense (including the reasonable cost of investigating or defending
any alleged loss, liability, damages, claim or expense and reasonable counsel
fees incurred in connection therewith) based upon the 1933 Act or any other
statute or common law and arising by reason of any person acquiring any Shares,
and alleging a wrongful act of the Distributor or any of its employees or
alleging that the registration statement, prospectus, Shareholder reports or
other information filed or made public by the Company (as from time to time
amended) included an untrue statement of a material fact or omitted to state a
material fact required to be stated or necessary in order to make the statements
not misleading, insofar as the statement or omission was made in reliance upon
and in conformity with information furnished to the Company by or on behalf of
the Distributor.
In no case (i) is the indemnity of the Distributor in favor of the
Company or any other person indemnified to be deemed to protect the Company or
any other person against any liability to which the Company or such other person
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement, or (ii) is the
Distributor to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Company or any person
indemnified unless the
<PAGE>
Company or person, as the case may be, shall have notified the Distributor in
writing of the claim within a reasonable time after the summons or other first
written notification giving information of the nature of the claim shall have
been served upon the Company or upon any person (or after the Company or such
person shall have received notice of service on any designated agent). However,
failure to notify the Distributor of any claim shall not relieve the Distributor
from any liability which it may have to the Company or any person against whom
the action is brought otherwise than on account of its indemnity agreement
contained in this paragraph.
The Distributor shall be entitled to participate, at its own expense, in
the defense or, if it so elects, to assume the defense of any suit brought to
enforce the claim, but if the Distributor elects to assume the defense, the
defense shall be conducted by counsel chosen by the Distributor and satisfactory
to the indemnified defendants whose approval shall not be unreasonably withheld.
In the event that the Distributor elects to assume the defense of any suit and
retain counsel, the defendants in the suit shall bear the fees and expenses of
any additional counsel retained by them. If the Distributor does not elect to
assume the defense of any suit, it will reimburse the indemnified defendants in
the suit for the reasonable fees and expenses of any counsel retained by them.
The Distributor agrees to notify the Company promptly of the
commencement of any litigation or proceedings against it in connection with the
issue and sale of any of the Company's Shares.
ARTICLE 8. Term. This Agreement shall continue in force for two years
-----
from the effective date and thereafter from year to year, provided that such
annual continuance is approved by (i) either the vote of a majority of the
Directors of the Company, or the vote of a majority of the outstanding voting
securities of the Company, and (ii) the vote of a majority of those Directors of
the Company who are not parties to this Agreement or the Company's Distribution
Plan or interested persons of any such party ("Qualified Directors"), cast in
person at a meeting called for the purpose of voting on the approval. This
Agreement shall automatically terminate in the event of its assignment. As used
in this paragraph the terms "vote of a majority of the outstanding voting
securities", "assignment" and "interested person" shall have the respective
meanings specified in the 1940 Act. In addition, this Agreement may at any time
be terminated without penalty by SFS, by a vote of a majority of Qualified
Directors or by vote of a majority of the outstanding voting securities of the
Company upon not less than sixty days prior written notice to the other party.
ARTICLE 9. Notices. Any notice required or permitted to be given by
--------
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party giving
notice: if to the Company, at 680 East Swedesford Road, Wayne, Pennsylvania, and
if to the Distributor, 680 East Swedesford Road, Wayne, Pennsylvania 19087.
<PAGE>
ARTICLE 10. Limitation of Liability. A copy of the Articles of
------------------------
Incorporation of the Company is on file with the Secretary of State of the
Commonwealth of Massachusetts, and notice is hereby given that this Agreement is
executed on behalf of the Directors of the Company as Directors and not
individually and that the obligations of this instrument are not binding upon
any of the Directors, officers or unitholders of the Company individually but
binding only upon the assets and property of the Company.
ARTICLE 11. Governing Law. This Agreement shall be construed in
--------------
accordance with the laws of the Commonwealth of Pennsylvania and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the
Commonwealth of Pennsylvania, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
ARTICLE 12. Multiple Originals. This Agreement may be executed in two or
-------------------
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
IN WITNESS, the Company and Distributor have each duly executed this
Agreement, as of the day and year above written.
COREFUNDS, Inc.
By: /s/ James W. Jennings, Secretary
--------------------------------
SEI FINANCIAL SERVICES COMPANY
By: /s/ Sandi K. Orlow
--------------------------------
CUSTODIAN AGREEMENT
This Agreement, dated the 24th day of July, 1985, made by and between
RED OAK CASH RESERVE FUND, INC. (the "Fund"), a corporation operating as an
open-end investment company, duly organized and existing under the laws of the
State of Maryland, and FIRST PENNSYLVANIA BANK n.a. ("First Pennsylvania"), a
national banking association duly organized and existing under the laws of the
United States of America;
WITNESSETH THAT:
WHEREAS, the Fund desires to appoint First Pennsylvania as custodian of
the Securities and principal cash of the Fund, and First Pennsylvania is willing
to act in such capacity upon the terms and conditions herein set forth; and
WHEREAS, First Pennsylvania in its capacity hereunder as custodian will
also collect and apply the dividends and interest on said Securities in the
manner and to the extent herein set forth; and
WHEREAS, pursuant to separate agreements, First Pennsylvania will
perform for the Fund the duties of Transfer Agent, Dividend Disbursing Agent,
and Accounting Services Agent.
<PAGE>
NOW THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
do hereby agree as follows:
Section 1. The terms as defined in this Section wherever used in this
Agreement, or in any amendment or supplement hereto, shall have the meanings
herein specified unless the context otherwise requires.
The Fund: The term Fund shall mean the Red Oak Cash Reserve Fund, Inc.
Custodian: The term Custodian shall mean First Pennsylvania Bank n.a. in
its capacity as custodian with respect to the Fund under this Agreement.
Securities: The term Securities shall mean bonds, debentures, notes,
stocks, shares, evidences of indebtedness, and other securities and investments
from time to time owned by the Fund.
Share Certificates: The term Share Certificates shall mean the stock
certificates for the Shares of the Fund.
Shareholders: The term Shareholders shall mean the registered owners
from time to time of the Shares of the Fund in accordance with the stock
registry records of the Fund.
<PAGE>
Shares: The term Shares shall mean the issued and outstanding shares of
common stock of the Fund.
Oral Instructions: The term Oral Instructions shall mean an
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to the Custodian in person or by telephone, telegram, telecopy,
or other mechanical or documentary means lacking original signature, by a person
or persons believed in good faith by the Custodian to be a person or persons
authorized by a resolution of the Board of Directors of the Fund to give Oral
Instructions on behalf of the Fund.
Written Instructions: The term Written Instructions shall mean an
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to the Custodian in original writing containing original
signatures or a copy of such document transmitted by telecopy including
transmission of such signature, believed in good faith by the Custodian to be
the signature of a person authorized by a resolution of the Board of Directors
of the Fund to give Written Instructions on behalf of the Fund.
Securities Depository: The term Securities Depository shall mean a
system for the central handling of securities where all securities of any
particular class or series of any issuer deposited within the system are treated
as fungible and may be transferred or pledged by bookkeeping entry without
physical delivery of the securities.
<PAGE>
Book-Entry Securities: The term Book-Entry Securities shall mean
securities issued by the Treasury of the United States of America and federal
agencies of the United States of America which are maintained in the book-entry
system as provided in Subpart O of Treasury Circular No. 300, 31 CFR 306,
Subpart B of 31 CFR Part 350, and the book-entry regulations of federal agencies
substantially in the form of Subpart O; and the term Book-Entry Account shall
mean an account maintained by a Federal Reserve Bank in accordance with the
aforesaid Circular and regulations.
Section 2. The Fund shall from time to time file with the Custodian a
certified copy of each resolution of its Board of Directors authorizing
execution of Written Instructions and the number of signatories required,
together with certified signatures of the officers and other signatories
authorized to sign, which shall constitute conclusive evidence of the authority
of the officers and other signatories designated therein to act, and shall be
considered in full force and effect with the Custodian fully protected in acting
in reliance thereon until it receives a new certified copy of a resolution
adding or deleting a person or persons with authority to give Written
Instructions. If the certifying officer is authorized to sign Written
Instructions, the certification shall also be signed by a second officer of the
Fund.
The Fund shall from time to time file with the Custodian a certified
copy of each resolution of its Board of Directors authorizing the transmittal of
Oral Instructions and specifying the person or persons authorized to give Oral
Instructions in accordance with this Agreement. Any resolution so filed with the
Custodian shall be considered in full
<PAGE>
force and effect and the Custodian shall be fully protected in acting in
reliance thereon until it actually receives a new certified copy of a resolution
adding or deleting a person or persons with authority to give Oral Instructions.
If the certifying officer is authorized to give Oral Instructions, the
certification shall also be signed by a second officer of the Fund.
Section 3. For all purposes under this Agreement, the Custodian is
authorized to act upon receipt of the first of any Written or Oral Instructions
it receives. In cases where the first Instruction is an Oral Instruction that is
not in the form of a document or written record, the Fund shall be responsible
for delivering, or having delivered to the Custodian, a confirmatory Written
Instruction or Oral Instruction in the form of a document or written record and,
in cases where the Custodian receives an Instruction, whether Written or Oral,
with respect to a portfolio transaction, the Fund shall cause the broker or
dealer to send a written confirmation to the Custodian. The Custodian shall be
entitled to rely on the first Instruction received and, for any act or omission
undertaken in compliance therewith, shall be free of liability and fully
indemnified and held harmless by the Fund. The Custodian shall act upon and
comply with any subsequent Written or Oral Instruction which modifies such first
Instruction. The sole obligation of the Custodian with respect to any follow-up
or confirmatory Written Instruction, Oral Instruction in documentary or written
form, or broker-dealer written confirmation shall be to make reasonable efforts
to detect any discrepancy between the original Instruction and such confirmation
and to report such discrepancy to the Fund. The Fund shall be responsible, at
the Fund's expense, for taking any
<PAGE>
action, including any reprocessing, necessary to correct any discrepancy or
error and, to the extent such action requires the Custodian to act, the Fund
shall give the Custodian specific Written Instructions as to the action
required.
Section 4. The Fund hereby appoints the Custodian as custodian of the
Securities and principal and income cash of the Fund from time to time on
deposit thereunder, to be held by the Custodian and applied as provided in this
Agreement. The Custodian hereby accepts such appointment subject to the terms
and conditions hereinafter provided. The Securities held by the Custodian shall,
unless payable to bearer or maintained in a Securities Depository or Book-Entry
Account pursuant to Section 5, be registered in the name of the Custodian or in
the name of its nominee or, if directed by Written Instructions, in the name of
the Fund or its nominee. Securities, excepting bearer securities, delivered from
time to time to the Custodian upon purchase or otherwise shall in all cases be
in due form for transfer or already registered as above provided. Such
Securities and principal and income cash of the fund shall, however, be and
remain the sole property of the Fund and the Custodian shall have only the bare
custody thereof.
Section 5. The Fund hereby authorizes the Custodian to (a) deposit in
its account(s) with any Securities Depository registered as a Clearing Agency
under Section 17A of the Securities Exchange Act of 1934 all or any part of the
Securities as may from time to time be held for the Fund, and (b) deposit
Book-Entry Securities belonging to the Fund in a Book-Entry Account which is
maintained for the Custodian by a Federal
<PAGE>
Reserve Bank. So long as any deposit referred to in (a) and (b) above is
maintained for the Fund, the Custodian:
(i) shall deposit the Securities in an account that includes only
assets held by it for customers;
(ii) shall send the Fund a confirmation (i.e. an advice or notice of a
transaction) of any transfers to or from the account of the Fund;
(iii) shall, with respect to Securities transferred to the account of
the Fund, identify as belonging to the Fund a quantity of
securities in a fungible bulk of securities (i) registered in the
name of the Custodian or its nominee, or (ii) shown on the
Custodian's account on the books of the Securities Depository, the
Book-Entry System, or the Custodian's agent;
(iv) shall promptly send to the Fund reports it receives from the
appropriate Federal Reserve Bank or Securities Depository on its
respective system of internal accounting control; and
(v) shall send to the Fund such reports of the systems of internal
accounting control of the Custodian and its agents through which
such Securities are deposited as are available and as the Fund may
reasonably request from time to time.
<PAGE>
The Fund warrants that its Board of Directors has approved the
arrangement for the deposit of Securities in a Securities Depository and the
Book-Entry System.
Section 6. The Fund will initially transfer and deposit or cause to be
transferred and deposited with the Custodian all of the Securities and principal
and income cash owned by the Fund at the time this Agreement becomes effective.
Such deposit shall be evidenced by appropriate schedules duly executed by the
Fund and the Fund agrees that it is solely responsible for the accuracy of said
schedules. The Fund will cause to be deposited with the Custodian additional
Securities of the Fund as the same are purchased or otherwise acquired from time
to time and dividends or interest collected on such Securities.
Thereafter the Fund will cause to be deposited with the Custodian
hereunder (a) the net proceeds of Securities sold from time to time and (b) the
applicable net asset value of Shares sold from time to time whether representing
initial issue, treasury stock, or reinvestments of dividends and/or
distributions payable to Shareholders, as well as any other securities and cash
as may be acquired from time to time. Deposits with respect to sales of Shares
shall be accompanied by Written or Oral Instructions stating the number of
Shares to be issued or reissued, the applicable net asset value per Share, and
the amount to be deposited with the Custodian. Any such Written or Oral
Instruction shall also include or be accompanied by registration instructions.
With respect to sales of Shares that are processed through the Fund's Transfer
Agent, such Written and Oral Instructions and any registration instructions
shall be given to the Custodian by the Transfer Agent.
<PAGE>
Section 7. The Custodian is hereby authorized and directed to disburse
principal cash from time to time as follows:
(a) for the purpose of payment for the purchase of Securities purchased
by the Fund, upon receipt by the Custodian of both (i) Written or Oral
Instructions specifying the Securities and stating the purchase price, and the
name of the broker, investment banker, or other party to or upon whose order the
purchase price is to be paid, and (ii) the Securities so purchased in due form
for transfer or already registered as provided in Section 4; provided, however,
that the Custodian may make payment for Securities on deposit with a Securities
Depository and Book-Entry Securities at such times as the Custodian enters a
credit in the account it maintains for the Fund to the effect that it has
accepted delivery of such Securities on behalf of the Fund;
(b) for the purpose of transferring funds in connection with a
repurchase agreement, upon receipt by the Custodian of (i) Written or Oral
Instructions specifying the Securities, the purchase price, and the party to
whom the purchase price is to be paid, (ii) written evidence of the obligation
of the other party to the agreement to repurchase the Securities from the Fund;
and (iii) the Securities subject to the repurchase agreement in due form for
transfer or already registered as provided in Section 4; provided, however, that
the Custodian may make payment for Securities on deposit with a Securities
Depository and for Book-Entry Securities at such time or times as the Custodian
enters a credit in the account it maintains for the Fund to the effect that it
has accepted delivery of such Securities on behalf of the Fund;
<PAGE>
(c) for the purpose of transferring funds to a duly designated
redemption paying agent to redeem or repurchase Shares, upon receipt of both
(i) Share Certificates in due form for transfer or proper processing of
Shares for which no Share Certificates are outstanding, and (ii) Written or Oral
Instructions from the Fund's Transfer Agent stating the applicable redemption
price;
(d) for the purpose of exercising warrants and rights received upon the
Securities, upon timely receipt of Written or Oral Instructions authorizing the
exercise of such warrants and rights and stating the consideration to be paid;
(e) for the purpose of repaying in whole or in part any loan of the Fund
upon receipt of Written or Oral Instructions directing payment and stating the
Securities, if any, to be received against payment;
(f) for the purpose of paying over to a duly designated Dividend
Disbursing Agent such amounts as may be stated in Written or Oral Instructions
representing proceeds of the sale of warrants, rights, stock dividends, profit,
and increases in values of the Securities, as the Fund may determine to include
in dividends and/or distributions declared on the Shares;
(g) for the purpose of making or reimbursing the Fund for other
corporate expenditures, upon receipt of Written or Oral Instructions stating
that such expenditures were authorized by resolution of the Board of Directors
of the Fund and are or were for proper corporate purposes, and
<PAGE>
specifying the amount of payment, the purpose for which such payment is to be
made, and the person or persons to whom payment is to be made; and
(h) for the purpose of transferring funds to any Sub-Custodian, upon
receipt of Written or Oral Instructions from the Fund.
Section 8. The Custodian is hereby authorized and directed to deliver
Securities of the Fund from time to time as follows:
(a) for the purpose of completing sales of Securities sold by the Fund,
upon receipt of both (i) the net proceeds of sale and (ii) Written or Oral
Instructions specifying the Securities sold and stating the amount to be
received and the broker, investment banker, or other party to or upon whose
order the Securities are to be delivered; provided, however, that the Custodian
may accept payment owing in connection with the disposition by the Fund of
Securities on deposit with a Securities Depository and Book-Entry Securities, by
means of a credit in the appropriate amount to the account described in Section
5 hereof.
(b) for the purpose of exchanging Securities for other Securities and/or
cash, (i) upon timely receipt of Written or Oral Instructions stating the
Securities to be delivered and the Securities and/or cash to be received in
exchange and in the manner in which the exchange is to be made, and (ii) against
receipt of the other Securities and/or cash as specified in the Written or Oral
Instructions;
<PAGE>
(c) for the purpose of exchanging or converting Securities pursuant to
their terms or pursuant to any plan of conversion, consolidation,
recapitalization, reorganization, readjustment, or otherwise, upon timely
receipt of (i) Written or Oral Instructions authorizing such exchange or
conversion and stating the manner in which such exchange or conversion is to be
made, and (ii) the Securities, certificates of deposit, interim receipts, and/or
cash to be received as specified in the Written or Ora1 Instructions;
(d) for the purpose of presenting Securities for payment which have
matured or have been called for redemption;
(e) for the purpose of delivery of Securities upon redemption of Shares
in kind, upon receipt (i) of Share Certificates in due form for transfer, or
proper processing of Shares for which no Share Certificates are outstanding, and
(ii) appropriate Written or Oral Instructions;
(f) for the purpose of depositing with the lender Securities to be held
as collateral for a loan to the Fund upon receipt of Written or Oral
Instructions directing delivery to the lender; or
(g) In connection with any repurchase agreement related to such
Securities, upon receipt of (i) Written or Oral Instructions stating the
Securities to be delivered and the payment to be received and (ii) payment.
Section 9. The Custodian will collect from time to time the dividends
and interest on the Securities held by it hereunder and will
<PAGE>
deposit the same in a separate income account until disbursed as hereinafter
provided.
The Custodian is authorized to advance or pay out of said income account
accrued interest on bonds purchased and dividends on stocks sold and like items.
In the event that any Securities are registered in the name of the Fund or its
nominee, the Fund will endorse to the Custodian, or cause to be endorsed,
dividend and interest checks or will issue appropriate orders to the issuers of
the Securities to pay dividends and interest to the Custodian.
Subject to proper reserves for dividends owing on stocks sold and like
items, the Custodian will disburse the money from time to time on deposit in the
income account to or upon the order of the Fund as it may from time to time
direct for the following purposes:
(a) to pay the proper compensation and expenses of the Custodian;
(b) to transfer funds to a duly designated Dividend Disbursing Agent to
pay dividends and/or distributions which may be declared by the Board of
Directors of the Fund upon receipt of appropriate Written or Oral Instructions;
(c) to pay, or provide the Fund with money to pay, taxes upon receipt of
appropriate Written or Oral Instructions;
<PAGE>
(d) to transfer funds to a separate checking account maintained by the
Fund pursuant to Section 17(f) of the Investment Company Act of 1940, as
amended;
(e) to pay interest, management or supervisory fees, administration,
dividend and transfer agency fees and costs, compensation of personnel, or
operating expenses (including, without limitation thereto, fees for legal,
accounting, and auditing services), and to disburse cash for other proper
corporate purposes. Before making any such payment or disbursement, however, the
Custodian shall receive (and may conclusively rely upon) Written or Oral
Instructions requesting such payment or disbursement and stating that it is for
one or more of the purposes hereinabove enumerated, provided that if such
payment or disbursement is for other proper corporate purposes, the Written or
Oral Instructions shall state that such payment or disbursement was authorized
by resolution of the Board of Directors of the Fund and is for a proper
corporate purpose.
The determination of the Board of Directors of the Fund as to what shall
constitute income derived from the Securities from time to time held hereunder
as distinguished from principal or capital shall be final and conclusive upon
the Fund, the Custodian, and the Shareholders.
If it elects so to do, the Fund may direct the Custodian by Written or
Oral Instructions to make transfers from the income account in its hands, to be
held as cash principal and applied as provided in this Agreement.
<PAGE>
Section 10. The Fund will cause any bank (including the Custodian) from
which the Fund borrows money using securities as collateral to deliver to the
Custodian a notice or undertaking in the form currently employed by such bank
setting forth the amount which such bank will loan to the Fund against delivery
of a stated amount of collateral. The Fund shall promptly deliver to the
Custodian Written or Oral Instructions for each loan stating: (a) the name of
the bank, (b) the amount and terms of the borrowing, which may be set forth by
incorporating by reference an attached promissory note, duly endorsed by the
Fund, or other loan agreement; (c) the time and date, if known, on which the
loan is to be entered into (the "borrowing date"), (d) the date on which the
loan becomes due and payable, (e) the total amount payable to the Fund on the
borrowing date, and (f) the market value of Securities to be delivered as
collateral for such loan, including the name of the issuer, the title and the
number of shares, or the principal amount of any particular securities. The
Custodian shall deliver on the borrowing date such specified collateral and the
executed promissory note, if any, against delivery by the lending bank of the
total amount of the loan payable, provided that the same conforms to the total
amount as set forth in the Written or Oral Instructions. At the option of the
lending bank, the Custodian may keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the lending bank by
virtue of any promissory note or loan agreement.
The Custodian shall deliver from time to time such Securities as
additional collateral as may be specified in Written or Oral Instructions, to
collateralize further any transaction described in this Section. The
<PAGE>
Fund shall cause all Securities released from collateral status to be returned
directly to the Custodian.
In the event that Written or Oral Instructions fail to specify the name
of the issuer, the title and number of shares or the principal amount of any
particular Securities to be delivered as collateral by the Custodian, the
Custodian shall not be under any obligation to deliver any particular
Securities.
Section 11. If the Custodian, in its sole discretion, should advance
funds on behalf of the Fund which results in an overdraft because the moneys
held by the Custodian for the account of the Fund shall be insufficient to pay
the total amount payable upon purchase of securities, or which results in an
overdraft for some other reason, or if the Fund is for any other reason indebted
to the Custodian, such overdraft or indebtedness shall be deemed to be a loan
made by the Custodian to the Fund payable on demand and bearing interest at the
current rate charged by the Custodian for such loans. The Fund hereby agrees
that the Custodian shall have a continuing lien and security interest in and to
any property at any time held by it for the benefit of the Fund or in which the
Fund may have an interest which is then in the Custodian's possession or control
or in possession or control of any third party acting on the Custodian's behalf
to the extent of any such overdraft or indebtedness. The Fund authorizes the
Custodian, in its sole discretion, at any time to charge any such overdraft or
indebtedness together with interest due thereon against any balance of account
standing to the Fund's credit on the Custodian's books.
<PAGE>
Section 12. Within 24 hours after each loan of Securities by the Fund,
the Fund shall deliver Written or Oral Instructions to the Custodian, stating:
(a) the name of the issuer and the title of the Securities, (b) the number of
shares or the principal amount loaned, (c) the date of the loan and delivery of
Securities, (d) the total amount to be delivered to the Custodian against the
loan of the Securities including the amount of cash collateral and the premium,
if any, separately identified, and (e) the name of the broker or other person to
whom the loan was made. The Custodian shall deliver the Securities loaned to the
person designated in (e) above against receipt of the total amount to be
delivered against the loan of Securities. The Custodian may accept payment only
in the form of a certified or bank cashier's check payable to the order of the
Fund or the Custodian and may deliver Securities in accordance with the customs
prevailing among dealers in securities.
The Fund shall promptly deliver Written or Oral Instructions to the
Custodian after each termination of a loan of Securities by the Fund stating:
(a) the name of the issuer and the title of Securities to be returned, (b) the
number of shares of the principal amount to be returned, (c) the date of
termination, (d) the total amount to be delivered by the Custodian (including
the cash collateral for such securities minus any offsetting credits as
described in the Written or Oral Instructions), and (e) the name of the broker
or other person from whom the Securities will be received. The Custodian shall
receive all Securities returned and upon receipt thereof shall pay, out of the
moneys held for the account of the Fund, the total amount payable upon such
return of Securities as set forth in the Written or Oral Instructions.
<PAGE>
Section 13. The Custodian assumes no duty, obligation, or responsibility
whatsoever to exercise any voting or consent powers with respect to the
Securities held by it from time to time hereunder, it being understood that the
Fund or such person or persons as it may designate, shall have the right to
vote, consent, or otherwise act with respect to such Securities. The Custodian
will exercise its best efforts to furnish to the Fund proxies or other
appropriate authorizations with respect to Securities registered in the name of
the Custodian or its nominee so that such voting powers, or powers to consent or
otherwise act, may be exercised by the Fund or pursuant to its direction.
Section 14. The Custodian's compensation shall be as set forth in
Schedule A hereto attached, or as shall be set forth in amendments to such
Schedule approved in writing by the Fund and the Custodian.
Section 15. The Custodian will exercise its best efforts to handle,
forward, or process in any way notices of stockholder meetings, proxy
statements, annual reports, conversion notices, call notices, or other notices
or written materials of any kind sent to the registered owners of securities
(hereinafter referred to as "notices and materials"), excluding only stock
certificates and dividend and interest payments, it being understood that the
Fund and its investment adviser have primary responsibility for obtaining such
notices and materials, and for taking action thereon. The Custodian will make
reasonable efforts to forward such notices and materials as it receives them to
the Fund, but makes no warranty or representation that all notices and materials
will be forwarded, and the Fund hereby agrees that it shall make no claim
<PAGE>
whatsoever against the Custodian for any expense, damage, or loss of any kind
arising out of failure to forward notices and materials.
Upon receipt by the Custodian of warrants or rights issued in connection
with the assets of the Fund, the Custodian shall enter into its ledgers
appropriate notations indicating such receipt and shall notify the Fund of such
receipt, but shall not have any obligation to take any action of any kind with
respect to such warrants or rights except upon receipt of Written or Oral
Instructions from the Fund.
Section 16. The Custodian assumes no duty, obligation, or responsibility
whatsoever with respect to Securities not deposited with the Custodian. Common
stocks or other Securities exchanged for Shares shall not be considered
deposited with the Custodian until physically received and registered in
accordance with the provisions of this Agreement.
Section 17. The Custodian acknowledges and agrees that all books and
records maintained for the Fund in any capacity under this Agreement are the
property of the Fund and may be inspected by the Fund, or any authorized
regulatory agency, at any reasonable time, and that upon request will be
surrendered promptly to the Fund. The Custodian agrees to make available upon
request and to preserve for the periods prescribed in Rule 31a-2 under the
Investment Company Act any records relating to services provided under this
Agreement which are required to be maintained by Rule 31a-1 under said Act. In
addition, the Custodian agrees to forward to the Fund's Transfer Agent the
information described in Sections 18 and
<PAGE>
20 of the Fund's Transfer Agency Agreement in accordance with the terms of said
Sections.
Section 18. The Custodian assumes only the usual duties and obligations
normally performed by custodians of mutual funds. It specifically assumes no
responsibility for the management, investment, or reinvestment of the Securities
from time to time owned by the Fund whether or not on deposit hereunder, it
being understood that the responsibility for the proper and timely management,
investment, and reinvestment of said Securities shall be that of the Fund and
its investment adviser.
The Custodian shall not be liable for any taxes, assessments, or
governmental charges which may be levied or assessed upon the Securities held by
it hereunder, or upon the income therefrom or otherwise whatsoever. The
Custodian may pay any such tax, assessment, or charge and reimburse itself out
of the moneys of the Fund or out of the Securities held hereunder; provided,
however, the Custodian shall consult the officers of the Fund before making any
such payment.
The Custodian may rely upon the advice of counsel, who may be counsel
for the Fund or for the Custodian, and upon statements of accountants, brokers,
or other persons believed by it in good faith to be expert in the matters upon
which they are consulted; and for any action taken or suffered in good faith
based upon such advice or statements the Custodian shall not be liable to
anyone. The Custodian shall not be liable for anything done or suffered to be
done in good faith in accordance with any Written or Oral Instructions, request
or advice of, or based upon
<PAGE>
information furnished by, the Fund or its officers. The Custodian is authorized
to accept a certificate of the President, Secretary, or Assistant Secretary of
the Fund to the effect that a resolution in the form submitted has been duly
adopted by its Board of Directors or by the Shareholders as conclusive evidence
that such resolution has been duly adopted and is in full force and effect. The
Custodian shall not be liable for any action done in good faith and believed to
be within the powers conferred upon it by this Agreement.
No liability of any kind other than to the Fund shall attach to the
Custodian by reason of its custody of the Securities and funds on deposit with
it from time to time under this Agreement or otherwise by reason of its
administration of its custodianship. In the event that any claim by reason
thereof shall be made against the Custodian, it shall have the right to pay the
same and to reimburse and indemnify itself out of the moneys of the Fund on
deposit with it or out of the Securities held; provided, however, that no such
claim shall be paid unless the Fund shall have been notified thereof and shall
have been afforded an opportunity to defend the claim if it so elects; and
further provided that any right to such reimbursement and indemnity shall not be
deemed a waiver by the Fund of any claim it may have against the Custodian.
Section 19. If so instructed by the Fund, the Custodian shall appoint
one or more U.S. banking institutions as Sub-Custodian (including, but not
limited to, U.S. banks located in foreign countries) of Securities and moneys at
any time owned by the Fund. The Custodian shall have no liability to the Fund or
any other person by reason of any act or omission
<PAGE>
of any Sub-Custodian so appointed, and the Fund shall indemnify the Custodian
and save it harmless from any and against any and all actions, suits, and
claims, whether groundless or otherwise, and from and against any and all
losses, damages, costs, charges, counsel fees, payments, expenses, and
liabilities arising directly or indirectly out of or in connection with the
performance of any Sub-Custodian which the Custodian was instructed to appoint.
The Custodian shall not be under any obligation to prosecute or to defend any
action, suit, or claim arising out of or in connection with the performance of
any such Sub-Custodian, which, in the opinion of its counsel, may involve it in
expense or liability, and the Fund shall, so often as reasonably requested,
furnish the Custodian with satisfactory indemnity against such expense or
liability, and upon request of the Custodian, the Fund shall assume the entire
defense of any action, suit, or claim subject to the foregoing indemnity. The
Fund shall pay all fees and expenses of any Sub-Custodian which the Fund
instructs the Custodian to appoint.
In addition, the Custodian may from time to time in its discretion
appoint in writing (and may at any time remove) any other bank or trust company
(which may include a foreign branch or agency of a bank or trust company) as
Sub-Custodian hereunder, to carry out as agent of the Custodian, in accordance
with the terms of this Agreement, such of the provisions of this Agreement as
the Custodian may from time to time direct; provided, however, that any such
Sub-Custodian (which must itself meet the qualifications for a successor
custodian set forth in Section 21 and which must be selected with reasonable
care, having in mind the duties to be assigned to it) is understood to be the
agent of the Custodian and not of
<PAGE>
the Fund, and the Custodian shall be fully responsible for the acts of any
Sub-Custodian which the Custodian shall appoint in its discretion, and the
Custodian shall not be relieved of any of its responsibilities hereunder by the
appointment of any such Sub-Custodian.
Section 20. This Agreement may be amended from time to time without
notice to or approval of the Shareholders by a written supplemental agreement
executed by the Fund and the Custodian and amending and supplementing this
Agreement in a manner mutually agreed.
Section 21. Either the Fund or the Custodian may give written notice to
the other of the termination of this Agreement, such termination to take effect
at the time specified in the notice, which shall not be earlier than sixty (60)
days after the date of giving such notice. In case such notice of termination is
given either by the Fund or by the Custodian, the Fund shall use its best
efforts to obtain a successor custodian, and the Board of Directors of the Fund
shall, by resolution duly adopted, promptly either designate the Fund as its own
custodian or appoint a successor custodian. Each successor custodian shall be a
person qualified to so act under the Investment Company Act of 1940, as amended.
Upon receipt of written notice from the Fund of the appointment of such
successor and upon receipt of Written or Oral Instructions, the Custodian shall
deliver such Securities and cash as it may then be holding hereunder directly to
and only to the successor custodian. Unless or until a successor custodian has
been appointed as above provided, the Custodian then acting shall continue to
act as Custodian under this Agreement. Every successor custodian appointed
hereunder shall execute and deliver an
<PAGE>
appropriate written acceptance of its appointment and shall thereupon become
vested with the rights, powers, obligations, and custody of its predecessor
Custodian. The Custodian ceasing to act shall, nevertheless, upon request of the
Fund and successor custodian and upon payment of its charges and disbursements,
execute an instrument in form approved by its counsel transferring to the
successor custodian all the predecessor Custodian's rights, duties, obligations,
and custody.
In case the Custodian shall consolidate with or merge into any other
corporation, the corporation remaining after or resulting from such
consolidation or merger shall, ipso facto, without the execution or filing of
any papers or other documents, succeed to and be substituted for the Custodian
with like effect as though originally named as such.
Section 22. Subject to the requirements of the Investment Company Act of
1940, as amended, and the rules promulgated thereunder, the Custodian may from
time to time in its sole discretion delegate some or all of its duties
hereunder, except actual possession of the Securities and other property owned
by the Fund, to Fund/Plan Services, Inc., a wholly owned subsidiary of First
Pennsylvania Corporation, which shall perform such functions as the agent of the
Custodian. To the extent of such delegation, the term "Custodian" in this
Agreement shall be deemed to refer to both First Pennsylvania and to Fund/Plan
Services, Inc. or to either of them, as the context may indicate. In each
provision of this Agreement limiting the liabilities or the delegations of the
Custodian, or providing for the indemnification or protection of the Custodian,
the term "Custodian" shall include Fund/Plan Services, Inc. The Custodian shall
not
<PAGE>
be relieved of any liability or ob1igation under the Agreement in connection
with such delegation of duties.
Section 23. Nothing contained in this Agreement is intended to or shall
require the Custodian in any capacity hereunder to perform any functions or
duties on any holiday, day of special observance, or any other day on which the
Custodian or the New York Stock Exchange is closed. Functions or duties norma11y
scheduled to be performed on such days shall be performed on, and as of, the
next succeeding business day on which both the New York Stock Exchange and the
Custodian are open.
Section 24. This Agreement shall take effect on the date hereof or on
such other date as the parties agree to transfer the Fund's assets to the
Custodian.
Section 25. This Agreement may be executed in two or more counterparts,
each of which when so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 26. This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Fund without the written
consent of the Custodian, or by the Custodian without the written consent of the
Fund, authorized or approved by a resolution of its Board of Directors.
<PAGE>
Section 27. This Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the Fund and the Custodian have caused this
Agreement to be signed by their respective Presidents or Vice Presidents and
their corporate seals hereunto duly affixed, and attested by their respective
Secretaries or Assistant Secretaries, as of the day and year above written.
RED OAK CASH RESERVE FUND, INC.
By: /s/ Francis J. Bruzda
----------------------------------------
Name: Francis J. Bruzda
(SEAL) Title:
Attest /s/ Richard B. Seidel
------------------------
Richard B. Seidel
FIRST PENNSYLVANIA BANK n.a.
By: /s/ John E. Huggard
-------------------------------------
Name: John E. Huggard
(SEAL) Title: Vice President
Attest /s/
---------------------
CUSTODIAN AGREEMENT
This Agreement, dated the 20th day of May, 1987, made by and between RED
OAK CASH RESERVE FUND, INC. (the "Fund"), a corporation operating as an open-end
investment company, duly organized and existing under the laws of the State of
Maryland, and THE PHILADELPHIA NATIONAL BANK ("PNB"), a national banking
association duly organized and existing under the laws of the United States of
America;
WITNESSETH THAT:
WHEREAS, the Fund desires to appoint PNB as custodian of the Securities
and principal cash of the Fund, and PNB is willing to act in such capacity upon
the terms and conditions herein set forth; and
WHEREAS, PNB in its capacity hereunder as custodian will also collect
and apply the dividends and interest on said Securities in the manner and to the
extent herein set forth; and
NOW THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
do hereby agree as follows:
Section 1. The terms as defined in this Section wherever used in this
Agreement, or in any amendment or supplement hereto, shall have the meanings
herein specified unless the context otherwise requires.
<PAGE>
The Fund: The term Fund shall mean the Red Oak Cash Reserve Fund, Inc.
Custodian: The term Custodian shall mean PNB in its capacity as
custodian with respect to the Fund under this Agreement.
Securities: The term Securities shall mean bonds, debentures, notes,
stocks, shares, evidences of indebtedness, and other securities and investments
from time to time owned by the Fund.
Share Certificates: The term Share Certificates shall mean the stock
certificates for the Shares of the Fund.
Shareholders: The term Shareholders shall mean the registered owners
from time to time of the Shares of the Fund in accordance with the stock
registry records of the Fund.
Shares: The term Shares shall mean the issued and outstanding shares of
common stock of the Fund.
Oral Instructions: The term Oral Instructions shall mean an
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to the Custodian in person or by telephone, telegram, telecopy,
or other mechanical or documentary means lacking original signature, by a person
or persons believed in good faith by the Custodian to be a person or persons
<PAGE>
authorized by a resolution of the Board of Directors of the Fund to give Oral
Instructions on behalf of the Fund.
Written Instructions: The term Written Instructions shall mean an
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to the Custodian in original writing containing original
signatures or a copy of such document transmitted by telecopy including
transmission of such signature, believed in good faith by the Custodian to be
the signature of a person authorized by a resolution of the Board of Directors
of the Fund to give Written Instructions on behalf of the Fund.
Securities Depository: The term Securities Depository shall mean a
system for the central handling of securities where all securities of any
particular class or series of any issuer deposited within the system are treated
as fungible and may be transferred or pledged by bookkeeping entry without
physical delivery of the securities.
Book-Entry Securities: The term Book-Entry Securities shall mean
securities issued by the Treasury of the United States of America and federal
agencies of the United States of America which are maintained in the book-entry
system as provided in Subpart O of Treasury Circular No. 300, 31 CFR 306,
Subpart B of 31 CFR Part 350, and the book-entry regulations of federal agencies
<PAGE>
substantially in the form of Subpart O; and the term Book-Entry Account shall
mean an account maintained by a Federal Reserve Bank in accordance with the
aforesaid Circular and regulations.
Section 2. The Fund shall from time to time file with the Custodian a
certified copy of each resolution of its Board of Directors authorizing
execution of Written Instructions and the number of signatories required,
together with certified signatures of the officers and other signatories
authorized to sign, which shall constitute conclusive evidence of the authority
of the officers and other signatories designated therein to act, and shall be
considered in full force and effect with the Custodian fully protected in acting
in reliance thereon until it receives a new certified copy of a resolution
adding or deleting a person or persons with authority to give Written
Instructions. If the certifying officer is authorized to sign Written
Instructions, the certification shall also be signed by a second officer of the
Fund.
The Fund shall from time to time file with the Custodian a certified
copy of each resolution of its Board of Directors authorizing the transmittal of
Oral Instructions and specifying the person or persons authorized to give Oral
Instructions in accordance with this Agreement. Any resolution so filed with the
Custodian shall be considered in full
<PAGE>
force and effect and the Custodian shall be fully protected in acting in
reliance thereon until it actually receives a new certified copy of a resolution
adding or deleting a person or persons with authority to give Oral Instructions.
If the certifying officer is authorized to give Oral Instructions, the
certification shall also be signed by a second officer of the Fund.
Section 3. For all purposes under this Agreement, the Custodian is
authorized to act upon receipt of the first of any Written or Oral Instructions
it receives. In cases where the first Instruction is an Oral Instruction that is
not in the form of a document or written record, the Fund shall be responsible
for delivering, or having delivered to the Custodian, a confirmatory Written
Instruction or Oral Instruction in the form of a document or written record and,
in cases where the Custodian receives an Instruction, whether Written or Oral,
with respect to a portfolio transaction, the Fund shall cause the broker or
dealer to send a written confirmation to the Custodian. The Custodian shall be
entitled to rely on the first Instruction received and, for any act or omission
undertaken in compliance therewith, shall be free of liability and fully
indemnified and held harmless by the Fund. The Custodian shall act upon and
comply with any subsequent Written or Oral Instruction which modifies such first
Instruction. The sole obligation of the Custodian with respect to any follow-up
or confirmatory Written Instruction, Oral Instruction in documentary or written
form, or broker-dealer written confirmation shall be to make reasonable efforts
to detect any discrepancy between the original Instruction and such confirmation
and to report such discrepancy to the Fund. The Fund shall be responsible, at
<PAGE>
the Fund's expense, for taking any action, including any reprocessing, necessary
to correct any discrepancy or error and, to the extent such action requires the
Custodian to act, the Fund shall give the Custodian specific Written
Instructions as to the action required.
Section 4. The Fund hereby appoints the Custodian as custodian of the
Securities and principal and income cash of the Fund from time to time on
deposit thereunder, to be held by the Custodian and applied as provided in this
Agreement. The Custodian hereby accepts such appointment subject to the terms
and conditions hereinafter provided. The Securities held by the Custodian shall,
unless payable to bearer or maintained in a Securities Depository or Book-Entry
Account pursuant to Section 5, be registered in the name of the Custodian or in
the name of its nominee or, if directed by Written Instructions, in the name of
the Fund or its nominee. Securities, excepting bearer securities, delivered from
time to time to the Custodian upon purchase or otherwise shall in all cases be
in due form for transfer or already registered as above provided. Such
Securities and principal and income cash of the fund shall, however, be and
<PAGE>
remain the sole property of the Fund and the Custodian shall have only the bare
custody thereof.
Section 5. The Fund hereby authorizes the Custodian to (a) deposit in
its account(s) with any Securities Depository registered as a Clearing Agency
under Section 17A of the Securities Exchange Act of 1934 all or any part of the
Securities as may from time to time be held for the Fund, and (b) deposit
Book-Entry Securities belonging to the Fund in a Book-Entry Account which is
maintained for the Custodian by a Federal Reserve Bank. So long as any deposit
referred to in (a) and (b) above is maintained for the Fund, the Custodian:
(i) shall deposit the Securities in an account that includes only assets
held by it for customers;
(ii) shall send the Fund a confirmation (i.e. an advice or notice of a
transaction) of any transfers to or from the account of the Fund;
(iii) shall, with respect to Securities transferred to the account of
the Fund, identify as belonging to the Fund a quantity of securities in a
fungible bulk of securities (i) registered in the name of the Custodian or its
nominee, or (ii) shown on the Custodian's account on the books of the Securities
Depository, the Book-Entry System, or the Custodian's agent;
(iv) shall promptly send to the Fund reports it receives from the
appropriate Federal Reserve Bank or Securities Depository on its respective
system of internal accounting control; and
<PAGE>
(v) shall send to the Fund such reports of the systems of internal
accounting control of the Custodian and its agents through which such
Securities are deposited as are available and as the Fund may reasonably request
from time to time.
The Fund warrants that its Board of Directors has approved the
arrangement for the deposit of Securities in a Securities Depository and the
Book-Entry System.
Section 6. The Fund will initially transfer and deposit or cause to be
transferred and deposited with the Custodian all of the Securities and principal
and income cash owned by the Fund at the time this Agreement becomes effective.
Such deposit shall be evidenced by appropriate schedules duly executed by the
Fund and the Fund agrees that it is solely responsible for the accuracy of said
schedules. The Fund will cause to be deposited with the Custodian additional
Securities of the Fund as the same are purchased or otherwise acquired from time
to time and dividends or interest collected on such Securities.
Thereafter the Fund will cause to be deposited with the Custodian
hereunder (a) the net proceeds of Securities sold from time to time and (b) the
applicable net asset value of Shares sold from time to time whether representing
<PAGE>
initial issue, treasury stock, or reinvestments of dividends and/or
distributions payable to Shareholders, as well as any other securities and cash
as may be acquired from time to time. Deposits with respect to sales of Shares
shall be accompanied by Written or Oral Instructions stating the number of
Shares to be issued or reissued, the applicable net asset value per Share, and
the amount to be deposited with the Custodian. Any such Written or Oral
Instruction shall also include or be accompanied by registration instructions.
With respect to sales of Shares that are processed through the Fund's Transfer
Agent, such Written and Oral Instructions and any registration instructions
shall be given to the Custodian by the Transfer Agent.
Section 7. The Custodian is hereby authorized and directed to disburse
principal cash from time to time as follows:
(a) for the purpose of payment for the purchase of Securities purchased
by the Fund, upon receipt by the Custodian of both (i) Written or Oral
Instructions specifying the Securities and stating the purchase price, and the
name of the broker, investment banker, or other party to or upon whose order the
purchase price is to be paid, and (ii) the Securities so purchased in due form
for transfer or already registered as provided in Section 4; provided, however,
that the Custodian may make payment for Securities on deposit with a Securities
<PAGE>
Depository and Book-Entry Securities at such times as the Custodian enters a
credit in the account it maintains for the Fund to the effect that it has
accepted delivery of such Securities on behalf of the Fund;
(b) for the purpose of transferring funds in connection with a
repurchase agreement, upon receipt by the Custodian of (i) Written or Oral
Instructions specifying the Securities, the purchase price, and the party to
whom the purchase price is to be paid, (ii) written evidence of the obligation
of the other party to the agreement to repurchase the Securities from the Fund;
and (iii) the Securities subject to the repurchase agreement in due form for
transfer or already registered as provided in Section 4; provided, however, that
the Custodian may make payment for Securities on deposit with a Securities
Depository and for Book-Entry Securities at such time or times as the Custodian
enters a credit in the account it maintains for the Fund to the effect that it
has accepted delivery of such Securities on behalf of the Fund;
(c) for the purpose of transferring funds to a duly designated
redemption paying agent to redeem or repurchase Shares, upon receipt of both
(i) Share Certificates in due form for transfer or proper processing of Shares
for which no Share Certificates are outstanding, and (ii) Written or Oral
Instructions from the Fund's Transfer Agent stating the applicable redemption
price;
<PAGE>
(d) for the purpose of exercising warrants and rights received upon the
Securities, upon timely receipt of Written or Oral Instructions authorizing the
exercise of such warrants and rights and stating the consideration to be paid;
(e) for the purpose of repaying in whole or in part any loan of the Fund
upon receipt of Written or Oral Instructions directing payment and stating the
Securities, if any, to be received against payment;
(f) for the purpose of paying over to a duly designated Dividend
Disbursing Agent such amounts as may be stated in Written or Oral Instructions
representing proceeds of the sale of warrants, rights, stock dividends, profit,
and increases in values of the Securities, as the Fund may determine to include
in dividends and/or distributions declared on the Shares;
(g) for the purpose of making or reimbursing the Fund for other
corporate expenditures, upon receipt of Written or Oral Instructions stating
that such expenditures were authorized by resolution of the Board of Directors
of the Fund and are or were for proper corporate purposes, and specifying the
amount of payment, the purpose for which such payment is to be made, and the
person or persons to whom payment is to be made; and
<PAGE>
(h) for the purpose of transferring funds to any Sub-Custodian, upon
receipt of Written or Oral Instructions from the Fund.
Section 8. The Custodian is hereby authorized and directed to deliver
Securities of the Fund from time to time as follows:
(a) for the purpose of completing sales of securities sold by the Fund,
upon receipt of both (i) the net proceeds of sale and (ii) Written or Oral
Instructions specifying the Securities sold and stating the amount to be
received and the broker, investment banker, or other party to or upon whose
order the Securities are to be delivered; provided, however, that the Custodian
may accept payment owing in connection with the disposition by the Fund of
Securities on deposit with a Securities Depository and Book-Entry Securities, by
means of a credit in the appropriate amount to the account described in Section
5 hereof.
(b) for the purpose of exchanging Securities for other Securities and/or
cash, (i) upon timely receipt of Written or Oral Instructions stating the
Securities to be delivered and the Securities and/or cash to be received in
exchange and in the manner in which the exchange is to be made, and (ii) against
receipt of the other Securities and/or cash as specified in the Written or Oral
Instructions;
<PAGE>
(c) for the purpose of exchanging or converting Securities pursuant to
their terms or pursuant to any plan of conversion, consolidation,
recapitalization, reorganization, readjustment, or otherwise, upon timely
receipt of (i) Written or Oral Instructions authorizing such exchange or
conversion and stating the manner in which such exchange or conversion is to be
made, and (ii) the Securities, certificates of deposit, interim receipts, and/or
cash to be received as specified in the Written or Ora1 Instructions;
(d) for the purpose of presenting Securities for payment which have
matured or have been called for redemption;
(e) for the purpose of delivery of Securities upon redemption of Shares
in kind, upon receipt (i) of Share Certificates in due form for transfer, or
proper processing of Shares for which no Share Certificates are outstanding, and
(ii) appropriate Written or Oral Instructions;
(f) for the purpose of depositing with the lender Securities to be held
as collateral for a loan to the Fund upon receipt of Written or Oral
Instructions directing delivery to the lender; or
(g) In connection with any repurchase agreement related to such
Securities, upon receipt of (i) Written or Oral Instructions stating the
Securities to be delivered and the payment to be received and (ii) payment.
<PAGE>
Section 9. The Custodian will collect from time to time the dividends
and interest on the Securities held by it hereunder and will deposit the same in
a separate income account until disbursed as hereinafter provided.
The Custodian is authorized to advance or pay out of said income account
accrued interest on bonds purchased and dividends on stocks sold and like items.
In the event that any Securities are registered in the name of the Fund or its
nominee, the Fund will endorse to the Custodian, or cause to be endorsed,
dividend and interest checks or will issue appropriate orders to the issuers of
the Securities to pay dividends and interest to the Custodian.
Subject to proper reserves for dividends owing on stocks sold and like
items, the Custodian will disburse the money from time to time on deposit in the
income account to or upon the order of the Fund as it may from time to time
direct for the following purposes:
(a) to pay the proper compensation and expenses of the Custodian;
(b) to transfer funds to a duly designated Dividend Disbursing Agent to
pay dividends and/or distributions which may be declared by the Board of
Directors of the Fund upon receipt of appropriate Written or Oral Instructions;
<PAGE>
(c) to pay, or provide the Fund with money to pay, taxes upon receipt of
appropriate Written or Oral Instructions;
(d) to transfer funds to a separate checking account maintained by the
Fund pursuant to Section 17(f) of the Investment Company Act of 1940, as
amended;
(e) to pay interest, management or supervisory fees, administration,
dividend and transfer agency fees and costs, compensation of personnel, or
operating expenses (including, without limitation thereto, fees for legal,
accounting, and auditing services), and to disburse cash for other proper
corporate purposes. Before making any such payment or disbursement, however, the
Custodian shall receive (and may conclusively rely upon) Written or Oral
Instructions requesting such payment or disbursement and stating that it is for
one or more of the purposes hereinabove enumerated, provided that if such
payment or disbursement is for other proper corporate purposes, the Written or
Oral Instructions shall state that such payment or disbursement was authorized
by resolution of the Board of Directors of the Fund and is for a proper
corporate purpose.
The determination of the Board of Directors of the Fund as to what shall
constitute income derived from the Securities from time to time held hereunder
as distinguished from principal or capital shall be final and conclusive upon
the Fund, the Custodian, and the Shareholders.
<PAGE>
If it elects so to do, the Fund may direct the Custodian by Written or
Oral Instructions to make transfers from the income account in its hands, to be
held as cash principal and applied as provided in this Agreement.
Section 10. The Fund will cause any bank (including the Custodian) from
which the Fund borrows money using securities as collateral to deliver to the
Custodian a notice or undertaking in the form currently employed by such bank
setting forth the amount which such bank will loan to the Fund against delivery
of a stated amount of collateral. The Fund shall promptly deliver to the
Custodian Written or Oral Instructions for each loan stating: (a) the name of
the bank, (b) the amount and terms of the borrowing, which may be set forth by
incorporating by reference an attached promissory note, duly endorsed by the
Fund, or other loan agreement; (c) the time and date, if known, on which the
loan is to be entered into (the "borrowing date"), (d) the date on which the
loan becomes due and payable, (e) the total amount payable to the Fund on the
borrowing date, and (f) the market value of Securities to be delivered as
collateral for such loan, including the name of the issuer, the title and the
number of shares, or the principal amount of any particular securities. The
Custodian shall deliver on the borrowing date such specified collateral and the
<PAGE>
executed promissory note, if any, against delivery by the lending bank of the
total amount of the loan payable, provided that the same conforms to the total
amount as set forth in the Written or Oral Instructions. At the option of the
lending bank, the Custodian may keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the lending bank by
virtue of any promissory note or loan agreement.
The Custodian shall deliver from time to time such Securities as
additional collateral as may be specified in Written or Oral Instructions, to
collateralize further any transaction described in this Section. The Fund shall
cause all Securities released from collateral status to be returned directly to
the Custodian.
In the event that Written or Oral Instructions fail to specify the name
of the issuer, the title and number of shares or the principal amount of any
particular Securities to be delivered as collateral by the Custodian, the
Custodian shall not be under any obligation to deliver any particular
Securities.
Section 11. If the Custodian, in its sole discretion, should advance
funds on behalf of the Fund which results in an overdraft because the moneys
held by the Custodian for the account of the Fund shall be insufficient to pay
the total amount payable upon purchase of securities, or which results in an
<PAGE>
overdraft for some other reason, or if the Fund is for any other reason indebted
to the Custodian, such overdraft or indebtedness shall be deemed to be a loan
made by the Custodian to the Fund payable on demand and bearing interest at the
current rate charged by the Custodian for such loans. The Fund hereby agrees
that the Custodian shall have a continuing lien and security interest in and to
any property at any time held by it for the benefit of the Fund or in which the
Fund may have an interest which is then in the Custodian's possession or control
or in possession or control of any third party acting on the Custodian's behalf
to the extent of any such overdraft or indebtedness. The Fund authorizes the
Custodian, in its sole discretion, at any time to charge any such overdraft or
indebtedness together with interest due thereon against any balance of account
standing to the Fund's credit on the Custodian's books.
Section 12. Within 24 hours after each loan of Securities by the Fund,
the Fund shall deliver Written or Oral Instructions to the Custodian, stating:
(a) the name of the issuer and the title of the Securities, (b) the number of
shares or the principal amount loaned, (c) the date of the loan and delivery of
Securities, (d) the total amount to be delivered to the Custodian against the
loan of the Securities including the amount of cash collateral and the premium,
if any, separately identified, and (e) the name of the broker or other person to
<PAGE>
whom the loan was made. The Custodian shall deliver the Securities loaned to the
person designated in (e) above against receipt of the total amount to be
delivered against the loan of Securities. The Custodian may accept payment only
in the form of a certified or bank cashier's check payable to the order of the
Fund or the Custodian and may deliver Securities in accordance with the customs
prevailing among dealers in securities.
The Fund shall promptly deliver Written or Oral Instructions to the
Custodian after each termination of a loan of Securities by the Fund stating:
(a) the name of the issuer and the title of Securities to be returned, (b) the
number of shares of the principal amount to be returned, (c) the date of
termination, (d) the total amount to be delivered by the Custodian (including
the cash collateral for such securities minus any offsetting credits as
described in the Written or Oral Instructions), and (e) the name of the broker
or other person from whom the Securities will be received. The Custodian shall
receive all Securities returned and upon receipt thereof shall pay, out of the
moneys held for the account of the Fund, the total amount payable upon such
return of Securities as set forth in the Written or Oral Instructions.
Section 13. The Custodian assumes no duty, obligation, or responsibility
whatsoever to exercise any voting or consent powers with respect to the
Securities held by it from time to time hereunder, it being understood that the
<PAGE>
Fund or such person or persons as it may designate, shall have the right to
vote, consent, or otherwise act with respect to such Securities. The Custodian
will exercise its best efforts to furnish to the Fund proxies or other
appropriate authorizations with respect to Securities registered in the name of
the Custodian or its nominee so that such voting powers, or powers to consent or
otherwise act, may be exercised by the Fund or pursuant to its direction.
Section 14. The Custodian's compensation shall be as set forth in
Schedule A hereto attached, or as shall be set forth in amendments to such
Schedule approved in writing by the Fund and the Custodian.
Section 15. The Custodian will exercise its best efforts to handle,
forward, or process in any way notices of stockholder meetings, proxy
statements, annual reports, conversion notices, call notices, or other notices
or written materials of any kind sent to the registered owners of securities
(hereinafter referred to as "notices and materials"), excluding only stock
certificates and dividend and interest payments, it being understood that the
Fund and its investment adviser have primary responsibility for obtaining such
notices and materials, and for taking action thereon. The Custodian will make
reasonable efforts to forward such notices and materials as it receives them to
<PAGE>
the Fund, but makes no warranty or representation that all notices and materials
will be forwarded, and the Fund hereby agrees that it shall make no claim
whatsoever against the Custodian for any expense, damage, or loss of any kind
arising out of failure to forward notices and materials.
Upon receipt by the Custodian of warrants or rights issued in connection
with the assets of the Fund, the Custodian shall enter into its ledgers
appropriate notations indicating such receipt and shall notify the Fund of such
receipt, but shall not have any obligation to take any action of any kind with
respect to such warrants or rights except upon receipt of Written or Oral
Instructions from the Fund.
Section 16. The Custodian assumes no duty, obligation, or responsibility
whatsoever with respect to Securities not deposited with the Custodian. Common
stocks or other Securities exchanged for Shares shall not be considered
deposited with the Custodian until physically received and registered in
accordance with the provisions of this Agreement.
Section 17. The Custodian acknowledges and agrees that all books and
records maintained for the Fund in any capacity under this Agreement are the
property of the Fund and may be inspected by the Fund, or any authorized
regulatory agency, at any reasonable time, and that upon request will be
surrendered promptly to the Fund. The Custodian agrees to make available upon
request and to preserve for the periods prescribed in Rule 31a-2 under the
<PAGE>
Investment Company Act any records relating to services provided under this
Agreement which are required to be maintained by Rule 31a-1 under said Act. In
addition, the Custodian agrees to forward to the Fund's Transfer Agent the
information described in Sections 18 and 20 of the Fund's Transfer Agency
Agreement in accordance with the terms of said Sections.
Section 18. The Custodian assumes only the usual duties and obligations
normally performed by custodians of mutual funds. It specifically assumes no
responsibility for the management, investment, or reinvestment of the Securities
from time to time owned by the Fund whether or not on deposit hereunder, it
being understood that the responsibility for the proper and timely management,
investment, and reinvestment of said Securities shall be that of the Fund and
its investment adviser.
The Custodian shall not be liable for any taxes, assessments, or
governmental charges which may be levied or assessed upon the Securities held by
it hereunder, or upon the income therefrom or otherwise whatsoever. The
Custodian may pay any such tax, assessment, or charge and reimburse itself out
of the moneys of the Fund or Out Of the Securities held hereunder; provided,
however, the Custodian shall consult the officers of the Fund before making any
such payment.
<PAGE>
The Custodian may rely upon the advice of counsel, who may be counsel
for the Fund or for the Custodian, and upon statements of accountants, brokers,
or other persons believed by it in good faith to be expert in the matters upon
which they are consulted; and for any action taken or suffered in good faith
based upon such advice or statements the Custodian shall not be liable to
anyone. The Custodian shall not be liable for anything done or suffered to be
done in good faith in accordance with any Written or Oral Instructions, request
or advice of, or based upon information furnished by, the Fund or its officers.
The Custodian is authorized to accept a certificate of the President, Secretary,
or Assistant Secretary of the Fund to the effect that a resolution in the form
submitted has been duly adopted by its Board of Directors or by the Shareholders
as conclusive evidence that such resolution has been duly adopted and is in full
force and effect. The Custodian shall not be liable for any action done in good
faith and believed to be within the powers conferred upon it by this Agreement.
No liability of any kind other than to the Fund shall attach to the
Custodian by reason of its custody of the Securities and funds on deposit with
it from time to time under this Agreement or otherwise by reason of its
administration of its custodianship. In the event that any claim by reason
thereof shall be made against the Custodian, it shall have the right to pay the
same and to reimburse and indemnify itself out of the
<PAGE>
moneys of the Fund on deposit with it or out of the Securities held; provided,
however, that no such claim shall be paid unless the Fund shall have been
notified thereof and shall have been afforded an opportunity to defend the claim
if it so elects; and further provided that any right to such reimbursement and
indemnity shall not be deemed a waiver by the Fund of any claim it may have
against the Custodian.
Section 19. If so instructed by the Fund, the Custodian shall appoint
one or more U.S. banking institutions as Sub-Custodian (including, but not
limited to, U.S. banks located in foreign countries) of Securities and moneys at
any time owned by the Fund. The Custodian shall have no liability to the Fund or
any other person by reason of any act or omission of any Sub-Custodian so
appointed, and the Fund shall indemnify the Custodian and save it harmless from
any and against any and all actions, suits, and claims, whether groundless or
otherwise, and from and against any and all losses, damages, costs, charges,
counsel fees, payments, expenses, and liabilities arising directly or indirectly
out of or in connection with the performance of any Sub-Custodian which the
Custodian was instructed to appoint. The Custodian shall not be under any
obligation to prosecute or to defend any action, suit, or claim arising out of
or in connection with the performance of any such Sub-Custodian, which, in the
opinion of its counsel, may involve it in expense or liability, and the Fund
shall, so often as reasonably requested, furnish the Custodian with satisfactory
<PAGE>
indemnity against such expense or liability, and upon request of the Custodian,
the Fund shall assume the entire defense of any action, suit, or claim subject
to the foregoing indemnity. The Fund shall pay all fees and expenses of any
Sub-Custodian which the Fund instructs the Custodian to appoint.
In addition, the Custodian may from time to time in its discretion
appoint in writing (and may at any time remove) any other bank or trust company
(which may include a foreign branch or agency of a bank or trust company) as
Sub-Custodian hereunder, to carry out as agent of the Custodian, in accordance
with the terms of this Agreement, such of the provisions of this Agreement as
the Custodian may from time to time direct; provided, however, that any such
Sub-Custodian (which must itself meet the qualifications for a successor
custodian set forth in Section 21 and which must be selected with reasonable
care, having in mind the duties to be assigned to it) is understood to be the
agent of the Custodian and not of the Fund, and the Custodian shall be fully
responsible for the acts of any Sub-Custodian which the Custodian shall appoint
in its discretion, and the Custodian shall not be relieved of any of its
responsibilities hereunder by the appointment of any such Sub-Custodian.
Section 20. This Agreement may be amended from time to time without
notice to or approval of the Shareholders by a written supplemental agreement
<PAGE>
executed by the Fund and the Custodian and amending and supplementing this
Agreement in a manner mutually agreed.
Section 21. Either the Fund or the Custodian may give written notice to
the other of the termination of this Agreement, such termination to take effect
at the time specified in the notice, which shall not be earlier than sixty (60)
days after the date of giving such notice. In case such notice of termination is
given either by the Fund or by the Custodian, the Fund shall use its best
efforts to obtain a successor custodian, and the Board of Directors of the Fund
shall, by resolution duly adopted, promptly either designate the Fund as its own
custodian or appoint a successor custodian. Each successor custodian shall be a
person qualified to so act under the Investment Company Act of 1940, as amended.
Upon receipt of written notice from the Fund of the appointment of such
successor and upon receipt of Written or Oral Instructions, the Custodian shall
deliver such Securities and cash as it may then be holding hereunder directly to
and only to the successor custodian. Unless or until a successor custodian has
been appointed as above provided, the Custodian then acting shall continue to
act as Custodian under this Agreement. Every successor custodian appointed
hereunder shall execute and deliver an appropriate written acceptance of its
appointment and shall thereupon become vested with the rights, powers,
obligations, and custody of its predecessor Custodian.
<PAGE>
The Custodian ceasing to act shall, nevertheless, upon request of the fund and
successor custodian and upon payment of its charges and disbursements, execute
an instrument in form approved by its counsel transferring to the successor
custodian all the predecessor Custodian's rights, duties, obligations, and
custody.
In case the Custodian shall consolidate with or merge into any other
corporation, the corporation remaining after or resulting from such
consolidation or merger shall, ipso facto, without the execution or filing of
any papers or other documents, succeed to and be substituted for the Custodian
with like effect as though originally named as such.
Section 22. Nothing contained in this Agreement is intended to or shall
require the Custodian in any capacity hereunder to perform any functions or
duties on any holiday, day of special observance, or any other day on which the
Custodian or the New York Stock Exchange is closed. Functions or duties norma11y
scheduled to be performed on such days shall be performed on, and as of, the
next succeeding business day on which both the New York Stock Exchange and the
Custodian are open.
Section 23. This Agreement shall take effect on the date hereof or on
such other date as the parties agree to transfer the Fund's assets to the
Custodian.
<PAGE>
Section 24. This Agreement may be executed in two or more counterparts,
each of which when so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 25. This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Fund without the written
consent of the Custodian, or by the Custodian without the written consent of the
Fund, authorized or approved by a reso1ution of its Board of Directors.
Section 26. This Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania.
<PAGE>
IN WITNESS WHEREOF, the Fund and the Custodian have caused this
Agreement to be signed by their respective Presidents or Vice Presidents and
their corporate seals hereunto duly affixed, and attested by their respective
Secretaries or Assistant Secretaries, as of the day and year above written.
RED OAK CASH RESERVE FUND, INC.
By: /s/ Francis J. Bruzda
--------------------------------
Francis J. Bruzda
Title:
(SEAL)
Attest /s/ Richard B. Seidel
--------------------------
Richard B. Seidel
THE PHILADELPHIA NATIONAL BANK
By: /s/
--------------------------------
Title:
(SEAL)
Attest /s/ Doris J. Flade
-------------------------
Doris J. Flade
AMENDED ADMINISTRATION AGREEMENT
March 6, 1990
Fairfield Group, Inc.
200 Gibraltar Road
Horsham, Pennsylvania 19044
Dear Sirs:
CoreFunds, Inc. (formerly, Red Oak Cash Reserve Fund, Inc.), a Maryland
corporation (the "Fund"), herewith amends and restates its Agreement with
Fairfield Group, Inc. ("Fairfield") as follows:
The Fund desires to employ its capital by investing and reinvesting the
same in investments of the type and in accordance with the limitations specified
in its Articles of Incorporation and in its Prospectus as from time to time in
effect, copies of which have been or will be submitted to Fairfield, together
with resolutions of the Fund's Board of Directors. The Fund desires to employ
Fairfield as its administrator, as follows:
1. Service as Administrator
Subject to the direction and control of the Board of Directors of the
Fund, Fairfield will assist in supervising all aspects of the Fund's operations
except those performed by the Fund's investment adviser under the Investment
Advisory Agreement, those performed by the Fund's custodian and transfer agent
under the Custodian and Transfer Agency Agreements, and those performed by the
Fund's distributor under the Distribution Agreement.
Fairfield will maintain office facilities for the Fund (which may be in
the offices of Fairfield or a corporate affiliate but shall be in such location
as the Fund shall reasonably determine); furnish statistical and research data,
clerical, accounting and bookkeeping services, and stationery and office
supplies; prepare the Fund's periodic reports to the Securities and Exchange
Commission on the forms prescribed by the Commission from time to time; compile
data for, arrange for, but not pay for, the preparation and filing of all the
Fund's federal and state tax returns and required tax filings other than those
required to be made by the Fund's custodian and transfer agent; arrange for, but
not pay for, the preparation of compliance filings pursuant to state securities
laws with the advice of the Fund's counsel; assist
<PAGE>
preparation of its Annual and Semi-Annual Reports to shareholders and its
Registration Statements (on Form N-1A or any replacement therefor); compile data
for, prepare, and file timely Notices to the Securities and Exchange Commission
required pursuant to Rule 24f-2 under the Investment Company Act of 1940 (the
"1940 Act"); arrange for and bear the cost of processing by the Fund's
distributor of share purchase and redemption orders; review and verify the
pricing of portfolio securities and computation by the Transfer Agent of the
Fund's net asset value and net income in accordance with the Fund's prospectus
and resolutions of the Fund's Board of Directors; provide information to the
Fund's other service providers relating to the performance of its services
hereunder at such time or times and in such form or forms as the Fund may
reasonably request; keep and maintain certain financial accounts and records of
the Fund; and generally assist in all aspects of the Fund's operations. In
compliance with the requirements of Rule 31a-3 under the 1940 Act, Fairfield
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. Fairfield further agrees to preserve for the
periods prescribed by Rule 3la-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
2. Fees; Expenses; Expense Reimbursement
In consideration of services rendered pursuant to this Agreement, the
Fund will pay Fairfield on the first business day of each month a fee calculated
at an annual rate of .25% of the Fund's average daily net assets. Net asset
value shall be computed at least once a day. The fee for the period from the day
of the month this Agreement is entered into until the end of that month shall be
pro-rated according to the proportion which such period bears to the full
monthly period. Upon any termination of this Agreement before the end of any
month, the fee for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement.
For the purpose of determining fees payable to Fairfield, the value of
the Fund's net assets shall be computed in the manner described in the Fund's
Articles of Incorporation and Registration Statement as in effect from time to
time.
Fairfield will from time to time employ or associate with itself such
person or persons as Fairfield may believe to be particularly fitted to assist
it in the performance of this Agreement. Such person or persons may be
<PAGE>
officers and employees who are employed by both Fairfield and the Fund. The
compensation of such person or persons shall be paid by Fairfield and no
obligation may be incurred on behalf of the Fund in such respect.
Fairfield will bear all expenses in connection with the performance of
its services under this Agreement. Other expenses to be incurred in the
operation of the Fund including, if applicable, taxes, interest, any brokerage
fees and commissions, fees of directors who are not officers, directors, or
employees of Fairfield or the Fund's investment adviser or distributor,
Securities and Exchange Commission fees and state Blue Sky qualification fees,
advisory and administration fees, charges of the custodian and transfer and
dividend disbursing agent, certain insurance premiums, outside auditing and
legal expenses, costs of compiling data for, preparing for execution and filing
all of the Fund's Federal and State tax returns and required tax filings, costs
of maintenance of corporate existence, typesetting and printing prospectuses for
regulatory purposes and for distribution to current shareholders of the Fund,
costs of shareholders' reports and corporate meetings, costs of obtaining market
quotations for certain portfolio securities, costs of preparing State Blue Sky
filings, and any extraordinary expenses will be borne by the Fund; provided,
however, that the Fund will not bear, directly or indirectly the cost of any
activity which is primarily intended to result in the distribution of shares of
the Fund; and further provided, that if the total expenses borne by the Fund in
any fiscal year of the Fund exceed any expense limitations imposed by applicable
state securities laws or regulations, Fairfield will reimburse the Fund for a
portion of such excess equal to the amount of such excess times the ratio of the
fees otherwise payable to Fairfield hereunder to the aggregate fees otherwise
payable to Fairfield hereunder and New Jersey National Bank pursuant to an
Investment Advisory Agreement between it and the Fund. The obligation of
Fairfield to reimburse the Fund hereunder is limited in any fiscal year of the
Fund to the amount of Fairfield's fee hereunder for such fiscal year; provided,
however, that notwithstanding the foregoing, Fairfield shall reimburse the Fund
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 Fund so
require. Any such expense reimbursements will be estimated daily and reconciled
and paid on a monthly basis.
3. Proprietary and Confidential Information
Fairfield agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Fund all records and other
<PAGE>
information relative to the Fund and prior, present, or potential shareholders,
and not to 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 Fairfield 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.
4. Limitation of Liability
Fairfield 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 matters to which
this Agreement relates, except for a loss resulting from willful misfeasance,
bad faith, or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement. Any person, even though also an officer, partner, employee, or agent
of Fairfield, who may be or become an officer, director, employee, or agent of
the Fund, shall be deemed, when rendering services to the Fund or acting on any
business of the Fund (other than services or business in connection with
Fairfield's duties under this or any other agreement with the Fund), to be
rendering such services to or acting solely for the Fund and not as an officer,
partner, employee, or agent or one under the control or direction of Fairfield
even though paid by it.
5. Term
This Agreement shall become effective as of the date first above written
and, unless sooner terminated as provided herein, shall continue automatically
for successive annual periods ending on June 30 of each year, provided such
continuance is specifically approved at least annually (i) by the Fund's Board
of Directors or (ii) by a vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of the Fund, provided that in either event the
continuance is also approved by the majority of the Fund's directors who are not
parties to the Agreement or interested persons (as defined in the 1940 Act) of
any party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable without
penalty, by the Fund's Board of Directors, by vote of a majority (as defined in
the 1940 Act) of the outstanding voting securities of the Fund, or by Fairfield,
on not less than sixty days' notice. This Agreement shall be governed by
Pennsylvania law.
<PAGE>
If the foregoing is in accordance with your understanding, will you
kindly so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
COREFUNDS, INC.
By: /s/ Francis J. Bruzda
-------------------------------
Francis J. Bruzda
Accepted:
FAIRFIELD GROUP, INC.
By: /s/ Richard B. Seidel
---------------------------
Richard B. Seidel
Authorized Officer
TRANSFER AGENCY AGREEMENT
This Agreement, dated as of the 24th day of July, 1985, made by and
between RED OAK CASH RESERVE FUND, INC. (the "Fund"), a corporation operating as
an open-end investment company, duly organized and existing under the laws of
the State of Maryland, and FIRST PENNSYLVANIA BANK n.a. (the "Bank"), a national
banking association duly organized and existing under the laws of the United
States of America:
WITNESSETH THAT:
WHEREAS, the Fund desires to appoint the Bank as its Transfer Agent and
as its Dividend Disbursing Agent;
WHEREAS, the Fund also desires to appoint the Bank as its Accounting
Services Agent to maintain and keep current the books, accounts, records,
journals, or other records of original entry relating to the business of the
Fund as set forth in Section 14 of this Agreement (the "Accounts and Records"),
and to perform certain other functions in connection with such Accounts and
Records; and
WHEREAS, pursuant to separate agreement (the "Custodian Agreement"), the
Bank will perform the duties of Custodian of the Securities and cash of the
Fund, the Bank hereinafter being referred to in such capacity as the Custodian.
<PAGE>
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto, intending to be legally bound, do hereby
agree as follows:
Section 1. The Fund hereby appoints the Bank as its Transfer, Dividend
Disbursing, and Accounting Services Agent, and the Bank accepts such
appointments and agrees to act in such capacities upon the terms set forth in
this Agreement.
TRANSFER AGENCY
Section 2. The Fund shall furnish to the Bank as Transfer Agent a
sufficient supply of blank Share Certificates and from time to time will renew
such supply upon the request of the Bank. Such blank Share Certificates shall be
signed manually or by facsimile signatures of officers of the Fund authorized by
law or the by-laws of the Fund to sign Share Certificates and, if required,
shall bear the corporate seal or a facsimile thereof.
Section 3. The Bank as Transfer Agent shall make original issues of
Shares in accordance with Section 25 and 26 below and with the Fund's Prospectus
and Statement of Additional Information upon the written request of the Fund and
upon being furnished with (i) a certified copy of a resolution or resolutions of
the Board of Directors of the Fund authorizing such issue; (ii) an opinion of
counsel as to the validity of such additional Shares; and (iii) necessary funds
for the payment of any original issue tax applicable to such additional Shares.
<PAGE>
Section 4. Transfers of Shares shall be registered and new Share
Certificates issued by the Bank upon surrender of outstanding Share Certificates
(i) in form deemed by the Bank to be properly endorsed for transfer, (ii) with
all necessary endorsers' signatures guaranteed by a member firm of a national
securities exchange or a commercial bank, accompanied by (iii) such assurances
as the Bank shall deem necessary or appropriate to evidence the genuineness and
effectiveness of each necessary endorsement, and (iv) satisfactory evidence of
compliance with all applicable laws relating to the payment or collection of
taxes.
Section 5. When mail is used for delivery of Share Certificates, the
Bank shall forward Share Certificates in "non-negotiable" form by first-class
mail, and Share Certificates in "negotiable" form by registered mail, all mail
deliveries to be covered while in transit to the addressee by insurance arranged
for by the Bank.
Section 6. In registering transfers, the Bank as Transfer Agent may rely
upon the Uniform Commercial Code or any other statutes which, in the opinion
of counsel, protect the Bank and the Fund in not requiring complete
documentation, in registering transfers without inquiry into adverse claims, in
delaying registration for purposes of such inquiry, or in refusing registration
where, in its judgment, an adverse claim requires such refusal.
Section 7. Upon receiving indemnity satisfactory to the Bank, the Bank
as Transfer Agent may issue new Share Certificates in place of Share
Certificates represented to have been lost, destroyed, or stolen, and
<PAGE>
may issue new Share Certificates in exchange for, and upon surrender of,
mutilated Share Certificates.
Section 8. In case any officer of the Fund who shall have signed
manually or whose facsimile signature shall have been affixed to blank Share
Certificates shall die, resign, or be removed from office prior to the issuance
of such Share Certificates, the Bank as Transfer Agent may issue or register
such Share Certificates as the Share Certificates of the Fund notwithstanding
such death, resignation, or removal; and the Fund shall file promptly with the
Bank such approval, adoption, or ratification as may be required by law.
Section 9. The Bank will maintain stock registry records in the usual
form in which it will note the issuance, transfer, and redemption of Shares and
the issuance and transfer of Share Certificates, and is also authorized to
maintain an account entitled Unissued Certificate Account in which it will
record the Shares and fractions issued and outstanding from time to time for
which issuance of Share Certificates is deferred. Except with respect to Share
transactions processed through the Transfer Agent, the Fund is responsible for
providing the Bank with reports of Fund Share purchases, redemptions, and total
Shares outstanding on the next business day after each net asset valuation. The
Bank is authorized to keep records, which will be part of the stock transfer
records, in which it will note the names and registered addresses of
Shareholders, and the number of Shares and fractions from time to time owned by
them for which no Share Certificates are outstanding. Each Shareholder will be
assigned a single account number. Whenever a Shareholder redeems Shares
represented by Share Certificates, the Bank as Transfer Agent, upon receipt of
<PAGE>
the Share Certificates registered in the name of the Shareholder (or if not so
registered, in proper form for transfer), shall cancel such Share Certificates,
debit the Shareholder's individual stock account, and credit the Shares to the
Unissued Share Certificate Account.
Section 10. The Bank will issue Share Certificates for Shares of the
Fund only upon receipt of a written request from a Shareholder. In all other
cases, the Fund authorizes the Bank to dispense with the issuance and
countersignature of Share Certificates whenever Shares are purchased. In such
case, the Bank as Transfer Agent shall merely note on its stock registry records
the issuance of the Shares and fractions (if any), shall credit the Unissued
Certificate Account with the Shares and fractions issued and shall credit the
proper number of Shares and fractions to the respective Shareholders. Likewise,
whenever the Bank has occasion to surrender for redemption Shares and fractions
owned by Shareholders, it shall be unnecessary to issue Share Certificates for
redemption purposes. The Fund authorizes the Bank in such cases to process the
transactions by appropriate entries in its stock transfer records, and debiting
of the Unissued Certificate Account and the record of issued Shares outstanding.
Section 11. The Bank as Transfer Agent will, in addition to the duties
and functions above mentioned, perform the usual duties and functions of a stock
Transfer Agent for a corporation. It will countersign for issuance or reissuance
Share Certificates representing original issue or reissued treasury Shares as
provided herein, and will transfer Share Certificates registered in the name of
Shareholders from one Shareholder to another in the usual manner. The Bank may
rely conclusively and act
<PAGE>
without further investigation upon any list, instruction, certification,
authorization, Share Certificate, or other instrument or paper believed by it in
good faith to be genuine and unaltered, and to have been signed, countersigned,
or executed by duly authorized person or persons, or upon the instructions of
any officer of the Fund, or upon the advice of counsel for the Fund or for the
Bank. The Bank may record any transfer of Share Certificates which is believed
by it in good faith to have been duly authorized or may refuse to record any
transfer of Share Certificates if, in good faith, the Bank as Transfer Agent
deems such refusal necessary in order to avoid any liability either to the Fund
or to the Bank. The Fund agrees to indemnify and hold the Bank harmless from and
against any and all losses, costs, claims, and liability which it may suffer or
incur by reason of so relying or acting or refusing to act.
Section 12. In case of any request or demand for the inspection of the
share records of the Fund, the Bank as Transfer Agent shall endeavor to notify
the Fund and to secure instructions as to permitting or refusing such
inspection. However, the Bank may exhibit such records to any person in any case
where it is advised by its counsel that it may be held liable for failure so to
do.
ACCOUNTING SERVICES
Section 13. The Fund shall promptly turn over to the Bank such of the
Accounts and Records previously maintained by or for it as are necessary for the
Bank to perform its functions under this Agreement. The Fund authorizes the Bank
to rely on such Accounts and Records turned over
<PAGE>
to it and hereby indemnifies and holds the Bank and its successors and assigns
harmless of and from any and all expenses, damages, claims, suits, liabilities,
actions, demands, and losses whatsoever arising out of or in connection with any
error, omission, inaccuracy, or other deficiency of such Accounts and Records or
the failure of the Fund to provide any portion of such or to provide any
information needed by the Bank to knowledgeably perform its functions.
The Fund agrees promptly to advise the Bank in writing of any
inaccuracies, omissions, discrepancies, or other deficiencies in the Accounts
and Records. The Bank shall make reasonable efforts to isolate and correct any
inaccuracies, omissions, discrepancies, or other deficiencies in the Accounts
and Records delivered to the Bank, to the extent such matters are disclosed to
the Bank or are discovered by it and are relevant to its performance of its
functions under this Agreement. The Fund shall provide the Bank with such
assistance as it may reasonably request in connection with its efforts to
correct such matters. The Fund agrees to pay the Bank on a current and ongoing
basis for its reasonable time and costs expended on the correction of such
matters, said payment to be in addition to the fees and charges agreed to for
the normal services rendered under this Agreement.
The Bank expressly makes no warranty or representation that any error,
omission, or deficiency can be satisfactorily corrected. The Fund further agrees
that if the Bank is subject to any claim, suit, or other expenses due, in the
Bank's sole reasonable judgment, to any inaccuracy, omission, discrepancy, or
other deficiency of the Accounts and Records
<PAGE>
delivered to the Bank hereunder, or due to any failure to provide any records or
material required hereunder, the Fund shall pay the Bank on a monthly basis for
all costs in connection therewith and indemnify and hold the Bank harmless from
and against all costs in connection therewith, including all attorneys' fees and
costs; provided, however, that if such error, omission, inaccuracy, or other
deficiency is caused directly or indirectly by gross negligence or reckless
disregard by the Bank of its duties and responsibilities hereunder, the Fund
shall have no obligation to indemnify and hold harmless the Bank, its
successors, or assigns.
Section 14. To the extent it and the Custodian possess the necessary
information by reason of the performance of their custodial, transfer agency,
and dividend disbursing services under this Agreement and the Custodian
Agreement, and to the extent it receives other necessary information by Written
or Oral Instructions, the Bank shall maintain and keep current the following
Accounts and Records relating to the business of the Fund in such form as may be
mutually agreed to between the Fund and the Bank:
(a) Cash Receipts Journal
(b) Cash Disbursements Journal
(c) Dividends Paid Record
(d) Purchase and Sales Journals - Portfolio
Securities
(e) Subscription and Redemption Journals
(f) Security Ledgers
(g) Broker Ledger
(h) General Ledger
<PAGE>
(i) Daily Expense Accruals
(j) Daily Interest Accruals
(k) Securities and moneys borrowed or loaned and
collateral therefor
(l) Daily Trial Balance
(m) Investment Income Journal
Unless necessary information to perform the above functions which is not
otherwise in the possession of the Transfer Agent or Custodian is furnished by
Written or Oral Instructions to the Bank daily prior to (i) the close of
business on the next day on which money market instruments are generally traded
(a "Business Day") and (ii) the calculation of the Fund's net asset value, as
provided below, the Bank shall incur no liability, and the Fund shall indemnify
and hold harmless the Bank from and against any liability arisinq from any
failure to provide complete information or from any discrepancy between the
information received by the Bank and used in such calculations and any
subsequent information received by the Bank.
Section 15. The Bank shall make the proper accounting entries in
accordance with the information available to it in accordance with Section 14
hereof, and shall notify the Custodian of all cash and Securities. The Fund
shall direct that the broker-dealer or other person through whom a transaction
occurred send a confirmation to the Bank. The Bank shall verify this
confirmation against the Written Instructions when received from the Fund and
forward the confirmation to the Custodian. The Bank shall promptly notify the
Fund of any discrepancy between the confirmation and the Fund's Written
Instructions, but shall incur no
<PAGE>
responsibility or liability for such discrepancy. The Fund shall cause any
necessary corrections to be made and shall advise the Bank accordingly.
Section 16. On each Business Day, the Bank shall calculate the Fund's
net asset value in accordance with the Fund's Prospectus and Statement of
Additional Information, and shall communicate this information to the
Administrator.
The Bank shall calculate the Fund's daily dividend ratio in accordance
with the Fund's Prospectus and Statement of Additional Information and
resolutions of the Fund's Board of Directors, and shall also communicate this
information to the Administrator. The Bank shall also prepare and maintain, at
such intervals not more frequently than daily as may be specified by the Fund
from time to time, an evaluation of Securities for which market quotations are
available through Quotron Financial Information Services or other mechanical
pricing services used by the Bank. All other Securities shall be evaluated in
accordance with the Fund's Written Instructions, and the Bank shall have no
responsibility or liability for the accuracy of the prices quoted by Quotron or
by the information supplied by the Fund or upon the Written Instructions.
The Fund assumes all responsibility for computation of "amortized cost,"
valuation of restricted securities, and all valuations not ascertainable solely
by mechanical procedures.
Section 17. For all purposes under this Agreement, the Bank is
authorized to act upon receipt of the first of any Written or Oral
<PAGE>
Instruction it receives from the Fund or its agents on behalf of the Fund. In
cases where the first Instruction is an Oral Instruction that is not in the form
of a document or written record, a confirmatory Written Instruction or Oral
Instruction in the form of a document or written record shall be delivered, and
in cases where the Bank receives an Instruction from the Fund, whether Written
or Oral, to enter a portfolio transaction on the records, the Fund shall cause
the broker-dealer to send a written confirmation to the Bank. The Bank shall be
entitled to rely on the first Instruction received and, for any act or omission
undertaken in compliance therewith, shall be free of liability and fully
indemnified and held harmless by the Fund; provided, however, that in the event
a Written or Oral Instruction received by the Bank is countermanded by a timely
later Written or Oral Instruction received by the Bank prior to acting upon such
countermanded Instruction, the Bank shall act upon such later Written or Oral
Instruction. The sole obligation of the Bank with respect to any follow-up or
confirmatory Written Instruction, Oral Instruction in documentary or written
form, or broker-dealer written confirmation shall be to make reasonable efforts
to detect any discrepancy between the original Instruction and such confirmation
and to report such discrepancy to the Fund. The Fund shall be responsible, at
the Fund's expense, for taking any action, including any reprocessing, necessary
to correct any discrepancy or error and, to the extent such action requires the
Bank to act, the Fund shall give the Bank specific Written Instruction as to the
action required.
Section 18. At the end of each month, the Fund shall cause the Custodian
to forward to the Bank a monthly statement of cash and portfolio transactions,
which will be reconciled with the Bank's Accounts and Records
<PAGE>
maintained for the Fund. The Bank will report any discrepancies to the
Custodian, and report any unreconciled items to the Fund.
Section 19. The Bank shall promptly supply daily and periodic reports of
the Fund as requested by the Fund and agreed upon by the Bank.
Section 20. The Fund shall and shall require each of its agents to
provide the Bank as of the close of each business day, or on such other schedule
as the fund determines is necessary, with Written or Oral Instructions (to be
delivered to the Bank by 10:00 a.m. the next following Business Day) containing
all data and information necessary for the Bank to maintain the Fund's Accounts
and Records, and the Bank may conclusively assume that the information it
receives by Written or Oral Instructions is complete and accurate. Except with
respect to Share transactions processed through the Transfer Agent, the Fund is
responsible to provide or cause to be provided to the Bank reports of Share
purchases, redemptions, and total Shares outstanding on the next business day
after each net asset valuation.
Section 21. The Accounts and Records, in the agreed-upon format,
maintained by the Bank shall be the property of the Fund, and shall be made
available to the Fund promptly upon request and shall be maintained for the
periods prescribed in Rule 31(a)-2 of the Investment Company Act of 1940, as
amended. The Bank shall assist the Fund's independent auditors or, upon approval
of the Fund or upon demand, any regulatory body, in any requested review of the
Fund's Accounts and Records but shall be reimbursed for all expenses and
employee time invested in any such review of the Fund's Accounts and Records
outside of routine and normal periodic reviews.
<PAGE>
Upon receipt from the Fund of any necessary information not in its possession,
the Bank shall supply the necessary data for the Fund's or its accountant's
completion of any necessary tax returns, questionnaires, periodic reports to
shareholders, and such other reports and information requests as the Fund and
the Bank shall agree upon from time to time.
Section 22. The Bank and the Fund may from time to time adopt such
procedures as they agree upon in writing, and the Bank may conclusively assume
that any procedure approved by the Fund or directed by the Fund, does not
conflict with or violate any requirements of the Fund's Prospectus, Statement of
Additional Information, Articles of Incorporation, By-Laws, or any rule or
regulation of any regulatory body or governmental agency. The Fund shall be
responsible for notifying the Bank of any changes in regulations or rules which
might necessitate changes in the Bank's procedures, and for working out with the
Bank such changes.
Section 23. The Bank, in performing under the terms and conditions of
this Agreement, shall incur no liability for its status hereunder or for any
actions taken or omitted in good faith reliance upon any authorized Written or
Oral Instruction, any certified copy of any resolution of the Board of Directors
of the Fund, or any other document reasonably believed by the Bank to be genuine
and to have been executed or signed by the proper person or persons, and the
Fund hereby agrees to indemnify and hold the Bank harmless from any and all
loss, liability, and expense, including any legal expenses, arising out of the
Bank's performance, or status, or any act or omission of the Bank, under this
Agreement.
<PAGE>
Section 24. All financial data provided to, processed by, and reported
by the Bank under this Agreement shall be stated in United States dollars or
currency. The Bank shall have no obligation to convert to, equate, or deal in
foreign currencies or values, and expressly assumes no liability for any
currency conversion or equation computations relating to the affairs of the
Fund.
ISSUANCE OF SHARES
Section 25. Prior to the daily determination of net asset value in
accordance with the Fund's Prospectus and Statement of Additional Information,
the Bank shall process all purchase orders received since the last determination
of the Fund's net asset value. For purposes of this Agreement, the date a
purchase order is received shall be determined in accordance with the Fund's
Prospectus as the same shall from time to time be in effect.
The Bank shall calculate daily the amount available for investment in
Shares of the Fund at the net asset value determined by the Fund as of the time
stated in the Fund's Prospectus and Statement of Additional Information, the
number of Shares and fractional Shares of the Fund to be purchased, and the net
asset value to be deposited with the Custodian. The Bank, as agent for the
Shareholders, shall place a purchase order daily with the Fund for the proper
number of Shares and fractional Shares of the Fund to be purchased, and shall
confirm such number to the Fund in writing.
<PAGE>
Section 26. Having made the calculations provided for in Section 25, the
Bank shall thereupon pay over the net asset value of Shares purchased to the
Custodian. The net asset value shall then be deposited in the account maintained
under the Custodian Agreement. The proper number of Shares and fractional Shares
of the Fund shall then be issued daily and credited by the Bank to the Unissued
Certificate Account. The Shares and fractional Shares of the Fund purchased for
each Shareholder will be credited by the Bank to his separate account. The Bank
shall mail to each Shareholder a confirmation of each purchase, with copies to
the Fund if requested. Such confirmations will show the prior Share balance, the
new Share balance, the Shares for which Share Certificates are outstanding (if
any), the amount invested, and the price paid for the newly purchased Shares.
REDEMPTIONS
Section 27. Prior to the daily determination of net asset value and in
accordance with the Fund's Prospectus and Statement of Additional Information,
the Bank shall process all requests from Shareholders to redeem Shares of the
Fund, and shall determine the number of Shares of the Fund required to be
redeemed to make monthly payments, automatic payments, or the like. Thereupon,
the Bank shall advise the Fund of the total number of Shares of the Fund
available for redemption and the number of Shares and fractional Shares of the
Fund requested to be redeemed. The Fund shall then quote to the Bank the
applicable net asset value, whereupon the Bank shall furnish the Fund with an
appropriate confirmation of the redemption and process the redemption by filing
<PAGE>
with the Custodian an appropriate statement and making the proper distribution
and application of the redemption proceeds in accordance with the Fund's
Prospectus and Statement of Additional Information. The stock registry books
recording outstanding Shares, the Unissued Certificate Account, and the
individual account of the Shareholder shall be properly debited.
Section 28. The proceeds of redemption shall be remitted by the Bank in
accordance with the Fund's Prospectus and Statement of Additional Information,
and in accordance with a particular Shareholder's Application Form filed with
the Transfer Agent. If Share Certificates have been issued for Shares being
redeemed, then such Share Certificates and a stock power with a signature
guarantee of a commercial bank, or of a member firm of a national securities
exchange, shall accompany the redemption request. If Share Certificates have not
been issued to the redeeming Shareholder, the signature of the Shareholder on
the redemption request must be similarly guaranteed. The Fund may authorize the
Bank to waive the signature guarantee in certain cases by Written Instructions,
and does hereby authorize the Bank to waive the signature guarantee in
connection with all redemptions by telephone and check as described in the
Fund's Prospectus and Statement of Additional Information.
For the purposes of redemption of Shares which have been purchased
within 15 days of a redemption request, the Fund shall provide the Bank, from
time to time, with Written Instructions concerning the time within which such
requests may be honored.
<PAGE>
DIVIDENDS
Section 29. Upon the declaration of each dividend and each capital gains
distribution by the Board of Directors of the Fund, the Fund shall notify the
Bank of the date of such declaration, the amount payable per Share, the record
date for determining the Shareholders entitled to payment, the payment, and the
reinvestment date price.
Section 30. On or before each payment date the Fund will transfer or
cause the Custodian to transfer to the Bank, in its capacity as Dividend
Disbursing Agent, the total amount of the dividend or distribution currently
payable. On the designated payment date, the Bank will automatically reinvest
all dividends in additional Shares of the Fund except in cases where
Shareholders have elected to receive Shares in cash, in which case the Bank will
mail distribution checks to the Shareholders for the proper amounts payable to
them.
GENERAL PROVISIONS
Section 31. The Bank shall maintain records (which may be part of the
stock transfer records) in connection with the issuance and redemption of
Shares, the disbursement of dividends, and dividend reinvestments, in which will
be noted the transactions effected for each Shareholder and the number of Shares
and fractional Shares owned by each for which no Share Certificates are
outstanding. The Bank agrees to make available upon request and to preserve for
the periods prescribed in Rule 31a-2 any records relating to services provided
under this Agreement which are required to be maintained by Rule 31a-1.
<PAGE>
Section 32. In addition to the services as Transfer Agent, Dividend
Disbursing, and Accounting Services Agent, as set forth above, the Bank will
perform other services for the Fund as agreed from time to time, including but
not limited to preparation of and mailing Federal Tax Information Forms, mailing
semi-annual reports of the Fund, preparation of one annual list of Shareholders,
and mailing notices of Shareholders' meetings, proxies, and proxy statements.
Section 33. Nothing contained in this Agreement is intended to or shall
require the Bank, in any capacity hereunder, to perform any functions or duties
on any holiday, day of special observance, or any other day on which the Bank or
the New York Stock Exchange is closed. Functions or duties normally scheduled to
be performed on such days shall be performed on, and as of, the next succeeding
business day on which both the New York Stock Exchange and the Bank are open.
Notwithstanding the foregoing, the Bank shall compute the Fund's net asset value
on each day required pursuant to Rule 22c-1 promulgated under the Investment
Company Act of 1940.
Section 34. The Fund agrees to pay the Bank compensation for its
services and to reimburse it for expenses, as set forth in Schedule A attached
hereto, or as shall be set forth in amendments to such Schedule approved by the
Fund and the Bank.
Section 35. In acting in any capacity set forth in this Agreement, the
Bank shall not be personally liable for any taxes, assessments, or governmental
charges which may be levied or assessed on any
<PAGE>
basis whatsoever in connection with its duties hereunder, excepting only for
taxes assessed against it in its corporate capacity arising out of its
compensation hereunder.
Section 36. The Fund shall indemnify the Bank and save it harmless from
and against any and all actions, suits, and claims, whether groundless or
otherwise, arising directly or indirectly out of or in connection with its
performance under this Agreement as Transfer Agent and Dividend Disbursing
Agent, and from and against any and all losses, damages, costs, charges, counsel
fees, payments, expenses, and liabilities incurred by the Bank in connection
with any such action, suit, or claim. The Bank shall not be under any obligation
to prosecute or to defend any action, suit, or claim arising out of or in
connection with its performance under this Agreement as Transfer Agent and
Dividend Disbursing Agent which, in the opinion of its counsel, may involve it
in expense or liability, and the Fund shall, so often as reasonably requested,
furnish the Bank with satisfactory indemnity against such expense or liability,
and upon request of the Bank the Fund shall assume the entire defense of any
action, suit, or claim subject to the foregoing indemnity; provided, however,
that the Bank shall give the Fund notice of and reasonable opportunity to defend
any such action, suit, or claim, in the name of the Fund or the Bank or both.
Without limiting the foregoing:
(a) The Bank may rely upon the advice of the Fund or of counsel, who may
be counsel for the Fund or counsel for the Bank, and upon statements of
accountants, brokers, and other persons reasonably believed
<PAGE>
by it in good faith to be expert in the matters upon which they are consulted,
and, for any actions taken in good faith upon such statements, the Bank shall
not be liable to anyone.
(b) The Bank may act upon any Oral Instruction which it receives and
which it believes in good faith was transmitted by the person or persons
authorized by the Board of Directors of the Fund to give such Oral Instruction.
The Bank shall have no duty or obligation to make any inquiry or effort of
certification of such Oral Instruction.
(c) The Bank shall not be liable for any action taken in good faith
reliance upon any Written Instruction or certified copy of any resolution of the
Board of Directors of the Fund, and the Bank may rely upon the genuineness of
any such document or copy thereof believed in good faith by the Bank to have
been validly executed.
(d) The Bank may rely and shall be protected in acting upon any
signature, instruction, request, letter of transmittal, certificate, opinion of
counsel, statement, instrument, report, notice, consent, order, or other paper
or document believed by it to be genuine and to have been signed or presented by
a purchaser, by the Fund, or by other proper party or parties.
Section 37. Upon receipt of Written Instructions from the fund and as
provided herein, the Bank is authorized to make payment upon redemption of
Shares without a signature guarantee. The Fund hereby agrees to indemnify and
hold the Bank and its successors and assigns harmless from
<PAGE>
and against any and all expenses, damages, claims, suits, liabilities, actions,
demands, and losses whatsoever arising out of or in connection with a payment by
the Bank upon redemption of Shares without a signature guarantee and, upon the
request of the Bank, the Fund shall assume the entire defense of any action,
suit, or claim subject to the foregoing indemnity. The Bank shall notify the
Fund of any such action, suit, or claim within 30 days after receipt by Bank of
notice thereof.
Section 38. The Fund shall promptly cause to be turned over to the Bank
(i) an accurate list of Shareholders of the Fund showing the proper registered
address and number of Shares owned and whether such Shares are represented by
outstanding Share Certificates or by non-certificated share accounts and (ii)
all Shareholder records, files, and other materials necessary or appropriate for
proper performance of the functions assumed by the Bank under this Agreement
(hereinafter called "Materials"), and hereby agrees to indemnify and hold the
Bank, its successors, and assigns, harmless from and against any and all
expenses, damages, claims, suits, liabilities, actions, demands, and losses
whatsoever arising out of or in connection with any error, omission, inaccuracy,
or other deficiency of such Materials, or out of the failure of the Fund to
provide any portion of such or to provide any information needed by the Bank
knowledgeably to perform its functions.
Section 39. The terms defined in Section 1 of the Custodian Agreement
shall have the same meanings wherever used in this Agreement. The Fund shall
file with the Bank a certified copy of each resolution of its Board of Directors
authorizing the execution of Written Instructions or
<PAGE>
the transmittal of Oral Instructions, as provided in Section 1 of the Custodian
Agreement.
Section 40. This Agreement may be amended from time to time by a
supplemental agreement executed by the Fund and the Bank.
Section 41. Either the Fund or the Bank may give 60 days' written notice
to the other of the termination of this Agreement, such termination to take
effect at the time specified in the notice.
Section 42. Any notice or other communication required by or permitted
to be given in connection with this Agreement shall be in writing, and shall be
delivered in person or sent by first class mail, postage prepaid, to the
respective parties as follows:
If to the Fund:
Red Oak Cash Reserve Fund, Inc.
232 Lakeside Drive
Horsham, PA 19044
Attention: Fairfield Group, Inc.
If to Bank:
First Pennsylvania Bank N.A.
P.O. Box 8070
Philadelphia, PA 19101
Attention: Chief Executive Officer
Section 43. The Fund represents and warrants to the Bank that the
execution and delivery of this Transfer Agency Agreement by the
<PAGE>
undersigned officers of the Fund has been duly and validly authorized by
resolution of the Board of Directors of the Fund.
Section 44. The Bank may from time to time in its sole discretion
delegate some or all of its duties hereunder to Fund/Plan Services, Inc., a
wholly owned subsidiary of First Pennsylvania Corporation, which shall perform
such functions as the agent of the Bank. To the extent of such delegation, the
term "Bank" in this Agreement shall be deemed to refer both to the Bank and to
Fund/Plan Services, Inc. or to either of them, as the context may indicate. In
each provision of this Agreement limiting the liabilities or the delegations of
the Bank or providing for the indemnification or protection of the Bank, the
term "Bank" shall include Fund/Plan Services, Inc. The Bank shall not be
relieved of any liabilities or obligations under the Agreement in connection
with such delegation of duties.
Section 45. This Agreement may be executed in two or more counterparts,
each of which when so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 46. This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Fund without the written
consent of the Bank or by the Bank without the written consent of the Fund,
authorized or approved by a resolution of its Board of Directors.
<PAGE>
Section 47. This Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania.
Section 48. Notwithstanding anything herein to the contrary, nothing
herein shall protect the Bank from the consequences of its gross negligence or
reckless disregard, if any, of the duties and responsibilities assumed by it
hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized officers and their corporate seals hereunto duly
affixed and attested, as of the day and year first above written.
RED OAK CASH RESERVE FUND, INC.
(SEAL) By /s/ Francis J. Bruzda
-------------------------------------
Francis J. Bruzda
Attest /s/ Richard B. Seidel
---------------------------------
Richard B. Seidel
FIRST PENNSYLVANIA BANK N.A.
(SEAL) By /s/ John E. Huggard
-------------------------------------
John E. Huggard
Attest /s/ ? ? ? ? ? ? ? ? ?
---------------------------------
AMENDMENT OF THE TRANSFER AGENCY AGREEMENT
This Amendment of the Transfer Agency Agreement, ("Amendment") made this
31st day of December, 1985, by and between Red Oak Cash Reserve Fund
("Customer"), and First Pennsylvania Bank N.A., a national banking association
duly organized and existing under the laws of the United States (the "Bank").
WITNESSETH:
WHEREAS, the parties have previously entered into a Transfer Agency
Agreement, (the "Agreement") whereby the Bank is providing the services
enumerated therein to the Customer; and
WHEREAS, pursuant to the Agreement, the Bank has delegated to Fund/Plan
Services, Inc. ("Fund/Plan") a wholly owned subsidiary of First Pennsylvania
corporation, ("FPC"), the duty to furnish the services provided thereunder; and
WHEREAS, it is contemplated that all of the outstanding shares of voting
stock of Fund/Plan will be sold by FPC to FinDaTex, Inc., a Pennsylvania
corporation, effective as of the close of business on December 31, 1985 (the
"Effective Date"); and
WHEREAS, the parties intend that Fund/Plan shall continue to provide
services in accordance with the Agreement, as amended hereby; and
NOW THEREFORE, in consideration of the premises and conditions
contained herein, the parties hereto, with intent to be legally bound hereby,
agree as follows:
1. Following the Effective Date, the Customer shall continue to purchase
and receive from Fund/Plan the services provided under the Agreement, in
accordance with the provisions of the Agreement, as amended hereby.
<PAGE>
2. From and after the Effective Date, the Customer agrees to look solely
to Fund/Plan for the performance of all duties and obligations under the
Agreement, and Fund/Plan agrees to perform all duties and obligations in
accordance with the terms and conditions of the Agreement.
3. Any reference to "First Pennsylvania Bank N.A." or the "Bank" in the
Agreement, except where the reference relates to the Bank in its capacity as
Custodian, shall, as of the Effective Date, be deleted from the Agreement, and
the name "Fund/Plan Services, Inc." shall be substituted therefor.
4. The Customer hereby releases, remises and discharges the Bank from
any and all claims, liabilities and causes of action which arise out of the
performance by Fund/Plan of its duties after the Effective Date.
5. In all other respects, the terms and conditions of the Agreement
shall remain in full force and effect between Fund/Plan and the Customer and
Fund/Plan hereby agrees to be bound by the terms and conditions of the
Agreement, as amended by this Amendment.
6. Nothing in this Amendment shall be construed to relieve the Customer
of responsibility for payment of any fees still outstanding after the Effective
Date for services rendered by the Bank prior to the Effective Date. Said fees
shall be payable to and remitted to Fund/Plan Services, Inc.
7. This Amendment of the Agreement of the Customer has been duly and
validly authorized by the parties hereto. Customer shall provide the Bank and
Fund/Plan with copies of a resolution of Customer's Board of Directors approving
or ratifying this Amendment as promptly as possible.
8. This Amendment may be executed and delivered in any number of
counterparts, each of which shall constitute an original but all together only
one Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their respective Presidents or Vice Presidents and their corporate seals
hereunto duly affixed, and attested by their respective Secretaries or Assistant
Secretaries, as of the day and year first above written.
FIRST PENNSYLVANIA BANK N.A.
BY: /s/ Edward E. Reital
------------------------------------
Edward E. Reital
Title
RED OAK CASH RESERVE FUND
BY: /s/ Richard B. Seidel
------------------------------------
Richard B. Seidel
Title
FUND/PLAN SERVICES, INC.
BY: /s/ Vice President
------------------------------------
Title
ATTEST:
(Corporate Seal)
/s/ Michele A. Buckwalter
- ----------------------------------
Michele A. Buckwalter
Corporate Secretary
ATTEST:
(Corporate Seal)
/s/ Jeffrey A. Dalke
- ----------------------------------
Jeffrey A. Dalke
Corporate Secretary
ATTEST:
(Corporate Seal)
/s/ Michele A. Buckwalter
- ----------------------------------
Michele A. Buckwalter
Corporate Secretary
RETAIL TRANSFER AGENT AGREEMENT
CLASS B
THIS AGREEMENT is made as of this ___th day of _____________ , 1992, by
and between CoreFunds, Inc. (the "Company"), a Maryland corporation, and SEI
Financial Management Corporation (the "Transfer Agent" or "SEI"), a Delaware
corporation.
WHEREAS, the Trust is an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Transfer Agent is a transfer agent registered under the
Securities Exchange Act of 1934; and
WHEREAS, the Transfer Agent and the Trust are parties to an
Administration Agreement dated ____________ , (the "Administration Agreement");
WHEREAS, the Company desires the Transfer Agent to provide, and the
Transfer Agent is willing to provide, in addition to the services provided under
the Administration Agreement, retail transfer agent services to the Class B
Shareholders of the Company's portfolios listed in Schedule A which is attached
hereto and made a part of this Agreement, and such other portfolios, or classes
of portfolios, as the Company and the Transfer Agent may agree on
("Portfolios"), on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Company and the Transfer Agent hereby agree as
follows:
ARTICLE 1. Retention of the Transfer Agent. The Company hereby retains
--------------------------------
the Transfer Agent to act as the Transfer Agent of Class B of the Portfolios and
to furnish the Portfolios with the retail transfer agent services as set forth
below. The Transfer Agent hereby accepts such employment to perform the duties
set forth below.
The Transfer Agent shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Company in any way and shall
not be deemed an agent of the Company. All of the Transfer Agent's duties shall
be subject always to the objectives, policies and restrictions contained in the
Company's current
<PAGE>
registration statement under the 1940 Act, to the Company's Articles of
Incorporation and By-Laws, to the provisions of the 1940 Act, and to any other
guidelines that may be established by the Company's Directors and which are
furnished to the Transfer Agent by the Company.
ARTICLE 2. Transfer Agent Services. The Transfer Agent will act as
------------------------
Transfer Agent for the Portfolios' retail accounts and, as such, will record in
an account (the "Account") the total number of units of beneficial interest
("Shares") of each Portfolio issued and outstanding from time to time and will
maintain Share transfer records in which it will note the names and registered
addresses of Shareholders, and the number of Shares from time to time owned by
each of them. Each Shareholder will be assigned one or more account numbers.
The Transfer Agent is authorized to set up accounts for shareholders and
record transactions in the accounts on the basis of instructions received from
Shareholders when accompanied by remittance in an appropriate amount and form as
provided in the Company's then current prospectus. The Company will not issue
certificates representing its Shares. Whenever Shares are purchased or issued,
the Transfer Agent shall credit the Account with the Shares issued, and credit
the proper number of Shares to the appropriate Shareholder.
Likewise, whenever the Transfer Agent has occasion to redeem Shares
owned by a Shareholder, the Company authorizes the Transfer Agent to process the
transaction by making appropriate entries in its Share transfer records and
debiting the Account.
Upon notification by the Company's Custodian of the receipt of funds
through the Federal Reserve wire system or conversion into Federal funds of
funds transmitted by other means for the purchase of Shares in accordance with
the Company's current prospectus, the Transfer Agent shall notify the Company of
such deposits on a daily basis.
The Transfer Agent shall credit each Shareholder's account with the
number of units purchased according to the price of the Shares in effect for
such purchases determined in the manner set forth in the Company's then current
prospectus. The Transfer Agent shall process each order for the redemption of
Shares from or on behalf of a Shareholder, and shall cause cash proceeds to be
wired in Federal funds.
The requirements as to instruments of transfer and other documentation,
the applicable redemption price and the time of payment shall be as provided for
in the then current prospectus, subject to such supplemental requirements
consistent with
2
<PAGE>
such prospectus as may be established by mutual agreement between the Company
and the Transfer Agent.
If the Transfer Agent or the Company's Distributor determines that a
request for redemption does not comply with the requirements for redemption, the
Transfer Agent shall promptly so notify the Shareholder, together with the
reason therefor, and shall effect such redemption at the price next determined
after receipt of documents complying with said standards.
On each day that the Company's Custodian and the New York Stock Exchange
are open for business ("Business Day"), the Transfer Agent shall notify the
Custodian of the amount of cash or other assets required to meet payments made
pursuant to the provisions of this Article 2, and the Company shall instruct the
Custodian to make available from time to time sufficient funds or other assets
therefor.
The authority of the Transfer Agent to perform its responsibilities as
to purchases and redemptions shall be suspended upon receipt by it of
notification from the Securities and Exchange Commission or the Directors of the
suspension of the determination of the Company's net asset value.
In registering transfers, the Transfer Agent may rely upon the opinion
of counsel in not requiring complete documentation, in registering transfers
without inquiry into adverse claims, in delaying registration for purposes of
such inquiry, or in refusing registration where in its judgment an adverse claim
requires such refusal.
ARTICLE 3. Compensation of the Transfer Agent.
-----------------------------------
(A) Transfer Agent. For the services to be rendered, the facilities
---------------
furnished and the expenses assumed by the Transfer Agent pursuant to
this Agreement, the Company shall pay to the Transfer Agent
compensation at an annual rate specified in the Schedule B which is
attached hereto and made a part of this Agreement. Such compensation
shall be accrued daily, and paid to the Transfer Agent monthly.
If this Agreement becomes effective subsequent to the first day of a
month or terminates before the last day of a month, the Transfer
Agent's compensation for that part of the month in which this
Agreement is in effect shall be prorated in a manner consistent with
the calculation of the fees as set forth above. Payment of the
Transfer Agent's compensation for the preceding month shall be made
promptly.
3
<PAGE>
(B) Survival of Compensation Rights. All rights of compensation under
--------------------------------
this Agreement for services performed as of the termination date
shall survive the termination of this Agreement.
ARTICLE 4. Limitation of Liability of the Transfer Agent. The duties of
----------------------------------------------
the Transfer Agent shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Transfer Agent
hereunder. The Transfer Agent shall not be liable for any error of judgment or
mistake of law or for any act or omission in carrying out its duties hereunder,
except a loss resulting from willful misfeasance, bad faith or gross negligence
in the performance of its duties, or by reason of reckless disregard of its
obligations and duties hereunder, except as may otherwise be provided under
provisions of applicable state law which cannot be waived or modified hereby.
(As used in this Article 4, the term "Transfer Agent" shall include directors,
officers, employees, sub-contracts and other corporate agents of the Transfer
Agent as well as that corporation itself.)
So long as the Transfer Agent does not violate the standard of care set
forth herein, the Company assumes full responsibility and shall indemnify the
Transfer Agent and hold it harmless from and against any and all actions, suits
and claims, whether groundless or otherwise, and from and against any and all
losses, damages, costs, charges, reasonable counsel fees and disbursements,
payments, expenses and liabilities (including reasonable investigation expenses
and attorney's fees) arising directly or indirectly out of said administration,
transfer agency, and dividend disbursing relationships to the Company or any
other service rendered to the Company hereunder. The indemnity and defense
provisions set forth herein shall indefinitely survive the termination of this
Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Company may be asked to indemnify or hold the
Transfer Agent harmless, the Company shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Transfer Agent will use all reasonable care to identify and
notify the Company promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Company, but failure to do so in good faith shall not affect the rights
hereunder.
The Transfer Agent may apply to the Company at any time for instructions
and may consult counsel for the Company or its own counsel and with accountants
and other experts with respect to any matter arising in connection with the
Transfer
4
<PAGE>
Agent's duties, and the Transfer Agent shall not be liable or accountable for
any action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel, accountants or other experts.
The Transfer Agent shall be protected in acting upon any document which
it reasonably believes to be genuine and to have been signed or presented by the
proper person or persons. Nor shall the Transfer Agent be held to have notice of
any change of authority of any officers, employee or agent of the Company until
receipt of written notice thereof from the Company.
ARTICLE 5. Activities of the Transfer Agent. The services of the
---------------------------------
Transfer Agent rendered to the Company are not to be deemed to be exclusive. The
Transfer Agent is free to render such services to others and to have other
businesses and interests. It is understood that Directors, officers, employees
and Shareholders of the Company are or may be or become interested in the
Transfer Agent, as directors, officers, employees and shareholders or otherwise
and that directors, officers, employees and shareholders of the Transfer Agent
and its counsel are or may be or become similarly interested in the Company, and
that the Transfer Agent may be or become interested in the Company as a
Shareholder or otherwise.
ARTICLE 6. Term of this Agreement. This Agreement shall remain in effect
-----------------------
for three years after the date of the Agreement and shall continue in effect for
successive periods of ______ years subject to review at least annually by the
Directors of the Company. SEI reserves the right to terminate this Agreement if
the Administration Agreement is terminated for any reason. Upon termination of
this Agreement all out-of-pocket expenses associated with the movement of
records and material will be borne by the Company.
This Agreement shall not be assignable by either party without the
written consent of the other party.
ARTICLE 7. Amendments. This Agreement may be amended by the parties
-----------
hereto only if such amendment is specifically approved (i) by the vote of a
majority of the Directors of the Company, and (ii) by the vote of a majority of
the Directors of the Company who are not parties to this Agreement or interested
persons of any such party, cast in person at a Board of Directors meeting called
for the purpose of voting on such approval.
For special cases, the parties hereto may amend such procedures set
forth herein as may be appropriate or practical under the circumstances, and the
Transfer Agent may conclusively assume that any special procedure which has been
approved by the Company does not conflict with or violate any requirements of
its Articles of
5
<PAGE>
Incorporation, By-Laws or prospectus, or any rule, regulation or requirement of
any regulatory body.
ARTICLE 8. Director's Liability. A copy of the Articles of Incorporation
---------------------
of the Company is on file with the Secretary of State of the State of Maryland,
[and notice is hereby given that this instrument is executed on behalf of the
Directors of the Company as Directors and not individually and that the
obligations of this instrument are not binding upon any of the Directors,
officers or Shareholders of the Company individually, but binding only upon the
assets and property of the Company].
ARTICLE 9. Certain Records. The Transfer Agent shall maintain customary
----------------
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Transfer Agent
on behalf of the Company shall be prepared and maintained at the expense of the
Transfer Agent, but shall be the property of the Company and will be made
available to or surrendered promptly to the Company on request.
In case of any request or demand for the inspection of such records by
another party, the Transfer Agent shall notify the Company and follow the
Company's instructions as to permitting or refusing such inspection; provided
that the Transfer Agent may exhibit such records to any person in any case where
it is advised by its counsel that it may be held liable for failure to do so,
unless (in cases involving potential exposure only to civil liability) the
Company has agreed to indemnify the Transfer Agent against such liability.
ARTICLE 10. Definitions of Certain Terms. The terms "interested person"
-----------------------------
and "affiliated person", when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 11. Notice. Any notice required or permitted to be given by
-------
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party giving
notice: if to the Company, at 680 East Swedesford Road, Wayne, PA, and if to the
Transfer Agent at 680 East Swedesford Road, Wayne, PA.
ARTICLE 12. Governing Law. This Agreement shall be construed in
--------------
accordance with the laws of the Commonwealth of Pennsylvania and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the
6
<PAGE>
Commonwealth of Pennsylvania, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
ARTICLE 13. Multiple Originals. This Agreement may be executed in two or
-------------------
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
CoreFunds, Inc.
By:
-------------------------------------
SEI FINANCIAL MANAGEMENT CORPORATION
By:
-------------------------------------
7
<PAGE>
SCHEDULE A
TO THE TRANSFER AGENT AGREEMENT
DATED ____________________
BETWEEN
CoreFunds, Inc.
AND
SEI FINANCIAL MANAGEMENT CORPORATION
Pursuant to the Preamble, the Transfer Agent shall provide services to Class B
of the following Portfolios:
Treasury Reserve
Cash Reserve
Tax Free Reserve
Growth Equity
Value Equity
International Growth
Balanced
Government Income
Intermediate-Term Municipal
8
ADMINISTRATION AGREEMENT
CoreFunds, Inc.
THIS AGREEMENT is made as of this 30th day of October, 1992, by and
between CoreFunds, Inc. (the "Company"), a Maryland corporation, and SEI
Financial Management Corporation (the "Administrator"), a Delaware corporation.
WHEREAS, the Company is an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Company desires the Administrator to provide, and the
Administrator is willing to provide management, administrative, transfer agent
and shareholder servicing services to the Company's Treasury Reserve, Cash
Reserve, Tax-Free Reserve, Growth Equity, Value Equity, Intermediate Bond,
Equity Index, International Growth, Balanced, Government Income,
Intermediate-Term Municipal, Fiduciary Reserve, Fiduciary Tax-Free Reserve, and
Fiduciary Treasury Reserve Portfolios and such other portfolios as the Company
and the Administrator may agree on ("Portfolios"), on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Company and the Administrator hereby agree as
follows:
ARTICLE 1. Retention of the Administrator. The Company hereby retains
-------------------------------
the Administrator to act as the Administrator and Shareholder Servicing Agent of
the Portfolios and to furnish the Portfolios with the management,
administrative, transfer agent and shareholder servicing services as set forth
below. The Administrator hereby accepts such employment to perform the duties
set forth below.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Company in any way and shall
not be deemed an agent of the Company. All of the Administrator's duties shall
be subject always to the objectives, policies and restrictions contained in the
Company's current registration statement under the 1940 Act, to the Company's
Articles of Incorporation and By-Laws, to the provisions of the 1940 Act, and to
any other guidelines that may be established by the Company's Directors.
<PAGE>
ARTICLE 2. Transfer Agent Services. The Administrator will act as
------------------------
Transfer Agent for the Portfolios' institutional accounts and, as such, will
record in an account (the "Account") the total number of units of beneficial
interest ("Shares") of each Portfolio issued and outstanding from time to time
and will maintain Share transfer records in which it will note the names and
registered addresses of Shareholders, and the number of Shares from time to time
owned by each of them. Each Shareholder will be assigned one or more account
numbers.
The Administrator is authorized to set up accounts and record
transactions in the accounts on the basis of instructions received from
Shareholders when accompanied by remittance in appropriate amount as provided in
the Company's then current prospectus. The Company will not issue certificates
representing its Shares. Whenever Shares are purchased or issued, the
Administrator shall credit the Account with the Shares issued, and credit the
proper number of Shares to the appropriate Shareholder.
Likewise, whenever the Administrator has occasion to redeem Shares owned
by a Shareholder, the Company authorizes the Administrator to process the
transaction by making appropriate entries in its Share transfer records and
debiting the Account.
Upon notification by the Company's Custodian of the receipt of funds
through the Federal Reserve wire system or conversion into Federal funds of
funds transmitted by other means for the purchase of Shares in accordance with
the Company's current prospectus, the Administrator shall notify the Company of
such deposits on a daily basis.
The Administrator shall credit each Shareholder's account with the
number of units purchased according to the price of the Shares in effect for
such purchases determined in the manner set forth in the Company's then current
prospectus. The Administrator shall process each order for the redemption of
Shares from or on behalf of a Shareholder, and shall cause cash proceeds to be
wired in Federal funds.
The requirements as to instruments of transfer and other documentation,
the applicable redemption price and the time of payment shall be as provided in
the then current prospectus, subject to such supplemental requirements
consistent with such prospectus as may be established by mutual agreement
between the Company and Administrator.
If the Administrator or the Company determines that a request for
redemption does not comply with the requirements for redemption, the
Administrator shall promptly so notify the Shareholder, together with the reason
therefor, and shall effect such redemption at the price next determined after
receipt of documents complying with said standards.
On each day that the Company's Custodian and the New York Stock Exchange
are open for business ("Business Day"), the Administrator shall notify the
Custodian of the amount of cash or other assets required to meet payments made
pursuant to the provisions of this Article 2, and the Company shall instruct the
Custodian to make available from time to
<PAGE>
time sufficient funds or other assets therefor.
The authority of the Administrator to perform its responsibilities under
this Article 2 shall be suspended upon receipt by it of notification from the
Securities and Exchange Commission or the Directors of the suspension of the
determination of the Company's net asset value.
In registering transfers, the Administrator may rely upon the opinion of
counsel in not requiring complete documentation, in registering transfers
without inquiry into adverse claims, in delaying registration for purposes of
such inquiry, or in refusing registration where in its judgment an adverse claim
requires such refusal.
The Company warrants that it has or shall deliver to the Administrator,
as transfer agent:
(a) a copy of the Articles of Incorporation of the Company,
incorporating all amendments thereto, certified by the Secretary or
Assistant Secretary of the Company;
(b) an opinion of counsel to the Company with respect to (i) the
legality and continuing existence of the Company, (ii) the legality
of its outstanding Shares of beneficial interest, and (iii) the
number of Shares authorized for issuance and stating that upon
issuance they will be validly issued and non-assessable; and
(c) the Company's Secretary's or Assistant Secretary's certificate as to
the authorized outstanding Shares of the Company, its address to
which notices may be sent, the names and specimen signatures of its
officers who are authorized to sign instructions or requests to the
Administrator on behalf of the Company, and the name and address of
legal counsel to the Company. In the event of any future amendment
or change in respect of any of the foregoing, prompt written
notification of such change shall be given by the Company to the
Administrator, together with copies of all relevant resolutions,
instruments or other documents, specimen signatures, certificates,
opinions or the like as the Administrator may deem necessary or
appropriate.
ARTICLE 3. Dividend Disbursing Agent. The Administrator shall act as
--------------------------
Dividend Disbursing Agent for the Company's institutional accounts and, as such,
in accordance with the provisions of the Company's Articles of Incorporation and
then current prospectus, shall prepare and wire or credit income and capital
gains distributions to Shareholders (or instruct the Custodian to do so).
The Company agrees that it shall promptly inform the Administrator of
the declaration of any dividend or distribution on its Shares, and that on or
before the payment date of a distribution, it shall instruct the Custodian to
make available, at the instruction of the
<PAGE>
Dividend Disbursing Agent, sufficient funds for the cash amount to be paid out.
If a Shareholder is entitled to receive additional Shares by virtue of any such
distribution or dividend, appropriate credits will be made to the Shareholder's
account.
ARTICLE 4. Other Administrative Services. In addition to the services
------------------------------
described above, the Administrator shall perform or supervise the performance by
others of other administrative services in connection with the operations of the
Portfolios, and, on behalf of the Company, will investigate, assist in the
selection of and conduct relations with custodians, depositories, accountants,
underwriters, brokers and dealers, corporate fiduciaries, insurers, banks and
persons in any other capacity deemed to be necessary or desirable for the
Portfolios' operation. The Administrator shall provide the Directors of the
Company with such reports regarding investment performance as they may
reasonably request but shall have no responsibility for supervising the
performance by any investment adviser or sub-adviser of its responsibilities.
The Administrator shall provide the Company with regulatory reporting,
fund accounting and related portfolio accounting services, all necessary office
space, equipment, personnel compensation and facilities (including facilities
for Shareholders' and Directors' meetings) for handling the affairs of the
Portfolios and such other services as the Administrator shall, from time to
time, determine to be necessary to perform its obligations under this Agreement.
The Administrator shall make reports to the Company's Directors
concerning the performance of its obligations hereunder; furnish advice and
recommendations with respect to other aspects of the business and affairs of the
Portfolios as the Company and the Administrator shall determine desirable; and
shall provide the Portfolios' Shareholders with the reports described in the
Company's current prospectus.
The Administrator shall calculate the daily net asset value of the
Portfolios in accordance with the procedures prescribed in the Company's
Registration Statement and such other procedures as may be established by the
Directors of the Company.
Also, the Administrator will perform other services for the Company as
agreed from time to time, including, but not limited to, preparation and mailing
of appropriate federal income tax forms; mailing the annual reports of the
Company; preparing an annual list of Shareholders; furnishing the Company with
such reports regarding the sale and redemption of Shares as may be required in
order to comply with federal and state securities law; and mailing notices of
Shareholders' meetings, proxies and proxy statements, for all of which the
Company will pay the Administrator's out-of-pocket expenses.
ARTICLE 5. Allocation of Charges and Expenses.
-----------------------------------
(A) The Administrator. The Administrator shall furnish at its own
------------------
expense the executive, supervisory and clerical personnel necessary
to perform its
<PAGE>
obligations under this Agreement. The Administrator shall also
provide the items which it is obligated to provide under this
Agreement, and shall pay all compensation, if any, of officers of
the Company as well as all Directors of the Company who are
affiliated persons of the Administrator or any affiliated
corporation; provided, however, that unless otherwise specifically
provided, the Administrator shall not be obligated to pay the
compensation of any employee of the Company retained by the
Directors of the Company to perform services on behalf of the
Company.
(B) The Company. The Company assumes and shall pay or cause to be paid
------------
all other expenses of the Company not otherwise allocated herein,
including, without limitation, organizational costs, taxes, expenses
for legal and auditing services, the expenses of preparing
(including typesetting), printing and mailing reports, prospectuses,
statements of additional information, proxy solicitation material
and notices to existing Shareholders, all expenses incurred in
connection with issuing and redeeming Company Shares, the costs of
custodial services, the cost of initial and ongoing registration of
the Company's Shares under federal and state securities laws, fees
and out-of-pocket expenses of Directors who are not affiliated
persons of the Administrator or any affiliated corporation,
insurance, interest, brokerage costs, litigation and other
extraordinary or nonrecurring expenses, all fees and charges of
investment advisers to the Company. In addition, the Company will
bear distribution expenses in accordance with the Company's
Distribution Plan.
ARTICLE 6. Compensation of the Administrator.
----------------------------------
(A) Administration Fee. For the services to be rendered, the facilities
-------------------
furnished and the expenses assumed by the Administrator pursuant to
this Agreement, the Company shall pay to the Administrator
compensation at an annual rate specified in the schedules which are
attached hereto and made a part of this Agreement ("Schedules").
Such compensation shall be calculated and accrued daily, and paid to
the Administrator monthly.
If this Agreement becomes effective subsequent to the first day of a
month or terminates before the last day of a month, the
Administrator's compensation for that part of the month in which
this Agreement is in effect shall be prorated in a manner consistent
with the calculation of the fees as set forth above. Payment of the
Administrator's compensation for the preceding month shall be made
promptly.
(B) Compensation from Transactions. The Company hereby authorizes any
-------------------------------
entity or person associated with the Administrator which is a member
of a national securities exchange to effect any transaction on the
exchange for the account of the Company which is permitted by
Section 11(a) of the Securities Exchange
<PAGE>
Act of 1934 and Rule 11a2-2(T) thereunder, and the Company hereby
consents to the retention of compensation for such transactions in
accordance with Rule 11a2-2(T)(a)(2)(iv).
(C) Survival of Compensation Rights. All rights of compensation under
--------------------------------
this Agreement for services performed as of the termination date
shall survive the termination of this Agreement.
ARTICLE 7. Limitation of Liability of the Administrator. The duties of
---------------------------------------------
the Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in carrying out its duties hereunder, except a loss resulting from
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of reckless disregard of its obligations and duties
hereunder, except as may otherwise be provided under provisions of applicable
state law which cannot be waived or modified hereby. (As used in this Article 7,
the term "Administrator" shall include directors, officers, employees and other
corporate agents of the Administrator as well as that corporation itself.)
So long as the Administrator acts in good faith and with due diligence
and without gross negligence, the Company assumes full responsibility and shall
indemnify the Administrator and hold it harmless from and against any and all
actions, suits and claims, whether groundless or otherwise, and from and against
any and all losses, damages, costs, charges, reasonable counsel fees and
disbursements, payments, expenses and liabilities (including reasonable
investigation expenses) arising directly or indirectly out of said
administration, transfer agency, and dividend disbursing relationships to the
Company or any other service rendered to the Company hereunder. The indemnity
and defense provisions set forth herein shall indefinitely survive the
termination of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Company may be asked to indemnify or hold the
Administrator harmless, the Company shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Administrator will use all reasonable care to identify and
notify the Company promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Company, but failure to do so in good faith shall not affect the rights
hereunder.
The Administrator may apply to the Company at any time for instructions
and may consult counsel for the Company or its own counsel and with accountants
and other experts with respect to any matter arising in connection with the
Administrator's duties, and the
<PAGE>
Administrator shall not be liable or accountable for any action taken or
omitted by it in good faith in accordance with such instruction or with the
opinion of such counsel, accountants or other experts.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. Nor shall the Administrator be held to have
notice of any change of authority of any officers, employee or agent of the
Company until receipt of written notice thereof from the Company.
ARTICLE 8. Activities of the Administrator. The services of the
--------------------------------
Administrator rendered to the Company are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that Directors, officers, employees
and Shareholders of the Company are or may be or become interested in the
Administrator, as directors, officers, employees and shareholders or otherwise
and that directors, officers, employees and shareholders of the Administrator
and its counsel are or may be or become similarly interested in the Company, and
that the Administrator may be or become interested in the Company as a
Shareholder or otherwise.
ARTICLE 9. Duration of This Agreement. This Agreement shall remain in
---------------------------
effect for three years after the date of the Agreement and shall continue in
effect for successive periods of three years subject to review at least annually
by the Directors of the Company unless terminated by either party on not less
than ninety days written notice to the other party.
In the event of a material breach of this Agreement by either party, the
non-breaching party shall notify the breaching party in writing of such breach
and upon receipt of such notice, the breaching party shall have 45 days to
remedy the breach or the non-breaching party may terminate this Agreement
immediately.
This Agreement shall not be assignable by either party without the
written consent of the other party.
ARTICLE 10. Amendments. This Agreement may be amended by the parties
-----------
hereto only if such amendment is specifically approved (i) by the vote of a
majority of the Directors of the Company, and (ii) by the vote of a majority of
the Directors of the Company who are not parties to this Agreement or interested
persons of any such party, cast in person at a Board of Directors meeting called
for the purpose of voting on such approval.
For special cases, the parties hereto may amend such procedures set
forth herein as may be appropriate or practical under the circumstances, and the
Administrator may conclusively assume that any special procedure which has been
approved by the Company does not conflict with or violate any requirements of
its Articles of Incorporation, By-Laws or prospectus, or any rule, regulation or
requirement of any regulatory body.
ARTICLE 11. Directors' Liability. A copy of the Articles of
---------------------
Incorporation is on file with the Secretary of State of the State of Maryland,
and notice is hereby given that this instrument is executed on behalf of the
Directors of the Company as Directors and not
<PAGE>
individually and that the obligations of this instrument are not binding upon
any of the Directors, officers or Shareholders of the Company individually, but
binding only upon the assets and property of the Company.
ARTICLE 12. Certain Records. The Administrator shall maintain customary
----------------
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Administrator
on behalf of the Company shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Company and will be made
available to or surrendered promptly to the Company on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Company and follow the
Company's instructions as to permitting or refusing such inspection; provided
that the Administrator may exhibit such records to any person in any case where
it is advised by its counsel that it may be held liable for failure to do so,
unless (in cases involving potential exposure only to civil liability) the
Company has agreed to indemnify the Administrator against such liability.
ARTICLE 13. Definitions of Certain Terms. The terms "interested person"
-----------------------------
and "affiliated person", when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 14. Notice. Any notice required or permitted to be given by
-------
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party giving
notice: if to the Company, at 680 East Swedesford Road, Wayne, PA, and if to the
Administrator at 680 East Swedesford Road, Wayne, PA.
ARTICLE 15. Governing Law. This Agreement shall be construed in
--------------
accordance with the laws of the Commonwealth of Pennsylvania and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the
Commonwealth of Pennsylvania, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
<PAGE>
ARTICLE 16. Multiple Originals. This Agreement may be executed in two or
-------------------
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
COREFUNDS, INC.
By: /s/ James W. Jennings
--------------------------------
James W. Jennings, Secretary
SEI FINANCIAL MANAGEMENT CORPORATION
By: /s/ Sandi K. Orlow
--------------------------------
Sandi K. Orlow, Vice President
<PAGE>
SCHEDULE A
TO THE ADMINISTRATION AGREEMENT
DATED October 30, 1992
BETWEEN
COREFUNDS, INC.
AND
SEI FINANCIAL MANAGEMENT CORPORATION
Pursuant to Article 6, Section A, the Company shall pay the Administrator
compensation which is calculated daily and paid monthly at an annual rate as
follows:
.25% for each Portfolio:
<PAGE>
AMENDMENT DATED, JUNE 1,1995
TO THE ADMINISTRATION AGREEMENT
DATED OCTOBER 30, 1992
BETWEEN
COREFUNDS, INC.
AND
SEI FINANCIAL MANAGEMENT CORPORATION
The Administration Agreement shall remain in effect for an additional three
years from the date of this Amendment and shall continue in effect for
successive periods of two years thereafter subject to review at least annually
by the Directors of the Company unless terminated by either party on not less
than ninety days written notice to the other party.
OREFUNDS, INC.
By: /s/ James W. Jennings
--------------------------------
James W. Jennings, Secretary
SEI FINANCIAL MANAGEMENT CORPORATION
By: /s/ Kathryn L. Stanton
--------------------------------
Kathryn L. Stanton
Vice President & Asst. Secretary
TRANSFER AGENT AND SHAREHOLDER SERVICES AGREEMENT
THIS AGREEMENT is made as of this 4th day of March, 1993, by and between
the CoreFunds, Inc. (the "Fund"), a Maryland corporation, and SEI Financial
Management Corporation (the "Transfer Agent" or "SEI"), a Delaware corporation.
WHEREAS, the Fund is an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Transfer Agent is a transfer agent registered under the
Securities Exchange Act of 1934; and
WHEREAS, the Fund desires the Transfer Agent to provide, and the
Transfer Agent is willing to provide transfer agent and shareholder servicing
services to the Fund's portfolios, including all series thereof, listed in
Schedule A which is attached hereto and made a part of this Agreement, and such
other portfolios as the Fund and the Transfer Agent may agree on ("Portfolios"),
on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and the Transfer Agent hereby agree as follows:
ARTICLE 1. Retention of the Transfer Agent. The Fund hereby retains the
--------------------------------
Transfer Agent to act as the Transfer Agent and Shareholder Servicing Agent of
the Portfolios and to furnish the Portfolios with the transfer agent and
shareholder servicing services as set forth below. The Transfer Agent hereby
accepts such employment to perform the duties set forth below.
The Transfer Agent shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Fund in any way and shall
not be deemed an agent of the Fund. All of the Transfer Agent's duties shall be
subject always to the objectives, policies and restrictions contained in the
Fund's current registration statement under the 1940 Act, to the Fund's Articles
of Incorporation and By-Laws, to the provisions of the 1940 Act, and to any
other guidelines that may be established by the Fund's Directors and which are
furnished to the Transfer Agent by the Fund.
ARTICLE 2. Transfer Agent Services. The Transfer Agent will act as
------------------------
Transfer Agent for the Portfolios' accounts and, as such, will record in an
account (the "Account") the total number of units of beneficial interest
("Shares") of each Portfolio issued and outstanding from time to time and will
maintain Share transfer records in which it will note the names and registered
addresses of Shareholders, and the number of Shares from
<PAGE>
time to time owned by each of them. Each Shareholder will be assigned one or
more account numbers.
The Transfer Agent is authorized to set up accounts for shareholders and
record transactions in the accounts on the basis of instructions received from
Shareholders when accompanied by remittance in an appropriate amount and form as
provided in the Fund's then current prospectus. The Fund will not issue
certificates representing its Shares. Whenever Shares are purchased or issued,
the Transfer Agent shall credit the Account with the Shares issued, and credit
the proper number of Shares to the appropriate Shareholder.
Likewise, whenever the Transfer Agent has occasion to redeem Shares
owned by a Shareholder, the Fund authorizes the Transfer Agent to process the
transaction by making appropriate entries in its Share transfer records and
debiting the Account.
The Transfer Agent shall credit each Shareholder's account with the
number of units purchased according to the price of the Shares in effect for
such purchases determined in the manner set forth in the Fund's then current
prospectus. The Transfer Agent shall process each order for the redemption of
Shares from or on behalf of a Shareholder, and shall cause cash proceeds to be
paid as set forth in the Fund's then current prospectus.
The requirements as to instruments of transfer and other documentation,
the applicable redemption price and the time of payment shall be as provided for
in the then current prospectus, subject to such supplemental requirements
consistent with such prospectus as may be established by mutual agreement
between the Fund and the Transfer Agent.
If the Transfer Agent or the Fund's Distributor determines that a
request for redemption does not comply with the requirements for redemption, the
Transfer Agent shall promptly so notify the Shareholder, together with the
reason therefor, and shall effect such redemption at the price next determined
after receipt of documents complying with said standards.
On each day that the Fund's Custodian and the New York Stock Exchange
are open for business ("Business Day"), the Transfer Agent shall notify the
Custodian of the amount of cash or other assets required to meet payments made
pursuant to the provisions of this Article 2, and the Fund shall instruct the
Custodian to make available from time to time sufficient funds or other assets
therefor.
The authority of the Transfer Agent to perform its responsibilities as
to purchases and redemptions shall be suspended upon receipt by it of
notification from the Securities
2
<PAGE>
and Exchange Commission or the Directors of the suspension of the determination
of the Fund's net asset value.
In registering transfers, the Transfer Agent may rely upon the opinion
of counsel in not requiring complete documentation, in registering transfers
without inquiry into adverse claims, in delaying registration for purposes of
such inquiry, or in refusing registration where in its judgment an adverse claim
requires such refusal.
The Fund warrants that it has or shall deliver to the Transfer Agent, as
transfer agent:
(a) a copy of the Articles of Incorporation of the Fund, incorporating
all amendments thereto, certified by the Secretary or Assistant
Secretary of the Fund;
(b) an opinion of counsel to the Fund with respect to (i) the legality
and continuing existence of the Fund, (ii) the legality of its
outstanding Shares of beneficial interest, and (iii) the number of
Shares authorized for issuance and stating that upon issuance they
will be validly issued and non-assessable; and
(c) the Fund's Secretary's or Assistant Secretary's certificate as to
the authorized outstanding Shares of the Fund, its address to which
notices may be sent, the names and specimen signatures of its
officers who are authorized to sign instructions or requests to the
Transfer Agent on behalf of the Fund, and the name and address of
legal counsel to the Fund. In the event of any future amendment or
change in respect of any of the foregoing, prompt written
notification of such change shall be given by the Fund to the
Transfer Agent, together with copies of all relevant resolutions,
instruments or other documents, specimen signatures, certificates,
opinions or the like as the Transfer Agent may deem necessary or
appropriate.
ARTICLE 3. Dividend Disbursing Agent. The Transfer Agent shall act as
--------------------------
Dividend Disbursing Agent for the Fund's accounts and, as such, in accordance
with the provisions of the Fund's Articles of Incorporation and then current
prospectus, shall prepare and wire or credit income and capital gains
distributions to Shareholders (or instruct the Custodian to do so) after
deducting any amount required to be withheld by any applicable tax laws, rules
and regulations or other applicable rules or regulations.
The Fund agrees that it shall promptly inform the Transfer Agent of the
declaration of any dividend or distribution on its Shares, and that on or before
the payment date of a distribution, it shall instruct the Custodian to make
available, at the instruction of the Dividend Disbursing Agent, sufficient funds
for the cash amount to be paid out. If a Shareholder is entitled to receive
additional Shares by virtue of any such distribution or dividend, appropriate
credits will be made to the Shareholder's account.
3
<PAGE>
In accordance with the prospectuses of the Portfolios and such
procedures as mutually agreed upon by the Fund, the Transfer Agent and the
Custodian, the Transfer Agent shall (a) arrange for issuance of shares obtained
through the Right of Accumulation, if any, and (b) arrange for the exchange of
shares for shares of such other funds as may be designated by the Fund.
ARTICLE 4. Other Services. The Transfer Agent will perform other
---------------
services for the Fund as agreed from time to time, including, but not limited
to, preparation and mailing of appropriate federal income tax forms and returns
to the Internal Revenue Service, other appropriate taxing authorities and
Shareholders as the Fund is so required to prepare, file or mail by applicable
laws, rules and regulations; mailing the annual reports of the Fund to the
Shareholders; preparing an annual list of Shareholders; furnishing the Fund with
such reports regarding the sale and redemption of Shares as may be required in
order to comply with federal and state securities law; and mailing notices of
Shareholders' meetings, proxies and proxy statements to the Shareholders, for
all of which the Fund will pay the Transfer Agent's out-of-pocket expenses. In
addition, the Transfer Agent shall make reports to the Fund's Directors
concerning the performance of its obligations hereunder.
ARTICLE 5. Compensation of the Transfer Agent.
-----------------------------------
(A) Transfer Agent. For the services to be rendered, the facilities
---------------
furnished and the expenses assumed by the Transfer Agent pursuant to
this Agreement, the Fund shall pay to the Transfer Agent
compensation at the rate specified in Schedule B which is attached
hereto and made a part of this Agreement. Such compensation shall be
accrued daily, and paid to the Transfer Agent monthly.
If this Agreement becomes effective subsequent to the first day of a
month or terminates before the last day of a month, the Transfer
Agent's compensation for that part of the month in which this
Agreement is in effect shall be prorated in a manner consistent with
the calculation of the fees as set forth above. Payment of the
Transfer Agent's compensation for the preceding month shall be made
promptly.
(B) Survival of Compensation Rights. All rights of compensation under
--------------------------------
this Agreement for services performed as of the termination date
shall survive the termination of this Agreement.
ARTICLE 6. Limitation of Liability of the Transfer Agent. The duties of
---------------------------------------------
the Transfer Agent shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Transfer Agent
hereunder. The
4
<PAGE>
Transfer Agent shall not be liable for any error of judgment or mistake of law
or for any act or omission in carrying out its duties hereunder, except a loss
resulting from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its obligations
and duties hereunder, except as may otherwise be provided under provisions of
applicable state law which cannot be waived or modified hereby. (As used in this
Article 6, the term "Transfer Agent" shall include directors, officers,
employees, sub-contractors and other corporate agents of the Transfer Agent as
well as that corporation itself.)
So long as the Transfer Agent does not violate the standard of care set
forth herein, the Fund assumes full responsibility and shall indemnify the
Transfer Agent and hold it harmless from and against any and all actions, suits
and claims, whether groundless or otherwise, and from and against any and all
losses, damages, costs, charges, reasonable counsel fees and disbursements,
payments, expenses and liabilities (including reasonable investigation expenses
and attorney's fees) arising directly or indirectly out of said administration,
transfer agency, and dividend disbursing relationships to the Fund or any other
service rendered to the Fund hereunder. The indemnity and defense provisions set
forth herein shall indefinitely survive the termination of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Fund may be asked to indemnify or hold the
Transfer Agent harmless, the Fund shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Transfer Agent will use all reasonable care to identify and
notify the Fund promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Fund, but failure to do so in good faith shall not affect the rights
hereunder.
The Transfer Agent may apply to the Fund at any time for instructions
and may consult counsel for the Fund or its own counsel and with accountants and
other experts with respect to any matter arising in connection with the Transfer
Agent's duties, and the Transfer Agent shall not be liable or accountable for
any action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel, accountants or other experts.
ARTICLE 7. Activities of the Transfer Agent. The services of the
---------------------------------
Transfer Agent rendered to the Fund are not to be deemed to be exclusive. The
Transfer Agent is free to render such services to others and to have other
businesses and interests. It is understood that Directors, officers, employees
and Shareholders of the Fund are or may be or become interested in the Transfer
Agent, as directors, officers, employees and
5
<PAGE>
shareholders or otherwise and that directors, officers, employees and
shareholders of the Transfer Agent and its counsel are or may be or become
similarly interested in the Fund, and that the Transfer Agent may be or become
interested in the Fund as a Shareholder or otherwise.
ARTICLE 8. Term of this Agreement. This Agreement shall remain in effect
-----------------------
until October 30, 1995 and shall continue in effect for successive periods of
three years subject to review at least annually by the Directors of the Fund.
SEI reserves the right to terminate this Agreement if the Administration
Agreement between the Fund and SEI is terminated for any reason. Upon
termination of this Agreement all out-of-pocket expenses associated with the
movement of records and material will be borne by the Fund.
This Agreement shall not be assignable by either party without the
written consent of the other party.
ARTICLE 9. Amendments. This Agreement may be amended by the parties
-----------
hereto only if such amendment is specifically approved (i) by the vote of a
majority of the Directors of the Fund, and (ii) by the vote of a majority of the
Directors of the Fund who are not parties to this Agreement or interested
persons of any such party, cast in person at a Board of Directors meeting called
for the purpose of voting on such approval.
For special cases, the parties hereto may amend such procedures set
forth herein as may be appropriate or practical under the circumstances, and the
Transfer Agent may conclusively assume that any special procedure which has been
approved by the Fund does not conflict with or violate any requirements of its
Articles of Incorporation, By-Laws or prospectus, or any rule, regulation or
requirement of any regulatory body.
ARTICLE 10. Certain Records. The Transfer Agent shall maintain customary
----------------
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Transfer Agent
on behalf of the Fund shall be prepared and maintained at the expense of the
Transfer Agent, but shall be the property of the Fund and will be made available
to or surrendered promptly to the Fund on request.
In case of any request or demand for the inspection of such records by
another party, the Transfer Agent shall notify the Fund and follow the Fund's
instructions as to permitting or refusing such inspection; provided that the
Transfer Agent may exhibit such records to any person in any case where it is
advised by its counsel that it may be held liable for failure to do so, unless
(in cases involving potential exposure only to civil liability) the Fund has
agreed to indemnify the Transfer Agent against such liability.
6
<PAGE>
ARTICLE 11. Definitions of Certain Terms. The terms "interested person"
-----------------------------
and "affiliated person", when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 12. Notice. Any notice required or permitted to be given by
-------
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party giving
notice: if to the Fund, at 680 East Swedesford Road, Wayne, PA, and if to the
Transfer Agent at 680 East Swedesford Road, Wayne, PA.
ARTICLE 13. Governing Law. This Agreement shall be construed in
--------------
accordance with the laws of the state of Maryland and the applicable provisions
of the 1940 Act. To the extent that the applicable laws of the state of
Maryland, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
ARTICLE 14. Multiple Originals. This Agreement may be executed in two or
-------------------
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
COREFUNDS, INC.
By: /s/ SANDI K. ORLOW
-------------------------------------
Sandi K. Orlow
SEI FINANCIAL MANAGEMENT CORPORATION
By: /s/ WAYNE M. WITHROW
-------------------------------------
Wayne M. Withrow
7
<PAGE>
SCHEDULE A
TO THE TRANSFER AGENT AND SHAREHOLDER
SERVICES AGREEMENT DATED MARCH 4, 1993
BETWEEN
COREFUNDS, INC.
AND
SEI FINANCIAL MANAGEMENT CORPORATION
Pursuant to the Preamble, the Transfer Agent shall provide services to the
following Portfolios:
Treasury Reserve
Cash Reserve
Tax Free Reserve
Growth Equity
Value Equity
International Growth
Balanced
Government Income
Intermediate Bond
Intermediate-Term Municipal
Equity Index
8
<PAGE>
SCHEDULE B
TO THE TRANSFER AGENT AND SHAREHOLDER
SERVICES AGREEMENT DATED MARCH 4, 1993
BETWEEN
COREFUNDS, INC.
AND
SEI FINANCIAL MANAGEMENT CORPORATION
Pursuant to Article 6, Section A, the Fund shall pay the Transfer Agent
compensation as follows:
the greater of -
$30,000 per portfolio per year or
--
$20.00 per money market account per year and
$15.00 per nonmoney market account per year
$ 2.00 per closed account
plus out-of-pocket costs, including, but not limited to: forms,
stationery, postage, toll-free lines, voice response system, microfilm,
microfiche, offsite storage, checkwriting books, terminals, proxy solicitation
and mailing, and any expenses incurred at the request of the Company such as
custom programming.
9
<PAGE>
PURCHASE AGREEMENT
Red Oak Cash Reserve Fund, Inc. (the "Fund"), a Maryland corporation,
and Fairfield Group, Inc. ("Fairfield"), a Pennsylvania corporation, hereby
agree with each other as follows:
1. The Fund hereby offers Fairfield and Fairfield hereby purchases
100,000 shares of Class A Common Stock (par value $.001 per share) of the Fund
(the "Shares") at a price of $1.00 per Share. Fairfield hereby acknowledges
receipt of one certificate representing the Shares, and the Fund hereby
acknowledges receipt from Fairfield of funds in the amount of $100,000 in full
payment for the Shares.
2. Fairfield represents and warrants to the Fund that the Shares are
being acquired for investment purposes and not with a view to the distribution
thereof.
3. Fairfield agrees that in the event any of the Shares are redeemed by
it or any other person during the period the expenses of organizing the Fund are
being amortized, the proceeds of said redemption payable by the Fund shall be
reduced by a pro rata portion of any organizational expenses that remain
unamortized at the time of redemption in the same proportion as the number of
Shares being redeemed bears to the number of Shares outstanding at the time of
redemption. If for any reason, because of the transfer of the Shares to a third
party or otherwise, the proceeds of any such redemption paid by the Fund are not
so reduced, Fairfield shall re-pay to the Fund an amount equal to the amount of
the reduction that would have resulted had the foregoing formula been applied
with respect to the Shares that were redeemed.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 24th day of July, 1985.
(SEAL)
Attest: RED OAK CASH RESERVE FUND, INC.
/s/ By: /s/
- ---------------------------------- -------------------------------------
Secretary , President
(SEAL)
Attest: FAIRFIELD GROUP, INC.
/s/ By: /s/
- ---------------------------------- -------------------------------------
Ass't Secretary
Consent of Independent Auditors
We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectuses and "Financial Statements" in the Statements of
Additional Information for the Growth Equity Fund, Core Equity Fund, Special
Equity Fund, Equity Index Fund, International Growth Fund, Balanced Fund, Cash
Reserve Fund, Treasury Reserve Fund, Elite Cash Reserve Fund, Elite Treasury
Reserve Fund, Short-Intermediate Bond Fund, Bond Fund, Government Income Fund,
Short Term Income Fund, Intermediate Municipal Bond Fund, Pennsylvania Municipal
Bond Fund, New Jersey Municipal Bond Fund, Global Bond Fund, Tax-Free Reserve
Fund and Elite Tax-Free Reserve Fund, and to the incorporation by reference in
this Post-Effective Amendment No. 30 to the Registration Statement (Form N-1A
No. 2-93214) of CoreFunds, Inc. of our report dated August 16, 1996, included in
the 1996 Annual Report to Shareholders of CoreFunds, Inc.
/s/ Ernst & Young LLP
- ---------------------
Philadelphia, Pennsylvania
October 21, 1996
CONSENT OF INDEPEDENT ACCOUNTANTS
We consent to the following with respect to Post-Effective Amendment No. 30
pursuant to the Securities Act of 1933, as amended, to the Registration
Statement on Form N-1A of the CoreFunds, Inc. (File No. 2-93214). We also
consent to the reference to our Firm under the heading "Financial Highlights" of
the CoreFunds, Inc. formerly The Conestoga Funds, (comprising of the Core Equity
Fund, formerly the Equity Fund, Special Equity Fund, Bond Fund, and Short Term
Income Fund) in the Prospectus.
/s/ Coopers & Lybrand L.L.P.
- ---------------------------
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
October 22, 1996
REPORT
OF
INDEPENDENT
AUDITORS
[] COREFUND
BOARD OF DIRECTORS AND SHAREHOLDERS
COREFUNDS, INC.
We have audited the accompanying statements of net assets of the Growth Equity
Fund, Equity Fund, Equity Index Fund, Special Equity Fund, International Growth
Fund, Balanced Fund, Government Income Fund, Short Term Income Fund,
Short-Intermediate Bond Fund, Intermediate Municipal Bond Fund, Bond Fund,
Pennsylvania Municipal Bond Fund, Cash Reserve, Treasury Reserve, and Tax-Free
Reserve and the schedules of investments and statements of assets and
liabilities of the Global Bond Fund and the New Jersey Municipal Bond Fund of
CoreFunds, Inc. (the "Fund") as of June 30, 1996, and the related statements of
operations for the period then ended, and for the Growth Equity Fund, Equity
Index Fund, International Growth Fund, Balanced Fund, Government Income Fund,
Short-Intermediate Bond Fund, Intermediate Municipal Bond Fund, Global Bond
Fund, Pennsylvania Municipal Bond Fund, New Jersey Municipal Bond Fund, Cash
Reserve, Treasury Reserve, and Tax-Free Reserve, the statements of changes in
net assets and the financial highlights for each of the periods presented
herein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on
our audits. The statements of changes in net assets for the period ended
October 31, 1995 and the financial highlights for the period ended October 31,
1990 through October 31, 1995 for the Equity Fund, Special Equity Fund,
Bond Fund, and Short Term Income Fund were audited by other auditors whose
report dated December 8, 1995 expressed an unqualified opinion on those
statements and financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification by examination of securities
held by the Custodian as of June 30, 1996 and confirmation of securities not
held by the Custodian by correspondence with others. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating, the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the 1996 financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the Growth Equity Fund, Equity Fund, Equity Index Fund, Special
Equity Fund, International Growth Fund, Balanced Fund, Government Income Fund,
Short Term Income Fund, Short-Intermediate Bond Fund, Intermediate Municipal
Bond Fund, Bond Fund, Global Bond Fund, Pennsylvania Municipal Bond Fund, New
Jersey Municipal Bond Fund, Cash Reserve, Treasury Reserve, and Tax-Free
Reserve of the Fund at June 30, 1996 and the results of their operations for
the period then ended, and for the Growth Equity Fund, Equity Index Fund,
International Growth Fund, Balanced Fund, Government Income Fund,
Short-Intermediate Bond Fund, Intermediate Municipal Bond Fund, Global Bond
Fund, Pennsylvania Municipal Bond Fund, New Jersey Municipal Bond Fund, Cash
Reserve, Treasury Reserve, and Tax-Free Reserve, the changes in their net
assets and the financial highlights for each of the periods presented herein,
in conformity with generally accepted accounting principles.
Philadelphia, Pennsylvania
August 16, 1996
/s/Ernst & Young LLP
36
<PAGE>
STATEMENT
OF
NET ASSETS
AS OF
JUNE 30, 1996
EQUITY INDEX FUND
[GRAPHIC OMITTED]
Pie Chart -- Shown is a pie chart depicting the industry classification for the
Equity Index Fund. The following represent the plot points for the chart:
Industry Classification % of Total Portfolio Investment
Miscellaneous 2
Utilities 12
Transportation 2
Technology 11
Healthcare 10
Finance 13
Basic Materials 7
Capital Goods 8
Consumer Cyclicals 13
Consumer Staples 13
Energy 9
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
COMMON STOCKS--99.8%
AEROSPACE & DEFENSE -- 0.8%
Lockheed Martin 5,800 $ 487
Raytheon 8,900 459
Rockwell International 5,763 330
TRW 1,500 135
-----
1,411
-----
AGRICULTURE -- 0.1%
Pioneer Hi-Bred International 3,000 159
-----
AIR TRANSPORTATION -- 0.5%
AMR* 2,800 255
Delta Air Lines 2,500 208
Southwest Airlines 3,300 96
US Air Group* 15,300 275
-----
834
-----
AIRCRAFT -- 1.5%
Boeing 11,037 962
General Dynamics 1,700 105
McDonnell Douglas 8,200 398
Northrop Grumman 1,700 116
Parker Hannifin 2,850 121
Teledyne 3,700 134
Textron 2,000 160
United Technologies 4,300 495
-----
2,491
-----
APPAREL/TEXTILES -- 0.4%
Liz Claiborne 5,000 173
Nike, Class B 4,400 452
Russell 3,100 86
-----
711
-----
APPLIANCES -- 0.1%
Maytag 5,600 117
Whirlpool 1,700 84
-----
201
-----
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
AUTOMOTIVE -- 2.6%
Allied Signal 9,100 $ 520
Chrysler 13,100 812
Dana 4,600 143
Echlin 2,500 95
Fleetwood Enterprises 4,055 126
Ford Motor 36,900 1,195
General Motors 24,100 1,262
Paccar 1,500 74
Varity* 2,700 130
-----
4,357
-----
BANKS -- 7.4%
Banc One 13,444 457
Bank of Boston 2,900 144
Bank of New York 5,500 282
BankAmerica 12,800 970
Bankers Trust New York 1,800 133
Barnett Banks of Florida 2,200 134
Boatmens Bancshares 4,600 185
Chase Manhattan 13,466 951
Citicorp 16,800 1,388
Comerica 3,600 161
Fifth Third Bancorp 3,000 162
First Bank System 3,800 220
First Chicago 12,701 497
First Union 10,530 641
Fleet Financial Group 9,801 426
Golden West Financial 1,800 101
Great Western Financial 9,800 234
H.F. Ahmanson 10,000 270
J.P. Morgan 5,800 491
Keycorp 7,800 302
MBNA 4,950 141
Mellon Bank 5,700 325
National City 6,800 239
NationsBank 9,000 744
Norwest 10,900 380
PNC Bank 13,900 414
Republic New York 2,200 137
Suntrust Banks 8,400 311
U.S. Bancorp 4,300 155
UST 4,600 158
Wachovia 7,100 311
Wells Fargo 3,433 820
------
12,284
------
BEAUTY PRODUCTS -- 2.3%
Alberto Culver, Class B 3,200 148
Avon Products 3,200 144
Colgate Palmolive 4,246 360
Dial 3,300 94
Ecolab 3,300 109
Gillette 15,600 973
International Flavors
& Fragrances 2,500 119
Procter & Gamble 21,900 1,985
-----
3,932
-----
BROADCASTING, NEWSPAPERS & ADVERTISING-- 0.6%
Comcast, Class A 5,400 100
Interpublic Group 2,200 103
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
37
<PAGE>
STATEMENT
OF
NET ASSETS
AS OF
JUNE 30, 1996
EQUITY INDEX FUND (CONTINUED)
Tele-Communications, Class A* 18,900 $ 343
Viacom, Class B* 10,526 409
-----
955
-----
BUILDING & CONSTRUCTION -- 0.3%
Fluor 1,900 124
Foster Wheeler 3,300 148
Halliburton 2,600 144
McDermott International 3,400 71
-----
487
-----
BUILDING MATERIALS -- 0.1%
Owens Corning* 2,800 120
-----
CHEMICALS -- 3.4%
Air Products & Chemical 2,600 150
B.F. Goodrich 4,200 157
Dow Chemical 8,150 619
E.I. DuPont de Nemours 19,000 1,503
Eastman Chemical 1,900 116
FMC* 1,400 91
Great Lakes Chemical 5,100 317
Hercules 2,700 149
Lilly (Eli) 17,400 1,131
Monsanto 19,500 634
Nalco Chemical 6,900 217
Rohm & Haas 2,500 157
Sigma Aldrich 2,800 150
Union Carbide 3,400 135
W.R. Grace 3,100 220
-----
5,746
-----
COMMUNICATIONS EQUIPMENT -- 2.6%
Andrew * 3,100 167
Cisco Systems* 18,400 1,042
ITT* 3,600 239
ITT Industries 3,500 88
Motorola 19,000 1,195
Northern Telecom 7,300 397
Scientific-Atlanta 11,200 174
Sprint 14,000 588
Tellabs* 3,100 207
US West Media Group* 13,600 248
-----
4,345
-----
COMPUTERS & SERVICES -- 6.7%
3COM* 5,000 229
Amdahl* 8,100 87
Apple Computer* 7,600 160
Automatic Data Processing 7,400 286
Bay Networks* 5,500 142
Ceridian* 3,400 172
Compaq Computer* 8,700 428
Computer Associates International 6,900 492
Computer Sciences* 1,900 142
Digital Equipment* 3,900 175
DSC Communications* 6,591 198
EMC* 7,100 132
First Data 6,500 518
Harris Computer Systems 1,600 98
Hewlett Packard 16,400 1,634
International Business Machines 17,900 1,772
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
Microsoft* 19,800 $ 2,378
Novell* 8,300 115
Oracle Systems* 19,575 772
Pitney Bowes 5,000 239
Silicon Graphics* 4,600 110
Sun Microsystems* 5,600 330
Tandem Computers* 18,986 235
Tandy 2,000 95
Unisys* 23,500 167
------
11,106
------
CONTAINERS & PACKAGING -- 0.2%
Crown Cork & Seal 3,700 167
Newell 3,600 110
-----
277
-----
DRUGS -- 5.5%
Allergan 4,300 169
Alza* 3,400 93
American Home Products 19,800 1,190
Amgen* 7,600 410
Bristol-Myers Squibb 15,720 1,415
Merck 40,200 2,598
Pfizer 20,500 1,463
Pharmacia & Upjohn 16,255 721
Schering Plough 10,900 684
Warner Lambert 7,400 407
-----
9,150
-----
ELECTRICAL EQUIPMENT -- 3.2%
Emerson Electric 7,300 660
General Electric 53,800 4,654
Westinghouse Electric 11,900 223
-----
5,537
-----
ELECTRICAL SERVICES -- 2.9%
American Electric Power 4,300 183
Baltimore Gas & Electric 4,700 133
Carolina Power & Light 3,600 137
Central & South West 5,400 157
Cinergy 4,600 147
Consolidated Edison of New York 5,300 155
Dominion Resources of Virginia 5,500 220
DTE Energy 3,300 102
Duke Power 6,100 313
Edison International 13,400 236
Entergy 5,200 148
FPL Group 6,100 281
General Public Utilities 4,200 148
Houston Industries 5,800 143
Niagara Mohawk Power* 26,200 203
Northern States Power 3,700 183
Ohio Edison 4,100 90
Pacific Gas and Electric 11,500 267
Pacificorp 6,400 142
PECO Energy 5,000 130
PP&L Resources 5,500 130
Public Service Enterprise Group 5,500 151
Southern 20,100 495
Texas Utilities 7,300 312
Unicom 4,800 134
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
38
<PAGE>
[] COREFUND EQUITY FUNDS
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
Union Electric Power 2,300 $ 93
-----
4,833
-----
ENTERTAINMENT -- 1.1%
King World Productions* 2,600 95
Time Warner, Class A 11,700 459
Walt Disney 21,426 1,347
-----
1,901
-----
ENVIRONMENTAL SERVICES -- 0.5%
Browning Ferris Industries 5,900 171
Laidlaw Incorporated, Class B 14,000 142
WMX Technologies 15,200 498
-----
811
-----
FINANCIAL SERVICES -- 2.3%
American Express 14,400 642
Beneficial 2,400 135
Dean Witter Discover 5,200 298
Federal Home Loan Mortgage
Corporation 5,800 496
Federal National Mortgage
Association 35,800 1,199
Green Tree Financial 4,500 141
Household International 4,100 311
Merrill Lynch 4,600 300
Morgan Stanley Group 4,200 206
Salomon 2,500 110
-----
3,838
-----
FOOD, BEVERAGE & TOBACCO -- 8.9%
American Brands 7,600 345
Anheuser Busch 8,200 615
Archer Daniels Midland 15,672 300
Brown Forman, Class B 2,700 108
Campbell Soup 8,100 571
Coca Cola 80,800 3,949
ConAgra 7,300 331
Coors, Adolph, Class B 5,600 100
CPC International 5,400 389
General Mills 5,900 322
H.J. Heinz 10,650 323
Hershey Foods 2,000 147
Kellogg 6,100 447
Pepsico 50,400 1,783
Philip Morris 27,800 2,891
Quaker Oats 3,000 102
Ralston-Purina Group 2,300 147
Sara Lee 16,900 547
Seagram 10,300 346
Unilever 5,300 769
Whitman 5,100 123
Wrigley, William Jr. 2,600 131
------
14,786
------
GAS/NATURAL GAS -- 1.2%
Coastal 2,500 104
Columbia Gas Systems 3,500 182
Consolidated Natural Gas 2,100 110
Enron 7,300 298
Nicor 3,700 105
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
Noram Energy 17,800 $ 194
Oneok 5,900 148
Pacific Enterprises 3,800 113
Panenergy 4,200 138
Peoples Energy 4,100 137
Sonat 6,800 306
Williams 2,500 124
-----
1,959
-----
GLASS PRODUCTS -- 0.4%
Corning 6,100 234
PPG Industries 7,300 356
-----
590
-----
HOTELS & LODGING -- 0.3%
Harrah's Entertainment* 8,200 231
Hilton Hotels 1,100 124
Marriott International 2,900 156
-----
511
-----
HOUSEHOLD FURNITURE & FIXTURES-- 0.5%
Armstrong World Industries 1,600 92
Illinois Tool Works 4,100 277
Masco 3,500 106
Sherwin Williams 2,300 107
Snap-On Tools 2,700 128
Stanley Works 3,600 107
-----
817
-----
HOUSEHOLD PRODUCTS -- 0.5%
Clorox 2,900 257
National Service Industries 3,000 117
Rubbermaid 6,300 172
Tupperware* 5,700 241
-----
787
-----
INSURANCE -- 3.9%
Aetna Life & Casualty 4,500 322
Alexander & Alexander Services 4,400 87
Allstate 13,000 593
American General 5,400 196
American International Group 15,268 1,506
AON 3,500 178
Chubb 6,600 329
Cigna 2,900 342
General Re 2,400 365
ITT Hartford Group 3,100 165
Jefferson-Pilot 2,100 108
Lincoln National 2,100 97
Loews 3,400 268
Marsh and McLennan 1,700 164
Providian 2,300 99
Safeco 2,800 99
St. Paul 2,827 151
Torchmark 5,400 236
Transamerica 1,600 131
Travelers 14,400 657
Unum 1,700 106
USF&G 5,500 90
USLife 3,900 128
-----
6,417
-----
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
39
<PAGE>
STATEMENT
OF
NET ASSETS
AS OF
JUNE 30, 1996
EQUITY INDEX FUND (CONTINUED)
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
LUMBER & WOOD PRODUCTS -- 0.2%
Georgia Pacific 2,700 $ 192
Potlatch 2,100 82
-----
274
-----
MACHINERY -- 1.2%
Black & Decker 3,500 135
Brunswick 3,500 70
Case 3,000 144
Caterpillar 5,900 400
Crane 3,100 127
Deere 7,800 312
Dover 2,800 129
Dresser Industries 3,900 115
Harnischfeger Industries 3,900 130
Ingersoll Rand 2,400 105
Tenneco 5,000 256
Timken 2,500 97
-----
2,020
-----
MEASURING DEVICES -- 0.4%
General Signal 6,400 242
Honeywell 2,900 158
Johnson Controls 1,500 104
Millipore 3,400 142
Pall 4,500 109
-----
755
-----
MEDICAL PRODUCTS & SERVICES-- 4.4%
Abbott Labs 26,000 1,131
Bausch & Lomb 2,000 85
Baxter International 7,800 369
Becton Dickinson 1,900 152
Beverly Enterprises* 19,600 235
Biomet* 7,400 106
Boston Scientific* 4,300 193
C.R. Bard 4,200 143
Columbia/HCA Healthcare 13,900 742
Community Psychiatric Centers* 16,900 161
Humana* 4,800 86
Johnson & Johnson 43,400 2,148
Mallinckrodt Group 3,300 128
Manor Care 3,900 154
Medtronic 8,000 448
Shared Medical Systems 2,400 154
St. Jude Medical 3,300 111
Tenet Healthcare* 4,100 88
U.S. Healthcare 3,600 198
U.S. Surgical 5,500 170
United Healthcare 5,100 258
-----
7,260
-----
METALS & MINING -- 0.9%
Alcan Aluminum 5,000 153
Aluminum Company of America 5,200 298
Asarco 3,300 91
Cyprus Amax Minerals 7,400 167
Engelhard 3,900 90
Freeport-McMoran Copper &
Gold, Class B 6,000 191
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
Inco 2,600 $ 84
Newmont Mining 1,900 94
Phelps Dodge 1,600 100
Reynolds Metals 1,500 78
Santa Fe Pacific Gold 9,000 127
-----
1,473
-----
MISCELLANEOUS BUSINESS SERVICES-- 0.1%
Ogden 8,900 161
-----
MISCELLANEOUS CHEMICAL PRODUCTS-- 0.2%
Morton International 3,300 123
Raychem 1,900 136
-----
259
-----
MISCELLANEOUS CONSUMER SERVICES-- 0.1%
H & R Block 2,400 78
Service International 2,900 167
-----
245
-----
MISCELLANEOUS MANUFACTURING -- 0.5%
Minnesota Mining &
Manufacturing 12,800 883
-----
PAPER & PAPER PRODUCTS -- 1.7%
Alco Standard 3,600 163
Avery Dennison 2,300 126
Bemis 3,500 123
Champion International 2,200 92
International Paper 12,035 444
James River 3,200 84
Kimberly Clark 10,752 831
Mead 1,600 83
Moore 7,600 143
Stone Container 3,800 52
Temple Inland 2,400 112
Union Camp 1,550 76
Westvaco 3,150 94
Weyerhaeuser 6,006 255
Willamette Industries 1,900 113
-----
2,791
-----
PETROLEUM REFINING -- 8.9%
Amerada Hess 2,100 113
Amoco 17,500 1,267
Ashland 2,100 83
Atlantic Richfield 5,000 592
Baker Hughes 4,000 132
Burlington Resources 2,900 125
Chevron 20,500 1,209
Enserch 6,600 144
Exxon 39,900 3,466
Helmerich and Payne 6,600 242
Kerr-McGee 1,500 91
Louisiana Land & Exploration 3,100 179
Mobil 12,700 1,424
Occidental Petroleum 9,900 245
Oryx Energy* 8,400 136
Pennzoil 4,700 217
Phillips Petroleum 7,200 301
Royal Dutch Petroleum 17,800 2,737
Santa Fe Energy Resources* 7,300 87
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
40
<PAGE>
[] COREFUND EQUITY FUNDS
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
Schlumberger 7,400 $ 623
Sun 5,200 158
Texaco 8,500 713
Unocal 6,400 216
USX Marathon Group 6,500 131
Western Atlas* 3,500 204
------
14,835
------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES-- 0.9%
Eastman Kodak 10,800 839
Polaroid 2,300 105
Xerox 10,800 578
-----
1,522
-----
PRECIOUS METALS -- 0.4%
Barrick Gold 12,000 326
Echo Bay Mines 9,100 98
Homestake Mining 6,800 116
Placer Dome Group 5,400 129
-----
669
-----
PRINTING & PUBLISHING -- 0.9%
American Greetings, Class A 3,200 87
Deluxe 2,500 89
Dow Jones 5,600 234
Gannett 4,800 339
Knight-Ridder 1,500 109
McGraw-Hill 2,200 101
Meredith 3,000 125
New York Times, Class A 3,200 104
R.R.Donnelly & Sons 3,200 112
Times Mirror, Class A 3,900 170
Tribune 1,500 109
-----
1,579
-----
PROFESSIONAL SERVICES -- 0.2%
Dun & Bradstreet 4,700 294
-----
RAILROADS -- 1.0%
Burlington Northern Santa Fe 5,464 442
Conrail 1,800 119
CSX 6,200 299
Norfolk Southern 4,600 390
Union Pacific 6,300 440
-----
1,690
-----
RESTAURANTS -- 0.8%
Darden Restaurants 11,800 127
McDonald's 22,400 1,047
Wendy's International 5,900 110
-----
1,284
-----
RETAIL -- 5.4%
Albertson's 6,400 265
American Stores 3,200 132
Charming Shoppes* 35,000 247
Circuit City Stores 3,000 108
Dayton-Hudson 2,600 268
Dillard Department Stores,
Class A 2,700 99
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
Federated Department Stores* 5,700 $ 195
Gap 9,600 308
Giant Food, Class A 3,900 140
Harcourt General 2,300 115
Hasbro 2,400 86
Home Depot 15,266 824
J.C. Penney 6,500 341
Jostens 6,000 118
K Mart* 10,000 124
Kroger* 3,100 122
Limited 9,500 204
Longs Drug Stores 2,900 129
Lowes 3,500 126
Mattel 6,250 179
May Department Stores 6,900 302
Melville 6,400 259
Mercantile Stores 2,500 147
Nordstrom 1,800 80
Pep Boys - Manny, Moe & Jack 3,226 110
Price/Costco* 4,900 106
Reebok International 7,300 245
Rite Aid 3,700 110
Sears Roebuck 11,500 559
TJX Companies 6,700 226
Toys R Us* 6,500 185
Tyco International 3,400 139
Wal Mart Stores 73,600 1,868
Walgreen 7,600 255
Winn Dixie Stores 3,400 120
Woolworth* 7,500 169
-----
9,010
-----
RUBBER & PLASTIC -- 0.2%
Goodyear Tire & Rubber 5,380 260
-----
260
-----
SEMI-CONDUCTORS/INSTRUMENTS-- 1.8%
Advanced Micro Devices* 7,500 102
AMP 6,200 249
Applied Materials* 4,600 140
Intel 26,300 1,931
LSI Logic* 4,000 104
Micron Technology 5,900 153
National Semiconductor* 5,600 87
Texas Instruments 5,200 259
-----
3,025
-----
SPECIALTY MACHINERY -- 0.1%
Cooper Industries 2,600 108
-----
108
-----
STEEL & STEEL WORKS -- 0.2%
Bethlehem Steel* 5,900 70
Nucor 2,000 101
USX U.S. Steel Group 1,900 54
Worthington Industries 4,600 96
-----
321
-----
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
41
<PAGE>
STATEMENT
OF
NET ASSETS
AS OF
JUNE 30, 1996
EQUITY INDEX FUND (CONCLUDED)
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
TECHNOLOGY, SERVICES -- 0.2%
Cabletron Systems* 2,000 $ 137
CUC International* 5,000 178
-----
315
-----
TELEPHONES & TELECOMMUNICATION-- 7.5%
AT&T 52,736 3,270
Airtouch Communications* 19,100 540
Alltel 5,500 169
Ameritech 18,300 1,087
Bell Atlantic 13,200 841
Bellsouth 33,900 1,437
General Instrument* 5,800 167
GTE 31,600 1,414
MCI Communications 20,158 517
NYNEX 12,600 598
Pacific Telesis Group 15,600 526
SBC Telecommunications 22,176 1,092
US West 13,600 433
Worldcom* 6,000 332
------
12,423
------
TRUCKING -- 0.2%
Caliber System 1,300 44
Cummins Engine 1,900 77
Roadway Express 650 9
Ryder System 5,000 141
-----
271
-----
WHOLESALE -- 0.6%
Fleming Companies 17,000 244
Genuine Parts 2,800 128
Praxair 3,500 148
Super-Valu 8,100 255
Sysco 4,100 140
W.W. Grainger 1,200 93
-------
1,008
-------
TOTAL COMMON STOCKS
(Cost $122,974) 166,088
-------
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
REPURCHASE AGREEMENTS--0.3%
Aubrey Lanston 5.40%, dated
06/28/96, matures 07/01/96,
repurchase price $204,092
(collateralized by U.S. Treasury
Bill, par value $220,000, 5.68%,
06/26/97; market value
$208,080) $204 $ 204
Hong Kong Shanghai Bank 5.42%,
dated 06/28/96, matures 07/01/96,
repurchase price $203,092
(collateralized by U.S. Treasury
Note, par value $200,000,
6.00%, 12/31/97;
market value $206,090) 203 203
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $407) 407
--------
TOTAL INVESTMENTS -- 100.1%
(Cost $123,381) 166,495
--------
OTHER ASSETS AND LIABILITIES,
NET -- (0.1%) (145)
--------
NET ASSETS:
Portfolio Shares ($0.001 par value -
500 million authorized) based on
5,842,895 outstanding shares 121,761
Accumulated Net Realized Gain
on Investments 1,478
Net Unrealized Appreciation on
Investments 43,114
Distributions in Excess of Net
Investment Income (3)
--------
TOTAL NET ASSETS -- 100.0% $166,350
========
NET ASSET VALUE & REDEMPTION PRICE
PER SHARE $28.47
========
* NON - INCOME PRODUCING SECURITY
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
42
<PAGE>
[] COREFUND EQUITY FUNDS
EQUITY FUND
[GRAPHIC OMITTED]
Pie Chart -- Shown is a pie chart depicting the industry classification for the
Equity Fund. The following represent the plot points for the chart:
Industry Classification % of Total Portfolio Investment
Miscellaneous 2
Utilities 15
Transportation 1
Technology 13
Healthcare 13
Finance 14
Basic Materials 6
Capital Goods 9
Consumer Cyclicals 8
Consumer Staples 10
Energy 9
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
COMMON STOCKS -- 96.6%
AIRCRAFT -- 2.4%
Boeing 60,000 $ 5,228
McDonnell Douglas 60,000 2,910
Textron 30,000 2,396
-------
10,534
-------
APPAREL/TEXTILES -- 0.2%
Burlington Industries* 49,771 703
-------
AUTOMOTIVE -- 3.0%
Allied Signal 90,775 5,186
Ford Motor 108,300 3,506
Magna International, Class A 90,000 4,140
-------
12,832
-------
BANKS -- 5.6%
Bank of Boston 130,000 6,435
Chase Manhattan 110,000 7,769
NationsBank 52,500 4,338
PNC Bank 165,500 4,923
-------
23,465
-------
BEAUTY PRODUCTS -- 0.8%
Owens-Corning 77,500 3,333
-------
CHEMICALS -- 3.7%
Hercules 20,000 1,105
IMC Global 120,000 4,515
Lilly, Eli 80,000 5,200
Monsanto 99,000 3,217
Sigma Aldrich 33,100 1,771
-------
15,808
-------
COMMUNICATIONS EQUIPMENT -- 1.1%
ITT Industries 47,500 1,193
Motorola 58,700 3,691
-------
4,884
-------
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
COMPUTERS & SERVICES -- 7.1%
Bay Networks* 65,000 $ 1,674
Compaq Computer* 57,500 2,832
Computer Associates Interational 50,000 3,563
Digital Equipment* 45,000 2,025
Hewlett Packard 28,500 2,839
International Business Machines 115,000 11,385
Microsoft* 43,500 5,225
Quantum* 49,700 727
-------
30,270
-------
CONTAINERS & PACKAGING -- 0.5%
Ball 67,500 1,941
-------
DRUGS -- 9.3%
Alza* 67,100 1,837
Biogen* 110,000 6,036
Caremark International 273,200 6,898
Elan (ADR)* 79,300 4,530
Ivax 185,000 2,937
Merck 195,000 12,602
Mylan Laboratories 273,200 4,713
-------
39,553
-------
ELECTRICAL SERVICES -- 5.1%
Central & South West 124,200 3,602
Cinergy 135,000 4,320
Consolidated Edison of
New York 145,000 4,241
Edison International 175,000 3,084
Unicom 235,000 6,551
-------
21,798
-------
ELECTRONICS -- 0.6%
Philips Electronics (ADR) 75,000 2,447
-------
ENVIRONMENTAL SERVICES -- 0.8%
Browning Ferris Industries 125,000 3,625
-------
FINANCIAL SERVICES -- 1.9%
Mercury Finance 330,000 4,208
Repsol (ADR) 115,000 3,996
-------
8,204
-------
FOOD, BEVERAGE & TOBACCO -- 8.1%
Canandaigua Wine Class A* 112,500 3,375
Chiquita Brands International 72,500 942
Nabisco Holdings Class A 152,500 5,395
Philip Morris 195,000 20,280
RJR Nabisco Holdings 155,000 4,805
-------
34,797
-------
GAS/NATURAL GAS -- 1.4%
Noram Energy 400,000 4,350
Panenergy 45,500 1,496
-------
5,846
-------
INSURANCE -- 6.6%
Aetna Life & Casualty 35,000 2,503
American International Group 40,000 3,945
Equitable 215,000 5,348
ITT Hartford Group 45,000 2,396
Travelers 310,000 14,144
--------
28,336
--------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
43
<PAGE>
STATEMENT
OF
NET ASSETS
AS OF
JUNE 30, 1996
EQUITY FUND (CONTINUED)
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
MACHINERY -- 5.4%
Baker Hughes 90,000 $ 2,959
Brunswick 50,300 1,006
Case 45,000 2,160
Caterpillar 42,000 2,845
General Electric 125,000 10,813
Texas Instruments 62,500 3,117
---------
22,900
---------
MEDICAL PRODUCTS & SERVICES-- 2.3%
Beverly Enterprises* 136,600 1,639
FHP International* 35,000 958
Foundation Health* 75,000 2,691
Medpartners/Mullikin* 179,800 3,753
United States Surgical 19,800 614
---------
9,655
---------
METALS & MINING -- 1.5%
Phelps Dodge 28,000 1,747
Potash of Saskatchewan 70,300 4,657
---------
6,404
---------
PAPER & PAPER PRODUCTS -- 0.7%
Kimberly Clark 38,000 2,936
---------
PETROLEUM & FUEL PRODUCTS -- 0.2%
Sonat Offshore Drilling 13,100 662
---------
PETROLEUM REFINING -- 7.2%
British Petroleum (ADR) 60,490 6,465
Burlington Resources 85,000 3,655
Kerr-McGee 37,500 2,283
Mobil 92,500 10,371
Pennzoil 40,000 1,850
USX Marathon Group 175,000 3,522
USX U.S. Steel Group 85,400 2,423
---------
30,569
---------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 0.9%
Xerox 72,000 3,852
---------
RAILROADS -- 0.9%
CSX 45,000 2,171
Union Pacific 25,000 1,747
---------
3,918
---------
REAL ESTATE -- 0.8%
Developers Diversified Realty 70,000 2,231
Kimco Realty 37,500 1,059
---------
3,290
---------
RESTAURANTS -- 1.2%
Darden Restaurants* 400,000 4,300
Vicorp Restaurants* 61,534 754
---------
5,054
--------
RETAIL -- 4.6%
Borders Group* 120,000 3,870
CML Group 275,000 1,169
General Nutrition* 98,550 1,725
Kroger* 100,000 3,950
- -------------------------------------------------------
DESCRIPTION SHARES/PAR (000) VALUE (000)
- -------------------------------------------------------
Lowes 155,000 $ 5,599
Pep Boys - Manny, Moe & Jack 88,900 3,022
Staples* 16,400 320
---------
19,655
---------
RUBBER & PLASTIC -- 0.6%
Goodyear Tire & Rubber 49,000 2,364
---------
SEMI-CONDUCTORS/INSTRUMENTS -- 1.9%
Intel 92,500 6,793
Silicon Valley Group* 80,000 1,500
---------
8,293
---------
SPECIALTY MACHINERY -- 0.7%
Westinghouse Electric 150,000 2,812
---------
TECHNOLOGY, SERVICES -- 0.7%
Cabletron Systems* 43,000 2,951
---------
TELEPHONES & TELECOMMUNICATION -- 7.9%
AT&T 207,500 12,865
Airtouch Communications* 225,000 6,356
BellSouth 140,000 5,932
Cellular Communications,
Series A* 49,339 2,621
Qualcomm* 115,000 6,109
---------
33,883
---------
WHOLESALE -- 0.9%
Praxair 95,700 4,043
---------
TOTAL COMMON STOCKS
(Cost $367,903) 411,617
---------
PREFERRED STOCK -- 0.5%
PRINTING & PUBLISHING -- 0.5%
News (ADR) 110,000 2,214
---------
TOTAL PREFERRED STOCK
(Cost $2,126) 2,214
--------
REPURCHASE AGREEMENTS -- 3.1%
Aubrey Lanston 5.40%, dated 06/28/96, matures
07/01/96, repurchase price
$6,462,907 (collateralized by
U.S. Treasury Bill, par value
$6,975,000, 5.68%, matures
06/26/97; market value
$6,597,077) $6,460 6,460
Sanwa Bank
5.40%, dated 06/28/96, matures
07/01/96, repurchase price
$6,462,907 (collateralized by
U.S. Treasury Note, par value
$6,435,000, 5.875%, matures
07/31/97; market value
$6,589,346) 6,460 6,460
---------
TOTAL REPURCHASE AGREEMENTS
(Cost $12,920) 12,920
---------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
44
<PAGE>
[] COREFUND EQUITY FUNDS
- -------------------------------------------------------
DESCRIPTION VALUE (000)
- -------------------------------------------------------
TOTAL INVESTMENTS -- 100.2%
(Cost $382,949) $426,751
--------
OTHER ASSETS AND LIABILITIES,
NET -- (0.2%) (749)
--------
NET ASSETS:
Portfolio Shares - Class Y
($0.001 par value - 50
million authorized) based on
24,032,368 outstanding shares 358,275
Portfolio Shares - Class A
($0.001 par value - 50
million authorized) based on
646,911 outstanding shares 8,010
Accumulated Net Realized Gain
on Investments 15,934
Net Unrealized Appreciation on
Investments 43,802
Distributions in excess of Net
Investment Income (19)
---------
TOTAL NET ASSETS -- 100.0% $426,002
=========
NET ASSET VALUE & REDEMPTION PRICE
PER SHARE
CLASS Y $17.26
=========
CLASS A $17.28
=========
* NON-INCOME PRODUCING SECURITY
ADR -- AMERICAN DEPOSITORY RECEIPT
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
GROWTH EQUITY FUND
[GRAPHIC OMITTED]
Pie Chart -- Shown is a pie chart depicting the industry classification for the
Growth Equity Fund. The following represent the plot points for the chart:
Industry Classification % of Total Portfolio Investment
Miscellaneous 2
Utilities 6
Technology 30
Healthcare 17
Finance 11
Capital Goods 4
Consumer Cyclicals 13
Consumer Staples 16
Energy 1
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
COMMON STOCKS--97.1%
BANKS -- 5.8%
Barnett Banks of Florida 35,000 $ 2,135
Citicorp 22,000 1,818
J.P. Morgan 24,000 2,031
Norwest 35,000 1,221
---------
7,205
---------
BEAUTY PRODUCTS -- 1.9%
Colgate Palmolive 28,000 2,373
---------
COMMUNICATIONS EQUIPMENT -- 8.8%
Ascend Communications* 21,000 1,181
Cascade Communications* 27,200 1,850
Cisco Systems* 43,900 2,486
Glenayre Technologies* 45,037 2,252
Motorola 18,800 1,182
U.S. Robotics* 22,212 1,899
---------
10,850
---------
COMPUTERS & SERVICES -- 15.4%
Computer Sciences* 30,494 2,279
CUC International* 66,000 2,343
DST Systems* 3,313 106
First Data 16,500 1,314
HBO 24,000 1,626
Microsoft* 15,016 1,804
Oracle Systems* 69,124 2,726
Parametric Technology* 56,200 2,438
Paychex 54,525 2,624
Peoplesoft* 24,000 1,710
---------
18,970
---------
DRUGS -- 12.0%
American Home Products 44,200 2,658
Amgen* 41,864 2,261
Merck 38,700 2,501
Schering Plough 40,892 2,566
SmithKline Beecham PLC (ADR) 48,550 2,640
Warner Lambert 40,000 2,200
---------
14,826
---------
45
<PAGE>
STATEMENT
OF
NET ASSETS
AS OF
JUNE 30, 1996
GROWTH EQUITY FUND (CONTINUED)
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
ELECTRICAL SERVICES -- 1.0%
Texas Utilities 29,000 $ 1,240
---------
ENTERTAINMENT -- 5.5%
Circus Circus Enterprises* 48,253 1,978
Hilton Hotels 14,000 1,575
International Game Technology 50,660 855
Mirage Resorts* 43,486 2,348
---------
6,756
---------
FINANCIAL SERVICES -- 3.1%
American Express 48,000 2,142
Federal National Mortgage
Association 49,656 1,663
---------
3,805
---------
FOOD, BEVERAGE & TOBACCO -- 11.0%
Coca Cola 58,600 2,864
CPC International 27,100 1,951
Hershey Foods 30,000 2,201
PepsiCo 76,900 2,720
Sara Lee 118,500 3,836
---------
13,572
---------
HEALTHCARE SERVICES -- 1.2%
Health Management Associates,
Class A* 74,025 1,499
---------
HOUSEHOLD PRODUCTS -- 2.2%
Gillette 42,800 2,670
---------
INSURANCE -- 1.5%
American International Group 18,400 1,815
---------
MACHINERY -- 4.3%
GE 33,589 2,905
Illinois Tool Works 35,000 2,367
---------
5,272
---------
MEDICAL PRODUCTS -- 2.0%
Johnson & Johnson 49,000 2,426
---------
MISCELLANEOUS CONSUMER SERVICES -- 2.2%
Service International 47,000 2,703
---------
PETROLEUM REFINING -- 1.0%
Schlumberger 15,100 1,272
---------
RETAIL -- 4.8%
Dayton-Hudson 24,000 2,475
Nordstrom 24,600 1,095
Walgreen 70,000 2,345
---------
5,915
---------
RUBBER & PLASTIC -- 0.2%
Rubbermaid 9,729 265
---------
- -------------------------------------------------------
DESCRIPTION SHARES/PAR (000) VALUE (000)
- -------------------------------------------------------
TELEPHONES & TELECOMMUNICATION-- 10.5%
Brooks Fiber Properties* 47,400 $ 1,564
Frontier 40,410 1,238
GTE 23,000 1,029
LCI International* 82,434 2,586
MCI Communications 86,000 2,204
MFS Communications* 33,812 1,272
Qualcomm* 25,400 1,349
Worldcom* 30,000 1,661
---------
12,903
---------
TECHNOLOGY -- 1.6%
UUNet Technologies* 29,500 1,954
---------
WHOLESALE -- 1.1%
Cardinal Health 19,400 1,399
---------
TOTAL COMMON STOCKS
(Cost $87,125) 119,690
---------
REPURCHASE AGREEMENTS -- 4.6%
Aubrey G. Lanston
5.40%, dated 06/28/96, matures
07/01/96, repurchase price
$1,894,852 (collateralized by
U.S. Treasury Bill, par value
$2,045,000, matures 06/26/97;
market value $1,934,197) $1,894 1,894
Sanwa Bank
5.40%, dated 06/28/96, matures
07/01/96, repurchase price
$1,893,852 (collateralized by
U.S. Treasury Note, par value
$1,885,000, 5.875%, matures
07/31/97; market value
$1,939,135) 1,893 1,893
Swiss Bank
5.45%, dated 06/28/96, matures
07/01/96, repurchase price
$1,894,860 (collateralized by
U.S. Treasury Note, par value
$1,560,000, 10.75%, matures
05/15/03; market value
$1,932,757) 1,894 1,894
---------
TOTAL REPURCHASE AGREEMENTS
(Cost $5,681) 5,681
---------
TOTAL INVESTMENTS -- 101.7%
(Cost $92,806) 125,371
---------
TOTAL OTHER ASSETS AND LIABILITIES,
NET -- (1.7%) (2,136)
---------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
46
<PAGE>
[] COREFUND EQUITY FUNDS
- -------------------------------------------------------
DESCRIPTION VALUE (000)
- -------------------------------------------------------
NET ASSETS:
Portfolio Shares - Class Y ($0.001 par
value - 100 million authorized) based on
8,460,884 outstanding shares $ 82,096
Portfolio Shares - Class A ($0.001 par
value - 100 million authorized) based on
223,118 outstanding shares 2,159
Accumulated Net Realized Gain on Investments 6,419
Net Unrealized Appreciation on Investments 32,565
Distributions in Excess of Net
Investment Income (4)
---------
TOTAL NET ASSETS -- 100.0% $123,235
=========
NET ASSET VALUE & REDEMPTION PRICE
PER SHARE
CLASS Y $14.19
=========
CLASS A $14.17
=========
* NON-INCOME PRODUCING SECURITY
ADR--AMERICAN DEPOSITORY RECEIPT
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
SPECIAL EQUITY FUND
[GRAPHIC OMITTED]
Pie Chart -- Shown is a pie chart depicting the industry classification for the
Special Equity Fund. The following represent the plot points for the chart:
Industry Classification % of Total Portfolio Investment
Miscellaneous 1
Utilities 5
Transportation 2
Technology 13
Healthcare 20
Finance 17
Basic Materials 3
Capital Goods 10
Consumer Cyclicals 18
Consumer Staples 6
Energy 5
- --------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------
COMMON STOCKS--96.7%
AIRCRAFT -- 1.0%
McDonnell Douglas 15,000 $ 728
-------
APPAREL/TEXTILES -- 2.5%
Burlington Industries* 5,117 72
Fieldcrest Cannon* 17,400 341
Haggar 20,000 270
Oneita Industries* 55,000 172
Oxford Industries 20,000 323
Quaker Fabric* 11,900 101
Supreme International* 18,400 317
-------
1,596
-------
AUTOMOTIVE -- 0.9%
Earl Scheib* 4,900 36
Ford Motor 7,500 243
Magna International, Class A 5,000 230
Walbro 3,000 61
-------
570
-------
BANKS -- 3.3%
Bank of Boston 13,000 643
First Chicago NBD 15,000 587
NationsBank 3,750 310
PNC Bank 18,000 536
-------
2,076
-------
BUILDING & CONSTRUCTION -- 1.5%
Cavalier Homes 16,387 379
Zurn Industries 30,000 622
-------
1,001
-------
BUILDING MATERIALS -- 0.9%
Owens Corning 14,000 602
-------
47
<PAGE>
STATEMENT
OF
NET ASSETS
AS OF
JUNE 30, 1996
SPECIAL EQUITY FUND (CONTINUED)
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
CHEMICALS -- 1.0%
Kinark* 60,800 $ 213
Terra Industries 35,000 433
-------
646
-------
COMMUNICATIONS EQUIPMENT -- 0.2%
ITT Industries 5,000 126
-------
COMPUTERS & SERVICES -- 4.3%
Computer Associates Interational 10,000 713
Gametek* 10,000 30
International Business Machines 8,500 841
Mizar* 18,200 118
Pace Health Management Systems* 43,500 272
Spyglass* 30,300 650
Video Lotteries Technologies* 34,200 154
-------
2,778
-------
CONTAINERS & PACKAGING -- 1.2%
Ball 20,000 575
Cronos Group* 31,400 220
-------
795
-------
DRUGS -- 11.7%
Anesta* 45,200 554
Aphton* 24,300 452
Autoimmune* 50,000 469
Biogen* 16,000 878
Collagenex Pharmaceuticals* 46,300 405
Elan (ADR)* 9,100 520
Flamel Technologies (ADR)* 90,000 726
Guilford Pharmaceuticals* 13,600 323
Hybridon* 22,500 263
Isis Pharmaceutical* 27,300 512
NBTY* 26,500 267
Pharmaceutical Resources* 105,000 525
Roberts Pharmaceuticals* 12,500 251
Scios Nova* 218,200 1,445
-------
7,590
-------
ELECTRONICS -- 3.6%
Kuhlman 50,000 869
Lam Research* 12,700 330
Philips Electronics (ADR)* 8,000 261
Smartflex Systems * 2,300 34
Teradyne* 23,000 397
Videonics* 42,600 458
-------
2,349
-------
ENTERTAINMENT -- 2.1%
Boomtown* 5,700 28
Cinergi Pictures Entertainment* 14,300 32
Hollywood Park* 20,000 193
Meridian Sports* 17,300 52
Mikohn Gaming* 110,000 976
Sports Club* 38,000 102
-------
1,383
-------
ENVIRONMENTAL SERVICES -- 1.5%
Browning Ferris Industries 25,000 725
Harding Lawson Associates
Group* 40,300 237
-------
962
-------
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
FINANCIAL SERVICES -- 6.2%
Jayhawk Acceptance* 50,000 $ 681
Mercury Finance 75,000 956
Olympic Financial* 35,000 805
Repsol (ADR) 15,000 521
WFS Financial * 47,000 1,058
-------
4,021
-------
FOOD, BEVERAGE & TOBACCO -- 2.4%
Cott* 19,000 178
Pepsi-Cola Puerto Rico
Bottling, Class B* 69,200 579
Philip Morris 6,300 655
RJR Nabisco Holdings 1,800 56
Rymer Foods* 178,600 112
-------
1,580
-------
FURNITURE/HOME APPLIANCE -- 0.4%
Winsloew Furniture* 44,180 254
-------
HOTELS & LODGING -- 1.8%
John Q. Hammons Hotels* 9,600 104
Prime Hospitality* 64,500 1,064
-------
1,168
-------
INSURANCE -- 4.9%
Everest Reinsurance Holdings 32,700 846
Gryphon Holdings* 36,700 550
Pac Rim Holding* 96,400 193
Travelers 21,000 958
Travelers/Aetna Property
Casualty* 18,100 514
Value Health* 5,400 128
-------
3,189
-------
MACHINERY -- 2.2%
Case 14,000 672
Caterpillar 11,500 779
-------
1,451
-------
MEDICAL PRODUCTS & SERVICES-- 8.3%
Acme United* 129,200 501
Aequitron Medical* 9,000 67
Circon* 25,000 294
Cooper* 49,999 587
Emeritus* 27,000 476
Harborside Healthcare* 18,000 185
Innovasive Devices* 9,000 90
Keravision* 34,500 539
Medpartners/Mullikin* 40,200 839
Metra Biosystems* 6,800 37
Molecular Dynamics* 1,400 9
Perseptive Biosystems* 21,000 196
Possis Medical* 22,600 376
Quest Medical* 9,000 63
Resound* 47,400 604
Spectranetics* 27,000 152
Urologix* 26,500 358
-------
5,373
-------
METALS & MINING -- 0.8%
Potash of Saskatchewan 7,800 517
-------
PETROLEUM & FUEL PRODUCTS -- 1.4%
Louis Dreyfus Natural Gas* 45,700 685
Sonat Offshore Drilling 3,900 197
-------
882
-------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
48
<PAGE>
[] COREFUND EQUITY FUNDS
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
PETROLEUM REFINING -- 2.8%
Kerr-McGee 12,000 $ 731
Pennzoil 15,000 694
USX-U.S. Steel Group 14,000 397
-------
1,822
-------
RAILROADS -- 0.8%
Union Pacific 7,000 489
-------
REAL ESTATE -- 2.7%
Agree Realty 9,400 168
Liberty Property Trust 25,800 513
Macerich 27,200 571
Pacific Gulf Properties 31,400 526
-------
1,778
-------
RESTAURANTS/FOOD SERVICES -- 4.3%
Darden Restaurants* 65,000 699
Hometown Buffet* 44,800 633
Michael Foods 55,676 647
Uno Restaurant* 90,000 675
Vicorp Restaurants* 5,000 61
Vie de France* 21,000 47
-------
2,762
-------
RETAIL -- 5.8%
Bon-Ton Stores* 46,300 237
Borders Group* 50,000 1,612
Chicos* 4,500 46
CML Group 92,200 392
Drug Emporium* 92,100 414
Kroger* 11,000 435
Sportmart* 14,400 54
Sportmart, Class A* 14,400 40
Staples* 24,000 468
Strouds* 19,000 71
--------
3,769
-------
RUBBER & PLASTIC -- 0.8%
O'Sullivan 45,000 534
-------
SEMI-CONDUCTORS/INSTRUMENTS-- 2.4%
Ess Technology* 4,600 85
Intel 12,500 918
Silicon Valley Group* 28,500 534
-------
1,537
-------
STEEL & STEEL WORKS -- 0.4%
Cold Metal Products* 42,800 284
-------
TECHNOLOGY SERVICES -- 1.3%
Cabletron Systems* 10,000 686
Landmark Graphics* 7,200 139
-------
825
-------
TELEPHONES & TELECOMMUNICATION-- 8.3%
American Portable Telecom* 52,100 560
Amnex* 126,500 459
Cellular Communications,
Series A* 5,439 289
Clearnet Communications,
Class A* 40,000 670
Lucent Technologies 22,500 852
- -------------------------------------------------------
DESCRIPTION SHARES/PAR (000) VALUE (000)
- -------------------------------------------------------
Mcleod, Class A* 32,500 $ 780
Metrocall* 25,000 278
Qualcomm* 20,000 1,063
Rural Cellular* 36,100 460
-------
5,411
-------
TESTING LABORATORIES -- 0.7%
Genome Therapeutics* 45,000 405
-------
TRANSPORTATION -- 0.6%
Expeditors International of
Washington 11,100 344
-------
TRUCKING & LEASING -- 0.3%
PST Vans* 45,900 195
-------
WHOLESALE -- 1.4%
Mail Boxes Etc* 26,800 613
Rexel* 18,800 266
-------
879
-------
TOTAL COMMON STOCKS
(Cost $59,754) 62,671
-------
REPURCHASE AGREEMENT--4.4%
Sanwa Bank
5.40%, dated 06/28/96, matures
07/01/96, repurchase price
$2,863,288 (collateralized by
U.S. Treasury Note, par value
$2,930,000, 5.375%, matures
11/30/97; market value
$2,919,670) $2,862 $ 2,862
-------
TOTAL REPURCHASE AGREEMENT
(Cost $2,862) 2,862
-------
TOTAL INVESTMENTS -- 101.1%
(Cost $62,616) 65,533
-------
OTHER ASSETS AND LIABILITIES,
NET -- (1.1%) (709)
-------
NET ASSETS:
Portfolio Shares - Class Y ($0.001 par value -
1 billion authorized) based on 5,368,869
outstanding shares 51,964
Portfolio Shares - Class A ($0.001 par value -
1 billion authorized) based on
96,547 outstanding shares 990
Accumulated Net Realized Gain on Investments 8,953
Net Unrealized Appreciation on Investments 2,917
-------
TOTAL NET ASSETS -- 100.0% $64,824
=======
NET ASSET VALUE & REDEMPTION PRICE
PER SHARE
CLASS Y $11.86
=======
CLASS A $11.85
=======
* NON-INCOME PRODUCING SECURITY
(ADR) -- AMERICAN DEPOSITORY RECEIPT
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
49
<PAGE>
STATEMENT
OF
NET ASSETS
AS OF
JUNE 30, 1996
INTERNATIONAL GROWTH FUND
[GRAPHIC OMITTED]
Pie Chart -- Shown is a pie chart depicting the industry classification for the
International Growth Fund. The following represent the plot points for the
chart:
Industry Classification % of Total Portfolio Investment
Cash Equivalents 9
Smaller Markets 7
United Kingdom 14
Europe 22
Other Pacific Rim 15
Japan 33
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
FOREIGN STOCKS -- 88.7%
ARGENTINA -- 0.6%
Banco DeGalicia ADR 4,500 $ 116
Banco Frances ADR 6,280 181
Capex GDR 12,500 203
Cementera Argentina * 6,500 30
Commercial del Plata * 19,000 60
Irsa GDR 1,440 49
Quilmes Industrial ADR 2,500 26
YPF Sociedad Anonima ADS 5,400 122
---------
787
---------
AUSTRALIA -- 2.3%
Broken Hill Proprietary 105,770 1,460
M.I.M. Holdings 340,000 438
Qantas Airways 313,000 529
Western Mining 110,000 786
---------
3,213
---------
AUSTRIA -- 0.4%
Vienna International Airport 7,900 543
---------
BRAZIL -- 1.3%
Cemig ADR 9,900 280
Compania Vale Do Rio Doce ADR 16,400 328
Electrobras ADR 19,500 270
Telebras ADR 8,950 623
Usiminas ADR 29,100 316
---------
1,817
---------
CHILE -- 0.6%
Andina Embotelladora ADR 1,200 44
Compania de Telecom Chile ADR 500 49
Madeco ADR 7,930 223
Maderas y Sinteticos Sociedad ADS 9,000 160
Santa Isabel ADR 2,100 58
Sociedad Quimica y Minera ADR 4,861 264
---------
798
---------
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
COLUMBIA -- 0.1%
Cementos Diamante GDS 13,800 $ 210
---------
FINLAND -- 0.3%
Amer Group 20,000 337
Nokia, class A 2,700 100
---------
437
---------
FRANCE -- 4.3%
Air Liquide 4,700 831
AXA 23,509 1,288
Canal Plus 400 98
Imetal SA 3,487 495
L'Oreal 2,600 864
Schneider 20,500 1,077
Seita 18,400 845
Societe Nationale Elf Aquitaine 7,266 535
---------
6,033
---------
GERMANY -- 4.3%
Bayer 2,500 88
Deutsche Bank AG 16,000 759
Hoechst 52,400 1,771
Mannesmann 4,300 1,482
SGL Carbon 2,058 242
Veba 32,500 1,729
---------
6,071
---------
HONG KONG -- 6.3%
Amoy Properties 822,000 993
Cheung Kong Holdings 50,000 360
China Light & Power 174,000 789
Citic Pacific 800 3
Giordano 226,000 219
Hong Kong Telecommunications 600,000 1,077
HSBC Holdings 133,081 2,012
Hutchison Whampoa 220,000 1,384
Sung Hung Kai Properties 22,000 222
Swire Pacific, series A 172,000 1,472
Swire Pacific, series B 250,000 344
Vtech Holdings 20,000 33
---------
8,908
---------
INDIA -- 0.9%
Himilayan Fund * 49,718 711
Indian Opportunities Fund * 41,982 484
---------
1,195
---------
INDONESIA -- 0.0%
Indosat ADR 1,800 60
---------
IRELAND -- 0.1%
Elan ADR* 2,400 137
---------
ISRAEL -- 0.4%
ECI Telecom ADR 1,800 42
Near East Opportunities Fund * 59,000 578
---------
620
---------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
50
<PAGE>
[] COREFUND EQUITY FUNDS
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
ITALY -- 2.4%
Bulgari 22,000 $ 352
De Rigo ADR * 11,000 250
Gucci Group ADR 2,400 155
LA Rinascente 112,000 803
LA Rinascente Warrants * 6,000 5
Saes Getters 12,000 336
Telecom Italia 637,000 1,371
Telecom Italia Mobile 72,000 161
---------
3,433
---------
JAPAN -- 31.0%
Advantest 1,400 56
Alpine Electronics 4,000 75
Amano 44,000 655
Asahi Chemical Industries 192,000 1,372
Asahi Diamond Industrial 42,000 549
Canon 87,000 1,813
Daifuku 40,000 614
Daiwa Securities 80,000 1,031
DDI 143 1,249
Eiden Sakakiya 30,000 419
Eisai 2,000 38
Hitachi 120,000 1,119
Hitachi Metals 107,000 1,232
Honda Motor 2,000 52
Hoya 2,000 65
Ito Yokado 28,000 1,691
Itochu 199,000 1,393
Jusco 3,000 98
Kamigumi 101,000 923
Kao 6,000 81
Kirin Beverage 32,000 471
Komatsu 14,000 138
Komori 22,000 563
Kuraray Warrants * 360 281
Kyocera 26,000 1,842
Mabuchi Motor 8,000 510
Marui Company 45,000 999
Mitsubishi Electric 10,000 70
Mitsubishi Estate 10,000 138
Mitsubishi Heavy Industries 286,000 2,491
Mitsui Fudosan 105,000 1,420
Mitsui Marine & Fire 10,000 80
NEC 5,000 54
Nikko Securities 8,000 90
Nippon Express 140,000 1,369
Nippon Shinpan 12,000 86
Nippon Steel 22,000 76
Nippon System Development 17,000 294
Nissan Motors 10,000 89
Nitto Denko 40,000 706
Nomura Securities 78,000 1,525
NTT Data Communications 6 180
Omron 4,000 85
Organo 40,000 431
Riso Kagaku Corporation 5,100 410
Rohm Company 30,000 1,985
Sanwa Bank 4,000 74
Sekisui Warrants * 115 207
Shimachu 17,000 505
Shin-Etsu Chemical 62,000 1,190
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
Sony Corporation 27,000 $ 1,779
Sumitomo 17,000 151
Sumitomo Bank 3,000 58
Sumitomo Electric 93,000 1,334
Sumitomo Forestry 74,000 1,102
Sumitomo Marine &
Fire Insurance 13,000 113
Sumitomo Trust & Banking 137,000 1,878
Taisho Pharmaceutical 25,000 542
Takeda Chemical 18,000 319
Tokio Marine & Fire Insurance 112,000 1,494
Tokyo Electronics 2,000 58
Toyota Motor 80,000 2,003
Ushio 2,000 25
Yamanouchi Pharmaceutical 3,000 65
---------
43,805
---------
LUXEMBOURG -- 0.1%
Millicom International Cellular * 1,800 86
---------
MALAYSIA -- 2.7%
AMMB Holdings 99,000 1,389
Edaran Otomobil 80,000 767
New Straits Times Press 20,000 104
Resorts World Berhad 88,000 505
United Engineers 150,000 1,040
---------
3,805
---------
MEXICO -- 0.7%
Cemex, series B 34,500 136
Cifra ADR * 35,000 51
Corporacion Industrial Alfa,
series A 28,945 130
Corporacion Industrial
San Luis ADR 5,000 181
Empresas ICA Sociedad
Controlladora ADR * 8,800 122
Grupo Carso SA ADS * 2,500 34
Grupo Financiero Banamex,
series B * 77,000 161
Grupo Financiero Banamex,
series L * 1,227 2
Grupo Modelo, series C 12,000 57
Kimberly Clark ADR 3,500 127
Kimberly Clark, series A 1,700 31
---------
1,032
---------
NETHERLANDS -- 2.5%
Amev 3,000 86
Elsevier NV 112,150 1,704
Getronics 4,800 106
Heineken 300 67
ING Groep 36,464 1,089
ING Groep Scrip 19,082 291
Polygram 700 41
Wolters Kluwer 800 91
---------
3,475
---------
NEW ZEALAND -- 0.6%
Carter Holt Harvey 350,000 800
Telecom New Zealand ADR 1,015 68
---------
868
---------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
51
<PAGE>
STATEMENT
OF
NET ASSETS
AS OF
JUNE 30, 1996
INTERNATIONAL GROWTH FUND (CONTINUED)
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
NORWAY -- 0.0%
Nycomed ASA, series B 2,600 $ 37
---------
PERU -- 0.0%
Credicorp 3,525 70
---------
PHILIPPINES -- 0.1%
San Miguel, series B 33,000 114
---------
SINGAPORE -- 2.1%
Development Bank of Singapore 109,000 1,360
First Capital Corporation 118,000 293
Hong Kong Land ADR 32,000 72
Jardine Matheson &
Company (U.S.) 142,566 1,048
Singapore Press 6,400 126
United Overseas Bank 600 6
---------
2,905
---------
SOUTH AFRICA -- 0.8%
Barlow 35,000 366
Safmarime & Rennies Holdings 123,000 362
Sasol 35,000 380
---------
1,108
---------
SOUTH KOREA -- 0.5%
CITIC Seoul Excel Trust IDR * 18 192
Korea Mobile Telecom ADR * 10,500 180
Korea Preferred Share Fund * 41,000 327
Samsung Electronics 2,463 60
Samsung Electronics new 1/2
Non-voting GDS * 115 6
---------
765
---------
SPAIN -- 1.2%
Banco de Santander 20,100 939
Continente 30,472 724
---------
1,663
---------
SWEDEN -- 2.0%
Asea AB, series B Free 500 53
Astra AB, series B Free 8,000 349
Ericsson, series B 48,008 1,037
Ericsson Telephone ADR 17,000 366
SSAB A 20,000 254
Stora Kopparbergs, series A Free 61,000 806
---------
2,865
---------
SWITZERLAND -- 4.4%
ABB AG 45 56
Ascom Holding AG 280 282
Ciba Geigy 1,435 1,750
Nestle SA Registered 1,430 1,634
Roche Holding 137 1,046
Sandoz 360 412
Sulzer AG 453 291
Zurich Insurance 2,960 807
---------
6,278
---------
TAIWAN -- 1.3%
Taiwan Opportunities Fund * 204,500 1,890
---------
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
THAILAND -- 1.4%
Advanced Info Service 7,700 $ 114
Bangkok Bank 3,000 41
Thai Military Bank 290,000 1,142
Total Access Communications
ADR 13,500 115
TPI Polene 140,000 634
---------
2,046
---------
UNITED KINGDOM -- 13.0%
Argyll Group 179,000 964
Barclays Bank 8,850 106
Barratt Development 190,500 751
Bass 9,700 122
British Aerospace 8,750 133
British Petroleum 13,000 114
British Sky Broadcasting ADR 4,200 171
British Steel 33,000 84
British Telecommunications 126,000 677
BTR Warrants * 269,000 31
Cable & Wireless 93,000 615
East Midlands Electricity 80,032 647
GKN 60,500 928
Glaxo Wellcome 85,000 1,143
Granada Group 76,750 1,027
Imperial Chemical 6,800 83
Ladbroke 322,000 900
Lasmo 180,318 493
Logica 11,750 118
McKechnie 76,500 548
Next 17,200 150
NFC 383,000 1,100
Perpetual 3,400 124
Prudential 14,300 90
Reckitt & Coleman 103,000 1,081
Reuters Holdings 25,500 308
RTZ 7,350 109
Shell Transportation & Trading 75,500 1,105
SmithKline Beecham Units 20,500 219
Standard Chartered Bank 12,400 123
Tesco 27,000 123
TSB Lloyds Group 200,500 981
Unilever 58,500 1,162
Wassall 152,250 676
Wolseley 156,000 1,102
Zeneca Group 10,000 221
---------
18,329
---------
TOTAL FOREIGN STOCKS
(Cost $113,589) 125,403
---------
CONVERTIBLE BOND -- 0.7%
JAPAN -- 0.7%
Mitsubishi Bank
3.000%, 11/30/02 $900 1,044
---------
TOTAL CONVERTIBLE BOND
(Cost $923) 1,044
---------
DEMAND DEPOSIT -- 8.2%
Morgan Stanley
4.250%, 07/01/96 11,652 11,652
---------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
52
<PAGE>
[] COREFUND EQUITY FUNDS
- -------------------------------------------------------
DESCRIPTION SHARES/PAR (000) VALUE (000)
- -------------------------------------------------------
TOTAL DEMAND DEPOSIT
(Cost $11,652) 11,652
---------
TOTAL INVESTMENTS -- 97.6%
(Cost $126,164) 138,099
---------
OTHER ASSETS AND LIABILITIES,
NET -- 2.4% 3,314
---------
NET ASSETS:
Portfolio Shares - Class Y ($0.001 par
value - 25 million authorized) based
on 9,966,192 outstanding shares 116,339
Portfolio Shares - Class A ($0.001 par
value - 25 million authorized) based
on 153,145 outstanding shares 1,972
Accumulated Net Realized Gain
on Investments 9,080
Net Unrealized Appreciation on
Foreign Currency Translation of Other
Assets and Liabilities Denominated in
Foreign Currency 889
Net Unrealized Appreciation
on Investments 11,935
Undistributed Net Investment
Income 1,198
---------
TOTAL NET ASSETS -- 100.0% $141,413
=========
NET ASSET VALUE & REDEMPTION
PRICE PER SHARE
CLASS Y $13.97
=========
CLASS A $13.96
=========
* NON-INCOME PRODUCING SECURITY
ADR -- AMERICAN DEPOSITORY RECEIPTS
ADS -- AMERICAN DEPOSITORY SHARES
GDR -- GLOBAL DEPOSITORY RECEIPTS
GDS -- GLOBAL DEPOSITORY SHARES
IDR -- INTERNATIONAL DEPOSITORY RECEIPTS
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
BALANCED FUND
[GRAPHIC OMITTED]
Pie Chart -- Shown is a pie chart depicting the industry classification for the
Balanced Fund. The following represent the plot points for the chart:
Industry Classification % of Total Equity Investments
Utilities 10
Transportation 3
Technology 19
Healthcare 19
Finance 6
Basic Materials 5
Capital Goods 12
Consumer Cyclicals 6
Consumer Staples 8
Energy 12
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
COMMON STOCKS--63.8%
AIR TRANSPORTATION -- 1.0%
Southwest Airlines 36,500 $ 1,063
---------
AIRCRAFT -- 0.6%
Boeing 7,700 671
---------
AUTOMOTIVE -- 1.1%
General Motors, Class H 18,900 1,136
---------
BANKS -- 1.4%
Barnett Banks of Florida 11,000 671
J.P. Morgan 10,000 846
---------
1,517
---------
CHEMICALS -- 1.2%
Monsanto 39,750 1,292
---------
COMMUNICATIONS EQUIPMENT -- 3.6%
Cascade Communications* 14,400 979
Cisco Systems* 23,600 1,336
Glenayre Technologies* 7,500 375
Motorola 3,300 207
U.S. Robotics* 9,200 787
---------
3,684
---------
COMPUTERS & SERVICES -- 2.6%
Compaq Computer* 2,000 99
Hewlett Packard 10,100 1,006
Microsoft* 6,000 721
Oracle Systems* 22,950 905
---------
2,731
---------
DRUGS -- 8.9%
American Home Products 20,000 1,203
Amgen* 13,600 734
Bristol-Myers Squibb 13,600 1,224
Chiron* 3,767 369
Genzyme* 15,000 754
Glaxo (ADR) 30,400 813
53
<PAGE>
STATEMENT
OF
NET ASSETS
AS OF
JUNE 30, 1996
BALANCED FUND (CONTINUED)
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
Merck 14,500 $ 937
Schering Plough 21,400 1,343
SmithKline Beecham (ADR) 16,000 870
Warner Lambert 20,000 1,100
---------
9,347
---------
ELECTRICAL EQUIPMENT -- 2.6%
Emerson Electric 7,650 691
General Electric 16,400 1,419
Westinghouse Electric 33,300 624
---------
2,734
---------
ELECTRICAL SERVICES -- 1.0%
Texas Utilities 25,000 1,069
---------
ENTERTAINMENT -- 0.4%
International Game Technology 25,330 427
---------
FINANCIAL SERVICES -- 1.3%
American Express 15,000 669
Federal National Mortgage
Association 21,600 724
---------
1,393
---------
FOOD, BEVERAGE & TOBACCO -- 3.5%
Coca Cola 23,600 1,153
PepsiCo 26,800 948
Philip Morris 9,000 936
Sara Lee 21,400 693
---------
3,730
---------
HOUSEHOLD PRODUCTS -- 2.4%
Gillette 10,600 661
Procter & Gamble 11,775 1,067
Rubbermaid 30,600 834
---------
2,562
---------
INSURANCE -- 1.3%
American International Group 6,000 592
General Re 5,000 761
---------
1,353
---------
MACHINERY -- 2.2%
Caterpillar 17,900 1,213
Deere 28,600 1,144
---------
2,357
---------
MEASURING DEVICES -- 0.9%
Honeywell 17,000 927
---------
MEDICAL PRODUCTS & SERVICES-- 4.1%
Cardinal Health 11,700 844
Guidant 15,100 744
HBO 10,000 678
Health Management Associates,
Class A* 29,362 595
Johnson & Johnson 13,200 653
United Healthcare 15,400 778
---------
4,292
---------
- -------------------------------------------------------
DESCRIPTION SHARES/PAR (000) VALUE (000)
- -------------------------------------------------------
METALS & MINING -- 1.2%
Aluminum Company of
America 23,000 $ 1,320
---------
PAPER & PAPER PRODUCTS -- 0.7%
Kimberly Clark 9,204 711
---------
PETROLEUM & FUEL PRODUCTS -- 0.9%
Anadarko Petroleum 16,500 957
---------
PETROLEUM REFINING -- 6.7%
Amoco 12,400 897
Atlantic Richfield 7,375 874
British Petroleum (ADR) 22 2
Chevron 17,100 1,009
Exxon 13,500 1,173
Mobil 10,200 1,144
Schlumberger 11,400 960
Texaco 12,500 1,048
---------
7,107
---------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 0.8%
Eastman Kodak 10,600 824
---------
RAILROADS -- 0.6%
Conrail 10,000 664
---------
RETAIL -- 1.7%
May Department Stores 19,100 836
Nordstrom 21,000 934
---------
1,770
---------
SEMI-CONDUCTORS/INSTRUMENTS-- 0.9%
Intel 13,500 991
---------
TECHNOLOGY, SERVICES -- 1.6%
First Data 7,000 557
Paychex 22,500 1,083
---------
1,640
---------
TELEPHONES & TELECOMMUNICATION-- 8.6%
Alltel 30,000 922
Bell Atlantic 8,000 510
Bellsouth 18,500 784
Brooks Fiber Properties* 21,000 693
Frontier 30,000 919
GTE 29,000 1,298
LCI International* 40,000 1,255
MFS Communications* 28,000 1,054
Qualcomm* 4,500 239
SBC Telecommunications 18,100 891
Worldcom* 10,000 554
---------
9,119
---------
TOTAL COMMON STOCKS
(Cost $53,905) 67,388
---------
U.S. TREASURY OBLIGATIONS--18.0%
U.S. Treasury Bonds
7.250%, 05/15/16 $ 500 512
8.750%, 05/15/17 665 789
U.S. Treasury Notes
7.250%, 08/31/96 500 501
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
54
<PAGE>
[] COREFUND EQUITY FUNDS
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
6.500%, 09/30/96 $ 2,500 $ 2,508
8.500%, 07/15/97 1,215 1,247
8.125%, 02/15/98 1,670 1,723
5.125%, 03/31/98 500 492
6.125%, 05/15/98 1,000 1,001
9.250%, 08/15/98 1,620 1,718
8.875%, 11/15/98 1,105 1,169
8.875%, 02/15/99 110 117
6.000%, 10/15/99 500 495
7.750%, 11/30/99 700 729
6.375%, 01/15/00 500 500
7.500%, 11/15/01 3,235 3,377
7.500%, 02/15/05 600 631
6.500%, 08/15/05 500 493
5.875%, 11/15/05 500 471
6.875%, 05/15/06 500 505
---------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $19,291) 18,978
---------
U.S. GOVERNMENT AGENCY OBLIGATIONS--0.9%
FHLMC
6.440%, 01/28/00 500 497
FNMA
5.940%, 12/12/05 500 463
---------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $1,000) 960
---------
U.S. GOVERNMENT MORTGAGE-BACKED
BONDS--2.8%
FHLMC
6.000%, 05/01/08 724 686
5.500%, 11/01/08 822 762
FNMA
6.500%, 07/01/10 264 256
6.500%, 09/01/10 341 330
6.000%, 04/25/23 235 211
6.500%, 11/01/24 503 471
GNMA
9.000%, 10/15/19 197 206
---------
TOTAL U.S. GOVERNMENT
MORTGAGE-BACKED BONDS
(Cost $3,071) 2,922
---------
ASSET-BACKED SECURITIES--1.0%
Contimortgage Home Equity Loan
Trust, Series 95-4 A7
6.950%, 01/15/14 200 188
Delta Funding Home Equity Loan
Trust, Series 95-A A2 6.57%
6.570%, 12/25/10 195 192
Equicredit Home Equity Loan Trust,
Series 96-1 A3
6.190%, 12/15/10 225 213
Equivantage Home Equity Loan
Trust, Series 96-1 A1
6.550%, 04/01/27 207 202
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
IMC Home Equity Loan Trust,
Series 96-1 A5
6.290%, 12/25/13 $ 130 $ 122
The Money Store Home Equity
Loan Trust, Series 95-C A2
6.250%, 08/15/16 195 191
---------
TOTAL ASSET-BACKED SECURITIES
(Cost $1,149) 1,108
---------
NON-AGENCY MORTGAGE-BACKED BONDS--0.3%
GE Capital Mortgage Services,
Series 94-2 A4, CMO
6.000%, 01/25/09 125 122
Prudential Home Mortgage
Securities, Series 94-29 A5,
CMO
7.000%, 10/25/24 235 223
---------
TOTAL NON-AGENCY MORTGAGE-BACKED BONDS
(Cost $351) 345
---------
CORPORATE OBLIGATIONS--8.1%
Arco Chemical
10.250%, 11/01/10 210 264
Bellsouth
7.000%, 02/01/05 500 498
Coastal
10.250%, 10/15/04 195 228
Coca Cola
6.000%, 07/15/03 1,000 945
CSR Finance
7.700%, 07/21/25 200 197
Dayton Hudson
8.500%, 12/01/22 500 496
Donaldson Lufkin & Jenrette
6.875%, 11/01/05 185 177
First Bank System
6.875%, 09/15/07 500 479
Ford Motor Credit
6.375%, 04/15/00 500 493
6.250%, 11/08/00 500 489
7.500%, 01/15/03 1,000 1,024
ITT
7.375%, 11/15/15 360 339
Laidlaw
8.750%, 04/15/25 75 80
MacMillan Bloedel
7.700%, 02/15/26 215 196
MBNA
7.250%, 09/15/02 185 186
Merck
6.300%, 01/01/26 1,000 875
Merrill Lynch
7.000%, 04/27/08 250 242
Midland Bank
6.950%, 03/15/11 200 188
Nationsbank
6.500%, 03/15/06 200 187
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
55
<PAGE>
STATEMENT
OF
NET ASSETS
[] COREFUND EQUITY FUNDS
AS OF
JUNE 30, 1996
BALANCED FUND (CONCLUDED)
- -------------------------------------------------------
DESCRIPTION SHARES/PAR (000) VALUE (000)
- -------------------------------------------------------
Noranda
8.125%, 06/15/04 $ 195 $ 202
Provident Bank
6.125%, 12/15/00 25 24
Royal Bank of Scotland
6.375%, 02/01/11 205 183
Santander
7.250%, 11/01/15 100 95
U.S. Bancorp
6.750%, 10/15/05 500 480
---------
TOTAL CORPORATE OBLIGATIONS
(Cost $8,903) 8,567
---------
REPURCHASE AGREEMENTS--6.0%
Aubrey Lanston
5.40%, dated 06/28/96, matures
07/01/96, repurchase price
$1,607,723 (collateralized by
U.S. Treasury Bill, par value
$1,735,000, 5.68%, 06/26/97;
market value $1,640,993) 1,607 1,607
Hong Kong Shanghai Bank
5.42%, dated 06/28/96, matures
07/01/96, repurchase price
$1,607,726 (collateralized by
U.S. Treasury Note, par value
1,600,000, 6.00%; market
value $1,648,723) 1,607 1,607
Sanwa Bank
5.40%, dated 06/28/96, matures
07/01/96, repurchase price
$1,607,723 (collateralized by
U.S. Treasury Note, par value
$1,600,000, 5.875%; market
value $1,638,978) 1,607 1,607
Swiss Bank
5.45%, dated 06/28/96, matures
07/01/96, repurchase price
$1,607,730 (collateralized by
U.S. Treasury Note, par value
$1,325,000, 10.75%; market
value $1,641,605) 1,607 1,607
---------
TOTAL REPURCHASE AGREEMENTS
(Cost $6,428) 6,428
---------
TOTAL INVESTMENTS -- 100.9%
(Cost $94,098) 106,696
---------
OTHER ASSETS AND LIABILITIES,
NET -- (0.9%) (993)
---------
- -------------------------------------------------------
DESCRIPTION VALUE (000)
- -------------------------------------------------------
NET ASSETS:
Portfolio Shares - Class Y ($0.001 par
value - 100 million authorized) based
on 8,144,688 outstanding shares $ 86,860
Portfolio Shares - Class A ($0.001 par
value - 100 million authorized) based
on 253,194 outstanding shares 2,668
Accumulated Net Realized Gain on
Investments 3,568
Net Unrealized Appreciation on
Investments 12,598
Undistributed Net
Investment Income 9
---------
TOTAL NET ASSETS -- 100.0% $105,703
=========
NET ASSET VALUE & REDEMPTION PRICE
PER SHARE
CLASS Y $12.59
=========
CLASS A $12.59
=========
*NON-INCOME PRODUCING SECURITY
ADR -- AMERICAN DEPOSITORY RECEIPT
CMO -- COLLATERALIZED MORTGAGE OBLIGATION
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONALMORTGAGE ASSOCIATION
GNMA -- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
56
<PAGE>
[This page intentionally left blank.]
<PAGE>
STATEMENT
OF
OPERATIONS
(000)
[] COREFUND EQUITY FUNDS
FOR THE PERIOD
ENDED
JUNE 30, 1996
<TABLE>
<CAPTION>
---------- -------- ----------- -------------- ------------- --------
EQUITY EQUITY GROWTH SPECIAL INTERNATIONAL BALANCED
INDEX FUND FUND(3) EQUITY FUND EQUITY FUND(3) GROWTH FUND FUND
---------- -------- ----------- -------------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 3,117 $ 5,338 $ 1,336 $ 402 $ 2,851 $ 1,000
Interest 42 325 327 111 156 1,825
Less: Foreign taxes withheld -- -- -- -- (309) --
-------- -------- -------- -------- -------- --------
Total investment income 3,159 5,663 1,663 513 2,698 2,825
-------- -------- -------- -------- -------- --------
EXPENSES:
Investment advisory fees 548 1,974 813 599 985 548
Waiver of investment advisory fees (365) -- (84) (573) (20) (106)
Administrative fees 343 526 271 78 308 195
Waiver of administrative fees (123) (101) (97) (7) (111) (65)
Transfer agent fees & expenses 45 81 40 6 40 26
Custodian fees -- (17) -- 15 163 --
Professional fees 18 50 10 4 12 6
Registration & filing fees 21 56 15 6 18 8
12b-1 fees -- 15 6 -- 5 7
Taxes--other than income (15) (4) (17) -- 7 (8)
Printing fees 10 2 10 -- 16 5
Organizational costs -- -- -- 5 -- 5
Miscellaneous 4 23 1 2 (11) 21
-------- -------- -------- -------- -------- --------
Total expenses 486 2,605 968 135 1,412 642
-------- -------- -------- -------- -------- --------
NET INVESTMENT INCOME 2,673 3,058 695 378 1,286 2,183
-------- -------- -------- -------- -------- --------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain from security
transactions 4,702 43,129 10,837 9,147 9,937 4,822
Net realized gain on forward currency
contracts and foreign currency
transactions -- -- -- -- 1,907 --
Net unrealized appreciation on forward
foreign currency contracts and
translation of assets and liabilities
in foreign currencies -- -- -- -- 200 --
Net change in unrealized appreciation
on investments 23,222 23,229 17,962 2,372 5,512 6,379
-------- -------- -------- -------- -------- --------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 30,597 $ 69,416 $ 29,494 $ 11,897 $ 18,842 $ 13,384
======== ======== ======== ======== ======== ========
COMPUTATION OF NET ASSET VALUE AND OFFERING
PRICE - JUNE 30, 1996:
CLASS Y
1Net asset value, offer and redemption
price $ 28.47 $ 17.26 $ 14.19 $ 11.86 $ 13.97 $ 12.59
======== ======== ======== ======== ======== ========
CLASS A
1Net asset value, redemption price 17.28 14.17 11.85 13.96 12.59
Maximum sales charge of 3.25% 0.58 0.48 0.40 0.47 0.42
-------- -------- -------- -------- --------
2Offering price $ 17.86 $ 14.65 $ 12.25 $ 14.43 $ 13.01
======== ======== ======== ======== ========
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0
1 NET ASSET VALUE PER SHARE, AS ILLUSTRATED, IS THE AMOUNT WHICH WOULD BE PAID
UPON THE REDEMPTION OR EXCHANGE OF SHARES.
2 THE OFFER PRICE IS CALCULATED BY DIVIDING THE NET ASSET VALUE OF CLASS A BY 1
MINUS THE MAXIMUM SALES CHARGE OF 3.25%.
3 DUE TO THE MERGER OF THIS FUND WITH A CONESTOGA FUND, AMOUNTS REPRESENT ACTIVITY
FOR THE PERIOD NOVEMBER 1, 1995 THROUGH JUNE 30, 1996. PLEASE SEE THE NOTES TO
THE FINANCIAL STATEMENTS FOR FURTHER DETAILS REGARDING THE MERGER.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</FN>
</TABLE>
58 & 59
<PAGE>
STATEMENT
OF CHANGES
IN NET ASSETS
(000)
[] COREFUND EQUITY FUNDS
FOR THE PERIODS
ENDED
JUNE 30
<TABLE>
<CAPTION>
------------------- ---------------------- ----------------------
EQUITY EQUITY GROWTH
INDEX FUND FUND EQUITY FUND
------------------- ---------------------- ----------------------
1996 1995 1996(1) 1995(2) 1996 1995
-------- -------- --------- --------- --------- ---------
OPERATIONS:
<S> <C> <C> <C> <C> <C> <C>
Net investment income $ 2,673 $ 2,147 $ 3,058 $ 2,924 $ 695 $ 645
Net realized gain from security transactions
and foreign currency transactions 4,702 3,527 43,129 28,979 10,837 308
Net unrealized appreciation (depreciation) on
investments, forward foreign currency
contracts and translation of assets and
liabilites in foreign currencies 23,222 14,303 23,229 12,894 17,962 16,243
-------- -------- --------- --------- --------- ---------
Net increase (decrease) in net assets
resulting from operations 30,597 19,977 69,416 44,797 29,494 17,196
-------- -------- --------- --------- --------- ---------
DIVIDENDS DISTRIBUTED FROM:
Net investment income:
Prior Class (a) -- -- -- (125) -- --
Retail Class (b) -- -- (35) (53) -- --
Institutional Class (b) -- -- (2,133) (2,638) -- --
Class Y (c) (2,677) (2,147) (1,001) -- (691) (632)
Class A (c) -- -- (21) -- (11) (10)
Net realized gains:
Prior Class (a) -- -- -- (2,660) -- --
Retail Class (b) -- -- (1,150) -- -- --
Institutional Class (b) -- -- (57,348) -- -- --
Class Y (c) (3,835) (3,652) -- -- (2,808) --
Class A (c) -- -- -- -- (63) --
-------- -------- --------- --------- --------- ---------
Total dividends distributed (6,512) (5,799) (61,688) (5,476) (3,573) (642)
-------- -------- --------- --------- --------- ---------
CAPITAL TRANSACTIONS(3):
Prior Class (a):
Redesignated to Retail Class (b) -- -- -- (5,674) -- --
Redesignated to Institutional Class (b) -- -- -- (42,589) -- --
Proceeds from shares issued -- -- -- 4,679 -- --
Reinvestment of cash distributions -- -- -- 2,420 -- --
Cost of shares redeemed -- -- -- (6,294) -- --
-------- -------- --------- --------- --------- ---------
Decrease in net assets from Prior Class
transactions -- -- -- (47,458) -- --
-------- -------- --------- --------- --------- ---------
Retail Class (b):
Redesignated from Prior Class (a) -- -- -- 5,674 -- --
Exchanged for Class A Shares -- -- -- -- -- --
Proceeds from shares issued -- -- 1,033 676 -- --
Reinvestment of cash distributions -- -- 1,168 52 -- --
Cost of shares redeemed -- -- (674) (948) -- --
-------- -------- --------- --------- --------- ---------
Increase (Decrease) in net assets from
Retail Class transactions -- -- 1,527 5,454 -- --
-------- -------- --------- --------- --------- ---------
Institutional Class (b):
Redesignated from Prior Class (a) -- -- -- 42,589 -- --
Exchanged for Class Y Shares -- -- -- -- -- --
Proceeds from shares issued -- -- 35,302 351,837 -- --
Reinvestment of cash distributions -- -- 58,151 2,568 -- --
Cost of shares redeemed -- -- (92,405) (59,497) -- --
-------- -------- --------- --------- --------- ---------
Increase (Decrease) in net assets from
Institutional Class transactions -- -- 1,048 337,497 -- --
-------- -------- --------- --------- --------- ---------
Class Y (c):
Proceeds from shares issued in merger (d) -- -- 34,310 -- -- --
Proceeds from shares issued 50,936 31,601 16,834 -- 24,852 28,885
Reinvestment of cash distributions 6,064 5,180 -- -- 3,081 528
Cost of shares redeemed (27,288) (10,958) (23,221) -- (24,528) (19,116)
-------- -------- --------- --------- --------- ---------
Increase in net assets from Class Y
transactions 29,712 25,823 27,923 -- 3,405 10,297
-------- -------- --------- --------- --------- ---------
Class A (c):
Proceeds from shares issued in merger (d) -- -- 2,807 -- -- --
Proceeds from shares issued -- -- 575 -- 980 280
Reinvestment of cash distributions -- -- -- -- 71 9
Cost of shares redeemed -- -- (549) -- (530) (359)
-------- -------- --------- --------- --------- ---------
Increase (Decrease) in net assets from
Class A transactions -- -- 2,833 -- 521 (70)
-------- -------- --------- --------- --------- ---------
Increase in net assets derived from capital
share transactions 29,712 25,823 33,331 295,493 3,926 10,227
-------- -------- --------- --------- --------- ---------
Net increase in net assets 53,797 40,001 41,059 334,815 29,847 26,781
-------- -------- --------- --------- --------- ---------
NET ASSETS:
Beginning of period 112,553 72,552 384,943 50,128 93,388 66,607
-------- -------- --------- --------- --------- ---------
End of period $166,350 $112,553 $ 426,002 $ 384,943 $ 123,235 $ 93,388
======== ======== ========= ========= ========= =========
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(A) ON FEBRUARY 21, 1995 THE SHARES OF THE CONESTOGA EQUITY AND SPECIAL EQUITY FUNDS
WERE REDESIGNATED FROM A SINGLE CLASS TO RETAIL AND INSTITUTIONAL CLASSES.
(B) RETAIL AND INSTITUTIONAL CLASS AMOUNTS FOR 1996 REPRESENT ACTIVITY OF THE
ACQUIRED CONESTOGA FUND FROM NOVEMBER 1, 1995 THROUGH APRIL 14, 1996.
(C) ON APRIL 22, 1996 SERIES A SHARES WERE REDESIGNATED CLASS Y SHARES, AND SERIES B
SHARES WERE REDESIGNATED CLASS A SHARES.
(D) ON APRIL 15 & 22, 1996 THE CONESTOGA FUNDS WERE ACQUIRED BY COREFUNDS, INC.
PLEASE SEE THE NOTES TO THE FINANCIAL STATEMENTS FOR FURTHER INFORMATION REGARDING
THE TRANSACTION.
</FN>
</TABLE>
<TABLE>
<CAPTION>
---------------------- ---------------------- ----------------------
SPECIAL INTERNATIONAL BALANCED
EQUITY FUND GROWTH FUND FUND
---------------------- ---------------------- ----------------------
1996(1) 1995(2) 1996 1995 1996 1995
--------- --------- --------- --------- --------- ---------
OPERATIONS:
<S> <C> <C> <C> <C> <C> <C>
Net investment income $ 378 $ 368 $ 1,286 $ 1,115 $ 2,183 $ 1,872
Net realized gain from security transactions
and foreign currency transactions 9,147 8,512 11,844 1,049 4,822 (155)
Net unrealized appreciation (depreciation) on
investments, forward foreign currency
contracts and translation of assets and
liabilites in foreign currencies 2,372 1,127 5,712 (2,683) 6,379 6,794
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets
resulting from operations 11,897 10,007 18,842 (519) 13,384 8,511
--------- --------- --------- --------- --------- ---------
DIVIDENDS DISTRIBUTED FROM:
Net investment income:
Prior Class (a) -- (35) -- -- -- --
Retail Class (b) -- (5) -- -- -- --
Institutional Class (b) -- (316) -- -- -- --
Class Y (c) (388) -- (2,440) (373) (2,108) (1,799)
Class A (c) (6) -- (38) (3) (69) (71)
Net realized gains:
Prior Class (a) -- (80) -- -- -- --
Retail Class (b) -- -- -- -- -- --
Institutional Class (b) -- -- -- -- -- --
Class Y (c) (8,564) -- (548) (7,009) (840) (171)
Class A (c) (113) -- (10) (129) (32) (8)
--------- --------- --------- --------- --------- ---------
Total dividends distributed (9,071) (436) (3,036) (7,514) (3,049) (2,049)
--------- --------- --------- --------- --------- ---------
CAPITAL TRANSACTIONS(3):
Prior Class (a):
Redesignated to Retail Class (b) -- (471) -- -- -- --
Redesignated to Institutional Class (b) -- (9,970) -- -- -- --
Proceeds from shares issued -- 652 -- -- -- --
Reinvestment of cash distributions -- 115 -- -- -- --
Cost of shares redeemed -- (81) -- -- -- --
--------- --------- --------- --------- --------- ---------
Decrease in net assets from Prior Class
transactions -- (9,755) -- -- -- --
--------- --------- --------- --------- --------- ---------
Retail Class (b):
Redesignated from Prior Class (a) -- 471 -- -- -- --
Exchanged for Class A Shares (984) -- -- -- -- --
Proceeds from shares issued 166 186 -- -- -- --
Reinvestment of cash distributions 115 5 -- -- -- --
Cost of shares redeemed (29) (57) -- -- -- --
--------- --------- --------- --------- --------- ---------
Increase (Decrease) in net assets from
Retail Class transactions (732) 605 -- -- -- --
--------- --------- --------- --------- --------- ---------
Institutional Class (b):
Redesignated from Prior Class (a) -- 9,970 -- -- -- --
Exchanged for Class Y Shares (58,929) -- -- -- -- --
Proceeds from shares issued 6,660 46,892 -- -- -- --
Reinvestment of cash distributions 8,821 316 -- -- -- --
Cost of shares redeemed (12,704) (9,538) -- -- -- --
--------- --------- --------- --------- --------- ---------
Increase (Decrease) in net assets from
Institutional Class transactions (56,152) 47,640 -- -- -- --
--------- --------- --------- --------- --------- ---------
Class Y (c):
Proceeds from shares issued in merger (d) 58,929 -- 16,130 -- 38,306 --
Proceeds from shares issued 2,827 -- 17,623 16,395 17,797 19,859
Reinvestment of cash distributions -- -- 2,732 6,850 2,494 1,818
Cost of shares redeemed (2,083) -- (23,593) (13,444) (27,174) (9,222)
--------- --------- --------- --------- --------- ---------
Increase in net assets from Class Y
transactions 59,673 -- 12,892 9,801 31,423 12,455
--------- --------- --------- --------- --------- ---------
Class A (c):
Proceeds from shares issued in merger (d) 984 -- 59 -- 95 --
Proceeds from shares issued 98 -- 421 440 678 216
Reinvestment of cash distributions -- -- 46 129 96 79
Cost of shares redeemed (3) -- (592) (486) (360) (427)
--------- --------- --------- --------- --------- ---------
Increase (Decrease) in net assets from
Class A transactions 1,079 -- (66) 83 509 (132)
--------- --------- --------- --------- --------- ---------
Increase in net assets derived from capital
share transactions 3,868 38,490 12,826 9,884 31,932 12,323
--------- --------- --------- --------- --------- ---------
Net increase in net assets 6,694 48,061 28,632 1,851 42,267 18,785
--------- --------- --------- --------- --------- ---------
NET ASSETS:
Beginning of period 58,130 10,069 112,781 110,930 63,436 44,651
--------- --------- --------- --------- --------- ---------
End of period $ 64,824 $ 58,130 $ 141,413 $ 112,781 $ 105,703 $ 63,436
========= ========= ========= ========= ========= =========
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) AMOUNTS REPRESENT CONESTOGA FUNDS ACTIVITY FROM NOVEMBER 1, 1995 THROUGH
APRIL 14, 1996 AND COREFUND ACTIVITY FROM APRIL 15, 1996 TO JUNE 30, 1996.
(2) AMOUNTS REPRESENT CONESTOGA FUNDS ACTIVITY FOR THE FISCAL YEAR ENDED OCTOBER 31, 1995.
(3) FOR CAPITAL SHARE TRANSACTIONS PLEASE SEE FOOTNOTE 8 IN THE NOTES TO THE
FINANCIAL STATEMENTS.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</FN>
</TABLE>
60 & 61
<PAGE>
FINANCIAL
HIGHLIGHTS
FOR THE PERIODS
ENDED
JUNE 30
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
NET
NET ASSET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS NET ASSETS RATIO
VALUE NET UNREALIZED FROM NET FROM ASSET VALUE END OF EXPENSES
BEGINNING INVESTMENT GAINS OR (LOSSES) INVESTMENT CAPITAL END TOTAL OF PERIOD TO AVERAGE
OF PERIOD INCOME ON SECURITIES INCOME GAINS OF PERIOD RETURN8 (000) NET ASSETS
--------- ---------- ----------------- ------------- ------------- ----------- ------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------
EQUITY INDEX FUND
- -----------------
CLASS Y**
1996 $23.79 $0.51 $ 5.47 $(0.51) $(0.79) $28.47 25.69% $166,350 0.35%
1995 20.54 0.52 4.24 (0.52) (0.99) 23.79 24.45 112,533 0.37
1994 20.97 0.55 (0.43) (0.55) -- 20.54 0.55 72,552 0.35
1993 19.22 0.52 1.84 (0.52) (0.09) 20.97 12.39 50,551 0.49
1992 18.46 0.52 1.80 (0.48) (1.08) 19.22 12.59 20,166 0.57
19911 19.48 0.03 (0.94) (0.02) (0.09) 18.46 (4.64)+ 12,117 0.97
- --------------
EQUITY FUND(9)
- --------------
CLASS Y*
1996 $17.07 $0.14 $ 1.49 $(0.14) $(1.30) $17.26 19.24% $414,824 0.97%
INSTITUTIONAL CLASS*
1995 15.00 0.19 2.87 (0.19) (0.80) 17.07 22.00 378,352 1.05
CLASS A*
1996 $17.08 $0.12 $ 1.49 $(0.11) $(1.30) $17.28 19.11% $ 11,178 1.22%
RETAIL CLASS*
1995 15.00 0.18 2.87 (0.17) (0.80) 17.08 21.94 6,591 1.34
PRIOR CLASS
1994 $15.39 $0.11 $ 0.22 $(0.11) $(0.61) $15.00 2.21% $ 50,128 1.49%
1993 13.93 0.14 1.89 (0.14) (0.43) 15.39 14.90 45,677 1.20
1992 13.08 0.19 1.02 (0.19) (0.17) 13.93 9.27 28,103 0.92
1991 8.95 0.26 4.13 (0.26) -- 13.08 49.37 12,830 0.54
19902 10.00 0.14 (1.05) (0.14) -- 8.95 (9.22) 5,982 0.65
- ------------------
GROWTH EQUITY FUND
- ------------------
CLASS Y**
1996 $11.18 $0.08 $ 3.36 $(0.08) $(0.35) $14.19 31.36% $120,073 0.89%
1995 9.11 0.08 2.07 (0.08) -- 11.18 23.71 91,345 0.76
1994 9.95 0.05 (0.84) (0.05) -- 9.11 (8.01) 64,877 0.69
1993 8.74 0.08 1.21 (0.08) -- 9.95 14.76 63,777 0.43
19923 10.00 0.05 (1.26) (0.05) -- 8.74 (12.05)+ 33,418 0.14
CLASS A**
1996 $11.17 $0.05 $ 3.35 $(0.05) $(0.35) $14.17 31.00% $ 3,162 1.14%
1995 9.10 0.06 2.07 (0.06) -- 11.17 23.44 2,043 1.01
1994 9.95 0.04 (0.85) (0.04) -- 9.10 (8.13) 1,730 0.94
19934 9.80 0.03 0.15 (0.03) -- 9.95 1.80+ 5,224 0.80
- ----------------------
SPECIAL EQUITY FUND(9)
- ----------------------
CLASS Y*
1996 $11.42 $0.07 $ 2.13 $(0.07) $(1.69) $11.86 22.27% $ 63,680 0.34%
INSTITUTIONAL CLASS*
1995 9.37 0.12 2.12 (0.12) (0.07) 11.42 24.44 57,396 0.32
CLASS A*
1996 $11.42 $0.08 $ 2.11 $(0.07) $(1.69) $11.85 22.14% $ 1,144 0.37%
RETAIL CLASS*
1995 9.37 0.12 2.12 (0.12) (0.07) 11.42 24.44 734 0.27
PRIOR CLASS
19945 $10.00 $0.06 $(0.63) $(0.06) -- $9.37 (5.72)% $ 10,069 0.15%
- -------------------------
INTERNATIONAL GROWTH FUND
- -------------------------
CLASS Y**
1996 $12.29 $0.16 $ 1.86 $(0.28) $(0.06) $13.97 16.72% $139,275 1.14%
1995 13.18 0.12 (0.17) (0.04) (0.80) 12.29 (0.21) 110,838 1.05
1994 11.71 0.12 1.78 (0.12) (0.31) 13.18 16.28 108,911 0.99
1993 10.52 0.10 1.16 (0.07) -- 11.71 12.06 61,655 0.99
1992 10.10 0.17 0.31 -- (0.06) 10.52 4.90 42,594 0.96
1991 10.75 0.19 (0.44) (0.27) (0.13) 10.10 (2.71) 20,582 0.99
19906 10.00 0.11 0.86 (0.09) (0.13) 10.75 9.74+ 13,513 1.22
CLASS A**
1996 $12.27 $0.11 $ 1.89 $(0.25) $(0.06) $13.96 16.54% $ 2,138 1.39%
1995 13.17 0.09 (0.17) (0.02) (0.80) 12.27 (0.48) 1,943 1.30
1994 11.71 0.06 1.82 (0.11) (0.31) 13.17 16.08 2,019 1.24
19934 10.07 0.05 1.59 -- -- 11.71 16.29+ 344 1.15
- -------------
BALANCED FUND
- -------------
CLASS Y**
1996 $11.06 $0.33 $1.68 $(0.33) $(0.15) $12.59 18.41% $102,515 0.81%
1995 9.88 0.35 1.21 (0.35) (0.03) 11.06 16.21 61,092 0.73
1994 10.39 0.35 (0.51) (0.35) -- 9.88 (1.62) 42,429 0.62
19934 10.00 0.16 0.39 (0.16) -- 10.39 5.52+ 29,434 0.45
CLASS A**
1996 $11.06 $0.30 $1.68 $(0.30) $(0.15) $12.59 18.13% $ 3,188 1.06%
1995 9.89 0.34 1.19 (0.33) (0.03) 11.06 15.84 2,344 0.98%
1994 10.38 0.31 (0.49) (0.31) -- 9.89 (1.86) 2,222 0.87
19937 10.00 0.16 0.38 (0.16) -- 10.38 2.50+ 701 0.55
</TABLE>
<TABLE>
<CAPTION>
RATIO RATIO OF NET
RATIO OF EXPENSES INCOME (LOSS)
OF NET TO AVERAGE TO AVERAGE
INCOME NET ASSETS NET ASSETS PORTFOLIO AVG.
TO AVERAGE (EXCLUDING (EXCLUDING TURNOVER COMM.
NET ASSETS WAIVERS) WAIVERS) RATE*** RATE10
---------- ----------- ------------- --------- ------
<S> <C> <C> <C> <C> <C>
- -----------------
EQUITY INDEX FUND
- -----------------
CLASS Y**
1996 1.94% 0.71% 1.59% 13% $0.0641
1995 2.48 0.76 2.09 27 --
1994 2.63 0.75 2.23 13 --
1993 2.82 0.88 2.43 4 --
1992 2.66 1.06 2.17 27 --
19911 1.79 1.20 1.56 -- --
- --------------
EQUITY FUND(9)
- --------------
CLASS Y*
1996 1.15% 1.01% 1.11% 114% $0.0636
INSTITUTIONAL CLASS*
1995 1.44 1.10 1.44 119 --
CLASS A*
1996 0.89% 1.26% 0.85% 114% $0.0636
RETAIL CLASS*
1995 1.23 1.53 1.04 119 --
PRIOR CLASS
1994 0.75% 1.51% 0.73% 35% --
1993 0.94 1.41 0.73 24 --
1992 1.47 1.23 1.17 39 --
1991 2.30 1.48 1.36 68 --
19902 2.29 1.59 1.35 43 --
- ------------------
GROWTH EQUITY FUND
- ------------------
CLASS Y**
1996 0.64% 1.05% 0.48% 81% $0.0601
1995 0.84 1.10 0.50 113 --
1994 0.48 1.11 0.06 127 --
1993 0.85 1.11 0.17 103 --
19923 1.38 1.12 0.40 66 --
CLASS A**
1996 0.40% 1.30% 0.23% 81% $0.0601
1995 0.59 1.35 0.25 113 --
1994 0.23 1.36 (0.19) 127 --
19934 0.39 1.48 (0.29) 103 --
- ----------------------
SPECIAL EQUITY FUND(9)
- ----------------------
CLASS Y*
1996 0.94% 1.79% (0.51)% 72% $0.0539
INSTITUTIONAL CLASS*
1995 1.14 1.97 (0.51) 129 --
CLASS A*
1996 0.91% 1.82% (0.55)% 72% $0.0539
RETAIL CLASS*
1995 1.29 2.24 (0.68) 129 --
PRIOR CLASS
19945 1.06% 2.10% (0.89)% 39% --
- -------------------------
INTERNATIONAL GROWTH FUND
- -------------------------
CLASS Y**
1996 1.05% 1.25% 0.94% 41% $0.0270
1995 0.98 1.19 0.84 59 --
1994 0.23 1.18 0.04 67 --
1993 1.22 1.28 0.93 59 --
1992 1.67 1.40 1.23 87 --
1991 1.80 1.56 1.23 49 --
19906 2.57 1.99 1.80 20 --
CLASS A**
1996 0.80% 1.50% 0.69% 41% $0.0270
1995 0.73 1.44 0.59 59 --
1994 0.05 1.43 (0.14) 67 --
19934 1.51 1.44 1.22 59 --
- -------------
BALANCED FUND
- -------------
CLASS Y**
1996 2.79% 1.03% 2.57% 74% $0.0621
1995 3.51 1.07 3.17 46 --
1994 3.46 1.08 3.00 56 --
19934 3.38 1.39 2.45 21 --
CLASS A**
1996 2.53% 1.27% 2.32% 74% $0.0621
1995 3.27 1.32 2.93 46 --
1994 3.21 1.33 2.75 56 --
19937 5.76 1.48 4.83 21 --
<FN>
* ON FEBRUARY 21, 1995 THE SHARES OF THE FUNDS WERE REDESIGNATED AS EITHER RETAIL OR INSTITUTIONAL SHARES. FOR THE YEAR
ENDED OCTOBER 31, 1995, THE FINANCIAL HIGHLIGHTS' RATIOS OF EXPENSES, NET INVESTMENT INCOME, TOTAL RETURN, AND THE PER
SHARE INVESTMENT ACTIVITIES AND DISTRIBUTIONS ARE PRESENTED ON A BASIS WHEREBY THE FUND'S NET INVESTMENT INCOME,
EXPENSES, AND DISTRIBUTIONS FOR THE PERIOD NOVEMBER 1, 1994 THROUGH FEBRUARY 20, 1995 WERE ALLOCATED TO EACH CLASS OF
SHARES BASED UPON THE RELATIVE NET ASSETS OF EACH CLASS OF SHARES AS OF FEBRUARY 21, 1995 AND THE RESULTS COMBINED
THEREWITH THE RESULTS OF OPERATIONS AND DISTRIBUTIONS FOR EACH APPLICABLE CLASS FOR THE PERIOD FEBRUARY 21, 1995
THROUGH OCTOBER 31, 1995. ADDITIONALLY, ON APRIL 15 & 22, 1996 THE CONESTOGA EQUITY AND SPECIAL EQUITY FUNDS WERE
ACQUIRED BY COREFUNDS, INC.; AT WHICH TIME THE INSTITUTIONAL CLASS OF SHARES OF THESE FUNDS WERE EXCHANGED FOR CLASS Y
SHARES AND THE RETAIL CLASS OF THESE FUNDS WERE EXCHANGED FOR CLASS A SHARES.
** ON APRIL 22, 1996 THE SERIES A SHARES OF EACH FUND WERE REDESIGNATED CLASS Y AND THE SERIES B SHARES OF EACH FUND WERE
REDESIGNATED CLASS A.
*** FOR 1996, TRANSACTIONS RELATING TO THE MERGER WERE EXCLUDED FROM THE CALCULATION OF THE PORTFOLIO TURNOVER RATE.
+ THIS FIGURE HAS NOT BEEN ANNUALIZED.
1 COMMENCED OPERATIONS JUNE 1, 1991. UNLESS OTHERWISE NOTED, ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
2 COMMENCED OPERATIONS FEBRUARY 28, 1990. UNLESS OTHERWISE NOTED, ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
3 COMMENCED OPERATIONS FEBRUARY 3, 1992. UNLESS OTHERWISE NOTED, ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
4 COMMENCED OPERATIONS JANUARY 4, 1993. UNLESS OTHERWISE NOTED, ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
5 COMMENCED OPERATIONS MARCH 15, 1994. UNLESS OTHERWISE NOTED, ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
6 COMMENCED OPERATIONS FEBRUARY 12, 1990. UNLESS OTHERWISE NOTED, ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
7 COMMENCED OPERATIONS MARCH 16, 1993. UNLESS OTHERWISE NOTED, ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
8 TOTAL RETURN DOES NOT REFLECT APPLICABLE SALES LOAD. ADDITIONALLY TOTAL RETURN FOR CLASS Y & CLASS A FOR THE EQUITY &
SPECIAL EQUITY FUNDS FOR 1996 ARE FOR AN EIGHT MONTH PERIOD ENDED JUNE 30, 1996.
9 THE PER SHARE AMOUNT FOR THESE FUNDS FOR 1996 REPRESENTS THE PERIOD FROM NOVEMBER 1, 1995 TO JUNE 30, 1996. ALL PRIOR
YEARS ARE FOR THE PERIODS NOVEMBER 1 TO OCTOBER 31.
10 AVERAGE COMMISSION RATE PAID PER SHARE FOR SECURITY PURCHASES AND SALES DURING THE PERIOD. PRESENTATION OF THE RATE IS
REQUIRED FOR FISCAL YEARS BEGINNING AFTER SEPTEMBER 1, 1995.
</FN>
</TABLE>
62
<PAGE>
STATEMENT
OF
NET ASSETS
[] COREFUND FIXED INCOME FUNDS
AS OF
JUNE 30, 1996
SHORT TERM INCOME FUND
[GRAPHIC OMITTED]
Pie Chart -- Shown is a pie chart depicting the industry classification for the
Short Term Income Fund. The following represent the plot points for the
chart:
Industry Classification % of Total Portfolio Investment
Cash Equivalents 6
Corporate Bonds 40
U.S. Treasury Obligations 54
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
U.S. TREASURY OBLIGATIONS--53.6%
U.S. Treasury Notes
7.875%, 07/31/96 $ 800 $ 802
6.500%, 09/30/96 555 557
7.500%, 12/31/96 1,030 1,040
6.500%, 05/15/97 500 503
5.875%, 07/31/97 1,000 1,000
5.625%, 08/31/97 1,000 997
7.375%, 11/15/97 4,000 4,072
6.000%, 12/31/97 5,075 5,078
8.250%, 07/15/98 2,000 2,080
-------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $16,174) 16,129
-------
CORPORATE BONDS--28.6%
American General Finance
7.000%, 10/01/97 985 993
AT&T Capital
5.970%, 02/27/98 1,000 994
First USA Bank
6.125%, 10/30/97 1,000 993
International Lease
7.830%, 11/14/96 1,000 1,007
Lehman Brothers Holdings
6.375%, 06/01/98 500 498
Salomon Brothers
9.000%, 07/23/96 500 501
Smith Barney
6.000%, 03/15/97 600 601
Tele-Communications
5.280%, 08/20/96 560 559
Time Warner
7.450%, 02/01/98 735 743
Transcont Gas
8.125%, 01/15/97 525 531
USX
6.650%, 10/09/97 1,200 1,203
-------
TOTAL CORPORATE BONDS
(Cost $8,634) 8,623
-------
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
ASSET-BACKED SECURITIES--11.3%
Banc One Credit Card Master Trust,
Series 94-A
7.150%, 12/15/98 $ 420 $ 423
Money Store Home Equity Loan
Trust, Series 93-B
5.400%, 08/15/05 517 500
Premier Auto Trust, Series 94-4 A4
6.450%, 05/02/98 600 602
Premier Auto Trust, Series 95-1 A4
7.850%, 09/04/98 1,000 1,015
Union Acceptance, Series 96-A
5.400%, 04/07/03 873 859
-------
TOTAL ASSET-BACKED SECURITIES
(Cost $3,421) 3,399
-------
REPURCHASE AGREEMENT--5.8%
Sanwa Bank
5.40%, dated 06/28/96, matures
07/01/96, repurchase price
$1,762,793 (collateralized by
U.S. Treasury Note, par value
$1,805,000, 5.375%, 11/30/97;
market value $1,798,039) 1,762 1,762
-------
TOTAL REPURCHASE AGREEMENT
(Cost $1,762) 1,762
-------
TOTAL INVESTMENTS -- 99.3%
(Cost $29,991) 29,913
-------
OTHER ASSETS AND LIABILITIES,
NET -- 0.7% 220
-------
NET ASSETS:
Portfolio Shares - Class Y ($0.001 par
value - 1 billion authorized) based on
3,032,169 outstanding shares 30,291
Portfolio Shares - Class A ($0.001 par
value -1 billion authorized) based on
60 outstanding shares 1
Accumulated Net Realized Loss on
Investments (81)
Net Unrealized Depreciation on
Investments (78)
-------
TOTAL NET ASSETS -- 100.0% $30,133
=======
NET ASSET VALUE & REDEMPTION PRICE
PER SHARE
CLASS Y $9.94
=======
CLASS A $9.93
=======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
63
<PAGE>
STATEMENT
OF
NET ASSETS
AS OF
JUNE 30, 1996
SHORT-INTERMEDIATE BOND FUND
[GRAPHIC OMITTED]
Pie Chart -- Shown is a pie chart depicting the industry classification for the
Short-Intermediate Bond Fund. The following represent the plot points for
the chart:
Industry Classification % of Total Portfolio Investment
US Agency Backed Bonds 6
Corporate Bonds 50
U.S. Treasury Obligations 44
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
U.S. TREASURY OBLIGATIONS--43.9%
U.S. Treasury Notes
6.000%, 08/31/97 $ 1,500 $ 1,501
7.375%, 11/15/97 4,000 4,073
6.000%, 12/31/97 1,310 1,311
5.125%, 02/28/98 1,500 1,479
9.250%, 08/15/98 10,500 11,135
8.875%, 11/15/98 275 291
8.875%, 02/15/99 6,120 6,501
7.125%, 09/30/99 12,165 12,432
6.000%, 10/15/99 2,200 2,178
7.750%, 12/31/99 2,500 2,606
7.750%, 01/31/00 8 8
7.125%, 02/29/00 2,660 2,721
6.375%, 03/31/01 9,645 9,601
7.500%, 11/15/01 320 334
7.250%, 05/15/04 8,000 8,289
7.500%, 02/15/05 6,740 7,088
---------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $71,692) 71,548
---------
U.S. AGENCY MORTGAGE-BACKED BONDS--6.5%
FHLMC
6.500%, 10/15/00 1,003 989
6.750%, 03/15/07 1,755 1,738
6.250%, 11/15/08 663 655
6.000%, 02/15/16 1,725 1,705
FNMA
6.500%, 07/01/10 1,660 1,606
6.500%, 10/01/10 1,271 1,230
6.750%, 06/25/20 2,800 2,708
--------
TOTAL U.S. AGENCY MORTGAGE-BACKED BONDS
(Cost $10,697) 10,631
--------
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
CORPORATE OBLIGATIONS--29.7%
Associates Corporation of
North America
6.375%, 08/15/98 $ 1,500 $ 1,498
AT&T Capital
5.970%, 02/27/98 2,255 2,241
Bear Stearns
6.875%, 10/01/05 1,840 1,773
BHP Financial Limited
5.625%, 11/01/00 1,730 1,650
Coastal
8.125%, 09/15/02 1,370 1,425
Colonial National Bank
7.000%, 08/01/03 1,595 1,565
Conseco
10.500%, 12/15/04 1,085 1,199
CSR America
6.875%, 07/21/05 1,670 1,620
Dean Witter Discover
6.000%, 03/01/98 1,250 1,242
Fleet Financial Group
7.180%, 07/09/97 160 162
Fletcher Challenge
7.750%, 06/20/06 1,700 1,721
Ford Motor Credit
6.800%, 08/15/97 1,000 1,008
Great Lakes Power
8.900%, 12/01/99 990 1,042
H.F. Ahmanson
6.000%, 03/27/97 1,500 1,501
ITT
6.750%, 11/15/05 1,530 1,457
John Deere Capital
4.625%, 09/02/96 1,500 1,497
Lehman Brothers Holdings
8.750%, 03/15/05 2,000 2,140
MBNA America Bank
7.250%, 09/15/02 1,080 1,084
Merrill Lynch
6.000%, 01/15/01 2,000 1,925
Morgan Stanley Group
5.625%, 03/01/99 1,000 975
Nabisco
6.850%, 06/15/05 1,425 1,357
Noranda
8.125%, 06/15/04 1,350 1,401
Norwest Financial
6.250%, 02/15/97 1,500 1,504
Paine Webber Group
6.630%, 09/17/97 160 161
9.250%, 12/15/01 2,205 2,379
Penn Power and Light
7.750%, 05/01/02 1,280 1,317
Santander Financial Issuances
7.875%, 04/15/05 1,625 1,668
Security Pacific
11.500%, 11/15/00 1,955 2,285
System Energy Resources
10.500%, 09/01/96 725 730
Time Warner
7.750%, 06/15/05 1,645 1,608
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
64
<PAGE>
[] COREFUND FIXED INCOME FUNDS
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
Transcont Gas
8.125%, 01/15/97 $ 1,055 $ 1,067
United Air Lines
6.750%, 12/01/97 2,435 2,432
USX
9.625%, 08/15/03 1,490 1,663
---------
TOTAL CORPORATE OBLIGATIONS
(Cost $48,648) 48,297
---------
ASSET-BACKED SECURITIES--19.6%
Aames Mortgage Trust,
Ser 96-B A1B
7.275%, 05/15/20 2,100 2,114
American Express Master
Trust, Ser 94-1A
7.150%, 08/15/99 1,000 1,014
Banc One Credit Card Master
Trust, Ser 94-A
7.150%, 12/15/98 1,675 1,686
Case Equipment Loan Trust,
Ser 95-B A2
5.950%, 09/15/00 760 760
Contimortgage Home Equity
Loan Trust, Ser 96-1 A2
5.580%, 01/15/11 1,999 1,956
Contimortgage Home Equity
Loan Trust, Ser 95-4 A7
6.950%, 01/15/14 1,350 1,271
Delta Funding Home Equity Loan
Trust, Ser 96-1 A4
7.230%, 06/25/11 1,520 1,528
Equicredit Home Equity Loan
Trust, Ser 96-1 A3
6.190%, 12/15/10 1,450 1,372
Equivantage Home Loan Trust,
Ser 96-1 A1
6.550%, 04/01/27 1,247 1,215
Money Store Home Equity Trust,
Ser 93-B
5.400%, 08/15/05 2,796 2,701
Money Store Home Equity Trust,
Ser 96-A A7
7.360%, 03/15/24 1,365 1,359
Money Store Home Equity Trust,
Ser 96-B A7
7.550%, 06/15/20 3,000 3,026
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
Premier Auto Trust, Ser 94-4
6.450%, 05/02/98 $ 1,625 $ 1,631
Premier Auto Trust, Ser 95-1 A4
7.850%, 02/04/98 2,870 2,912
Sears Credit Account Master
Trust, Ser 95-3 A
7.000%, 10/15/04 3,000 3,039
Standard Credit Card Master
Trust, Ser 95-6 A
6.750%, 06/07/00 2,000 2,014
Union Acceptance, Ser 96-A
5.400%, 04/07/03 2,356 2,321
---------
TOTAL ASSET-BACKED SECURITIES
(Cost $32,053) 31,919
---------
TOTAL INVESTMENTS -- 99.7%
(Cost $163,091) $162,395
---------
OTHER ASSETS AND LIABILITIES,
NET -- 0.3% 508
---------
NET ASSETS:
Portfolio Shares - Class Y ($0.001 par
value - 100 million authorized) based on
16,370,741 outstanding shares 162,813
Portfolio Shares - Class A ($0.001 par
value - 100 million authorized) based on
313,718 outstanding shares 3,711
Accumulated Net Realized Loss on
Investments (2,925)
Net Unrealized Depreciation on
Investments (696)
--------
TOTAL NET ASSETS -- 100.0% $162,903
========
NET ASSET VALUE & REDEMPTION PRICE
PER SHARE
CLASS Y $9.76
========
CLASS A $9.76
========
CMO -- COLLATERALIZED MORTGAGE OBLIGATION
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
65
<PAGE>
STATEMENT
OF
NET ASSETS
AS OF
JUNE 30, 1996
GOVERNMENT INCOME FUND
[GRAPHIC OMITTED]
Pie Chart -- Shown is a pie chart depicting the industry classification for the
Government Income Fund. The following represent the plot points for the
chart:
Industry Classification % of Total Portfolio Investment
US Agency Backed Bonds 8
US Government Backed Bonds 76
U.S. Treasury Obligations 16
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
U.S. GOVERNMENT MORTGAGE-BACKED
BONDS -- 74.3%
GNMA
8.000%, 09/15/09 $ 730 $ 748
8.000%, 02/15/22 377 381
8.000%, 09/15/22 60 60
8.000%, 10/15/22 276 279
8.000%, 11/15/22 474 479
7.000%, 04/15/23 382 367
7.500%, 08/15/23 1,340 1,325
6.500%, 11/15/23 478 446
6.500%, 12/15/23 1,923 1,791
7.000%, 01/15/24 931 893
8.000%, 05/15/25 846 854
6.500%, 12/15/25 1,004 935
7.500%, 02/15/26 493 487
7.000%, 03/15/26 598 574
8.000%, 05/15/26 989 998
8.000%, 06/15/26 700 706
-------
TOTAL U.S. GOVERNMENT
MORTGAGE-BACKED BONDS
(Cost $11,556) 11,323
-------
U.S. AGENCY MORTGAGE-BACKED BONDS -- 7.4%
FHLMC
6.000%, 05/01/08 374 354
FNMA
7.000%, 10/01/22 795 766
-------
TOTAL U.S. AGENCY MORTGAGE-BACKED BONDS
(Cost $1,176) 1,120
-------
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 15.1%
U.S. Treasury Bond
6.875%, 08/15/25 $ 750 $ 742
U.S. Treasury Notes
5.875%, 04/30/98 1,000 996
5.625%, 02/28/01 250 242
6.500%, 05/31/01 320 320
-------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $2,395) 2,300
-------
TOTAL INVESTMENTS -- 96.8%
(Cost $15,127) 14,743
-------
OTHER ASSETS AND LIABILITIES,
NET -- 3.2% 487
-------
NET ASSETS:
Portfolio Shares - Class Y ($0.001 par
value - 100 million authorized) based
on 1,449,067 outstanding shares 14,474
Portfolio Shares - Class A ($0.001 par
value - 100 million authorized) based
on 133,706 outstanding shares 1,369
Accumulated Net Realized Loss on
Investments (229)
Net Unrealized Depreciation on Investments (384)
-------
TOTAL NET ASSETS -- 100.0% $15,230
=======
NET ASSET VALUE & REDEMPTION PRICE
PER SHARE
CLASS Y $9.62
=======
CLASS A $9.62
=======
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL
MORTGAGE CORPORATION
GNMA -- GOVERNMENT NATIONAL MORTGAGE CORPORATION
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
66
<PAGE>
[] COREFUND FIXED INCOME FUNDS
BOND FUND
[GRAPHIC OMITTED]
Pie Chart -- Shown is a pie chart depicting the industry classification for the
Bond Fund. The following represent the plot points for the chart:
Industry Classification % of Total Portfolio Investment
US Agency Backed Bonds 21
US Government Backed Bonds 4
U.S. Treasury Obligations 34
Cash Equivalents 4
Corporate Bonds 37
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
U.S. TREASURY OBLIGATIONS--33.2%
U.S. Treasury Bonds
8.750%, 05/15/17 $ 1,850 $ 2,194
8.000%, 11/15/21 2,090 2,324
7.625%, 02/15/25 2,775 2,993
6.875%, 08/15/25 150 148
U.S. Treasury Notes
6.000%, 12/31/97 2,650 2,651
6.000%, 05/31/98 1,940 1,936
9.250%, 08/15/98 4,800 5,090
8.875%, 11/15/98 4,015 4,247
8.875%, 02/15/99 11,255 11,955
7.125%, 09/30/99 3,475 3,551
7.750%, 11/30/99 3,150 3,280
7.750%, 01/31/00 503 524
7.125%, 02/29/00 8,680 8,879
6.375%, 03/31/01 4,075 4,056
7.500%, 11/15/01 6,975 7,282
7.500%, 02/15/05 4,985 5,243
---------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $66,790) 66,353
---------
U.S. GOVERNMENT MORTGAGE-BACKED BONDS--24.5%
FHLMC
6.750%, 03/15/07 1,925 1,907
7.500%, 01/01/08 3,473 3,490
6.250%, 11/15/08 1,725 1,705
6.000%, 02/15/16 2,705 2,673
FNMA
6.500%, 07/01/10 3,406 3,294
6.500%, 09/01/10 3,881 3,753
7.500%, 06/01/11 2,699 2,712
7.500%, 06/01/11 1,759 1,767
6.750%, 01/25/16 1,740 1,730
6.500%, 03/25/19 1,660 1,617
8.500%, 01/25/20 1,836 1,909
6.750%, 06/25/20 3,180 3,076
7.000%, 05/01/23 3,710 3,569
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
7.500%, 08/01/25 $ 3,215 $ 3,174
7.500%, 09/01/25 4,757 4,695
GNMA
7.500%, 12/15/25 7,995 7,881
---------
TOTAL U.S. GOVERNMENT
MORTGAGE-BACKED BONDS
(Cost $49,251) 48,952
---------
ASSET-BACKED SECURITIES--8.4%
Aames Mortgage Trust,
Series 96-B A1B
7.275%, 05/15/20 2,374 2,390
Advanta Mortgage Loan Trust,
Series 96-2 A5
8.080%, 06/25/27 2,240 2,240
Contimortgage Home Equity
Loan Trust, Series 95-4 A7
6.950%, 01/15/14 1,900 1,788
Delta Funding Home Equity
Loan Trust, Series 96-1 A4
7.230%, 06/25/11 2,020 2,030
Equicredit Home Equity Loan
Trust, Series 96-1 A3
6.190%, 12/15/10 2,025 1,916
Equivantage Home Equity Loan
Trust, Series 96-1 A1
6.550%, 04/01/27 1,801 1,755
Money Store Home Equity
Trust, Series 96-A A7
7.360%, 03/15/24 1,575 1,568
Money Store Home Equity
Trust, Series 96-B A7
7.550%, 06/15/20 3,000 3,026
---------
TOTAL ASSET-BACKED SECURITIES
(Cost $16,888) 16,713
---------
NON-AGENCY MORTGAGE-BACKED BONDS--2.5%
GE Capital Mortgage Services,
Series 94-2 A4 (CMO)
6.000%, 01/25/09 2,680 2,606
Prudential Home Mortgage
Securities, Series 94-29
A5 (CMO)
7.000%, 10/25/24 2,595 2,467
---------
TOTAL NON-AGENCY MORTGAGE-BACKED BONDS
(Cost $5,094) 5,073
---------
CORPORATE BONDS--26.2%
Advanta
7.000%, 05/01/01 1,940 1,918
American Stores
8.000%, 06/01/26 2,110 2,115
Arco Chemical
10.250%, 11/01/10 1,990 2,497
AT&T Capital
5.970%, 02/27/98 2,210 2,196
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
67
<PAGE>
STATEMENT
OF
NET ASSETS
AS OF
JUNE 30, 1996
BOND FUND (CONCLUDED)
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
Boise Cascade
7.350%, 02/01/16 $ 1,175 $ 1,081
Coastal
10.250%, 10/15/04 1,940 2,267
Conseco
10.500%, 12/15/04 2,055 2,271
CSR Finance
7.700%, 07/21/25 1,815 1,786
Donaldson Lufkin & Jenrette
6.875%, 11/01/05 1,725 1,647
Fletcher Challenge Capital
8.250%, 06/20/16 2,000 2,027
Great Lakes Power
8.900%, 12/01/99 750 789
H.F. Ahmanson
6.000%, 03/27/97 1,900 1,901
ITT
7.375%, 11/15/15 3,570 3,365
Lehman Brothers Holdings
8.750%, 03/15/05 1,650 1,766
MBNA
7.250%, 09/15/02 1,745 1,752
Midland Bank
6.950%, 03/15/11 2,045 1,925
Nabisco
7.550%, 06/15/15 1,845 1,771
NationsBank
9.375%, 09/15/09 1,090 1,255
Noranda
8.125%, 06/15/04 1,940 2,013
Paine Webber Group
9.250%, 12/15/01 2,635 2,843
Quebec Province
7.500%, 07/15/23 2,085 1,989
Royal Bank of Scotland
6.375%, 02/01/11 1,870 1,674
Santander Fin Issuances
6.375%, 02/15/11 1,955 1,740
Smurfit Capital Funding
7.500%, 11/20/25 1,975 1,834
System Energy Resources
10.500%, 09/01/96 1,020 1,026
Time Warner
9.125%, 01/15/13 1,550 1,628
Tosco
7.625%, 05/15/06 1,410 1,399
USX
9.375%, 05/15/22 1,800 1,978
---------
TOTAL CORPORATE BONDS
(Cost $53,633) 52,453
---------
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
REPURCHASE AGREEMENT -- 4.1%
Sanwa Bank
5.40%, dated 06/28/96, matures
07/01/96, repurchase price
$8,183,681 (collateralized by
various U.S. Treasury Notes,
ranging in par value $1,865,000-
$6,455,000, 5.375%-5.875%,
07/31/97-11/30/97; total market
value $8,340,539) $8,180 $ 8,180
---------
TOTAL REPURCHASE AGREEMENT
(Cost $8,180) 8,180
---------
TOTAL INVESTMENTS -- 98.9%
(Cost $199,838) 197,724
---------
OTHER ASSETS AND LIABILITIES,
NET -- 1.1% 2,154
---------
NET ASSETS:
Portfolio Shares - Class Y ($0.001 par
value - 1 billion authorized) based
on 19,575,777 outstanding shares 201,684
Portfolio Shares - Class A ($0.001 par
value - 1 billion authorized) based
on 125,414 outstanding shares 1,330
Accumulated Net Realized Loss on
Investments (1,022)
Net Unrealized Depreciation on
Investments (2,114)
---------
TOTAL NET ASSETS -- 100.0% $199,878
=========
NET ASSET VALUE & REDEMPTION PRICE
PER SHARE
CLASS Y $10.15
=========
CLASS A $10.15
=========
(CMO) -- COLLATERALIZED MORTGAGE OBLIGATION
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
GNMA -- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
68
<PAGE>
SCHEDULE
OF
INVESTMENTS
[] COREFUND FIXED INCOME FUNDS
AS OF
JUNE 30, 1996
GLOBAL BOND FUND
[GRAPHIC OMITTED]
Pie Chart -- Shown is a pie chart depicting the security classification for the
Global Bond Fund. The following represent the plot points for the chart:
Industry Classification % of Total Portfolio Investment
United States 30
Portugal 5
New Zealand 5
Netherlands 9
Austraila 10
Denmark 12
France 8
Germany 19
Ireland 2
- -------------------------------------------------------
DESCRIPTION PAR (000)(1) VALUE (000)
- -------------------------------------------------------
FOREIGN BONDS -- 65.5%
AUSTRALIA -- 9.7%
Australian Government
8.750%, 01/15/01 $2,245 $ 1,777
New South Wales Treasury
12.000%, 12/01/01 1,600 1,428
-------
3,205
-------
DENMARK -- 11.4%
Kingdom of Denmark
8.000%, 03/15/06 10,030 1,780
8.000%, 05/15/03 10,958 1,986
-------
3,766
-------
FRANCE -- 7.9%
Electric de France
7.500%, 05/11/12 3,950 812
Government of France OAT
7.500%, 04/25/05 6,028 1,257
Kansai Electric Power
7.000%, 08/04/03 2,700 546
-------
2,615
-------
GERMANY -- 17.0%
Bundesrepublic
7.375%, 01/03/05 5,765 4,006
6.250%, 01/04/24 450 262
World Bank
7.125%, 04/12/05 1,980 1,355
-------
5,623
-------
IRELAND -- 1.9%
Government of Ireland
9.250%, 07/11/03 356 634
-------
- -------------------------------------------------------
DESCRIPTION PAR (000)(1) VALUE (000)
- -------------------------------------------------------
NETHERLANDS -- 8.7%
LKB Baden-Wuerttemburg
5.750%, 02/10/04 $2,420 $ 1,369
Kingdom of Netherlands
8.250%, 09/15/07 2,096 1,387
7.500%, 01/15/23 215 133
-------
2,889
-------
NEW ZEALAND -- 4.6%
Government of New Zealand
8.000%, 02/15/01 2,336 1,541
-------
PORTUGAL -- 4.3%
Republic of Portugal
7.700%, 06/07/05 FRF 6,910 1,439
-------
TOTAL FOREIGN BONDS
(Cost $21,506) 21,712
-------
U.S. TREASURY OBLIGATIONS -- 28.3%
U.S. Treasury Notes
7.750%, 11/30/99 $ 1,510 1,573
4.750%, 09/30/98 6,800 6,602
6.875%, 07/31/99 1,180 1,198
-------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $9,453) 9,373
-------
DEBT OPTIONS -- 0.3%
Bundrepublic 7.375% Put,
strike 105.39* 7,300 46
Government of France OAT
7.5% Put, strike 106.7* 23,000 56
-------
TOTAL DEBT OPTIONS
(Cost $147) 102
-------
CURRENCY OPTIONS -- 0.7%
Deutsche Mark Call, strike 1.525 6,700 122
Deutsche Mark Call, strike 1.5141 8,500 125
-------
TOTAL CURRENCY OPTIONS
(Cost $278) 247
-------
TOTAL INVESTMENTS -- 94.8%
(Cost $31,384) $31,434
=======
* NON-INCOME PRODUCING SECURITY
FRF -- FRENCH FRANCS
(1) IN LOCAL CURRENCY UNLESS OTHERWISE INDICATED
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
69
<PAGE>
STATEMENT
OF
NET ASSETS
AS OF
JUNE 30, 1996
INTERMEDIATE MUNICIPAL BOND FUND
[GRAPHIC OMITTED]
Pie Chart -- Shown is a pie chart depicting the industry classification for the
Intermediate Municipal Fund. The following represent the plot points for the
chart:
Industry Classification % of Total Portfolio Investment
Cash Equivalents 5
Pre-Refunded Securities 15
General Obligations 35
Revenue Bonds 45
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
MUNICIPAL BONDS--92.3%
FLORIDA -- 3.6%
Jacksonville, Florida Electric
Authority Revenue Bond,
Series 3-A
5.200%, 10/01/02 $ 50 $ 51
-------
GEORGIA -- 3.6%
De Kalb County, Georgia Health
Facilities GO
5.300%, 01/01/03 50 51
-------
HAWAII -- 3.5%
Hawaii State GO
5.200%, 06/01/04 50 50
-------
MARYLAND -- 3.6%
Maryland State Health & Higher
Education Facilities Authority
Revenue Bond for Johns
Hopkins Project
5.125%, 07/01/03 50 51
-------
MASSACHUSETTS -- 3.6%
Massachusetts Bay Transportation
Authority Revenue Bond, Series A
5.300%, 03/01/05 50 51
-------
MICHIGAN -- 7.1%
Grand Haven, Michigan Electric
Revenue Bond (MBIA)
5.000%, 07/01/04 100 100
-------
NEW JERSEY -- 3.6%
Burlington County, New Jersey
Community Bridge Systems
Revenue Bond, Callable
10/01/03 at 101 (CG)
5.050%, 10/01/04 50 51
-------
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
OREGON -- 3.5%
Umatilla County, Oregon Franciscan
Health Systems Revenue
Bond (A) (SG)
3.650%, 12/01/24 $ 50 $ 50
-------
PENNSYLVANIA -- 58.4%
Allegheny County Revenue Bond
for Pennsylvania Community
College Project, Series A (CG)
4.375%, 07/15/02 100 95
Allegheny County, Pennsylvania,
Series C-33, GO
7.450%, 02/15/98 50 52
Bethlehem, Pennsylvania School
District GO (FGIC)
4.800%, 09/01/01 50 50
Governor Mifflin, Pennsylvania
School District GO (AMBAC)
4.850%, 11/15/01 50 50
Luzerne County, Pennsylvania,
Series A, GO, Callable 09/15/00
at 100 (FGIC)
5.850%, 09/15/02 50 52
Pennsylvania State Higher Education
Facilities Authority Hospital
Revenue Bond for Thomas
Jefferson University Project,
Pre-refunded 01/01/98 at 102
8.000%, 01/01/18 85 91
Pennsylvania State Infrastructure
Authority Revenue Bond for
Pennvest Loan Pool Project
(MBIA)
6.000%, 09/01/03 65 69
Pennsylvania State Turnpike
Commission Revenue Bond,
Series F, Pre-Refunded 12/01/99
at 102 (AMBAC)
7.250%, 12/01/17 50 55
Pennsylvania State Turnpike
Commission Revenue Bond,
Series 1, Pre-Refunded 12/01/01
at 102 (FGIC)
7.150%, 12/01/11 50 56
Pittsburgh, Pennsylvania School
District, Series A, GO (FGIC)
4.850%, 09/01/03 100 99
Reading, Pennsylvania Parking
Authority Revenue Bond (MBIA)
4.950%, 11/15/02 50 50
Wallenpaupack, Pennsylvania Area
School District, Series C, GO,
Callable 09/01/00 at 100 (FGIC)
6.000%, 09/01/03 50 52
West View, Pennsylvania Municipal
Water Authority Revenue Bond
(FGIC)
4.800%, 11/15/06 60 57
-------
828
-------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
70
<PAGE>
[] COREFUND FIXED INCOME FUNDS
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
TENNESSEE -- 1.8%
Tennessee State, Series B, GO
5.900%, 06/01/98 $ 25 $ 26
-------
TOTAL MUNICIPAL BONDS
(Cost $1,313) 1,309
-------
CASH EQUIVALENT--4.9%
SEI Institutional Tax Free Portfolio 70 70
-------
TOTAL CASH EQUIVALENT
(Cost $70) 70
-------
TOTAL INVESTMENTS -- 97.2%
(Cost $1,383) 1,379
-------
OTHER ASSETS AND LIABILITIES,
NET -- 2.8% 39
-------
NET ASSETS:
Portfolio Shares - Class Y ($0.001 par
value - 100 million authorized) based on
40,637 outstanding shares 441
Portfolio Shares - Class A ($0.001 par
value - 100 million authorized) based on
102,290 outstanding shares 1,058
- -------------------------------------------------------
DESCRIPTION VALUE (000)
- -------------------------------------------------------
Accumulated Net Realized Loss on
Investments $ (77)
Net Unrealized Depreciation on
Investments (4)
-------
TOTAL NET ASSETS -- 100.0% $1,418
=======
NET ASSET VALUE & REDEMPTION PRICE
PER SHARE
CLASS Y $9.92
=======
CLASS A $9.92
=======
GO -- GENERAL OBLIGATION
(A) VARIABLE RATE SECURITY -- THE RATE SHOWN ON THE STATEMENT OF NET ASSETS IS
THE RATE IN EFFECT ON JUNE 30, 1996
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
CG -- COUNTY GUARANTY
FGIC -- FINANCIAL GUARANTY INSURANCE COMPANY
MBIA -- MUNICIPAL BOND INVESTORS ASSURANCE
SG -- SOCIETE GENERALE
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
71
<PAGE>
STATEMENT
OF
NET ASSETS
AS OF
JUNE 30, 1996
PENNSYLVANIA MUNICIPAL BOND FUND
[GRAPHIC OMITTED]
Pie Chart -- Shown is a pie chart depicting the industry classification for the
Pennsylvania Municipal Bond Fund. The following represent the plot points
for the chart:
Industry Classification % of Total Portfolio Investment
Cash Equivalents 1
Pre-Refunded Securities 1
General Obligations 33
Revenue Bonds 65
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
MUNICIPAL BONDS -- 97.9%
PENNSYLVANIA -- 97.9%
Allegheny County, Pennsylvania
GO, Series C-43, Callable
09/15/04 at 100 (MBIA)
5.875%, 09/15/10 $ 60 $ 61
5.875%, 09/15/13 100 101
Allegheny County, Pennsylvania
Hospital Development Authority
Revenue Bond for Mercy Hospital
of Pittsburgh (AMBAC)
6.450%, 04/01/01 200 213
Allegheny County, Pennsylvania
Hospital Development Authority
Revenue Bond for Montefiore
Hospital Association
5.800%, 10/01/03 140 143
Allegheny County, Pennsylvania
Hospital Development Authority
Revenue Bond for Presbyterian
Health Center, Series B, Callable
11/01/02 at 102 (MBIA)
6.000%, 11/01/12 25 25
Allegheny County, Pennsylvania
Redevelopment Authority
Revenue Bond for Home
Improvement Loan Project,
Series A, Callable 02/01/04
at 102 (FHA)
5.700%, 02/01/07 15 15
Allegheny County, Pennsylvania
Sanitation Authority Sewer
Revenue Bond, Series B,
Callable 06/01/99 at 100 (FGIC)
7.450%, 12/01/09 130 141
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
Berks County, Pennsylvania
Revenue Bond for Reading
Hospital & Medical Center,
Series B, Callable 10/01/04
at 102 (MBIA)
5.600%, 10/01/06 $ 65 $ 66
Burrell, Pennsylvania School
District GO (FGIC)
5.250%, 11/15/10 215 207
Center City District, Pennsylvania
Business Improvement
Assessment Bond, Callable
12/01/07 at 100 (AMBAC)
5.600%, 12/01/08 60 60
Central Bucks, Pennsylvania
School District GO, Callable
02/01/01 at 100
6.600%, 06/01/03 175 187
Chester County, Pennsylvania
GO, Series B
5.625%, 11/15/16 100 97
Crawford, Pennsylvania Central
School District GO (FGIC)
7.000%, 02/15/05 100 113
Dauphin County, Pennsylvania
GO (MBIA)
5.450%, 08/01/07 200 201
Delaware County, Pennsylvania GO
7.100%, 12/01/98 170 172
5.500%, 10/01/15 75 73
Delaware County, Pennsylvania
Revenue Bond for Villanova
University (AMBAC)
5.400%, 08/01/08 200 198
Dover Township, Pennsylvania
Sewer Authority Revenue Bond
6.250%, 05/01/12 20 21
Elizabethtown, Pennsylvania Area
School District GO (MBIA)
5.125%, 09/01/09 265 257
Erie County, Pennsylvania Prison
Authority Revenue Bond (MBIA)
5.850%, 11/01/96 100 101
Hampden Township, Pennsylvania
Sewer Authority Special
Obligation Bond, Callable
10/01/96 at 100
5.350%, 04/01/03 130 132
Hempfield, Pennsylvania School
District GO
5.300%, 10/15/14 250 234
Lower Burrell, Pennsylvania City
Municipal Sewer Authority
Revenue Bond (AMBAC)
5.125%, 02/01/16 250 230
Lower Merion Township,
Pennsylvania GO, Callable
08/01/02 at 100
5.625%, 08/01/05 100 103
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
72
<PAGE>
[] COREFUND FIXED INCOME FUNDS
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
Manheim, Pennsylvania Central
School District GO, Callable
05/15/04 at 100 (FGIC)
6.100%, 05/15/14 $100 $ 101
Millcreek Township, Pennsylvania
Sewer Authority Revenue Bond,
Callable 11/01/99 at 100 (MBIA)
6.000%, 11/01/06 150 157
Montgomery County,
Pennsylvania GO,
Callable 10/15/03 at 100
5.750%, 10/15/11 175 176
Montgomery County, Pennsylvania
Higher Education and Health
Authority Revenue Bond for
Abington Memorial Hospital,
Series A (AMBAC)
5.125%, 06/01/14 250 228
Nazareth, Pennsylvania Area School
District GO, Callable 05/15/02
at 100 (AMBAC)
5.500%, 11/15/12 200 195
North Wales, Pennsylvania Water
Authority Revenue Bond
6.750%, 11/01/10 100 112
Northampton County, Pennsylvania
Higher Education Authority
Revenue Bond for Lehigh
University, Series A (MBIA)
5.750%, 11/15/18 150 149
Pennsylvania State Convention
Center Authority Revenue Bond,
Series A (FGIC)
6.700%, 09/01/16 75 83
Pennsylvania State GO,
Callable 09/01/99 at 100
6.250%, 09/01/00 150 153
Pennsylvania State GO, Second Series
6.000%, 07/01/05 25 26
Pennsylvania State GO, Series 2
6.250%, 07/01/11 60 64
Pennsylvania State Higher Education
Facilities Authority Health Services
Revenue Bond for Allegheny/
Delaware Valley, Series A (MBIA)
5.500%, 11/15/08 400 398
Pennsylvania State Higher Education
Facilities Authority Revenue Bond
Callable 12/15/02 at 100 (AMBAC)
6.000%, 12/15/09 225 231
Pennsylvania State Higher Education
Facilities Authority Revenue Bond
for Allegheny General Hospital,
Series A
6.300%, 09/01/97 200 204
Pennsylvania State Higher Education
Facilities Authority Revenue Bond
for Health Services, Series A,
Callable 01/01/04 at 102
6.000%, 01/01/10 100 103
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
Pennsylvania State Higher Education
Facilities Authority Revenue Bond
for Thomas Jefferson University,
Series A, Callable 07/01/99 at 102
6.000%, 07/01/19 $150 $ 151
Pennsylvania State Higher Education
Facilities Authority Revenue Bond
for University of Pennsylvania,
Series B
5.700%, 01/01/11 150 149
5.850%, 09/01/13 100 100
Pennsylvania State Housing Finance
Agency Revenue Bond, Series C
6.400%, 07/01/12 300 303
Pennsylvania State Industrial
Development Authority Revenue
Bond (AMBAC)
6.000%, 01/01/05 25 26
5.800%, 07/01/09 250 255
6.000%, 01/01/12 100 102
Pennsylvania State Infrastructure
Investment Authority Revenue
Bond for Pennvest Loan
Pool (MBIA)
6.000%, 09/01/04 400 424
Pennsylvania State Turnpike
Commission Revenue Bond,
Series O, Callable 12/01/02
at 102 (FGIC)
5.900%, 12/01/08 125 127
Pennsylvania State Turnpike
Commission Revenue Bond,
Series P
5.100%, 12/01/99 250 254
5.350%, 12/01/01 250 256
5.800%, 12/01/06 75 78
Pennsylvania State University
Revenue Bond
5.200%, 03/01/98 250 253
Pennsylvania State University
Revenue Bond, Callable
03/01/04 at 100
6.150%, 03/01/05 185 196
Philadelphia, Pennsylvania Gas
Works Revenue Bond,
Series 15 (MBIA)
4.600%, 08/01/03 250 241
Philadelphia, Pennsylvania
Hospitals and Higher Education
Facilities Authority Revenue
Bond for Pennsylvania Hospital,
Series A (FGIC)
5.250%, 02/15/14 250 232
Pittsburgh, Pennsylvania GO,
Series D, Callable 09/01/02
at 102 (AMBAC)
6.125%, 09/01/17 25 26
73
<PAGE>
STATEMENT
OF
NET ASSETS
AS OF
JUNE 30, 1996
PENNSYLVANIA MUNICIPAL BOND FUND (CONCLUDED)
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
Pittsburgh, Pennsylvania Higher
Education Authority Revenue
Bond for University Capital
Project, Series A, Callable
06/01/02 at 102 (MBIA)
6.125%, 06/01/21 $115 $ 118
Radnor Township, Pennsylvania GO,
Callable 05/01/06 at 100
5.250%, 11/01/16 200 186
Rose Tree/Media, Pennsylvania
School District GO (FGIC)
5.350%, 02/15/10 150 147
Scranton-Lackawanna, Pennsylvania
Health and Welfare Authority
Revenue Bond for University
of Scranton, Series A
6.150%, 03/01/03 150 156
Seneca Valley, Pennsylvania GO
5.850%, 02/15/15 105 104
Wayne County, Pennsylvania
Housing Authority Revenue
Bond for Section 8 Assisted
Project (MBIA)
5.350%, 10/01/07 190 185
York, Pennsylvania City School
District GO, Callable 03/01/03
at 100 (FGIC)
5.600%, 03/01/07 75 76
-------
TOTAL MUNICIPAL BONDS
(Cost $9,658) 9,676
-------
CASH EQUIVALENT -- 0.9%
SEI Institutional
Tax Free Portfolio 85 85
-------
TOTAL CASH EQUIVALENT
(Cost $85) 85
-------
TOTAL INVESTMENTS -- 98.8%
(Cost $9,743) 9,761
-------
OTHER ASSETS AND LIABILITIES,
NET -- 1.2% 122
-------
- -------------------------------------------------------
DESCRIPTION VALUE (000)
- -------------------------------------------------------
NET ASSETS:
Portfolio Shares - Class Y ($0.001 par
value - 100 million authorized) based on
869,658 outstanding shares $8,982
Portfolio Shares - Class A ($0.001 par
value - 100 million authorized) based on
97,222 outstanding shares 1,000
Accumulated Net Realized Loss on
Investments (117)
Net Unrealized Appreciation on
Investments 18
-------
TOTAL NET ASSETS -- 100.0% $9,883
=======
NET ASSET VALUE & REDEMPTION PRICE
PER SHARE
CLASS Y $10.22
=======
CLASS A $10.22
=======
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
FGIC -- FINANCIAL GUARANTY INSURANCE COMPANY
FHA -- FEDERAL HOUSING AGENCY
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
MBIA -- MUNICIPAL BOND INVESTORS ASSURANCE
GO -- GENERAL OBLIGATION
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
74
<PAGE>
SCHEDULE
OF
INVESTMENTS
[] COREFUND FIXED INCOME FUNDS
AS OF
JUNE 30, 1996
NEW JERSEY MUNICIPAL BOND FUND
[GRAPHIC OMITTED]
Pie Chart -- Shown is a pie chart depicting the industry classification for the
New Jersey Municipal Bond Fund. The following represent the plot points for
the chart:
Industry Classification % of Total Portfolio Investment
Cash Equivalents 5
General Obligations 44
Revenue Bonds 51
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
MUNICIPAL BONDS -- 83.6%
NEW JERSEY -- 68.2%
Bayonne, New Jersey GO (FGIC)
5.900%, 05/01/08 $150 $ 154
Cherry Hill Township,
New Jersey GO
5.900%, 06/01/05 50 53
Flemington-Raritan, New Jersey
Regional School District GO
5.700%, 05/01/06 50 51
Marlboro Township, New Jersey
GO (FGIC)
5.500%, 07/15/09 40 40
Millburn Township, New Jersey GO
5.350%, 07/15/12 100 99
Monmouth County, New Jersey
Improvement Authority
Revenue Bond (CG)
6.625%, 12/01/05 40 43
New Jersey Health Care Facilities
Finance Authority Revenue Bond
for Bridgeton Hospital Association,
Series B
6.000%, 07/01/13 50 51
New Jersey Health Care Facilities
Finance Authority Revenue Bond
for Burlington County Memorial
Hospital Project
6.000%, 07/01/12 50 51
New Jersey State Economic
Development Authority Revenue
Bond for Peddie School Project,
Series A
5.400%, 02/01/06 50 51
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
New Jersey State Economic
Development Authority Revenue
Bond for Rutgers State University
(AMBAC)
6.125%, 07/01/24 $ 55 $ 56
New Jersey State Educational
Facilities Authority Revenue
Bond for University of Medicine
and Dentistry, Series B (AMBAC)
5.250%, 12/01/13 60 56
New York & New Jersey States Port
Authority Revenue Bond,
Eighty-First Series
5.700%, 08/01/07 50 51
North Brunswick Township,
New Jersey GO
6.125%, 05/15/04 24 26
North Brunswick Township,
New Jersey GO,
Callable 02/01/05 at 100
6.300%, 02/01/12 150 158
Secaucus, New Jersey Sewer
Authority Revenue Bond, Series A
6.100%, 12/01/10 60 63
South Monmouth, New Jersey Sewer
Authority Revenue Bond (MBIA)
5.550%, 01/15/06 50 51
West Windsor Township, New Jersey
Parking Authority Revenue Bond
6.100%, 12/01/12 50 52
-------
1,106
-------
OREGON -- 3.1%
Umatilla County, Oregon Hospital
Facilities Authority Revenue Bond
for Franciscan Health Systems
Project, Series B (A) (TD)
3.650%, 12/01/24 50 50
-------
VIRGINIA -- 12.3%
Peninsula Ports Authority of
Virginia Revenue Bond for
Dominion Terminal Project,
Series C (A) (NW)
3.600%, 07/01/16 200 200
-------
TOTAL MUNICIPAL BONDS
(Cost $1,333) 1,356
-------
CASH EQUIVALENT -- 4.6%
SEI Institutional
Tax Free Portfolio 75 75
-------
TOTAL CASH EQUIVALENT
(Cost $75) 75
-------
TOTAL INVESTMENTS -- 88.2%
(Cost $1,408) $1,431
=======
GO -- GENERAL OBLIGATION
(A) VARIABLE RATE SECURITY -- THE RATE REPORTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT ON JUNE 30, 1996.
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
CG -- COUNTY GUARANTY
FGIC -- FINANCIAL GUARANTY INSURANCE COMPANY
TD -- TORONTO DOMINION BANK
NW -- NATIONAL WESTMINSTER
MBIA -- MUNICIPAL BOND INVESTORS ASSURANCE
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
75
<PAGE>
[This page intentionally left blank.]
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
(000)
[] COREFUND FIXED INCOME FUNDS
FOR THE PERIOD
ENDED
JUNE 30, 1996
<TABLE>
<CAPTION>
--------- --------------
GLOBAL NEW JERSEY
BOND FUND MUNICIPAL FUND
--------- --------------
<S> <C> <C>
ASSETS:
Investments at Market Value (Cost $31,384, $1,408, respectively) $ 31,434 $ 1,431
Cash 1,192 79
Foreign Currency (Cost $328) 328 --
Receivable for Accrued Interest 691 20
Other Assets 88 103
-------- --------
Total Assets 33,733 1,633
-------- --------
LIABILITIES:
Income Distribution Payable 554 5
Other Liabilities 29 7
-------- --------
Total Liabilities 583 12
-------- --------
NET ASSETS:
Portfolio Shares--Class Y ($0.001 Par Value--25 million authorized) based
on 3,402,528 outstanding shares, and ($0.001 Par Value --100 million
authorized)
based on 130,650 outstanding shares, respectively 33,829 1,278
Portfolio Shares-- Class A ($0.001 Par Value--25 million authorized) based
on 15,642 outstanding shares, and ($0.001 Par Value--100 million
authorized)
based on 30,193 outstanding shares, respectively 156 310
Accumulated Net Realized Gain (Loss) on Investments (990) 10
Net Unrealized Appreciation on Foreign Currency and
Translation of Other Assets and Liabilities
Denominated in Foreign Currencies 73 --
Net Unrealized Appreciation on Investments 50 23
Undistributed Net Investment Income 32 --
-------- --------
TOTAL NET ASSETS $ 33,150 $ 1,621
======== ========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
CLASS Y $ 9.70 $ 10.08
======== ========
CLASS A $ 9.68 $ 10.07
======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
77
<PAGE>
<PAGE>
STATEMENT
OF
OPERATIONS
(000)
[] COREFUND FIXED INCOME FUNDS
FOR THE PERIOD
ENDED
JUNE 30, 1996
<TABLE>
<CAPTION>
---------- ------------ ----------- ------- ------- ------------ ------------ ----------
SHORT TERM SHORT- GLOBAL INTERMEDIATE PENNSYLVANIA NEW JERSEY
INCOME INTERMEDIATE GOVERNMENT BOND BOND MUNICIPAL MUNICIPAL MUNICIPAL
FUND(3) BOND FUND INCOME FUND FUND(3) FUND BOND FUND BOND FUND BOND FUND
---------- ------------ ----------- ------- ------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $ 1,286 $ 5,147 $ 988 $ 8,920 $ 2,080 $ 59 $ 244 $ 84
------- ------- ------- ------- ------- ------- ------- -------
Total Investment income 1,286 5,147 988 8,920 2,080 59 244 84
------- ------- ------- ------- ------- ------- ------- -------
EXPENSES
Investment advisory fees 164 404 72 966 191 6 22 8
Waiver of investment advisory fees (108) (137) (23) (509) (45) (5) (22) (8)
Administrative fees 42 202 36 251 80 3 11 4
Waiver of administrative fees (6) (74) (13) (34) (29) (1) (11) (4)
Transfer agent fees & expenses 5 20 5 41 12 3 5 1
Custodian fees -- -- -- (14) 15 -- -- --
Professional fees 5 10 2 23 -- (3) 1 --
Registration & filing fees 5 3 11 8 5 (2) -- 2
12b-1 fees -- 5 3 2 -- 2 1 --
Taxes--other than income -- (13) (4) -- 2 (1) -- --
Printing fees -- 16 1 (2) 4 -- 1 --
Organizational costs 3 -- 6 -- 3 10 1 2
Miscellaneous 2 15 -- (7) (9) 1 1 2
------- ------- ------- ------- ------- ------- ------- -------
Total expenses 112 451 96 725 229 13 10 7
------- ------- ------- ------- ------- ------- ------- -------
NET INVESTMENT INCOME 1,174 4,696 892 8,195 1,851 46 234 77
------- ------- ------- ------- ------- ------- ------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS: Net realized gain
(loss) from:
Security transactions (81) (987) 31 (1,251) 496 -- (30) 16
Option transactions -- -- -- -- (283) -- -- --
Net realized gain on forward foreign
currency contracts and foreign
currency transactions -- -- -- -- 984 -- -- --
Net unrealized appreciation on
forward foreign currency contracts
and translation of other assets
and liabilities in foreign
currencies -- -- -- -- 167 -- -- --
Net change in unrealized appreciation
(depreciation) on investments (170) 156 (414) (4,687) (805) 13 36 (8)
------- ------- ------- ------- ------- ------- ------- -------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 923 $ 3,865 $ 509 $ 2,257 $ 2,410 $ 59 $ 240 $ 85
======= ======= ======= ======= ======= ======= ======= =======
COMPUTATION OF NET ASSET VALUE AND OFFERING
PRICE - JUNE 30, 1996:
CLASS Y
1Net asset value, offer and
redemption price $ 9.94 $ 9.76 $ 9.62 $ 10.15 $ 9.70 $ 9.92 $ 10.22 $ 10.08
======= ======= ======= ======= ======= ======= ======= =======
CLASS A
1Net asset value, redemption price 9.93 9.76 9.62 10.15 9.68 9.92 10.22 10.07
Maximum sales charge of 3.25% 0.33 0.33 0.32 0.34 0.33 0.33 0.34 0.34
------- ------- ------- ------- ------- ------- ------- -------
2Offering price $ 10.26 $ 10.09 $ 9.94 $ 10.49 $ 10.01 $ 10.25 $ 10.56 $ 10.41
======= ======= ======= ======= ======= ======= ======= =======
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
1 NET ASSET VALUE PER SHARE, AS ILLUSTRATED, IS THE AMOUNT WHICH WOULD BE PAID
UPON THE REDEMPTION OR EXCHANGE OF SHARES.
2 THE OFFER PRICE IS CALCULATED BY DIVIDING THE NET ASSET VALUE OF CLASS A BY 1
MINUS THE MAXIMUM SALES CHARGE OF 3.25%.
3 DUE TO THE MERGER OF THIS FUND WITH A CONESTOGA FUND, AMOUNTS REPRESENT ACTIVITY
FOR THE PERIOD NOVEMBER 1, 1995 THROUGH JUNE 30, 1996. PLEASE SEE THE NOTES TO
THE FINANCIAL STATEMENTS FOR FURTHER DETAILS REGARDING THE MERGER.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
78 & 79
<PAGE>
STATEMENT
OF CHANGES
IN NET ASSETS
(000)
[] COREFUND FIXED INCOME FUNDS
FOR THE PERIODS
ENDED
JUNE 30
<TABLE>
<CAPTION>
---------------- ----------------- ----------------- --------------------
SHORT-
SHORT TERM INTERMEDIATE GOVERNMENT BOND
INCOME FUND BOND FUND INCOME FUND FUND
---------------- ------------------ ----------------- --------------------
1996(1) 1995(3) 1996 1995 1996 1995 1996(1) 1995(3)
------- ------- -------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 1,174 $ 981 $ 4,696 $ 3,311 $ 892 $ 732 $ 8,196 $ 6,198
Net realized gain (loss) from security
transactions and foreign
currency transactions (81) 32 (987) (738) 31 (213) (1,252) 3,058
Net unrealized appreciation (depreciation)
on investments,
forward foreign currency contracts and
translation of
assets and liabilites in foreign
currencies (170) 92 156 1,857 (414) 611 (4,687) 3,499
------- ------- -------- ------- ------- ------- -------- --------
Net increase (decrease) in net assets
resulting from operations 923 1,105 3,865 4,430 509 1,130 2,257 12,755
------- ------- -------- ------- ------- ------- -------- --------
DIVIDENDS DISTRIBUTED FROM:
Net investment income:
Prior Class (a) -- -- -- -- -- -- -- (359)
Retail Class (b) -- -- -- -- -- -- -- (56)
Institutional Class (b) -- (917) -- -- -- -- -- (5,443)
Class Y (c) (1,238) -- (4,567) (2,981) (812) (648) (8,523) --
Class A (c) -- -- (123) (331) (78) (86) (56) --
Net realized gains:
Prior Class (a) -- -- -- -- -- -- -- --
Retail Class (b) -- -- -- -- -- -- (10) --
Institutional Class (b) (32) -- -- -- -- -- (1,458) --
Class Y (c) -- -- -- (9) -- (1) -- --
Class A (c) -- -- -- (2) -- -- -- --
------- ------- -------- ------- ------- ------- -------- --------
Total dividends distributed (1,270) (917) (4,690) (3,323) (890) (735) (10,047) (5,858)
------- ------- -------- ------- ------- ------- -------- --------
CAPITAL TRANSACTIONS (2):
Prior Class (a):
Redesignated to Retail Class (b) -- -- -- -- -- -- -- (1,365)
Redesignated to Institutional Class (b) -- -- -- -- -- -- -- (29,097)
Proceeds from shares issued -- -- -- -- -- -- -- 9,204
Reinvestment of cash distributions -- -- -- -- -- -- -- 244
Cost of shares redeemed -- -- -- -- -- -- -- (2,665)
------- ------- -------- ------- ------- ------- -------- --------
Increase (decrease) in net assets from
Prior Class transactions -- -- -- -- -- -- -- (23,679)
------- ------- -------- ------- ------- ------- -------- --------
Retail Class (b):
Redesignated from Prior Class (a) -- -- -- -- -- -- -- 1,365
Exchanged for Class A Shares (1) -- -- -- -- -- (1,294) --
Proceeds from shares issued -- 11 -- -- -- -- 122 164
Reinvestment of cash distributions -- -- -- -- -- -- 44 48
Cost of shares redeemed (11) -- -- -- -- -- (198) (291)
------- ------- -------- ------- ------- ------- -------- --------
Increase (decrease) in net assets from
Retail Class transactions (12) 11 -- -- -- -- (1,326) 1,286
------- ------- -------- ------- ------- ------- -------- --------
Institutional Class (b):
Redesignated from Prior Class (a) -- -- -- -- -- -- -- 29,097
Exchanged for Class Y Shares (29,918) -- -- -- -- -- (194,533) --
Proceeds from shares issued 5,788 46,933 -- -- -- -- 28,200 192,154
Reinvestment of cash distributions 931 917 -- -- -- -- 7,057 5,109
Cost of shares redeemed (12,577) (11,979) -- -- -- -- (28,354) (38,426)
------- ------- -------- ------- ------- ------- -------- --------
Increase (decrease) in net assets from
Institutional Class transactions (35,776) 35,871 -- -- -- -- (187,630) 187,934
------- ------- -------- ------- ------- ------- -------- --------
Class Y (c):
Proceeds from shares issued in merger (d) 29,918 -- 113,422 -- -- -- 194,533 --
Proceeds from shares issued 2,116 -- 16,680 17,116 5,296 3,952 13,215 --
Reinvestment of cash distributions 203 -- 3,735 2,752 412 268 1,409 --
Cost of shares redeemed (2,040) -- (28,327) (14,254) (2,718) (2,353) (9,632) --
------- ------- -------- ------- ------- ------- -------- --------
Increase in net assets from Class Y
transactions 30,197 -- 105,510 5,614 2,990 1,867 199,525 --
------- ------- -------- ------- ------- ------- -------- --------
Class A (c):
Proceeds from shares issued in merger (d) 1 -- 1,207 -- -- -- 1,294 --
Proceeds from shares issued -- -- 282 62 157 170 65 --
Reinvestment of cash distributions -- -- 85 325 70 72 13 --
Cost of shares redeemed -- -- (445) (7,763) (285) (450) (88) --
------- ------- -------- ------- ------- ------- -------- --------
Increase (decrease) in net assets from
Class A transactions 1 -- 1,129 (7,376) (58) (208) 1,284 --
------- ------- -------- ------- ------- ------- -------- --------
Increase (decrease) in net assets derived
from capital share transactions (5,590) 35,882 106,639 (1,762) 2,932 1,659 11,853 165,541
------- ------- -------- ------- ------- ------- -------- --------
Net increase (decrease) in net assets (5,937) 36,070 105,814 (655) 2,551 2,054 4,063 172,438
------- ------- -------- ------- ------- ------- -------- --------
NET ASSETS:
Beginning of period 36,070 -- 57,089 57,744 12,679 10,625 195,815 23,377
------- ------- -------- ------- ------- ------- -------- --------
End of period $30,133 $36,070 $162,903 $57,089 $15,230 $12,679 $199,878 $195,815
======= ======= ======== ======= ======= ======= ======== ========
</TABLE>
<TABLE>
<CAPTION>
----------------- ----------------- ----------------- ------------------
INTERMEDIATE PENNSYLVANIA NEW JERSEY
GLOBAL MUNICIPAL MUNICIPAL MUNICIPAL
BOND FUND BOND FUND BOND FUND BOND FUND
----------------- ----------------- ----------------- ------------------
1996 1995 1996 1995 1996 1995 1996 1995
------- ------- ------- ------- ------ ------ ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 1,851 $ 1,772 $ 46 $ 69 $ 234 $ 115 $ 77 $ 84
Net realized gain (loss) from security
transactions and foreign
currency transactions 1,197 (180) -- (57) (30) (12) 16 4
Net unrealized appreciation (depreciation)
on investments,
forward foreign currency contracts and
translation of
assets and liabilites in foreign
currencies (638) 847 13 70 36 64 (8) 40
------- ------- ------- ------- ------ ------ ------- ------
Net increase (decrease) in net assets
resulting from operations $ 2,410 2,439 59 82 240 167 85 128
------- ------- ------- ------- ------ ------ ------- ------
DIVIDENDS DISTRIBUTED FROM:
Net investment income:
Prior Class (a) -- -- -- -- -- -- -- --
Retail Class (b) -- -- -- -- -- -- -- --
Institutional Class (b) -- -- -- -- -- -- -- --
Class Y (c) (2,254) (845) (10) (27) (212) (105) (72) (84)
Class A (c) (11) (5) (35) (42) (21) (10) (5) --
Net realized gains:
Prior Class (a) -- -- -- -- -- -- -- --
Retail Class (b) -- -- -- -- -- -- -- --
Institutional Class (b) -- -- -- -- -- -- -- --
Class Y (c) -- -- -- -- -- -- (9) --
Class A (c) -- -- -- -- -- -- (1) --
------- ------- ------- ------- ------ ------ ------- ------
Total dividends distributed (2,265) (850) (45) (69) (233) (115) (87) (84)
------- ------- ------- ------- ------ ------ ------- ------
CAPITAL TRANSACTIONS (2):
Prior Class (a):
Redesignated to Retail Class (b) -- -- -- -- -- -- -- --
Redesignated to Institutional Class (b) -- -- -- -- -- -- -- --
Proceeds from shares issued -- -- -- -- -- -- -- --
Reinvestment of cash distributions -- -- -- -- -- -- -- --
Cost of shares redeemed -- -- -- -- -- -- -- --
------- ------- ------- ------- ------ ------ ------- ------
Increase (decrease) in net assets from
Prior Class transactions -- -- -- -- -- -- -- --
------- ------- ------- ------- ------ ------ ------- ------
Retail Class (b):
Redesignated from Prior Class (a) -- -- -- -- -- -- -- --
Exchanged for Class A Shares -- -- -- -- -- -- -- --
Proceeds from shares issued -- -- -- -- -- -- -- --
Reinvestment of cash distributions -- -- -- -- -- -- -- --
Cost of shares redeemed -- -- -- -- -- -- -- --
------- ------- ------- ------- ------ ------ ------- ------
Increase (decrease) in net assets from
Retail Class transactions -- -- -- -- -- -- -- --
------- ------- ------- ------- ------ ------ ------- ------
Institutional Class (b):
Redesignated from Prior Class (a) -- -- -- -- -- -- -- --
Exchanged for Class Y Shares -- -- -- -- -- -- -- --
Proceeds from shares issued -- -- -- -- -- -- -- --
Reinvestment of cash distributions -- -- -- -- -- -- -- --
Cost of shares redeemed -- -- -- -- -- -- -- --
------- ------- ------- ------- ------ ------ ------- ------
Increase (decrease) in net assets from
Institutional Class transactions -- -- -- -- -- -- -- --
------- ------- ------- ------- ------ ------ ------- ------
Class Y (c):
Proceeds from shares issued in merger (d) -- -- -- -- 5,703 -- -- --
Proceeds from shares issued 5,150 327 193 -- 1,175 1,718 438 520
Reinvestment of cash distributions 1,604 564 8 10 134 73 39 54
Cost of shares redeemed (797) (529) (167) (732) (397) -- (625) (499)
------- ------- ------- ------- ------ ------ ------- ------
Increase in net assets from Class Y
transactions 5,957 362 34 (722) 6,615 1,791 (148) 75
------- ------- ------- ------- ------ ------ ------- ------
Class A (c):
Proceeds from shares issued in merger (d) -- -- -- -- 684 -- -- --
Proceeds from shares issued 2 76 126 76 124 154 196 21
Reinvestment of cash distributions 10 4 31 33 17 9 4 --
Cost of shares redeemed (32) (87) (179) (407) (153) (14) (3) --
------- ------- ------- ------- ------ ------ ------- ------
Increase (decrease) in net assets from
Class A transactions (20) (7) (22) (298) 672 149 197 21
------- ------- ------- ------- ------ ------ ------- ------
Increase (decrease) in net assets derived
from capital share transactions 5,937 355 13 (1,020) 7,287 1,940 49 96
------- ------- ------- ------- ------ ------ ------- ------
Net increase (decrease) in net assets 6,082 1,944 26 (1,007) 7,294 1,992 47 140
------- ------- ------- ------- ------ ------ ------- ------
NET ASSETS:
Beginning of period 27,068 25,124 1,392 2,399 2,589 597 1,574 1,434
------- ------- ------- ------- ------ ------ ------- ------
End of period $33,150 $27,068 $ 1,418 $ 1,392 $9,883 $2,589 $ 1,621 $1,574
======= ======= ======= ======= ====== ====== ======= ======
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) FIGURES REPRESENT ACTIVITY FOR THE PERIOD NOVEMBER 1 1995 THROUGH JUNE 30, 1996.
(2) FOR CAPITAL SHARE TRANSACTIONS PLEASE SEE FOOTNOTE 8 IN THE NOTES TO THE FINANCIAL STATEMENTS.
(3) 1995 AMOUNTS FOR THE SHORT TERM INCOME AND BOND FUND ARE FOR THE PERIODS MAY 15 THROUGH
OCTOBER 31, 1995 AND NOVEMBER 1, 1994 THROUGH OCTOBER 31, 1995, RESPECTIVELY.
(A) ON FEBRUARY 21, 1995 THE SHARES OF THE BOND FUND WAS REDESIGNATED FROM A
SINGLE CLASS TO RETAIL AND INSTITUTIONAL CLASSES.
(B) RETAIL AND INSTITUTIONAL CLASS AMOUNTS REPRESENT ACTIVITY OF THE ACQUIRED CONESTOGA
FUND FROM NOVEMBER 1, 1995 THROUGH APRIL 21, 1996.
(C) ON APRIL 22, 1996 SERIES A SHARES WERE REDESIGNATED CLASS Y SHARES, AND SERIES B
SHARES WERE REDESIGNATED CLASS A SHARES.
(D) ON APRIL 15 & 22, THE CONESTOGA FUNDS WERE ACQUIRED BY COREFUNDS, INC.
PLEASE SEE THE NOTES TO THE FINANCIAL STATEMENTS FOR FUTHER INFORMATION
REGARDING THE TRANSACTION.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
80 & 81
<PAGE>
FINANCIAL
HIGHLIGHTS
FOR THE PERIODS
ENDED
JUNE 30
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
NET REALIZED AND NET RATIO
ASSET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS NET ASSETS RATIO OF NET
VALUE NET GAINS FROM NET FROM ASSET VALUE END OF EXPENSES INCOME
BEGINNING INVESTMENT OR (LOSSES) INVESTMENT CAPITAL END TOTAL OF PERIOD TO AVERAGE TO AVERAGE
OF PERIOD INCOME ON SECURITIES INCOME GAINS OF PERIOD RETURN10 (000) NET ASSETS NET ASSETS
--------- ---------- ------------- ------------- ------------- ----------- -------- --------- ----------- ----------
- ------------------------
SHORT TERM INCOME FUND11
- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS Y*
1996 $10.05 $0.36 $(0.08) $(0.38) $(0.01) $ 9.94 2.78% $30,132 0.51% 5.31%
INSTITUTIONAL CLASS*
19951 $10.00 $0.25 $0.03 $(0.23) $ -- $10.05 2.57%+ $36,059 0.63% 5.43%
CLASS A*
1996 $10.04 $0.35 $(0.10) $(0.35) $(0.01) $ 9.93 2.55% $ 1 0.76% 5.05%
RETAIL CLASS*
19952 $10.01 $0.23 $0.02 $(0.22) $ -- $10.04 2.87%+ $ 11 0.88% 5.05%
- ----------------------------
SHORT-INTERMEDIATE BOND FUND
- ----------------------------
CLASS Y**
1996 $ 9.84 $0.57 $(0.08) $(0.57) $ -- $ 9.76 5.05% $159,841 0.55% 5.80%
1995 9.63 0.53 0.21 (0.53) -- 9.84 8.22 55,128 0.60 5.76
1994 10.18 0.43 (0.53) (0.43) (0.02) 9.63 (0.32) 48,379 0.58 4.30
1993 10.01 0.47 0.31 (0.47) (0.14) 10.18 7.90 44,692 0.42 4.62
19923 10.00 0.23 0.01 (0.23) -- 10.01 2.49+ 22,623 0.11 5.73
CLASS A**
1996 $ 9.84 $0.54 $(0.08) $(0.54) $ -- $ 9.76 4.79% $ 3,062 0.81% 5.51%
1995 9.63 0.54 0.20 (0.53) -- 9.84 7.95 1,961 0.85 5.27
1994 10.18 0.41 (0.53) (0.41) (0.02) 9.63 (0.56) 9,365 0.83 4.05
19934 10.01 0.20 0.17 (0.20) -- 10.18 3.95+ 5,752 0.75 3.78
- ----------------------
GOVERNMENT INCOME FUND
- ----------------------
CLASS Y**
1996 $ 9.83 $0.61 $(0.21) $(0.61) $ -- $ 9.62 4.09% $13,943 0.64% 6.17%
1995 9.52 0.62 0.31 (0.62) -- 9.83 10.26 11,305 0.59 6.53
1994 10.18 0.50 (0.62) (0.50) (0.04) 9.52 (1.34) 9,089 0.50 4.93
19935 10.00 0.13 0.18 (0.13) -- 10.18 3.12+ 6,323 0.44 5.41
CLASS A**
1996 $ 9.84 $0.58 $(0.22) $(0.58) $ -- $ 9.62 3.73% $ 1,287 0.88% 5.93%
1995 9.51 0.61 0.33 (0.61) -- 9.84 10.23 1,374 0.85 6.25
1994 10.17 0.47 (0.62) (0.47) (0.04) 9.51 (1.57) 1,536 0.75 4.68
19934 10.00 0.07 0.17 (0.07) -- 10.17 1.71+ 201 0.63 5.35
- -----------
BOND FUND11
- -----------
CLASS Y*
1996 $10.55 $0.43 $(0.30) $(0.45) $(0.08) $10.15 1.23% $198,605 0.55% 6.28%
INSTITUTIONAL CLASS*
1995 $ 9.81 $0.61 $ 0.71 $(0.58) $ -- $10.55 13.87% $194,442 0.71% 6.09%
CLASS A*
1996 $10.56 $0.44 $(0.33) $(0.44) $(0.08) $10.15 0.98% $ 1,273 0.80% 6.02%
RETAIL CLASS*
1995 $ 9.81 $0.60 $ 0.72 $(0.57) $ -- $10.56 13.83% $ 1,373 0.97% 6.02%
PRIOR CLASS
1994 $11.18 $0.53 $(1.04) $(0.52) $(0.34) $ 9.81 (4.75)% $ 23,377 1.01% 5.07%
1993 10.89 0.56 0.54 (0.56) (0.25) 11.18 10.63 27,346 0.88 5.16
1992 10.65 0.70 0.32 (0.68) (0.10) 10.89 9.82 15,180 0.46 6.78
1991 9.96 0.78 0.69 (0.78) -- 10.65 15.16 7,255 0.47 7.71
19906 10.00 0.50 (0.04) (0.50) -- 9.96 4.64+ 4,593 0.68 7.75
</TABLE>
<TABLE>
<CAPTION>
RATIO RATIO OF
OF EXPENSES NET INCOME
TO AVERAGE TO AVERAGE
NET ASSETS NET ASSETS PORTFOLIO
(EXCLUDING (EXCLUDING TURNOVER
WAIVERS) WAIVERS) RATE***
----------- ----------- ---------
- ------------------------
SHORT TERM INCOME FUND11
- ------------------------
<S> <C> <C> <C>
CLASS Y*
1996 1.03% 4.79% 102%
INSTITUTIONAL CLASS*
19951 1.08% 4.98% 40%
CLASS A*
1996 1.25% 4.56% 102%
RETAIL CLASS*
19952 1.33% 4.60% 40%
- ----------------------------
SHORT-INTERMEDIATE BOND FUND
- ----------------------------
CLASS Y**
1996 0.81% 5.54% 257%
1995 0.84 5.52 405
1994 0.86 4.02 299
1993 0.86 4.18 188
19923 0.84 5.00 51
CLASS A**
1996 1.06% 5.27% 257%
1995 1.09 5.03 405
1994 1.11 3.77 299
19934 1.19 3.34 188
- ----------------------
GOVERNMENT INCOME FUND
- ----------------------
CLASS Y**
1996 0.89% 5.92% 131%
1995 0.98 6.14 368
1994 1.00 4.43 157
19935 1.10 4.75 93
CLASS A**
1996 1.14% 5.67% 131%
1995 1.24 5.86 368
1994 1.25 4.18 157
19934 1.29 4.69 93
- -----------
BOND FUND11
- -----------
CLASS Y*
1996 0.97% 5.86% 190%
INSTITUTIONAL CLASS*
1995 1.12% 5.68% 352%
CLASS A*
1996 1.22% 5.61% 190%
RETAIL CLASS*
1995 1.44% 5.55% 352%
PRIOR CLASS
1994 1.60% 4.48% 232%
1993 1.49 4.55 158
1992 1.24 6.01 99
1991 1.41 6.78 47
19906 1.62 6.81 23
</TABLE>
82
<PAGE>
[] COREFUND FIXED INCOME FUNDS
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
NET REALIZED AND NET RATIO
ASSET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS NET ASSETS RATIO OF NET
VALUE NET GAINS FROM NET FROM ASSET VALUE END OF EXPENSES INCOME
BEGINNING INVESTMENT OR (LOSSES) INVESTMENT CAPITAL END TOTAL OF PERIOD TO AVERAGE TO AVERAGE
OF PERIOD INCOME ON SECURITIES INCOME GAINS OF PERIOD RETURN10 (000) NET ASSETS NET ASSETS
--------- ---------- ------------- ------------- ------------- ----------- -------- --------- ----------- ----------
- ----------------
GLOBAL BOND FUND
- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS Y**
1996 $ 9.62 $0.47 $ 0.30 $(0.69) $ -- $ 9.70 8.00% $ 32,998 0.71% 5.81%
1995 9.06 0.62 0.24 (0.30) -- 9.62 9.70 26,898 0.64 6.84
19947 10.00 0.25 (1.15) (0.04) -- 9.06 (9.00)+ 24,957 0.73 5.04
CLASS A**
1996 $ 9.61 $0.61 $ 0.12 $(0.66) $ -- $ 9.68 7.74% $ 152 0.96% 5.56%
1995 9.04 0.61 0.24 (0.28) -- 9.61 9.57 170 0.89 6.59
19947 10.00 0.19 (1.11) (0.04) -- 9.04 (9.22)+ 167 0.98 4.79
- --------------------------------
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------
CLASS Y**
1996 $ 9.83 $0.37 $ 0.09 $(0.37) $-- $ 9.92 4.74% $ 403 0.81% 3.73%
1995 9.68 0.38 0.15 (0.38) -- 9.83 5.58 365 0.82 3.91
1994 10.09 0.39 (0.41) (0.39) -- 9.68 (0.27) 1,088 0.63 3.91
19938 10.00 0.04 0.09 (0.04) -- 10.09 1.33+ 2,009 0.58 2.74
CLASS A**
1996 $ 9.83 $0.35 $ 0.09 $(0.35) $-- $ 9.92 4.48% $ 1,015 1.08% 3.47%
1995 9.67 0.35 0.16 (0.35) -- 9.83 5.42 1,027 1.08 3.65
1994 10.08 0.37 (0.41) (0.37) -- 9.67 (0.52) 1,311 0.88 3.66
19934 10.00 0.03 0.08 (0.03) -- 10.08 1.19+ 166 0.81 2.51
- --------------------------------
PENNSYLVANIA MUNICIPAL BOND FUND
- --------------------------------
CLASS Y**
1996 $10.16 $0.55 $ 0.06 $(0.55) $ -- $10.22 6.02% $ 8,864 0.21% 5.25%
1995 9.95 0.51 0.21 (0.51) -- 10.16 7.50 2,272 0.39 5.26
19949 10.00 0.06 (0.05) (0.06) -- 9.95 0.14+ 434 0.42 5.09
CLASS A**
1996 $10.16 $0.52 $ 0.06 $(0.52) $ -- $10.22 5.76%$ 994 0.46% 4.93%
1995 9.95 0.49 0.21 (0.49) -- 10.16 7.25 317 0.64 4.95
19949 10.00 0.06 (0.05) (0.06) -- 9.95 0.09+ 163 0.67 4.84
- ------------------------------
NEW JERSEY MUNICIPAL BOND FUND
- ------------------------------
CLASS Y**
1996 $10.12 $0.51 $(0.02) $(0.51) $ (0.06) $10.08 5.28% $ 1,317 0.37% 4.93%
1995 9.94 0.52 0.18 (0.52) -- 10.12 7.25 1,550 0.42 5.21
19949 10.00 0.06 (0.06) (0.06) -- 9.94 0.01+ 1,432 0.43 5.07
CLASS A**
1996 $10.12 $0.48 $(0.01) $(0.48) $ (0.06) $10.07 4.93% $ 304 0.60% 4.65%
1995 9.95 0.49 0.17 (0.49) -- 10.12 6.84 24 0.68 4.97
19949 10.00 0.06 (0.05) (0.06) -- 9.95 0.08+ 2 0.68 4.82
</TABLE>
<TABLE>
<CAPTION>
RATIO RATIO OF
OF EXPENSES NET INCOME
TO AVERAGE TO AVERAGE
NET ASSETS NET ASSETS PORTFOLIO
(EXCLUDING (EXCLUDING TURNOVER
WAIVERS) WAIVERS) RATE***
----------- ----------- ---------
- ----------------
GLOBAL BOND FUND
- ----------------
<S> <C> <C> <C>
CLASS Y**
1996 0.95% 5.57% 67%
1995 1.03 6.45 133
19947 1.12 4.65 161
CLASS A**
1996 1.20% 5.32% 67%
1995 1.28 6.20 133
19947 1.37 4.40 161
- --------------------------------
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------
CLASS Y**
1996 1.31% 3.23% 10%
1995 1.26 3.47 9
1994 1.17 3.37 43
19938 1.45 1.87 10
CLASS A**
1996 1.61% 2.94% 10%
1995 1.52 3.21 9
1994 1.42 3.12 43
19934 1.68 1.64 10
- --------------------------------
PENNSYLVANIA MUNICIPAL BOND FUND
- --------------------------------
CLASS Y**
1996 0.96% 4.50% 92%
1995 1.14 4.51 18%
19949 1.17 4.34 3
CLASS A**
1996 1.21% 4.18% 92%
1995 1.39 4.20 18
19949 1.42 4.09 3
- ------------------------------
NEW JERSEY MUNICIPAL BOND FUND
- ------------------------------
CLASS Y**
1996 1.12% 4.18% 21%
1995 1.17 4.46 32
19949 1.35 4.15 13
CLASS A**
1996 1.35% 3.90% 21%
1995 1.44 4.21 32
19949 1.60 3.90 13
<FN>
* ON FEBRUARY 21, 1995 THE SHARES OF THE FUNDS WERE REDESIGNATED AS EITHER
RETAIL OR INSTITUTIONAL SHARES. FOR THE YEAR ENDED OCTOBER 31, 1995, THE
FINANCIAL HIGHLIGHTS' RATIOS OF EXPENSES, NET INVESTMENT INCOME, TOTAL
RETURN, AND THE PER SHARE INVESTMENT ACTIVITIES AND DISTRIBUTIONS ARE
PRESENTED ON A BASIS WHEREBY THE FUND'S NET INVESTMENT INCOME, EXPENSES, AND
DISTRIBUTIONS FOR THE PERIOD NOVEMBER 1, 1994 THROUGH FEBRUARY 20, 1995 WERE
ALLOCATED TO EACH CLASS OF SHARES BASED UPON THE RELATIVE NET ASSETS OF EACH
CLASS OF SHARES AS OF FEBRUARY 21, 1995 AND THE RESULTS COMBINED THEREWITH
THE RESULTS OF OPERATIONS AND DISTRIBUTIONS FOR EACH APPLICABLE CLASS FOR THE
PERIOD FEBRUARY 21, 1995 THROUGH OCTOBER 31, 1995. ADDITIONALLY, ON APRIL 22,
1996 THE CONESTOGA SHORT-TERM INCOME AND BOND FUNDS WERE ACQUIRED BY
COREFUNDS, INC. AT WHICH TIME THE INSTITUTIONAL CLASS OF SHARES OF THESE
FUNDS WERE REDESIGNATED CLASS Y AND THE RETAIL CLASS OF THESE FUNDS WERE
REDESIGNATED CLASS A.
** ON APRIL 22, 1996 THE SERIES A SHARES OF EACH FUND, EXCLUDING THE SHORT TERM
INCOME AND BOND FUNDS, WERE REDESIGNATED CLASS Y AND THE SERIES B SHARES OF
EACH FUND, EXCLUDING THE SHORT TERM INCOME AND BOND FUNDS, WERE REDESIGNATED
CLASS A.
*** FOR 1996 TRANSACTIONS RELATING TO THE MERGER WERE EXCLUDED FROM THE CALCULATION
OF THE PORTFOLIO TURNOVER RATE.
+ THIS FIGURE HAS NOT BEEN ANNULAIZED.
1 COMMENCED OPERATIONS MAY 15, 1995. UNLESS OTHERWISE NOTED, ALL RATIOS FOR THE
PERIOD HAVE BEEN ANNUALIZED.
2 COMMENCED OPERATIONS MAY 17, 1995. UNLESS OTHERWISE NOTED, ALL RATIOS FOR
THE PERIOD HAVE BEEN ANNUALIZED.
3 COMMENCED OPERATIONS FEBRUARY 3, 1992. UNLESS OTHERWISE NOTED, ALL RATIOS FOR
THE PERIOD HAVE BEEN ANNUALIZED.
4 COMMENCED OPERATIONS JANUARY 4, 1993. UNLESS OTHERWISE NOTED, ALL RATIOS FOR
THE PERIOD HAVE BEEN ANNUALIZED.
5 COMMENCED OPERATIONS APRIL 1, 1993. UNLESS OTHERWISE NOTED, ALL RATIOS FOR
THE PERIOD HAVE BEEN ANNUALIZED.
6 COMMENCED OPERATIONS FEBRUARY 28, 1990. UNLESS OTHERWISE NOTED, ALL RATIOS FOR
THE PERIOD HAVE BEEN ANNUALIZED.
7 COMMENCED OPERATIONS DECEMBER 15, 1993. UNLESS OTHERWISE NOTED, ALL RATIOS FOR
THE PERIOD HAVE BEEN ANNUALIZED.
8 COMMENCED OPERATIONS MAY 3, 1993. UNLESS OTHERWISE NOTED, ALL RATIOS FOR THE
PERIOD HAVE BEEN ANNUALIZED.
9 COMMENCED OPERATIONS MAY 16, 1994. UNLESS OTHERWISE NOTED, ALL RATIOS FOR THE
PERIOD HAVE BEEN ANNUALIZED.
10 TOTAL RETURN DOES NOT REFLECT THE SALES LOAD CHARGED ON THE CLASS A SHARES.
ADDITIONALLY, TOTAL RETURN FOR CLASS Y & CLASS A FOR THE SHORT TERM INCOME
AND BOND FUNDS FOR 1996 ARE FOR THE EIGHT MONTH PERIOD ENDED JUNE 30, 1996.
11 THE PER SHARE AMOUNT FOR THESE FUNDS FOR 1996 REPRESENTS THE PERIOD FROM
NOVEMBER 1, 1995 TO JUNE 30, 1996. ALL PRIOR YEARS ARE FOR THE PERIODS
NOVEMBER 1 TO OCTOBER 31.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
83
<PAGE>
STATEMENT
OF
NET ASSETS
AS OF
JUNE 30, 1996
TREASURY RESERVE
[GRAPHIC OMITTED]
Pie Chart -- Shown is a pie chart depicting the industry classification for the
Treasury Reserve. The following represent the plot points for the chart:
Industry Classification % of Total Portfolio Investments
Cash Equivalents 61
US Treasury Securities 39
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 39.3%
U.S. Treasury Bills+
5.170%, 07/25/96 $10,000 $ 9,966
5.340%, 07/25/96 5,000 4,983
5.850%, 07/25/96 5,000 4,982
5.120%, 08/01/96 5,000 4,978
4.980%, 08/15/96 5,000 4,970
5.080%, 08/22/96 15,500 15,388
5.120%, 09/19/96 15,000 14,832
5.130%, 09/26/96 10,000 9,879
5.140%, 09/26/96 10,000 9,879
5.260%, 10/03/96 15,000 14,799
5.150%, 10/10/96 20,000 19,718
4.980%, 10/17/96 10,000 9,855
5.060%, 10/17/96 10,000 9,853
5.170%, 10/24/96 20,000 19,678
5.230%, 10/31/96 10,000 9,827
5.220%, 11/07/96 15,000 14,726
5.370%, 11/14/96 10,000 9,802
5.230%, 11/21/96 10,000 9,798
5.300%, 11/29/96 10,000 9,784
5.460%, 12/05/96 10,000 9,768
5.310%, 12/12/96 15,000 14,651
5.380%, 12/19/96 10,000 9,751
5.360%, 12/26/96 10,000 9,742
5.290%, 01/09/97 5,000 4,865
5.410%, 01/09/97 10,000 9,723
5.340%, 02/06/97 5,000 4,844
5.340%, 02/06/97 10,000 9,687
5.400%, 03/06/97 6,000 5,788
5.460%, 04/03/97 10,000 9,603
5.650%, 04/03/97 5,000 4,795
5.650%, 05/01/97 5,000 4,774
5.740%, 05/29/97 4,000 3,800
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
U.S. Treasury STRIPS+
5.230%, 08/15/96 $ 10,000 $ 9,936
5.300%, 11/15/96 15,000 14,706
5.580%, 02/15/97 10,000 9,654
5.640%, 05/15/97 15,000 14,293
---------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $358,077) 358,077
---------
REPURCHASE AGREEMENTS -- 61.1%
Aubrey Lanston
5.40%, dated 06/28/96,
matures 07/01/96, repurchase
price $180,081,000
(collateralized by various
U.S. Treasury Notes ranging
in par value $37,255,000-
$50,000,000, 5.375%-7.875%,
06/30/97-01/15/98; total
market value $183,951,990) 180,000 180,000
First National Bank of Chicago
5.40%, dated 06/28/96,
matures 07/01/96, repurchase
price $40,018,000
(collateralized by various
U.S. Treasury Notes ranging
in par value $4,320,000-
$25,000,000, 6.50%-7.125%,
09/30/96-10/15/18; total
market value $40,820,393) 40,000 40,000
Goldman Sachs
5.42%, dated 06/28/96,
matures 07/01/96, repurchase
price $40,018,067
(collaterlized by U.S. Treasury
Note par value $32,615,000,
10.75%, 02/15/03; market
value $41,096,300) 40,000 40,000
Hong Kong Shanghai Bank
5.42%, dated 06/28/96, matures
07/01/96, repurchase price
$30,013,550 (collateralized by
U.S. Treasury Note par value
$30,200,000, 5.25%, 12/31/97;
market value $30,663,889) 30,000 30,000
Hong Kong Shanghai Bank 5.25%,
dated 06/28/96, matures
07/01/96, repurchase price
$12,683,547 (collateralized
by U.S. Treasury Note par value
$12,990,000, 6.25%, 04/30/01;
market value $13,000,413) 12,678 12,678
Morgan Stanley
5.30%, dated 06/28/96, matures
07/01/96, repurchase price
$35,015,458 (collateralized
by various U.S. Treasury Notes
ranging in par value
$3,970,000-$25,390,000,
125%-9.25%, 08/15/98-
07/31/00; total market
value $35,711,078) 35,000 35,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
84
<PAGE>
[] COREFUND MONEY MARKET FUNDS
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
Sanwa Bank
5.40%, dated 06/28/96,
matures 07/01/96, repurchase
price $180,081,000
(collateralized by various
U.S. Treasury Notes ranging
in par value $11,025,000-
$50,000,000, 5.125%-7.25%,
09/30/96-03/31/98; total
market value $183,622,629) $180,000 $180,000
Swiss Bank
5.45%, dated 06/28/96, matures
07/01/96, repurchase price
$40,018,167 (collateralized
by U.S. Treasury Note par
value $40,295,000, 6.50%,
05/15/97; market value
$40,872,598) 40,000 40,000
---------
TOTAL REPURCHASE AGREEMENTS
(Cost $557,678) 557,678
---------
TOTAL INVESTMENTS -- 100.4%
(Cost $915,755) 915,755
---------
OTHER ASSETS AND LIABILITIES,
NET -- (0.4%) (3,807)
---------
- -------------------------------------------------------
DESCRIPTION VALUE (000)
- -------------------------------------------------------
NET ASSETS:
Portfolio Shares - Class Y ($0.001 par value -
250 million authorized) based on
892,564,972 outstanding shares $ 892,565
Portfolio Shares - Class C ($0.001 par value -
250 million authorized) based on
19,385,228 outstanding shares 19,385
Accumulated Net Realized Loss on
Investments (2)
---------
TOTAL NET ASSETS -- 100.0% $911,948
=========
NET ASSET VALUE & REDEMPTION PRICE
PER SHARE
CLASS Y $1.00
=========
CLASS C $1.00
=========
+ YIELD TO MATURITY
STRIPS -- SEPARATELY TRADED REGISTERED INTEREST AND PRINCIPAL SECURITIES
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
85
<PAGE>
STATEMENT
OF
NET ASSETS
AS OF
JUNE 30, 1996
CASH RESERVE
[GRAPHIC OMITTED]
Pie Chart -- Shown is a pie chart depicting the industry classification for the
Cash Reserve. The following represent the plot points for the chart:
Industry Classification % of Total Portfolio Investment
Cash Equivalents 6
US Treasury Securities 11
Time Deposits 2
Corporate Securities 81
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
COMMERCIAL PAPER -- 70.3%
Alcatel-Alsthom
5.190%, 07/05/96 $15,000 $ 14,991
American Express Credit
5.290%, 08/14/96 10,000 9,935
5.290%, 08/16/96 10,000 9,932
Ameritech Capital
5.280%, 07/16/96 10,000 9,978
5.280%, 11/15/96 10,000 9,799
Arco Coal Australia
5.300%, 07/10/96 10,000 9,987
Asset Securitization
5.280%, 07/19/96 10,000 9,974
5.280%, 07/23/96 10,000 9,968
AT&T
5.240%, 08/13/96 10,000 9,937
5.280%, 08/20/96 10,000 9,927
5.270%, 08/20/96 10,000 9,927
Banc One Funding
5.330%, 07/31/96 10,000 9,956
5.390%, 08/16/96 10,000 9,931
Caisse Des Depots
En Consignations
5.290%, 07/09/96 15,000 14,982
5.240%, 08/22/96 10,000 9,924
5.300%, 09/05/96 10,000 9,903
Campbell
4.980%, 10/04/96 5,000 4,934
Coca Cola
5.260%, 07/19/96 10,000 9,974
5.270%, 08/08/96 10,000 9,944
5.320%, 08/26/96 10,000 9,917
E.I. duPont de Nemours
5.270%, 07/18/96 10,000 9,975
5.270%, 07/26/96 10,000 9,963
Ford Motor Credit
5.250%, 07/22/96 10,000 9,969
5.300%, 09/16/96 10,000 9,887
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
General Electric Capital
5.250%, 07/10/96 $ 5,000 $ 4,994
5.290%, 08/12/96 10,000 9,938
5.290%, 08/15/96 10,000 9,934
Goldman Sachs
5.330%, 09/19/96 10,000 9,882
Merrill Lynch
5.310%, 08/07/96 10,000 9,946
5.300%, 08/12/96 10,000 9,938
5.270%, 08/14/96 5,000 4,968
5.380%, 08/29/96 10,000 9,912
Metropolitan Life Funding
5.260%, 08/23/96 10,000 9,923
Mitsubishi International
5.350%, 08/30/96 20,000 19,822
Mobile Australia Finance
5.320%, 08/16/96 10,000 9,932
Motorola Credit
5.250%, 07/16/96 10,000 9,978
National Rural Utility
5.270%, 07/29/96 15,000 14,939
New Center Asset Trust
5.600%, 07/01/96 31,000 31,000
Norwest Financial
5.280%, 08/09/96 10,000 9,943
Pitney Bowes
5.270%, 07/23/96 3,000 2,990
Proctor and Gamble
5.250%, 07/08/96 10,000 9,990
5.360%, 09/20/96 10,000 9,879
Province of Quebec
5.420%, 09/16/96 10,000 9,884
Royal Bank of Canada
5.100%, 07/05/96 5,000 4,997
Southwestern Bell Capital
5.260%, 07/22/96 10,000 9,969
5.290%, 07/25/96 3,462 3,450
Swedish Export Credit
5.380%, 12/03/96 5,000 4,884
Toyota Motor Credit
5.280%, 09/03/96 20,000 19,812
5.360%, 09/18/96 10,000 9,882
Toys R Us
5.300%, 07/31/96 10,600 10,589
Walt Disney
5.180%, 07/15/96 10,000 9,980
5.210%, 02/03/97 10,000 9,686
Weyerhauser
5.290%, 07/25/96 15,000 14,947
5.270%, 08/06/96 10,000 9,947
5.300%, 08/22/96 10,000 9,924
---------
TOTAL COMMERCIAL PAPER
(Cost $569,473) 569,473
---------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
86
<PAGE>
[] COREFUND MONEY MARKET FUNDS
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 10.7%
FHLB
5.100%, 09/06/96 $10,000 $ 9,905
5.180%, 10/16/96 17,500 17,231
FNMA
4.850%, 07/24/96 20,000 19,938
4.820%, 08/09/96 20,000 19,896
5.310%, 12/11/96 10,000 9,994
4.780%, 02/14/97 10,000 9,992
---------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $86,956) 86,956
---------
CORPORATE OBLIGATIONS -- 3.3%
American Express Centurion
Bank (A)
5.423%, 07/10/96 12,000 12,000
General Electric Capital (A)
5.170%, 01/21/97 14,500 14,497
---------
TOTAL CORPORATE OBLIGATIONS
(Cost $26,497) 26,497
---------
CERTIFICATES OF DEPOSIT -- 3.0%
Bayerische Vereinsbank
5.010%, 08/05/96 10,000 10,000
Deutsche Bank
5.060%, 08/05/96 10,000 10,001
Society Generale
5.400%, 07/09/96 4,000 4,000
---------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $24,001) 24,001
---------
TIME DEPOSIT -- 2.5%
First Union Bank
5.500%, 07/01/96 20,000 20,000
---------
TOTAL TIME DEPOSIT
(Cost $20,000) 20,000
---------
MASTER NOTES -- 1.5%
Associates Corporation of
North America (A)
5.286%, 07/01/96 11,366 11,366
SLMA (A)
5.290%, 07/01/96 762 762
---------
TOTAL MASTER NOTES
(Cost $12,128) 12,128
---------
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
BANK NOTES -- 1.1%
FCC National Bank
5.900%, 08/21/96 $ 5,000 $ 4,999
5.650%, 11/01/96 4,000 3,999
---------
TOTAL BANK NOTES
(Cost $8,998) 8,998
---------
U.S. TREASURY OBLIGATIONS -- 3.6%
U.S. Treasury Bills+
5.850%, 07/25/96 5,000 4,982
5.360%, 03/06/97 20,000 19,299
U.S. Treasury STRIPS+
5.520%, 02/15/97 5,000 4,832
---------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $29,113) 29,113
---------
REPURCHASE AGREEMENT -- 4.3%
Hong Kong Shanghai Bank
5.25%, dated 06/28/96, matures
07/01/96, repurchase price
$35,015,313 (collateralized by
U.S. Treasury Note, par value
$35,865,000, 6.25%, 04/30/01;
market value $35,893,750) 35,000 35,000
---------
TOTAL REPURCHASE AGREEMENT
(Cost $35,000) 35,000
---------
TOTAL INVESTMENTS -- 100.3%
(Cost $812,166) 812,166
---------
OTHER ASSETS AND LIABILITIES,
NET -- (0.3%) (2,218)
---------
NET ASSETS:
Portfolio Shares - Class Y ($0.001 par
value - 1 billion authorized) based
on 790,350,082 outstanding shares 790,350
Portfolio Shares - Class C ($0.001 par
value - 1 billion authorized) based
on 19,739,821 outstanding shares 19,740
Accumulated Net Realized Loss on
Investments (142)
---------
TOTAL NET ASSETS -- 100.0% $809,948
=========
NET ASSET VALUE & REDEMPTION PRICE
PER SHARE
CLASS Y $1.00
=========
CLASS C $1.00
=========
+ YIELD TO MATURITY
(A) VARIABLE RATE SECURITIES - THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT ON JUNE 30, 1996.
FHLB -- FEDERAL HOME LOAN BANK
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
SLMA -- STUDENT LOAN MARKETING ASSOCIATION
STRIPS -- SEPARATELY TRADED REGISTERED INTEREST AND PRINCIPAL OF SECURITIES
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
87
<PAGE>
STATEMENT
OF
NET ASSETS
AS OF
JUNE 30, 1996
TAX-FREE RESERVE
[GRAPHIC OMITTED]
Pie Chart -- Shown is a pie chart depicting the industry classification for the
Tax-Free Reserve. The following represent the plot points for the chart:
Industry Classification % of Total Portfolio Investment
Revenue Bonds 52
Tax-Exempt Commercial Paper 35
Anticipation Notes 8
General Obligations 5
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
MUNICIPAL BONDS -- 102.9%
ALABAMA -- 2.7%
Alabama State Housing Finance
Authority Revenue Bond for
Heatherbro Project (A) (B) (C)
3.550%, 07/05/96 $ 900 $ 900
Montgomery, Alabama TECP (C)
3.550%, 10/23/96 2,000 2,000
---------
2,900
---------
ALASKA -- 1.9%
Valdez, Alaska TECP (C)
3.550%, 08/16/96 2,000 2,000
---------
ARIZONA -- 0.7%
Flagstaff, Arizona TECP
3.650%, 10/22/96 750 750
---------
CALIFORNIA -- 0.3%
Santa Clara, California Electric
Revenue Bond, Series A
(A) (B) (C)
3.200%, 07/05/96 370 370
---------
DELAWARE -- 0.7%
Wilmington, Delaware Hospital
Revenue Bond for Franciscan
Health Systems Project,
Series A (A) (B) (C)
3.650%, 07/01/96 600 600
Wilmington, Delaware Hospital
Revenue Bond for Franciscan
Health Systems Project,
Series B (A) (B) (C)
3.650%, 07/01/96 100 100
---------
700
---------
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
FLORIDA -- 1.1%
Dade County, Florida Capital
Asset Revenue Bond,
Series 1990 (A) (B) (C)
3.600%, 07/05/96 $1,200 $ 1,200
---------
GEORGIA -- 3.9%
Burke County, Georgia TECP (C)
3.700%, 07/11/96 2,000 2,000
Hapeville, Georgia Industrial
Development Authority
Revenue Bond for Hapeville
Hotel Project (A) (B) (C)
3.600%, 07/01/96 2,200 2,200
---------
4,200
---------
HAWAII -- 1.4%
Honolulu County, Hawaii
TECP (C)
3.650%, 08/05/96 1,500 1,500
---------
ILLINOIS -- 5.9%
Chicago, Illinois O'Hare
International Airport Revenue
Bond for Industrial Lien,
Series C (A) (B) (C)
3.400%, 07/05/96 1,500 1,500
Illinois Development Finance
Authority Revenue Bond
3.300%, 07/05/96 1,800 1,800
Illinois State Housing and
Finance Authority Revenue
Bond for Franciscan Village
Project, Series A (A) (B) (C)
3.400%, 07/05/96 675 675
Illinois State Toll Highway
Authority Revenue Bond,
Series B (A) (B) (C)
3.300%, 07/05/96 1,000 1,000
St. Charles, Illinois Industrial
Development Authority
Revenue Bond for Pier One
Imports Project (A) (B) (C)
3.500%, 07/05/96 1,300 1,300
---------
6,275
---------
INDIANA -- 6.2%
Gary, Indiana Industrial
Development Authority
Revenue Bond for U.S. Steel
Project (A) (B) (C)
3.700%, 07/15/96 1,600 1,600
Jasper County, Indiana TECP (C)
3.650%, 07/17/96 500 500
Mt. Vernon, Indiana TECP (C)
3.600%, 08/21/96 3,900 3,900
Sullivan, Indiana TECP (C)
3.650%, 07/17/96 600 600
---------
6,600
---------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
88
<PAGE>
[] COREFUND MONEY MARKET FUNDS
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
IOWA -- 0.4%
Des Moines, Iowa Commercial
Development Revenue Bond
for Capital Center III Project
(A) (B) (C)
3.100%, 07/05/96 $ 400 $ 400
---------
KANSAS -- 4.7%
Burlington, Kansas TECP (C)
3.700%, 08/14/96 1,450 1,450
3.700%, 09/06/96 2,000 2,000
3.600%, 10/10/96 1,500 1,500
Wichita, Kansas Health Facilities
Revenue Bond for Wichita
Health Systems Project,
Series XXV (A) (B) (C)
3.650%, 07/05/96 100 100
---------
5,050
---------
KENTUCKY -- 2.1%
Jefferson County, Kentucky
TECP (C)
3.650%, 08/08/96 2,200 2,200
---------
LOUISIANA -- 4.5%
De Soto Parish, Louisiana
Pollution Control Revenue
Bond for Central Louisiana
Electric Company Project
(A) (B) (C)
3.250%, 07/05/96 700 700
East Baton Rouge, Louisiana
Pollution Control Revenue
Bond (A) (B) (C)
3.600%, 07/01/96 400 400
Jefferson Parish, Louisiana
Industrial Development
Authority Revenue Bond for
George J. Ackel, Sr. Project
(A) (B) (C)
3.150%, 07/05/96 800 800
Louisiana State Public Facilities
Authority Revenue Bond for
Kenner Hotel Project (A) (B) (C)
3.600%, 07/01/96 400 400
Louisiana State Recovery District
Sales Tax Revenue, Series 88
(A) (B) (C)
3.650%, 07/01/96 500 500
South Louisiana Port Common
Marine Terminal Facilities
Revenue Bond for Occidental
Petroleum Project (A) (B) (C)
3.400%, 07/05/96 2,000 2,000
---------
4,800
---------
MICHIGAN -- 4.7%
Delta County, Michigan
Environmental Improvement
Revenue Bond for Mead
Escambia Paper Project, Series C
(A) (B) (C)
3.600%, 07/01/96 400 400
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
Michigan State GO (C)
4.000%, 09/30/96 $2,000 $ 2,004
Michigan State Industrial
Development Authority Revenue
Bond for Consumer Power
Project (A) (B) (C)
3.550%, 07/01/96 1,600 1,600
Michigan State Underground
Storage Tank Financial
Assurance Authority Revenue
Bond, Series I (A) (B) (C)
3.450%, 08/15/96 1,000 1,000
---------
5,004
---------
MINNESOTA -- 1.4%
Rochester, Minnesota TECP (C)
3.700%, 07/03/96 1,500 1,500
---------
MISSISSIPPI -- 2.1%
Claiborne County, Mississippi
TECP (C)
3.650%, 07/24/96 1,000 1,000
3.650%, 08/07/96 1,000 1,000
Jackson County, Mississippi Port
Facility Revenue Bond for
Chevron USA Project (A) (B) (C)
3.550%, 07/01/96 200 200
---------
2,200
---------
MISSOURI -- 5.6%
Independence Waste, Missouri
TECP (C)
3.550%, 08/23/96 1,500 1,500
Missouri State Environmental
Improvement TECP (C)
3.550%, 07/10/96 1,500 1,500
University of Missouri Capital
Project Note, Series FY
4.750%, 06/30/97 3,000 3,025
---------
6,025
---------
MONTANA -- 0.3%
Forsyth, Montana Pollution
Control Revenue Bond for
Portland General Electric
Project (A) (B) (C)
3.300%, 07/05/96 200 200
Forsyth, Montana Pollution
Control Revenue Bond for
Portland General Electric
Project, Series B (A) (B) (C)
3.300%, 07/05/96 100 100
---------
300
---------
NEVADA -- 1.4%
Nevada State Housing Facilities
Revenue Bond for Multi-Unit
Park Project, Series A (A) (B) (C)
3.500%, 07/05/96 1,500 1,500
---------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
89
<PAGE>
STATEMENT
OF
NET ASSETS
AS OF
JUNE 30, 1996
TAX-FREE RESERVE (CONTINUED)
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
NEW HAMPSHIRE -- 1.8%
Manchester, New Hampshire GO
5.500%, 11/01/96 $1,945 $ 1,955
---------
NEW MEXICO -- 0.9%
Albuquerque, New Mexico Gross
Receipts Revenue Bond
(A) (B) (C)
3.400%, 07/05/96 1,000 1,000
---------
NEW YORK -- 0.4%
New York City, New York
Municipal Water Finance
Authority Revenue Bond,
Series C (A) (B) (C)
3.600%, 07/01/96 400 400
---------
NORTH CAROLINA -- 2.1%
North Carolina TECP (C)
3.300%, 07/15/96 1,500 1,500
Wake County, North Carolina
Industrial Development
Authority Revenue Bond for
Carolina Power & Light
Company Project, Series A
(A) (B) (C)
3.400%, 07/05/96 800 800
---------
2,300
---------
OHIO -- 2.3%
Ohio State Air Quality Revenue
Bond, Series B (A) (B)
3.750%, 07/01/96 1,300 1,300
Ohio State Water Development
Authority Revenue Bond for
Environmental Mead Company,
Series B (A) (B) (C)
3.600%, 07/01/96 1,200 1,200
---------
2,500
---------
OREGON -- 0.6%
Port of Portland, Oregon Pollution
Control Revenue Bond for
Reynold Metals Project
(A) (B) (C)
3.650%, 07/01/96 500 500
Umatilla County, Oregon
Franciscan Health System
Revenue Bond, Series A
(A) (B) (C)
3.650%, 07/01/96 100 100
---------
600
---------
PENNSYLVANIA -- 12.7%
Allegheny County, Pennsylvania
Hospital Development Revenue
Bond for Presbyterian University
Hospital Project, Series B1
(A) (B) (C)
3.550%, 07/01/96 1,800 1,800
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
Allegheny County, Pennsylvania
Hospital Development Revenue
Bond for Presbyterian University
Hospital Project, Series B2
(A) (B) (C)
3.550%, 07/01/96 $ 300 $ 300
Beaver County, Pennsylvania
Industrial Development
Authority Revenue Bond for
Duquesne Light Company
Project, Series B (A) (B) (C)
3.250%, 07/05/96 100 100
Langhorne, Pennsylvania Hospital
Authority Revenue Bond for
St. Mary's Hospital, Series A
(A) (B) (C)
3.600%, 07/01/96 200 200
Lehigh County, Pennsylvania
Industrial Development
Authority Revenue Bond for
Allegheny Electric Corporation
Project (A) (B) (C)
3.650%, 07/01/96 300 300
Montgomery County, Pennsylvania
TECP (C)
3.400%, 07/11/96 2,400 2,400
3.500%, 09/09/96 2,000 2,000
Pennsylvania State Higher
Education Facilities Authority
Revenue Bond for Carnegie
Mellon University Project,
Series B (A) (B)
3.700%, 07/01/96 1,500 1,500
Pennsylvania State Higher
Education Facilities Authority
Revenue Bond for Carnegie
Mellon University Project
4.250%, 11/01/96 1,560 1,563
Pennsylvania State Higher
Education Facilities Revenue
Bond for Carnegie Mellon
University Project, Series C
(A) (B)
3.700%, 07/01/96 2,300 2,300
Washington County, Pennsylvania
Lease Revenue Bond (A) (B) (C)
3.300%, 07/05/96 1,155 1,155
---------
13,618
---------
SOUTH CAROLINA -- 1.4%
Berkley County, South Carolina
Pollution Control Revenue
Bond for Amoco Chemical
Project (A) (B) (C)
3.550%, 07/01/96 700 700
Richland County, South Carolina
Hospital Facilities Revenue
Bond for Sunhealth-Orangeburg
Project, Series C2 (A) (B) (C)
3.600%, 07/05/96 450 450
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
90
<PAGE>
[] COREFUND MONEY MARKET FUNDS
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
York County, South Carolina
Pollution Control Revenue
Bond, Series NRU-84N-2
(A) (B) (C)
3.150%, 07/05/96 $ 400 $ 400
---------
1,550
---------
SOUTH DAKOTA -- 0.7%
Rapid City, South Dakota
Industrial Development
Authority Revenue Bond for
Corporate Property Association
Project (A) (B) (C)
3.300%, 07/05/96 765 765
---------
TENNESSEE -- 0.2%
Sullivan County, Tennessee
Industrial Development
Authority Pollution Control
Revenue Bond for Mead
Project (A) (B) (C)
3.650%, 07/01/96 200 200
---------
TEXAS -- 13.3%
Camp County, Texas Industrial
Development Authority
Revenue Bond for Texas Oil &
Gas Project (A) (B) (C)
3.300%, 07/05/96 500 500
Grapevine, Texas Industrial
Development Authority
Revenue Bond for American
Airlines Project, Series A4
(A) (B) (C)
3.650%, 07/01/96 100 100
Grapevine, Texas Industrial
Development Authority
Revenue Bond for American
Airlines Project, Series B1
(A) (B) (C)
3.650%, 07/01/96 200 200
Grapevine, Texas Industrial
Development Authority
Revenue Bond for American
Airlines Project, Series B3
(A) (B) (C)
3.650%, 07/01/96 600 600
Houston, Texas TRAN
4.500%, 06/30/97 2,000 2,011
Hunt County, Texas Industrial
Development Authority
Revenue Bond for Trico
Industries Incorporated
Project (A) (B) (C)
3.600%, 07/05/96 1,600 1,600
Montgomery County, Texas
Industrial Development
Authority Revenue Bond for
Dallas Tile Corporation Project,
Series A (A) (B) (C)
3.150%, 07/05/96 100 100
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
Nueces County, Texas Health
Facilities Authority Revenue
Bond for Driscoll Children's
Foundation Project (A) (B) (C)
3.150%, 07/05/96 $1,675 $ 1,675
Port Arthur, Texas Navigation
District Industrial Authority
Revenue Bond for American
Petrofina Incorporated
Project (A) (B) (C)
3.800%, 07/01/96 900 900
Texas State Higher Education
Authority Revenue Bond,
Series B (A) (B) (C)
3.100%, 07/05/96 1,900 1,900
Texas State TRAN, Series A
4.750%, 08/30/96 4,600 4,607
---------
14,193
---------
UTAH -- 3.5%
Davis County, Utah TRAN
4.500%, 12/31/96 2,000 2,007
Salt Lake City, Utah TRAN
4.500%, 12/31/96 1,750 1,757
---------
3,764
---------
VERMONT -- 1.2%
Vermont State Student Loan
Revenue Bond for Student
Loan Assistance Corporation
Project (A) (B) (C)
3.650%, 07/01/96 1,335 1,335
---------
VIRGINIA -- 4.2%
Chesapeake, Virginia TECP (C)
3.650%, 09/16/96 1,000 1,000
Virginia State Peninsula Port
Authority TECP (C)
3.600%, 07/17/96 1,000 1,000
3.600%, 09/24/96 1,000 1,000
Virginia State Peninsula Port
Authority Revenue Bond for
Dominion Terminal Project,
Series 1987C (A)
3.600%, 07/01/96 1,500 1,500
---------
4,500
---------
WEST VIRGINIA -- 0.4%
West Virginia State Hospital
Finance Authority Revenue
Bond for St. Mary's Hospital
Project (A) (B) (C)
3.300%, 07/05/96 400 400
---------
WISCONSIN -- 0.7%
Lac Du Flambeau, Wisconsin
Lake Superior Chippewa
Indians Special Obligation for
Simpson Electric Project
(A) (B) (C)
3.450%, 07/01/96 800 800
---------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
91
<PAGE>
STATEMENT
OF
NET ASSETS
AS OF
JUNE 30, 1996
TAX-FREE RESERVE (CONCLUDED)
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
WYOMING -- 4.5%
Converse, Wyoming TECP (C)
3.550%, 09/12/96 $1,000 $ 1,000
Gillette County, Wyoming
TECP (C)
3.600%, 09/19/96 1,200 1,200
Lincoln County, Wyoming
Resource Recovery Revenue
Bond for Exxon Project,
Series C (A) (B) (C)
3.600%, 07/01/96 1,900 1,900
Sublette County, Wyoming
Pollution Control Revenue
Bond for Exxon Project,
Series 84 (A) (B) (C)
3.550%, 07/01/96 700 700
---------
4,800
---------
TOTAL MUNICIPAL BONDS
(Cost $110,154) 110,154
---------
TOTAL INVESTMENTS -- 102.9%
(Cost $110,154) 110,154
---------
OTHER ASSETS AND LIABILITIES,
NET -- (2.9%) (3,108)
---------
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
NET ASSETS:
Portfolio Shares - Class Y ($0.001 par value
- 250 million authorized) based on
104,248,346 outstanding shares $104,248
Portfolio Shares - Class C ($0.001 par value -
250 million authorized) based on
2,851,047 outstanding shares 2,851
Accumulated Net Realized Loss on
Investments (53)
---------
TOTAL NET ASSETS -- 100.0% $107,046
=========
NET ASSET VALUE & REDEMPTION PRICE
PER SHARE
CLASS Y $1.00
=========
CLASS C $1.00
=========
(A) VARIABLE RATE SECURITIES--THE RATE REFLECTED ON THE STATEMENT OF THE NET
ASSETS IS THE RATE IN EFFECT ON JUNE 30, 1996.
(B) PUT OR DEMAND FEATURES EXIST REQUIRING THE ISSUER TO REPURCHASE THE
INSTRUMENT PRIOR TO MATURITY. THE MATURITY DATE SHOWN IS THE LESSOR OF THE
PUT DEMAND OR MATURITY DATE.
(C) SECURITIES ARE HELD IN CONNECTION WITH A LETTER OF CREDIT ISSUED BY A MAJOR
COMMERCIAL BANK OR FINANCIAL INSTITUTION.
GO -- GENERAL OBLIGATION
TECP -- TAX EXEMPT COMMERCIAL PAPER
TRAN -- TAX AND REVENUE ANTICIPATION NOTE
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
92
<PAGE>
STATEMENT
OF
OPERATIONS
(000)
[] COREFUND MONEY MARKET FUNDS
FOR THE YEAR
ENDED
JUNE 30, 1996
<TABLE>
<CAPTION>
-------- -------- --------
TAX-
TREASURY CASH FREE
RESERVE RESERVE RESERVE
-------- -------- --------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 32,947 $ 36,234 $ 2,653
-------- -------- --------
Total investment income 32,947 36,234 2,653
EXPENSES:
Investment advisory fees 2,797 3,063 343
Less investment advisory fees waived (1,102) (1,237) (135)
Administrative fees 1,503 1,618 187
Less administrative fees waived (536) (582) (76)
Transfer agent fees & expenses 172 196 25
Custodian -- -- --
Professional fees 54 59 5
Registration & filing fees 69 102 1
12b-1 fees 51 47 5
Taxes--other than income (137) (155) (23)
Printing 49 53 9
Organization costs -- -- --
Miscellaneous 101 94 12
-------- -------- --------
Total expenses 3,021 3,258 353
-------- -------- --------
NET INVESTMENT INCOME 29,926 32,976 2,300
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS:
Net realized loss from security
transactions (4) (2) --
Net change unrealized appreciation
on investments -- -- --
-------- -------- --------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 29,922 $ 32,974 $ 2,300
======== ======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
93
<PAGE>
STATEMENT
OF CHANGES
IN NET ASSETS
(000)
FOR THE PERIODS
ENDED
JUNE 30
<TABLE>
<CAPTION>
------------------------ ------------------------ --------------------------
TREASURY CASH TAX-FREE
RESERVE RESERVE RESERVE
------------------------ ------------------------ --------------------------
1996 1995 1996 1995 1996 1995
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 29,926 $ 23,160 $ 32,976 $ 27,369 $ 2,300 $ 2,418
Net realized gain (loss) on securities
transactions (4) 4 (2) (30) -- (27)
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets resulting
from operations 29,922 23,164 32,974 27,339 2,300 2,391
----------- ----------- ----------- ----------- ----------- -----------
DIVIDENDS DISTRIBUTED FROM:
Net investment income:
Class Y* (28,940) (22,642) (32,056) (26,626) (2,245) (2,359)
Class C* (986) (518) (920) (743) (55) (59)
Net realized gain:
Class Y* -- -- -- -- -- --
Class C* -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total dividends distributed (29,926) (23,160) (32,976) (27,369) (2,300) (2,418)
----------- ----------- ----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Class Y*
Proceeds from shares issued in merger (a) 397,193 -- 220,190 -- 51,375 --
Proceeds from shares issued 2,291,733 1,884,529 1,319,098 1,153,765 223,212 196,955
Reinvestment of cash distributions 5,323 5,268 3,471 3,226 216 228
Cost of shares redeemed (2,280,888) (1,895,568) (1,262,885) (1,151,894) (233,363) (213,785)
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets from
Class Y* transactions 413,361 (5,771) 279,874 5,097 41,440 (16,602)
----------- ----------- ----------- ----------- ----------- -----------
Class C*
Proceeds from shares issued in merger (a) 744 -- 2,038 -- 1,258 --
Proceeds from shares issued 32,271 31,754 34,793 42,775 2,753 3,788
Reinvestment of cash distributions 440 257 905 690 53 55
Cost of shares redeemed (35,682) (17,973) (35,584) (37,332) (2,738) (5,026)
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets from
Class C transactions (2,227) 14,038 2,152 6,133 1,326 (1,183)
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets derived
from capital share transactions 411,134 8,267 282,026 11,230 42,766 (17,785)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets 411,130 8,271 282,024 11,200 42,766 (17,812)
----------- ----------- ----------- ----------- ----------- -----------
NET ASSETS:
Beginning of year 500,818 492,547 527,924 516,724 64,280 82,092
----------- ----------- ----------- ----------- ----------- -----------
End of year $ 911,948 $ 500,818 $ 809,948 $ 527,924 $ 107,046 $ 64,280
=========== =========== =========== =========== =========== ===========
<FN>
* ON APRIL 22, 1996 SERIES A SHARES WERE REDESIGNATED CLASS Y AND SERIES B SHARES
WERE REDESIGNATED CLASS C.
(A) ON APRIL 15 & 22, THE CONESTOGA FUNDS WERE AQUIRED BY COREFUNDS INC.
PLEASE SEE THE NOTES TO THE FINANCIAL STATEMENTS FOR FURTHER INFORMATION
REGARDING THE TRANSACTION.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
94
<PAGE>
FINANCIAL
HIGHLIGHTS
[] COREFUND MONEY MARKET FUNDS
FOR THE PERIODS
ENDED
JUNE 30
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
RATIO RATIO OF
NET NET RATIO OF EXPENSES NET INCOME
ASSET DISTRIBUTIONS NET ASSETS RATIO OF NET TO AVERAGE TO AVERAGE
VALUE NET FROM NET ASSET VALUE END OF EXPENSES INCOME NET ASSETS NET ASSETS
BEGINNING INVESTMENT INVESTMENT END TOTAL OF PERIOD TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING
OF PERIOD INCOME INCOME OF PERIOD RETURN (000) NET ASSETS NET ASSETS WAIVERS) WAIVERS)
--------- ---------- ------------- -------- ------ --------- ------------ ----------- ----------- ---------
- ----------------
TREASURY RESERVE
- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS Y*
1996 $1.00 $0.05 $(0.05) $1.00 5.20% $892,562 0.50% 5.02% 0.77% 4.75%
1995 1.00 0.05 (0.05) 1.00 4.98 479,206 0.48 4.91 0.85 4.54
1994 1.00 0.03 (0.03) 1.00 2.91 484,974 0.48 2.87 0.86 2.49
1993 1.00 0.03 (0.03) 1.00 2.96 446,788 0.46 2.89 0.85 2.50
1992 1.00 0.05 (0.05) 1.00 4.73 444,388 0.38 4.58 0.82 4.14
1991 1.00 0.07 (0.07) 1.00 7.11 427,439 0.37 6.80 0.82 6.35
1990 1.00 0.08 (0.08) 1.00 8.38 270,524 0.37 8.03 0.84 7.56
19892 1.00 0.06 (0.06) 1.00 4.66+ 220,479 0.20 9.26 0.84 8.62
CLASS C*
1996 $1.00 $0.05 $(0.05) $1.00 4.94% $ 19,386 0.75% 4.81% 1.03% 4.53%
1995 1.00 0.05 (0.05) 1.00 4.72 21,612 0.73 4.81 1.10 4.44
1994 1.00 0.03 (0.03) 1.00 2.65 7,573 0.73 2.62 1.11 2.24
19931 1.00 0.01 (0.01) 1.00 1.21+ 7,672 0.75 2.46 1.14 2.07
- ------------
CASH RESERVE
- ------------
CLASS Y*
1996 $1.00 $0.05 $(0.05) $1.00 5.26% $790,211 0.50% 5.09% 0.78% 4.81%
1995 1.00 0.05 (0.05) 1.00 5.15 510,341 0.48 5.04 0.85 4.67
1994 1.00 0.03 (0.03) 1.00 3.00 505,273 0.47 2.95 0.85 2.57
1993 1.00 0.03 (0.03) 1.00 2.99 460,832 0.46 2.97 0.85 2.58
1992 1.00 0.05 (0.05) 1.00 4.83 568,672 0.38 4.68 0.82 4.24
1991 1.00 0.07 (0.07) 1.00 7.28 473,187 0.37 6.94 0.82 6.49
1990 1.00 0.08 (0.08) 1.00 8.65 316,290 0.34 8.28 0.80 7.82
1989 1.00 0.09 (0.09) 1.00 8.87 186,151 0.37 8.62 0.90 8.05
1988 1.00 0.07 (0.07) 1.00 6.70 82,399 0.55 6.54 1.14 5.96
1987 1.00 0.06 (0.06) 1.00 5.85 35,054 0.54 5.60 1.01 5.13
CLASS C*
1996 $1.00 $0.05 $(0.05) $1.00 5.00% $ 19,736 0.75% 4.86% 1.03% 4.58%
1995 1.00 0.05 (0.05) 1.00 4.89 17,583 0.73 4.86 1.10 4.49
1994 1.00 0.03 (0.03) 1.00 2.74 11,451 0.72 2.70 1.10 2.32
19931 1.00 0.01 (0.01) 1.00 1.23+ 15,330 0.76 2.52 1.15 2.13
- ----------------
TAX-FREE RESERVE
- ----------------
CLASS Y*
1996 $1.00 $0.03 $(0.03) $1.00 3.20% $104,196 0.48% 3.14% 0.76% 2.86%
1995 1.00 0.03 (0.03) 1.00 3.12 62,756 0.48 3.09 0.85 2.72
1994 1.00 0.02 (0.02) 1.00 2.03 79,384 0.49 2.00 0.87 1.62
1993 1.00 0.02 (0.02) 1.00 2.23 72,255 0.51 2.20 0.89 1.82
1992 1.00 0.03 (0.03) 1.00 3.56 80,147 0.37 3.39 0.88 2.88
19913 1.00 0.01 (0.01) 1.00 1.07+ 42,573 0.06 4.20 0.81 3.45
CLASS C*
1996 $1.00 $0.03 $(0.03) $1.00 2.95% $ 2,850 0.73% 2.94% 1.02% 2.65%
1995 1.00 0.03 (0.03) 1.00 2.86 1,524 0.73 2.80 1.10 2.43
1994 1.00 0.02 (0.02) 1.00 1.78 2,708 0.74 1.75 1.12 1.37
19931 1.00 0.01 (0.01) 1.00 0.85+ 1,795 0.76 1.71 1.14 1.33
<FN>
* ON APRIL 22, 1996, SERIES A SHARES WERE REDESIGNATED CLASS Y AND SERIES B SHARES WERE REDESIGNATED CLASS C.
+ RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
1 COMMENCED OPERATIONS JANUARY 4, 1993. RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
2 COMMENCED OPERATIONS NOVEMBER 21, 1988. RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
3 COMMENCED OPERATIONS APRIL 16, 1991. RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
95
<PAGE>
NOTES TO
FINANCIAL
STATEMENTS
FOR THE YEAR
ENDED
JUNE 30, 1996
1. ORGANIZATION
The CoreFund Equity Index Fund, Equity Fund, Growth Equity Fund, Special
Equity Fund, International Growth Fund, Balanced Fund (the Equity Funds), Short
Term Income Fund, Short- Intermediate Bond Fund, Government Income Fund, Bond
Fund, Intermediate Municipal Bond Fund, Global Bond Fund, Pennsylvania Municipal
Bond Fund, New Jersey Municipal Bond Fund (the Fixed Income Funds), Cash
Reserve, Treasury Reserve, and Tax-Free Reserve (the Money Market Funds) are
portfolios offered by CoreFunds, Inc. (The Company), an open-end investment
company registered under the Investment Company Act of 1940, as amended. The
Company is presently authorized to offer 20 separate portfolios (the
Portfolios):
EQUITY PORTFOLIOS: MONEY MARKET PORTFOLIOS:
Equity Index Fund Treasury Reserve
Equity Fund Cash Reserve
Growth Equity Fund Tax-Free Reserve
Special Equity Fund Fiduciary Reserve
International Growth Fund Fiduciary Treasury Reserve
Balanced Fund Fiduciary Tax-Free Reserve
FIXED INCOME PORTFOLIOS:
Short Term Income Fund
Short-Intermediate Bond Fund
Government Income Fund
Bond Fund
Intermediate Municipal Bond Fund
Global Bond Fund
Pennsylvania Municipal Bond Fund
New Jersey Municipal Bond Fund
The financial statements of the Equity Funds are included on pages 37 to
62, the financial statements of the Fixed Income Funds are included on pages 63
to 83 and the financial statements of the Money Market Funds are included on
pages 84 to 95. The financial statements of the Fiduciary Reserve, Fiduciary
Treasury Reserve and Fiduciary Tax-Free Reserve are not presented herein.
The assets of each Portfolio are segregated, and a Shareholder's interest
is limited to the Portfolio in which shares are held. The Funds' prospectus
provides a description of the Funds' investment objectives, policies and
strategies.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Portfolios.
SECURITY VALUATION--Investment securities of the Equity and Fixed Income
Funds which are listed on a securities exchange for which market quotations are
available are valued by an independent pricing service at the last quoted sales
price for such securities on each business day. If there is no such reported
sale, these securities and unlisted securities for which market quotations are
readily available are valued at the most recent quoted bid price using
procedures determined in good faith by the Board of Trustees. Debt obligations
with sixty days or less remaining until maturity may be valued at their
amortized cost. Under this valuation method, purchase discounts and premiums are
accreted and amortized ratably to maturity and are included in interest income.
Investment securities of the Money Market Funds are stated at amortized
cost which approximates market value. Under this valuation method,
purchaseydiscounts and premiums are accreted and amortized ratably to maturity
and are included in interest income.
The books and records of the International Growth Fund and Global Bond
Fund are maintained in U.S. dollars. Foreign currency amounts are translated
into U.S. dollars on the following bases:
(I) market value of investment securities, asset and liabilities at the
current rate of exchange; and
(II) purchases and sales of investment securities, income and expenses at
the relevant rates of exchange prevailing on the respective dates of such
transactions.
The International Growth Fund does not isolate the portion of gains or
losses on investments in equity securities which is due to changes in the
foreign exchange rates from that which is due to changes in market prices of
equity securities.
The International Growth Fund and Global Bond Fund report certain foreign
currency related transactions as components of unrealized and realized gains for
financial reporting purposes, whereas such components are treated as ordinary
income for Federal income tax purposes.
96
<PAGE>
[] COREFUND
FORWARD FOREIGN CURRENCY CONTRACTS--The International Growth Fund and
Global Bond Fund enter into forward foreign currency contracts as hedges against
either specific transactions or portfolio positions. The aggregate principal
amounts of the contracts are not recorded as the funds intend to settle the
contracts prior to delivery. All commitments are "marked-to-market" daily at the
applicable foreign exchange rate and any resulting unrealized gains or losses
are recorded currently. The funds realize gains or losses at the time forward
contracts are extinguished. Financial future contracts are valued at the
settlement price established each day by the board of trade on exchange on which
they are traded.
SECURITY TRANSACTIONS AND INVESTMENT INCOME--Security transactions are
accounted for on the trade date of the security purchase or sale. Cost used in
determining net realized capital gains and losses on the sale of securities are
those of the specific securities sold, adjusted for the accretion and
amortization of purchase discounts or premiums during the respective holding
period, which is calculated using the effective interest method. Interest income
is recorded on the accrual basis. Dividend income is recorded on ex-dividend
date.
REPURCHASE AGREEMENTS--Securities pledged as collateral for Repurchase
Agreements are held by each Portfolio's custodian bank until maturity of the
Repurchase Agreements. Provisions of the Agreements and procedures adopted by
the Advisor ensure that the market value of the collateral, including accrued
interest thereon, is sufficient in the event of default by the counterparty. If
the counterparty defaults and the value of the collateral declines or if the
counterparty enters into insolvency proceedings, realization of collateral by
the Portfolio may be delayed or limited.
EXPENSES--Expenses that are directly related to one of the Portfolios are
charged directly to that Portfolio. Other operating expenses of the Company are
pro-rated to the Portfolios on the basis of relative net assets.yClass specific
expenses, such as the 12B-1 fees, are borne by that class. Income, other
expenses and accumulated realized and unrealized gains and losses of a Portfolio
are allocated to the respective class on the basis of the relative net asset
value each day.
DISTRIBUTION TO SHAREHOLDERS--The Equity Index, Equity, Growth Equity,
Special Equity, Balanced Fund and Global Bond Fund declare and pay dividends on
a quarterly basis. The International Growth Fund declares and pays dividends on
a semi-annual basis. Such dividends are reinvested in additional shares unless
otherwise requested. The Short Term Income Fund, Short-Intermediate Bond Fund,
Government Income Fund, Bond Fund, Intermediate Municipal Bond Fund,
Pennsylvania Municipal Bond Fund, New Jersey Municipal Bond Fund, Treasury
Reserve, Cash Reserve and Tax-Free Reserve distributions from net investment
income are declared on a daily basis and are payable on the first business day
of the following month. Any net realized capital gains on sales of securities
for a Portfolio are distributed to its shareholders at least annually.
Distributions from net investment income and net realized capital gains are
determined in accordance with U.S. Federal income tax regulations, which may
differ from those amounts determined under generally accepted accounting
principles. These book/tax differences are either temporary or permanent in
nature. To the extent these differences are permanent, they are charged or
credited to paid in capital in the period that the difference arises.
Accordingly, the following permanent differences primarily attributable to
realized foreign exchange gains and losses, have been reclassified from
accumulated net realized gain (loss) on foreign currency transactions to
undistributed net investment income:
(000)
--------
INTERNATIONAL GROWTH FUND $ 1,440
GLOBAL BOND FUND (1,068)
These reclassifications have no effect on net assets or net asset values per
share.
FEDERAL INCOME TAXES--It is each Portfolio's intention to continue to
qualify as a regulated investment company and distribute all of its taxable
income. Accordingly, no provision for Federal income tax is required.
OTHER--Organizational costs incurred with the start up of the Balanced
Fund, Government Income Fund, Short Term Income Fund, Intermediate Municipal
Bond Fund, Global Bond Fund, Pennsylvania Municipal Bond Fund and New Jersey
Municipal Bond Fund are being amortized on a straight line basis over a maximum
period of sixty months. If any or all of the shares representing initial capital
of each fund are redeemed by any holder thereof prior to the end of the
amortization period, the proceeds will be reduced by the unamortized
organizational cost balance in the same proportion as the number of shares
redeemed bears to the initial shares outstanding immediately preceding the
redemption.
97
<PAGE>
NOTES TO
FINANCIAL
STATEMENTS
(CONTINUED)
FOR THE YEAR
ENDED
JUNE 30, 1996
3. INVESTMENT ADVISORY AND CUSTODIAL SERVICES
The Company has entered into an investment advisory agreement with
CoreStates Investment Advisers, Inc. ("CSIA") to provide investment advisory
services to each Fund. For its services CSIA receives a fee based on the annual
average daily net assets of each Fund as shown in the following table:
<TABLE>
<CAPTION>
ADVISER INVESTMENT ADVISORY ADVISER INVESTMENT ADVISORY
FUND FEE AGREEMENT DATE FUND FEE AGREEMENT DATE
- -------------------- ------- ------------------ ----------------------- ------ ------------------
<S> <C> <C> <C> <C> <C>
Equity Index 0.40% March 25, 1991 Short Term Income 0.74% April 12, 1996
Equity 0.74 April 12, 1996 Short-Intermediate Bond 0.50 March 25, 1991
Growth Equity 0.75 March 25, 1991 Government Income 0.50 March 25, 1991
Special Equity 1.50 April 12, 1996 Bond 0.74 April 12, 1996
International Growth 0.80 December 5, 1989 Global Bond 0.60 March 25, 1991
Balanced 0.70 March 25, 1991 Intermediate Municipal 0.50 March 25, 1991
Bond
Treasury Reserve 0.40 April 12, 1996 Pennsylvania Municipal 0.50 May 15, 1994
Cash Reserve 0.40 April 12, 1996 Bond
Tax-Free Reserve 0.40 April 12, 1996 New Jersey Municipal 0.50 May 15, 1994
Bond
</TABLE>
Prior to April 22, 1996 the Adviser fee for the Equity, Treasury Reserve,
Cash Reserve and Tax-Free Reserve were 0.75%, 0.50%, 0.50% and 0.50%,
respectively. This fee is computed daily and paid monthly for all Funds.
Additionally, for the year ended June 30, 1996, CSIA has voluntarily waived a
portion of their fees in order to assist the Funds in maintaining competitive
expense ratios.
CoreStates Bank serves as Custodian to the Company. No fees are being paid
to CoreStates Bank for such services. Sub-Advisory services are provided to the
CoreStates Advisers for the International Growth Fund by Martin Currie, Inc. and
Aberdeen Managers (The "Sub-Advisers"). Sub-Advisory services are provided for
the Global Bond Fund by Analytic TSA (formerly Alpha Global). CoreStates
Advisers is responsible for the supervision, and payment of fees to the
Sub-Advisers in connection with their services.
4. ADMINISTRATIVE, TRANSFER AGENT AND DISTRIBUTION SERVICES
Pursuant to an Administration agreement dated October 30, 1992, as amended
June 1, 1995, SEI Fund Resources ("SFR") acts as the Portfolio's Administrator.
Under the terms of such agreement, SFR is entitled to receive an annual fee of
0.25% on the average net assets of the Portfolios. SFR voluntarily waives a
portion of their fees in order to assist the Funds in maintaining competitive
expense ratios.
Effective for the period July 1, 1995 to November 16, 1995, SEI Financial
Management Corporation acted as the Transfer Agent of the Trust. Pursuant to a
Transfer Agency agreement dated November 16, 1995, Boston Financial Data
Services ("BFDS"), a wholly owned subsidiary of State Street Bank and Trust
Company acts as the Portfolio's Transfer Agent. As such, BFDS provides transfer
agency, dividend disbursing and shareholder servicing for the Portfolios.
On November 2, 1992, SEI Financial Services ("SFS"), a wholly owned
subsidiary of SEI, became the "Portfolios" exclusive Distributor pursuant to a
distribution agreement dated October 30, 1992.
The Company has adopted a Distribution Plan (the Plan) for those Portfolios
offering Class A shares. The Plan provides for the payment by the Company to the
Distributor of up to 0.25% of the daily net assets of each Class A and C
Portfolio to which the Plan is applicable. The Distributor is authorized to use
this fee as compensation for its distribution related services and as payment to
certain securities broker/dealers and financial institutions which enter into
shareholder servicing agreements or broker agreements with the Distributor. The
Portfolios paid approximately $149,000 to affiliated brokers for the fiscal year
ended 1996 for commissions earned on the sales of the shares of the Funds.
Certain officers of the Company are also officers of the Administrator.
Such officers are paid no fees by the Portfolios.
The Portfolios have paid legal fees to a law firm in which the Secretary of
the Company is partner.
98
<PAGE>
[] COREFUND
5. INVESTMENT TRANSACTIONS
During the year ended June 30, 1996, purchases of securities and proceeds
from sales of securities, other than temporary investments in short-term
securities, were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
------------------------------- --------------------------------
PURCHASES SALES
------------------------------- --------------------------------
U.S. U.S.
PORTFOLIO INVESTMENT TRANSACTIONS (000) GOVERNMENT OTHER TOTAL GOVERNMENT OTHER TOTAL
---------- -------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Growth Equity Fund $ -- $ 85,109 $ 85,109 $ -- $ 71,263 $ 71,263
Equity Fund -- 96,249 96,249 -- 100,409 100,409
Equity Index Fund -- 44,239 44,239 -- 21,174 21,174
Special Equity Fund -- 41,311 41,311 -- 46,401 46,401
International Growth Fund -- 49,435 49,435 -- 60,528 60,528
Balanced Fund 5,185 46,745 51,930 3,454 52,078 55,532
Government Income Fund 15,770 6,658 22,428 13,405 4,170 17,575
Short Term Income Fund 21,055 6,307 27,362 19,921 2,952 22,873
Short-Intermediate Bond Fund 52,624 39,555 92,179 56,010 30,134 86,144
Intermediate Municipal Fund -- 249 249 -- 221 221
Bond Fund $214,483 166,396 380,879 219,103 156,101 375,204
Global Bond Fund 6,754 20,693 27,447 1,816 16,209 18,025
Pennsylvania Municipal Bond Fund -- 2,600 2,600 -- 1,865 1,865
New Jersey Municipal Bond Fund -- 635 635 -- 742 742
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
At June 30, 1996, the Government Income Fund, Short- Intermediate Bond
Fund, Intermediate Municipal Bond Fund, Global Bond Fund, Pennsylvania Municipal
Bond Fund, Cash Reserve and Tax-Free Reserve had capital loss carryforwards for
federal tax purposes of approximately $211,666, $1,700,933, $76,745, $990,270,
$8,879, $32,384 and $54,381, respectively, resulting from security sales. For
tax purposes, the losses in the Funds can be carried forward for a maximum of
eight years to offset any net realized capital gains. The carryforward for the
Government Income Fund, Short- Intermediate Bond Fund, Intermediate Municipal
Bond Fund, Global Bond Fund, Cash Reserve and Tax-Free Reserve Funds expires in
2003.
At June 30, 1996 the total cost of securities and the net realized gains or
losses on securities sold for Federal income tax purposes was not materially
different from amounts reported for financial purposes. The aggregate gross
unrealized gain or loss on securities at June 30, 1996 for each portfolio within
the CoreFunds is as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
------------ ------------ --------
AGGREGATE AGGREGATE
GROSS GROSS
AGGREGATE GROSS UNREALIZED GAIN (LOSS) (000) APPRECIATION DEPRECIATION NET
------------ ------------ --------
<S> <C> <C> <C>
Growth Equity Fund $33,348 $ (783) $32,565
Equity Fund 53,452 (9,650) 43,802
Equity Index Fund 45,993 (2,879) 43,114
Special Equity Fund 9,558 (6,641) 2,917
International Growth Fund 16,025 (4,090) 11,935
Balanced Fund 14,374 (1,776) 12,598
Government Income Fund 47 (431) (384)
Short Term Income Fund 20 (98) (78)
Short-Intermediate Bond Fund 621 (1,317) (696)
Intermediate Municipal Fund 6 (10) (4)
Bond Fund 541 (2,655) (2,114)
Global Bond Fund 867 (817) 50
Pennsylvania Municipal Bond Fund 127 (109) 18
New Jersey Municipal Bond Fund 26 (3) 23
- ----------------------------------------------------------------------------------------
</TABLE>
99
<PAGE>
NOTES TO
FINANCIAL
STATEMENTS
(CONTINUED)
FOR THE YEAR
ENDED
JUNE 30, 1996
6. FORWARD FOREIGN CURRENCY CONTRACTS
The International Growth Fund and Global Bond Fund enter into forward foreign
currency contracts as hedges against portfolio positions. Such contracts, which
protect the value of a Fund's investment securities against a decline in the
value of currency, do not eliminate fluctuations in the underlying prices of the
securities. They simply establish an exchange rate at a future date. Also,
although such contracts tend to minimize the risk of loss due to a decline in
the value of a hedged currency, at the same time they tend to limit any
potential gain that might be realized should the value of such foreign currency
increase. The following forward foreign currency contracts were outstanding at
June 30, 1996:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
---------------- ------------ --------------
UNREALIZED
CONTRACTS TO IN EXCHANGE APPRECIATION
INTERNATIONAL GROWTH FUND: DELIVER/RECEIVE FOR (DEPRECIATION)
---------------- ------------ --------------
<S> <C> <C> <C>
Foreign Currency Sales:
8/14/96 JY 2,337,449,153 $22,588,500 $1,091,155
==========
Foreign Currency Purchases:
8/14/96 JY 1,186,482,931 11,118,500 $ (206,505)
==========
Net Unrealized Appreciation $ 884,650
==========
GLOBAL BOND FUND:
Foreign Currency Sales:
7/26/96 DM 8,822,000 $ 5,833,499 $ 22,820
7/22-10/22/96 DK 22,132,600 3,816,448 33,699
7/22-8/22/96 FF 21,700,000 4,231,258 2,573
7/26/96 NL 5,123,500 3,030,939 20,726
----------
Net Unrealized Appreciation $ 79,818
==========
- --------------------------------------------------------------------------------------
</TABLE>
CURRENCY LEGEND
DM German Marks
DK Danish Kroner
FF French Francs
JY Japanese Yen
NL Netherlands Guilder
100
<PAGE>
[] COREFUND
7. CONCENTRATION OF CREDIT RISK
The Intermediate Municipal Bond Fund, Pennsylvania Municipal Bond Fund, New
Jersey Municipal Bond Fund, and Tax-Free Reserve invest in debt instruments of
municipal issuers. Although these Funds maintain a diversified portfolio, with
the exception of the Pennsylvania Municipal Bond Fund and the New Jersey
Municipal Bond Fund, the issuers ability to meet their obligations may be
affected by economic developments in a specific state or region.
The Intermediate Municipal Bond Fund, Pennsylvania Municipal Bond Fund, New
Jersey Municipal Bond Fund, and Tax-Free Reserve invest in securities which
include revenue bonds, tax exempt commercial paper, tax and revenue anticipation
notes, and general obligation bonds. At June 30, 1996, the percentage of
portfolio investments by each revenue source was as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
------------ ------------ ---------- --------
INTERMEDIATE PENNSYLVANIA NEW JERSEY
MUNICIPAL MUNICIPAL MUNICIPAL
BOND BOND BOND TAX-FREE
FUND FUND FUND RESERVE
------------ ------------ ---------- --------
<S> <C> <C> <C> <C>
REVENUE BONDS:
Education Bonds 18.2% 21.5% 22.3% 11.8%
Health Care Bonds 3.8 12.6 11.1 6.1
Transportation Bonds 16.3 7.3 18.6 8.5
Utility Bonds 21.2 14.9 8.5 3.1
Housing Bonds -- 5.2 -- --
Pollution Control Bonds -- -- -- 8.5
Industrial Bonds -- 3.9 -- 7.9
Other 3.7 3.0 6.9 8.4
GENERAL OBLIGATIONS 36.8 31.6 32.6 3.6
TAX EXEMPT COMMERCIAL PAPER -- -- -- 34.4
TAX AND REVENUE ANTICIPATION NOTES -- -- -- 6.8
TAX ANTICIPATION NOTES -- -- -- 0.9
--- --- --- ---
100% 100% 100% 100%
- ---------------------------------------------------------------------------------------
</TABLE>
The rating of long-term debt as a percentage of total value of investments
at June 30, 1996 is as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
------------ ------------ ---------- ------ ------------ ------------
SHORT- PENNSYLVANIA NEW JERSEY
INTERMEDIATE INTERMEDIATE GOVERNMENT GLOBAL INTERMEDIATE INTERMEDIATE
BOND MUNICIPAL INCOME BOND MUNICIPAL MUNICIPAL
FUND FUND FUND FUND FUND FUND
------------ ------------ ---------- ------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
STANDARD & POORS RATINGS:
AAA 71% 54% 100% 89% 74% 32%
AA 3 22 -- 7 20 49
AA+ -- -- -- -- -- --
AA- -- -- -- -- -- --
A+ -- -- -- -- -- --
A 11 7 -- -- 5 7
NR 15 17 -- 4 1 12
--- --- --- --- --- ---
100% 100% 100% 100% 100% 100%
- ----------------------------------------------------------------------------------------------------
</TABLE>
Many municipalities insure their obligations with insurance underwritten by
insurance companies which undertake to pay a holder, when due, the interest and
principal amount on an obligation if the issuer defaults on its obligation.
Although bond insurance reduces the risk of loss due to default by the issuer,
there is no assurance that the insurance company will meet its obligations.
Also, some of the securities have credit enhancements (letters of credit or
guarantees issued by third party domestic or foreign banks or other
institutions). At June 30, 1996, the percentage of securities with credit
enhancements are as follows:
----------------------------------------------------------------------
------- ---------
LETTERS
OF BOND
CREDIT INSURANCE
------ ---------
Intermediate Municipal Fund -- 64.3%
Pennsylvania Municipal Bond Fund -- 56.1
New Jersey Municipal Bond Fund -- 27.9
Tax-Free Reserve 76.3% --
-----------------------------------------------------------------------
101
<PAGE>
NOTES TO
FINANCIAL
STATEMENTS
(CONTINUED)
FOR THE YEAR
ENDED
JUNE 30, 1996
8. SHARE TRANSACTIONS (000):
For the fiscal year ended June 30, 1996.
<TABLE>
<CAPTION>
------ ------- ------ ------- ------------- -------- ---------- ---------- --------
EQUITY GROWTH SPECIAL INTERNATIONAL
INDEX EQUITY EQUITY EQUITY GROWTH BALANCED CASH TREASURY TAX-FREE
FUND FUND (1) FUND FUND (2) FUND FUND RESERVE RESERVE RESERVE
------ ------- ------ ------- ------------- -------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INSTITUTIONAL
Shares exchanged for
Class Y shares -- -- (5,306) -- -- -- -- --
Shares issued -- 2,000 -- 622 -- -- -- -- --
Shares issued in lieu
of cash distributions -- 3,511 -- 885 -- -- -- -- --
Shares repurchased -- (5,337) -- (1,228) -- -- -- -- --
------ ------ ------ ------ ------ ------ ---------- ---------- --------
Net Increase (Decrease) -- 174 -- (5,027) -- -- -- -- --
====== ====== ====== ====== ====== ====== ========== ========== ========
CLASS Y*
Shares issued in merger* -- 2,067 -- 5,306 1,175 3,164 220,322 397,193 51,380
Shares issued 1,922 980 1,955 237 1,312 1,463 1,319,098 2,291,733 223,212
Shares issued in lieu
of cash distributions 234 -- 253 -- 209 211 3,471 5,323 216
Shares repurchased (1,045) (1,348) (1,918) (174) (1,752) (2,218) (1,262,885) (2,280,888) (233,363)
------ ------ ------ ------ ------ ------ ---------- ---------- --------
Net increase 1,111 1,699 290 5,369 944 2,620 280,006 413,361 41,445
====== ====== ====== ====== ====== ====== ========== ========== ========
RETAIL
Shares exchanged
for Class A shares -- -- -- (89) -- -- -- -- --
Shares issued -- 60 -- 16 -- -- -- -- --
Shares issued in lieu
of cash distributions -- 70 -- 12 -- -- -- -- --
Shares repurchased -- (38) -- (3) -- -- -- -- --
------ ------ ------ ------ ------ ------ ---------- ---------- --------
Net increase (Decrease) -- 92 -- (64) -- -- -- -- --
====== ====== ====== ====== ====== ====== ========== ========== ========
CLASS A*
Shares issued in merger -- 169 -- 89 4 8 2,041 744 1,258
Shares issued -- 32 78 8 32 55 34,793 32,271 2,753
Shares issued in lieu
of cash distributions -- -- 6 -- 4 8 905 440 53
Shares repurchased -- (33) (44) -- (45) (30) (35,584) (35,682) (2,738)
------ ------ ------ ------ ------ ------ ---------- ---------- --------
Net increase (Decrease) -- 168 40 97 (5) 41 2,155 (2,227) 1,326
====== ====== ====== ====== ====== ====== ========== ========== ========
TOTAL SHARE ACTIVITY
FOR PERIOD 1,111 2,133 330 375 939 2,661 282,161 411,134 42,771
====== ====== ====== ====== ====== ====== ========== ========== ========
</TABLE>
102
<PAGE>
[] COREFUND
8. SHARE TRANSACTIONS (000): -- CONTINUED
<TABLE>
<CAPTION>
---------- ------------ ---------- -------- -------- ------------ ------------ ----------
SHORT-
SHORT TERM INTERMEDIATE GOVERNMENT GLOBAL INTERMEDIATE PENNSYLVANIA NEW JERSEY
INCOME BOND INCOME BOND BOND MUNICICPAL MUNICIPAL MUNICIPAL
FUND (2) FUND FUND FUND (2) FUND BOND FUND BOND FUND BOND FUND
---------- ------------ ---------- -------- -------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INSTITUTIONAL
Shares exchanged
for Class Y shares (3,004) -- -- (19,082) -- -- -- --
Shares issued 576 -- -- 2,678 -- -- -- --
Shares issued in lieu
of cash distributions 93 -- -- 674 -- -- -- --
Shares repurchased (1,252) -- -- (2,692) -- -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Net Increase (3,587) -- -- (18,422) -- -- -- --
======= ======= ======= ======= ======= ======= ======= =======
CLASS Y*
Shares issued in merger* 3,004 11,582 -- 19,082 -- -- 558 --
Shares issued 213 1,699 542 1,306 523 20 113 34
Shares issued in lieu
of cash distributions 20 380 42 139 164 1 13 4
Shares repurchased (206) (2,892) (284) (951) (80) (17) (39) (60)
------- ------- ------- ------- ------- ------- ------- -------
Net increase 3,031 10,769 300 19,576 607 4 645 (22)
======= ======= ======= ======= ======= ======= ======= =======
RETAIL
Shares exchanged
for Class A shares -- -- -- (127) -- -- -- --
Shares issued -- -- -- 12 -- -- -- --
Shares issued in lieu
of cash distributions -- -- -- 4 -- -- -- --
Shares repurchased (1) -- -- (19) -- -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Net Increase (1) -- -- (130) -- -- -- --
======= ======= ======= ======= ======= ======= ======= =======
CLASS A*
Shares issued in merger* -- 123 -- 127 -- -- 67 --
Shares issued -- 28 16 6 -- 13 12 28
Shares issued in lieu
of cash distributions -- 9 7 1 1 3 2 --
Shares repurchased -- (45) (29) (9) (3) (18) (15) --
------- ------- ------- ------- ------- ------- ------- -------
Net increase -- 115 (6) 125 (2) (2) 66 28
======= ======= ======= ======= ======= ======= ======= =======
TOTAL SHARE ACTIVITY
FOR PERIOD (557) 10,884 294 1,149 605 2 711 6
======= ======= ======= ======= ======= ======= ======= =======
<FN>
* ON APRIL 15, 1996 COREFUNDS INC. ACQUIRED THE CONESTOGA FUNDS. AMOUNTS SHOWN
IN THE 'SHARES ISSUED IN MERGER' CAPTION REFLECT SHARES OF THE RESPECTIVE
COREFUND ISSUED IN EXCHANGE FOR THE ASSETS OF THE RESPECTIVE CONESTOGA FUND. ON
APRIL 15 & 22 SERIES A SHARES WERE REDESIGNATED CLASS Y AND SERIES B SHARES WERE
REDESIGNATED CLASS A FOR ALL FUNDS EXCEPT CASH RESERVE, TREASURY RESERVE, AND
TAX-FREE RESERVE, WHICH WERE REDESIGNATED AS CLASS C SHARES.
(1) AMOUNTS ARE FOR THE PERIOD NOVEMBER 1, 1995 THROUGH APRIL 14, 1996.
(2) AMOUNTS ARE FOR THE PERIOD NOVEMBER 1, 1995 THROUGH APRIL 21, 1996.
</FN>
</TABLE>
103
<PAGE>
NOTES TO
FINANCIAL
STATEMENTS
(CONTINUED)
FOR THE YEAR
ENDED
JUNE 30, 1996
9. ACQUISITION OF THE CONESTOGA FUNDS
On December 7, 1995 and December 21, 1995, respectively, the Board of
Trustees of the Company and the Board of Trustees of the Conestoga Funds
(Conestoga) approved an Agreement and Plan of Reorganization (the
"Reorganization Agreement") providing for the transfer of all assets and
liabilities of the Conestoga Funds in exchange for the issuance of shares in the
Company in a tax-free reorganization. At a special meeting of shareholders held
on March 22, 1996, the shareholders of Conestoga voted to approve the
Reorganization Agreement. Pursuant to the Reorganization Agreement, on April 15,
1996 substantially all of the assets and liabilities of the Conestoga Cash
Management, Tax-Free, U.S. Treasury Securities, Equity, Intermediate Income,
Pennsylvania Tax-Free Bond, Balanced and International Equity Funds were
transferred to the Company in a tax-free exchange for either institutional or
individual shares of the Company, except for all of the assets and liabilities
of the Conestoga Special Equity, Bond and Short-Term Income Funds which
transferred on April 22, 1996 to newly-organized CoreFund investment portfolios.
The detail of these business combinations as they relate to the Portfolios are
described below.
The following table summarizes certain relevant information of the
Portfolios prior to and immediately after the business combinations on April 15,
1996 and April 22, 1996. Unless indicated otherwise, the CoreFund Portfolio is
the accounting survivor.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
SHARES COMBINED
ISSUED IN NET ASSETS NAV
SHARES @ NET ASSETS @ BUSINESS AFTER BUSINESS PER
CONESTOGA FUND 4/15/ 96 4/15/ 96 COREFUND COMBINATION COMBINATION SHARE
- -------------------- -------------- ------------- ----------------------- -------------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
Cash Management Fund Cash Reserve
Institutional Shares 220,322,384 $220,189,531 Institutional Shares 220,189,709 $847,447,402 $ 1.00
Retail Shares 2,041,405 2,038,370 Individual Shares 2,038,419 20,673,698 1.00
Tax-Free Fund Fund Tax-Free Reserve
Institutional Shares 51,379,922 51,375,489 Institutional Shares 51,375,516 104,896,223 1.00
Retail Shares 1,258,231 1,258,071 Individual Shares 1,258,231 2,631,816 1.00
U.S. Treasury Securities Fund Treasury Reserve
Institutional Shares 397,192,930 397,192,693 Institutional Shares 397,375,516 907,179,954 1.00
Retail Shares 743,703 743,873 Individual Shares 743,703 20,662,296 1.00
Equity Fund1 Equity Fund
Institutional Shares 22,334,281 370,740,042 Institutional Shares 2,066,877 405,049,356 16.60
Retail Shares 477,115 7,916,398 Individual Shares 169,196 10,723,729 16.59
Intermediate Income Fund Short-Intermediate Bond Fund
Institutional Shares 10,943,740 113,378,113 Institutional Shares 11,581,750 169,106,386 9.79
Retail Shares 116,393 1,206,986 Individual Shares 123,311 3,060,429 9.79
Pennsylvania Tax-Free Fund Pennsylvania Municipal Bond Fund
Institutional Shares 566,976 5,703,144 Institutional Shares 557,994 8,784,273 10.22
Retail Shares 68,008 684,055 Individual Shares 66,905 929,951 10.22
Balanced Fund Balanced Fund
Institutional Shares 3,720,166 38,297,844 Institutional Shares 3,163,886 107,866,268 12.10
Retail Shares 9,232 95,033 Individual Shares 7,850 2,870,301 12.11
International Equity Fund International Growth Fund
Institutional Shares 1,454,181 16,130,491 Institutional Shares 1,174,860 143,410,586 13.73
Retail Shares 5,304 58,772 Individual Shares 4,281 2,134,656 13.72
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES COMBINED
ISSUED IN NET ASSETS NAV
SHARES @ NET ASSETS @ BUSINESS AFTER BUSINESS PER
CONESTOGA FUND 4/22/ 96 4/22/ 96 COREFUND COMBINATION COMBINATION SHARE
- ------------------ ---------------- ------------ -------------------------- ----------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
Special Equity Fund(1) Special Equity Fund
Institutional Shares 5,306,327 $ 58,928,614 Institutional Shares 5,306,327 $ 58,928,614 $11.11
Retail Shares 88,731 984,343 Individual Shares 88,731 984,343 11.09
Bond Fund(1) Bond Fund
Institutional Shares 19,081,597 194,598,883 Institutional Shares 19,081,597 194,598,883 10.20
Retail Shares 126,977 1,295,564 Individual Shares 126,977 1,295,564 10.20
Short-Term Income Fund(1) Short Term Income Fund
Institutional Shares 3,004,321 29,907,243 Institutional Shares 3,004,321 29,907,243 9.95
Retail Shares 48 474 Individual Shares 48 474 9.94
</TABLE>
The acquired unrealized appreciation/(depreciation) at April 15, 1996 of the
Conestoga Intermediate Income, Pennsylvania Tax-Free, Balanced and International
Equity Funds were ($1,420,974), ($78,904), $981,675, and $1,348,380,
respectively. The acquired appreciation of the Conestoga Equity Fund at April
15, 1996 was $4,231,903. The acquired unrealized appreciation/(depreciation) at
April 22, 1996 of the Conestoga Special Equity, Bond, and Short-Term Income
Funds were $4,066,989, ($4,179,133) and ($57,636), respectively.
(1) THE CONESTOGA FUND IS THE ACCOUNTING SURVIVOR IN THIS BUSINESS COMBINATION.
104
<PAGE>
[] COREFUND
10. SHAREHOLDER VOTING RESULTS (UNAUDITED):
There was a special meeting scheduled for April 9,1996 at which the
shareholders of the Cash Reserve, Treasury Reserve, Growth Equity Fund, Short
Intermediate Bond Fund (formerly Intermediate Bond Fund), Government Income
Fund, Intermediate Municipal Bond Fund, Tax-Free Reserve, Value Equity Fund,
Global Bond Fund, Equity Index Fund, Balanced Fund, International Growth Fund,
New Jersey Municipal Bond Fund, Fiduciary Reserve, Fiduciary Tax Free Reserve,
Fiduciary Treasury Reserve, (the "Funds") voted on a series of proposals (the
"Proposals"). With respect to Proposal 2 relating to the Pennsylvania Municipal
Bond Fund, the meeting was adjourned until July 17, 1996. The proposals and the
results of the shareholder meeting are set forth below (unaudited).
PROPOSAL 1: To consider and act upon a proposal to elect a Board of Directors.
ELECTION OF DIRECTORS:
SHARES VOTED "FOR" % OF VOTED % OF TOTAL
------------------ ------------ ----------
Emil J. Mikity 897,624,729.00 99.67% 54.71%
George H. Strong 897,631,180.00 99.67% 54.71%
Erin Anderson 897,649,083.00 99.67% 54.71%
Cheryl H. Wade 897,614,431.00 99.67% 54.71%
Thomas J. Taylor 897,630,502.00 99.67% 54.71%
SHARES VOTED "FOR"
WITHHELD AUTHORITY % OF VOTED % OF TOTAL
------------------ ------------ ----------
Emil J. Mikity 2,998,845.00 0.33% 0.18%
George H. Strong 2,992,394.00 0.33% 0.18%
Erin Anderson 2,974,491.00 0.33% 0.18%
Cheryl H. Wade 3,009,143.00 0.33% 0.18%
Thomas J. Taylor 2,993,072.00 0.33% 0.18%
PROPOSAL 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").
SHORT-INTERMEDIATE BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 2,812,494.00 96.91% 48.69%
AGAINST 57,130.00 1.97% 0.99%
ABSTAIN 32,682.00 1.13% 0.57%
CASH RESERVE FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 302,869,534.00 99.98% 51.28%
AGAINST 631,760.00 .21% .11%
ABSTAIN 2,501,075.00 .82% .42%
TREASURY RESERVE FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 279,305,695.00 99.86% 50.22%
AGAINST 181,597.00 .6% .3%
ABSTAIN 206,812.00 .7% .4%
GROWTH EQUITY FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 4,370,815.00 97.35% 50.83%
AGAINST 32,878.00 .73% .38%
ABSTAIN 85,945.00 1.91% .1%
105
<PAGE>
NOTES TO
FINANCIAL
STATEMENTS
(CONTINUED)
[] COREFUND
FOR THE YEAR
ENDED
JUNE 30, 1996
INTERMEDIATE BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 62,694.00 84.04% 49.96%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 11,905.00 15.96% 9.49%
GOVERNMENT INCOME FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 824,683.00 99.62% 55.41%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 3,152.00 .38% .21%
TAX-FREE RESERVE FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 33,136,439.00 99.71% 49.91%
AGAINST 97,294.00 .29% .15%
ABSTAIN 0.00 0.00% 0.00%
VALUE EQUITY FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 2,010,658.00 99.92% 75.86%
AGAINST 65.00 0.00% 0.00%
ABSTAIN 1,501.00 .7% .6%
GLOBAL BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 3,279,675.00 100.00% 95.19%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
EQUITY INDEX FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 3,164,839.00 99.40% 59.23%
AGAINST 5,049.00 .16% .9%
ABSTAIN 14,111.00 .44% .26%
BALANCED FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 3,134,366.00 96.20% 53.00%
AGAINST 24,641.00 .76% .42%
ABSTAIN 99,236.00 3.05% 1.68%
INTERNATIONAL GROWTH FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 6,439,273.00 99.87% 71.92%
AGAINST 1,804.00 .3% .2%
ABSTAIN 6,466.00 .10% .7%
NJ MUNICIPAL FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 83,788.00 100.00% 52.19%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
106
<PAGE>
[] COREFUND
FIDUCIARY RESERVE FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 195,289,296.00 99.85% 53.52%
AGAINST 50,476.00 .3% .1%
ABSTAIN 237,317.00 .12% .7%
FIDUCIARY TAX-FREE FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 55,972,626.00 99.12% 73.01%
AGAINST 67,984.00 .12% .22%
ABSTAIN 428,845.00 .76% .56%
FIDUCIARY TREASURY FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 15,216,211.00 100.00% 76.23%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
PENNSYLVANIA MUNICIPAL BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 565,475.00 96.40% 58.19%
AGAINST 19,980.00 3.41% 2.06%
ABSTAIN 1,119.00 .19% .12%
PROPOSAL 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.
INTERNATIONAL GROWTH FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 6,434,497.00 99.80% 71.86%
AGAINST 6,500.00 .10% .7%
ABSTAIN 6,546.00 .10% .7%
PROPOSAL 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.
INTERNATIONAL GROWTH FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 6,438,013.00 99.85% 71.90%
AGAINST 3,576.00 .6% .4%
ABSTAIN 5,953.00 .9% .7%
PROPOSAL 5: To consider and vote upon a proposal to approve the selection of
Alpha Global Fixed Income Managers, Inc. ("Alpha Global") or its successor as a
Sub-Adviser to the Global Bond Fund.
GLOBAL BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 3,279,675.00 100.00% 95.19%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
107
<PAGE>
NOTES TO
FINANCIAL
STATEMENTS
(CONTINUED)
FOR THE YEAR
ENDED
JUNE 30, 1996
PROPOSAL 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.
GLOBAL BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 3,279,675.00 100.00% 95.19%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
PROPOSAL 7: To consider and vote upon a proposal to change the fundamental
policy of the Short-Intermediate Bond Fund so that the Fund maintains an average
weighted maturity of two to five years instead of the existing average weighted
maturity of three to ten years.
SHORT-INTERMEDIATE BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 2,370,056.00 97.90% 41.03%
AGAINST 36,158.00 1.49% .63%
ABSTAIN 14,715.00 .61% .25%
PROPOSAL 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.
FIDUCIARY TREASURY FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 15,216,211.00 100.00% 76.23%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
FIDUCIARY TAX-FREE FUND
SHARES VOTED % OF VOTED % OF TOTAL
-------------- ------------ ----------
FOR 55,814,121.00 98.84% 72.80%
AGAINST 170,134.00 .30% .22%
ABSTAIN 485,200.00 .86% .63%
108
<PAGE>
[] COREFUND
(UNAUDITED)
FOR TAXPAYERS FILING ON A CALENDAR YEAR BASIS, THIS NOTICE IS FOR INFORMATIONAL
PURPOSES ONLY.
Dear CoreFund Shareholders:
For the fiscal year ended June 30, 1996, each portfolio is designating
long-term capital gains, qualifying dividends and exempt income with regard to
distributions paid during the year as follows:
<TABLE>
<CAPTION>
(A) (B)
LONG TERM ORDINARY (C) (E)
CAPITAL GAINS INCOME TOTAL (D) TAX (F)
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS QUALIFYING EXEMPT FOREIGN
PORTFOLIO (TAX BASIS) (TAX BASIS) (TAX BASIS) DIVIDENDS1 INTEREST TAX CREDIT2
- --------- ------------- ------------- ------------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Equity Index Fund ................... 47% 53% 100% 92% 0% 0%
Equity Fund ......................... 12% 88% 100% 30% 0% 0%
Growth Equity Fund .................. 75% 25% 100% 64% 0% 0%
Special Equity Fund ................. 5% 95% 100% 62% 0% 0%
International Growth Fund ........... 16% 84% 100% 0% 0% 9%(3)
Balanced Fund ....................... 24% 76% 100% 30% 0% 0%
Short Term Income Fund .............. 0% 100% 100% 0% 0% 0%
Short-Intermediate Bond Fund ........ 0% 100% 100% 0% 0% 0%
Government Income Fund .............. 0% 100% 100% 0% 0% 0%
Bond Fund ........................... 0% 100% 100% 0% 0% 0%
Global Bond Fund .................... 0% 100% 100% 0% 0% 0%
Intermediate Municipal Bond Fund .... 0% 100% 100% 0% 100% 0%
Pennsylvania Municipal Bond Fund .... 0% 100% 100% 0% 100% 0%
New Jersey Municipal Bond Fund ...... 7% 93% 100% 0% 100% 0%
Treasury Reserve .................... 0% 100% 100% 0% 0% 0%
Cash Reserve ........................ 0% 100% 100% 0% 0% 0%
Tax-Free Reserve .................... 0% 100% 100% 0% 100% 0%
Please consult your tax adviser for proper treatment of this information.
<FN>
- ----------
(1) QUALIFYING DIVIDENDS REPRESENT DIVIDENDS WHICH QUALIFY FOR THE CORPORATE
DIVIDENDS RECEIVED DEDUCTION.
(2) SEE ATTACHED NOTICE WHICH DETAILS THE PER SHARE AMOUNT OF FOREIGN TAXES PAID
BY COUNTRY AND THE PER SHARE AMOUNT OF EACH DIVIDEND THAT REPRESENTS INCOME
DERIVED FROM SOURCES WITHIN EACH COUNTRY.
(3) THIS AMOUNT REPRESENTS THE FOREIGN TAX CREDIT FOR CLASS Y. THE FOREIGN TAX
CREDIT FOR CLASS A IS 10%.
* ITEMS (A) AND (B) ARE BASED ON A PERCENTAGE OF THE PORTFOLIO'S TOTAL DISTRIBUTIONS.
** ITEMS (D), (E) AND (F) ARE BASED ON A PERCENTAGE OF ORDINARY INCOME DISTRIBUTIONS OF THE PORTFOLIO.
</FN>
</TABLE>
109
<PAGE>
NOTES TO
FINANCIAL
STATEMENTS
[] COREFUND
FOR THE YEAR
ENDED
JUNE 30, 1996
(UNAUDITED)
FOR TAXPAYERS FILING ON A CALENDAR YEAR BASIS, THIS NOTICE IS FOR INFORMATIONAL
PURPOSES ONLY.
The CoreFund International Growth Fund has made an election under Section
853 of the Internal Revenue Code to provide a foreign tax deduction or credit to
its shareholders for the fiscal year ended June 30, 1996. The information
provided below is pertinent to taxpayers who meet the following two criteria: 1)
file a U.S. Federal Income Tax Return on the basis of the fiscal year ended June
30, 1996, and 2) held shares of the Fund on the dividend record date of December
28, 1995.
The amount per share of income and foreign taxes paid to each country is
listed in the following schedule:
Class Y Class A
Gross Foreign Gross Foreign
Country Dividend Taxes Paid Dividend Taxes Paid
- -------- -------- ---------- -------- ----------
Argentina......... 0.0039 0.0000 0.0035 0.0000
Australia......... 0.0071 0.0005 0.0064 0.0005
Austria........... 0.0020 0.0002 0.0018 0.0002
Belgium........... 0.0027 0.0003 0.0024 0.0003
Brazil............ 0.0036 0.0002 0.0030 0.0002
Colombia.......... 0.0002 0.0000 0.0002 0.0000
Chile............. 0.0020 0.0002 0.0018 0.0002
Ecuador........... 0.0009 0.0000 0.0008 0.0000
France............ 0.0152 0.0000 0.0135 0.0000
Germany........... 0.0081 0.0005 0.0073 0.0005
Hong Kong......... 0.0272 0.0000 0.0242 0.0000
Ireland........... 0.0003 0.0000 0.0003 0.0000
Italy............. 0.0037 0.0007 0.0034 0.0007
Japan............. 0.0398 0.0047 0.0360 0.0047
Malaysia.......... 0.0040 0.0007 0.0036 0.0007
Mexico............ 0.0004 0.0000 0.0003 0.0000
Netherlands....... 0.0115 0.0010 0.0103 0.0010
Singapore......... 0.0115 0.0016 0.0104 0.0016
Spain............. 0.0084 0.0010 0.0076 0.0010
Sweden ........... 0.0042 0.0005 0.0037 0.0005
South Africa...... 0.0046 0.0004 0.0041 0.0004
Switzerland....... 0.0068 0.0008 0.0062 0.0008
Thailand.......... 0.0015 0.0001 0.0013 0.0001
United Kingdom.... 0.1013 0.0123 0.0912 0.0123
United States..... 0.0390 0.0000 0.0346 0.0000
------- ------- ------- -------
0.3099 0.0257 0.2779 0.0257
110
<PAGE>
SHAREHOLDER
NOTES
[] COREFUND
111
<PAGE>
SHAREHOLDER
NOTES
[] COREFUND
112
<PAGE>
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE
GENERAL INFORMATION OF THE SHAREHOLDERS OF THE CORPORATION. THE REPORT IS NOT
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE CORPORATION UNLESS
PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. SHARES IN THE FUNDS ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, CORESTATES BANK, N.A.,
THE PARENT CORPORATION OF EACH FUND'S INVESTMENT ADVISER. SUCH SHARES ARE ALSO
NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY. INVESTMENTS IN SHARES OF A MUTUAL FUND
INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. CORESTATES BANK, N.A.
SERVES AS CUSTODIAN FOR THE FUNDS.
<PAGE>
COREFUNDS, INC.
DIRECTORS
EMIL J. MIKITY, CHAIRMAN
GEORGE H. STRONG
ERIN ANDERSON
THOMAS TAYLOR
CHERYL WADE
OFFICERS
DAVID G. LEE, PRESIDENT
JAMES W. JENNINGS, SECRETARY
INVESTMENT ADVISER
CORESTATES INVESTMENT ADVISERS, INC.
PHILADELPHIA, PA 19101
ADMINISTRATOR
SEI FUND RESOURCES
WAYNE, PA 19087
DISTRIBUTOR
SEIFINANCIAL SERVICES COMPANY
WAYNE, PA 19087
LEGAL COUNSEL
MORGAN, LEWIS &BOCKIUS
PHILADELPHIA, PA 19103
AUDITORS
ERNST & YOUNG, LLP
PHILADELPHIA, PA 19103
INVESTMENT ADVISER
[GRAPHIC OMITTED]
CORESTATES LOGO
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
FOR MORE INFORMATION, CALL COREFUND AT 1-800-355-CORE (2673).
COR-F-044-04
<PAGE>
CoreFunds, Inc.
--------------
FIDUCIARY RESERVE
ANNUAL REPORT
June 30, 1996
<PAGE>
INVESTMENT ADVISER'S REPORT
COREFUND FIDUCIARY RESERVE
JUNE 30, 1996
The CoreFund Fiduciary Reserve Fund (Class Y) returned 5.62% for the one-year
period ended June 30, 1996. The Fund significantly outperformed its benchmark
index, the IBC Financial Data All Taxable Money Fund Average, which returned
5.16% for the same period.
The Fund's assets decreased by 5.45% during the period from $406.6 million on
June 30, 1995 to $384.4 million on June 30, 1996.
The average maturity of the Fund was adjusted quarterly in keeping with our view
of Fed policy and movement of interest rates. The Awm had changed from 35-45
days to 55-65 during the one-year period. the current maturity target for the
CoreFund Fiduciary is 45 to 50 days.
Portfolio structure continues to favor commercial paper as it offers the best
absolute value to the Fund. During periods when corporate supply has dried up,
U.S. Government agency discount notes have provided yield and at the same time
did not present diversification issues.
<PAGE>
STATEMENT OF NET ASSETS COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
PAR VALUE
FIDUCIARY RESERVE (000) (000)
- -------------------------------------------------------
COMMERCIAL PAPER - 82.9%
Abbott Laboratories
5.300%, 07/18/96 ......... $ 5,000 $ 4,987
Alcatel-Alsthom
5.190%, 07/05/96 ......... 10,000 9,994
Arco Coal Austrialia
5.280%, 07/22/96 ......... 4,900 4,885
Asset Securitization Cooperative
5.300%, 07/18/96 ......... 10,000 9,975
5.420%, 09/25/96 ......... 5,000 4,935
AT&T Capital
5.260%, 08/15/96 ......... 5,000 4,967
5.240%, 08/28/96 ......... 5,000 4,958
Banc One Funding
5.310%, 08/01/96 ......... 5,000 4,977
CAFCO
5.250%, 09/04/96 ......... 5,000 4,953
5.350%, 09/16/96 ......... 5,000 4,943
Canadian Bank of Commerce
5.300%, 07/11/96 ......... 10,000 9,985
Coca Cola
5.280%, 07/15/96 ......... 5,905 5,893
5.330%, 08/19/96 ......... 5,000 4,964
E.I. duPont de Nemours
5.260%, 08/05/96 ......... 4,450 4,427
5.350%, 08/08/96 ......... 5,000 4,972
5.330%, 08/12/96 ......... 5,000 4,969
Ford Motor Credit
5.250%, 08/28/96 ......... 10,000 9,915
5.420%, 10/25/96 ......... 5,000 4,913
Gannett
5.320%, 07/12/96 ......... 10,000 9,984
General Electric
5.320%, 09/09/96 ......... 10,000 9,896
Goldman Sachs
5.230%, 07/26/96 ......... 10,000 9,964
J.P. Morgan
5.300%, 07/09/96 ......... 10,000 9,988
Kellogg
5.250%, 07/17/96 ......... 2,125 2,120
Merrill Lynch
5.310%, 08/07/96 ......... 10,000 9,945
1
<PAGE>
STATEMENT OF NET ASSETS (CONTINUED) COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
PAR VALUE
FIDUCIARY RESERVE (000) (000)
- ---------------------------------------------------
Metropolitan Life Funding
5.270%, 07/19/96 ..... $ 5,000 $ 4,987
5.260%, 08/22/96 ..... 2,000 1,985
Mitsubishi International
5.330%, 08/30/96 ..... 5,000 4,956
National Rural Utility
5.270%, 07/29/96 ..... 4,900 4,880
New Center Asset Trust
5.600%, 07/01/96 ..... 9,000 9,000
Norwest Financial
5.320%, 07/08/96 ..... 10,000 9,990
Pitney Bowes Credit
5.350%, 09/13/96 ..... 10,000 9,890
Procter & Gamble
5.360%, 09/17/96 ..... 5,000 4,942
Province of Alberta
5.300%, 09/03/96 ..... 4,000 3,962
Province of British Columbia
5.370%, 11/29/96 ..... 10,000 9,775
Province of Quebec
5.400%, 09/09/96 ..... 10,000 9,895
5.420%, 09/16/96 ..... 4,000 3,954
Prudential Funding
5.250%, 07/01/96 ..... 5,000 5,000
Shell Oil
5.210%, 07/31/96 ..... 5,000 4,978
Siemens
5.300%, 08/15/96 ..... 5,000 4,967
Southwestern Bell Capital
5.270%, 07/22/96 ..... 5,000 4,985
5.270%, 08/14/96 ..... 5,000 4,968
Swedish Export Credit
5.270%, 08/26/96 ..... 5,000 4,959
5.380%, 12/03/96 ..... 5,000 4,884
Toyota Motor Credit
5.280%, 08/29/96 ..... 5,000 4,957
5.000%, 10/11/96 ..... 5,000 4,929
Toys "R" Us
5.320%, 07/23/96 ..... 3,000 2,990
Unilever Capital
5.260%, 07/16/96 ..... 10,000 9,978
5.250%, 08/23/96 ..... 5,000 4,961
2
<PAGE>
STATEMENT OF NET ASSETS (CONTINUED) COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
PAR VALUE
FIDUCIARY RESERVE (000) (000)
- ---------------------------------------------------------------
U.S. West Capital Funding
5.340%, 08/16/96 ............... $ 5,000 $ 4,966
Walt Disney
5.270%, 10/16/96 ............... 4,900 4,823
5.270%, 11/18/96 ............... 2,000 1,959
Weyerhauser
5.290%, 07/23/96 ............... 4,600 4,585
--------
TOTAL COMMERCIAL PAPER
(Cost $318,614) .............................. 318,614
- ---------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 10.4%
FNMA
4.820%, 08/09/96 ............... 10,000 9,948
4.811%, 07/10/96 ............... 10,000 9,988
5.310%, 12/11/96 ............... 10,000 9,994
4.780%, 02/14/97 ............... 10,000 9,992
--------
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS
(Cost $39,922) ............................... 39,922
- ---------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 3.1%
U.S. Treasury Bill(DAGGER)
5.341%, 03/06/97 ............... 10,000 9,651
U.S. Treasury STRIPS(DAGGER)
5.520%, 02/15/97 ............... 2,500 2,416
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $12,067) ............................... 12,067
- ---------------------------------------------------------------
CORPORATE OBLIGATIONS - 1.3%
American Express Centurion (A)
5.423%, 07/10/96 ............... 5,000 5,000
--------
TOTAL CORPORATE OBLIGATIONS
(Cost $5,000) ................................ 5,000
- ---------------------------------------------------------------
MASTER NOTES - 0.1%
Associates Corporation of North America
5.286%, 07/01/96 ............... 377 377
SLMA
5.290%, 07/01/96 ............... 13 13
--------
TOTAL MASTER NOTES
(Cost $390) .................................. 390
- ---------------------------------------------------------------
See accompanying notes to financial statements.
3
<PAGE>
STATEMENT OF NET ASSETS (CONCLUDED) COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
PAR VALUE
FIDUCIARY RESERVE (000) (000)
- ---------------------------------------------------------------
TIME DEPOSITS - 2.6%
Bank of Montreal
5.500%, 07/01/96 ............... $5,000 $ 5,000
Sumitomo Bank
5.688%, 07/01/96 ............... 5,000 5,000
-------
TOTAL TIME DEPOSITS
(Cost $10,000) ............................... 10,000
- ---------------------------------------------------------------
TOTAL INVESTMENTS - 100.4%
(Cost $385,993) ................................. 385,993
- ---------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET - (0.4%).......... (1,547)
- ---------------------------------------------------------------
NET ASSETS:
Portfolio Shares ($0.001 par value -
750 million authorized) based on
384,445,563 outstanding shares ............... 384,446
- ---------------------------------------------------------------
TOTAL NET ASSETS - 100.0% .......................... $384,446
- ---------------------------------------------------------------
NET ASSET VALUE & REDEMPTION PRICE
PER SHARE ..................................... $ 1.00
(DAGGER) YIELD TO MATURITY
(A) VARIABLE RATE SECURITY - THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT ON JUNE 30, 1996.
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
SLMA -- STUDENT LOAN MARKETING ASSOCIATION
STRIPS -- SEPARATELY TRADED REGISTERED INTEREST AND PRINCIPAL SECURITIES
See accompanying notes to financial statements.
4
<PAGE>
STATEMENT OF OPERATIONS (000) COREFUND MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
For the year ended June 30, 1996
FIDUCIARY RESERVE
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest .............................................. $ 22,228
--------
EXPENSES:
Investment advisory fees ................................. 1,892
Less investment advisory fees waived ..................... (1,892)
Administrative fees ...................................... 989
Less administrative fees waived .......................... (532)
Transfer agent fees & expenses ........................... 42
Professional fees ........................................ 31
Registration & filing fees ............................... 75
Printing ................................................. 15
Miscellaneous ............................................ (31)
--------
Total expenses ................................................. 589
--------
NET INVESTMENT INCOME .......................................... 21,639
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........... $ 21,639
========
See accompanying notes to financial tatements.
5
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (000) COREFUND MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
For the years ended June 30
FIDUCIARY RESERVE
- --------------------------------------------------------------------------------
07/01/95 07/01/94
TO 06/31/96 TO 06/31/95
----------- -----------
OPERATIONS:
Net investment income ........................... $ 21,639 $ 21,503
Net realized loss on securities sold ............ -- (4)
--------- ---------
Net increase in net assets resulting
from operations .............................. 21,639 21,499
--------- ---------
DIVIDENDS DISTRIBUTED FROM:
Net investment income ........................... (21,639) (21,503)
--------- ---------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued ..................... 596,669 546,029
Cost of shares redeemed ......................... (618,820) (522,242)
--------- ---------
Increase (decrease) in net assets derived from
capital share transactions ................... (22,151) 23,783
--------- ---------
NET INCREASE (DECREASE) IN NET ASSETS: ................ (22,151) 23,783
NET ASSETS:
Beginning of period ............................. 406,597 382,814
--------- ---------
End of period ................................... $ 384,446 $ 406,597
========= =========
SHARES ISSUED AND REDEEMED:
Shares issued ................................... 596,669 546,029
Shares redeemed ................................. (618,820) (522,242)
--------- ---------
Increase (decrease) in net shares derived from
capital share transactions ................... (22,151) 23,787
--------- ---------
OUTSTANDING SHARES:
Beginning of period ............................. 406,597 382,810
--------- ---------
End of period ................................... 384,446 406,597
========= =========
See accompanying notes to financial statements.
6
<PAGE>
FINANCIAL HIGHLIGHTS COREFUND MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
FIDUCIARY RESERVE
- --------------------------------------------------------------------------------
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
RATIO RATIO OF
NET NET NET RATIO OF EXPENSES NET INCOME
ASSET DISTRIBUTIONS ASSET ASSETS RATIO OF NET TO AVERAGE TO AVERAGE
VALUE NET FROM NET VALUE END OF OF EXPENSES INCOME NET ASSETS NET ASSETS
BEGINNING INVESTMENT INVESTMENT END OF TOTAL PERIOD TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING
OF PERIOD INCOME INCOME PERIOD RETURN 000) NET ASSETS NET ASSETS WAIVERS) WAIVERS)
--------- ---------- ------------- ------ ------ ------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
For the year ended
June 30, 1996 $1.00 0.05 (0.05) $1.00 5.62% $384,446 0.15% 5.46% 0.76% 4.85%
For the year ended
June 30, 1995 $1.00 0.05 (0.05) $1.00 5.46%$ 406,597 0.17% 5.35% 0.81% 4.71%
For the year ended
June 30, 1994 $1.00 0.03 (0.03) $1.00 3.31% $382,814 0.16% 3.24% 0.84% 2.56%
For the year ended
June 30, 1993 $1.00 0.03 (0.03) $1.00 3.29% $424,363 0.17% 3.25% 0.81% 2.61%
For the year ended
June 30, 1992 $1.00 0.05 (0.05) $1.00 5.04% $416,945 0.18% 4.96% 0.83% 4.31%
For the year ended
June 30, 1991 $1.00 0.07 (0.07) $1.00 7.49% $453,947 0.15% 7.05% 0.80% 6.40%
For the period ended
June 30, 1990 (1) $1.00 0.08 (0.08) $1.00 8.03%* $232,091 0.13% 8.42% 0.83% 7.72%
<FN>
- ----------
* RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED.
(1) THE FIDUCIARY RESERVE COMMENCED OPERATIONS AUGUST 7, 1989.
RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
</FN>
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS COREFUND MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
1. ORGANIZATION
The CoreFund Fiduciary Reserve is a Fund offered by CoreFunds, Inc. (the
"Company"), an open-end investment company registered under the Investment
Company Act of 1940, as amended.
The Company is presently authorized to offer shares in the following Funds (the
"Funds"):
EQUITY FUNDS: MONEY MARKET FUNDS:
Growth Equity Fund Cash Reserve
Equity Fund Treasury Reserve
Equity Index Fund Tax-Free Reserve
International Growth Fund Fiduciary Reserve
Balanced Fund Fiduciary Treasury Reserve
Special Equity Fund Fiduciary Tax-Free Reserve
FIXED INCOME FUNDS:
Short-Term Income
Government Income Fund
Short-Intermediate Bond Fund
Intermediate Municipal Bond Fund
Bond Fund
Global Bond Fund
Pennsylvania Municipal Bond Fund
New Jersey Municipal Bond Fund
The financial statements included herein present only those of the Fiduciary
Reserve Fund. The financial statements of the remaining Funds are presented
separately. The assets of each Fund are segregated, and a shareholder's interest
is limited to the Fund in which shares are held. The Funds' prospectus provides
a description of the Funds' investment objectives, policies and strategies.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fiduciary Reserve.
SECURITY VALUATION -- Investment securities of the Fiduciary Reserve Fund are
stated at amortized cost which approximates market value. Under this valuation
method, purchase discounts and premiums are accreted and amortized ratably to
maturity and are included in interest income.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED) COREFUND MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are
accounted for on the trade date of the security purchase or sale. Costs used in
determining net realized capital gains and losses on the sale of securities are
those of the specific securities sold, adjusted for the accretion and
amortization of the purchase discounts and premiums during the respective
holding period. Interest income is recorded on the accrual basis.
EXPENSES -- Expenses that are directly related to a Fund are charged directly
to that Fund. Other operating expenses of the Company are prorated to the Fund
on the basis of relative net assets.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income are
declared on a daily basis and are payable on the first business day of the
following month. Any net realized capital gains on sales of securities for a
Fund are distributed to its shareholders at least annually.
FEDERAL INCOME TAXES -- It is the Fund's intention to continue to qualify as a
regulated investment company and distribute all of its taxable income.
Accordingly, no provision for Federal income taxes is required.
3. INVESTMENT ADVISORY AND CUSTODIAL SERVICES
Pursuant to an investment advisory agreement dated August 12, 1996, investment
advisory services are provided to the Company by CoreStates Investment Advisers,
Inc. ("CoreStates Advisers"), a wholly-owned subsidiary of CoreStates Bank, N.A.
("CoreStates Bank"), itself a wholly-owned subsidiary of CoreStates Financial
Corp. Under the terms of suchyagreement, CoreStates Advisers is entitled to
receive an annual fee of 0.20% on the average net assets of the Fiduciary
Reserve Fund. Prior to August 12, 1996 CoreStates Advisers was entitled to
receive an annual fee of 0.50% on the average net assets of the Fiduciary
Reserve Fund. For the year ended June 30, 1996, CoreStates Advisers earned
$1,892,127 in investment advisory fees, all of which was voluntarily waived in
order to assist the Fund in maintaining a competitive expense ratio.
CoreStates Bank also serves as Custodian to the Company. No fees are being paid
to CoreStates Bank for such services.
4. ADMINISTRATIVE, DISTRIBUTION, AND TRANSFER AGENT SERVICES
Pursuant to an administration agreement dated October 30, 1992, as amended June
1, 1995, SEI Fund Resources ("SFR"), a wholly-owned subsidiary of SEI
Corporation, acts as the Fund's Administrator. Under the terms of such
agreement, SFR is entitled to receive an annual fee of 0.25% on the average
daily net assets of the Fiduciary Reserve Fund. Such a fee is computed daily and
paid monthly. For the year ended June 30, 1996, administrative fees totaled
$989,264 of which $532,139 was voluntarily waived in order to assist the Fund in
maintaining a competitive expense ratio.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED) COREFUND MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
Effective for the period July 1, 1995 to November 16, 1995, SEI Financial
Management Corporation acted as the Transfer Agent of the Fund. Pursuant to a
transfer agency agreement dated November 16, 1995, Boston Financial Data
Services ("BFDS") a subsidiary of State Street Bank and Trust Company acts as
the Fund's Transfer Agent. As such, BFDS provides transfer agency, dividend
disbursing, shareholder servicing and administrative services for the Fund.
On November 2, 1992, SEI Financial Services Company ("SFS"), also a wholly-owned
subsidiary of SEI Corporation, became the Fund's exclusive Distributor pursuant
to a distribution agreement dated October 30, 1992.
Certain officers of the Company are also officers of the Administrator. Such
officers are not paid fees by the Fund.
The Fund has paid legal fees to a law firm in which the secretary of the Company
is a partner.
SHAREHOLDER VOTING RESULTS (UNAUDITED):
There was a special meeting scheduled for April 9,1996 at which the shareholders
of the Cash Reserve, Treasury Reserve, Growth Equity Fund, Short-Intermediate
Bond Fund (formerly Intermediate Bond Fund), Government Income Fund,
Intermediate Municipal Bond Fund, Tax-Free Reserve, Value Equity Fund, Global
Bond Fund, Equity Index Fund, Balanced Fund, International Growth Fund, New
Jersey Municipal Bond Fund, Fiduciary Reserve, Fiduciary Tax Free Reserve,
Fiduciary Treasury Reserve, Elite Cash Reserve, Elite Government Reserve, and
Elite Treasury Reserve (the "Funds") voted on a series of proposals (the
"Proposals"). With respect to Proposal 2 relating to the Pennsylvania Municipal
Bond Fund meeting was adjourned until July 17, 1996. The proposals and the
results of the shareholder meeting are set forth as follows (unaudited).
PROPOSAL 1: To consider and act upon a proposal to elect a Board of Directors.
ELECTION OF DIRECTORS:
SHARES VOTED "FOR" % OF VOTED % OF TOTAL
Emil J. Mikity 897,624,729.00 99.67% 54.71%
George H. Strong 897,631,180.00 99.67% 54.71%
Erin Anderson 897,649,083.00 99.67% 54.71%
Cheryl H. Wade 897,614,431.00 99.67% 54.71%
Thomas J. Taylor 897,630,502.00 99.67% 54.71%
10
<PAGE>
COREFUND MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
SHARES VOTED "FOR" % OF VOTED % OF TOTAL
WITHHELD AUTHORITY
Emil J. Mikity 2,998,845.00 0.33% 0.18%
George H. Strong 2,992,394.00 0.33% 0.18%
Erin Anderson 2,974,491.00 0.33% 0.18%
Cheryl H. Wade 3,009,143.00 0.33% 0.18%
Thomas J. Taylor 2,993,072.00 0.33% 0.18%
PROPOSAL 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").
SHORT-INTERMEDIATE BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 2,812,494.00 96.91% 48.69%
AGAINST 57,130.00 1.97% 0.99%
ABSTAIN 32,682.00 1.13% 0.57%
CASH RESERVE FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 302,869,534.00 99.98% 51.28%
AGAINST 631,760.00 0.21% 0.11%
ABSTAIN 2,501,075.00 0.82% 0.42%
TREASURY RESERVE FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 279,305,695.00 99.86% 50.22%
AGAINST 181,597.00 0.6% 0.3%
ABSTAIN 206,812.00 0.7% 0.4%
GROWTH EQUITY FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 4,370,815.00 97.35% 50.83%
AGAINST 32,878.00 0.73% 0.38%
ABSTAIN 85,945.00 1.91% 0.1%
11
<PAGE>
COREFUND MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1995
INTERMEDIATE BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 62,694.00 84.04% 49.96%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 11,905.00 15.96% 9.49%
GOVERNMENT INCOME FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 824,683.00 99.62% 55.41%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 3,152.00 0.38% 0.21%
TAX-FREE RESERVE FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 3,136,439.00 99.71% 49.91%
AGAINST 97,294.00 0.29% 0.15%
ABSTAIN 0.00 0.00% 0.00%
VALUE EQUITY FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 2,010,658.00 99.92% 75.86%
AGAINST 65.00 0.00% 0.00%
ABSTAIN 1,501.00 0.7% 0.6%
GLOBAL BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 3,279,675.00 100.00% 95.19%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
EQUITY INDEX FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 3,164,839.00 99.40% 59.23%
AGAINST 5,049.00 0.16% 0.9%
ABSTAIN 14,111.00 0.44% 0.26%
BALANCED FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 3,134,366.00 96.20% 53.00%
AGAINST 24,641.00 0.76% 0.42%
ABSTAIN 99,236.00 3.05% 1.68%
12
<PAGE>
COREFUND MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1995
INTERNATIONAL GROWTH FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 6,439,273.00 99.87% 71.92%
AGAINST 1,804.00 0.3% 0.2%
ABSTAIN 6,466.00 0.10% 0.7%
NEW JERSEY MUNICIPAL FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 83,788.00 100.00% 52.19%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
FIDUCIARY RESERVE FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 195,289,296.00 99.85% 53.52%
AGAINST 50,476.00 0.3% 0.1%
ABSTAIN 237,317.00 0.12% 0.7%
FIDUCIARY TAX-FREE FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 55,972,626.00 99.12% 73.01%
AGAINST 67,984.00 0.12% 0.22%
ABSTAIN 428,845.00 0.76% 0.56%
FIDUCIARY TREASURY FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 15,216,211.00 100.00% 76.23%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
PENNSYLVANIA MUNICIPAL BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 565,475.00 96.40% 58.19%
AGAINST 19,980.00 3.41% 2.06%
ABSTAIN 1,119.00 0.19% 0.12%
13
<PAGE>
COREFUND MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1995
PROPOSAL 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.
INTERNATIONAL GROWTH FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 6,434,497.00 99.80% 71.86%
AGAINST 6,500.00 0.10% 0.7%
ABSTAIN 6,546.00 0.10% 0.7%
PROPOSAL 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.
INTERNATIONAL GROWTH FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 6,438,013.00 99.85% 71.90%
AGAINST 3,576.00 0.6% 0.4%
ABSTAIN 5,953.00 0.9% 0.7%
PROPOSAL 5: To consider and vote upon a proposal to approve the selection of
Alpha Global Fixed Income Managers, Inc. ("Alpha Global") or its successor as a
Sub-Adviser to the Global Bond Fund.
GLOBAL BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 3,279,675.00 100.00% 95.19%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
PROPOSAL 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.
GLOBAL BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 3,279,675.00 100.00% 95.19%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
14
<PAGE>
COREFUND MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1995
PROPOSAL 7: To consider and vote upon a proposal to change the fundamental
policy of the Short Intermediate Bond Fund so that the Fund maintains an average
weighted maturity of two to five years instead of the existing average weighted
maturity of three to ten years.
SHORT-INTERMEDIATE BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 2,370,056.00 97.90% 41.03%
AGAINST 36,158.00 1.49% 0.63%
ABSTAIN 14,715.00 0.61% 0.25%
PROPOSAL 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.
FIDUCIARY TREASURY FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 15,216,211.00 100.00% 76.23%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
FIDUCIARY TAX-FREE FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 55,814,121.00 98.84% 72.80%
AGAINST 170,134.00 0.30% 0.22%
ABSTAIN 485,200.00 0.86% 0.63%
15
<PAGE>
NOTICE TO SHAREHOLDERS OF COREFUNDS
(UNAUDITED)
For taxpayers filing on a calendar year basis, this notice is for
informational purposes only.
Dear CoreFund Shareholders:
For the fiscal year ended June 30, 1996, the Fiduciary Reserve Fund is
designating long-term capital gains, qualifying dividends and exempt income with
regard to distributions paid during the year as follows:
<TABLE>
<CAPTION>
(A) (B)
LONG TERM ORDINARY (C) (E)
CAPITAL GAINS INCOME TOTAL (D) TAX (F)
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS QUALIFYING EXEMPT FOREIGN
PORTFOLIO (TAX BASIS) (TAX BASIS) (TAX BASIS) DIVIDENDS (1) INTEREST TAX CREDIT(2)
------------ ------------- ------------- ------------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Fiduciary Reserve 0% 100% 100% 0% 0% 0%
<FN>
(1)QUALIFYING DIVIDENDS REPRESENT DIVIDENDS WHICH QUALIFY FOR THE CORPORATE RECEIVED DEDUCTION.
* ITEMS (A) AND (B) ARE BASED ON A PERCENTAGE OF THE FUNDS' TOTAL DISTRIBUTION.
** ITEMS (D), (E) AND (F) ARE BASED ON A PERCENTAGE OF ORDINARY INCOME DISTRIBUTIONS OF THE PORTFOLIO.
</FN>
</TABLE>
Please consult your tax department for proper treatment of this information.
16
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
CoreFunds, Inc.
We have audited the accompanying statement of net assets of the CoreFund
Fiduciary Reserve of CoreFunds, Inc. (the "Fund") as of June 30, 1996, and the
related statement of operations for the year then ended, and the statements of
changes in net assets and the financial highlights for each of the years
presented therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included verification by examination of securities held by the
Custodian as of June 30, 1996 and confirmation of securities not held by the
Custodian by correspondence with others. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
CoreFund Fiduciary Reserve of CoreFunds, Inc. at June 30, 1996, the results of
its operations for the year then ended, the changes in its net assets and the
financial highlights for each of the years presented therein, in conformity with
generally accepted accounting principles.
Philadelphia, Pennsylvania
August 16, 1996
17
<PAGE>
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Corporation. The report is not
authorized for distribution to prospective investors in the Corporation unless
preceded or accompanied by an effective prospectus. Shares in the Fund are not
deposits or obligations of, or guaranteed or endorsed by, CoreStates Bank, N.A.,
the parent corporation of the Fund's investment adviser. Such shares are also
not federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other agency.
COR-F-056-01
<PAGE>
CoreFunds,Inc.
--------------
FIDUCIARY TREASURY RESERVE
ANNUAL REPORT
June 30, 1996
<PAGE>
INVESTMENT ADVISER'S REPORT
COREFUND FIDUCIARY TREASURY RESERVE
JUNE 30, 1996
The CoreFund Fiduciary Treasury Reserve returned 5.54% net of expenses for the
one-year period ended June 30, 1996. The Fund's assets increased in size by
33.1% during the period from $18,396,000 on June 30, 1995 to $24,498,000 on June
30, 1996. The average weighted maturity of the Fund increased from 49 to 58 days
during the one-year period. Although the asset size of the Fund increased by
$1.6 million, the average maturity also increased. The 11 day increase in
average maturity was due to the purchase of treasury securities in the 6 month
to 1 year areas. The FED decreased short-term interest rates by 75 basis points
during the period and the portfolio was extended to guard against further FED
easing.
As of this writing the money market has factored in a 25 basis point increase in
short-term rates. Recent economic data has been stronger than expected and the
market consensus is for the FED to move rates at their next FOMC meeting (August
20th). Although the average maturity of the Fund will be lowered to the 45 to 50
day area, purchases will be made on market weakness until there is clear
direction on the FED's next move.
<PAGE>
STATEMENT OF NET ASSETS COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
PAR VALUE
FIDUCIARY TREASURY RESERVE (000) (000)
- ---------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 38.8%
U.S. Treasury Bills(DAGGER)
5.120%, 09/19/96 ........................ $ 500 $ 494
5.130%, 09/26/96 ........................ 500 494
5.150%, 10/10/96 ........................ 300 296
5.060%, 10/17/96 ........................ 500 493
5.170%, 10/24/96 ........................ 500 492
5.230%, 10/31/96 ........................ 500 491
5.220%, 11/07/96 ........................ 500 491
5.370%, 11/14/96 ........................ 500 490
5.230%, 11/21/96 ........................ 500 490
5.460%, 12/05/96 ........................ 500 488
5.270%, 12/12/96 ........................ 500 488
5.380%, 12/19/96 ........................ 500 488
5.360%, 12/26/96 ........................ 500 487
5.290%, 01/09/97 ........................ 500 487
5.340%, 02/06/97 ........................ 200 194
5.650%, 04/03/97 ........................ 500 479
U.S. Treasury STRIPS(DAGGER)
5.230%, 08/15/96 ........................ 700 696
5.300%, 11/15/96 ........................ 1,000 980
5.640%, 05/15/97 ........................ 500 476
------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $9,494) ........................................... 9,494
- ---------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 61.7%
Aubrey Lanston 5.40%,dated 06/28/96, matures
07/01/96, repurchase price $800,360
(collateralized by U.S. Treasury Note, par
value $820,000, 5.375%, matures 11/30/97;
market value $818,473) ..................... 800 800
First National Bank of Chicago 5.40%, dated
06/28/96, matures 07/01/96, repurchase
price $800,360 (collateralized by U.S.
Treasury Note, par value $790,000,
6.50%, matures 08/15/97; market
value $814,120) ............................ 800 800
Goldman Sachs 5.42%, dated 06/28/96, matures
07/01/96, repurchase price $5,502,484
(collateralized by U.S. Treasury Note, par
value $4,485,000, 10.75%, matures 02/15/03;
market value $5,651,197) ................... 5,500 5,500
1
<PAGE>
STATEMENT OF NET ASSETS (CONCLUDED) COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
PAR VALUE
FIDUCIARY TREASURY RESERVE (000) (000)
- --------------------------------------------------------------------------
Hong Kong Shanghai Bank 5.42%, dated 06/28/96,
matures 07/01/96, repurchase price $300,136
(collateralized by U.S. Treasury Note, par
value $300,000, 5.25%, matures 12/31/97;
market value $304,592) ......................... $ 300 $ 300
Hong Kong Shanghai Bank 5.25%, dated 06/28/96,
matures 07/01/96, repurchase price $629,275
(collateralized by U.S. Treasury Note, par
value $645,000, 6.25%, matures 04/30/01;
market value $645,577) ......................... 629 629
Morgan Stanley 5.30%, dated 06/28/96, matures
07/01/96, repurchase price $800,353
(collateralized by U.S. Treasury Note, par
value $745,000, 9.25%, matures 08/15/98;
market value $815,608) ......................... 800 800
Sanwa Bank 5.40%, dated 06/28/96, matures
07/01/96, repurchase price $800,360
(collateralized by U.S. Treasury Note, par
value $795,000, 5.875%, matures 07/31/97;
market value $814,359) ......................... 800 800
Swiss Bank 5.45%, dated 06/28/96, matures
07/01/96, repurchase price $5,502,498
(collateralized by U.S. Treasury Note, par
value $5,540,000, 6.50%, matures 05/15/97;
market value $5,619,662) ....................... 5,500 5,500
-------
TOTAL REPURCHASE AGREEMENTS
(Cost $15,129) .......................................... 15,129
- --------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.5%
(Cost $24,623) ............................................. 24,623
- --------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET - (0.5%) .................... (125)
- --------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares ($0.001 par value - 250 million
authorized) based on 24,498,083 outstanding shares ...... 24,498
- --------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% ..................................... $24,498
- --------------------------------------------------------------------------
NET ASSET VALUE, OFFERING & REDEMPTION PRICE PER SHARE ........ $ 1.00
- --------------------------------------------------------------------------
STRIPS -- SEPARATELY TRADED REGISTERED INTEREST AND PRINCIPAL OF SECURITIES
(DAGGER) YIELD TO MATURITY
See accompanying notes to financial statements.
2
<PAGE>
STATEMENT OF OPERATIONS (000) COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
For the year ended June 30, 1996
FIDUCIARY TREASURY RESERVE
- -------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest .......................................... $1,152
------
EXPENSES:
Investment advisory fees ............................. 97
Less investment advisory fees waived ................. (97)
Administrative fees .................................. 52
Less administrative fees waived ...................... (28)
Transfer agent fees & expenses ....................... 4
Professional fees .................................... 4
Registration & filing fees ........................... 2
Printing ............................................. 8
Miscellaneous ........................................ (2)
------
Total expenses ............................................. 40
------
NET INVESTMENT INCOME ...................................... 1,112
NET REALIZED LOSS ON INVESTMENTS:
Net realized loss from securities sold ............... (1)
------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ....... $1,111
======
See accompanying notes to financial statements.
3
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (000) COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
For the years ended June 30
FIDUCIARY TREASURY RESERVE
- --------------------------------------------------------------------------------
07/01/95 07/01/94
TO 06/30/96 TO 06/30/95
----------- -----------
OPERATIONS:
Net investment income .......................... $ 1,112 $ 1,111
Net realized gain (loss) on securities sold .... (1) 1
-------- --------
Net increase in net assets resulting
from operations ............................. 1,111 1,112
-------- --------
DIVIDENDS DISTRIBUTED FROM:
Net investment income .......................... (1,112) (1,111)
Net realized gains ............................. -- --
-------- --------
Total dividends distributed .................... (1,112) (1,111)
-------- --------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued .................... 26,668 25,716
Cost of shares redeemed ........................ (20,565) (27,684)
-------- --------
Increase (decrease) in net assets derived
from capital share transactions ............. 6,103 (1,968)
-------- --------
NET INCREASE (DECREASE) IN NET ASSETS ................ 6,102 (1,967)
NET ASSETS:
Beginning of period ............................ 18,396 20,363
-------- --------
End of period .................................. $ 24,498 $ 18,396
======== ========
SHARES ISSUED AND REDEEMED:
Shares issued .................................. 26,668 25,716
Shares redeemed ................................ (20,565) (27,684)
-------- --------
Increase (decrease) in net shares derived
from capital share transactions ............. 6,103 (1,968)
-------- --------
OUTSTANDING SHARES:
Beginning of period ............................ 18,395 20,363
-------- --------
End of period .................................. 24,498 18,395
======== ========
See accompanying notes to financial statements.
4
<PAGE>
FINANCIAL HIGHLIGHTS COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
FIDUCIARY TREASURY RESERVE
- --------------------------------------------------------------------------------
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
RATIO RATIO OF
NET NET NET RATIO OF EXPENSES NET INCOME
ASSET DISTRIBUTIONS ASSET ASSETS RATIO OF NET TO AVERAGE TO AVERAGE
VALUE NET FROM NET VALUE END OF OF EXPENSES INCOME NET ASSETS NET ASSETS
BEGINNING INVESTMENT INVESTMENT END OF TOTAL PERIOD TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING
OF PERIOD INCOME INCOME PERIOD RETURN (000) NET ASSETS NET ASSETS WAIVERS) WAIVERS)
--------- ---------- ------------- ------ ------ ------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
For the year ended
June 30, 1996 $1.00 0.05 (0.05) $1.00 5.54% $24,498 0.19% 5.39% 0.80% 4.78%
For the year ended
June 30, 1995 $1.00 0.05 (0.05) $1.00 5.24% $18,396 0.23% 5.09% 0.87% 4.45%
For the year ended
June 30, 1994 $1.00 0.03 (0.03) $1.00 3.10% $20,363 0.28% 3.03% 0.91% 2.40%
For the year ended
June 30, 1993 $1.00 0.03 (0.03) $1.00 3.17% $27,614 0.18% 3.19% 0.85% 2.52%
For the period ended
June 30, 1992 (1) $1.00 0.02 (0.02) $1.00 2.00%* $49,328 0.05% 3.95% 0.80% 3.20%
<FN>
- ----------
* RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED.
(1) THE FIDUCIARY TREASURY RESERVE COMMENCED OPERATIONS ON DECEMBER 10, 1991.
RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
</FN>
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
1. ORGANIZATION
The CoreFund Fiduciary Treasury Reserve is a Fund offered by CoreFunds, Inc.
(the "Company"), an open-end investment company registered under the Investment
Company Act of 1940, as amended.
The Company is presently authorized to offer shares in the following Funds (the
"Funds"):
EQUITY FUNDS: MONEY MARKET FUNDS:
Growth Equity Fund Cash Reserve
Equity Fund Treasury Reserve
Equity Index Fund Tax-Free Reserve
International Growth Fund Fiduciary Reserve
Balanced Fund Fiduciary Treasury Reserve
Special Equity Fund Fiduciary Tax-Free Reserve
FIXED INCOME FUNDS:
Short Term Income Fund
Government Income Fund
Short-Intermediate Bond Fund
Intermediate Municipal Bond Fund
Bond Fund
Global Bond Fund
Pennsylvania Municipal Bond Fund
New Jersey Municipal Bond Fund
The financial statements included herein present only those of the Fiduciary
Treasury Reserve Fund. The financial statements of the remaining Funds are
presented separately. The assets of each Fund are segregated, and a
shareholder's interest is limited to the Fund in which shares are held. The
Funds' prospectus provides a description of the Funds' investment objectives,
policies and strategies.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fiduciary Treasury Reserve Fund.
SECURITY VALUATION -- Investment securities of the Fiduciary Treasury Reserve
Fund are stated at amortized cost which approximates market value. Under this
valuation method, purchase discounts and premiums are accreted and amortized
ratably to maturity and are included in interest income.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUE COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are
accounted for on the trade date of the security purchase or sale. Costs used in
determining net realized capital gains and losses on the sale of securities are
those of the specific securities sold, adjusted for the accretion and
amortization of the purchase discounts and premiums during the respective
holding period. Interest income is recorded on the accrual basis.
REPURCHASE AGREEMENTS -- Securities pledged as collateral for Repurchase
Agreements are held by each Fund's custodian bank until maturity of the
Repurchase Agreements. Provisions of the Agreements and procedures adopted by
the Adviser ensure that the market value of the collateral, including accrued
interest thereon, is sufficient in the event of default by the counterparty. If
the counterparty defaults and the value of the collateral declines or if the
counterparty enters into insolvency proceedings, realization of the collateral
by the Fund may be delayed or limited.
EXPENSES -- Expenses that are directly related to the Fund are charged directly
to that Fund. Other operating expenses of the Company are prorated to the Fund
on the basis of relative net assets.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income are
declared on a daily basis and are payable on the first business day of the
following month. Any net realized capital gains on sales of securities for a
Fund are distributed to its shareholders at least annually.
FEDERAL INCOME TAXES -- It is the Fund's intention to continue to qualify as a
regulated investment company and distribute all of its taxable income.
Accordingly, no provision for Federal income taxes is required.
3. INVESTMENT ADVISORY AND CUSTODIAL SERVICES
Pursuant to an investment advisory agreement dated August 12, 1996, investment
advisory services are provided to the Company by CoreStates Investment Advisers,
Inc. ("CoreStates Advisers"), a wholly-owned subsidiary of CoreStates Bank, N.A.
("CoreStates Bank"), itself a wholly-owned subsidiary of CoreStates Financial
Corp. Under the terms of such agreement, CoreStates Advisers is entitled to
receive an annual fee of 0.20% on the average net assets of the Fiduciary
Treasury Reserve Fund. Prior to August 12, 1996, CoreStates Advisers were
entitled to receive an annual fee of 0.50% on the average net assets of the
Fiduciary Treasury Reserve Fund. For the year ended June 30, 1996, CoreStates
Advisers earned $96,785 in investment advisory fees, all of which was
voluntarily waived in order to assist the Fund in maintaining a competitive
expense ratio.
CoreStates Bank also serves as Custodian to the Company. No fees are being paid
to CoreStates Bank for such services.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED) COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
4. ADMINISTRATIVE, DISTRIBUTION, AND TRANSFER AGENT SERVICES
Pursuant to an administration agreement dated October 30, 1992, as amended June
1, 1995, SEI Fund Resources ("SFR"), a wholly-owned subsidiary of SEI
Corporation, acts as the Fund's Administrator. Under the terms of such
agreement, SFR is entitled to receive an annual fee of 0.25% on the average
daily net assets of the Fiduciary Treasury Reserve Portfolio. Such a fee is
computed daily and paid monthly. For the year ended June 30, 1996,
administrative fees totaled $51,550 of which $28,627 was voluntarily waived in
order to assist the Fund in maintaining a competitive expense ratio.
Effective for the period July 1, 1995 to November 16, 1995, SEI Financial
Management Corporation acted as the Transfer Agent of the Fund. Pursuant to a
transfer agency agreement dated November 16, 1995, Boston Financial Data
Services ("BFDS") a subsidiary of State Street Bank and Trust Company acts as
the Fund's Transfer Agent. As such, BFDS provides transfer agency, dividend
disbursing, and shareholder servicing for the Fund.
On November 2, 1992, SEI Financial Services Company ("SFS"), also a wholly-owned
subsidiary of SEI Corporation, became the Fund's exclusive Distributor pursuant
to a distribution agreement dated October 30, 1992.
Certain officers of the Company are also officers of the Administrator. Such
officers are not paid fees by the Fund.
The Fund has paid legal fees to a law firm in which the secretary of the Company
is a partner.
SHAREHOLDER VOTING RESULTS (UNAUDITED):
There was a special meeting scheduled for April 9,1996 at which the shareholders
of the Cash Reserve, Treasury Reserve, Growth Equity Fund, Short-Intermediate
Bond Fund (formerly Intermediate Bond Fund), Government Income Fund,
Intermediate Municipal Bond Fund, Tax-Free Reserve, Value Equity Fund, Global
Bond Fund, Equity Index Fund, Balanced Fund, International Growth Fund, New
Jersey Municipal Bond Fund, Fiduciary Reserve, Fiduciary Tax Free Reserve,
Fiduciary Treasury Reserve, Elite Cash Reserve, Elite Government Reserve, and
Elite Treasury Reserve (the "Funds") voted on a series of proposals (the
"Proposals"). With respect to Proposal 2 relating to the Pennsylvania Municipal
Bond Fund meeting was adjourned until July 17, 1996. The proposals and the
results of the shareholder meeting are set forth as follows (unaudited).
8
<PAGE>
COREFUND MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
PROPOSAL 1: To consider and act upon a proposal to elect a Board of Directors.
ELECTION OF DIRECTORS:
SHARES VOTED "FOR" % OF VOTED % OF TOTAL
Emil J. Mikity 897,624,729.00 99.67% 54.71%
George H. Strong 897,631,180.00 99.67% 54.71%
Erin Anderson 897,649,083.00 99.67% 54.71%
Cheryl H. Wade 897,614,431.00 99.67% 54.71%
Thomas J. Taylor 897,630,502.00 99.67% 54.71%
SHARES VOTED "FOR" % OF VOTED % OF TOTAL
WITHHELD AUTHORITY
Emil J. Mikity 2,998,845.00 0.33% 0.18%
George H. Strong 2,992,394.00 0.33% 0.18%
Erin Anderson 2,974,491.00 0.33% 0.18%
Cheryl H. Wade 3,009,143.00 0.33% 0.18%
Thomas J. Taylor 2,993,072.00 0.33% 0.18%
PROPOSAL 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").
SHORT INTERMEDIATE BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 2,812,494.00 96.91% 48.69%
AGAINST 57,130.00 1.97% 0.99%
ABSTAIN 32,682.00 1.13% 0.57%
CASH RESERVE FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 302,869,534.00 99.98% 51.28%
AGAINST 631,760.00 0.21% 0.11%
ABSTAIN 2,501,075.00 0.82% 0.42%
9
<PAGE>
COREFUND MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
TREASURY RESERVE FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 279,305,695.00 99.86% 50.22%
AGAINST 181,597.00 0.6% 0.3%
ABSTAIN 206,812.00 0.7% 0.4%
GROWTH EQUITY FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 4,370,815.00 97.35% 50.83%
AGAINST 32,878.00 0.73% 0.38%
ABSTAIN 85,945.00 1.91% 0.1%
INTERMEDIATE BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 62,694.00 84.04% 49.96%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 11,905.00 15.96% 9.49%
GOVERNMENT INCOME FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 824,683.00 99.62% 55.41%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 3,152.00 0.38% 0.21%
TAX-FREE RESERVE FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 33,136,439.00 99.71% 49.91%
AGAINST 97,294.00 0.29% 0.15%
ABSTAIN 0.00 0.00% 0.00%
VALUE EQUITY FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 2,010,658.00 99.92% 75.86%
AGAINST 65.00 0.00% 0.00%
ABSTAIN 1,501.00 0.7% 0.6%
GLOBAL BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 3,279,675.00 100.00% 95.19%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
10
<PAGE>
COREFUND MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
EQUITY INDEX FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 3,164,839.00 99.40% 59.23%
AGAINST 5,049.00 0.16% 0.9%
ABSTAIN 14,111.00 0.44% 0.26%
BALANCED FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 3,134,366.00 96.20% 53.00%
AGAINST 24,641.00 0.76% 0.42%
ABSTAIN 99,236.00 3.05% 1.68%
INTERNATIONAL GROWTH FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 6,439,273.00 99.87% 71.92%
AGAINST 1,804.00 0.3% 0.2%
ABSTAIN 6,466.00 0.10% 0.7%
NEW JERSEY MUNICIPAL FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 83,788.00 100.00% 52.19%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
FIDUCIARY RESERVE FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 195,289,296.00 99.85% 53.52%
AGAINST 50,476.00 0.3% 0.1%
ABSTAIN 237,317.00 0.12% 0.7%
FIDUCIARY TAX-FREE FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 55,972,626.00 99.12% 73.01%
AGAINST 67,984.00 0.12% 0.22%
ABSTAIN 428,845.00 0.76% 0.56%
FIDUCIARY TREASURY FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 15,216,211.00 100.00% 76.23%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
11
<PAGE>
COREFUND MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
PENNSYLVANIA MUNICIPAL BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 565,475.00 96.40% 58.19%
AGAINST 19,980.00 3.41% 2.06%
ABSTAIN 1,119.00 0.19% 0.12%
PROPOSAL 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.
INTERNATIONAL GROWTH FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 6,434,497.00 99.80% 71.86%
AGAINST 6,500.00 0.10% 0.7%
ABSTAIN 6,546.00 0.10% 0.7%
PROPOSAL 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.
INTERNATIONAL GROWTH FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 6,438,013.00 99.85% 71.90%
AGAINST 3,576.00 0.6% 0.4%
ABSTAIN 5,953.00 0.9% 0.7%
PROPOSAL 5: To consider and vote upon a proposal to approve the selection of
Alpha Global Fixed Income Managers, Inc. ("Alpha Global") or its successor as a
Sub-Adviser to the Global Bond Fund.
GLOBAL BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 3,279,675.00 100.00% 95.19%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
12
<PAGE>
COREFUND MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
PROPOSAL 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.
GLOBAL BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 3,279,675.00 100.00% 95.19%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
PROPOSAL 7: To consider and vote upon a proposal to change the fundamental
policy of the Short Intermediate Bond Fund so that the Fund maintains an average
weighted maturity of two to five years instead of the existing average weighted
maturity of three to ten years.
SHORT-INTERMEDIATE BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 2,370,056.00 97.90% 41.03%
AGAINST 36,158.00 1.49% 0.63%
ABSTAIN 14,715.00 0.61% 0.25%
PROPOSAL 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.
FIDUCIARY TREASURY FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 15,216,211.00 100.00% 76.23%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
FIDUCIARY TAX-FREE FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 55,814,121.00 98.84% 72.80%
AGAINST 170,134.00 0.30% 0.22%
ABSTAIN 485,200.00 0.86% 0.63%
13
<PAGE>
NOTICE TO SHAREHOLDERS OF COREFUNDS
(UNAUDITED)
For taxpayers filing on a calendar year basis, this notice is for
informational purposes only.
Dear CoreFund Shareholders:
For the fiscal year ended June 30, 1996, the Fiduciary Treasury Reserve
Fund is designating long-term capital gains, qualifying dividends and exempt
income with regard to distributions paid during the year as follows:
<TABLE>
<CAPTION>
(A) (B)
LONG TERM ORDINARY (C) (E)
CAPITAL GAINS INCOME TOTAL (D)** TAX (F)
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS QUALIFYING EXEMPT FOREIGN
PORTFOLIO (TAX BASIS) (TAX BASIS) (TAX BASIS) DIVIDENDS (1) INTEREST TAX CREDIT (2)
------------ ------------- ------------- ------------- ------------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Fiduciary Treasury Reserve 0% 100% 100% 0% 0% 0%
<FN>
(1) QUALIFYING DIVIDENDS REPRESENT DIVIDENDS WHICH QUALIFY FOR THE CORPORATE RECEIVED DEDUCTION.
* ITEMS (A) AND (B) ARE BASED ON A PERCENTAGE OF THE PORTFOLIOS' TOTAL DISTRIBUTION.
** ITEMS (D), (E) AND (F) ARE BASED ON A PERCENTAGE OF ORDINARY INCOME DISTRIBUTIONS OF THE PORTFOLIO.
</FN>
</TABLE>
Please consult your tax department for proper treatment of this information.
14
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
CoreFunds, Inc.
We have audited the accompanying statement of net assets of the CoreFund
Fiduciary Treasury Reserve of CoreFunds, Inc. (the "Fund") as of June 30, 1996,
and the related statement of operations for the year then ended, and the
statements of changes in net assets and the financial highlights for each of the
years presented therein. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included verification by examination of securities held by the
Custodian as of June 30, 1996 and confirmation of securities not held by the
Custodian by correspondence with others. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
CoreFund Fiduciary Treasury Reserve of CoreFunds, Inc. at June 30, 1996, the
results of its operations for the year then ended, the changes in its net assets
and the financial highlights for each of the years presented therein, in
conformity with generally accepted accounting principles.
Philadelphia, Pennsylvania
August 16, 1996
15
<PAGE>
NOTES
<PAGE>
NOTES
<PAGE>
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Corporation. The report is not
authorized for distribution to prospective investors in the Corporation unless
preceded or accompanied by an effective prospectus. Shares in the Fund are not
deposits or obligations of, or guaranteed or endorsed by, CoreStates Bank, N.A.,
the parent corporation of the Fund's investment adviser. Such shares are also
not federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other agency.
COR-F-057-01
<PAGE>
CoreFunds,Inc.
--------------
FIDUCIARY TAX-FREE RESERVE
ANNUAL REPORT
June 30, 1996
<PAGE>
INVESTMENT ADVISER'S REPORT
COREFUND FIDUCIARY TAX-FREE RESERVE
JUNE 30, 1996
The CoreFund Fiduciary Tax-Free returned 3.51% for the one-year period ended
June 30, 1996. This compared with a return of 3.15% for the Benchmark Index, the
Donoghue Tax Free, for the same period. The Fund's assets grew by 13.93%
from $72.6 million on June 30, 1995 to $86.5 million on June 30, 1996.
The average maturity of the Fund changed from 28 days at June 30, 1995 to
41 days at June 30, 1996. Maturities were lengthened to lock-in yields as
interest rates declined and shortened when rates changed directions in March of
1996. The current market sentiment suggests a strong likelihood of a rate hike
before the calendar year end. The Fund's average maturity will be managed
accordingly.
<PAGE>
STATEMENT OF NET ASSETS COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
PAR VALUE
FIDUCIARY TAX-FREE RESERVE (000) (000)
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - 102.2%
ALABAMA - 7.9%
Montgomery, Alabama TECP
3.400%, 07/10/96 ................. $3,460 $3,460
3.600%, 08/21/96 ................. 990 990
Winfield, Alabama Industrial Development
Authority Revenue Bond for Union
Underwear Project (A) (B) (C)
3.550%, 07/05/96 ................. 2,400 2,400
------
Total Alabama .................... 6,850
------
ALASKA - 3.2%
Valdez, Alaska TECP, Series A
3.400%, 07/11/96 ................. 1,325 1,325
Valdez, Alaska Industrial Development
Authority Revenue Bond for Exxon
Pipeline Company Project (A) (B)
3.550%, 07/01/96 ................. 300 300
Valdez, Alaska TECP
3.550%, 08/16/96 ................. 1,100 1,100
------
Total Alaska ..................... 2,725
------
COLORADO - 1.6%
Moffat County, Colorado Pollution
Control Revenue Bond (A) (B)
3.150%, 07/05/96 ................. 1,400 1,400
------
DELAWARE - 0.7%
New Castle County, Delaware GO
3.850%, 04/01/97 ................. 615 615
------
FLORIDA - 7.1%
Dade County, Florida Fixed Capital
Asset Acquisition Revenue
Bond, Series 1990 (A) (B) (C)
3.600%, 07/05/96 ................. 1,400 1,400
Florida Municipal Power TECP
3.550%, 12/02/96 ................. 1,250 1,250
Florida State Housing Finance
Agency Revenue Bond for Carlton
Project, Series EEE (A) (B) (C)
3.150%, 07/05/96 ................. 1,020 1,020
Florida State Housing Finance Agency
Revenue Bond for Huntington
Project (A) (B) (C)
3.750%, 07/05/96 ................. 200 200
Orange County, Florida Industrial
Development Authority Revenue Bond
for Orlando International
Project (A) (B) (C)
3.900%, 07/01/96 ................. 300 300
1
<PAGE>
STATEMENT OF NET ASSETS (CONTINUED) COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
PAR VALUE
FIDUCIARY TAX-FREE RESERVE (000) (000)
- --------------------------------------------------------------------------------
Sunshine State, Florida TECP
3.550%, 09/10/96 ................ $2,000 $2,000
------
Total Florida ................... 6,170
------
ILLINOIS - 4.4%
Chicago, Illinois O'Hare Airport
Revenue Bond (A) (B) (C)
3.400%, 07/05/96 ................ 400 400
Illinois Development Finance Authority
Pollution Control
Revenue Bond (A) (B)
3.550%, 07/01/96 ................ 300 300
Illinois State Development Finance
Authority Revenue Bond
for Illinois Power Company
Project, Series B (A) (B) (C)
3.400%, 07/05/96 ................ 1,400 1,400
Illinois State Health Facilities
Authority Revenue Bond for
Franciscan Village Project,
Series A (A) (B) (C)
3.400%, 07/05/96 ................ 300 300
Lisle, Illinois Housing Authority
Revenue Bond for Ashley
of Lisle Project (A) (B) (C)
3.300%, 07/05/96 ................ 1,400 1,400
------
Total Illinois .................. 3,800
------
INDIANA - 9.2%
City of Mt. Vernon, Indiana TECP
3.450%, 07/30/96 ................ 735 735
Gary, Indiana Environmental Improvement
Revenue Bond for U.S. Steel Project
(A) (B) (C)
3.700%, 07/15/96 ................ 700 700
Jasper County, Indiana TECP, Series 88C
3.450%, 07/11/96 ................ 400 400
Jasper County, Indiana TECP, Series 88D
3.450%, 07/11/96 ................ 1,000 1,000
Jasper County, Indiana TECP, Series 88A
3.250%, 08/08/96 ................ 200 200
Jasper County, Indiana TECP
3.650%, 07/17/96 ................ 1,000 1,000
3.650%, 08/08/96 ................ 1,190 1,190
Sullivan, Indiana TECP
3.400%, 07/17/96 ................ 1,000 1,000
2
<PAGE>
STATEMENT OF NET ASSETS COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
PAR VALUE
FIDUCIARY TAX-FREE RESERVE (000) (000)
- --------------------------------------------------------------------------------
Sullivan, Indiana TECP
3.250%, 08/08/96 .................. $ 500 $ 500
3.600%, 10/16/96 .................. 950 950
Sullivan, Indiana TECP, Series L2
3.500%, 07/30/96 .................. 300 300
------
Total Indiana ..................... 7,975
------
KANSAS - 2.8%
Burlington, Kansas TECP, Series C1
3.650%, 07/17/96 .................. 400 400
3.600%, 10/23/96 .................. 1,500 1,500
Kansas City, Kansas Industrial
Development Revenue Bond for
PQ Corporation Project (A) (B) (C)
3.700%, 07/01/96 .................. 100 100
Wichita, Kansas Health Facilities Revenue
Bond for Wichita
Health Systems Project,
Series XXV (A) (B) (C)
3.650%, 07/05/96 .................. 400 400
------
Total Kansas ...................... 2,400
------
KENTUCKY - 3.5%
Pendelton County, Kentucky TECP
3.700%, 08/05/96 .................. 3,000 3,000
------
LOUISIANA - 1.2%
Jefferson Parish, Louisiana Industrial
Revenue Bond for
George J. Ackel, Sr
Project (A) (B) (C)
3.150%, 07/05/96 .................. 1,000 1,000
------
MASSACHUSETTS - 1.2%
Commonwealth of Massachusetts
GO (A) (B) (C)
3.600%, 07/01/96 .................. 1,000 1,000
------
MICHIGAN - 1.2%
Michigan State GO
4.000%, 09/30/96 .................. 1,000 1,002
------
MISSISSIPPI - 3.5%
Claiborne County, Mississippi TECP
3.650%, 07/24/96 .................. 2,000 2,000
3.650%, 08/07/96 .................. 1,000 1,000
------
Total Mississippi ................. 3,000
------
3
<PAGE>
STATEMENT OF NET ASSETS (CONTINUED) COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
PAR VALUE
FIDUCIARY TAX-FREE RESERVE (000) (000)
- --------------------------------------------------------------------------------
MISSOURI - 1.2%
Missouri State Environmental
Improvement TECP
3.550%, 07/10/96 ............... $1,000 $1,000
------
MONTANA - 3.5%
Forsyth, Montana Pollution Control
Revenue Bond for Portland
General Electric
Project (A) (B) (C)
3.300%, 07/05/96 ............... 1,000 1,000
Forsyth, Montana Pollution Control
Revenue Bond for Portland
General Electric Project,
Series A (A) (B) (C)
3.200%, 07/05/96 ............... 2,000 2,000
------
Total Montana .................. 3,000
------
NEVADA - 2.5%
Nevada State Housing Authority
Revenue Bond for Multi-Unit
Park Project, Series A (A) (B) (C)
3.500%, 07/05/96 ............... 2,200 2,200
------
NEW HAMPSHIRE - 0.7%
New Hampshire State Industrial
Development Revenue Bond for
Oerlikon-Burlhe Project (A) (B) (C)
3.650%, 07/01/96 ............... 600 600
------
NEW JERSEY - 2.9%
Springfield Township, New Jersey BAN
3.750%, 10/04/96 ............... 2,500 2,502
------
NEW YORK - 2.5%
New York, New York TECP, Series J3
3.500%, 09/17/96 ............... 2,000 2,000
New York, New York GO (A) (B) (C)
3.750%, 07/01/96 ............... 200 200
------
Total New York ................. 2,200
------
OHIO - 2.4%
Evandale, Ohio Industrial
Development Authority
Revenue Bond (A) (B) (C)
3.550%, 07/05/96 ............... 1,600 1,600
Ohio State Air Quality Revenue
Bond (A) (B) (C)
3.600%, 07/01/96 ............... 100 100
Ohio State Air Quality Revenue
Bond, Series B (A) (B) (C)
3.750%, 07/01/96 ............... 400 400
------
Total Ohio ..................... 2,100
------
4
<PAGE>
STATEMENT OF NET ASSETS COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
PAR VALUE
FIDUCIARY TAX-FREE RESERVE (000) (000)
- --------------------------------------------------------------------------------
OREGON - 1.2%
Port of Portland, Pollution Control
Authority Revenue Bond for
Dates-Reynolds Metals
Project (A) (B) (C)
3.650%, 07/01/96 ................. $ 400 $ 400
Port of St. Helens, Portland,
Oregon Pollution Control
Revenue Bond (A) (B) (C)
3.550%, 07/01/96 ................. 600 600
-------
Total Oregon ..................... 1,000
-------
PENNSYLVANIA - 20.3%
Allegheny County, Pennsylvania
Revenue Bond for Presbyterian
University Hospital (A) (B)
3.550%, 07/05/96 ................. 4,535 4,535
Beaver County, Pennsylvania
Industrial Development Authority
Revenue Bond for Duquesne
Light Company Project,
Series A (A) (B) (C)
3.250%, 07/05/96 ................. 1,000 1,000
Beaver County, Pennsylvania
Industrial Development Authority
Revenue Bond for Duquesne Light
Company Project,
Series B (A) (B) (C)
3.250%, 07/05/96 ................. 1,100 1,100
Lehigh County, Pennsylvania Industrial
Development Authority
Revenue Bond for Allegheny Electric
Project, Series A (A) (B) (C)
3.550%, 07/05/96 ................. 500 500
Montgomery County, Pennsylvania TECP
3.500%, 09/09/96 ................. 3,000 3,000
Pennsylvania State Higher Education
Facility Authority Revenue
Bond for Thomas Jefferson University,
Series B (C)
3.300%, 08/26/96 ................. 405 405
Pennsylvania State University GO
4.250%, 04/04/97 ................. 2,000 2,011
Washington County, Pennsylvania
Industrial Development
Authority Revenue Bond for
Werrerau Finance Company
Project (A) (B) (C)
3.550%, 07/05/96 ................. 2,500 2,500
Washington County, Pennsylvania
Lease Revenue Bond (A) (B) (C)
3.300%, 07/05/96 ................. 2,500 2,500
-------
Total Pennsylvania ............... 17,551
-------
5
<PAGE>
STATEMENT OF NET ASSETS (CONTINUED) COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
PAR VALUE
FIDUCIARY TAX-FREE RESERVE (000) (000)
- --------------------------------------------------------------------------------
TEXAS - 7.6%
Grapevine, Texas Industrial
Development Revenue Bond (A) (B) (C)
3.650%, 07/01/96 ................. $2,000 $2,000
Houston, Texas TRAN
4.500%, 06/30/97 ................. 2,000 2,011
Nueces County, Texas Health
Facilities Authority Revenue Bond for
Driscoll Children's Foundation
Project (A) (B) (C)
3.150%, 07/05/96 ................. 600 600
Texas State Southwest, Texas Higher
Education Authority Revenue
Bond for Southern Methodist
University (A) (B) (C)
3.550%, 07/01/96 ................. 2,000 2,000
------
Total Texas ...................... 6,611
------
VERMONT - 1.5%
Vermont State Student Loan Revenue
Bond, Student Loan
Assistance Corporation
Project (A) (B) (C)
3.650%, 07/01/96 ................. 1,340 1,340
------
VIRGINIA - 0.6%
Virginia State Peninsula Port Authority
Revenue Bond for
Dominion Terminal Project,
Series 1987C (A) (B) (C)
3.600%, 07/01/96 ................. 500 500
------
WEST VIRGINIA - 1.5%
Putnam County, West Virginia
Industrial Development Authority
Revenue Bond for FMC Corporation
Project (A) (B) (C)
3.650%, 07/01/96 ................. 1,300 1,300
------
WISCONSIN - 2.3%
Milwaukee, Wisconsin RAN, Series A
3.500%, 02/27/97 ................. 2,000 2,006
------
WYOMING - 4.0%
Gillette County, Wyoming TECP
3.650%, 08/16/96 ................. 3,000 3,000
6
<PAGE>
STATEMENT OF NET ASSETS (CONCLUDED) COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
FACE MARKET
AMOUNT VALUE
FIDUCIARY TAX-FREE RESERVE (000) (000)
- --------------------------------------------------------------------------------
Platte County, Wyoming Pollution
Control Revenue Bond (A) (B) (C)
3.700%, 07/01/96 ..................... $100 $ 100
Sublette County, Wyoming Pollution
Control Revenue Bond for
Exxon Project, Series 84 (A) (B)
3.550%, 07/01/96 ..................... 400 400
--------
Total Wyoming ........................ 3,500
--------
TOTAL MUNICIPAL BONDS
(Cost $88,347) ...................................... 88,347
--------
TOTAL INVESTMENTS - 102.2%
(Cost $88,347) ......................................... 88,347
--------
OTHER ASSETS AND LIABILITIES, NET - (2.2%) ................ (1,870)
--------
NET ASSETS:
Portfolio Shares ($0.001 par value -
250 million authorized) based on
86,506,941 outstanding shares ........................ 86,507
Accumulated Net Realized Loss on Investments (30)
--------
TOTAL NET ASSETS - 100.0% .................................. $ 86,477
--------
NET ASSET VALUE, OFFERING & REDEMPTION
PRICE PER SHARE ......................................... $ 1.00
--------
BAN -- BOND ANTICIPATION NOTE
GO -- GENERAL OBLIGATION
RAN -- REVENUE ANTICIPATION NOTE
TECP -- TAX-EXEMPT COMMERCIAL PAPER
TRAN -- TAX & REVENUE ANTICIPATION NOTE
(A) VARIABLE RATE SECURITY - THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT ON JUNE 30, 1996.
(B) PUT OR DEMAND FEATURES EXIST REQUIRING THE ISSUER TO REPURCHASE THE
INSTRUMENT PRIOR TO MATURITY. THE MATURITY DATE SHOWN IS THE LESSER OF THE
PUT DEMAND DATE OR MATURITY DATE.
(C) SECURITIES ARE HELD IN CONNECTION WITH A LETTER OF CREDIT ISSUED BY A MAJOR
COMMERCIAL BANK.
See accompanying notes to financial statements.
7
<PAGE>
STATEMENT OF OPERATIONS (000) COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
For the year ended June 30, 1996
FIDUCIARY TAX-FREE RESERVE
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest ............................................... $3,152
------
EXPENSES:
Investment advisory fees .................................. 406
Less investment advisory fees waived ...................... (406)
Administrative fees ....................................... 219
Less administrative fees waived ........................... (119)
Transfer agent fees & expenses ............................ 16
Professional fees ......................................... 11
Registration & filing fees ................................ 23
Taxes - other than income ................................. (19)
Miscellaneous ............................................. (9)
------
Total expenses .................................................. 140
------
NET INVESTMENT INCOME ........................................... 3,012
NET REALIZED LOSS ON INVESTMENTS:
Net realized loss from securities sold .................... (5)
------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............ $3,007
======
See accompanying notes to financial statements.
8
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (000) COREFUND MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
For the years ended June 30
FIDUCIARY TAX-FREE RESERVE
- --------------------------------------------------------------------------------
07/01/95 07/01/94
TO 06/30/96 TO 06/30/95
----------- -----------
OPERATIONS:
Net investment income ...................... $ 3,012 $ 2,856
Net realized loss on securities sold ....... (5) (7)
--------- ---------
Net increase in net assets resulting
from operations ......................... 3,007 2,849
--------- ---------
DIVIDENDS DISTRIBUTED FROM:
Net investment income ...................... (3,012) (2,856)
Net realized gains ......................... -- (3)
--------- ---------
Total dividends distributed ................ (3,012) (2,859)
--------- ---------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued ................ 224,591 213,817
Cost of shares redeemed .................... (210,702) (219,433)
--------- ---------
Increase (decrease) in net assets derived
from capital share transactions ......... 13,889 (5,616)
--------- ---------
NET INCREASE (DECREASE) IN NET ASSETS ............ 13,884 (5,626)
NET ASSETS:
Beginning of period ........................ 72,593 78,219
--------- ---------
End of period .............................. $ 86,477 $ 72,593
========= =========
SHARES ISSUED AND REDEEMED:
Shares issued .............................. 224,591 213,817
Shares redeemed ............................ (210,702) (219,433)
--------- ---------
Increase (decrease) in net shares derived
from capital share transactions ......... 13,889 (5,616)
--------- ---------
OUTSTANDING SHARES:
Beginning of period ........................ 72,618 78,234
--------- ---------
End of period .............................. 86,507 72,618
========= =========
See accompanying notes to financial statements.
9
<PAGE>
FINANCIAL HIGHLIGHTS -- COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
FIDUCIARY TAX-FREE RESERVE
- --------------------------------------------------------------------------------
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
NET NET
ASSET DISTRIBUTIONS NET ASSETS
VALUE NET FROM NET ASSET VALUE END
BEGINNING INVESTMENT INVESTMENT END TOTAL OF PERIOD
OF PERIOD INCOME INCOME OF PERIOD RETURN (000)
--------- ---------- ------------- ----------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
For the year ended
June 30, 1996 $1.00 0.03 (0.03) $1.00 3.51% $86,477
For the year ended
June 30, 1995 $1.00 0.03 (0.03) $1.00 3.41% $72,593
For the year ended
June 30, 1994 $1.00 0.02 (0.02) $1.00 2.32% $78,219
For the year ended
June 30, 1993 $1.00 0.02 (0.02) $1.00 2.48% $48,424
For the period ended
June 30, 1992 (1) $1.00 0.02 (0.02) $1.00 1.50%* $66,158
</TABLE>
<TABLE>
<CAPTION>
RATIO RATIO OF
RATIO OF EXPENSES NET INCOME
RATIO OF NET TO AVERAGETO AVERAGE
OF EXPENSES INCOME NET ASSETS NET ASSETS
TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING
NET ASSETS NET ASSETS WAIVERS) WAIVERS)
----------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
For the year ended
June 30, 1996 0.16% 3.44% 0.76% 2.84%
For the year ended
June 30, 1995 0.19% 3.37% 0.83% 2.73%
For the year ended
June 30, 1994 0.17% 2.29% 0.82% 1.64%
For the year ended
June 30, 1993 0.19% 2.45% 0.83% 1.81%
For the period ended
June 30, 1992 (1) 0.17% 3.00% 0.89% 2.28%
<FN>
- --------------
* RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED.
(1) THE FIDUCIARY TAX-FREE RESERVE COMMENCED OPERATIONS ON NOVEMBER 19, 1991.
RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
</FN>
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
1. ORGANIZATION
The CoreFund Fiduciary Tax-Free Reserve is a Fund offered by CoreFunds, Inc.
(the "Company"), an open-end investment company registered under the Investment
Company Act of 1940, as amended.
The Company is presently authorized to offer shares in the following Funds (the
"Funds"):
EQUITY FUNDS: MONEY MARKET FUNDS:
Growth Equity Fund Cash Reserve
Equity Fund Treasury Reserve
Equity Index Fund Tax-Free Reserve
International Growth Fund Fiduciary Reserve
Balanced Fund Fiduciary Treasury Reserve
Special Equity Fund Fiduciary Tax-Free Reserve
FIXED INCOME FUNDS:
Short Term Income Fund
Government Income Fund
Short-Intermediate Bond Fund
Intermediate Municipal Bond Fund
Bond Fund
Global Bond Fund
Pennsylvania Municipal Bond Fund
New Jersey Municipal Bond Fund
The financial statements included herein present only those of the Fiduciary
Tax-Free Reserve Fund. The financial statements of the remaining Funds are
presented separately. The assets of each Fund are segregated, and a
shareholder's interest is limited to the Fund in which shares are held. The
Funds' prospectus provides a description of the Funds' investment objectives,
policies and strategies.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fiduciary Tax-Free Reserve Fund.
SECURITY VALUATION -- Investment securities of the Fiduciary Tax-Free Reserve
Fund are stated at amortized cost which approximates market value. Under this
valuation method, purchase discounts and premiums are accreted and amortized
ratably to maturity and are included in interest income.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED) COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are
accounted for on the trade date of the security purchase or sale. Costs used in
determining net realized capital gains and losses on the sale of securities are
those of the specific securities sold, adjusted for the accretion and
amortization of the purchase discounts and premiums during the respective
holding period. Interest income is recorded on the accrual basis.
EXPENSES -- Expenses that are directly related to a Fund are charged
directly to that Fund. Other operating expenses of the Company are prorated to a
Fund on the basis of relative net assets.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income
are declared on a daily basis and are payable on the first business day of the
following month. Any net realized capital gains on sales of securities for a
Fund are distributed to its shareholders at least annually.
FEDERAL INCOME TAXES -- It is the Fund's intention to continue to
qualify as a regulated investment company and distribute all of its taxable
income. Accordingly, no provision for Federal income taxes is required.
3. INVESTMENT ADVISORY AND CUSTODIAL SERVICES
Pursuant to an investment advisory agreement dated August 12, 1996, investment
advisory services are provided to the Company by CoreStates Investment Advisers,
Inc. ("CoreStates Advisers"), a wholly-owned subsidiary of CoreStates Bank, N.A.
("CoreStates Bank"), itself a wholly-owned subsidiary of CoreStates Financial
Corp. Under the terms of such agreement, CoreStates Advisers is entitled to
receive an annual fee of 0.20% on the average net assets of the Fiduciary
Tax-Free Reserve Fund. Prior to August 12, 1996, CoreStates Advisers were
entitled to receive an annual fee of 0.50% on the average net assets of the
Fiduciary Tax-Free Reserve Fund. For the year ended June 30, 1996, CoreStates
Advisers earned $405,928 in investment advisory fees, all of which was
voluntarily waived in order to assist the Fund in maintaining a competitive
expense ratio.
CoreStates Bank also serves as Custodian to the Company. No fees are being paid
to CoreStates Bank for such services.
4. ADMINISTRATIVE, DISTRIBUTION, AND TRANSFER AGENT SERVICES
Pursuant to an administration agreement dated October 30, 1992, as amended June
1, 1995, SEI Fund Resources ("SFR"), a wholly-owned subsidiary of SEI
Corporation, acts as the Fund's Administrator. Under the terms of such
agreement, SFR is entitled to receive an annual fee of 0.25% on the average
daily net assets of the Fiduciary Tax-Free Reserve Fund. Such a fee is computed
daily and paid monthly. For the year ended June 30, 1996, administrative fees
totaled $218,633 of which $118,592 was voluntarily waived in order to assist the
Fund in maintaining a competitive expense ratio.
Effective for the period July 1, 1995 to November 16, 1995, SEI Financial
Management Corporation acted as the Transfer Agent of the Fund. Pursuant to a
transfer agency agreement dated November 16, 1995, Boston Financial Data
Services ("BFDS") a subsidiary of State Street
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED) COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
Bank and Trust Company acts as the Fund's Transfer Agent. As such, BFDS provides
transfer agency, dividend disbursing, and shareholder servicing for the Fund.
On November 2, 1992, SEI Financial Services Company ("SFS"), also a wholly-owned
subsidiary of SEI Corporation, became the Fund's exclusive Distributor pursuant
to a distribution agreement dated October 30, 1992.
Certain officers of the Company are also officers of the Administrator. Such
officers are not paid fees by the Fund.
The Fund has paid legal fees to a law firm in which the secretary of the Company
is a partner.
5. INVESTMENT COMPOSITION
The Fund invests in securities which include revenue and general obligation
instruments.
At June 30,1996, the revenue sources by purpose were as follows:
% OF PORTFOLIO
INVESTMENTS
--------------
REVENUE INSTRUMENTS
Education Bonds ............................. 7%
Hospital & Health Care Bonds ................ 7%
Housing Bonds ............................... 6%
Industrial Bonds ............................ 13%
Other Bonds ................................. 7%
Pollution Control Bonds ..................... 8%
Transportation Bonds ........................ 3%
Utility Bonds ............................... 3%
TAX EXEMPT COMMERCIAL PAPER .......................... 39%
GENERAL OBLIGATIONS .................................. 5%
TAX & REVENUE ANTICIPATION NOTES ..................... 2%
----
100%
====
In addition, certain investments are covered by insurance issued by several
private issuers who guarantee the payment of interest and principal at final
maturity in the event of default. Such insurance, however, does not guarantee
the market value of the securities or the value of the Fund's shares.
13
<PAGE>
COREFUND MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
SHAREHOLDER VOTING RESULTS (UNAUDITED):
There was a special meeting scheduled for April 9,1996 at which the shareholders
of the Cash Reserve, Treasury Reserve, Growth Equity Fund, Short-Intermediate
Bond Fund (formerly Intermediate Bond Fund), Government Income Fund,
Intermediate Municipal Bond Fund, Tax-Free Reserve, Value Equity Fund, Global
Bond Fund, Equity Index Fund, Balanced Fund, International Growth Fund, New
Jersey Municipal Bond Fund, Fiduciary Reserve, Fiduciary Tax Free Reserve,
Fiduciary Treasury Reserve, Elite Cash Reserve, Elite Government Reserve, and
Elite Treasury Reserve (the "Funds") voted on a series of proposals (the
"Proposals"). With respect to Proposal 2 relating to the Pennsylvania Municipal
Bond Fund, the meeting was adjourned until July 17, 1996. The proposals and the
results of the shareholder meeting are set forth as follows.
PROPOSAL 1: To consider and act upon a proposal to elect a Board of Directors.
ELECTION OF DIRECTORS:
SHARES VOTED "FOR" % OF VOTED % OF TOTAL
Emil J. Mikity 897,624,729.00 99.67% 54.71%
George H. Strong 897,631,180.00 99.67% 54.71%
Erin Anderson 897,649,083.00 99.67% 54.71%
Cheryl H. Wade 897,614,431.00 99.67% 54.71%
Thomas J. Taylor 897,630,502.00 99.67% 54.71%
SHARES VOTED "FOR" % OF VOTED % OF TOTAL
WITHHELD AUTHORITY
Emil J. Mikity 2,998,845.00 0.33% 0.18%
George H. Strong 2,992,394.00 0.33% 0.18%
Erin Anderson 2,974,491.00 0.33% 0.18%
Cheryl H. Wade 3,009,143.00 0.33% 0.18%
Thomas J. Taylor 2,993,072.00 0.33% 0.18%
PROPOSAL 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").
14
<PAGE>
COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
SHORT-INTERMEDIATE BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 2,812,494.00 96.91% 48.69%
AGAINST 57,130.00 1.97% 0.99%
ABSTAIN 32,682.00 1.13% 0.57%
CASH RESERVE FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 302,869,534.00 99.98% 51.28%
AGAINST 631,760.00 0.21% 0.11%
ABSTAIN 2,501,075.00 0.82% 0.42%
TREASURY RESERVE FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 279,305,695.00 99.86% 50.22%
AGAINST 181,597.00 0.6% 0.3%
ABSTAIN 206,812.00 0.7% 0.4%
GROWTH EQUITY FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 4,370,815.00 97.35% 50.83%
AGAINST 32,878.00 0.73% 0.38%
ABSTAIN 85,945.00 1.91% 0.1%
INTERMEDIATE BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 62,694.00 84.04% 49.96%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 11,905.00 15.96% 9.49%
GOVERNMENT INCOME FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 824,683.00 99.62% 55.41%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 3,152.00 0.38% 0.21%
15
<PAGE>
COREFUND MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
TAX-FREE RESERVE FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 33,136,439.00 99.71% 49.91%
AGAINST 97,294.00 0.29% 0.15%
ABSTAIN 0.00 0.00% 0.00%
VALUE EQUITY FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 2,010,658.00 99.92% 75.86%
AGAINST 65.00 0.00% 0.00%
ABSTAIN 1,501.00 0.7% 0.6%
GLOBAL BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 3,279,675.00 100.00% 95.19%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
EQUITY INDEX FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 3,164,839.00 99.40% 59.23%
AGAINST 5,049.00 0.16% 0.9%
ABSTAIN 14,111.00 0.44% 0.26%
BALANCED FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 3,134,366.00 96.20% 53.00%
AGAINST 24,641.00 0.76% 0.42%
ABSTAIN 99,236.00 3.05% 1.68%
INTERNATIONAL GROWTH FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 6,439,273.00 99.87% 71.92%
AGAINST 1,804.00 0.3% 0.2%
ABSTAIN 6,466.00 0.10% 0.7%
NEW JERSEY MUNICIPAL FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 83,788.00 100.00% 52.19%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
16
<PAGE>
COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
FIDUCIARY RESERVE FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 195,289,296.00 99.85% 53.52%
AGAINST 50,476.00 0.3% 0.1%
ABSTAIN 237,317.00 0.12% 0.7%
FIDUCIARY TAX-FREE FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 55,972,626.00 99.12% 73.01%
AGAINST 67,984.00 0.12% 0.22%
ABSTAIN 428,845.00 0.76% 0.56%
FIDUCIARY TREASURY FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 15,216,211.00 100.00% 76.23%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
PENNSYLVANIA MUNICIPAL BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 565,475.00 96.40% 58.19%
AGAINST 19,980.00 3.41% 2.06%
ABSTAIN 1,119.00 0.19% 0.12%
PROPOSAL 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.
INTERNATIONAL GROWTH FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 6,434,497.00 99.80% 71.86%
AGAINST 6,500.00 0.10% 0.7%
ABSTAIN 6,546.00 0.10% 0.7%
17
<PAGE>
COREFUND MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
PROPOSAL 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.
INTERNATIONAL GROWTH FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 6,438,013.00 99.85% 71.90%
AGAINST 3,576.00 0.6% 0.4%
ABSTAIN 5,953.00 0.9% 0.7%
PROPOSAL 5: To consider and vote upon a proposal to approve the selection of
Alpha Global Fixed Income Managers, Inc. ("Alpha Global") or its successor as a
Sub-Adviser to the Global Bond Fund.
GLOBAL BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 3,279,675.00 100.00% 95.19%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
PROPOSAL 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.
GLOBAL BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 3,279,675.00 100.00% 95.19%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
PROPOSAL 7: To consider and vote upon a proposal to change the fundamental
policy of the Short-Intermediate Bond Fund so that the Fund maintains an average
weighted maturity of two to five years instead of the existing average weighted
maturity of three to ten years.
SHORT-INTERMEDIATE BOND FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 2,370,056.00 97.90% 41.03%
AGAINST 36,158.00 1.49% 0.63%
ABSTAIN 14,715.00 0.61% 0.25%
18
<PAGE>
COREFUND FIDUCIARY MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
June 30, 1996
PROPOSAL 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.
FIDUCIARY TREASURY FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 15,216,211.00 100.00% 76.23%
AGAINST 0.00 0.00% 0.00%
ABSTAIN 0.00 0.00% 0.00%
FIDUCIARY TAX-FREE FUND
SHARES VOTED % OF VOTED % OF TOTAL
FOR 55,814,121.00 98.84% 72.80%
AGAINST 170,134.00 0.30% 0.22%
ABSTAIN 485,200.00 0.86% 0.63%
19
<PAGE>
NOTICE TO SHAREHOLDERS OF COREFUNDS
(UNAUDITED)
For taxpayers filing on a calendar year basis, this notice is for
informational purposes only.
Dear CoreFund Shareholders:
For the fiscal year ended June 30, 1996, the Fiduciary Tax-Free Reserve
Fund is designating long-term capital gains, qualifying dividends and exempt
income with regard to distributions paid during the year as follows:
<TABLE>
<CAPTION>
(A) (B)
LONG TERM ORDINARY (C)
CAPITAL GAINS INCOME TOTAL
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
PORTFOLIO (TAX BASIS) (TAX BASIS) (TAX BASIS)
--------- ------------- ------------- -------------
<S> <C> <C> <C>
Fiduciary Tax-Free Reserve 0% 100% 100%
</TABLE>
<TABLE>
<CAPTION>
(E)
(D)** TAX (F)
QUALIFYING EXEMPT FOREIGN
PORTFOLIO DIVIDENDS (1) INTEREST TAX CREDIT (2)
--------- ------------- -------- --------------
<S> <C> <C> <C>
Fiduciary Tax-Free Reserve 0% 100% 0%
<FN>
(1) QUALIFYING DIVIDENDS REPRESENT DIVIDENDS WHICH QUALIFY FOR THE CORPORATE
RECEIVED DEDUCTION.
* ITEMS (A) AND (B) ARE BASED ON A PERCENTAGE OF THE PORTFOLIOS' TOTAL
DISTRIBUTION.
** ITEMS (D), (E) AND (F) ARE BASED ON A PERCENTAGE OF ORDINARY INCOME
DISTRIBUTIONS OF THE PORTFOLIO.
</FN>
</TABLE>
Please consult your tax department for proper treatment of this information.
20
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
CoreFunds, Inc.
We have audited the accompanying statement of net assets of the CoreFund
Fiduciary Tax-Free Reserve of CoreFunds, Inc. (the "Fund") as of June 30, 1996,
and the related statement of operations for the year then ended, and the
statements of changes in net assets and the financial highlights for each of the
years presented therein. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included verification by examination of securities held by the
Custodian as of June 30, 1996 and confirmation of securities not held by the
Custodian by correspondence with others. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
CoreFund Fiduciary Tax-Free Reserve of CoreFunds, Inc. at June 30, 1996, the
results of its operations for the year then ended, the changes in its net assets
and the financial highlights for each of the years presented therein, in
conformity with generally accepted accounting principles.
Philadelphia, Pennsylvania
August 16, 1996
21
<PAGE>
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Corporation. The report is not
authorized for distribution to prospective investors in the Corporation unless
preceded or accompanied by an effective prospectus. Shares in the Fund are not
deposits or obligations of, or guaranteed or endorsed by, CoreStates Bank, N.A.,
the parent corporation of the Fund's investment adviser. Such shares are also
not federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other agency.
COR-F-058-01
COREFUNDS, INC.
REGULAR MEETING OF THE B0ARD OF DIRECTORS
DECEMBER 4, 1991
A regular meeting of the Board of Directors of CoreFunds, Inc. (the
"Fund") was held pursuant to notice given to all directors at the Union League
Club, 140 S. Broad Street, Philadelphia, Pennsylvania at 8:30 a.m. on December
4, 1991.
The following members of the Board of Directors, constituting all of the
members of the Board of Directors, were present:
Phillip Alampi
Francis J. Bruzda
Emil Mikity
Also present at the invitation of the Directors were Richard B. Seidel,
Treasurer of the Fund; George H. Strong, a director of Viking Money Market Fund,
Inc. and Viking Equity Index Fund, Inc.; Dung Vukhac and Richard Lindsay of
CoreStates Investment Advisers, Inc. ("CSIA"); Marianne Hay of Martin Currie,
Inc. ("Martin Currie") and Thomas Jones of Morgan, Lewis & Bockius.
Mr. Bruzda acted as chairman of the meeting and Mr. Jones acted as
secretary of the meeting.
The first order of business undertaken was the review of the minutes of
the meeting of the Board of Directors held September 3, 1991. Upon motion duly
made and seconded, it was unanimously:
RESOLVED, that the Minutes of the regular meeting of the Board of
Directors on September 3, 1991, as presented, be and they hereby are
approved.
<PAGE>
Mr. Bruzda then turned to the proposed resolutions set forth in the
meeting materials which pertained to the calendar year-end distributions for the
Fund's portfolios. After Mr. Seidel discussed the purpose of the proposed
resolutions, upon motion duly made and seconded, it was unanimously:
Calendar Year-End Distribution - Cash Reserve, Treasury Reserve and Fiduciary
Reserve Portfolios
WHEREAS, the officers of the Fund have reported that consistent with the
policy of the Fund no capital gains have been realized during the
12-month period ending October 31, 1991 for the Fund's money market
portfolios and that daily dividends equal to the investment company
income have been declared and paid throughout the year:
RESOLVED, that in order to comply with the distribution requirements
applicable to regulated investment companies under the Internal Revenue
Code of 1986, as amended, there is declared a dividend to shareholders
of record of each of the Fund's money market portfolios on December 30,
1991, a dividend payable on December 31, 1991, in an amount, if any, as
may be necessary to ensure that there have been distributions to such
shareholders of as close as possible to 100%, but not less than 98% nor
more than 100%, of the net investment income of the portfolios for the
year ending December 31, 1991; and
Calendar Year-End Distribution - Tax-Free Reserve Portfolio
WHEREAS, the officers of the Fund have reported that consistent with the
policy of the Fund no capital gains have been realized during the
12-month period ending October 31, 1991 for the Fund's Tax-Free Reserve
portfolio and that daily dividends equal to the investment company
income have been declared and paid throughout the year:
RESOLVED, that in order to comply with the distribution requirements
applicable to regulated investment companies under the Internal Revenue
Code of 1986, as amended, there is declared a dividend to shareholders
of record of the Fund's Tax-Free Reserve portfolio on December 30, 1991,
a dividend payable on December 31, 1991, in an amount, if any, as may be
necessary to ensure that there have been distributions to such
2
<PAGE>
shareholders of as close as possible to 100%, but not less than 98% nor
more than 100%, of the net investment income of the portfolios for the
year ending December 31, 1991.
Calendar Year-End Distribution - Value Equity, International Growth and Equity
Index Portfolios
RESOLVED, that a determination of the net investment income of each of
the CoreFunds International Growth Fund and CoreFunds Value Equity Fund
(the "Portfolios") for the year ending December 31, 1991, be made as of
the close of business on such date, exclusive of realized capital gains
and in accordance with generally accepted accounting principles,
including the accrual of any interest earned and an appropriate charge
to expenses with respect to the expenses of the portfolio accrued during
such period, plus any dividends or other distributions on the portfolio
securities during such period;
FURTHER RESOLVED, that the President and Treasurer of the Fund shall
together determine the amount of dividends arising from net income to be
distributed to shareholders of such Portfolios for the year ending
December 31, 1991; provided, however, such amount shall be no less than
98% and as much as 100% of the accumulated and undistributed net
investment income of each Portfolio for the year ending December 31,
1991, as determined in accordance with the foregoing resolution, which
amount shall be distributed pro rata on a per share basis to the persons
who are shareholders of record of each of the Portfolios at the close of
business on December 30, 1991, provided that the amount of such
Portfolio's accumulated undistributed net investment income that is so
distributed shall be rounded down to the nearest cent per Portfolio
share;
FURTHER RESOLVED, that such distribution shall be paid on December 31,
1991 as follows: (i) in the case of those holders of shares who have so
elected in writing prior to the date of distribution, in cash, in
accordance with their elections or (ii) in additional whole and
fractional shares of the portfolio with respect to which the
distribution is made, valued at their net asset value as of the
determination of net asset value per share on such payment due, except
that dividends payable to shareholders who redeem all of their shares of
each Portfolio shall be distributed in cash within seven business days
after such redemption;
3
<PAGE>
FURTHER RESOLVED, that a determination of the undistributed capital gain
income, if any, of such Portfolios for the 12-month period ending
October 31, 1991 be made as of the close of business on December 31,
1991 in accordance with generally accepted accounting principles; and
that all of such undistributed capital gain net income, as so
determined, shall be distributed pro rata on a per share basis to the
persons who are shareholders of record of such Portfolios at the close
of business on December 30, 1991, on or about December 31, 1991 as
follows: (i) in the case of those holders of shares who have so elected
in writing prior to the date of distribution, in cash, in accordance
with their elections or (ii) in additional whole and fractional shares
of the Portfolio with respect to which the distribution is made, valued
at their net asset value as of the determination of net asset value per
share on such payment date, except that dividends payable to
shareholders who redeem all of their shares of each Portfolio shall be
distributed in cash within seven business days after such redemption.
After Mr. Seidel discussed the compliance checklist and financial
information materials that had been sent previously to the Directors, Messrs.
Lindsay and Vukhac presented the reports of CSIA on the Fund's portfolios. Mr.
Vukhac begun by discussing the taxable money market portfolios, noting that all
had been performing well and had continued growing in size. He stated that the
average maturities of these portfolios had been extended to obtain the benefits
of higher short-term interest rates. He then discussed short-term interest rates
and the factors currently affecting their direction. Mr. Vukhac then continued
the report on the taxable money market portfolios by discussing the concern CSIA
has that the portfolios be prepared to sell positions in companies that
experience credit problems and receive credit rating downgrades. Mr. Vukhac also
stated that CSIA is attentive to the problems
4
<PAGE>
affecting Japanese banks due to recent scandals. Mr. Vukhac then generally spoke
of CSIA's concern about investing in securities that may experience credit
difficulties.
Discussion next centered on CoreFund Tax-Free Reserve. Mr. Vukhac
commented that the Tax-Free portfolio had been seeking to invest in fixed rate
securities and would continue to seek to invest in fixed rate securities with
durations extending through the first quarter of 1992. Mr. Vukhac explained that
this was being done because the first quarter of a new year, particularly the
period from January 15 to March 15, often had very low yields for tax-exempt
obligations. Mr. Vukhac concluded his discussion of the Tax-Free portfolio by
noting that its yield was competitive and that its average maturity was sixty-
one days. Mr. Mikity then questioned whether the tax-exempt portfolios of the
Fund could purchase tax-exempt obligations in any state. Mr. Vukhac responded
that credit ratings determine whether a particular state's obligations are
eligible for investment by the portfolios and that typically 80% of the Tax-Free
Reserve is invested in Pennsylvania obligations as that is what the investors
desire. Mr. Mikity then inquired whether the Fund purchases any insured issues.
Mr. Vukhac responded that the Fund does purchase some insured issues, but before
doing so insists that the underlying security be rated at least A and carefully
examines the insurer of the issue to ensure its stability.
At this point, Mr. Lindsay informed the Directors that on November 19,
1991 the Fiduciary Tax-Free Reserve had been
5
<PAGE>
funded and that the Fiduciary Treasury Reserve portfolio should be funded by the
end of the year. Mr. Lindsay then presented the report on the Equity Index Fund.
He noted that the Equity Index Fund had been performing well, basically matching
the Standard & Poor's 500 Index except for the 70 basis points expense ratio of
the portfolio. Mr. Lindsay commented that the Equity Index Fund had taken steps
to reduce its expense ratio, had merged the Viking Equity Index portfolios into
it, and had merged its General and Fiduciary portfolios. Collectively, these
steps enabled the Equity Index Fund to reduce its expense ratio and become more
competitive with similar funds. Mr. Lindsay commented that the Equity Index Fund
would seek to further reduce its expense ratio so as to become even more
competitive with similar funds.
Mr. Lindsay next discussed the Value Equity Fund. He noted that the
Value Equity Fund had achieved excellent returns and that its sub-adviser,
Cashman, Farrell and Associates continued to purchase securities that were
undervalued and had low price to earnings ratios.
Marianne Hay of Martin Currie, sub-advisor to the International Growth
Fund, then began a presentation on Martin Currie and the International Growth
Fund. Ms. Hay presented and discussed overhead projections on the background of
Martin Currie and its investment practices. Ms. Hay stated that Martin Currie
advises pension funds, closed-end and open-end mutual funds and charitable
funds, with $4.6 billion under management. In
6
<PAGE>
response to a question by Mr. Mikity as to how much of this sum represented
investments of United States customers, Ms. Hay stated that $200 million came
from these customers and that $28 million came from the International Growth
Fund.
Ms. Hay continued her presentation by presenting a chart demonstrating
the International Growth Fund's asset allocation over geographical locations,
and noting that Martin Currie is emphasizing the Pacific Basin in its
investments of the International Growth Fund's assets. Ms. Hay then showed a
comparison between the International Growth Fund and the EAFE Index which
revealed that the International Growth Fund is generally outperforming the EAFE
Index. At this point Ms. Hay distributed to the Directors and discussed a
summary of Martin Currie's outlook on particular geographical areas. This
summary is attached as Exhibit A.
Upon the conclusion of her presentation Ms. Hay responded to several
questions from the Directors. Mr. Strong inquired how Martin Currie invests in
Mexico and Ms. Hay responded that Martin Currie often invests in securities that
are liquid, such as American Depositary Receipts ("ADRs"). Ms. Hay added
currently Martin Currie is focusing on consumer stocks and stocks of companies
that will build Mexico's infrastructure. Mr. Strong also inquired how Martin
Currie obtains current and reliable information on Mexican companies and Ms. Hay
responded that Martin Currie obtains information in a variety of ways, such
7
<PAGE>
as visiting the companies or obtaining the information that these companies are
required to provide if they sell ADRs.
Mr. Bruzda then turned the focus of the meeting to a discussion of Rule
12b-1 and the Fund's plans for offering separate classes of certain of its
current portfolios and implementing sales loads and distribution plans. Mr.
Lindsay commenced the discussion by outlining the considerations CSIA had
undertaken in seeking the Exemptive Order that was obtained from the Securities
and Exchange Commission and explaining how the adoption of sales loads and
distribution plans would work and why these sales loads and distribution plans
were being considered. Mr. Lindsay and Mr. Bruzda clarified the distinctions
between sales loads, distribution fees and Rule 12b-1 before Mr. Lindsay
explained that CSIA believed that the adoption of sales loads and distribution
plans was necessary for the Fund to effectively compete against similar funds.
Mr. Lindsay spoke of the barrier CSIA encountered when marketing the Fund's
portfolios to 401(k) plans because the Fund's smaller size made potential 401(k)
investors reluctant to invest in the Fund. Mr. Lindsay also spoke of the much
greater advertising efforts of competing funds and how the Fund could not
successfully compete against those funds with the much more limited marketing
efforts currently made on its behalf.
Mr. Lindsay stated that CSIA believed that the adoption of sales loads
and distribution plans would enable the Fund's portfolios to grow in size,
compete more successfully with its
8
<PAGE>
competitors and provide its shareholders better services. He noted that
currently investors of a particular Fund portfolio who may be seeking to invest
in another segment of the market have no person to contact to discuss the
options that the Fund's portfolios offer. Mr. Lindsay stated that CSIA believes
there is a large market of investors who are willing to pay sales loads and
distribution fees because they do not want to research their investment options
and will pay the sales load and distribution fee in order to have their
investment decision made for them. Furthermore, Mr. Lindsay stated that some
investors also want to obtain better servicing of their accounts and
distribution plans provide brokers incentives to be more attentive to investor
accounts.
As Mr. Lindsay discussed the adoption of classes of certain portfolios
and the adoption of sales loads and distribution plans, the Directors asked
several questions. Mr. Strong asked whether Rule 12b-1 distribution fees would
increase a portfolio's expense ratio and therefore reduce its competitiveness.
Mr. Mikity also inquired whether studies had indicated Rule 12b-1 plans tend to
reduce a fund's yield. Mr. Lindsay and Mr. Bruzda responded that these fees
would increase a portfolio's expense ratio and would reduce yield to the extent
of the Rule 12b-1 fee, but noted also that a growth in a portfolio's size may
result in economies of scale that would reduce the portfolio's expenses. Mr.
Mikity inquired what the minimum investment would be for an investor to obtain a
waiver of the
9
<PAGE>
sales load or Rule 12b-1 fees and Mr. Lindsay responded that CSIA was not
certain at this time what that minimum investment level would be.
Mr. Strong asked whether a broker obtaining a Rule 12b-1 fee commission
would receive that commission annually as long as those assets the broker
brought into the Fund remained there. Mr. Vukhac responded that the broker would
receive such an annual commission and noted that a broker would therefore have
an incentive to provide services for investors that would encourage the
investors to remain in the Fund.
Mr. Strong then inquired where the Fund would stand competitively if it
adopted sales loads and distribution fees. Mr. Lindsay responded that most of
the Fund's competitors have Rule 12b-1 plans. Mr. Strong then inquired whether
Vanguard has sales loads or Rule 12b-1 plans and Mr. Lindsay responded that
Vanguard did not and that Vanguard's approach and market target were different
from that of the Fund. Discussion then ensued of how an investor is directed to
a particular fund upon calling a broker and it was explained that typically a
Merrill Lynch broker, for example, would place the investor in one of the
brokerage company's funds and obtain the benefit of the sales load and Rule
12b-1 commission. Mr. Mikity then inquired about the size and locations of the
Capital Markets Group of CoreStates and Mr. Lindsay responded that the Capital
Markets Group has three locations and employs approximately twenty-five persons.
10
<PAGE>
At this point Mr. Jones provided the Directors a discussion of the legal
requirements of Rule 12b-1. A memorandum prepared by Morgan, Lewis & Bockius
discussing Rule 12b-1 had been sent to the Directors previously. Mr. Jones
discussed the procedural and substantive requirements of Rule 12b-1, noting the
provisions the written Rule 12b-1 plan must contain and emphasizing the role the
Directors, particularly the independent Directors, have under Rule 12b-1. Mr.
Strong then inquired how many mutual funds have adopted Rule 12b-1 plans and Mr.
Jones responded that he had read a 1988 court opinion that had stated 415 mutual
funds had Rule 12b-1 plans at that time. Mr. Strong then inquired the
circumstances under which the Directors may face potential liability in
connection with adopting a Rule 12b-1 plan. Mr. Jones responded that liability
could stem from a failure to follow the procedural and substantive requirements
of Rule 12b-1 and that Directors must satisfy their fiduciary duties under the
Investment Company Act of 1940 as well as state law in deciding to approve a
Rule 12b-1 plan.
Further discussion then ensued on the compensation of brokers in
connection with the adoption of sales loads and Rule 12b-1 plans. Mr. Mikity
inquired how much of the sales load and Rule 12b-1 fees would go to a broker and
Mr. Lindsay and Mr. Bruzda provided estimates of those numbers. Mr. Strong then
inquired about the sum on which a broker would obtain a Rule 12b-1 fee
commission on and Mr. Seidel responded that with Rule 12b-1 plans adopted for
the Fund's money market portfolios the
11
<PAGE>
commission would be based upon the dividend income the portfolio generates.
At this time, there being no further business to come before the
meeting, upon motion duly made and seconded, the meeting was adjourned at
approximately 10:15 a.m.
Respectfully submitted,
-----------------------------------
Thomas D. Jones, III
Secretary
12
<PAGE>
EXHIBIT E
<PAGE>
COREFUNDS, INC.
REGULAR MEETING OF THE BOARD OF DIRECTORS
MARCH 3, 1992
A regular meeting of the Board of Directors of CoreFunds, Inc. (the
"Fund") was held, pursuant to notice given to all directors, at the Union League
Club, 140 S. Broad Street, Philadelphia, Pennsylvania at 8:30 a.m. on
March 3, 1992.
The following members of the Board of Directors, constituting all of the
members of the Board of Directors, were present:
Phillip Alampi
Francis J. Bruzda
Emil Mikity
Also present at the invitation of the Directors were Richard B. Seidel,
Treasurer of the Fund; George H. Strong, a special consultant; Dung Vukhac and
Richard Lindsay of CoreStates Investment Advisers, Inc. ("CSIA"); and James
Jennings and Thomas Jones of Morgan, Lewis & Bockius.
Mr. Bruzda acted as chairman of the meeting and Mr. Jones acted as
secretary of the meeting.
The first order of business undertaken was the review of the minutes of
the meeting of the Board of Directors held December 4, 1991. Upon motion duly
made and seconded, it was unanimously:
RESOLVED, that the Minutes of the regular meeting of the Board of
Directors on December 4, 1991, as presented, be and they hereby are
approved. Mr. Bruzda then turned to the proposed resolutions set forth
in the meeting materials which pertained to the
<PAGE>
determination of the income and distribution of dividends for the Value
Equity and Growth Equity Portfolios. After Mr. Seidel discussed the
purpose of the proposed resolutions, upon motion duly made and seconded,
it was unanimously:
RESOLVED, that a determination of the net investment income of the
Fund's Value Equity Portfolio and Growth Equity Portfolio for the fiscal
quarter ending March 31, 1992, be made as of the close of business on
such date, exclusive of realized capital gains and in accordance with
generally accepted accounting principles, including the accrual of any
interest earned and an appropriate charge to expenses with respect to
the expenses of the Value Equity Portfolio accrued during such period,
plus dividends or other distributions on the portfolio securities during
such period;
FURTHER RESOLVED, that the President and Treasurer of the Fund shall
together determine the amount of dividends arising from net income to be
distributed to shareholders of the Fund's Value Equity Portfolio and
Growth Equity Portfolio for the fiscal quarter ending March 31, 1992,
taking into consideration the objective of evenly distributing income
during each quarter of the fiscal year; provided, however, such amount
shall be no less than 90% and as much as 100% of the accumulated and
undistributed net investment income of the Fund's Value Equity Portfolio
and Growth Equity Portfolio for the period ending March 31, 1992, as
determined in accordance with the foregoing resolution, which amount
shall be distributed pro rata on a per share basis to the persons who
are shareholders of record of such Portfolio at the close of business on
March 30, 1992, provided that the amount of the accumulated
undistributed net investment income of the Value Equity Portfolio and
the Growth Equity Portfolio that is so distributed shall be rounded down
to the nearest cent per Portfolio share; and
FURTHER RESOLVED, that such distribution shall be paid on March 31, 1992
(i) in the case of those holders of shares who have so elected in
writing prior to the date of distribution, in cash, in accordance with
their elections or (ii) in additional whole and fractional shares of the
Portfolio with respect to which the distribution is made, valued at
their net asset value as of the determination of net asset value per
share on such payment date.
Mr. Bruzda then discussed the resolution concerning the election of Mr.
James Nesher as Assistant Treasurer of the Fund, and upon motion duly made and
seconded, it was unanimously:
2
<PAGE>
RESOLVED, that the following person be, and he hereby is, elected to the
office set forth opposite his name, to hold office and to serve until
his successor is duly elected or until his earlier resignation or
removal as provided in the Fund's By-laws:
James Lesher Assistant Treasurer
Messrs. Lindsay and Vukhac then presented the reports of CSIA on the
Fund's portfolios. Mr. Vukhac began by discussing the taxable money market
portfolios, noting that both the Cash Reserve and Treasury Reserve portfolios
had enjoyed considerable growth since the last reporting period and that both
were producing favorable yields while maintaining the quality of their
investments.
Mr. Vukhac next discussed the Fiduciary Tax-Free Reserve and Tax-Free
Reserve portfolios, stating that they have both grown in size and that while
their yields remain relatively low, CSIA believes that their average maturities
will increase and their yields will be more competitive by June 1992. Mr. Vukhac
emphasized that the quality of the investments of the tax-exempt portfolios
remains a key focus of CSIA.
Discussion next focused upon the International Growth Fund, which had
experienced a difficult quarter and had produced yields below the Morgan Stanley
Capital International EAFE Index. Mr. Vukhac explained that this
underperformance stemmed primarily from the concentration by the sub-advisor,
Martin Currie, in cyclical stocks in the United Kingdom and Western Europe in
anticipation of a greater economic turnaround then had occurred as well as
Martin Currie's expectation that the dollar would
3
<PAGE>
strengthen, which did not occur. At this point Mr. Strong inquired whether
Martin Currie consulted with CSIA in making investment decisions and Mr. Vukhac
responded that discussions are held between the investment advisors but that
CSIA has confidence in Martin Currie's judgment because of Martin Currie's
experience and performance record. A discussion was held at this time between
the Directors and CSIA concerning the international investing arena and the
situations in particular areas of the world, including Great Britain, the
Commonwealth of Independent States and the United States. The Directors inquired
of Mr. Vukhac what CSIA's impressions were of these particular situations and
Mr. Vukhac responded with CSIA's outlook.
Mr. Lindsay then provided the investment report on the Value Equity
Fund. Mr. Lindsay commented that while Cashman, Farrell, the sub-advisor to the
Value Equity Fund, had underperformed the market for the most recent quarter, it
had outperformed the market for the year and he commented that CSIA was pleased
with the performance achieved by Cashman, Farrell.
Mr. Lindsay next discussed the Equity Index Fund. He informed the
Directors that a new manager had assumed responsibility for the Equity Index
Fund and would be working in conjunction with the model that replicates the S&P
Index. Mr. Lindsay pointed out that the Equity Index Fund's merger with Viking
Equity Index Fund had resulted in reduced expenses for the Equity Index Fund,
and that the expense ratio had been reduced from a high of 170 basis points to a
level of approximately 50 basis
4
<PAGE>
points. Mr. Lindsay also reported that CSIA was taking further efforts to reduce
this expense ratio. He remarked that the Equity Index Fund had been growing in
size and had seen more interest from 401(k) plans. Mr. Vukhac and Mr. Lindsay
then stated that CSIA was currently studying whether enabling the Equity Index
Fund to invest in S&P futures as it grows in size would aid the Equity Index
Fund to reduce the expenses associated with small investment transactions in the
stocks that make up the S&P Index. CSIA will report to the Board if they
determine that enabling the Equity Index Fund to invest in such futures would
help reduce expenses.
Mr. Lindsay concluded CSIA's investment report by discussing the
performance results of the employee benefit funds offered by CoreStates and the
CoreStates Growth Equity Fund, a bank common trust fund. Messrs. Strong and
Mikity then asked questions regarding the investment style employed by the
manager of the Growth Equity Fund and its portfolio turnover rate, and Messrs.
Vukhac and Lindsay responded to these questions while providing further
information about the Growth Equity Fund.
At this point Mr. Bruzda asked that Mr. Jennings discuss the legal
issues connected with the adoption of sales loads by certain portfolios of the
Fund and to provide background to the introduction of classes to certain
portfolios pursuant to the Exemptive Order (the "Order") obtained by the Fund
from the Securities and Exchange Commission. Mr. Jennings discussed the
background to the Fund's obtaining the Order and its purpose,
5
<PAGE>
referring to memoranda which had been distributed to the Directors. (These
Morgan, Lewis & Bockius memoranda are attached as Exhibits A and B,
respectively, to these minutes.)
Mr. Jennings continued to discuss the Rule 12b-1 distribution plans that
certain classes would implement with Director approval. Mr. Strong inquired
whether 12b-1 plans are typically imposed on funds that generate high dividends
and Mr. Jennings responded that various types of funds, including those that do
not generate high dividends, have 12b-1 plans. Mr. Strong then inquired whether
investors would choose to avoid those classes which impose 12b-1 fees and Mr.
Jennings responded by stating that the classes are designed for particular
investors so that only those classes which would attract investors seeking the
12b-1 services would have 12b-1 plans. Mr. Jennings explained that since
institutional funds, for example, required little marketing effort and thus
cause few distribution costs, they would invest in classes without 12b-1 plans.
At this point Mr. Lindsay distributed and discussed a chart which
provided information concerning sales loads and 12b-l plans for the Fund's
competitors. (This chart is attached as Exhibit C to these minutes.) Mr. Lindsay
noted that whereas currently the Fund was a no-load fund which did not have
12b-1 plans, most of its competitors as shown in this chart either had a sales
load or 12b-1 plan, or had both.
Mr. Lindsay then distributed a memorandum CSIA had prepared which
concerned sales loads and 12b-1 classes.
6
<PAGE>
(This CSIA memorandum is attached as Exhibit D to these minutes.) He discussed
the selling strategy recommended for the Fund and spoke of the distribution
channels and compensation mechanisms that would be employed to target particular
market segments. As Mr. Lindsay reviewed particular market segments discussed in
the CSIA memorandum, Mr. Mikity inquired who would qualify as a wealthy
individual and Mr. Lindsay responded that the qualifications would vary but that
an individual with as little as $250,000 could qualify. Mr. Lindsay explained
that the Fund wants to attract wealthy investors who do not have advisory
relationships with CoreStates and that the adoption of 12b-1 plans will enable
the Fund to offer such individuals the better quality services they seek.
Messrs. Lindsay and Vukhac continued the discussion of sales loads by
speaking about the incentive sales loads provide brokers. They explained that
because of the considerable effort required to encourage retail investors to
purchase shares of a fund, a sales load is often used as a method to encourage
the broker to sell shares of a particular fund.
Mr. Mikity then inquired what percentage sales load would be paid by an
investor not fitting within the market segments Mr. Lindsay had discussed, and
Mr. Lindsay then explained that such an investor would pay the four percent
load, unless the investor qualified for an exemption or reduction of the sales
loads. Mr. Mikity then asked what volume of sales the Fund could expect to
generate through sales to retail investors
7
<PAGE>
and Mr. Lindsay then indicated the vendor with whom CSIA had been speaking had
provided numbers indicating that they would sell $3.5 million per broker and use
80 brokers. Mr. Lindsay stated that he believed those numbers were too high and
that the Fund could expect approximately $100 million in sales per year.
Mr. Lindsay next discussed market analyses performed by CSIA of bank
customers which indicated that bank customers often are persons who need brokers
to direct them into appropriate funds. The market analyses also indicated that
even the more sophisticated investors, who eventually chose to pursue no-load
funds such as Vanguard, typically purchased load funds when first buying mutual
fund shares.
Mr. Mikity then inquired how the Fund would compete against the Fidelity
and Dreyfus funds, which spend much greater amounts on advertising than the
Fund. Mr. Lindsay responded that these well-known funds are sources of
competition but that bank customers often feel comfortable with investing in the
Fund because of their relationship with CoreStates and that there are many of
these bank customers who are willing to pay sales loads and 12b-1 fees. Mr.
Lindsay explained that these investors want service as they are sometimes
intimidated when making investment decisions.
At this point Mr. Lindsay reviewed the discussion in the CSIA memorandum
on the size of the sales loads and the breakpoints as well as the other issues
addressed in the memorandum. He next highlighted the discussion of 12b-1 plans
8
<PAGE>
in the memorandum before summarizing the chart reviewing sales loads and 12b-1
plans of competitors of the Fund.
Upon concluding the summarizations of these memoranda, Mr. Lindsay
recommended to the Board of Directors that they adopt sales loads of up to four
percent on the equity and fixed income portfolios of Fund. Mr. Lindsay explained
that CSIA would seek to get the annuity vendor who will be selling Fund shares
to settle for a two percent load on the fixed income portfolio, but he
recognized that obtaining such a concession may be difficult given current
industry practice. Mr. Jennings then indicated that the Board should vote upon
the sales load resolution.
Mr. Mikity then expressed his concern that the proximity of Vanguard
might result in many investors selecting Vanguard over CoreFunds if CoreFunds
implemented a sales load. Mr. Lindsay responded by acknowledging that some
investors will prefer Vanguard because it is no-load and he stated that the
adoption of the sales load is in part an experiment aimed at targeting retail
investors who will be willing to pay the sales load. Mr. Lindsay added that it
is CSIA's belief that there are many investors who will be willing to pay a
sales load to invest in CoreFunds. Mr. Jennings then stated that the aim of the
sales loads is to spur growth of Fund by giving brokers an incentive to sell
shares of the Fund and that CSIA had determined that adoption of the sales loads
was worthy of experiment by the Fund. At this point, after motion duly made and
seconded, it was:
RESOLVED, that the adoption of sales charges of up to four percent to be
assessed upon shares of the Value Equity Fund,
9
<PAGE>
the Growth Equity Fund, the International Growth Fund and the
Intermediate Bond Fund be, and hereby is, approved; and
FURTHER RESOLVED, that the officers of the Fund be, and each of them
hereby is, authorized to file amendments to the Fund's prospectuses to
reflect the adoption of sales charges.
Mr. Jennings then explained that the Fund's distribution agreement
needed to be amended to reflect the adoption of sales charges on certain fund
shares and, after motion duly made and seconded, it was:
RESOLVED, that the Amended Distribution Agreement be, and hereby is,
approved.
Mr. Bruzda then announced that the meeting would adjourn but prior to
adjournment Mr. Lindsay informed the Directors that at the April 13, 1992
Special Meeting of the Board of Directors, the Board would be asked to consider
the change of its international custodian from Chase Manhattan to Barclays Bank.
Mr. Strong then inquired why the change was being recommended and whether the
change would lessen the protection available for the Fund's assets. Mr. Lindsay
responded that the change was under consideration because the Fund's custodian,
CoreStates Bank, was consolidating its custodial relationships with Barclays
Bank and that the change might result in greater efficiency for the Fund. Both
Mr. Jennings and Mr. Lindsay then explained briefly that the protections of
Section 17(f) of the Investment Company Act of 1940 operated to protect the
Fund's assets and that Barclays would have to comply with Section 17(f) in order
to be eligible to become the Fund's international
10
<PAGE>
sub-custodian. At this point it was agreed that further discussion on this
matter should be continued at the April 13, 1992 meeting.
There being no further business to come before the meeting, upon motion
duly made and seconded, the meeting was adjourned at approximately 10:45 a.m.
Respectfully submitted,
/s/ THOMAS D. JONES, III
-----------------------------------
Thomas D. Jones, III
Secretary of the Meeting
11
EXHIBIT 16
Exhibit 16 - Yield Calculations
COREFUND CASH RESERVE
Seven-day Average Yield:
- ------------------------
Daily Dividend
--------------
6/30/90 .000155
6/29/90 .000155
6/28/90 .000156
6/27/90 .000156
6/25/90 .000156
6/24/90 .000156
6/23/90 .000156
-------
Total .001090
Divided by 7 .00015571428
Multiplied by 365 .0568357122
- -------------------------------------------------------------------------------
Compounded Effective Yield:
- ---------------------------
[ (1 + .001090) 365/7 ] - 1 = .05844914
- -------------------------------------------------------------------------------
Number of Shareholders as of 10/15 was: 1,492
<PAGE>
COREFUND TAX-FREE RESERVE
Seven-day Average Yield:
- ------------------------
Daily Dividend
--------------
6/30/90 .000115
6/29/90 .000115
6/28/90 .000114
6/27/90 .000115
6/25/90 .000114
6/24/90 .000114
6/23/90 .000114
-------
Total .000801
Divided by 7 .00011442857
Multiplied by 365 .04176642805
- -------------------------------------------------------------------------------
Compounded Effective Yield:
- ---------------------------
[ (1 + .00080) 365/7 ] - 1 = .04263349
- -------------------------------------------------------------------------------
Number of Shareholders as of 10/15 was: 23
<PAGE>
COREFUND FIDUCIARY RESERVE
Seven-day Average Yield:
- ------------------------
Daily Dividend
--------------
6/30/90 .000162
6/29/90 .000162
6/28/90 .000163
6/27/90 .000162
6/25/90 .000163
6/24/90 .000163
6/23/90 .000163
-------
Total .001138
Divided by 7 .00016257142
Multiplied by 365 .0593385683
- -------------------------------------------------------------------------------
Compounded Effective Yield:
- ---------------------------
[ (1 + .001138) 365/7 ] - 1 = .061098650
- -------------------------------------------------------------------------------
Number of Shareholders as of 10/15 was: 6
<PAGE>
COREFUND TREASURY RESERVE
Seven-day Average Yield:
- ------------------------
Daily Dividend
--------------
6/30/90 .000158
6/29/90 .000159
6/28/90 .000162
6/27/90 .000158
6/25/90 .000158
6/24/90 .000158
6/23/90 .000158
-------
Total .001111
Divided by 7 .00015871428
Multiplied by 365 .0579307122
- -------------------------------------------------------------------------------
Compounded Effective Yield:
- ---------------------------
[ (1 + .001111) 365/7 ] - 1 = .05960750
- -------------------------------------------------------------------------------
Number of Shareholders as of 10/15 was: 341
EXHIBIT 16
Illustration of the Computation of SEC 30 Day Yield
Formula: Yield = 2[(((a-b)/(c*d))-1]
Where: a = Total income
b = Expenses
c = Shares
d = NAV
<TABLE>
<CAPTION>
- --------------------- -------------------- --------------------- --------------------- ------------------- -------------------
Short Term Income Short Term Income Short-Intermediate Short-Intermediate Core Equity Core Equity
Class Y Class A Bond Class Y Bond Class A Class Y Class A
- --------------------- -------------------- --------------------- --------------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C>
a 153,644 a 3 a 910,427 a 16,975 a 751,861 a 20,146
b 11,335 b 0 b 65,892 b 1,849 b 327,359 b 11,086
c 3,056,706 c 57 c 16,759,360 c 314,430 c 24,175,470 c 647,557
d 9.94 d 10.26 d 9.76 d 10.09 d 17.26 d 18.29
Yield 5.69% Yield 5.26% Yield 6.28% Yield 5.79% Yield 1.22% Yield 0.92%
Special Equity Special Equity Equity Index Equity Index Growth Equity Growth Equity
Class Y Class A Class Y Class Y Class Y Class A
- --------------------- -------------------- --------------------- --------------------- ------------------- -------------------
a 70,969 a 1,253 a 300,741 a 0 a 137,237 a 3,499
b 16,313 b 523 b 52,516 b 0 b 96,606 b 3,099
c 5,334,861 c 93,616 c 5,788,007 c 0 c 8,662,109 c 221,141
d 11.86 d 12.54 d 28.47 d 0.00 d 14.19 d 14.99
Yield 1.04% Yield 0.75% Yield 1.81% Yield #DIV/0! Yield 0.40% Yield 0.14%
Government Income Government Income Balanced Balanced Intermediate Intermediate
Class Y Class A Class Y Class A Municipal Class Y Municipal Class A
- --------------------- ------------------- ------------------- ------------------ --------------------- -----------------------
a 91,114 a 7,507 a 322,789 a 9,707 a 1,549 a 3,877
b 8,344 b 947 b 67,363 b 2,685 b 170 b 633
c 1,611,959 c 132,665 c 8,399,182 c 253,546 c 40,812 c 102,162
d 9.62 d 9.94 d 12.59 d 13.01 d 9.92 d 10.25
Yield 6.49% Yield 6.04% Yield 2.92% Yield 2.57% Yield 4.12% Yield 3.75%
Global Bond Global Bond Pennsylvania Pennsylvania New Jersey New Jersey
Class Y Class A Municipal Class Y Municipal Class A Municipal Class Y Municipal Class A
- --------------------- ------------------- ------------------- ------------------ --------------------- -----------------------
a 172,916 a 820 a 39,377 a 4,101 a 5,109 a 801
b 25,755 b 155 b 851 b 297 b 410 b 106
c 3,458,282 c 16,423 c 871,309 c 97,214 c 130,643 c 20,486
d 9.83 d 10.14 d 10.22 d 10.56 d 10.08 d 10.57
Yield 5.25% Yield 4.8 Yield 5.25% Yield 4.49% Yield 4.32% Yield 3.88%
Bond Bond
Class Y Class A
- --------------------- --------------------
a 1,156,586 a 7,495
b 89,344 b 839
c 19,429,197 c 126,318
d 10.15 d 10.66
Yield 6.58% Yield 6.01%
</TABLE>
<PAGE>
EXHIBIT 16
Illustration of the Computation of Total Return
Formula: ERV = P(1 + T)n
Where: T = Total Return
ERV = Ending redeemable value at the end of the period of a
hypothetical $1,000 investment made at the beginning of the period.
P = A hypothetical initial payment of $1,000
n = Time in years
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Example: Cash Reserve Cash Reserve Treasury Reserve Treasury Reserve Tax-Free Reserve Tax-Free Reserve
Class Y Class C Class Y Class C Class Y Class C
-------------------- -------------------- ------------------ ------------------ ------------------ ------------------
P 1,000.00 P 1,000.00 P 1,000.00 P 1,000.00 P 1,000.00 P 1,000.00
n 1 n 1 n 1 n 1 n 1 n 1
ERV 1,052.60 ERV 1,050.00 ERV 1,052.00 ERV 1,049.40 ERV 1,032.00 ERV 1,029.50
T 5.26% T 5.00% T 5.20% T 4.94% T 3.20% T 2.95%
Elite Cash Reserve Elite Cash Reserve Elite Treasury Elite Treasury Elite Government Elite Government
Class Y Class C Reserve Class Y Reserve Class C Reserve Class Y Reserve Class C
-------------------- -------------------- ------------------ ------------------ ------------------ ------------------
P 1,000.00 P 1,000.00 P 1,000.00 P 1,000.00 P 1,000.00 P 1,000.00
n 1 n 1 n 1 n 1 n 1 n 1
ERV 1,054.60 ERV 1,052.10 ERV 1,055.40 ERV 1,052.90 ERV 1,055.00 ERV 1,052.50
T 5.46% T 5.21% T 5.54% T 5.29% T 5.50% T 5.25%
Elite Tax-Free Elite Tax-Free Short-Intermediate Short-Intermediate Core Equity Core Equity
Reserve Class Y Reserve Class C Bond Class Y Bond Class C Class Y Class C
-------------------- -------------------- ------------------ ------------------ ------------------ ------------------
P 1,000.00 P 1,000.00 P 1,000.00 P 1,000.00 P 1,000.00 P 1,000.00
n 1 n 1 n 1 n 1 n 1 n 1
ERV 1,035.10 ERV 1,032.60 ERV 1,050.50 ERV 1,047.90 ERV 1,192.40 ERV 1,191.10
T 3.51% T 3.26% T 5.05% T 4.79% T 19.24% T 19.11%
International Growth International Growth Equity Index Equity Index Growth Equity Growth Equity
Class Y Class C Class Y Class C Class Y Class C
-------------------- -------------------- ------------------ ------------------ ------------------ ------------------
P 1,000.00 P 1,000.00 P 1,000.00 P 1,000.00 P 1,000.00 P 1,000.00
n 1 n 1 n 1 n 1 n 1 n 1
ERV 1,167.20 ERV 1,165.40 ERV 1,256.90 ERV 1,256.90 ERV 1,313.60 ERV 1,310.00
T 16.72% T 16.54% T 25.69% T 25.69% T 31.36% T 31.00%
Government Income Government Income Balanced Balanced Intermediate Intermediate
Class Y Class C Class Y Class C Municipal Class Y Municipal Class C
-------------------- -------------------- ------------------ ------------------ ------------------ ------------------
P 1,000.00 P 1,000.00 P 1,000.00 P 1,000.00 P 1,000.00 P 1,000.00
n 1 n 1 n 1 n 1 n 1 n 1
ERV 1,040.90 ERV 1,037.30 ERV 1,184.10 ERV 1,181.30 ERV 1,047.40 ERV 1,044.80
T 4.09% T 3.73% T 18.41% T 18.13% T 4.74% T 4.48%
Global Bond Global Bond Pennsylvania Pennsylvania New Jersey New Jersey
Class Y Class C Municipal Class Y Municipal Class C Municipal Class Y Municipal Class C
-------------------- -------------------- ------------------ ------------------ ------------------ ------------------
P 1,000.00 P 1,000.00 P 1,000.00 P 1,000.00 P 1,000.00 P 1,000.00
n 1 n 1 n 1 n 1 n 1 n 1
ERV 1,080.00 ERV 1,077.40 ERV 1,060.20 ERV 1,057.60 ERV 1,052.80 ERV 1,049.30
T 8.00% T 7.74% T 6.02% T 5.76% T 5.28% T 4.93%
Bond Bond Short Term Income Short Term Income Special Equity Special Equity
Class Y Class C Class Y Class C Class Y Class C
-------------------- -------------------- ------------------ ------------------ ------------------ ------------------
P 1,000.00 P 1,000.00 P 1,000.00 P 1,000.00 P 1,000.00 P 1,000.00
n 1 n 1 n 1 n 1 n 1 n 1
ERV 1,012.30 ERV 1,009.80 ERV 1,027.80 ERV 1,025.50 ERV 1,222.70 ERV 1,221.40
T 1.23% T 0.98% T 2.78% T 2.55% T 22.27% T 22.14%
</TABLE>
EXHIBIT 18
CoreFunds, Inc.
Rule 18f-3
Multiple Class Plan
June 1, 1995
Introduction
The Cash Reserve, Treasury Reserve, Value Equity, International Growth,
Growth Equity, Intermediate Bond, Tax-Free Reserve, Balanced, Government Income,
Intermediate Municipal Bond, Global Bond, Pennsylvania Municipal Bond and New
Jersey Municipal Bond (each a "Fund" and, collectively, the "Funds"), portfolios
of CoreFunds, Inc. (the "Company"), have elected to rely on Rule 18f-3 under the
Investment Company Act of 1940, as amended (the "1940 Act") in offering multiple
classes or series of shares in each Fund. Each Fund is identified in the
Articles of Incorporation of CoreFunds, Inc. as a class so that Cash Reserve is
Class A, Treasury Reserve is Class B, Value Equity is Class D, International
Growth is Class E, Growth Equity is Class G, Intermediate Bond is Class H,
Tax-Free Reserve is Class J, Balanced is Class L, Government Income is Class M,
Intermediate-Term Municipal is Class N, Global Bond is Class O, Pennsylvania
Municipal Bond is Class P and New Jersey Municipal Bond is Class Q. Each Fund
has been permitted by the Order referred to below to issue separate series of
shares, whereby two (2) such series of shares for the Funds have been so
effected. The Plan sets forth the differences among series, including
shareholder services, distribution arrangements, expense allocations, and
conversion or exchange options.
A. Attributes of Share Series
The rights of each existing series of shares of the Funds shall be as
set forth in the resolutions and related materials of the Funds adopted by the
Board pursuant to the order dated August 28, 1991, obtained by CoreFunds, Inc.
et. al. and applicable to the Funds (Investment Company Act Release No. 18289),
as set forth in Exhibits A - E.
With respect to any class of shares of a Fund created after the date
hereof, each share of a Fund will represent an equal pro rata interest in the
Fund and will have identical terms and conditions, except that: (i) each new
class will have a different class name (or other designation) that identifies
the class as separate from any other class; (ii) each class will separately bear
any distribution expenses ("distribution fees") in connection with a plan
adopted pursuant to Rule 12b-1 under the 1940 Act (a "Rule 12b-1 Plan"), and
will separately bear any non-Rule 12b-1 Plan service payments ("service fees")
that are made under any servicing agreement entered into with respect to that
class; (iii) each class may bear, consistent with rulings and other published
statements of position by the Internal Revenue Service, the
<PAGE>
expenses of the Fund's operations which are directly attributable to such class
("Class Expenses"); and (iv) shareholders of the class will have exclusive
voting rights regarding the Rule 12b-1 Plan and the servicing agreements
relating to such class, and will have separate voting rights on any matter
submitted to shareholders in which the interests of that class differ from the
interests of any other class.
B. Expense Allocations
Expenses of each existing class and of each class created after the date
hereof shall be allocated as follows: (i) distribution and shareholder servicing
payments associated with any Rule 12b-1 Plan or servicing agreement relating to
each class of shares are (or will be) borne exclusively by that class; (ii) any
incremental transfer agency fees relating to a particular class are (or will be)
borne exclusively by that class; and (iii) Class Expenses relating to a
particular class are (or will be) borne exclusively by that class.
Until and unless changed by the Board, the methodology and procedures
for calculating the net asset value of the various classes of shares and the
proper allocation of income and expenses among the various classes of shares
shall be as set forth in the "Methodology and Control Procedures for Accounting
For Multiple Classes of Shares." A report by Ernst & Young was rendered on
January 22, 1991, and states that the methodology and procedures are adequate to
ensure that such calculations and allocations will be made in an appropriate
manner. This Report is attached hereto as Exhibit E.
C. Amendment of Plan; Periodic Review
This Plan must be amended to properly describe (through additional
exhibits hereto or otherwise) each new class of shares approved by the Board
after the date hereof.
The Board of the Funds, including a majority of the independent
Directors, must periodically review this Plan for its continued appropriateness,
and must approve any material amendment of the Plan as it relates to any class
of any Fund covered by the Plan.
- 2 -
<PAGE>
EXHIBIT A
<PAGE>
COREFUNDS, INC.
SPECIAL MEETING OF THE B0ARD OF DIRECTORS
APRIL 13, 1992
A special meeting of the Board of Directors of CoreFunds, Inc. (the
"Fund") was held, pursuant to notice duly given to all Directors, at the Union
League Club, 140 S. Broad Street, Philadelphia, Pennsylvania at 8:30 a.m. on
April 13, 1992.
The following members of the Board of Directors, constituting all of the
members of the Board of Directors, were present:
Phillip Alampi
Francis J. Bruzda
Emil Mikity
Richard B. Seidel
George H. Strong
Also present at the invitation of the Directors were Richard Lindsay of
CoreStates Investment Advisers, Inc. ("CSIA"); John Principe of CoreStates Bank;
Paul Corelli of Barclays Bank ("Barclays"); and James Jennings and Thomas Jones
of Morgan, Lewis & Bockius ("ML&B").
Mr. Bruzda called the meeting to order at approximately 8:30 a.m. and asked
that Mr. Lindsay introduce the topic of approving Barclays as sub-custodian for
the Fund. Mr. Lindsay introduced Mr. Corelli and Mr. Principe and asked that Mr.
Principe provide a brief background on why CoreStates Bank selected Barclays to
serve as sub-custodian. Mr. Principe provided this background, explaining that
CoreStates Bank was
l
<PAGE>
impressed with the service Barclays could provide, its huge global network of
banks and its lower fees than those charged by The Chase Manhattan Bank, N.A.
("Chase"), the Fund's current sub-custodian. Mr. Principe explained that
CoreStates Bank had been considering changing its custodial relationships to
Barclays even prior to learning of fee increases imposed by Chase.
At this point Mr. Jennings provided the Directors with a discussion of
the legal requirements associated with a change in sub-custodian of the Fund. In
discussing the legal requirements Mr. Jennings reviewed a memorandum prepared by
ML&B which discussed Rule 17f-5 of the Investment Company Act of 1940. This
memorandum is attached as Exhibit A to these minutes. Mr. Mikity inquired what
amount of assets would be placed with the foreign sub-custodian and Mr. Principe
responded that $35 million would be placed with the foreign sub-custodian. Mr.
Strong then inquired why the Fund required a sub-custodial relationship and why
the Fund did not instead seek a direct custodial relationship for its foreign
assets. Mr. Principe responded that the sub-custodial arrangement provided the
Fund greater security since CoreStates Bank remained liable as the Fund's
custodian in the event the sub-custodian did not meet its legal obligations. Mr.
Strong then inquired whether the sub-custodial arrangement would result in the
Fund paying two custodial fees and Mr. Principe responded that the Fund would
not.
At this point Mr. Corelli began a discussion on Barclays by providing
background on Barclays' global custodial
2
<PAGE>
network. After discussing this network, Mr. Corelli explained that Barclays had
received exemptive relief from the Securities and Exchange Commission ("SEC") to
allow certain of its subsidiaries to serve as foreign custodian for investment
companies. Mr. Corelli then discussed the network management oversight system
Barclays uses to review the banks that are part of its network.
Mr. Jennings then discussed Rule 17f-2 and its requirement that three
times annually an audit of the Fund's custodian be performed. Mr. Jennings and
Mr. Corelli then explained that this requirement would not apply to Barclays
because there is no affiliation between Barclays and the Fund.
Mr. Alampi then inquired why the Fund should change its foreign
sub-custodian since Chase is such a large financial institution. Mr. Corelli
then stated that Barclays is greater in asset size than Chase. Mr. Jennings then
stated that the Directors could rely on the review by ML&B of the Rule 17f-5
book prepared by Barclays and the determination of ML&B that Barclays satisfied
all requirements of the rule.
Mr. Mikity then inquired what would occur if the International Growth
Fund engaged in transactions in a country in which Barclays does not have a
custodian bank. Mr. Corelli explained that Board approval would have to be
obtained in such a case and Mr. Bruzda stated that the sub-advisor for the
International Growth Fund, Martin Currie, should have a list of countries in
which Barclays has custodian banks to avoid such a
3
<PAGE>
situation. The discussion of Barclays then concluded with further information
offered about the relationship between CoreStates Bank and Barclays, and the
time frame for implementation of the new sub-custodial arrangements and the
termination of the arrangements with Chase.
At this point Mr. Jennings reviewed in more detail the memorandum
distributed to the Directors on Rule 17f-5 and its requirements. Mr. Jennings
explained that ML&B had reviewed information provided by Barclays which
addressed the law in other countries regarding the bankruptcy of custodian banks
and the ability to obtain custodial assets. Mr. Jennings stated that the Fund
relies in part on Martin Currie not to invest in countries in which the Fund
could experience difficulties recouping its custodial assets in the event of the
bankruptcy of a custodial bank in that country and to avoid countries where
expropriation, nationalization or similar action could expose the Fund to a loss
of its assets. Mr. Strong then inquired how the Directors could determine
whether the law in other countries provided similar safeguards to those provided
by CoreStates Bank. Messrs. Jennings and Lindsay responded by stating that a
review of the law of other countries contained in the book provided by Barclays
indicated the protection provided by the law of other countries and that a
review of the banks Barclays has in its global custodial network provided an
indication of what safeguards are available to the Fund.
4
<PAGE>
Mr. Lindsay then summarized the factors motivating the request that the
Fund's Directors approve a change in the sub-custodian of the Fund. He stated
that in recommending the change CoreStates Bank was looking for a leading bank
that presented minimal financial risk and with which CoreStates Bank would have
the opportunity to develop a strong relationship. Mr. Lindsay then distributed
the fee schedule showing the differences in fees to be charged by Barclays and
those charged by Chase. This fee schedule is attached as Exhibit B to these
minutes. The fee schedule indicated Barclays' fees were considerably lower than
those charged by Chase. Mr. Mikity then inquired whether there were other banks
that were cheaper than Barclays and Mr. Lindsay responded that there were not
too many banks that serve as foreign custodians for investment companies and
that CoreStates Bank believed that Barclays' fee was very competitive. Mr.
Bruzda then added that the size, character and stature of Barclays provided the
Board comfort that the Fund's interests would be well served by Barclays.
Mr. Jennings explained that while the substantive issues of the
custodial agreement between Barclays and the Fund had been agreed upon, the
agreement was still being worked upon and that it would be voted upon at the
next meeting of the Directors. He added that the requirements of Rule 17f-5 had
been satisfied and that the necessary documentation to comply with 17f-5 was
found in the book provided by Barclays, which had been reviewed by ML&B. With
the discussion of the sub-custodial
5
<PAGE>
proposal concluded, Messrs. Corelli and Principe left the meeting.
Mr. Bruzda then asked for approval of the previous minutes and after
discussion and upon motion duly made and seconded it was:
RESOLVED, that the minutes of the regular meeting of the Board of
Directors on March 3, 1992, as presented, be and they hereby are approved.
Mr. Bruzda then asked Mr. Jennings to provide a discussion on Rule 12b-1
and Mr. Jennings began doing so by discussing Rule 12b-1's background. Mr.
Jennings then stated that the Board was being asked to consider adopting a 12b-1
plan to increase the size of the Fund. In this connection, Mr. Jennings stated
that to spur growth the Fund is focusing on financial institutions and brokers
who will get a 12b-1 fee in order to encourage them to distribute Fund shares.
Mr. Lindsay then followed up on the introduction by Mr. Jennings by distributing
two memoranda on Rule 12b-1 fees. The first memorandum, attached as Exhibit C to
these minutes, outlined data concerning other bank funds and 12b-1 fees and also
discussed the details of the 12b-1 plan structure envisioned by CSIA. The second
memorandum, attached as Exhibit D to these minutes, provided comparative data on
the 12b-1 fees of local bank funds and other fees imposed by those banks. Mr.
Lindsay then discussed the services to be provided according to the proposed
12b-1 plan and the fee to be charged for those services.
6
<PAGE>
Mr. Strong inquired whether the 12b-1 fee would be competitive enough so
that persons not affiliated with CoreStates Bank would be interested in the
Fund. Mr. Lindsay responded that the fee would be competitive enough to attract
non-affiliates, but added that the marketing focus would be on CoreStates Bank
affiliates. Mr. Strong then inquired what percentage of the twenty-five basis
points 12b-1 fee would go to the salesperson. Mr. Lindsay responded that
CoreStates affiliates would not get a certain percentage of the 12b-1 fee,
though they may obtain bonuses for their sales efforts.
Mr. Mikity then inquired what CSIA would do in six or twelve months if
the intended results of the 12b-1 plan do not materialize. Mr. Lindsay responded
that CSIA is convinced that the 12b-1 fee will be accepted by its money market
shareholders since such shareholders desire the services the 12b-1 plan will
provide them. Mr. Lindsay then discussed the 12b-1 fees charged by competitor
banks and data from Morningstar, Inc. on the industry and 12b-1 fees. Mr.
Jennings then discussed how some banks impose shareholder servicing agent fees
which are similar to 12b-1 fees but do not include the adoption of a 12b-1 plan.
Mr. Jennings explained that in the analysis of ML&B, the Fund is better
protected by going through the requirements of Rule 12b-1 in considering the
adoption of a servicing plan.
Mr. Jennings then explained that CSIA is informing the Board of
Directors that the adoption of a Rule 12b-1 plan is an opportunity to bring more
assets into the Fund because if
7
<PAGE>
personnel who undertake efforts to distribute the Fund's shares are compensated
for doing so, they will have an incentive to sell more Fund shares. Mr. Alampi
then inquired at what time signals will be sent to the Fund if the Rule 12b-1
fees are not being accepted. Mr. Lindsay responded that any such indications
would come a few months after implementation of the Rule 12b-1 plan but he
stated that CSIA is extremely confident that the Rule 12b-1 fee will be accepted
for the money market portfolios as assets have already been identified which
will come into the Fund and pay a 12b-1 fee.
Mr. Lindsay concluded by stating that to get more assets into the Fund
through CoreStates Bank affiliates, the Fund needs a Rule 12b-1 Plan because
otherwise CoreStates Bank salespeople will sell Dreyfus funds and receive the
Rule 12b-1 fee provided by the Dreyfus funds. Mr. Jennings then stated that in
effect CSIA is trying to neutralize the efforts of its competitors who have
12b-1 fees by adopting a Rule 12b-1 plan. Mr. Jennings then explained the
process of filing a Post-Effective Amendment adding classes with Rule 12b-1 fees
with the SEC and obtaining the approval of an initial shareholder, such as
Fairfield, as well as public shareholder approval at the next shareholder
meeting, which must be held within 16 months of the effectiveness of the
post-effective amendment adding the classes. Mr. Jennings also explained how the
adoption of a Rule 12b-1 plan would preclude a potential argument that
Fairfield's administration fee represents payment for distributing the Fund's
8
<PAGE>
shares. Upon a request from Mr. Bruzda, Mr. Jennings then explained the broker
and the shareholder servicing agreements presented to the Directors.
Mr. Mikity then stated that the mutual funds are in their best position
ever and that he wanted to ensure the Fund was not locking itself into the Rule
12b-1 fee if the fee is not accepted. Mr. Lindsay stated that the Fund is not
locked into the Rule 12b-1 fee. Mr. Lindsay added that market research examined
by CSIA indicates there is a significant body of customers who want services in
selecting their funds and that to provide these services the persons providing
the services need compensation. For that reason, Mr. Lindsay stated, the Fund
should adopt a Rule 12b-1 plan.
The discussion of the Rule 12b-1 plan having come to a conclusion, upon
motion made and duly seconded, it was:
RESOLVED, that the proposed Plan of Distribution (the "Plan") is
determined to be reasonably likely to benefit the Fund and its shareholders;
FURTHER RESOLVED, that the Plan be, and the same hereby is, approved;
FURTHER RESOLVED, that the proposed form of Shareholder Servicing
Agreement concerning the Fund be, and the same hereby is, approved, in
substantially the form presented to this meeting;
FURTHER RESOLVED, that the proposed form of Broker Agreement concerning
the Fund be, and the same hereby is, approved, in substantially the form
presented to this meeting.
Mr. Jennings then informed the Board that to implement the 12b-1 plan
the officers of the Fund would need to be authorized to file a Post-Effective
Amendment to the Fund's
9
<PAGE>
Registration Statement and to file Articles Supplementary with the State of
Maryland. After Mr. Jennings' discussion, upon motion made and duly seconded, it
was unanimously:
RESOLVED, that the officers of the Fund be, and they hereby are,
authorized to file a Post-Effective Amendment to the Fund's Registration
Statement and to file Articles Supplementary with the State of Maryland to
effect the implementation of the multi-class system for certain portfolios of
the Fund.
At this point Mr. Seidel provided the report of the Administrator on the
special meeting of shareholders held on April 1, 1992, and he reported that all
resolutions had been overwhelmingly passed.
There being no further business to come before the meeting, upon motion
duly made and seconded, the meeting was adjourned at approximately 10:45 a.m.
Respectfully submitted,
/s/ THOMAS D. JONES, III
----------------------------------------
Thomas D. Jones, III
Secretary of the Meeting
10
<PAGE>
EXHIBIT B
<PAGE>
COREFUNDS, INC.
DISTRIBUTION PLAN
Class B Portfolio Shares
WHEREAS, CoreFunds, Inc. (the "Fund") is engaged in business as a
diversified, open-end investment company registered under the Investment Company
Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Directors of the Fund have determined that there is a
reasonable likelihood that the following Distribution Plan will benefit the Fund
and the owners of shares of the series designated as "Series B" in each of the
Cash Reserve, Treasury Reserve and Tax-Free Reserve portfolios of the Fund, and
such other portfolios of the Fund as may add a Series B (the "Class B
Portfolios");
NOW, THEREFORE, thc Directors of the Fund hereby adopt this Distribution
Plan pursuant to Rule 12b-1 under the 1940 Act.
1. The Plan. This Plan (the "Plan") is a written plan as described in
Rule 12b-1 (the "Rule") under the 1940 Act of the Fund. Other capitalized terms
herein have the meaning given to them in the Fund's prospectus.
2. Payments Authorized. (a) The Fairfield Group, Inc. ("Fairfield") is
authorized, pursuant to this Plan, to accept payments made to it under the
Distribution Plan and to make payments on behalf of the Fund to any Shareholder
Servicing Agent with which it has entered into a shareholder servicing agreement
or to any Participating Broker/Dealer with which it has entered into a broker
agreement.
(b) The Fund will pay Fairfield* an annual fee, calculated on an
average daily net basis and paid monthly, of up to .25% of the average daily net
assets of each Class B Portfolio, which fee Fairfield is authorized to use to
pay as service payments to certain securities broker/dealers and financial
institutions which enter into shareholder servicing agreements or broker
agreements (collectively, the "Service Agreements") with Fairfield. Under these
Service Agreements, the securities broker/dealers and financial institutions
will provide shareholder servicing administrative services, including such
services as: (i) establishing and maintaining customer accounts and records;
(ii) aggregating and processing purchase and redemption requests from customers
and placing net purchase and redemption orders with Fairfield; (iii)
automatically investing customer account cash balances; (iv) providing periodic
statements to their customers; (v) arranging for bank wires; (vi) answering
routine customer inquiries concerning their investments in the shares offered in
connection with this 12b-1 Plan and related distribution agreement; (vii)
assisting customers in changing dividend options, account designations and
addresses; (viii) performing sub-accounting functions; (ix) processing dividend
payments from the Fund on behalf of customers; (x) forwarding certain
shareholder communications from the Fund (such as proxies, shareholder reports
and dividend, distribution and tax notices) to customers; and (xi) providing
such other similar services as may be reasonably requested to the extent they
are permitted to do so under applicable statutes, rules or regulations. The
actual fee paid to a securities broker/dealer or financial institution will be
based upon the extent and quality of the services provided.
* or any successor Distributor
<PAGE>
3. Other Distribution Resources. Fairfield is a party to a Distribution
Agreement with the Fund pursuant to which Fairfield undertakes to act as the
underwriter of the Fund's shares. Fairfield will report to the Board of
Directors on its distribution activities on an annual basis at the time of the
review of its Distribution and Administration Agreements with the Fund.
4. Reports. While this Plan is in effect, Fairfield shall report in
writing at least quarterly to the Fund's Board of Directors, and the Board shall
review, the following: (i) the amounts of all payments under Section 2 of the
Plan, the identity of the recipients of each such payment; (ii) the basis on
which the amount of the payment to such recipient was made; and (iii) the
amounts of expenses authorized under this Plan and the purpose of each such
expense, in each case during thc preceding calendar or fiscal quarter.
5. Effectiveness. Continuation. Termination and Amendment. This Plan has
been approved (i) by a vote of the Board of Directors of the Fund and of a
majority of the Directors who are not interested persons (as defined in the 1940
Act), cast in person at a meeting called for the purpose of voting on this Plan;
and (ii) will be approved by a vote of holders of at least a majority of the
outstanding voting securities (as defined in the 1940 Act) of any of the Fund's
portfolios to which this Plan is applicable. This Plan shall, unless terminated
as hereinafter provided, continue in effect from year to year only so long as
such continuance is specifically approved at least annually by the vote of the
Fund's Board of Directors and by the vote of a majority of the Directors of the
Fund who are not interested persons (as defined in the 1940 Act), cast in person
at a meeting called for the purpose of voting on such continuance. This Plan may
be terminated at any time by a vote of a majority of thc Directors who are not
interested persons (as defined in the 1940 Act) or by the vote of the holders of
a majority of the Fund's outstanding voting securities (as defined in the 1940
Act). This Plan may not be amended to increase materially the amount of payments
to be made without shareholder approval, as set forth in (ii) above, and all
amendments must be approved in the manner set forth under (i) above.
<PAGE>
EXHIBIT C
EXHIBIT 99.(24)(a)
COREFUNDS, INC.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned director and/or
officer of CoreFunds, Inc. (the "Fund"), a corporation organized under the laws
of the State of Maryland, hereby constitutes and appoints David G. Lee, Kevin P.
Robins and Carmen V. Romeo, and each of them singly, his or her true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
to sign for him or her and in his or her name, place and stead, and in the
capacity indicated below, to sign any or all amendments (including
post-effective amendments) to the Fund's Registration Statement on Form N-1A
under the provisions of the Investment Company Act of 1940 and the Securities
Act of 1933, each such Act as amended, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, acting alone, full power and authority to do and perform each and every
act and thing requisite or necessary to be done in and about the premises, as
fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them, or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand and
seal as of the date set forth below.
/s/ EMIL MIKITY Date: September 8, 1994
- ----------------------------------- ------------------------------
Emil Mikity
Director
<PAGE>
EXHIBIT 99.(24)(a)
COREFUNDS, INC.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned director and/or
officer of CoreFunds, Inc. (the "Fund"), a corporation organized under the laws
of the State of Maryland, hereby constitutes and appoints David G. Lee, Kevin P.
Robins and Carmen V. Romeo, and each of them singly, his or her true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
to sign for him or her and in his or her name, place and stead, and in the
capacity indicated below, to sign any or all amendments (including
post-effective amendments) to the Fund's Registration Statement on Form N-1A
under the provisions of the Investment Company Act of 1940 and the Securities
Act of 1933, each such Act as amended, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, acting alone, full power and authority to do and perform each and every
act and thing requisite or necessary to be done in and about the premises, as
fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them, or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand and
seal as of the date set forth below.
/s/ GEORGE H. STRONG Date: September 8, 1994
- ----------------------------------- -----------------------------
George H. Strong
Director
<PAGE>
EXHIBIT 99.(24)(a)
COREFUNDS, INC.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned director and/or
officer of CoreFunds, Inc. (the "Fund"), a corporation organized under the laws
of the State of Maryland, hereby constitutes and appoints David G. Lee, Kevin P.
Robins and Carmen V. Romeo, and each of them singly, his or her true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
to sign for him or her and in his or her name, place and stead, and in the
capacity indicated below, to sign any or all amendments (including
post-effective amendments) to the Fund's Registration Statement on Form N-1A
under the provisions of the Investment Company Act of 1940 and the Securities
Act of 1933, each such Act as amended, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, acting alone, full power and authority to do and perform each and every
act and thing requisite or necessary to be done in and about the premises, as
fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them, or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand and
seal as of the date set forth below.
/s/ ERIN ANDERSON Date: September 8, 1994
- ----------------------------------- -----------------------------
Erin Anderson
Director
<PAGE>
EXHIBIT 99.(24)(a)
COREFUNDS, INC.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned director and/or
officer of CoreFunds, Inc. (the "Fund"), a corporation organized under the laws
of the State of Maryland, hereby constitutes and appoints Kevin P. Robins and
Carmen V. Romeo, and each of them singly, his or her true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
to sign for him or her and in his or her name, place and stead, and in the
capacity indicated below, to sign any or all amendments (including
post-effective amendments) to the Fund's Registration Statement on Form N-1A
under the provisions of the Investment Company Act of 1940 and the Securities
Act of 1933, each such Act as amended, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, acting alone, full power and authority to do and perform each and every
act and thing requisite or necessary to be done in and about the premises, as
fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them, or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand and
seal as of the date set forth below.
/s/ DAVID G. LEE Date: September 8, 1994
- ----------------------------------- -----------------------------
David G. Lee
President & Chief Executive Officer
EXHIBIT 99.(24)(b)
COREFUNDS, INC.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned director and/or
officer of CoreFunds, Inc. (the "Fund"), a corporation organized under the laws
of the State of Maryland, hereby constitutes and appoints David G. Lee and Kevin
P. Robins, and each of them singly, his or her true and lawful attorney-in-fact
and agent with full power of substitution and resubstitution, to sign for him or
her and in his or her name, place and stead, and in the capacity indicated
below, to sign any or all amendments (including post-effective amendments) to
the Fund's Registration Statement on Form N-1A under the provisions of the
Investment Company Act of 1940 and the Securities Act of 1933, each such Act as
amended, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, acting alone, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand and
seal as of the date set forth below.
/s/ CARMEN V. ROMEO Date: 11/14/94
- ----------------------------------- ------------------------------
Carmen V. Romeo
Treasurer
<PAGE>
EXHIBIT 99.(24)(b)
COREFUNDS, INC.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned director and/or
officer of CoreFunds, Inc. (the "Fund"), a corporation organized under the laws
of the State of Maryland, hereby constitutes and appoints David G. Lee, Kevin P.
Robins and Carmen V. Romeo, and each of them singly, his or her true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
to sign for him or her and in his or her name, place and stead, and in the
capacity indicated below, to sign any or all amendments (including
post-effective amendments) to the Fund's Registration Statement on Form N-1A
under the provisions of the Investment Company Act of 1940 and the Securities
Act of 1933, each such Act as amended, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, acting alone, full power and authority to do and perform each and every
act and thing requisite or necessary to be done in and about the premises, as
fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them, or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand and
seal as of the date set forth below.
/s/ JEAN YOUNG Date: 11/14/94
- ----------------------------------- ------------------------------
Jean Young
Controller
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<PER-SHARE-NAV-END> 11.85
<EXPENSE-RATIO> .37
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
