COREFUNDS SWEEP
Money Market Funds
Prospectus
CoreFunds, Inc.
May 31, 1997
Individual Shares
CoreFunds(R)
Family of
Mutual Funds
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 C
Shares of three money market portfolios (the "Funds"). This prospectus is
provided only to CoreFunds sweep customers of CoreStates Bank, N.A. Please call
1-800-222-0246 if you have any questions regarding the CoreFunds sweep feature
on your account, or consult your CoreFunds Sweep Agreement.
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, or to obtain
information about any other fund in the CoreFund Family of Mutual Funds, call or
write:
CoreFunds, Inc.
Oaks, PA 19456
1-800-355-CORE (2673)
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, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS / / COREFUND
INFORMATION ON THE FUNDS
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Investment Objectives and Policies of the Funds...... 7
Money Market Funds................................. 7
General Investment Policies and Practices............ 8
Temporary Investments................................ 10
Investment Restrictions.............................. 10
Investment Risks..................................... 11
Distributions........................................ 11
Taxes................................................ 12
Valuation of Shares.................................. 13
Net Asset Value.................................... 13
Portfolio Pricing.................................. 13
Management........................................... 14
Investment Adviser................................. 14
Administrator...................................... 14
Distributor........................................ 15
Performance Information.............................. 15
Total Return and Yield............................. 15
In General......................................... 16
Description of Shares................................ 16
General Information.................................. 18
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SHAREHOLDER SERVICES GUIDE
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Opening an Account and Purchasing
Shares............................................ 19
Selling Your Shares.................................. 19
Exchanging Shares.................................... 19
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2 Table of Contents
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.
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HIGHLIGHTS
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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 C Shares of the
Money Market Funds. Materials relating to other Shares of the Funds or to the Class Y Shares of the
Money Market Funds may be obtained by calling 1-800-355-CORE (2673), or by writing to CoreFunds,
Inc., Oaks, PA 19456.
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Investors may choose to invest in any of the three portfolios of CoreFunds offered in this
Prospectus.
MONEY CASH RESERVE seeks to obtain maximum current income consistent with the preservation of principal and
MARKET maintenance of liquidity by investing in a diversified portfolio of money market instruments of the
FUNDS 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.
RISK Investment in the Funds involves a number of risks, including possible loss of principal. Certain
CHARACTER- risk factors applicable to the Funds are described below. The share price of each Fund may, at
ISTICS redemption, be more or less than at the time of initial purchase.
Securities held by Cash Reserve and Treasury Reserve may be subject to credit risk. Securities held
by Tax-Free Reserve may be subject to several types of investment risk, including market risk (or
interest rate risk), credit risk and call risk (or income risk).
PAGE 7
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INVESTMENT CoreStates Investment Advisers, Inc. ("CoreStates Advisers") serves as the investment adviser for
ADVISER each Fund. CoreStates Advisers has extensive experience in the management of money market, tax-free,
fixed income, equity, and international investments.
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Highlights 3
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DISTRIBUTIONS Shareholders of a Fund are entitled to dividends and distributions arising from the net investment
income and capital gains, if any, earned on investments held by the Fund.
PAGE 11
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TAXES The sale or redemption of shares of a mutual fund is a taxable event to the selling or redeeming
shareholder. Any receipt of dividends which represent capital gain distributions will be subject to
federal and state income taxes. Ordinary dividends also will be subject to state income taxes.
PAGE 12
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PURCHASING You may purchase shares through cash sweep arrangements established by CoreStates Bank, N.A. You may
SHARES sign up for this service by executing a CoreFunds Sweep Agreement with CoreStates Bank, N.A. Please
call CoreStates Bank, N.A. at 1-800-222-0246 for information about the CoreFunds Sweep Feature. You
may open accounts in or obtain additional information regarding this and other funds in the CoreFund
Family of Mutual Funds by calling 1-800-355-CORE (2673).
PAGE 19
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SELLING You may redeem or sell shares of each Fund in the manner set forth in your CoreFunds Sweep
SHARES Agreement.
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SERVICES FOR Please contact CoreStates Bank, N.A. at 1-800-222-0246 for information about the CoreFunds Sweep
SHAREHOLDERS feature on your account, or consult your CoreStates Bank CoreFunds Sweep Agreement.
PAGE 19
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4 Highlights
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TRANSACTION AND OPERATING EXPENSE TABLES
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 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.
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<CAPTION>
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CASH TREASURY TAX-FREE
Money Market Funds RESERVE RESERVE RESERVE
<CAPTION>
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Class C Shares
SHAREHOLDER TRANSACTION EXPENSES 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 (After Waivers)(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
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* 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 permitted by the Conduct Rules 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 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) The numbers in the Example reflect the effect of waivers.
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Transaction and Operating Expense Tables 5
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FINANCIAL HIGHLIGHTS / / COREFUND
The tables that follow present information about the investment results of
the shares of the Funds. The financial highlights for each of the 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 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,
Money Market Funds(1)
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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
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CASH RESERVE
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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
<CAPTION>
Ratio of Ratio of
Expenses to Net Income
Average Net to Average
Assets Net Assets
(Excluding (Excluding
Waivers) Waivers)
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CLASS C (INDIVIDUAL)*
<S> <C> <C>
1996 1.03% 4.58%
1995 1.10 4.49
1994 1.10 2.32
1993(1) 1.15 2.13
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TREASURY RESERVE
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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
<CAPTION>
Ratio of Ratio of
Expenses to Net Income
Average Net to Average
Assets Net Assets
(Excluding (Excluding
Waivers) Waivers)
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CLASS C (INDIVIDUAL)*
<S> <C> <C>
1996 1.03% 4.53%
1995 1.10 4.44
1994 1.11 2.24
1993(1) 1.14 2.07
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TAX-FREE RESERVE
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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
Expenses to Net Income
Average Net to Average
Assets Net Assets
(Excluding (Excluding
Waivers) Waivers)
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CLASS C (INDIVIDUAL)*
<S> <C> <C>
1996 1.02% 2.65%
1995 1.10 2.43
1994 1.12 1.37
1993(1) 1.14 1.33
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* 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.
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6 Financial Highlights
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INFORMATION ON THE FUNDS / / COREFUND
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INVESTMENT OBJECTIVES
AND POLICIES
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. There can
be no assurance that a Fund will meet its objective. 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."
MONEY MARKET FUNDS _____________________________________________________________
Investments made by the 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."
CASH RESERVE Cash Reserve seeks as high a level of current income as is
consistent with liquidity and relative stability of principal. Cash Reserve
invests 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 seeks current interest income, liquidity and
safety of principal. Treasury Reserve invests 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 seeks 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. Tax-Free Reserve invests in a diversified
portfolio 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. This Fund intends, under normal market conditions, to invest
at least 80% of its assets in tax-free securities. Up to 20% of all assets in
this Fund can be invested in taxable debt securities for defensive purposes or
when appropriate tax-exempt securities are not available for purchase.
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Investment Objectives and Policies 7
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INFORMATION ON THE FUNDS (CONTINUED)
GENERAL INVESTMENT POLICIES AND PRACTICES ______________________________________
In addition to the investments described
above, the Funds may engage in a number
of additional investment practices, as
discussed below:
REPURCHASE AGREEMENTS--
Under the terms of a repurchase agreement, a Fund purchases securities from
financial institutions such as banks and broker-dealers ("seller") which are
deemed to be creditworthy under guidelines approved by the Fund, subject to the
seller's agreement to repurchase them at a mutually agreed-upon date and price.
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.
REVERSE REPURCHASE AGREEMENTS--
Pursuant to reverse repurchase agreements, a Fund sells portfolio securities to
financial institutions such as banks and broker-dealers, and agree to repurchase
them at a mutually agreed-upon date and price. The Fund must maintain a
segregated custodial account that contains 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). 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.
OTHER INVESTMENT COMPANIES--
Shares of investment companies will be purchased by the Funds within the limits
prescribed by the Investment Company Act.
PUT TRANSACTIONS--Tax-Free Reserve
The Fund may purchase securities subject to a put. A "put" feature permits a
Fund to sell a security at a fixed price prior to maturity. Any premium paid
will have the effect of reducing the yield otherwise receivable on the
underlying security. The Fund will limit their put transactions to institutions
which their advisers believe present minimal credit risk.
WHEN-ISSUED SECURITIES--Tax-Free Reserve
The Fund 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. The 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.
ILLIQUID SECURITIES--All Funds
The Funds may invest in illiquid securities, which are securities that cannot be
sold or disposed of in seven days or less at approximately their carrying value.
The Funds may invest up to 10% of their assets in illiquid securities. 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. Each Fund may lend portfolio securities with a value of
up to 33 1/3% of its total assets. These Funds will receive collateral in an
amount equal to at least 100% of the current market
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8 Investment Objectives and Policies
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value of the loaned securities plus accrued interest. Cash collateral received
by the Funds will be invested in Short-Term Obligations.
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.
MUNICIPAL SECURITIES--
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.
5. Municipal Lease Obligations
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.
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Investment Objectives and Policies 9
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INFORMATION ON THE FUNDS (CONTINUED)
VARIABLE AMOUNT
MASTER DEMAND NOTES--
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. Although there is no secondary market in the notes, the Fund may
demand payment of principal and accrued interest at any time.
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 Fannie Mae; 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.
3. STRIPS are 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.
TEMPORARY INVESTMENTS __________________________________________________________
Due to market conditions, the Funds are permitted to make temporary investments
in Short-Term Obligations. 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.
TAX-FREE RESERVE Tax-Free Reserve may hold uninvested cash reserves and may
invest all of any portion of its assets in Taxable Obligations.
/ /
INVESTMENT
RESTRICTIONS
The investment objectives of each Fund, along with the restrictions and
limitations described herein 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. (i) 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 (ii) 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.
2. Invest 25% or more of its total assets in any one industry. For purposes of
this limitation, wholly-owned finance companies will be
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10 Investment Restrictions
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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 Tax-Free Reserve, this limitation does not apply to
investments in tax-exempt securities issued by governments or political
sub-divisions of governments.
INVESTMENT RISKS _______________________________________________________________
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.
MONEY MARKET FUNDS
Securities held by Cash Reserve and Treasury Reserve may be subject to credit
risk.
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).
/ /
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.
Dividends are paid in the form of additional Class C Shares of a Fund
unless a shareholder selects one of the following options on the Account Opening
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 Opening 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
C Shares because of the distribution and incremental transfer agent expenses
charged to Class C Shares.
The net investment income of each of the Money Market Funds is declared
daily as a dividend to its shareholders and paid monthly. Capital gains
distributions, if any, will be made by the Money Market Funds at least annually.
Dividends paid shortly after the purchase of shares by an investor,
although in effect a return of capital, are taxable as ordinary income.
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Distributions 11
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INFORMATION ON THE FUNDS (CONTINUED)
/ /
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 the favorable tax treatment afforded a "regulated investment
company" under the Code.
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 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
This Fund 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 the 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. Tax-Free Reserve is permitted to purchase
"private activity bonds" that are subject to the Federal Alternative Minimum Tax
(the "AMT").
Interest on indebtedness incurred or continued by a shareholder in order
to purchase or carry shares of the Fund is not deductible for federal income tax
purposes. Furthermore, the 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 or private activity bonds. 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.
Corporate shareholders 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
shares of the Fund would have on their own AMT liability.
Except as noted below, tax-exempt interest dividends and other
distributions paid by the Fund may be taxable to investors as
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12 Taxes
<PAGE>
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/ / COREFUND
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.
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.
/ /
VALUATION OF SHARES
NET ASSET VALUE ________________________________________________________________
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 are valued according to the broadest and most
representative market. 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.
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).
----
Valuation Of Shares 13
<PAGE>
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INFORMATION ON THE FUNDS (CONTINUED)
/ /
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 $17.6 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.
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 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.
ADMINISTRATOR __________________________________________________________________
SEI Fund Resources ("SFR" or the "Administrator"), with principal offices at 530
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
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14 Management
<PAGE>
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/ / COREFUND
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 Oaks, PA 19456, serves as each Fund's distributor pursuant to a
Distribution Agreement. 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 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. CoreStates Bank, N.A., has entered into a Shareholder Servicing
Agreement with the Distributor.
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.
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 C Shares will receive different compensation with
respect to Class C Shares than Class Y Shares.
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.
/ /
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.
----
Performance Information 15
<PAGE>
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INFORMATION ON THE FUNDS (CONTINUED)
MONEY MARKET FUNDS
In addition to quoting total return, the 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.
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 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.
/ /
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, Global Bond, Cash Reserve, Treasury Reserve, Tax-Free Reserve, Elite Cash
Reserve, Elite Government Reserve (not currently being offered), Elite Treasury
Reserve and Elite Tax-Free Reserve Portfolios. CoreFunds offers two classes of
shares of each portfolio. In total, CoreFunds presently offers shares in twenty
different portfolios. CoreFunds may in the future create additional portfolios
or 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 the Money Market Funds' Class C Shares --
Individual.
INVESTORS WISHING TO OBTAIN SIMILAR INFORMATION REGARDING OTHER COREFUND
PORTFOLIOS MAY OBTAIN PROSPECTUSES DESCRIBING THESE
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16 Description Of Shares
<PAGE>
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/ / COREFUND
PORTFOLIOS BY CONTACTING THE DISTRIBUTOR AT 1-800-355-CORE.
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, 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.
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.
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Description Of Shares 17
<PAGE>
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INFORMATION ON THE FUNDS (CONTINUED)
/ /
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 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.
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18 General Information
<PAGE>
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SHAREHOLDER SERVICES GUIDE
<TABLE>
<S> <C>
OPENING AN ACCOUNT This prospectus is provided only to CoreFunds sweep customers of CoreStates Bank, N.A. Please
AND PURCHASING contact CoreStates Bank, N.A. at 1-800-222-0246, or consult your CoreFunds Sweep Agreement, for
SHARES information regarding CoreFund purchases and redemptions through the CoreFunds sweep feature. If
you need assistance with an Account Opening Form for other Funds in the CoreFund Family of Mutual
Funds or if you have any questions about the CoreFunds, please call 1-800-355-CORE (2673).
EXECUTION OF ORDERS A purchase order received before 12:00 p.m. for a Money Market Fund on any business day 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. An order received after 12:00 p.m. will be
executed on the next business day of the Fund. For non-cash sweep customers, an order is deemed
to be received when received by the Transfer Agent. Depending on the terms of the CoreFunds Sweep
Agreement, cash sweeps will occur on either a daily or weekly basis. CoreFunds sweep customers
should consult their CoreFunds Sweep Agreement for more information on purchases. The Distributor
reserves the right to reject any purchase order when it determines that it is not in the best
interests of the Fund and its Shareholders to accept such purchase order.
IMPORTANT Redemption orders for the Money Market Funds are executed at the net asset value per share at
REDEMPTION 12:00 p.m. that day if received by 12:00 p.m. that day. An order is deemed to be received when
INFORMATION: 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. CoreFunds sweep customers do not have access to telephone or other special
redemption procedures. Please contact CoreStates Bank, N.A. at 1-800-222-0246, or consult your
CoreFunds Sweep Agreement, for details regarding redemptions. For non-CoreFunds Sweep customers,
payment 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.
</TABLE>
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Shareholder Services 19
<PAGE>
CoreFunds(R)
Family of
Mutual Funds
Money Market Funds
Class C-Individual Shares
Prospectus
May 31, 1997
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
Oaks, PA 19456
Legal Counsel
Morgan, Lewis & Bockius LLP
Philadelphia, PA 19103
Auditors
Ernst & Young LLP
Philadelphia, PA 19103
CoreStates
CoreStates
Investment Advisers
For current performance, purchase, redemption and
other information, call 1-800-355-CORE (2673)
COR-F-062-01
99 32B - (4/97)
