As filed with the Securities and Exchange Commission on September 28, 1998
File No. 811-8858
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 13
CORE TRUST (DELAWARE)
Two Portland Square
Portland, Maine
207-879-1900
David I. Goldstein, Esq.
Forum Administrative Services, LLC
Two Portland Square
Portland, Maine 04101
Copies to:
Robert J. Zutz, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Ave., N.W. 2nd Floor
Washington, D.C. 20036-1800
EXPLANATORY NOTE
This Registration Statement is being filed by Registrant pursuant to Section
8(b) of the Investment Company Act of 1940, as amended. Beneficial interests in
the series of Registrant are not being registered under the Securities Act of
1933, as amended, because such interests will be issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of that act. Investments in Registrant's series may only
be made by certain institutional investors, whether organized within or without
the United States. This Registration Statement does not constitute an offer to
sell, or the solicitation of an offer to buy, any beneficial interests in any
series of Registrant.
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PART A
CORE TRUST (DELAWARE)
Prime Money Market Portfolio, Money Market Portfolio, Positive Return Bond
Portfolio, Stable Income Portfolio, Strategic Value Bond Portfolio, Managed
Fixed Income Portfolio, Index Portfolio, Income Equity Portfolio, Large Company
Growth Portfolio, Disciplined Growth Portfolio, Small Cap Index Portfolio, Small
Company Stock Portfolio, Small Company Growth Portfolio, Small Company Value
Portfolio, Small Cap Value Portfolio and International Portfolio.
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PART B
CORE TRUST (DELAWARE)
Prime Money Market Portfolio, Money Market Portfolio, Positive Return Bond
Portfolio, Stable Income Portfolio, Strategic Value Bond Portfolio, Managed
Fixed Income Portfolio, Index Portfolio, Income Equity Portfolio, Large Company
Growth Portfolio, Disciplined Growth Portfolio, Small Cap Index Portfolio, Small
Company Stock Portfolio, Small Company Growth Portfolio, Small Company Value
Portfolio, Small Cap Value Portfolio and International Portfolio.
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PART A
CORE TRUST (DELAWARE)
PRIVATE PLACEMENT MEMORANDUM
OCTOBER 1, 1998
This Private Placement Memorandum relates to beneficial interests ("Interests")
in Prime Money Market Portfolio, Money Market Portfolio, Positive Return Bond
Portfolio, Stable Income Portfolio, Managed Fixed Income Portfolio, Index
Portfolio, Income Equity Portfolio, Large Company Growth Portfolio, Small
Company Stock Portfolio, Small Company Growth Portfolio, Small Company Value
Portfolio, International Portfolio, Strategic Value Bond Portfolio, Disciplined
Growth Portfolio, Small Cap Value Portfolio and Small Cap Index Portfolio (each
a "Portfolio" and collectively the "Portfolios"), diversified portfolios of Core
Trust (Delaware) (the "Trust"), a registered, open-end management investment
company.
Investments in the Portfolios may only be made by certain institutional
investors, whether organized within or outside the United States (excluding
individuals, S corporations, partnerships, and grantor trusts beneficially owned
by any individuals, S corporations, or partnerships). An investor in a Portfolio
must also be an "accredited investor," as that term is defined under Rule 501(a)
of Regulation D under the Securities Act of 1933, as amended ("1933 Act").
The Trust has filed with the Securities and Exchange Commission ("SEC") a Part B
to this Private Placement Memorandum (the "Statement of Additional Information"
or "SAI") with respect to the Portfolios dated the same date as this Private
Placement Memorandum and as may be further amended from time to time, which
contains more detailed information about the Trust and the Portfolios and is
incorporated into this Private Placement Memorandum by reference. A prospective
investor may obtain a copy of the SAI without charge by contacting Forum
Financial Services, Inc. ("FFSI"), the Trust's placement agent (the "Placement
Agent") at Two Portland Square, Portland, Maine 04101 or by calling (207)
879-1900.
This Private Placement Memorandum does not constitute an offer to sell, or the
solicitation of an offer to buy, Interestss in any Portfolio. An investor may
subscribe for a Interest in a Portfolio by contacting the Placement Agent at Two
Portland Square, Portland, Maine 04101, (207) 879-1900, for a complete
subscription package, including a subscription agreement. The Trust and the
Placement Agent reserve the right to refuse to accept any subscription for any
reason.
TABLE OF CONTENTS PAGE
General Description of Registrant 2
Investment Objectives 3
Investment Policies 4
Additional Investment Policies 11
Risk Consideration 12
Management of the Portfolios 13
Description of Beneficial Interests 17
Purchase of Interests 18
Redemption of Repurchase of Interests 19
Pending Legal Proceedings 19
Appendix A: Control Persons of the Portfolios A-1
THE SECURITIES OF THE TRUST DESCRIBED IN THIS PRIVATE PLACEMENT MEMORANDUM HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ARE
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER (1) THE TERMS OF THE TRUST INSTRUMENT OF THE
TRUST AND (2) THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
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GENERAL DESCRIPTION OF REGISTRANT
Core Trust (Delaware) (the "Trust") is an open-end, management investment
company which was organized as a business trust under the laws of the State of
Delaware pursuant to a Trust Instrument dated September 1, 1994, as amended and
restated November 1, 1994. The Trust offers units of Interest without any sales
charge and units may be redeemed without charge.
Beneficial interests in the Trust are divided into 21 separate diversified
series, each having a distinct investment objective and distinct investment
policies. The Portfolios are 16 of those series. The Trust is empowered to
establish, without investor approval, additional series which may have different
investment objectives and policies.
Index Portfolio and International Portfolio commenced operations on November 10,
1994. Positive Return Bond Portfolio, Stable Income Portfolio, Managed Fixed
Income Portfolio, Income Equity Portfolio, Large Company Growth Portfolio, Small
Company Stock Portfolio, Small Company Growth Portfolio and Small Company Value
Portfolio commenced operations on June 1, 1997. Prime Money Market Portfolio and
Money Market Portfolio commenced operations on August 22, 1997. Strategic Value
Bond Portfolio, Disciplined Growth Portfolio, and Small Cap Value Portfolio
commenced operations on October 1, 1997 while Small Cap Index Portfolio
commenced operations on April 9, 1998. The assets of each Portfolio belong only
to that Portfolio, and the assets belonging to a Portfolio are charged with the
liabilities of that Portfolio and all expenses, costs, charges and reserves
attributable to that Portfolio.
Effective June 1, 1997 Small Company Portfolio, a former series of the Trust,
divided to form three of the Portfolios -- Small Company Stock Portfolio, Small
Company Growth Portfolio and Small Company Value Portfolio. Small Company
Portfolio was managed by three portfolio managers, each of whom now serves as
the portfolio manager for one of the three new Portfolios. The division was
accomplished by Small Company Portfolio transferring the assets managed by each
portfolio manager to the corresponding new Portfolio. Also effective June 1,
1997, International Portfolio II changed its name to International Portfolio and
acquired the assets of a former series of the Trust which itself was named
International Portfolio.
Beneficial interests in the Portfolios are offered solely in private placement
transactions which do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act. Investments in a Portfolio may only be made by
certain institutional investors, whether organized within or outside the United
States (excluding individuals, S corporations, partnerships, and grantor trusts
beneficially owned by any individuals, S corporations, or partnerships). This
registration statement does not constitute an offer to sell, or the solicitation
of an offer to buy, any "security" as that term is defined in the 1933 Act.
Norwest Investment Management, Inc. ("Norwest"), a subsidiary of Norwest Bank
Minnesota, N.A. ("Norwest Bank"), serves as the investment adviser of each
Portfolio except International Portfolio, for which Schroder Capital Management
International Inc. ("Schroder") serves as the investment adviser.
Galliard Capital Management, Inc. ("Galliard") is the investment subadviser of
Stable Income Portfolio, Managed Fixed Income Portfolio and Strategic Value Bond
Portfolio. Crestone Capital Management, Inc. ("Crestone") is the investment
subadviser of Small Company Stock Portfolio. Peregrine Capital Management, Inc.
("Peregrine") is the investment subadviser of Positive Return Bond Portfolio,
Large Company Growth Portfolio, Small Company Growth Portfolio and Small Company
Value Portfolio. Smith Asset Management Group, LP ("Smith Group"), an investment
advisory affiliate of Norwest Bank, is the investment subadviser of Disciplined
Growth Portfolio and Small Cap Value Portfolio. Galliard, Crestone and Peregrine
are each investment advisory subsidiaries of Norwest Bank and, together with
Smith, are referred to as the "Subadvisers." Norwest, Schroder, Galliard,
Crestone, Peregrine and Smith (or Norwest and a Subadviser) are collectively
referred to as the "Advisers" or as applicable, individually, as the "Adviser."
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INVESTMENT OBJECTIVES
The investment objective of each Portfolio is fundamental and may not be changed
without investor approval. There can be no assurance that any Portfolio will
achieve its investment objective.
PRIME MONEY MARKET PORTFOLIO'S investment objective is to seek to provide high
current income to the extent consistent with the preservation of capital and the
maintenance of liquidity.
MONEY MARKET PORTFOLIO'S investment objective is to seek to provide high current
income to the extent consistent with the preservation of capital and the
maintenance of liquidity.
POSITIVE RETURN BOND PORTFOLIO'S investment objective is to seek positive total
return each calendar year regardless of the bond market.
STABLE INCOME PORTFOLIO'S investment objective is to maintain safety of
principal while providing low-volatility total return.
MANAGED FIXED INCOME PORTFOLIO'S investment objective is to seek consistent
fixed income returns by investing primarily in investment grade
intermediate-term obligations.
INDEX PORTFOLIO'S investment objective is to duplicate the return of the
Standard & Poor's 500 Composite Stock Price Index (the "Index").
INCOME EQUITY PORTFOLIO'S investment objective is to provide long-term capital
appreciation consistent with above-average dividend income.
LARGE COMPANY GROWTH PORTFOLIO'S investment objective is to provide long-term
capital appreciation by investing primarily in large, high-quality domestic
companies that the investment adviser believes have superior growth potential.
SMALL COMPANY STOCK PORTFOLIO'S investment objective is long-term capital
appreciation.
SMALL COMPANY GROWTH PORTFOLIO'S investment objective is to provide long-term
capital appreciation by investing in smaller sized domestic companies.
SMALL COMPANY VALUE PORTFOLIO'S investment objective is to seek to provide
long-term capital appreciation.
INTERNATIONAL PORTFOLIO'S investment objective is to provide long-term capital
appreciation by investing directly or indirectly in high quality companies based
outside the United States ("foreign companies").
STRATEGIC VALUE BOND PORTFOLIO'S investment objective is to seek total return by
investing primarily in income producing securities.
DISCIPLINED GROWTH PORTFOLIO'S investment objective is to seek capital
appreciation by investing primarily in common stocks of larger companies.
SMALL CAP VALUE PORTFOLIO'S investment objective is to seek capital appreciation
by investing primarily in common stocks of smaller companies.
SMALL CAP INDEX PORTFOLIO'S investment objective is to replicate the return of
the Standard & Poor's Small Cap 600 Composite Stock Price Index.
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INVESTMENT POLICIES
There can be no assurance that any Portfolio will achieve its investment
objective or that Prime Money Market Portfolio ("Prime Portfolio") or Money
Market Portfolio (collectively, the "Money Market Portfolios"), will maintain a
stable net asset value. Each Portfolio's (other than Money Market Portfolios)
net asset value and total return will fluctuate based upon changes in the value
of its portfolio securities. Upon redemption, an investment in a Portfolio may
be worth more or less than its original value. Certain of the Portfolios are
designed for investment of that portion of an investor's funds which can
appropriately bear the special risks associated with certain types of
investments (i.e., investment in small capitalization companies).
MONEY MARKET PORTFOLIOS
The Money Market Portfolios' investments are made under the requirements of an
SEC rule governing the investments that money market funds may make. Each
Portfolio invests only in high-quality, U.S. dollar-denominated short-term money
market instruments that are determined by the Adviser, under procedures adopted
by the Board, to be eligible for purchase and to present minimal credit risks.
The Portfolios may invest in securities with fixed, variable or floating rates
of interest.
High-quality instruments include those that: (1) are rated (or, if unrated, are
issued by an issuer with comparable outstanding short-term debt that is rated)
in 1 of the 2 highest rating categories by 2 NRSROs or, if only 1 NRSRO has
issued a rating, by that Nationally Recognized Statistical Rating Organizations
("NRSRO"); or (2) are otherwise unrated and determined by the Adviser to be of
comparable quality. Each Portfolio invests at least 95% of its total assets in
securities in the highest rating category.
PRIME MONEY MARKET PORTFOLIO AND THE MONEY MARKET PORTFOLIO
The Money Market Portfolios' objective is to provide high current income to the
extent consistent with the preservation of capital and the maintenance of
liquidity.
The Money Market Portfolios generally have the same investment policies, except
that the Prime Money Market Portfolio seeks to maintain a rating from at least
one NRSRO. Because Prime Portfolio seeks to maintain a rating within the 2
highest short-term categories assigned by at least 1 NRSRO, it is more limited
in the type and amount of securities it may purchase.
The Money Market Portfolios pursue their objectives by investing in a broad
spectrum of high-quality money market instruments of U.S. and foreign issuers,
including U.S. Government Securities, municipal securities, corporate debt
securities, and obligations of financial institutions.
The Money Market Portfolios may invest in obligations of financial institutions.
These include negotiable certificates of deposit, bank notes, bankers'
acceptances and time deposits of U.S. banks (including savings banks and savings
associations), foreign branches of U.S. banks, foreign banks and their non-U.S.
branches, U.S. branches and agencies of foreign banks and wholly-owned
banking-related subsidiaries of foreign banks. The Money Market Portfolios limit
their investments in obligations of financial institutions to institutions that
at the time of investment have total assets in excess of $1 billion, or the
equivalent in other currencies.
Each Portfolio normally will invest more than 25% of its total assets in the
obligations of domestic and foreign financial institutions, their holding
companies, and their subsidiaries. Neither Portfolio may invest more than 25% of
its total asset in any other single industry.
The principal risks associated with the Money Market Portfolios are credit risk,
interest rate risk, and foreign investment risks. See "Risk Considerations."
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FIXED INCOME PORTFOLIOS
POSITIVE RETURN BOND PORTFOLIO
The Portfolio seeks to produce a positive return each calender year regardless
of general bond market performance by investing in a portfolio of U.S.
Government Securities and corporate fixed income investments. The Portfolio's
assets are divided into two components, short bonds with maturities (or average
life) of 2 years or less and long bonds with maturities of 25 years or more.
Shifts between short bonds and long bonds are made based on movement in the
prices of bonds rather than on the Adviser's forecast of interest rates. During
periods of falling prices (generally, increasing interest rate environments)
long bonds are sold to protect capital and limit losses. Conversely, when bond
prices rise, long bonds are purchased. The average dollar-weighted maturity
owill vary between 1 and 30 years.
Under normal circumstances, at least 50% of the net assets of the Portfolio will
be invested in U.S. Government Securities, including U.S. Treasury Securities.
The Portfolio only purchases securities that are rated, at the time of purchase,
within 1 of the 2 highest long-term rating categories assigned by an NRSROsuch
as Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings Group
("Standard & Poor's") or Fitch Investors Services, L.P. ("Fitch") or that are
unrated and determined by the Adviser to be of comparable quality. The Portfolio
may invest up to 25% of its assets in securities rated in the second highest
rating category. The Portfolio does not invest more than 25% of its net assets
in zero-coupon securities, securities with variable or floating rates of
interest, and asset-backed securities.
The principal risk factors associated with the Portfolio are credit risk. market
risk, interest rate risk, and prepayment risk. See "Risk Considerations."
STABLE INCOME PORTFOLIO
The Portfolio invests primarily in short-term Investment Grade securities. The
Portfolio invests in a diversified portfolio of fixed and variable rate U.S.
dollar- denominated fixed income securities of a broad spectrum of U.S. and
foreign issuers, including U.S. Government Securities and the debt securities of
financial institutions, corporations and others. The Portfolio normally limts
its investments in mortgage-backed securities to not more than 60% of its total
assets, other types of asset-backed securities to not more than 25% of its total
assets, mortgage-backed securities that are not U.S. Government Securities to
not more than 25% of its total assets, and U.S. Government Securities to not
more than 50% of its total assets
The Portfolio may not invest more than 30% of its total assets in the securities
issued or guaranteed by any single agency or instrumentality of the U.S.
Government, except U.S. Treasury Securities, and may not invest more than 10% of
its total assets in the securities of any other issuer.
The Portfolio only purchases those securities that are rated, at the time of
purchase, within the four highest long-term or two highest short-term rating
categories assigned by an NRSRO, such as Moody's, Standard & Poor's or Fitch, or
which are unrated and determined by the Advisers to be of comparable quality
("Investment Grade Securities").
The Portfolio invests in debt obligations with maturities (or average life in
the case of mortgage-backed and similar securities) ranging from short-term
(including overnight) to 12 years and seeks to maintain an average
dollar-weighted portfolio maturity of between 2 and 5 years.
The Portfolio may use options, swap agreements, interest rate caps, floors and
collars, currency forward contracts, and futures contracts to manage risk. The
Portfolio may also use options to enhance return.
The principal risk factors associated with the Portfolio are credit risk,
leverage risk, foreign risk, market risk, interest rate risk, and prepayment
risk. See "Risk Considerations."
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MANAGED FIXED INCOME PORTFOLIO
The Portfolio seeks consistent fixed income returns by investing primarily in
Investment Grade intermediate-term securities. The Portfolio invests in a
diversified portfolio of fixed and variable rate U.S. dollar denominated, fixed
income securities of a broad spectrum of U.S. and foreign issuers, including
U.S. Government Securities, and the debt securities of financial institutions,
corporations and others. The Adviser emphasizes the use of intermediate maturity
securities to lessen Duration and employs low risk yield enhancement techniques
to enhance return over a complete economic or interest rate cycle. The Adviser
considers intermediate-term securities to be those with maturities of between 2
and 20 years.
The Portfolio will limit its investment in mortgage-backed securities to not
more than 65% of its total assets and its investment in asset-backed
securitiesto not more than 25% of its net assets. In addition, the Portfolio may
not invest more than 30% of its total assets in securities issued or guaranteed
by any single agency or instrumentality of the U.S. Government, except the U.S.
Treasury.
The Portfolio only purchases Investment Grade securities. The Portfolio invests
in debt securities with maturities (or average life in the case of
mortgage-backed and similar securities) ranging from overnight to 30 years. The
Portfolio normally will have an average dollar-weighted portfolio maturity of
between 3 and 12 years and a duration of between 2 and 6 years.
The Portfolio also may purchase up to 10% of its total assets in securities
issued or guaranteed by foreign governments the Adviser deems stable, or their
subdivisions, agencies, or instrumentalities; loan or security participations;
securities of supranational organizations; and Municipal Securities.
The Portfolio may use options, swap agreements, interest rate caps, floors and
collars, and futures contracts to manage risk. The Portfolio may also use
options to enhance return,
The principal risk factors associated with the Portfolio are credit risk,
leverage risk, foreign risk, market risk, interest rate risk, and prepayment
risk. See "Risk Considerations."
STRATEGIC VALUE BOND PORTFOLIO
The Portfolio invests in a broad range of fixed-income instruments in order to
create a strategically diversified portfolio of high quality fixed-income
investments. These investments include corporate bonds, mortgage- and
asset-backed securities, U.S. Government Securities, preferred stock,
convertible bonds and foreign bonds.
The Adviser focuses on relative value as opposed to the prediction of the
direction of interest rates. In general, the Portfolio seeks higher current
income instruments, such as corporate bonds and mortgage- and asset backed
securities, in order to enhance returns. The Adviser believes that this exposure
enhances performance in varying economic and interest rate cycles and avoids
excessive risk concentrations. The Adviser's investment process involves
rigorous evaluation of each security, including identifying and valuing cash
flows, embedded options, credit quality, structure, liquidity, marketability,
current versus historical trading relationships, supply and demand for the
instrument and expected returns in varying economic/interest rate environments.
The Adviser uses this process to seek to identify securities which represent the
best relative economic value. The Adviser then evaluates the results of the
investment process against the Portfolio's objective and purchases those
securities that are consistent with the Portfolio's investment objective.
The Portfolio particularly seeks strategic diversification. The Portfolio will
not invest more than 75% of its total assets in corporate bonds; 60% of its
total assets in mortgage-backed securities; 50% of its total assets in
asset-backed securities; or 25% of its total assets in a single industry of the
corporate market. The Portfolio may invest in U.S. Government Securities without
restriction. The Portfolio generally will not invest more than 5% of its total
assets in the corporate bonds of any single issuer.
The Portfolio will invest 65% of its total assets in fixed-income securities
rated, at the time of purchase, withinthe four highest rating categories by at
least one NRSRO,, or which are unrated and determined by the Adviser to be of
comparable quality. The Portfolio may invest up to 20% of its total assets in
Non-Investment grade securities.
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The average maturity of the Portfolio will vary between 5 and 15 years. In the
case of mortgage-backed and similar securities, the Portfolio uses the
security's average life in calculating the Portfolio's average maturity. The
Portfolio's duration normally will vary between 3 and 8 years.
The Portfolio may use options, swap agreements, interest rate caps, floors and
collars, and futures contracts to manage risk. The Portfolio may also use
options to enhance returns.
The principal risk factors associated with the Portfolio are credit risk, market
risk, interest rate risk, prepayment risk and leverage risk. See "Risk
Considerations."
EQUITY PORTFOLIOS
INDEX PORTFOLIO
Index Portfolio is designed to replicate the return of the S&P 500 Index (the
"S&P 500 Index") with minimum tracking error and tominimizing transaction costs.
Under normal circumstances, the Portfolio holds stocks representing 100% of the
capitalization-weighted market values of the S&P 500 Index. The Adviser
generally executes portfolio transactions for the Portfolio only to replicate
the composition of the S&P 500 Index, to invest cash received from portfolio
security dividends or investments in the Portfolio, and to raise cash to fund
redemptions. The Portfolio may hold cash or cash equivalents to facilitate
payment of the Portfolio's expenses or redemptions and may invest in index
futures contracts to a limited extent. For these and other reasons, the
Portfolio's performance can be expected to approximate but not equal that of the
Index.
The S&P 500 Index tracks the total return performance of 500 common stocks which
are chosen for inclusion in the S&P 500 Index by Standard & Poor's Corporation
("S&P") on a statistical basis. The 500 securities, most of which trade on the
New York Stock Exchange, represent approximately 70% of the total market value
of all U.S. common stocks. Each stock in the S&P 500 Index is weighted by its
market value. Because of the market-value weighting, the 50 largest companies in
the S&P 500 Index currently account for approximately 47% of its value. The
Index emphasizes large capitalizations and, typically, companies included in the
Index are the largest and most dominant firms in their respective industries.
S&P does not sponsor, sell, or endorse, the Portfolio. S&P does not warrant that
the S&P 500 Index is a good investment, is accurate or complete, or will track
general market performance.
The principal risk factors associated with the Portfolio are index risk, market
risk, and leverage risk. See "Risk Considerations."
INCOME EQUITY PORTFOLIO
The Portfolio invests primarily in the common stock of large, high-quality
domestic companies that have above-average return potential based on current
market valuations. The Portfolio primarily emphasizes investments in securities
of companies with above-average dividend income. In selecting securities for the
Portfolio, the Adviser uses various valuation measures, including above-average
dividend yields and below industry average price to earnings, price to book and
price to sales ratios. The Adviser considers large companies to be those whose
Market Capitalization is greater than the median of the Russell 1000 Index or
approximately $3.7 billion. Market capitalization refers to the total market
value of a company's outstanding shares of common stock.
The Portfolio may invest in preferred stock, convertible securities, and
securities of foreign companies The Portfolio will not normally invest more than
10% of its total assets in the securities of a single issuer.
The principal risk factors associated with the Portfolio are currency risk,
foreign risk, and market risk. See "Risk Considerations."
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LARGE COMPANY GROWTH PORTFOLIO
Large Company Growth Portfolio invests primarily in the common stock of large,
high-quality domestic companies that have superior growth potential. The Adviser
considers large companies to be those companies whose Market Capitalization is
greater than the median of the Russell 1,000 Index or approximately $3.7
billion. In selecting securities for the Portfolio, the Adviser seek issuers
whose stock is attractively valued with fundamental characteristics that are
significantly better than the market average and support internal earnings
growth capability. The Portfolio may invested in the securities of companies
whose growth potential is, in the Advisers' opinion, generally unrecognized or
misperceived by the market.
The Portfolio may invest up to 20% of its total assets in the securities of
foreign companies and may hedge against currency risk by using foreign currency
forward contracts. The Portfolio may not invest more than 10% of its total
assets in the securities of a single issuer.
The principal risk factors associated with the Portfolio are currency risk,
foreign risk, leverage risk and market risk. See "Risk Considerations."
DISCIPLINED GROWTH PORTFOLIO
The Portfolio seeks capital appreciation by investing in common stocks of larger
companies. The Portfolio seeks higher long-term returns by investing primarily
in the common stock of companies that, in the view of the Adviser, possess above
average potential for growth. The Portfolio invests in companies with average
Market Capitalizations greater than $5 billion.
The Portfolio seeks to identify growth companies that will report a level of
corporate earnings that exceeds the level expected by investors. In seeking
these companies, the investment adviser uses both quantitative and fundamental
analysis. The Adviser may consider, among other factors, changes of earnings
estimates by investment analysts, the recent trend of company earnings reports,
and an analysis of the fundamental business outlook for the company. The Adviser
uses a variety of valuation measures to determine whether the share price
already reflects any positive fundamentals identified by the Adviser. In
addition to approximately equal weighting of portfolio securities, the Adviser
attempts to constrain the variability of the investment returns by employing
risk control screens for price volatility, financial quality and valuation.
The principal risk factors associated with the Portfolio is market risk. See
"Risk Considerations."
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SMALL COMPANY STOCK PORTFOLIO
The Small Company Stock Portfolio invests primarily in the common stock of small
and medium-size domestic companies that have Market Capitalizations well below
that of the average company in the S&P 500 Index (the "Index") or $63 billion.
The Adviser considers small companies to be those companies whose Market
Capitalizations are less than the largest stock in the Russell 2000 Index or
approximately $1.4 billion. The Adviser considers medium companies to be those
companies whose Market Capitalizations range from $500 million to $8 billion.
In selecting securities for the Portfolio, the Adviser seek securities with
significant price appreciation potential and attempt to identify companies that
show above-average growth, as compared to long-term overall market growth. The
Portfolio invests in companies that may be in a relatively early stage of
development or may produce goods and services that have favorable prospects for
growth due to increasing demand or developing markets. Frequently, such
companies have a small management group and single product or product line
expertise, which, in the view of the Adviser, may result in an enhanced
entrepreneurial spirit and greater focus. The Adviser believe that such
companies may develop into significant business enterprises and that an
investment in such companies offers a greater opportunity for capital
appreciation than an investment in larger, more established entities.
The Portfolio may invest up to 20% of its total assets in the securities of
foreign issuers. See "Risk Considerations."
The principal risk factors associated with the Portfolio are currency risk,
small company risk, foreign risk, and market risk. See "Risk Considerations."
SMALL COMPANY GROWTH PORTFOLIO
Small Company Growth Portfolio invests primarily in the common stock of small
and medium-sized domestic companies that are either growing rapidly or
completing a period of significant change. Small companies are those companies
whose market capitalization is less than the largest stock in the Russell 2,000
Index or approximately $1.4 billion..
In selecting securities for the Portfolio, the Adviser seeks to identify
companies that are rapidly growing (usually with relatively short operating
histories) or that are emerging from a period of investor neglect by undergoing
a dramatic change. These changes may involve a sharp increase in earnings, the
hiring of new management or measures taken to close the gap between the
company's share price and takeover/asset value.
The Portfolio will invest up to 10% of its total assets in securities of foreign
companies. The Portfolio will not invest more than 10% of its total assets in
the securities of a single issuer.
The principal risk factors associated with the Portfolio are currency risk,
small company risk, foreign risk, and market risk. See "Risk Considerations."
SMALL COMPANY VALUE PORTFOLIO
The Small Company Value Portfolio seeks to provide long-term capitalization by
investing primarily in smaller companies whose Market Capitalization is less
than the largest stock in the Russell 2000 Index or approximately $1.4 billion.
The Adviser focuses on securities that are conservatively valued in the
marketplace relative to the stock of comparable companies, determined by
price/earnings ratios, cash flows, or other measures. Value investing provides
investors with a less aggressive way to take advantage of growth opportunities
of small companies. Value investing may reduce downside risk and offer potential
for capital appreciation as a stock gains favor among other investors and its
stock price rises.
The principal risk factors associated with the Portfolio are index risk,
leverage risk, and market risk. See "Risk Considerations."
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SMALL CAP VALUE PORTFOLIO
Small Cap Value Portfolio seeks capital appreciation by investing in common
stocks of smaller companies. The Portfolio will normally invest substantially
all of its assets in securities of companies with Market Capitalizations of
companies included in the Russell 2000 Index, which range from approximately
$221.9 billion to approximately $1.4 billion. The Portfolio seeks higher growth
rates and greater long-term returns by investing primarily in the common stock
of smaller companies that the Adviser believes to be undervalued and likely to
report a level of corporate earnings exceeding the level expected by investors
The Adviser values companies based upon both the price to earnings ratio of the
company and a comparison of the public market value of the company to a
proprietary model that values the company in the private market. In seeking
companies that will report a level of earnings exceeding that expected by
investors, the Adviser uses both quantitative and fundamental analysis. Among
the factors, the Adviser considers are changes of earnings estimates by
investment analysts, the recent trend of company earnings reports, and the
fundamental business outlook for the company.
The principal risk factors associated with the Portfolio are market risk and
small company risk. See "Risk Considerations."
SMALL CAP INDEX PORTFOLIO
Small Cap Index Portfolio seeks to replicate the return of the S&P Small Cap 600
Index with minimum tracking error and to minimize transaction costs. Under
normal circumstances, the Portfolio will hold stocks representing 100% of the
capitalization-weighted market values of the S&P Small Cap 600 Index. The
Adviser generally executes portfolio transactions to replicate the composition
of the S&P Small Cap 600 Index, to invest cash received from portfolio security
dividends or investments in the Portfolio, and to raise cash to fund
redemptions. The Portfolio may hold cash or cash equivalents for the purpose of
facilitating payment of the Portfolio's expenses or redemptions and may invest
in index-futures contracts. For these and other reasons, the Portfolio's
performance can be expected to approximate but not equal that of the S&P Small
Cap 600 Index.
The S&P Small Cap 600 Index tracks the total return performance of 600 common
stocks which are chosen for inclusion in the S&P Small Cap 600 Index by S&P on a
statistical basis. The 600 securities, most of which trade on the New York Stock
Exchange, represent approximately 4% of the total market value of all U.S.
common stocks. Each stock in the Small Cap Small Cap 600 Index is weighted by
its market value. The S&P Small Cap 600 Index emphasizes smaller capitalizations
and typically, companies included in the S&P Small Cap 600 Index may not be the
largest nor most dominant firms in their respective industries.
S&P does not sponsor, sell, promote, or endorse the Portfolio. S&P does not
warrant that the S&P Small Cap Index is a good investment, is accurate or
complete, or will track general stock market performance.,
The principal investment risks associated with the Portfolio are leverage risk,
market risk, and index risk. See "Risk Considerations.")
INTERNATIONAL PORTFOLIO
International Portfolio seeks to provide long-term capital appreciation by
investing directly or indirectly in high-quality companies based outside the
United States. The Portfolio selects its investments on the basis of their
potential for capital appreciation without regard to current income. The
Portfolio may also invest in the securities of domestic closed-end investment
companies that invest primarily in foreign securities and may invest in debt
obligations of foreign governments or their political subdivisions, agencies, or
instrumentalities, of supranational organizations, and of foreign corporations.
The Portfolio's investments are generally diversified among securities of
issuers in foreign countries including, but not limited to Japan, Germany, the
United Kingdom, France, the Netherlands, Hong Kong, Singapore, and Australia. In
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general, the Portfolio will invest only in securities of companies and
governments in countries that the Adviser, in its judgment, considers both
politically and economically stable. The Portfolio has no limit on the amount of
its assets that may be invested in any one type of foreign instrument or in any
foreign country; however, to the extent the Portfolio concentrates its assets in
a foreign country, it will incur greater risks.
Under normal circumstances, International Portfolio will invest substantially
all of its assets, but not less than 65% of its net assets, in equity securities
of companies domiciled outside the United States. The Portfolio may purchase
preferred stock and convertible debt securities, including convertible preferred
stock. The Portfolio also may enter into foreign exchange contracts, including
forward contracts to purchase or sell foreign currencies, in anticipation of its
currency requirements and to protect against possible adverse movements in
foreign exchange rates and may purchase American Depository Receipts, European
Depository Receipts or other similar securities of foreign issuers..
The principal risks associated with the Portfolio are credit risk, geographic
concentration risk, market risk, currency risk, interest rate risk, prepayment
risk, foreign risk, and leverage risk. See "Risk Considerations."
ADDITIONAL INVESTMENT POLICIES
DOWNGRADED SECURITIES
Each Portfolio may retain a security whose rating has been lowered (or a
security of comparable quality to a security whose rating has been lowered)
below a Portfolio's lowest permissible rating category if the Portfolio's
Adviser determines that retaining the security is in the best interests of the
Portfolio. Because a downgrade often results in a reduction in the market price
of the security, sale of a downgraded security may result in a loss.
TEMPORARY DEFENSIVE POSITION
To respond to adverse market, economic, political, or other conditions, each
Portfolio may assume a temporary defensive position and invest without limit in
cash and cash equivalents. When a Portfolio makes temporary defensive
investments, it may not be invested so as to achieve its investment objective.
PORTFOLIO TRANSACTIONS
From time to time, a Portfolio may engage in active short-term trading to take
advantage of price movements affecting individual issues, groups of issues or
markets. Higher portfolio turnover rates may result in increased brokerage costs
and a possible increase in short-term capital gains or losses..
The frequency of portfolio transactions for each Portfolio is contained in the
annual report for those Portfolios included in the SAI. The portfolio turnover
rate of a Portfolio will vary from year to year depending upon a variety of
factors. An annual portfolio turnover rate of 100% would occur if all of the
securities in a Portfolio were replaced once in a period of one year. No
Portfolio anticipate its turnover rate will exceed 100%.
YEAR 2000 AND EURO
The Portfolios could be adversely affected if the computer systems used by the
Advisers and other service providers (and in particular foreign service
providers) to the Portfolios do not properly process and calculate date-related
information and data from and after January 1, 2000 or information regarding the
new common currency of the European Union. The Year 2000 and Euro issues also
may adversely affect the Funds' investments.
Norwest, Schroder and Forum Financial Group are taking steps to address the Year
2000 and Euro issues for their computer systems and to obtain reasonable
assurances that comparable steps are being taken by the Portfolios' other major
service providers. While the Portfolios do not anticipate any adverse effect on
their computer systems from the Year 2000 issue, there can be no assurance that
these steps will be sufficient to avoid any adverse impact on the Portfolios.
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RISK CONSIDERATIONS
This section describes the principal risks that may apply to the Portfolios.
Each Portfolio's exposure to these risks depends upon its specific investment
profile. See "Investment Objectives" and "Investment Policies."
CREDIT RISK
The risk that the issuer of a security, or the counterparty to a contract, will
default or otherwise be unable to honor a financial obligation. This risk is
greater for Non-Investment grade securities.
CURRENCY RISK
The risk that fluctuations in the exchange rates between the U.S. dollar and
foreign currencies may negatively affect a Portfolio's investments.
FOREIGN RISK
The risk that foreign investments may be subject to political and economic
instability, the imposition or tightening of exchange controls or other
limitations on repatriation of foreign capital, or nationalization, increased
taxation or confiscation of investors' assets. This risk may be greater for
investments in issuers in emerging or developing markets.
GEOGRAPHIC CONCENTRATION RISK
The risk that factors adversely affecting a Portfolio's investments in issuers
located in a state, country or region will affect the Portfolio's net asset
value more than would be the case if the Portfolio had made more geographically
diverse investments.
INDEX RISK
The risk that a Portfolio designed to replicate the performance of an index of
securities will replicate the performance of the index during adverse market
conditions because the portfolio manager is not permitted to take a temporary
defensive position or otherwise vary the Portfolio's investments to respond to
the adverse market conditions.
INTEREST RATE RISK
The risk that changes in interest rates may affect the value of your investment.
With fixed-rate securities, including Municipal Securities and U.S. Government
Securities, an increase in interest rates typically causes the value of a
Portfolio's fixed-rate securities to fall, while a decline in interest rates may
produce an increase in the market value of the securities. Because of this risk,
an investment in a Portfolio that invests in fixed-income securities is subject
to risk even if all the fixed-income securities in the Portfolio's portfolio are
paid in full at maturity. Changes in interest rates will affect the value of
longer-term fixed-income securities more than shorter-term securities.
LEVERAGE RISK
The risk that some transactions may multiply smaller market movements into large
changes in a Portfolio's net asset value. This risk may occur when a Portfolio
borrows money or enters into transactions that have a similar economic effect,
such as short sales or forward commitment transactions. This risk also may occur
when a Portfolio makes investments in certain derivative instruments.
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MARKET RISK
The risk that the market value of a Portfolio's investments will fluctuate as
the stock and bond markets fluctuate generally. Market risk may affect a single
issuer, industry or section of the economy or may affect the market as a whole.
PREPAYMENT RISK
The risk that issuers will prepay fixed rate securities when interest rates
fall, forcing the Portfolio to invest in securities with lower interest rates
than the prepaid securities. For a Portfolio investing in mortgage- and other
asset-backed securities, this is also the risk that a decline in interest rates
may result in holders of the assets backing the securities to prepay their
debts, resulting in potential losses in these securities' values and yield.
Alternatively, rising interest rates may reduce the amount of prepayments on the
assets backing these securities, causing the Portfolio's average maturity to
rise and increasing the Portfolio's sensitivity to rising interest rates and
potential for losses in value.
SMALL COMPANY RISK
The risk that investments in smaller companies may be more
volatile than investments in larger companies. Smaller companies may have higher
failure rates than larger companies. A small company's securities may be hard to
sell because the trading volume of the securities of smaller companies is
normally lower than that of larger companies. Short term changes in the demand
for the securities of smaller companies may have a disproportionate effect on
their market price, tending to make prices of these securities fall more in
response to selling pressure.
MANAGEMENT OF THE PORTFOLIOS
TRUSTEES AND OFFICERS
The business of the Trust is managed under the direction of the Board of
Trustees. Forum Administrative Services, LLC ("FAdS"), the Portfolios'
administrator, provides persons satisfactory to the Board to serve as officers
of the Trust. Part B contains general background information about each Trustee
and officer of the Trust.
INVESTMENT ADVISERS
Norwest serves as investment adviser of each Portfolio except International
Portfolio. In this capacity, Norwest makes investment decisions for and
administers the Portfolios' investment programs. Norwest is located at Norwest
Center, Sixth Street and Marquette, Minneapolis, Minnesota 55479,
Schroder is the investment adviser for International Portfolio. In this
capacity. Schroder makes investment decisions for and administers the
Portfolio's investment programs.. Schroder is located at 787 Seventh Avenue, New
York, New York 10019.,
SUBADVISERS
Norwest and certain Portfolios have retained investment subadvisers to make
investment decisions for and administer the investment programs of those
Portfolios. Norwest decides which portion of the assets of a Portfolio the
subadviser should manage and supervises the subadvisers' performance of their
duties. The subadvisers are:
PORTFOLIO SUBADVISER
Positive Return Bond Portfolio Peregrine
Stable Income Portfolio Galliard
Managed Fixed Income Portfolio Galliard
Strategic Value Bond Portfolio Galliard
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Large Company Growth Portfolio Peregrine
Disciplined Growth Portfolio Smith
Small Company Stock Portfolio Crestone
Small Company Growth Portfolio Peregrine
Small Company Value Portfolio Peregrine
Small Cap Value Portfolio Smith
Galliard, Crestone, Peregrine and Smith make investment decisions for the
Portfolios to which they act as investment subadviser and continuously review,
supervise and administer those Portfolios' investment programs with respect to
that portion, if any, of the Portfolios assets that Norwest believes should be
managed by the Subadviser. Currently, each Subadviser manages all of the assets
of each Portfolio that they subadvise.
Galliard, which is located at 800 LaSalle Avenue, Suite 2060, Minneapolis,
Minnesota 55479, is an investment advisory subsidiary of Norwest Bank. Galliard
provides investment advisory services to bank and thrift institutions, pension
and profit sharing plans, trusts and charitable organizations and corporate and
other business entities.
Crestone, which is located at 7720 East Belleview Avenue, Suite 220, Englewood
Colorado 80111, is an investment adviser subsidiary of Norwest Bank. Crestone
provides investment advice regarding companies with small market capitalization
to various clients, including institutional investors.
Peregrine, which is located at LaSalle Plaza, 800 LaSalle Avenue, Suite 1850,
Minneapolis, Minnesota 55402, is an investment adviser subsidiary of Norwest
Bank. Peregrine provides investment advisory services to corporate and public
pension plans, profit sharing plans, savings-investment plans and 401(k) plans.
Smith Asset Management Group, L.P. , which is located at 300 Crescent Court,
Suite 750, Dallas, Texas 75201 is an investment advisory affiliate of Norwest
Bank. Smith provides investment management services to company retirement plans,
foundations, endowments, trust companies, and high net worth individuals using a
disciplined equity style
PORTFOLIO MANAGERS
The following persons, are primarily responsible for day-to-day management of
the Portfolios and, unless otherwise noted, have been since the inception of the
Portfolio.
MONEY MARKET PORTFOLIO/PRIME MONEY MARKET PORTFOLIO - David D. Sylvester, Laurie
R. White, Robert G. Leuty (1998). Mr. Sylvester has been associated with Norwest
or its affiliates since 1979 and is currently a Managing Director -- Reserve
Asset Management. Ms. White has been associated with Norwest or its affiliates
since 1991 and is a Director -- Reserve Asset Management. Mr. Leuty has been
associated with Norwest or its affiliates since 1992 and is Senior Portfolio
Manager of Norwest.
POSITIVE RETURN BOND PORTFOLIO - William D. Giese, CFA and Patricia Burns
(1998). Mr. Giese has been associated with Norwest or its affiliates since 1982.
Mr. Giese is a Senior Vice President of Peregrine, has been a portfolio manager
at Peregrine for more than ten years, and has over 20 years experience in fixed
income securities management. Ms. Burns has been associated with Norwest or its
affiliates since 1983. Ms. Burns is a Senior Vice President of Peregrine and has
been a portfolio manager at Peregrine for more than ten years.
STABLE INCOME PORTFOLIO - Karl P. Tourville. Mr. Tourville has been associated
with Norwest or its affiliates since 1986. Mr. Tourville has been a managing
partner of Galliard since 1995.
STRATEGIC VALUE BOND PORTFOLIO - Richard Merriam, CFA, John Huber (1998), and
David Yim (1998). Mr. Merriam has been associated with Norwest or its affiliates
since 1995. Mr. Merriam has been a managing partner of Galliard since 1995 and
is responsible for investment process and strategy. Mr. Merriam was previously
chief investment officer of Insight Investment Management. John Huber has been
associated with Norwest of its affiliates since 1991. Mr. Huber has been a
Portfolio Manager and Corporate Trading Specialist at Galliard since 1995 and
has been in investment management since 1991. David Yim has been associated with
Norwest or its affiliates since 1995. Mr. Yim has been a Portfolio Manager and
Credit Research Specialist at Galliard since 1995 and previously worked for
American Express Financial Advisors as a research analyst.
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MANAGED FIXED INCOME PORTFOLIO - Richard Merriam, CFA and Ajay Mirza (1998). For
a description of Mr. Merriam, see "Strategic Value Bond Portfolio." Mr. Mirza
has been associated with Norwest or its affiliates since 1995. Mr. Mirza has
been a Portfolio Manager and Mortgage Specialist with Galliard since 1995.
Before joining Galliard, Mr. Mirza was a research analyst at Insight Investment
Management and at Lehman Brothers.
SMALL CAP INDEX PORTFOLIO -- David D. Sylvester and Laurie R. White. For a
description of Mr. Sylvester and Ms. White, see "Money Market Portfolio/Prime
Money Market Portfolio."
INDEX PORTFOLIO - David D. Sylvester (1996) and Laurie R. White (1996). For a
description of Mr. Sylvester and Ms. White, see "Money Market Portfolio/Prime
Money Market Portfolio."
INCOME EQUITY PORTFOLIO - David L. Roberts, CFA and Gary J. Dunn. Mr. Roberts
has been associated with Norwest or its affiliates since 1972. Mr. Roberts is a
Managing Director, Equities of Norwest. Mr. Dunn has been associated with
Norwest or its affiliates since 1979. Mr. dunn is a Director of Institutional
Investments of Norwest.
LARGE COMPANY GROWTH PORTFOLIO - John S. Dale, CFA and Gary E. Nussbaum (1998).
Mr. Dale has been associated with Norwest or its affiliates since 1968. Mr. Dale
is a Senior Vice President of Peregrine. since 1968. Mr. Nussbaum has been
associated with Norwest since 1990. Mr. Nussbaum is a Senior Vice President of
Peregrine.
DISCIPLINED GROWTH PORTFOLIO/SMALL CAP VALUE PORTFOLIO - Stephen S. Smith, CFA.
Mr. Smith has been associated with Norwest since 1997. Mr. Smith has been a
Chief Investment Officer and principal of Smith Group since 1995. Mr. Smith
previously served as senior portfolio manger with NationsBank and in several
capacities with AIM Management Company's Summit Fund.
SMALL COMPANY STOCK PORTFOLIO - Kirk McCown, CFA. Mr. McCown has been associated
with Norwest or its affiliates since 1993. Mr. McCown is the founder, President
and a Director of Crestone. Mr. McCown has been associated with Norwest or its
affiliates since 1990.
SMALL COMPANY GROWTH PORTFOLIO - Robert B. Mersky, CFA and Paul E. von Kuster,
CFA(1998). Mr. Mersky has been associated with Norwest or its affiliates since
1968. Mr. Mersky is the President of Peregrine. Mr. von Kuster has been
associated with Norwest or its affiliates since 1972. Mr. von Kuster is a Senior
Vice President of Peregrine.
SMALL COMPANY VALUE PORTFOLIO - Tasso H. Coin, Jr. and Douglas G. Pugh. Mr. Coin
has been associated with Norwest or its affiliates since 1995. Mr. Coin has been
a Senior Vice President of Peregrine since 1995. From 1992 to 1995 he was a
research officer at Lord Asset Management. Mr. Pugh has been associated with
Norwest or its affiliates since 1997. Mr. Pugh is a Senior Vice President of
Peregrine. Before joining Peregrine, Mr. Pugh was a senior equity analyst and
portfolio manager for Advantus Capital Management and an analyst with Kemper
Corporation. Mr. Pugh has been associated with Norwest or its affiliates since
1997.
INTERNATIONAL PORTFOLIO - Michael Perelstein (1997). Mr. Perelstein has been
associated with Schroder or its affiliates since 1997. Mr. Perelstein has been a
Senior Vice President of Schroder since January 1997. Previously, Mr. Perelstein
was a Managing Director at MacKay Shields.
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ADVISORY FEES
For their services, Norwest and Schroder receive investment advisory fees from
the Portfolios at the following annual rates of the Portfolio's average daily
net assets.
PORTFOLIO INVESTMENT ADVISORY FEE
Prime Money Market Portfolio 0.40% of the first $300 million of assets;
0.36% for next $400 million;
0.32% of remaining assets
Money Market Portfolio 0.20% of the first $300 million of assets;
0.16% for next $400 million;
0.12% of remaining assets
Stable income Portfolio 0.30%
Managed Fixed Income Portfolio 0.35%
Positive Return Bond Portfolio 0.35%
Strategic Value Bond Fund 0.50%
Index Portfolio 0.15%
Income Equity Portfolio 0.50%
Large Company Growth Portfolio 0.65%
Disciplined Growth Portfolio 0.90%
Small Company Stock Portfolio 0.90%
Small Company Growth Portfolio 0.90%
Small Company Value Portfolio 0.90%
Small Cap Value Portfolio 0.95%
Small Cap Index Portfolio 0.25%
International Portfolio 0.45%
Norwest (and not the Portfolios) pays each Subadviser a fee for their investment
subadvisory services. This compensation does not increase the amount paid by the
Portfolios to Norwest for investment advisory services.
Each Adviser places orders for the purchase and sale of assets they manage with
brokers and dealers selected by and in the discretion of the respective Adviser.
Subject to seeking the most favorable price and execution available, a Portfolio
may conduct brokerage transactions through certain affiliates of its Adviser.
The Trust has adopted policies to ensure that these transactions are reasonable
and fair and that the commission charged are comparable to those charged by
non-affiliated qualified broker-dealers.A Portfolio may pay higher than the
lowest available commission rates when an Adviser believes it is reasonable to
do so in light of the value of the brokerage and research services provided by
the broker effecting the transaction.
CUSTODIAN
Norwest Bank serves as the custodian for each Portfolio and may appoint
subcustodians to custody foreign securities and other assets held in foreign
countries. For its custodial services, Norwest Bank receives a fee with respect
to each Portfolio at an annual rate of 0.02% of the first $100 million of the
Portfolio's average daily net assets, 0.015% of the next $100 million of the
Portfolio's average daily net assets and 0.01% of the Portfolio's remaining
average daily net assets. With respect to International Portfolio, Norwest
receives a fee at an annual rate of 0.07% of the Portfolio's average daily net
assets Norwest has appointed Morgan Stanley Trust Company as the sub-custodian
for International Portfolio, which employs foreign subcustodians to maintain
International Portfolio's foreign assets outside the United States
ADMINISTRATOR, INTERESTHOLDER RECORDKEEPER AND FUND ACCOUNTANT
FAdS supervises the overall management of the Portfolios, including the
Portfolios' receipt of services for which the Trust is obligated to pay, and
provides the Trust and Portfolios' with general office facilities pursuant to an
Administration Agreement with the Trust. As of June 30, 1998, FAdS and its
affiliates provided management and administrative services to registered
investment companies and collective investment funds with assets of
approximately $38 billion. For its services FAdS receives a fee with respect to
each Portfolio (other than International Portfolio) at an annual rate of 0.05%
of the Portfolio's average daily net assets. With respect to International
Portfolio, FAdS receives a fee at an annual rate of 0.15% of the Portfolio's
average daily net assets.
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Forum Accounting Services, LLC ("FAcSis the Trust's interestholder recordkeeper
and fund accountant. FAcS is an affiliate of FAdS. For its services, FAcS
receives a base fee of $48,000 per year for each Portfolio plus additional
amounts depending on the assets of the Portfolio, the number of interestholders
of the Portfolio, the number and type of securities held by the Portfolio and
the portfolio turnover rate of the Portfolio.
FAdS and FAcS are located at Two Portland Square, Portland, Maine 04101.
EXPENSES
Each Portfolio is obligated to pay for all of its expenses. Each Portfolio's
expenses comprise Trust expenses attributable to the Portfolio, which are
allocated to the Portfolio, and expenses not attributable to the Portfolio,
which are allocated among the Portfolios in proportion to their average net
assets or as otherwise determined by the Board. These expenses include:
governmental fees; interest charges; taxes; brokerage fees and commissions;
insurance premiums; investment advisory, custodial, administrative and transfer
agency and fund accounting fees, as described above; compensation of certain of
the Trust's Trustees; costs of membership trade associations; fees and expenses
of independent auditors and legal counsel to the Trust; and expenses of
calculating the net asset value of and the net income of the Portfolios.
DESCRIPTION OF BENEFICIAL INTERESTS
The Trust was organized as a business trust under the laws of the State of
Delaware. Under the Trust Instrument, the Trustees are authorized to issue
Interests in separate series of the Trust. The Trust currently has 21 series;
the Trust reserves the right to create and issue additional series.
Each investor in a Portfolio is entitled to participate equally in the
Portfolio's earnings and assets and to a vote in proportion to the amount of its
investment in the Portfolio. Investments in a Portfolio may not be transferred,
but an investor may withdraw all or any portion of its investment at any time at
net asset value ("NAV"). In determining the outcome of interestholder votes, the
Trust normally counts votes on a Interest by Interest basis. This means that
shareholders of Portfolios with comparatively high net assets values will have a
comparatively smaller impact on the outcome of votes by all of the Portfolios
than do shareholders of Portfolios with comparatively low net asset values. An
entity which holds in excess of 25% of a Portfolio's Interests is considered a
"control person" of the Portfolio. Table 1 of Appendix A identifies the control
persons of each Portfolio as of August 28, 1998.
Investments in a Portfolio have no preemptive or conversion rights and are fully
paid and non-assessable, except as set forth below. The Trust is not required
and has no current intention to hold annual meetings of investors, but the Trust
will hold special meetings of investors when in the Trustees' judgment it is
necessary or desirable to submit matters to an investor vote. Generally,
interests will be voted in the aggregate without reference to a particular
Portfolio, except if the matter affects only one Portfolio or Portfolio voting
is required, in which case interests will be voted separately by Portfolio.
Investors have the right to remove one or more Trustees without a meeting by a
declaration in writing by a specified number of investors. Upon liquidation of a
Portfolio, investors will be entitled to share pro rata in the Portfolio's net
assets available for distribution to investors.
A Portfolio's net income consists of (1) all dividends, accrued interest
(including earned discount, both original issue and market discount), and other
income, including any net realized gains on the Portfolio's assets, less (2) all
actual and accrued expenses of the Portfolio, amortization of any premium, and
net realized losses on the Portfolio's assets, all as determined in accordance
with generally accepted accounting principles. All of a Portfolio's net income
is allocated pro rata among the investors in the Portfolio. A Portfolio's net
income generally is not distributed to the investors in the Portfolio, except as
determined by the Trustees from time to time, but instead is included in the NAV
of the investors' respective Interests in the Portfolio.
Under the Portfolios' method of operations, they are not be subject to any
income tax. However, each investor in a Portfolio will be taxable on its
proportionate share (as determined in accordance with the Trust's Trust
Instrument and the Internal Revenue Code of 1986, as amended (the "Code"), and
the regulations promulgated thereunder) of the Portfolio's ordinary income and
capital gain. It is intended that each Portfolio's assets and income will be
managed in such a way that an investor in the Portfolio will be able to satisfy
the requirements of Subchapter M of the Code, assuming that the investor
invested all of its assets in the Portfolio.
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Investor inquiries may be directed to Forum Financial Services, Inc. ("FFSI").
PURCHASE OF INTERESTS
Interests in the Portfolios are issued solely in private placement transactions
that do not involve any "public offering" within the meaning of Section 4(2) of
the 1933 Act. All investments in the Portfolios are made without a sales load,
at the NAV next determined after an order is received by the Portfolio.
The NAV of each non-money market Portfolio is determined as of 4:00 P.M.,
Eastern Time ("Valuation Time"), on all weekdays, except New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving and Christmas
("Business Day"). A Money Market Portfolio determines its net asset value as of
3:00P.M., Eastern Time, on a Portfolio Business Day. Net asset value per
Interest is calculated by dividing the aggregate value of the Portfolio's assets
less all liabilities by the number of Interests outstanding. All Portfolios,
except the Money Market Portfolios, value portfolio securities at current market
value of market quotations are readily available. If market quotations are not
readily available, the Portfolios value those securities at fair value as
determined by or pursuant to procedures adopted by the Board.
In order to maintain net asset value per share at $1.00, the Money Market
Portfolios value their portfolio securities at amortized cost. Amortized cost
valuation involves valuing an instruments at its cost and then assuming a
constant amortization to maturity of any discount or premium. If the market
value of a Money Market Portfolio deviates more than 1/2 of 1% from the value
determined on the basis of amortized cost, the Board will consider whether to
take any action to prevent any material affect on Interest holders.
Each investor in a Portfolio may add to or reduce its investment in the
Portfolio. At the Valuation Time on each Business Day, the value of each
investor's Interest in a Portfolio will be determined by multiplying the
Portfolio's NAV by the percentage, effective for that day, that represents that
investor's share of the aggregate Interests in the Portfolio. Any additions to
or withdrawals of those interests which are to be effected on that day will then
be effected. Each investor's share of the aggregate Interests in the Portfolio
then will be recomputed using the percentage equal to the fraction (1) the
numerator of which is the value of the investor's investment in the Portfolio as
of the Valuation Time on that day plus or minus, as the case may be, the amount
of any additions to or withdrawals from such investment effected on that day and
(2) the denominator of which is the Portfolio's aggregate NAV as of the
Valuation Time on that day plus or minus, as the case may be, the amount of the
net additions to or withdrawals from the aggregate investments in the Portfolio
by all investors. The percentages so determined then will be applied to
determine the value of each investor's respective interest in the Portfolio as
of the Valuation Time on the following Business Day.
Trading in securities on European, Far Eastern and other international
securities exchanges and over-the-counter markets is normally completed well
before the close of business of each Business Day. Trading in foreign
securities, however, may not take place on all Business Days or may take place
on days other than Business Days.. If events occur that affect the securities'
value after the close of the markets on which they trade, the Portfolios may
make adjustments to the value of the securities for purposes of determining net
asset value.
For purposes of determining NAV, the Portfolios convert all assets and
liabilities denominated in foreign currencies into U.S. dollars at the mean of
the bid and asked prices of such currencies against the U.S. dollar last quoted
by a major bank prior to the time of conversion.
There is no minimum initial or subsequent investment amount in a Portfolio.
However, since each Portfolio intends to be as fully invested at all times as is
reasonably practicable in order to enhance the return on its assets, investments
must be made in federal funds (i.e., monies credited to the account of the
Trust's custodian by a Federal Reserve Bank).
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The exclusive placement agent for the Trust is FFSI. Please contact FFSI at Two
Portland Square, Portland, Maine 04101, (207) 879-1900, for a complete
subscription package. The Trust reserves the right to refuse any subscription
for any reason.. Forum receives no compensation for serving as the exclusive
placement agent for the Trust.
REDEMPTION OR REPURCHASE OF INTERESTS
An investor in a Portfolio may withdraw all or any portion of its investment in
the Portfolio at the NAV next determined after a withdrawal request in proper
form is furnished by the investor to the Trust. The proceeds of a withdrawal
will be paid by the Portfolio in federal funds normally on the business day
after the withdrawal is effected, but in any event within seven days.
Investments in a Portfolio may not be transferred. The right of redemption may
not be suspended nor the payment dates postponed for more than seven days except
when the New York Stock Exchange is closed (or when trading thereon is
restricted) for any reason other than its customary weekend or holiday closings
or under any emergency or other circumstances as determined by the SEC.
Redemptions from a Portfolio may be made wholly or partially in portfolio
securities. The Trust has filed an election with the SEC pursuant to which each
Portfolio will only consider effecting a redemption in portfolio securities if
the particular interestholder is redeeming more than $250,000 or 1% of the
Portfolio's NAV, whichever is less, during any 90-day period.
PENDING LEGAL PROCEEDINGS
None
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APPENDIX A
<TABLE>
CONTROL PERSONS OF THE PORTFOLIOS
All entities referenced in the Table are series of Norwest Advantage Funds, an
open end management company. Norwest is the Adviser for the Norwest Advantage
Funds and is located at Norwest Center, Sixth Street and Marquete, Minneapolis,
Minnesota 55479.
<S> <C> <C>
PORTFOLIO CONTROL PERSON % OF PORTFOLIOS INTEREST
Disciplined Growth Portfolio Diversified Equity Fund 58.92%
Income Equity Portfolio Income Equity Fund 69.87%
Index Portfolio Index Fund 57.97%
International Portfolio International Equity Fund 29.88%
Growth Equity Fund 32.01%
Diversified Equity Fund 26.51%
Large Company Growth Portfolio Large Company Growth Fund 24.74%
Growth Equity Fund 33.73%
Diversified Equity Fund 28.79%
Managed Fixed Income Portfolio Diversified Bond Fund 20.74%
Moderate Balanced Fund 28.15%
Growth Balanced Fund 32.58%
Money Market Portfolio Cash Investment Fund 99.10%
Positive Return Bond Portfolio Moderate Balanced Fund 28.12%
Growth Balanced Fund 32.70%
Prime Money Market Portfolio Cash Investment Fund 76.92%
Small Company Stock Portfolio Small Company Stock Fund 51.47%
Growth Equity Fund 26.33%
Small Cap Value Portfolio Growth Equity Fund 50.70%
Diversified Equity Fund 25.82%
Stable Income Portfolio Moderate Balanced Portfolio 24.76%
Stable Value Fund 62.08%
Strategic Value Bond Portfolio Total Return Bond Portfolio 47.37%
Small Company Growth Portfolio Small Company Growth Fund 82.56%
Small Cap Value Portfolio Growth Equity Fund 50.07%
Diversified Equity Fund 25.82%
Small Company Index Portfolio Growth Equity Fund 55.42%
Diversified Equity Fund 28.26%
</TABLE>
A-1
<PAGE>
PART B
CORE TRUST (DELAWARE)
PRIVATE PLACEMENT MEMORANDUM
STATEMENT OF ADDITIONAL INFORMATION
October 1, 1998
This Part B to the Private Placement Memorandum (the "Statement of Additional
Information" or "SAI") relates to beneficial interests in the PRIME MONEY MARKET
PORTFOLIO, MONEY MARKET PORTFOLIO, POSITIVE RETURN BOND PORTFOLIO, STABLE INCOME
PORTFOLIO, MANAGED FIXED INCOME PORTFOLIO, INDEX PORTFOLIO, INCOME EQUITY
PORTFOLIO, LARGE COMPANY GROWTH PORTFOLIO, SMALL COMPANY STOCK PORTFOLIO, SMALL
COMPANY GROWTH PORTFOLIO, SMALL COMPANY VALUE PORTFOLIO, INTERNATIONAL
PORTFOLIO, STRATEGIC VALUE BOND PORTFOLIO, DISCIPLINED GROWTH PORTFOLIO, SMALL
CAP VALUE PORTFOLIO and SMALL CAP INDEX PORTFOLIO (each a "Portfolio" and
collectively, the "Portfolios") of Core Trust (Delaware) (the "Trust"), a
registered, open-end management investment company. This SAI asupplements Part A
of the Private Placement Memorandum ("Part A") dated October 1, 1998, relating
to the Portfolios.
This SAI does not constitute an offer to sell, or the solicitation of an offer
to buy, beneficial interests in the Portfolios. An investor may subscribe for a
beneficial interest in a Portfolio by contacting Forum Financial Services, Inc.
("Forum"), the Trust's Placement Agent (the "Placement Agent"), at Two Portland
Square, Portland, Maine 04101, (207) 879-1900, for a complete subscription
package, including Part A and a subscription agreement. The Trust and the
Placement Agent reserve the right to refuses to accept any subscription for any
reason.
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TABLE OF CONTENTS
Page
Introduction............................................2
Investment Policies.....................................3
Additional Investment Policies..........................29
Management of the Trust.................................33
Control Persons and Principal Holders of Securities.....34
Investment Advisory and Other Services..................35
Brokerage Allocation and Other Practices................38
Capital Stock and Other Securities......................40
Purchase, Redemption and Pricing of Securities..........40
Tax Status..............................................41
Underwriters............................................42
Calculation of Performance Data.........................42
Financial Statements....................................43
Appendix A: Descriptions of Securities Ratings.........A-1
Appendix B: Miscellaneous Tables.......................B-1
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THE SECURITIES OF THE TRUST DESCRIBED IN THIS PRIVATE PLACEMENT MEMORANDUM HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ARE
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER (1) THE TERMS OF THE TRUST INSTRUMENT OF THE
TRUST AND (2) THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
<PAGE>
INTRODUCTION
GLOSSARY
As used in Part B, the following terms shall have the meanings listed:
"Advisers" shall mean, collectively, Norwest, Schroder, Galliard, Crestone,
Peregrine and Smith, as applicable, or, Norwest and any Subadviser.
"Board" shall mean the Board of Trustees of the Trust.
"CFTC" shall mean the U.S. Commodity Futures Trading Commission.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Crestone" shall mean Crestone Capital Management, Inc.
"Custodian" shall mean Norwest Bank Minnesota, N.A. acting in its capacity as
custodian of a Portfolio.
"FAcS" shall mean Forum Accounting Services, LLC, the Trust's interestholder
recordkeeper and Portfolio accountant.
"FAdS" shall mean Forum Administrative Services, LLC, the Portfolio's
administrator.
"Fitch" shall mean Fitch IBCA, Inc.
"Fixed Income Portfolios" shall mean Managed Fixed Income Portfolio, Positive
Return Bond Portfolio, Stable Income Portfolio, and Strategic Value Bond
Portfolio.
"FFSI" shall mean Forum Financial Services, Inc., a registered broker-dealer and
the Trust's Placement Agent.
"FAcS" shall mean Forum Accounting Services, LLC, the Trust's Portfolio
accountant.
"Galliard" shall mean Galliard Capital Management, Inc.
Index Futures" shall mean futures contracts that relate to broadly-based stock
indices.
"Money Market Portfolios" shall mean the Prime Money Market portfolio and Money
Market Portfolio.
"Moody's" shall mean Moody's Investors Service, Inc.
"Norwest" shall mean Norwest Investment Management, Inc., a subsidiary of
Norwest Bank Minnesota, N.A.
"Norwest Bank" shall mean "Norwest Bank Minnesota, N.A.," a subsidiary of
Norwest Corporation and each Portfolio's custodian.
"NRSRO" shall mean a nationally recognized statistical rating organization.
"Peregrine" shall mean Peregrine Capital Management, Inc.
"Portfolio" shall mean Prime Money Market Portfolio, Money Market Portfolio,
Positive Return Bond Portfolio, Stable Income Portfolio, Managed Fixed Income
Portfolio, , Index Portfolio, Income Equity Portfolio, Large Company Growth
Portfolio, Small Company Stock Portfolio, Small Company Growth Portfolio, Small
Company
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Value Portfolio, Strategic Value Bond Portfolio, Disciplined Growth
Portfolio, Small Cap Value Portfolio, Small Cap Index Portfolio and
International Portfolio, 16 separate portfolios of the Trust.
"Schroder" shall mean Schroder Capital Management Inc.
"Smith " shall mean Smith Asset Management Group, LP.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"S&P" shall mean Standard & Poor's, A Division of the McGraw Hill Companies.
"Subadvisers" shall mean, collectively, Smith, Galliard, Crestone and Peregrine.
"Trust" shall mean Core Trust (Delaware), an open-end, management investment
company registered under the 1940 Act.
"U.S. Government Securities" shall mean obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1940 Act" shall mean the Investment Company Act of 1940, as amended.
INVESTMENT POLICIES
Part A contains information about the investment objectives, policies and
restrictions of each Portfolio. The following discussion is intended to
supplement the disclosure in Part A concerning the Portfolios' investments,
investment techniques and strategies and the risks associated therewith. This
Part B should be read only in conjunction with Part A.
SECURITY RATINGS INFORMATION
Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation
("S&P") and other nationally recognized statistical rating organizations
("NRSROs") are private services that provide ratings of the credit quality of
debt obligations, including convertible securities. A description of the range
of ratings assigned to bonds and other securities by several NRSROs is included
in Appendix A to this Statement of Additional Information. The Portfolios may
use these ratings to determine whether to purchase, sell or hold a security.
However, ratings are general and are not absolute standards of quality.
Consequently, securities with the same maturity, interest rate and rating may
have different market prices. Credit ratings attempt to evaluate the safety of
principal and interest payments and do not evaluate the risks of fluctuations in
market value. Also, rating agencies may fail to make timely changes in credit
ratings. An issuer's current financial condition may be better or worse than a
rating indicates.
MONEY MARKET PORTFOLIO MATTERS
The Money Market Portfolios invest only in high quality, short-term money market
instruments determined by the Adviser, under procedures adopted by the Board, to
be eligible for purchase and to present minimal credit risks. Each Portfolio
will invest only in U.S. dollar-denominated instruments that have a remaining
maturity of 397 days or less (as calculated pursuant to Rule 2a-7 under the 1940
Act) and will maintain a dollar-weighted average portfolio maturity of 90 days
or less. Securities with ultimate maturities of greater than 397 days may be
purchased in accordance with Rule 2a-7. Under that Rule, only those long-term
instruments that have demand features which comply with certain requirements and
certain variable rate U.S. Government Securities, as described below, may be
purchased. The securities in which the Portfolios may invest may have fixed,
variable or floating rates of interest.
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<PAGE>
Except to the limited extent permitted by Rule 2a-7 and except for U.S.
Government Securities, no Portfolio will invest more than 5% of its total assets
in the securities of any one issuer. Also, a Portfolio may not purchase a
security if the value of all securities held by the Portfolio and issued or
guaranteed by the same issuer (including letters of credit in support of a
security) would exceed 10% of the issuers voting securities. In addition, to
ensure adequate liquidity, no Portfolio may invest more than 10% of its net
assets in illiquid securities, including repurchase agreements maturing in more
than seven days.
As used herein, high quality instruments include those that: (1) are rated (or,
if unrated, are issued by an issuer with comparable outstanding short-term debt
that is rated) in one of the two highest rating categories by two NRSROs or, if
only one NRSRO has issued a rating, by that NRSRO; or (2) are otherwise unrated
and determined by the Adviser, pursuant to guidelines adopted by the Board, to
be of comparable quality. Each Portfolio will invest at least 95% of its total
assets in securities in the highest rating category as determined pursuant to
Rule 2a-7.
The market value of the interest-bearing debt securities held by the Portfolios,
including municipal securities, will be affected by changes in interest rates.
There is normally an inverse relationship between the market value of securities
sensitive to prevailing interest rates and actual changes in interest rates;
(i.e., a decline in interest rates produces an increase in market value, while
an increase in rates produces a decrease in market value.) Moreover, the longer
the remaining maturity of a security, the greater will be the effect of interest
rate changes on the market value of that security. In addition, changes in the
ability of an issuer to make payments of interest and principal and in the
market's perception of an issuer's creditworthiness will also affect the market
value of the debt securities of that issuer. Obligations of issuers of debt
securities, including municipal securities, are also subject to the provisions
of bankruptcy, insolvency and other laws affecting the rights and remedies of
creditors. The possibility exists, therefore, that, as a result of bankruptcy,
litigation or other conditions, the ability of any issuer to pay, when due, the
principal of and interest on its debt securities may be materially affected.
Although each Portfolio only invests in high quality money market instruments,
an investment in the Portfolio is subject to risk even if all securities in the
Portfolio's portfolio are paid in full at maturity. All money market
instruments, including U.S. Government Securities, can change in value as a
result of changes interest rates and/or the issuer's actual or perceived
creditworthiness.
Each Money Market Portfolio may not invest in a security that has received, or
is deemed comparable in quality to a security that has received, the second
highest rating by the requisite number of NRSROs (a "second tier security") if
immediately after the acquisition thereof the Portfolio would have invested more
than (A) the greater of one percent of its total assets or one million dollars
in securities issued by that issuer which are second tier securities, or (B)
five percent of its total assets in second tier securities.
Immediately after the acquisition of any put, no more than five percent of a
Money Market Portfolio's total assets may be invested in securities issued by or
subject to conditional puts from the same institution and no more than ten
percent of a Money Market Portfolio's total assets may be invested in securities
issued by or subject to unconditional puts (including guarantees) from the same
institution.
COMMON STOCK AND PREFERRED STOCK
EQUITY PORTFOLIOS. Common stockholders are the owners of the company issuing the
stock and, accordingly, vote on various corporate governance matters. They are
not creditors of the company, but rather, upon liquidation of the company are
entitled to their pro rata share of the company's assets after creditors
(including fixed income security holders) and, if applicable, preferred
stockholders are paid. Preferred stock is a class of stock having a preference
over common stock as to dividends and, generally, as to the recovery of
investment. A preferred stockholder is a shareholder in the company and not a
creditor of the company as is a holder of the company's fixed income securities.
Dividends paid to common and preferred stockholders are distributions of the
earnings of the company and not interest payments, which are expenses of the
company. Equity securities owned by a Portfolio may be traded on a securities
exchange or in the over-the-counter market and may not be traded every day or in
the volume typical of securities traded on a major national securities exchange.
As a result, disposition by a Portfolio of a portfolio security to meet
4
<PAGE>
redemptions by shareholders or otherwise may require the Portfolio to sell these
securities at a discount from market prices, to sell during periods when
disposition is not desirable, or to make many small sales over an extended
period of time. The market value of all securities, including equity securities,
is based upon the market's perception of value and not necessarily the book
value of an issuer or other objective measure of a company's worth.
EQUITY-LINKED SECURITIES
EQUITY PORTFOLIOS. Equity-linked securities are securities that are convertible
into or based upon the value of, equity securities upon certain terms and
conditions. The following are three examples of equity-linked securities.
Preferred Equity Redemption Cumulative Stock ("PERCS") technically are preferred
stock with some characteristics of common stock. PERCS are mandatory convertible
into common stock after a period of time, usually three years, during which the
investors' capital gains are capped, usually at 30%. Commonly, PERCS may be
redeemed by the issuer either at any time or when the issuer's common stock is
trading at a specified price level or better. The redemption price starts at the
beginning of the PERCS' duration period at a price that is above the cap by the
amount of the extra dividends the PERCS holder is entitled to receive relative
to the common stock over the duration of the PERCS and declines to the cap price
shortly before maturity of the PERCS. In exchange for having the cap on capital
gains and giving the issuer the option to redeem the PERCS at any time or at the
specified common stock price level, a Fund may be compensated with a
substantially higher dividend yield than that on the underlying common stock.
Funds that seek current income find PERCS attractive because a PERCS provides a
higher dividend income than that paid with respect to a company's common stock.
Equity-Linked Securities ("ELKS") differ from ordinary debt securities, in that
the principal amount received at maturity is not fixed but is based on the price
of the issuer's common stock. ELKS are debt securities commonly issued in fully
registered form for a term of three years under an indenture trust. At maturity,
the holder of ELKS will be entitled to receive a principal amount equal to the
lesser of a cap amount, commonly in the range of 30% to 55% greater than the
current price of the issuer's common stock, or the average closing price per
share of the issuer's common stock, subject to adjustment as a result of certain
dilution events, for the 10 trading days immediately prior to maturity. Unlike
PERCS, ELKS are commonly not subject to redemption prior to maturity. ELKS
usually bear interest during the three-year term at a substantially higher rate
than the dividend yield on the underlying common stock. In exchange for having
the cap on the return that might have been received as capital gains on the
underlying common stock, the Investment Fund may be compensated with the higher
yield, contingent on how well the underlying common stock does. Funds that seek
current income find ELKS attractive because ELKS provide a higher dividend
income than that paid with respect to a company's common stock.
Liquid Yield Option Notes ("LYONs") differ from ordinary debt securities in that
the amount received prior to maturity is not fixed but is based on the price of
the issuer's common stock. LYONs are zero-coupon notes that sell at a large
discount from face value. For an investment in LYONs, a Fund will not receive
any interest payments until the notes mature, typically in 15 or 20 years, when
the notes are redeemed at face, or par, value. The yield on LYONs, typically, is
lower-than-market rate for debt securities of the same maturity, due in part to
the fact that the LYONs are convertible into common stock of the issuer at any
time at the option of the holder of the LYON. Commonly, LYONs are redeemable by
the issuer at any time after an initial period or if the issuer's common stock
is trading at a specified price level or better, or, at the option of the
holder, upon certain fixed dates. The redemption price typically is the purchase
price of the LYONs plus accrued original issue discount to the date of
redemption, which amounts to the lower-than-market yield. A Fund will receive
only the lower-than-market yield unless the underlying common stock increases in
value at a substantial rate. LYONs are attractive to investors when it appears
that they will increase in value due to the rise in value of the underlying
common stock.
WARRANTS
EQUITY PORTFOLIOS. A warrant is an option to purchase an equity security at a
specified price (usually representing a premium over the applicable market value
of the underlying equity security at the time of the warrant's issuance)
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and usually during a specified period of time. The price of warrants does not
necessarily move parallel to the prices of the underlying securities. Warrants
have no voting rights, receive no dividends and have no rights with respect to
the assets of the issuer. Unlike convertible securities and preferred stocks,
warrants do not pay a fixed dividend. Investments in warrants involve certain
risks, including the possible lack of a liquid market for the resale of the
warrants, potential price fluctuations as a result of speculation or other
factors and failure of the price of the underlying security to reach a level at
which the warrant can be prudently exercised. To the extent that the market
value of the security that may be purchased upon exercise of the warrant rises
above the exercise price, the value of the warrant will tend to rise. To the
extent that the exercise price equals or exceeds the market value of such
security, the warrants will have little or no market value. If a warrant is not
exercised within the specified time period, it will become worthless and the
Portfolio will lose the purchase price paid for the warrant and the right to
purchase the underlying security.
CONVERTIBLE SECURITIES
Strategic Value Bond Portfolio and Equity Portfolios. Convertible securities,
which include convertible debt, convertible preferred stock and other securities
exchangeable under certain circumstances for shares of common stock, are fixed
income securities or preferred stock which generally may be converted at a
stated price within a specific amount of time into a specified number of shares
of common stock. A convertible security entitles the holder to receive interest
paid or accrued on debt or the dividend paid on preferred stock until the
convertible security matures or is redeemed, converted or exchanged. Before
conversion, convertible securities have characteristics similar to
nonconvertible debt securities in that they ordinarily provide a stream of
income with generally higher yields than those of common stocks of the same or
similar issuers. These securities are usually senior to common stock in a
company's capital structure, but usually are subordinated to non-convertible
debt securities. In general, the value of a convertible security is the higher
of its investment value (its value as a fixed income security) and its
conversion value (the value of the underlying shares of common stock if the
security is converted). As a fixed income security, the value of a convertible
security generally increases when interest rates decline and generally decreases
when interest rates rise. The value of a convertible security is, however, also
influenced by the value of the underlying common stock.
Although no securities investment is without some risk, investment in
convertible securities generally entails less risk than in the issuer's common
stock. However, the extent to which such risk is reduced depends in large
measure upon the degree to which the convertible security sells above its value
as a fixed income security. Convertible securities have unique investment
characteristics in that they generally: (1) have higher yields than common
stocks, but lower yields than comparable non-convertible securities, (2) are
less subject to fluctuation in value than the underlying stocks since they have
fixed income characteristics and (3) provide the potential for capital
appreciation if the market price of the underlying common stock increases.
The value of a convertible security is a function of its "investment value"
(determined by a comparison of its yield with the yields of other securities of
comparable maturity and quality that do not have a conversion privilege) and its
"conversion value" (the security's worth, at market value, if converted into the
underlying common stock). The investment value of a convertible security is
influenced by changes in interest rates, with investment value declining as
interest rates increase and increasing as interest rates decline. The credit
standing of the issuer and other factors also may have an effect on the
convertible security's investment value. The conversion value of a convertible
security is determined by the market price of the underlying common stock. If
the conversion value is low relative to the investment value, the price of the
convertible security is governed principally by its investment value and
generally the conversion value decreases as the convertible security approaches
maturity. To the extent the market price of the underlying common stock
approaches or exceeds the conversion price, the price of the convertible
security will be increasingly influenced by its conversion value. In addition, a
convertible security generally will sell at a premium over its conversion value
determined by the extent to which investors place value on the right to acquire
the underlying common stock while holding a fixed income security.
A convertible security may be subject to redemption at the option of the issuer
at a price established in the convertible security's governing instrument. If a
convertible security held by the Portfolio is called for redemption, the
Portfolio will be required to permit the issuer to redeem the security, convert
it into the underlying common stock or sell it to a third party.
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FIXED INCOME INVESTMENTS
ALL PORTFOLIOS. Yields on fixed income securities, including municipal
securities, are dependent on a variety of factors, including the general
conditions of the money market and other fixed income securities markets, the
size of a particular offering, the maturity of the obligation and the rating of
the issue. An investment in a Portfolio that invests in fixed income securities
is subject to risk even if all fixed income securities in the Portfolio's
portfolio are paid in full at maturity. All fixed income securities, including
U.S. Government Securities, can change in value when there is a change in
interest rates or the issuer's actual or perceived creditworthiness or ability
to meet its obligations.
There is normally an inverse relationship between the market value of securities
sensitive to prevailing interest rates and actual changes in interest rates. In
other words, an increase in interest rates produces a decrease in market value.
The longer the remaining maturity (and duration) of a security, the greater will
be the effect of interest rate changes on the market value of that security.
Changes in the ability of an issuer to make payments of interest and principal
and in the markets' perception of an issuer's creditworthiness will also affect
the market value of the debt securities of that issuer. Obligations of issuers
of fixed income securities (including 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 Reform Act of 1978. In
addition, the obligations of municipal issuers may become subject to laws
enacted in the future by Congress, state legislatures, or referenda extending
the time for payment of principal and/or interest, or imposing other constraints
upon enforcement of such obligations or upon the ability of municipalities to
levy taxes. Changes in the ability of an issuer to make payments of interest and
principal and in the market's perception of an issuer's creditworthiness will
also affect the market value of the debt securities of that issuer. The
possibility exists, therefore, that, the ability of any issuer to pay, when due,
the principal of and interest on its debt securities may become impaired.
A Portfolio may invest in fixed income securities include those issued by the
governments of foreign countries or by those countries' political subdivisions,
agencies or instrumentalities as well as by supranational organizations such as
the International Bank for Reconstruction and Development and the Inter-American
Development Bank if the Adviser believes that the securities do not present
risks inconsistent with a Portfolios' investment objective.
The corporate debt securities in which the Portfolios may invest include
corporate bonds and notes and short-term investments such as commercial paper
and variable rate demand notes. Commercial paper (short-term promissory notes)
is issued by companies to finance their or their affiliate's current obligations
and is frequently unsecured. Variable and floating rate demand notes are
unsecured obligations redeemable upon not more than 30 days' notice. These
obligations include master demand notes that permit investment of fluctuating
amounts at varying rates of interest pursuant to a direct arrangement with the
issuer of the instrument. The issuer of these obligations often has the right,
after a given period, to prepay the outstanding principal amount of the
obligations upon a specified number of days' notice. These obligations generally
are not traded, nor generally is there an established secondary market for these
obligations. To the extent a demand note does not have a 7 day or shorter demand
feature and there is no readily available market for the obligation, it is
treated as an illiquid security.
U.S. GOVERNMENT SECURITIES
ALL PORTFOLIOS. The Portfolios may invest in U.S. Government Securities that are
U.S. Treasury Securities and obligations issued or guaranteed by U.S. Government
agencies and instrumentalities and backed by the full faith and credit of the
U.S. Government, such as those guaranteed by the Small Business Administration
or issued by the Government National Mortgage Association. In addition,
Portfolios may invest in U.S. Government Securities that are supported primarily
or solely by the creditworthiness of the issuer, such as securities of the
Federal National Mortgage Association, the Federal Home Loan Mortgage
Corporation and the Tennessee Valley Authority. There is no guarantee that the
U.S. Government will support securities not backed by its full faith and credit.
Accordingly, although these securities have historically involved little risk of
loss of principal if held to maturity, they may involve more risk than
securities backed by the U.S. Government's full faith and credit. A Portfolio
will invest in the obligations of such agencies or instrumentalities only when
Norwest believes that the credit risk with respect thereto is consistent with
the Portfolio's investment policies.
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BANK OBLIGATIONS
All Portfolios. A Portfolio may invest in obligations of financial institutions,
including negotiable certificates of deposit, bankers' acceptances and time
deposits of U.S. banks (including savings banks and savings associations),
foreign branches of U.S. banks, foreign banks and their non-U.S. branches
(Eurodollars), U.S. branches and agencies of foreign banks (Yankee dollars), and
wholly-owned banking-related subsidiaries of foreign banks.
A certificate of deposit is an interest-bearing negotiable certificate issued by
a bank against funds deposited in the bank. A bankers' acceptance is a
short-term draft drawn on a commercial bank by a borrower, usually in connection
with an international commercial transaction. Although the borrower is liable
for payment of the draft, the bank unconditionally guarantees to pay the draft
at its face value on the maturity date. Time deposits are non-negotiable
deposits with a banking institution that earn a specified interest rate over a
given period. Certificates of deposit and fixed time deposits, which are payable
at the stated maturity date and bear a fixed rate of interest, generally may be
withdrawn on demand by the Portfolio but may be subject to early withdrawal
penalties which vary depending upon market conditions and the remaining maturity
of the obligation and could reduce the Portfolio's yield. Although fixed-time
deposits do not in all cases have a secondary market, there are no contractual
restrictions on the Portfolio's right to transfer a beneficial interest in the
deposits to third parties. Deposits subject to early withdrawal penalties or
that mature in more than seven days are treated as illiquid securities if there
is no readily available market for the securities. A Portfolio's investments in
the obligations of foreign banks and their branches, agencies or subsidiaries
may be obligations of the parent, of the issuing branch, agency or subsidiary,
or both. Investments in foreign bank obligations are limited to banks and
branches located in countries which the Advisers believe do not present undue
risk.
The Portfolios may invest in Eurodollar certificates of deposit, which are U.S.
dollar denominated certificates of deposit issued by offices of foreign and
domestic banks located outside the United States; Yankee certificates of
deposit, which are certificates of deposit issued by a U.S. branch of a foreign
bank denominated in U.S. dollars and held in the United States; Eurodollar time
deposits ("ETDs"), which are U.S. dollar denominated deposits in a foreign
branch of a U.S. bank or a foreign bank; and Canadian time deposits, which are
essentially the same as ETDs, except that they are issued by Canadian offices of
major Canadian banks.
Investments in instruments of foreign banks, branches or subsidiaries may
involve certain risks, including future political and economic developments, the
possible imposition of foreign withholding taxes on interest income payable on
such securities, the possible seizure or nationalization of foreign deposits,
differences from domestic banks in applicable accounting, auditing and financial
reporting standards, and the possible establishment of exchange controls or
other foreign governmental laws or restrictions applicable to the payment of
certificates of deposit or time deposits which might affect adversely the
payment of principal and interest on such securities held by the Portfolio.
SHORT TERM DEBT SECURITIES/COMMERCIAL PAPER
ALL PORTFOLIOS EXCEPT THE MONEY MARKET PORTFOLIOS. Except for the Money Market
Portfolios, each Portfolio may assume a temporary defensive position and may
invest without limit in commercial paper that is rated in one of the two highest
rating categories by an NRSRO or, if not rated, determined by the Adviser to be
of comparable quality. Certain additional Portfolios may invest in commercial
paper as an investment and not as a temporary defensive position. Except as
noted below with respect to variable master demand notes, issues of commercial
paper normally have maturities of less than nine months and fixed rates of
return.
Variable amount master demand notes 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. Because master demand
notes are direct lending arrangements between a Portfolio and the issuer, they
are not normally traded. Although there is no secondary market in the notes, the
Portfolio may demand payment of principal and accrued interest at any time.
Variable amount master demand notes must satisfy the same criteria as set forth
above for commercial paper.
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GUARANTEED INVESTMENT CONTRACTS
The FIXED INCOME PORTFOLIOS may invest in guaranteed investment contracts
("GICs") issued by insurance companies. Pursuant to such contracts, a Portfolio
makes cash contributions to a deposit Portfolio of the insurance company's
general account. The insurance company then credits to the deposit Portfolio on
a monthly basis guaranteed interest at a rate based on an index. The GICs
provide that this guaranteed interest will not be less than a certain minimum
rate. The insurance company may assess periodic charges against a GIC for
expense and service costs allocable to it, and these charges will be deducted
from the value of the deposit Portfolio. A Portfolio will purchase a GIC only
when the Adviser has determined that the GIC presents minimal credit risks to
the Portfolio and is of comparable quality to instruments in which the Portfolio
may otherwise invest. Because a Portfolio may not receive the principal amount
of a GIC from the insurance company on seven days' notice or less, a GIC may be
considered an illiquid investment. The term of a GIC will be one year or less.
In determining the average weighted portfolio maturity of a Portfolio, a GIC
will be deemed to have a maturity equal to the period of time remaining until
the next readjustment of the guaranteed interest rate. The interest rate on a
GIC may be tied to a specified market index and is guaranteed not to be less
than a certain minimum rate.
ZERO COUPON SECURITIES
All Portfolios. A Portfolio may invest in Treasury Bills and separately traded
principal and interest components of securities issued or guaranteed by the U.S.
Treasury. The separately traded components are traded independently under the
Treasury's Separate Trading of Registered Interest and Principal of Securities
("STRIPS") program or as Coupons Under Book Entry Safekeeping ("CUBES"). The
Portfolios may invest in other types of related zero-coupon securities. For
instance, a number of banks and brokerage firms separate the principal and
interest portions of U.S. Treasury securities and sell them separately in the
form of receipts or certificates representing undivided interests in these
instruments. These instruments are generally held by a bank in a custodial or
trust account on behalf of the owners of the securities and are known by various
names, including Treasury Receipts ("TRs"), Treasury Investment Growth Receipts
("TIGRs") and Certificates of Accrual on Treasury Securities ("CATS"). For the
purpose solely of an investment policy of investing at least 65% of a
Portfolio's assets in U.S. Government Securities, such securities are currently
not deemed to be U.S. Government Securities but rather securities issued by the
bank or brokerage firm involved. Zero-coupon securities also may be issued by
corporations and municipalities.
Zero coupon securities are sold at original issue discount and pay no interest
to holders prior to maturity. These securities usually trade at a deep discount
from their face or par value and will be subject to greater fluctuations of
market value in response to changing interest rates than debt obligations of
comparable maturities which make current distributions of interest. Federal tax
law requires that a Portfolio accrue a portion of the discount at which a
zero-coupon security was purchased as income each year even though the Portfolio
receives no interest payment in cash on the security during the year. Interest
on these securities, however, is reported as income by the Portfolio and must be
distributed to its shareholders. The Portfolios distribute all of their net
investment income, and may have to sell portfolio securities to distribute
imputed income, which may occur at a time when the Adviser would not have chosen
to sell such securities and which may result in a taxable gain or loss.
MUNICIPAL SECURITIES
MONEY MARKET PORTFOLIOS AND FIXED INCOME PORTFOLIOS. Municipal securities are
issued by the states, territories and possessions of the United States, their
political subdivisions (such as cities, counties and towns) and various
authorities (such as public housing or redevelopment authorities),
instrumentalities, public corporations and special districts (such as water,
sewer or sanitary districts) of the states, territories and possessions of the
United States or their political subdivisions. In addition, municipal securities
include securities issued by or on behalf of public authorities to finance
various privately operated facilities, such as industrial development bonds or
other private activity bonds that are backed only by the assets and revenues of
the non-governmental user (such as manufacturing enterprises, hospitals,
colleges or other entities).
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The Portfolios may invest in municipal bonds, notes and leases. Municipal
securities may be zero-coupon securities. Yields on municipal securities are
dependent on a variety of factors, including the general conditions of the
municipal security markets and the fixed income markets in general, the size of
a particular offering, the maturity of the obligation and the rating of the
issue. The achievement of a Portfolio's investment objective is dependent in
part on the continuing ability of the issuers of municipal securities in which
the Portfolio invests to meet their obligations for the payment of principal and
interest when due.
Municipal securities historically have not been subject to registration with the
SEC, although there have been proposals which would require registration in the
future.
MUNICIPAL BONDS. Municipal bonds can be classified as either "general
obligation" or "revenue" bonds. General obligation bonds are secured by a
municipality's pledge of its full faith, credit and taxing power for the payment
of principal and interest. Revenue bonds are usually 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 or other tax, but not from general
tax revenues. Municipal bonds include industrial development bonds. Municipal
bonds may also be "moral obligation" bonds, which are normally issued by special
purpose public authorities. If the issuer is unable to meet its obligations
under the bonds from current revenues, it may draw on a reserve Portfolio that
is backed by the moral commitment (but not the legal obligation) of the state or
municipality that created the issuer.
A Portfolio may invest in tax-exempt industrial development bonds, which in most
cases are revenue bonds and generally do not have the pledge of the credit of
the municipality. The payment of the principal and interest on these bonds is
dependent solely on the ability of an initial or subsequent user of the
facilities financed by the bonds to meet its financial obligations and the
pledge, if any, of real and personal property so financed as security for such
payment. The Portfolio will acquire private activity securities only if the
interest payments on the security are exempt from federal income taxation (other
than the Alternative Minimum Tax (AMT)).
Municipal bonds meet longer term capital needs of a municipal issuer and
generally have maturities of more than one year when issued. General obligation
bonds are used to Portfolio a wide range of public projects, including
construction or improvement of schools, highways and roads, and water and sewer
systems. The taxes that can be levied for the payment of debt service may be
limited or unlimited as to rate or amount. Revenue bonds in recent years have
come to include an increasingly wide variety of types of municipal obligations.
As with other kinds of municipal obligations, the issuers of revenue bonds may
consist of virtually any form of state or local governmental entity. Generally,
revenue bonds are secured by the revenues or net revenues derived from a
particular facility, class of facilities, or, in some cases, from the proceeds
of a special excise or other specific revenue source, but not from general tax
revenues. Revenue bonds are issued to finance a wide variety of capital projects
including electric, gas, water and sewer systems; highways, bridges, and
tunnels; port and airport facilities; colleges and universities; and hospitals.
Many of these bonds are additionally secured by a debt service reserve Portfolio
which can be used to make a limited number of principal and interest payments
should the pledged revenues be insufficient. Various forms of credit
enhancement, such as a bank letter of credit or municipal bond insurance, may
also be employed in revenue bond issues. Revenue bonds issued by housing
authorities may be secured in a number of ways, including partially or fully
insured mortgages, rent subsidized and/or collateralized mortgages, and/or the
net revenues from housing or other public projects. Some authorities provide
further security in the form of a state's ability (without obligation) to make
up deficiencies in the debt service reserve Portfolio. In recent years, revenue
bonds have been issued in large volumes for projects that are privately owned
and operated, as discussed below.
Municipal bonds are considered private activity bonds if they are issued to
raise money for privately owned or operated facilities used for such purposes as
production or manufacturing, housing, health care and other nonprofit or
charitable purposes. These bonds are also used to finance public facilities such
as airports, mass transit systems and ports. The payment of the principal and
interest on such bonds is dependent solely on the ability of the facility's
owner or user to meet its financial obligations and the pledge, if any, of real
and personal property as security for such payment.
While at one time the pertinent provisions of the Code permitted private
activity bonds to bear tax-exempt interest in connection with virtually any type
of commercial or industrial project (subject to various restrictions as to
authorized costs, size limitations, state per capita volume restrictions, and
other matters), the types of qualifying projects under the Code have become
increasingly limited, particularly since the enactment of the Tax Reform Act
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of 1986. Under current provisions of the Code, tax-exempt financing remains
available, under prescribed conditions, for certain privately owned and operated
facilities of organizations described in Section 501(c)(3) of the Code,
multi-family rental housing facilities, airports, docks and wharves, mass
commuting facilities and solid waste disposal projects, among others, and for
the tax-exempt refinancing of various kinds of other private commercial projects
originally financed with tax-exempt bonds. In future years, the types of
projects qualifying under the Code for tax-exempt financing could become
increasingly limited.
MUNICIPAL NOTES. Municipal notes, which may be either "general obligation" or
"revenue" securities are intended to fulfill the short-term capital needs of the
issuer and generally have maturities not exceeding one year. They include the
following: tax anticipation notes, revenue anticipation notes, bond anticipation
notes, construction loan notes and tax-exempt commercial paper. Tax anticipation
notes are issued to finance working capital needs of municipalities, and are
payable from various anticipated future seasonal tax revenues, such as income,
sales, use and business taxes. Revenue anticipation notes are issued in
expectation of receipt of other types of revenues, such as federal revenues
available under various federal revenue sharing programs. Bond anticipation
notes are issued to provide interim financing until long-term financing can be
arranged and are typically payable from proceeds of the long-term bonds.
Construction loan notes are sold to provide construction financing. After
successful completion and acceptance, many such projects receive permanent
financing through the Federal Housing Administration under the Federal National
Mortgage Association or the Government National Mortgage Association. Tax-exempt
commercial paper is a short-term obligation with a stated maturity of 365 days
or less. It is issued by agencies of state and local governments to finance
seasonal working capital needs or as short-term financing in anticipation of
longer term financing. Municipal notes also include longer term issues that are
remarketed to investors periodically, usually at one year intervals or less.
MUNICIPAL LEASES. Municipal leases generally take the form of a lease or an
installment purchase or conditional sale contract. Municipal leases are entered
into by state and local governments and authorities to acquire a wide variety of
equipment and facilities such as fire and sanitation vehicles,
telecommunications equipment and other capital assets. Municipal leases
frequently have special risks not normally associated with general obligation or
revenue bonds. Leases and installment purchase or conditional sale contracts
(which normally provide for title to the leased asset to pass eventually to the
government issuer) have evolved as a means for governmental issuers to acquire
property and equipment without being required to meet the constitutional and
statutory requirements for the issuance of debt. The debt-issuance limitations
of many state constitutions and statutes are deemed to be inapplicable because
of the inclusion in many leases or contracts of "non-appropriation" clauses that
provide that the governmental issuer has no obligation to make future payments
under the lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis. Generally, the
Portfolios will invest in municipal lease obligations through certificates of
participation.
PARTICIPATION INTERESTS. The Portfolios may purchase participation interests in
municipal securities that are owned by banks or other financial institutions.
Participation interests may sometimes carry a demand feature backed by a letter
of credit or guarantee of the bank or institution permitting the holder to
tender them back to the bank or other institution.
STAND-BY COMMITMENTS. The Portfolios may purchase municipal securities together
with the right to resell them to the seller or a third party at an agreed-upon
price or yield within specified periods prior to their maturity dates. Such a
right to resell is commonly known as a stand-by commitment, and the aggregate
price which a Portfolio pays for securities with a stand-by commitment may be
higher than the price which otherwise would be paid. The primary purpose of this
practice is to permit a Portfolio to be as fully invested as practicable in
municipal securities while preserving the necessary flexibility and liquidity to
meet unanticipated redemptions. In this regard, a Portfolio acquires stand-by
commitments solely to facilitate portfolio liquidity and does not exercise its
rights thereunder for trading purposes. Stand-by commitments involve certain
expenses and risks, including the inability of the issuer of the commitment to
pay for the securities at the time the commitment is exercised,
non-marketability of the commitment, and differences between the maturity of the
underlying security and the maturity of the commitment. The Portfolio's policy
is to enter into stand-by commitment transactions only with municipal securities
dealers which, in the view of Norwest, present minimal credit risks.
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The acquisition of a stand-by commitment does not affect the valuation or
maturity of the underlying municipal securities which continue to be valued in
accordance with the amortized cost method. Stand-by commitments acquired by the
Portfolio are valued at zero in determining net asset value. When a Portfolio
pays directly or indirectly for a stand-by commitment, its cost is reflected as
unrealized depreciation for the period during which the commitment is held.
Stand-by commitments do not affect the average weighted maturity of the
Portfolio's portfolio of securities.
PUTS ON MUNICIPAL SECURITIES. The Portfolios may acquire "puts" with respect to
municipal securities. A put gives the Portfolio the right to sell the municipal
security at a specified price at any time on or before a specified date. The
Portfolios may sell, transfer or assign a put only in conjunction with its sale,
transfer or assignment of the underlying security or securities. The amount
payable to a Portfolio upon its exercise of a "put" is normally: (1) the
Portfolio's acquisition cost of the municipal securities (excluding any accrued
interest which the Portfolio paid on their acquisition), less any amortized
market premium or plus any amortized market or original issue discount during
the period the Portfolio owned the securities, plus (2) all interest accrued on
the securities since the last interest payment date during that period.
Puts may be acquired by the Portfolios to facilitate the liquidity of its
portfolio assets. Puts may also be used to facilitate the reinvestment of a
Portfolio's assets at a rate of return more favorable than that of the
underlying security. The Portfolios expect that they will generally acquire puts
only where the puts are available without the payment of any direct or indirect
consideration. However, if necessary or advisable, the Portfolios may pay for a
put either separately in cash or by paying a higher price for portfolio
securities which are acquired subject to the puts (thus reducing the yield to
maturity otherwise available for the same securities). The Portfolios intend to
enter into puts only with dealers, banks and broker-dealers which, in the
Portfolio's Adviser's opinion, present minimal credit risks.
Puts may, under certain circumstances, also be used to shorten the maturity of
underlying variable rate or floating rate securities for purposes of calculating
the remaining maturity of those securities and the dollar-weighted average
portfolio maturity of a Portfolio's assets.
ALTERNATIVE MINIMUM TAX. Municipal securities are also categorized according to
(i) whether the interest is or is not includable in the calculation of
alternative minimum taxes imposed on individuals and corporations, (ii) whether
the costs of acquiring or carrying the bonds are or are not deductible in part
by banks and other financial institutions, and (iii) other criteria relevant for
Federal income tax purposes. Due to the increasing complexity of the Code and
related requirements governing the issuance of tax-exempt bonds, industry
practice has uniformly required as a condition to the issuance of such bonds,
but particularly for revenue bonds, an opinion of nationally recognized bond
counsel as to the tax-exempt status of interest on the bonds.
VARIABLE AND FLOATING RATE SECURITIES
ALL PORTFOLIOS. The Portfolios may invest in securities (including
mortgage-related securities) with variable or floating rates of interest. These
securities pay interest at rates that are adjusted periodically according to a
specified formula, usually with reference to some interest rate index or market
interest rate (the "underlying index"). The interest paid on these securities is
a function primarily of the underlying index upon which the interest rate
adjustments are based. Such adjustments minimize changes in the market value of
the obligation and, accordingly, enhance the ability of the Portfolio to
maintain a stable net asset value. Similar to fixed rate debt instruments,
variable and floating rate instruments are subject to changes in value based on
changes in market interest rates or changes in the issuer's creditworthiness.
The rate of interest on securities purchased by a Portfolio may be tied to
Treasury or other government securities or indices on those securities as well
as any other rate of interest or index. Certain variable rate securities
(including mortgage-related securities) pay interest at a rate that varies
inversely to prevailing short-term interest rates (sometimes referred to as
"inverse floaters"). For instance, upon reset the interest rate payable on a
security may go down when the underlying index has risen. During times when
short-term interest rates are relatively low as compared to long-term interest
rates a Portfolio may attempt to enhance its yield by purchasing inverse
floaters. Certain inverse floaters may have an interest rate reset mechanism
that multiplies the effects of changes in the underlying index. This form of
leverage may have the effect of increasing the volatility of the security's
market value
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while increasing the security's, and thus the Portfolio's, yield. Money Market
Portfolios may not invest in inverse floaters and certain other variable and
floating rates securities that do not comply with Rule 2a-7.
There may not be an active secondary market for certain floating or variable
rate instruments (particularly inverse floaters and similar instruments) which
could make it difficult for a Portfolio to dispose of the instrument during
periods that the Portfolio is not entitled to exercise any demand rights (such
as puts) it may have. A Portfolio could, for this or other reasons, suffer a
loss with respect to those instruments. The Adviser monitors the liquidity of
each Portfolio's investment in variable and floating rate instruments, but there
can be no guarantee that an active secondary market will exist.
The Portfolios, except U.S. Government Portfolio and Treasury Portfolio, also
may purchase variable and floating rate demand notes of corporations, which are
unsecured obligations redeemable upon not more than 30 days' notice. These
obligations include master demand notes that permit investment of fluctuating
amounts at varying rates of interest pursuant to direct arrangement with the
issuer of the instrument. The issuer of these obligations often has the right,
after a given period, to prepay their outstanding principal amount of the
obligations upon a specified number of days' notice. These obligations generally
are not traded, nor generally is there an established secondary market for these
obligations. To the extent a demand note does not have a seven day or shorter
demand feature and there is no readily available market for the obligation, it
is treated as an illiquid security.
Certain securities may have an initial principal amount that varies over time
based on an interest rate index, and, accordingly, a Portfolio might be entitled
to less than the initial principal amount of the security upon the security's
maturity. A Portfolio will purchase these securities only when the Adviser
believes the interest income from the instrument justifies any principal risks
associated with the instrument. The Advisers may attempt to limit any potential
loss of principal by purchasing similar instruments that are intended to provide
an offsetting increase in principal. There can be no assurance that an Adviser
will be able to limit the effects of principal fluctuations and, accordingly, a
Portfolio may incur losses on those securities even if held to maturity without
issuer default.
Many variable rate instruments include the right of the holder to demand
prepayment of the principal amount of the obligation prior to its stated
maturity and the right of the issuer to prepay the principal amount prior to
maturity. The payment of principal and interest by issuers of certain securities
purchased by the Portfolios may be guaranteed by letters of credit or other
credit facilities offered by banks or other financial institutions. Such
guarantees will be considered in determining whether a security meets the
Portfolios' investment quality requirements.
Variable rate obligations purchased by the Portfolios may include participation
interests in variable rate obligations purchased by the Portfolios from banks,
insurance companies or other financial institutions that are backed by
irrevocable letters of credit or guarantees of banks. The Portfolios can
exercise the right, on not more than thirty days' notice, to sell such an
instrument back to the bank from which it purchased the instrument and draw on
the letter of credit for all or any part of the principal amount of a
Portfolio's participation interest in the instrument, plus accrued interest, but
will do so only (1) as required to provide liquidity to a Portfolio, (2) to
maintain a high quality investment portfolio, or (3) upon a default under the
terms of the demand instrument. Banks and other financial institutions retain
portions of the interest paid on such variable rate obligations as their fees
for servicing such instruments and the issuance of related letters of credit,
guarantees and repurchase commitments.
A Portfolio will not purchase participation interests in variable rate
obligations unless it is advised by counsel or receives a ruling of the Internal
Revenue Service that interest earned by the Portfolios from the obligations in
which it holds participation interests is exempt from Federal income tax. The
Internal Revenue Service has announced that it ordinarily will not issue advance
rulings on certain of the Federal income tax consequences applicable to
securities, or participation interests therein, subject to a put. Each
Portfolio's Adviser monitors the pricing, quality and liquidity of variable rate
demand obligations and participation interests therein held by the Portfolio on
the basis of published financial information, rating agency reports and other
research services to which the Adviser may subscribe.
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MORTGAGE-BACKED SECURITIES
ALL PORTFOLIOS. Mortgage-backed securities represent an interest in a pool of
mortgages originated by lenders such as commercial banks, savings associations
and mortgage bankers and brokers. Mortgage-backed securities may be issued by
governmental or government-related entities or by non-governmental entities such
as special purpose trusts created by banks, savings associations, private
mortgage insurance companies or mortgage bankers.
Interests in mortgage-backed securities differ from other forms of debt
securities, which normally provide for periodic payment of interest in fixed
amounts with principal payments at maturity or on specified call dates. In
contrast, mortgage-backed securities provide monthly payments which consist of
interest and, in most cases, principal. In effect, these payments are a
"pass-through" of the monthly payments made by the individual borrowers on their
mortgage loans, net of any fees paid to the issuer or guarantor of the
securities or a mortgage loan servicer. Additional payments to holders of these
securities are caused by prepayments resulting from the sale or foreclosure of
the underlying property or refinancing of the underlying loans.
UNDERLYING MORTGAGES. Pools of mortgages consist of whole mortgage loans or
participations in mortgage loans. The majority of these loans are made to
purchasers of 1-4 family homes, but may be made to purchasers of mobile homes or
other real estate interests. The terms and characteristics of the mortgage
instruments are generally uniform within a pool but may vary among pools. For
example, in addition to fixed-rate, fixed-term mortgages, the Portfolio may
purchase pools of variable rate mortgages, growing equity mortgages, graduated
payment mortgages and other types. Mortgage servicers impose qualification
standards for local lending institutions which originate mortgages for the pools
as well as credit standards and underwriting criteria for individual mortgages
included in the pools. In addition, many mortgages included in pools are insured
through private mortgage insurance companies.
LIQUIDITY AND MARKETABILITY. The market for mortgage-backed securities has
expanded considerably in recent years. The size of the primary issuance market
and active participation in the secondary market by securities dealers and many
types of investors make government and government-related pass-through pools
highly liquid. The recently introduced private conventional pools of mortgages
(pooled by commercial banks, savings and loan institutions and others, with no
relationship with government and government-related entities) have also achieved
broad market acceptance and consequently an active secondary market has emerged,
however, the market for conventional pools is smaller and less liquid than the
market for government and government-related mortgage pools.
AVERAGE LIFE AND PREPAYMENTS. The average life of a pass-through pool varies
with the maturities of the underlying mortgage instruments. In addition, a
pool's terms may be shortened by unscheduled or early payments of principal and
interest on the underlying mortgages. Prepayments with respect to securities
during times of declining interest rates will tend to lower the return of a
Portfolio and may even result in losses to a Portfolio if the securities were
acquired at a premium. The occurrence of mortgage prepayments is affected by
various factors including the level of interest rates, general economic
conditions, the location and age of the mortgage and other social and
demographic conditions.
As prepayment rates of individual pools vary widely, it is not possible to
accurately predict the average life of a particular pool. For pools of
fixed-rate 30-year mortgages, common industry practice is to assume that
prepayments will result in a 12-year average life. Pools of mortgages with other
maturities or different characteristics will have varying assumptions for
average life. The assumed average life of pools of mortgages having terms of
less than 30 years is less than 12 years, but typically not less than 5 years.
YIELD CALCULATIONS. Yields on pass-through securities are typically quoted by
investment dealers based on the maturity of the underlying instruments and the
associated average life assumption. In periods of falling interest rates, the
rate of prepayment tends to increase, thereby shortening the actual average life
of a pool of mortgages. Conversely, in periods of rising rates, the rate of
prepayment tends to decrease, thereby lengthening the actual average life of the
pool. Actual prepayment experience may cause the yield to differ from the
assumed average life yield. Reinvestment of prepayments may occur at higher or
lower interest rates than the original investment, thus affecting the yield of a
Portfolio.
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GOVERNMENT AND GOVERNMENT-RELATED GUARANTORS. The principal government guarantor
of mortgage-backed securities is the Government National Mortgage Association
("GNMA"), a wholly-owned United States Government corporation within the
Department of Housing and Urban Development. GNMA is authorized to guarantee,
with the full faith and credit of the United States Government, the timely
payment of principal and interest on securities issued by institutions approved
by GNMA and backed by pools of FHA-insured or VA-guaranteed mortgages.
The Federal National Mortgage Association ("FNMA") is a government-sponsored
corporation owned entirely by private stockholders that is subject to general
regulation by the Secretary of Housing and Urban Development. FNMA purchases
residential mortgages from a list of approved seller-servicers. The Federal Home
Loan Mortgage Corporation ("FHLMC") is a corporate instrumentality of the United
States Government that was created by Congress in 1970 for the purpose of
increasing the availability of mortgage credit for residential housing. Its
stock is owned by the twelve Federal Home Loan Banks. FHLMC issues Participation
Certificates ("PCs") which represent interests in mortgages from FHLMCs national
portfolio. FNMA and FHLMC each guarantee the payment of principal and interest
on the securities they issue. These securities, however, are not backed by the
full faith and credit of the United States Government.
PRIVATELY ISSUED MORTGAGE-BACKED SECURITIES. Mortgage-backed securities offered
by private issuers include pass-through securities comprised of pools of
conventional mortgage loans; mortgage-backed bonds which are considered to be
debt obligations of the institution issuing the bonds and which are
collateralized by mortgage loans; and collateralized mortgage obligations.
Mortgage-backed securities issued by non-governmental issuers may offer a higher
rate of interest than securities issued by government issuers because of the
absence of direct or indirect government guarantees of payment. Many
non-governmental issuers or servicers of mortgage-backed securities, however,
guarantee timely payment of interest and principal on such securities. Timely
payment of interest and principal may also be supported by various forms of
insurance, including individual loan, title, pool and hazard policies. There can
be no assurance that the private issuers or insurers will be able to meet their
obligations under the relevant guarantees and insurance policies.
ADJUSTABLE RATE MORTGAGE-BACKED SECURITIES. Adjustable rate mortgage-backed
securities ("ARMs") are securities that have interest rates that are reset at
periodic intervals, usually by reference to some interest rate index or market
interest rate. Although the rate adjustment feature may act as a buffer to
reduce sharp changes in the value of adjustable rate securities, these
securities are still subject to changes in value based on changes in market
interest rates or changes in the issuer's creditworthiness. Because of the
resetting of interest rates, adjustable rate securities are less likely than
non-adjustable rate securities of comparable quality and maturity to increase
significantly in value when market interest rates fall. Also, most adjustable
rate securities (or the underlying mortgages) are subject to caps or floors.
"Caps" limit the maximum amount by which the interest rate paid by the borrower
may change at each reset date or over the life of the loan and, accordingly,
fluctuation in interest rates above these levels could cause such mortgage
securities to "cap out" and to behave more like long-term, fixed-rate debt
securities.
ARMs may have less risk of a decline in value during periods of rapidly rising
rates, but they may also have less potential for capital appreciation than other
debt securities of comparable maturities due to the periodic adjustment of the
interest rate on the underlying mortgages and due to the likelihood of increased
prepayments of mortgages as interest rates decline. Furthermore, during periods
of declining interest rates, income to a Portfolio will decrease as the coupon
rate resets to reflect the decline in interest rates. During periods of rising
interest rates, changes in the coupon rates of the mortgages underlying a
Portfolio's ARMs may lag behind changes in market interest rates. This may
result in a slightly lower net value until the interest rate resets to market
rates. Thus, investors could suffer some principal loss if they sold Portfolio
shares before the interest rates on the underlying mortgages were adjusted to
reflect current market rates.
COLLATERALIZED MORTGAGE OBLIGATIONS. Collateralized Mortgage Obligations
("CMOs") are debt obligations that are collateralized by mortgages or mortgage
pass-through securities issued by GNMA, FHLMC or FNMA or by pools of
conventional mortgages ("Mortgage Assets"). CMOs may be privately issued or U.S.
Government Securities. Payments of principal and interest on the Mortgage Assets
are passed through to the holders of the CMOs on the same schedule as they are
received, although, certain classes (often referred to as tranches) of CMOs have
priority over other classes with respect to the receipt of payments. Multi-class
mortgage pass-through securities are interests in trusts that
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hold Mortgage Assets and that have multiple classes similar to those of CMOs.
Unless the context indicates otherwise, references to CMOs include multi-class
mortgage pass-through securities. Payments of principal of and interest on the
underlying Mortgage Assets (and in the case of CMOs, any reinvestment income
thereon) provide Portfolios to pay debt service on the CMOs or to make scheduled
distributions on the multi-class mortgage pass-through securities. Parallel pay
CMOs are structured to provide payments of principal on each payment date to
more than one class. These simultaneous payments are taken into account in
calculating the stated maturity date or final distribution date of each class,
which, as with other CMO structures, must be retired by its stated maturity date
or final distribution date but may be retired earlier. Planned amortization
class mortgage-based securities ("PAC Bonds") are a form of parallel pay CMO.
PAC Bonds are designed to provide relatively predictable payments of principal
provided that, among other things, the actual prepayment experience on the
underlying mortgage loans falls within a contemplated range. If the actual
prepayment experience on the underlying mortgage loans is at a rate faster or
slower than the contemplated range, or if deviations from other assumptions
occur, principal payments on a PAC Bond may be greater or smaller than
predicted. The magnitude of the contemplated range varies from one PAC Bond to
another; a narrower range increases the risk that prepayments will be greater or
smaller than contemplated. CMOs may have complicated structures and generally
involve more risks than simpler forms of mortgage-backed securities.
The final tranche of a CMO may be structured as an accrual bond (sometimes
referred to as a "Z-tranche"). Holders of accrual bonds receive no cash payments
for an extended period of time. During the time that earlier tranches are
outstanding, accrual bonds receive accrued interest which is a credit for
periodic interest payments that increases the face amount of the security at a
compounded rate, but is not paid to the bond holder. After all previous tranches
are retired, accrual bond holders start receiving cash payments that include
both principal and continuing interest. The market value of accrual bonds can
fluctuate widely and their average life depends on the other aspects of the CMO
offering. Interest on accrual bonds is taxable when accrued even though the
holders receive no accrual payment. The Portfolios distribute all of their net
investment income, and may have to sell portfolio securities to distribute
imputed income, which may occur at a time when an Adviser would not have chosen
to sell such securities and which may result in a taxable gain or loss.
STRIPPED MORTGAGE-BACKED SECURITIES. Stripped mortgage-backed securities are
classes of mortgage-backed securities that receive different proportions of the
interest and principal distributions from the underlying Mortgage Assets. They
may be privately issued or U.S. Government Securities. In the most extreme case,
one class will be entitled to receive all or a portion of the interest but none
of the principal from the Mortgage Assets (the interest-only or "IO" class) and
one class will be entitled to receive all or a portion of the principal, but
none of the interest (the "PO" class). Currently, no Portfolio may purchase IOs
or POs.
TYPES OF CREDIT ENHANCEMENT. To lessen the effect of failures by obligors on
Mortgage Assets to make payments, mortgage-backed securities may contain
elements of credit enhancement. Credit enhancement falls into two categories:
(1) liquidity protection and (2) protection against losses resulting after
default by an obligor on the underlying assets and collection of all amounts
recoverable directly from the obligor and through liquidation of the collateral.
Liquidity protection refers to the provisions of advances, generally by the
entity administering the pool of assets (usually the bank, savings association
or mortgage banker that transferred the underlying loans to the issuer of the
security), to ensure that the receipt of payments on the underlying pool occurs
in a timely fashion. Protection against losses resulting after default and
liquidation ensures ultimate payment of the obligations on at least a portion of
the assets in the pool. Such protection may be provided through guarantees,
insurance policies or letters of credit obtained by the issuer or sponsor from
third parties, through various means of structuring the transaction or through a
combination of such approaches. The Portfolios will not pay any additional fees
for such credit enhancement, although the existence of credit enhancement may
increase the price of security.
Examples of credit enhancement arising out of the structure of the transaction
include: (1) "senior-subordinated securities" (multiple class securities with
one or more classes subordinate to other classes as to the payment of principal
thereof and interest thereon, with the result that defaults on the underlying
assets are borne first by the holders of the subordinated class); (2) creation
of "spread accounts" or "reserve Portfolios" (where cash or investments,
sometimes funded from a portion of the payments on the underlying assets are
held in reserve against future losses); and (3) "over-collateralization" (where
the scheduled payments on, or the principal amount of, the underlying assets
exceeds that required to make payment of the securities and pay any servicing or
other fees). The
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degree of credit enhancement provided for each issue generally is based on
historical information regarding the level of credit risk associated with the
underlying assets. Delinquency or loss in excess of that covered by credit
enhancement protection could adversely affect the return on an investment in
such a security.
ASSET-BACKED SECURITIES
POSITIVE RETURN BOND PORTFOLIO, STABLE INCOME PORTFOLIO, MANAGED FIXED INCOME
PORTFOLIO, AND STRATEGIC VALUE BOND PORTFOLIO. Asset-backed securities represent
direct or indirect participations in, or are secured by and payable from, assets
other than mortgage-backed assets such as motor vehicle installment sales
contracts, installment loan contracts, leases of various types of real and
personal property and receivables from revolving credit (credit card)
agreements. No Portfolio may invest more than 10 percent of its net assets in
asset-backed securities that are backed by a particular type of credit, for
instance, credit card receivables. Asset-backed securities, including adjustable
rate asset-backed securities, have yield characteristics similar to those of
mortgage-backed securities and, accordingly, are subject to many of the same
risks. Assets are securitized through the use of trusts and special purpose
corporations that issue securities that are often backed by a pool of assets
representing the obligations of a number of different parties. Payments of
principal and interest may be guaranteed up to certain amounts and for a certain
time period by a letter of credit issued by a financial institution.
Asset-backed securities do not always have the benefit of a security interest in
collateral comparable to the security interests associated with mortgage-backed
securities. As a result, the risk that recovery on repossessed collateral might
be unavailable or inadequate to support payments on asset-backed securities is
greater for asset-backed securities than for mortgage-backed securities. In
addition, because asset-backed securities are relatively new, the market
experience in these securities is limited and the market's ability to sustain
liquidity through all phases of an interest rate or economic cycle has not been
tested.
A Portfolio may invest in asset-backed securities, which have structural
characteristics similar to mortgage-backed securities but have underlying assets
that are not mortgage loans or interests in mortgage loans. Asset-backed
securities are securities that represent direct or indirect participations in,
or are secured by and payable from, assets such as motor vehicle installment
sales contracts, installment loan contracts, leases of various types of real and
personal property and receivables from revolving credit (credit card)
agreements. Such assets are securitized through the use of trusts and special
purpose corporations.
Asset-backed securities are often backed by a pool of assets representing the
obligations of a number of different parties. Payments of principal and interest
may be guaranteed up to certain amounts and for a certain time period by a
letter of credit issued by a financial institution.
Asset-backed securities present certain risks that are not presented by
mortgage-backed debt securities or other securities in which a Portfolio may
invest. Primarily, these securities do not always have the benefit of a security
interest in comparable collateral. Credit card receivables are generally
unsecured and the debtors are entitled to the protection of a number of state
and Federal consumer credit laws, many of which give such debtors the right to
set off certain amounts owed on the credit cards, thereby reducing the balance
due. Automobile receivables generally are secured by automobiles. Most issuers
of automobile receivables permit the loan servicers to retain possession of the
underlying obligations. If the servicer were to sell these obligations to
another party, there is a risk that the purchaser would acquire an interest
superior to that of the holders of the asset-backed securities. In addition,
because of the large number of vehicles involved in a typical issuance and the
technical requirements under state laws, the trustee for the holders of the
automobile receivables may not have a proper security interest in the underlying
automobiles. Therefore, there is the possibility that recoveries on repossessed
collateral may not, in some cases, be available to support payments on these
securities. Because asset-backed securities are relatively new, the market
experience in these securities is limited and the market's ability to sustain
liquidity through all phases of the market cycle has not been tested.
INTEREST RATE PROTECTION TRANSACTIONS
STABLE INCOME PORTFOLIO, MANAGED FIXED INCOME PORTFOLIO, AND STRATEGIC VALUE
BOND PORTFOLIO. To manage its exposure to different types of investments, a
Portfolio may enter into interest rate, currency and mortgage (or other asset)
swap agreements and may purchase and sell interest rate "caps," "floors" and
"collars." In a typical interest rate
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swap agreement, one party agrees to make regular payments equal to a floating
interest rate on a specified amount (the "notional principal amount") in return
for payments equal to a fixed interest rate on the same amount for a specified
period. If a swap agreement provides for payment in different currencies, the
parties may also agree to exchange the notional principal amount. Mortgage swap
agreements are similar to interest rate swap agreements, except that the
notional principal amount is tied to a reference pool of mortgages. In a cap or
floor, one party agrees, usually in return for a fee, to make payments under
particular circumstances. For example, the purchaser of an interest rate cap has
the right to receive payments to the extent a specified interest rate exceeds an
agreed upon level; the purchaser of an interest rate floor has the right to
receive payments to the extent a specified interest rate falls below an agreed
upon level. A collar entitles the purchaser to receive payments to the extent a
specified interest rate falls outside an agreed upon range.
Swap agreements may involve leverage and may be highly volatile; depending on
how they are used, they may have a considerable impact on the Portfolios
performance. Swap agreements involve risks depending upon the counterparties'
creditworthiness and ability to perform as well as the Portfolio's ability to
terminate its swap agreements or reduce its exposure through offsetting
transactions.
A Portfolio expects to enter into interest rate protection transactions to
preserve a return or spread on a particular investment or portion of its
portfolio or to protect against any increase in the price of securities it
anticipates purchasing at a later date. The Portfolios intend to use these
transactions as a hedge and not as a speculative investment.
A Portfolio may enter into interest rate protection transactions on an
asset-based basis, depending on whether it is hedging its assets or its
liabilities, and will usually enter into interest rate swaps on a net basis,
i.e., the two payment streams are netted out, with the Portfolio receiving or
paying, as the case may be, only the net amount of the two payments. Inasmuch as
these interest rate protection transactions are entered into for good faith
hedging purposes, and inasmuch as segregated accounts will be established with
respect to such transactions, the Portfolios believe such obligations do not
constitute senior securities. The net amount of the excess, if any, of a
Portfolio's obligations over its entitlements with respect to each interest rate
swap will be accrued on a daily basis and an amount of cash, U.S. Government
Securities or other liquid high grade debt obligations having an aggregate net
asset value at least equal to the accrued excess will be maintained in a
segregated account by a custodian that satisfies the requirements of the 1940
Act. The Portfolios also will establish and maintain such segregated accounts
with respect to its total obligations under any interest rate swaps that are not
entered into on a net basis and with respect to any interest rate caps, collars
and floors that are written by the Portfolio.
A Portfolio will enter into interest rate protection transactions only with
banks and other institutions the Adviser believes to present minimal credit
risks. If there is a default by the other party to such a transaction, the
Portfolio will have to rely on its contractual remedies (which may be limited by
bankruptcy, insolvency or similar laws) pursuant to the agreements related to
the transaction.
The swap market has grown substantially in recent years with a large number of
banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. Caps, collars and floors are more
recent innovations for which documentation is less standardized and,
accordingly, are less liquid than swaps.
HIGH YIELD/JUNK BONDS
STRATEGIC VALUE BOND PORTFOLIO may invest in bonds rated below "Baa" by Moody's
or "BBB" by S&P (commonly known as "high yield/high risk securities" or "junk
bonds"). Securities rated less than "Baa" by Moody's or "BBB" by S&P are
classified as non-investment grade securities and are considered speculative by
those rating agencies. Junk bonds may be issued as a consequence of corporate
restructurings, such as leveraged buyouts, mergers, acquisitions, debt
recapitalizations, or similar events or by smaller or highly leveraged
companies. Although the growth of the high yield/high risk securities market in
the 1980's had paralleled a long economic expansion, many issuers subsequently
have been affected by adverse economic and market conditions. It should be
recognized that an economic downturn or increase in interest rates is likely to
have a negative effect on: (1) the high yield bond market; (2) the value of high
yield/high risk securities; and (3) the ability of the securities' issuers to
service their
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principal and interest payment obligations, to meet their projected business
goals or to obtain additional financing. In addition, the market for high
yield/high risk securities, which is concentrated in relatively few market
makers, may not be as liquid as the market for investment grade securities.
Under adverse market or economic conditions, the market for high yield/high risk
securities could contract further, independent of any specific adverse changes
in the condition of a particular issuer. As a result, the Portfolio could find
it more difficult to sell these securities or may be able to sell the securities
only at prices lower than if such securities were widely traded. Prices realized
upon the sale of such lower rated or unrated securities, under these
circumstances, may be less than the prices used in calculating the Portfolio's
net asset value.
In periods of reduced market liquidity, prices of high yield/high risk
securities may become more volatile and may experience sudden and substantial
price declines. Also, there may be significant disparities in the prices quoted
for high yield/high risk securities by various dealers. Under such conditions,
the Portfolio may have to use subjective rather than objective criteria to value
its high yield/high risk securities investments accurately and rely more heavily
on the judgment of the Portfolio's Adviser.
Prices for high yield/high risk securities also may be affected by legislative
and regulatory developments. For example, Congress has considered legislation to
restrict or eliminate the corporate tax deduction for interest payments or to
regulate corporate restructurings such as takeovers, mergers or leveraged
buyouts. These laws could adversely affect the Portfolio's net asset value and
investment practices, the market for high yield/high risk securities, the
financial condition of issuers of these securities and the value of outstanding
high yield/high risk securities.
Lower rated or unrated debt obligations also present risks based on payment
expectations. If an issuer calls the obligation for redemption, the Portfolio's
Adviser may have to replace the security with a lower yielding security,
resulting in a decreased return for investors. If a Portfolio experiences
unexpected net redemptions, the Portfolio's Adviser may be forced to sell the
Portfolio's higher rated securities, resulting in a decline in the overall
credit quality of the Portfolio's portfolio and increasing the exposure of the
Core Portfolio to the risks of high yield/high risk securities.
OPTIONS AND FUTURES CONTRACTS
A Portfolio (except for the Money Market Portfolios) may (1) purchase or sell
(write) put and call options on securities to enhance the Portfolio's
performance and (2) seek to hedge against a decline in the value of securities
owned by the Portfolio or an increase in the price of securities that the
Portfolio plans to purchase through the writing and purchase of exchange-traded
and over-the-counter options on individual securities or securities or financial
indices and through the purchase and sale of interest-rate futures contracts and
options on those futures contracts. To the extent a Portfolio invests in foreign
securities, it may also invest in options on foreign currencies, foreign
currency futures contracts and options on those futures contracts. These
instruments are considered to be derivatives. Use of these instruments is
subject to regulation by the SEC, the several options and futures exchanges on
which futures and options are traded or the CFTC. No assurance can be given that
any hedging or option income strategy will achieve its intended result. A
Portfolio may enter into futures contracts only if the aggregate of initial
margin deposits for open futures contract positions does not exceed 5% of the
Portfolio's total assets.
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COVER FOR OPTIONS AND FUTURES CONTRACTS. When engaging in hedging transactions,
a Portfolio will hold securities, currencies, or other options or futures
positions whose values are expected to offset ("cover") its obligations under
the transactions. A Portfolio will enter into a hedging strategy that exposes it
to an obligation to another party only if the Portfolio owns either (1) an
offsetting ("covered") position in the underlying security, currency or options
or futures contract, or (2) cash, receivables and liquid debt securities with a
value sufficient at all times to cover its potential obligations. Each Portfolio
will comply with SEC guidelines with respect to coverage of these strategies
and, if the guidelines require, will set aside cash, liquid debt securities and
other permissible assets ("Segregated Assets") in a segregated account with the
Custodian in the prescribed amount. Segregated Assets cannot be sold or closed
out while the hedging or option income strategy is outstanding, unless the
Segregated Assets are replaced with similar assets. As a result, there is a
possibility that the use of cover or segregation involving a large percentage of
a Portfolio's assets could impede portfolio management or a Portfolio's ability
to meet redemption requests or other current obligations.
The Portfolios have no current intention of investing in futures contracts and
options thereon for purposes other than hedging. No Portfolio may purchase any
call or put option on a futures contract if the premiums associated with all
such options held by the Portfolio would exceed 5% of the Portfolio's total
assets as of the date the option is purchased. No Portfolio may sell a put
option if the exercise value of all put options written by the Portfolio would
exceed 50% of the Portfolio's total assets or sell a call option if the exercise
value of all call options written by the Portfolio would exceed the value of the
Portfolio's assets. In addition, the current market value of all open futures
positions held by a Portfolio will not exceed 50% of its total assets.
OPTIONS ON SECURITIES. A call option is a contract under which the purchaser of
the call option, in return for a premium paid, has the right to buy the security
underlying the option at a specified exercise price at any time during the term
of the option. The writer of the call option, who receives the premium, has the
obligation upon exercise of the option to deliver the underlying security
against payment of the exercise price during the option period. A put option
gives its purchaser, in return for a premium, the right to sell the underlying
security at a specified price during the term of the option. The writer of the
put, who receives the premium, has the obligation to buy the underlying security
upon exercise at the exercise price during the option period. The amount of
premium received or paid is based upon certain factors, including the market
price of the underlying assets, the relationship of the exercise price to the
market price, the historical price volatility of the underlying assets, the
option period, supply and demand and interest rates.
OPTIONS ON STOCK INDICES. A stock index assigns relative values to the stock
included in the index, and the index fluctuates with changes in the market
values of the stocks included in the index. Stock index options operate in the
same way as the more traditional options on securities except that exercises of
stock index options are effected with cash payments and do not involve delivery
of securities (i.e., stock index options are settled exclusively in cash). Thus,
upon exercise of stock index options, the purchaser will realize and the writer
will pay an amount based on the differences between the exercise price and the
closing price of the stock index.
OPTIONS ON FOREIGN CURRENCIES. Options on foreign currencies are similar to
options on securities except that an option on a foreign currency gives the
purchaser the right, in return for the premium paid, to purchase a set amount of
the foreign currency at a specified price at any time during the duration of the
option. The value of foreign currency options is dependent upon the value of the
foreign currency relative to the U.S. dollar and has no relationship to the
investment merits of a foreign security. Because foreign currency transactions
occurring in the interbank market involve substantially larger amounts than
those that may be involved in the use of foreign currency options, the Fund may
be disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign currencies at
prices that are less favorable than for round lots. To the extent that the U.S.
options markets are closed while the market for the underlying currencies
remains open, significant price and rate movements may take place in the
underlying markets that cannot be reflected in the options markets.
OPTIONS ON FUTURES CONTRACTS. Options on futures contracts are similar to
options on securities except that an option on a futures contract gives the
purchaser the right, in return for the premium paid, to assume a position in a
futures contract rather than to purchase or sell stock, at a specified exercise
price at any time during the period of the option. Upon exercise of the option,
the delivery of the futures position to the holder of the option will be
accompanied by transfer to the holder of an accumulated balance representing the
amount by which the market price of the futures contract exceeds, in the case of
a call, or is less than, in the case of a put, the exercise price of the option
on the future.
FUTURES CONTRACTS AND INDEX FUTURES CONTRACTS. A futures contract is a bilateral
agreement where one party agrees to accept, and the other party agrees to make,
delivery of cash, an underlying debt security or a currency, as called for in
the contract, at a specified date and at an agreed-upon price. A bond or stock
index futures contract involves the delivery of an amount of cash equal to a
specified dollar amount times the difference between the bond or stock index
value at the close of trading of the contract and the price at which the futures
contract is originally
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struck. No physical delivery of the securities comprising the index is made.
Generally, these futures contracts are closed out prior to the expiration date
of the contracts.
CERTAIN RISKS OF OPTIONS AND FUTURES. A Portfolio's use of options and futures
contracts subjects the Portfolio to certain unique investment risks. These risks
include: (1) dependence on an Adviser's ability to correctly predict movements
in the prices of individual securities and fluctuations in interest rates, the
general securities markets and other economic factors; (2) imperfect
correlations between movements in the prices of options or futures contracts and
movements in the price of the securities hedged or used for cover which may
cause a given hedge not to achieve its objective; (3) the fact that the skills
and techniques needed to trade these instruments are different from those needed
to select the other securities in which a Portfolio invests; (4) lack of
assurance that a liquid secondary market will exist for any particular
instrument at any particular time, which, among other things, may hinder a
Portfolio's ability to limit exposures by closing its positions; (5) the
possible need to defer closing out certain options, futures contracts and
related options to avoid adverse tax consequences; and (6) the potential for
unlimited losses when investing in futures contracts or writing options for
which an offsetting position is not held.
Other risks include the inability of a Portfolio, as the writer of covered call
options, to benefit from any appreciation of the underlying securities above the
exercise price and the possible loss of the entire premium paid for options
purchased by the Portfolio. In addition, the futures exchanges may limit the
amount of fluctuation permitted in certain futures contract prices on related
options during a single trading day. A Portfolio may be forced, therefore, to
liquidate or close out a futures contract position at a disadvantageous price.
There is no assurance that a counterparty in an over-the-counter option
transaction will be able to perform its obligations. There are a limited number
of options on interest rate futures contracts and exchange-traded options
contracts on fixed income securities. The Portfolios may use various futures
contracts that are relatively new instruments without a significant trading
history. As a result, there can be no assurance that an active secondary market
in those contracts will develop or continue to exist. A Portfolio's activities
in the futures and options markets may result in higher portfolio turnover rates
and additional brokerage costs, which could reduce a Portfolio's yield.
FOREIGN CURRENCY TRANSACTIONS
MONEY MARKET PORTFOLIOS, STABLE INCOME PORTFOLIO, MANAGED FIXED INCOME
PORTFOLIO, STRATEGIC VALUE BOND PORTFOLIO, INCOME EQUITY PORTFOLIO, LARGE
COMPANY GROWTH PORTFOLIO, SMALL COMPANY STOCK PORTFOLIO, SMALL COMPANY GROWTH
PORTFOLIO, AND INTERNATIONAL PORTFOLIO. A Portfolio may conduct foreign currency
exchange transactions either on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign exchange market or by entering into a forward foreign
currency contract. A forward foreign currency contract ("forward contract")
involves an obligation to purchase or sell a specific amount of a specific
currency at a future date, which may be any fixed number of days (usually less
than one year) from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. Forward contracts are considered to be
"derivatives" -- financial instruments whose performance is derived, at least in
part, from the performance of another asset (such as a security, currency or an
index of securities). The Portfolio enters into forward contracts in order to
"lock in" the exchange rate between the currency it will deliver and the
currency it will receive for the duration of the contract. In addition, the
Portfolio may enter into forward contracts to hedge against risks arising from
securities the Portfolio owns or anticipates purchasing, or the U.S. dollar
value of interest and dividends paid on those securities. The Portfolio will not
enter into forward contracts for speculative purposes. The Portfolio will not
have more than 25% of its total assets committee to forward contracts, or
maintain a net exposure to forward contracts that would obligate the Portfolio
to deliver an amount of foreign currency in excess of the value of the
Portfolio's investment securities or other assets denominated in that currency.
If the Portfolio makes delivery of the foreign currency at or before the
settlement of a forward contract, it may be required to obtain the currency
through the conversion of assets of the Portfolio into the currency. The
Portfolio may close out a forward contract obligating it to purchase a foreign
currency by selling an offsetting contract, in which case it will realize a gain
or a loss.
Foreign currency transactions involve certain costs and risks. The Portfolio
incurs foreign exchange expenses in converting assets from one currency to
another. Forward contracts involve a risk of loss if the Adviser is inaccurate
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in its prediction of currency movements. The projection of short-term currency
market movements is extremely difficult, and the successful execution of a
short-term hedging strategy is highly uncertain. The precise matching of forward
contract amounts and the value of the securities involved is generally not
possible. Accordingly, it may be necessary for the Portfolio to purchase
additional foreign currency if the market value of the security is less than the
amount of the foreign currency the Portfolio is obligated to deliver under the
forward contract and the decision is made to sell the security and make delivery
of the foreign currency. The use of forward contracts as a hedging technique
does not eliminate fluctuations in the prices of the underlying securities the
Portfolio owns or intends to acquire, but it does fix a rate of exchange in
advance. Although forward contracts can reduce the risk of loss due to a decline
in the value of the hedged currencies, they also limit any potential gain that
might result from an increase in the value of the currencies.
ILLIQUID AND RESTRICTED SECURITIES
ALL PORTFOLIOS. Each Portfolio limits its purchase of illiquid securities. No
Portfolio may knowingly acquire securities or invest in repurchase agreements
with respect to any securities if, as a result, more than 15 percent (10 percent
in the case of the Money Market Portfolios) of the Portfolio's net assets taken
at current value would be invested in securities which are not readily
marketable. Illiquid securities are securities that cannot be disposed of within
seven days in the ordinary course of business at approximately the amount at
which the Portfolio has valued the securities and include, among other things,
repurchase agreements not entitling the holder to payment within seven days and
restricted securities (other than those determined to be liquid pursuant to
guidelines established by the Board or Core Board). Under the supervision of the
Board or Core Board, the Advisers determine and monitor the liquidity of the
portfolio securities.
Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933 ("restricted securities"),
securities which are otherwise not readily marketable, such as over-the-counter
options, and repurchase agreements not entitling the holder to payment of
principal in 7 days. Limitations on resale may have an adverse effect on the
marketability of portfolio securities and a Portfolio might also have to
register restricted securities in order to dispose of them, resulting in expense
and delay. A Portfolio might not be able to dispose of restricted or other
securities promptly or at reasonable prices and might thereby experience
difficulty satisfying redemptions. There can be no assurance that a liquid
market will exist for any security at any particular time.
An institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, including repurchase agreements,
commercial paper, foreign securities and corporate bonds and notes.
Institutional investors depend on an efficient institutional market in which the
unregistered security can be readily resold or on the issuer's ability to honor
a demand for repayment of the unregistered security. A security's contractual or
legal restrictions on resale to the general public or to certain institutions
may not be indicative of the liquidity of the security. If such securities are
eligible for purchase by institutional buyers in accordance with Rule 144A under
the Securities Act of 1933 or other exemptions, the Advisers may determine that
such securities are not illiquid securities, under guidelines or other
exemptions adopted by the Board (or, in the case of the Core Portfolios, the
Core Trusts' board of trustees). These guidelines take into account trading
activity in the securities and the availability of reliable pricing information,
among other factors. If there is a lack of trading interest in a particular Rule
144A security, a Portfolio's holdings of that security may be illiquid.
The Board has the ultimate responsibility for determining whether specific
securities are liquid or illiquid and has delegated the function of making
day-to-day determinations of liquidity to the Adviser of each Portfolio,
pursuant to guidelines approved by the applicable board. The Advisers take into
account a number of factors in reaching liquidity decisions, including but not
limited to: (1) the frequency of trades and quotations for the security; (2) the
number of dealers willing to purchase or sell the security and the number of
other potential buyers; (3) the willingness of dealers to undertake to make a
market in the security; and (4) the nature of the marketplace trades, including
the time needed to dispose of the security, the method of soliciting offers and
the mechanics of the transfer. The Advisers monitor the liquidity of the
securities held by each Portfolio and report periodically on such decisions to
the Board.
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In connection with a Portfolio's original purchase of restricted securities, it
may negotiate rights with the issuer to have such securities registered for sale
at a later time. Further, the expenses of registration of restricted securities
that are illiquid may also be negotiated by the Portfolio with the issuer at the
time such securities are purchased by a Portfolio. When registration is
required, however, a considerable period may elapse between a decision to sell
the securities and the time the Portfolio would be permitted to sell such
securities. A similar delay might be experienced in attempting to sell such
securities pursuant to an exemption from registration. Thus, a Portfolio may not
be able to obtain as favorable a price as that prevailing at the time of the
decision to sell.
Limitations on resale may have an adverse effect on the marketability of
portfolio securities and a Portfolio might also have to register restricted
securities in order to dispose of them, resulting in expense and delay. A
Portfolio might not be able to dispose of restricted or other securities
promptly or at reasonable prices and might thereby experience difficulty
satisfying redemptions. There can be no assurance that a liquid market will
exist for any security at any particular time.
LOANS OF PORTFOLIO SECURITIES
ALL PORTFOLIOS. Each Portfolio may lend its portfolio securities. Under
applicable regulatory requirements (which are subject to change), the loan
collateral must, on each business day, at least equal the market value of the
loaned securities and must consist of cash, bank letters of credit, U.S.
Government securities, or other cash equivalents in which the Portfolio is
permitted to invest. To be acceptable as collateral, letters of credit must
obligate a bank to pay amounts demanded by the Portfolio if the demand meets the
terms of the letter. Such terms and the issuing bank must be satisfactory to the
Portfolio. In a portfolio securities lending transaction, the Portfolio receives
from the borrower an amount equal to the interest paid or the dividends declared
on the loaned securities during the term of the loan as well as the interest on
the collateral securities, less any finders' or administrative fees the
Portfolio pays in arranging the loan. The Portfolio may share the interest it
receives on the collateral securities with the borrower as long as it realizes
at least a minimum amount of interest required by the lending guidelines
established by the Trust's Board of Trustees. The Portfolio will not lend its
portfolio securities to any officer, director, employee or affiliate of the
Portfolio or an Adviser. The terms of a Portfolio's loans must meet certain
tests under the Code and permit the Core Portfolio to reacquire loaned
securities on five business days' notice or in time to vote on any important
matter.
BORROWING AND TRANSACTIONS INVOLVING LEVERAGE
TECHNIQUES INVOLVING LEVERAGE
ALL PORTFOLIOS. Use of leveraging involves special risks and may involve
speculative investment techniques. The Portfolios may borrow for other than
temporary or emergency purposes, lend their securities, enter reverse repurchase
agreements, and purchase securities on a when-issued or forward commitment
basis. In addition, Managed Fixed Income Portfolio may engage in dollar roll
transactions. Each of these transactions involve the use of "leverage" when cash
made available to the Portfolio through the investment technique is used to make
additional portfolio investments. In addition, the use of swap and related
agreements may involve leverage. The Portfolios use these investment techniques
only when the Adviser to a Portfolio believes that the leveraging and the
returns available to the Portfolio from investing the cash will provide
shareholders a potentially higher return.
Leverage exists when a Portfolio achieves the right to a return on a capital
base that exceeds the Portfolio's investment. Leverage creates the risk of
magnified capital losses which occur when losses affect an asset base, enlarged
by borrowings or the creation of liabilities, that exceeds the equity base of
the Portfolio. Leverage may involve the creation of a liability that requires
the Portfolio to pay interest (for instance, reverse repurchase agreements) or
the creation of a liability that does not entail any interest costs (for
instance, forward commitment transactions).
The risks of leverage include a higher volatility of the net asset value of the
Portfolio's shares and the relatively greater effect on the net asset value of
the shares caused by favorable or adverse market movements or changes in the
cost of cash obtained by leveraging and the yield obtained from investing the
cash. So long as a Portfolio is able to realize a
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net return on its investment portfolio that is higher than interest expense
incurred, if any, leverage will result in higher current net investment income
being realized by the Portfolio than if the Portfolio were not leveraged. On the
other hand, interest rates change from time to time as does their relationship
to each other depending upon such factors as supply and demand, monetary and tax
policies and investor expectations. Changes in such factors could cause the
relationship between the cost of leveraging and the yield to change so that
rates involved in the leveraging arrangement may substantially increase relative
to the yield on the obligations in which the proceeds of the leveraging have
been invested. To the extent that the interest expense involved in leveraging
approaches the net return on the Portfolio's investment portfolio, the benefit
of leveraging will be reduced, and, if the interest expense on borrowings were
to exceed the net return to shareholders, the Portfolio's use of leverage would
result in a lower rate of return than if the Portfolio were not leveraged.
Similarly, the effect of leverage in a declining market could be a greater
decrease in net asset value per share than if the Portfolio were not leveraged.
In an extreme case, if the Portfolio's current investment income were not
sufficient to meet the interest expense of leveraging, it could be necessary for
the Portfolio to liquidate certain of its investments at an inappropriate time.
The use of leverage may be considered speculative.
In order to limit the risks involved in various transactions involving leverage,
the Trust's custodian will set aside and maintain in a segregated account cash
and other liquid securities in accordance with SEC guidelines. The account
value, which is marked to market daily, will be at least equal to the
Portfolio's commitments under these transactions. The Portfolio's commitments
may include: (1) the Portfolio's obligations to repurchase securities under a
reverse repurchase agreement, settle when-issued and forward commitment
transactions and make payments under a cap or floor (see "Swap Agreements"); and
(2) the greater of the market value of securities sold short or the value of the
securities at the time of the short sale (reduced by any margin deposit). The
net amount of the excess, if any, of a Portfolio's obligations over its
entitlements with respect to each interest rate swap will be calculated on a
daily basis and an amount at least equal to the accrued excess will be
maintained in the segregated account. If the Portfolio enters into an interest
rate swap on other than a net basis, the Portfolio will maintain the full amount
accrued on a daily basis of the Portfolio's obligations with respect to the swap
in their segregated account.
REPURCHASE AGREEMENTS, SECURITIES LENDING, REVERSE REPURCHASE AGREEMENTS,
WHEN-ISSUED SECURITIES, FORWARD COMMITMENTS AND DOLLAR ROLL TRANSACTIONS.
A Portfolio's use of repurchase agreements, securities lending, reverse
repurchase agreements and forward commitments (including "dollar roll"
transactions) entails certain risks not associated with direct investments in
securities. For instance, in the event that bankruptcy or similar proceedings
were commenced against a counterparty while these transactions remained open or
a counterparty defaulted on its obligations, the Portfolio might suffer a loss.
Failure by the other party to deliver a security purchased by the Portfolio may
result in a missed opportunity to make an alternative investment. The Advisers
monitor the creditworthiness of counterparties to these transactions and intend
to enter into these transactions only when they believe the counterparties
present minimal credit risks and the income to be earned from the transaction
justifies the attendant risks. Counterparty insolvency risk with respect to
repurchase agreements is reduced by favorable insolvency laws that allow the
Portfolio, among other things, to liquidate the collateral held in the event of
the bankruptcy of the counterparty. Those laws do not apply to securities
lending and, accordingly, securities lending involves more risk than does the
use of repurchase agreements. As a result of entering forward commitments and
reverse repurchase agreements, as well as lending its securities, a Portfolio
may be exposed to greater potential fluctuations in the value of its assets and
net asset value per share.
REPURCHASE AGREEMENTS -- ALL PORTFOLIOS. A Portfolio may enter into repurchase
agreements and may lend portfolio securities to brokers, dealers and other
financial institutions. These investments may entail certain risks not
associated with direct investments in securities. For instance, in the event
that bankruptcy or similar proceedings were commenced against a counterparty in
these transactions or a counterparty defaulted on its obligations, a Portfolio
may have difficulties in exercising its rights to the underlying securities, may
incur costs and experience time delays in disposing of them and may suffer a
loss.
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Repurchase agreements are transactions in which a Portfolio purchases a security
and simultaneously commits to resell that security to the seller at an
agreed-upon price on an agreed-upon future date, normally one to seven days
later. The resale price reflects a market rate of interest that is not related
to the coupon rate or maturity of the purchased security. When a Portfolio lends
a security it receives interest from the borrower or from investing cash
collateral. The Trust maintains possession of the purchased securities and any
underlying collateral in these transactions, the total market value of which on
a continuous basis is at least equal to the repurchase price or value of
securities loaned, plus accrued interest. The Portfolios may pay fees to arrange
securities loans and each Portfolio will limit securities lending to not more
than 33 1/3%.
The Portfolios may invest in securities subject to repurchase agreements with
U.S. banks or broker-dealers. In a typical repurchase agreement, the seller of a
security commits itself at the time of the sale to repurchase that security from
the buyer at a mutually agreed-upon time and price. The repurchase price exceeds
the sale price, reflecting an agreed-upon interest rate effective for the period
the buyer owns the security subject to repurchase. The agreed-upon rate is
unrelated to the interest rate on that security. The Adviser will monitor the
value of the underlying security at the time the transaction is entered into and
at all times during the term of the repurchase agreement to ensure that the
value of the security always equals or exceeds the repurchase price (including
accrued interest). In the event of default by the seller under the repurchase
agreement, a Portfolio may have difficulties in exercising its rights to the
underlying securities and may incur costs and experience time delays in
connection with the disposition of such securities. To evaluate potential risks,
the Adviser reviews the credit-worthiness of those banks and dealers with which
a Portfolio enters into repurchase agreements.
Counterparties to a Money Market Portfolio's repurchase agreements must be a
primary dealer that reports to the Federal Reserve Bank of New York ("primary
dealers") or one of the largest 100 commercial banks in the United States.
Securities subject to repurchase agreements will be held by a Portfolio's
custodian or another qualified custodian or in the Federal Reserve book-entry
system. Repurchase agreements are considered to be loans by a Portfolio for
certain purposes under the 1940 Act. The Trust's custodian maintains possession
of the collateral underlying a repurchase agreement, which has a market value,
determined daily, at least equal to the repurchase price, and which consists of
the types of securities in which a Portfolio may invest directly. International
Portfolio and, with respect to the portion of their assets managed in the
International Portfolio style, Small Company Growth Portfolio, Small Company
Stock Portfolio, Large Company Growth Portfolio, and Income Equity Portfolio may
enter into repurchase agreements with foreign entities.
SECURITIES LENDING -- ALL PORTFOLIOS. A Portfolio may lend securities from its
portfolios to brokers, dealers and other financial institutions. Securities
loans must be continuously secured by cash or U.S. Government Securities with a
market value, determined daily, at least equal to the value of the Portfolio's
securities loaned, including accrued interest. A Portfolio receives interest in
respect of securities loans from the borrower or from investing cash collateral.
A Portfolio may pay fees to arrange the loans. No Portfolio will lend portfolio
securities in excess of 33 1/3 percent of the value of the Portfolio's total
assets.
REVERSE REPURCHASE AGREEMENTS -- ALL PORTFOLIOS. A Portfolio may enter into
reverse repurchase agreements, transactions in which the Portfolio sells a
security and simultaneously commits to repurchase that security from the buyer
at an agreed upon price on an agreed upon future date. The resale price in a
reverse repurchase agreement reflects a market rate of interest that is not
related to the coupon rate or maturity of the sold security. For certain demand
agreements, there is no agreed upon repurchase date and interest payments are
calculated daily, often based upon the prevailing overnight repurchase rate.
Because certain of the incidents of ownership of the security are retained by
the Portfolio, reverse repurchase agreements may be viewed as a form of
borrowing by the Portfolio from the buyer, collateralized by the security sold
by the Portfolio. A Portfolio will use the proceeds of reverse repurchase
agreements to Portfolio redemptions or to make investments. In most cases these
investments either mature or have a demand feature to resell to the issuer on a
date not later than the expiration of the agreement. Interest costs on the money
received in a reverse repurchase agreement may exceed the return received on the
investments made by the Portfolio with those monies. Any significant commitment
of a Portfolio's assets to the reverse repurchase agreements will tend to
increase the volatility of the Portfolio's net asset value per share.
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Counterparties to a Money Market Portfolio's reverse repurchase agreements must
be a primary dealer that reports to the Federal Reserve Bank of New York
("primary dealers") or one of the largest 100 commercial banks in the United
States.
Generally, a reverse repurchase agreement enables the Portfolio to recover for
the term of the reverse repurchase agreement all or most of the cash invested in
the portfolio securities sold and to keep the interest income associated with
those portfolio securities. Such transactions are only advantageous if the
interest cost to the Portfolio of the reverse repurchase transaction is less
than the cost of obtaining the cash otherwise. In addition, interest costs on
the money received in a reverse repurchase agreement may exceed the return
received on the investments made by a Portfolio with those monies. The use of
reverse repurchase agreement proceeds to make investments may be considered to
be a speculative technique.
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS -- ALL PORTFOLIOS. A Portfolio
may purchase securities on a "when-issued" or "forward commitment" basis. When
these transactions are negotiated, the price, which is generally expressed in
yield terms, is fixed at the time the commitment is made, but delivery and
payment for the securities take place at a later date. Normally, the settlement
date occurs within 3 months after the transaction. During the period between a
commitment and settlement, no payment is made for the securities purchased and
no interest on the security accrues to the purchaser. At the time a Portfolio
makes a commitment to purchase securities in this manner, the Portfolio
immediately assumes the risk of ownership, including price fluctuation. Failure
by the other party to deliver a security purchased by a Portfolio may result in
a loss or a missed opportunity to make an alternative investment. The use of
when-issued transactions and forward commitments enables a Portfolio to hedge
against anticipated changes in interest rates and prices. If the Adviser were to
forecast incorrectly the direction of interest rate movements, however, a
Portfolio might be required to complete these transactions when the value of the
security is lower than the price paid by the Portfolio. Except for dollar-roll
transactions, a Portfolio will not purchase securities on a when-issued or
forward commitment basis if, as a result, more than 15 percent of the value of
the Portfolio's total assets would be committed to such transactions.
When-issued securities and forward commitments may be sold prior to the
settlement date, but the Portfolios purchase securities on a when-issued and
forward commitment basis only with the intention of actually receiving the
securities. When-issued securities may include bonds purchased on a "when, and
if issued" basis under which the issuance of the securities depends upon the
occurrence of a subsequent event. Commitment of a Portfolio's assets to the
purchase of securities on a when-issued or forward commitment basis will tend to
increase the volatility of the Portfolios net asset value per share.
When-issued or delayed delivery transactions arise when securities are purchased
by a Portfolio with payment and delivery to take place in the future in order to
secure what is considered to be an advantageous price and yield to the Portfolio
at the time it enters into the transaction. In those cases, the purchase price
and the interest rate payable on the securities are fixed on the transaction
date and delivery and payment may take place a month or more after the date of
the transaction. When a Portfolio enters into a delayed delivery transaction, it
becomes obligated to purchase securities and it has all of the rights and risks
attendant to ownership of the security, although delivery and payment occur at a
later date. To facilitate such acquisitions, the Portfolio will maintain with
its custodian a separate account with portfolio securities in an amount at least
equal to such commitments.
At the time a Portfolio makes the commitment to purchase securities on a
when-issued or delayed delivery basis, the Portfolio will record the transaction
as a purchase and thereafter reflect the value each day of such securities in
determining its net asset value. The value of the fixed income securities to be
delivered in the future will fluctuate as interest rates and the credit of the
underlying issuer vary. On delivery dates for such transactions, the Portfolio
will meet its obligations from maturities, sales of the securities held in the
separate account or from other available sources of cash. A Portfolio generally
has the ability to close out a purchase obligation on or before the settlement
date, rather than purchase the security. If a Portfolio chooses to dispose of
the right to acquire a when-issued security prior to its acquisition, it could,
as with the disposition of any other portfolio obligation, realize a gain or
loss due to market fluctuation.
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To the extent a Portfolio engages in when-issued or delayed delivery
transactions, it will do so for the purpose of acquiring securities consistent
with the Portfolio's investment objectives and policies and not for the purpose
of investment leverage or to speculate in interest rate changes.
The use of when-issued transactions and forward commitments enables the
Portfolio to hedge against anticipated changes in interest rates and prices. If
an Adviser were to forecast incorrectly the direction of interest rate
movements, however, a Portfolio might be required to complete when-issued or
forward transactions at prices inferior to the current market values.
When-issued securities and forward commitments may be sold prior to the
settlement date, but a Portfolio enters into when-issued and forward commitments
only with the intention of actually receiving or delivering the securities, as
the case may be. In some instances, the third-party seller of when-issued or
forward commitment securities may determine prior to the settlement date that it
will be unable to meet its existing transaction commitments without borrowing
securities. If advantageous from a yield perspective, a Portfolio may, in that
event, agree to resell its purchase commitment to the third-party seller at the
current market price on the date of sale and concurrently enter into another
purchase commitment for such securities at a later date. As an inducement for a
Portfolio to "roll over" its purchase commitment, the Portfolio may receive a
negotiated fee. When-issued securities may include bonds purchased on a "when,
as and if issued" basis under which the issuance of the securities depends upon
the occurrence of a subsequent event. Any significant commitment of a
Portfolio's assets to the purchase of securities on a "when, as and if issued"
basis may increase the volatility of the Portfolio's net asset value. For
purposes of the Portfolios' investment policies, the purchase of securities with
a settlement date occurring on a Public Securities Association approved
settlement date is considered a normal delivery and not a when-issued or forward
commitment purchase.
DOLLAR ROLL TRANSACTIONS -- POSITIVE RETURN BOND PORTFOLIO, STABLE INCOME
PORTFOLIO, MANAGED FIXED INCOME PORTFOLIO, AND STRATEGIC VALUE PORTFOLIO. A
Portfolio may enter into "dollar roll" transactions wherein the Portfolio sells
fixed income securities, typically mortgage-backed securities, and makes a
commitment to purchase similar, but not identical, securities at a later date
from the same party. Like a forward commitment, during the roll period no
payment is made for the securities purchased and no interest or principal
payments on the security accrue to the purchaser, but the Portfolio assumes the
risk of ownership. A Portfolio is compensated for entering into dollar roll
transactions by the difference between the current sales price and the forward
price for the future purchase, as well as by the interest earned on the cash
proceeds of the initial sale. Like other when-issued securities or firm
commitment agreements, dollar roll transactions involve the risk that the market
value of the securities sold by the Portfolio may decline below the price at
which a Portfolio is committed to purchase similar securities. In the event the
buyer of securities under a dollar roll transaction becomes insolvent, the
Portfolios use of the proceeds of the transaction may be restricted pending a
determination by the other party, or its trustee or receiver, whether to enforce
the Portfolios obligation to repurchase the securities. The Portfolios will
engage in roll transactions for the purpose of acquiring securities for its
portfolio and not for investment leverage. Each Portfolio will limit its
obligations on dollar roll transactions to 35 percent of the Portfolio's net
assets.
BORROWING. EACH PORTFOLIO. A Portfolio may borrow money for temporary or
emergency purposes, including the meeting of redemption requests, in amounts up
to 33 1/3 percent of the Portfolio's total assets. Borrowing involves special
risk considerations. Interest costs on borrowings may fluctuate with changing
market rates of interest and may partially offset or exceed the return earned on
borrowed Portfolios (or on the assets that were retained rather than sold to
meet the needs for which Portfolios were borrowed). Under adverse market
conditions, a Portfolio might have to sell portfolio securities to meet interest
or principal payments at a time when investment considerations would not favor
such sales. Except as otherwise noted, no Portfolio may purchase securities for
investment while any borrowing equaling five percent or more of the Portfolio's
total assets is outstanding or borrow for purposes other than meeting
redemptions in an amount exceeding five percent of the value of the Portfolio's
total assets. A Portfolio's use of borrowed proceeds to make investments would
subject the Portfolio to the risks of leveraging. Reverse repurchase agreements,
short sales not against the box, dollar roll transactions and other similar
investments that involve a form of leverage have characteristics similar to
borrowings but are not considered borrowings if the Portfolio maintains a
segregated account.
TEMPORARY DEFENSIVE POSITION
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ALL PORTFOLIOS (EXCEPT THE MONEY MARKET PORTFOLIOS). A Portfolio, when business
or financial conditions warrant, may assume a temporary defensive position and
invest without limit in cash or prime quality cash equivalents, including: (1)
short-term U.S. Government Securities; (2) certificates of deposit, bankers
acceptances and interest-bearing savings deposits of commercial banks doing
business in the United States (United States banks in the case of Small Cap
Opportunities Portfolio) that have, at the time of investment, except in the
case of International Portfolio, total assets in excess of one billion dollars
and that are insured by the Federal Deposit Insurance Corporation; (3)
commercial paper of prime quality rated Prime-2 or higher by Moody's or A-2 or
higher by S&P or, if not rated, determined by the Adviser to be of comparable
quality; (4) repurchase agreements covering any of the securities in which the
Portfolio may invest directly; and (5) shares of money market Portfolios
registered under the 1940 Act within the limits specified therein. During
periods when and to the extent that a Portfolio has assumed a temporary
defensive position, it may not be pursuing its investment objective. Prime
quality instruments are those that are rated in one of the two highest
short-term rating categories by an NRSRO or, if not rated, determined by the
Adviser to be of comparable quality. Apart from temporary defensive purposes, a
Portfolio may at any time invest a portion of its assets in cash and cash
equivalents as described above. Except during periods when the Portfolio assumes
a temporary defensive position, each Equity Portfolio will have at least 65% of
its total assets invested in common stock and International Portfolio will have
at least 65% of its net assets invested in securities of companies domiciled
outside the United States. International Portfolio may hold cash and bank
instruments denominated in any major foreign currency.
SMALL COMPANY INVESTMENT CONSIDERATIONS AND RISK FACTORS.
SMALL COMPANY STOCK PORTFOLIO, SMALL COMPANY GROWTH PORTFOLIO, SMALL COMPANY
VALUE PORTFOLIO, SMALL CAP VALUE PORTFOLIO, AND SMALL CAP INDEX PORTFOLIO. While
all investments have risks, investments in smaller capitalization companies
carry greater risk than investments in larger capitalization companies. Smaller
capitalization companies generally experience higher growth rates and higher
failure rates than do larger capitalization companies; and the trading volume of
smaller capitalization companies' securities is normally lower than that of
larger capitalization companies and, consequently, generally has a
disproportionate effect on market price (tending to make prices rise more in
response to buying demand and fall more in response to selling pressure).
Investments in small, unseasoned issuers generally carry greater risk than is
customarily associated with larger, more seasoned companies. Such issuers often
have products and management personnel that have not been tested by time or the
marketplace and their financial resources may not be as substantial as those of
more established companies. Their securities (which a Core Portfolio may
purchase when they are offered to the public for the first time) may have a
limited trading market which can adversely affect their sale by the Core
Portfolio and can result in such securities being priced lower than otherwise
might be the case. If other institutional investors engage in trading this type
of security, the Core Portfolio may be forced to dispose of its holdings at
prices lower than might otherwise be obtained.
FOREIGN INVESTMENT RISKS.
MONEY MARKET FUNDS, STABLE INCOME PORTFOLIO, MANAGED FIXED INCOME PORTFOLIO,
STRATEGIC VALUE PORTFOLIO, INCOME EQUITY PORTFOLIO, LARGE COMPANY SMALL COMPANY
STOCK PORTFOLIO, SMALL COMPANY GROWTH PORTFOLIO, AND INTERNATIONAL PORTFOLIO.
All investments, domestic and foreign, involve certain risks. Investments in the
securities of foreign issuers may involve risks in addition to those normally
associated with investments in the securities of U.S. issuers. All foreign
investments are subject to risks of foreign political and economic instability,
adverse movements in foreign exchange rates, the imposition or tightening of
exchange controls or other limitations on repatriation of foreign capital, and
changes in foreign governmental attitudes towards private investment, possibly
leading to nationalization, increased taxation or confiscation of foreign
investors' assets.
Moreover, dividends payable on foreign securities may be subject to foreign
withholding taxes, thereby reducing the income available to shareholders;
commission rates payable on foreign transactions are generally higher than in
the U.S.; foreign accounting, auditing and financial reporting standards differ
from those in the U.S. and, accordingly, less information may be available about
foreign companies than is available about issuers of comparable securities in
the U.S.; and foreign securities may trade less frequently and with lower volume
and may exhibit greater price volatility than U.S. securities.
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Changes in foreign exchange rates will also affect the value in U.S. dollars of
all foreign currency-denominated securities held by the Portfolio. Exchange
rates are influenced generally by the forces of supply and demand in the foreign
currency markets and by numerous other political and economic events occurring
outside the United States, many of which may be difficult, if not impossible, to
predict.
Income from foreign securities will be received and realized in foreign
currencies. A decline in the value of a particular foreign currency against the
U.S. dollar occurring after the Portfolio's income has been earned and computed
in U.S. dollars may require the Portfolio to liquidate portfolio securities to
acquire sufficient U.S. dollars to Portfolio redemptions. Similarly, if the
exchange rate declines between the time the Portfolio incurs expenses in U.S.
dollars and the time such expenses are paid, the Portfolio may be required to
liquidate additional foreign securities to purchase the U.S. dollars required to
meet such expenses.
ADDITIONAL INVESTMENT POLICIES
For purposes of all fundamental and non-fundamental investment policies of the
Portfolio: (1) the term 1940 Act includes the rules thereunder, SEC
interpretations and any exemptive order upon which the Portfolio may rely and
(2) the term Code includes the rules thereunder, IRS interpretations and any
private letter ruling or similar authority upon which the Portfolio may rely.
Except as required by the 1940 Act, if any percentage restriction on investment
or utilization of assets is adhered to at the time an investment is made, a
later change in percentage resulting from a change in the market values of a
Portfolio's assets or purchases and redemptions of interests will not be
considered a violation of the limitation.
FUNDAMENTAL LIMITATIONS
Each Portfolio has adopted the following investment limitations which are
fundamental policies of the Portfolio and cannot be changed without the
affirmative vote of the lesser of (a) more than 50% of the outstanding interests
of the Portfolio or (b) 67% or more of the interests present at an
interestholders' meeting if more than 50% of the outstanding interests of the
Portfolio are represented at the meeting in person or by proxy.
(1) DIVERSIFICATION
Each Portfolio, may not, with respect to 75% of its assets, purchase a
security (other than a U.S. Government Security or a security of an
investment company) if, as a result (i) more than 5% of the Portfolio's
total assets would be invested in the securities of a single issuer, or
(ii) the Portfolio would own more than 10% of the outstanding voting
securities of any single issuer.
(2) CONCENTRATION
Each of SMALL COMPANY STOCK PORTFOLIO, SMALL COMPANY GROWTH PORTFOLIO,
SMALL COMPANY VALUE PORTFOLIO, SMALL CAP INDEX PORTFOLIO, AND SMALL CAP
VALUE PORTFOLIO may not, not purchase securities if, immediately after
the purchase, more than 25% of the value of the Portfolio's total
assets would be invested in the securities of issuers conducting their
principal business activities in the same industry; provided, however
that there is no limit on investments in U.S. Government Securities.
Notwithstanding anything to the contrary, to the extent permitted by
the 1940 Act, the Fund may invest in one or more investment companies;
provided that, except to the extent the Fund invests in other
investment companies pursuant to Section 12(d)(1)(A) of the 1940 Act,
the Fund treats the assets of the investment companies in which it
invests as its own for purposes of this policy
INTERNATIONAL PORTFOLIO may not purchase a security if, as a result,
more than 25% of the Fund's total assets would be invested in
securities of issuers conducting their principal business activities in
the same industry; provided: (1) there is no limit on investments in
U.S. Government Securities, or in repurchase agreements covering U.S.
Government Securities; (2) there is no limit on investment in issuers
domiciled in a single country; (3) financial service companies are
classified according to the end users of their services (for
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example, automobile finance, bank finance and diversified finance);
and (4) utility companies are classified according to their services
(for example, gas, gas transmission, electric and gas, electric and
telephone). Notwithstanding anything to the contrary, to the extent
permitted by the 1940 Act, the Fund may invest in one or more
investment companies; provided that, except to the extent the Fund
invests in other investment companies pursuant to Section 12(d)(1)(A)
of the 1940 Act, the Fund treats the assets of the investment
companies in which it invests as its own for purposes of this policy.
PRIME MONEY MARKET PORTFOLIO AND MONEY MARKET PORTFOLIO may not
purchase a security if, as a result, more than 25% of the Portfolio's
total assets would be invested in securities of issuers conducting
their principal business activities in the same industry; provided,
(1) there is no limit on investments in U.S. Government Securities, in
repurchase agreements covering U.S. Government Securities or in
foreign government securities, (2) municipal securities are not
treated as involving a single industry, (3) there is no limit on
investment in issuers domiciled in a single country, (4) financial
service companies are classified according to the end users of their
services (for example, automobile finance, bank finance and
diversified finance) and (5) utility companies are classified
according to their services (for example, gas, gas transmission,
electric and gas, electric and telephone); and provided the Portfolio
will invest more than 25% of the value of the Portfolio's total assets
in obligations of domestic and foreign financial institutions and
their holding companies. Notwithstanding anything to the contrary, to
the extent permitted by the 1940 Act, the Portfolio may invest in one
or more investment companies; provided that, except to the extent the
Portfolio invests in other investment companies pursuant to Section
12(d)(1)(A) of the 1940 Act, the Portfolio treats the assets of the
investment companies in which it invests as its own for purposes of
this policy.
STRATEGIC VALUE BOND PORTFOLIO may not purchase a security if, as a
result, more than 25% of the Portfolio's total assets would be
invested in securities of issuers conducting their principal business
activities in the same industry; provided, (i) there is no limit on
investments in U.S. Government Securities, or in repurchase agreements
covering U.S. Government Securities, (ii) mortgage-related or
housing-related securities (including mortgage-related or
housing-related U.S. Government Securities) and municipal securities
are not treated as involving a single industry, (iii) financial
service companies are classified according to the end users of their
services (for example, automobile finance, bank finance and
diversified finance), (iv) utility companies are classified according
to their services (for example, gas, gas transmission, electric and
gas, electric and telephone). Notwithstanding anything to the
contrary, to the extent permitted by the 1940 Act, the Portfolio may
invest in one or more investment companies; provided that, except to
the extent the Portfolio invests in other investment companies
pursuant to Section 12(d)(1)(A) of the 1940 Act, the Portfolio treats
the assets of the investment companies in which it invests as its own
for purposes of this policy.
INDEX PORTFOLIO, POSITIVE RETURN PORTFOLIO, STABLE INCOME PORTFOLIO,
MANAGED FIXED INCOME PORTFOLIO, INCOME EQUITY PORTFOLIO, DISCIPLINED
GROWTH PORTFOLIO, and LARGE COMPANY GROWTH PORTFOLIO may not purchase a
security if, as a result, more than 25% of the Portfolio's total assets
would be invested in securities of issuers conducting their principal
business activities in the same industry; provided, however, that there
is no limit on investments in U.S. Government Securities, repurchase
agreements covering U.S. Government Securities, foreign government
securities, mortgage-related or housing-related securities, municipal
securities and issuers domiciled in a single country; that financial
service companies are classified according to the end users of their
services (for example, automobile finance, bank finance and diversified
finance); that utility companies are classified according to their
services (for example, gas, gas transmission, electric and gas,
electric and telephone. Notwithstanding anything to the contrary, to
the extent permitted by the 1940 Act, the Portfolio may invest in one
or more investment companies; provided that, except to the extent the
Portfolio invests in other investment companies pursuant to Section
12(d)(1)(A) of the 1940 Act, the Portfolio treats the assets of the
investment companies in which it invests as its own for purposes of
this policy.
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(3) BORROWING
EACH PORTFOLIO may not borrow money, if, as a result, outstanding
borrowings would exceed an amount equal to 33 1/3% of the Portfolio's
total assets.
(4) ISSUANCE OF SENIOR SECURITIES
EACH PORTFOLIO may not issue senior securities except to the extent
permitted by the 1940 Act.
(5) UNDERWRITING ACTIVITIES
EACH PORTFOLIO may not underwrite securities of other issuers, except
to the extent that the Portfolio may be considered to be acting as an
underwriter in connection with the disposition of portfolio securities.
(6) MAKING LOANS
EACH PORTFOLIO may not make loans, except the Portfolio may enter into
repurchase agreements, purchase debt securities that are otherwise
permitted investments and lend portfolio securities.
(7) PURCHASES AND SALES OF REAL ESTATE
EACH PORTFOLIO may not purchase or sell real estate, any interest
therein or real estate limited partnership interests, except that the
Portfolio may invest in debt obligations secured by real estate or
interests therein or securities issued by companies that invest in real
estate or interests therein.
(8) PURCHASES AND SALES OF COMMODITIES
EACH PORTFOLIO may not purchase or sell physical commodities or
contracts, options or options on contracts to purchase or sell physical
commodities, provided that currencies and currency-related contracts
and contracts on indices are not deemed to be physical commodities.
NONFUNDAMENTAL LIMITATIONS
Each Portfolio has adopted the following investment limitations which are not
fundamental policies of the Portfolio and may be changed by the Board.
(1) BORROWING
Borrowing for other than temporary or emergency purposes or meeting
redemption requests is limited to 5% of the value of the Portfolio's
total assets. Where the Portfolio establishes a segregated account to
limit the amount of leveraging of the Portfolio with respect to certain
investment techniques, the Portfolio does not treat those techniques as
involving borrowings for purposes of this limitation.
(2) ILLIQUID SECURITIES
MONEY MARKET PORTFOLIOS may not acquire securities or invest in
repurchase agreements with respect to any securities if, as a result,
more than 10% of the Portfolio's net assets (taken at current value)
would be invested in repurchase agreements not entitling the holder to
payment of principal within seven days and in securities which are not
readily marketable, including securities that are not readily
marketable by virtue of restrictions on the sale of such securities to
the public without registration under the 1933 Act ("Restricted
Securities").
EACH OTHER PORTFOLIO may not acquire securities or invest in repurchase
agreements with respect to any securities if, as result, more than 15%
of the Portfolio's net assets (taken at current value) would be
invested in repurchase agreements not entitling the holder to payment
of principal within seven days and in
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securities which are not readily marketable, including securities that
are not readily marketable by virtue of restrictions on the sale of
such securities to the public without registration under the 1933 Act
("Restricted Securities").
(3) OTHER INVESTMENT COMPANIES
EACH PORTFOLIO may not invest in securities of another investment
company, except to the extent permitted by the 1940 Act.
(4) MARGIN AND SHORT SALES
EACH PORTFOLIO may not purchase securities on margin or make short
sales of securities (except short sales against the box) except for the
use of short-term credit necessary for the clearance of purchases and
sales of portfolio securities. Each Portfolio may make margin deposits
in connection with permitted transactions in options and futures
contracts.
EACH PORTFOLIO (other than Small Cap Index Portfolio, Small Cap Value
Portfolio, Small Company Growth Portfolio, Small Company Value
Portfolio, and Small Company Stock Portfolio) may not enter short sales
if, as a result, more that 25% of the value of the Portfolio's total
assets would be so invested, or such a position would represent more
than 2% of the outstanding voting securities of any single issuer or
class of an issuer.
(5) UNSEASONED ISSUERS
EACH PORTFOLIO (other than Small Cap Index Portfolio, Small Cap Value
Portfolio, Small Company Growth Portfolio, Small Company Value
Portfolio, and Small Company Stock Portfolio) may not invest in
securities (other than fully-collateralized debt obligations) issued by
companies that have conducted continuous operations for less than three
years, including the operations of predecessors, unless guaranteed as
to principal and interest by an issuer in whose securities the
Portfolio could invest, if, as a result, more than 5% of the value of
the Portfolio's total assets would be so invested.
(6) PLEDGING
EACH PORTFOLIO may not pledge, mortgage, hypothecate or encumber any of
its assets except to secure permitted borrowings.
(7) SECURITIES WITH VOTING RIGHTS
MONEY MARKET PORTFOLIO, PRIME MONEY MARKET PORTFOLIO POSITIVE RETURN
PORTFOLIO, STABLE INCOME PORTFOLIO, STRATEGIC VALUE BOND PORTFOLIO, AND
MANAGED FIXED INCOME PORTFOLIO may not purchase securities having
voting rights except securities of other investment companies; provided
that the Portfolios may hold securities with voting rights obtained
through a conversion or other corporate transaction of the issuer of
the securities, whether or not the Portfolio was permitted to exercise
any rights with respect to the conversion or other transaction.
(8) LENDING OF PORTFOLIO SECURITIES
EACH PORTFOLIO may not lend portfolio securities if the total value of
all loaned securities would exceed 33 1/3% of the Portfolio's total
assets.
(9) OPTIONS AND FUTURES CONTRACTS
MONEY MARKET PORTFOLIO and PRIME MONEY MARKET PORTFOLIO may not invest
in options, futures contracts or options on futures contracts.
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<PAGE>
NO OTHER PORTFOLIO may purchase an option if, as a result, more that 5%
of the value of the Portfolio's total assets would be so invested.
(10) WARRANTS
EACH PORTFOLIO may not invest in warrants if (i) more than 5% of the
value of the Portfolio's net assets would will be invested in warrants
(valued at the lower of cost or market) or (ii) more than 2% of the
value of the Portfolio's net assets would be invested in warrants which
are not listed on the New York Stock Exchange or the American Stock
Exchange; provided, that warrants acquired by a Portfolio attached to
securities are deemed to have no value.
(11) PURCHASES AND SALES OF COMMODITIES
MONEY MARKET PORTFOLIO and PRIME MONEY MARKET PORTFOLIO may not
purchase or sell physical commodities or contracts, options or options
on contracts to purchase or sell physical commodities, provided that
currencies and currency-related contracts and contracts on indices are
not be deemed to be physical commodities.
MANAGEMENT OF THE TRUST
The Trustees and officers of the Trust and their principal occupations during
the past five years are set forth below. Each Trustee who is an "interested
person" (as defined by the 1940 Act) of the Trust is indicated by an asterisk.
John Y. Keffer*, Chairman and President (age 54).
President , Forum Financial Group, LLC (mutual fund services company
holding company). Mr. Keffer is a Trustee/Director and/or officer of
various registered investment companies for which Forum Financial
Services, Inc. serves as manager, administrator and/or distributor.
His address is Two Portland Square, Portland, Maine 04101.
Costas Azariadis, Trustee (age 55).
Professor of Economics, University of California, Los Angeles, since
July 1992. Prior thereto, Dr. Azariadis was Professor of Economics at
the University of Pennsylvania. His address is Department of
Economics, University of California, Los Angeles, 405 Hilgard Avenue,
Los Angeles, California 90024.
James C. Cheng, Trustee (age 56).
President, Technology Marketing Associates (a marketing company for
small and medium size businesses in New England) since 1991. Prior
thereto, Mr. Cheng Mr. Cheng was President of Network Dynamics, Inc.
(a software development company). His address is 27 Temple Street,
Belmont, MA 02718.
J. Michael Parish, Trustee (age 54).
Partner at the law firm of Reid & Priest L.L.P. since 1995. From 1989
to 1995, he was a partner at Winthrop, Stimson, Putnam & Roberts. His
address is 40 West 57th Street, New York, New York 10019.
Stacey Hong, Treasurer (age 32)
Director, Fund Accounting, Forum Financial Group, LLC, with which he
has been associated since April 1992. Prior thereto, Mr. Hong was a
Senior Accountant at Ernst & Young, LLP. His address is Two Portland
Square, Portland, Maine 04101.
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Thomas G. Sheehan, Vice President (age 43).
Managing Director, Forum Financial Group, LLC with which he has been
associated since October 1993. Prior thereto, Mr. Sheehan was Special
Counsel to the Division of Investment Management of the SEC. Mr.
Sheehan also serves as an officer of other registered investment
companies for which the various Forum Financial Group of Companies
provides services. Her address is Two Portland Square, Portland, Maine
04101.
David I. Goldstein, Secretary (age 37).
General Counsel, Forum Financial Group , LLC, with which he has been
associated since 1991. Prior thereto, Mr. Goldstein was associated
with the law firm of Kirkpatrick & Lockhart, LLP. Mr. Goldstein is
also an officer of various registered investment companies for which
Forum Financial Services, Inc. serves as manager, administrator and/or
distributor. His address is Two Portland Square, Portland, Maine
04101.
Leslie K. Klenk, Secretary (age 34)
Assistant Counsel, Forum Financial Group, LLC with which she has been
associated since April 1998. Prior thereto, Ms. Klenk was Vice
President and Associate General Counsel of Smith Barney Inc. Ms. Klenk
also serves as an officer of other registered investment companies for
which the various Forum Financial Group of Companies provides
services. Her address is Two Portland Square, Portland, Maine 04101.
Pamela Stutch, Assistant Secretary (age 31)
Fund Administrator, Forum Financial Group, LLC with which she has been
associated since May 1998. Prior thereto, Ms. Stutch attended Temple
University School of Law and graduated in 1997. Ms. Stutch was also a
legal intern for the Maine Department of the Attorney General. Ms.
Stutch also serves as an officer of other registered investment
companies for which the various Forum Financial Group of Companies
provides services. Her address is Two Portland Square, Portland, Maine
04101.
Each Trustee of the Trust (other than persons who are interested persons of the
Trust) is paid $1,000 for each Board meeting attended (whether in person or by
electronic communication) plus $100 per active portfolio of the Trust and is
paid $1,000 for each Committee meeting attended on a date when a Board meeting
is not held. To the extent a meeting relates to only certain portfolios of the
Trust, Trustees are paid the $100 fee only with respect to those portfolios.
Trustees are also reimbursed for travel and related expenses incurred in
attending meetings of the Board. No officer of the Trust is compensated by the
Trust.
The following table provides the aggregate compensation paid to the Trustees of
the Trust by the Trust. Information is presented for the year ended May 31,
1998, the Portfolios' fiscal year end.
Total Compensation
from the Trust
John Keffer $0
- ----------------------------------------------------
Costas Azariadis $9,357.48
James C. Cheng $9,357.48
J. Michael Parish $9,357.58
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
From time to time, certain interestholders may own a large percentage of the
shares of a Portfolio. Accordingly, those interestholders may be able to greatly
affect (if not determine) the outcome of a imterestholder vote. Table 1
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in Appendix B all interestholders who owned of record 5% or more of the
outstanding shares of any of Portfolio as of August 28, 1998
Norwest Advantage Funds have informed the Trust that whenever a series of
Norwest Advantage Funds that invests all of its investable assets in a Portfolio
is requested to vote on matters pertaining to a Portfolio, that series will hold
a meeting of its shareholders and will cast its vote as instructed by its
shareholders. In addition, Norwest Advantage Funds has informed the Trust that
it will similarly hold a meeting of its shareholders whenever it is requested to
vote on matters pertaining to a Portfolio if required by law to do so. It is
anticipated that any other registered investment company (or series thereof)
that may in the future invest in a Portfolio will follow the same or a similar
practice.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISORY SERVICES
Norwest Investment Management, Inc., a subsidiary of Norwest Bank Minnesota,
N.A., acts as investment adviser to the Portfolios (except International
Portfolio) and is required to furnish at its expense all services, facilities
and personnel necessary in connection with managing the investments of, and
effecting portfolio transactions for, those Portfolios.
Schroder acts as investment adviser to International Portfolio and is required
to furnish at its expense all services, facilities and personnel necessary in
connection with managing the investments of, and effecting portfolio
transactions for, those Portfolios.
Crestone Capital Management, Inc. ("Crestone"), an investment advisory
subsidiary of Norwest Bank, is the investment subadviser of Small Company Stock
Portfolio.. Crestone provides investment advice regarding companies with small
capitalization to various clients, including institutional investors."
Galliard Capital Management, Inc. ("Galliard"), an investment advisory
subsidiary of Norwest Bank, is the investment subadviser of Stable Income
Portfolio, Managed Fixed Income Portfolio and Strategic Value Bond Portfolio.
Galliard provides investment advice regarding advisory services to bank and
thrift institutions, pension and profit sharing plans, trusts and charitable
organizations and corporate and other business entities
Peregrine Capital Management, Inc. ("Peregrine"), an investment advisory
subsidiary of Norwest, is the investment subadviser of Positive Return Bond
Portfolio, Small Company Stock Portfolio, Small Company Growth Portfolio, Large
Company Growth Portfolio and Small Company Value Portfolio. Peregrine provides
investment advisory services to corporate and public pension plans, profit
sharing plans, savings-investment plans and 401(k) plans.
Smith Asset Management Group, L.P. ("Smith"), a registered investment adviser,
is the investment subadviser of Disciplined Growth Portfolio and Small Cap Value
Portfolio. Smith group provides investment management services to company
retirement plans, foundations, endowments, trust companies, and high net worth
individuals.
The investment advisory agreement for each Portfolio ("Advisory Agreement") will
remain in effect for a period of two years from the date of its effectiveness
and thereafter shall continue for successive one-year periods provided such
continuance is specifically approved at least annually by the Board or by vote
of the interestholders of the Portfolio, and, in either case, by a majority of
the Trustees who are not parties to the Advisory Agreement or interested persons
of any such party (other than as trustees of the Trust). The Advisory Agreement
with respect to a Portfolio is terminable without the payment of penalty, (i) by
the Board or by a vote of a majority of the Portfolio's outstanding voting
securities (as defined in the 1940 Act) on 60 days' written notice to Norwest or
Schroder, as applicable, or (ii) by Norwest or Schroder on 60 days' written
notice to the Trust. Each Advisory Agreement terminates automatically upon its
assignment. The Advisory Agreement with respect to each Portfolio also provides
that, with respect to the Portfolio, the Adviser shall not be liable for any
mistake of judgment or in any event whatsoever except for willful misfeasance,
reckless disregard. bad faith or gross negligence in the performance of its
duties under the Investment Advisory Agreement.
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An Investment Subadvisory Agreement (the "Subadvisory Agreement") for a
Portfolio will remain in effect for a period of two years from the date of its
effectiveness and thereafter shall continue for successive one-year periods
provided such continuance is specifically approved at least annually by the
Board or by vote of the interestholders of the Portfolio, and, in either case,
by a majority of the Trustees who are not parties to the Advisory Agreement or
interested persons of any such party (other than as trustees of the Trust). A
Portfolio's Subadvisory Agreement is terminable without penalty by the Board or
a majority of the outstanding voting securities of the Portfolio on 60 days'
written notice to the Subadviser or by the Subadviser on 60 days' written notice
to the Trust when authorized either by vote of a Portfolio's shareholders or by
a vote of a majority of the Board, or by the Subadvisor on not more than 60
days' nor less than 30 days' written notice, and will automatically terminate in
the event of its assignment. The Subadvisory Agreement for a Portfolio also
provides that neither the Subadvisor will not be liable l for any mistake of
judgment or in any event except for willful misfeasance, reckless disregard, bad
faith or gross negligence in the performance of its or their obligations and
duties under the Subadvisory Advisory Agreement. A Portfolio's Subadvisory
Advisory Agreement provides that the Subadviser may render services to others.
The advisory fees, as described in Part A, are accrued daily and paid monthly.
Either adviser in its sole discretion, may waive all or any portion of its
advisory fee with respect to each Portfolio. Each Advisory Agreement provides
that the Advisers may render service to others.
Table 2 in Appendix B shows the dollar amount of advisory fees payable as a
percentage of daily net assets by each Portfolio to the Norwest or Schroder.
Specifically, the table details the dollar amount of fees that would have been
payable had certain waivers not been in place, together with the dollar amount
of fees waived and the dollar amount of net fees paid. The advisory fee rates
are set forth in Part A. This information is provided for the past three years
or such shorter terms as a Portfolio has been operational.
ADMINISTRATIVE SERVICES
Pursuant to an Administration Agreement with the Trust, FAdS supervises the
overall administration of the Portfolios which includes, among other
responsibilities, overseeing the performance of administrative and professional
services rendered to the Trust by others, including its custodian, transfer
agent and Portfolio accountant as well as legal and auditing services; preparing
and printing the periodic updating of the Trust's registration statement, tax
returns, and reports to interestholders and the SEC; preparing, filing and
maintaining the Trust's governing documents; preparing and disseminating
materials for meetings of the Board; and providing the Trust with general office
facilities.
The Administration Agreement between FAdS and the Trust will continue in effect
with respect to a Portfolio only if such continuance is specifically approved at
least annually by the Board or by a majority of the outstanding voting
securities of the Portfolio the interestholders of that Portfolio and, in either
case, by a majority of the Trustees who are not parties to the Administration
Agreement or interested persons of any such party (other than as Trustees of the
Trust).
The administration agreement may be terminated with respect to each Portfolio
without penalty by the Board on 60 days' written notice to FAdS by FAdS on 60
days' written notice to the Trust. The Administration Agreement also provides
that FAdS shall not be liable for any action or inaction except for bad faith,
willful misfeasance, gross negligence or reckless disregard in the performance
of its duties and obligations under the Administration Agreement.
Table 3 in Appendix B shows the dollar amount of administrative fees payable as
a percentage of daily net assets by each Portfolio to FAdS. Specifically, the
table details the dollar amount of fees that would have been payable had certain
waivers not been in place, together with the dollar amount of fees waived and
the dollar amount of net fees paid. The advisory fee rates are set forth in Part
A. This information is provided for the past three years or such shorter terms
as a Portfolio has been operational.
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PORTFOLIO ACCOUNTING
Pursuant to a Portfolio and Unitholder Accounting Agreement (the "Accounting
Agreement") with the Trust FAcS, an affiliate of FAdS, performs portfolio
accounting services for each Portfolio. Under the Accounting Agreement, FAcS
prepares and maintains books and records of each Portfolio on behalf of the
Trust that are required to be maintained under the 1940 Act, calculates the net
asset value per share of each Portfolio (and class thereof) and dividends and
capital gain distributions and prepares periodic reports to shareholders and the
SEC.
The Accounting Agreement will continue in effect with respect to a Portfolio
only if such continuance is specifically approved at least annually by the
Board. The Accounting Agreement may be terminated with respect to a Portfolio at
any time. without penalty, by the Board on 60 days' written notice to FAcS or by
FAcS on 60 days' written notice to the Board. The Accounting Agreement provides
that FAcS shall not be liable for any action or inaction except for bad faith,
willful misfeasance, gross negligence or reckless disregard in the performance
of its duties and obligations under the Accounting Agreement.
For its accounting services, FAcS receives from the Trust with respect to each
Portfolio a fee of $48,000 per year plus certain amounts based upon the number
of interestholders, the type of Portfolio, and number and types of portfolio
transactions within each Portfolio
Table 4 in Appendix B shows the dollar amount of accounting fees payable as a
percentage of daily net assets by each Portfolio to FAcS. Specifically, the
table details the dollar amount of fees that would have been payable had certain
waivers not been in place, together with the dollar amount of fees waived and
the dollar amount of net fees paid. The advisory fee rates are set forth in Part
A. This information is provided for the past three years or such shorter terms
as a Portfolio has been operational.
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP, One Post Office Square, Boston, Massachusetts 02109,
is the independent auditor for Index Portfolio, Small Company Stock Portfolio,
Small Company Value Portfolio, Small Company Growth Portfolio and International
Portfolio since the inception of those Portfolios through the year ended May 31,
1998. KPMG Peat Marwick LLP, 99 High Street, Boston, MA 02110 is the independent
auditor for Money Market Portfolio, Prime Money Market Portfolio, Stable Income
Portfolio, Managed Fixed Income Portfolio, Positive Return Bond Portfolio,
Income Equity Portfolio, Large Company Growth Portfolio, Small Cap Index
Portfolio, Strategic Value Bond Portfolio, Disciplined Growth Portfolio, and
Small Cap Value Portfolio.
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CUSTODIAN
Norwest Bank, 733 Marquette Avenue, Minneapolis, Minnesota 55479-0040, is the
custodian of the Portfolio's assets. Morgan Stanley acts as sub-custodian of
International Portfolio's assets, but plays no role in making decisions as to
the purchase or sale of portfolio securities for the Portfolios. Pursuant to
rules adopted under the 1940 Act, each Portfolio may maintain its foreign
securities and cash in the custody of certain eligible foreign banks and
securities depositories. Selection of these foreign custodial institutions is
made by the Board following a consideration of a number of factors. Morgan
Stanley employs qualified foreign subcustodians to provide custody of
International Portfolio's assets in accordance with applicable regulations.
BROKERAGE ALLOCATION AND OTHER PRACTICES
Investment decisions for the Portfolios will be made independently from those
for any other client account or investment company that is or may in the future
become managed by an Adviser or their affiliates. Investment decisions are the
product of many factors including basic suitability for the particular client
involved. Thus, a particular security may be bought or sold for certain clients
even though it could have been bought or sold for other clients at the same
time. Likewise, a particular security may be bought for one or more clients when
one or more clients are selling the security. In some instances, one client may
sell a particular security to another client. It also sometimes happens that two
or more clients simultaneously purchase or sell the same security, in which
event each day's transactions in such security are, insofar as is possible,
averaged as to price and allocated between such clients in a manner which, in an
Adviser's opinion, is equitable to each and in accordance with the amount being
purchased or sold by each. There may be circumstances when purchases or sales of
portfolio securities for one or more clients will have an adverse effect on
other clients. In addition, when purchases or sales of the same security for the
Portfolio and other client accounts managed by an Adviser occur
contemporaneously, the purchase or sale orders may be aggregated in order to
obtain any price advantages available to large denomination purchases or sales.
Purchases and sales of fixed income portfolio securities are generally effected
as principal transactions. These securities are normally purchased directly from
the issuer or from an underwriter or market maker for the securities. There
usually are no brokerage commissions paid for such purchases. Purchases from
underwriters of portfolio securities include a commission or concession paid by
the issuer to the underwriter, and purchases from dealers serving as market
makers include the spread between the bid and ask prices In the case of
securities traded in the foreign and domestic over-the-counter markets, there is
generally no stated commission, but the price usually includes an undisclosed
commission or markup In underwritten offerings, the price includes a disclosed
fixed commission or discount.
Purchases and sales of equity securities on exchanges are generally effected
through brokers who charge commissions except in the over-the-counter markets.
Allocations of transactions to brokers and dealers and the frequency of
transactions are determined by Norwest or Schroder, as applicable in its best
judgment and in a manner deemed to be in the best interest of holders of
beneficial interests of the Portfolios rather than by any formula. The primary
consideration is prompt execution of orders in an effective manner and at the
most favorable price available to the Portfolio. In transactions on stock
exchanges in the United States, these commissions are negotiated, whereas on
foreign stock exchanges these commissions are generally fixed. Where
transactions are executed in the over-the-counter market, the Portfolio will
seek to deal with the primary market makers; but where necessary in order to
obtain best execution, it will utilize the services of others. In all cases the
Portfolio will attempt to negotiate best execution.
A Portfolio may not always pay the lowest commission or spread available.
Rather, in determining the amount of commission, including certain dealer
spreads, paid in connection with securities transactions, Norwest and Schroder
take into account such factors as size of the order, difficulty of execution,
efficiency of the executing broker's facilities (including the services
described below) and any risk assumed by the executing broker. Norwest and
Schroder may also take into account payments made by brokers effecting
transactions for a Portfolio (i) to the Portfolio or (ii) to other persons on
behalf of the Portfolio for services provided to it for which it would be
obligated to pay.
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In addition, an Adviser may give consideration to research services furnished by
brokers for their use and may cause the Portfolio to pay these brokers a higher
amount of commission than may be charged by other brokers. Such research and
analysis may be used by Norwest and Schroder in connection with services to
clients other than the Portfolios, and advisory fees are not reduced by reason
of their receipt of the research services.
Subject to the general policies regarding allocation of portfolio brokerage as
set forth above, the Board has authorized the Advisers to employ their
respective affiliates to effect securities transactions of the Portfolios,
provided certain other conditions are satisfied. Payment of brokerage
commissions to an affiliate of an Adviser, as applicable, for effecting such
transactions is subject to Section 17(e) of the 1940 Act, which requires, among
other things, that commissions for transactions on securities exchanges paid by
a registered investment company to a broker which is an affiliated person of
such investment company, or an affiliated person of another person so
affiliated, not exceed the usual and customary brokers' commissions for such
transactions. It is the Portfolios' policy that commissions paid to Schroder
Muenchmeyer ("Muenchmeyer"), Norwest Investment Services, Inc. ("Norwest
Services") and other affiliates of either Norwest or Schroder will, in the
judgment of the adviser responsible for making portfolio decisions and selecting
brokers, be (i) at least as favorable as commissions contemporaneously charged
by the affiliate on comparable transactions for its most favored unaffiliated
customers and (ii) at least as favorable as those which would be charged on
comparable transactions by other qualified brokers having comparable execution
capability. The Board, including a majority of the non-interested Trustees, has
adopted procedures to ensure that commissions paid to affiliates of the Norwest
or Schroder by the Portfolios satisfy the foregoing standards.
The Trust has no understanding or arrangement to direct any specific portion of
its brokerage to Muenchmeyer or Norwest Services, and will not direct brokerage
to Muenchmeyer or Norwest Services in recognition of research services.
Table 5 in Appendix B shows the dollar amount of brokerage commissions paid by
each Portfolio for the past three years or such shorter terms as a Portfolio has
been operational. In addition, the table also indicates the dollar amount of
brokerage commissions, percentage of brokerage commissions and percentage of
commission transactions executed through broker/dealer affiliates of Norwest or
Schroder. As of May 31, 1998, several Portfolios maintained equity investments
in brokers/dealers (or their parent companies) used to affect portfolio
transactions. Table 6 of Appendix B provides details of these investments.
Transactions in futures contracts are executed through futures commission
merchants ("FCMs"), who receive brokerage commissions for their services. The
Trust's procedures in selecting FCMs to execute the Trust's transactions in
futures contracts, including procedures permitting the use of affiliates of
Norwest or Schroder, are similar to those in effect with respect to brokerage
transactions in securities.
The Trust will not purchase securities that are offered in underwritings in
which any affiliate of Norwest or Schroder is a member of the underwriting or
selling group, except pursuant to procedures adopted by the Board pursuant to
Rule 10f-3 under the 1940 Act. Among other things, these procedures require that
the spread or commission paid in connection with such a purchase be reasonable
and fair, the purchase be at not more than the public offering price prior to
the end of the first business day after the date of the public offering and that
Norwest, Schroder or any affiliates thereof not participate in or benefit from
the sale to the Trust.
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CAPITAL STOCK AND OTHER SECURITIES
Under the Trust Instrument, the Trustees are authorized to issue beneficial
interest in one or more separate and distinct series. Investments in each
Portfolio have no preference, preemptive, conversion or similar rights and are
fully paid and nonassessable, except as set forth below. Each investor in a
Portfolio is entitled to a vote in proportion to the amount of its investment
therein. Investors in the Portfolios will all vote together in certain
circumstances (e.g., election of the Trustees and ratification of auditors, as
required by the 1940 Act and the rules thereunder). One or more Portfolios could
control the outcome of these votes. Investors do not have cumulative voting
rights, and investors holding more than 50% of the aggregate interests in the
Trust or in a Portfolio, as the case may be, may control the outcome of votes.
The Trust is not required and has no current intention to hold annual meetings
of investors, but the Trust will hold special meetings of investors when (1) a
majority of the Trustees determines to do so or (2) investors holding at least
10% of the interests in the Trust (or a Portfolio) request in writing a meeting
of investors in the Trust (or Portfolio). Except for certain matters
specifically described in the Trust Instrument, the Trustees may amend the
Trust's Trust Instrument without the vote of investors.
The Trust, with respect to a Portfolio, may enter into a merger or
consolidation, or sell all or substantially all of its assets, if approved by
the Trust's Board. A Portfolio may be terminated (1) upon liquidation and
distribution of its assets, if approved by the vote of a majority of the
Portfolio's outstanding voting securities (as defined in the 1940 Act) or (2) by
the Trustees on written notice to the Portfolio's investors. Upon liquidation or
dissolution of any Portfolio, the investors therein would be entitled to share
pro rate in its net assets available for distribution to investors.
The Trust is organized as a business trust under the laws of the State of
Delaware. The Trust's interestholders are not personally liable for the
obligations of the Trust under Delaware law. The Delaware Business Trust Act
provides that an interestholder of a Delaware business trust shall be entitled
to the same limitation of liability extended to shareholders of private
corporations for profit. However, no similar statutory or other authority
limiting business trust interestholder liability exists in many other states,
including Texas. As a result, to the extent that the Trust or an interestholder
is subject to the jurisdiction of courts in those states, the courts may not
apply Delaware law, and may thereby subject the Trust to liability. To guard
against this risk, the Trust Instrument of the Trust disclaims liability for
acts or obligations of the Trust and requires that notice of such disclaimer be
given in each agreement, obligation and instrument entered into by the Trust or
its Trustees, and provides for indemnification out of Trust property of any
interestholder held personally liable for the obligations of the Trust. Thus,
the risk of an interestholder incurring financial loss beyond his investment
because of shareholder liability is limited to circumstances in which (1) a
court refuses to apply Delaware law, (2) no contractual limitation of liability
is in effect, and (3) the Trust itself is unable to meet its obligations.
PURCHASE, REDEMPTION AND PRICING OF SECURITIES
Interests in the Portfolios are issued solely in private placement transactions
that do not involve any "public offering" within the meaning of section 4(2) of
the 1933 Act. See "General Description of Registrant," "Purchase of Securities,"
and "Redemption or Repurchase" in Part A. Table 7 of Appendix B provides the net
asset values for each Portfolio as of May 31, 1998.
The Trust was granted an exemptive order by the Commission which allows only
open-end management investment companies or their separate series for which
Norwest (or any person controlled by, controlling or under common control with
Norwest) acts as investment adviser (collectively, "Norwest Gateways") to invest
in Index Portfolio, Small Company Portfolio and International Portfolio II. The
original exemptive order, which imposed several substantive conditions upon the
Trust and Norwest Advantage Funds, was amended effective August 6, 1996, to
permit any Norwest Advantage Fund to invest all or a portion of its assets in a
Core Trust portfolio, irrespective of investment style, and which removed
certain restrictions imposed on the Trust thereby permitting the Trust to accept
investments from persons other than Norwest Advantage Funds.
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TAX STATUS
Each Portfolio is classified for federal income tax purposes as a separate
partnership that is not a "publicly traded partnership." As a result, no
Portfolio is subject to federal income tax; instead, each investor in a
Portfolio is required to take into account in determining its federal income tax
liability its share of the Portfolio's income, gains, losses, deductions, and
credits, without regard to whether it has received any cash distributions from
the Portfolio. Each Portfolio also is not subject to Delaware income or
franchise tax.
Each investor in a Portfolio is deemed to own a proportionate share of the
Portfolio's assets, and to earn a proportionate share of the Portfolio's income,
for purposes of determining whether the investor satisfies the requirements to
qualify as a regulated investment company ("RIC") under Subchapter M of the
Internal Revenue Code of 1986, as amended. Accordingly, each Portfolio intends
to conduct its operations so that its investors that intend to qualify as RICs
("RIC investors") will be able to satisfy all those requirements.
Distributions to an investor from a Portfolio (whether pursuant to a partial or
complete withdrawal or otherwise) will not result in the investor's recognition
of any gain or loss for federal income tax purposes, except that (1) gain will
be recognized to the extent any cash that is distributed exceeds the investor's
basis for its interest in the Portfolio before the distribution, (2) income or
gain will be recognized if the distribution is in liquidation of the investor's
entire interest in the Portfolio and includes a disproportionate share of any
unrealized receivables held by the Portfolio, (3) loss will be recognized if a
liquidation distribution consists solely of cash and/or unrealized receivables,
and (4) gain or loss may be recognized on a distribution to an investor that
contributed property to the Portfolio. An investor's basis for its interest in a
Portfolio generally will equal the amount of cash and the basis of any property
it invests in the Portfolio, increased by the investor's share of the
Portfolio's net income and gains and decreased by (a) the amount of cash and the
basis of any property the Portfolio distributes to the investor and (b) the
investor's share of the Portfolio's losses.
Dividends and interest received by a Portfolio may be subject to income,
withholding, or other taxes imposed by foreign countries and; U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors.
Each Portfolio (except Index Portfolio) may invest in the stock of "passive
foreign investment companies" ("PFICs"). A PFIC is a foreign corporation that,
in general, meets either of the following tests: (1) at least 75% of its gross
income is passive or (2) an average of at least 50% of its assets produce, or
are held for the production of, passive income. Under certain circumstances, a
RIC that holds stock of a PFIC indirectly through its interest in a Portfolio
will be subject to federal income tax on its proportionate share of a portion of
any "excess distribution" received by the Portfolio on the stock or of any gain
on disposition of the stock (collectively "PFIC income"), plus interest thereon,
even if the RIC distributes the PFIC income as a taxable dividend to its
shareholders. The balance of the PFIC income will be included in the RIC's
investment company taxable income and, accordingly, will not be taxable to it to
the extent that income is distributed to its shareholders.
If a Portfolio invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund," then in lieu of the foregoing tax and interest obligation, each
RIC investor in the Portfolio would be required to include in income each year
its proportionate share of the Portfolio's pro rata share of the qualified
electing fund's annual ordinary earnings and net capital gain (the excess of net
long-term capital gain over net short-term capital loss) -- which most likely
would have to be distributed by the RIC investor to satisfy the distribution
requirements applicable to it -- even if those earnings and gain were not
received by it. In most instances it will be very difficult, if not impossible,
to make this election because of certain requirements thereof.
Proposed regulations have been published pursuant to which certain RICs would be
entitled to elect to "mark to market" their stock in certain PFICs. "Marking to
market," in this context, means recognizing as gain for each taxable year the
excess, as of the end of that year, of the fair market value of each such PFIC's
stock over the adjusted basis in that stock (including mark-to-market gain for
each prior year for which an election was in effect).
The Portfolios' use of hedging strategies, such as writing (selling) and
purchasing options and futures and entering into forward contracts, involves
complex rules that will determine for income tax purposes the character and
timing of recognition of the gains and losses the Portfolios realize in
connection therewith. For each Portfolio, gains from the
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disposition of foreign currencies (except certain gains that may be excluded by
future regulations), and gains from hedging instruments derived by it with
respect to its business of investing in securities or foreign currencies, will
qualify as permissible income for its RIC investors under the requirement that
at least 90% of a RIC's gross income each taxable year consist of specified
types of income. However, income from the disposition by a Portfolio of hedging
instruments (other than those on foreign currencies) held for less than three
months will be subject to the requirement applicable to its RIC investors that
less than 30% of a RIC's gross income each taxable year consist of certain
short-term gains ("Short-Short Limitation"). Income from the disposition of
foreign currencies, and hedging instruments on foreign currencies, that are not
directly related to a Portfolio's principal business of investing in securities
(or options and futures with respect thereto) also will be subject to the
Short-Short Limitation for its RIC investors if they are held for less than
three months.
If a Portfolio satisfies certain requirements, any increase in value of a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether its RIC investors
satisfy the Short-Short Limitation. Thus, only the net gain (if any) from the
designated hedge will be included in gross income for purposes of that
limitation. Each Portfolio will consider whether it should seek to qualify for
this treatment for its hedging transactions. To the extent a Portfolio does not
so qualify, it may be forced to defer the closing out of certain hedging
instruments beyond the time when it otherwise would be advantageous to do so, in
order for its RIC investors to qualify or continue to qualify as RICs.
UNDERWRITERS
FFSI, Two Portland Square, Portland, Maine 04101, the Portfolios' serves as the
Trust's placement agent. FFSI receives no compensation for such placement agent
services.
CALCULATION OF PERFORMANCE DATA
A Portfolio may advertise total return. Standardized SEC yield and total return
information for the Portfolios as of May 31, 1998 is set forth in Table 9 of
Appendix B.
TOTAL RETURN INFORMATION
Total return information for the Funds as of May 31,1998 is contained in Table
8 of Appendix B.
Total returns quoted reflect all aspects of a Portfolio's return. Average annual
returns generally are calculated by determining the growth or decline in value
of a hypothetical historical investment in a Portfolio over a stated period, and
then calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had been
constant over the period. While average annual returns are a convenient means of
comparing investment alternatives, investors should realize that the performance
is not constant over time but changes from year to year, and that average annual
returns represent averaged figures as opposed to the actual year-to-year
performance of the Portfolios.
Average annual total return is calculated by finding the average annual
compounded rates of return of a hypothetical investment, over such periods
according to the following formula:
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 (ERV is the value, at the
end of the applicable period, of a hypothetical
$1,000 payment made at the beginning of the applicable
period).
In addition to average annual total returns, the Portfolio may quote cumulative
total returns reflecting the simple change in value of an investment over a
stated period. Total returns may be broken down into their components of
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income and capital (including capital gain and changes in share price) in order
to illustrate the relationship of these factors and their contributions to total
return. Total returns, yields, and other performance information may be quoted
numerically or in a table, graph, or similar illustration.
Period total return is calculated according to the following formula:
PT = (ERV/P-1); where:
PT = period total return;
The other definitions are the same as in average
annual total return above.
YIELD INFORMATION
Each Portfolio may provide current annualized and effective annualized yield
quotations. These quotations may from time to time be used in interestholder
reports or other communications to interestholders or investors. All performance
information supplied by a Portfolio is historical and is not intended to
indicate future returns.
In performance advertising, the Portfolios may compare any of their performance
information with data published by independent evaluators such as Morningstar,
Lipper Analytical Services, Inc., IBC Financial Data, Inc. or CDA/Wiesenberger
or other companies which track the investment performance of investment
companies ("Portfolio Tracking Companies"). The Portfolios may also compare any
of their performance information with the performance of recognized stock, bond
and other indexes. The Portfolios may also refer in such materials to mutual
Portfolio performance rankings and other data published by Portfolio Tracking
Companies. Performance advertising may also refer to discussion of a Portfolio
and comparative mutual Portfolio data and ratings reported in independent
periodicals, such as newspapers and financial magazines.
Although published yield information is useful to investors in reviewing
performance, interestholders should be aware that each Portfolio's yield
fluctuates from day to day and that the class' yield for any given period is not
an indication or representation by the Portfolio of future yields or rates of
return. Yields are not fixed or guaranteed, and an investment in a Portfolio is
not insured or guaranteed. Accordingly, yield information may not necessarily be
used to compare the Portfolio with investment alternatives which, like money
market instruments or bank accounts, may provide a fixed rate of interest. Also,
it may not be appropriate directly to compare a Portfolio's yield information to
similar information of investment alternatives which are insured or guaranteed.
Income calculated for the purpose of determining yield differs from income as
determined for other accounting purposes. Because of the different accounting
methods used, and because of the compounding assumed in yield calculations, the
quoted yield may differ from the rate of income reported in the Portfolio's
financial statements.
FINANCIAL STATEMENTS
The annual report for the Portfolios for the year ended May 31, 1998, including
the independent auditors' reports thereon, are included along with this Part B.
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Appendix A
DESCRIPTION OF SECURITIES RATINGS
MUNICIPAL AND CORPORATE BONDS (INCLUDING CONVERTIBLE BONDS)
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S")
Moody's rates municipal and corporate bond issues, including convertible issues,
as follows:
Bonds which are rated Aaa are judged by Moody's 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.
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 or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat larger than in Aaa securities.
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 some time in the future.
Bonds which are rated Baa 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 which are rated Ba are judged to have speculative elements; their future
cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate, and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Bonds which are rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
Bonds which are rated C are the lowest rated class of bonds, and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.
Note: Those bonds in the Aa, A, Baa, Ba or B groups which Moody's ranks in the
higher end of its generic rating category are designated by the symbols Aa1, A1,
Baa1, Ba1 and B1.
A-1
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STANDARD & POOR'S ("S&P")
S&P rates corporate bond issues, including convertible debt issues, as follows:
Bonds rated AAA have the highest rating assigned by S&P. The capacity to meet
the financial commitment on the obligation is extremely strong.
Bonds rated AA have a very strong capacity to meet the financial commitment on
the obligation and differ from the highest-rated issues only in small degree.
Bonds rated A have a strong capacity to meet the financial commitment on the
obligation, although they are somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than obligations rated in
higher-rated categories.
Bonds rated BBB exhibit adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to meet the financial commitment on the obligation than in
higher-rated categories.
Bonds rated BB, B, CCC, CC and C are regarded, as having significant speculative
characteristics. BB indicates the least degree of speculation and C the highest
degree of speculation. While such bonds will likely have some quality and
protective characteristics, these may be outweighed by large uncertainties or
major exposures to adverse conditions. Bonds rated BB have less vulnerability to
nonpayment than other speculative issues. However, they face major ongoing
uncertainties or exposure to adverse business, financial, or economic conditions
which could lead to inadequate capacity to meet the financial commitment on the
obligation.
Bonds rated B are more vulnerable to nonpayment then bonds rated BB, but
currently have the capacity to meet the financial commitment on the obligation.
Adverse business, financial, or economic conditions will likely impair capacity
or willingness to meet the financial commitment on the obligation.
Bonds rated CCC are currently vulnerable to nonpayment, and are dependent upon
favorable business, financial, and economic conditions to meet the financial
commitment on the obligation. In the event of adverse business, financial, or
economic conditions, they are not likely to have the capacity to meet the
financial commitment on the obligation.
Bonds rated CC are currently highly vulnerable to nonpayment.
The C rating may be used to cover a situation where a bankruptcy petition has
been filed or similar action taken, but payments are being continued.
Bonds are rated D when the issue is in payment default. The D rating category is
used when payments on an obligation are not made on the date due, even if the
applicable grace period has not expired, unless S&P believes that such payments
will made during such grace period. The D rating will also be used upon the
filing of the bankruptcy petition or the taking of a similar action if payments
on the obligation are jeopardized.
Note: The ratings from AA to CCC may be modified by the addition of a plus (+)
or minus (-) sign to show the relative standing within the major rating
categories.
FITCH IOCA, INC. ("FITCH")
Fitch rates corporate bond issues, including convertible debt issues, as
follows:
AAA Bonds are considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and/or
dividends and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
A-2
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AA Bonds are considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and/or dividends and repay principal is
very strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rate F-1+.
A Bonds are considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and/or dividends and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB Bonds are considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest or dividends and repay principal
is considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these bonds
and, therefore, impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.
BB Bonds are considered speculative. The obligor's ability to pay interest or
dividends and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service requirements.
B Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements or paying dividends, the probability
of continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
CCC Bonds have certain identifiable characteristics that if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C Bonds are in imminent default in payment of interest or principal.
DDD, DD, and D Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.
Plus (+) and minus (-) signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus signs,
however, are not used in the AAA, DDD, DD or D categories.
PREFERRED STOCK
MOODY'S
Moody's rates preferred stock as follows:
An issue rated aaa is considered to be a top-quality preferred stock. This
rating indicates good asset protection and the least risk of dividend impairment
within the universe of preferred stock.
An issue rated aa is considered a high-grade preferred stock. This rating
indicates that there is a reasonable assurance the earnings and asset protection
will remain relatively well-maintained in the foreseeable future.
An issue rated a is considered to be an upper-medium grade preferred stock.
While risks are judged to be somewhat greater than in the aaa and aa
classification, earnings and asset protection are, nevertheless, expected to be
maintained at adequate levels.
A-3
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An issue rated baa is considered to be a medium-grade preferred stock, neither
highly protected nor poorly secured. Earnings and asset protection appear
adequate at present but may be questionable over any great length of time.
An issue rated ba is considered to have speculative elements and its future
cannot be considered well assured. Earnings and asset protection may be very
moderate and not well safeguarded during adverse periods. Uncertainty of
position characterizes preferred stocks in this class.
An issue which is rated b generally lacks the characteristics of a desirable
investment. Assurance of dividend payments and maintenance of other terms of the
issue over any long period of time may be small.
An issue which is rated caa is likely to be in arrears on dividend payments.
This rating designation does not purport to indicate the future status of
payments.
An issue which is rated ca is speculative in a high degree and is likely to be
in arrears on dividends with little likelihood of eventual payment.
An issue which is rated c can be regarded as having extremely poor prospects of
ever attaining any real investment standing. This is the lowest rated class of
preferred or preference stock.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each rating
classification. The modifier 1 indicates that the security 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 issuer ranks in the lower end of its
generic rating category.
S&P
S&P rates preferred stock as follows:
AAA is the highest rating that is assigned by S&P to a preferred stock issue and
indicates an extremely strong capacity to pay the preferred stock obligations.
A preferred stock issue rated AA also qualifies as a high-quality, fixed income
security. The capacity to pay preferred stock obligations is very strong,
although not as overwhelming as for issues rated AAA.
An issue rated A is backed by a sound capacity to pay the preferred stock
obligations, although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
An issue rated BBB is regarded as backed by an adequate capacity to pay the
preferred stock obligations. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to make payments for a preferred stock in
this category than for issues in the A category.
Preferred stock rated BB, B, and CCC are regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay preferred stock
obligations. BB indicates the lowest degree of speculation and CCC the highest
degree of speculation. While such issues will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions.
The rating CC is reserved for a preferred stock issue in arrears on dividends or
sinking fund payments but that is currently paying.
A preferred stock rated C is a non-paying issue.
A preferred stock rated D is a non-paying issue with the issuer in default on
debt instruments.
To provide more detailed indications of preferred stock quality, the ratings
from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign
to show relative standing within the major rating categories.
A-4
<PAGE>
FITCH
Fitch utilizes the same ratings criteria in rating preferred stock as it does in
rating corporate bond issues, as described earlier in this Appendix.
SHORT TERM MUNICIPAL LOANS
Moody's. Moody's highest rating for short-term municipal loans is MIG 1/VMIG 1.
A rating of MIG 1/VMIG 1 denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broadbased access to the market for refinancing. Loans bearing the MIG 2/VMIG 2
designation are of high quality. Margins of protection are ample although not so
large as in the MIG 1/VMIG 1 group. A rating of MIG 3/VMIG 3 denotes favorable
quality. All security elements are accounted for but there is lacking the
undeniable strength of the preceding grades. Liquidity and cash flow protection
may be narrow and market access for refinancing is likely to be less well
established. A rating of MIG 4/VMIG 4 denotes adequate quality. Protection
commonly regarded as required of an investment security is present and although
not distinctly or predominantly speculative, there is specific risk.
S&P. S&P's highest rating for short-term municipal loans is SP-1. S&P states
that short-term municipal securities bearing the SP-1 designation have very
strong or strong capacity to pay principal and interest. Those issues rated SP-1
which are determined to possess overwhelming safety characteristics will be
given a plus (+) designation. Issues rated SP-2 have satisfactory capacity to
pay principal and interest. Issues rated SP-3 have speculative capacity to pay
principal and interest.
Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of generally up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.
The short-term rating places greater emphasis than a long-term rating on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.
Short-term issues rated F-1+ are regarded as having the strongest degree of
assurance for timely payment. Issues assigned a rating of F-1 reflect an
assurance of timely payment only slightly less in degree than issues rated F-1+.
Issues assigned a rating of F-2 have a satisfactory degree of assurance for
timely payment, but the margin of safety is not as great as for issues assigned
F-1+ or F-1.
SHORT TERM DEBT (INCLUDING COMMERCIAL PAPER)
MOODY'S
Moody's two highest ratings for short-term debt, including commercial paper, are
Prime-1 and Prime-2. Both are judged investment grade, to indicate the relative
repayment capacity of rated issuers.
Issuers rated Prime-1 have a superior capacity for repayment of short-term
promissory obligations. Prime-1 repayment capacity will normally be evidenced by
the following characteristics: Leading market positions in well-established
industries; high rates of return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset protection; broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; well-established access to a range of financial markets and assured
sources of alternate liquidity.
Issuers rated Prime-2 have a strong capacity for repayment of short-term
promissory obligations. This will normally be evidenced by many of the
characteristics of issuers rated Prime-1 but to a lesser degree. Earnings trends
and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
A-5
<PAGE>
S&P
A S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt considered short-term in the relevant market. An A-1
designation indicates the highest category and that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus (+) sign designation. The
capacity for timely payment on issues with an A-2 designation is satisfactory.
However, the relative degree of safety is not as high as for issues designated
A-1. Issues carrying an A-3 designation have an adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
Fitch
Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of generally up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.
The short-term rating places greater emphasis than a long-term rating on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.
F-1+. Exceptionally strong credit quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1. Very strong credit quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F-1+.
F-2. Good credit quality. Issues assigned this rating have a satisfactory degree
of assurance for timely payment, but the margin of safety is not as great as for
issues assigned F-1+ or F-1 rating.
F-3. Fair credit quality. Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is adequate; however,
near-term adverse changes could cause these securities to be rated below
investment grade.
F-5. Weak credit quality. Issues assigned this rating have characteristics
suggesting a minimal degree of assurance for timely payment and are vulnerable
to near-term adverse changes in financial and economic conditions.
D. Default. Issues assigned this rating are in actual or imminent payment
default.
LOC. The symbol LOC indicates that the rating is based on a letter of credit
issued by a commercial bank.
A-6
<PAGE>
APPENDIX B
MISCELLANEOUS TABLES
TABLE 1: CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
All entities referenced in the Table are series of Norwest Advantage Funds, an
open-end management company, except Monarch Cash Fund, Monarch Crown Money Fund,
Monarch Treasury Cash Fund, Forum Daily Assets Cash Fund, Forum Assets Treasury
Obligations Fund, Forum Daily Assets Government Obligations Fund, Forum Daily
Assets Government Fund, and Forum Daily Assets Municipal Fund. Norwest is the
Adviser for the Norwest Advantage Funds and is located at Norwest Center, Sixth
Street and Marquette, Minneapolis, Minnesota 55479. The Monarch Cash Fund,
Monarch Crown Money Fund, and the Monarch Treasury Fund are series of Monarch
Funds, an open-end, management company (the "Monarch Funds"). Forum Daily Assets
Cash Fund, Forum Daily Assets Treasury Obligations Fund, Forum Daily Assets
Government Fund, and Forum Daily Assets Municipal Fund are separate series of
Forum Funds, an open-end management company (the "Forum Funds"). Forum
Investment Advisors, LLC is the adviser to both the Monarch and Forum Funds and
is located at Two Portland Square, Portland, Maine 04105.
<TABLE>
<S> <C> <C>
PORTFOLIO CONTROL PERSON % OF PORTFOLIOS
INTEREST
--------- -------------- ---------------
Disciplined Growth Portfolio Diversified Equity Fund 58.92%
Performa Disciplined Growth Fund 15.86%
Growth Balanced Fund 15.90%
Moderate Balanced Fund 07.05%
Income Equity Portfolio Income Equity Fund 69.87%
Diversified Equity Strategic Income Fund 20.87%
Growth Balanced Fund 05.72%
Index Portfolio Index Fund 57.97%
Diversified Equity Fund 29.08%
Growth Balanced Fund 07.94%
International Portfolio International Equity Fund 29.88%
Growth Equity Fund 32.01%
Diversified Equity Fund 26.51%
Growth Balanced Fund 07.14%
Large Company Growth Portfolio Growth Equity Fund 33.73%
Diversified Equity Fund 28.79%
Large Company Growth Fund 24.74%
Growth Balanced Fund 07.95%
Managed Fixed Income Portfolio Moderate Balanced Fund 28.15%
Growth Balanced Fund 32.58%
Diversified Bond Fund 20.74%
Strategic Income Fund 18.23%
Money Market Portfolio Cash Investment Fund 99.10%
Positive Return Bond Portfolio Growth Balanced Fund 32.70%
Moderate Balanced Fund 28.12%
Diversified Bond Fund 20.72%
Strategic Income Fund 18.17%
Prime Money Market Portfolio Cash Investment Fund 76.92%
</TABLE>
B-1
<PAGE>
TABLE 1: CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES CONT.
<TABLE>
<S> <C> <C>
PORTFOLIO CONTROL PERSON % OF PORTFOLIOS
Interest
--------- -------------- ---------------
Small Company Stock Portfolio Small Company Stock Fund 51.47%
Growth Equity Fund 26.33%
Diversified Equity Fund 13.90%
Small Cap Value Portfolio Growth Equity Fund 50.70%
Diversified Equity Fund 25.82%
Growth Balanced Fund 7.01%
Stable Income Portfolio Stable Value Fund 62.08%
Moderate Balanced Portfolio 24.76%
Strategic Income Fund 13.16%
Strategic Value Bond Portfolio Total Return Bond Portfolio 47.37%
Growth Balanced Fund 15.88%
Moderate Balanced Fund 13.71%
Diversified Bond Fund 10.10%
Strategic Income Fund 08.88%
Small Company Growth Portfolio Small Company Growth Fund 82.56%
Growth Equity Fund 09.45%
Diversified Equity Fund 05.04%
Small Cap Value Portfolio Growth Equity Fund 50.07%
Diversified Equity Fund 25.82%
Performa Small Cap Value Fund 09.20%
Growth Balanced Fund 07.01%
Small Company Index Portfolio Growth Equity Fund 55.42%
Diversified Equity Fund 28.26%
Growth Balanced Fund 07.67%
Cash Portfolio Monarch Cash Fund 94.60%
Forum Daily Assets Cash Fund 05.40%
Treasury Cash Portfolio Monarch Treasury Cash Fund 61.70%
Forum Daily Assets Treasury Obligations 38.30%
Fund
Municipal Cash Portfolio Forum Daily Assets Municipal Fund 100%
Government Cash Portfolio Monarch Government Cash Fund 97.60%
Forum Daily Assets Government Obligations 02.40%
Fund
Government Portfolio Forum Daily Assets Government Fund 97.60%
Monarch Crown Money Fund 02.40%
</TABLE>
B-2
<PAGE>
TABLE 2: ADVISORY FEES
FEE WAIVED OR FEE
FEE REIMBURSED RETAINED BY
PAYABLE BY NORWEST ADVISER
Index Portfolio
Year ended May 31, 1998 1,709,358 0 1,709,358
Year ended May 31, 1997 592,067 592,067 0
Year ended May 31, 1996 281,183 281,183 0
Small Company Growth Portfolio
Year ended May 31, 1998 7,752,366 0 7,752,366
Small Company Stock Portfolio
Year ended May 31, 1998 3,024,869 0 3,024,869
Small Company Value Portfolio
Year ended May 31, 1998 1,558,410 0 1,558,410
Large Company Growth
Year ended May 31, 1998 6,448,644 0 6,448,644
Income Equity Portfolio
Year ended May 31, 1998 7,756,155 0 7,756,155
Small Cap Index Portfolio
Year ended May 31, 1998 45,748 0 45,748
Managed Fixed Income Portfolio
Year ended May 31, 1998 975,529 0 975,529
Positive Return Bond Fund
Year ended May 31, 1998 727,322 0 727,322
Stable Income Portfolio
Year ended May 31, 1998 682,043 0 682,043
Money Market Portfolio
Year ended May 31, 1998 2,332,191 646,233 1,685,958
Prime Money Market Portfolio
Year ended May 31, 1998 7,337,295 0 7,337,295
Disciplined Growth Portfolio
Year ended May 31, 1998 679,865 0 679,865
Small Cap Value Portfolio
Year ended May 31, 1998 580,454 0 580,454
Strategic Value Bond Portfolio
Year ended May 31, 1998 601,240 0 601,240
<PAGE>
B-3
FEE WAIVED OR FEE
FEE REIMBURSED RETAINED BY
PAYABLE BY SCHRODER SCHRODER
International Portfolio
Year ended May 31, 1998 3,832,528 117,141 3,715,387
Year ended May 31, 1997 812,485 N/A 812,485
Year ended May 31, 1996 1,005,925 1,005,925 1,005,925
<PAGE>
B-4
TABLE 3: ADMINISTRATIVE FEES
<TABLE>
<S> <C> <C> <C>
FEE FEE FEE
PAYABLE WAIVED RETAINED
Index Portfolio
Year ended May 31, 1998 $652,010 $648,264 $3,746
Year ended May 31, 1997 $394,711 $163,837 $230,874
Year ended May 31, 1996 $187,455 $7,045 $180,410
Small Company Growth Portfolio
Year ended May 31, 1998 $486,767 $479,752 $7,015
Small Company Stock Portfolio
Year ended May 31, 1998 $197,916 $193,557 $4,359
Small Company Value Portfolio
Year ended May 31, 1998 $101,259 $96,092 $5,167
Large Company Growth Portfolio
Year ended May 31, 1998 $576,912 $572,067 $4,845
Income Equity Portfolio
Year ended May 31, 1998 $860,981 $856,592 $4,389
Small Cap Index Portfolio
Year ended May 31, 1998 $9,150 $3,594 $5,556
Managed Fixed Income Portfolio
Year ended May 31, 1998 $155,633 $153,576 $2,057
Positive Return Portfolio
Year ended May 31, 1998 $120,200 $117,575 $2,625
Stable Income Portfolio
Year ended May 31, 1998 $131,001 $127,246 $3,755
International Portfolio
Year ended May 31, 1998 $1,209,182 $0 $1,209,182
Year ended May 31, 1997 270,828 141,294 129,534
Year ended May 31, 1996 223,539 0 223,539
</TABLE>
B-5
<PAGE>
TABLE 4: ACCOUNTING FEES
<TABLE>
<S> <C> <C> <C>
FEE FEE FEE
PAYABLE WAIVED RETAINED
Index Portfolio
Year ended May 31, 1998 $142,000 $0 $142,000
Year ended May 31, 1997 $106,000 $42,000 $64,000
Year ended May 31, 1996 $58,000 $7045 $51,955
Small Company Growth Portfolio
Year ended May 31, 1998 $78,000 $0 $78,000
Small Company Stock Portfolio
Year ended May 31, 1998 $75,000 $0 $75,000
Small Company Value Portfolio
Year ended May 31, 1998 $74,000 $0 $74,000
Large Company Growth Portfolio
Year ended May 31, 1998 $79,500 $0 $79,500
Income Equity Portfolio
Year ended May 31, 1998 $77,500 $0 $77,500
Small Cap Index Portfolio
Year ended May 31, 1998 $24,067 $0 $24,067
Managed Fixed Income Portfolio
Year ended May 31, 1998 $88,000 $0 $88,000
Positive Return Portfolio
Year ended May 31, 1998 $60,500 $0 $60,500
Stable Income Portfolio
Year ended May 31, 1998 $94,000 $0 $94,000
International Portfolio
Year ended May 31, 1998 $121,500 $0 $121,500
Year ended May 31, 1997 $85,000 $13,000 $47,000
Year ended May 31, 1996 $47,000 $0 $47,000
</TABLE>
B-6
<PAGE>
TABLE 5: BROKERAGE COMMISSIONS
<TABLE>
<S> <C> <C> <C> <C> <C>
BROKER/DEALER AFFILIATES OF SCHRODER
------------------------------------------------------------
TOTAL BROKERAGE TOTAL BROKERAGE PERCENTAGE OF PERCENTAGE OF
COMMISSIONS ($) COMMISSIONS ($) COMMISSIONS TRANSACTIONS
INTERNATIONAL PORTFOLIO
Year ended May 31, 1998 $1,178,923.74 $0.00 0.00% 0.00%
Year ended May 31, 1997 $1,644,601 $12,743.92 0.77% 0.54%
Year ended May 31, 1996 $434,449.57 $0.00 0.00% 0.00%
BROKER/DEALER AFFILIATES OF NORWEST
--------------------------------------------------------
TOTAL BROKERAGE TOTAL BROKERAGE PERCENTAGE OF PERCENTAGE OF
COMMISSIONS ($) COMMISSIONS ($) COMMISSIONS TRANSACTIONS
INDEX PORTFOLIO
Year ended May 31, 1998 $123,225.58 $0.00 0.00% 0.00%
Year Ended May 31, 1997 $2149,635.70 $0.00 0.00% 0.00%
Year Ended May 31, 1996 $74,898.21 $0.00 0.00% 0.00%
MANAGED FIXED INCOME PORTFOLIO
Year ended May 31, 1998 $0.00 $0.00 0.00% 0.00%
STABLE INCOME BOND PORTFOLIO
Year ended May 31, 1998 $0.00 $0.00 0.00% 0.00%
POSITIVE RETURN BOND PORTFOLIO
Year ended May 31, 1998 $0.00 $0.00 0.00% 0.00%
SMALL COMPANY INDEX PORTFOLIO
Year ended May 31, 1998 $84,525.00 $0.00 0.00% 0.00%
SMALL COMPANY VALUE PORTFOLIO
Year ended May 31, 1998 $584,876.09 $0.00 0.00% 0.00%
SMALL COMPANY GROWTH PORTFOLIO
Year ended May 31, 1998 $2,078,599.82 $0.00 0.00% 0.00%
SMALL COMPANY STOCK PORTFOLIO
Year ended May 31, 1998 $946,640.73 $0.00 0.00% 0.00%
DISCIPLINED GROWTH PORTFOLIO
Year ended May 31, 1998 $341,932.40 $0.00 0.00% 0.00%
SMALL CAP VALUE PORTFOLIO
Year ended May 31, 1998 $528,242.70 $0.00 0.00% 0.00%
STRATEGIC VALUE BOND PORTFOLIO
Year ended May 31, 1998 $0.00 $0.00 0.00% 0.00%
PRIME MONEY MARKET PORTFOLIO
Year ended May 31, 1998 $0.00 $0.00 0.00% 0.00%
MONEY MARKET PORTFOLIO
Year ended May 31, 1998 $0.00 $0.00 0.00% 0.00%
</TABLE>
B-7
<PAGE>
TABLE 6: INVESTMENTS IN BROKER/DEALERS
<TABLE>
<S> <C> <C>
International Portfolio Daiwa Securities ($2,563,000)
HSBC Holdings PLC ($4,222,000)
Index Portfolio Charles Schwab Corp. ($1,417,000)
Merrill Lynch & Co., Inc. ($3,257,000)
Morgan Stanley, Dean Witter, Discover & Co. ($4,627,000)
Stable Income Portfolio Lehman Brothers Holdings, Inc. ($2,066,000)
Bear Stearns & Co., Inc. ($61,000)
Managed Fixed Income Portfolio Charles Schwab Corp. ($4,782,000)
Lehman Brothers Holdings, Inc. ($2,731,000)
PaineWebber Group, Inc. ($4,935,000)
Large Company Growth Portfolio Charles Schwab Corp. ($53,970,000)
Donaldson, Lufkin & Jenrette, Inc. ($17,211,000)
Small Company Stock Portfolio Friedman, Billings, Ramsey Group, Inc. ($2,562,000)
Small Company Growth Portfolio Amresco, Inc. ($10,307,000)
Strategic Value Portfolio Charles Schwab Corp. ($3,084,000)
Bear Stearns & Co., Inc. ($3,507,000)
Discipline Growth Portfolio Bear Stearns & Co., Inc. ($3,035,000)
Small Cap Index Portfolio Amresco, Inc. ($422,000)
Dain Rauscher Corp. ($216,000)
Eaton Vance Corp. ($252,000)
Legg Mason, Inc. ($501,000)
Pioneer Group, Inc. ($216,000)
Raymond James Financial, Inc. ($442,000)
SEI Investments Co. ($367,000)
Money Market Portfolio Bear Stearns & Co., Inc. ($20,000,000)
Morgan Stanley Group, Inc. ($50,000,000)
BT Securities Corp. ($2,501,000)
CS First Boston, Inc. ($10,000,000)
Prime Money Market Portfolio Bear Stearns Cos., Inc. ($30,000,000)
Morgan Stanley Group Inc. ($70.000,000)
CS First Boston, Inc. ($15,000,000)
</TABLE>
B-8
<PAGE>
TABLE 7: NET ASSET VALUE OF THE PORTFOLIOS AS OF MAY 31, 1998
NET ASSET VALUE
PORTFOLIO MAY 31, 1998
International Portfolio $30.78
Index Portfolio $54.84
Small Company Growth Portfolio $12.27
Small Company Stock Portfolio $10.84
Small Company Value Portfolio $13.32
Large Company Growth Portfolio $13.27
Income Equity Portfolio $12.90
Small Company Index Portfolio $9.49
Managed Fixed Income Portfolio $11.03
Positive Return Bond Portfolio $11.70
Stable Income Portfolio $10.66
Money Market Portfolio $1.00
Prime Money Market Portfolio $1.00
Disciplined Growth Portfolio $10.58
Small Cap Value Portfolio $10.34
Strategic Value Portfolio $10.69
B-9
<PAGE>
TABLE 8: TOTAL RETURN FIGURES FOR EACH PORTFOLIO AS OF MAY 31, 1998
ANNUALIZED TOTAL
RETURN TOTAL RETURN SINCE
PORTFOLIO ONE YEAR INCEPTION
International Portfolio 12.91% 13.42%(a)
Index Portfolio 30.42% 29.59%(a)
Small Company Growth Portfolio N/A 22.70%
Small Company Stock Portfolio N/A 8.40%
Small Company Value Portfolio N/A 33.20%
Large Company Growth Portfolio N/A 32.70%
Income Equity Portfolio N/A 29.00%
Small Company Index Portfolio N/A (5.10%)
Managed Fixed Income Portfolio N/A 10.30%
Positive Return Bond Portfolio N/A 17.00%
Stable Income Portfolio N/A 6.60%
Money Market Portfolio N/A 4.47%
Prime Money Market Portfolio N/A 4.27%
Disciplined Growth Portfolio N/A 5.80%
Small Cap Value Portfolio N/A 3.40%
Strategic Value Portfolio N/A 6.90%
(a) Annualized.
B-10
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
Part A: None
Part B:
Audited Financial Statements for the fiscal year ended May 31,
1998 including Report of Independent Auditors, Statements of
Assets and Liabilities, Statements of Operations, Statement of
Changes in Net Assets, Financial Highlights, Notes to
Financial Statements, and Schedules of Investments for Prime
Money Market Portfolio, Money Market Portfolio, Positive
Return Bond Portfolio, Stable Income Portfolio, Strategic
Value Bond Portfolio, Managed Fixed Income Portfolio, Index
Portfolio, Income Equity Portfolio, Large Company Growth
Portfolio, Disciplined Growth Portfolio, Small Cap Index
Portfolio, Small Company Stock Portfolio, Small Company Growth
Portfolio, Small Company Value Portfolio, Small Cap Value
Portfolio and International Portfolio are filed herewith as
Exhibit (12) under Item 24(b).
(b) Exhibits:
(1) Trust Instrument of Registrant dated November 1, 1994 as
amended April 4, 1995 and August 30, 1995 (filed herewith).
(2) Not Applicable.
(3) Not Applicable.
(4) Not Applicable.
(5)(a) Investment Advisory Agreement between Registrant and Norwest
Investment Management, Inc. relating to Index Portfolio, Small
Company Stock Portfolio, Small Company Growth Portfolio, Small
Company Value Portfolio, Large Company Portfolio, Income
Equity Portfolio, Managed Fixed Income Portfolio, Total Return
Bond Portfolio, Positive Return Bond Portfolio and Stable
Income Portfolio Disciplined Growth Portfolio, Small Cap Value
Portfolio, Strategic Value Bond Portfolio, and Small Cap Index
Portfolio dated October 1, 1997(filed herewith).
(b) Investment Advisory Agreement between Registrant and Schroder
Capital Management International Inc. relating to
International Portfolio dated November 9,1994(see Note 1).
(c) Investment Advisory Agreement between Registrant and Forum
Investment Advisors, LLC relating to Treasury Cash
Portfolio, Government Portfolio, Government Cash Portfolio,
Cash Portfolio and Municipal Cash Portfolio dated December
30, 1997(see Note 2).
(d) Investment Subadvisory Agreement between Norwest
Investment Management, Inc. and Crestone Capital Management,
Inc. relating to Small Company Stock Portfolio dated June 1,
1997(see Note 2).
(e) Investment Subadvisory Agreement between Norwest Investment
Management, Inc. and Peregrine Capital Management, Inc.
relating to Small Company Growth Portfolio, Large Company
Growth Portfolio, Small Company Value Portfolio and Positive
Return Portfolio dated June 1, 1997(see Note 2).
(f) Investment Subadvisory Agreement between Norwest Investment
Management, Inc. and Galliard Capital Management, Inc.
relating to Strategic Value Bond Portfolio dated October 1,
1997(see Note 2).
(g) Investment Subadvisory Agreement between Norwest Investment
Management, Inc. and Smith Asset Management Group relating
to Disciplined Growth Portfolio and Small Cap Value
Portfolio dated October 1, 1997(see Note 2).
(6) Not required.
(7) Not Applicable.
(8)(a) Custodian Agreement between Registrant and Norwest Bank
Minnesota, N.A. dated as of November 9, 1994, as amended
June 1, 1997(filed herewith).
(b) Custodian Agreement between Registrant and Imperial Trust
Company dated September 1, 1995, as amended August 31, 1998
(filed herewith).
(c) Custody Agreement between Morgan Stanley Trust Company and
Norwest Bank Minnesota, N.A. dated June 18, 1993, as amended
April 1, 1996.
(9)(a) Administration Agreement between Registrant and Forum
Administrative Services, LLC. relating to Prime Money
Market Portfolio, Money Market Portfolio, Positive Return
Bond Portfolio, Stable Income Portfolio, Strategic Value
Bond Portfolio, Managed Fixed Income Portfolio, Index
Portfolio, Income Equity Portfolio, Large Company Growth
Portfolio, Disciplined Growth Portfolio, Small Cap Index
Portfolio, Small Company Stock Portfolio, Small Company Growth
Portfolio, Small Company Value Portfolio, Small Cap Value
Portfolio, International Portfolio, Cash Portfolio, Government
Cash Portfolio, Treasury Cash Portfolio, Government Portfolio
and Municipal Cash Portfolio dated December 1, 1997 (see
Note 2).
(b) Fund Portfolio and Unitholder Accounting Agreement between
Registrant and Forum Accounting Services, LLC. relating to
Prime Money Market Portfolio, Money Market Portfolio,
Positive Return Bond Portfolio, Stable Income Portfolio,
Strategic Value Bond Portfolio, Managed Fixed Income
Portfolio, Index Portfolio, Income Equity Portfolio, Large
Company Growth Portfolio, Disciplined Growth Portfolio,
Small Cap Index Portfolio, Small Company Stock Portfolio,
Small Company Growth Portfolio, Small Company Value
Portfolio, Small Cap Value Portfolio, International
Portfolio, Cash Portfolio, Government Cash Portfolio,
Treasury Cash Portfolio, Government Portfolio and Municipal
Cash Portfolio dated as of June 1, 1997 and amended December
5, 1997 (see Note 2).
(c) Placement Agent Agreement between Registrant and Forum
Financial Services Inc. relating to Prime Money
Market Portfolio, Money Market Portfolio, Positive Return
Bond Portfolio, Stable Income Portfolio, Strategic Value
Bond Portfolio, Managed Fixed Income Portfolio, Index
Portfolio, Income Equity Portfolio, Large Company Growth
Portfolio, Disciplined Growth Portfolio, Small Cap Index
Portfolio, Small Company Stock Portfolio, Small Company Growth
Portfolio, Small Company Value Portfolio, Small Cap Value
Portfolio and International Portfolio dated November 9, 1994
(see Note 1).
(d) Placement Agent Agreement between Registrant and Forum
relating to Treasury Cash Portfolio, Government Cash
Portfolio, Cash Portfolio, Government Portfolio and Municipal
cash Portfolio dated September 1, 1995 (filed herewith).
(10) Not required.
(11) Not required.
(12)(a) Independent Auditors' Report, KPMG Peat Marwick LLP,
Report of Independent Accountants, PricewaterhouseCoopers LLP,
Statements of Assets and Liabilities, Statements of
Operations, Statements of Changes in Net Assets, Financial
Highlights, Notes to Financial Highlights, Schedules of
Investments for Stable Income Portfolio, Managed Fixed Income
Portfolio, Positive Return Bond Portfolio, Index Portfolio,
Income Equity Portfolio, Disciplined Growth Portfolio, Large
Company Growth Portfolio, Small Cap Index Portfolio, Small
Company Stock Portfolio, Small Cap Value Portfolio, Small
Company Value Portfolio, Small Company Growth Portfolio and
International Portfolio, dated May 31, 1998 (filed herewith).
(b) Independent Auditors' Report, KPMG Peat Marwick LLP,
Statements of Assets and Liabilities, Statements of
Operations, Statements of Changes in Net Asstes, Financial
Highlights, Notes to Financial Statements and Schedules of
Investments for Prime Money Market Portfolio and Money Market
Portfolio dated May 31, 1998 (filed herewith).
(13) Not Applicable.
(14) Not Applicable.
(15) Not Applicable.
(16) Not Applicable.
(17) Financial Data Schedules (filed herewith).
(18) Not Applicable.
- -----------
Note 1 Exhibit incorporated by reference as filed in Amendment No. 5 via
EDGAR on September 30, 1996, accession number 0001004402-98-000003.
Note 2 Exhibit incorporated by reference as filed in Amendment No. 12 via
EDGAR on January 2, 1998, accession number 0001004402-98-000003.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES AS OF AUGUST 28, 1998.
Title of Class of Shares
of Beneficial Interest Number of Holders
Treasury Cash Portfolio 2
Government Cash Portfolio 2
Cash Portfolio 2
Government Portfolio 2
Municipal Cash Portfoli 1
Prime Money Market Portfolio 2
Money Market Portfolio 2
Positive Return Bond Portfolio 5
Stable Income Portfolio 4
Strategic Value Bond Portfolio 7
Managed Fixed Income Portfolio 5
Total Return Bond Portfolio 0
Index Portfolio 7
Income Equity Portfolio 9
Large Company Growth Portfolio 8
Disciplined Growth Portfolio 6
Small Cap Index Portfolio 0
Small Company Stock Portfolio 9
Small Cap Value Portfolio 9
International Portfolio 11
ITEM 27. INDEMNIFICATION.
The Trust currently holds a directors' and officers' errors and
omissions insurance policy jointly with Forum Funds, the terms of which are
consistent with industry standards. The policy provides generally for the
indemnification against loss by the insured in connection with a judgment of
liability in certain litigation arising from the insured's wrongful act or an
error, act or omission by a person for whom the insured becomes legally
responsible. The policy provides coverage in the amount of $6,000,000. The
policy premiums are allocated between the Trust and Forum Funds based upon the
pro rata share of assets of each insured. The Trust's trustees and officers also
are insured under the Trust's fidelity bond purchased pursuant to Rule 17j-1
under the Investment Company Act of 1940, as amended (the "Act").
The general effect of Article 5 of Registrant's Trust Instrument is to
indemnify existing or former trustees and officers of the Trust to the fullest
extent permitted by law against liability and expenses. There is no
indemnification if, among other things, any such person is adjudicated liable to
the Registrant or its shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office. This description is modified in its entirety by the provisions of
Article 5 of Registrant's Trust Instrument contained in this Registration
Statement as Exhibit 1 and incorporated herein by reference.
Provisions of each of Registrant's investment advisory agreements
provide that the respective investment adviser shall not be liable for any
mistake of judgment or in any event whatsoever, except for lack of good faith,
provided that nothing shall be deemed to protect, or purport to protect, the
investment adviser against any liability to Registrant or to Registrant's
interestholders to which the investment adviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of the investment adviser's duties, or by reason of the investment adviser's
reckless disregard of its obligations and duties hereunder. This description is
modified in its entirety by the provisions of Registrant's Investment Advisory
Agreements contained in this Registration Statement as Exhibit 5 and
incorporated herein by reference.
As custodian to certain portfolios of the Trust, under Section 18 of
its custodian agreement Norwest is not liable for any action taken in good faith
reliance upon the advice or statements of certain experts. Under that agreement,
the Trust has agreed to indemnify and hold Norwest harmless for any loss, claim,
damage or expense arising out of the custodian relationship; provided such loss,
claim, damage or expense is not the direct result of the Custodian's negligence
or willful misconduct. This description is modified in its entirety by the
provisions of Registrant's Custodian Agreement contained in this Registration
Statement as Exhibit 8(a) and incorporated herein by reference.
The indemnification provisions set forth under Section 1 paragraphs (f)
and (g) of the Placement Agent Agreement between FFSI (defined as "Forum" under
the agreement) and the Trust, specifically provide as follows:
(f) The Trust agrees to indemnify, defend and hold Forum, its several
officers and directors, and any person who controls Forum within the
meaning of Section 15 of the Securities Act of 1933 ("1933 Act") or
Section 20 of the Securities Exchange Act of 1934 (the "1934 Act") (for
purposes of this Section 1(f), collectively, "Covered Persons") free
and harmless from and against any and all claims, demands, liabilities
and any counsel fees incurred in connection therewith) which any
Covered Person may incur under the 1933 Act, the 1934 Act, common law
or otherwise, arising out of or based on any untrue statement of a
material fact contained in any registration statement, private
placement memorandum or other offering material ("Offering Material")
or arising out of or based on any omission to state a material fact
required to be stated in any Offering Material or necessary to make the
statements in any Offering Material not misleading, provided, however,
that the Trust's agreement to indemnify Covered Persons shall not be
deemed to cover any claims, demands, liabilities or expenses arising
out of any financial and other statements as are furnished in writing
to the Trust by Forum in its capacity as Placement Agent for use in the
answers to any items of any registration statement or in any statements
made in any Offering Material, or arising out of or based on 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 Trust's agreement to Section 1(e) shall not be deemed
to cover any liability to the Trust or its investors to which a Covered
Person would otherwise be subject by reason or willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by
reason of a Covered Person's reckless disregard of its obligations and
duties under this Agreement. The Trust shall be notified of any action
brought against a Covered Person, such notification to be given by
letter or by telegram addressed to the Secretary of the Trust, promptly
after the summons or other first legal process shall have been duly and
completely served upon such Covered Person. The failure to notify the
Trust of any such action shall not relieve the Trust from any liability
except to the extent that the Trust shall have been prejudiced by such
failure, or from any liability that the Trust may have to the Covered
Person against whom such action is brought by reason of any such untrue
statement or omission, otherwise than on account of the Trust's
indemnity agreement contained in this Section 1(f). The Trust 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 chosen by the Trust and approved by Forum, 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
Trust does not elect to assume the defense of any such suit, or in case
Forum reasonably does not approve of counsel chosen by the Trust, the
Trust will reimburse the Covered Person named as defendant in such
suit, for the fees and expenses of any counsel retained by Forum or
such Covered Person. The Trust's indemnification agreement contained in
this Section (f) and the Trust'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 Covered
Persons, and shall survive the delivery of any Interests. This
agreement of indemnity will inure exclusively to Covered Persons and
their successors. The Trust agrees to notify Forum promptly of the
commencement of any litigation or proceedings against the Trust or any
of its officers or Trustees in connection with the issue and sale of
any Interests.
(g) Forum agrees to indemnify, defend and hold the Trust, its several
officers and trustees, and any person who controls the Trust within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
(for purposes of this Section 1(g) collectively, "Covered Persons")
free and harmless from and against any and all claims, demands,
liabilities and expenses (including the costs of investigating or
defending such claims, demands, liabilities and any counsel fees
incurred in connection therewith) that Covered Persons may incur under
the 1933 Act, the 1934 Act, or common law or otherwise, but only to the
extent that such liability or expense incurred by a Covered Person
resulting from such claims or demands shall arise out of or be based on
any untrue statement of a material fact contained in information
furnished in writing by Forum in its capacity as Placement Agent to the
Trust for use in the answers to any of the items of any registration
statement or in any statements in any Offering Material or shall arise
out of or be based on any omission to state a material fact in
connection with such information furnished in writing by Forum to the
Trust required to be stated in such answers or necessary to make such
information not misleading. Forum shall be notified of any action
brought against a Covered Person, such notification to be given by
letter or telegram addressed to Forum, Attention: Legal Department,
promptly after the summons or other first legal process shall have been
duly and completely served upon such Covered Person. Forum shall have
the right of first control of the defense of the action with counsel of
its own choosing satisfactory to the Trust if such action is based
solely on such alleged misstatement or omission on Forum's part, and in
any other event each Covered Person shall have the right to participate
in the defense or preparation of the defense of any such action. The
failure to so notify Forum of any such action shall not relieve Forum
from any liability except to the extent that Forum shall have been
prejudiced by such failure, or from any liability that Forum may have
to Covered Persons by reason of any such untrue or alleged untrue
statement, or omission or alleged omission, otherwise than on account
of Forum's indemnity agreement contained in this Section 1(g).
Insofar as indemnification for liability arising under the 1933 Act may
be permitted to trustees, officers and controlling persons of the Trust pursuant
to the foregoing provisions, or otherwise, the Trust 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 the Trust of expenses incurred or paid by a trustee, officer
or controlling person of the Trust in the successful defense of any action, suit
or proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Trust 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 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 ADVISERS.
(a) Norwest Investment Management, Inc.
The description of Norwest Investment Management, Inc. ("NIM") in Parts
A and B of the Registration Statement is incorporated by reference
herein.
The following are the directors and principal executive officers of
NIM, including their business connections which are of a substantial
nature. The address of Norwest Corporation, the parent of Norwest Bank
Minnesota, N.A. ("Norwest Bank"), which is the parent of NIM, is
Norwest Center, Sixth Street and Marquette Avenue, Minneapolis, MN
55479. Unless otherwise indicated below, the principal business address
of any company with which the directors and principal executive
officers are connected is also Sixth Street and Marquette Avenue,
Minneapolis, MN 55479.
<PAGE>
<TABLE>
<S> <C> <C>
---------------------------------- ------------------------------------ ----------------------------------
Name Title Business Connection
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
P. Jay Kiedrowski Chairman, Chief Executive Officer, Norwest Investment Management,
President Inc.
------------------------------------ ----------------------------------
Executive Vice President, Employee Norwest Bank Minnesota, N.A.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Crestone Capital Management, Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman Galliard Capital Management, Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
James W. Paulsen Senior Vice President, Chief Norwest Investment Management,
Investment Officer Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Stephen P. Gianoli Senior Vice President, Chief Norwest Investment Management,
Executive Officer Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Crestone Capital Management, Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
David S. Lunt Vice President, Senior Portfolio Norwest Investment Management,
Manager Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Richard C. Villars Vice President, Senior Portfolio Norwest Investment Management,
Manager Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Lee K. Chase Senior Vice President Norwest Investment Management,
Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Andrew Owen Vice President Norwest Investment Management,
Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Eileen A. Kuhry Investment Compliance Specialist Norwest Investment Management,
Inc.
---------------------------------- ------------------------------------ ----------------------------------
</TABLE>
(b) Schroder Capital Management International Inc.
The description of Schroder Capital Management International Inc.
("SCMI") in Parts A and B of the Registration Statement, is
incorporated by reference herein.
The following are the directors and principal officers of SCMI,
including their business connections of a substantial nature. The
address of each company listed, unless otherwise noted, is 787 Seventh
Avenue, 34th Floor, New York, NY 10019. Schroder Capital Management
International Limited ("Schroder Ltd.") is a United Kingdom affiliate
of Schroder which provides investment management services to
international clients located principally in the United States.
<PAGE>
<TABLE>
<S> <C> <C>
---------------------------------- ------------------------------------ ----------------------------------
Name Title Business Connection
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
David M. Salisbury Chairman, Director SCMI
------------------------------------ ----------------------------------
Chief Executive, Director Schroder Ltd.*
------------------------------------ ----------------------------------
Director Schroders plc.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Schroder Series Trust II
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Richard R. Foulkes Deputy Chairman, Director SCMI
------------------------------------ ----------------------------------
Deputy Chairman Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
John A. Troiano Chief Executive, Director SCMI
------------------------------------
----------------------------------
Chief Executive, Director Schroder Ltd.*
------------------------------------ ----------------------------------
----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Sharon L. Haugh Executive Vice President, Director SCMI
----------------------------------
------------------------------------ ----------------------------------
Director, Chairman Schroder Fund Advisors Inc.
------------------------------------ ----------------------------------
Director Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman, Director Schroder Capital Management Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Gavin D. L. Ralston Senior Vice President, Managing SCMI
Director
------------------------------------ ----------------------------------
Director Schroder Ltd.*
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Mark J. Smith Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Senior Vice President, Director Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Fund Advisors Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Robert G. Davy Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Director Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Name Title Business Connection
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Jane P. Lucas Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Director Schroder Fund Advisors Inc.
------------------------------------ ----------------------------------
Director Schroder Capital Management Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
David R. Robertson Group Vice President SCMI
------------------------------------ ----------------------------------
Senior Vice President Schroder Fund Advisors Inc..
----------------------------------
------------------------------------
Director of Institutional Business Oppenheimer Funds, Inc.
resigned 2/98
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Michael M. Perelstein Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Senior Vice President, Director Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Managing Director MacKay Shields Financial
Corporation
resigned 11/96
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Louise Croset First Vice President, Director SCMI
------------------------------------ ----------------------------------
First Vice President Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Schroder Series Trust II
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Ellen B. Sullivan Group Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Capital Management Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Catherine A. Mazza Group Vice President SCMI
------------------------------------ ----------------------------------
President, Director Schroder Fund Advisors Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Capital Management Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Heather F. Crighton First Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
First Vice President, Director Schroder Ltd.*
---------------------------------- ------------------------------------ ----------------------------------
<PAGE>
---------------------------------- ------------------------------------ ----------------------------------
Name Title Business Connection
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Ira Unschuld Group Vice President SCMI
------------------------------------ ----------------------------------
Officer
Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Paul M. Morris Senior Vice President SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Capital Management Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Principal, Senior Portfolio Manager Weiss, Peck & Greer LLC
resigned 12/96
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Susan B. Kenneally First Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
First Vice President, Director Schroder Ltd.*
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Jennifer A. Bonathan First Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
First Vice President, Director Schroder Ltd.*
---------------------------------- ------------------------------------ ----------------------------------
</TABLE>
*Schroder Ltd and Schroders plc. are located at 31 Gresham St., London EC2V 7QA,
United Kingdom.
(c) Crestone Capital Management, Inc.
The description of Crestone Capital Management, Inc. ("Crestone") in
Parts A and B of the Registration Statement is incorporated by
reference herein.
The following are the directors and principal executive officers of
Crestone, including their business connections which are of a
substantial nature. The address of Crestone is 7720 East Belleview
Avenue, Suite 220, Englewood Colorado 80111-2614 and, unless otherwise
indicated below, that address is the principal business address of any
company with which the directors and principal executive officers are
connected.
<TABLE>
<S> <C> <C>
---------------------------------- ------------------------------------ ----------------------------------
Name (Address if Different) Title Business Connection
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Kirk McCown President, Director Crestone Capital Management, Inc.
---------------------------------- ------------------------------------ ----------------------------------
<PAGE>
---------------------------------- ------------------------------------ ----------------------------------
Name (Address if Different) Title Business Connection
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
P. Jay Kiedrowski Director Crestone Capital Management, Inc.
------------------------------------ ----------------------------------
Sixth and Marquette Ave., Chairman, Chief Executive Officer, Norwest Investment Management,
Minneapolis, MN 55479 President Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Executive Vice President, Employee Norwest Bank Minnesota, N.A.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman Galliard Capital Management, Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Stephen P. Gianoli Director Crestone Capital Management, Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Sixth and Marquette Ave., Senior Vice President, Chief Norwest Investment Management,
Minneapolis, MN 55479 Executive Officer Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Susan Koonsman Director Crestone Capital Management, Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
1740 Broadway President Norwest Investments & Trust
Denver, CO 80274
---------------------------------- ------------------------------------ ----------------------------------
</TABLE>
(d) Peregrine Capital Management, Inc.
The description of Peregrine Capital Management, Inc. ("Peregrine") in
Parts A and B of the Registration Statement is incorporated by referenc
herein.
The following are the directors and principal executive officers of
Peregrine, including their business connections which are of a
substantial nature. The address of Peregrine is LaSalle Plaza, 800
LaSalle Avenue, Suite 1850, Minneapolis, Minnesota 55402 and, unless
otherwise indicated below, that address is the principal business
address of any company with which the directors and principal executive
officers are connected.
<TABLE>
<S> <C> <C>
---------------------------------- ------------------------------------ ----------------------------------
Name (Address if Different) Title Business Connection
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
James R. Campbell Director Peregrine Capital Management,
Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Sixth and Marquette Ave., President, Chief Executive Norwest Bank
Minneapolis, MN 55479-0116 Officer, Director
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Patricia D. Burns Senior Vice President Peregrine Capital Management,
Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Tasso H. Coin Senior Vice President Peregrine Capital Management,
Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Name Title Business Connection
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
John S. Dale Senior Vice President Peregrine Capital Management,
Inc.
---------------------------------- ------------------------------------ ----------------------------------
<PAGE>
---------------------------------- ------------------------------------ ----------------------------------
Name (Address if Different) Title Business Connection
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Julie M. Gerend Senior Vice President Peregrine Capital Management,
Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
William D. Giese Senior Vice President Peregrine Capital Management,
Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Daniel J. Hagen Vice President Peregrine Capital Management,
Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Ronald G. Hoffman Senior Vice President, Secretary Peregrine Capital Management,
Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Frank T. Matthews Vice President Peregrine Capital Management,
Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Jeannine McCormick Senior Vice President Peregrine Capital Management,
Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Barbara K. McFadden Senior Vice President Peregrine Capital Management,
Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Robert B. Mersky Chairman, President, Chief Peregrine Capital Management,
Executive Officer Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Gary E. Nussbaum Senior Vice President Peregrine Capital Management,
Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
James P. Ross Vice President Peregrine Capital Management,
Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Vice President Norwest Bank (prior to November,
1996)
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Jonathan L. Scharlau Assistant Vice President Peregrine Capital Management,
Inc.
---------------------------------- ------------------------------------ ----------------------------------
<PAGE>
---------------------------------- ------------------------------------ ----------------------------------
Jay H. Strohmaier Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Senior Vice President/Managed Voyageur Asset Management (prior
Accounts to September, 1996)
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Paul E. von Kuster Senior Vice President Peregrine Capital Management,
Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Janelle M. Walter Assistant Vice President Peregrine Capital Management,
Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Paul R. Wurm Senior Vice President Peregrine Capital Management,
Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Name Title Business Connection
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
J. Daniel Vendermark Vice President Peregrine Capital Management,
Sixth and Marquette Avenue Inc.
Minneapolis, MN 55479-1013
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Albert J. Edwards Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Vice President/Marketing U.S. Trust Company of California
(prior to June 9, 1997)
---------------------------------- ------------------------------------ ----------------------------------
</TABLE>
(e) Galliard Capital Management, Inc.
The description of Galliard Capital Management, Inc. ("Galliard") of
Parts A and B of the Registration Statement is
incorporated by reference herein.
The following are the directors and principal executive officers of
Galliard, including their business connections which are of a
substantial nature. The address of Galliard is LaSalle Plaza, Suite
2060, 800 LaSalle Avenue, Minneapolis, Minnesota 55479 and, unless
otherwise indicated below, that address is the principal business
address of any company with which the directors and principal executive
officers are connected.
<TABLE>
<S> <C> <C>
---------------------------------- ------------------------------------ ----------------------------------
Name (Address if Different) Title Business Connection
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
P. Jay Kiedrowski Chairman Galliard Capital Management, Inc.
------------------------------------ ----------------------------------
Sixth and Marquette Ave., Chairman, Chief Executive Officer, Norwest Investment Management,
Minneapolis, MN 55479 President Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Executive Vice President, Employee Norwest Bank Minnesota, N.A.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Crestone Capital Management, Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Richard Merriam Principal, Senior Portfolio Manager Galliard Capital Management, Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
John Caswell Principal, Senior Portfolio Manager Galliard Capital Management, Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Karl Tourville Principal, Senior Portfolio Manager Galliard Capital Management, Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Laura Gideon Senior Vice President of Marketing Galliard Capital Management, Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Leela Scattum Vice President of Operations Galliard Capital Management, Inc.
---------------------------------- ------------------------------------ ----------------------------------
</TABLE>
<PAGE>
(f) Forum Investment Advisors, LLC
The description of Forum Investment Advisors, LLC of Parts A and Bof
this Registration Statement are incorporated by reference herein.
The following are the members of Forum Investment Advisors, LLC, Two
Portland Square, Portland, Maine 04101, including their business
connections which are of a substantial nature.
Forum Holdings Corp. I., Member.
Forum Trust, LLC., Member.
Both Forum Holdings Corp. I.and Forum Trust are controlled indirectly
by John Y. Keffer, Chairman and President of the Registrant. Mr. Keffer
is President of Forum Trust and Forum Financial Group, LLC. Mr. Keffer
is also a director and/or officer of various registered investment
companies for which the various Forum Financial Group's operating
subsidiaries provide services.
The following are the officers of Forum Investment Advisors, LLC,
including their business connections that are of a substantial nature.
Each officer may serve as an officer of various registered investment
companies for which the Forum Financial Group provides services.
<TABLE>
<S> <C> <C>
---------------------------------- ------------------------------------ ----------------------------------
Name Title Business Connection
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Sara M. Morris Treasurer Forum Investment Advisors, LLC.
------------------------------------ ----------------------------------
Chief Financial Officer Forum Financial Group, LLC.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Other Forum affiliated companies
---------------------------------- ------------------------------------ ----------------------------------
--------------------------------- ------------------------------------- ----------------------------------
David I. Goldstein Secretary Forum Investment Advisors, LLC.
------------------------------------- ----------------------------------
General Counsel Forum Financial Group, LLC.
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Officer Other Forum affiliated companies
--------------------------------- ------------------------------------- ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Leslie C. Berthy Managing Director Forum Investment Advisors, LLC.
---------------------------------- ------------------------------------ ----------------------------------
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) Forum Financial Services, Inc. is the Registrant's placement
agent. Registrant has no underwriters.
(b) Not applicable.
(c) Not Applicable.
ITEM 30. LOCATION OF BOOKS AND RECORDS.
The majority of the accounts, books and other documents required to be
maintained by Section 31(a) of the Act and the Rules thereunder are maintained
at the offices of Forum Financial Services, Inc., Forum Financial Corp. and
Forum Accounting Services, Limited Liability Company, Two Portland Square,
Portland, Maine 04104. The records required to be maintained under Rule
31a-1(b)(1) with respect to journals of receipts and deliveries of securities
and receipts and disbursements of cash are maintained at the offices of the
Registrant's custodians, as listed under "Custodian" in Part B to this
Registration Statement. The records required to be maintained under Rule
31a-1(b)(5), (6) and (9) are maintained at the offices of Registrant's
investment advisers, as listed in Item 28 hereof.
ITEM 31. MANAGEMENT SERVICES.
Not Applicable.
ITEM 32. UNDERTAKINGS.
Registrant undertakes to contain in its Trust Instrument provisions for
assisting shareholder communications and for the removal of trustees
substantially similar to those provided for in Section 16(c) of the Act, except
to the extent such provisions are mandatory or prohibited under applicable
Delaware law.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant, Core Trust (Delaware), has duly caused this amendment to its
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Portland and the State of Maine on the 28th day
of September, 1998.
CORE TRUST (DELAWARE)
By: /s/ John Y. Keffer
-----------------------------
John Y. Keffer
President
<PAGE>
Index to Exhibits
Exhibit
(1) Trust Instrument of Registrant dated November 1, 1994 as amended April
4, 1995 and August 30, 1995.
(5)(a) Investment Advisory Agreement between Registrant and Norwest
Investment Management, Inc. relating to Index Portfolio, Small Company
Stock Portfolio, Small Company Growth Portfolio, Small Company Value
Portfolio, Large Company Portfolio, Income Equity Portfolio, Managed
Fixed Income Portfolio, Total Return Bond Portfolio, Positive Return
Bond Portfolio and Stable Income Portfolio Disciplined Growth
Portfolio, Small Cap Value Portfolio, Strategic Value Bond Portfolio,
and Small Cap Index Portfolio dated October 1, 1997.
(8)(a) Custodian Agreement between Registrant and Norwest Bank Minnesota,
N.A. dated as of November 9, 1994, as amended June 1, 1997.
(b) Custodian Agreement between Registrant and Imperial Trust Company
dated September 1, 1995, as amended August 31, 1998.
(c) Custody Agreement between Morgan Stanley Company and Norwest Bank
Minnesota, N.A. dated June 18, 1993, as amended April 1, 1996.
(9)(d) Placement Agent Agreement between Registrant and Forum relating to
Treasury Cash Portfolio, Government Cash Portfolio, Cash Portfolio and
Treasury Portfolio. dated September 1, 1995.
(12)(a) Independent Auditors' Report, KPMG Peat Marwick LLP, Report of
Independent Accountants, PricewaterhouseCoopers LLP, Statements of
Assets and Liabilities, Statements of Operations, Statements of
Changes in Net Assets, Financial Highlights, Notes to Financial
Highlights, Schedules of Investments for Stable Income Portfolio,
Managed Fixed Income Portfolio, Positive Return Bond Portfolio, Index
Portfolio, Income Equity Portfolio, Disciplined Growth Portfolio,
Large Company Growth Portfolio, Small Cap Index Portfolio, Small
Company Stock Portfolio, Small Cap Value Portfolio, Small Company
Value Portfolio, Small Company Growth Portfolio and International
Portfolio, dated May 31, 1998.
(b) Independent Auditors' Report, KPMG Peat Marwick LLP, Statements of
Assets and Liabilities, Statements of Operations, Statements of
Changes in Net Asstes, Financial Highlights, Notes to Financial
Statements and Schedules of Investments for Prime Money Market
Portfolio and Money Market Portfolio dated May 31, 1998.
(17) Financial Data Schedules.
Exhibit 1
CORE TRUST (DELAWARE)
TRUST INSTRUMENT
AS AMENDED AND RESTATED NOVEMBER 1, 1994
TABLE OF CONTENTS
<TABLE>
<S> <C>
Page
ARTICLE I -- THE TRUST
Section 1.1 Name........................................................................... 1
Section 1.2 Definitions.................................................................... 1
ARTICLE II -- TRUSTEES AND OFFICERS
Section 2.1 Number and Qualification....................................................... 3
Section 2.2 Term and Election.............................................................. 3
Section 2.3 Resignation and Removal........................................................ 3
Section 2.4 Vacancies...................................................................... 3
Section 2.5 Meetings....................................................................... 3
Section 2.6 Committees..................................................................... 4
Section 2.7 By-Laws........................................................................ 5
Section 2.8 Officers of the Trust.......................................................... 5
Section 2.9 Election, Tenure and Removal of Officers....................................... 5
Section 2.10 Chairman, President and Vice Presidents....................................... 5
Section 2.11 Secretary..................................................................... 6
Section 2.12 Treasurer..................................................................... 6
Section 2.13 Other Officers and Duties..................................................... 6
ARTICLE III -- POWERS OF TRUSTEES
Section 3.1 General........................................................................ 6
Section 3.2 Investments.................................................................... 6
Section 3.3 Legal Title.................................................................... 7
Section 3.4 Sale of Interests.............................................................. 7
Section 3.5 Borrow Money................................................................... 7
Section 3.6 Delegation..................................................................... 7
Section 3.7 Collection and Payment......................................................... 7
Section 3.8 Expenses....................................................................... 7
Section 3.9 Miscellaneous Powers........................................................... 8
Section 3.10 Further Powers................................................................ 8
Section 3.11 Principal Transactions........................................................ 8
ARTICLE IV -- INVESTMENT MANAGEMENT, CUSTODIAL AND PRIVATE
PLACEMENT ARRANGEMENTS
Section 4.1 Investment Management and Other Arrangements................................... 8
Section 4.2 Custodial Arrangements......................................................... 9
Section 4.3 Parties to Contract............................................................ 9
Section 4.4 Compliance with 1940 Act....................................................... 9
ARTICLE V -- LIMITATIONS OF LIABILITY
Section 5.1 No Personal Liability of Trustees, Holders..................................... 9
Section 5.2 Indemnification................................................................ 10
Section 5.3 No Bond Required of Trustees................................................... 11
Section 5.4 No Duty of Investigation; Notice in Trust Instruments, etc..................... 11
Section 5.5 Reliance on Experts, etc....................................................... 12
ARTICLE VI -- INTERESTS OF THE TRUST
Section 6.1 Interests...................................................................... 12
Section 6.2 Rights of Holders.............................................................. 12
Section 6.3 Purchase of or Increase in Interests........................................... 12
Section 6.4 Register of Interests.......................................................... 12
Section 6.5 Non-Transferability............................................................ 12
Section 6.6 Notices........................................................................ 12
Section 6.7 Assent to Trust Instrument..................................................... 13
Section 6.8 Establishment of Series........................................................ 13
Section 6.9 Assets and Liabilities of Series............................................... 13
ARTICLE VII -- DECREASES AND WITHDRAWALS
Section 7.1 Decreases and Withdrawals...................................................... 14
ARTICLE VIII -- DETERMINATION OF BOOK CAPITAL ACCOUNT
BALANCES, NET ASSET VALUE, ALLOCATIONS
AND DISTRIBUTIONS
Section 8.1 Book Capital Account Balances.................................................. 14
Section 8.2 Net Asset Value................................................................ 14
Section 8.3 Allocation of Net Profits and Net Losses....................................... 15
Section 8.4 Distributions.................................................................. 15
Section 8.5 Power to Modify Foregoing Procedures........................................... 15
ARTICLE IX -- HOLDERS
Section 9.1 Meetings of Holders............................................................ 15
Section 9.2 Notice of Meetings............................................................. 16
Section 9.3 Record Date for Meetings....................................................... 16
Section 9.4 Proxies, etc................................................................... 16
Section 9.5 Inspectors of Election......................................................... 16
Section 9.6 Inspection of Records.......................................................... 17
Section 9.7 Holder Action by Written Consent............................................... 17
Section 9.8 Voting Powers.................................................................. 17
ARTICLE X -- DURATION; TERMINATION; DISSOLUTION; AMENDMENT;
MERGERS; ETC.
Section 10.1 Termination of Trust or any Series............................................ 17
Section 10.2 Dissolution................................................................... 18
Section 10.3 Amendment Procedure........................................................... 18
Section 10.4 Merger or Consolidation....................................................... 19
Section 10.5 Incorporation................................................................. 19
ARTICLE XI -- MISCELLANEOUS
Section 11.1 Governing Law................................................................. 19
Section 11.2 Counterparts.................................................................. 20
Section 11.3 Reliance by Third Parties..................................................... 20
Section 11.4 Provisions in Conflict with Law on Regulations................................ 20
Section 11.5 Signatures.................................................................... 20
Section 11.6 Seal.......................................................................... 20
Section 11.7 Fiscal Year................................................................... 20
Section 11.8 Waivers of Notice............................................................. 20
Section 11.9 Reports....................................................................... 20
</TABLE>
CORE TRUST (DELAWARE)
This TRUST INSTRUMENT of CORE TRUST (DELAWARE) is restated and amended
this 1st day of November, 1994 by the parties signatory hereto, as Trustees.
WHEREAS, having formed a business trust under the law of Delaware for
the investment and reinvestment of the Trust's assets the Trustees do desire to
amend and restate the Trust Instrument executed on September 1, 1994; and
WHEREAS, it is proposed that the trust assets be composed of money and
property contributed hereto by the holders of interests in the trust entitled to
ownership rights in the trust;
NOW, THEREFORE, the Trustees hereby declare that they will hold in
trust all money and property contributed to the trust fund to manage and dispose
of the same for the benefit of the holders of interests in the trust and subject
to the provisions hereof, to wit:
ARTICLE I
The Trust
1.1. Name. The name of the trust created hereby (the "Trust") shall be
"Core Trust (Delaware)," and so far as may be practicable the Trustees shall
conduct the Trust's activities, execute all documents and sue or be sued under
that name, which name (and the word "Trust" wherever hereinafter used) shall
refer to the Trustees as Trustees, and not individually, and shall not refer to
the officers, agents, employees or holders of interests in the Trust. However,
should the Trustees determine that the use of the name of the Trust is not
advisable, they may select such other name for the Trust as they deem proper and
the Trust may hold its property and conduct its activities under such other
name.
1.2. Definitions. As used in this Trust Instrument, the following terms
shall have the following meanings:
The terms "Affiliated Person," "Assignment" and "Interested Person"
shall have the meanings given them in the 1940 Act, as modified by any
applicable order or orders of the Commission or interpretive releases of the
Commission thereunder.
"Book Capital Account" shall mean, for any Holder of Interests in a
particular Series at any time, the Book Capital Account of the Holder with
respect to that Series for such day, determined in accordance with Article VIII
of this Instrument.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"Delaware Act" shall mean Chapter 38 of Title 12 of the Delaware Code
entitled "Treatment of Delaware Business Trusts," as it may be amended from time
to time.
"Fiscal Year" shall mean, with respect to any Series, an annual period
as determined by the Trustees.
"Holders" shall mean as of any particular time all holders of record of
Interests of a Series of the Trust at such time.
"Instrument" shall mean this Trust Instrument as amended from time to
time. References in this Instrument to "Instrument," "hereof," "herein" and
"hereunder" shall be deemed to refer to the Instrument rather than the article
or section in which such words appear.
"Interest(s)" shall mean, with respect to each Series, the interest of
a Holder in that Series, including all rights, powers and privileges accorded to
such Holders in this Instrument, which interest may be expressed as a
percentage, determined by calculating, at such times and on such basis, as the
Trustees shall from time to time determine, the ratio of each Holder's Book
Capital Account balance to the total of all Holders' Book Capital Account
balances in that Series. Reference herein to a specified percentage in, or
fraction of, Interests of the Holders in a Series means Holders whose combined
Book Capital Accounts represent such specified percentage or fraction of the
Book Capital Accounts of all Holders in that Series.
"Investment Manager" shall mean any person furnishing services to the
Trust or any Series pursuant to any investment management contract as described
in Section 4.1 hereof.
"Majority Interests Vote" shall mean, with respect to the Trust or a
Series thereof, the vote, at a meeting of the Holders of the Trust or Series, as
the case may be, of (i) 67% or more of the Interests present or represented at
such meeting, if the Holders of more than 50% of the Interests of the Trust or
Series, as the case may be, are present or represented by proxy or (ii) more
than 50% of the Interests of the Trust or Series, as the case may be, whichever
is less.
"Net Asset Value" shall have the meaning assigned to that term in
Section 8.2 hereof.
"Person" shall mean and include individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities, whether
or not legal entities, and governments and agencies and political subdivisions
thereof.
"Registration Statement" shall mean the Registration Statement of the
Trust under the 1940 Act, as amended from time to time.
"Series" shall mean a series of Interests of the Trust established in
accordance with the provisions of Article VI, Section 6.8 hereof.
"Trustees" shall mean the signatories to this Instrument, so long as
they shall continue in office in accordance with the terms hereof, and all other
persons who at the time in question have been duly elected or appointed and have
qualified as trustees in accordance with the provisions hereof and are then in
office, who are herein referred to as the "Trustees," and reference in this
Instrument to a Trustee or Trustees shall refer to such person or persons in
their capacity as trustees hereunder.
"Trust Property" shall mean as of any particular time any and all
property, real or personal, tangible or intangible, which at such time is owned
or held by or for the account of the Trust or any Series, or the Trustees on
behalf of the Trust or any Series.
The "1940 Act" refers to the Investment Company Act of 1940, as amended
from time to time, and the rules and regulations thereunder.
ARTICLE II
Trustees and Officers
2.1. Number and Qualification. The number of Trustees shall be fixed
from time to time by the Trustees then in office, provided, however, that the
number of Trustees shall in no event be less than three or more than twelve. Any
vacancy created by an increase in Trustees may be filled by the appointment of
an individual having the qualifications described in this Article. Any such
appointment shall not become effective, however, until the individual appointed
shall have accepted such appointment and agreed to be bound by the terms of this
Instrument. No reduction in the number of Trustees shall have the effect of
removing any Trustee from office. Whenever a vacancy in the number of Trustees
shall occur, until such vacancy is filled as provided in Section 2.4 hereof, the
Trustees in office, regardless of their number, shall have all the powers
granted to the Trustees and shall discharge all the duties imposed upon the
Trustees by this Instrument.
2.2. Term and Election. Each Trustee named herein, or elected or
appointed hereunder, shall (except in the event of resignations or removals or
vacancies pursuant to Section 2.3 or 2.4 hereof) hold office until the Trustee's
successor has been elected and has qualified to serve as Trustee. Beginning with
the Trustees elected at the first meeting of Holders, each Trustee shall hold
office during the lifetime of this Trust and until its termination as
hereinafter provided unless such Trustee resigns or is removed as provided in
Section 2.3 below.
2.3. Resignation and Removal. Any Trustee may resign their trust
(without need for prior or subsequent accounting) by an instrument in writing
signed by him and delivered or mailed to the Chairman, if any, the President or
the Secretary and such resignation shall be effective upon such delivery, or at
a later date according to the terms of the instrument. Any of the Trustees may
be removed by the affirmative vote of the Holders of two-thirds (2/3) of the
Interests or (provided the aggregate number of Trustees, after such removal and
after giving effect to any appointment made to fill the vacancy created by such
removal, shall not be less than the number required by Section 2.1 hereof) with
cause, by the action of two-thirds of the remaining Trustees. Removal with cause
includes, but is not limited to, the removal of a Trustee due to physical or
mental incapacity. Upon the resignation or removal of a Trustee, or the
Trustee's otherwise ceasing to be a Trustee, the Trustee shall execute and
deliver such documents as the remaining Trustees shall require for the purpose
of conveying to the Trust or the remaining Trustees any Trust Property held in
the name of the resigning or removed Trustee. Upon the death of any Trustee or
upon removal or resignation due to any Trustee's incapacity to serve as trustee,
the Trustee's legal representative shall execute and deliver on the Trustee's
behalf such documents as the remaining Trustees shall require as provided in the
preceding sentence.
2.4. Vacancies. The term of office of a Trustee shall terminate and a
vacancy shall occur in the event of the death, resignation, adjudicated
incompetence or other incapacity to perform the duties of the office, or
removal, of a Trustee or increase in the number of Trustees. No such vacancy
shall operate to annul this Instrument or to revoke any existing agency created
pursuant to the terms of this Instrument. In the case of a vacancy, the Holders
of at least a majority of the Interests entitled to vote, acting at any meeting
of the Holders held in accordance with Section 9.1 hereof, or a majority vote of
the Trustees continuing in office, may fill such vacancy, and any Trustee so
elected by the Trustees or the Holders shall hold office as provided in this
Instrument.
2.5. Meetings.
(a) Meetings of the Trustees shall be held from time to time upon the
call of the Chairman, if any, the President, the Secretary, or any two Trustees.
The Trustees may act with or without a meeting. A quorum for all meetings of the
Trustees shall be a majority of the Trustees. Unless provided otherwise in this
Instrument, any action of the Trustees may be taken by vote of a majority of the
Trustees present (a quorum being present) at a meeting duly called or by
unanimous written consent of the Trustees without a meeting. In the absence of a
quorum, a majority of the Trustees present may adjourn the meeting from time to
time until a quorum shall be present. Notice of an adjourned meeting need not be
given. The Trustees by majority vote may delegate to any one or more of their
number their authority to approve particular matters or take particular actions
on behalf of the Trust.
(b) Regular meetings of the Trustees may be held without call or notice
at a time and place fixed by the Trustees. Notice of any other meeting shall be
given by mail, facsimile or telegram (which term shall include a cablegram) or
delivered personally, which shall include by telephone. Notice of a meeting
designating the time, date and place of such meeting shall be mailed not less
than 72 hours or otherwise given not less than 24 hours before the meeting but
may be waived in writing by any Trustee either before or after such meeting. The
attendance of a Trustee at a meeting shall constitute a waiver of notice of such
meeting except where a Trustee attends a meeting for the express purpose of
objecting, at the commencement of such meeting, to the transaction of any
business on the ground that the meeting has not been lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
meeting of the Board of Trustees need be stated in the notice or waiver of
notice of such meeting, and no notice need be given of action proposed to be
taken by unanimous written consent.
(c) All or any one or more Trustees may participate in a meeting of the
Trustees or any committee thereof by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other and participation in a meeting pursuant to such
communications system shall constitute presence in person at such meeting.
(d) The Chairman, if any, shall act as chairman at all meetings of the
Trustees; in the Chairman's absence the President shall act as chairman; and, in
the absence of the Chairman and the President, the Trustees present shall elect
one of their number to act as temporary chairman. The results of all actions
taken at a meeting of the Trustees, or by unanimous written consent of the
Trustees, shall be recorded by the Secretary.
(e) With respect to actions of the Trustees and any committee of the
Trustees, Trustees who are Interested Persons of the Trust or otherwise
interested in any action to be taken may be counted for quorum purposes under
this Section 2.5, or with respect to committees, Section 2.6 of this Instrument,
and shall be entitled to vote to the extent permitted by the 1940 Act.
2.6. Committees.
(a) Any committee of the Trustees may act with or without a meeting. A
quorum for all meetings of any committee shall be a majority of the members
thereof or such lesser number as determined by the Trustees. Unless provided
otherwise in this Instrument, any action of any committee may be taken by a vote
of a majority of the members present (a quorum being present) at a meeting or by
unanimous written consent of the members without a meeting or by telephone
meeting.
(b) The Trustees by vote of a majority of all the Trustees may elect
from their own number an Executive Committee to consist of not less than two (2)
to hold office at the pleasure of the Trustees, which shall have the power to
conduct the current and ordinary business of the Trust while the Trustees are
not in session, including the purchase and sale of securities and the
designation of securities to be delivered upon decrease or withdrawal of
Interests of the Trust or any Series, and such other powers of the Trustees as
the Trustees may, from time to time, delegate to them except those powers which
by law or this Instrument they are prohibited from delegating. The Trustees may
also elect from their own number other Committees from time to time, the number
composing such Committees, the powers conferred upon the same (subject to the
same limitations as with respect to the Executive Committee) and the term of
membership on such Committees to be determined by the Trustees. The Trustees may
designate a Chairman of any such Committee. In the absence of such designation,
the Committee may elect its own Chairman. Each Committee shall keep regular
minutes of its meetings and records of decisions taken without a meeting and
cause them to be recorded in a book designated for that purpose and kept in the
Office of the Trust.
(c) The Trustees may (1) provide for stated meetings of any Committee;
(2) specify the manner of calling and notice required for special meetings of
any Committee; (3) specify the number of members of a Committee required to
constitute a quorum and the number of members of a Committee required to
exercise specified powers delegated to such Committee; (4) authorize the making
of decisions to exercise specified powers by written assent of the requisite
number of members of a Committee without a meeting; and (5) authorize the
members of a Committee to meet by means of a telephone conference circuit.
2.7. By-Laws. The Trustees may, but need not, adopt By-Laws for
the conduct of the business of the Trust and may from time to time amend or
repeal any By-Laws.
2.8. Officers of the Trust. The Trustees shall, from time to time,
elect a President, a Secretary and a Treasurer. The Trustees may elect or
appoint, from time to time, a Chairman of the Board. The Trustees may elect or
appoint such other officers or assistant officers, including Vice Presidents, as
the business of the Trust may require. The Trustees may delegate to any officer
or committee the power to appoint any subordinate officers or agents. Any two or
more of the offices may be held by the same person, except that the same person
may not be both President and Secretary. The Trustees may designate a Vice
President as an Executive Vice President and may designate the order in which
the other Vice Presidents may act. The Chairman and the President shall be
Trustees, but no other officer of the Trust need be a Trustee. Any officer may
be required by the Trustees to be bonded for the faithful performance of the
officer's duties in such amount and with such sureties as the Trustees may
determine.
2.9. Election, Tenure and Removal of Officers. At the initial
organization meeting and thereafter at each annual meeting of the Trustees, the
Trustees shall elect the Chairman, if any, President, Secretary, Treasurer. The
Trustees may from time to time elect or appoint such other officers as the
Trustees shall deem necessary or appropriate in order to carry out the business
of the Trust and such officers shall hold office until the next annual meeting
of the Trustees and until their successors have been duly elected and qualified.
The Trustees also may authorize or appoint the President to appoint such other
officers as the Trustees shall deem necessary or appropriate in order to carry
out the business of the Trust. The Trustees may fill any vacancy in office or
add any additional officers at any time. Any officer may be removed at any time,
with or without cause, by action of a majority of the Trustees. This provision
shall not prevent the making of a contract of employment for a definite term
with any officer and shall have no effect upon any cause of action which any
officer may have as a result of removal in breach of a contract of employment.
Any officer may resign at any time by notice in writing signed by such officer
and delivered or mailed to the Chairman, if any, President, or Secretary, and
such resignation shall take effect immediately, or at a later date according to
the terms of such notice in writing.
2.10. Chairman, President, and Vice Presidents. The Chairman, if any,
shall, if present, preside at all meetings of the Holders and of the Trustees
and shall exercise and perform such other powers and duties as may be from time
to time assigned to him by the Trustees. Subject to such supervisory powers, if
any, as may be given by the Trustees to the Chairman, if any, the President
shall be the chief executive officer of the Trust and, subject to the control of
the Trustees, shall have general supervision, direction and control of the
business of the Trust and of its employees and shall exercise such general
powers of management as are usually vested in the office of President of a
corporation. In the absence of the Chairman, if any, the President shall preside
at all meetings of the Holders and the Trustees. Subject to direction of the
Trustees, the Chairman, if any, and the President shall each have power in the
name and on behalf of the Trust to execute any and all loan documents,
contracts, agreements, deeds, mortgages, and other instruments in writing, and
to employ and discharge employees and agents of the Trust. Unless otherwise
directed by the Trustees, the Chairman, if any, and the President shall each
have full authority and power, on behalf of all of the Trustees, to attend and
to act and to vote, on behalf of the Trust, at any meetings of business
organizations in which the Trust holds an interest, or to confer such powers
upon any other persons, by executing any proxies duly authorizing such persons.
The Chairman, if any, and the President shall have such further authorities and
duties as the Trustees shall from time to time determine. In the absence or
disability of the President, the Vice Presidents in order of their rank or the
Vice President designated by the Trustees, shall perform all of the duties of
President, and when so acting shall have all the powers of and be subject to all
of the restrictions upon the President. Subject to the direction of the
President, each Vice President shall have the power in the name and on behalf of
the Trust to execute any and all loan documents, contracts, agreements, deeds,
mortgages and other instruments in writing, and, in addition, shall have such
other duties and powers as shall be designated from time to time by the Trustees
or by the President.
2.11. Secretary. The Secretary shall keep the minutes of all meetings
of, and record all votes of, Holders, Trustees and the Executive Committee, if
any. The Secretary shall be custodian of the seal of the Trust, if any, and the
Secretary (and any other person so authorized by the Trustees) shall affix the
seal or, if permitted, a facsimile thereof, to any instrument executed by the
Trust which would be sealed by a Delaware corporation executing the same or a
similar instrument and shall attest the seal and the signature or signatures of
the officer or officers executing such instrument on behalf of the Trust. The
Secretary shall also perform any other duties commonly incident to such office
in a Delaware business corporation, and shall have such other authorities and
duties as the Trustees shall from time to time determine.
2.12. Treasurer. Except as otherwise directed by the Trustees, the
Treasurer shall have the general supervision of the monies, funds, securities,
notes receivable and other valuable papers and documents of the Trust, and shall
have and exercise under the supervision of the Trustees and of the President all
powers and duties normally incident to the President's office. The Treasurer may
endorse for deposit or collection all notes, checks and other instruments
payable to the Trust or to its order. The Treasurer shall deposit all funds of
the Trust as may be ordered by the Trustees or the Treasurer. The Treasurer
shall deliver all funds of the Trust which may come into the Treasurer's hands
to such Custodian as the Trustees may employ pursuant to Article V of these
By-Laws. The Treasurer shall keep accurate account of the books of the Trust's
transactions which shall be the property of the Trust, and which together with
all other property of the Trust in the Treasurer's possession, shall be subject
at all times to the inspection and control of the Trustees. Unless the Trustees
shall otherwise determine, the Treasurer shall be the principal accounting
officer of the Trust and shall also be the principal financial officer of the
Trust. The Treasurer shall have such other duties and authorities as the
Trustees or President shall from time to time determine. Notwithstanding
anything to the contrary herein contained, the Trustees may authorize any
investment adviser, administrator or manager to maintain bank accounts and
deposit and disburse funds on behalf of the Trust.
2.13. Other Officers and Duties. The Trustees may elect such other
officers and assistant officers as they shall from time to time determine to be
necessary or desirable in order to conduct the business of the Trust. Assistant
officers shall act generally in the absence of the officer whom they assist and
shall assist that officer in the duties of their office. Each officer, employee
and agent of the Trust shall have such other duties and authority as may be
conferred upon him by the Trustees or delegated to him by the President.
ARTICLE III
Powers of Trustees
3.1. General. The Trustees shall have exclusive and absolute control
over the Trust Property and over the business of the Trust to the same extent as
if the Trustees were the sole owners of the Trust Property and business in their
own right, but with such powers of delegation as may be permitted by this
Instrument. The Trustees may perform such acts as in their sole discretion are
proper for conducting the business of the Trust. The enumeration of any specific
power herein shall not be construed as limiting the aforesaid power. Such powers
of the Trustees may be exercised without order of or resort to any court.
3.2. Investments. The Trustees shall have power to:
(a) Conduct, operate and carry on the business of an investment
company;
(b) Subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, transfer, exchange, distribute or otherwise
deal in or dispose of any form of property including United States and foreign
currencies and related instruments including forward contracts, and securities,
including common and preferred stocks, warrants, bonds, debentures, time notes
and all other evidences of indebtedness, negotiable or non-negotiable
instruments, obligations, certificates of deposit or indebtedness, commercial
paper, repurchase agreements, reverse repurchase agreements, convertible
securities, forward contracts, options, futures contracts, and other securities,
including, without limitation, those issued, guaranteed or sponsored by any
state, territory or possession of the United States and the District of Columbia
and their political subdivisions, agencies and instrumentalities, or by the
United States Government, any foreign government, or any agency, instrumentality
or political subdivision of the United States Government or any foreign
government, or international instrumentalities, or by any bank, savings
institution, corporation or other business entity organized under the laws of
the United States or under foreign laws; and to exercise any and all rights,
powers and privileges of ownership or interest in respect of any and all such
investments of every kind and description, including, without limitation, the
right to consent and otherwise act with respect thereto, with power to designate
one or more persons, firms, associations or corporations to exercise any of said
rights, powers and privileges in respect of any of said instruments; and the
Trustees shall be deemed to have the foregoing powers with the respect to any
additional securities in which the Trustees may determine to invest.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
3.3. Legal Title. Legal title to all the Trust Property shall be vested
in the Trustees as joint tenants except that the Trustees shall have the power
to cause legal title to any Trust Property to be held by or in the name of one
or more of the Trustees, or in the name of the Trust, or in the name of any
other Person on behalf of the Trust, on such terms as the Trustees may
determine.
The right, title and interest of the Trustees in the Trust Property
shall vest automatically in each person who may hereafter become a Trustee upon
the Trustee's due election and qualification. Upon the resignation, removal or
death of a Trustee, the Trustee shall automatically cease to have any right,
title or interest in any of the Trust Property, and the right, title and
interest of such Trustee in the Trust Property shall vest automatically in the
remaining Trustees. Such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered.
3.4. Sale of Interests. Subject to the more detailed provisions set
forth in Articles VII and VIII, the Trustees shall have the power to permit
persons to purchase Interests and to add to or reduce, in whole or in part,
their Interest in the Trust or any Series thereof.
3.5. Borrow Money. The Trustees shall have power to borrow money or
otherwise obtain credit and to secure the same by mortgaging, pledging or
otherwise subjecting as security the assets of the Trust, including the lending
of portfolio securities, and to endorse, guarantee or undertake the performance
of any obligation, contract or engagement of any other person, firm, association
or corporation.
3.6. Delegation. The Trustees shall have power, consistent with their
continuing exclusive authority over the management of the Trust and the Trust
Property, to delegate from time to time to such of their number or to officers,
employees or agents of the Trust the doing of such things and the execution of
such instruments either in the name of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient.
3.7. Collection and Payment. The Trustees shall have power to collect
all property due to the Trust; and to pay all claims, including taxes, against
the Trust Property; to prosecute, defend, compromise or abandon any claims
relating to the Trust Property; to foreclose any security interest securing any
obligations, by virtue of which any property is owed to the Trust; and to enter
into releases, agreements and other instruments.
3.8. Expenses. The Trustees shall have power to incur and pay all
expenses which in the opinion of the Trustees are necessary or incidental to
carry out any of the purposes of this Instrument, and to pay reasonable
compensation from the funds of the Trust or the assets of the appropriate Series
to themselves as Trustees. The Trustees shall fix the compensation of all
officers, employees and Trustees. The Trustees may pay themselves such
compensation for special services, including legal and brokerage services, as
they in good faith may deem reasonable, and reimbursement for expenses
reasonably incurred by themselves on behalf of the Trust or any Series thereof.
3.9. Miscellaneous Powers. The Trustees shall have the power to: (a)
employ or contract with such Persons as the Trustees may deem desirable for the
transaction of the business of the Trust and terminate such employees or
contractual relationships as they consider appropriate; (b) enter into joint
ventures, partnerships and any other combinations or associations; (c) purchase,
and pay for out of Trust Property or the assets of the appropriate Series,
insurance policies insuring the Investment Manager, placement agent, Holders,
Trustees, officers, employees, agents, or independent contractors of the Trust
against all claims arising by reason of holding any such position or by reason
of any action taken or omitted by any such Person in such capacity, whether or
not the Trust would have the power to indemnify such Person against such
liability; (d) establish pension, profit-sharing and other retirement, incentive
and benefit plans for any Trustees, officers, employees and agents of the Trust;
(e) make donations, irrespective of benefit to the Trust, for charitable,
religious, educational, scientific, civic or similar purposes; (f) to the extent
permitted by law, indemnify any Person with whom the Trust has dealings,
including the Investment Manager, placement agent, Holders, Trustees, officers,
employees, agents or independent contractors of the Trust, to such extent as the
Trustees shall determine; (g) guarantee indebtedness or contractual obligations
of others; (h) determine and change the Fiscal Year of each Series of the Trust
and the method in which its accounts shall be kept; (i) adopt a seal for the
Trust, but the absence of such seal shall not impair the validity of any
instrument executed on behalf of the Trust; (j) establish separate and distinct
Series with separately defined investment objectives and policies and distinct
investment purposes in accordance with the provisions of Article VI hereof; (k)
subject to the provisions of Section 3804 of the Delaware Act, allocate assets,
liabilities and expenses of the Trust to a particular Series or apportion the
same between or among two or more Series, provided that any liabilities or
expenses incurred by a particular Series shall be payable solely out of the
assets belonging to that Series as provided for in Article VI hereof; (l)
establish, from time to time, a minimum investment for Holders in the Trust or
in one or more Series, and require the withdrawal of any Holder whose investment
is less than such minimum upon giving notice to such Holder and; (m) appoint, or
authorize any officer or officers to appoint, one or more registrars of the
Trust.
3.10. Further Powers. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices, whether within or without the State of Delaware, in any
and all states of the United States of America, in the District of Columbia, and
in any and all commonwealths, territories, dependencies, colonies, possessions,
agencies or instrumentalities of the United States of America and of foreign
governments, and to do all such other things and execute all such instruments as
they deem necessary, proper or desirable in order to promote the interests of
the Trust although such things are not herein specifically mentioned. Any
determination as to what is in the interests of the Trust made by the Trustees
in good faith shall be conclusive. In construing the provisions of this
Instrument, the presumption shall be in favor of a grant of power to the
Trustees. The Trustees will not be required to obtain any court order to deal
with Trust Property.
3.11. Principal Transactions. The Trustees may, on behalf of the Trust,
buy any securities from or sell any securities to, or lend any assets of the
Trust or any Series to, any Trustee or officer of the Trust or any firm of which
any such Trustee or officer is a member acting as principal, or have any such
dealings with any investment manager, placement agent or transfer agent for the
Trust or with any Interested Person of such person; and the Trust may employ any
such person, or firm or company in which such person is an Interested Person, as
broker, legal counsel, registrar, investment manager, placement agent, transfer
agent, dividend disbursing agent, custodian or in any other capacity upon
customary terms.
ARTICLE IV
Investment Management, Custodial
and Placement Agent Arrangements
4.1. Investment Management and Other Arrangements. The Trustees may in
their discretion, from time to time, enter into investment management contracts
or placement agent agreements with respect to the Trust or any Series whereby
the other party to such contract or agreement shall undertake to furnish the
Trustees such investment management, placement agent and/or other services as
the Trustees shall, from time to time, consider desirable and all upon such
terms and conditions as the Trustees may in their discretion determine.
Notwithstanding any provisions of this Instrument, the Trustees may authorize
any Investment Manager (subject to such general or specific instruments as the
Trustees may, from time to time, adopt) to effect purchases, sales, loans or
exchanges of Trust Property on behalf of the Trustees or may authorize any
officer, employee or Trustee to effect such purchases, sales, loans or exchanges
pursuant to recommendations of any such Investment Manager (and all without
further action by the Trustees). Any such purchases, sales, loans and exchanges
shall be deemed to have been authorized by all of the Trustees.
4.2. Custodial Arrangements.
(a) The Trustees shall at all times employ a bank, a company that is a
member of a national securities exchange, or a trust company, each having
capital, surplus and undivided profits of at least two million dollars
($2,000,000) as custodian with authority as the Trust's agent, but subject to
such restrictions, limitations and other requirements as the Trustees shall
determine (i) to hold the securities owned by the Trust and deliver the same
upon written order or oral order confirmed in writing; (ii) to receive and
receipt for any monies due to the Trust and deposit the same in its own banking
department or elsewhere as the Trustees may direct; and (iii) to disburse such
funds upon orders or vouchers.
(b) The Trustees may direct the custodian to deposit all or any part of
the securities owned by the Trust in a system for the central handling of
securities established by a national securities exchange or a national
securities association registered with the Commission under the Securities
Exchange Act of 1934, as amended, or such other person as may be permitted by
the Commission, or otherwise in accordance with the 1940 Act, pursuant to which
system 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 such securities, provided that
all such deposits shall be subject to withdrawal only upon the order of the
Trust or its custodians, subcustodians or other agents.
(c) The funds of the Trust shall be deposited in such depositories as
the Trustees shall designate and shall be drawn out on checks, drafts or other
orders signed by such officer, officers, agent or agents (including any
investment adviser, administrator or manager), as the Trustees may from time to
time authorize.
4.3. Parties to Contract. Any contract may be entered into with any
corporation, firm, trust or association, although one or more of the Trustees or
officers of the Trust may be an officer, director, trustee, shareholder, or
member of such other party to the contract, and no such contract shall be
invalidated or rendered void or voidable by reason of the existence of any such
relationship, nor shall any person holding such relationship be disqualified
from voting on or executing the same in the Holder's and/or Trustee's capacity
as Holder and/or Trustee, nor shall any person holding such relationship be
liable merely by reason of such relationship for any loss or expense to the
Trust under or by reason of said contract or accountable for any profit realized
directly or indirectly therefrom. The same person (including a firm,
corporation, trust, or association) may be the other party to contracts entered
into pursuant to Sections 4.1 or 4.2 above or otherwise, and any person may be
financially interested or otherwise affiliated with persons who are parties to
any or all of the contracts mentioned in this Section 4.3.
4.4. Compliance with 1940 Act. Any contract entered into pursuant to
Section 4.1 shall be consistent with and subject to the requirements of Section
15 of the 1940 Act, as modified by any applicable order or orders of the
Commission or interpretive releases of the Commission thereunder, with respect
to its continuance in effect, its termination and the method of authorization
and approval of such contract or renewal thereof.
ARTICLE V
Limitations of Liability
5.1. No Personal Liability of Trustees, Holders. No Trustee, when
acting in such capacity, shall be subject to any personal liability whatsoever
to any Person, other than the Trust or its Holders, in connection with Trust
Property or the affairs of the Trusts. No Trustee, when acting in such capacity,
shall be subject to any personal liability whatsoever, provided that nothing
contained herein or in the Delaware Act shall protect any Trustee against any
liability to the Trust or its 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 the office of Trustees hereunder. No
Holder shall be subject to any personal liability whatsoever to any Person in
connection with Trust Property or the affairs of the Trust. The Trustees shall
have no power to bind any Holder personally or to call upon any Holder for the
payment of any sum of money or assessment whatsoever other than such as the
Holder may at any time personally agree to pay by way of purchase of or increase
in Interests or otherwise.
5.2. Indemnification.
(a) Subject to the exceptions and limitations contained in Section
(b) below:
(i) Every Person who is, or has been, a Trustee or officer of
the Trust (hereinafter referred to as a "Covered Person") shall be
indemnified by the Trust to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him
in connection with any claim, action, suit or proceeding in which he
becomes involved as a party or otherwise by virtue of being or having
been a Trustee or officer and against amounts paid or incurred by him
in the settlement thereof;
(ii) The words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened while in
office or thereafter, and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts
paid in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) Who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Trust or its
Holders by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of the
Covered Person's office or (B) not to have acted in good faith in the
reasonable belief that Covered Person's action was in the best interest
of the Trust; or
(ii) In the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the Trustee's or officer's office,
(A) By the court or other body
approving the settlement;
(B) By at least a majority of those Trustees
who are neither Interested Persons of the Trust nor are
parties to the matter based upon a review of readily available
facts (as opposed to a full trial-type inquiry); or
(C) By written opinion of independent legal
counsel based upon a review of readily available facts (as
opposed to a full trial-type inquiry);
provided, however, that any Holder may, by appropriate legal
proceedings, challenge any such determination by the Trustees or by
independent counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now or
hereafter be entitled, shall continue as to a person who has ceased to be a
Covered Person and shall inure to the benefit of the heirs, executors and
administrators of such a person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel, other than Covered Persons,
and other persons may be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
paragraph (a) of this Section 5.2 may be paid by the Trust or Series from time
to time prior to final disposition thereof upon receipt of an undertaking by or
on behalf of such Covered Person that such amount will be paid over by him to
the Trust or Series if it is ultimately determined that he is not entitled to
indemnification under this Section 5.2; provided, however, that either (a) such
Covered Person shall have provided appropriate security for such undertaking,
(b) the Trust is insured against losses arising out of any such advance payments
or (c) either a majority of the Trustees who are neither Interested Persons of
the Trust nor parties to the matter, or independent legal counsel in a written
opinion, shall have determined, based upon a review of readily available facts
(as opposed to a trial-type inquiry or full investigation), that there is reason
to believe that such Covered Person will be found entitled to indemnification
under this Section 5.2.
(e) Conditional advancing of indemnification monies under this Section
5.2 for actions based upon the 1940 Act may be made only on the following
conditions: (i) the advances must be limited to amounts used, or to be used, for
the preparation or presentation of a defense to the action, including costs
connected with the preparation of a settlement; (ii) advances may be made only
upon receipt of a written promise by, or on behalf of, the recipient to repay
that amount of the advance which exceeds that amount which it is ultimately
determined that he is entitled to receive from the Trust by reason of
indemnification; and (iii) (a) such promise must be secured by a surety bond,
other suitable insurance or an equivalent form of security which assures that
any repayments may be obtained by the Trust without delay or litigation, which
bond, insurance or other form of security must be provided by the recipient of
the advance, or (b) a majority of a quorum of the Trust's disinterested,
non-party Trustees, or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts, that the recipient of
the advance ultimately will be found entitled to indemnification.
(f) In case any Holder or former Holder of any Series shall be held to
be personally liable solely by reason of the Holder or former Holder being or
having been a Holder of that Series and not because of the Holder or former
Holder acts or omissions or for some other reason, the Holder or former Holder
(or the Holder or former Holder's heirs, executors, administrators or other
legal representatives, or, in the case of a corporation or other entity, its
corporate or other general successor) shall be entitled out of the assets
belonging to the applicable Series to be held harmless from and indemnified
against all loss and expense arising from such liability. The Trust, on behalf
of the affected Series, shall, upon request by the Holder, assume the defense of
any claim made against the Holder for any act or obligation of the Series and
satisfy any judgment thereon from the assets of the Series.
5.3. No Bond Required of Trustees. No Trustee shall, as such, be
obligated to give any bond or surety or other security for the performance of
any of the Trustee's duties hereunder.
5.4. No Duty of Investigation; Notice in Trust Instruments, etc. No
purchaser, lender, or other person dealing with the Trustees or any officer,
employee or agent of the Trust shall be bound to make any inquiry concerning the
validity of any transaction purporting to be made by the Trustees or by said
officer, employee or agent or be liable for the application of money or property
paid, loaned, or delivered to or on the order of the Trustees or of said
officer, employee or agent. Every obligation, contract, instrument, certificate
or other interest or undertaking of the Trust or any Series, and every other act
or thing whatsoever executed in connection with the Trust or any Series, shall
be conclusively taken to have been executed or done by the executors thereof
only in their capacity as Trustees, officers, employees or agents of the Trust.
Every written obligation, contract, instrument, certificate or other interest or
undertaking of the Trust or any Series made or sold by the Trustees or by any
officer, employee or agent of the Trust, in their capacity as such, shall
contain an appropriate recital to the effect that the Trustee, officer, employee
and agent of the Trust shall not personally be bound by or liable thereunder,
nor shall resort be had to their private property for the satisfaction of any
obligation or claim thereunder, and appropriate references shall be made therein
to the Instrument, and may contain any further recital which they may deem
appropriate, but the omission of such recital shall not operate to impose
personal liability on any of the Trustees, officers, employees or agents of the
Trust. The Trustees may maintain insurance for the protection of the Trust
Property, its Holders, Trustees, officers, employees and agents in such amount
as the Trustees shall deem adequate to cover possible tort liability, and such
other insurance as the Trustees in their sole judgment shall deem advisable.
5.5. Reliance on Experts, etc. Each Trustee and officer or employee of
the Trust shall, in the performance of the Trustee's, officer's and employee's
duties, be fully and completely justified and protected with regard to any act
or any failure to act resulting from reliance in good faith upon the books of
account or other records of the Trust or any Series, upon an opinion of counsel,
or upon reports made to the Trust or any Series by any of its officers or
employees or by any Investment Manager, accountant, appraiser or other experts
or consultants selected with reasonable care by the Trustees, officers or
employees of the Trust, regardless of whether such counsel or expert may also be
a Trustee.
ARTICLE VI
Interests of the Trust
6.1. Interests. The beneficial interest in the property of the Trust
shall be divided into Interests of one or more separate and distinct Series as
the Trustees shall from time to time create and establish. The Trustees may
permit the purchase of Interests in any Series by any number of Persons. Subject
to applicable law and to such restrictions as may be adopted by the Trustees, a
Holder may increase or decrease its Interest in any Series without limitation.
6.2. Rights of Holders. The ownership of the Trust Property of every
description and the right to conduct any business hereinbefore described are
vested exclusively in the Trustees, and the Holders shall have no right or title
therein other than the beneficial interest conferred by their Interests and they
shall have no right to call for any partition or division of any property,
profits or rights of the Trust. The Interests shall be personal property giving
only the rights specifically set forth in this Instrument.
6.3. Purchase of or Increase in Interests. The Trustees, in their
discretion, may, from time to time, without a vote of the Holders, permit the
purchase of Interests of any Series by such party or parties (or increase in the
Interest of a Holder in any Series) and for such type of consideration,
including cash or property, at such time or times (including, without
limitation, each business day), and on such terms as the Trustees may deem best,
and may in such manner acquire other assets (including the acquisition of assets
subject to, and in connection with the assumption of, liabilities) and
businesses. The Trustees may make such additional rules and regulations, not
inconsistent with this Instrument, as they may deem expedient concerning the
purchase or increase of Interests.
6.4. Register of Interests. A register shall be kept at the principal
office of the Trust under the direction of the Trustees which shall contain the
names and addresses of the Holders of each Series and the Book Capital Account
balances of each Holder of each Series. Each such register shall be conclusive
as to who are the Holders of each Series of the Trust and who shall be entitled
to payments of distributions or otherwise to exercise or enjoy the rights of
Holders. No Holder shall be entitled to receive payment of any distribution, or
to have notice given to it as herein provided, until it has given its address to
such officer or agent of the Trustees as shall keep the said register for entry
thereon.
6.5. Non-Transferability. Interests of a Series shall not be
transferable, unless the prospective transferor obtains the prior unanimous
consent of the Holders of that Series to the transfer. Except as otherwise
provided by law, the Trust shall be entitled to recognize the exclusive right of
a person in whose name any Interest stands on the record of Holders as the
holder of such Interest for all purposes, including, without limitation, the
rights to receive distributions, and to vote as such holder, and the Trust shall
not be bound to recognize any equitable or legal claim to or interest in any
such Interest on the part of any other person.
6.6. Notices. Any and all notices to which any Holder hereunder may be
entitled and any and all communications shall be deemed duly served or given if
mailed, postage prepaid, addressed to any Holder of record at its last known
address as recorded on the register of the Trust.
6.7. Assent to Trust Instrument. Every Holder, by virtue of having
become a Holder, shall be held to have expressly assented and agreed to the
terms hereof and to have become a party hereto.
6.8. Establishment of Series. The Trust created hereby shall consist of
one or more Series and separate and distinct records shall be maintained by the
Trust for each Series and the assets associated with any such Series shall be
held and accounted for separately from the assets of the Trust or any other
Series. The Trustees shall have full power and authority, in their sole
discretion, and without obtaining any prior authorization or vote of the Holders
of any Series of the Trust, to establish and designate and to change in any
manner any such Series of Interests and to fix such preferences, voting powers,
right and privileges of such Series as the Trustees may from time to time
determine, to classify or reclassify any unissued Interests or any Series into
one or more Series, and to take such other action with respect to the Interests
as the Trustees may deem desirable. The establishment and designation of any
Series shall be effective upon the adoption of a resolution by a majority of the
Trustees setting forth such establishment and designation and the relative
rights and preferences of the Interests of such Series. At any time that there
are no Interests outstanding of any particular Series previously established and
designated, the Trustees may by a majority vote abolish that Series and the
establishment and designation thereof.
All references to Interests in this Trust Instrument shall be deemed to
be Interests of any or all Series, as the context may require. All provisions
herein relating to the Trust shall apply equally to each Series of the Trust,
except as the context otherwise requires.
6.9. Assets and Liabilities of Series. All consideration received by
the Trust for the issuance or sale of Interests of a particular Series, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may be,
shall be held and accounted for separately from the other assets of the Trust
and of every other Series and may be referred to herein as "assets belonging to"
that Series. The assets belonging to a particular Series shall belong to that
Series for all purposes, and to no other Series, subject only to the rights of
creditors of that Series. In addition, any assets, income, earnings, profits or
funds, or payments and proceeds with respect thereto, which are not readily
identifiable as belonging to any particular Series shall be allocated by the
Trustees between and among one or more of the Series in such manner as the
Trustees, in their sole discretion, deem fair and equitable. Each such
allocation shall be conclusive and binding upon the Holders of all Series for
all purposes, and such assets, income, earnings, profits or funds, or payments
and proceeds with respect thereto shall be assets belonging to that Series. The
assets belonging to a particular Series shall be so recorded upon the books of
the Trust, and shall be held by the Trustees in trust for the benefit of the
Holders of Interests of that Series. The assets belonging to each particular
Series shall be charged with the liabilities of that Series and all expenses,
costs, charges and reserves attributable to that Series. Any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular Series shall be allocated
and charged by the Trustees between or among any one or more of the Series in
such manner as the Trustees in their sole discretion deem fair and equitable.
Each such allocation shall be conclusive and binding upon the Holders of all
Series for all purposes. Without limitation of the foregoing provisions of this
Section 6.9, but subject to the right of the Trustees in their discretion to
allocate general liabilities, expenses, costs, changes or reserves as herein
provided, the debts, liabilities, obligations and expenses incurred, contracted
for or otherwise existing with respect to a particular Series shall be
enforceable against assets of such Series only, and not against the assets of
the Trust generally. Notice of this contractual limitation on inter-Series
liabilities may, in the Trustee's sole discretion, be set forth in the
certificate of trust of the Trust (whether originally or by amendment) as filed
or to be filed in the Office of the Secretary of State of the State of Delaware
pursuant to the Delaware Act, and upon the giving of such notice in the
certificate of trust, the statutory provisions of Section 3804 of the Delaware
Act relating to limitations on inter-Series liabilities (and the statutory
effect under Section 3804 of the Delaware Act setting forth such notice in the
certificate of trust) shall become applicable to the Trust and each Series. Any
person extending credit to, contracting with or having any claim against any
Series may look only to the assets of that Series to satisfy or enforce any debt
with respect to that Series. No Holder or former Holder of any Series shall have
a claim on or any right to any assets allocated or belonging to any other
Series.
ARTICLE VII
Decreases and Withdrawals
7.1. Decreases and Withdrawals. A Holder shall have the authority to
decrease or withdraw its Interest in any Series of the Trust, at such Holder's
option, subject to the terms and conditions provided in this Article VII. The
Trust shall, upon application of any Holder or pursuant to authorization from
any Holder, and subject to this Article VII, decrease or withdraw such Holder's
Interest for an amount (which shall be treated as a distribution for purposes of
Section 8.1) determined by the application of a formula adopted for such purpose
by resolution of the Trustees; provided that (a) such amount shall not exceed
the positive balance in such Holder's Book Capital Account (determined after
taking into account such adjustments as are required by Treasury Department
Regulation ss. 1.704-1(b) (2) (ii) (b) (2) but before reduction thereof to
reflect the distribution of such amount) and (b) if so authorized by the
Trustees, the Trust may, at any time and from time to time, charge fees for
effecting such decrease or withdrawal, at such rates as the Trustees may
establish, and may, at any time and from time to time, suspend such right of
decrease or withdrawal. The procedures for effecting decreases or withdrawals
shall be as determined by the Trustees from time to time.
ARTICLE VIII
Determination of Book Capital Account
Balances, Net Asset Value, Allocations and Distributions
8.1. Book Capital Account Balances. A Book Capital Account shall be
maintained for each Holder of each Series. With respect to each Series, each
Book Capital Account shall be credited with the amounts of consideration paid by
the Holder to purchase or increase its Interest in the Series and with its share
of the Series' Net Profits (defined below), shall be charged with such Holder's
share of the Series' Net Losses (defined below), distributions and withholding
taxes (if any) and shall otherwise appropriately reflect transactions of the
Series and the Holders. No interest shall be paid on any amount of consideration
paid to the Trust to purchase or increase Interests.
"Net Profits" of a Series for any given time period shall mean the
excess of the Net Asset Value of the Series (defined in Section 8.2) at the
close of business on the last day of the period, prior to any distribution being
made with respect to such period, over the Net Asset Value of the Series as of
the opening of business on the first day of such period, after any additional
contributions made on such date.
"Net Losses" of a Series for any given time period shall mean the
excess of the Net Asset Value of the Series as of the opening of business on the
first day of the period, after any additional contributions made on such date,
over the Net Asset Value of the Series at the close of business on the last day
of such period, prior to any distribution being made with respect to such
period.
The Book Capital Account balances of Holders of each Series shall be
determined periodically at such time or times as the Trustees may determine. The
power and duty to make calculations necessary to determine these balances may be
delegated by the Trustees to the Investment Manager, custodian, or such other
person as the Trustees may determine.
Notwithstanding anything herein to the contrary, the Book Capital
Accounts and any related accounts (including without limitation tax capital
accounts, gross appreciation [unrealized gain] accounts, and gross depreciation
[unrealized loss] accounts) of the Holders and of any series shall at all times
during the full term of such Series be determined and maintained in accordance
with the rules of Treasury Department Regulation ss. 1.704-1 (b) (2) (iv). The
Trustees are authorized to prescribe, in their absolute discretion, such
policies for the establishment and maintenance of such accounts ("Policies") as
they, in consultation with the Trust's professional advisers, consider to be in
accordance with the requirements of such rules.
8.2. Net Asset Value. The term "Net Asset Value" shall mean, with
respect to any Series, that amount by which the assets of the Series exceed its
liabilities, all as determined by or under the direction of the Trustees. In
making this determination, the Trustees, without Holder approval, may alter the
method of valuing portfolio securities insofar as permitted under the 1940 Act
and the rules, regulations and interpretations thereof promulgated or issued by
the Commission or insofar as permitted by any order of the Commission applicable
to the Series. The Trustees may delegate any of their powers and duties under
this Section 8.2 with respect to valuation of assets and liabilities.
8.3. Allocation of Net Profits and Net Losses.
(a) Net Profits and Net Losses of each Series shall be determined and
allocated daily as of the close of business to and among the Holders of that
Series in proportion to their respective Interests in the Series, determined as
of the opening of business on such day.
(b) Except as otherwise provided in this Section 8.3, for each fiscal
year, items of income, deduction, gain, loss or credit that are recognized by a
Series for tax purposes shall be allocated pursuant to Treasury Department
Regulations ss. 1.704-1(b) in such manner as to equitably reflect amounts
credited or debited to the Book Capital Account of each Holder of that Series
for such year. Allocations of such items also shall be made, where appropriate,
in accordance with section 704(c) of the Code and the regulations thereunder, as
may be provided in any Policies adopted by the Trustees pursuant to Section 8.1.
(c) Expenses of a Series, if any, which are borne by any Holder of that
Series in its individual capacity shall be specially allocated to that Holder.
(d) Notwithstanding anything in Section 8.3(b) or (c) to the contrary,
in the event any Holder of a Series unexpectedly receives any adjustments,
allocations or distributions described in Treasury Department Regulations
ss.1.704-1(b)(2)(ii)(d)(4), ss.1.704-1(b)(2)(ii)(d)(5) or
ss.1.704-1(b)(2)(ii)(d)(6), items of income (including gross income) and gain of
that Series shall be specially allocated to such Holder in an amount and manner
sufficient to eliminate the deficit balance in the Holder's Book Capital Account
(as determined in accordance with Treasury Department Regulation ss. 1.704-1
(b)(2)(ii)(d)) created by such adjustments, allocations or distributions as
quickly as possible. Any special allocations of income and gain of a Series
pursuant to this Section 8.3(d) shall be taken into account in computing
subsequent allocations of income and gain of that Series pursuant to this
Article VIII, so that the net amount of any items of that Series so allocated
and the income, gain, loss, deduction and all other items of that Series
allocated to each Holder pursuant to this Article VIII shall, to the extent
possible, equal the net amount that would have been allocated to each such
Holder pursuant to the provisions of this Article VIII if such special
allocations had not been made.
8.4. Distributions. The Trustees may from time to time agree to the
payment of distributions to Holders of a Series. The amount of such
distributions and the payment of them and whether they are in cash or in any
other assets of the Series shall be wholly in the discretion of the Trustees.
8.5. Power to Modify Foregoing Procedures. Notwithstanding any of the
foregoing provisions of this Article VIII, the Trustees may prescribe, in their
absolute discretion, such other bases and times for determining, for financial
reporting and/or tax accounting purposes, (a) the Net Profits, Net Losses,
taxable income, tax loss, and/or net assets of any Series (or, where appropriate
in the Trustees' judgment, of the Trust as a whole), and/or (b) the allocation
of the Net profits or Net Losses and taxable income or tax loss so determined
among, or the payment of distributions to, the Holders of any Series as they
deem necessary or desirable to enable the Trust or any Series to comply with any
provision of the 1940 Act, the Code, any rule or regulation thereunder, or any
order of exemption issued by the Commission, all as in effect now or as
hereafter amended or modified.
ARTICLE IX
Holders
9.1. Meetings of Holders. Meetings of the Holders of any Series may be
called at any time by a majority of the Trustees and shall be called by any
Trustee upon written request of Holders holding, in the aggregate, not less than
10% of the Interests of that Series, such request specifying the purpose or
purposes for which such meeting is to be called. Any such meeting shall be held
within or without the State of Delaware on such day and at such time as the
Trustees shall designate. Holders of one-third of the Interests entitled to
vote, present in person or by proxy, shall constitute a quorum for the
transaction of any business, except as may otherwise be required by law or by
this Instrument. The Chairman, if any, shall act as chairman at all meetings of
the Holders; in the Chairman's absence, the President shall act as chairman; and
in the absence of the Chairman and the President, the Trustee or Trustees
present at each meeting may elect a temporary chairman for the meeting, who may
be one of themselves. Holders may vote either in person or by duly executed
proxy and each Holder shall be entitled to vote proportionate to the Holder's
Interest in the Trust or affected Series. If a quorum is present at a meeting,
an affirmative vote of a majority of interest of the Holders present and
entitled to vote thereon, either in person or by proxy, at such meeting
constitutes the action of the Holders, unless law or this Instrument requires a
greater number of affirmative votes.
9.2. Notice of Meetings. Notice of all meetings of the Holders of any
Series, stating the time, place and purposes of the meeting, shall be given by
the Trustees by mail to each Holder of that Series, at the Holder's registered
address, mailed at least 10 days and not more than 90 days before the meeting.
At any such meeting, any business properly before the meeting may be considered
whether or not stated in the notice of the meeting. Any adjourned meeting may be
held as adjourned without further notice. No notice need be given to any Holder
who shall have failed to inform the Trust of the Holder's current address or if
a written waiver of notice, executed before or after the meeting by the Holder
or the Holder's attorney thereunto authorized, is filed with the records of the
meeting.
9.3. Record Date for Meetings. For the purpose of determining the
Holders who are entitled to notice of and to vote at any meeting, including any
adjournment thereof, or to participate in any distribution, or for the purpose
of any other action, the Trustees may from time to time fix a date, not more
than 90 days prior to the date of any meeting of the Holders or payment of
distributions or other action, as the case may be, as a record date for the
determination of the Persons to be treated as Holders of record for such
purposes. If the Trustees do not, prior to any meeting of Holders, so fix a
record date, then the date of mailing notice of the meeting shall be the record
date.
9.4. Proxies, etc. At any meeting of Holders, any Holder entitled to
vote thereat may vote by proxy, provided that no proxy shall be voted at any
meeting unless it shall have been placed on file with the Secretary, or with
such other officer or agent of the Trust as the Secretary may direct, for
verification prior to the time at which such vote shall be taken. A proxy may be
given in writing, by any electronic or telecommunications device or in any other
manner. Pursuant to a resolution of a majority of the Trustees, proxies may be
solicited in the name of one or more Trustees or one or more of the officers of
the Trust. Only Holders of record shall be entitled to vote. Each Holder shall
be entitled to a vote proportionate to its Interest in the Trust or applicable
Series, as the case may be. When Interests are held jointly by several persons,
any one of them may vote at any meeting in person or by proxy in respect of such
Interest, but if more than one of them shall be present at such meeting in
person or by proxy, and such joint owners or their proxies so present disagree
as to any vote to be cast, such vote shall not be received in respect of such
Interest. A proxy purporting to be executed by or on behalf of a Holder shall be
deemed valid unless challenged at or prior to its exercise, and the burden of
proving invalidity shall rest on the challenger. If the Holder is a minor or a
person of unsound mind, and subject to guardianship or to the legal control of
any other person as regards the charge or management of its Interest, the Holder
may vote by the Holder's guardian or such other person appointed or having such
control, and such vote may be given in person or by proxy. No proxy shall be
valid after eleven (11) months from the date of its execution, unless a longer
period is expressly stated in such proxy.
9.5. Inspectors of Election. In advance of any meeting of Holders, the
Trustees may appoint Inspectors of Election to act at the meeting or any
adjournment thereof. If Inspectors of Election are not so appointed, the
Chairman, if any, of any meeting of Holders may, and on the request of any
Holder or the Holder's proxy shall, appoint Inspectors of Election of the
meeting. The number of Inspectors shall be either one or three. If appointed at
the meeting on the request of one or more Holders or proxies, a majority of the
Interests present shall determine whether one or three Inspectors are to be
appointed, but failure to allow such determination by the Holders shall not
affect the validity of the appointment of Inspectors of Election. In case any
person appointed as Inspector fails to appear or fails or refuses to act, the
vacancy may be filled by appointment made by the Trustees in advance of the
convening of the meeting or at the meeting by the person acting as Chairman. The
Inspectors of Election shall determine the percentage of the total Interests
represented at the meeting, the existence of a quorum, the authenticity,
validity and effect of proxies, shall receive votes, ballots or consents, shall
hear and determine all challenges and questions in any way arising in connection
with the right to vote, shall count and tabulate all votes or consents,
determine the results, and do such other acts as may be proper to conduct the
election or vote with fairness to all Holders. If there are three Inspectors of
Election, the decision, act or certificate of a majority is effective in all
respects as the decision, act or certificate of all. On request of the Chairman,
if any, of the meeting, or of any Holder or a Holder's proxy, the Inspectors of
Election shall make a report in writing of any challenge or question or matter
determined by them and shall execute a certificate of any facts found by them.
9.6. Inspection of Records. The records of the Trust shall be open to
inspection by Holders during normal business hours for any purpose not harmful
to the Trust. At each meeting of the Holders of the Trust or any Series there
shall be open for inspection the minutes of the last previous meeting of Holders
of the Trust or Series, as the case may be, and a list of the Holders of the
Trust or Series, certified to be true and correct by the Secretary or other
proper agent of the Trust, as of the record date of the meeting. Such list of
Holders shall contain the name of each Holder and the address and the percentage
of the total Interests owned by such Holder.
9.7. Holder Action by Written Consent. Any action which may be taken by
Holders may be taken without a meeting if Holders shall unanimously consent to
the action in writing and the written consents are filed with the records of the
meetings of Holders. Such consent shall be treated for all purposes as a vote
taken at a meeting of Holders.
9.8. Voting Powers. The Holders shall have power to vote only (i) for
the election of Trustees as provided in Sections 2.2 and 2.4; (ii) for the
removal of Trustees as provided in Section 2.3; (iii) with respect to any
investment management contract entered into pursuant to Section 4.1; (iv) with
respect to termination of the Trust as provided in Section 10.1; and (v) with
respect to any such additional matters relating to the Trust as may be required
by this Instrument or any registration of the Trust as an investment company
under the 1940 Act with the Commission (or any successor agency) or as the
Trustees may consider necessary or desirable. On any matter submitted to a vote
of the Holders, all Interests shall be voted separately by individual Series,
except (i) when required by the 1940 Act, Interests shall be voted in the
aggregate and not by individual Series; and (ii) when the Trustees have
determined that the matter affects the interests of more than one Series, then
the Holders of all such Series shall be entitled to vote thereon. There shall be
no cumulative voting in the election of Trustees. Until Interests are issued and
at any time wherein no Interests are outstanding, the Trustees may exercise all
rights of Holders and may take any action required by law or this Instrument to
be taken by Holders.
ARTICLE X
Duration; Termination; Dissolution;
Amendment; Mergers; Etc.
10.1. Termination of Trust or any Series.
(a) The Trust or any Series may be terminated by (i) a Majority
Interests Vote of each Series affected by the matter or, if applicable, a
Majority Interests vote of the Trust, or (ii) the Trustees by written notice to
the Holders. Upon any such termination,
(i) The Trust or any affected Series shall carry on no
business except for the purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the
Trust or any affected Series and all of the powers of the Trustees
under this Instrument with respect to the Trust or any affected Series
shall continue until the affairs of the Trust or any such Series shall
have been wound up, including the power to fulfill or discharge the
contracts of the Trust or any such Series, collect its assets, sell,
convey, assign, exchange, or otherwise dispose of all or any part of
the remaining assets of the Trust or any such Series to one or more
persons at public or private sale for consideration which may consist
in whole or in part of cash, securities or other property of any kind,
discharge or pay its liabilities, and do all other acts appropriate to
liquidate its business.
(iii) After paying or adequately providing for the payment of
all liabilities, and upon receipt of such releases, indemnities and
refunding agreements, as they deem necessary for their protection, the
Trustees shall distribute the remaining assets of the Trust or any
affected Series, in cash or in kind or partly each, among the Holders
of the Trust or the affected Series in proportion to their respective
Interests in the Trust or Series (that is, in accordance with the
positive Book Capital Account balances of the Holders), after taking
into account such adjustments as are required by Treasury Department
Regulation ss. 1.704-1(b) (2) (ii) (b) (2).
(b) Upon termination of the Trust or any Series and distribution to the
Holders as herein provided, a majority of the Trustees shall execute and lodge
among the records of the Trust an instrument in writing setting forth the fact
of such termination. Upon termination of the Trust or any Series, the Trustees
shall thereupon be discharged from all further liabilities and duties hereunder
with respect to the Trust or Series, and the rights and interests of all Holders
of the Trust or Series shall thereupon cease.
10.2. Dissolution. Any Series shall be dissolved 120 days after a
Holder of an Interest in such Series either (a) makes an assignment for the
benefit of creditors, (b) files a voluntary petition in bankruptcy, (c) is
adjudicated a bankrupt or insolvent, (d) files any pleading admitting or failing
to contest the material allegations of a petition filed against it in any
bankruptcy or insolvency proceeding, or (e) seeks, consents to, or acquiesces in
the appointment of a trustee, receiver, or liquidator of such Holder or of all
or any substantial part of its assets, unless, within such 120 days, Holders
(excluding the Holder with respect to whom such event occurs) owning a majority
of the Interests in such Series vote to continue the Series. Upon any
dissolution pursuant to this section, the provisions of Section 10.1(a) (i),
(ii), and (iii) shall apply as if such dissolution were a termination described
in Section 10.1.
10.3. Amendment Procedure.
(a) Except as specifically provided herein, the Trustees may, without
the vote or consent of Holders, amend or otherwise supplement this Instrument by
making an amendment, a trust instrument supplemental hereto or an amended and
restated trust instrument. Holders shall have the right to vote (i) on any
amendment which would affect their right to vote granted in Section 9.8, (ii) on
any amendment to this Section 10.3, (iii) on any amendment as may be required by
law or by the Trust's registration statement filed with the Commission, and (iv)
on any amendment submitted to them by the Trustees. Any amendment required or
permitted to be submitted to Holders which, as the Trustees determine, shall
affect the Holders of one or more Series shall be authorized by vote of the
Holders of each Series affected, and no vote of Holders of a Series not affected
shall be required.
(b) Notwithstanding anything else herein, any Amendment to Article 5
hereof shall not limit the rights to indemnification or insurance provided
therein with respect to action or omission of Covered Persons prior to such
amendment. Nothing contained in this Instrument shall permit the amendment of
this Instrument to impair the exemption from personal liability of the Holders
or Trustees of the Trust.
(c) A certification signed by a majority of the Trustees setting forth
an amendment and reciting that it was duly adopted by the Holders or by the
Trustees as aforesaid or a copy of the Instrument, as amended, executed by a
majority of the Trustees, shall be conclusive evidence of such amendment when
lodged among the records of the Trust.
Notwithstanding any other provision hereof, until such time as
Interests are first sold, this Instrument may be terminated or amended in any
respect by the affirmative vote of a majority of the Trustees or by an
instrument signed by a majority of the Trustees.
10.4. Merger or Consolidation. Notwithstanding anything else herein,
the Trustees may, without the prior consent or vote of the Holders, cause the
Trust or any Series to merge or consolidate with any other partnership, trust or
other organization. Pursuant to and in accordance with the provisions of Section
3815(f) of the Delaware Act, and notwithstanding anything to the contrary
contained in this Instrument, any such agreement of merger or consolidation may
effect any amendment to the Instrument or effect the adoption of a new trust
instrument of the Trust if the Trust or Series is the surviving or resulting
entity in the merger or consolidation.
10.5. Incorporation. Notwithstanding anything else herein, the Trustees
may, without the prior consent or vote of the Holders, cause to be organized or
assist in organizing a corporation or corporations under the laws of any
jurisdiction or any other trust, partnership, association or other organization
to take over all of the Trust Property or the assets of any Series or to carry
on any business in which the Trust or any Series shall directly or indirectly
have any interest, and to sell, convey and transfer the Trust Property or the
assets of any Series to any such corporation, trust, association or organization
in exchange for the equity interests thereof or otherwise, and to lend money to,
subscribe for the equity interests of, and enter into any contracts with any
such corporation, trust, partnership, association or organization, or any
corporation, partnership, trust, association or organization in which the Trust
or any Series holds or is about to acquire equity interests. The Trustees may
also cause a merger or consolidation between the Trust or any Series or any
successor thereto and any such corporation, trust, partnership, association or
other organization if and to the extent permitted by law, as provided under the
law then in effect. In addition, nothing contained herein shall be construed as
requiring approval of the Holders for the Trustees to organize or assist in
organizing one or more corporations, trusts, partnerships, associations or other
organizations and selling, conveying or transferring a portion of the Trust
Property or the assets of any Series to such organizations or entities.
ARTICLE XI
Miscellaneous
11.1. Governing Law. The trust set forth in this instrument is made in
the State of Delaware, and the Trust and this Instrument, and the rights and
obligations of the Trustees and Holders hereunder, are to be governed by and
construed and administered according to the Delaware Act and the laws of said
State; provided, however, that there shall not be applicable to the Trust, the
Trustees or this Instrument (a) the provisions of Section 3540 of Title 12 of
the Delaware Code or (b) any provisions of the laws (statutory or common) of the
State of Delaware (other than the Delaware Act) pertaining to trusts which
relate to or regulate (i) the filing with any court or governmental body or
agency of trustee accounts or schedules of trustee fees and charges, (ii)
affirmative requirements to post bonds for trustees, officers, agents or
employees of a trust, (iii) the necessity for obtaining court or other
governmental approval concerning the acquisition, holding or disposition of real
or personal property, (iv) fees or other sums payable to trustees, officers,
agents or employees of a trust, (v) the allocation of receipts and expenditures
to income or principal, (vi) restrictions or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding of trust assets, or (vii) the
establishment of fiduciary or other standards or responsibilities or limitations
on the acts or powers of trustees, which are inconsistent with the limitations
or liabilities or authorities and powers of the Trustees set forth or referenced
in this Instrument. The Trust shall be of the type commonly called a "business
trust," and without limiting the provisions hereof, the Trust may exercise all
powers which are ordinarily exercised by such a trust under Delaware law. The
trust specifically reserves the right to exercise any of the powers or
privileges afforded to trusts or actions that may be engaged in by trusts under
the Delaware Act, and the absence of a specific reference herein to any such
power, privilege or action shall not imply that the Trust may not exercise such
power or privilege or take such actions.
11.2. Counterparts. This Instrument may be simultaneously executed in
several counterparts, each of which shall be deemed to be an original, and such
counterparts, together, shall constitute one and the same instrument, which
shall be sufficiently evidenced by any such original counterpart.
11.3. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust or of any recording office
in which this Instrument may be recorded, appears to be a Trustee hereunder,
certifying to: (a) the number or identity of Trustees or Holders; (b) the due
authorization of the execution of any instrument or writing; (c) the form of any
vote passed at a meeting of Trustees or Holders; (d) the fact that the number of
Trustees or Holders present at any meeting or executing any written instrument
satisfies the requirements of this Instrument; (e) the form of any By-Laws
adopted by or the identity of any officers elected by the Trustees, or; (f) the
existence of any fact or facts which in any manner relate to the affairs of the
Trust, shall be conclusive evidence as to the matters so certified in favor of
any person dealing with the Trustees and their successors.
11.4. Provisions in Conflict With Law or Regulations.
(a) The provisions of this Instrument are severable, and if the
Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with any applicable laws or regulations, the
conflicting provision shall be deemed never to have constituted a part of this
Instrument; provided, however, that such determination shall not affect any of
the remaining provisions of this Instrument or render invalid or improper any
action taken or omitted prior to such determination.
(b) If any provision of this Instrument shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Instrument in any jurisdiction.
(c) It is intended that each Series of the Trust be classified as a
partnership for federal income tax purposes. The Trustees, in their sole
discretion and without the vote or consent of the Holders, may amend this
Instrument and do whatever else they determine to be necessary to ensure that
this objective is achieved.
11.5. Signatures. All contracts and other instruments shall be executed
on behalf of the Trust by such officer, officers, agent or agents, as provided
in this Instrument or as the Trustees may from time to time by resolution
provide.
11.6. Seal. The seal of the Trust, if any, may be affixed to any
document, and the seal and its attestation may be lithographed, engraved or
otherwise printed on any document with the same force and effect as if it had
been imprinted and attested manually in the same manner and with the same effect
as if done by a Delaware business corporation.
11.7. Fiscal Year. The fiscal year of the Trust and each Series shall
begin on June 1, provided, however, that the Trustees may from time to time
change the fiscal year of the Trust or of any Series.
11.8. Waivers of Notice. Whenever any notice whatever is required to be
given by law or this Instrument, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. A notice shall be deemed to
have been telegraphed, cabled or wirelessed for the purposes of this Instrument
when it has been delivered to a representative of any telegraph, cable or
wireless company with instructions that it be telegraphed, cabled or wirelessed.
11.9. Reports. The Trustees shall cause to be prepared, at least
annually, a report of operations containing those financial statements as may be
required by laws or as the Trustees may direct for each Series prepared in
conformity with generally accepted accounting principles and an opinion of an
independent public accountant on such financial statements. The Trustees shall,
in addition, furnish to the Holders of each Series at least semi-annually
interim reports containing unaudited financial statements as may be required by
laws or as the Trustees may direct.
IN WITNESS WHEREOF, the undersigned have caused this amended and
restated Trust Instrument to be executed as of the day and year first above
written.
/s/ Thomas G. Sheehan
Thomas G. Sheehan
as Trustee and not individually
/s/ Max Berueffy
Max Berueffy
as Trustee and not individually
/s/ David I. Goldstein
David I. Goldstein
as Trustee and not individually
CORE TRUST (DELAWARE)
TRUST INSTRUMENT
AS AMENDED AND RESTATED NOVEMBER 1, 1994
Amendment Dated April 4, 1995
In accordance with Section 10.03 of the Trust Instrument as amended and
restated November 1, 1994 of Core Trust (Delaware) (the "Trust Instrument")
(which provides that except as specifically provided therein, the Board of
Trustees of Core Trust (Delaware) may, without shareholder vote, amend or
otherwise supplement the Trust Instrument by making an amendment) the following
trustees, being all of the Board of Trustees of Core Trust (Delaware), met on
April 4, 1995 and amended the Trust Instrument as follows.
RESOLVED, that Article VI, Section 6.3, of the Trust Instrument, is
hereby amended to provide in its entirety as follows:
6.3. Purchase of or Increase in Interests. The Trustees, in their
discretion, may, from time to time, without a vote of the Holders,
permit the purchase of Interests of any Series by such party or parties
(or increase in the Interest of a Holder in any Series) and for such
type of consideration, including cash or property, at such time or
times (including, without limitation, each business day), and on such
terms as the Trustees may deem best, and may in such manner acquire
other assets (including the acquisition of assets subject to, and in
connection with the assumption of, liabilities) and businesses;
provided, however, that the Trustees may not permit the purchase of
Interests of any Series if any Series would have more than 500 Holders.
The Trustees may make such additional rules and regulations, not
inconsistent with this Instrument, as they may deem expedient
concerning the purchase or increase of Interests.
IN WITNESS WHEREOF, the trustees hereto have caused this Trust
Instrument Amendment to be duly executed all as of the day and year first above
written.
/s/ John Y. Keffer
John Y. Keffer, Trustee
/s/ Michael Parish
J. Michael Parish, Trustee
/s/ Costas Azariadis
Costas Azariadis, Trustee
/s/ James C. Cheng
James C. Cheng, Trustee
MARKED TO REFLECT CHANGES
6.3. Purchase of or Increase in Interests. The Trustees, in their
discretion, may, from time to time, without a vote of the Holders,
permit the purchase of Interests of any Series by such party or parties
(or increase in the Interest of a Holder in any Series) and for such
type of consideration, including cash or property, at such time or
times (including, without limitation, each business day), and on such
terms as the Trustees may deem best, and may in such manner acquire
other assets (including the acquisition of assets subject to, and in
connection with the assumption of, liabilities) and businesses;
provided, however, that the Trustees may not permit the purchase of
Interests of any Series if any Series would have more than 500 Holders.
The Trustees may make such additional rules and regulations, not
inconsistent with this Instrument, as they may deem expedient
concerning the purchase or increase of Interests.
CORE TRUST (DELAWARE)
TRUST INSTRUMENT
AS AMENDED AND RESTATED NOVEMBER 1, 1994
Amendment Dated August 30, 1995
In accordance with Section 10.03 of the Trust Instrument as amended and
restated November 1, 1994 of Core Trust (Delaware) (the "Trust Instrument")
(which provides that except as specifically provided therein, the Board of
Trustees of Core Trust (Delaware) may, without shareholder vote, amend or
otherwise supplement the Trust Instrument by making an amendment) the following
trustees, being all of the Board of Trustees of Core Trust (Delaware), met on
August 30, 1995 and amended the Trust Instrument as follows.
RESOLVED, that Appendix A of the Trust Instrument, is hereby added to
provide in its entirety as follows:
APPENDIX A
(as amended August 30, 1995)
Established Portfolios
The following Series have been created by the Trustees in accordance
with section 6.8 of the Trust Instrument:
<TABLE>
<S> <C> <C>
Portfolio Date Established
1. International Portfolio 11/9/94
2. International Portoflio II 11/9/94
3. Small Company Portfolio 11/9/94
4. Index Portfolio 11/9/94
5. Treasury Cash Portfolio 8/30/95
6. Government Cash Portfolio 8/30/95
7. Cash Portfolio 8/30/95
8. Treasury Portfolio 8/30/95
</TABLE>
IN WITNESS WHEREOF, the trustees hereto have caused this Trust
Instrument Amendment to be duly executed all as of the day and year first above
written.
-----------------------------
John Y. Keffer, Trustee
-----------------------------
J. Michael Parish, Trustee
-----------------------------
Costas Azariadis, Trustee
-----------------------------
James C. Cheng, Trustee
Exhibit (5)(a)
CORE TRUST (DELAWARE)
INVESTMENT ADVISORY AGREEMENT
October 1, 1997
AGREEMENT made this 1st day of October, 1997, between Core Trust
(Delaware) (the "Trust"), a business trust organized under the laws of the State
of Delaware with its principal place of business at Two Portland Square,
Portland, Maine 04101, and Norwest Investment Management, Inc. (the "Adviser"),
a corporation organized under the laws of State of Delaware with its principal
place of business at 733 Marquette Avenue, Minneapolis, Minnesota 55479.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended, (the "Act") as an open-end management investment company and
is authorized to issue interests (as defined in the Trust's Trust Instrument) in
separate series; and
WHEREAS, the Trust desires that the Adviser perform investment advisory
services for each Portfolio listed in Appendix A (each a "Portfolio," and
collectively the "Portfolios"), and the Adviser is willing to provide those
services on the terms and conditions set forth in this Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
SECTION 1. THE TRUST; DELIVERY OF DOCUMENTS
The Trust is engaged in the business of investing and reinvesting its
assets in securities of the type and in accordance with the limitations
specified in its Trust Instrument and Registration Statement filed with the
Securities and Exchange Commission (the "Commission") under the Act, as may be
supplemented from time to time, all in such manner and to such extent as may
from time to time be authorized by the Trust's Board of Trustees (the "Board").
The Trust is currently authorized to issue twenty-two series of interests and
the Board is authorized to issue interests in any number of additional series.
The Trust has delivered to the Adviser copies of the Trust's Trust Instrument
and Registration Statement and will from time to time furnish Adviser with any
amendments thereof.
SECTION 2. INVESTMENT ADVISER; APPOINTMENT
The Trust hereby employs Adviser, subject to the direction and control
of the Board, to manage the investment and reinvestment of the assets in each
Portfolio and, without limiting the generality of the foregoing, to provide
other services specified in Section 3 hereof.
SECTION 3. DUTIES OF THE ADVISER
(a) The Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets in each Portfolio. To carry out
such decisions, the Adviser is hereby authorized, as agent and attorney-in-fact
for the Trust, for the account of, at the risk of and in the name of the Trust,
to place orders and issue instructions with respect to those transactions of the
Portfolios. In all purchases, sales and other transactions in securities for the
Portfolios, the Adviser is authorized to exercise full discretion and act for
the Trust in the same manner and with the same force and effect as the Trust
might or could do with respect to such purchases, sales or other transactions,
as well as with respect to all other things necessary or incidental to the
furtherance or conduct of such purchases, sales or other transactions.
(b) The Adviser will report to the Board at each meeting thereof all
changes in each Portfolio since the prior report, and will also keep the Board
informed of important developments affecting the Trust, the Portfolios and the
Adviser, and on its own initiative, will furnish the Board from time to time
with such information as the Adviser may believe appropriate for this purpose,
whether concerning the individual companies whose securities are included in the
Portfolios' holdings, the industries in which they engage, or the economic,
social or political conditions prevailing in each country in which the
Portfolios' maintain investments. The Adviser will also furnish the Board with
such statistical and analytical information with respect to securities in the
Portfolios as the Adviser may believe appropriate or as the Board reasonably may
request. In making purchases and sales of securities for the Portfolios, the
Adviser will bear in mind the policies set from time to time by the Board as
well as the limitations imposed by the Trust's Trust Instrument and Registration
Statement under the Act, the limitations in the Act and in the Internal Revenue
Code of 1986, as amended, in respect of regulated investment companies and the
investment objectives, policies and restrictions of the Portfolios.
(c) The Adviser will from time to time employ or associate with such
persons as the Adviser believes to be particularly fitted to assist in the
execution of the Adviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Adviser. No obligation may be incurred on the
Trust's behalf in any such respect.
(d) The Adviser shall maintain records relating to portfolio
transactions and the placing and allocation of brokerage orders as are required
to be maintained by the Trust under the Act. The Adviser shall prepare and
maintain, or cause to be prepared and maintained, in such form, for such periods
and in such locations as may be required by applicable law, all documents and
records relating to the services provided by the Adviser pursuant to this
Agreement required to be prepared and maintained by the Trust pursuant to the
rules and regulations of any national, state, or local government entity with
jurisdiction over the Trust, including the Commission and the Internal Revenue
Service. The books and records pertaining to the Trust which are in possession
of the Adviser shall be the property of the Trust. The Trust, or the Trust's
authorized representatives, shall have access to such books and records at all
times during the Adviser's normal business hours. Upon the reasonable request of
the Trust, copies of any such books and records shall be provided promptly by
the Adviser to the Trust or the Trust's authorized representatives.
SECTION 4. EXPENSES
The Trust hereby confirms that the Trust shall be responsible and shall
assume the obligation for payment of all the Trust's expenses, including:
interest charges, taxes, brokerage fees and commissions; certain insurance
premiums; fees, interest charges and expenses of the Trust's custodian and
transfer agent; telecommunications expenses; auditing, legal and compliance
expenses; costs of the Trust's formation and maintaining its existence; costs of
preparing the Trust's registration statement, account application forms and
interestholder reports and delivering them to existing and prospective
interestholders; costs of maintaining books of original entry for portfolio and
fund accounting and other required books and accounts and of calculating the net
asset value of interests in the Trust; costs of reproduction, stationery and
supplies; compensation of the Trust's trustees, officers and employees and the
costs of other personnel performing services for the Trust who are not officers
of the Adviser or of Forum Financial Services, Inc. or affiliated persons of
either; costs of Trust meetings; registration fees and related expenses for
registration with the Commission and the securities regulatory authorities of
other countries in which the Trust's interests are sold; state securities law
registration fees and related expenses; and fees and out-of-pocket expenses
payable to Forum Financial Services, Inc. under any placement agent, management
or similar agreement.
SECTION 5. STANDARD OF CARE
The Trust shall expect of the Adviser, and the Adviser will give the
Trust the benefit of, the Adviser's best judgment and efforts in rendering its
services to the Trust, and as an inducement to the Adviser's undertaking these
services the Adviser shall not be liable hereunder for any mistake of judgment
or in any event whatsoever, except for lack of good faith, provided that nothing
herein shall be deemed to protect, or purport to protect, the Adviser against
any liability to the Trust or to the Trust's interestholders to which the
Adviser would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of the Adviser's duties hereunder, or by
reason of the Adviser's reckless disregard of its obligations and duties
hereunder. As used in this Section 5, the term "Adviser" shall include any
affiliates of the Adviser performing services for the Portfolios contemplated
hereby and directors, officers and employees of the Adviser as well as the
Adviser itself.
SECTION 6. COMPENSATION
In consideration of the foregoing, the Trust shall pay the Adviser,
with respect to each of the Portfolios, a fee at an annual rate as listed in
Appendix A hereto. Such fees shall be accrued by the Trust daily and shall be
payable monthly in arrears on the first day of each calendar month for services
performed hereunder during the prior calendar month.
SECTION 7. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to a Portfolio
immediately upon approval by a majority of the outstanding voting interests of
that Portfolio.
(b) This Agreement shall remain in effect with respect to a Portfolio
for a period of two years from the date of its effectiveness and shall continue
in effect for successive twelve-month periods (computed from each anniversary
date of the approval) with respect to the Portfolio; provided that such
continuance is specifically approved at least annually (i) by the Board or by
the vote of a majority of the outstanding voting interests of the Portfolio,
and, in either case, (ii) by a majority of the Trust's trustees who are not
parties to this Agreement or interested persons of any such party (other than as
trustees of the Trust); provided further, however, that if this Agreement or the
continuation of this Agreement is not approved as to a Portfolio, the Adviser
may continue to render to that Portfolio the services described herein in the
manner and to the extent permitted by the Act and the rules and regulations
thereunder.
(c) This Agreement may be terminated with respect to a Portfolio at any
time, without the payment of any penalty, (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Portfolio on 60 days'
written notice to the Adviser or (ii) by the Adviser on 60 days' written notice
to the Trust. This agreement shall terminate upon assignment.
SECTION 8. ACTIVITIES OF THE ADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Adviser's right, or the
right of any of the Adviser's officers, directors or employees who may also be a
trustee, officer or employee of the Trust, or persons otherwise affiliated
persons of the Trust to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, trust, firm, individual or association.
SECTION 9. LIMITATION OF INTERESTHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the interestholders of each Portfolio
shall not be liable for any obligations of the Trust or of the Portfolios under
this Agreement, and the Adviser agrees that, in asserting any rights or claims
under this Agreement, it shall look only to the assets and property of the Trust
or the Portfolio to which the Adviser's rights or claims relate in settlement of
such rights or claims, and not to the Trustees of the Trust or the
interestholders of the Portfolios.
SECTION 10. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto and, if required by the Act, by a vote of a majority of the
outstanding voting interests of the Portfolios thereby affected. No amendment to
this Agreement or the termination of this Agreement with respect to a Portfolio
shall effect this Agreement as it pertains to any other Portfolio.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(c) This Agreement may be executed by the parties hereto on any number
of counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
(d) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(e) This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Delaware.
(f) The terms "vote of a majority of the outstanding voting interests,"
"interested person," "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act to the terms "vote of a majority of the
outstanding voting securities," "interested person," "affiliated person" and
"assignment," respectively.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
CORE TRUST (DELAWARE)
--------------------------
By: John Y. Keffer
President
NORWEST INVESTMENT MANAGEMENT, INC.
------------------------
By: P. Jay Kiedrowski
President
CORE TRUST (DELAWARE)
INVESTMENT ADVISORY AGREEMENT
Appendix A
<TABLE>
<S> <C>
Annual Fee as a % of
the Average Daily
Portfolios of the Trust Net Assets of the Portfolio
Money Market Portfolio 0.20% of the first $300 million of assets
0.16% for next $400 million
0.12% of remaining net assets
Prime Money Market Portfolio 0.40% of the first $300 million of assets
0.36% for next $400 million
0.32% of remaining net assets
Index Portfolio 0.15%
Small Company Stock Portfolio 0.90%
Small Company Growth Portfolio 0.90%
Small Company Value Portfolio 0.90%
Large Company Growth Portfolio 0.65%
Income Equity Portfolio 0.50%
Managed Fixed Income Portfolio 0.35%
Total Return Bond Portfolio 0.35%
Positive Return Bond Portfolio 0.35%
Stable Income Portfolio 0.30%
International Portfolio 0.45%
Disciplined Growth Portfolio 0.90%
Small Cap Value Portfolio 0.95%
Strategic Value Bond Portfolio 0.50%
Small Cap Index Portfolio 0.25%
</TABLE>
Exhibit (8)(a)
CORE TRUST (DELAWARE) CUSTODIAN AGREEMENT
AGREEMENT, dated as of November 9, 1994, as amended June 1, 1997
between Core Trust (Delaware) (the "Trust"), a business trust organized under
the laws of the State of Delaware with its principal place of business at Two
Portland Square, Portland, Maine 04101 and Norwest Bank Minnesota, N.A. (the
"Custodian"), a banking association organized under the laws of the United
States of America with its principal place of business at 733 Marquette Avenue,
Minneapolis, Minnesota 55479.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end management investment company and
is authorized to issue its interests, no par value, in separate series;
WHEREAS, the Trust desires to appoint Norwest Bank Minnesota, N.A.,
custodian of its securities and cash and Norwest Bank Minnesota, N.A. is willing
to act in such capacity upon the terms and conditions set forth below; and
WHEREAS, pursuant to a separate agreement between the Trust and Forum
Financial Corp. (the "Transfer Agency Agreement"),
Forum Financial Corp. will perform the duties of transfer agent of the Trust
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the parties do hereby agree as follows:
SECTION 1. Definitions. Whenever used in this Agreement, the
following terms shall have the meanings specified, insofar as
the context will allow.
(a) Act: The term Act shall mean the Investment Company Act of 1940, as
amended from time to time.
(b) Board: The term Board shall mean the Board of Trustees of the
Trust.
(c) Book-Entry Account: The term Book-Entry Account shall mean an
account maintained by a Federal Reserve Bank in which Book-Entry Securities are
held.
(d) Book-Entry Securities: The term Book-Entry Securities shall mean
securities issued by the United States Treasury and United States Federal
agencies and instrumentalities that are maintained in the book-entry system
maintained by a Federal Reserve Bank.
(e) Custodian: The term Custodian shall mean Norwest Bank, Minnesota,
N.A., in its capacity as custodian under this Agreement.
(f) Foreign Securities: The term Foreign Securities shall mean "Foreign
Securities" as that term is defined in Rule 17f-5 under the Act.
(g) Foreign Sub-Custodian: The term Foreign Sub-Custodian shall mean
"Eligible Foreign Sub-Custodian" as that term is defined in Rule 17f-5 under the
Act.
(h) Fund Business Day: The term Fund Business Day shall mean a day that
is a business day for a Series as defined in the Series' prospectus.
(i) 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, vocal telegram or
other electronic means, by a person or persons reasonably believed in good faith
by the Custodian to be a person or persons authorized by a resolution of the
Board to give Oral Instructions on behalf of the Trust. Each Oral Instruction
shall specify whether it is applicable to the entire Trust or a specific Series
of the Trust.
(j) Securities: The term Securities shall mean bonds, debentures,
notes, stocks, Interests, evidences of indebtedness, and other securities and
investments from time to time owned by the Trust.
(k) Securities Depository: The term Securities Depository shall mean a
system, domestic or foreign, for the central handling of securities in which 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 and shall include any system
for the issuance of Book-Entry Securities.
(l) Series: The term Series shall mean the Series listed in Appendix A
or any series that the Trust and Custodian may in the future agree are subject
to this Agreement.
(m) Interestholders: The term Interestholders shall mean the registered
owners from time to time of the Interests, as reflected on the interest registry
records of the Trust.
(n) Interests: The term Interests shall mean the issued and outstanding
Interests of beneficial interest, no par value, of the Trust, including any
fractions thereof.
(o) Sub-Custodian: The term Sub-Custodian shall mean any person
selected by the Custodian under Section 20 hereof and in accordance with the
requirements of the Act to custody any or all of the Securities and cash of the
Trust, and shall include Foreign Sub-Custodians.
(p) Trust: The term Trust shall mean Norwest Funds.
(q) 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, or other mechanical or documentary means, at the
request of a person or persons reasonably believed in good faith by the
Custodian to be a person or persons authorized by a resolution of the Board to
give Written Instructions on behalf of the Trust. Each Written Instruction shall
specify whether it is applicable to the entire Trust or a specific Series of the
Trust.
(r) 1934 Act: The term 1934 Act shall mean theSecurities Exchange
Act of 1934, as amended from time to time.
SECTION 2. Appointment. The Trust hereby appoints the Custodian as
custodian of the Securities and cash of each Series from time to time on deposit
hereunder. The Securities and cash of the Trust shall be and remain the sole
property of the Trust and the Custodian shall have only custody thereof. The
Custodian shall hold, earmark and physically segregate for the appropriate
Series account of the Trust all non-cash property, including all Securities that
are not maintained pursuant to Section 6 in a Securities Depository or
Book-Entry Account. The Custodian will collect from time to time the dividends
and interest of the Securities held by the Custodian.
The Custodian shall open and maintain a separate bank or trust account
or accounts in the name of the Trust, subject only to draft or order by the
Custodian acting pursuant to the terms of this Agreement, and shall hold in such
account or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Trust. Notwithstanding the foregoing, a separate
bank account may be established by the Trust to be used as a petty cash account
in accordance with Rule 17f-3 under the Act and the Custodian shall have not
duty or liability with regard to such account.
Upon receipt of Written Instructions, funds held by the Custodian for
the Trust may be deposited by the Custodian to its credit in the banking
department of the Custodian or in such other banks or trust companies as it may
in its discretion deem necessary or desirable. Such funds shall be deposited by
the Custodian in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
SECTION 3. Delivery of Board Resolutions. The Trust shall, as
necessary, file with the Custodian a certified copy of the operative resolution
of the Board authorizing execution of Written Instructions and the number of
signatories required and setting forth authentic signatures of all signatories
authorized to sign on behalf of the Trust or any Series thereof. Such resolution
shall constitute conclusive evidence of the authority of all 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 the Custodian
receives a certified copy of a replacement resolution adding or deleting a
person or persons authorized to give written Instructions.
The Trust shall, as necessary, file with the Custodian a certified copy
of the operative resolution of the Board authorizing the transmittal of Oral
Instructions and specifying the person or persons authorized to give Oral
Instructions on behalf of the Trust or any Series. Such resolution shall
constitute conclusive evidence of the authority of the person or persons
designated therein to act and shall be considered in full force and effect, with
the Custodian fully protected in acting in reliance therein, until the Custodian
actually receives a certified copy of a replacement resolution adding or
deleting a person or persons authorized to give Oral Instructions. If the
officer certifying the resolution is authorized to give Oral Instructions, the
certification shall also be signed by a second officer of the Trust.
SECTION 4. Instructions. For all purposes under this Agreement, the
Custodian is authorized to act upon receipt of the first of any Written or Oral
Instruction it receives. If the first Instruction is an Oral Instruction, the
Trust shall deliver or have delivered to the Custodian a confirmatory Written
Instruction; and if the Custodian receives an Instruction, whether Written or
Oral, with respect to a Securities transaction, the Trust shall cause the broker
or dealer to send a written confirmation of the transaction 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 Trust. The sole
obligation of the Custodian with respect to any confirmatory Written Instruction
or broker or 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 Trust. The Trust shall be responsible, at
the Trust'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 Trust shall give the Custodian specific
Written Instructions as to the action required.
SECTION 5. Deposit of Trust Assets. The Trust will initially transfer
and deposit or cause to be transferred and deposited with the Custodian all of
the Securities, other property and cash owned by the Trust at the time this
Agreement becomes effective, provided that the Custodian shall have the right,
in its sole discretion, to refuse to accept any securities or other property
that are not in proper form for deposit or any reason. Such transfer and deposit
shall be evidenced by appropriate schedules duly executed by the Trust. The
Trust may deposit with the Custodian additional Securities of the Trust and
dividends or interest collected on such Securities as the same are acquired from
time to time.
The Trust will cause to be deposited with the Custodian from time to
time (i) the net proceeds of Securities sold, (ii) the applicable net asset
value of Interests sold, whether representing initial issue or any other
securities and (iii) cash as may be acquired. Deposits with respect to sales of
Interests shall be accompanied by Written or Oral Instructions stating the
amount to be deposited with the Custodian and registration instructions.
SECTION 6. Deposit of Trust Assets with Third Parties. The Trust
hereby authorizes the Custodian to deposit assets of the Trust as follows:
(a) With the Custodian or any other bank licensed and regularly
examined by the United States or any state thereof assets held in the Option
Account created pursuant to Section 13(b).
(b) In the Custodian's or Sub-Custodian's account(s) with any
Securities Depository as the Trust shall permit by Written or Oral Instruction.
(c) Book-Entry Securities belonging to the Trust in a Book-Entry
Account maintained for the Custodian.
So long as any deposit referred to in (b) or (c) above is maintained
for the Trust, the Custodian shall: (i) deposit the Securities in an account
that includes only assets held by the Custodian for customers; (ii) send the
Trust a confirmation (i.e., an advice of notice of transaction) of any transfers
of the Trust to or from the account; (iii) with respect to Securities of the
Trust transferred to the account, identify as belonging to the Trust a quantity
of securities in a fungible bulk of securities that are registered in the name
of the Custodian or its nominee, or credited to the Custodian's account on the
books of a Securities Depository or the Custodian's agent; (iv) promptly send to
the Trust all reports it receives from the appropriate Federal Reserve Bank or
Securities Depository on its respective system of internal accounting control;
and (v) send to the Trust such reports of the systems of internal accounting
control of the Custodian and its agents through which Securities are deposited
as are available and as the Trust may reasonably request from time to time.
The Custodian shall be liable to the Trust for any loss or damage to
the Trust resulting from the negligence (including failure to act), fault or
willful misconduct of the Custodian, its agents or employees in selecting a
Securities Depository or Book-Entry Account. The Custodian shall not waive any
rights it may have against a Securities Depository or Federal Reserve Bank. The
Trust may elect to be subrogated to the rights of the Custodian against the
Securities Depository or Federal Reserve Bank or any other person with respect
to any claim that the Custodian may have as a consequence of any such loss or
damage, if and to the extent that the Trust has not been made whole for any such
loss or damage.
SECTION 7. Registration of Securities. The Securities held by the
Custodian, unless payable to bearer or maintained in a Securities Depository or
Book-Entry Account pursuant to Section 6, shall 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 Trust or its nominee. In the event that any Securities are
registered in the name of the Trust or its nominee, the Trust will endorse, or
cause to be endorsed, to the Custodian dividend and interest checks, or will
issue appropriate orders to the issuers of the Securities to pay dividends and
interest to the Custodian. Securities, excepting bearer securities, delivered
from time to time to the Custodian shall, in all cases, be in due form for
transfer, or registered as above provided.
SECTION 8. Disbursements of Cash. The Custodian is hereby authorized
and directed to disburse cash to or from the Trust from time to time as follows:
(a) For the purchase of Securities by the Trust, upon receipt by the
Custodian of (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)
either the Securities so purchased, in due form for transfer or already
registered as provided in Section 7, or notification by a Securities Depository
or a Federal Reserve Bank that the Securities have been credited to the
Custodian's account with the Securities Depository or Federal Reserve Bank.
(b) For transferring funds, including mark-to-the-market payments, in
connection with a repurchase agreement covering Securities that have been
received by the Custodian as provided in subsection (a) above, upon receipt by
the Custodian of (i) Written or Oral Instruction specifying the Securities, the
purchase price and the party to whom the purchase price is to be paid and (ii)
written agreement to repurchase the Securities from the Trust.
(c) For transferring funds to a duly-designated redemption paying agent
to redeem or repurchase Interests, upon receipt of Written or Oral Instructions
stating the applicable redemption price.
(d) For 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 repaying, in whole or in part, any loan of the Trust, or
returning cash collateral for Securities loaned by the Trust, upon receipt of
Written or Oral Instructions directing payment and stating the Securities, if
any, to be received against payment.
(f) For paying over to a duly-designated dividend disbursing agent such
amounts as may be stated in Written or Oral Instructions as the Trust deems
appropriate to include in dividends or distributions declared on the Interests.
(g) For paying or reimbursing the Trust for other corporate
expenditures, upon receipt of Written or Oral Instructions stating that such
expenditures are or were authorized by resolution of the Board and specifying
the amount of payment, the purposes for which such payment is to be made, and
the person or persons to whom payment is to be made.
(h) For transferring funds to any Sub-Custodian, upon receipt of
Written or Oral Instructions and upon agreement by the Custodian.
(i) To advance or pay out accrued interest on bonds purchased,
dividends on stocks sold and similar items.
(j) To pay proper compensation and expenses of the Custodian.
(k) To pay, or provide the Trust with money to pay, taxes, upon receipt
of appropriate Written or Oral Instructions.
(l) To transfer funds to a separate checking account maintained by the
Trust.
(m) To pay interest, management or supervisory fees, administration,
dividend and transfer agency fees and costs, compensation of personnel and
operating expenses, including but not limited to fees for legal, accounting and
auditing services.
Before making any payments or disbursements, 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
or the purposes enumerated above. Notwithstanding the foregoing, the Custodian
may disburse cash for other corporate purposes; provided, however, that such
disbursement maybe made only upon receipt of Written or Oral Instructions
stating that such disbursement was authorized by resolution of the Board.
SECTION 9. Delivery of Securities. The Custodian is hereby authorized
and directed to deliver Securities of the Trust from time to time as follows:
(a) For completing sales of Securities sold by the Trust, upon receipt
of (i) Written or Oral Instructions specifying the Securities sold, the amount
to be received and the broker, investment banker or other party to or upon whose
order the Securities are to be delivered and (ii) the net proceeds of sale;
provided, however, that the Custodian may accept payment in connection with the
sale of Book-Entry Securities and Securities on deposit with a Securities
Depository by means of a credit in the appropriate amount to the account
described in Section 6(b) or (c) above.
(b) For exchanging Securities for other Securities (and cash, if
applicable), upon timely receipt of (i) Written or Oral Instructions stating the
Securities to be exchanged, cash to be received and the manner in which the
exchange is to be made and (ii) the other Securities (and cash, if applicable)
as specified in the Written or Oral Instructions.
(c) For exchanging or converting Securities pursuant to their terms or
pursuant to any plan of conversion, consolidation, recapitalization,
reorganization, re-adjustment 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 Oral Instructions.
(d) For presenting for payment Securities that have matured or have
been called for redemption;
(e) For delivering Securities upon redemption of Interests in kind,
upon receipt of appropriate Written or Oral Instructions.
(f) For depositing with the lender Securities to be held as collateral
for a loan to the Trust or depositing with a borrower Securities to be loaned by
the Trust, (i) upon receipt of Written or Oral Instructions directing delivery
to the lender or borrower and suitable collateral, if Securities are loaned or
(ii) pursuant to the terms of a separate securities lending agreement.
(g) For complying with a repurchase agreement, upon receipt of Written
or Oral Instructions stating (i) the securities to be delivered and the payment
to be received and (ii) payment.
(h) For depositing with a depository agent in connection with a tender
or other similar offer to purchase Securities of the Trust, upon receipt of
Written or Oral Instructions.
(i) For depositing Securities with the issuer thereof, or its agents,
for the purpose of transferring such Securities into the name of the Trust, the
Custodian or any nominee of either in accordance with Section 7.
(j) For other proper corporate purposes; provided, that the Custodian
shall receive Written or Oral Instructions requesting such delivery.
(k) Notwithstanding the foregoing, the Custodian may, without Written
or Oral Instructions, surrender and exchange Securities for other Securities in
connection with any reorganization, recapitalization, or similar transaction in
which the owner of the Securities is not given an option; provided, however,
that the Custodian has no responsibility to effect any such exchange unless it
has received actual notice of the event permitting or requiring such exchange.
To facilitate any such exchange, the Custodian is authorized to surrender
against payment maturing obligations and obligations called for redemption and
to effectuate the exchange in accordance with customary practices and procedures
established in the market for exchanges.
SECTION 10. Borrowings. The Trust will cause any person (including the
Custodian) from which it borrows money using Securities as collateral to deliver
to the Custodian a notice of undertaking in the form currently employed by the
lender setting forth the amount that the lender will loan to the Trust against
delivery of a stated amount of collateral. The Trust shall promptly deliver to
the Custodian Written or Oral Instructions for each loan, stating (i) the name
of the lender, (ii) the amount and terms of the loan, which terms may be
specified by incorporating by reference an attached promissory note or loan
agreement duly endorsed by the Trust, (iii) the time and date, if known, on
which the loan will be consummated (the "borrowing date"), (iv) the date on
which the loan becomes due and payable, (v) the total amount payable to the
Trust on the borrowing date, (vi) the market value of Securities to be delivered
as collateral for such loan and (vii) the name of the issuer, the title and the
number of Interests or principal amount of the Securities to be delivered as
collateral. The Custodian shall deliver on the borrowing date such specified
collateral and the executed promissory note, if any, and receive from the lender
the total amount of the loan proceeds; provided, however, that no delivery of
Securities shall occur if the amount of loan proceeds does not conform to the
amount set forth in the Written or Oral Instructions, or if such Instruction do
not contain the requirements of (vii) above. The Custodian may, at the option of
the lender, keep such collateral in its possession; provided such collateral is
subject to all rights given the lender by any promissory note or loan agreement
executed by the Trust.
The Custodian shall deliver, from time to time, any Securities required
as additional collateral for any transaction described in this Section, upon
receipt of Written or Oral Instructions. The Trust shall cause all Securities
released from collateral status to be returned directly to the Custodian.
SECTION 11. Indebtedness to Custodian. If, in its sole discretion, the
Custodian advances funds to the Trust to pay for the purchase of Securities, to
cover an overdraft of the Trust's account with the Custodian, or to pay any
other indebtedness to the Custodian, the Trust's indebtedness shall be deemed to
be a loan by the Custodian to the Trust, payable on demand and bearing interest
at the rate then charged by the Custodian for such loans; provided, however,
that the Custodian shall give the Trust notice of any such advance that exceeds
five percent of the value of the Securities and cash held by the Custodian at
the time of the advance. The Trust hereby agrees that the Custodian shall have a
continuing lien and security interest, to the extent of any such overdraft or
indebtedness, in any property then held by the Custodian or its agents for the
benefit of the Trust, or in which the Trust may have an interest. The Trust
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 then credited to the Trust on the Custodian's books.
SECTION 12. Securities Loans. The Custodian may from time to time
lend securities of the Trust in accordance with and pursuant to a separate
securities lending agreement.
SECTION 13. Option Contracts. The Custodian's responsibilities
regarding option contracts will be governed by the following sub-paragraphs:
(a) Unless more particularly described below, Written or Oral
Instructions regarding option contracts purchased or sold by any Series shall
state (i) the price at which the underlying Security may be bought or sold, (ii)
the issuer, the title and number of the Interests or principal amount of such
Security, (iii) the premium to be paid, (iv) the expiration date of the option
contract, (v) if the transaction is a "closing sale transaction," whether the
sale requires delivery of a certificate of ownership to the broker through whom
the sale is made and (vi) if the transaction is a purchase of an option
contract, the requirement that payment of the premium be made only upon receipt
of a certificate of ownership executed by the broker through whom the purchase
is made.
(b) Whenever a Series sells an option contract, Written or Oral
Instructions to the Custodian must state (ii) the issuer, the title and number
of Interests or principal amount of the Security subject to the option contract,
(ii) the exercise price of the option contract, (iii) the expiration date of the
option contract, (iv) the premium to be received by the Series, (v) the name of
the broker from whom the premium is to be received and (vi) if the option is a
call, whether it is covered.
If the option contract sold is a put, the Written or Oral Instructions
shall also state (i) the amount and kind of collateral required by the broker or
(ii) the amount and kind of assets of the Series, if any, that shall be
segregated from the general assets of the Series and held by the Custodian in a
segregated option account (the "Option Account"). If collateral is required, the
Custodian shall deliver the collateral directly to the broker through whom such
option was written and receive in return a receipt and a confirmation of the
option transaction, in accordance with the customs prevailing among brokers in
such securities. If an Option Account is established, the Custodian shall
maintain it as specified in Written or Oral Instructions.
(c) If the Custodian (i) acts as escrow agent with respect to a covered
call option contract, (ii) maintains securities underlying a covered call option
contract with a Securities Depository or (iii) holds assets in the Option
Account in connection with a put option contract, the Custodian shall deliver,
or cause to be delivered, all receipts required by the customs prevailing among
dealers in such securities.
(d) If an option contract purchased or sold by any Series expires, the
Trust will deliver to the Custodian Written or Oral Instructions containing the
information specified in paragraph (b) above and instructing the Custodian to
(i) delete such option contract from the list of holdings that the Custodian
maintains for that Series and (ii) either remove from the Option Account
specified assets held with respect to such option or remove the restriction on
any securities underlying a covered call option contract, as the case may be.
Upon the return and/or cancellation or expiration of any receipts issued
pursuant to paragraph (c) above, the Custodian shall remove such restriction,
delete the option from the list of holdings maintained by the Custodian and
transfer the assets to the general account maintained by the Custodian for the
benefit of the Series. Collateral delivered by a broker with whom it was
previously deposited pursuant to paragraph (b) above shall, if identical with
the collateral specified in the receipt previously issued by such broker, be
accepted by the Custodian and held in the general account maintained by the
Custodian for the benefit of the Series. The Custodian shall accept delivery of
collateral not specified in such a receipt only upon receipt of Written or Oral
Instructions.
(e) If a covered call option sold by a Series is exercised, the Trust
shall promptly furnish the Custodian with Written or Oral Instructions stating
(i) the issuer, the title and number of Interests or principal amount of the
Security subject to the option contract, (ii) the person to whom the underlying
Securities are to be delivered, (iii) the amount to be received and held by the
Custodian upon delivery and (iv) the assets, if any, to be removed from the
Option Account or the collateral, if any, to be returned by a broker with whom
it was deposited under paragraph (b) above.
(f) If a put option contract sold by a Series is exercised, the Trust
shall promptly furnish the Custodian with Written or Oral Instructions stating
(i) the issuer, the title and number of Interests or principal amount of the
Security subject to the option contract, (ii) the name of the person whom the
Custodian will pay for Securities subject to the put, in return for receipt of
such Securities, (iii) the amount of such payment and (iv) the assets, if any,
to be removed from the Option Account or the collateral, if any, to be returned
by a broker with whom it was deposited under paragraph (b) above.
(g) In the event a Series purchases, in a "closing purchase
transaction," an option contract identical to a previously sold option contract
in order to liquidate its position as a seller of a call option contract, the
Trust will deliver to the Custodian Written or Oral Instructions stating (i) the
issuer, the title and number of Interests or principal amount of the Security
subject to the option contract, (ii) the exercise price of the option contract,
(iii) the premium to be paid, (iv) the expiration date of the option contract
and (v) the name of the person to whom the premium is to be paid. Upon the
Custodian's payment of the premium and the return and/or cancellation of any
receipts issued pursuant to paragraph (c) above, the Custodian shall (i) either
remove from the Option Account the assets held therein or remove the
previously-composed restrictions on the Securities underlying the option that is
liquidated by reason of the Closing Purchase Transaction, (ii) delete such
option from the list of holdings maintained by that Series and (iii) transfer
such Securities or assets to the general account maintained by the Custodian for
the benefit of the Series. Collateral delivered by a broker with whom it was
previously deposited pursuant to paragraph (b) above shall, if identical with
the collateral specified in the receipt previously issued by such broker, be
accepted by the Custodian and transferred to the general account maintained by
the Custodian for the benefit of the Series. The Custodian shall accept delivery
of collateral not specified in such a receipt only upon receipt of Written or
Oral Instructions.
(h) If a Series exercises an option contract held by the Custodian, the
Trust shall deliver to the Custodian, at least 24 hours before the last business
day on which such option contract may be exercised, Written or Oral Instructions
containing the information required under paragraph (a) above and instructing
the Custodian (i) in the case of a put option contract, to deliver the
securities subject the put to the broker specified in the Written or Oral
Instructions, in return for receipt of the exercise price or (ii) in the case of
a covered call option contract, to pay the exercise price of the option contract
to the broker specified in the Written or Oral Instructions, in return for
receipt of the Securities subject to the call.
(i) The Custodian shall have no duty or obligation to see that a Series
has deposited or is maintaining adequate margin, if required, with any broker in
connection with an option contract. The Custodian shall have no duty or
obligation to present such option contract to the broker unless it receives
Written or Oral Instructions from the Trust. The Custodian shall have no
responsibility for (i) the legality of any option contract purchased or sold on
behalf of a Series, (ii) the propriety of any such purchase or sale and (iii)
the adequacy of any collateral delivered to a broker in connection with an
option or held in the Option Account.
SECTION 14. Exercise of Powers With Respect to Securities. 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. The Trust or such persons as it may designate shall have the
right to vote, consent or otherwise act with respect to Securities. The
Custodian will exercise its best efforts (as defined in Section 16) to furnish
to the Trust in a timely manner all proxies or other appropriate authorizations
with respect to Securities registered in the name of the Custodian or its
nominee, so that the Trust or its designee may vote, consent or otherwise act.
SECTION 15. Compensation.
(a) The Trust agrees to pay to the Custodian compensation for its
services as set forth in Appendix B hereto, or as shall be set forth in written
amendments to Appendix B approved by the Trust and the Custodian from time to
time.
(b) The Trust shall pay all fees and expenses of any Sub-Custodian
approved by the Trust.
SECTION 16. Corporate Activity. The Custodian will exercise its best
efforts to forward to the Trust in a timely manner all notices of interestholder
meetings, proxy statements, annual reports, conversion notices, call notices, or
other notices or written materials of any kind (excluding dividend, principal
and interest payments) sent to the Custodian as registered owner of Securities.
Best efforts as used in this Agreement shall mean the efforts reasonably
believed in good faith by the Custodian to be adequate in the circumstances.
Upon receipt of warrants or rights issued in connection with the assets
of the Trust, the Custodian shall enter into its ledgers appropriate notations
indicating such receipt and shall notify the Trust of such receipt. However, the
Custodian shall have no obligation to take any other action with respect to such
warrants or rights, except as directed in Written or Oral Instructions.
Custodian shall take all reasonable actions, as agreed to by the Trust
and the Custodian, to assist the Trust in obtaining from year to year favorable
opinions from the Trust's independent auditors with respect to the Custodian's
activities hereunder.
SECTION 17. Records. The Custodian acknowledges and agrees that all
books and records maintained for the Trust in any capacity under this Agreement
are the property of the Trust and may be inspected by the Trust or any
authorized regulatory agency at any reasonable time. Upon request all such books
and records will be surrendered promptly to the Trust. The Custodian agrees to
make available upon request and to preserve for the periods prescribed in Rule
31a-2 of the Act any records related to services provided under this Agreement
and required to be maintained by Rule 31a-1 under the Act.
SECTION 18. Liability. The Custodian assumes only the usual duties and
obligations normally performed by custodians of open-end investment companies.
The Custodian specifically assumes no responsibility for the management,
investment or reinvestment of the Securities from time to time owned by the
Trust, whether or not on deposit hereunder. The Custodian assumes no duty,
obligation or responsibility whatsoever with respect to Securities not deposited
with the Custodian.
The Custodian may rely upon the advice of counsel, who may be counsel
for the Trust or for the Custodian, and upon statements of accountants, brokers
or other persons believed by the Custodian in good faith to be expert in the
matters upon which they are consulted. The Custodian shall not be liable for any
action taken in good faith reliance upon such advice or statements. The
Custodian shall not be liable for action taken in good faith in accordance with
any Written or Oral Instructions, request or advice of the Trust or its
officers, or information furnished by the Trust or its officers. The Custodian
shall not be liable for any non-negligent action taken in good faith and
reasonably believed by it to be within the powers conferred upon it by this
Agreement.
No liability of any kind, other than to the Trust, shall attach to the
Custodian by reason of its custody of the Securities and cash held by the
Custodian hereunder or otherwise as a result of its custodianship. In the event
that any claim shall be made against the Custodian, it shall have the right to
pay the claim and reimburse itself from the assets of the Trust; provided,
however, that no such reimbursement shall occur unless the Trust is notified of
the claim and is afforded an opportunity to contest or defend the claim, if it
so elects. The Trust agrees to indemnify and hold the Custodian harmless for any
loss, claim, damage or expense arising out of the custodian relationship under
this Agreement; provided such loss, claim, damage or expense is not the direct
result of the Custodian's negligence or willful misconduct.
SECTION 19. Taxes. The Custodian shall not be liable for any taxes,
assessments or governmental charges that may be levied or assessed upon the
Securities held by it hereunder, or upon the income therefrom. Upon Written or
Oral Instruction, the Custodian may pay any such tax, assessment or charge and
reimburse itself out of the monies of the Trust or the Securities held
hereunder.
SECTION 20. Sub-Custodians.
(a) The Custodian may from time to time request appointment of one or
more Sub-Custodians. Upon receipt of Written or Oral Instructions authorizing
the use of a Sub-Custodian, the Custodian shall appoint one or more
Sub-Custodians or Foreign Sub-Custodians of Securities and cash owned by the
Trust from time to time.
(b) Custodian shall cause Foreign Securities and amounts of cash
reasonably required to effect Trust's Foreign Securities transactions in the
Custodian Account to be held in such countries or other jurisdictions as Trust
shall direct in Written or Oral Instructions.
Custodian may hold Foreign Securities and cash in sub-custody accounts,
which shall be deemed part of the Custodian Account and which have been
established by Custodian or by a Sub-Custodian with those Foreign Sub-Custodians
as Trust shall approve in Written or Oral Instructions.
Each Foreign Sub-Custodian is authorized to hold Foreign Securities in
an account with any foreign Securities Depository as Trust shall approve in
Written or Oral Instructions.
The contractual agreement between the Custodian and any Foreign
Sub-Custodian must provide at a minimum that the Foreign Sub-Custodian shall
provide, obtain or use its best efforts to assist the Trust in obtaining
information responsive to the "notes" to Rule 17f-5 under the Act with respect
to (i) each country or jurisdiction where the Trust's assets are proposed to be
maintained, are maintained or in the future may be maintained and (ii) each
Foreign Sub-Custodian which is proposed to hold, holds or in the future may hold
Foreign Securities or cash of the Trust. Notwithstanding any other provisions of
this Agreement, each Foreign Sub-Custodian's undertaking to assist Trust in
obtaining such information shall neither increase the Foreign Sub-Custodian's
duty of care nor reduce Trust's responsibility to determine for itself the
prudence of entrusting its assets to any particular Foreign Sub-Custodian or
foreign Securities Depository.
The Custodian shall deposit Foreign Securities and cash of the Trust
with a Foreign Sub-Custodian only in an account of the Foreign Sub-Custodian
which holds only assets held by Custodian as custodian for its customers. In the
event that a Foreign Sub-Custodian is authorized to hold any of the Foreign
Securities placed in its care in a foreign Securities Depository, Custodian will
direct the Foreign Sub-Custodian to identify the Foreign Securities on the books
of the foreign Securities Depository as being held for the account of Custodian
as custodian for its customers.
(c) The Custodian shall have no liability to the Trust by reason of any
act or omission of any Sub-Custodian approved by the Trust, and the Trust shall
indemnify the Custodian and hold it harmless from and against any and all
actions, suits, claims, 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 approved by the Trust. The Custodian
assigns to the Trust any and all claims for any losses, costs, expenses, or
damages that may be incurred by the Trust by reason of the negligence, gross
negligence or misconduct of any Sub-Custodian approved by the Trust, or by
reason of the failure of a Sub-Custodian approved by the Trust to perform in
accordance with any applicable agreement, including instructions of the
Custodian. The Custodian shall be under no obligation to prosecute or to defend
any action, suit or claim arising out of, or in connection with, the performance
of any Sub-Custodian approved by the Trust, if, in the opinion of the
Custodian's counsel, such action will involve expense or liability to the
Custodian. The Trust shall, upon request, furnish the Custodian with
satisfactory indemnity against such expense or liability, and upon request of
the Custodian, the Trust shall assume the entire defense of any action, suit, or
claim subject to the foregoing indemnity.
With respect to each Sub-Custodian not approved by the Trust, which may
not be a Foreign Sub-Custodian, the Custodian shall be liable to the Trust for
any loss which shall occur as a result of the failure of the Sub-Custodian to
exercise reasonable care with respect to the safekeeping of assets to the same
extent that the Custodian would be liable to the Trust if the Custodian were
holding such assets in its own premises. The Custodian shall be liable to the
Trust under this paragraph only to the extent of the Trust's direct damages, to
be determined based on the market value of the assets which are subject to loss
and without reference to any special conditions or circumstances.
SECTION 21. Effectiveness, Duration and Termination.
(a) This Agreement may be executed in more than one counterpart, each
of which shall be deemed to be an original, and shall become effective on the
date hereof. This Agreement shall remain in effect for a period of one year from
the date of its effectiveness and shall continue in effect for successive
twelve-month periods; provided that such continuance is specifically approved at
least annually by the Board and by a majority of the Trustees who are not
parties to this Agreement or interested persons of any such party.
(b) This Agreement may be terminated by either party upon notice to the
other. The termination shall become effective at the time specified in the
notice but no earlier than sixty (60) days after the date of the notice. Upon
notice of termination, the Trust shall use its best efforts to obtain a
successor custodian. If a successor custodian is not appointed within ninety
(90) days after the date of the notice of termination, the Board shall, by
resolution, designate the Trust as its own custodian. Each successor custodian
shall be a person qualified to serve under the Act. Promptly following receipt
of written notice from the Trust of the appointment of a successor custodian and
receipt of Written or Oral Instructions, the Custodian shall deliver all
Securities and cash it then holds directly to the successor custodian and shall,
upon request of the Trust and the successor custodian and upon payment of the
Custodian's reasonable charges and disbursements, (i) execute and deliver to the
successor custodian an instrument approved by the successor custodian's counsel
transferring to the successor custodian all the rights, duties and obligations
of the Custodian, (ii) transfer to the successor custodian the originals or
copies of all books and records maintained by the Custodian hereunder and (iii)
cooperate with, and provide reasonable assistance to, the successor custodian in
the establishment of the books and records necessary to carry out the successor
custodian's responsibilities hereunder. Upon delivery of the Securities and
other assets of the Trust and compliance with the other requirements of this
Section 21, the Custodian shall have no further duty or liability hereunder.
Every successor custodian appointed hereunder shall execute and deliver an
appropriate written acceptance of its appointment and shall thereupon become
vested with the rights, duties and obligations of the predecessor custodian.
SECTION 22. Required Performance on Fund Business Days. 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 day other than
a Fund Business Day. Functions or duties normally scheduled to be performed on
any day which is not a Fund Business Day shall be performed on, and as of, the
next Fund Business Day unless otherwise required by law.
SECTION 23. Miscellaneous.
(a) This Agreement shall extend to and bind the parties hereto and
their respective successors and assigns; provided, however, that this Agreement
shall not be assignable by the Trust without the written consent of the
Custodian, or by the Custodian without the written consent of the Trust.
Notwithstanding the foregoing, either party may assign this Agreement without
the consent of the other party so long as the assignee is an affiliate, parent
or subsidiary of the assigning party and the assignee of the Custodian is
qualified to serve as custodian under the Act.
(b) This Agreement shall be governed by and construed in accordance
with the laws of the State of Minnesota.
(c) The captions inserted herein are for convenience of reference and
shall not affect, in any way, the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
NORWEST FUNDS
/s/ John Y. Keffer
John Y. Keffer
President
NORWEST BANK MINNESOTA, N.A.
/s/ Jay Kiedrowski
Jay Kiedrowski
Executive Vice President
CORE TRUST (DELAWARE)
CUSTODIAN AGREEMENT
Appendix A
Series of the Trust
as of September 22, 1997
Small Company Growth Portfolio
Small Company Value Portfolio
Large Company Growth Portfolio
International Portfolio
Income Equity Portfolio
Managed Fixed Income Portfolio
Index Portfolio
Positive Return Portfolio
Stable Income Portfolio
Money Market Portfolio
Prime Money Market Portfolio
<PAGE>
CORE TRUST (DELAWARE)
CUSTODIAN AGREEMENT
Appendix A
Series of the Trust
as of March 18, 1998
Small Company Growth Portfolio
Small Company Value Portfolio
Small Cap Index Portfolio
Large Company Growth Portfolio
Disciplined Growth Portfolio
Small Cap Value Portfolio
Strategic Value Bond Portfolio
International Portfolio
Income Equity Portfolio
Managed Fixed Income Portfolio
Index Portfolio
Positive Return Portfolio
Stable Income Portfolio
Money Market Portfolio
Prime Money Market Portfolio
CORE TRUST (DELAWARE)
CUSTODIAN AGREEMENT
Appendix B
Compensation
(a) Account Administrative Fee. $0.20/1000 up to $100 million;
$0.15/1000 on next $100 million; and $0.10/1000 on over $200 million. Based on
the fair market value of custody assets. Market value charges will be based on
the average size of the account during the year using monthly valuations.
(b) Holding Fee Per Issue. $20.00/Book entry item and $25.00/Physical
item per annum. Charges are based on the average number of assets held during
the year using quarterly valuations.
(c) Transaction Fee. $15.00/Book entry transaction and $20.00/Physical
transaction for any asset movement defined as a purchase or sale. No transaction
charge will be made for the initial receipt of securities related to the opening
of any account.
(d) Limitation. The Custodian's total fees for the services rendered by
it pursuant to this Agreement shall not exceed, with respect to Money Market
Portfolio and Prime Money Market Portfolio, 0.03% of the average daily net
assets of such Series, and with respect to all other Series, 0.05% of the
average daily net assets of such Series, computed and paid monthly, with the
exception of International Portfolio, which will pay all fees and expenses of
any Sub-Custodian approved by the Trust, without limitation.
Exhibit (8)(b)
CORE TRUST (DELAWARE) CUSTODIAN CONTRACT
Contract made this 1st day of September, 1995, as amended August 31,
1998, between Core Trust (Delaware) (the "Trust"), a business trust organized
under the laws of the State of Delaware, having its principal place of business
at Two Portland Square, Portland, Maine 04101, and Imperial Trust Company (the
"Custodian"), a California trust company, having its principal place of business
at 201 N. Figueroa Street, Suite 610, Los Angeles, California 90012.
WHEREAS, the Trust is authorized to issue interests in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Trust offers interests in various series as listed in
Appendix A hereto (each a "Portfolio," and collectively the "Portfolios"), (such
series together with all other series established by the Trust and made subject
to this Contract in accordance with Section 12);
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
SECTION 1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Trust hereby employs the Custodian as the custodian of the assets
of the Portfolios pursuant to the provisions of the Trust Instrument. The Trust
on behalf of the Portfolios agrees to deliver to the Custodian all securities
and cash of the Portfolios, and all payments of income, payments of principal or
capital distributions received by it with respect to all securities owned by the
Portfolios from time to time, and the cash consideration received by it for such
shares of beneficial interest of the Trust representing interests in the
Portfolios ("Interests") as may be issued or sold from time to time. The
Custodian shall not be responsible for any property of a Portfolio held or
received by the Portfolio and not delivered to the Custodian.
The Trust hereby authorizes the Custodian to use Imperial Bank and The
Bank of New York as subcustodians, the use of Imperial Bank being limited to
custodianship of cash. In addition, the Custodian may, at any time and from time
to time, appoint any other bank as defined in Section 2(a)(5) of the Investment
Company Act of 1940 ("1940 Act") meeting the requirements of a custodian under
Section 17(f) of the 1940 Act and the rules and regulations thereunder, to act
on behalf of one or more Portfolios as a subcustodian for the purposes of
holding cash, securities and other assets of the Portfolios and performing other
functions of the Custodian; provided that the Custodian sends written
notification to the Trust on or before the day upon which such other
subcustodian is first employed. The Custodian shall be liable for the actions or
omissions of any subcustodian to the same extent as if such action or omission
were performed by the Custodian itself.
SECTION 2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF
THE TRUST HELD BY TO CUSTODIAN
2.1 Holding Securities. The Custodian shall hold and physically segregate
for the account of each Portfolio all non-cash property, including all
securities owned by such Portfolio, other than securities which are
maintained pursuant to Section 2.12 in a clearing agency which acts as
a securities depository or in a book-entry system authorized by the
U.S. Department of the Treasury, collectively referred to herein as
"Securities Systems."
2.2 Delivery of Securities. The Custodian shall release and deliver
securities owned by a Portfolio held by the Custodian or in a
Securities System account of the Custodian only upon receipt of Proper
Instructions from the Trust on behalf of the applicable Portfolio,
which may be continuing instructions when deemed appropriate by the
parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Portfolio;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.12 hereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Portfolio or into the name of any nominee or
nominees of the Custodian or into the name or nominee name of
any agent appointed pursuant to Section 2.11 or into the name
or nominee name of any subcustodian appointed pursuant to
Section l; or for exchange for a different number of bonds,
certificates or other evidence representing the same aggregate
face amount or number of units; provided that, in any such day
upon which such other subcustodian is first employed. The
Custodian shall be liable for the actions or omissions of any
subcustodian to the same extent as if such action or omission
were performed by the Custodian itself.
7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street delivery"
custom;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash,
if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Portfolio, but only against receipt of adequate
collateral as agreed upon from time to time by the Custodian
and the Trust on behalf of the Portfolio, which may be in the
form of cash or obligations issued by the United States
Government, its agencies or instrumentalities, except that in
connection with any loans for which collateral is to be
credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for the
delivery of securities owned by the Portfolio prior to the
receipt of such collateral;
11) For delivery as security in connection with any borrowings by
the Trust on behalf of the Portfolio requiring a pledge of
assets by the Trust on behalf of the Portfolio, but only
against receipt of amounts borrowed;
12) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Trust, for delivery to such
Transfer Agent or to the holders of interests in connection
with distributions in kind, as may be described from time to
time in the currently effective Part A and Part B of the
registration statement of the Trust related to the Portfolios
("Prospectus"), in satisfaction of requests by holders of
Interests for repurchase or redemption; and
13) For any other proper corporate purpose, but only upon receipt
of, in addition to Proper Instructions from the Trust on
behalf of the applicable Portfolio, a writing signed by an
officer of the Trust and certified by the Secretary or an
Assistant Secretary, specifying the securities of the
Portfolio to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to
whom delivery of such securities shall be made.
2.3 Registration of Securities. Securities held by the Custodian (other
than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Trust on behalf of the
Portfolio or of any nominee of the Custodian, or in the name or nominee
name of any agent appointed pursuant to Section 2.11 or in the name or
nominee name of any subcustodian appointed pursuant to Section 1,
unless specifically directed by Proper Instructions to hold such
registered securities in so-called street name; provided that, in any
event, all such securities and other assets shall be held in an account
of the Custodian containing only assets of a Portfolio, or only assets
held by a Custodian as a fiduciary or custodian for customers, and
provided further, that the records of the Custodian shall indicate at
all times the Portfolio or other customer for which such securities and
other assets are held in such account and their respective interests
therein.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or other accounts in the name of Custodian, as custodian of
each Portfolio, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such account
or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Portfolio, other than cash maintained by
the Portfolio in a bank account established and used in accordance with
Rule 17f-3 under the 1940 Act. Cash held hereunder shall be deemed to
be a special deposit. Funds held by the Custodian for a Portfolio may
be deposited by it to its credit as Custodian in the Banking Department
of the Custodian or in such other banks or trust companies as it may in
its discretion deem necessary or desirable; provided, however, that
every such bank or trust company shall be appointed in accordance with
and subject to the terms of Section 1 hereof.
2.5 Payments for Interests. The Custodian shall receive from the placement
agent for the Interests or from the Transfer Agent of the Trust and
deposit into the account of the appropriate Portfolio such payments as
are received for Interests of that Portfolio issued or sold form time
to time by the Trust. The Custodian will provide timely notification to
the Trust on behalf of each such Portfolio and the Transfer Agent of
any receipt by it of payments for Interests of such Portfolio.
2.6 Availability of Federal Funds. Upon mutual agreement between the Trust
on behalf of each applicable Portfolio and the Custodian, the Custodian
shall, upon the receipt of Proper Instructions from the Trust on behalf
of a Portfolio, make federal funds available to such Portfolio as of
specified times agreed upon from time to time by the Trust and the
Custodian in the amount of checks received in payment for Interests of
such Portfolio which are deposited into the Portfolio's account.
2.7 Collection of Income. The Custodian shall collect on a timely basis all
income and other payments with respect to registered securities held
hereunder to which each Portfolio shall be entitled either by law or
pursuant to custom in the securities business, and shall collect on a
timely basis all income and other payments with respect to bearer
securities if, on the date of payment by the issuer, such securities
are held by the Custodian or its agent thereof and shall credit such
income, as collected, to such Portfolio's custodian account. Without
limiting the generality of the foregoing, the Custodian shall detach
and present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest
when due on securities held hereunder. Income due each Portfolio on
securities loaned pursuant to the provisions of Section 2.2 10) shall
be the responsibility of the Trust. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the Trust
with such information or data as may be necessary to assist the Trust
in arranging for the timely delivery to the Custodian of the income to
which the Portfolio is properly entitled.
2.8 Payment of Monies. Upon receipt of Proper Instructions from the Trust
on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian
shall pay out monies of a Portfolio in the following cases only:
1) Upon the purchase of securities, for the account of the
Portfolio but only (a) against the delivery of such securities
to the Custodian (or any bank, banking firm or trust company
doing business in the United States which is qualified under
the 1940 Act to act as a custodian and has been designed by
the Custodian as its agent for this purpose) registered in the
name of the Portfolio or in the name of a nominee of the
Custodian referred to in Section 2.3 hereof or in proper form
for transfer; (b) in the case of a purchase effected through a
Securities System, in accordance with the conditions set forth
in Section 2.12 hereof; (c) in the case of repurchase
agreements entered into between the Trust on behalf of the
Portfolio and the Custodian, or another bank, or a
broker-dealer which is a member of the NASD, (i) against
delivery of the securities either in certificate form or
through an entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii) against
delivery of the receipt evidencing purchase by the Portfolio
of securities owned by the Custodian along with written
evidence of the agreement by the Custodian to repurchase such
securities from the Portfolio or (d) for transfer to a time
deposit account of the Trust in any domestic bank; such
transfer may be effected prior to receipt of a confirmation
from a broker and/or the applicable bank pursuant to Proper
Instructions from the Trust as defined in Section 2.17;
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section 2.2
hereof;
3) For the redemption or repurchase of Interests issued by the
Portfolio as set forth in Section 2.10 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments
for the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Trust whether or not such expenses are to be
in whole or part capitalized or treated as deferred expenses;
5) For the payment of any distributions on Interests of the
Portfolio declared pursuant to the governing documents of the
Trust;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions from the Trust on behalf of
the Portfolio, a writing signed by an officer of the Trust and
certified by its Secretary or an Assistant Secretary,
specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such
purpose to be a proper purpose, and naming the person or
persons to whom such payment is to be made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of securities for the account of
a Portfolio is made by the Custodian in advance of receipt of the
securities purchased in the absence of specific written instructions
from the Trust on behalf of such Portfolio to so pay in advance, the
Custodian shall be absolutely liable to the Trust for such securities
to the same extent as if the securities had been received by the
Custodian.
2.10 Payments for Repurchases or Redemptions of Interests of the Trust. From
such funds as may be available for the purpose but subject to the
limitations of the Trust Instrument and any applicable votes of the
Board of Trustees of the Trust (the "Board") pursuant thereto, the
Custodian shall, upon receipt of instructions from the Transfer Agent,
make funds available for payment to holders of Interests who have
delivered to the Transfer Agent a request for redemption or repurchase
of their Interests. In connection with the redemption or repurchase of
Interests of a Portfolio, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a
commercial bank designated by the redeeming shareholders. In connection
with the redemption or repurchase of Interests of the Trust, the
Custodian shall honor checks drawn on the Custodian by a holder of
Interests, which checks have been furnished by the Trust to the holder
of Interests, when presented to the Custodian in accordance with such
procedures and controls as are mutually agreed upon from time to time
between the Trust and the Custodian.
2.11 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the 1940 Act to act as a
custodian, as its agent to carry out such of the provisions of this
Section 2 as the Custodian may from time to time direct; provided,
however, that the appointment of any agent shall not relieve the
Custodian of its responsibilities or liabilities hereunder.
2.12 Deposit of Trust Assets in Securities Systems. Upon receipt of Proper
Instructions, the Custodian may deposit and/or maintain securities
owned by a Portfolio in a clearing agency registered with the
Securities and Exchange Commission under Section 17A of the Securities
Exchange Act of 1934, which acts as a securities depository, or in the
book-entry system authorized by the U.S. Department of the Treasury and
certain federal agencies, collectively referred to herein as
"Securities Systems" in accordance with applicable Federal Reserve
Board and Securities and Exchange Commission rules and regulations, if
any, and subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in a
Securities System provided that such securities are
represented in an account ("Account") of the Custodian in the
Securities System which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a Securities System shall
identify by book-entry those securities belonging to the
Portfolio;
3) The Custodian shall pay for securities purchased for the
account of the Portfolio upon (i) receipt of advice from the
Securities System that such securities have been transferred
to the Account, and (ii) the making of an entry on the records
of the Custodian to reflect such payment and transfer for the
account of the Portfolio. The Custodian shall transfer
securities sold for the account of the Portfolio upon (i)
receipt of advice from the Securities System that payment for
such securities has been transferred to the Account, and (ii)
the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the
Portfolio. Copies of all advices from the Securities System of
transfers of securities for the account of the Portfolio shall
identify the Portfolio, be maintained for the Portfolio by the
Custodian and be provided to the Trust at its request. Upon
request, the Custodian shall furnish the Trust on behalf of
the Portfolio confirmation of each transfer to or from the
account of the Portfolio in the form of a written advice or
notice and shall furnish to the Trust on behalf of the
Portfolio copies of daily transaction sheets reflecting each
days transactions in the Securities System for the account of
the Portfolio.
4) The Custodian shall provide the Trust for the Portfolio with
any report obtained by the Custodian on the Securities Systems
accounting system, internal accounting control and procedures
for safeguarding securities deposited in the Securities
System;
5) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Trust for the benefit of the
Portfolio for any loss or damage to the Portfolio resulting
from use of the Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of its
agents or of any of its or their employees or from failure of
the Custodian or any such agent to enforce effectively such
rights as it may have against the Securities System; at the
election of the Trust, it shall be entitled to be subrogated
to the rights of the Custodian with respect to any claim
against the Securities System or any other person which the
Custodian may have as a consequence of any such loss or damage
if and to the extent that the Portfolio has not been made
whole for any such loss or damage.
2.13 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Trust on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for an on
behalf of each such Portfolio, into which account or accounts may be
transferred cash and/or securities, including securities maintained in
an account by the Custodian pursuant to Section 2.12 hereof, (i) for
the purposes of compliance by the Portfolio with the procedures
required by Investment Company Act Release No. 10666, or any subsequent
release or releases of the Securities and Exchange Commission relating
to the maintenance of segregated accounts by registered investment
companies and (ii) for other proper corporate purposes, but only, in
the case of clause (ii), upon receipt of, in addition to Proper
Instructions from the Trust on behalf of the applicable Portfolio, a
writing signed by an officer of the Trust and certified by the
Secretary or an Assistant Secretary, setting forth the purpose or
purposes of such segregated account and declaring such purposes to be
proper corporate purposes.
2.14 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to securities of each Portfolio held by it and in
connection with transfers of securities.
2.15 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of
such securities, if the securities are registered otherwise than in the
name of the Portfolio or a nominee of the Portfolio, all proxies are to
be voted, and shall promptly deliver to the Portfolio such proxies, all
proxy soliciting materials and all notices relating to such securities.
2.16 Communications Relating to Portfolio Securities. The Custodian shall
transmit promptly to the Trust for each Portfolio all written
information (including, without limitation, pendency of calls and
maturities of securities and expirations of rights in connection
therewith) received by the Custodian from issuers of the securities
being held for the Portfolio. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Portfolio all
written information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party (or
his agents) making the tender or exchange offer.
2.17 Proper Instructions. Proper Instructions as used throughout this
Section 2 means a writing signed or initialed by one or more person or
persons as the Board shall have from time to time authorized. Each such
writing shall set forth the specific transaction or type of transaction
involved, including a specific statement of the purpose for which such
action is requested. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been
given by a person authorized to give such instructions with respect to
the transaction involved. The Trust shall cause all oral instructions
to be confirmed in writing. Upon receipt of a certificate of the
Secretary or an Assistant Secretary as to the authorization by the
Board, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the
Board and the Custodian are satisfied that such procedures afford
adequate safeguards for the Portfolios' assets. For purposes of this
Section, Proper Instructions shall include instructions received by the
Custodian pursuant to any three-party agreement which requires a
segregated asset account in accordance with Section 2.13.
Notwithstanding anything to the contrary contained in the Contract, no
person authorized by the Board as described in the preceding paragraph,
Trustee, officer, employee or agent of the Trust shall have physical
access to the assets of any Portfolio held by the Custodian nor shall
the Custodian deliver any assets of a Portfolio for delivery to an
account of such person; provided, however, that nothing in this Section
2.17 shall prohibit the Trust's independent certified public
accountants from examining or reviewing the assets of the Portfolio's
held by the Custodian.
2.18 Actions Permitted without Express Authority. The Custodian may in its
discretion, without express authority from the Trust on behalf of each
applicable Portfolio:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, provided that all such payments
shall be accounted for to the Trust on behalf of the
Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Portfolio except as otherwise directed by the Board.
2.19 Evidence of Authority. The Custodian shall be protected in acting upon
any instructions, notice, request, consent, certificate or other
instrument or paper reasonably believed by it to be genuine and to have
been properly executed by or on behalf of the Trust. The Custodian may
receive and accept a certified copy of a vote of the Board as
conclusive evidence (a) of the authority of any person to act in
accordance with such vote or (b) of any determination or of any action
by the Board pursuant to the Trust Instrument as described in such
vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
SECTION 3. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF
ACCOUNT
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board who keep the books of account of
each Portfolio.
SECTION 4. RECORDS
The Custodian shall with respect to each Portfolio create and maintain
all records relating to its activities and obligations under this Contract in
such manner as will meet the obligations of the Trust under the 1940 Act with
particular attention to Section 31 thereof and Rules 3la-1 and 3la-2 thereunder.
All such records shall be the property of the Trust and shall at all times
during the regular business hours of the Custodian be open for inspection by
duly authorized officers, employees and agents of the Trust and employees and
agents of the Securities and Exchange Commission. The Custodian shall, at the
Trust's request, supply the Trust with a tabulation of securities owned by each
Portfolio and held by the Custodian and shall, when requested to do so by the
Trust and for such compensation as shall be agreed upon between the Trust and
the Custodian, include certificate numbers in such tabulations.
SECTION 5. OPINION OF TRUST'S INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as the Trust on behalf
of each applicable Portfolio may from time to time request, to obtain from year
to year favorable opinions from the Trust's independent accountants with respect
to its activities hereunder in connection with the preparation of the Trust's
Form N-lA, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
SECTION 6. REPORTS TO TRUST BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide the Trust, on behalf of each of the
Portfolios at such times as the Trust may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, including securities
deposited and/or maintained in a Securities System, relating to the services
provided by the Custodian under this Contract; such reports, shall be of
sufficient scope and in sufficient detail, as may reasonably be required by the
Trust to provide reasonable assurance that any material inadequacies would be
disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.
SECTION 7. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Trust on behalf of each applicable Portfolio and the Custodian.
SECTION 8. RESPONSIBILITY OF CUSTODIAN
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties.
The Custodian shall be held to the exercise of reasonable care in carrying out
the provisions of this Contract, but shall be kept indemnified by and shall be
without liability to the Trust for any action taken or omitted by it in good
faith without negligence. It shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for the Trust) on all matters, and shall
be without liability for any action reasonably taken or omitted pursuant to such
advice.
If the Trust on behalf of a Portfolio requires the Custodian to take
any action with respect to securities, which action involves the payment of
money or which action may, in the opinion of the Custodian, result in the
Custodian or its nominee assigned to the Trust or the Portfolio being liable for
the payment of money or incurring liability of some other form, the Trust on
behalf of the Portfolio, as a prerequisite to requiring the Custodian to take
such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Trust requires the Custodian to advance cash or securities for
any purpose for the benefit of a Portfolio or in the event that the Custodian or
its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance of this
Contract, except such as may arise from its or its nominees own negligent
action, negligent failure to act or willful misconduct, the Custodian promptly
shall notify the Trust of the existence of any such advances, their amount and
the Portfolio to which the advance applies. Such advances shall be payable on
demand, on the first business day following the Trust's receipt of notice of
such demand.
SECTION 9. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than sixty (60) days after the date of such delivery or mailing; provided, that
the Trust on behalf of one or more of the Portfolios may at time by action of
its Board (i) substitute another bank or trust company for the Custodian by
giving notice as described above to the Custodian, or (ii) terminate this
Contract immediately or at such later time as the Trust may designate in the
event the Trust determines that there is a reasonable basis to conclude that the
Custodian is insolvent or that the financial condition of the Custodian is
deteriorating in any material respect.
Upon termination of the Contract, the Trust on behalf of each
applicable Portfolio shall pay to the Custodian such compensation as may be due
as of the date of such termination and shall likewise reimburse the Custodian
for its costs, expenses and disbursements.
SECTION 10. SUCCESSOR CUSTODIAN
If a successor custodian for the Trust or of one or more of the
Portfolios shall be appointed by the Board, the Custodian shall, upon
termination, deliver to such successor custodian at the office of the Custodian
all property of the Trust then held by it hereunder and, in the case of
securities, duly endorsed and in the form for transfer, all securities of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor custodian all of the securities of each such Portfolio held in
a Securities System. The Custodian shall take all reasonable steps to assist in
the transfer of the assets of the applicable Portfolios to the successor
custodian.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board, deliver
at the office of the Custodian and transfer such securities, funds and other
properties in accordance with such vote. In the event that no written order
designating a successor custodian or certified copy of a vote of the Board shall
have been delivered to the Custodian on or before the date when such termination
shall become effective, then the Custodian shall have the right to deliver to a
bank or trust company, which is a "bank" as defined in the 1940 Act, doing
business in New York City, of its own selection, having an aggregate capital,
surplus, and undivided profits, as shown by its last published report, of not
less than $25,000,000, all securities, funds and other properties held by the
Custodian on behalf of each applicable Portfolio and all instruments held by the
Custodian relative thereto and all other property held by it under this Contract
on behalf of each applicable Portfolio and to transfer to an account of such
successor custodian all the securities of each such Portfolio held in any
Securities System. Thereafter, such bank or trust company shall be the successor
of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Trust to procure the certified copy of the vote referred to or of
the Board to appoint a successor custodian, the Custodian shall be entitled to
fair compensation for its services during such period as the Custodian retains
possession of such securities, funds and other properties and the provisions of
this Contract relating to the duties and obligations of the Custodian shall
remain in full force and effect.
SECTION 11. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Contract, the Custodian and
the Trust on behalf of each of the Portfolios, may from time to time agree on
such provisions interpretive of or in addition to the provisions of this
Contract as may in their joint opinion be consistent with the general tenor of
this Contract. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, provided that no
such interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Trust Instrument of the
Trust. No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this Contract.
SECTION 12. ADDITIONAL PORTFOLIOS
In the event that the Trust establishes one or more series of Interests
in addition to the Portfolios with respect to which it desires to have the
Custodian render services as custodian under the terms hereof, it shall so
notify the Custodian in writing, and if the Custodian agrees in writing to
provide such services, such series of Interests shall become a Portfolio
hereunder.
SECTION 13. CALIFORNIA LAW TO APPLY
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of State of California.
SECTION 14. PRIOR CONTRACTS
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Trust on behalf of each of the Portfolios and the
Custodian relating to the custody of the Trust's assets.
SECTION 15. MISCELLANEOUS
15.1 The Custodian agrees to treat all records and other information
relative to the Trust and its prior, present or potential Shareholders
confidentially and the Custodian on behalf of itself and its employees
agrees to keep confidential all such information, except after prior
notification to and approval in writing by the Trust, which approval
shall not be unreasonably withheld. The preceding notwithstanding, in
the event legal process is served upon the Custodian requiring certain
disclosure, the Custodian may divulge such information. In such event,
the Custodian shall, if legally permissible, advise the Trust of its
receipt of such legal process.
15.2 Notwithstanding any other provision of this Contract, the parties agree
that the assets and liabilities of each Portfolio of the Trust are
separate and distinct from the assets and liabilities of each other
Portfolio and that no Portfolio shall be liable or shall be charged for
any debt, obligation or liability or any other Portfolio, whether
arising under the Contract or otherwise.
15.3 The provisions of this Section 15, Sections 7, 8, 13 and 16, and
Section 2.19, and any other rights or obligations incurred or accrued
by any party hereto prior to termination of this Contract shall survive
any termination of this Contract.
SECTION 16. LIMITATIONS OF LIABILITY OF THE TRUSTEES AND
SHAREHOLDERS OFFICERS, EMPLOYEES AND AGENT
A copy of the Trust Instrument of the Trust is on file with the
Secretary of the Trust. The parties agree that neither the Shareholders,
Trustees, officers, employees nor any agent of the Trust shall be liable
hereunder and that the parties to this Contract other than the Trust shall look
solely to the Trust property for the performance of this Contract or payment of
any claim under this Contract.
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be
duly executed all as of the day and year first above written.
ATTEST CORE TRUST (DELAWARE)
By:_____________________ _ By:______________________
David I. Goldstein John Y. Keffer
Secretary President
ATTEST IMPERIAL TRUST COMPANY
By:_____________________ _ By:_______________________
Title:_____________________ Title:______________________
CUSTODIAN CONTRACT
Core Trust
Appendix A
Portfolios of the Trust
August 31, 1998
Government Portolfio
Treasury Cash Portolfio
Cash Portfolio
Government Cash Portfolio
Municipal Cash Portfolio
CORE TRUST (DELAWARE)
CUSTODIAN CONTRACT FEE ARRANGEMENT
September 1, 1995
WHEREAS, Core Trust (Delaware), a business trust organized under the
laws of the State of Delaware, having its principal place of business at 61
Broadway, New York, N.Y. 10006 (the "Trust") and Imperial Trust Company, a
California trust company, having its principal place of business at 201 N.
Figueroa Street, Suite 610, Los Angeles, California 90012 (the "Custodian") have
entered into a Custodian Contract on the 1st day of September, 1995 (the
"Contract"); and
WHEREAS, Section 7 of the Contract provides that the Custodian shall be
entitled to reasonable compensation for its services and expenses as Custodian,
as agreed upon from time to time between the Trust on behalf of each portfolio
of the Trust and the Custodian;
NOW THEREFORE, in consideration of the services to be provided by the
Custodian under the Contract, the Trust and the Custodian agree that the Trust
shall pay the Custodian, with respect to Treasury Cash Portfolio, Government
Cash Portfolio, and Cash Portfolio, (each a "Portfolio"), a fee of 0.025% of the
average annual daily net assets of each Portfolio. Such fees shall be accrued by
the Trust daily and payable monthly in arrears on the first day of the next
month.
ATTEST CORE TRUST (DELAWARE)
____________________ By__________________
David I. Goldstein John Y. Keffer
Secretary President
ATTEST IMPERIAL TRUST COMPANY
____________________ By__________________
Jai Sondhi Michael Vaughan
Senior Vice President President
CORE TRUST (DELAWARE)
CUSTODIAN CONTRACT FEE ARRANGEMENT
as of June 16, 1998
WHEREAS, Core Trust (Delaware), a business trust organized under the
laws of the State of Delaware, having its principal place of business at Two
Portland Square, Portland, Maine 04101 (the "Trust") and Imperial Trust Company,
a California trust company, having its principal place of business at 201 N.
Figueroa Street, Suite 610, Los Angeles, California 90012 (the "Custodian") have
entered into a Custodian Contract on the 1st day of September, 1995 (the
"Contract"); and
WHEREAS, Section 7 of the Contract provides that the Custodian shall be
entitled to reasonable compensation for its services and expenses as Custodian,
as agreed upon from time to time between the Trust on behalf of each portfolio
of the Trust and the Custodian;
NOW THEREFORE, in consideration of the services to be provided by the
Custodian under the Contract, the Trust and the Custodian agree that the Trust
shall pay the Custodian, with respect to Treasury Cash Portfolio, Government
Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio (each a
"Portfolio"), a fee of 0.025% of the average annual daily net assets of each
Portfolio. Such fees shall be accrued by the Trust daily and payable monthly in
arrears on the first day of the next month.
ATTEST CORE TRUST (DELAWARE)
\s\ By:\s\
David I. Goldstein John Y. Keffer
Secretary President
ATTEST IMPERIAL TRUST COMPANY
\s\ By:\s\
Title: Title:
<PAGE>
CORE TRUST (DELAWARE)
CUSTODIAN CONTRACT FEE ARRANGEMENT
as of August 31, 1998
WHEREAS, Core Trust (Delaware), a business trust organized under the
laws of the State of Delaware, having its principal place of business at Two
Portland Square, Portland, Maine 04101 (the "Trust") and Imperial Trust Company,
a California trust company, having its principal place of business at 201 N.
Figueroa Street, Suite 610, Los Angeles, California 90012 (the "Custodian") have
entered into a Custodian Contract on the 1st day of September, 1995, as amended
August 31, 1998, (the "Contract"); and
WHEREAS, Section 7 of the Contract provides that the Custodian shall be
entitled to reasonable compensation for its services and expenses as Custodian,
as agreed upon from time to time between the Trust on behalf of each portfolio
of the Trust and the Custodian;
NOW THEREFORE, in consideration of the services to be provided by the
Custodian under the Contract, the Trust and the Custodian agree that the Trust
shall pay the Custodian, with respect to Government Portfolio, Treasury Cash
Portfolio, Government Cash Portfolio, Cash Portfolio and Municipal Cash
Portfolio (each a "Portfolio"), the following fees::
Portfolio Fee as a % of the Annual Average Daily Net Assets of
Each Portfolio
Municipal Cash Portfolio .025%
Other Portfolios .025% of the first $1.5 billion, .020% of the next $1.0
billion and .015% of the remaining assets
Such fees shall be accrued by the Trust daily and payable monthly in arrears on
the first day of the next month.
<PAGE>
ATTEST CORE TRUST (DELAWARE)
By:___________________________ By: _______________________________
David I. Goldstein John Y. Keffer
Secretary President
ATTEST IMPERIAL TRUST COMPANY
By: By: _______________________________
Title: Title:
Exhibit (8)(c)
CUSTODY AGREEMENT
This Custody Agreement is dated June 18, 1993, 1993 between MORGAN STANLEY
TRUST COMPANY, a New York State chartered trust company (the "Custodian"), and
Norwest Bank Minnesota, N.A. (the "Client").
1. The Client hereby appoints the Custodian as a custodian of securities
and other property owned or under the control of the Client which are delivered
to the Custodian, or any Subcustodian as appointed below, from time to time to
be held in custody for the benefit of the Client. The Client instructs the
Custodian to establish on the books and records of the Custodian one or more
accounts (the "Accounts") in the name of the Client. The Custodian shall record
in the Accounts and shall have general responsibility for the safekeeping of all
securities ("Securities"), cash and other property (all such Securities, cash
and other property being collectively the "Property") of the Client so delivered
for custody. It is understood that the specific procedures the Custodian will
use in carrying out its responsibilities under this Agreement are set forth in
the procedures manual (the "Procedures Manual") prepared by the Custodian and
delivered to the Client, as such Procedures Manual may be amended from time to
time by the Custodian by written notice to the Client. The Client acknowledges
that the Procedures Manual constitutes an integral part of this Agreement.
2. The Property may be held in custody and deposit accounts that have
been established by the Custodian with one or more domestic or foreign banks, or
through the facilities of one or more clearing agencies or central securities
depositories, as listed on Exhibit A hereto (the "Subcustodians"), as such
Exhibit may be amended from time to time by the Custodian by written notice to
the Client. The Custodian may hold Property for all of its customers with a
Subcustodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers. Any Subcustodian may hold Property
in a securities depository and may utilize a clearing agency. The Client agrees
that the Property may be physically held outside the United States. The
Custodian shall not be liable for any loss resulting from the physical presence
of any Property in a foreign country including, but not limited to, losses
resulting from nationalization, expropriation, exchange controls or acts of war
or terrorism. Except as provided in the previous sentence, the liability of the
Custodian for losses incurred by the Client in respect of Securities shall not
be affected by the Custodian's use of Subcustodians.
3. With respect to Property held by a Subcustodian pursuant to Section 2:
(a) The Custodian will identify on its books as belonging to the
Client any Property held by a Subcustodian for the Custodian's
account;
(b) The Custodian will hold Property through a Subcustodian only if
(i) such Subcustodian and any securities depository or clearing agency
in which such Subcustodian holds Property, or any of their creditors,
may not assert any right, charge, security interest, lien, encumbrance
or other claim of any kind to such Property except a claim of payment
for its safe custody or administration and (ii) beneficial ownership
of such Property may be freely transferred without the payment of
money or value other than for safe custody or administration;
(c) The Custodian shall require that Property held by the Subcustodian
for the Custodian's account be identified on the Subcustodian's books
as separate from any property held by the Subcustodian other than
property of the Custodian's customers and as held solely for the
benefit of customers of the Custodian; and
<PAGE>
(d) In the event that the Subcustodian holds Property in a securities
depository or clearing agency, such Subcustodian will be required by
its agreement with the Custodian to identify on its books such
Property as being held for the account of the Custodian as a custodian
for its customers. 4. The Custodian shall allow the Client's
accountants reasonable access to the Custodian's records relating to
the Property held by the Custodian as such accountants may reasonably
require in connection with their examination of the Client's affairs.
The Custodian shall also obtain from any Subcustodian (and will
require each Subcustodian to use reasonable efforts to obtain from any
securities depository or clearing agency in which it deposits
Property) an undertaking, to the extent consistent with local practice
and the laws of the jurisdiction or jurisdictions to which such
Subcustodian, securities depository or clearing agency is subject, to
permit independent public accountants such reasonable access to the
records of such Subcustodian, securities depository or clearing agency
as may be reasonably required in connection with the examination of
the Client's affairs or to take such other action as the Custodian in
its judgment may deem sufficient to ensure such reasonable access.
5. The Custodian shall provide such reports and other information
to the Client and to such persons as the Client directs as the Custodian and the
Client may agree from time to time.
6. The Custodian shall make or cause any Subcustodian to make
payments from monies being held in the Accounts only:
(a) upon the purchase of Securities and then, to the extent
consistent with practice in the jurisdiction in which settlement occurs, upon
the delivery of such Securities;
(b) for payments to be made in connection with the conversion,
exchange or surrender of Securities;
(c) upon a request of the Client that the Custodian return monies
being held in the Accounts;
(d) upon a request of the Client that monies be exchanged for or
used to purchase monies denominated in a different currency;
(e) as provided in Sections 8 and 12 hereof;
(f) upon termination of this Custody Agreement as hereinafter set
forth; and
(g) for any other purpose upon receipt of Authorized Instructions
(as hereinafter defined).
Except as provided in the last two sentences of this Section 6 and
as provided in Section 8, all payments pursuant to this Section 6 will be made
only upon receipt by the Custodian of Authorized
Instructions. In the event that it is not possible to make a payment in
accordance with Authorized Instructions, the Custodian shall proceed in
accordance with the procedures set forth in the Procedures Manual. Any payment
pursuant to subsection (f) of this Section 6 will be made in accordance with
Section 16.
7. The Custodian will make or cause any Subcustodian to make transfers,
exchanges or deliveries of Securities only:
(a) upon sale of such Securities and then, to the extent consistent
with practice in the jurisdiction in which settlement occurs, upon
receipt of payment therefor;
(b) upon exercise of conversion, subscription, purchase, exchange or
other similar rights pertaining to such Securities and, if applicable
to such exercise and if consistent with practice in applicable
jurisdiction, only on receipt of substitute or additional securities to
be received upon such exercise;
<PAGE>
(c) as provided in Section 8 hereof; (d) upon the termination of this
Custody Agreement as hereinafter set forth; and
(e) for any other purpose upon receipt of Authorized Instructions.
Except as provided in the last two sentences of this Section 7 and as
provided in Section 8, all transfers, exchanges or deliveries of
Securities pursuant to this Section 7 will be made only upon receipt
by the Custodian of Authorized Instructions. In the event that it is
not possible to transfer Securities in accordance with Authorized
Instructions of the Client, the Custodian shall proceed in accordance
with the procedures set forth in the Procedures Manual. Any transfer
or delivery pursuant to subsection (d) of this Section 7 will be made
in accordance with Section 16.
8. In the absence of Authorized Instructions to the contrary, the
Custodian may, and may authorize any Subcustodian to:
(a) make payments to itself or others for expenses of handling Property
or other similar items relating to its duties under this Agreement,
provided that all such payments shall be accounted for to the Client;
(b) receive and collect all income and principal with respect to
Securities and to credit cash receipts to the Accounts; (c) exchange
Securities when the exchange is purely ministerial (including, without
limitation, the exchange of interim receipts or temporary securities
for securities in definitive form and the exchange of warrants, or
other documents of entitlement to securities, for the securities
themselves); (d) surrender Securities at maturity or when called for
redemption upon receiving payment therefor; (e) execute in the Client's
name such ownership and other certificates as may be required to obtain
the payment of income from Securities; (f) pay or cause to be paid,
from the Accounts, any and all taxes and levies in the nature of taxes
imposed on Property by any governmental authority in connection with
custody of and transactions in such Property; (g) endorse for
collection, in the name of the Client, checks, drafts and other
negotiable instruments; and (h) in general, attend to all
nondiscretionary details in connection with the custody, sale,
purchase, transfer and other dealings with the Property. 9. "Authorized
Instructions" of the Client shall mean instructions received by
telecopy, tested telex, electronic link or other electronic means or by
such other means as may be agreed in writing
pursuant to the Procedures Manual or otherwise in advance between the Client and
the Custodian. The Custodian shall be entitled to act, and shall have no
liability for acting, in accordance with the terms of this Agreement or upon any
instructions, notice, request, consent, certificate or other instrument or paper
believed by it to be genuine and to have been properly executed by or on behalf
of the Client.
10. Securities which must be held in registered form may be registered
in the name of the Custodian's nominee or, in the case of Securities in the
custody of an entity other than the Custodian, in the name of such entity's
nominee. The Client agrees to hold the Custodian and Subcustodians and any such
nominee harmless from any liability arising out of any such person acting as a
holder of record of such Securities, provided, however, that the Client shall
not be liable for any such liability incurred as a result of the negligence or
willful miconduct of the Custodian or a Subcustodian. The Custodian may without
notice to the Client cause any Securities to cease to be registered in the name
of any such nominee and to be registered in the name of the Client.
<PAGE>
11. Unless the Client and the Custodian otherwise agree, all cash
received by the Custodian for the Accounts shall be placed in deposit accounts
maintained by the Custodian for the benefit of its customers with Subcustodians
or other domestic or foreign deposit taking institutions identified to the
Client. The Client understands that such deposit accounts may not be accompanied
by the benefit of any governmental insurance. If the Custodian and the Client
have agreed in writing in advance that certain cash in the Accounts shall bear
interest, the Custodian shall be responsible for crediting the Accounts with
interest on such cash at the rates and times as agreed between the Client and
the Custodian from time to time and such rates may be greater than or less than
the rates paid on deposits by the applicable deposit taking institution. Any
difference between the interest so paid to the Client and the interest so paid
by the Subcustodians and other deposit taking institutions shall be for the
account of the Custodian.
12. From time to time, the Custodian may extend or arrange short-term
credit for the Client which is (i) necessary in connection with payment and
clearance of securities and foreign exchange transactions or (ii) pursuant to an
agreed schedule, as and if set forth in the Procedures Manual, of credits for
dividends and interest payments on Securities. All such extensions of credit
shall be repayable by the Client on demand. The Custodian shall be entitled to
charge the Client interest for any such credit extension at rates to be agreed
upon from time to time. In addition to any other remedies available, the
Custodian shall be entitled to a right of set-off against the Property to
satisfy the repayment of such credit extensions and the payment of accrued
interest thereon. The Custodian may act as the Client's agent or act as a
principal in foreign exchange transactions at such rates as are agreed from time
to time between the Client and the Custodian.
13. The Client represents that (i) the execution, delivery and
performance of this Agreement (including, without limitation, the ability to
obtain the short-term extensions of credit in accordance with Section 12) are
within the Client's power and authority and have been duly authorized by all
requisite action (corporate or otherwise) and (ii) this Agreement and each
extension of short-term credit extended or arranged for the benefit of the
Client in accordance with Section 12 will at all times constitute a legal, valid
and binding obligation of the Client and be enforceable against the Client in
accordance with their respective terms, except as may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
in general and subject to the effect of general principles of equity (regardless
of whether considered in a proceeding in equity or at law).
The Custodian represents that the execution, delivery and performance
of this Agreement is within the Custodian's power and authority and has been
duly authorized by all requisite action of the Custodian. This Agreement
constitutes the legal, valid and binding obligation of the Custodian enforceable
against the Custodian in accordance with its terms, except as may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights in general and subject to the effect of general principles of
equity (regardless of whether considered in a proceeding in equity or at law).
<PAGE>
14. The Custodian shall be responsible for the performance of only such
duties as are set forth in this Agreement or the Procedures Manual or contained
in Authorized Instructions given to the Custodian which are not contrary to the
provisions of any relevant law or regulation. The Custodian shall not be liable
to the Client or to any other person for any action taken or omitted to be taken
by it in connection with this Agreement in the absence of negligence or willful
misconduct on the part of the Custodian. Upon the request of the Custodian, the
Client agrees to deliver to the Custodian a duly executed power of attorney, in
form and substance satisfactory to the Custodian, authorizing the Custodian to
take any action or execute any instrument on behalf of the Client as necessary
or advisable to accomplish the purposes of this Agreement.
15. The Client agrees to pay to the Custodian from time to time such
compensation for its services pursuant to this Agreement as may be mutually
agreed upon from time to time and the Custodian's out-of-pocket or incidental
expenses. The Client hereby agrees to hold the Custodian harmless from any
liability or loss resulting from any taxes or other governmental charges, and
any expenses related thereto, which may be imposed or assessed with respect to
the Accounts or any Property held therein. The Custodian is and any
Subcustodians are authorized to charge the Accounts for such items and the
Custodian shall have a lien, charge and security interest on any and all
Property for any amount owing to the Custodian from time to time under this
Agreement.
16. This Agreement may be terminated by the Client or the Custodian by
60 days written notice to the other, sent by registered mail. If notice of
termination is given, the Client shall, within 30 days following the giving of
such notice, deliver to the Custodian a statement in writing specifying the
successor custodian or other person to whom the Custodian shall transfer the
Property. In either event the Custodian, subject to the satisfaction of any lien
it may have, will transfer the Property to the person so specified. If the
Custodian does not receive such statement the Custodian, at its election, may
transfer the Property to a bank or trust company established under the laws of
the United States or any state thereof to be held and disposed of pursuant to
the provisions of this Agreement or may continue to hold the Property until such
a statement is delivered to the Custodian. In such event the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian remains in possession of any Property and the provisions of this
Agreement relating to the duties and obligations of the Custodian shall remain
in full force and effect; provided, however, that the Custodian shall no longer
settle any transactions in securities for the Accounts.
17. The Custodian, its agents and employees will maintain the
confidentiality of information concerning the Property held in the Client's
account, including in dealings with affiliates of the Custodian. In the event
the Custodian or any Subcustodian is requested or required to disclose any
confidential information concerning the Property, the Custodian shall to the
extent practicable and legally permissible, promptly notify the Client of such
request or requirement so that the Client may seek a protective order or waive
the Custodian's or such Subcustodian's compliance with this Section 17. In the
absence of such a waiver, if the Custodian or such Subcustodian is compelled, in
the opinion of its counsel, to disclose any confidential information, the
Custodian or such Subcustodian may disclose such information to such persons as,
in the opinion of counsel, is so required.
18. Any notice or other communication from the Client to the Custodian,
unless otherwise provided by this Agreement, shall be sent by certified or
registered mail to Morgan Stanley Trust Company, One Pierrepont Plaza, Brooklyn,
New York, 11201, Attention: President, and any notice from the Custodian to the
Client is to be mailed postage prepaid, addressed to the Client at the address
appearing below, or as it may hereafter be changed on the Custodian's records in
accordance with notice from the Client.
<PAGE>
19. The Custodian may assign all of its rights and obligations
hereunder to any other entity which is qualified to act as custodian under the
terms of this Agreement and majority-owned, directly or indirectly, by Morgan
Stanley Group Inc., and upon the assumption of the rights and obligations
hereunder by such entity, such entity shall succeed to all of the rights and
obligations of, and be substituted for, the Custodian hereunder as if such
entity had been originally named as custodian herein. The Custodian shall give
prompt written notice to the Client upon the effectiveness of any such
assignment.
<PAGE>
This Agreement shall bind the successors and assigns of the Client and
the Custodian and shall be governed by the laws of the State of New York
applicable to contracts executed in and to be performed in that state.
[Norwest Bank Minnesota, N.A.]
By \S\ WEBSTER A. HILL
-----------------------------------
Name: Webster A. Hill
Title: VP Trust Asset Services
Address for record:
733 Marquette Ave.
Minneapolis, MN 55479-0047
Accepted:
MORGAN STANLEY TRUST COMPANY
By \S\ DANIEL ROCCATO
------------------------------------
Daniel Roccato
Authorized Signature
<PAGE>
AMENDMENT TO CUSTODY AGREEMENT
BETWEEN
MORGAN STANLEY TRUST COMPANY
AND
NORWEST BANK MINNESOTA, N.A.
DATED JUNE 18, 1993
This Amendment, dated as of April 1, 1996, amends the custody agreement
dated June 18, 1993 ("Custody Agreement") between Morgan Stanley Trust Company
("Custodian") and Norwest Bank Minnesota, N.A. ("Client").
Intending to be legally bound, the parties hereby agree as follows, with respect
to Account Nos. 412718 and 412726 (separate accounts established on the
Custodian's books and records for two customers of the Client):
1. The second and third sentences of Article 1 of the Custody Agreement
shall be deleted and replaced in their entirety with the following:
"The Client instructs the Custodian to establish on the books and
records of the Custodian one or more accounts ("the Accounts") in the
name of the Client, one or more of which shall be for the benefit of
Account No. 412718 and one or more of which shall be for the benefit of
Account No. 412726. The Custodian shall record in the Accounts and
shall have general responsibility for the safekeeping of all securities
("Securities"), cash and other property (all such Securities, cash and
other property being collectively, the "Property") of the Client for
the benefit of each customer."
2. The following sentence shall be inserted in Article 1 of the Custody
Agreement immediately after the third sentence:
"The Client shall cause to be delivered to the Accounts only customer
assets and the Custodian shall maintain in the Accounts only these assets and
none of its proprietary assets."
3. The last sentence of Article 1 of the Custody Agreement shall be
deleted and replaced in its entirety with the following:
"The Client acknowledges that, to the extent not inconsistent with the
terms of the Custody Agreement, the Procedures Manual constitutes an integral
part of this Agreement."
4. The last sentence of Article 2 of the Custody Agreement shall be
deleted and replaced in its entirety with the following:
<PAGE>
"Except as provided in the previous sentence, the Custodian shall be
liable for losses incurred by the Client in respect of Property held by
a Subcustodian to the extent such loss is caused by the negligence or
willful misconduct of any Subcustodian."
5. The first sentence of Article 3(a) of the Custody Agreement shall be deleted
and replaced in its entirety with the following:
"The Custodian will identify on its books as belonging to the Client
for the benefit of its customers any Property held by a Subcustodian for the
Custodian's account:"
6. The fourth sentence of Article 12shall be deleted and replaced in its
entirety with the following:
"In addition to any other remedies available, the Custodian shall be
entitled to a right of set-off against the Property in the particular
Account that caused the extension of credit to satisfy the repayment of
such credit extensions and the payment of accrued interest thereon."
7. This Amendment may not be modified except by a writing signed by both parties
hereto.
8. This Amendment may be signed in counterparts which, when taken together as a
whole, shall constitute a single agreement.
9. All other provisions of the Custody Agreement shall remain in full force and
effect.
10. This Amendment shall bind the successors and assigns of the Client and the
Custodian and shall be governed by the laws of the State of New York applicable
to contracts executed in and to be performed in that State.
NORWEST BANK MINNESOTA, N.A.
By:_\S\ JEANNETTE DUBANOWSKI____
Name: Jeabbette Dubanowski
Title: Trust Officer
MORGAN STANLEY TRUST COMPANY
By:_\S\ JACK FEDERICO_______________
Name: Jack Federico
Title: Principal
Exhibit (9)(d)
CORE TRUST (DELAWARE)
PLACEMENT AGENT AGREEMENT
AGREEMENT made this 1st day of September, 1995, between Core Trust
(Delaware) (the "Trust"), a business trust organized under the laws of the State
of Delaware with its principal place of business at Two Portland Square,
Portland, Maine 04101, and Forum Financial Services, Inc. ("Forum"), a
corporation organized under the laws of State of Delaware with its principal
place of business at 61 Broadway, New York, New York 10006.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended, (the "Act") as an open-end management investment company and
is authorized to issue Interests (as defined in the Trust's Trust Instrument) in
separate series; and
WHEREAS, the Trust desires that Forum perform placement agent services
for each of the portfolios of the Trust as listed in Appendix A hereto (each a
"Portfolio," and collectively the "Portfolios") and Forum is willing to provide
those services on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
SECTION 1. SERVICES AS PLACEMENT AGENT
(a) Forum will act as Placement Agent of the Interests of the
Portfolios. As Placement Agent, Forum shall have the right to sell Interests of
the Portfolios upon the terms set forth in the Trust's registration statement,
as such registration statement is amended and in effect from time to time. In
acting as Placement Agent, neither Forum nor its employees nor any agents
thereof shall make any offer or sale of Interests in a manner which would
require the Interests to be registered under the Securities Act of 1933, as
amended (the "1933 Act"). As used in this Agreement the term "registration
statement" shall mean any registration statement filed with the Securities and
Exchange Commission (the "Commission") as modified by any amendments thereto
that at any time shall have been filed with the Commission by or on behalf of
the Trust.
(b) All activities by Forum and its agents and employees as Placement
Agent of Interests shall comply with all applicable laws, rules and regulations,
including without limitation, all rules and regulations adopted pursuant to the
1940 Act by the Commission.
(c) Nothing herein shall be construed to require the Trust to accept
any offer to purchase any Interests, all of which shall be subject to approval
by the Trust's Board of Trustees.
(d) The Trust shall furnish from time to time for use in connection
with the sale of Interests such information with respect to the Trust and
Interests as Forum may reasonably request. The Trust shall also furnish Forum
upon request with: (a) audited annual and unaudited semiannual statements of the
Trust's books and accounts prepared by the Trust, and (b) from time to time such
additional information regarding the Trust's financial or regulatory condition
as Forum may reasonably request.
(e) The Trust represents to Forum that all registration statements
filed by the Trust with the Commission under the 1940 Act with respect to
Interests have been prepared in conformity with the requirements of such statute
and rules and regulations of the Commission thereunder. The Trust represents and
warrants to Forum that any registration statement will contain all statements
required to be stated herein in conformity with both such statute and the rules
and regulations of the Commission; that all statements of fact contained in any
registration statement will be true and correct in all material respects at the
time of filing of such registration statements or amendments thereto; and that
no registration statement 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 Interests. The Trust may
but shall not be obligated to, propose from time to time such amendment to any
registration statement as in the light of future developments may, in the
opinion of the Trust's counsel, be necessary or advisable. If the Trust shall
not propose such amendment and/or supplement within fifteen days after receipt
by the Trust of a written request from Forum to do so, Forum may, at its option,
terminate this Agreement. The Trust shall not file any amendment to any
registration statement without giving Forum reasonable notice thereof in
advance; provided, however, that nothing contained in this Agreement shall in
any way limit the Trust's right to file at any time such amendment to any
registration statement as the Trust may deem advisable, such right being in all
respects absolute and unconditional.
(f) The Trust agrees to indemnify, defend and hold Forum, its several
officers and directors, and any person who controls Forum within the meaning of
Section 15 of the 1933 Act or Section 20 of the Securities Exchange Act of 1934
(the "1934 Act") (for purposes of this Section 1(f), collectively, "Covered
Persons") free and harmless from and against any and all claims, demands,
liabilities and any counsel fees incurred in connection therewith) which any
Covered Person may incur under the 1933 Act, the 1934 Act, common law or
otherwise, arising out of or based on any untrue statement of a material fact
contained in any registration statement, private placement memorandum or other
offering material ("Offering Material") or arising out of or based on any
omission to state a material fact required to be stated in any Offering Material
or necessary to make the statements in any Offering Material not misleading,
provided, however, that the Trust's agreement to indemnify Covered Persons shall
not be deemed to cover any claims, demands, liabilities or expenses arising out
of any financial and other statements as are furnished in writing to the Trust
by Forum in its capacity as Placement Agent for use in the answers to any items
of any registration statement or in any statements made in any Offering
Material, or arising out of or based on 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 Trust's indemnification shall not be deemed to
cover any liability to the Trust or its investors to which a Covered Person
would otherwise be subject by reason or willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of a Covered Person's
reckless disregard of its obligations and duties under this Agreement. The Trust
shall be notified of any action brought against a Covered Person, such
notification to be given by letter or by telegram addressed to the Secretary of
the Trust, promptly after the summons or other first legal process shall have
been duly and completely served upon such Covered Person. The failure to notify
the Trust of any such action shall not relieve the Trust from any liability
except to the extent that the Trust shall have been prejudiced by such failure,
or from any liability that the Trust may have to the Covered Person against whom
such action is brought by reason of any such untrue statement or omission,
otherwise than on account of the Trust's indemnity agreement contained in this
Section 1(f). The Trust 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 chosen by the Trust and approved by Forum,
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 Trust does not elect
to assume the defense of any such suit, or in case Forum reasonably does not
approve of counsel chosen by the Trust, the Trust will reimburse the Covered
Person named as defendant in such suit, for the fees and expenses of any counsel
retained by Forum or such Covered Person. The Trust's indemnification agreement
contained in this Section 1(f) and the Trust'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 Covered Persons, and shall survive the
delivery of any Interests. This agreement of indemnity will inure exclusively to
Covered Persons and their successors. The Trust agrees to notify Forum promptly
of the commencement of any litigation or proceedings against the Trust or any of
its officers or Trustees in connection with the issue and sale of any Interests.
(g) Forum agrees to indemnify, defend and hold the Trust, its several
officers and trustees, and any person who controls the Trust within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act (for purposes of
this Section 1(g) collectively, "Covered Persons") free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
costs of investigating or defending such claims, demands, liabilities and any
counsel fees incurred in connection therewith) that Covered Persons may incur
under the 1933 Act, the 1934 Act, or common law or otherwise, but only to the
extent that such liability or expense incurred by a Covered Person resulting
from such claims or demands shall arise out of or be based on any untrue
statement of a material fact contained in information furnished in writing by
Forum in its capacity as Placement Agent to the Trust for use in the answers to
any of the items of any registration statement or in any statements in any
Offering Material or shall arise out of or be based on any omission to state a
material fact in connection with such information furnished in writing by Forum
to the Trust required to be stated in such answers or necessary to make such
information not misleading. Forum shall be notified of any action brought
against a Covered Person, such notification to be given by letter or telegram
addressed to Forum, Attention: Legal Department, promptly after the summons or
other first legal process shall have been duly and completely served upon such
Covered Person. Forum shall have the right of first control of the defense of
the action with counsel of its own choosing satisfactory to the Trust if such
action is based solely on such alleged misstatement or omission on Forum's part,
and in any other event each Covered Person shall have the right to participate
in the defense or preparation of the defense of any such action. The failure to
so notify Forum of any such action shall not relieve Forum from any liability
except to the extent that Forum shall have been prejudiced by such failure, or
from any liability that Forum may have to Covered Persons by reason of any such
untrue or alleged untrue statement, or omission or alleged omission, otherwise
than on account of Forum's indemnity agreement contained in this Section 1(g).
(h) No Interests shall be offered by either Forum or the Trust under
any of the provisions of this Agreement and no orders for the purchase or sale
of Interests hereunder shall be accepted by the Trust if and so long as the
effectiveness of the registration statement or any necessary amendments thereto
shall be suspended under any of the provisions of the 1940 Act; provided,
however, that nothing contained in this Section 1(h) shall in any way restrict
or have an application to or bearing on the Trust's obligation to redeem
Interests from any investor in accordance with the provisions of the Trust's
registration statement or Trust Instrument, as amended from time to time.
(i) The Trust agrees to advise Forum as soon as reasonably practical by
a notice in writing delivered to Forum or its counsel:
(ii) of any request by the Commission for amendment to the registration
statement then in effect or for additional information;
(iii) in the event of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement then in
effect or the initiation by service of process on the Trust of any
proceeding for that purpose;
(iv) of the happening of any event that makes untrue any statement of
a material fact made in the registration statement then in effect or
that requires the making of a change in such registration statement in
order to make the statements therein not misleading; and
(v) of all action of the Commission with respect to any amendment to
any registration statement that may from time to time be filed with the
Commission.
For purposes of this Section 1(i), informal requests by or acts of the
Staff of the Commission shall not be deemed actions or requests by the
Commission.
(j) Forum agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Trust all records and other
information not otherwise publicly available relative to the Trust and its
prior, present or potential investors 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 Trust, which approval shall not be unreasonably withheld and may not be
withheld where Forum 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 Trust.
(k) In addition to Forum's duties as Placement Agent, the Trust
understands that Forum may, in its discretion, perform additional functions in
connection with transactions in Interests.
(l) Forum shall receive no fee for its services hereunder.
(m) The processing of Interest transactions may include, but is not
limited to, compilation of all transactions; creation of a transaction tape and
timely delivery of it to the Trust's transfer agent for processing;
reconciliation of all transactions delivered to the Trust's transfer agent; and
the recording and reporting of these transactions executed by the Trust's
transfer agent in customer statements; and rendering of periodic customer
statements.
(n) Forum may also provide other investor services, such as
communicating with Trust investors and other functions in administering customer
accounts for Trust investors.
(o) Nothing herein is intended, nor shall be construed, as requiring
Forum to perform any of the foregoing functions.
SECTION 2. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to each
Portfolio on the date hereof and with respect to each future portfolio of the
Trust on the date this Agreement or Appendix A hereto is amended. Upon
effectiveness of this Agreement, it shall supersede all previous agreements
between the parties hereto covering the subject matter hereof insofar as such
Agreement may have been deemed to relate to the Portfolios.
(b) This Agreement shall continue in effect with respect to a Portfolio
for a period of one year from its effectiveness and shall continue in effect for
successive twelve-month periods; provided, however, that continuance is
specifically approved at least annually (i) by the Board or by a vote of a
majority of the outstanding voting interests of the Portfolio and (ii) by a vote
of a majority of Trustees of the Trust who are not parties to this agreement or
interested persons of any such party (other than as Trustees of the Trust);
provided further, however, that if the continuation of this agreement is not
approved as to a Portfolio, Forum may continue to render to the Portfolio the
services described herein in the manner and to the extent permitted by the Act
and the rules and regulations thereunder.
(c) This Agreement may be terminated with respect to a Portfolio at any
time, without the payment of any penalty, (i) by the Board on 60 days' written
notice to Forum or (ii) by Forum on 60 days' written notice to the Trust. This
agreement shall terminate upon assignment.
SECTION 3. REPRESENTATIONS AND WARRANTIES
Forum and the Trust each hereby represents and warrants to the other
that it has all requisite authority to enter into, execute, deliver and perform
its obligations under this Agreement and that, with respect to it, this
Agreement is legal, valid and binding, and enforceable in accordance with its
terms.
SECTION 4. ACTIVITIES OF FORUM
Except to the extent necessary to perform Forum's obligations
hereunder, nothing herein shall be deemed to limit or restrict Forum's right, or
the right of any of Forum's officers, directors or employees who may also be a
trustee, officer or employee of the Trust, or persons otherwise affiliated
persons of the Trust to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, trust, firm, individual or association.
SECTION 5. LIMITATION OF INTERESTHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the interestholders of each Portfolio
shall not be liable for any obligations of the Trust or of the Portfolios under
this Agreement, and Forum agrees that, in asserting any rights or claims under
this Agreement, it shall look only to the assets and property of the Trust or
the Portfolio to which Forum's rights or claims relate in settlement of such
rights or claims, and not to the Trustees of the Trust or the interestholders of
the Portfolios.
SECTION 6. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(c) This Agreement may be executed by the parties hereto on any number
of counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
(d) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(e) This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of New York.
(f) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
(g) The terms "vote of a majority of the outstanding voting interests,"
"interested person," "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act to the terms "vote of a majority of the
outstanding voting securities," "interested person," "affiliated person" and
"assignment," respectively.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
CORE TRUST (DELAWARE)
/s/ John Y. Keffer
John Y. Keffer
President
FORUM FINANCIAL SERVICES, INC.
/s/ David R. Keffer
David R. Keffer
Vice President
<PAGE>
CORE TRUST (DELAWARE)
PLACEMENT AGENT AGREEMENT
Appendix A
Treasury Cash Portfolio
Government Cash Portfolio
Cash Portfolio
Treasury Portfolio
Exhibit (12)(a)
<PAGE>
ANNUAL REPORT
MAY 31, 1998
STABLE INCOME PORTFOLIO
MANAGED FIXED INCOME PORTFOLIO
POSITIVE RETURN BOND PORTFOLIO
STRATEGIC VALUE BOND PORTFOLIO
INDEX PORTFOLIO
INCOME EQUITY PORTFOLIO
DISCIPLINED GROWTH PORTFOLIO
LARGE COMPANY GROWTH PORTFOLIO
SMALL CAP INDEX PORTFOLIO
SMALL COMPANY STOCK PORTFOLIO
SMALL CAP VALUE PORTFOLIO
SMALL COMPANY VALUE PORTFOLIO
SMALL COMPANY GROWTH PORTFOLIO
INTERNATIONAL PORTFOLIO
CORE TRUST (DELAWARE)
<PAGE>
INDEPENDENT AUDITORS' REPORT MAY 31, 1998
- - ------------------------------------------------------------------------------
To the Board of Trustees and Partners of Core Trust
(Delaware)
We have audited the accompanying statements of assets
and liabilities of nine portfolios of Core Trust
(Delaware), Stable Income Portfolio, Managed Fixed Income
Portfolio, Positive Return Bond Portfolio, Strategic Value
Bond Portfolio, Income Equity Portfolio, Disciplined
Growth Portfolio, Large Company Growth Portfolio, Small
Cap Index Portfolio, and Small Cap Value Portfolio
(collectively the "Portfolios"), including the schedules
of investments as of May 31, 1998, and the related
statements of operations, statements of changes in net
assets and financial highlights for the year ended May 31,
1998 for the Stable Income Portfolio, Managed Fixed Income
Portfolio, Positive Return Bond Portfolio, Income Equity
Portfolio and Large Company Growth Portfolio, for the
period from April 9, 1998 to May 31, 1998 for the Small
Cap Index Portfolio and for the period from October 1,
1997 to May 31, 1998 for the Strategic Value Bond
Portfolio, Disciplined Growth Portfolio and Small Cap
Value Portfolio. These financial statements and financial
highlights are the responsibility of the Portfolios'
management. Our responsibility is to express an opinion on
these financial statements and financial highlights based
on our audits.
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 and financial highlights. Our procedures
included confirmation of securities owned as of May 31,
1998 by correspondence with the custodian and brokers. 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 financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of the
Portfolios as of May 31, 1998, the results of their
operations, changes in their net assets and financial
highlights for the year or periods listed in the first
paragraph above, in conformity with generally accepted
accounting principles.
[SIGNATURE]
Boston, Massachusetts
July 21, 1998
CORE TRUST (DELAWARE)
104
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS MAY 31, 1998
- - ------------------------------------------------------------------------------
To Trustees and Investors of Core Trust (Delaware)
In our opinion, the accompanying statements of assets
and liabilities, including the schedules of investments,
and related statements of operations and of changes in net
assets and the financial highlights present fairly, in all
material respects, the financial position of five
portfolios of Core Trust (Delaware): Index Portfolio,
Small Company Stock Portfolio, Small Company Value
Portfolio, Small Company Growth Portfolio and
International Portfolio (collectively the "Portfolios"),
at May 31, 1998, the results of their operations, the
changes in their net assets and financial highlights for
each of the periods indicated therein, in conformity with
generally accepted accounting principles. These financial
statements and the financial highlights (herein referred
to as "financial statements") are the responsibility of
the Portfolios' management; our responsibility is to
express an opinion on these financial statements based on
our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant
estimates made by management, and evaluating the overall
financial statement presentation. We believe that our
audits, which included confirmation of securities at May
31, 1998, by correspondence with the custodian and
brokers, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
July 21, 1998
CORE TRUST (DELAWARE)
105
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRATEGIC
STABLE MANAGED FIXED POSITIVE VALUE
INCOME INCOME RETURN BOND BOND INDEX
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments (Note 2):
Investments at cost......... $ 254,715,158 $325,904,053 $151,112,420 $ 233,017,203 $ 860,776,094
Repurchase agreements at
cost.................... - - 60,000,000 - -
Net unrealized appreciation
(depreciation).......... 339,437 5,258,750 11,345,742 1,829,598 523,084,425
------------- ------------- ------------- ------------- ---------------
TOTAL INVESTMENTS AT VALUE... 255,054,595 331,162,803 222,458,162 234,846,801 1,383,860,519
Collateral for securities
loaned (Notes 2 and 7)... 49,810,558 20,574,571 63,062,607 27,843,961 366,750,637
Cash......................... - - - - -
Net receivable for forward
foreign currency
contracts................ - - - - -
Receivable for investments
sold..................... - - - - -
Receivable for dividends, and
interest and other
receivables.............. 3,726,977 4,605,783 1,722,530 2,967,330 2,174,027
Organization Costs, net of
amortization (Note 2).... 8,951 8,892 8,892 - 8,821
------------- ------------- ------------- ------------- ---------------
TOTAL ASSETS.................. 308,601,081 356,352,049 287,252,191 265,658,092 1,752,794,004
------------- ------------- ------------- ------------- ---------------
LIABILITIES:
Payable for investments
purchased................ - - - 824,682 225,069
Payable for securities loaned
(Notes 2 and 7).......... 49,810,558 20,574,571 63,062,607 27,843,961 366,750,637
Payable for daily variation
margin on financial
futures contracts (Note
2)....................... - - - - 316,225
Payable to custodian (Note
3)....................... 3,464 4,100 3,158 3,270 13,193
Payable to investment adviser
(Note 3)................. 65,706 98,905 65,931 99,790 178,791
Payable to administrator
(Note 3)................. 3,755 2,058 2,626 4,056 3,747
Accrued expenses and other
liabilities.............. 8,677 9,228 8,153 5,158 26,419
------------- ------------- ------------- ------------- ---------------
TOTAL LIABILITIES............. 49,892,160 20,688,862 63,142,475 28,780,917 367,514,081
------------- ------------- ------------- ------------- ---------------
NET ASSETS.................... $ 258,708,921 $335,663,187 $224,109,716 $ 236,877,175 $ 1,385,279,923
------------- ------------- ------------- ------------- ---------------
------------- ------------- ------------- ------------- ---------------
</TABLE>
See Notes to Financial Statements
CORE TRUST (DELAWARE)
106
<PAGE>
MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LARGE SMALL SMALL SMALL
INCOME DISCIPLINED COMPANY CAP COMPANY CAP
EQUITY GROWTH GROWTH INDEX STOCK VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- ------------- --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments (Note
2):
Investments at
cost.......... $ 1,181,107,714 $ 119,608,219 $ 555,644,481 $ 128,934,743 $ 209,732,751 $ 97,975,312
Repurchase
agreements at
cost.......... - - - - - -
Net unrealized
appreciation
(depreciation)... 798,435,839 11,172,163 526,694,218 (6,355,843) 15,925,772 5,377,263
--------------- ------------- --------------- ------------- ------------- -------------
TOTAL INVESTMENTS
AT VALUE....... 1,979,543,553 130,780,382 1,082,338,699 122,578,900 225,658,523 103,352,575
Collateral for
securities
loaned (Notes 2
and 7)......... 325,802,261 37,358,714 268,977,623 13,829,403 37,526,093 13,878,587
Cash............... - - - - - -
Net receivable for
forward foreign
currency
contracts...... - - - - - -
Receivable for
investments
sold........... - - - - 1,947,711 1,723,884
Receivable for
dividends, and
interest and
other
receivables.... 5,739,941 95,910 277,803 61,015 23,103 33,670
Organization Costs,
net of
amortization
(Note 2)....... 11,841 - 11,681 - 3,135 -
--------------- ------------- --------------- ------------- ------------- -------------
TOTAL ASSETS........ 2,311,097,596 168,235,006 1,351,605,806 136,469,318 265,158,565 118,988,716
--------------- ------------- --------------- ------------- ------------- -------------
LIABILITIES:
Payable for
investments
purchased...... 28,624,638 - - 63,009 2,554,238 743,479
Payable for
securities
loaned (Notes 2
and 7)......... 325,802,261 37,358,714 268,977,623 13,829,403 37,526,093 13,878,587
Payable for daily
variation
margin on
financial
futures
contracts (Note
2)............. - - - 29,275 - -
Payable to
custodian (Note
3)............. 18,011 2,089 10,603 2,025 3,276 1,782
Payable to
investment
adviser (Note
3)............. 836,844 99,859 606,379 26,669 180,220 85,953
Payable to
administrator
(Note 3)....... 4,389 3,539 4,844 5,555 4,359 2,997
Accrued expenses
and other
liabilities.... 9,320 5,586 8,236 20,937 21,676 6,069
--------------- ------------- --------------- ------------- ------------- -------------
TOTAL LIABILITIES... 355,295,463 37,469,787 269,607,685 13,976,873 40,289,862 14,718,867
--------------- ------------- --------------- ------------- ------------- -------------
NET ASSETS.......... $ 1,955,802,133 $ 130,765,219 $ 1,081,998,121 $ 122,492,445 $ 224,868,703 $ 104,269,849
--------------- ------------- --------------- ------------- ------------- -------------
--------------- ------------- --------------- ------------- ------------- -------------
<CAPTION>
SMALL SMALL
COMPANY COMPANY
VALUE GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ---------------
<S> <C> <C> <C>
ASSETS:
Investments (Note
2):
Investments at
cost.......... $ 132,400,943 $ 754,874,797 $ 753,906,482
Repurchase
agreements at
cost.......... - - -
Net unrealized
appreciation
(depreciation)... 15,120,905 141,601,029 202,916,655
------------- ------------- ---------------
TOTAL INVESTMENTS
AT VALUE....... 147,521,848 896,475,826 956,823,137
Collateral for
securities
loaned (Notes 2
and 7)......... 17,596,912 - 178,898,445
Cash............... - - 15,111,999
Net receivable for
forward foreign
currency
contracts...... - - 1,576,307
Receivable for
investments
sold........... - 6,880,944 1,827,558
Receivable for
dividends, and
interest and
other
receivables.... 144,631 99,793 2,794,106
Organization Costs,
net of
amortization
(Note 2)....... 2,884 2,923 8,821
------------- ------------- ---------------
TOTAL ASSETS........ 165,266,275 903,459,486 1,157,040,373
------------- ------------- ---------------
LIABILITIES:
Payable for
investments
purchased...... - 8,637,161 26,406,076
Payable for
securities
loaned (Notes 2
and 7)......... 17,596,912 - 178,898,445
Payable for daily
variation
margin on
financial
futures
contracts (Note
2)............. - - -
Payable to
custodian (Note
3)............. 2,346 9,272 42,049
Payable to
investment
adviser (Note
3)............. 115,298 719,778 347,373
Payable to
administrator
(Note 3)....... 5,167 7,014 121,755
Accrued expenses
and other
liabilities.... 21,107 23,141 39,089
------------- ------------- ---------------
TOTAL LIABILITIES... 17,740,830 9,396,366 205,854,787
------------- ------------- ---------------
NET ASSETS.......... $ 147,525,445 $ 894,063,120 $ 951,185,586
------------- ------------- ---------------
------------- ------------- ---------------
</TABLE>
CORE TRUST (DELAWARE)
107
<PAGE>
STATEMENTS OF OPERATIONS
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MANAGED
STABLE FIXED POSITIVE STRATEGIC
INCOME INCOME RETURN BOND VALUE BOND INDEX
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ----------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend income.............. $ - $ - $ - $ - $ 17,573,083
Interest income.............. 14,372,161 19,333,965 12,690,152 7,956,239 2,373,273
Securities lending income
(Note 2)................. 32,479 18,239 88,818 28,889 379,207
------------ ------------ ------------ ----------- -------------
TOTAL INVESTMENT INCOME....... 14,404,640 19,352,204 12,778,970 7,985,128 20,325,563
------------ ------------ ------------ ----------- -------------
EXPENSES:
Advisory (Note 3)............ 682,043 975,529 727,322 601,240 1,709,358
Administration (Note 3)...... 131,004 155,632 120,200 60,122 652,010
Custody (Note 3)............. 37,735 42,809 35,714 20,709 128,957
Accounting (Note 3).......... 94,000 88,000 60,500 49,500 142,000
Legal........................ 1,912 2,220 1,793 1,254 17,521
Audit........................ 15,968 15,968 15,968 14,500 34,023
Trustees..................... 1,594 1,647 1,626 725 3,110
Amortization of organization
costs (Note 2)........... 2,234 2,221 2,221 - 6,072
Miscellaneous................ 8,541 8,392 2,201 2,778 67,941
------------ ------------ ------------ ----------- -------------
TOTAL EXPENSES................ 975,031 1,292,418 967,545 750,828 2,760,992
FEES WAIVED (Note 4)........ (127,246) (153,576) (117,575) (56,068) (648,264)
------------ ------------ ------------ ----------- -------------
NET EXPENSES.................. 847,785 1,138,842 849,970 694,760 2,112,728
------------ ------------ ------------ ----------- -------------
NET INVESTMENT INCOME
(LOSS).................... 13,556,855 18,213,362 11,929,000 7,290,368 18,212,835
------------ ------------ ------------ ----------- -------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) FROM
INVESTMENTS:
Net Realized Gain (Loss) from
Securities................. 423,040 2,891,576 6,562,062 67,326 30,466,020
Foreign currency
transactions........... - - - - -
Financial futures
transactions........... - - - - 10,111,823
------------ ------------ ------------ ----------- -------------
Net Realized Gain (Loss) from
investments.............. 423,040 2,891,576 6,562,062 67,326 40,577,843
Net Change in Unrealized
Appreciation
(Depreciation) from
Securities................. 333,836 5,029,200 13,771,972 1,829,598 232,903,674
Foreign currency
transactions........... - - - - -
Financial futures
transactions........... - - - - (587,949)
------------ ------------ ------------ ----------- -------------
Net Change in Unrealized
Appreciation
(Depreciation) from
Investments.............. 333,836 5,029,200 13,771,972 1,829,598 232,315,725
------------ ------------ ------------ ----------- -------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) FROM
INVESTMENTS............... 756,876 7,920,776 20,334,034 1,896,924 272,893,568
------------ ------------ ------------ ----------- -------------
INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS................ $ 14,313,731 $26,134,138 $32,263,034 $9,187,292 $ 291,106,403
------------ ------------ ------------ ----------- -------------
------------ ------------ ------------ ----------- -------------
(a) Beginning of Period....... Jun 1, 1997 Jun 1, 1997 Jun 1, 1997 Oct 1, 1997 Jun 1, 1997
(b) Net of unrecoverable
foreign withholding taxes
of $1,559,177
</TABLE>
See accompanying Notes to Financial Statements
CORE TRUST (DELAWARE)
108
<PAGE>
FOR THE PERIOD ENDED MAY 31, 1998 (a)
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME DISCIPLINED LARGE COMPANY SMALL CAP SMALL COMPANY SMALL CAP
EQUITY GROWTH GROWTH INDEX STOCK VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- -------------- ------------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend income.............. $ 33,794,578 $ 941,034 $ 5,487,382 $ 113,563 $ 1,070,726 $ 341,645
Interest income.............. 1,311,997 226,497 523,451 168,627 1,000,834 207,609
Securities lending income
(Note 2)................. 256,026 15,873 421,025 3,032 221,189 7,746
-------------- -------------- ------------- -------------- ------------- --------------
TOTAL INVESTMENT INCOME....... 35,362,601 1,183,404 6,431,858 285,222 2,292,749 557,000
-------------- -------------- ------------- -------------- ------------- --------------
EXPENSES:
Advisory (Note 3)............ 7,756,161 679,865 6,448,644 45,748 3,024,869 580,454
Administration (Note 3)...... 860,981 37,764 576,913 9,156 197,912 30,550
Custody (Note 3)............. 170,123 14,658 114,210 3,471 48,610 12,174
Accounting (Note 3).......... 77,500 49,500 79,500 24,067 75,000 47,000
Legal........................ 12,639 1,093 8,595 66 4,082 898
Audit........................ 16,285 13,500 14,968 14,500 27,859 13,500
Trustees..................... 3,564 684 2,940 300 1,843 668
Amortization of organization
costs (Note 2)........... 2,963 - 2,917 - 2,088 -
Miscellaneous................ 15,980 2,051 10,127 792 7,733 2,612
-------------- -------------- ------------- -------------- ------------- --------------
TOTAL EXPENSES................ 8,916,196 799,115 7,258,814 98,100 3,389,996 687,856
FEES WAIVED (Note 4)........ (856,592) (34,231) (572,067) (3,594) (193,557) (27,553)
-------------- -------------- ------------- -------------- ------------- --------------
NET EXPENSES.................. 8,059,604 764,884 6,686,747 94,506 3,196,439 660,303
-------------- -------------- ------------- -------------- ------------- --------------
NET INVESTMENT INCOME
(LOSS).................... 27,302,997 418,520 (254,889) 190,716 (903,690) (103,303)
-------------- -------------- ------------- -------------- ------------- --------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) FROM
INVESTMENTS:
Net Realized Gain (Loss) from
Securities................. 21,124,145 (4,466,320) 103,483,455 (887) 75,015,565 (2,328,929)
Foreign currency
transactions........... - - - - - -
Financial futures
transactions........... - - - (30,973) - -
-------------- -------------- ------------- -------------- ------------- --------------
Net Realized Gain (Loss) from
investments.............. 21,124,145 (4,466,320) 103,483,455 (31,860) 75,015,565 (2,328,929)
Net Change in Unrealized
Appreciation
(Depreciation) from
Securities................. 331,743,519 11,172,163 175,686,535 (6,355,843) (41,102,519) 5,377,263
Foreign currency
transactions........... - - - - - -
Financial futures
transactions........... - - - (374,725) - -
-------------- -------------- ------------- -------------- ------------- --------------
Net Change in Unrealized
Appreciation
(Depreciation) from
Investments.............. 331,743,519 11,172,163 175,686,535 (6,730,568) (41,102,519) 5,377,263
-------------- -------------- ------------- -------------- ------------- --------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) FROM
INVESTMENTS............... 352,867,664 6,705,843 279,169,990 (6,762,428) 33,913,046 3,048,334
-------------- -------------- ------------- -------------- ------------- --------------
INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS................ $ 380,170,661 $ 7,124,363 $278,915,101 $ (6,571,712) $ 33,009,356 $ 2,945,031
-------------- -------------- ------------- -------------- ------------- --------------
-------------- -------------- ------------- -------------- ------------- --------------
(a) Beginning of Period....... Jun 1, 1997 Oct 1, 1997 Jun 1, 1997 Apr 9, 1998 Jun 1, 1997 Oct 1, 1997
(b) Net of unrecoverable
foreign withholding taxes
of $1,559,177
<CAPTION>
SMALL
COMPANY SMALL COMPANY
VALUE GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividend income.............. $ 2,589,822 $ 2,332,991 $ 11,873,542(b)
Interest income.............. 206,113 2,124,402 3,941,336
Securities lending income
(Note 2)................. 107,342 - 365,494
------------ ------------- -------------
TOTAL INVESTMENT INCOME....... 2,903,277 4,457,393 16,180,372
------------ ------------- -------------
EXPENSES:
Advisory (Note 3)............ 1,558,410 7,752,366 3,832,528
Administration (Note 3)...... 101,259 486,767 1,209,182
Custody (Note 3)............. 30,974 101,137 511,866
Accounting (Note 3).......... 74,000 78,000 121,500
Legal........................ 2,416 8,285 9,665
Audit........................ 26,542 32,359 44,573
Trustees..................... 1,515 2,611 2,676
Amortization of organization
costs (Note 2)........... 1,920 1,944 6,072
Miscellaneous................ 7,597 13,515 42,163
------------ ------------- -------------
TOTAL EXPENSES................ 1,804,633 8,476,984 5,780,225
FEES WAIVED (Note 4)........ (96,092) (479,752) (117,141)
------------ ------------- -------------
NET EXPENSES.................. 1,708,541 7,997,232 5,663,084
------------ ------------- -------------
NET INVESTMENT INCOME
(LOSS).................... 1,194,736 (3,539,839) 10,517,288
------------ ------------- -------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) FROM
INVESTMENTS:
Net Realized Gain (Loss) from
Securities................. 49,410,647 157,449,385 15,722,123
Foreign currency
transactions........... - - 3,063,593
Financial futures
transactions........... - - -
------------ ------------- -------------
Net Realized Gain (Loss) from
investments.............. 49,410,647 157,449,385 18,785,716
Net Change in Unrealized
Appreciation
(Depreciation) from
Securities................. 1,904,286 (8,948,010) 76,972,797
Foreign currency
transactions........... - - 2,006,982
Financial futures
transactions........... - - -
------------ ------------- -------------
Net Change in Unrealized
Appreciation
(Depreciation) from
Investments.............. 1,904,286 (8,948,010) 78,979,779
------------ ------------- -------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) FROM
INVESTMENTS............... 51,314,933 148,501,375 97,765,495
------------ ------------- -------------
INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS................ $52,509,669 $144,961,536 $108,282,783
------------ ------------- -------------
------------ ------------- -------------
(a) Beginning of Period....... Jun 1, 1997 Jun 1, 1997 Jun 1, 1997
(b) Net of unrecoverable
foreign withholding taxes
of $1,559,177
</TABLE>
CORE TRUST (DELAWARE)
109
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRATEGIC
STABLE MANAGED FIXED POSITIVE VALUE
INCOME INCOME RETURN BOND BOND INDEX
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
NET ASSETS, MAY 31, 1996...... $ - $ - $ - $ - $ 360,469,155
------------- ------------- ------------- ------------- ---------------
OPERATIONS
Net investment income........ - - - - 7,998,685
Net realized gain on
investments sold......... - - - - 11,395,983
Net change in unrealized
appreciation on
investments.............. - - - - 85,427,079
------------- ------------- ------------- ------------- ---------------
Net increase in net assets
resulting from
operations............... - - - - 104,821,747
------------- ------------- ------------- ------------- ---------------
TRANSACTIONS IN INVESTORS'
BENEFICIAL INTERESTS
Contributions................ - - - - 41,212,190
Withdrawals.................. - - - - (50,510,474)
------------- ------------- ------------- ------------- ---------------
Net increase (decrease) from
transactions in
investors' beneficial
interest................. - - - - (9,298,284)
------------- ------------- ------------- ------------- ---------------
NET INCREASE IN NET ASSETS.... - - - - 95,523,463
------------- ------------- ------------- ------------- ---------------
NET ASSETS, MAY 31, 1997
(a)....................... - - - - 455,992,618
------------- ------------- ------------- ------------- ---------------
OPERATIONS
Net investment income
(loss)................... 13,556,855 18,213,362 11,929,000 7,290,368 18,212,835
Net realized gain (loss) on
investments sold......... 423,040 2,891,576 6,562,062 67,326 40,577,843
Net change in unrealized
appreciation
(depreciation) on
investments.............. 333,836 5,029,200 13,771,972 1,829,598 232,315,725
------------- ------------- ------------- ------------- ---------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS................ 14,313,731 26,134,138 32,263,034 9,187,292 291,106,403
------------- ------------- ------------- ------------- ---------------
TRANSACTIONS IN INVESTORS'
BENEFICIAL INTERESTS
Contributions (Note 9)....... 329,276,657 374,891,352 255,480,588 254,050,881 791,000,962
Withdrawals.................. (84,881,467) (65,362,303) (63,633,906) (26,360,998) (152,820,060)
------------- ------------- ------------- ------------- ---------------
Net increase from
transactions in
investors' beneficial
interest................. 244,395,190 309,529,049 191,846,682 227,689,883 638,180,902
------------- ------------- ------------- ------------- ---------------
NET INCREASE IN NET ASSETS.... 258,708,921 335,663,187 224,109,716 236,877,175 929,287,305
------------- ------------- ------------- ------------- ---------------
NET ASSETS, MAY 31, 1998...... $ 258,708,921 $335,663,187 $224,109,716 $236,877,175 $ 1,385,279,923
------------- ------------- ------------- ------------- ---------------
------------- ------------- ------------- ------------- ---------------
(a) Beginning of Period....... Jun 1, 1997 Jun 1, 1997 Jun 1, 1997 Oct 1, 1997 Jun 1, 1997
</TABLE>
See accompanying Notes to Financial Statements
CORE TRUST (DELAWARE)
110
<PAGE>
FOR THE YEARS OR PERIODS ENDED MAY 31, 1997 AND 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME DISCIPLINED LARGE COMPANY SMALL CAP SMALL COMPANY
EQUITY GROWTH GROWTH INDEX STOCK
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
NET ASSETS, MAY 31, 1996...... $ - $ - $ - $ - $ -
--------------- ------------- --------------- ------------- --------------
OPERATIONS
Net investment income........ - - - - -
Net realized gain on
investments sold......... - - - - -
Net change in unrealized
appreciation on
investments.............. - - - - -
--------------- ------------- --------------- ------------- --------------
Net increase in net assets
resulting from
operations............... - - - - -
--------------- ------------- --------------- ------------- --------------
TRANSACTIONS IN INVESTORS'
BENEFICIAL INTERESTS
Contributions................ - - - - -
Withdrawals.................. - - - - -
--------------- ------------- --------------- ------------- --------------
Net increase (decrease) from
transactions in
investors' beneficial
interest................. - - - - -
--------------- ------------- --------------- ------------- --------------
NET INCREASE IN NET ASSETS.... - - - - -
--------------- ------------- --------------- ------------- --------------
NET ASSETS, MAY 31, 1997
(a)....................... - - - - -
--------------- ------------- --------------- ------------- --------------
OPERATIONS
Net investment income
(loss)................... 27,302,997 418,520 (254,889) 190,716 (903,690)
Net realized gain (loss) on
investments sold......... 21,124,145 (4,466,320) 103,483,455 (31,860) 75,015,565
Net change in unrealized
appreciation
(depreciation) on
investments.............. 331,743,519 11,172,163 175,686,535 (6,730,568) (41,102,519)
--------------- ------------- --------------- ------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS................ 380,170,661 7,124,363 278,915,101 (6,571,712) 33,009,356
--------------- ------------- --------------- ------------- --------------
TRANSACTIONS IN INVESTORS'
BENEFICIAL INTERESTS
Contributions (Note 9)....... 1,656,178,203 127,393,238 1,039,939,974 130,179,195 462,417,317
Withdrawals.................. (80,546,731) (3,752,382) (236,856,954) (1,115,038) (270,557,970)
--------------- ------------- --------------- ------------- --------------
Net increase from
transactions in
investors' beneficial
interest................. 1,575,631,472 123,640,856 803,083,020 129,064,157 191,859,347
--------------- ------------- --------------- ------------- --------------
NET INCREASE IN NET ASSETS.... 1,955,802,133 130,765,219 1,081,998,121 122,492,445 224,868,703
--------------- ------------- --------------- ------------- --------------
NET ASSETS, MAY 31, 1998...... $ 1,955,802,133 $130,765,219 $ 1,081,998,121 $122,492,445 $ 224,868,703
--------------- ------------- --------------- ------------- --------------
--------------- ------------- --------------- ------------- --------------
(a) Beginning of Period....... Jun 1, 1997 Oct 1, 1997 Jun 1, 1997 Apr 9, 1998 Jun 1, 1997
<CAPTION>
SMALL CAP SMALL COMPANY SMALL COMPANY
VALUE VALUE GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
NET ASSETS, MAY 31, 1996...... $ - $ - $ - $ 439,815,157
------------- ------------- -------------- --------------
OPERATIONS
Net investment income........ - - - 7,278,121
Net realized gain on
investments sold......... - - - 11,031,767
Net change in unrealized
appreciation on
investments.............. - - - 41,949,537
------------- ------------- -------------- --------------
Net increase in net assets
resulting from
operations............... - - - 60,259,425
------------- ------------- -------------- --------------
TRANSACTIONS IN INVESTORS'
BENEFICIAL INTERESTS
Contributions................ - - - 108,485,326
Withdrawals.................. - - - (69,263,029)
------------- ------------- -------------- --------------
Net increase (decrease) from
transactions in
investors' beneficial
interest................. - - - 39,222,297
------------- ------------- -------------- --------------
NET INCREASE IN NET ASSETS.... - - - 99,481,722
------------- ------------- -------------- --------------
NET ASSETS, MAY 31, 1997
(a)....................... - - - 539,296,879
------------- ------------- -------------- --------------
OPERATIONS
Net investment income
(loss)................... (103,303) 1,194,736 (3,539,839) 10,517,288
Net realized gain (loss) on
investments sold......... (2,328,929) 49,410,647 157,449,385 18,785,716
Net change in unrealized
appreciation
(depreciation) on
investments.............. 5,377,263 1,904,286 (8,948,010) 78,979,779
------------- ------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS................ 2,945,031 52,509,669 144,961,536 108,282,783
------------- ------------- -------------- --------------
TRANSACTIONS IN INVESTORS'
BENEFICIAL INTERESTS
Contributions (Note 9)....... 109,215,794 182,821,915 893,179,444 406,915,054
Withdrawals.................. (7,890,976) (87,806,139) (144,077,860) (103,309,130)
------------- ------------- -------------- --------------
Net increase from
transactions in
investors' beneficial
interest................. 101,324,818 95,015,776 749,101,584 303,605,924
------------- ------------- -------------- --------------
NET INCREASE IN NET ASSETS.... 104,269,849 147,525,445 894,063,120 411,888,707
------------- ------------- -------------- --------------
NET ASSETS, MAY 31, 1998...... $104,269,849 $147,525,445 $ 894,063,120 $ 951,185,586
------------- ------------- -------------- --------------
------------- ------------- -------------- --------------
(a) Beginning of Period....... Oct 1, 1997 Jun 1, 1997 Jun 1, 1997 Jun 1, 1997
</TABLE>
CORE TRUST (DELAWARE)
111
<PAGE>
FINANCIAL HIGHLIGHTS
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO TO
AVERAGE
NET ASSETS(a)
-------------------------------------------
NET
INVESTMENT PORTFOLIO AVERAGE
INCOME NET TURNOVER COMMISSION
(LOSS) EXPENSES GROSS EXPENSES RATE RATE(b)
---------- ----------- -------------- -------- ----------
<S> <C> <C> <C> <C> <C>
STABLE INCOME PORTFOLIO
- - ---------------------------------------------------------------------------------------------------------------
June 1, 1997(c) to May 31, 1998....... 5.96% 0.37% 0.43% 37.45% N/A
MANAGED FIXED INCOME PORTFOLIO
- - ---------------------------------------------------------------------------------------------------------------
June 1, 1997(c) to May 31, 1998....... 6.53% 0.41% 0.46% 91.59% N/A
POSITIVE RETURN BOND PORTFOLIO
- - ---------------------------------------------------------------------------------------------------------------
June 1, 1997(c) to May 31, 1998....... 5.74% 0.41% 0.47% 68.18% N/A
STRATEGIC VALUE BOND PORTFOLIO
- - ---------------------------------------------------------------------------------------------------------------
October 1, 1997(c) to May 31, 1998.... 6.06% 0.58% 0.62% 134.56% N/A
INDEX PORTFOLIO
- - ---------------------------------------------------------------------------------------------------------------
June 1, 1997 to May 31, 1998.......... 1.60% 0.19% 0.24% 6.68% $0.0339
June 1, 1996 to May 31, 1997.......... 2.03% 0.11% 0.31% 7.29% 0.0444
November 1, 1995 to May 31, 1996...... 2.35% 0.17% 0.32% 7.21% 0.0501
November 11, 1994(c) to October 31,
1995................................ 2.42% 0.17% 0.33% 7.73% N/A
INCOME EQUITY PORTFOLIO
- - ---------------------------------------------------------------------------------------------------------------
June 1, 1997(c) to May 31, 1998....... 1.76% 0.52% 0.57% 3.49% $0.0585
DISCIPLINED GROWTH PORTFOLIO
- - ---------------------------------------------------------------------------------------------------------------
October 1, 1997(c) to May 31, 1998.... 0.55% 1.01% 1.06% 68.08% $0.0553
LARGE COMPANY GROWTH PORTFOLIO
- - ---------------------------------------------------------------------------------------------------------------
June 1, 1997(c) to May 31, 1998....... (0.03%) 0.67% 0.73% 13.03% $0.0552
SMALL CAP INDEX PORTFOLIO
- - ---------------------------------------------------------------------------------------------------------------
April 9, 1998(c) to May 31, 1998...... 1.04% 0.52% 0.54% 2.25% $0.0199
SMALL COMPANY STOCK PORTFOLIO
- - ---------------------------------------------------------------------------------------------------------------
June 1, 1997(c) to May 31, 1998....... (0.27%) 0.95% 1.01% 166.16% $0.0616
SMALL CAP VALUE PORTFOLIO
- - ---------------------------------------------------------------------------------------------------------------
October 1, 1997(c) to May 31, 1998.... (0.17%) 1.08% 1.13% 79.43% $0.0556
SMALL COMPANY VALUE PORTFOLIO
- - ---------------------------------------------------------------------------------------------------------------
June 1, 1997(c) to May 31, 1998....... 0.69% 0.99% 1.04% 99.08% $0.0522
SMALL COMPANY GROWTH PORTFOLIO
- - ---------------------------------------------------------------------------------------------------------------
June 1, 1997(c) to May 31, 1998....... (0.41%) 0.93% 0.98% 123.36% $0.0567
INTERNATIONAL PORTFOLIO
- - ---------------------------------------------------------------------------------------------------------------
June 1, 1997 to May 31, 1998.......... 1.23% 0.66% 0.68% 36.96% $0.0194
June 1, 1996 to May 31, 1997.......... 1.53% 0.19% 0.67% 53.32% 0.0244
November 1, 1995 to May 31, 1996...... 1.75% 0.23% 0.68% 17.58% 0.0247
November 11, 1994(c) to October 31,
1995................................ 1.94% 0.25% 0.70% 28.19% N/A
</TABLE>
- - ------------------------------
(a) Ratios for periods of less than one year are annualized
(b) For fiscal years ending after September 1, 1995, the Portfolios are required
to disclose average commissions per share paid to brokers on the purchase
and sale of equity securities
(c) Commencement of operations
CORE TRUST (DELAWARE)
112
<PAGE>
NOTES TO FINANCIAL STATEMENTS MAY 31, 1998
- --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION
Core Trust (Delaware) ("Core Trust"), organized as a Delaware business trust,
was formed on September 1, 1994. Core Trust, which is registered as an open-end
management investment company under the Investment Company Act of 1940 (the
"Act"), currently has twenty-one separate investment portfolios. These financial
statements relate to the following fourteen diversified portfolios (each a
"Portfolio" and collectively the "Portfolios"), which commenced operations on
the following dates:
<TABLE>
<S> <C>
Stable Income Portfolio................. June 1, 1997
Managed Fixed Income Portfolio.......... June 1, 1997
Positive Return Bond Portfolio.......... June 1, 1997
Strategic Value Bond Portfolio.......... October 1, 1997
Index Portfolio......................... November 11, 1994
Income Equity Portfolio................. June 1, 1997
Disciplined Growth Portfolio............ October 1, 1997
Large Company Growth Portfolio.......... June 1, 1997
Small Cap Index Portfolio............... April 9, 1998
Small Company Stock Portfolio........... June 1, 1997
Small Cap Value Portfolio............... October 1, 1997
Small Company Value Portfolio........... June 1, 1997
Small Company Growth Portfolio.......... June 1, 1997
International Portfolio................. November 11, 1994
</TABLE>
On June 1, 1997, the following transactions occurred (1) Small Company Portfolio
was divided into Small Company Stock Portfolio, Small Company Value Portfolio
and Small Company Growth Portfolio; its assets were divided by investment style;
and (2) International Portfolio merged into another portfolio of Core Trust,
International Portfolio II. The combined portfolio was named International
Portfolio.
Interests in the Portfolios are sold without any sales charge in private
placement transactions to qualified investors, including open-end management
investment companies.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements are prepared in accordance with generally accepted
accounting principles, which require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of increase and decrease in net assets from
operations during the fiscal period. Actual results could differ from those
estimates. The following represents significant accounting policies of the
Portfolios:
SECURITIES VALUATION--Short-term securities that mature in sixty days or less
are valued at amortized cost. Equity securities for which market quotations are
readily available are valued using the last reported sales price provided by
independent pricing services. If no sales are reported, the mean of the last bid
and ask price is used. If no mean price is available, the last bid price is
used. Fixed income and other securities, for which market quotations are readily
available, are valued using the mean of the bid and ask prices provided by
independent pricing services. If no mean price is available, the last bid price
is used. In the absence of readily available market quotations, securities are
valued at fair value determined in accordance with procedures adopted by the
Board of Trustees.
SECURITY TRANSACTIONS AND INVESTMENT INCOME--Investment transactions are
accounted for on the trade date. Dividend income is recorded on the ex-dividend
date. With respect to dividends on foreign securities, certain instances may
arise where a Portfolio is not notified of a dividend until after the ex-
dividend date has passed. In these instances a dividend is recorded as soon as
the Portfolio is informed of the dividend. Dividend income is recorded net of
unrecoverable withholding tax. Interest income, including amortization of
premium or accretion of discount is recorded as earned. Identified cost of
investments sold is used to determine realized gain and loss for both financial
statement and federal income tax purposes. Foreign dividend and interest income
amounts and realized capital gains and losses are converted to U.S. dollars
using foreign exchange rates in effect at the date of the transactions.
Foreign currency amounts are translated into U.S. dollars at the mean of the bid
and asked prices of such currencies against U.S. dollars as follows: (i) assets
and liabilities at the rate of exchange at the end of the respective period; and
(ii) purchases and sales of securities and income and expenses at the rate of
exchange prevailing on the dates of such transactions. The portion of the
results of operations arising from changes in the exchange rates and the portion
due to fluctuations arising from changes in the market prices of securities are
not isolated. Such fluctuations are included with the net realized and
unrealized gain or loss on investments.
International Portfolio may enter into forward contracts to purchase or sell
foreign currencies to protect against the effect on the U.S. dollar value of the
underlying portfolio of possible adverse movements in foreign exchange rates.
Risks associated with such contracts include the movement in value of the
foreign currency relative to the U.S. dollar and the ability of the counterparty
to perform. Fluctuations in the value of such contracts are recorded as
unrealized gain or loss; realized gain or loss include net gain or loss on
contracts that have terminated by settlement or by the Portfolio entering into
offsetting commitments.
CORE TRUST (DELAWARE)
113
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FUTURES CONTRACTS--Each Portfolio may invest in stock index futures contracts to
enhance its return and hedge against a decline in the value of securities. A
futures contract is an agreement between two parties to buy and sell a security
at a set price on a future date. Upon entering into such a contract the
Portfolio is required to pledge to the broker an amount of cash or securities
equal to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Portfolio agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
value of the contract. Such receipts or payments are known as "variation margin"
and are recorded by the Portfolio as unrealized gain or loss. When the contract
is closed, the Portfolio records a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the value at the
time it was closed. The potential risk to the Portfolio is that the change in
value of the underlying securities may not correlate to the change in value of
the contracts.
REPURCHASE AGREEMENTS--Each Portfolio may invest in repurchase agreements. Each
Portfolio, through its custodian, receives delivery of the underlying
collateral, whose market value must always equal or exceed the repurchase price.
The investment adviser is responsible for determining the value of the
underlying collateral at all times. In the event of default, the Portfolios may
have difficulty with the disposition of any securities held as collateral.
SECURITY LOANS--The Portfolios receive compensation for lending securities in
the form of fees or by retaining a portion of interest on the investment
securities or cash received as collateral. A Portfolio also continues to receive
interest or dividends on the securities loaned. Security loans are secured at
all times by collateral equal to at least 102% of the market value of the
securities loaned plus accrued interest. Gain or loss in the market price of the
securities loaned that may occur during the term of the loan are reflected in
the value of the Portfolio.
ORGANIZATIONAL COSTS--The costs incurred by Stable Income Portfolio, Managed
Fixed Income Portfolio, Positive Return Bond Portfolio, Index Portfolio, Income
Equity Portfolio, Large Company Growth Portfolio, Small Company Stock Portfolio,
Small Company Value Portfolio, Small Company Growth Portfolio and International
Portfolio in connection with their organization have been capitalized and are
being amortized using the straight line method over a five year period beginning
on the commencement of each Portfolio's operations.
EXPENSE ALLOCATION--Core Trust accounts separately for the assets and
liabilities and operations of each Portfolio. Expenses that are directly
attributable to more than one Portfolio are allocated among the respective
Portfolios in proportion to each Portfolio's net assets.
NOTE 3. ADVISORY, SERVICING FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER--The investment adviser of each Portfolio, except
International Portfolio, is Norwest Investment Management, Inc. ("Adviser"), an
indirect subsidiary of Norwest Corporation. The investment adviser of
International Portfolio is Schroder Capital Management International Inc.
("Schroder"). Schroder is a wholly owned U.S. subsidiary of Schroders
Incorporated, the wholly owned U.S. holding company subsidiary of Schroders PLC.
The Adviser has retained the services of certain of its affiliates as investment
subadvisers (Galliard Capital Management, Inc., Crestone Capital Management,
Inc., Peregrine Capital Management, Inc., and Smith Asset Management, Inc.) on
selected Portfolios. The fees related to subadvisory services are borne directly
by the Adviser and do not increase the overall fees paid by the Portfolios to
the Adviser. The investment advisory fee and the associated subadviser are as
follows:
<TABLE>
<CAPTION>
INVESTMENT
ADVISORY FEE SUBADVISER
-------------- ------------------------------
<S> <C> <C>
Galliard Capital Management,
Stable Income Portfolio................. 0.30% Inc.
Galliard Capital Management,
Managed Fixed Income Portfolio.......... 0.35% Inc.
Peregrine Capital Management,
Positive Return Bond Portfolio.......... 0.35% Inc.
Galliard Capital Management,
Strategic Value Bond Portfolio.......... 0.50% Inc.
Index Portfolio......................... 0.15% -
Income Equity Portfolio................. 0.50% -
Disciplined Growth Portfolio............ 0.90% Smith Asset Management, Inc.
Peregrine Capital Management,
Large Company Growth Portfolio.......... 0.65% Inc.
Small Cap Index Portfolio............... 0.25% -
Crestone Capital Management,
Small Company Stock Portfolio........... 0.90% Inc.
Small Cap Value Portfolio............... 0.95% Smith Asset Management, Inc.
Peregrine Capital Management,
Small Company Value Portfolio........... 0.90% Inc.
Peregrine Capital Management,
Small Company Growth Portfolio.......... 0.90% Inc.
International Portfolio................. 0.45% -
</TABLE>
ADMINISTRATIVE AND OTHER SERVICES--Forum Administrative Services, LLC ("FAdS")
is the administrator to Core Trust and receives a fee with respect to each
Portfolio (other than the International Portfolio) at an annual rate of 0.05% of
the Portfolio's average daily net assets. With respect to International
Portfolio, FAdS receives a fee at an annual rate of 0.15% of the Portfolio's
average daily net assets. In addition, for the year ended May 31, 1998, certain
legal expenses were charged to the Portfolios by FAdS aggregating $7,889.
CORE TRUST (DELAWARE)
114
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
NOTE 3. ADVISORY, SERVICING FEES AND OTHER TRANSACTIONS WITH
AFFILIATES (CONTINUED)
Norwest Bank Minnesota, N.A. ("Norwest") serves as the custodian for each
Portfolio and may appoint certain subcustodians to custody those portfolios'
foreign securities and other assets held in foreign countries. Norwest receives
a fee with respect to each Portfolio (other than International Portfolio) at an
annual rate of 0.02% of the first $100 million of the Portfolio's average daily
net assets, 0.015% of the next $100 million of the Portfolio's average daily net
assets and 0.01% of the remaining Portfolio's average daily net assets. With
respect to International Portfolio Norwest receives a fee at an annual rate of
0.07% of the Portfolio's average daily net assets. Norwest also receives
transaction fees for providing services in connection with the securities
lending program.
OTHER SERVICE PROVIDER--Forum Accounting Services, LLC, an affiliate of FAdS,
provides portfolio accounting and interestholder recordkeeping services to each
Portfolio.
NOTE 4. WAIVERS
For the year ended May 31, 1998, fees waived by the Portfolios' service
providers were as follows:
<TABLE>
<CAPTION>
FEES WAIVED
BY FADS
--------------
<S> <C>
Stable Income Portfolio................. $ 127,246
Managed Fixed Income Portfolio.......... 153,576
Positive Return Bond Portfolio.......... 117,575
Strategic Value Bond Portfolio.......... 56,068
Index Portfolio......................... 648,264
Income Equity Portfolio................. 856,592
Disciplined Growth Portfolio............ 34,231
Large Company Growth Portfolio.......... 572,067
Small Cap Index Portfolio............... 3,594
Small Company Stock Portfolio........... 193,557
Small Cap Value Portfolio............... 27,553
Small Company Value Portfolio........... 96,092
Small Company Growth Portfolio.......... 479,752
International Portfolio................. -
</TABLE>
Schroder waived investment advisory fees of $117,141 for International
Portfolio.
NOTE 5. FEDERAL INCOME TAXES
The Portfolios are not required to pay federal income taxes on their net
investment income and net capital gain as they are treated as partnerships for
federal income tax purposes. All interest, dividends, gain and loss of the
Portfolios are deemed to have been "passed through" to the interestholders in
proportion to their holdings of the Portfolios regardless of whether such
interest, dividends or gain have been distributed by the Portfolios.
The Portfolios use the "aggregate method" (as described in the applicable
regulation under the Internal Revenue Code) for allocation of capital gains and
losses to interestholders. On September 29, 1997, Stable Income Portfolio,
Managed Fixed Income Portfolio, Positive Return Bond Portfolio, Index Portfolio,
Income Equity Portfolio, Large Company Growth Portfolio, Small Company Stock
Portfolio, Small Company Value Portfolio, Small Company Growth Portfolio and
International Portfolio, applied to the Internal Revenue Service for permission
to use the aggregate method for the allocation of capital gains and losses from
the sale of securities contributed by their respective interestholders on June
1, 1997. On January 23, 1998, Income Equity Portfolio, Small Company Stock
Portfolio, and Small Company Growth Portfolio applied to the Internal Revenue
Service for permission to use the aggregate method for securities contributed by
the respective interestholders on September 15, 1997. The requests are pending.
Without permission to use the aggregate method an adjustment of the allocation
to interestholders of capital gains and losses, if any, from the sale of such
contributed securities may result.
CORE TRUST (DELAWARE)
115
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
NOTE 6. SECURITIES TRANSACTIONS
The cost of purchases and the proceeds from sales (including maturities) of
securities (excluding short-term investments) for the year ended May 31, 1998,
were as follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
------------- -------------
<S> <C> <C>
Stable Income Portfolio........................... $ 202,155,631 $ 96,703,273
Managed Fixed Income Portfolio.................... 411,403,297 253,592,415
Positive Return Bond Portfolio.................... 125,225,799 130,641,342
Strategic Value Bond Portfolio.................... 490,325,953 252,097,983
Index Portfolio................................... 235,511,483 70,927,993
Income Equity Portfolio........................... 245,713,956 54,216,439
Disciplined Growth Portfolio...................... 196,312,110 75,672,417
Large Company Growth Portfolio.................... 128,062,599 245,902,971
Small Cap Index Portfolio......................... 123,631,405 2,652,319
Small Company Stock Portfolio..................... 520,863,741 710,864,848
Small Cap Value Portfolio......................... 165,688,041 71,025,157
Small Company Value Portfolio..................... 167,377,489 234,211,616
Small Company Growth Portfolio.................... 1,043,674,183 1,032,347,981
International Portfolio........................... 293,622,245 253,418,671
</TABLE>
For federal income tax purposes, the tax basis of investment securities owned as
of May 31, 1998, and the aggregate gross unrealized appreciation and the
aggregate unrealized depreciation based on identified tax cost as of May 31,
1998 were as follows:
<TABLE>
<CAPTION>
TAX UNREALIZED UNREALIZED APPRECIATION
COST BASIS APPRECIATION DEPRECIATION (DEPRECIATION)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Stable Income Portfolio................. $ 254,715,158 $ 824,915 $ 485,478 $ 339,437
Managed Fixed Income Portfolio.......... 325,904,678 6,061,393 803,268 5,258,125
Positive Return Bond Portfolio.......... 211,370,154 11,309,354 221,346 11,088,008
Strategic Value Bond Portfolio.......... 233,136,332 2,070,355 359,886 1,710,469
Index Portfolio......................... 860,960,624 543,020,760 20,120,865 522,899,895
Income Equity Portfolio................. 1,181,109,593 807,396,409 8,962,449 798,433,960
Disciplined Growth Portfolio............ 119,608,219 14,415,957 3,243,794 11,172,163
Large Company Growth Portfolio.......... 555,981,911 535,736,259 9,379,471 526,356,788
Small Cap Index Portfolio............... 128,961,254 2,874,666 9,257,020 (6,382,354)
Small Company Stock Portfolio........... 210,552,408 29,673,505 14,567,390 15,106,115
Small Cap Value Portfolio............... 97,979,208 9,917,633 4,544,266 5,373,367
Small Company Value Portfolio........... 132,761,510 20,118,968 5,358,630 14,760,338
Small Company Growth Portfolio.......... 755,850,316 171,672,271 31,046,761 140,625,510
International Portfolio................. 753,907,608 271,142,246 68,226,717 202,915,529
</TABLE>
NOTE 7. PORTFOLIO SECURITIES LOANED
As of May 31, 1998, certain Portfolios had loaned portfolio investments in
return for cash collateral which was invested in various short-term fixed income
securities. Norwest receives transaction fees for providing services in
connection with the securities lending program. The value of the securities on
loan and the value of the related collateral were as follows:
<TABLE>
<CAPTION>
SECURITIES COLLATERAL
------------- -------------
<S> <C> <C>
Stable Income Portfolio................. $ 47,461,675 $ 49,810,558
Managed Fixed Income Portfolio.......... 19,606,649 20,574,571
Positive Return Bond Portfolio.......... 60,097,016 63,062,607
Strategic Value Bond Portfolio.......... 26,612,101 27,843,961
Index Portfolio......................... 349,029,995 366,750,637
Income Equity Portfolio................. 310,321,380 325,802,261
Disciplined Growth Portfolio............ 35,553,274 37,358,714
Large Company Growth Portfolio.......... 256,884,617 268,977,623
Small Cap Index Portfolio............... 13,458,322 13,829,403
Small Company Stock Portfolio........... 35,750,846 37,526,093
Small Cap Value Portfolio............... 13,222,030 13,878,587
Small Company Value Portfolio........... 16,725,751 17,596,912
International Portfolio................. 173,070,923 178,898,445
</TABLE>
CORE TRUST (DELAWARE)
116
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONCLUDED) MAY 31, 1998
- - ------------------------------------------------------------------------------
NOTE 8. CONCENTRATION OF CREDIT RISK
International Portfolio invests in countries which may involve greater risks.
The consequences of political, social, or economic events in these markets my
have disruptive effects on the market prices of the Portfolio's investments.
NOTE 9. CONTRIBUTION OF SECURITIES
After the close of business on May 31, 1997, International Portfolio (prior to
June 1, 1997 named International Portfolio II) merged with a former portfolio of
Core Trust. In that transaction International Portfolio acquired the assets and
assumed the liabilities of the former portfolio in exchange for an interest in
International Portfolio equal in value to the net asset value of the former
portfolio. The former portfolio had the same investment objective and investment
policies as International Portfolio. The merger, which was not subject to
interestholder approval, was accomplished without the recognition of gain or
loss. The former portfolio contributed net assets with a value of $232,334,610
and the net assets of International Portfolio immediately after the transaction
was $771,507,344.
Also after the close of business on May 31, 1997, Small Company Portfolio (a
former Portfolio of Core Trust) divided into three portfolios-Small Company
Stock Portfolio, Small Company Growth Portfolio and Small Company Value
Portfolio. The assets of Small Company Portfolio (and the related liabilities)
were divided in accordance with the investment style to which the assets had
been allocated. The division, which was not subject to interestholder approval,
was accomplished without the recognition of gain or loss. Small Company
Portfolio's net assets were divided as follows: Small Company Stock Portfolio,
$178,533,353; Small Company Growth Portfolio, $167,525,486; and Small Company
Value Portfolio, $165,287,781.
In connection with the merger and division, and the contemporaneous commencement
of operations of certain portfolios on June 1, 1997, certain investors
contributed all or a portion of their net assets to the portfolios listed in the
following table.
<TABLE>
<CAPTION>
INVESTOR CONTRIBUTIONS
-----------------------------
NET UNREALIZED
PORTFOLIO ASSETS GAIN/(LOSS)
- - ---------------------------------------- ------------- -------------
<S> <C> <C>
Stable Income Portfolio................. $ 205,865,654 $ 5,601
Managed Fixed Income Portfolio.......... 186,226,721 229,550
Positive Return Bond Portfolio.......... 186,707,645 (2,426,230)
Index Portfolio......................... 512,437,536 115,520,269
Income Equity Portfolio................. 955,691,053 110,368,720
Large Company Growth Portfolio.......... 615,745,586 276,554,260
Small Company Stock Portfolio........... 355,894,495 50,282,300
Small Company Value Portfolio........... 165,287,781 13,216,619
Small Company Growth Portfolio.......... 756,220,600 150,549,039
International Portfolio................. 232,334,610 33,714,226
</TABLE>
Additionally, on September 15, 1997, certain investors contributed net assets to
the portfolios listed in the following table:
<TABLE>
<CAPTION>
INVESTOR CONTRIBUTIONS
-----------------------------
NET UNREALIZED
PORTFOLIO ASSETS GAIN/(LOSS)
- - ---------------------------------------- ------------- -------------
<S> <C> <C>
Income Equity Portfolio................. $ 477,132,067 $190,138,062
Small Company Stock Portfolio........... 45,144,489 6,745,993
Small Company Growth Portfolio.......... 140,475,014 40,180,322
</TABLE>
CORE TRUST (DELAWARE)
117
<PAGE>
SCHEDULES OF INVESTMENTS MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
STABLE INCOME PORTFOLIO
- - -----------------------------------------------------------------
ASSET BACKED SECURITIES (16.4%)
1,412,875 AFC Home Equity Loan Trust Series 1995-2
A1, 7.41% V/R, 7/25/26 $ 1,421,505
3,500,000 Aesop Funding II LLC,
Series 1997-1 A1, 6.22% V/R,
10/20/01(b) 3,529,628
61,006 Bear Stearns Secured Investors Trust,
Series 1991-2 H, 7.50% V/R, 9/20/20 60,918
4,000,000 DreamWorks Film Trust, 5.88% V/R,
10/15/05 4,000,056
1,500,000 EQCC Home Equity Loan Trust, Series
1995-3 A4, 7.10%, 2/15/12 1,543,103
2,928,803 GMAC, Commercial Mortgage Securities,
Inc., Series 1996-C1 A1, 6.16% V/R,
10/15/28 2,930,927
5,105,000 Green Tree Financial Corp., Series
1993-4 A3, 6.25%, 1/15/19 5,123,097
1,075,000 Green Tree Financial Corp., Series
1994-1 A3, 6.90%, 4/15/19 1,088,712
2,274,717 Green Tree Financial Corp., Series
1995-5 A3, 6.25%, 9/15/26 2,280,529
3,500,000 HCLT, Series 1997-1 A3, 6.01% V/R,
3/15/07 3,493,350
5,000,000 HCLT, Series 1997-2 A3, 6.06% V/R,
11/15/07 5,004,120
2,400,000 Keystone Home Improvement Loan Trust,
Series 1997-P2 IA3, 6.99%, 4/25/14 2,417,954
4,500,000 Loop Funding Master Trust, Series
1997-A144 B1, 6.06% V/R, 12/26/07 4,504,343
1,231,444 MLMI, Inc., Series 1987-C A, 10.10%,
12/15/07 1,267,851
3,105,521 Sequoia Mortgage Trust, Series 2 A1,
6.49% V/R, 10/25/24 3,144,271
---------------
TOTAL ASSET BACKED SECURITIES (COST $41,696,869) 41,810,364
---------------
COLLATERALIZED MORTGAGE OBLIGATIONS (23.0%)
2,112,955 Commercial Loan Funding Trust, Series I
A, 5.89% V/R, 8/15/05(b) 2,104,683
1,998,843 DLJ Mortgage Acceptance Corp., Series
1998-STF1 A1, 5.91% V/R, 2/8/00 1,999,109
2,958,697 FAMC, Series CS-1012 1, 7.06% V/R,
7/25/02 3,037,730
198,447 FNMA, Series 1993-39 FA, 7.09% V/R,
4/25/23 203,352
5,352,614 MLCC Mortgage Investors, Inc., Series
1994 A A2, 6.09% V/R, 7/15/19 5,341,882
3,000,000 MLCC Mortgage Investors, Inc., Series
1994 A A3, 6.49% V/R, 7/15/19 3,031,546
2,511,430 MLCC Mortgage Investors, Inc., Series
1994-B A2, 6.29% V/R, 12/15/19 2,513,050
2,945,341 MLMI, Inc., Series 1983-I A2, 6.09% V/R,
11/15/23 2,947,447
775,047 MLMI, Inc., Series 1994-I A1, 8.03% V/R,
1/25/05 790,104
1,647,427 MNB Mortgage Pass-thru Certificates,
Series 1990-1 A, 9.50%, 6/25/19 1,647,607
3,000,000 PRAT, Series 1997-1 B, 6.55%, 9/6/03 3,043,440
682,353 RFMSI ARM, Series 1989-5A, 7.58% V/R,
10/25/19 686,109
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
STABLE INCOME PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COLLATERALIZED MORTGAGE OBLIGATIONS (continued)
<TABLE>
<C> <S> <C>
266,499 RRMSI ARM, Series 1991 21 BA, 7.57% V/R,
8/25/21 $ 272,124
361,280 RTC, Series 1991-6 E, 11.59% V/R,
5/25/24 373,050
966,810 RTC, Series 1991-14 A1, 7.50% V/R,
1/25/22 967,076
123,258 RTC, Series 1991 M6 A3, 8.46% V/R,
6/25/21 123,066
671,823 RTC, Series 1992-4 A2, 7.60% V/R,
7/25/28 676,892
3,177,084 RTC, Series 1992-7 A2D, 8.35%, 6/25/29 3,175,527
3,000,761 RTC, Series 1992-8 B5, 6.63% V/R,
2/25/22 3,003,867
1,147,359 RTC, Series 1992-9 B4, 7.46% V/R,
4/25/27 1,143,796
2,005,411 RTC, Series 1992-18P A4, 6.64% V/R,
4/25/28(b) 2,005,683
5,510,163 RTC, Series 1992-C2 A2, 6.69% V/R,
10/25/21 5,539,230
2,614,682 RTC, Series 1992-C3 A3, 6.84% V/R,
8/25/23 2,615,323
2,202,862 RTC, Series 1994-C1 A3, 6.24% V/R,
6/25/26 2,201,001
1,393,061 RTC, Series 1995-1 A3, 7.30% V/R,
10/25/28 1,409,226
1,051,145 RTC, Series 1995-2 A1B, 7.15%, 5/25/29 1,054,903
1,273,009 RTC, Series 1995 C2 A2, 6.14% V/R,
5/25/27 1,274,918
5,375,000 Vendee Mortgage Trust, Series 1993-1 E,
7.00%, 1/15/16 5,465,746
---------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST
$58,838,049) 58,647,487
---------------
CORPORATE BONDS & NOTES (8.5%)
4,037,000 Chase Manhattan Corp., 10.13%, 11/1/00 4,402,793
2,150,000 Chrysler Financial Corp., 6.26%, 7/20/98 2,151,801
2,500,000 Corestates Capital Corp., 9.63%, 2/15/01 2,722,405
2,043,000 Lehman Brothers Holdings, Inc., 8.88%,
11/1/98 2,066,419
3,475,000 Newell Co., 6.18%, 7/11/00 3,496,621
2,300,000 Philip Morris Cos., Inc., 6.15%, 3/15/00 2,304,370
1,500,000 Transamerica Financial, 6.41%, 6/20/00 1,507,730
1,000,000 Transamerica Financial, 6.36%, 6/26/00 1,004,221
2,000,000 USAA Capital Corp., 5.97%, 8/4/99(b) 2,005,352
---------------
TOTAL CORPORATE BONDS & NOTES (COST $21,478,305) 21,661,712
---------------
GOVERNMENT AGENCY BONDS & NOTES (1.4%)
400,000 FHLB, 3.00% V/R, 7/15/98 398,786
2,000,000 FHLB, 7.11%, 7/8/99(d) 2,029,424
1,000,000 FNMA, 8.70%, 6/10/99 1,029,343
---------------
TOTAL GOVERNMENT AGENCY BONDS & NOTES (COST $3,454,228)
3,457,553
---------------
MORTGAGE BACKED SECURITIES (13.6%)
FHLMC (0.8%)
411,061 Pool 410220, 7.59% V/R, 10/1/25 417,741
1,070,607 Pool 845151, 7.75% V/R, 6/1/22 1,116,685
470,228 Pool 846367, 7.74% V/R, 4/1/29 490,866
---------------
TOTAL FHLMC (COST $1,992,063) 2,025,292
---------------
FNMA (6.0%)
271,119 Pool 46698, 7.01% V/R, 12/1/15 284,076
1,466,284 Pool 155506, 7.20% V/R, 4/1/22 1,523,249
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
118
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
STABLE INCOME PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
MORTGAGE BACKED SECURITIES (continued)
FNMA (continued)
<TABLE>
<C> <S> <C>
6,617,537 Pool 160334, 6.93% V/R, 3/1/01 $ 6,740,762
2,706,691 Pool 190815, 5.87% V/R, 7/1/17 2,735,111
791,718 Pool 220706, 8.02% V/R, 6/1/23 825,097
1,319,113 Pool 318464, 7.47% V/R, 4/1/25 1,370,663
1,259,541 Pool 321051, 7.93% V/R, 8/1/25 1,314,419
492,472 Pool 331866, 7.55% V/R, 12/1/25 513,046
---------------
TOTAL FNMA (COST $15,153,350) 15,306,423
---------------
SBA (6.8%)
109,863 Pool 500025, 8.38% V/R, 12/25/10 115,906
64,950 Pool 500276, 10.38% V/R, 5/25/07 70,228
127,952 Pool 500299, 10.38% V/R, 6/25/07 135,629
718,568 Pool 500392, 8.38% V/R, 11/25/12 767,071
99,302 Pool 500569, 10.38% V/R, 6/25/08 107,618
563,747 Pool 500664, 8.38% V/R, 3/25/04 587,625
624,603 Pool 500806, 7.00% V/R, 2/25/14 640,999
571,998 Pool 500957, 8.75% V/R, 7/25/14 628,483
185,028 Pool 501017, 6.88% V/R, 9/25/14 191,042
567,897 Pool 501224, 7.25% V/R, 6/25/15 601,261
71,646 Pool 501973, 10.13% V/R, 12/25/01 74,153
266,036 Pool 502083, 8.38% V/R, 11/25/04 274,682
201,335 Pool 502241, 8.38% V/R, 4/25/03 204,355
425,528 Pool 502394, 10.13% V/R, 6/25/13 475,528
1,057,581 Pool 502462, 9.73% V/R, 11/25/07 1,134,256
753,296 Pool 502501, 9.73% V/R, 4/25/03 787,195
296,910 Pool 502568, 9.73% V/R, 9/25/03 310,642
293,527 Pool 502583, 9.73% V/R, 9/25/03 307,103
161,374 Pool 502966, 9.73% V/R, 5/25/15 183,810
337,083 Pool 503249, 8.38% V/R, 4/25/07 350,144
293,372 Pool 503250, 9.73% V/R, 3/25/09 321,610
457,954 Pool 503398, 8.88% V/R, 6/25/13 498,026
789,800 Pool 503405, 8.88% V/R, 5/25/16 876,676
2,176,555 Pool 503611, 8.38% V/R, 12/25/21 2,408,816
213,474 Pool 503653, 9.13% V/R, 1/25/10 233,572
1,392,202 Pool 503658, 9.63% V/R, 9/25/10 1,550,716
1,183,123 Pool 503664, 8.98% V/R, 1/25/13 1,300,714
1,909,455 Pool 503694, 8.38% V/R, 3/25/22 2,109,724
---------------
TOTAL SBA (COST $17,309,042) 17,247,584
---------------
TOTAL MORTGAGE BACKED SECURITIES (COST $34,454,455) 34,579,299
---------------
MUNICIPAL BONDS & NOTES (4.9%)
3,300,000 Connecticut State, GO Bonds, Taxable
Series A, 5.70%, 1/15/01 3,275,966
3,145,000 Denver, CO, City and County SD #1,
Educational Facilities RV, Taxable
Pension, School Facilities Lease,
AMBAC insured, 6.34%, 12/15/00 3,185,130
4,000,000 New York State, GO Bonds, Series C,
6.13%, 3/1/02 4,007,500
1,870,000 Washington State, GO Bonds, State
Housing Trust Fund, Series T, 6.60%,
1/1/01 1,905,840
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
STABLE INCOME PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
MUNICIPAL BONDS & NOTES (continued)
<TABLE>
<C> <S> <C>
170,000 York County, PA, Tax-Exempt Economic
Development RV, 5.45%, 12/30/98 $ 169,739
---------------
TOTAL MUNICIPAL BONDS & NOTES (COST $12,473,063) 12,544,175
---------------
RECEIVABLES BACKED SECURITIES (1.9%)
700,453 First Merchants Auto Receivables Corp.,
Series 1996-A A2, 6.70%, 7/17/00(b) 704,645
1,228,133 First Merchants Grantor Trust,
Series 1996-2 A, 6.85%, 11/15/01(b) 1,243,490
3,000,000 Standard Credit Card Master Trust,
Series 1991-3 B, 9.25%, 9/7/99 3,045,825
---------------
TOTAL RECEIVABLES BACKED SECURITIES (COST $5,002,520) 4,993,960
---------------
REPURCHASE AGREEMENTS (2.7%)
7,000,000 BancAmerica Robertson Stephens, 5.58%,
6/1/98, to be repurchased at
$7,003,255 (cost $7,000,000)(e) 7,000,000
---------------
TIME DEPOSITS (5.0%)
12,764,705 PNC Bank, NA Nassau, 5.66%, 6/1/98 (cost
$12,764,705) 12,764,705
---------------
U.S. TREASURY NOTES (22.6%)
55,000,000 8.50%, 2/15/00(d) (cost $57,552,964) 57,595,340
---------------
TOTAL INVESTMENTS (100.0%) (COST $254,715,158) $ 255,054,595
---------------
---------------
- - -----------------------------------------------------------------
MANAGED FIXED INCOME PORTFOLIO
- - -----------------------------------------------------------------
ASSET BACKED SECURITIES (13.6%)
1,800,000 ContiMortgage Home Equity Loan Trust,
Series 1997-4 A7, 6.63% V/R, 9/15/16 $ 1,819,115
2,441,000 EQCC Home Equity Loan Trust, Series
1996-2 A4, 7.50%, 6/15/21 2,555,595
4,900,000 EQCC Home Equity Loan Trust, Series
1997-2 A9, 6.81%, 7/15/28 5,029,703
1,000,000 GE Capital Mortgage Services, Inc.,
Series 1997 HE-2 A7, 7.12%, 6/25/27 1,010,670
3,800,000 Green Tree Financial Corp., Series
1994-1 A4, 7.20%, 4/15/19 3,930,170
600,000 Green Tree Financial Corp., Series
1995-5 A5, 6.55%, 9/15/26 618,721
9,863,701 Green Tree Financial Corp., Series
1997-7 A8, 6.86%, 9/15/16 10,070,147
1,100,000 Green Tree Home Improvement Loan Trust,
Series 1995-F A4, 6.15%, 1/15/21 1,100,198
3,000,000 Keystone Home Improvement Loan Trust,
Series 1997-P2 IA3, 6.99%, 4/25/14 3,031,407
3,300,000 Loop Funding Master Trust, Series
1997-A144 B1, 6.00% V/R, 12/26/07 3,301,033
6,693,000 Oakwood Mortgage Investors Inc., Series
1995-A A3, 7.10%, 9/15/20 6,937,689
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
119
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
MANAGED FIXED INCOME PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
ASSET BACKED SECURITIES (continued)
<TABLE>
<C> <S> <C>
5,518,000 Rental Car Finance Corp.,
Series 1997-1 B3, 6.70%, 9/25/07 $ 5,589,563
---------------
TOTAL ASSET BACKED SECURITIES (COST $44,159,787) 44,994,011
---------------
COLLATERALIZED MORTGAGE OBLIGATIONS (15.1%)
1,443,517 American Housing Trust,
Series VI I-I, 9.15%, 5/25/20 1,549,571
1,500,000 Asset Securitization Corp.,
Series 1997-D4 A1C, 7.42%, 4/14/29 1,607,692
2,371,801 CMC Securities Corp. II,
Series 1993-2I A2, 6.90% V/R, 9/25/23 2,406,374
2,712,139 FAMC, Series CS-1012 1, 7.06%, 7/25/02 2,787,572
750,000 FHLMC, Series 1832 D, 6.50%, 6/15/08 761,037
410,952 FNMA, Series 1988-5 Z, 9.20%, 3/25/18 432,617
1,499,556 First Plus Home Loan Trust, Series
1996-2 A6, 7.85%, 8/20/13 1,566,564
1,635,296 L.F. Rothschild Mortgage Trust, Series 2
Z, 9.95%, 8/1/17 1,788,906
951,194 MLMI, Inc., Series 1994-I, 8.04% V/R,
1/25/05 969,707
5,000,000 MLMI, Inc., Series 1997-CI A3, 7.12%,
6/18/29 5,290,475
2,150,000 RFMSI, 7.00%, 5/25/24 2,167,018
621,521 RTC, Series 1991-14 A1, 7.50% V/R,
1/25/22 621,691
1,083,788 RTC, Series 1991-M5 A, 9.00%, 3/25/17 1,090,063
1,881,103 RTC, Series 1992-4 A2, 7.60% V/R,
7/25/28 1,895,296
2,401,609 RTC, Series 1992-8 B5, 6.63% V/R,
2/25/22 2,404,095
2,000,000 RTC, Series 1995-1 A2C, 7.50%, 10/25/28 2,038,126
1,000,000 RTC, Series 1995-1 A2D, 7.50%, 10/25/28 1,016,691
1,000,000 RTC, Series 1995-2 A1C, 7.45%, 5/25/29 1,000,000
76,510 RTC, Series 1995-C2 A1C, 6.55% V/R,
5/25/27 76,391
965,715 Vendee Mortgage Trust,
Series 1992-2 2D, 7.75%, 12/15/14 978,655
3,788,278 Vendee Mortgage Trust,
Series 1992-2 G, 7.25% V/R, 2/15/19 3,909,092
3,250,000 Vendee Mortgage Trust,
Series 1995-1C 3E, 8.00%, 7/15/18 3,413,394
5,500,000 Vendee Mortgage Trust,
Series 1996-2 1E, 6.75%, 5/15/20 5,572,980
3,000,000 Vendee Mortgage Trust,
Series 1997-1 2C, 7.50%, 9/15/17 3,088,545
1,500,000 Vendee Mortgage Trust,
Series 1997-1 2D, 7.50%, 1/15/19 1,549,012
---------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST
$49,542,811) 49,981,564
---------------
CORPORATE BONDS & NOTES (44.7%)
2,250,000 Allied-Signal, Inc., 9.88%, 6/1/02 2,559,207
755,000 Allied-Signal, Inc., 9.20%, 2/15/03 852,955
600,000 Applied Materials, 6.70%, 9/6/05 617,895
5,400,000 Applied Materials, 7.00%, 9/6/05 5,654,880
1,700,000 Bausch & Lomb, Inc., 6.56%, 8/12/26 1,734,791
3,600,000 Cargill, Inc., 8.35%, 2/12/11(b) 3,960,000
700,000 Charles Schwab Corp., 7.19%, 5/31/01 720,869
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
MANAGED FIXED INCOME PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
CORPORATE BONDS & NOTES (continued)
<TABLE>
<C> <S> <C>
2,000,000 Charles Schwab Corp., 6.25%, 1/23/03 $ 2,005,097
2,000,000 Charles Schwab Corp., 6.88%, 9/2/03 2,055,910
3,400,000 Chase Manhattan Corp., 8.63%, 5/1/02 3,694,331
3,400,000 Citicorp, 9.50%, 2/1/02 3,779,575
1,500,000 Colonial Pipeline, 7.13%, 8/15/02(b) 1,561,530
2,300,000 Continental Airlines, 7.15%, 6/30/07 2,373,726
2,500,000 Continental Airlines, 6.80%, 7/2/07 2,529,638
2,175,000 Corestates Capital Corp., 5.88%,
10/15/03(b) 2,142,312
750,000 Corestates Capital Corp., 6.31% V/R,
1/15/27(b) 736,537
3,000,000 Dayton Hudson Co., 5.90%, 6/15/37 3,005,166
1,000,000 El Paso Natural Gas, 7.75%, 1/15/02 1,049,158
200,000 First Bank N.A., 6.00%, 10/15/03 199,561
2,500,000 First Bank Systems, Inc., 8.00%, 7/2/04 2,727,005
1,300,000 First Bank Systems, Inc., 7.63%, 5/1/05 1,403,732
3,000,000 Florida Residential Property & Casualty,
7.25%, 7/1/02(b) 3,104,138
1,700,000 Hyundai Semiconductor, 8.25%, 5/15/04(b) 1,417,701
1,500,000 LG-Caltex Oil, 7.88%, 7/1/06(b) 1,283,053
2,500,000 Lehman Brothers, Inc., 7.50%, 8/1/26 2,731,243
5,065,000 Levi Strauss & Co., 6.80%, 11/1/03(b) 5,171,876
3,700,000 Massachusetts Institute of Technology,
7.25%, 11/2/96 4,273,452
2,000,000 May Department Stores, 9.88%, 6/15/00 2,147,373
1,060,000 Nabisco, Inc., 6.00%, 2/15/11 1,060,148
5,635,000 Oracle Corp., 6.72%, 2/15/04 5,756,941
3,600,000 Paine Webber Group, Inc., 7.00%, 3/1/00 3,651,196
1,250,000 Paine Webber Group, Inc., 6.90%, 8/15/03 1,284,115
5,000,000 Pep Boys, 6.71%, 11/3/04 5,060,705
1,305,000 Petroliam Nasional Berhad, 6.63%,
10/18/01(b) 1,230,332
2,750,000 Philip Morris Cos., Inc., 7.63%, 5/15/02 2,876,736
2,500,000 Philip Morris Cos., Inc., 7.50%, 4/1/04 2,625,695
2,709,000 Philips Electronics, 6.75%, 8/15/03 2,788,561
2,000,000 Potomac Capital Investment Corp., 7.32%,
4/14/00 2,038,200
2,450,000 Prudential Insurance Co., 7.65%,
7/1/07(b) 2,642,474
3,000,000 Raytheon Co., 5.95%, 3/15/01 3,001,122
5,200,000 Reinsurance Group of America, 7.25%,
4/1/06(b) 5,474,664
4,000,000 Reliastar Financial Corp., 7.13%, 3/1/03 4,149,548
2,500,000 Reynolds & Reynolds, 7.00%, 12/15/06 2,604,653
1,750,000 Royal Carribbean Cruises, 7.13%, 9/18/02 1,805,430
3,325,000 Scholastic Corp., 7.00%, 12/15/03 3,431,796
3,000,000 Susa Partnership LP, 8.20%, 6/1/17 3,317,856
2,200,000 Terra Nova Holdings, 7.20%, 8/15/07 2,309,747
3,000,000 Texas Utilities, 6.20%, 10/1/02(b) 3,017,019
3,000,000 Tommy Hilfiger, 6.50%, 6/1/03 3,002,184
2,100,000 Transamerica Financial, 6.41%, 6/20/00 2,110,822
750,000 Tyco International Ltd., 6.50%, 11/1/01 761,725
2,500,000 Tyco International Ltd., 6.38%, 1/15/04 2,534,060
1,050,000 USA Waste Services, Inc., 7.00%, 10/1/04 1,079,391
1,000,000 US West Capital Funding, Inc., 6.95%,
1/15/37 1,059,277
885,000 United Missouri Bancshares, 7.30%,
2/24/03 931,547
1,000,000 Universal Corp., 9.25%, 2/15/01 1,074,300
6,500,000 Van Kampen, CLO-I, 5.96% V/R, 10/8/07 6,512,643
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
120
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
MANAGED FIXED INCOME PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
CORPORATE BONDS & NOTES (continued)
<TABLE>
<C> <S> <C>
250,000 Vastar Resources, Inc., 6.95%, 11/8/06 $ 261,013
850,000 Whitman Corp., 7.50%, 2/1/03 893,044
1,970,000 Whitman Corp., 7.29%, 9/15/26 2,102,215
---------------
TOTAL CORPORATE BONDS & NOTES (COST $145,095,094) 147,941,870
---------------
MORTGAGE BACKED SECURITIES (14.6%)
FHLMC (1.1%)
542,082 Pool 410425, 7.87% V/R, 9/1/26 563,917
295,595 Pool 410464, 7.65% V/R, 11/1/26 307,197
1,304,425 Pool 606279, 7.22% V/R, 2/1/15 1,367,741
1,410,684 Pool 846367, 7.76% V/R, 4/1/29 1,472,598
---------------
TOTAL FHLMC (COST $3,625,143) 3,711,453
---------------
FNMA (12.3%)
3,458,543 Pool 73919, 6.80%, 1/1/04 3,554,811
253,768 Pool 342042, 7.50%, 6/1/25 263,720
791,188 Pool 344689, 7.65%, 11/1/25 824,655
564,157 Pool 344692, 7.54% V/R, 10/1/25 587,700
390,906 Pool 347712, 7.69% V/R, 6/1/26 406,062
4,960,766 Pool 375168, 7.13%, 6/1/04 5,183,916
6,330,292 Pool 402858, 6.50%, 12/1/27 6,302,945
5,465,410 Pool 408118, 6.50%, 1/1/28 5,441,799
4,784,342 Pool 415414, 6.50%, 2/1/28 4,761,712
8,802,334 Pool 415714, 6.00%, 4/1/28 8,540,993
4,909,965 Pool 417648, 6.00%, 2/1/13 4,857,134
---------------
TOTAL FNMA (COST $40,551,190) 40,725,447
---------------
GNMA (1.2%)
78 Pool 665, 7.50%, 5/15/01 80
1,046 Pool 2218, 6.50%, 12/15/02 1,055
4,000,000 Pool 473917, 7.00%, 4/15/28 4,067,680
---------------
TOTAL GNMA (COST $4,066,672) 4,068,815
---------------
TOTAL MORTGAGE BACKED SECURITIES (COST $48,243,005) 48,505,715
---------------
MUNICIPAL BONDS & NOTES (4.0%)
3,500,000 Denver, CO, City and County SD #1,
Educational Facilities RV, Taxable
Pension, School Facilities Lease,
AMBAC insured, 6.67%, 12/15/04 3,617,460
3,805,000 Hudson County, NJ, Import Authority
Facilities, Leasing RV, FSA insured,
7.40%, 12/1/25 4,127,436
5,220,000 Washington State, GO Bonds, State
Housing Trust Fund, Series T, 6.60%,
1/1/04 5,336,761
---------------
TOTAL MUNICIPAL BONDS & NOTES (COST $12,694,063) 13,081,657
---------------
RECEIVABLES BACKED SECURITIES (1.3%)
2,031,312 First Merchants Auto Receivables Corp.,
Series 1996-A A2, 6.70%, 7/17/00 2,043,471
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
MANAGED FIXED INCOME PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
RECEIVABLES BACKED SECURITIES (continued)
<TABLE>
<C> <S> <C>
2,300,000 Keystone/Lehman Title I Loan Trust
1996-2, 7.45%, 11/25/10 $ 2,395,349
---------------
TOTAL RECEIVABLES BACKED SECURITIES (COST $4,328,440) 4,438,820
---------------
U.S. TREASURY OBLIGATIONS (5.9%)
17,550,000 U.S. Treasury Bonds, 6.75%, 8/15/26(d)
(cost $19,228,336) 19,606,649
---------------
TIME DEPOSITS (0.8%)
2,612,517 PNC Bank, N.A. Nassau, 5.57%, due 6/1/98
(cost $2,612,517) 2,612,517
---------------
TOTAL INVESTMENTS (100.0%) (COST $325,904,053) $ 331,162,803
---------------
---------------
- - -----------------------------------------------------------------
POSITIVE RETURN BOND PORTFOLIO
- - -----------------------------------------------------------------
ASSET BACKED SECURITIES (1.8%)
4,000,000 Citibank Credit Card Master Trust I,
Series 1998-7 A, 5.66%, 5/15/02 (cost
$4,000,000) $ 3,998,124
---------------
U.S. TREASURY BONDS (66.6%)
65,275,000 6.00%, 2/15/26(d) 66,254,190
56,575,000 6.50%, 11/15/26(d) 61,348,572
12,875,000 6.63%, 2/15/27(d) 14,202,747
6,000,000 6.38%, 8/15/27(d) 6,435,006
---------------
TOTAL U.S. TREASURY BONDS (COST $136,892,897) 148,240,515
---------------
REPURCHASE AGREEMENTS (27.0%)
60,000,000 BancAmerica Robertson Stephens, 5.58%,
6/1/98, to be repurchased at
$60,027,900 (cost $60,000,000)(e) 60,000,000
---------------
TIME DEPOSITS (4.6%)
10,219,523 PNC Bank, N.A., Nassau, 5.66%, 6/1/98
(cost $10,219,523) 10,219,523
---------------
TOTAL INVESTMENTS (100.0%) (COST $211,112,420) $ 222,458,162
---------------
---------------
- - -----------------------------------------------------------------
STRATEGIC VALUE BOND PORTFOLIO
- - -----------------------------------------------------------------
ASSET BACKED SECURITIES (7.1%)
3,000,000 Aesop Funding II LLC,
Series 1998-1 A, 6.14%, 5/20/06(b) $ 2,991,564
2,000,000 Dollar Thrifty Rent A Car, 6.70%,
9/25/07 2,025,938
3,237,000 EQCC Home Equity Loan Trust, Series
1998-1 A6F, 6.25%, 12/15/07 3,217,594
2,959,110 Green Tree Financial Corp., Series
1997-7 A8, 6.86%, 9/15/16 3,021,045
2,000,000 Loop Funding Master Trust, 6.00%,
12/26/07(b) 2,000,626
2,000,000 Oakwood Mortgage Investors, Inc., Series
1995-A A3, 7.10% V/R, 9/15/20 2,073,118
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
121
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
STRATEGIC VALUE BOND PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
ASSET BACKED SECURITIES (continued)
<TABLE>
<C> <S> <C>
1,330,937 Sequoia Mortgage Trust, Series 2 A1,
6.49% V/R, 10/25/24 $ 1,349,166
---------------
TOTAL ASSET BACKED SECURITIES (COST $16,562,317) 16,679,051
---------------
COLLATERALIZED MORTGAGE OBLIGATIONS (9.4%)
1,500,000 Bear Stearns Structured Securities,
Inc., Series 1997-2 1A2, 7.00%,
8/25/36 1,509,609
1,972,465 FAMC Series CS-1012 1, 7.06% V/R,
7/25/02 2,027,325
2,500,000 FHLMC Structured Pass Through
Securities, Series T-8 A4, 7.00%,
8/15/13 2,553,850
4,000,000 MLMI, Inc., Series 1997-CI A3, 7.12%,
6/18/29 4,232,380
2,000,507 RTC, Series 1992-8 B5, 6.63% V/R,
2/25/22 2,002,578
1,515,311 Vendee Mortgage Trust,
Series 1992-2 G, 7.25% V/R, 2/15/19 1,563,637
4,500,000 Vendee Mortgage Trust,
Series 1994-1 2E, 6.50%, 1/15/17 4,541,513
3,500,000 Vendee Mortgage Trust,
Series 1996-2 1E, 6.75%, 5/15/20 3,546,442
---------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST
$21,863,030) 21,977,334
---------------
CORPORATE BONDS & NOTES (41.2%)
750,000 AK Steel Corp., 9.13%, 12/15/06 794,063
1,250,000 American Standard Cos., Inc., 7.13%,
2/15/03 1,241,132
2,500,000 Applied Materials, 7.00%, 9/6/05 2,618,000
1,000,000 Atlas Air, Inc., 9.25%, 4/15/08(b) 1,003,750
1,000,000 Barrett Resources Corp., 7.55%, 2/1/07 1,044,134
2,000,000 Bausch & Lomb, Inc., 6.75%, 12/15/04 2,037,502
2,000,000 Bear Stearns Cos., Inc., 6.13%, 2/1/03 1,998,024
500,000 Chancellor Media Group, 9.38%, 10/1/04 525,000
3,000,000 Charles Schwab Corp., 6.88%, 9/2/03 3,083,865
3,000,000 Continental Airlines, 6.80%, 7/2/07 3,035,565
2,500,000 Corestates Capital Corp., 9.63%, 2/15/01 2,722,405
2,500,000 Dayton Hudson Co., 5.90%, 6/15/37 2,504,305
3,000,000 Equitable Life Assurance Society, 6.95%,
12/1/05(b) 3,097,074
2,500,000 First Bank Systems, Inc., 8.00%, 7/2/04 2,727,005
2,000,000 Genfinance Luxembourg SA, 6.34% V/R,
5/29/49 1,990,000
1,000,000 Kroger Company, 8.15%, 7/13/06 1,110,974
2,000,000 Levi Strauss & Co., 6.80%, 11/1/03(b) 2,042,202
2,000,000 Lincoln National Corp., 7.00%, 3/15/18 2,037,858
500,000 Long Island Lighting Co., 7.13%, 6/1/05 528,206
1,000,000 Mallinckrodt, Inc., 6.30%, 3/15/01(b) 1,002,403
2,500,000 Massachusetts Institute of Technology,
7.25%, 11/2/96 2,887,468
2,000,000 MedPartners, Inc., 6.88%, 9/1/00 1,879,196
1,000,000 Nabisco, Inc., 6.00%, 2/15/11 1,000,140
1,000,000 Northwest Airlines Corp., 8.38%, 3/15/04 1,034,427
2,225,000 Old Kent Financial Corp., 6.63%,
11/15/05 2,265,128
2,500,000 Oracle Corp., 6.72%, 2/15/04 2,554,100
2,000,000 Pep Boys, 6.71%, 11/3/04 2,024,282
2,500,000 Philip Morris, 7.50%, 4/1/04 2,625,695
1,400,000 Potomac Capital Investment, 7.05%,
10/2/01(b) 1,435,070
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
STRATEGIC VALUE BOND PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
CORPORATE BONDS & NOTES (continued)
<TABLE>
<C> <S> <C>
1,750,000 Prudential Insurance Co., 7.65%,
7/1/07(b) $ 1,887,482
1,000,000 R&B Falcon Corp., 6.75%, 4/15/05(b) 1,003,719
500,000 Randall's Food Markets, 9.38%, 7/1/07 530,000
2,000,000 Raytheon Co., 5.95%, 3/15/01 2,000,748
500,000 Regal Cinemas, Inc., 9.50%, 6/1/08 503,125
2,500,000 Reinsurance Group of America, 7.25%,
4/1/06(b) 2,632,050
2,500,000 Reliastar Financial Corp., 7.13%, 3/1/03 2,593,468
3,000,000 Royal Carribbean Cruises, 7.13%, 9/18/02 3,095,022
500,000 Sinclair Broadcast Group, 8.75%,
12/15/07 508,750
2,500,000 Susa Partnership LP, 8.20%, 6/1/17 2,764,880
1,000,000 Teekay Shipping Corp., 8.32%, 2/1/08 1,042,500
1,000,000 Tenet Healthcare Corp., 7.88%, 1/15/03 1,021,250
2,500,000 Tenneco, Inc., 10.08%, 2/1/01 2,738,265
2,500,000 Terra Nova (U.K.) Holdings, 7.20%,
8/15/07 2,624,713
1,875,000 Texas Utilities, 6.20%, 10/1/02(b) 1,885,637
1,400,000 Tommy Hilfiger, 6.50%, 6/1/03 1,401,019
1,250,000 Tricon Global Restaurants, 7.65%,
5/15/08 1,262,034
1,000,000 Triton Energy Ltd. Corp., 8.75%, 4/15/02 1,048,424
2,500,000 United Telecommunications, Inc., 9.50%,
4/1/03 2,861,265
3,500,000 Van Kampen, CLO-I, 5.97% V/R, 10/8/07 3,506,808
1,000,000 Western Financial Savings, 8.50%, 7/1/03 982,875
2,000,000 Whitman Corp., 7.29%, 9/15/26 2,134,228
2,000,000 Williams Cos., Inc., 6.13%, 2/15/02 1,996,840
---------------
TOTAL CORPORATE BONDS & NOTES (COST $96,079,372) 96,874,075
---------------
GOVERNMENT AGENCY BONDS & NOTES (4.1%)
2,250,000 FNMA, 6.85%, 4/5/04(d) 2,366,528
5,490,000 FNMA, 8.95%, 2/12/18(d) 7,295,024
---------------
TOTAL GOVERNMENT AGENCY BONDS & NOTES (COST $9,227,857)
9,661,552
---------------
INVESTMENT IN LIMITED PARTNERSHIP (0.2%)
362,000 PPM America CBO II, 12/18/04 (cost
$362,000) 362,000
---------------
MORTGAGE BACKED SECURITIES (18.0%)
FNMA (9.4%)
1,976,310 Pool 73919, 6.80%, 1/1/04 2,031,321
1,984,306 Pool 375168, 7.13%, 6/1/04 2,073,567
3,000,000 Pool 380268, 6.20%, 5/2/05 3,003,750
3,461,879 Pool 402858, 6.50%, 12/1/27 3,446,923
1,987,422 Pool 408118, 6.50%, 1/1/28 1,978,836
2,491,845 Pool 415414, 6.50%, 2/1/28 2,480,058
3,996,596 Pool 415714, 6.00%, 4/1/28 3,877,930
3,142,378 Pool 417648, 6.00%, 2/1/13 3,108,566
---------------
TOTAL FNMA (COST $21,956,526) 22,000,951
---------------
GNMA (8.6%)
3,156,150 Pool 345066, 6.50%, 10/15/23 3,159,243
3,123,993 Pool 346960, 6.50%, 12/15/23 3,127,055
2,925,604 Pool 354692, 6.50%, 11/15/23 2,928,471
3,511,275 Pool 361398, 6.50%, 1/15/24 3,512,504
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
122
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
STRATEGIC VALUE BOND PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
MORTGAGE BACKED SECURITIES (continued)
GNMA (continued)
<TABLE>
<C> <S> <C>
3,623,111 Pool 366641, 6.50%, 11/15/23 $ 3,626,662
3,800,000 Pool 473918, 7.00%, 4/15/28 3,864,296
---------------
TOTAL GNMA ($20,226,636) 20,218,231
---------------
TOTAL MORTGAGE BACKED SECURITIES (COST $42,183,162) 42,219,182
---------------
MUNICIPAL BONDS & NOTES (2.2%)
2,000,000 Hudson County, NJ, Import Authority
Facilities, Leasing RV, FSA Insured,
7.40%, 12/1/25 2,169,480
1,045,000 Washington State, GO Bonds, State
Housing Trust Fund, Series T, 6.60%,
1/1/03 1,070,186
2,010,000 Western Minnesota, Power Agency RV,
Series A, AMBAC Insured, 6.33%, 1/1/02 2,034,803
---------------
TOTAL MUNICIPAL BONDS & NOTES (COST $5,131,131) 5,274,469
---------------
U.S. TREASURY OBLIGATIONS (14.5%)
U.S. TREASURY BONDS (2.4%)
5,000,000 6.75%, 8/15/26(d) (cost $5,482,031) 5,585,940
---------------
U.S. TREASURY NOTES (9.1%)
5,000,000 8.50%, 2/15/00(d) 5,235,940
5,000,000 6.25%, 4/30/02(d) 5,179,690
5,000,000 7.88%, 11/15/04 5,600,005
5,000,000 7.00%, 7/15/06(d) 5,426,565
---------------
TOTAL U.S TREASURY NOTES (COST $21,385,547) 21,442,200
---------------
U.S. TREASURY STRIPS (3.0%)
10,350,000 0.00%, effective yield 5.67%, 2/15/05
(cost $7,097,068) 7,127,310
---------------
TOTAL U.S. TREASURY OBLIGATIONS (COST $33,964,646) 34,155,450
---------------
TIME DEPOSITS (3.3%)
7,643,688 PNC Bank, N.A., Nassau, 5.57%, 6/1/98
(cost $7,643,688) 7,643,688
---------------
TOTAL INVESTMENTS (100.0%) (COST $233,017,203) $ 234,846,801
---------------
---------------
- - -----------------------------------------------------------------
INDEX PORTFOLIO
- - -----------------------------------------------------------------
COMMON STOCKS (97.4%)
AGRICULTURAL PRODUCTION--CROPS (0.1%)
1,620 Agribrands International, Inc.(a) $ 55,485
38,400 Pioneer Hi-Bred International, Inc.(d) 1,461,600
---------------
1,517,085
---------------
AMUSEMENT & RECREATION SERVICES (0.9%)
15,900 Harrah's Entertainment, Inc.(a) 397,500
105,800 Walt Disney Co. 11,968,625
---------------
12,366,125
---------------
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
<TABLE>
<C> <S> <C>
APPAREL & ACCESSORY STORES (0.6%)
27,100 CVS Corp.(d) $ 1,902,081
600 Charming Shoppes, Inc.(a) 3,037
62,100 Gap, Inc. 3,353,400
42,800 Limited, Inc. 1,423,100
12,200 Nordstrom, Inc. 879,162
25,300 TJX Cos., Inc.(d) 1,182,775
---------------
8,743,555
---------------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS
(0.1%)
10,400 Liz Claiborne, Inc. 527,150
19,100 V.F. Corp. 1,015,881
---------------
1,543,031
---------------
AUTOMOTIVE DEALERS & GASOLINE SERVICE STATIONS (0.1%)
23,800 Autozone, Inc.(a)(d) 791,350
10,000 Pep Boys--Manny, Moe & Jack 222,500
---------------
1,013,850
---------------
AUTOMOTIVE REPAIR, SERVICES & PARKING (0.0%)
12,100 Ryder System, Inc. 412,156
---------------
BUILDING CONSTRUCTION--GENERAL CONTRACTORS & OPERATIVE
BUILDERS (0.0%)
9,400 Centex Corp.(d) 336,050
6,000 Kaufman & Broad Home Corp.(d) 154,125
3,300 Pulte Corp.(d) 175,931
---------------
666,106
---------------
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY & MOBILE HOME
DEALERS (0.8%)
114,700 Home Depot, Inc. 9,011,118
27,500 Lowe's Cos., Inc. 2,177,656
---------------
11,188,774
---------------
BUSINESS SERVICES (4.7%)
55,600 3Com Corp.(a) 1,410,850
10,700 Adobe Systems, Inc. 427,332
7,300 Autodesk, Inc. 310,250
46,900 Automatic Data Processing, Inc. 2,984,013
24,900 Cabletron Systems, Inc.(a) 320,588
127,100 Cendant Corp.(a)(d) 2,756,482
11,400 Ceridian Corp.(a) 615,600
25,500 Cognizant Corp. 1,357,875
85,600 Computer Associates International, Inc. 4,494,000
24,500 Computer Sciences Corp. 1,272,469
23,500 Equifax, Inc. 854,813
67,100 First Data Corp. 2,231,075
33,100 HBO & Co. 1,910,492
19,700 Interpublic Group of Cos., Inc. 1,168,456
381,900 Microsoft Corp.(d) 32,389,894
55,000 Novell, Inc.(a) 577,500
25,400 Omnicom Group, Inc.(d) 1,189,037
154,400 Oracle Corp.(d) 3,647,700
40,300 Parametric Technology Co.(d) 1,235,449
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
123
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
BUSINESS SERVICES (continued)
<TABLE>
<C> <S> <C>
4,200 Shared Medical Systems Corp. $ 305,550
59,200 Sun Microsystems, Inc.(a) 2,371,700
28,800 UST, Inc. 766,800
---------------
64,597,925
---------------
CHEMICALS & ALLIED PRODUCTS (13.0%)
119,900 Abbott Laboratories 8,895,084
18,400 Air Products & Chemicals, Inc.(d) 1,600,800
8,900 Alberto Culver Co. 264,775
10,200 Allergan, Inc. 428,400
480 Allergan Specialty Therapeutics, Inc.(a) 5,040
13,400 Alza Corp.(d) 648,225
20,700 Avon Products, Inc. 1,693,518
43,900 Baxter International, Inc. 2,510,532
155,800 Bristol-Myers Squibb Co.(d) 16,748,500
16,200 Clorox Co. 1,352,700
46,300 Colgate-Palmolive Co. 4,028,100
35,600 Dow Chemical Co. 3,448,750
177,400 E.I. du Pont de Nemours & Co. 13,659,800
12,300 Eastman Chemical Co. 824,100
20,300 Ecolab, Inc. 626,763
173,800 Eli Lilly & Co. 10,677,838
5,400 FMC Corp.(a) 412,762
11,300 Goodrich (B.F.) Co.(d) 579,125
9,400 Great Lakes Chemical Corp. 376,000
15,100 Hercules, Inc.(d) 665,344
17,200 International Flavors & Fragrances,
Inc.(d) 825,600
210,700 Johnson & Johnson 14,551,469
11,400 Mallinckrodt, Inc. 351,262
187,800 Merck & Co., Inc. 21,984,338
93,000 Monsanto Co.(d) 5,149,875
20,500 Morton International, Inc. 623,968
10,400 Nalco Chemical Co.(d) 390,000
27,900 PPG Industries, Inc.(d) 2,033,213
202,700 Pfizer, Inc. 21,245,494
79,600 Pharmacia & Upjohn, Inc.(d) 3,517,325
24,800 Praxair, Inc. 1,222,950
210,500 Procter & Gamble Co. 17,668,843
9,600 Rohm & Haas Co. 1,054,800
114,700 Schering-Plough Corp. 9,598,957
27,000 Sherwin-Williams Co. 897,750
19,200 Union Carbide Corp.(d) 958,800
11,600 W.R. Grace & Co.(a) 215,325
128,100 Warner-Lambert Co. 8,174,381
---------------
179,910,506
---------------
COMMUNICATIONS (7.4%)
254,500 AT&T Corp.(d) 15,492,688
88,500 Airtouch Communications, Inc.(a)(d) 4,214,813
28,800 Alltel Corp.(d) 1,135,800
169,900 Ameritech Corp. 7,210,131
121,700 Bell Atlantic Corp.(d) 11,150,762
155,400 BellSouth Corp. 10,023,300
19,200 Clear Channel Communications, Inc.(a)(d) 1,840,800
54,700 Comcast Corp., Class A(d) 1,875,188
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
COMMUNICATIONS (continued)
<TABLE>
<C> <S> <C>
25,800 Frontier Corp.(d) $ 785,287
150,100 GTE Corp. 8,752,706
11,500 King World Productions, Inc.(a) 293,250
109,200 MCI Communications Corp. 5,838,793
41,300 Nextel Communications, Inc.(a)(d) 973,131
287,300 SBC Communications, Inc.(d) 11,168,787
67,300 Sprint Corp.(d) 4,828,775
79,500 Tele-Communications, Inc.(a)(d) 2,727,843
75,700 US West Communications Group(d) 3,841,775
95,100 US West Media Group(a)(d) 3,524,644
158,700 WorldCom, Inc.(a)(d) 7,220,850
---------------
102,899,323
---------------
DEPOSITORY INSTITUTIONS (8.8%)
22,400 BB&T Corp.(d) 1,482,600
101,200 Banc One Corp.(d) 5,578,650
59,000 Bank of New York Co., Inc. 3,606,375
108,700 BankAmerica Corp. 8,988,131
22,800 BankBoston Corp. 2,402,550
15,300 Bankers Trust New York Corp.(d) 1,889,550
66,100 Chase Manhattan Corp. 8,985,469
71,600 Citicorp(d) 10,677,350
24,750 Comerica, Inc. 1,627,312
36,450 Fifth Third Bancorp(d) 1,795,163
45,600 First Chicago NBD Corp. 3,987,150
151,620 First Union Corp. 8,386,481
41,900 Fleet Financial Group, Inc. 3,435,800
8,900 Golden West Financial Corp. 961,200
17,300 H. F. Ahmanson & Co. 1,319,125
30,000 Huntington Bancshares, Inc. 982,500
27,800 J.P. Morgan & Co., Inc. 3,452,413
68,800 KeyCorp(d) 2,610,100
39,900 Mellon Bank Corp. 2,690,757
20,600 Mercantile Bancorp.(d) 1,053,175
51,600 National City Corp. 3,495,900
147,400 NationsBank Corp.(d) 11,165,550
17,500 Northern Trust Corp. 1,234,298
118,400 Norwest Corp.(c)(d) 4,602,800
47,800 PNC Bank Corp. 2,760,450
8,500 Republic New York Corp.(d) 1,091,718
25,300 State Street Corp. 1,744,118
27,600 Summit Bancorp 1,383,450
33,000 Suntrust Banks, Inc.(d) 2,607,000
41,250 Synovus Financial Corp. 925,547
115,500 U.S. Bancorp 4,518,937
32,200 Wachovia Corp. 2,578,013
40,400 Washington Mutual, Inc.(d) 2,853,250
13,600 Wells Fargo & Co.(d) 4,916,400
---------------
121,789,282
---------------
EATING & DRINKING PLACES (0.7%)
23,300 Darden Restaurants, Inc. 359,694
39,900 Marriott International, Inc., Class A 1,386,525
108,100 McDonald's Corp. 7,094,062
23,700 Tricon Global Restaurants, Inc.(a) 736,182
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
124
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
EATING & DRINKING PLACES (continued)
<TABLE>
<C> <S> <C>
20,800 Wendy's International, Inc.(d) $ 513,500
---------------
10,089,963
---------------
ELECTRIC, GAS & SANITARY SERVICES (3.2%)
21,500 Ameren Corp.(d) 841,188
29,700 American Electric Power Co. 1,347,638
23,100 Baltimore Gas & Electric Co. 703,106
30,500 Browning-Ferris Industries(d) 1,084,657
24,800 CINergy Corp. 801,350
23,500 Carolina Power & Light Co. 963,500
33,200 Central & Southwest Corp. 877,725
16,600 Coastal Corp.(d) 1,170,300
8,700 Columbia Energy Group 734,063
36,800 Consolidated Edison Co. 1,575,500
15,000 Consolidated Natural Gas Co.(d) 848,437
22,800 DTE Energy Co.(d) 902,025
30,400 Dominion Resources, Inc. 1,206,500
56,500 Duke Energy Corp.(d) 3,255,813
3,200 Eastern Enterprises 128,400
59,700 Edison International(d) 1,761,150
51,500 Enron Corp.(d) 2,581,437
38,300 Entergy Corp.(d) 1,007,768
28,500 FPL Group, Inc.(d) 1,750,968
36,100 FirstEnergy Corp. 1,071,719
19,900 GPU, Inc. 766,150
44,300 Houston Industries, Inc. 1,268,088
51,600 Laidlaw, Inc. 638,550
22,600 Niagara Mohawk Power Corp.(a) 279,675
7,600 Nicor, Inc. 293,550
11,800 Northern States Power Co. 671,125
4,900 Oneok, Inc. 191,407
26,000 PP&L Resources, Inc. 575,250
46,400 PacifiCorp 1,070,100
13,100 Pacific Enterprises 498,618
59,700 Pacific Gas & Electric Co.(d) 1,880,550
34,800 Peco Energy Co. 983,100
5,500 People's Energy Corp. 202,813
36,300 Public Service Enterprise Group, Inc.(d) 1,200,168
17,000 Sonat, Inc. 666,188
108,200 Southern Co.(d) 2,874,062
38,700 Texas Utilities Co. 1,528,650
71,400 Waste Management, Inc. 2,320,500
64,300 Williams Cos., Inc.(d) 2,085,731
---------------
44,607,519
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER
EQUIPMENT (7.6%)
34,500 AMP, Inc. 1,311,000
22,300 Advanced Micro Devices, Inc.(a)(d) 434,850
4,500 Aeroquip-Vickers, Inc.(d) 277,875
13,800 Andrew Corp.(a)(d) 303,170
18,900 Cooper Industries, Inc. 1,216,687
18,400 DSC Communications Corp.(a) 314,525
69,600 Emerson Electric Co. 4,228,200
512,900 General Electric Co. 42,763,037
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT
(continued)
<TABLE>
<C> <S> <C>
23,200 General Instrument Corp.(a) $ 552,450
12,500 Harris Corp.(d) 602,343
256,400 Intel Corp. 18,316,575
22,200 LSI Logic Corp.(a) 473,138
204,000 Lucent Technologies, Inc. 14,471,250
14,900 Maytag Corp.(d) 751,518
33,200 Micron Technology, Inc.(a)(d) 782,275
93,500 Motorola, Inc. 4,949,657
25,800 National Semiconductor Corp.(a) 419,250
6,800 National Service Industries 346,800
81,700 Northern Telecom Ltd.(d) 5,228,800
13,300 Raychem Corp. 500,412
12,400 Scientific-Atlanta, Inc. 273,575
28,400 Tellabs, Inc.(a)(d) 1,951,614
61,200 Texas Instruments, Inc. 3,144,150
8,600 Thomas & Betts Corp. 459,563
11,800 Whirlpool Corp. 806,087
---------------
104,878,801
---------------
ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT & RELATED SERVICES (0.1%)
26,700 Dun & Bradstreet Corp. 901,125
7,200 EG&G, Inc. 226,800
---------------
1,127,925
---------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT
(1.1%)
4,700 Ball Corp. 185,356
7,300 Crane Co. 384,618
20,200 Crown Cork & Seal Co., Inc.(d) 1,047,875
26,900 Fortune Brands, Inc. 1,033,968
87,800 Gillette Co. 10,283,575
17,400 Parker-Hannifin Corp. 714,487
9,600 Snap-On, Inc. 421,200
13,900 Stanley Works 660,250
---------------
14,731,329
---------------
FOOD STORES (0.4%)
38,500 Albertson's, Inc. 1,783,032
42,900 American Stores Co. 1,069,818
9,500 Giant Food, Inc., Class A 408,500
6,000 Great Atlantic & Pacific Tea Co. 192,000
39,900 Kroger Co.(a) 1,713,207
23,300 Winn-Dixie Stores, Inc. 948,018
---------------
6,114,575
---------------
FOOD & KINDRED PRODUCTS (6.0%)
5,800 Adolph Coors Co. 217,500
76,800 Anheuser-Busch Cos., Inc. 3,528,000
89,700 Archer Daniels Midland Co.(d) 1,693,088
45,200 Bestfoods, Inc. 2,550,975
10,800 Brown-Forman Corp. 622,350
71,600 Campbell Soup Co.(d) 3,902,200
387,600 Coca-Cola Co. 30,378,150
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
125
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
FOOD & KINDRED PRODUCTS (continued)
<TABLE>
<C> <S> <C>
74,600 Conagra, Inc.(d) $ 2,182,050
24,900 General Mills, Inc.(d) 1,699,425
57,300 Heinz (H.J.) Co.(d) 3,040,482
22,400 Hershey Foods Corp. 1,551,200
64,400 Kellogg Co.(d) 2,660,525
237,700 PepsiCo, Inc. 9,701,132
21,700 Quaker Oats Co. 1,251,818
16,800 Ralston-Ralston Purina Group 1,870,050
74,200 Sara Lee Corp.(d) 4,368,525
55,900 Seagram Co. Ltd.(d) 2,456,106
100,400 Unilever N.V.(d) 7,925,325
18,200 Wrigley (Wm) Jr. Co. 1,751,750
---------------
83,350,651
---------------
FURNITURE & FIXTURES (0.1%)
25,900 Masco Corp.(d) 1,456,875
---------------
GENERAL MERCHANDISE STORES (2.7%)
16,900 Consolidated Stores Corp. 645,369
68,600 Dayton Hudson Corp. 3,181,325
17,400 Dillards, Inc.(d) 731,888
32,900 Federated Department Stores, Inc.(a)(d) 1,704,631
11,100 Harcourt General, Inc. 604,950
39,200 J.C. Penney Co., Inc. 2,815,050
76,600 KMart Corp.(a)(d) 1,484,125
36,300 May Department Stores Co. 2,334,544
5,700 Mercantile Stores Co., Inc. 448,162
61,500 Sears, Roebuck & Co. 3,801,468
352,200 Wal-Mart Stores, Inc.(d) 19,437,038
21,200 Woolworth Corp.(a)(d) 418,700
---------------
37,607,250
---------------
HEALTH SERVICES (0.5%)
101,500 Columbia/HCA Healthcare Corp.(d) 3,317,782
61,700 HEALTHSOUTH Corp.(a)(d) 1,750,738
10,000 Manor Care, Inc. 315,625
48,100 Tenet Healthcare Corp.(a) 1,683,500
---------------
7,067,645
---------------
HEAVY CONSTRUCTION OTHER THAN BUILDING CONSTRUCTION-- CONTRACTORS (0.2%)
13,100 Fluor Corp. 624,707
6,300 Foster Wheeler Corp. 159,863
41,100 Halliburton Co.(d) 1,947,112
---------------
2,731,682
---------------
HOLDING & OTHER INVESTMENT OFFICES (0.1%)
29,500 Conseco, Inc.(d) 1,375,437
---------------
HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES (0.0%)
15,500 Circuit City Stores 656,813
---------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGING PLACES (0.1%)
39,200 Hilton Hotels Corp.(d) 1,232,350
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGING PLACES (continued)
<TABLE>
<C> <S> <C>
28,100 Mirage Resorts, Inc.(a) $ 584,831
---------------
1,817,181
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT (6.5%)
20,800 Apple Computer, Inc.(a)(d) 553,800
57,400 Applied Materials, Inc. 1,836,800
26,600 Baker Hughes, Inc. 957,600
34,400 Bay Networks, Inc.(a) 952,450
14,900 Black & Decker Corp. 869,788
3,800 Briggs & Stratton Corp. 172,425
15,700 Brunswick Corp. 493,568
11,900 Case Corp.(d) 688,713
58,400 Caterpillar, Inc.(d) 3,208,350
6,200 Cincinnati Milacron, Inc. 185,613
159,600 Cisco Systems, Inc. 12,069,750
237,300 Compaq Computer Corp.(d) 6,481,257
5,900 Cummins Engine Co., Inc. 306,800
7,600 Data General Corp.(a) 115,900
39,100 Deere & Co. 2,028,312
102,300 Dell Computer Corp.(d) 8,430,165
23,000 Digital Equipment Corp.(a) 1,262,125
34,800 Dover Corp.(d) 1,305,000
27,600 Dresser Industries, Inc. 1,285,125
77,700 EMC Corp.(a)(d) 3,219,694
23,700 Gateway 2000, Inc.(d) 1,067,981
6,800 General Signal Corp. 279,650
7,500 Harnischfeger Industries, Inc. 236,250
163,100 Hewlett-Packard Co. 10,132,588
152,400 IBM Corp.(d) 17,887,950
26,000 Ingersoll-Rand Co.(d) 1,171,625
9,400 McDermott International, Inc. 358,962
19,600 Pall Corp.(d) 388,325
45,400 Pitney Bowes, Inc. 2,133,800
38,000 Seagate Technology Inc.(a) 878,750
29,400 Silicon Graphics, Inc.(a) 352,800
16,200 Tandy Corp. 716,850
26,600 Tenneco, Inc. 1,107,225
9,900 Timken Co. 372,488
89,800 Tyco International Ltd.(d) 4,972,675
39,100 Unisys Corp.(a)(d) 957,950
---------------
89,439,104
---------------
INSURANCE AGENTS, BROKERS & SERVICES (0.4%)
26,300 Aon Corp. 1,684,844
25,700 Humana, Inc.(a) 798,307
26,600 Marsh & McLennan Cos., Inc. 2,329,162
---------------
4,812,313
---------------
INSURANCE CARRIERS (4.5%)
23,300 Aetna Life & Casualty, Inc. 1,821,768
67,200 Allstate Corp. 6,325,200
39,800 American General Corp. 2,671,575
109,901 American International Group, Inc. 13,606,994
34,800 CIGNA Corp.(d) 2,383,800
26,600 Chubb Corp. 2,116,362
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
126
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
INSURANCE CARRIERS (continued)
<TABLE>
<C> <S> <C>
25,800 Cincinnati Financial Corp. $ 1,083,600
12,300 General Re Corp.(d) 2,704,463
18,500 Hartford Financial Services Group(d) 2,036,157
16,500 Jefferson-Pilot Corp. 944,625
16,000 Lincoln National Corp.(d) 1,438,000
18,000 Loews Corp. 1,633,500
15,400 MBIA, Inc. 1,148,262
17,900 MGIC Investment Corp.(d) 1,072,881
11,300 Progressive Corp.(d) 1,557,988
14,900 Providian Financial Corp. 948,012
22,200 Safeco Corp.(d) 1,032,300
36,186 St. Paul Cos., Inc.(d) 1,605,753
30,600 SunAmerica, Inc.(d) 1,487,925
21,900 Torchmark Corp.(d) 938,963
179,600 Travelers Group, Inc.(d) 10,955,600
29,500 United Healthcare Corp. 1,888,000
21,700 Unum Corp. 1,205,706
---------------
62,607,434
---------------
LUMBER & WOOD PRODUCTS, EXCEPT FURNITURE (0.0%)
17,200 Louisiana-Pacific Corp. 342,926
---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS; PHOTOGRAPHIC,
MEDICAL & OPTICAL GOODS (2.0%)
8,900 Bard (C.R.), Inc. 308,719
8,600 Bausch & Lomb, Inc.(d) 428,388
19,100 Becton, Dickinson & Co. 1,351,325
17,600 Biomet, Inc.(d) 508,200
30,500 Boston Scientific Corp.(a) 1,944,375
50,900 Eastman Kodak Co. 3,632,988
23,600 Guidant Corp.(d) 1,520,725
19,900 Honeywell, Inc. 1,670,357
13,200 Johnson Controls, Inc.(d) 785,400
13,200 KLA-Tencor Corp.(a)(d) 447,150
73,500 Medtronic, Inc. 4,088,438
6,900 Millipore Corp. 230,287
7,600 Perkin-Elmer Corp.(d) 520,600
7,100 Polaroid Corp.(d) 287,994
2,100 Raytheon Co., Class A 111,956
51,100 Raytheon Co., Class B(d) 2,794,531
13,100 St. Jude Medical, Inc.(a)(d) 468,325
7,900 Tektronix, Inc. 302,175
24,900 Thermo Electron Corp.(a)(d) 874,613
11,900 U.S. Surgical Corp. 473,025
51,100 Xerox Corp.(d) 5,250,525
---------------
28,000,096
---------------
METAL MINING (0.3%)
58,400 Barrick Gold Corp.(d) 1,124,200
36,000 Battle Mountain Gold Co. 191,250
14,700 Cyprus Amax Minerals Co. 233,362
30,400 Freeport McMoran, Inc., Class B 509,200
33,100 Homestake Mining Co.(d) 359,962
24,500 Newmont Mining Corp.(d) 610,968
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
METAL MINING (continued)
<TABLE>
<C> <S> <C>
38,800 Placer Dome, Inc.(d) $ 482,575
---------------
3,511,517
---------------
MISCELLANEOUS MANUFACTURING INDUSTRIES (0.3%)
20,900 Hasbro, Inc. 799,425
18,500 ITT Industries, Inc. 682,188
6,000 Jostens, Inc. 151,500
45,600 Mattel, Inc.(d) 1,727,100
1,200 NACCO Industries, Inc. 175,800
---------------
3,536,013
---------------
MISCELLANEOUS RETAIL (0.5%)
33,600 Costco Cos., Inc.(a)(d) 1,944,600
6,000 Longs Drug Stores, Inc. 181,875
40,500 Rite Aid Corp.(d) 1,450,406
44,500 Toys "R" Us, Inc.(a)(d) 1,179,250
77,700 Walgreen Co.(d) 2,734,068
---------------
7,490,199
---------------
MOTION PICTURES (0.1%)
34,000 Unicom Corp. 1,168,750
---------------
NONDEPOSITORY CREDIT INSTITUTIONS (2.6%)
72,800 American Express Co. 7,471,100
62,998 Associates First Capital Corp.(d) 4,713,038
8,300 Beneficial Corp. 1,112,200
17,100 Countrywide Credit Industries, Inc. 790,875
108,900 FHLMC 4,954,950
166,200 FNMA 9,951,225
21,300 Green Tree Financial Corp.(d) 855,994
16,700 Household International, Inc.(d) 2,259,718
78,600 MBNA Corp.(d) 2,490,637
9,800 Transamerica Corp. 1,127,000
---------------
35,726,737
---------------
OIL & GAS EXTRACTION (0.9%)
9,400 Anadarko Petroleum Corp. 620,400
14,900 Apache Corp. 509,394
27,700 Burlington Resources, Inc. 1,166,863
7,900 Helmerich & Payne, Inc. 199,475
53,200 Occidental Petroleum Corp.(d) 1,469,650
16,600 Oryx Energy Co.(a) 386,988
13,500 Rowan Cos., Inc.(a) 345,093
78,000 Schlumberger, Ltd. 6,088,875
39,700 Union Pacific Resources Group, Inc.(d) 803,925
8,500 Western Atlas, Inc. 735,781
---------------
12,326,444
---------------
PAPER & ALLIED PRODUCTS (1.6%)
16,100 Avery Dennison Corp. 834,182
8,300 Bemis Co., Inc.(d) 350,157
8,800 Boise Cascade Corp. 293,700
15,000 Champion International Corp. 720,000
32,700 Fort James Corp.(d) 1,563,469
14,500 Georgia-Pacific Group(d) 930,718
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
127
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
PAPER & ALLIED PRODUCTS (continued)
<TABLE>
<C> <S> <C>
21,100 IKON Office Solutions, Inc. $ 447,057
47,400 International Paper Co.(d) 2,180,400
87,200 Kimberly-Clark Corp.(d) 4,321,850
16,400 Mead Corp. 510,450
64,000 Minnesota Mining & Manufacturing Co. 5,928,000
15,500 Stone Container Corp.(a) 275,125
8,800 Temple-Inland, Inc. 517,000
10,900 Union Camp Corp. 596,093
16,000 Westvaco Corp. 456,000
31,300 Weyerhaeuser Co.(d) 1,590,432
17,500 Willamette Industries, Inc. 600,468
---------------
22,115,101
---------------
PERSONAL SERVICES (0.2%)
16,400 H&R Block, Inc. 721,600
39,500 Service Corp. International 1,614,563
---------------
2,336,163
---------------
PETROLEUM REFINING & RELATED INDUSTRIES (6.3%)
14,400 Amerada Hess Corp.(d) 778,500
152,400 Amoco Corp.(d) 6,372,225
11,800 Ashland, Inc. 588,525
50,200 Atlantic Richfield Co. 3,959,525
103,000 Chevron Corp. 8,227,125
386,500 Exxon Corp. 27,248,250
7,500 Kerr-McGee Corp. 474,375
123,000 Mobil Corp. 9,594,000
7,500 Pennzoil Co. 433,594
41,200 Phillips Petroleum Co. 2,062,575
336,000 Royal Dutch Petroleum Co.(d) 18,837,000
14,800 Sun Co., Inc. 629,000
85,800 Texaco, Inc. 4,954,950
45,100 USX-Marathon Group, Inc. 1,578,500
38,700 Unocal Corp. 1,378,688
---------------
87,116,832
---------------
PHARMACEUTICAL PREPARATIONS (0.9%)
203,600 American Home Products Corp. 9,836,425
41,200 Amgen, Inc.(a)(d) 2,492,600
---------------
12,329,025
---------------
PRIMARY METAL INDUSTRIES (0.6%)
35,600 Alcan Aluminum Ltd. 1,014,600
30,600 Allegheny Teledyne, Inc.(d) 711,450
27,000 Aluminum Co. of America 1,873,125
17,000 Armco, Inc.(a) 92,438
6,200 Asarco, Inc. 140,663
20,100 Bethlehem Steel Corp.(a) 246,225
22,700 Engelhard Corp. 472,443
26,200 Inco Ltd. 376,625
7,700 Inland Steel Industries, Inc. 220,413
13,700 Nucor Corp.(d) 705,550
9,300 Phelps Dodge Corp.(d) 567,300
11,600 Reynolds Metals Co. 672,800
13,500 USX-US Steel Group, Inc.(d) 484,312
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
PRIMARY METAL INDUSTRIES (continued)
<TABLE>
<C> <S> <C>
15,200 Worthington Industries, Inc. $ 267,900
---------------
7,845,844
---------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES (1.6%)
11,400 American Greetings Corp. 541,500
12,800 Deluxe Corp. 429,600
15,100 Dow Jones & Co., Inc. 726,688
44,400 Gannett Co., Inc. 2,927,625
13,200 Knight-Ridder, Inc. 753,225
15,500 McGraw-Hill Cos., Inc. 1,211,907
8,300 Meredith Corp. 329,925
13,900 Moore Corp. Ltd.(d) 201,550
15,000 New York Times Co. 1,057,500
22,900 R.R. Donnelley & Sons Co.(d) 1,030,500
90,700 Time Warner, Inc.(d) 7,057,593
13,800 Times Mirror Co.(d) 883,200
19,200 Tribune Co. 1,284,000
55,300 Viacom, Inc., Class B(a)(d) 3,041,500
---------------
21,476,313
---------------
RAILROAD TRANSPORTATION (0.6%)
24,500 Burlington Northern Santa Fe Corp.(d) 2,437,750
34,200 CSX Corp. 1,628,775
59,100 Norfolk Southern Corp. 1,850,568
38,800 Union Pacific Corp. 1,876,950
---------------
7,794,043
---------------
RUBBER & MISCELLANEOUS PLASTICS PRODUCTS (0.7%)
6,300 Armstrong World Industries(d) 529,988
12,400 Cooper Tire & Rubber Co. 293,725
24,500 Goodyear Tire & Rubber Co.(d) 1,760,938
39,100 Illinois Tool Works, Inc.(d) 2,580,600
45,600 Nike, Inc., Class B(d) 2,097,600
8,800 Reebok International Ltd.(a) 253,000
23,400 Rubbermaid, Inc. 763,425
13,012 Sealed Air Corp.(a)(d) 696,143
9,600 Tupperware Corp. 259,200
---------------
9,234,619
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES (1.2%)
41,600 Charles Schwab Corp. 1,372,800
39,600 Franklin Resources, Inc. 1,935,450
16,000 Lehman Brothers Holding, Inc. 1,135,000
52,200 Merrill Lynch & Co., Inc. 4,671,900
92,900 Morgan Stanley, Dean Witter & Co. 7,252,006
---------------
16,367,156
---------------
STONE, CLAY, GLASS & CONCRETE PRODUCTS (0.3%)
36,200 Corning, Inc.(d) 1,427,638
25,000 Newell Co.(d) 1,206,250
8,400 Owens Corning(d) 315,000
22,100 Owens-Illinois, Inc.(a)(d) 993,118
---------------
3,942,006
---------------
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
128
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
<TABLE>
<C> <S> <C>
TEXTILE MILL PRODUCTS (0.1%)
11,500 Fruit of the Loom, Inc.(a) $ 413,282
5,700 Russell Corp.(d) 155,325
3,200 Springs Industries, Inc., Class A 179,600
---------------
748,207
---------------
TOBACCO PRODUCTS (1.0%)
380,000 Philip Morris Cos., Inc. 14,202,500
---------------
TRANSPORTATION BY AIR (0.5%)
14,300 AMR Corp.(a) 2,201,307
11,800 Delta Airlines, Inc.(d) 1,357,000
23,000 FDX Corp.(a) 1,474,875
34,600 Southwest Airlines Co. 923,387
14,300 U.S. Air Group, Inc.(a) 1,001,000
---------------
6,957,569
---------------
TRANSPORTATION EQUIPMENT (3.7%)
88,400 Allied-Signal, Inc.(d) 3,779,100
156,700 Boeing Co.(d) 7,462,838
101,700 Chrysler Corp.(d) 5,657,062
16,500 Dana Corp.(d) 860,062
11,300 Eaton Corp. 1,014,881
9,900 Echlin, Inc. 470,250
5,700 Fleetwood Enterprises, Inc. 228,000
188,100 Ford Motor Co.(d) 9,757,687
19,800 General Dynamics Corp. 879,862
110,900 General Motors Corp.(d) 7,977,868
30,500 Lockheed Martin Corp.(d) 3,423,625
11,300 Navistar International Corp.(a) 341,118
10,400 Northrop Grumman Corp. 1,114,750
12,200 Paccar, Inc.(d) 673,669
31,500 Rockwell International Corp.(d) 1,732,500
19,200 TRW, Inc.(d) 1,028,400
25,800 Textron, Inc. 1,914,037
36,500 United Technologies Corp. 3,431,000
---------------
51,746,709
---------------
WHOLESALE TRADE--DURABLE GOODS (0.4%)
111,500 CBS Corp.(d) 3,540,125
28,000 Genuine Parts Co. 950,250
7,800 Grainger (W.W.), Inc. 823,387
4,600 Potlatch Corp. 201,537
---------------
5,515,299
---------------
WHOLESALE TRADE--NONDURABLE GOODS (0.3%)
17,200 Cardinal Health, Inc.(d) 1,532,950
15,800 Sigma Aldrich 576,700
9,500 Supervalu, Inc. 397,812
53,300 Sysco Corp. 1,242,556
---------------
3,750,018
---------------
TOTAL COMMON STOCKS
(COST $823,650,158) 1,346,700,301
---------------
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
CORPORATE NOTE (0.1%)
2,000,000 NationsBank Corp., 5.81% V/R, 7/1/04
(cost $1,987,556) $ 1,995,028
---------------
PREFERRED STOCK (0.0%)
5,320 Sealed Air Corp., 12/31/49 (cost
$269,502)(a) 296,257
---------------
TIME DEPOSITS (2.4%)
17,000,000 Erste Bank der Oeste, 5.69%, 6/1/98 17,000,000
1,525,381 PNC Bank N.A. Nassau, 5.66%, 6/1/98 1,525,381
15,000,000 Union Bank of Switzerland, 5.69%, 6/1/98 15,000,000
---------------
TOTAL TIME DEPOSITS
(COST $33,525,381) 33,525,381
---------------
U.S. TREASURY BILLS (0.1%)
1,410,000 U.S. Treasury Bills, 5.11% yield,
4/29/99(f) (cost $1,343,497) 1,343,552
---------------
TOTAL INVESTMENTS (100.0%) (COST $860,776,094) $ 1,383,860,519
---------------
---------------
FINANCIAL FUTURES CONTRACTS (0.0%)
</TABLE>
<TABLE>
<CAPTION>
UNREALIZED GAIN
POSITION CONTRACTS INDEX (LOSS)
- - ------------- --------- ----------------------------- ---------------
<S> <C> <C> <C>
Long 13 S&P 500 Futures,
Expiring June 19, 1998
(notional value $3,545,100) $ 433,150
Long 106 S&P 500 Futures,
Expiring September 18, 1998
(notional value
$29,221,550) (16,125)
---------------
$ 417,025
---------------
---------------
</TABLE>
- - ---------------------------------------------------------
INCOME EQUITY PORTFOLIO
- - ---------------------------------------------------------
COMMON STOCKS (97.7%)
BUSINESS SERVICES (1.6%)
608,900 Cognizant $ 32,423,926
Corp.
---------------
CHEMICALS & ALLIED PRODUCTS (5.2%)
845,200 E.I. du 65,080,400
Pont de
Nemours
&
Co.(d)
1,242,000 Morton 37,803,375
International,
Inc.
---------------
102,883,775
---------------
COMMUNICATIONS (5.7%)
1,113,200 AT&T 67,766,050
Corp.(d)
782,600 GTE Corp. 45,635,362
---------------
113,401,412
---------------
DEPOSITORY INSTITUTIONS (4.8%)
424,450 J.P. 52,711,384
Morgan
& Co.,
Inc.(d)
1,067,850 U.S. 41,779,631
Bancorp
---------------
94,491,015
---------------
EATING & DRINKING PLACES (2.0%)
602,750 McDonald's 39,555,468
Corp.
---------------
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
129
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
INCOME EQUITY PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
<TABLE>
<C> <S> <C>
ELECTRIC, GAS, & SANITARY SERVICES (6.9%)
493,000 Consolidated Natural Gas Co.(d) $ 27,885,312
740,600 Pacific Gas & Electric Co.(d) 23,328,900
604,100 Public Service Enterprise Group, Inc. 19,973,056
876,350 Texas Utilities Co.(d) 34,615,825
937,700 Waste Management, Inc.(d) 30,475,250
---------------
136,278,343
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER
EQUIPMENT (12.1%)
1,588,800 AMP, Inc.(d) 60,374,400
513,200 Emerson Electric Co. 31,176,900
536,600 General Electric Co. 44,739,025
567,600 Honeywell, Inc. 47,642,928
783,146 Lucent Technologies, Inc.(d) 55,554,419
---------------
239,487,672
---------------
ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT, & RELATED
SERVICES (2.7%)
1,563,600 Dun & Bradstreet Corp. 52,771,501
---------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT
(3.0%)
1,536,600 Fortune Brands, Inc. 59,063,062
---------------
FOOD & KINDRED PRODUCTS (7.8%)
1,365,640 PepsiCo, Inc.(d) 55,735,182
554,800 Procter & Gamble Co.(d) 46,568,525
877,250 Sara Lee Corp.(d) 51,648,093
---------------
153,951,800
---------------
GENERAL MERCHANDISE STORES (8.0%)
965,800 Dayton Hudson Corp. 44,788,975
538,400 J.C. Penney Co., Inc. 38,663,850
729,500 May Department Stores Co. 46,915,968
473,830 Sears, Roebuck & Co.(d) 29,288,616
---------------
159,657,409
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT (3.3%)
1,051,800 Hewlett-Packard Co. 65,343,075
---------------
INSURANCE CARRIERS (2.3%)
686,750 American General Corp.(d) 46,098,093
---------------
MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS; PHOTOGRAPHIC,
MEDICAL & OPTICAL GOODS (2.0%)
544,050 Eastman Kodak Co.(d) 38,831,568
---------------
NONDEPOSITORY CREDIT INSTITUTIONS (4.9%)
412,300 American Express Co. 42,312,287
470,900 Transamerica Corp. 54,153,500
---------------
96,465,787
---------------
OIL & GAS EXTRACTION (1.5%)
395,100 Schlumberger Ltd.(d) 30,842,493
---------------
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
INCOME EQUITY PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
<TABLE>
<C> <S> <C>
PAPER & ALLIED PRODUCTS (2.1%)
452,150 Minnesota Mining & Manufacturing Co.(d) $ 41,880,393
---------------
PETROLEUM REFINING & RELATED INDUSTRIES (8.3%)
538,200 Atlantic Richfield Co. 42,450,525
458,750 Chevron Corp.(d) 36,642,656
524,700 Exxon Corp.(d) 36,991,350
301,500 Mobil Corp.(d) 23,517,000
440,600 Royal Dutch Petroleum Co. ADR(d) 24,701,137
---------------
164,302,668
---------------
PHARMACEUTICAL PREPARATIONS (8.6%)
922,900 American Home Products Corp.(d) 44,587,606
520,750 Johnson & Johnson(d) 35,964,296
287,400 Merck & Co., Inc.(d) 33,643,762
530,400 Pfizer, Inc. 55,592,550
---------------
169,788,214
---------------
PRINTING, PUBLISHING, & ALLIED INDUSTRIES (1.0%)
581,800 Deluxe Corp. 19,526,662
---------------
TOBACCO PRODUCTS (2.2%)
1,144,450 Philip Morris Cos., Inc. 42,773,818
---------------
TRANSPORTATION EQUIPMENT (1.7%)
369,300 United Technologies Corp.(d) 34,714,209
---------------
TOTAL COMMON STOCKS
(COST $1,136,096,524) 1,934,532,363
---------------
TIME DEPOSITS (2.3%)
45,011,190 PNC Bank, N.A. Nassau, 5.66%, 6/1/98
(cost $45,011,190) 45,011,190
---------------
TOTAL INVESTMENTS (100.0%) (COST $1,181,107,714) $ 1,979,543,553
---------------
---------------
- - -----------------------------------------------------------------
DISCIPLINED GROWTH PORTFOLIO
- - -----------------------------------------------------------------
COMMON STOCKS (97.4%)
APPAREL & ACCESSORY STORES (2.5%)
74,600 Ross Stores, Inc. $ 3,291,726
---------------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS
(3.3%)
63,200 Tommy Hilfiger Corp.(d) 4,250,201
---------------
BUSINESS SERVICES (7.7%)
79,300 BMC Software, Inc.(a)(d) 3,652,758
92,830 Cadence Design Systems, Inc.(d) 3,272,258
60,690 Robert Half International, Inc.(a) 3,072,431
---------------
9,997,447
---------------
CHEMICALS & ALLIED PRODUCTS (2.2%)
106,530 Solutia, Inc. 2,922,916
---------------
COMMUNICATIONS (4.7%)
49,900 AT&T Corp.(d) 3,037,663
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
130
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
DISCIPLINED GROWTH PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
COMMUNICATIONS (continued)
<TABLE>
<C> <S> <C>
48,000 BellSouth Corp. $ 3,096,000
---------------
6,133,663
---------------
DOMESTIC DEPOSITORY INSTITUTIONS (4.5%)
45,715 Comerica, Inc. 3,005,761
100,350 Dime Bancorp, Inc. 2,928,965
---------------
5,934,726
---------------
EATING & DRINKING PLACES (2.3%)
195,750 Darden Restaurants, Inc. 3,021,890
---------------
ELECTRIC, GAS & SANITARY SERVICES (2.2%)
76,230 GPU, Inc. 2,934,855
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER
EQUIPMENT (3.4%)
62,000 Lucent Technologies, Inc. 4,398,125
---------------
ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT & RELATED SERVICES (2.3%)
62,090 Halliburton Co.(d) 2,941,514
---------------
FOOD & KINDRED PRODUCTS (2.3%)
91,380 Interstate Bakeries Corp.(d) 2,947,006
---------------
FURNITURE & FIXTURES (2.2%)
105,600 Herman Miller, Inc. 2,923,800
---------------
GENERAL MERCHANDISE STORES (6.0%)
84,400 Dayton Hudson Corp. 3,914,064
83,100 TJX Cos., Inc.(d) 3,884,925
---------------
7,798,989
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT (9.8%)
54,670 Caterpillar, Inc. 3,003,433
75,850 EMC Corp.(a)(d) 3,143,035
68,930 Lexmark International Group, Inc.(a) 3,825,615
46,420 Sundstrand Corp. 2,878,040
---------------
12,850,123
---------------
INSURANCE CARRIERS (2.4%)
65,490 SunAmerica, Inc.(d) 3,184,451
---------------
MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS; PHOTOGRAPHIC,
MEDICAL & OPTICAL GOODS (1.9%)
71,780 SCI Systems, Inc.(a)(d) 2,449,492
---------------
MISCELLANEOUS RETAIL (2.6%)
58,700 Costco Cos., Inc.(a) 3,397,262
---------------
NONDEPOSITORY CREDIT INSTITUTIONS (2.1%)
69,790 SLM Holding Corp.(d) 2,787,238
---------------
PAPER & ALLIED PRODUCTS (2.2%)
56,900 Bowater, Inc.(d) 2,880,562
---------------
PETROLEUM REFINING & RELATED INDUSTRIES (4.7%)
42,500 Exxon Corp. 2,996,250
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
DISCIPLINED GROWTH PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
PETROLEUM REFINING & RELATED INDUSTRIES (continued)
<TABLE>
<C> <S> <C>
74,790 Sun Co., Inc. $ 3,178,575
---------------
6,174,825
---------------
PHARMACEUTICAL PREPARATIONS (5.5%)
73,000 Watson Pharmaceuticals, Inc. 3,193,751
47,400 Schering-Plough Corp. 3,966,787
---------------
7,160,538
---------------
PRIMARY METAL INDUSTRIES (2.3%)
83,430 USX-U.S. Steel Group, Inc.(d) 2,993,051
---------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES (4.7%)
46,530 Gannett Co., Inc. 3,068,071
48,900 Times Mirror Co. 3,129,600
---------------
6,197,671
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICE (2.3%)
55,950 Bear Stearns Cos., Inc. 3,035,287
---------------
TRANSPORTATION BY AIR (2.2%)
35,710 UAL Corp.(a)(d) 2,836,713
---------------
TRANSPORTATION EQUIPMENT (4.5%)
70,090 General Dynamics Corp.(d) 3,114,624
50,900 Paccar, Inc.(d) 2,810,636
---------------
5,925,260
---------------
WATER TRANSPORTATION (2.4%)
44,900 Royal Caribbean Cruises Ltd.(d) 3,128,970
---------------
WHOLESALE TRADE--NONDURABLE GOODS (2.2%)
75,800 Universal Corp. 2,847,237
---------------
TOTAL COMMON STOCKS (COST $116,173,375) 127,345,538
---------------
TIME DEPOSITS (2.6%)
3,434,844 PNC Bank, N.A. Nassau, 5.57%, 6/1/98
(cost $3,434,844) 3,434,844
---------------
TOTAL INVESTMENTS (100.0%) (COST $119,608,219) $ 130,780,382
---------------
---------------
- - -----------------------------------------------------------------
LARGE COMPANY GROWTH PORTFOLIO
- - -----------------------------------------------------------------
COMMON STOCKS (98.8%)
AMUSEMENT & RECREATION SERVICES (1.8%)
170,730 Walt Disney Co.(d) $ 19,313,831
---------------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS
(1.6%)
383,200 Cintas Corp. 17,507,450
---------------
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY & MOBILE HOME DEALERS (5.0%)
127,800 Fastenal Co.(d) 6,326,100
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
131
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
LARGE COMPANY GROWTH PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY & MOBILE HOME DEALERS (continued)
<TABLE>
<C> <S> <C>
609,389 Home Depot, Inc.(d) $ 47,875,123
---------------
54,201,223
---------------
BUSINESS SERVICES (18.7%)
252,700 Automatic Data Processing, Inc. 16,078,037
286,400 Cognizant Corp. 15,250,800
215,300 DST Systems, Inc.(a) 11,383,987
587,200 First Data Corp. 19,524,400
272,850 Fiserv, Inc.(a)(d) 16,089,639
461,300 HBO & Co.(d) 26,625,682
1,006,580 Microsoft Corp.(a)(d) 85,370,566
356,500 Sungard Data Systems, Inc.(a)(d) 12,165,563
---------------
202,488,674
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER
EQUIPMENT (14.3%)
812,200 Intel Corp.(d) 58,021,537
461,348 Molex, Inc., Class A 12,023,882
185,960 Motorola, Inc. 9,844,257
414,200 Solectron Corp.(a)(d) 17,137,525
2,074,000 Telefonaktiebolaget LM Ericsson, Series
B ADR(d) 57,812,750
---------------
154,839,951
---------------
ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT, & RELATED SERVICES (2.4%)
290,500 Gartner Group, Inc.(a)(d) 9,604,656
467,266 Paychex, Inc. 16,821,594
---------------
26,426,250
---------------
FOOD & KINDRED PRODUCTS (3.3%)
461,200 Coca-Cola Co.(d) 36,146,550
---------------
HOLDING & OTHER INVESTMENT OFFICES (7.5%)
1,012,900 Franklin Resources, Inc.(d) 49,505,487
887,600 T. Rowe Price(d) 31,454,325
---------------
80,959,812
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT (7.0%)
777,550 Cisco Systems, Inc.(a)(d) 58,802,218
267,700 Hewlett-Packard Co.(d) 16,630,862
---------------
75,433,080
---------------
INSURANCE CARRIERS (5.0%)
434,262 American International Group, Inc.(d) 53,767,064
---------------
MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS; PHOTOGRAPHIC,
MEDICAL & OPTICAL GOODS (5.0%)
967,600 Medtronic, Inc.(d) 53,822,750
---------------
MISCELLANEOUS RETAIL (3.0%)
191,600 MSC Industrial Direct Co., Inc.(a)(d) 5,113,326
826,850 Staples, Inc.(a)(d) 20,774,606
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
LARGE COMPANY GROWTH PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
MISCELLANEOUS RETAIL (continued)
<TABLE>
<C> <S> <C>
232,500 Viking Office Products, Inc.(a) $ 6,648,058
---------------
32,535,990
---------------
OIL & GAS EXTRACTION (4.2%)
589,700 Schlumberger Ltd.(d) 46,033,456
---------------
PHARMACEUTICAL PREPARATIONS (10.1%)
328,400 Merck & Co., Inc.(d) 38,443,328
675,600 Pfizer, Inc. 70,811,326
---------------
109,254,654
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES, & SERVICES (6.6%)
1,635,450 Charles Schwab Corp.(d) 53,969,850
390,600 Donaldson, Lufkin & Jenrette, Inc.(d) 17,210,812
---------------
71,180,662
---------------
TOBACCO PRODUCTS (1.6%)
458,200 Philip Morris Cos., Inc.(d) 17,125,225
---------------
WHOLESALE TRADE-NONDURABLE GOODS (1.7%)
210,500 Cardinal Health, Inc.(d) 18,760,812
---------------
TOTAL COMMON STOCKS
(COST $543,103,216) 1,069,797,434
---------------
TIME DEPOSITS (1.2%)
12,541,265 PNC Bank, N.A. Nassau, 5.66%, 6/1/98
(cost $12,541,265) 12,541,265
---------------
TOTAL INVESTMENTS (100.0%) (COST $555,644,481) $ 1,082,338,699
---------------
---------------
- - -----------------------------------------------------------------
SMALL CAP INDEX PORTFOLIO
- - -----------------------------------------------------------------
COMMON STOCKS (93.5%)
ADMINISTRATION OF ENVIRONMENTAL QUALITY & HOUSING PROGRAMS (0.1%)
5,500 Dames & Moore, Inc. $ 71,156
---------------
AGRICULTURAL PRODUCTION--CROPS (0.6%)
18,900 Chiquita Brands International, Inc. 253,969
11,500 Delta & Pine Land Co. 492,344
---------------
746,313
---------------
AMUSEMENT & RECREATION SERVICES (0.5%)
12,700 Grand Casinos, Inc.(d) 223,044
8,000 Hollywood Park, Inc.(a) 103,500
9,700 Players International, Inc. 52,744
9,700 Westwood One, Inc.(a) 259,475
---------------
638,763
---------------
APPAREL & ACCESSORY STORES (1.8%)
7,800 AnnTaylor Stores Corp.(a)(d) 170,138
4,100 Ashworth, Inc.(a) 52,019
4,200 Baker (J.), Inc. 50,925
8,500 Cato Corp. 128,563
7,000 Dress Barn, Inc. 202,782
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
132
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL CAP INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
APPAREL & ACCESSORY STORES (continued)
<TABLE>
<C> <S> <C>
6,400 Filene's Basement Corp.(a) $ 39,200
8,600 Footstar, Inc.(a) 380,013
7,500 Gymboree Corp.(d) 118,594
9,100 Just For Feet, Inc.(d) 199,631
14,500 Ross Stores, Inc. 639,813
5,100 St. John Knits, Inc. 196,031
---------------
2,177,709
---------------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS
(1.0%)
6,700 Authentic Fitness Corp. 121,856
2,600 Haggar Corp. 36,400
10,300 Hartmarx Corp.(a) 81,113
6,500 Kellwood Co. 214,906
11,900 Nautica Enterprises, Inc. 348,075
3,000 Oshkosh B'Gosh, Inc. 115,500
8,200 Phillips-Van Heusen Corp. 106,600
4,000 Pillowtex Corp. 187,000
---------------
1,211,450
---------------
AUTOMOTIVE DEALERS & GASOLINE SERVICE STATIONS (0.3%)
5,000 Discount Auto Parts, Inc.(a) 128,438
6,400 O'Reilly Automotive, Inc. 208,000
---------------
336,438
---------------
AUTOMOTIVE REPAIR, SERVICES & PARKING (0.6%)
9,600 Breed Technologies, Inc.(d) 183,000
8,000 Central Parking Corp.(d) 358,500
18,600 Rollins Truck Leasing Corp. 223,200
---------------
764,700
---------------
BUILDING CONSTRUCTION--GENERAL CONTRACTORS & OPERATIVE BUILDERS (0.9%)
16,025 D.R. Horton, Inc. 288,450
5,400 MDC Holdings, Inc.(d) 81,675
4,400 Ryland Group, Inc. 88,275
4,400 Southern Energy Homes, Inc. 43,450
9,000 Standard Pacific Corp. 155,813
11,200 Toll Brothers, Inc. 288,400
3,600 U.S. Home Corp.(a) 145,575
---------------
1,091,638
---------------
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY & MOBILE HOME DEALERS (0.1%)
8,800 Eagle Hardware & Garden, Inc.(d) 160,050
---------------
BUSINESS SERVICES (7.6%)
6,200 ABM Industries, Inc. 171,663
6,800 ADVO, Inc.(a) 170,425
15,900 Acxiom Corp.(d) 343,838
12,600 American Management Systems, Inc. 341,775
6,800 Analysts International Corp. 198,900
8,000 BISYS Group, Inc.(a) 297,000
8,500 Boole & Babbage, Inc. 209,313
6,300 Broderbund Software, Inc. 100,800
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL CAP INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
BUSINESS SERVICES (continued)
<TABLE>
<C> <S> <C>
5,600 Catalina Marketing Corp. $ 253,400
10,000 Cerner Corp. 256,250
13,700 Ciber, Inc. 439,256
12,600 Cognex Corp. 239,400
6,300 Computer Task Group, Inc. 199,238
4,500 Cyrk, Inc.(a) 53,719
6,300 Envoy Corp.(a)(d) 276,413
4,100 Fair, Isaac & Co., Inc. 148,881
4,600 FileNet Corp. 253,144
6,900 Gerber Scientific, Inc. 173,794
12,600 Harbinger Corp. 293,344
5,700 Henry (Jack) & Associates 185,963
5,800 Hyperion Software Corp. 187,413
3,400 Insurance Auto Auctions(a) 45,050
14,100 Interim Services, Inc.(d) 409,781
2,500 Kronos, Inc. 89,375
11,700 Midway Games, Inc.(a) 157,950
9,300 National Computer Systems, Inc. 225,525
10,200 National Data Corp. 382,500
6,500 Network Equipment Technologies, Inc. 101,969
8,200 Norrell Corp. 185,013
14,000 PMT Services, Inc. 273,000
6,900 Platinum Software Corp. 132,394
23,600 Platinum Technology, Inc.(d) 646,051
7,900 Primark Corp.(a)(d) 264,156
3,600 Progress Software Corp. 116,550
15,300 S3, Inc. 100,406
14,400 System Software Associates, Inc.(a) 105,300
6,700 TCSI Corp. 34,338
7,900 Technology Soultions, Inc. 238,481
13,600 True North Communications, Inc. 432,650
13,100 Vanstar Corp.(a)(d) 190,769
7,600 Vantive Corp. 204,250
4,500 Volt Information Sciences, Inc. 136,969
2,800 Wall Data, Inc.(a) 36,225
---------------
9,302,631
---------------
CHEMICALS & ALLIED PRODUCTS (4.1%)
11,400 Advanced Tissue Sciences, Inc.(a)(d) 104,025
9,700 Alliance Pharmaceutical Corp.(a) 45,469
7,800 Alpharma, Inc. 169,650
3,600 Cambrex Corp. 201,375
6,100 ChemFirst, Inc. 156,694
2,700 Collagen Corp. 52,650
7,000 Geon Co. 151,375
3,200 Hauser, Inc. 24,800
6,900 Immune Response Corp.(a)(d) 79,350
8,700 Jones Pharma, Inc.(d) 267,525
7,000 Lilly Industires, Inc., Class A 136,500
11,400 Liposome Company, Inc.(a) 70,182
7,600 Macdermid, Inc.(d) 311,600
3,100 McWhorter Technologies, Inc.(a) 85,638
7,800 MedImmune, Inc.(a) 389,025
8,300 Mississippi Chemical Corp. 139,025
10,900 Mycogen Corp. 257,513
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
133
<PAGE>
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL CAP INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
CHEMICALS & ALLIED PRODUCTS (continued)
<TABLE>
<C> <S> <C>
17,000 NBTY, Inc. $ 296,438
5,700 Natures Sunshine Product, Inc. 131,813
9,600 North American Vaccine, Inc.(d) 187,800
6,200 Noven Pharmaceuticals, Inc.(a) 37,975
6,700 OM Group, Inc. 278,050
7,200 Parexel International Corp. 216,000
2,200 Penford Corp. 67,925
5,500 Protein Design Labs, Inc.(a) 138,188
2,600 Quaker Chemical Corp. 54,113
8,900 Roberts Pharmaceutical Corp.(a) 146,850
9,300 SEQUUS Pharmaceuticals, Inc. 105,788
5,700 Scotts Co.(a) 198,788
6,400 TheraTech, Inc. 60,400
4,200 USA Detergents, Inc.(d) 58,538
7,600 Vertex Pharmaceuticals, Inc. 218,500
6,800 W.H. Brady Co. 197,200
---------------
5,036,762
---------------
COMMUNICATIONS (0.8%)
15,200 Brightpoint, Inc. 240,350
15,000 General Communications, Inc.(a) 90,470
5,000 Metro Networks, Inc.(a) 198,750
20,300 Tel-Save Holdings, Inc.(d) 400,925
---------------
930,495
---------------
CONSTRUCTION--SPECIAL TRADE CONTRACTORS (0.2%)
8,400 Apogee Enterprises, Inc. 117,075
8,200 Insituform Technologies, Class A(a) 105,575
---------------
222,650
---------------
DEPOSITORY INSTITUTIONS (8.1%)
8,000 Astoria Financial Corp. 440,250
6,300 CCB Financial Corp. 689,850
7,800 Centura Banks, Inc. 512,850
5,100 Commerce Bancorp, Inc. 283,369
12,200 Commercial Federal Corp. 406,413
6,700 Cullen/Frost Bankers, Inc. 363,056
8,505 Downey Financial Corp. 281,728
11,300 First Commercial Corp. 781,819
6,100 First Midwest Bancorp, Inc. 280,219
4,600 FirstBank Puerto Rico 257,025
18,800 FirstMerit Corp. 527,575
8,200 Hubco, Inc.(d) 289,050
3,000 JSB Financial, Inc. 174,375
15,800 Keystone Financial, Inc. 616,200
10,000 Magna Group, Inc. 555,625
12,700 Provident Financial Group, Inc. 650,081
4,500 Queens County Bancorp, Inc. 198,000
9,300 Riggs National Corp. 254,588
40,000 Sovereign Bancorp, Inc. 707,500
10,400 St. Paul Bancorp, Inc. 262,600
5,900 U.S. Trust Corp. 441,763
9,000 UST Corp.(d) 250,313
11,800 United Bankshares, Inc. 296,475
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL CAP INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
DEPOSITORY INSTITUTIONS (continued)
<TABLE>
<C> <S> <C>
6,300 Whitney Holding Corp. $ 347,288
---------------
9,868,012
---------------
EATING & DRINKING PLACES (1.9%)
9,600 Applebee's International, Inc. 234,000
2,700 Bertucci's, Inc. 27,675
5,900 Cheesecake Factory 119,106
14,000 CKE Restaurants, Inc. 444,500
6,300 Consolidated Products, Inc.(a) 124,819
11,900 Foodmaker, Inc.(a) 200,813
2,900 Ihop Corp.(a) 117,450
7,900 Landry's Seafood Restaurants, Inc. 178,985
7,100 Luby's Cafeterias, Inc. 131,350
10,000 Ruby Tuesday, Inc.(d) 160,625
14,300 Ryan's Family Steak Houses, Inc. 145,681
14,800 Shoney's, Inc.(a) 65,675
5,700 Showbiz Pizza Time, Inc. 202,350
5,850 Sonic Corp. 121,022
7,200 TCBY Enterprises, Inc. 69,750
4,500 Taco Cabana, Inc., Class A 28,688
---------------
2,372,489
---------------
EDUCATIONAL SERVICES (0.3%)
10,500 DeVry, Inc. 418,031
---------------
ELECTRIC, GAS & SANITARY SERVICES (4.2%)
2,200 Aquarion Co. 73,425
9,100 Atmos Energy Corp. 279,825
2,200 Bangor Hydro-Electric Co.(a) 18,975
3,300 Cascade Natural Gas Corp. 51,356
5,200 Central Hudson Gas & Electric 227,175
3,500 Central Vermont Public Service 51,188
4,100 CILCORP, Inc. 180,656
6,500 Commonwealth Energy System 247,000
3,100 Connecticut Energy Corp. 90,094
2,700 Consumers Water Co. 57,713
6,200 Eastern Utilities Associates 157,325
8,800 Energen Corp. 178,750
1,600 Green Mountain Power Corp. 25,900
8,900 KCS Energy, Inc. 105,688
12,900 K N Energy, Inc 698,213
5,400 New Jersey Resources 194,063
7,400 Northwest Natural Gas Co. 203,500
4,100 Orange & Rockland Utilities, Inc. 219,094
2,900 Pennsylvania Enterprises, Inc. 75,400
8,300 Philadelphia Suburban Corp. 163,406
9,200 Piedmont Natural Gas Co. 291,525
6,100 Public Service Co. of North Carolina,
Inc. 129,625
9,400 Sierra Pacific Resources 322,538
2,700 Southern California Water Co. 58,894
8,300 Southwest Gas Corp. 181,563
7,500 Southwestern Energy Co. 79,219
4,000 TNP Enterprises, Inc. 130,250
4,300 United Illuminating Co. 203,713
10,900 United Water Resources, Inc. 175,081
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
134
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL CAP INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
ELECTRIC, GAS & SANITARY SERVICES (continued)
<TABLE>
<C> <S> <C>
5,600 Wicor, Inc. $ 256,200
---------------
5,127,354
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER
EQUIPMENT (8.1%)
8,300 Allen Group, Inc.(a) 99,600
5,100 Amtech Corp.(a) 23,588
15,100 Aspect Telecommunications Corp. 389,769
8,400 BMC Industries, Inc. 123,375
10,900 Baldor Electric Co. 284,081
3,500 Benchmark Electronics, Inc. 70,656
4,100 BroadBand Technologies, Inc.(a) 24,856
11,000 Burr-Brown Corp. 282,219
2,800 C-Cor Electronics, Inc. 44,450
11,200 C-Cube Microsystems, Inc. 219,100
4,800 CTS Corp. 150,000
8,600 Cable Design Technologies 202,638
5,000 California Microwave, Inc.(a) 107,188
2,200 Centigram Communications Corp. 27,225
10,300 Checkpoint Systems, Inc. 181,538
8,300 Dallas Semiconductor Corp. 279,606
14,100 Digital Microwave Corp. 136,154
3,500 Dionex Corp. 182,875
3,400 Electro Scientific Industries, Inc.(a) 113,900
6,600 Etec Systems, Inc.(a) 241,313
11,200 General Semiconductor, Inc.(a) 151,200
4,000 HADCO Corp.(a) 128,500
5,700 Harman International Industries, Inc. 242,606
3,100 Harmon Industries, Inc. 74,013
6,000 Helix Technology Corp. 106,875
6,000 Hutchinson Technology, Inc. 150,000
4,400 Innovex, Inc. 81,675
8,100 Inter-Tel, Inc. 152,129
4,400 InterVoice, Inc. 58,300
15,600 International Rectifier Corp. 164,775
4,400 Itron, Inc.(a)(d) 67,925
5,600 Juno Lighting, Inc. 119,000
12,200 Kemet Corp. 196,344
5,000 Kuhlman Corp. 211,250
7,100 Lattice Semiconductor Corp. 274,238
10,800 Methode Electronics, Inc. 137,700
16,100 Microchip Technology, Inc.(d) 394,450
2,200 National Presto Industries, Inc. 88,963
10,200 Novellus Systems, Inc.(d) 385,688
5,400 Oak Industries, Inc.(a) 188,325
12,700 P-COM, Inc. 190,500
3,500 Park Electrochemical Corp. 83,125
7,400 Photronics, Inc. 195,175
11,500 Picturetel Corp. 107,813
4,500 Plexus Corp. 96,750
14,700 Read-Rite Corp.(a)(d) 129,544
2,800 Rival Co. 40,425
7,000 Royal Appliance Manufacturing Co. 36,313
6,300 Sanmina Corp.(d) 490,613
4,800 Speedfam International, Inc.(a) 93,600
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL CAP INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT
(continued)
<TABLE>
<C> <S> <C>
4,800 Standard Microsystems Corp. $ 53,100
4,800 SymmetriCom, Inc. 30,300
4,900 Technitrol, Inc. 197,838
4,800 Thomas Industries, Inc. 123,000
2,400 Three-Five Systems, Inc. 40,350
7,400 Unitrode Corp.(a) 96,663
14,200 VLSI Technology, Inc.(a) 220,100
7,200 Valence Technology, Inc.(a) 42,750
12,900 Vicor Corp. 201,563
21,800 Vitesse Semiconductor Corp. 558,625
2,500 Watkins-Johnson Co. 62,969
13,000 Xylan Corp.(a)(d) 313,625
---------------
9,962,828
---------------
ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT & RELATED SERVICES (1.7%)
8,800 American Oncology Resources, Inc. 112,200
10,000 Billing Information Concepts 232,500
14,300 Bio-Technology General Corp.(a) 121,550
11,400 Blount International, Inc., Class A 321,338
6,000 CDI Corp. 220,875
7,200 COR Therapeutics, Inc.(a) 123,750
8,700 Cephalon, Inc.(a) 92,438
7,500 Franklin Covey Co.(a) 150,000
8,000 Incyte Pharmaceuticals, Inc. 293,750
6,200 NFO Worldwide, Inc. 105,400
3,700 Pharmaceuticals Marketing Services,
Inc.(a) 49,025
9,400 Regeneron Pharmaceuticals, Inc.(a) 87,832
3,900 Stone & Webster, Inc. 157,950
7,300 U.S. Bioscience, Inc. 68,438
---------------
2,137,046
---------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT
(1.1%)
4,000 Alliant Techsystems, Inc.(a) 258,000
5,500 AptarGroup, Inc. 356,469
2,400 Butler Manufacturing Co. 84,000
9,300 Griffon Corp.(a) 129,038
2,600 Insteel Industries, Inc. 18,688
4,500 Lukens, Inc. 144,281
4,700 Material Sciences Corp. 47,294
8,200 Sturm, Ruger & Co., Inc. 152,725
3,800 Zero Corp. 109,725
---------------
1,300,220
---------------
FOOD & KINDRED PRODUCTS (1.3%)
5,700 Canandaigua Brands, Inc. 262,913
2,500 Coca-Cola Bottling Co. 155,781
10,800 Corn Products International, Inc.(a) 369,900
6,500 Earthgrains Co. 343,281
2,100 Goodmark Foods, Inc. 48,038
2,700 J&J Snack Foods Corp. 52,144
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
135
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL CAP INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
FOOD & KINDRED PRODUCTS (continued)
<TABLE>
<C> <S> <C>
11,400 Smithfield Foods, Inc. $ 307,800
---------------
1,539,857
---------------
FOOD STORES (0.4%)
3,600 Au Bon Pain Co., Inc.(a) 34,200
7,900 Whole Foods Market, Inc.(d) 434,500
---------------
468,700
---------------
FURNITURE & FIXTURES (0.7%)
4,000 Bassett Furniture Industries, Inc. 122,000
8,700 Ethan Allen Interiors, Inc. 437,719
5,400 LA-Z-BOY, Inc. 276,413
---------------
836,132
---------------
GENERAL MERCHANDISE STORES (0.7%)
15,900 Casey's General Stores, Inc. 225,581
2,300 GC Companies, Inc.(a) 114,713
3,200 Gottschalks, Inc. 26,600
7,800 Shopko Stores, Inc.(a) 272,025
14,000 Stein Mart, Inc.(d) 220,500
---------------
859,419
---------------
HEALTH SERVICES (4.1%)
5,700 Access Health, Inc. 146,063
3,100 Chemed Corp. 114,119
10,200 Coventry Health Care, Inc. 147,900
3,800 Curative Health Services, Inc.(a) 106,875
7,400 Enzo Biochem, Inc. 96,200
5,000 Express Scripts, Inc. 384,688
10,700 Genesis Health Ventures, Inc.(d) 270,844
11,600 Idexx Laboratories, Inc. 258,100
13,000 Integrated Health Services, Inc. 483,438
8,700 Lincare Holdings, Inc.(d) 652,500
9,300 Magellan Health Services, Inc.(a) 251,100
8,900 Mariner Health Group, Inc.(a) 132,388
14,100 Orthodontic Centers of America, Inc.(d) 298,744
12,500 Paragon Health Network, Inc. 192,188
4,600 Pediatrix Medical Group, Inc.(a) 166,463
19,600 Phycor, Inc.(d) 330,750
6,900 Renal Care Group, Inc. 250,125
5,500 Sierra Health Services, Inc. 204,188
3,100 Syncor International Corp.(a) 55,025
9,800 Universal Health Services, Inc.(a) 539,000
---------------
5,080,698
---------------
HEAVY CONSTRUCTION OTHER THAN BUILDING CONSTRUCTION-- CONTRACTORS (0.2%)
16,500 Morrison Knudsen Corp.(a) 195,938
---------------
HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES (1.2%)
11,600 Bombay Co., Inc.(a) 50,750
5,200 Lechters, Inc. 30,550
11,800 Linens 'N Things, Inc. 379,075
5,900 MicroAge, Inc. 79,650
20,500 Pier 1 Imports, Inc.(d) 493,281
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL CAP INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES (continued)
<TABLE>
<C> <S> <C>
15,600 Williams-Sonoma, Inc. $ 430,950
---------------
1,464,256
---------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGING
PLACES (0.8%)
13,700 Aztar Corp.(a) 95,900
7,500 CapStar Hotel Co.(a)(d) 219,375
9,000 Marcus Corp. 159,188
8,800 Primadonna Resorts, Inc.(a) 152,900
14,300 Prime Hospitality Corp.(a) 256,506
4,900 Showboat, Inc. 150,063
---------------
1,033,932
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT (3.5%)
14,400 Anixter International, Inc. 289,800
7,300 Applied Magnetics Corp.(d) 41,063
8,400 Applied Power, Inc.(d) 287,700
2,800 Astec Industries, Inc. 92,400
7,600 Auspex Systems, Inc.(a) 42,275
6,600 BancTec, Inc. 154,275
4,900 Dialogic Corp.(a) 161,700
5,900 Electroglas, Inc. 80,388
6,800 Exabyte Corp. 66,300
12,800 Fedders Corp. 80,000
4,500 Flow International Corp.(a) 54,563
6,900 Global Industrial Technologies, Inc.(a) 116,869
7,900 Graco, Inc. 273,538
15,900 Komag, Inc. 157,013
7,100 Kulicke & Soffa Industries, Inc.(a) 121,588
2,800 Lindsay Manufacturing Co. 130,200
5,200 Manitowoc Co., Inc. 213,200
14,600 Paxar Corp. 180,675
3,300 Robbins & Myers, Inc. 97,969
3,700 SPS Technologies, Inc. 216,913
5,600 Scott Technologies, Inc., Class A(a) 82,600
9,800 Snyder Oil Corp. 189,875
4,800 Telxon Corp. 159,600
3,900 Toro Co. 136,256
6,300 Ultratech Stepper, Inc.(d) 127,575
8,400 Valmont Industries, Inc. 168,000
2,600 Walbro Corp. 26,813
4,600 Watsco, Inc. 135,125
6,900 Xircom, Inc.(a) 108,244
7,400 Zebra Technologies Corp. 283,975
---------------
4,276,492
---------------
INSURANCE AGENTS, BROKERS & SERVICE (0.2%)
5,000 Arthur J. Gallagher & Co. 215,625
3,900 Hilb Rogal Hamilton 68,250
---------------
283,875
---------------
INSURANCE CARRIERS (5.7%)
9,300 Allied Group, Inc. 391,763
12,600 American Bankers Insurance Group, Inc. 756,000
6,800 CMAC Investment Corp.(d) 411,400
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
136
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL CAP INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
INSURANCE CARRIERS (continued)
<TABLE>
<C> <S> <C>
4,800 Capital Re Corp. $ 357,600
3,100 Compdent Corp.(a) 45,725
5,916 Delphi Financial Group, Class A 321,313
5,700 Enhance Financial Services Group,
Inc.(d) 371,213
3,300 Executive Risk, Inc. 207,694
6,700 Fidelity National Financial, Inc.(d) 223,613
5,300 First American Financial Corp. 382,263
10,000 Fremont General Corp. 571,875
10,300 Frontier Insurance Group, Inc. 252,350
5,300 Life Re Corp. 390,213
11,700 Mutual Risk Management Ltd.(d) 410,231
5,600 NAC Re Corp. 261,450
8,400 Orion Capital Corp. 473,025
18,700 Protective Life Corp. 673,200
8,900 Selective Insurance Group, Inc. 234,738
3,600 Trenwick Group, Inc. 136,800
5,400 Zenith National Insurance Corp. 154,575
---------------
7,027,041
---------------
LEATHER & LEATHER PRODUCTS (0.7%)
5,500 Brown Group, Inc. 98,656
8,000 Justin Industries 127,000
1,700 K-Swiss, Inc. 33,575
3,400 Timberland Co.(a)(d) 278,800
12,900 Wolverine World Wide, Inc 318,469
---------------
856,500
---------------
LOCAL & SUBURBAN TRANSIT & INTERURBAN HIGHWAY PASSENGER TRANSPORTATION
(0.1%)
4,100 Rural/Metro Corp.(a) 96,863
---------------
LUMBER & WOOD PRODUCTS, EXCEPT FURNITURE (0.8%)
14,200 Champion Enterprises, Inc. 382,513
14,100 Oakwood Homes Corp.(d) 383,344
2,900 Skyline Corp. 84,463
5,200 TJ International, Inc. 150,475
---------------
1,000,795
---------------
MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS; PHOTOGRAPHIC,
MEDICAL & OPTICAL GOODS (4.4%)
5,800 ADAC Laboratories(a) 115,275
2,800 Amcast Industrial Corp. 60,375
3,900 Analogic Corp. 177,450
8,800 Ballard Medical Products 196,900
4,000 Circon Corp.(a) 55,500
7,000 Coherent, Inc. 161,438
4,500 Cooper Companies, Inc.(a) 177,750
6,100 Cygnus, Inc.(a) 56,425
5,200 Daniel Industries 105,625
4,800 Datascope Corp. 135,000
4,100 Diagnostic Products Corp. 127,100
5,600 Fluke Corp. 179,900
4,000 Hologic, Inc. 84,000
13,300 Input/Output, Inc. 292,600
3,700 Integrated Circuit Systems, Inc.(d) 50,991
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL CAP INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS; PHOTOGRAPHIC,
MEDICAL & OPTICAL GOODS (continued)
<TABLE>
<C> <S> <C>
3,800 Intermagnetics General Corp. $ 38,475
9,000 Invacare Corp. 237,375
4,800 Ionics, Inc. 214,800
5,400 Marquette Medical Systems, Inc.(a) 151,200
7,500 Mentor Corp. 198,516
5,400 Molecular Biosystems, Inc.(a) 47,925
2,000 Nashua Corp.(a) 31,625
6,100 ReSound Corp.(a) 38,506
9,600 Respironics, Inc. 157,800
9,400 Roper Industries, Inc. 311,963
7,400 Sola International, Inc.(a) 292,763
2,900 SpaceLabs Medical, Inc.(a) 48,031
10,300 Steris Corp.(d) 643,750
9,500 Summit Technology, Inc. 51,063
5,900 Sunrise Medical, Inc. 91,450
7,600 Tracor, Inc.(a) 300,200
6,800 Trimble Navigation Ltd.(a) 133,875
4,700 VISX, Inc.(a) 230,888
3,400 Whittaker Corp.(a) 48,450
6,400 X-Rite, Inc. 86,400
1,900 Zoll Medical Corp.(a) 11,578
---------------
5,342,962
---------------
METAL MINING (1.2%)
6,600 Coeur D'Alene Mines Corp.(a)(d) 58,163
10,500 Dekalb Genetics Corp., Class B 1,006,688
9,300 Getchell Gold Corp. 176,700
9,500 Glamis Gold Ltd.(a) 39,188
16,700 Hecla Mining Co.(a) 84,544
6,200 Stillwater Mining Co.(a) 150,350
---------------
1,515,633
---------------
MINING & QUARRYING OF NONMETALLIC MINERALS, EXCEPT FUELS (0.1%)
8,600 AMCOL International Corp. 118,250
4,500 Dravo Corp.(a) 50,625
---------------
168,875
---------------
MISCELLANEOUS MANUFACTURING INDUSTRIES (0.4%)
4,200 Bell Sports Corp.(a) 39,638
5,000 Cross (A.T.) Co. 57,813
7,900 Jan Bell Marketing, Inc. 40,488
5,000 K2, Inc. 100,000
5,000 Lydall, Inc.(a) 87,500
6,700 Russ Berrie & Co., Inc. 169,175
---------------
494,614
---------------
MISCELLANEOUS RETAIL (1.5%)
5,300 Books-A-Million, Inc. 27,163
7,400 Cash America International, Inc. 124,875
2,400 Damark International, Inc., Class A(a) 23,700
5,700 Fabri-Centers of America(a) 168,150
5,500 Galoob Toys, Inc. 60,844
6,400 Hancock Fabrics, Inc. 84,800
2,900 Lillian Vernon Corp. 50,388
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
137
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL CAP INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
MISCELLANEOUS RETAIL (continued)
<TABLE>
<C> <S> <C>
8,800 Michaels Stores, Inc.(a) $ 263,450
19,600 Sports Authority, Inc. 144,600
14,600 Tech Data Corp. 593,125
10,900 Zale Corp.(a) 337,219
---------------
1,878,314
---------------
MOTION PICTURES (0.1%)
3,400 Carmike Cinemas, Inc.(a) 89,038
---------------
MOTOR FREIGHT TRANSPORTATION & WAREHOUSING (1.1%)
9,600 American Freightway Corp. 109,800
5,900 Arkansas Best Corp.(a) 57,525
5,100 Frozen Food Express Industries, Inc. 49,725
9,100 Heartland Express, Inc. 199,063
3,800 Landstar System, Inc.(a) 128,488
3,700 M.S. Carriers, Inc. 110,538
7,900 USFreightways Corp. 248,850
14,500 Werner Enterprises, Inc. 275,500
8,700 Yellow Corp.(a) 163,125
---------------
1,342,614
---------------
OIL & GAS EXTRACTION (2.8%)
8,900 Benton Oil & Gas Co. 92,894
7,500 Cabot Oil and Gas Corp. 151,875
14,400 Cross Timbers Oil Co. 249,300
9,800 Devon Energy Corp. 359,538
5,600 HS Resources, Inc.(a) 80,850
10,900 Newfield Exploration Co. 243,888
7,000 Oceaneering International, Inc. 150,500
5,100 Plains Resources, Inc. 97,538
11,400 Pogo Producing Co. 292,125
6,400 Pool Energy Services Co.(a) 130,400
14,300 Pride International, Inc.(a)(d) 320,856
6,200 Remington Oil & Gas Corp.(a) 38,750
31,300 Santa Fe Energy Resources, Inc.(a) 311,044
6,700 Seitel, Inc.(a) 113,900
3,300 St. Mary Land & Exploration Co. 89,925
4,100 Tetra Technologies, Inc.(a) 89,431
13,400 Tuboscope Vetco International Corp.(a) 303,175
15,700 Vintage Petroleum, Inc. 284,563
2,700 Wiser Oil Co. 28,181
---------------
3,428,733
---------------
PAPER & ALLIED PRODUCTS (0.5%)
11,200 Buckeye Technologies, Inc. 252,700
4,100 Pope & Talbot, Inc. 55,606
3,600 Republic Group, Inc. 68,625
4,900 Schweitzer-Mauduit International, Inc. 162,006
8,250 Shorewood Packaging Corp.(a) 113,953
---------------
652,890
---------------
PERSONAL SERVICES (0.5%)
2,800 Angelica Corp. 63,000
3,000 CPI Corp. 76,875
6,100 G & K Services, Inc.(d) 237,900
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL CAP INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
PERSONAL SERVICES (continued)
<TABLE>
<C> <S> <C>
7,100 Regis Corp. $ 198,800
---------------
576,575
---------------
PETROLEUM REFINING & RELATED INDUSTRIES (0.1%)
4,700 WD-40 128,956
---------------
PRIMARY METAL INDUSTRIES (2.0%)
3,500 Acme Metals, Inc.(a) 27,563
7,900 Belden, Inc. 313,531
9,000 Birmingham Steel Corp. 126,000
15,000 CommScope, Inc.(a) 232,500
4,800 Commonwealth Industries, Inc. 70,200
4,900 IMCO Recycling, Inc. 92,794
7,700 Intermet Corp. 150,150
10,600 Mueller Industries, Inc. 328,600
7,400 Northwestern Steel & Wire Co.(a) 33,763
4,300 Quanex Corp. 133,569
3,600 Steel Technologies, Inc. 40,500
6,400 Texas Industries, Inc. 380,000
3,600 Tredegar Industries, Inc. 311,400
5,800 WHX Corp.(a)(d) 79,750
4,300 Wolverine Tube, Inc.(a) 156,950
---------------
2,477,270
---------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES (1.5%)
5,500 Bowne & Co., Inc. 235,469
3,900 Consolidated Graphics, Inc. 199,631
5,000 Gibson Greetings, Inc.(a) 120,625
9,400 John H. Harland Co. 168,613
4,900 Merrill Corp. 110,863
4,200 New England Business Service, Inc. 136,763
1,100 Plenum Publishing Corp. 74,250
5,200 Thomas Nelson, Inc. 67,275
12,000 Valassis Communications, Inc.(a) 422,250
11,600 World Color Press, Inc.(a)(d) 348,725
---------------
1,884,464
---------------
RAILROAD TRANSPORTATION (0.0%)
2,800 RailTex, Inc.(a) 42,875
---------------
RUBBER & MISCELLANEOUS PLASTICS PRODUCTS (0.7%)
4,800 O'Sullivan Corp. 46,800
16,000 Safeskin Corp. 560,000
5,100 Standard Products Co. 149,813
6,600 Titan International, Inc. 128,288
---------------
884,901
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES (2.0%)
12,500 Amresco, Inc.(a) 421,875
3,800 Dain Rauscher Corp. 215,650
5,600 Eaton Vance Corp. 251,650
8,300 Legg Mason, Inc. 500,594
7,600 Pioneer Group, Inc. 216,125
14,600 Raymond James Financial, Inc. 441,650
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
138
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL CAP INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES (continued)
<TABLE>
<C> <S> <C>
5,500 SEI Investments Co. $ 367,125
---------------
2,414,669
---------------
STONE, CLAY, GLASS & CONCRETE PRODUCTS (0.9%)
10,700 Gentex Corp. 391,888
3,300 Lone Star Industries, Inc.(d) 248,119
5,100 Medusa Corp. 293,888
4,000 Standex International Corp. 120,500
---------------
1,054,395
---------------
TEXTILE MILL PRODUCTS (1.3%)
7,900 Cone Mills Corp.(a) 76,038
7,500 Delta Woodside Industries, Inc. 44,531
3,400 Dixie Group, Inc. 44,200
3,500 Galey & Lord, Inc.(a) 86,625
7,800 Guilford Mills, Inc. 210,600
7,800 Interface, Inc. 305,663
3,300 Johnston Industries, Inc.(a) 17,222
15,800 Mohawk Industries, Inc. 479,925
2,700 Oxford Industries, Inc. 94,152
9,600 Triarc Cos., Inc.(a) 234,000
9,100 Tultex Corp.(a) 27,300
---------------
1,620,256
---------------
TRANSPORTATION BY AIR (0.8%)
20,300 Comair Holdings, Inc. 540,488
8,600 Mesa Air Group, Inc. 69,875
6,600 Offshore Logistics, Inc.(a) 134,475
6,200 Pittston BAX Group 108,888
3,500 Skywest, Inc. 151,365
---------------
1,005,091
---------------
TRANSPORTATION EQUIPMENT (2.5%)
4,800 A. O. Smith Corp. 242,400
8,400 AAR Corp. 222,075
8,700 Artic Cat, Inc. 79,388
6,900 BE Aerospace, Inc.(a) 199,453
7,350 Clarcor, Inc. 169,050
8,700 Halter Marine Group, Inc. 163,125
3,900 Huffy Corp. 59,231
13,400 JLG Industries, Inc. 236,175
9,800 Orbital Sciences Corp.(a)(d) 400,575
7,900 Polaris Industries, Inc. 276,500
6,300 Regal-Beloit Corp. 205,538
3,800 SPX, Inc.(a) 262,675
5,500 Simpson Industries, Inc. 77,000
3,800 Spartan Motors, Inc. 27,788
4,000 Standard Motor Products, Inc. 88,000
3,700 Thor Industries, Inc. 102,444
6,100 Wabash National Corp. 158,219
7,200 Winnebago Industries, Inc. 80,540
---------------
3,050,176
---------------
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL CAP INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
<TABLE>
<C> <S> <C>
TRANSPORTATION SERVICES (0.6%)
10,500 Air Express International Corp. $ 271,021
7,500 Expeditors International of Washington,
Inc. 300,000
10,800 Fritz Companies, Inc. 140,400
---------------
711,421
---------------
WATER TRANSPORTATION (0.1%)
6,500 Kirby Corp.(a) 139,750
---------------
WHOLESALE TRADE--DURABLE GOODS (2.2%)
6,700 Applied Industrial Technologies, Inc. 157,450
6,200 Barnes Group, Inc. 184,450
2,800 Bell Industries, Inc.(a) 35,350
3,700 Building Materials Holding Corp. 50,413
4,300 Castle (A.M.) & Co. 96,750
4,500 Commercial Metals Co. 138,094
4,100 Digi International, Inc. 93,275
1,500 Global Motorsport Group(a) 31,688
7,400 Ha-Lo Industries, Inc. 228,937
5,700 Hughes Supply, Inc. 192,019
7,000 Kaman Corp., Class A 128,625
8,200 Kent Electronics Corp. 172,200
3,400 Lawson Products, Inc. 92,225
5,000 Marshall Industries 154,688
9,800 Owens & Minor, Inc. Holding Co. 115,150
10,000 Patterson Dental Co. 325,000
8,000 Pioneer-Standard Electronics, Inc. 99,500
2,500 Swiss Army Brands, Inc. 28,906
7,100 TBC Corp. 57,244
5,200 Universal Forest Products, Inc. 89,375
3,900 Vital Signs, Inc. 67,753
5,800 Wynn's International, Inc. 121,800
---------------
2,660,892
---------------
WHOLESALE TRADE--NONDURABLE GOODS (1.8%)
9,500 Barrett Resources Corp. 330,719
7,700 Caraustar Industries, Inc 236,294
13,500 DIMON, Inc. 182,250
11,500 Fleming Cos., Inc. 219,219
3,900 LSB Industries, Inc. 16,819
6,700 Men's Wearhouse, Inc. 285,588
5,500 Myers Industries, Inc. 116,188
5,900 NCS HealthCare, Inc.(a) 170,363
3,400 Nash-Finch Co. 57,375
14,400 Richfood Holdings, Inc. 351,900
14,500 Stride Rite Corp. 193,021
---------------
2,159,736
---------------
TOTAL COMMON STOCKS (COST $120,978,198) 114,622,333
---------------
TIME DEPOSITS (6.3%)
3,000,000 Erste Bank der Oestereich, 5.687%,
6/1/98 3,000,000
722,351 PNC Bank, N.A. Nassau, 5.66%, 6/1/98 722,351
4,000,000 Union Bank of Switzerland, 5.687%,
6/1/98 4,000,000
---------------
TOTAL TIME DEPOSITS (COST $7,722,351) 7,722,351
---------------
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
139
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL CAP INDEX PORTFOLIO (continued)
- - -----------------------------------------------------------------
U.S. TREASURY BILLS (0.2%)
190,000 5.03% yield, 10/8/98(g) $ 186,582
50,000 5.12% yield, 4/29/99(g) 47,634
---------------
TOTAL U.S. TREASURY BILLS (COST $234,194) 234,216
---------------
TOTAL INVESTMENTS (100.0%) (COST $128,934,743) $ 122,578,900
---------------
---------------
FINANCIAL FUTURES CONTRACTS (-0.3%)
</TABLE>
<TABLE>
<CAPTION>
UNREALIZED
POSITION CONTRACTS INDEX (LOSS)
- - --------- --------------- -------------------------------------- -----------
<S> <C> <C> <C>
Long 33 Russell 2000 Index
Expiring June 19, 1998
(notional value $7,539,675) $(371,350)
Long 1 Russell 2000 Index
Expiring September 18, 1998
(notional value $230,755) (3,375)
-----------
$(374,725)
-----------
-----------
</TABLE>
<TABLE>
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL COMPANY STOCK PORTFOLIO
- - -----------------------------------------------------------------
COMMON STOCKS (95.0%)
AGRICULTURAL PRODUCTION--LIVESTOCK & ANIMAL SPECIALTIES (1.0%)
82,200 Michael Foods, Inc. $ 2,291,326
---------------
APPAREL & ACCESSORY STORES (2.3%)
89,500 Dress Barn, Inc.(a) 2,592,707
53,350 Stage Stores, Inc.(a) 2,487,444
---------------
5,080,151
---------------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS
(1.6%)
94,210 Oshkosh B'Gosh, Inc. 3,627,085
---------------
AUTOMOTIVE DEALERS & GASOLINE SERVICE STATIONS (1.1%)
170,100 Lithia Motors, Inc.(a) 2,381,400
---------------
BUSINESS SERVICES (15.0%)
392,500 Accelr8 Technology Corp.(a)(d) 5,396,875
84,400 Ciber, Inc.(d) 2,706,075
93,470 Computer Horizons Corp. 3,122,486
82,500 Computer Task Group, Inc. 2,609,064
133,600 Leasing Solutions, Inc.(a)(d) 3,740,800
76,300 Mercury Interactive Corp.(a) 2,536,975
74,800 Metro Information Services, Inc.(a) 2,440,351
108,400 QuadraMed Corp.(a)(d) 2,608,375
260,120 SEEC, Inc.(a)(d) 2,422,369
132,100 SPR, Inc.(a) 3,731,825
124,500 Sykes Enterprises, Inc.(a) 2,598,938
---------------
33,914,133
---------------
CHEMICALS & ALLIED PRODUCTS (1.8%)
38,200 Hauser, Inc.(a) 296,050
207,200 Lifecore Biomedical, Inc.(a) 3,846,149
---------------
4,142,199
---------------
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL COMPANY STOCK PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
<TABLE>
<C> <S> <C>
COMMUNICATIONS (1.4%)
93,800 COMSAT Corp.(d) $ 3,271,276
---------------
CONSTRUCTION--SPECIAL TRADE CONTRACTORS (1.5%)
118,000 Dycom Industries, Inc.(a) 3,377,752
---------------
CONSUMER DURABLES (3.1%)
181,000 Rayovac Corp.(a) 3,801,000
99,130 Windmere-Durable Holdings, Inc.(d) 3,141,183
---------------
6,942,183
---------------
DEPOSITORY INSTITUTIONS (3.6%)
98,794 Downey Financial Corp. 3,272,568
60,340 People's Bank 2,300,464
75,060 Webster Financial Corp. 2,533,275
---------------
8,106,307
---------------
EATING & DRINKING PLACES (3.9%)
162,900 Foodmaker, Inc.(a) 2,748,939
222,900 Schlotzsky's, Inc.(a)(d) 3,622,126
66,700 Showbiz Pizza Time, Inc.(a) 2,367,850
---------------
8,738,915
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER
EQUIPMENT (3.2%)
106,600 Artesyn Technologies, Inc.(a) 1,748,914
6,500 EFTC Corp.(a) 95,875
122,100 Exar Corp.(a) 2,808,300
249,200 FARO Technologies, Inc.(a) 2,694,478
---------------
7,347,567
---------------
ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT & RELATED SERVICES (3.8%)
131,600 A.C. Nielson Corp.(a) 3,396,927
209,900 Barringer Technologies, Inc.(a) 2,203,950
140,287 Tetra Tech., Inc. 3,086,314
---------------
8,687,191
---------------
FOOD & KINDRED PRODUCTS (1.3%)
63,200 Celestial Seasonings, Inc.(a)(d) 2,851,901
---------------
FOOD STORES (1.0%)
80,400 Wild Oats Markets, Inc. 2,311,500
---------------
HEALTH SERVICES (3.6%)
87,000 Access Health, Inc.(a) 2,229,376
210,820 Graham-Field Health Products, Inc.(a)(d) 1,238,567
230,350 Specialty Care Network, Inc.(a)(d) 2,274,708
69,900 Trigon Healthcare, Inc.(a) 2,376,600
---------------
8,119,251
---------------
HOLDING & OTHER INVESTMENT OFFICES (2.8%)
123,400 Consolidated Capital Corp.(a) 2,722,513
242,700 Sunstone Hotel Investors, Inc. 3,488,814
---------------
6,211,327
---------------
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
140
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL COMPANY STOCK PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
<TABLE>
<C> <S> <C>
HOSPITAL SUPPLY (1.5%)
142,300 Maxxim Medical, Inc.(a) $ 3,326,264
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT (1.3%)
150,110 Snyder Oil Corp. 2,908,383
---------------
MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS; PHOTOGRAPHIC, MEDICAL &
OPTICAL GOODS (2.4%)
148,200 OEA, Inc.(d) 2,537,926
280,295 Tava Technologies, Inc.(a)(d) 2,943,098
---------------
5,481,024
---------------
MISCELLANEOUS RETAIL (3.9%)
260,030 Funco, Inc.(a) 4,257,994
173,700 Guitar Center, Inc.(a)(d) 4,592,195
---------------
8,850,189
---------------
MOTOR FREIGHT TRANSPORTATION & WAREHOUSING (1.9%)
122,800 Covenant Transportation, Inc.(a) 2,010,854
174,015 Jevic Transportation, Inc.(a) 2,164,313
---------------
4,175,167
---------------
NONDEPOSITORY CREDIT INSTITUTIONS (8.4%)
153,650 American Capital Strategies Ltd. 3,620,379
150,000 First Sierra Financial, Inc.(a) 3,646,875
164,980 Franchise Mortgage Acceptance Co. LLC(a) 3,629,560
111,000 Imperial Credit Industries, Inc.(a)(d) 2,344,877
223,025 Medallion Financial Corp. 5,631,382
---------------
18,873,073
---------------
OIL & GAS EXTRACTION (6.4%)
72,220 Atwood Oceanics, Inc. 3,737,385
123,995 Basin Exploration, Inc.(a) 1,952,922
153,700 Callon Petroleum Co.(a)(d) 2,536,050
180,570 Marine Drilling Co., Inc.(a) 3,396,973
94,500 Stolt Comex Seaway, S.A. 3,000,375
---------------
14,623,705
---------------
PAPER & ALLIED PRODUCTS (1.7%)
164,000 Ivex Packaging Corp.(a) 3,802,749
---------------
PRIMARY METAL INDUSTRIES (3.0%)
100,900 Quanex Corp. 3,134,206
152,970 Titanium Metals Corp.(d) 3,719,085
---------------
6,853,291
---------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES (3.8%)
60,100 Mail-Well, Inc.(d) 2,764,600
101,050 Mecklermedia Corp.(a) 2,096,788
103,800 Valassis Communications, Inc.(a) 3,652,462
---------------
8,513,850
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES (1.1%)
163,300 Friedman, Billings, Ramsey Group,
Inc.(a)(d) 2,561,771
---------------
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL COMPANY STOCK PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
<TABLE>
<C> <S> <C>
TRANSPORTATION EQUIPMENT (1.0%)
55,600 Orbital Sciences Corp.(a)(d) $ 2,272,650
---------------
WHOLESALE TRADE--DURABLE GOODS (5.6%)
75,700 CellStar Corp.(d) 2,278,101
146,000 CHS Electronics, Inc.(d) 2,901,751
159,200 Keystone Automotive Industries,
Inc.(a)(d) 4,139,152
135,050 SCP Pool Corp. 3,249,642
---------------
12,568,646
---------------
WHOLESALE TRADE--NONDURABLE GOODS (1.0%)
114,300 Fresh America Corp.(a) 2,214,563
---------------
TOTAL COMMON STOCKS (COST $198,501,017) 214,426,789
---------------
TIME DEPOSITS (5.0%)
11,231,734 PNC Bank, N.A. Nassau, 5.66%, 6/1/98
(cost $11,231,734) 11,231,734
---------------
TOTAL INVESTMENTS (100.0%) (COST $209,732,751) $ 225,658,523
---------------
---------------
- - -----------------------------------------------------------------
SMALL CAP VALUE PORTFOLIO
- - -----------------------------------------------------------------
COMMON STOCKS (94.6%)
AMUSEMENT & RECREATION SERVICES (2.0%)
22,490 Anchor Gamin(a) $ 2,046,590
---------------
APPAREL & ACCESSORY STORES (3.8%)
39,050 Claire's Stores, Inc. 734,628
60,440 Intimate Brands, Inc.(d) 1,733,872
37,040 St. John Knits, Inc. 1,423,725
---------------
3,892,225
---------------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS
(1.7%)
61,470 Nautica Enterprises, Inc.(a)(d) 1,797,997
---------------
AUTOMOTIVE REPAIR, SERVICES & PARKING (1.2%)
40,860 Budget Group, Inc.(a) 1,205,370
---------------
BUILDING CONSTRUCTION--GENERAL CONTRACTORS & OPERATIVE BUILDERS (3.2%)
49,200 Centex Corp.(d) 1,758,900
60,360 Toll Brothers, Inc.(a) 1,554,271
---------------
3,313,171
---------------
BUSINESS SERVICES (2.7%)
44,640 ADVO, Inc.(a) 1,118,791
66,400 Avant Corp.(a)(d) 1,705,650
---------------
2,824,441
---------------
CHEMICALS & ALLIED PRODUCTS (1.6%)
41,050 Dexter Corp. 1,693,312
---------------
COMMUNICATIONS (1.1%)
47,130 Aliant Communications, Inc. 1,092,827
---------------
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
141
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL CAP VALUE PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
<TABLE>
<C> <S> <C>
EATING & DRINKING PLACES (3.1%)
103,400 Ruby Tuesday, Inc.(d) $ 1,660,863
73,905 Sonic Corp.(a) 1,528,910
---------------
3,189,773
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER
EQUIPMENT (5.0%)
28,690 Aeroquip-Vickers, Inc.(d) 1,771,607
16,310 C-Cube Microsystems, Inc. 319,064
35,900 Kuhlman Corp. 1,516,775
39,400 Teleflex, Inc. 1,593,237
---------------
5,200,683
---------------
FABRICATED METAL PRODUCTS (1.8%)
27,990 AptarGroup, Inc. 1,814,101
---------------
FOOD & KINDRED PRODUCTS (3.2%)
50,440 Adolph Coors Co. 1,891,500
29,700 Canandaigua Brands, Inc.(a) 1,369,913
---------------
3,261,413
---------------
FURNITURE & FIXTURES (3.3%)
109,590 O'Sullivan Industries Holdings, Inc.(a) 1,643,850
75,040 Winsloew Furniture, Inc.(a) 1,800,960
---------------
3,444,810
---------------
HEALTH SERVICES (4.1%)
121,900 NovaCare, Inc.(a) 1,340,900
81,300 Pediatric Services of America, Inc.(a) 1,504,050
54,300 RehabCare Group, Inc.(a) 1,408,406
---------------
4,253,356
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT (10.1%)
66,750 Detroit Diesel Corp.(a) 1,635,375
48,830 Gleason Corp. 1,443,536
52,555 Graco, Inc. 1,819,717
50,320 Kaydon Corp. 1,984,495
39,050 Pentair, Inc. 1,713,319
130,230 Scitex Corp. Ltd.(a) 1,806,942
---------------
10,403,384
---------------
INSURANCE AGENTS, BROKERS & SERVICE (1.7%)
47,610 E.W. Blanch Holdings, Inc. 1,791,327
---------------
INSURANCE CARRIERS (5.2%)
46,394 Fidelity National Financial, Inc.(d) 1,548,400
43,900 LandAmerica Financial Group, Inc. 2,096,226
9,980 Markel Corp.(a) 1,724,668
---------------
5,369,294
---------------
LUMBER & WOOD PRODUCTS, EXCEPT FURNITURE (1.6%)
57,870 TJ International, Inc. 1,674,613
---------------
MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS; PHOTOGRAPHIC, MEDICAL &
OPTICAL GOODS (5.4%)
66,140 CONMED Corp.(a) 1,397,208
90,070 Esco Electronics Corp.(a)(d) 1,615,631
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL CAP VALUE PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS; PHOTOGRAPHIC, MEDICAL & OPTICAL
GOODS (continued)
<TABLE>
<C> <S> <C>
75,680 Esterline Technologies Corp.(a) $ 1,627,120
74,090 Integrated Circuit Systems, Inc.(d) 1,021,056
---------------
5,661,015
---------------
MOTOR FREIGHT TRANSPORTATION & WAREHOUSING (3.1%)
55,430 M.S. Carriers, Inc.(a) 1,655,971
47,910 USFreightways Corp. 1,509,165
---------------
3,165,136
---------------
NONDEPOSITORY CREDIT INSTITUTIONS (1.6%)
51,650 AmeriCredit Corp.(a) 1,685,082
---------------
OIL & GAS EXTRACTION (4.6%)
64,980 Pool Energy Services Co.(a) 1,323,968
36,370 Veritas DGC, Inc.(a) 1,884,420
85,390 Vintage Petroleum, Inc. 1,547,693
---------------
4,756,081
---------------
STONE, CLAY, GLASS & CONCRETE PRODUCTS (1.8%)
24,680 Lone Star Industries, Inc.(d) 1,855,628
---------------
TRANSPORTATION BY AIR (4.9%)
44,800 Airborne Freight Corp. 1,668,800
64,600 America West Airlines, Inc.(a)(d) 1,828,988
53,505 Midwest Express Holdings, Inc.(a) 1,534,925
---------------
5,032,713
---------------
TRANSPORTATION EQUIPMENT (6.9%)
34,730 Cordant Technologies, Inc. 1,732,158
73,320 Monaco Coach Corp.(a) 1,979,640
118,710 Simpson Industries, Inc. 1,661,940
51,310 Varlen Corp. 1,738,126
---------------
7,111,864
---------------
TRANSPORTATION SERVICES (1.6%)
60,040 Circle International Group, Inc. 1,624,832
---------------
WATER TRANSPORTATION (1.6%)
84,440 Trico Marine Services, Inc.(a)(d) 1,667,690
---------------
WHOLESALE TRADE--DURABLE GOODS (2.9%)
76,900 Ballantyne of Omaha, Inc.(a) 1,408,231
69,120 Pomeroy Computer Resources, Inc.(a) 1,555,200
---------------
2,963,431
---------------
WHOLESALE TRADE-NONDURABLE GOODS (3.8%)
80,690 Day Runner, Inc.(a) 1,775,180
10,010 Men's Wearhouse, Inc.(a) 426,676
28,800 United Stationers, Inc.(a) 1,717,200
---------------
3,919,056
---------------
TOTAL COMMON STOCKS
(COST $92,333,952) 97,711,215
---------------
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
142
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL CAP VALUE PORTFOLIO (continued)
- - -----------------------------------------------------------------
REPURCHASE AGREEMENTS (1.9%)
$ 2,000,000 BancAmerica Robertson Stephens, 5.58%,
6/1/98 to be repurchased at $2,000,930
(cost $2,000,000)(e) $ 2,000,000
---------------
TIME DEPOSITS (3.5%)
3,641,360 PNC Bank, N.A. Nassau, 5.57%, 6/1/98
(cost $3,641,360) 3,641,360
---------------
TOTAL INVESTMENTS (100.0%) (COST $97,975,312) $ 103,352,575
---------------
---------------
- - -----------------------------------------------------------------
SMALL COMPANY VALUE PORTFOLIO
- - -----------------------------------------------------------------
COMMON STOCKS (97.5%)
ADMINISTRATION OF ENVIRONMENTAL QUALITY & HOUSING PROGRAMS (1.1%)
124,800 Dames & Moore, Inc. $ 1,614,600
---------------
AMUSEMENT & RECREATION SERVICES (1.7%)
79,400 Jackpot Enterprises, Inc.(a) 972,650
106,800 Station Casinos, Inc.(a) 1,588,650
---------------
2,561,300
---------------
BUILDING CONSTRUCTION--GENERAL CONTRACTORS & OPERATIVE BUILDERS (2.3%)
17,727 M/I Schottenstein Homes, Inc. 356,755
47,800 NVR, Inc.(a) 1,535,575
156,100 Southern Energy Homes, Inc.(a) 1,541,487
---------------
3,433,817
---------------
BUSINESS SERVICES (5.2%)
4,231 Grey Advertising, Inc. 1,891,257
56,400 Learning Co.(a)(d) 1,607,400
58,900 Leasing Solutions, Inc.(a) 1,649,200
54,800 Network Equipment Technologies, Inc.(a) 859,674
56,300 Ogden Corp. 1,608,068
---------------
7,615,599
---------------
CHEMICALS & ALLIED PRODUCTS (1.6%)
42,800 Georgia Gulf Corp. 1,072,675
74,500 Mississippi Chemical Corp. 1,247,875
---------------
2,320,550
---------------
DEPOSITORY INSTITUTIONS (18.5%)
53,300 Anchor Bancorp Wisconsin, Inc. 2,258,588
16,600 First Citizens BancShares, Inc. 1,759,600
39,300 ALBANK Financial Corp. 2,043,600
60,500 Andover Bancorp, Inc. 2,072,127
43,400 BSB Bancorp, Inc. 1,361,676
59,400 Banknorth Group, Inc. 2,168,100
55,075 Commercial Federal Corp. 1,834,685
90,900 Commonwealth Bancorp, Inc. 2,147,512
37,274 Community Bank System, Inc. 1,264,987
60,100 First Republic Bank(a) 1,998,325
55,000 FirstFed Financial Corp.(a) 2,698,438
45,685 Medford Bancorp, Inc. 1,941,612
46,800 SIS Bancorp, Inc. 1,959,751
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL COMPANY VALUE PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
DEPOSITORY INSTITUTIONS (continued)
<TABLE>
<C> <S> <C>
75,900 Statewide Financial Corp. $ 1,745,700
---------------
27,254,701
---------------
EATING & DRINKING PLACES (2.4%)
118,900 Piccadilly Cafeterias, Inc. 1,530,837
200,100 Ryan's Family Steak Houses, Inc.(a) 2,038,518
---------------
3,569,355
---------------
ELECTRIC, GAS & SANITARY SERVICES (10.4%)
24,900 BEC Energy 1,010,006
30,600 CILCORP, Inc. 1,348,312
95,700 Central Maine Power Co. 1,830,263
91,700 Central Vermont Public Service 1,341,112
49,500 Commonwealth Energy System 1,881,000
68,600 Public Service Co. of New Mexico 1,487,763
54,300 Rochester Gas & Electric Corp. 1,669,725
55,600 TNP Enterprises, Inc. 1,810,475
92,500 UniSource Energy Corp.(a) 1,462,656
47,900 WPS Resources Corp. 1,499,868
---------------
15,341,180
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER
EQUIPMENT (4.3%)
27,100 DuPont Photomasks, Inc.(a) 1,154,292
79,400 HMT Technology Corp.(a)(d) 923,025
39,000 Harman International Industries, Inc. 1,659,938
23,100 Inacom Corp.(a)(d) 749,307
101,300 Powell Industries, Inc.(a) 1,215,600
107,600 SymmetriCom, Inc.(a) 679,225
---------------
6,381,387
---------------
FABRICATED METAL PRODUCTS (2.6%)
19,700 Alliant Techsystems, Inc.(a) 1,270,650
40,900 Nortek, Inc.(a) 1,257,675
67,600 Wyman-Gordon Co.(a)(d) 1,343,550
---------------
3,871,875
---------------
FOOD STORES (0.8%)
96,400 Ingles Markets, Inc. 1,205,000
---------------
GENERAL MERCHANDISE STORES (1.2%)
87,700 Homebase, Inc.(d) 761,894
28,200 Shopko Stores, Inc.(a) 983,475
---------------
1,745,369
---------------
HEALTH SERVICES (2.2%)
56,200 Genesis Health Ventures, Inc.(a)(d) 1,422,563
49,700 Integrated Health Services, Inc.(d) 1,848,219
---------------
3,270,782
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT (3.6%)
56,500 Ampco Pittsburgh Corp. 833,375
89,300 Auspex Systems, Inc.(a) 496,731
37,700 DT Industries, Inc. 1,092,123
46,000 Data General Corp.(a)(d) 701,500
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
143
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL COMPANY VALUE PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT (continued)
<TABLE>
<C> <S> <C>
41,760 Gleason Corp. $ 1,234,531
39,700 Tractor Supply Co.(a) 957,762
---------------
5,316,022
---------------
INSURANCE CARRIERS (8.5%)
68,600 ARM Financial Group, Inc. 1,402,012
68,400 Acceptance Insurance Cos., Inc.(a) 1,573,200
40,900 Farm Family Holdings, Inc.(a) 1,674,343
58,200 Frontier Insurance Group, Inc.(d) 1,425,900
78,700 HCC Insurance Holdings, Inc.(d) 1,682,212
61,700 Nymagic, Inc. 1,804,725
45,599 PXRE Corp. 1,436,368
81,600 Symons International Group, Inc.(a) 1,509,600
---------------
12,508,360
---------------
MACHINERY (0.8%)
69,900 Global Industrial Technologies, Inc.(a) 1,183,931
---------------
MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS; PHOTOGRAPHIC, MEDICAL &
OPTICAL GOODS (3.4%)
69,900 ADAC Laboratories(a) 1,389,263
34,000 CONMED Corp.(a) 718,250
46,600 Esterline Technologies Corp.(a) 1,001,900
36,289 Invacare Corp. 957,123
31,400 Tech-Sym Corp.(a) 908,639
---------------
4,975,175
---------------
MISCELLANEOUS MANUFACTURING INDUSTRIES (1.2%)
85,900 K2, Inc. 1,718,000
---------------
MOTOR FREIGHT TRANSPORTATION & WAREHOUSING (1.6%)
132,900 Arkansas Best Corp.(a) 1,295,775
56,500 Roadway Express, Inc. 1,062,906
---------------
2,358,681
---------------
NONDEPOSITORY CREDIT INSTITUTIONS (2.2%)
120,917 Consumer Portfolio Services, Inc.(a)(d) 1,435,889
118,100 Southern Pacific Funding Corp.(a)(d) 1,815,787
---------------
3,251,676
---------------
OIL & GAS EXTRACTION (2.6%)
20,200 Devon Energy Corp. 741,088
38,900 Giant Industries, Inc. 731,806
27,900 SEACOR SMIT, Inc.(a)(d) 1,632,150
40,300 Vintage Petroleum, Inc. 730,438
---------------
3,835,482
---------------
PERSONAL SERVICES (1.0%)
68,372 Angelica Corp. 1,538,370
---------------
PETROLEUM REFINING & RELATED INDUSTRIES (0.6%)
43,000 Tesoro Petroleum Corp.(a) 830,438
---------------
PRIMARY METAL INDUSTRIES (8.5%)
76,900 AK Steel Holding Corp. 1,432,262
28,700 Carpenter Technology Corp. 1,521,100
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL COMPANY VALUE PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
PRIMARY METAL INDUSTRIES (continued)
<TABLE>
<C> <S> <C>
49,100 Chase Industries, Inc.(a) $ 1,519,032
39,646 Citation Corp.(a) 758,230
80,800 Intermet Corp. 1,575,600
34,100 Lone Star Technologies, Inc.(a) 647,900
77,100 National Steel Corp. 1,214,325
70,000 RMI Titanium Co.(a)(d) 1,500,625
19,600 Texas Industries, Inc. 1,163,750
51,600 Titanium Metals Corp.(d) 1,254,525
---------------
12,587,349
---------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES (2.2%)
39,300 Bowne & Co., Inc. 1,682,532
35,400 Media General, Inc. 1,628,400
---------------
3,310,932
---------------
TEXTILE MILL PRODUCTS (0.6%)
23,800 Oxford Industries, Inc. 830,025
---------------
TRANSPORTATION EQUIPMENT (0.7%)
36,600 TransTechnology Corp. 988,200
---------------
WHOLESALE TRADE--DURABLE GOODS (1.5%)
60,000 Associated Materials Inc.(a) 930,000
43,500 Commercial Metals Co. 1,334,906
---------------
2,264,906
---------------
WHOLESALE TRADE--NONDURABLE GOODS (4.2%)
50,000 Burlington Coat Factory Warehouse 1,003,125
71,700 Nash-Finch Co. 1,209,937
80,800 Performance Food Group Co.(a) 1,515,000
89,000 Standard Commercial Corp.(a) 990,125
38,700 Universal Corp. 1,453,669
---------------
6,171,856
---------------
TOTAL COMMON STOCKS
(COST $128,734,013) 143,854,918
---------------
TIME DEPOSITS (2.5%)
3,666,930 PNC Bank, NA Nassau, 5.66%, 6/1/98 (cost
$3,666,930) 3,666,930
---------------
TOTAL INVESTMENTS (100.0%) (COST $132,400,943) $ 147,521,848
---------------
---------------
- - -----------------------------------------------------------------
SMALL COMPANY GROWTH PORTFOLIO
- - -----------------------------------------------------------------
COMMON STOCKS (98.1%)
APPAREL & ACCESSORY STORES (3.6%)
435,000 Just For Feet, Inc.(a) $ 9,542,812
291,000 North Face, Inc.(a) 7,220,437
323,200 Stage Stores, Inc.(a) 15,069,200
---------------
31,832,449
---------------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS
(4.3%)
478,400 Nautica Enterprises, Inc.(a) 13,993,200
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
144
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL COMPANY GROWTH PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS
(continued)
<TABLE>
<C> <S> <C>
164,400 Tommy Hilfiger Corp.(a) $ 11,055,900
321,100 Warnaco Group, Inc., Class A 13,245,375
---------------
38,294,475
---------------
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY & MOBILE HOME
DEALERS (1.0%)
312,500 Central Garden & Pet Co.(a) 9,238,282
---------------
BUSINESS SERVICES (10.2%)
163,100 ATL Ultrasound, Inc. 7,390,469
190,700 Autodesk, Inc. 8,104,750
211,800 Legato Systems, Inc. 6,062,776
385,700 Platinum Technology, Inc.(a) 10,558,537
278,700 Rental Service Corp.(a) 7,228,781
327,500 Select Appointments Holdings Public Ltd.
Co. 9,456,562
355,100 Snyder Communications, Inc.(a) 14,314,968
591,700 Symantec Corp.(a) 14,126,837
339,000 Synopsys, Inc.(a) 14,555,813
---------------
91,799,493
---------------
CHEMICALS & ALLIED PRODUCTS (9.8%)
245,300 Agouron Pharmaceuticals, Inc. 8,340,200
514,400 Alkermes, Inc.(a) 11,252,500
54,800 Axogen Ltd.(a) 3,178,400
215,000 Barr Laboratories, Inc.(a) 8,774,688
243,900 Biovail Corp. International(a) 8,277,356
199,444 Elan Corp. plc ADR(a) 12,203,480
541,800 Genzyme Corp. 14,831,775
40,000 North American Vaccine, Inc.(a) 782,500
238,400 Protein Design Labs, Inc.(a) 5,989,800
332,800 Sepracor, Inc.(a) 14,310,400
---------------
87,941,099
---------------
COMMUNICATIONS (2.3%)
387,200 Electric Lightwave, Inc.(a) 5,275,600
823,100 Western Wireless Corp.(a) 15,227,350
---------------
20,502,950
---------------
CONTAINERS (0.7%)
272,900 Ivex Packaging Corp.(a) 6,327,868
---------------
DOMESTIC DEPOSITORY INSTITUTIONS (3.4%)
437,000 Golden State Bancorp, Inc.(a) 16,742,563
810,700 Independence Community Bank Corp.(a) 14,085,912
---------------
30,828,475
---------------
EATING & DRINKING PLACES (3.1%)
444,300 Apple South, Inc. 5,831,438
467,000 Buffets, Inc.(a) 7,617,937
478,300 Foodmaker, Inc.(a) 8,071,312
271,300 Landry's Seafood Restaurants, Inc.(a) 6,146,655
---------------
27,667,342
---------------
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL COMPANY GROWTH PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
<TABLE>
<C> <S> <C>
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER
EQUIPMENT (5.1%)
150,200 ATMI, Inc.(a) $ 2,722,375
355,000 American Power Conversion Corp.(a) 10,650,000
439,800 Artesyn Technologies, Inc.(a) 7,215,490
90,400 Benchmark Electronics, Inc. 1,824,950
94,800 CTS Corp. 2,962,500
182,100 Micrel, Inc. 5,696,325
377,700 Xilink, Inc.(a) 14,364,423
---------------
45,436,063
---------------
ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT & RELATED SERVICES (1.5%)
323,200 Core Laboratories N.V. 8,544,601
593,000 Medaphis Corp.(a) 4,447,500
---------------
12,992,101
---------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT
(1.3%)
205,500 Tower Automotive, Inc.(a) 9,645,657
108,600 Metals USA, Inc.(a) 2,009,100
---------------
11,654,757
---------------
HEALTH SERVICES (3.5%)
498,304 Quorum Health Group, Inc. 14,980,143
54,366 SonoSight, Inc.(a) 366,970
522,633 Total Renal Care Holdings, Inc. 16,038,301
---------------
31,385,414
---------------
HOLDING & OTHER INVESTMENT OFFICES (1.8%)
244,900 Capital Automotive 3,520,437
355,000 Chastain Capital Corp.(a) 4,925,625
349,600 Consolidation Capital Corp.(a) 7,713,050
---------------
16,159,112
---------------
HOSPITAL SUPPLY (0.7%)
286,600 Maxxim Medical, Inc.(a) 6,699,276
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT (3.9%)
494,400 Pentair, Inc. 21,691,800
113,000 SPS Technologies, Inc. 6,624,625
414,300 Xircom, Inc.(a) 6,499,331
---------------
34,815,756
---------------
INSURANCE CARRIERS (1.5%)
340,200 Everest Reinsurance Holdings, Inc. 13,225,275
---------------
MISCELLANEOUS REPAIR SERVICES (0.6%)
174,300 World Access, Inc.(a) 5,468,663
---------------
MISCELLANEOUS RETAIL (3.3%)
312,900 CSK Auto Corp.(a) 8,409,188
378,000 Borders Group, Inc.(a) 11,718,000
236,400 Tech Data Corp.(a) 9,603,750
---------------
29,730,938
---------------
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
145
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL COMPANY GROWTH PORTFOLIO (continued)
- -------------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
<TABLE>
<C> <S> <C>
MOTOR FREIGHT TRANSPORTATION & WAREHOUSING (1.8%)
378,651 Swift Transportation, Inc. $ 8,424,963
247,600 USFreightways Corp. 7,799,400
---------------
16,224,363
---------------
NONDEPOSITORY CREDIT INSTITUTIONS (3.5%)
415,000 American Capital Strategies Ltd. 9,778,438
228,000 First Sierra Financial, Inc.(a) 5,543,250
329,900 Heller Financial, Inc.(a) 9,195,963
414,900 UniCapital Corp.(a) 7,208,888
---------------
31,726,539
---------------
OIL & GAS EXTRACTION (8.9%)
327,100 Apache Corp. 11,182,731
232,000 Cooper Cameron Corp. 13,804,000
199,900 Dawson Production Services, Inc.(a) 2,223,887
260,500 Global Industries Ltd. 5,551,906
496,200 Marine Drilling Co., Inc.(a) 9,334,762
346,100 Noble Drilling Corp.(a) 10,209,950
472,800 Parker Drilling Co.(a) 3,989,250
328,600 R & B Falcon Corp.(a) 9,426,712
303,600 Rowan Cos., Inc.(a) 7,760,775
176,100 Santa Fe International Corp. 6,141,488
---------------
79,625,461
---------------
PRIMARY METAL INDUSTRIES (3.0%)
247,400 Essex International, Inc.(a) 6,076,763
574,351 General Cable Corp. 15,220,276
233,200 Titanium Metals Corp. 5,669,675
---------------
26,966,714
---------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES (1.4%)
350,500 Valassis Communications, Inc.(a) 12,333,218
---------------
REAL ESTATE (2.0%)
378,700 Intrawest Corp. 7,502,994
377,100 Newhall Land & Farming Co. 10,794,487
---------------
18,297,481
---------------
RUBBER & MISCELLANEOUS PLASTICS PRODUCTS (2.2%)
209,800 EVI Weatherford, Inc. 10,608,012
304,700 Standard Products Co. 8,950,562
---------------
19,558,574
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES (1.2%)
305,400 Amresco, Inc.(a) 10,307,250
---------------
TRANSPORTATION EQUIPMENT (4.8%)
382,350 AAR Corp. 10,108,378
352,900 Gulfstream Aerospace Corp.(a) 14,998,250
200,200 Hayes Lemmerz International, Inc.(a) 7,845,337
375,300 Wabash National Corp. 9,734,343
---------------
42,686,308
---------------
TRANSPORTATION SERVICES (0.8%)
176,300 Coach USA, Inc.(a) 7,591,919
---------------
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
SMALL COMPANY GROWTH PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
COMMON STOCKS (continued)
<TABLE>
<C> <S> <C>
WATER TRANSPORTATION (0.9%)
196,900 Sea Containers, Ltd. $ 7,962,144
---------------
WHOLESALE TRADE--DURABLE GOODS (4.6%)
537,000 CHS Electronics, Inc. 10,672,875
225,700 HA-LO Industries, Inc.(a) 6,982,593
570,100 ITEQ, Inc.(a) 6,769,937
446,500 PSS World Medical, Inc.(a) 5,581,250
205,600 Reliance Steel & Aluminum Co. 7,851,351
190,500 West Marine, Inc.(a) 3,655,218
---------------
41,513,224
---------------
WHOLESALE TRADE--NONDURABLE GOODS (1.4%)
282,200 Daisytek International Corp. 7,196,100
162,700 National-Oilwell, Inc. 5,684,332
---------------
12,880,432
---------------
TOTAL COMMON STOCKS
(COST $738,072,386) 879,673,415
---------------
TIME DEPOSITS (1.9%)
16,802,411 PNC Bank, N.A. Nassau, 5.66%, 6/1/98
(cost $16,802,411) 16,802,411
---------------
TOTAL INVESTMENTS (100.0%) (COST $754,874,797) $ 896,475,826
---------------
---------------
- - -----------------------------------------------------------------
INTERNATIONAL PORTFOLIO
- - -----------------------------------------------------------------
STOCKS & WARRANTS (91.1%)
AUSTRALIA (2.2%)
COMMON STOCKS
920,000 Australia & New Zealand Banking Group
Ltd. $ 6,534,385
326,000 Brambles Industries Ltd. 6,615,558
451,789 Broken Hill Proprietary Co. Ltd. 3,871,022
327,000 Telstra Corp. 770,086
521,000 Woodside Petroleum Ltd. 2,995,603
---------------
20,786,654
---------------
AUSTRIA (0.8%)
PREFERRED STOCK
43,250 Bank Austria AG(d) 3,885,464
42,890 Bank Austria AG(d) 3,836,027
---------------
7,721,491
---------------
BELGIUM (1.1%)
COMMON STOCKS
11,498 Grupo Bruxelles Lambert 2,528,374
119,140 IPSO-Industrial Laundry Group 8,430,215
---------------
10,958,589
---------------
DENMARK (1.8%)
COMMON STOCKS
232,650 International Service System A/S 11,989,266
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
146
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
INTERNATIONAL PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
DENMARK (continued)
COMMON STOCKS (continued)
<TABLE>
<C> <S> <C>
60,560 Unidanmark A/S $ 4,895,305
---------------
16,884,571
---------------
FINLAND (0.3%)
COMMON STOCKS
129,800 Rauma Group(d) 2,683,204
---------------
FRANCE (8.8%)
COMMON STOCKS
54,580 Accor SA 14,970,545
38,990 Canal Plus 7,077,479
68,018 Compagnie Generale des Eaux 13,665,447
95,975 Elf Aquitaine 13,330,752
39,570 Groupe Danone 10,655,090
27,920 Legrand SA 7,700,074
155,000 METALEUROP, SA 1,606,272
126,107 Michelin 7,803,171
23,595 Primagaz Cie 2,015,284
1 Societe Generale 267
32,350 Suez Lyonnaise des Eaux 5,520,718
---------------
84,345,099
---------------
WARRANTS
55,391 Cie Generale Des Eaux Warrants 96,286
2,145 Primagaz Cie 25,635
---------------
121,921
---------------
84,467,020
---------------
GERMANY (11.8%)
COMMON STOCKS
45,500 Allianz AG(d) 14,394,211
301,080 Bayer AG(d) 14,405,499
187,560 Deutsche Bank AG(d) 16,159,535
107,660 Hoechst AG 5,374,546
15,760 Mannesmann AG 15,425,848
288,310 Tarkett AG(d) 11,320,227
144,100 Veba AG 9,473,031
---------------
86,552,897
---------------
PREFERRED STOCK
47,300 SAP AG(d) 26,265,987
---------------
112,818,884
---------------
ITALY (4.1%)
COMMON STOCKS
8,665,350 Banca di Roma(d) 17,880,174
1,067,100 Fiat SpA 4,780,326
2,217,742 Telecom Italia SpA(d) 16,770,665
---------------
39,431,165
---------------
JAPAN (13.4%)
COMMON STOCKS
336,000 Amada Metrecs Co. Ltd. 2,012,629
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
INTERNATIONAL PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
JAPAN (continued)
COMMON STOCKS (continued)
<TABLE>
<C> <S> <C>
258,000 Arcland Sakamoto(d) $ 1,694,368
120,000 Asahi Bank Ltd.(d) 451,198
274,000 Bridgestone Corp.(d) 6,248,620
265,650 Credit Saison Co. Ltd.(d) 5,329,678
239,000 Dai-Dan Co. Ltd. 1,310,864
1,122,000 Dai-Tokyo Fire & Marine Insurance Co. 3,765,236
319,000 Daiwa House Industry Co. Ltd. 2,484,040
674,000 Daiwa Securities 2,563,404
847 East Japan Railway Co. 4,022,126
151,000 Fuji Photo Film Co. 5,110,886
90,000 Glory Ltd. 1,627,034
667,000 Hanshin Electric Railway(d) 1,978,398
768,000 Hitachi Ltd. 5,060,326
79,000 Ito-Yokado Co. Ltd. 3,933,892
314,000 Japan Airport Terminal Co. 1,778,876
2,771,000 Kobe Steel Ltd.(d) 2,119,770
33,000 Kyocera Corp. 1,609,930
32,000 Mabuchi Motor Co. 2,078,446
452,000 Matsushita Electric Industrial Co.
Ltd.(d) 7,078,555
69,100 Meiko Shokai 877,684
506,000 Mitsubishi Corp. 3,052,835
877,000 Mitsubishi Electric Corp. 2,075,966
800,000 Mitsui & Co.(d) 4,099,159
230,000 Mitsui Fudosan Co. Ltd. 1,860,715
181,000 Murata Manufacturing Co. Ltd. 5,264,173
69,600 Nagaileben Co. Ltd.(d) 1,255,726
556,000 Oji Paper Co. Ltd.(d) 2,347,346
263,000 Omron Corp. 3,966,873
31,300 SMC Corp.(d) 2,529,931
64,000 Secom Ord. 3,634,973
337,000 Showa Shell Sekiyu 1,529,772
60,000 Sony Corp. 5,066,214
1,426,000 Sumitomo Metal Industries(d) 2,212,608
231,000 Takeda Chemical Ind. 5,968,175
840,000 Teijin Ltd. 2,533,973
38,500 Toho Co. 4,306,642
324,000 Tokio Marine & Fire Insurance Co. 3,067,788
547,000 Toppan Printing Co. Ltd. 5,968,780
170,000 Toyota Motor Corp. 4,208,135
---------------
128,085,744
---------------
NETHERLANDS (12.9%)
COMMON STOCKS
111,140 Aegon NV 8,906,247
407,000 ABN Amro Holdings(d) 9,865,561
401,000 Elsevier NV 6,247,225
197,800 Gucci Group(d) 8,975,175
353,125 Heineken NV 13,586,463
674,749 ING Group NV 46,380,402
175,081 Oce NV 7,363,667
200,390 Philips Electronics NV 19,060,540
140,000 Xeikon NV(a)(d) 3,386,251
---------------
123,771,531
---------------
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
147
<PAGE>
SCHEDULES OF INVESTMENTS (CONCLUDED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
INTERNATIONAL PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
NETHERLANDS (continued)
<TABLE>
<C> <S> <C>
PREFERRED STOCK
8,400 ING Group NV $ 38,841
---------------
123,810,372
---------------
PORTUGAL (1.9%)
COMMON STOCKS
260,360 Portugal Telecom 13,699,393
177,750 Semapa - Sociedade de Investimento e
Gestao SGPS SA 4,866,325
---------------
18,565,718
---------------
SINGAPORE (1.0%)
COMMON STOCKS
967,000 City Developments Ltd. 3,494,833
538,200 Development Bank of Singapore Ltd.(d) 3,247,205
248,698 Singapore Press Holdings Ltd. 2,035,346
261,000 United Overseas Bank Ltd. 1,021,237
---------------
9,798,621
---------------
SPAIN (2.8%)
COMMON STOCKS
66,000 Banco Popular Espanol SA 5,242,838
132,000 Centros Comerciales Pryca SA(d) 2,420,778
781,130 Endesa SA 18,739,066
---------------
26,402,682
---------------
SWEDEN (1.8%)
COMMON STOCKS
243,000 Atlas Copco AB(d) 7,183,657
368,000 Telefonaktiebolaget LM Ericsson "B"
Shares 10,503,006
---------------
17,686,663
---------------
SWITZERLAND (9.6%)
COMMON STOCKS
9,140 Asea Brown Boveri Ltd.(d) 15,515,623
4,830 Alusuisse-Lonza Holding AG(d) 6,500,541
2,840 Nestle SA 6,094,495
21,928 Novartis AG 37,194,254
860 Roche Holding AG(d) 8,861,153
19,770 Selectra Group 4,037,970
22,160 Zurich Versicherungsgesellschaft(d) 13,863,115
---------------
92,067,151
---------------
UNITED KINGDOM (16.8%)
COMMON STOCKS
1,131,900 Airtours plc 8,398,800
438,000 Allied Domecq plc 4,360,714
1,462,000 Asda Group plc 4,339,270
179,900 Barclays plc 4,793,813
811,911 Blue Circle Industries plc 5,203,542
522,200 British Airways plc 5,518,356
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - -----------------------------------------------------------------
INTERNATIONAL PORTFOLIO (continued)
- - -----------------------------------------------------------------
</TABLE>
UNITED KINGDOM (continued)
COMMON STOCKS (continued)
<TABLE>
<C> <S> <C>
522,000 British Energy plc $ 4,809,687
482,300 British Land Co. plc 5,273,681
400,000 British Sky Broadcasting Group plc 2,811,481
322,700 Cable & Wireless plc 3,646,952
342,609 Cadbury Schweppes plc 5,232,441
1,645,800 David S. Smith Holdings plc 6,709,883
267,000 De La Rue plc 1,280,138
360,000 EMI Group plc 3,041,095
429,600 Enterprise Oil plc 3,975,830
161,800 HSBC Holdings plc 4,221,787
185,300 Johnson Matthey plc 1,862,972
334,600 Kingfisher plc 5,920,435
1,012,300 LASMO plc 4,787,459
530,000 Lloyds TSB Group plc 7,688,111
1,139,000 LucasVarity plc 5,015,168
1,263,900 MFI Furniture plc 1,648,923
208,000 Marks & Spencer plc 1,852,055
36,220 National Westminster Bank plc 660,962
1,483,000 Pilkington Brothers plc 3,555,136
389,420 Prudential Corp. plc 5,169,405
584,243 Rank Group plc 3,401,413
199,000 Rio Tinto plc 2,484,256
1,395,730 Rolls-Royce plc 6,640,643
243,596 Standard Chartered plc 3,023,102
309,200 Tesco plc 2,712,812
371,405 Tibbett & Britten Group plc 3,591,701
443,844 United News & Media plc 6,373,199
1,065,074 Vodafone Group plc 11,689,412
580,100 Williams Holdings plc 4,162,491
99,000 Zeneca Group plc 4,018,445
---------------
159,875,570
---------------
TOTAL STOCKS, WARRANTS & RIGHTS (COST $669,127,444) 872,044,099
---------------
CASH MANAGEMENT ACCOUNTS (4.9%)
46,779,038 Treasury Fund (cost $46,779,038) 46,779,038
---------------
CERTIFICATES OF DEPOSIT (4.0%)
17,000,000 Barclays Bank, 5.48%, 7/2/98 17,000,000
6,000,000 Deutsche Bank, 5.47%, 6/22/98 6,000,000
15,000,000 Morgan Guaranty, 5.48%, 6/2/98 15,000,000
---------------
TOTAL CERTIFICATES OF DEPOSIT (COST $38,000,000) 38,000,000
---------------
TOTAL INVESTMENTS (100.0%) (COST $753,906,482) $ 956,823,137
---------------
---------------
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACT
CONTRACT TO SELL
</TABLE>
<TABLE>
<CAPTION>
EXPIRATION UNDERLYING FACE UNREALIZED
DATE CURRENCY UNITS AMOUNT OF VALUE APPRECIATION
- - ---------- ------------ ------------ --------------- ------------
<C> <S> <C> <C> <C>
6/19/98 Japanese Yen 3,000,000,000 ($21,649,500) $1,769,338
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
148
<PAGE>
NOTES TO SCHEDULES OF INVESTMENTS MAY 31, 1998
- --------------------------------------------------------------------------------
(a) Non-income producing security
(b) Securities that may be resold to "qualified institutional buyers" under rule
144A or securities offered pursuant to 4(2) of the Securities Act of 1933,
as amended. The Board of Trustees has deemed these securities to be liquid
at May 31, 1998
(c) During the year June 1, 1997 through May 31, 1998, Index Portfolio purchased
20,000 shares of Norwest Corp
(d) Part or all of this investment on loan, see Note 7 of Notes to Financial
Statements
(e) The Portfolios have invested in a joint repurchase agreement. The following
represents the collateral on the BancAmerica Robertson Stephens joint
repurchase agreement: Collateralized by $136,000,000 FNMA Discount Notes,
5.41% to 5.43%, 1998; $85,000,000 FHLMC Discount Notes, 5.43% to 5.45%,
1998; $13,960,000 FFCB Discount Notes, 5.42%, 1998; $119,000,000 FHLB
Discount Notes, 5.37% to 5.38%, 1998; $30,000,000 FNMA Agency Notes, 6.05%,
3/12/01; $9,275,000 FHLB Agency Notes, 5.51%, 2/6/01 and $20,250,000 FHLB
Agency Notes, 5.71%, 3/19/03, with a total market value of $408,309,000.
(f) At May 31, 1998, $1,410,000 of U.S. Treasury Bills, 4/29/99, with a market
value of $1,343,552, were pledged to cover margin requirements fo open
future contracts
(g) At May 31, 1998, $190,000 of U.S. Treasury Bills, 10/08/98, with a market
value of $186,582 and $50,000 of U.S. Treasury Bills, 4/29,99, with a market
value of $47,634, were pledged to cover margin requirements for open futures
contracts
ABBREVIATIONS
- - ------------------------------------------------------------------------------
<TABLE>
<S> <C>
ADR American Depositary Receipts
AFC Allmerica Financial Corporation
AMBAC American Municipal Bond Assurance Corporation
ARM Adjustable Rate Mortgage
EQCC EquiCredit Corporation
FAMC Federal Agricultural Mortgage Corporation
FFCB Federal Farm Credit Bank
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
FSA Financial Security Assurance, Inc.
GMAC General Motors Acceptance Corporation
GNMA Government National Mortgage Association
HCLT Household Consumer Loan Trust
MLMI Merrill Lynch Mortgage Investors
MNB Maryland National Bank
PRAT Premier Auto Trust
RFMSI Residential Funding Mortgage Security I
RTC Resolution Trust Corporation
RV Revenue Bonds
SBA Small Business Administration
SD School District
V/R Variable rate
</TABLE>
See Notes to Financial Statements CORE TRUST (DELAWARE)
Exhibit (12)(b)
ANNUAL REPORT
MAY 31, 1998
PRIME MONEY MARKET PORTFOLIO
MONEY MARKET PORTFOLIO
CORE TRUST (DELAWARE)
<PAGE>
INDEPENDENT AUDITORS' REPORT
- - ------------------------------------------------------------------------------
To the Board of Trustees and Partners
Core Trust (Delaware)
We have audited the accompanying statements of assets
and liabilities of two portfolios of Core Trust
(Delaware), Prime Money Market Portfolio and Money Market
Portfolio, (collectively, the "Portfolios"), including the
schedules of investments, as of May 31, 1998, and the
related statements of operations, statements of changes in
net assets and financial highlights for the period from
August 23, 1997 (commencement of operations) to May 31,
1998. These financial statements and financial highlights
are the responsibility of the Portfolios' management. Our
responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
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 and financial highlights. Our procedures
included confirmation of securities owned as of May 31,
1998, by correspondence with the custodian. 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 financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of the
Portfolios as of May 31, 1998, the results of their
operations, changes in their net assets and financial
highlights for the period from August 23, 1997 to May 31,
1998, in conformity with generally accepted accounting
principles.
[LOGO]
Boston, Massachusetts
July 21, 1998
CORE TRUST (DELAWARE)
20
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRIME MONEY MONEY
MARKET MARKET
PORTFOLIO PORTFOLIO
---------------- ----------------
<S> <C> <C>
ASSETS
Investments at cost (Note 2)............... $ 3,127,213,156 $ 2,360,526,186
Cash....................................... 117,269 111,446
Receivable for interest and other
receivables.............................. 12,458,411 11,953,861
Organization Costs, net of amortization
(Note 2)................................. 12,663 12,663
---------------- ----------------
TOTAL ASSETS................................. 3,139,801,499 2,372,604,156
---------------- ----------------
LIABILITIES
Payable to custodian (Note 3).............. 27,675 21,322
Payable to adviser (Note 3)................ 878,817 200,477
Payable to other related parties (Note
3)....................................... 132,007 4,593
Accrued expenses and other liabilities..... 11,009 9,102
---------------- ----------------
TOTAL LIABILITIES............................ 1,049,508 235,494
---------------- ----------------
NET ASSETS................................... $ 3,138,751,991 $ 2,372,368,662
---------------- ----------------
---------------- ----------------
COMPONENTS OF NET ASSETS
Investors' capital......................... $ 3,138,751,991 $ 2,372,368,662
---------------- ----------------
---------------- ----------------
</TABLE>
See Notes to Financial Statements CORE TRUST (DELAWARE)
21
<PAGE>
STATEMENTS OF OPERATIONS PERIOD ENDED MAY 31, 1998(a)
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRIME MONEY MONEY
MARKET MARKET
PORTFOLIO PORTFOLIO
------------- ------------
<S> <C> <C>
INVESTMENT INCOME
Interest income............................ $126,455,477 $ 97,103,729
------------- ------------
EXPENSES
Advisory (Note 3).......................... 7,337,295 2,332,191
Administration (Note 3).................... 1,098,165 842,979
Custody (Note 3)........................... 231,222 180,185
Accounting (Note 3)........................ 71,887 70,387
Legal (Note 3)............................. 22,869 16,495
Audit...................................... 13,968 13,968
Trustees................................... 4,087 3,352
Amortization of organization costs (Note
2)....................................... 2,531 2,531
Miscellaneous.............................. 35,467 14,559
------------- ------------
TOTAL EXPENSES............................... 8,817,491 3,476,647
Fees waived and expenses reimbursed (Note
4)....................................... - (1,484,619)
------------- ------------
NET EXPENSES................................. 8,817,491 1,992,028
------------- ------------
NET INVESTMENT INCOME........................ 117,637,986 95,111,701
NET REALIZED LOSS FROM INVESTMENTS SOLD...... (42,987) (21,885)
------------- ------------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................. $117,594,999 $ 95,089,816
------------- ------------
------------- ------------
</TABLE>
(a) For the period August 23, 1997 (date of commencement of operations), to May
31, 1998
See Notes to Financial Statements CORE TRUST (DELAWARE)
22
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS PERIOD ENDED MAY 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRIME MONEY MONEY
MARKET MARKET
PORTFOLIO PORTFOLIO
---------------- ---------------
<S> <C> <C>
NET ASSETS -- AUGUST 23, 1997 (COMMENCEMENT OF
OPERATIONS)..................................... $ - $ -
---------------- ---------------
OPERATIONS
Net investment income........................... 117,637,986 95,111,701
Net realized loss on investments sold........... (42,987) (21,885)
---------------- ---------------
Net increase in net assets resulting from
operations................................. 117,594,999 95,089,816
---------------- ---------------
TRANSACTIONS IN INVESTOR'S BENEFICIAL INTERESTS
Contributions (Note 5).......................... 5,373,694,156 4,410,026,378
Withdrawals..................................... (2,352,537,164) (2,132,747,532)
---------------- ---------------
Net increase from transactions in investors'
beneficial interests....................... 3,021,156,992 2,277,278,846
---------------- ---------------
Net increase in net assets.................. 3,138,751,991 2,372,368,662
---------------- ---------------
NET ASSETS -- MAY 31, 1998........................ $ 3,138,751,991 $ 2,372,368,662
---------------- ---------------
---------------- ---------------
</TABLE>
See Notes to Financial Statements CORE TRUST (DELAWARE)
23
<PAGE>
FINANCIAL HIGHLIGHTS
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS TO
AVERAGE
NET ASSETS(a)
-------------
NET
EXPENSES
-------------
<S> <C>
PRIME MONEY MARKET PORTFOLIO
August 23, 1997(c) to May 31, 1998................................................................. 0.40%
MONEY MARKET PORTFOLIO
August 23, 1997(c) to May 31, 1998................................................................. 0.12%
<CAPTION>
GROSS
EXPENSES(b)
---------------
<S> <C>
PRIME MONEY MARKET PORTFOLIO
August 23, 1997(c) to May 31, 1998................................................................. 0.40%
MONEY MARKET PORTFOLIO
August 23, 1997(c) to May 31, 1998................................................................. 0.21%
<CAPTION>
NET
INVESTMENT
INCOME
---------------
PRIME MONEY MARKET PORTFOLIO
August 23, 1997(c) to May 31, 1998................................................................. 5.36%
MONEY MARKET PORTFOLIO
August 23, 1997(c) to May 31, 1998................................................................. 5.64%
</TABLE>
(a) Annualized
(b) During the period, various fees were waived and reimbursed. The ratio of
Gross Expenses to Average Net Assets reflects the expense ratio in the
absence of any waivers and reimbursements (Note 4)
(c) Commencement of operations
See Notes to Financial Statements CORE TRUST (DELAWARE)
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS MAY 31, 1998
- - ------------------------------------------------------------------------------
NOTE 1. ORGANIZATION
Core Trust (Delaware) ("Core Trust"), organized as a Delaware business trust,
was formed on September 1, 1994. Core Trust, which is registered as an open-end
management investment company under the Investment Company Act of 1940 (the
"Act"), currently has twenty-one separate investment portfolios. These financial
statements relate to Prime Money Market Portfolio and Money Market Portfolio
(each a "Portfolio" and collectively the "Portfolios"), each of which is
diversified. The Portfolios commenced operations on August 23, 1997. Interests
in the Portfolios are sold in private placement transactions without any sales
charge to qualified investors, including open-end management investment
companies.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with generally accepted
accounting principles, which require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of increase and decrease in net assets from
operations during the fiscal period. Actual results could differ from those
estimates. The following represent significant accounting policies of the Funds:
PORTFOLIO VALUATION - Core Trust determines the net asset value per share of
each Portfolio as of 1:00 p.m., Pacific time, on each Portfolio business day
utilizing the amortized cost method pursuant to Rule 2a-7 under the Act. Under
this method, all investments purchased at a discount or premium are valued by
accreting or amortizing, respectively, the difference between the original
purchase price and the maturity value of the investment over the period to the
investment's maturity.
REPURCHASE AGREEMENTS - The Portfolios may invest in repurchase agreements. Each
Portfolio, through its custodian, receives delivery of the underlying
collateral, whose market value must always equal or exceed the repurchase price.
The investment adviser is responsible for determining the value of the
underlying collateral at all times. In the event of default, a Portfolio may
have difficulties with the disposition of such securities held as collateral.
ORGANIZATION COSTS - The costs incurred by each Portfolio in connection with its
organization have been capitalized and are being amortized using the
straight-line method over a five year period beginning on the commencement of
each Portfolio's operations.
FEDERAL TAXES - The Portfolios are not required to pay federal income taxes on
their net investment income and net capital gain as they are treated as
partnerships for federal income tax purposes. All interest, dividends, gain and
loss of a Portfolio are deemed to have been "passed through" to the partners in
proportion to their holdings of the Portfolio.
SECURITIES TRANSACTIONS, INTEREST INCOME AND REALIZED GAIN AND LOSS - Securities
transactions are recorded on a trade date basis, interest income is accrued as
earned and realized gain and loss on investments sold are recorded on the basis
of identified cost. The cost basis of investments for federal income tax
purposes at May 31, 1998, is the same as for financial reporting purposes.
NOTE 3. ADVISORY, SERVICING FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER - The investment adviser of Prime Money Market Portfolio and
Money Market Portfolio is Norwest Investment Management, Inc. ("Adviser"), an
indirect subsidiary of Norwest Corporation. The Adviser receives an advisory fee
from Core Trust with respect to Prime Money Market Portfolio and Money Market
Portfolio at annual rates of 0.40% and 0.20% , respectively, of the average
daily net assets for the first $300 million of net assets of each Portfolio,
declining to 0.32% and 0.12%, respectively, of the average daily net assets in
excess of $700 million.
ADMINISTRATIVE - The administrator of Core Trust is Forum Administrative
Services, LLC ("FAdS"). FAdS receives an administration fee of 0.05% of the
average daily net assets of each Portfolio. In addition, for the period ended
May 31, 1998, certain legal expenses were charged to the Portfolios by FAdS. The
respective amounts for Prime Money Market Portfolio and Money Market Portfolio
were $879 and $674.
CUSTODIAN - Norwest Bank, Minnesota, N.A., a subsidiary of Norwest Corporation,
serves as the custodian for the Portfolios and receives a fee of 0.02% of the
first $100 million of a Portfolio's average daily net assets, 0.015% of the next
$100 million of a Portfolio's average daily net assets and 0.01% of a
Portfolio's remaining average daily net assets.
PLACEMENT AGENT - Forum Financial Services, Inc.-Registered Trademark- acts as
Core Trust's placement agent pursuant to a separate agreement with Core Trust
and receives no compensation for its services.
OTHER SERVICE PROVIDERS - Forum Accounting Services, LLC ("FAcS") provides
portfolio accounting and interestholder recordkeeping services to each Portfolio
pursuant to a separate agreement.
NOTE 4. WAIVERS AND REIMBURSEMENTS
For the period ended May 31, 1998, the Adviser voluntarily waived a portion of
its advisory fees and FAdS voluntarily waived a portion of its administration
fees for Money Market Portfolio in the amounts of $646,233 and $838,386,
respectively. The Adviser and FAdS, at their discretion, may revise or
discontinue the voluntary fee waivers at any time.
CORE TRUST (DELAWARE)
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
NOTE 5. REORGANIZATION
In connection with the merger and division and the contemporaneous commencement
of operations of certain Portfolios on August 23, 1997, certain investors
contributed all or a portion of their net assets to the Portfolios. The fair
market value and tax cost basis of those contributions is as follows:
<TABLE>
<CAPTION>
MARKET TAX COST
PORTFOLIO VALUE BASIS
- - ------------------------------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
Prime Money Market Portfolio............................................................... $ 2,699,819,155 $ 2,699,819,155
Money Market Portfolio..................................................................... 2,101,885,695 2,101,898,478
</TABLE>
CORE TRUST (DELAWARE)
26
<PAGE>
SCHEDULES OF INVESTMENTS MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - ------------------------------------------------------------------------
PRIME MONEY MARKET PORTFOLIO
- - ------------------------------------------------------------------------
ASSET BACKED SECURITIES (1.3%)
42,386,942 WFP Tower B Finance Corp., Short-Term
STEERS Trust, Series A, 5.69% V/R,
12/8/98(a) $ 42,386,942
--------------
CERTIFICATES OF DEPOSIT (11.5%)
50,000,000 Abbey National Treasury Services,
London, 5.75%, 2/26/99 50,000,000
16,000,000 Banco Espirito Santo e Comercial de
Lisboa, New York Branch, 5.74%,
3/26/99 15,997,500
40,000,000 Bankers Trust Co., 5.91%, 8/7/98 39,993,614
47,000,000 Banque Paribas, New York Branch, 5.73%,
3/29/99 46,984,228
130,000,000 Deutsche Bank, New York Branch, 5.73%,
4/15/99 129,956,606
25,000,000 Generale Bank, New York Branch, 6.02%,
12/16/98 25,000,970
28,000,000 Societe Generale, New York Branch,
5.97%, 9/15/98 27,996,115
25,000,000 Societe Generale, New York Branch,
5.70%, 3/23/99 24,989,353
--------------
TOTAL CERTIFICATES OF DEPOSIT 360,918,386
--------------
COMMERCIAL PAPER (55.0%)
25,000,000 AGA Capital, Inc., 5.53%, 6/9/98(a) 24,969,278
10,000,000 Ace Overseas Corp., 5.45%, 10/5/98(a) 9,809,251
45,000,000 Asset Backed Capital Finance, Inc.,
5.78% V/R, 6/12/98(a) 45,000,000
10,000,000 Banca CRT Financial Corp., 5.41%, 8/7/98 9,899,314
45,000,000 Banco Rio de La Plata St, Bayerische
Vereinsbank, AG, LOC, 5.47%, 12/7/98 43,711,653
47,960,000 Bankers Trust New York Corp., 5.35%,
10/5/98 47,061,950
24,972,000 Barton Capital Corp., 5.58%, 6/19/98(a) 24,902,328
83,070,000 Bavaria GLB Corp., 5.51%, 7/15/98(a) 82,510,570
45,000,000 CC (USA), Inc., 5.53%, 7/14/98(a) 44,702,763
20,000,000 CC (USA), Inc., 5.59%, 7/15/98(a) 19,864,089
64,855,000 CPI Funding Corp., 5.55%, 6/25/98(a) 64,613,793
21,424,000 CPI Funding Corp., 5.50%, 8/25/98(a) 21,145,786
25,000,000 Centre Square Funding Corp., 5.58%,
6/15/98(a) 24,945,750
44,463,000 Citation Capital Corp., 5.58%,
7/21/98(a) 44,118,412
10,000,000 Citation Capital Corp., 5.56%, 8/4/98(a) 9,901,156
60,283,000 Citation Capital Corp. 5.50%, 9/1/98(a) 59,435,689
7,310,000 City of New York, NY, 5.72%, 7/20/98 7,310,000
10,000,000 COFCO Capital Corp., Credit Suisse First
Boston, LOC, 5.53%, 7/21/98 9,923,195
6,225,000 Cooperative Association of Tractor
Dealers, Inc., 5.51%, 7/13/98 6,184,984
15,400,000 Cooperative Association of Tractor
Dealers, Inc., 5.40%, 8/7/98 15,245,230
25,000,000 Corporate Asset Securitization Australia
Ltd., Inc., 5.55%, 6/10/98(a) 24,965,313
25,000,000 Creditanstalt Finance, Inc., 5.38%,
7/27/98 24,790,778
35,000,000 Diageo Capital plc, 5.40%, 7/27/98(a) 34,706,000
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - ------------------------------------------------------------------------
PRIME MONEY MARKET PORTFOLIO (continued)
- - ------------------------------------------------------------------------
50,000,000 Diageo Capital plc, 5.40%, 7/28/98(a) $ 49,572,500
30,000,000 Galicia Funding Corp., Dresdner Bank AG,
LOC, 5.60%, 6/12/98 29,948,667
14,323,000 Galleon Capital Corp., 5.53%, 6/1/98(a) 14,323,000
9,895,000 Gotham Funding Corp., 5.59%, 6/5/98(a) 9,888,854
11,000,000 Hitachi Credit America Corp., 5.52%,
7/8/98 10,937,594
40,000,000 Lexington Parker Capital Co. LLC.,
5.50%, 8/21/98(a) 39,505,000
22,000,000 Market Street Funding Corp., 5.54%,
6/2/98(a) 21,996,614
30,354,000 Market Street Funding Corp., 5.54%,
6/16/98(a) 30,283,933
10,000,000 Mitsubishi Motor Credit, 5.63%, 6/15/98 9,978,087
50,000,000 Old Line Funding Corp., 5.54%, 6/1/98(a) 50,000,000
37,000,000 Pacific Dunlop Holdings, Inc., 5.54%,
6/5/98(a) 36,977,245
41,083,000 Perry Funding Corp., 5.57%, 6/1/98(a) 41,083,000
35,000,000 Perry Funding Corp., 5.57%, 8/17/98(a) 34,583,024
18,088,000 Repeat Offering Securitization Entity,
5.57%, 7/28/98(a) 17,928,479
36,000,000 Royal Bank of Canada, 5.38%, 7/28/98 35,693,340
34,000,000 San Paulo US Financial Corp., 5.49%,
7/13/98 33,782,230
10,000,000 Sigma Finance Corp., 5.71%, 6/15/98(a) 9,977,794
20,000,000 Silver Tower US Funding Corp., 5.54%,
8/13/98(a) 19,775,525
12,550,000 Silver Tower US Funding Corp., 5.53%,
8/14/98(a) 12,407,342
46,000,000 Silver Tower US Funding Corp., 5.54%,
11/18/98(a) 44,796,590
23,424,000 Silver Tower US Funding Corp., 5.53%,
11/30/98(a) 22,769,131
13,500,000 Sinochem American C.P., Inc., Credit
Suisse First Boston, LOC, 5.54%,
6/17/98 13,466,760
6,000,000 Special Purpose Accounts Receivables
Cooperative Corp., 5.55%, 7/31/98(a) 5,944,500
25,000,000 Special Purpose Accounts Receivables
Cooperative Corp., 5.55%, 8/12/98(a) 24,722,500
8,000,000 Sunkyoung America, Inc., Credit Suisse
LOC, 5.50%, 7/9/98 7,953,556
46,947,000 Sydney Capital Corp., 5.55%, 6/9/98(a) 46,889,099
24,492,000 Sydney Capital Corp., 5.51%, 7/1/98(a) 24,379,541
17,000,000 TI Group, Inc., 5.77%, 6/2/98 16,997,275
10,000,000 TI Group, Inc., 5.77%, 6/18/98 9,972,753
8,500,000 TI Group, Inc., 5.60%, 6/26/98 8,466,945
20,000,000 TI Group, Inc., 5.53%, 11/9/98 19,505,373
46,000,000 Thames Asset Global Securitization,
Inc., 5.57%, 6/18/98(a) 45,879,196
41,000,000 Thames Asset Global Securitization,
Inc., 5.52%, 7/6/98(a) 40,779,967
37,111,000 Thames Asset Global Securitization,
Inc., 5.52%, 7/15/98(a) 36,860,625
26,448,000 Three Rivers Funding Corp., 5.55%,
6/18/98(a) 26,378,684
29,000,000 Toshiba Capital (Asia) Ltd., 5.52%,
6/19/98 28,919,960
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
27
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - ------------------------------------------------------------------------
PRIME MONEY MARKET PORTFOLIO (continued)
- - ------------------------------------------------------------------------
11,960,000 Toshiba International Finance (UK),
5.54%, 6/18/98 $ 11,928,711
11,000,000 Toshiba International Finance (UK),
5.52%, 7/6/98 10,940,967
8,400,000 Toshiba International Finance (UK),
5.52%, 7/10/98 8,349,768
20,660,000 Trident Capital Finance, Inc., 5.58%,
6/11/98(a) 20,627,977
34,750,000 Yamaha Motors Owner Trust, 5.66%,
6/15/98(a) 34,684,317
--------------
TOTAL COMMERCIAL PAPER 1,719,573,705
--------------
CORPORATE NOTES (11.3%)
28,000,000 Asset Backed Trust 1995 Series A-1,
5.65% V/R, 12/10/98(a) 28,000,000
28,000,000 Asset Backed Trust 1995 Series A-3,
5.68% V/R, 4/15/99(a) 28,000,000
10,000,000 Asset Backed Trust 1996 Series A-4,
5.67% V/R, 1/15/99(a) 10,000,000
15,000,000 Asset Backed Trust 1997 Series C, 5.66%
V/R, 6/15/98(a) 15,000,000
3,000,000 Beneficial Corp., 8.83%, 6/15/98 3,002,890
20,000,000 Beta Finance, Inc., 6.00%, 10/30/98(a) 20,000,000
25,000,000 BRAVO Trust Series 1997-1, 5.71% V/R,
10/15/98(a) 25,000,473
30,000,000 Bear Stearns & Co., Inc., 5.81% V/R,
3/15/01 30,000,000
14,000,000 Centauri Corp., 6.17%, 6/3/98(a) 14,000,000
30,000,000 Compagnie Bancaire (USA) Funding, Inc.,
6.03%, 9/17/98 30,000,798
6,000,000 Compagnie Bancaire (USA) Funding, Inc.,
6.15%, 12/28/98 6,016,015
15,000,000 CS First Boston, Inc., 5.78% V/R,
5/15/99 15,000,000
20,000,000 Medium Term Structured Enhanced Return
Trust (STEERS), Series 1997 A-27,
5.71% V/R, 8/21/98 20,000,000
20,000,000 Medium Term Structured Enhanced Return
Trust (STEERS), Series 1997 A-28,
5.65% V/R, 9/23/98(a) 20,000,000
40,000,000 Morgan Stanley Group, Inc., 5.79% V/R,
3/15/01, puttable 5/15/99 40,000,000
30,000,000 Morgan Stanley Group, Inc., 5.73% V/R,
5/15/01, puttable 5/15/99 30,000,000
20,000,000 Restructured Asset Certificates, Series
1996 MM-2-2, 5.84% V/R, 1/10/00(a) 20,000,000
--------------
TOTAL CORPORATE NOTES 354,020,176
--------------
FLOATING RATE FUNDING AGREEMENTS (6.9%)
115,000,000 General American Life Insurance Co.,
5.84% V/R, 3/20/30 115,000,000
30,000,000 Providian Life & Health Insurance Co.,
5.78% V/R, 6/1/99 30,000,000
40,000,000 Providian Life & Health Insurance Co.,
5.77% V/R, 6/18/99 40,000,000
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - ------------------------------------------------------------------------
PRIME MONEY MARKET PORTFOLIO (continued)
- - ------------------------------------------------------------------------
30,000,000 Transamerica Life Insurance, 5.66% V/R,
4/12/99 $ 30,000,000
--------------
TOTAL FLOATING RATE FUNDING AGREEMENTS 215,000,000
--------------
MASTER NOTES (1.0%)
20,000,000 American General Finance, Inc. 20,000,000
10,000,000 General Electric Co. 10,000,000
--------------
TOTAL MASTER NOTES 30,000,000
--------------
MUNICIPAL BONDS & NOTES (0.4%)
4,700,000 Durham, NC, COP, Series B, 5.54% V/R,
7/1/03 4,700,000
590,000 Kalamazoo Funding Co., Old Kent Bank,
LOC, 5.70% V/R, 12/15/26 590,000
1,105,000 Kalamazoo Funding Co., Old Kent Bank,
LOC, 5.70% V/R, 12/15/26 1,105,000
1,235,000 Kalamazoo Funding Co., Old Kent Bank,
LOC, 5.70% V/R, 12/15/26 1,235,000
665,000 Kalamazoo Funding Co., Old Kent Bank,
LOC, 5.70% V/R, 12/15/26 665,000
690,000 Kalamazoo Funding Co., Old Kent Bank,
LOC, 5.70% V/R, 12/15/26 690,000
1,555,000 Kalamazoo Funding Co., Old Kent Bank,
LOC, 5.70% V/R, 12/15/26 1,555,000
1,300,000 Prince William County, VA, Taxable
Notes, Series A, Wachovia Bank of
North Carolina, LOC, 5.54% V/R, 3/1/17 1,300,000
--------------
TOTAL MUNICIPAL BONDS & NOTES 11,840,000
--------------
TIME DEPOSITS (12.6%)
35,000,000 ABN Amro Bank N.V., 5.69%, 6/1/98 35,000,000
27,800,000 Banque Paribas, 5.75%, 6/1/98 27,800,000
67,000,000 Credit Suisse, 5.59%, 6/1/98 67,000,000
105,000,000 Erste Bank de Oestereich, 5.69%, 6/1/98 105,000,000
26,673,946 PNC Bank, N.A. Nassau, 5.66%, 6/1/98 26,673,947
132,000,000 Union Bank of Switzerland, 5.69%, 6/1/98 132,000,000
--------------
TOTAL TIME DEPOSITS 393,473,947
--------------
TOTAL INVESTMENTS (100.00%) $3,127,213,156
--------------
--------------
- - ------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
- - ------------------------------------------------------------------------
ASSET BACKED SECURITIES (1.5%)
34,501,000 WFP Tower B Finance Corp., Short-Term
STEERS Trust, Series A, 5.69% V/R,
12/8/98(a) $ 34,501,000
--------------
CERTIFICATES OF DEPOSIT (15.6%)
40,000,000 Abbey National Treasury Services,
London, 5.75%, 2/26/99 40,000,000
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
28
<PAGE>
SCHEDULES OF INVESTMENTS (CONTINUED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - ------------------------------------------------------------------------
MONEY MARKET PORTFOLIO (continued)
- - ------------------------------------------------------------------------
50,000,000 Banco Espirito Santo e Comercial de
Lisboa, NY Branch, 5.74%, 3/26/99 $ 49,992,180
27,200,000 Bankers Trust Co., 5.91%, 8/7/98 27,195,661
40,000,000 Banque Paribas, New York Branch, 5.73%,
3/29/99 39,986,578
68,000,000 Deutsche Bank, New York Branch, 5.73%,
4/15/99 67,977,304
15,000,000 Generale Bank, New York Branch, 6.02%,
12/16/98 15,000,582
15,255,000 Kansallis-Osake-Pankki New York Branch,
Merita Bank Ltd., 9.75%, 12/15/98 15,576,636
12,100,000 Royal Bank of Canada, New York Branch,
5.80%, 10/1/98 12,104,867
20,000,000 Societe Generale, New York Branch,
5.97%, 9/15/98 19,997,226
25,000,000 Societe Generale, New York Branch,
5.70%, 3/23/99 24,989,353
55,000,000 Societe Generale, New York Branch,
5.80%, 4/28/99 54,980,905
--------------
TOTAL CERTIFICATES OF DEPOSIT 367,801,292
--------------
COMMERCIAL PAPER (48.2%)
14,200,000 AGA Capital, Inc., 5.53%, 6/4/98(a) 14,193,456
36,750,000 Ace Overseas Corp., 5.55%, 6/10/98(a) 36,699,009
10,000,000 Ace Overseas Corp., 5.45%, 10/5/98 9,809,252
40,000,000 Asset Backed Capital Finance, Inc.,
5.78% V/R, 6/12/98(a) 40,000,000
21,000,000 Asset Backed Capital Finance, Inc.,
5.51%, 7/8/98(a) 20,881,076
14,500,000 Asset Backed Capital Finance, Inc.,
5.57%, 7/22/98(a) 14,385,583
5,000,000 Banca CRT Financial Corp., 5.60%,
6/15/98 4,989,111
5,000,000 Banca CRT Financial Corp., 5.60%, 7/6/98 4,972,778
10,000,000 Banca CRT Financial Corp., 5.40%, 8/3/98 9,905,500
12,500,000 Banca CRT Financial Corp., 5.55%,
10/8/98 12,251,407
12,000,000 Banca CRT Financial Corp., 5.55%,
10/15/98 11,748,400
40,000,000 Banco Rio de La Plata St, Bayerische
Vereinsbank, A.G., LOC, 5.47%, 12/7/98 38,851,301
20,000,000 Banner Receivables Corp., 5.59%,
6/4/98(a) 19,990,683
23,102,000 Bavaria GLB Corp., 5.52%, 6/16/98(a) 23,048,866
24,050,000 Bavaria Universal Funding, 5.54%,
6/12/98(a) 24,009,289
18,000,000 Beta Finance, Inc., 5.40%, 7/16/98(a) 17,878,500
17,000,000 CC (USA), Inc., 5.58%, 6/11/98(a) 16,973,650
10,000,000 CC (USA), Inc., 5.56%, 7/15/98(a) 9,932,045
29,000,000 CC (USA), Inc., 5.55%, 8/11/98(a) 28,682,571
20,000,000 CPI Funding Corp., 5.55%, 6/25/98(a) 19,925,734
24,300,000 Centre Square Funding Corp., 5.58%,
6/15/98(a) 24,247,269
8,600,000 Certain Funding Corp., 5.60%, 8/10/98(a) 8,506,356
16,461,000 Citation Capital Corp., 5.56%, 8/4/98(a) 16,298,292
20,300,000 Cooperative Association of Tractor
Dealers, 5.51%, 7/13/98 20,169,505
50,000,000 Corporate Asset Securitization Australia
Ltd., Inc., 5.55%, 6/8/98(a) 49,946,042
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - ------------------------------------------------------------------------
MONEY MARKET PORTFOLIO (continued)
- - ------------------------------------------------------------------------
25,000,000 Corporate Asset Securitization Australia
Ltd., Inc., 5.55%, 7/15/98(a) $ 24,831,639
19,000,000 Creditanstalt Finance, Inc., 5.38%,
7/27/98 18,840,991
10,000,000 Galicia Funding Corp., Dresdner Bank AG,
LOC, 5.60%, 6/12/98 9,982,889
25,000,000 Lexington Parker Capital Co. LLC.,
5.41%, 7/24/98(a) 24,800,882
10,000,000 Lexington Parker Capital Co. LLC.,
5.50%, 8/21/98(a) 9,876,251
20,266,000 Lexington Parker Capital Co. LLC.,
5.49%, 10/8/98(a) 19,867,318
41,436,000 Lexington Parker Capital Co. LLC.,
5.47%, 10/16/98(a) 40,573,452
35,000,000 Market Street Funding Corp., 5.54%,
6/2/98(a) 34,994,614
27,108,000 Old Line Funding Corp., 5.54%, 6/1/98(a) 27,108,000
7,404,000 Old Line Funding Corp., 5.54%,
6/11/98(a) 7,392,606
13,500,000 Orix America, Inc., 5.32%, 10/9/98 13,240,650
14,400,000 Pacific Dunlop Holdings, Inc., 5.54%,
6/2/98(a) 14,397,786
35,000,000 Perry Funding Corp., 5.57%, 6/1/98(a) 35,000,000
38,749,000 Perry Funding Corp., 5.57%, 8/17/98(a) 38,287,360
28,000,000 Royal Bank of Canada, 5.38%, 7/28/98 27,761,487
5,000,000 Sigma Finance Corp., 5.71%, 6/15/98(a) 4,988,897
18,420,000 Sigma Finance Corp., 5.47%, 10/1/98(a) 18,078,545
19,815,000 Silver Tower US Funding Corp., 5.54%,
8/13/98(a) 19,592,602
20,100,000 Silver Tower US Funding Corp., 5.54%,
11/18/98(a) 19,574,163
31,250,000 SunkYong America, Inc., Credit Suisse,
LOC, 5.53%, 6/17/98 31,173,195
20,000,000 Sydney Capital Corp., 5.51%, 7/1/98(a) 19,908,167
15,000,000 TI Group, Inc., 5.50%, 10/23/98 14,670,001
10,000,000 TI Group, Inc., 5.53%, 11/9/98 9,752,686
62,000,000 Thames Asset Global Securitization,
Inc., 5.57%, 6/18/98(a) 61,837,159
32,504,000 Thames Asset Global Securitization,
Inc., 5.52%, 7/6/98(a) 32,329,562
16,784,000 Three Rivers Funding Corp., 5.52%,
7/17/98(a) 16,665,617
11,526,000 Trident Capital Finance, Inc., 5.58%,
6/12/98(a) 11,506,348
32,850,000 Yamaha Motors Owner Trust, 5.66%,
6/15/98(a) 32,778,077
--------------
TOTAL COMMERCIAL PAPER 1,138,106,619
--------------
CORPORATE NOTES (12.2%)
19,000,000 Asset Backed Trust 1995 Series A-1,
5.65% V/R, 12/10/98(a) 19,000,000
22,000,000 Asset Backed Trust 1995 Series A-3,
5.68% V/R, 4/15/99(a) 22,000,000
5,000,000 Asset Backed Trust 1996 Series A-4,
5.67% V/R, 1/15/99(a) 5,000,000
10,000,000 Asset Backed Trust 1997 Series C, 5.66%
V/R, 6/15/98(a) 10,000,000
2,500,000 BT Securities Corp., 5.93% V/R, 9/1/98 2,501,285
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
CORE TRUST (DELAWARE)
29
<PAGE>
SCHEDULES OF INVESTMENTS (CONCLUDED) MAY 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - ------------------------------------------------------------------------
MONEY MARKET PORTFOLIO (continued)
- - ------------------------------------------------------------------------
20,000,000 Bear Stearns & Co., Inc., 5.81% V/R,
5/15/99 $ 20,000,000
3,000,000 Beneficial Corp., 8.83%, 6/15/98 3,002,890
20,000,000 Beta Finance, Inc., 6.00%, 10/30/98(a) 20,000,000
20,000,000 BRAVO Trust Series 1997-1, 5.71% V/R,
10/15/98(a) 20,000,378
15,000,000 CC (USA), Inc., 6.20%, 6/3/98(a) 15,000,054
10,000,000 CS First Boston, Inc., 5.78% V/R,
6/15/99 10,000,000
11,000,000 Centauri Corp., 6.17%, 6/3/98(a) 11,000,000
20,000,000 Compagnie Bancaire (USA) Funding, Inc.,
6.03%, 9/17/98 20,000,532
10,100,000 Japan Financial Corp., 9.25%, 9/21/98 10,195,258
20,000,000 Medium Term Structured Enhanced Return
Trust (STEERS), Series 1997 A-27,
5.71% V/R, 8/21/98(a) 20,000,000
20,000,000 Medium Term Structured Enhanced Return
Trust (STEERS), Series 1997 A-28,
5.65% V/R, 9/23/98(a) 20,000,000
30,000,000 Morgan Stanley Group, Inc., 5.79% V/R,
3/15/01, puttable 6/15/99 30,000,000
20,000,000 Morgan Stanley Group, Inc., 5.73% V/R,
5/15/01, puttable 6/15/99 20,000,000
10,000,000 Restructured Asset Certificates, Series
1996 MM-2-2, 5.84% V/R, 1/10/00(a) 10,000,000
--------------
TOTAL CORPORATE NOTES 287,700,397
--------------
FLOATING RATE FUNDING AGREEMENTS (6.8%)
85,000,000 General American Life Insurance Co.,
5.84% V/R, 3/20/30 85,000,000
35,000,000 Providian Life & Health Insurance Co.,
5.77% V/R, 4/18/99 35,000,000
20,000,000 Providian Life & Health Insurance Co.,
5.78% V/R, 6/1/99 20,000,000
20,000,000 Transamerica Life Insurance, 5.66% V/R,
4/12/99 20,000,000
--------------
TOTAL FLOATING RATE FUNDING AGREEMENTS 160,000,000
--------------
MASTER NOTES (0.8%)
10,000,000 American General Finance, Inc., 5.61% 10,000,000
10,000,000 General Electric Co., 5.59% 10,000,000
--------------
TOTAL MASTER NOTES 20,000,000
--------------
MUNICIPAL NOTES (0.4%)
3,600,000 Durham, NC, COP, Series B, Wachovia
Bank, LOC, 5.54% V/R, 7/1/03 3,600,000
460,000 Kalamazoo Funding Co., Old Kent Bank,
LOC, 5.70% V/R, 12/15/26 460,000
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- - ------------------------------------------------------------------------
MONEY MARKET PORTFOLIO (continued)
- - ------------------------------------------------------------------------
860,000 Kalamazoo Funding Co., Old Kent Bank,
LOC, 5.70% V/R, 12/15/26 $ 860,000
965,000 Kalamazoo Funding Co., Old Kent Bank,
LOC, 5.70% V/R, 12/15/26 965,000
435,000 Kalamazoo Funding Co., Old Kent Bank,
LOC, 5.70% V/R, 12/15/26 435,000
410,000 Kalamazoo Funding Co., Old Kent Bank,
LOC, 5.70% V/R, 12/15/26 410,000
1,135,000 Kalamazoo Funding Co., Old Kent Bank,
LOC, 5.70% V/R, 12/15/26 1,135,000
1,380,000 Kalamazoo Funding Co., Old Kent Bank,
LOC, 5.70% V/R, 12/15/26 1,380,000
1,000,000 Prince William County, VA, Taxable
Notes, Series A, Wachovia Bank of
North Carolina, LOC, 5.54% V/R, 3/1/17 1,000,000
--------------
TOTAL MUNICIPAL NOTES 10,245,000
--------------
TIME DEPOSITS (14.5%)
20,000,000 ABN AMRO Toronto Branch, 5.69%, 6/1/98 20,000,000
10,000,000 Banque Paribas Canada, Toronto, 5.75%,
6/1/98 10,000,000
60,000,000 Credit Suisse, 5.60%, 6/1/98 60,000,000
95,000,000 Erste Bank der Oestereich, 5.69%, 6/1/98 95,000,000
32,171,878 PNC Bank, N.A., 5.66%, 6/1/98 32,171,878
40,000,000 Union Bank of Switzerland, 5.60%, 6/1/98 40,000,000
85,000,000 Union Bank of Switzerland, 5.69%, 6/1/98 85,000,000
--------------
TOTAL TIME DEPOSITS 342,171,878
--------------
TOTAL INVESTMENTS (100.0%) $2,360,526,186
--------------
--------------
</TABLE>
- - ------------------------------------------------------------------------------
NOTES TO SCHEDULES OF INVESTMENTS
- - ------------------------------------------------------------------------------
(a) Securities that may be resold to "qualified institutional buyers" under rule
144A or securities offered pursuant to 4(2) of the Securities Act of 1933,
as amended. The Board of Trustees has determined these securities to be
liquid.
ABBREVIATIONS
<TABLE>
<S> <C>
COP Certificate of Participation
LOC Letter of Credit
V/R Variable rate -- these securities are deemed to have a
maturity remaining until the next adjustment
of the interest rate or the longer of the
demand period or readjustment. The interest
rates shown reflect the rate in effect on
May 31, 1998.
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
CORE TRUST (DELAWARE)
30
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE NORWEST
ADVANTAGE ANNUAL REPORT DATED MAY 31, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000929958
<NAME> CORE TRUST (DELAWARE)
<SERIES>
<NUMBER>002
<NAME>INTERNATIONAL NON-PUBLIC
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-1-1997
<PERIOD-END> MAY-31-1998
<INVESTMENTS-AT-COST> 753,906,482
<INVESTMENTS-AT-VALUE> 956,823,137
<RECEIVABLES> 6,197,971
<ASSETS-OTHER> 194,019,265
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,157,040,373
<PAYABLE-FOR-SECURITIES> 26,406,076
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 179,448,711
<TOTAL-LIABILITIES> 205,854,787
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<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
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<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 951,185,586
<DIVIDEND-INCOME> 11,873,542
<INTEREST-INCOME> 3,941,336
<OTHER-INCOME> 365,494
<EXPENSES-NET> 5,663,084
<NET-INVESTMENT-INCOME> 10,517,288
<REALIZED-GAINS-CURRENT> 18,785,716
<APPREC-INCREASE-CURRENT> 78,979,779
<NET-CHANGE-FROM-OPS> 108,282,783
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 411,888,707
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,832,528
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,780,224
<AVERAGE-NET-ASSETS> 851,672,893
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0.66
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE NORWEST
ADVANTAGE ANNUAL REPORT DATED MAY 31, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000929958
<NAME> CORE TRUST (DELAWARE)
<SERIES>
<NUMBER>004
<NAME>INDEX NON-PUBLIC
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-1-1997
<PERIOD-END> MAY-31-1998
<INVESTMENTS-AT-COST> 860,776,094
<INVESTMENTS-AT-VALUE> 1,383,860,519
<RECEIVABLES> 2,174,027
<ASSETS-OTHER> 366,759,458
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,752,794,004
<PAYABLE-FOR-SECURITIES> 255,069
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 367,289,012
<TOTAL-LIABILITIES> 367,514,081
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,385,279,923
<DIVIDEND-INCOME> 17,573,083
<INTEREST-INCOME> 2,373,273
<OTHER-INCOME> 379,207
<EXPENSES-NET> 2,112,728
<NET-INVESTMENT-INCOME> 18,212,835
<REALIZED-GAINS-CURRENT> 40,577,843
<APPREC-INCREASE-CURRENT> 232,315,725
<NET-CHANGE-FROM-OPS> 291,106,403
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 929,287,305
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,709,358
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,760,987
<AVERAGE-NET-ASSETS> 1,139,572,264
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .19
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE NORWEST
ADVANTAGE ANNUAL REPORT DATED MAY 31, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000929958
<NAME> CORE TRUST (DELAWARE)
<SERIES>
<NUMBER>016
<NAME>SMALL COMPANY GROWTH
<S>
<C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-1-1997
<PERIOD-END> MAY-31-1998
<INVESTMENTS-AT-COST> 754,874,797
<INVESTMENTS-AT-VALUE> 896,475,826
<RECEIVABLES> 6,980,737
<ASSETS-OTHER> 2,923
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 903,459,486
<PAYABLE-FOR-SECURITIES> 8,637,161
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 759,205
<TOTAL-LIABILITIES> 9,396,366
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<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 894,063,120
<DIVIDEND-INCOME> 2,332,991
<INTEREST-INCOME> 2,124,402
<OTHER-INCOME> 0
<EXPENSES-NET> 7,997,232
<NET-INVESTMENT-INCOME> (3,539,839)
<REALIZED-GAINS-CURRENT> 157,449,385
<APPREC-INCREASE-CURRENT> (8,948,010)
<NET-CHANGE-FROM-OPS> 144,961,536
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 894,063,120
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,752,366
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8,476,983
<AVERAGE-NET-ASSETS> 861,373,996
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
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<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .93
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE NORWEST
ADVANTAGE ANNUAL REPORT DATED MAY 31, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000929958
<NAME> CORE TRUST (DELAWARE)
<SERIES>
<NUMBER>015
<NAME>SMALL COMPANY STOCK
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-1-1997
<PERIOD-END> MAY-31-1998
<INVESTMENTS-AT-COST> 209,732,751
<INVESTMENTS-AT-VALUE> 225,658,523
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<SENIOR-LONG-TERM-DEBT> 0
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<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
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<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 224,868,703
<DIVIDEND-INCOME> 1,070,726
<INTEREST-INCOME> 1,000,834
<OTHER-INCOME> 221,189
<EXPENSES-NET> 3,196,439
<NET-INVESTMENT-INCOME> (903,690)
<REALIZED-GAINS-CURRENT> 75,015,565
<APPREC-INCREASE-CURRENT> (41,102,519)
<NET-CHANGE-FROM-OPS> 33,009,356
<EQUALIZATION> 0
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<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 244,868,703
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,024,869
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,390,000
<AVERAGE-NET-ASSETS> 336,096,604
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE NORWEST
ADVANTAGE ANNUAL REPORT DATED MAY 31, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000929958
<NAME> CORE TRUST (DELAWARE)
<SERIES>
<NUMBER>017
<NAME>SMALL COMPANY VALUE
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-1-1997
<PERIOD-END> MAY-31-1998
<INVESTMENTS-AT-COST> 132,400,943
<INVESTMENTS-AT-VALUE> 147,521,848
<RECEIVABLES> 144,631
<ASSETS-OTHER> 17,599,796
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 165,266,275
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 17,740,830
<TOTAL-LIABILITIES> 17,740,830
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 147,525,445
<DIVIDEND-INCOME> 2,589,822
<INTEREST-INCOME> 206,113
<OTHER-INCOME> 107,342
<EXPENSES-NET> 1,708,541
<NET-INVESTMENT-INCOME> 1,194,736
<REALIZED-GAINS-CURRENT> 49,410,647
<APPREC-INCREASE-CURRENT> 1,904,286
<NET-CHANGE-FROM-OPS> 52,509,669
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 147,525,445
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,558,410
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,804,633
<AVERAGE-NET-ASSETS> 173,156,688
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .99
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE NORWEST
ADVANTAGE ANNUAL REPORT DATED MAY 31, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000929958
<NAME> CORE TRUST (DELAWARE)
<SERIES>
<NUMBER>014
<NAME>LARGE COMPANY GROWTH
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-1-1997
<PERIOD-END> MAY-31-1998
<INVESTMENTS-AT-COST> 555,644,481
<INVESTMENTS-AT-VALUE> 1,082,338,699
<RECEIVABLES> 277,803
<ASSETS-OTHER> 268,989,304
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,351,605,806
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 269,607,685
<TOTAL-LIABILITIES> 269,607,685
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,081,998,121
<DIVIDEND-INCOME> 5,487,382
<INTEREST-INCOME> 523,451
<OTHER-INCOME> 421,025
<EXPENSES-NET> 6,686,747
<NET-INVESTMENT-INCOME> (254,889)
<REALIZED-GAINS-CURRENT> 103,483,455
<APPREC-INCREASE-CURRENT> 175,686,535
<NET-CHANGE-FROM-OPS> 278,915,101
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,081,998,121
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,448,644
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,258,812
<AVERAGE-NET-ASSETS> 992,099,097
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .67
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE NORWEST
ADVANTAGE ANNUAL REPORT DATED MAY 31, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000929958
<NAME> CORE TRUST (DELAWARE)
<SERIES>
<NUMBER>013
<NAME>INCOME EQUITY
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-1-1997
<PERIOD-END> MAY-31-1998
<INVESTMENTS-AT-COST> 1,181,107,714
<INVESTMENTS-AT-VALUE> 1,979,543,553
<RECEIVABLES> 5,739,941
<ASSETS-OTHER> 325,814,102
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,311,097,596
<PAYABLE-FOR-SECURITIES> 28,624,638
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 326,670,825
<TOTAL-LIABILITIES> 355,295,463
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 331,743,519
<NET-ASSETS> 1,955,802,133
<DIVIDEND-INCOME> 33,794,578
<INTEREST-INCOME> 1,311,997
<OTHER-INCOME> 256,026
<EXPENSES-NET> 8,059,604
<NET-INVESTMENT-INCOME> 27,302,997
<REALIZED-GAINS-CURRENT> 21,124,145
<APPREC-INCREASE-CURRENT> 331,743,519
<NET-CHANGE-FROM-OPS> 380,170,661
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,955,802,133
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,756,155
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8,916,190
<AVERAGE-NET-ASSETS> 1,551,231,031
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .52
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE NORWEST
ADVANTAGE ANNUAL REPORT DATED MAY 31, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000929958
<NAME> CORE TRUST (DELAWARE)
<SERIES>
<NUMBER>23
<NAME>SMALL CAP INDEX
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> APR-9-1998
<PERIOD-END> MAY-31-1998
<INVESTMENTS-AT-COST> 128,934,743
<INVESTMENTS-AT-VALUE> 122,578,900
<RECEIVABLES> 61,015
<ASSETS-OTHER> 13,829,403
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 136,469,318
<PAYABLE-FOR-SECURITIES> 63,009
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 13,913,864
<TOTAL-LIABILITIES> 13,976,873
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 122,492,445
<DIVIDEND-INCOME> 113,563
<INTEREST-INCOME> 168,627
<OTHER-INCOME> 3,032
<EXPENSES-NET> 94,506
<NET-INVESTMENT-INCOME> 190,716
<REALIZED-GAINS-CURRENT> (31,860)
<APPREC-INCREASE-CURRENT> (6,730,568)
<NET-CHANGE-FROM-OPS> (6,571,712)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 122,492,445
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 45,748
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 98,099
<AVERAGE-NET-ASSETS> 126,023,723
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .52
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE NORWEST
ADVANTAGE ANNUAL REPORT DATED MAY 31, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000929958
<NAME> CORE TRUST (DELAWARE)
<SERIES>
<NUMBER>011
<NAME>MANAGED FIXED INCOME
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-1-1997
<PERIOD-END> MAY-31-1998
<INVESTMENTS-AT-COST> 325,904,053
<INVESTMENTS-AT-VALUE> 331,162,803
<RECEIVABLES> 4,605,783
<ASSETS-OTHER> 20,583,463
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 356,352,049
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 20,688,862
<TOTAL-LIABILITIES> 20,688,862
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 335,663,187
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 19,333,965
<OTHER-INCOME> 18,239
<EXPENSES-NET> 1,138,842
<NET-INVESTMENT-INCOME> 18,213,362
<REALIZED-GAINS-CURRENT> 2,891,576
<APPREC-INCREASE-CURRENT> 5,029,200
<NET-CHANGE-FROM-OPS> 26,134,138
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 335,663,187
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 975,529
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,292,418
<AVERAGE-NET-ASSETS> 278,722,454
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .41
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE NORWEST
ADVANTAGE ANNUAL REPORT DATED MAY 31, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000929958
<NAME> CORE TRUST (DELAWARE)
<SERIES>
<NUMBER>009
<NAME>POSITIVE RETURN BOND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-1-1997
<PERIOD-END> MAY-31-1998
<INVESTMENTS-AT-COST> 211,112,420
<INVESTMENTS-AT-VALUE> 222,458,162
<RECEIVABLES> 1,722,530
<ASSETS-OTHER> 63,071,499
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 287,252,191
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 63,142,475
<TOTAL-LIABILITIES> 63,142,475
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 224,109,716
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 12,690,152
<OTHER-INCOME> 88,818
<EXPENSES-NET> 849,970
<NET-INVESTMENT-INCOME> 11,929,000
<REALIZED-GAINS-CURRENT> 6,562,062
<APPREC-INCREASE-CURRENT> 13,771,972
<NET-CHANGE-FROM-OPS> 32,263,034
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 224,109,716
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 727,322
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 967,541
<AVERAGE-NET-ASSETS> 207,806,172
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .41
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE NORWEST
ADVANTAGE ANNUAL REPORT DATED MAY 31, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000929958
<NAME> CORE TRUST (DELAWARE)
<SERIES>
<NUMBER>010
<NAME>STABLE INCOME
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-1-1997
<PERIOD-END> MAY-31-1998
<INVESTMENTS-AT-COST> 254,715,158
<INVESTMENTS-AT-VALUE> 255,054,595
<RECEIVABLES> 3,726,977
<ASSETS-OTHER> 49,819,509
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 308,601,081
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 49,892,160
<TOTAL-LIABILITIES> 49,892,160
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 258,708,921
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 14,372,161
<OTHER-INCOME> 32,479
<EXPENSES-NET> 847,785
<NET-INVESTMENT-INCOME> 13,556,855
<REALIZED-GAINS-CURRENT> 423,040
<APPREC-INCREASE-CURRENT> 333,836
<NET-CHANGE-FROM-OPS> 14,313,731
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 258,708,921
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 682,043
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 975,028
<AVERAGE-NET-ASSETS> 227,347,606
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .37
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE NORWEST
ADVANTAGE ANNUAL REPORT DATED MAY 31, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000929958
<NAME> CORE TRUST (DELAWARE)
<SERIES>
<NUMBER>022
<NAME>PRIME MONEY MARKET PORTFOLIO
<S> <C>
<PERIOD-TYPE> 10-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> AUG-23-1997
<PERIOD-END> MAY-31-1998
<INVESTMENTS-AT-COST> 3,127,213,156
<INVESTMENTS-AT-VALUE> 3,139,801,499
<RECEIVABLES> 1,248,411
<ASSETS-OTHER> 12,663
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,139,801,499
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,049,508
<TOTAL-LIABILITIES> 1,049,508
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,138,751,991
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 126,455,477
<OTHER-INCOME> 0
<EXPENSES-NET> 8,817,491
<NET-INVESTMENT-INCOME> 117,637,986
<REALIZED-GAINS-CURRENT> (42,987)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 117,594,999
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,138,781,991
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<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE NORWEST
ADVANTAGE ANNUAL REPORT DATED MAY 31, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000929958
<NAME> CORE TRUST (DELAWARE)
<SERIES>
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<NAME>DISCIPLINED GROWTH
<S> <C>
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<PERIOD-START> OCT-1-1997
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<TABLE> <S> <C>
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE NORWEST
ADVANTAGE ANNUAL REPORT DATED MAY 31, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000929958
<NAME> CORE TRUST (DELAWARE)
<SERIES>
<NUMBER>020
<NAME>SMALL CAP VALUE
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> OCT-1-1997
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE NORWEST
ADVANTAGE ANNUAL REPORT DATED MAY 31, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000929958
<NAME> CORE TRUST (DELAWARE)
<SERIES>
<NUMBER>021
<NAME>MONEY MARKET PORTFOLIO
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</TABLE>
