CHARLOTTE, N.C. - First Union Corp.'s capital management group, aiming to capture more of the $500 billion of retirement assets held by minority-owned companies, is investing in a venture to be headed by one of its portfolio managers.

ForeFront Capital Advisors LLC, which is slated to start doing business in November out of Philadelphia, will be owned 40% by First Union and 60% by Stephen Dalton, portfolio manager of First Union's large-cap Evergreen Select Secular Growth Fund. The bank has invested $1 million.

ForeFront, which has as its first assignment to subadvise Evergreen Select Secular, aims to manage money for institutions and wealthy investors, Mr. Dalton said. The stellar record of that fund and ForeFront's minority ownership should give it an advantage in its attempts to secure contracts for minority-controlled pension plans, he said. "We expect to get our fair share of these opportunities."

Mr. Dalton and his analysts - who are to join him at ForeFront - have invested the Evergreen fund in companies best suited to profit from broad U.S. economic trends. Much of the investment is in companies that provide computer networking and other services that help companies cut costs and boost productivity.

The strategy has produced excellent results, as the Evergreen fund has substantially outperformed its benchmark, the Russell 1000. At yearend 1999, it had a one-year return of 66%, and its return over the past five years was 39%. The Russell index had a 38.71% one-year return and a 32.23% five-year return.

When ForeFront opens its doors, it will probably be subadvising $400 million to $500 million in corporate pension and high-net-worth assets in addition to the $1 billion Evergreen fund, said Mr. Dalton, who will be chairman and chief executive officer. He expects ForeFront's asset size to double within three years.

First Union will have two members on ForeFront's five-member board: Dennis Ferro, chief investment officer of the bank's First Capital group, and Richard Gershen, chief operating officer of First Capital.

Mr. Dalton was managing director at Core States Investment Advisors, which First Union bought in 1998.

First Union had $258 billion of assets and a market capitalization of $14 billion as of June 30. It has 15 million retail and corporate customers.

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