-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Lz+cCZK+OdcIujbc0UQaVTJD9m7zo4tt6hLeRL4MyR3o4aQqjQCXSx/Qx5EgIzfm U5ET0ZL5+7XXEG3ufXBDUA== 0000950116-00-000386.txt : 20000229 0000950116-00-000386.hdr.sgml : 20000229 ACCESSION NUMBER: 0000950116-00-000386 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 20000228 EFFECTIVENESS DATE: 20000228 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GLENMEDE FUND INC CENTRAL INDEX KEY: 0000835663 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MD FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 033-22884 FILM NUMBER: 555621 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 811-05577 FILM NUMBER: 555622 BUSINESS ADDRESS: STREET 1: ONE LIBERTY PLACE STREET 2: 1650 MARKET STREET STE 1200 CITY: PHILADELPHIA STATE: PA ZIP: 19103 BUSINESS PHONE: 2154196021 MAIL ADDRESS: STREET 1: ONE SOUTH STREET CITY: BALTIMORE STATE: MD ZIP: 21202 485BPOS 1 As filed with the Securities and Exchange Commission on February 28, 2000 Registration Nos. 33-22884 811-5577 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X] Pre-Effective Amendment No. [_] Post-Effective Amendment No. 31 [X] and REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X] Amendment No. 33 [X] ---------------------------- The Glenmede Fund, Inc. (Exact Name of Registrant as Specified in Charter) One South Street Baltimore, Maryland 21202 (Address of Principal Executive Offices) Registrant's Telephone Number: 1-800-442-8299 Michael P. Malloy, Esq. Secretary Drinker Biddle & Reath LLP One Logan Square 18th & Cherry Streets Philadelphia, Pennsylvania 19103-6996 (Name and Address of Agent for Service) It is proposed that this filing will become effective (check appropriate box) [X] immediately upon filing pursuant to paragraph (b) [_] on (date) pursuant to paragraph (b) [_] 60 days after filing pursuant to paragraph (a)(i) [_] on (date) pursuant to paragraph (a)(i) [_] 75 days after filing pursuant to paragraph (a)(ii) [_] on (date) pursuant to paragraph (a)(ii) of rule 485. If appropriate, check the following box: [_] this post-effective amendment designates a new effective date for a previously filed post-effective amendment. Title of Securities Being Registered: Shares of Common Stock - -------------------------------------------------------------------------------- THE GLENMEDE FUND, INC. THE GLENMEDE PORTFOLIOS Prospectus February 28, 2000 Money Market Portfolios Government Cash Portfolio Tax-Exempt Cash Portfolio Bond Portfolios Core Fixed Income Portfolio Muni Intermediate Portfolio New Jersey Muni Portfolio Investment Advisor The Glenmede Trust Company The Securities and Exchange Commission has not approved or disapproved the Portfolios' securities or determined if this prospectus is accurate or complete. It is a criminal offense to state otherwise. TABLE OF CONTENTS RISK/RETURN SUMMARY..................................................... INVESTMENTS............................................................. PRICE OF PORTFOLIO SHARES............................................... PURCHASE OF SHARES...................................................... REDEMPTION OF SHARES.................................................... ADDITIONAL INFORMATION ON THE PURCHASE AND REDEMPTION OF SHARES OF THE PORTFOLIOS.............................................. DIVIDENDS AND DISTRIBUTIONS............................................. TAXES................................................................... MANAGEMENT OF THE PORTFOLIOS............................................ GENERAL INFORMATION..................................................... FINANCIAL HIGHLIGHTS.................................................... RISK/RETURN SUMMARY Money Market Portfolios
Investment Objective Principal Investment Strategies Government Cash Portfolio Maximum current interest income The Portfolio invests primarily in short-term consistent with the preservation of securities issued by the U.S. Treasury or capital and liquidity U.S. Government-related agencies, and repurchase agreements secured by such instruments. Tax-Exempt Cash Portfolio Maximum current interest income The Portfolio invests primarily in tax-exempt exempt from Federal income short-term, high quality municipal obligations, taxes consistent with the including, for example, project and demand notes, preservation of capital and tax, revenue or bond anticipation notes, municipal liquidity bonds, variable rate demand notes and non-rated privately placed securities. Each Money Market Portfolio invests in securities which the Advisor believes present minimal credit risks at the time of purchase and which mature or provide for redemption within 13 months from the date of purchase. The dollar-weighted average maturity of each Money Market Portfolio is expected to be 90 days or less.
3 Bond Portfolios ----------------------------------------------------------------- Important Concept Total return consists of net income (dividend and interest income Side-Note: from portfolio securities less expenses of the Portfolio) and capital gains and losses, both realized and unrealized, from portfolio securities. -----------------------------------------------------------------
Investment Objective Principal Investment Strategies Core Fixed Income Portfolio Maximum long-term total return The Portfolio invests primarily in mortgage-backed consistent with reasonable and fixed income securities issued by the U.S. risk to principal Treasury or U.S. Government-related agencies. The Portfolio may also invest in privately issued mortgage-backed securities, debt obligations of domestic and foreign companies, repurchase agreements collateralized by U.S. Government securities and may enter into reverse repurchase agreements. The Advisor purchases securities that it believes have potential for higher returns than other securities with similar characteristics and risk, considering factors such as maturity, coupon, credit and any prepayment options. The Advisor will generally sell a security for a number of reasons, including when the expected performance has been realized or to purchase another security with similar characteristics and risk but that the Advisor believes has a higher expected return. Such securities will be rated at least A by Standard & Poor's Rating Group ("S&P") or Moody's Investors Service, Inc. ("Moody's") and if unrated, determined to be of comparable quality at the time of purchase. Muni Intermediate Portfolio As high a level of current income The Portfolio invests primarily in intermediate and exempt from Federal income tax long-term tax-exempt obligations of the Commonwealth as is consistent with preservation of Pennsylvania and its political subdivisions, of capital agencies, instrumentalities and authorities.
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New Jersey Muni Portfolio As high a level of current income The Portfolio invests primarily in intermediate exempt from Federal income tax as and long-term tax-exempt obligations of the State is consistent with preservation of New Jersey and its political subdivisions, of capital agencies, instrumentalities and authorities. Each Muni Portfolio purchases municipal obligations that the Advisor believes have the best value compared to securities of similiar credit quality and maturity range. The Portfolios generally sell municipal obligations for a number of reasons, including a change in credit quality, to extend maturity, to increase yield or to raise funds to cover redemptions. Each Muni Portfolio will invest in securities that are rated at the time of purchase within the three highest ratings assigned by Moody's (i.e., Aaa, Aa, A) or S&P (AAA, AA, A) in the case of bonds, or rated SP-1 or higher by S&P or MIG-2 or higher by Moody's in the case of notes. Each Portfolio may invest in unrated securities if they are determined to be of comparable quality at the time of purchase. Each Bond Portfolio expects to maintain a dollar-weighted average maturity of 3 to 10 years.
Principal Risks of Investing
All Portfolios The strategy that the Advisor uses may fail to produce the intended result. An investment in a Portfolio is not a deposit of The Glenmede Trust Company and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
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All Bond Portfolios The value of fixed income securities tends to fluctuate with changes in interest rates. Generally, their value will decrease when interest rates rise and increase when interest rates fall. Fixed income securities are also subject to the risk that an issuer will be unable to make principal and interest payments when due. Therefore, you could lose money by investing in the Portfolios. Fixed income securities with longer maturities are more susceptible to interest rate fluctuations than those with shorter maturities. Therefore, the risk of interest rate fluctuation is greater to the extent that the Portfolios invest in long-term securities. Core Fixed Income Portfolio The Core Fixed Income Portfolio may make loans through collateralized repurchase agreements. It may also borrow money through reverse repurchase agreements. Although loans made by the Portfolio are collateralized with the borrower's securities, the Portfolio could suffer a loss if the borrower defaults on its obligation to buy the securities back under the terms of the repurchase agreement. The Core Fixed Income Portfolio is subject to prepayment risk. Prepayment risk is the risk that a debt security may be paid off and the proceeds returned to the Portfolio earlier than anticipated. Depending on market conditions, proceeds may be reinvested at lower interest rates. Muni Portfolios The Muni Intermediate Portfolio and New Jersey Muni Portfolio are subject to additional risks. Because the Muni Intermediate Portfolio invests primarily in Pennsylvania municipal obligations and the New Jersey Muni Portfolio invests primarily in New Jersey municipal obligations, they are classified as non-diversified. This means that each Portfolio may invest a greater percentage of its assets in a particular issuer, and that a Portfolio's performance will be dependent upon a smaller category of securities than is a diversified portfolio. Accordingly, each Portfolio may experience greater fluctuations in net asset value and may have greater risk of loss.
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The Muni Intermediate Portfolio and the New Jersey Muni Portfolio are each especially susceptible to the economic, political and regulatory events that affect Pennsylvania and New Jersey, respectively. Each of the Muni Portfolios is subject to call risk. Call risk is the risk that changes in interest rates may cause certain municipal securities to be paid off much sooner or later than expected, which could adversely affect a Portfolio's value. All Money Market Portfolios Although these Portfolios invest in money market instruments which the Advisor believes present minimal credit risks at the time of purchase, there is a risk that an issuer may not be able to make principal and interest payments when due. Although the Portfolios seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Portfolios. The Government Cash Portfolio may make loans through collateralized repurchase agreements. Although loans made by the Portfolio are collateralized with the borrower's securities, the Portfolio could suffer a loss if the borrower defaults on its obligation to buy the securities back under the terms of the repurchase agreement.
Who may want to invest in the
Bond Portfolios The Bond Portfolios may be appropriate for you if you seek a regular stream of income with higher potential returns than money market funds and if you are also willing to accept some risk. Money Market Portfolios The Money Market Portfolios may be appropriate for you if you seek monthly income with minimal risk to principal. The Portfolios are NOT appropriate for you if you are seeking a high level of monthly income or long-term total return.
7 Bar Charts and Performance Tables
The bar charts and tables below show the Portfolios' annual total returns, their long-term performance and provide some indication of the risks of investing in the Portfolios. The bar charts show how the performance of the Portfolios has varied from year to year. The tables show how each Portfolio's average annual total returns for one, five and ten years compare to those of selected market indices. The bar charts and performance tables assume reinvestment of dividends and distributions. The Portfolios' past performance does not necessarily indicate how they will perform in the future.
Government Cash Portfolio 1990 8.32% 1991 6.13% 1992 3.85% 1993 3.18% 1994 4.19% 1995 5.92% 1996 5.40% 1997 5.58% 1998 5.51% 1999 5.07% During the periods shown in the bar chart, the highest quarterly return was 2.48% (for the quarter ended June 30, 1989) and the lowest quarterly return was .78% (for the quarter ended June 30, 1993). Tax-Exempt Cash Portfolio 1990 5.87% 1991 4.53% 1992 3.07% 1993 2.22% 1994 2.70% 1995 3.83% 1996 3.33% 1997 3.51% 1998 3.30% 1999 3.11% 8 During the periods shown in the bar chart, the highest quarterly return was 1.71% (for the quarter ended June 30, 1989) and the lowest quarterly return was .53% (for the quarter ended March 31, 1994. Core Fixed Income Portfolio 1990 10.25% 1991 15.02% 1992 6.74% 1993 8.84% 1994 -2.35% 1995 14.45% 1996 3.88% 1997 9.68% 1998 9.08% 1999 -0.64% During the periods shown in the bar chart, the highest quarterly return was 6.34% (for the quarter ended June 30, 1989) and the lowest quarterly return was -2.54% (for the quarter ended March 31, 1994). Muni Intermediate Portfolio 1993 8.99% 1994 -4.44% 1995 13.69% 1996 4.36% 1997 7.15% 1998 5.57% 1999 0.86% During the periods shown in the bar chart, the highest quarterly return was 6.22% (for the quarter ended March 31, 1995) and the lowest quarterly return was -3.39% (for the quarter ended March 31, 1994). New Jersey Muni Portfolio 1994 -5.44% 1995 15.03% 1996 4.13% 1997 7.00% 1998 5.67% 1999 -0.16% 9 During the periods shown in the bar chart, the highest quarterly return was 3.39% (for the quarter ended June 30, 1995) and the lowest quarterly return was -4.17% (for the quarter ended March 31, 1994).
The Portfolios' Average Annual Total Returns for the Periods Ended December 31, 1999 Money Market Portfolios - ----------------------------------------------------- ---------------------------------- ------------ ------------ ------------ Past 1 Past 5 Past 10 o IBC's U.S. Government and Agencies Money Fund Year Years Years Average(TM)is comprised of money market funds investing in U.S. treasury securities and ---------------------------------- ------------ ------------ ------------ government agency obligations. Government Cash Portfolio 5.07% 5.49% 5.31% o IBC's Stock Broker and General Purpose Tax-Free ---------------------------------- ------------ ------------ ------------ Average(TM) is comprised of money market funds IBC's U.S. Government and 4.52% 4.68% 5.08% investing in fixed-income securities issued by Agencies Money Fund Average(TM) state and local governments. Generally, interest ---------------------------------- ------------ ------------ ------------ payments on securities qualify for exemption from Federal income taxes. Funds may also own municipal securities subject to the alternative minimum tax. - ----------------------------------------------------- ---------------------------------- ------------ ------------ ------------ Past 1 Past 5 Past 10 Year Years Years ---------------------------------- ------------ ------------ ------------ 3.11% 3.42% 3.54% Tax-Exempt Cash Portfolio ---------------------------------- ------------ ------------ ------------ IBC's Stock Broker and General 2.70% 2.89% 3.40% Purpose Tax-Free Average(TM) ---------------------------------- ------------ ------------ ------------
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Bond Portfolios - ----------------------------------------------------- ---------------------------------- ------------ ------------ ------------ o The Lehman Brothers Aggregate Bond Index is an Past 1 Past 5 Past 10 unmanaged index made up of the Lehman Brothers Year Years Years Government Corporate Bond, Mortgage Backed Securities, and Asset Backed Securities Indexes. ---------------------------------- ------------ ------------ ------------ Core Fixed Income Portfolio -0.64% 7.17% 7.35% o The Lipper Intermediate U.S. Government Fund Index is comprised of the 30 largest funds in the Lipper ---------------------------------- ------------ ------------ ------------ Intermediate U.S. Government Fund Average. The Lehman Brothers Aggregate -0.83% 7.73% 7.69% Average consists of funds that invest at least 65% Bond Index of their assets in securities issued or guaranteed by the U.S. government, its agencies or ---------------------------------- ------------ ------------ ------------ instrumentalities with dollar-weighted average Lipper Intermediate U.S. -1.40% 6.63% 6.59% maturities of 5 to 10 years. Government Fund Index o The Lehman Brothers Municipal 5-Year Bond Index is ---------------------------------- ------------ ------------ ------------ an unmanaged total return performance benchmark for the short-intermediate, investment-grade ---------------------------------- ------------ ------------ ------------ tax-exempt bond market. Since Past 1 Past 5 June 5, o The Lipper Intermediate Municipal Debt Fund Index Year Years 1992 is comprised of the 30 largest funds in the Lipper Intermediate Municipal Debt Fund Average. The ---------------------------------- ------------ ------------ ------------ Average consists of funds that invest in municipal Muni Intermediate Portfolio 0.86% 6.24% 5.09% debt issues with dollar-weighted average maturities of 5 to 10 years. ---------------------------------- ------------ ------------ ------------ Lehman Brothers Municipal 0.74% 5.71% 5.47% o The Lipper New Jersey Municipal Debt Fund Index is 5-Year Bond Index comprised of the 10 largest funds in the Lipper New Jersey Municipal Debt Fund Average. The ---------------------------------- ------------ ------------ ------------ Average consists of funds that invest only in Lipper Intermediate Municipal -1.39% 5.59% 5.21% securities that are exempt from taxation in New Debt Fund Index Jersey or cities in New Jersey. --------------------------------------------------- ---------------------------------- ------------ ------------ ------------ ---------------------------------- ----------- ------------- ------------ Since Past 1 Past 5 November Year Years 1, 1993 ---------------------------------- ----------- ------------- ------------ New Jersey Muni Portfolio -0.16% 6.22% 4.13% ---------------------------------- ----------- ------------- ------------ Lehman Brothers Municipal 0.74% 5.71% 4.59% 5-Year Bond Index ---------------------------------- ----------- ------------- ------------ Lipper New Jersey Municipal Debt -4.43% 5.65% 3.73% Fund Index ---------------------------------- ----------- ------------- ------------
11 Fees and Expenses of the Portfolios This table describes the fees and expenses that you may pay if you buy and hold shares of the Portfolios.
Money Market Portfolios Bond Portfolios - ---------------------------------------------------------------------|--------------------------------------------- Tax- | New Government Exempt | Core Fixed Muni Jersey Cash Cash | Income Intermediate Muni Portfolio Portfolio| Portfolio Portfolio Portfolio ---------- ---------| ----------- ------------ ---------- | Shareholder Fees (fees paid | directly from your investment) | | Maximum Account Fee 1.00% 1.00% | 1.00% 1.00% 1.00% (annual percentage of assets under | management)* | | Annual Portfolio Operating Expenses | (expenses that are deducted | from Portfolio assets) | Management Fees .00% .00% | .00% .00% .00% Other Expenses .11% .12% | .55%** .20% .24% ---- ---- | ---- ---- ---- Operating Expenses .11% .12% | .12% .20% .24% Interest Expenses** | .43% | Total Annual Portfolio | Operating Expenses .11% .12% | .55%** .20% .24% ==== ==== | ==== ==== ==== - ---------------------------------------------------------------------|---------------------------------------------
* The Portfolios described in this prospectus do not pay any advisory fees to The Glenmede Trust Company, the investment advisor of the Funds (the "Advisor"), or its affiliated companies ("Affiliates"). However, investors in these Portfolios must be clients of the Advisor, its Affiliates or certain financial institutions, or must be certain employee benefit plans. The "Maximum Account Fee" in the above table is the current maximum annual fee that the Advisor or an Affiliate would charge its clients directly for fiduciary, trust and/or advisory services (e.g., personal trust, estate, advisory, tax and custodian services). The actual annual fees charged by the Advisor and Affiliates for such services vary depending on a number of factors, including the particular services provided to the client, but are generally lower than 1% of the client's assets under management. Investors may also have to pay various fees to others to become shareholders of the Portfolios. See "Purchase of Shares." ** "Other Expenses" includes interest expenses of the Core Fixed Income Portfolio generated from its investment in reverse repurchase agreements. If such interest expenses were not included, "Total Annual Portfolio Operating Expenses" would be 0.12% for the Core Fixed Income Portfolio. 12 Example This Example is intended to help you compare the cost of investing in the Portfolios with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Portfolios for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Portfolios' operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Money Market Portfolios Bond Portfolios - ------------------------------------------------------------|------------------------------------------ Government Tax-Exempt | Core Fixed Muni New Jersey Cash Cash | Income Intermediate Muni Portfolio Portfolio | Portfolio Portfolio Portfolio - ------------------------------------------------------------|------------------------------------------ | One Year $ 11 $ 12 | $ 56 $ 20 $ 25 | Three Years $ 35 $ 39 | $ 176 $ 64 $ 77 | Five Years $ 62 $ 68 | $ 307 $113 $135 | Ten Years $141 $154 | $ 699 $255 $306 - ------------------------------------------------------------|------------------------------------------
13 INVESTMENTS Objective and Principal Strategies To help you decide which Portfolio is appropriate for you, this section looks more closely at the Portfolios' investment objectives and policies. You should carefully consider your own investment goals, time horizon and risk tolerance before investing in a Portfolio. Each Portfolio's investment objective may be changed by the Board members without shareholder approval. Money Market Portfolios Government Cash Portfolio The investment objective of the Government Cash Portfolio is to provide maximum current interest income consistent with the preservation of capital and liquidity. Under normal market conditions, the Government Cash Portfolio invests at least 65% of its total assets in short-term securities issued by the U.S. Treasury, U.S. Government agencies, or other agencies or instrumentalities sponsored by the U.S. Government, and enters into repurchase agreements secured by such instruments. Tax-Exempt Cash Portfolio The investment objective of the Tax-Exempt Cash Portfolio is to provide maximum current interest income exempt from Federal income taxes consistent with the preservation of capital and liquidity. The Tax-Exempt Cash Portfolio invests primarily in short-term, high quality municipal obligations. Municipal obligations may include the following: project notes, demand notes, short-term municipal obligations (including tax anticipation notes, revenue anticipation notes, bond anticipation notes, tax and revenue anticipation notes, construction loan notes, and short-term discount notes), municipal bonds, variable rate demand notes, and non-rated tax-exempt, privately placed securities. Under normal circumstances, the Portfolio will invest at least 80% of its net assets in municipal obligations which pay interest that is exempt from regular Federal income tax and Federal alternative minimum tax. The Portfolio will use its best efforts to avoid investing any of its assets in municipal obligations which pay interest that may be subject to Federal alternative minimum tax. Investment Duration and Quality: Each Portfolio will invest in securities maturing within 13 months from the date of purchase. While this limitation also applies to the Portfolio's investments in repurchase agreements, securities collateralizing those repurchase agreements may bear maturities exceeding 13 months. Each Portfolio may also purchase bonds with longer final maturities if, pursuant to a demand feature, they provide for redemption within 13 months from the date of purchase. Each Portfolio's dollar-weighted average maturity is expected to be 90 days or less. 14 The Portfolios may invest only in securities which the Advisor believes present minimal credit risk at the time of purchase. Eligible securities are: (i) securities rated in the two highest rating categories of a nationally recognized statistical rating organization. If they are rated by more than one such rating agency, at least one other rating agency must rate them in one of its two highest categories; and (ii) unrated securities determined to be of comparable quality at the time of purchase. Bond Portfolios Core Fixed Income Portfolio The investment objective of the Core Fixed Income Portfolio is to provide maximum long-term total return consistent with reasonable risk to principal. The Portfolio invests primarily in mortgage-backed securities and fixed income securities issued by the U.S. Treasury, U.S. Government agencies, or other agencies or instrumentalities sponsored by the U.S. Government (collectively, "U.S. Government Securities"). The Portfolio may also invest in privately issued mortgage-backed securities and debt obligations of domestic and foreign companies. The Portfolio expects to achieve consistent results over the long term. The dollar-weighted average maturity of the Portfolio is expected to be between three and ten years. Under normal circumstances, at least 65% of the Portfolio's total assets will be invested in U.S. Government Securities and repurchase agreements collateralized by U.S. Government Securities. The Portfolio may, from time to time, take a temporary defensive position that is inconsistent with its principal investment strategy in response to adverse market, economic, political or other conditions. Such investments may include, for example, cash and short-term debt instruments which meet the Portfolio's quality criteria. A defensive position, taken at the wrong time, would have an adverse impact on the Portfolio's performance. To the extent the Portfolio employs a temporary defensive investment strategy, it may not achieve its investment objective. The net asset value of the Portfolio will fluctuate. The Advisor purchases securities that it believes have potential for higher returns than other securities with similar characteristics and risk, considering factors such as, maturity, coupon, credit and any prepayment options. The Advisor will generally sell a security for a number of reasons, including when the expected performance has been realized or to purchase another security with similar characteristics and risk but that the Advisor believes has a higher expected return. The Portfolio may actively trade portfolio securities to achieve its principal investment strategies. A high rate of portfolio turnover involves correspondingly high transaction costs, which may adversely affect the Portfolio's performance. High portfolio turnover may also result in the realization of short-term capital gains. Distributions derived from such gains will be treated as ordinary income for federal income tax purposes. 15 Muni Intermediate Portfolio and New Jersey Muni Portfolio The investment objective of the Muni Intermediate and New Jersey Muni Portfolios is to seek as high a level of current income exempt from Federal income tax as is consistent with preservation of capital. The Muni Intermediate Portfolio invests primarily in intermediate and long-term tax-exempt obligations of the Commonwealth of Pennsylvania and its political subdivisions, agencies and authorities. The New Jersey Muni Portfolio invests at least 65% of its net assets in intermediate and long-term tax-exempt obligations of the State of New Jersey and its political subdivisions, agencies and authorities. During normal market conditions, the Muni Intermediate Portfolio and New Jersey Muni Portfolio will invest at least 80% of their net assets in intermediate and long-term municipal obligations, which pay tax-exempt interest. Each of the Portfolios may invest up to 20% of its net assets in municipal obligations which pay interest which is exempt from regular Federal income tax, but may be subject to Federal alternative minimum tax. The Portfolios may, from time to time, take temporary defensive positions that are inconsistent with their principal investment strategies in response to adverse market, economic, political, or other conditions. Such investments may include, for example, cash reserves and short-term instruments such as tax-exempt money market securities. A defensive position, taken at the wrong time, would have an adverse impact on the Portfolio's performance. To the extent a Portfolio employs a temporary defensive investment strategy, it may not achieve its investment objective. The net asset value of the Portfolios will fluctuate. The Muni Intermediate and New Jersey Muni Portfolios purchase municipal obligations that the Advisor believes have the best value compared to securities of similar credit quality and maturity range. The Portfolios generally sell municipal obligations for a number of reasons, including a change in credit quality, to extend maturity, to increase yield or to raise funds to cover redemptions. Investment Duration and Quality: Each Portfolio expects to maintain a dollar-weighted average maturity of 3 to 10 years. The Core Fixed Income Portfolio's investments in privately issued mortgage-backed obligations, debt obligations of domestic and foreign companies, and any other publicly or privately placed U.S. Government Securities will be rated at least A by Standard & Poor's Ratings Group ("S&P") or Moody's Investors Service, Inc. ("Moody's"). The Portfolio may invest in unrated securities if they are determined to be of comparable quality at the time of purchase. The Muni Intermediate and New Jersey Muni Portfolios will invest in securities that are rated at the time of purchase within the three highest ratings assigned by Moody's (i.e., Aaa, Aa, A) or S&P (AAA, AA, A) in the case of bonds, or rated SP-1 or higher by S&P or MIG-2 or higher by Moody's in the case of notes. Each Portfolio may invest in unrated securities if they are determined to be of comparable quality at the time of purchase. If a portfolio security's rating is reduced to below the above levels, the Advisor will dispose of the security in an orderly fashion as soon as practicable. 16 Risks All Bond and Money Market Portfolios The risks of investing in any of the Bond or Money Market Portfolios have been described above in the Risk/Return Summary. The following supplements that description. Interest Rate Risks Generally, a fixed-income security will increase in value when interest rates fall and decrease in value when interest rates rise. Longer-term securities are generally more sensitive to interest rate changes than shorter-term securities, but they usually offer higher yields to compensate investors for the greater risks. A Bond Portfolio's dollar-weighted average maturity is a measure of how the Portfolio will react to interest rate changes. The stated maturity of a bond is the date the issuer must repay the bond's entire principal value to an investor. A bond's term to maturity is the number of years remaining to maturity. A Bond Portfolio does not have a stated maturity, but it does have a dollar-weighted average maturity. This is calculated by averaging the terms to maturity of bonds held by a Portfolio, with each maturity "weighted" according to the percentage of net assets it represents. Credit Risks The risk that an issuer will be unable to make principal and interest payments when due is known as "credit risk." U.S. Government Securities are generally considered to be the safest type of investment in terms of credit risk. Municipal obligations generally rank between U.S. Government Securities and corporate debt securities in terms of credit safety. Corporate debt securities, particularly those rated below investment grade, may present the highest credit risk. Ratings published by Rating Agencies are widely accepted measures of credit risk. The lower a bond issue is rated by an agency, the more credit risk it is considered to represent. Lower-rated bonds generally pay higher yields to compensate investors for the greater risk. Mortgage-Backed Obligations The Core Fixed Income Portfolio may invest in mortgage-backed securities (including collateralized mortgage obligations) that represent pools of mortgage loans assembled for sale to investors by various government-related organizations. These organizations include the Government National Mortgage Association (whose obligations are guaranteed by the U.S. Government), and the Federal National Mortgage Association and Federal Home Loan Mortgage Corporation (whose obligations are not guaranteed by the U.S. Government). Mortgage-backed securities provide a monthly payment consisting of interest and principal payments. Additional payments may be made out of unscheduled repayments of principal resulting from the sale of the underlying residential property, refinancing or foreclosure. When interest rates are declining, prepayments of principal on mortgage-backed securities may tend to increase due to refinancing of mortgages. Any premium paid by the Portfolio on purchases of mortgage-backed securities may be lost if an underlying mortgage is prepaid. The yield of the Portfolio may be affected when it reinvests prepayments it receives. 17 Debt Obligations Debt obligations of domestic and foreign companies may include a broad range of fixed and variable rate bonds, debentures and notes. The Core Fixed Income Portfolio's shares are subject to the risk of market value fluctuations. The market value of securities held by the Portfolio is expected to vary according to factors such as changes in interest rates and changes in the average weighted maturity of the Portfolio. Municipal Revenue Obligations The Tax-Exempt Cash, Muni Intermediate and New Jersey Muni Portfolios may each invest 25% or more of its net assets in municipal obligations, which pay interest and principal from revenues of similar projects. Each Portfolio may also invest up to 20% of its total assets in taxable investments including private activity bonds. Such investments involve risks presented by the laws and economic conditions relating to such projects and bonds. These securities do not carry the general obligation of the issuer and are not backed by taxing power. In many cases, the Internal Revenue Service has not ruled on whether the interest received on a municipal obligation is tax-exempt. The Portfolios and the Advisor rely on the opinion of bond counsel to the issuers at the time of issuance and will not review the bases for them. The Muni Intermediate and New Jersey Muni Portfolios invest primarily in Pennsylvania Municipal and New Jersey Municipal Obligations, respectively. If Pennsylvania or New Jersey or any of their political subdivisions, agencies, instrumentalities and authorities were to suffer serious financial difficulties that might jeopardize the ability to pay their obligations, the value of the affected Portfolio could be adversely affected. Repurchase Agreements The Government Cash and Core Fixed Income Portfolios may enter into collateralized repurchase agreements with qualified brokers, dealers, banks and other financial institutions deemed creditworthy by the Advisor. Such agreements can be entered into for periods of one day or for a fixed term. In a repurchase agreement, a Portfolio purchases a security and simultaneously commits to resell that security at a future date to the seller (a qualified bank or securities dealer) at an agreed upon price plus an agreed upon market rate of interest (itself unrelated to the coupon rate or date of maturity of the purchased security). The seller under a repurchase agreement will be required to maintain the value of the securities which are subject to the agreement and held by a Portfolio at not less than the agreed upon repurchase price. If the seller defaults on its repurchase obligation, the Portfolio holding such obligation suffers a loss to the extent that the proceeds from a sale of the underlying securities (including accrued interest) is less than the repurchase price (including accrued interest) under the agreement. In the event that such a defaulting seller files for bankruptcy or becomes insolvent, disposition of such securities by the Portfolio might be delayed pending court action. 18 Reverse Repurchase Agreements The Core Fixed Income Portfolio may enter into an agreement to sell a security and simultaneously commit to repurchase that security at a future date from the buyer. In effect, the Portfolio is temporarily borrowing funds at an agreed upon interest rate from the purchaser of the security. The Portfolio's investment of the proceeds of a reverse repurchase agreement is the speculative factor known as leverage. The Portfolio may enter into a reverse repurchase agreement only if the interest income from investment of the proceeds is greater than the interest expense of the transaction and the proceeds are invested for a period no longer than the term of the agreement. The Portfolio will maintain liquid securities at least equal to the value of its purchase obligations under these agreements. The Advisor will consider the creditworthiness of the other party in determining whether the Portfolio will enter into a reverse repurchase agreement. The Portfolio is permitted to invest up to one-third of its total assets in reverse repurchase agreements and securities lending transactions combined. The use of reverse repurchase agreements involves certain risks. For example, the securities acquired by the Portfolio with the proceeds of such an agreement may decline in value and the market value of the securities sold by the Portfolio may decline below the repurchase price. Neither eventuality affects the Portfolio's responsibility to complete the transaction at full value. The Portfolio will invest the proceeds of reverse repurchase agreements in overnight repurchase agreements. Selection of Investments The Advisor evaluates the rewards and risks presented by all securities purchased by the Portfolios and how they may advance the Portfolios' investment objective. It is possible, however, that these evaluations will prove to be inaccurate. Other Types of Investments This Prospectus describes each Portfolio's principal investment strategies, and the particular types of securities which each Portfolio may select for investment. Each Portfolio may make other types of investments and pursue other investment strategies in support of its overall investment goal. These supplemental investment strategies--and the risks involved--are described in the Statement of Additional Information, which is referred to on the Back Cover of this Prospectus. 19 PRICE OF PORTFOLIO SHARES The price of shares issued by each Portfolio is based on its net asset value ("NAV"). The NAV per share of each Money Market Portfolio is determined as of 12:00 noon (Eastern time) on each day that the New York Stock Exchange is open for business (a "Business Day"). The NAV per share of the Core Fixed Income, Muni Intermediate and New Jersey Muni Portfolios is determined as of the close of regular trading hours of the Exchange on each Business Day currently 4:00 p.m. (Eastern time). Government Cash and Tax-Exempt Cash Portfolios For the purpose of calculating each Money Market Portfolio's NAV per share, securities are valued at "amortized cost." Bond Portfolios Marketable fixed income securities are priced at market value. Debt securities with remaining maturities of 60 days or less are valued at amortized cost. The value of other assets and securities for which quotations are unreliable or not readily available (including restricted securities) is determined in good faith at fair value using methods determined by the Board of Directors or the Board of Trustees. PURCHASE OF SHARES Shares of each Portfolio are sold without a sales commission on a continuous basis to the Advisor acting on behalf of its clients or the clients of its Affiliates ("Clients") and to other institutions, including brokers acting on behalf of their clients (the "Institutions"), at the NAV per share next determined after receipt, in proper order, of the purchase order by the transfer agent. We consider orders to be in "proper order" when all required documents are properly completed, signed and received. The minimum initial investment for each Portfolio is $25,000; the minimum for subsequent investments for each Portfolio is $1,000. The minimum initial and subsequent investment requirements may be reduced or waived from time to time. Beneficial ownership of shares will be reflected on books maintained by the Advisor or the Institutions. The Advisor has informed the Funds that it and its Affiliates' minimum and subsequent investment requirements for their Clients' investments in the Portfolios are the same as those for the Funds. Other Institutions may have such requirements. If you wish to purchase shares in the Funds, you should contact the Advisor by telephone or facsimile or contact your Institution. Your Institution may charge you for purchasing or selling shares of the Portfolios. There is no transaction charge for shares purchased directly from the Portfolios through the Advisor. Shares purchased in the Money Market Portfolios before 12:00 noon (Eastern time) begin earning dividends on the same business day provided Federal funds are available to the particular Portfolio before 12:00 noon (Eastern time) that day. Purchases of a Portfolio's shares will be made in full and fractional shares calculated to three decimal places. In the interest of economy and convenience, certificates for shares will not be issued except upon your written request. Certificates for fractional shares, however, will not be issued. 20 REDEMPTION OF SHARES You may redeem shares of each Portfolio at any time, without cost, at the NAV per share next determined after the transfer agent receives your redemption order. Generally, a properly signed written order is all that is required. If you wish to redeem your shares, you should contact the Advisor by telephone or facsimile or contact your Institution. You will ordinarily be paid your redemption proceeds within one business day, but in no event more than seven days, after the Funds' transfer agent receives your order in proper form. The Funds may suspend the right of redemption or postpone the date of payment under any emergency circumstances as determined by the Securities and Exchange Commission (the "SEC"). Redemption proceeds are normally paid in cash, although the Funds have the right to limit each shareholder to cash redemptions of $250,000 or 1% of such Portfolio's NAV, whichever is less, within a 90-day period. Any additional redemption proceeds would be made in readily marketable securities. ADDITIONAL INFORMATION ON THE PURCHASE AND REDEMPTION OF SHARES OF THE PORTFOLIOS The Glenmede Fund, Inc. and The Glenmede Portfolios (together, the "Funds") may appoint one or more entities as their agent to receive purchase and redemption orders of shares of the Portfolios and cause these orders to be transmitted, on an aggregated basis, to the Funds' transfer agent. In these instances, orders are effected at the NAV per share next determined after receipt of that order by the entity, if the order is actually received by the transfer agent not later than the next business morning. DIVIDENDS AND DISTRIBUTIONS The Portfolios have the following dividend and capital gains policies: (a) The Money Market Portfolios declare dividends daily and normally distribute substantially all of their net investment income to shareholders monthly. (b) The Core Fixed Income, Muni Intermediate and New Jersey Muni Portfolios normally distribute substantially all of their net investment income to shareholders monthly. The Portfolios normally distribute any realized net capital gains at least once a year. 21 TAXES Federal Taxes Taxable Portfolios. Each Portfolio contemplates declaring, as dividends each year, all or substantially all of its taxable income, including its net capital gain (the excess of long-term capital gain over short-term capital loss). Distributions attributable to the net capital gain of a Portfolio will be taxable to you as long-term capital gain, regardless of how long you have held your shares. Other Portfolio distributions (other than exempt-interest dividends, discussed below) will generally be taxable as ordinary income. You will be subject to income tax on Portfolio distributions regardless of whether they are paid in cash or reinvested in additional shares. You will be notified annually of the tax status of distributions to you. The investment objectives of the Bond and Money Market Portfolios will generally cause their annual distributions to consist primarily of ordinary income. The one major exception to these tax principles is that distributions on, and sales, exchanges and redemptions of, shares held in an IRA (or other tax-qualified plan) will not be currently taxable. Tax-Exempt Cash, Muni Intermediate and New Jersey Muni Portfolios ("Tax-Exempt Portfolios"). Each Tax-Exempt Portfolio anticipates that substantially all of its income dividends will be "exempt interest dividends," which are exempt from Federal income taxes. However, some dividends will be taxable, such as dividends that are derived from occasional taxable investments, and distributions of short and long-term capital gains. Interest on indebtedness you incur to purchase or carry shares of each Tax-Exempt Portfolio generally will not be deductible for Federal income tax purposes. A portion of the exempt-interest dividends paid by the Tax-Exempt Portfolios may constitute an item of tax preference for purposes of determining Federal alternative minimum tax liability. Exempt-interest dividends will also be considered along with other adjusted gross income in determining whether any Social Security or railroad retirement payments received by you are subject to Federal income taxes. If you receive an exempt-interest dividend with respect to any share and the share is held by you for six months or less, any loss on the sale or exchange of the share will be disallowed to the extent of such dividend amount. Miscellaneous. If you purchase shares of the Core Fixed Income, Muni Intermediate and New Jersey Muni Portfolios, just before a distribution, the purchase price will reflect the amount of the upcoming distribution, but you will be taxed on the entire amount of the distribution received, even though, as an economic matter, the distribution simply constitutes a return of capital. This is known as "buying into a dividend." 22 You will recognize taxable gain or loss on a sale, exchange or redemption of your shares of the Core Fixed Income, Muni Intermediate and New Jersey Muni Portfolios, including an exchange for shares of another Portfolio, based on the difference between your tax basis in the shares and the amount you receive for them. (To aid in computing your tax basis, you should retain your account statements for the periods during which you held shares.) Generally, this gain or loss will be long-term or short-term depending on whether your holding period for the shares exceeds 12 months, except that any loss realized on shares held for six months or less will be treated as a long-term capital loss to the extent of any long-term capital gain distributions that were received on the shares. Pennsylvania Tax Considerations Shareholders of the Muni Intermediate Portfolio will not be subject to Pennsylvania Personal Income Tax on distributions from the Portfolio attributable to interest income from Pennsylvania Municipal Obligations held by the Portfolio. The exemption from Pennsylvania Personal Income Tax also will extend to interest on obligations of the United States, its territories and certain of its agencies and instrumentalities (collectively, "Federal Securities"). In addition, shareholders of the Portfolio who are Philadelphia residents will not be subject to the Philadelphia School District Net Income Tax on distributions from the Portfolio attributable to interest income from Pennsylvania municipal obligations or Federal Securities. Distributions derived from investments other than Pennsylvania Municipal Obligations and Federal Securities and distributions from net realized capital gains will be subject to the Pennsylvania Personal Income Tax and the Philadelphia School District Tax, except that distributions attributable to capital gains on investments held by the Portfolio for more than six months are not subject to the Philadelphia School District Tax. Gain on the disposition of a share of the Muni Intermediate Portfolio will be subject to Pennsylvania Personal Income Tax and the School District Tax, except that gain realized with respect to a share held for more than six months is not subject to the School District Tax. New Jersey Tax Considerations It is anticipated that substantially all dividends paid by the New Jersey Muni Portfolio will not be subject to New Jersey personal income tax. In accordance with the provisions of New Jersey law, distributions paid by a "qualified investment fund" will not be subject to the New Jersey personal income tax to the extent that the distributions are attributable to income received as interest or gain from New Jersey Municipal Obligations, or as interest or gain from direct U.S. Government obligations. Distributions by a qualified investment fund that are attributable to most other sources will be subject to the New Jersey personal income tax. If the New Jersey Muni Portfolio qualifies as a qualified investment fund under New Jersey law, any gain on the redemption or sale of the Portfolio's shares will not be subject to the New Jersey personal income tax. To be classified as a qualified investment fund, at least 80% of the Portfolio's investment must consist of New Jersey Municipal Obligations or direct U.S. Government obligations; it must have no investments other than interest-bearing obligations, obligations issued at a discount, and cash and cash items (including receivables) and financial options, futures and forward contracts related to interest bearing obligations issued at a discount; and it must satisfy certain reporting obligations and provide certain information to its shareholders. Shares of the Portfolio are not subject to property taxation by New Jersey or its political subdivisions. To the extent that a shareholder is subject to state or local taxes outside New Jersey, dividends earned by an investment in the New Jersey Muni Portfolio may represent taxable income. 23 The New Jersey personal income tax is not applicable to corporations. For all corporations subject to the New Jersey Corporation Business Tax, dividend and distributions from a "qualified investment fund" are included in the net income tax base for purposes of computing the Corporation Business Tax. Furthermore, any gain upon the redemption or sale of New Jersey Muni Portfolio shares by a corporate shareholder is also included in the net income tax base for purposes of computing the Corporation Business Tax. MANAGEMENT OF THE PORTFOLIOS Investment Advisor The Glenmede Trust Company with principal offices at One Liberty Place, 1650 Market Street, Suite 1200, Philadelphia, Pennsylvania 19103, serves as investment advisor to the Portfolios. The Advisor, a limited purpose trust company chartered in 1956, provides fiduciary and investment services to endowment funds, foundations, employee benefit plans and other institutions and individuals. The Advisor is a wholly-owned subsidiary of The Glenmede Corporation. At December 31, 1999, the Advisor had over $17 billion in assets in the accounts for which it serves in various capacities including as executor, trustee or investment advisor. Under its Investment Advisory Agreements with the Funds, the Advisor, subject to the control and supervision of the particular Fund's Board and in conformance with the stated investment objective and policies of each Portfolio, manages the investment and reinvestment of the assets of each Portfolio. It is the responsibility of the Advisor to make investment decisions for the Portfolios and to place each Portfolio's purchase and sale orders. The Advisor does not receive any fee from the Funds for its investment services provided to the Portfolios. However, shareholders in the Funds who are clients of the Advisor, or an Affiliate of the Advisor, pay fees which vary, depending on the capacity in which the Advisor or the Affiliate provides them with fiduciary and investment services (e.g., personal trust, estate settlement, advisory and custodian services). Shareholders in the Funds who are customers of other Institutions may pay fees to those Institutions. Mary Ann B. Wirts, First Vice President and Manager of the Fixed Income Division of the Advisor, has been the portfolio manager primarily responsible for the management of the Tax-Exempt Cash Portfolio since that Portfolio commenced operations on November 7, 1988. Since November 1, 1996, Mrs. Wirts has also been the portfolio manager primarily responsible for the management of the Government Cash Portfolio. Mrs. Wirts has been employed by the Advisor since 1982. Laura LaRosa is the portfolio manager primarily responsible for the management of the Muni Intermediate and New Jersey Muni Portfolios. Ms. LaRosa has been primarily responsible for the management of those Portfolios since November 1994. Ms. LaRosa has been employed by the Advisor as a portfolio manager since 1994. Prior to her employment with the Advisor in 1994, Ms. LaRosa had been Vice President of Institutional Sales at Hopper Soliday, Philadelphia. 24 Timothy M. Woolley, CFA is the portfolio manager primarily responsible for the management of the Core Fixed Income Portfolio. Mr. Woolley has been primarily responsible for the management of this Portfolio since January 1, 1998. Mr. Woolley is a Fixed Income Portfolio Manager and analyst specializing in mortgage-backed securities. Mr. Woolley has been employed by the Advisor as a portfolio manager since 1994. Prior to his employment with the Advisor in 1994, Mr. Woolley had been with Meridian Capital Markets and Meridian Bank for five years, most recently serving as Vice President specializing in mortgage research. GENERAL INFORMATION If you have any questions regarding the Portfolios contact the Funds at the address or telephone number stated on the back cover page. 25 FINANCIAL HIGHLIGHTS The financial highlights tables are intended to help you understand each Portfolio's financial performance for the past 5 years. Certain information reflects financial results for a single Portfolio share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in each Portfolio (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, whose report, along with the Portfolios' financial statements, are included in the Annual Report, which is available upon request. Core Fixed Income Portfolio (For a share outstanding throughout each year)
Year Ended October 31, ------------------------------------------------------------------------ 1999 1998 1997 1996 1995 -------- ------- ------- ------- ------ Net Asset Value, Beginning of Year............. $ 10.70 $ 10.46 $ 10.29 $ 10.36 $ 9.89 -------- -------- -------- -------- -------- Income from Investment Operations: Net Investment Income.......................... 0.63 0.64 0.68 0.66 0.69 Net Gain/(Loss) on Securities (both realized and unrealized)................ (0.54) 0.24 0.17 (0.08) 0.46 -------- -------- -------- -------- -------- Total From Investment Operations............... 0.09 0.88 0.85 0.58 1.15 -------- -------- -------- -------- -------- Less Distributions: Dividends (from net investment income)......... (0.63) (0.64) (0.68) (0.65) (0.68) Distributions (from capital gains)............. -- -- -- -- -- -------- -------- -------- -------- -------- Total Distributions............................ (0.63) (0.64) (0.68) (0.65) (0.68) -------- -------- -------- -------- -------- Net Aset Value, End of Year.................... $ 10.16 $ 10.70 $ 10.46 $ 10.29 $ 10.36 ======== ======== ======== ======== ======== Total Return(1)................................ 0.91% 9.32% 8.63% 5.88% 12.06% ======== ======== ======== ======== ======== Ratios/Supplemental Data: Net Assets, End of Year (in 000's)........... $230,684 $258,986 $266,733 $259,503 $342,874 Ratio of Expenses to Average Net Assets...... 0.12% 0.11% 0.13% 0.16% 0.11% Ratio of Gross Expense to Average Net Assets. Ratio of Net Investment Income to Average 0.55%(2) 0.99%(2) 0.43%(2) 0.16% 0.11% Net Assets................................. Portfolio Turnover Rate...................... 6.08% 6.58% 6.67% 6.37% 6.67% 191% 93% 307% 47% 228%
- ----------------- (1) Total Return represents aggregate total return for the period indicated. (2) The annualized gross expense ratio includes interest expense. The ratios excluding interest expense for the years ended October 31, 1999, 1998 and 1997 were 0.12%, 0.11% and 0.13%, respectively. 26 Muni Intermediate Portfolio (For a share outstanding throughout each year)
Year Ended October 31, ------------------------------------------------------------------------ 1999 1998 1997 1996 1995 -------- -------- --------- --------- --------- Net Asset Value, Beginning of Year....... $ 10.56 $ 10.40 $ 10.26 $ 10.32 $ 9.74 -------- -------- --------- --------- --------- Income from Investment Operations: Net Investment Income.................... 0.51 0.51 0.52 0.53 0.53 Net Gain/(Loss) on Securities (both realized and unrealized)......... (0.42) 0.16 0.14 (0.06) 0.58 -------- -------- --------- --------- --------- Total From Investment Operations......... 0.09 0.67 0.66 0.47 1.11 -------- -------- --------- --------- --------- Less Distributions: Dividends (from net investment income)... (0.51) (0.51) (0.52) (0.53) (0.53) -------- -------- --------- --------- --------- Net Asset Value, End of Year............. $ 10.14 $ 10.56 $ 10.40 $ 10.26 $ 10.32 ======== ======== ========= ========= ========= Total Return(1).......................... 0.91% $ 6.63% 6.69% 4.67% 11.76% ======== ======== ========= ========= ========= Ratios/Supplemental Data: Net Assets, End of Year (in 000's)..... $ 16,526 $ 19,975 $ 19,219 $ 18,471 $ 18,096 Ratio of Expenses to Average Net Assets 0.20% 0.30% 0.34% 0.32% 0.28% Ratio of Net Investment Income to Average Net Assets................... 4.90% 4.88% 5.09% 5.16% 5.23% Portfolio Turnover Rate................ 6% 11% 21% 44% 28%
- ---------------------- (1) Total Return represents aggregate total return for the period indicated. 27 New Jersey Muni Portfolio (For a share outstanding throughout each year)
Year Ended October 31, ----------------------------------------------------------------------- 1999 1998 1997 1996 1995 --------- -------- -------- ------- ------- Net Asset Value, Beginning of Year............ $ 10.43 $ 10.20 $ 9.97 $ 10.00 $ 9.22 --------- -------- ------- ------- ------- Income from Investment Operations: Net Investment Income......................... 0.44 0.44 0.44 0.44 0.41 Net Gain/(Loss) on Securities (both realized and unrealized............... (0.43) 0.23 0.23 (0.03) 0.78 --------- -------- ------- ------- ------- Total From Investment Operations.............. 0.01 0.67 0.67 0.41 1.19 --------- -------- ------- ------- ------- Less Distributions: Dividends (from net investment income)........ (0.44) (0.44) (0.44) (0.44) (0.41) --------- -------- ------- ------- ------- Net Asset Value, End of Year.................. $ 10.00 $ 10.43 $ 10.20 $ 9.97 $ 10.00 ========= ======== ======= ======= ======= Total Return(1)............................... 0.08% 6.71% 6.90% 4.24% 13.25% ========= ======== ======= ======= ======= Ratios/Supplemental Data: Net Assets, End of Year (in 000's)......... $17,953 $17,492 $12,117 $ 7,545 $ 5,932 Ratio of Expenses to Average Net Assets.... 0.24% 0.30% 0.31% 0.24% 0.53% Ratio of Net Investment Income to Average Net Assets....................... 4.34% 4.33% 4.42% 4.56% 4.30% Portfolio Turnover Rate.................... 10% 7% 19% 33% 12%
- ----------------- (1) Total Return represents aggregate total return for the period indicated. 28 Government Cash Portfolio (For a share outstanding throughout each year)
Year Ended October 31, -------------------------------------------------------------------- 1999 1998 1997 1996 1995 -------- --------- --------- --------- --------- Net Asset Value, Beginning of Year............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- --------- --------- --------- --------- Income from Investment Operations: Net Investment Income......................... 0.049 0.051 0.054 0.053 0.059 Less Distributions: Dividends (from net investment income)........ (0.049) (0.051) (0.054) (0.053) (0.059) -------- --------- --------- --------- --------- Net Asset Value, End of Year.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ========= ========= ========= ========= Total Return(1)............................... 5.00% 5.63% 5.53% 5.46% 5.87% ======== ========= ========= ========= ========= Ratios/Supplemental Data: Net Assets, End of Year (in 000's).......... $405,907 $ 430,165 $ 451,038 $ 452,395 $ 408,605 Ratio of Expenses to Average Net Assets..... 0.11% 0.11% 0.13% 0.16% 0.15% Ratio of Net Investment Income to Average Net Assets.............................. 4.87% 5.41% 5.39% 5.32% 5.71%
- ---------------- (1) Total Return represents aggregate total return for the period indicated. 29 Tax-Exempt Cash Portfolio (For a share outstanding throughout each year)
Year Ended October 31, ------------------------------------------------------------------------ 1999 1998 1997 1996 1995 -------- --------- --------- -------- ---------- Net Asset Value, Beginning of Year............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- --------- -------- --------- Income from Investment Operations: Net Investment Income.......................... 0.030 0.034 0.034 0.034 0.038 Less Distributions: Dividends (from net investment income)......... (0.030) (0.034) (0.034) (0.034) (0.038) -------- -------- --------- -------- --------- Net Asset Value, End of Year................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ========= ======== ========= Total Return(1)................................ 3.02% 3.41% 3.46% 3.42% 3.76% ======== ======== ========= ======== ========= Ratios/Supplemental Data: Net Assets, End of Year (in 000's)........... $350,032 $375,924 $ 280,950 $224,999 $ 222,808 Ratio of Expenses to Average Net Assets...... 0.12% 0.13% 0.14% 0.15% 0.15% Ratio of Net Investment Income to Average Net Assets............................... 2.97% 3.37% 3.40% 3.36% 3.69%
- ------------ (1) Total Return represents aggregate total return for the period indicated. 30 Where to find more information More Portfolio information is available to you upon request and without charge: Annual and Semi-Annual Report The Annual and Semi-Annual Reports provide additional information about the Portfolios' investments and performance. The Annual Report also contains a discussion of the market conditions and investment strategies that significantly affected the Portfolios' performance during the last fiscal year. Statement of Additional Information (SAI) The SAI includes additional information about the Portfolios' investment policies, organization and management. It is legally part of this prospectus (it is incorporated by reference). You can get free copies of the Portfolios' Annual Report, Semi-Annual Report or SAI. You may also request other information about the Portfolios, and make inquiries. Write to: The Glenmede Fund/Portfolios One South Street Baltimore, MD 21202 By phone: 1-800-442-8299 Information about the Portfolios (including the Portfolios' SAI) can be reviewed and copied at the Securities and Exchange Commission's Public Reference Room in Washington, DC. Information about the operation of the Public Reference Room may be obtained by calling the SEC at 1-202-942-8090. Reports and other information about the Portfolios are available on the EDGAR Database on SEC's Internet site at http://www.sec.gov. Copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the Public Reference Section of the SEC, Washington, DC 20549-0102. The Glenmede Fund, Inc. Investment Company Act File No. is 811-5577 The Glenmede Portfolios Investment Company Act File No. is 811-6578 31 THE GLENMEDE FUND, INC. Prospectus February 28, 2000 Equity Portfolios International Portfolio Large Cap Value Portfolio Small Capitalization Value Portfolio (Advisor Shares) Strategic Equity Portfolio Small Capitalization Growth Portfolio Core Value Portfolio Investment Advisor The Glenmede Trust Company Investment Sub-Advisors to the Small Capitalization Growth Portfolio Winslow Capital Management, Inc. TCW Investment Management Company The Securities and Exchange Commission has not approved or disapproved the Portfolios' securities or determined if this prospectus is accurate or complete. It is a criminal offense to state otherwise. TABLE OF CONTENTS Page RISK/RETURN SUMMARY............................................................. INVESTMENTS..................................................................... PRICE OF PORTFOLIO SHARES....................................................... PURCHASE OF SHARES.............................................................. REDEMPTION OF SHARES............................................................ ADDITIONAL INFORMATION ON THE PURCHASE AND REDEMPTION OF SHARES OF THE PORTFOLIOS..................................................... DIVIDENDS AND DISTRIBUTIONS..................................................... TAXES .......................................................................... MANAGEMENT OF THE PORTFOLIOS.................................................... GENERAL INFORMATION............................................................. FINANCIAL HIGHLIGHTS............................................................ -i- RISK/RETURN SUMMARY Equity Portfolios --------------------------------------------- Important Concepts Market capitalization is a common measure of the size of a company. It is the market price of a share of the company's stock multiplied by the number of shares that are outstanding. Total return consists of net income (dividend and interest income from portfolio securities, less expenses of the Portfolio) and capital gains and losses, both realized and unrealized, from portfolio securities. ---------------------------------------------
Investment Objective Principal Investment Strategies International Portfolio Maximum long-term total return The Portfolio invests primarily in common consistent with reasonable risk to stocks, including dividend-paying common stocks, principal of companies located outside the United States and that the Advisor believes are undervalued. Stocks appear to the Advisor to be undervalued by the stock market when the Advisor believes the stock price becomes inexpensive relative to the company's estimated earnings and/or dividend-paying ability over the long-term. The Advisor selects stocks to buy and sell by evaluating a company's growth outlook and market valuation based on price-to-earnings, dividend yields and other operating and financial conditions. The Advisor selects countries primarily by evaluating a country's valuation ratios, such as price-to-earnings and dividend yields, prospective economic growth, government policies and other factors. Large Cap Value Maximum long-term total return The Portfolio invests primarily in equity Portfolio consistent with reasonable risk to securities, such as common stocks, including principal dividend-paying common stocks, and preferred stocks,
of U.S. companies with market capitalizations greater than $5 billion at the time of purchase and that the Advisor believes are undervalued. Stocks appear to the Advisor to be undervalued by the stock market when the Advisor believes the stock price becomes inexpensive relative to the company's estimated earnings and/or dividend-paying ability over the long-term. In selecting securities to buy and sell, the Advisor uses its own computer model which ranks stocks as an investment guide. This computer model considers factors such as price-to-book value ratios, price-to-earnings ratios, price-to-cash flow ratios, return on equity ratios, debt-to-equity ratios, dividend yields, earnings growth rates and historic stock price patterns. A security may be sold for a number of reasons, including performance, a change in its ranking by the Advisor's computer model, or due to changing industry or specific company operating or financial conditions. Small Capitalization Long-term capital The Portfolio invests primarily in equity Value Portfolio (formerly, appreciation consistent with securities, such as common stocks and preferred the "Small Capitalization reasonable risk to principal stocks, of U.S. companies with market Equity Portfolio") capitalizations, at the time of purchase, that are below the largest market capitalization of any stock in the Russell 2000 Index and that the Advisor believes are undervalued. Stocks appear to the Advisor to be undervalued by the stock market when the Advisor believes the stock price becomes inexpensive relative to the company's estimated earnings and/or dividend-paying ability over the long-term. In selecting securities to buy and sell, the Advisor examines the earnings and dividend-paying ability of a company, divided by the market value of the security and may also consider price-to- earnings ratios, price-to-cash flow ratios, price-to-book ratios, reinvestment rates, dividend yields, expected growth rates and balance sheet quality. Strategic Equity Portfolio Maximum long-term total The Portfolio invests primarily in equity (formerly, the "Tax return consistent with securities, such as common stocks, preferred stocks Managed Equity reasonable risk to principal and securities convertible into common and Portfolio") preferred stocks, of U.S. companies that appear to the Advisor to be reasonably priced and have revenue and earnings growth potential that the Advisor believes is greater than the stock market in general. The Advisor attempts to minimize the impact of federal and state income taxes on shareholders' returns by, for example, investing in stocks with low dividend yields and in companies with above average earnings predictability and stability, holding stocks for several years and
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selling depreciated securities to offset realized capital gains. Small Capitalization Long-term capital The Portfolio invests primarily in equity Growth Portfolio appreciation consistent with securities, such as common stocks, preferred reasonable risk to principal stocks and securities convertible into common and preferred stocks, of U.S. companies with market capitalizations at the time of purchase, that are below the largest market capitalization of any stock in the Russell 2000 Growth Index. The small capitalization stocks that the Portfolio invests in are primarily growth stocks of U.S. companies. In general, small capitalization growth stocks offer strong revenue and earnings potential, and accompanying capital growth potential, with less dividend income than small capitalization value stocks. The Portfolio uses a multi-manager approach. Subject to the approval of the Glenmede Fund's Board of Directors, the Advisor selects sub- advisors, each of which manages a portion of the Portfolio's assets. The Advisor monitors the performance of the sub-advisors and may change the allocation of assets between them. Core Value Portfolio Maximum long-term total return The Portfolio invests primarily in equity consistent with reasonable risk to securities, such as common stocks, principal including dividend-paying common stocks, and preferred stocks, of U.S. companies with market capitalizations similar to the Standard & Poor's 500 Composite Stock Price Index ("S&P 500") and that the Advisor believes are undervalued. Stocks appear to the Advisor to be undervalued by the stock market when the Advisor believes the stock price becomes inexpensive relative to the company's estimated earnings and/or dividend-paying ability over the long-term. In selecting securities to buy and sell, the Advisor uses its own computer model which ranks stocks as an investment guide. This computer model considers factors such as price-to-book value ratios, price-to-earnings ratios, price-to-cash flow ratios, return on equity ratios, debt-to-equity ratios, dividend yields, earnings growth rates and historic stock price patterns. The Advisor also utilizes other portfolio software which analyze the Portfolio in comparison to the S&P 500 Index. A security may be sold for a number of reasons, including performance, a change in its ranking by the Advisor's computer model, or due to changing industry or specific company operating or financial conditions.
-3- Principal Risks of Investing All Equity Portfolios Stocks may decline over short or even extended periods of time. Equity markets tend to be cyclical: there are times when stock prices generally increase, and other times when they generally decrease. Therefore, you could lose money by investing in the Portfolios. In addition, each of the Equity Portfolios is subject to the additional risk that the particular types of stocks held by the Portfolio will underperform other types of stocks. The strategy that the Advisor uses may fail to produce the intended result. An investment in a Portfolio is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. International Portfolio The International Portfolio is subject to additional risks due to its foreign investments. Foreign stocks involve special risks not typically associated with U.S. stocks. The stocks held by the Portfolio may underperform other types of stocks, and they may not increase or may decline in value. The Portfolio may also enter into foreign currency exchange contracts to hedge the currency risk of portfolio securities denominated in a foreign currency. Foreign investments may be riskier than U.S. investments because of factors such as foreign government restrictions, changes in currency exchange rates, incomplete financial information about the issuers of securities, and political or economic instability. Foreign stocks may be more -4- volatile and less liquid than U.S. stocks. The risks associated with foreign investments are heightened when investing in emerging markets. The government and economies of emerging market countries feature greater instability than those of more developed countries. Such investments tend to fluctuate in price more widely and to be less liquid than other foreign investments. Small Capitalization Value and The Small Capitalization Value and Small Small Capitalization Growth Capitalization Growth Portfolios are Portfolios subject to the risk that the stocks of smaller and newer issuers can be more volatile and more speculative than the stocks of larger issuers. Smaller companies tend to have limited resources, product lines and market share. As a result, their share prices tend to fluctuate more than those of larger companies. Their shares may also trade less frequently and in limited volume, making them potentially less liquid. The price of small company stocks might fall regardless of trends in the broader market. International, Large Cap Value, Although these Portfolios invest in Small Capitalization Value and stocks the Advisor believes to be Core Value Portfolios undervalued, there is no guarantee that the prices of these stocks will not move even lower. Small Capitalization Growth The values of growth stocks may be more Portfolio sensitive to changes in current or expected earnings than the values of other stocks. The Advisor's allocation of assets between sub-advisors may not achieve its desired effect. Also, the strategy that a sub-advisor uses may fail to produce the intended result. Strategic Equity Portfolio The Strategic Equity Portfolio uses various investment methods to reduce the impact of federal and state income taxes on shareholders' returns. Accordingly, the Portfolio may miss the opportunity to realize gains or reduce losses as a -5- result of this tax managed investment strategy. This Portfolio invests in securities with strong earnings growth prospects that the Advisor believes are reasonably priced. There is no guarantee that the prices of these stocks will not move even lower. Who may want to The Portfolios may be appropriate for invest in the Portfolios you if you want your capital to grow over the long term, are investing for goals several years away, and are comfortable with stock market risks. The Portfolios would NOT be appropriate for you if you are investing for short-term goals, or are mainly seeking current income. Bar Charts and The bar charts and tables below show the Performance Tables Portfolios' annual total returns, their long-term performance and provide some indication of the risks of investing in the Portfolios. The bar charts show how the performance of the Portfolios has varied from year to year. The tables show how each Portfolio's average annual total returns for one, five and ten years compare to those of selected market indices. The bar charts and performance tables assume reinvestment of dividends and distributions. The Portfolios' past performance does not necessarily indicate how they will perform in the future. The bar chart and performance table information has been omitted for the Small Capitalization Growth and Core Value Portfolios because these Portfolios have been in operation for less than one calendar year. -6- International Portfolio 1990 -4.00% 1991 13.94% 1992 -3.11% 1993 35.66% 1994 4.43% 1995 14.58% 1996 17.68% 1997 7.59% 1998 16.18% 1999 25.33% During the periods shown in the bar chart, the highest quarterly return was 15.54% (for the quarter ended December 31, 1998) and the lowest quarterly return was -12.43% (for the quarter ended September 30, 1990). Large Cap Value Portfolio 1994 -2.76% 1995 19.15% 1996 25.96% 1997 31.50% 1998 17.52% 1999 4.94% During the periods shown in the bar chart, the highest quarterly return was 22.79% (for the quarter ended December 31, 1998) and the lowest quarterly return was -14.60% (for the quarter ended September 30, 1998). Small Capitalization Value Portfolio (Advisor Shares) 1992 12.46% 1993 21.40% 1994 1.05% 1995 27.59% 1996 25.10% 1997 29.92% 1998 -13.46% 1999 1.41% During the periods shown in the bar chart, the highest quarterly return was 17.72% (for the quarter ended December 31, 1992) and the lowest quarterly return was -20.27% (for the quarter ended September 30, 1998). -7- Strategic Equity Portfolio 1990 -5.68% 1991 30.72% 1992 8.18% 1993 10.71% 1994 -1.67% 1995 31.65% 1996 31.58% 1997 34.02% 1998 14.86% 1999 22.54% During the periods shown in the bar chart, the highest quarterly return was 19.64% (for the quarter ended December 31, 1999) and the lowest quarterly return was -12.91% (for the quarter ended September 30, 1990). -8-
The Portfolios' Average Annual Total Returns for the Periods Ended December 31, 1999 - ----------------------------------------- ------------------------------------------------------------------------ o The Morgan Stanley EAFE-IX(R) ND Past 1 Past 5 Past 10 Weighted Index is an unmanaged Year Years Years capitalization weighted composite ------------------------------------------------------------------------ portfolio consisting of equity total International Portfolio 25.33% 16.13% 12.23% returns of companies in Australia, New Zealand, Europe and the Far East. ------------------------------------------------------------------------ Morgan Stanley EAFE-IX(R)ND 26.96% 12.83% 7.01% o The Lipper International Fund Index Weighted Index is comprised of the 30 largest funds ------------------------------------------------------------------------ in the Lipper International Fund Lipper International Fund Index 37.83% 15.96% 10.64% Average. The Average consists of funds that invest in securities whose ------------------------------------------------------------------------ primary trading markets are outside the United States. ------------------------------------------------------------------------ Past 1 Past 5 Since o The S&P 500 Stock Index is an Year Years January unmanaged index comprised of 500 4, 1993 widely held common stocks listed on ------------------------------------------------------------------------ the New York Stock Exchange, the Large Cap Value Portfolio 4.94% 19.47% 16.46% American Stock Exchange and NASDAQ. ------------------------------------------------------------------------ o The Lipper Multi-Cap Core Index is S&P 500 Index 21.03% 28.54% 21.61% comprised of the 30 largest mutual funds ------------------------------------------------------------------------ in the Lipper Multi-Cap Core Funds Lipper Multi-Cap Core Index 20.77% 23.58% 16.05% Classification. This Classification ------------------------------------------------------------------------ consists of funds that generally have Russell 1000 Index 20.91% 28.05% 21.12% between 25% to 75% of their assets ------------------------------------------------------------------------ invested in companies with market capitalizations (on a 3-year weighted basis) above 300% of the dollar-weighted median market capitalization of the S&P Mid-Cap 400 Index. o The Russell 1000 Index is an ------------------------------------------------------------------------ unmanaged capitalization weighted Past 1 Past 5 Since total return index which is comprised Year Years March 1, of the 1000 largest of the 3000 1991 largest U.S. companies, based on ------------------------------------------------------------------------ market capitalization. Small Capitalization Value 1.41% 12.72% 12.61% Portfolio (Advisor Shares) o The Russell 2000 Index is an ------------------------------------------------------------------------ unmanaged market capitalization S&P 500 Index 21.03% 28.54% 19.62% weighted total return index which is ------------------------------------------------------------------------ comprised of the 2000 smallest of the Russell 2000 Index 21.26% 16.69% 15.51% 3000 largest U.S. companies, based on ------------------------------------------------------------------------ market capitalization. Lipper Small Capitalization Fund 1.32% 12.18% 12.71% Index o The Lipper Small Capitalization Fund ------------------------------------------------------------------------ Index is comprised of the 30 largest funds in the Lipper Small ------------------------------------------------------------------------ Capitalization Fund Average. This Past 1 Past 5 Past 10 Average consists of funds that invest Year Years Years primarily in companies with market ------------------------------------------------------------------------ capitalizations of less than $1 Strategic Equity Portfolio 22.54% 26.72% 16.85% billion at the time of purchase. ------------------------------------------------------------------------ o The Dow Jones Industrial Average is S&P 500 Index 21.03% 28.54% 18.22% an unmanaged price weighted average ------------------------------------------------------------------------ based on the performance (excluding Dow Jones Industrial Average 27.29% 27.10% 18.38% dividends) of 30 blue chip stocks. ------------------------------------------------------------------------ The average is computed by adding the Lipper Large-Cap Core Index 19.35% 25.32% 16.67% prices of the 30 stocks and dividing by a denominator, which has been ------------------------------------------------------------------------ adjusted over the years for stock splits, stock dividends, and substitutions of stocks. o The Lipper Large-Cap Core Index is comprised of the 30 largest mutual funds in the Lipper Large-Cap Core Funds Classification. This Classification consists of funds that invest at least 75% of their equity assets in companies with market capitalizations (on a 3-year weighted basis) above 300% of the dollar- weighted median market capitalization of the S&P Mid-Cap 400 Index. - -----------------------------------------
-9- Fees and Expenses of the Portfolios This table describes the fees and expenses that you may pay if you buy and hold shares of the Portfolios. Glenmede Equity Portfolios
- -------------------------------------------------------------------------------------------------------------------------------- Small Small Large Cap Capitalization Strategic Capitalization International Value Value Portfolio Equity Growth Core Value Portfolio Portfolio (Advisor Shares)(1) Portfolio(2) Portfolio Portfolio --------- --------- ------------------- ------------ --------- --------- - -------------------------------------------------------------------------------------------------------------------------------- Shareholder Fees (fees paid directly from your investment) - -------------------------------------------------------------------------------------------------------------------------------- Maximum Account Fee (annual percentage of assets under management)(3)..................... 1.00% 1.00% 1.00%(4) 1.00% 1.00%(4) 1.00%(4) - -------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------- Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets) - -------------------------------------------------------------------------------------------------------------------------------- Management Fees.................... .00% .00% .55% .00% .85% .45% - -------------------------------------------------------------------------------------------------------------------------------- Other Expenses..................... .11% .13% .33% .12% .32%(5) .12%(5) ---- ---- ---- ---- ----- ---- - -------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------- Total Annual Portfolio Operating Expenses........................... .11% .13% .88% .12% 1.17% .57% ==== ==== ==== ==== ===== ==== - --------------------------------------------------------------------------------------------------------------------------------
- ---------- (1). The Small Capitalization Equity Portfolio was renamed the Small Capitalization Value Portfolio on February 28, 2000. (2). The Tax Managed Equity Portfolio was renamed the Strategic Equity Portfolio on February 28, 2000. (3). The International, Large Cap Value and Strategic Equity Portfolios do not pay any advisory fees to the Advisor, or its affiliated companies ("Affiliates"). However, investors in these Portfolios must be clients of the Advisor, its Affiliates or certain financial institutions, or must be certain employee benefit plans. The "Maximum Account Fee" in the above table is the current maximum annual fee that the Advisor or an Affiliate would charge its clients directly for fiduciary, trust and/or advisory services (e.g., personal trust, estate, advisory, tax and custodian services). The actual annual fees ("Client Fees") charged by the Advisor and Affiliates for such services vary depending on a number of factors, including the particular services provided to the client, but are generally lower than 1% of the client's assets under management. Investors also may have to pay various fees to others to become shareholders of the Portfolios. See "Purchase of Shares." (4). The Advisor and Affiliates currently intend to exclude the portion of their clients' assets invested in the Small Capitalization Value, Small Capitalization Growth and Core Value Portfolios when calculating Client Fees. (5). "Other Expenses" of the Small Capitalization Growth and Core Value Portfolios are based on estimated amounts for the current fiscal year. -10- Example This Example is intended to help you compare the cost of investing in the Portfolios with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Portfolios for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Portfolios' operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years ------ ------- ------- -------- International Portfolio..................... $11 $35 $62 $141 Large Cap Value Portfolio................... $13 $42 $73 $166 Small Capitalization Value Portfolio (Advisor Shares).......................... $90 $281 $488 $1,084 Strategic Equity Portfolio.................. $12 $39 $68 $154 Small Capitalization Growth Portfolio....... $119 $372 N/A N/A Core Value Portfolio........................ $58 $183 N/A N/A
-11- INVESTMENTS Objective and Principal Strategies To help you decide which Portfolio is appropriate for you, this section looks more closely at the Portfolios' investment objectives and policies. You should carefully consider your own investment goals, time horizon and risk tolerance before investing in a Portfolio. Each Portfolio's investment objective may be changed by the Board members without shareholder approval. Each Portfolio may, from time to time, take temporary defensive positions that are inconsistent with its principal investment strategies in response to adverse market, economic, political, or other conditions. Such investments may include, for example, various short-term instruments, such as money market securities (including commercial paper, certificates of deposit, banker's acceptances and time deposits), U.S. government securities and repurchase agreements. A defensive position, taken at the wrong time, would have an adverse impact on that Portfolio's performance. To the extent a Portfolio employs a temporary defensive investment strategy, it may not achieve its investment objective. International Portfolio The investment objective of the International Portfolio is to provide maximum long-term total return consistent with reasonable risk to principal. The Portfolio attempts to achieve its objective by investing primarily in common stocks, including dividend-paying common stocks, of companies located outside the United States and that the Advisor believes are undervalued. The Portfolio is expected to diversify its investments across companies located in a number of foreign countries, which may include, but are not limited to, Japan, the United Kingdom, Germany, France, Italy, Spain, Switzerland, the Netherlands, Norway, Sweden, Australia, Hong Kong and Singapore. Under normal circumstances, the Portfolio will invest at least 65% of its total assets in the securities of companies based in at least three different countries, other than the United States. Factors considered by the Advisor in selecting stocks to buy and sell for this Portfolio include both country selection and stock selection. Countries are primarily selected by evaluating a country's valuation ratios, such as price-to-earnings and dividend yields, prospective economic growth, government policies and other factors. Security selection is primarily determined by evaluating a company's growth outlook and market valuation based on price-to earnings, dividend yields and other operating and financial conditions. Large Cap Value Portfolio The investment objective of the Large Cap Value Portfolio is to provide maximum long-term total return consistent with reasonable risk to principal. -12- The Advisor attempts to achieve the Portfolio's objective by investing, under normal market conditions, at least 65% of the value of its total assets in equity securities, such as common stocks, including dividend-paying common stocks, and preferred stocks, of primarily U.S. companies with market capitalizations greater than $5 billion at the time of purchase and that the Advisor believes are undervalued. The Advisor will actively manage this Portfolio based upon its ongoing analysis of economic, financial and market developments. In selecting securities to buy and sell, the Advisor uses its own equity computer model, which ranks stocks, as an investment guide. This computer model considers factors such as, price-to-book value ratios, price-to-earnings ratios, price-to-cash flow ratios, return on equity ratios, debt-to-equity ratios, dividend yields, earnings growth rates and historic stock price patterns. The Advisor currently runs its computer model at least weekly. A security may be sold for a number of reasons, including performance, a change in its ranking by the Advisor's computer model, or due to changing industry or specific company operating or financial conditions. The Large Cap Value Portfolio may actively trade portfolio securities to achieve its principal investment strategies. A high rate of portfolio turnover involves correspondingly high brokerage commission expenses and other transaction costs, which may adversely affect the Portfolio's performance. High portfolio turnover may also result in the realization of short-term capital gains. Distributions derived from such gains will be treated as ordinary income for federal income tax purposes. Small Capitalization Value Portfolio The objective of the Small Capitalization Value Portfolio is to provide long-term capital appreciation consistent with reasonable risk to principal. The Portfolio attempts to achieve its objective by investing, under normal market conditions, at least 65% of its total assets in equity securities, such as common stocks and preferred stocks, of primarily U.S. companies with market capitalizations, at the time of purchase, that are below the largest market capitalization of any stock in the Russell 2000 Index and that the Advisor believes are undervalued. (This amount was $11 billion as of January 20, 2000.) To evaluate securities for purchase or sale, the Advisor examines the earnings and dividend paying ability of companies and divides these characteristics by the market value of the underlying equity securities. In addition, the Advisor may consider price-to-earnings ratios, price-to-cash flow ratios, price-to-book ratios, reinvestment rates, dividend yields, expected growth rates and balance sheet quality. Equity securities purchased by the Portfolio will be primarily traded on the various stock exchanges and NASDAQ, although the Portfolio may purchase unlisted securities and penny stocks. The securities held by the Portfolio may represent many different types of companies and industries. -13- Strategic Equity Portfolio The objective of the Strategic Equity Portfolio is to provide maximum long-term total return consistent with reasonable risk to principal. The Portfolio attempts to achieve its objective by investing primarily in equity securities, such as common stocks, preferred stocks and securities convertible into common and preferred stocks, of U.S. companies that appear to the Advisor to be reasonably priced and have revenue and earnings growth potential that the Advisor believes is greater than the stock market in general. Securities purchased by the Portfolio will be primarily those traded on the various stock exchanges and NASDAQ. Under normal circumstances, at least 65% of the Portfolio's total assets will be invested in equity securities such as common and preferred stock and securities convertible into such stock. Although the Portfolio is not a tax-exempt fund, it will use several methods to reduce the impact of federal and state income taxes on shareholders' returns. For example, the Portfolio: o attempts to distribute relatively low levels of taxable investment income by investing in stocks with low dividend yields; o attempts to hold taxes on realized capital gains to a minimum by investing primarily in the securities of companies with above average earnings predictability and stability which the Portfolio expects to hold for several years; o attempts to avoid realizing short-term capital gains; and o sells depreciated securities to offset realized capital gains, when consistent with its overall investment approach, thus reducing capital gains distributions. However, when deciding whether to sell a security, investment considerations will take precedence over tax considerations. Small Capitalization Growth Portfolio The objective of the Small Capitalization Growth Portfolio is to provide long-term capital appreciation consistent with reasonable risk to principal. The Portfolio attempts to achieve its objective by investing, under normal market conditions, at least 65% of its total assets in equity securities, such as common stocks, preferred stocks and securities convertible into common and preferred stocks, of companies with market capitalizations, at the time of purchase, that are below the largest market capitalization of any stock in the Russell 2000 Growth Index. (This amount was $11 billion as of January 20, 2000.) The small capitalization stocks that the Portfolio invests in are primarily growth stocks of U.S. companies. In general, the sub-advisors believe that small capitalization growth stocks offer strong revenue and earnings potential and accompanying capital growth potential, with less dividend income than small capitalization value stocks. As further described in this Prospectus under the heading "Management of the Portfolio," the Advisor selects one or more sub-advisors to manage the -14- Portfolio's assets, subject to the approval of the Glenmede Fund's Board of Directors. Winslow Capital Management, Inc. ("Winslow Capital") and TCW Investment Management Company ("TCW") each currently serves as a sub-advisor to a portion of the Portfolio's assets (collectively, the "Sub-Advisors" or individually, a "Sub-Advisor"). (TCW changed its name from TCW Funds Management, Inc. on January 1, 2000.) The Advisor monitors the performance of the Sub-Advisors and, to the extent it deems appropriate to achieve the Portfolio's investment objective, may change the allocation of assets between them. In managing its portion of the Portfolio, Winslow Capital attempts to achieve the Portfolio's objective by generally selecting stocks of companies that have a history of consistent growth, and which Winslow Capital believes have potential for increased earnings and revenue growth. Winslow Capital generally attempts to identify these stocks through its own direct research on the issuers and by working closely with experienced financial analysts who provide Winslow with additional company and industry specific research, including, for example, cash flow, sales growth and earnings per share information. When selling a portfolio security, Winslow Capital generally follows the same research process and will generally sell a security when the issuer's fundamentals, such as revenue growth, earnings growth, return on equity or return on invested capital, no longer support the current stock price. In managing its portion of the Portfolio, TCW attempts to achieve the Portfolio's objective by generally selecting stocks of companies that TCW believes have the potential for surprising the marketplace with sustained earnings growth over a three year period above consensus estimates. TCW generally attempts to identify stocks by using a fundamental company-by-company analysis, which may include a review of available financial and other business information, company visits and management interviews. Company analysis is used together with market analysis to screen potential investments and to continuously monitor the value of the securities in the Portfolio. Some of the factors TCW will generally consider in determining whether to sell a security include, without limitation, changes in the price-to-earnings ratio and earnings. Equity securities purchased by the Portfolio will be primarily traded on the various stock exchanges and NASDAQ, although the Portfolio may purchase unlisted securities and penny stocks. The securities held by the Portfolio may represent many different types of companies and industries. Core Value Portfolio The investment objective of the Core Value Portfolio is to provide maximum long-term total return consistent with reasonable risk to principal. The Advisor attempts to achieve the Portfolio's objective by investing, under normal market conditions, at least 65% of the value of its total assets in equity securities, such as common stocks, including dividend-paying common stocks, and preferred stocks, of primarily U.S. companies with market capitalizations greater than $5 billion at the time of purchase and that the Advisor believes are undervalued. The overall average capitalization of the Portfolio is maintained at a level similar to the S&P 500 Index. The S&P 500 Index is an unmanaged index composed of 500 common stocks, most of which are listed on the New York Stock Exchange. The S&P 500 -15- Index assigns relative values to the stocks included in the index, weighted according to each stock's total market value relative to the total market value of the other stocks included in the index. The Advisor will actively manage this Portfolio based upon its ongoing analysis of economic, financial and market developments. In selecting securities to buy and sell, the Advisor uses its own computer model, which ranks stocks, as an investment guide. This computer model considers factors such as, price-to-book value ratios, price-to-earnings ratios, price-to-cash flow ratios, return on equity ratios, debt-to-equity ratios, dividend yields, earnings growth rates and historic stock price patterns. The Advisor currently runs its computer model at least weekly. The Advisor also utilizes other portfolio software which analyze the Portfolio in comparison to the S&P 500 Index. The Advisor expects that the average price-to-earnings ratio of the holdings of the Portfolio will generally be equal to or less than the average price-to-earnings ratio of the S&P 500 Index. A security may be sold for a number of reasons, including performance, a change in its ranking by the Advisor's computer model, or due to changing industry or specific company operating or financial conditions. The Core Value Portfolio may actively trade portfolio securities to achieve its principal investment strategies. A high rate of portfolio turnover involves correspondingly high brokerage commission expenses and other transaction costs, which may adversely affect the Portfolio's performance. High portfolio turnover may also result in the realization of short-term capital gains. Distributions derived from such gains will be treated as ordinary income for federal income tax purposes. Risks--All Portfolios The risks of investing in any of the Portfolios have been described above in the Risk/Return Summary. The following supplements that description. Selection of Investments The Advisor and Sub-Advisors evaluate the rewards and risks presented by all securities purchased by the Portfolios and how they may advance the Portfolios' investment objective. It is possible, however, that these evaluations will prove to be inaccurate. Other Types of Investments This describes each Portfolio's principal investment strategies, and the particular types of securities which each Portfolio may select for investment. Each Portfolio may make other types of investments and pursue other investment strategies in support of its overall investment goal. These supplemental investment strategies--and the risks involved--are described in the Statement of Additional Information, which is referred to on the Back Cover of this Prospectus. -16- Risks--International Portfolio Foreign Securities The International Portfolio may purchase securities in any foreign country, developed or underdeveloped. There are substantial risks involved in investing in such securities. These risks include differences in accounting, auditing and financial reporting standards, generally higher commission rates on foreign transactions, the possibility of expropriation or confiscatory taxation, adverse changes in investment or exchange control regulations, political instability, and potential restrictions on the flow of international capital. The dividends payable on the Portfolio's foreign portfolio securities may be subject to foreign withholding taxes, thus reducing the income available for distribution to the Portfolio's shareholders. Foreign securities often trade with less frequency and volume than domestic securities and, therefore, may exhibit greater price volatility. Changes in foreign exchange rates will affect the value of those securities in the Portfolio which are denominated or quoted in currencies other than the U.S. dollar. In many countries there is less publicly available information about issuers than is available in reports about companies in the United States. These risks are often heightened for investments in developing or emerging markets. Developing countries may also impose restrictions on the Portfolio's ability to repatriate investment income or capital. Even without such restrictions, the mechanics of repatriation may affect certain aspects of the operations of the Portfolio. Some of the currencies in emerging markets have been devalued relative to the U.S. dollar. In many cases these devaluations have been significant. Certain developing countries impose constraints on currency exchange. Governments of some developing countries exercise substantial influence over many aspects of the private sector. In some countries, the government owns or controls many companies, including the largest in the country. As such, government actions in the future could have a significant effect on economic conditions in developing countries in these regions, which in turn, could affect the value of the Portfolio's investments. Brokerage commissions, custodial services, and other costs relating to investment in foreign securities markets are generally more expensive than in the United States. Foreign securities markets have different clearance and settlement procedures, and in certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. Delays in settlement could prevent the Portfolio from investing the proceeds of the sale. Inability to dispose of portfolio securities due to settlement problems could expose the Portfolio to losses due either to subsequent declines in the value of the portfolio security or, if the security has been sold, to claims by the purchaser. In many emerging markets, there is less government supervision and regulation of business and industry practices, stock exchanges, brokers and -17- listed companies than in the United States. The Portfolio may invest in foreign securities markets which are smaller, less liquid, and subject to greater price volatility than those in the United States. There are additional risk factors, including possible losses through the holding of securities in domestic and foreign custodian banks and depositories. European Currency Unification Many European countries have adopted a single European currency, the Euro. On January 1, 1999, the euro became legal tender for all countries participating in the Economic and Monetary Union ("EMU"). A new European Central Bank has been created to manage the monetary policy of the new unified region. On the same date, the exchange rates were irrevocably fixed between the EMU member countries. National currencies will continue to circulate until they are replaced by euro coins and bank notes by the middle of 2002. This change is likely to significantly impact the European capital markets in which the International Portfolio invests and may result in the Portfolio facing additional risks in pursuing its investment objective. These risks, which include, but are not limited to, volatility of currency exchange rates as a result of the conversion, uncertainty as to capital market reaction, conversion costs that may affect issuer profitability and creditworthiness, and lack of participation by some European countries, may increase the volatility of the Portfolio's net asset value per share. PRICE OF PORTFOLIO SHARES The price of shares issued by each Portfolio is based on its net asset value ("NAV"). Each Portfolio's NAV per share is determined as of the close of regular trading hours of the New York Stock Exchange, currently 4:00 p.m. (Eastern time), on each day that the Exchange is open for business. Marketable equity securities are priced at market value. The value of securities for which no quotations are readily available (including restricted securities) is determined in good faith at fair value using methods determined by the Board of Directors of The Glenmede Fund, Inc. (the "Glenmede Fund"). Securities listed on a foreign exchange and unlisted foreign securities are valued at the latest quoted sales price available when assets are valued. If a subsequent occurrence is believed to have changed such value, however, the fair value of those securities may be determined through consideration of other factors by or under the direction of the Board of Directors. These securities may trade on days when shares of the Glenmede Fund are not priced; as a result, the NAV of those shares may change on days when you will not be able to purchase or redeem such Portfolio's shares. Foreign currency amounts are translated into U.S. dollars at the bid prices of such currencies against U.S. dollars last quoted by a major bank. -18- PURCHASE OF SHARES Shares of each Portfolio are sold without a sales commission on a continuous basis to the Advisor acting on behalf of its clients or the clients of its Affiliates ("Clients") and to employee benefit plans and institutions, including brokers acting on behalf of their clients (the "Institutions"), at the NAV per share next determined after receipt, in proper order, of the purchase order by the Glenmede Fund's transfer agent. We consider orders to be in "proper order" when all required documents are properly completed, signed and received. The minimum initial investment for the Small Capitalization Growth Portfolio is $25,000; the minimum for subsequent investment is $1,000. Glenmede Fund reserves the right to reduce or waive the minimum initial and subsequent investments requirements for this Portfolio from time to time. There are no minimum initial or subsequent investment requirements for the other Portfolios. The Advisor has informed the Glenmede Fund that it and its Affiliates' minimum and subsequent investment requirements for their Clients' investments in the Small Capitalization Growth Portfolio are the same as those for the Glenmede Fund, and that neither it nor its Affiliates currently have any minimum or subsequent investment requirements for their Clients' investments in the other Portfolios. Other Institutions may have such requirements. Beneficial ownership of shares will be reflected on books maintained by the Advisor or the Institutions. If you wish to purchase shares in the Glenmede Fund, you should contact the Advisor by telephone or facsimile or contact your Institution. Your Institution may charge you for purchasing or selling shares of a Portfolio. There is no transaction charge for shares purchased directly from a Portfolio through the Advisor. Purchases of a Portfolio's shares will be made in full and fractional shares of the Portfolio calculated to three decimal places. In the interest of economy and convenience, certificates for shares will not be issued except upon your written request. Certificates for fractional shares, however, will not be issued. REDEMPTION OF SHARES You may redeem shares of each Portfolio at any time, without cost, at the NAV per share next determined after the Glenmede Fund's transfer agent receives your redemption order. Generally, a properly signed written order is all that is required. If you wish to redeem your shares, contact the Advisor by telephone or facsimile or contact your Institution. You will ordinarily be paid your redemption proceeds within one business day, but in no event more than seven days, after the transfer agent receives your order in proper form. The Glenmede Fund may suspend the right of redemption or postpone the date of payment under any emergency circumstances as determined by the Securities and Exchange Commission (the "SEC"). Redemption proceeds are normally paid in cash, although the Glenmede Fund has the right to limit each shareholder to cash redemptions of $250,000 or 1% of such Portfolio's NAV, whichever is less, within a 90-day period. Any additional redemption proceeds would be made in readily marketable securities. -19- ADDITIONAL INFORMATION ON THE PURCHASE AND REDEMPTION OF SHARES OF THE PORTFOLIOS The Glenmede Fund may appoint one or more entities as its agent to receive purchase and redemption orders of shares of the Portfolios and cause these orders to be transmitted, on an aggregated basis, to the Glenmede Fund's transfer agent. In these instances, orders are effected at the NAV per share next determined after receipt of that order by the entity, if the order is actually received by the transfer agent not later than the next business morning. DIVIDENDS AND DISTRIBUTIONS The Portfolios normally distribute substantially all of their net investment income to shareholders in the form of a quarterly dividend. The Portfolios normally distribute any realized net capital gains at least once a year. TAXES Federal Taxes Each Portfolio contemplates declaring, as dividends each year, all or substantially all of its taxable income, including its net capital gain (the excess of long-term capital gain over short-term capital loss). Distributions attributable to the net capital gain of a Portfolio will be taxable to you as long-term capital gain, regardless of how long you have held your shares. Other Portfolio distributions will generally be taxable as ordinary income. You will be subject to income tax on Portfolio distributions regardless of whether they are paid in cash or reinvested in additional shares. You will be notified annually of the tax status of distributions to you. If you purchase shares just before a distribution, the purchase price will reflect the amount of the upcoming distribution, but you will be taxed on the entire amount of the distribution received, even though, as an economic matter, the distribution simply constitutes a return of capital. This is known as "buying into a dividend." You will recognize taxable gain or loss on a sale, exchange or redemption of your shares, including an exchange for shares of another Portfolio, based on the difference between your tax basis in the shares and the amount you receive for them. (To aid in computing your tax basis, you should retain your account statements for the periods during which you held shares.) Generally, this gain or loss will be long-term or short-term depending on whether your holding period for the shares exceeds 12 months, except that any loss realized on shares held for six months or less will be treated as a long-term capital loss to the extent of any long-term capital gain distributions that were received on the shares. -20- The one major exception to these tax principles is that distributions on, and sales, exchanges and redemptions of, shares held in an IRA (or other tax-qualified plan) will not be currently taxable. A Portfolio's dividends that are paid to its corporate shareholders and are attributable to qualifying dividends the Portfolio receives from U.S. domestic corporations may be eligible, in the hands of the corporate shareholders, for the corporate dividends-received deduction, subject to certain holding period requirements and debt financing limitations. It is expected that the International Portfolio will be subject to foreign withholding taxes with respect to dividends or interest received from sources in foreign countries. The International Portfolio may make an election to treat a proportionate amount of such taxes as constituting a distribution to each shareholder, which would allow each shareholder either to credit such proportionate amount of taxes against U.S. Federal income tax liability or to take such amount as an itemized deduction. State and Local Taxes You may also be subject to state and local taxes on distributions and redemptions. State income taxes may not apply, however, to the portions of a Portfolio's distributions, if any, that are attributable to interest on federal securities or interest on securities of the particular state or localities within the state. The foregoing is only a summary of certain tax considerations under current law, which may be subject to change in the future. Shareholders who are nonresident aliens, foreign trusts or estates, or foreign corporations or partnerships, may be subject to different U.S. Federal income tax treatment. You should consult your tax adviser for further information regarding federal, state, local and/or foreign tax consequences relevant to your specific situation. MANAGEMENT OF THE PORTFOLIOS Investment Advisor and Sub-Advisors The Glenmede Trust Company with principal offices at One Liberty Place, 1650 Market Street, Suite 1200, Philadelphia, Pennsylvania 19103, serves as investment advisor to the Portfolios. The Advisor, a limited purpose trust company chartered in 1956, provides fiduciary and investment services to endowment funds, foundations, employee benefit plans and other institutions and individuals. The Advisor is a wholly-owned subsidiary of The Glenmede Corporation. At December 31, 1999, the Advisor had over $17 billion in assets in the accounts for which it serves in various capacities including as executor, trustee or investment advisor. Under Investment Advisory Agreements with the Glenmede Fund, the Advisor, subject to the control and supervision of the Glenmede Fund's Board and in conformance with the stated investment objective and policies of each -21- Portfolio, manages the investment and reinvestment of the assets of each Portfolio. It is the responsibility of the Advisor to make investment decisions for each Portfolio and to place each Portfolio's purchase and sale orders. The Advisor is not entitled to a management fee from the Glenmede Fund for its investment services provided to the Strategic Equity, International and Large Cap Value Portfolios. The Advisor is entitled to receive management fees from the Small Capitalization Growth and Core Value Portfolios at the annual rate of .25% and .45%, respectively, of such Portfolio's average daily net assets. In addition, the Advisor receives a management fee from the Small Capitalization Value Portfolio at the annual rate of .55% of that Portfolio's average daily net assets. Shareholders in the Glenmede Fund who are clients of the Advisor, or an Affiliate, pay fees which vary, depending on the capacity in which the Advisor or its Affiliate provides fiduciary and investment services to the particular client (e.g., personal trust, estate settlement, advisory and custodian services). Shareholders in the Portfolios who are customers of other Institutions may pay fees to those Institutions. Bruce D. Simon, Chief Investment Officer of the High Net Worth Division of the Advisor, and Thomas R. Angers, CFA, Vice President and Director of Equity Research of the Advisor, are primarily responsible for the management of the Strategic Equity Portfolio. Mr. Simon has been responsible for the management of the Portfolio since January 1, 1998 and has been employed by the Advisor as a portfolio manager since 1994. Mr. Angers has been responsible for the management of the Portfolio since September 10, 1998 and has been employed by the Advisor as an equity analyst and Director of Equity Research since 1995. Prior to joining the Advisor, Mr. Angers was a vice president, portfolio manager and securities analyst at Independence Capital Management, Inc. Andrew B. Williams, Senior Vice President of the Advisor, is primarily responsible for the management of the International Portfolio. Mr. Williams has been responsible for the management of the Portfolio since November 17, 1988. Mr. Williams has been employed by the Advisor as a portfolio manager since May 1985. Robert J. Mancuso is the portfolio manager primarily responsible for the management of the Small Capitalization Value Portfolio. Mr. Mancuso has been primarily responsible for the management of the Portfolio since February 27, 1996. Mr. Mancuso has been employed by the Advisor as a portfolio manager since November 1992. Stephen A. Mozur, CFA, CPA is the portfolio manager primarily responsible for the management of the Large Cap Value and Core Value Portfolios. Mr. Mozur has been responsible for the management of the Large Cap Value Portfolio since February 9, 1998 and the Core Value Portfolio since it commenced operations on February 28, 2000. Mr. Mozur has been employed by the Advisor as a portfolio manager since February 1998. Prior to joining the Advisor, he was responsible for portfolio management and research at both Newbold's Asset Management from 1987 to 1997 and Pilgrim Baxter & Associates from 1997 to February 1998. Under an Investment Advisory Agreement for the Small Capitalization Growth Portfolio, the Advisor manages the investment and reinvestment of the assets of the Portfolio directly or through sub-advisors. Specifically, the -22- Advisor continuously reviews, supervises and administers the investment program of this Portfolio, determines in its (or any selected sub-advisor determines in its) discretion the investment decisions for this Portfolio and the securities to be purchased or sold, and monitors the services performed by the selected sub-advisors. For its services, the Advisor is entitled to receive a management fee from this Portfolio at an annual rate of .25% of its average daily net assets. Pursuant to the Investment Advisory Agreement, the Advisor serves as investment advisor to the Small Capitalization Growth Portfolio using a multi-manager approach by which the Advisor is permitted to select sub-advisors, subject to the approval of the Glenmede Fund's Board, and allocate the Portfolio's assets between them. When determining how to allocate Portfolio assets between sub-advisors, the Advisor considers a number of factors, including, without limitation, the sub-advisor's investment style and performance record as well as the characteristics of the sub-advisor's typical portfolio investments. The Advisor monitors the performance of each sub-advisor and the Portfolio and, to the extent it deems appropriate to achieve this Portfolio's investment objective, may change the allocation of Portfolio assets between the sub-advisors. Bruce D. Simon, Chief Investment Officer of the High Net Worth Division of the Advisor, is primarily responsible for evaluating the performance of the sub-advisors. As of the date of this Prospectus, the assets of the Small Capitalization Growth Portfolio are managed in part by Winslow Capital and in part by TCW pursuant to Sub-Investment Advisory Agreements entered into with the Advisor and the Glenmede Fund. For its services, each Sub-Advisor is entitled to receive a management fee from the Portfolio at an annual rate of .60% of the portion of the Portfolio's average daily net assets allocated to that Sub-Advisor. Each Sub-Advisor, subject to the control and supervision of the Advisor and the Glenmede Fund's Board, and in conformance with the stated investment objectives and policies of the Portfolio, performs sub-advisory and portfolio transaction services for the Portfolio. These services include managing the Portfolio's holdings in accordance with its investment objective and policies, making investment decisions concerning investments for the Portfolio, placing purchase and sale orders for portfolio transactions and providing the Advisor and the Board with records and regular reports concerning the discharge of its responsibilities. Winslow Capital is located at 4720 IDS Tower, 80 South Eighth Street, Minneapolis, Minnesota 55402. Winslow Capital was founded in 1992 to manage a limited number of growth equity accounts for corporations, endowments, foundations, public funds and other institutions. The firm is 100% employee owned and is a registered investment advisor. As of December 31, 1999, Winslow Capital managed over $1.3 billion in assets for 24 clients. Winslow Capital employs a team approach to manage its allocated portion of the Portfolio's assets; however, Joseph J. Docter is primarily responsible for implementing the principal investment strategy. Mr. Docter has been a Managing Director and portfolio manager at Winslow Capital since joining the firm in April 1997. From 1996 to 1997, Mr. Docter was a partner and equity portfolio manager at Baird Capital Management. For 12 years prior to that, he was an analyst and portfolio manager with Firstar Investment Research and Management Company (FIRMCO) in Milwaukee, Wisconsin. At FIRMCO, he was responsible for the start-up and portfolio management for the Emerging Growth -23- product. He managed in excess of $1.1 billion in individually managed institutional assets, mutual funds and commingled trust funds. TCW is located at 865 S. Figueroa Street, Los Angeles, California, 90017. It is a wholly-owned subsidiary of The TCW Group, Inc. Established in 1971, TCW Group companies provide a variety of trust, investment management and investment advisory services. As of December 31, 1999, TCW Group companies had over $70 billion of assets under management or committed to management. Mr. Douglas Foreman, Mr. Christopher Ainley and Mr. Charles Larsen jointly manage TCW's portion of the Portfolio's assets. Mr. Foreman is one of the firm's Group Managing Directors and is the Chief Investment Officer-U.S. Equities. He joined TCW as a Group Managing Director in 1994. Prior to that time, he spent eight years at Putnam Investments in Boston, Massachusetts. Mr. Foreman spent his last five years at Putnam managing institutional accounts and mutual funds for clients. Mr. Ainley has been a Managing Director and portfolio manager at TCW since joining the firm in 1994. Prior to that time, Mr. Ainley spent two years at Putnam Investments as a Vice President and Analyst in the Equity Research Group and then as a Portfolio Manager for the Core Equity Group. Previously, he was Vice President, Equity Research Analyst for J.P. Morgan Investment Management, Tax Supervisor for Coopers & Lybrand L.L.P. and also served as Director of Programming for the New England Council, Inc. Mr. Larson is also a Managing Director and portfolio manager at TCW. He joined the firm in 1984 as a portfolio manager, having worked the previous 16 years for CIGNA Investment Management Company, where he was Senior Vice President and Portfolio Manager. Mr. Larsen is a Chartered Financial Analyst and a Chartered Investment Counselor. GENERAL INFORMATION If you have any questions regarding the Portfolios contact the Glenmede Fund at the address or telephone number stated on the back cover page. -24- FINANCIAL HIGHLIGHTS The financial highlights tables are intended to help you understand each Portfolio's financial performance for the past 5 years. Certain information reflects financial results for a single Portfolio share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in each Portfolio (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, whose report, along with the Portfolios' financial statements, are included in the Annual Report, which is available upon request. Financial highlights are not provided for the Small Capitalization Growth and Core Value Portfolios because they had not commenced operations during the period ended October 31, 1999. -25- International Portfolio (For a share outstanding throughout each year) ----------------------------------------------
Year Ended October 31, ------------------------------------------------------------------------ 1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- Net Asset Value, Beginning of Year............. $ 15.66 $ 15.11 $ 13.87 $ 12.70 $ 13.04 ---------- ---------- ---------- -------- -------- Income From Investment Operations: Net Investment Income........................ 0.48 0.37 0.39 0.40 0.32 Net Gain on Securities (both realized and unrealized).............. 3.33 0.74 1.89 1.29 0.23 ---------- ---------- ---------- -------- -------- Total From Investment Operations............... 3.81 1.11 2.28 1.69 0.55 ---------- ---------- ---------- -------- -------- Less Distributions from: Net investment income........................ (0.57) (0.40) (0.35) (0.43) (0.32) Net realized capital gains................... (1.03) (0.16) (0.62) (0.04) (0.57) In excess of net realized gains.............. -- -- -- (0.05) -- In excess of net investment income........... -- -- (0.07) ---------- ---------- ---------- -------- -------- Total Distributions............................ (1.60) (0.56) (1.04) (0.52) (0.89) ---------- ---------- ---------- -------- -------- Net Asset Value, End of Year................... $17.87 $15.66 $15.11 $13.87 $12.70 ========== ========== ========== ======== ======== Total Return(1)................................ 24.65% 7.44% 16.35% 13.47% 4.23% ========== ========== ========== ======== ======== Ratios/Supplemental Data: Net Assets, End of Year (in 000's)........... $1,500,559 $1,135,192 $1,051,102 $643,459 $343,209 Ratio of Expenses to Average Net Assets...... 0.11% 0.13% 0.14% 0.18% 0.18% Ratio of Net Investment Income to Average Net Assets...................................... 2.52% 2.32% 2.77% 3.05% 2.61% Portfolio Turnover Rate...................... 20% 19% 15% 6% 24%
- ------------ (1). Total Return represents the aggregate total return for the period indicated. -26- Large Cap Value Portfolio (For a share outstanding throughout each year) ---------------------------------------------
Year Ended October 31, -------------------------------------------------------------------------------- 1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- Net Asset Value, Beginning of Year...... $ 11.77 $ 13.29 $ 11.68 $ 10.34 $ 10.62 ------- ------- ------- ------- ------- Income from Investment Operations: Net Investment Income................. 0.18 0.24 0.29 0.26 0.32 Net Gain on Securities (both realized and unrealized).......... 2.00 0.35 3.95 1.49 1.38 ------- ------- ------- ------- ------- Total From Investment Operations........ 2.18 0.59 4.24 1.75 1.70 ------- ------- ------- ------- ------- Less Distributions from: Net investment income................. (0.19) (0.25) (0.29) (0.27) (0.31) Net realized capital gains............ (2.52) ( 1.86) (2.34) (0.14) (1.67) ------- ------- ------- ------- ------- Total Distributions..................... (2.71) (2.11) (2.63) (0.41) (1.98) ------- ------- ------- ------- ------- Net Asset Value, End of Year............ $ 11.24 $ 11.77 $ 13.29 $ 11.68 $ 10.34 ======= ======= ======= ======= ======= Total Return(1)......................... 19.59% 4.77% 36.55% 17.13% 16.01% ======= ======= ======= ======= ======= Ratios/Supplemental Data: Net Assets, End of Year (in 000's).... $59,178 $66,620 $71,177 $50,131 $15,981 Ratio of Expenses to Average Net Assets 0.13% 0.12% 0.13% 0.15% 0.20% Ratio of Net Investment Income to Average Net Assets................... 1.28% 1.74% 2.10% 2.62% 2.80% Portfolio Turnover Rate............... 105% 132% 109% 104% 227%
- ---------- (1). Total Return represents the aggregate total return for the period indicated. -27- Small Capitalization Value Portfolio (Advisor Shares)+ (For a share outstanding throughout each year) ---------------------------------------------
Year Ended October 31, -------------------------------------------------------------------- 1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- Net Asset Value, Beginning of Year............. $15.28 $19.06 $16.12 $14.98 $13.95 ------ ------ ------ ------ ------ Income From Investment Operations: Net Investment Income........................ 0.20 0.19 0.38 0.33 0.28 Net Gain/(Loss) on Securities (both realized and unrealized)............. (0.25) (3.66) 6.32 2.38 2.69 ------ ------ ------ ------ ------ Total From Investment Operations............. (0.05) (3.47) 6.70 2.71 2.97 ------ ------ ------ ------ ------ Less Distributions: Dividends (from net investment income)....... (0.19) (0.19) (0.37) (0.33) (0.26) Distributions (from capital gains)........... - (0.12) (3.39) (1.24) (1.68) ------ ------ ------ ------ ------ Total Distributions............................ (0.19) (0.31) (3.76) (1.57) (1.94) ------ ------ ------ ------ ------ Net Asset Value, End of Year................... $15.04 $15.28 $19.06 $16.12 $14.98 ====== ======== ====== ====== ====== Total Return (1)............................... (0.32)% (18.35)% 41.80% 18.22% 21.15% ====== ======= ===== ===== ===== Ratios/Supplemental Data: Net Assets, End of Year (in 000's)........... $253,357 $307,596 $434,656 $308,415 $170,969 Ratio of Expenses to Average Net Assets...... 0.88% 0.76% 0.12% 0.17% 0.14% Ratio of Net Investment Income to Average Net Assets...................................... 1.27% 1.07% 2.00% 2.15% 1.92% Portfolio Turnover Rate...................... 77% 42% 59% 37% 57%
- ---------- (+) The Portfolio's name was changed from the Small Capitalization Equity Portfolio to the Small Capitalization Value Portfolio on February 28, 2000. (1). Total Return represents the aggregate total return for the period indicated. -28- Strategic Equity Portfolio+ (For a share outstanding throughout each year)
Year Ended October 31, -------------------------------------------------------------------- 1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- Net Asset Value, Beginning of Year............. $20.69 $20.11 $16.79 $14.67 $12.56 ------ ------ ------ ------ ------ Income From Investment Operations: Net Investment Income........................ 0.28 0.37 0.28 0.41 0.32 Net Gain on Securities (both realized and unrealized)............ 4.51 1.02 5.69 3.73 2.64 ---- ---- ------ ------ ------ Total From Investment Operations............... 4.79 1.39 5.97 4.14 2.96 ---- ---- ------ ------ ------ Less Distributions: Dividends (from net investment income)...... (0.28) (0.36) (0.28) (0.40) (0.33) Distributions (from capital gains).......... (2.50) (0.45) (2.37) (1.62) (0.52) ------ ------ ------ ------ ------ Total Distributions............................ (2.78) (0.81) (2.65) (2.02) (0.85) ------ ------ ------ ------ ------ Net Asset Value, End of Year................... $22.70 $20.69 $20.11 $16.79 $14.67 ====== ====== ====== ====== ====== Total Return(1)................................ 23.88% 7.00% 36.39% 28.65% 23.78% ===== ===== ===== ===== ===== Ratios/Supplemental Data: Net Assets, End of year (in 000's)........... $148,784 $152,601 $140,495 $94,185 $80,157 Ratio of Expenses to Average Net Assets...... 0.12% 0.12% 0.13% 0.17% 0.14% Ratio of Net Investment Income to Average Net Assets...................................... 1.17% 1.71% 1.91% 2.26% 2.32% Portfolio Turnover Rate...................... 40% 52% 26% 36% 70%
- ---------- (+) The Portfolio's name was changed from the Tax Managed Equity Portfolio to the Strategic Equity Portfolio on February 28, 2000. (1). Total Return represents the aggregate total return for the period indicated. -29- Where to find more information More Portfolio information is available to you upon request and without charge: Annual and Semi-Annual Report The Annual and Semi-Annual Reports provide additional information about the Portfolios' investments and performance. The Annual Report also contains a discussion of the market conditions and investment strategies that significantly affected the Portfolios' performance during the last fiscal year. Statement of Additional Information (SAI) The SAI includes additional information about the Portfolios' investment policies, organization and management. It is legally part of this prospectus (it is incorporated by reference). You can get free copies of the Portfolios' Annual Report, Semi-Annual Report or SAI. You may also request other information about the Portfolios, and make inquiries. Write to: The Glenmede Fund, Inc. One South Street Baltimore, MD 21202 By phone: 1-800-442-8299 Information about the Portfolios (including the Portfolios' SAI) can be reviewed and copied at the Securities and Exchange Commission's Public Reference Room in Washington, DC. Information about the operation of the Public Reference Room may be obtained by calling the SEC at 1-202-942-8090. Reports and other information about the Portfolios are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov. Copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the Public Reference Section of the SEC, Washington, DC 20549-0102. Glenmede Fund Inc.'s, Investment Company Act File No. is 811-5577 -30- THE GLENMEDE FUND, INC. Prospectus February 28, 2000 Small Capitalization Value Portfolio (Institutional Shares) Investment Advisor The Glenmede Trust Company The Securities and Exchange Commission has not approved or disapproved the Portfolio's securities or determined if this prospectus is accurate or complete. It is a criminal offense to state otherwise. TABLE OF CONTENTS
RISK/RETURN SUMMARY............................................................................................... INVESTMENTS....................................................................................................... PRICE OF PORTFOLIO SHARES......................................................................................... PURCHASE OF SHARES................................................................................................ REDEMPTION OF SHARES.............................................................................................. ADDITIONAL INFORMATION ON THE PURCHASE AND REDEMPTION OF SHARES OF THE PORTFOLIO.................................. DIVIDENDS AND DISTRIBUTIONS....................................................................................... TAXES............................................................................................................. MANAGEMENT OF THE PORTFOLIO....................................................................................... GENERAL INFORMATION............................................................................................... FINANCIAL HIGHLIGHTS..............................................................................................
-2- RISK/RETURN SUMMARY ------------------------------------- Important Concepts Market capitalization is a common measure of the size of a company. It is the market price of a share of the company's stock multiplied by the number of shares outstanding. ------------------------------------- Investment Objective Long-term capital appreciation consistent with reasonable risk to principal Principal Investment Strategies The Portfolio invests primarily in equity securities, such as common stocks and preferred stocks, of U.S. companies with market capitalizations, at the time of purchase, that are below the largest market capitalization of any stock in the Russell 2000 Index and that the Advisor believes are undervalued. Stocks appear to the Advisor to be undervalued by the stock market when the Advisor believes the stock price becomes inexpensive relative to the company's estimated earnings and/or dividend-paying ability over the long-term. In selecting securities to buy and sell, the Advisor examines the earnings and dividend-paying ability of a company, divided by the market value of the security and may also consider price-to-earnings ratios, price-to-cash flow ratios, price-to-book ratios, reinvestment rates, dividend yields, expected growth rates and balance sheet quality. Principal Risks of Stocks may decline over short or Investing even extended periods of time. Equity markets tend to be cyclical: there are times when stock prices generally increase, and other times when they generally decrease. Therefore, you could lose money by investing in the Portfolio. Although the Portfolio invests in stocks the Advisor believes to be undervalued, there is no guarantee that the prices of these stocks will not move even lower. -3- The Portfolio is subject to the risk that the stocks of smaller and newer issuers can be more volatile and more speculative than the stocks of larger issuers. Smaller companies tend to have limited resources, product lines and market share. As a result, their share prices tend to fluctuate more than those of larger companies. Their shares may also trade less frequently and in limited volume, making them potentially less liquid. The price of small company stocks might fall regardless of trends in the broader market. The strategy that the Advisor uses may fail to produce the intended result. An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Who may want to The Portfolio may be appropriate invest in the Portfolio for you if you want your capital to grow over the long term, are investing for goals several years away, and are comfortable with stock market risks. The Portfolio would NOT be appropriate for you if you are investing for short-term goals, or are mainly seeking current income. Bar Chart and The bar chart and table below Performance Table show the annual total returns, long-term performance of the Portfolio's Institutional Shares and provide some indication of the risks of investing in the Portfolio. The bar chart shows how the performance of the Portfolio's Institutional Shares has varied from year to year. The table shows how the average annual total returns for one year and the life of the Portfolio's Institutional Shares compare to those of selected market indices. The bar chart and performance table assume reinvestment of dividends and distributions. The Portfolio's past performance does not necessarily indicate how it will perform in the future. -4- Small Capitalization Value Portfolio (Institutional Shares) 1998 -13.26% 1999 1.65% During the periods shown in the bar chart, the highest quarterly return was 9.61% (for the quarter ended December 31, 1998) and the lowest quarterly return was -20.22% (for the quarter ended September 30, 1998). The Portfolio's Average Annual Total Returns for the Periods Ended December 31, 1999 ------------------------------------------- ---------- ------------- Since Past 1 January 2, Year 1998 ------------------------------------------- ---------- ------------- Small Capitalization Value Portfolio 1.65% -6.20% (Institutional Shares) ------------------------------------------- ---------- ------------- S&P 500 Index 21.03% 19.62% ------------------------------------------- ---------- ------------- Russell 2000 Index 21.26% 15.51% ------------------------------------------- ---------- ------------- Lipper Small Capitalization Fund Index 1.32% 12.71% ------------------------------------------- ---------- ------------- o The S&P 500 Stock Index is an unmanaged index comprised of 500 widely held common stocks listed on the New York Stock Exchange, the American Stock Exchange and NASDAQ. o The Russell 2000 Index is an unmanaged market capitalization weighted total return index which is comprised of the 2000 smallest of the 3000 largest U.S. companies, based on market capitalization. o The Lipper Small Capitalization Fund Index is comprised of the 30 largest funds in the Lipper Small Capitalization Fund Average. This Average consists of funds that invest primarily in companies with market capitalization of less than $1 billion at the time of purchase. -5- Fees and Expenses of the Portfolio This table describes the fees and expenses that you may pay if you buy and hold shares of the Portfolio. ------------------------------------ ---------------------- Small Capitalization Value Portfolio(1) (Institutional Shares) ------------------------------------ ---------------------- Shareholder Fees (fees paid directly from your investment) ------------------------------------ ---------------------- Maximum Account Fee (annual percentage of assets under management)*....................... 1.00%** ------------------------------------ ---------------------- Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets) ------------------------------------ ---------------------- Management Fees.................... .55% ------------------------------------ ---------------------- Other Expenses..................... .13% ---- ------------------------------------ ---------------------- Total Annual Portfolio Operating Expenses................. .68% ==== ------------------------------------ ---------------------- - ---------------- (1) The Small Capitalization Equity Portfolio was renamed the Small Capitalization Value Portfolio on February 28, 2000. * Investors in the Portfolio may be clients of the Advisor or its affiliated companies ("Affiliates"). The "Maximum Account Fee" in the above table is the current maximum annual fee that the Advisor or an Affiliate would charge its clients directly for fiduciary, trust and/or advisory services (e.g., personal trust, estate, advisory, tax and custodian services). The actual annual fees ("Client Fees") charged by the Advisor and Affiliates for such services vary depending on a number of factors, including the particular services provided to the client, but are generally lower than 1% of the client's assets under management. Investors also may have to pay various fees to others to become shareholders of the Portfolio. See "Purchase of Shares." ** The Advisor and Affiliates currently intend to exclude the portion of their clients' assets invested in the Portfolio when calculating Client Fees. Example This Example is intended to help you compare the cost of investing in the Portfolio with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Portfolio for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Portfolio's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: -6-
1 Year 3 Years 5 Years 10 Years ------ ------- ------- -------- Small Capitalization Value Portfolio (Institutional Shares)................................ $69 $218 $379 $847
INVESTMENTS Objective and Principal Strategies To help you decide whether the Portfolio is appropriate for you, this section looks more closely at the Portfolio's investment objective and policies. You should carefully consider your own investment goals time horizon and risk tolerance before investing in the Portfolio. The Portfolio's investment objective may be changed by the Board members without shareholder approval. The objective of the Portfolio is to provide long-term capital appreciation consistent with reasonable risk to principal. The Portfolio attempts to achieve its objective by investing, under normal market conditions, at least 65% of its total assets in equity securities, such as common stocks and preferred stocks, of primarily U.S. companies with market capitalizations, at the time of purchase, that are below the largest market capitalization of any stock in the Russell 2000 Index and that the Advisor believes are undervalued. (This amount was $11 billion as of January 20, 2000.) To evaluate securities for purchase or sale, the Advisor examines the earnings and dividend-paying ability of companies and divides these characteristics by the market value of the underlying equity securities. In addition, the Advisor may consider price-to-earnings ratios, price-to-cash flow ratios, price-to-book ratios, reinvestment rates, dividend yields, expected growth rates and balance sheet quality. Equity securities purchased by the Portfolio will be primarily traded on the various stock exchanges and NASDAQ, although the Portfolio may purchase unlisted securities and penny stocks. The securities held by the Portfolio may represent many different types of companies and industries. The Portfolio may, from time to time, take temporary defensive positions that are inconsistent with its principal investment strategies in response to adverse market, economic, political, or other conditions. Such investments may include, for example, various short-term instruments, such as money market instruments and government bonds. A defensive position, taken at the wrong time, would have an adverse impact on the Portfolio's performance. To the extent the Portfolio employs a temporary defensive investment strategy, it may not achieve its investment objective. -7- Risks The risks of investing in the Portfolio have been described above in the Risk/Return Summary. The following supplements that description. Selection of Investments The Advisor evaluates the rewards and risks presented by all securities purchased by the Portfolio and how they may advance the Portfolio's investment objective. It is possible, however, that these evaluations will prove to be inaccurate. Other Types of Investments This Prospectus describes the Portfolio's principal investment strategies, and the particular types of securities it may select for investment. The Portfolio may make other types of investments and pursue other investment strategies in support of its overall investment goal. These supplemental investment strategies--and the risks involved--are described in the Statement of Additional Information, which is referred to on the Back Cover of this Prospectus. PRICE OF PORTFOLIO SHARES The price of shares issued by the Portfolio is based on its net asset value ("NAV"). The Portfolio's NAV per share is determined as of the close of regular trading hours of the New York Stock Exchange (the "Exchange"), currently 4:00 p.m. (Eastern time), on each day that the Exchange is open for business. Marketable equity securities are priced at market value. The value of securities for which no quotations are readily available (including restricted securities) is determined in good faith at fair value using methods determined by the Board of Directors of The Glenmede Fund, Inc. (the "Glenmede Fund"). PURCHASE OF SHARES Institutional shares of the Portfolio are sold without a sales commission on a continuous basis to the Advisor acting on behalf of its clients or the clients of its Affiliates ("Clients") and to other institutions, including brokers acting on behalf of their clients (the "Institutions"), at the NAV per share next determined after receipt, in proper order, of the purchase order by the Glenmede Fund's transfer agent. We consider orders to be in "proper order" when all required documents are properly completed, signed and received. The minimum initial investment for Institutional Shares of the Portfolio is $10,000,000 or any lesser amount if, in the Advisor's opinion, the investor has adequate intent and availability of funds to reach a future level of investment of $10,000,000. There is no minimum for subsequent investments. The Portfolio reserves the right to reduce or waive the minimum initial and subsequent investment requirements from time to time. Beneficial ownership of shares will be reflected on books maintained by the Advisor or the Institutions. The Advisor has informed the Glenmede Fund that it and its Affiliates' minimum and subsequent investment requirements for their Clients' investments in the Portfolio are the same as those for the Glenmede Fund. Other Institutions may have such requirements. If you wish to purchase shares in the Portfolio, you should contact the Advisor by telephone or facsimile or contact your Institution. -8- Your Institution may charge you for purchasing or selling shares of the Portfolio. There is no transaction charge for shares purchased directly from the Portfolio through the Advisor. Purchases of the Portfolio's shares will be made in full and fractional shares calculated to three decimal places. In the interest of economy and convenience, certificates for shares will not be issued except upon your written request. Certificates for fractional shares, however, will not be issued. REDEMPTION OF SHARES You may redeem Institutional Shares of the Portfolio at any time, without cost, at the NAV per share next determined after the Glenmede Fund's transfer agent receives your redemption order. Generally, a properly signed written order is all that is required. If you wish to redeem your shares, contact the Advisor by telephone or facsimile or contact your Institution. You will ordinarily be paid your redemption proceeds within one business day, but in no event more than seven days, after the transfer agent receives your order in proper form. The Portfolio may suspend the right of redemption or postpone the date of payment under any emergency circumstances as determined by the Securities and Exchange Commission (the "SEC"). Redemption proceeds are normally paid in cash, although the Glenmede Fund has the right to limit each shareholder to cash redemptions of $250,000 or 1% of the Portfolio's NAV, whichever is less, within a 90-day period. Any additional redemption proceeds would be made in readily marketable securities. ADDITIONAL INFORMATION ON THE PURCHASE AND REDEMPTION OF SHARES OF THE PORTFOLIO The Glenmede Fund may appoint one or more entities as its agent to receive purchase and redemption orders of shares of the Portfolio and cause these orders to be transmitted, on an aggregated basis, to the Glenmede Fund's transfer agent. In these instances, orders are effected at the NAV per share next determined after receipt of that order by the entity, if the order is actually received by the transfer agent not later than the next business morning. DIVIDENDS AND DISTRIBUTIONS The Portfolio normally distributes substantially all of its net investment income to shareholders in the form of a quarterly dividend. The Portfolio normally distributes any realized net capital gains at least once a year. -9- TAXES Federal Taxes The Portfolio contemplates declaring, as dividends each year, all or substantially all of its taxable income, including its net capital gain (the excess of long-term capital gain over short-term capital loss). Distributions attributable to the net capital gain of the Portfolio will be taxable to you as long-term capital gain, regardless of how long you have held your shares. Other Portfolio distributions will generally be taxable as ordinary income. You will be subject to income tax on Portfolio distributions regardless of whether they are paid in cash or reinvested in additional shares. You will be notified annually of the tax status of distributions to you. If you purchase shares just before a distribution, the purchase price will reflect the amount of the upcoming distribution, but you will be taxed on the entire amount of the distribution received, even though, as an economic matter, the distribution simply constitutes a return of capital. This is known as "buying into a dividend." You will recognize taxable gain or loss on a sale, exchange or redemption of your shares, including an exchange for shares of another Portfolio, based on the difference between your tax basis in the shares and the amount you receive for them. (To aid in computing your tax basis, you should retain your account statements for the periods during which you held shares.) Generally, this gain or loss will be long-term or short-term depending on whether your holding period for the shares exceeds 12 months, except that any loss realized on shares held for six months or less will be treated as a long-term capital loss to the extent of any long-term capital gain distributions that were received on the shares. The one major exception to these tax principles is that distributions on, and sales, exchanges and redemptions of, shares held in an IRA (or other tax-qualified plan) will not be currently taxable. The Portfolio's dividends that are paid to its corporate shareholders and are attributable to qualifying dividends the Portfolio receives from U.S. domestic corporations may be eligible, in the hands of the corporate shareholders, for the corporate dividends-received deduction, subject to certain holding period requirements and debt financing limitations. State and Local Taxes You may also be subject to state and local taxes on distributions and redemptions. State income taxes may not apply however, to the portions of the Portfolio's distributions, if any, that are attributable to interest on federal securities. The foregoing is only a summary of certain tax considerations under current law, which may be subject to change in the future. Shareholders who are nonresident aliens, foreign trusts or estates, or foreign corporations or partnerships, may be subject to different U. S. Federal income tax treatment. You should consult your tax adviser for further information regarding federal, state, local and/or foreign tax consequences relevant to your specific situation. -10- MANAGEMENT OF THE PORTFOLIO Investment Advisor The Glenmede Trust Company with principal offices at One Liberty Place, 1650 Market Street, Suite 1200, Philadelphia, Pennsylvania 19103, serves as investment advisor to the Portfolio. The Advisor, a limited purpose trust company chartered in 1956, provides fiduciary and investment services to endowment funds, foundations, employee benefit plans and other institutions and individuals. The Advisor is a wholly-owned subsidiary of The Glenmede Corporation. At December 31, 1999, the Advisor had over $17 billion in assets in the accounts for which it serves in various capacities including as executor, trustee or investment advisor. Under an Investment Advisory Agreement with the Glenmede Fund, the Advisor, subject to the control and supervision of the Glenmede Fund's Board and in conformance with the stated investment objective and policies of the Portfolio, manages the investment and reinvestment of the assets of the Portfolio. It is the responsibility of the Advisor to make investment decisions for the Portfolio and to place the Portfolio's purchase and sale orders. For the fiscal year ended October 31, 1999, the Advisor received a management fee from the Portfolio at an annual rate of .55% of the Portfolio's average daily net assets. Shareholders in the Glenmede Fund who are clients of the Advisor, or an Affiliate, pay fees which vary, depending on the capacity in which the Advisor or its Affiliate provides fiduciary and investment services to the particular client (e.g., personal trust, estate settlement, advisory and custodian services). Robert J. Mancuso is the portfolio manager primarily responsible for the management of the Portfolio. Mr. Mancuso has been primarily responsible for the management of the Portfolio since February 27, 1996. Mr. Mancuso has been employed by the Advisor as a portfolio manager since November 1992. GENERAL INFORMATION If you have any questions regarding the Portfolio contact the Glenmede Fund at the address or telephone number stated on the back cover page. -11- FINANCIAL HIGHLIGHTS The financial highlights table is intended to help you understand the Portfolio's financial performance since it commenced operations. Certain information reflects financial results for a single Portfolio share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Portfolio (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, whose report, along with the Portfolio's financial statements, are included in the Annual Report, which is available upon request. Small Capitalization Value Portfolio+ Institutional Shares (For a share outstanding throughout each period)
For the Period January 2, 1998(1) For the Fiscal Year Ended Through October 31, 1999 October 31, 1998 ---------------- ---------------- Net Asset Value, Beginning of Period.............................. $15.29 $19.33 ------- ------- Income from Investment Operations: Net Investment Income........................................... 0.23 0.15 Net (Loss) on Securities (both realized and unrealized)......... (0.24) (3.94) ------- ------- Total From Investment Operations.................................. (0.01) (3.79) ------- ------- Less Distributions: Dividends (from net investment income).......................... (0.27) (0.13) Distributions (from capital gains).............................. -- (0.12) ------- ------- Total Distributions............................................... (0.27) (0.25) ------- ------- Net Asset Value, End of Period.................................... $15.01 $15.29 ======= ======= Total Return(2)................................................... (0.10)% (19.69)% ======= ======= Ratios/Supplemental Data: Net Assets, End of Period (in 000's)............................ $28,455 $31,794 Ratio of Expenses to Average Net Assets......................... 0.68% 0.69%(3) Ratio of Net Investment Income to Average Net Assets............ 1.47% 1.07%(3) Portfolio Turnover Rate......................................... 77% 42%
- ---------------------- + The Portfolio's name was changed from the Small Capitalization Equity Portfolio to the Small Capitalization Value Portfolio effective February 28, 2000. (1) Commencement of operations. (2) Total Return represents aggregate total return for the period indicated. (3) Annualized. -12- Where to find more information More Portfolio information is available to you upon request and without charge: Annual and Semi-Annual Report The Annual and Semi-Annual Reports provide additional information about the Portfolio's investments and performance. The Annual Report also contains a discussion of the market conditions and investment strategies that significantly affected the Portfolio's performance during the last fiscal year. Statement of Additional Information (SAI) The SAI includes additional information about the Portfolio's investment policies, organization and management. It is legally part of this prospectus (it is incorporated by reference). You can get free copies of the Portfolio's Annual Report, Semi-Annual Report or SAI. You may also request other information about the Portfolio, and make inquiries. Write to: The Glenmede Fund, Inc. One South Street Baltimore, MD 21202 By phone: 1-800-442-8299 Information about the Portfolio (including the Portfolio's SAI) can be reviewed and copied at the Securities and Exchange Commission's Public Reference Room in Washington, DC. Information about the operation of the Public Reference Room may be obtained by calling the SEC at 1-202-942-8090. Reports and other information about the Portfolio are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov. Copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the Public Reference Section of the SEC, Washington, DC 20549-0102. Glenmede Fund, Inc.'s Investment Company Act File No. is 811-5577 -13- THE GLENMEDE FUND, INC. Prospectus February 28, 2000 Institutional International Portfolio Investment Advisor The Glenmede Trust Company The Securities and Exchange Commission has not approved or disapproved the Portfolio's securities or determined if this prospectus is accurate or complete. It is a criminal offense to state otherwise. TABLE OF CONTENTS RISK/RETURN SUMMARY............................................................. INVESTMENTS..................................................................... PRICE OF PORTFOLIO SHARES....................................................... PURCHASE OF SHARES.............................................................. REDEMPTION OF SHARES............................................................ ADDITIONAL INFORMATION ON THE PURCHASE AND REDEMPTION OF SHARES OF THE PORTFOLIO..................................................... DIVIDENDS AND DISTRIBUTIONS..................................................... TAXES........................................................................... MANAGEMENT OF THE PORTFOLIO..................................................... GENERAL INFORMATION............................................................. FINANCIAL HIGHLIGHTS............................................................ -2- RISK/RETURN SUMMARY ------------------------------------------------------- Important Concepts Total return consists of net income (dividend and interest income from portfolio securities less expenses of the Portfolio) and capital gains and losses, both realized and unrealized, from portfolio securities. ------------------------------------------------------- Investment Objective Maximum long-term total return consistent with reasonable risk to principal Principal Investment Strategies The Portfolio invests primarily in common stocks, including dividend-paying common stocks, of companies located outside the United States and that the Advisor believes are undervalued. Stocks appear to the Advisor to be undervalued by the stock market when the Advisor believes the stock price becomes inexpensive relative to the company's estimated earnings and/or dividend-paying ability over the long-term. The Advisor selects stocks to buy and sell by evaluating a company's growth outlook and market valuation based on price-to-earnings, dividend yields and other operating and financial conditions. The Advisor selects countries primarily by evaluating a country's valuation ratios, such as price-to-earnings and dividend yields, prospective economic growth, government policies and other factors. Principal Risks of Stocks may decline over short or even Investing extended periods of time. Equity markets tend to be cyclical: there are times when stock prices generally increase, and other times when they generally decrease. Therefore, you could lose money by investing in the Portfolio. Although the Portfolio invests in stocks the Advisor believes are undervalued, there is no guarantee that the prices of these stocks will not move even lower. -3- The Portfolio is subject to additional risks due to its foreign investments. Foreign stocks involve special risks not typically associated with U.S. stocks. The stocks held by the Portfolio may underperform other types of stocks, and they may not increase or may decline in value. The Portfolio may also enter into foreign currency exchange contracts to hedge the currency risk of portfolio securities denominated in a foreign currency. Foreign investments may be riskier than U.S. investments because of factors such as foreign government restrictions, changes in currency exchange rates, incomplete financial information about the issuers of securities, and political or economic instability. Foreign stocks may be more volatile and less liquid than U.S. stocks. The risks associated with foreign investments are heightened when investing in emerging markets. The governments and economies of emerging market countries feature greater instability than those of more developed countries. Such investments tend to fluctuate in price more widely and to be less liquid than other foreign investments. The strategy that the Advisor uses may fail to produce the intended result. An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Who may want to The Portfolio may be appropriate for you invest in the Portfolio if you want your capital to grow over the long term, are investing for goals several years away, and are comfortable with the risks of investing in foreign securities. The Portfolio would NOT be appropriate for you if you are investing for short-term goals, or are mainly seeking current income. -4- Bar Chart and The bar chart and table below show the Performance Table Portfolio's annual total returns, its long-term performance and provide some indication of the risks of investing in the Portfolio. The bar chart shows how the performance of the Portfolio has varied from year to year. The table shows how the Portfolio's average annual total returns for one and five years, and the life of the Portfolio compare to those of selected market indices. The bar chart and performance table assume reinvestment of dividends and distributions. The Portfolio's past performance does not necessarily indicate how it will perform in the future. Institutional International Portfolio 1993 35.58% 1994 2.78% 1995 11.38% 1996 17.89% 1997 7.18% 1998 15.51% 1999 23.47% During the periods shown in the bar chart, the highest quarterly return was 14.79% (for the quarter ended December 31, 1998) and the lowest quarterly return was -11.19% (for the quarter ended September 30, 1998).
The Portfolio's Average Annual Total Returns for the Periods Ended December 31, 1999 - -------------------------------------------------------- ------------------------------------------------------ o The Morgan Stanley EAFE-IX(R)ND Weighted Index is Past 1 Past 5 Since an unmanaged capitalization weighted composite Year Years August 1, portfolio consisting of equity total returns of 1992 companies in Australia, New Zealand, Europe and ------------------------------------------------------ the Far East. Institutional International 23.47% 14.97% 14.28% o The Lipper International Fund Index is comprised of Portfolio the 30 largest funds in the Lipper International Fund ------------------------------------------------------ Average. The Average consists of funds that invest in Morgan Stanley securities whose primary trading markets are outside EAFE-IX(R) ND 26.96% 12.83% 13.85% the United States. Weighted Index ------------------------------------------------------ Lipper International Fund 37.73% 15.96% 14.97% Index - -------------------------------------------------------- ------------------------------------------------------
-5-
Fees and Expenses of the Portfolio This table describes the fees and expenses that you may pay if you buy and hold shares of the Portfolio. -------------------------------------------------------------- Institutional International Portfolio --------- -------------------------------------------------------------- Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets) -------------------------------------------------------------- Management Fees*........................ .75% -------------------------------------------------------------- Other Expenses.......................... .11% ---- -------------------------------------------------------------- -------------------------------------------------------------- Total Annual Portfolio Operating Expenses ............................... .86% ---- --------------------------------------------------------------
- --------------------- * The Advisor has agreed to waive its fees to the extent necessary to ensure that the Portfolio's annual total operating expenses do not exceed 1.00% of the Portfolio's average net assets. Example This Example is intended to help you compare the cost of investing in the Portfolio with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Portfolio for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Portfolio's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years ------ ------- ------- -------- Institutional International Portfolio................... $88 $274 $477 $1,061
-6- INVESTMENTS Objective and Principal Strategies To help you decide whether the Portfolio is appropriate for you, this section looks more closely at the Portfolio's investment objective and policies. You should carefully consider your own investment goals, time horizon and risk tolerance before investing in the Portfolio. The Portfolio's investment objective may be changed by the Board members without shareholder approval. The investment objective of the Portfolio is to provide maximum long-term total return consistent with reasonable risk to principal. The Portfolio attempts to achieve its objective by investing primarily in common stocks, including dividend-paying common stocks, of companies located outside the United States and that the Advisor believes are undervalued. The Portfolio is expected to diversify its investments across companies located in a number of foreign countries, which may include, but are not limited to, Japan, the United Kingdom, Germany, France, Italy, Spain, Switzerland, the Netherlands, Norway, Sweden, Australia, Hong Kong and Singapore. Under normal circumstances, the Portfolio will invest at least 65% of its total assets in the securities of companies based in at least three different countries, other than the United States. Factors considered by the Advisor in selecting stocks to buy and sell for this Portfolio include both country selection and stock selection. Countries are primarily selected by evaluating a country's valuation ratios, such as price-to-earnings and dividend yields, prospective economic growth, government policies and other factors. Security selection is primarily determined by evaluating a company's growth outlook and market valuation based on price-to-earnings, dividend yields and other operating and financial conditions. The Portfolio may, from time to time, take temporary defensive positions that are inconsistent with its principal investment strategies in response to adverse market, economic, political, or other conditions. Such investments may include various short-term instruments, including, for example, repurchase agreements and money market instruments. A defensive position, taken at the wrong time, would have an adverse impact on the Portfolio's performance. To the extent the Portfolio employs a temporary defensive investment strategy, it may not achieve its investment objective. Risks of Foreign Investments The risks of investing in the Portfolio have been described above in the Risk/Return Summary. The following supplements that description. -7- Foreign Securities The Portfolio may purchase securities in any foreign country, developed or underdeveloped. There are substantial risks involved in investing in such securities. These risks include differences in accounting, auditing and financial reporting standards, generally higher commission rates on foreign portfolio transactions, the possibility of expropriation or confiscatory taxation, adverse changes in investment or exchange control regulations, political instability, and potential restrictions on the flow of international capital. The dividends payable on the Portfolio's foreign securities may be subject to foreign withholding taxes, thus reducing the income available for distribution to the Portfolio's shareholders. Foreign securities often trade with less frequency and volume than domestic securities and, therefore, may exhibit greater price volatility. Changes in foreign exchange rates will affect the value of those securities in the Portfolio which are denominated or quoted in currencies other than the U.S. dollar. In many countries there is less publicly available information about issuers than is available in reports about companies in the United States. These risks are often heightened for investments in developing or emerging markets. Developing countries may also impose restrictions on the Portfolio's ability to repatriate investment income or capital. Even without such restrictions, the mechanics of repatriation may affect certain aspects of the operations of the Portfolio. Some of the currencies in emerging markets have been devalued relative to the U.S. dollar. In many cases these devaluations have been significant. Certain developing countries impose constraints on currency exchange. Governments of some developing countries exercise substantial influence over many aspects of the private sector. In some countries, the government owns or controls many companies, including the largest in the country. As such, government actions in the future could have a significant effect on economic conditions in developing countries in these regions, which in turn, could affect the value of the Portfolio's investments. Brokerage commissions, custodial services, and other costs relating to investment in foreign securities markets are generally more expensive than in the United States. Foreign securities markets have different clearance and settlement procedures, and in certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. Delays in settlement could prevent the Portfolio from investing the proceeds of the sale. Inability to dispose of portfolio securities due to settlement problems could expose the Portfolio to losses due either to subsequent declines in the value of the portfolio security or, if the security has been sold, to claims by the purchaser. In many emerging markets, there is less government supervision and regulation of business and industry practices, stock exchanges, brokers and listed companies than in the United States. The Portfolio may invest in foreign securities markets which are smaller, less liquid, and subject to greater price volatility than those in the United States. -8- There are additional risk factors, including possible losses through the holding of securities in domestic and foreign custodian banks and depositories. European Currency Unification Many European countries have adopted a single European currency, the euro. On January 1, 1999, the euro became legal tender for all countries participating in the Economic and Monetary Union ("EMU"). A new European Central Bank has been created to manage the monetary policy of the new unified region. On the same date, the exchange rates were irrevocably fixed between the EMU member countries. National currencies will continue to circulate until they are replaced by euro coins and bank notes by the middle of 2002. This change is likely to significantly impact the European capital markets in which the Portfolio invests and may result in the Portfolio facing additional risks in pursuing its investment objective. These risks, which include, but are not limited to, volatility of currency exchange rates as a result of the conversion, uncertainty as to capital market reaction, conversion costs that may affect issuer profitability and creditworthiness, and lack of participation by some European countries, may increase the volatility of the Portfolio's net asset value per share. Other Risks Selection of Investments The Advisor evaluates the rewards and risks presented by all securities purchased by the Portfolio and how they may advance the Portfolio's investment objective. It is possible, however, that these evaluations will prove to be inaccurate. Other Types of Investments This Prospectus describes the Portfolio's principal investment strategies, and the particular types of securities it may select for investment. The Portfolio may make other types of investments and pursue other investment strategies in support of its overall investment goal. These supplemental investment strategies--and the risks involved--are described in the Statement of Additional Information, which is referred to on the Back Cover of this Prospectus. PRICE OF PORTFOLIO SHARES The price of shares issued by the Portfolio is based on its net asset value ("NAV"). The NAV per share is determined as of the close of regular trading hours of the New York Stock Exchange, currently 4:00 p.m. (Eastern time), on each day that the Exchange is open for business. Marketable equity securities are priced at market value. Securities listed on a foreign exchange and unlisted foreign securities are valued at the latest quoted price available when assets are valued. If a subsequent occurrence -9- is believed to have changed such value, however, the fair value of those securities may be determined through consideration of other factors by or under the direction of the Board of Directors of The Glenmede Fund, Inc. (the "Glenmede Fund"). These securities may trade on days when shares of the Portfolio are not priced; as a result, the NAV of shares of the Portfolio may change on days when you will not be able to purchase or redeem the Portfolio's shares. Foreign currency amounts are translated into U.S. dollars at the bid prices of such currencies against U.S. dollars last quoted by a major bank. The value of securities for which no quotations are readily available (including restricted securities) is determined in good faith at fair value using methods determined by the Board of Directors. PURCHASE OF SHARES Shares of the Portfolio are sold without a sales commission on a continuous basis to the Advisor acting on behalf of its clients ("Clients") and to other institutions, including brokers acting on behalf of their clients (the "Institutions"), at the NAV per share next determined after receipt, in proper order, of the purchase order by the Glenmede Fund's transfer agent. We consider orders to be in "proper order" when all required documents are properly completed, signed and received. The minimum initial investment is $25,000; the minimum for subsequent investments is $1,000. The Portfolio reserves the right to reduce or waive the minimum initial and subsequent investment requirements from time to time. Beneficial ownership of shares will be reflected on books maintained by the Advisor or the Institutions. If you wish to purchase shares in the Portfolio, you should contact the Advisor by telephone or facsimile or contact your Institution. Your Institution may charge you for purchasing or selling shares of the Portfolio. There is no transaction charge for shares purchased directly from the Portfolio through the Advisor. Purchases of the Portfolio's shares will be made in full and fractional shares calculated to three decimal places. In the interest of economy and convenience, certificates for shares will not be issued except upon your written request. Certificates for fractional shares, however, will not be issued. REDEMPTION OF SHARES You may redeem Shares of the Portfolio at any time, without cost, at the NAV per share next determined after the Glenmede Fund's transfer agent receives your redemption order. Generally, a properly signed written order is all that is required. If you wish to redeem your shares, contact the Advisor by telephone or facsimile or contact your Institution. You will ordinarily be paid your redemption proceeds within one business day, but in no event more than seven days, after the transfer agent receives your order in proper form. The Portfolio may suspend the right of redemption or postpone the date of payment under any emergency circumstances as determined by the Securities and Exchange Commission (the "SEC"). Redemption proceeds are normally paid in cash, although the Glenmede Fund has the right to limit each shareholder to cash redemptions of $250,000 or -10- 1% of the Portfolio's NAV, whichever is less, within a 90-day period. Any additional redemption proceeds would be made in readily marketable securities. ADDITIONAL INFORMATION ON THE PURCHASE AND REDEMPTION OF SHARES OF THE PORTFOLIO The Glenmede Fund may appoint one or more entities as its agent to receive purchase and redemption orders of shares of the Portfolio and cause these orders to be transmitted, on an aggregated basis, to the Glenmede Fund's transfer agent. In these instances, orders are effected at the net asset value per share next determined after receipt of that order by the entity, if the order is actually received by the transfer agent not later than the next business morning. DIVIDENDS AND DISTRIBUTIONS The Portfolio normally distributes substantially all of its net investment income to shareholders in the form of a quarterly dividend. The Portfolio normally distributes any realized net capital gains at least once a year. TAXES Federal Taxes The Portfolio contemplates declaring, as dividends each year, all or substantially all of its taxable income, including its net capital gain (the excess of long-term capital gain over short-term capital loss). Distributions attributable to the net capital gain of the Portfolio will be taxable to you as long-term capital gain, regardless of how long you have held your shares. Other Portfolio distributions will generally be taxable as ordinary income. You will be subject to income tax on Portfolio distributions regardless of whether they are paid in cash or reinvested in additional shares. You will be notified annually of the tax status of distributions to you. If you purchase shares just before a distribution, the purchase price will reflect the amount of the upcoming distribution, but you will be taxed on the entire amount of the distribution received, even though, as an economic matter, the distribution simply constitutes a return of capital. This is known as "buying into a dividend." You will recognize taxable gain or loss on a sale, exchange or redemption of your shares, including an exchange for shares of another Portfolio, based on the difference between your tax basis in the shares and the amount you receive for them. (To aid in computing your tax basis, you should retain your account statements for the periods during which you held shares.) Generally, this gain or loss will be long-term or short-term depending on whether your holding period for the shares exceeds 12 months, except that any loss realized on shares held for six months or less will be treated as a -11- long-term capital loss to the extent of any long-term capital gain distributions that were received on the shares. The one major exception to these tax principles is that distributions on, and sales, exchanges and redemptions of, shares held in an IRA (or other tax-qualified plan) will not be currently taxable. It is expected that the Portfolio will be subject to foreign withholding taxes with respect to dividends or interest received from sources in foreign countries. The Portfolio may make an election to treat a proportionate amount of such taxes as constituting a distribution to each shareholder, which would allow each shareholder either to credit such proportionate amount of taxes against U.S. Federal income tax liability or to take such amount as an itemized deduction. The Portfolio's dividends that are paid to its corporate shareholders and are attributable to qualifying dividends the Portfolio receives from U.S. domestic corporations may be eligible, in the hands of the corporate shareholders, for the corporate dividends-received deduction, subject to certain holding period requirements and debt financing limitations. State and Local Taxes You may also be subject to state and local taxes on distributions and redemptions. State income taxes may not apply however, to the portions of the Portfolio's distributions, if any, that are attributable to interest on federal securities. The foregoing is only a summary of certain tax considerations under current law, which may be subject to change in the future. Shareholders who are nonresident aliens, foreign trusts or estates, or foreign corporations or partnerships, may be subject to different U.S. Federal income tax treatment. You should consult your tax adviser for further information regarding federal, state, local and/or foreign tax consequences relevant to your specific situation. MANAGEMENT OF THE PORTFOLIO Investment Advisor The Glenmede Trust Company with principal offices at One Liberty Place, 1650 Market Street, Suite 1200, Philadelphia, Pennsylvania 19103, serves as investment advisor to the Portfolio. The Advisor, a limited purpose trust company chartered in 1956, provides fiduciary and investment services to endowment funds, foundations, employee benefit plans and other institutions and individuals. The Advisor is a wholly-owned subsidiary of The Glenmede Corporation. At December 31, 1999, the Advisor had over $17 billion in assets in the accounts for which it serves in various capacities including as executor, trustee or investment advisor. Under an Investment Advisory Agreement with the Glenmede Fund, the Advisor, subject to the control and supervision of the Glenmede Fund's Board and in conformance with the stated investment objective and policies of the -12- Portfolio, manages the investment and reinvestment of the Portfolio's assets. It is the responsibility of the Advisor to make investment decisions for the Portfolio and to place the Portfolio's purchase and sale orders. For the fiscal year ended October 31, 1999, the Advisor received a management fee from the Portfolio at the annual rate of .75% of the Portfolio's average daily net assets. Shareholders in the Portfolio who are customers of other Institutions may pay fees to those Institutions. Andrew B. Williams, Senior Vice President of the Advisor, has been primarily responsible for the management of the Portfolio since it commenced operations on August 1, 1992. Mr. Williams has been employed by the Advisor as a portfolio manager since May 1985. GENERAL INFORMATION If you have any questions regarding the Portfolio, contact the Glenmede Fund at the address or telephone number stated on the back cover page. -13- FINANCIAL HIGHLIGHTS The financial highlights table is intended to help you understand the Portfolio's financial performance for the past 5 years. Certain information reflects financial results for a single Portfolio share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Portfolio (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, whose report, along with the Portfolio's financial statements, are included in the Annual Report, which is available upon request. Institutional International Portfolio (For a share outstanding throughout each year)
Year Ended October 31, ------------------------------------------------------------------- 1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- Net Asset Value, Beginning of Year...... $ 15.53 $ 14.89 $ 13.67 $ 12.34 $ 12.63 -------- ------- ------- ------- ------- Income from Investment Operations: Net Investment Income................. 0.39 0.26 0.27 0.28 0.19 Net Gain/(Loss) on Securities (both realized and unrealized)........ 3.15 0.81 1.86 1.50 (0.13) -------- ------- ------- ------- ------- Total From Investment Operations........ 3.54 1.07 2.13 1.78 0.06 -------- ------- ------- ------- ------- Less Distributions from: Net investment income................. (0.40) (0.28) (0.22) (0.25) (0.18) Net realized capital gains............ (0.85) (0.15) (0.61) (0.14) (0.17) In excess of net realized gains....... -- -- -- (0.06) -- In excess of net investment income.... -- -- (0.08) -- -- -------- ------- ------- ------- ------- Total Distributions..................... (1.25) (0.43) (0.91) (0.45) (0.35) -------- ------- ------- ------- ------- Net Asset Value, End of Year............ $ 17.82 $ 15.53 $ 14.89 $ 13.67 $ 12.34 ======== ======= ======= ======= ======= Total Return(1)......................... 22.98% 7.26% 15.54% 14.46% 0.38% ======== ======= ======= ======= ======= Ratios/Supplemental Data: Net Assets, End of Year (in 000's).... $175,951 $98,727 $81,659 $58,390 $44,206 Ratio of Expenses to Average Net Assets 0.86% 0.87% 0.87% 0.95% 0.93% Ratio of Net Investment Income to Average Net Assets.......................... 1.83% 1.58% 1.94% 2.06% 1.78% Portfolio Turnover Rate............... 20% 19% 15% 10% 25%
- ---------------- (1) Total Return represents the aggregate total return for the period indicated. -14- Where to find more information More Portfolio information is available to you upon request and without charge: Annual and Semi-Annual Report The Annual and Semi-Annual Reports provide additional information about the Portfolio's investments and performance. The Annual Report also contains a discussion of the market conditions and investment strategies that significantly affected the Portfolio's performance during the last fiscal year. Statement of Additional Information (SAI) The SAI includes additional information about the Portfolio's investment policies, organization and management. It is legally part of this prospectus (it is incorporated by reference). You can get free copies of the Portfolio's Annual Report, Semi-Annual Report or SAI. You may also request other information about the Portfolio, and make inquiries. Write to: The Glenmede Fund, Inc. One South Street Baltimore, MD 21202 By phone: 1-800-442-8299 Information about the Portfolio (including the Portfolio's SAI) can be reviewed and copied at the Securities and Exchange Commission's Public Reference Room in Washington, DC. Information about the operation of the Public Reference Room may be obtained by calling the SEC at 1-202-942-8090. Reports and other information about the Portfolio are available on the Edgar Database on the SEC's Internet site at http://www.sec.gov. Copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the Public Reference Section of the SEC, Washington, DC 20549-0102. The Glenmede Fund, Inc.'s Investment Company Act File No. is 811-5577 -15- THE GLENMEDE FUND, INC. Prospectus February 28, 2000 Global Equity Portfolio Investment Advisor The Glenmede Trust Company The Securities and Exchange Commission has not approved or disapproved the Portfolio's securities or determined if this prospectus is accurate or complete. It is a criminal offense to state otherwise. TABLE OF CONTENTS Page RISK/RETURN SUMMARY............................................................. INVESTMENTS..................................................................... PRICE OF PORTFOLIO SHARES....................................................... PURCHASE OF SHARES.............................................................. REDEMPTION OF SHARES............................................................ ADDITIONAL INFORMATION ON THE PURCHASE AND REDEMPTION OF SHARES OF THE PORTFOLIO....................................................... DIVIDENDS AND DISTRIBUTIONS..................................................... TAXES .......................................................................... MANAGEMENT OF THE PORTFOLIO..................................................... GENERAL INFORMATION............................................................. FINANCIAL HIGHLIGHTS............................................................ -i- RISK/RETURN SUMMARY ----------------------------------------------------- Important Concepts Total return consists of net income (dividend and interest income from portfolio securities less expenses of the Portfolio) and capital gains and losses, both realized and unrealized, from portfolio securities. ----------------------------------------------------- Investment Objective Maximum long-term total return consistent with reasonable risk to principal Principal Investment Strategies The Portfolio invests primarily in equity securities, such as common stocks, including dividend-paying common stocks, and securities convertible into equity securities, of companies located inside and outside the United States and that the Advisor believes are undervalued. Stocks appear to the Advisor to be undervalued by the stock market when the Advisor believes the stock price becomes inexpensive relative to the company's estimated earnings and/or dividend-paying ability over the long-term. The Advisor selects securities to buy and sell by evaluating a company's growth outlook and market valuation based on price-to-earnings, dividend yields and other operating and financial conditions. The Advisor selects countries primarily by evaluating a country's valuation ratios, such as price-to-earnings and dividend yields, prospective economic growth, government policies and other factors. Principal Risks of Stocks may decline over short or even Investing extended periods of time. Equity markets tend to be cyclical: there are times when stock prices generally increase, and other times when they generally decrease. Therefore, you could lose money by investing in the Portfolio. Although the Portfolio invests in stocks the Advisor believes are undervalued, there is no guarantee that the prices of these stocks will not move even lower. The Portfolio is subject to additional risks due to its foreign investments. Foreign stocks involve special risks not typically associated with U.S. stocks. The stocks held by the Portfolio may underperform other types of stocks, and they may not increase or may decline in value. The Portfolio may also enter into foreign currency exchange contracts to hedge the currency risk of portfolio securities denominated in a foreign currency. Foreign investments may be riskier than U.S. investments because of factors such as foreign government restrictions, changes in currency exchange rates, incomplete financial information about the issuers of securities, and political or economic instability. Foreign stocks may be more volatile and less liquid than U.S. stocks. The risks associated with foreign investments are heightened when investing in emerging markets. The government and economies of emerging market countries feature greater instability than those of more developed countries. Such investments tend to fluctuate in price more widely and to be less liquid than other foreign investments. The strategy that the Advisor uses may fail to produce the intended result. An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Who may want to The Portfolio may be appropriate for you invest in the Portfolio if you want your capital to grow over the long term, are investing for goals several years away, and are comfortable with the risks of investing in foreign securities. The Portfolio would NOT be appropriate for you if you are investing -2- for short-term goals, or are mainly seeking current income. Bar Chart and The bar chart and table below show the Performance Table Portfolio's annual total returns, its long-term performance and provide some indication of the risks of investing in the Portfolio. The bar chart shows how the performance of the Portfolio has varied from year to year. The table shows how the Portfolio's average annual total returns for one year and the life of the Portfolio compare to those of selected market indices. The bar chart and performance table assume reinvestment of dividends and distributions. The Portfolio's past performance does not necessarily indicate how it will perform in the future. Global Equity Portfolio 1998 12.99% 1999 17.91% During the periods shown in the bar chart, the highest quarterly return was 17.03% (for the quarter ended December 31, 1998) and the lowest quarterly return was -13.08% (for the quarter ended September 30, 1998).
The Portfolio's Average Annual Total Returns for the Periods Ended December 31, 1999 - ---------------------------------------------- --------------------------------------------------------- Since The Morgan Stanley Capital International Past 1 Year November 3, (MSCI) World Index is an unmanaged, market 1997 capitalization weighted index which tracks --------------------------------------------------------- the performance of developed and emerging equity markets throughout the world. Global Equity Portfolio 17.91% 14.01% --------------------------------------------------------- The Morgan Stanley EAFE-IX(R) ND Weighted Index is an unmanaged capitalization MSCl World Index 26.38% 21.33% weighted composite portfolio consisting of equity total returns of companies in --------------------------------------------------------- Australia, New Zealand, Europe and the Far Morgan Stanley East. EAFE-IX(R) ND 26.96% 22.05% Weighted Index - ---------------------------------------------- --------------------------------------------------------- Fees and Expenses of the Portfolio This table describes the fees and expenses that you may pay if you buy and hold shares of the Portfolio.
-3- ------------------------------------------------------------ Global Equity Portfolio --------- ------------------------------------------------------------ Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets) ------------------------------------------------------------ Management Fees.............................. .70% ------------------------------------------------------------ Other Expenses............................... .23% ---- ------------------------------------------------------------ ------------------------------------------------------------ Total Annual Portfolio Operating Expenses.... .93 --- ------------------------------------------------------------ ------------------------------------------------------------ - --------------------- Example This Example is intended to help you compare the cost of investing in the Portfolio with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Portfolio for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Portfolio's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years ------ ------- ------- -------- Global Equity Portfolio................................. $95 $296 $515 $1,143
INVESTMENTS Objective and Principal Strategies To help you decide whether the Portfolio is appropriate for you, this section looks more closely at the Portfolio's investment objective and policies. You should carefully consider your own investment goals, time horizon and risk tolerance before investing in the Portfolio. The Portfolio's investment objective may be changed by the Board members without shareholder approval. The investment objective of the Portfolio is to provide maximum long-term total return consistent with reasonable risk to principal. The Portfolio attempts to achieve its objective by investing primarily in equity securities, such as common stocks, including dividend-paying common stocks, and securities convertible into equity securities, of companies located inside and outside the United States and that the Advisor believes are undervalued. The Portfolio is expected to diversify its investments across companies located in a number of countries which may include, but are not limited to, the United States, Japan, the United Kingdom, Germany, France, Italy, Spain, Switzerland, the Netherlands, Norway, Sweden, Australia, -4- Hong Kong and Singapore. Under normal circumstances, the Portfolio will invest at least 65% of its total assets in equity securities and securities convertible into equity securities. Factors considered by the Advisor in selecting securities to buy and sell for this Portfolio include both country selection and stock selection. Countries are primarily selected by evaluating a country's valuation ratios, such as price-to-earnings and dividend yields, prospective economic growth, government policies and other factors. Security selection is primarily determined by evaluating a company's growth outlook and market valuation based on price-to earnings, dividend yields and other operating and financial conditions. The Portfolio may, from time to time, take temporary defensive positions that are inconsistent with its principal investment strategies in response to adverse market, economic, political, or other conditions. Such investments may include various short-term instruments, including, for example, repurchase agreements and money market instruments. A defensive position, taken at the wrong time, would have an adverse impact on the Portfolio's performance. To the extent the Portfolio employs a temporary defensive investment strategy, it may not achieve its investment objective. Risks of Foreign Investments The risks of investing in the Portfolio have been described above in the Risk/Return Summary. The following supplements that description. Foreign Securities The Portfolio may purchase securities in any foreign country, developed or underdeveloped. There are substantial risks involved in investing in such securities. These risks include differences in accounting, auditing and financial reporting standards, generally higher commission rates on foreign portfolio transactions, the possibility of expropriation or confiscatory taxation, adverse changes in investment or exchange control regulations, political instability, and potential restrictions on the flow of international capital. The dividends payable on the Portfolio's foreign securities may be subject to foreign withholding taxes, thus reducing the income available for distribution to the Portfolio's shareholders. Foreign securities often trade with less frequency and volume than domestic securities and, therefore, may exhibit greater price volatility. Changes in foreign exchange rates will affect the value of those securities in the Portfolio which are denominated or quoted in currencies other than the U.S. dollar. In many countries there is less publicly available information about issuers than is available in reports about companies in the United States. These risks are often heightened for investments in developing or emerging markets. Developing countries may also impose restrictions on the Portfolio's ability to repatriate investment income or capital. Even without such restrictions, the mechanics of repatriation may affect certain aspects of the operations of the Portfolio. -5- Some of the currencies in emerging markets have been devalued relative to the U.S. dollar. In many cases these devaluations have been significant. Certain developing countries impose constraints on currency exchange. Governments of some developing countries exercise substantial influence over many aspects of the private sector. In some countries, the government owns or controls many companies, including the largest in the country. As such, government actions in the future could have a significant effect on economic conditions in developing countries in these regions, which in turn, could affect the value of the Portfolio's investments. Brokerage commissions, custodial services, and other costs relating to investment in foreign securities markets are generally more expensive than in the United States. Foreign securities markets have different clearance and settlement procedures, and in certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. Delays in settlement could prevent the Portfolio from investing the proceeds of the sale. Inability to dispose of portfolio securities due to settlement problems could expose the Portfolio to losses due either to subsequent declines in the value of the portfolio security or, if the security has been sold, to claims by the purchaser. In many emerging markets, there is less government supervision and regulation of business and industry practices, stock exchanges, brokers and listed companies than in the United States. The Portfolio may invest in foreign securities markets which are smaller, less liquid, and subject to greater price volatility than those in the United States. There are additional risk factors, including possible losses through the holding of securities in domestic and foreign custodian banks and depositories. European Currency Unification Many European countries have adopted a single European currency, the euro. On January 1, 1999, the euro became legal tender for all countries participating in the Economic and Monetary Union ("EMU"). A new European Central Bank has been created to manage the monetary policy of the new unified region. On the same date, the exchange rates were irrevocably fixed between the EMU member countries. National currencies will continue to circulate until they are replaced by euro coins and bank notes by the middle of 2002. This change is likely to significantly impact the European capital markets in which the Portfolio invests and may result in the Portfolio facing additional risks in pursuing its investment objective. These risks, which include, but are not limited to, volatility of currency exchange rates as a result of the conversion, uncertainty as to capital market reaction, conversion costs that may affect issuer profitability and creditworthiness, and lack of participation by some European countries, may increase the volatility of the Portfolio's net asset value per share. -6- Other Risks Selection of Investments The Advisor evaluates the rewards and risks presented by all securities purchased by the Portfolio and how they may advance the Portfolio's investment objective. It is possible, however, that these evaluations will prove to be inaccurate. Other Types of Investments This Prospectus describes the Portfolio's principal investment strategies, and the particular types of securities it may select for investment. The Portfolio may make other types of investments and pursue other investment strategies in support of its overall investment goal. These supplemental investment strategies--and the risks involved--are described in the Statement of Additional Information, which is referred to on the Back Cover of this Prospectus. PRICE OF PORTFOLIO SHARES The price of shares issued by the Portfolio is based on its net asset value ("NAV"). The NAV per share is determined as of the close of regular trading hours of the New York Stock Exchange, currently 4:00 p.m. (Eastern time), on each day that the Exchange is open for business. Marketable equity securities are priced at market value. Securities listed on a foreign exchange and unlisted foreign securities are valued at the latest quoted price available when assets are valued. If a subsequent occurrence is believed to have changed such value, however, the fair value of those securities may be determined through consideration of other factors by or under the direction of the Board of Directors of The Glenmede Fund, Inc. (the "Glenmede Fund"). These securities may trade on days when shares of the Portfolio are not priced; as a result, the NAV of shares of the Portfolio may change on days when you will not be able to purchase or redeem the Portfolio's shares. Foreign currency amounts are translated into U.S. dollars at the bid prices of such currencies against U.S. dollars last quoted by a major bank. The value of securities for which no quotations are readily available (including restricted securities) is determined in good faith at fair value using methods determined by the Board of Directors. PURCHASE OF SHARES Shares of the Portfolio are sold without a sales commission on a continuous basis to the Advisor acting on behalf of its clients ("Clients") and to other institutions, including brokers acting on behalf of their clients (the "Institutions"), at the NAV per share next determined after receipt, in proper order, of the purchase order by the Glenmede Fund's transfer agent. We consider orders to be in "proper order" when all required documents are properly completed, signed and received. The minimum initial investment is $25,000; the minimum for subsequent investments is $1,000. The Portfolio reserves the right to reduce or waive the minimum initial and subsequent investment requirements from time to time. Beneficial ownership of shares will be reflected on books maintained by the Advisor or the Institutions. If you wish to purchase shares in the Portfolio, you should contact the Advisor by telephone or facsimile or contact your Institution. -7- Your Institution may charge you for purchasing or selling shares of the Portfolio. There is no transaction charge for shares purchased directly from the Portfolio through the Advisor. Purchases of the Portfolio's shares will be made in full and fractional shares calculated to three decimal places. In the interest of economy and convenience, certificates for shares will not be issued except upon your written request. Certificates for fractional shares, however, will not be issued. REDEMPTION OF SHARES You may redeem shares of the Portfolio at any time, without cost, at the NAV per share next determined after the Glenmede Fund's transfer agent receives your redemption order. Generally, a properly signed written order is all that is required. If you wish to redeem your shares, contact the Advisor by telephone or facsimile or contact your Institution. You will ordinarily be paid redemption proceeds within one business day, but in no event more than seven days, after the transfer agent receives your order in proper form. The Portfolio may suspend the right of redemption or postpone the date of payment under any emergency circumstances as determined by the Securities and Exchange Commission (the "SEC"). Redemption proceeds are normally paid in cash, although the Glenmede Fund has the right to limit each shareholder to cash redemptions of $250,000 or 1% of the Portfolio's NAV, whichever is less, within a 90-day period. Any additional redemption proceeds would be made in readily marketable securities. ADDITIONAL INFORMATION ON THE PURCHASE AND REDEMPTION OF SHARES OF THE PORTFOLIO The Glenmede Fund may appoint one or more entities as its agent to receive purchase and redemption orders of shares of the Portfolio and cause these orders to be transmitted, on an aggregated basis, to the Glenmede Fund's transfer agent. In these instances, orders are effected at the NAV per share next determined after receipt of that order by the entity, if the order is actually received by the transfer agent not later than the next business morning. DIVIDENDS AND DISTRIBUTIONS The Portfolio normally distributes substantially all of its net investment income to shareholders in the form of a quarterly dividend. The Portfolio normally distributes any realized net capital gains at least once a year. -8- TAXES Federal Taxes The Portfolio contemplates declaring, as dividends each year, all or substantially all of its taxable income, including its net capital gain (the excess of long-term capital gain over short-term capital loss). Distributions attributable to the net capital gain of the Portfolio will be taxable to you as long-term capital gain, regardless of how long you have held your shares. Other Portfolio distributions will generally be taxable as ordinary income. You will be subject to income tax on Portfolio distributions regardless of whether they are paid in cash or reinvested in additional shares. You will be notified annually of the tax status of distributions to you. If you purchase shares just before a distribution, the purchase price will reflect the amount of the upcoming distribution, but you will be taxed on the entire amount of the distribution received, even though, as an economic matter, the distribution simply constitutes a return of capital. This is known as "buying into a dividend." You will recognize taxable gain or loss on a sale, exchange or redemption of your shares, including an exchange for shares of another Portfolio, based on the difference between your tax basis in the shares and the amount you receive for them. (To aid in computing your tax basis, you should retain your account statements for the periods during which you held shares.) Generally, this gain or loss will be long-term or short-term depending on whether your holding period for the shares exceeds 12 months, except that any loss realized on shares held for six months or less will be treated as a long-term capital loss to the extent of any long-term capital gain distributions that were received on the shares. The one major exception to these tax principles is that distributions on, and sales, exchanges and redemptions of, shares held in an IRA (or other tax-qualified plan) will not be currently taxable. It is expected that the Portfolio will be subject to foreign withholding taxes with respect to dividends or interest received from sources in foreign countries. If more than half of the Portfolio's assets in a given year consist of foreign securities, the Portfolio may make an election to treat a proportionate amount of such taxes as constituting a distribution to each shareholder, which would allow each shareholder either to credit such proportionate amount of taxes against U.S. Federal income tax liability or to take such amount as an itemized deduction. The Portfolio's dividends that are paid to its corporate shareholders and are attributable to qualifying dividends the Portfolio receives from U.S. domestic corporations may be eligible, in the hands of the corporate shareholders, for the corporate dividends-received deduction, subject to certain holding period requirements and debt financing limitations. -9- State and Local Taxes You may also be subject to state and local taxes on distributions and redemptions. State income taxes may not apply however, to the portions of the Portfolio's distributions, if any, that are attributable to interest on federal securities. The foregoing is only a summary of certain tax considerations under current law, which may be subject to change in the future. Shareholders who are nonresident aliens, foreign trusts or estates, or foreign corporations or partnerships, may be subject to different U.S. Federal income tax treatment. You should consult your tax adviser for further information regarding federal, state, local and/or foreign tax consequences relevant to your specific situation. MANAGEMENT OF THE PORTFOLIO Investment Advisor The Glenmede Trust Company with principal offices at One Liberty Place, 1650 Market Street, Suite 1200, Philadelphia, Pennsylvania 19103, serves as investment advisor to the Portfolio. The Advisor, a limited purpose trust company chartered in 1956, provides fiduciary and investment services to endowment funds, foundations, employee benefit plans and other institutions and individuals. The Advisor is a wholly-owned subsidiary of The Glenmede Corporation. At December 31, 1999, the Advisor had over $17 billion in assets in the accounts for which it serves in various capacities including as executor, trustee or investment advisor. Under an Investment Advisory Agreement with the Glenmede Fund, the Advisor, subject to the control and supervision of the Glenmede Fund's Board and in conformance with the stated investment objective and policies of the Portfolio, manages the investment and reinvestment of the Portfolio's assets. It is the responsibility of the Advisor to make investment decisions for the Portfolio and to place the Portfolio's purchase and sale orders. For the fiscal year ended October 31, 1999, the Advisor received a management fee from the Portfolio at the annual rate of .70% of the Portfolio's average daily net assets. Shareholders in the Portfolio who are customers of other Institutions may pay fees to those Institutions. Andrew B. Williams, Senior Vice President of the Advisor, has been primarily responsible for the management of the Portfolio since it commenced operations on November 3, 1997. Mr. Williams has been employed by the Advisor as a portfolio manager since May 1985. GENERAL INFORMATION If you have any questions regarding the Portfolio, contact the Glenmede Fund at the address or telephone number stated on the back cover page. -10- FINANCIAL HIGHLIGHTS The financial highlights table is intended to help you understand the Portfolio's financial performance since it commenced operations. Certain information reflects financial results for a single Portfolio share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Portfolio (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, whose report, along with the Portfolio's financial statements, are included in the Annual Report, which is available upon request. -11- Global Equity Portfolio (For a share outstanding throughout each period)
For the Period For the Year Ended November 3, 1997(1) October 31, through October 31, 1999 1998 ---------------- ---------------- Net Asset Value, Beginning of Period.................. $10.05 $10.00 Income from Investment Operations: Net Investment Income............................... 0.18 0.15 Net Gain on Securities (both realized and unrealized).................... 1.94 0.09 ------- ------- Total From Investment Operations...................... 2.12 0.24 ------- ------- Less Distributions: Dividends (from net investment income).............. (0.25) (0.12) Distributions (from capital gains).................. (0.49) (0.07) ------- ------- Total Distributions................................... (0.74) (0.19) ------- ------- Net Asset Value, End of Period........................ $11.43 $10.05 ======= ======= Total Return(2)....................................... 21.18% 2.29% ======= ======= Ratios/Supplemental Data: Net Assets, End of Period (in 000's)................ $30,040 $25,311 Ratio of Expenses to Average Net Assets............. 0.93% 0.88%(3) Ratio of Net Investment Income to................... 1.43% 1.43%(3) Average Net Assets.................................. 43% 48% Portfolio Turnover Rate.............................
- ------------------------ (1) Commencement of operations. (2) Total Return represents aggregate total return for the period indicated. (3) Annualized. -12- Where to find more information More Portfolio information is available to you upon request and without charge: Annual and Semi-Annual Report The Annual and Semi-Annual Reports provide additional information about the Portfolio's investments and performance. The Annual Report also contains a discussion of the market conditions and investment strategies that significantly affected the Portfolio's performance during the last fiscal year. Statement of Additional Information (SAI) The SAI includes additional information about the Portfolio's investment policies, organization and management. It is legally part of this prospectus (it is incorporated by reference). You can get free copies of the Portfolio's Annual Report, Semi-Annual Report or SAI. You may also request other information about the Portfolio, and make inquiries. Write to: The Glenmede Fund, Inc. One South Street Baltimore, MD 21202 By phone: 1-800-442-8299 Information about the Portfolio (including the Portfolio's SAI) can be reviewed and copied at the Securities and Exchange Commission's Public Reference Room in Washington, DC. Information about the operation of the Public Reference Room may be obtained by calling the SEC at 1-202-942-8090. Reports and other information about the Portfolio are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov. Copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the Public Reference Section of the SEC, Washington, DC 20549-0102. Glenmede Fund, Inc.'s Investment Company Act File No. is 811-5577 -13- THE GLENMEDE FUND, INC. Prospectus February 28, 2000 Emerging Markets Portfolio Investment Advisor The Glenmede Trust Company Investment Sub-Advisor Pictet International Management Limited The Securities and Exchange Commission has not approved or disapproved the Portfolio's securities or determined if this prospectus is accurate or complete. It is a criminal offense to state otherwise. TABLE OF CONTENTS RISK/RETURN SUMMARY............................................................. INVESTMENTS..................................................................... PRICE OF PORTFOLIO SHARES....................................................... PURCHASE OF SHARES.............................................................. REDEMPTION OF SHARES............................................................ ADDITIONAL INFORMATION ON THE PURCHASE AND REDEMPTION OF SHARES OF THE PORTFOLIO....................................................... DIVIDENDS AND DISTRIBUTIONS..................................................... TAXES........................................................................... MANAGEMENT OF THE PORTFOLIO..................................................... GENERAL INFORMATION............................................................. FINANCIAL HIGHLIGHTS............................................................ RISK/RETURN SUMMARY ---------------------------------------- Important Concepts Emerging market countries are those considered to be developing or emerging by the World Bank and the International Finance Corporation, and countries that are classified by the United Nations or otherwise regarded by their authorities as developing. Emerging market equity securities are: o equity securities of companies with principal securities trading markets located in an emerging market country; o equity securities, traded in any market, of companies that derive 50% or more of their total revenue from goods or services produced, or sales made, in emerging market countries; and o equity securities of companies organized under the laws of, and with a principal office in, an emerging market country. Total return consists of net income (dividend and interest income from portfolio securities less expenses of the Portfolio) and capital gains and losses, both realized and unrealized, from portfolio securities. ---------------------------------------- Investment Objective Long-term growth of capital Principal Investment Strategies The Portfolio invests primarily in equity securities, such as common stocks, preferred stocks and depositary receipts, of foreign issuers in emerging markets that the Sub-Advisor believes are undervalued. Stocks appear to the Sub-Advisor to be undervalued by the stock market when the Sub-Advisor believes the stock price becomes inexpensive relative to the company's estimated earnings and/or dividend-paying ability over the long-term. The Sub-Advisor selects securities to buy and sell by financial analysis of companies, considering factors such as cash generation, liquidity, asset valuations, debt level and cash flow compared to stock price, in emerging markets that satisfy the -2- Sub-Advisor's custodial and economic criteria. Principal Risks of Stocks may decline over short or even Investing extended periods of time. Equity markets tend to be cyclical: there are times when stock prices generally increase, and other times when they generally decrease. Therefore, you could lose money by investing in the Portfolio. Although the Portfolio invests in stocks the Sub-Advisor believes to be undervalued, there is no guarantee that the prices of these stocks will not move even lower. The Portfolio is subject to additional risks due to the nature of its foreign investments. Foreign stocks involve special risks not typically associated with U.S. stocks. The stocks held by the Portfolio may underperform other types of stocks, and they may not increase or may decline in value. These risks are heightened in the case of developing countries. The Portfolio may also enter into foreign currency exchange contracts to hedge the currency risk of portfolio securities denominated in a foreign currency. Foreign investments may be riskier than U.S. investments because of factors such as foreign government restrictions, changes in currency exchange rates, incomplete financial information about the issuers of securities, and political or economic instability. Foreign stocks may be more volatile and less liquid than U.S. stocks. The risks associated with foreign investments are heightened when investing in emerging markets. The governments and economies of emerging market countries feature greater instability than those of more developed countries. Such investments tend to fluctuate in price more widely and to be less liquid than other foreign investments. The strategy that the Sub-Advisor uses may fail to produce the intended result. -3- An investment in the portfolio is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Who may want to The Portfolio may be appropriate for you invest in the Portfolio if you want your capital to grow over the long term, are investing for goals several years away, and are comfortable with the risks of investing in equity securities of companies in developing countries. The Portfolio would NOT be appropriate for you if you are investing for short-term goals, or are mainly seeking current income. Bar Chart and The bar chart and table below show the Performance Table Portfolio's annual total returns, its long-term performance and provide some indication of the risks of investing in the Portfolio. The bar chart shows how the performance of the Portfolio has varied from year to year. The table shows how the Portfolio's average annual total returns for one and five years, and the life of the Portfolio compare to those of selected market indices. The bar chart and performance table assume reinvestment of dividends and distributions. The Portfolio's past performance does not necessarily indicate how it will perform in the future. Emerging Markets Portfolio 1995 -9.20% 1996 12.61% 1997 -9.95% 1998 -25.78% 1999 70.10% During the periods shown in the bar chart, the highest quarterly return was 38.53% (for the quarter ended June 30, 1999) and the lowest quarterly return was -26.33% (for the quarter ended June 30, 1998). -4-
The Portfolio's Average Annual Total Returns for the Periods Ended December 31, 1999 - --------------------------------------------------- --------------------------------------------------------------------- o The Morgan Stanley Emerging Markets Free Since Index is an unmanaged measure of the Past 1 Past 5 December 14, performance of the major emerging economies Year Years 1994 with sizable and active equity markets in Asia, --------------------------------------------------------------------- Latin America, the Middle East, Africa, and Europe. Emerging Markets Portfolio 70.10% 3.06% 2.82% o The International Financial Corporation Composite Index is an unmanaged measure of --------------------------------------------------------------------- the performance of stock markets in countries Morgan Stanley Emerging with developing economies, especially those Markets Free Index 66.41% 2.00% 0.77% meeting World Bank classifications of low- income and middle-income, but may include --------------------------------------------------------------------- high-income economies where the stock market International Financial is likely to be developing for some time. Corporation Composite Index 62.70% 0.75% 0.14% o The Lipper Emerging Markets Fund Index is comprised of the 30 largest funds in the Lipper --------------------------------------------------------------------- Emerging Markets Fund Average. The Lipper Emerging Markets Average consists of funds that seek long-term Fund Index 68.96% 3.02% 2.03% capital appreciation by investing at least 65% of their assets in emerging market equity --------------------------------------------------------------------- securities. - ---------------------------------------------------
-5-
Fees and Expenses of the Portfolio This table describes the fees and expenses that you may pay if you buy and hold shares of the Portfolio. --------------------------------------------------------- Emerging Markets Portfolio --------------------------------------------------------- Shareholder Fees (fees paid directly from your investment). --------------------------------------------------------- Maximum Account Fee (annual percentage of assets under management)* 1.00%** --------------------------------------------------------- Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets) --------------------------------------------------------- Management Fees......................... 1.25% --------------------------------------------------------- Other Expenses.......................... .50% ---- --------------------------------------------------------- --------------------------------------------------------- Total Annual Portfolio Operating Expenses ............................... 1.75% ----- ---------------------------------------------------------
* Investors in the Portfolio may be clients of the Advisor or its affiliated companies ("Affiliates"). The "Maximum Account Fee" in the above table is the current maximum annual fee that the Advisor or an Affiliate would charge its clients directly for fiduciary, trust and/or advisory services (e.g., personal trust, estate, advisory, tax and custodian services). The actual annual fees ("Client Fees") charged by the Advisor and Affiliates for such services vary depending on a number of factors, including the particular services provided to the client, but are generally lower than 1% of the client's assets under management. Investors also may have to pay various fees to others to become shareholders of the Portfolio. See "Purchase of Shares." ** The Advisor and Affiliates currently intend to exclude the portion of their clients' assets invested in the Portfolio when calculating Client Fees. Example This Example is intended to help you compare the cost of investing in the Portfolio with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Portfolio for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Portfolio's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: -6-
1 Year 3 Years 5 Years 10 Years ------ ------- ------- -------- Emerging Markets Portfolio.............................. $178 $551 $949 $2,062
-7- INVESTMENTS Objective and Principal Strategies To help you decide whether the Portfolio is appropriate for you, this section looks more closely at the Portfolio's investment objective and policies. You should carefully consider your own investment goals time horizon and risk tolerance before investing in the Portfolio. The Portfolio's investment objective may be changed by the Board members without shareholder approval. The objective of the Portfolio is to provide long-term growth of capital. The Portfolio attempts to achieve this objective by normally investing at least 65% of its total assets in emerging market equity securities. Emerging market countries tend to be located in Africa, Asia, Eastern Europe, the Middle East and Latin America. They include South Africa, Turkey, India, Indonesia, Brazil, Malaysia, China, Taiwan, South Korea and Mexico. The equity securities in which the Portfolio invests may include common stock, preferred stock, and sponsored or unsponsored American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs") and Global Depositary Receipts ("GDRs"). Determinations as to eligibility will be made by the Portfolio's sub-advisor, Pictet International Management Limited (the "Sub-Advisor"), based on publicly available information and inquiries made to the companies. The Portfolio will at all times, except during defensive periods, maintain investments in at least three emerging market countries. The Sub-Advisor will limit holdings in any one country to no more than 25% of the Portfolio's total assets. The Sub-Advisor may use various methods of selecting securities to buy and sell for the Portfolio that the Sub-Advisor believes are undervalued, and may rely on independent or affiliated sources of information and ideas in connection with management of the Portfolio. The Sub-Advisor's philosophy focuses on stock selection and significantly diversifying the Portfolio's investments. The Sub-Advisor also uses its own data base which screens emerging markets for stocks that meet the Sub-Advisor's investment criteria. The Sub-Advisor selects securities to buy and sell by financial analysis of companies in emerging markets, considering factors such as cash generation, liquidity, asset valuations, debt level and cash flow compared to stock price. Generally, in order for a country to be included by the Sub-Advisor as a permissible emerging market investment, it must satisfy certain criteria, including: o the country must meet certain custodial criteria, such as security of assets and international experience; and o the country must satisfy certain specific cyclical criteria, including liquidity conditions, industrial production capacity constraints, direction of real interest rates and the valuation of the market. The Portfolio may, from time to time, take temporary defensive positions that are inconsistent with its principal investment strategies in response to adverse market, economic, political, or other conditions. Such -8- investments may include various short-term money market instruments including, for example, U.S. or foreign government obligations, certificates of deposit, bankers acceptances and repurchase agreements. A defensive position, taken at the wrong time, would have an adverse impact on the Portfolio's performance. To the extent the Portfolio employs a temporary defensive investment strategy, it may not achieve its investment objective. The Portfolio may actively trade portfolio securities to achieve its principal investment strategies. A high rate of portfolio turnover involves correspondingly high brokerage commission expenses and other transaction costs, which may adversely affect the Portfolio's performance. High portfolio turnover may also result in the realization of short-term capital gains. Distributions derived from such gains will be treated as ordinary income for federal income tax purposes. Risks of Foreign Investments The risks of investing in the Portfolio have been described above in the Risk/Return Summary. The following supplements that description. Foreign Securities The Portfolio may purchase securities in any foreign country, developed or underdeveloped. There are substantial risks involved in investing in such securities. These risks include differences in accounting, auditing and financial reporting standards, generally higher commission rates on foreign portfolio transactions, the possibility of expropriation or confiscatory taxation, adverse changes in investment or exchange control regulations, political instability, and potential restrictions on the flow of international capital. The dividends payable on the Portfolio's foreign securities may be subject to foreign withholding taxes, thus reducing the income available for distribution to the Portfolio's shareholders. Foreign securities often trade with less frequency and volume than domestic securities and, therefore, may exhibit greater price volatility. Changes in foreign exchange rates will affect the value of those securities in the Portfolio which are denominated or quoted in currencies other than the U.S. dollar. In many countries there is less publicly available information about issuers than is available in reports about companies in the United States. These risks are often heightened for investments in developing or emerging markets. Developing countries may also impose restrictions on the Portfolio's ability to repatriate investment income or capital. Even without such restrictions, the mechanics of repatriation may affect certain aspects of the operations of the Portfolio. Some of the currencies in emerging markets have been devalued relative to the U.S. dollar. In many cases these devaluations have been significant. Certain developing countries impose constraints on currency exchange. Governments of some developing countries exercise substantial influence over many aspects of the private sector. In some countries, the government owns or controls many companies, including the largest in the country. As such, government actions in the future could have a significant effect on economic conditions in developing countries in these regions, which, in turn, could affect the value of the Portfolio's investments. -9- Brokerage commissions, custodial services, and other costs relating to investment in foreign securities markets are generally more expensive than in the United States. Foreign securities markets have different clearance and settlement procedures, and in certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. Delays in settlement could prevent the Portfolio from investing the proceeds of the sale. Inability to dispose of portfolio securities due to settlement problems could expose the Portfolio to losses due either to subsequent declines in value of the portfolio security or, if the security has been sold, to claims by the purchaser. In many emerging markets, there is less government supervision and regulation of business and industry practices, stock exchanges, brokers and listed companies than in the United States. The Portfolio may invest in foreign securities markets which are smaller, less liquid, and subject to greater price volatility than those in the United States. There are additional risk factors, including possible losses through the holding of securities in domestic and foreign custodian banks and depositories. Other Risks Selection of Investments The Sub-Advisor evaluates the rewards and risks presented by all securities purchased by the Portfolio and how they may advance the Portfolio's investment objective. It is possible, however, that these evaluations will prove to be inaccurate. Other Types of Investments This Prospectus describes the Portfolio's principal investment strategies, and the particular types of securities it may select for investment. The Portfolio may make other types of investments and pursue other investment strategies in support of its overall investment goal. These supplemental investment strategies--and the risks involved--are described in the Statement of Additional Information, which is referred to on the Back Cover of this Prospectus. PRICE OF PORTFOLIO SHARES The price of shares issued by the Portfolio is based on its net asset value ("NAV"). The Portfolio's NAV per share is determined as of the close of regular trading hours of the New York Stock Exchange, currently 4:00 p.m. (Eastern time), on each day that the Exchange is open for business. Marketable equity securities are priced at market value. Securities listed on a foreign exchange and unlisted foreign securities are valued at the latest quoted sales price available when assets are valued. If a subsequent occurrence is believed to have changed such value, however, the fair value of those securities may be determined through consideration of other factors by or under the direction of the Board of Directors of The Glenmede Fund, Inc. (the "Glenmede Fund"). These securities may trade on days when shares of the Portfolio are not priced; as a result, the NAV of shares of the Portfolio may change on days when you will not be able to purchase or redeem the Portfolio's shares. Foreign currency amounts are translated into U.S. dollars at the bid -10- prices of such currencies against U.S. dollars last quoted by a major bank. The value of securities for which no quotations are readily available (including restricted securities) is determined in good faith at fair value using methods determined by the Board of Directors. PURCHASE OF SHARES Shares of the Portfolio are sold without a sales commission on a continuous basis to the Advisor acting on behalf of its clients ("Clients") and to other institutions, including brokers acting on behalf of their clients (the "Institutions"), at the NAV per share next determined after receipt, in proper order, of the purchase order by the Glenmede Fund's transfer agent. We consider orders to be in "proper order" when all required documents are properly completed, signed and received. The minimum initial investment is $25,000; the minimum for subsequent investments is $1,000. The Portfolio reserves the right to reduce or waive the minimum initial and subsequent investment requirements from time to time. Beneficial ownership of shares will be reflected on books maintained by the Advisor or the Institutions. If you wish to purchase shares in the Portfolio, you should contact the Advisor by telephone or facsimile or contact your Institution. Your Institution may charge you for purchasing or selling shares of the Portfolio. There is no transaction charge for shares purchased directly from the Portfolio through the Advisor. Purchases of the Portfolio's shares will be made in full and fractional shares calculated to three decimal places. In the interest of economy and convenience, certificates for shares will not be issued except upon your written request. Certificates for fractional shares, however, will not be issued. REDEMPTION OF SHARES You may redeem shares of the Portfolio at any time, without cost, at the NAV per share of the Portfolio next determined after the Glenmede Fund's transfer agent receives your redemption order. Generally, a properly signed written order is all that is required. If you wish to redeem your shares, contact the Advisor by telephone or facsimilie or contact your Institution. You will ordinarily be paid your redemption proceeds within one business day, but in no event more than seven days, after the transfer agent receives your order in proper form. The Portfolio may suspend the right of redemption or postpone the date of payment under any emergency circumstances as determined by the Securities and Exchange Commission (the "SEC"). Redemption proceeds are normally paid in cash, although the Glenmede Fund has the right to limit each shareholder to cash redemptions of $250,000 or 1% of the Portfolio's NAV, whichever is less, within a 90-day period. Any additional redemption proceeds would be made in readily marketable securities. -11- ADDITIONAL INFORMATION ON THE PURCHASE AND REDEMPTION OF SHARES OF THE PORTFOLIO The Glenmede Fund may in its sole discretion appoint one or more entities as its agent to receive purchase and redemption orders of shares of the Portfolio and cause these orders to be transmitted, on an aggregated basis, to the Glenmede Fund's transfer agent. In these instances, orders are effected at the net asset value per share next determined after receipt of that order by the entity, if the order is actually received by the transfer agent not later than the next business morning. DIVIDENDS AND DISTRIBUTIONS The Portfolio normally distributes substantially all of its net investment income to shareholders in the form of a quarterly dividend. The Portfolio normally distributes any realized net capital gains at least once a year. TAXES Federal Taxes The Portfolio contemplates declaring, as dividends each year, all or substantially all of its taxable income, including its net capital gain (the excess of long-term capital gain over short-term capital loss). Distributions attributable to the net capital gain of the Portfolio will be taxable to you as long-term capital gain, regardless of how long you have held your shares. Other Portfolio distributions will generally be taxable as ordinary income. You will be subject to income tax on Portfolio distributions regardless of whether they are paid in cash or reinvested in additional shares. You will be notified annually of the tax status of distributions to you. If you purchase shares just before a distribution, the purchase price will reflect the amount of the upcoming distribution, but you will be taxed on the entire amount of the distribution received, even though, as an economic matter, the distribution simply constitutes a return of capital. This is known as "buying into a dividend." You will recognize taxable gain or loss on a sale, exchange or redemption of your shares, including an exchange for shares of another Portfolio, based on the difference between your tax basis in the shares and the amount you receive for them. (To aid in computing your tax basis, you should retain your account statements for the periods during which you held shares.) Generally, this gain or loss will be long-term or short-term depending on whether your holding period for the shares exceeds 12 months, except that any loss realized on shares held for six months or less will be treated as a long-term capital loss to the extent of any long-term capital gain distributions that were received on the shares. -12- The one major exception to these tax principles is that distributions on, and sales, exchanges and redemptions of, shares held in an IRA (or other tax-qualified plan) will not be currently taxable. It is expected that the Portfolio will be subject to foreign withholding taxes with respect to dividends or interest received from sources in foreign countries. The Portfolio may make an election to treat a proportionate amount of such taxes as constituting a distribution to each shareholder, which would allow each shareholder either to credit such proportionate amount of taxes against U.S. Federal income tax liability or to take such amount as an itemized deduction. The Portfolio's dividends that are paid to its corporate shareholders and are attributable to qualifying dividends the Portfolio receives from U.S. domestic corporations may be eligible, in the hands of the corporate shareholders, for the corporate dividends-received deduction, subject to certain holding period requirements and debt financing limitations. State and Local Taxes You may also be subject to state and local taxes on distributions and redemptions. State income taxes may not apply however, to the portions of the Portfolio's distributions, if any, that are attributable to interest on federal securities. The foregoing is only a summary of certain tax considerations under current law, which may be subject to change in the future. Shareholders who are nonresident aliens, foreign trusts or estates, or foreign corporations or partnerships, may be subject to different U.S. Federal income tax treatment. You should consult your tax adviser for further information regarding federal, state, local and/or foreign tax consequences relevant to your specific situation. -13- MANAGEMENT OF THE PORTFOLIO Investment Advisor and Sub-Advisor The Glenmede Trust Company with principal offices at One Liberty Place, 1650 Market Street, Suite 1200, Philadelphia, Pennsylvania 19103, serves as investment advisor to the Portfolio. The Advisor, a limited purpose trust company chartered in 1956, provides fiduciary and investment services to endowment funds, foundations, employee benefit plans and other institutions and individuals. The Advisor is a wholly-owned subsidiary of The Glenmede Corporation. At December 31, 1999, the Advisor had over $17 billion in assets in the accounts for which it serves in various capacities including as executor, trustee or investment advisor. Under an Investment Advisory Agreement with the Glenmede Fund, the Advisor, subject to the control and supervision of the Glenmede Fund's Board and in conformance with the stated investment objective and policies of the Portfolio, has agreed to manage the investment and reinvestment of the Portfolio assets, make investment decisions for the Portfolio and place the Portfolio's purchase and sale orders. Pursuant to that Agreement, the Advisor also may select a person to act as sub-advisor. The Advisor and the Glenmede Fund, on behalf of the Emerging Markets Portfolio, have entered into a sub-investment advisory agreement with Pictet International Management Limited, located at Cutlers Gardens, 5 Devonshire Square, London, United Kingdom EC2M 4WB. The Sub-Advisor, subject to the control and supervision of the Glenmede Fund's Board and in conformance with the stated investment objective and policies of the Portfolio, performs sub-advisory and portfolio transaction services for the Portfolio, including managing the Portfolio's holdings in accordance with the Portfolio's investment objective and policies, making investment decisions concerning foreign investments for the Portfolio, placing purchase and sale orders for portfolio transactions and employing professional portfolio managers and security analysts who provide research services to the Portfolio. The Sub-Advisor is an affiliate of Pictet & Cie (the "Bank"), a Swiss private bank, which was founded in 1805. As of December 31, 1999, the Bank managed in excess of $77 billion for institutional and private clients. The Bank is owned by eight partners. The Sub-Advisor was established in 1980 to manage the investment needs of clients seeking to invest in the international fixed revenue and equity markets. For the fiscal year ended October 31, 1999, the Advisor and Sub-Advisor received management fees from the Portfolio at the annual rate of .75% and .50%, respectively, of the Portfolio's average daily net assets. Shareholders in the Glenmede Fund who are clients of the Advisor, or an Affiliate, pay fees which vary, depending on the capacity in which the Advisor or its Affiliate provides fiduciary and investment services to the particular client (e.g., personal trust, estate settlement, advisory and custodian services). Shareholders in the Portfolio who are customers of other Institutions may pay fees to those Institutions. Douglas Polunin, Senior Investment Manager at the Sub-Advisor, is a co-portfolio manager for the Portfolio. Mr. Polunin has been employed by the Sub-Advisor as a portfolio manager since January 1989. -14- Paul Parsons, Senior Investment Manager at the Sub-Advisor, is a co-portfolio manager for the Portfolio. Mr. Parsons has been employed by the Sub-Advisor as a portfolio manager since January 1995. Prior to joining the Sub-Advisor, Mr. Parsons was employed by Invesco MIM since 1987 as a market analyst and a specialist in Asian fund management. GENERAL INFORMATION If you have any questions regarding the Portfolio, contact the Glenmede Fund at the address or telephone number stated on the back cover page. -15- FINANCIAL HIGHLIGHTS The financial highlights table is intended to help you understand the Portfolio's financial performance for the past 5 years. Certain information reflects financial results for a single Portfolio share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Portfolio (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, whose report, along with the Portfolio's financial statements, are included in the Annual Report, which is available upon request. Emerging Markets Portfolio (For a share outstanding throughout each period)
Year Ended October 31, ------------------------------------------------------------------------- For the Period December 14, 1994(1) through October 31, 1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- Net Asset Value, Beginning of Period............... $ 5.87 $ 9.05 $ 9.52 $ 9.73 $ 10.00 ------- -------- ------- ------- ------- Income from Investment Operations: Net Investment Income .......................... (0.01) 0.02 0.03 0.06 0.16 Net Gain/(Loss) on Securities (both realized and unrealized).................. 2.43 (3.20) 0.09 (0.16) (0.31) ------- -------- ------- ------- ------- Total From Investment Operations................ 2.42 (3.18) 0.12 (0.10) (0.15) ------- -------- ------- ------- ------- Less Distributions: Dividends (from net investment income).......... - - (0.02) (0.08) (0.12) Distributions (from capital gains).............. - - (0.57) (0.03) - ------- -------- ------- ------- ------- Total Distributions............................. - - (0.59) (0.11) (0.12) ------- -------- ------- ------- ------- Net Asset Value, End of Period..................... $8.29 $ 5.87 $ 9.05 $ 9.52 $ 9.73 ======= ======== ======= ======= ======= Total Return(2).................................... 41.23% (35.14)% 1.01% (0.96)% (1.96)% ======= ======== ======= ======= ======= Ratios/Supplemental Data: Net Assets, End of Period (in 000's)............ $73,174 $55,789 $95,012 $86,385 $ 27,297 Ratio of Expenses to Average Net Assets......... 1.75% 1.85% 1.73% 1.76% 1.81%(3) Ratio of Net Investment Income to Average Net Assets.......................................... (0.16)% 0.26% 0.29% 0.80% 1.87%(3) Portfolio Turnover Rate......................... 134% 113% 94% 44% 50%
- ----------------- (1) Commencement of operations. (2) Total return represents aggregate total return for the period indicated. (3) Annualized. -16- Where to find more information More Portfolio information is available to you upon request and without charge: Annual and Semi-Annual Report The Annual and Semi-Annual Reports provide additional information about the Portfolio's investments and performance. The Annual Report also contains a discussion of the market conditions and investment strategies that significantly affected the Portfolio's performance during the last fiscal year. Statement of Additional Information (SAI) The SAI includes additional information about the Portfolio's investment policies, organization and management. It is legally part of this prospectus (it is incorporated by reference). You can get free copies of the Portfolio's Annual Report, Semi-Annual Report or SAI. You may also request other information about the Portfolio, and make inquiries. Write to: The Glenmede Fund, Inc. One South Street Baltimore, MD 21202 By phone: 1-800-442-8299 Information about the Portfolio (including the Portfolio's SAI) can be reviewed and copied at the Securities and Exchange Commission's Public Reference Room in Washington, DC. Information about the operation of the Public Reference Room may be obtained by calling the SEC at 1-202-942-8090. Reports and other information about the Portfolio are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov. Copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov or by writing the Public Reference Section of the SEC, Washington, DC 20549-0102. The Glenmede Fund, Inc.'s Investment Company Act File No. is 811-5577 -17- THE GLENMEDE FUND, INC. THE GLENMEDE PORTFOLIOS (800) 442-8299 STATEMENT OF ADDITIONAL INFORMATION February 28, 2000 This Statement of Additional Information is not a prospectus but should be read in conjunction with The Glenmede Fund, Inc.'s ("Glenmede Fund") and The Glenmede Portfolios' ("Glenmede Portfolios" and, collectively with the Glenmede Fund, the "Funds") Prospectuses dated February 28, 2000, as amended or supplemented from time to time (the "Prospectuses"). No investment in shares of a Portfolio should be made without first reading the Prospectus of the Portfolio. This Statement of Additional Information is for the Government Cash, Tax-Exempt Cash, Core Fixed Income, International, Strategic Equity, Small Capitalization Value (Advisor Shares and Institutional Shares), Large Cap Value, Core Value, Small Capitalization Growth, Muni Intermediate, New Jersey Muni, Institutional International, Emerging Markets and Global Equity Portfolios. This Statement of Additional Information is incorporated by reference in its entirety into each Prospectus. The Funds' audited financial statements and financial highlights appearing in the 1999 Annual Report to Shareholders are incorporated by reference into this Statement of Additional Information. A copy of the Funds' Prospectuses and Annual Report are available without charge, upon request, by calling the Funds at the above telephone number. Capitalized terms used in this Statement of Additional Information and not otherwise defined have the same meanings given to them in the Funds' Prospectuses. Table of Contents Page THE FUNDS......................................................................1 INVESTMENT STRATEGIES..........................................................1 COMMON INVESTMENT POLICIES AND RISKS..........................................11 PRICE OF PORTFOLIO SHARES.....................................................17 PURCHASE OF SHARES............................................................19 REDEMPTION OF SHARES..........................................................20 SHAREHOLDER SERVICES..........................................................20 PORTFOLIO TURNOVER............................................................20 INVESTMENT LIMITATIONS........................................................20 MANAGEMENT OF THE FUNDS.......................................................23 INVESTMENT ADVISORY AND OTHER SERVICES........................................25 PORTFOLIO TRANSACTIONS........................................................31 ADDITIONAL INFORMATION CONCERNING TAXES.......................................33 PERFORMANCE CALCULATIONS......................................................42 GENERAL INFORMATION...........................................................48 FINANCIAL STATEMENTS..........................................................49 OTHER INFORMATION.............................................................49 APPENDIX -- DESCRIPTION OF SECURITIES AND RATINGS............................A-1 THE FUNDS The Glenmede Fund was organized as a Maryland corporation on June 30, 1988. The Glenmede Fund's Articles of Incorporation authorize its Board of Directors to issue 2,500,000,000 shares of common stock, with a $.001 par value. The Board has the power to subdivide these shares into one or more investment portfolios ("Portfolios") from time to time. The Board also has the power to designate separate classes of shares within the same Portfolio. Currently, the Glenmede Fund is offering shares of the following twelve Portfolios: International Portfolio, Large Cap Value Portfolio, Small Capitalization Value Portfolio (Advisor Shares and Institutional Shares), Strategic Equity Portfolio, Core Value Portfolio, Small Capitalization Growth Portfolio, Government Cash Portfolio, Tax-Exempt Cash Portfolio, Core Fixed Income Portfolio, Emerging Markets Portfolio, Global Equity Portfolio and Institutional International Portfolio. The Glenmede Portfolios was organized as a Massachusetts business trust on March 3, 1992. The Glenmede Portfolios' Master Trust Agreement authorizes its Board of Trustees to issue an unlimited number of shares of beneficial interest with a $.001 par value. The Board has the power to subdivide these shares into one or more investment portfolios (Sub-Trusts). Currently, the Glenmede Portfolios is offering shares of two Sub-Trusts, the Muni Intermediate and New Jersey Muni Portfolios. Each Fund is an open-end, management investment company. The International, Large Cap Value, Small Capitalization Value, Strategic Equity, Core Value, Small Capitalization Growth, Core Fixed Income, Government Cash, Tax-Exempt Cash, Institutional International, Emerging Markets and Global Equity Portfolios are diversified Portfolios of the Glenmede Fund. The Muni Intermediate and New Jersey Muni Portfolios are non-diversified Portfolios of the Glenmede Portfolios. On February 27, 1997, the Model Equity Portfolio changed its name to the Large Cap Value Portfolio. On September 25, 1997, the Intermediate Government Portfolio changed its name to the Core Fixed Income Portfolio. On February 28, 2000, the Small Capitalization Equity Portfolio (Advisor and Institutional Shares) changed its name to the Small Capitalization Value Portfolio (Advisor and Institutional Shares). On August 20, 1998, the Equity Portfolio changed its name to the Tax Managed Equity Portfolio, and then on February 28, 2000, it changed its name to the Strategic Equity Portfolio. References in this Statement of Additional Information are to a Portfolio's current name. On March 1, 1991 the Small Capitalization Value Portfolio commenced operations offering a single class of shares. On January 1, 1998, the Small Capitalization Value Portfolio began to offer a second class of shares known as "Institutional Shares." The original class of shares has been designated as "Advisor Shares." Historical information concerning expenses and performance prior to January 1, 1998 is that of the Advisor Shares. INVESTMENT STRATEGIES The following investment strategies supplement those set forth in the Funds' Prospectuses. Unless specified below and except as described under "Investment Limitations," the following investment strategies are not fundamental and a particular Fund's Board may change such strategies without shareholder approval. -1- Government Cash Portfolio During normal market conditions, the Portfolio will invest at least 65% of its total assets in short-term U.S. dollar denominated money market instruments issued by the U.S. Treasury, U.S. Government agencies, or other agencies, enterprises or instrumentalities sponsored by the U.S. Government, and repurchase agreements secured by such instruments. The Portfolio may invest in the following Eligible Securities: (i) straight-debt and mortgage-backed obligations issued by the U.S. Government or its sponsored agencies, enterprises or instrumentalities; (ii) securities of international institutions (e.g., Asian Development Bank, Export-Import Bank, Inter American Development Bank, International Bank for Reconstruction and Development, Government Trust Certificates, Private Export Funding Corp. and Agency for International Development) which are not direct obligations of the U.S. Government but which involve governmental agencies, instrumentalities or enterprises (such investments will represent no more than 25% of the Portfolio's total assets); and (iii) any publicly or privately placed, unrated securities issued by the U.S. Government, its agencies, enterprises or instrumentalities, including floating and variable rate securities, which, in the Advisor's opinion, are equivalent in credit quality to securities rated AAA by Standard & Poor's Ratings Group ("S&P") or Aaa by Moody's Investors Service, Inc. ("Moody's"). Additionally, the Portfolio may enter into reverse repurchase agreements. Tax-Exempt Cash Portfolio Municipal obligations in which the Portfolio may invest include the following Eligible Securities: project notes, demand notes, short-term municipal obligations (including tax anticipation notes, revenue anticipation notes, bond anticipation notes, tax and revenue anticipation notes, construction loan notes, and short-term discount notes) rated SP-1+ or SP-1 by S&P or MIG-1 by Moody's; tax-exempt commercial paper rated A-1+ or A-1 by S&P or Prime-1 by Moody's; municipal bonds with a remaining effective maturity of 13 months or less, rated AA or better by S&P or Aa or better by Moody's; variable rate demand notes rated "VMIG-1" by Moody's; and any non-rated tax-exempt, privately placed securities which, in the Advisor's opinion, are equivalent in credit quality to an AA or Aa-rated security as determined by S&P or Moody's, respectively. The two principal classifications of municipal obligations are "general obligation" securities and "revenue" securities. General obligation securities are secured by the issuer's pledge of its full faith, credit and taxing power for the payment of principal and interest. Revenue securities are payable only from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special or specific excise tax or other specific revenue source such as the user of the facility being financed. Revenue securities include private activity bonds which are not payable from the unrestricted revenues of the issuer. Consequently, the credit quality of private activity bonds is usually directly related to the credit standing of the corporate user of the facility involved. Municipal obligations may also include "moral obligation" bonds, which are normally issued by special purpose public authorities. If the issuer of moral obligation bonds is unable to meet its debt service obligations from current revenues, it may draw on a reserve fund, the restoration of which is a moral commitment but not a legal obligation of the state or municipality which created the issuer. The municipal obligations in which the Portfolio invests may include variable rate demand notes. Such notes are frequently not rated by credit rating agencies, but unrated notes will be purchased by the Portfolio if they are -2- comparable in quality at the time of the purchase to rated Eligible Securities as determined by the Advisor. Where necessary to ensure that a note is an Eligible Security, the Portfolio will require that the issuer's obligation to pay the principal of the note be backed by an unconditional bank letter or line of credit, guarantee or commitment to lend. While there may be no active secondary market with respect to a particular variable rate demand note purchased by the Portfolio, the Portfolio may, upon the notice specified in the note, demand payment of the principal of the note at any time or during specified periods not exceeding 13 months, depending upon the instrument involved. The absence of such an active secondary market, however, could make it difficult for the Portfolio to dispose of a variable rate demand note if the issuer defaulted on its payment obligation or during the periods that the Portfolio is not entitled to exercise its demand rights. The Portfolio could, for this or other reasons, suffer a loss to the extent of the default. The Portfolio invests in variable rate demand notes only when the Advisor deems the investment to involve minimal credit risk. The Advisor also monitors the continuing creditworthiness of issuers of such notes and parties providing credit enhancement to determine whether the Portfolio should continue to hold the notes. Core Fixed Income Portfolio The Portfolio may invest in the following securities: (i) straight-debt and mortgage-backed obligations issued by the U.S. Government or its sponsored agencies, enterprises or instrumentalities; (ii) securities of international institutions which are not direct obligations of the U.S. Government but which involve governmental agencies, enterprises or instrumentalities; (iii) any other publicly or privately placed, unrated securities issued by the U.S. Government, its agencies, enterprises or instrumentalities, which, in the Advisor's opinion, are equivalent in credit quality to securities rated at least A by S&P or Moody's; (iv) mortgage-backed and asset-backed obligations which are privately issued with a rating of at least A by S&P or Moody's or which if unrated, are in the Advisor's opinion equivalent in credit quality to securities so rated; and (v) debt obligations of domestic and foreign companies rated at least A by S&P or Moody's or which if unrated, are in the Advisor's opinion equivalent in credit quality to securities so rated. Any of the above securities may be variable or floating rate. Under normal circumstances, the Portfolio will invest no more than 35% of the value of its total assets in the securities described in (ii) and (v) of the first sentence of this paragraph. The Portfolio's securities held subject to repurchase agreements may have stated maturities exceeding 13 months, however, the Advisor currently expects that repurchase agreements will mature in less than 13 months. Asset-Backed Securities. The Core Fixed Income Portfolio may invest in asset-backed securities consisting of undivided fractional interests in pools of consumer loans or receivables held in a trust. Examples include certificates for automobile receivables and credit card receivables. Payments of principal and interest on the loans or receivables are passed through to certificate holders. Asset-backed securities are not issued or guaranteed by the U.S. Government or its agencies or instrumentalities, however, they may be guaranteed up to a certain amount by a private issuer through a letter of credit. Payment on asset-backed securities of private issuers is typically supported by some form of credit enhancement, such as a letter of credit, surety bond, limited guaranty, or subordination. The extent of credit enhancement varies, but usually amounts to only a fraction of the asset-backed security's par value until exhausted. Ultimately, asset-backed securities are dependent upon payment of the consumer loans or receivables by individuals, and the certificate holder frequently has no recourse to the entity that originated the loans or receivables. -3- An asset-backed security's underlying assets may be prepaid with the result of shortening the certificate's weighted average life. Prepayment rates vary widely and may be affected by changes in market interest rates. It is not possible to accurately predict the average life of a particular pool of loans or receivables. The proceeds of prepayments received by the Portfolio must be reinvested in securities whose yields reflect interest rates prevailing at the time. Thus, the Portfolio's ability to maintain a portfolio which includes high-yielding asset-backed securities will be adversely affected to the extent reinvestments are in lower yielding securities. The actual maturity and realized yield will therefore vary based upon the prepayment experience of the underlying asset pool and prevailing interest rates at the time of prepayment. Asset-backed securities may be subject to greater risk of default during periods of economic downturn than other instruments. Also, while the secondary market for asset-backed securities is ordinarily quite liquid, in times of financial stress the secondary market may not be as liquid as the market for other types of securities, which could result in the Portfolio's experiencing difficulty in valuing or liquidating such securities. Muni Intermediate and New Jersey Muni Portfolios The Portfolios' investments in municipal obligations may also include tax-exempt commercial paper rated A-1 or higher by S&P or Prime-1 or higher by Moody's. For a description of the two principal classifications of municipal obligations, "general obligation" securities and "revenue" securities, see the "Tax-Exempt Cash Portfolio" above. During temporary defensive periods, each Portfolio may invest without limitation in obligations which are not municipal obligations and may hold without limitation uninvested cash reserves. Such securities may include, without limitation, bonds, notes, variable rate demand notes and commercial paper, provided such securities are rated within the relevant categories applicable to municipal obligations as set forth above and in the Portfolios' prospectus under the heading "Bond Portfolios--Investment Duration and Quality," or if unrated, are of comparable quality as determined by the Advisor. Additionally, each Portfolio may invest, without limitation, in other non-municipal debt obligations, such as bank obligations which are also of comparable quality as determined by the Advisor. Furthermore, each Portfolio may acquire "stand-by commitments" with respect to municipal obligations held by it. Under a stand-by commitment, a dealer agrees to purchase, at the Portfolio's option, specified municipal obligations at a specified price. Each Portfolio will acquire stand-by commitments solely to facilitate portfolio liquidity and does not intend to exercise its rights thereunder for trading purposes. International Portfolio The securities which the Portfolio may purchase include the following: common stocks of companies located outside the U.S.; shares of closed-end investment companies which invest chiefly in the shares of companies located outside the U.S. (such shares will be purchased by the Portfolio within the limits prescribed by the 1940 Act); and U.S. or foreign securities convertible into foreign common stock. The Portfolio intends to remain, for the most part, fully invested in equity securities of companies located outside of the United States. However, the Portfolio may invest a portion of its assets (up to 35% under normal circumstances) in the following fixed income and money market securities: obligations of the U.S. Government and its guaranteed or sponsored agencies, including shares of open-end or closed-end investment companies which invest in such obligations (such shares will be purchased within the limits prescribed by the 1940 Act and would subject a shareholder of the Portfolio to expenses of the -4- other investment company in addition to the expenses of the Portfolio); short-term money market instruments issued in the U.S. or abroad, denominated in dollars or any foreign currency, including short-term certificates of deposit (including variable rate certificates of deposit), time deposits with a maturity no greater than 180 days, bankers' acceptances, commercial paper rated A-1 by S&P or Prime-1 by Moody's, or in equivalent money market securities; and high quality fixed income securities denominated in U.S. dollars, any foreign currency, or a multi-national currency unit such as the European Currency Unit. The Portfolio may also enter into forward currency exchange contracts only to hedge against uncertainty in the level of future foreign exchange rates in the purchase and sale of investment securities; it may not enter into such contracts for speculative purposes. Large Cap Value Portfolio From time to time, the Advisor may revise its equity computer model programs to try to maintain or enhance the Portfolio's performance. The Portfolio intends to remain, for the most part, fully invested in equity securities which may include American Depositary Receipts ("ADRs") listed on the New York Stock Exchange. The Portfolio will not engage in "market timing" transactions. However, for temporary purposes the Portfolio may invest a portion of its assets (up to 20%) in short-term money market instruments issued by U.S. or foreign issuers, denominated in dollars or any foreign currency, including short-term certificates of deposit (including variable rate certificates of deposit), time deposits with a maturity no greater than 180 days, bankers' acceptances, commercial paper rated A-1 by S&P or Prime-1 by Moody's, or in similar money market securities. Small Capitalization Value Portfolio The Portfolio may invest in securities of companies located outside the United States. Under normal market conditions, at least 65% of the Portfolio's total assets will be invested in equity securities of companies with market capitalizations, at the time of purchase, that are below the maximum capitalization permitted for a stock in the Russell 2000 Index. However, if warranted in the judgement of the Advisor, the Portfolio may invest a portion of its assets (up to 20% under normal circumstances) in preferred stocks and convertible debentures with a minimum rating of BBB by S&P or Baa by Moody's, and the following fixed income and money market securities: obligations of the U.S. Government and its guaranteed or sponsored agencies, including shares of open-end or closed-end investment companies which invest in such obligations (such shares will be purchased within the limits prescribed by the 1940 Act and would subject a shareholder of the Portfolio to expenses of the other investment company in addition to the expenses of the Portfolio); short-term money market instruments issued in the U.S. or abroad, denominated in dollars or any foreign currency, including short-term certificates of deposit (including variable rate certificates of deposit), time deposits with a maturity no greater than 180 days, bankers' acceptances, commercial paper rated A-1 by S&P or Prime-1 by Moody's, or in equivalent money market securities; and high quality fixed income securities denominated in U.S. dollars, any foreign currency, or a multi-national currency unit such as the European Currency Unit. -5- The Portfolio's holdings will tend to be characterized by relatively low price-to-earnings ratios. There is no mandated income requirement for securities held by the Portfolio. The Portfolio generally will be more volatile and have a higher expected growth rate than the overall market. In certain periods, the Portfolio may fluctuate independently of broad, larger capitalization indices such as the S&P 500. Strategic Equity Portfolio The Portfolio expects to have a low portfolio turnover rate relative to other funds with similar investment objectives. It is impossible to predict the impact of such a strategy on the realization of gains and losses. Additionally, the Portfolio reserves the right to sell securities irrespective of how long they have been held. The Portfolio may sell a particular security, even though it may realize a short-term capital gain, if the value of that security is believed to have reached its peak or is expected to decline before the Portfolio would have held it for the long-term holding period. The Portfolio may also be required to sell securities in order to generate cash to pay expenses or satisfy shareholder redemptions. Certain equity and other securities held by the Portfolio will produce ordinary taxable income on a regular basis. The Portfolio intends to remain, for the most part, fully invested in equity securities, which may include securities of companies located outside the United States, and will not engage in "market timing" transactions. However, the Portfolio may invest a portion of its assets (up to 20% under normal circumstances) in preferred stocks, convertible debentures, and the following fixed income and money market securities: obligations of the U.S. Government and its guaranteed or sponsored agencies, including shares of open-end or closed-end investment companies which invest in such obligations (such shares will be purchased within the limits prescribed by the 1940 Act and would subject a shareholder of the Portfolio to expenses of the other investment company in addition to the expenses of the Portfolio); short-term money market instruments issued in the U.S. or abroad, denominated in dollars or any foreign currency, including short-term certificates of deposit (including variable rate certificates of deposit), time deposits with a maturity no greater than 180 days, bankers' acceptances, commercial paper rated A-1 by S&P or Prime-1 by Moody's, or in equivalent money market securities; and high quality fixed income securities denominated in U.S. dollars, any foreign currency, or a multi-national currency unit such as the European Currency Unit. The Portfolio may also purchase or write call and put options on appropriate securities or securities indices. The aggregate value of the Portfolio's assets subject to options written may not exceed 50% of its total assets (taken at market value on the date written) and the aggregate premiums on options purchased by the Portfolio will not exceed 50% of its total assets. Options can attempt to enhance return through price appreciation of the option, increase income, hedge to reduce overall portfolio risk, and/or hedge to reduce individual security risk. Additionally, the Portfolio may also enter into closing sale transactions in order to realize gains or minimize losses on options it has purchased. Purchasing Options. The Portfolio may purchase call options in anticipation of an increase in the market value of securities of the type in which it may invest. The purchase of a call option entitles the Portfolio, in return for the premium paid, to purchase specified securities at a specified price during the option period. The Portfolio will ordinarily realize a gain if, during the option period, the value of such securities exceeds the sum of the -6- exercise price, the premium paid and transaction costs; otherwise the Portfolio will realize either no gain or a loss on the purchase of the call option. The Portfolio will normally purchase put options in anticipation of a decline in the market value of securities in its portfolio or in securities in which it may invest. The purchase of a put option entitles the Portfolio, in exchange for the premium paid, to sell specified securities at a specified price during the option period. The purchase of puts is designed to offset or hedge against a decline in the market value of the Portfolio's securities. Put options may also be purchased by the Portfolio for the purpose of affirmatively benefiting from a decline in the price of securities which it does not own. The Portfolio will ordinarily realize a gain if, during the option period, the value of the underlying securities decreases below the exercise price sufficiently to more than cover the premium and transaction costs; otherwise the Portfolio will realize either no gain or a loss on the purchase of the put option. Gains and losses on the purchase of put options will tend to be offset by countervailing changes in the value of the underlying portfolio securities. The Portfolio will purchase put and call options on securities indices for the same purposes as it will purchase options on individual securities. Writing Covered Options. The Portfolio may write covered call and put options on any securities in which it may invest. A call option written by the Portfolio obligates the Portfolio to sell specified securities to the holder of the option at a specified price if the option is exercised at any time before the expiration date. All call options written by the Portfolio will be covered, which means that the Portfolio will own the securities subject to the option as long as the option is outstanding or the Portfolio will use the other methods described below. The Portfolio's purpose in writing covered call options is to realize greater income than would be realized on portfolio securities transactions alone. However, the Portfolio foregoes the opportunity to profit from an increase in the market price of the underlying security that exceeds the exercise price of the call option. A put option written by the Portfolio obligates the Portfolio to purchase specified securities from the option holder at a specified price if the option is exercised at any time before the expiration date. All put options written by the Portfolio will be covered, which means that the Portfolio will segregate cash or liquid assets with a value at least equal to the exercise price of the put option. The purpose of writing such options is to generate additional income for the Portfolio. However, in return for the option premium, the Portfolio accepts the risk that it may be required to purchase the underlying securities at a price in excess of the securities' market value at the time of purchase. Call and put options written by the Portfolio will also be considered to be covered to the extent that the Portfolio's liabilities under such options are wholly or partially offset by its rights under call and put options purchased by the Portfolio. In addition, a written call option or put option may be covered by segregating cash or liquid assets, by entering into an offsetting forward contract and/or by purchasing an offsetting option which, by virtue of its exercise price or otherwise, reduces the Portfolio's net exposure on its written option position. -7- The Portfolio may also write covered call and put options on any securities index composed of securities in which it may invest. Options on securities indices are similar to options on securities, except that the exercise of securities index options requires cash payments and does not involve the actual purchase or sale of securities. In addition, securities index options are designed to reflect price fluctuations in a group of securities or segment of the securities market rather than price fluctuations in a single security. The Portfolio may cover call options on a securities index by owning securities whose price changes are expected to be similar to those of the underlying index, or by having an absolute and immediate right to acquire such securities without additional cash consideration (or for additional cash consideration segregated by the Portfolio) upon conversion or exchange of other securities in its portfolio. The Portfolio may cover call and put options on a securities index by segregating cash or liquid assets with a value equal to the exercise price. The Portfolio may terminate its obligations under an exchange traded call or put option by purchasing an option identical to the one it has written. Obligations under over-the-counter options may be terminated only by entering into an offsetting transaction with the counterparty to such option. Such purchases are referred to as "closing purchase transactions." Small Capitalization Growth Portfolio The Portfolio may invest in securities of companies located outside the United States. Under normal market conditions, at least 65% of the Portfolio's total assets will be invested in equity securities of companies with market capitalizations, at the time of purchase, that are below the maximum capitalization permitted for a stock in the Russell 2000 Growth Index. However, if warranted in the judgement of the Sub-Advisors, the Portfolio may invest a portion of its assets (up to 20% under normal circumstances) in preferred stocks and convertible debentures with a minimum rating of BBB by S&P or Baa by Moody's, and the following fixed income and money market securities: obligations of the U.S. Government and its guaranteed or sponsored agencies, including shares of open-end or closed-end investment companies which invest in such obligations (such shares will be purchased within the limits prescribed by the 1940 Act and would subject a shareholder of the Portfolio to expenses of the other investment company in addition to the expenses of the Portfolio); short-term money market instruments issued in the U.S. or abroad, denominated in dollars or any foreign currency, including short-term certificates of deposit (including variable rate certificates of deposit), time deposits with a maturity no greater than 180 days, bankers' acceptances, commercial paper rated A-1 by S&P or Prime-1 by Moody's, or in equivalent money market securities; and high quality fixed income securities denominated in U.S. dollars, any foreign currency, or a multi-national currency unit such as the European Currency Unit. Core Value Portfolio From time to time, the Advisor may revise its equity computer model programs to try to maintain or enhance the Portfolio's performance. -8- The Portfolio intends to remain, for the most part, fully invested in equity securities which may include American Depositary Receipts ("ADRs") listed on the New York Stock Exchange. The Portfolio will not engage in "market timing" transactions. However, for temporary purposes this Portfolio may invest a portion of its assets (up to 20%) in short-term money market instruments issued by U.S. or foreign issuers, denominated in dollars or any foreign currency, including short-term certificates of deposit (including variable rate certificates of deposit), time deposits with a maturity no greater than 180 days, bankers' acceptances, commercial paper rated A-1 by S&P or Prime-1 by Moody's, or in similar money market securities. Institutional International Portfolio The securities which the Portfolio may purchase include the following: common stocks of companies located outside the U.S.; shares of closed-end investment companies which invest chiefly in the shares of companies located outside the U.S. (such shares will be purchased by the Portfolio within the limits prescribed by the 1940 Act); and U.S. or foreign securities convertible into foreign common stock. The Portfolio intends to remain, for the most part, fully invested in equity securities of companies located outside of the United States. However, the Portfolio may invest a portion of its assets (up to 20% under normal circumstances) in the following fixed income and money market securities: obligations of the U.S. Government and its guaranteed or sponsored agencies, including shares of open-end or closed-end investment companies which invest in such obligations (such shares will be purchased within the limits prescribed by the 1940 Act and would subject a shareholder of the Portfolio to expenses of the other investment company in addition to the expenses of the Portfolio); short-term money market instruments issued in the U.S. or abroad, denominated in dollars or any foreign currency, including short-term certificates of deposit (including variable rate certificates of deposit), time deposits with a maturity no greater than 180 days, bankers' acceptances, commercial paper rated A-1 by S&P or Prime-1 by Moody's, or in equivalent money market securities; and high quality fixed income securities denominated in U.S. dollars, any foreign currency, or a multi-national currency unit such as the European Currency Unit. The Portfolio may also enter into forward currency exchange contracts only to hedge against uncertainty in the level of future foreign exchange rates in the purchase and sale of investment securities; it may not enter into such contracts for speculative purposes. Emerging Markets Portfolio The Portfolio may invest up to 35% of its total assets in debt securities (defined as bonds, notes, debentures, convertible bonds, commercial paper, certificates of deposit, time deposits and bankers' acceptances) which are rated at least Baa by Moody's or BBB by S&P or are unrated debt securities deemed to be of comparable quality by the Sub-Advisor. Certain debt securities can provide the potential for long-term growth of capital based on various factors such as changes in interest rates, economic and market conditions, improvement in an issuer's ability to repay principal and pay interest, and ratings upgrades. Additionally, convertible bonds can provide the potential for long-term growth of capital through the conversion feature, which enables the holder of the bond to benefit from increases in the market price of the securities into which they are convertible. However, there can be no assurances -9- that debt securities or convertible bonds will provide long-term growth of capital. The Portfolio may invest in European Depositary Receipts ("EDRs"), and may enter into forward foreign currency contracts and reverse repurchase agreements. When deemed appropriate by the Sub-Advisor, the Portfolio may invest cash balances in repurchase agreements and other money market investments to maintain liquidity in an amount to meet expenses or for day-to-day operating purposes. When the Sub-Advisor believes that market conditions warrant, the Portfolio may adopt a temporary defensive position and may invest up to 100% of its total assets in the following high-quality (that is, rated Prime-1 by Moody's or A or better by S&P or, if unrated, of comparable quality as determined by the Sub-Advisor) money market securities, denominated in U.S. dollars or in the currency of any foreign country, issued by entities organized in the United States or any foreign country: short-term (less than twelve months to maturity) and medium-term (not greater than five years to maturity) obligations issued or guaranteed by the U.S. Government or the governments of foreign countries, their agencies or instrumentalities; finance company and corporate commercial paper, and other short-term corporate obligations; obligations (including certificates of deposit, time deposits and bankers' acceptances) of banks; and repurchase agreements with banks and broker-dealers with respect to such securities. The Portfolio also may purchase shares of closed-end investment companies which invest chiefly in the shares of companies located outside the U.S. (such shares will be purchased by the Portfolio within the limits prescribed by the 1940 Act). Global Equity Portfolio The Portfolio intends to remain, for the most part, fully invested in equity securities and securities convertible into equity securities. However, the Portfolio may invest a portion of its assets (up to 20% under normal circumstances) in the following fixed income and money market securities: obligations of the U.S. Government and its guaranteed or sponsored agencies, including shares of open-end or closed-end investment companies which invest in such obligations (such shares will be purchased within the limits prescribed by the 1940 Act and would subject a shareholder of the Portfolio to expenses of the other investment company in addition to the expenses of the Portfolio); short-term money market instruments issued in the U.S. or abroad, denominated in dollars or any foreign currency, including short-term certificates of deposit (including variable rate certificates of deposit), time deposits with a maturity no greater than 180 days, bankers' acceptances, commercial paper rated A-1 by S&P or Prime-1 by Moody's, or in equivalent money market securities; and high quality fixed income securities denominated in U.S. dollars, any foreign currency, or a multi-national currency unit such as the European Currency Unit. The Portfolio may also enter into forward currency exchange contracts only to hedge against uncertainty in the level of future foreign exchange rates in the purchase and sale of investment securities; it may not enter into such contracts for speculative purposes. Additionally, the Portfolio may enter into reverse repurchase agreements. -10- COMMON INVESTMENT POLICIES AND RISKS Repurchase Agreements Each Portfolio may enter into repurchase agreements with qualified brokers, dealers, banks and other financial institutions deemed creditworthy by the Advisor. Under normal circumstances, however, the International, Large Cap Value, Core Value, Small Capitalization Growth, Institutional International, Small Capitalization Value, Strategic Equity, Emerging Markets, Global Equity, Muni Intermediate and New Jersey Muni Portfolios will not enter into repurchase agreements if entering into such agreements would cause, at the time of entering into such agreements, more than 20% of the value of the total assets of the particular Portfolio to be subject to repurchase agreements. The International and Institutional International Portfolios will generally enter into repurchase transactions to invest cash reserves and for temporary defensive purposes. In effect, by entering into a repurchase agreement, a Portfolio is lending its funds to the seller at the agreed upon interest rate, and receiving a security as collateral for the loan. Such agreements can be entered into for periods of one day (overnight repo) or for a fixed term (term repo). Repurchase agreements are a common way to earn interest income on short-term funds. In a repurchase agreement, a Portfolio purchases a security and simultaneously commits to resell that security at a future date to the seller (a qualified bank or securities dealer) at an agreed upon price plus an agreed upon market rate of interest (itself unrelated to the coupon rate or date of maturity of the purchased security). The seller under a repurchase agreement will be required to maintain the value of the securities which are subject to the agreement and held by a Portfolio at not less than the agreed upon repurchase price. If the seller defaults on its repurchase obligation, a Portfolio holding such obligation will suffer a loss to the extent that the proceeds from a sale of the underlying securities (including accrued interest) were less than the repurchase price (including accrued interest) under the agreement. In the event that such a defaulting seller files for bankruptcy or becomes insolvent, disposition of such securities by a Portfolio might be delayed pending court action. Repurchase agreements that do not provide for payment to a Portfolio within seven days after notice without taking a reduced price are considered illiquid securities. Borrowing As a temporary measure for extraordinary or emergency purposes, each Portfolio may borrow money from banks. However, none of the Portfolios will borrow money for speculative purposes. If the market value of a Portfolio's securities should decline, the Portfolio may experience difficulty in repaying the borrowing. Securities Lending Each Portfolio may lend its portfolio securities with a value of up to one-third of its total assets (including the value of the collateral for the loans) to qualified brokers, dealers, banks and other financial institutions who -11- need to borrow securities in order to complete certain transactions, such as covering short sales, avoiding failures to deliver securities or completing arbitrage operations. By lending its investment securities, a Portfolio attempts to increase its income through the receipt of interest on the loan. Any gain or loss in the market price of the securities loaned that might occur during the term of the loan would be for the account of the Portfolio. A Portfolio may lend its portfolio securities only when the terms, the structure and the aggregate amount of such loans are not inconsistent with the 1940 Act or the rules and regulations or interpretations of the SEC thereunder. All relevant facts and circumstances, including the creditworthiness of the broker, dealer or institution, will be considered by the Advisor in making decisions with respect to the lending of securities, subject to review by the particular Fund's Board. When lending portfolio securities, the securities may not be available to a Portfolio on a timely basis. Therefore, a Portfolio may lose the opportunity to sell the securities at a desirable price. Such loans would also involve risks of delay in receiving additional collateral if the value of the collateral decreases below the value of the securities loaned or even the loss of rights to the collateral should the borrower of the securities fail financially. Additionally, if a borrower of securities files for bankruptcy or becomes insolvent, disposition of the securities may be delayed pending court action. A Portfolio may, from time to time, pay negotiated fees in connection with the lending of securities. "When Issued," "Delayed Settlement," and Forward Delivery Securities Each Portfolio may purchase and sell securities on a "when issued," "delayed settlement" or "forward delivery" basis. "When issued" or "forward delivery" refers to securities whose terms and indenture are available and for which a market exists, but which are not available for immediate delivery. When issued or forward delivery transactions may be expected to occur one month or more before delivery is due. Delayed settlement is a term used to describe settlement of a securities transaction in the secondary market which will occur sometime in the future. No payment or delivery is made by a Portfolio in a when issued, delayed settlement or forward delivery transaction until the Portfolio receives payment or delivery from the other party to the transaction. A Portfolio will maintain a separate account of cash, U.S. Government securities or other high grade debt obligations at least equal to the value of purchase commitments until payment is made. Such segregated securities will either mature or, if necessary, be sold on or before the settlement date. Although a Portfolio receives no income from the above described securities prior to delivery, the market value of such securities is still subject to change. A Portfolio will engage in when issued transactions to obtain what is considered to be an advantageous price and yield at the time of the transaction. When a Portfolio engages in when issued, delayed settlement or forward delivery transactions, it will do so for the purpose of acquiring securities consistent with its investment objective and policies and not for the purpose of speculation. Each Portfolio's when issued, delayed settlement and forward delivery commitments are not expected to exceed 25% of its total assets absent unusual market circumstances, and each Portfolio will only sell securities on such a basis to offset securities purchased on such a basis. Securities purchased or sold on a "when issued," "delayed settlement" or "forward delivery" basis are subject to changes in value based upon changes in the general level of interest rates. In when-issued and delayed settlement transactions, a Portfolio relies on the seller to complete the transaction; the seller's failure to do so may cause a Portfolio to miss an advantageous price or yield. -12- Investment Company Securities In connection with the management of their daily cash positions, the Portfolios (other than the Emerging Markets Portfolio) may each invest in securities issued by other open-end or closed-end investment companies which invest in the obligations of the U.S. Government and its guaranteed or sponsored agencies. In addition, the International, Institutional International and Emerging Markets Portfolios may each invest in shares of closed-end investment companies which invest chiefly in the shares of companies located outside of the U.S. Except as otherwise permitted under the 1940 Act, each Portfolio limits its investments so that, as determined immediately after a securities purchase is made: (a) not more than 5% of the value of its total assets will be invested in the securities of any one investment company; (b) not more than 10% of the value of its total assets will be invested in the aggregate in the securities of investment companies as a group; and (c) not more than 3% of the outstanding voting stock of any one investment company will be owned by the Portfolio. As a shareholder of another investment company, the Portfolio would bear its pro rata portion of the other investment company's advisory fees and other expenses, in addition to the expenses the Portfolio bears directly in connection with its own operations. Furthermore, the investment company securities in which a Portfolio invests may decline in value. Illiquid Securities The Portfolios (other than the Emerging Markets, Small Capitalization Growth and Global Equity Portfolios) will not invest more than 10% of their respective net assets in securities that are illiquid. The Emerging Markets, Small Capitalization Growth and Global Equity Portfolios will not invest more than 15% of their respective net assets in securities that are illiquid. These securities are subject to the risk that should a Portfolio need to dispose of such securities, there may not be a ready market or the Portfolio may have to sell such securities at an undesirable price. Stand-by Commitments The Muni Intermediate and New Jersey Muni Portfolios may acquire stand-by commitments which may increase the cost, and thereby reduce the yield, of the municipal obligation to which such commitment relates. Foreign Securities The International, Strategic Equity, Small Capitalization Value, Large Cap Value, Core Value, Small Capitalization Growth, Institutional International, Emerging Markets and Global Equity Portfolios may invest in foreign securities. Such investments may involve higher costs than investments in U.S. securities, including higher transaction costs and additional taxes by foreign governments. Foreign investments may also present additional risks associated with currency exchange rates, differences in accounting, auditing and financial reporting standards, holding securities in domestic and foreign custodian banks and depositories, less complete financial information about the issuers, less market liquidity, and political instability. Future political and economic developments, the possible imposition of withholding taxes on dividends, the possible seizure or nationalization of foreign holdings, the possible establishment of exchange controls, or the adoption of other governmental restrictions, might adversely affect the payment of dividends or principal and interest on foreign obligations. Foreign securities markets also have different clearance and settlement procedures, and in certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it -13- difficult to conduct such transactions. Delays in settlement could result in temporary periods when assets of a Portfolio are uninvested and no return is earned. The inability of a Portfolio to make intended security purchases due to these and other settlement problems could cause such Portfolio to miss attractive investment opportunities. Inability to dispose of portfolio securities due to settlement problems could result in losses to a Portfolio due to subsequent declines in value of the portfolio security or, if the Portfolio has entered into a contract to sell the security, could result in possible liability to the purchaser. Additionally, a Portfolio may encounter difficulties or be unable to pursue legal remedies and obtain judgments in foreign courts. Although the Portfolios may invest in securities denominated in foreign currencies, the Portfolios value their securities and other assets in U.S. dollars. As a result, the NAV of the Portfolios' shares may fluctuate with U.S. dollar exchange rates as well as with price changes of a Portfolio's securities in the various local markets and currencies. Thus, an increase in the value of the U.S. dollar compared to the currencies in which the Portfolios make their investments could reduce the effect of increases and magnify the effect of decreases in the prices of the Portfolios' securities in their local markets. Conversely, a decrease in the value of the U.S. dollar will have the opposite effect of magnifying the effect of increases and reducing the effect of decreases in the prices of the Portfolios' securities in their local markets. In addition to favorable and unfavorable currency exchange rate developments, the Portfolios are subject to the possible imposition of exchange control regulations or freezes on convertibility of currency. The Emerging Markets, International, Institutional International and Global Equity Portfolios may invest in emerging market countries. Developing countries may impose restrictions on a Portfolio's ability to repatriate investment income or capital. Even if there is no outright restriction on repatriation of investment income or capital, the mechanics of repatriation may affect certain aspects of the operations of the Portfolio. For example, funds may be withdrawn from the People's Republic of China only in U.S. or Hong Kong dollars and only at an exchange rate established by the government once each week. Some of the currencies in emerging markets have experienced devaluations relative to the U.S. dollar, and major adjustments have been made periodically in certain of such currencies. Certain developing countries face serious exchange constraints. Lastly, governments of some developing countries exercise substantial influence over many aspects of the private sector. In some countries, the government owns or controls many companies, including the largest in the country. As such, government actions in the future could have a significant effect on economic conditions in developing countries in these regions, which could affect private sector companies, a Portfolio and the value of its securities. Furthermore, certain developing countries are among the largest debtors to commercial banks and foreign governments. Trading in debt obligations issued or guaranteed by such governments or their agencies and instrumentalities involves a high degree of risk. Depositary Receipts The International, Large Cap Value, Core Value, Institutional International, Emerging Markets and Global Equity Portfolios may purchase certain sponsored or unsponsored depositary receipts. In sponsored programs, an issuer makes arrangements to have its securities traded in the form of depositary receipts. For purposes of a Portfolio's investment policies, the Portfolio's investments in depositary receipts will be deemed to be investments -14- in the underlying securities. In unsponsored programs, the issuer may not be directly involved in the creation of the program. Although regulatory requirements with respect to sponsored and unsponsored programs are generally similar, in some cases it may be easier to obtain financial information from an issuer that has participated in the creation of a sponsored program. Accordingly, there may be less information available regarding issuers of securities underlying unsponsored programs and there may not be a correlation between such information and the market value of the depositary receipts. The International, Large Cap Value, Core Value, Institutional International, Global Equity and Emerging Markets Portfolios may invest in American Depositary Receipts ("ADRs"). ADRs are depositary receipts issued in registered form by a U.S. bank or trust company evidencing ownership of underlying securities issued by a foreign company. ADRs may be listed on a national securities exchange or may be traded in the over-the-counter market. ADR prices are denominated in U.S. dollars although the underlying securities are denominated in a foreign currency. The Emerging Markets and Global Equity Portfolios may also purchase European Depositary Receipts ("EDRs") and Global Depositary Receipts ("GDRs") which are designed for use in either foreign or domestic exchanges and their respective over-the-counter markets. EDRs and GDRs are depositary receipts typically issued by foreign banks or trust companies, although they also may be issued by U.S. banks or trust companies, and evidence ownership of underlying securities issued by either a foreign or a United States corporation. Generally, depositary receipts in registered form are designed for use in the U.S. securities market and depositary receipts in bearer form are designed for use in securities markets outside the United States. Depositary receipts may not necessarily be denominated in the same currency as the underlying securities into which they may be converted. Investments in ADRs, EDRs and GDRs involve risks similar to those accompanying direct investments in foreign securities. Forward Foreign Exchange Contracts The Institutional International, International, Emerging Markets and Global Equity Portfolios may enter into forward foreign exchange contracts, but such contracts may not be used for speculative purposes. A forward foreign currency exchange contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract as agreed by the parties, at a price set at the time of the contract. In the case of a cancelable forward contract, the holder has the unilateral right to cancel the contract at maturity by paying a specified fee. The contracts are traded in the interbank market conducted directly between currency traders (usually large commercial banks) and their customers. A forward contract generally has no deposit requirement, and no commissions are charged at any stage for trades. A foreign currency futures contract is a standardized contract for the future delivery of a specified amount of a foreign currency at a future date at a price set at the time of the contract. Foreign currency futures contracts traded in the United States are designed by and traded on exchanges regulated by the Commodity Futures Trading Commission (the "CFTC") such as the New York Mercantile Exchange. The Portfolios would enter into foreign currency futures contracts solely for hedging or other appropriate investment purposes as defined in CFTC regulations. Forward foreign currency exchange contracts allow a Portfolio to hedge the currency risk of portfolio securities denominated in a foreign currency. This method of protecting the value of a Portfolio's investment securities -15- against a decline in the value of a currency does not eliminate fluctuations in the underlying prices of the securities. It simply establishes a rate of exchange at a future date. Although such contracts tend to minimize the risk of loss due to a decline in the value of the hedged currency, at the same time they tend to limit any potential gain which might result should the value of such currency increase. Additionally, investments in foreign currency exchange contracts involve other risks similar to those accompanying direct investments in foreign securities. Forward foreign currency exchange contracts differ from foreign currency futures contracts in certain respects. For example, the maturity date of a forward contract may be any fixed number of days from the date of the contract agreed upon by the parties, rather than a predetermined date in any given month. Forward contracts may be in any amounts agreed upon by the parties rather than predetermined amounts. Also, forward foreign exchange contracts are traded directly between currency traders so that no intermediary is required. A forward contract generally requires no margin or other deposit. At the maturity of a forward contract, a Portfolio may either accept or make delivery of the currency specified in the contract, or at or prior to maturity enter into a closing transaction involving the purchase or sale of an offsetting contract. Closing transactions with respect to forward contracts are usually effected with the currency trader who is a party to the original forward contract. Reverse Repurchase Agreements The Government Cash, Core Fixed Income, Emerging Markets and Global Equity Portfolios may enter into reverse repurchase agreements. In a reverse repurchase agreement the Portfolio sells a security and simultaneously commits to repurchase that security at a future date from the buyer. In effect, the Portfolio is temporarily borrowing funds at an agreed upon interest rate from the purchaser of the security, and the sale of the security represents collateral for the loan. The Portfolio retains record ownership of the security and the right to receive interest and principal payments on the security. At an agreed upon future date, the Portfolio repurchases the security by remitting the proceeds previously received, plus interest. In certain types of agreements, there is no agreed upon repurchase date and interest payments are calculated daily, often based on the prevailing overnight repurchase rate. These agreements, which are treated as if reestablished each day, are expected to provide the Portfolio with a flexible borrowing tool. Reverse repurchase agreements are considered to be borrowings by the Portfolio under the 1940 Act. The Portfolio's investment of the proceeds of a reverse repurchase agreement is the speculative factor known as leverage. The Portfolio may enter into a reverse repurchase agreement only if the interest income from investment of the proceeds is greater than the interest expense of the transaction and the proceeds are invested for a period no longer than the term of the agreement. The Portfolio will maintain liquid securities at least equal to its purchase obligations under these agreements. The Advisor will consider the creditworthiness of the other party in determining whether a Portfolio will enter into a reverse repurchase agreement. A Portfolio is permitted to invest up to one-third of its total assets in reverse repurchase agreements and securities lending transactions. Reverse repurchase agreements and securities lending transactions will be aggregated for purposes of this investment limitation. -16- The use of reverse repurchase agreements involves certain risks. For example, the securities acquired by a Portfolio with the proceeds of such an agreement may decline in value, although the Portfolio is obligated to repay the proceeds. In addition, the market value of the securities sold by a Portfolio may decline below the repurchase price, to which the Portfolio remains committed. Interest Rate Risks The Portfolios may invest in fixed-income securities. Generally, a fixed-income security will increase in value when interest rates fall and decrease in value when interest rates rise. Longer-term securities are generally more sensitive to interest rate changes than shorter-term securities, but they usually offer higher yields to compensate investors for the greater risks. Credit Risks Because the Portfolios may invest in fixed-income securities, they are subject to "credit risk"-- the risk that an issuer will be unable to make principal and interest payments when due. U.S. Government Securities are generally considered to be the safest type of investment in terms of credit risk. Municipal obligations generally rank between U.S. Government Securities and corporate debt securities in terms of credit safety. Corporate debt securities, particularly those rated below investment grade, may present the highest credit risk. The Small Capitalization Value, Small Capitalization Growth and Emerging Markets Portfolios may invest in securities which have the lowest rating in the investment grade category (i.e., Baa by Moody's or BBB by S&P). Such securities are considered to have some speculative characteristics and are more sensitive to economic change than higher rated securities. Ratings published by nationally recognized statistical rating organizations are widely accepted measures of credit risk. The lower a bond issue is rated by an agency, the more credit risk it is considered to represent. Lower-rated bonds generally pay higher yields to compensate investors for the greater risk. U.S. Government Obligations The Portfolios may invest in obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities. Direct obligations of the U.S. Government such as Treasury bills, notes and bonds are supported by its full faith and credit. Indirect obligations issued by federal agencies and government-sponsored entities generally are not backed by the full faith and credit of the U.S. Treasury. Some of these indirect obligations may be supported by the right of the issuer to borrow from the Treasury; others are supported by the discretionary authority of the U.S. government to purchase the agency's obligations; still others are supported only by the credit of the instrumentality. PRICE OF PORTFOLIO SHARES The NAV per share of each Portfolio is determined by dividing the total market value of its investments and other assets, less liabilities, by the total number of its shares outstanding. -17- Equity securities listed on a U.S. securities exchange for which quotations are readily available are valued at the last quoted sale price as of the close of the exchange's regular trading hours on the day the valuation is made. Price information on listed securities is taken from the exchange where the security is primarily traded. Unlisted U.S. equity securities and listed securities not traded on the valuation date for which market quotations are readily available are valued not in excess of the asked prices or less than the bid prices. For the purpose of calculating the Government Cash and Tax-Exempt Cash Portfolio's (collectively, the "Money Market Portfolios") NAV per share, securities are valued by the "amortized cost" method of valuation, which does not take into account unrealized gains or losses. The amortized cost method involves valuing an instrument at its cost and thereafter assuming a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of the instrument. While this method provides certainty in valuation, it may result in periods during which value, as determined by amortized cost, is higher or lower than the price the Portfolio would receive if it sold the instrument. The use of amortized cost and the maintenance of each Money Market Portfolio's per share NAV at $1.00 is based on its election to operate under the provisions of Rule 2a-7 under the 1940 Act. As a condition of operating under that Rule, each Money Market Portfolio must maintain an average weighted maturity of 90 days or less, purchase only instruments deemed to have remaining maturities of 13 months or less, and invest only in securities which are determined by the Advisor, pursuant to procedures established by the Board, to present minimal credit risks and which are Eligible Securities, pursuant to procedures established by the Board. The Board has established procedures reasonably designed to stabilize the NAV per share for the purposes of sales and redemptions at $1.00. These procedures include daily review of the relationship between the amortized cost value per share and a NAV per share based upon available indications of market value. In the event of a deviation of over 1/2 of 1% between a Money Market Portfolio's NAV based upon available market quotations or market equivalents and $1.00 per share based on amortized cost, the Board members will promptly consider what action, if any, should be taken. The Board members also will take such action as they deem appropriate to eliminate or to reduce to the extent reasonably practicable any material dilution or other unfair results which might arise from differences between the two. Such action may include redemption in kind, selling instruments prior to maturity to realize capital gains or losses or to shorten the average weighted maturity, exercising puts, withholding dividends, paying distributions from capital or capital gains or utilizing a NAV per share as determined by using available market quotations. The NAV per share of each Money Market Portfolio will ordinarily remain at $1.00, but each Portfolio's daily dividends will vary in amount. There can be no assurance, however, that the Portfolios will maintain a constant NAV per share of $1.00. Marketable fixed income securities are valued according to the broadest and most representative market, which will ordinarily be the over-the-counter market, at the most recent quoted bid price, or when stock exchange valuations are used, at the latest quoted sale price on the day of valuation. If there is not such a reported sale, the latest quoted bid price will be used. NAV includes interest on fixed income securities which is accrued daily. In addition, bond and other fixed income securities may be valued on the basis of prices provided by a pricing service or by using a matrix or formula, when the Advisor believes such prices reflect the fair market value of such securities. The prices provided by a pricing service are determined without regard to bid or last sale prices, but take into account institutional size trading in similar groups of -18- securities and any developments related to specific securities. The matrix pricing method values securities by reference to prices of comparable securities obtained from sources the Advisor deems accurate and reliable. Debt securities with remaining maturities of 60 days or less are valued at amortized cost, pursuant to which (i) such securities shall be valued initially at cost on the date of purchase or, in the case of securities purchased with more than 60 days maturity, at their market or fair value on the 61st day prior to maturity, and (ii) thereafter (absent unusual circumstances), a constant proportionate amortization of any discount or premium shall be assumed until maturity of the security. Securities listed on a foreign exchange and unlisted foreign securities are valued at the latest quoted sales price available when assets are valued. If a subsequent occurrence is believed to have changed such value, however, the fair value of those securities may be determined through consideration of other factors by or under the direction of the Board. These securities may trade on days when shares of a Portfolio are not priced; as a result, the NAV of shares of such Portfolio may change on days when shareholders will not be able to purchase or redeem the Portfolio's shares. Foreign currency amounts are translated into U.S. dollars at the bid prices of such currencies against U.S. dollars last quoted by a major bank. The Muni Intermediate and New Jersey Muni Portfolios' municipal obligations for which quotations are readily available are valued at the most recent quoted bid price provided by investment dealers, provided that municipal obligations may be valued on the basis of prices provided by a pricing service when such prices are determined by the Advisor to reflect the fair market value of such municipal obligations. Municipal obligations for which market quotations are not readily available are valued at fair market value as determined in good faith by or under the direction of the Board. Debt obligations with remaining maturities of 60 days or less are valued on the basis of amortized cost, pursuant to which (i) such securities are valued initially at cost on the date of purchase or, in the case of securities purchased with more than 60 days maturity, at their market or fair value on the 61st day prior to maturity, and (ii) thereafter (absent unusual circumstances), a constant proportionate amortization of any discount or premium shall be assumed until maturity of the security. PURCHASE OF SHARES The purchase price of shares of each Portfolio is the NAV next determined after receipt of the purchase order by the particular Fund. It is the responsibility of the Advisor or Institutions to transmit orders for share purchases to Investment Company Capital Corp. ("ICC"), the Funds' transfer agent, and to deliver required funds to The Chase Manhattan Bank, N.A., the Funds' custodian, on a timely basis. Each Portfolio reserves the right in its sole discretion (i) to suspend the offering of its shares, (ii) to reject purchase orders when in the judgment of management such rejection is in the best interest of the particular Fund, and (iii) to reduce or waive the minimum for initial and subsequent investments from time to time. At the discretion of the Funds, investors may be permitted to purchase Portfolio shares by transferring securities to the Portfolio that meet the Portfolio's investment objective and policies. -19- REDEMPTION OF SHARES Redemption proceeds are normally paid in cash, although the Funds have elected to be governed by rule 18f-1 under the 1940 Act which permits them to limit each shareholder to cash redemptions of $250,000 or 1% of such Portfolio's NAV, whichever is less, within a 90-day period. Any additional redemption proceeds would be made in readily marketable securities. SHAREHOLDER SERVICES Shareholders may transfer shares of the Portfolios to another person. An investor wishing to transfer shares should contact the Advisor. PORTFOLIO TURNOVER The Portfolios will not normally engage in short-term trading, but reserve the right to do so. A high portfolio turnover rate can result in corresponding increases in brokerage commissions; however, the Advisor and the particular Sub-Advisor (with respect to the Emerging Markets and Small Capitalization Growth Portfolios), will not consider turnover rate a limiting factor in making investment decisions consistent with that Portfolio's investment objective and policies. Changes in the Core Fixed Income Portfolio's turnover rate over the last two most recently completed fiscal years were due to market fluctuations and investment opportunities. INVESTMENT LIMITATIONS Each Portfolio is subject to the following restrictions. The numbered restrictions are fundamental policies and may not be changed without the approval of the lesser of: (1) 67% of the voting securities of the affected Portfolio present at a meeting if the holders of more than 50% of the outstanding voting securities of the affected Portfolio are present or represented by proxy, or (2) more than 50% of the outstanding voting securities of the affected Portfolio. Each Portfolio will not: (1) invest in commodities or commodity contracts, except that each Portfolio may invest in futures contracts and options; (2) purchase or sell real estate, although it may purchase and sell securities of companies which deal in real estate and may purchase and sell securities which are secured by interests in real estate; (3) make loans, except (i) by purchasing bonds, debentures or similar obligations (including repurchase agreements, subject to the limitation described in investment limitation (9) below, and money market instruments, including bankers' acceptances and commercial paper, and selling securities on a when issued, delayed settlement or forward delivery basis) which are publicly or privately distributed, and (ii) by lending its portfolio securities to banks, brokers, dealers and other financial institutions so long as such loans are not inconsistent with the 1940 Act or the rules and regulations or interpretations of the SEC thereunder; -20- (4) purchase on margin or sell short, except as specified above in investment limitation (1); (5) purchase more than 10% of any class of the outstanding voting securities of any issuer; (6) issue senior securities, except that a Portfolio may borrow money in accordance with investment limitation (7) below, purchase securities on a when issued, delayed settlement or forward delivery basis and enter into reverse repurchase agreements; (7) borrow money, except as a temporary measure for extraordinary or emergency purposes, and then not in excess of 10% of its total assets at the time of the borrowing (entering into reverse repurchase agreements and purchasing securities on a when issued, delayed settlement or forward delivery basis are not subject to this investment limitation); (8) pledge, mortgage, or hypothecate any of its assets to an extent greater than 10% (15% in the case of the Emerging Markets and Global Equity Portfolios) of its total assets at fair market value, except as described in the Prospectus and this Statement of Additional Information and in connection with entering into futures contracts, but the deposit of assets in a segregated account in connection with the writing of covered put and call options and the purchase of securities on a when issued, delayed settlement or forward delivery basis and collateral arrangements with respect to initial or variation margin for futures contracts will not be deemed to be pledges of a Portfolio's assets or the purchase of any securities on margin for purposes of this investment limitation; (9) underwrite the securities of other issuers, or with respect to each Portfolio other than the Global Equity, Core Value and Small Capitalization Growth Portfolios, invest more than an aggregate of 10% (15% in the case of the Emerging Markets Portfolio) of the total assets of the Portfolio, at the time of purchase, in securities for which there are no readily available markets, including repurchase agreements which have maturities of more than seven days or, in the case of each Portfolio (other than the Emerging Markets Portfolio), securities subject to legal or contractual restrictions on resale; (10) invest for the purpose of exercising control over management of any company; (11) invest its assets in securities of any investment company, except in connection with mergers, acquisitions of assets or consolidations and except as may otherwise be permitted by the 1940 Act; (12) acquire any securities of companies within one industry if, as a result of such acquisition, more than 25% of the value of the Portfolio's total assets would be invested in securities of companies within such industry; provided, however, that there shall be no limitation on the purchase of obligations issued or guaranteed by the U.S. Government, its agencies, enterprises or instrumentalities, and (13) write or acquire options or interests in oil, gas or other mineral exploration or development programs. -21- Each Portfolio, with the exception of the Muni Intermediate and New Jersey Muni Portfolios, also will not: (14) with respect to 75% of its total assets, invest more than 5% of its total assets at the time of purchase in the securities of any single issuer (other than obligations issued or guaranteed by the U.S. Government, its agencies, enterprises or instrumentalities). Pursuant to Rule 2a-7 under the 1940 Act, each of the Government Cash Portfolio and the Tax-Exempt Cash Portfolio may not invest more than 5% of its total assets in securities of any one issuer (other than U.S. Government securities, repurchase agreements collateralized by such obligations, certain money market fund securities and securities subject to certain guarantees which are issued by persons that, directly or indirectly, do not control and are not controlled by or under common control with the issuer). Each of these portfolios may, however, invest more than 5% of its total assets in First Tier Securities (as defined in Rule 2a-7) of a single issuer for a period of three business days after the purchase thereof. For the Government Cash Portfolio and the Tax-Exempt Cash Portfolio compliance with the diversification provisions of Rule 2a-7 under the 1940 Act will be deemed to be compliance with the diversification limitation in paragraph (14). Each of the Muni Intermediate and New Jersey Muni Portfolios is classified as a "non-diversified" investment company under the 1940 Act, which means that each Portfolio is not limited by the 1940 Act in the proportion of its assets that it may invest in the securities of a single issuer. However, each Portfolio intends to conduct its operations so as to qualify as a "regulated investment company" for purposes of the Internal Revenue Code of 1986, as amended (the "Code"), which generally will relieve the Portfolio of any liability for Federal income tax to the extent its earnings are distributed to shareholders. In order to qualify as a regulated investment company, the Code requires, among other things, that at the end of each quarter, no more than 5% of the value of a Portfolio's total assets may be invested in the securities of any one issuer, and no more than 10% of the outstanding voting securities of such issuer may be held by the Portfolio, except that (a) up to 50% of the value of the Portfolio's total assets may be invested without regard to these limitations, provided that no more than 25% of the value of the Portfolio's total assets are invested in the securities of any one issuer (or two or more issuers which the Portfolio controls and which are engaged in the same or similar trades or businesses or related trades or businesses); (b) the foregoing limitations do not apply to securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities; and (c) a Portfolio will be considered to have violated these diversification requirements only if the noncompliance results from an acquisition of securities during the quarter and is not cured within 30 days after the end of the quarter. If a Portfolio's borrowings are in excess of 5% (excluding overdrafts) of its total net assets, additional portfolio purchases will not be made until the amount of such borrowing is reduced to 5% or less. With respect to the International, Large Cap Value, Core Value, Small Capitalization Growth, Small Capitalization Value, Strategic Equity, Institutional International, Emerging Markets and Global Equity Portfolios, borrowings including reverse repurchase agreements and securities purchased on a when issued, delayed settlement or forward delivery basis may not exceed 33 1/3% of each Portfolio's total net assets. -22- With respect to investment limitations (7) and (8), the Institutional International, International, Emerging Markets and Global Equity Portfolios may borrow money as a temporary measure for extraordinary or emergency purposes, enter into reverse repurchase agreements and purchase securities on a when-issued, delayed settlement or forward delivery basis, which activities may involve a borrowing, provided that the aggregate of such borrowings shall not exceed 33 1/3% of the value of each Portfolio's total assets (including the amount borrowed) less liabilities (other than borrowings) and may pledge up to 33 1/3% of the value of its total assets to secure borrowings. As a matter of policy which may be changed by the particular Fund's Board without shareholder approval, with respect to limitation (12), Portfolios other than the Government Cash Portfolio and the Tax-Exempt Cash Portfolio will not invest more than 25% of the value of their respective total assets in instruments issued by U.S. banks. In addition, with respect to investment limitation (12), (a) there is no limitation with respect to (i) instruments issued or guaranteed by the United States, any state, territory or possession of the United States, the District of Columbia or any of their authorities, agencies, instrumentalities or political subdivisions, and (ii) repurchase agreements secured by the instruments described in clause (i); (b) wholly-owned finance companies will be considered to be in the industries of their parents if their activities are primarily related to financing the activities of the parents; and (c) utilities will be divided according to their services; for example, gas, gas transmission, electric and gas, electric and telephone will each be considered a separate industry. With regard to limitation (13), the purchase of securities of a corporation, a subsidiary of which has an interest in oil, gas or other mineral exploration or development programs shall not be deemed to be prohibited by the limitation. If a percentage restriction is adhered to at the time an investment is made, a later increase in percentage resulting from a change in value or assets will not constitute a violation of such restriction. MANAGEMENT OF THE FUNDS Each Fund's officers, under the supervision of the particular Board, manage the day-to-day operations of the Fund. The Board members set broad policies for each Fund and choose its officers. Board Members and Officers The business and affairs of each of the Funds are managed under the direction of its Board. The following is a list of the Board members and officers of each of the Funds and a brief statement of their principal occupations during the past five years: -23-
Name and Address Age Principal Occupation During Past Five Years - ------------------------------- --- ------------------------------------------------------------------------------- H. Franklin Allen, Ph.D. 43 Director of the Glenmede Fund; Trustee of the Glenmede Portfolios; Nippon Life Finance Department Professor of Finance and Economics; Professor of Finance and Economics from The Wharton School 1990-1996; Vice Dean and Director of Wharton Doctoral Programs from 1990-1993. University of Pennsylvania Employed by The University of Pennsylvania since 1980. Philadelphia, PA 19104-6367 Willard S. Boothby, Jr. 78 Director of the Glenmede Fund; Trustee of the Glenmede Portfolios; Director, 600 East Gravers Lane Penn Engineering & Manufacturing Corp.; Former Director of Georgia-Pacific Wyndmoor, PA 19118 Corp.; Former Chairman and Chief Executive Officer Blyth Eastman Dillon & Co., Inc.; Former Managing Director of Paine Webber, Inc.; Former Chairman of U.S. Securities Industry Association. John W. Church, Jr.* 67 Chairman and Director of the Glenmede Fund; Chairman and Trustee of the Glenmede 44 Wistar Road Portfolios; Retired, Executive Vice President and Chief Investment Officer of Villanova, PA 19085 The Glenmede Trust Company from 1979 - 1997. Francis J. Palamara 74 Director of the Glenmede Fund; Trustee of the Glenmede Portfolios; Trustee of P.O. Box 44024 Gintel Fund; Former Director of XTRA Corporation; Former Executive Vice Phoenix, AZ 85064-4024 President--Finance of ARAMARK, Inc. G. Thompson Pew, Jr.* 57 Director of the Glenmede Fund; Trustee of the Glenmede Portfolios; Director of 310 Caversham Road The Glenmede Trust Company; Former Director of Brown & Glenmede Holdings, Inc.; Bryn Mawr, PA 19010 Former Co-Director, Principal and Officer of Philadelphia Investment Banking Co.; Former Director and Officer of Valley Forge Administrative Services Company. Mary Ann B. Wirts 48 President of the Glenmede Fund and the Glenmede Portfolios; First Vice President One Liberty Place and Manager of The Fixed Income Division of The Glenmede Trust Company. Employed 1650 Market Street, Suite 1200 by The Glenmede Trust Company since 1982. Philadelphia, PA 19103 Kimberly C. Osborne 34 Executive Vice President and Treasurer of the Glenmede Fund and the Glenmede One Liberty Place Portfolios; Vice President of The Glenmede Trust Company. Employed by The Glenmede 1650 Market Street, Suite 1200 Trust Company since 1993. Philadelphia, PA 19103 Michael P. Malloy 40 Secretary of the Glenmede Fund and the Glenmede Portfolios; Partner in the law One Logan Square firm of Drinker Biddle & Reath LLP. 18th and Cherry Streets Philadelphia, PA 19103-6996
- -------------- *Board members Church and Pew are "interested persons" of the Funds as that term is defined in the 1940 Act. -24- Messrs. Allen, Boothby, Church, Palamara and Pew are members of the Audit and Valuation Committees of the Boards. The Funds' Audit Committees, among other things, review the results of the annual audit and recommend to the Funds the firm to be selected as independent auditors. The Glenmede Fund's Valuation Committee determines, in consultation with the Fund's administrator and Advisor, the fair value of certain securities pursuant to procedures adopted by the Glenmede Fund's Board. Remuneration of Board Members The Glenmede Fund pays each Board member, other than officers of the Advisor, an annual fee of $11,000 plus $1,250 for each Board meeting attended and out-of-pocket expenses incurred in attending Board meetings. The Glenmede Portfolios pays each Board member, other than officers of the Advisor, an annual fee of $1,000 per year and out-of-pocket expenses incurred in attending Board meetings. Board members receive no compensation as members of the Audit or Valuation Committees. Officers of the Funds receive no compensation as officers from the Funds. Set forth in the table below is the compensation received by Board members for the fiscal year ended October 31, 1999.
Pension or Retirement Estimated Aggregate Aggregate Benefits Annual Total Compensation Compensation Total Benefits Compensation Name of from from Glenmede Part of the Upon from the Person, Position Glenmede Fund Portfolios Funds' Expense Retirement Funds ---------------- ------------- ------------- -------------- ---------- ------------ H. Franklin Allen, Ph.D., $14,943.59 $1,056.41 None None $16,000 Director/Trustee Willard S. Boothby, Jr., $14,943.59 $1,056.41 None None $16,000 Director/Trustee John W. Church, Jr. $14,943.59 $1,056.41 None None $16,000 Director/Trustee Francis J. Palamara, $14,943.59 $1,056.41 None None $16,000 Director/Trustee G. Thompson Pew, Jr., $14,943.59 $1,056.41 None None $16,000 Director/Trustee
INVESTMENT ADVISORY AND OTHER SERVICES Investment Advisor and Sub-Advisors The Advisor, The Glenmede Trust Company, a limited purpose trust company chartered in 1956, provides fiduciary and investment services to -25- endowment funds, foundations, employee benefit plans and other institutions and individuals. The Advisor is a wholly-owned subsidiary of The Glenmede Corporation (the "Corporation") whose shares are closely held by 79 shareholders. The Corporation has a nine person Board of Directors which, at December 31, 1999, collectively, owned 34.77% of the Corporation's voting shares and 98.67% of the Corporation's total outstanding shares. The members of the Board and their respective interests in the Corporation at December 31, 1999 are as follows:
The Glenmede Corporation Percent of Percent of Board of Directors Voting Shares Total Shares - ------------------- ------------- ------------ Susan W. Catherwood.................................. 10.83% 1.12% Richard F. Pew....................................... 10.83% .96% Thomas W. Langfitt, M.D.............................. 11.07% 8.62% Arthur E. Pew III.................................... 10.83% .96% J. Howard Pew, II.................................... 10.83% 1.30% J. N. Pew, III....................................... 11.07% 4.86% J. N. Pew, IV........................................ 11.07% 1.31% R. Anderson Pew...................................... 11.07% 5.42% Ethel Benson Wister.................................. 11.07% 10.22% ------ ------ 98.67% 34.77%
The Sub-Advisor to the Emerging Markets Portfolio, Pictet International Management Limited, is an affiliate of Pictet and Cie, a Swiss private bank, which was founded in 1805. Pictet and Cie is owned by eight partners. A Sub-Advisor to the Small Capitalization Growth Portfolio, Winslow Capital Management, Inc., was founded in 1992 to manage a limited number of growth equity portfolios for corporations, endowments, foundations, public funds and other institutions. The firm is 100% employee owned. These shareholders also act as the firm's Board of Directors and their respective interests in the firm at December 31, 1999 are as follows: Name Percent of Ownership ---- -------------------- Clark J. Winslow 57% Richard E. Pyle, CFA 21% R. Bart Wear, CFA 10% Joseph J. Docter, CFA 6% Jon R. Foust 6% ---- 100% A Sub-Advisor to the Small Capitalization Growth Portfolio, TCW Investment Management Company ("TCW"), is a wholly-owned subsidiary of The TCW Group, Inc. ("TCW Group") (TCW changed its name from TCW Funds Management, Inc. on January 1, 2000.) Established in 1971, TCW Group, including TCW, provide a -26- variety of trust, investment management and investment advisory services. Ownership of TCW Group lies approximately 95% with employees and 5% with the directors. Robert A. Day, who is Chairman of the Board of Directors of TCW Group may be deemed to be a control person of TCW, by virtue of the aggregate ownership by Mr. Day and his family of more than 25% of the outstanding voting stock of TCW Group. As noted in the Prospectuses, the Advisor does not receive any fee from the Government Cash, Tax-Exempt Cash, Core Fixed Income, International, Strategic Equity, Large Cap Value, Muni Intermediate and New Jersey Muni Portfolios for its investment services. The Advisor is entitled to receive a fee from the Small Capitalization Value Portfolio for its investment services calculated daily and payable monthly, at an annual rate of .55% of the Portfolio's average daily net assets. Prior to January 1, 1998, the Advisor did not receive any fee from the Small Capitalization Value Portfolio for its investment services. For the fiscal year ended October 31, 1999 and for the period January 1, 1998 to October 31, 1998, the Small Capitalization Value Portfolio paid the Advisor fees of $1,755,859 and $1,965,405, respectively. The Advisor is entitled to receive a fee from the Institutional International Portfolio for its services, calculated daily and payable monthly, at the annual rate of .75% of the Portfolio's average daily net assets. The Advisor has agreed to waive its fees to the extent necessary to ensure that the Institutional International Portfolio's annual total operating expenses do not exceed 1.00% of average net assets. There were no waivers necessary for the fiscal years ended October 31, 1999, 1998 and 1997 respectively. For the fiscal years ended October 31, 1999, 1998 and 1997, the Institutional International Portfolio paid the Advisor advisory fees of $1,011,323, $718,993 and $564,533, respectively. The Advisor is entitled to receive a fee from the Emerging Markets Portfolio for its services, calculated daily and payable monthly, at the annual rate of .75% of the Portfolio's average daily net assets, and the Sub-Advisor is entitled to receive a fee from the Emerging Markets Portfolio for its services, calculated daily and payable monthly, at the annual rate of .50% of the Portfolio's average daily net assets. Prior to November 1, 1996, the Advisor and Sub-Advisor were entitled to receive fees from the Emerging Markets Portfolio for their services, calculated daily and payable monthly at the annual rate of .50% and .75%, respectively, of the Portfolio's average daily net assets. For the fiscal years ended October 31, 1999, 1998 and 1997, the Emerging Markets Portfolio paid the Advisor advisory fees of $523,210, $570,667 and $794,794, respectively, and paid the Sub-Advisor sub-advisory fees of $348,806, $380,444 and $529,863, respectively. The Advisor is entitled to receive a fee from the Global Equity Portfolio for its investment services, calculated daily and payable monthly, at the annual rate of .70% of the Portfolio's average daily net assets. For the fiscal year ended October 31, 1999 and the period November 3, 1997 (commencement of operations) to October 31, 1998, the Global Equity Portfolio paid the Advisor advisory fees of $201,240 and $178,727, respectively. The Advisor is entitled to receive a fee from the Small Capitalization Growth Portfolio for its services, calculated daily and payable monthly, at the annual rate of .25% of the Portfolio's average daily net assets, and each Sub-Advisor is entitled to receive a fee from the Small Capitalization Growth Portfolio for its services, calculated daily and payable monthly, at the annual -27- rate of .60% of that portion of the Portfolio's average daily net assets that the Sub-Advisor manages. For the fiscal year ended October 31, 1999, no advisory or sub-advisory fees were paid by the Small Capitalization Growth Portfolio because it had not commenced operations. The Advisor is entitled to receive a fee from the Core Value Portfolio for its services, calculated daily and payable monthly, at the annual rate of 0.45% of the Portfolio's average daily net assets. For the fiscal year ended October 31, 1999, no advisory fees were paid by the Core Value Portfolio because it had not commenced operations. Additionally, many shareholders in the Portfolios are clients of the Advisor or an Affiliate and, as clients, pay fees which vary depending on the capacity in which the Advisor or Affiliate provides fiduciary and investment services to the particular client. Such services may include personal trust, estate settlement, advisory and custodian services. For example, for advisory services, the Advisor charges its clients up to 1% on the first $2 million of principal, .60% on the next $3 million of principal and .50% on the next $5 million of principal. For accounts in excess of $10 million of principal, the fee would be determined by special analysis. Administrative, Transfer Agency and Dividend Paying Services ICC, One South Street, Baltimore, Maryland 21202, serves as the Funds' administrator, transfer agent and dividend paying agent pursuant to a Master Services Agreement, and in those capacities supervises all aspects of the Funds' day-to-day operations, other than management of the Funds' investments. ICC is an indirect subsidiary of Deutsche Bank AG. For its services as administrator, transfer agent and dividend paying agent, ICC is entitled to receive fees from the Funds based on the combined net assets of all Portfolios of the Funds according to the following schedule: .12% of the first $100 million; .08% of the next $150 million; .04% of the next $500 million; and .03% over $750 million. The fee is allocated to each Portfolio based on its relative net assets. For the fiscal year ended October 31, 1999, ICC received fees at the rate of .04% of the average net assets of each of the Funds' Portfolios other than the Small Capitalization Growth and Core Value Portfolios, which had not commenced operations as of October 31, 1999. For the fiscal year ended October 31, 1999, the Funds paid ICC fees of $177,284 for the Government Cash Portfolio, $136,105 for the Tax-Exempt Cash Portfolio, $94,966 for the Core Fixed Income Portfolio, $472,896 for the International Portfolio, $56,347 for the Strategic Equity Portfolio, $113,673 for the Small Capitalization Value Portfolio, $27,038 for the Large Cap Value Portfolio, $6,477 for the Muni Intermediate Portfolio and $6,639 for the New Jersey Muni Portfolio, $25,405 for the Emerging Markets Portfolio, $52,101 for the Institutional International Portfolio and $10,505 for the Global Equity Portfolio. For the fiscal year ended October 31, 1998, the Funds paid ICC fees of $172,208 for the Government Cash Portfolio, $109,335 for the Tax-Exempt Cash Portfolio, $93,997 for the Core Fixed Income Portfolio, $430,419 for the International Portfolio, $58,477 for the Strategic Equity Portfolio, $171,862 for the Small Capitalization Value Portfolio, $27,783 for the Large Cap Value Portfolio, $7,047 for the Muni Intermediate Portfolio, $5,131 for the New Jersey Muni Portfolio, $28,180 for the Emerging Markets Portfolio and $36,343 for the Institutional International Portfolio. For the period November 3, 1997 (commencement of operations) to October 31, 1998, ICC received fees of $9,297 for the Global Equity Portfolio. -28- For the fiscal year ended October 31, 1997, the Funds paid ICC fees of $178,351 for the Government Cash Portfolio, $99,450 for the Tax-Exempt Cash Portfolio, $101,654 for the Core Fixed Income Portfolio, $342,102 for the International Portfolio, $45,406 for the Strategic Equity Portfolio, $144,610 for the Small Capitalization Value Portfolio, $24,893 for the Large Cap Value Portfolio, $7,183 for the Muni Intermediate Portfolio, $3,821 for the New Jersey Muni Portfolio, $40,354 for the Emerging Markets Portfolio and $28,484 for the Institutional International Portfolio. Shareholder Services Plan Glenmede Portfolios has adopted a Shareholder Servicing Plan effective January 1, 1995 and Glenmede Fund has adopted an Amended and Restated Shareholder Servicing Plan (collectively the "Plans") effective January 1, 1998 under which the Funds may pay a fee to broker/dealers, banks and other financial institutions (including the Advisor and its affiliates) that are dealers of record or holders of record or which have a servicing relationship ("Servicing Agents") with the beneficial owners of shares in any of the Portfolios. As of the date of this Statement of Additional Information, the Institutional International, Emerging Markets and Global Equity Portfolios are not subject to the Plans and, accordingly, pay no shareholder servicing fees. Under the Plans, Servicing Agents enter into Shareholder Servicing Agreements (the "Agreements") with the Funds. Pursuant to such Agreements, Servicing Agents provide shareholder support services to their clients ("Customers") who beneficially own shares of the Portfolios. The fee, which is at an annual rate of .05% (.25% for the Small Capitalization Growth Portfolio and for the Advisor Shares of the Small Capitalization Value Portfolio), is computed monthly and is based on the average daily net assets of the shares beneficially owned by Customers of such Servicing Agents. For the period November 1, 1997 through December 31, 1997, Advisor Shares of the Small Capitalization Value Portfolio paid shareholder servicing fees at an annual rate of .05% of average daily net assets. All expenses incurred by the Portfolios in connection with the Agreements and the implementation of the Plans shall be borne entirely by the holders of the shares of the particular Portfolio involved and will result in an equivalent increase to each Portfolio's Total Annual Portfolio Operating Expenses. The services provided by the Servicing Agents under the Agreements may include aggregating and processing purchase and redemption requests from Customers and transmitting purchase and redemption orders to the transfer agent; providing Customers with a service that invests the assets of their accounts in shares pursuant to specific or pre-authorized instructions; processing dividend and distribution payments from the Funds on behalf of Customers; providing information periodically to Customers showing their positions; arranging for bank wires; responding to Customers' inquiries concerning their investments; providing sub-accounting with respect to shares beneficially owned by Customers or the information necessary for sub-accounting; if required by law, forwarding shareholder communications (such as proxies, shareholder reports, annual and semi-annual financial statements and dividend, distribution and tax notices) to Customers; and providing such other similar services as may be reasonably requested. The Advisor has entered into an Agreement with the Funds and provides shareholder support services to their clients who beneficially own shares of certain Portfolios listed below. For the fiscal year ended October 31, 1999, the Small Capitalization Growth and Core Value Portfolios did not have any shares issued or outstanding. Shareholder servicing fees paid to the Advisor for the fiscal year ended October 31, 1999 for the Government Cash, Tax-Exempt Cash, Core Fixed Income, Muni Intermediate, New Jersey Muni, Strategic Equity, International, Small Capitalization Value (Advisor Shares), Small Capitalization Value (Institutional Shares) and Large Cap Value Portfolios were $240,169, -29- $185,886, $130,098, $8,847, $9,197, $76,980, $665,111, $722,155, $15,192 and $36,258, respectively. Shareholder servicing fees paid to the Advisor for the fiscal year ended October 31, 1998 for the Government Cash, Tax-Exempt Cash, Core Fixed Income, Muni Intermediate, New Jersey Muni, Strategic Equity, International, Small Capitalization Value (Advisor Shares) and Large Cap Value Portfolios were $232,765, $147,783, $130,578, $9,527, $7,046, $79,117, $621,378, $849,585 and $37,371, respectively. Shareholder servicing fees paid to the Advisor for the period January 2, 1998 (commencement of operations of Institutional Shares) to October 31, 1998 for the Small Capitalization Value Portfolio (Institutional Shares) were $16,036. Shareholder servicing fees paid to the Advisor for the fiscal year ended October 31, 1997 for the Government Cash, Tax-Exempt Cash, Core Fixed Income, Muni Intermediate, New Jersey Muni, Strategic Equity, International, Small Capitalization Value and Large Cap Value Portfolios were $233,912, $130,408, $129,813, $9,418, $5,023, $59,674, $448,678, $189,976 and $32,710, respectively. Custodian Custody services are provided to each Portfolio by The Chase Manhattan Bank, N.A., 3 Chase Metrotech Center, Brooklyn, New York 11245. Distributor Shares of the Funds are distributed continuously and are offered without a sales load by ICC Distributors, Inc. ("ICC Distributors"), Two Portland Square, Portland, Maine 04101, pursuant to Distribution Agreements between the Funds and ICC Distributors. ICC Distributors receives no fee from the Funds for its distribution services. Independent Accountants PricewaterhouseCoopers LLP, 250 West Pratt Street, Baltimore, MD, 21201, serves as the Funds' independent accountants and will audit their financial statements annually. Counsel Drinker Biddle & Reath LLP, One Logan Square, 18th and Cherry Streets, Philadelphia, Pennsylvania 19103-6996, serves as counsel to the Funds. Reports Shareholders receive unaudited semi-annual financial statements and audited annual financial statements. -30- PORTFOLIO TRANSACTIONS The Investment Advisory Agreements and the Sub-Advisory Agreements authorize the Advisor, and the Sub-Advisors (Emerging Markets and Small Capitalization Growth Portfolios), to select the brokers or dealers that will execute the purchases and sales of investment securities for each of the Portfolios and direct the Advisor or each Sub-Advisor to use its best efforts to obtain the best available price and most favorable execution with respect to all transactions for the Portfolios. The Advisor or Sub-Advisor may, however, consistent with the interests of a Portfolio, select brokers on the basis of the research, statistical and pricing services they provide to a Portfolio. Information and research received from such brokers will be in addition to, and not in lieu of, the services required to be performed by the Advisor or Sub-Advisor under each Investment Advisory Agreement and each Sub-Advisory Agreement. A commission paid to such brokers may be higher than that which another qualified broker would have charged for effecting the same transaction, provided that such commissions are paid in compliance with the Securities Exchange Act of 1934, as amended, and that the Advisor or Sub-Advisor determines in good faith that such commission is reasonable in terms either of the transaction or the overall responsibility of the Advisor or Sub-Advisor to a Portfolio and the Advisor's or Sub-Advisor's other clients. The Funds are required to identify any securities of their regular brokers or dealers (as defined in Rule 10b-1 under the 1940 Act) or their parents that the Portfolios have acquired during the Funds' most recent fiscal year. During the fiscal year ended October 31, 1999, the Core Fixed Income, Large Cap Value, Global Equity, International and Institutional International Portfolios acquired and sold securities of their regular broker/dealers. At October 31, 1999, the Core Fixed Income Portfolio held Goldman Sachs & Co. debt securities with a value of $3,805,080, and Merrill Lynch, Pierce, Fenner & Smith Inc. debt securities with a value of $4,572,700; the Large Cap Value Portfolio held Morgan Stanley Dean Witter equity securities with a value of $728,062; the Global Equity Portfolio held Morgan Stanley Dean Witter equity securities with a value of $88,250; the International Portfolio held ABN Amro Incorporated equity securities with a value of $20,055,821; and the Institutional International Portfolio held ABN Amro Incorporated equity securities with a value of $2,102,237. During the fiscal year ended October 31, 1999, the Strategic Equity, International, Small Capitalization Value, Large Cap Value, Institutional International, Emerging Markets and Global Equity Portfolios paid $172,117, $1,189,519, $922,862, $1,254,914, $184,218, $714,797 and $33,657 in brokerage commissions, respectively. During the fiscal year ended October 31, 1998, the Strategic Equity, International, Small Capitalization Value, Large Cap Value, Institutional International and Emerging Markets Portfolios paid $191,112, $889,483, $613,021, $225,179, $89,805 and $630,185 in brokerage commissions, respectively. For the period November 3, 1997 (commencement of operations) to October 31, 1998, the Global Equity Portfolio paid $84,877 in brokerage commissions. During the fiscal year ended October 31, 1997, the Strategic Equity, International, Small Capitalization Value, Large Cap Value, Institutional International and Emerging Markets Portfolios paid $80,102, $1,256,020, $592,458, $171,033, $21,782 and $118,807 in brokerage commissions, respectively. During the fiscal year ended October 31, 1999, the Small Capitalization Growth and Core Value Portfolios had not yet commenced operations. The Government Cash, Tax-Exempt Cash, Core Fixed Income, Muni Intermediate and New Jersey Muni Portfolios do not currently expect to incur any brokerage commission expense on transactions in their portfolio securities because debt instruments are generally traded on a "net" basis with dealers acting as principal for their own accounts without a stated commission. The price of the security, however, usually includes a profit to the dealer. To the extent that a Portfolio effects brokerage transactions with a broker/dealer affiliated directly or indirectly with the Funds, the Advisor, Sub-Advisors or ICC Distributors, such transactions will be reasonable and fair compared to the commissions, fees or other remuneration received by other -31- brokers in connection with comparable transactions involving similar securities being purchased or sold on a securities exchange during a comparable period of time. During the fiscal year ended October 31, 1999, the Emerging Markets, International and Institutional International Portfolios paid $1,975, $14,840 and $1,501, respectively, in brokerage commissions to affiliated persons (representing 0.28%, 1.25% and 0.81%, respectively, of total commissions paid). These commissions were paid to Bankers Trust Company, DB Alex Brown LLC and Deutsche Morgan Grenfell Proprietary Limited who were affiliated with two of the Fund's officers prior to June 14, 1999. The total amount of transactions on which brokerage commissions were paid by the Emerging Markets, International and Institutional International Portfolios was $151,852,434, $557,244,184 and $85,256,061, respectively, of which 0.43%, 1.34% and 0.89%, respectively, involved the payment of commissions effected through affiliated persons. During the fiscal year ended October 31, 1998, the Emerging Markets Portfolio paid $1,777 in brokerage commissions to Bankers Trust Company (representing 0.28% of total commissions paid). The total amount of transactions on which brokerage commissions were paid was $124,570,709, of which 0.28% involved the payment of commissions effected through affiliated persons. Because shares of the Portfolios are not marketed through intermediary brokers or dealers, it is not the Funds' practice to allocate brokerage or effect principal transactions with dealers on the basis of sales of shares which may be made through such firms. However, the Advisor or each Sub-Advisor may place portfolio orders with qualified broker-dealers who refer clients to it. Some securities considered for investment by each Portfolio may also be appropriate for other clients served by the Advisor or Sub-Advisor. If the purchase or sale of securities is consistent with the investment policies of a Portfolio and one or more of these other clients served by the Advisor or a Sub-Advisor and is considered at or about the same time, transactions in such securities will be allocated among the Portfolio and clients in a manner deemed fair and reasonable by the Advisor or such Sub-Advisor. While in some cases this practice could have a detrimental effect on the price, value or quantity of the security as far as a Portfolio is concerned, in other cases it is believed to be beneficial to the Portfolios. -32- ADDITIONAL INFORMATION CONCERNING TAXES General The following summarizes certain additional tax considerations generally affecting the Portfolios and their shareholders that are not described in the Prospectuses. No attempt is made to present a detailed explanation of the tax treatment of the Portfolios or their shareholders, and the discussion here and in the Prospectuses is not intended as a substitute for careful tax planning. Potential investors should consult their tax advisers with specific reference to their own tax situation. Each Portfolio is treated as a separate corporate entity under the Code, and intends to qualify as a regulated investment company. Such qualification generally relieves a Portfolio of liability for Federal income taxes to the extent its earnings are distributed in accordance with the Code. Qualification as a regulated investment company under the Code requires, among other things, that each Portfolio distribute to its shareholders an amount equal to at least the sum of 90% of its investment company taxable income and 90% of its tax-exempt income (if any) net of certain deductions for a taxable year. (In general, a Portfolio's investment company taxable income will be the sum of its net investment income, including interest and dividends, subject to certain adjustments, and net short-term capital gain over net long-term capital loss, if any, for such year.) In addition, each Portfolio must satisfy certain requirements with respect to the source of its income for a taxable year. At least 90% of the gross income of each Portfolio must be derived from dividends, interest, payments with respect to securities loans, gains from the sale or other disposition of stock, securities or foreign currencies, and other income (including, but not limited to, gains from options, futures, or forward contracts) derived with respect to the Portfolio's business of investing in such stock, securities or currencies. The Treasury Department may by regulation exclude from qualifying income foreign currency gains which are not directly related to a Portfolio's principal business of investing in stock or securities, or options and futures with respect to stock or securities. Any income derived by a Portfolio from a partnership or trust is treated for this purpose as derived with respect to the Portfolio's business of investing in stock, securities or currencies only to the extent that such income is attributable to items of income which would have been qualifying income if realized by the Portfolio in the same manner as by the partnership or trust. Any distribution of the excess of net long-term capital gain over net short-term capital loss is taxable to a shareholder as long-term capital gain, regardless of how long the shareholder has held the distributing Portfolio's shares and whether such distribution is received in cash or additional Portfolio shares. Each Portfolio will designate such distributions as capital gain dividends in a written notice mailed to shareholders within 60 days after the close of the Portfolio's taxable year. Upon the sale or exchange of Portfolio shares, if the shareholder has not held such shares for more than six months, any loss on the sale or exchange of those shares will be treated as long-term capital loss to the extent of the capital gain distributions received with respect to the shares. The following Portfolios have available capital loss carryforwards to offset future net capital gains through the indicated expiration dates as follows: -33-
Expiring Expiring Expiring Expiring Expiring Expiring Expiring Expiring Portfolio in 2000 in 2001 in 2002 in 2003 in 2004 in 2005 in 2006 in 2007 - --------- -------- -------- -------- -------- -------- -------- ------- -------- Government Cash - $ 127 $ 1,000 $26,819 - $ 7,815 - Tax-Exempt Cash $18,922 19,079 8,905 27,815 $ 13 - $ 7,168 Core Fixed Income - - 7,273,798 1,869,325 - Muni Intermediate - - 143,831 549,436 2,107 42,723 - New Jersey Muni - - 56,593 21,708 11,660 - 1,722 $ 2,683 Small Capitalization - - - - - - 20,153,292 Value Emerging Markets - - - - - - 25,319,729
If the Emerging Markets Portfolio retains net capital gains for reinvestment, the Portfolio may elect to treat such amounts as having been distributed to shareholders. As a result, the shareholders would be subject to tax on undistributed net capital gains, would be able to claim their proportionate share of the Federal income taxes paid by the Portfolio on such gains as a credit against their own Federal income tax liabilities, and would be entitled to an increase in their basis in their Portfolio shares. If for any taxable year a Portfolio does not qualify for the special Federal income tax treatment afforded regulated investment companies, all of its taxable income will be subject to Federal income tax at regular corporate rates (without any deduction for distributions to its shareholders). In such event, dividend distributions (including amounts derived from interest on tax-exempt obligations in the case of the Tax-Exempt Cash, Muni Intermediate and New Jersey Muni Portfolios) would be taxable as ordinary income to shareholders to the extent of the Portfolio's current and accumulated earnings and profits, and would be eligible for the dividends received deduction for corporations. International, Institutional International, Emerging Markets and Global Equity Portfolios Income received from sources within foreign countries may be subject to withholding and other income or similar taxes imposed by such countries. If more than 50% of the value of a Portfolio's total assets at the close of its taxable year consists of stock or securities of foreign corporations, each Portfolio will be eligible and intends to elect to "pass-through" to its shareholders the amount of foreign taxes paid by it. Pursuant to this election, each shareholder will be required to include in gross income (in addition to taxable dividends actually received) his pro rata share of the foreign taxes paid by the Portfolio, and will be entitled either to deduct (as an itemized deduction) his pro rata share of foreign taxes in computing his taxable income or to use it as a foreign tax credit against his U.S. Federal income tax liability, subject to limitations. No deduction for foreign taxes may be claimed by a shareholder who does not itemize deductions, but such a shareholder may be eligible to claim the foreign tax credit (see below). Each shareholder will be notified within 60 days after the close of a Portfolio's taxable year whether the foreign taxes paid by the Portfolio will "pass-through" for that year. Tax-Exempt Cash, Muni Intermediate and New Jersey Muni Portfolios As described in the Prospectus, these Portfolios are designed to provide investors with current tax-exempt interest income. Shares of the -34- Portfolios are not suitable for tax-exempt institutions and may not be suitable for retirement plans qualified under Section 401 of the Code, H.R. 10 plans and individual retirement accounts since such plans and accounts are generally tax-exempt and, therefore, would not only fail to gain any additional benefit from each such Portfolio's dividends being tax-exempt, but such dividends would be ultimately taxable to the beneficiaries when distributed to them. In addition, the Portfolios may not be an appropriate investment for entities which are "substantial users" of facilities financed by private activity bonds or "related persons" thereof. "Substantial user" is defined under U.S. Treasury Regulations to include a non-exempt person who regularly uses a part of such facilities in his trade or business and whose gross revenues derived with respect to the facilities financed by the issuance of bonds are more than 5% of the total revenues derived by all users of such facilities, who occupies more than 5% of the usable area of such facilities or for whom such facilities or a part thereof were specifically constructed, reconstructed or acquired. "Related persons" include certain related natural persons, affiliated corporations, a partnership and its partners and an S corporation and its shareholders. The percentage of total dividends paid by each Portfolio with respect to any taxable year which qualify as Federal exempt-interest dividends will be the same for all shareholders receiving dividends for such year. In order for each Portfolio to pay exempt-interest dividends with respect to any taxable year, at the close of each quarter of its taxable year at least 50% of the aggregate value of each Portfolio's assets must consist of exempt-interest obligations. After the close of its taxable year, each Portfolio will notify its shareholders of the portion of the dividends paid by it which constitutes an exempt-interest dividend with respect to such year. While each Portfolio seeks to invest substantially all of its assets in tax-exempt obligations (except on a temporary basis or for temporary defensive periods), any investment company taxable income earned by a Portfolio will be distributed. In general, each Portfolio's investment company taxable income will be its taxable income (including taxable interest received from temporary investments and any net short-term capital gains realized by a Portfolio) subject to certain adjustments and excluding the excess of any net long-term capital gains for the taxable year over the net short-term capital loss, if any, for such year. Other Tax Matters The tax principles applicable to transactions in financial instruments and futures contracts and options that may be engaged in by a Portfolio, and investments in passive foreign investment companies ("PFICs"), are complex and, in some cases, uncertain. Such transactions and investments may cause a Portfolio to recognize taxable income prior to the receipt of cash, thereby requiring the Portfolio to liquidate other positions, or to borrow money, so as to make sufficient distributions to shareholders to avoid corporate-level tax. Moreover, some or all of the taxable income recognized may be ordinary income or short-term capital gain, so that the distributions may be taxable to shareholders as ordinary income. In addition, in the case of any shares of a PFIC in which a Portfolio invests, the Portfolio may be liable for corporate-level tax on any ultimate gain or distributions on the shares if the Fund fails to make an election to recognize income annually during the period of its ownership of the PFIC shares. -35- A 4% nondeductible excise tax is imposed on regulated investment companies that fail to currently distribute specified percentages of their ordinary taxable income and net capital gain (excess of capital gains over capital losses). Each Portfolio intends to make sufficient distributions or deemed distributions of its ordinary taxable income and any net capital gain prior to the end of each calendar year to avoid liability for this excise tax. Each Portfolio will be required in certain cases to withhold and remit to the United States Treasury 31% of taxable dividends or gross proceeds realized upon sale paid to shareholders who have failed to provide a correct tax identification number in the manner required, or who are subject to withholding by the IRS for failure properly to include on their return payments of taxable interest or dividends, or who have failed to certify to the Portfolio that they are not subject to backup withholding when required to do so or that they are "exempt recipients." Special Considerations Regarding Investment In Pennsylvania Municipal Obligations The concentration of investments in Pennsylvania Municipal Obligations by the Muni Intermediate Portfolio raises special investment considerations. In particular, changes in the economic condition and governmental policies of the Commonwealth of Pennsylvania and its municipalities could adversely affect the value of the Portfolio and its portfolio securities. This section briefly describes current economic trends in Pennsylvania. Pennsylvania's economy historically has been dependent on heavy industry although recent declines in the coal, steel and railroad industries have led to diversification of the Commonwealth's economy. Recent sources of economic growth in Pennsylvania are in the service sector, including trade, medical and health services, education and financial institutions. Agriculture continues to be an important component of the Commonwealth's economic structure, with nearly one-third of the Commonwealth's total land area devoted to cropland, pasture and farm woodlands. The Commonwealth utilizes the fund method of accounting and over 120 funds have been established for purposes of recording receipts and disbursements of the Commonwealth, of which the General Fund is the largest. Most of the Commonwealth's operating and administrative expenses are payable from the General Fund. The major tax sources for the General Fund are the sales tax, the personal income tax and the corporate net income tax. Major expenditures of the Commonwealth include funding for education, public health and welfare, transportation, and economic development. The constitution of the Commonwealth provides that operating budget appropriations of the Commonwealth may not exceed the estimated revenues and available surplus in the fiscal year for which funds are appropriated. Annual budgets are enacted for the General Fund and for certain special revenue funds which together represent the majority of expenditures of the Commonwealth. Although the balance in the General Fund of the Commonwealth (the principal operating fund of the Commonwealth) experienced deficits in fiscal 1990 and 1991, tax increases and spending decreases have resulted in surpluses the last seven years; as of June 30, 1998, the General Fund had a surplus of $1,958.9 million. The deficit in the Commonwealth's unreserved/undesignated funds also has been eliminated. -36- Current constitutional provisions permit the Commonwealth to issue the following types of debt: (i) electorate approved debt, (ii) debt for capital projects subject to an aggregate debt limit of 1.75 times the annual average tax revenues of the preceding five fiscal years, (iii) tax anticipation notes payable in the fiscal year of issuance and (iv) debt to suppress insurrection or rehabilitate areas affected by disaster. Certain state-created agencies issue debt supported by assets of, or revenues derived from, the various projects financed and the debt of such agencies is not an obligation of the Commonwealth although some of the agencies are indirectly dependent on Commonwealth appropriations. Certain litigation is pending against the Commonwealth that could adversely affect the ability of the Commonwealth to pay debt service on its obligations including as of June 1, 1999, suits relating to the following matters: (i) In February 1999, a taxpayer filed a petition for review in the Commonwealth Court of Pennsylvania asking the court to declare that Chapter 5 (relating to Sports Facilities Financing) of the Capital Facilities Debt Enabling Act is in violation of the Pennsylvania Constitution. Commonwealth Court denied the taxpayer's motion for a preliminary injunction and the Supreme Court denied an appeal of such denial. The respondents have filed preliminary objections in the nature of a demurrer, requesting the Court dismiss the case with prejudice. Oral arguments before the Commonwealth Court regarding the preliminary objections were scheduled for May 19, 1999, (ii) The American Civil Liberties Union ("ACLU") filed suit in federal court demanding additional funding for child welfare services; the Commonwealth settled a similar suit in the Commonwealth Court of Pennsylvania and is seeking the dismissal of the federal suit, among other things, because of that settlement. After its earlier denial of class certification was reversed by the Third Circuit Court of Appeals, the district court granted class certification to the ACLU, and the parties are proceeding with discovery. In July 1998, a settlement agreement was reached with the City of Philadelphia. The Commonwealth has agreed to pay $100,000 to settle plaintiffs' $1.4 million claim for attorney's fees and to take other actions in exchange for a full and final release and dismissal of the case against the Commonwealth parties. The settlement was approved by the district court on February 1, 1999, and the case was dismissed; (iii) In 1987, the Supreme Court of Pennsylvania held the statutory scheme for county funding of the judicial system to be in conflict with the constitution of the Commonwealth, but it stayed judgment pending enactment by the legislature of funding consistent with the opinion, and the legislature has yet to consider legislation implementing the judgment. In 1992, a new action in mandamus was filed seeking to compel the Commonwealth to comply with the original decision. The Court issued a writ in mandamus and appointed a special master in 1996 to submit a plan for implementation, which it intended to require by January 1, 1998. In January 1997, the Court established a committee, consisting of the special master and representatives of the Executive and Legislative branches, to develop an implementation plan; an implementation plan was filed in July 1997. In April 1998 the General Assembly appropriated approximately $12 million for the funding of county court administrators, under the implementation plan. However, no legislation has been approved for the payment of Commonwealth -37- compensation of county court administrators. In May 1998, an action was filed by the Administrative Governing Board of the First Judicial District claiming the city government has failed to provide adequate Funds for the Operation of the courts of the First Judicial District. In November 1998, the First Judicial District Governing Board filed with the Supreme Court a renewed motion for entry of an order providing emergency relief, which requests the City of Philadelphia to provide funds to the First Judicial District Courts, in order to maintain necessary judicial operations throughout the end of the fiscal year. Although the Supreme Court issued no order, the City is apparently continuing its funding of the courts; (iv) Litigation was filed in both state and federal courts by an association of rural and small schools and several individual school districts and parents challenging the constitutionality of the Commonwealth's system for funding local school districts -- the federal case has been stayed pending the resolution of the state case; a trial in the state case commenced in January 1997 and has recessed; no briefing schedule or date for oral argument has yet been set; On July 9, 1998 the state court issued an opinion dismissing the petitioners' claim in its entirety. On July 20, 1998 the petitioner filed a timely motion for post-trial relief, taking exception to the state court's findings of fact and conclusions of law. The Supreme Court, after assuming jurisdiction in the case directed that all parties submit briefs on all issues presented in the petitioners' motion for post-trial relief; and (v) In 1995, the Commonwealth, the Governor of Pennsylvania, the City of Philadelphia and the Mayor of Philadelphia were joined as additional respondents in an enforcement action commenced in Commonwealth Court in 1973 by the Pennsylvania Human Relations Commission against the School District of Philadelphia pursuant to the Pennsylvania Human Relations Act. The Commonwealth and the City were joined to determine their liability, if any, to pay additional costs necessary to remedy segregation-related conditions found to exist in Philadelphia public schools. In January 1997, the Pennsylvania Supreme Court ordered the parties to brief certain issues. The Supreme Court heard oral argument on the issues in February 1998 but no decision has been issued, (vi) In February 1997, five residents of the City of Philadelphia, joined by the City, the School District and others, filed a civil action in the Commonwealth Court for declaratory judgment against the Commonwealth and certain Commonwealth officers and officials that the defendants had failed to provide an adequate quality of education in Philadelphia, as required by the Pennsylvania Constitution. In March 1998, the Commonwealth Court dismissed the case on the grounds that the issues prescribed are not justifiable. An appeal to the Supreme Court of Pennsylvania is pending, (vii) In April 1995, the Commonwealth reached a settlement agreement with Fidelity Bank and certain other banks with respect to the constitutional validity of the Amended Bank Shares Act and related legislation; although this settlement agreement did not require expenditure of Commonwealth funds, the petitions of other banks are currently pending with the Commonwealth Court; In January 1998 a panel of the Commonwealth Court ruled in favor of the Commonwealth, finding no constitutional violation. Royal Bank filed exceptions, which the Commonwealth Court en banc denied. Royal Bank appealed to the Supreme Court and briefing has been completed. The Court has not yet scheduled oral arguments. (viii) Suit has been filed in state court against the State Employees' Retirement Board claiming that the use of gender district actuarial factors to compute benefits received before August 1, 1983 violates the Pennsylvania Constitution (gender-neutral factors have been used since August 1, 1983, the date on which the U.S. Supreme Court held in Arizona Governing Committee v. Norris that the use of such factors violated the Federal Constitution); in 1996, the Commonwealth Court heard oral argument en banc, and in 1997 denied the plaintiff's motion for judgement on the pleading. The case is currently in discovery. (ix) In March 1997, Rite Aid of Pennsylvania, Inc. filed in the United States District Court for the Eastern District of Pennsylvania, a civil action against the Secretary of Public Welfare alleging that regulations promulgated in October 1995 governing payment rates for prescription drugs and related services provided to recipients of benefits under the Pennsylvania Medical Assistance Program violated provisions of Title XIX of the Social Security Act and regulations of the U.S. Department of Health and Human Services, as well as provisions of State law and Federal constitutional due process. In August 1998, the court declared that certain pharmacy reimbursement rates were in violation of the Medicaid Act and enjoined the Secretary from using these rates to reimburse for any prescription drugs and related services provided to Medicaid recipients on and after October 1, 1998. The Secretary filed motions for appeal and in March 1999, the U.S. Court of Appeals for the -38- Third Circuit reversed the district court's order and remanded the case for further proceedings. The plaintiffs on April 5, 1999 filed an application for rehearing. (x) On March 9, 1998 several residents of the City of Philadelphia along with the School District of Philadelphia and others brought suit in the United States District Court for the Eastern District of Pennsylvania against the Governor, the Secretary of Education and others alleging that the defendants are violating a regulation of the U.S. Department of Education promulgated under Title VI of the Civil Rights Act of 1964 in that the Commonwealth's system for funding public schools has the effect of discrimination on the basis of race. On November 18, 1998, the district court dismissed the action with prejudice. An appeal by the plaintiffs was filed and the parties are awaiting the scheduling of oral argument. Local government units in the Commonwealth of Pennsylvania (which include, among other things, counties, cities, boroughs, towns, townships, school districts and other municipally created units such as industrial development authorities and municipality authorities, including water and sewer authorities) are permitted to issue debt for capital projects: (i) in any amount so long as the debt has been approved by the voters of the local government unit; or (ii) without electoral approval if the aggregate outstanding principal amount of debt of the local government unit is not in excess of 100% of its borrowing base (in the case of a school district of the first class), 300% of its borrowing base (in the case of a county) or 250% of its borrowing base (in the case of all other local government units); or (iii) without electoral approval and without regard to the limit described in (ii) in any amount in the case of certain subsidized debt and self-liquidating debt (defined to be debt with no claim on taxing power, secured solely by revenues from a specific source which have been projected to be sufficient to pay debt service on the related debt). Lease rental debt may also be issued, in which case the total debt limits described in section (ii) (taking into account all existing lease rental debt in addition to all other debt) are increased. The borrowing base for a local government unit is the average of total revenues for the three fiscal years preceding the borrowing. The risk of investing in debt issued by any particular local government unit depends, in the case of general obligation bonds secured by tax revenues, on the creditworthiness of that issuer or, in the case of revenue bonds, on the revenue producing ability of the project being financed, and not directly on the credit-worthiness of the Commonwealth of Pennsylvania as a whole. The City of Philadelphia (the "City") experienced a series of General Fund deficits for Fiscal Years 1988 through 1992 and, while its general financial situation has improved, the City is still seeking a long-term solution for its economic difficulties. The City has no legal authority to issue deficit reduction bonds on its own behalf, but state legislation has been enacted to create an Intergovernmental Cooperation Authority (the "Authority") to provide fiscal oversight for Pennsylvania cities (primarily Philadelphia) suffering recurring financial difficulties. The Authority is broadly empowered to assist cities in avoiding defaults and eliminating deficits by encouraging the adoption of sound budgetary practices and issuing bonds. In order for the Authority to issue bonds on behalf of the City, the City and the Authority entered into an intergovernmental cooperative agreement providing the Authority with certain oversight powers with respect to the fiscal affairs of the City, and in recent years, the Authority has issued approximately $2.37 billion of Special Revenue Bonds on behalf of the City. The City currently is operating under a five-year plan approved by the Authority in 1996, with technical amendments officially incorporated on July 18, 1996. The audited balance of the City's General Fund as of June 30, 1998 showed a surplus of approximately $169.2 million up from approximately $128.8 million as of June 30, 1997. The Authority's power to issue further bonds to finance capital projects or deficit expired on December 31, 1994. The Authority's power to issue debt to finance a cash flow deficit expired on December 31, 1996, and its ability to refund outstanding bonds is unrestricted. The Authority had approximately $1.1 billion in Special Revenue Bonds outstanding as of April 15, 1999. -39- The foregoing information as to certain Pennsylvania risk factors constitutes only a brief summary, does not purport to be a complete description of Pennsylvania risk factors and is principally drawn from official statements relating to securities offerings of the Commonwealth of Pennsylvania that have come to the Funds' attention and were available as of the date of this Statement of Additional Information. Special Considerations Regarding Investment in New Jersey Municipal Obligations The concentration of investments by the New Jersey Muni Portfolio in New Jersey Municipal Obligations also raises special investment considerations. The State of New Jersey (the "State") generally has a diversified economic base consisting of, among others, commerce and service industries, selective commercial agriculture, insurance, tourism, petroleum refining and manufacturing, although the State's manufacturing industry has shown a downward trend in the last few years. Recently, the state's unemployment rate has fallen, and job growth has been experienced in several sectors of the state's economy. While the State's economic base has become more diversified over time and thus its economy appears to be less vulnerable during recessionary periods, adverse conditions including a recurrence of high levels of unemployment, could adversely affect the State's overall economy and its ability to meet its financial obligations. To the extent that any adverse conditions exist in the future which affect the obligor's ability to repay debt, the value of the Portfolio may be immediately and substantially affected. The State and its political subdivisions, agencies and public authorities are authorized to issue two general classes of indebtedness; general obligation bonds and revenue bonds. Both classes of bonds may be included in the New Jersey Muni Portfolio. The repayment of principal and interest on general obligation bonds is secured by the full faith and credit of the issuer, backed by the issuer's taxing authority, without recourse to any special project or source of revenue. Special obligation or revenue bonds may be repaid only from revenues received in connection with the project for which the bonds are issued, special excise taxes, or other special revenue sources and generally are issued by entities without taxing power. Neither the State of New Jersey nor any of its subdivisions is liable for the repayment of principal or interest on revenue bonds except to the extent stated in the preceding sentences. General obligation bonds of the state are repaid from revenues obtained through the state's general taxing authority. An inability to increase taxes may adversely affect the state's ability to authorize or repay debt. Public authorities, private non-profit corporations, agencies and similar entities of New Jersey ("Authorities") are established for a variety of beneficial purposes, including economic development, housing and mortgage financing, health care facilities and public transportation. The Authorities are not operating entities of the State of New Jersey, but are separate legal entities that are managed independently. The state oversees the Authorities by appointing the governing boards, designating management, and by significantly influencing operations. The Authorities are not subject to New Jersey constitutional restrictions on the incurrence of debt, applicable to the State of New Jersey itself, and may issue special obligation or private activity bonds in legislatively authorized amounts. -40- An absence or reduction of revenue will affect a bond-issuing Authority's ability to repay debt on special obligation bonds and no assurance can be given that sufficient revenues will be obtained to make such payments, although in some instances repayment may be guaranteed or otherwise secured. Various Authorities have issued bonds for the construction of health care facilities, transportation facilities, office buildings and related facilities, housing facilities, pollution control facilities, water and sewerage facilities and power and electric facilities. Each of these facilities may incur different difficulties in meeting its debt repayment obligations. Hospital facilities, for example, are subject to changes in Medicare and Medicaid reimbursement regulations, attempts by Federal and state legislatures to limit the costs of health care and management's ability to complete construction projects on a timely basis as well as to maintain projected rates of occupancy and utilization. At any given time, there are several proposals pending on a Federal and state level concerning health care, which may further affect a hospital's debt service obligation. Housing facilities may be subject to increases in operating costs, management's ability to maintain occupancy levels, rent restrictions and availability of Federal or state subsidies, while power and electric facilities may be subject to increased costs resulting from environmental restrictions, fluctuations in fuel costs, delays in licensing procedures and the general regulatory framework in which these facilities operate. All of these entities are constructed and operated under rigid regulatory guidelines. Some entities which financed facilities with proceeds of private activity bonds issued by the New Jersey Economic Development Authority, a major issuer of special obligation bonds, have defaulted on their debt service obligations. Because these special obligation bonds were repayable only from revenue received from the specific projects which they funded, the New Jersey Economic Development Authority was unable to repay the debt service to bondholders for such facilities. Each issue of special obligation bonds, however, depends on its own revenue for repayment, and thus these defaults should not affect the ability of the New Jersey Economic Development Authority to repay obligations on other bonds that it issues in the future. Certain litigation is pending against the State in which the State has a potential for either a significant loss of revenue or a significant unanticipated expenditure including as of August 1, 1999, suits relating to the following matters: (i) A coalition of churches and church leaders in Hudson County have filed suit asserting the State-owned Liberty State Park in Jersey City violates environmental standards; (ii) Representatives of the trucking industry have filed a constitutional challenge to annual hazardous and solid waste licensure renewal fees; (iii) Several suits have been filed against the State to compel the State to close the spending gap between poor urban school districts and wealthy rural school districts; (iv) A group of insurance companies have filed a constitutional challenge to the challenge to the State's assessment of monies pursuant to the Fair Automobile Insurance Reform Act of 1990; (v) A class action consisting of prisoners with serious mental disorders has been filed against officers of the Department of Corrections, alleging sex discrimination, violation of the Americans with Disabilities Act of 1990, and constitutional violations; (vi) A class action brought in federal court challenging the State's method of determining the monthly needs of a spouse of an institutionalized person under the Medicare Catastrophic Act is now being appealed to the U.S. Supreme Court by the plaintiff; (vii) Several suits have been filed against the State in federal court alleging that the State committed -41- securities fraud and environmental violations in the financing of a new Atlantic City highway and tunnel; (viii) A class action filed against the State alleging the State's breach of contract for not paying certain Medicare co-insurance and deductibles has been appealed by the plaintiff; (ix) An action has been filed challenging the State's issuance of bonds to fund the accrued liability in its pension funds under the Pension Bond Financing Act of 1997; (x) Several cases have been filed by state hospitals with respect to Medicaid hospital reimbursement that challenge the state's compliance with federal regulations and the correctness of reimbursement rates. This Chapter 11 case commenced when United Hospital closed and demands that the bankruptcy court take jurisdiction of and decide certain Medicaid reimbursement matters pending in New Jersey administrative proceedings or the New Jersey appellate courts; (xi) Several plaintiffs have filed a complaint seeking damages and injunctive relief on constitutional grounds on behalf of individuals who did not obtain an increase in welfare benefits under the "family cap" provisions of the State Work First New Jersey Act; (xii) Several cases have been filed by various hospitals alleging the $10 per adjusted hospital admission charge is a "tax" as opposed to a "regulatory fee" and is in violation of the State's constitution; and (xiii) The owner of a resource recovery facility in South Camden who filed suit to have the county's solid waste process halted to clarify bid specifications has filed a motion for leave to appeal to the Supreme Court of New Jersey. Although the Portfolio generally intends to invest its assets primarily in New Jersey Municipal Obligations rated no lower than A, MIG2 or Prime-1 by Moody's or A, SP-1 or A-1 by S&P, there can be no assurance that such ratings will remain in effect until the bond matures or is redeemed or will not be revised downward or withdrawn. Such a revision or withdrawal may have an adverse affect on the market price of such securities. PERFORMANCE CALCULATIONS Each of the Strategic Equity, International, Small Capitalization Value, Core Value, Small Capitalization Growth, Institutional International and Large Cap Value Portfolios may compare their total returns for the shares to that of other investment companies with similar investment objectives and to stock and other relevant indices such as the S&P 500, the Dow Jones Industrial Average, the Russell Indexes or the NASDAQ Composite Index or to rankings prepared by independent services or other financial or industry publications that monitor the performance of mutual funds. For example, the total return of the shares of the Strategic Equity, International, Small Capitalization Value, Institutional International, Core Value, Small Capitalization Growth or Large Cap Value Portfolios may also be compared to data prepared by Lipper, Inc. ("Lipper"). In addition, for example, the International or Institutional International Portfolios' total return may also be compared to the Morgan Stanley Capital International EAFE Index (the "EAFE Index"). Each of the Core Fixed Income, Muni Intermediate and New Jersey Muni Portfolios may compare their total returns, and their yields, to that of other investment companies with similar investment objectives and to bond and other relevant indices such as those compiled by Merrill Lynch, Lehman Brothers or others or to rankings prepared by independent services or other financial or industry publications that monitor the performance of mutual funds. For example, the total return or the yield of the Core Fixed Income, Muni Intermediate or New Jersey Muni Portfolios may be compared to data prepared by Lipper. Each of the Government Cash and Tax-Exempt Portfolios may compare their yields to that of other investment companies with similar investment objectives and to other relevant indices or to rankings prepared by independent services or other financial or industry publications that monitor the performance of mutual funds. For example, the yield of the Government Cash or Tax-Exempt Portfolios may be compared to data prepared by IBC Financial Data, Inc. -42- The Emerging Markets Portfolio may compare its total return to that of other investment companies with similar investment objectives and to stock and other relevant indices or to rankings prepared by independent services or other financial or industry publications that monitor the performance of mutual funds. For example, the total return of the Emerging Markets Portfolio may be compared to data prepared by Lipper, the Morgan Stanley Capital International Emerging Markets Free Index (also known as the Emerging Markets Index) and the International Financial Corporation Composite Index. The Global Equity Portfolio may compare its total return to that of other investment companies with similar investment objectives and to stock and other relevant indices or to rankings prepared by independent services or other financial or industry publications that monitor the performance of mutual funds. For example, the total return of the Portfolio may be compared to data prepared by Lipper, the MSCI World Index and the EAFE Index. Total return, yield (for the Core Fixed Income, Muni Intermediate and New Jersey Muni Portfolios), and other performance data as reported in national financial publications such as Money Magazine, Forbes, Barron's, The Wall Street Journal and The New York Times, or in publications of a local or regional nature, may also be used in comparing the performances of the Portfolios. Performance quotations represent a Portfolio's past performance and should not be considered as indicative of future results. Since performance will fluctuate, performance data for a Portfolio should not be used to compare an investment in the Portfolio's shares with bank deposits, savings accounts and similar investment alternatives which often provide an agreed or guaranteed fixed yield/return for a stated period of time. Performance is generally a function of the kind and quality of the instruments held in a Portfolio, portfolio maturity, operating expenses and market conditions. Any management fees charged by the Advisor, an Affiliate, or Institutions to their respective clients will not be included in a Portfolio's calculations of yield, effective yield, tax-equivalent yield or total return, as appropriate. From time to time, the Government Cash Portfolio and the Tax-Exempt Cash Portfolio, may advertise or quote yield, effective yield, tax-equivalent yield (Tax-Exempt Cash Portfolio only), or total return. The "yield" and "effective yield" of the Government Cash and Tax-Exempt Cash Portfolios, and the "tax-equivalent yield" of the Tax-Exempt Cash Portfolio, are calculated according to formulas prescribed by the SEC. The standardized seven-day yield of each of these Portfolios is computed by determining the net change, exclusive of capital changes, in the value of a hypothetical pre-existing account in the particular Portfolio having a balance of one share at the beginning of the period, dividing the net change in account value by the value of the account at the beginning of the base period to obtain the base period return, and multiplying the base period return by (365/7). The net change in the value of an account in the Money Market Portfolios includes the value of additional shares purchased with dividends from the original share, and dividends declared on both the original share and any such additional shares, net of all fees, other than nonrecurring account or sales charges, that are charged by the Fund to all shareholder accounts in proportion to the length of the base period and the Portfolio's average account size. The capital changes to be excluded from the calculation of the net change in account value are realized gains and losses from the sale of securities and unrealized appreciation and depreciation. An effective annualized yield for the Money Market Portfolios may be computed by compounding the unannualized base period return (calculated as above) by adding 1 to the base period return, raising the sum to a power equal to 365 divided by 7, and subtracting 1 from the result. -43- The Tax-Exempt Cash Portfolio's "7-day tax-equivalent yield" may be computed by dividing the tax-exempt portion of the Portfolio's yield (calculated as above) by one minus a stated Federal income tax rate and adding the product to that portion, if any, of the Portfolio's yield that is not tax-exempt. The Tax-Exempt Cash Portfolio's tax-equivalent yield, and the Money Market Portfolios' yield and effective yield, do not reflect any fees charged by the Advisor to its clients. See "Investment Advisor" in the Prospectus. Set forth below is an example, for purposes of illustration only, of the current yield calculations for each of the Money Market Portfolios for the seven-day period ended October 31, 1999.
Government Tax-Exempt Cash Portfolio Cash Portfolio 10/31/99 10/31/99 -------------- -------------- 7-Day Yield (Net Change X 365/7 average NAV) 5.13% 3.17% 7-Day Effective Yield 5.26% 3.22% 7-Day Tax-Equivalent Yield N/A 5.33%*
- --------------------------------- * Assumes an effective Federal income tax rate of 39.6% The SEC yield of the Core Fixed Income Portfolio, Muni Intermediate Portfolio and the New Jersey Muni Portfolio for the 30-day period ended October 31, 1999 was 6.54%, 4.82% and 4.48%, respectively. These yields were calculated by dividing the net investment income per share (as described below) earned by the Portfolio during a 30-day (or one month) period by the maximum offering price per share on the last day of the period and annualizing the result on a semi-annual basis by adding one to the quotient, raising the sum to the power of six, subtracting one from the result and then doubling the difference. The Portfolio's net investment income per share earned during the period is based on the average daily number of shares outstanding during the period entitled to receive dividends and includes dividends and interest earned during the period minus expenses accrued for the period, net of reimbursements. This calculation can be expressed as follows: 6 Yield = 2 [(a-b + 1) - 1] --- cd Where: a = dividends and interest earned during the period. b = expenses accrued for the period net of reimbursements. c = the average daily number of shares outstanding during the period that were entitled to receive dividends. d = maximum offering price per share on the last day of the period. For the purpose of determining net investment income earned during the period (variable "a" in the formula), interest earned on any debt obligations -44- held by the Core Fixed Income, Muni Intermediate or New Jersey Muni Portfolios is calculated by computing the yield to maturity of each obligation held by the Portfolio based on the market value of the obligation (including actual accrued interest) at the close of business on the last business day of each month, or, with respect to obligations purchased during the month, the purchase price (plus actual accrued interest) and dividing the result by 360 and multiplying the quotient by the market value of the obligation (including actual accrued interest) in order to determine the interest income on the obligation for each day of the subsequent month that the obligation is held by the particular Portfolio. For purposes of this calculation, it is assumed that each month contains 30 days. The maturity of an obligation with a call provision is the next call date on which the obligation reasonably may be expected to be called or, if none, the maturity date. With respect to debt obligations purchased at a discount or premium, the formula generally calls for amortization of the discount or premium. The amortization schedule will be adjusted monthly to reflect changes in the market values of such debt obligations. Undeclared earned income will be subtracted from the maximum offering price per share (variable "d" in the formula). Undeclared earned income is the net investment income which, at the end of the base period, has not been declared as a dividend, but is reasonably expected to be and is declared and paid as a dividend shortly thereafter. The Core Fixed Income, Muni Intermediate and New Jersey Muni Portfolios' yields do not reflect any fees charged by the Advisor or an Affiliate to its clients. See "Investment Advisor" in the Prospectus. The Muni Intermediate and New Jersey Muni Portfolios' "tax-equivalent" yield is computed by dividing the portion of the yield that is exempt from Federal and/or State income taxes by one minus a stated Federal income tax rate and/or the State income tax rate and by adding that figure to that portion, if any, of the yield that is not tax-exempt. The 30 day tax-equivalent yield for the Muni Intermediate Portfolio and New Jersey Portfolio for the 30-day period ended October 31, 1999 was 8.21% and 7.92%, respectively (assuming a Federal income tax rate of 39.6% and Pennsylvania and New Jersey income tax rates of 2.80 and 6.37%, respectively). The Core Fixed Income, Strategic Equity, International, Small Capitalization Value, Muni Intermediate, New Jersey Muni, Large Cap Value, Core Value, Small Capitalization Growth, Institutional International, Emerging Markets and Global Equity Portfolios each compute their respective average annual total returns separately for each class by determining the average annual compounded rates of return during specified periods that equate the initial amount invested to the ending redeemable value of such investment. This is done by dividing the ending redeemable value of a hypothetical $1,000 initial payment by $1,000 and raising the quotient to a power equal to one divided by the number of years (or fractional portion thereof) covered by the computation and subtracting one from the result. This calculation can be expressed as follows: -45- n P (1 + T) = ERV Where: T = average annual total return. ERV = ending redeemable value at the end of the period covered by the computation of a hypothetical $1,000 payment made at the beginning of the period. P = hypothetical initial payment of $1,000. n = period covered by the computation, expressed in terms of years. The Core Fixed Income, Strategic Equity, International, Small Capitalization Value, Muni Intermediate, New Jersey Muni, Large Cap Value, Core Value, Small Capitalization Growth, Institutional International, Emerging Markets and Global Equity Portfolios compute their aggregate total returns separately for each class by determining the aggregate rates of return during specified periods that likewise equate the initial amount invested to the ending redeemable value of such investment. The formula for calculating aggregate total return is as follows: T = [(ERV) - 1] --- P The calculations of average annual total return and aggregate total return assume the reinvestment of all dividends and capital gain distributions. The ending redeemable value (variable "ERV" in each formula) is determined by assuming complete redemption of the hypothetical investment and the deduction of all nonrecurring charges at the end of the period covered by the computations. None of the Portfolio's average annual total return and aggregate total return reflects any fees charged by the Advisor, an Affiliate, or Institutions to their clients. See "Investment Advisor" in the Prospectuses. On January 2, 1998, the Small Capitalization Value Portfolio began to offer Institutional Shares. Institutional Shares are subject to an annual .05% fee payable pursuant to the Amended and Restated Shareholder Servicing Plan ("Shareholder Servicing Fee"). Prior to January 1, 1998, the Small Capitalization Value Portfolio did not have an advisory fee and Advisor Shares had a .05% Shareholder Servicing Fee. Performance of the Institutional Shares prior to January 2, 1998 is represented by performance of the Advisor Shares. Set forth below are the average annual total return figures for the Core Fixed Income, Strategic Equity, International, Small Capitalization Value, Muni Intermediate, Large Cap Value, New Jersey Muni, Institutional International, Emerging Markets and Global Equity Portfolios since inception and for the one-, five-, and ten-year periods ended October 31, 1999. The Small Capitalization Growth and Core Value Portfolios had not commenced investment operations as of October 31, 1999. -46-
Small Core Fixed Strategic Capitalization Muni Income Equity International Value Intermediate Portfolio Portfolio Portfolio Portfolio Portfolio --------- --------- --------- ----------------------- --------- Advisor Institutional Shares Shares ------ ------ 1 Year Ended 10/31/99 0.91% 23.88% 24.65% -0.32% -0.10% 0.91% 5 Years Ended 10/31/99 7.29% 23.55% 13.01% 10.57% N/A 6.08% 10 Years Ended 10/31/99 7.54% 16.00% 12.32% N/A N/A N/A Inception to 10/31/99 7.90% 15.67% 12.35% 11.67% 11.72% 5.13%
Large Cap New Institutional Emerging Global Value Jersey Muni International Markets Equity Government Tax-Exempt Cash Portfolio Portfolio Portfolio Portfolio Portfolio Cash Portfolio Portfolio --------- --------- --------- --------- --------- -------------- --------- 1 Year Ended 10/31/99 19.59% 0.08% 22.98% 41.23% 21.18% 5.00% 3.02% 5 Years Ended 10/31/99 18.38% 6.15% 11.86%* N/A N/A 5.50% 3.41% 10 Years Ended 10/31/99 N/A N/A N/A N/A N/A 5.36% 3.58% Inception to 10/31/99 16.50% 4.19% 13.44%* -2.10% 11.45% 5.72% 3.83%
* The Institutional International Portfolio's average annual total return figures for the 5 Year and since Inception periods above are net of fee waivers. The Portfolio's average annual total return figures without fee waivers for the 5-Year and since Inception periods would have been lower. Inception Dates: Core Fixed Income Portfolio.................................. 11/17/88 Strategic Equity Portfolio................................... 07/20/89 International Portfolio...................................... 11/17/88 Small Capitalization Value Portfolio Advisor Shares.......................................... 03/01/91 Institutional Shares.................................... 01/02/98 Muni Intermediate Portfolio.................................. 06/05/92 Large Cap Value Portfolio.................................... 01/04/93 New Jersey Muni Portfolio.................................... 11/01/93 Institutional International Portfolio........................ 08/01/92 Emerging Markets Portfolio................................... 12/14/94 Global Equity Portfolio...................................... 11/03/97 Government Cash Portfolio.................................... 11/07/88 Tax-Exempt Cash Portfolio.................................... 11/10/88 Small Capitalization Growth Portfolio........................ 12/29/99 Core Value Portfolio......................................... 02/28/00 -47- Set forth below are the aggregate total return figures for the Core Fixed Income, Strategic Equity, International, Small Capitalization Value, Muni Intermediate, Large Cap Value, New Jersey Muni, Institutional International, Emerging Markets and Global Equity Portfolios from inception to October 31, 1999. The Small Capitalization Growth and Core Value Portfolios had not commenced investment operations as of October 31, 1999. Portfolio Inception Date Aggregate Total Return - --------- -------------- ---------------------- Core Fixed Income 11/17/88 130.01% Strategic Equity 07/20/89 346.64% International 11/17/88 258.11% Small Capitalization Value Advisor Shares 03/01/91 160.40% Institutional Shares 01/02/98 161.41% Muni Intermediate 06/05/92 44.88% Large Cap Value 01/04/93 183.48% New Jersey Muni 11/01/93 27.87% Institutional International 08/01/92 149.34% Emerging Markets 12/14/94 -9.82% Global Equity 11/03/97 24.07% GENERAL INFORMATION Description of Shares and Voting Rights The shares of each Portfolio have no preference as to conversion, exchange, dividends, retirement or other rights, and, when issued and paid for as provided in this Prospectus, will be fully paid and non-assessable. The shares of each Portfolio have no pre-emptive rights and do not have cumulative voting rights, which means that the holders of more than 50% of the shares of a Fund voting for the election of its Board members can elect 100% of the Board of that Fund if they choose to do so. A shareholder is entitled to one vote for each full share held (and a fractional vote for each fractional share held), then standing in his or her name on the books of the particular Fund. The Funds will not hold annual meetings of shareholders, except as required by the 1940 Act, the next sentence and other applicable law. Each Fund has undertaken that its Board will call a meeting of shareholders for the purpose of voting upon the question of removal of a Board member or members if such a meeting is requested in writing by the holders of not less than 10% of the outstanding shares of the particular Fund. To the extent required by the undertaking, the particular Fund will assist shareholder communication in such matters. The staff of the SEC has expressed the view that the use of a combined Prospectus for the Funds may subject a Fund to liability for misstatements, inaccuracies or incomplete disclosure about the other Fund. Rule 18f-2 under the 1940 Act provides that any matter required to be submitted to the holders of the outstanding voting securities of an investment company shall not be deemed to have been effectively acted upon unless approved by a majority of the outstanding shares of the Portfolio or class affected by the matter. The Portfolio or class is affected by a matter unless it is clear that the interests of the Portfolio or class in the matter are substantially identical or that the matter does not affect any interest of the Portfolio or class. Under Rule 18f-2, the approval of an investment advisory agreement or any change in a fundamental investment policy would be effectively acted upon with respect to the Portfolio only if approved by a majority of the outstanding shares of the Portfolio. However, the Rule also provides that the ratification of independent public accountants and the election of directors or trustees may be effectively acted upon by shareholders of the Fund voting without regard to the Portfolio. -48- Notwithstanding any provision of Maryland law requiring a greater vote of the Glenmede Fund's common stock (or of the shares of the Portfolio or class voting separately as a class) in connection with any corporate action, unless otherwise provided by law (for example by Rule 18f-2 discussed above) or by the Glenmede Fund's Articles of Amendment and Restatement, the Glenmede Fund may take or authorize such action upon the favorable vote of the holders of more than 50% of the outstanding common stock of the Glenmede Fund entitled to vote thereon. Certain Record Holders As of February 1, 2000, the Advisor held of record substantially all of the outstanding shares of each Portfolio (including the Advisor and Institutional Share classes of the Small Capitalization Value Portfolio). For more information about the Advisor, see "Investment Advisor" in the Prospectuses. As of February 1, 2000, the directors/trustees and officers of the Funds collectively owned less than 1% of the outstanding shares of each of the Funds' Portfolios. As of February 1, 2000, no shares of the Core Value Portfolio were issued or outstanding. As of the date of this Statement of Additional Information, the Advisor, the Core Value Portfolio's Initial Shareholder, owned all of its outstanding shares. Dividends and Distributions Each Portfolio's policy is to distribute substantially all of its net investment income, if any, together with any net realized capital gains in the amount and at the times that will avoid both income (including capital gains) taxes on it and the imposition of the Federal excise tax on undistributed income and gains. The amounts of any income dividends or capital gains distributions for a Portfolio cannot be predicted. FINANCIAL STATEMENTS The Funds' Financial Statements for the Government Cash, Tax-Exempt Cash, Core Fixed Income, International, Tax-Managed Equity (currently, Strategic Equity), Small Capitalization Equity (currently, Small Capitalization Value), Large Cap Value, Muni Intermediate, New Jersey Muni, Institutional International, Emerging Markets and Global Equity Portfolios for the year or period ended October 31, 1999, and the financial highlights for each of the respective periods presented, appearing in the 1999 Annual Report to Shareholders, and the reports thereon of PricewaterhouseCoopers LLP, the Funds' independent accountants, also appearing therein, are incorporated by reference in this Statement of Additional Information. No other parts of the 1999 Annual Report to Shareholders are incorporated herein. No financial statements are supplied for the Small Capitalization Growth and Core Value Portfolios because they had not commenced operations during the period ended October 31, 1999. OTHER INFORMATION The Funds' Prospectuses and this Statement of Additional Information do not contain all the information included in the Registration Statement filed with the SEC under the Securities Act of 1933 with respect to the securities offered by the Prospectuses. Certain portions of the Registration Statement have been omitted from the Prospectus and this Statement of Additional Information pursuant to the rules and regulations of the SEC. The Registration Statement, including the exhibits filed therewith, may be examined at the office of the SEC in Washington, D.C. -49- Statements contained in the Prospectuses or in this Statement of Additional Information as to the contents of any contract or other documents referred to are not necessarily complete, and in each instance reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement of which the Prospectuses and this Statement of Additional Information form a part, each such statement being qualified in all respects by such reference. -50- APPENDIX -- DESCRIPTION OF SECURITIES AND RATINGS I. Commercial Paper Ratings A Standard & Poor's commercial paper rating is a current opinion of the creditworthiness of an obligor with respect to financial obligations having an original maturity of no more than 365 days. The following summarizes the rating categories used by Standard & Poor's for commercial paper: "A-1" - Obligations are rated in the highest category indicating that the obligor's capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor's capacity to meet its financial commitment on these obligations is extremely strong. "A-2" - Obligations are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor's capacity to meet its financial commitment on the obligation is satisfactory. "A-3" - Obligations exhibit adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. "B" - Obligations are regarded as having significant speculative characteristics. The obligor currently has the capacity to meet its financial commitment on the obligation; however, it faces major ongoing uncertainties which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation. "C" - Obligations are currently vulnerable to nonpayment and are dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. "D" - Obligations are 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 Standard & Poor's believes that such payments will be made during such grace period. The "D" rating will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized. Moody's commercial paper ratings are opinions of the ability of issuers to repay senior debt obligations punctually, not having an original maturity in excess of one year, unless explicitly noted. The following summarizes the rating categories used by Moody's for commercial paper: "Prime-1" - Issuers (or supporting institutions) have a superior ability for repayment of senior short-term debt obligations. Prime-1 repayment ability will often be evidenced by many of the following characteristics: A-1 leading market positions in well-established industries; high rates of return on funds employed; conservative capitalization structure with moderate reliance on debt and ample asset protection; broad margins in earnings coverage of fixed financial charges and high internal cash generation; and well-established access to a range of financial markets and assured sources of alternate liquidity. "Prime-2" - Issuers (or supporting institutions) have a strong ability for repayment of senior short-term debt obligations. This will normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, may be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. "Prime-3" - Issuers (or supporting institutions) have an acceptable ability for repayment of senior short-term debt obligations. The effect of industry characteristics and market compositions may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and may require relatively high financial leverage. Adequate alternate liquidity is maintained. "Not Prime" - Issuers do not fall within any of the Prime rating categories. II. Corporate and Municipal Long-Term Debt Ratings The following summarizes the ratings used by Standard & Poor's for corporate and municipal debt: "AAA" - An obligation rated "AAA" has the highest rating assigned by Standard & Poor's. The obligor's capacity to meet its financial commitment on the obligation is extremely strong. "AA" - An obligation rated "AA" differs from the highest rated obligations only in small degree. The obligor's capacity to meet its financial commitment on the obligation is very strong. "A" - An obligation rated "A" is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor's capacity to meet its financial commitment on the obligation is still strong. "BBB" - An obligation rated "BBB" exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. Obligations 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. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions. A-2 "BB" - An obligation rated "BB" is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial or economic conditions which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation. "B" - An obligation rated "B" is more vulnerable to nonpayment than obligations rated "BB," but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitment on the obligation. "CCC" - An obligation rated "CCC" is currently vulnerable to nonpayment, and is dependent upon favorable business, financial and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation. "CC" - An obligation rated "CC" is currently highly vulnerable to nonpayment. "C" - The "C" rating may be used to cover a situation where a bankruptcy petition has been filed or similar action taken, but payments on this obligation are being continued. "D" - An obligation rated "D" 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 Standard & Poor's believes that such payments will be made during such grace period. The "D" rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized. PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories. "c" - The 'c' subscript is used to provide additional information to investors that the bank may terminate its obligation to purchase tendered bonds if the long-term credit rating of the issuer is below an investment-grade level and/or the issuer's bonds are deemed taxable. "p" - The letter 'p' indicates that the rating is provisional. A provisional rating assumes the successful completion of the project financed by the debt being rated and indicates that payment of debt service requirements is largely or entirely dependent upon the successful, timely completion of the project. This rating, however, while addressing credit quality subsequent to completion of the project, makes no comment on the likelihood of or the risk of default upon failure of such completion. The investor should exercise his own judgment with respect to such likelihood and risk. * Continuance of the ratings is contingent upon Standard & Poor's receipt of an executed copy of the escrow agreement or closing documentation confirming investments and cash flows. A-3 "r" - The 'r' highlights derivative, hybrid, and certain other obligations that Standard & Poor's believes may experience high volatility or high variability in expected returns as a result of noncredit risks. Examples of such obligations are securities with principal or interest return indexed to equities, commodities, or currencies; certain swaps and options; and interest-only and principal-only mortgage securities. The absence of an 'r' symbol should not be taken as an indication that an obligation will exhibit no volatility or variability in total return. N.R. Not rated. Debt obligations of issuers outside the United States and its territories are rated on the same basis as domestic corporate and municipal issues. The ratings measure the creditworthiness of the obligor but do not take into account currency exchange and related uncertainties. The following summarizes the ratings used by Moody's for corporate and municipal long-term debt: "Aaa" - Bonds are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. "Aa" - Bonds 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 the "Aaa" securities. "A" - Bonds possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future. "Baa" - Bonds 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. "Ba," "B," "Caa," "Ca" and "C" - Bonds that possess one of these ratings provide questionable protection of interest and principal ("Ba" indicates speculative elements; "B" indicates a general lack of characteristics of desirable investment; "Caa" indicates poor standing; "Ca" represents obligations which are speculative in a high degree; and "C" represents the lowest rated class of bonds). "Caa," "Ca" and "C" bonds may be in default. A-4 Con. (---) - Bonds for which the security depends upon the completion of some act or the fulfillment of some condition are rated conditionally. These are bonds secured by (a) earnings of projects under construction, (b) earnings of projects unseasoned in operating experience, (c) rentals which begin when facilities are completed, or (d) payments to which some other limiting condition attaches. Parenthetical rating denotes probable credit stature upon completion of construction or elimination of basis of condition. Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from "Aa" through "Caa." The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of its generic rating category. III. Municipal Note Ratings A Standard & Poor's note rating reflects the liquidity factors and market access risks unique to notes due in three years or less. The following summarizes the ratings used by Standard & Poor's for municipal notes: "SP-1" - The issuers of these municipal notes exhibit a strong capacity to pay principal and interest. Those issues determined to possess a very strong capacity to pay debt service are given a plus (+) designation. "SP-2" - The issuers of these municipal notes exhibit satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes. "SP-3" - The issuers of these municipal notes exhibit speculative capacity to pay principal and interest. Moody's ratings for state and municipal notes and other short-term loans are designated Moody's Investment Grade ("MIG") and variable rate demand obligations are designated Variable Moody's Investment Grade ("VMIG"). Such ratings recognize the differences between short-term credit risk and long-term risk. The following summarizes the ratings by Moody's Investors Service, Inc. for short-term notes: "MIG-1"/"VMIG-1" - This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing. "MIG-2"/"VMIG-2" - This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group. "MIG-3"/"VMIG-3" - This designation denotes favorable quality, with all security elements accounted for but 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-5 "MIG-4"/"VMIG-4" - This designation 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. "SG" - This designation denotes speculative quality. Debt instruments in this category lack margins of protection. IV. Description of Mortgage-Backed Securities Mortgage-Related Securities. The Core Fixed Income Portfolio may purchase mortgage-backed securities that are secured by entities such as the Government National Mortgage Association ("GNMA"), Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"), commercial banks, trusts, financial companies, finance subsidiaries of industrial companies, savings and loan associations, mortgage banks and investment banks. These certificates are in most cases pass-through instruments, through which the holder receives a share of all interest and principal payments from the mortgages underlying the certificate, net of certain fees. The average life of a mortgage-backed security varies with the underlying mortgage instruments, which have maximum maturities of 40 years. The average life is likely to be substantially less than the original maturity of the mortgage pools underlying the securities as the result of prepayments, mortgage refinancings or foreclosure. Mortgage prepayment rates are affected by factors including the level of interest rates, general economic conditions, the location and age of the mortgage and other social and demographic conditions. Such prepayments are passed through to the registered holder with the regular monthly payments of principal and interest and have the effect of reducing future payments. There are a number of important differences among the agencies and instrumentalities of the U.S. Government that issue mortgage-related securities and among the securities that they issue. Mortgage-related securities guaranteed by GNMA include GNMA Mortgage Pass-Through Certificates (also known as "Ginnie Maes") which are guaranteed as to the timely payment of principal and interest by GNMA and such guarantee is backed by the full faith and credit of the United States. GNMA is a wholly-owned U.S. Government corporation within the Department of Housing and Urban Development. GNMA certificates also are supported by the authority of GNMA to borrow funds from the U.S. Treasury to make payments under its guarantee. Mortgage-related securities issued by FNMA include FNMA guaranteed Mortgage Pass-Through Certificates (also known as "Fannie Maes") which are solely the obligations of FNMA, are not backed by or entitled to the full faith and credit of the United States and are supported by the right of the issuer to borrow from the Treasury. FNMA is a government-sponsored organization owned entirely by private stockholders. Fannie Maes are guaranteed as to timely payment of principal and interest by FNMA. Mortgage-related securities issued by the Federal Home Loan Mortgage Corporation ("FHLMC") include FHLMC Mortgage Participation Certificates (also known as "Freddie Macs" or "Pcs"). FHLMC is a corporate instrumentality of the United States, created pursuant to an Act of Congress, which is owned entirely by Federal Home Loan Banks. Freddie Macs are not guaranteed by the United States or by any Federal Home Loan Banks and do not constitute a debt or obligation of the United States or of any Federal Home Loan Bank. Freddie Macs entitle the holder to timely payment of interest, which is guaranteed by FHLMC. FHLMC guarantees either ultimate collection or timely payment of all principal payments on the underlying mortgage loans. When FHLMC A-6 does not guarantee timely payment of principal, FHLMC may remit the amount due on account of its guarantee of ultimate payment of principal at any time after default on an underlying mortgage, but in no event later than one year after it becomes payable. The Core Fixed Income Portfolio may invest in mortgage-backed securities issued or sponsored by both government and non-governmental entities. Privately issued mortgage-backed securities are generally backed by pools of conventional (i.e., non-government guaranteed or insured) mortgage loans. Privately-issued mortgage backed securities must have a rating of at least A by S&P or Moody's or which if unrated, is in the Advisor's opinion equivalent in credit quality to securities so rated. The ratings assigned by a rating organization (e.g., S&P or Moody's) to privately-issued mortgage-backed securities address the likelihood of the receipt of all distributions on the underlying mortgage loans by the related certificate-holders under the agreements pursuant to which such certificates are issued. A rating organization's ratings take into consideration the credit quality of the related mortgage pool, including any credit support providers, structural and legal aspects associated with such certificates, and the extent to which the payment stream on such mortgage pool is adequate to make payments required by such certificates. A rating organization's ratings on such certificates do not, however, constitute a statement regarding frequency of prepayments on the related mortgage loans. Additionally, in order to receive a high quality rating from the rating organizations, privately issued mortgaged-backed securities normally are structured with one or more types of "credit enhancement." Credit enhancement falls generally into two categories: (i) liquidity protection and (ii) protection against losses resulting from default by an obligor on the underlying assets. Liquidity protection refers to the provision of advances, generally by the entity administering the pools of mortgages, the provision of a reserve fund, or a combination thereof, to ensure, subject to certain limitations, that scheduled payments on the underlying pool are made in a timely fashion. Protection against losses resulting from default ensures ultimate payment of the obligations on at least a portion of the assets in the pool. Such credit support can be provided by, among other things, payment guarantees, letters of credit, pool insurance, subordination, or any combination thereof. The Core Fixed Income Portfolio may also invest in multiple class securities, including collateralized mortgage obligations ("CMOs") and Real Estate Mortgage Investment Conduit ("REMIC") pass-through or participation certificates. CMOs provide an investor with a specified interest in the cash flow from a pool of underlying mortgages or of other mortgage-backed securities. These securities may be issued by U.S. Government agencies and instrumentalities such as Fannie Mae or sponsored enterprises such as Freddie Mac or by trusts formed by private originators of, or investors in, mortgage loans, including savings and loan associations, mortgage bankers, commercial banks, insurance companies, investment banks and special purpose subsidiaries of the foregoing. In general, CMOs are debt obligations of a legal entity that are collateralized by, and multiple class mortgage-backed securities represent direct ownership interests in, a pool of mortgage loans or mortgage-backed securities the payments on which are used to make payments on the CMOs or multiple class mortgage-backed securities. Fannie Mae REMIC certificates are issued and guaranteed as to timely distribution of principal and interest by Fannie Mae. In addition, Fannie Mae A-7 will be obligated to distribute the principal balance of each class of REMIC certificates in full, whether or not sufficient funds are otherwise available. Freddie Mac guarantees the timely payment of interest on Freddie Mac REMIC certificates and also guarantees the payment of principal as payments are required to be made on the underlying mortgage participation certificates ("PCs"). PCs represent undivided interests in specified level payment, residential mortgages or participations therein purchased by Freddie Mac and placed in a PC pool. With respect to principal payments on PCs, Freddie Mac generally guarantees ultimate collection of all principal of the related mortgage loans without offset or deduction. Freddie Mac also guarantees timely payment of principal of certain PCs. CMOs and guaranteed REMIC certificates issued by Fannie Mae and Freddie Mac are types of multiple class mortgage-backed securities. Investors may purchase beneficial interests in REMICs, which are known as "regular" interests or "residual" interests. The Funds do not intend to purchase residual interests in REMICs. The REMIC certificates represent beneficial ownership interests in a REMIC trust, generally consisting of mortgage loans or Fannie Mae, Freddie Mac or Ginnie Mae guaranteed mortgage-backed securities. The obligations of Fannie Mae or Freddie Mac under their respective guaranty of the REMIC certificates are obligations solely of Fannie Mae or Freddie Mac, respectively. CMOs are issued in multiple classes, each with a specified fixed or floating interest rate and a final scheduled distribution date. In most cases, payments of principal are applied to the CMO classes in order of their respective stated maturities, so that no principal payments will be made on a CMO class until all other classes having an earlier stated maturity date are paid in full. These are referred to as "sequential pay" CMOs, or REMIC Certificates. A REMIC is a CMO that qualifies for special tax treatment under the Code, and invests in certain mortgages principally secured by interests in real property and other permitted investments. Additional structures of CMOs and REMIC certificates include, among others, "parallel pay" CMOs and REMIC certificates. Parallel pay CMOs or REMIC certificates are those which are structured to apply principal payments and prepayments of mortgage assets to two or more classes concurrently on a proportionate or disproportionate basis. These simultaneous payments are taken into account in calculating the final distribution date of each class. A wide variety of REMIC certificates may be issued in sequential pay or parallel pay structures. These securities include accrual certificates (also known as "Z-Bonds"), which only accrue interest at a specified rate until all other certificates having an earlier final distribution date have been retired and are converted thereafter to an interest-paying security, and planned amortization class ("PAC") certificates, which are parallel pay REMIC certificates that generally require that specified amounts of principal be applied on each payment date to one or more classes or REMIC certificates (the "PAC Certificates"), even though all other principal payments and prepayments of the mortgage assets are then required to be applied to one or more other classes of the certificates. The scheduled principal payments for the PAC Certificates generally have the highest priority on each payment date after interest due has been paid to all classes entitled to receive interest currently. Shortfalls, if any, are added to the amount payable on the next payment date. The PAC Certificate payment schedule is taken into account in calculating the final A-8 distribution date of each class of PAC. In order to create PAC tranches, one or more tranches generally must be created that absorb most of the volatility in the underlying mortgage assets. These tranches tend to have market prices and yields that are much more volatile that other PAC classes. CMOs may involve additional risks other than those found in other types of mortgage-related obligations. CMOs may exhibit more price volatility and interest rate risk than other types of mortgage-related obligations. During periods of rising interest rates, CMOs may lose their liquidity as CMO market makers may choose not to repurchase, or may offer prices, based on current market conditions, which are unacceptable to the Portfolio based on the Portfolio's analysis of the market value of the security. The Core Fixed Income Portfolio may also invest in stripped mortgage-backed securities ("SMBS") (including interest only and principal only securities), which are derivative multiple class mortgage-backed securities. The Core Fixed Income Portfolio may also invest in privately-issued SMBS. Although the market for such securities is increasingly liquid, privately-issued SMBS' may not be readily marketable and will be considered illiquid for purposes of the Portfolio's limitation on investments in illiquid securities. The Advisor may determine that SMBS' which are U.S. Government securities are liquid for purposes of the Portfolio's limitation on investments in illiquid securities. SMBS are usually structured with two different classes: one that receives 100% of the interest payments and the other that receives 100% of the principal payments from a pool of mortgage loans. If the underlying mortgage loans experience different than anticipated prepayments of principal, the Fund may fail to fully recoup its initial investment in these securities. The market value of the class consisting entirely of principal payments generally is unusually volatile in response to changes in interest rates. The yields on a class of SMBS that receives all or most of the interest from mortgage loans are generally higher than prevailing market yields on other mortgage-backed securities because their cash flow patterns are more volatile and there is a greater risk that the initial investment will not be fully recouped. Because derivative mortgage-backed securities (such as principal-only (POs), interest-only (IOs) or inverse floating rate securities) are more exposed to mortgage prepayments, they generally involve a greater amount of risk. Small changes in prepayments can significantly impact the cash flow and the market value of these securities. The risk of faster than anticipated prepayments generally adversely affects IOs, super floaters and premium priced mortgage-backed securities. The risk of slower than anticipated prepayments generally adversely affects POs, floating-rate securities subject to interest rate caps, support tranches and discount priced mortgage-backed securities. In addition, particular derivative securities may be leveraged such that their exposure (i.e., price sensitivity) to interest rate and/or prepayment risk is magnified. V. Description of Asset-Backed Securities Asset-Backed Securities. The Core Fixed Income Portfolio may invest in asset-backed securities. Asset-backed securities include interests in pools of receivables, such as motor vehicle installment purchase obligations and credit A-9 card receivables. Such securities are generally issued as pass-through certificates, which represent undivided fractional ownership interests in the underlying pools of assets. Such securities may also be debt instruments, which are also known as collateralized obligations and are generally issued as the debt of a special purpose entity organized solely for the purpose of owning such assets and issuing such debt. Asset-backed securities are not issued or guaranteed by the U.S. Government or its agencies or instrumentalities; however, the payment of principal and interest on such obligations may be guaranteed up to certain amounts and for a certain time period by a letter of credit issued by a financial institution (such as a bank or insurance company) unaffiliated with the issuers of such securities. The purchase of asset-backed securities may raise considerations peculiar to the financing of the instruments underlying such securities. For example, most organizations that issue asset-backed securities relating to motor vehicle installment purchase obligations perfect their interests in the respective obligations only by filing a financing statement and by having the servicer of the obligations, which is usually the originator, take custody thereof. In such circumstances, if the servicer were to sell the same obligations to another party, in violation of its duty not to do so, there is a risk that such party could acquire an interest in the obligations superior to that of the holders of the asset-backed securities. Also, although most of such obligations grant a security interest in the motor vehicle being financed, in most states the security interest in a motor vehicle must be noted on the certificate of title to perfect such security interest against competing claims of other parties. Due to the large number of vehicles involved, however, the certificate of title to each vehicle financed, pursuant to the obligations underlying the asset-backed securities, usually is not amended to reflect the assignment of the seller's security interest for the benefit of the holders of the asset-backed securities. Therefore, there is the possibility that recoveries on repossessed collateral may not, in some cases, be available to support payments on those securities. In addition, various state and federal laws give the motor vehicle owner the right to assert against the holder of the owner's obligation certain defenses such owner would have against the seller of the motor vehicle. The assertion of such defenses could reduce payments on the related asset-backed securities. Insofar as credit card receivables are concerned, credit card holders are entitled to the protection of a number of state and federal consumer credit laws, many of which give such holders the right to set off certain amounts against balances owed on the credit card, thereby reducing the amounts paid on such receivables. In addition, unlike most other asset-backed securities, credit card receivables are unsecured obligations of the cardholder. VI. Description of U.S. Government Securities and Certain Other Securities The term "U.S. Government Securities" refers to a variety of securities which are issued or guaranteed by the United States Government, and by various instrumentalities which have been established or sponsored by the United States Government. U.S. Treasury securities are backed by the "full faith and credit" of the United States. Securities issued or guaranteed by Federal agencies and U.S. Government sponsored enterprises or instrumentalities may or may not be backed by the full faith and credit of the United States. In the case of securities not backed by the full faith and credit of the United States, an investor must look A-10 principally to the agency, enterprise or instrumentality issuing or guaranteeing the obligation for ultimate repayment, and may not be able to assert a claim against the United States itself in the event the agency, enterprise or instrumentality does not meet its commitment. Agencies which are backed by the full faith and credit of the United States include the Export Import Bank, Farmers Home Administration, Federal Financing Bank and others. Certain agencies, enterprises and instrumentalities, such as the Government National Mortgage Association are, in effect, backed by the full faith and credit of the United States through provisions in their charters that they may make "indefinite and unlimited" drawings on the Treasury, if needed to service its debt. Debt from certain other agencies, enterprises and instrumentalities, including the Federal Home Loan Bank and Federal National Mortgage Association, are not guaranteed by the United States, but those institutions are protected by the discretionary authority for the U.S. Treasury to purchase certain amounts of their securities to assist the institution in meeting its debt obligations. Finally, other agencies, enterprises and instrumentalities, such as the Farm Credit System and the Federal Home Loan Mortgage Corporation, are federally chartered institutions under Government supervision, but their debt securities are backed only by the creditworthiness of those institutions, not the U.S. Government. Some of the U.S. Government agencies that issue or guarantee securities include the Export-Import Bank of the United States, Farmers Home Administration, Federal Housing Administration, Maritime Administration, Small Business Administration and The Tennessee Valley Authority. An instrumentality of the U.S. Government is a Government agency organized under Federal charter with Government supervision. Instrumentalities issuing or guaranteeing securities include, among others, Overseas Private Investment Corporation, Federal Home Loan Banks, the Federal Land Banks, Central Bank for Cooperatives, Federal Intermediate Credit Banks and the Federal National Mortgage Association. International institutions that issue securities which the Core Fixed Income Portfolio may purchase include the Asian Development Bank, Inter-American Development Bank and the International Bank for Reconstruction and Development (the "World Bank"). VII. Description of Municipal Obligations Municipal Obligations generally include debt obligations issued by states and their political subdivisions, and duly constituted authorities and corporations, to obtain funds to construct, repair or improve various public facilities such as airports, bridges, highways, hospitals, housing, schools, streets and water and sewer works. Municipal Obligations may also be issued to refinance outstanding obligations as well as to obtain funds for general operating expenses and for loan to other public institutions and facilities. Industrial revenue bonds in most cases are revenue bonds and generally do not have the pledge of the credit of the issuer. The payment of the principal and interest on such industrial revenue bonds is dependent solely on the ability of the 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. Short-term municipal obligations issued by states, cities, municipalities or municipal agencies, include Tax Anticipation Notes, Revenue Anticipation Notes, Bond Anticipation Notes, Construction Loan Notes and Short-Term Discount Notes. Project Notes are instruments guaranteed by the A-11 Department of Housing and Urban Development but issued by a state or local housing agency. While the issuing agency has the primary obligation on Project Notes, they are also secured by the full faith and credit of the United States. Note obligations with demand or put options may have a stated maturity in excess of 13 months, but permit any holder to demand payment of principal plus accrued interest upon a specified number of days' notice. Frequently, such obligations are secured by letters of credit or other credit support arrangements provided by banks. The issuer of such notes normally has a corresponding right, after a given period, to repay in its discretion the outstanding principal of the note plus accrued interest upon a specific number of days' notice to the bondholders. The interest rate on a demand note may be based upon a known lending rate, such as a bank's prime rate, and be adjusted when such rate changes, or the interest rate on a demand note may be a market rate that is adjusted at specified intervals. The demand notes in which the Tax-Exempt Cash Portfolio will invest are payable on not more than thirteen months notice. The yields of Municipal Obligations depend on, among other things, general money market conditions, conditions in the Municipal Obligation market, the size of a particular offering, the maturity of the obligation, and the rating of the issue. The ratings of Moody's and S&P represent their opinions of the quality of the Municipal Obligations rated by them. It should be emphasized that such ratings are general and are not absolute standards of quality. Consequently, Municipal Obligations with the same maturity, coupon and rating may have different yields, while Municipal Obligations of the same maturity and coupon, but with different ratings may have the same yield. It will be the responsibility of the Advisor to appraise independently the fundamental quality of the bonds held by the Tax-Exempt Cash Portfolio. Municipal Obligations are sometimes purchased on a "when issued" basis, which means the buyer has committed to purchase certain specified securities at an agreed upon price when they are issued. The period between commitment date and issuance date can be a month or more. It is possible that the securities will never be issued and the commitment cancelled. From time to time proposals have been introduced before Congress to restrict or eliminate the Federal income tax exemption for interest on Municipal Obligations. Similar proposals may be introduced in the future. If any such proposal were enacted, it might restrict or eliminate the ability of the Tax-Exempt Cash, Muni Intermediate and New Jersey Muni Portfolios to achieve their investment objectives. In that event the Funds' Board members and officers would reevaluate the Tax-Exempt Cash, Muni Intermediate and New Jersey Muni Portfolios' investment objectives and policies and consider recommending to their shareholders changes in such objectives and policies. VIII. Foreign Investments Investors should recognize that investing in foreign companies involves certain special considerations which are not typically associated with investing in U.S. companies. Because the stocks of foreign companies are frequently denominated in foreign currencies, and because the Strategic Equity, International, Small Capitalization Value, Large Cap Value, Core Value, Small A-12 Capitalization Growth, Institutional International, Emerging Markets and Global Equity Portfolios may temporarily hold uninvested reserves in bank deposits in foreign currencies, these Portfolios may be affected favorably or unfavorably by changes in currency rates and in exchange control regulations, and may incur costs in connection with conversions between various currencies. The investment policies of the International, Institutional International, Emerging Markets and Global Equity Portfolios permit the Portfolios to enter into forward foreign currency exchange contracts in order to hedge the Portfolio's holdings and commitments against changes in the level of future currency rates. Such contracts involve an obligation to purchase or sell a specific currency at a future date at a price set at the time of the contract. As foreign companies are not generally subject to uniform accounting, auditing and financial reporting standards and they may have policies that are not comparable to those of domestic companies, there may be less information available about certain foreign companies than about domestic companies. Securities of some foreign companies are generally less liquid and more volatile than securities of comparable domestic companies. There is generally less government supervision and regulation of stock exchanges, brokers and listed companies than in the U.S. In addition, there is the possibility of expropriation or confiscatory taxation, political or social instability, or diplomatic developments which could affect U.S. investments in foreign countries. Although the Strategic Equity, International, Small Capitalization Value, Large Cap Value, Core Value, Small Capitalization Growth, Institutional International, Emerging Markets and Global Equity Portfolios will endeavor to achieve most favorable execution costs in its portfolio transactions, commissions on many foreign stock exchanges are generally higher than negotiated commissions on U.S. exchanges. Certain foreign governments levy withholding taxes on dividend and interest income. Although in some countries a portion of these taxes are recoverable, the non-recovered portion of foreign withholding taxes will reduce the income received from the foreign companies comprising the Strategic Equity, International, Small Capitalization Value, Large Cap Value, Core Value, Small Capitalization Growth, Institutional International, Emerging Markets and Global Equity Portfolios. IX. Options The Strategic Equity Portfolio's writing and purchase of options is a highly specialized activity which involves investment analysis and risks that are different from those associated with ordinary portfolio securities transactions. Purchasing options to attempt to increase return through their price appreciation involves the risk of loss of option premium if the Advisor is incorrect in its expectation of the direction or magnitude of the change in securities prices. Writing options to seek to increase income in the Portfolio involves the risk of net loss (after receiving the option premium) if the Advisor is incorrect in its expectation of the direction or magnitude of the change in securities prices. The successful use of options for hedging purposes also depends in part on the degree of correlation between the option and a security or index of securities. If the Advisor is incorrect in its expectation A-13 of changes in securities prices or its estimation of the correlation between the option and a security index, the investment performance of the Portfolio will be less favorable than it would have been in the absence of such options transactions. The use of options may increase the Portfolio's portfolio turnover rate. Higher rates of turnover may result in increased brokerage commissions, and could increase the amount of income received by the Portfolio that constitutes taxable capital gains. To the extent capital gains are realized, distributions from those gains may be ordinary income for federal tax purposes. Additionally, there is no assurance that a liquid secondary market on an options exchange will exist for any particular exchange-traded option or option traded over-the-counter at any particular time. If the Portfolio is unable to effect a closing purchase transaction with respect to covered options it has written, the Portfolio will not be able to sell the underlying securities or dispose of segregated assets until the options expire or are exercised. Similarly, if the Portfolio is unable to effect a closing sale transaction with respect to options it has purchased, it will have to exercise the options in order to realize any profit and will incur transaction costs upon the purchase or sale of the underlying securities. Reasons for the absence of a liquid secondary market on an exchange include the following: (i) there may be insufficient trading interest in certain options; (ii) restrictions may be imposed by an exchange on opening or closing transactions or both; (iii) trading halts, suspensions or other restrictions may be imposed with respect to particular classes or series of options; (iv) unusual or unforeseen circumstances may interrupt normal operations on an exchange; (v) the facilities of an exchange or the Options Clearing Corporation may not at all times be adequate to handle current trading volume; or (v) one or more exchanges could, for economic or other reasons, decide or be compelled at some future date to discontinue the trading of options (or a particular class or series of options), in which event the secondary market on that exchange (or in that class or series of options) would cease to exist, although outstanding options on that exchange that had been issued by the Options Clearing Corporation as a result of trades on that exchange would continue to be exercisable in accordance with their terms. The Portfolio may purchase and sell both options that are traded on U.S. exchanges and options traded over-the-counter with broker-dealers who make markets in these options. The ability to terminate over-the-counter options is more limited than with exchange-traded options and may involve the risk that broker-dealers participating in such transactions will not fulfill their obligations. Until such time as the staff of the SEC changes its position, the Portfolio will treat purchased over-the-counter options and all assets used to cover written over-the-counter options as illiquid securities. A-14 THE GLENMEDE FUND, INC. PART C. OTHER INFORMATION Item 23. Exhibits (a) (1) Articles of Amendment and Restatement dated October 12, 1988 are incorporated herein by reference to Exhibit 1(a) to Post-Effective Amendment No. 17 to Registrant's Registration Statement on Form N-1A (Nos. 33-22884/811-5577) filed with the SEC on December 29, 1995 ("PEA #17"). (2) Articles Supplementary dated August 16, 1989 to Articles of Incorporation are incorporated herein by reference to Exhibit 1(b) to PEA #17. (3) Articles Supplementary dated February 28, 1991 to Articles of Incorporation are incorporated herein by reference to Exhibit 1(c) to PEA #17. (4) Articles Supplementary dated March 3, 1992 to Articles of Incorporation are incorporated herein by reference to Exhibit 1(d) to PEA #17. (5) Articles Supplementary dated June 2, 1992 to Articles of Incorporation are incorporated herein by reference to Exhibit 1(e) to PEA #17. (6) Articles Supplementary dated September 30, 1994 to Articles of Incorporation are incorporated herein by reference to Exhibit 1(f) to PEA #17. (7) Articles Supplementary dated December 30, 1994 to Articles of Incorporation are incorporated herein by reference to Exhibit 1(g) to PEA #17. (8) Articles Supplementary dated February 26, 1997 to Articles of Incorporation are incorporated herein by reference to Exhibit 1(h) to Post-Effective Amendment No. 21 to the Registrant's Registration Statement on Form N-1A (Nos. 33-22884/811-5577) as filed with the SEC on June 7, 1997 ("PEA #21"). (9) Articles Supplementary dated September 24, 1997 to Articles of Incorporation are incorporated herein by reference to Exhibit 1(i) to Post-Effective Amendment No. 24 to the Registrant's Registration Statement on Form N-1A (Nos. 33-22884/811-5577) filed with the SEC on October 31, 1997 ("PEA #24"). (10) Articles of Amendment dated September 24, 1997 to Articles of Incorporation are incorporated herein by reference to Exhibit 1(i) to PEA #24. (11) Articles of Amendment dated September 24, 1997 to Articles of Incorporation are incorporated herein by reference to Exhibit 1(k) to PEA #24. (12) Articles Supplementary dated September 26, 1997 to Articles of Incorporation are incorporated herein by reference to Exhibit 1(l) to PEA #24. (13) Articles of Amendment dated December 23, 1997 to Articles of Incorporation are incorporated herein by reference to Exhibit 1(m) to Post-Effective Amendment No. 26 to the Registrant's Registration Statement on Form N-1A (Nos. 33-22884/811-5577) filed with the SEC on March 2, 1998 ("PEA #26"). (14) Articles Supplementary dated December 23, 1997 to Articles of Incorporation are incorporated herein by reference to Exhibit 1(n) to PEA #26. (15) Articles of Amendment dated August 20, 1998 to Articles of Incorporation are incorporated herein by reference to Exhibit (a)(15) to Post-Effective Amendment No. 27 to the Registrant's Registration Statement on Form N-1A (Nos. 33-22884/811-5577) filed with the SEC on December 23, 1998 ("PEA #27"). (16) Articles Supplementary dated October 11, 1999 to Articles of Incorporation are incorporated herein by reference to Exhibit (a)(16) to Post-Effective Amendment No. 29 to the Registrant's Registration Statement on Form N-1A (Nos. 33-22884/811-5577) filed with the SEC on October 15, 1999 ("PEA #29"). (17) Articles Supplementary dated December 13, 1999 to Articles of Incorporation are incorporated herein by reference to Exhibit (a)(17) to Post-Effective Amendment No. 30 to the Registrant's Registration Statement on Form N-1A (Nos. 33-22884/811-5577) filed with the SEC on December 15, 1999 ("PEA #30"). (18) Articles of Amendment dated February 1, 2000 to Articles of Incorporation. (b) By-Laws of Registrant are incorporated herein by reference to Exhibit 2 to PEA #17. -2- (c) See: Article Fifth, Articles of Amendment and Restatement dated October 12, 1988 which are incorporated herein by reference to Exhibit 1(a) to PEA #17; Articles Supplementary dated August 16, 1989 to Articles of Incorporation which are incorporated herein by reference to Exhibit 1(b) to PEA #17; Articles Supplementary dated February 28, 1991 to Articles of Incorporation which are incorporated herein by reference to Exhibit 1(c) to PEA #17; Articles Supplementary dated March 3, 1992 to Articles of Incorporation which are incorporated herein by reference to Exhibit 1(d) to PEA #17; Articles Supplementary dated June 2, 1992 to Articles of Incorporation which are incorporated herein by reference to Exhibit 1(e) to PEA #17; Articles Supplementary dated September 30, 1994 to Articles of Incorporation which are incorporated herein by reference to Exhibit 1(f) to PEA #17; Articles Supplementary dated December 30, 1994 to Articles of Incorporation which are incorporated by reference to Exhibit 1(g) to PEA #17; Articles Supplementary dated February 26, 1997 to Articles of Incorporation which are incorporated herein by reference to Exhibit 1(h) to PEA #21; Articles Supplementary dated September 24, 1997 to Articles of Incorporation which are incorporated herein by reference to Exhibit 1(i) to PEA #24; Articles Supplementary dated September 26, 1997 to Articles of Incorporation which are incorporated herein by reference to Exhibit 1(l) to PEA #24; Articles Supplementary dated December 23, 1997 to Articles of Incorporation which are incorporated herein by reference as Exhibit 1(n) to PEA #26; Articles Supplementary dated October 11, 1999 to Articles of Incorporation which are incorporated herein by reference to Exhibit (a)(16) to PEA #29; Articles Supplementary dated December 13, 1999 to Articles of Incorporation which are incorporated herein by reference to Exhibit (a)(17) to PEA #30; and Sections (7) and (11) of Article II, Article VII and Section (3) of Article VIII of Registrant's By-Laws which are incorporated herein by reference to Exhibit 2 to PEA #17. (d) (1) Investment Advisory Agreement between Registrant and The Glenmede Trust Company dated October 25, 1988 is incorporated herein by reference to Exhibit 5(a) to PEA #17. (2) Investment Advisory Agreement between Registrant and The Glenmede Trust Company relating to the Institutional International Portfolio dated July 31, 1992 is incorporated herein by reference to Exhibit 5(b) to PEA #17. (3) Amendment No. 1, dated September 13, 1994, to Investment Advisory Agreement between Registrant and The Glenmede Trust Company is incorporated herein by reference to Exhibit 5(c) to PEA #17. (4) Supplement dated November 1, 1992, to Investment Advisory Agreement between Registrant and The Glenmede Trust Company, relating to the International Fixed Income and Large Cap Value Portfolios is incorporated herein by reference to Exhibit 5(d) to PEA #17. -3- (5) Investment Advisory Agreement between Registrant and The Glenmede Trust Company relating to the Emerging Markets Portfolio dated December 12, 1994 is incorporated herein by reference to Exhibit 5(e) to PEA #17. (6) Sub-Investment Advisory Agreement among the Registrant, The Glenmede Trust Company and Pictet International Management Limited relating to the Emerging Markets Portfolio dated December 12, 1994 is incorporated herein by reference to Exhibit 5(f) to PEA #17. (7) Amendment No. 1, dated December 12, 1994, to the Investment Advisory Agreement for the Emerging Markets Portfolio between the Registrant and the Glenmede Trust Company is incorporated herein by reference to Exhibit 5(g) to Post-Effective Amendment No. 18 to the Registrant's Registration Statement on Form N-1A (Nos. 33-22884/811-5577) as filed with the SEC on February 27, 1996 ("PEA #18"). (8) Amendment No. 1, dated September 11, 1996, to the Investment Advisory Agreement for the Emerging Markets Portfolio between Registrant and the Glenmede Trust Company is incorporated herein by reference to Exhibit 5(h) to PEA #21. (9) Amendment No. 1, dated September 11, 1996, to the Sub-Investment Advisory Agreement among the Registrant, The Glenmede Trust Company and Pictet International Management Limited relating to the Emerging Markets Portfolio is incorporated herein by reference to Exhibit 5(i) to PEA #21. (10) Investment Advisory Agreement between the Registrant and The Glenmede Trust Company relating to the Small Capitalization Equity Portfolio is incorporated herein by reference to Exhibit (d)(10) to PEA #27. (11) Investment Advisory Agreement between the Registrant and The Glenmede Trust Company relating to the Global Equity Portfolio dated September 16, 1997 is incorporated herein by reference to Exhibit 5(k) to PEA #26. (12) Investment Advisory Agreement between the Registrant and The Glenmede Trust Company relating to the Small Capitalization Growth Portfolio. (13) Sub-Investment Advisory Agreement among the Registrant, The Glenmede Trust Company and Winslow Capital Management, Inc. relating to the Small Capitalization Growth Portfolio. (14) Sub-Investment Advisory Agreement among the Registrant, The Glenmede Trust Company and TCW Funds Management, Inc. relating to the Small Capitalization Growth Portfolio. -4- (15) Investment Advisory Agreement between the Registrant and The Glenmede Trust Company relating to the Core Value Portfolio. (e) (1) Distribution Agreement dated September 10, 1997, between Registrant and ICC Distributors, Inc. is incorporated herein by reference to Exhibit 6 to PEA #24. (2) Appendix A to Distribution Agreement between Registrant and ICC Distributors Inc. relating to the Small Capitalization Growth and Core Value Portfolios. (f) Not Applicable. (g) (1) Custody Agreement dated December 13, 1994, as amended and restated May 1, 1995 between Registrant and The Chase Manhattan Bank, N.A. is incorporated herein by reference to Exhibit 8(a) to PEA #17. (2) Amendment dated May 1, 1995 to Custody Agreement between Registrant and The Chase Manhattan Bank, N.A. dated May 1, 1995 is incorporated herein by reference to Exhibit 8(b) to PEA #17. (3) Amendment to Exhibit A to Custody Agreement between Registrant and The Chase Manhattan Bank, N.A. relating to the Small Capitalization Growth and Core Value Portfolios. (h) (1) Master Services Agreement between Registrant and Investment Company Capital Corp. dated July 1, 1995 is incorporated herein by reference to Exhibit 9(a) to PEA #17. (2) Form of Amended Fee Schedule to the Master Services Agreement is incorporated herein by reference to Exhibit 9(b) to PEA #21. (3) Amended and Restated Shareholder Servicing Plan is incorporated herein by reference to Exhibit 9(c) to PEA #24. (4) Form of Amended and Restated Shareholder Servicing Agreement is incorporated herein by reference to Exhibit 9(d) to PEA #24. (5) Amended and Restated Shareholder Servicing Agreement and Plan relating to the Small Capitalization Growth and Core Value Portfolios. (i) (1) Opinion of Counsel as to Legality of Securities Being Registered is incorporated herein by reference to Post-Effective Amendment No. 25 to -5- the Registrant's Registration Statement on Form N-1A (Nos. 33-22884/811-5577) as filed with the SEC on December 30, 1997 ("PEA #25"). (2) Opinion of Counsel as to Legality of Securities Being Registered is incorporated herein by reference to Exhibit (i)(2) to PEA #29. (3) Opinion of Counsel as to Legality of Securities Being Registered is incorporated herein by reference to Exhibit (i)(3) to PEA #30. (j) (1) Consent of Drinker Biddle & Reath LLP. (2) Consent of PricewaterhouseCoopers LLP. (k) Not Applicable. (l) (1) Purchase Agreement between the Registrant and The Glenmede Trust Company relating to the Emerging Markets Portfolio dated December 12, 1994 is incorporated by reference to Exhibit 13(d) to PEA #17. (2) Purchase Agreement between the Registrant and The Glenmede Trust Company relating to the Global Equity Portfolio dated September 16, 1997 is incorporated herein by reference to Exhibit 13(b) to PEA #26. (3) Purchase Agreement between Registrant and The Glenmede Trust Company relating to the Small Capitalization Growth Portfolio. (4) Purchase Agreement between Registrant and The Glenmede Trust Company relating to the Core Value Portfolio. (m) Not Applicable. (n) Amended and Restated Plan Pursuant to Rule 18f-3 for Operation of a Multi-Class System dated October 24, 1997 is incorporated herein by reference to Exhibit 18 to PEA #24. Item 24. Persons Controlled by or Under Common Control with Registrant Registrant is not controlled by or under common control with any person. Registrant is controlled by its Board of Directors. Item 25. Indemnification Reference is made to Article Ten of the Registrant's Amended and Restated Article of Incorporation, incorporated herein by reference to Exhibit 1. Insofar as -6- indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of counsel the matter has been settled by controlling precedent, submit to 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 26. Business and Other Connections of Investment Advisor (a) The Glenmede Trust Company Reference is made to the caption of "Investment Advisor" in the Prospectuses in Part A of this Registration Statement and "Investment Advisory and Other Services" in Part B of this Registration Statement. Set forth below is a list of all of the directors, senior officers and those officers primarily responsible for Registrant's affairs and, with respect to each such person, the name and business address of the Company (if any) with which such person has been connected at any time since October 31, 1997, as well as the capacity in which such person was connected.
Name and Principal Name and Position Business Address Connection with with Investment Adviser of other Company other Company ----------------------- ------------------ ---------------- Susan W. Catherwood The Glenmede Corporation Director The Glenmede Trust Company Director of New Jersey PECO Energy Director University of Pennsylvania Vice Chairman, Board of Trustees The World Affairs Council Board Member of Philadelphia Monell Chemical Senses Director Center
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Name and Principal Name and Position Business Address Connection with with Investment Adviser of other Company other Company ----------------------- ------------------ ---------------- The Christopher Ludwick Vice Chairman, Foundation Member, Board of Managers Executive Service Corps Vice Chairman, of the Delaware Valley Board of Directors Montessori Genesis II Advisory Board Member United Way of Southeastern Director Pennsylvania Thomas Harrison Skelton Board Member Foundation The Catherwood Foundation Board Member Richard F. Pew The Glenmede Corporation Director Yellowstone Center Director for Mountain Environments Mountain Research Center, Director Montana State University Teton Science School; Director Kelly Wyoming Thomas W. Langfitt, M.D. The Glenmede Corporation Director Medical Committee on Chairman Automotive Safety, General Motors Corporation University of Pennsylvania Board Member Medical Center Institute of Medicine Board Member
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Name and Principal Name and Position Business Address Connection with with Investment Adviser of other Company other Company ----------------------- ------------------ ---------------- The American Philosophical Member Society Greater Philadelphia Urban Board Member Affairs Coalition The Philadelphia Public Board Member School/Business Partnership for Reform Governing Board Secretary's Advisory Board Member Committee on Infant Mortality, Department of Health and Human Services Community College of Director Philadelphia National Museum of Trustee American History - Smithsonian Institution Arthur E. Pew, III The Glenmede Corporation Director Minnesota Transportation Member, Board of Museum, Inc. Trustees Museum of Transportation Chairman of the Development Corporation, Board St. Paul, Minnesota Manitou Island Association Member, Board of (White Bear Lake, Minnesota) Directors Osceola and St. Croix Member, Board of Valley Railway (Osceola, Directors Wisconsin) J. Howard Pew, II The Glenmede Corporation Director J.N. Pew, III The Glenmede Corporation Director J.N. Pew, IV, M.D. The Glenmede Corporation Director The Glenmede Trust Company Director of New Jersey Private Practice President of Internal Medicine Flying Hills Self Storage, President Inc.
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Name and Principal Name and Position Business Address Connection with with Investment Adviser of other Company other Company ----------------------- ------------------ ---------------- American Red Cross, Director Berks County French and Pickering Creek Director Conservation Trust, Inc. R. Anderson Pew The Glenmede Corporation Director, Chairman of the Board The Glenmede Trust Company, Director N.A. Sun Company, Inc. Director Bryn Mawr College Vice Chairman, Board of Trustees The Children's Hospital Vice Chairman of of Philadelphia Board of Trustees The Jackson Library Member, Corporation Board of Trustees The Curtis Institute Member, Board of Trustees of Music, Philadelphia Aircraft Owners and Pilots Chairman of the Board Association AOPA Air Safety Chairman of Foundation the Board of Trustees Academy of Music Member, Philadelphia, Inc. AOM Committee Ethel Benson Wister The Glenmede Corporation Director Academy of Music Committee Member Philadelphia, Inc. Concerto Soloists Orchestra Arts Award 1997 Recipient Scheie Eye Institute/Department Recipient, Guest of Honor Of Ophthalmology-University of Award 1998 - Scheie Pennsylvania Odyssey Ball Philadelphia Television Network, Board Member Inc.
-10- (b) Sub-Investment Advisor - Pictet International Management Limited Pictet International Management Limited is an affiliate of Pictet & Cie (the "Bank"), a Swiss private bank, which was founded in 1805. The Bank manages the accounts for institutional and private clients and is owned by eight partners. Pictet International Management Limited, established in 1980, manages the investment needs of clients seeking to invest in the international fixed revenue and equity markets. The list required by this Item 26 of officers and directors of Pictet International Management Limited, together with the information as to any other business, profession, vocation or employment of a substantial nature engaged in by such officers and directors during the past two years, is incorporated by reference to Schedules A and D of Form ADV filed by Pictet International Management Limited pursuant to the Investment Advisers Act of 1940 (SEC File No. 801-15143). (c) Sub-Investment Advisor - Winslow Capital Management, Inc. The officers and directors at Winslow Capital Management, Inc. are all active employees of the firm. None of the directors or officers has any other business, profession, vocation or employment outside of the firm. All of the directors and officers have been in the investment management business for at least the last ten consecutive years. Prior to joining Winslow Capital Management, Inc., Joseph J. Docter, CFA and R. Bart Wear, CFA were partners at Baird Capital Management from July 1996 to March 1997. (d) Sub-Investment Advisor - TCW Investment Management Company (formerly known as TCW Funds Management, Inc.) The list required by this Item 26 of the activities and affiliations of the officers and directors of TCW Investment Management Company is incorporated by reference to Schedules A and D of Form ADV filed by TCW Investment Management Company pursuant to the Investment Advisers Act of 1940. In addition to the Funds, TCW Investment Management Company serves as investment adviser or sub-adviser to a number of open-end and closed-end management investment companies that are registered under the Investment Company Act of 1940 and to a number of foreign investment companies. -11- Item 27. Principal Underwriters. (a) In addition to The Glenmede Fund, Inc., ICC Distributors, Inc. ("ICC Distributors") currently acts as distributor for The Glenmede Portfolios, BT Advisor Funds, BT Institutional Funds, BT Investment Funds, BT Pyramid Mutual Funds, Flag Investors Series Funds, Inc. (formerly Flag Investors International Fund, Inc.), Flag Investors Emerging Growth Fund, Inc., Flag Investors Equity Partners Fund, Inc., Flag Investors Communications Fund, Inc., Flag Investors Real Estate Securities Fund, Inc., Flag Investors Value Builder Fund, Inc., Total Return U.S. Treasury Fund, Inc., Flag Investors Short Intermediate Income Fund, Inc., Managed Municipal Fund, Inc., Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. (formerly BT Alex. Brown Cash Reserve Fund, Inc.), Flag Investors Portfolios Trust (formerly Deutsche Portfolios), Flag Investors Funds, Inc. (formerly Deutsche Funds, Inc.), Morgan Grenfell Investment Trust, Cash Management Portfolio, Intermediate Tax Free Portfolio, Tax Free Money Portfolio, NY Tax Free Money Portfolio, Treasury Money Portfolio, International Equity Portfolio, Equity 500 Index Portfolio, Capital Appreciation Portfolio, Asset Management Portfolio, BT Investment Portfolios, and DP Trust. ICC Distributors is registered with the Securities and Exchange Commission as a broker-dealer and is a member of the National Association of Securities Dealers. (b)
Name and Principal Position and Offices Position and Offices Business Address with Principal Underwriter with Registrant - ------------------ -------------------------- --------------- John Y. Keffer President None David I. Goldstein Secretary None Benjamin L. Niles Vice President None Nanette K. Chern Chief Compliance Officer None Ronald H. Hirsch Treasurer None Marc D. Keffer Assistant Secretary None Federick Skillin Assistant Treasurer None
(c) Not Applicable. -12- Item 28. Location of Accounts and Records All accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder will be maintained at the offices of: (1) The Glenmede Trust Company One Liberty Place 1650 Market Street, Suite 1200 Philadelphia, Pennsylvania 19103 (records relating to its functions as investment advisor) (2) Pictet International Management Limited Cutlers Garden 5 Devonshire Square London, United Kingdom EC2M 4WD (records relating to its functions as sub-investment advisor to Emerging Markets Portfolio) (3) The Chase Manhattan Bank, N.A. One Chase Manhattan Plaza New York, New York 10081 (records relating to its functions as custodian) (4) Investment Company Capital Corp. One South Street Baltimore, Maryland 21202 (records relating to its functions as administrator, transfer agent and dividend disbursing agent) (5) ICC Distributors, Inc. Two Portland Square Portland, Maine 04101 (records relating to its functions as distributor) (6) Drinker Biddle & Reath LLP One Logan Square 18th & Cherry Streets Philadelphia, Pennsylvania 19103-6996 (Registrant's minute books) (7) Winslow Capital Management, Inc. 4720 IDS Tower 80 South Eighth Street Minneapolis, Minnesota 55402 (records relating to its functions as sub-investment advisor to the Small Capitalization Growth Portfolio) -13- (8) TCW Investment Management Company 865 South Figueroa Street Los Angeles, California 90017 (records relating to its functions as sub-investment advisor to the Small Capitalization Growth Portfolio) Item 29. Management Services Not applicable. Item 30. Undertakings. (a) Registrant undertakes to comply with the provisions of Section 16(c) of the 1940 Act in regard to shareholders' rights to call a meeting of shareholders for the purpose of voting on the removal of directors and to assist in shareholder communications in such matters, to the extent required by law. Specifically, the Registrant will, if requested to do so by the holders of at least 10% of the Registrant's outstanding shares, call a meeting of shareholders for the purpose of voting upon the question of the removal of directors, and the Registrant will assist in shareholder communications as required by Section 16(c) of the Act. (b) Registrant undertakes to furnish to each person to whom a prospectus is delivered, a copy of Registrant's latest annual report to shareholders, upon request and without charge. -14- SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, the Registrant certifies that it meets all of the requirements for effectiveness of this Post-Effective Amendment No. 31 to its Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-Effective Amendment No. 31 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Philadelphia, and Commonwealth of Pennsylvania on the 28th day of February, 2000. THE GLENMEDE FUND, INC. By /s/ Mary Anne B. Wirts ------------------------ Mary Ann B. Wirts President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, as amended, this Post-Effective Amendment No. 31 to the Registration Statement of The Glenmede Fund, Inc. has been signed by the following persons in the capacities and on the date indicated.
Signature Title Date --------- ------ ---- * John W. Church Chairman February 28, 2000 - ---------------------------- John W. Church, Jr. /s/ Mary Ann B. Wirts President and February 28, 2000 - --------------------------- Chief Executive Mary Ann B. Wirts Officer * H. Franklin Allen Director February 28, 2000 - ---------------------------- H. Franklin Allen, Ph.D. * Willard S. Boothby Director February 28, 2000 - --------------------------- Willard S. Boothby, Jr. * Francis J. Palamara Director February 28, 2000 - ---------------------------- Francis J. Palamara
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Signature Title Date --------- ------ ---- * G. Thompson Pew, Jr. Director February 28, 2000 - ---------------------------- G. Thompson Pew, Jr. /s/ Kimberly C. Osborne Executive Vice February 28, 2000 - ---------------------------- President and Kimberly C. Osborne Treasurer
*By: /s/ Michael P. Malloy ----------------------------------- Michael P. Malloy, Attorney-in-fact -16- THE GLENMEDE FUND, INC. THE GLENMEDE PORTFOLIOS Power of Attorney I hereby appoint John W. Church, Jr., Michael P. Malloy or Mary Ann B. Wirts attorney for me, with full power of substitution, and in my name and on my behalf as a director or trustee to sign any Registration Statement or Amendment thereto of THE GLENMEDE FUND, INC. and/or THE GLENMEDE PORTFOLIOS to be filed with the Securities and Exchange Commission under the Securities Act of 1933 and/or the Investment Company Act of 1940 and generally to do and perform all things necessary to be done in that connection. I have signed this Power of Attorney on January 23, 2000. /s/ H. Franklin Allen, Ph.D. ----------------------------- H. Franklin Allen, Ph.D. THE GLENMEDE FUND, INC. THE GLENMEDE PORTFOLIOS Power of Attorney I hereby appoint John W. Church, Jr., Michael P. Malloy or Mary Ann B. Wirts attorney for me, with full power of substitution, and in my name and on my behalf as a director or trustee to sign any Registration Statement or Amendment thereto of THE GLENMEDE FUND, INC. and/or THE GLENMEDE PORTFOLIOS to be filed with the Securities and Exchange Commission under the Securities Act of 1933 and/or the Investment Company Act of 1940 and generally to do and perform all things necessary to be done in that connection. I have signed this Power of Attorney on January 28, 2000. /s/ Willard S. Boothby, Jr. ---------------------------- Willard S. Boothby, Jr. THE GLENMEDE FUND, INC. THE GLENMEDE PORTFOLIOS Power of Attorney I hereby appoint John W. Church, Jr., Michael P. Malloy or Mary Ann B. Wirts attorney for me, with full power of substitution, and in my name and on my behalf as a director or trustee to sign any Registration Statement or Amendment thereto of THE GLENMEDE FUND, INC. and/or THE GLENMEDE PORTFOLIOS to be filed with the Securities and Exchange Commission under the Securities Act of 1933 and/or the Investment Company Act of 1940 and generally to do and perform all things necessary to be done in that connection. I have signed this Power of Attorney on January 29, 2000. /s/ Francis J. Palamara ---------------------------- Francis J. Palamara THE GLENMEDE FUND, INC. THE GLENMEDE PORTFOLIOS Power of Attorney I hereby appoint John W. Church, Jr., Michael P. Malloy or Mary Ann B. Wirts attorney for me, with full power of substitution, and in my name and on my behalf as a director or trustee to sign any Registration Statement or Amendment thereto of THE GLENMEDE FUND, INC. and/or THE GLENMEDE PORTFOLIOS to be filed with the Securities and Exchange Commission under the Securities Act of 1933 and/or the Investment Company Act of 1940 and generally to do and perform all things necessary to be done in that connection. I have signed this Power of Attorney on January 21, 2000. /s/ G. Thompson Pew, Jr. ---------------------------- G. Thompson Pew, Jr. THE GLENMEDE FUND, INC. THE GLENMEDE PORTFOLIOS Power of Attorney I hereby appoint Michael P. Malloy or Mary Ann B. Wirts attorney for me, with full power of substitution, and in my name and on my behalf as the Chairman and a director or trustee to sign any Registration Statement or Amendment thereto of THE GLENMEDE FUND, INC. and/or THE GLENMEDE PORTFOLIOS to be filed with the Securities and Exchange Commission under the Securities Act of 1933 and/or the Investment Company Act of 1940 and generally to do and perform all things necessary to be done in that connection. I have signed this Power of Attorney on January 21, 2000. /s/ John W. Church, Jr. ---------------------------- John W. Church, Jr. EXHIBIT INDEX Exhibit No. - ----------- (a) (18) Articles of Amendment dated February 1, 2000 to the Articles of Incorporation. (d) (12) Investment Advisory Agreement relating to the Small Capitalization Growth Portfolio. (13) Sub-Investment Advisory Agreement Relating to the Small Capitalization Growth Portfolio. (14) Sub-Investment Advisory Agreement Relating to the Small Capitalization Growth Portfolio. (15) Investment Advisory Agreement relating to the Core Value Portfolio. (e) (2) Appendix A to Distribution Agreement between Registrant and ICC Distributors, Inc. relating to the Small Capitalization Growth and Core Value Portfolios. (g) (3) Amendment to Exhibit A to Custody Agreement between Registrant and The Chase Manhattan Bank, N.A. relating to the Small Capitalization Growth and Core Value Portfolios. (h) (5) Amended and Restated Shareholder Servicing Agreement and Plan relating to the Small Capitalization Growth and Core Value Portfolios. (j) (1) Consent of Drinker Biddle & Reath LLP. (2) Consent of PricewaterhouseCoopers LLP. (l) (3) Purchase Agreement between Registrant and the Glenmede Trust Company relating to the Small Capitalization Growth Portfolio. (4) Purchase Agreement between Registrant and The Glenmede Trust Company relating to the Core Value Portfolio. EX-99.A18 2 ARTICLES OF AMENDMENT THE GLENMEDE FUND, INC. ARTICLES OF AMENDMENT THE GLENMEDE FUND, INC., a Maryland corporation having its principal office in Baltimore City, Maryland ("Glenmede Fund"), hereby certifies to the State Department of Assessments and Taxation of Maryland that: FIRST: In accordance with the requirements of Section 2-605 of the Maryland General Corporation Law, the Board of Directors of Glenmede Fund pursuant to resolutions approved at a regular meeting of the Board of Directors held on December 13, 1999, has amended the Charter of Glenmede Fund, as previously amended and restated, as follows: RESOLVED, that the Charter of the Glenmede Fund be, and hereby is, amended to rename the authorized issued and unissued shares of the Glenmede Fund classified as the "Small Capitalization Equity Portfolio - Advisor Shares" and "Small Capitalization Equity Portfolio - Institutional Shares," respectively, to shares of the "Small Capitalization Value Portfolio - Advisor Shares" and "Small Capitalization Value Portfolio - Institutional Shares," respectively, of Glenmede Fund; and FURTHER RESOLVED, that the foregoing name change will become effective at 12:01 a.m. on February 28, 2000. SECOND: In accordance with the requirements of Section 2-605 of the Maryland General Corporation Law, the Board of Directors of Glenmede Fund, by unanimous written consent dated as of January 31, 2000, has amended the Charter of the Glenmede Fund, as previously amended and restated, as follows: RESOLVED, that the Charter of the Glenmede Fund be, and hereby is, amended to rename the authorized issued and unissued shares of the Glenmede Fund classified as the "Tax Managed Equity Portfolio" shares to shares of the "Strategic Equity Portfolio" of Glenmede Fund; and FURTHER RESOLVED, that the foregoing name change will become effective at 12:01 a.m. on February 28, 2000. THIRD: The foregoing amendments to the Charter have been duly approved by at least a majority of the entire Board of Directors of Glenmede Fund. The amendments are limited to a change expressly permitted to be made without action of the stockholders under Section 2-605 of the Maryland General Corporation Law. FOURTH: The Articles of Amendment will become effective at 12:01 a.m. on February 28, 2000. IN WITNESS WHEREOF, The Glenmede Fund, Inc. has caused these Articles of Amendment to be signed in its name and on its behalf as of this 1st day of February, 2000. Attest: THE GLENMEDE FUND, INC. /s/ Michael P. Malloy /s/ Mary Ann B. Wirts - --------------------------- ---------------------- Michael P. Malloy Mary Ann B. Wirts Secretary President THE UNDERSIGNED, President of Glenmede Fund, who executed on behalf of said Glenmede Fund the foregoing Articles of Amendment to the Charter, of which this certificate is made a part, hereby acknowledges, in the name and on behalf of said Glenmede Fund, the foregoing Articles of Amendment to the Charter to be the corporate act of said Glenmede Fund and further certifies that, to the best of her knowledge, information and belief, the matters and facts set forth therein with respect to the approval thereof are true in all material respects, under the penalties of perjury. /s/ Mary Ann B. Wirts ----------------------- Mary Ann B. Wirts President EX-99.(D)(12) 3 EXHIBIT (D)(12) Exhibit (d)(12) INVESTMENT ADVISORY AGREEMENT Agreement made this 29th day of December, 1999 by and between The Glenmede Fund, Inc., a Maryland corporation (the "Company"), and The Glenmede Trust Company, a Pennsylvania corporation (the "Adviser"). 1. Duties of Adviser. The Company hereby appoints the Adviser to provide or arrange to provide directly or through third parties, investment advisory services to its Small Capitalization Growth Portfolio (the "Portfolio") for the period and on such terms set forth in this Agreement. Subject to the approval of the Company's Board of Directors, any applicable provisions of the Investment Company Act of 1940 (the "1940 Act") and the Investment Advisers Act of 1940, the Adviser may select sub-advisers to perform any or all of the services set forth in this Agreement for assets of the Portfolio assigned by the Adviser to the particular sub-adviser. The Company employs the Adviser, directly or through sub-advisers: to manage the investment and reinvestment of the assets of the Portfolio; to continuously review, supervise and administer the investment program of the Portfolio; to determine in its (or any selected sub-advisers') discretion the securities to be purchased or sold and the portion of the Portfolio's assets to be held uninvested; to provide the Company with records concerning the Adviser's (and any selected sub-advisers') activities which the Company is required to maintain; and to render regular reports to the Company's officers and Board of Directors concerning the Adviser's discharge of the foregoing responsibilities. The Adviser shall monitor the services performed by any selected sub-advisers. The Adviser and any selected sub-advisers shall discharge the foregoing responsibilities subject to the control of the officers and the Board of -1- Directors of the Company and in compliance with the objective, policies and limitations set forth in the Portfolio's prospectus and applicable laws and regulations. The Adviser accepts such employment and agrees to render the services and to provide, at its own expense, the office space, furnishings and equipment and the personnel required by it to perform the services on the terms and for the compensation provided herein. 2. Portfolio Transactions. The Adviser is authorized to select the brokers that will execute the purchases and sales of securities for the Portfolio and is directed to use its best efforts to obtain the best available price and most favorable execution, except as prescribed herein. Subject to policies established by the Board of Directors of the Company, the Adviser may also be authorized to effect individual securities transactions at commission rates in excess of the minimum commission rates available, if the Adviser determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage or research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Adviser's overall responsibilities with respect to the Company and other accounts as to which the Adviser exercises investment discretion. The execution of such transactions shall not be deemed to represent an unlawful act or breach of any duty created by this Agreement or otherwise. The Adviser will promptly communicate to the officers and Directors of the Company such information relating to portfolio transactions as they may reasonably request. 3. Compensation of the Adviser. For the services provided and the expenses assumed pursuant to this Agreement, effective as of the date hereof, the Portfolio will pay the Adviser and the Adviser will accept as full compensation therefor, a fee computed daily and paid monthly (in arrears), at an annual rate of .25% of the average daily net assets held in the Portfolio. -2- 4. Other Services. At the request of the Company, the Adviser in its discretion may make available to the Company office facilities, equipment, and other services. Such office facilities, equipment, and services shall be provided for or rendered by the Adviser and billed to the Company at the Adviser's cost. The Adviser further agrees to assume the cost of printing and mailing prospectuses to persons other than current shareholders of the Company and the cost of any other activities primarily intended to result in the sale of the Company's shares. 5. Reports. The Company and the Adviser agree to furnish to each other current prospectuses, proxy statements, reports to shareholders, certified copies of their financial statements, and such other information with regard to their affairs as each may reasonably request. 6. Status of Adviser. The services of the Adviser to the Company are not to be deemed exclusive, and the Adviser shall be free to render similar services to others so long as its services to the Company are not impaired thereby. 7. Liability of Adviser. In the absence of (i) willful misfeasance, bad faith or gross negligence on the part of the Adviser in performance of its obligations and duties hereunder, (ii) reckless disregard by the Adviser of its obligations and duties hereunder, or (iii) a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services (in which case any award of damages shall be limited to the period and the amount set forth in Section 36(b)(3) of the 1940 Act), the Adviser shall not be subject to any liability whatsoever to the Company or to any shareholder of -3- the Company, for any error or judgment, mistake of law or any other act or omission in the course of, or connected with, rendering services hereunder including without limitation, for any losses that may be sustained in connection with the purchase, holding, redemption or sale of any security on behalf of the Portfolio. 8. Permissible Interests. Subject to and in accordance with the Articles of Amendment and Restatement of the Company and the Articles of Incorporation of the Adviser, Directors, officers, agents and shareholders of the Company are or may be interested in the Adviser (or any successor thereof) as Directors, officers, agents, shareholders or otherwise; Directors, officers, agents and shareholders of the Adviser are or may be interested in the Company as Directors, officers, shareholders or otherwise; and the Adviser (or any successor) is or may be interested in the Company as a shareholder or otherwise; and that the effect of any such interrelationships shall be governed by said Articles of Amendment and Restatement or Articles of Incorporation (as applicable) and the provisions of the 1940 Act. 9. Corporate Name. The Company acknowledges that it has obtained its corporate name by consent of the Adviser, which consent was given in reliance and upon the provisions hereafter contained. The Company agrees that if the Adviser should cease to be the investment adviser of the Company, the Company will, upon written demand of the Adviser forthwith (a) for a period of two years after such written demand, state in all prospectuses, advertising material, letterheads and other material designed to be read by investors or prospective investors, in a prominent position and in prominent type (as may be reasonably approved by the Adviser), that The Glenmede Trust Company no longer serves as the investment adviser of the Company, and (b) delete from its name -4- the word "Glenmede" or any approximation thereof. The Company further agrees that the Adviser may permit other persons, partnerships (general or limited), associations, trusts, corporations or other incorporated or unincorporated groups of persons, including without limitation any investment company or companies of any type which may be initially sponsored or organized by the Adviser in the future, to use the word "GLENMEDE" or any approximation thereof as part of their names. As used in this section, "The Glenmede Trust Company" and "Adviser" shall include any successor corporation, partnership, limited partnership, trust or person. 10. Duration and Termination. This Agreement, unless sooner terminated as provided herein, shall continue until October 31, 2000 and thereafter shall continue for periods of one year so long as such continuance is specifically approved at least annually (a) by the vote of a majority of those members of the Board of Directors of the Company who are not parties to this Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval, and (b) by the Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Portfolio; provided however, that if the holders of the Portfolio fail to approve the Agreement as provided herein, the Adviser may continue to serve the Portfolio in such capacity in the manner and to the extent permitted by the Company's Board of Directors and the 1940 Act and Rules thereunder. This Agreement may be terminated by the Company at any time, without the payment of any penalty, by vote of a majority of the entire Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Portfolio on 60 days' written notice to the Adviser. This Agreement may be terminated by the Adviser at any time, without the payment of any penalty, upon 90 days' written notice to the Company. This Agreement will automatically and immediately terminate in the event of its assignment. Any notice under this Agreement shall be given in writing, addressed and delivered or mailed postpaid, to the other party at any office of such party. -5- As used in this Section 10, the terms "assignment", "interested persons", and a "vote of a majority of the outstanding voting securities" shall have the respective meanings set forth in Section 2(a)(4), Section 2(a)(19) and Section 2(a)(42) of the 1940 Act. 11. Books and Records. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Adviser hereby agrees that all records which it maintains for the Portfolio are the property of the Company and further agrees to surrender promptly to the Company any of such records upon the Company's request. The Adviser further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records which it maintains for the Company and are required to be maintained by Rule 31a-1 under the 1940 Act. 12. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania. 13. Amendment of Agreement. This Agreement may be amended by mutual consent, subject to the applicable requirements of the 1940 Act. -6- 14. Severability. If any provisions of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. IN WITNESS WHEREOF, intending to be legally bound hereby, the parties hereto have caused this Agreement to be executed as of this 29th day of December, 1999. THE GLENMEDE FUND, INC. By: /s/ Mary Ann B. Wirts ---------------------- Mary Ann B. Wirts Title: President THE GLENMEDE TRUST COMPANY By: /s/ Bruce Simon --------------- Bruce Simon -7- EX-99.(D)(13) 4 EXHIBIT 99.(D)(13) SUB-INVESTMENT ADVISORY AGREEMENT THE GLENMEDE FUND, INC. (Small Capitalization Growth Portfolio) December 15, 1999 Winslow Capital Management, Inc. 4720 IDS Tower 80 South Eighth Street Minneapolis, MN 55402 Ladies and Gentlemen: The Glenmede Fund, Inc., a Maryland Corporation (the "Company"), and Glenmede Trust Company, a Pennsylvania Trust Company (the "Adviser"), each confirms its agreement with Winslow Capital Management, Inc. (the "Sub-Adviser"), as follows: 1. Investment Description; Appointment The Company desires to employ its capital relating to its Small Capitalization Growth Portfolio (the "Portfolio") by investing and reinvesting in investments of the kind and in accordance with the investment objective(s), policies and limitations specified in its Articles of Incorporation, as amended from time to time (the "Articles of Incorporation"), in the prospectus (the "Prospectus") and the statement of additional information (the "Statement") filed with the Securities and Exchange Commission as part of the Company's Registration Statement on Form N-1A, as amended from time to time, and in the manner and to the extent as may from time to time be approved by the Board of Directors of the Company (the "Board"). Copies of the Prospectus, the Statement and the Articles of Incorporation have been or will be submitted to the Sub-Adviser. The Company agrees to provide copies of all amendments to the Prospectus, the Statement and the Articles of Incorporation to the Sub-Adviser on an on-going basis. The Company employs the Adviser as the investment adviser to the Portfolio, and the Company and the Adviser desire to employ and hereby appoint the Sub-Adviser to act as a sub-investment adviser to the Portfolio. The Sub-Adviser accepts the appointment and agrees to furnish the services for the compensation set forth below. 2. Services as Sub-Adviser The Company and the Adviser hereby appoint the Sub-Adviser to act as sub-investment adviser to the Portfolio for a portion of the assets of the Portfolio which the Adviser, as fiduciary for the Company, determines to assign to the Sub-Adviser (those assets being referred to as the "Portfolio Account") for the period and on such terms set forth in this Agreement. It is understood that the Portfolio Account may consist of all, a portion of or none of the assets of the Portfolio, and that the Adviser has the right to allocate and reallocate such assets to the Portfolio Account at any time, and from time to time, upon such notice to the Sub-Adviser as may be reasonably necessary, in the view of the Company, to ensure orderly management of the Portfolio Account or the Portfolio. The Company and the Adviser employ the Sub-Adviser to manage the investment and reinvestment of the assets of the Portfolio Account, to continuously review, supervise and administer the investment program of the Portfolio Account, to determine in its discretion the securities to be purchased or sold and the portion of the Portfolio Account's assets to be held uninvested, to provide the Company and the Adviser with records concerning the Sub-Adviser's activities which the Company and the Sub-Adviser are required to maintain, and to render regular reports to the Company's officers and Board of Directors and the Adviser concerning the Sub-Adviser's discharge of the foregoing responsibilities. The Sub-Adviser shall discharge the foregoing responsibilities subject to the control of the officers and the Board of Directors of the Company and the Adviser in compliance with the objectives, policies and limitations set forth in the Prospectus, Statement and applicable laws and regulations. The Sub-Adviser accepts such employment and agrees to render the services and to provide, at is own expense, the office space, furnishings and equipment and the personnel required by it to perform the services on the terms and for the compensation provided herein. 3. Portfolio Transactions The Sub-Adviser is authorized to select the brokers that will execute the purchases and sales of securities for the Portfolio Account and is directed to use its best efforts to obtain the best available price and most favorable execution, except as prescribed herein. Subject to policies established by the Board of Directors of the Company and the Adviser, the Sub-Adviser may also be authorized to effect individual securities transactions at commission rates in excess of the minimum commission rates available, if the Sub-Adviser determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage or research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Sub-Adviser's overall responsibilities with respect to the Company and other accounts as to which the Sub-Adviser exercises investment discretion. The execution of such transactions shall not be deemed to represent an unlawful act or breach of any duty by this Agreement or otherwise. The Sub-Adviser will promptly communicate to the officers and Directors of the Company and the Adviser such information relating to the Portfolio Account's transactions as they may reasonably request. 4. Information Provided to the Company The Sub-Adviser will keep the Company and the Adviser informed of developments materially affecting the Portfolio Account, and will, on its own initiative, furnish the Company and the Adviser from time to time with whatever information the Sub-Adviser believes is appropriate for this purpose. 5. Compensation of the Sub-Adviser For the services provided and the expenses assumed pursuant to this Agreement, effective as of the date hereof, the Portfolio will pay the Sub-Adviser and the Sub-Adviser will accept as full compensation therefor, a fee computed daily and paid monthly (in arrears), at an annual rate of .60% of the average daily net assets held in the Portfolio Account. 6. Expenses The Sub-Adviser will bear all expenses in connection with the performance of its services under this Agreement. The Portfolio will bear certain other expenses to be incurred in its operation, including but not limited to, investment advisory, sub-advisory and administration fees; fees for necessary professional and brokerage services; fees for any pricing service; the costs of regulatory compliance; custody and transfer agency fees; and costs associated with maintaining the Company's legal existence and shareholder relations. 7. Standard of Care In the absence of (i) willful misfeasance, bad faith or gross negligence on the part of the Sub-Adviser in performance of its obligations and duties hereunder, (ii) reckless disregard by the Sub-Adviser of its obligations and duties hereunder, or (iii) a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation or services (in which case any award of damages shall be limited to the period and the amount set forth in Section 36(b)(3) of the Investment Company Act of 1940 ("1940 Act")), the Sub-Adviser shall not be subject to any liability whatsoever to the Company, any shareholder of the Company or to the Adviser, for any error or judgment, mistake of law or any other act or omission in the course of, or connected with, rendering services hereunder including without limitation, for any losses that may be sustained in connection with the purchase, holding, redemption or sale of any security on behalf of the Portfolio. 8. Term of Agreement This Agreement shall become effective as of December 29, 1999 (the "Effective Date") and shall continue until October 31, 2000 and shall continue thereafter so long as such continuance is specifically approved at least annually by (i) the Board or (ii) a vote of a "majority" (as that term is defined in the 1940 Act) of the Portfolio's outstanding voting securities, provided that in either event the continuance is also approved by a majority of the board who are not "interested persons" (as defined in the 1940 Act) of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. This Agreement is terminable, without penalty, on 60 days' written notice, by the board or by vote of holders of a majority of the Portfolio's shares, or upon 90 days' written notice, by the Sub-Adviser. This Agreement will also terminate automatically in the event of its assignment (as defined in the 1940 Act and the rules thereunder). 9. Services to Other Companies or Accounts Provided that such action shall not constitute a breach of the duties assumed by the Sub-Adviser under this Agreement, the Sub-Adviser and its officers may act and continue to act as investment managers for others, and nothing in this Agreement shall in any way be deemed to restrict the right of the Sub-Adviser to perform investment management or other services for any other person or entity, and the performance of such services for others shall not be deemed to violate or give rise to any duty or obligation to the Company or the Adviser. It is the Sub-Adviser's policy to allocate within its reasonable discretion, investment opportunities among the Portfolio Account and the Sub-Adviser's other clients over a period of time in a fair and equitable manner, taking into account the investment objectives and policies of the Portfolio and any specific investment restrictions applicable thereto. Subject to the foregoing, and applicable laws, rules or regulations, nothing in this Agreement shall limit or restrict the Sub-Adviser or any of its officers, affiliates or employees from buying, selling or trading in any securities for its or their own account or accounts. The Company acknowledges that the Sub-Adviser and its officers, affiliates and employees, and its other clients may at any time have, acquire, increase, decrease or dispose of positions in investments which are at the same time being acquired or disposed of for the Portfolio Account. The Sub-Adviser shall have no obligation to acquire, or dispose of, a position for the Portfolio Account in any investment which the Sub-Adviser, its officers, affiliates or employees may acquire, or dispose of, for its or their own accounts or for the account of another client, provided that the Sub-Adviser acts in good faith. Nothing in this Section 9 shall be construed to relieve the Sub-Adviser of any of its duties or obligations as set forth in or arising under other provisions of this Agreement or applicable laws, rules or regulations. 10. Books and Records In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Sub-Adviser hereby agrees that all records which it maintains for the Portfolio Account are the property of the Company and further agrees to surrender promptly to the Company any of such records upon the Company's request. The Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act, the records which it maintains for the Company are required to be maintained by Rule 31a-1 under the 1940 Act. 11. Governing Law This Agreement shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania. 12. Amendment of Agreement This Agreement may be amended by mutual consent, subject to applicable requirements of the 1940 Act. 13. Severability If any provisions of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. If the foregoing is in accordance with your understanding, kindly indicate your acceptance of this Agreement by signing and returning the enclosed copy of this Agreement. Very truly yours, THE GLENMEDE FUND, INC. By: /s/ Mary Ann B. Wirts -------------------------- Mary Ann B. Wirts THE GLENMEDE TRUST COMPANY By: /s/ Bruce Simon -------------------------- Bruce Simon Agreed to and Accepted by: WINSLOW CAPITAL MANAGEMENT, INC. By: /s/ Joseph J. Docter ---------------------------- Joseph J. Docter EX-99.D14 5 EXHIBIT 99.D14 Exhibit (d)(14) SUB-INVESTMENT ADVISORY AGREEMENT THE GLENMEDE FUND, INC. (Small Capitalization Growth Portfolio) December 15, 1999 TCW Funds Management, Inc. 865 S. Figueroa Street Los Angeles, CA 90017 Ladies and Gentlemen: The Glenmede Fund, Inc., a Maryland Corporation (the "Company"), and Glenmede Trust Company, a Pennsylvania Trust Company (the "Adviser"), each confirms its agreement with TCW Funds Management, Inc. (the "Sub-Adviser"), as follows: 1. Investment Description; Appointment The Company desires to employ its capital relating to its Small Capitalization Growth Portfolio (the "Portfolio") by investing and reinvesting in investments of the kind and in accordance with the investment objective(s), policies and limitations specified in its Articles of Incorporation, as amended from time to time (the "Articles of Incorporation"), in the prospectus (the "Prospectus") and the statement of additional information (the "Statement") filed with the Securities and Exchange Commission as part of the Company's Registration Statement on Form N-1A, as amended from time to time, and in the manner and to the extent as may from time to time be approved by the Board of Directors of the Company (the "Board"). Copies of the Prospectus, the Statement and the Articles of Incorporation have been or will be submitted to the Sub-Adviser. The Company agrees to provide copies of all amendments to the Prospectus, the Statement and the Articles of Incorporation to the Sub-Adviser on an on-going basis. The Company employs the Adviser as the investment adviser to the Portfolio, and the Company and the Adviser desire to employ and hereby appoint the Sub-Adviser to act as a sub-investment adviser to the Portfolio. The Sub-Adviser accepts the appointment and agrees to furnish the services for the compensation set forth below. 2. Services as Sub-Adviser The Company and the Adviser hereby appoint the Sub-Adviser to act as sub-investment adviser to the Portfolio for a portion of the assets of the Portfolio which the Adviser, as fiduciary for the Company, determines to assign to the Sub-Adviser (those assets being referred to as the "Portfolio Account") for the period and on such terms set forth in this Agreement. It is understood that the Portfolio Account may consist of all, a portion of or none of the assets of the Portfolio, and that the Adviser has the right to allocate and reallocate such assets to the Portfolio Account at any time, and from time to time, upon such notice to the Sub-Adviser as may be reasonably necessary, in the view of the Company, to ensure orderly management of the Portfolio Account or the Portfolio. In making investment decisions, Sub-Adviser will only take into account the assets it manages in the Portfolio Account and not other assets of the Portfolio managed by the Adviser or others. The Company and the Adviser employ the Sub-Adviser to manage the investment and reinvestment of the assets of the Portfolio Account, to continuously review, supervise and administer the investment program of the Portfolio Account, to determine in its discretion the securities to be purchased or sold and the portion of the Portfolio Account's assets to be held uninvested, to provide the Company and the Adviser with records concerning the Sub-Adviser's activities which the Company and the Sub-Adviser are required to maintain, and to render regular reports to the Company's officers and Board of Directors and the Adviser concerning the Sub-Adviser's discharge of the foregoing responsibilities. The Sub-Adviser shall discharge the foregoing responsibilities subject to the control of the officers and the Board of Directors of the Company and the Adviser in compliance with the objectives, policies and limitations set forth in the Prospectus, Statement and applicable laws and regulations. The Sub-Adviser accepts such employment and agrees to render the services and to provide, at is own expense, the office space, furnishings and equipment and the personnel required by it to perform the services on the terms and for the compensation provided herein. 3. Portfolio Transactions The Sub-Adviser is authorized to select the brokers that will execute the purchases and sales of securities for the Portfolio Account and is directed to use its best efforts to obtain the best available price and most favorable execution, except as prescribed herein. Subject to policies established by the Board of Directors of the Company and the Adviser, the Sub-Adviser may also be authorized to effect individual securities transactions at commission rates in excess of the minimum commission rates available, if the Sub-Adviser determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage or research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Sub-Adviser's overall responsibilities with respect to the Company and other accounts as to which the Sub-Adviser exercises investment discretion. The execution of such transactions shall not be deemed to represent an unlawful act or breach of any duty by this Agreement or otherwise. The Sub-Adviser will promptly communicate to the officers and Directors of the Company and the Adviser such information relating to the Portfolio Account's transactions as they may reasonably request. 4. Information Provided to the Company The Sub-Adviser will keep the Company and the Adviser informed of developments materially affecting the Portfolio Account, and will, on its own initiative, furnish the Company and the Adviser from time to time with whatever information the Sub-Adviser believes is appropriate for this purpose. 5. Compensation of the Sub-Adviser For the services provided and the expenses assumed pursuant to this Agreement, effective as of the date hereof, the Portfolio will pay the Sub-Adviser and the Sub-Adviser will accept as full compensation therefor, a fee computed daily and paid monthly (in arrears), at an annual rate of .60% of the average daily net assets held in the Portfolio Account. 6. Expenses The Sub-Adviser will bear all expenses in connection with the performance of its services under this Agreement. The Portfolio will bear certain other expenses to be incurred in its operation, including but not limited to, investment advisory, sub-advisory and administration fees; fees for necessary professional and brokerage services; fees for any pricing service; the costs of regulatory compliance; custody and transfer agency fees; and costs associated with maintaining the Company's legal existence and shareholder relations. 7. Standard of Care In the absence of (i) willful misfeasance, bad faith or gross negligence on the part of the Sub-Adviser in performance of its obligations and duties hereunder, (ii) reckless disregard by the Sub-Adviser of its obligations and duties hereunder, or (iii) a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation or services (in which case any award of damages shall be limited to the period and the amount set forth in Section 36(b)(3) of the Investment Company Act of 1940 ("1940 Act")), the Sub-Adviser shall not be subject to any liability whatsoever to the Company, any shareholder of the Company or to the Adviser, for any error or judgment, mistake of law or any other act or omission in the course of, or connected with, rendering services hereunder including without limitation, for any losses that may be sustained in connection with the purchase, holding, redemption or sale of any security on behalf of the Portfolio. 8. Term of Agreement This Agreement shall become effective as of December 29, 1999 (the "Effective Date") and shall continue until October 31, 2000 and shall continue thereafter so long as such continuance is specifically approved at least annually by (i) the Board or (ii) a vote of a "majority" (as that term is defined in the 1940 Act) of the Portfolio's outstanding voting securities, provided that in either event the continuance is also approved by a majority of the board who are not "interested persons" (as defined in the 1940 Act) of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. This Agreement is terminable, without penalty, on 60 days' written notice, by the board or by vote of holders of a majority of the Portfolio's shares, or upon 90 days' written notice, by the Sub-Adviser. This Agreement will also terminate automatically in the event of its assignment (as defined in the 1940 Act and the rules thereunder). 9. Services to Other Companies or Accounts The services of the Sub-Adviser to the Company and the Adviser are not to be deemed exclusive, and the Sub-Adviser shall be free to render similar services to others so long as its services to the Company and the Adviser are not impaired thereby. Subject to applicable law, nothing in this Agreement shall be deemed to confer upon the Sub-Adviser any obligation to acquire a position in any security which the Sub-Adviser, its principals, affiliates, agents or employees may acquire for its or their own account or for the account of any other client. 10. Books and Records In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Sub-Adviser hereby agrees that all records which it maintains for the Portfolio Account are the property of the Company and further agrees to surrender promptly to the Company any of such records upon the Company's request. The Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act, the records which it maintains for the Company are required to be maintained by Rule 31a-1 under the 1940 Act. 11. Governing Law This Agreement shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania. 12. Amendment of Agreement This Agreement may be amended by mutual consent, subject to applicable requirements of the 1940 Act. 13. Severability If any provisions of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. If the foregoing is in accordance with your understanding, kindly indicate your acceptance of this Agreement by signing and returning the enclosed copy of this Agreement. Very truly yours, THE GLENMEDE FUND, INC. By: /s/ Mary Ann B. Wirts -------------------------- Mary Ann B. Wirts THE GLENMEDE TRUST COMPANY By: /s/ Kimberly C. Osborne -------------------------- Kimberly C. Osborne Agreed to and Accepted by: TCW FUNDS MANAGEMENT, INC. By /s/ Michael Cahill ----------------------- Michael Cahill By: /s/ Patricia M. Navis ----------------------- Patricia M. Navis EX-99.(D)(15) 6 EXHIBIT (D)(15) Exhibit (d)(15) INVESTMENT ADVISORY AGREEMENT Agreement made this 25th day of February, 2000 by and between The Glenmede Fund, Inc., a Maryland corporation (the "Company"), and The Glenmede Trust Company, a Pennsylvania corporation (the "Adviser"). 1. Duties of Adviser. The Company hereby appoints the Adviser to act as investment adviser to its Core Value Portfolio (the "Portfolio") for the period and on such terms set forth in this Agreement. The Company employs the Adviser to manage the investment and reinvestment of the assets of the Portfolio, to continuously review, supervise and administer the investment program of the Portfolio, to determine in its discretion the securities to be purchased or sold and the portion of the Portfolio's assets to be held uninvested, to provide the Company with records concerning the Adviser's activities which the Company is required to maintain, and to render regular reports to the Company's officers and Board of Directors concerning the Adviser's discharge of the foregoing responsibilities. The Adviser shall discharge the foregoing responsibilities subject to the control of the officers and the Board of Directors of the Company and in compliance with the objective, policies and limitations set forth in the Portfolio's prospectus and applicable laws and regulations. The Adviser accepts such employment and agrees to render the services and to provide, at its own expense, the office space, furnishings and equipment and the personnel required by it to perform the services on the terms and for the compensation provided herein. -1- 2. Portfolio Transactions. The Adviser is authorized to select the brokers that will execute the purchases and sales of securities for the Portfolio and is directed to use its best efforts to obtain the best available price and most favorable execution, except as prescribed herein. Subject to policies established by the Board of Directors of the Company, the Adviser may also be authorized to effect individual securities transactions at commission rates in excess of the minimum commission rates available, if the Adviser determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage or research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Adviser's overall responsibilities with respect to the Company and other accounts as to which the Adviser exercises investment discretion. The execution of such transactions shall not be deemed to represent an unlawful act or breach of any duty created by this Agreement or otherwise. The Adviser will promptly communicate to the officers and Directors of the Company such information relating to portfolio transactions as they may reasonably request. 3. Compensation of the Adviser. For the services provided and the expenses assumed pursuant to this Agreement, effective as of the date hereof, the Portfolio will pay the Adviser and the Adviser will accept as full compensation therefor, a fee computed daily and paid monthly (in arrears), at an annual rate of .45% of the average daily net assets held in the Portfolio. 4. Other Services. At the request of the Company, the Adviser in its discretion may make available to the Company office facilities, equipment, and other services. Such office facilities, equipment, and services shall be provided for or rendered by the Adviser and billed to the Company at the Adviser's cost. The Adviser further agrees to assume the cost of printing and mailing prospectuses to persons other than current shareholders of the Company and the cost of any other activities primarily intended to result in the sale of the Company's shares. -2- 5. Reports. The Company and the Adviser agree to furnish to each other current prospectuses, proxy statements, reports to shareholders, certified copies of their financial statements, and such other information with regard to their affairs as each may reasonably request. 6. Status of Adviser. The services of the Adviser to the Company are not to be deemed exclusive, and the Adviser shall be free to render similar services to others so long as its services to the Company are not impaired thereby. 7. Liability of Adviser. In the absence of (i) willful misfeasance, bad faith or gross negligence on the part of the Adviser in performance of its obligations and duties hereunder, (ii) reckless disregard by the Adviser of its obligations and duties hereunder, or (iii) a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services (in which case any award of damages shall be limited to the period and the amount set forth in Section 36(b)(3) of the Investment Company Act of 1940 ("1940 Act")), the Adviser shall not be subject to any liability whatsoever to the Company or to any shareholder of the Company, for any error or judgment, mistake of law or any other act or omission in the course of, or connected with, rendering services hereunder including without limitation, for any losses that may be sustained in connection with the purchase, holding, redemption or sale of any security on behalf of the Portfolio. -3- 8. Permissible Interests. Subject to and in accordance with the Articles of Amendment and Restatement of the Company and the Articles of Incorporation of the Adviser, Directors, officers, agents and shareholders of the Company are or may be interested in the Adviser (or any successor thereof) as Directors, officers, agents, shareholders or otherwise; Directors, officers, agents and shareholders of the Adviser are or may be interested in the Company as Directors, officers, shareholders or otherwise; and the Adviser (or any successor) is or may be interested in the Company as a shareholder or otherwise; and that the effect of any such interrelationships shall be governed by said Articles of Amendment and Restatement or Articles of Incorporation (as applicable) and the provisions of the 1940 Act. 9. Corporate Name. The Company acknowledges that it has obtained its corporate name by consent of the Adviser, which consent was given in reliance and upon the provisions hereafter contained. The Company agrees that if the Adviser should cease to be the investment adviser of the Company, the Company will, upon written demand of the Adviser forthwith (a) for a period of two years after such written demand, state in all prospectuses, advertising material, letterheads and other material designed to be read by investors or prospective investors, in a prominent position and in prominent type (as may be reasonably approved by the Adviser), that The Glenmede Trust Company no longer serves as the investment adviser of the Company, and (b) delete from its name the word "Glenmede" or any approximation thereof. The Company further agrees that the Adviser may permit other persons, partnerships (general or limited), associations, trusts, corporations or other incorporated or unincorporated groups of persons, including without limitation any investment company or companies of any type which may be initially sponsored or organized by the Adviser in the future, to use the word "GLENMEDE" or any approximation thereof as part of their names. As used in this section, "The Glenmede Trust Company" and "Adviser" shall include any successor corporation, partnership, limited partnership, trust or person. -4- 10. Duration and Termination. This Agreement, unless sooner terminated as provided herein, shall continue until October 31, 2000 and thereafter shall continue for periods of one year so long as such continuance is specifically approved at least annually (a) by the vote of a majority of those members of the Board of Directors of the Company who are not parties to this Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval, and (b) by the Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Portfolio; provided however, that if the holders of the Portfolio fail to approve the Agreement as provided herein, the Adviser may continue to serve the Portfolio in such capacity in the manner and to the extent permitted by the Company's Board of Directors and the 1940 Act and Rules thereunder. This Agreement may be terminated by the Company at any time, without the payment of any penalty, by vote of a majority of the entire Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Portfolio on 60 days' written notice to the Adviser. This Agreement may be terminated by the Adviser at any time, without the payment of any penalty, upon 90 days' written notice to the Company. This Agreement will automatically and immediately terminate in the event of its assignment. Any notice under this Agreement shall be given in writing, addressed and delivered or mailed postpaid, to the other party at any office of such party. As used in this Section 10, the terms "assignment", "interested persons", and a "vote of a majority of the outstanding voting securities" shall have the respective meanings set forth in Section 2(a)(4), Section 2(a)(19) and Section 2(a)(42) of the 1940 Act. -5- 11. Books and Records. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Adviser hereby agrees that all records which it maintains for the Portfolio are the property of the Company and further agrees to surrender promptly to the Company any of such records upon the Company's request. The Adviser further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records which it maintains for the Company and are required to be maintained by Rule 31a-1 under the 1940 Act. 12. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania. 13. Amendment of Agreement. This Agreement may be amended by mutual consent, subject to the applicable requirements of the 1940 Act. 14. Severability. If any provisions of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. -6- IN WITNESS WHEREOF, intending to be legally bound hereby, the parties hereto have caused this Agreement to be executed as of this 25th day of February, 2000. THE GLENMEDE FUND, INC. By: /s/ Mary Ann B. Wirts ---------------------- Mary Ann B. Wirts President THE GLENMEDE TRUST COMPANY By: /s/ Steve Mozur ----------------- Steve Mozur First Vice President -7- EX-99.(E)(2) 7 EXHIBIT-99.(E)(2) Exhibit (e)(2) THE GLENMEDE FUND, INC. DISTRIBUTION AGREEMENT Appendix A as of December 29, 1999
==================================================================================================================== Distribution Funds of The Glenmede Fund, Inc. Class Fee - ------------------------------------------------------- ---------------------------------- ------------------------- Government Cash Portfolio Single class of shares None - ------------------------------------------------------- ---------------------------------- ------------------------- Tax-Exempt Cash Portfolio Single class of shares None - ------------------------------------------------------- ---------------------------------- ------------------------- Core Fixed Income Single class of shares None - ------------------------------------------------------- ---------------------------------- ------------------------- Tax-Managed Equity Portfolio Single class of shares None - ------------------------------------------------------- ---------------------------------- ------------------------- Institutional International Portfolio Institutional Series Shares None - ------------------------------------------------------- ---------------------------------- ------------------------- International Portfolio Single class of shares None - ------------------------------------------------------- ---------------------------------- ------------------------- Small Capitalization Equity Portfolio Institutional Series Shares None Advisor Series Shares None - ------------------------------------------------------- ---------------------------------- ------------------------- Large Cap Value Portfolio Single class of shares None - ------------------------------------------------------- ---------------------------------- ------------------------- Emerging Market Portfolio Single class of shares None - ------------------------------------------------------- ---------------------------------- ------------------------- Global Equity Portfolio Single class of shares None - ------------------------------------------------------- ---------------------------------- ------------------------- Small Capitalization Growth Portfolio Single class of shares None - ------------------------------------------------------- ---------------------------------- ------------------------- Core Value Portfolio Single class of shares None ====================================================================================================================
The Glenmede Fund, Inc. ICC Distributors, Inc. The Glenmede Portfolios By: /s/ Mary Ann B. Wirts By: /s/ John Keffer ---------------------- ---------------- Mary Ann B. Wirts John Keffer Title: President EX-99.(G)(3) 8 EXHIBIT-99.(G)(3) Exhibit (g)(3) CUSTODY AGREEMENT AMENDMENT TO EXHIBIT A Portfolios covered by the Custody Agreement between The Chase Manhattan Bank, N.A. and The Glenmede Fund, Inc. Emerging Markets Portfolio Government Cash Portfolio Tax-Exempt Cash Portfolio Core Fixed Income Portfolio Tax-Managed Equity Portfolio Small Capitalization Equity Portfolio Large Cap Value Portfolio International Portfolio Institutional International Portfolio Global Equity Portfolio Small Capitalization Growth Portfolio Core Value Portfolio The Glenmede Fund, Inc. Chase Manhattan Bank, N.A. The Glenmede Portfolios By: /s/ Mary Ann B. Wirts By: /s/ David Etzbach ---------------------------- ------------------------ Title: President Title: Vice President EX-99.(H)(5) 9 EXHIBIT 99.(H)(5) Exhibit (h)(5) THE GLENMEDE FUND, INC. AMENDED AND RESTATED SHAREHOLDER SERVICING PLAN Section 1. Each of the proper officers of The Glenmede Fund, Inc. (the "Company") is authorized to execute and deliver, in the name and on behalf of the Company, written agreements based substantially on the form attached hereto as Appendix A or any other form duly-approved by the Company's Board of Directors ("Agreements") with broker/dealers, banks and other financial institutions that are dealers of record or holders of record or which have a servicing relationship ("Servicing Agents") with the beneficial owners of shares in any of the Company's series listed on Exhibit I hereto (the "Portfolios"). Pursuant to such Agreements, Servicing Agents shall provide shareholder support services as set forth therein to their clients who beneficially own shares of the Portfolios in consideration of a fee, computed monthly in the manner set forth in the applicable Portfolio's then current prospectus, at an annual rate specified on Exhibit I hereto as a percentage of the average daily net asset value of the shares beneficially owned by or attributable to such clients. Affiliates of the Company's distributor, administrator and adviser are eligible to become Servicing Agents and to receive fees under this Plan. All expenses incurred by the Portfolios in connection with the Agreements and the implementation of this Plan shall be borne entirely by the holders of the shares of the particular Portfolio involved. If more than one Portfolio is involved and expenses are not directly attributable to shares of a particular Portfolio, then the expenses may be allocated between or among the shares of the Portfolios in a manner determined by the Board. Section 2. The Company's administrator shall monitor the arrangements pertaining to the Company's Agreements with Servicing Agents. The Company's administrator shall not, however, be obligated by this Plan to recommend, and the Company shall not be obligated to execute, any Agreement with any qualifying Servicing Agents. Section 3. So long as this Plan is in effect, the Company's administrator shall provide to the Company's Board of Directors, and the Directors shall review, at least quarterly, a written report of the amounts expended pursuant to this Plan and the purposes for which such expenditures were made. Section 4. This Plan shall become effective on January 1, 1998 and unless sooner terminated, this Plan shall continue in effect until October 31, 1998 and thereafter for successive annual periods, provided that such continuance is specifically approved by a majority of the Board of Directors, including a majority of the Directors who are not "interested persons," as defined in the Investment Company Act of 1940, of the Company and have no direct or indirect financial interest in the operation of this Plan or in any Agreement related to this Plan (the "Disinterested Directors") pursuant to a vote cast in person at a meeting called for the purpose of voting on this Plan. Section 5. This Plan may be amended at any time with respect to any Portfolio by the Company's Board of Directors, provided that any material amendment of the terms of this Plan (including a material increase of the fee payable hereunder) shall become effective only upon the approvals set forth in Section 4. Section 6. This Plan is terminable at any time with respect to any Portfolio by vote of a majority of the Disinterested Directors. Section 7. While this Plan is in effect, the selection and nomination of those Directors who are not "interested persons (as defined in the Investment Company Act of 1940) of the Company shall be committed to the discretion of such non-interested Directors. Section 8. The Company will preserve copies of this Plan, Agreements, and any written reports regarding this Plan presented to the Board of Directors for a period of not less than six years. Dated: October 24, 1997 -2- EXHIBIT I THE GLENMEDE FUND, INC. Portfolio Fee (as a percentage of average daily net assets) ------------------- Government Cash Portfolio .05% Tax-Exempt Cash Portfolio .05% Core Fixed Income Portfolio .05% International Portfolio .05% Tax-Managed Equity Portfolio .05% Small Capitalization Equity Portfolio Institutional Shares .05% Advisor Shares .25% Large Cap Value Portfolio .05% Small Capitalization Growth Portfolio .25% Core Value Portfolio .05% THE GLENMEDE FUND, INC. AMENDED AND RESTATED SHAREHOLDER SERVICING AGREEMENT Ladies and Gentlemen: We wish to enter into this Shareholder Servicing Agreement ("Agreement") with you concerning the provision of administrative support services to your clients ("Customers") who may from time to time beneficially own shares in one or more series listed on Exhibit I hereto (the "Portfolios") of The Glenmede Fund, Inc. (the "Company"). The terms and conditions of this Agreement are as follows: Section 1. You agree to provide the following administrative support services to your Customers who may from time to time beneficially own shares of one or more Portfolios:(1) (i) aggregating and processing purchase and redemption requests from Customers and transmitting promptly net purchase and redemption orders to our distributor or transfer agent; (ii) providing Customers with a service that invests the assets of their accounts in shares pursuant to specific or pre-authorized instructions; (iii) processing dividend and distribution payments from the Company on behalf of Customers; (iv) providing information periodically to Customers showing their positions; (v) arranging for bank wires; (vi) responding to Customers' inquiries concerning their investment; (vii) providing subaccounting with respect to shares beneficially owned by Customers or the information necessary for subaccounting; (viii) if required by law, forwarding shareholder communications from us (such as proxies, shareholder reports, annual and semi-annual financial statements and dividend, distribution and tax notices) to Customers; and (ix) providing such other similar services as we may reasonably request to the extent you are permitted to do so under applicable statutes, rules or regulations. All services rendered hereunder by you shall be performed in a professional, competent and timely manner. Section 2. You will perform only those activities which are consistent with statutes and regulations applicable to you. You will act solely as agent or, upon the order of, and for the account of, your Customers. Section 3. You will provide such office space and equipment, telephone facilities and personnel (which may be any part of the space, equipment and facilities currently used in your business, or any personnel employed by you) as may be reasonably necessary or beneficial in order to provide the administrative support services contemplated hereby. - ------------------- (1) Services may be modified or omitted in the particular case and items relettered or renumbered. Section 4. Neither you nor any of your officers, employees or agents are authorized to make any representations concerning us or the shares except those contained in our then current prospectuses and statements of additional information, as amended or supplemented from time to time, copies of which will be supplied by us to you, or in such supplemental literature or advertising as may be authorized by our distributor or us in writing. Section 5. For all purposes of this Agreement you will be deemed to be an independent contractor, and will have no authority to act as agent for us in any matter or in any respect. By your written acceptance of this Agreement, you agree to and do release, indemnify and hold us harmless from and against any and all direct or indirect liabilities or losses resulting from requests, directions, actions or inactions of or by you or your officers, employees or agents regarding your responsibilities hereunder or the purchase, redemption, transfer or registration of shares (or orders relating to the same) by or on behalf of Customers. You and your employees will, upon request, be available during normal business hours to consult with us or our designees concerning the performance of your responsibilities under this Agreement. Section 6. In consideration of the services and facilities provided by you hereunder, we will pay to you, and you will accept as full payment therefor, a fee as described in Exhibit I hereto, as amended from time to time. The fee rate payable to you may be prospectively increased or decreased by us, in our sole discretion, at any time upon notice to you. Further, we may, in our discretion and without notice, suspend or withdraw the sale of shares of any and all Portfolios, including the sale of shares to you for the account of any Customer or Customers. Compensation payable under this Agreement may be subject to, among other things, the National Association of Securities Dealers, Inc. ("NASD") Rules of Fair Practice governing receipt by NASD members of shareholder servicing plan fees from registered investment companies (the "NASD Servicing Plan Rule"), which became effective on July 7, 1993. Such compensation shall only be paid if permissible under the NASD Servicing Plan Rule and shall not be payable for services that are deemed to be distribution-related services. Section 7. You will furnish us or our designees with such information as we or they may reasonably request (including, without limitation, periodic certifications confirming the provision to Customers of the services described herein), and will otherwise cooperate with us and our designees (including, without limitation, any auditors or legal counsel designated by us), in connection with the preparation of reports to our Board of Directors concerning this Agreement and the monies paid or payable by us pursuant hereto, as well as any other reports or filings that may be required by law. -2- Section 8. We may enter into other similar Agreements with any other person or persons without your consent. Section 9. By your written acceptance of this Agreement, you represent, warrant and agree that: (i) in no event will any of the services provided by you hereunder be primarily intended to result in the sale of any shares issued by us; and (ii) the compensation payable to you hereunder, together with any other compensation you receive in connection with the investment of your Customers' assets in shares of the Portfolios, will be disclosed by you to your Customers to the extent required by applicable laws or regulations, will be authorized by your Customers and will not result in an excessive or unreasonable fee to you. Section 10. This Agreement will become effective on the date a fully executed copy of this Agreement is received by us or our designee. Unless sooner terminated, this Agreement will continue until October 31, 1998 and thereafter will continue automatically for successive annual periods provided such continuance is specifically approved at least annually by us in the manner described in Section 11. This Agreement is terminable with respect to shares of any Portfolio, without penalty, at any time by us (which termination may be by a vote of a majority of our Disinterested Directors as defined below) or by you upon written notice to the other party hereto. Section 11. This Agreement has been approved by vote of a majority of (1) our Board of Directors and (ii) those Directors who are not "interested persons" (as defined in the Investment Company Act of 1940) of us and have no direct or indirect financial interest in the operation of the Shareholder Servicing Plan adopted by us regarding the provision of support services to the beneficial owners of shares of the Portfolios or in any agreement related thereto cast in person at a meeting called for the purpose of voting on such approval ("Disinterested Directors"). Section 12. All notices and other communications to either you or us will be duly given if mailed, telegraphed, telexed or transmitted by similar telecommunications device to the appropriate address or number stated herein (with a confirming copy by mail), or to such other address as either party shall so provide in writing to the other. -3- Section 13. This Agreement will be construed in accordance with the internal laws of The Commonwealth of Pennsylvania without giving effect to principles of conflict of laws, and is nonassignable by the parties hereto. If you agree to be legally bound by the provisions of this Agreement, please sign a copy of this letter where indicated below and promptly return it to us, at the following address: Investment Company Capital Corp., One South Street, Baltimore, Maryland 21202; fax number (410) 895-3720. Very truly yours, THE GLENMEDE FUND, INC. Date: December 29, 1999 By: /s/ Mary Ann B. Wirts ---------------------- Name: Mary Ann B. Wirts ----------------- Title: President --------- Accepted and Agreed to: Servicing Agent The Glenmede Trust Company -------------------------- (Firm Name) 1650 Market Street, ------------------- (Address) Philadelphia, PA 19103-7391 --------------------------- (City) (State) Fax #: (215) 419-6197 -------------- Attention:____________________ Date: December 29, 1999 By: /s/ Bruce Simon ---------------- Name: Bruce Simon ----------- Title: Chief Investment Officer -4- EXHIBIT I THE GLENMEDE FUND, INC. Portfolio Fee (as a percentage of average daily net assets) ------------------- Government Cash Portfolio .05% Tax-Exempt Cash Portfolio .05% Core Fixed Income Portfolio .05% International Portfolio .05% Tax-Managed Equity Portfolio .05% Small Capitalization Equity Portfolio Institutional Shares .05% Advisor Shares .25% Large Cap Value Portfolio .05% Small Capitalization Growth Portfolio .25% Core Value Portfolio .05% EX-99.(J)(1) 10 EXHIBIT 99.(J)(1) Exhibit (j)(1) CONSENT OF COUNSEL We hereby consent to the use of our name and to the reference to our Firm under the caption "Counsel" in the Prospectuses that are included in Post-Effective Amendment No. 31 to the Registration Statement (No. 33-22884) on Form N-1A under the Securities Act of 1933, as amended, and Post-Effective Amendment No. 33 to the Registration Statement (No. 811-5577) on Form N-1A under the Investment Company Act of 1940, as amended, of The Glenmede Fund, Inc. This consent does not constitute a consent under section 7 of the Securities Act of 1933, and in consenting to the use of our name and the references to our Firm under such caption we have not certified any part of the Registration Statement and do not otherwise come within the categories of persons whose consent is required under said section 7 or the rules and regulations of the Securities and Exchange Commission thereunder. /s/ DRINKER BIDDLE & REATH LLP ------------------------------- DRINKER BIDDLE & REATH LLP Philadelphia, Pennsylvania February 28, 2000 EX-99.(J)(2) 11 EXHIBIT 99.(J)(2) Exhibit (j)(2) CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Post-Effective Amendment No. 31 (File No. 33-22884) under the Securities Act of 1933 and Post-Effective Amendment No. 33 (File No. 811-5577) under the Investment Company Act of 1940 to the registration statement on Form N-1A ("Registration Statement") of our reports dated December 13, 1999 relating to the financial statements and financial highlights which appear in the October 31, 1999 Annual Reports to Shareholders of The Glenmede Fund, Inc. and The Glenmede Portfolios, which is also incorporated by reference in this Registration Statement. We also consent to the reference to us under the headings "Financial Highlights" in the Prospectuses and "Independent Accountants" and "Financial Statements" in the Statement of Additional Information. /s/ PricewaterhouseCoopers LLP - ------------------------------ PricewaterhouseCoopers LLP Baltimore, Maryland February 25, 2000 EX-99.(L)(3) 12 EXHIBIT 99.(L)(3) Exhibit (l)(3) PURCHASE AGREEMENT SMALL CAPITALIZATION GROWTH PORTFOLIO The Glenmede Fund, Inc., a Maryland corporation (the "Company"), and The Glenmede Trust Company, a Pennsylvania trust Company ("Glenmede Trust"), hereby agree with each other as follows: 1. The Company hereby offers Glenmede Trust and Glenmede Trust hereby purchases one share (the "Share") of the Company's Small Capitalization Growth Portfolio for $10.00 per share. The Company hereby acknowledges receipt from Glenmede Trust of funds in the total amount of $10.00 in full payment for such Share. 2. Glenmede Trust represents and warrants to the Company that the Share is being acquired for investment purposes and not with a view to the distribution thereof. IN AGREEMENT WHEREOF, and intending to be legally bound hereby, the parties hereto have executed this Agreement as of the 28th day of December, 1999. THE GLENMEDE FUND, INC. ATTEST: /s/ Kimberly C. Osborne /s/ Mary Ann B. Wirts - ------------------------ ---------------------- By: Kimberly C. Osborne By: Mary Ann B. Wirts Title: Executive Vice President Title: President and Treasurer THE GLENMEDE TRUST COMPANY ATTEST: By: /s/ Kimberly C. Osborne By: /s/ Bruce Simon ------------------------ ---------------- Kimberly C. Osborne Bruce Simon Title: Vice President EX-99.(L)(4) 13 EXHIBIT 99.(L)(4) Exhibit (l)(4) PURCHASE AGREEMENT CORE VALUE PORTFOLIO The Glenmede Fund, Inc., a Maryland corporation (the "Company"), and The Glenmede Trust Company, a Pennsylvania trust Company ("Glenmede Trust"), hereby agree with each other as follows: 1. The Company hereby offers Glenmede Trust and Glenmede Trust hereby purchases one share (the "Share") of the Company's Core Value Portfolio for $10.00 per share. The Company hereby acknowledges receipt from Glenmede Trust of funds in the total amount of $10.00 in full payment for such Share. 2. Glenmede Trust represents and warrants to the Company that the Share is being acquired for investment purposes and not with a view to the distribution thereof. IN AGREEMENT WHEREOF, and intending to be legally bound hereby, the parties hereto have executed this Agreement as of the 25th day of February, 2000. THE GLENMEDE FUND, INC. ATTEST: /s/ Kimberly C. Osborne /s/ Mary Ann B. Wirts - ----------------------------- ---------------------- By: Kimberly C. Osborne By: Mary Ann B. Wirts Title: Executive Vice President Title: President and Treasurer THE GLENMEDE TRUST COMPANY ATTEST: /s/ Kimberly C. Osborne /s/ Bruce Simon - ----------------------------- ----------------------- By: Kimberly C. Osborne By: Bruce Simon Title: Vice President Title: Chief Investment Officer -----END PRIVACY-ENHANCED MESSAGE-----