-----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, BpqKTkLf0S8oumEmDQlVnyZfGei7ksFLqQ1cQaERfxQhBb9lmzmk6DTu82bxvkLh a2/2R4sKokoIQLNqY3vR5w== 0000934563-98-000001.txt : 19980105 0000934563-98-000001.hdr.sgml : 19980105 ACCESSION NUMBER: 0000934563-98-000001 CONFORMED SUBMISSION TYPE: 485APOS PUBLIC DOCUMENT COUNT: 18 FILED AS OF DATE: 19980102 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HIRTLE CALLAGHAN TRUST CENTRAL INDEX KEY: 0000934563 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 485APOS SEC ACT: SEC FILE NUMBER: 033-87762 FILM NUMBER: 98500043 BUSINESS ADDRESS: STREET 1: 575 E SWEDESFORD RD CITY: WAYNE STATE: PA ZIP: 19087 BUSINESS PHONE: 6102549595 MAIL ADDRESS: STREET 1: 575 E SWEDESFORD ROAD CITY: WAYNE STATE: PA ZIP: 19087 485APOS 1 N-1A AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION December 31, 1997 1933 Act File No. 87762 1940 Act File No. 811-8918 Form N-1A Securities and Exchange Commission Washington, D.C. 20549 Form N-1A Registration Statement Under the Securities Act of 1933 [ ] Pre-Effective Amendment No. [ ] Post-Effective Amendment No. 7 [x] and/or Registration Statement Under the Investment Company Act of 1940 [x] Amendment No. 9 (Check appropriate box or boxes.) THE HIRTLE CALLAGHAN TRUST - ------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) 575 E. Swedesford Road, Wayne PA 19087 - ------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) 610-254-9596 - ------------------------------------------------------------------------------- (Registrant's Telephone Number, including Area Code) Laura Anne Corsell, Esq (With Copy To): c/o Hirtle Callaghan & Co. Inc. Audrey Talley, Esq. 575 Swedesford Road Drinker Biddle & Reath Wayne, PA 19087 1345 Chestnut Street Philadelphia, PA, 19107-2700 - ------------------------------------------------------------------------------- (Name and Address of Agent for Service) Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of this Registration Statement It is proposed that this filing will become effective (check appropriate box) [ ] Immediately upon filing pursuant to paragraph (b) [ ] on (date) pursuant to paragraph (b) [ ] 60 days after filing pursuant to paragraph (a)(i) [ ] on _______ pursuant to paragraph (a)(i) of rule 485 [X] 75 days after filing pursuant to paragraph (a)(ii) of Rule 485 [ ] on (date) pursuant to paragraph (a)(i) of Rule 485 An indefinite number of Registrant's securities has been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940; the notice required by that rule was filed on August 29, 1997. CROSS REFERENCE SHEET (Required by Rule 481(a) under the Securities Act of 1933) Part A -- Information required in a Prospectus Prospectus Heading ------------------------------------ ------------------ Item 1. Cover Page Cover Page Item 2. Synopsis Expense Information Item 3. Condensed Financial Information Financial Highlights Item 4. General Description of Registrant Cover Page; Management of the Trust;Investment Objectives and Policies; Investment Practices and Risk Considerations; General Item 5. Management of the Fund Management of the Trust Item 5A. Management Discussion and Analysis [Annual Report] Item 6. Capital Stock and other Securities General Item 7. Purchase of Securities Being Offered Purchases and Redemptions Item 8. Redemption or Repurchase Purchases and Redemptions Item 9. Legal Proceedings Not Applicable Part B -- Information required in a Statement Statement of Additional of Additional Information Heading ------------------------------------------- Item 10. Cover Page Cover Page Item 11. Table of Contents Cover Page Item 12. General Information and History Cover Page; Management of the Trust Item 13. Investment Objectives and Policies Further Information on Investment Policies; Hedging through the use of Options; Hedging through the use of Futures Contracts; Hedging through the use of Currency-related Instruments; Investment Restriction Item 14. Management of the Registrant Management of the Trust Item 15. Control Persons and Principal Management of the Trust; Holders of Securities Performance and Other Information Item 16. Investment Advisory and Other Management of the Trust Services Item 17. Brokerage Allocation Portfolio Transactions and Valuation Item 18. Capital Stock and Other Securities General (in Prospectus) Item 19. Purchase, Redemption and Pricing of Additional Purchase and Securities Being Offered Redemption Information; Portfolio Transactions and Valuation Item 20. Tax Status Dividends, Distributions and Taxes Item 21. Underwriters Management of the Trust Item 22. Calculation of Performance Data Not Applicable Item 23. Financial Statements Independent Accountants and Financial Statements Part C - Other Information Information required to be included in Part C is set forth under the appropriate item so numbered in Part C of this Registration Statement. THE HIRTLE CALLAGHAN TRUST 575 E. Swedesford Road Wayne PA 19087 March _____, 1998 The Hirtle Callaghan Trust ("Trust"), a diversified, open-end management investment company, was organized in 1994 by Hirtle, Callaghan & Co., Inc. ("Hirtle Callaghan") to enhance Hirtle Callaghan's ability to acquire the services of independent specialist money management organizations for the clients Hirtle Callaghan serves. The Trust currently consists of seven separate investment portfolios (each a "Portfolio"). Day-to-day portfolio management services are provided to each of the Trust's five Portfolios by one or more independent investment advisory organizations ("Investment Managers"), selected by, and under the general supervision of, the Trust's Board of Trustees ("Board"). Shares of the Trust are available exclusively to investors ("Eligible Investors") who are clients of Hirtle Callaghan or clients of financial intermediaries, such as investment advisers, acting in a fiduciary capacity with investment discretion, that have established relationships with Hirtle Callaghan. The Trust currently consists of seven separate Portfolios, as listed below: The Value Equity Portfolio seeks total return by investing in equity securities. The Growth Equity Portfolio seeks capital appreciation by investing in equity securities. The Small Capitalization Equity Portfolio seeks long term capital appreciation by investing primarily in equity securities of smaller companies. The International Equity Portfolio seeks total return by investing in a diversified portfolio of equity securities of non-U.S. issuers. The Limited Duration Municipal Bond Portfolio seeks a high level of current income exempt from Federal income tax, consistent with the preservation of capital by investing primarily in a diversified portfolio of securities issued by municipalities and related entities. The Portfolio expects to maintain an overall duration of less than 4 years. The Fixed Income Portfolio seeks a high level of current income by investing primarily in a diversified portfolio of debt securities, including U.S. and non-U.S. government securities, corporate debt securities and asset-backed issues. The Portfolio expects to maintain a dollar weighted effective average portfolio maturity of between five and ten years. The Intermediate Term Municipal Bond Portfolio seeks a high level of current income exempt from Federal income tax, consistent with the preservation of capital by investing primarily in securities issued by municipalities and related entities. The Portfolio expects to maintain a dollar weighted effective average portfolio maturity of between five and ten years. This prospectus contains concise information about the Trust that a prospective investor needs to know before investing in any of the Portfolios. Please read it carefully and keep it for future reference. A Statement of Additional Information, dated March _____, 1998, has been filed with the Securities and Exchange Commission and is incorporated by reference in this prospectus. It may be obtained upon request free of charge by contacting the Trust at 575 E. Swedesford Road, Suite 205, Wayne, PA 19087, (610) 254-9596. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. EXPENSE INFORMATION Table 1: Shareholder Transaction Expenses: NONE Table 2: Annual Operating Expenses (as a percentage of average net assets) * [TO BE SUPPLIED BY AMENDMENT] The preceding table of annual operating expenses is designed to assist investors in understanding expenses borne by investors as shareholders of the Trust, either directly or indirectly. Example: An investor would pay the following expenses on a $1,000 investment, assuming (1) 5% annual return and (2) redemption at the end of each time period: [TO BE SUPPLIED BY AMENDMENT] The preceding example assumes that all dividends and distributions are reinvested and that the percentage totals shown in Table 2: "Annual Operating Expenses" remain the same in the years shown. The example should not be considered a representation of future expenses and actual expenses may be greater or less than those shown. As shown above in Table 1, none of the Trust's Portfolios impose any shareholder transaction fees in connection with either the purchase or redemption of shares. Investors who acquire shares of the Trust through a program of services offered by a financial intermediary, such as an investment adviser or bank, may be subject to charges for services. All such charges are in addition to those expenses borne by the Trust and described in the foregoing tables, or reflected in the Example shown. Investors should contact any such financial intermediary for information concerning what, if any, additional fees may be charged. For more complete descriptions of the various costs and expenses, see "Management of the Trust," in this prospectus. FINANCIAL HIGHLIGHTS (Selected per share data and rations for a share outstanding throughout each period) The following information has been audited with respect to the periods ended June 30, 1996 and June 30, 1997 by __________, the Trust's independent accountants, whose report thereon appears in the Trust's Annual Report to Shareholders for the period ended June 30, 1997. The Annual Report to Shareholders is incorporated by reference in the Trust's Statement of Additional Information, which is available, without charge, upon request. Information with respect to the six month period ended December 31, 1997 is unaudited. [TO BE SUPPLIED BY AMENDMENT] INVESTMENT OBJECTIVES AND POLICIES Set forth below is a brief description of the investment objective and policies of each of the Trust's Portfolios, as well as the identity of the Investment Manager(s) responsible for making day-to-day investment decisions for each Portfolio. More detailed information about the Investment Managers appears in this prospectus under the heading "Management of the Trust." Further information about the types of instruments in which each Portfolio may invest, and the risks associated with such investments, appears in this prospectus under the heading "Investment Practices and Risk Considerations" and in the related Statement of Additional Information. The Statement of Additional Information also lists those investment restrictions to which the various Portfolios are subject under the Investment Company Act of 1940 ("Investment Company Act"). Unless otherwise noted, the investment objectives and policies of the respective Portfolios as set forth below are not fundamental and may be changed or modified by the Trust's Board without a shareholder vote. As further described in this prospectus under the heading "Management of the Trust," investment discretion with respect to the assets of each Portfolio is vested with one or more Investment Managers retained by the Trust. While the Trust's Board is ultimately responsible for all matters relating to the Trust, day-to-day decisions with respect to the purchase and sale of securities in accordance with a Portfolio's investment objectives and policies are the responsibility of the Investment Managers retained from time to time by the Trust on behalf of the respective Portfolios. As is the case with any investment in securities, an investment in any of the Portfolios involves certain risks and there can be no assurance that any Portfolio will achieve its objective. The Equity Portfolios. Each of the Portfolios described below ("Equity Portfolios") seeks to active its investment objective by investing primarily in equity securities. In general, the prices of equity securities fluctuate over time and, accordingly, an investment in any of the Equity Portfolios may be more suitable for long-term investors who can bear the risk of short-term principal fluctuation. Further information about equity related securities appears in this prospectus under the heading "Investment Practices and Risk Considerations: About Equity Securities. The Value Equity Portfolio. The investment objective of this Portfolio is to provide total return consisting of capital appreciation and current income. The Portfolio seeks to achieve this objective primarily through investment in a diversified portfolio of equity securities. In selecting securities for the Portfolio, the Investment Managers will generally emphasize equity securities with a relatively lower price-earnings ratio but higher dividend income than the average range for stocks included in the Standard & Poor's 500 Stock Index; dividends paid by The Value Equity Portfolio can generally be expected to be higher than those paid by The Growth Equity Portfolio. Up to 15% of the Portfolio's total assets may be invested in convertible securities; up to 15% of the Portfolio's total assets may be invested in American Depository Receipts. " Hotchkis and Wiley and Institutional Capital Corporation currently serve as Investment Managers for The Value Equity Portfolio. The Growth Equity Portfolio. The investment objective of this Portfolio is to provide capital appreciation, with income as a secondary consideration. The Portfolio will seek to achieve this objective by investing primarily in a diversified portfolio of equity securities traded on registered exchanges or in the over-the-counter market in the U.S. In selecting securities for the Portfolio, the Investment Managers will generally emphasize equity securities with long-term earnings growth potential and relatively higher price-earnings ratios than the average range for stocks included in the Standard & Poor's 500 Stock Index. Although dividend paying securities will be considered for inclusion in the Portfolio, dividends paid by The Growth Equity Portfolio can generally be expected to be lower than those paid by The Value Equity Portfolio. Up to 10% of the Portfolio's total assets may be invested in convertible securities. In addition, a maximum of 20% of the Portfolio's total assets may be invested in securities of non-U.S. issuers. Further information about the special considerations applicable to international investments appears in this prospectus under the heading "Investment Practices and Risk Considerations: About Foreign Securities." Jennison Associates Capital Corporation and Goldman Sachs Asset Management Company, Inc. currently serve as Investment Managers for The Growth Equity Portfolio. The Small Capitalization Equity Portfolio. The investment objective of this Portfolio is to provide long term capital appreciation by investing primarily in equity securities of smaller companies. Companies in which the Portfolio may invest are those which, in the view of one or more of the Portfolio's Investment Managers, have demonstrated, or have the potential for, strong capital appreciation potential due to their relative market position, anticipated earnings, changes in management or other factors. Under normal market conditions, at least 65% of the Portfolio's total assets will be invested in equity securities of companies with capitalizations of less than $1.0 billion at the time of purchase; up to 35% of the Portfolio's total assets may be invested in the equity securities of companies with larger capitalizations. Clover Capital Management, Inc. and Frontier Capital Management Company currently serve as Investment Managers for The Small Capitalization Equity Portfolio. The International Equity Portfolio. The investment objective of this Portfolio is to maximize total return, consisting of capital appreciation and current income, by investing primarily in a diversified portfolio of equity securities of non-U.S. issuers. Under normal market conditions, at least 65% of the Portfolio's total assets will be invested in equity securities of issuers located in at least three countries other than the United States. Further information about the special considerations applicable to international investments appears in this prospectus under the heading "Investment Practices and Risk Considerations: About Foreign Securities." Brinson Partners, Inc. currently serves as Investment Manager for The International Equity Portfolio. The International Equity Portfolio is designed to invest in the equity securities of non-U.S. issuers that are believed to be undervalued in relation to the issuer's assets, cash flow, earnings and revenues based upon the Investment Manager's research and proprietary valuation systems. Although the Portfolio may invest anywhere in the world, the Portfolio is expected to invest primarily in the equity markets included in the Morgan Stanley Capital International Europe, Australia, Far East Index ("EAFE"). Currently, these markets are Japan, the United Kingdom, Germany, France, Canada, Italy, the Netherlands, Australia, Switzerland, Spain, Hong Kong, Belgium, Singapore, Malaysia, Sweden, Denmark, Norway, New Zealand, Austria, Finland and Ireland. Securities of non-U.S. issuers purchased by the Portfolio may be purchased on U.S. registered exchanges, the over-the-counter markets or in the form of sponsored or unsponsored American Depositary Receipts traded on registered exchanges or NASDAQ or sponsored or unsponsored European Depositary Receipts. Securities may also be purchased on recognized foreign exchanges or on over-the- counter markets overseas. In addition, the Portfolio may enter into forward foreign currency exchange contracts, buy or sell options, futures or options on futures relating to foreign currencies and may purchase securities indexed to currency baskets in order to hedge against fluctuations in the relative value of the currencies in which securities held by the Portfolio are denominated. Further information about the Portfolio's use of these instruments appears in this prospectus under the heading "Investment Practices and Risk Considerations: About Hedging Strategies." The International Equity Portfolio may also invest in high-quality short-term debt instruments (including repurchase agreements) denominated in U.S. or foreign currencies for temporary purposes. Further information about the Portfolio's temporary investment practices appears in this prospectus under the heading "Investment Practices and Risk Considerations: About Temporary Investment Practices." The Fixed-Income Portfolios. Each of the Portfolios described below ("Fixed Income Portfolios") seeks to active its investment objective by investing primarily in fixed income securities. Morgan Grenfell Capital Management Incorporated currently serves as Investment Manager for each of these Portfolios. In selecting fixed income investments (including municipal securities), the Investment Manager seeks to identify fixed income securities and sectors which it believes to be undervalued relative to the market and alternative sectors rather than forecasting changes in the interest rate environment. Fixed income securities may be undervalued for a variety of reasons, such as market inefficiencies relating to lack of market information about particular securities and sectors, supply and demand shifts and lack of market penetration by some issuers. Further information about investing in fixed income securities, including the impact of maturity policies on investment risk, appears in this prospectus in the section entitled "Investment Practices and Risk Considerations." Relevant subheadings include, "About Fixed Income Securities," and "About Temporary Investment Practices." Information relating to the municipal securities in which The Limited Duration Municipal Bond and the Intermediate Term Municipal Bond Portfolios ("Municipal Portfolios") invest appears under the heading ""Investment Practices and Risk Considerations: About Tax-Exempt Securities." The Limited Duration Municipal Bond Portfolio. The investment objective of this Portfolio is to provide a high level of current income exempt from Federal income tax, consistent with the preservation of capital. The Portfolio seeks to achieve this objective by investing primarily in a diversified portfolio of municipal bonds (i.e., debt securities issued by municipalities and related entities, the interest on which is exempt from Federal income tax). It is a fundamental policy of the Portfolio that, under normal circumstances, at least 80% of its net assets will be invested in such securities (collectively, "Tax- Exempt Securities"). Tax-Exempt Securities may include general obligation bonds and notes, revenue bonds and notes (including industrial revenue bonds and municipal lease obligations), as well as participation interests relating to such securities. In order to maintain liquidity or in the event that the Investment Manager determines that securities meeting the Portfolio's investment objective and policies are not otherwise readily available for purchase, the Portfolio is authorized to invest up to 20% of its total assets in taxable instruments. It is anticipated that the average credit quality of all Tax-Exempt Securities purchased for the Portfolio will be comparable to securities rated "Aa" by Moody's Investors Service ("Moody's"), or "AA" by Standard & Poor's Corporation ("S&P"), respectively (or, in the case of municipal notes and commercial paper, corresponding ratings assigned to such instruments). The Portfolio is also, however, authorized to invest in Tax-Exempt Securities that, at the time of investment, are rated at least investment grade (e.g. "Baa" or better by Moody's, "BBB" by S&P or, if unrated, are determined by the Portfolio's Investment Manager to be of comparable quality to securities that have received such ratings). Securities rated "Baa" or "BBB" may be said to have speculative characteristics in that changes in economic conditions or other circumstances may be more likely to weaken the issuer's capacity to make principal and interest payments than is the case with respect to securities that have received higher ratings. The municipal notes in which the Portfolio may invest will be limited to those obligations which are rated, at the time of purchase, at least MIG-1 or VMIG-1 by Moody's or SP-1 by S&P or, if unrated, are determined by the Investment Manager to be of comparable quality to securities that have received such ratings. Tax-exempt commercial paper must be rated at least A-1 by S&P or Prime -1 by Moody's at the time of investment or, if not rated, determined by the Portfolio's Investment Manager to be of comparable quality to issues that have received such ratings. Taxable investments, if any, will be limited to those rated "Aa" or "AA" by Moody's or S&P, respectively (or, in the case of securities not rated by these services or unrated, of comparable quality). Tax-Exempt Securities purchased for the Portfolio will have varying maturities, but under normal circumstances the Portfolio will have an overall duration of less than 4 years. Duration is a concept that incorporates a bond's yield, coupon interest payments, final maturity and call features into one measure that is used by investment professionals as a more precise alternative to the concept of term-to-maturity. As a point of reference, the maturity of a current coupon bond with a 3 year duration is approximately 3.5 years and the maturity of a current coupon bond with a 6 year duration is approximately 9 years. Changes in interest rates can adversely affect the value of an investment in the Portfolio. As an example, a one percent increase in interest rates could result in a four percent decrease in the value of a portfolio with a duration of four years. When interest rates are falling, a fixed income portfolio with a shorter duration generally will not generate as high a level of total return as one with a longer duration. When interest rates are flat, shorter duration portfolios generally will not generate as high a level of total return as longer duration portfolios. Because of its shorter portfolio maturity, The Limited Duration Municipal Bond Portfolio can be expected to be less volatile in response to changes in interest rates than The Intermediate Term Municipal Bond Portfolio. Its yield, however, can also be expected to be lower than its longer term counterpart. The Intermediate Term Municipal Bond Portfolio. The investment objective of The Intermediate Term Municipal Bond Portfolio is to provide a high level of current income exempt from Federal income tax consistent with the preservation of capital. The Portfolio seeks to achieve its objective by investing primarily in a diversified portfolio of municipal bonds with characteristics similar to those in which The Limited Duration Municipal Bond Portfolio invests, except that the Intermediate Term Municipal Bond Portfolio expects to maintain a dollar weighted effective average remaining portfolio maturity of 5 to 10 years. It is a fundamental policy of the Portfolio that, under normal circumstances, at least 80% of its net assets will be invested in Tax-Exempt Securities; the Portfolio is, however, authorized to invest up to 20% of its total assets in taxable instruments to maintain liquidity or in the event that the Investment Manager determines that securities meeting the Portfolio's investment objective and policies are not otherwise readily available for purchase. Because of its longer portfolio maturity, The Intermediate Term Municipal Bond Portfolio can be expected to be more volatile in response to changes in interest rates than The Limited Duration Municipal Bond Portfolio. Its yield, however, can also be expected to be higher than its shorter-term counterpart. The Fixed Income Portfolio. The investment objective of the Fixed Income Portfolio is to seek a high level of income consistent with the preservation of capital. The Fixed Income Portfolio expects to maintain a dollar weighted effective average remaining portfolio maturity of 5 to 10 years, but may purchase securities with any stated remaining maturity. The Fixed Income Portfolio will normally invest at least 80% of its assets in fixed income securities of all types, including U.S. Government securities; custodial receipts evidencing interests in such securities; corporate bonds and debentures; mortgage-backed securities and asset-backed securities; U.S. dollar denominated securities of foreign governments, their political subdivisions, agencies or instrumentalities, as U.S. dollar denominated obligations of supra-national entities; taxable municipal securities, and state, municipal or private activity bonds; equipment lease and trust certificates; and repurchase agreements involving any of the foregoing. Certain of these securities may have floating or variable rates of interest or include put features that afford their holders the right to sell the security at face value prior to maturity. Investments in U.S. dollar denominated securities of non-U.S. issuers will not exceed 25% of its total assets. Under normal conditions the Fixed Income Portfolio may hold up to 20% of its total assets in cash or money market instruments in order to maintain liquidity, or in the event that the Investment Manager determines that securities meeting the Portfolio's investment objective and policies are not otherwise readily available for purchase. The Fixed Income Portfolio invests primarily in fixed income securities that, at the time of purchase, are either rated in one of three highest rating categories assigned by Moody's, S&P or other ratings organizations, or unrated securities determined by the Investment Manager to be of comparable quality. However, the Portfolio may also invest up to 15% of its assets in fixed income securities that are, at the time of purchase, either rated within the fourth highest rating category assigned by Moody's or S&P, or, if unrated by these, determined by the Investment Manager to be of comparable quality. See "About Fixed Income Securities". In the event any security held by the Fixed Income Portfolio is downgraded below the rating categories set forth above, the Investment Manager will review the security and determine whether to retain or dispose of that security. Fixed income securities rated in one of the four highest ratings categories and unrated securities determined by the Investment Manager to be of comparable quality are referred herein as "investment grade fixed income securities." Fixed income securities in the lowest investment grade category are considered medium grade securities. Such securities have speculative characteristics, involve greater risk of loss than higher quality securities, and are more sensitive to changes in the issuer's capacity to pay. INVESTMENT PRACTICES AND RISK CONSIDERATIONS Although the Trust's Portfolios have different investment objectives and policies, certain investment practices may be used by one or more of the Portfolios. A general description of each such practice is set forth below, together with the Portfolios to which each practice is available. About Equity Securities. Each of the Equity Portfolios invests primarily in equity securities. For purposes of the investment policies of these Portfolios, the term "equity securities" includes total common and preferred stock and rights and warrants to purchase other equity securities. A maximum of 15% of the assets of The Value Equity Portfolio and up to 10% of the total assets of The Growth Equity Portfolio may be invested in convertible issues, the market value of which tend to move together with the market value of the underlying common stock as a result of the conversion feature. Both The International Equity Portfolio and The Small Capitalization Equity Portfolio are also authorized to invest up to 5% of their respective total assets in similar convertible issues, although these Portfolios have no present intention of doing so. In general, investments in equity securities and convertible issues are subject to market risks that may cause their prices to fluctuate over time. Additionally, the value of securities, such as warrants and convertible issues, is also affected by prevailing interest rates, the credit quality of the issuer and any call provisions. Convertible issues purchased for any Portfolio will be limited to those issues that are either rated (or, unrated securities that, in the judgment of the relevant Investment Manager, are comparable in quality to securities rated) investment grade or better by Moody's or S&P or other ratings organization. Please refer to "About Fixed Income Securities" in this section of the prospectus for further information about such organizations and their ratings. Fluctuations in the value of equity securities in which a Portfolio invests will cause the net asset value of that Portfolio to fluctuate. The Small Capitalization Equity Portfolio invests primarily in equity securities issued by smaller companies, generally with capitalizations of less than $1.0 billion. Equity securities of smaller companies involve greater risk than is customarily associated with investments in larger, more established companies. This increased risk may be due to the fact that such companies often have limited markets and financial resources, narrow product lines and lack of depth of management. The securities of smaller companies are often traded in the over-the-counter markets and, if listed on national or regional exchanges, may not be traded in volumes typical for such exchanges. Thus, the securities of smaller companies are likely to be less liquid, and subject to more abrupt or erratic price movements than larger, more established companies. Further information about securities that may be illiquid appears under the heading "About Illiquid Securities," below. About Foreign Securities. The International Equity Portfolio invests primarily in equity securities of non-U.S. issuers, which securities may be traded in the U.S. or abroad and which may be denominated in foreign currencies; it may also invest in short-term debt instruments denominated in foreign currencies under unusual market conditions. The Growth Equity Portfolio may also invest in non-U.S. equity issues. The Fixed-Income Portfolio may invest up to 25% of its assets in debt securities of non-U.S. issuers, which securities may be denominated in U.S. or foreign currencies. Equity securities of overseas issuers are subject to the same risks, described above, applicable to equity securities in general. In addition, both debt and equity securities of foreign issuers may involve risks which are not ordinarily associated with investing in domestic securities. Such factors include the unavailability of financial information or the difficulty of interpreting financial information prepared under foreign accounting standards; less liquidity and more volatility in foreign securities markets; the possibility of expropriation; the imposition of foreign withholding and other taxes; the impact of foreign political, social or diplomatic developments; limitations on the movement of funds or other assets between different countries; difficulties in invoking legal process abroad and enforcing contractual obligations; and the difficulty of assessing economic trends in foreign countries. In addition, changes in foreign exchange rates will affect the value of securities denominated or quoted in foreign currencies relative to the U.S. dollar. Exchange rate movements can be large and can endure for extended periods of time, affecting either favorably or unfavorably the value of securities held in the Portfolio and, thus, the Portfolio's net asset value per share. Securities transactions effected in markets overseas are generally subject to higher fixed commissions than may be negotiated on U.S. exchanges. Custody arrangements for the Portfolio's foreign securities will be more costly than those associated with domestic securities of equal value. Certain foreign governments levy withholding taxes against dividend and interest income. Although in some countries a portion of these taxes is recoverable, the non- recovered portion of foreign withholding taxes will reduce the Portfolio's income. The Value Equity Portfolio may invest in American Depositary Receipts ("ADRs"). ADRs are dollar-denominated receipts generally issued in registered form by domestic banks, that represent the deposit with the bank of a security of a foreign issuer. ADRs, which are publicly traded on U.S. exchanges and in the over-the-counter markets, may be sponsored by the foreign issuer of the underlying security or may be unsponsored. The International Equity Portfolio and The Growth Equity Portfolio are also permitted to invest in ADRs. Additionally, these portfolios may invest in European Depositary Receipts ("EDRs"). EDRs are similar to ADRs but are issued and traded in Europe. EDRs are generally issued in bearer form and denominated in foreign currencies and, for this reason, are subject to the currency risks described above. For purposes of the Trust's investment policies, ADRs and EDRs are deemed to have the same classification as the underlying securities they represent. Thus, an ADR or EDR representing ownership of common stock will be treated as common stock. ADR or EDR programs may be sponsored or unsponsored. Unsponsored programs are subject to certain risks. In contrast to sponsored programs, where the foreign issuer of the underlying security works with the depository institution to ensure a centralized source of information about the underlying company, including any annual or other similar reports to shareholders, dividends and other corporate actions, unsponsored programs are based on a service agreement between the depository institution and holders of ADRs or EDRs issued by the program; thus investors bear expenses associated with certificate transfer, custody and dividend payments. In addition, there may be several depository institutions involved in issuing unsponsored ADRs or EDRs for the same underlying issuer. Such duplication may lead to market confusion because there would be no central source of information for buyers, sellers and intermediaries, and delays in the payment of dividends and information about the underlying issuer or its securities could result. About Fixed Income Securities. Each of the Fixed-Income Portfolios invests primarily in fixed income securities (sometimes referred to as "debt securities") and the performance of these Portfolios is subject to certain risks associated with investments in such securities. Interest rate risk is the risk that the value of an investment will fluctuate in response to changes in interest rates. Generally, the value of debt securities will tend to decrease when interest rates rise and increase when interest rates fall, with shorter term securities generally less sensitive to interest rate changes than longer term securities. In periods of declining interest rates, the yield of a Portfolio that invests in fixed income securities will tend to be higher than prevailing market rates, and in periods of rising interest rates, the yield of the Portfolio will tend to be lower. Also, when interest rates are falling, the inflow of net new money to such a Portfolio will likely be invested in portfolio instruments producing lower yields than the balance of the Portfolio; in periods of rising interest rates, the opposite can be true. The net asset value of a Portfolio investing in fixed income securities can generally be expected to change as general levels of interest rates fluctuate. The value of fixed income securities held by a Portfolio generally varies inversely with changes in interest rates. The market value of fixed income securities with longer effective maturities are more sensitive to interest rate changes than those with shorter effective maturities. Credit risk is the risk that an issuer (or in the case of certain securities, the guarantor or counterparty) will be unable to make principal and interest payments when due. The creditworthiness of an issuer may be affected by a number of factors including the financial condition of the issuer (or guarantor) and, in the case of foreign issuers, the financial condition of the region. Debt securities (including convertible issues) may be rated by one or more nationally recognized rating organization, such as S&P and Moody's (each an "NRSRO"). Such ratings represent the judgment of the relevant NRSRO with regard to the safety of principal and interest payments; they do not, however, evaluate the risks of fluctuations in market value, are not a guarantee of quality and may be subject to change even after the Trust has acquired the security. Also, an NRSRO may fail to make timely changes in credit ratings in response to subsequent events, so that an issuer's current financial conditions may be better or worse than the rating indicates. If a security's rating is reduced while it is held by the Trust, the appropriate Investment Manager will consider whether the Trust should continue to hold the security but is not required to dispose of it. A summary of the ratings categories of Moody's and S&P appears in the Appendix to the Statement of Additional Information. The creditworthiness of the issuers of fixed-income securities is monitored by the Investment Manager of the Fixed-Income Portfolios with reference to ratings, if any, assigned to individual fixed income issues by NRSROs, as well as other factors deemed relevant to the Investment Manager.The Fixed-Income Portfolios may purchase debt securities that have not been assigned ratings by an NRSRO but are determined by the relevant Investment Manager to be of a quality comparable to rated securities that the Portfolio is permitted to purchase. Fixed-income securities may be purchased on a "when-issued" basis. When securities are purchased on a when-issued or delayed delivery basis, the Portfolio must maintain, in a segregated account until the settlement date, cash, U.S. Government securities or high-grade, liquid obligations in an amount sufficient to meet the purchase price (or enter into offsetting contracts for the forward sale of other securities it owns). The purchase of securities on a when-issued or delayed delivery basis involves a risk of loss if the value of the security to be purchased declines prior to the settlement date. Although purchases of securities on a when-issued or delayed delivery basis are expected to be made only with the intention of acquiring those securities for the investment portfolio of the purchasing Portfolio, when-issued or delayed delivery securities may be sold prior to settlement if the purchasing Portfolio's Investment Manager deems it appropriate to do so. The market value of when-issued securities may increase or decrease prior to settlement as a result of changes in interest rates or other factors and short-term gains or losses may be realized on any sales of such when-issued securities. About Taxable Fixed Income Securities. Those instruments in which the Fixed Income Portfolio may invest include those described below. Further information is available in the Statement of Additional Information relating to the Trust. U.S. Government Securities. U.S. Government securities are obligations issued or guaranteed as to both principal and interest by the U.S. Government, its agencies, instrumentalities or sponsored enterprises ("U.S. Government securities"). Some U.S. Government securities, such as U.S. Treasury bills, notes and bonds, are supported by the full faith and credit of the United States. Others, such as obligations issued or guaranteed by U.S. Government agencies or instrumentalities are supported either by (i) the full faith and credit of the U.S. Government (such as securities of the GNMA), (ii) the right of the issuer to borrow from the U.S. Treasury (such as securities of the Federal Home Loan Banks), (iii) the discretionary authority of the U.S. Government to purchase the agency's obligations (such as securities of the Federal National Mortgage Association), or (iv) only the credit of the issuer. Separately traded principal and interest components of securities guaranteed or issued by the U.S. Government or its agencies, instrumentalities or sponsored enterprises may also be acquired if such components are traded independently under the Separate Trading of Registered Interest and Principal of Securities program ("STRIPS") or any similar program sponsored by the U.S. Government. STRIPS are sold as zero coupon securities. See "Zero Coupon Securities." Custodial Receipts. Custodial Receipts are interests in separately traded interest and principal component parts of U.S. Government securities that are issued by banks or brokerage firms and are created by depositing U.S. Government securities into a special account at a custodian bank. The custodian holds the interest and principal payments for the benefit of the registered owners of the certificates or receipts. The custodian arranges for the issuance of the certificates or receipts evidencing ownership and maintains the register. Custodial receipts include Treasury Receipts ("TRs"), Treasury Investment Growth Receipts ("TIGRs"), and Certificates of Accrual on Treasury Securities ("CATS"). TIGRs and CATS are interests in private proprietary accounts while TRs and STRIPS (see "U.S. Government Securities" above) are interests in accounts sponsored by the U.S. Treasury. Receipts are sold as zero coupon securities; for more information, see "Zero Coupon Securities." Zero Coupon Securities. STRIPS and custodial receipts (TRs, TIGRs and CATS) are sold as zero coupon securities, that is, fixed income securities that have been stripped of their unmatured interest coupons. Zero Coupon Securities are sold at a (usually substantial discount) and redeemed at face value at their maturity date without interim cash payments of interest or principal. The amount of this discount is accreted over the life of the security, and the accretion constitutes the income earned on the security for both accounting and tax purposes. Because a Portfolio must distribute the accreted amounts in order to qualify for favorable tax treatment, it may have to sell portfolio securities to generate cash to satisfy the applicable distribution requirements. As a result of these features, the market prices of zero coupon securities are generally more volatile than the market prices of securities that have similar maturity but that pay interest periodically. Zero coupon securities are likely to respond to a greater degree to interest rate changes than are non-zero coupon securities with similar maturity and credit qualities. Mortgage-Backed and Asset-Backed Securities. Mortgage-backed securities represent direct or indirect participation in, or are collateralized by and payable from, mortgage loans secured by real property. Mortgage-backed securities in which The Fixed Income Portfolio may invest include those issued or guaranteed by U.S. Government agencies or instrumentalities such as the Government National Mortgage Association ("GNMA"), Federal National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage Corporation("FHLMC"). The Portfolio may also invest in mortgage-backed securities issued by non-governmental entities, including collateralized mortgage obligations ("CMOs") and real estate mortgage investment conduits ("REMICS"). Asset-backed securities represent participation in, or are secured by and payable from, assets such as motor vehicle installment sales, installment loan contracts, leases of various types of real and personal property and receivables from revolving credit (credit card) agreements and other categories or receivables. Such securities are generally issued by trusts and special purpose corporations. Asset-backed securities present certain risks that are not presented by mortgage-backed securities because asset-backed generally do not have the benefit of a security interest in collateral that is comparable to mortgage assets. In addition, there is the possibility that, in some cases, recoveries on repossessed collateral may not be available to support payments on these securities. M any mortgage and asset-backed securities may be considered derivative instruments. Mortgage-backed and asset-backed securities are often subject to more rapid repayment than their stated maturity date would indicate as a result of the pass-through of prepayments of principal on the underlying loans. Accordingly, the market values of such securities will vary with changes in market interest rates generally and in yield differentials among various kinds of U.S. Government securities and other mortgage-backed and asset-backed securit ies. For example, during periods of declining interest rates, prepayment of loans underlying mortgage-backed and asset-backed securities can be expected to accelerate, and thus impair a Portfolio's ability to reinvest the returns of principal at comparable yields. In periods of rising interest rates, however, the rate at which the underlying mortgages are pre-paid is likely to be reduced. As a result, the effective maturity and volatility of the mortgaged-backed security involved would increase, as would the n the value of the security itself. Under unusual circumstances, the ability of a Portfolio to dispose of such mortgage or asset-backed issues could be impaired. Mortgage Dollar Rolls. The Fixed Income Portfolio may enter into mortgage "dollar rolls." This transaction involved the sale of securities by the Portfolio for delivery in the current month and a simultaneous contract to repurchase substantially similar (same type, coupon and maturity) securities on a specified future date. During the roll period, the Portfolio forgoes principal and interest paid on the securities. The Portfolio is compensated, however, by the difference between the current sales price and the lower forward price for the future purchase (often referred to as the "drop") or fee income and by the interest earned on the cash proceeds of the initial sale. A "covered roll" is a specific type of dollar roll for which there is an offsetting cash position or a cash equivalent security position that matures on or before the forward settlement date of the dollar roll transaction. The Portfolio may enter into both covered and uncovered rolls. Municipal Securities. The Fixed Income Portfolio may, consistent with its investment policies, invest in the types of municipal securities listed below under the heading "Tax-Exempt Securities" but unlike the Municipal Portfolio, municipal securities may be acquired by The Fixed Income Portfolio without regard to the tax character of interest paid on any such security. Foreign Government Securities. The foreign government securities in which The Fixed Income Portfolio may invest generally consist of debt obligations issued or guaranteed by national, state or provincial governments or similar political subdivisions. Foreign government securities also include debt obligations of supranational or quasi-governmental entities. Quasi-governmental and supranational entities include international organizations designated or supported by governmental entities to promote economic reconstruction or development and international banking institutions and related government agencies. Examples include the International Bank for Reconstruction and Development (the "World Bank"), the Japanese Development Bank, the Asian Development Bank and the InterAmerican Development Bank. Foreign government securities also include mortgage-related securities issued or guaranteed by national, state or provincial governmental instrumentalities, including quasi-governmental agencies. Investment in debt obligations of a government, its agencies or instrumentalities involve the risks associated with any investment in debt securities as well as the risks associated with an investment in foreign securities, as described above. In addition, investments in foreign government securities involve the risk that the governmental entity may not be willing or able to repay the principal and/or interest when due in accordance with the terms of such debt. A governmental entity's ability or willingness to repay principal and interest due in a timely manner may be affected by, among other factors, its cash flow situation, the availability of sufficient foreign exchange on the date a payment is due, the extent of its foreign reserves, the relative size of the debt service burden to the economy as a whole and the political constraints to which a governmental entity may be subject. About Tax-Exempt Securities. Each of the Municipal Portfolios intends to invest substantially all of their assets in Tax-Exempt Securities, including municipal bonds, notes and related instruments. In determining whether to invest in a particular Tax Exempt Security, the Portfolio's Investment Manager will rely on the opinion of bond counsel for the issuer as to the validity of the security and the exemption of interest on such security from Federal and relevant state income taxes, and will not make an independent investigation of the basis for any such opinion. Municipal bonds are debt obligations which are typically issued with maturities of five years or more, issued by local, state and regional governments or other governmental authorities. Municipal bonds may be issued for a wide range of purposes, including construction of public facilities, funding operating expenses, funding of loans to public institutions; or refunding outstanding municipal debt. Municipal bonds may be "general obligations" of their issuers, the repayment of which is secured by the issuer's pledge of full faith, credit and taxing power. "Revenue" or "special tax" bonds, such as municipal lease obligations and industrial revenue bonds are obligations that are payable from revenues derived from a particular facility or a special excise or other tax. Trusts for repayment of revenue bonds are generally limited to revenues from the underlying project or facility. As a consequence, the credit quality of such obligations is ordinarily dependent on the credit quality of the private user or operator of the project or facility rather than the governmental issuer of the obligation. Municipal lease obligations likewise may not be backed by the issuing municipality's credit and may involve risks not normally associated with investments in Tax-Exempt Securities. For example, interest on municipal lease obligations may become taxable if the lease is assigned. The Portfolio may also incur losses if the municipal issuer does not appropriate funds for lease payments on an annual basis, which may result in termination of the lease and possible default. Municipal leases may also be illiquid. Further information about securities that may be illiquid is included in this section under the heading "About Illiquid Securities." The Municipal Portfolios may also invest in Tax-Exempt Securities, the proceeds of which are directed, at least in part, to private, for-profit organizations. Although the interest from such bonds is exempt from regular Federal income tax, the interest may be treated as tax preference items for purposes of the alternative minimum tax if the bond was issued after August 7, 1986; such bonds are often referred to as "AMT Bonds." The alternative minimum tax is a special separate tax that applies to a limited number of taxpayers who have certain adjustments to income or tax preference items. Municipal notes are obligations issued by local, state and regional governments to meet their short-term funding requirements. Municipal notes may be short-term debt obligations which are issued pending receipt of taxes or other revenues, and retired upon receipt of such revenues. Such securities include bond anticipation notes, revenue anticipation notes and tax and revenue anticipation notes. Other types of municipal notes in which the Portfolio may invest are issued to fund municipal operations on a temporary or revolving basis and may include construction loan notes, short-term discount notes, tax-exempt commercial paper demand notes and similar instruments. Long term fixed rate municipal bonds that have been coupled with puts granted by a third party financial institution may also be purchased for the Municipal Portfolios. Such instruments, which may be represented by custodial receipts or trust certificates, are designed to enhance the liquidity and shorten the duration of the underlying bond. Under certain circumstances, however, such as the downgrading of the underlying bond or a change in its tax-exempt status, the associated put will terminate automatically and the weighted average maturity of the Portfolios may increase. A "Participation interest" is a floating or variable rate security issued by a financial institution. These instruments represent interests in municipal bonds or other municipal obligations held by the issuing financial institution. Participation interests are generally backed by an irrevocable letter of credit or guarantee by a bank (which may or may not be the issuing financial institution). The letter of credit feature is usually designed to enhance the credit quality of the underlying municipal obligations. In addition, participation interests generally carry a demand feature. These demand features permit the Portfolios to tender the participation interest back to the issuing financial institution and are usually designed to provide liquidity for the Portfolio in the event of a downgrade in the credit quality of the instrument or default in the underlying municipal obligation. The Portfolio may acquire stand-by commitments, also known as "liquidity puts" solely for the purpose of facilitating portfolio liquidity. These instruments give the Portfolio the right to sell specified securities back to the seller, at the option of the Portfolio, at a specified price. It is expected that such stand-by commitments will be available without the payment of any direct or indirect consideration. However, if advisable in the judgment of the Investment Manager of the Portfolios, the Portfolios may pay for such commitments at the time the underlying security is acquired. About Temporary Investment Practices. It is the intention of the Trust that eac h of the Portfolios be fully invested in accordance with its respective investment objectives and policies at all times. To maintain liquidity pending investment, however, each of the Portfolios are authorized to invest up to 20% of their respective assets in short-term money market instruments issued, sponsored or guaranteed by the U.S. Government, its agencies or instrumentalities or repurchase agreements secured by such securities (collectively, "U.S. Government Securities"), or short-term money market instruments of other issuers, which may include corporate commercial paper, and variable and floating rate debt instruments, that have received, or are comparable in quality to securities that have received, one of the two highest ratings assigned by at least one NRSRO. The International Equity Portfolio is also permitted to invest in U.S. Government Securities or short-term money market instruments of other issuers denominated in U.S. dollars or other currencies to maintain liquidity pending investment. Investments in short-term instruments denominated in foreign currencies are subject to the same risk considerations as described above under the heading "About Foreign Securities." All such investments will be subject to the same quality standards as those applicable to short-term investments made on behalf of the Trust's domestic portfolios. Under extraordinary market or economic conditions, all or any portion of a Portfolio's assets may be invested in short-term money market instruments for temporary defensive purposes. Further information about those instruments that each of the Portfolios may use for temporary investment purposes appears in the Statement of Additional Information, under the heading "Further Information on Investment Policies." About Illiquid Securities. A Portfolio may not purchase illiquid securities if, at the time of such purchase, more than 15% of the value of the Portfolio's net assets will be invested in illiquid securities. Illiquid securities are those that cannot be disposed of promptly within seven days and in the usual course of business at the prices at which they are valued. Such securities include, but are not limited to, time deposits and repurchase agreements with maturities longer than seven days. Variable rate demand notes with demand periods in excess of seven days, securities issued with restrictions on their disposition ("restricted issues") and municipal lease obligations, which may be unrated, will be deemed illiquid unless a Portfolio's Investment Manager determines that such securities are readily marketable and could be disposed of within seven days promptly at the prices at which they are valued. In the case of municipal lease obligations, this determination will be made by the Portfolio's Investment Manager in accordance with guidelines established by the Trust's Board. The liquidity of restricted issues and, in particular, the availability of an adequate dealer or institutional trading market for those restricted issues ("Rule 144A Securities") that are not registered for sale to the general public but can be resold to institutional investors, will be determined by each Portfolio's Investment Manager in accordance with guidelines established by the Trust's Board. The institutional market for Rule 144A Securities is relatively new and liquidity of the investments in such securities could be impaired if trading does not further develop or declines. Factors relevant to the liquidity of a particular instrument include the frequency of trades and availability of dealer quotes, the number of dealers and market makers active in the issue and the nature of marketplace trades (e.g. mechanics of transfer and solicitation of offers). About Hedging Strategies. Each of the Portfolios may engage in certain strategies ("Hedging Strategies") designed to reduce certain risks that would otherwise be associated with their respective securities investments, and/or in anticipation of futures purchases and to gain market exposure pending direct investment in securities. These strategies include the use of options on securities and securities indices, options on stock index and interest rate futures contracts and options on such futures contracts. The Growth Equity, International Equity and Fixed Income Portfolios may also use forward foreign currency contracts in connection with the purchase and sale of those securities, denominated in foreign currencies, in which each is permitted to invest. In addition, The International Equity Portfolio and The Fixed Income Portfolio may use foreign currency options and foreign currency futures to hedge against fluctuations in the relative value of the currencies in which securities held by these Portfolios are denominated. A Portfolio may invest in the instruments noted above (collectively, "Hedging Instruments") only in a manner consistent with its investment objective and policies. A Portfolio may not invest more than 10% of its total assets in option purchases and may not commit more than 5% of its net assets to margin deposits on futures contracts and premiums for options on futures contracts. The Portfolios may not use Hedging Instruments for speculative purposes. Further information relating to the use of Hedging Instruments, and the limitations on their use, appears in the Statement of Additional Information. There are certain overall considerations to be aware of in connection with the use of Hedging Instruments in any of the Portfolios. The ability to predict the direction of the securities or currency markets and interest rates involves skills different from those used in selecting securities. Although the use of various Hedging Instruments is intended to enable each of the Portfolios to hedge against certain investment risks, there can be no guarantee that this objective will be achieved. For example, in the event that an anticipated change in the price of the securities (or currencies) that are the subject of the strategy does not occur, it may be that the Portfolio employing the Hedging Strategy would have been in a better position had it not used such a strategy at all. Moreover, even if the Investment Manager correctly predicts interest rate or market price movements, a hedge could be unsuccessful if changes in the value of the option or futures position do not correspond to changes in the value of investments that the position was designed to hedge. Liquid markets do not always exist for certain Hedging Instruments and lack of a liquid market for any reason may prevent a Portfolio from liquidating an unfavorable position. In the case of an option, the option could expire before it can be sold, with the resulting loss of the premium paid by a Portfolio for the option. In the case of a futures contract, a Portfolio would remain obligated to meet margin requirements until the position is closed. In addition, options that are traded over-the-counter differ from exchanged traded options in that they are two-party contracts with price and other terms negotiated between the parties. For this reason, the liquidity of these instruments may depend on the willingness of the counter party to enter into a closing transaction. In the case of currency related instruments, such as foreign currency options, options on foreign currency futures, and forward foreign currency contracts, it is generally not possible to structure transactions to match the precise value of the securities involved since the future value of the securities will change during the period that the arrangement is outstanding. As a result, such transactions may preclude or reduce the opportunity for gain if the value of the hedged currency changes relative to the U.S. dollar. Like over-the-counter options, such instruments are essentially contracts between the parties and the liquidity of these instruments may depend on the willingness of the counter party to enter into a closing transaction. About Other Permitted Instruments. Each of the Portfolios may borrow money from a bank for temporary emergency purposes, and may enter into reverse repurchase agreements. A reverse repurchase agreement, which is considered a borrowing for purposes of the Investment Company Act, involves the sale of a security by the Trust and its agreement to repurchase the instrument at a specified time and price. Accordingly, the Trust will maintain a segregated account consisting of cash, U.S. Government securities or high-grade, liquid obligations, maturing not later than the expiration of the reverse repurchase agreement, to cover its obligations under reverse repurchase agreements. To avoid potential leveraging effects of a Portfolio's borrowings, additional investments will not be made while aggregate borrowings, including reverse repurchase agreements, are in excess of 5% of a Portfolio's total assets. Borrowings outstanding at any time will be limited to no more than one-third of a Portfolio's total assets. Each of the Portfolios may lend portfolio securities to brokers, dealers and financial institutions provided that cash, or equivalent collateral, equal to at least 100% of the market value (plus accrued interest) of the securities loaned is maintained by the borrower with the lending Portfolio. During the time securities are on loan, the borrower will pay to the Portfolio any income that may accrue on the securities. The Portfolio may invest the cash collateral and earn additional income or may receive an agreed upon fee from the borrower who has delivered equivalent collateral. No Portfolio will enter into any securities lending transaction if, at the time the loan is made, the value of all loaned securities, together with any other borrowings, equals more than one-third of the value of that Portfolio's total assets. As permitted under the Investment Company Act, a Portfolio may invest up to 5% of its net assets in securities of other investment companies but may not acquire more than 3% of the voting securities of the investment company. Generally, the Portfolios do not make such investments. The Growth Equity Portfolio does, however, invest in certain instruments known as Standard & Poor's Depositary Receipts or "SPDRs" as part of its overall hedging strategies. Such strategies are designed to reduce certain risks that would otherwise be associated with the investments in the types of securities in which the Portfolio invests and/or in anticipation of future purchases, including to achieve market exposure pending direct investment in securities, provided that the use of such strategies are not for speculative purposes and are otherwise consistent with the investment policies and restrictions adopted by the Portfolio. SPDRs, which are listed on the American Stock Exchange, are interests in a unit investment trust ("UIT") that may be obtained from the UIT or purchased in the secondary market. Further information about these and other derivative instruments is contained in the Statement of Additional Information. MANAGEMENT OF THE TRUST The Board of Trustees. The Trust's Board is responsible for the overall supervision and management of the business and affairs of the Trust, including (i) the selection and general supervision of the Investment Managers that provide day-to-day portfolio management services to the Trust's several Portfolios; and (ii) for Portfolios for which more than one Investment Manager has been retained, allocation of that Portfolio's assets among such Investment Managers. In particular, the Board may, from time to time, allocate portions of a Portfolio's assets between or among several Investment Managers, each of whom may have a different investment style and/or security selection discipline. The Board also may reallocate a Portfolio's assets among such Investment Managers or terminate particular Investment Managers, if the Board deems it appropriate to do so in order to achieve the overall objectives of the Portfolio involved. The Board may also retain additional Investment Managers on behalf of a Portfolio subject to the approval of the shareholders of that Portfolio in accordance with the Investment Company Act. The Investment Managers. As indicated above, day-to-day investment decisions for each of the Portfolios are the responsibility of one or more Investment Managers retained by the Trust. In accordance with the terms of individual investment advisory contracts relating to the respective Portfolios, and subject to the general supervision of the Trust's Board, each of the Investment Managers is responsible for providing a continuous program of investment management to, and placing all orders for, the purchase and sale of securities and other instruments on behalf of the respective Portfolios they serve. Brinson Partners, Inc. ("Brinson") serves as Investment Manager for The International Equity Portfolio. For its services to the Portfolio, Brinson receives a fee, based on the average daily net asset value of that portion of the Portfolio's assets managed by it, at an annual rate of 0.40%. Brinson, the principal offices of which are located at 209 South LaSalle Street, Chicago, Illinois 60604-1295, and its predecessor entities have provided investment management services for international equity assets since 1974. The day-to-day management of The International Equity Portfolio is the responsibility of a team of Brinson's investment professionals; investment decisions are made by committee and no person has primary responsibility for making recommendations to the committee. Brinson had discretionary assets of approximately $81.3 billion under management as of June 30, 1997, of which approximately $1.9 billion represented assets of U.S. mutual funds. Brinson is a wholly-owned indirect subsidiary of Swiss Bank Corporation, an internationally diversified organization with operations in many aspects of the financial services industry. Clover Capital Management, Inc. ("Clover Capital") serves as an Investment Manager for The Small Capitalization Equity Portfolio. For its services to the Portfolio, Clover Capital receives a fee, based on the average daily net asset value of that portion of the Portfolio's assets managed by it, at an annual rate of 0.45%. Clover Capital, the principal offices of which are located at 11 Tobey Village Office Park, Pittsford, New York 14534, was incorporated in 1986. Michael E. Jones and Geoffrey H. Rosenberger are primarily responsible for making day-to-day investment decisions for that portion of the Portfolio's assets assigned to Clover Capital. Mr. Jones and Mr. Rosenberger are the founders of Clover Capital and have served as Managing Directors of Clover Capital since the firm's inception. Mr. Jones, a chartered financial analyst, is a research analyst and portfolio manager. Mr. Rosenberger, also a chartered financial analyst, manages Clover Capital's overall research effort. Clover Capital had, as of August 31, 1997, assets of approximately $2.1 billion under management, of which approximately $197 million represented assets of mutual funds. Hotchkis and Wiley ("Hotchkis") serves as an Investment Manager for The Value Equity Portfolio since August 1996. For its services to the Portfolio, Hotchkis receives a fee, based on the average daily net asset value of that portion of the Portfolio's assets managed by it, at an annual rate of 0.30%. Hotchkis, the principal offices of which are located at 800 West Sixth Street, Los Angeles, California, 90017, and its predecessor entities have provided investment management services for equity assets since 1980. Sheldon Lieberman is responsible for making day-to-day investment decisions for that portion of The Value Equity Portfolio allocated to Hotchkis and Wiley. Before joining Hotchkis and Wiley in 1994, Mr. Lieberman was the Chief Investment Officer for the Los Angeles County Employees Retirement Association. Prior to that, he was Manager of Trust Investments at Lockheed Corporation. As of August 31, 1997, Hotchkis and Wiley managed total assets of approximately $11.6 billion, of which approximately $2.6 billion represented assets of mutual funds. Hotchkis, a division of Merrill Lynch Asset Management LP, is controlled by Merrill Lynch & Co., Inc. Frontier Capital Management Company ("Frontier") serves as an Investment Manager for The Small Capitalization Equity Portfolio. For its services to the Portfolio, Frontier receives a fee based on the average daily net asset value of that portion of the Portfolio's assets managed by it, at an annual rate of 0.45%. Frontier, the principal offices of which are located at 99 Summer Street, Boston, Massachusetts 02110, was established in 1980. Michael Cavarretta is responsible for making the day-to-day investment decisions for that portion of the Portfolio's assets assigned to Frontier. Mr. Cavarretta has been an investment professional with Frontier since 1988. Before joining Frontier, Mr. Cavarretta was a financial analyst with General Electric Co. and attended Harvard Business School (M.B.A. 1988). Frontier had, as of June 30, 1997, approximately $3.0 billion in assets under management, of which approximately $108 million represented assets of mutual funds. Goldman Sachs Asset Management ("GSAM") serves as Investment Manager for the Growth Equity Portfolio. For its services to the Portfolio, GSAM currently receives a fee of 0.30%. The firm's principal offices of which are located at One New York Plaza, New York, New York 10004, is a separate operating division of Goldman Sachs. As of August 31, 1997, GSAM, together with its affiliates, managed total assets of in excess of $124.1 billion. Robert C. Jones, Victor Pinter and Kent Clark will be responsible for making day-to-day investment decisions for that portion of The Growth Equity Portfolio allocated to GSAM. Mr. Jones, a chartered financial analyst and Managing Director of GSAM has been an officer and investment professional with GSAM since 1989. Mr. Pinter and Mr. Clarke, each of whom is a Vice President of GSAM, joined GSAM in 1990 and 1992, respectively. The Trust has conditionally approved an amendment to the GSAM Agreement ("Performance Fee Amendment"). Under the Performance Fee Amendment, GSAM would be compensated based, in part, on the investment results achieved by it. Under the amendment, to the GSAM Agreement that would permit GSAM to be compensated on a performance fee basis. Implementation of the Performance Fee Amendment, however, is subject to receipt of certain assurances from the staff of the SEC that such implementation will not be viewed by the SEC staff as inconsistent with the requirements of the Investment Advisers Act. There can be no assurance that such relief will be granted by the SEC. If the Performance Fee Amendment is implemented, it could, under certain circumstances, increase or decrease the fee paid to GSAM, when compared to the current fixed fee arrangement and could result in the payment of incentive compensation during periods of declining markets. Further information about the Performance Fee Amendment appears in the Statement of Additional Information. Institutional Capital Corporation ("ICAP") serves as an Investment Manager for The Value Equity Portfolio. For its services to the Portfolio, ICAP receives a fee, based on the average daily net asset value of that portion of the Portfolio's assets managed by it, at an annual rate of 0.35%. ICAP, the principal offices of which are located at 225 West Wacker, Chicago, Illinois 60606, has provided investment management services for equity assets since 1970. Investment decisions for those assets of the Portfolio assigned to ICAP are made by a team of ICAP investment professionals; investment decisions are made by committee and no single individual has primary responsibility for making recommendations to the committee. ICAP had assets of approximately $9.3 billion under management as of August 31, 1997, of which approximately $1.7 billion represented assets of mutual funds. Jennison Associates Capital Corp. ("Jennison") serves as an Investment Manager for The Growth Equity Portfolio. For its services to the Portfolio, Jennison receives a fee, based on the average daily net asset value of that portion of the Portfolio's assets managed by it, at an annual rate of 0.30%. Jennison, the principal offices of which are located at 466 Lexington Avenue, New York, New York 10017, was established in 1969. Robert B. Corman, Senior Vice-President and a director of Jennison, is responsible for making day-to-day investment decisions for the portion of the Portfolio's assets assigned to Jennison. Mr. Corman, who is a chartered financial analyst, has been an officer and investment professional with Jennison since 1981. As of June 30, 1997, Jennison had approximately $34.9 billion under management, of which approximately $5.6 billion represented assets of mutual funds. Jennison is a wholly-owned subsidiary of Prudential Insurance Company of America. Morgan Grenfell Capital Management Incorporated ("Morgan Grenfell") serves as Investment Manager for The Limited Duration Municipal Bond Portfolio, The Intermediate Term Municipal Bond Portfolio and The Fixed Income Portfolio. For its services to each of the Intermediate Term Municipal Bond Portfolio and the Fixed Income Portfolio, Morgan Grenfell receives, based of the average daily net assets value of each such portfolio an annual fee of 0.25% . For its services to the Limited Duration Municipal Bond Portfolio, Morgan Grenfell receives a fee of .20% of the average net asset value of that Portfolio.. Morgan Grenfell, whose principal offices are located at 885 Third Avenue, New York, New York 10022, has been active in managing municipal securities since 1989. David Baldt, an Executive Vice-President of Morgan Grenfell is primarily responsible for making the day-to-day investment decisions for each of the Trust's Fixed-Income Portfolios. Mr. Baldt has managed fixed income investments since 1973, and has been with Morgan Grenfell since 1989. As of September 30, 1997, Morgan Grenfell managed assets of approximately $8.9 billion, of which approximately $1.5 billion represented assets of mutual funds. Morgan Grenfell is an indirect, wholly-owned subsidiary of Deutschebank, A.G., a German financial services conglomerate. Consulting Arrangement. Pursuant to an agreement with the Trust, ("HCCI Consulting Agreement"), Hirtle Callaghan continuously monitors the performance of various investment management organizations, including the Investment Managers. The HCCI Consulting Agreement provides that Hirtle Callaghan will make its officers available to serve as officers and/or Trustees of the Trust, and maintain office space sufficient for the Trust's principal office. For its services under The HCCI Consulting Agreement, Hirtle Callaghan is entitled to receive an annual fee of .05% of each Portfolio's average net assets. Hirtle Callaghan's principal offices are located at 575 East Swedesford Road, Wayne, Pennsylvania 19087. Hirtle Callaghan was organized in 1988 and has no history of operation prior to that date. Hirtle Callaghan is registered as an investment adviser under the Investment Advisers Act of 1940 and, as of August 31, 1997, had approximately $1.6 billion of assets under management. Hirtle Callaghan is controlled by Jonathan Hirtle and Donald E. Callaghan, each of whom also serves on the Trust's Board and as an officer of the Trust. Administration, Distribution, and Related Services. BISYS Fund Services, L.P. ("BISYS") 3435 Stelzer Road, Columbus, Ohio 43219 has been retained, pursuant to a separate Administrative Services Contract with the Trust, to serve as the Trust's administrator. Services performed by BISYS in that capacity include, but are not limited to: (a) general supervision of the operation of the Trust and coordination of services performed by the various service organizations retained by the Trust; (b) regulatory compliance, including the compilation of information for documents and reports furnished to the Securities and Exchange Commission and corresponding state agencies; (c) assistance in connection with the preparation and filing of the Trust's registration statement and amendments thereto; and (d) maintenance of the Trust's registration in the various states in which shares of the Trust are offered. Pursuant to separate contracts, BISYS or its affiliates also serve as the Trust's transfer and dividend disbursing agent, as well as the Trust's accounting agent and receives fees for such services. For its services, BISYS receives a single all-inclusive fee payable. ("Omnibus Fee"). The Omnibus Fee is to be computed daily and paid monthly in arrears, at an annual rate of .10% of the aggregate average daily net assets of the Value Equity, Growth Equity, Small Capitalization Equity and International Equity Portfolios and of any additional portfolios that invest primarily in equity securities that may be created by the Trust in the future, and .08% of the aggregate average daily net assets of the Limited Duration Municipal Bond, Fixed Income and Intermediate Term Municipal Bond Portfolios and of any additional portfolios that invest primarily in debt securities that may be created in the future by the Trust. BISYS performs similar services for mutual funds other than the Trust. BISYS and its affiliated companies are wholly-owned by The BISYS Group, Inc., a publicly-held company which is a provider of information processing, loan servicing and 401(k) administration and record keeping services to and through banking and other financial organizations. Affiliates of BISYS also serve as the Trust's distributor. Bankers Trust Company has been retained by the Trust to serve as custodian for the assets of each of the Portfolios. Expenses. The Trust pays all expenses incurred in its operation, other than those expenses expressly assumed by Hirtle Callaghan, the Investment Managers or other service organizations. Those Trust expenses that can be readily identified as belonging to a particular Portfolio will be paid by that Portfolio. General expenses of the Trust that are not so identified will be allocated among the Portfolios based on their relative net assets at the time those expenses are accrued. The Trust's principal expenses are the fees payable to the Investment Managers; the Omnibus fee payable to BISYS for administration, transfer agency and portfolio accounting services; fees for domestic and international custody of the Trust's assets payable to Bankers Trust Company; fees for independent auditing and for legal services; fees for filing reports and registering shares with regulatory bodies; and consulting fees payable to Hirtle Callaghan. PURCHASES AND REDEMPTIONS General Information About Purchases. Shareholder accounts in the Trust may be established only by, and shares of each of the Portfolios are available exclusively to, Eligible Investors. Shares are sold at net asset value and without sales charge. Payment for purchases of Trust shares may be made by wire transfer or by check drawn on a U.S. bank. All purchases must be made in U.S. dollars. The Trust reserves the right to reject any purchase order. Purchase orders may be received by the Trust's transfer agent on any day the Trust is open for business ("Business Day"). The Trust is open every day, Monday through Friday, that the New York Stock Exchange is open for trading, which excludes the following business holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The Trust reserves the right to reject any purchase order and will not issue share certificates. Purchases of shares of the Portfolios will be executed at the net asset value per share next computed after receipt by the Trust of a purchase order placed on behalf of an Eligible Investor and after the order has been accepted by the Trust. If such a purchase order is received prior to 4 P.M. Eastern Time on any Business Day, the purchase will be executed at the net asset value per share determined as of the close of trading on the New York Stock Exchange on that Business Day--normally 4:00 P.M. Eastern Time. Purchase orders received after 4 P.M. Eastern Time will be executed at the net asset value per share as determined on the following Business Day. General Information About Redemptions. Shares may be redeemed on any Business Day. Shares will be redeemed at the net asset value next computed after receipt of a redemption request in proper form by the transfer agent. The Trust reserves the right to redeem the account of any shareholder if as a result of redemptions, the aggregate value of shares held in a Portfolio falls below a minimum of $5,000 after 30 days notice and provided that, during such 30 day period, such aggregate value is not increased to at least such minimum level. Under extraordinary conditions, as provided under the rules of the Securities and Exchange Commission, payment for shares redeemed may be postponed, or the right of redemption suspended. Redemptions may be made in number of shares or a stated dollar amount by sending a written request to the Trust's transfer agent at the address shown on the first page of this prospectus. Redemption requests must be signed in the exact name in which the shares are registered; redemption requests for joint accounts require the signature of each joint owner. For redemption requests of $25,000 or more, each signature must be guaranteed by a commercial bank or trust company which is a member of the Federal Deposit Insurance Corporation, a member firm of a national securities exchange and certain other securities dealers and credit unions. Guarantees must be signed by an authorized signatory of the guarantor institution and "Signature Guaranteed" must appear with the signature. Proceeds of redemption requests transmitted by mail will normally be paid by check and mailed to the shareholder's address as indicated on the Trust's books. Redemption proceeds of $2,500 or more may be transferred electronically to the bank account number, if any, recorded on the Trust's books. Wire redemption requests received prior to 1:00 P.M. on any Business Day will be effected on that Business Day and wired to your bank on the following Business Day. The Trust ordinarily will make payment for all shares redeemed within seven days after receipt of a redemption request in proper form. Payment of redemption proceeds for shares purchased by check may be delayed for a period of up to fifteen days after their purchase, pending a determination that the check has cleared. Additional Information About Purchases and Redemptions. The Trust does not impose investment minimums or sales charges of any kind. It is expected, however, that shares of the Trust will be acquired through a program of services offered by a financial intermediary, such as an investment adviser or bank, and that shares will be held, of record, in the name of such intermediary or a related entity. Intermediaries may impose service or advisory fees, which are in addition to those expenses borne by the Trust and described in this prospectus under the heading "Expense Information." Investors should contact such intermediary for information concerning what, if any, additional fees may be charged. The Trust may, at its discretion, permit investors to purchase shares of a Portfolio through an exchange of securities. Any securities exchanged must meet the investment objectives, policies and limitations of the Portfolio involved, must have a readily ascertainable market value, must be liquid and must not be subject to restrictions on resale. The market value of any securities exchanged plus any cash, must be at least $250,000. Shares acquired through any such exchange will not be redeemed until the transfer of securities to the Trust has settled -- usually within 15 days following the purchase by exchange. The Trust may, at its discretion, pay any portion of the redemption amount by a distribution "in kind" of securities held in a Portfolio's investment portfolio. Investors will incur brokerage charges on the sale of these portfolio securities. Shareholder Reports and Inquiries. Shareholders will receive semi-annual reports containing unaudited financial statements as well as annual reports containing financial statements which have been audited by the Trust's independent accountants. Each shareholder will be notified annually as to the Federal tax status of distributions made by the Portfolios in which such shareholder is invested. Shareholders may contact the Trust by calling the telephone number, or by writing to the Trust at the address, shown on the first page of this prospectus PORTFOLIO TRANSACTIONS AND VALUATION Portfolio Transactions. Subject to the general supervision of the Board, each of the Investment Managers is responsible for placing orders for securities transactions for the Portfolio they serve. Purchases and sales of equity securities will normally be conducted through brokerage firms entitled to receive commissions for effecting such transactions. In placing orders, it is the policy of the Trust to ensure that the most favorable execution for its transactions is obtained. Where such execution may be obtained from more than one broker or dealer, securities transactions may be directed to those who provide research, statistical and other information to the Trust or the Investment Managers. Purchases and sales of debt securities are expected to occur primarily with issuers, underwriters or major dealers acting as principals. Such transactions are normally effected on a net basis and do not involve payment of brokerage commissions. The Trust has no obligation to enter into securities transactions with any particular dealer, issuer, underwriter or other entity. In addition, the Board may, to the extent consistent with the Investment Company Act and other applicable law, authorize Investment Managers to direct transactions to service organizations retained by the Trust or their affiliates; under appropriate circumstances, such transactions may be used for the purpose of offsetting fees otherwise payable by the Trust for custody, transfer agency or other services. Valuation. The net asset value per share of the Portfolios is determined once on each Business Day as of the close of the New York Stock Exchange, which is normally 4 P.M. Eastern Time. Each Portfolio's net asset value per share is calculated by adding the value of all securities and other assets of the Portfolio, subtracting its liabilities and dividing the result by the number of its outstanding shares. Those assets that are traded on an exchange or in the over-the-counter market are valued based upon market quotations. Short-term obligations with maturities of 60 days or less are valued at amortized cost, which constitutes fair value as determined by the Trust's Board. Other assets for which market quotations are not readily available are valued at their fair value as determined in good faith by the Trust's Trustees. With the approval of the Board, any of the Portfolios may use a pricing service, bank or broker- dealer experienced in such matters to value the Portfolio's securities. A more detailed discussion of net asset value and security valuation is contained in the Statement of Additional Information. DIVIDENDS, DISTRIBUTIONS AND TAXES Dividend and Capital Gain Distribution Options. It is anticipated that The Value Equity Portfolio, The Growth Equity Portfolio and The Small Capitalization Equity Portfolio will declare and distribute dividends from net investment income on a quarterly basis. The Limited Duration Municipal Bond, Intermediate Term Municipal Bond and Fixed Income Portfolios will declare and distribute dividends from net investment income daily, with payments on a monthly basis. The International Equity Portfolio will declare dividends from net investment income semi-annually. Net realized capital gains, if any, will be distributed at least annually for each Portfolio. Unless another distribution option is elected, dividends and capital gain distributions will be credited to shareholder accounts in additional shares of the Portfolio with respect to which they are paid. Elections may be made by writing to the Trust c/o its Transfer Agent. Elections must be received in writing by the transfer agent at least five days prior to the payable date of the dividend in order for the election to be effective for that dividend and on or before the record date of a distribution in order to be effective for that distribution. In the event that a shareholder redeems all shares in an account between the record date and the payable date, the value of dividends or gain distributions declared and payable will be paid in cash regardless of the existing election. Dividends declared in October, November or December of any year payable to shareholders of record on a specified date in such a month will be deemed to have been received by the shareholders on December 31 of such year, provided such dividends are paid during January of the following year. Investors should also be careful to consider the tax implications of buying shares just prior to a distribution. The price of shares purchased at that time may reflect the amount of the forthcoming distribution. Those investors purchasing just prior to a distribution may nevertheless be taxed on the entire amount of the distribution received, although the distribution may have the effect of reducing the market value of shares below the shareholder's cost. The Trust will provide written notices to shareholders annually regarding the tax status of distributions made by each Portfolio. Federal Taxes. The following discussion is only a brief summary of some of the important Federal tax considerations generally affecting the Portfolios and their shareholders and is not intended as a substitute for careful tax planning. Dividends and distributions may also be taxable under state and local tax laws. In addition, shareholders who are nonresident alien individuals, foreign trusts or estates, foreign corporations or foreign partnerships may be subject to different tax treatment under U.S. Federal income tax laws than shareholders who are U.S. residents. Furthermore, future legislative or administrative changes or court decisions may materially affect the tax consequences of investing in one or more Portfolios of the Trust. Accordingly, shareholders are urged to consult their tax advisers with specific reference to his or her particular tax situation. Each Portfolio intends to qualify annually to be treated as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended ("Code"). In order to do so, each Portfolio must distribute at least 90% of its taxable income annually, and must derive at least 90% of its gross income from its investment activities. So long as a Portfolio qualifies for this tax treatment, that Portfolio will be not be subject to Federal income tax on amounts distributed to shareholders. Shareholders, however, will be subject to income or capital gains taxes on distributed amounts (except for dividends that are treated as tax-exempt dividends such as those expected to be paid by the Municipal Portfolios), regardless of whether such dividends and/or distributions are paid in cash or reinvested in additional shares. Distributions paid by a Portfolio out of long term capital gains are taxable to those investors subject to income tax as long-term capital gains, regardless of the length of time an investor has owned shares in the Portfolio. All other distributions, to the extent they are taxable, are taxed to shareholders as ordinary income. A redemption of shares of any Portfolio may also result in a capital gain or loss to the redeeming shareholder. A loss incurred upon redemption of shares of any Portfolio of the Trust (other than the Municipal Portfolios) held for six months or less will be treated as long-term capital loss to the extent of capital gain dividends received with respect to such shares. Tax Matters Relating to the Municipal Portfolios. As a matter of fundamental policy, The Limited Duration Municipal Bond and The Intermediate Term Municipal Bond Portfolios intend to invest a sufficient portion of its assets in municipal bonds and notes so that it will qualify to pay "exempt-interest dividends." Exempt- interest dividends distributed to shareholders are excluded from a shareholder's gross income for Federal tax purposes. Under certain circumstances, receipt of exempt-interest dividends may be relevant to shareholders in determining their tax liability. Dividends paid from gains realized by the Portfolio from the disposition of a tax-exempt bond that was acquired after April 30, 1993 for a price less than the principal amount of the bond is taxable to shareholders as ordinary income to the extent of the accrued market discount. Exempt interest dividends paid by the Municipal Portfolios, although exempt from regular income tax in the hands of a shareholder of the Portfolio, are includable in the tax base for determining the extent to which a shareholder's Social Security Benefits would be subject to Federal income tax. Shareholders are required to disclose their receipt of tax-exempt interest on their Federal income tax returns. In addition, a portion of such dividends may be derived from income on "private activity" municipal bonds and therefore may be a preference item under Federal tax law and subject to the Federal alternative minimum tax. A loss incurred upon the redemption of shares of the Municipal Portfolios held for six months or less will be disallowed to the extent of exempt-interest dividends paid with respect to such shares; any loss not so disallowed will be treated as a long-term capital loss to the extent of capital gain dividends received with respect to such shares. Tax Matters Relating to International Investments. Foreign currency gains and losses realized by a Portfolio, including those from forward currency exchange contracts and certain futures and options on foreign currencies, will increase or decrease the Portfolio's investment company taxable income available to be distributed to shareholders as ordinary income. If foreign currency losses exceed other investment company taxable income during a taxable year, the Portfolio would not be able to make any ordinary dividend distributions, and any distributions made before the losses were realized but in the same taxable year would be recharacterized as a return of capital to shareholders, thereby reducing each shareholder's basis in shares of that Portfolio. A Portfolio may be subject to foreign withholding taxes on income from certain foreign securities, if any, held. If more than 50% of the total assets of this Portfolio is invested in securities of foreign corporations, the Portfolio may elect to pass-through to its shareholders their pro rata share of foreign taxes paid by such Portfolio. If this election is made, shareholders will be (i) required to include in their gross income their pro rata share of foreign source income (including any foreign taxes paid by the Portfolio), and (ii) entitled to either deduct (as an itemized deduction in the case of individuals) their share of such foreign taxes in computing their taxable income or to claim a credit for such taxes against their U.S. income tax, subject to certain limitations under the Code. Back-up Withholding; Dividends-Received Deduction. The Trust is required to withhold 31% of taxable dividends, capital gains distributions, and redemptions paid to shareholders who have not provided the Trust with their certified taxpayer identification number in compliance with regulations adopted by the Internal Revenue Service. Dividends paid from net investment income by the Equity Portfolios will generally qualify in part for the corporate dividends-received deduction available to corporate investors. The portion of the dividends so qualified, however, depends on the aggregate qualifying dividend income received by each such Portfolio from domestic (U.S.) sources. Further information about tax matters relating to the Trust, including its foreign investments, appears in the Statement of Additional Information under the heading "Dividends, Distributions and Taxes." PERFORMANCE INFORMATION Yield and Effective Yield. From time to time, each of the Portfolios may quote its "yield" and/or its "total return" in sales literature and in presentations to prospective investors. These figures are based on historical earnings and are not intended to indicate future performance. To arrive at a Portfolio's "yield," the net investment income generated by an investment in the Portfolio during a 30 day (or one month) period, is determined and the resulting figure is annualized, (i.e. assumed to be the amount of income generated each week over a 52-week period) and expressed as a percentage of the initial investment. The "effective yield" of a Portfolio is calculated in a similar manner but, when annualized, the income earned by an investment in the Portfolio is assumed to be reinvested. The "effective yield" will be slightly higher than the "yield" because of the compounding effect of this assumed reinvestment. The yield of any investment is generally a function of prevailing interest rates, portfolio quality and maturity, type of investment and operating expenses. The yield on shares of the Portfolio will fluctuate and is not necessarily representative of future results. The Municipal Portfolios may also quote its tax-equivalent yield; this figure is calculated by determining the pre-tax yield which, after being taxed at a stated rate, would be equivalent to the yield determined as described above. Average Annual Total Return. This figure shows the average percentage change in value of a particular investment from the beginning date of the measuring period to the end of the measuring period. The calculations required to determine average total return will reflect changes in net asset value per share and assume that any income dividends and/or capital gains distributions made during the period were reinvested. Figures will be given for recent one, five and ten year periods (if applicable), and may be given for other periods as well (such as from commencement of operations, or on a year-by-year basis). In addition, each Portfolio may present its total return over different periods by means of aggregate, average, year-by-year or other types of total return figures, or compare the yield or total return of a Portfolio to those of other mutual funds with similar investment objectives and to other relevant indices. For example, the performance of any of the Portfolios may be compared to the data prepared by Lipper Analytical Services, Inc., a widely-recognized independent service that monitors the performance of mutual funds. The Portfolios may also compare their individual performance records to those of relevant indices, such as the Standard & Poor's 500 Stock Index, the Russell 1000 Growth Stock Index, and the Morgan Stanley Capital International Europe, Australia, Far East Index ("EAFE"). GENERAL The Trust was organized as a Delaware business trust on December 15, 1994, and is registered with the Securities and Exchange Commission as an open-end diversified, series, management investment company. The Trust currently offers shares of seven investment portfolios, each with a different objective and differing investment policies. The Trust may organize additional investment portfolios in the future. The Trust is authorized to issue an unlimited number of shares, each with a par value of $.001. Under the Trust's Amended and Restated Declaration of Trust, the Board has the power to classify or reclassify any unissued shares from time to time, and to increase the number of authorized shares. Each share of the respective Portfolios represents an equal proportionate interest in that Portfolio. Each share is entitled to one vote for the election of Trustees and any other matter submitted to a shareholder vote. Voting rights are not cumulative and, accordingly, the holders of more than 50% of the aggregate shares of the Trust may elect all of the Trustees. Shares of the Trust do not have preemptive or conversion rights and, when issued for payment as described in this prospectus, shares of the Trust will be fully paid and non-assessable. The Trust is authorized to issue two classes of shares in each of its portfolios. Class A shares and Class B shares have identical rights and preferences; the only difference between the two classes is that each has established a separate CUSIP number, which aids those investment managers whose clients purchase shares of the Trust in tracking information relating to their clients' accounts. As a Delaware business trust, the Trust is not required, and currently does not intend, to hold annual meetings of shareholders except as required by the Investment Company Act or other applicable law. The Investment Company Act requires initial shareholder approval of each of the investment advisory agreements, election of Trustees and, if the Trust holds an annual meeting, ratification of the Board's selection of the Trust's independent public accountants. Under certain circumstances, the law provides shareholders with the right to call for a meeting of shareholders to consider the removal of one or more Trustees. To the extent required by law, the Trust will assist in shareholder communications in such matters. THE HIRTLE CALLAGHAN TRUST TABLE OF CONTENTS Expense Information Financial Highlights Investment Objectives and Policies The Equity Portfolios The Value Equity Portfolio The Growth Equity Portfolio The Small Capitalization Equity Portfolio The International Equity Portfolio The Fixed-Income Portfolios The Limited Duration Municipal Bond Portfolio The Intermediate Term Municipal Bond Portfolio The Fixed Income Portfolio Investment Practices and Risk Considerations About Equity Securities About Foreign Securities About Fixed Income Securities About Taxable Fixed Income Securities About Tax-Exempt Securities About Temporary Investment Practices About Illiquid Securities About Hedging Strategies About Other Permitted Instruments Management of the Trust Purchases and Redemptions Portfolio Transactions and Valuation Dividends, Distributions and Taxes Performance Information General No person has been authorized to give any information or to make representations not contained in this prospectus in connection with any offering made by this prospectus and, if given or made, such information must not be relied upon as having been authorized by the Trust or its distributor. This prospectus does not constitute an offering by the Trust or by its distributor in any jurisdiction in which such offering may not lawfully be made. STATEMENT OF ADDITIONAL INFORMATION The Hirtle Callaghan Trust 575 E. Swedesford Road Wayne, PA 19087 This statement of additional information is designed to supplement information contained in the prospectus relating to The Hirtle Callaghan Trust ("Trust"). The Trust is an open-end, diversified, series, management investment company registered under the Investment Company Act of 1940 ("Investment Company Act"). This document, although not a prospectus, is incorporated by reference in its entirety in the Trust's prospectus and should be read in conjunction with the Trust's prospectus dated March , 1998. A copy of that prospectus is available by contacting the Trust at 610-254-9596.
Statement of Additional Information Heading PAGE Corresponding Prospectus Heading - ------------------------------------------- ____ -------------------------------- Management of the Trust Management of the Trust; General; Expense Information Further Information About the Trust's Investment Investment Objectives and Policies Policies Investment Practices and Risk Considerations Hedging through the Use of Options Investment Practices and Risk Considerations: About Hedging Strategies Hedging through the Use of Investment Practices and Risk Futures Contracts and Related Instruments Considerations: About Hedging Strategies Hedging through the Use of Investment Practices and Risk Currency-Related Instruments Considerations: About Hedging Strategies Investment Restrictions Investment Objectives and Policies Investment Practices and Risk Considerations Additional Purchases and Redemption Information Purchases and Redemptions Portfolio Transactions and Valuation Portfolio Transactions and Valuation Dividends, Distributions and Taxes Dividends, Distributions and Taxes Performance Information Performance Information Financial Statements and Independent Accountants Ratings Appendix
This Statement of Additional Information does not contain all of the information set forth in the registration statement filed by the Trust with the Securities and Exchange Commission ("SEC") under the Securities Act of 1933. Copies of the registration statement may be obtained at a reasonable charge from the SEC or may be examined, without charge, at its offices in Washington, D.C. The Trust's Annual Report to Shareholders dated June 30, 1997 accompanies this Statement of Additional Information and is incorporated by reference herein. The date of this Statement of Additional Information is________ 1998. MANAGEMENT OF THE TRUST Trustees and Officers. The Trust's Board of Trustees ("Board") is responsible for the overall supervision and management of the business and affairs of the Trust, including (i) the selection and general supervision of those investment advisory organizations ("Investment Managers") retained by the Trust to provide portfolio management services to each of its separate investment portfolios (each a "Portfolio"); and (ii) for Portfolios for which more than one Investment Manager has been retained, allocation of that Portfolio's assets among such Investment Managers. In particular, the Board may, from time to time, allocate portions of a Portfolio's assets between or among several Investment Managers, each of whom may have a different investment style and/or investment selection discipline. The Board also may reallocate a Portfolio's assets among such Investment Managers, or terminate particular Investment Managers, if the Board deems it appropriate to do so in order to achieve the overall objectives of the Portfolio involved. In addition, the Board may retain additional Investment Managers on behalf of a Portfolio subject to the approval of the shareholders of that Portfolio in accordance with the Investment Company Act. Day-to-day operations of the Trust are the responsibility of the Trust's officers, who are elected by, and serve at the pleasure of, the Board. The name and principal occupation for the past five years of each of the Trust's current officers and trustees are set forth below; unless otherwise indicated, the business address of each is 575 East Swedesford Road Wayne, PA 19087. [TABLE SUBJECT TO COMPLETION BY AMENDMENT]
Name, Business Address and Age Position with the Trust Principal Occupation for the Last Five Years - ------------------------------------------------------------------------------------------------------------------------------ *Donald E. Callaghan Chairman of the Board of For more than the past five years, Trustees and President Principal, Hirtle Callaghan & Co., Inc. Ross H. Goodman Trustee For more than the past five years, Mr. Goodman has been Vice President of American Industrial Management & Sales, Inc. *Jonathan J. Hirtle Trustee For more than the past five years, Principal, Hirtle Callaghan & Co., Inc. Jarrett Burt Kling Trustee For more than the past five years, Mr. Kling has been associated with CRA Real Estate Securities, L.P. and its affiliate, Radnor Advisers, Inc. a Mr. Kling is general partner of TDH II and a special limited partner of TDH III (venture capital limited partnerships) since 1983. *David M. Spungen Trustee For more than the past five years, 1926 Arch Street Mr. Spungen has been associated Philadelphia, PA 19103-1484 with The CMS Companies (financial services).Mr. Spungen currently serves as Director of CMS Capital Management, (a division of CMS Investment Resources, Inc.) Richard W. Wortham, III Trustee For more than the past five years, President, Video Rental of Pennsylvania, Inc. and its parent, Houston VMC, Inc. Mr. Wortham is also a trustee of the Wortham Foundation and the Museum of Fine Arts, Houston.
Robert Zion Vice President and Treasurer Mr. Zion is a Principal of Hirtle Callaghan, and has been employed by that firm for more than the last five years. Laura Anne Corsell, Esq. Secretary Ms. Corsell is an attorney in 7307 Elbow Lane private practice. From 1989 Philadelphia, PA 19119 through 1994, Ms. Corsell was associated with the law firm of Ballard Spahr Andrews and Ingersoll, as counsel. *Indicates a Trustee who is an "interested person" of the Trust within the meaning of the Investment Company Act.
Each of those members of the Board who are not "interested persons" of the Trust within the meaning of the Investment Company Act ("Independent Trustees") receive from the Trust a fee of $1,000.00 per meeting of the Board attended and are reimbursed for expenses incurred in connection with each such meeting. Those members of the Board who are "interested persons" of the Trust and the Trust's officers receive no compensation from the Trust for performing the duties of their respective offices. The table below, which is required to be included in this Statement of Additional by the SEC, shows the aggregate compensation received from the Trust by each of the Independent Trustees during the fiscal year ending June 30, 1997 (excluding reimbursed expenses). Pension/ Estimated Aggregate Retirement Benefits Upon Name and Compensation Benefits Retirement From Total Compensation Position From Trust From Trust From Trust From Trust - ---------------------- ------------ ---------- --------------- ------------------ Ross H. Goodman $3000.00 $0.0 $0.0 $3000.00 Jarrett Burt Kling 3000.00 0.0 0.0 3000.00 Richard W. Wortham, III 3000.00 0.0 0.0 3000.00
As permitted under the Trust's Amended and Restated Declaration and Agreement of Trust and by-laws, the Board has established an executive committee and has appointed Messrs. Callaghan, Hirtle and Spungen to serve on that committee. Under the Trust's by-laws, the executive committee is authorized to act for the full Board in all matters for which the affirmative vote of a majority of the Board of the Trust's Independent Trustees is not required under the Investment Company Act or other applicable law. All of the officers and trustees of the Trust own in the aggregate, less than one percent of the outstanding shares of the shares of the respective Portfolios of the Trust. During the fiscal year ended June 30, 1997, Ms. Corsell received fees for legal services rendered to the Trust (including related out-of-pocket expenses) of $49,324.00. Investment Advisory Arrangements. As described in the prospectus, Hirtle, Callaghan & Co., Inc. ("Hirtle Callaghan") has entered into a written consulting agreement with the Trust ("HCCI Consulting Agreement"). The HCCI Consulting Agreement was approved by the Trust's initial shareholder on July 21, 1995, following the approval of the Trust's Board (including a majority of the Trust's Independent Trustees) at a meeting of the Board held on July 20, 1995; that agreement was last approved by the Trust's Board on May 6, 1997. The HCCI Consulting Agreement will remain in effect until its second anniversary, unless sooner terminated and will continue from year to year so long as such continuation is approved, at a meeting called for the purpose of voting on such continuance, at least annually (i) by vote of a majority of the Trust's Board or the vote of the holders of a majority of the outstanding securities of the Trust; and (ii) by a majority of the Independent Trustees, by vote cast in person. The HCCI Consulting Agreement may be terminated at any time, without penalty, either by the Trust or by Hirtle Callaghan, upon sixty days' written notice and will automatically terminate in the event of its assignment as defined in the Investment Company Act. The HCCI Consulting Agreement permits the Trust to use the name "Hirtle Callaghan." In the event, however, the HCCI Consulting Agreement is terminated, Hirtle Callaghan has the right to require the Trust to discontinue any references to the name "Hirtle Callaghan" and to change the name of the Trust as soon as is reasonably practica ble. The HCCI Consulting Agreement further provides that HCCI will not be liable to the Trust for any error, mistake of judgment or of law, or loss suffered by the Trust in connection with the matters to which the HCCI Consulting Agreement relates (including any action of any Hirtle Callaghan officer or employee in connection with the service of any such officer or employee as an officer of the Trust), whether or not any such action was taken in reliance upon information provided to the Trust by Hirtle Callaghan, except losses that may be sustained as a result of willful misfeasance, reckless disregard of its duties, bad faith or gross negligence on the part of Hirtle Callaghan. Portfolio Management Contracts. The Trust has also entered into investment advisory contracts on behalf of each of the Portfolios with one or more of the Investment Managers. Other than the agreement between the Trust and Hotchkis and Wiley ("Hotchkis") relating to The Value Equity Portfolio and the agreement between the Trust and Goldman Sachs Asset Management ("GSAM"), each such contract (collectively, the "Portfolio Management Contracts") was approved by the Trust's initial shareholder on July 21, 1995, following that approval of the Trust's Board (including the Independent Trustees) at a meeting of the Board held on July 20, 1995; each such agreement was last approved by the Trust's Board on May 6, 1997. Each such contract will remain in effect from year to year so long as such continuation is approved, at a meeting called to vote on such continuance, at least annually (i) by vote of a majority of the Trust's Board or the vote of the holders of a majority of the outstanding securities of the Trust; and (ii) by a majority of the Independent Trustees, by vote cast in person. Each of the Portfolio Management Contracts may be terminated at any time, without penalty, either by the Trust or by the respective Investment Managers named in the contract, in each case upon sixty days' written notice, and each will automatically terminate in the event of its assignment, as that term is defined in the Investment Company Act. Each of the Portfolio Management Contracts provides that the named Investment Manager will, subject to the overall supervision of the Board, provide a continuous investment program for the assets of the Portfolio to which such contract relates, or that portion of such assets as may be, from time to time allocated to such Investment Manager. The Portfolio Managers are responsible, among other things, for the provision of investment research and management of all investments and other instruments and the selection of brokers and dealers through which securities transactions are executed. Each of the Portfolio Management Contracts provides that the named Investment Manager will not be liable to the Trust for any error of judgment or mistake of law on the part of the Investment Manager, or for any loss sustained by the Trust in connection with the purchase or sale of any instrument on behalf of the named Portfolio, except losses that may be sustained as a result of willful misfeasance, reckless disregard of its duties, misfeasance, bad faith or gross negligence on the part of the named Investment Manager. Agreement with Hotchkis relating to The Value Equity Portfolio. Hotchkis serves as an Investment Manager for The Value Equity Portfolio pursuant to a contract ("Hotchkis Agreement") that was approved by the Board (including the Independent Trustees) on July 19, 1996, and by the shareholders of The Value Equity Portfolio on October 23, 1996. The Hotchkis Agreement first became effective on November 12, 1996. The Hotchkis Agreement will remain in effect until its second anniversary, and will continue in effect thereafter from year to year so long as such continuation is approved, at a meeting called for the purpose of voting on such continuance, at least annually (i) by vote of a majority of the Trust's Board or the vote of the holders of a majority of the outstanding securities of the Trust; and (ii) by a majority of the Independent Trustees, by vote cast in person. The terms and conditions set forth in the Hotchkis Agreement are identical to those contained in the Portfolio Management Contracts except for the description of the portfolio manager, the effective and termination dates, and the modification of certain notice provisions relating to the obligation of Hotchkis to indemnify the Trust under certain circumstances. Specifically, Section 5 of the Hotchkis Agreement provides that the indemnification obligation of the portfolio manager with respect to information provided to the Trust by Hotchkis L.P. in writing for use in the Trust's registration statement and certain other documents shall not apply unless the portfolio manager has had an opportunity to review such documents for a specified period of time prior to the date on which they are filed with the SEC and unless the portfolio manager is notified in writing of any claim for indemnification within specified periods. From July 29, 1996, until November 12, 1996, Hotchkis' predecessor limited partnership served as a portfolio manager of The Value Equity Portfolio pursuant to an agreement ("15a-4 Agreement") approved by the Board at a meeting held on July 19, 1996. The 15a-4 Agreement became effective on July 29, 1996, the date on which a similar contract ("Prior Agreement") with a former portfolio manager for the Portfolio was terminated, and was approved by the shareholders of The Value Equity Portfolio on October 23, 1996, in the manner contemplated under rule 15a-4 of the Investment Company Act. The 15a-4 Agreement is identical to the Hotchkis Agreement except for the name of the advisory organization and the terms relating to effective dates. The Hotchkis Agreement is identical to the Prior Agreement except for the name of the advisory organization, effective dates and the modification of notice provisions relating to the Trust's right of indemnification, as noted above. Prior to November 12, 1996, Hotchkis was an independent California limited partnership. On November 11, 1996, all of the interests in that partnership were acquired by Merrill Lynch & Co., ("ML") and the limited partnership became a division of Merrill Lynch Asset Management LP., a company controlled ML. In accordance with the Investment Company Act, the consummation of that acquisition terminated the 15a-4 Agreement; at the same time, and in accordance with the terms of the 15a-4 Agreement and the Hotchkis Agreement, the Hotchkis Agreement became effective. ML is a public company whose shares are traded on the New York Stock Exchange. Agreement with Institutional Capital Corporation relating to The Value Equity Portfolio. An amendment to the Portfolio Management Agreement between the Trust and Institutional Capital Corporation ("ICAP") was approved by shareholders of The Value Equity Portfolio on January 12, 1998, and by the Trust's Board on November 21, 1997. Pursuant to the amendment, the fee payable to ICAP by The Value Equity Portfolio was increased from .30% of the average net assets of that portion of the Portfolio managed by ICAP to .35% of such assets. The amendment first became effective on February 2, 1998. Agreement with Goldman Sachs Asset Management relating to The Growth Equity Portfolio. GSAM serves as an Investment Manager for The Growth Equity Portfolio pursuant to a contract (" GSAM Agreement") that was approved by the Board (including the Independent Trustees) on September 12, 1997, and by the shareholders of The Value Equity Portfolio on January 12, 1998. The GSAM Agreement first became effective on October 1, 1997. The GSAM Agreement will remain in effect until its second anniversary, and will continue in effect thereafter from year to year so long as such continuation is approved, at a meeting called for the purpose of voting on such continuance, at least annually (i) by vote of a majority of the Trust's Board or the vote of the holders of a majority of the outstanding securities of the Trust; and (ii) by a majority of the Independent Trustees, by vote cast in person. The terms and conditions set forth in the GSAM Agreement are identical to those contained in the Portfolio Management Contracts except for the description of the portfolio manager, the effective and termination dates, and the modification of certain notice provisions relating to the obligation of GSAM to indemnify the Trust under certain circumstances. Specifically, Section 5 of the GSAM Agreement provides that the indemnification obligation of the portfolio manager with respect to information provided to the Trust by GSAM shall not apply unless the portfolio manager has had an opportunity to review such documents for a specified period of time prior to the date on which they are filed with the SEC and unless the portfolio manager is notified in writing of any claim for indemnification within specified periods. That section also provides that the Trust will indemnify the Portfolio Manager with respect to information included in filings made with the SEC by the Trust, other than information relating to, and provided in writing by, the Portfolio Manager. The Board, at its meeting held on November 21, 1997, and the shareholders of The Growth Equity Portfolio, at a meeting held on January 12, 1997, also conditionally approved an amendment ("Performance Fee Amendment"). Under the Performance Fee Amendment, GSAM would be entitled to receive a base fee ("Base Fee") calculated at the annual rate of .30% (or 30 basis points) of the average net assets of that portion of the Growth Portfolio's assets assigned to GSAM ("GSAM Account"). After an initial one year period, the Base Fee would be increased or decreased at an annual rate of 25% of the net value added by GSAM over the total return of the Russell 1000 Growth Index plus 30 basis points during the 12 months immediately preceding the calculation date. This 30 basis point "performance hurdle" is designed to assure that GSAM will earn a performance adjustment only with respect to the value that its portfolio management adds to the GSAM Account. GSAM's total compensation under the Performance Fee Amendment could not exceed 50 basis points with respect to any 12 month period; the minimum annual fee that would be payable to GSAM under the amended agreement is 10 basis points. In addition, the Performance Fee Amendment will not take effect unless and until certain relief is obtained from the SEC from certain rules adopted by the SEC. The relief sought would permit the proposed performance compensation to be based on the gross performance of that portion of the Portfolio's assets assigned by the Board to GSAM. There can be no assurance that the SEC will grant such relief. If the Performance Fee Amendment is implemented, it could increase or decrease the fee currently payable to GSAM and GSAM could earn a positive performance adjustment in declining markets if the decline in the total return of GSAM Account is less than the decline in the total return of the Russell 1000 Growth Index. Investment Advisory Fees. For the fiscal year ended June 30, 1997, Hirtle Callaghan received advisory fees from each of the Portfolios, calculated at an annual rate of .05%, as follows: The Value Equity Portfolio, $44,605; The Growth Equity Portfolio, $ 65,417; The Small Capitalization Portfolio, $41,020; The International Equity, Portfolio, $52,703; and The Limited Duration Municipal Bond Portfolio, $16,428. For the fiscal year ended June 30, 1996, Hirtle Callaghan received advisory fees from each of the Portfolios, calculated at an annual rate of .05%, as follows: The Value Equity Portfolio, $24,343; The Growth Equity Portfolio, $34,071; The Small Capitalization Portfolio, $16,940; The International Equity, Portfolio, $24,436; and The Limited Duration Municipal Bond Portfolio, $7,628. The foregoing figures reflect voluntary expense reimbursements by Hirtle Callaghan to the Small Capitalization and Limited Duration Portfolios of $24,082 and $36,701, respectively for the year ended June 30 1996. The following table sets forth the investment advisory fee received from the specified Portfolio by each of its respective Investment Managers during the fiscal years ended June 30, 1997 and June 30, 1996, respectively:
Actual Fee Paid for Investment Manager Portfolio Advisory Fee Rate 1 fiscal year ended 1997 1996 - ----------------- --------- ----------------- --------------------- Institutional Value Equity .30% of average $150,281 $ 94,103 Capital Corporation net assets Hotchkis & Wiley Value Equity .30% of average $118,592 -0- net assets Jennison Associates Growth Equity .30% of average $210,125 102,397 Capital Corp. net assets Westfield Capital Growth Equity .30% of average $179,941 102,030 Management Co. net assets Clover Capital Small Cap .45% of average $185,827 86,448 Management, Inc. net assets Frontier Capital Small Cap .45% of average $187,263 66,017 Management Co. net assets Brinson Partners International .40% of average $424,428 95,488 net assets Morgan Grenfell Limited .20% of average $64,927 30,513 Capital Management Duration net assets Incorporate - ------------------- (1) Rate shown applies to that portion of the indicated portfolio's assets allocated to the specified Investment Manager. (2) The fee payable to ICAP by The Value Equity Portfolio was increased .35% of that portion of the average daily net assets of The Value Equity Portfolio managed by ICAP. Such increase first became effective on February 2, 1998. (3) Effective July 29, 1996, Hotchkis and Wiley replaced Cowen Asset Management. For the fiscal year ended June 30, 1996, The Growth Equity Portfolio paid advisory fees to Cowen Asset Management in the amount of $51,954 of that portfolio's average net assets. (4) Effective October 1, 1997, Goldman Sachs Asset Management replaced Westfield Capital Management, Inc. GSAM received no compensation from the Trust for the relevant periods. (5) No information is provided for the Fixed Income Portfolio or the Intermediate Term Municipal Bond Portfolio, neither of which had commenced operations during the relevant periods.
Other Matters. BISYS Fund Services LP ("BISYS") serves as the Trust's principal underwriter pursuant to an agreement approved by the Board on July 19, 1996. BISYS does not receive any underwriting fees or other compensation for serving as the distributor of the Trust's shares. Pursuant to separate agreements, BISYS has also, since January 1, 1997, provided administrative and other services for the Trust; these services and relevant agreements are described in the Trust's prospectus. For the fiscal year ended June 30, 1997, BISYS received for such services, fees from each of the Portfolios, as follows: The Value Equity Portfolio, $89,565; The Growth Equity Portfolio, $ 130,138; The Small Capitalization Portfolio, $41,020; The International Equity, Portfolio, $52,703; and The Limited Duration Municipal Bond Portfolio, $31,952 (all of which was voluntarily waived by BISYS). FURTHER INFORMATION ABOUT THE TRUST'S INVESTMENT POLICIES As stated in the prospectus, the Trust currently consists of seven portfolios, each with its own invesetment objectives and policies. These portfolios are The Value Equity, Growth Equity, Small Capitalization Equity and International Equity Portfolios (collectively, the "Equity Portfolios") and The Fixed Income, Limited Duration Municipal Bond and Intermediate Municipal Bond Portfolios (collectively, the "Fixed-Income Portfolios"). The following discussion supplements the discussion of the investment policies of each of the Portfolios as set forth in the prospectus and the types of securities and other instruments in which the respective Portfolios may invest. Repurchase Agreements. As noted in the prospectus, among the instruments that each of the Portfolios may use for temporary investment purposes are repurchase agreements. Under the terms of a typical repurchase Agreement, a Portfolio would acquire an underlying debt security for a relatively short period (usually not more than one week), subject to an obligation of the seller to repurchase that security and the obligation of the Portfolio to resell that security at an agreed-upon price and time. Repurchase agreements could involve certain risks in the event of default or insolvency of the other party, including possible delays or restrictions upon the Portfolio's ability to dispose of the underlying securities. The Investment Manager for each Portfolio, in accordance with guidelines adopted by the Board, monitors the creditworthiness of those banks and non-bank dealers with which the respective Portfolios may enter into repurchase agreements. The Trust also monitors the market value of the securities underlying any repurchase agreement to ensure that the repurchase obligation of the seller is adequately collateralized. Repurchase agreements may be entered into with primary dealers in U.S. Government Securities who meet credit guidelines established by the Board (each a "repo counterparty"). Under each repurchase Agreement, the repo counterparty will be required to maintain, in an account with the Trust's custodian bank, securities that equal or exceed the repurchase price of the securities subject to the repurchase Agreement. A Portfolio will generally enter into repurchase agreements with short durations, from overnight to one week, although securities subject to repurchase agreements generally have longer maturities. A Portfolio may not enter into a repurchase agreement with more than seven days to maturity if, as a result, more than 15% of the value of its net assets would be invested in illiquid securities including such repurchase agreements. For purposes of the Investment Company Act, a repurchase agreement may be deemed a loan to the repo counterparty. It is not clear whether, in the context of a bankruptcy proceeding involving a repo counterparty, a court would consider a security acquired by a Portfolio subject to a repurchase Agreement as being owned by that Portfolio or as being collateral for such a "loan." If a court were to characterize the transaction as a loan, and a Portfolio has not perfected a security interest in the security acquired, that Portfolio could be required to turn the security acquired over to the bankruptcy trustee and be treated as an unsecured creditor of the repo counterparty. As an unsecured creditor, the Portfolio would be at the risk of losing some or all of the principal and income involved in the transaction. In the event of any such bankruptcy or insolvency proceeding involving a repo counterparty with whom a Portfolio has outstanding repurchase agreements a Portfolio may encounter delays and incur costs before being able to sell securities acquired subject to such repurchase agreements. Any such delays may involve loss of interest or a decline in price of the security so acquired. Apart from the risk of bankruptcy or insolvency proceedings, there is also the risk that the repo counterparty may fail to repurchase the security. However, a Portfolio will always receive as collateral for any repurchase agreement to which it is a party securities acceptable to it, the market value of which is equal to at least 100% of the repurchase price, and the Portfolio will make payment against such securities only upon physical delivery or evidence of book entry transfer of such collateral to the account of its custodian bank. If the market value of the security subject to the repurchase agreement falls below the repurchase price the Trust will direct the repo counterparty to deliver to the Trust's custodian additional securities so that the market value of all securities subject to the repurchase agreement will equal or exceed the repurchase price. Variable and Floating Rate Instruments. As noted in the prospectus, among the instruments that each of the Portfolios may use for temporary investment purposes are short-term variable rate instruments (including floating rate instruments) from banks and other issuers. In addition, each of the Income Portfolios may purchase longer-term variable and floating rate instruments in furtherance of the investment objectives of the respective Income Portfolios. A "variable rate instrument" is one whose terms provide for the adjustment of its interest rate on set dates and which, upon such adjustment, can reasonably be expected to have a market value that approximates its par value. A "floating rate instrument" is one whose terms provide for the adjustment of its interest rate whenever a specified interest rate changes and which, at any time, can reasonably be expected to have a market value that approximates its par value. These instruments may include variable amount master demand notes that permit the indebtedness to vary in addition to providing for periodic adjustments in the interest rates. Variable rate instruments are generally not rated by nationally recognized ratings organizations (each, an "NRSRO"). The appropriate Investment Manager will consider the earning power, cash flows and other liquidity ratios of the issuers and guarantors of such instruments and, if the instrument is subject to a demand feature, will continuously monitor their financial ability to meet payment on demand. Where necessary to ensure that a variable or floating rate instrument is equivalent to the quality standards applicable to a Portfolio's fixed income investments, the issuer's obligation to pay the principal of the instrument will be backed by an unconditional bank letter or line of credit, guarantee or commitment to lend. Any bank providing such a bank letter, line of credit, guarantee or loan commitment will meet the Portfolio's investment quality standards relating to investments in bank obligations. A Portfolio will invest in variable and floating rate instruments only when the appropriate Investment Manager deems the investment to involve minimal credit risk. The Investment Manager will also continuously monitor the creditworthiness of issuers of such instruments to determine whether a Portfolio should continue to hold the investments. The absence of an active secondary market for certain variable and floating rate notes could make it difficult to dispose of the instruments, and a Portfolio could suffer a loss if the issuer defaults or during periods in which a Portfolio is not entitled to exercise its demand rights. Variable and floating rate instruments held by a Portfolio will be subject to the Portfolio's limitation on investments in illiquid securities when a reliable trading market for the instruments does not exist and the Portfolio may not dema nd payment of the principal amount of such instruments within seven days. If an issuer of a variable rate demand note defaulted on its payment obligation, a Portfolio might be unable to dispose of the note and a loss would be incurred to the extent of the default. Custodial Receipts. The Fixed Income Portfolio may acquire U.S. Government Securities and their unmatured interest coupons that have been separated ("stripped") by their holder, typically a custodian bank or investment brokerage firm. Having separated the interest coupons from the underlying principal of the U.S. Government Securities, the holder will resell the stripped securities in custodial receipt programs with a number of different names, including "Treasury Income Growth Receipts" ("TIGRs") and "Certificate of Accrual on Treasury Securities" ("CATS"). The stripped coupons are sold separately from the underlying principal, which is usually sold at a deep discount because the buyer receives only the right to receive a future fixed payment on the security and does not receive any rights to periodic interest (cash) payments. The underlying U.S. Treasury bonds and notes themselves are generally held in book-entry form at a Federal Reserve Bank. Counsel to the underwriters of these certificates or other evidences of ownership of U.S. Treasury securities have stated that, in their opinion, purchasers of the stripped securities most likely will be deemed the beneficial holders of the underlying U.S. Government Securities for federal tax and securities purposes. In the case of CATS and TIGRS, the Internal Revenue Service ( the "IRS") has reached this conclusion for the purpose of applying the tax diversification requirements applicable to regulated investment companies such as the Portfolios. CATS and TIGRS are not considered U.S. Government Securities by the staff of the Commission. Further, the IRS conclusion noted above is contained only in a general counsel memorandum, which is an internal document of no precedential value or binding effect, and a private letter ruling, which also may not be relied upon by the Portfolios. The Trust is not aware of any binding legislative, judicial or administrative authority on this issue. When-Issued Securities. As noted in the prospectus, Fixed Income Securities may be purchased on a "when-issued" basis. The price of securities purchased on a when-issued basis, which may be expressed in yield terms, is fixed at the time the commitment to purchase is made, but delivery and payment for the when- issued securities takes place at a later date. Normally, the settlement date occurs within one month of the purchase. During the period between purchase and settlement, no payment is made by the purchaser to the issuer and no interest accrues to the purchaser. Thus, to the extent that assets are held in cash pending the settlement of a purchase of securities, the purchaser would earn no income. At the time a commitment to purchase a security on a when-issued basis is made, the transaction is recorded and the value of the security will be reflected in determining net asset value. The market value of the when-issued securities may be more or less than the purchase price. The Trust does not believe that net asset value or income will be adversely affected by the purchase of securities on a when-issued basis. Municipal Securities. As stated in the prospectus, The Limited Duration Municipal Bond Portfolio and The Intermediate Term Municipal Bond Portfolio (collective, the "Municipal Portfolios"), and to a lesser extent, The Fixed Income Portfolio, may invest in municipal securities. Muncipal securities consist of bonds, notes and other instrument issued by or on behalf of states, terriotires and possessions of the United States (including the district of Columbia) and their policitcal subdivisions, agencies or instrumentalities, the interests on which is exempt from regular federal tax. Municipal securities may also be issued on a taxable basis. The two principal classifications of the obligations of the issuers with respect to "general obligations" and/or "revenue obligations. may be backed by a letter of credit, guarantee or insurance. General obligations and revenue obligations may be issued in a variety of forms, including commercial paper, fixed, variable and floating rate securities, tender option bonds, auction rate bonds and capital appreciation bonds. In addition to general obligations and revenue obligations, there is a variety of hybrid and special types of municipal securities. There are also numerous differences in the credit backing of municipal securities both within and between these two principal classifications. For the purpose of applying a Portfolio's investment restrictions, the identification of the issuer of a municipal security which is not a general obligation is made by the appropriate Investment Manager based on the characteristics of the municipal security, the most important of which is the source of funds for the payment of principal and interest on such securities. An entire issue of municipal securities may be purchased by one or a small number of institutional investors such as a Portfolio. Thus, the issue may not be said to be publicly offered. Unlike some securities that are not publicly offered, a secondary market exists for many municipal securities that were not publicly offered initially and such securities can be readily marketable. The obligations of an issuer to pay the principal of and interest on a municipal security are subject to the provisions of bankruptcy, insolvency and other laws affecting the rights and remedies of creditors, such as the Federal Bankruptcy Act, and laws, if any, that may be enacted by Congress or state legislatures extending the time for payment of principal or interest or imposing other constraints upon the enforcement of such obligations. There is also the possibility that, as a result of litigation or other conditions, the power or ability of the issuer to pay when due principal of or interest on a municipal security may be materially affected. Municipal Leases, Certificates of Participation and Other Participation Interests. Municipal leases frequently involve special risks not normally associated with general obligation or revenue bonds, some of which are summarized in the prospectus. In addition, leases and installment purchase or conditional sale contracts (which normally provide for title to the leased asset to pass eventually to the governmental issuer) have evolved as a means for governmental issuers to acquire property and equipment without meeting the constitutional and statutory requirements for the issuance of debt. The debt issuance limitations are deemed to be inapplicable because of the inclusion in many leases or contracts of "non-appropriation" clauses that relieve the governmental issuer of any obligation to make future payments under the lease or contract unless money is appropriated for such purpose by the appropriate legislative body on a yearly or other periodic basis. Thus, a Portfolio's investment in municipal leases will be subject to the special risk that the governmental issuer may not appropriate funds for lease payments. In addition, such leases or contracts may be subject to the temporary abatement of payments in the event the issuer is prevented from maintaining occupancy of the leased premises or utilizing the leased equipment. Although the obligations may be secured by the leased equipment or facilities, the disposition of the property in the event of nonappropriation or foreclosure might prove difficult, time consuming and costly, and result in an unsatisfactory or delayed recoupment of a Portfolio's original investment. Certificates of participation represent undivided interests in municipal leases, installment purchase contracts or other instruments. The certificates are typically issued by a trust or other entity which has received an assignment of the payments to be made by the state or political subdivision under such leases or installment purchase contracts. Certain municipal lease obligations and certificates of participation may be deemed illiquid for the purpose of the Portfolios' respective limitations on investments in illiquid securities. Other municipal lease obligations and certificates of participation acquired by a Portfolio may be determined by the appropriate Investment Manager, pursuant to guidelines adopted by the Trustees of the Trust, to be liquid securities for the purpose of such Portfolio's limitation on investments in illiquid securities. In determining the liquidity of municipal lease obligations and certificates of participation, the Appropriate Investment Manager will consider a variety of factors including: (1) the willingness of dealers to bid for the security; (2) the number of dealers willing to purchase or sell the obligation and the number of other potential buyers; (3) the frequency of trades or quotes for the obligation; and (4) the nature of the marketplace trades. In addition, the Appropriate Investment Manager will consider factors unique to particular lease obligations and certificates of participation affecting the marketability thereof. These include the general creditworthiness of the issuer, the importance to the issuer of the property covered by the lease and the likelihood that the marketability of the obligation will be maintained throughout the time the obligation is held by a Portfolio. No Portfolio may invest more than 5% of its net assets in municipal leases. Each of the Income Portfolios may purchase participations in municipal securities held by a commerc ial bank or other financial institution. Such participations provide a Portfolio with the right to a pro rata undivided interest in the underlying municipal securities. In addition, such participations generally provide a Portfolio with the right to demand payment, on not more than seven days notice, of all or any part of the Portfolio's participation interest in the underlying municipal security, plus accrued interest. Municipal Notes. Municipal securities in the form of notes generally are used to provide for short-term capital needs, in anticipation of an issuer's receipt of other revenues or financing, and typically have maturities of up to three years. Such instruments may include Tax Anticipation Notes, Revenue Anticipation Notes, Bond Anticipation Notes, Tax and Revenue Anticipation Notes and Construction Loan Notes. Tax Anticipation Notes are issued to finance the working capital needs of governments. Generally, they are issued in anticipation of various tax revenues, such as income, sales, property, use and business taxes, and are payable from these specific future taxes. Revenue Anticipation Notes are issued in expectation of receipt of other kinds of revenue, such as federal revenues available under federal revenue sharing programs. Bond Anticipation Notes are issued to provide interim financing until long-term bond financing can be arranged. In most cases, the long-term bonds then provide the funds needed for repayment of the notes. Tax and Revenue Anticipation Notes combine the funding sources of both Tax Anticipation Notes and Revenue Anticipation Notes. Construction Loan Notes are sold to provide construction financing. These notes are secured by mortgage notes insured by the Federal Housing Authority; however, the proceeds from the insurance may be less than the economic equivalent of the payment of principal and interest on the mortgage note if there has been a default. The obligations of an issuer of municipal notes are generally secured by the anticipated revenues from taxes, grants or bond financing. An investment in such instruments, however, presents a risk that the anticipated revenues will not be received or that such revenues will be insufficient to satisfy the issuer's payment obligations under the notes or that refinancing will be otherwise unavailable. Tax-Exempt Commercial Paper. Issues of tax-exempt commercial paper typically represent short-term, unsecured, negotiable promissory notes. These obligations are issued by state and local governments and their agencies to finance working capital needs of municipalities or to provide interim construction financing and are paid from general revenues of municipalities or are refinanced with long-term debt. In most cases, tax-exempt commercial paper is backed by letters of credit, lending agreements, note repurchase agreements or other credit facility agreements offered by banks or other institutions. Pre-Refunded Municipal Securities. The principal of and interest on municipal securities that have been pre-refunded are no longer paid from the original revenue source for the securities. Instead, after pre-refunding the source of such payments is typically an escrow fund consisting of obligations issued or guaranteed by the U.S. Government. The assets in the escrow fund are derived from the proceeds of refunding bonds issued by the same issuer as the pre-refunded municipal securities. Issuers of municipal securities use this advance refunding technique to obtain more favorable terms with respect to securities that are not yet subject to call or redemption by the issuer. For example, advance refunding enables an issuer to refinance debt at lower market interest rates, restructure debt to improve cash flow or eliminate restrictive covenants in the indenture or other governing instrument for the pre-refunded municipal securities. However, except for a change in the revenue source from which principal and interest payments are made, the pre-refunded municipal securities remain outstanding on their original terms until they mature or are redeemed by the issuer. Pre-refunded municipal securities are usually purchased at a price which represents a premium over their face value. Tender Option Bonds. A tender option bond is a municipal security (generally held pursuant to a custodial arrangement) having a relatively long maturity and bearing interest at a fixed rate substantially higher than prevailing short-term tax-exempt rates. The bond is typically issued in conjunction with the agreement of a third party, such as a bank, broker-dealer or other financial institution, pursuant to which such institution grants the security holders the option, at periodic intervals, to tender their securities to the institution and receive the face value thereof. As consideration for providing the option, the financial institution receives periodic fees equal to the difference between the bond's fixed coupon rate and the rate, as determined by a remarketing or similar agent at or near the commencement of such period, that would cause the securities, coupled with the tender option, to trade at par on the date of such determination. Thus, after payment of this fee, the security holder effectively holds a demand obligation that bears interest at the prevailing short-term tax-exempt rate. However, an institution will not be obligated to accept tendered bonds in the event of certain defaults or a significant downgrade in the credit rating assigned to the issuer of the bond. The liquidity of a tender option bond is a function of the credit quality of both the bond issuer and the financial institution providing liquidity. Tender option bonds are deemed to be liquid unless, in the opinion of the Appropriate Investment Manager, the credit quality of the bond issuer and the financial institution is deemed, in light of the Portfolio's credit quality requirements, to be inadequate. Each Municipal Portfolio intends to invest only in tender option bonds the interest on which will, in the opinion of bond counsel, counsel for the issuer of interests therein or counsel selected by the appropriate Investment Manager, be exempt from regular federal income tax. However, because there can be no assurance that the IRS will agree with such counsel's opinion in any particular case, there is a risk that a Municipal Portfolio will not be considered the owner of such tender option bonds and thus will not be entitled to treat such interest as exempt from such tax. Additionally, the federal income tax treatment of certain other aspects of these investments, including the proper tax treatment of tender option bonds and the associated fees, in relation to various regulated investment company tax provisions is unclear. Each Municipal Portfolio intends to manage its portfolio in a manner designed to eliminate or minimize any adverse impact from the tax rules applicable to these investments. Auction Rate Securities. Auction rate securities consist of auction rate municipal securities and auction rate preferred securities issued by closed-end investment companies that invest primarily in municipal securities. Provided that the auction mechanism is successful, auction rate securities usually permit the holder to sell the securities in an auction at par value at specified intervals. The dividend is reset by "Dutch" auction in which bids are made by broker-dealers and other institutions for a certain amount of securities at a specified minimum yield. The dividend rate set by the auction is the lowest interest or dividend rate that covers all securities offered for sale. While this process is designed to permit auction rate securities to be traded at par value, there is the risk that an auction will fail due to insufficient demand for the securities. Dividends on auction rate preferred securities issued by a closed-end fund may be designated as exempt from federal income tax to the extent they are attributable to tax-exempt interest income earned by the fund on the securities in its portfolio and distributed to holders of the preferred securities, provided that the preferred securities are treated as equity securities for federal income tax purposes and the closed-end fund complies with certain requirements under the Internal Revenue Code of 1986, as amended (the "Code"). For purposes of complying with the 20% limitation on each Municipal Portfolio's investments in taxable investments, auction rate preferred securities will be treated as taxable investments unless substantially all of the dividends on such securities are expected to be exempt from regular federal income taxes. A Portfolio's investments in auction rate preferred securities of closed-end funds are subject to limitations on investments in other U.S. registered investment companies, which limitations are prescribed by the 1940 Act. These limitations include prohibitions against acquiring more than 3% of the voting securities of any other such investment company, and investing more than 5% of the Portfolio's assets in securities of any one such investment company or more than 10% of its assets in securities of all such investment companies. A Portfolio will indirectly bear its proportionate share of any management fees paid by such closed-end funds in addition to the advisory fee payable directly by the Portfolio. Private Activity Bonds. Certain types of municipal securities, generally referred to as industrial development bonds (and referred to under current tax law as private activity bonds), are issued by or on behalf of public authorities to obtain funds for privately-operated housing facilities, airport, mass transit or port facilities, sewage disposal, solid waste disposal or hazardous waste treatment or disposal facilities and certain local facilities for water supply, gas or electricity. Other types of industrial development bonds, the proceeds of which are used for the construction, equipment, repair or improvement of privately operated industrial or commercial facilities, may constitute municipal securities, although the current federal tax laws place substantial limitations on the size of such issues. The interest from certain private activity bonds owned by a Portfolio (including a Municipal Portfolio's distributions attributable to such interest) may be a preference item for purposes of the alternative minimum tax. Mortgage-Backed Securities. As stated in the Prospectus, The Fixed Income Portfolio may invest in mortgage-backed securities, including derivative instruments. Mortgage-backed securities represent direct or indirect participations in or obligations collateralized by and payable from mortgage loans secured by real property. A Portfolio may invest in mortgage-backed securities issued or guaranteed by U.S. Government agencies or instrumentalities such as the Government National Mortgage Association ("GNMA"), the Federal National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC"). Obligations of GNMA are backed by the full faith and credit of the U.S. Government. Obligations of FNMA and FHLMC are not backed by the full faith and credit of the U.S. Government but are considered to be of high quality since they are considered to be instrumentalities of the United States. The market value and yield of these mortgage-backed securities can vary due to market interest rate fluctuations and early prepayments of underlying mortgages. These securities represent ownership in a pool of Federally insured mortgage loans with a maximum maturity of 30 years. The scheduled monthly interest and principal payments relating to mortgages in the pool will be "passed through" to investors. Government mortgage-backed securities differ from conventional bonds in that principal is paid back to the certificate holders over the life of the loan rather than at maturity. As a result, there will be monthly scheduled payments of principal and interest. Only The Fixed Income Portfolio may invest in mortgage-backed securities issued by non-governmental entities including collateralized mortgage obligations ("CMOs") and real estate mortgage investment conduits ("REMICs"). CMOs are securities collateralized by mortgages, mortgage pass-throughs, mortgage pay-through bonds (bonds representing an interest in a pool of mortgages where the cash flow generated from the mortgage collateral pool is dedicated to bond repayment), and mortgage-backed bonds (general obligations of the issuers payable out of the issuers' general funds and additionally secured by a first lien on a pool of single family detached properties). Many CMOs are issued with a number of classes or series which have different maturities and are retired in sequence. Investors purchasing such CMOs in the shortest maturities receive or are credited with their pro rata portion of the unscheduled prepayments of principal up to a predetermined portion of the total CMO obligation. Until that portion of such CMO obligation is repaid, investors in the longer maturities receive interest only. Accordingly, the CMOs in the longer maturity series are less likely than other mortgage pass-throughs to be prepaid prior to their stated maturity. Although some of the mortgages underlying CMOs may be supported by various types of insurance, and some CMOs may be backed by GNMA certificates or other mortgage pass-throughs issued or guaranteed by U.S. Government agencies or instrumentalities, the CMOs themselves are not generally guaranteed. REMICs are private entities formed for the purpose of holding a fixed pool of mortgages secured by an interest in real property. REMICs are similar to CMOs in that they issue multiple classes of securities, including "regular" interests and "residual" interests. The Portfolios do not intend to acquire residual interests in REMICs under current tax law, due to certain disadvantages for regulated investment companies that acquire such interests. Mortgage-backed securities are subject to unscheduled principal payments representing prepayments on the underlying mortgages. Although these securities may offer yields higher than those available from other types of securities, mortgage-backed securities may be less effective than other types of securities as a means of "locking in" attractive long-term rates because of the prepayment feature. For instance, when interest rates decline, the value of these securities likely will not rise as much as comparable debt securities due to the prepayment feature. In addition, these prepayments can cause the price of a mortgage-backed security originally purchased at a premium to decline in price to its par value, which may result in a loss. Due to prepayments of the underlying mortgage instruments, mortgage-backed securities do not have a known actual maturity. In the absence of a known maturity, market participants generally refer to an estimated average life. The appropriate Investment Manager believes that the estimated average life is the most appropriate measure of the maturity of a mortgage-backed security. Accordingly, in order to determine whether such security is a permissible investment, it will be deemed to have a remaining maturity of three years or less if the average life, as estimated by the appropriate Investment Manager, is three years or less at the time of purchase of the security by a Portfolio. An average life estimate is a function of an assumption regarding anticipated prepayment patterns. The assumption is based upon current interest rates, current conditions in the appropriate housing markets and other factors. The assumption is necessarily subjective, and thus different market participants could produce somewhat different average life estimates with regard to the same security. Although the appropriate Investment Manager will monitor the average life of the portfolio securities of each Portfolio with a portfolio maturity policy and make needed adjustments to comply with such Portfolios' policy as to average dollar weighted portfolio maturity, there can be no assurance that the average life of portfolio securities as estimated by the appropriate Investment Manager will be the actual average life of such securities. Asset-Backed Securities. As stated in the Prospectus, the Fixed Income Portfolio may invest in asset-backed securities, which represent participations in, or are secured by and payable from, pools of assets including company receivables, truck and auto loans, leases and credit card receivables. The asset pools that back asset-backed securities are securitized through the use of privately-formed trusts or special purpose corporations. Payments or distributions of principal and interest may be guaranteed up to certain amounts and for a certain time period by a letter of credit or a pool insurance policy issued by a financial institution unaffiliated with the trust or corporation, or other credit enhancements may be present. Certain asset backed securities may be considered derivative instruments. As stated in the Prospectus, no Portfolio will invest 25% or more of its total assets in asset-backed securities. Foreign Government Securities. The foreign government securities in which The Fixed Income Portfolio may invest generally consist of debt obligations issued or guaranteed by national, state or provincial governments or similar political subdivisions. The Portfolio may invest in foreign government securitie s in the form of American Depositary Receipts. Foreign government securities also include debt securities of supranational entities. Currently, the Fixed Income Portfolio intends to invest only in obligations issued or guaranteed by the Asian Development Bank, the Inter-American Development Bank, the International Bank for Reconstruction and Development (the "World Bank"), the African Development Bank, the European Coal and Steel Community, the European Economic Community, the European Investment Bank and the Nordic Investment Bank. Foreign government securities also include mortgage-related securities issued or guaranteed by national, state or provincial governmental instrumentalities, including quasi-governmental agencies. Commercial Paper. Commercial paper is a short-term, unsecured negotiable promissory note of a U.S. or non-U.S. issuer. Each of the Portfolios may purchase commercial paper for temporary purposes; the Fixed-Income Portfolios may acquire these instruments as described in the Prospectus. Each Portfoliomay similarly invest in variable rate master demand notes which typically are issued by large corporate borrowers and which provide for variable amounts of principal indebtedness and periodic adjustments in the interest rate. Demand notes are direct lending arrangements between a Portfolio and an issuer, and are not normally traded in a secondary market. A Portfolio, however, may demand payment of principal and accrued interest at any time. In addition, while demand notes generally are not rated, their issuers must satisfy the same criteria as those that apply to issuers of commercial paper. The appropriate Investment Manager will consider the earning power, cash flow and other liquidity ratios of issuers of demand notes and continually will monitor their financial ability to meet payment on demand. See also Variable and Floating Rate Instruments," above. Bank Obligations. Each of the Portfolios may purchase certain bank obligations for temporary purposes;the Fixed-Income Portfolios may acquire these instruments as described in the Prospectus. Such instruments may include certificates of deposit, time deposits and bankers' acceptances. Certificates of Deposit ("CDs") are short-term negotiable obligations of commercial banks. Time Deposits ("TDs") are non-negotiable deposits maintained in banking institutions for specified periods of time at stated interest rates. Bankers' acceptances are time drafts drawn on commercial banks by borrowers usually in connection with international transactions. U.S. commercial banks organized under federal law are supervised and examined by the Comptroller of the Currency and are required to be members of the Federal Reserve System and to be insured by the Federal Deposit Insurance Corporation (the "FDIC"). U.S. banks organized under state law are supervised and examined by state banking authorities but are members of the Federal Reserve System only if they elect to join. Most state banks are insured by the FDIC (although such insurance may not be of material benefit to a Portfolio, depending upon the principal amount of CDs of each bank held by the Portfolio) and are subject to federal examination and to a substantial body of federal law and regulation. As a result of governmental regulations, U.S. branches of U.S. banks, among other things, generally are required to maintain specified levels of reserves, and are subject to other supervision and regulation designed to promote financial soundness. U.S. savings and loan associations, the CDs of which may be purchased by the Portfolios, are supervised and subject to examination by the Office of Thrift Supervision. U.S. savings and loan associations are insured by the Savings Association Insurance Portfolio which is administered by the FDIC and backed by the full faith and credit of the U.S. Government. HEDGING THROUGH THE USE OF OPTIONS. As indicated in the prospectus, each of the Portfolios may, consistent with its investment objectives and policies, use options on securities and securities indexes to reduce the risks associated with the types of securities in which each is authorized to invest and/or in anticipation of future purchases, including to achieve market exposure, pending direct investment in securities. A Portfolio may use options only in a manner consistent with its investment objective and policies and may not invest more than 10% of its total assets in option purchases. Options may be used only for the purpose of reducing investment risk and not for speculative purposes. The following discussion sets forth certain information relating to the types of options that the Portfolios may use, together with the risks that may be associated with their use. About Options on Securities. A call option is a short-term contract pursuant to which the purchaser of the option, in return for a premium, has the right to buy the security underlying the option at a specified price at any time during the term of the option. The writer of the call option, who receives the premium, has the obligation, upon exercise of the option during the option period, to deliver the underlying security against payment of the exercise price. A put option is a similar contract that gives its purchaser, in return for a premium, the right to sell the underlying security at a specified price during the term of the option. The writer of the put option, who receives the premium, has the obligation, upon exercise of the option during the option period, to buy the underlying security at the exercise price. Options may be based on a security, a securities index or a currency. Options on securities are generally settled by delivery of the underlying security whereas options on a securities index or currency are settled in cash. Options may be traded on an exchange or in the over-the-counter markets. Option Purchases. Call options on securities may be purchased in order to fix the cost of a future purchase. In addition, call options may be used as a means of participating in an anticipated advance of a security on a more limited risk basis than would be possible if the security itself were purchased. In the event of a decline in the price of the underlying security, use of this strategy would serve to limit the amount of loss, if any, to the amount of the option premium paid. Conversely, if the market price of the underlying security rises and the call is exercised or sold at a profit, that profit will be reduced by the amount initially paid for the call. Put options may be purchased in order to hedge against a decline in market value of a security held by the purchasing portfolio. The put effectively guarantees that the underlying security can be sold at the predetermined exercise price, even if that price is greater than the market value at the time of exercise. If the market price of the underlying security increases, the profit realized on the eventual sale of the security will be reduced by the premium paid for the put option. Put options may also be purchased on a security that is not held by the purchasing portfolio in anticipation of a price decline in the underlying security. In the event the market value of such security declines below the designated exercise price of the put, the purchasing portfolio would then be able to acquire the underlying security at the market price and exercise its put option, thus realizing a profit. In order for this strategy to be successful, however, the market price of the underlying security must decline so that the difference between the exercise price and the market price is greater than the option premium paid. Option Writing. Call options may be written (sold) by the Portfolios. Generally, calls will be written only when, in the opinion of a Portfolio's Investment Manager, the call premium received, plus anticipated appreciation in the market price of the underlying security up to the exercise price of the call, will be greater than the appreciation in the price of the underlying security. Put options may also be written. This strategy will generally be used when it is anticipated that the market value of the underlying security will remain higher than the exercise price of the put option or when a temporary decrease in the market value of the underlying security is anticipated and, in the view of a Portfolio's Investment Manager, it would not be appropriate to acquire the underlying security. If the market price of the underlying security rises or stays above the exercise price, it can be expected that the purchaser of the put will not exercise the option and a profit, in the amount of the premium received for the put, will be realized by the writer of the put. However, if the market price of the underlying security declines or stays below the exercise price, the put option may be exercised and the portfolio that sold the put will be obligated to purchase the underlying security at a price that may be higher than its current market value. All option writing strategies will be employed only if the option is "covered." For this purpose, "covered" means that, so long as the Portfolio that has written (sold) the option is obligated as the writer of a call option, it will (1) own the security underlying the option; or (2) hold on a share-for-share basis a call on the same security, the exercise price of which is equal to or less than the exercise price of the call written. In the case of a put option, the Portfolio that has written (sold) the put option will (1) maintain cash or cash equivalents in an amount equal to or greater than the exercise price; or (2) hold on a share-for share basis, a put on the same security as the put written provided that the exercise price of the put held is equal to or greater than the exercise price of the put written. Options on Securities Indices. Options on securities indices may by used in much the same manner as options on securities. Index options may serve as a hedge against overall fluctuations in the securities markets or market sectors, rather than anticipated increases or decreases in the value of a particular security. Thus, the effectiveness of techniques using stock index options will depend on the extent to which price movements in the securities index selected correlate with price movements of the portfolio to be hedged. Options on stock indices are settled exclusively in cash. Risk Factors Relating to the Use of Options Strategies. The premium paid or received with respect to an option position will reflect, among other things, the current market price of the underlying security, the relationship of the exercise price to the market price, the historical price volatility of the underlying security, the option period, supply and demand, and interest rates. Moreover, the successful use of options as a hedging strategy depends upon the ability to forecast the direction of market fluctuations in the underlying securities, or in the case of index options, in the market sector represented by the index selected. Under normal circumstances, options traded on one or more of the several recognized options exchanges may be closed by effecting a "closing purchase transaction," i.e. by purchasing an identical option with respect to the underlying security in the case of options written and by selling an identical option on the underlying security in the case of options purchased. A closing purchase transaction will effectively cancel an option position, thus permitting profits to be realized on the position, to prevent an underlying security from being called from, or put to, the writer of the option or, in the case of a call option, to permit the sale of the underlying security. A profit or loss may be realized from a closing purchase transaction, depending on whether the overall cost of the closing transaction (including the price of the option and actual transaction costs) is less or more than the premium received from the writing of the option. It should be noted that, in the event a loss is incurred in a closing purchase transaction, that loss may be partially or entirely offset by the premium received from a simultaneous or subsequent sale of a different call or put option. Also, because increases in the market price of an option will generally reflect increases in the market price of the underlying security, any loss resulting from a closing purchase transaction is likely to be offset in whole or in part by appreciation of the underlying security held. Options will normally have expiration dates between three and nine months from the date written. The exercise price of the options may be below, equal to, or above the current market values of the underlying securities at the time the options are written. Options that expire unexercised have no value. Unless an option purchased by a Portfolio is exercised or a closing purchase transaction is effected with respect to that position, a loss will be realized in the amount of the premium paid. HEDGING THROUGH THE USE OF FUTURES CONTRACTS AND RELATED INSTRUMENTS. As indicated in the prospectus, each of the Portfolios may, consistent with its investment objectives and policies, use futures contracts and options on futures contracts to reduce the risks associated with the types of securities in which each is authorized to invest and/or in anticipation of future purchases. A Portfolio may invest in futures-related instruments only for hedging purposes and not for speculation and only in a manner consistent with its investment objective and policies. In particular, a Portfolio may not commit more than 5% of its net assets, in the aggregate, to margin deposits on futures contracts or premiums for options on futures contracts. The following discussion sets forth certain information relating to the types of futures contracts that the Portfolios may use, together with the risks that may be associated with their use. About Futures Contracts and Options on Futures Contracts. A futures contract is a bilateral agreement pursuant to which one party agrees to make, and the other party agrees to accept, delivery of the specified type of security or currency called for in the contract at a specified future time and at a specified price. In practice, however, contracts relating to financial instruments or currencies are closed out through the use of closing purchase transactions before the settlement date and without delivery or the underlying security or currency. In the case of futures contracts based on a securities index, the contract provides for "delivery" of an amount of cash equal to the dollar amount specified multiplied by the difference between the value of the underlying index on the settlement date and the price at which the contract was originally fixed. Stock Index Futures Contracts. A Portfolio may sell stock index futures contracts in anticipation of a general market or market sector decline that may adversely affect the market values of securities held. To the extent that securities held correlate with the index underlying the contract, the sale of futures contracts on that index could reduce the risk associated with a market decline. Where a significant market or market sector advance is anticipated, the purchase of a stock index futures contract may afford a hedge against not participating in such advance at a time when a Portfolio is not fully invested. This strategy would serve as a temporary substitute for the purchase of individual stocks which may later be purchased in an orderly fashion. Generally, as such purchases are made, positions in stock index futures contracts representing an equivalent securities would be liquidated. Futures Contracts on Debt Securities. Futures contracts on debt securities, often referred to as "interest rate futures," obligate the seller to deliver a specific type of debt security called for in the contract, at a specified future time. A public market now exists for futures contracts covering a number of debt securities, including long-term U.S. Treasury bonds, ten-year U.S. Treasury notes, and three-month U.S. Treasury bills, and additional futures contracts based on other debt securities or indices of debt securities may be developed in the future. Such contracts may be used to hedge against changes in the general level of interest rates. For example, a Portfolio may purchase such contracts when it wishes to defer a purchase of a longer-term bond because short-term yields are higher than long-term yields. Income would thus be earned on a short-term security and minimize the impact of all or part of an increase in the market price of the long-term debt security to be purchased in the future. A rise in the price of the long-term debt security prior to its purchase either would be offset by an increase in the value of the contract purchased by the Portfolio or avoided by taking delivery of the debt securities underlying the futures contract. Conversely, such a contract might be sold in order to continue to receive the income from a long-term debt security, while at the same time endeavoring to avoid part or all of any decline in market value of that security that would occur with an increase in interest rates. If interest rates did rise, a decline in the value of the debt security would be substantially offset by an increase in the value of the futures contract sold. Options on Futures Contracts. An option on a futures contract gives the purchaser the right, in return for the premium, to assume a position in a futures contract (a long position if the option is a call and a short position if the option is a put) at a specified price at any time during the period of the option. The risk of loss associated with the purchase of an option on a futures contract is limited to the premium paid for the option, plus transaction cost. The seller of an option on a futures contract is obligated to a broker for the payment of initial and variation margin in amounts that depend on the nature of the underlying futures contract, the current market value of the option, and other futures positions held by the Portfolio. Upon exercise of the option, the option seller must deliver the underlying futures position to the holder of the option, together with the accumulated balance in the seller's futures margin account that represents the amount by which the market price of the underlying futures contract exceeds, in the case of a call, or is less than, in the case of a put, the exercise price of the option involved. If an option is exercised on the last trading day prior to the expiration date of the option, settlement will be made entirely in cash equal to the difference between the exercise price of the option and the value at the close of trading on the expiration date. Risk Considerations Relating to Futures Contracts and Related Instruments. Participants in the futures markets are subject to certain risks. Positions in futures contracts may be closed out only on the exchange on which they were entered into (or through a linked exchange): no secondary market exists for such contracts. In addition, there can be no assurance that a liquid market will exist for the contracts at any particular time. Most futures exchanges and boards of trade limit the amount of fluctuation permitted in futures contract prices during a single trading day. Once the daily limit has been reached in a particular contract, no trades may be made that day at a price beyond that limit. It is possible that futures contract prices could move to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of futures positions and subjecting some futures traders to substantial losses. In such event, and in the event of adverse price movements, a Portfolio would be required to make daily cash payments of variation margin. In such circumstances, an increase in the value of that portion of the securities being hedged, if any, may partially or completely offset losses on the futures contract. As noted above, there can be no assurance that price movements in the futures markets will correlate with the prices of the underlying securities positions. In particular, there may be an imperfect correlation between movements in the prices of futures contracts and the market value of the underlying securities positions being hedged. In addition, the market prices of futures contracts may be affected by factors other than interest rate changes and, as a result, even a correct forecast of interest rate trends might not result in a successful hedging strategy. If participants in the futures market elect to close out their contracts through offsetting transactions rather than by meeting margin deposit requirements, distortions in the normal relationship between debt securities and the futures markets could result. Price distortions could also result if investors in the futures markets opt to make or take delivery of the underlying securities rather than engage in closing transactions because such trend might result in a reduction in the liquidity of the futures market. In addition, an increase in the participation of speculators in the futures market could cause temporary price distortions. The risks associated with options on futures contracts are similar to those applicable to all options and are summarized above under the heading "Hedging Through the Use of Options: Risk Factors Relating to the Use of Options Strategies." In addition, as is the case with futures contracts, there can be no assurance that (1) there will be a correlation between price movements in the options and those relating to the underlying securities; (2) a liquid market for options held will exist at the time when a Portfolio may wish to effect a closing transaction; or (3) predictions as to anticipated interest rate or other market trends on behalf of a Portfolio will be correct. Margin Requirements and Limitations Applicable to Futures Related Transactions. When a purchase or sale of a futures contract is made by a Portfolio, that Portfolio is required to deposit with its custodian (or broker, if legally permitted) a specified amount of cash or U.S. Government securities ("initial margin"). The margin required for a futures contract is set by the exchange on which the contract is traded and may be modified during the term of the contract. The initial margin is in the nature of a performance bond or good faith deposit on the futures contract which is returned to the Portfolio upon termination of the contract, assuming all contractual obligations have been satisfied. The Portfolio expects to earn interest income on its initial margin deposits. A futures contract held by a Portfolio is valued daily at the official settlement price of the exchange on which it is traded. Each day the Portfolio pays or receives cash, called "variation margin" equal to the in daily change in value of the futures contract. This process is known as "marking to market." Variation margin does not represent a borrowing or loan by the Portfolio but is instead a settlement between the Portfolio and the broker of the amount one would owe the other if the futures contract expired. In computing daily net asset value, the Portfolio will value its open futures positions at market. A Portfolio will not enter into a futures contract or an option on a futures contract if, immediately thereafter, the aggregate initial margin deposits relating to such positions plus premiums paid by it for open futures option positions, less the amount by which any such options are "in-the-money," would exceed 5% of the Portfolio's total assets. A call option is "in-the-money" if the value of the futures contract that is the subject of the option exceeds the exercise price. A put option is "in-the-money" if the exercise price exceeds the value of the futures contract that is the subject of the option. Segregation Requirements. Futures Contracts. When purchasing a futures contract, a Portfolio will maintain, either with its custodian bank or, if permitted, a broker, and will mark-to-market on a daily basis, cash, U.S. Government securities, or other highly liquid securities that, when added to the amounts deposited with a futures commission merchant as margin, are equal to the market value of the futures contract. Alternatively, a Portfolio may "cover" its position by purchasing a put option on the same futures contract with a strike price as high or higher than the price of the contract held by the Portfolio. When selling a futures contract, a Portfolio will similarly maintain liquid assets that, when added to the amount deposited with a futures commission merchant as margin, are equal to the market value of the instruments underlying the contract. Alternatively, a Portfolio may "cover" its position by owning the instruments underlying the contract (or, in the case of an index futures contract, a portfolio with a volatility substantially similar to that of the index on which the futures contract is based), or by holding a call option permitting a Portfolio to purchase the same futures contract at a price no higher than the price of the contract written by that Portfolio (or at a higher price if the difference is maintained in liquid assets with the Trust's custodian). Options on Futures Contracts. When selling a call option on a futures contract, a Portfolio will maintain, either with its custodian bank or, if permitted, a broker, and will mark-to-market on a daily basis, cash, U. S. Government securities, or other highly liquid securities that, when added to the amounts deposited with a futures commission merchant as margin, equal the total market value of the futures contract underlying the call option. Alternatively, the Portfolio may cover its position by entering into a long position in the same futures contract at a price no higher than the strike price of the call option, by owning the instruments underlying the futures contract, or by holding a separate call option permitting the Portfolio to purchase the same futures contract at a price not higher than the strike price of the call option sold by the Portfolio. When selling a put option on a futures contract, the Portfolio will similarly maintain cash, U.S. Government securities, or other highly liquid securities that equal the purchase price of the futures contract, less any margin on deposit. Alternatively, the Portfolio may cover the position either by entering into a short position in the same futures contract, or by owning a separate put option permitting it to sell the same futures contract so long as the strike price of the purchased put option is the same or higher than the strike price of the put option sold by the Portfolio. HEDGING THROUGH THE USE OF CURRENCY RELATED INSTRUMENTS. As indicated in the prospectus, The Growth Equity Portfolio may use forward foreign currency exchange contracts in connection with permitted purchases and sales of securities of non-U.S. issuers. In addition, The International Equity Portfolio and The Fixed Income Portfolio may, consistent with their respective investment objectives and policies, use such contracts as well as certain other currency related instruments to reduce the risks associated with the types of securities in which it is authorized to invest and to hedge against fluctuations in the relative value of the currencies in which securities held by The International Equity Portfolio are denominated. The following discussion sets forth certain information relating to forward currency contracts and other currency related instruments, together with the risks that may be associated with their use. About Currency Transactions and Hedging. The International Equity Portfolio and The Fixed Income Portfolio are authorized to purchase and sell options, futures contracts and options thereon relating to foreign currencies and securities denominated in foreign currencies. Such instruments may be traded on foreign exchanges, including foreign over-the- counter markets. Transactions in such instruments may not be regulated as effectively as similar transactions in the United States, may not involve a clearing mechanism and related guarantees, and are subject to the risk of governmental actions affecting trading in, or the prices of, foreign securities. The value of such positions also could be adversely affected by: (i) foreign political, legal and economic factors; (ii) lesser availability than in the United States of data on which to make trading decisions; (iii) delays in a Portfolio's ability to act upon economic events occurring in foreign markets during non-business hours in the United States; and (iv) lesser trading volume. Foreign currency exchange transactions may be entered into for the purpose of hedging against foreign currency exchange risk arising from the Portfolio's investment or anticipated investment in securities denominated in foreign currencies. The International Equity Portfolio may also purchase and sell options relating to foreign currencies to increase exposure to a foreign currency or to shift foreign currency exposure from one country to another. Foreign Currency Options and Related Risks. The International Equity Portfolio and The Fixed Income Portfolio may take positions in options on foreign currencies to hedge against the risk of foreign exchange rate fluctuations on foreign securities the Portfolio holds in its portfolio or intends to purchase. For example, if the Portfolio were to enter into a contract to purchase securities denominated in a foreign currency, it could effectively fix the maximum U.S. dollar cost of the securities by purchasing call options on that foreign currency. Similarly, if the Portfolio held securities denominated in a foreign currency and anticipated a decline in the value of that currency against the U.S. dollar, it could hedge against such a decline by purchasing a put option on the currency involved. The markets in foreign currency options are relatively new, and the Portfolio's ability to establish and close out positions in such options is subject to the maintenance of a liquid secondary market. There can be no assurance that a liquid secondary market will exist for a particular option at any specific time. In addition, options on foreign currencies are affected by all of those factors that influence foreign exchange rates and investments generally. The quantities of currencies underlying option contracts represent odd lots in a market dominated by transactions between banks, and as a result extra transaction costs may be incurred upon exercise of an option. There is no systematic reporting of last sale information for foreign currencies or any regulatory requirement that quotations be firm or revised on a timely basis. Quotation information is generally representative of very large transactions in the interbank market and may not reflect smaller transactions where rates may be less favorable. Option markets may be closed while round-the-clock interbank currency markets are open, and this can create price and rate discrepancies. Forward Foreign Currency Exchange Contracts. The Growth Equity and Fixed Income Portfolios may use forward contracts to protect against uncertainty in the level of future exchange rates in connection with specific transactions. For example, when the Portfolio enters into a contract for the purchase or sale of a security denominated in a foreign currency, or when the Portfolio anticipates the receipt in a foreign currency of dividend or interest payments on a security that it holds, the Portfolio may desire to "lock in" the U.S. dollar price of the security or the U.S. dollar equivalent of the payment, by entering into a forward contract for the purchase or sale of the foreign currency involved in the underlying transaction in exchange for a fixed amount of U.S. dollars or foreign currency. This may serve as a hedge against a possible loss resulting from an adverse change in the relationship between the currency exchange rates during the period between the date on which the security is purchased or sold, or on which the payment is declared, and the date on which such payments are made or received. The International Equity Portfolio may also use forward contracts in connection with specific transactions. In addition, it may use such contracts to lock in the U.S. dollar value of those positions, to increase the Portfolio's exposure to foreign currencies that the Investment Manager believes may rise in value relative to the U.S. dollar or to shift the Portfolio's exposure to foreign currency fluctuations from one country to another. For example, when the Investment Manager believes that the currency of a particular foreign country may suffer a substantial decline relative to the U.S. dollar or another currency, it may enter into a forward contract to sell the amount of the former foreign currency approximating the value of some or all of the Portfolio's portfolio securities denominated in such foreign currency. This investment practice generally is referred to as "cross-hedging." The precise matching of the forward contract amounts and the value of the securities involved will not generally be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date the forward contract is entered into and the date it matures. Accordingly, it may be necessary for a Portfolio to purchase additional foreign currency on the spot (i.e., cash) market (and bear the expense of such purchase) if the market value of the security is less than the amount of foreign currency the Portfolio is obligated to deliver and if a decision is made to sell the security and make delivery of the foreign currency. Conversely, it may be necessary to sell on the spot market some of the foreign currency received upon the sale of the portfolio security if its market value exceeds the amount of foreign currency the Portfolio is obligated to deliver. The projection of short-term currency market movements is extremely difficult, and the successful execution of a short-term hedging strategy is highly uncertain. Forward contracts involve the risk that anticipated currency movements will not be accurately predicted, causing the Portfolio to sustain losses on these contracts and transaction costs. A Portfolio may enter into forward contracts or maintain a net exposure to such contracts only if: (1) the consummation of the contracts would not obligate the Portfolio to deliver an amount of foreign currency in excess of the value of the Portfolio's securities and other assets denominated in that currency; or (2) the Portfolio maintains cash, U.S. Government securities or other liquid securities in a segregated account in an amount which, together with the value of all the Portfolio's securities denominated in such currency, equals or exceeds the value of such contracts. At or before the maturity date of a forward contract that requires the Portfolio to sell a currency, the Portfolio may either sell a portfolio security and use the sale proceeds to make delivery of the currency or retain the security and offset its contractual obligation to deliver the currency by purchasing a second contract pursuant to which the Portfolio will obtain, on the same maturity date, the same amount of the currency that it is obligated to deliver. Similarly, the Portfolio may close out a forward contract requiring it to purchase a specified currency by entering into another contract entitling it to sell the same amount of the same currency on the maturity date of the first contract. As a result of such an offsetting transaction, a Portfolio would realize a gain or a loss to the extent of any change in the exchange rate between the currencies involved between the execution dates of the first and second contracts. The cost to a Portfolio of engaging in forward contracts varies with factors such as the currencies involved, the length of the contract period and the prevailing market conditions. Because forward contracts are usually entered into on a principal basis, no fees or commissions are involved. The use of forward contracts does not eliminate fluctuations in the prices of the underlying securities the Portfolio owns or intends to acquire, but it does fix a rate of exchange in advance. In addition, although forward contracts limit the risk of loss due to a decline in the value of the hedged currencies, they also limit any potential gain that might result should the value of the currencies increase. Although those International Equity Portfolio values its assets daily in terms of U.S. dollars, it does not intend to convert its holdings of foreign currencies into U.S. dollars on a daily basis. The Portfolio may convert foreign currency from time to time, and investors should be aware of the costs of currency conversion. Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the difference between the prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to the Portfolio at one rate, while offering a lesser rate of exchange should the Portfolio desire to resell that currency to the dealer. Other Hedging Instruments. As permitted under the Investment Company Act, a Portfolio may invest up to 5% of its net assets in securities of other investment companies but may not acquire more than 3% of the voting securities of the investment company. Generally, the Portfolios do not make such investments. The Growth Equity Portfolio does, however, invest in certain instruments known as Standard & Poor's Depositary Receipts or "SPDRs" as part of its overall hedging strategies. Such strategies are designed to reduce certain risks that would otherwise be associated with the investments in the types of securities in which the Portfolio invests and/or in anticipation of future purchases, including to achieve market exposure pending direct investment in securities, provided that the use of such strategies are not for speculative purposes and are otherwise consistent with the investment policies and restrictions adopted by the Portfolio. SPDRs are interests in a unit investment trust ("UIT") that may be obtained from the UIT or purchased in the secondary market (SPDRs are listed on the American Stock Exchange). The UIT will issue SPDRs in aggregations known as "Creation Units" in exchange for a "Portfolio Deposit" consisting of (a) a portfolio of securities substantially similar to the component securities ("Index Securities") of the Standard & Poor's 500 Composite Stock Price Index (the "S&P Index"), (b) a cash payment equal to a pro rata portion of the dividends accrued on the UIT's portfolio securities since the last dividend payment by the UIT, net of expenses and liabilities, and (c) a cash payment or credit, called a "Balancing Amount") designed to equalize the net asset value of the S&P Index and the net asset value of a Portfolio Deposit. SPDRs are not individually redeemable, except upon termination of the UIT. To redeem, the Portfolio must accumulate enough SPDRs to reconstitute a Creation Unit. The liquidity of small holdings of SPDRs, therefore, will depend upon the existence of a secondary market. Upon redemption of a Creation Unit, the Portfolio will receive Index Securities and cash identical to the Portfolio Deposit required of an investor wishing to purchase a Creation Unit that day. The price of SPDRs is derived from and based upon the securities held by the UIT. Accordingly, the level of risk involved in the purchase or sale of a SPDR is similar to the risk involved in the purchase or sale of traditional common stock, with the exception that the pricing mechanism for SPDRs is based on a basket of stocks. Disruptions in the markets for the securities underlying SPDRs purchased or sold by the Funds could result in losses on SPDRs. Trading in SPDRs involves risks similar to those risks involved in the writing of options on securities. INVESTMENT RESTRICTIONS In addition to the investment objectives and policies of the Portfolios, each Portfolio is subject to certain investment restrictions both in accordance with various provisions of the Investment Company Act and guidelines adopted by the Trust's Board. These investment restrictions are summarized below. The following investment restrictions (1 though 9) are fundamental and cannot be changed with respect to any Portfolio without the affirmative vote of a majority of the Portfolio's outstanding voting securities as defined in the Investment Company Act. A Portfolio may not: 1. Purchase the securities of any issuer, if as a result of such purchase, more than 5% of the total assets of the Portfolio would be invested in the securities of that issuer, or purchase any security if, as a result of such purchase, a Portfolio would hold more than 10% of the outstanding voting securities of an issuer, provided that up to 25% of the value of the Trust's assets may be invested without regard to this limitation, and provided further that this restriction shall not apply to investments in obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities, repurchase agreements secured by such obligations, or securities issued by other investment companies. 2. Borrow money, except that a Portfolio (i) may borrow amounts, taken in the aggregate, equal to up to 5% of its total assets, from banks for temporary purposes (but not for leveraging or investment) and (ii) may engage in reverse repurchase agreements for any purpose, provided that (i) and (ii) in combination do not exceed 33 1/3% of the value of the Portfolio's total assets (including the amount borrowed) less liabilities (other than borrowings). 3. Mortgage, pledge or hypothecate any of its assets except in connection with any permitted borrowing, provided that this restriction does not prohibit escrow, collateral or margin arrangements in connection with a Portfolio's permitted use of options, futures contracts and similar derivative financial instruments described in the Trust's prospectus. 4. Issue senior securities, as defined in the Investment Company Act, provided that this restriction shall not be deemed to prohibit a Portfolio from making any permitted borrowing, mortgage or pledge, and provided further that the permitted use of options, futures contracts and similar derivative financial instruments described in the Trust's prospectus shall not constitute issuance of a senior security. 5. Underwrite securities issued by others, provided that this restriction shall not be violated in the event that the Portfolio may be considered an underwriter within the meaning of the Securities Act of 1933 in the disposition of portfolio of securities. 6. Purchase or sell real estate unless acquired as a result of ownership of securities or other instruments, provided that this shall not prevent a portfolio from investing in securities or other instruments backed by real real estate or securities of companies engaged in the real estate business. 7. Purchase or sell commodities or commodity contracts, unless acquired as a result of ownership of securities or other instruments, provided that a Portfolio may purchase and sell futures contracts relating to financial instruments and currencies and related options in the manner described in the Trust's prospectus. 8. Make loans to others, provided that this restriction shall not be construed to limit (a) purchases of debt securities or repurchase agreements in accordance with a Portfolio's investment objectives and policies; and (b) loans of portfolio securities in the manner described in the Trust's prospectus. 9. Invest more than 25% of the market value of its assets in the securities of companies engaged in any one industry provided that this restriction does not apply to obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities, repurchase agreements secured by such obligations or securities issued by other investment companies. The following investment restrictions (10 through 15) reflect policies that have been adopted by the Trust, but which are not fundamental and may be changed by the Trust's Board, without shareholder vote. A Portfolio may not: 10. Invest in any issuer for purposes of exercising control or management. 11. Make short sales of securities or maintain a short position, or purchase securities on margin, provided that this restriction shall not preclude the Trust from obtaining such short-term credits as may be necessary for the clearance of purchases and sales of its portfolio securities, and provided further that this restriction will not be applied to limit the use by a Portfolio of options, futures contracts and similar derivative financial instruments in the manner described in the Trust's prospectus. 12. Invest in securities of other investment companies except as permitted under the Investment Company Act. An investment restriction applicable to a particular Portfolio shall not be deemed violated as a result of a change in the market value of an investment, the net or total assets of that Portfolio, or any other later change provided that the restriction was satisfied at the time the relevant action was taken. In order to permit the sale of its shares in certain states, the Trust may make commitments more restrictive than those described above. Should the Trust determine that any such commitment may no longer be appropriate, the Board will consider whether to revoke the commitment and terminate sales of its shares in the state involved. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION The Trust reserves the right in its sole discretion to suspend the continued offering of the Trust's shares and to reject purchase orders in whole or in part when in the judgment of the Board such action is in the best interest of the Trust. Payments to shareholders for shares of the Trust redeemed directly from the Trust will be made as promptly as possible but no later than seven days after receipt by the Trust's transfer agent of the written request in proper form, with the appropriate documentation as stated in the prospectus, except that the Trust may suspend the right of redemption or postpone the date of payment during any period when (a) trading on the New York Stock Exchange is restricted as determined by the SEC or such Exchange is closed for other than weekends and holidays; (b) an emergency exists as determined by the SEC making disposal of portfolio securities or valuation of net assets of the Trust not reasonably practicable; or for such other period as the SEC may permit for the protection of the Trust's shareholders. Each of the Portfolios reserves the right, if conditions exist which make cash payments undesirable, to honor any request for redemption or repurchase of the Trust's shares by making payment in whole or in part in readily marketable securities chosen by the Trust and valued in the same way as they would be valued for purposes of computing each Portfolio's net asset value. If such payment were made, an investor may incur brokerage costs in converting such securities to cash. The value of shares on redemption or repurchase may be more or less than the investor's cost, depending upon the market value of the Trust's portfolio securities at the time of redemption or repurchase. PORTFOLIO TRANSACTIONS AND VALUATION Subject to the general supervision of the Board, the Investment Managers of the respective Portfolios are responsible for placing orders for securities transactions for each of the Portfolios. Securities transactions involving stocks will normally be conducted through brokerage firms entitled to receive commissions for effecting such transactions. In placing portfolio transactions, an Investment Manager will use its best efforts to choose a broker or dealer capable of providing the services necessary to obtain the most favorable price and execution available. The full range and quality of services available will be considered in making these determinations, such as the size of the order, the difficulty of execution, the operational facilities of the firm involved, the firm's risk in positioning a block of securities, and other factors. In placing brokerage transactions, the respective Investment Managers may, however, consistent with the interests of the Portfolios they serve, select brokerage firms on the basis of the research, statistical and pricing services they provide to the Investment Manager. In such cases, a Portfolio may pay a commission that is higher than the commission that another qualified broker might have charged for the same transaction, providing the Investment Manager involved determines in good faith that such commission is reasonable in terms either of that transaction or the overall responsibility of the Investment Manager to the Portfolio and such manager's other investment advisory clients. Transactions involving debt securities and similar instruments are expected to occur primarily with issuers, underwriters or major dealers acting as principals. Such transactions are normally effected on a net basis and do not involve payment of brokerage commissions. The price of the security, however, usually includes a profit to the dealer. Securities purchased in underwritten offerings include a fixed amount of compensation to the underwriter, generally referred to as the underwriter's concession or discount. When securities are purchased directly from or sold directly to an issuer, no commissions or discounts are paid. The table below reflects the aggregate dollar amount of brokerage commissions paid by each of the portfolios of the Trust paid the during the fiscal years indicated. Portfolio Aggregate Brokerage Commissions for the Fiscal Years ended 1997 1996 - ----------------- ----------- ------------- [S] [C] [C] Value Equity $179,053 $137,963 Growth Equity 258,337 238,948 Small Cap 227,730 147,928 International Equity 250,705 144,359 Limited Duration -0- -0- The Trust has adopted procedures pursuant to which each portfolio is permitted to allocate brokerage transactions to affiliates of the various Investment Managers. Under such procedures, commissions paid to any such affiliate must be fair and reasonable compared to the commission, fees or other remuneration paid to other brokers in connection with comparable transactions. Several of the Trust's Investment Managers are affiliated with brokerage firms to which brokerage transactions may, from time to time, be allocated. The table below reflects the aggregate dollar amount of commissions paid to each such firm, as well as similar information about transactions allocated to Furman Selz, LLC, (which served as the Trust's principal underwriter prior to January 1, 1997) by the Portfolios during the period. Information shown is expressed both as a percentage of the total amount of commission dollars paid by each portfolio and as a percentage of the total value of all brokerage transactions effected on behalf of each portfolio. "NA" indicates that during the relevant period, indicated broker was not considered an affiliate of the specified portfolio.
Affiliated Portfolio Broker 1 ------------------------------------------------------- For Value For Growth For Small For Int'l For Limited Equity Equity Cap Equity Equity Duration 1997 1996 1997 1996 1997 1996 1997 1996 1997 1996 - --------- ------------ --------------- ------------ ------------ ---------- Cowen & Co.2 % of commissions -0- 34% -0- .02% -0- -0- -0- -0- -0- -0- % of transactions -0- .94% -0- .05% -0- -0- -0- -0- -0- -0- Prudential Securities3 % of commissions NA NA 1.36 1.45% NA NA NA NA NA NA % of transactions NA NA 1.38% .70% NA NA NA NA NA NA Merrill Lynch & Co.4 % of commissions .80% NA 2.21% NA 1.51%% NA 2.08% NA -0- NA % of transactions .61% NA 5.47% NA 1.56% NA 2.74% NA -0- NA Furman Selz LLC5 % of commissions -0- -0- -0- 4.20% -0- -0- -0- -0- -0- -0- % of transactions -0- -0- -0- 1.26% -0- -0- -0- -0- -0- -0- - -------
1. Other brokers deemed to be affiliated with certain Portfolios are: with respect to The International Portfolio, companies affiliated with Swiss Bank, of which Brinson Partners is a wholly-owned subsidiary, and with respect to the Income Portofolios, companies affiliated with Deutchebank, the parent company of Morgan Grenfell Capital Management Incorporated. No brokerage transactions were affected through such companies during the periods reflected in the above table by the relevant Portfolios. 2. Cowen Asset Management, which served as an Investment Manager of The Value Equity Portfolio prior to August 1, 1996, is a division of Cowen & Co. 3. Both Prudential Securities and Jennison Associates Capital Management Corp., which serves as an Investment Manager of The Value Equity Portfolio, are wholly-owned subsidiaries of Prudential Insurance Company of America. 4. Figures shown include all brokers affiliated with Merrill Lynch & Co. Merrill Lynch Asset Management, LLP, ("MLAM") of which Hotchkis and Wiley is a division. MLAM is a wholly, indirect subsidiary of Merrill Lynch & Co. 5. Furman Selz LLC served as the Trust's principal underwriter prior to January 1, 1997. In no instance will portfolio securities be purchased from or sold to Investment Managers, Hirtle Callaghan or any affiliated person of the foregoing entities except to the extent permitted by applicable law or an order of the SEC. Investment decisions for the several Portfolios are made independently from those of any other client accounts (which may include mutual funds) managed or advised by an Investment Manager. Nevertheless, it is possible that at times identical securities will be acceptable for both a Portfolio of the Trust and one or more of such client accounts. In such cases, simultaneous transactions are inevitable. Purchases and sales are then averaged as to price and allocated as to amount according to a formula deemed equitable to each such account. While in some cases this practice could have a detrimental effect upon the price or value of the security as far as a Portfolio is concerned, in other cases it is believed that the ability of a Portfolio to participate in volume transactions may produce better executions for such Portfolio. Portfolio Turnover. Changes may be made in the holdings of any of the Portfolios consistent with their respective investment objectives and policies whenever, in the judgment of the relevant Investment Manager, such changes are believed to be in the best interests of the Portfolio involved. It is anticipated that the annual portfolio turnover rate for a Portfolio will not exceed 100% under normal circumstances. The portfolio turnover rate is calculated by dividing the lesser of purchases or sales of portfolio securities by the average monthly value of a Portfolio's securities. For purposes of this calculation, portfolio securities exclude all securities having a maturity when purchased of one year or less. The portfolio turnover rate for each of the Portfolios that has more than one Investment Manager will be an aggregate of the rates for each individually managed portion of that Portfolio. Rates for each portion, however, may vary significantly. The portfolio turnover rate for each of the Trust's Portfolios for the fiscal year ended June 30, 1997 were: for the Value Equity Portfolio, 97.30%; for the Growth Equity Portfolio, 80.47%; for the Small Capitalization Equity Portfolio, 54.16%; for the International Portfolio, 29.85% and for the Limited Duration Municipal Bond Portfolio, 44.57%. The portfolio turnover rates for the portfolios for the period beginning with the commencement of the respective portfolio's operations and ending on June 30, 1996, were as follows: for the Value Equity Portfolio, 92.00%; for the Growth Equity Portfolio, 80.00%; for the Small Capitalization Equity Portfolio, 38.00%; and for the International Portfolio, 15.00%. The portfolio turnover rate for the Limited Duration Municipal Bond Portfolio for the same period was 116.00%. This rate is due to the fact that securities may be sold by the Investment Manager in order to adjust the overall duration or average effective of the overall portfolio. The portfolio turnover rate for The Fixed Income and Intermediate Term Municipal Bond Portfolios is similarly expected to exceed 100%. Valuation. The net asset value per share of the Portfolios is determined once on each Business Day as of the close of the New York Stock Exchange, which is normally 4 P.M. New York City time, on each day the New York Stock Exchange is open for trading. The Trust does not expect to determine the net asset value of its shares on any day when the Exchange is not open for trading even if there is sufficient trading in its portfolio securities on such days to materially affect the net asset value per share. In valuing the Trust's assets for calculating net asset value, readily marketable portfolio securities listed on a national securities exchange or on NASDAQ are valued at the last sale price on the business day as of which such value is being determined. If there has been no sale on such exchange or on NASDAQ on such day, the security is valued at the closing bid price on such day. Readily marketable securities traded only in the over-the-counter market and not on NASDAQ are valued at the current or last bid price. If no bid is quoted on such day, the security is valued by such method as the Board shall determine in good faith to reflect the security's fair value. All other assets of each Portfolio are valued in such manner as the Board in good faith deems appropriate to reflect their fair value. The net asset value per share of each of the Trust's Portfolios is calculated as follows: All liabilities incurred or accrued are deducted from the valuation of total assets which includes accrued but undistributed income; the resulting net asset value is divided by the number of shares outstanding at the time of the valuation and the result (adjusted to the nearest cent) is the net asset value per share. DIVIDENDS, DISTRIBUTIONS AND TAXES Dividends and Distributions. As noted in the prospectus, each Portfolio will distribute substantially all of its net investment income and net realized capital gains, if any. It is anticipated that The Value Portfolio, The Growth Portfolio and The Small Capitalization Equity Portfolio will declare and distribute dividends from net investment income on a quarterly basis. The Limited Duration Municipal Bond Portfolio will declare dividends daily, with payments on a monthly basis. The International Equity Portfolio will declare dividends semi-annually. The Trust expects to distribute any undistributed net investment income and capital gains for the 12-month period ended each October 31, on or about December 31 of each year. Tax Information. Each of the Trust's Portfolios is treated as a separate entity for federal income tax purposes. Each Portfolio intends to qualify and elect to be treated as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code") for the fiscal year ending June 30, 1996 and intends to continue to so qualify. Accordingly, it is the policy of each Portfolio to distribute to its shareholders by December 31 of each calendar year (i) at least 98% of its ordinary income for such year; (ii) at least 98% of the excess of its realized capital gains over its realized capital losses for the 12-month period ending on October 31 during such year; and (iii) any amounts from the prior calendar year that were not distributed. The following discussion and related discussion in the prospectus do not purport to be a complete description of all tax implications of an investment in the Trust. In addition, such information relates solely to the application of that law to U.S. citizens or residents and U.S. domestic corporations, partnerships, trusts and estates. A shareholder should consult with his or her own tax adviser for more information about Federal, state, local or foreign taxes. Each shareholder who is not a U.S. person should consider the U.S. and foreign tax consequences of ownership of shares of the Trust, including the possibility that such a shareholder may be subject to a U.S. withholding tax on amounts constituting ordinary income. Distributions of net investment income and short-term capital gains are taxable to shareholders as ordinary income. Distributions paid by a Portfolio out of long-term capital gain are taxable to those investors who are subject to income tax as long term capital gain. In the case of corporate shareholders, a portion of the distributions may qualify for the dividends-received deduction to the extent the Trust designates the amount distributed by any Portfolio as a qualifying dividend. The aggregate amount so designated cannot, however, exceed the aggregate amount of qualifying dividends received by that Portfolio for its taxable year. It is expected that dividends from domestic corporations will be part of the gross income for one or more of the Portfolios and, accordingly, that part of the distributions by such Portfolios may be eligible for the dividends-received deduction for corporate shareholders. However, the portion of a particular Portfolio's gross income attributable to qualifying dividends is largely dependent on that Portfolio's investment activities for a particular year and therefore cannot be predicted with any certainty. The deduction may be reduced or eliminated if shares of such Portfolio held by a corporate investor are treated as debt-financed or are held for less than 46 days. Distributions of net investment income and short-term capital gains are taxable to shareholders as long-term capital gains, regardless of the length of time they have held their shares. Capital gains distributions are not eligible for the dividends-received deduction referred to in the previous paragraph. Distributions of any net investment income and net realized capital gains will be taxable as described above, whether received in shares or in cash. Shareholders electing to receive distributions in the form of additional shares will have a cost basis for federal income tax purposes in each share so received equal to the net asset value of a share on the reinvestment date. Distributions are generally taxable when received. However, distributions declared in October, November or December to shareholders of record on a date in such a month and paid the following January are taxable as if received on December 31. Distributions are includable in alternative minimum taxable income in computing a shareholder's liability for the alternative minimum tax. A redemption of Trust shares may result in recognition of a taxable gain or loss. Any loss realized upon a redemption of shares within six months from the date of their purchase will be treated as a long-term capital loss to the extent of any amounts treated as distributions of long-term capital gains during such six-month period. Any loss realized upon a redemption may be disallowed under certain wash sale rules to the extent shares of the same Trust are purchased (through reinvestment of distributions or otherwise) within 30 days before or after the redemption or exchange. The Trust is required to report to the Internal Revenue Service all distributions of taxable income and capital gains as well as gross proceeds from the redemption or exchange of Trust shares, except in the case of exempt shareholders, which includes most corporations. Pursuant to the backup withholding provisions of the Code, distributions of any taxable income and capital gains and proceeds from the redemption of Trust shares may be subject to withholding of federal income tax at the rate of 31 percent in the case of non- exempt shareholders who fail to furnish the Trust with their taxpayer identification numbers and with required certifications regarding their status under the federal income tax law. If the withholding provisions are applicable, any such distributions and proceeds, whether taken in cash or reinvested in additional shares, will be reduced by the amounts required to be withheld. Corporate and other exempt shareholders should provide the Trust with their taxpayer identification numbers or certify their exempt status in order to avoid possible erroneous application of backup withholding. The Trust reserves the right to refuse to open an account for any person failing to provide a certified taxpayer identification number. Tax Matters Relating to the Use of Certain Hedging Instruments and Foreign Investments. Certain of the Portfolios may write, purchase or sell certain options, futures and foreign currency contracts. Such transactions are subject to special tax rules that may affect the amount, timing and character of distributions to shareholders. Unless a Portfolio is eligible to make, and makes, a special election, any such contract that is a "Section 1256 contract" will be "marked-to-market" for Federal income tax purposes at the end of each taxable year, i.e., each contract will be treated for tax purposes as though it had been sold for its fair market value on the last day of the taxable year. In general, unless the special election referred to in the previous sentence is made, gain or loss from transactions in Section 1256 contracts will be 60% long term and 40% short term capital gain or loss. Additionally, Section 1092 of the Code, which applies to certain "straddles," may affect the tax treatment of income derived by a Portfolio from transactions in option, futures and foreign currency contracts. In particular, under this provision, a Portfolio may, for tax purposes, be required to postpone recognition of losses incurred in certain closing transactions. Section 988 of the Code contains special tax rules applicable to certain foreign currency transactions that may affect the amount, timing, and character of income, gain or loss recognized by the Trust. Under these rules, foreign exchange gain or loss realized with respect to foreign currency-denominated debt instruments, foreign currency forward contracts, foreign currency-denominated payables and receivables, and foreign currency options and futures contracts (other than options, futures, and foreign currency contracts that are governed by the mark-to-market and 60%-40% rules of Section 1256 of the Code and for which no election is made) is treated as ordinary income or loss. Under the Code, dividends or gains derived by a Portfolio from any investment in a "passive foreign investment company" ("PFIC")-- a foreign corporation 75 percent or more of the gross income of which consists of interest, dividends, royalties, rents, annuities or other "passive income" or 50 percent or more of the assets of which produce "passive income" -- may subject a Portfolio to U.S. federal income tax even with respect to income distributed by the Portfolio to its shareholders. In addition, any such tax will not itself give rise to a deduction or credit to the Portfolio or to any shareholder. In order to avoid the tax consequences described above, those Portfolios authorized to invest in foreign securities will attempt to avoid investments in PFICs. PERFORMANCE AND OTHER INFORMATION From time to time, a Portfolio may state its total return in sales literature and investor presentations. Total return may be stated for any relevant period specified. Any statements of total return will be accompanied by information on that Portfolio's average annual compounded rate of return over the most recent four calendar quarters and the period from the inception of that Portfolio's operations. The Trust may also advertise aggregate and average total return information over different periods of time for the various Portfolios. The average annual compounded rate of return for a Portfolio is determined by reference to a hypothetical $1,000 investment that includes capital appreciation and depreciation for the stated period, according to the formula P(1+T)/n/ = ERV. For purposes of this formula, the variables represent the following values: P = a hypothetical initial purchase of $1,000 T = average annual total return n = number of years ERV = redeemable value of hypothetical $1,000 initial purchase at the end of the period. Aggregate total return is calculated in a similar manner, except that the results are not annualized. Each calculation assumes that all dividends and distributions are reinvested at net asset value on the reinvestment dates during the period and gives effect to the maximum applicable sales charge. From time to time, evaluations of a Trust's performance by independent sources may also be used in advertisements and in information furnished to present or prospective investors in the Trusts. Investors should note that the investment results of each of the Trust's Portfolios will fluctuate over time, and any presentation of a Portfolio's total return for any period should not be considered as a representation of what an investment may earn or what an investor's total return may be in any future period. The table below shows the name and address of record of each person known to the Trust to hold, as of record or beneficially, 5% or more of shares of the Trust as August 29, 1997. Hirtle Callaghan may be deemed to have, or share, investment and/or voting power with respect to more than 50% of the shares of the Trust's portfolios, with respect to which shares Hirtle Callaghan disclaims beneficial ownership. [SUBJECT TO UPDATE BY AMENDMENT]
- ----------------------------------------------------------------------------------------------------------------- Small Name and Address of Value Growth Capitalization International Limited Duration Record Holder Equity Equity Equity Equity Municipal Bond - ----------------------------------------------------------------------------------------------------------------- Bankers Trust Company 68.19% 78.14% 83.25% 65.50% 94.12% 1 Bankers Trust Plaza New York, N.Y. 10006 PNC Bank, N.A. 12.41% 7.86% 6.69% 18.04% (1) -- P.O. Box 7780-1888 Philadelphia, PA 19182 Northern Trust Company 11.11% (2) 8.16% (3) 6.94% (4) 5.89% (5) -- P.O. Box 92956 Chicago, IL 60675 - ---------------------------- (1) Shares include 12.24% held FBO 78 PGH Pension (2) Shares include 10.45% held FBO SFTRS 26-31827 (3) Shares include 7.48% held FBO SFTRS HC (4) Shares include 6.29% held FBO SFTRS HC (5) Shares include 5.34% held FBO SFTRS HC
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS [TO BE SUPPLIED BY AMENDMENT] Ratings Appendix Ratings for Corporate Debt Securities
Moody's Investors Service, Inc. Standard & Poor's Corporation Aaa AAA Judged to be of the best quality; smallest This is the highest rating assigned by S&P to a degree of investment risk debt obligation and indicates an extremely strong capacity to pay principal and interest. Aa AA Judged to be of high quality by all Also qualify as high-quality debt obligations. standards; together with Aaa group, Capacity to pay principal and interest is very comprise what are generally known as strong "high grade bonds" A A Possess many favorable investment Strong capacity to pay principal and interest, attributes and are to be considered as although securities in this category are somewhat upper medium grade obligations more susceptible to the adverse effects of changes in circumstances and economic conditions. Baa BBB Medium grade obligations, i.e. Bonds rated BBB are regarded as having an adequate they are neither highly protected nor capacity to pay principal and interest. Although poorly secured. Interest payments they normally exhibit adequate protection and principal security appear parameters, adverse economic conditions or adequate for present but certain changing circumstances are more likely to lead to protective elements may be lacking or a weakened capacity to pay principal and interest unreliable over time. Lacking in for bonds in this category than for bonds in the A outstanding investment characteristics and category. have speculative characteristics as well Ba BB Judged to have speculative elements: their Bonds rated BB are regarded, on balance, as future cannot be considered as well predominantly speculative with respect to the assured. Often the protection of issuer's capacity to pay interest and repay interest and principal payments principal in accordance with the terms of the may every moderate and thereby not well obligation. While such bonds will likely have some safeguarded during both good and bad quality and protective characteristics, these are times over the future. Uncertainty outweighed by large uncertainties or major risk of position characterize bonds exposures to adverse conditions. in this class
RATINGS FOR MUNICIPAL SECURITIES The following summarizes the two highest ratings used by Standard & Poor's Corporation for short term notes: SP-1 -- Loans bearing this designation evidence a very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a (+) designation. SP-2 -- Loans bearing this designation evidence a satisfactory capacity to pay principal and interest. The following summarizes the two highest ratings used by Moody's Investors Service, Inc. for short term notes: MIG-1/VIG-1 -- Obligations bearing these designations are of the best quality, enjoying strong protection from established cash flows of funds for their servicing or from established and broad-based access to the market for refinancing, or both. MIG-1/VIG-2 -- Obligations bearing these designations are of the high quality, with margins of protection ample although not so large as in the preceding group. The following summarizes the two highest ratings used by Standard & Poor's Corporation for commercial paper: Commercial Paper rated A-1 by Standard & Poor's Corporation indicated that the degree of safety regarding timely payment is either overwhelming or very strong. Those issues determined to possess overwhelming safety characteristics are denoted A-1+. Capacity for timely payment on commercial paper rated A-2 is strong, but the relative degree of safety is not as high as for issues designated A-1. The following summarizes the two highest ratings used by Moody's Investors Service, Inc. for commercial paper: The rating Prime-1 is the highest commercial paper rating assigned by Moody's. Issuers rated Prime-1 (or related supporting institutions) are considered to have a superior capacity for repayment of short-term promissory obligations. Issuers rated Prime-2 (or related supporting institutions) are considered to have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics of issuers rated Prime-1 but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternative liquidity is maintained. Part C OTHER INFORMATION Item 24. Financial Statements and Exhibits (a) TO BE SUPPLIED BY AMENDMENT (b) TO BE SUPPLIED BY AMENDMENT (c) TO BE SUPPLIED BY AMENDMENT (b) Exhibits: (1)(a)Certificate of Trust filed on December 15, 1994 with the Secretary of State of Delaware. FILED HEREWITH (1)(b)Amended and Restated Declaration and Agreement of Trust (as amended November 9, 1995) (Incorporated herein by reference to Item 1(b) contained in Post-effective Amendment No. 4, filed with the Securities and Exchange Commission on December 16, 1996.) (2) Bylaws of the Trust (as amended November 9, 1995) (Incorporated herein by reference to Item 2 contained in Post-effective Amendment No. 4, filed with the Securities and Exchange Commission on December 16, 1996.) (3) /[voting trust agreement]/ Not Applicable. (4) /[instruments defining right of securityholders]/ Not Applicable. (5) Investment Advisory Agreements (a) Consulting Agreement between the Trust and Hirtle, Callaghan & Co., Inc. FILED HEREWITH (b) Portfolio Management Contract between the Trust and Institutional Capital Corporation related to the Value Equity Portfolio. FILED HEREWITH (c) Portfolio Management Contracts between the Trust and Hotchkis and Wiley related to the Value Equity Portfolio. (Incorporated herein by reference to Item 5(c)(A-B) in Post-effective Amendment No. 3, filed with the Commission on October 18, 1996.) (d) Portfolio Management Contract between the Trust and Goldman Sachs Asset Management and Jennison Associates Capital Corporation related to the Growth Equity Portfolio. FILED HEREWITH (e) Portfolio Management Contract between the Trust and Clover Capital Management Inc. and Frontier Capital Management Co. related to the Small Capitalization Equity Portfolio. FILED HEREWITH (f) Portfolio Management Contract between the Trust and Brinson Partners, Inc. related to the International Equity Portfolio. FILED HEREWITH (g) Portfolio Management Contract between the Trust and Morgan Grenfell Capital Management Inc. related to the Limited Duration Municipal Bond Portfolio. FILED HEREWITH (h) Portfolio Management Contract between the Trust and Morgan Grenfell Capital Management Inc. related to the Fixed Income Portfolio. FILED HEREWITH (i) Portfolio Management Contract between the Trust and Morgan Grenfell Capital Management Inc. related to the Intermediate Term Portfolio. FILED HEREWITH (6) Distribution Agreement between BISYS Fund Services (Incorporated herein by reference to Item 1(b) contained in Post-effective Amendment No. 4, filed with the Securities and Exchange Commission on December 16, 1996.) (7) [bonus, pension and profit-sharing plans] Not Applicable. (8) Custodian Agreement between Bankers Trust Company and the Trust FILED HEREWITH (9) Registrant's Agreements with BISYS Fund Services (i) Amendment to Adminstration Agreement (ii) Amendment to Transfer Agency Agreement (iii) Amendment to Fund Accounting Agreement (Incorporated herein by reference to Item 9(b) contained in Post-effective Amendment No. 4, filed with the Securities and Exchange Commission on December 16, 1996.) (iv) Omnibus Fee Agreement. FILED HEREWITH (10) Opinion of Counsel and related consent. TO BE FILED BY AMENDMENT (11) Consent of Accountants. TO BE FILED BY AMENDMENT (12) Audited Financial Statements TO BE FILED BY AMENDMENT (13) [agreements regarding initial capital] Not Applicable. (14) [model retirement plans] Not Applicable. (15) [Rule 12b-1 plan] Not Applicable. (16) [computation for Item 22 performance] Not Applicable. (17) Financial Data Schedule [See Item 27, below] (18) [plan pursuant to rule 18f-3] Not Applicable. (24) Powers of Attorney (Incorporated herein by reference to Item 24 contained in Post-effective Amendment No. 4, filed with the Securities and Exchange Commission on December 16, 1996.) (27) Financial Data Schedules (Rule 483 under the Securities Act of 1933) (Incorporated herein by reference to filing made by Registrant on September 10, 1997, with the Securities and Exchange Commission, pursuant to Rule 30(d) under Investment Company Act of 1940.) Item 25. Persons Controlled by or Under Common Control with Registrant. -------------------------------------------------------------- None. Item 26. Number of Holders of Securities. -------------------------------- [SUBJECT TO COMPLETION BY AMENDMENT] Title of Class Number of Record Holders as of __________ Units of beneficial interest, par value $.001 The Value Equity Portfolio ____ The Growth Equity Portfolio ____ The Small Capitalization Equity ____ Portfolio The International Equity Portfolio ____ The Limited Duration Municipal Bond Portfolio ____ The Fixed Income Portfolio ____ The Intermediate Term Portfolio ____ Item 27. Indemnification. ---------------- Reference is made to Article VII of the Trust's Amended and Restated Agreement and Declaration of Trust and to Article VI of the Trust's By-Laws, which are incorporated herein by reference. Pursuant to Rule 484 under the Securities Act of 1933 (the "Act"), as amended, the Trust furnishes the following undertaking: Insofar as indemnification for liabilities arising under the Act may be permitted to trustees, officers and controlling persons of the Trust pursuant to the foregoing provisions, or otherwise, the Trust has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Trust of expenses incurred or paid by a trustee, officer or controlling person of the Trust in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer or controlling person in connection with the securities being registered, the Trust will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Item 28. Business and Other Connections of Investment Advisers. ------------------------------------------------------ Information relating to the business and other connections of each of the Trust's Investment Managers and each director, officer or partner of such managers are hereby incorporated by reference from each such manager's Form ADV, as filed with the Securities and Exchange Commission, as follows: Investment Manager SEC File No. 801- ADV Item No. - ------------------------------------------------------------------------------ Brinson Partners, Inc. 34910 Part I (8, 10 & 12) Part II (6 - 9, 13) Frontier Capital Management Co. 15724 Part I (8, 10 & 12) Part II (6 - 9, 13) Jennison Associates Capital Corp. 5608 Part I (8, 10 & 12) Part II (6 - 9, 13) Institutional Capital Corporation 40779 Part I (8, 10 & 12) Part II (6 - 9, 13) Goldman Sachs Asset Management _____ Part I (8, 10 & 12) Part II (6 - 9, 13) Clover Capital Management Inc. 27041 Part I (8, 10 & 12) Part II (6 - 9, 13) Morgan Grenfell Capital Management Inc. 27291 Part I (8, 10 & 12) Part II (6 - 9, 13) Hotchkis and Wiley, (a division of Merrill Lynch Asset Management LP 11583 Part I (8, 10 & 12) Part II (6 - 9, 13) Hirtle, Callaghan & Co., Inc. ("HCCI") has entered into a Consulting Agreement with the Trust. Although HCCI is a registered investment adviser, HCCI does not have investment discretion with regard to the assets of the Trust. Information regarding the business and other connections of HCCI's officers and directors is incorporated by reference to Part I (Items 8, 10 and 12) and Part II (Items 6 - 9 and 13) of HCCI's Form ADV, File No. 801-32688 which has been filed with the Securities and Exchange Commission. Item 29. Principal Underwriters. ----------------------- (a) BISYS Fund Services, Inc. ("BISYS") serves as the principal underwriter for the Trust. BISYS also serves as a principal underwriter for the the following investment companies: The American Performance Funds, AmSouth Mutual funds, The ARCH Fund, Inc., The BB&T Mutual Funds Group, The Coventry Group, First Choice Funds, Fountain Square Funds, HSBC Family of Funds, The HighMark Group, The Infinity Mutual Fudns, Inc., The Kent Funds, Marketwatch Funds, MMA Praxis Mutual Funds, M.S.C.&T. Funds, Pacific Capital Funds, Parkstone Group of Funds, The Parkstone Riverfront Funds, Inc., Pegasus Funds, Qualivest Funds, The Republic Funds The SBSF Funds, Inc. (dba Key Mutual Funds), The Sessions Group, Summit Investment Trust, The Time Horizon Funds, and The Victory Portfolios. (b) The following table sets forth the indicated information with respect to each director and officer of BISYS. Unless otherwise noted, the business address for each such person is 3435 Stelzer Road, Columbus, Ohio 43219: Name Positions and Offices with Positions with Trust - ---- Underwriter -------------------- ----------- The BISYS Group, Inc. Sole shareholder None 150 Clove Road Sole Limited Partner Little Falls, NJ 07424 BISYS Fund Services, Inc. 3435 Stlezer Road Columbus Ohio 53219 Sole General Partner None (c) Not Applicable. Item 30. Location of Accounts and Records. --------------------------------- (a) Bankers Trust Company, 130 Liberty Street, One Bankers Trust Plaza, New York, New York 10006 (records relating to its function as custodian.) (b) BISYS Fund Services, 125 West 55th Street, New York, New York 10119 (records relating to its function as administrator, accounting agent, transfer and dividend disbursing agent and distributor.) (c) BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio 43219. (d) Records relating to the activities of each of the investment managers on behalf of the indicated portfolio are maintained as follows: Investment Manager Location of Accounts and ------------------ Records ------------------------ The International Equity Portfolio - ---------------------------------- Brinson Partners, Inc. 209 South LaSalle Street Chicago, IL 60604-1295 The Small Capitalization Equity Portfolio - ------------------------------------------ Clover Capital Management, Inc. 11 Tobey Village Office Park Pittsford, NY 14534 Frontier Capital Management 99 Summer Street Company Boston, MA 02110 The Value Equity Portfolio - -------------------------- Hotchkis and Wiley 800 West Sixth Street Los Angeles, California 90017 Institutional Capital 225 West Wacker Corporation Suite 2400 Chicago, IL 60606 The Growth Equity Portfolio: - --------------------------- Jennison Associates Capital Corp. 466 Lexington Ave. New York, NY 10017 Goldman Sachs Asset Management 85 Broad Street New York, NY 10004 The Limited Duration Municipal Bond Portfolio: - --------------------------------------------- Morgan Grenfell Capital 885 Third Avenue Management Incorporated New York, NY 10022-4802 and 1435 Walnut Street (4th Fl.) Philadelphia, PA 19102 Item 31. Management Services. -------------------- None. Item 32. Undertakings. ------------- Not Applicable. -------------- SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has duly caused this Post-Effective Amendment No. 7 to be signed on its behalf by the undersigned, thereto duly authorized in the City of Wayne, and the Commonwealth of Pennsylvania on December 30, 1997. THE HIRTLE CALLAGHAN TRUST BY: /s/ --------------------------- Donald E. Callaghan Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the date indicated. /s/ Treasurer and Vice-President December 30, 1997 ------------------------- (Principal Financial Officer) Robert Zion /s/ Trustee December 30, 1997 ------------------------- Donald E. Callaghan /s/ * Trustee December 30, 1997 ------------------------- Richard W. Wortham, III /s/ * Trustee December 30, 1997 ------------------------- Ross H. Goodman /s/ * Trustee December 30, 1997 ------------------------- Jarrett Burt Kling /s/ * Trustee December 30, 1997 ------------------------- David M. Spungen /s/ * Trustee December 30, 1997 ------------------------- Jonathan J. Hirtle
* signed by Donald E. Callaghan, pursuant to powers of attorney filed as Exhibits to Post-effective Amendment No 4, filed with the Commission on December 16, 1996 and incorporated by reference herein. EX-1 2 EXHIBIT LIST Exhibit List (1) Exhibit List (2) Certificate of Trust filed on December 15, 1994 with the Secretary of the State of Deleware. (3) Consulting Agreement between the Trust and Hirtle, Callaghan & Co., Inc. (4) Portfolio Management Contract between the Trust and Institutional Capital Corporation related to the Value Equity Portfolio. (5) Portfolio Management Contract between the Trust and Goldman Sachs Asset Management related to the Growth Equity Portfolio. (6) Portfolio Management Contract between the Trust and Jennison Associates Capital Corporation related to the Growth Equity Portfolio. (7) Portfolio Management Contract between the Trust and Clover Capital Management Inc. related to the Small Capitalization Equity Portfolio. (8) Portfolio Management Contract between the Trust and Frontier Capital Management Co. related to the Small Capitalization Equity Portfolio. (9) Portfolio Management Contract between the Trust and Brinson Partners, Inc. related to the International Equity Portfolio. (10) Portfolio Management Contract between the Trust and Morgan Grenfell Capital Management Inc. related to the Limited Duration Municipal Bond Portfolio. (11) Portfolio Management Contract between the Trust and Morgan Grenfell Capital Management Inc. related to the Fixed Income Portfolio. (12) Portfolio Management Contract between the Trust and Morgan Grenfell Capital Management Inc. related to the Intermediate Term Portfolio. (13) Custodian Agreement between Bankers Trust Company and the Trust. (14) Amendment to Administration Agreement. (15) Amendment to Transfer Agency Agreement. (16) Amendment to Fund Accounting Agreement. (17) Omnibus Fee Agreement. EX-2 3 CERT OF TRUST STATE OF DELAWARE OFFICE OF THE SECRETARY I, EDWARD J. FREEL, SECRETARY OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORECT COPY OF THE CERTIFIATE OF BUSINESS TRUST REGISTRATION OF "THE HIRTLE CALLAGHAN TRUST", FILED IN THIS OFFICE ON THE FIFTEENTH DAY OF DECEMBER, A.D. 1994, AT 10 O'CLOCK A.M. /s/ ________________________________________ Edward J. Freel, Secretary of the State AUTHENTICATION: 7342070 DATE: 12-16-94 EX-3 4 CONSULT AGREE. CONSULTING SERVICES AGREEMENT AGREEMENT made this 21st day of July, 1995 between HIRTLE CALLAGHAN & CO., INC. , a Delaware corporation ("HCCI") and THE HIRTLE CALLAGHAN TRUST, a Delaware business trust ("Trust"). WHEREAS, the Trust is registered as an open-end, diversified, management series investment company under the Investment Company Act of 1940, as amended ("Investment Company Act") which currently offers five series of beneficial interests ("shares") representing interests in separate investment portfolios, and may offer additional portfolios in the future (each referred to hereinafter as a "Portfolio" and collectively, as the "Portfolios"); and WHEREAS, the Trust intends to retain one or more investment management organizations to provide portfolio management services to its Portfolios and HCCI is willing, in accordance with the terms and conditions hereof, to provide assistance to the Trust in monitoring investment management organizations in accordance with this Agreement; NOW THEREFORE, in consideration of the mutual promises and covenants set forth herein and intending to be legally bound hereby, it is agreed between the parties as follows: 1. Duties of HCCI. (a) HCCI shall assist the Trust in evaluating and monitoring investment management organizations retained by the Trust ("Portfolio Managers") and/or investment management organizations proposed to be retained by the Trust ("Manager Candidates"). Such assistance shall be provided to the Trust in such form as may be agreed upon by the Trust and HCCI from time to time and may involve the preparation of oral and/or written presentations to the Trust's Board of Trustees ("Board") or committees established by the Board. HCCI, upon the request of the Trustees, shall make its officers and/or employees available to serve as officers, employees or Trustees of the Trust and provide office space and equipment sufficient for the maintenance of the Trust's principal office. (b) HCCI shall not have investment discretion with respect to the purchase or sale of securities by any Portfolio, or any other assets of the Trust or its Portfolios. Nothing in this Agreement shall be construed to render HCCI an agent of the Trust or otherwise authorized to act on the Trust's behalf, except to the extent that the Trust may expressly so request in writing. Notwithstanding the foregoing, individual officers or employees of HCCI may, from time to time serve as officers and/or trustees of the Trust and this Agreement shall not be construed as imposing any limitation on the ability of any such individual to act in such capacity in accordance with the Trust's Declaration of Trust and Bylaws. 2. Expenses and Compensation. HCCI shall pay all of its expenses incurred in the performance of its duties under this Agreement. For its services under this Agreement, HCCI shall be entitled to receive a fee at the annual rate of .05% of the average daily net assets of the Trust, which fee shall be payable monthly. If the expenses borne by the Trust in any year exceed the applicable expense limitations imposed by the securities regulations of any state in which shares are registered or qualified for sale bo the public, HCCI shall reimburse the Trust for any excess up to the full amount of the fee to which it is entitled under this Section 2. 3. Limitation of Liability. (a) HCCI shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Trust in connection with the matters to which this Agreement relates including, without limitation, losses that may be sustained in connection with the allocation or reallocation of assets among various asset categories by the Trust, the retention or termination of any investment management organization by the Trust or any recommendation or investment made by any such organization, whether or not any such action was taken in reliance upon information provided by HCCI as part of the consulting services that HCCI is obligated to provide hereunder except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of HCCI in the performance of its duties or from reckless disregard by HCCI of its obligations and duties under this Agreement. (b) Notwithstanding the foregoing, HCCI expressly agrees that the Trust may rely upon information provided, in writing, by HCCI to the Trust (including, without limitation, information contained in HCCI's then current Form ADV) in accordance with Section 8 of this Agreement or otherwise, in preparing the Trust's registration statement and amendments thereto and certain periodic reports relating to the Trust and its Portfolios that are required to be furnished to shareholders of the Trust and/or filed with the Securities and Exchange Commission (collectively, "SEC Filings"). HCCI agrees to indemnify and hold harmless the Trust and each of its Trustees, officers and employees from any claims, liabilities and expenses, including reasonable attorneys' fees, incurred as a result of any untrue statement or alleged untrue statement of a material fact made by HCCI in any such written information and upon which the Trust relies in preparing any SEC Filing, or any omission or alleged omission to state in such written information a material fact necessary to make such statements not misleading ("material omission"). HCCI will not, however, be required to so indemnify any person under this Section 3 to the extent that, in making any such statement or material omission, HCCI relied upon an untrue or alleged untrue statement of material fact made by, or material omission on the part of, any officer, Trustee or agent of the Trust (other than an officer, Trustee or agent that is an employee, officer or director of HCCI) or where such statement or material omission was made in reliance upon information furnished, in writing, by any such officer, Trustee or agent, including, without limitation, the Trust's custodian bank, administrator, distributor, accounting agent or any Portfolio Manager. 4. Permissible Interest.Subject to and in accordance with the Trust's Declaration of Trust and Bylaws and corresponding governing documents of HCCI, Trustees, officers, agents and shareholders of the Trust may have an interest in HCCI as officers, directors, agents and/or shareholders or otherwise. HCCI may also have similar interests in the Trust. The effect of any such interrelationships shall be governed by said governing documents and the provisions of the Investment Company Act. 5 Duration, Termination and Amendments.(a) This Agreement shall become effective as of the date first written above and shall continue in effect for two years. Thereafter, this Agreement shall continue in effect from year to year for so long as its continuance is specifically approved at least annually by (i) a majority of the Board or the vote of the holders of a majority of the Trust's outstanding voting securities; and (ii) the affirmative vote, cast in person at a meeting called for the purpose of voting on such approval, of a majority of those members of the Board ("Independent Trustees") who are not "interested persons" of the Trust. (b) This Agreement may be terminated by the Trust or by HCCI at any time and without penalty upon sixty days written notice to the other party, which notice may be waived by the party entitled to it. This Agreement may not be amended except by an instrument in writing and signed by the party to be bound thereby provided that if the Investment Company Act requires that such amendment be approved by the vote of the Board, the Independent Directors or the holders of a majority of the Trust's outstanding securities, such approval must be obtained before any such amendment may become effective. This Agreement shall terminate automatically upon its assignment. (c) For purposes of this Agreement, the terms "majority of the outstanding voting securities, "assignment" and "interested person" shall have the meanings set forth in the Investment Company Act. 6. Confidentiality. The Trust acknowledges and agrees that it may gain access to methodologies and other information that is proprietary to HCCI ("Proprietary Information") as a result of the services provided to the Trust by HCCI hereunder. The Trust agrees that it will use any such Proprietary Information exclusively in connection with the oversight of the investment activities of Portfolio Managers and the evaluation of Manager Candidates. The Trust further agrees that it shall use its best efforts to ensure that any agent or affiliate of the Trust who may gain access to Proprietary Information shall be made aware of its proprietary nature and shall likewise treat it as confidential. 7 Use of Name. It is acknowledged and agreed that the names "Hirtle Callaghan," "Hirtle Callaghan Chief Investment Officers" (which is a registered trademark of HCCI), and derivatives of either, as well as any logo that is now or shall later become associated with either name ("Marks") are valuable property of HCCI and that the use of the Marks, or any one of them, is subject to the approval of HCCI. HCCI hereby grants to the Trust a non-exclusive license to use the Marks provided that, in the event that this Agreement terminates, such license shall likewise terminate and the Trust shall promptly cease using the Marks and shall promptly take such action as is necessary to change the name of the Trust. 8. Representation, Warranties and Agreements of HCCI. HCCI represents and warrants that: (a) It is registered as an investment adviser under the Investment Advisers Act and that it will maintain such registration in full force and effect. (b) It understands that, as a result of its services hereunder, certain of its employees and officers may be deemed "access persons" of the Trust within the meaning of Rule 17j-1 under the Investment Company Act and that each such access person is subject to the provisions of the code of ethics adopted by the Trust in compliance with such rule ("Trust's Code"). HCCI further represents that it is subject to a written code of ethics complying with the requirements of Rule 204-2(a)(12) under the Investment Advisers Act ("HCCI Code") and will provide the Trust with a copy of such code of ethics. During the period that this Agreement is in effect, an officer or director of HCCI shall certify to the Trust, at least annually, that HCCI has complied with the requirements of HCCI's Code during the prior year; and that either (i) that no violation of such code occurred or (ii) if such a violation occurred, that appropriate action was taken in response to such violation. Upon the written request of the Trust, HCCI shall permit the Trust, or it designated agents, to examine the reports required to be made by HCCI's officers and employees under HCCI's Code. In addition, HCCI acknowledges that the Trust may, in response to regulations or recommendations issued by the Securities and Exchange Commission or other regulatory agencies, from time to time request additional information regarding the personal securities trading of its directors, partners, officers and employees and the policies of HCCI with regard to such trading. HCCI agrees that it will make every effort to respond to the Trust's reasonable requests in this area. (c) Upon request of the Trust, HCCI shall promptly supply the Trust with any information concerning HCCI and its stockholders, employees and affiliates which the Trust may reasonably require in connection with the preparation of its registration statements, proxy materials, reports and other documents required, under applicable state or Federal laws, to be filed with state or Federal agencies or to be provided to shareholders of the Trust. (d) In performing its duties hereunder, HCCI shall comply with applicable provisions of the Investment Company Act and Investment Advisers Act. In particular, and without limiting the generality of the foregoing, HCCI acknowledges and agrees that any records it maintains for the Trust are the property of the Trust; that HCCI will surrender promptly to the Trust any such records upon the Trust's request; and that it shall furnish to the Board such information as may be reasonably necessary for the Board to evaluate the terms of this Agreement and HCCI performance hereunder.. 9. Status of HCCI. The Trust and HCCI acknowledge and agree that the relationship between HCCI and the Trust is that of an independent contractor and under no circumstances shall any employee of HCCI be deemed an employee of the Trust or any other organization that the Trust may, from time to time, engage to provide services to the Trust, its Portfolios or its shareholders, notwithstanding the service of any such employee of HCCI as an officer or Trustee of the Trust in the manner contemplated under this Agreement. The parties also acknowledge and agree that nothing in this Agreement shall be construed to restrict the right of HCCI or any affiliate of HCCI to perform investment management or other services to any person or entity, including without limitation, other investment companies and persons who may retain HCCI to provide individualized investment management services and the performance of such services shall not be deemed to violate or give rise to any duty or obligations to the Trust. 10. Counterparts and Notice. This Agreement many be executed in one or more counterparts, each of which shall be deemed to be an original. Any notice required to be given under this Agreement shall be deemed given when received, in writing addressed and delivered, by certified mail, by hand or via overnight delivery service as follows: If to the Trust: The Hirtle Callaghan Trust with copy to: Audrey C.Talley, Esq. 575 E. Swedesford Road Stradley Ronon Steven & Young Wayne. PA 19087-1937 2600 One Commerce Square Pennsylvania, PA 19103-7098 If to HCCI: Mr. Donald E. Callaghan Hirtle Callaghan & Co., Inc. 575 E. Swedesford Road Wayne. PA 19087-1937 11. Miscellaneous. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and shall be governed by the law of the state of Delaware provided that nothing herein shall be construed as inconsistent with the Investment Company Act or the Investment Advisers Act. The provisions of Sections 6 and 7 of this Agreement, relating to confidentiality of certain information and use of HCCI's Marks by the Trust shall survive the termination of this Agreement. Portfolio Manager is hereby expressly put on notice of the limitations of shareholder and Trustee liability set forth in the Declaration of Trust of the Trust and agrees that obligations assumed by the Trust pursuant to this Agreement shall be limited in all cases to the assets of The Growth Equity Portfolio. Portfolio Manager further agrees that it will not seek satisfaction of any such obligations from the shareholders or any individual shareholder of the Trust, or from the Trustees of the Trust or any individual Trustee of the Trust. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers thereunto duly authorized as of the day and year first written above. Hirtle, Callaghan & Co. Inc. By: /s/ The Hirtle Callaghan Trust By: /s/ EX-4 5 VALUE CONTRACT PORTFOLIO MANAGEMENT AGREEMENTAGREEMENT made this __________day of August, 1995 between Institutional Capital Corporation,a corporation organized under the laws of Delaware ("Portfolio Manager") and THE HIRTLECALLAGHAN TRUST, a Delaware business trust ("Trust"). WHEREAS, the Trust is registered as an open-end, diversified, management series investment companyunder the Investment Company Act of 1940, as amended ("Investment Company Act") which currentlyoffers five series of beneficial interests ("shares") representing interests in separate investmentportfolios, and may offer additional portfolios in the future; and WHEREAS, the Trust desires to retain the Portfolio Manager to provide a continuous program ofinvestment management for The Value Equity Portfolio of the Trust ("Portfolio") and Portfolio Manageris willing, in accordance with the terms and conditions hereof, to provide such services to the Trust; NOW THEREFORE, in consideration of the promises and covenants set forth herein and intending tobe legally bound hereby, it is agreed between the parties as follows: 1. Appointment of Portfolio Manager. The Trust hereby retains Portfolio Manager to provide the investment services set forth herein andPortfolio Manager agrees to accept such appointment. In carrying out its responsibilities under thisAgreement, the Portfolio Manager shall at all times act in accordance with the investment objectives,policies and restrictions applicable to the Portfolio as set forth in the then current Registration Statementof the Trust, applicable provisions of the Investment Company Act and the rules and regulationspromulgated under that Act and other applicable federal securities laws. 2. Duties of Portfolio Manager. (a) Portfolio Manager shall provide a continuous program of investment management for that portionof the assets of the Portfolio ("Account") that may, from time to time be allocated to it by the Trust'sBoard of Trustees, in writing, by an authorized officer of the Trust. It is understood that the Accountmay consist of all, a portion of or none of the assets of the Portfolio, and that the Board of Trustees hasthe right to allocate and reallocate such assets to the Account at any time, and from time to time, uponsuch notice to the Portfolio Manager as may be reasonably necessary, in the view of the Trust, to ensureorderly management of the Account or the Portfolio. (b) Subject to the general supervision of the Trust's Board of Trustees, Portfolio Manager shall have soleinvestment discretion with respect to the Account, including investment research, selection of thesecurities to be purchased and sold and the portion of the Account, if any, that shall be held uninvested,and the selection of brokers and dealers through which securities transactions in the Account shall beexecuted. Specifically, and without limiting the generality of the foregoing, Portfolio Manager agreesthat it will: (i) promptly advise the Portfolio's designated custodian bank and administrator or accountingagent of each purchase and sale, as the case may be, made on behalf of the Account, specifying thename and quantity of the security purchased or sold, the unit and aggregate purchase or sale price,commission paid, the market on which the transaction was effected, the trade date, the settlement date,the identity of the effecting broker or dealer and/or such other information, and in such manner, as mayfrom time to time be reasonably requested by the Trust; (ii) maintain all applicable books and records with respect to the securities transactions of theAccount. Specifically, Portfolio Manager agrees to maintain with respect to the Account those recordsrequired to be maintained under Rule 31a-1(b)(1), (b)(5) and (b)(6) under the Investment Company Actwith respect to transactions in the Account including, without limitation, records which reflect securitiespurchased or sold in the Account, showing for each such transaction, the name and quantity ofsecurities, the unit and aggregate purchase or sale price, commission paid, the market on which thetransaction was effected, the trade date, the settlement date, and the identity of the effecting broker ordealer. Portfolio Manager will preserve such records in the manner and for the periods prescribed byRule 31a-2 under the Investment Company Act. Portfolio Manager acknowledges and agrees that allrecords it maintains for the Trust are the property of the Trust and Portfolio Manager will surrenderpromptly to the Trust any such records upon the Trust's request. The Trust agrees, however, thatPortfolio Manager may retain copies of those records that are required to be maintained by PortfolioManager under federal or state regulations to which it may be subject or are reasonably necessary forpurposes of conducting its business; (iii) provide, in a timely manner, such information as may be reasonably requested by the Trustor its designated agents in connection with, among other things, the daily computation of the Portfolio'snet asset value and net income, preparation of proxy statements or amendments to the Trust'sregistration statement and monitoring investments made in the Account to ensure compliance with thevarious limitations on investments applicable to the Portfolio and to ensure that the Portfolio willcontinue to qualify for the special tax treatment accorded to regulated investment companies underSubchapter M of the Internal Revenue Code of 1986, as amended; and (iv) render regular reports to the Trust concerning the performance of Portfolio Manager of itsresponsibilities under this Agreement. In particular, Portfolio Manager agrees that it will, at thereasonable request of the Board of Trustees, attend meetings of the Board or its validly constitutedcommittees and will, in addition, make its officers and employees available to meet with the officersand employees of the Trust at least quarterly and at other times upon reasonable notice, to review theinvestments and investment program of the Account. 3. Portfolio Transaction and Brokerage. In placing orders for portfolio securities with brokers anddealers, Portfolio Manager shall use its best efforts to execute securities transactions on behalf of theAccount in such a manner that the total cost or proceeds in each transaction is the most favorable underthe circumstances. Portfolio Manager may, however, in its discretion, direct orders to brokers thatprovide to Portfolio Manager research, analysis, advice and similar services, and Portfolio Manager may cause the Account to pay to those brokers a higher commission than may be charged by other brokersfor similar transactions, provided that Portfolio Manager determines in good faith that such commissionis reasonable in terms either of the particular transaction or of the overall responsibility of the PortfolioManager to the Account and any other accounts with respect to which Portfolio Manager exercisesinvestment discretion, and provided further that the extent and continuation of any such practice issubject to review by the Trust's Board of Trustees. Portfolio Manager shall not execute any portfoliotransactions for the Trust with a broker or dealer which is an "affiliated person" of the Trust or PortfolioManager, including any other investment advisory organization that may, from time to time act as aportfolio manager for the Portfolio or any of the Trust's other Portfolios, without prior written approvalof the Trust. The Trust shall provide a list of such affiliated brokers and dealers to Portfolio Managerand will promptly advise Portfolio Manager of any changes in such list. 4. Expenses and Compensation.Portfolio Manager shall pay all of its expenses incurred in the performance of its duties under thisAgreement and shall not be required to pay any other expenses of the Trust, including withoutlimitation, brokerage expenses. For its services under this Agreement, Portfolio Manager shall beentitled to receive a fee at the annual rate of .30% of the average daily net asset value of the Account,which fee shall be payable monthly. 5. Limitation of Liability and Indemnification.(a) Portfolio Manager shall not be liable for any error of judgment or mistake of law or for any losssuffered by the Trust in connection with the matters to which this Agreement relates including, withoutlimitation, losses that may be sustained in connection with the purchase, holding, redemption or saleof any security or other investment by the Trust except a loss resulting from willful misfeasance, badfaith or gross negligence on the part of Portfolio Manager in the performance of its duties or fromreckless disregard by it of its duties under this Agreement. (b) Notwithstanding the foregoing, Portfolio Manager expressly agrees that the Trust may rely uponwritten information provided, in writing, by Portfolio Manager to the Trust (including, withoutlimitation, information contained in Portfolio Manager's then current Form ADV) in accordance withSection 9 of the Agreement or otherwise, in preparing the Trust's registration statement and amendmentsthereto and certain periodic reports relating to the Trust and its Portfolios that are required to befurnished to shareholders of the Trust and/or filed with the Securities and Exchange Commission ("SECFilings"). Portfolio Manager agrees to indemnify and hold harmless the Trust and each of its Trustees,officers and employees from any claims, liabilities and expenses, including reasonable attorneys' fees,incurred as a result of any untrue statement or alleged untrue statement of a material fact made by Portfolio Manager in any such written information and upon which the Trust relies in preparing anySEC Filing, or any omission or alleged omission to state in such written information a material factnecessary to make such statements not misleading ("material omission"). Portfolio Manager will not,however, be required to so indemnify any person under this Section 5 to the extent that PortfolioManager relied upon an untrue statement or material omission made by an officer or Trustee of theTrust or where such untrue statement or material omission was made in reliance upon informationfurnished to the Portfolio Manager in writing by such officer or Trustee, or by the Trust's Custodian,Administrator or Accounting Agent. 6. Permissible Interest.Subject to and in accordance with the Trust's Declaration of Trust and Bylaws and correspondinggoverning documents of Portfolio Manager, Trustees , officers, agents and shareholders of the Trustmay have an interest in the Portfolio Manager as officers, directors, agents and/or shareholders orotherwise. Portfolio Manager may have similar interests in the Trust. The effect of any suchinterrelationships shall be governed by said governing documents and the provisions of the InvestmentCompany Act. 7. Duration, Termination and Amendments.This Agreement shall become effective as of the date first written above and shall continue in effect fortwo years. Thereafter, this Agreement shall continue in effect from year to year for so long as itscontinuance is specifically approved, at least annually, by (i) a majority of the Board of Trustees or thevote of the holders of a majority of the Portfolio's outstanding voting securities; and (ii) the affirmativevote, cast in person at a meeting called for the purpose of voting on such continuance, of a majority ofthose members of the Board of Trustees ("Independent Trustees ") who are not "interested persons" ofthe Trust or any investment adviser to the Trust.This Agreement may be terminated by the Trust or by Portfolio Manager at any time and withoutpenalty upon sixty days written notice to the other party, which notice may be waived by the partyentitled to it. This Agreement may not be amended except by an instrument in writing and signed bythe party to be bound thereby provided that if the Investment Company Act requires that suchamendment be approved by the vote of the Board, the Independent Trustees and/or the holders of theTrust's or the Portfolio's outstanding shareholders, such approval must be obtained before any suchamendment may become effective. This Agreement shall terminate upon its assignment. For purposes of this Agreement, the terms "majority of the outstanding voting securities, "assignment" and "interested person" shall have the meanings set forth in the Investment Company Act. 8. Confidentiality; Use of Name.Portfolio Manager acknowledges and agrees that during the course of its responsibilities hereunder, itmay have access to certain information that is proprietary to the Trust or to one or more of the Trust'sagents or service providers. Portfolio Manager agrees that Portfolio Manager, its officers and itsemployees shall treat all such proprietary information as confidential and will not use or discloseinformation contained in, or derived from such material for any purpose other than in connection withthe carrying out of Portfolio Manager's responsibilities hereunder. In addition, Portfolio Manager shalluse its best efforts to ensure that any agent or affiliate of Portfolio Manager who may gain access tosuch proprietary materials shall be made aware of the proprietary nature of such materials and shalllikewise treat such materials as confidential. It is acknowledged and agreed that the names "Hirtle Callaghan," "Hirtle Callaghan Chief InvestmentOfficers" (which is a registered trademark of Hirtle, Callaghan & Co., Inc. ("HCCI")), and derivativeof either, as well as any logo that is now or shall later become associated with either name ("Marks")are valuable property of HCCI and that the use of the Marks, or any one of them, by the Trust or itsagents is subject to the license granted to the Trust by HCCI. Portfolio Manager agrees that it will notuse any Mark without the prior written consent of the Trust. Portfolio Manager consents to use of itsname, performance data, biographical data and other pertinent data by the Trust for use in marketingand sales literature, provided that any such marketing and sales literature shall not be used by the Trustwithout the prior written consent of Portfolio Manager, which consent shall not be unreasonablywithheld. The provisions of this Section 8 shall survive termination of this Agreement. 9. Representation, Warranties and Agreements of Portfolio Manager. Portfolio Manager represents and warrants that: (a) It is registered as an investment adviser under the Investment Advisers Act of 1940 ("InvestmentAdvisers Act"), it will maintain such registration in full force and effect and will promptly report to theTrust the commencement of any formal proceeding that could render the Portfolio Manager ineligibleto serve as an investment adviser to a registered investment company under Section 9 of the InvestmentCompany Act. (b) It understands that, as a result of its services hereunder, certain of its employees and officers maybe deemed "access persons" of the Trust within the meaning of Rule 17j-1 under the InvestmentCompany Act and that each such access person is subject to the provisions of the code of ethics ("Trust'sCode") adopted by the Trust in compliance with such rule. Portfolio Manager further represents thatit is subject to a written code of ethics ("Portfolio Manager's Code") complying with the requirementsof Rule 204-2(a)(12) under the Investment Advisers Act and will provide the Trust with a copy of suchcode of ethics. During the period that this Agreement is in effect, an officer or director of PortfolioManager shall certify to the Trust, on a quarterly basis, that Portfolio Manager has complied with the requirements of the Portfolio Manager's Code during the prior year; and that either (i) that no violationof such code occurred or (ii) if such a violation occurred, that appropriate action was taken in responseto such violation. Upon the written request of the Trust, Portfolio Manager shall permit the Trust, orit designated agents, to examine the reports required to be made by Portfolio Manager under rule 17j-1(c)(1) under the Investment Company Act. In addition, Portfolio Manager acknowledges that the Trustmay, in response to regulations or recommendations issued by the Securities and Exchange Commissionor other regulatory agencies, from time to time, request additional information regarding the personalsecurities trading of its directors, partners, officers and employees and the policies of Portfolio Managerwith regard to such trading. Portfolio Manager agrees that it make every effort to respond to the Trust'sreasonable requests in this area. (c) Upon request of the Trust, Portfolio Manager shall promptly supply the Trust with any informationconcerning Portfolio Manager and its stockholders, employees and affiliates that the Trust mayreasonably require in connection with the preparation of its registration statements, proxy materials,reports and other documents required, under applicable state or Federal laws, to be filed with state orFederal agencies or to be provided to shareholders of the Trust. 10. Status of Portfolio Manager. The Trust and Portfolio Manager acknowledge and agree that the relationship between PortfolioManager and the Trust is that of an independent contractor and under no circumstances shall anyemployee of Portfolio Manager be deemed an employee of the Trust or any other organization that theTrust may, from time to time, engage to provide services to the Trust, its Portfolios or its shareholders. The parties also acknowledge and agree that nothing in this Agreement shall be construed to restrict theright of Portfolio Manager or its affiliates to perform investment management or other services to anyperson or entity, including without limitation, other investment companies and persons who may retainPortfolio Manager to provide investment management services and the performance of such servicesshall not be deemed to violate or give rise to any duty or obligations to the Trust. 11. Counterparts and Notice. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be anoriginal. Any notice required to be given under this Agreement shall be deemed given when received,in writing addressed and delivered, by certified mail, by hand or via overnight delivery service as follows: If to the Trust: Mr. Donald E. Callaghan, President The Hirtle Callaghan Trust 575 East Swedesford Road Wayne, PA 19087 If to Portfolio Manager: Robert H. Lyon Institutional Capital Corporation 225 South Wacker Drive Chicago, Illinois 60606 12. Miscellaneous. The captions in this Agreement are included for convenience of reference only andin no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule orotherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall bebinding upon and shall inure to the benefit of the parties hereto and their respective successors and shallbe governed by the law of the state of Delaware provided that nothing herein shall be construed asinconsistent with the Investment Company Act or the Investment Advisers Act. Portfolio Manager is hereby expressly put on notice of the limitations of shareholder and Trusteeliability set forth in the Declaration of Trust of the Trust and agrees that obligations assumed by theTrust pursuant to this Agreement shall be limited in all cases to the assets of The Value EquityPortfolio. Portfolio Manager further agrees that it will not seek satisfaction of any such obligationsfrom the shareholders or any individual shareholder of the Trust, or from the Trustees of the Trust orany individual Trustee of the Trust. 13. Acknowledgement. The Trust acknowledges that it has received a copy of PortfolioManagerscurrent Form ADV, as filed with the Securities and Exchange Commission. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by theirofficers thereunto duly authorized as of the day and year first written above. By: /s/ Institutional Capital Corporation By: /s/ The Hirtle Callaghan Trust EX-5 6 GOLDMAN CONTRACT PORTFOLIO MANAGEMENT AGREEMENT AGREEMENT made this 18th day of September, 1997, between Goldman Sachs Asset Management, a separate operating division of Goldman, Sachs & Co., a New York limited partnership, and THE HIRTLE CALLAGHAN TRUST, a Delaware business trust ("Trust"). WHEREAS, the Trust is registered as an open-end, diversified, management series investment company under the Investment Company Act of 1940, as amended ("Investment Company Act"), which currently offers five series of beneficial interests ("shares") representing interests in separate investment portfolios, and may offer additional portfolios in the future (each referred to hereinafter as a "Portfolio" and collectively, as the "Portfolios"); and WHEREAS, the Trust desires to retain the Portfolio Manager to provide a continuous program of investment management for The Growth Equity Portfolio of the Trust ("Portfolio") and Portfolio Manager is willing, in accordance with the terms and conditions hereof, to provide such services to the Trust; NOW THEREFORE, in consideration of the promises and covenants set forth herein and intending to be legally bound hereby, it is agreed between the parties as follows: 1. APPOINTMENT OF PORTFOLIO MANAGER. The Trust hereby retains Portfolio Manager to provide the investment services set forth herein and Portfolio Manager agrees to accept such appointment. In carrying out its responsibilities under this Agreement, the Portfolio Manager shall at all times act in accordance with the investment objectives, policies and restrictions applicable to the Portfolio as set forth in the then current Registration Statement of the Trust, applicable provisions of the Investment Company Act and the rules and regulations promulgated under that Act and other applicable federal securities laws. 2. DUTIES OF PORTFOLIO MANAGER. (a) Portfolio Manager shall provide a continuous program of investment management for that portion of the assets of the Portfolio ("Account") that may, from time to time be allocated to it by the Trust's Board of Trustees, in writing, by an authorized officer of the Trust. It is understood that the Account may consist of all, a portion of or none of the assets of the Portfolio, and that the Board of Trustees has the right to allocate and reallocate such assets to the Account at any time, and from time to time, upon such notice to the Portfolio Manager as may be reasonably necessary to ensure orderly management of the Account or the Portfolio. (b) Subject to the general supervision of the Trust's Board of Trustees, Portfolio Manager shall have sole investment discretion with respect to the Account, including investment research, selection of the securities to be purchased and sold and the portion of the Account, if any, that shall be held uninvested, and the selection of brokers and dealers (including, subject to Section 3 of this Agreement, Goldman Sachs & Co.,) through which securities transactions in the Account shall be executed. The Trust agrees that the Portfolio Manager shall manage the Account in accordance with the objectives, policies, and limitations set forth in the Trust's current prospectus and statement of additional information. Specifically, and without limiting the generality of the foregoing, Portfolio Manager agrees that it will: (i) promptly advise the Portfolio's designated custodian bank and administrator or accounting agent of each purchase and sale, as the case may be, made on behalf of the Account, specifying the name and quantity of the security purchased or sold, the unit and aggregate purchase or sale price, commission paid, the market on which the transaction was effected, the trade date, the settlement date, the identity of the effecting broker or dealer and/or such other information, and in such manner, as may from time to time be reasonably requested by the Trust; (ii) maintain all applicable books and records with respect to the securities transactions of the Account. Specifically, Portfolio Manager agrees to maintain with respect to the Account those records required to be maintained under Rule 31a-1(b)(1), (b)(5) and (b)(6) under the Investment Company Act with respect to transactions in the Account including, without limitation, records which reflect securities purchased or sold in the Account, showing for each such transaction, the name and quantity of securities, the unit and aggregate purchase or sale price, commission paid, the market on which the transaction was effected, the trade date, the settlement date, and the identity of the effecting broker or dealer. Portfolio Manager will preserve such records in the manner and for the periods prescribed by Rule 31a-2 under the Investment Company Act. Portfolio Manager acknowledges and agrees that all such records it maintains for the Trust are the property of the Trust and Portfolio Manager will surrender promptly to the Trust any such records upon the Trust's request; (iii) provide, in a timely manner, such information as may be reasonably requested by the Trust or its designated agents in connection with, among other things, the daily computation of the Portfolio's net asset value and net income, preparation of proxy statements or amendments to the Trust's registration statement and monitoring investments made in the Account to ensure compliance with the various limitations on investments applicable to the Portfolio and to ensure that the Portfolio will continue to qualify for the special tax treatment accorded to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended; and (iv) render regular reports to the Trust concerning the performance by Portfolio Manager of its responsibilities under this Agreement. In particular, Portfolio Manager agrees that it will, at the reasonable request of the Board of Trustees, attend meetings of the Board or its validly constituted committees and will, in addition, make its officers and EDGARPlus(TM) FORM-TYPE: PROXY FILING-DATE: December 13, 1997 employees available to meet with the officers and employees of the Trust at least quarterly and at other times upon reasonable notice, to review the investments and investment program of the Account. 3. PORTFOLIO TRANSACTION AND BROKERAGE. (i) In placing orders for portfolio securities with brokers and dealers, Portfolio Manager shall use its best efforts to execute securities transactions on behalf of the Account at the most favorable execution and net price available. Portfolio Manager may, however, in its discretion, direct orders to brokers that provide to Portfolio Manager research, analysis, advice and similar services, and Portfolio Manager may cause the Account to pay to those brokers a higher commission than may be charged by other brokers for similar transactions, provided that Portfolio Manager determines in good faith that such commission is reasonable in terms either of the particular transaction or of the overall responsibility of the Portfolio Manager to the Account and any other accounts with respect to which Portfolio Manager exercises investment discretion, and provided further that the extent and continuation of any such practice is subject to review by the Trust's Board of Trustees. Portfolio Manager may execute any portfolio transactions for the Trust with a broker or dealer which is an "affiliated person" of the Trust or Portfolio Manager, including any other investment advisory organization that may, from time to time act as a portfolio manager for the Portfolio or any of the Trust's other Portfolios, subject to the provisions of the Investment Company Act and the Trust's approved procedures. The Trust shall provide a list of such affiliated brokers and dealers to Portfolio Manager and will immediately advise Portfolio Manager of any changes in such list. (ii) The Portfolio Manager may, on occasions when it deems the purchase or sale of a security to be in the best interests of the Trust as well as its other clients, aggregate, to the extent permitted by applicable laws and rules, the securities to be sold or purchased in order to obtain the most favorable execution and net price. In such event, allocation of the securities so purchased or sold, as well as the expenses incurred in the transaction, will be made by the Portfolio Manager in the manner it considers to be the most equitable and consistent with its obligations to the Trust and to such other clients. The Portfolio Manager is not, however, required to aggregate securities orders. 4. EXPENSES AND COMPENSATION. For its services under this Agreement, Portfolio Manager shall be entitled to receive a fee in accordance with the Schedule A of this Agreement. 5. LIMITATION OF LIABILITY AND INDEMNIFICATION. (a) Neither the Portfolio Manager nor any person that is an "affiliated person" of the Portfolio Manager or any of its affiliated companies (collectively, "Associated Persons") shall be liable for any error of judgment or mistake of law or for any loss suffered by the Trust in connection with the matters to which this Agreement relates including, without limitation, losses that may be sustained in connection with the purchase, holding, redemption or sale of any security or other investment by the Trust except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of Portfolio Manager or such Associated Persons in the performance of its duties or from reckless disregard by it of its duties under this Agreement. (b) Notwithstanding the foregoing, Portfolio Manager expressly agrees that the Trust may rely upon written information provided by Portfolio Manager to the Trust (including, without limitation, information contained in Portfolio Manager's then current Form ADV) concerning the Portfolio Manager and its Associated Persons in accordance with Section 9 of the Agreement or otherwise in preparing the Trust's registration statement and amendments thereto and certain periodic reports relating to the Trust and its Portfolios that are required to be furnished to shareholders of the Trust and/or filed with the Securities and Exchange Commission ("SEC Filing"), provided that a copy of any such filing is provided to Portfolio Manager at least 10 days prior to the date on which it will become effective, in the case of a registration statement or, in the case of proxy statements and/or shareholders report, at least 10 days prior to the date on which such document is first distributed shareholders for the purpose of obtaining Portfolio Manager's consent pursuant to Section (v). Portfolio Manager agrees to indemnify and hold harmless the Trust and each of its Trustees, officers and employees from any claims, liabilities and expenses (including reasonable attorneys' fees), incurred: (i) as a result of any untrue statement, or alleged untrue statement, of a material fact made by Portfolio Manager in such written information; and/or (ii) as a result of the omission, or the alleged omission, in such written information of any material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading ("Material Omission"), provided that the Trust has relied upon such statement or Material Omission in preparing any SEC Filing. Portfolio Manager shall not be required to indemnify any person under this Section 5 to the extent that Portfolio Manager relied upon an untrue statement or Material Omission made by an officer or Trustee of the Trust or where such untrue statement or Material Omission was made in reliance upon information furnished to the Portfolio Manager in writing by such officer or Trustee, or by the Trust's custodian bank, administrator or accounting agent. (c) The Trust agrees to indemnify and hold harmless the Portfolio Manager and its Associated Persons from any claims, liabilities and expenses, including reasonable attorneys' fees, incurred as a result of any untrue statement of a material fact which relates to information in any SEC filing, or any omission to state in such written information a material fact necessary to make such statements not misleading ("material omission"), contained in any information in such SEC filings not supplied by the Portfolio Manager pursuant to Section 5(b) hereof. (d) The Portfolio Manager shall not be liable for (i) any acts of any other portfolio manager to the Portfolio or the Trust with respect to the portion of the assets of the Account not managed by the Portfolio Manager; and (ii) acts of the Portfolio Manager which result from acts of the Trust, including, but not limited to, a failure of the Trust to provide accurate and current information with respect to any records maintained by Trust or any other portfolio manager to the Portfolio. The Trust agrees that the Portfolio Manager shall manage the Account as if it was a separate operating series and shall comply with (a) the objectives, policies, and limitations for the Account set forth in the Trust's current prospectus and statement of additional information, and (b) applicable laws and regulations (including, but not limited to, the investment objectives, policies and restrictions applicable to the Account and qualification of the Account as a regulated investment company under the Internal Revenue Code of 1986, as amended) with respect to the portion of the assets of the Account not allocated to the Portfolio Manager. In no event shall the Portfolio Manager or its Associated Persons have any liability arising from the conduct of the Trust and any other portfolio manager with respect to the portion of the Portfolio's assets not allocated to the Portfolio Manager. 6. PERMISSIBLE INTEREST. Subject to and in accordance with the Trust's Declaration of Trust and Bylaws and corresponding governing documents of Portfolio Manager, Trustees , officers, agents and shareholders of the Trust may have an interest in the Portfolio Manager as officers, directors, agents and/or shareholders or otherwise. Portfolio Manager may have similar interests in the Trust. The effect of any such interrelationships shall be governed by said governing documents and the provisions of the Investment Company Act. 7. DURATION, TERMINATION AND AMENDMENTS. This Agreement shall become effective as of the date on which that certain agreement between Westfield Capital Management Company and the Trust is terminated ("Effective Date") and shall continue in effect thereafter, unless sooner terminated, for two years provided that this Agreement is approved by the shareholders of the Portfolio on or before the 120th day after such Effective Date. Thereafter, this Agreement shall continue in effect, unless sooner terminated, from year to year for so long as its continuance is specifically approved, at least annually, by (i) a majority of the Board of Trustees or the vote of the holders of a majority of the Portfolio's outstanding voting securities; and (ii) the affirmative vote, cast in person at a meeting called for the purpose of voting on such continuance, of a majority of those members of the Board of Trustees ("Independent Trustees ") who are not "interested persons" of the Trust or any investment adviser to the Trust. This Agreement may be terminated by the Trust or by Portfolio Manager at any time and without penalty upon sixty days written notice to the other party, which notice may be waived by the party entitled to it. This Agreement may not be amended except by an instrument in writing and signed by the party to be bound thereby provided that if the Investment Company Act requires that such amendment be approved by the vote of the Board, the Independent Trustees and/or the holders of the Trust's or the Portfolio's outstanding shareholders, such approval must be obtained before any such amendment may become effective. This Agreement shall terminate automatically upon its assignment. For purposes of this Agreement, the terms "majority of the outstanding voting securities," "assignment, " "affiliated person" and "interested person" shall have the meanings set forth in the Investment Company Act. 8. CONFIDENTIALITY; USE OF NAME. (i) Portfolio Manager acknowledges and agrees that during the course of its responsibilities hereunder, it may have access to certain information that is proprietary to the Trust or to one or more of the Trust's agents or service providers, and which information has not been developed by Portfolio Manager. Portfolio Manager agrees that Portfolio Manager, its officers and its employees shall treat all such proprietary information as confidential and will not use or disclose information contained in, or derived from such material for any purpose other than in connection with the carrying out of Portfolio Manager's responsibilities hereunder or as required by law. In addition, Portfolio Manager shall use its best efforts to ensure that any agent or affiliate of Portfolio Manager who may gain access to such proprietary materials shall be made aware of the proprietary nature of such materials and shall likewise treat such materials as confidential. (ii) It is acknowledged and agreed that the names "Hirtle Callaghan," "Hirtle Callaghan Chief Investment Officers" (which is a registered trademark of Hirtle Callaghan & Co., Inc. ("HCCI")), and derivative of either, as well as any logo that is now or shall later become associated with either name ("Marks") are valuable property of HCCI and that the use of the Marks, or any one of them, by the Trust or its agents is subject to the license granted to the Trust by HCCI. Portfolio Manager agrees that it will not use any Mark (other than to indicate that it is acting as Portfolio Manager to Account) without the prior written consent of the Trust. (iii) The Trust will not publish or distribute any information regarding the provision of investment advisory services by the Portfolio Manager pursuant to this Agreement. Notwithstanding the foregoing, the Trust may, without the prior written consent of the Portfolio Manager, distribute information regarding the provision of investment advisory services by the Portfolio Manager (a) to the Trust's Board of Trustees, committees of the Board and officers of the Trust; (b) to the Trust's administrator, fund accounting agent, custodian banks, counsel and auditors; (c) to HCCI; and (d) to persons to whom, and in documents in which, disclosure of such information is required by law. (iv) All information and advice by the Portfolio Manager for the Account will be treated as confidential by the Trust and will not be disclosed without the Portfolio Manager's prior written consent to third parties except (a) to the Trust's Board of Trustees, committees of the Board and officers of the Trust; (b) to the Trust's administrator, fund accounting agent, custodian banks, counsel and auditors; (c) to HCCI; and (d) to persons to whom, and in documents in which, disclosure of such information is required by law. (v) The Trust will not publish or use in advertising, publicity or otherwise the name of the Portfolio Manager or any of its affiliates, or any trade name, trademark, trade device, service mark, symbol or any abbreviation, contraction or simulation thereof of the Portfolio Manager or its affiliates, without the prior written consent of the Portfolio Manager, provided, however, that this limitation does not include the inclusion in the Trust's registration statement of information provided to the Trust in writing by Portfolio Manager. (vi) The provisions of this Section 8 shall survive termination of this Agreement. 9. REPRESENTATION, WARRANTIES AND AGREEMENTS OF PORTFOLIO MANAGER. Portfolio Manager represents and warrants that: (a) It is registered as an investment adviser under the Investment Advisers Act of 1940 ("Investment Advisers Act"), it will maintain such registration in full force and effect and will promptly report to the Trust the commencement of any formal proceeding that could render the Portfolio Manager ineligible to serve as an investment adviser to a registered investment company under Section 9 of the Investment Company Act. (b) It understands that, as a result of its services hereunder, certain of its employees and officers may be deemed "access persons" with respect to the Portfolio within the meaning of Rule 17j-1 under the Investment Company Act and that each such access person is subject to the provisions of the code of ethics ("Trust's Code") adopted by the Trust in compliance with such rule. Portfolio Manager further represents that it is subject to a written code of ethics ("Portfolio Manager's Code") complying with the requirements of Rule 204-2(a)(12) under the Investment Advisers Act and will provide the Trust with a copy of such code of ethics. During the period that this Agreement is in effect, an officer or director of Portfolio Manager shall certify to the Trust, on a quarterly basis, that Portfolio Manager has complied with the requirements of the Portfolio Manager's Code as it relates to the Account during the prior year; and that either (i) that no violation of such code as it relates to the Account occurred or (ii) if such a violation occurred, that appropriate action was taken in response to such violation. Upon the written request of the Trust, Portfolio Manager shall permit the Trust, or it designated agents, to examine the reports required to be made by Portfolio Manager under rule 17j-1(c)(1) under the Investment Company Act as it relates to the Account. In addition, Portfolio Manager acknowledges that the Trust may, in response to regulations or recommendations issued by the Securities and Exchange Commission or other regulatory agencies, from time to time, request additional information regarding the personal securities trading of its directors, partners, officers and employees and the policies of Portfolio Manager with regard to such trading. Portfolio Manager agrees that it make reasonable efforts to respond to the Trust's reasonable requests in this area. (c) Upon request of the Trust, Portfolio Manager shall promptly supply the Trust with any information concerning Portfolio Manager and its Associated Persons that the Trust may reasonably require in connection with the preparation of its registration statements, proxy materials, reports and other documents required, under applicable state or Federal laws, to be filed with state or Federal agencies or to be provided to shareholders of the Trust. 10. STATUS OF PORTFOLIO MANAGER. The services of the Portfolio Manager to the Trust are not to be deemed exclusive, and the Portfolio Manager is free to render similar services to others so long as its services to the Trust are not impaired thereby. The Portfolio Manager will be deemed to be an independent contractor and will, unless otherwise expressly provided or authorized, have no authority to act for or represent the Trust in any way or otherwise be deemed an agent of the Trust. Without limiting the foregoing, the Trust understands that the Portfolio Manager now acts, will continue to act, or may act in the future, as investment adviser or investment sub-adviser to fiduciary and other managed accounts, including other investment companies and that the Trust has no objection to the Portfolio Manager so acting, provided that the Portfolio Manager duly performs all obligations under this Agreement. The Trust also understands that the Portfolio Manager may give advice and take action with respect to any of its other clients or for its own account which may differ from the timing or nature of action taken by the Portfolio Manager with respect to the Trust. Nothing in this Agreement imposes upon the Portfolio Manager any obligation to purchase or sell or to recommend for purchase or sale, with respect to the Account, any security which the Portfolio Manager or its Associated Persons may purchase or sell for its or their own account(s) or for the account of any other client. 11. DELIVERY OF INFORMATION AND REPORTS. The Trust agrees to furnish to the Portfolio Manager current prospectuses, statements of additional information, proxy statements, reports of shareholders, certified copies of financial statements, charter documents and such other information with regard to the affairs of the Trust and Account as the Portfolio Manager may reasonably request. The Portfolio Manager agrees to render to the Trust such periodic and special reports regarding its activities under this Agreement as the Trust may reasonably request. The Trust represents that it has received Parts I and II of the Portfolio Manager's Form ADV. 12. COUNTERPARTS AND NOTICE. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original. Any notice required to be given under this Agreement shall be deemed given when received, in writing addressed and delivered, by certified mail, by hand or via overnight delivery service as follows: If to the Trust: Mr. Donald E. Callaghan, President The Hirtle Callaghan Trust 575 East Swedesford Road Wayne, PA 19087-1937 If to Portfolio Manager: Goldman Sachs Asset Management One New York Plaza 85 Broad Street New York, New York 10004 Attention: Howard B. Surloff, Esq. 13. MISCELLANEOUS. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and shall be governed by the law of the state of Delaware provided that nothing herein shall be construed as inconsistent with the Investment Company Act or the Investment Advisers Act. Portfolio Manager is hereby expressly put on notice of the limitations of shareholder and Trustee liability set forth in the Declaration of Trust of the Trust and agrees that obligations assumed by the Trust pursuant to this Agreement shall be limited in all cases to the assets of The Growth Equity Portfolio. Portfolio Manager further agrees that it will not seek satisfaction of any such obligations from the shareholders or any individual shareholder of the Trust, or from the Trustees of the Trust or any individual Trustee of the Trust. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers thereunto duly authorized as of the day and year first written above. Goldman, Sachs & Co., on behalf of Goldman Sachs Asset Management By: /s/ ----------------------------- The Hirtle Callaghan Trust By: /s/ ----------------------------- A EX-7 7 CLOVER CONTRACT PORTFOLIO MANAGEMENT AGREEMENT AGREEMENT made this __________day of August between Clover Capital Management, Inc., a corporation organized under the laws of New York ("Portfolio Manager") and THE HIRTLE CALLAGHAN TRUST, a Delaware business trust ("Trust"). WHEREAS, the Trust is registered as an open-end, diversified, management series investment company under the Investment Company Act of 1940, as amended ("Investment Company Act") which currently offers five series of beneficial interests ("shares") representing interests in separate investment portfolios, and may offer additional portfolios in the future; and WHEREAS, the Trust desires to retain the Portfolio Manager to provide a continuous program of investment management for The Small Capitalization Equity Portfolio of the Trust ("Portfolio") and Portfolio Manager is willing, in accordance with the terms and conditions hereof, to provide such services to the Trust; NOW THEREFORE, in consideration of the promises and covenants set forth herein and intending to be legally bound hereby, it is agreed between the parties as follows: 1. Appointment of Portfolio Manager. The Trust hereby retains Portfolio Manager to provide the investment services set forth herein and Portfolio Manager agrees to accept such appointment. In carrying out its responsibilities under this Agreement, the Portfolio Manager shall at all times act in accordance with the investment objectives, policies and restrictions applicable to the Portfolio as set forth in the then current Registration Statement of the Trust, applicable provisions of the Investment Company Act and the rules and regulations promulgated under that Act and other applicable federal securities laws. 2. Duties of Portfolio Manager. (a) Portfolio Manager shall provide a continuous program of investment management for that portion of the assets of the Portfolio ("Account") that may, from time to time be allocated to it by the Trust's Board of Trustees, in writing, by an authorized officer of the Trust. It is understood that the Account may consist of all, a portion of or none of the assets of the Portfolio, and that the Board of Trustees has the right to allocate and reallocate such assets to the Account at any time, and from time to time, upon such notice to the Portfolio Manager as may be reasonably necessary, in the view of the Trust, to ensure orderly management of the Account or the Portfolio. (b) Subject to the general supervision of the Trust's Board of Trustees, Portfolio Manager shall have sole investment discretion with respect to the Account, including investment research, selection of the securities to be purchased and sold and the portion of the Account, if any, that shall be held uninvested, and the selection of brokers and dealers through which securities transactions in the Account shall be executed. Specifically, and without limiting the generality of the foregoing, Portfolio Manager agrees that it will: (i) promptly advise the Portfolio's designated custodian bank and administrator or accounting agent of each purchase and sale, as the case may be, made on behalf of the Account, specifying the name and quantity of the security purchased or sold, the unit and aggregate purchase or sale price, commission paid, the market on which the transaction was effected, the trade date, the settlement date, the identity of the effecting broker or dealer and/or such other information, and in such manner, as may from time to time be reasonably requested by the Trust; (ii) maintain all applicable books and records with respect to the securities transactions of the Account. Specifically, Portfolio Manager agrees to maintain with respect to the Account those records required to be maintained under Rule 31a-1(b)(1), (b)(5) and (b)(6) under the Investment Company Act with respect to transactions in the Account including, without limitation, records which reflect securities purchased or sold in the Account, showing for each such transaction, the name and quantity of securities, the unit and aggregate purchase or sale price, commission paid, the market on which the transaction was effected, the trade date, the settlement date, and the identity of the effecting broker or dealer. Portfolio Manager will preserve such records in the manner and for the periods prescribed by Rule 31a-2 under the Investment Company Act. Portfolio Manager acknowledges and agrees that all records it maintains for the Trust are the property of the Trust and Portfolio Manager will surrender promptly to the Trust any such records upon the Trust's request; (iii) provide, in a timely manner, such information as may be reasonably requested by the Trust or its designated agents in connection with, among other things, the daily computation of the Portfolio's net asset value and net income, preparation of proxy statements or amendments to the Trust's registration statement and monitoring investments made in the Account to ensure compliance with the various limitations on investments applicable to the Portfolio and to ensure that the Portfolio will continue to qualify for the special tax treatment accorded to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended; and (iv) render regular reports to the Trust concerning the performance of Portfolio Manager of its responsibilities under this Agreement. In particular, Portfolio Manager agrees that it will, at the reasonable request of the Board of Trustees, attend meetings of the Board or its validly constituted committees and will, in addition, make its officers and employees available to meet with the officers and employees of the Trust at least quarterly and at other times upon reasonable notice, to review the investments and investment program of the Account. 3. Portfolio Transaction and Brokerage. In placing orders for portfolio securities with brokers and dealers, Portfolio Manager shall use its best efforts to execute securities transactions on behalf of the Account in such a manner that the total cost or proceeds in each transaction is the most favorable under the circumstances. Portfolio Manager may, however, in its discretion, direct orders to brokers that provide to Portfolio Manager research, analysis, advice and similar services, and Portfolio Manager may cause the Account to pay to those brokers a higher commission than may be charged by other brokers for similar transactions, provided that Portfolio Manager determines in good faith that such commission is reasonable in terms either of the particular transaction or of the overall responsibility of the Portfolio Manager to the Account and any other accounts with respect to which Portfolio Manager exercises investment discretion, and provided further that the extent and continuation of any such practice is subject to review by the Trust's Board of Trustees. Portfolio Manager shall not execute any portfolio transactions for the Trust with a broker or dealer which is an "affiliated person" of the Trust or Portfolio Manager, including any other investment advisory organization that may, from time to time act as a portfolio manager for the Portfolio or any of the Trust's other Portfolios, without prior written approval of the Trust. The Trust shall provide a list of such affiliated brokers and dealers to Portfolio Manager and will promptly advise Portfolio Manager of any changes in such list. 4. Expenses and Compensation. Portfolio Manager shall pay all of its expenses incurred in the performance of its duties under this Agreement and shall not be required to pay any other expenses of the Trust. For its services under this Agreement, Portfolio Manager shall be entitled to receive a fee at the annual rate of .45% of the average daily net asset value of the Account, which fee shall be payable monthly. 5. Limitation of Liability and Indemnification. (a) Portfolio Manager shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Trust in connection with the matters to which this Agreement relates including, without limitation, losses that may be sustained in connection with the purchase, holding, redemption or sale of any security or other investment by the Trust except a loss resulting from willful misfeasance, bad faith or negligence on the part of Portfolio Manager in the performance of its duties or from reckless disregard by it of its duties under this Agreement. (b) Notwithstanding the foregoing, Portfolio Manager expressly agrees that the Trust may rely upon written information provided, in writing, by Portfolio Manager to the Trust (including, without limitation, information contained in Portfolio Manager's then current Form ADV) in accordance with Section 9 of the Agreement or otherwise, in preparing the Trust's registration statement and amendments thereto and certain periodic reports relating to the Trust and its Portfolios that are required to be furnished to shareholders of the Trust and/or filed with the Securities and Exchange Commission ("SEC Filings"). Portfolio Manager agrees to indemnify and hold harmless the Trust and each of its Trustees, officers and employees from any claims, liabilities and expenses, including reasonable attorneys' fees, incurred as a result of any untrue statement or alleged untrue statement of a material fact made by Portfolio Manager in any such written information and upon which the Trust relies in preparing any SEC Filing, or any omission or alleged omission to state in such written information a material fact necessary to make such statements not misleading ("material omission"). Portfolio Manager will not, however, be required to so indemnify any person under this Section 5 to the extent that Portfolio Manager relied upon an untrue statement or material omission made by an officer or Trustee of the Trust or where such untrue statement or material omission was made in reliance upon information furnished to the Portfolio Manager in writing by such officer or Trustee, or by the Trust's Custodian, Administrator or Accounting Agent. 6. Permissible Interest. Subject to and in accordance with the Trust's Declaration of Trust and Bylaws and corresponding governing documents of Portfolio Manager, Trustees , officers, agents and shareholders of the Trust may have an interest in the Portfolio Manager as officers, directors, agents and/or shareholders or otherwise. Portfolio Manager may have similar interests in the Trust. The effect of any such interrelationships shall be governed by said governing documents and the provisions of the Investment Company Act. 7. Duration, Termination and Amendments. This Agreement shall become effective as of the date first written above and shall continue in effect for two years. Thereafter, this Agreement shall continue in effect from year to year for so long as its continuance is specifically approved, at least annually, by (i) a majority of the Board of Trustees or the vote of the holders of a majority of the Portfolio's outstanding voting securities; and (ii) the affirmative vote, cast in person at a meeting called for the purpose of voting on such continuance, of a majority of those members of the Board of Trustees ("Independent Trustees ") who are not "interested persons" of the Trust or any investment adviser to the Trust. This Agreement may be terminated by the Trust or by Portfolio Manager at any time and without penalty upon sixty days written notice to the other party, which notice may be waived by the party entitled to it. This Agreement may not be amended except by an instrument in writing and signed by the party to be bound thereby provided that if the Investment Company Act requires that such amendment be approved by the vote of the Board, the Independent Trustees and/or the holders of the Trust's or the Portfolio's outstanding shareholders, such approval must be obtained before any such amendment may become effective. This Agreement shall terminate upon its assignment. For purposes of this Agreement, the terms "majority of the outstanding voting securities, "assignment" and "interested person" shall have the meanings set forth in the Investment Company Act. 8. Confidentiality; Use of Name. Portfolio Manager acknowledges and agrees that during the course of its responsibilities hereunder, it may have access to certain information that is proprietary to the Trust or to one or more of the Trust's agents or service providers. Portfolio Manager agrees that Portfolio Manager, its officers and its employees shall treat all such proprietary information as confidential and will not, without the express written permission of the Trust, use or disclose information contained in, or derived from such material for any purpose other than in connection with the carrying out of Portfolio Manager's responsibilities hereunder. In addition, Portfolio Manager shall use its best efforts to ensure that any agent or affiliate of Portfolio Manager who may gain access to such proprietary materials shall be made aware of the proprietary nature of such materials and shall likewise treat such materials as confidential. This provision shall not apply, however, to information that is publicly available. It is acknowledged and agreed that the names "Hirtle Callaghan," "Hirtle Callaghan Chief Investment Officers" (which is a registered trademark of Hirtle Callaghan & Co., Inc. ("HCCI"), and derivative of either, as well as any logo that is associated with either name ("Marks") are valuable property of HCCI and that the use of the Marks, or any one of them, by the Trust or its agents is subject to the license granted to the Trust HCCI. Portfolio Manager agrees that it will not use any Mark without the prior written consent of the Trust. Portfolio Manager consents to use of its name, performance data, biographical data and other pertinent data by the Trust for use in marketing and sales literature, provided that any such marketing and sales literature shall not be used by the Trust without the prior written consent of Portfolio Manager, which consent shall not be unreasonably withheld. The provisions of this Section 8 shall survive termination of this Agreement. 9.Representation, Warranties and Agreements of Portfolio Manager. Portfolio Manager represents and warrants that: (a) It is registered as an investment adviser under the Investment Advisers Act of 1940 ("Investment Advisers Act"), it will maintain such registration in full force and effect and will promptly report to the Trust the commencement of any formal proceeding that could render the Portfolio Manager ineligible to serve as an investment adviser to a registered investment company under Section 9 of the Investment Company Act. (b) It understands that, as a result of its services hereunder, certain of its employees and officers may be deemed "access persons" of the Trust within the meaning of Rule 17j-1 under the Investment Company Act and that each such access person is subject to the provisions of the code of ethics ("Trust's Code") adopted by the Trust in compliance with such rule. Portfolio Manager further represents that it is subject to a written code of ethics ("Portfolio Manager's Code") complying with the requirements of Rule 204-2(a)(12) under the Investment Advisers Act and will provide the Trust with a copy of such code of ethics. During the period that this Agreement is in effect, an officer or director of Portfolio Manager shall certify to the Trust, on a quarterly basis, that Portfolio Manager has complied with the requirements of the Portfolio Manager's Code during the prior year; and that either (i) that no violation of such code occurred or (ii) if such a violation occurred, that appropriate action was taken in response to such violation. Upon the written request of the Trust, Portfolio Manager shall permit the Trust, or it designated agents, to examine the reports required to be made by Portfolio Manager under rule 17j-1(c)(1) under the Investment Company Act. In addition, Portfolio Manager acknowledges that the Trust may, in response to regulations or recommendations issued by the Securities and Exchange Commission or other regulatory agencies, from time to time, request additional information regarding the personal securities trading of its directors, partners, officers and employees and the policies of Portfolio Manager with regard to such trading. Portfolio Manager agrees that it make every effort to respond to the Trust's reasonable requests in this area. (c) Upon request of the Trust, Portfolio Manager shall promptly supply the Trust with any information concerning Portfolio Manager and its stockholders, employees and affiliates that the Trust may reasonably require in connection with the preparation of its registration statements, proxy materials, reports and other documents required, under applicable state or Federal laws, to be filed with state or Federal agencies or to be provided to shareholders of the Trust. 10. Status of Portfolio Manager. The Trust and Portfolio Manager acknowledge and agree that the relationship between Portfolio Manager and the Trust is that of an independent contractor and under no circumstances shall any employee of Portfolio Manager be deemed an employee of the Trust or any other organization that the Trust may, from time to time, engage to provide services to the Trust, its Portfolios or its shareholders. The parties also acknowledge and agree that nothing in this Agreement shall be construed to restrict the right of Portfolio Manager or its affiliates to perform investment management or other services to any person or entity, including without limitation, other investment companies and persons who may retain Portfolio Manager to provide investment management services and the performance of such services shall not be deemed to violate or give rise to any duty or obligations to the Trust. 11. Counterparts and Notice. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original. Any notice required to be given under this Agreement shall be deemed given when received, in writing addressed and delivered, by certified mail, by hand or via overnight delivery service as follows: If to the Trust: Mr. Donald E. Callaghan, PresidentThe Hirtle Callaghan Trust 575 East Swedesford Road Wayne, PA 19087 If to Portfolio Manager: Michael E. Jones Clover Capital Management, Inc. 11 Tobey Village Office ParkPittsford, New York 14534 12. Miscellaneous. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and shall be governed by the law of the state of Delaware provided that nothing herein shall be construed as inconsistent with the Investment Company Act or the Investment Advisers Act. Portfolio Manager is hereby expressly put on notice of the limitations of shareholder and Trustee liability set forth in the Declaration of Trust of the Trust and agrees that obligations assumed by the Trust pursuant to this Agreement shall be limited in all cases to the assets of The Small Capitalization Equity Portfolio. Portfolio Manager further agrees that it will not seek satisfaction of any such obligations from the shareholders or any individual shareholder of the Trust, or from the Trustees of the Trust or any individual Trustee of the Trust. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers thereunto duly authorized as of the day and year first written above. Clover Capital Management, Inc. By: /s/ The Hirtle Callaghan Trust By: /s/ EX-8 8 FRONTIER CONTRACT PORTFOLIO MANAGEMENT AGREEMENT AGREEMENT made this __________day of August, 1995, between Frontier Capital Management Company, a corporation organized under the laws of Massachusetts ("Portfolio Manager") and THE HIRTLE CALLAGHAN TRUST, a Delaware business trust ("Trust"). WHEREAS, the Trust is registered as an open-end, diversified, management series investment company under the Investment Company Act of 1940, as amended ("Investment Company Act") which currently offers five series of beneficial interests ("shares") representing interests in separate investment portfolios, and may offer additional portfolios in the future; and WHEREAS, the Trust desires to retain the Portfolio Manager to provide a continuous program of investment management for The Small Capitalization Equity Portfolio of the Trust ("Portfolio") and Portfolio Manager is willing, in accordance with the terms and conditions hereof, to provide such services to the Trust; NOW THEREFORE, in consideration of the promises and covenants set forth herein and intending to be legally bound hereby, it is agreed between the parties as follows: 1. Appointment of Portfolio Manager. The Trust hereby retains Portfolio Manager to provide the investment services set forth herein and Portfolio Manager agrees to accept such appointment. In carrying out its responsibilities under this Agreement, the Portfolio Manager shall at all times act in accordance with the investment objectives, policies and restrictions applicable to the Portfolio as set forth in the then current Registration Statement of the Trust, applicable provisions of the Investment Company Act and the rules and regulations promulgated under that Act and other applicable federal securities laws. 2. Duties of Portfolio Manager. (a) Portfolio Manager shall provide a continuous program of investment management for that portion of the assets of the Portfolio ("Account") that may, from time to time be allocated to it by the Trust's Board of Trustees, in writing, by an authorized officer of the Trust. It is understood that the Account may consist of all, a portion of or none of the assets of the Portfolio, and that the Board of Trustees has the right to allocate and reallocate such assets to the Account at any time, and from time to time, upon such notice to the Portfolio Manager as may be reasonably necessary, in the view of the Trust, to ensure orderly management of the Account or the Portfolio. (b) Subject to the general supervision of the Trust's Board of Trustees, Portfolio Manager shall have sole investment discretion with respect to the Account, including investment research, selection of the securities to be purchased and sold and the portion of the Account, if any, that shall be held uninvested, and the selection of brokers and dealers through which securities transactions in the Account shall be executed. Specifically, and without limiting the generality of the foregoing, Portfolio Manager agrees that it will: (i) promptly advise the Portfolio's designated custodian bank and administrator or accounting agent of each purchase and sale, as the case may be, made on behalf of the Account, specifying the name and quantity of the security purchased or sold, the unit and aggregate purchase or sale price, commission paid, the market on which the transaction was effected, the trade date, the settlement date, the identity of the effecting broker or dealer and/or such other information, and in such manner, as may from time to time be reasonably requested by the Trust; (ii) maintain all applicable books and records with respect to the securities transactions of the Account. Specifically, Portfolio Manager agrees to maintain with respect to the Account those records required to be maintained under Rule 31a-1(b)(1), (b)(5) and (b)(6) under the Investment Company Act with respect to transactions in the Account including, without limitation, records which reflect securities purchased or sold in the Account, showing for each such transaction, the name and quantity of securities, the unit and aggregate purchase or sale price, commission paid, the market on which the transaction was effected, the trade date, the settlement date, and the identity of the effecting broker or dealer. Portfolio Manager will preserve such records in the manner and for the periods prescribed by Rule 31a-2 under the Investment Company Act. Portfolio Manager acknowledges and agrees that all records it maintains for the Trust are the property of the Trust and Portfolio Manager will surrender promptly to the Trust any such records upon the Trust's request; (iii) provide, in a timely manner, such information as may be reasonably requested by the Trust or its designated agents in connection with, among other things, the daily computation of the Portfolio's net asset value and net income, preparation of proxy statements or amendments to the Trust's registration statement and monitoring investments made in the Account to ensure compliance with the various limitations on investments applicable to the Portfolio and to ensure that the Portfolio will continue to qualify for the special tax treatment accorded to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended; and (iv) render regular reports to the Trust concerning the performance of Portfolio Manager of its responsibilities under this Agreement. In particular, Portfolio Manager agrees that it will, at the reasonable request of the Board of Trustees, attend meetings of the Board or its validly constituted committees and will, in addition, make its officers and employees available to meet with the officers and employees of the Trust at least quarterly and at other times upon reasonable notice, to review the investments and investment program of the Account. 3. Portfolio Transaction and Brokerage. In placing orders for portfolio securities with brokers and dealers, Portfolio Manager shall use its best efforts to execute securities transactions on behalf of the Account in such a manner that the total cost or proceeds in each transaction is the most favorable under the circumstances. Portfolio Manager may, however, in its discretion, direct orders to brokers that provide to Portfolio Manager research, analysis, advice and similar services, and Portfolio Manager may cause the Account to pay to those brokers a higher commission than may be charged by other brokers for similar transactions, provided that Portfolio Manager determines in good faith that such commission is reasonable in terms either of the particular transaction or of the overall responsibility of the Portfolio Manager to the Account and any other accounts with respect to which Portfolio Manager exercises investment discretion, and provided further that the extent and continuation of any such practice is subject to review by the Trust's Board of Trustees. Portfolio Manager shall not execute any portfolio transactions for the Trust with a broker or dealer which is an "affiliated person" of the Trust or Portfolio Manager, including any other investment advisory organization that may, from time to time act as a portfolio manager for the Portfolio or any of the Trust's other Portfolios, without prior written approval of the Trust. The Trust shall provide a list of such affiliated brokers and dealers to Portfolio Manager and will promptly advise Portfolio Manager of any changes in such list. 4. Expenses and Compensation. Portfolio Manager shall pay all of its expenses incurred in the performance of its duties under this Agreement and shall not be required to pay any other expenses of the Trust. For its services under this Agreement, Portfolio Manager shall be entitled to receive a fee at the annual rate of .45% of the average daily net asset value of the Account, which fee shall be payable monthly. 5. Limitation of Liability and Indemnification. (a) Portfolio Manager shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Trust in connection with the matters to which this Agreement relates including, without limitation, losses that may be sustained in connection with the purchase, holding, redemption or sale of any security or other investment by the Trust except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of Portfolio Manager in the performance of its duties or from reckless disregard by it of its duties under this Agreement. (b) Notwithstanding the foregoing, Portfolio Manager expressly agrees that the Trust may rely upon written information provided, in writing, by Portfolio Manager to the Trust (including, without limitation, information contained in Portfolio Manager's then current Form ADV) in accordance with Section 9 of the Agreement or otherwise, in preparing the Trust's registration statement and amendments thereto and certain periodic reports relating to the Trust and its Portfolios that are required to be furnished to shareholders of the Trust and/or filed with the Securities and Exchange Commission ("SEC Filings"). Portfolio Manager agrees to indemnify and hold harmless the Trust and each of its Trustees, officers and employees from any claims, liabilities and expenses, including reasonable attorneys' fees, incurred as a result of any untrue statement or alleged untrue statement of a material fact made by Portfolio Manager in any such written information and upon which theTrust relies in preparing any SEC Filing, or any omission or alleged omission to state in such written information a material fact necessary to make such statements not misleading ("material omission"). Portfolio Manager will not, however, be required to so indemnify any person under this Section 5 to the extent that Portfolio Manager relied upon an untrue statement or material omission made by an officer or Trustee of the Trust or where such untrue statement or material omission was made in reliance upon information furnished to the Portfolio Manager in writing by such officer or Trustee, or by the Trust's Custodian, Administrator or Accounting Agent. 6. Permissible Interest. Subject to and in accordance with the Trust's Declaration of Trust and Bylaws and corresponding governing documents of Portfolio Manager, Trustees , officers, agents and shareholders of the Trust may have an interest in the Portfolio Manager as officers, directors, agents and/or shareholders or otherwise. Portfolio Manager may have similar interests in the Trust. The effect of any such interrelationships shall be governed by said governing documents and the provisions of the Investment Company Act. 7. Duration, Termination and Amendments. This Agreement shall become effective as of the date first written above and shall continue in effect for two years. Thereafter, this Agreement shall continue in effect from year to year for so long as its continuance is specifically approved, at least annually, by (i) a majority of the Board of Trustees or the vote of the holders of a majority of the Portfolio's outstanding voting securities; and (ii) the affirmative vote, cast in person at a meeting called for the purpose of voting on such continuance, of a majority of those members of the Board of Trustees ("Independent Trustees") who are not "interested persons" of the Trust or any investment adviser to the Trust. This Agreement may be terminated by the Trust or by Portfolio Manager at any time and without penalty upon sixty days written notice to the other party, which notice may be waived by the party entitled to it. This Agreement may not be amended except by an instrument in writing and signed by the party to be bound thereby provided that if the Investment Company Act requires that such amendment be approved by the vote of the Board, the Independent Trustees and/or the holders of the Trust's or the Portfolio's outstanding shareholders, such approval must be obtained before any such amendment may become effective. This Agreement shall terminate upon its assignment. For purposes of this Agreement, the terms "majority of the outstanding voting securities, "assignment" and "interested person" shall have the meanings set forth in the Investment Company Act. 8. Confidentiality; Use of Name. Portfolio Manager acknowledges and agrees that during the course of its responsibilities hereunder, it may have access to certain information that is proprietary to the Trust or to one or more of the Trust's agents or service providers. Portfolio Manager agrees that Portfolio Manager, its officers and its employees shall treat all such proprietary information as confidential and will not use or disclose information contained in, or derived from such material for any purpose other than in connection with the carrying out of Portfolio Manager's responsibilities hereunder. In addition, Portfolio Manager shall use its best efforts to ensure that any agent or affiliate of Portfolio Manager who may gain access to such proprietary materials shall be made aware of the proprietary nature of such materials and shall likewise treat such materials as confidential.It is acknowledged and agreed that the names "Hirtle Callaghan," "Hirtle Callaghan Chief Investment Officers" (which is a registered trademark of Hirtle, Callagha & Co., Inc. ("HCCI")) and derivatives of either, as well as any logo that is now or shall later become associated with either name ("Marks") are valuable property of Hirtle, Callaghan and Co. Inc. ("HCCI") and that the use of the Marks, or any one of them, by the Trust or its agents is subject to the license granted to the Trust by HCCI. Portfolio Manager agrees that it will not use any Mark without the prior written consent of the Trust. Portfolio Manager consents to use of its name, performance data, biographical data and other pertinent data by the Trust for use in marketing and sales literature, provided that any such marketing and sales literature shall not be used by the Trust without the prior written consent of Portfolio Manager, which consent shall not be unreasonably withheld. The provisions of this Section 8 shall survive termination of this Agreement. 9. Representation, Warranties and Agreements of Portfolio Manager. Portfolio Manager represents and warrants that: (a) It is registered as an investment adviser under the Investment Advisers Act of 1940 ("Investment Advisers Act"), it will maintain such registration in full force and effect and will promptly report to the Trust the commencement of any formal proceeding that could render the Portfolio Manager ineligible to serve as an investment adviser to a registered investment company under Section 9 of the Investment Company Act. (b) It understands that, as a result of its services hereunder, certain of its employees and officers may be deemed "access persons" of the Trust within the meaning of Rule 17j-1 under the Investment Company Act and that each such access person is subject to the provisions of the code of ethics ("Trust's Code") adopted by the Trust in compliance with such rule. Portfolio Manager further represents that it is subject to a written code of ethics ("Portfolio Manager's Code") complying with the requirements of Rule 204-2(a)(12) under the Investment Advisers Act and will provide the Trust with a copy of such code of ethics. During the period that this Agreement is in effect, an officer or director of Portfolio Manager shall certify to the Trust, on a quarterly basis, that Portfolio Manager has complied with the requirements of the Portfolio Manager's Code during the prior year; and that either (i) that no violation of such code occurred or (ii) if such a violation occurred, that appropriate action was taken in response to such violation. Upon the written request of the Trust, Portfolio Manager shall permit the Trust, or it designated agents, to examine the reports required to be made by Portfolio Manager under rule 17j-1(c)(1) under the Investment Company Act. In addition, Portfolio Manager acknowledges that the Trust may, in response to regulations or recommendations issued by the Securities and Exchange Commission or other regulatory agencies, from time to time, request additional information regarding the personal securities trading of its directors, partners, officers and employees and the policies of Portfolio Manager with regard to such trading. Portfolio Manager agrees that it make every effort to respond to the Trust's reasonable requests in this area. (c) Upon request of the Trust, Portfolio Manager shall promptly supply the Trust with any information concerning Portfolio Manager and its stockholders, employees and affiliates that the Trust may reasonably require in connection with the preparation of its registration statements, proxy materials, reports and other documents required, under applicable state or Federal laws, to be filed with state or Federal agencies or to be provided to shareholders of the Trust. 10. Status of Portfolio Manager. The Trust and Portfolio Manager acknowledge and agree that the relationship between Portfolio Manager and the Trust is that of an independent contractor and under no circumstances shall any employee of Portfolio Manager be deemed an employee of the Trust or any other organization that the Trust may, from time to time, engage to provide services to the Trust, its Portfolios or its shareholders. The parties also acknowledge and agree that nothing in this Agreement shall be construed to restrict the right of Portfolio Manager or its affiliates to perform investment management or other services to any person or entity, including without limitation, other investment companies and persons who may retain Portfolio Manager to provide investment management services and the performance of such services shall not be deemed to violate or give rise to any duty or obligations to the Trust.11. Counterparts and Notice. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original. Any notice required to be given under this Agreement shall be deemed given when received, in writing addressed and delivered, by certified mail, by hand or via overnight delivery service as follows: If to the Trust: Mr. Donald E. Callaghan, President The Hirtle Callaghan Trust 575 East Swedesford Road Wayne, PA 19087-1937 If to Portfolio Manager: Michael A. Cavarretta Frontier Capital Management Company 99 Summer Street Boston, Massachusetts 02110 12. Miscellaneous. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and shall be governed by the law of the state of Delaware provided that nothing herein shall be construed as inconsistent with the Investment Company Act or the Investment Advisers Act. Portfolio Manager is hereby expressly put on notice of the limitations of shareholder and Trustee liability set forth in the Declaration of Trust of the Trust and agrees that obligations assumed by the Trust pursuant to this Agreement shall be limited in all cases to the assets of The Small Capitalization Equity Portfolio. Portfolio Manager further agrees that it will not seek satisfaction of any such obligations from the shareholders or any individual shareholder of the Trust, or from the Trustees of the Trust or any individual Trustee of the Trust. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers thereunto duly authorized as of the day and year first written above. Frontier Capital Management Company By: /s/ The Hirtle Callaghan Trust By: /s/ EX-9 9 BRINSON CONTRACT PORTFOLIO MANAGEMENT AGREEMENTAGREEMENT made this __________day of August, 1995 between Brinson Partners, Inc. a corporation organized underthe laws of Delaware ("Portfolio Manager") and THE HIRTLE CALLAGHAN TRUST, a Delaware business trust("Trust"). WHEREAS, the Trust is registered as an open-end, diversified, management series investment company under theInvestment Company Act of 1940, as amended ("Investment Company Act") which currently offers five series of beneficialinterests ("shares") representing interests in separate investment portfolios, and may offer additional portfolios in the future; and WHEREAS, the Trust desires to retain the Portfolio Manager to provide a continuous program of investment managementfor The International Equity Portfolio of the Trust ("Portfolio") and Portfolio Manager is willing, in accordance with theterms and conditions hereof, to provide such services to the Trust; NOW THEREFORE, in consideration of the promises and covenants set forth herein and intending to be legally boundhereby, it is agreed between the parties as follows: 1. Appointment of Portfolio Manager. The Trust hereby retains Portfolio Manager to provide the investment services set forth herein and Portfolio Manageragrees to accept such appointment. In carrying out its responsibilities under this Agreement, the Portfolio Manager shallat all times act in accordance with the investment objectives, policies and restrictions applicable to the Portfolio as set forthin the then current Registration Statement of the Trust, applicable provisions of the Investment Company Act and the rulesand regulations promulgated under that Act and other applicable federal securities laws. 2. Duties of Portfolio Manager. (a) Portfolio Manager shall provide a continuous program of investment management for that portion of the assets of thePortfolio ("Account") that may, from time to time be allocated to it by the Trust's Board of Trustees, in writing, by anauthorized officer of the Trust. It is understood that the Account may consist of all, a portion of or none of the assets ofthe Portfolio, and that the Board of Trustees has the right to allocate and reallocate such assets to the Account at any time,and from time to time, upon such notice to the Portfolio Manager as may be reasonably necessary, in the view of the Trust,to ensure orderly management of the Account or the Portfolio. (b) Subject to the general supervision of the Trust's Board of Trustees, Portfolio Manager shall have sole investmentdiscretion with respect to the Account, including investment research, selection of the securities to be purchased and soldand the portion of the Account, if any, that shall be held uninvested, and the selection of brokers and dealers through whichsecurities transactions in the Account shall be executed. Specifically, and without limiting the generality of the foregoing,Portfolio Manager agrees that it will: (i) promptly advise the Portfolio's designated custodian bank and administrator or accounting agent of eachpurchase and sale, as the case may be, made on behalf of the Account, specifying the name and quantity of the securitypurchased or sold, the unit and aggregate purchase or sale price, commission paid, the market on which the transaction waseffected, the trade date, the settlement date, the identity of the effecting broker or dealer and/or such other information, and in such manner, as may from time to time be reasonably requested by the Trust; (ii) maintain all applicable books and records with respect to the securities transactions of the Account. Specifically, Portfolio Manager agrees to maintain with respect to the Account those records required to be maintainedunder Rule 31a-1(b)(1), (b)(5) and (b)(6) under the Investment Company Act with respect to transactions in the Accountincluding, without limitation, records which reflect securities purchased or sold in the Account, showing for each suchtransaction, the name and quantity of securities, the unit and aggregate purchase or sale price, commission paid, the marketon which the transaction was effected, the trade date, the settlement date, and the identity of the effecting broker or dealer. Portfolio Manager will preserve such records in the manner and for the periods prescribed by Rule 31a-2 under theInvestment Company Act. Portfolio Manager acknowledges and agrees that all records it maintains for the Trust are theproperty of the Trust and Portfolio Manager will surrender promptly to the Trust any such records upon the Trust's request. The Trust agrees, however, that Portfolio Manager may retain copies of those records that are required to be maintainedby Portfolio Manager under federal or state regulations to which it may be subject or are reasonably necessary for purposesof conducting its business; (iii) provide, in a timely manner, such information as may be reasonably requested by the Trust or its designatedagents in connection with, among other things, the daily computation of the Portfolio's net asset value and net income,preparation of proxy statements or amendments to the Trust's registration statement and monitoring investments made inthe Account to ensure compliance with the various limitations on investments applicable to the Portfolio and to ensure that the Portfolio will continue to qualify for the special tax treatment accorded to regulated investment companies underSubchapter M of the Internal Revenue Code of 1986, as amended; and (iv) render regular reports to the Trust concerning the performance of Portfolio Manager of its responsibilitiesunder this Agreement. In particular, Portfolio Manager agrees that it will, at the reasonable request of the Board ofTrustees, attend meetings of the Board or its validly constituted committees and will, in addition, make its officers andemployees available to meet with the officers and employees of the Trust at least quarterly and at other times uponreasonable notice, to review the investments and investment program of the Account. 3. Portfolio Transaction and Brokerage. In placing orders for portfolio securities with brokers and dealers, PortfolioManager shall use its best efforts to execute securities transactions on behalf of the Account in such a manner that the totalcost or proceeds in each transaction is the most favorable under the circumstances. Portfolio Manager may, however, inits discretion, direct orders to brokers that provide to Portfolio Manager research, analysis, advice and similar services, andPortfolio Manager may cause the Account to pay to those brokers a higher commission than may be charged by otherbrokers for similar transactions, provided that Portfolio Manager determines in good faith that such commission isreasonable in terms either of the particular transaction or of the overall responsibility of the Portfolio Manager to theAccount and any other accounts with respect to which Portfolio Manager exercises investment discretion, and providedfurther that the extent and continuation of any such practice is subject to review by the Trust's Board of Trustees. PortfolioManager shall not execute any portfolio transactions for the Trust with a broker or dealer which is an "affiliated person"of the Trust or Portfolio Manager, including any other investment advisory organization that may, from time to time actas a portfolio manager for the Portfolio or any of the Trust's other Portfolios, without prior written approval of the Trust. The Trust shall provide a list of such affiliated brokers and dealers to Portfolio Manager and will promptly advise PortfolioManager of any changes in such list. 4. Expenses and Compensation.Portfolio Manager shall pay all of its expenses incurred in the performance of its duties under this Agreement and shallnot be required to pay any other expenses of the Trust. For its services under this Agreement, Portfolio Manager shall beentitled to receive a fee at the annual rate of .40% of the average daily net asset value of the Account, which fee shall bepayable monthly. 5. Limitation of Liability and Indemnification.(a) Portfolio Manager shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Trustin connection with the matters to which this Agreement relates including, without limitation, losses that may be sustainedin connection with the purchase, holding, redemption or sale of any security or other investment by the Trust except a lossresulting from willful misfeasance, bad faith or gross negligence on the part of Portfolio Manager in the performance ofits duties or from reckless disregard by it of its duties under this Agreement. (b) Notwithstanding the foregoing, Portfolio Manager expressly agrees that the Trust may rely upon written informationprovided, in writing, by Portfolio Manager to the Trust (including, without limitation, information contained in PortfolioManager's then current Form ADV) in accordance with Section 9 of the Agreement or otherwise, in preparing the Trust'sregistration statement and amendments thereto and certain periodic reports relating to the Trust and its Portfolios that arerequired to be furnished to shareholders of the Trust and/or filed with the Securities and Exchange Commission ("SECFilings"). Portfolio Manager agrees to indemnify and hold harmless the Trust and each of its Trustees, officers andemployees from any claims, liabilities and expenses, including reasonable attorneys' fees, incurred as a result of any untruestatement or alleged untrue statement of a material fact made by Portfolio Manager in any such written information and upon which the Trust relies in preparing any SEC Filing, or any omission or alleged omission to state in such writteninformation a material fact necessary to make such statements not misleading ("material omission"). Portfolio Managerwill not, however, be required to so indemnify any person under this Section 5 to the extent that Portfolio Manager reliedupon an untrue statement or material omission made by an officer or Trustee of the Trust or where such untrue statementor material omission was made in reliance upon information furnished to the Portfolio Manager in writing by such officeror Trustee, or by the Trust's Custodian, Administrator or Accounting Agent. 6. Permissible Interest.Subject to and in accordance with the Trust's Declaration of Trust and Bylaws and corresponding governing documentsof Portfolio Manager, Trustees , officers, agents and shareholders of the Trust may have an interest in the PortfolioManager as officers, directors, agents and/or shareholders or otherwise. Portfolio Manager may have similar interests inthe Trust. The effect of any such interrelationships shall be governed by said governing documents and the provisions ofthe Investment Company Act. 7. Duration, Termination and Amendments.This Agreement shall become effective as of the date first written above and shall continue in effect for two years. Thereafter, this Agreement shall continue in effect from year to year for so long as its continuance is specifically approved,at least annually, by (i) a majority of the Board of Trustees or the vote of the holders of a majority of the Portfolio'soutstanding voting securities; and (ii) the affirmative vote, cast in person at a meeting called for the purpose of voting onsuch continuance, of a majority of those members of the Board of Trustees ("Independent Trustees ") who are not"interested persons" of the Trust or any investment adviser to the Trust. This Agreement may be terminated by the Trust or by Portfolio Manager at any time and without penalty upon sixty dayswritten notice to the other party, which notice may be waived by the party entitled to it. This Agreement may not beamended except by an instrument in writing and signed by the party to be bound thereby provided that if the InvestmentCompany Act requires that such amendment be approved by the vote of the Board, the Independent Trustees and/or theholders of the Trust's or the Portfolio's outstanding shareholders, such approval must be obtained before any suchamendment may become effective. This Agreement shall terminate upon its assignment. For purposes of this Agreement, the terms "majority of the outstanding voting securities, "assignment" and "interestedperson" shall have the meanings set forth in the Investment Company Act. 8. Confidentiality; Use of Name.(a) Portfolio Manager acknowledges and agrees that during the course of its responsibilities hereunder, it may have accessto certain information that is proprietary to the Trust or to one or more of the Trust's agents or service providers. PortfolioManager agrees that Portfolio Manager, its officers and its employees shall treat all such proprietary information asconfidential and will not use or disclose information contained in, or derived from such material for any purpose other thanin connection with the carrying out of Portfolio Manager's responsibilities hereunder. In addition, Portfolio Manager shall use its best efforts to ensure that any agent or affiliate of Portfolio Manager who may gain access to such proprietarymaterials shall be made aware of the proprietary nature of such materials and shall likewise treat such materials as confidential. (b) It is acknowledged and agreed that the names "Hirtle Callaghan," "Hirtle Callaghan Chief Investment Officers" (whichis a registered trademark of Hirtle, Callaghan & Co., Inc. ("HCCI")), and derivatives of either, as well as any logo that isnow or shall later become associated with either name ("Marks") are valuable property of HCCI and that the use of theMarks, or any one of them, by the Trust or its agents is subject to the license granted to the Trust HCCI. Portfolio Manageragrees that it will not use any Mark without the prior written consent of the Trust. Portfolio Manager consents to use ofits name, performance data, biographical data and other pertinent data by the Trust for use in marketing and sales literature,provided that any such marketing and sales literature shall not be used by the Trust without the prior written consent ofPortfolio Manager, which consent shall not be unreasonably withheld. The provisions of this Section 8 shall survivetermination of this Agreement. 9. Representation, Warranties and Agreements of Portfolio Manager. Portfolio Manager represents and warrants that: (a) It is registered as an investment adviser under the Investment Advisers Act of 1940 ("Investment Advisers Act"), it willmaintain such registration in full force and effect and will promptly report to the Trust the commencement of any formalproceeding that could render the Portfolio Manager ineligible to serve as an investment adviser to a registered investmentcompany under Section 9 of the Investment Company Act. (b) It understands that, as a result of its services hereunder, certain of its employees and officers may be deemed "accesspersons" of the Trust within the meaning of Rule 17j-1 under the Investment Company Act and that each such accessperson is subject to the provisions of the code of ethics ("Trust's Code") adopted by the Trust in compliance with such rule. Portfolio Manager further represents that it is subject to a written code of ethics ("Portfolio Manager's Code") complyingwith the requirements of Rule 204-2(a)(12) under the Investment Advisers Act and will provide the Trust with a copy of such code of ethics. During the period that this Agreement is in effect, an officer or director of Portfolio Manager shallcertify to the Trust, at least quarterly, that Portfolio Manager has complied with the requirements of the Portfolio Manager'sCode during the prior year; and that either (i) that no violation of such code has occurred or (ii) if such a violation occurred,that appropriate action was taken in response to such violation. Upon the written request of the Trust, Portfolio Managershall permit the Trust, or it designated agents, to examine the reports required to be made by Portfolio Manager under rule17j-1(c)(1) under the Investment Company Act. In addition, Portfolio Manager acknowledges that the Trust may, inresponse to regulations or recommendations issued by the Securities and Exchange Commission or other regulatoryagencies, from time to time, request additional information regarding the personal securities trading of its directors,partners, officers and employees and the policies of Portfolio Manager with regard to such trading. Portfolio Manageragrees that it make every effort to respond to the Trust's reasonable requests in this area. (c) Upon request of the Trust, Portfolio Manager shall promptly supply the Trust with any information concerning PortfolioManager and its stockholders, employees and affiliates that the Trust may reasonably require in connection with thepreparation of its registration statements, proxy materials, reports and other documents required, under applicable state orFederal laws, to be filed with state or Federal agencies or to be provided to shareholders of the Trust. 10. Status of Portfolio Manager. The Trust and Portfolio Manager acknowledge and agree that the relationship between Portfolio Manager and the Trustis that of an independent contractor and under no circumstances shall any employee of Portfolio Manager be deemed anemployee of the Trust or any other organization that the Trust may, from time to time, engage to provide services to the Trust, its Portfolios or its shareholders. The parties also acknowledge and agree that nothing in this Agreement shall beconstrued to restrict the right of Portfolio Manager or its affiliates to perform investment management or other services toany person or entity, including without limitation, other investment companies and persons who may retain PortfolioManager to provide investment management services and the performance of such services shall not be deemed to violateor give rise to any duty or obligations to the Trust. 11. Counterparts and Notice. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original. Any noticerequired to be given under this Agreement shall be deemed given when received, in writing addressed and delivered, bycertified mail, by hand or via overnight delivery service as follows: If to the Trust: Mr. Donald E. Callaghan, President The Hirtle Callaghan Trust 575 East Swedesford Road Wayne, PA 19087 If to Portfolio Manager: Michael Jacobs, Esq. Brinson Partners, Inc. 209 South LaSalle Street Chicago, Illinois 60604-1295 12. Miscellaneous. The captions in this Agreement are included for convenience of reference only and in no way defineor delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not beaffected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and theirrespective successors and shall be governed by the law of the state of Delaware provided that nothing herein shall beconstrued as inconsistent with the Investment Company Act or the Investment Advisers Act. Portfolio Manager is hereby expressly put on notice of the limitations of shareholder and Trustee liability set forth in theDeclaration of Trust of the Trust and agrees that obligations assumed by the Trust pursuant to this Agreement shall belimited in all cases to the assets of The International Equity Portfolio. Portfolio Manager further agrees that it will not seeksatisfaction of any such obligations from the shareholders or any individual shareholder of the Trust, or from the Trusteesof the Trust or any individual Trustee of the Trust. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers thereunto dulyauthorized as of the day and year first written above. Brinson Partners, Inc. By: /s/ The Hirtle Callaghan Trust By: /s/ EX-10 10 LIMITED CONTRACT PORTFOLIO MANAGEMENT AGREEMENT AGREEMENT made this __________day of September 1995, between Morgan Grenfell Capital Management, Incorporated, a corporation organized under the laws of Delaware ("Portfolio Manager") and THE HIRTLE CALLAGHAN TRUST, a Delaware business trust ("Trust"). WHEREAS, the Trust is registered as an open-end, diversified, management series investment company under the Investment Company Act of 1940, as amended ("Investment Company Act") which currently offers five series of beneficial interests ("shares") representing interests in separate investment portfolios, and may offer additional portfolios in the future; and WHEREAS, the Trust desires to retain the Portfolio Manager to provide a continuous program of investment management for The Limited Duration Municipal Bond Portfolio of the Trust ("Portfolio") and Portfolio Manager is willing, in accordance with the terms and conditions hereof, to provide such services to the Trust; NOW THEREFORE, in consideration of the promises and covenants set forth herein and intending to be legally bound hereby, it is agreed between the parties as follows: 1. Appointment of Portfolio Manager. The Trust hereby retains Portfolio Manager to provide the investment services set forth herein and Portfolio Manager agrees to accept such appointment. In carrying out its responsibilities under this Agreement, the Portfolio Manager shall at all times act in accordance with the investment objectives, policies and restrictions applicable to the Portfolio as set forth in the then current Registration Statement of the Trust, applicable provisions of the Investment Company Act and the rules and regulations promulgated under that Act and other applicable federal securities laws. 2. Duties of Portfolio Manager. (a) Portfolio Manager shall provide a continuous program of investment management for that portion of the assets of the Portfolio ("Account") that may, from time to time be allocated to it by the Trust's Board of Trustees, in writing, by an authorized officer of the Trust. It is understood that the Account may consist of all, a portion of or none of the assets of the Portfolio, and that the Board of Trustees has the right to allocate and reallocate such assets to the Account at any time, and from time to time, upon such notice to the Portfolio Manager as may be reasonably necessary, in the view of the Trust, to ensure orderly management of the Account or the Portfolio. (b) Subject to the general supervision of the Trust's Board of Trustees, Portfolio Manager shall have sole investment discretion with respect to the Account, including investment research, selection of the securities to be purchased and sold and the portion of the Account, if any, that shall be held uninvested, and the selection of brokers and dealers through which securities transactions in the Account shall be executed. Specifically, and without limiting the generality of the foregoing, Portfolio Manager agrees that it will: (i) promptly advise the Portfolio's designated custodian bank and administrator or accounting agent of each purchase and sale, as the case may be, made on behalf of the Account, specifying the name and quantity of the security purchased or sold, the unit and aggregate purchase or sale price, commission paid, the market on which the transaction was effected, the trade date, the settlement date, the identity of the effecting broker or dealer and/or such other information, and in such manner, as may from time to time be reasonably requested by the Trust; (ii) maintain all applicable books and records with respect to the securities transactions of the Account. Specifically, Portfolio Manager agrees to maintain with respect to the Account those records required to be maintained under Rule 31a-1(b)(1), (b)(5) and (b)(6) under the Investment Company Act with respect to transactions in the Account including, without limitation, records which reflect securities purchased or sold in the Account, showing for each such transaction, the name and quantity of securities, the unit and aggregate purchase or sale price, commission paid, the market on which the transaction was effected, the trade date, the settlement date, and the identity of the effecting broker or dealer. Portfolio Manager will preserve such records in the manner and for the periods prescribed by Rule 31a-2 under the Investment Company Act. Portfolio Manager acknowledges and agrees that all records it maintains for the Trust are the property of the Trust and Portfolio Manager will surrender promptly to the Trust any such records upon the Trust's request; (iii) provide, in a timely manner, such information as may be reasonably requested by the Trust or its designated agents in connection with, among other things, the daily computation of the Portfolio's net asset value and net income, preparation of proxy statements or amendments to the Trust's registration statement and monitoring investments made in the Account to ensure compliance with the various limitations on investments applicable to the Portfolio and to ensure that the Portfolio will continue to qualify for the special tax treatment accorded to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended; and (iv) render regular reports to the Trust concerning the performance ofPortfolio Manager of its responsibilities under this Agreement. In particular, Portfolio Manager agrees that it will, at the reasonable request of the Board of Trustees, attend meetings of the Board or its validly constituted committees and will, in addition, make its officers and employees available to meet with the officers and employees of the Trust at least quarterly and at other times upon reasonable notice, to review the investments and investment program of the Account. 3. Portfolio Transaction and Brokerage. In placing orders for portfolio securities with brokers and dealers, Portfolio Manager shall use its best efforts to execute securities transactions on behalf of the Account in such a manner that the total cost or proceeds in each transaction is the most favorable under the circumstances. Portfolio Manager may, however, in its discretion, direct orders to brokers that provide to Portfolio Manager research, analysis, advice and similar services, and Portfolio Manager may cause the Account to pay to those brokers a higher commission than may be charged by other brokers for similar transactions, provided that Portfolio Manager determines in good faith that such commission is reasonable in terms either of the particular transaction or of the overall responsibility of the Portfolio Manager to the Account and any other accounts with respect to which Portfolio Manager exercises investment discretion, and provided further that the extent and continuation of any such practice is subject to review by the Trust's Board of Trustees. Portfolio Manager shall not execute any portfolio transactions for the Trust with a broker or dealer which is an "affiliated person" of the Trust or Portfolio Manager, including any other investment advisory organization that may, from time to time act as a portfolio manager for the Portfolio or any of the Trust's other Portfolios, without prior written approval of the Trust. The Trust shall provide a list of such affiliated brokers and dealers to Portfolio Manager and will promptly advise Portfolio Manager of any changes in such list. 4. Expenses and Compensation. Portfolio Manager shall pay all of its expenses incurred in the performance of its duties under this Agreement and shall not be required to pay any other expenses of the Trust. For its services under this Agreement, Portfolio Manager shall be entitled to receive a fee at the annual rate of .20% of the average daily net asset value of the Account, which fee shall be payable monthly. 5. Limitation of Liability and Indemnification. (a) Portfolio Manager shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Trust in connection with the matters to which this Agreement relates including, without limitation, losses that may be sustained in connection with the purchase, holding, redemption or sale of any security or other investment by the Trust except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of Portfolio Manager in the performance of its duties or from reckless disregard by it of its duties under this Agreement. (b) Notwithstanding the foregoing, Portfolio Manager expressly agrees that the Trust may rely upon information provided, in writing, by Portfolio Manager to the Trust (including, without limitation, information contained in Portfolio Manager's then current Form ADV) in accordance with Section 9 of the Agreement or otherwise, in preparing the Trust's registration statement and amendments thereto and certain periodic reports relating to the Trust and its Portfolios that are required to be furnished to shareholders of the Trust and/or filed with the Securities and Exchange Commission ("SEC Filings"), provided that a copy of any such filing is provided to Portfolio Manager (i) at least 10 business days prior to the date on which it will become effective, in the case of a registration statement; (ii) at least 10 business days prior to the date upon which it is filed with the SEC in the case of the Trust's semi-annual report on Form N-SAR or any shareholder report or proxy statement. (c) Portfolio Manager agrees to indemnify and hold harmless the Trust and each of its Trustees, officers and employees from any claims, liabilities and expenses, including reasonable attorneys' fees, (collectively, "Losses") to the extent that Losses are incurred as a result of statements contained in an SEC Filing ("Disputed Statements") that are misleading either because they are (i) untrue statements of material fact; or (ii) omitted to state any material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading. For purposes of the indemnification obligation set forth in this Section 5(c), a Disputed Statement will be deemed misleading if so declared by a decision of a court or administrative law judge or in an order of settlement issued by any court or administrative body. Portfolio Manager further agrees to indemnify and hold harmless the Trust and each of its Trustees, from any Losses to the extent that such Losses are incurred as a result of Disputed Statements that are alleged (i) to be untrue statements of material fact; or (ii) to have omitted to state any material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, provided that the indemnification obligation set forth in this Section 5(d) is expressly limited to Losses arising from Disputed Statements that accurately reflect information provided to the Trust in writing by the Portfolio Manager and that cannot be independently verified by the Trust. Further, the indemnification set forth in this Section 5(d) will not require reimbursement of fees or expenses other than those incurred by the Trust's regular counsel in connection with such counsel's representation of the Trust or its Trustees. (e) The indemnification obligations set forth in Sections 5(c) and (d) shall not apply unless (i) Disputed Statements accurately reflect information provided to the Trust in writing by the Portfolio Manager; (ii) Disputed Statements were included in an SEC Filing in reliance upon written information provided to the Trust by the Portfolio Manager; (iii) the Portfolio Manager was afforded the opportunity to review Disputed Statements in connection with the 10 business day review requirement set forth in Section 5(b) above; and (iv) upon receipt by the Trust of any notice of the commencement of any action or the assertion of any claim to which the indemnification obligations set forth in Section 5(c) and (d) may apply, the Trust notifies the Portfolio Manager, within 30 days and in writing, of such receipt and provides to Portfolio Manager the opportunity to participate in the defense and/or settlement of any such action or claim. Further, Portfolio Manager will not be required to indemnify any person under this Section 5 to the extent that Portfolio Manager relied upon statements or information furnished to the Portfolio Manager, in writing, by any officer, employee or Trustee of the Trust, or by the Trust's Custodian, Administrator or Accounting Agent or any other agent of the Trust, in preparing written information provided to the Trust and upon which the Trust relied in preparing any Disputed Statement. 6. Permissible Interest. Subject to and in accordance with the Trust's Declaration of Trust and By-laws and corresponding governing documents of Portfolio Manager, Trustees , officers, agents and shareholders of the Trust may have an interest in the Portfolio Manager as officers, directors, agents and/or shareholders or otherwise. Portfolio Manager may have similar interests in the Trust. The effect of any such interrelationships shall be governed by said governing documents and the provisions of the Investment Company Act. 7. Duration, Termination and Amendments. This Agreement shall become effective as of the date first written above and shall continue in effect for two years. Thereafter, this Agreement shall continue in effect from year to year for so long as its continuance is specifically approved, at least annually, by (i) a majority of the Board of Trustees or the vote of the holders of a majority of the Portfolio's outstanding voting securities; and (ii) the affirmative vote, cast in person at a meeting called for the purpose of voting on such continuance, of a majority of those members of the Board of Trustees ("Independent Trustees ") who are not "interested persons" of the Trust or any investment adviser to the Trust. This Agreement may be terminated by the Trust or by Portfolio Manager at any time and without penalty upon sixty days written notice to the other party, which notice may be waived by the party entitled to it. This Agreement may not be amended except by an instrument in writing and signed by the party to be bound thereby provided that if the Investment Company Act requires that such amendment be approved by the vote of the Board, the Independent Trustees and/or the holders of the Trust's or the Portfolio's outstanding shareholders, such approval must be obtained before any such amendment may become effective. This Agreement shall terminate upon its assignment. For purposes of this Agreement, the terms "majority of the outstanding voting securities, "assignment" and "interested person" shall have the meanings set forth in the Investment Company Act. 8. Confidentiality; Use of Name. Portfolio Manager and the Trust acknowledge and agree that during the term of this Agreement the parties may have access to certain information that is proprietary to the Trust or Portfolio Manager, respectively (or to their affiliates and/or service providers). The parties agree that their respective officers and employees shall treat all such proprietary information as confidential and will not use or disclose information contained in, or derived from such material for any purpose other than in connection with the carrying out of their responsibilities under this Agreement and the management of the Trust's assets, provided, however, that this shall not apply in the case of (i) information that is publicly available; and (ii) disclosures required by law or requested by any regulatory authority that may have jurisdiction over Portfolio Manager or the Trust, as the case may be, in which case such party shall request such confidential treatment of such information as may be reasonably available. In addition, each party shall use its best efforts to ensure that its agents or affiliates who may gain access to such proprietary information shall be made aware of the proprietary nature and shall likewise treat such materials as confidential. It is acknowledged and agreed that the names "Hirtle Callaghan," "Hirtle Callaghan Chief Investment Officers" (which is a registered trademark of Hirtle Callaghan & Co., Inc. ("HCCI")), and derivative of either, as well as any logo that is now or shall later become associated with either name ("Marks") are valuable property of HCCI and that the use of the Marks, or any one of them, by the Trust or its agents is subject to the license granted to the Trust by HCCI. Portfolio Manager agrees that it will not use any Mark without the prior written consent of the Trust. Portfolio Manager consents to use of its name, performance data, biographical data and other pertinent data by the Trust for use in marketing and sales literature, provided that any such marketing and sales literature shall not be used by the Trust without the prior written consent of Portfolio Manager, which consent shall not be unreasonably withheld. The provisions of this Section 8 shall survive termination of this Agreement. 9. Representation, Warranties and Agreements of Portfolio Manager. Portfolio Manager represents and warrants that: (a) It is registered as an investment adviser under the Investment Advisers Act of 1940 ("Investment Advisers Act"), it will maintain such registration in full force and effect and will promptly report to the Trust the commencement of any formal proceeding that could render the Portfolio Manager ineligible to serve as an investment adviser to a registered investment company under Section 9 of the Investment Company Act. (b) It understands that, as a result of its services hereunder, certain of its employees and officers may be deemed "access persons" of the Trust within the meaning of Rule 17j-1 under the Investment Company Act and that each such access person is subject to the provisions of the code of ethics ("Trust's Code") adopted by the Trust in compliance with such rule. Portfolio Manager further represents that it is subject to a written code of ethics ("Portfolio Manager's Code") complying with the requirements of Rule 204-2(a)(12) under the Investment Advisers Act and will provide the Trust with a copy of such code of ethics. During the period that this Agreement is in effect, an officer or director of Portfolio Manager shall certify to the Trust, on a quarterly basis, that Portfolio Manager has complied with the requirements of the Portfolio Manager's Code during the prior year; and that either (i) that no violation of such code occurred or (ii) if such a violation occurred, that appropriate action was taken in response to such violation. In addition, Portfolio Manager acknowledges that the Trust may, in response to regulations or recommendations issued by the Securities and Exchange Commission or other regulatory agencies, from time to time, request additional information regarding the personal securities trading of its directors, partners, officers and employees and the policies of Portfolio Manager with regard to such trading. Portfolio Manager agrees that it make every effort to respond to the Trust's reasonable requests in this area. (c) Upon request of the Trust, Portfolio Manager shall promptly supply the Trust with any information concerning Portfolio Manager and its stockholders, employees and affiliates that the Trust may reasonably require in connection with the preparation of its registration statements, proxy materials, reports and other documents required, under applicable state or Federal laws, to be filed with state or Federal agencies or to be provided to shareholders of the Trust. 10. Status of Portfolio Manager. The Trust and Portfolio Manager acknowledge and agree that the relationship between Portfolio Manager and the Trust is that of an independent contractor and under no circumstances shall any employee of Portfolio Manager be deemed an employee of the Trust or any other organization that the Trust may, from time to time, engage to provide services to the Trust, its Portfolios or its shareholders. The parties also acknowledge and agree that nothing in this Agreement shall be construed to restrict the right of Portfolio Manager or its affiliates to perform investment management or other services to any person or entity, including without limitation, other investment companies and persons who may retain Portfolio Manager to provide investment management services and the performance of such services shall not be deemed to violate or give rise to any duty or obligations to the Trust. 11. Counterparts and Notice. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original. Any notice required to be given under this Agreement shall be deemed given when received, in writing addressed and delivered, by certified mail, by hand or via overnight delivery service as follows: If to the Trust: Mr. Donald E. Callaghan, President The Hirtle Callaghan Trust 575 East Swedesford Road Wayne, PA 19087 If to Portfolio Manager: Jim Minnick Morgan Grenfell Capital Management Incorporated 855 Third Avenue New York, New York 10022 with a copy to: David Baldt Morgan Grenfell Capital Management Incorporated 1435 Walnut -- 4th Floor Philadelphia, PA 19102 12. Miscellaneous. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and shall be governed by the law of the state of Delaware provided that nothing herein shall be construed as inconsistent with the Investment Company Act or the Investment Advisers Act. Portfolio Manager is hereby expressly put on notice of the limitations of shareholder and Trustee liability set forth in the Declaration of Trust of the Trust and agrees that obligations assumed by the Trust pursuant to this Agreement shall be limited in all cases to the assets of The Limited Duration Municipal Bond Portfolio. Portfolio Manager further agrees that it will not seek satisfaction of any such obligations from the shareholders or any individual shareholder of the Trust, or from the Trustees of the Trust or any individual Trustee of the Trust. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers thereunto duly authorized as of the day and year first written above. Morgan Grenfell Capital Management, Incorporated By: /s/ The Hirtle Callaghan Trust By: /s/ EX-11 11 FIXED INC CONTRACT PORTFOLIO MANAGEMENT AGREEMENT AGREEMENT made this __________day of __________, 199__, between Morgan Grenfell Capital Management, Incorporated, a corporation organized under the laws of Delaware ("Portfolio Manager") and THE HIRTLE CALLAGHAN TRUST, a Delaware business trust ("Trust"). WHEREAS, the Trust is registered as an open-end, diversified, management series investment company under the Investment Company Act of 1940, as amended ("Investment Company Act") which currently offers seven series of beneficial interests ("shares") representing interests in separate investment portfolios, and may offer additional portfolios in the future; and WHEREAS, the Trust desires to retain the Portfolio Manager to provide a continuous program of investment management for The Fixed Income Portfolio of the Trust ("Portfolio") and Portfolio Manager is willing, in accordance with the terms and conditions hereof, to provide such services to the Trust; NOW THEREFORE, in consideration of the promises and covenants set forth herein and intending to be legally bound hereby, it is agreed between the parties as follows: 1. Appointment of Portfolio Manager. The Trust hereby retains Portfolio Manager to provide the investment services set forth herein and Portfolio Manager agrees to accept such appointment. In carrying out its responsibilities under this Agreement, the Portfolio Manager shall at all times act in accordance with the investment objectives, policies and restrictions applicable to the Portfolio as set forth in the then current Registration Statement of the Trust, applicable provisions of the Investment Company Act and the rules and regulations promulgated under that Act and other applicable federal securities laws. 2. Duties of Portfolio Manager. (a) Portfolio Manager shall provide a continuous program of investment management for that portion of the assets of the Portfolio ("Account") that may, from time to time be allocated to it by the Trust's Board of Trustees, in writing, by an authorized officer of the Trust. It is understood that the Account may consist of all, a portion of or none of the assets of the Portfolio, and that the Board of Trustees has the right to allocate and reallocate such assets to the Account at any time, and from time to time, upon such notice to the Portfolio Manager as may be reasonably necessary, in the view of the Trust, to ensure orderly management of the Account or the Portfolio. (b) Subject to the general supervision of the Trust's Board of Trustees, Portfolio Manager shall have sole investment discretion with respect to the Account, including investment research, selection of the securities to be purchased and sold and the portion of the Account, if any, that shall be held uninvested, and the selection of brokers and dealers through which securities transactions in the Account shall be executed. Specifically, and without limiting the generality of the foregoing, Portfolio Manager agrees that it will: (i) promptly advise the Portfolio's designated custodian bank and administrator or accounting agent of each purchase and sale, as the case may be, made on behalf of the Account, specifying the name and quantity of the security purchased or sold, the unit and aggregate purchase or sale price, commission paid, the market on which the transaction was effected, the trade date, the settlement date, the identity of the effecting broker or dealer and/or such other information, and in such manner, as may from time to time be reasonably requested by the Trust; (ii) maintain all applicable books and records with respect to the securities transactions of the Account. Specifically, Portfolio Manager agrees to maintain with respect to the Account those records required to be maintained under Rule 31a-1(b)(1), (b)(5) and (b)(6) under the Investment Company Act with respect to transactions in the Account including, without limitation, records which reflect securities purchased or sold in the Account, showing for each such transaction, the name and quantity of securities, the unit and aggregate purchase or sale price, commission paid, the market on which the transaction was effected, the trade date, the settlement date, and the identity of the effecting broker or dealer. Portfolio Manager will preserve such records in the manner and for the periods prescribed by Rule 31a-2 under the Investment Company Act. Portfolio Manager acknowledges and agrees that all records it maintains for the Trust are the property of the Trust and Portfolio Manager will surrender promptly to the Trust any such records upon the Trust's request; (iii) provide, in a timely manner, such information as may be reasonably requested by the Trust or its designated agents in connection with, among other things, the daily computation of the Portfolio's net asset value and net income, preparation of proxy statements or amendments to the Trust's registration statement and monitoring investments made in the Account to ensure compliance with the various limitations on investments applicable to the Portfolio and to ensure that the Portfolio will continue to qualify for the special tax treatment accorded to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended; and (iv) render regular reports to the Trust concerning the performance of Portfolio Manager of its responsibilities under this Agreement. In particular, Portfolio Manager agrees that it will, at the reasonable request of the Board of Trustees, attend meetings of the Board or its validly constituted committees and will, in addition, make its officers and employees available to meet with the officers and employees of the Trust at least quarterly and at other times upon reasonable notice, to review the investments and investment program of the Account. 3. Portfolio Transaction and Brokerage. In placing orders for portfolio securities with brokers and dealers, Portfolio Manager shall use its best efforts to execute securities transactions on behalf of the Account in such a manner that the total cost or proceeds in each transaction is the most favorable under the circumstances. Portfolio Manager may, however, in its discretion, direct orders to brokers that provide to Portfolio Manager research, analysis, advice and similar services, and Portfolio Manager may cause the Account to pay to those brokers a higher commission than may be charged by other brokers for similar transactions, provided that Portfolio Manager determines in good faith that such commission is reasonable in terms either of the particular transaction or of the overall responsibility of the Portfolio Manager to the Account and any other accounts with respect to which Portfolio Manager exercises investment discretion, and provided further that the extent and continuation of any such practice is subject to review by the Trust's Board of Trustees. Portfolio Manager shall not execute any portfolio transactions for the Trust with a broker or dealer which is an "affiliated person" of the Trust or Portfolio Manager, including any other investment advisory organization that may, from time to time act as a portfolio manager for the Portfolio or any of the Trust's other Portfolios, without prior written approval of the Trust. The Trust shall provide a list of such affiliated brokers and dealers to Portfolio Manager and will promptly advise Portfolio Manager of any changes in such list. 4. Expenses and Compensation. Portfolio Manager shall pay all of its expenses incurred in the performance of its duties under this Agreement and shall not be required to pay any other expenses of the Trust. For its services under this Agreement, Portfolio Manager shall be entitled to receive a fee at the annual rate of .25% of the average daily net asset value of the Account, which fee shall be payable monthly. 5. Limitation of Liability and Indemnification. (a) Portfolio Manager shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Trust in connection with the matters to which this Agreement relates including, without limitation, losses that may be sustained in connection with the purchase, holding, redemption or sale of any security or other investment by the Trust except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of Portfolio Manager in the performance of its duties or from reckless disregard by it of its duties under this Agreement. (b) Notwithstanding the foregoing, Portfolio Manager expressly agrees that the Trust may rely upon information provided, in writing, by Portfolio Manager to the Trust (including, without limitation, information contained in Portfolio Manager's then current Form ADV) in accordance with Section 9 of the Agreement or otherwise, in preparing the Trust's registration statement and amendments thereto and certain periodic reports relating to the Trust and its Portfolios that are required to be furnished to shareholders of the Trust and/or filed with the Securities and Exchange Commission ("SEC Filings"), provided that a copy of any such filing is provided to Portfolio Manager (i) at least 10 business days prior to the date on which it will become effective, in the case of a registration statement; (ii) at least 10 business days prior to the date upon which it is filed with the SEC in the case of the Trust's semi-annual report on Form N-SAR or any shareholder report or proxy statement. (c) Portfolio Manager agrees to indemnify and hold harmless the Trust and each of its Trustees, officers and employees from any claims, liabilities and expenses, including reasonable attorneys' fees, (collectively, "Losses") to the extent that Losses are incurred as a result of statements contained in an SEC Filing ("Disputed Statements") that are misleading either because they are (i) untrue statements of material fact; or (ii) omitted to state any material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading. For purposes of the indemnification obligation set forth in this Section 5(c), a Disputed Statement will be deemed misleading if so declared by a decision of a court or administrative law judge or in an order of settlement issued by any court or administrative body. (d) Portfolio Manager further agrees to indemnify and hold harmless the Trust and each of its Trustees, from any Losses to the extent that such Losses are incurred as a result of Disputed Statements that are alleged (i) to be untrue statements of material fact; or (ii) to have omitted to state any material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, provided that the indemnification obligation set forth in this Section 5(d) is expressly limited to Losses arising from Disputed Statements that accurately reflect information provided to the Trust in writing by the Portfolio Manager and that cannot be independently verified by the Trust. Further, the indemnification set forth in this Section 5(d) will not require reimbursement of fees or expenses other than those incurred by the Trust's regular counsel in connection with such counsel's representation of the Trust or its Trustees. (e) The indemnification obligations set forth in Sections 5(c) and (d) shall not apply unless (i) Disputed Statements accurately reflect information provided to the Trust in writing by the Portfolio Manager; (ii) Disputed Statements were included in an SEC Filing in reliance upon written information provided to the Trust by the Portfolio Manager; (iii) the Portfolio Manager was afforded the opportunity to review Disputed Statements in connection with the 10 business day review requirement set forth in Section 5(b) above; and (iv) upon receipt by the Trust of any notice of the commencement of any action or the assertion of any claim to which the indemnification obligations set forth in Section 5(c) and (d) may apply, the Trust notifies the Portfolio Manager, within 30 days and in writing, of such receipt and provides to Portfolio Manager the opportunity to participate in the defense and/or settlement of any such action or claim. Further, Portfolio Manager will not be required to indemnify any person under this Section 5 to the extent that Portfolio Manager relied upon statements or information furnished to the Portfolio Manager, in writing, by any officer, employee or Trustee of the Trust, or by the Trust's Custodian, Administrator or Accounting Agent or any other agent of the Trust, in preparing written information provided to the Trust and upon which the Trust relied in preparing any Disputed Statement. 6. Permissible Interest. Subject to and in accordance with the Trust's Declaration of Trust and By-laws and corresponding governing documents of Portfolio Manager, Trustees , officers, agents and shareholders of the Trust may have an interest in the Portfolio Manager as officers, directors, agents and/or shareholders or otherwise. Portfolio Manager may have similar interests in the Trust. The effect of any such interrelationships shall be governed by said governing documents and the provisions of the Investment Company Act. 7. Duration, Termination and Amendments. This Agreement shall become effective as of the date first written above and shall continue in effect for two years. Thereafter, this Agreement shall continue in effect from year to year for so long as its continuance is specifically approved, at least annually, by (i) a majority of the Board of Trustees or the vote of the holders of a majority of the Portfolio's outstanding voting securities; and (ii) the affirmative vote, cast in person at a meeting called for the purpose of voting on such continuance, of a majority of those members of the Board of Trustees ("Independent Trustees ") who are not "interested persons" of the Trust or any investment adviser to the Trust. This Agreement may be terminated by the Trust or by Portfolio Manager at any time and without penalty upon sixty days written notice to the other party, which notice may be waived by the party entitled to it. This Agreement may not be amended except by an instrument in writing and signed by the party to be bound thereby provided that if the Investment Company Act requires that such amendment be approved by the vote of the Board, the Independent Trustees and/or the holders of the Trust's or the Portfolio's outstanding shareholders, such approval must be obtained before any such amendment may become effective. This Agreement shall terminate upon its assignment. For purposes of this Agreement, the terms "majority of the outstanding voting securities, "assignment" and "interested person" shall have the meanings set forth in the Investment Company Act. 8. Confidentiality; Use of Name. Portfolio Manager and the Trust acknowledge and agree that during the term of this Agreement the parties may have access to certain information that is proprietary to the Trust or Portfolio Manager, respectively (or to their affiliates and/or service providers). The parties agree that their respective officers and employees shall treat all such proprietary information as confidential and will not use or disclose information contained in, or derived from such material for any purpose other than in connection with the carrying out of their responsibilities under this Agreement and the management of the Trust's assets, provided, however, that this shall not apply in the case of (i) information that is publicly available; and (ii) disclosures required by law or requested by any regulatory authority that may have jurisdiction over Portfolio Manager or the Trust, as the case may be, in which case such party shall request such confidential treatment of such information as may be reasonably available. In addition, each party shall use its best efforts to ensure that its agents or affiliates who may gain access to such proprietary information shall be made aware of the proprietary nature and shall likewise treat such materials as confidential. It is acknowledged and agreed that the names "Hirtle Callaghan," "Hirtle Callaghan Chief Investment Officers" (which is a registered trademark of Hirtle Callaghan & Co., Inc. ("HCCI")), and derivative of either, as well as any logo that is now or shall later become associated with either name ("Marks") are valuable property of HCCI and that the use of the Marks, or any one of them, by the Trust or its agents is subject to the license granted to the Trust by HCCI. Portfolio Manager agrees that it will not use any Mark without the prior written consent of the Trust. Portfolio Manager consents to use of its name, performance data, biographical data and other pertinent data by the Trust for use in marketing and sales literature, provided that any such marketing and sales literature shall not be used by the Trust without the prior written consent of Portfolio Manager, which consent shall not be unreasonably withheld. The provisions of this Section 8 shall survive termination of this Agreement. 9. Representation, Warranties and Agreements of Portfolio Manager. Portfolio Manager represents and warrants that: (a) It is registered as an investment adviser under the Investment Advisers Act of 1940 ("Investment Advisers Act"), it will maintain such registration in full force and effect and will promptly report to the Trust the commencement of any formal proceeding that could render the Portfolio Manager ineligible to serve as an investment adviser to a registered investment company under Section 9 of the Investment Company Act. (b) It understands that, as a result of its services hereunder, certain of its employees and officers may be deemed "access persons" of the Trust within the meaning of Rule 17j-1 under the Investment Company Act and that each such access person is subject to the provisions of the code of ethics ("Trust's Code") adopted by the Trust in compliance with such rule. Portfolio Manager further represents that it is subject to a written code of ethics ("Portfolio Manager's Code") complying with the requirements of Rule 204-2(a)(12) under the Investment Advisers Act and will provide the Trust with a copy of such code of ethics. During the period that this Agreement is in effect, an officer or director of Portfolio Manager shall certify to the Trust, on a quarterly basis, that Portfolio Manager has complied with the requirements of the Portfolio Manager's Code during the prior year; and that either (i) that no violation of such code occurred or (ii) if such a violation occurred, that appropriate action was taken in response to such violation. In addition, Portfolio Manager acknowledges that the Trust may, in response to regulations or recommendations issued by the Securities and Exchange Commission or other regulatory agencies, from time to time, request additional information regarding the personal securities trading of its directors, partners, officers and employees and the policies of Portfolio Manager with regard to such trading. Portfolio Manager agrees that it make every effort to respond to the Trust's reasonable requests in this area. (c) Upon request of the Trust, Portfolio Manager shall promptly supply the Trust with any information concerning Portfolio Manager and its stockholders, employees and affiliates that the Trust may reasonably require in connection with the preparation of its registration statements, proxy materials, reports and other documents required, under applicable state or Federal laws, to be filed with state or Federal agencies or to be provided to shareholders of the Trust. 10. Status of Portfolio Manager. The Trust and Portfolio Manager acknowledge and agree that the relationship between Portfolio Manager and the Trust is that of an independent contractor and under no circumstances shall any employee of Portfolio Manager be deemed an employee of the Trust or any other organization that the Trust may, from time to time, engage to provide services to the Trust, its Portfolios or its shareholders. The parties also acknowledge and agree that nothing in this Agreement shall be construed to restrict the right of Portfolio Manager or its affiliates to perform investment management or other services to any person or entity, including without limitation, other investment companies and persons who may retain Portfolio Manager to provide investment management services and the performance of such services shall not be deemed to violate or give rise to any duty or obligations to the Trust. 11. Counterparts and Notice. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original. Any notice required to be given under this Agreement shall be deemed given when received, in writing addressed and delivered, by certified mail, by hand or via overnight delivery service as follows: If to the Trust: Mr. Donald E. Callaghan, President The Hirtle Callaghan Trust 575 East Swedesford Road Wayne, PA 19087 If to Portfolio Manager: Jim Minnick Morgan Grenfell Capital Management Incorporated 855 Third Avenue New York, New York 10022 with a copy to: David Baldt Morgan Grenfell Capital Management Incorporated 1435 Walnut -- 4th Floor Philadelphia, PA 19102 12. Miscellaneous. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and shall be governed by the law of the state of Delaware provided that nothing herein shall be construed as inconsistent with the Investment Company Act or the Investment Advisers Act. Portfolio Manager is hereby expressly put on notice of the limitations of shareholder and Trustee liability set forth in the Declaration of Trust of the Trust and agrees that obligations assumed by the Trust pursuant to this Agreement shall be limited in all cases to the assets of The Limited Duration Municipal Bond Portfolio. Portfolio Manager further agrees that it will not seek satisfaction of any such obligations from the shareholders or any individual shareholder of the Trust, or from the Trustees of the Trust or any individual Trustee of the Trust. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers thereunto duly authorized as of the day and year first written above. Morgan Grenfell Capital Management, Incorporated By: /s/ The Hirtle Callaghan Trust (on behalf of The Fixed Income Portfolio) By: /s/ EX-12 12 INTERMEDIATE CONTRACT PORTFOLIO MANAGEMENT AGREEMENT AGREEMENT made this __________day of __________, 199__, between Morgan Grenfell Capital Management, Incorporated, a corporation organized under the laws of Delaware ("Portfolio Manager") and THE HIRTLE CALLAGHAN TRUST, a Delaware business trust ("Trust"). WHEREAS, the Trust is registered as an open-end, diversified, management series investment company under the Investment Company Act of 1940, as amended ("Investment Company Act") which currently offers seven series of beneficial interests ("shares") representing interests in separate investment portfolios, and may offer additional portfolios in the future; and WHEREAS, the Trust desires to retain the Portfolio Manager to provide a continuous program of investment management for The Intermediate Municipal Bond Portfolio of the Trust ("Portfolio") and Portfolio Manager is willing, in accordance with the terms and conditions hereof, to provide such services to the Trust; NOW THEREFORE, in consideration of the promises and covenants set forth herein and intending to be legally bound hereby, it is agreed between the parties as follows: 1. Appointment of Portfolio Manager. The Trust hereby retains Portfolio Manager to provide the investment services set forth herein and Portfolio Manager agrees to accept such appointment. In carrying out its responsibilities under this Agreement, the Portfolio Manager shall at all times act in accordance with the investment objectives, policies and restrictions applicable to the Portfolio as set forth in the then current Registration Statement of the Trust, applicable provisions of the Investment Company Act and the rules and regulations promulgated under that Act and other applicable federal securities laws. 2. Duties of Portfolio Manager. (a) Portfolio Manager shall provide a continuous program of investment management for that portion of the assets of the Portfolio ("Account") that may, from time to time be allocated to it by the Trust's Board of Trustees, in writing, by an authorized officer of the Trust. It is understood that the Account may consist of all, a portion of or none of the assets of the Portfolio, and that the Board of Trustees has the right to allocate and reallocate such assets to the Account at any time, and from time to time, upon such notice to the Portfolio Manager as may be reasonably necessary, in the view of the Trust, to ensure orderly management of the Account or the Portfolio. (b) Subject to the general supervision of the Trust's Board of Trustees, Portfolio Manager shall have sole investment discretion with respect to the Account, including investment research, selection of the securities to be purchased and sold and the portion of the Account, if any, that shall be held uninvested, and the selection of brokers and dealers through which securities transactions in the Account shall be executed. Specifically, and without limiting the generality of the foregoing, Portfolio Manager agrees that it will: (i) promptly advise the Portfolio's designated custodian bank and administrator or accounting agent of each purchase and sale, as the case may be, made on behalf of the Account, specifying the name and quantity of the security purchased or sold, the unit and aggregate purchase or sale price, commission paid, the market on which the transaction was effected, the trade date, the settlement date, the identity of the effecting broker or dealer and/or such other information, and in such manner, as may from time to time be reasonably requested by the Trust; (ii) maintain all applicable books and records with respect to the securities transactions of the Account. Specifically, Portfolio Manager agrees to maintain with respect to the Account those records required to be maintained under Rule 31a-1(b)(1), (b)(5) and (b)(6) under the Investment Company Act with respect to transactions in the Account including, without limitation, records which reflect securities purchased or sold in the Account, showing for each such transaction, the name and quantity of securities, the unit and aggregate purchase or sale price, commission paid, the market on which the transaction was effected, the trade date, the settlement date, and the identity of the effecting broker or dealer. Portfolio Manager will preserve such records in the manner and for the periods prescribed by Rule 31a-2 under the Investment Company Act. Portfolio Manager acknowledges and agrees that all records it maintains for the Trust are the property of the Trust and Portfolio Manager will surrender promptly to the Trust any such records upon the Trust's request; (iii) provide, in a timely manner, such information as may be reasonably requested by the Trust or its designated agents in connection with, among other things, the daily computation of the Portfolio's net asset value and net income, preparation of proxy statements or amendments to the Trust's registration statement and monitoring investments made in the Account to ensure compliance with the various limitations on investments applicable to the Portfolio and to ensure that the Portfolio will continue to qualify for the special tax treatment accorded to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended; and (iv) render regular reports to the Trust concerning the performance of Portfolio Manager of its responsibilities under this Agreement. In particular, Portfolio Manager agrees that it will, at the reasonable request of the Board of Trustees, attend meetings of the Board or its validly constituted committees and will, in addition, make its officers and employees available to meet with the officers and employees of the Trust at least quarterly and at other times upon reasonable notice, to review the investments and investment program of the Account. 3. Portfolio Transaction and Brokerage. In placing orders for portfolio securities with brokers and dealers, Portfolio Manager shall use its best efforts to execute securities transactions on behalf of the Account in such a manner that the total cost or proceeds in each transaction is the most favorable under the circumstances. Portfolio Manager may, however, in its discretion, direct orders to brokers that provide to Portfolio Manager research, analysis, advice and similar services, and Portfolio Manager may cause the Account to pay to those brokers a higher commission than may be charged by other brokers for similar transactions, provided that Portfolio Manager determines in good faith that such commission is reasonable in terms either of the particular transaction or of the overall responsibility of the Portfolio Manager to the Account and any other accounts with respect to which Portfolio Manager exercises investment discretion, and provided further that the extent and continuation of any such practice is subject to review by the Trust's Board of Trustees. Portfolio Manager shall not execute any portfolio transactions for the Trust with a broker or dealer which is an "affiliated person" of the Trust or Portfolio Manager, including any other investment advisory organization that may, from time to time act as a portfolio manager for the Portfolio or any of the Trust's other Portfolios, without prior written approval of the Trust. The Trust shall provide a list of such affiliated brokers and dealers to Portfolio Manager and will promptly advise Portfolio Manager of any changes in such list. 4. Expenses and Compensation. Portfolio Manager shall pay all of its expenses incurred in the performance of its duties under this Agreement and shall not be required to pay any other expenses of the Trust. For its services under this Agreement, Portfolio Manager shall be entitled to receive a fee at the annual rate of .25% of the average daily net asset value of the Account, which fee shall be payable monthly. 5. Limitation of Liability and Indemnification. (a) Portfolio Manager shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Trust in connection with the matters to which this Agreement relates including, without limitation, losses that may be sustained in connection with the purchase, holding, redemption or sale of any security or other investment by the Trust except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of Portfolio Manager in the performance of its duties or from reckless disregard by it of its duties under this Agreement. (b) Notwithstanding the foregoing, Portfolio Manager expressly agrees that the Trust may rely upon information provided, in writing, by Portfolio Manager to the Trust (including, without limitation, information contained in Portfolio Manager's then current Form ADV) in accordance with Section 9 of the Agreement or otherwise, in preparing the Trust's registration statement and amendments thereto and certain periodic reports relating to the Trust and its Portfolios that are required to be furnished to shareholders of the Trust and/or filed with the Securities and Exchange Commission ("SEC Filings"), provided that a copy of any such filing is provided to Portfolio Manager (i) at least 10 business days prior to the date on which it will become effective, in the case of a registration statement; (ii) at least 10 business days prior to the date upon which it is filed with the SEC in the case of the Trust's semi-annual report on Form N-SAR or any shareholder report or proxy statement. (c) Portfolio Manager agrees to indemnify and hold harmless the Trust and each of its Trustees, officers and employees from any claims, liabilities and expenses, including reasonable attorneys' fees, (collectively, "Losses") to the extent that Losses are incurred as a result of statements contained in an SEC Filing ("Disputed Statements") that are misleading either because they are (i) untrue statements of material fact; or (ii) omitted to state any material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading. For purposes of the indemnification obligation set forth in this Section 5(c), a Disputed Statement will be deemed misleading if so declared by a decision of a court or administrative law judge or in an order of settlement issued by any court or administrative body. (d) Portfolio Manager further agrees to indemnify and hold harmless the Trust and each of its Trustees, from any Losses to the extent that such Losses are incurred as a result of Disputed Statements that are alleged (i) to be untrue statements of material fact; or (ii) to have omitted to state any material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, provided that the indemnification obligation set forth in this Section 5(d) is expressly limited to Losses arising from Disputed Statements that accurately reflect information provided to the Trust in writing by the Portfolio Manager and that cannot be independently verified by the Trust. Further, the indemnification set forth in this Section 5(d) will not require reimbursement of fees or expenses other than those incurred by the Trust's regular counsel in connection with such counsel's representation of the Trust or its Trustees. (e) The indemnification obligations set forth in Sections 5(c) and (d) shall not apply unless (i) Disputed Statements accurately reflect information provided to the Trust in writing by the Portfolio Manager; (ii) Disputed Statements were included in an SEC Filing in reliance upon written information provided to the Trust by the Portfolio Manager; (iii) the Portfolio Manager was afforded the opportunity to review Disputed Statements in connection with the 10 business day review requirement set forth in Section 5(b) above; and (iv) upon receipt by the Trust of any notice of the commencement of any action or the assertion of any claim to which the indemnification obligations set forth in Section 5(c) and (d) may apply, the Trust notifies the Portfolio Manager, within 30 days and in writing, of such receipt and provides to Portfolio Manager the opportunity to participate in the defense and/or settlement of any such action or claim. Further, Portfolio Manager will not be required to indemnify any person under this Section 5 to the extent that Portfolio Manager relied upon statements or information furnished to the Portfolio Manager, in writing, by any officer, employee or Trustee of the Trust, or by the Trust's Custodian, Administrator or Accounting Agent or any other agent of the Trust, in preparing written information provided to the Trust and upon which the Trust relied in preparing any Disputed Statement. 6. Permissible Interest. Subject to and in accordance with the Trust's Declaration of Trust and By-laws and corresponding governing documents of Portfolio Manager, Trustees , officers, agents and shareholders of the Trust may have an interest in the Portfolio Manager as officers, directors, agents and/or shareholders or otherwise. Portfolio Manager may have similar interests in the Trust. The effect of any such interrelationships shall be governed by said governing documents and the provisions of the Investment Company Act. 7. Duration, Termination and Amendments. This Agreement shall become effective as of the date first written above and shall continue in effect for two years. Thereafter, this Agreement shall continue in effect from year to year for so long as its continuance is specifically approved, at least annually, by (i) a majority of the Board of Trustees or the vote of the holders of a majority of the Portfolio's outstanding voting securities; and (ii) the affirmative vote, cast in person at a meeting called for the purpose of voting on such continuance, of a majority of those members of the Board of Trustees ("Independent Trustees ") who are not "interested persons" of the Trust or any investment adviser to the Trust. This Agreement may be terminated by the Trust or by Portfolio Manager at any time and without penalty upon sixty days written notice to the other party, which notice may be waived by the party entitled to it. This Agreement may not be amended except by an instrument in writing and signed by the party to be bound thereby provided that if the Investment Company Act requires that such amendment be approved by the vote of the Board, the Independent Trustees and/or the holders of the Trust's or the Portfolio's outstanding shareholders, such approval must be obtained before any such amendment may become effective. This Agreement shall terminate upon its assignment. For purposes of this Agreement, the terms "majority of the outstanding voting securities, "assignment" and "interested person" shall have the meanings set forth in the Investment Company Act. 8. Confidentiality; Use of Name. Portfolio Manager and the Trust acknowledge and agree that during the term of this Agreement the parties may have access to certain information that is proprietary to the Trust or Portfolio Manager, respectively (or to their affiliates and/or service providers). The parties agree that their respective officers and employees shall treat all such proprietary information as confidential and will not use or disclose information contained in, or derived from such material for any purpose other than in connection with the carrying out of their responsibilities under this Agreement and the management of the Trust's assets, provided, however, that this shall not apply in the case of (i) information that is publicly available; and (ii) disclosures required by law or requested by any regulatory authority that may have jurisdiction over Portfolio Manager or the Trust, as the case may be, in which case such party shall request such confidential treatment of such information as may be reasonably available. In addition, each party shall use its best efforts to ensure that its agents or affiliates who may gain access to such proprietary information shall be made aware of the proprietary nature and shall likewise treat such materials as confidential. It is acknowledged and agreed that the names "Hirtle Callaghan," "Hirtle Callaghan Chief Investment Officers" (which is a registered trademark of Hirtle Callaghan & Co., Inc. ("HCCI")), and derivative of either, as well as any logo that is now or shall later become associated with either name ("Marks") are valuable property of HCCI and that the use of the Marks, or any one of them, by the Trust or its agents is subject to the license granted to the Trust by HCCI. Portfolio Manager agrees that it will not use any Mark without the prior written consent of the Trust. Portfolio Manager consents to use of its name, performance data, biographical data and other pertinent data by the Trust for use in marketing and sales literature, provided that any such marketing and sales literature shall not be used by the Trust without the prior written consent of Portfolio Manager, which consent shall not be unreasonably withheld. The provisions of this Section 8 shall survive termination of this Agreement. 9. Representation, Warranties and Agreements of Portfolio Manager. Portfolio Manager represents and warrants that: (a) It is registered as an investment adviser under the Investment Advisers Act of 1940 ("Investment Advisers Act"), it will maintain such registration in full force and effect and will promptly report to the Trust the commencement of any formal proceeding that could render the Portfolio Manager ineligible to serve as an investment adviser to a registered investment company under Section 9 of the Investment Company Act. (b) It understands that, as a result of its services hereunder, certain of its employees and officers may be deemed "access persons" of the Trust within the meaning of Rule 17j-1 under the Investment Company Act and that each such access person is subject to the provisions of the code of ethics ("Trust's Code") adopted by the Trust in compliance with such rule. Portfolio Manager further represents that it is subject to a written code of ethics ("Portfolio Manager's Code") complying with the requirements of Rule 204-2(a)(12) under the Investment Advisers Act and will provide the Trust with a copy of such code of ethics. During the period that this Agreement is in effect, an officer or director of Portfolio Manager shall certify to the Trust, on a quarterly basis, that Portfolio Manager has complied with the requirements of the Portfolio Manager's Code during the prior year; and that either (i) that no violation of such code occurred or (ii) if such a violation occurred, that appropriate action was taken in response to such violation. In addition, Portfolio Manager acknowledges that the Trust may, in response to regulations or recommendations issued by the Securities and Exchange Commission or other regulatory agencies, from time to time, request additional information regarding the personal securities trading of its directors, partners, officers and employees and the policies of Portfolio Manager with regard to such trading. Portfolio Manager agrees that it make every effort to respond to the Trust's reasonable requests in this area. (c) Upon request of the Trust, Portfolio Manager shall promptly supply the Trust with any information concerning Portfolio Manager and its stockholders, employees and affiliates that the Trust may reasonably require in connection with the preparation of its registration statements, proxy materials, reports and other documents required, under applicable state or Federal laws, to be filed with state or Federal agencies or to be provided to shareholders of the Trust. 10. Status of Portfolio Manager. The Trust and Portfolio Manager acknowledge and agree that the relationship between Portfolio Manager and the Trust is that of an independent contractor and under no circumstances shall any employee of Portfolio Manager be deemed an employee of the Trust or any other organization that the Trust may, from time to time, engage to provide services to the Trust, its Portfolios or its shareholders. The parties also acknowledge and agree that nothing in this Agreement shall be construed to restrict the right of Portfolio Manager or its affiliates to perform investment management or other services to any person or entity, including without limitation, other investment companies and persons who may retain Portfolio Manager to provide investment management services and the performance of such services shall not be deemed to violate or give rise to any duty or obligations to the Trust. 11. Counterparts and Notice. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original. Any notice required to be given under this Agreement shall be deemed given when received, in writing addressed and delivered, by certified mail, by hand or via overnight delivery service as follows: If to the Trust: Mr. Donald E. Callaghan, President The Hirtle Callaghan Trust 575 East Swedesford Road Wayne, PA 19087 If to Portfolio Manager: Jim Minnick Morgan Grenfell Capital Management Incorporated 855 Third Avenue New York, New York 10022 with a copy to: David Baldt Morgan Grenfell Capital Management Incorporated 1435 Walnut -- 4th Floor Philadelphia, PA 19102 12. Miscellaneous. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and shall be governed by the law of the state of Delaware provided that nothing herein shall be construed as inconsistent with the Investment Company Act or the Investment Advisers Act. Portfolio Manager is hereby expressly put on notice of the limitations of shareholder and Trustee liability set forth in the Declaration of Trust of the Trust and agrees that obligations assumed by the Trust pursuant to this Agreement shall be limited in all cases to the assets of The Limited Duration Municipal Bond Portfolio. Portfolio Manager further agrees that it will not seek satisfaction of any such obligations from the shareholders or any individual shareholder of the Trust, or from the Trustees of the Trust or any individual Trustee of the Trust. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers thereunto duly authorized as of the day and year first written above. Morgan Grenfell Capital Management, Incorporated By: /s/ The Hirtle Callaghan Trust (on behalf of The Intermediate Term Municipal Bond Portfolio) By: /s/ EX-13 13 CUSTODIAN AGREEMENT CUSTODIAN AGREEMENT between BANKERS TRUST COMPANY and THE HIRTLE CALLAGHAN TRUST TABLE OF CONTENTS Page 1. Employment of Custodian 1 2. Maintenance of Securities and Cash at Custodian and Subcustodian Locations 2 3. Custody Account 2 4. Subcustodians and Securities Systems 4 (a) Domestic Custody 4 (b) Foreign Custody 4 (c) General 5 5. Use of Subcustodian 5 6. Use of Securities System 6 7. Records, Ownership of Property, Statements, Opinions of Independent Certified Public Accountants 7 8. Holding of Securities, Nominees, etc. 8 9. Proxies, etc. 8 10. Segregated Account9 11. Settlement Procedures 9 12. Instructions 10 13. Standard of Care 11 14. Investment Limitations and Legal or Contractual Restrictions or Regulations 13 15. Fees and Expenses13 16. Tax Reclaims 14 17. Amendment, Modifications, etc. 14 18. Termination 14 (a) Termination of Entire Agreement 14 (b) Termination as to One or More Portfolios 15 19. Notices 15 20. Representations and Warranties 16 21. Governing Law and Successors and Assigns 16 22. Publicity17 23. Representative Capacity and Binding Obligation 17 24. Submission to Jurisdiction 17 25. Counterparts17 26. Confidentiality 17 27. Severability18 28. Headings 18 EXHIBIT A EXHIBIT B EXHIBIT C EXHIBIT D EXHIBIT E CUSTODIAN AGREEMENT AGREEMENT dated as of July 20, 1995 between BANKERS TRUST COMPANY (the"Custodian") and The Hirtle Callaghan Trust, a Delaware business trust(the "Trust"). WHEREAS, the Trust may be organized with one or more series of shares,each of which shall represent an interest in a separate portfolio of Property as defined in Section 1) (all such existing and additional series now or hereafter listed on Exhibit A being hereafter referredto individually as a "Portfolio" and collectively, as the"Portfolios"); and WHEREAS, the Trust desires to appoint the Custodian as custodian on behalf of the Portfolios under the terms and conditions set forth inthis Agreement, and the Custodian has agreed to so act as custodian; NOW, THEREFORE, in consideration of the mutual covenants andagreements herein contained, the parties hereto agree as follows: 1. Employment of Custodian. (a) The Trust hereby employs theCustodian as custodian of all assets of each Portfolio which aredelivered to and accepted by the Custodian or any Subcustodian (asthat term is defined in Section 4) (the "Property") pursuant to theterms and conditions set forth herein, and the Custodian accepts suchemployment. Without limitation, such Property may include stocks andother equity interests of every type, evidences of indebtedness, otherinstruments representing same or rights or obligations to receive,purchase, deliver or sell same and other non-cash investment propertyof a Portfolio which is acceptable for deposit ("Securities") and cashfrom any source and in any currency ("Cash"). The Custodian shall notbe responsible for any property of a Portfolio held or received by theTrust or others and not delivered to the Custodian or anySubcustodian. (b) Custodian agrees that each Portfolio shall be regarded for allpurposes hereunder as a separate party to this Agreement apart anddistinguished from any other Portfolio and that with respect to everytransaction covered by this Agreement every reference to the Trust shallbe deemed to relate solely to the Portfolio or Portfolios. Under nocircumstances shall the rights, obligations or remedies with respect to aparticular Portfolio constitute a right, obligation or remedy applicableto any other Portfolio. The use of this Agreement to set forth theseparate agreements between the Custodian and each Portfolio in connectionwith the employment of the Custodian as set forth hereunder is understoodby the Custodian to be for clerical convenience only and shall not constitute any basis for joining several Portfolios for any reason. 2. Maintenance of Securities and Cash at Custodian and Subcustodian Locations. The Trust, on behalf of a Portfolio, by Instructions (asthat term is defined in Section 12), shall direct the Custodian to (a)settle Securities transactions and maintain cash in the country orother jurisdiction in which the principal trading market for suchSecurities is located, either where such Securities are to bepresented for payment or where such Securities are acquired, and (b)maintain cash and cash equivalents in such countries in amountsreasonably necessary to effect the Portfolio's transactions in suchSecurities, provided that the limitation in (b) above shall not applyto cash and cash equivalents maintained in the United States.Instructions to settle Securities transactions in any country shall bedeemed to authorize the holding of such Securities and Cash in thatcountry. 3. Custody Account. The Custodian agrees to establish and maintain one or more custody accounts on its books for each Portfolio (all accountsrelating to a single Portfolio hereinafter referred to as, an "Account")for any and all Property from time to time received and accepted by theCustodian or any Subcustodian (as defined in Section 4) on behalf of a Portfolio. The Custodian shall allocate such Property to the Accounts inaccordance with such Instructions (as defined in Section 12); providedthat the Custodian shall have the right, in its sole discretion, to refuse to accept any Property that is not in proper form for deposit for anyreason or with respect to which Instructions have not been received.Subject to Section 1(b) above, the Trust, on behalf of each Portfolio,acknowledges its responsibility as a principal for all of its obligationsto the Custodian arising under or in connection with this Agreement,warrants its authority to deposit in the appropriate Account any Property received therefor by the Custodian or a Subcustodian and to give, andauthorize others to give, instructions relative thereto. The Custodian may deliver securities of the same class in place of those deposited in the Account. The Custodian shall hold, keep safe and protect as custodian for eachPortfolio, all Property in such Accounts. All transactions,including, but not limited to, foreign exchange transactions,involving the Property shall be executed or settled solely inaccordance with Instructions, except that, until the Custodianreceives Instructions to the contrary, the Custodian will: (a) collect all interest and dividends and all other income andpayments, whether paid in cash or in kind, on the Property, as thesame become payable and thereafter promptly credit the same to theappropriate Account; (b) present for payment all Securities held in an Account which arecalled, redeemed or retired or otherwise become payable and allcoupons and other income items which call for payment uponpresentation to the extent that the Custodian or Subcustodian isactually aware of such opportunities and hold the cash received insuch Account pursuant to this Agreement; (c) (i) exchange Securities where the exchange is purely ministerial(including, without limitation, the exchange of temporary securities forthose in definitive form and the exchange of warrants, or other documentsof entitlement to securities, for the Securities themselves) and (ii) whennotification of a tender or exchange offer (other than ministerialexchanges described in (i) above) is received for an Account, endeavor toreceive Instructions, provided that if such Instructions are not receivedin time for the Custodian to take timely action, no action shall be takenwith respect thereto; (d) whenever notification of a rights entitlement or a fractionalinterest resulting from a rights issue, stock dividend or stock splitis received for an Account and such rights entitlement or fractionalinterest bears an expiration date, if after endeavoring to obtainInstructions such Instructions are not received in time for theCustodian to take timely action or if actual notice of such actionswas received too late to seek Instructions, sell in the discretion ofthe Custodian (which sale is hereby authorized) such rightsentitlement or fractional interest and credit the Account with the netproceeds of such sale; (e) execute, whenever the Custodian deems it appropriate, suchownership and other certificates as may be required to obtain thepayment of income from the Property in such Account; (f) in connection with Property held outside the United States, pay foreach Account any and all taxes and levies in the nature of taxes imposedon interest, dividends or other similar income on the Property in suchAccount by any governmental authority. In the event there is insufficientCash available in such Account to pay such taxes and levies, the Custodianshall notify the Trust of the amount of the shortfall and the Trust, atits option, may deposit additional Cash in such Account or take steps tomake sufficient Cash available to the Custodian for such payment. TheTrust agrees, when and if requested by the Custodian and required inconnection with the payment of any such taxes and levies, to cooperatewith the Custodian in furnishing information, executing documents orotherwise; and (g) appoint brokers and agents for any of the ministerial transactionsinvolving the Securities described in (a) - (f) above, including, withoutlimitation, affiliates of the Custodian or any Subcustodian. 4. Subcustodians and Securities Systems. (a) Domestic Custody. The Custodian is authorized to hold theProperty in custody accounts which have been established by theCustodian with (i) one or more of the Custodian's U.S. branches oranother U.S. bank or trust company or branch thereof located in theU.S., provided that each such bank, branch bank, or trust company isitself qualified under the Investment Company Act of 1940, as amended("1940 Act"), to act as custodian (individually, a "U.S.Subcustodian") , or (ii) a U.S. securities depository or clearingagency or system in which the Custodian or a U.S. Subcustodianparticipates (individually, a "U.S. Securities System"). In each casein which a U.S. Subcustodian or U.S. Securities System is employed,each such U.S. Subcustodian or U.S. Securities System shall have beenapproved by Instructions. (b) Foreign Custody. The Custodian is further authorized to holdProperty in custody accounts which have been established by theCustodian with (i) one or more of the Custodian's non-U.S. branches ormajority-owned non-U.S. subsidiaries, a non-U.S. branch ormajority-owned subsidiary of a U.S. bank or a non-U.S. bank or trustcompany, acting as custodian (individually, a "non-U.S. Subcustodian";U.S. Subcustodians and non-U.S. Subcustodians, collectively,"Subcustodians"), or a non-U.S. depository or clearing agency orsystem in which the Custodian or any Subcustodian participates(individually, a "non-U.S. Securities System"; U.S. Securities Systemand non-U.S. Securities System, collectively, "Securities System"). In each case in which a non-U.S. Subcustodian or non-U.S. SecuritiesSystem is employed (a) such non-U.S. Subcustodian or non-U.S.Securities System either is (i) a "qualified U.S. bank" as defined byRule 17f-5 under the 1940 Act ("Rule 17f-5"); (ii) an "eligibleforeign custodian" within the meaning of Rule 17f-5 or (iii) thesubject of an order granted by the U.S. Securities and ExchangeCommission ("SEC") exempting such non-U.S. Subcustodian or non-U.S.Securities System or the subcustody arrangements thereto from all orpart of the provisions of Rule 17f-5. In addition, Property shall notbe held in any non-U.S. Subcustodian unless the agreement between theCustodian and such non-U.S. Subcustodian has been approved byInstructions, nor shall Property be held in any non-U.S. SecuritiesSystem unless the use of such non-U.S. Securities System is approvedby Instructions. Upon request of the Trust, the Custodian shall deliver to theTrust annually (i) a certificate stating: (x) the identity ofeach non-U.S. Subcustodian and non-U.S. Securities System thenacting on behalf of the Custodian and the name and address of thegovernmental agency or other regulatory authority that supervisesor regulates such non-U.S Subcustodian and non-U.S. SecuritiesSystem, and (y) the countries in which each non-U.S. Subcustodianor non-U.S. Securities System is located; and (ii) such otherinformation relating to such non-U.S. Subcustodians and non-U.S.Securities Systems as may reasonably be requested by the Trust toensure compliance with Rule 17f-5. So long as Rule 17f-5 requiresthe Trust's Board of Trustees to directly approve its foreigncustody arrangements, the Custodian shall furnish annually to theTrust information concerning such non-U.S. Subcustodians andnon-U.S. Securities Systems similar in kind and scope as thatfurnished to the Trust in connection with the initial approval ofthis Agreement. Custodian agrees to promptly notify the Trust if,in the normal course of its custodial activities, the Custodianhas reason to believe that any non-U.S. Subcustodian or non-U.S.Securities System has ceased to be a qualified U.S. bank or aneligible foreign custodian each within the meaning of Rule 17f-5or has ceased to be exempt from some or all of the requirements ofSection 17f-5 pursuant to an order of the SEC. (c) General. The Custodian shall have no liability or responsibility fordetermining whether the approval of any Subcustodian or Securities Systemhas been proper under the 1940 Act or any rule or regulation thereunder. Upon receipt of Instructions, the Custodian agrees to cease theemployment of any Subcustodian or Securities System with respectto a Portfolio, and if desirable and practicable, appoint areplacement subcustodian or securities system in accordance withthe provisions of this Section. In addition, the Custodian may,at any time in its discretion, upon written notification to theTrust, terminate the employment of any Subcustodian or SecuritiesSystem. 5. Use of Subcustodian. With respect to Property maintained by theCustodian in the custody of a Subcustodian employed pursuant toSection 4: (a) The Custodian will identify on its books as belonging to theTrust, on behalf of a Portfolio, any Property held by suchSubcustodian. (b) Any Property in the Account held by a Subcustodian will be subjectonly to the instructions of the Custodian or its agents. (c) Property deposited with a Subcustodian will be maintained in anaccount holding only assets for customers of the Custodian. (d) Any agreement the Custodian shall enter into with a non-U.S.Subcustodian with respect to the holding of Property shall require that(i) the Account will be adequately indemnified or its losses adequatelyinsured; (ii) the Securities will not be subject to any right, charge,security interest, lien or claim of any kind in favor of such Subcustodianor its creditors except a claim for payment in accordance with suchagreement for their safe custody or administration and expenses relatedthereto, (iii) beneficial ownership of such Securities will be freelytransferable without the payment of money or value other than for safecustody or administration and expenses related thereto, (iv) adequaterecords will be maintained identifying the Property held pursuant to suchAgreement as belonging to the Custodian, on behalf of its customers and(v) to the extent permitted by applicable law, officers of or auditorsemployed by, or other representatives of or designated by, the Custodian,including the independent public accountants of or designated by, theTrust will be given access to the books and records of such Subcustodianrelating to its actions under its agreement pertaining to any Propertyheld by it thereunder or confirmation of or pertinent informationcontained in such books and records be furnished to such personsdesignated by the Custodian. 6. Use of Securities System. With respect to Property in theAccount(s) which are maintained by the Custodian or any Subcustodianin the custody of a Securities System employed pursuant to Section 4: (a) The Custodian shall, and the Subcustodian will be required by itsagreement with the Custodian to, identify on its books such Propertyas being held for the account of the Custodian or Subcustodian for itscustomers. (b) Any Property held in a Securities System for the account of theCustodian or a Subcustodian will be subject only to the instructionsof the Custodian or such Subcustodian, as the case may be. (c) Property deposited with a Securities System will be maintained in anaccount holding only assets for customers of the Custodian orSubcustodian, as the case may be, unless precluded by applicable law,rule, or regulation. (d) The Custodian shall provide the Trust with any report obtained bythe Custodian on the Securities System's accounting system, internalaccounting control and procedures for safeguarding securitiesdeposited in the Securities System. 7. Records, Ownership of Property, Statements, Opinions ofIndependent Certified Public Accountants. (a) The ownership of the Property whether Securities, Cash and/orother property, and whether held by the Custodian or a Subcustodian orin a Securities System as authorized herein, shall be clearly recordedon the Custodian's books as belonging to the appropriate Account andnot for the Custodian's own interest. The Custodian shall keepaccurate and detailed accounts of all investments, receipts,disbursements and other transactions for each Account. All accounts,books and records of the Custodian relating thereto shall be open toinspection and audit at all reasonable times during normal businesshours by any person designated by the Trust. All such accounts shallbe maintained and preserved in the form reasonably requested by theTrust. The Custodian will supply to the Trust from time to time, asmutually agreed upon, a statement in respect to any Property in anAccount held by the Custodian or by a Subcustodian. In the absence ofthe filing in writing with the Custodian by the Trust of exceptions orobjections to any such statement within sixty (60) days of the mailingthereof, the Trust, on behalf of the applicable Portfolio, shall bedeemed to have approved such statement and in such case or uponwritten approval of the Trust of any such statement, such statementshall be presumed to be for all purposes correct with respect to allinformation set forth therein. (b) The Custodian shall take all reasonable action as the Trust mayrequest to obtain from year to year favorable opinions from the Trust'sindependent certified public accountants with respect to the Custodian'sactivities hereunder in connection with the preparation of the Trust'sForm N-1A and the Trust's Form N-SAR or other periodic reports to the SECand with respect to any other requirements of the SEC. (c) At the request of the Trust, the Custodian shall deliver to theTrust a written report prepared by the Custodian's independentcertified public accountants with respect to the services provided bythe Custodian under this Agreement, including, without limitation, theCustodian's accounting system, internal accounting control andprocedures for safeguarding Cash and Securities, including Cash andSecurities deposited and/or maintained in a Securities System or witha Subcustodian. Such report shall be of sufficient scope and insufficient detail as may reasonably be required by the Trust and asmay reasonably be obtained by the Custodian. (d) The Trust, on behalf of the Portfolios, may elect to participatein any of the electronic on-line service and communications systemsoffered by the Custodian which can provide the Trust, on a dailybasis, with the ability to view on-line or to print on hard copyvarious reports of Account activity and of Securities and/or Cashbeing held in any Account. To the extent that such service shallinclude market values of Securities in an Account, the Trust, onbehalf of the Portfolios, hereby acknowledges that the Custodian nowobtains and may in the future obtain information on such values fromoutside sources that the Custodian considers to be reliable and theTrust, on behalf of the Portfolios, agrees that the Custodian (i) doesnot verify nor represent or warrant either the reliability of suchservice nor the accuracy or completeness of any such informationfurnished or obtained by or through such service and (ii) shall bewithout liability in selecting and utilizing such service orfurnishing any information derived therefrom. 8. Holding of Securities, Nominees, etc. Securities in an Account whichare held by the Custodian or any Subcustodian may be held by such entityin the name of the Trust, on behalf of a Portfolio, in the Custodian's orSubcustodian's name, in the name of the Custodian's or Subcustodian'snominee, or in bearer form. Securities that are held by a Subcustodian orwhich are eligible for deposit in a Securities System as provided abovemay be maintained with the Subcustodian or the Securities System in anaccount for the Custodian's or Subcustodian's customers, unless prohibitedby law, rule, or regulation. The Custodian or Subcustodian, as the casemay be, may combine certificates representing Securities held in anAccount with certificates of the same issue held by it as fiduciary or asa custodian. In the event that any Securities in the name of theCustodian or its nominee or held by a Subcustodian and registered in thename of such Subcustodian or its nominee are called for partial redemptionby the issuer of such Security, the Custodian may, subject to the rules orregulations pertaining to allocation of any securities depository in whichsuch Securities have been deposited, allot, or cause to be allotted, thecalled portion of the respective beneficial holders of such class ofsecurity in any manner the Custodian deems to be fair and equitable. 9. Proxies, etc. With respect to any proxies, notices, reports orother communications relative to any of the Securities in any Account,the Custodian shall perform only such services relative thereto as are(i) set forth in Section 3 of this Agreement, (ii) described inExhibit B attached hereto (as such service therein described may be in effect from time to time) (the "Proxy Service") and (iii) as mayotherwise be agreed upon between the Custodian and the Trust, onbehalf of the Portfolios. The liability and responsibility of theCustodian in connection with the Proxy Service referred to in (ii) ofthe immediately preceding sentence and in connection with anyadditional services which the Custodian and the Trust, on behalf ofthe Portfolios, may agree upon as provided in (iii) of the immediatelypreceding sentence shall be as set forth in the description of theProxy Service and as may be agreed upon by the Custodian and theTrust, on behalf of the Portfolios, in connection with the furnishingof any such additional service and shall not be affected by any otherterm of this Agreement. Neither the Custodian nor its nominees oragents shall vote upon or in respect of any of the Securities in anAccount, execute any form of proxy to vote thereon, or give anyconsent or take any action (except as provided in Section 3) withrespect thereto except upon the receipt of Instructions relativethereto. 10. Segregated Account. Upon receipt of Instructions, the Custodianshall establish and maintain a segregated account or accounts for andon behalf of a Portfolio, into which account or accounts may betransferred Cash and/or Securities, including Securities maintained inan account by the Custodian in a Securities System (i) in accordancewith the provisions of any agreement among the Trust, on behalf of aPortfolio, the Custodian and a broker-dealer registered under theSecurities Exchange Act of 1934 and a member of the NationalAssociation of Securities Dealers, Inc. (or any futures commissionmerchant registered under the Commodity Exchange Act), relating tocompliance with the rules of The Options Clearing Corporation and ofany registered national securities exchange (or the Commodity FuturesTrading commission or any registered contract market), or of anysimilar organization or organizations, regarding escrow or otherarrangements in connection with transactions by the Trust, (ii) forthe purposes of segregating Cash or Government Securities inconnection with options purchased, sold or written by the Trust, on behalf of a Portfolio or commodity futures contracts or options thereonpurchased or sold by the Trust, (iii) for the purposes of compliance by aPortfolio with Investment Company Act Release No. 10666, or any subsequentrelease or releases of the SEC relating to the maintenance of segregatedaccounts by registered investment companies, and (iv) for other propercorporate purposes. 11. Settlement Procedures. Securities will be transferred, exchangedor delivered by the Custodian or a Subcustodian upon receipt by theCustodian of Instructions which include all information required bythe Custodian. Settlement and payment for Securities received for anAccount and delivery of Securities out of such Account may be effectedin accordance with the customary or established securities trading orsecurities processing practices and procedures in the jurisdiction ormarket in which the transaction occurs, including, without limitation,delivering Securities to the purchaser thereof or to a dealer therefor(or an agent for such purchaser or dealer) against a receipt with theexpectation of receiving later payment for such Securities from suchpurchaser or dealer, as such practices and procedures may be modifiedor supplemented in accordance with the standard operating proceduresof the Custodian in effect from time to time for that jurisdiction ormarket. The Custodian shall not be liable for any loss which resultsfrom effecting transactions in accordance with the customary orestablished securities trading or securities processing practices andprocedures in the applicable jurisdiction or market. Notwithstanding that the Custodian may settle purchases and salesagainst, or credit income to, an Account, on a contractual basis, asoutlined in the Investment Manager User Guide provided to the Trust bythe Custodian, the Custodian may, at its sole option, reverse suchcredits or debits to the appropriate Account in the event that thetransaction does not settle, or the income is not received in a timelymanner, and the Trust agrees to hold the Custodian harmless from anylosses which may result therefrom. Except as otherwise may be agreed upon by the parties hereto, theCustodian shall not be required to comply with Instructions to settle thepurchase of any assets for an Account unless there is sufficient clearedand available funds in such Account at the time or to settle thetransactions, provided further that if the transaction is for the sale ofany Securities in such Account, unless such Securities are in deliverableform. Notwithstanding the foregoing, if the purchase price of suchSecurities exceeds the amount of Cash in an Account at the time ofsettlement of such purchase, the Custodian may, in its sole discretion,but in no way shall have any obligation to, permit an overdraft in suchAccount in the amount of the difference solely for the purpose offacilitating the settlement of such purchase of Securities for promptdelivery for such Account. The Trust, on behalf of each Portfolio, agreesto immediately repay the amount of any such overdraft in the ordinarycourse of business and further agrees to indemnify and hold the Custodianharmless from and against any and all losses, costs, including, withoutlimitation the cost of funds, and expenses incurred in connection withsuch overdraft. The Trust agrees that it will not use the Account tofacilitate the purchase or sale of securities without sufficient funds inthe Account (which funds shall not include the proceeds of the sale of thepurchased securities). 12. Instructions. The Trust shall deliver to the Custodian a list ofpersons authorized to give particular classes of Instructions,together with their signatures and their office addresses. The term"Instructions" means instructions in respect of any of the Custodian'sduties hereunder which have been received by the Custodian (i) inwriting (including, without limitation, facsimile transmission) or bytested telex, in each case from persons reasonably believed by theCustodian to be authorized to give such instructions, or (ii)transmitted electronically through an electronic on-line service andcommunications system offered by the Custodian or other electronicinstruction system acceptable to the Custodian, or (iii) by atelephonic or oral communication in each case from persons reasonablybelieved by the Custodian to be authorized to give such instructions;or (iv) upon receipt of such other form of instructions as the Trustmay from time to time authorize in writing and which the Custodian hasagreed in writing to accept. Instructions in the form of oralcommunications shall be confirmed by the Trust by tested telex orwriting in the manner set forth in clause (i) above, but the lack of such confirmation shall in no way affect any action taken by the Custodianin reliance upon such oral instructions prior to the Custodian's receiptof such confirmation. Instructions may relate to specific transactions orto types or classes of transactions, and may be in the form of standinginstructions. Instructions shall specifically identify the Account to which theInstructions relate. Instructions shall be delivered to the Custodianat the address and in the manner set forth in the User Guide providedto the Trust, as amended from time to time. The Custodian shall have the right to assume in the absence of noticeto the contrary from the Trust that any person whose name is on filewith the Custodian pursuant to this Section 12 has been authorized bythe Trust to give the Instructions in question and that suchauthorization has not been revoked. The Custodian may act upon andconclusively rely on, without any liability to the Trust or any otherperson or entity for any losses resulting therefrom, any Instructionsreasonably believed by it to be furnished by the proper person orpersons as provided above. 13. Standard of Care. The Custodian shall be responsible for theperformance of only such duties as are set forth herein or containedin Instructions given to the Custodian which are not the contrary tothe provisions of this Agreement. The Custodian will use reasonablecare with respect to the safekeeping of Property in each Account and,except as otherwise expressly provided herein, in carrying out itsobligations under this Agreement. So long as and to the extent thatit has exercised reasonable care, the Custodian shall not beresponsible for the title, validity or genuineness of any Property orother property or evidence of title thereto received by it ordelivered by it pursuant to this Agreement and shall be held harmlessin acting upon, and may conclusively rely on, without liability forany loss resulting therefrom, any notice, request, consent,certificate or other instrument reasonably believed by it to begenuine and to be signed or furnished by the proper party or parties,including, without limitation, Instructions, and shall be indemnified by the applicable Portfolio of the Trust for any losses, damages, costsand expenses (including, without limitation, the fees and expenses ofcounsel) incurred by the Custodian and arising out of action taken oromitted with reasonable care by the Custodian hereunder or under anyInstructions. The Custodian shall be liable to the applicable Portfolioof the Trust for any act or omission to act of any Subcustodian to thesame extent as if the Custodian committed such act itself. With respectto a Securities System, the Custodian shall only be responsible or liablefor losses arising from employment of such Securities System caused by theCustodian's own failure to exercise reasonable care. In the event of anyloss to a Portfolio of the Trust by reason of the failure of the Custodianor a Subcustodian to utilize reasonable care, the Custodian shall beliable to the applicable Portfolio to the extent of the Portfolio's actualdamages at the time such loss was discovered without reference to anyspecial conditions or circumstances. In no event shall the Custodian beliable for any consequential or special damages. The Custodian shall beentitled to rely, and may act, on advice of counsel (who may be counselfor the Trust) on all matters and shall be without liability for anyaction reasonably taken or omitted pursuant to such advice. In the event the Trust, on behalf of the Portfolios, subscribes to anelectronic on-line service and communications system offered by theCustodian, the Trust shall be fully responsible for the security ofthe Trust's connecting terminal, access thereto and the proper andauthorized use thereof and the initiation and application ofcontinuing effective safeguards with respect thereto and the Trust, onbehalf of each Portfolio, agrees to defend and indemnify the Custodianand hold the Custodian harmless from and against any and all losses,damages, costs and expenses (including the fees and expenses ofcounsel) incurred by the Custodian as a result of any improper orunauthorized use of such terminal by the Trust or by any others. All collections of funds or other property paid or distributed in respectof Securities in an Account, including funds involved in third-partyforeign exchange transactions, shall be made at the risk of the applicablePortfolio of the Trust. Subject to the exercise of reasonable care, the Custodian shall haveno liability for any loss occasioned by delay in the actual receipt ofnotice by the Custodian or by a Subcustodian of any payment,redemption or other transaction regarding Securities in each Accountin respect of which the Custodian has agreed to take action asprovided in Section 3 hereof. The Custodian shall not be liable forany loss resulting from, or caused by, or resulting from acts ofgovernmental authorities (whether de jure or de facto), including,without limitation, nationalization, expropriation, and the impositionof currency restrictions; devaluations of or fluctuations in the valueof currencies; changes in laws and regulations applicable to thebanking or securities industry; market conditions that prevent theorderly execution of securities transactions or affect the value ofProperty; acts of war, terrorism, insurrection or revolution; strikesor work stoppages; the inability of a local clearing and settlementsystem to settle transactions for reasons beyond the control of theCustodian; hurricane, cyclone, earthquake, volcanic eruption, nuclearfusion, fission or radioactivity, or other acts of God. The Custodian shall have no liability in respect of any loss, damageor expense suffered by the Trust or any Portfolio, insofar as suchloss, damage or expense arises from the performance of the Custodian'sduties hereunder by reason of the Custodian's reliance upon recordsthat were maintained for the Trust or any Portfolio by entities otherthan the Custodian prior to the Custodian's employment under thisAgreement. Except as otherwise provided in this Agreement, the Custodian agreesto indemnify and hold harmless each Portfolio against and from anyloss, damage and expense suffered or incurred by such Portfolio andarising from (i) the bad faith, reckless disregard of duties, willfulmisfeasance, or gross negligence of the Custodian or any Subcustodian;and (ii) any breach of this Agreement by the Custodian. The provisions of this Section 13 shall survive termination of thisAgreement. 14. Investment Limitations and Legal or Contractual Restrictions orRegulations. Provided that the Custodian acts in accordance withInstructions, the Custodian shall not be liable to the Trust or anyPortfolio and the Trust, on behalf of each Portfolio, agrees toindemnify the Custodian and its nominees, for any loss, damage orexpense suffered or incurred by the Custodian or its nominees arisingout of any violation of any investment restriction or otherrestriction or limitation applicable to the Trust or any Portfoliopursuant to any contract or any law or regulation. The provisions ofthis Section 14 shall survive termination of this Agreement. 15. Fees and Expenses. The Trust, on behalf of each Portfolio, agreesto pay to the Custodian such compensation for its services pursuant tothis Agreement, including if elected by the Trust fees for anelectronic on-line service and communications system offered by theCustodian, as may be mutually agreed upon in writing from time to timeand the Custodian's reasonable out-of-pocket or incidental expenses inconnection with the performance of this Agreement, including (butwithout limitation) legal fees as described herein and/or deemednecessary in the judgment of the Custodian to keep safe or protect theProperty in the Account. The initial fee schedule is attached heretoas Exhibit C. The Trust, on behalf of each Portfolio, hereby agrees to hold theCustodian harmless from any liability or loss resulting from any taxesor other governmental charges, and any expense related thereto, whichmay be imposed, or assessed with respect to any Property in an Accountand also agrees to hold the Custodian, its Subcustodians, and theirrespective nominees harmless from any liability as a record holder ofProperty in such Account. The Custodian is authorized to charge theapplicable Account for such items and the Custodian shall have a lienon the Property in the applicable Account for any amount payable tothe Custodian under this Section 15, Section 1, and the last paragraphof Section 11. The provisions of this Section shall survive thetermination of this Agreement. 16. Tax Reclaims. With respect to withholding taxes deducted and whichmay be deducted from any income received from any Property in an Account,the Custodian shall perform such services with respect thereto as aredescribed in Exhibit D attached hereto and shall in connection therewithbe subject to the standard of care set forth in such Exhibit D. Suchstandard of care shall not be affected by any other term of thisAgreement. 17. Amendment, Modifications, etc. No provision of this Agreement maybe amended, modified or waived except in a writing signed by theparties hereto. No waiver of any provision hereto shall be deemed acontinuing waiver unless it is so designated. No failure or delay onthe part of either party in exercising any power or right under thisAgreement operates as a waiver, nor does any single or partialexercise of any power or right preclude any other or further exercisethereof or the exercise of any other power or right. 18. Termination. (a) Termination of Entire Agreement. This Agreement may beterminated by the Trust or the Custodian by ninety (90) days' writtennotice to the other; provided that notice by the Trust shall specifythe names of the persons to whom the Custodian shall deliver theSecurities in each Account and to whom the Cash in such Account shallbe paid. If notice of termination is given by the Custodian, theTrust shall, within ninety (90) days following the giving of suchnotice, deliver to the Custodian a written notice specifying the namesof the persons to whom the Custodian shall deliver the Property ineach Account. The Custodian will deliver such Property to the personsso specified, after deducting therefrom any amounts which theCustodian determines to be owed to it under Sections 1, the lastparagraph of Section 11, and 15. In addition, upon written notice tothe Trust, the Custodian may in its discretion withhold from deliverysuch Property as may be necessary to settle transactions pending atthe time of such delivery. If within ninety (90) days following thegiving of a notice of termination by the Custodian, the Custodian doesnot receive from the Trust a written notice specifying the names of the persons to whom the Custodian shall deliver the Property in eachAccount, the Custodian, at its election, may deliver such Property and paysuch Cash to a bank or trust company doing business in the State of NewYork to be held and disposed of pursuant to the provisions of thisAgreement, or may continue to hold such Property until a written notice asaforesaid is delivered to the Custodian, provided that the Custodian'sobligations shall be limited to safekeeping. (b) Termination as to One or More Portfolios. This Agreement may beterminated by the Trust or the Custodian as to one or more Portfolios(but less than all of the Portfolios) by delivery of an amendedExhibit A deleting such Portfolios, in which case termination as tosuch deleted Portfolios shall take effect ninety (90) days after thedate of the delivery of applicable Property, or such earlier time asmutually agreed. The execution and delivery of an amended Exhibit Awhich deletes one or more Portfolios shall constitute a termination ofthis Agreement only with respect to such deleted Portfolios(s), shallbe governed by the preceding provisions of Section 18 as to theidentification of a successor custodian and the delivery of Propertyof the Portfolios(s) so deleted to such successor custodian, and shallnot affect the obligations of the Custodian and the Trust hereunderwith respect to the other Portfolios set forth in Exhibit A, asamended from time to time. 19. Notices. Except as otherwise provided in this Agreement, allrequests, demands or other communications between the parties ornotices in connection herewith (a) shall be in writing, hand deliveredor sent by telex, telegram, cable, facsimile or other means ofelectronic communication agreed upon by the parties hereto addressed,if to the Trust, to: The Hirtle Callaghan Trustc/o Hirtle Callaghan & Co., Inc.575 E. Swedesford RoadWayne, PA. 19087 with a copy to: The Hirtle Callaghan Trust c/o Furman Selz Incorporated 237 Park Avenue New York, N.Y. 10017 if to the Custodian, to: Attn: Sandra T. Gross Bankers Trust Company One Bankers Trust Plaza 130 Liberty Street New York, N.Y. 10006 or in either case to such other address as shall have been furnished tothe receiving party pursuant to the provisions hereof and (b) shall bedeemed effective when received, or, in the case of a telex, when sent tothe proper number and acknowledged by a proper answerback. 20. Representations and Warranties. (a) The Trust, on behalf of each Portfolio, hereby represents andwarrants to the Custodian that: (i) the employment of the Custodian and the allocation of fees,expenses and other charges to any Account as herein provided, isnot prohibited by law or any governing documents or contracts towhich the Trust is subject; (ii) the terms of this Agreement do not violate any obligation bywhich the Trust is bound, whether arising by contract, operationof law or otherwise; (iii) this Agreement has been duly authorized by appropriateaction and when executed and delivered will be binding upon theTrust and each Portfolio in accordance with its terms; and (iv) the Trust will deliver to the Custodian such evidence ofsuch authorization as the Custodian may reasonably require,whether by way of a certified resolution or otherwise. (b) The Custodian hereby represents and warrants to the Trust that: (i) the terms of this Agreement do not violate any obligation bywhich the Custodian is bound, whether arising by contract,operation of law or otherwise; (ii) this Agreement has been duly authorized by appropriateaction and when executed and delivered will be binding upon theCustodian in accordance with its terms; (iii) the Custodian will deliver to the Trust such evidence ofsuch authorization as the Trust may reasonably require, whether byway of a certified resolution or otherwise; and (iv) Custodian is qualified as a custodian under Section 26(a) ofthe 1940 Act and warrants that it will remain so qualified or uponceasing to be so qualified shall promptly notify the Trust inwriting. 21. Governing Law and Successors and Assigns. This Agreement shall begoverned by the law of the State of New York and shall not beassignable by either party, but shall bind the successors in interestof the Trust and the Custodian. 22. Publicity. Trust, on behalf of each Portfolio, shall furnish toCustodian at its office referred to in Section 19 above, prior to anydistribution thereof, copies of any material prepared by any personother than the Custodian for distribution to any persons who are notparties hereto that refer in any way to the Custodian. Trust shallnot distribute or permit the distribution of such materials ifCustodian reasonably objects in writing within ten (10) business daysof receipt thereof (or such other time as may be mutually agreed)after receipt thereof. Notwithstanding the foregoing, priornotification shall not be required with respect to references to theCustodian in the Trust's prospectus(es) or to account statementsrelating to individual custody accounts maintained by Custodian, whichstatements are forwarded by Hirtle Callaghan & Co. to its advisoryclients provided that the form of any such reference was presented toCustodian in accordance with this section and is used in subsequentprospectuses and/or account statements in a substantially identicalform as that presented. The provisions of this Section 22 shallsurvive the termination of this Agreement. 23. Representative Capacity and Binding Obligation. Notice is herebygiven that this Agreement is not executed on behalf of the Trustees ofthe Trust as individuals, and the obligations of this Agreement arenot binding upon any of the Trustees, officers or shareholders of theTrust individually but are binding only upon the assets and propertyof the Portfolios. The Custodian agrees that no shareholder, trustee or officer of theTrust may be held personally liable or responsible for any obligationsof the Trust arising out of this Agreement. 24. Submission to Jurisdiction. Any suit, action or proceedingarising out of this Agreement may be instituted in any State orFederal court sitting in the City of New York, State of New York,United States of America, and the Trust irrevocably submits to thenon-exclusive jurisdiction of any such court in any such suit, actionor proceeding and waives, to the fullest extent permitted by law, anyobjection which it may now or hereafter have to the laying of venue ofany such suit, action or proceeding brought in such a court and anyclaim that such suit, action or proceeding was brought in aninconvenient forum. 25. Counterparts. This Agreement may be executed in any number ofcounterparts, each of which shall be deemed an original. ThisAgreement shall become effective when one or more counterparts havebeen signed and delivered by each of the parties hereto. 26. Confidentiality. The parties hereto agree that each shall treatconfidentially the terms and conditions of this Agreement and allinformation provided by each party to the other regarding its businessand operations. All confidential information provided by a partyhereto shall be used by any other party hereto solely for the purposeof rendering services pursuant to this Agreement and, except as may berequired in carrying out this Agreement, shall not be disclosed to anythird party without the prior consent of such providing party, whichconsent shall not be withheld unreasonably. The foregoing shall notbe applicable to any information that is publicly available whenprovided or thereafter becomes publicly available other than through abreach of this Agreement, or that is required or requested to bedisclosed by any bank or other regulatory examiner of the Custodian,Trust, or any Subcustodian, any auditor of the parties hereto, byjudicial or administrative process or otherwise by applicable law orregulation. 27. Severability. If any provision of this Agreement is determinedto be invalid or unenforceable, such determination shall not affectthe validity or enforceability of any other provision of thisAgreement. 28. Headings. The headings of the paragraphs hereof are included forconvenience of reference only and do not form a part of thisAgreement. THE HIRTLE CALLAGHAN TRUST By: _/s/_________________________Title: _______________________ BANKERS TRUST COMPANY By: ___/s/_______________________Title: _______________________ EXHIBIT A To Custodian Agreement dated as of July 20, 1995 between Bankers TrustCompany and The Hirtle Callaghan Trust. LIST OF PORTFOLIOS The following is a list of Portfolios referred to in the first WHEREASclause of the above-referred to Custodian Agreement. Terms usedherein as defined terms unless otherwise defined shall have themeanings ascribed to them in the above-referred to CustodianAgreement. The Value Equity PortfolioThe Growth Equity Portfolio The Small Capitalization PortfolioThe Internationalization Equity Portfolio The Limited Duration Municipal Bond Portfolio Dated as of: July 20, 1995 THE HIRTLE CALLAGHAN TRUST By: _____/s/_____________________Title: _______________________ BANKERS TRUST COMPANY By: ______/s/____________________Title: _______________________ EXHIBIT B To Custodian Agreement dated as of July 20, 1995 between Bankers TrustCompany and The Hirtle Callaghan Trust. PROXY SERVICE The following is a description of the Proxy Service referred to inSection 9 of the above referred to Custodian Agreement. Terms usedherein as defined terms unless otherwise defined shall have themeanings ascribed to them therein unless otherwise defined below. The Custodian provides a service, described below, for thetransmission of corporate communications in connection withshareholder meetings relating to Securities held in Argentina,Australia, Austria, Canada, Denmark, Finland, France, Germany, Greece,Hong Kong, Indonesia, Ireland, Italy, Japan, Korea, Malaysia, Mexico,Netherlands, New Zealand, Pakistan, Poland, Singapore, South Africa,Spain, Sri Lanka, Sweden, United Kingdom, United States, andVenezuela. For the United States and Canada, the term "corporatecommunications" means the proxy statements or meeting agenda, proxycards, annual reports and any other meeting materials received by theCustodian. For countries other than the United States and Canada, the term "corporate communications" means the meeting agenda only and doesnot include any meeting circulars, proxy statements or any othercorporate communications furnished by the issuer in connection withsuch meeting. Non-meeting related corporate communications are notincluded in the transmission service to be provided by the Custodianexcept upon request as provided below. The Custodian's process for transmitting and translating meetingagendas will be as follows: 1) If the meeting agenda is not provided by the issuer in the Englishlanguage, and if the language of such agenda is in the officiallanguage of the country in which the related security is held, theCustodian will as soon as practicable after receipt of the originalmeeting agenda by a Subcustodian provide an English translationprepared by that Subcustodian. 2) If an English translation of the meeting agenda is furnished, thelocal language agenda will not be furnished unless requested. Translations will be free translations and neither the Custodian norany Subcustodian will be liable or held responsible for the accuracythereof or any direct or indirect consequences arising therefrom,including without limitation arising out of any action taken oromitted to be taken based thereon. If requested, the Custodian will, on a reasonable efforts basis,endeavor to obtain any additional corporate communication such asannual or interim reports, proxy statements, meeting circulars, orlocal language agendas, and provide them in the form obtained. Timing in the voting process is important and, in that regard, uponreceipt by the Custodian of notice from a Subcustodian, the Custodianwill provide a notice to the Trust indicating the deadline for receiptof its instructions to enable the voting process to take placeeffectively and efficiently. As voting procedures will vary frommarket to market, attention to any required procedures will be veryimportant. Upon timely receipt of voting instructions, the Custodianwill promptly forward such instructions to the applicableSubcustodian. If voting instructions are not timely received, theCustodian shall have no liability or obligation to take any action. For Securities held in markets other than those set forth in the firstparagraph, the Custodian will not furnish the material described aboveor seek voting instructions. However, if requested to exercise votingrights at a specific meeting, the Custodian will endeavor to do so ona reasonable efforts basis without any assurance that such rights willbe so exercised at such meeting. If the Custodian or any Subcustodian incurs extraordinary expenses inexercising voting rights related to any Securities pursuant toappropriate instructions or direction (e.g., by way of illustrationonly and not by way of limitation, physical presence is required at ameeting and/or travel expenses are incurred), such expenses will bereimbursed out of the Account containing such Securities unless otherarrangements have been made for such reimbursement. It is the intent of the Custodian to expand the Proxy Service toinclude jurisdictions which are not currently included as set forth inthe second paragraph hereof. The Custodian will notify the Trust asto the inclusion of additional countries or deletion of existingcountries after their inclusion or deletion and this Exhibit B will bedeemed to be automatically amended to include or delete such countriesas the case may be. Dated as of: July 20, 1995 THE HIRTLE CALLAGHAN TRUST By: ____/s/______________________Title: _______________________ BANKERS TRUST COMPANY By: ____/s/______________________Title: _______________________ EXHIBIT C To Custodian Agreement dated as of ______________, 1995 between Bankers Trust Company and The Hirtle Callaghan Trust. CUSTODY FEE SCHEDULE This Exhibit C shall be amended upon delivery by the Custodian of a newExhibit C to the Trust and acceptance thereof by the Trust and shall beeffective as of the date of acceptance by the Trust or a date agreed uponbetween the Custodian and the Trust. EXHIBIT D To Custodian Agreement dated as of July 20, 1995 between Bankers TrustCompany and The Hirtle Callaghan Trust. TAX RECLAIMS Pursuant to Section 16 of the above referred to Custodian Agreement,the Custodian shall perform the following services with respect towithholding taxes imposed or which may be imposed on income fromProperty in any Account. Terms used herein as defined terms shallunless otherwise defined have the meanings ascribed to them in theabove referred to Custodian Agreement. When withholding tax has been deducted with respect to income from anyProperty in an Account, the Custodian will actively pursue on areasonable efforts basis the reclaim process and will provide fullydetailed advices/vouchers to support reclaims submitted to the localauthorities by the Custodian or its designee. In all cases ofwithholding, the Custodian will provide full details to the Trust. Ifexemption from withholding at the source can be obtained in thefuture, the Custodian will notify the Trust and advise whatdocumentation, if any, is required to obtain the exemption. Uponreceipt of such documentation from the Trust, the Custodian will filefor exemption on the Trust's behalf and notify the Trust when it hasbeen obtained. In connection with providing the foregoing service, the Custodianshall be entitled to apply categorical treatment of the Trustaccording to the Trust's nationality, the particulars of itsorganization and other relevant details that shall be supplied by theTrust. It shall be the duty of the Trust to inform the Custodian ofany change in the organization, domicile or other relevant factconcerning tax treatment of the Trust and further to inform theCustodian if the Trust is or becomes the beneficiary of any specialruling or treatment not applicable to the general nationality andcategory or entity of which the Trust is a part under general laws andtreaty provisions. The Custodian may rely on any such informationprovided by the Trust. In connection with providing the foregoing service, the Custodian mayalso rely on professional tax services published by a majorinternational accounting firm and/or advice received from aSubcustodian in the jurisdictions in question. In addition, theCustodian may seek the advice of counsel or other professional taxadvisers in such jurisdictions. The Custodian is entitled to rely,and may act, on information set forth in such services and on advicereceived from a Subcustodian, counsel or other professional taxadvisers and shall be without liability to the Trust for any actionreasonably taken or omitted pursuant to information contained in suchservices or such advice. Dated as of: July 20, 1995 THE HIRTLE CALLAGHAN TRUST ______________________________ By: ___/s/_______________________ Title: _______________________ BANKERS TRUST COMPANY By: ___/s/_______________________ Title: _______________________ EX-14 14 ADMIN. AGREE AMENDMENT TO ADMINISTRATION AGREEMENT This Amendment is made as of October 1, 1997, between The Hirtle Callaghan Trust (the "Trust") and BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services (the "Administrator"). The parties hereby amend the Administration Agreement (the "Agreement") between the Trust and the Administrator, dated as of October 1, 1996, as set forth below. WHEREAS, the parties hereto wish to modify ARTICLE 4 of the Agreement and such portion of Schedule A to the Agreement entitled "Fees" by revising the fees that are payable to the Administrator; and WHEREAS, the parties hereto wish to modify the portion of Schedule A to the Agreement entitled "Term" by extending the initial term set forth therein. NOW THEREFORE, in consideration of the foregoing and the mutual premises and covenants herein set forth, the parties agree as follows: 1. Capitalized terms not otherwise defined herein shall have the same meaning as in the Agreement. 2.ARTICLE 4, Paragraph (A) of the Agreement shall be amended by adding the following sentence after the first sentence of such paragraph: Effective as of October 1, 1997, for the services rendered, the facilities furnished and the expenses assumed by the Administrator pursuant to this Agreement, the Trust shall pay to the Administrator compensation that is more particularly described in the Omnibus Fee Agreement among the Administrator, BISYS Fund Services, Inc. and the Trust dated October 1, 1997. 3.Schedule A to the Agreement shall be amended by adding the following sentence at the end of the section entitled "Fees": Effective as of October 1, 1997, the fee schedule set forth above shall be superseded by the fee schedule that is more particularly described in the Omnibus Fee Agreement among the Administrator, BISYS Fund Services, Inc. and the Trust dated October 1, 1997. 4. Schedule A to the Agreement shall be amended by replacing the first sentence of the first paragraph of the section entitled "Term" with the following: The initial term of this Agreement (the "Initial Term") shall be for a period commencing on the date this Agreement is executed by both parties and ending on December 31, 1998. 5. This Amendment may be executed in one or more counterparts, each of which will be deemed an original, but all of which together shall constitute one and the same instrument. 6. Except as specifically set forth herein, all other provisions of the Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above. THE HIRTLE CALLAGHAN TRUST By: ___/s/_______________________________ Title:________________________________ BISYS FUND SERVICES LIMITED PARTNERSHIP By: BISYS Fund Services, Inc., General Partner By: _______/s/___________________________ Title:________________________________ EX-6 15 JENNISON CONTRACT PORTFOLIO MANAGEMENT AGREEMENT AGREEMENT made this _____day of July, 1995 between JENNISON ASSOCIATES CAPITAL CORP., a New York corporation ("Portfolio Manager") and THE HIRTLE CALLAGHAN TRUST, a Delaware business trust ("Trust"). WHEREAS, the Trust is registered as an open-end, diversified, management series investment company under the Investment Company Act of 1940, as amended ("Investment Company Act") which currently offers five series of beneficial interests ("shares") representing interests in separate investment portfolios, and may offer additional portfolios in the future (each referred to hereinafter as a "Portfolio" and collectively, as the "Portfolios"); and WHEREAS, the Trust desires to retain the Portfolio Manager to provide a continuous program of investment management for The Growth Equity Portfolio of the Trust ("Portfolio") and Portfolio Manager is willing, in accordance with the terms and conditions hereof, to provide such services to the Trust; NOW THEREFORE, in consideration of the promises and covenants set forth herein and intending to be legally bound hereby, it is agreed between the parties as follows: 1. Appointment of Portfolio Manager. The Trust hereby retains Portfolio Manager to provide the investment services set forth herein and Portfolio Manager agrees to accept such appointment. In carrying out its responsibilities under this Agreement, the Portfolio Manager shall at all times act in accordance with the investment objectives, policies and restrictions applicable to the Portfolio as set forth in the then current Registration Statement of the Trust, applicable provisions of the Investment Company Act and the rules and regulations promulgated under that Act and other applicable federal securities laws. 2. Duties of Portfolio Manager. (a) Portfolio Manager shall provide a continuous program of investment management for that portion of the assets of the Portfolio ("Account") that may, from time to time be allocated to it by the Trust's Board of Trustees, in writing, by an authorized officer of the Trust. It is understood that the Account may consist of all, a portion of or none of the assets of the Portfolio, and that the Board of Trustees has the right to allocate and reallocate such assets to the Account at any time, and from time to time, upon such notice to Portfolio Manager as may, in the view of the Trust, be necessary to ensure orderly management of the Account or the Portfolio. (b) Subject to the general supervision of the Trust's Board of Trustees, Portfolio Manager shall have sole investment discretion with respect to the Account, including investment research, selection of the securities to be purchased and sold and the portion of the Account, if any, that shall be held uninvested, and the selection of brokers and dealers through which securities transactions in the Account shall be executed. Specifically, and without limiting the generality of the foregoing, Portfolio Manager agrees that it will: (i) promptly advise the Portfolio's designated custodian bank and administrator or accounting agent of each purchase and sale, as the case may be, made on behalf of the Account, specifying the name and quantity of the security purchased or sold, the unit and aggregate purchase or sale price, commission paid, the market on which the transaction was effected, the trade date, the settlement date, the identity of the effecting broker or dealer and/or such other information, and in such manner, as may from time to time be reasonably requested by the Trust; (ii) maintain all applicable books and records with respect to the securities transactions of the Account. Specifically, Portfolio Manager agrees to maintain with respect to the Account those records required to be maintained under Rule 31a-1(b)(1), (b)(5) and (b)(6) under the Investment Company Act with respect to transactions in the Account including, without limitation, records which reflect securities purchased or sold in the Account, showing for each such transaction, the name and quantity of securities, the unit and aggregate purchase or sale price, commission paid, the market on which the transaction was effected, the trade date, the settlement date, and the identity of the effecting broker or dealer. Portfolio Manager will preserve such records in the manner and for the periods prescribed by Rule 31a-2 under the Investment Company Act. Portfolio Manager acknowledges and agrees that all records it maintains for the Trust are the property of the Trust and Portfolio Manager will surrender promptly to the Trust any such records upon the Trust's request. The Trust agrees, however, that Portfolio Manager may retain copies of those records that are required to be maintained by Portfolio Manager under federal or state regulations to which it may be subject or are reasonably necessary for purposes of conducting its business; (iii) provide, in a timely manner, such information as may be reasonably requested by the Trust or its designated agents in connection with, among other things, the daily computation of the Portfolio's net asset value and net income, preparation of proxy statements or amendments to the Trust's registration statement and monitoring investments made in the Account to ensure compliance with the various limitations on investments applicable to the Portfolio and to ensure that the Portfolio will continue to qualify for the special tax treatment accorded to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended; and (iv) render regular reports to the Trust concerning the performance of Portfolio Manager of its responsibilities under this Agreement. In particular, Portfolio Manager agrees that it will, upon reasonable notice and at the reasonable request of the Board of Trustees, attend meetings of the Board or its validly constituted committees and make its officers and employees available to meet with the officers and employees of the Trust at least quarterly to review the investments and investment program of the Account. 3. Portfolio Transaction and Brokerage. In placing orders for portfolio securities with brokers and dealers, Portfolio Manager shall use its best efforts to execute securities transactions on behalf of the Account in such a manner that the total cost or proceeds in each transaction is the most favorable under the circumstances. Portfolio Manager may, however, in its discretion, direct orders to brokers that provide to Portfolio Manager research, analysis, advice and similar services, and Portfolio Manager may cause the Account to pay to those brokers a higher commission than may be charged by other brokers for similar transactions, provided that Portfolio Manager determines in good faith that such commission is reasonable in terms either of the particular transaction or of the overall responsibility of the Portfolio Manager to the Account and any other accounts with respect to which Portfolio Manager exercises investment discretion, and provided further that the extent and continuation of any such practice is subject to review by the Trust's Board of Trustees. Portfolio Manager shall not execute any portfolio transactions for the Trust with a broker or dealer which is an "affiliated person" of the Trust or Portfolio Manager, including any other investment advisory organization that may, from time to time act as a portfolio manager for the Portfolio or any of the Trust's other Portfolios, without prior written approval of the Trust. The Trust shall provide a list of such affiliated brokers and dealers to Portfolio Manager and will promptly advise Portfolio Manager of any changes in such list. 4. Expenses and Compensation. Portfolio Manager shall pay all of its expenses incurred in the performance of its duties under this Agreement and shall not be required to pay any expenses of the Trust. For its services under this Agreement, Portfolio Manager shall be entitled to receive a fee at the annual rate of .30% of the average daily net assets of the Account, which fee shall be payable monthly. 5. Limitation of Liability and Indemnification. (a) Portfolio Manager shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Trust in connection with the matters to which this Agreement relates including, without limitation, losses that may be sustained in connection with the purchase, holding, redemption or sale of any security or other investment by the Trust except a loss resulting directly from willful misfeasance, bad faith or gross negligence on the part of Portfolio Manager in the performance of its duties or from reckless disregard by it of its duties under this Agreement. (b) Notwithstanding the foregoing, Portfolio Manager expressly agrees that the Trust may rely upon written information provided by Portfolio Manager to the Trust (including, without limitation, information contained in Portfolio Manager's then current Form ADV) in accordance with Section 9 of the Agreement or otherwise in preparing the Trust's registration statement and amendments thereto and certain periodic reports relating to the Trust and its Portfolios that are required to be furnished to shareholders of the Trust and/or filed with the Securities and Exchange Commission ("SEC Filings"). Portfolio Manager agrees to indemnify and hold harmless the Trust and each of its Trustees, officers and employees from any claims, liabilities and expenses, including reasonable attorneys' fees, incurred as a result of any untrue statement or alleged untrue statement of a material fact made by Portfolio Manager in any such written information and upon which the Trust relies in preparing any SEC Filing, or any omission or alleged omission to state in such written information a material fact necessary to make such statements not misleading ("material omission"). Portfolio Manager will not, however, be required to so indemnify any person under this Section 5 to the extent that Portfolio Manager relied upon an untrue statement or material omission made by an officer or Trustee of the Trust or where such untrue statement or material omission was made in reliance upon information furnished to the Portfolio Manager in writing by such officer or Trustee, or by the Trust's custodian bank, administrator or accounting agent. 6. Permissible Interest. Subject to and in accordance with the Trust's Declaration of Trust and Bylaws and corresponding governing documents of Portfolio Manager, directors, officers, agents and shareholders of the Trust may have an interest in the Portfolio Manager as officers, directors, agents and/or shareholders or otherwise. Portfolio Manager may have similar interests in the Trust. The effect of any such interrelationships shall be governed by said governing documents and the provisions of the Investment Company Act. 7. Duration, Termination and Amendments. This Agreement shall become effective as of the date first written above and shall continue in effect for two years. Thereafter, this Agreement shall continue in effect from year to year for so long as its continuance is specifically approved, at least annually, by (i) a majority of the Board of Trustees or the vote of the holders of a majority of the Portfolio's outstanding voting securities; and (ii) the affirmative vote, cast in person at a meeting called for the purpose of voting on such continuance, of a majority of those members of the Board of Trustees ("IndependentTrustees") who are not "interested persons" of the Trust or any investment adviser to the Trust. This Agreement may be terminated by the Trust or by Portfolio Manager at any time and without penalty upon sixty days written notice to the other party, which notice may be waived by the party entitled to it. This Agreement may not be amended except by an instrument in writing and signed by the party to be bound thereby provided that if the Investment Company Act requires that such amendment be approved by the vote of the Board, the Independent Directors, and/or the holders of the Trust's or the Portfolio's outstanding shareholders, such approval must be obtained before any such amendment may become effective. This Agreement shall terminate upon its assignment. For purposes of this Agreement, the terms "majority of the outstanding voting securities, "assignment" and "interested person" shall have the meanings set forth in the Investment Company Act. 8. Confidentiality; Use of Name. (a) Portfolio Manager acknowledges and agrees that during the course of its responsibilities hereunder, it may have access to certain information that is proprietary to the Trust or to one or more of the Trust's agents or service providers. Portfolio Manager agrees that Portfolio Manager, its officers and its employees shall treat all such proprietary information as confidential and will not use or disclose information contained in, or derived from such material for any purpose other than in connection with the carrying out of Portfolio Manager's responsibilities hereunder, provided, however, that this shall not apply in the case of (i) information that is publicly available; (ii) information that Portfolio Manager obtains from other sources without knowing of any obligation of confidentiality that such sources have to the Trust, and (iii) disclosures required by law or requested by any regulatory authority that may have jurisdiction over Portfolio Manager, in which case Portfolio Manager shall request such confidential treatment of such information as may be reasonably available. In addition, Portfolio Manager shall use its best efforts to ensure that any agent or affiliate of Portfolio Manager who may gain access to such proprietary materials shall be made aware of the proprietary nature of such materials and shall likewise treat such materials as confidential. (b) It is acknowledged and agreed that the names "Hirtle Callaghan," "Hirtle Callaghan Chief Investment Officers" (which is a registered trademark ofHirtle, Callaghan & Co., Inc. ("HCCI")), and derivatives of either, as well as any logo that is now or shall later become associated with either name ("Marks") are valuable property of HCCI and that the use of the Marks, or any one of them, by the Trust or its agents is subject to the license granted to the Trust by HCCI. Portfolio Manager agrees that it will not use any Mark without the prior written consent of the Trust or HCCI. (c) Portfolio Manager consents to use of its name, performance data, biographical data and other pertinent data by the Trust for use in marketing and sales literature, provided that any such marketing and sales literature (other than the Trust's prospectus included in its then current registration statement) shall not be used by the Trust without the prior written consent of Portfolio Manager. The Trust agrees to treat Portfolio Manager's advice and information rendered to the Portfolio confidential and for use only by the Trust, subject to the exception stated in clauses Section 8(a)(i), (ii) and (iii), above. The provisions of this Section 8 shall survive termination of this Agreement. 9. Representations, Warranties and Agreements of Portfolio Manager. Portfolio Manager represents and warrants that: (a) It is registered as an investment adviser under the Investment Advisers Act of 1940 ("Investment Advisers Act"), it will maintain such registration in full force and effect and will promptly report to the Trust the commencement of any formal proceeding that would be reasonably likely to render the Portfolio Manager ineligible to serve as an investment adviser to a registered investment company under Section 9 of the Investment Company Act. (b) It has adopted a written code of ethics complying with the requirements of Rule 17j-1 under the Investment Company Act and has provided the Trust with a copy of the code of ethics. During the period that this Agreement is in effect, an officer or director of Portfolio Manager shall certify to the Trust, on a quarterly basis, that (i) Portfolio Manager has complied with the requirements of Rule 17j-1 during the prior year and (ii) that there has been no violation of such code of ethics or, if such a violation has occurred, that appropriate action was taken in response to such violation. Upon the written request of the Trust, Portfolio Manager shall permit the Trust, or it designated agents, to examine the reports required to be made by Portfolio Manager under rule 17j-1(c)(1) under the Investment Company Act. In addition, Portfolio Manager acknowledges that the Trust may, in response to regulations or recommendations issued by the Securities and Exchange Commission or other regulatory agencies, from time to time, request additional information regarding the personal securities trading of its directors, partners, officers and employees and the policies of Portfolio Manager with regard to such trading. Portfolio Manager agrees that it make every reasonable effort to respond to the Trust's requests in this area. (c) Upon request of the Trust, Portfolio Manager shall promptly supply the Trust with any information concerning Portfolio Manager and its stockholders, employees and affiliates that the Trust may reasonably require in connection with the preparation of its registration statements, proxy materials, reports and other documents required, under applicable state or Federal laws, to be filed with state or Federal agencies or to be provided to shareholders of the Trust. 10. Status of Portfolio Manager. The Trust and Portfolio Manager acknowledge and agree that the relationship between Portfolio Manager and the Trust is that of an independent contractor and under no circumstances shall any employee of Portfolio Manager be deemed an employee of the Trust or any other organization that the Trust may, from time to time, engage to provide services to the Trust, its Portfolios or its shareholders. The parties also acknowledge and agree that nothing in this Agreement shall be construed to restrict the right of Portfolio Manager or its affiliates to perform investment management or other services to any person or entity, including without limitation, other investment companies and persons who may retain Portfolio Manager to provide investment management services and the performance of such services shall not be deemed to violate or give rise to any duty or obligations to the Trust. It is understood that Portfolio Manager shall not have any obligation to purchase for or sell for the Portfolio any security that Portfolio Manager or its affiliates or employees may purchase or sell for its or their own account or for the account of any other client. 11. Counterparts and Notice. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original. Any notice required to be given under this Agreement shall be deemed given when received, in writing addressed and delivered, by certified mail, by hand or via overnight delivery service as follows: If to the Trust: Mr. Donald E. Callaghan, President The Hirtle Callaghan Trust 575 East Swedesford Road Wayne, PA 19087-1937 If to Portfolio Manager: Mr. Robert B. Corman Senior Vice President Jennison Associates Capital Corp. 466 Lexington Avenue New York, New York 10017 12. Miscellaneous. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and shall be governed by the law of the state of Delaware provided that nothing herein shall be construed as inconsistent with the Investment Company Act or the Investment Advisers Act. Portfolio Manager is hereby expressly put on notice of the limitations of shareholder and Trustee liability set forth in the Declaration of Trust of the Trust and agrees that obligations assumed by the Trust pursuant to this Agreement shall be limited in all cases to the assets of The Growth Equity Portfolio Manager further agrees that it will not seek satisfaction of any such obligations from the shareholders or any individual shareholder of the Trust, or from the Trustees of the Trust or any individual Trustee of the Trust. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers thereunto duly authorized as of the day and year first written above. Jennison Associates Capital Corp. By: /s/ The Hirtle Callaghan Trust By: /s/ EX-15 16 TRANSFER AGREE. AMENDMENT TO TRANSFER AGENCY AGREEMENT This Amendment is made as of October 1, 1997, between The Hirtle Callaghan Trust (the "Trust") and BISYS Fund Services, Inc. ("BISYS"). The parties hereby amend the Transfer Agency Agreement (the "Agreement") between the Trust and BISYS, dated as of October 1, 1996, as set forth below. WHEREAS, the parties hereto wish to modify Section 2 of the Agreement and Schedule B to the Agreement by revising the fees that are payable to BISYS; and WHEREAS, the parties hereto wish to modify Section 5 of the Agreement by extending the initial term set forth therein. NOW THEREFORE, in consideration of the foregoing and the mutual premises and covenants herein set forth, the parties agree as follows: 1. Capitalized terms not otherwise defined herein shall have the same meaning as in the Agreement. 2.Section 2 of the Agreement shall be amended by adding the following sentence at the end of such paragraph: Effective as of October 1, 1997, for the services rendered, the facilities furnished and the expenses assumed by BISYS pursuant to this Agreement, the Trust shall pay to BISYS compensation that is more particularly described in the Omnibus Fee Agreement among BISYS Fund Services Limited Partnership, BISYS Fund Services, Inc. and the Trust, dated October 1, 1997. 3.Schedule B to the Agreement shall be amended by adding the following sentence at the end of the fee schedule contained therein: Effective as of October 1, 1997, the fee schedule set forth above shall be superseded by the fee schedule that is more particularly described in the Omnibus Fee Agreement among BISYS Fund Services Limited Partnership, BISYS Fund Services, Inc. and the Trust, dated October 1, 1997. 4. Section 5 of the Agreement shall be amended by replacing the first sentence of the first paragraph of the section entitled "Term" with the following: The initial term of this Agreement (the "Initial Term") shall be for a period commencing on the date this Agreement is executed by both parties and ending on December 31, 1998. 5. This Amendment may be executed in one or more counterparts, each of which will be deemed an original, but all of which together shall constitute one and the same instrument. 6. Except as specifically set forth herein, all other provisions of the Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above. THE HIRTLE CALLAGHAN TRUST By: _____/s/_____________________________ Title:________________________________ BISYS FUND SERVICES, INC. By: _______/s/___________________________ Title:________________________________ EX-16 17 FUND ACCOUNTING AGREE. AMENDMENT TO FUND ACCOUNTING AGREEMENT This Amendment is made as of October 1, 1997, between The Hirtle Callaghan Trust (the "Trust") and BISYS Fund Services, Inc. ("Fund Accountant"). The parties hereby amend the Fund Accounting Agreement (the "Agreement") between the Trust and Fund Accountant, dated as of October 1, 1996, as set forth below. WHEREAS, the parties hereto wish to modify Section 3 of the Agreement and Schedule A to the Agreement by revising the fees that are payable to Fund Accountant; and WHEREAS, the parties hereto wish to modify Section 6 of the Agreement by extending the initial term set forth therein. NOW THEREFORE, in consideration of the foregoing and the mutual premises and covenants herein set forth, the parties agree as follows: 1. Capitalized terms not otherwise defined herein shall have the same meaning as in the Agreement. 2.Section 3 of the Agreement shall be amended by adding the following sentence at the end of such paragraph: Effective as of October 1, 1997, for the services rendered, the facilities furnished and the expenses assumed by Fund Accountant pursuant to this Agreement, the Trust shall pay to Fund Accountant compensation that is more particularly described in the Omnibus Fee Agreement among BISYS Fund Services Limited Partnership, BISYS Fund Services, Inc. and the Trust, dated October 1, 1997. 3.Schedule A to the Agreement, as amended effective January 1, 1997, shall be amended by adding the following sentence at the end of the fee schedule contained therein: Effective as of October 1, 1997, the fee schedule set forth above shall be superseded by the fee schedule that is more particularly described in the Omnibus Fee Agreement among BISYS Fund Services Limited Partnership, BISYS Fund Services, Inc. and the Trust, dated October 1, 1997. 4. Section 6 of the Agreement shall be amended by replacing the first sentence of the first paragraph of the section entitled "Term" with the following: The initial term of this Agreement (the "Initial Term") shall be for a period commencing on the date this Agreement is executed by both parties and ending on December 31, 1998. 5. This Amendment may be executed in one or more counterparts, each of which will be deemed an original, but all of which together shall constitute one and the same instrument. 6. Except as specifically set forth herein, all other provisions of the Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above. THE HIRTLE CALLAGHAN TRUST By: ___/s/_______________________________ Title:________________________________ BISYS FUND SERVICES, INC. By: _____/s/_____________________________ Title:________________________________ EX-17 18 OMNIBUS FEE OMNIBUS FEE AGREEMENT THIS AGREEMENT is made as of this 1st day of October, 1997, by and among THE HIRTLE CALLAGHAN TRUST (the "Company"), a Delaware business trust, BISYS FUND SERVICES LIMITED PARTNERSHIP, d/b/a BISYS FUND SERVICES ("BISYS LP"), an Ohio limited partnership, and BISYS FUND SERVICES, INC. ("BISYS"), a Delaware corporation. WHEREAS, the Company is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act") consisting of several series of shares of beneficial interest ("Shares"); WHEREAS, the Company and BISYS LP have entered into an Administration Agreement, dated October 1, 1996, as amended on October 1, 1997, concerning the provision of management and administrative services for the investment portfolios of the Company (individually referred to herein as a "Fund" and collectively as the "Funds"); WHEREAS, the Company and BISYS have entered into a Fund Accounting Agreement and a Transfer Agency Agreement, each of which is dated October 1, 1996, as amended on October 1, 1997, concerning the provision of fund accounting and transfer agency services, respectively, for the Funds; and WHEREAS, the parties desire to set forth the compensation payable by the Company under the foregoing agreements in a separate written document. NOW, THEREFORE, in consideration of the mutual premises and covenants herein set forth, the parties agree as follows: 1. The Administration Agreement, Fund Accounting Agreement, and Transfer Agency Agreement referred to herein shall be referred to collectively as the "Service Agreements." 2. The Company shall pay to BISYS LP all of the compensation set forth herein on the dates set forth herein. 3. The amount of the compensation due and payable to BISYS LP shall be the aggregate fee amount due and payable for Administration, Fund Accounting and Transfer Agency services set forth in Schedule A hereto during the term of the Service Agreements. 4. This Agreement shall be governed by, and its provisions shall be construed in accordance with, the laws of the State of Ohio. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be fully executed as of the day and year first written above. THE HIRTLE CALLAGHAN TRUST By: /s/ BISYS FUND SERVICES LIMITED PARTNERSHIP By: /s/ BISYS FUND SERVICES, INC., General Partner BISYS FUND SERVICES, INC. By: /s/ SCHEDULE A FEE SCHEDULE FOR ADMINISTRATION, FUND ACCOUNTING AND TRANSFER AGENCY SERVICES The Company will pay to BISYS LP on the first business day of each month in arrears, or at such time(s) as BISYS LP shall request and the parties hereto shall agree, a fee computed daily at the annual rate set forth below: Ten one-hundredths of one percent (.10%) of the Company's average daily net assets attributable to equity Funds. Eight one-hundreths of one percent (.08%) of the Company's average daily net assets atrributable to fixed income Funds. The fee payable by the Company hereunder shall be allocated to each Fund based upon its pro rata share of the total fee payable hereunder. Such fee as is attributable to each Fund shall be a separate (and not joint or joint and several) obligation of each such Fund. The fees set forth above shall be in addition to the payment of out-of-pocket expenses, as provided for in the Service Agreements. -----END PRIVACY-ENHANCED MESSAGE-----