497 1 d193966d497.htm HC CAPITAL TRUST HC CAPITAL TRUST
Table of Contents

Supplement to Prospectus

HC Advisors Shares

Dated November 1, 2015

HC Capital Trust

The date of this Supplement is October 17, 2016

The International Equity Portfolio and The Institutional International Equity Portfolio (the Portfolios”):

Effective October 14, 2016, Capital Guardian Trust Company (“CapGuardian”) no longer serves as a Specialist Manager for the Portfolios pursuant to notice of termination by the Trust, on behalf of the Board of Trustees, dated August 15, 2016. Accordingly, the Prospectus is supplemented as shown below with references to CapGuardian deleted entirely.

1. The following replaces the “Investment Subadvisers” section of the Prospectus:

Page 50:

Investment Subadvisers

Artisan Partners Limited Partnership (“Artisan”), Cadence Capital Management LLC (“Cadence”), Causeway Capital Management LLC (“Causeway”), City of London Investment Management Company Limited (“CLIM”), Parametric Portfolio Associates (“Parametric”) and Mellon Capital Management Corporation (“Mellon Capital”) are the Specialist Managers for the Portfolio.

Page 55:

Investment Subadvisers

Artisan Partners Limited Partnership (“Artisan”), Cadence Capital Management LLC (“Cadence”), Causeway Capital Management LLC (“Causeway”), City of London Investment Management Company Limited (“CLIM”), Lazard Asset Management LLC (“Lazard”), Parametric Portfolio Associates (“Parametric”) and Mellon Capital Management Corporation (“Mellon Capital”) are the Specialist Managers for the Portfolio.

2. The “CapGuardian” section is each deleted in its entirety under the “Portfolio Managers” sections on pages 50 and 55 of the Prospectus.

3. The “CapGuardian Investment Selection Process” section is deleted in its entirety under “More Information About Fund Investments and Risks” “The International Equity Portfolio; Specialist Managers” on page 127 and “The Institutional International Equity Portfolio; Specialist Managers” on page 130. Additionally, reference to CapGuardian in the first paragraph under “The International Equity Portfolio; Specialist Managers” on page 126 and “The Institutional International Equity Portfolio; Specialist Managers” on page 129 is each deleted in its entirety.

4. Reference to CapGuardian in the fourth and fifth paragraphs under “More Information About Fund Investments and Risks” Specialist Managers” on page 153 is each deleted in its entirety.

5. The “Capital Guardian Trust Company” section is deleted in its entirety under “Specialist Manager Guide” on page 170.

 

 

The Small Capitalization - Mid Capitalization Equity Portfolio and The Institutional Small Capitalization - Mid Capitalization Equity Portfolio (the “Portfolios”) (From the Supplement Filed on September 14, 2016):

At a meeting held on September 13, 2016, the Board of Trustees (the “Board”) for HC Capital Trust (the “Trust”) approved the engagement of Advisory Research, Inc. (“Advisory Research”) as an investment advisory organization (“Specialist Manager”) to manage portions of the assets of the Portfolios, effective upon the date of the employment of Andrew Cupps at Advisory Research (the “Effective Date”), which is anticipated on or about September 30, 2016.

At a meeting held on September 13, 2016, the Trust’s Board approved the termination of Cupps Capital Management Company, LLC (“Cupps”) as specialist manager of the Portfolios effective upon the Effective Date.

Accordingly, upon the Effective Date, the Prospectus is supplemented as shown below with references to Cupps deleted entirely, and additional disclosures related to Advisory Research included.

The Small Capitalization - Mid Capitalization Equity Portfolio

1. The following replaces the “Investment Subadvisers” section on page 27 of the Prospectus:

Investment Subadvisers

Advisory Research, Inc. (“Advisory Research”), Ariel Investments, LLC (“Ariel”), Cadence Capital Management LLC (“Cadence”), Frontier Capital Management Company, LLC (“Frontier”), IronBridge Capital Management LP (“IronBridge”), Mellon Capital Management Corporation (“Mellon Capital”), Parametric Portfolio Associates (“Parametric”) and Pzena Investment Management, LLC (“Pzena”) are the Specialist Managers for the Portfolio.

2. The following is added before “Ariel” under the “Portfolio Managers” section on page 27 of the Prospectus:

Advisory Research: Andrew S. Cupps has managed the portfolio of the Portfolio allocated to Advisory Research since June, 2011*.

 

* Includes Mr. Cupps’ services with a previous Investment Subadviser.

3. The following replaces the first paragraph of the “Specialist Managers” section under “More Information About Fund Investments and Risks - The Small Capitalization - Mid Capitalization Equity Portfolio” on page 116:

A portion of the Portfolio is managed in accordance with an “active management” approach, which involves the buying and selling of securities based upon economic, financial and market analysis and investment judgment. Advisory Research, Ariel, Frontier, IronBridge, Parametric and Pzena are currently responsible for implementing the active component of the Portfolio’s investment strategy. The remaining portion of the Portfolio is managed using “passive” or “index” investment approaches that are is designed to approximate as closely as practicable, before expenses, the performance of the Portfolio’s benchmark index or one or more identifiable subsets or other portions of that index (see “Fund Management,” included later in this Prospectus). Cadence and Mellon Capital are currently responsible for implementing the passive component of the Portfolio’s investment strategy. Further information about the Specialist Managers, individual portfolio managers responsible for day-to-day investment decisions for the Portfolio, and the manner in which the Portfolio’s assets are allocated among them appears in the “Specialist Manager Guide” included later in this Prospectus.

4. The “Cupps Investment Selection Process” section is deleted in its entirety and the following is added under “More Information About Fund Investments and Risks - The Small Capitalization - Mid Capitalization Equity Portfolio; Specialist Managers” on page 117 before the “Ariel Investment Selection Process”:

 

The Advisory Research Investment Selection Process:   

Advisory Research believes earnings growth is the primary variable driving intermediate and long term stock performance and Advisory Research therefore focuses on companies it

believes are poised to experience high or improving rates of earnings growth. Advisory Research uses a proprietary investment framework to evaluate the attractiveness of stocks. Cupps’ investment approach begins with fundamental analysis to determine valuation and then considers four additional perspectives that include both fundamental and technical disciplines to generate an overall opinion of a stock’s attractiveness. Sell decisions, like buy decisions, take into account these same perspectives. If a company’s financial results fall significantly off its projected growth path, either in terms of product sales or market development, or if the company loses significant competitive advantage, or if the stock demonstrates poor technical behavior, positions will most likely be reduced or eliminated entirely.

The Institutional Small Capitalization - Mid Capitalization Equity Portfolio

1. The following replaces the “Investment Subadvisers” section on page 32 of the Prospectus:

Advisory Research, Inc. (“Advisory Research”), Ariel Investments, LLC (“Ariel”), Cadence Capital Management LLC (“Cadence”), Frontier Capital Management Company, LLC (“Frontier”), IronBridge Capital Management LP (“IronBridge”), Mellon Capital Management Corporation (“Mellon Capital”), Parametric Portfolio Associates (“Parametric”) and Pzena Investment Management, LLC (“Pzena”) are the Specialist Managers for the Portfolio.

2. The following is added before “Ariel” under the “Portfolio Managers” section on page 32 of the Prospectus:

Advisory Research: Andrew S. Cupps has managed the portfolio of the Portfolio allocated to Advisory Research since June, 2011*.

 

* Includes Mr. Cupps’ services with a previous Investment Subadviser.

3. The following replaces the first paragraph of the “Specialist Managers” section under “More Information About Fund Investments and Risks - The Institutional Small Capitalization - Mid Capitalization Equity Portfolio” on page 119:

A portion of the Portfolio is managed in accordance with an “active management” approach, which involves the buying and selling of securities based upon economic, financial and market analysis and investment judgment. Advisory Research, Ariel, Frontier, IronBridge, Parametric and Pzena, are currently responsible for implementing the active component of the Portfolio’s investment strategy. The remaining portion of the Portfolio is managed using “passive” or “index” investment approaches that are designed to approximate as closely as practicable, before expenses, the performance of the Portfolio’s benchmark index or one or more identifiable subsets or other portions of that index (see “Fund Management,” included later in this Prospectus). Cadence and Mellon Capital are currently responsible for implementing the passive component of the Portfolio’s investment strategy. The investment selection process for each of these Specialist Managers is described below; further information about the Specialist Managers, individual portfolio managers responsible for day-to-day investment decisions for the Portfolio, and the manner in which the Portfolio’s assets are allocated among them appears in the “Specialist Manager Guide” included later in this Prospectus.

4. The “Cupps Investment Selection Process” section is deleted in its entirety and the following is added under “More Information About Fund Investments and Risks - The Institutional Small Capitalization - Mid Capitalization Equity Portfolio; Specialist Managers” on page 119 before the “Ariel Investment Selection Process”:

 

The Advisory Research Investment Selection Process:    Advisory Research believes earnings growth is the primary variable driving intermediate and long-term stock performance and Advisory Research therefore focuses on companies it believes are poised to experience high or improving rates of earnings growth. Advisory Research uses a proprietary investment framework to evaluate the attractiveness of stocks. Advisory Research’ investment approach begins with fundamental analysis to determine valuation and then considers four additional perspectives that include both fundamental and technical disciplines to generate an overall opinion of a stock’s attractiveness. Sell decisions, like buy decisions, take into account these same perspectives. If a company’s financial results fall significantly off its projected growth path, either in terms of product sales or market development, or if the company loses significant competitive advantage, or if the stock demonstrates poor technical behavior, positions will most likely be reduced or eliminated entirely.

The Small Capitalization - Mid Capitalization Equity Portfolio and The Institutional Small Capitalization - Mid Capitalization Equity Portfolio

The “Cupps Capital Management, LLC,” section is deleted in its entirety and the following is added under “Specialist Manager Guide” on page 166 before the “Agincourt Capital Management, LLC”:

Advisory Research, Inc. (“Advisory Research”) serves as a Specialist Manager for The Small Capitalization – Mid Capitalization Equity and The Institutional Small Capitalization – Mid Capitalization Equity Portfolios. For its services to The Small Capitalization – Mid Capitalization Equity and The Institutional Small Capitalization – Mid Capitalization Equity Portfolios, Advisory Research receives a fee based on the average daily net asset value of that portion of each Portfolio allocated to it, at an annual rate of 0.85%. As of June 30, 2016, Advisory Research had total assets under management of approximately $8.1 billion in assets.

Advisory Research, the principal offices of which are located at 180 N. Stetson Avenue, Suite 5500, Chicago, Illinois 60601, was established in 1974 and is a registered investment adviser. Advisory Research is a subsidiary of Piper Jaffray Companies. Andrew S. Cupps is responsible for making the day-to-day investment decisions for the portion of the Portfolios’ assets assigned to Advisory Research. Mr. Cupps serves as the Chief Investment Officer. He is responsible for the research agenda of the firm’s investment team and has analyst responsibilities within the healthcare and technology sectors. Prior to his employment with Advisory Research, Mr. Cupps served as President and Chief Investment Officer of Cupps Capital Management , LLC, since the firm’s inception in 2000. Mr. Cupps attended Harvard University where he studied economics and graduated cum laude in 1992.


Table of Contents

 

The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization—Mid Capitalization Equity Portfolio, The Institutional Small Capitalization—Mid Capitalization Equity Portfolio, The International Equity Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio, The Core Fixed Income Portfolio, The U.S. Corporate Fixed Income Securities Portfolio, The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio, The Short-Term Municipal Bond Portfolio, The Intermediate Term Municipal Bond Portfolio and The Intermediate Term Municipal Bond II Portfolio (the “Portfolios”) (From the Supplement Filed on September 2, 2016):

On August 25, 2016, the Board of Trustees (the “Board”) for HC Capital Trust (the “Trust”) approved changes in each of the Portfolio’s investment strategies as set forth below, to become effective on November 1, 2016. Accordingly, the Prospectus is supplemented as follows:

The Value Equity Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 2 of the Prospectus:

The Portfolio is a diversified investment company that is designed to implement a value-oriented investment approach. A “value investor” seeks to select securities that trade for less than the intrinsic value of the issuing company, as measured by fundamental investment considerations such as earnings, book value and dividend paying ability. Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e., at least 80% of its net assets) in equity securities. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio may invest up to 20% of the total assets of the actively managed portion of the Portfolio in income-producing securities other than common stock, such as preferred stocks or bonds, including those that are convertible into common stock. These income-producing securities may be of any quality or maturity. The Portfolio will focus its investments in equity securities of large and mid-capitalization issuers. As of the date of this Prospectus, companies with a market capitalization of between $5 billion and $24 billion would likely be included in the “mid cap” range. Up to 20% of the total assets of the total Portfolio may also be invested in securities issued by non-U.S. companies. The Portfolio may invest in securities issued by other investment companies, including Exchange-Traded Funds (“ETFs”) that invest in equity securities. The Portfolio may also invest in other instruments including option or futures contracts, and similar instruments in order to gain market exposure pending investment or to hedge against fluctuations in market price of the securities in which the Portfolio invests. In accordance with applicable interpretations of the SEC, certain derivative instruments may be counted as equity securities for purposes of the Portfolio’s policies regarding investments in equity securities, to the extent that such derivative instruments have economic characteristics similar to those of equity securities. Additionally, a portion of the Portfolio may be managed using a more “passive” investment approach designed to approximate as closely as practicable, before expenses, the performance of either the Portfolio’s benchmark index or, from time to time, one or more identifiable subsets or other portions of that index.

The Institutional Value Equity Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 7 of the Prospectus:

The Portfolio is a diversified investment company that is designed to implement a value-oriented investment approach. A “value investor” seeks to select securities that trade for less than the intrinsic value of the issuing company, as measured by fundamental investment considerations such as earnings, book value and dividend paying ability. Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e., at least 80% of its net assets) in equity securities. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio will focus its investments in equity securities of large and mid-capitalization issuers. As of the date of this Prospectus, companies with a market capitalization of between $5 billion and $24 billion would likely be included in the “mid cap” range. Up to 20% of the total assets of the actively managed portion of the Portfolio may be invested in income-producing securities other than common stock, such as preferred stocks or bonds, including those that are convertible into common stock. These income-producing securities may be of any quality or maturity. Up to 20% of the total assets of the total Portfolio may also be invested in securities issued by non-U.S. companies. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in equity securities. Consistent with their respective investment styles, the Portfolio’s Specialist Managers may use instruments including option or futures contracts and similar instruments in order to pursue their investment objectives, gain market exposure pending investment or to hedge against fluctuations in market price of the securities in which the Portfolio invests. In accordance with applicable interpretations of the SEC, certain derivative instruments may be counted as equity securities for purposes of the Portfolio’s policies regarding investments in equity securities, to the extent that such derivative instruments have economic characteristics similar to those of equity securities. Additionally, a portion of the Portfolio may be managed using a more “passive” investment approach designed to approximate as closely as practicable, before expenses, the performance of either the Portfolio’s benchmark index or, from time to time, one or more identifiable subsets or other portions of that index.

The Growth Equity Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 12 of the Prospectus:

The Portfolio is a diversified investment company that is designed to implement a growth-oriented investment approach. “Growth investing” means that securities acquired for the Portfolio can be expected to have above-average potential for growth in revenue and earnings. Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e., at least 80% of its net assets) in equity securities. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio may invest up to 20% of the total assets of the actively managed portion of the Portfolio in income-producing securities other than common stock, such as preferred stocks or bonds, including those that are convertible into common stock. These income-producing securities may be of any quality or maturity. The Portfolio will focus its investments in equity securities of large and mid-capitalization issuers. As of the date of this Prospectus, companies with a market capitalization of between $5 billion and $24 billion would likely be included in the “mid cap” range. Up to 20% of the total assets of the total Portfolio may also be invested in securities issued by non-U.S. companies. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in equity securities. Although some of the equity securities in which the Portfolio will invest are expected to be dividend paying issues, income is a secondary consideration in the stock selection process. Accordingly, dividends paid by this Portfolio can generally be expected to be lower than those paid by The Value Equity Portfolio. Consistent with their respective investment styles, the Portfolio’s Specialist Managers may use instruments including option or futures contracts and similar instruments in order to gain market exposure pending investment or to hedge against fluctuations in market price of the securities in which the Portfolio invests. In accordance with applicable interpretations of the SEC, certain derivative instruments may be counted as equity securities for purposes of the Portfolio’s policies regarding investments in equity securities, to the extent that such derivative instruments have economic characteristics similar to those of equity securities. Additionally, a portion of the Portfolio may be managed using a more “passive” investment approach designed to approximate as closely as practicable, before expenses, the performance of either the Portfolio’s benchmark index or, from time to time, one or more identifiable subsets or other portions of that index.

The Institutional Growth Equity Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 17 of the Prospectus:

The Portfolio is a diversified investment company that is designed to implement a growth-oriented investment approach. “Growth investing” means that securities acquired for the Portfolio can be expected to have above-average potential for growth in revenue and earnings. Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e., at least 80% of its net assets) in equity securities. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio may invest up to 20% of the total assets of the actively managed portion of the Portfolio in income-producing securities other than common stock, such as preferred stocks or bonds, including those that are convertible into common stock. These income-producing securities may be of any quality or maturity. The Portfolio will focus its investments in equity securities of large and mid-capitalization issuers. As of the date of this Prospectus, companies with a market capitalization of between $5 billion and $24 billion would likely be included in the “mid cap” range. Up to 20% of the total assets of the total Portfolio may also be invested in securities issued by non-U.S. companies. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in equity securities. Although some of the equity securities in which the Portfolio will invest are expected to be dividend paying issues, income is a secondary consideration in the stock selection process. Accordingly, dividends paid by this Portfolio can generally be expected to be lower than those paid by The Institutional Value Equity Portfolio. Consistent with their respective investment styles, the Portfolio’s Specialist Managers may use instruments including option or futures contracts, swaps and similar instruments in order to pursue their investment objectives, gain market exposure pending investment or to hedge against fluctuations in market price of the securities in which the Portfolio invests. The Portfolio may also use currency forwards in connection with the purchase and sale of securities denominated in foreign currencies. In accordance with applicable interpretations of the SEC, certain derivative instruments may be counted as equity securities for purposes of the Portfolio’s policies regarding investments in equity securities, to the extent that such derivative instruments have economic characteristics similar to those of equity securities. Additionally, a portion of the Portfolio may be managed using a more “passive” investment approach designed to approximate as closely as practicable, before expenses, the performance of either the Portfolio’s benchmark index or, from time to time, one or more identifiable subsets or other portions of that index.

The Small Capitalization—Mid Capitalization Equity Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 23 of the Prospectus:

Under normal circumstances, the Portfolio invests primarily (i.e., at least 80% of its net assets) in equity securities of small capitalization and mid-capitalization issuers. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio, a diversified investment company, is designed to invest primarily in equity securities of U.S. issuers which have market capitalizations that are comparable to the capitalization of companies in the Russell 3000® Index that are classified as “Small” or “Medium” at the time of purchase. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in equity securities of “small cap” and/or “mid cap” issuers. The Portfolio will invest in both dividend paying securities and securities that do not pay dividends. Also, consistent with their respective investment styles, the Portfolio’s Specialist Managers may use instruments such as option or futures contracts in order to gain market exposure pending investment or to hedge against fluctuations in market price of the securities in which the Portfolio invests. In accordance with applicable interpretations of the SEC, certain derivative instruments may be counted as equity securities for purposes of the Portfolio’s policies regarding investments in equity securities, to the extent that such derivative instruments have economic characteristics similar to those of equity securities. As of July 31, 2015, the market capitalization range of companies in the Russell 3000® Index that were classified as “Small” or “Medium” was between approximately $177 million and $28.7 billion. Additionally, a portion of the Portfolio may be managed using a more “passive” investment approach designed to approximate as closely as practicable, before expenses, the performance of either the Portfolio’s benchmark index or, from time to time, one or more identifiable subsets or other portions of that index.

The Institutional Small Capitalization—Mid Capitalization Equity Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 28 of the Prospectus:

Under normal circumstances, the Portfolio invests primarily (i.e., at least 80% of its net assets) in equity securities of small-capitalization and mid-capitalization issuers. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio, a diversified investment company, is designed to invest primarily in equity securities of U.S. issuers which have market capitalizations that are comparable to the capitalization of companies in the Russell 3000® Index that are classified as “Small” or “Medium” at the time of purchase. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in equity securities of “small cap” and/or “mid cap” issuers. The Portfolio will invest in both dividend paying securities and securities that do not pay dividends. Also, consistent with their respective investment styles, the Portfolio’s Specialist Managers may use instruments such as option or futures contracts in order to gain market exposure pending investment or to hedge against fluctuations in market price of the securities in which the Portfolio invests. In accordance with applicable interpretations of the SEC, certain derivative instruments may be counted as equity securities for purposes of the Portfolio’s policies regarding investments in equity securities, to the extent that such derivative instruments have economic characteristics similar to those of equity securities. As of July 31, 2015, the market capitalization range of companies in the Russell 3000® Index that were classified as “Small” or “Medium” was between approximately $177 million and $28.7 billion. Additionally, a portion of the Portfolio may be managed using a more “passive” investment approach designed to approximate as closely as practicable, before expenses, the performance of either the Portfolio’s benchmark index or, from time to time, one or more identifiable subsets or other portions of that index.

The International Equity Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 46 of the Prospectus:

Under normal circumstances, the Portfolio invests primarily (i.e., at least 80% of its net assets) in equity securities. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. Under normal circumstances, the Portfolio will provide exposure to investments that are economically tied to at least three different countries, including the U.S., and at least 40% of the Portfolio’s net assets will provide exposure to investments that are economically tied to non-U.S. countries. Although the Portfolio, a diversified investment company, may invest anywhere in the world, the Portfolio is expected to invest primarily in the equity markets included in the MSCI EAFE Index. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in equity securities of issuers located in non-U.S. countries. Also, consistent with their respective investment styles, the Portfolio’s Specialist Managers may use instruments such as option or futures contracts in order to gain market exposure pending investment or to hedge against fluctuations in market price of the securities in which the Portfolio invests. The Portfolio may also use currency forwards in connection with the purchase and sale of securities denominated in foreign currencies and to hedge against fluctuations in the relative value of the currencies in which securities held by the Portfolio are denominated. In accordance with applicable interpretations of the SEC, certain derivative instruments may be counted as equity securities for purposes of the Portfolio’s policies regarding investments in equity securities, to the extent that such derivative instruments have economic characteristics similar to those of equity securities. Additionally, a portion of the Portfolio may be managed using a more “passive” investment approach designed to approximate as closely as practicable, before expenses, the performance of either the Portfolio’s benchmark index or, from time to time, one or more identifiable subsets or other portions of that index.

The Institutional International Equity Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 51 of the Prospectus:

Under normal circumstances, the Portfolio invests primarily (i.e., at least 80% of its net assets) in equity securities of issuers located in non-U.S. countries. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. Under normal circumstances, the Portfolio will provide exposure to investments that are economically tied to at least three different countries, including the U.S., and at least 40% of the Portfolio’s net assets will provide exposure to investments that are economically tied to non-U.S. countries. Although the Portfolio, a diversified investment company, may invest anywhere in the world, the Portfolio is expected to invest primarily in the equity markets included in the MSCI EAFE Index. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in equity securities of issuers located in non-U.S. countries. Also, consistent with their respective investment styles, the Portfolio’s Specialist Managers may use instruments such as option or futures contracts in order to gain market exposure pending investment or to hedge against fluctuations in market price of the securities in which the Portfolio invests. The Portfolio may also use currency forwards in connection with the purchase and sale of securities denominated in a foreign currency and to hedge against fluctuations in the relative value of the currencies in which securities held by the Portfolio are denominated. In accordance with applicable interpretations of the SEC, certain derivative instruments may be counted as equity securities for purposes of the Portfolio’s policies regarding investments in equity securities, to the extent that such derivative instruments have economic characteristics similar to those of equity securities. Additionally, a portion of the Portfolio may be managed using a more “passive” investment approach designed to approximate as closely as practicable, before expenses, the performance of either the Portfolio’s benchmark index or, from time to time, one or more identifiable subsets or other portions of that index.

The Emerging Markets Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 56 of the Prospectus:

Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e., at least 80% of its net assets) in securities of issuers domiciled or, in the view of the Specialist Manager, deemed to be doing material amounts of business in countries determined by the Specialist Manager to have a developing or emerging economy or securities market. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. Typically 80% of the Portfolio’s net assets will be invested in equity securities, equity swaps, structured equity notes, equity linked notes and depositary receipts concentrated in emerging market countries. The Portfolio, a diversified investment company, invests primarily in the Morgan Stanley Capital International® Emerging Markets Index (“MSCI EM Index”) countries. As the MSCI EM Index introduces new emerging market countries, the Portfolio may include those countries among the countries in which it may invest. In determining securities in which to invest, the Portfolio’s management team will evaluate the countries’ economic and political climates with prospects for sustained macro and micro economic growth. The Portfolio’s management team will take into account traditional securities valuation methods, including (but not limited to) an analysis of price in relation to assets, earnings, cash flows, projected earnings growth, inflation and interest rates. Liquidity and transaction costs will also be considered. The Portfolio may also invest in companies of any market capitalization. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in securities issued by companies domiciled or deemed to be doing material amounts of business in countries that have a developing or emerging economy or securities market. Also, consistent with their respective investment styles, the Portfolio’s Specialist Managers may use instruments such as option or futures contracts in order to gain market exposure pending investment or to hedge against fluctuations in market price of the securities in which the Portfolio invests. In accordance with applicable interpretations of the SEC, certain derivative instruments may be counted as equity securities for purposes of the Portfolio’s policies regarding investments in equity securities, to the extent that such derivative instruments have economic characteristics similar to those of equity securities. Additionally, a portion of the Portfolio may be managed using a more “passive” investment approach designed to approximate as closely as practicable, before expenses, the performance of either the Portfolio’s benchmark index or, from time to time, one or more identifiable subsets or other portions of that index.

The Core Fixed Income Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 62 of the Prospectus:

Under normal circumstances, the Portfolio invests primarily (i.e. at least 80% of its net assets) in fixed income securities. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio, under normal circumstances, invests predominantly in fixed income securities that, at the time of purchase, are rated in one of four highest rating categories assigned by one of the major independent rating agencies or are, in the view of the Specialist Manager, deemed to be of comparable quality. Securities in the fourth highest rating category may have speculative characteristics. From time to time, a substantial portion of the Portfolio, a diversified investment company, may be invested in any of the following: (1) investment grade mortgage-backed or asset-backed securities; (2) securities issued or fully guaranteed by the U.S. Government, Federal Agencies, or sponsored agencies; (3) investment grade fixed income securities issued by U.S. corporations; or (4) municipal bonds (i.e., debt securities issued by municipalities and related entities). Under normal conditions, the Portfolio may invest up to 20% of its assets in high yield securities (“junk bonds”) as well as cash or money market instruments in order to maintain liquidity, or in the event that the Specialist Manager determines that securities meeting the Portfolio’s investment objective and policies are not otherwise readily available for purchase. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in fixed income securities. Consistent with its investment policies, the Portfolio may purchase and sell securities without regard to the effect on portfolio turnover. The Portfolio has historically had significant portfolio turnover (e.g., over 200% annually), and it is anticipated that such portfolio turnover will continue in the future. Securities purchased for the Portfolio will have varying maturities, but under normal circumstances the Portfolio will have an effective dollar weighted average portfolio maturity that is within the range of the average portfolio maturity in the Barclays Capital U.S. Aggregate Bond Index, which range, as of June 30, 2015, was between one and ten years. The weighted average maturity of the Barclays Capital U.S. Aggregate Bond Index as of June 30, 2015 was 7.87 years. The Portfolio may engage in transactions involving instruments such as option or futures contracts, both in order to hedge against fluctuations in the market value of the securities in which the Portfolio invests and to achieve market exposure pending investment and, in the case of asset-backed and similar securities, for investment purposes.

The U.S. Corporate Fixed Income Securities Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 84 of the Prospectus:

Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e. at least 80% of net assets) fixed income securities issued by U.S. corporations. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. In general, the Portfolio invests predominantly in investment grade fixed income securities and will maintain aggregate characteristics similar to the Barclays Capital U.S. Corporate Index. Securities held by the Portfolio will be rated investment-grade or better by one of the established rating agencies or, if not rated by an agency, of comparable credit quality as determined by the Specialist Manager at the time of purchase. Securities held by the Portfolio which are downgraded below investment-grade by all ratings agencies may be retained up to a maximum market value of 5% of the Portfolio. Securities purchased for the Portfolio will have varying maturities, but under normal circumstances the Portfolio will have an effective dollar weighted average portfolio maturity that is within the range of the average portfolio maturity in the Barclays Capital U.S. Corporate Investment Grade Index, which range, as of June 30, 2015, was between one and twenty years. The weighted average maturity of the Barclays Capital U.S. Corporate Investment Grade Index as of June 30, 2015 was 10.59 years. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in investment grade fixed income securities issued by U.S. corporations. The Portfolio may also invest up to 20% of its assets in municipal bonds (i.e., debt securities issued by municipalities and related entities). The Portfolio may invest in fixed income securities of foreign issuers.

The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 89 of the Prospectus:

Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e. at least 80% of net assets) U.S. mortgage and asset backed securities. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio invests predominantly in publicly issued, investment grade U.S. mortgage and asset backed securities and, in general, seeks to maintain aggregate characteristics similar to the Barclays Capital U.S. Securitized Index. The Portfolio will seek to invest in U.S. dollar denominated agency and non-agency mortgage-backed securities backed by loans secured by residential, multifamily and commercial properties including, but not limited to: pass throughs, collateralized mortgage obligations (“CMOs”), real estate mortgage investment conduits (“REMICs”), stripped mortgage-backed securities (“SMBS”), project loans, construction loans, and adjustable rate mortgages. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in mortgage and asset backed securities. The Portfolio may also invest in U.S. Treasury and agency securities. Securities must be rated investment-grade or better by a nationally recognized credit rating agency at the time of purchase or, if not rated by an agency, of comparable credit quality as determined by the Specialist Manager at the time of purchase. The Portfolio may engage in transactions involving instruments such as option or futures contracts both in order to hedge against fluctuations in the market value of the securities in which the Portfolio invests and to achieve market exposure pending investment and, in the case of asset-backed and similar securities, for investment purposes. Securities purchased for the Portfolio will have varying maturities, but under normal circumstances the Portfolio will have an effective dollar weighted average portfolio maturity that is within the range of the average portfolio maturity in the Barclays Capital U.S. Securitized Index, which has a weighted average maturity of 6.84 years as of June 30, 2015 and can vary between three and eight years.

The Short-Term Municipal Bond Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 94 of the Prospectus:

Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e. at least 80% of net assets) in municipal bonds. The policy stated in the foregoing sentence is a fundamental policy and may not be changed without shareholder approval. Municipal bonds are debt securities issued by municipalities and related entities, the interest on which is exempt from Federal income tax so that they will qualify to pay “exempt-interest dividends” (“Municipal Securities”). The Portfolio intends to maintain a dollar-weighted effective average portfolio maturity of no longer than three years. The Portfolio invests primarily in securities that are rated in one of the top four rating categories of a nationally recognized statistical rating organization or, if unrated, that are determined by the Specialist Manager to be of comparable quality. Fixed income securities rated in the fourth highest rating category by a rating agency may have speculative characteristics. The Portfolio does not currently intend to invest in obligations, the interest on which is a preference item for purposes of the Federal alternative minimum tax. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in municipal bonds.

The Intermediate Term Municipal Bond Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 99 of the Prospectus:

Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e., at least 80% of net assets) in municipal bonds. The policy stated in the foregoing sentence is a fundamental policy of the Portfolio and may not be changed without shareholder approval. Municipal bonds are debt securities issued by municipalities and related entities, the interest on which is exempt from Federal income tax so that they will qualify to pay “exempt-interest dividends” (“Municipal Securities”). Municipal Securities purchased for the Portfolio will have varying maturities, but under normal circumstances the Portfolio will have an effective dollar weighted average portfolio maturity that is within the range of the average portfolio maturity in the Barclays Capital 3-15 Year Blend Municipal Bond Index, currently three to fifteen years. Municipal Securities acquired for the Portfolio will generally be rated in one of the three highest rating categories assigned by one of the major independent rating agencies, or are, in the view of the Specialist Manager, deemed to be of comparable quality. The Portfolio is, however, authorized to invest up to 15% of its assets in Municipal Securities that are rated in the fourth highest category and up to 10% of its assets in high yield securities (“junk bonds”). Fixed income securities rated in the fourth highest rating category by a rating agency may have speculative characteristics. Also, the Portfolio is authorized to invest up to 20% of its net assets in taxable instruments. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in municipal securities.

The Intermediate Term Municipal Bond II Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 104 of the Prospectus:

Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e., at least 80% of net assets) in a portfolio of municipal bonds. The policy stated in the foregoing sentence is a fundamental policy of the Portfolio and may not be changed without shareholder approval. Municipal bonds are debt securities issued by municipalities and related entities, the interest on which is exempt from Federal income tax, and 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 and are referred to as “Tax-Exempt Municipal Securities.” The Portfolio invests primarily in securities that are rated in one of the top four rating categories of a nationally recognized statistical rating organization or, if unrated, that are determined by the Specialist Manager to be of comparable quality. Tax Exempt Securities purchased for the Portfolio will have varying maturities, but under normal circumstances the Portfolio will have an effective dollar weighted average portfolio maturity that is within the range of the average portfolio maturity in the Barclays Capital 3-15 Year Blend Municipal Bond Index, currently three to fifteen years. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in municipal securities.

 


Table of Contents

 

The Emerging Markets Portfolio (the “Portfolio”) (From the Supplement filed on July 29, 2016):

On July 29, 2016, RBC Global Asset Management (UK) Limited (“RBC GAM”) was added as a Specialist Manager to the Portfolio pursuant to a Portfolio Management Agreement approved by the shareholders of the Portfolio. The following material supplements the Prospectus dated November 1, 2015 to incorporate information about RBC GAM with respect to the Portfolio.

1. The following replaces the “Annual Operating Expenses” table and accompanying “Example” in the “Fees and Expenses” section on page 56 of the Prospectus:

Annual Operating Expenses

(expenses that you pay each year as a percentage of the value of your investment)

 

Management Fees (based on asset allocations among Specialist Managers, see “Advisory Services – Specialist Managers”)

     0.43

Distribution and/or Service (12b-1) Fees

     0.25

Other Expenses

     0.19

Acquired Fund Fees and Expenses

     0.04

Total Annual Portfolio Operating Expenses

     0.91

Example: This Example is intended to help you compare the cost of investing in the Portfolio with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Portfolio for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes the reinvestment of all dividends and distributions in shares of the Portfolio and that your investment has a 5% return each year and that the Portfolio’s operating expenses remain the same. Although your actual cost may be higher or lower, based on these assumptions, your costs would be:

 

1 Year

   $ 93   

3 Years

   $ 290   

5 Years

   $ 504   

10 Years

   $ 1,120   

2. The following replaces the “Investment Subadvisers” section on page 40 of the Prospectus:

Investment Subadvisers

AllianceBernstein L.P. (“AllianceBernstein”), Cadence Capital Management LLC (“Cadence”) Mellon Capital Management Corporation (“Mellon Capital”), Parametric Portfolio Associates (“Parametric”), Pacific Investment Management Company LLC (“PIMCO”) and RBC Global Asset Management (UK) Limited (“RBC GAM”) are the Specialist Managers for the Portfolio.

3. The following is added after “Parametric” under the “Portfolio Managers” section on page 61 of the Prospectus:

RBC GAM: Philippe Langham, ACA and Laurence Bensafi, CFA, have managed the portion of the Portfolio allocated to RBC since July, 2016.

4. The following replaces the first paragraph of the “Specialist Managers” section under “The Emerging Markets Portfolio” on page 132:

Specialist Managers. A portion of the Portfolio is managed in accordance with an “active management” approach, which involves the buying and selling of securities based upon economic, financial and market analysis and investment judgment. TBCAM, CLIM, Parametric and RBC GAM are currently responsible for implementing the active component of the Portfolio’s investment strategy. Cadence and Mellon Capital also manage a portion of the Portfolio that may be managed using a “passive” or “index” investment approach designed to replicate the composition of the Portfolio’s benchmark index or one or more identifiable subsets or other portions of that index (see “Fund Management,” included later in this Prospectus). The investment selection process for each of these Specialist Managers is described below; further information about the Specialist Managers, individual portfolio managers responsible for day-to-day investment decisions for the Portfolio, and the manner in which the Portfolio’s assets are allocated between them appears in the “Specialist Manager Guide” included later in this Prospectus.

5. The following is added to the Section “More Information About Fund Investments and Risks - The Emerging Markets Portfolio” on page 133:

 

The RBC GAM Investment Selection Process    The RBC GAM Emerging Markets Equity team believes that companies with a sustainably high cash flow return on investment (CFROI®) produce superior returns and seeks to identify and invest in such companies. There are three components RBC GAM looks for when selecting securities for this strategy: 1) Strong management; 2) Quality franchises; and 3) Sustainability. The strategy emphasizes quality and long-term growth at a reasonable price, combining a fundamental bottom-up approach to stock selection with a top-down macroeconomic overlay driven by long-term secular themes.
   RBC GAM generally sells stocks under the following circumstances: 1)The investment case has changed; 2) The valuation has increased to a level that supports realization of the profit; or 3) A better stock has been found.

6. The following replaces “Specialist Managers” section under “The Emerging Markets Portfolio” on page 153:

The Emerging Markets Portfolio – The Portfolio is managed by six Specialist Managers, each of whom is compensated in accordance with a different fee schedule. Although asset allocations and fees payable to the Specialist Managers may vary, the figures assume an anticipated allocation of assets at July 29, 2016 of 42% TBCAM, 0% Cadence, 0% CLIM, 4% Parametric, 42% Mellon Capital, 2% HC Capital and 10% RBC GAM.

7. The following is added to the “Specialist Manager Guide” on page 180 between Pzena Investment Management, LLC and Standish Mellon Asset Management Company LLC:

RBC Global Asset Management (UK) Limited (“RBC GAM”) serves as Specialist Manager for The Emerging Markets Portfolio. RBC GAM is a wholly owned subsidiary of Royal Bank of Canada. RBC GAM has been registered with the SEC as an investment adviser since September, 2013, and has been a portfolio manager of publicly-offered funds since 1998. RBC GAM maintains its offices at Riverbank House, 2 Swan Lane, London, UK, EC4R 3AF. As of March 31, 2016, RBC GAM managed approximately $13 billion in assets.

For its services with respect to the portion of The Emerging Markets Portfolio allocated to RBC GAM from time to time (the “Account”), RBC GAM receives a fee calculated at an annual rate of 0.80% of the first $100 million of Combined Assets; 0.65% of the next $150 million of Combined Assets; and 0.60% of Combined Assets in excess of $250 million. Combined Assets refers to the aggregate of all assets of the Portfolio managed by RBC GAM and any assets of other clients of the Adviser managed by RBC GAM using the same strategy. During the fiscal year ended June 30, 2015, RBC GAM was not allocated assets of The Commodity Returns Strategy Portfolio.

Philippe Langham, ACA, and Laurence Bensafi, CFA, are primarily responsible for the day-to-day management of the portion of the assets of Portfolio allocated to RBC GAM.

Philippe Langham is Senior Portfolio Manager and Head of the Emerging Markets Equity team in London and lead manager for the Emerging Markets Equity and Emerging Markets Small Cap Equity Strategies. Philippe joined RBC GAM in 2009 to establish and lead the Emerging Markets Equity team in London. He has worked in the investment industry since 1992 and prior to joining RBC GAM, Philippe was the Head of Global Emerging Markets at Société Générale Asset Management in London. Previously, Philippe managed the Global Emerging Markets, Asian, Latin American and US portfolios at the Kuwait Investment Office in London, and was Director and Head of Asia and Emerging Markets at Credit Suisse in Zurich. Philippe obtained a BSc in Economics from the University of Manchester in England, and is a Chartered Accountant.

Laurence Bensafi is Senior Portfolio Manager and Deputy Head of Emerging Markets Equity in London and lead portfolio manager for the Emerging Markets Value Equity strategy. Prior to joining RBC GAM in 2013, Laurence was the Head of Aviva Investors’ Emerging Markets team, where she was responsible for managing Global Emerging Markets income funds, and for developing quantitative stock selection and analysis models. Laurence began her investment career as a Quantitative Analyst at Société Générale Asset Management, supporting European and Global Equity portfolio management by developing quantitative models to assist in the portfolio construction and security selection process. In 1997, Laurence obtained a Magistère d’Économiste Statisticien & D.E.S.S. Statistique et Économétrie from Toulouse University in France. Laurence is a CFA charterholder.

8. The following disclosure is added following “Emerging Markets Risk” in the Principal Investment Risks section on page 58 of the Prospectus:

China Risk. In addition to the risks listed above under “Emerging Market Securities,” investing in China presents additional risks including confiscatory taxation, nationalization, exchange control regulations (including currency blockage) and differing legal standards. The Chinese government could, at any time, alter or discontinue economic reform programs implemented since 1978. Chinese authorities may intervene in the China securities market and halt or suspend trading of securities for short or even longer periods of time. Recently, the China securities market has experienced considerable volatility and been subject to relatively frequent and extensive trading halts and suspensions. These trading halts and suspensions have, among other things, contributed to uncertainty in the markets and reduced the liquidity of the securities subject to such trading halts and suspensions, which could include securities held by a Portfolio.

The Fixed Income Opportunity Portfolio (the “Portfolio”) (From the Supplement filed on July 29, 2016): The prospectus is supplemented to reflect the addition of Garrick Bauer in the portfolio managers for the Portfolio as shown below.

1. The following replaces the “Fort Washington” paragraph under the “Portfolio Managers” section of the Investment SubAdvisers, regarding the Portfolio on page 74 of the Prospectus:

Fort Washington: Brendan White and Timothy Jossart have co-managed the portion of the Portfolio allocated to Fort Washington since May, 2012. In 2016, Garrick Bauer also began co-managing alongside White and Jossart.

2. The following replaces the second paragraph of Fort Washington Investment Advisors, Inc. (“Fort Washington”) section of the “Specialist Manager Guide” on page 173 of the Prospectus:

Messrs. White, Jossart, and Bauer are the individuals primarily responsible for the day-to-day management of the portion of the Portfolio’s assets allocated to Fort Washington. Brendan White is Co-Chief Investment Officer and Senior Portfolio Manager for the High Yield strategy. He has led this strategy since its inception. In this role, he also manages the Credit Team and serves on the firm’s Senior Management Team. Mr. White joined the Firm in 1993. Prior to joining Fort Washington he was with Ohio Casualty Corporation where he was an analyst supporting the High Yield and Mortgage Backed Securities portfolios. Mr. White received a BS in Finance from The Ohio State University and an MBA from Xavier University. He is a CFA charter holder. Timothy Jossart is a Vice President, Co-Portfolio Manager and a Senior Credit Analyst focusing on high yield fixed income securities. Timothy joined the firm in 1996 as a member of the Public Equity team before moving to High Yield in 2005. Prior to joining Fort Washington Tim worked for Star Bank in Cincinnati where he was an equity analyst supporting Trust Department investments. Prior to his work at Star Bank, he spent two and a half years as a credit analyst with PNC Bank overseeing corporate credits. Timothy received a BBA in Finance from the University of Wisconsin-Madison. He is a CFA charterholder. Garrick Bauer is an Assistant Vice President, Co-Portfolio Manager and a Senior Credit Analyst focusing on high yield fixed income securities. Garrick joined the firm in 2013. Prior to joining Fort Washington he worked at Wellington Management Company as a credit portfolio manager on several mutual funds. While at Wellington he was also an analyst on the High Yield team following a variety of sectors. Prior to Wellington Management he worked at Summit Investment Partners and PricewaterhouseCoopers. Garrick received his BS in Accounting from Miami University and his Masters in Business Administration from the University of Virginia. He is a CFA charterholder and earned the Certified Public Accountant designation (inactive).

 

 

The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization - Mid Capitalization Equity Portfolio, The Institutional Small Capitalization - Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The International Equity Portfolio, The Institutional International Equity Portfolio and The Emerging Markets Portfolio (From the Supplement Filed on June 15, 2016): On June 14, 2016, the Trust, on behalf of its series, The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization- Mid Capitalization Equity Portfolio, The Institutional Small Capitalization- Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The International Equity Portfolio, The Institutional International Equity Portfolio and The Emerging Markets Portfolio, entered into new investment management agreements with Cadence Capital Management, LLC (“Cadence”) due to a change in control of Cadence’s parent. The new agreements, which are substantially identical to the existing investment management agreements, would take effect upon the anticipated change of control of Cadence’s parent company. No changes in Cadence’s investment management team are expected as a result of the change of control of Cadence’s parent company.

The Emerging Markets Portfolio (the “Portfolio”) (From the Supplement Filed on June 15, 2016): At a meeting held on June 14, 2016, the Board of Trustees (the “Board”) for HC Capital Trust (the “Trust”) (i) approved the engagement of RBC Global Asset Management (“RBC”) as an additional investment advisory organization (“Proposed Specialist Manager”) to manage portions of the assets of The Emerging Markets Portfolio and (ii) recommended approval of a portfolio management agreement between RBC and the Trust, on behalf of the Portfolio (the “Proposed Agreement”) by shareholders of the Portfolio. A meeting of the shareholders of the Portfolio is scheduled to be held on July 29, 2016 for the purpose of approving the Proposed Agreement.

The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization - Mid Capitalization Equity Portfolio, The Institutional Small Capitalization - Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The International Equity Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio and The Fixed Income Opportunity Portfolio (the “Portfolios”) (From the Supplement Filed on June 15, 2016): At a meeting held on June 14, 2016, the Board approved, on behalf of the Portfolios, (i) an additional strategy, known as the Targeted Strategy (as defined below), to be managed by Parametric Portfolio Associates, LLC (“Parametric”) and HC Capital Solutions, the investment adviser to the Portfolios and (ii) new Portfolio Agreements between the Trust and Parametric on behalf of each Portfolio, that include the compensation arrangements applicable to assets managed according to Parametric’s Targeted Strategy. In addition, a new member was added to the Parametric Liquidity Strategy team for each Portfolio and a new member replaced another member of the Parametric Defensive Equity Strategy team for The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio and The Institutional Growth Equity Portfolio. Accordingly, effective, June 15, 2016, the Prospectus is supplemented as follows:

1. The disclosure with respect to Parametric under the heading “Portfolio Managers” for each of The Small Capitalization - Mid Capitalization Equity Portfolio (p.27), The Institutional Small Capitalization - Mid Capitalization Equity Portfolio (p.32), The Real Estate Securities Portfolio (p.38), The Commodity Returns Strategy Portfolio (p.45), The International Equity Portfolio (p.50), The Institutional International Equity Portfolio (p.55), The Emerging Markets Portfolio (p. 61) and The Fixed Income Opportunity Portfolio (p.74) is hereby deleted and replaced with the following:

Parametric (Liquidity Strategy): Justin Henne, CFA, Clint Talmo, CFA and Jason Nelson, CFA have managed the portion of the Portfolio allocated to Parametric’s Liquidity Strategy since March, 2015 and Dane Fickel, Associate Portfolio Manager, has managed the portion of the Portfolio allocated to Parametric’s Liquidity Strategy since June, 2016.

Parametric (Targeted Strategy): Justin Henne, CFA, Tom Lee, CFA, Clint Talmo, CFA, Jason Nelson, CFA, Dane Fickel, Associate Portfolio Manager, Perry Li, Associate Portfolio Manager and Michael Zaslavsky, Associate Portfolio Manager, managed the portion of the Portfolio allocated to Parametric’s Targeted Strategy since June, 2016.

2. The disclosure with respect to The Parametric Investment Selection Process for each of The Small Capitalization - Mid Capitalization Equity Portfolio (p. 118), The Institutional Small Capitalization - Mid Capitalization Equity Portfolio (p. 120), The Real Estate Securities Portfolio (p. 122), The Commodity Returns Strategy Portfolio (p. 124), The International Equity Portfolio (p. 128), The Institutional International Equity Portfolio (p. 131), The Emerging Markets Portfolio (p. 133) and The Fixed Income Opportunity Portfolio (p. 135) is hereby deleted and replaced with the following:

 

The Parametric Investment Selection Process:   

Parametric currently manages assets for the Portfolio using two separate and distinct strategies: “Liquidity Strategy” and “Targeted Strategy”.

 

In selecting investments for that portion of the Portfolio to be managed pursuant to the Liquidity Strategy, Parametric adheres to a strategy that seeks to closely match the performance of the Portfolio’s benchmark index (or other benchmark as specified by the Adviser) through the use of exchange-traded futures contracts, exchange traded funds (ETFs) and closed-end funds. The strategy utilizes a disciplined approach that is implemented in a mechanical manner, and which does not rely on predictive forecasts or market timing when making investment decisions. The Liquidity Strategy seeks to provide returns commensurate with the Portfolio’s stated benchmark index or other benchmark as specified by the Adviser.

 

The Targeted Strategy is the second of a two stage investment process under the direction of the Adviser in which Parametric effects transactions at the direction of the Adviser as set forth in “HC Capital Solutions – Investment Selection Process” shown below. Parametric provides expertise in trade execution, instrument and structure selection. Additionally, Parametric provides customized reporting on position details, liquidity/margin status and adequacy, and performance.

3. The disclosure with respect to Parametric under the heading “Portfolio Managers” for each of The Value Equity Portfolio (p.6), The Institutional Value Equity Portfolio (p. 11), The Growth Equity Portfolio (p. 16) and The Institutional Growth Equity Portfolio (p. 22) is hereby deleted and replaced with the following:

Parametric (Defensive Equity Strategy): Jay Strohmaier, CFA and Alex Zweber, CFA have managed the portion of the Portfolio allocated to Parametric’s Defensive Equity Strategy since July, 2014 and Perry Li, Associate Portfolio Manager, has managed the portion of the Portfolio allocated to Parametric’s Defensive Equity Strategy since June, 2016.

Parametric (Liquidity Strategy): Justin Henne, CFA, Clint Talmo, CFA and Jason Nelson, CFA have managed the portion of the Portfolio allocated to Parametric’s Liquidity Strategy since March, 2015 and Dane Fickel, Associate Portfolio Manager, has managed the portion of the Portfolio allocated to Parametric’s Liquidity Strategy since June, 2016.

Parametric (Targeted Strategy): Justin Henne, CFA, Tom Lee, CFA, Clint Talmo, CFA, Jason Nelson, CFA, Dane Fickel, Associate Portfolio Manager, Perry Li, Associate Portfolio Manager and Michael Zaslavsky, Associate Portfolio Manager, have managed the portion of the Portfolio allocated to Parametric’s Targeted Strategy since June, 2016.

4. The disclosure with respect to The Parametric Investment Selection Process for each of The Value Equity Portfolio (p. 111), The Institutional Value Equity Portfolio (p. 112), The Growth Equity Portfolio (p. 114) and The Institutional Growth Equity Portfolio (p. 116) is hereby deleted and replaced with the following:

 

The Parametric Investment Selection Process:   

Parametric currently manages assets for the Portfolio using three separate and distinct strategies: “Defensive Equity Strategy”, “Liquidity Strategy” and “Targeted Strategy”.

 

Parametric Defensive Equity Strategy uses equity index exposure (through exchanged traded funds and futures contracts), US Treasury bills, equity index call options and equity index put options. The strategy utilizes a rules-based approach that is implemented in a mechanical manner, and which does not rely on predictive forecasts or market timing when making investment decisions. The defensive equity strategy seeks to provide attractive relative returns compared to the S&P 500 over a full market cycle, while providing meaningful protection in down markets. Over shorter term time periods, the strategy is designed to deliver superior relative performance in modestly higher, flat and down markets, while trailing the index in strong markets.

 

In selecting investments for that portion of the Portfolio to be managed pursuant to the Liquidity Strategy, Parametric adheres to a strategy that seeks to closely match the performance of the Portfolio’s benchmark index (or other benchmark as specified by the Adviser) through the use of exchange-traded futures contracts, exchange traded funds (ETFs) and closed-end funds. The strategy utilizes a disciplined approach that is implemented in a mechanical manner, and which does not rely on predictive forecasts or market timing when making investment decisions. The Liquidity Strategy seeks to provide returns commensurate with the Portfolio’s stated benchmark index or other benchmark as specified by the Adviser.

 

The Targeted Strategy is the second of a two stage investment process under the direction of the Adviser in which Parametric effects transactions at the direction of the Adviser as set forth in “HC Capital Solutions – Investment Selection Process” shown below. Parametric provides expertise in trade execution, instrument and structure selection. Additionally, Parametric provides customized reporting on position details, liquidity/margin status and adequacy, and performance.

5. The following is added to the disclosure under the heading “More Information About Fund Investments and Risks” with respect to each of The Value Equity Portfolio (p. 111), The Institutional Value Equity Portfolio (p. 112), The Growth Equity Portfolio (p. 114), The Institutional Growth Equity Portfolio (p. 116), The Small Capitalization - Mid Capitalization Equity Portfolio (p. 118), The Institutional Small Capitalization - Mid Capitalization Equity Portfolio (p. 120), The Real Estate Securities Portfolio (p. 122), The Commodity Returns Strategy Portfolio (p. 124), The International Equity Portfolio (p. 128), The Institutional International Equity Portfolio (p. 131), The Emerging Markets Portfolio (p. 133) and The Fixed Income Opportunity Portfolio (p. 135):

 

The HC Capital Solutions Investment Selection Process:    The Adviser’s investment process is to determine what asset classes, market sectors, industries or countries offer the highest compensation for risk in the form of excess expected returns relative to a policy portfolio. The methodology for deriving expected returns is based on long-term normalized earnings in order to strip out the cyclical or transitory fluctuations. When the long-term, normalized earnings compared to the going-in price represents a substantial premium to the normal historical yield premium, the Adviser uses its professional judgment as to the optimal weighting in the Portfolio, taking into consideration the risk of impairment, the asset’s likely co-movement with other assets in the Portfolio and the contribution of the asset to the risk/reward ratio in the Portfolio’s total asset mix. When the asset is judged to considerably increase expected return or reduce the overall risk for the Portfolio, the Adviser seeks to implement the exposure with the most efficient instrument – including futures on indexes, customized tilted indexes and ETFs – when taking into account the trading costs, management fees, and basis risk of the instrument with the intended exposure. The Adviser then directs Parametric to establish the desired exposure relying on their trading expertise to execute on the most advantageous terms available in the given timeframe. The Adviser’s decision to reverse the exposure is predicated on the same considerations – expected risk/return contribution.

6. The following replaces the “Parametric Portfolio Associates LLC” section under the “Specialist Manager Guide” on page 179:

Parametric Portfolio Associates LLC (“Parametric”) serves as Specialist Manager for The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization – Mid Capitalization Equity Portfolio, The Institutional Small Capitalization – Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The International Equity Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio and The Fixed Income Opportunity Portfolio. Parametric is a majority-owned subsidiary of Eaton Vance Corporation (“Eaton Vance”). Eaton Vance through its wholly owned affiliates Eaton Vance Acquisitions (“EVA”) and EVA Holdings LLC, maintains voting control of Parametric and Profit and Capital interests of 92% and 97%, respectively. Parametric Portfolio LP (“PPLP”) maintains an indirect Profit and Capital ownership interest in Parametric of 8% and 3%, respectively. The business address of Eaton Vance, EVA and EVA Holdings, LLC is Two International Place, Boston, MA 02110. The business address of Parametric and PPLP is 1918 Eighth Ave, Seattle, WA 98101. As of June 30, 2015, Parametric and its subsidiary had approximately $146.1 billion in assets under management.

For its services to The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization – Mid Capitalization Equity Portfolio, The Institutional Small Capitalization – Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The International Equity Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio and The Fixed Income Opportunity Portfolio (the “Portfolios”), Parametric receives a fee from each Portfolio, calculated daily and payable monthly in arrears, at the annual rate of 0.15% of the first $50 million of the Combined Liquidity Assets (as defined below) committed to Parametric’s Liquidity Strategy; 0.10% of the next $100 million of the Combined Liquidity Assets and 0.05% on Combined Liquidity Assets over $150 million. The term “Combined Liquidity Assets” means the sum of the net assets of that portion of each of the Portfolios allocated to Parametric from time-to-time in their Liquidity Strategy. Parametric is also be entitled to receive a flat fee of $10,000 per year per Portfolio, provided that 1/12 of such fee related to any given Portfolio will be waived with respect to each calendar month during which no assets of such Portfolio were allocated to Parametric for investment in their Liquidity Strategy. Under the terms of separate portfolio management agreements, for its services to The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio and The Institutional Growth Equity Portfolio, Parametric is also entitled to receive a separate fee at the annual rate of 0.35% of the first $50 million of the Combined Defensive Assets committed to the Defensive Equity Strategy and 0.25% on Combined Defensive Assets over $50 million. Combined Defensive Assets means the sum of the net assets of that portion of each of The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio and The Institutional Growth Equity Portfolio allocated to Parametric from time-to-time for investment using the Defensive Equity Strategy. Under the terms of separate portfolio management agreements, for its services to The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization – Mid Capitalization Equity Portfolio, The Institutional Small Capitalization – Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The International Equity Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio and The Fixed Income Opportunity Portfolio, Parametric receives a fee from each Portfolio, calculated daily and payable monthly in arrears, at the annual rate of 0.05% of the Targeted Strategy Assets (as defined below) committed to Parametric’s Targeted Strategy. The term “Targeted Strategy Assets” means the sum of the net assets of that portion of each of the Portfolios allocated to Parametric from time-to-time in their Targeted Strategy. Parametric shall also be entitled to receive a flat fee of $5,000 per year, provided that such fee will be waived with respect to each calendar year during which no Portfolio assets were allocated to the Targeted Strategy Assets. During the fiscal year ended June 30, 2015, Parametric received fees of 0.08%, 0.07%, 0.07%, 0.07%, 0.33%, 0.24%, 0.31%, 0.08%, 0.07%, 0.06%, 0.31%, and 0.10% of the average daily net assets for the portion of The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization – Mid Capitalization Equity Portfolio, The Institutional Small Capitalization – Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The International Equity Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio and The Fixed Income Opportunity Portfolio, respectively.

Mr. Jay Strohmaier, Mr. Alex Zweber and Mr. Perry Li are primarily responsible for the day-to-day management of the portion of each the assets of each of The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio and The Institutional Growth Equity Portfolio allocated to Parametric for investment in its Defensive Equity strategy. Mr. Strohmaier, Senior Portfolio Manager, leads a team of investment professionals responsible for designing, trading and managing overlay portfolios with an emphasis on Defensive Equity, hedging, and other asymmetric strategies. Mr. Strohmaier joined Parametric upon Parametric’s acquisition of Clifton in 2012, and prior to that acquisition was employed by Clifton since 2009. Before joining Clifton in 2009, Mr. Strohmaier worked for Cargill, Peregrine Capital Management and Advantus Capital Management where his responsibilities included research, portfolio management, trading, marketing and client service. He has over 25 years of investment experience. Mr. Strohmaier holds a BS degree in Agricultural Economics from Washington State University and MS in Applied Economics from the University of Minnesota. Mr. Zweber, CFA, Portfolio Manager, joined Parametric in 2012 upon Parametric’s acquisition of Clifton, and prior to the acquisition worked at Clifton in various investment capacities for over eight years. Mr. Zweber holds a BA in Economics from Macalester College. Mr. Li is responsible for trading and assisting with day-to-day management of Parametric’s options-based investment strategies, including the Defensive Equity and other proprietary strategies. He is an Associate Portfolio Manager at Parametric. Prior to joining Parametric in 2014, Mr. Li worked for CHS Inc. from 2011 to 2014 , where he managed commodity futures and options portfolios and conducted research on macro economy and derivative strategies. Mr. Li earned a B.S. in Statistics from the Sun Yat-Sen University and a M.S. in Financial Mathematics from the University of Minnesota. He holds a Financial Risk Manager certificate from the Global Association of Risk Professionals.

Mr. Justin Henne, Mr. Clint Talmo, Mr. Jason Nelson and Mr. Dane Fickel are primarily responsible for the day-to-day management of the portion of each Portfolio’s assets allocated to Parametric for investment in its Liquidity Strategy. As Managing Director – Customized Exposure Management, Mr. Henne leads the investment team responsible for the implementation and enhancement of Parametric’s Customized Exposure Management product. Mr. Henne joined Parametric upon Parametric’s acquisition of Clifton in 2012, and prior to that acquisition was employed by Clifton since 2004. Mr. Henne holds a BA in Financial Management from the University of St. Thomas. He is a CFA charterholder and a member of the CFA Society of Minnesota. Mr. Talmo is responsible for designing, trading, and managing overlay portfolios with an emphasis on options and OTC swaps. Prior to joining Parametric in 2014, Clint was a Partner at Aerwulf Asset Management from 2012 to 2014. Prior to that, he worked for Interlachen Capital Group and EBF & Associates where his responsibilities at each firm included research, trading, and portfolio management. He earned a B.S. in Finance from the University of Colorado. He is a CFA charterholder and a member of the CFA Society of Minnesota. Mr. Nelson is an Associate Portfolio Manager at Parametric. Prior to joining Parametric in 2014, Mr. Nelson worked for Marquette Asset Management from 2012 to 2014, where his responsibilities included asset allocation, equity research, and trading, and before that time worked as an Investment Analyst at Clifton. Mr. Nelson earned a B.S. in Economics and Finance from Minnesota State University, Mankato. He is a CFA charterholder and a member of the CFA Society of Minnesota. Mr. Fickel is responsible for trading client accounts as well as creating and analyzing daily investment management reports with an emphasis in OTC instruments. He is an Associate Portfolio Manager at Parametric. Prior to joining Parametric in 2015, Mr. Fickel worked for Russell Investments from 2010 to 2015 and Morgan Stanley from 2009 to 2010, where his responsibilities included trading, portfolio management and client services. Mr. Fickel earned a B.A. in Economics from the University of Washington.

Mr. Tom Lee, Mr. Jay Strohmaier, Mr. Alex Zweber, Mr. Justin Henne, Mr. Clint Talmo, Mr. Jason Nelson, Mr. Dane Fickel, Mr. Perry Li and Mr. Michael Zaslavsky are primarily responsible for the day-to-day management of the portion of each Portfolio’s assets allocated to Parametric for investment in its Targeted Strategy. Mr. Lee, Managing Director, Investment Strategy and Research, has oversight responsibility for all investment strategies managed out of Parametric’s Minneapolis investment center. Mr. Lee joined Parametric upon Parametric’s acquisition of The Clifton Group Investment Management Company (“Clifton”) in 2012, and prior to that acquisition was employed by Clifton since 1994. He earned a B.S. in economics and an MBA in finance from the University of Minnesota. He is a CFA charterholder and a member of the CFA Society of Minnesota. Mr. Strohmaier, Senior Portfolio Manager, leads a team of investment professionals responsible for designing, trading and managing overlay portfolios with an emphasis on Defensive Equity, hedging, and other asymmetric strategies. Mr. Strohmaier joined Parametric upon Parametric’s acquisition of Clifton in 2012, and prior to that acquisition was employed by Clifton since 2009. Before joining Clifton in 2009, Mr. Strohmaier worked for Cargill, Peregrine Capital Management and Advantus Capital Management where his responsibilities included research, portfolio management, trading, marketing and client service. He has over 25 years of investment experience. Mr. Strohmaier holds a BS degree in Agricultural Economics from Washington State University and MS in Applied Economics from the University of Minnesota. Mr. Zweber, CFA, Portfolio Manager, joined Parametric in 2012 upon Parametric’s acquisition of Clifton, and prior to the acquisition worked at Clifton in various investment capacities for over eight years. Mr. Zweber holds a BA in Economics from Macalester College. Mr. Justin Henne, As Managing Director – Customized Exposure Management, Mr. Henne leads the investment team responsible for the implementation and enhancement of Parametric’s Customized Exposure Management product. Mr. Henne joined Parametric upon Parametric’s acquisition of Clifton in 2012, and prior to that acquisition was employed by Clifton since 2004. Mr. Henne holds a BA in Financial Management from the University of St. Thomas. He is a CFA charterholder and a member of the CFA Society of Minnesota. Mr. Talmo is responsible for designing, trading, and managing overlay portfolios with an emphasis on options and OTC swaps. Prior to joining Parametric in 2014, Mr. Talmo was a Partner at Aerwulf Asset Management from 2012 to 2014. Prior to that, he worked for Interlachen Capital Group and EBF & Associates where his responsibilities at each firm included research, trading, and portfolio management. He earned a B.S. in Finance from the University of Colorado. He is a CFA charterholder and a member of the CFA Society of Minnesota. Mr. Nelson is an Associate Portfolio Manager at Parametric. Prior to joining Parametric in 2014, Mr. Nelson worked for Marquette Asset Management from 2012 to 2014, where his responsibilities included asset allocation, equity research, and trading, and before that time worked as an Investment Analyst at Clifton. Mr. Nelson earned a B.S. in Economics and Finance from Minnesota State University, Mankato. He is a CFA charterholder and a member of the CFA Society of Minnesota. Mr. Fickel is responsible for trading client accounts as well as creating and analyzing daily investment management reports with an emphasis in OTC instruments. He is an Associate Portfolio Manager at Parametric. Prior to joining Parametric in 2015, Mr. Fickel worked for Russell Investments from 2010 to 2015 and Morgan Stanley from 2009 to 2010, where his responsibilities included trading, portfolio management and client services. Mr. Fickel earned a B.A. in Economics from the University of Washington. Mr. Li is responsible for trading and assisting with day-to-day management of Parametric’s options-based investment strategies, including the Defensive Equity and other proprietary strategies. He is an Associate Portfolio Manager at Parametric. Prior to joining Parametric in 2014, Mr. Li worked for CHS Inc. from 2011 to 2014, where he managed commodity futures and options portfolios and conducted research on macro economy and derivative strategies. Mr. Li earned a B.S. in Statistics from the Sun Yat-Sen University and a M.S. in Financial Mathematics from the University of Minnesota. He holds a Financial Risk Manager certificate from the Global Association of Risk Professionals. Mr. Zaslavsky is responsible for trading and assisting with day-to-day management of Parametric’s options-based investment strategies, including the Defensive Equity and other proprietary strategies. He is an Associate Portfolio Manager at Parametric. Prior to joining Parametric in 2015, Mr. Zaslavsky worked for Citigroup’s proprietary options trading and market-making group from 2009 to 2015, where he specialized in volatility modeling, portfolio management and derivatives arbitrage. He earned a B.S. in Finance from Bowling Green State University.

The Institutional Value Equity Portfolio and The Institutional Growth Equity Portfolio (the “Portfolios”) (From the Supplement Filed on June 15, 2016): The prospectus is supplemented to reflect the removal of Mohsen Fahmi in the portfolio managers for the Portfolios as shown below.

1. The following replaces the “PIMCO” paragraph under the “Portfolio Managers” section of the Investment SubAdvisers, regarding the Institutional Value Equity Portfolio on page 11 of the Prospectus:

PIMCO: Sudi Mariappa has managed the portion of the Portfolio allocated to PIMCO since January, 2015

2. The following replaces the “PIMCO” paragraph under the “Portfolio Managers” section of the Investment SubAdvisers, regarding the Institutional Growth Equity Portfolio on page 22 of the Prospectus:

PIMCO: Sudi Mariappa has managed the portion of the Portfolio allocated to PIMCO since January, 2015

3. The following replaces the second paragraph of Pacific Investment Management Company LLC (“PIMCO”) section of the “Specialist Manager Guide” on page 178 of the Prospectus:

For its services to The Institutional Value Equity and The Institutional Growth Equity Portfolios, PIMCO receives an annual fee of 0.25% of that portion of each Portfolio’s assets allocated to PIMCO from time to time. During the fiscal year ended June 30, 2015, PIMCO received a fee of 0.25% of the average daily net assets of the portion of The Institutional Growth Equity Portfolio allocated to PIMCO. During the fiscal year ended June 30, 2015, PIMCO was not allocated assets of The Institutional Value Portfolio. Sudi Mariappa is primarily responsible for the day-to-day management of that portion of the Portfolios allocated to PIMCO. Mr. Mariappa is a managing director and generalist portfolio manager in the Newport Beach office. He rejoined PIMCO in 2014 from GLG, a London-based hedge fund, where he was a managing director, developing and managing fixed income funds. Previously at PIMCO, Mr. Mariappa was a managing director and head of global portfolio management. He also served as a senior advisor to PIMCO’s portfolio management group from 2009-2011. Prior to joining PIMCO in 2000, he was a managing director for Merrill Lynch in Tokyo, overseeing Japanese government bond and swap derivative trading. He has 28 years of investment experience and holds an MBA, as well as a bachelor’s degree in chemical engineering, from Cornell University.

 

 

The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Short-Term Municipal Bond Portfolio and The Intermediate Term Municipal Bond Portfolio II (the “Portfolios”) (From the Supplement Filed on May 2, 2016)

The prospectus is supplemented to reflect a change in the portfolio managers for each of the Portfolios as shown below.

1. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding AllianceBernstein L.P. (“AllianceBernstein”), on page 6 of the Prospectus with respect to The Value Equity Portfolio:

AllianceBernstein: Gerry Paul has managed the portion of the Portfolio allocated to AllianceBernstein since September, 2009, and Cem Inal has co-managed the portion of the Portfolio allocated to AllianceBernstein since March, 2016.

2. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding AllianceBernstein, on page 11 of the Prospectus with respect to The Institutional Value Equity Portfolio:

AllianceBernstein: Gerry Paul has managed the portion of the Portfolio allocated to AllianceBernstein since September, 2009, and Cem Inal has co-managed the portion of the Portfolio allocated to AllianceBernstein since March, 2016.

3. The following replaces the third and fourth paragraphs of the AllianceBernstein section of the “Specialist Manager Guide” on page 166 of the Prospectus:

Gerry Paul and Cem Inal are responsible for making day-to-day investment decisions for that portion of The Value Equity and Institutional Value Equity Portfolios allocated to AllianceBernstein. Mr. Paul was appointed CIO of the North American Value Equity Investment Policy Group and Co-CIO of U.S. Large Cap Equities in 2009. Prior to this appointment, Mr. Paul was the Global Head of Diversified Value Services, CIO – Advanced Value Fund, CIO – Small and Mid-Capitalization, and Co-CIO – Real Estate Investments. Mr. Paul joined Bernstein in 1987 as a research analyst covering the automotive industry. He earned a BS from the University of Arizona and an MS from the Sloan School of Management of the Massachusetts Institute of Technology.

Mr. Inal was appointed Portfolio Manager of US Large Cap Value Equities in March 2016. He is also a Senior Research Analyst and leader of the technology sector. Previously, Mr. Inal co-managed the International Small Cap Value service from its inception in 2014 until 2016. Before joining the firm in 2003 as a research analyst, Mr. Inal was a vice president at fusionOne, a communications software provider. Prior to that, he was an engagement manager at McKinsey & Company and a research engineer at Mitsubishi Electric. Mr. Inal holds a BSE in electrical engineering from Princeton University and an MBA in financial engineering from Cornell University.

4. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding Breckinridge Capital Advisors, Inc. (“Breckinridge”) on page 98 of the Prospectus with respect to The Short-Term Municipal Bond Portfolio:

Breckinridge: Peter Coffin and David Madigan have co-managed the Portfolio since March, 2006. Matthew Buscone has co-managed the Portfolio since July, 2008. Ji Young Jung and Sara Chanda have co-managed since March, 2013 and December, 2013, respectively. Jeff Glenn and Eric Haase have co-managed the Portfolio since May, 2015 and May, 2016, respectively.

5. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding Breckinridge on page 108 of the Prospectus with respect to The Short-Term Municipal Bond Portfolio:

Breckinridge: Peter Coffin, David Madigan and Matthew Buscone have co-managed the Portfolio since March, 2010. Ji Young Jung and Sara Chanda have co-managed since March, 2013 and December, 2013, respectively. Jeff Glenn and Eric Haase have co-managed the Portfolio since May, 2015 and May, 2016, respectively.

6. The following replaces the third paragraph of the Breckinridge section of the “Specialist Manager Guide” on page 168 of the Prospectus:

The portfolio management team is led by a team of investment professionals at Breckinridge, including the following individuals who are jointly and primarily responsible for making day-to-day investment decisions: Peter B. Coffin, President of Breckinridge, David Madigan, Chief Investment Officer at Breckinridge, Matthew Buscone, Portfolio Manager at Breckinridge, Ji Young Jung, Portfolio Manager at Breckinridge, Sara Chanda, Portfolio Manager at Breckinridge, Jeff Glenn, Portfolio Manager at Breckinridge and Eric Haase, Portfolio Manager at Breckinridge.

Prior to founding Breckinridge in 1993, Mr. Coffin was a Senior Vice-President and portfolio manager with Massachusetts Financial Services, where he was also a member of the firm’s Fixed Income Policy Committee.

Mr. Madigan joined Breckinridge in 2003. He was Executive Vice-President at Thomson Financial and was a portfolio manager at Banker’s Trust and Prudential Insurance (managing single state municipal bond funds). Mr. Madigan also has served as Chief Municipal Strategist for Merrill Lynch.

Mr. Buscone joined Breckinridge in 2002. He has been a Portfolio Manager since 2008, after having served as a trader at Breckinridge. Prior to joining Breckinridge, he was a trader at Mellon Private Asset Management, and a portfolio manager at David L. Babson from 1992 to 2002.

Mr. Glenn, CFA, joined Breckinridge in 2012. He has been a Portfolio Manager since 2015, after having served as a trader since 2012. Prior to joining Breckinridge, Mr. Glenn was an Associate Portfolio Manager/ Analyst at Brandes Investment Partners from 2002 to 2012, and an Associate Director at Banc One Markets responsible for investment grade utility credits from 2000 to 2002. Mr. Glenn began his career at Old Republic Asset Management as an Investment Analyst.

Ms. Chanda joined Breckinridge in 2010. She has been a Portfolio Manager since 2013, after spending her first few years at Breckinridge as a trader. Ms. Chanda was a Vice President and trader at Eaton Vance Management from 1999 to 2003, where she was responsible for trading various specialty state mutual funds and overseeing the adviser’s separately managed account trading and operations. Ms. Chanda also was responsible for municipal bond trading at Fidelity Investments. Ms. Chanda began her career at State Street Bank & Trust Company.

Ms. Jung, CFA, joined Breckinridge in 2010. She has been a Portfolio Manager since 2013 after spending her prior time at Breckinridge as a credit analyst and then a portfolio analyst. Prior to joining Breckinridge, Ms. Jung worked as an analyst for Assured Guaranty from 2009 to 2010 and for Financial Security Assurance from 2006 to 2009.

Mr. Haase, CFA, joined Breckinridge in 2016. Previously, Mr. Haase was employed at SCS Financial LLC from 2005 to 2016, where he served in various roles including trader. His most recent role at SCS was a Portfolio Manager focusing on tax-exempt separate accounts and conducting manager research across fixed income sectors.

 

 

The Commodity Returns Strategy Portfolio (From the Supplement Filed on March 29, 2016):

At a meeting held on March 8, 2016, the Board of Trustees (the “Board”) for HC Capital Trust (the “Trust”) approved the engagement of Vaughan Nelson Investment Management, L.P. (“Vaughan Nelson”) as an investment advisory organization (“Specialist Manager”) to manage portions of the assets of The Commodity Returns Strategy Portfolio. Accordingly, effective March 29, 2016, the Prospectus is supplemented as shown below and related disclosures amended accordingly.

1. The following replaces the “Investment Subadvisers” section on page 45 of the Prospectus:

Investment Subadvisers

Cadence Capital Management LLC (“Cadence”), Mellon Capital Management Corporation (“Mellon Capital”), Parametric Portfolio Associates (“Parametric”), Pacific Investment Management Company LLC (“PIMCO”), Vaughan Nelson Investment Management, L.P. (“Vaughan Nelson”) and Wellington Management Company LLP (“Wellington Management”) are the Specialist Managers for the Portfolio.

2. The following is added to the “Portfolio Managers” section on page 45 of the Prospectus:

Vaughan Nelson: Steve Henriksen, Charles Ellis, Portfolio Manager and Blanca Garza-Bianco have co-managed the portion of the Portfolio allocated to Vaughan Nelson since March 2016.

3. The following replaces “Specialist Managers” introductory paragraph under “The Commodity Returns Strategy Portfolio” on page 123:

Specialist Managers. A portion of the Portfolio is managed in accordance with an “active management” approach, which involves the buying and selling of securities based upon economic, financial and market analysis and investment judgment. Parametric, PIMCO, Vaughan Nelson and Wellington Management are currently responsible for implementing the active component of the Portfolio’s investment strategy. The remaining portion of the Portfolio is managed using “passive” or “index” investment approaches that are designed to approximate as closely as practicable, before expenses, the performance of the Portfolio’s benchmark index or one or more identifiable subsets or other portions of that index (see “Fund Management,” included later in this Prospectus). Cadence and Mellon Capital are currently responsible for implementing the passive component of the Portfolio’s investment strategy. Further information about the Specialist Managers, individual portfolio managers responsible for day-to-day investment decisions for the Portfolio, and the manner in which the Portfolio’s assets are allocated among them appears in the “Specialist Manager Guide” included later in this Prospectus.

4. The following is added under “More Information About Fund Investments and Risks—The Commodity Returns Strategy Portfolio; Specialist Managers” beginning on page 125:

 

The Vaughan Nelson Investment Selection Process    In making investment decisions for the Portfolio, Vaughan Nelson employs bottom-up fundamental analysis and achieves flexibility in fixed income portfolio construction through sector rotation, duration/yield curve positioning and opportunistic trading efficiencies to produce a value-oriented portfolio of energy/commodity sector fixed income securities. Vaughan Nelson tries to emphasize capital preservation relative to other opportunities within its investment universe and, therefore, focuses on companies’ balance sheets, short-term liquidity and asset bases. The sell discipline is driven by a combination of factors, including the realization of the investment objective, new risks materializing, credit quality deterioration or a better relative value opportunity is uncovered.


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5. The following replaces “The Commodity Returns Strategy Portfolio” paragraph under “Advisory Services-Specialist Managers” on page 151:

The Commodity Returns Strategy Portfolio – The Portfolio is managed by six Specialist Managers, each of whom is compensated in accordance with a different fee schedule. Although asset allocations and fees payable to the Specialist Managers may vary, the figures assume an estimated allocation of assets at March 29, 2016 of 28% Wellington Management Global Natural Resources strategy, 17% Wellington Management Commodity strategy, 3% Parametric, 16% PIMCO, 0% Cadence, 8% Vaughan Nelson and 28% Mellon Capital.

6. The following is added as a new section in the “Specialist Manager Guide” beginning before the last two paragraphs on page 182:

Vaughan Nelson Investment Management, L.P. (“Vaughan Nelson”) serves as a Specialist Manager of The Commodity Returns Strategy Portfolio. Vaughan Nelson is an indirect wholly-owned subsidiary of Natixis Global Asset Management SA, a French investment banking/financial services firm, of which a minority share of ownership is publicly traded on the Euronext exchange in Paris. Vaughan Nelson’s headquarters are located at 600 Travis Street, Suite 6300, Houston, Texas 77002. Founded in 1970, Vaughan Nelson is a registered investment adviser which has approximately $12.5 billion in assets under management as of December 31, 2015.

For its services with respect to the portion of The Commodity Returns Strategy Portfolio allocated to Vaughan Nelson from time to time (the “Account”), Vaughan Nelson shall receive a fee calculated at an annual rate and payable quarterly in arrears based on the Average Quarterly Net Assets of the Combined Assets (as defined below) of 0.35% of the first $25 million of the Combined Assets, 0.25% of the next $75 million of Combined Assets and 0.20% of the Combined Assets exceeding $100 million. For purposes of calculating fees, the term “Combined Assets” shall mean the sum of (i) the net assets of the Account; and (ii) the net assets of each other investment advisory account for which the Adviser serves as investment adviser and for which Vaughan Nelson provides portfolio management services (“Other Hirtle Accounts”) using the same strategies as employed for the Account. “Average Quarterly Net Assets” shall mean the average of the average daily net asset values of the Account and/or the average of the net asset values of the Other Hirtle Accounts, as the case may be, as of the last business day of each of the three months in the calendar quarter. During the fiscal year ended June 30, 2015, Vaughan Nelson was not allocated assets of The Commodity Returns Strategy Portfolio.

Day-to-day investment decisions for The Commodity Returns Strategy Portfolio are the responsibility of Steve Henriksen, Senior Portfolio Manager/ Director -Fixed Income Investments of Vaughan Nelson, Charles Ellis, Portfolio Manager and Blanca Garza-Bianco, Portfolio Manager, each a member of the Vaughan Nelson Fixed Investment team. Mr. Henriksen joined Vaughan Nelson in 1994. He received a B.A. from Louisiana State University and has over 33 years of investment management and research experience. Mr. Ellis joined Vaughan Nelson in 2003. He received a B.B.A. from Texas Tech University and has over 41 years of investment management and research experience. Ms. Garza-Bianco joined Vaughan Nelson in 1998. She received a B.A. from the University of Houston and an M.B.A. from the University of St. Thomas and has over 23 years of investment management and research experience.

The Core Fixed Income Portfolio, The Fixed Income Opportunity Portfolio, The U.S. Government Fixed Income Securities Portfolio, The Inflation Protected Securities Portfolio, The U.S. Corporate Fixed Income Securities Portfolio and The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio (the “Portfolios”) (From the Supplement Filed on March 29, 2016):

The prospectus is supplemented to reflect a change in the portfolio managers for each of the Portfolios as shown below.

1. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding Mellon Capital Management Corporation (“Mellon Capital”) on page 67 of the Prospectus with respect to The Core Fixed Income Portfolio:

Mellon Capital: David C. Kwan and Gregg Lee have co-managed the portion of the Portfolio allocated to Mellon Capital since December, 2010 and Paul Benson has co-managed the portion of the Portfolio allocated to Mellon Capital since March 2016.

2. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding Mellon Capital Management Corporation (“Mellon Capital”) on page 74 of the Prospectus with respect to The Fixed Income Opportunity Portfolio:

Mellon Capital: David Kwan, John DiRe, Manual Hayes and Stephanie Shu have co-managed the portion of the Portfolio allocated to Mellon Capital since August, 2013 and Paul Benson has co-managed the portion of the Portfolio allocated to Mellon Capital since March 2016.


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3. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding Mellon Capital Management Corporation (“Mellon Capital”) on page 78 of the Prospectus with respect to The U.S. Government Fixed Income Securities Portfolio:

Mellon Capital: David C. Kwan and Gregg Lee have co-managed the Portfolio since December, 2010 and Paul Benson has co-managed the Portfolio since March 2016.

4. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding Mellon Capital Management Corporation (“Mellon Capital”) on page 83 of the Prospectus with respect to The Inflation Protected Securities Portfolio:

Mellon Capital: David C. Kwan, CFA and Wyatt Cerny have co-managed the Portfolio since the Portfolio’s inception in February 2014 and Paul Benson has co-managed the Portfolio since March 2016.

5. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding Mellon Capital Management Corporation (“Mellon Capital”) on page 88 of the Prospectus with respect to The U.S. Corporate Fixed Income Securities Portfolio:

Mellon Capital: David C. Kwan, John DiRe, and Manuel Hayes have co-managed the portion of the Portfolio allocated to Mellon Capital since August 2013 and Paul Benson has co-managed the portion of the Portfolio allocated to Mellon Capital since March 2016.

6. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding Mellon Capital Management Corporation (“Mellon Capital”) on page 93 of the Prospectus with respect to The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio:

Mellon Capital: Mr. David C. Kwan and Mr. Gregg Lee have co-managed the Portfolio since December, 2012 and Paul Benson has co-managed the Portfolio since March 2016.

7. The following replaces the Mellon Capital Management Corporation section of the “Specialist Manager Guide” on page 175 of the Prospectus:

Mellon Capital Management Corporation (“Mellon Capital”) serves as a Specialist Manager for The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization—Mid Capitalization Equity Portfolio, The Institutional Small Capitalization—Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The International Equity Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio, The Core Fixed income Portfolio, The Fixed Income Opportunity Portfolio, The Inflation Protected Securities Portfolio and The U.S. Corporate Fixed Income Securities Portfolio. Mellon Capital, which was organized as a Delaware corporation in 1983, is headquartered at 50 Fremont Street, Suite 3900, San Francisco, CA 94105. Mellon Capital is a wholly-owned indirect subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”).

For its services to The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization—Mid Capitalization Equity Portfolio and The Institutional Small Capitalization—Mid Capitalization Equity Portfolio, Mellon Capital receives a fee from each Portfolio calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it, at an annual rate of 0.065% so long as the aggregate assets allocated to Mellon Capital for all of its passive equity mandates (including accounts for other clients of the Adviser and certain of its affiliates besides the Trust) exceed $2 billion. Should these aggregate assets fall below $2 billion, the fee will be calculated at an annual rate of 0.075%. During the fiscal year ended June 30, 2015, Mellon Capital received fees of 0.065% of the average daily net assets for each portion of The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization—Mid Capitalization Equity Portfolio and The Institutional Small Capitalization—Mid Capitalization Equity Portfolio allocated to Mellon Capital. Mellon Capital did not manage any assets of The Value Equity Portfolio and The Institutional Value Equity Portfolio during the fiscal year ended June 30, 2015.

For its services to The Real Estate Securities Portfolio and The Commodity Returns Strategy Portfolio, Mellon Capital receives a fee from each Portfolio calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it, at an annual rate of 0.10% so long as the aggregate assets allocated to Mellon Capital for all of its passive equity mandates (including accounts for other clients of the Adviser and certain of its affiliates besides the Trust) exceed $2 billion. Should these aggregate assets fall below $2 billion, the fee will be calculated at an annual rate of 0.11%. During the fiscal year ended June 30, 2015, Mellon Capital received fees of 0.10% of the average daily net assets for the portion of The Commodity Returns Strategy Portfolio allocated to Mellon Capital. Mellon Capital did not manage any assets of The Real Estate Securities Portfolio during the fiscal year ended June 30, 2015.


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For its services to The International Equity Portfolio and The Institutional International Equity Portfolio, Mellon Capital receives a fee from each Portfolio calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it, at an annual rate of 0.10% for those assets allocated to developed markets strategies and at an annual rate of 0.13% for those assets allocated to emerging markets strategies, so long as the aggregate assets allocated to Mellon Capital for all of its passive equity mandates (including accounts for other clients of the Adviser and certain of its affiliates besides the Trust) exceed $2 billion. Should these aggregate assets fall below $2 billion, the fee will be calculated an annual rate of 0.11% for those assets allocated to developed markets strategies and at an annual rate of 0.15% for those assets allocated to emerging markets strategies. During the fiscal year ended June 30, 2015, Mellon received fees of 0.13% of the average daily net assets for each portion of The International Equity Portfolio and The Institutional International Equity Portfolio allocated to Mellon Capital.

For its services to The Emerging Markets Portfolio, Mellon Capital receives a fee from each Portfolio calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it, at an annual rate of 0.13% so long as the aggregate assets allocated to Mellon Capital for all of its passive equity mandates (including accounts for other clients of the Adviser and certain of its affiliates besides the Trust) exceed $2 billion. Should these aggregate assets fall below $2 billion, the fee will be calculated at an annual rate of 0.15%. The initial allocation to Mellon Capital is expected to exceed $2 billion. During the fiscal year ended June 30, 2015, Mellon Capital received fees of 0.13% of the average daily net assets for the portion of The Emerging Markets Portfolio allocated to Mellon Capital.

For its services to The Core Fixed Income Portfolio (for assets allocated to government and mortgage/asset backed securities strategies), The U.S. Government Fixed Income Securities Portfolio and The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio, Mellon Capital receives a fee, based on the average daily net asset value of that portion of the assets of each Portfolio managed by it, at an annual rate of 0.06%. During the fiscal year ended June 30, 2015, Mellon Capital received fees of 0.06% of the average daily net assets for each portion of The Core Fixed Income Portfolio, The U.S. Government Fixed Income Securities Portfolio and The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio allocated to Mellon Capital.

For its services to The Core Fixed Income Portfolio (for assets allocated to corporate securities strategies) and The U.S. Corporate Fixed Income Securities Portfolio, Mellon Capital receives a fee, based on the average daily net asset value of that portion of the assets of each Portfolio managed by it, at an annual rate of 0.15% of that portion of each Portfolio dedicated to investments in U.S. corporate fixed income securities. During the fiscal year ended June 30, 2015, Mellon Capital received fees of 0.15% of the average daily net assets for the portion of The Core Fixed Income Portfolio allocated (to corporate securities strategies) to Mellon Capital. Mellon Capital did not manage any assets in The U.S. Corporate Fixed Income Securities Portfolio during the fiscal year ended June 30, 2015.

For its services to The Fixed Income Opportunity Portfolio, Mellon Capital receives a fee, based on the average daily net asset value of that portion of the assets of the Portfolios managed by it, at an annual rate of 0.25%. During the fiscal year ended June 30, 2015, Mellon Capital was not allocated assets of The Fixed Income Opportunity Portfolio.

For its services to The Inflation Protected Securities Portfolio, Mellon Capital receives a fee from the Portfolio calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it, at an annual rate of: 0.04% of the average daily net assets of that portion of the Account invested according to a domestic inflation-protected securities strategy; 0.07% of the average daily net assets of that portion of the Account invested according to a global inflation-protected securities strategy; and 0.13% of the average daily net assets of that portion of the Account invested according to an emerging markets inflation-protected securities strategy. During the period ended June 30, 2015, Mellon Capital received fees of 0.04% of the average daily net assets of The Emerging Markets Portfolio.

The Portfolio Managers for the Value Equity, Institutional Value Equity, Growth Equity, Institutional Growth Equity, Small Capitalization—Mid Capitalization Equity and Institutional Small Capitalization—Mid Capitalization Equity Portfolios are Karen Wong, William Cazalet, Ronald Gala and Kristin Crawford. The Portfolio Managers for the Real Estate Securities, Commodity Returns Strategy, International Equity, Institutional International Equity and Emerging Markets Portfolios are Karen Wong, William Cazalet, Peter Goslin and Kristin Crawford. The Portfolio Managers for The Inflation Protected Securities Portfolio are David C. Kwan, CFA, Paul Benson, CFA, CAIA and Wyatt Cerny.


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Karen Q. Wong, CFA is a Managing Director and Head of Equity Portfolio Management at Mellon Capital. She has an M.B.A. and a B. S. from San Francisco State University. Ms. Wong has 15 years of investment experience with tenure of 14 years at Mellon Capital. Ms. Wong is the head of equity portfolio management responsible for overseeing all equity indexing strategies, including exchange traded funds (ETFs) and is responsible for refinement and implementation of the equity portfolio management process. She is a member of the Senior Management Committee, Investment Management Committee, Risk Management Committee, Fiduciary Committee, and Trade Management Oversight Committee. Prior to joining Mellon Capital she worked as a security analyst at Redwood Securities. She is member of the CFA Institute and the CFA Society of San Francisco and is also a member of S&P Index Advisory Panel and Russell Index Client Advisory Board.

William Cazalet, CAIA is a Managing Director and Head of Active Equity Portfolio Management at Mellon Capital. He has an M.S.M from Stanford University Graduate School of Business. and an M.A. from Cambridge University. Mr. Cazalet has 21 years of investment experience and joined Mellon Capital in 2013. Mr. Cazalet manages the entire team of portfolio managers and researchers for all U.S. and international active equity strategies.

Ronald Gala, CFA is a Managing Director, Team Leader and Senior Portfolio Manager for the Active Equity Strategies. Mr. Gala has 28 years of investment experience with tenure of 21 years between Mellon Capital and Mellon Equity Associates, LLP. He is a member and past president of the CFA Society of Pittsburgh and a member of the CFA Institute. He has an M.B.A. from the University of Pittsburgh and a B.S. from Duquesne University.

Kristin Crawford is a Director and Senior Portfolio Manager for the Active Equity Strategies. Ms. Crawford has 20 years of investment experience with tenure of 13 years between Mellon Capital and Franklin Portfolio Associates. She has an M.B.A. from Suffolk University and a B.S. from Smith College. Prior to joining Mellon Capital, she was a vice president and portfolio manager at Franklin Portfolio Associates.

Peter Goslin, CFA is a Director and Senior Portfolio Manager for the Active Equity Strategies. Mr. Goslin has 21 years of investment experience with tenure of 15 years at Mellon Capital. Mr. Goslin has an M.B.A. from the University of Notre Dame in Finance. Prior to joining Mellon Capital, Mr. Goslin was a derivatives trader and NASDAQ market maker for Merrill Lynch and ran Merrill’s Equity Index Option desk at the Chicago Mercantile Exchange.

Day-to-day investment decisions for the portions of The Core Fixed Income Portfolio and The U.S. Government Fixed Income Securities Portfolio allocated to Mellon Capital are the responsibility of David C. Kwan, CFA, Paul Benson, CFA, CAIA and Gregg Lee, CFA. Mr. Kwan is a Managing Director, Fixed Income Management of Mellon Capital with 24 years of investment experience at the firm. He earned both a B.S. and an M.B.A. at the University of California at Berkeley. Mr. Benson is Managing Director and Head of Fixed Income Portfolio Management at Mellon Capital with 20 years of investment experience and 10 years at the firm. He earned a B.A. at the University of Michigan at Ann Arbor. Mr. Lee is a Vice President, Senior Portfolio Manager at Mellon Capital with 25 years of finance and investment experience and 25 years at the firm. He earned a B.S. at University of California at Davis.

Day-to-day investment decisions for the portion of The Fixed Income Opportunity Portfolio allocated to Mellon Capital are the responsibility of David Kwan, John DiRe, Manual Hayes, Paul Benson and Stephanie Shu. Mr. Kwan is a Managing Director, Fixed Income Management of Mellon Capital with 24 years of investment experience at the firm. He earned both a B.S. and an M.B.A. at the University of California at Berkeley. Mr. DiRe is a Director, Senior Portfolio Manager with 21 years of investment experience and 10 years at the firm. He earned a B.S at the University of Illinois, Chicago and an M.B.A. at University of California at Los Angeles. Mr. Hayes is a Senior Portfolio Manager with 10 years investment experience and 5 years at the firm. He earned a B.S at the University of California at Berkeley. Mr. Benson is Managing Director and Head of Fixed Income Portfolio Management at Mellon Capital with 20 years of investment experience and 10 years at the firm. He earned a B.A. at the University of Michigan at Ann Arbor. Ms. Shu is a Director, Senior Portfolio Manager with 16 years of investment experience and 14 years at the firm. She earned a M.S. at Texas A&M University.

The Portfolio Managers for The Inflation Protected Securities Portfolio are David C. Kwan, CFA , Paul Benson, CFA, CAIA and Wyatt Cerny. Mr. Kwan is a Managing Director, Fixed Income Management of Mellon Capital with 24 years of investment experience at the firm. He earned both a B.S. and an M.B.A. at the University of California at Berkeley. Mr. Benson is Managing Director and Head of Fixed Income Portfolio Management at Mellon Capital with 20 years of investment experience and 10 years at the firm. He earned a B.A. at the University of Michigan at Ann Arbor. Mr. Cerny is a Portfolio Manager of Fixed Income Management of Mellon Capital with 6 years of investment experience at the firm. He earned his B.S. at Georgetown University.

Day-to-day investment decisions for the portion of The U.S. Corporate Fixed Income Securities Portfolio allocated to Mellon Capital are the responsibility of David C. Kwan, CFA, Paul Benson, CFA, CAIA , John DiRe, and Manual Hayes. Mr. Kwan is a Managing Director, Fixed Income Management of Mellon Capital with 24 years of investment experience at the firm. He earned both a B.S. and an M.B.A. at the University of California at Berkeley. Mr. Benson is Managing Director and Head of Fixed Income Portfolio Management at Mellon Capital with 20 years of investment experience and 10 years at the firm. He earned a B.A. at the University of Michigan at Ann Arbor. Mr. DiRe is a Director, Senior Portfolio Manager with 21 years of investment experience and 10 years at the firm. He earned a B.S at the University of Illinois, Chicago and an M.B.A. at University of California at Los Angeles. Mr. Hayes is a Senior Portfolio Manager with 10 years investment experience and 5 years at the firm. He earned a B.S at the University of California at Berkeley.


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As of June 30, 2015, Mellon Capital had assets under management totaling approximately $392 billion, which includes overlay strategies.

 

 

The Emerging Markets Portfolio (the “Portfolio”) (From the Supplement Filed on February 18, 2016): The prospectus is supplemented to reflect the removal of Kirk Henry in the portfolio managers for the Portfolio as shown below.

1. The following replaces the “TBCAM” paragraph under the “Portfolio Managers” section of the Investment SubAdvisers, regarding the Portfolio on page 61 of the Prospectus:

TBCAM: Warren Skillman has managed the portion of the Portfolio allocated to TBCAM since March, 2010.

2. The following replaces the first two paragraphs of The Boston Company Asset Management LLC section of the “Specialist Manager Guide” on page 168 of the Prospectus:

The Boston Company Asset Management LLC (“TBCAM”) serves as a Specialist Manager for The Emerging Markets Portfolio. TBCAM is an investment adviser registered with the Securities and Exchange Commission under the Investment Advisers Act and is a wholly-owned subsidiary of The Bank of New York Mellon Corporation. TBCAM is headquartered at the One Boston Place, Boston, MA 02108. Mr. Warren Skillman is primarily responsible for the day-to-day management of the portion of the Portfolio’s assets allocated to TBCAM. As of June 30, 2015, TBCAM had total assets under management of approximately $44.4 billion in assets.

The International Equity Portfolio and Institutional International Equity Portfolio (the “Portfolios”) (From the Supplement Filed on February 18, 2016): The sections relating to the City of London Investment Management Company Limited (“CLIM”) Investment Selection Process under “More Information About Fund Investments and Risks; Specialist Managers” on page 128 for The International Equity Portfolio and page 131 for The Institutional International Equity Portfolio are each deleted in its entirety and replaced by the following:

 

The CLIM Investment Selection Process:   

CLIM attempts to achieve above average long term performance with low relative volatility through active management of a portfolio consisting mostly of closed-end funds. Within sector allocation parameters set by the Adviser, CLIM uses a bottom-up stock selection process to identify a set of closed end funds that will provide the desired asset-class exposure. CLIM uses four main factors in selecting closed-end funds for purchase:

 

•       The historical, net performance of the closed-end fund in NAV terms, versus its benchmark (i.e. quality of exposure to the desired asset class);

 

•       The current discount to NAV of the fund compared to its historical average and its peer group and its potential to generate alpha;

 

•       The potential for the fund’s discount to NAV to narrow due to unitization (conversion to open-ended status), a share buyback program or some other form of corporate activity; and

 

•       Extraneous valuation factors such as rights issues, mergers or other event-driven situations that can be accretive to shareholders.

 

CLIM generally sells positions either to adjust asset allocations or because a superior investment opportunity has been identified.


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The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization—Mid Capitalization Equity Portfolio, The Institutional Small Capitalization—Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The International Equity Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio, The Core Fixed Income Portfolio, The Fixed Income Opportunity Portfolio , The U.S. Government Fixed Income Securities Portfolio, The Inflation Protected Securities Portfolio, The U.S. Corporate Fixed Income Securities Portfolio and The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio, The Short-Term Municipal Bond Portfolio, The Intermediate Term Municipal Bond Portfolio and The Intermediate Term Municipal Bond II Portfolio (the “Portfolios”) (From the Supplement Filed on January 14, 2016): The prospectus is supplemented to reflect the addition of Scott Jacobson in the portfolio managers for each of the Portfolios as shown below.

1. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Value Equity Portfolio on page 6 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

2. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Institutional Value Equity Portfolio on page 11 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

3. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Growth Equity Portfolio on page 16 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

4. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Institutional Growth Equity Portfolio on page 22 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

5. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Small Capitalization—Mid Capitalization Equity Portfolio on page 27 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

6. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Institutional Small Capitalization—Mid Capitalization Equity Portfolio on page 32 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

7. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Real Estate Securities Portfolio on page 38 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.


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8. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Commodity Returns Strategy Portfolio on page 45 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

9. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The International Equity Portfolio on page 50 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

10. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Institutional International Equity Portfolio on page 55 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

11. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Emerging Markets Portfolio on page 61 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

12. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Core Fixed Income Portfolio on page 67 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

13. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Fixed Income Opportunity Portfolio on page 74 of the Prospectus:

Thomas Cowhey, CFA has managed the Portfolio since June, 2013. Brad Conger, CFA has managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

14. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The U.S. Government Fixed Income Securities Portfolio on page 78 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

15. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Inflation Protected Securities Portfolio on page 83 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since its inception in February 2014. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

16. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The U.S. Corporate Fixed Income Securities Portfolio on page 88 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

17. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio on page 93 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.


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18. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Short-Term Municipal Bond Portfolio on page 98 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

19. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Intermediate Term Municipal Bond Portfolio on page 103 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

20. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Intermediate Term Municipal Bond Portfolio II on page 108 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

21. The following replaces the fifth paragraph under “Advisory Services” in the section “More Information About the Fund Investments and Risks” on page 151 of the Prospectus:

Officers and/or employees of the Adviser serve as the executive officers of the Trust and/or as members of the Board of Trustees. For its services under the HC Capital Agreements, the Adviser is entitled to receive an annual fee of 0.05% of each Portfolio’s average net assets. The principal offices of the Adviser are located at Five Tower Bridge, 300 Barr Harbor Drive, Suite 500, West Conshohocken, PA 19428-2970. A registered investment adviser under the Investment Advisers Act of 1940, as amended, since 1988, the Adviser had, as of June 30, 2015, approximately $25.4 billion in assets under management. HC Capital Solutions is a division of Hirtle, Callaghan & Co. LLC, and wholly owned by Hirtle Callaghan Holdings, Inc., which is controlled by one of its founders, Jonathan J. Hirtle. Mr. Thomas Cowhey, CFA, Mr. Brad Conger, CFA and Mr. Scott Jacobson, CFA act as portfolio managers for each Portfolio. Mr. Cowhey is the Chief Investment Strategist for the Adviser and has been with the Advisor since 2000. Mr. Conger is a Vice President at the Adviser and has been with the Adviser since December 2010. Prior to joining the Adviser, Mr. Conger spent over four years as a Director and Senior Analyst at Clearbridge Advisors. Mr. Jacobson is a Capital Allocation Investment Strategist for the Adviser and has been with the Adviser since 2015. Prior to joining the Adviser, Mr. Jacobson served as a Managing Director at Wedbush Securities, Inc., a Consultant for ClearVol Capital Management, LLC and the Head of Derivative Strategy at Sanford C. Bernstein & Co., LLC.

The Commodity Returns Strategy Portfolio (the “Portfolio”) (From the Supplement Filed on December 16, 2015): The prospectus is supplemented to reflect a change, effective January 1, 2016, in the portfolio managers for the Portfolio as shown below.

1. The following replaces the “Portfolio Managers” section of the Investment Subadviser, regarding Wellington Management Company LLP (“Wellington Management”) on page 45 of the Prospectus with respect to the Portfolio:

Wellington Management: Jay Bhutani has managed a portion of the Portfolio allocated to Wellington Management since June 2010. David Chang has managed a portion of the Portfolio allocated to Wellington Management since April 2011.

2. The following replaces the last four paragraphs of the Wellington Management section of the “Specialist Manager Guide” on page 181 of the Prospectus:

Jay Bhutani, Managing Director and Global Industry Analyst affiliated with Wellington Management and located outside of the United States, has served as Portfolio Manager for the Commodity Related Securities portion of the Fund since June 2010. Mr. Bhutani joined Wellington Management as an investment professional in 2007.

David A. Chang, CFA, Senior Managing Director and Commodities Portfolio Manager of Wellington Management, has served as Portfolio Manager for the Subsidiary since April 2011. Mr. Chang joined Wellington Management in 2001, and has been an investment professional since 2002.

For its services to The Commodity Returns Strategy Portfolio, Wellington Management receives a fee, payable monthly, at the following rates: For assets managed in its Global Natural Resources strategy, Wellington


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Management receives a fee at an annual rate of 0.60% of the average daily net assets of the account so long as at least $150 million in assets are present in the account; and 0.85% of the average daily net assets of the account if less than $150 million in assets are present in the account. Prior to March 11, 2015, Wellington Management received a fee, payable monthly, for Portfolio assets managed in its Global Natural Resources strategy, of 0.85% of the average daily net assets of that portion of the Portfolio’s assets allocated to such strategy so long as there are at least $50 million in assets present in such account and 1.00% if less than $50 million are present in the account. Wellington Management has waived the $50 million minimum assets level for the first six months of the Portfolio’s operations. For assets managed in its Commodity strategy, Wellington Management will receive a fee at an annual rate of 0.75% of the average daily net assets of that portion of the Portfolio’s assets allocated to such strategy from time to time. During the fiscal year ended June 30, 2015, Wellington Management received a total fee of 0.76% of the average daily net assets of The Commodity Returns Strategy Portfolio.

The Core Fixed Income Portfolio (the “Portfolio”):

1. The section “Principal Investment Strategies” pertaining to the Portfolio on page 62 of the Prospectus is revised and restated as shown below:

Principal Investment Strategies

Under normal circumstances, the Portfolio invests primarily (i.e. at least 80% of its net assets) in a diversified portfolio of fixed income securities. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio, under normal circumstances, will invest at least 80% of its net assets in fixed income securities that, at the time of purchase, are rated in one of four highest rating categories assigned by one of the major independent rating agencies or are, in the view of the Specialist Manager, deemed to be of comparable quality. Securities in the fourth highest rating category may have speculative characteristics. From time to time, a substantial portion of the Portfolio may be invested in any of the following: (1) investment grade mortgage-backed or asset-backed securities; (2) securities issued or fully guaranteed by the U.S. Government, Federal Agencies, or sponsored agencies; (3) investment grade fixed income securities issued by U.S. corporations; or (4) municipal bonds (i.e., debt securities issued by municipalities and related entities). Under normal conditions, the Portfolio may invest up to 20% of its assets in high yield securities (“junk bonds”) as well as cash or money market instruments in order to maintain liquidity, or in the event that the Specialist Manager determines that securities meeting the Portfolio’s investment objective and policies are not otherwise readily available for purchase. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in fixed income securities. Consistent with its investment policies, the Portfolio may purchase and sell securities without regard to the effect on portfolio turnover. The Portfolio has historically had significant portfolio turnover (e.g., over 200% annually), and it is anticipated that such portfolio turnover will continue in the future. Securities purchased for the Portfolio will have varying maturities, but under normal circumstances the Portfolio will have an effective dollar weighted average portfolio maturity that is within the range of the average portfolio maturity in the Barclays Capital U.S. Aggregate Bond Index, which range, as of June 30, 2015, was between one and ten years. The weighted average maturity of the Barclays Capital U.S. Aggregate Bond Index as of June 30, 2015 was 7.87 years. The Portfolio may engage in transactions involving instruments such as option or futures contracts, both in order to hedge against fluctuations in the market value of the securities in which the Portfolio invests and to achieve market exposure pending investment and, in the case of asset-backed and similar securities, for investment purposes.

The Portfolio is authorized to operate on a multi-manager basis. This means that a single Portfolio may be managed by more than one Specialist Manager. The multi-manager structure is generally designed to provide investors access to broadly diversified investment styles. The Trust seeks to engage skilled Specialist Managers to provide a broad exposure to the relevant asset class and returns in excess of the Portfolio’s benchmark over time.

2. The paragraph under “The Core Fixed Income Portfolio” on page 133 of the Prospectus is revised and restated as shown below:

The Portfolio, under normal circumstances, will invest at least 80% of its net assets in fixed income securities that, at the time of purchase, are rated in one of four highest rating categories assigned by one of the major independent rating agencies or are, in the view of the Specialist Manager, deemed to be of comparable quality. The Portfolio may invest a substantial portion of its total assets in mortgage-backed and asset-backed issues. Under normal conditions, the Portfolio may invest up to 20% of its assets in high yield securities (“junk bonds”) as well as cash or money market instruments in order to maintain liquidity, or in the event that the Specialist Manager determines that securities meeting the Portfolio’s investment objective and policies are not otherwise readily available for purchase. Consistent with its investment policies, the Portfolio may purchase and sell securities without regard to the effect on portfolio turnover. The Portfolio has historically had significant portfolio turnover (e.g., over 200%/annually), and it is anticipated that such portfolio turnover will continue in the future. High portfolio turnover will cause the Portfolio


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to incur additional transaction costs; higher transaction costs will reduce total return. High portfolio turnover also is likely to generate short-term capital gains, which is taxed as ordinary income. Securities purchased for the Portfolio will have varying maturities, but under normal circumstances the Portfolio will have an effective dollar weighted average portfolio maturity that is within the range of the average portfolio maturity in the Barclays Capital U.S. Aggregate Bond Index, which range, as of June 30, 2015, was between one and ten years. The weighted average maturity of the Barclays Capital U.S. Aggregate Bond Index as of June 30, 2015 was 7.87 years. The Portfolio may engage in transactions involving “derivative instruments” including, but not limited to, futures, forwards, options and options on futures both in order to hedge against fluctuations in the market value of the securities in which the Portfolio invests and to achieve market exposure pending investment and, in the case of asset-backed and similar securities, for investment purposes.

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.


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Supplement to Prospectus

HC Strategic Shares

Dated November 1, 2015

HC Capital Trust

The date of this Supplement is October 17, 2016

The International Equity Portfolio and The Institutional International Equity Portfolio (the Portfolios”):

Effective October 14, 2016, Capital Guardian Trust Company (“CapGuardian”) no longer serves as a Specialist Manager for the Portfolios pursuant to notice of termination by the Trust, on behalf of the Board of Trustees, dated August 15, 2016. Accordingly, the Prospectus is supplemented as shown below with references to CapGuardian deleted entirely.

1. The following replaces the “Investment Subadvisers” section of the Prospectus:

Page 51:

Investment Subadvisers

Artisan Partners Limited Partnership (“Artisan”), Cadence Capital Management LLC (“Cadence”), Causeway Capital Management LLC (“Causeway”), City of London Investment Management Company Limited (“CLIM”), Parametric Portfolio Associates (“Parametric”) and Mellon Capital Management Corporation (“Mellon Capital”) are the Specialist Managers for the Portfolio.

Page 56:

Investment Subadvisers

Artisan Partners Limited Partnership (“Artisan”), Cadence Capital Management LLC (“Cadence”), Causeway Capital Management LLC (“Causeway”), City of London Investment Management Company Limited (“CLIM”), Lazard Asset Management LLC (“Lazard”), Parametric Portfolio Associates (“Parametric”) and Mellon Capital Management Corporation (“Mellon Capital”) are the Specialist Managers for the Portfolio.

2. The “CapGuardian” section is each deleted in its entirety under the “Portfolio Managers” sections on pages 51 and 56 of the Prospectus.

3. The “CapGuardian Investment Selection Process” section is deleted in its entirety under “More Information About Fund Investments and Risks” “The International Equity Portfolio; Specialist Managers” on page 128 and “The Institutional International Equity Portfolio; Specialist Managers” on page 131. Additionally, reference to CapGuardian in the first paragraph under “The International Equity Portfolio; Specialist Managers” on page 127 and “The Institutional International Equity Portfolio; Specialist Managers” on page 130 is each deleted in its entirety.

4. Reference to CapGuardian in the sixth and seventh paragraphs under “More Information About Fund Investments and Risks” Specialist Managers” on page 154 is each deleted in its entirety.

5. The “Capital Guardian Trust Company” section is deleted in its entirety under “Specialist Manager Guide” on page 172.

 

 

The Small Capitalization - Mid Capitalization Equity Portfolio and The Institutional Small Capitalization - Mid Capitalization Equity Portfolio (the “Portfolios”) (From the Supplement Filed on September 14, 2016):

At a meeting held on September 13, 2016, the Board of Trustees (the “Board”) for HC Capital Trust (the “Trust”) approved the engagement of Advisory Research, Inc. (“Advisory Research”) as an investment advisory organization (“Specialist Manager”) to manage portions of the assets of the Portfolios, effective upon the date of the employment of Andrew Cupps at Advisory Research (the “Effective Date”), which is anticipated on or about September 30, 2016.

At a meeting held on September 13, 2016, the Trust’s Board approved the termination of Cupps Capital Management Company, LLC (“Cupps”) as specialist manager of the Portfolios effective upon the Effective Date.

Accordingly, upon the Effective Date, the Prospectus is supplemented as shown below with references to Cupps deleted entirely, and additional disclosures related to Advisory Research included.

The Small Capitalization - Mid Capitalization Equity Portfolio

1. The following replaces the “Investment Subadvisers” section on page 28 of the Prospectus:

Investment Subadvisers

Advisory Research, Inc. (“Advisory Research”), Ariel Investments, LLC (“Ariel”), Cadence Capital Management LLC (“Cadence”), Frontier Capital Management Company, LLC (“Frontier”), IronBridge Capital Management LP (“IronBridge”), Mellon Capital Management Corporation (“Mellon Capital”), Parametric Portfolio Associates (“Parametric”) and Pzena Investment Management, LLC (“Pzena”) are the Specialist Managers for the Portfolio.

2. The following is added before “Ariel” under the “Portfolio Managers” section on page 28 of the Prospectus:

Advisory Research: Andrew S. Cupps has managed the portfolio of the Portfolio allocated to Advisory Research since June, 2011*.

 

* Includes Mr. Cupps’ services with a previous Investment Subadviser.

3. The following replaces the first paragraph of the “Specialist Managers” section under “More Information About Fund Investments and Risks - The Small Capitalization - Mid Capitalization Equity Portfolio” on page 118:

A portion of the Portfolio is managed in accordance with an “active management” approach, which involves the buying and selling of securities based upon economic, financial and market analysis and investment judgment. Advisory Research, Ariel, Frontier, IronBridge, Parametric and Pzena are currently responsible for implementing the active component of the Portfolio’s investment strategy. The remaining portion of the Portfolio is managed using “passive” or “index” investment approaches that are is designed to approximate as closely as practicable, before expenses, the performance of the Portfolio’s benchmark index or one or more identifiable subsets or other portions of that index (see “Fund Management,” included later in this Prospectus). Cadence and Mellon Capital are currently responsible for implementing the passive component of the Portfolio’s investment strategy. Further information about the Specialist Managers, individual portfolio managers responsible for day-to-day investment decisions for the Portfolio, and the manner in which the Portfolio’s assets are allocated among them appears in the “Specialist Manager Guide” included later in this Prospectus.

4. The “Cupps Investment Selection Process” section is deleted in its entirety and the following is added under “More Information About Fund Investments and Risks - The Small Capitalization - Mid Capitalization Equity Portfolio; Specialist Managers” on page 118 before the “Ariel Investment Selection Process”:

 

The Advisory Research Investment Selection Process    Advisory Research believes earnings growth is the primary variable driving intermediate and long term stock performance and Advisory Research therefore focuses on companies it believes are poised to experience high or improving rates of earnings growth. Advisory Research uses a proprietary investment framework to evaluate the attractiveness of stocks. Cupps’ investment approach begins with fundamental analysis to determine valuation and then considers four additional perspectives that include both fundamental and technical disciplines to generate an overall opinion of a stock’s attractiveness. Sell decisions, like buy decisions, take into account these same perspectives. If a company’s financial results fall significantly off its projected growth path, either in terms of product sales or market development, or if the company loses significant competitive advantage, or if the stock demonstrates poor technical behavior, positions will most likely be reduced or eliminated entirely.

The Institutional Small Capitalization - Mid Capitalization Equity Portfolio

1. The following replaces the “Investment Subadvisers” section on page 33 of the Prospectus:

Advisory Research, Inc. (“Advisory Research”), Ariel Investments, LLC (“Ariel”), Cadence Capital Management LLC (“Cadence”), Frontier Capital Management Company, LLC (“Frontier”), IronBridge Capital Management LP (“IronBridge”), Mellon Capital Management Corporation (“Mellon Capital”), Parametric Portfolio Associates (“Parametric”) and Pzena Investment Management, LLC (“Pzena”) are the Specialist Managers for the Portfolio.

2. The following is added before “Ariel” under the “Portfolio Managers” section on page 33 of the Prospectus:

Advisory Research: Andrew S. Cupps has managed the portfolio of the Portfolio allocated to Advisory Research since June, 2011*.

 

* Includes Mr. Cupps’ services with a previous Investment Subadviser.

3. The following replaces the first paragraph of the “Specialist Managers” section under “More Information About Fund Investments and Risks - The Institutional Small Capitalization - Mid Capitalization Equity Portfolio” on page 120:

A portion of the Portfolio is managed in accordance with an “active management” approach, which involves the buying and selling of securities based upon economic, financial and market analysis and investment judgment. Advisory Research, Ariel, Frontier, IronBridge, Parametric and Pzena, are currently responsible for implementing the active component of the Portfolio’s investment strategy. The remaining portion of the Portfolio is managed using “passive” or “index” investment approaches that are designed to approximate as closely as practicable, before expenses, the performance of the Portfolio’s benchmark index or one or more identifiable subsets or other portions of that index (see “Fund Management,” included later in this Prospectus). Cadence and Mellon Capital are currently responsible for implementing the passive component of the Portfolio’s investment strategy. The investment selection process for each of these Specialist Managers is described below; further information about the Specialist Managers, individual portfolio managers responsible for day-to-day investment decisions for the Portfolio, and the manner in which the Portfolio’s assets are allocated among them appears in the “Specialist Manager Guide” included later in this Prospectus.

4. The “Cupps Investment Selection Process” section is deleted in its entirety and the following is added under “More Information About Fund Investments and Risks - The Institutional Small Capitalization - Mid Capitalization Equity Portfolio; Specialist Managers” on page 120 before the “Ariel Investment Selection Process”:

 

The Advisory Research Investment Selection Process:    Advisory Research believes earnings growth is the primary variable driving intermediate and long-term stock performance and Advisory Research therefore focuses on companies it believes are poised to experience high or improving rates of earnings growth. Advisory Research uses a proprietary investment framework to evaluate the attractiveness of stocks. Advisory Research’ investment approach begins with fundamental analysis to determine valuation and then considers four additional perspectives that include both fundamental and technical disciplines to generate an overall opinion of a stock’s attractiveness. Sell decisions, like buy decisions, take into account these same perspectives. If a company’s financial results fall significantly off its projected growth path, either in terms of product sales or market development, or if the company loses significant competitive advantage, or if the stock demonstrates poor technical behavior, positions will most likely be reduced or eliminated entirely.

The Small Capitalization - Mid Capitalization Equity Portfolio and The Institutional Small Capitalization - Mid Capitalization Equity Portfolio

The “Cupps Capital Management, LLC,” section is deleted in its entirety and the following is added under “Specialist Manager Guide” on page 168 before the “Agincourt Capital Management, LLC”:

Advisory Research, Inc. (“Advisory Research”) serves as a Specialist Manager for The Small Capitalization – Mid Capitalization Equity and The Institutional Small Capitalization – Mid Capitalization Equity Portfolios. For its services to The Small Capitalization – Mid Capitalization Equity and The Institutional Small Capitalization – Mid Capitalization Equity Portfolios, Advisory Research receives a fee based on the average daily net asset value of that portion of each Portfolio allocated to it, at an annual rate of 0.85%. As of June 30, 2016, Advisory Research had total assets under management of approximately $8.1 billion in assets.

Advisory Research, the principal offices of which are located at 180 N. Stetson Avenue, Suite 5500, Chicago, Illinois 60601, was established in 1974 and is a registered investment adviser. Advisory Research is a subsidiary of Piper Jaffray Companies. Andrew S. Cupps is responsible for making the day-to-day investment decisions for the portion of the Portfolios’ assets assigned to Advisory Research. Mr. Cupps serves as the Chief Investment Officer. He is responsible for the research agenda of the firm’s investment team and has analyst responsibilities within the healthcare and technology sectors. Prior to his employment with Advisory Research, Mr. Cupps served as President and Chief Investment Officer of Cupps Capital Management , LLC, since the firm’s inception in 2000. Mr. Cupps attended Harvard University where he studied economics and graduated cum laude in 1992.


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The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization—Mid Capitalization Equity Portfolio, The Institutional Small Capitalization—Mid Capitalization Equity Portfolio, The International Equity Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio, The Core Fixed Income Portfolio, The U.S. Corporate Fixed Income Securities Portfolio, The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio, The Short-Term Municipal Bond Portfolio, The Intermediate Term Municipal Bond Portfolio and The Intermediate Term Municipal Bond II Portfolio (the “Portfolios”) (From the Supplement Filed on September 2, 2016):

On August 25, 2016, the Board of Trustees (the “Board”) for HC Capital Trust (the “Trust”) approved changes in each of the Portfolio’s investment strategies as set forth below, to become effective on November 1, 2016. Accordingly, the Prospectus is supplemented as follows:

The Value Equity Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 2 of the Prospectus:

The Portfolio is a diversified investment company that is designed to implement a value-oriented investment approach. A “value investor” seeks to select securities that trade for less than the intrinsic value of the issuing company, as measured by fundamental investment considerations such as earnings, book value and dividend paying ability. Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e., at least 80% of its net assets) in equity securities. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio may invest up to 20% of the total assets of the actively managed portion of the Portfolio in income-producing securities other than common stock, such as preferred stocks or bonds, including those that are convertible into common stock. These income-producing securities may be of any quality or maturity. The Portfolio will focus its investments in equity securities of large and mid-capitalization issuers. As of the date of this Prospectus, companies with a market capitalization of between $5 billion and $24 billion would likely be included in the “mid cap” range. Up to 20% of the total assets of the total Portfolio may also be invested in securities issued by non-U.S. companies. The Portfolio may invest in securities issued by other investment companies, including Exchange-Traded Funds (“ETFs”) that invest in equity securities. The Portfolio may also invest in other instruments including option or futures contracts, and similar instruments in order to gain market exposure pending investment or to hedge against fluctuations in market price of the securities in which the Portfolio invests. In accordance with applicable interpretations of the SEC, certain derivative instruments may be counted as equity securities for purposes of the Portfolio’s policies regarding investments in equity securities, to the extent that such derivative instruments have economic characteristics similar to those of equity securities. Additionally, a portion of the Portfolio may be managed using a more “passive” investment approach designed to approximate as closely as practicable, before expenses, the performance of either the Portfolio’s benchmark index or, from time to time, one or more identifiable subsets or other portions of that index.

The Institutional Value Equity Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 7 of the Prospectus:

The Portfolio is a diversified investment company that is designed to implement a value-oriented investment approach. A “value investor” seeks to select securities that trade for less than the intrinsic value of the issuing company, as measured by fundamental investment considerations such as earnings, book value and dividend paying ability. Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e., at least 80% of its net assets) in equity securities. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio will focus its investments in equity securities of large and mid-capitalization issuers. As of the date of this Prospectus, companies with a market capitalization of between $5 billion and $24 billion would likely be included in the “mid cap” range. Up to 20% of the total assets of the actively managed portion of the Portfolio may be invested in income-producing securities other than common stock, such as preferred stocks or bonds, including those that are convertible into common stock. These income-producing securities may be of any quality or maturity. Up to 20% of the total assets of the total Portfolio may also be invested in securities issued by non-U.S. companies. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in equity securities. Consistent with their respective investment styles, the Portfolio’s Specialist Managers may use instruments including option or futures contracts and similar instruments in order to pursue their investment objectives, gain market exposure pending investment or to hedge against fluctuations in market price of the securities in which the Portfolio invests. In accordance with applicable interpretations of the SEC, certain derivative instruments may be counted as equity securities for purposes of the Portfolio’s policies regarding investments in equity securities, to the extent that such derivative instruments have economic characteristics similar to those of equity securities. Additionally, a portion of the Portfolio may be managed using a more “passive” investment approach designed to approximate as closely as practicable, before expenses, the performance of either the Portfolio’s benchmark index or, from time to time, one or more identifiable subsets or other portions of that index.

The Growth Equity Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 12 of the Prospectus:

The Portfolio is a diversified investment company that is designed to implement a growth-oriented investment approach. “Growth investing” means that securities acquired for the Portfolio can be expected to have above-average potential for growth in revenue and earnings. Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e., at least 80% of its net assets) in equity securities. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio may invest up to 20% of the total assets of the actively managed portion of the Portfolio in income-producing securities other than common stock, such as preferred stocks or bonds, including those that are convertible into common stock. These income-producing securities may be of any quality or maturity. The Portfolio will focus its investments in equity securities of large and mid-capitalization issuers. As of the date of this Prospectus, companies with a market capitalization of between $5 billion and $24 billion would likely be included in the “mid cap” range. Up to 20% of the total assets of the total Portfolio may also be invested in securities issued by non-U.S. companies. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in equity securities. Although some of the equity securities in which the Portfolio will invest are expected to be dividend paying issues, income is a secondary consideration in the stock selection process. Accordingly, dividends paid by this Portfolio can generally be expected to be lower than those paid by The Value Equity Portfolio. Consistent with their respective investment styles, the Portfolio’s Specialist Managers may use instruments including option or futures contracts and similar instruments in order to gain market exposure pending investment or to hedge against fluctuations in market price of the securities in which the Portfolio invests. In accordance with applicable interpretations of the SEC, certain derivative instruments may be counted as equity securities for purposes of the Portfolio’s policies regarding investments in equity securities, to the extent that such derivative instruments have economic characteristics similar to those of equity securities. Additionally, a portion of the Portfolio may be managed using a more “passive” investment approach designed to approximate as closely as practicable, before expenses, the performance of either the Portfolio’s benchmark index or, from time to time, one or more identifiable subsets or other portions of that index.

The Institutional Growth Equity Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 18 of the Prospectus:

The Portfolio is a diversified investment company that is designed to implement a growth-oriented investment approach. “Growth investing” means that securities acquired for the Portfolio can be expected to have above-average potential for growth in revenue and earnings. Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e., at least 80% of its net assets) in equity securities. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio may invest up to 20% of the total assets of the actively managed portion of the Portfolio in income-producing securities other than common stock, such as preferred stocks or bonds, including those that are convertible into common stock. These income-producing securities may be of any quality or maturity. The Portfolio will focus its investments in equity securities of large and mid-capitalization issuers. As of the date of this Prospectus, companies with a market capitalization of between $5 billion and $24 billion would likely be included in the “mid cap” range. Up to 20% of the total assets of the total Portfolio may also be invested in securities issued by non-U.S. companies. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in equity securities. Although some of the equity securities in which the Portfolio will invest are expected to be dividend paying issues, income is a secondary consideration in the stock selection process. Accordingly, dividends paid by this Portfolio can generally be expected to be lower than those paid by The Institutional Value Equity Portfolio. Consistent with their respective investment styles, the Portfolio’s Specialist Managers may use instruments including option or futures contracts, swaps and similar instruments in order to pursue their investment objectives, gain market exposure pending investment or to hedge against fluctuations in market price of the securities in which the Portfolio invests. The Portfolio may also use currency forwards in connection with the purchase and sale of securities denominated in foreign currencies. In accordance with applicable interpretations of the SEC, certain derivative instruments may be counted as equity securities for purposes of the Portfolio’s policies regarding investments in equity securities, to the extent that such derivative instruments have economic characteristics similar to those of equity securities. Additionally, a portion of the Portfolio may be managed using a more “passive” investment approach designed to approximate as closely as practicable, before expenses, the performance of either the Portfolio’s benchmark index or, from time to time, one or more identifiable subsets or other portions of that index.

The Small Capitalization—Mid Capitalization Equity Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 24 of the Prospectus:

Under normal circumstances, the Portfolio invests primarily (i.e., at least 80% of its net assets) in equity securities of small capitalization and mid-capitalization issuers. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio, a diversified investment company, is designed to invest primarily in equity securities of U.S. issuers which have market capitalizations that are comparable to the capitalization of companies in the Russell 3000® Index that are classified as “Small” or “Medium” at the time of purchase. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in equity securities of “small cap” and/or “mid cap” issuers. The Portfolio will invest in both dividend paying securities and securities that do not pay dividends. Also, consistent with their respective investment styles, the Portfolio’s Specialist Managers may use instruments such as option or futures contracts in order to gain market exposure pending investment or to hedge against fluctuations in market price of the securities in which the Portfolio invests. In accordance with applicable interpretations of the SEC, certain derivative instruments may be counted as equity securities for purposes of the Portfolio’s policies regarding investments in equity securities, to the extent that such derivative instruments have economic characteristics similar to those of equity securities. As of July 31, 2015, the market capitalization range of companies in the Russell 3000® Index that were classified as “Small” or “Medium” was between approximately $177 million and $28.7 billion. Additionally, a portion of the Portfolio may be managed using a more “passive” investment approach designed to approximate as closely as practicable, before expenses, the performance of either the Portfolio’s benchmark index or, from time to time, one or more identifiable subsets or other portions of that index.

The Institutional Small Capitalization—Mid Capitalization Equity Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 29 of the Prospectus:

Under normal circumstances, the Portfolio invests primarily (i.e., at least 80% of its net assets) in equity securities of small-capitalization and mid-capitalization issuers. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio, a diversified investment company, is designed to invest primarily in equity securities of U.S. issuers which have market capitalizations that are comparable to the capitalization of companies in the Russell 3000® Index that are classified as “Small” or “Medium” at the time of purchase. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in equity securities of “small cap” and/or “mid cap” issuers. The Portfolio will invest in both dividend paying securities and securities that do not pay dividends. Also, consistent with their respective investment styles, the Portfolio’s Specialist Managers may use instruments such as option or futures contracts in order to gain market exposure pending investment or to hedge against fluctuations in market price of the securities in which the Portfolio invests. In accordance with applicable interpretations of the SEC, certain derivative instruments may be counted as equity securities for purposes of the Portfolio’s policies regarding investments in equity securities, to the extent that such derivative instruments have economic characteristics similar to those of equity securities. As of July 31, 2015, the market capitalization range of companies in the Russell 3000® Index that were classified as “Small” or “Medium” was between approximately $177 million and $28.7 billion. Additionally, a portion of the Portfolio may be managed using a more “passive” investment approach designed to approximate as closely as practicable, before expenses, the performance of either the Portfolio’s benchmark index or, from time to time, one or more identifiable subsets or other portions of that index.

The International Equity Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 47 of the Prospectus:

Under normal circumstances, the Portfolio invests primarily (i.e., at least 80% of its net assets) in equity securities. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. Under normal circumstances, the Portfolio will provide exposure to investments that are economically tied to at least three different countries, including the U.S., and at least 40% of the Portfolio’s net assets will provide exposure to investments that are economically tied to non-U.S. countries. Although the Portfolio, a diversified investment company, may invest anywhere in the world, the Portfolio is expected to invest primarily in the equity markets included in the MSCI EAFE Index. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in equity securities of issuers located in non-U.S. countries. Also, consistent with their respective investment styles, the Portfolio’s Specialist Managers may use instruments such as option or futures contracts in order to gain market exposure pending investment or to hedge against fluctuations in market price of the securities in which the Portfolio invests. The Portfolio may also use currency forwards in connection with the purchase and sale of securities denominated in foreign currencies and to hedge against fluctuations in the relative value of the currencies in which securities held by the Portfolio are denominated. In accordance with applicable interpretations of the SEC, certain derivative instruments may be counted as equity securities for purposes of the Portfolio’s policies regarding investments in equity securities, to the extent that such derivative instruments have economic characteristics similar to those of equity securities. Additionally, a portion of the Portfolio may be managed using a more “passive” investment approach designed to approximate as closely as practicable, before expenses, the performance of either the Portfolio’s benchmark index or, from time to time, one or more identifiable subsets or other portions of that index.

The Institutional International Equity Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 52 of the Prospectus:

Under normal circumstances, the Portfolio invests primarily (i.e., at least 80% of its net assets) in equity securities of issuers located in non-U.S. countries. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. Under normal circumstances, the Portfolio will provide exposure to investments that are economically tied to at least three different countries, including the U.S., and at least 40% of the Portfolio’s net assets will provide exposure to investments that are economically tied to non-U.S. countries. Although the Portfolio, a diversified investment company, may invest anywhere in the world, the Portfolio is expected to invest primarily in the equity markets included in the MSCI EAFE Index. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in equity securities of issuers located in non-U.S. countries. Also, consistent with their respective investment styles, the Portfolio’s Specialist Managers may use instruments such as option or futures contracts in order to gain market exposure pending investment or to hedge against fluctuations in market price of the securities in which the Portfolio invests. The Portfolio may also use currency forwards in connection with the purchase and sale of securities denominated in a foreign currency and to hedge against fluctuations in the relative value of the currencies in which securities held by the Portfolio are denominated. In accordance with applicable interpretations of the SEC, certain derivative instruments may be counted as equity securities for purposes of the Portfolio’s policies regarding investments in equity securities, to the extent that such derivative instruments have economic characteristics similar to those of equity securities. Additionally, a portion of the Portfolio may be managed using a more “passive” investment approach designed to approximate as closely as practicable, before expenses, the performance of either the Portfolio’s benchmark index or, from time to time, one or more identifiable subsets or other portions of that index.

The Emerging Markets Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 57 of the Prospectus:

Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e., at least 80% of its net assets) in securities of issuers domiciled or, in the view of the Specialist Manager, deemed to be doing material amounts of business in countries determined by the Specialist Manager to have a developing or emerging economy or securities market. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. Typically 80% of the Portfolio’s net assets will be invested in equity securities, equity swaps, structured equity notes, equity linked notes and depositary receipts concentrated in emerging market countries. The Portfolio, a diversified investment company, invests primarily in the Morgan Stanley Capital International® Emerging Markets Index (“MSCI EM Index”) countries. As the MSCI EM Index introduces new emerging market countries, the Portfolio may include those countries among the countries in which it may invest. In determining securities in which to invest, the Portfolio’s management team will evaluate the countries’ economic and political climates with prospects for sustained macro and micro economic growth. The Portfolio’s management team will take into account traditional securities valuation methods, including (but not limited to) an analysis of price in relation to assets, earnings, cash flows, projected earnings growth, inflation and interest rates. Liquidity and transaction costs will also be considered. The Portfolio may also invest in companies of any market capitalization. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in securities issued by companies domiciled or deemed to be doing material amounts of business in countries that have a developing or emerging economy or securities market. Also, consistent with their respective investment styles, the Portfolio’s Specialist Managers may use instruments such as option or futures contracts in order to gain market exposure pending investment or to hedge against fluctuations in market price of the securities in which the Portfolio invests. In accordance with applicable interpretations of the SEC, certain derivative instruments may be counted as equity securities for purposes of the Portfolio’s policies regarding investments in equity securities, to the extent that such derivative instruments have economic characteristics similar to those of equity securities. Additionally, a portion of the Portfolio may be managed using a more “passive” investment approach designed to approximate as closely as practicable, before expenses, the performance of either the Portfolio’s benchmark index or, from time to time, one or more identifiable subsets or other portions of that index.

The Core Fixed Income Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 63 of the Prospectus:

Under normal circumstances, the Portfolio invests primarily (i.e. at least 80% of its net assets) in fixed income securities. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio, under normal circumstances, invests predominantly in fixed income securities that, at the time of purchase, are rated in one of four highest rating categories assigned by one of the major independent rating agencies or are, in the view of the Specialist Manager, deemed to be of comparable quality. Securities in the fourth highest rating category may have speculative characteristics. From time to time, a substantial portion of the Portfolio, a diversified investment company, may be invested in any of the following: (1) investment grade mortgage-backed or asset-backed securities; (2) securities issued or fully guaranteed by the U.S. Government, Federal Agencies, or sponsored agencies; (3) investment grade fixed income securities issued by U.S. corporations; or (4) municipal bonds (i.e., debt securities issued by municipalities and related entities). Under normal conditions, the Portfolio may invest up to 20% of its assets in high yield securities (“junk bonds”) as well as cash or money market instruments in order to maintain liquidity, or in the event that the Specialist Manager determines that securities meeting the Portfolio’s investment objective and policies are not otherwise readily available for purchase. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in fixed income securities. Consistent with its investment policies, the Portfolio may purchase and sell securities without regard to the effect on portfolio turnover. The Portfolio has historically had significant portfolio turnover (e.g., over 200% annually), and it is anticipated that such portfolio turnover will continue in the future. Securities purchased for the Portfolio will have varying maturities, but under normal circumstances the Portfolio will have an effective dollar weighted average portfolio maturity that is within the range of the average portfolio maturity in the Barclays Capital U.S. Aggregate Bond Index, which range, as of June 30, 2015, was between one and ten years. The weighted average maturity of the Barclays Capital U.S. Aggregate Bond Index as of June 30, 2015 was 7.87 years. The Portfolio may engage in transactions involving instruments such as option or futures contracts, both in order to hedge against fluctuations in the market value of the securities in which the Portfolio invests and to achieve market exposure pending investment and, in the case of asset-backed and similar securities, for investment purposes.

The U.S. Corporate Fixed Income Securities Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 85 of the Prospectus:

Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e. at least 80% of net assets) fixed income securities issued by U.S. corporations. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. In general, the Portfolio invests predominantly in investment grade fixed income securities and will maintain aggregate characteristics similar to the Barclays Capital U.S. Corporate Index. Securities held by the Portfolio will be rated investment-grade or better by one of the established rating agencies or, if not rated by an agency, of comparable credit quality as determined by the Specialist Manager at the time of purchase. Securities held by the Portfolio which are downgraded below investment-grade by all ratings agencies may be retained up to a maximum market value of 5% of the Portfolio. Securities purchased for the Portfolio will have varying maturities, but under normal circumstances the Portfolio will have an effective dollar weighted average portfolio maturity that is within the range of the average portfolio maturity in the Barclays Capital U.S. Corporate Investment Grade Index, which range, as of June 30, 2015, was between one and twenty years. The weighted average maturity of the Barclays Capital U.S. Corporate Investment Grade Index as of June 30, 2015 was 10.59 years. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in investment grade fixed income securities issued by U.S. corporations. The Portfolio may also invest up to 20% of its assets in municipal bonds (i.e., debt securities issued by municipalities and related entities). The Portfolio may invest in fixed income securities of foreign issuers.

The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 90 of the Prospectus:

Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e. at least 80% of net assets) U.S. mortgage and asset backed securities. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio invests predominantly in publicly issued, investment grade U.S. mortgage and asset backed securities and, in general, seeks to maintain aggregate characteristics similar to the Barclays Capital U.S. Securitized Index. The Portfolio will seek to invest in U.S. dollar denominated agency and non-agency mortgage-backed securities backed by loans secured by residential, multifamily and commercial properties including, but not limited to: pass throughs, collateralized mortgage obligations (“CMOs”), real estate mortgage investment conduits (“REMICs”), stripped mortgage-backed securities (“SMBS”), project loans, construction loans, and adjustable rate mortgages. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in mortgage and asset backed securities. The Portfolio may also invest in U.S. Treasury and agency securities. Securities must be rated investment-grade or better by a nationally recognized credit rating agency at the time of purchase or, if not rated by an agency, of comparable credit quality as determined by the Specialist Manager at the time of purchase. The Portfolio may engage in transactions involving instruments such as option or futures contracts both in order to hedge against fluctuations in the market value of the securities in which the Portfolio invests and to achieve market exposure pending investment and, in the case of asset-backed and similar securities, for investment purposes. Securities purchased for the Portfolio will have varying maturities, but under normal circumstances the Portfolio will have an effective dollar weighted average portfolio maturity that is within the range of the average portfolio maturity in the Barclays Capital U.S. Securitized Index, which has a weighted average maturity of 6.84 years as of June 30, 2015 and can vary between three and eight years.

The Short-Term Municipal Bond Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 95 of the Prospectus:

Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e. at least 80% of net assets) in municipal bonds. The policy stated in the foregoing sentence is a fundamental policy and may not be changed without shareholder approval. Municipal bonds are debt securities issued by municipalities and related entities, the interest on which is exempt from Federal income tax so that they will qualify to pay “exempt-interest dividends” (“Municipal Securities”). The Portfolio intends to maintain a dollar-weighted effective average portfolio maturity of no longer than three years. The Portfolio invests primarily in securities that are rated in one of the top four rating categories of a nationally recognized statistical rating organization or, if unrated, that are determined by the Specialist Manager to be of comparable quality. Fixed income securities rated in the fourth highest rating category by a rating agency may have speculative characteristics. The Portfolio does not currently intend to invest in obligations, the interest on which is a preference item for purposes of the Federal alternative minimum tax. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in municipal bonds.

The Intermediate Term Municipal Bond Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 100 of the Prospectus:

Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e., at least 80% of net assets) in municipal bonds. The policy stated in the foregoing sentence is a fundamental policy of the Portfolio and may not be changed without shareholder approval. Municipal bonds are debt securities issued by municipalities and related entities, the interest on which is exempt from Federal income tax so that they will qualify to pay “exempt-interest dividends” (“Municipal Securities”). Municipal Securities purchased for the Portfolio will have varying maturities, but under normal circumstances the Portfolio will have an effective dollar weighted average portfolio maturity that is within the range of the average portfolio maturity in the Barclays Capital 3-15 Year Blend Municipal Bond Index, currently three to fifteen years. Municipal Securities acquired for the Portfolio will generally be rated in one of the three highest rating categories assigned by one of the major independent rating agencies, or are, in the view of the Specialist Manager, deemed to be of comparable quality. The Portfolio is, however, authorized to invest up to 15% of its assets in Municipal Securities that are rated in the fourth highest category and up to 10% of its assets in high yield securities (“junk bonds”). Fixed income securities rated in the fourth highest rating category by a rating agency may have speculative characteristics. Also, the Portfolio is authorized to invest up to 20% of its net assets in taxable instruments. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in municipal securities.

The Intermediate Term Municipal Bond II Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 105 of the Prospectus:

Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e., at least 80% of net assets) in a portfolio of municipal bonds. The policy stated in the foregoing sentence is a fundamental policy of the Portfolio and may not be changed without shareholder approval. Municipal bonds are debt securities issued by municipalities and related entities, the interest on which is exempt from Federal income tax, and 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 and are referred to as “Tax-Exempt Municipal Securities.” The Portfolio invests primarily in securities that are rated in one of the top four rating categories of a nationally recognized statistical rating organization or, if unrated, that are determined by the Specialist Manager to be of comparable quality. Tax Exempt Securities purchased for the Portfolio will have varying maturities, but under normal circumstances the Portfolio will have an effective dollar weighted average portfolio maturity that is within the range of the average portfolio maturity in the Barclays Capital 3-15 Year Blend Municipal Bond Index, currently three to fifteen years. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in municipal securities.

 


Table of Contents

 

The Emerging Markets Portfolio (the “Portfolio”) (From the Supplement filed on July 29, 2016):

On July 29, 2016, RBC Global Asset Management (UK) Limited (“RBC GAM”) was added as a Specialist Manager to the Portfolio pursuant to a Portfolio Management Agreement approved by the shareholders of the Portfolio. The following material supplements the Prospectus dated November 1, 2015 to incorporate information about RBC GAM with respect to the Portfolio.

1. The following replaces the “Annual Operating Expenses” table and accompanying “Example” in the “Fees and Expenses” section on page 57 of the Prospectus:

Annual Operating Expenses

(expenses that you pay each year as a percentage of the value of your investment)

 

Management Fees (based on asset allocations among Specialist Managers, see “Advisory Services – Specialist Managers”)

     0.43

Other Expenses

     0.19

Acquired Fund Fees and Expenses

     0.04

Total Annual Portfolio Operating Expenses

     0.66

Example: This Example is intended to help you compare the cost of investing in the Portfolio with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Portfolio for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes the reinvestment of all dividends and distributions in shares of the Portfolio and that your investment has a 5% return each year and that the Portfolio’s operating expenses remain the same. Although your actual cost may be higher or lower, based on these assumptions, your costs would be:

 

1 Year

   $ 67   

3 Years

   $ 211   

5 Years

   $ 368   

10 Years

   $ 822   

2. The following replaces the “Investment Subadvisers” section on page 60 of the Prospectus:

Investment Subadvisers

AllianceBernstein L.P. (“AllianceBernstein”), Cadence Capital Management LLC (“Cadence”) Mellon Capital Management Corporation (“Mellon Capital”), Parametric Portfolio Associates (“Parametric”), Pacific Investment Management Company LLC (“PIMCO”) and RBC Global Asset Management (UK) Limited (“RBC GAM”) are the Specialist Managers for the Portfolio.

3. The following is added after “Parametric” under the “Portfolio Managers” section on page 60 of the Prospectus:

RBC GAM: Philippe Langham, ACA and Laurence Bensafi, CFA, have managed the portion of the Portfolio allocated to RBC since July, 2016.

4. The following replaces the first paragraph of the “Specialist Managers” section under “The Emerging Markets Portfolio” on page 133:

Specialist Managers. A portion of the Portfolio is managed in accordance with an “active management” approach, which involves the buying and selling of securities based upon economic, financial and market analysis and investment judgment. TBCAM, CLIM, Parametric and RBC GAM are currently responsible for implementing the active component of the Portfolio’s investment strategy. Cadence and Mellon Capital also manage a portion of the Portfolio that may be managed using a “passive” or “index” investment approach designed to replicate the composition of the Portfolio’s benchmark index or one or more identifiable subsets or other portions of that index (see “Fund Management,” included later in this Prospectus). The investment selection process for each of these Specialist Managers is described below; further information about the Specialist Managers, individual portfolio managers responsible for day-to-day investment decisions for the Portfolio, and the manner in which the Portfolio’s assets are allocated between them appears in the “Specialist Manager Guide” included later in this Prospectus.

5. The following is added to the Section “More Information About Fund Investments and Risks - The Emerging Markets Portfolio” on page 134:

 

The RBC GAM Investment Selection Process    The RBC GAM Emerging Markets Equity team believes that companies with a sustainably high cash flow return on investment (CFROI®) produce superior returns and seeks to identify and invest in such companies. There are three components RBC GAM looks for when selecting securities for this strategy: 1) Strong management; 2) Quality franchises; and 3) Sustainability. The strategy emphasizes quality and long-term growth at a reasonable price, combining a fundamental bottom-up approach to stock selection with a top-down macroeconomic overlay driven by long-term secular themes.
   RBC GAM generally sells stocks under the following circumstances: 1)The investment case has changed; 2) The valuation has increased to a level that supports realization of the profit; or 3) A better stock has been found.

6. The following replaces “Specialist Managers” section under “The Emerging Markets Portfolio” on page 154:

The Emerging Markets Portfolio – The Portfolio is managed by six Specialist Managers, each of whom is compensated in accordance with a different fee schedule. Although asset allocations and fees payable to the Specialist Managers may vary, the figures assume an anticipated allocation of assets at July 29, 2016 of 42% TBCAM, 0% Cadence, 0% CLIM, 4% Parametric, 42% Mellon Capital, 2% HC Capital and 10% RBC GAM.

7. The following is added to the “Specialist Manager Guide” on page 129 between Pzena Investment Management, LLC and Standish Mellon Asset Management Company LLC:

RBC Global Asset Management (UK) Limited (“RBC GAM”) serves as Specialist Manager for The Emerging Markets Portfolio. RBC GAM is a wholly owned subsidiary of Royal Bank of Canada. RBC GAM has been registered with the SEC as an investment adviser since September, 2013, and has been a portfolio manager of publicly-offered funds since 1998. RBC GAM maintains its offices at Riverbank House, 2 Swan Lane, London, UK, EC4R 3AF. As of March 31, 2016, RBC GAM managed approximately $13 billion in assets.

For its services with respect to the portion of The Emerging Markets Portfolio allocated to RBC GAM from time to time (the “Account”), RBC GAM receives a fee calculated at an annual rate of 0.80% of the first $100 million of Combined Assets; 0.65% of the next $150 million of Combined Assets; and 0.60% of Combined Assets in excess of $250 million. Combined Assets refers to the aggregate of all assets of the Portfolio managed by RBC GAM and any assets of other clients of the Adviser managed by RBC GAM using the same strategy. During the fiscal year ended June 30, 2015, RBC GAM was not allocated assets of The Commodity Returns Strategy Portfolio.

Philippe Langham, ACA, and Laurence Bensafi, CFA, are primarily responsible for the day-to-day management of the portion of the assets of Portfolio allocated to RBC GAM.

Philippe Langham is Senior Portfolio Manager and Head of the Emerging Markets Equity team in London and lead manager for the Emerging Markets Equity and Emerging Markets Small Cap Equity Strategies. Philippe joined RBC GAM in 2009 to establish and lead the Emerging Markets Equity team in London. He has worked in the investment industry since 1992 and prior to joining RBC GAM, Philippe was the Head of Global Emerging Markets at Société Générale Asset Management in London. Previously, Philippe managed the Global Emerging Markets, Asian, Latin American and US portfolios at the Kuwait Investment Office in London, and was Director and Head of Asia and Emerging Markets at Credit Suisse in Zurich. Philippe obtained a BSc in Economics from the University of Manchester in England, and is a Chartered Accountant.

Laurence Bensafi is Senior Portfolio Manager and Deputy Head of Emerging Markets Equity in London and lead portfolio manager for the Emerging Markets Value Equity strategy. Prior to joining RBC GAM in 2013, Laurence was the Head of Aviva Investors’ Emerging Markets team, where she was responsible for managing Global Emerging Markets income funds, and for developing quantitative stock selection and analysis models. Laurence began her investment career as a Quantitative Analyst at Société Générale Asset Management, supporting European and Global Equity portfolio management by developing quantitative models to assist in the portfolio construction and security selection process. In 1997, Laurence obtained a Magistère d’Économiste Statisticien & D.E.S.S. Statistique et Économétrie from Toulouse University in France. Laurence is a CFA charterholder.

8. The following disclosure is added following “Emerging Markets Risk” in the Principal Investment Risks section on page 37 of the Prospectus:

China Risk. In addition to the risks listed above under “Emerging Market Securities,” investing in China presents additional risks including confiscatory taxation, nationalization, exchange control regulations (including currency blockage) and differing legal standards. The Chinese government could, at any time, alter or discontinue economic reform programs implemented since 1978. Chinese authorities may intervene in the China securities market and halt or suspend trading of securities for short or even longer periods of time. Recently, the China securities market has experienced considerable volatility and been subject to relatively frequent and extensive trading halts and suspensions. These trading halts and suspensions have, among other things, contributed to uncertainty in the markets and reduced the liquidity of the securities subject to such trading halts and suspensions, which could include securities held by a Portfolio.

The Fixed Income Opportunity Portfolio (the “Portfolio”) (From the Supplement filed on July 29, 2016): The prospectus is supplemented to reflect the addition of Garrick Bauer in the portfolio managers for the Portfolio as shown below.

1. The following replaces the “Fort Washington” paragraph under the “Portfolio Managers” section of the Investment SubAdvisers, regarding the Portfolio on page 75 of the Prospectus:

Fort Washington: Brendan White and Timothy Jossart have co-managed the portion of the Portfolio allocated to Fort Washington since May, 2012. In 2016, Garrick Bauer also began co-managing alongside White and Jossart.

2. The following replaces the second paragraph of Fort Washington Investment Advisors, Inc. (“Fort Washington”) section of the “Specialist Manager Guide” on page 175 of the Prospectus:

Messrs. White, Jossart, and Bauer are the individuals primarily responsible for the day-to-day management of the portion of the Portfolio’s assets allocated to Fort Washington. Brendan White is Co-Chief Investment Officer and Senior Portfolio Manager for the High Yield strategy. He has led this strategy since its inception. In this role, he also manages the Credit Team and serves on the firm’s Senior Management Team. Mr. White joined the Firm in 1993. Prior to joining Fort Washington he was with Ohio Casualty Corporation where he was an analyst supporting the High Yield and Mortgage Backed Securities portfolios. Mr. White received a BS in Finance from The Ohio State University and an MBA from Xavier University. He is a CFA charter holder. Timothy Jossart is a Vice President, Co-Portfolio Manager and a Senior Credit Analyst focusing on high yield fixed income securities. Timothy joined the firm in 1996 as a member of the Public Equity team before moving to High Yield in 2005. Prior to joining Fort Washington Tim worked for Star Bank in Cincinnati where he was an equity analyst supporting Trust Department investments. Prior to his work at Star Bank, he spent two and a half years as a credit analyst with PNC Bank overseeing corporate credits. Timothy received a BBA in Finance from the University of Wisconsin-Madison. He is a CFA charterholder. Garrick Bauer is an Assistant Vice President, Co-Portfolio Manager and a Senior Credit Analyst focusing on high yield fixed income securities. Garrick joined the firm in 2013. Prior to joining Fort Washington he worked at Wellington Management Company as a credit portfolio manager on several mutual funds. While at Wellington he was also an analyst on the High Yield team following a variety of sectors. Prior to Wellington Management he worked at Summit Investment Partners and PricewaterhouseCoopers. Garrick received his BS in Accounting from Miami University and his Masters in Business Administration from the University of Virginia. He is a CFA charterholder and earned the Certified Public Accountant designation (inactive).

 

 

The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization - Mid Capitalization Equity Portfolio, The Institutional Small Capitalization - Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The International Equity Portfolio, The Institutional International Equity Portfolio and The Emerging Markets Portfolio (From the Supplement Filed on June 15, 2016): On June 14, 2016, the Trust, on behalf of its series, The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization- Mid Capitalization Equity Portfolio, The Institutional Small Capitalization- Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The International Equity Portfolio, The Institutional International Equity Portfolio and The Emerging Markets Portfolio, entered into new investment management agreements with Cadence Capital Management, LLC (“Cadence”) due to a change in control of Cadence’s parent. The new agreements, which are substantially identical to the existing investment management agreements, would take effect upon the anticipated change of control of Cadence’s parent company. No changes in Cadence’s investment management team are expected as a result of the change of control of Cadence’s parent company.

The Emerging Markets Portfolio (the “Portfolio”) (From the Supplement Filed on June 15, 2016): At a meeting held on June 14, 2016, the Board of Trustees(the “Board”) for HC Capital Trust (the “Trust”) (i) approved the engagement of RBC Global Asset Management (“RBC”) as an additional investment advisory organization (“Proposed Specialist Manager”) to manage portions of the assets of The Emerging Markets Portfolio and (ii) recommended approval of a portfolio management agreement between RBC and the Trust, on behalf of the Portfolio (the “Proposed Agreement”) by shareholders of the Portfolio. A meeting of the shareholders of the Portfolio is scheduled to be held on July 29, 2016 for the purpose of approving the Proposed Agreement.

The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization - Mid Capitalization Equity Portfolio, The Institutional Small Capitalization - Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The International Equity Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio and The Fixed Income Opportunity Portfolio (the “Portfolios”) (From the Supplement Filed on June 15, 2016): At a meeting held on June 14, 2016, the Board approved, on behalf of the Portfolios, (i) an additional strategy, known as the Targeted Strategy (as defined below), to be managed by Parametric Portfolio Associates, LLC (“Parametric”) and HC Capital Solutions, the investment adviser to the Portfolios and (ii) new Portfolio Agreements between the Trust and Parametric on behalf of each Portfolio, that include the compensation arrangements applicable to assets managed according to Parametric’s Targeted Strategy. In addition, a new member was added to the Parametric Liquidity Strategy team for each Portfolio and a new member replaced another member of the Parametric Defensive Equity Strategy team for The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio and The Institutional Growth Equity Portfolio. Accordingly, effective, June 15, 2016, the Prospectus is supplemented as follows:

1. The disclosure with respect to Parametric under the heading “Portfolio Managers” for each of The Small Capitalization - Mid Capitalization Equity Portfolio (p.28), The Institutional Small Capitalization - Mid Capitalization Equity Portfolio (p.33), The Real Estate Securities Portfolio (p.39), The Commodity Returns Strategy Portfolio (p.46), The International Equity Portfolio (p.51), The Institutional International Equity Portfolio (p.56), The Emerging Markets Portfolio (p. 62) and The Fixed Income Opportunity Portfolio (p.75) is hereby deleted and replaced with the following:

Parametric (Liquidity Strategy): Justin Henne, CFA, Clint Talmo, CFA and Jason Nelson, CFA have managed the portion of the Portfolio allocated to Parametric’s Liquidity Strategy since March, 2015 and Dane Fickel, Associate Portfolio Manager, has managed the portion of the Portfolio allocated to Parametric’s Liquidity Strategy since June, 2016.

Parametric (Targeted Strategy): Justin Henne, CFA, Tom Lee, CFA, Clint Talmo, CFA, Jason Nelson, CFA, Dane Fickel, Associate Portfolio Manager, Perry Li, Associate Portfolio Manager and Michael Zaslavsky, Associate Portfolio Manager, managed the portion of the Portfolio allocated to Parametric’s Targeted Strategy since June, 2016.

2. The disclosure with respect to The Parametric Investment Selection Process for each of The Small Capitalization - Mid Capitalization Equity Portfolio (p. 119), The Institutional Small Capitalization - Mid Capitalization Equity Portfolio (p. 121), The Real Estate Securities Portfolio (p. 123), The Commodity Returns Strategy Portfolio (p. 125), The International Equity Portfolio (p. 129), The Institutional International Equity Portfolio (p. 132), The Emerging Markets Portfolio (p. 134) and The Fixed Income Opportunity Portfolio (p. 136) is hereby deleted and replaced with the following:

 

The Parametric Investment Selection Process:   

Parametric currently manages assets for the Portfolio using two separate and distinct strategies: “Liquidity Strategy” and “Targeted Strategy”.

 

In selecting investments for that portion of the Portfolio to be managed pursuant to the Liquidity Strategy, Parametric adheres to a strategy that seeks to closely match the performance of the Portfolio’s benchmark index (or other benchmark as specified by the Adviser) through the use of exchange-traded futures contracts, exchange traded funds (ETFs) and closed-end funds. The strategy utilizes a disciplined approach that is implemented in a mechanical manner, and which does not rely on predictive forecasts or market timing when making investment decisions. The Liquidity Strategy seeks to provide returns commensurate with the Portfolio’s stated benchmark index or other benchmark as specified by the Adviser.

 

The Targeted Strategy is the second of a two stage investment process under the direction of the Adviser in which Parametric effects transactions at the direction of the Adviser as set forth in “HC Capital Solutions – Investment Selection Process” shown below. Parametric provides expertise in trade execution, instrument and structure selection. Additionally, Parametric provides customized reporting on position details, liquidity/margin status and adequacy, and performance.

3. The disclosure with respect to Parametric under the heading “Portfolio Managers” for each of The Value Equity Portfolio (p. 6), The Institutional Value Equity Portfolio (p. 11), The Growth Equity Portfolio (p. 17) and The Institutional Growth Equity Portfolio (p. 23) is hereby deleted and replaced with the following:

Parametric (Defensive Equity Strategy): Jay Strohmaier, CFA and Alex Zweber, CFA have managed the portion of the Portfolio allocated to Parametric’s Defensive Equity Strategy since July, 2014 and Perry Li, Associate Portfolio Manager, has managed the portion of the Portfolio allocated to Parametric’s Defensive Equity Strategy since June, 2016.

Parametric (Liquidity Strategy): Justin Henne, CFA, Clint Talmo, CFA and Jason Nelson, CFA have managed the portion of the Portfolio allocated to Parametric’s Liquidity Strategy since March, 2015 and Dane Fickel, Associate Portfolio Manager, has managed the portion of the Portfolio allocated to Parametric’s Liquidity Strategy since June, 2016.

Parametric (Targeted Strategy): Justin Henne, CFA, Tom Lee, CFA, Clint Talmo, CFA, Jason Nelson, CFA, Dane Fickel, Associate Portfolio Manager, Perry Li, Associate Portfolio Manager and Michael Zaslavsky, Associate Portfolio Manager, have managed the portion of the Portfolio allocated to Parametric’s Targeted Strategy since June, 2016.

4. The disclosure with respect to The Parametric Investment Selection Process for each of The Value Equity Portfolio (p. 112), The Institutional Value Equity Portfolio (p. 113), The Growth Equity Portfolio (p. 115) and The Institutional Growth Equity Portfolio (p. 117) is hereby deleted and replaced with the following:

 

The Parametric Investment Selection Process:    Parametric currently manages assets for the Portfolio using three separate and distinct strategies: “Defensive Equity Strategy”, “Liquidity Strategy” and “Targeted Strategy”.
   Parametric Defensive Equity Strategy uses equity index exposure (through exchanged traded funds and futures contracts), US Treasury bills, equity index call options and equity index put options. The strategy utilizes a rules-based approach that is implemented in a mechanical manner, and which does not rely on predictive forecasts or market timing when making investment decisions. The defensive equity strategy seeks to provide attractive relative returns compared to the S&P 500 over a full market cycle, while providing meaningful protection in down markets. Over shorter term time periods, the strategy is designed to deliver superior relative performance in modestly higher, flat and down markets, while trailing the index in strong markets.
   In selecting investments for that portion of the Portfolio to be managed pursuant to the Liquidity Strategy, Parametric adheres to a strategy that seeks to closely match the performance of the Portfolio’s benchmark index (or other benchmark as specified by the Adviser) through the use of exchange-traded futures contracts, exchange traded funds (ETFs) and closed-end funds. The strategy utilizes a disciplined approach that is implemented in a mechanical manner, and which does not rely on predictive forecasts or market timing when making investment decisions. The Liquidity Strategy seeks to provide returns commensurate with the Portfolio’s stated benchmark index or other benchmark as specified by the Adviser.
   The Targeted Strategy is the second of a two stage investment process under the direction of the Adviser in which Parametric effects transactions at the direction of the Adviser as set forth in “HC Capital Solutions – Investment Selection Process” shown below. Parametric provides expertise in trade execution, instrument and structure selection. Additionally, Parametric provides customized reporting on position details, liquidity/margin status and adequacy, and performance.

5. The following is added to the disclosure under the heading “More Information About Fund Investments and Risks” with respect to each of The Value Equity Portfolio (p. 112), The Institutional Value Equity Portfolio (p. 113), The Growth Equity Portfolio (p. 115), The Institutional Growth Equity Portfolio (p. 117), The Small Capitalization - Mid Capitalization Equity Portfolio (p. 119), The Institutional Small Capitalization - Mid Capitalization Equity Portfolio (p. 121), The Real Estate Securities Portfolio (p. 123), The Commodity Returns Strategy Portfolio (p. 125), The International Equity Portfolio (p. 129), The Institutional International Equity Portfolio (p. 132), The Emerging Markets Portfolio (p. 134) and The Fixed Income Opportunity Portfolio (p. 136):

 

The HC Capital Solutions Investment Selection Process:    The Adviser’s investment process is to determine what asset classes, market sectors, industries or countries offer the highest compensation for risk in the form of excess expected returns relative to a policy portfolio. The methodology for deriving expected returns is based on long-term normalized earnings in order to strip out the cyclical or transitory fluctuations. When the long-term, normalized earnings compared to the going-in price represents a substantial premium to the normal historical yield premium, the Adviser uses its professional judgment as to the optimal weighting in the Portfolio, taking into consideration the risk of impairment, the asset’s likely co-movement with other assets in the Portfolio and the contribution of the asset to the risk/reward ratio in the Portfolio’s total asset mix. When the asset is judged to considerably increase expected return or reduce the overall risk for the Portfolio, the Adviser seeks to implement the exposure with the most efficient instrument – including futures on indexes, customized tilted indexes and ETFs – when taking into account the trading costs, management fees, and basis risk of the instrument with the intended exposure. The Adviser then directs Parametric to establish the desired exposure relying on their trading expertise to execute on the most advantageous terms available in the given timeframe. The Adviser’s decision to reverse the exposure is predicated on the same considerations – expected risk/return contribution.

6. The following replaces the “Parametric Portfolio Associates LLC” section under the “Specialist Manager Guide” on page 181:

Parametric Portfolio Associates LLC (“Parametric”) serves as Specialist Manager for The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization – Mid Capitalization Equity Portfolio, The Institutional Small Capitalization – Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The International Equity Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio and The Fixed Income Opportunity Portfolio. Parametric is a majority-owned subsidiary of Eaton Vance Corporation (“Eaton Vance”). Eaton Vance through its wholly owned affiliates Eaton Vance Acquisitions (“EVA”) and EVA Holdings LLC, maintains voting control of Parametric and Profit and Capital interests of 92% and 97%, respectively. Parametric Portfolio LP (“PPLP”) maintains an indirect Profit and Capital ownership interest in Parametric of 8% and 3%, respectively. The business address of Eaton Vance, EVA and EVA Holdings, LLC is Two International Place, Boston, MA 02110. The business address of Parametric and PPLP is 1918 Eighth Ave, Seattle, WA 98101. As of June 30, 2015, Parametric and its subsidiary had approximately $146.1 billion in assets under management.

For its services to The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization – Mid Capitalization Equity Portfolio, The Institutional Small Capitalization – Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The International Equity Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio and The Fixed Income Opportunity Portfolio (the “Portfolios”), Parametric receives a fee from each Portfolio, calculated daily and payable monthly in arrears, at the annual rate of 0.15% of the first $50 million of the Combined Liquidity Assets (as defined below) committed to Parametric’s Liquidity Strategy; 0.10% of the next $100 million of the Combined Liquidity Assets and 0.05% on Combined Liquidity Assets over $150 million. The term “Combined Liquidity Assets” means the sum of the net assets of that portion of each of the Portfolios allocated to Parametric from time-to-time in their Liquidity Strategy. Parametric is also be entitled to receive a flat fee of $10,000 per year per Portfolio, provided that 1/12 of such fee related to any given Portfolio will be waived with respect to each calendar month during which no assets of such Portfolio were allocated to Parametric for investment in their Liquidity Strategy. Under the terms of separate portfolio management agreements, for its services to The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio and The Institutional Growth Equity Portfolio, Parametric is also entitled to receive a separate fee at the annual rate of 0.35% of the first $50 million of the Combined Defensive Assets committed to the Defensive Equity Strategy and 0.25% on Combined Defensive Assets over $50 million. Combined Defensive Assets means the sum of the net assets of that portion of each of The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio and The Institutional Growth Equity Portfolio allocated to Parametric from time-to-time for investment using the Defensive Equity Strategy. Under the terms of separate portfolio management agreements, for its services to The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization – Mid Capitalization Equity Portfolio, The Institutional Small Capitalization – Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The International Equity Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio and The Fixed Income Opportunity Portfolio, Parametric receives a fee from each Portfolio, calculated daily and payable monthly in arrears, at the annual rate of 0.05% of the Targeted Strategy Assets (as defined below) committed to Parametric’s Targeted Strategy. The term “Targeted Strategy Assets” means the sum of the net assets of that portion of each of the Portfolios allocated to Parametric from time-to-time in their Targeted Strategy. Parametric shall also be entitled to receive a flat fee of $5,000 per year, provided that such fee will be waived with respect to each calendar year during which no Portfolio assets were allocated to the Targeted Strategy Assets. During the fiscal year ended June 30, 2015, Parametric received fees of 0.08%, 0.07%, 0.07%, 0.07%, 0.33%, 0.24%, 0.31%, 0.08%, 0.07%, 0.06%, 0.31%, and 0.10% of the average daily net assets for the portion of The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization – Mid Capitalization Equity Portfolio, The Institutional Small Capitalization – Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The International Equity Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio and The Fixed Income Opportunity Portfolio, respectively.

Mr. Jay Strohmaier, Mr. Alex Zweber and Mr. Perry Li are primarily responsible for the day-to-day management of the portion of each the assets of each of The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio and The Institutional Growth Equity Portfolio allocated to Parametric for investment in its Defensive Equity strategy. Mr. Strohmaier, Senior Portfolio Manager, leads a team of investment professionals responsible for designing, trading and managing overlay portfolios with an emphasis on Defensive Equity, hedging, and other asymmetric strategies. Mr. Strohmaier joined Parametric upon Parametric’s acquisition of Clifton in 2012, and prior to that acquisition was employed by Clifton since 2009. Before joining Clifton in 2009, Mr. Strohmaier worked for Cargill, Peregrine Capital Management and Advantus Capital Management where his responsibilities included research, portfolio management, trading, marketing and client service. He has over 25 years of investment experience. Mr. Strohmaier holds a BS degree in Agricultural Economics from Washington State University and MS in Applied Economics from the University of Minnesota. Mr. Zweber, CFA, Portfolio Manager, joined Parametric in 2012 upon Parametric’s acquisition of Clifton, and prior to the acquisition worked at Clifton in various investment capacities for over eight years. Mr. Zweber holds a BA in Economics from Macalester College. Mr. Li is responsible for trading and assisting with day-to-day management of Parametric’s options-based investment strategies, including the Defensive Equity and other proprietary strategies. He is an Associate Portfolio Manager at Parametric. Prior to joining Parametric in 2014, Mr. Li worked for CHS Inc. from 2011 to 2014, where he managed commodity futures and options portfolios and conducted research on macro economy and derivative strategies. Mr. Li earned a B.S. in Statistics from the Sun Yat-Sen University and a M.S. in Financial Mathematics from the University of Minnesota. He holds a Financial Risk Manager certificate from the Global Association of Risk Professionals.

Mr. Justin Henne, Mr. Clint Talmo, Mr. Jason Nelson and Mr. Dane Fickel are primarily responsible for the day-to-day management of the portion of each Portfolio’s assets allocated to Parametric for investment in its Liquidity Strategy. As Managing Director – Customized Exposure Management, Mr. Henne leads the investment team responsible for the implementation and enhancement of Parametric’s Customized Exposure Management product. Mr. Henne joined Parametric upon Parametric’s acquisition of Clifton in 2012, and prior to that acquisition was employed by Clifton since 2004. Mr. Henne holds a BA in Financial Management from the University of St. Thomas. He is a CFA charterholder and a member of the CFA Society of Minnesota. Mr. Talmo is responsible for designing, trading, and managing overlay portfolios with an emphasis on options and OTC swaps. Prior to joining Parametric in 2014, Clint was a Partner at Aerwulf Asset Management from 2012 to 2014. Prior to that, he worked for Interlachen Capital Group and EBF & Associates where his responsibilities at each firm included research, trading, and portfolio management. He earned a B.S. in Finance from the University of Colorado. He is a CFA charterholder and a member of the CFA Society of Minnesota. Mr. Nelson is an Associate Portfolio Manager at Parametric. Prior to joining Parametric in 2014, Mr. Nelson worked for Marquette Asset Management from 2012 to 2014, where his responsibilities included asset allocation, equity research, and trading, and before that time worked as an Investment Analyst at Clifton. Mr. Nelson earned a B.S. in Economics and Finance from Minnesota State University, Mankato. He is a CFA charterholder and a member of the CFA Society of Minnesota. Mr. Fickel is responsible for trading client accounts as well as creating and analyzing daily investment management reports with an emphasis in OTC instruments. He is an Associate Portfolio Manager at Parametric. Prior to joining Parametric in 2015, Mr. Fickel worked for Russell Investments from 2010 to 2015 and Morgan Stanley from 2009 to 2010, where his responsibilities included trading, portfolio management and client services. Mr. Fickel earned a B.A. in Economics from the University of Washington.

Mr. Tom Lee, Mr. Jay Strohmaier, Mr. Alex Zweber, Mr. Justin Henne, Mr. Clint Talmo, Mr. Jason Nelson, Mr. Dane Fickel, Mr. Perry Li and Mr. Michael Zaslavsky are primarily responsible for the day-to-day management of the portion of each Portfolio’s assets allocated to Parametric for investment in its Targeted Strategy. Mr. Lee, Managing Director, Investment Strategy and Research, has oversight responsibility for all investment strategies managed out of Parametric’s Minneapolis investment center. Mr. Lee joined Parametric upon Parametric’s acquisition of The Clifton Group Investment Management Company (“Clifton”) in 2012, and prior to that acquisition was employed by Clifton since 1994. He earned a B.S. in economics and an MBA in finance from the University of Minnesota. He is a CFA charterholder and a member of the CFA Society of Minnesota. Mr. Strohmaier, Senior Portfolio Manager, leads a team of investment professionals responsible for designing, trading and managing overlay portfolios with an emphasis on Defensive Equity, hedging, and other asymmetric strategies. Mr. Strohmaier joined Parametric upon Parametric’s acquisition of Clifton in 2012, and prior to that acquisition was employed by Clifton since 2009. Before joining Clifton in 2009, Mr. Strohmaier worked for Cargill, Peregrine Capital Management and Advantus Capital Management where his responsibilities included research, portfolio management, trading, marketing and client service. He has over 25 years of investment experience. Mr. Strohmaier holds a BS degree in Agricultural Economics from Washington State University and MS in Applied Economics from the University of Minnesota. Mr. Zweber, CFA, Portfolio Manager, joined Parametric in 2012 upon Parametric’s acquisition of Clifton, and prior to the acquisition worked at Clifton in various investment capacities for over eight years. Mr. Zweber holds a BA in Economics from Macalester College. Mr. Justin Henne, As Managing Director – Customized Exposure Management, Mr. Henne leads the investment team responsible for the implementation and enhancement of Parametric’s Customized Exposure Management product. Mr. Henne joined Parametric upon Parametric’s acquisition of Clifton in 2012, and prior to that acquisition was employed by Clifton since 2004. Mr. Henne holds a BA in Financial Management from the University of St. Thomas. He is a CFA charterholder and a member of the CFA Society of Minnesota. Mr. Talmo is responsible for designing, trading, and managing overlay portfolios with an emphasis on options and OTC swaps. Prior to joining Parametric in 2014, Mr. Talmo was a Partner at Aerwulf Asset Management from 2012 to 2014. Prior to that, he worked for Interlachen Capital Group and EBF & Associates where his responsibilities at each firm included research, trading, and portfolio management. He earned a B.S. in Finance from the University of Colorado. He is a CFA charterholder and a member of the CFA Society of Minnesota. Mr. Nelson is an Associate Portfolio Manager at Parametric. Prior to joining Parametric in 2014, Mr. Nelson worked for Marquette Asset Management from 2012 to 2014, where his responsibilities included asset allocation, equity research, and trading, and before that time worked as an Investment Analyst at Clifton. Mr. Nelson earned a B.S. in Economics and Finance from Minnesota State University, Mankato. He is a CFA charterholder and a member of the CFA Society of Minnesota. Mr. Fickel is responsible for trading client accounts as well as creating and analyzing daily investment management reports with an emphasis in OTC instruments. He is an Associate Portfolio Manager at Parametric. Prior to joining Parametric in 2015, Mr. Fickel worked for Russell Investments from 2010 to 2015 and Morgan Stanley from 2009 to 2010, where his responsibilities included trading, portfolio management and client services. Mr. Fickel earned a B.A. in Economics from the University of Washington. Mr. Li is responsible for trading and assisting with day-to-day management of Parametric’s options-based investment strategies, including the Defensive Equity and other proprietary strategies. He is an Associate Portfolio Manager at Parametric. Prior to joining Parametric in 2014, Mr. Li worked for CHS Inc. from 2011 to 2014, where he managed commodity futures and options portfolios and conducted research on macro economy and derivative strategies. Mr. Li earned a B.S. in Statistics from the Sun Yat-Sen University and a M.S. in Financial Mathematics from the University of Minnesota. He holds a Financial Risk Manager certificate from the Global Association of Risk Professionals. Mr. Zaslavsky is responsible for trading and assisting with day-to-day management of Parametric’s options-based investment strategies, including the Defensive Equity and other proprietary strategies. He is an Associate Portfolio Manager at Parametric. Prior to joining Parametric in 2015, Mr. Zaslavsky worked for Citigroup’s proprietary options trading and market-making group from 2009 to 2015, where he specialized in volatility modeling, portfolio management and derivatives arbitrage. He earned a B.S. in Finance from Bowling Green State University.

The Institutional Value Equity Portfolio and The Institutional Growth Equity Portfolio (the “Portfolios”) (From the Supplement Filed on June 15, 2016): The prospectus is supplemented to reflect the removal of Mohsen Fahmi in the portfolio managers for the Portfolios as shown below.

1. The following replaces the “PIMCO” paragraph under the “Portfolio Managers” section of the Investment SubAdvisers, regarding the Institutional Value Equity Portfolio on page 11 of the Prospectus:

PIMCO: Sudi Mariappa has managed the portion of the Portfolio allocated to PIMCO since January, 2015

2. The following replaces the “PIMCO” paragraph under the “Portfolio Managers” section of the Investment SubAdvisers, regarding the Institutional Growth Equity Portfolio on page 23 of the Prospectus:

PIMCO: Sudi Mariappa has managed the portion of the Portfolio allocated to PIMCO since January, 2015

3. The following replaces the second paragraph of Pacific Investment Management Company LLC (“PIMCO”) section of the “Specialist Manager Guide” on page 180 of the Prospectus:

For its services to The Institutional Value Equity and The Institutional Growth Equity Portfolios, PIMCO receives an annual fee of 0.25% of that portion of each Portfolio’s assets allocated to PIMCO from time to time. During the fiscal year ended June 30, 2015, PIMCO received a fee of 0.25% of the average daily net assets of the portion of The Institutional Growth Equity Portfolio allocated to PIMCO. During the fiscal year ended June 30, 2015, PIMCO was not allocated assets of The Institutional Value Portfolio. Sudi Mariappa is primarily responsible for the day-to-day management of that portion of the Portfolios allocated to PIMCO. Mr. Mariappa is a managing director and generalist portfolio manager in the Newport Beach office. He rejoined PIMCO in 2014 from GLG, a London-based hedge fund, where he was a managing director, developing and managing fixed income funds. Previously at PIMCO, Mr. Mariappa was a managing director and head of global portfolio management. He also served as a senior advisor to PIMCO’s portfolio management group from 2009-2011. Prior to joining PIMCO in 2000, he was a managing director for Merrill Lynch in Tokyo, overseeing Japanese government bond and swap derivative trading. He has 28 years of investment experience and holds an MBA, as well as a bachelor’s degree in chemical engineering, from Cornell University.

 

 

The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Short-Term Municipal Bond Portfolio and The Intermediate Term Municipal Bond Portfolio II (the “Portfolios”) (From the Supplement Filed on May 2, 2016)

The prospectus is supplemented to reflect a change in the portfolio managers for each of the Portfolios as shown below.

1. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding AllianceBernstein L.P. (“AllianceBernstein”), on page 6 of the Prospectus with respect to The Value Equity Portfolio:

AllianceBernstein: Gerry Paul has managed the portion of the Portfolio allocated to AllianceBernstein since September, 2009, and Cem Inal has co-managed the portion of the Portfolio allocated to AllianceBernstein since March, 2016.

2. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding AllianceBernstein, on page 11 of the Prospectus with respect to The Institutional Value Equity Portfolio:

AllianceBernstein: Gerry Paul has managed the portion of the Portfolio allocated to AllianceBernstein since September, 2009, and Cem Inal has co-managed the portion of the Portfolio allocated to AllianceBernstein since March, 2016.

3. The following replaces the third and fourth paragraphs of the AllianceBernstein section of the “Specialist Manager Guide” on page 168 of the Prospectus:

Gerry Paul and Cem Inal are responsible for making day-to-day investment decisions for that portion of The Value Equity and Institutional Value Equity Portfolios allocated to AllianceBernstein. Mr. Paul was appointed CIO of the North American Value Equity Investment Policy Group and Co-CIO of U.S. Large Cap Equities in 2009. Prior to this appointment, Mr. Paul was the Global Head of Diversified Value Services, CIO – Advanced Value Fund, CIO – Small and Mid-Capitalization, and Co-CIO – Real Estate Investments. Mr. Paul joined Bernstein in 1987 as a research analyst covering the automotive industry. He earned a BS from the University of Arizona and an MS from the Sloan School of Management of the Massachusetts Institute of Technology.

Mr. Inal was appointed Portfolio Manager of US Large Cap Value Equities in March 2016. He is also a Senior Research Analyst and leader of the technology sector. Previously, Mr. Inal co-managed the International Small Cap Value service from its inception in 2014 until 2016. Before joining the firm in 2003 as a research analyst, Mr. Inal was a vice president at fusionOne, a communications software provider. Prior to that, he was an engagement manager at McKinsey & Company and a research engineer at Mitsubishi Electric. Mr. Inal holds a BSE in electrical engineering from Princeton University and an MBA in financial engineering from Cornell University.

4. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding Breckinridge Capital Advisors, Inc. (“Breckinridge”) on page 99 of the Prospectus with respect to The Short-Term Municipal Bond Portfolio:

Breckinridge: Peter Coffin and David Madigan have co-managed the Portfolio since March, 2006. Matthew Buscone has co-managed the Portfolio since July, 2008. Ji Young Jung and Sara Chanda have co-managed since March, 2013 and December, 2013, respectively. Jeff Glenn and Eric Haase have co-managed the Portfolio since May, 2015 and May, 2016, respectively.

5. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding Breckinridge on page 109 of the Prospectus with respect to The Short-Term Municipal Bond Portfolio:

Breckinridge: Peter Coffin, David Madigan and Matthew Buscone have co-managed the Portfolio since March, 2010. Ji Young Jung and Sara Chanda have co-managed since March, 2013 and December, 2013, respectively. Jeff Glenn and Eric Haase have co-managed the Portfolio since May, 2015 and May, 2016, respectively.

6. The following replaces the third paragraph of the Breckinridge section of the “Specialist Manager Guide” on page 170 of the Prospectus:

The portfolio management team is led by a team of investment professionals at Breckinridge, including the following individuals who are jointly and primarily responsible for making day-to-day investment decisions: Peter B. Coffin, President of Breckinridge, David Madigan, Chief Investment Officer at Breckinridge, Matthew Buscone, Portfolio Manager at Breckinridge, Ji Young Jung, Portfolio Manager at Breckinridge, Sara Chanda, Portfolio Manager at Breckinridge, Jeff Glenn, Portfolio Manager at Breckinridge and Eric Haase, Portfolio Manager at Breckinridge.

Prior to founding Breckinridge in 1993, Mr. Coffin was a Senior Vice-President and portfolio manager with Massachusetts Financial Services, where he was also a member of the firm’s Fixed Income Policy Committee.

Mr. Madigan joined Breckinridge in 2003. He was Executive Vice-President at Thomson Financial and was a portfolio manager at Banker’s Trust and Prudential Insurance (managing single state municipal bond funds). Mr. Madigan also has served as Chief Municipal Strategist for Merrill Lynch.

Mr. Buscone joined Breckinridge in 2002. He has been a Portfolio Manager since 2008, after having served as a trader at Breckinridge. Prior to joining Breckinridge, he was a trader at Mellon Private Asset Management, and a portfolio manager at David L. Babson from 1992 to 2002.

Mr. Glenn, CFA, joined Breckinridge in 2012. He has been a Portfolio Manager since 2015, after having served as a trader since 2012. Prior to joining Breckinridge, Mr. Glenn was an Associate Portfolio Manager/ Analyst at Brandes Investment Partners from 2002 to 2012, and an Associate Director at Banc One Markets responsible for investment grade utility credits from 2000 to 2002. Mr. Glenn began his career at Old Republic Asset Management as an Investment Analyst.

Ms. Chanda joined Breckinridge in 2010. She has been a Portfolio Manager since 2013, after spending her first few years at Breckinridge as a trader. Ms. Chanda was a Vice President and trader at Eaton Vance Management from 1999 to 2003, where she was responsible for trading various specialty state mutual funds and overseeing the adviser’s separately managed account trading and operations. Ms. Chanda also was responsible for municipal bond trading at Fidelity Investments. Ms. Chanda began her career at State Street Bank & Trust Company.

Ms. Jung, CFA, joined Breckinridge in 2010. She has been a Portfolio Manager since 2013 after spending her prior time at Breckinridge as a credit analyst and then a portfolio analyst. Prior to joining Breckinridge, Ms. Jung worked as an analyst for Assured Guaranty from 2009 to 2010 and for Financial Security Assurance from 2006 to 2009.

Mr. Haase, CFA, joined Breckinridge in 2016. Previously, Mr. Haase was employed at SCS Financial LLC from 2005 to 2016, where he served in various roles including trader. His most recent role at SCS was a Portfolio Manager focusing on tax-exempt separate accounts and conducting manager research across fixed income sectors.

 

 

The Commodity Returns Strategy Portfolio (From the Supplement Filed on March 29, 2016):

At a meeting held on March 8, 2016, the Board of Trustees (the “Board”) for HC Capital Trust (the “Trust”) approved the engagement of Vaughan Nelson Investment Management, L.P. (“Vaughan Nelson”) as an investment advisory organization (“Specialist Manager”) to manage portions of the assets of The Commodity Returns Strategy Portfolio. Accordingly, effective March 29, 2016, the Prospectus is supplemented as shown below and related disclosures amended accordingly.

1. The following replaces the “Investment Subadvisers” section on page 46 of the Prospectus:

Investment Subadvisers

Cadence Capital Management LLC (“Cadence”), Mellon Capital Management Corporation (“Mellon Capital”), Parametric Portfolio Associates (“Parametric”), Pacific Investment Management Company LLC (“PIMCO”), Vaughan Nelson Investment Management, L.P. (“Vaughan Nelson”) and Wellington Management Company LLP (“Wellington Management”) are the Specialist Managers for the Portfolio.

2. The following is added to the “Portfolio Managers” section on page 46 of the Prospectus:

Vaughan Nelson: Steve Henriksen, Charles Ellis, Portfolio Manager and Blanca Garza- Bianco have co-managed the portion of the Portfolio allocated to Vaughan Nelson since March 2016.

3. The following replaces “Specialist Managers” introductory paragraph under “The Commodity Returns Strategy Portfolio” on page 124:

Specialist Managers. A portion of the Portfolio is managed in accordance with an “active management” approach, which involves the buying and selling of securities based upon economic, financial and market analysis and investment judgment. Parametric, PIMCO, Vaughan Nelson and Wellington Management are currently responsible for implementing the active component of the Portfolio’s investment strategy. The remaining portion of the Portfolio is managed using “passive” or “index” investment approaches that are designed to approximate as closely as practicable, before expenses, the performance of the Portfolio’s benchmark index or one or more identifiable subsets or other portions of that index (see “Fund Management,” included later in this Prospectus). Cadence and Mellon Capital are currently responsible for implementing the passive component of the Portfolio’s investment strategy. Further information about the Specialist Managers, individual portfolio managers responsible for day-to-day investment decisions for the Portfolio, and the manner in which the Portfolio’s assets are allocated among them appears in the “Specialist Manager Guide” included later in this Prospectus.

4. The following is added under “More Information About Fund Investments and Risks—The Commodity Returns Strategy Portfolio; Specialist Managers” beginning on page 125:

 

The Vaughan Nelson Investment Selection Process    In making investment decisions for the Portfolio, Vaughan Nelson employs bottom-up fundamental analysis and achieves flexibility in fixed income portfolio construction through sector rotation, duration/yield curve positioning and opportunistic trading efficiencies to produce a value-oriented portfolio of energy/commodity sector fixed income securities. Vaughan Nelson tries to emphasize capital preservation relative to other opportunities within its investment universe and, therefore, focuses on companies’ balance sheets, short-term liquidity and asset bases. The sell discipline is driven by a combination of factors, including the realization of the investment objective, new risks materializing, credit quality deterioration or a better relative value opportunity is uncovered.


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5. The following replaces “The Commodity Returns Strategy Portfolio” paragraph under “Advisory Services-Specialist Managers” on page 154:

The Commodity Returns Strategy Portfolio – The Portfolio is managed by six Specialist Managers, each of whom is compensated in accordance with a different fee schedule. Although asset allocations and fees payable to the Specialist Managers may vary, the figures assume an estimated allocation of assets at March 29, 2016 of 28% Wellington Management Global Natural Resources strategy, 17% Wellington Management Commodity strategy, 3% Parametric, 16% PIMCO, 0% Cadence, 8% Vaughan Nelson and 28% Mellon Capital.

6. The following is added as a new section in the “Specialist Manager Guide” beginning before the last two paragraphs on page 184:

Vaughan Nelson Investment Management, L.P. (“Vaughan Nelson”) serves as a Specialist Manager of The Commodity Returns Strategy Portfolio. Vaughan Nelson is an indirect wholly-owned subsidiary of Natixis Global Asset Management SA, a French investment banking/financial services firm, of which a minority share of ownership is publicly traded on the Euronext exchange in Paris. Vaughan Nelson’s headquarters are located at 600 Travis Street, Suite 6300, Houston, Texas 77002. Founded in 1970, Vaughan Nelson is a registered investment adviser which has approximately $12.5 billion in assets under management as of December 31, 2015.

For its services with respect to the portion of The Commodity Returns Strategy Portfolio allocated to Vaughan Nelson from time to time (the “Account”), Vaughan Nelson shall receive a fee calculated at an annual rate and payable quarterly in arrears based on the Average Quarterly Net Assets of the Combined Assets (as defined below) of 0.35% of the first $25 million of the Combined Assets, 0.25% of the next $75 million of Combined Assets and 0.20% of the Combined Assets exceeding $100 million. For purposes of calculating fees, the term “Combined Assets” shall mean the sum of (i) the net assets of the Account; and (ii) the net assets of each other investment advisory account for which the Adviser serves as investment adviser and for which Vaughan Nelson provides portfolio management services (“Other Hirtle Accounts”) using the same strategies as employed for the Account. “Average Quarterly Net Assets” shall mean the average of the average daily net asset values of the Account and/or the average of the net asset values of the Other Hirtle Accounts, as the case may be, as of the last business day of each of the three months in the calendar quarter. During the fiscal year ended June 30, 2015, Vaughan Nelson was not allocated assets of The Commodity Returns Strategy Portfolio.

Day-to-day investment decisions for The Commodity Returns Strategy Portfolio are the responsibility of Steve Henriksen, Senior Portfolio Manager/ Director -Fixed Income Investments of Vaughan Nelson, Charles Ellis, Portfolio Manager and Blanca Garza-Bianco, Portfolio Manager, each a member of the Vaughan Nelson Fixed Investment team. Mr. Henriksen joined Vaughan Nelson in 1994. He received a B.A. from Louisiana State University and has over 33 years of investment management and research experience. Mr. Ellis joined Vaughan Nelson in 2003. He received a B.B.A. from Texas Tech University and has over 41 years of investment management and research experience. Ms. Garza-Bianco joined Vaughan Nelson in 1998. She received a B.A. from the University of Houston and an M.B.A. from the University of St. Thomas and has over 23 years of investment management and research experience.

The Core Fixed Income Portfolio, The Fixed Income Opportunity Portfolio, The U.S. Government Fixed Income Securities Portfolio, The Inflation Protected Securities Portfolio, The U.S. Corporate Fixed Income Securities Portfolio and The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio (the “Portfolios”) (From the Supplement Filed on March 29, 2016):

The prospectus is supplemented to reflect a change in the portfolio managers for each of the Portfolios as shown below.

1. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding Mellon Capital Management Corporation (“Mellon Capital”) on page 68 of the Prospectus with respect to The Core Fixed Income Portfolio:

Mellon Capital: David C. Kwan and Gregg Lee have co-managed the portion of the Portfolio allocated to Mellon Capital since December, 2010 and Paul Benson has co-managed the portion of the Portfolio allocated to Mellon Capital since March 2016.

2. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding Mellon Capital Management Corporation (“Mellon Capital”) on page 75 of the Prospectus with respect to The Fixed Income Opportunity Portfolio:

Mellon Capital: David Kwan, John DiRe, Manual Hayes and Stephanie Shu have co-managed the portion of the Portfolio allocated to Mellon Capital since August, 2013 and Paul Benson has co-managed the portion of the Portfolio allocated to Mellon Capital since March 2016.


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3. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding Mellon Capital Management Corporation (“Mellon Capital”) on page 79 of the Prospectus with respect to The U.S. Government Fixed Income Securities Portfolio:

Mellon Capital: David C. Kwan and Gregg Lee have co-managed the Portfolio since December, 2010 and Paul Benson has co-managed the Portfolio since March 2016.

4. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding Mellon Capital Management Corporation (“Mellon Capital”) on page 84 of the Prospectus with respect to The Inflation Protected Securities Portfolio:

Mellon Capital: David C. Kwan, CFA and Wyatt Cerny have co-managed the Portfolio since the Portfolio’s inception in February 2014 and Paul Benson has co-managed the Portfolio since March 2016.

5. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding Mellon Capital Management Corporation (“Mellon Capital”) on page 89 of the Prospectus with respect to The U.S. Corporate Fixed Income Securities Portfolio:

Mellon Capital: David C. Kwan, John DiRe, and Manuel Hayes have co-managed the portion of the Portfolio allocated to Mellon Capital since August 2013 and Paul Benson has co-managed the portion of the Portfolio allocated to Mellon Capital since March 2016.

6. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding Mellon Capital Management Corporation (“Mellon Capital”) on page 94 of the Prospectus with respect to The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio:

Mellon Capital: Mr. David C. Kwan and Mr. Gregg Lee have co-managed the Portfolio since December, 2012 and Paul Benson has co-managed the Portfolio since March 2016.

7. The following replaces the Mellon Capital Management Corporation section of the “Specialist Manager Guide” on page 177 of the Prospectus:

Mellon Capital Management Corporation (“Mellon Capital”) serves as a Specialist Manager for The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization—Mid Capitalization Equity Portfolio, The Institutional Small Capitalization—Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The International Equity Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio, The Core Fixed income Portfolio, The Fixed Income Opportunity Portfolio, The Inflation Protected Securities Portfolio and The U.S. Corporate Fixed Income Securities Portfolio. Mellon Capital, which was organized as a Delaware corporation in 1983, is headquartered at 50 Fremont Street, Suite 3900, San Francisco, CA 94105. Mellon Capital is a wholly-owned indirect subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”).

For its services to The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization—Mid Capitalization Equity Portfolio and The Institutional Small Capitalization—Mid Capitalization Equity Portfolio, Mellon Capital receives a fee from each Portfolio calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it, at an annual rate of 0.065% so long as the aggregate assets allocated to Mellon Capital for all of its passive equity mandates (including accounts for other clients of the Adviser and certain of its affiliates besides the Trust) exceed $2 billion. Should these aggregate assets fall below $2 billion, the fee will be calculated at an annual rate of 0.075%. During the fiscal year ended June 30, 2015, Mellon Capital received fees of 0.065% of the average daily net assets for each portion of The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization—Mid Capitalization Equity Portfolio and The Institutional Small Capitalization—Mid Capitalization Equity Portfolio allocated to Mellon Capital. Mellon Capital did not manage any assets of The Value Equity Portfolio and The Institutional Value Equity Portfolio during the fiscal year ended June 30, 2015.


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For its services to The Real Estate Securities Portfolio and The Commodity Returns Strategy Portfolio, Mellon Capital receives a fee from each Portfolio calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it, at an annual rate of 0.10% so long as the aggregate assets allocated to Mellon Capital for all of its passive equity mandates (including accounts for other clients of the Adviser and certain of its affiliates besides the Trust) exceed $2 billion. Should these aggregate assets fall below $2 billion, the fee will be calculated at an annual rate of 0.11%. During the fiscal year ended June 30, 2015, Mellon Capital received fees of 0.10% of the average daily net assets for the portion of The Commodity Returns Strategy Portfolio allocated to Mellon Capital. Mellon Capital did not manage any assets of The Real Estate Securities Portfolio during the fiscal year ended June 30, 2015.

For its services to The International Equity Portfolio and The Institutional International Equity Portfolio Mellon Capital receives a fee from each Portfolio calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it, at an annual rate of 0.10% for those assets allocated to developed markets strategies and at an annual rate of 0.13% for those assets allocated to emerging markets strategies, so long as the aggregate assets allocated to Mellon Capital for all of its passive equity mandates (including accounts for other clients of the Adviser and certain of its affiliates besides the Trust) exceed $2 billion. Should these aggregate assets fall below $2 billion, the fee will be calculated an annual rate of 0.11% for those assets allocated to developed markets strategies and at an annual rate of 0.15% for those assets allocated to emerging markets strategies. During the fiscal year ended June 30, 2015, Mellon received fees of 0.13% of the average daily net assets for each portion of The International Equity Portfolio and The Institutional International Equity Portfolio allocated to Mellon Capital.

For its services to The Emerging Markets Portfolio, Mellon Capital receives a fee from each Portfolio calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it, at an annual rate of 0.13% so long as the aggregate assets allocated to Mellon Capital for all of its passive equity mandates (including accounts for other clients of the Adviser and certain of its affiliates besides the Trust) exceed $2 billion. Should these aggregate assets fall below $2 billion, the fee will be calculated at an annual rate of 0.15%. During the fiscal year ended June 30, 2015, Mellon Capital received fees of 0.13% of the average daily net assets for the portion of The Emerging Markets Portfolio allocated to Mellon Capital.

For its services to The Core Fixed Income Portfolio (for assets allocated to government and mortgage/asset backed securities strategies), The U.S. Government Fixed Income Securities Portfolio and The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio, Mellon Capital receives a fee, based on the average daily net asset value of that portion of the assets of each Portfolio managed by it, at an annual rate of 0.06%. During the fiscal year ended June 30, 2015, Mellon Capital received fees of 0.06% of the average daily net assets for each portion of The Core Fixed Income Portfolio, The U.S. Government Fixed Income Securities Portfolio and The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio allocated to Mellon Capital.

For its services to The Core Fixed Income Portfolio (for assets allocated to corporate securities strategies) and the U.S. Corporate Fixed Income Securities Portfolio, Mellon Capital receives a fee, based on the average daily net asset value of that portion of the assets of each Portfolio managed by it, at an annual rate of 0.15% of that portion of each Portfolio dedicated to investments in U.S. corporate fixed income securities. During the fiscal year ended June 30, 2015, Mellon Capital received fees of 0.15% of the average daily net assets for the portion of The Core Fixed Income Portfolio allocated (to corporate securities strategies) to Mellon Capital. Mellon Capital did not manage any assets in The U.S. Corporate Fixed Income Securities Portfolio during the fiscal year ended June 30, 2015.

For its services to The Fixed Income Opportunity Portfolio, Mellon Capital receives a fee, based on the average daily net asset value of that portion of the assets of the Portfolios managed by it, at an annual rate of 0.25%. During the fiscal year ended June 30, 2015, Mellon Capital was not allocated assets of The Fixed Income Opportunity Portfolio.

For its services to The Inflation Protected Securities Portfolio, Mellon Capital receives a fee from the Portfolio calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it, at an annual rate of: 0.04% of the average daily net assets of that portion of the Account invested according to a domestic inflation-protected securities strategy; 0.07% of the average daily net assets of that portion of the Account invested according to a global inflation-protected securities strategy; and 0.13% of the average daily net assets of that portion of the Account invested according to an emerging markets inflation-protected securities strategy. During the period ended June 30, 2015, Mellon Capital received fees of 0.04% of the average daily net assets of The Emerging Markets Portfolio.

The Portfolio Managers for the Value Equity, Institutional Value Equity, Growth Equity, Institutional Growth Equity, Small Capitalization—Mid Capitalization Equity and Institutional Small Capitalization—Mid Capitalization Equity Portfolios are Karen Wong, William Cazalet, Ronald Gala and Kristin Crawford. The Portfolio Managers for the Real Estate Securities, Commodity Returns Strategy, International Equity, Institutional International Equity and Emerging Markets Portfolios are Karen Wong, William Cazalet, Peter Goslin and Kristin Crawford. The Portfolio Managers for The Inflation Protected Securities Portfolio are David C. Kwan, CFA, Paul Benson, CFA, CAIA and Wyatt Cerny.


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Karen Q. Wong, CFA is a Managing Director and Head of Equity Portfolio Management at Mellon Capital. She has an M.B.A. and a B. S. from San Francisco State University. Ms. Wong has 15 years of investment experience with tenure of 14 years at Mellon Capital. Ms. Wong is the head of equity portfolio management responsible for overseeing all equity indexing strategies, including exchange traded funds (ETFs) and is responsible for refinement and implementation of the equity portfolio management process. She is a member of the Senior Management Committee, Investment Management Committee, Risk Management Committee, Fiduciary Committee, and Trade Management Oversight Committee. Prior to joining Mellon Capital she worked as a security analyst at Redwood Securities. She is member of the CFA Institute and the CFA Society of San Francisco and is also a member of S&P Index Advisory Panel and Russell Index Client Advisory Board.

William Cazalet, CAIA is a Managing Director and Head of Active Equity Portfolio Management at Mellon Capital. He has an M.S.M from Stanford University Graduate School of Business and an M.A. from Cambridge University. Mr. Cazalet has 21 years of investment experience and joined Mellon Capital in 2013. Mr. Cazalet manages the entire team of portfolio managers and researchers for all U.S. and international active equity strategies.

Ronald Gala, CFA is a Managing Director, Team Leader and Senior Portfolio Manager for the Active Equity Strategies. Mr. Gala has 28 years of investment experience with tenure of 21 years between Mellon Capital and Mellon Equity Associates, LLP. He is a member and past president of the CFA Society of Pittsburgh and a member of the CFA Institute. He has an M.B.A. from the University of Pittsburgh and a B.S. from Duquesne University.

Kristin Crawford is a Director and Senior Portfolio Manager for the Active Equity Strategies. Ms. Crawford has 21 years of investment experience with tenure of 13 years between Mellon Capital and Franklin Portfolio Associates. She has an M.B.A. from Suffolk University and a B.S. from Smith College. Prior to joining Mellon Capital, she was a vice president and portfolio manager at Franklin Portfolio Associates.

Peter Goslin, CFA is a Director and Senior Portfolio Manager for the Active Equity Strategies. Mr. Goslin has 21 years of investment experience with tenure of 15 years at Mellon Capital. Mr. Goslin has an M.B.A. from the University of Notre Dame in Finance. Prior to joining Mellon Capital, Mr. Goslin was a derivatives trader and NASDAQ market maker for Merrill Lynch and ran Merrill’s Equity Index Option desk at the Chicago Mercantile Exchange.

Day-to-day investment decisions for the portions of The Core Fixed Income Portfolio and The U.S. Government Fixed Income Securities Portfolio allocated to Mellon Capital are the responsibility of David C. Kwan, CFA, Paul Benson, CFA, CAIA and Gregg Lee, CFA. Mr. Kwan is a Managing Director, Fixed Income Management of Mellon Capital with 24 years of investment experience at the firm. He earned both a B.S. and an M.B.A. at the University of California at Berkeley. Mr. Benson is Managing Director and Head of Fixed Income Portfolio Management at Mellon Capital with 20 years of investment experience and 10 years at the firm. He earned a B.A.at the University of Michigan at Ann Arbor. Mr. Lee is a Vice President, Senior Portfolio Manager at Mellon Capital with 25 years of finance and investment experience and 25 years at the firm. He earned a B.S. at University of California at Davis.

Day-to-day investment decisions for the portion of The Fixed Income Opportunity Portfolio allocated to Mellon Capital are the responsibility of David Kwan, John DiRe, Manual Hayes, Paul Benson, CFA, CAIA and Stephanie Shu. Mr. Kwan is a Managing Director, Fixed Income Management of Mellon Capital with 24 years of investment experience at the firm. He earned both a B.S. and an M.B.A. at the University of California at Berkeley. Mr. DiRe is a Director, Senior Portfolio Manager with 21 years of investment experience and 10 years at the firm. He earned a B.S at the University of Illinois, Chicago and an M.B.A. at University of California at Los Angeles. Mr. Hayes is a Senior Portfolio Manager with 10 years investment experience and 5 years at the firm. He earned a B.S at the University of California at Berkeley. Ms. Shu is a Director, Senior Portfolio Manager with 16 years of investment experience and 14 years at the firm. She earned a M.S. at Texas A&M University.

Day-to-day investment decisions for the portion of The U.S. Corporate Fixed Income Securities Portfolio allocated to Mellon Capital are the responsibility of David C. Kwan, CFA, Paul Benson, CFA, CAIA , John DiRe, and Manual Hayes. Mr. Kwan is a Managing Director, Fixed Income Management of Mellon Capital with 24 years of investment experience at the firm. He earned both a B.S. and an M.B.A. at the University of California at Berkeley. Mr. Benson is Managing Director and Head of Fixed Income Portfolio Management at Mellon Capital with 20 years of investment experience and 10 years at the firm. He earned a B.A.at the University of Michigan at Ann Arbor. Mr. DiRe is a Director, Senior Portfolio Manager with 21 years of investment experience and 10 years at the firm. He earned a B.S at the University of Illinois, Chicago and an M.B.A. at University of California at Los Angeles. Mr. Hayes is a Senior Portfolio Manager with 10 years investment experience and 5 years at the firm. He earned a B.S at the University of California at Berkeley.


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The Portfolio Managers for The Inflation Protected Securities Portfolio are David C. Kwan, CFA, Paul Benson, CFA, CAIA and Wyatt Cerny. Mr. Kwan is a Managing Director, Fixed Income Management of Mellon Capital with 24 years of investment experience at the firm. He earned both a B.S. and an M.B.A. at the University of California at Berkeley. Mr. Benson is Managing Director and Head of Fixed Income Portfolio Management at Mellon Capital with 20 years of investment experience and 10 years at the firm. He earned a B.A.at the University of Michigan at Ann Arbor. Mr. Cerny is a Portfolio Manager of Fixed Income Management of Mellon Capital with 6 years of investment experience at the firm. He earned his B.S. at Georgetown University.

As of June 30, 2015, Mellon Capital had assets under management totaling approximately $392 billion, which includes overlay strategies.

 

 

The Emerging Markets Portfolio (the “Portfolio”) (From the Supplement Filed on February 18, 2016): The prospectus is supplemented to reflect the removal of Kirk Henry in the portfolio managers for the Portfolio as shown below.

1. The following replaces the “TBCAM” paragraph under the “Portfolio Managers” section of the Investment SubAdvisers, regarding the Portfolio on page 62 of the Prospectus:

TBCAM: Warren Skillman has co-managed the portion of the Portfolio allocated to TBCAM since March, 2010.

2. The following replaces the first two paragraphs of The Boston Company Asset Management LLC section of the “Specialist Manager Guide” on page 118 of the Prospectus:

The Boston Company Asset Management LLC (“TBCAM”) serves as a Specialist Manager for The Emerging Markets Portfolio. TBCAM is an investment adviser registered with the Securities and Exchange Commission under the Investment Advisers Act and is a wholly-owned subsidiary of The Bank of New York Mellon Corporation. TBCAM is headquartered at the One Boston Place, Boston, MA 02108. Mr. Warren Skillman is primarily responsible for the day-to-day management of the portion of the Portfolio’s assets allocated to TBCAM. As of June 30, 2015, TBCAM had total assets under management of approximately $44.4 billion in assets.

The International Equity Portfolio and Institutional International Equity Portfolio (the “Portfolios”) (From the Supplement Filed on February 18, 2016): The sections relating to the City of London Investment Management Company Limited (“CLIM”) Investment Selection Process under “More Information About Fund Investments and Risks; Specialist Managers” on page 129 for The International Equity Portfolio and page 132 for The Institutional International Equity Portfolio are each deleted in its entirety and replaced by the following:

 

The CLIM Investment Selection Process:   

CLIM attempts to achieve above average long term performance with low relative volatility through active management of a portfolio consisting mostly of closed-end funds. Within sector allocation parameters set by the Adviser, CLIM uses a bottom-up stock selection process to identify a set of closed end funds that will provide the desired asset-class exposure. CLIM uses four main factors in selecting closed-end funds for purchase:

 

•       The historical, net performance of the closed-end fund in NAV terms, versus its benchmark (i.e. quality of exposure to the desired asset class);

 

•       The current discount to NAV of the fund compared to its historical average and its peer group and its potential to generate alpha;

 

•       The potential for the fund’s discount to NAV to narrow due to unitization (conversion to open-ended status), a share buyback program or some other form of corporate activity; and

 

•       Extraneous valuation factors such as rights issues, mergers or other event-driven situations that can be accretive to shareholders.

 

CLIM generally sells positions either to adjust asset allocations or because a superior investment opportunity has been identified.


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The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization—Mid Capitalization Equity Portfolio, The Institutional Small Capitalization—Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The International Equity Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio, The Core Fixed Income Portfolio, The Fixed Income Opportunity Portfolio , The U.S. Government Fixed Income Securities Portfolio, The Inflation Protected Securities Portfolio, The U.S. Corporate Fixed Income Securities Portfolio and The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio, The Short-Term Municipal Bond Portfolio, The Intermediate Term Municipal Bond Portfolio and The Intermediate Term Municipal Bond II Portfolio (the “Portfolios”) (From the Supplement Filed on January 14, 2016): The prospectus is supplemented to reflect the addition of Scott Jacobson in the portfolio managers for each of the Portfolios as shown below.

1. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Value Equity Portfolio on page 6 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

2. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Institutional Value Equity Portfolio on page 11 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

3. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Growth Equity Portfolio on page 17 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

4. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Institutional Growth Equity Portfolio on page 23 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

5. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Small Capitalization—Mid Capitalization Equity Portfolio on page 28 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

6. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Institutional Small Capitalization—Mid Capitalization Equity Portfolio on page 33 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

7. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Real Estate Securities Portfolio on page 39 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.


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8. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Commodity Returns Strategy Portfolio on page 46 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

9. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The International Equity Portfolio on page 51 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

10. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Institutional International Equity Portfolio on page 56 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

11. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Emerging Markets Portfolio on page 62 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

12. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Core Fixed Income Portfolio on page 68 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

13. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Fixed Income Opportunity Portfolio on page 75 of the Prospectus:

Thomas Cowhey, CFA has managed the Portfolio since June, 2013. Brad Conger, CFA has managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

14. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The U.S. Government Fixed Income Securities Portfolio on page 79 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

15. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Inflation Protected Securities Portfolio on page 84 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since its inception in February 2014. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

16. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The U.S. Corporate Fixed Income Securities Portfolio on page 89 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

17. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio on page 94 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.


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18. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Short-Term Municipal Bond Portfolio on page 99 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

19. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Intermediate Term Municipal Bond Portfolio on page 104 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

20. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Intermediate Term Municipal Bond Portfolio II on page 109 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

21. The following replaces the fifth paragraph under “Advisory Services” in the section “More Information About the Fund Investments and Risks” on page 153 of the Prospectus:

Officers and/or employees of the Adviser serve as the executive officers of the Trust and/or as members of the Board of Trustees. For its services under the HC Capital Agreements, the Adviser is entitled to receive an annual fee of 0.05% of each Portfolio’s average net assets. The principal offices of the Adviser are located at Five Tower Bridge, 300 Barr Harbor Drive, Suite 500, West Conshohocken, PA 19428-2970. A registered investment adviser under the Investment Advisers Act of 1940, as amended, since 1988, the Adviser had, as of June 30, 2015, approximately $25.4 billion in assets under management. HC Capital Solutions is a division of Hirtle, Callaghan & Co. LLC, and wholly owned by Hirtle Callaghan Holdings, Inc., which is controlled by one of its founders, Jonathan J. Hirtle. Mr. Thomas Cowhey, CFA, Mr. Brad Conger, CFA and Mr. Scott Jacobson, CFA act as portfolio managers for each Portfolio. Mr. Cowhey is the Chief Investment Strategist for the Adviser and has been with the Advisor since 2000. Mr. Conger is a Vice President at the Adviser and has been with the Adviser since December 2010. Prior to joining the Adviser, Mr. Conger spent over four years as a Director and Senior Analyst at Clearbridge Advisors. Mr. Jacobson is a Capital Allocation Investment Strategist for the Adviser and has been with the Adviser since 2015. Prior to joining the Adviser, Mr. Jacobson served as a Managing Director at Wedbush Securities, Inc., a Consultant for ClearVol Capital Management, LLC and the Head of Derivative Strategy at Sanford C. Bernstein & Co., LLC.

The Commodity Returns Strategy Portfolio (the “Portfolio”) (From the Supplement Filed on December 16, 2015): The prospectus is supplemented to reflect a change, effective January 1, 2016, in the portfolio managers for the Portfolio as shown below.

1. The following replaces the “Portfolio Managers” section of the Investment Subadviser, regarding Wellington Management Company LLP (“Wellington Management”) on page 46 of the Prospectus with respect to the Portfolio:

Wellington Management: Jay Bhutani has managed a portion of the Portfolio allocated to Wellington Management since June 2010. David Chang has managed a portion of the Portfolio allocated to Wellington Management since April 2011.

2. The following replaces the last four paragraphs of the Wellington Management section of the “Specialist Manager Guide” on page 183 of the Prospectus:

Jay Bhutani, Managing Director and Global Industry Analyst affiliated with Wellington Management and located outside of the United States, has served as Portfolio Manager for the Commodity Related Securities portion of the Fund since June 2010. Mr. Bhutani joined Wellington Management as an investment professional in 2007.

David A. Chang, CFA, Senior Managing Director and Commodities Portfolio Manager of Wellington Management, has served as Portfolio Manager for the Subsidiary since April 2011. Mr. Chang joined Wellington Management in 2001, and has been an investment professional since 2002.

For its services to The Commodity Returns Strategy Portfolio, Wellington Management receives a fee, payable monthly, at the following rates: For assets managed in its Global Natural Resources strategy, Wellington


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Management receives a fee at an annual rate of 0.60% of the average daily net assets of the account so long as at least $150 million in assets are present in the account; and 0.85% of the average daily net assets of the account if less than $150 million in assets are present in the account. Prior to March 11, 2015, Wellington Management received a fee, payable monthly, for Portfolio assets managed in its Global Natural Resources strategy, of 0.85% of the average daily net assets of that portion of the Portfolio’s assets allocated to such strategy so long as there are at least $50 million in assets present in such account and 1.00% if less than $50 million are present in the account. Wellington Management has waived the $50 million minimum assets level for the first six months of the Portfolio’s operations. For assets managed in its Commodity strategy, Wellington Management will receive a fee at an annual rate of 0.75% of the average daily net assets of that portion of the Portfolio’s assets allocated to such strategy from time to time. During the fiscal year ended June 30, 2015, Wellington Management received a total fee of 0.76% of the average daily net assets of The Commodity Returns Strategy Portfolio.

The Core Fixed Income Portfolio (the “Portfolio”) (From the Supplement Filed on December 16, 2015):

1. The section “Principal Investment Strategies” pertaining to the Portfolio on page 62 of the Prospectus is revised and restated as shown below:

Principal Investment Strategies

Under normal circumstances, the Portfolio invests primarily (i.e. at least 80% of its net assets) in a diversified portfolio of fixed income securities. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio, under normal circumstances, will invest at least 80% of its net assets in fixed income securities that, at the time of purchase, are rated in one of four highest rating categories assigned by one of the major independent rating agencies or are, in the view of the Specialist Manager, deemed to be of comparable quality. Securities in the fourth highest rating category may have speculative characteristics. From time to time, a substantial portion of the Portfolio may be invested in any of the following: (1) investment grade mortgage-backed or asset-backed securities; (2) securities issued or fully guaranteed by the U.S. Government, Federal Agencies, or sponsored agencies; (3) investment grade fixed income securities issued by U.S. corporations; or (4) municipal bonds (i.e., debt securities issued by municipalities and related entities). Under normal conditions, the Portfolio may invest up to 20% of its assets in high yield securities (“junk bonds”) as well as cash or money market instruments in order to maintain liquidity, or in the event that the Specialist Manager determines that securities meeting the Portfolio’s investment objective and policies are not otherwise readily available for purchase. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in fixed income securities. Consistent with its investment policies, the Portfolio may purchase and sell securities without regard to the effect on portfolio turnover. The Portfolio has historically had significant portfolio turnover (e.g., over 200% annually), and it is anticipated that such portfolio turnover will continue in the future. Securities purchased for the Portfolio will have varying maturities, but under normal circumstances the Portfolio will have an effective dollar weighted average portfolio maturity that is within the range of the average portfolio maturity in the Barclays Capital U.S. Aggregate Bond Index, which range, as of June 30, 2015, was between one and ten years. The weighted average maturity of the Barclays Capital U.S. Aggregate Bond Index as of June 30, 2015 was 7.87 years. The Portfolio may engage in transactions involving instruments such as option or futures contracts, both in order to hedge against fluctuations in the market value of the securities in which the Portfolio invests and to achieve market exposure pending investment and, in the case of asset-backed and similar securities, for investment purposes.

The Portfolio is authorized to operate on a multi-manager basis. This means that a single Portfolio may be managed by more than one Specialist Manager. The multi-manager structure is generally designed to provide investors access to broadly diversified investment styles. The Trust seeks to engage skilled Specialist Managers to provide a broad exposure to the relevant asset class and returns in excess of the Portfolio’s benchmark over time.

2. The paragraph under “The Core Fixed Income Portfolio” on page 134 of the Prospectus is revised and restated as shown below:

The Portfolio, under normal circumstances, will invest at least 80% of its net assets in fixed income securities that, at the time of purchase, are rated in one of four highest rating categories assigned by one of the major independent rating agencies or are, in the view of the Specialist Manager, deemed to be of comparable quality. The Portfolio may invest a substantial portion of its total assets in mortgage-backed and asset-backed issues. Under normal conditions, the Portfolio may invest up to 20% of its assets in high yield securities (“junk bonds”) as well as cash or money market instruments in order to maintain liquidity, or in the event that the Specialist Manager determines that securities meeting the Portfolio’s investment objective and policies are not otherwise readily available for purchase. Consistent with its investment policies, the Portfolio may purchase and sell securities without regard to the effect on portfolio turnover. The Portfolio has historically had significant portfolio turnover (e.g., over 200%/annually), and it is anticipated that such portfolio turnover will continue in the future. High portfolio turnover will cause the Portfolio


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to incur additional transaction costs; higher transaction costs will reduce total return. High portfolio turnover also is likely to generate short-term capital gains, which is taxed as ordinary income. Securities purchased for the Portfolio will have varying maturities, but under normal circumstances the Portfolio will have an effective dollar weighted average portfolio maturity that is within the range of the average portfolio maturity in the Barclays Capital U.S. Aggregate Bond Index, which range, as of June 30, 2015, was between one and ten years. The weighted average maturity of the Barclays Capital U.S. Aggregate Bond Index as of June 30, 2015 was 7.87 years. The Portfolio may engage in transactions involving “derivative instruments” including, but not limited to, futures, forwards, options and options on futures both in order to hedge against fluctuations in the market value of the securities in which the Portfolio invests and to achieve market exposure pending investment and, in the case of asset-backed and similar securities, for investment purposes.

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.


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Supplement to Prospectus

Institutional Portfolios

HC Strategic Shares

Dated November 1, 2015

HC Capital Trust

The date of this Supplement is October 17, 2016

The Institutional International Equity Portfolio (the Portfolios”):

Effective October 14, 2016, Capital Guardian Trust Company (“CapGuardian”) no longer serves as a Specialist Manager for the Portfolio pursuant to notice of termination by the Trust, on behalf of the Board of Trustees, dated August 15, 2016. Accordingly, the Prospectus is supplemented as shown below with references to CapGuardian deleted entirely.

1. The following replaces the “Investment Subadvisers” section of the Prospectus:

Page 34:

Investment Subadvisers

Artisan Partners Limited Partnership (“Artisan”), Cadence Capital Management LLC (“Cadence”), Causeway Capital Management LLC (“Causeway”), City of London Investment Management Company Limited (“CLIM”), Lazard Asset Management LLC (“Lazard”), Parametric Portfolio Associates (“Parametric”) and Mellon Capital Management Corporation (“Mellon Capital”) are the Specialist Managers for the Portfolio.

2. The “CapGuardian” section is deleted in its entirety under the “Portfolio Managers” sections on pages 34 of the Prospectus.

3. The “CapGuardian Investment Selection Process” section is deleted in its entirety under “More Information About Fund Investments and Risks” “The Institutional International Equity Portfolio; Specialist Managers” on page 85. Additionally, reference to CapGuardian in the first paragraph under “The Institutional International Equity Portfolio; Specialist Managers” on page 84 is deleted in its entirety.

4. Reference to CapGuardian in the first paragraph under “More Information About Fund Investments and Risks” Specialist Managers” on page 106 is deleted in its entirety.

5. The “Capital Guardian Trust Company” section is deleted in its entirety under “Specialist Manager Guide” on page 119.

 

 

The Institutional Small Capitalization - Mid Capitalization Equity Portfolio (the “Portfolio”) (From the Supplement Filed on September 14, 2016):

At a meeting held on September 13, 2016, the Board of Trustees (the “Board”) for HC Capital Trust (the “Trust”) approved the engagement of Advisory Research, Inc. (“Advisory Research”) as an investment advisory organization (“Specialist Manager”) to manage portions of the assets of the Portfolio, effective upon the date of the employment of Andrew Cupps at Advisory Research (the “Effective Date”), which is anticipated on or about September 30, 2016.

At a meeting held on September 13, 2016, the Trust’s Board approved the termination of Cupps Capital Management Company, LLC (“Cupps”) as specialist manager of the Portfolios effective upon the Effective Date.

Accordingly, upon the Effective Date, the Prospectus is supplemented as shown below with references to Cupps deleted entirely, and additional disclosures related to Advisory Research included.

1. The following replaces the “Investment Subadvisers” section on page 16 of the Prospectus:

Advisory Research, Inc. (“Advisory Research”), Ariel Investments, LLC (“Ariel”), Cadence Capital Management LLC (“Cadence”), Frontier Capital Management Company, LLC (“Frontier”), IronBridge Capital Management LP (“IronBridge”), Mellon Capital Management Corporation (“Mellon Capital”), Parametric Portfolio Associates (“Parametric”) and Pzena Investment Management, LLC (“Pzena”) are the Specialist Managers for the Portfolio.

2. The following is added before “Ariel” under the “Portfolio Managers” section on page 16 of the Prospectus:

Advisory Research: Andrew S. Cupps has managed the portfolio of the Portfolio allocated to Advisory Research since June, 2011*.

 

* Includes Mr. Cupps’ services with a previous Investment Subadviser.

3. The following replaces the first paragraph of the “Specialist Managers” section under “More Information About Fund Investments and Risks - The Institutional Small Capitalization - Mid Capitalization Equity Portfolio” on page 76:

A portion of the Portfolio is managed in accordance with an “active management” approach, which involves the buying and selling of securities based upon economic, financial and market analysis and investment judgment. Advisory Research, Ariel, Frontier, IronBridge, Parametric and Pzena, are currently responsible for implementing the active component of the Portfolio’s investment strategy. The remaining portion of the Portfolio is managed using “passive” or “index” investment approaches that are designed to approximate as closely as practicable, before expenses, the performance of the Portfolio’s benchmark index or one or more identifiable subsets or other portions of that index (see “Fund Management,” included later in this Prospectus). Cadence and Mellon Capital are currently responsible for implementing the passive component of the Portfolio’s investment strategy. The investment selection process for each of these Specialist Managers is described below; further information about the Specialist Managers, individual portfolio managers responsible for day-to-day investment decisions for the Portfolio, and the manner in which the Portfolio’s assets are allocated among them appears in the “Specialist Manager Guide” included later in this Prospectus.

4. The “Cupps Investment Selection Process” section is deleted in its entirety and the following is added under “More Information About Fund Investments and Risks - The Institutional Small Capitalization - Mid Capitalization Equity Portfolio; Specialist Managers” on page 77 before the “Ariel Investment Selection Process”:

 

The Advisory Research Investment Selection Process:    Advisory Research believes earnings growth is the primary variable driving intermediate and long-term stock performance and Advisory Research therefore focuses on companies it believes are poised to experience high or improving rates of earnings growth. Advisory Research uses a proprietary investment framework to evaluate the attractiveness of stocks. Advisory Research’ investment approach begins with fundamental analysis to determine valuation and then considers four additional perspectives that include both fundamental and technical disciplines to generate an overall opinion of a stock’s attractiveness. Sell decisions, like buy decisions, take into account these same perspectives. If a company’s financial results fall significantly off its projected growth path, either in terms of product sales or market development, or if the company loses significant competitive advantage, or if the stock demonstrates poor technical behavior, positions will most likely be reduced or eliminated entirely.

5. The “Cupps Capital Management, LLC,” section is deleted in its entirety and the following is added under “Specialist Manager Guide” on page 116 before the “Agincourt Capital Management, LLC”:

Advisory Research, Inc. (“Advisory Research”) serves as a Specialist Manager for The Institutional Small Capitalization – Mid Capitalization Equity Portfolio. For its services to The Institutional Small Capitalization – Mid Capitalization Equity Portfolio, Advisory Research receives a fee based on the average daily net asset value of that portion of the Portfolio allocated to it, at an annual rate of 0.85%. As of June 30, 2016, Advisory Research had total assets under management of approximately $8.1 billion in assets.

Advisory Research, the principal offices of which are located at 180 N. Stetson Avenue, Suite 5500, Chicago, Illinois 60601, was established in 1974 and is a registered investment adviser. Advisory Research is a subsidiary of Piper Jaffray Companies. Andrew S. Cupps is responsible for making the day-to-day investment decisions for the portion of the Portfolios’ assets assigned to Advisory Research. Mr. Cupps serves as the Chief Investment Officer. He is responsible for the research agenda of the firm’s investment team and has analyst responsibilities within the healthcare and technology sectors. Prior to his employment with Advisory Research, Mr. Cupps served as President and Chief Investment Officer of Cupps Capital Management, LLC, since the firm’s inception in 2000. Mr. Cupps attended Harvard University where he studied economics and graduated cum laude in 1992.


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The Institutional Value Equity Portfolio, The Institutional Growth Equity Portfolio, The Institutional Small Capitalization—Mid Capitalization Equity Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio, The Core Fixed Income Portfolio, The U.S. Corporate Fixed Income Securities Portfolio and The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio (the “Portfolios”) (From the Supplement Filed on September 2, 2016):

On August 25, 2016, the Board of Trustees (the “Board”) for HC Capital Trust (the “Trust”) approved changes in each of the Portfolio’s investment strategies as set forth below, to become effective on November 1, 2016. Accordingly, the Prospectus is supplemented as follows:

The Institutional Value Equity Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 2 of the Prospectus:

The Portfolio is a diversified investment company that is designed to implement a value-oriented investment approach. A “value investor” seeks to select securities that trade for less than the intrinsic value of the issuing company, as measured by fundamental investment considerations such as earnings, book value and dividend paying ability. Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e., at least 80% of its net assets) in equity securities. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio will focus its investments in equity securities of large and mid-capitalization issuers. As of the date of this Prospectus, companies with a market capitalization of between $5 billion and $24 billion would likely be included in the “mid cap” range. Up to 20% of the total assets of the actively managed portion of the Portfolio may be invested in income-producing securities other than common stock, such as preferred stocks or bonds, including those that are convertible into common stock. These income-producing securities may be of any quality or maturity. Up to 20% of the total assets of the total Portfolio may also be invested in securities issued by non-U.S. companies. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in equity securities. Consistent with their respective investment styles, the Portfolio’s Specialist Managers may use instruments including option or futures contracts and similar instruments in order to pursue their investment objectives, gain market exposure pending investment or to hedge against fluctuations in market price of the securities in which the Portfolio invests. In accordance with applicable interpretations of the SEC, certain derivative instruments may be counted as equity securities for purposes of the Portfolio’s policies regarding investments in equity securities, to the extent that such derivative instruments have economic characteristics similar to those of equity securities. Additionally, a portion of the Portfolio may be managed using a more “passive” investment approach designed to approximate as closely as practicable, before expenses, the performance of either the Portfolio’s benchmark index or, from time to time, one or more identifiable subsets or other portions of that index.

The Institutional Growth Equity Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 7 of the Prospectus:

The Portfolio is a diversified investment company that is designed to implement a growth-oriented investment approach. “Growth investing” means that securities acquired for the Portfolio can be expected to have above-average potential for growth in revenue and earnings. Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e., at least 80% of its net assets) in equity securities. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio may invest up to 20% of the total assets of the actively managed portion of the Portfolio in income-producing securities other than common stock, such as preferred stocks or bonds, including those that are convertible into common stock. These income-producing securities may be of any quality or maturity. The Portfolio will focus its investments in equity securities of large and mid-capitalization issuers. As of the date of this Prospectus, companies with a market capitalization of between $5 billion and $24 billion would likely be included in the “mid cap” range. Up to 20% of the total assets of the total Portfolio may also be invested in securities issued by non-U.S. companies. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in equity securities. Although some of the equity securities in which the Portfolio will invest are expected to be dividend paying issues, income is a secondary consideration in the stock selection process. Accordingly, dividends paid by this Portfolio can generally be expected to be lower than those paid by The Institutional Value Equity Portfolio. Consistent with their respective investment styles, the Portfolio’s Specialist Managers may use instruments including option or futures contracts, swaps and similar instruments in order to pursue their investment objectives, gain market exposure pending investment or to hedge against fluctuations in market price of the securities in which the Portfolio invests. The Portfolio may also use currency forwards in connection with the purchase and sale of securities denominated in foreign currencies. In accordance with applicable interpretations of the SEC, certain derivative instruments may be counted as equity securities for purposes of the Portfolio’s policies regarding investments in equity securities, to the extent that such derivative instruments have economic characteristics similar to those of equity securities. Additionally, a portion of the Portfolio may be managed using a more “passive” investment approach designed to approximate as closely as practicable, before expenses, the performance of either the Portfolio’s benchmark index or, from time to time, one or more identifiable subsets or other portions of that index.

The Institutional Small Capitalization—Mid Capitalization Equity Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 12 of the Prospectus:

Under normal circumstances, the Portfolio invests primarily (i.e., at least 80% of its net assets) in equity securities of small-capitalization and mid-capitalization issuers. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio, a diversified investment company, is designed to invest primarily in equity securities of U.S. issuers which have market capitalizations that are comparable to the capitalization of companies in the Russell 3000® Index that are classified as “Small” or “Medium” at the time of purchase. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in equity securities of “small cap” and/or “mid cap” issuers. The Portfolio will invest in both dividend paying securities and securities that do not pay dividends. Also, consistent with their respective investment styles, the Portfolio’s Specialist Managers may use instruments such as option or futures contracts in order to gain market exposure pending investment or to hedge against fluctuations in market price of the securities in which the Portfolio invests. In accordance with applicable interpretations of the SEC, certain derivative instruments may be counted as equity securities for purposes of the Portfolio’s policies regarding investments in equity securities, to the extent that such derivative instruments have economic characteristics similar to those of equity securities. As of July 31, 2015, the market capitalization range of companies in the Russell 3000® Index that were classified as “Small” or “Medium” was between approximately $177 million and $28.7 billion. Additionally, a portion of the Portfolio may be managed using a more “passive” investment approach designed to approximate as closely as practicable, before expenses, the performance of either the Portfolio’s benchmark index or, from time to time, one or more identifiable subsets or other portions of that index.

The Institutional International Equity Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 30 of the Prospectus:

Under normal circumstances, the Portfolio invests primarily (i.e., at least 80% of its net assets) in equity securities of issuers located in non-U.S. countries. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. Under normal circumstances, the Portfolio will provide exposure to investments that are economically tied to at least three different countries, including the U.S., and at least 40% of the Portfolio’s net assets will provide exposure to investments that are economically tied to non-U.S. countries. Although the Portfolio, a diversified investment company, may invest anywhere in the world, the Portfolio is expected to invest primarily in the equity markets included in the MSCI EAFE Index. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in equity securities of issuers located in non-U.S. countries. Also, consistent with their respective investment styles, the Portfolio’s Specialist Managers may use instruments such as option or futures contracts in order to gain market exposure pending investment or to hedge against fluctuations in market price of the securities in which the Portfolio invests. The Portfolio may also use currency forwards in connection with the purchase and sale of securities denominated in a foreign currency and to hedge against fluctuations in the relative value of the currencies in which securities held by the Portfolio are denominated. In accordance with applicable interpretations of the SEC, certain derivative instruments may be counted as equity securities for purposes of the Portfolio’s policies regarding investments in equity securities, to the extent that such derivative instruments have economic characteristics similar to those of equity securities. Additionally, a portion of the Portfolio may be managed using a more “passive” investment approach designed to approximate as closely as practicable, before expenses, the performance of either the Portfolio’s benchmark index or, from time to time, one or more identifiable subsets or other portions of that index.

The Emerging Markets Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 35 of the Prospectus:

Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e., at least 80% of its net assets) in securities of issuers domiciled or, in the view of the Specialist Manager, deemed to be doing material amounts of business in countries determined by the Specialist Manager to have a developing or emerging economy or securities market. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. Typically 80% of the Portfolio’s net assets will be invested in equity securities, equity swaps, structured equity notes, equity linked notes and depositary receipts concentrated in emerging market countries. The Portfolio, a diversified investment company, invests primarily in the Morgan Stanley Capital International® Emerging Markets Index (“MSCI EM Index”) countries. As the MSCI EM Index introduces new emerging market countries, the Portfolio may include those countries among the countries in which it may invest. In determining securities in which to invest, the Portfolio’s management team will evaluate the countries’ economic and political climates with prospects for sustained macro and micro economic growth. The Portfolio’s management team will take into account traditional securities valuation methods, including (but not limited to) an analysis of price in relation to assets, earnings, cash flows, projected earnings growth, inflation and interest rates. Liquidity and transaction costs will also be considered. The Portfolio may also invest in companies of any market capitalization. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in securities issued by companies domiciled or deemed to be doing material amounts of business in countries that have a developing or emerging economy or securities market. Also, consistent with their respective investment styles, the Portfolio’s Specialist Managers may use instruments such as option or futures contracts in order to gain market exposure pending investment or to hedge against fluctuations in market price of the securities in which the Portfolio invests. In accordance with applicable interpretations of the SEC, certain derivative instruments may be counted as equity securities for purposes of the Portfolio’s policies regarding investments in equity securities, to the extent that such derivative instruments have economic characteristics similar to those of equity securities. Additionally, a portion of the Portfolio may be managed using a more “passive” investment approach designed to approximate as closely as practicable, before expenses, the performance of either the Portfolio’s benchmark index or, from time to time, one or more identifiable subsets or other portions of that index.

The Core Fixed Income Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 41 of the Prospectus:

Under normal circumstances, the Portfolio invests primarily (i.e. at least 80% of its net assets) in fixed income securities. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio, under normal circumstances, invests predominantly in fixed income securities that, at the time of purchase, are rated in one of four highest rating categories assigned by one of the major independent rating agencies or are, in the view of the Specialist Manager, deemed to be of comparable quality. Securities in the fourth highest rating category may have speculative characteristics. From time to time, a substantial portion of the Portfolio, a diversified investment company, may be invested in any of the following: (1) investment grade mortgage-backed or asset-backed securities; (2) securities issued or fully guaranteed by the U.S. Government, Federal Agencies, or sponsored agencies; (3) investment grade fixed income securities issued by U.S. corporations; or (4) municipal bonds (i.e., debt securities issued by municipalities and related entities). Under normal conditions, the Portfolio may invest up to 20% of its assets in high yield securities (“junk bonds”) as well as cash or money market instruments in order to maintain liquidity, or in the event that the Specialist Manager determines that securities meeting the Portfolio’s investment objective and policies are not otherwise readily available for purchase. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in fixed income securities. Consistent with its investment policies, the Portfolio may purchase and sell securities without regard to the effect on portfolio turnover. The Portfolio has historically had significant portfolio turnover (e.g., over 200% annually), and it is anticipated that such portfolio turnover will continue in the future. Securities purchased for the Portfolio will have varying maturities, but under normal circumstances the Portfolio will have an effective dollar weighted average portfolio maturity that is within the range of the average portfolio maturity in the Barclays Capital U.S. Aggregate Bond Index, which range, as of June 30, 2015, was between one and ten years. The weighted average maturity of the Barclays Capital U.S. Aggregate Bond Index as of June 30, 2015 was 7.87 years. The Portfolio may engage in transactions involving instruments such as option or futures contracts, both in order to hedge against fluctuations in the market value of the securities in which the Portfolio invests and to achieve market exposure pending investment and, in the case of asset-backed and similar securities, for investment purposes.

The U.S. Corporate Fixed Income Securities Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 62 of the Prospectus:

Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e. at least 80% of net assets) fixed income securities issued by U.S. corporations. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. In general, the Portfolio invests predominantly in investment grade fixed income securities and will maintain aggregate characteristics similar to the Barclays Capital U.S. Corporate Index. Securities held by the Portfolio will be rated investment-grade or better by one of the established rating agencies or, if not rated by an agency, of comparable credit quality as determined by the Specialist Manager at the time of purchase. Securities held by the Portfolio which are downgraded below investment-grade by all ratings agencies may be retained up to a maximum market value of 5% of the Portfolio. Securities purchased for the Portfolio will have varying maturities, but under normal circumstances the Portfolio will have an effective dollar weighted average portfolio maturity that is within the range of the average portfolio maturity in the Barclays Capital U.S. Corporate Investment Grade Index, which range, as of June 30, 2015, was between one and twenty years. The weighted average maturity of the Barclays Capital U.S. Corporate Investment Grade Index as of June 30, 2015 was 10.59 years. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in investment grade fixed income securities issued by U.S. corporations. The Portfolio may also invest up to 20% of its assets in municipal bonds (i.e., debt securities issued by municipalities and related entities). The Portfolio may invest in fixed income securities of foreign issuers.

The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio

Effective November 1, 2016, the following replaces the first paragraph under the “Principal Investment Strategies” section on page 67 of the Prospectus:

Under normal circumstances, the Portfolio seeks to achieve its objective by investing primarily (i.e. at least 80% of net assets) U.S. mortgage and asset backed securities. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio invests predominantly in publicly issued, investment grade U.S. mortgage and asset backed securities and, in general, seeks to maintain aggregate characteristics similar to the Barclays Capital U.S. Securitized Index. The Portfolio will seek to invest in U.S. dollar denominated agency and non-agency mortgage-backed securities backed by loans secured by residential, multifamily and commercial properties including, but not limited to: pass throughs, collateralized mortgage obligations (“CMOs”), real estate mortgage investment conduits (“REMICs”), stripped mortgage-backed securities (“SMBS”), project loans, construction loans, and adjustable rate mortgages. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in mortgage and asset backed securities. The Portfolio may also invest in U.S. Treasury and agency securities. Securities must be rated investment-grade or better by a nationally recognized credit rating agency at the time of purchase or, if not rated by an agency, of comparable credit quality as determined by the Specialist Manager at the time of purchase. The Portfolio may engage in transactions involving instruments such as option or futures contracts both in order to hedge against fluctuations in the market value of the securities in which the Portfolio invests and to achieve market exposure pending investment and, in the case of asset-backed and similar securities, for investment purposes. Securities purchased for the Portfolio will have varying maturities, but under normal circumstances the Portfolio will have an effective dollar weighted average portfolio maturity that is within the range of the average portfolio maturity in the Barclays Capital U.S. Securitized Index, which has a weighted average maturity of 6.84 years as of June 30, 2015 and can vary between three and eight years.


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The Emerging Markets Portfolio (the “Portfolio”) (From the Supplement filed on July 29, 2016):

On July 29, 2016, RBC Global Asset Management (UK) Limited (“RBC GAM”) was added as a Specialist Manager to the Portfolio pursuant to a Portfolio Management Agreement approved by the shareholders of the Portfolio. The following material supplements the Prospectus dated November 1, 2015 to incorporate information about RBC GAM with respect to the Portfolio.

1. The following replaces the “Annual Operating Expenses” table and accompanying “Example” in the “Fees and Expenses” section on page 35 of the Prospectus:

Annual Operating Expenses

(expenses that you pay each year as a percentage of the value of your investment)

 

Management Fees (based on asset allocations among Specialist Managers, see “Advisory Services – Specialist Managers”)

     0.43

Other Expenses

     0.19

Acquired Fund Fees and Expenses

     0.04

Total Annual Portfolio Operating Expenses

     0.66

Example: This Example is intended to help you compare the cost of investing in the Portfolio with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Portfolio for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes the reinvestment of all dividends and distributions in shares of the Portfolio and that your investment has a 5% return each year and that the Portfolio’s operating expenses remain the same. Although your actual cost may be higher or lower, based on these assumptions, your costs would be:

 

1 Year

   $ 67   

3 Years

   $ 211   

5 Years

   $ 368   

10 Years

   $ 822   

2. The following replaces the “Investment Subadvisers” section on page 40 of the Prospectus:

Investment Subadvisers

AllianceBernstein L.P. (“AllianceBernstein”), Cadence Capital Management LLC (“Cadence”) Mellon Capital Management Corporation (“Mellon Capital”), Parametric Portfolio Associates (“Parametric”), Pacific Investment Management Company LLC (“PIMCO”) and RBC Global Asset Management (UK) Limited (“RBC GAM”) are the Specialist Managers for the Portfolio.

3. The following is added after “Parametric” under the “Portfolio Managers” section on page 40 of the Prospectus:

RBC GAM: Philippe Langham, ACA and Laurence Bensafi, CFA, have managed the portion of the Portfolio allocated to RBC since July, 2016.

4. The following replaces the first paragraph of the “Specialist Managers” section under “The Emerging Markets Portfolio” on page 87:

Specialist Managers. A portion of the Portfolio is managed in accordance with an “active management” approach, which involves the buying and selling of securities based upon economic, financial and market analysis and investment judgment. TBCAM, CLIM, Parametric and RBC GAM are currently responsible for implementing the active component of the Portfolio’s investment strategy. Cadence and Mellon Capital also manage a portion of the Portfolio that may be managed using a “passive” or “index” investment approach designed to replicate the composition of the Portfolio’s benchmark index or one or more identifiable subsets or other portions of that index (see “Fund Management,” included later in this Prospectus). The investment selection process for each of these Specialist Managers is described below; further information about the Specialist Managers, individual portfolio managers responsible for day-to-day investment decisions for the Portfolio, and the manner in which the Portfolio’s assets are allocated between them appears in the “Specialist Manager Guide” included later in this Prospectus.

5. The following is added to the Section “More Information About Fund Investments and Risks - The Emerging Markets Portfolio” on page 88:

 

The RBC GAM Investment Selection Process    The RBC GAM Emerging Markets Equity team believes that companies with a sustainably high cash flow return on investment (CFROI®) produce superior returns and seeks to identify and invest in such companies. There are three components RBC GAM looks for when selecting securities for this strategy: 1) Strong management; 2) Quality franchises; and 3) Sustainability. The strategy emphasizes quality and long-term growth at a reasonable price, combining a fundamental bottom-up approach to stock selection with a top-down macroeconomic overlay driven by long-term secular themes.
   RBC GAM generally sells stocks under the following circumstances: 1) The investment case has changed; 2) The valuation has increased to a level that supports realization of the profit; or 3) A better stock has been found.

6. The following replaces “Specialist Managers” section under “The Emerging Markets Portfolio” on page 106:

The Emerging Markets Portfolio – The Portfolio is managed by six Specialist Managers, each of whom is compensated in accordance with a different fee schedule. Although asset allocations and fees payable to the Specialist Managers may vary, the figures assume an anticipated allocation of assets at July 29, 2016 of 42% TBCAM, 0% Cadence, 0% CLIM, 4% Parametric, 42% Mellon Capital, 2% HC Capital and 10% RBC GAM.

7. The following is added to the “Specialist Manager Guide” on page 129 between Pzena Investment Management, LLC and Sustainable Growth Advisers, LP:

RBC Global Asset Management (UK) Limited (“RBC GAM”) serves as Specialist Manager for The Emerging Markets Portfolio. RBC GAM is a wholly owned subsidiary of Royal Bank of Canada. RBC GAM has been registered with the SEC as an investment adviser since September, 2013, and has been a portfolio manager of publicly-offered funds since 1998. RBC GAM maintains its offices at Riverbank House, 2 Swan Lane, London, UK, EC4R 3AF. As of March 31, 2016, RBC GAM managed approximately $13 billion in assets.

For its services with respect to the portion of The Emerging Markets Portfolio allocated to RBC GAM from time to time (the “Account”), RBC GAM receives a fee calculated at an annual rate of 0.80% of the first $100 million of Combined Assets; 0.65% of the next $150 million of Combined Assets; and 0.60% of Combined Assets in excess of $250 million. Combined Assets refers to the aggregate of all assets of the Portfolio managed by RBC GAM and any assets of other clients of the Adviser managed by RBC GAM using the same strategy. During the fiscal year ended June 30, 2015, RBC GAM was not allocated assets of The Commodity Returns Strategy Portfolio.

Philippe Langham, ACA, and Laurence Bensafi, CFA, are primarily responsible for the day-to-day management of the portion of the assets of Portfolio allocated to RBC GAM.

Philippe Langham is Senior Portfolio Manager and Head of the Emerging Markets Equity team in London and lead manager for the Emerging Markets Equity and Emerging Markets Small Cap Equity Strategies. Philippe joined RBC GAM in 2009 to establish and lead the Emerging Markets Equity team in London. He has worked in the investment industry since 1992 and prior to joining RBC GAM, Philippe was the Head of Global Emerging Markets at Société Générale Asset Management in London. Previously, Philippe managed the Global Emerging Markets, Asian, Latin American and US portfolios at the Kuwait Investment Office in London, and was Director and Head of Asia and Emerging Markets at Credit Suisse in Zurich. Philippe obtained a BSc in Economics from the University of Manchester in England, and is a Chartered Accountant.

Laurence Bensafi is Senior Portfolio Manager and Deputy Head of Emerging Markets Equity in London and lead portfolio manager for the Emerging Markets Value Equity strategy. Prior to joining RBC GAM in 2013, Laurence was the Head of Aviva Investors’ Emerging Markets team, where she was responsible for managing Global Emerging Markets income funds, and for developing quantitative stock selection and analysis models. Laurence began her investment career as a Quantitative Analyst at Société Générale Asset Management, supporting European and Global Equity portfolio management by developing quantitative models to assist in the portfolio construction and security selection process. In 1997, Laurence obtained a Magistère d’Économiste Statisticien & D.E.S.S. Statistique et Économétrie from Toulouse University in France. Laurence is a CFA charterholder.

8. The following disclosure is added following “Emerging Markets Risk” in the Principal Investment Risks section on page 37 of the Prospectus:

China Risk. In addition to the risks listed above under “Emerging Market Securities,” investing in China presents additional risks including confiscatory taxation, nationalization, exchange control regulations (including currency blockage) and differing legal standards. The Chinese government could, at any time, alter or discontinue economic reform programs implemented since 1978. Chinese authorities may intervene in the China securities market and halt or suspend trading of securities for short or even longer periods of time. Recently, the China securities market has experienced considerable volatility and been subject to relatively frequent and extensive trading halts and suspensions. These trading halts and suspensions have, among other things, contributed to uncertainty in the markets and reduced the liquidity of the securities subject to such trading halts and suspensions, which could include securities held by a Portfolio.

The Fixed Income Opportunity Portfolio (the “Portfolio”) (From the Supplement filed on July 29, 2016): The prospectus is supplemented to reflect the addition of Garrick Bauer in the portfolio managers for the Portfolio as shown below.

1. The following replaces the “Fort Washington” paragraph under the “Portfolio Managers” section of the Investment SubAdvisers, regarding the Portfolio on page 53 of the Prospectus:

Fort Washington: Brendan White and Timothy Jossart have co-managed the portion of the Portfolio allocated to Fort Washington since May, 2012. In 2016, Garrick Bauer also began co-managing alongside White and Jossart.

2. The following replaces the second paragraph of Fort Washington Investment Advisors, Inc. (“Fort Washington”) section of the “Specialist Manager Guide” on page 122 of the Prospectus:

Messrs. White, Jossart, and Bauer are the individuals primarily responsible for the day-to-day management of the portion of the Portfolio’s assets allocated to Fort Washington. Brendan White is Co-Chief Investment Officer and Senior Portfolio Manager for the High Yield strategy. He has led this strategy since its inception. In this role, he also manages the Credit Team and serves on the firm’s Senior Management Team. Mr. White joined the Firm in 1993. Prior to joining Fort Washington he was with Ohio Casualty Corporation where he was an analyst supporting the High Yield and Mortgage Backed Securities portfolios. Mr. White received a BS in Finance from The Ohio State University and an MBA from Xavier University. He is a CFA charter holder. Timothy Jossart is a Vice President, Co-Portfolio Manager and a Senior Credit Analyst focusing on high yield fixed income securities. Timothy joined the firm in 1996 as a member of the Public Equity team before moving to High Yield in 2005. Prior to joining Fort Washington Tim worked for Star Bank in Cincinnati where he was an equity analyst supporting Trust Department investments. Prior to his work at Star Bank, he spent two and a half years as a credit analyst with PNC Bank overseeing corporate credits. Timothy received a BBA in Finance from the University of Wisconsin-Madison. He is a CFA charterholder. Garrick Bauer is an Assistant Vice President, Co-Portfolio Manager and a Senior Credit Analyst focusing on high yield fixed income securities. Garrick joined the firm in 2013. Prior to joining Fort Washington he worked at Wellington Management Company as a credit portfolio manager on several mutual funds. While at Wellington he was also an analyst on the High Yield team following a variety of sectors. Prior to Wellington Management he worked at Summit Investment Partners and PricewaterhouseCoopers. Garrick received his BS in Accounting from Miami University and his Masters in Business Administration from the University of Virginia. He is a CFA charterholder and earned the Certified Public Accountant designation (inactive).

 

 

The Institutional Value Equity Portfolio, The Institutional Growth Equity Portfolio, The Institutional Small Capitalization - Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The Institutional International Equity Portfolio and The Emerging Markets Portfolio (From the Supplement Filed on June 15, 2016): On June 14, 2016, the Trust, on behalf of its series, The Institutional Value Equity Portfolio, The Institutional Growth Equity Portfolio, The Institutional Small Capitalization- Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The Institutional International Equity Portfolio and The Emerging Markets Portfolio, entered into new investment management agreements with Cadence Capital Management, LLC (“Cadence”) due to a change in control of Cadence’s parent. The new agreements, which are substantially identical to the existing investment management agreements, would take effect upon the anticipated change of control of Cadence’s parent company. No changes in Cadence’s investment management team are expected as a result of the change of control of Cadence’s parent company.

The Emerging Markets Portfolio (the “Portfolio”) (From the Supplement Filed on June 15, 2016): At a meeting held on June 14, 2016, the Board of Trustees(the “Board”) for HC Capital Trust (the “Trust”) (i) approved the engagement of RBC Global Asset Management (“RBC”) as an additional investment advisory organization (“Proposed Specialist Manager”) to manage portions of the assets of The Emerging Markets Portfolio and (ii) recommended approval of a portfolio management agreement between RBC and the Trust, on behalf of the Portfolio (the “Proposed Agreement”) by shareholders of the Portfolio. A meeting of the shareholders of the Portfolio is scheduled to be held on July 29, 2016 for the purpose of approving the Proposed Agreement.

The Institutional Value Equity Portfolio, The Institutional Growth Equity Portfolio, The Institutional Small Capitalization - Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio and The Fixed Income Opportunity Portfolio (the “Portfolios”) (From the Supplement Filed on June 15, 2016): At a meeting held on June 14, 2016, the Board approved, on behalf of the Portfolios, (i) an additional strategy, known as the Targeted Strategy (as defined below), to be managed by Parametric Portfolio Associates, LLC (“Parametric”) and HC Capital Solutions, the investment adviser to the Portfolios and (ii) new Portfolio Agreements between the Trust and Parametric on behalf of each Portfolio that include the compensation arrangements applicable to assets managed according to Parametric’s Targeted Strategy. In addition, a new member was added to the Parametric Liquidity Strategy team for each Portfolio and a new member replaced another member of the Parametric Defensive Equity Strategy team for The Institutional Value Equity Portfolio and The Institutional Growth Equity Portfolio. Accordingly, effective, June 15, 2016, the Prospectus is supplemented as follows:

1. The disclosure with respect to Parametric under the heading “Portfolio Managers” for each of The Institutional Small Capitalization - Mid Capitalization Equity Portfolio (p. 16), The Real Estate Securities Portfolio (p. 22), The Commodity Returns Strategy Portfolio (p. 29), The Institutional International Equity Portfolio (p. 34), The Emerging Markets Portfolio (p. 40) and The Fixed Income Opportunity Portfolio (p. 53) is hereby deleted and replaced with the following:

Parametric (Liquidity Strategy): Justin Henne, CFA, Clint Talmo, CFA and Jason Nelson, CFA have managed the portion of the Portfolio allocated to Parametric’s Liquidity Strategy since March, 2015 and Dane Fickel, Associate Portfolio Manager, has managed the portion of the Portfolio allocated to Parametric’s Liquidity Strategy since June, 2016.

Parametric (Targeted Strategy): Justin Henne, CFA, Tom Lee, CFA, Clint Talmo, CFA, Jason Nelson, CFA, Dane Fickel, Associate Portfolio Manager, Perry Li, Associate Portfolio Manager and Michael Zaslavsky, Associate Portfolio Manager, managed the portion of the Portfolio allocated to Parametric’s Targeted Strategy since June, 2016.

2. The disclosure with respect to The Parametric Investment Selection Process for each of The Institutional Small Capitalization - Mid Capitalization Equity Portfolio (p. 78), The Real Estate Securities Portfolio (p. 80), The Commodity Returns Strategy Portfolio (p. 82), The Institutional International Equity Portfolio (p. 87), The Emerging Markets Portfolio (p. 88) and The Fixed Income Opportunity Portfolio (p. 91) is hereby deleted and replaced with the following:

 

The Parametric Investment Selection Process:   

Parametric currently manages assets for the Portfolio using two separate and distinct strategies: “Liquidity Strategy” and “Targeted Strategy”.

 

In selecting investments for that portion of the Portfolio to be managed pursuant to the Liquidity Strategy, Parametric adheres to a strategy that seeks to closely match the performance of the Portfolio’s benchmark index (or other benchmark as specified by the Adviser) through the use of exchange-traded futures contracts, exchange traded funds (ETFs) and closed-end funds. The strategy utilizes a disciplined approach that is implemented in a mechanical manner, and which does not rely on predictive forecasts or market timing when making investment decisions. The Liquidity Strategy seeks to provide returns commensurate with the Portfolio’s stated benchmark index or other benchmark as specified by the Adviser.

 

The Targeted Strategy is the second of a two stage investment process under the direction of the Adviser in which Parametric effects transactions at the direction of the Adviser as set forth in “HC Capital Solutions – Investment Selection Process” shown below. Parametric provides expertise in trade execution, instrument and structure selection. Additionally, Parametric provides customized reporting on position details, liquidity/margin status and adequacy, and performance.

3. The disclosure with respect to Parametric under the heading “Portfolio Managers” for each of The Institutional Value Equity Portfolio (p. 6) and The Institutional Growth Equity Portfolio (p. 11) is hereby deleted and replaced with the following:

Parametric (Defensive Equity Strategy): Jay Strohmaier, CFA and Alex Zweber, CFA have managed the portion of the Portfolio allocated to Parametric’s Defensive Equity Strategy since July, 2014 and Perry Li, Associate Portfolio Manager, has managed the portion of the Portfolio allocated to Parametric’s Defensive Equity Strategy since June, 2016.

Parametric (Liquidity Strategy): Justin Henne, CFA, Clint Talmo, CFA and Jason Nelson, CFA have managed the portion of the Portfolio allocated to Parametric’s Liquidity Strategy since March, 2015 and Dane Fickel, Associate Portfolio Manager, has managed the portion of the Portfolio allocated to Parametric’s Liquidity Strategy since June, 2016.

Parametric (Targeted Strategy): Justin Henne, CFA, Tom Lee, CFA, Clint Talmo, CFA, Jason Nelson, CFA, Dane Fickel, Associate Portfolio Manager, Perry Li, Associate Portfolio Manager and Michael Zaslavsky, Associate Portfolio Manager,] have managed the portion of the Portfolio allocated to Parametric’s Targeted Strategy since June, 2016.

4. The disclosure with respect to The Parametric Investment Selection Process for each of The Institutional Value Equity Portfolio (p. 74) and The Institutional Growth Equity Portfolio (p. 75) is hereby deleted and replaced with the following:

 

The Parametric Investment Selection Process:   

Parametric currently manages assets for the Portfolio using three separate and distinct strategies: “Defensive Equity Strategy”, “Liquidity Strategy” and “Targeted Strategy”.

 

Parametric Defensive Equity Strategy uses equity index exposure (through exchanged traded funds and futures contracts), US Treasury bills, equity index call options and equity index put options. The strategy utilizes a rules-based approach that is implemented in a mechanical manner, and which does not rely on predictive forecasts or market timing when making investment decisions. The defensive equity strategy seeks to provide attractive relative returns compared to the S&P 500 over a full market cycle, while providing meaningful protection in down markets. Over shorter term time periods, the strategy is designed to deliver superior relative performance in modestly higher, flat and down markets, while trailing the index in strong markets.

 

In selecting investments for that portion of the Portfolio to be managed pursuant to the Liquidity Strategy, Parametric adheres to a strategy that seeks to closely match the performance of the Portfolio’s benchmark index (or other benchmark as specified by the Adviser) through the use of exchange-traded futures contracts, exchange traded funds (ETFs) and closed-end funds. The strategy utilizes a disciplined approach that is implemented in a mechanical manner, and which does not rely on predictive forecasts or market timing when making investment decisions. The Liquidity Strategy seeks to provide returns commensurate with the Portfolio’s stated benchmark index or other benchmark as specified by the Adviser.

 

The Targeted Strategy is the second of a two stage investment process under the direction of the Adviser in which Parametric effects transactions at the direction of the Adviser as set forth in “HC Capital Solutions – Investment Selection Process” shown below. Parametric provides expertise in trade execution, instrument and structure selection. Additionally, Parametric provides customized reporting on position details, liquidity/margin status and adequacy, and performance.

5. The following is added to the disclosure under the heading “More Information About Fund Investments and Risks” with respect to each of The Institutional Value Equity Portfolio (p. 74), The Institutional Growth Equity Portfolio (p. 75), The Institutional Small Capitalization - Mid Capitalization Equity Portfolio (p. 78), The Real Estate Securities Portfolio (p. 80), The Commodity Returns Strategy Portfolio (p. 82), The Institutional International Equity Portfolio (p. 87), The Emerging Markets Portfolio (p. 88) and The Fixed Income Opportunity Portfolio (p. 91):

 

The HC Capital Solutions Investment Selection Process:    The Adviser’s investment process is to determine what asset classes, market sectors, industries or countries offer the highest compensation for risk in the form of excess expected returns relative to a policy portfolio. The methodology for deriving expected returns is based on long-term normalized earnings in order to strip out the cyclical or transitory fluctuations. When the long-term, normalized earnings compared to the going-in price represents a substantial premium to the normal historical yield premium, the Adviser uses its professional judgment as to the optimal weighting in the Portfolio, taking into consideration the risk of impairment, the asset’s likely co-movement with other assets in the Portfolio and the contribution of the asset to the risk/reward ratio in the Portfolio’s total asset mix. When the asset is judged to considerably increase expected return or reduce the overall risk for the Portfolio, the Adviser seeks to implement the exposure with the most efficient instrument – including futures on indexes, customized tilted indexes and ETFs – when taking into account the trading costs, management fees, and basis risk of the instrument with the intended exposure. The Adviser then directs Parametric to establish the desired exposure relying on their trading expertise to execute on the most advantageous terms available in the given timeframe. The Adviser’s decision to reverse the exposure is predicated on the same considerations – expected risk/return contribution.

6. The following replaces the “Parametric Portfolio Associates LLC” section under the “Specialist Manager Guide” on page 181:

Parametric Portfolio Associates LLC (“Parametric”) serves as Specialist Manager for The Institutional Value Equity Portfolio, The Institutional Growth Equity Portfolio, The Institutional Small Capitalization – Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio and The Fixed Income Opportunity Portfolio. Parametric is a majority-owned subsidiary of Eaton Vance Corporation (“Eaton Vance”). Eaton Vance through its wholly owned affiliates Eaton Vance Acquisitions (“EVA”) and EVA Holdings LLC, maintains voting control of Parametric and Profit and Capital interests of 92% and 97%, respectively. Parametric Portfolio LP (“PPLP”) maintains an indirect Profit and Capital ownership interest in Parametric of 8% and 3%, respectively. The business address of Eaton Vance, EVA and EVA Holdings, LLC is Two International Place, Boston, MA 02110. The business address of Parametric and PPLP is 1918 Eighth Ave, Seattle, WA 98101. As of June 30, 2015, Parametric and its subsidiary had approximately $146.1 billion in assets under management.

For its services to The Institutional Value Equity Portfolio, The Institutional Growth Equity Portfolio, The Institutional Small Capitalization – Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio and The Fixed Income Opportunity Portfolio (the “Portfolios”), Parametric receives a fee from each Portfolio, calculated daily and payable monthly in arrears, at the annual rate of 0.15% of the first $50 million of the Combined Liquidity Assets (as defined below) committed to Parametric’s Liquidity Strategy; 0.10% of the next $100 million of the Combined Liquidity Assets and 0.05% on Combined Liquidity Assets over $150 million. The term “Combined Liquidity Assets” means the sum of the net assets of that portion of each of the Portfolios allocated to Parametric from time-to-time in their Liquidity Strategy. Parametric is also be entitled to receive a flat fee of $10,000 per year per Portfolio, provided that 1/12 of such fee related to any given Portfolio will be waived with respect to each calendar month during which no assets of such Portfolio were allocated to Parametric for investment in their Liquidity Strategy. Under the terms of separate portfolio management agreements, for its services to The Institutional Value Equity Portfolio and The Institutional Growth Equity Portfolio, Parametric is also entitled to receive a separate fee at the annual rate of 0.35% of the first $50 million of the Combined Defensive Assets committed to the Defensive Equity Strategy and 0.25% on Combined Defensive Assets over $50 million. Combined Defensive Assets means the sum of the net assets of that portion of each of The Institutional Value Equity Portfolio and The Institutional Growth Equity Portfolio allocated to Parametric from time-to-time for investment using the Defensive Equity Strategy. Under the terms of separate portfolio management agreements, for its services to The Institutional Value Equity Portfolio, The Institutional Growth Equity Portfolio, The Institutional Small Capitalization – Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio and The Fixed Income Opportunity Portfolio, Parametric receives a fee from each Portfolio, calculated daily and payable monthly in arrears, at the annual rate of 0.05% of the Targeted Strategy Assets (as defined below) committed to Parametric’s Targeted Strategy. The term “Targeted Strategy Assets” means the sum of the net assets of that portion of each of the Portfolios allocated to Parametric from time-to-time in their Targeted Strategy. Parametric shall also be entitled to receive a flat fee of $5,000 per year, provided that such fee will be waived with respect to each calendar year during which no Portfolio assets were allocated to the Targeted Strategy Assets. During the fiscal year ended June 30, 2015, Parametric received fees of 0.07%, 0.07%, 0.24%, 0.31%, 0.08%, 0.06%, 0.31%, and 0.10% of the average daily net assets for the portion of The Institutional Value Equity Portfolio, The Institutional Growth Equity Portfolio, The Institutional Small Capitalization – Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The International Equity Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio and The Fixed Income Opportunity Portfolio, respectively.

Mr. Jay Strohmaier, Mr. Alex Zweber and Mr. Perry Li are primarily responsible for the day-to-day management of the portion of each the assets of each of The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio and The Institutional Growth Equity Portfolio allocated to Parametric for investment in its Defensive Equity strategy. Mr. Strohmaier, Senior Portfolio Manager, leads a team of investment professionals responsible for designing, trading and managing overlay portfolios with an emphasis on Defensive Equity, hedging, and other asymmetric strategies. Mr. Strohmaier joined Parametric upon Parametric’s acquisition of Clifton in 2012, and prior to that acquisition was employed by Clifton since 2009. Before joining Clifton in 2009, Mr. Strohmaier worked for Cargill, Peregrine Capital Management and Advantus Capital Management where his responsibilities included research, portfolio management, trading, marketing and client service. He has over 25 years of investment experience. Mr. Strohmaier holds a BS degree in Agricultural Economics from Washington State University and MS in Applied Economics from the University of Minnesota. Mr. Zweber, CFA, Portfolio Manager, joined Parametric in 2012 upon Parametric’s acquisition of Clifton, and prior to the acquisition worked at Clifton in various investment capacities for over eight years. Mr. Zweber holds a BA in Economics from Macalester College. Mr. Li is responsible for trading and assisting with day-to-day management of Parametric’s options-based investment strategies, including the Defensive Equity and other proprietary strategies. He is an Associate Portfolio Manager at Parametric. Prior to joining Parametric in 2014, Mr. Li worked for CHS Inc. from [ ] to [ ], where he managed commodity futures and options portfolios and conducted research on macro economy and derivative strategies. Mr. Li earned a B.S. in Statistics from the Sun Yat-Sen University and a M.S. in Financial Mathematics from the University of Minnesota. He holds a Financial Risk Manager certificate from the Global Association of Risk Professionals.

Mr. Justin Henne, Mr. Clint Talmo, Mr. Jason Nelson and Mr. Dane Fickel are primarily responsible for the day-to-day management of the portion of each Portfolio’s assets allocated to Parametric for investment in its Liquidity Strategy. As Managing Director – Customized Exposure Management, Mr. Henne leads the investment team responsible for the implementation and enhancement of Parametric’s Customized Exposure Management product. Mr. Henne joined Parametric upon Parametric’s acquisition of Clifton in 2012, and prior to that acquisition was employed by Clifton since 2004. Mr. Henne holds a BA in Financial Management from the University of St. Thomas. He is a CFA charterholder and a member of the CFA Society of Minnesota. Mr. Talmo is responsible for designing, trading, and managing overlay portfolios with an emphasis on options and OTC swaps. Prior to joining Parametric in 2014, Clint was a Partner at Aerwulf Asset Management from 2012 to 2014. Prior to that, he worked for Interlachen Capital Group and EBF & Associates where his responsibilities at each firm included research, trading, and portfolio management. He earned a B.S. in Finance from the University of Colorado. He is a CFA charterholder and a member of the CFA Society of Minnesota. Mr. Nelson is an Associate Portfolio Manager at Parametric. Prior to joining Parametric in 2014, Mr. Nelson worked for Marquette Asset Management from 2012 to 2014, where his responsibilities included asset allocation, equity research, and trading, and before that time worked as an Investment Analyst at Clifton. Mr. Nelson earned a B.S. in Economics and Finance from Minnesota State University, Mankato. He is a CFA charterholder and a member of the CFA Society of Minnesota. Mr. Fickel is responsible for trading client accounts as well as creating and analyzing daily investment management reports with an emphasis in OTC instruments. He is an Associate Portfolio Manager at Parametric. Prior to joining Parametric in 2015, Mr. Fickel worked for Russell Investments from 2010 to 2015 and Morgan Stanley from 2009 to 2010, where his responsibilities included trading, portfolio management and client services. Mr. Fickel earned a B.A. in Economics from the University of Washington.

Mr. Tom Lee, Mr. Jay Strohmaier, Mr. Alex Zweber, Mr. Justin Henne, Mr. Clint Talmo, Mr. Jason Nelson, Mr. Dane Fickel, Mr. Perry Li and Mr. Michael Zaslavsky are primarily responsible for the day-to-day management of the portion of each Portfolio’s assets allocated to Parametric for investment in its Targeted Strategy. Mr. Lee, Managing Director, Investment Strategy and Research, has oversight responsibility for all investment strategies managed out of Parametric’s Minneapolis investment center. Mr. Lee joined Parametric upon Parametric’s acquisition of The Clifton Group Investment Management Company (“Clifton”) in 2012, and prior to that acquisition was employed by Clifton since 1994. He earned a B.S. in economics and an MBA in finance from the University of Minnesota. He is a CFA charterholder and a member of the CFA Society of Minnesota. Mr. Strohmaier, Senior Portfolio Manager, leads a team of investment professionals responsible for designing, trading and managing overlay portfolios with an emphasis on Defensive Equity, hedging, and other asymmetric strategies. Mr. Strohmaier joined Parametric upon Parametric’s acquisition of Clifton in 2012, and prior to that acquisition was employed by Clifton since 2009. Before joining Clifton in 2009, Mr. Strohmaier worked for Cargill, Peregrine Capital Management and Advantus Capital Management where his responsibilities included research, portfolio management, trading, marketing and client service. He has over 25 years of investment experience. Mr. Strohmaier holds a BS degree in Agricultural Economics from Washington State University and MS in Applied Economics from the University of Minnesota. Mr. Zweber, CFA, Portfolio Manager, joined Parametric in 2012 upon Parametric’s acquisition of Clifton, and prior to the acquisition worked at Clifton in various investment capacities for over eight years. Mr. Zweber holds a BA in Economics from Macalester College. Mr. Justin Henne, As Managing Director – Customized Exposure Management, Mr. Henne leads the investment team responsible for the implementation and enhancement of Parametric’s Customized Exposure Management product. Mr. Henne joined Parametric upon Parametric’s acquisition of Clifton in 2012, and prior to that acquisition was employed by Clifton since 2004. Mr. Henne holds a BA in Financial Management from the University of St. Thomas. He is a CFA charterholder and a member of the CFA Society of Minnesota. Mr. Talmo is responsible for designing, trading, and managing overlay portfolios with an emphasis on options and OTC swaps. Prior to joining Parametric in 2014, Mr. Talmo was a Partner at Aerwulf Asset Management from 2012 to 2014. Prior to that, he worked for Interlachen Capital Group and EBF & Associates where his responsibilities at each firm included research, trading, and portfolio management. He earned a B.S. in Finance from the University of Colorado. He is a CFA charterholder and a member of the CFA Society of Minnesota. Mr. Nelson is an Associate Portfolio Manager at Parametric. Prior to joining Parametric in 2014, Mr. Nelson worked for Marquette Asset Management from 2012 to 2014, where his responsibilities included asset allocation, equity research, and trading, and before that time worked as an Investment Analyst at Clifton. Mr. Nelson earned a B.S. in Economics and Finance from Minnesota State University, Mankato. He is a CFA charterholder and a member of the CFA Society of Minnesota. Mr. Fickel is responsible for trading client accounts as well as creating and analyzing daily investment management reports with an emphasis in OTC instruments. He is an Associate Portfolio Manager at Parametric. Prior to joining Parametric in 2015, Mr. Fickel worked for Russell Investments from 2010 to 2015 and Morgan Stanley from 2009 to 2010, where his responsibilities included trading, portfolio management and client services. Mr. Fickel earned a B.A. in Economics from the University of Washington. Mr. Li is responsible for trading and assisting with day-to-day management of Parametric’s options-based investment strategies, including the Defensive Equity and other proprietary strategies. He is an Associate Portfolio Manager at Parametric. Prior to joining Parametric in 2014, Mr. Li worked for CHS Inc. from 2011 to 2014, where he managed commodity futures and options portfolios and conducted research on macro economy and derivative strategies. Mr. Li earned a B.S. in Statistics from the Sun Yat-Sen University and a M.S. in Financial Mathematics from the University of Minnesota. He holds a Financial Risk Manager certificate from the Global Association of Risk Professionals. Mr. Zaslavsky is responsible for trading and assisting with day-to-day management of Parametric’s options-based investment strategies, including the Defensive Equity and other proprietary strategies. He is an Associate Portfolio Manager at Parametric. Prior to joining Parametric in 2015, Mr. Zaslavsky worked for Citigroup’s proprietary options trading and market-making group from 2009 to 2015, where he specialized in volatility modeling, portfolio management and derivatives arbitrage. He earned a B.S. in Finance from Bowling Green State University.

The Institutional Value Equity Portfolio and The Institutional Growth Equity Portfolio (the “Portfolios”) (From the Supplement Filed on June 15, 2016): The prospectus is supplemented to reflect the removal of Mohsen Fahmi in the portfolio managers for the Portfolios as shown below.

1. The following replaces the “PIMCO” paragraph under the “Portfolio Managers” section of the Investment SubAdvisers, regarding the Institutional Value Equity Portfolio on page 6 of the Prospectus:

PIMCO: Sudi Mariappa has managed the portion of the Portfolio allocated to PIMCO since January, 2015

2. The following replaces the “PIMCO” paragraph under the “Portfolio Managers” section of the Investment SubAdvisers, regarding the Institutional Growth Equity Portfolio on page 11 of the Prospectus:

PIMCO: Sudi Mariappa has managed the portion of the Portfolio allocated to PIMCO since January, 2015

3. The following replaces the second paragraph of Pacific Investment Management Company LLC (“PIMCO”) section of the “Specialist Manager Guide” on page 127 of the Prospectus:

For its services to The Institutional Value Equity and The Institutional Growth Equity Portfolios, PIMCO receives an annual fee of 0.25% of that portion of each Portfolio’s assets allocated to PIMCO from time to time. During the fiscal year ended June 30, 2015, PIMCO received a fee of 0.25% of the average daily net assets of the portion of The Institutional Growth Equity Portfolio allocated to PIMCO. During the fiscal year ended June 30, 2015, PIMCO was not allocated assets of The Institutional Value Portfolio. Sudi Mariappa is primarily responsible for the day-to-day management of that portion of the Portfolios allocated to PIMCO. Mr. Mariappa is a managing director and generalist portfolio manager in the Newport Beach office. He rejoined PIMCO in 2014 from GLG, a London-based hedge fund, where he was a managing director, developing and managing fixed income funds. Previously at PIMCO, Mr. Mariappa was a managing director and head of global portfolio management. He also served as a senior advisor to PIMCO’s portfolio management group from 2009-2011. Prior to joining PIMCO in 2000, he was a managing director for Merrill Lynch in Tokyo, overseeing Japanese government bond and swap derivative trading. He has 28 years of investment experience and holds an MBA, as well as a bachelor’s degree in chemical engineering, from Cornell University.

 

 

The Institutional Value Equity Portfolio (the “Portfolio”) (From the Supplement Filed on May 2, 2016)

The prospectus is supplemented to reflect a change in the portfolio manager for the Portfolio as shown below.

1. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding AllianceBernstein L.P. (“AllianceBernstein”), on page 6 of the Prospectus with respect to The Institutional Value Equity Portfolio:

AllianceBernstein: Gerry Paul has managed the portion of the Portfolio allocated to AllianceBernstein since September, 2009, and Cem Inal has co-managed the portion of the Portfolio allocated to AllianceBernstein since March, 2016.

2. The following replaces the third and fourth paragraphs of the AllianceBernstein section of the “Specialist Manager Guide” on page 116 of the Prospectus:

Gerry Paul and Cem Inal are responsible for making day-to-day investment decisions for that portion of The Institutional Value Equity Portfolio allocated to AllianceBernstein. Mr. Paul was appointed CIO of the North American Value Equity Investment Policy Group and Co-CIO of U.S. Large Cap Equities in 2009. Prior to this appointment, Mr. Paul was the Global Head of Diversified Value Services, CIO – Advanced Value Fund, CIO – Small and Mid-Capitalization, and Co-CIO – Real Estate Investments. Mr. Paul joined Bernstein in 1987 as a research analyst covering the automotive industry. He earned a BS from the University of Arizona and an MS from the Sloan School of Management of the Massachusetts Institute of Technology.

Mr. Inal was appointed Portfolio Manager of US Large Cap Value Equities in March 2016. He is also a Senior Research Analyst and leader of the technology sector. Previously, Mr. Inal co-managed the International Small Cap Value service from its inception in 2014 until 2016. Before joining the firm in 2003 as a research analyst, Mr. Inal was a vice president at fusionOne, a communications software provider. Prior to that, he was an engagement manager at McKinsey & Company and a research engineer at Mitsubishi Electric. Mr. Inal holds a BSE in electrical engineering from Princeton University and an MBA in financial engineering from Cornell University.

 

 

The Commodity Returns Strategy Portfolio (From the Supplement Filed on March 29, 2016):

At a meeting held on March 8, 2016, the Board of Trustees (the “Board”) for HC Capital Trust (the “Trust”) approved the engagement of Vaughan Nelson Investment Management, L.P. (“Vaughan Nelson”) as an investment advisory organization (“Specialist Manager”) to manage portions of the assets of The Commodity Returns Strategy Portfolio. Accordingly, effective March 29, 2016, the Prospectus is supplemented as shown below and related disclosures amended accordingly.

1. The following replaces the “Investment Subadvisers” section on page 29 of the Prospectus:

Investment Subadvisers

Cadence Capital Management LLC (“Cadence”), Mellon Capital Management Corporation (“Mellon Capital”), Parametric Portfolio Associates (“Parametric”), Pacific Investment Management Company LLC (“PIMCO”), Vaughan Nelson Investment Management, L.P. (“Vaughan Nelson”) and Wellington Management Company LLP (“Wellington Management”) are the Specialist Managers for the Portfolio.

2. The following is added to the “Portfolio Managers” section on page 29 of the Prospectus:

Vaughan Nelson: Steve Henriksen, Charles Ellis, Portfolio Manager and Blanca Garza- Bianco have co-managed the portion of the Portfolio allocated to Vaughan Nelson since March 2016.

3. The following replaces “Specialist Managers” introductory paragraph under “The Commodity Returns Strategy Portfolio” on page 81:

Specialist Managers. A portion of the Portfolio is managed in accordance with an “active management” approach, which involves the buying and selling of securities based upon economic, financial and market analysis and investment judgment. Parametric, PIMCO, Vaughan Nelson and Wellington Management are currently responsible for implementing the active component of the Portfolio’s investment strategy. The remaining portion of the Portfolio is managed using “passive” or “index” investment approaches that are designed to approximate as closely as practicable, before expenses, the performance of the Portfolio’s benchmark index or one or more identifiable subsets or other portions of that index (see “Fund Management,” included later in this Prospectus). Cadence and Mellon Capital are currently responsible for implementing the passive component of the Portfolio’s investment strategy. Further information about the Specialist Managers, individual portfolio managers responsible for day-to-day investment decisions for the Portfolio, and the manner in which the Portfolio’s assets are allocated among them appears in the “Specialist Manager Guide” included later in this Prospectus.

4. The following is added under “More Information About Fund Investments and Risks—The Commodity Returns Strategy Portfolio; Specialist Managers” beginning on page 81:

 

The Vaughan Nelson Investment Selection Process    In making investment decisions for the Portfolio, Vaughan Nelson employs bottom-up fundamental analysis and achieves flexibility in fixed income portfolio construction through sector rotation, duration/yield curve positioning and opportunistic trading efficiencies to produce a value-oriented portfolio of energy/commodity sector fixed income securities. Vaughan Nelson tries to emphasize capital preservation relative to other opportunities within its investment universe and, therefore, focuses on companies’ balance sheets, short-term liquidity and asset bases. The sell discipline is driven by a combination of factors, including the realization of the investment objective, new risks materializing, credit quality deterioration or a better relative value opportunity is uncovered.


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5. The following replaces “The Commodity Returns Strategy Portfolio” paragraph under “Advisory Services-Specialist Managers” on page 105:

The Commodity Returns Strategy Portfolio – The Portfolio is managed by six Specialist Managers, each of whom is compensated in accordance with a different fee schedule. Although asset allocations and fees payable to the Specialist Managers may vary, the figures assume an estimated allocation of assets at March 29, 2016 of 28% Wellington Management Global Natural Resources strategy, 17% Wellington Management Commodity strategy, 3% Parametric, 16% PIMCO, 0% Cadence, 8% Vaughan Nelson and 28% Mellon Capital.

5. The following is added as a new section in the “Specialist Manager Guide” beginning before the last two paragraphs on page 130:

Vaughan Nelson Investment Management, L.P. (“Vaughan Nelson”) serves as a Specialist Manager of The Commodity Returns Strategy Portfolio. Vaughan Nelson is an indirect wholly-owned subsidiary of Natixis Global Asset Management SA, a French investment banking/financial services firm, of which a minority share of ownership is publicly traded on the Euronext exchange in Paris. Vaughan Nelson’s headquarters are located at 600 Travis Street, Suite 6300, Houston, Texas 77002. Founded in 1970, Vaughan Nelson is a registered investment adviser which has approximately $12.5 billion in assets under management as of December 31, 2015.

For its services with respect to the portion of The Commodity Returns Strategy Portfolio allocated to Vaughan Nelson from time to time (the “Account”), Vaughan Nelson shall receive a fee calculated at an annual rate and payable quarterly in arrears based on the Average Quarterly Net Assets of the Combined Assets (as defined below) of 0.35% of the first $25 million of the Combined Assets, 0.25% of the next $75 million of Combined Assets and 0.20% of the Combined Assets exceeding $100 million. For purposes of calculating fees, the term “Combined Assets” shall mean the sum of (i) the net assets of the Account; and (ii) the net assets of each other investment advisory account for which the Adviser serves as investment adviser and for which Vaughan Nelson provides portfolio management services (“Other Hirtle Accounts”) using the same strategies as employed for the Account. “Average Quarterly Net Assets” shall mean the average of the average daily net asset values of the Account and/or the average of the net asset values of the Other Hirtle Accounts, as the case may be, as of the last business day of each of the three months in the calendar quarter. During the fiscal year ended June 30, 2015, Vaughan Nelson was not allocated assets of The Commodity Returns Strategy Portfolio.

Day-to-day investment decisions for The Commodity Returns Strategy Portfolio are the responsibility of Steve Henriksen, Senior Portfolio Manager/ Director -Fixed Income Investments of Vaughan Nelson, Charles Ellis, Portfolio Manager and Blanca Garza-Bianco, Portfolio Manager, each a member of the Vaughan Nelson Fixed Investment team. Mr. Henriksen joined Vaughan Nelson in 1994. He received a B.A. from Louisiana State University and has over 33 years of investment management and research experience. Mr. Ellis joined Vaughan Nelson in 2003. He received a B.B.A. from Texas Tech University and has over 41 years of investment management and research experience. Ms. Garza-Bianco joined Vaughan Nelson in 1998. She received a B.A. from the University of Houston and an M.B.A. from the University of St. Thomas and has over 23 years of investment management and research experience.

The Core Fixed Income Portfolio, The Fixed Income Opportunity Portfolio, The U.S. Government Fixed Income Securities Portfolio, The Inflation Protected Securities Portfolio, The U.S. Corporate Fixed Income Securities Portfolio and The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio (the “Portfolios”) (From the Supplement Filed on March 29, 2016): The prospectus is supplemented to reflect a change in the portfolio managers for each of the Portfolios as shown below.

1. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding Mellon Capital Management Corporation (“Mellon Capital”) on page 46 of the Prospectus with respect to The Core Fixed Income Portfolio:

Mellon Capital: David C. Kwan and Gregg Lee have co-managed the portion of the Portfolio allocated to Mellon Capital since December, 2010 and Paul Benson has co-managed the portion of the Portfolio allocated to Mellon Capital since March 2016.


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2. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding Mellon Capital Management Corporation (“Mellon Capital”) on page 53 of the Prospectus with respect to The Fixed Income Opportunity Portfolio:

Mellon Capital: David Kwan, John DiRe, Manual Hayes and Stephanie Shu have co-managed the portion of the Portfolio allocated to Mellon Capital since August, 2013 and Paul Benson has co-managed the portion of the Portfolio allocated to Mellon Capital since March 2016.

3. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding Mellon Capital Management Corporation (“Mellon Capital”) on page 57 of the Prospectus with respect to The U.S. Government Fixed Income Securities Portfolio:

Mellon Capital: David C. Kwan and Gregg Lee have co-managed the Portfolio since December, 2010 and Paul Benson has co-managed the Portfolio since March 2016.

4. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding Mellon Capital Management Corporation (“Mellon Capital”) on page 61 of the Prospectus with respect to The Inflation Protected Securities Portfolio:

Mellon Capital: David C. Kwan, CFA and Wyatt Cerny have co-managed the Portfolio since the Portfolio’s inception in February 2014 and Paul Benson has co-managed the Portfolio since March 2016.

5. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding Mellon Capital Management Corporation (“Mellon Capital”) on page 66 of the Prospectus with respect to The U.S. Corporate Fixed Income Securities Portfolio:

Mellon Capital: David C. Kwan, John DiRe, and Manuel Hayes have co-managed the portion of the Portfolio allocated to Mellon Capital since August 2013 and Paul Benson has co-managed the portion of the Portfolio allocated to Mellon Capital since March 2016.

6. The following replaces the “Portfolio Managers” section of the Investment Subadviser regarding Mellon Capital Management Corporation (“Mellon Capital”) on page 71 of the Prospectus with respect to The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio:

Mellon Capital: Mr. David C. Kwan and Mr. Gregg Lee have co-managed the Portfolio since December, 2012 and Paul Benson has co-managed the Portfolio since March 2016.

7. The following replaces the Mellon Capital Management Corporation section of the “Specialist Manager Guide” on page 124 of the Prospectus:

Mellon Capital Management Corporation (“Mellon Capital”) serves as a Specialist Manager for The Institutional Value Equity Portfolio, The Institutional Growth Equity Portfolio, The Institutional Small Capitalization—Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio, The Core Fixed Income Portfolio, The Fixed Income Opportunity Portfolio, The Inflation Protected Securities Portfolio and The U.S. Corporate Fixed Income Securities Portfolio. Mellon Capital, which was organized as a Delaware corporation in 1983, is headquartered at 50 Fremont Street, Suite 3900, San Francisco, CA 94105. Mellon Capital is a wholly-owned indirect subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”).

For its services to The Institutional Value Equity Portfolio, The Institutional Growth Equity Portfolio, and The Institutional Small Capitalization—Mid Capitalization Equity Portfolio, Mellon Capital receives a fee from each Portfolio calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it, at an annual rate of 0.065% so long as the aggregate assets allocated to Mellon Capital for all of its passive equity mandates (including accounts for other clients of the Adviser and certain of its affiliates besides the Trust) exceed $2 billion. Should these aggregate assets fall below $2 billion, the fee will be calculated at an annual rate of 0.075%. During the fiscal year ended June 30, 2015, Mellon Capital received fees of 0.065% of the average daily net assets for each portion of The Institutional Growth Equity Portfolio and The Institutional Small Capitalization—Mid Capitalization Equity Portfolio allocated to Mellon Capital. Mellon Capital did not manage any assets of The Institutional Value Equity Portfolio during the fiscal year ended June 30, 2015.

For its services to The Real Estate Securities Portfolio and The Commodity Returns Strategy Portfolio, Mellon Capital receives a fee from each Portfolio calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it, at an annual rate of 0.10% so long as the aggregate assets allocated to Mellon Capital for all of its passive equity mandates (including accounts for other clients of the Adviser and certain of its affiliates besides the Trust) exceed $2 billion. Should these aggregate assets fall below $2 billion, the fee will be calculated at an annual rate of 0.11%. During the fiscal year ended June 30, 2015, Mellon Capital received fees of 0.10% of the average daily net assets for the portion of The Commodity Returns Strategy Portfolio allocated to Mellon Capital. Mellon Capital did not manage any assets of The Real Estate Securities Portfolio during the fiscal year ended June 30, 2015.


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For its services to The Institutional International Equity Portfolio, Mellon Capital receives a fee from the Portfolio calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it, at an annual rate of 0.10% for those assets allocated to developed markets strategies and at an annual rate of 0.13% for those assets allocated to emerging markets strategies, so long as the aggregate assets allocated to Mellon Capital for all of its passive equity mandates (including accounts for other clients of the Adviser and certain of its affiliates besides the Trust) exceed $2 billion. Should these aggregate assets fall below $2 billion, the fee will be calculated an annual rate of 0.11% for those assets allocated to developed markets strategies and at an annual rate of 0.15% for those assets allocated to emerging markets strategies. During the fiscal year ended June 30, 2015, Mellon received fees of 0.13% of the average daily net assets for the portion of The Institutional International Equity Portfolio allocated to Mellon Capital.

For its services to The Emerging Markets Portfolio, Mellon Capital receives a fee from each Portfolio calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it, at an annual rate of 0.13% so long as the aggregate assets allocated to Mellon Capital for all of its passive equity mandates (including accounts for other clients of the Adviser and certain of its affiliates besides the Trust) exceed $2 billion. Should these aggregate assets fall below $2 billion, the fee will be calculated at an annual rate of 0.15%. During the fiscal year ended June 30, 2015, Mellon Capital received fees of 0.13% of the average daily net assets for the portion of The Emerging Markets Portfolio allocated to Mellon Capital.

For its services to The Core Fixed Income Portfolio (for assets allocated to government and mortgage/asset backed securities strategies), The U.S. Government Fixed Income Securities Portfolio and The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio, Mellon Capital receives a fee, based on the average daily net asset value of that portion of the assets of each Portfolio managed by it, at an annual rate of 0.06%. During the fiscal year ended June 30, 2015, Mellon Capital received fees of 0.06% of the average daily net assets for each portion of The Core Fixed Income Portfolio, The U.S. Government Fixed Income Securities Portfolio and The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio allocated to Mellon Capital.

For its services to The Core Fixed Income Portfolio (for assets allocated to corporate securities strategies) and The U.S. Corporate Fixed Income Securities Portfolio, Mellon Capital receives a fee, based on the average daily net asset value of that portion of the assets of each Portfolio managed by it, at an annual rate of 0.15% of that portion of each Portfolio dedicated to investments in U.S. corporate fixed income securities. During the fiscal year ended June 30, 2015, Mellon Capital received fees of 0.15% of the average daily net assets for the portion of The Core Fixed Income Portfolio allocated (to corporate securities strategies) to Mellon Capital. Mellon Capital did not manage any assets of The U.S. Corporate Fixed Income Securities Portfolio during the fiscal year ended June 30, 2015.

For its services to The Fixed Income Opportunity Portfolio, Mellon Capital receives a fee, based on the average daily net asset value of that portion of the assets of the Portfolios managed by it, at an annual rate of 0.25%. During the fiscal year ended June 30, 2015, Mellon Capital was not allocated assets of The Fixed Income Opportunity Portfolio.

For its services to The Inflation Protected Securities Portfolio, Mellon Capital receives a fee from the Portfolio calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it, at an annual rate of: 0.04% of the average daily net assets of that portion of the Account invested according to a domestic inflation-protected securities strategy; 0.07% of the average daily net assets of that portion of the Account invested according to a global inflation-protected securities strategy; and 0.13% of the average daily net assets of that portion of the Account invested according to an emerging markets inflation-protected securities strategy. During the period ended June 30, 2015, Mellon Capital received fees of 0.04% of the average daily net assets of The Emerging Markets Portfolio.

The Portfolio Managers for the Institutional Value Equity, Institutional Growth Equity, and Institutional Small Capitalization—Mid Capitalization Equity Portfolios are Karen Wong, William Cazalet, Ronald Gala and Kristin Crawford. The Portfolio Managers for the Real Estate Securities, Commodity Returns Strategy, Institutional International Equity and Emerging Markets Portfolios are Karen Wong, William Cazalet, Peter Goslin and Kristin Crawford. The Portfolio Managers for The Inflation Protected Securities Portfolio are David C. Kwan, CFA, Paul Benson CFA, CAIA and Wyatt Cerny.

Karen Q. Wong, CFA is a Managing Director and Head of Equity Portfolio Management at Mellon Capital. She has an M.B.A. and a B. S. from San Francisco State University. Ms. Wong has 15 years of investment experience and joined Mellon Capital in 2000. Ms. Wong is the head of equity portfolio management responsible for overseeing all equity indexing strategies, including exchange traded funds (ETFs) and is responsible for refinement and implementation of the equity portfolio management process. She is a member of the Senior Management Committee, Investment Management Committee, Risk Management Committee, Fiduciary Committee, and Trade Management Oversight Committee. Prior to joining Mellon Capital she worked as a security analyst at Redwood Securities. She is member of the CFA Institute and the CFA Society of San Francisco and is also a member of S&P Index Advisory Panel and Russell Index Client Advisory Board.


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William Cazalet, CAIA is a Managing Director and Head of Active Equity Portfolio Management at Mellon Capital. He has an M.S.M from Stanford University Graduate School of Business. and an M.A. from Cambridge University. Mr. Cazalet has 21 years of investment experience and joined Mellon Capital in 2013. Mr. Cazalet manages the entire team of portfolio managers and researchers for all U.S. and international active equity strategies.

Ronald Gala, CFA is a Managing Director, Team Leader and Senior Portfolio Manager for the Active Equity Strategies. Mr. Gala has 29 years of investment experience with tenure of 21 years between Mellon Capital and Mellon Equity Associates, LLP. He is a member and past president of the CFA Society of Pittsburgh and a member of the CFA Institute. He has an M.B.A. from the University of Pittsburgh and a B.S. from Duquesne University.

Kristin Crawford is a Director and Senior Portfolio Manager for the Active Equity Strategies. Ms. Crawford has 21 years of investment experience with tenure of 13 years between Mellon Capital and Franklin Portfolio Associates. She has an M.B.A. from Suffolk University and a B.S. from Smith College. Prior to joining Mellon Capital, she was a vice president and portfolio manager at Franklin Portfolio Associates.

Peter Goslin, CFA is a Director and Senior Portfolio Manager for the Active Equity Strategies. Mr. Goslin has 21 years of investment experience with tenure of 15 years at Mellon Capital. Mr. Goslin has an M.B.A. from the University of Notre Dame in Finance. Prior to joining Mellon Capital, Mr. Goslin was a derivatives trader and NASDAQ market maker for Merrill Lynch and ran Merrill’s Equity Index Option desk at the Chicago Mercantile Exchange.

Day-to-day investment decisions for the portions of The Core Fixed Income Portfolio and The U.S. Government Fixed Income Securities Portfolio allocated to Mellon Capital are the responsibility of David C. Kwan, CFA Paul Benson, CFA, CAIA and Gregg Lee, CFA. Mr. Kwan is a Managing Director, Fixed Income Management of Mellon Capital with 24 years of investment experience at the firm. He earned both a B.S. and an M.B.A. at the University of California at Berkeley. Mr. Benson is Managing Director and Head of Fixed Income Portfolio Management at Mellon Capital with 20 years of investment experience and 10 years at the firm. He earned a B.A. at the University of Michigan at Ann Arbor. Mr. Lee is a Vice President, Senior Portfolio Manager at Mellon Capital with 25 years of finance and investment experience and 25 years at the firm. He earned a B.S. at University of California at Davis.

Day-to-day investment decisions for the portion of The Fixed Income Opportunity Portfolio allocated to Mellon Capital are the responsibility of David Kwan, John DiRe, Manual Hayes, Paul Benson and Stephanie Shu. Mr. Kwan is a Managing Director, Fixed Income Management of Mellon Capital with 24 years of investment experience at the firm. He earned both a B.S. and an M.B.A. at the University of California at Berkeley. Mr. DiRe is a Director, Senior Portfolio Manager with 20 years of investment experience and 10 years at the firm. He earned a B.S at the University of Illinois, Chicago and an M.B.A. at University of California at Los Angeles. Mr. Hayes is a Senior Portfolio Manager with 10 years investment experience and 5 years at the firm. He earned a B.S at the University of California at Berkeley. Mr. Benson is Managing Director and Head of Fixed Income Portfolio Management at Mellon Capital with 20 years of investment experience and 10 years at the firm. He earned a B.A. at the University of Michigan at Ann Arbor. Ms. Shu is a Director, Senior Portfolio Manager with 16 years of investment experience and 14 years at the firm. She earned a M.S. at Texas A&M University.

Day-to-day investment decisions for the portion of The U.S. Corporate Fixed Income Securities Portfolio allocated to Mellon Capital is the responsibility of David C. Kwan, CFA, Paul Benson, CFA, CAIA John DiRe, and Manual Hayes. Mr. Kwan is a Managing Director, Fixed Income Management of Mellon Capital with 24 years of investment experience at the firm. He earned both a B.S. and an M.B.A. at the University of California at Berkeley. Mr. Benson is Managing Director and Head of Fixed Income Portfolio Management at Mellon Capital with 20 years of investment experience and 10 years at the firm. He earned a B.A. at the University of Michigan at Ann Arbor. Mr. DiRe is a Director, Senior Portfolio Manager with 21 years of investment experience and 10 years at the firm. He earned a B.S at the University of Illinois, Chicago and an M.B.A. at University of California at Los Angeles. Mr. Hayes is a Senior Portfolio Manager with 10 years investment experience and 5 years at the firm. He earned a B.S at the University of California at Berkeley.


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The Portfolio Managers for The Inflation Protected Securities Portfolio are David C. Kwan, CFA, Paul Benson, CFA, CAIA and Wyatt Cerny. Mr. Kwan is a Managing Director, Fixed Income Management of Mellon Capital with 23 years of investment experience at the firm. He earned both a B.S. and an M.B.A. at the University of California at Berkeley. Mr. Benson is Managing Director and Head of Fixed Income Portfolio Management at Mellon Capital with 20 years of investment experience and 10 years at the firm. He earned a B.A.at the University of Michigan at Ann Arbor. Mr. Cerny is a Portfolio Manager of Fixed Income Management of Mellon Capital with 5 years of investment experience at the firm. He earned his B.S. at Georgetown University.

As of June 30, 2015, Mellon Capital had assets under management totaling approximately $392 billion, which includes overlay strategies.

 

 

The Emerging Markets Portfolio (the “Portfolio”) (From the Supplement Filed on February 18, 2016): The prospectus is supplemented to reflect the removal of Kirk Henry in the portfolio managers for the Portfolio as shown below.

1. The following replaces the “TBCAM” paragraph under the “Portfolio Managers” section of the Investment SubAdvisers, regarding the Portfolio on page 40 of the Prospectus:

TBCAM: Warren Skillman has co-managed the portion of the Portfolio allocated to TBCAM since March, 2010.

2. The following replaces the first two paragraphs of The Boston Company Asset Management LLC section of the “Specialist Manager Guide” on page 118 of the Prospectus:

The Boston Company Asset Management LLC (“TBCAM”) serves as a Specialist Manager for The Emerging Markets Portfolio. TBCAM is an investment adviser registered with the Securities and Exchange Commission under the Investment Advisers Act and is a wholly-owned subsidiary of The Bank of New York Mellon Corporation. TBCAM is headquartered at the One Boston Place, Boston, MA 02108. Mr. Warren Skillman is primarily responsible for the day-to-day management of the portion of the Portfolio’s assets allocated to TBCAM. As of June 30, 2015, TBCAM had total assets under management of approximately $44.4 billion in assets.

The Institutional International Equity Portfolio (From the Supplement Filed on February 18, 2016): The section relating to the City of London Investment Management Company Limited (“CLIM”) Investment Selection Process under “More Information About Fund Investments and Risks; Specialist Managers” on page 86 for The Institutional International Equity Portfolio is deleted in its entirety and is replaced by the following:

 

The CLIM Investment Selection Process:    CLIM attempts to achieve above average long term performance with low relative volatility through active management of a portfolio consisting mostly of closed-end funds. Within sector allocation parameters set by the Adviser, CLIM uses a bottom-up stock selection process to identify a set of closed end funds that will provide the desired asset-class exposure. CLIM uses four main factors in selecting closed-end funds for purchase:
  

•       The historical, net performance of the closed-end fund in NAV terms, versus its benchmark (i.e. quality of exposure to the desired asset class);

  

•       The current discount to NAV of the fund compared to its historical average and its peer group and its potential to generate alpha;

  

•       The potential for the fund’s discount to NAV to narrow due to unitization (conversion to open-ended status), a share buyback program or some other form of corporate activity; and

  

•       Extraneous valuation factors such as rights issues, mergers or other event-driven situations that can be accretive to shareholders.

  

 

CLIM generally sells positions either to adjust asset allocations or because a superior investment opportunity has been identified.


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The Institutional Value Equity Portfolio, The Institutional Growth Equity, The Institutional Small Capitalization—Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio The Core Fixed Income Portfolio, The Fixed Income Opportunity Portfolio , The U.S. Government Fixed Income Securities Portfolio, The Inflation Protected Securities Portfolio, The U.S. Corporate Fixed Income Securities Portfolio and The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio (the “Portfolios”) (From the Supplement Filed on January 14, 2016): The prospectus is supplemented to reflect the addition of Scott Jacobson in the portfolio managers for each of the Portfolios as shown below.

1. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Institutional Value Equity Portfolio on page 6 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

2. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Institutional Growth Equity Portfolio on page 11 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

3. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Institutional Small Capitalization—Mid Capitalization Equity Portfolio on page 16 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

4. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Real Estate Securities Portfolio on page 22 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

5. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Commodity Returns Strategy Portfolio on page 29 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

6. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Institutional International Equity Portfolio on page 34 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

7. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Emerging Markets Portfolio on page 40 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.


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8. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Core Fixed Income Portfolio on page 46 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

9. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Fixed Income Opportunity Portfolio on page 53 of the Prospectus:

Thomas Cowhey, CFA has managed the Portfolio since June, 2013. Brad Conger, CFA has managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

10. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The U.S. Government Fixed Income Securities Portfolio on page 57 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

11. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The Inflation Protected Securities Portfolio on page 61 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since its inception in February 2014. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

12. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The U.S. Corporate Fixed Income Securities Portfolio on page 66 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

13. The following replaces the “Portfolio Managers” section of the Investment Adviser, regarding The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio on page 71 of the Prospectus:

Thomas Cowhey, CFA and Brad Conger, CFA have managed the Portfolio since August, 2013. Scott Jacobson, CFA has managed the Portfolio since January, 2016.

14. The following replaces the fifth paragraph under “Advisory Services” in the section “More Information About the Fund Investments and Risks” on page 104 of the Prospectus:

Officers and/or employees of the Adviser serve as the executive officers of the Trust and/or as members of the Board of Trustees. For its services under the HC Capital Agreements, the Adviser is entitled to receive an annual fee of 0.05% of each Portfolio’s average net assets. The principal offices of the Adviser are located at Five Tower Bridge, 300 Barr Harbor Drive, Suite 500, West Conshohocken, PA 19428-2970. A registered investment adviser under the Investment Advisers Act of 1940, as amended, since 1988, the Adviser had, as of June 30, 2015, approximately $25.4 billion in assets under management. HC Capital Solutions is a division of Hirtle, Callaghan & Co. LLC, and wholly owned by Hirtle Callaghan Holdings, Inc., which is controlled by one of its founders, Jonathan J. Hirtle. Mr. Thomas Cowhey, CFA, Mr. Brad Conger, CFA and Mr. Scott Jacobson, CFA act as portfolio managers for each Portfolio. Mr. Cowhey is the Chief Investment Strategist for the Adviser and has been with the Advisor since 2000. Mr. Conger is a Vice President at the Adviser and has been with the Adviser since December 2010. Prior to joining the Adviser, Mr. Conger spent over four years as a Director and Senior Analyst at Clearbridge Advisors. Mr. Jacobson is a Capital Allocation Investment Strategist for the Adviser and has been with the Adviser since 2015. Prior to joining the Adviser, Mr. Jacobson served as a Managing Director at Wedbush Securities, Inc., a Consultant for ClearVol Capital Management, LLC and the Head of Derivative Strategy at Sanford C. Bernstein & Co., LLC.


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The Commodity Returns Strategy Portfolio (the “Portfolio”) (From the Supplement Filed on December 16, 2015): The prospectus is supplemented to reflect a change, effective January 1, 2016, in the portfolio managers for the Portfolio as shown below.

1. The following replaces the “Portfolio Managers” section of the Investment Subadviser, regarding Wellington Management Company LLP (“Wellington Management”) on page 29 of the Prospectus with respect to the Portfolio:

Wellington Management: Jay Bhutani has managed a portion of the Portfolio allocated to Wellington Management since June 2010. David Chang has managed a portion of the Portfolio allocated to Wellington Management since April 2011.

2. The following replaces the last four paragraphs of the Wellington Management section of the “Specialist Manager Guide” on page 129 of the Prospectus:

Jay Bhutani, Managing Director and Global Industry Analyst affiliated with Wellington Management and located outside of the United States, has served as Portfolio Manager for the Commodity Related Securities portion of the Fund since June 2010. Mr. Bhutani joined Wellington Management as an investment professional in 2007.

David A. Chang, CFA, Senior Managing Director and Commodities Portfolio Manager of Wellington Management, has served as Portfolio Manager for the Subsidiary since April 2011. Mr. Chang joined Wellington Management in 2001, and has been an investment professional since 2002.

For its services to The Commodity Returns Strategy Portfolio, Wellington Management receives a fee, payable monthly, at the following rates: For assets managed in its Global Natural Resources strategy, Wellington Management receives a fee at an annual rate of 0.60% of the average daily net assets of the account so long as at least $150 million in assets are present in the account; and 0.85% of the average daily net assets of the account if less than $150 million in assets are present in the account. Prior to March 11, 2015, Wellington Management received a fee, payable monthly, for Portfolio assets managed in its Global Natural Resources strategy, of 0.85% of the average daily net assets of that portion of the Portfolio’s assets allocated to such strategy so long as there are at least $50 million in assets present in such account and 1.00% if less than $50 million are present in the account. Wellington Management has waived the $50 million minimum assets level for the first six months of the Portfolio’s operations. For assets managed in its Commodity strategy, Wellington Management will receive a fee at an annual rate of 0.75% of the average daily net assets of that portion of the Portfolio’s assets allocated to such strategy from time to time. During the fiscal year ended June 30, 2015, Wellington Management received a total fee of 0.76% of the average daily net assets of The Commodity Returns Strategy Portfolio.

The Core Fixed Income Portfolio (the “Portfolio”) (From the Supplement Filed on December 16, 2015):

1. The section “Principal Investment Strategies” pertaining to the Portfolio on page 41 of the Prospectus is revised and restated as shown below:

Principal Investment Strategies

Under normal circumstances, the Portfolio invests primarily (i.e. at least 80% of its net assets) in a diversified portfolio of fixed income securities. In the unlikely event that a change in this investment policy is adopted by the Board of Trustees, shareholders will receive at least 60 days prior written notice before such change is implemented. The Portfolio, under normal circumstances, will invest at least 80% of its net assets in fixed income securities that, at the time of purchase, are rated in one of four highest rating categories assigned by one of the major independent rating agencies or are, in the view of the Specialist Manager, deemed to be of comparable quality. Securities in the fourth highest rating category may have speculative characteristics. From time to time, a substantial portion of the Portfolio may be invested in any of the following: (1) investment grade mortgage-backed or asset-backed securities; (2) securities issued or fully guaranteed by the U.S. Government, Federal Agencies, or sponsored agencies; (3) investment grade fixed income securities issued by U.S. corporations; or (4) municipal bonds (i.e., debt securities issued by municipalities and related entities). Under normal conditions, the Portfolio may invest up to 20% of its assets in high yield securities (“junk bonds”) as well as cash or money market instruments in order to maintain liquidity, or in the event that the Specialist Manager determines that securities meeting the Portfolio’s investment objective and policies are not otherwise readily available for purchase. The Portfolio may invest in securities issued by other investment companies, including ETFs, that invest in fixed income securities. Consistent with its investment policies, the Portfolio may purchase and sell securities without regard to the effect on portfolio turnover. The Portfolio has historically had significant portfolio turnover (e.g., over 200% annually), and it is anticipated that such portfolio turnover will continue in the future. Securities purchased for the Portfolio will have varying maturities, but under normal circumstances the Portfolio will have an effective dollar weighted average portfolio maturity that is within the range of the average portfolio maturity in the Barclays Capital U.S. Aggregate Bond Index, which range, as of June 30, 2015, was between one and ten years. The weighted average maturity of the Barclays Capital U.S. Aggregate Bond Index as of June 30, 2015 was 7.87 years. The Portfolio may engage in transactions involving instruments such as option or futures contracts, both in order to hedge against fluctuations in the market value of the securities in which the Portfolio invests and to achieve market exposure pending investment and, in the case of asset-backed and similar securities, for investment purposes.


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The Portfolio is authorized to operate on a multi-manager basis. This means that a single Portfolio may be managed by more than one Specialist Manager. The multi-manager structure is generally designed to provide investors access to broadly diversified investment styles. The Trust seeks to engage skilled Specialist Managers to provide a broad exposure to the relevant asset class and returns in excess of the Portfolio’s benchmark over time.

2. The paragraph under “The Core Fixed Income Portfolio” on page 88 of the Prospectus is revised and restated as shown below:

The Portfolio, under normal circumstances, will invest at least 80% of its net assets in fixed income securities that, at the time of purchase, are rated in one of four highest rating categories assigned by one of the major independent rating agencies or are, in the view of the Specialist Manager, deemed to be of comparable quality. The Portfolio may invest a substantial portion of its total assets in mortgage-backed and asset-backed issues. Under normal conditions, the Portfolio may invest up to 20% of its assets in high yield securities (“junk bonds”) as well as cash or money market instruments in order to maintain liquidity, or in the event that the Specialist Manager determines that securities meeting the Portfolio’s investment objective and policies are not otherwise readily available for purchase. Consistent with its investment policies, the Portfolio may purchase and sell securities without regard to the effect on portfolio turnover. The Portfolio has historically had significant portfolio turnover (e.g., over 200%/annually), and it is anticipated that such portfolio turnover will continue in the future. High portfolio turnover will cause the Portfolio to incur additional transaction costs; higher transaction costs will reduce total return. High portfolio turnover also is likely to generate short-term capital gains, which is taxed as ordinary income. Securities purchased for the Portfolio will have varying maturities, but under normal circumstances the Portfolio will have an effective dollar weighted average portfolio maturity that is within the range of the average portfolio maturity in the Barclays Capital U.S. Aggregate Bond Index, which range, as of June 30, 2015, was between one and ten years. The weighted average maturity of the Barclays Capital U.S. Aggregate Bond Index as of June 30, 2015 was 7.87 years. The Portfolio may engage in transactions involving “derivative instruments” including, but not limited to, futures, forwards, options and options on futures both in order to hedge against fluctuations in the market value of the securities in which the Portfolio invests and to achieve market exposure pending investment and, in the case of asset-backed and similar securities, for investment purposes.

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.


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STATEMENT OF ADDITIONAL INFORMATION

HC Advisors Shares

November 1, 2015

As Supplemented October 17, 2016

HC CAPITAL TRUST

FIVE TOWER BRIDGE, 300 BARR HARBOR DRIVE, SUITE 500

WEST CONSHOHOCKEN, PA 19428-2970

This Statement of Additional Information is designed to supplement information contained in the Prospectus relating to HC Capital Trust (“Trust”). The Trust is an open-end, series, management investment company registered under the Investment Company Act of 1940, as amended (“Investment Company Act”). HC Capital Solutions serves as the overall investment adviser to the Trust under the terms of a discretionary investment advisory agreement. It generally oversees the services provided to the Trust. HC Capital Solutions is a separate operating division of Hirtle Callaghan & Co., LLC (the “Adviser”). This document although not a Prospectus, is incorporated by reference in its entirety in the Trust’s Prospectuses and should be read in conjunction with the Trust’s Prospectuses dated November 1, 2015. A copy of those Prospectuses is available by contacting the Trust at (800) 242-9596.

 

    

Ticker Symbol

The Value Equity Portfolio

   HCVPX

The Institutional Value Equity Portfolio

   HCEIX

The Growth Equity Portfolio

   HCGWX

The Institutional Growth Equity Portfolio

   HCIWX

The Small Capitalization—Mid Capitalization Equity Portfolio

   HCSAX

The Institutional Small Capitalization—Mid Capitalization Equity Portfolio

   HCISX

The Real Estate Securities Portfolio

   HCRSX

The Commodity Returns Strategy Portfolio

   HCCAX

The ESG Growth Portfolio

   HCSGX

The International Equity Portfolio

   HCIAX

The Institutional International Equity Portfolio

   HCITX

The Emerging Markets Portfolio

   HCEPX

The Core Fixed Income Portfolio

   HCFNX

The Fixed Income Opportunity Portfolio

   HCFOX

The U.S. Government Fixed Income Securities Portfolio

   HCUAX

The Inflation Protected Securities Portfolio

   HCPAX

The U.S. Corporate Fixed Income Securities Portfolio

   HCXAX

The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio

   HCAAX

The Short-Term Municipal Bond Portfolio

   HCSTX

The Intermediate Term Municipal Bond Portfolio

   HCIBX

The Intermediate Term Municipal Bond II Portfolio

   HCBAX

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, 2015 and Semi-Annual Report dated December 31, 2014 accompanies this Statement of Additional Information and is incorporated herein by reference. The date of this Statement of Additional Information is November 1, 2015.


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TABLE OF CONTENTS

 

Statement of Additional Information Heading

   Page      Corresponding Prospectus Heading

Management of the Trust

     3       Management of the Trust

Further Information About the Trust’s Investment Policies

     22       Investment Risks and Strategies

Investment Restrictions

     55       Investment Risks and Strategies

Additional Purchase and Redemption Information

     57       Shareholder Information

Portfolio Transactions and Valuation

     58       Shareholder Information

Additional Information about the Portfolio Managers

     62       Specialist Manager Guide

Dividends, Distributions and Taxes

     106       Shareholder Information

History of the Trust and Other Information

     110       Management of Trust

Proxy Voting

     113       N/A

Independent Registered Public Accounting Firm and Financial Statements

     129       Financial Highlights

Ratings Appendix

     130       N/A


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MANAGEMENT OF THE TRUST

GOVERNANCE. The Trust’s Board of Trustees (“Board”) currently consists of five members. A majority of the members of the Board are individuals who are not “interested persons” of the Trust within the meaning of the Investment Company Act; in the discussion that follows, these Board members are referred to as “Independent Trustees.” The remaining Board member is a senior officer of the Adviser and is thus considered an “interested person” of the Trust for purposes of the Investment Company Act. This Board member is referred to as an “Affiliated Trustee.” Each Trustee serves until the election and qualification of his or her successor, unless the Trustee sooner resigns or is removed from office.

Day-to-day operations of the Trust are the responsibility of the Trust’s officers, each of whom is elected by, and serves at the pleasure of, the Board. The Board is responsible for the overall supervision and management of the business and affairs of the Trust and of each of the Trust’s separate investment portfolios (each, a “Portfolio” and collectively, the “Portfolios”), including the selection and general supervision of those investment advisory organizations (“Specialist Managers”) retained by the Trust to provide portfolio management services to the respective Portfolios. The Board also may retain new Specialist Managers or terminate particular Specialist Managers, if the Board deems it appropriate to do so in order to achieve the overall objectives of the Portfolio involved. More detailed information regarding the Trust’s use of a multi-manager structure appears in this Statement of Additional Information under the heading “Management of the Trust: Multi-Manager Structure.”

OFFICERS AND AFFILIATED TRUSTEE. The table below sets forth certain information about the Trust’s Affiliated Trustee, as well as its executive officers.

 

NAME, ADDRESS, AND AGE

  

POSITION(S)

HELD WITH

TRUST

  

TERM OF

OFFICE;
TERM

SERVED IN

OFFICE

  

PRINCIPAL OCCUPATION(S)

DURING PAST 5 YEARS

   NUMBER OF
PORTFOLIOS
IN FUND
COMPLEX
OVERSEEN
   OTHER
DIRECTORSHIPS
HELD BY
TRUSTEE**

Robert J. Zion*

Five Tower Bridge,

300 Barr Harbor Drive,

W. Conshohocken, PA 19428

Born: 1961

   Trustee; President    Indefinite; Trustee since 4/30/07; President since 6/12/2012    Mr. Zion is currently the Chief Operating Officer, Secretary and a Principal of the Adviser. He has been with the Adviser for more than the past five years.    21    None

Colette Bergman

Five Tower Bridge,

300 Barr Harbor Drive,

W. Conshohocken, PA 19428

Born: 1970

   Vice President & Treasurer    Indefinite; Since 6/12/2012    Ms. Bergman is currently a Vice President of the Adviser. She has been with the Adviser for more than 5 years.    21    N/A

Guy Talarico

Alaric Compliance Services, LLC

150 Broadway, Suite 302

New York, NY 10038

Born: 1955

   Chief Compliance Officer    Indefinite; Since 4/25/2013    Mr. Talarico is the founder and CEO of Alaric Compliance Services LLC and has been since the company’s inception in 2004.    21    N/A

Curtis Barnes

Citi Fund Services

3435 Stelzer Road

Columbus, OH 43219

Born: 1953

   Secretary    Indefinite; Since 6/05/14    Mr. Barnes is a Senior Vice President and has been with Citi Fund Services Ohio, Inc. since June 1995.    21    N/A

 

* Mr. Zion may be deemed to be an “interested person,” of the Adviser as that term is defined by the Investment Company Act, as a result of his past or present positions with the Adviser or its affiliates.
** The information in this column relates only to directorships in companies required to file certain reports with the SEC under the various federal securities laws.

 

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INDEPENDENT TRUSTEES. The following table sets forth certain information about the Independent Trustees.

 

NAME, ADDRESS, AND AGE

  

POSITION(S)

HELD WITH

TRUST

  

TERM OF

OFFICE;

TERM

SERVED IN

OFFICE

  

PRINCIPAL OCCUPATION(S)

DURING PAST 5 YEARS

   NUMBER OF
PORTFOLIOS
IN FUND
COMPLEX
OVERSEEN
   OTHER
DIRECTORSHIPS
HELD BY
TRUSTEE*

Jarrett Burt Kling

Five Tower Bridge,

300 Barr Harbor Drive,

W. Conshohocken, PA 19428

Born: 1943

   Trustee    Indefinite; Since 7/20/95    For more than the past five years Mr. Kling has been a managing director of CBRE Clarion Securities, LLC, a registered investment adviser.    21    None

Harvey G. Magarick

Five Tower Bridge,

300 Barr Harbor Drive,

W. Conshohocken, PA 19428

Born: 1939

   Trustee    Indefinite; Since 7/01/04    Mr. Magarick is retired. Prior to June 3, 2004, he was a partner in the accounting firm of BDO Seidman, LLP.    21    Resource
Credit
Opportunity,
Inc. and
Resource
Real Estate
Innovation
Office
REIT, Inc.

R. Richard Williams

Five Tower Bridge,

300 Barr Harbor Drive,

W. Conshohocken, PA 19428

Born: 1945

   Trustee    Indefinite; Since 7/15/99    Since 2000, Mr. Williams has been the owner of Seaboard Advisers (consulting services).    21    Franklin
Square
Energy and
Power
Fund

Richard W. Wortham, III

Five Tower Bridge,

300 Barr Harbor Drive,

W. Conshohocken, PA 19428

Born: 1938

   Trustee    Indefinite; Since 7/20/95    Mr. Wortham is currently the Chairman and Chief Executive Officer of The Wortham Foundation and has been a Trustee for more than the past five years.    21    Oncor
Electric
Delivery
Company
LLC

 

* The information in this column relates only to directorships in companies required to file certain reports with the SEC under the various federal securities laws.

The Independent Trustees identified in the table above have served together on the Trust’s Board for 11 years. Taken as a whole, the Board represents a broad range of business and investment experience, as well as professional skills. Mr. Magarick has extensive experience in public accounting, tax and internal controls and was previously a Partner with BDO Seidman, LLP. Mr. Kling, who holds a B. S. from the Wharton School of The University of Pennsylvania, has over 40 years of experience in investment management and as a co-founder of CBRE Clarion Securities, LLC, has extensive experience in the distribution of investment products. Mr. Williams brings to the Board the experience of a long term business owner, having founded, owned and operated a company that became, during his tenure, the country’s largest distributor of certain industrial equipment, as well as a market leader in pharmaceutical, commercial construction and other business segments. Mr. Wortham has over three decades of executive management experience, having served as a Trustee of The Wortham Foundation, a private philanthropic foundation with assets of approximately $260 million. He is also a life trustee of the Museum of Fine Arts Houston, serving on the executive, finance, investment and audit committees, and is a director of a large electrical transmission and distribution company. The Affiliated Trustee, Mr. Zion, was a certified public accountant with Coopers & Lybrand LLP prior to joining the Hirtle Callaghan organization, has served in executive capacities with companies affiliated with Hirtle Callaghan & Co., LLC for more than ten years.

COMMITTEES OF THE BOARD OF TRUSTEES. The Board has established two committees to assist the Trustees in fulfilling their oversight responsibilities.

The Nominating Committee is responsible for the nomination of individuals to serve as Independent Trustees. The Nominating Committee, whose members consist of all of the Independent Trustees, did not meet during the fiscal year ended June 30, 2015. The Nominating Committee will consider persons submitted by security holders for nomination to the Board. Recommendations for consideration by the Nominating Committee should be sent to the Secretary of the Trust in writing, together with appropriate biographical information concerning each such proposed nominee, at the principal executive office of the Trust. When evaluating individuals for recommendation for Board membership, the Nominating Committee considers the candidate’s knowledge of the mutual fund industry, educational background and experience and the extent to which such experience and background would enable the Board to maintain a diverse mix of skills and qualifications. Additionally, the entire Board annually performs a self-assessment with respect to its current members, which includes a review of their backgrounds, professional experience, qualifications and skills.

 

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The Audit Committee is responsible for overseeing the audit process and the selection of independent registered public accounting firms for the Trust, as well as providing assistance to the full Board in fulfilling its responsibilities as they relate to fund accounting, tax compliance and the quality and integrity of the Trust’s financial reports. The Audit Committee, whose members consist of all of the Independent Trustees, held 5 meetings during the fiscal year ended June 30, 2015. Mr. Magarick currently serves as the Audit Committee Chairman.

Compliance and Risk Oversight Process. The Trustees overall responsibility for identifying and overseeing the operational, business and investment risks inherent in the operation of the Trust is handled by the Board as a whole and by the Board’s Audit Committee, particularly with respect to accounting matters. To assist them in carrying out their oversight responsibilities, the Trustees receive, in connection with each of the Board’s regular quarterly meetings, regular reports from the Trust’s Administrator with respect to portfolio compliance, fund accounting matters and matters relating to the computation of the Trust’s net asset value per share. The Trustees also receive reports, at least quarterly, from the Trust’s Chief Compliance Officer or “CCO.” These reports, together with presentations provided to the Board at its regular meetings and regular compliance conference calls among the Advisor, the CCO and the Chair of the Board’s Audit Committee held each month in which there is not a quarterly Board meeting, are designed to keep the Board informed with respect to the effectiveness of the Trust’s overall compliance program including compliance with stated investment strategies, and to help ensure that the occurrence of any event or circumstance that may have a material adverse effect on the Trust are brought promptly to the attention of the Board and that appropriate action is taken to mitigate any such adverse effect. Additionally, the full Board annually receives a report from the Trust’s CCO and both the full Board and, at the discretion of the Independent Trustees, the Independent Trustees separately meet with the CCO for the purpose of discussing the extent to which the Trust’s overall compliance program is reasonably designed to detect and prevent violations of the federal securities laws and assessing the effectiveness of the overall compliance program. Additionally, both the Board, and the Audit Committee meet at least annually with the Trust’s independent public accounting firm. As indicated above, the Audit Committee is comprised solely of Independent Trustees and the Audit Committee and its Chair are regular participants in the compliance and risk oversight process. To date, the Board has not found it necessary to specifically identify a “lead trustee” or to elect, as the Board’s Chairman, an Independent Trustee, although the Board reserves the right to do so in the future.

COMPENSATION ARRANGEMENTS. Since January 1, 2015, each of the Independent Trustees has been entitled to receive from the Trust a fee of (i) $72,500 per year; (ii) an additional $10,000 for each regular and special in person Board meeting attended by him (regardless of whether attendance is in person or by telephone), plus reimbursement for reasonable out-of-pocket expenses incurred in connection with his attendance at such meetings; (iii) $2,500 for each Audit Committee Meeting attended in person or telephonically and (iv) $2,500 per each regular and special telephonic meeting attended by him, plus reimbursement for reasonable out-of-pocket expenses incurred in connection with his attendance at such meetings. Committee Chairs receive an additional $10,000 annual fee. The Affiliated Trustee and the Trust’s officers receive no compensation from the Trust for performing the duties of their respective offices. The table below shows the aggregate compensation received from the Trust by each of the Independent Trustees during the fiscal year ending June 30, 2015 (excluding reimbursed expenses) and reflects the above compensation arrangements except that the annual retainer fee prior to January 1, 2015 was $65,000 per year.

 

NAME

  AGGREGATE
COMPENSATION
FROM TRUST
    PENSION
RETIREMENT
BENEFITS
FROM TRUST
  ESTIMATED
BENEFITS
UPON RETIREMENT
FROM TRUST
  TOTAL
COMPENSATION
FROM TRUST
 

Jarrett Burt Kling

  $ 121,500      none   none   $ 121,500   

Harvey G. Magarick

  $ 131,250      none   none   $ 131,250   

R. Richard Williams

  $ 121,250      none   none   $ 121,250   

Richard W. Wortham, III

  $ 121,250      none   none   $ 121,250   

 

 

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TRUSTEE OWNERSHIP OF SECURITIES OF HC CAPITAL TRUST. The table below sets forth the extent of each Trustee’s beneficial interest in shares of the Portfolios as of December 31, 2014. For purposes of this table, beneficial interest includes any direct or indirect pecuniary interest in securities issued by the Trust and includes shares of any of the Trust’s Portfolios held by members of a Trustee’s immediate family. As of August 3, 2015, all of the officers and trustees of the Trust own, in the aggregate, less than one percent of the outstanding shares of the respective Portfolios of the Trust; officers and Trustees of the Trust may, however, be investment advisory clients of the Adviser and shareholders of the Trust.

 

     ROBERT
J. ZION*
   JARRETT
BURT
KLING
   HARVEY G.
MAGARICK
   R. RICHARD
WILLIAMS
   RICHARD W.
WORTHAM, III**

The Value Equity Portfolio

   e    c    d    e    a

The Institutional Value Equity Portfolio

   e    a    d    e    a

The Growth Equity Portfolio

   e    c    d    e    a

The Institutional Growth Equity Portfolio

   e    a    d    a    a

The Small Capitalization—Mid Capitalization Equity Portfolio

   b    b    b    a    a

The Institutional Small Capitalization—Mid Capitalization Equity Portfolio

   e    a    a    a    a

The Real Estate Securities Portfolio

   a    a    a    a    a

The Commodity Returns Strategy Portfolio

   c    a    e    d    a

The ESG Growth Portfolio

   a    a    a    a    a

The International Equity Portfolio

   e    d    e    e    a

The Institutional International Equity Portfolio

   e    a    d    e    a

The Emerging Markets Portfolio

   e    c    e    e    a

The Core Fixed Income Portfolio

   a    a    e    a    a

The Fixed Income Opportunity Portfolio

   a    a    e    a    a

The U.S. Government Fixed Income Securities Portfolio

   a    a    a    a    a

The Inflation Protected Securities Portfolio

   a    a    a    a    a

The U.S. Corporate Fixed Income Securities Portfolio

   a    a    a    a    a

The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio

   a    a    a    a    a

The Short-Term Municipal Bond Portfolio

   a    a    c    a    a

The Intermediate Term Municipal Bond Portfolio

   c    c    e    a    a

The Intermediate Term Municipal Bond II Portfolio

   a    a    c    a    a

AGGREGATE DOLLAR RANGE OF TRUST SHARES

   e    e    e    e    a

NOTE:

a = None

b = $1 - $10,000

c = $10,001 - $50,000

d = $50,001 - $100,000

e = Over $100,000

 

* Mr. Zion is also a trustee of a Revocable Trust which held shares as of December 31, 2014 of between $10,001-$50,000 in each of The Intermediate Term Municipal Bond Portfolio and The Commodity Returns Strategy Portfolio and also over $100,000 in each of The Value Equity Portfolio, The Growth Equity Portfolio, The International Equity Portfolio, and The Emerging Markets Portfolio. Mr. Zion disclaims beneficial ownership of the Trust.
** Mr. Wortham serves as a trustee for the Wortham Foundation which held shares as of December 31, 2014 of over $100,000 in each of The Emerging Markets Portfolio, The Fixed Income Opportunity Portfolio, The Institutional Value Equity Portfolio, The Institutional Growth Equity Portfolio, The Inflation Protected Securities Portfolio and The Institutional International Equity Portfolio. Mr. Wortham has no beneficial interest in the Foundation.

MULTI-MANAGER STRUCTURE. As noted in the Prospectus, each of the Trust’s Portfolios is authorized to operate on a “multi-manager” basis. This means that a single Portfolio may be managed by more than one Specialist Manager. In selecting Specialist Managers, the Adviser seeks to identify and retain Specialist Managers who have achieved and will continue to achieve superior investment records relative to selected benchmarks; (b) pair Specialist Managers that have complementary investment styles; (c) monitor Specialist Managers’ performance and adherence to stated styles; and (d) effectively allocate Portfolio assets among

 

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Specialist Managers. At present, the Value Equity, Growth Equity, Small Capitalization—Mid Capitalization Equity, International Equity, Emerging Markets, Institutional Value Equity, Institutional Growth Equity, Institutional Small Capitalization—Mid Capitalization Equity, Institutional International Equity, Real Estate Securities, Commodity Returns Strategy, ESG Growth, Fixed Income Opportunity, Core Fixed Income and U.S. Corporate Fixed Income Securities Portfolios each employ the multi-manager structure.

Engagement and Termination of Specialist Managers. The Board is responsible for making decisions with respect to the engagement and/or termination of Specialist Managers based on a continuing quantitative and qualitative evaluation of their skills and proven abilities in managing assets pursuant to specific investment styles. While superior performance is regarded as the ultimate goal, short-term performance by itself is not a significant factor in selecting or terminating Specialist Managers. From time to time, the Adviser may recommend, and the Board may consider, terminating the services of a Specialist Manager. The criteria for termination may include, but are not limited to, the following: (a) departure of key personnel from the Specialist Manager’s firm; (b) acquisition of the Specialist Manger by a third party; (c) change in or departure from investment style, or (d) prolonged poor performance relative to the relevant benchmark index.

The Board’s authority to retain Specialist Managers is subject to the provisions of Section 15(a) of the Investment Company Act. Section 15(a) prohibits any person from serving as an investment adviser to a registered investment company unless the written contract has been approved by the shareholders of that company. Rule 15a-4 under the Investment Company Act (“Rule 15a-4”), however, provides for an exception from the provisions of Section 15(a). Rule 15a-4 permits an adviser to provide advisory services to an investment company before shareholder approval is obtained pursuant to the terms of an interim agreement in the event that a prior advisory contract is terminated by action of such company’s board; in such case, a new contract must be approved by such shareholders within 150 days of the effective date of the interim agreement, or such interim agreement will terminate. The Trust has relied upon the provisions of Rule 15a-4 from time to time, as more fully discussed in this Statement of Additional Information under the heading “Management of the Trust: Investment Advisory Arrangements.” Additionally, the Trust has received an order from the SEC that exempts the Trust from the provisions of Section 15(a) and certain related provisions of the Investment Company Act under certain circumstances. This order permits the Trust to enter into portfolio management agreements with Specialist Managers upon the approval of the Board but without submitting such contracts for the approval of the shareholders of the relevant Portfolio. The shareholders of each Portfolio have approved this structure. Unless otherwise permitted by law, the Board will not act in reliance upon such order with respect to any new Portfolio unless the approval of the shareholders of that Portfolio is first obtained. The SEC has proposed a rule that, if adopted, would provide relief from Section 15(a) similar to that currently available only by SEC order. The Board may consider relying upon this rule, if adopted, in connection with the Trust’s multi-manager structure.

Allocation of Assets Among Specialist Managers. The Adviser is responsible for determining the level of assets that will be allocated among the Specialist Managers in those Portfolios that are served by two or more Specialist Managers. The Adviser and the Trust’s officers monitor the performance of both the overall Portfolio and of each Specialist Manager and, from time to time, may make changes in the allocation of assets to the Specialist Managers that serve a particular Portfolio. For example, a reallocation may be made in the event that a Specialist Manager experiences variations in performance as a result of factors or conditions that affect the particular universe of securities emphasized by that investment manager, as a result of personnel changes within the manager’s organization or in connection with the engagement of an additional Specialist Manager for a particular Portfolio.

INVESTMENT ADVISORY ARRANGEMENTS. The services provided to the Trust by the Adviser and by the various Specialist Managers are governed under the terms of written agreements, in accordance with the requirements of the Investment Company Act. Each of these agreements is described below.

The HC Capital Agreement. The services provided to the Trust by the Adviser, described above and in the Prospectus, are governed under the terms of two written agreements with the Trust (“HC Capital Agreements”).

Each HC Capital Agreement provides for an initial term of two years. Thereafter, each HC Capital Agreement remains in effect 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 the vote of a majority of the Board or the vote of the holders of a majority of the outstanding securities of the Trust within the meaning of Section 2(a)(42) of the Investment Company Act; and (ii) by a majority of the Independent Trustees, by vote cast in person. Each of the HC Capital Agreements may be terminated at any time, without penalty, either by the Trust or by the Adviser, upon sixty days written notice and will automatically terminate in the event of its assignment as defined in the Investment Company Act. The HC Capital Agreements permit the Trust to use the logos and/or trademarks of the Adviser. In the event, however, that the HC Capital Agreements are terminated, the Adviser has the right to require the Trust to discontinue any references to such logos and/or trademarks and to change the name of the Trust as soon as is reasonably practicable. The HC Capital Agreements further provide that the Adviser 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 HC Capital Agreements relate (including any action of any officer of the Adviser 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 the Adviser, 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 the Adviser.

 

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The dates of the Board and shareholder approvals of the HC Capital Agreements with respect to each Portfolio are set forth as follows:

 

    

MOST RECENT CONTRACT APPROVAL

AGREEMENT RELATING TO:

  

SHAREHOLDERS

  

BOARD

The Value Equity Portfolio    December 27, 2006    March 10, 2015
The Institutional Value Equity Portfolio    July 18, 2008    March 10, 2015
The Growth Equity Portfolio    December 27, 2006    March 10, 2015
The Institutional Growth Equity Portfolio    August 8, 2008    March 10, 2015
The Small Capitalization—Mid Capitalization Equity Portfolio    December 27, 2006    March 10, 2015
The Institutional Small Capitalization—Mid Capitalization Equity Portfolio    August 15, 2008    March 10, 2015
The Real Estate Securities Portfolio    May 14, 2009    March 10, 2015
The Commodity Returns Strategy Portfolio    June 2, 2010    March 10, 2015
The ESG Growth Portfolio    July 13, 2015    June 9, 2015
The International Equity Portfolio    December 27, 2006    March 10, 2015
The Institutional International Equity Portfolio    November 20, 2009    March 10, 2015
The Emerging Markets Portfolio    December 10, 2009    March 10, 2015
The Core Fixed Income Portfolio    December 27, 2006    March 10, 2015
The Fixed Income Opportunity Portfolio    December 27, 2006    March 10, 2015
The U.S. Government Fixed Income Securities Portfolio    November 22, 2010    March 10, 2015
The Inflation Protected Securities Portfolio    February 24, 2014    March 10, 2015
The U.S. Corporate Fixed Income Securities Portfolio    November 22, 2010    March 10, 2015
The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio    November 22, 2010    March 10, 2015
The Short-Term Municipal Bond Portfolio    December 27, 2006    March 10, 2015
The Intermediate Term Municipal Bond Portfolio    December 27, 2006    March 10, 2015
The Intermediate Term Municipal Bond II Portfolio    July 13, 2010    March 10, 2015

Portfolio Management Contracts with Specialist Managers. The provision of portfolio management services by the various Specialist Managers is governed by individual investment advisory contracts (each, a “Portfolio Management Contract”) between the relevant Specialist Manager and the Trust. Each of the Portfolio Management Contracts includes a number of similar provisions. Each Portfolio Management Contract provides that the named Specialist 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 Specialist Manager. Under their respective contracts, each Specialist Manager is responsible 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 contracts provides that the named Specialist Manager will not be liable to the Trust for any error of judgment or mistake of law on the part of the Specialist 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, bad faith or gross negligence on the part of the named Specialist Manager. Each of the Portfolio Management Contracts provides that it will remain in effect for an initial period of two years and then 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 the vote of a majority of the Board or the vote of the holders of a majority of the outstanding securities of the Trust within the meaning of Section 2(a)(42) of the Investment Company Act; and (ii) by a majority of the Independent Trustees, by vote cast in person, and further, that the contract may be terminated at any time, without penalty, either by the Trust or by the named Specialist Manager, in each case upon sixty days’ written notice. Each of the Portfolio Management Contracts provides that it will automatically terminate in the event of its assignment, as that term is defined in the Investment Company Act.

The Portfolio Management Contracts and the Portfolios to which they relate are listed on the following pages:

 

PORTFOLIO

  

SPECIALIST MANAGER

   SERVED
PORTFOLIO
SINCE
   MOST RECENT
CONTRACT

APPROVAL
SHAREHOLDERS
   MOST RECENT
CONTRACT
APPROVAL
BOARD
The Value Equity Portfolio   

Mellon Capital Management Corporation (“Mellon Capital”)

   August 2, 2013    August 2, 2013    March 10, 2015
   Cadence Capital Management LLC (“Cadence”)    August 20, 2013    September 30, 2013    September 22, 2015
   AllianceBernstein L.P. (“AllianceBernstein”)    December 24, 2008    December 5, 2008    June 9, 2015
   Parametric Portfolio Associates LLC (“Parametric”)    July 18, 2014    July 18, 2014    March 10, 2015

 

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PORTFOLIO

 

SPECIALIST MANAGER

  SERVED
PORTFOLIO
SINCE
  MOST RECENT
CONTRACT

APPROVAL
SHAREHOLDERS
  MOST RECENT
CONTRACT
APPROVAL
BOARD
The Institutional Value  

Mellon Capital

  August 2, 2013   August 2, 2013   March 10, 2015
Equity Portfolio  

Cadence

  August 20, 2013   September 30, 2013   September 22, 2015
 

AllianceBernstein

  December 24, 2008   December 5, 2008   June 9, 2015
 

Pacific Investment Management Company LLC (“PIMCO”)

  April 22, 2009   December 5, 2008   June 9, 2015
 

Parametric

  July 18, 2014   July 18, 2014   March 10, 2015
The Growth Equity Portfolio   Jennison Associates LLC (“Jennison”)   August 25, 1995   July 21, 1995   June 9, 2015
  Mellon Capital   August 2, 2013   August 2, 2013   March 10, 2015
  Cadence   September 30, 2013   September 30, 2013   September 22, 2015
  Sustainable Growth Advisers (“SGA”)   May 22, 2006   May 15, 2006   June 9, 2015
  Parametric   July 18, 2014   July 18, 2014   March 10, 2015
The Institutional Growth Equity Portfolio   Jennison   Inception (August 8, 2008)   August 8, 2008   June 9, 2015
  Mellon Capital   August 2, 2013   August 2, 2013   March 10, 2015
  Cadence   September 30, 2013   September 30, 2013   September 22, 2015
  SGA   Inception (August 8, 2008)   August 8, 2008   June 9, 2015
  PIMCO   April 22, 2009   December 5, 2008   June 9, 2015
  Parametric   July 18, 2014   July 18, 2014   March 10, 2015
The Small Capitalization—Mid Capitalization Equity Portfolio   IronBridge Capital Management L.P. (“IronBridge”)   November 1, 2004   May 30, 2008   September 22, 2015
  Frontier Capital Management Company, LLC (“Frontier”)   Inception (September 5, 1995)   December 16, 1999   September 22, 2015
  Pzena Investment Management, LLC (“Pzena”)   April 12, 2010   August 27, 2009   September 22, 2015
  Mellon Capital   August 2, 2013   August 2, 2013   March 10, 2015
  Ariel Investments, LLC (“Ariel”)   August 2, 2013   August 2, 2013   September 22, 2015
  Cadence   September 30, 2013   September 30, 2013   September 22, 2015
  Parametric   March 10, 2015   March 10, 2015   March 10, 2015
  Advisory Research, Inc. (“Advisory Research”)(1)   September, 2016   September 13, 2016   September 13, 2016
The Institutional Small Capitalization—Mid Capitalization Equity Portfolio   IronBridge   Inception (August 15, 2008)   August 15, 2008   September 22, 2015
  Frontier   Inception (August 15, 2008)   August 15, 2008   September 22, 2015
  Pzena   April 12, 2010   August 27, 2009   September 22, 2015
  Mellon Capital   August 2, 2013   August 2, 2013   March 10, 2015
  Ariel   August 2, 2013   August 2, 2013   September 22, 2015
  Cadence   September 30, 2013   September 30, 2013   September 22, 2015
  Advisory Research(1)   September, 2016   September 13, 2016   September 13, 2016
  Parametric   March 10, 2015   March 10, 2015   March 10, 2015

 

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PORTFOLIO

 

SPECIALIST MANAGER

  SERVED
PORTFOLIO
SINCE
  MOST RECENT
CONTRACT

APPROVAL
SHAREHOLDERS
  MOST RECENT
CONTRACT
APPROVAL
BOARD
The Real Estate Securities Portfolio   Wellington Management Company LLP (“Wellington Management”)   May 21, 2009   May 14, 2009   December 11, 2014
  Mellon Capital   August 2, 2013   August 2, 2013   March 10, 2015
  Cadence   September 30, 2013   September 30, 2013   September 22, 2015
  Parametric   March 10, 2015   March 10, 2015   March 10, 2015
The Commodity Returns Strategy Portfolio   Wellington Management   Inception (June 8, 2010)   June 2, 2010   March 10, 2015
  PIMCO   Inception (June 8, 2010)   June 2, 2010   June 9, 2015
  Mellon Capital   August 2, 2013   August 2, 2013   March 10, 2015
  Cadence   September 30, 2013   September 30, 2013   September 22, 2015
  Vaughan Nelson Investment Management, L.P. (“Vaughan Nelson”)   March 29, 2016   March 29, 2016   March 8, 2016
  Parametric   March 10, 2015   March 10, 2015   March 10, 2015
The ESG Growth Portfolio   Agincourt Capital Management, LLC (“Agincourt”)   July 13, 2015   July 13, 2015   June 9, 2015
  Cadence   July 13, 2015   September 13, 2016   September 13, 2016
  Mellon Capital   July 13, 2015   September 13, 2016   September 13, 2016
  Parametric   July 13, 2015   July 13, 2015   June 9, 2015
The International Equity Portfolio  

Artisan Partners Limited Partnership (“Artisan Partners”)

  July 23, 1999   May 30, 2008   December 11, 2014
  Causeway Capital Management LLC (“Causeway”)   May 22, 2006   May 15, 2006   December 11, 2014
  Mellon Capital   August 2, 2013   August 2, 2013   March 10, 2015
  Cadence   August 20, 2013   September 30, 2013   September 22, 2015
  City of London Investment Management Company Limited (“CLIM”)   January 23, 2015   January 23, 2015   December 11, 2014
  Parametric   March 10, 2015   March 10, 2015   March 10, 2015
The Institutional International Equity Portfolio  

Artisan

  Inception (November 20, 2009)   November 20, 2009   December 11, 2014
  Causeway   Inception (November 20, 2009)   November 20, 2009   December 11, 2014
  Lazard Asset Management LLC (“Lazard”)   September 27, 2011   September 23, 2011   December 11, 2014
  Mellon Capital   August 2, 2013   August 2, 2013   March 10, 2015
  Cadence   August 20, 2013   September 30, 2013   September 22, 2015
  Parametric   March 10, 2015   March 10, 2015   March 10, 2015
  CLIM   January 23, 2015   January 23, 2015   December 11, 2014
The Emerging Markets Portfolio  

The Boston Company Asset Management LLC (“TBCAM”)

  March 16, 2010   December 10, 2009   December 11, 2014
  Mellon Capital   August 2, 2013   August 2, 2013   March 10, 2015
  Cadence   September 30, 2013   September 30, 2013   September 22, 2015
  Parametric   March 10, 2015   March 10, 2015   March 10, 2015
  CLIM   January 23, 2015   January 23, 2015   December 11, 2014
  RBC Global Asset Management (UK) Limited (“RBC GAM”)   July 29, 2016   July 29, 2016   June 14, 2016
The Core Fixed Income Portfolio   Mellon Capital   December 6, 2010   November 30, 2010   March 10, 2015
  Seix Investment Advisors LLC   December 6, 2010   November 30, 2010   March 11, 2014
  Agincourt   March 10, 2015   March 10, 2015   March 10, 2015

 

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PORTFOLIO

 

SPECIALIST MANAGER

  SERVED
PORTFOLIO
SINCE
  MOST RECENT
CONTRACT

APPROVAL
SHAREHOLDERS
  MOST RECENT
CONTRACT
APPROVAL
BOARD
The Fixed Income Opportunity Portfolio   Mellon Capital   August 22, 2013   Not Applicable   March 10, 2015
  Fort Washington Investment Advisors, Inc. (“Fort Washington”)   May 24, 2012   April 30, 2012   March 10, 2015
  Western Asset Management Company (“Western Asset”)   July 28, 2014   August 29, 2014*   July 28, 2014
  Parametric   March 10, 2015   March 10, 2015   March 10, 2015
  CLIM   November 3, 2014   January 23, 2015**   December 11, 2014
The U.S. Government Fixed Income Securities Portfolio   Mellon Capital   December 6, 2010   November 22, 2010   March 10, 2015
The Inflation Protected Securities Portfolio   Mellon Capital   February 24, 2014   February 24, 2014   March 10, 2015
The U.S. Corporate Fixed Income Securities Portfolio  

Agincourt

  March 10, 2015   March 10, 2015   March 10, 2015
  Mellon Capital   August 22, 2013   Not Applicable   March 10, 2015
The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio   Mellon Capital   January 8, 2013   Not Applicable   March 10, 2015
The Short-Term Municipal Bond Portfolio   Breckinridge Capital Advisors, Inc. (“Breckinridge”)   Inception (March 1, 2006)   February 28, 2006   March 10, 2015
The Intermediate Term Municipal Bond Portfolio   Standish Mellon Asset Management Company LLC (“Standish”)   December 5, 2008   February 6, 2009   March 10, 2015
The Intermediate Term Municipal Bond II Portfolio   Breckinridge   Inception (July 13, 2010)   July 13, 2010   March 10, 2015

 

* Prior to August 29, 2014 and in reliance on an order issued by the Securities and Exchange Commission, the Trust has entered into the Portfolio Management Agreement based solely on the approval of the Board and without direct approval by the shareholders of the Portfolio. On August 29, 2014, shareholders of the Portfolio approved a new Portfolio Management Agreement that provided for an increase in the Specialist Manager fee to 0.75% payable to Parametric beginning August 29, 2014.
** Prior to January 23, 2015 and in reliance on Rule 15a-4, the Trust had entered into an Interim Portfolio Management Agreement based solely on the approval of the Board and without direct approval by the shareholders of the Portfolio. On January 23, 2015, shareholders of the Portfolio approved a final Portfolio Management Agreement having identical terms as those of the Interim Portfolio Management agreement dated November 3, 2014.
(1)  At a meeting held on September 13, 2016, the Board for the Trust approved (i) the engagement of Advisory Research as a specialist manager to manage portions of the assets of the Portfolios, effective upon the employment of Andrew Cupps at Advisory Research, which is anticipated on or about September 30, 2016 and (ii) the termination of Cupps as specialist manager of the Portfolios effective upon the employment of Andrew Cupps at Advisory Research, which is anticipated on or about September 30, 2016.

 

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INVESTMENT ADVISORY FEES: The following table sets forth the advisory fees received by the Adviser from each of the Portfolios, calculated at an annual rate of 0.05% of each of the Portfolio’s average daily net assets, for services rendered during the periods indicated (amounts in thousands).

 

     FISCAL YEAR
ENDED
June 30, 2015
     FISCAL YEAR
ENDED
June 30, 2014
    FISCAL YEAR
ENDED
June 30, 2013
 

The Value Equity Portfolio

   $ 320       $ 319      $ 342   

The Institutional Value Equity Portfolio

   $ 504       $ 479      $ 526   

The Growth Equity Portfolio

   $ 439       $ 400      $ 365   

The Institutional Growth Equity Portfolio

   $ 717       $ 646      $ 555   

The Small Capitalization—Mid Capitalization Equity Portfolio

   $ 56       $ 60      $ 63   

The Institutional Small Capitalization—Mid Capitalization Equity Portfolio

   $ 95       $ 89      $ 100   

The Real Estate Securities Portfolio

   $ 79       $ 69 (a)    $ 34   

The Commodity Returns Strategy Portfolio

   $ 559       $ 526      $ 392   

The ESG Growth Portfolio

     N/A         N/A        N/A   

The International Equity Portfolio

   $ 758       $ 769      $ 661   

The Institutional International Equity Portfolio

   $ 1,462       $ 1,388      $ 1,121   

The Emerging Markets Portfolio

   $ 933       $ 690      $ 461   

The Core Fixed Income Portfolio

   $ 51       $ 49      $ 50   

The Fixed Income Opportunity Portfolio

   $ 404       $ 438      $ 331   

The U.S. Government Fixed Income Securities Portfolio

   $ 130       $ 126      $ 128   

The Inflation Protected Securities Portfolio

   $ 259       $ 57 (b)      N/A   

The U.S. Corporate Fixed Income Securities Portfolio

   $ 121       $ 111      $ 110   

The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio

   $ 130       $ 126      $ 124   

The Short-Term Municipal Bond Portfolio

   $ 11       $ 11      $ 12   

The Intermediate Term Municipal Bond Portfolio

   $ 210       $ 210      $ 222   

The Intermediate Term Municipal Bond II Portfolio

   $ 39       $ 38      $ 37   

 

(a) For the period September 12, 2013 through June 30, 2014.
(b)  For the period April 3, 2014 (commencement of operations) through June 30, 2014.

 

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SPECIALIST MANAGER FEES. In addition to the fees paid by the Trust to the Adviser, each of the Portfolios pays a fee to its Specialist Manager(s). For each Portfolio, the Specialist Managers receive a fee based on a specified percentage of that portion of the Portfolio’s assets allocated to that Specialist Manager. The rate at which these fees are calculated is set forth in the Trust’s Prospectuses. The following table sets forth the actual investment advisory fee received from the specified Portfolio by each of its respective Specialist Managers for services rendered during each of the Trust’s last three fiscal years (amounts in thousands):

 

         ACTUAL FEES EARNED FOR FISCAL  
         YEAR ENDED JUNE 30  
PORTFOLIO    SPECIALIST MANAGER   2015      2014      2013  

The Value Equity Portfolio

   ICAP(1)   $ 175       $ 371       $ 493   
   SSgA FM(2)   $ —           —        $ 156   
   AllianceBernstein(3)   $ 781       $ 688       $ 568   
   Mellon Capital(7)     *      *      *
   Cadence(24)   $ 176       $ 167         *
   Parametric(25)   $ 4         *      *

The Institutional Value Equity Portfolio

   ICAP(1)   $ 234       $ 550       $ 747   
   SSgA FM(2)   $ —         $ —        $ 245   
   AllianceBernstein(3)   $ 1,275       $ 1,098       $ 835   
   PIMCO(15)   $ —         $ —        $ —    
   Mellon Capital(7)   $ —           *      *
   Cadence(24)   $ 278       $ 244         *
   Parametric(25)   $ 6         *      *

The Growth Equity Portfolio

   Jennison(4)   $ 766       $ 629       $ 451   
   SSgA FM(2)   $ —         $ —        $ 164   
   SGA(5)   $ 757       $ 471       $ 558   
   Mellon Capital(7)   $ 158       $ 222         *
   Cadence(24)     *      *      *
   Parametric(25)   $ 5         *      *

The Institutional Growth Equity Portfolio

   Jennison(4)   $ 1,332       $ 926       $ 445   
   SSgA FM(2)   $ —         $ —        $ 254   
   SGA(5)   $ 785       $ 277       $ 462   
   PIMCO(15)   $ 207       $ 399       $ 460   
   Mellon Capital(7)   $ 273       $ 369         *
   Cadence(24)   $ —           *      *
   Parametric(25)   $ 6         *      *

The Small Capitalization—Mid Capitalization Equity Portfolio

   Frontier(6)   $ 151       $ 131       $ 120   
   Mellon Capital(7)   $ 3       $ 13         *
   IronBridge(8)   $ 330       $ 224       $ 198   
   Pzena(9)   $ 88       $ 177       $ 222   
   SSgA FM(2)   $ —        $ —        $ 22   
   Ariel(23)   $ 54       $ 19         *
   Cupps/Advisory
Research(20)
  $ 100         *      *
   Cadence(24)     *    $ *      *
   Parametric(25)   $ 2         *      *

The Institutional Small Capitalization—Mid Capitalization Equity Portfolio

   Frontier(6)   $ 258       $ 216       $ 182   
   Mellon Capital(7)   $ 2       $ 13         *
   IronBridge(8)   $ 658       $ 413       $ 343   
   Pzena(9)   $ 149       $ 237       $ 383   
   SSgA FM(2)   $ —         $ —        $ 22   
   Ariel(23)     *      *      *
   Cupps/Advisory
Research(20)
  $ 225       $ 157       $ 247   
   Cadence(24)     *      *      *
   Parametric(25)   $ 2         *      *

The Real Estate Securities Portfolio

   Wellington Management(10)   $ 1,027       $ 908       $ 441   
   SSgA FM(2)     *    $ —          *
   Mellon Capital(7)     *      *      *
   Cadence(24)     *      *      *
   Parametric(25)   $ 2         *      *

 

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          ACTUAL FEES EARNED FOR FISCAL  
          YEAR ENDED JUNE 30  
PORTFOLIO    SPECIALIST MANAGER    2015      2014      2013  

The Commodity Returns Strategy Portfolio

   Wellington Management
(Commodity)(10)
   $ 2,448       $ 2,808       $ 868   
   Wellington Management
(Global Natural
Resources)(10)
   $ 1,728       $ 1,484       $ 2,419   
   PIMCO(15)    $ 1,084       $ 982       $ 564   
   SSgA FM(2)    $ —         $ —        $ 161   
   Mellon Capital(7)    $ 338       $ 305         *
   Cadence(24)    $ *      *      *
   Vaughan Nelson(29)      *      *      *
   Parametric(25)    $ 5         *      *

The ESG Growth Portfolio

           
   Agincourt(28)      *      *      *
   Cadence(24)      *      *      *
   Mellon Capital(7)      *      *      *
   Parametric(25)      *      *      *

The International Equity Portfolio

   CapGuardian(11)    $ 685       $ 1,108       $ 910   
   Artisan(12)    $ 910       $ 1,249       $ 1,336   
   Causeway(13)    $ 777       $ 1,092       $ 1,229   
   SSgA FM(2)    $ —         $ —        $ 294   
   Mellon Capital(7)    $ 144       $ 132         *
   Cadence(24)    $ 897       $ 602         *
   CLIM(27)      *      *      *
   Parametric(25)    $ 6         *      *

The Institutional International Equity Portfolio

   CapGuardian(11)    $ 692       $ 1,457       $ 1,345   
   Artisan(12)    $ 1,522       $ 1,882       $ 1,985   
   Causeway(13)    $ 1,097       $ 1,600       $ 1,819   
   Lazard(21)    $ 1,109       $ 1,106       $ 1,029   
   SSgA FM(2)    $ —         $ —        $ 457   
   Mellon Capital(7)    $ 259       $ 233         *
   Cadence(24)    $ 1,714       $ 1,090         *
   CLIM(27)      *      *      *
   Parametric(25)    $ 8         *      *

The Emerging Markets Portfolio

   SSgA FM (Active)(2)    $ —         $ 2,411       $ 2,302   
   TBCAM(14)    $ 5,441       $ 3,913       $ 2,397   
   SSgA FM (Passive)(2)    $ —         $ —        $ 411   
   Mellon Capital(7)    $ 1,175       $ 561         *
   Cadence(24)      *      *      *
   CLIM(27)      *      *      *
   Parametric(25)    $ 2         *      *
   RBC GAM(30)      *      *      *

The Core Fixed Income Portfolio

   BlackRock(16)    $ —         $ —        $ 47   
   Seix(17)    $ 51       $ 75       $ 76   
   Mellon Capital (7)    $ 35       $ 37       $ 23   
   Agincourt(28)    $ 6         *      *

The Fixed Income Opportunity Portfolio

   Seix(17)    $ —         $ —        $ 1,599   
   Fort Washington (22)    $ 1,185       $ 1,470       $ 552   
   Mellon Capital(7)    $ —         $ 185         *
   Western(26)    $ 328         *      *
   CLIM(27)    $ 131         *      *
   Parametric(25)    $ 4         *      *

The U.S. Government Fixed Income Securities Portfolio

   Mellon Capital (7)    $ 136       $ 148       $ 233   

The Inflation Protected Securities Portfolio

   Mellon Capital(7)    $ 186       $ 44         *

The U.S. Corporate Fixed Income Securities Portfolio

   Seix(17)    $ 353       $ 486       $ 483   
   Mellon Capital(7)    $ —         $ —        $ —    
   Agincourt(28)    $ 35         *      *

 

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          ACTUAL FEES EARNED FOR FISCAL  
          YEAR ENDED JUNE 30  
PORTFOLIO    SPECIALIST MANAGER    2015      2014      2013  
The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio    Blackrock(16)    $ —         $ —         $ 288   
   Mellon Capital(7)    $ 137       $ 146       $ —    

The Short-Term Municipal Bond Portfolio

   Breckinridge(18)    $ 27       $ 28       $ 31   

The Intermediate Term Municipal Bond Portfolio

   Standish(19)    $ 529       $ 721       $ 766   

The Intermediate Term Municipal Bond II Portfolio

   Breckinridge(18)    $ 85       $ 94       $ 92   

 

** The Specialist Manager had not yet begun providing portfolio management services to the Portfolio.
(1)  Prior to March 10, 2015, ICAP provided services to a portion of The Value Equity and The Institutional Value Equity Portfolios. ICAP was compensated at an annual rate of 0.35% of the average net assets of the respective Portfolio assigned to ICAP.
(2)  Prior to June 5, 2014, SSgA FM provided services to an actively managed portion of The Emerging Markets Portfolio, SSgA FM was compensated at an annual rate of 0.85% for the first $50 million of average net assets, 0.75% for the next $50 million in such assets and 0.70% of such assets in excess of $100 million of the average net assets of the Portfolio assigned to SSgA FM. Prior to August 28, 2013 SSgA provided services with respect to passive investment strategy for The Emerging Markets Portfolio, for which SSgA FM was compensated at an annual rate of 0.16% of the average net assets of the Portfolio assigned to SSgA FM.

Prior to August 20, 2013, SSgA FM provided services to the passively managed portion of The Value Equity, The Institutional Value Equity, The International Equity and The Institutional International Equity Portfolios. With respect to The Value Equity and The Institutional Value Equity Portfolios, SSgA FM was compensated at an annual rate of 0.04% of the average net assets of the respective Portfolio assigned to SSgA FM. With respect to The International Equity Portfolio and The Institutional International Equity Portfolio, SSgA FM was compensated at an annual rate of 0.06% of the average net assets of the respective Portfolio assigned to SSgA FM.

Prior to August 28, 2013, SSgA FM provided services to the passively managed portion of The Growth Equity, The Institutional Growth Equity, The Small Capitalization—Mid Capitalization Equity, The Institutional Small Capitalization—Mid Capitalization Equity and The Commodity Returns Strategy and The Real Estate Securities Portfolios. With respect to The Growth Equity, The Institutional Growth Equity, The Small Capitalization—Mid Capitalization Equity, The Institutional Small Capitalization—Mid Capitalization Equity Portfolios, SSgA FM was compensated at an annual rate of 0.04% of the average net assets of the respective Portfolio assigned to SSgA FM. With respect to The Commodity Returns Strategy Portfolio, SSgA FM was compensated at an annual rate of 0.06% of the average net assets of the Portfolio assigned to SSgA FM. With respect to The Real Estate Securities Portfolio, SSgA FM was compensated at an annual rate of 0.12% of the average net assets of the Portfolio. SSgA FM had not begun managing assets of The Real Estate Securities Portfolio prior to August 28, 2013.

 

(3)  For its services to The Value Equity and The Institutional Value Equity Portfolios, AllianceBernstein is compensated at an annual rate, effective October 1, 2013, of 0.37% of the first $150 million in total Combined Assets (see the Specialist Manager section of the Prospectus for the definition of Combined Assets), 0.35% of the next $150 million of Combined Assets and 0.29% of the Combined Assets exceeding $300 million. Prior to October 1, 2013, AllianceBernstein was compensated at an annual rate of 0.38% of the first $300 million in total Combined Assets and 0.37% on such Combined Assets over $300 million. Pursuant to a Fee Waiver Agreement dated October 16, 2009 and the Amendments to the Fee Waiver Agreement dated December 16, 2010, June 30, 2011 and October 1, 2012, AllianceBernstein has contractually agreed to waive the portion of the fee to which it is entitled that exceeds 0.25% of the average daily net assets of the Combined Assets, for the period October 1, 2009 to September 30, 2011 and it will waive that portion of the fee to which it is entitled that exceeds 0.31% of the Portfolio’s average daily net asset value of the Combined Assets for the period from October 1, 2011 through September 30, 2013. Numbers shown reflect contractual fee waivers for the period October 1, 2009 to June 30, 2013.
(4)  For its services to The Growth Equity and The Institutional Growth Equity Portfolios, Jennison is compensated for it services to each Portfolio at an annual rate of 0.75% on the first $10 million of Combined Assets (see the Specialist Manager section of the Prospectus for the definition of Combined Assets), 0.50% on the next $30 million of such Combined Assets; 0.35% of the next $25 million of such Combined Assets; 0.25% on the next $335 million of such Combined Assets; 0.22% of the next $600 million of such Combined Assets; 0.20% on the next $4 billion of such Combined Assets; and 0.25% on the balance of such Combined Assets; subject to a maximum annual fee of 0.30% of the average daily net assets of the portion of the Portfolios allocated to Jennison.

 

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(5)  For its services to The Growth Equity and The Institutional Growth Equity Portfolios, SGA is compensated at an annual rate, effective June 10, 2015, of 0.35% of the first $200 million of the Combined Assets (as defined below), 0.30% of the next $200 million of Combined Assets, 0.25% of the next $200 million of Combined Assets, 0.22% of the next $400 million of Combined Assets and 0.20% of the Combined Assets exceeding $1 billion. The term “Combined Assets” means the sum of (i) the net assets of the Account; (ii) the net assets of that portion of the Portfolios allocated to SGA from time-to-time; and (iii) the net assets of each other investment advisory account for which Hirtle Callaghan & Co. serves as investment adviser and for which SGA provides portfolio management services. Prior to June 10, 2015, SGA received a fee of 0.35% of the average net assets of the respective Portfolios assigned to SGA.
(6)  For its services to The Small Capitalization—Mid Capitalization Equity and The Institutional Small Capitalization—Mid Capitalization Equity Portfolios, Frontier was compensated prior to March 10, 2015 at an annual rate of 0.45% of the average net assets of the respective Portfolios assigned to Frontier. Effective March 10, 2015, Frontier is entitled to receive its standard annual fee for the asset class of 0.75% for all assets allocated to it in excess of $90 million of the Combined Assets (as defined below), provided that it will continue to receive an annual fee of 0.45% on the first $90 million of such Combined Assets. The term “Combined Assets” means the sum of the net assets of that portion of each of the Portfolios allocated to Frontier from time-to-time along with the net assets of each of those separately managed accounts advised by Hirtle Callaghan & Co. LLC for which Portfolio Manager provides day-to-day portfolio management services.
(7)  For its services to The Core Fixed Income Portfolio (US Government and US Mortgage/Asset Backed sleeves) and The U.S. Government Fixed Income Securities Portfolio, Mellon Capital receives a fee, effective September 1, 2012, based on the average daily net asset value of that portion of the assets of The Core Fixed Income Portfolio (US Government and US Mortgage/Asset Backed sleeves) and The U.S. Government Fixed Income Securities Portfolio managed by it, at an annual rate of 0.06%. For its services to The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio Mellon Capital receives a fee based on the average daily net asset value of that portion of the assets of the Portfolios managed by it, at an annual rate of 0.06%. Prior to September 1, 2012, Mellon Capital received a fee at an annual rate of 0.12% for these assets. For its services to The Core Fixed Income Portfolio (US Corporate sleeve) and The U.S. Corporate Fixed Income Securities Portfolio, Mellon Capital receives a fee based on the average daily net asset value of that portion of the assets of the Portfolios managed by it, at an annual rate of 0.15%. For its services to The Fixed Income Opportunity Portfolio Mellon Capital receives a fee based on the average daily net asset value of that portion of the assets of the Portfolios managed by it, at an annual rate of 0.25%. For its services to The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization—Mid Capitalization Equity Portfolio and The Institutional Small Capitalization—Mid Capitalization Equity Portfolio, Mellon Capital receives a fee from each Portfolio calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it, at an annual rate of 0.065% so long as the aggregate assets allocated to Mellon Capital for all of its passive equity mandates (including accounts for other clients of the Adviser and certain of its affiliates besides the Trust) exceed $2 billion. Should these aggregate assets fall below $2 billion, the fee will be calculated at an annual rate of 0.075%.

For its services to The International Equity Portfolio and The Institutional International Equity Portfolio, Mellon Capital receives a fee from each Portfolio calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it, at an annual rate of 0.10% for those assets allocated to developed markets strategies and at an annual rate of 0.13% for those assets allocated to emerging markets strategies, so long as the aggregate assets allocated to Mellon Capital for all of its passive equity mandates (including accounts for other clients of the Adviser and certain of its affiliates besides the Trust) exceed $2 billion. Should these aggregate assets fall below $2 billion, the fee will be calculated an annual rate of 0.11% for those assets allocated to developed markets strategies and at an annual rate of 0.15% for those assets allocated to emerging markets strategies.

For its services to The Real Estate Securities Portfolio and The Commodity Returns Strategy Portfolio, Mellon Capital receives a fee from each Portfolio calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it, at an annual rate of 0.10% so long as the aggregate assets allocated to Mellon Capital for all of its passive equity mandates (including accounts for other clients of the Adviser and certain of its affiliates besides the Trust) exceed $2 billion. Should these aggregate assets fall below $2 billion, the fee will be calculated at an annual rate of 0.11%.

For its services to The Emerging Markets Portfolio, Mellon Capital receives a fee from the Portfolio calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it, at an annual rate of 0.13% so long as the aggregate assets allocated to Mellon Capital for all of its passive equity mandates (including accounts for other clients of the Adviser and certain of its affiliates besides the Trust) exceed $2 billion. Should these aggregate assets fall below $2 billion, the fee will be calculated at an annual rate of 0.15%.

For its services to The Inflation Protected Securities Portfolio, Mellon Capital receives a fee from the Portfolio at an annual rate of: 0.04% of the average daily net assets of that portion of the Account invested according to a domestic inflation-protected securities strategy; 0.07% of the average daily net assets of that portion of the Account invested according to a global inflation-protected securities strategy; and 0.13% of the average daily net assets of that portion of the Account invested according to an emerging markets inflation-protected securities strategy.

 

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Effective September 13, 2016, for its services to The ESG Growth Portfolio, Mellon Capital receives a fee calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it based on the asset class in which assets of the account are invested, as set forth below. In each case, the annual rate set forth is applied to the average daily net assets of that portion of the assets allocated to the designated asset class (“Designated Assets”). Domestic Large Cap Equity Securities at the rate of 0.09% of the net asset value of Designated Assets for the first 24 months of the Portfolio’s operations following June 23, 2015 (“Effective Date”), and after the second anniversary of the Effective Date, (i) at the rate of 0.12% of the net asset value of Designated Assets if the net asset value of such assets is less than $100 million; and (ii) at the rate of 0.09% of the net asset value of Designated Assets if the net asset value of such assets equals or exceeds $100 million. Developed Markets International Equity Securities at the rate of 0.14% of the net asset value of Designated Assets for the first 24 months of the Portfolio’s operations following the Effective Date, and after the second anniversary of the Effective Date, (i) at the rate of 0.20% of the net asset value of Designated Assets if the net asset value of such assets is less than $100 million; and (ii) at the rate of 0.14% of the net asset value of Designated Assets if the net asset value of such assets equals or exceeds $100 million. Provided that, in each case of Domestic Large Cap Equity Securities and Developed Markets International Equity Securities, that an adjustment in the rate at which the fee is computed will be implemented: (i) on the first business day of the calendar quarter following the date on which the value of Designated Assets crosses the breakpoints set forth in the above schedule; and (ii) in the case of an increase in the rate at which the fee is computed, such increase will only be implemented in the event that the change in the net asset value of the Designated Assets is the result of net withdrawals or net redemptions from the Account during the prior quarter. Domestic Small and Mid Cap Equity Securities at the rate of 0.12% of the net asset value of Designated Assets. Emerging Markets International Equity Securities at the rate of 0.18% of the net asset value of Designated Assets.

Prior to September 13, 2016, for its services to The ESG Growth Portfolio, Mellon Capital received a fee calculated at the following rates (in each case, the annual rate set forth was applied to the average daily net assets of that portion of the assets allocated to the designated asset class (“Designated Assets”)): Domestic Large Cap Equity Securities at the rate of 0.09% of the net asset value of Designated Assets for the first twelve months of the Portfolio’s operations. After the first anniversary of the Portfolio’s operations at the rate of 0.12% of the net asset value of Designated Assets if the net asset value of such assets is less than $100 million; and at the rate of 0.09% of the net asset value of Designated Assets if the net asset value of such assets equals or exceeds $100 million. Domestic Small and Mid Cap Equity Securities at the rate of 0.12% of the net asset value of Designated Assets. Developed Markets International Equity Securities at the rate of 0.14% of the net asset value of Designated Assets for the first twelve months of the Portfolio’s operations. After the first anniversary of the Portfolio’s operations at the rate of 0.20% of the net asset value of Designated Assets if the net asset value of such assets is less than $100 million; and at the rate of 0.14% of the net asset value of Designated Assets if the net asset value of such assets equals or exceeds $100 million. Emerging Markets International Equity Securities at the rate of 0.18% of the net asset value of Designated Assets. Provided that, in each case, where an adjustment mat be required, such adjustment in the rate at which the fee is computed will be implemented: (i) on the first business day of the calendar quarter following the date on which the value of Designated Assets crosses the breakpoints set forth in the above schedule; and (ii) in the case of an increase in the rate at which the fee is computed, such increase will only be implemented in the event that the change in the net asset value of the Designated Assets is the result of net withdrawals or net redemptions from the Account during the prior quarter.

(8)  For its services to The Small Capitalization—Mid Capitalization Equity Portfolio and beginning with the inception of The Institutional Small Capitalization—Mid Capitalization Equity Portfolio, IronBridge is compensated, effective September 23, 2015, at an annual rate of 0.70% of the average net assets of the respective Portfolios assigned to IronBridge. Prior to September 23, 2015, Ironbridge was entitled to receive a fee of 0.95% of the average daily net assets of that portion of the Portfolios allocated to Ironbridge.
(9)  For its services to The Small Capitalization—Mid Capitalization Equity and The Institutional Small Capitalization—Mid Capitalization Equity Portfolios, Pzena is compensated at an annual rate of 1.00% of the average net assets of the respective Portfolio assigned to Pzena.
(10)  For its services to The Real Estate Securities Portfolio, Wellington Management is compensated at an annual rate of 0.75% on the first $50 million of the average daily net Combined Assets (see the Specialist Manager section of the Prospectus for the definition of Combined Assets) and 0.65% on Combined Assets over $50 million. With respect to The Commodity Returns Strategy Portfolio, for assets managed in its Global Natural Resources strategy (the “Account”), Wellington Management received prior to March 11, 2015 a fee at an annual rate of 0.85% of the average daily net assets of that portion of the Portfolio’s assets allocated to such strategy so long as there are at least $50 million in assets present in such account and 1.00% if less than $50 million are present in the account. Effective March 11, 2015, Wellington Management shall be entitled to receive a fee, which fee shall be calculated daily and payable monthly in arrears at the annual rate of 0. 60% of the average daily net assets of the Account so long as at least $150 million in assets are present in the Account; and 0.85% of the average daily net assets of the Account if less than $150 million in assets are present in the Account. Wellington Management waived the $50 million minimum assets level for the first six months of the Portfolio’s operations. For assets managed in its Commodity strategy, Wellington Management receives a fee at an annual rate of 0.75% of the average daily net assets of that portion of the Portfolio’s assets allocated to such strategy.
(11)  For its services to The International Equity Portfolio and The Institutional International Equity Portfolio, CapGuardian is compensated at an annual rate of 0.70% for the first $25 million of the average of the average daily net asset values of the Account as of the last business day of each of the three months in the calendar quarter, 0.55% for the next $25 million, 0.425% for the next $200 million in such assets and 0.375% for those assets in excess of $250 million. There is a minimum annual fee of $312,500 based upon an account size of $50 million. The following fee discounts will be applied based upon the total annualized aggregate fees (include other assets managed by CapGuardian); 5% discount on fees from $1.25 million to $4 million; 7.5% discount on fees from $4 million to $8 million; 10% discount on fees from $8 million to $12 million; and 12.5% discount on fees over $12 million. When the total aggregate fees exceed $3 million, before discounts, fee break points are to be eliminated and the Portfolios will pay a fee at an annual rate of 0.375% on all assets in the Portfolios managed by CapGuardian. The CapGuardian sub-advisory agreement with respect to each of The International Equity Portfolio and The Institutional International Equity Portfolio has been terminated effective October 14, 2016.
(12)  For its services to The International Equity Portfolio and The Institutional International Equity Portfolio, Artisan is compensated at an annual rate of 0.47% of the average net assets of the respective Portfolios allocated to Artisan, so long as the combined assets of the Portfolios are greater than $500 million. If the combined assets are reduced to $500 million or less, Artisan is compensated at an annual rate of 0.80% of average net assets for the first $50 million of the respective portfolio assets allocated to Artisan and 0.60% for such assets over $50 million.
(13)  For its services to The International Equity and The Institutional International Equity Portfolios, Causeway is compensated at an annual rate of 0.45% of the average net assets of The International Equity and The Institutional International Equity Portfolios allocated to Causeway.

 

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(14)  For its services to The Emerging Markets Portfolio, TBCAM is compensated at an annual rate of 0.90% of average net assets for the first $50 million in Portfolio assets, 0.85% for the next $50 million in such assets, 0.70% for the next $100 million in such assets, 0.55% on the next $200 million in such assets, and 0.50% for such assets over $400 million. Prior to June 5, 2014, TBCAM was compensated at an annual rate of 0.90% of average net assets for the first $50 million in Portfolio assets, 0.85% for the next $50 million in such assets, 0.70% for the next $100 million in such assets and 0.60% for such assets over $200 million.
(15)  For its services to The Institutional Value Equity Portfolio and The Institutional Growth Equity Portfolio, PIMCO is compensated at an annual rate of 0.25% of the average net assets of each Portfolio assigned to PIMCO. With respect to The Commodity Returns Strategy Portfolio, PIMCO is compensated at an annual rate of 0.49% of that portion of the Portfolio allocated to PIMCO.
(16)  For its services to The Core Fixed Income Portfolio and The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio, BlackRock was entitled to receive a fee of 0.175% of the average daily net assets of the first $200 million of the Combined Assets (as defined below) of that portion of the Portfolio allocated to BlackRock and 0.15% of those Combined Assets exceeding $200 million. For purposes of computing BlackRock’s fee for the two Portfolios, the term “Combined Assets” shall mean the consolidated total amount of the assets managed by BlackRock in each of The Core Fixed Income Portfolio and The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio and certain other assets managed by BlackRock for clients of Hirtle Callaghan and Co., LLC. Effective January 8, 2013, the investment advisory relationship between the Trust and BlackRock Financial Management, Inc. with respect to The Core Fixed Income Portfolio and The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio has been terminated.
(17)  Prior to August 20, 2013, Seix received a fee for its services to The Fixed Income Opportunity Portfolio, based on the average daily net asset value of the assets of the Portfolio under its management at an annual rate of 0.40% for the first $100 million of the Combined Assets (as defined below), 0.25% on the next $200 million of the Combined Assets, and 0.20% on the balance of the Combined Assets. For the purpose of computing Seix’s fee for The Fixed Income Opportunity Portfolio, the term “Combined Assets” shall mean the sum of (i) the net assets of the Portfolio; and (ii) the net assets of each other Hirtle Callaghan account to which Seix provides similar services. Seix’s investment advisory relationship with the Trust related to the Fixed Income Opportunity Portfolio was terminated effective August 20, 2013. Prior to March 10, 2015, Seix received a fee for its services to The Core Fixed Income Portfolio and The U.S. Corporate Fixed Income Securities Portfolio based on the average daily net asset value of the assets of the Portfolios under its management at an annual rate of 0.25% of the first $100 million in such Combined Assets (as defined below) of that portion of the Portfolio allocated to Seix and 0.20% of for those Combined Assets exceeding $100 million. For purposes of computing Seix’s fee for the two Portfolios, the term “Combined Assets” shall mean the consolidated total amount of the assets managed by Seix in each of The Core Fixed Income Portfolio and The U.S. Corporate Fixed Income Securities Portfolio. Seix’s investment advisory relationship with the Trust related to The Core Fixed Income Portfolio and The U.S. Corporate Fixed Income Securities Portfolio was terminated effective March 10, 2015.
(18)  For its services to The Intermediate Term Municipal Bond II Portfolio and The Short Term Municipal Bond Portfolio, Breckinridge is compensated at an annual rate of 0.125% of the average net assets of each Portfolio. Breckinridge became a Specialist Manager and began providing investment management serves to The Intermediate Term Municipal Bond II Portfolio on July 13, 2010.
(19)  For its services to The Intermediate Term Municipal Bond Portfolio, Standish is compensated at the annual rate of 0.25% for the first $100 million of the “Combined Assets” of that portion of the Portfolio allocated to Standish and 0.15% of those Combined Assets (as defined below) exceeding $100 million, subject to a maximum annual fee of 0.20% of the average daily of net assets of the Portfolio. For the purposes of computing Standish’s fee for the Portfolio, the term “Combined Assets” shall mean the consolidated total amount of the assets managed by Standish in The Intermediate Term Municipal Bond Portfolio and certain other assets managed by Standish for clients of Hirtle Callaghan and Co., LLC.
(20)  Until September 30, 2016, for its services to The Small Capitalization—Mid Capitalization Equity Portfolio and The Institutional Small Capitalization—Mid Capitalization Equity Portfolio, Cupps receives a fee based on the average daily net asset value of that portion of each Portfolio allocated to it, at an annual rate of 0.85%. After September 30, 2016 and immediately following the employment of Andrew Cupps at Advisory Research, Advisory Research will receive a fee based on the average daily net asset value of that portion of each Portfolio allocated to it, at an annual rate of 0.85%.
(21)  For its services to The Institutional International Equity Portfolio, Lazard receives at the annual rate of 0.45% of the average daily net assets of the first $100 million 0.40% on assets between $100 million and $250 million and 0.375% on the excess over $250 million of that portion of the assets of the Portfolio that may, from time to time be allocated to Lazard.

 

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(22)  For its services to The Fixed Income Opportunity Portfolio, Fort Washington receives a fee at the annual rate of 0.40% of the first $25 million of the Combined Assets (as defined below) that may, from time to time, be allocated to it by the Adviser, 0.375% of the next $25 million, 0.3375% of the next $50 million, 0.25% of the next $100 million and 0.20% on all assets allocated to Fort Washington if the average daily net assets exceeds $200 million. For the purposes of computing Fort Washington’s fee for the Portfolio, the term “Combined Assets” shall mean the consolidated total amount of the assets managed by Fort Washington in The Fixed Income Opportunity Portfolio and certain other assets managed by Fort Washington for clients of Hirtle Callaghan and Co., LLC.
(23)  For its services to The Small Capitalization—Mid Capitalization Equity Portfolio and The Institutional Small Capitalization—Mid Capitalization Equity Portfolio, Ariel receives an annual fee, calculated daily and payable quarterly, in arrears, based on the Combined Assets (as defined below), in accordance with the following schedule: 1.00% of the first $10 million of the Combined Assets, 0.75% of the next $10 million and 0.50% of Combined Assets exceeding $20 million.
(24)  For its services to The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization—Mid Capitalization Equity Portfolio and The Institutional Small Capitalization—Mid Capitalization Equity Portfolio, Cadence receives a fee from each Portfolio calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it, at an annual rate of 0.065% so long as the aggregate assets allocated to Cadence for all of its passive equity mandates (including accounts for other clients of the Adviser and certain of its affiliates besides the Trust) exceed $2 billion. Should these aggregate assets fall below $2 billion, the fee will be calculated at an annual rate of 0.075%.

For its services to The International Equity Portfolio and The Institutional International Equity Portfolio, Cadence receives a fee from each Portfolio calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it, at an annual rate of 0.10% for those assets allocated to developed markets strategies and at an annual rate of 0.13% for those assets allocated to emerging markets strategies, so long as the aggregate assets allocated to Cadence for all of its passive equity mandates (including accounts for other clients of the Adviser and certain of its affiliates besides the Trust) exceed $2 billion. Should these aggregate assets fall below $2 billion, the fee will be calculated an annual rate of 0.11% for those assets allocated to developed markets strategies and at an annual rate of 0.15% for those assets allocated to emerging markets strategies.

For its services to The Real Estate Securities Portfolio and The Commodity Returns Strategy Portfolio, Cadence receives a fee from each Portfolio calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it, at an annual rate of 0.10% so long as the aggregate assets allocated to Cadence for all of its passive equity mandates (including accounts for other clients of the Adviser and certain of its affiliates besides the Trust) exceed $2 billion. Should these aggregate assets fall below $2 billion, the fee will be calculated at an annual rate of 0.11%.

For its services to The Emerging Markets Portfolio, Cadence receives a fee from the Portfolio calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it, at an annual rate of 0.13% so long as the aggregate assets allocated to Cadence for all of its passive equity mandates (including accounts for other clients of the Adviser and certain of its affiliates besides the Trust) exceed $2 billion. Should these aggregate assets fall below $2 billion, the fee will be calculated at an annual rate of 0.15%.

Effective September 13, 2016, for its services to The ESG Growth Portfolio, Cadence receives a fee calculated based on the average daily net assets of that portion of the assets of the Portfolio managed by it based on the asset class in which assets of the account are invested, as set forth below. In each case, the annual rate set forth is applied to the average daily net assets of that portion of the Portfolio’s assets allocated to the designated asset class (“Designated Assets”): Domestic Large Cap Equity Securities at the rate of 0.09% of the net asset value of Designated Assets; Domestic Small and Mid Cap Equity Securities at the rate of 0.12% of the net asset value of Designated Assets; Developed Markets International Equity Securities at the rate of 0.14% of the net asset value of Designated Assets; and Emerging Markets International Equity Securities at the rate of 0.18% of the net asset value of Designated Assets. Cadence is also entitled to receive an annual account fee of $24,000 from The ESG Growth Portfolio.

Prior to September 13, 2016, for its services to The ESG Growth Portfolio, Cadence received a fee calculated at the following rates (in each case, the annual rate set forth was applied to the average daily net assets of that portion of the assets allocated to the designated asset class (“Designated Assets”)): Domestic Large Cap Equity Securities at the rate of 0.09% of the net asset value of Designated Assets for the first twelve months of the Portfolio’s operations. After the first anniversary of the Portfolio’s operations at the rate of 0.12% of the net asset value of Designated Assets if the net asset value of such assets is less than $100 million; and at the rate of 0.09% of the net asset value of Designated Assets if the net asset value of such assets equals or exceeds $100 million. Developed Markets International Equity Securities at the rate of 0.14% of the net asset value of Designated Assets for the first twelve months of the Portfolio’s operations. After the first anniversary of the Portfolio’s operations at the rate of 0.20% of the net asset value of Designated Assets if the net asset value of such assets is less than $100 million; and at the rate of 0.14% of the net asset value of Designated Assets if the net asset value of such assets equals or exceeds $100 million. Provided that, in each case, an adjustment in the rate at which the fee is computed will be implemented: (i) on the first business day of the calendar quarter following the date on which the value of Designated Assets crosses the breakpoints set forth in the above schedule; and (ii) in the case of an increase in the rate at which the fee is computed, such increase will only be implemented in the event that the change in the net asset value of the Designated Assets is the result of net withdrawals or net redemptions from the Account during the prior quarter. Cadence is also entitled to receive an annual account fee of $24,000.

 

(25) 

For its services to The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization—Mid Capitalization Equity Portfolio, The Institutional Small Capitalization—Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The ESG Growth Portfolio, The International Equity Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio and The Fixed Income Opportunity Portfolio, Parametric receives a fee from each Portfolio, calculated daily and payable monthly in arrears, at the annual rate of 0.15% of the first $50 million of the Combined Liquidity Assets (as defined below) committed to Parametric’s Liquidity Strategy; 0.10% of the next $100 million of the Combined Liquidity Assets and 0.05% on Combined Liquidity Assets over $150 million. The term “Combined Liquidity Assets” means

 

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  the sum of the net assets of that portion of each of the Portfolios allocated to Parametric from time-to-time in their Liquidity Strategy. Parametric is also be entitled to receive a flat fee of $10,000 per year per Portfolio, provided that 1/12 of such fee related to any given Portfolio will be waived with respect to each calendar month during which no assets of such Portfolio were allocated to Parametric for investment in their Liquidity Strategy. Under the terms of separate portfolio management agreements, for its services to The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, Parametric is also entitled to receive a separate fee at the annual rate of 0.35% of the first $50 million of the Combined Defensive Assets committed to the Defensive Equity Strategy and 0.25% on Combined Defensive Assets committed to the Defensive Equity Strategy over $50 million. Combined Defensive Assets means the sum of the net assets of that portion of each of The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio and The Institutional Growth Equity Portfolio allocated to Parametric from time-to-time for investment using the Defensive Equity Strategy. Under the terms of separate portfolio management agreements, for its services to The Value Equity Portfolio, The Institutional Value Equity Portfolio, The Growth Equity Portfolio, The Institutional Growth Equity Portfolio, The Small Capitalization - Mid Capitalization Equity Portfolio, The Institutional Small Capitalization - Mid Capitalization Equity Portfolio, The Real Estate Securities Portfolio, The Commodity Returns Strategy Portfolio, The ESG Growth Portfolio, The International Equity Portfolio, The Institutional International Equity Portfolio, The Emerging Markets Portfolio and The Fixed Income Opportunity Portfolio, Parametric is also entitled to receive a separate fee at the annual rate of 0.05% of the Targeted Strategy Assets committed to the Targeted Strategy. Targeted Strategy Assets means the sum of the net assets of that portion of each of the Portfolios allocated to Parametric from time-to-time for investment using the Targeted Strategy. Parametric shall also be entitled to receive a flat fee of $5,000 per year per Portfolio, provided that such fee will be waived with respect to each calendar year during which no Portfolio assets were allocated to the Targeted Strategy Assets. Parametric did not manage assets for any of these Portfolios during the periods shown in the table.
(26)  For its services to The Fixed Income Opportunity Portfolio, Western receives a fee at the annual rate of 0.75% of the average daily net assets of that portion of the Portfolio allocated to Western. Prior to August 29, 2014, Western received a fee of 0.40% of the first $25 million of the Combined Assets (as defined below) that may, from time to time, be allocated to it by the Adviser, 0.375% of the next $25 million, 0.3375% of the next $50 million, 0.25% of the next $100 million and 0.20% on all assets allocated to Western if the average daily net assets exceeds $200 million. Western did not manage assets of the Portfolio during the periods shown in the table. For the purposes of computing Western’s fee for the Portfolio, the term “Combined Assets” shall mean the consolidated total amount of the assets managed by Western in The Fixed Income Opportunity Portfolio and certain other assets managed by Western for clients of Hirtle Callaghan and Co., LLC.
(27)  For its services to The Fixed Income Opportunity Portfolio, CLIM is compensated at an annual rate of 0.45% of the average net assets of Portfolio assigned to CLIM.

For its services to The International Equity Portfolio and The Institutional International Equity Portfolio, CLIM receives a fee from each Portfolio at the annual rate of 0.80% for the first $50 million of the “Combined Assets” of that portion of the Portfolio allocated to CLIM and 0.40% of those Combined Assets (as defined below) exceeding $50 million. For the purposes of computing CLIM’s fee for these Portfolios, the term “Combined Assets” shall mean the average daily net assets managed by CLIM in each of the International Equity and Institutional International Equity Portfolios and the net assets invested in the same strategy as these Portfolios that are managed by CLIM for the benefit of certain other investors who are clients of Hirtle Callaghan and Co., LLC.

For its services to The Emerging Markets Portfolio, CLIM receives a fee from the Portfolio at the annual rate of 1.00% for the first $100 million of the “Combined Assets” of that portion of the Portfolio allocated to CLIM and 0.80% of those Combined Assets (as defined below) exceeding $100 million. For the purposes of computing CLIM’s fee for this Portfolio, the term “Combined Assets” shall mean the sum of the average daily net assets managed by CLIM in The Emerging Markets Portfolio and the net assets invested in the same strategy as the Portfolio that are managed by CLIM for the benefit of certain other investors who are clients of Hirtle Callaghan and Co., LLC.

 

(28)  For its services to The Core Fixed Income Portfolio and The U.S. Corporate Fixed Income Securities Portfolio, Agincourt is compensated at an annual rate of 0.08% of the average daily net assets of that portion of each Portfolio that is managed by Agincourt. For its services to The ESG Growth Portfolio, Agincourt is compensated at an annual rate of 0.12% of the average daily net assets of that portion of the Portfolio that is managed by Agincourt.

 

(29)  For its services with respect to the portion of The Commodity Returns Strategy Portfolio allocated to Vaughan Nelson from time to time (the “Account”), Vaughan Nelson shall receive a fee calculated at an annual rate and payable quarterly in arrears based on the Average Quarterly Net Assets of the Combined Assets (as defined below) of 0.35% of the first $25 million of the Combined Assets, 0.25% of the next $75 million of Combined Assets and 0.20% of the Combined Assets exceeding $100 million. For purposes of calculating fees, the term “Combined Assets” shall mean the sum of (i) the net assets of the Account; and (ii) the net assets of each other investment advisory account for which the Adviser serves as investment adviser and for which Vaughan Nelson provides portfolio management services (“Other Hirtle Accounts”) using the same strategies as employed for the Account. “Average Quarterly Net Assets” shall mean the average of the average daily net asset values of the Account and/or the average of the net asset values of the Other Hirtle Accounts, as the case may be, as of the last business day of each of the three months in the calendar quarter.

 

(30) For its services with respect to the portion of The Emerging Markets Portfolio allocated to RBC GAM from time to time (the “Account”), RBC GAM receives a fee calculated at an annual rate of 0.80% of the first $100 million of Combined Assets; 0.65% of the next $150 million of Combined Assets; and 0.60% of Combined Assets in excess of $250 million. Combined Assets refers to the aggregate of all assets of the Portfolio managed by RBC GAM and any assets of other clients of the Adviser managed by RBC GAM using the same strategy.

ADMINISTRATION, DISTRIBUTION, AND RELATED SERVICES. Citi Fund Services Ohio, Inc. (“Citi”), 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. Citi performs similar services for mutual funds other than the Trust. Citi is owned by Citibank, N.A. Citibank, N.A. and its affiliated companies are wholly owned subsidiaries of Citigroup Inc., a publicly held company (NYSE: C).

Services performed by Citi include: (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 SEC and corresponding state agencies; and (c) assistance in connection with the preparation and filing of the Trust’s registration statement and amendments thereto. Pursuant to separate contracts, Citi or its affiliates also serve as the Trust’s accounting agent and receives fees for such services. For its services, Citi receives a single all-inclusive fee which is computed daily and paid monthly in arrears, is calculated at an annual rate of 0.0506% of the Portfolios’ average daily net assets up to $6 billion; 0.0047% of the Portfolios’ average daily net assets between $6 billion and $12 billion, and 0.0276% of the Portfolios’ average daily

 

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net assets in excess of $12 billion. Prior to March 31, 2015, Citi served as the Trust’s transfer and dividend disbursing agent (“Transfer Agent”) and received fees for such services, including the maintenance of the Trust’s registration in the various states in which shares of the Trust are offered. Citi assigned and transferred such services to SunGard Investor Services LLC, pursuant to an amendment to the Services Agreement dated March 31, 2015. Prior to March 31, 2015, Citi’s fee, as computed daily and paid monthly in arrears, was calculated at an annual rate of 0.054% of the Portfolios’ average daily net assets up to $6 billion; 0.005% of the Portfolios’ average daily net assets between $6 billion and $12 billion, and 0.0295% of the Portfolios’ average daily net assets in excess of $12 billion.

For the fiscal years ended June 30, 2013, 2014 and 2015, Citi, as Administrator received administration fees in accordance with the agreement in effect at the time in the following amounts for each of the Portfolios (amounts in thousands):

 

     FISCAL YEAR
ENDED
June 30, 2015
     FISCAL YEAR
ENDED
June 30, 2014
    FISCAL YEAR
ENDED
June 30, 2013
 

The Value Equity Portfolio

   $ 186       $ 189      $ 213   

The Institutional Value Equity Portfolio

   $ 293       $ 283      $ 328   

The Growth Equity Portfolio

   $ 255       $ 236      $ 228   

The Institutional Growth Equity Portfolio

   $ 416       $ 381      $ 346   

The Small Capitalization—Mid Capitalization Equity Portfolio

   $ 32       $ 36      $ 40   

The Institutional Small Capitalization—Mid Capitalization Equity Portfolio

   $ 56       $ 53      $ 62   

The Real Estate Securities Portfolio

   $ 47       $ 40 (a)    $ 20   

The Commodity Returns Strategy Portfolio

   $ 324       $ 311      $ 244   

The ESG Growth Portfolio

     N/A         N/A        N/A   

The International Equity Portfolio

   $ 438       $ 454      $ 412   

The Institutional International Equity Portfolio

   $ 846       $ 819      $ 698   

The Emerging Markets Portfolio

   $ 541       $ 407      $ 286   

The Core Fixed Income Portfolio

   $ 29       $ 29      $ 31   

The Fixed Income Opportunity Portfolio

   $ 236       $ 258      $ 206   

The U.S. Government Fixed Income Securities Portfolio

   $ 76       $ 74      $ 80   

The Inflation Protected Securities Portfolio

   $ 148       $ 34 (b)      N/A   

The U.S. Corporate Fixed Income Securities Portfolio

   $ 71       $ 65      $ 69   

The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio

   $ 76       $ 74      $ 77   

The Short-Term Municipal Bond Portfolio

   $ 6       $ 7      $ 8   

The Intermediate Term Municipal Bond Portfolio

   $ 122       $ 124      $ 139   

The Intermediate Term Municipal Bond II Portfolio

   $ 21       $ 22      $ 23   

 

(a) For the period September 12, 2013 through June 30, 2014.
(b)  For the period April 3, 2014 (commencement of operations) through June 30, 2014.

Under a Compliance Services Agreement between the Trust and Citi, Citi provides infrastructure and support in implementing the written policies and procedures comprising the Trust’s compliance program. This includes providing support services to the Chief Compliance Officer (“CCO”), and assisting in preparing or providing documentation for the Trust’s CCO to deliver to the Board.

SunGard Investor Services LLC (“SunGard”) serves as the Trust’s Transfer Agent pursuant to an agreement approved by the Board on March 10, 2015. SunGard is a wholly-owned subsidiary of SunGard Investment Systems LLC. SunGard will receive, for performing the services listed under its agreement, a fee, which is paid monthly, calculated at an annual rate of: 0.0034% of the Portfolios’ average daily net assets up to $6 billion; 0.0003% of the Portfolios’ average daily net assets between $6 billion and $12 billion, and 0.0019% of the Portfolios’ average daily net assets in excess of $12 billion. The offices of the Transfer Agent are located at 3435 Stelzer Road, Columbus, Ohio 43219.

 

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Unified Financial Securities, Inc. (“Unified”) serves as the Trust’s principal underwriter pursuant to an agreement approved by the Board on March 11, 2014. Unified is a wholly-owned subsidiary of Huntington Bancshares, Inc. Because shares of the Trust’s Portfolios are available only to clients of the Adviser and financial intermediaries that have established a relationship with the Adviser, the services to be provided by Unified are limited. Unified will receive an annual fee of $50,000 for performing the services listed under its agreement. The offices of the principal underwriter are located at 2960 North Meridian St., Suite 300, Indianapolis, IN, 46208. None of Unified’s duties under its agreement are primarily intended to result in the sale of Trust shares.

Alaric Compliance Services LLC (“Alaric”), 800 Third Ave., 11th Floor, New York, NY, 10022 provides CCO services to the Trust and its Portfolios pursuant to a Compliance Services Agreement. Alaric makes an Alaric employee available to serve as the CCO for the Trust. The CCO develops the reports for the Board, makes findings and conducts reviews pertaining to the Trust’s compliance program and related policies and procedures of the Trust’s service providers.

State Street Bank and Trust Company is the Trust’s custodian. The custodian is responsible for the safekeeping of the domestic and foreign assets of each of the Trust’s Portfolios. The custodian is compensated at the rate of 0.01% of the first $2 billion, 0.0075% of the next $3 billion, and 0.005% of the assets in excess of $5 billion of the Trust’s domestic assets, 0.0225% of the Trust’s foreign assets in developed countries. With respect to securities from emerging markets, the custodian is compensated at rates ranging from 0.07% to 0.50% depending upon the particular market in question. The offices of the custodian are located at State Street Financial Center, 1 Lincoln Street, Boston, MA 02111.

HC Advisors Shares Marketing and Service Plan. Under the Trust’s Marketing and Service Plan (the “12b-1” Plan), the Trust can pay to the Adviser a fee of up to 0.25% annually of the average daily net assets attributable to HC Advisors Shares. The fee is not tied exclusively to actual expenses incurred by the Adviser in performing the services set forth below and the fee may exceed such expenses. The Plan Fee shall be calculated daily based upon the average daily net assets of each Portfolio attributable to such Portfolio’s HC Advisors Shares, and such fee shall be charged only to such HC Advisors Shares.

The fee is intended to compensate the Adviser for expenses associated with the (i) oversight and coordination of those organizations, including the Administrator, Transfer Agent, Fund Accounting Agent and principal underwriter (collectively, “Service Organizations”) retained by the Trust in connection with the distribution of shares of the HC Advisors Shares to Third Party Institutions that will, in turn, hold shares of one or more of the HC Advisors Shares for the benefit of their discretionary clients; and (ii) the provision of shareholder services to such third party Institutions. Such oversight, coordination and shareholder services may include, but are not limited to, the following: (1) services associated with the provision of prospectuses, statements of additional information, any supplements thereto and shareholder reports relating to the HC Advisors Shares and to be provided to Third Party Institutions; (2) obtaining information and providing explanations to Third Party Institutions (and, if requested to do so by a Third Party Institution that would be permitted to acquire shares of the HC Advisors Shares and if acceptable to the Adviser, to Discretionary Clients of such institutions) regarding the investment objectives and policies of the respective Portfolios, as well as other information appropriate information about the HC Advisors Shares and the Portfolios; (3) coordination and oversight of the accounting and record-keeping processes as they relate to the HC Advisors Shares and responding to inquiries from Third Party Institutions that are holder of record of shares of HC Advisors Shares through “f/b/o” or “omnibus accounts” and coordination of administrative services for the HC Advisors Shares (e.g. in connection with proxy solicitations; distribution of periodic shareholders reports); and compliance with applicable regulations as they related to HC Advisors Shares (e.g. Rule 22c-2 and anti-money laundering procedures); (4) any other activity that the Board determines is primarily intended to result in the sale of shares of HC Advisors Shares or to provide appropriate services to a Third Party Institution.

The 12b-1 Plan was approved by the Board on December 10, 2009 but has not been operational at any point since that time. Accordingly, no payments under the 12b-1 Plan have ever been made by the Trust.

FURTHER INFORMATION ABOUT THE TRUST’S INVESTMENT POLICIES

As stated in the Prospectuses, the Trust currently offers twenty-one portfolios, each of which are presented in this Statement of Additional Information, each with its own investment objectives and policies. These portfolios are: The Equity Portfolios—The Value Equity, Growth Equity, Small Capitalization—Mid Capitalization Equity, Real Estate Securities, International Equity, Emerging Markets, Commodity Returns Strategy and ESG Growth Portfolios; The Institutional Equity Portfolios—The Institutional Value Equity, Institutional Growth Equity, Institutional Small Capitalization—Mid Capitalization Equity, Institutional International Equity Portfolios; and The Income Portfolios—The Core Fixed Income, Fixed Income Opportunity, U.S. Government Fixed Income Securities, Inflation Protected Securities, U.S. Corporate Fixed Income Securities, U.S. Mortgage/Asset Backed Fixed Income Securities, Short-Term Municipal Bond, Intermediate Term Municipal Bond and Intermediate Term Municipal Bond II Portfolios.

 

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The following discussion supplements the prospectus discussion of the investment risks associated with the types of investments in which the Portfolios are entitled to invest. The table below summarizes these investments. The table is, however, only a summary list and is qualified in its entirety by the more detailed discussion included in the Prospectuses and in this Statement of Additional Information. Further, as indicated in the Prospectuses, that portion of the assets of the Value Equity, Growth Equity, Small Capitalization—Mid Capitalization Equity, International Equity, Institutional Value Equity, Institutional Growth Equity, Institutional Small Capitalization – Mid Capitalization, Institutional International Equity, Emerging Markets, Real Estate Securities and Commodity Related Securities Portfolios (“Index Accounts”) that have been or may be allocated to Cadence and/or Mellon Capital and the indexing strategies that those Specialist Managers have been retained to provide, may be invested exclusively in securities included in the benchmark index associated with those Portfolios, respectively, provided that Cadence and/or Mellon Capital are authorized to and may use certain derivative instruments solely for the purpose of gaining market exposure consistent with such index strategy and provided further that the Index Accounts may temporarily hold non-index names due to corporate actions (i.e., spin-offs, mergers, etc.).

Additionally, to enable The Commodity Returns Strategy Portfolio to achieve its investment objective through commodity, economic and investment cycles, the Portfolio seeks to augment its equity returns by reinforcing the Specialist Managers’ commodity views via exposure to commodity-linked structured notes. The Portfolio may also anticipate future investments in equities by investing in options and futures contracts. The Portfolio may focus on the securities of particular issuers or industries within the commodity-related industries in which the Portfolio invests, or in particular countries or regions, at different times. The Portfolio intends to gain exposure to the commodity markets in part by investing a portion of its assets in two wholly-owned subsidiaries organized under the laws of the Cayman Islands (the “Subsidiaries”). Among other investments, the Subsidiaries are expected to invest in commodity-linked derivative instruments, such as swaps and futures. The Subsidiaries have the same investment objective and will generally be subject to the same fundamental, non-fundamental and certain other investment restrictions as the Portfolio; however, the Subsidiaries (unlike the Portfolio) may invest without limitation in commodities, commodity-linked swap agreements and other commodity linked derivative instruments as well as make short sales of securities, maintain a short position or purchase securities on margin within the context of a total portfolio of investments designed to achieve the Portfolio’s objectives. The Portfolio and the Subsidiaries may test for compliance with certain investment restrictions on a consolidated basis. The Subsidiaries must, however, comply with the asset segregation requirements (described elsewhere in the SAI) with respect to its investments in commodity-linked swaps and other commodity-linked derivatives as well as short sales. By investing in the Subsidiaries, the Portfolio is indirectly exposed to the risks associated with the Subsidiaries’ investments.

The Equity and Institutional Equity Portfolios

 

Investment Instrument/Strategy

   Value    Growth    Small-
Mid Cap
   Real
Estate
   Int’l    Emerging
Markets
   Inst.
Value
   Inst.
Growth
   Inst.
Small -
Mid
Cap
   Inst.
Int’l
   Commodity    ESG

ADRs, EDRs and GDRs

   x    x    x    x    x    x    x    x    x    x    x    x

Agencies

   *    *    *    *    *    *    x    x    *    *    x    *

Asset-Backed Securities

   -    -    -    -    -    -    x    x    -    -    x    x

Cash Equivalents

   *    *    *    *    *    *    x    x    *    *    x    x

Collateralized Mortgage Obligations

   -    -    -    -    -    -    x    x    -    -    x    x

Commercial Paper

   *    *    *    *    *    *    x    x    *    *    x    x

Commodity-Linked Derivatives

   -    -    -    -    -    -    -    -    -    -    x    -

Common Stock

   x    x    x    x    x    x    x    x    x    x    x    x

Convertibles

   x    x    x    x    x    x    x    x    x    x    x    x

Corporates

   -    -    -    -    -    -    x    x    -    -    x    x

Depositary Receipts

   x    x    x    x    x    x    x    x    x    x    x    x

Emerging Markets Securities

   x    x    x    x    x    x    x    x    x    x    x    x

Floaters

   *    *    *    -    *    *    x    x    *    *    x    *

Foreign Currency

   -    -    -    x    x    x    x    x    -    x    x    x

Foreign Equity (US $)

   x    x    x    x    x    x    x    x    x    x    x    x

Foreign Equity (non-US $)

   x    x    x    x    x    x    x    x    x    x    x    x

Foreign Fixed-Income Securities

   -    -    -    -    -    -    x    x    -    -    x    x

Forwards

   x    x    x    x    x    x    x    x    x    x    x    x

Futures

   x    x    x    x    x    x    x    x    x    x    x    x

High Yield Debt Securities

   -    -    -    x    -    -    -    -    -    -    x    x

Investment Companies

   x    x    x    x    x    x    x    x    x    x    x    x

Investment Grade Debt Securities

   -    -    -    x    -    -    x    x    -    -    x    x

Money Market Funds

   x    x    x    x    x    x    x    x    x    x    x    x

 

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Investment Instrument/Strategy

   Value    Growth    Small-
Mid Cap
   Real
Estate
   Int’l    Emerging
Markets
   Inst.
Value
   Inst.
Growth
   Inst.
Small -
Mid Cap
  Inst.
Int’l
  Commodity    ESG

Mortgage-Backed Securities

   -    -    -    x    -    -    x    x    -   -   x    x

Mortgage Securities

   -    -    -    -    -    -    x    x    -   -   x    x

Municipals

   -    -    -    -    -    -    x    x    -   -   x    -

Options

   x    x    x    x    x    x    x    x    **   **   x    x

Preferred Stock

   x    x    x    x    x    x    x    x    x   x   x    x

REITs

   x    x    x    x    x    x    x    x    x   x   x    x

Repurchase Agreements

   *    *    *    *    *    *    x    x    *   *   x    *

Reverse Repurchase Agreements

   *    *    *    *    *    *    x    x    *   *   x    *

Rights

   x    x    x    x    x    x    x    x    x   x   x    x

Securities Lending

   x    x    x    x    x    x    x    x    x   x   x    x

Short Sales

   x    x    x    x    x    x    x    x    x   x   x    x

Step-Up Bonds

   -    -    -    -    -    -    x    x    -   -   x    -

Stripped Mortgage-Backed Securities

   -    -    -    -    -    -    x    x    -   -   x    x

Structured Notes

   x    x    x    -    x    x    x    x    x   x   x    x

Swaps

   x    x    x    x    x    x    x    x    x   x   x    x

TIPS

   -    -    -    -    -    -    x    x    -   -   x    -

U.S. Governments

   *    *    *    *    *    *    x    x    *   *   x    x

Warrants

   x    x    x    x    x    x    x    x    x   x   x    x

When-Issued Securities

   x    x    x    x    x    x    x    x    x   x   x    x

Yankees and Eurobonds

   -    -    -    -    -    -    x    x    -   -   x    x

Zero Coupon Agencies

   -    -    -    -    -    -    x    x    -   -   x    -

The Income Portfolios

 

Investment Instrument/Strategy

   Core
Fixed
   Fixed
Inc.
Oppy.
   U.S.
Govt.
   Infla-
tion
Protect
   U.S.
Corporate
   U.S.
Mortgage/Asset
Backed
   Short-
Term
   Interm.    Intermediate
Term II

Agencies

   x    x    x    x    x    x    x    x    x

Asset-Backed Securities

   x    x    -    -    -    x    x    x    x

Brady Bonds

   x    x    -    -    -    -    -    -    -

Cash Equivalents

   x    x    x    x    x    x    x    *    *

Collateralized Bond Obligations

   -    x    -    -    -    x    -    -    -

Collateralized Debt Obligations

   -    x    -    -    -    x    -    -    -

Collateralized Loan Obligations

   -    x    -    -    -    x    -    -    -

Collateralized Mortgage Obligations

   x    x    -    -    -    x    -    -    -

Commercial Paper

   x    x    x    x    x    x    x    *    *

Commodity-Linked Derivatives

   -    -    -    -    -    -    -    -    -

Convertibles

   x    x    -    -    -    -    -    -    -

Corporates

   x    x    -    -    x    -    -    -    -

Depositary Receipts

   x    x    -    -    x    x    -    -    -

Emerging Markets Securities

   -    x    -    x    -    -    -    -    -

Floaters

   x    x    -    x    -    -    -    -    x

Foreign Currency

   x    x    -    x    x    -    -    -    -

Foreign Equity (US $)

   -    x    -    -    -    -    -    -    -

Foreign Equity (non-US $)

   -    x    -    -    -    -    -    -    -

Foreign Fixed Income Securities

   x    x    -    x    -    -    -    -    -

Mortgage Securities

   x    x    -    -    -    x    x    x    x

Forwards

   x    x    x    x    x    x    x    x    x

Futures

   x    x    x    x    x    x    x    x    x

High Yield Securities

   x    x    -    x    -    -    -    x    -

Inverse Floaters

   x    x    -    x    -    -    -    -    -

Investment Companies

   x    x    x    x    x    x    x    x    x

Loan (Participations and Assignments)

   -    x    -    -    -    x    x    -    -

Municipals

   x    x    x    x    x    x    x    x    x

Options

   x    x    x    x    x    x    x    -    -

Preferred Stock

   x    x    -    -    x    -    -    -    -

REITS

   -    x    -    -    -    -    -    -    -

 

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Table of Contents

Investment Instrument/Strategy

   Core
Fixed
   Fixed
Inc.
Oppy.
   U.S.
Govt.
   Infla-
tion
Protect
   U.S.
Corporate
   U.S.
Mortgage/Asset
Backed
   Short-
Term
   Interm.    Intermediate
Term II

Repurchase Agreements

   *    *    *    *    *    *    *    *    *

Reverse Repurchase Agreements

   *    *    *    *    *    *    *    *    *

Rights

   x    x    -    -    -    -    -    -    -

Stripped Mortgage-Backed Securities

   x    x    -    -    -    x    -    -    -

Securities Lending

   x    x    x    x    x    x    x    x    x

Short Sales

   x    x    x    x    x    x    x    x    x

Step-Up Bonds

   x    x    -    -    -    -    -    -    -

Structured Investments

   x    x    -    -    x    -    x    x    x

Structured Notes

   x    x    -    -    x    -    x    x    x

Swaps

   x    x    x       x    x    x    x    x

TIPs

   x    x    x    x    x    -    x    x    x

U.S. Governments

   x    x    x    x    x    x    x    x    x

 

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The Income Portfolios (Continued)

 

Investment Instrument/Strategy

   Core
Fixed
   Fixed
Inc.
Oppy.
   U.S.
Govt.
   Infla-
tion
Protect
   U.S.
Corporate
   U.S.
Mortgage/Asset
Backed
   Short-
Term
   Interm.    Intermediate
Term II

Warrants

   -    x    -    -    -    -    -    -    -

When-Issued Securities

   x    x    -    -    -    -    x    x    x

Yankees and Eurobonds

   x    x    -    x    x    x    -    -    -

Zero Coupons Agencies

   x    x    x    -    x    x    x    -    -

 

x Allowable investment
- Not an allowable investment
* Money market instruments for cash management or temporary purposes

FOREIGN INVESTMENTS.

FOREIGN SECURITIES AND FOREIGN GOVERNMENT SECURITIES. American Depositary Receipts (“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 are publicly traded on U.S. exchanges and in the over-the-counter markets. Generally, they are issued in registered form, denominate in U.S. dollars, and designed for use in the U.S. securities markets. The Equity and Institutional Equity Portfolios are permitted to invest in ADRs. Additionally, these Portfolios may invest in European Depositary Receipts (“EDRs”) and Global Depositary Receipts (“GDRs”). EDRs are similar to ADRs but are issued and traded in Europe. Both EDRs and GDRs may be issued in bearer form and denominated in currencies other than U.S. dollars, and are generally designed for use in securities markets outside the U.S. For purposes of the Trust’s investment policies, ADRs, EDRs and GDRs are deemed to have the same classification as the underlying securities they represent. Thus, an ADR, EDR or GDR representing ownership of common stock will be treated as common stock. ADR, EDR or GDR programs may be sponsored or unsponsored. The depositary receipts are securities that demonstrate ownership interests in a security or pool of securities that have been placed with a ‘depository.’ These depositary receipts may be sponsored or unsponsored. Depositary receipts may or may not be denominated in the same currency as the underlying securities. 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, EDRs or GDRs 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, EDRs or GDRs 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. For other depositary receipts, the depository may be foreign or a U.S. entity, and the underlying securities may have a foreign or U.S. issuer.

The foreign government securities in which certain Portfolios 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 securities of supranational entities. Such securities may be denominated in other currencies. Foreign government securities also include mortgage-related securities issued or guaranteed by national, state or provincial governmental instrumentalities, including quasi-governmental agencies. A Portfolio may invest in foreign government securities in the form of ADRs as described above.

The Real Estate Securities Portfolio may invest without limit in equity securities of non-U.S. real estate companies, or sponsored and unsponsored depositary receipts for such securities.

DIRECT CHINA INVESTMENTS Historically, investments in stocks, bonds, and warrants listed and traded on a Mainland China stock exchange, investment companies, and other financial instruments (collectively referred to as “China Securities”) approved by the China Securities Regulatory Commission (“CSRC”) were not eligible for investment by non-Chinese investors.

The Emerging Markets Portfolio, however, may purchase certain Shanghai Stock Exchange (“SSE”) listed eligible China A shares via the Shanghai-Hong Kong Stock Connect program (“Stock Connect”). Stock Connect allows investors to trade and settle such SSE eligible shares via the Stock Exchange of Hong Kong Limited (“HKEx”) and clearing house. To the extent that the Emerging Markets Portfolio’s investments in China are made through Stock Connect, such investments may be subject to additional risk factors.

The list of eligible China A shares is provided by HKEx from time to time. If a share ceases to be an eligible China A share but continues to be an SSE listed share, the Emerging Markets Portfolio will only be allowed to sell such China A shares and will be restricted from buying additional shares. The trading and settlement currency of China A shares are in Chinese Yuan Renminbi (“RMB”) and the Emerging Markets Portfolio will be exposed to currency risks due to the conversion of another currency into RMB.

The Emerging Markets Portfolio trades SSE listed shares through a broker that is a Stock Connect participant. SSE listed shares will be settled by the Hong Kong Securities Clearing Company (“HKSCC”) with ChinaClear, the central clearinghouse in the People’s Republic of China (“PRC”), on behalf of Hong Kong investors. During the settlement process, HKSCC will act as nominee on behalf of Hong Kong executing brokers, and as a result, SSE listed shares will not be in the name of the Emerging Markets Portfolio, its custodian, or any of its brokers during this time period.

While the Emerging Markets Portfolio’s ownership of the shares will be reflected on the books of the custodian’s records, the Emerging Markets Portfolio will only have beneficial rights in the shares. Stock Connect regulations provide that investors, such as the Emerging Markets Portfolio, enjoy the rights and benefits of SSE listed shares purchased through Stock Connect. However, Stock Connect is a new program, and the status of the Emerging Markets Portfolio’s beneficial interest in Stock Connect securities is untested.

The Fund also would be exposed to counterparty risk with respect to ChinaClear. In the event of the insolvency of ChinaClear, the Emerging Markets Portfolio’s ability to take action directly to recover the Portfolio’s assets may be limited. The HKSCC, as nominee holder, would have the exclusive right, but not the obligation, to take any legal action or court proceeding to enforce any rights of investors, such as the Emerging Markets Portfolio. Recovery of Portfolio assets may be subject to delays and expenses, which may be material. Similarly, HKSCC would be responsible for the exercise of shareholder rights with respect to corporate actions (including all dividends, rights issues, merger proposals or other shareholder votes). While HKSCC will endeavor to provide investors with the opportunity to provide voting instructions, investors may not have sufficient time to consider proposals or provide instructions. In addition, the Emerging Markets Portfolio also would be exposed to counterparty risk with respect to HKSCC. A failure or delay by the HKSCC in the performance of its obligations may result in a failure of settlement, or the loss, of Stock Connect securities and/or monies in connection with them and the Emerging Markets Portfolio may suffer losses as a result.

While certain aspects of the Stock Connect trading process are subject to Hong Kong law, PRC rules applicable to share ownership will apply including foreign shareholding restrictions and disclosure obligations applicable to China A shares. In addition, transactions using Stock Connect are not subject to the Hong Kong investor compensation fund or the China Securities Investor Protection Fund.

Investment in Stock Connect securities is subject to various risks associated with the legal and technical framework of Stock Connect. Stock Connect is generally available only on business days when both the HKEx and SSE are open. When either or both the HKEx and SSE is/are closed, investors will not be able to trade Stock Connect securities at times that may otherwise be beneficial to such trades. Because the program is new, the technical framework for Stock Connect has only been tested using simulated market conditions. In the event of high trade volumes or unexpected market conditions, Stock Connect may be available only on a limited basis, if at all.

CURRENCY RELATED INSTRUMENTS. As indicated in the Prospectuses, certain Portfolios may use forward foreign currency exchange contracts and currency swap contracts in connection with permitted purchases and sales of securities of non-U.S. issuers. Certain Portfolios 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 each is authorized to invest and to hedge against fluctuations in the relative value of the currencies in which securities held by each are denominated. The following discussion sets forth certain information relating to forward currency contracts, currency swaps, and other currency related instruments, together with the risks that may be associated with their use. Currency positions are not considered to be an investment in a foreign government for industry concentration purposes.

 

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ABOUT CURRENCY TRANSACTIONS AND HEDGING. Certain Portfolios 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. Options relating to foreign currencies may also be purchased or sold to increase exposure to a foreign currency or to shift foreign currency exposure from one country to another.

FOREIGN CURRENCY OPTIONS AND RELATED RISKS. Certain Portfolios 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 AND CURRENCY SWAPS. To the extent indicated in the Prospectuses, the Portfolios may use forward contracts and swaps to protect against uncertainty in the level of future exchange rates in connection with specific transactions or for hedging purposes. For example, when a 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 or swap 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, Institutional International Equity, Institutional Value Equity, Institutional Growth Equity, Commodity Returns Strategy, Fixed Income Opportunity, Inflation Protected Securities and Emerging Markets Portfolios may also use forward or swap contracts in connection with specific transactions. In addition, they 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 Specialist 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 Specialist 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 or swap contract to sell the amount of the former foreign currency approximating the value of some or all of the portfolio securities held by the Portfolio that are denominated in such foreign currency. This investment practice generally is referred to as “cross-hedging.”

The precise matching of the forward or swap 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 or swap 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 and swap 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 or swap 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.

 

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At or before the maturity date of a forward or swap 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 or swap 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 or swap contracts varies with factors such as the currencies involved, the length of the contract period and the prevailing market conditions. Because forward and swap contracts are usually entered into on a principal basis, no fees or commissions are involved. The use of forward or swap contracts does not eliminate fluctuations in the prices of the underlying securities a Portfolio owns or intends to acquire, but it does fix a rate of exchange in advance. In addition, although forward and swap 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.

Certain forward foreign currency contracts do not provide for physical settlement of the underlying currencies but instead provide for settlement by a single cash payment (“non-deliverable forwards”). Under definitions adopted by the Commodity Futures Trading Commission (“CFTC”) and the SEC, non-deliverable forwards are considered swaps. Although non-deliverable forwards have historically been traded in the over-the-counter (“OTC”) market, as swaps they may in the future be required to be centrally cleared and traded on public facilities. For more information, see “HEDGING INSTRUMENTS AND OTHER DERIVATIVES – SWAP AGREEMENTS” below.

Although the Portfolios value their assets daily in terms of U.S. dollars, no Portfolio intends to convert its holdings of foreign currencies into U.S. dollars on a daily basis. The Portfolios 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 a Portfolio at one rate, while offering a lesser rate of exchange should the Portfolio desire to resell that currency to the dealer.

HEDGING INSTRUMENTS AND OTHER DERIVATIVES.

OPTIONS. To the extent indicated in the Prospectuses, the Portfolios may, consistent with their 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. With the exception of The Institutional Value Equity Portfolio, The Institutional Growth Equity Portfolio, The Commodity Returns Strategy Portfolio and The Fixed Income Opportunity Portfolio, options may be used only for the purpose of reducing investment risk or to gain market exposure pending investment. The Portfolios mentioned above may invest in options as disclosed in their Prospectus. The Portfolios may invest in options on individual securities, baskets of securities or particular measurements of value or rate (an “index”), such as an index of the price of treasury securities or an index representative of short-term interest rates. Such options may be traded on an exchange or in the OTC markets. OTC options are subject to greater credit and liquidity risk. See “Additional Risk Factors of OTC Options.” 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 ON SECURITIES INDICES. Options on securities indices may be 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.

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.

 

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Put options may be purchased in order to hedge against a decline in market value of a security held by the 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 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 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 Specialist 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 Specialist 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 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 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 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.

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.

To the extent that a Portfolio writes a call option on a security it holds in its portfolio and intends to use such security as the sole means of “covering” its obligation under the call option, the Portfolio has, in return for the premium on the option, given up the opportunity to profit from a price increase in the underlying security above the exercise price during the option period, but, as long as its obligation under such call option continues, has retained the risk of loss should the price of the underlying security decline. If a Portfolio were unable to close out such a call option, the Portfolio would not be able to sell the underlying security unless the option expired without exercise.

 

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ADDITIONAL RISK FACTORS OF OTC OPTIONS. Certain instruments traded in OTC markets, including indexed securities and OTC options, involve significant liquidity and credit risks. The absence of liquidity may make it difficult or impossible for a Portfolio to sell such instruments promptly at an acceptable price. In addition, lack of liquidity may also make it more difficult to the Portfolio to ascertain a market value for the instrument. A Portfolio will only acquire an illiquid OTC instrument if the agreement with the counterparty contains a formula price at which the contract can be sold or terminated or if on each business day, the Specialist Manager anticipates that at least one dealer quote is available.

Instruments traded in OTC markets are not guaranteed by an exchange or clearing organization and generally do not require payment of margin. To the extent that a Portfolio has unrealized gains in such instruments or has deposited collateral with its counterparty, the Portfolio is at risk that its counterparty will become bankrupt or otherwise fail to honor its obligations. The Portfolio will attempt to minimize these risks by engaging in transactions with counterparties who have significant capital or who have provided the Portfolio with a third party guarantee or credit enhancement.

FUTURES CONTRACTS AND RELATED INSTRUMENTS. To the extent indicated in the Prospectuses, the Portfolios may use futures contracts and 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. As part of their investment strategies, a portion of each Portfolio may invest directly in futures contracts and options on futures contracts to attempt to achieve each Portfolio’s investment objective without investing directly in the underlying futures contract.

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.

Futures contracts may be bought and sold on U.S. and non-U.S. exchanges. Futures contracts in the U.S. have been designed by exchanges that have been designated “contract markets” by the CFTC and must be executed through a futures commission merchant (“FCM”), which is a brokerage firm that is a member of the relevant contract market. Each exchange guarantees performance of the contracts as between the clearing members of the exchange, thereby reducing the risk of counterparty default. Futures contracts may also be entered into on certain exempt markets, including exempt boards of trade and electronic trading facilities, available to certain market participants. Because all transactions in the futures market are made, offset or fulfilled by an FCM through a clearinghouse associated with the exchange on which the contracts are traded, a Portfolio will incur brokerage fees when it buys or sells futures contracts.

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 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

 

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market value of the option, and other futures positions held by a 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 las