<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
December 13, 1996
1933 Act File No. 87762
1940 Act File No. 811-8918
Form N-1A
Securities and Exchange Commission
Washington, D.C. 20549
Form N-1A
Registration Statement Under the Securities Act of 1933 [ ]
Pre-Effective Amendment No. _________ [ ]
Post-Effective Amendment No.___4_____ [x]
and/or
Registration Statement Under the Investment Company Act of 1940 [x]
Amendment No. 6
(Check appropriate box or boxes.)
THE HIRTLE CALLAGHAN TRUST
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(Exact Name of Registrant as Specified in Charter)
575 E. Swedesford Road, Wayne PA 19087
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(Address of Principal Executive Offices) (Zip Code)
610-254-9596
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(Registrant's Telephone Number, including Area Code)
Laura Anne Corsell, Esq (With Copy To):
c/o Hirtle Callaghan & Co. Inc. Audrey Talley, Esq.
575 Swedesford Road Stradley Ronan Stevens & Young
Wayne, PA 19087 2600 One commerce Square
Philadelphia, PA, 19103-7098
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(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this
Registration Statement
It is proposed that this filing will become effective (check appropriate box)
[ ] Immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[x] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i) of rule 485
[ ] 75 days after filing pursuant to paragraph (a)(ii) of Rule 485
[ ] on (date) pursuant to paragraph (a)(i) of Rule 485
An indefinite number of Registrant's securities has been registered pursuant to
Rule 24f-2 under the Investment Company Act of 1940.
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<PAGE>
CROSS REFERENCE SHEET
(Required by Rule 481(a) under the Securities Act of 1933)
<TABLE>
<S> <C>
Part A -- Information required in a Prospectus Prospectus Heading
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Item 1. Cover Page Cover Page
Item 2. Synopsis Expense Information
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant Cover Page;
Management of the
Trust; General
Item 5. Management of the Fund Management of the
Trust
Item 6. Capital Stock and other Securities General
Item 7. Purchase of Securities Being Offered Purchases and Redemptions
Item 8. Redemption or Repurchase Purchases and Redemptions
Item 9. Legal Proceedings Not Applicable
Part B -- Information required in a Statement Statement of Additional
of Additional Information Heading
-------------------------------------------
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
Item 12. General Information and History Cover Page; Management of
the Trust
Item 13. Investment Objectives and Policies Further Information on
Investment Policies;
Hedging through the use
of Options; Hedging
through the use of Futures
Contracts; Hedging
through the use of
Currency-related
Instruments; Investment
Restrictions
Item 14. Management of the Registrant Management of the Trust
Item 15. Control Persons and Principal Management of the Trust
Holders of Securities
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Item 16. Investment Advisory and Other Management of the Trust
Services
Item 17. Brokerage Allocation Portfolio Transactions and
Valuation
Item 18. Capital Stock and Other Securities General (in Prospectus)
Item 19. Purchase, Redemption and Pricing of Additional Purchase and
Securities Being Offered Redemption Information;
Portfolio Transactions
and Valuation
Item 20. Tax Status Dividends, Distributions
and Taxes
Item 21. Underwriters Management of the Trust
Item 22. Calculation of Performance Date Not Applicable
Item 23. Financial Statements Independent Accountants
and Financial Statements
</TABLE>
Part C - Other Information
Information required to be included in Part C is set forth under the
appropriate item so numbered in Part C of this Registration Statement.
<PAGE>
<PAGE>
THE HIRTLE CALLAGHAN TRUST
575 E. Swedesford Road
Wayne, PA 19087
January , 1997
The Hirtle Callaghan Trust ("Trust"), a diversified, open-end management
investment company, was organized in 1994 by Hirtle, Callaghan & Co., Inc.
("Hirtle Callaghan") to enhance Hirtle Callaghan's ability to acquire the
services of independent specialist money management organizations for the
clients Hirtle Callaghan serves. The Trust currently consists of five separate
investment portfolios (each a "Portfolio"). Day-to-day portfolio management
services are provided to each of the Trust's five Portfolios by one or more
independent investment advisory organizations ("Investment Managers"),
selected by, and under the general supervision of, the Trust's Board of Trustees
("Board"). Shares of the Trust are available exclusively to investors
("Eligible Investors") who are clients of Hirtle Callaghan or clients of
financial intermediaries, such as investment advisers, acting in a fiduciary
capacity with investment discretion, that have established relationships with
Hirtle Callaghan.
The Trust currently consists of five separate Portfolios, as listed below:
The Value Equity Portfolio seeks total return by investing in equity
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securities.
The Growth Equity Portfolio seeks capital appreciation by investing in equity
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securities.
The Small Capitalization Equity Portfolio seeks long term capital appreciation
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by investing primarily in equity securities of smaller companies.
The International Equity Portfolio seeks total return by investing in a
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diversified portfolio of equity securities of non-U.S. issuers.
The Limited Duration Municipal Bond Portfolio seeks a high level of current
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income exempt from Federal income tax, consistent with the preservation of
capital.
This prospectus contains concise information about the Trust that a prospective
investor needs to know before investing in any of the Portfolios. Please read
it carefully and keep it for future reference. A Statement of Additional
Information, dated January , 1997, has been filed with the Securities and
Exchange Commission and is incorporated by reference in this prospectus. It may
be obtained upon request free of charge by contacting the Trust at 610-254-9596.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
<PAGE>
EXPENSE INFORMATION
Table 1: Shareholder Transaction Expenses: NONE
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Table 2: Annual Operating Expenses (as a percentage of average net assets) *
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Portfolio Value Growth Small Cap International Limited Duration
Equity Equity Equity Equity Municipal Bond
Management 0.35% 0.35% 0.50% 0.45% 0.25%
Fees
Other Expenses** 0.28% 0.28% 0.28% 0.36% 0.28%
(after waivers)
Total Portfolio 0.63% 0.63% 0.78% 0.81% 0.53%
Operating Expenses
(after waivers)
*Figures show reflect expenses incurred during the fiscal year ended June
30, 1996.
** The caption "Other Expenses" does not include extraordinary expenses as
determined by the use of generally accepted accounting principles. amount
shown reflect certain waivers and fee reimbursements by certain of the
Trust's service providers. Without these waivers, the expenses that appear
under the caption "Other Expenses" would be .33% for The Value Equity and
Growth Equity Portfolios, .40% for The Small Capitalization Equity
Portfolio, .47% for The International Equity Portfolio and .56% for The
Limited Duration Municipal Bond Portfolio. Similarly, the amounts shown
under the caption "Total Portfolio Operating Expenses," absent such waivers
and fee reimbursements, would be: for The Value Equity, .68%; for The
Growth Equity Portfolio, .68%%; for The Small Capitalization Equity
Portfolio, .90% for The International Equity Portfolio and .92% for The
Limited Duration Municipal Bond Portfolio, .81%.
The preceding table of annual operating expenses replaces the
corresponding table that appears on page 2 of the prospectus. This table
is designed to assist investors in understanding expenses borne by
investors as shareholder of the Trust, either directly or indirectly.
Example: An investor would pay the following expenses on a $1,000 investment,
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assuming (1) 5% annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
Small
Value Growth Capitalization International Limited Duration
Portfolio Equity Equity Equity Equity Municipal Bond
- --------- ------ ------ -------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
1 year $ 7 $ 7 $ 8 $ 9 $ 5
3 years $21 $21 $26 $27 $17
</TABLE>
The preceding example assumes that all dividends and distributions are
reinvested and that the percentage totals listed under "Estimated Annual Trust
Operating Expenses" remain the same in the years shown. The example should not
be considered a representation of future expenses and actual expenses may be
greater or less than those shown.
As shown above in Table 1, none of the Trust's Portfolios impose any shareholder
transaction fees in connection with either the purchase or redemption of shares.
Investors who acquire shares of the Trust through a program of services offered
by a financial intermediary, such as an investment adviser or bank, may be
subject to charges for services. All such charges are in addition to those
expenses borne by the Trust and described in the foregoing tables, or reflected
in the Example shown. Investors should contact any such financial intermediary
for information concerning what, if any, additional fees may be charged. For
more complete descriptions of the various costs and expenses, see "Management of
the Trust," in this prospectus.
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<PAGE>
Financial Highlights
(Selected per share data and rations for a share outstanding throughtout each
period)
The following information has been audited by ________________,
the Trust's independent accountants, whose report appears in the
Statement of Additional Information along with the financial statements.
The Trust's financial statements are included in the Trust's Statement
of Additional Information, which is available upon request.
<PAGE>
<TABLE>
<CAPTION>
VALUE GROWTH SMALL CAPITALIZATION INTERNATIONAL LIMITED DURATION
AUGUST 25, 1995 AUGUST 8, 1995 SEPTEMBER 5, 1995 AUGUST 17, 1995 OCTOBER 10, 1995
(COMMENCEMENT (COMMENCEMENT (COMMENCEMENT (COMMENCEMENT (COMMENCEMENT
OF OPERATIONS) OF OPERATIONS) OF OPERATIONS) OF OPERATIONS) OF OPERATIONS)
THROUGH THROUGH THROUGH THROUGH THROUGH
JUNE 30, 1996 JUNE 30, 1996 JUNE 30, 1996 JUNE 30, 1996 JUNE 30, 1996
--------------- -------------- -------------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period................. $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
------- -------- ------- ------- -------
Income from Investment
Operations:
Net investment income..... 0.22 0.04 0.10 0.16 0.35
Net realized and
unrealized gain on
investments and foreign
currency transactions.... 1.51 1.13 1.07 1.35 0.01
------- -------- ------- ------- -------
Total from investment
operations............... 1.73 1.17 1.17 1.51 0.36
------- -------- ------- ------- -------
Less Distributions:
From net investment
income................... (0.22) (0.04) (0.10) (0.24) (0.36)
From realized gains....... (0.03) 0.00 0.00 (0.01) 0.00
------- -------- ------- ------- -------
Total distributions....... (0.25) (0.04) (0.10) (0.25) (0.36)
------- -------- ------- ------- -------
Net Asset Value, End of
Period.................... $ 11.48 $ 11.13 $ 11.07 $ 11.26 $ 10.00
======= ======== ======= ======= =======
Total Return............... 17.28% 11.69% 11.82% 15.15% 3.60%
Net Assets End of Period
(in thousands)............ $71,503 $110,537 $61,503 $77,732 $29,485
Ratios to Average Net
Assets of:
Net investment income*.... 2.55% 0.46% 1.33% 1.75% 4.78%
Expenses net of
waivers/reimbursements*.. 0.63% 0.63% 0.78% 0.81% 0.53%
Expenses before
waivers/reimbursements*.. 0.68% 0.68% 0.90% 0.92% 0.81%
Portfolio Turnover Rate.... 92% 80% 38% 15% 116%
</TABLE>
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* Annualized.
<PAGE>
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INVESTMENT OBJECTIVES AND POLICIES
Set forth below is a brief description of the investment objective and policies
of each of the Trust's Portfolios, as well as the identity of the Investment
Manager(s) responsible for making day-to-day investment decisions for each
Portfolio. More detailed information about the Investment Managers appears in
this prospectus under the heading "Management of the Trust." Further
information about the types of instruments in which each Portfolio may invest,
and the risks associated with such investments, appears in this prospectus under
the heading "Investment Practices and Risk Considerations" and in the related
Statement of Additional Information. The Statement of Additional Information
also lists those investment restrictions to which the various Portfolios are
subject under the Investment Company Act of 1940 ("Investment Company Act").
Unless otherwise noted, the investment objectives and policies of the respective
Portfolios as set forth below are not fundamental and may be changed or modified
by the Trust's Board without a shareholder vote.
As further described in this prospectus under the heading "Management of the
Trust," investment discretion with respect to the assets of each Portfolio is
vested with one or more Investment Managers retained by the Trust. While the
Trust's Board is ultimately responsible for all matters relating to the Trust,
day-to-day decisions with respect to the purchase and sale of securities in
accordance with a Portfolio's investment objectives and policies are the
responsibility of the Investment Managers retained from time to time by the
Trust on behalf of the respective Portfolios. As is the case with any
investment in securities, an investment in any of the Portfolios involves
certain risks and there can be no assurance that any Portfolio will achieve its
objective.
The Value Equity Portfolio. The investment objective of this Portfolio is to
- --------------------------
provide total return consisting of capital appreciation and current income. The
Portfolio seeks to achieve this objective primarily through investment in a
diversified portfolio of equity securities. In selecting securities for the
Portfolio, the Investment Managers will generally emphasize equity securities
with a relatively lower price-earnings ratio but higher dividend income than the
average range for stocks included in the Standard & Poor's 500 Stock Index;
dividends paid by The Value Equity Portfolio can generally be expected to be
higher than those paid by The Growth Equity Portfolio. Up to 15% of the
Portfolio's assets may be invested in convertible securities; up to 15% of the
Portfolio's assets may be invested in American Depositary Receipts. Further
information about equity related securities appears in this prospectus under the
heading "Investment Practices and Risk Considerations: About Equity Securities."
Hotchkis and Wiley and Institutional Capital Corporation currently serve as
Investment Managers for The Value Equity Portfolio.
The Growth Equity Portfolio. The investment objective of this Portfolio is to
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provide capital appreciation, with income as a secondary consideration. The
Portfolio will seek to achieve this objective by investing primarily in a
diversified portfolio of equity securities traded on registered exchanges or in
the over-the-counter market in the U.S. In selecting securities for the
Portfolio, the Investment Managers will generally emphasize equity securities
with long-term earnings growth potential and relatively higher price-earnings
ratios than the average range for stocks included in the Standard & Poor's 500
Stock Index. Although dividend paying securities will be considered for
<PAGE>
<PAGE>
inclusion in the Portfolio, dividends paid by The Growth Equity Portfolio can
generally be expected to be lower than those paid by The Value Equity Portfolio.
Up to 10% of the Portfolio's assets may be invested in convertible securities.
Further information about investments in equity related investments appears in
this prospectus under the heading "Investment Practices and Risk Considerations:
About Equity Securities." In addition, a maximum of 20% of the Portfolio's
assets may be invested in securities of non-U.S. issuers. Further information
about the special considerations applicable to international investments appears
in this prospectus under the heading "Investment Practices and Risk
Considerations: About Foreign Securities." Jennison Associates Capital Corp.
and Westfield Capital Management Company, Inc. currently serve as Investment
Managers for The Growth Equity Portfolio.
The Small Capitalization Equity Portfolio. The investment objective of this
- -----------------------------------------
Portfolio is to provide long term capital appreciation by investing primarily in
equity securities of smaller companies. Companies in which the Portfolio may
invest are those which, in the view of one or more of the Portfolio's Investment
Managers, have demonstrated, or have the potential for, strong capital
appreciation potential due to their relative market position, anticipated
earnings, changes in management or other factors. Under normal market
conditions, at least 65% of the Portfolio's total assets will be invested in
equity securities of companies with capitalizations of less than $1.0 billion at
the time of purchase; up to 35% of the Portfolio's assets may be invested in
the equity securities of companies with larger capitalizations. Further
information about the special considerations applicable to equity investments in
smaller companies appears in this prospectus under the heading "Investment
Practices and Risk Considerations: About Equity Securities." Clover Capital
Management, Inc. and Frontier Capital Management Company currently serve as
Investment Managers for The Small Capitalization Equity Portfolio.
The International Equity Portfolio. The investment objective of this
- ----------------------------------
Portfolio is to maximize total return, consisting of capital appreciation and
current income, by investing primarily in a diversified portfolio of equity
securities of non-U.S. issuers. Under normal market conditions, at least 65% of
the Portfolio's total assets will be invested in equity securities of issuers
located in at least three countries other than the United States. Further
information about the special considerations applicable to international
investments appears in this prospectus under the heading "Investment Practices
and Risk Considerations: About Foreign Securities." Brinson Partners, Inc.
currently serves as Investment Manager for The International Equity Portfolio.
The International Equity Portfolio is designed to invest in the equity
securities of non-U.S. issuers that are believed to be undervalued in relation
to the issuer's assets, cash flow, earnings and revenues based upon the
Investment Manager's research and proprietary valuation systems. Although the
Portfolio may invest anywhere in the world, the Portfolio is expected to invest
primarily in the equity markets included in the Morgan Stanley Capital
International Europe, Australia, Far East Index ("EAFE"). Currently, these
markets are Japan, the United Kingdom, Germany, France, Canada, Italy, the
Netherlands, Australia, Switzerland, Spain, Hong Kong, Belgium, Singapore,
Malaysia, Sweden, Denmark, Norway, New Zealand, Austria, Finland and Ireland.
Securities of non-U.S. issuers purchased by the Portfolio may be purchased on
U.S. registered exchanges, the over-the-counter markets or in the form of
sponsored or unsponsored American Depositary Receipts traded on registered
exchanges or NASDAQ or sponsored or unsponsored European Depositary Receipts.
<PAGE>
<PAGE>
Securities may also be purchased on recognized foreign exchanges or on over-the-
counter markets overseas. In addition, the Portfolio may enter into forward
foreign currency exchange contracts, buy or sell options, futures or options on
futures relating to foreign currencies and may purchase securities indexed to
currency baskets in order to hedge against fluctuations in the relative value of
the currencies in which securities held by the Portfolio are denominated.
Further information about the Portfolio's use of these instruments appears in
this prospectus under the heading "Investment Practices and Risk Considerations:
About Hedging Strategies." The International Equity Portfolio may also invest
in high-quality short-term debt instruments (including repurchase agreements)
denominated in U.S. or foreign currencies for temporary purposes. Further
information about the Portfolio's temporary investment practices appears in this
prospectus under the heading "Investment Practices and Risk Considerations:
About Temporary Investment Practices."
The Limited Duration Municipal Bond Portfolio. The investment objective of this
- ---------------------------------------------
Portfolio is to provide a high level of current income exempt from Federal
income tax, consistent with the preservation of capital. The Portfolio seeks to
achieve this objective by investing primarily in a diversified portfolio of
municipal bonds (i.e., debt securities issued by municipalities and related
entities, the interest on which is exempt from Federal income tax). It is a
fundamental policy of the Portfolio that, under normal circumstances, at least
80% of its net assets will be invested in such securities (collectively, "Tax-
Exempt Securities"). Tax-Exempt Securities may include general obligation bonds
and notes, revenue bonds and notes (including industrial revenue bonds and
municipal lease obligations), as well as participation interests relating to
such securities. In order to maintain liquidity, the Portfolio is authorized to
invest up to 20% of its total assets in taxable instruments. Further
information about such investments appears in this prospectus under the heading
"Investment Practices and Risk Considerations: About Temporary Investment
Practices." Morgan Grenfell Capital Management Incorporated currently serves as
Investment Manager for The Limited Duration Municipal Bond Portfolio.
It is anticipated that the average credit quality of all Tax-Exempt Securities
purchased for the Portfolio will be comparable to securities rated "Aa" by
Moody's Investors Service ("Moody's"), or "AA" by Standard & Poor's Corporation
("S&P"), respectively (or, in the case of municipal notes and commercial paper,
corresponding ratings assigned to such instruments). The Portfolio is also,
however, authorized to invest in Tax-Exempt Securities that, at the time of
investment, are rated at least investment grade (e.g. "Baa" or better by
Moody's, "BBB" by S&P or, if unrated, are determined by the Portfolio's
Investment Manager to be of comparable quality to securities that have
received such ratings). Securities rated "Baa" or "BBB" may be said to have
speculative characteristics in that changes in economic conditions or other
circumstances may be more likely to weaken the issuer's capacity to make
principal and interest payments than is the case with respect to securities that
have received higher ratings. The municipal notes in which the Portfolio may
invest will be limited to those obligations which are rated, at the time of
purchase, at least MIG-1 or V-MIG-1 by Moody's or SP-1 by S&P or, if unrated,
are determined by the Investment Manager to be of comparable quality to
securities that have received such ratings. Tax-exempt commercial paper must be
rated at least A-1 by S&P or Prime -1 by Moody's at the time of investment or,
if not rated, determined by the Portfolio's Investment Manager to be of
comparable quality to issues that have received such ratings. Taxable
investments, if any, will be limited to those rated "Aa" or "AA" by Moody's or
<PAGE>
<PAGE>
S&P, respectively (or, in the case of securities not rated by these services or
unrated, of comparable quality). Further information about ratings appears in
this prospectus under the heading "Investment Practices and Risk Considerations:
About Debt Securities and Ratings Organizations."
Municipal securities purchased for the Portfolio will have varying maturities,
but under normal circumstances the Portfolio will have an overall duration of
less than 4 years. Duration is a concept that incorporates a bond's yield,
coupon interest payments, final maturity and call features into one measure that
is used by investment professionals as a more precise alternative to the concept
of term-to-maturity. As a point of reference, the maturity of a current coupon
bond with a 3 year duration is approximately 3.5 years and the maturity of a
current coupon bond with a 6 year duration is approximately 9 years. Changes in
interest rates can adversely affect the value of an investment in the Portfolio.
As an example, a one percent increase in interest rates could result in a four
percent decrease in the value of a portfolio with a duration of four years.
When interest rates are falling, a fixed income portfolio with a shorter
duration generally will not generate as high a level of total return as one with
a longer duration. When interest rates are flat, shorter duration portfolios
generally will not generate as high a level of total return as longer duration
portfolios. In determining whether to invest in a particular Tax Exempt
Security, the Portfolio's Investment Manager will rely on the opinion of bond
counsel for the issuer as to the validity of the security and the exemption of
interest on such security from Federal and relevant state income taxes, and will
not make an independent investigation of the basis for any such opinion.
INVESTMENT PRACTICES AND RISK CONSIDERATIONS
Although the Trust's Portfolios have different investment objectives and
policies, certain investment practices may be used by one or more of the
Portfolios. A general description of each such practice is set forth below,
together with the Portfolios to which each practice is available.
About Equity Securities. The Value Equity, Growth Equity, Small Capitalization
- -----------------------
Equity and International Equity Portfolios invest primarily in equity
securities. For purposes of the investment policies of these Portfolios, the
term "equity securities" includes common and preferred stock and rights and
warrants to purchase other equity securities. A maximum of 15% of the assets of
The Value Equity Portfolio and up to 10% of the assets of The Growth Equity
Portfolio may be invested in convertible issues, the market value of which tend
to move together with the market value of the underlying common stock as a
result of the conversion feature. Both The International Equity Portfolio and
The Small Capitalization Equity Portfolio are also authorized to invest up to 5%
of their respective assets in similar convertible issues, although these
Portfolios have no present intention of doing so. In general, investments in
equity securities and convertible issues are subject to market risks that may
cause their prices to fluctuate over time. Additionally, the value of
securities, such as warrants and convertible issues, is also affected by
prevailing interest rates, the credit quality of the issuer and any call
provisions. Convertible issues purchased for any Portfolio will be limited to
those issues that are either rated (or, unrated securities that, in the judgment
of the relevant Investment Manager, are comparable in quality to securities
rated) investment grade or better by Moody's or S&P or other ratings
organization. Please refer to "Debt Securities and Ratings Organizations" in
this section of the prospectus for further information about such organizations
<PAGE>
<PAGE>
and their ratings. Fluctuations in the value of equity securities in which a
Portfolio invests will cause the net asset value of that Portfolio to
fluctuate.
An investment in those Portfolios of the Trust that invest primarily in equity
securities may be more suitable for long-term investors who can bear the risk of
short-term principal fluctuation. The Small Capitalization EquityPortfolio
invests primarily in equity securities issued by smaller companies, generally
with a capitalization of less than $1.0 billion. Equity securities of smaller
companies involve greater risk than that customarily associated with
investments in larger, more established companies. This increased risk may be
due to the fact that such companies often have limited markets and financial
resources, narrow product lines and lack of depth of management. The securities
of smaller companies are often traded in the over-the-counter markets and, if
listed on national or regional exchanges, may not be traded in volumes typical
for such exchanges. Thus, the securities of smaller companies are likely to be
less liquid, and subject to more abrupt or erratic price movements than larger,
more established companies. Further information about securities that may be
illiquid is included in this section under the heading
"About Illiquid Securities."
About Debt Securities and Ratings Organizations. Ratings of debt securities and
- ------------------------------------------------
rated convertible issues represent the judgment of the nationally recognized
rating organization (each an "NRSRO"), such as S&P and Moody's, that assigns the
rating regarding the rated instrument. Such ratings are not a guarantee of
quality and may be reduced after the Trust has acquired the security. If a
security's rating is reduced while it is held by the Trust, the appropriate
Investment Manager will consider whether the Trust should continue to hold the
security but is not required to dispose of it. Credit ratings attempt to
evaluate the safety of principal and interest payments and do not evaluate the
risks of fluctuations in market value. Also, an NRSRO may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial conditions may be better or worse than the rating indicates. A
summary of the ratings categories of Moody's and S&P appears in the Appendix to
the Statement of Additional Information.
Certain of the Portfolios may purchase debt securities that have not been
assigned ratings by any NRSRO but are determined by the relevant Investment
Manager to be of a quality comparable to rated securities that the Portfolio is
permitted to purchase. The quality of unrated securities will be determined by
an Investment Manager in accordance with guidelines adopted by the Board.
About Foreign Securities. The International Equity Portfolio invests primarily
- ------------------------
in equity securities of non-U.S. issuers, which securities may be traded in the
U.S. or abroad and which may be denominated in foreign currencies. In addition
and as noted earlier in this prospectus, The Growth Equity Portfolio may also
invest in such securities. The International Equity Portfolio may also invest
in short-term debt instruments denominated in foreign currencies under unusual
market conditions. Equity securities of overseas issuers are subject to the
same risks, described above, applicable to equity securities in general. In
addition, both debt and equity securities of foreign issuers may involve risks
which are not ordinarily associated with investing in domestic securities. Such
factors include the unavailability of financial information or the difficulty of
interpreting financial information prepared under foreign accounting standards;
<PAGE>
<PAGE>
less liquidity and more volatility in foreign securities markets; the
possibility of expropriation; the imposition of foreign withholding and other
taxes; the impact of foreign political, social or diplomatic developments;
limitations on the movement of funds or other assets between different
countries; difficulties in invoking legal process abroad and enforcing
contractual obligations; and the difficulty of assessing economic trends in
foreign countries. In addition, changes in foreign exchange rates will affect
the value of securities denominated or quoted in foreign currencies relative to
the U.S. dollar. Exchange rate movements can be large and can endure for
extended periods of time, affecting either favorably or unfavorably the value of
securities held in the Portfolio and, thus, the Portfolio's net asset value per
share. Securities transactions effected in markets overseas are generally
subject to higher fixed commissions than may be negotiated on U.S. exchanges.
Custody arrangements for the Portfolio's foreign securities will be more costly
than those associated with domestic securities of equal value. Certain foreign
governments levy withholding taxes against dividend and interest income.
Although in some countries a portion of these taxes is recoverable, the non-
recovered portion of foreign withholding taxes will reduce the Portfolio's
income.
The Value Equity Portfolio may invest in American Depositary Receipts ("ADRs").
ADRs are dollar-denominated receipts generally issued in registered form by
domestic banks, that represent the deposit with the bank of a security of a
foreign issuer. ADRs, which are publicly traded on U.S. exchanges and in the
over-the-counter markets, may be sponsored by the foreign issuer of the
underlying security or may be unsponsored. The International Equity Portfolio
and the Growth Equity Portfolio are also permitted to invest in ADRs.
Additionally, these portfolios may invest in European Depositary Receipts
("EDRs"). EDRs are similar to ADRs but are issued and traded in Europe. EDRs
are generally issued in bearer form and denominated in foreign currencies and,
for this reason, are subject to the currency risks described above. For
purposes of the Trusts' investment policies, ADRs and EDRs are deemed to have
the same classification as the underlying securities they represent. Thus, an
ADR or EDR representing ownership of common stock will be treated as common
stock. ADR or EDR programs may be sponsored or unsponsored. Unsponsored
programs are subject to certain risks. In contrast to sponsored programs,
where the foreign issuer of the underlying security works with the depository
institution to ensure a centralized source of information about the underlying
company, including any annual or other similar reports to shareholders,
dividends and other corporate actions, unsponsored programs are based on a
service agreement between the depository institution and holders of ADRs or
EDRs issued by the program; thus investors bear expenses associated with
certificate transfer, custody and dividend payments. In addition, there may be
several depository institutions involved in issuing unsponsored ADRs or EDRs for
the same underlying issuer. Such duplication may lead to market confusion
because there would be no central source of information for buyers, sellers and
intermediaries, and delays in the payment of dividends and information about the
underlying issuer or its securities could result.
About Tax-Exempt Securities. The Limited Duration Municipal Bond Portfolio
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intends to invest substantially all of its assets in Tax-Exempt Securities,
including municipal bonds, notes and related instruments. The performance of
this Portfolio depends primarily on interest rate risk and credit risk.
Interest rate risk is the risk that the value of an investment will fluctuate in
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response to changes in interest rates. Credit risk is the risk that an issuer
will be unable to make principal and interest payments when due. The credit
quality of municipal obligations held by the Portfolio can be affected, among
other things, by the financial condition of the issuer or guarantor of a Tax-
Exempt Security, the issuer's future borrowing plans and sources of revenue, the
economic feasibility of the underlying project and regional political or
economic developments.
Generally, the value of debt securities such as Tax-Exempt Securities, will tend
to decrease in value when interest rates rise and increase in value when
interest rates fall, with shorter term securities generally less sensitive to
interest rate changes than longer term securities. Municipal bonds are debt
obligations which are typically issued with maturities of five years or more,
issued by local, state and regional governments or other governmental
authorities. Municipal bonds may be issued for a wide range of purposes,
including construction of public facilities, funding operating expenses, funding
of loans to public institutions; or refunding outstanding municipal debt.
Municipal bonds may be "general obligations" of their issuers, the repayment of
which is secured by the issuer's pledge of full faith, credit and taxing power.
"Revenue" or "special tax" bonds, such as municipal lease obligations and
industrial revenue bonds are obligations that are payable from revenues derived
from a particular facility or a special excise or other tax. Trusts for
repayment of revenue bonds are generally limited to revenues from the underlying
project or facility. As a consequence, the credit quality of such obligations
is ordinarily dependent on the credit quality of the private user or operator of
the project or facility rather than the governmental issuer of the obligation.
Municipal lease obligations likewise may not be backed by the issuing
municipality's credit and may involve risks not normally associated with
investments in Tax-Exempt Securities. For example, interest on such obligations
may become taxable if the lease is assigned. The Portfolio may also incur
losses if the municipal issuer does not appropriate funds for lease payments on
an annual basis, which may result in termination of the lease and possible
default. Municipal leases may also be illiquid. Further information about
securities that may be illiquid is included in this section under the heading
"About Illiquid Securities."
The Limited Duration Municipal Bond Portfolio may also invest in Tax-Exempt
Securities, the proceeds of which are directed, at least in part, to private,
for-profit organizations. Although the interest from such bonds is exempt from
regular Federal income tax, if the bond was issued after August 7, 1986, the
interest may be treated as tax preference items for purposes of the alternative
minimum tax; such bonds are often referred to as "AMT Bonds." The alternative
minimum tax is a special separate tax that applies to a limited number of
taxpayers who have certain adjustments to income or tax preference items.
Municipal notes are obligations issued by local, state and regional governments
to meet their short-term funding requirements. Municipal notes may be short-
term debt obligations which are issued pending receipt of taxes or other
revenues, and retired upon receipt of such revenues. Such securities include
bond anticipation notes, revenue anticipation notes and tax and revenue
anticipation notes. Other types of municipal notes in which the Portfolio may
invest are issued to fund municipal operations on a temporary or revolving basis
and may include construction loan notes, short-term discount notes, tax-exempt
commercial paper demand notes and similar instruments.
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Long term fixed rate municipal bonds that have been coupled with puts granted by
a third party financial institution may also be purchased for the Portfolio.
Such instruments, which may be represented by custodial receipts or trust
certificates, are designed to enhance the liquidity and shorten the duration of
the underlying bond. Under certain circumstances, however, such as the
downgrading of the underlying bond or a change in its tax-exempt status, the
associated put will terminate automatically and the weighted average maturity
of the Portfolio may increase. A "Participation interest" is a floating or
variable rate security issued by a financial institution. These instruments
represent interests in municipal bonds or other municipal obligations held by
the issuing financial institution. Participation interests are generally backed
by an irrevocable letter of credit or guarantee by a bank (which may or may not
be the issuing financial institution). The letter of credit feature is usually
designed to enhance the credit quality of the underlying municipal obligations.
In addition, participation interests generally carry a demand feature. These
demand features permit the Portfolio to tender the participation interest back
to the issuing financial institution and are usually designed to provide
liquidity for the Portfolio in the event of a downgrade in the credit quality
of the instrument or default in the underlying municipal obligation. The
Portfolio may acquire stand-by commitments, also known as "liquidity puts"
solely for the purpose of facilitating portfolio liquidity. These instruments
give the Portfolio the right to sell specified securities back to the seller,
at the option of the Portfolio, at a specified price. It is expected that such
stand-by commitments will be available without the payment of any direct or
indirect consideration. However, if advisable in the judgment of the Investment
Manager of the Portfolio, the Portfolio may pay for such commitments at the time
the underlying security is acquired.
Tax-Exempt Securities may be purchased on a "when-issued" basis. When
securities are purchased on a when-issued or delayed delivery basis, the
Portfolio must maintain, in a segregated account until the settlement date,
cash, U.S. Government Securities or high-grade debt obligations in an amount
sufficient to meet the purchase price (or enter into offsetting contracts for
the forward sale of other securities it owns). The purchase of securities on a
when-issued or delayed delivery basis involves a risk of loss if the value of
the security to be purchased declines prior to the settlement date. Although
purchases of securities on a when-issued or delayed delivery basis are expected
to be made only with the intention of acquiring those securities for the
investment portfolio of the purchasing Portfolio, when-issued or delayed
delivery securities may be sold prior to settlement if the purchasing
Portfolio's Investment Manager deems it appropriate to do so. The market value
of when-issued securities may increase or decrease prior to settlement as a
result of changes in interest rates or other factors and short-term gains or
losses may be realized on any sales of such when-issued securities.
About Temporary Investment Practices. Although it is the intention of the Trust
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that each of the Portfolios be fully invested in accordance with its respective
investment objectives and policies at all times, to maintain liquidity pending
investment, The Value Equity, Growth Equity, Small Capitalization Equity and
Limited Duration Municipal Bond Portfolios are authorized to invest up to 20% of
their respective assets in short-term money market instruments issued, sponsored
or guaranteed by the U.S. Government, its agencies or instrumentalities or
repurchase agreements secured by such securities (collectively, "U.S. Government
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Securities"), or short-term money market instruments of other issuers, which may
include corporate commercial paper, and variable and floating rate debt
instruments, that have received, or are comparable in quality to securities that
have received, one of the two highest ratings assigned by at least one NRSRO.
The International Equity Portfolio is also permitted to invest in U.S.
Government Securities or short-term money market instruments of other issuers
denominated in U.S. dollars or other currencies to maintain liquidity pending
investment. Investments in short-term instruments denominated in foreign
currencies are subject to the same risk considerations as described above under
the heading "About Foreign Securities." All such investments will be subject to
the same quality standards as those applicable to short-term investments made on
behalf of the Trust's domestic portfolios. Under extraordinary market or
economic conditions, all or any portion of a Portfolio's assets may be invested
in short-term money market instruments for temporary defensive purposes.
Further information about those instruments that each of the Portfolios may use
for temporary investment purposes appears in the Statement of Additional
Information, under the heading "Further Information on Investment Policies."
About Illiquid Securities. A Portfolio may not purchase illiquid securities if,
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at the time of such purchase, more than 15% of the value of the Portfolio's net
assets will be invested in illiquid securities. Illiquid securities are those
that cannot be disposed of promptly within seven days and in the usual course of
business at the prices at which they are valued. Such securities include, but
are not limited to, time deposits and repurchase agreements with maturities
longer than seven days. Variable rate demand notes with demand periods in
excess of seven days, securities issued with restrictions on their disposition
("restricted issues") and municipal lease obligations, which may be unrated,
will be deemed illiquid unless a Portfolio's Investment Manager determines that
such securities are readily marketable and could be disposed of within seven
days promptly at the prices at which they are valued. In the case of municipal
lease obligations, this determination will be made by the Portfolio's Investment
Manager in accordance with guidelines established by the Trust's Board. The
liquidity of restricted issues and, in particular, the availability of an
adequate dealer or institutional trading market for those restricted issues
("Rule 144A Securities") that are not registered for sale to the general public
but can be resold to institutional investors, will be determined by each
Portfolio's Investment Manager in accordance with guidelines established by
the Trust's Board. The institutional market for Rule 144A Securities is
relatively new and liquidity of the investments in such securities could be
impaired if trading does not further develop or declines. Factors relevant to
the liquidity of a particular instrument include the frequency of trades and
availability of dealer quotes, the number of dealers and market makers active in
the issue and the nature of marketplace trades (e.g. mechanics of transfer and
solicitation of offers).
About Hedging Strategies. Each of the Portfolios may engage in certain
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strategies ("Hedging Strategies") designed to reduce certain risks that would
otherwise be associated with their respective securities investments, and/or in
anticipation of futures purchases. These strategies include the use of options
on securities and securities indices, options on stock index and interest rate
futures contracts and options on such futures contracts. The Growth Equity and
International Equity Portfolios may also use forward foreign currency contracts
in connection with the purchase and sale of those securities, denominated in
foreign currencies, in which each is permitted to invest. The International
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Equity Portfolio may use foreign currency options and foreign currency futures
to hedge against fluctuations in the relative value of the currencies in which
securities held by The International Equity Portfolio are denominated. A
Portfolio may invest in the instruments noted above (collectively, "Hedging
Instruments") only in a manner consistent with its investment objective and
policies. A Portfolio may not invest more than 10% of its total assets in option
purchases and may not commit more than 5% of its net assets to margin deposits
on futures contracts and premiums for options on futures contracts. In
addition, each Portfolio may use the Hedging Instruments only for the purpose of
reducing investment risk and not for speculative purposes. Further information
relating to the use of Hedging Instruments, and the limitations on their use,
appears in the Statement of Additional Information.
There are certain overall considerations to be aware of in connection with the
use of Hedging Instruments in any of the Portfolios. The ability to predict the
direction of the securities or currency markets and interest rates involves
skills different from those used in selecting securities. Although the use of
various Hedging Instruments is intended to enable each of the Portfolios to
hedge against certain investment risks, there can be no guarantee that this
objective will be achieved. For example, in the event that an anticipated
change in the price of the securities (or currencies) that are the subject of
the strategy does not occur, it may be that the Portfolio employing the Hedging
Strategy would have been in a better position had it not used such a strategy at
all. Moreover, even if the Investment Manager correctly predicts interest rate
or market price movements, a hedge could be unsuccessful if changes in the value
of the option or futures position do not correspond to changes in the value of
investments that the position was designed to hedge. Liquid markets do not
always exist for certain Hedging Instruments and lack of a liquid market for any
reason may prevent a Portfolio from liquidating an unfavorable position. In the
case of an option, the option could expire before it can be sold, with the
resulting loss of the premium paid by a Portfolio for the option. In the case
of a futures contract, a Portfolio would remain obligated to meet margin
requirements until the position is closed. In addition, options that are traded
over-the-counter differ from exchanged traded options in that they are two-party
contracts with price and other terms negotiated between the parties. For this
reason, the liquidity of these instruments may depend on the willingness of the
counterparty to enter into a closing transaction. In the case of currency
related instruments, such as foreign currency options, options on foreign
currency futures, and forward foreign currency contracts, it is generally not
possible to structure transactions to match the precise value of the securities
involved since the future value of the securities will change during the period
that the arrangement is outstanding. As a result, such transactions may
preclude or reduce the opportunity for gain if the value of the hedged currency
changes relative to the U.S. dollar. Like over-the-counter options, such
instruments are essentially contracts between the parties and the liquidity of
these instruments may depend on the willingness of the counterparty to enter
into a closing transaction.
About Other Permitted Instruments. Each of the Portfolios may borrow money from
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a bank for temporary emergency purposes, and may enter into reverse repurchase
agreements. A reverse repurchase agreement, which is considered a borrowing for
purposes of the Investment Company Act, involves the sale of a security by the
Trust and its agreement to repurchase the instrument at a specified time and
price. Accordingly, the Trust will maintain a segregated account consisting of
cash, U.S. Government securities or high-grade debt obligations, maturing not
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later than the expiration of the reverse repurchase agreement, to cover its
obligations under reverse repurchase agreements. To avoid potential leveraging
effects of a Portfolio's borrowings, additional investments will not be made
while aggregate borrowings, including reverse repurchase agreements, are in
excess of 5% of a Portfolio's total assets. Borrowings outstanding at any time
will be limited to no more than one-third of a Portfolio's total assets.
Each of the Portfolios may lend portfolio securities to brokers, dealers and
financial institutions provided that cash, or equivalent collateral, equal to at
least 100% of the market value (plus accrued interest) of the securities loaned
is maintained by the borrower with the lending Portfolio. During the time
securities are on loan, the borrower will pay the Portfolio any income that may
accrue on the securities. The Portfolio may invest the cash collateral and earn
additional income or may receive an agreed upon fee from the borrower who has
delivered equivalent collateral. No Portfolio will enter into any securities
lending transaction if, at the time the loan is made, the value of all loaned
securities, together with any other borrowings, equals more than one-third of
the value of that Portfolio's total assets.
MANAGEMENT OF THE TRUST
The Board of Directors. The Trust's Board is responsible for the overall
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supervision and management of the business and affairs of the Trust, including
(i) the selection and general supervision of the Investment Managers that
provide day-to-day portfolio management services to the Trust's several
Portfolios; and (ii) for Portfolios for which more than one Investment Manager
has been retained, allocation of that Portfolio's assets among such Investment
Managers. In particular, the Board may, from time to time, allocate portions of
a Portfolio's assets between or among several Investment Managers, each of whom
may have a different investment style and/or security selection discipline.
The Board also may reallocate a Portfolio's assets among such Investment
Managers or terminate particular Investment Managers, if the Board deems it
appropriate to do so in order to achieve the overall objectives of the Portfolio
involved. The Board may also retain additional Investment Managers on behalf
of a Portfolio subject to the approval of the shareholders of that Portfolio in
accordance with the Investment Company Act.
The Investment Managers. As indicated above, day-to-day investment decisions
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for each of the Portfolios are the responsibility of one or more Investment
Managers retained by the Trust. In accordance with the terms of individual
investment advisory contracts relating to the respective Portfolios, and subject
to the general supervision of the Trust's Board, each of the Investment Managers
is responsible for providing a continuous program of investment management to,
and placing all orders for, the purchase and sale of securities and other
instruments on behalf of the respective Portfolios they serve.
Brinson Partners, Inc. ("Brinson") serves as Investment Manager for The
International Equity Portfolio. For its services to the Portfolio, Brinson
receives a fee, based on the average daily net asset value of that portion of
the Portfolio's assets managed by it, at an annual rate of 0.40%. Brinson, the
principal offices of which are located at 209 South LaSalle Street, Chicago,
Illinois 60604-1295, and its predecessor entities have provided investment
management services for international equity assets since 1974. The day-to-day
management of The International Equity Portfolio is the responsibility of a team
of Brinson's investment professionals; investment decisions are made by
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committee and no person has primary responsibility for making recommendations to
the committee. Brinson had assets of approximately $57.9 billion under
management as of June 30, 1996, of which approximately $1.1 billion
represented assets of mutual funds. Brinson is a wholly-owned indirect
subsidiary of Swiss Bank Corporation, an internationally diversified
organization with operations in many aspects of the financial services industry.
Clover Capital Management, Inc. ("Clover Capital") serves an Investment Manager
for The Small Capitalization Equity Portfolio. For its services to the
Portfolio, Clover Capital receives a fee, based on the average daily net asset
value of that portion of the Portfolio's assets managed by it, at an annual rate
of 0.45%. Clover Capital, the principal offices of which are located at 11 Tobey
Village Office Park, Pittsford, New York 14534, was incorporated in 1986.
Michael E. Jones and Geoffrey H. Rosenberger are primarily responsible for
making day-to-day investment decisions for that portion of the Portfolio's
assets assigned to Clover Capital. Mr. Jones and Mr. Rosenberger are the
founders of Clover Capital and have served as Managing Directors of Clover
Capital since the firm's inception. Mr. Jones, a chartered financial analyst, is
a research analyst and portfolio manager. Mr. Rosenberger, also a chartered
financial analyst, manages Clover Capital's overall research effort. Clover
Capital had, as of September 30, 1996, assets of approximately $1.7 billion
under management, of which approximately $139 million represented
assets of mutual funds.
Hotchkis and Wiley ("Hotchkis") serves as an Investment Manager for The Value
Equity Portfolio. For its services to the Portfolio, Hotchkis receives a fee,
based on the average daily net asset value of that portion of the Portfolio's
assets managed by it, at an annual rate of 0.30%. Hotchkis, the principal
offices of which are located at 800 West Sixth Street, Los Angeles, California,
90017, and its predecessor entities have provided investment management
services for equity assests since 1980. Sheldon Lieberman will be
responsible for making day-to-day investment
decisions for that portion of The Value Equity Portfolio allocated to
Hotchkis and Wiley. Before joining Hotchkis and Wiley in 1994, Mr.
Lieberman was the Chief Investment Officer for the Los Angeles County
Employees Retirement Association. Prior to that, he was Manager of
Trust Investments at Lockheed Corporation. As of September 30, 1996, Hotchkis
and Wiley managed total assets of approximately $9.8 billion, of which
approximately $1.4 billion represent assets of mutual funds. Hotchkis,
a division of Merrill Lynch Asset Management LP, is controlled by
Merrill Lynch & Co., Inc.
Frontier Capital Management Company ("Frontier") serves as an Investment Manager
for The Small Capitalization Equity Portfolio. For its services to the
Portfolio, Frontier receives a fee based on the average daily net asset value of
that portion of the Portfolio's assets managed by it, at an annual rate of
0.45%. Frontier, the principal offices of which are located at 99 Summer
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Street, Boston, Massachusetts 02110, was established in 1980. Michael
Cavarretta is responsible for making the day-to-day investment decisions for
that portion of the Portfolio's assets assigned to Frontier. Mr. Cavarretta has
been an investment professional with Frontier since 1988. Before joining
Frontier, Mr. Cavarretta was a financial analyst with General Electric Co. and
attended Harvard Business School (M.B.A. 1988). Frontier had, as of ________,
1996, assets of approximately $___ billion under management, of which
approximately $__ million represented assets of mutual funds.
Institutional Capital Corporation ("ICAP") serves as an Investment Manager for
The Value Equity Portfolio. For its services to the Portfolio, ICAP receives a
fee, based on the average daily net asset value of that portion of the
Portfolio's assets managed by it, at an annual rate of 0.30%. ICAP, the
principal offices of which are located at 225 West Wacker, Chicago, Illinois
60606, has provided investment management services for equity assets since 1970.
Investment decisions for those assets of the Portfolio assigned to ICAP are made
by a team of ICAP investment professionals; investment decisions are made by
committee and no single individual has primary responsibility for making
recommendations to the committee. ICAP had assets of approximately $5 billion
under management as of September 30, 1996, of which approximately $ 497 million
represented assets of mutual funds.
Jennison Associates Capital Corp. ("Jennison") serves as an Investment Manager
for The Growth Equity Portfolio. For its services to the Portfolio, Jennison
receives a fee, based on the average daily net asset value of that portion of
the Portfolio's assets managed by it, at an annual rate of 0.30%. Jennison, the
principal offices of which are located at 466 Lexington Avenue, New York, New
York 10017, was established in 1969. Robert B. Corman, Senior Vice-President and
a director of Jennison, is responsible for making day-to-day investment
decisions for the portion of the Portfolio's assets assigned to Jennison. Mr.
Corman, who is a chartered financial analyst, has been an officer and investment
professional with Jennison since 1981. As of September 30, 1996, Jennison had
approximately $31.3 billion under management, of which approximately $3.5
billion represented assets of mutual funds. Jennison is a wholly-owned
subsidiary of Prudential Insurance Company of America.
Morgan Grenfell Capital Management Incorporated ("Morgan Grenfell") serves as
Investment Manager for The Limited Duration Municipal Bond Portfolio. For its
services to the Portfolio, Morgan Grenfell receives a fee, based on the average
daily net asset value of that portion of the Portfolio's assets managed by it,
at an annual rate of 0.20%. Morgan Grenfell, whose principal offices are
located at 885 Third Avenue, New York, New York 10022, has been active in
managing municipal securities since 1989. David Baldt, who is Morgan Grenfell's
Fixed Income Manager, is primarily responsible for making the day-to-day
investment decisions for the Portfolio. Mr. Baldt has managed fixed income
investments since 1973, and has been with Morgan Grenfell since 1989. As of
October 31, 1996, Morgan Grenfell had assets of approximately $8.5 billion of
which approximately $1.1 billion represented assets of mutual funds. Morgan
Grenfell is an indirect, wholly-owned subsidiary of Deutschebank, A.G., a German
financial services conglomerate.
Westfield Capital Management Company, Inc. ("Westfield") serves as an Investment
Manager for The Growth Equity Portfolio. For its services to the Portfolio,
Westfield receives a fee, based on the average daily net asset value of that
portion of the Portfolio's assets managed by it, at an annual rate of 0.30%.
Westfield, established in 1989, is owned 100% by the active members of its
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professional staff. The firm maintains its principal offices at One Financial
Center, Boston, Massachusetts, 02111. C. Michael Hazard, Arthur J. Bauernfeind
and Michael J. Chapman are responsible for making the day-to-day investment
decisions for the Portfolio. Mr. Hazard is Chairman of the Board and Chief
Executive Officer of Westfield. Prior to founding Westfield in 1989, he was
Executive Vice President of Essex Investment Management Company, Inc. in Boston
Massachusetts. Mr. Bauernfeind, President and Chief Operating Officer of
Westfield, is a chartered financial analyst and chartered investment counselor.
Before joining Westfield in 1990, he was a Managing Partner and Vice-President
of Loomis Sayles & Co. in Boston, Massachusetts. Mr. Chapman, Westfield's
Director of Research and Chief Investment Officer, has been an officer and
portfolio manager with Westfield since 1990. He joined Westfield after nine
years with Eaton Vance Corporation in Boston, Massachusetts, where he was a
Vice-President and headed the Emerging Growth Department. Mr. Chapman is also
a chartered financial analyst. Westfield had, as of September 30, 1996,
assets of approximately $1.2 million under management, of which approximately
$141 million represented assets of mutual funds.
Consulting Arrangement. Pursuant to an agreement with the Trust, ("HCCI
Consulting Agreement"), Hirtle Callaghan continuously monitors the performance
of various investment management organizations, including the Investment
Managers. The HCCI Consulting Agreement provides that Hirtle Callaghan will make
its officers available to serve as officers and/or Trustees of the Trust, and
maintain office space sufficient for the Trust's principal office. For its
services under The HCCI Consulting Agreement, Hirtle Callaghan is entitled to
receive an annual fee of .05% of each Portfolio's average net assets. Hirtle
Callaghan's principal offices are located at 575 East Swedesford Road, Wayne,
Pennsylvania 19087. Hirtle Callaghan was organized in 1988 and has no history of
operation prior to that date. However, Hirtle Callaghan has, since 1988, been
registered as an investment adviser under the Investment Advisers Act of 1940
and, as of August 31, 1996, had approximately $ 685 million of assets under
management. Hirtle Callaghan is controlled by Jonathan Hirtle and Donald E.
Callaghan, each of whom also serves on the Trust's Board and as an officer of
the Trust.
Administration, Distribution, and Related Services. BISYS Fund Services
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("BISYS")3435 Stelzer Road, Columbus, Ohio 43219 has been retained, pursuant to
a separate Administrative Services Contract with the Trust, to serve as
the Trust's administrator. Services performed by BISYS in that capacity
include, but are not limited to: (a) general supervision of the operation of the
Trust and coordination of services performed by the various service
organizations retained by the Trust; (b) regulatory compliance, including the
compilation of information for documents and reports furnished to the Securities
and Exchange Commission and corresponding state agencies; (c) assistance in
connection with the preparation and filing of the Trust's registration statement
and amendments thereto; and (d) maintenance of the Trust's registration in the
various states in which shares of the Trust are offered. For its services as the
Trust's administrator, BISYS is entitled to receive a fee, payable monthly
by the Trust, at the annual rate of 0.10% of the Trust's average daily net
assets up to $1 billion and 0.060% on such assets in excess of $1 billion.
Pursuant to separate contracts, BISYS or its affiliates also serve as the
Trust's transfer and dividend disbursing agent, as well as the Trust's
accounting agent and receives a fee for such services based on the number of
shareholder accounts maintained and the services required by each such account.
BISYS also serves as the Trust's distributor. BISYS performs similar services
for mutual funds other than the Trust. BISYS and its affiliated companies are
wholly-owned by The BISYS Group, Inc., a publicly-held company which is a
provider of information processing, loan servicing and 401(k) administration
and recordkeeping services to and through banking and other financial
organizations. Bankers Trust Company has been retained
by the Trust to serve as custodian for the assets of each of the Portfolios.
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Expenses. The Trust pays all expenses incurred in its operation, other than
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those expenses expressly assumed by Hirtle Callaghan, the Investment Managers or
other service organizations. Those Trust expenses that can be readily identified
as belonging to a particular Portfolio will be paid by that Portfolio. General
expenses of the Trust that are not so identified will be allocated among the
Portfolios based on their relative net assets at the time those expenses are
accrued. The Trust's principal expenses are the fees payable to the Investment
Managers; fees for administration, transfer agency and portfolio accounting
payable to Furman Selz; fees for domestic and international custody of the
Trust's assets payable to Bankers Trust Company; fees for independent auditing
and for legal services; fees for filing reports and registering shares with
regulatory bodies; and consulting fees payable to Hirtle Callaghan.
PURCHASES AND REDEMPTIONS
General Information About Purchases. Shareholder accounts in the Trust may be
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established only by, and shares of each of the Portfolios are available
exclusively to, Eligible Investors. Shares are sold at net asset value and
without sales charge. Payment for purchases of Trust shares may be made by
wire transfer or by check drawn on a U.S. bank. All purchases must be made in
U.S. dollars. The Trust reserves the right to reject any purchase order.
Purchase orders may be received by the Trust's Transfer Agent on any day the
Trust is open for business ("Business Day"). The Trust is open every day,
Monday through Friday, that the New York Stock Exchange is open for
trading, which excludes the following business holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The Trust reserves the right to reject any
purchase order and will not issue share certificates. Purchases of shares of the
Portfolios will be executed at the net asset value per share next computed after
receipt by the Trust of a purchase order placed on behalf of an Eligible
Investor and after the order has been accepted by the Trust. If such a purchase
order is received prior to 4 P.M. Eastern Time on any Business Day, the purchase
will be executed at the net asset value per share determined as of the close of
trading on the New York Stock Exchange on that Business Day--normally 4:00 P.M.
Eastern Time. Purchase orders received after 4 P.M. Eastern Time will be
executed at the net asset value per share as determined on the following
Business Day.
General Information About Redemptions. Shares may be redeemed on any Business
- -------------------------------------
Day. Shares will be redeemed at the net asset value next computed after receipt
of a redemption request in proper form by the Transfer Agent. The Trust
reserves the right to redeem the account of any shareholder if as a result of
redemptions, the aggregate value of shares held in a Portfolio falls below a
minimum of $5,000 after 30 days notice and provided that, during such 30 day
period, such aggregate value is not increased to at least such minimum level.
Under extraordinary conditions, as provided under the rules of the Securities
and Exchange Commission, payment for shares redeemed may be postponed, or the
right of redemption suspended.
<PAGE>
<PAGE>
Redemptions may be made in number of shares or a stated dollar amount by sending
a written request to the Trust's Transfer Agent at the address shown on the
first page of this prospectus. Redemption requests must be signed in the exact
name in which the shares are registered; redemption requests for joint accounts
require the signature of each joint owner. For redemption requests of $25,000
or more, each signature must be guaranteed by a commercial bank or trust company
which is a member of the Federal Deposit Insurance Corporation, a member firm of
a national securities exchange and certain other securities dealers and credit
unions. Guarantees must be signed by an authorized signatory of the guarantor
institution and "Signature Guaranteed" must appear with the signature.
Proceeds of redemption requests transmitted by mail will normally be paid by
check and mailed to the shareholder's address as indicated on the Trust's books.
Redemption proceeds of $2,500 or more may be transferred electronically to the
bank account number, if any, recorded on the Trust's books. Wire redemption
requests received prior to 1:00 P.M. on any Business Day will be effected on
that Business Day and wired to your bank on the following Business Day. The
Trust ordinarily will make payment for all shares redeemed within seven days
after receipt of a redemption request in proper form. Payment of redemption
proceeds for shares purchased by check may be delayed for a period of up to
fifteen days after their purchase, pending a determination that the check has
cleared.
Additional Information About Purchases and Redemptions. The Trust does not
- ------------------------------------------------------
impose investment minimums or sales charges of any kind. It is expected,
however, that shares of the Trust will be acquired through a program of services
offered by a financial intermediary, such as an investment adviser or bank, and
that shares will be held, of record, in the name of such intermediary or a
related entity. Intermediaries may impose service or advisory fees, which are
in addition to those expenses borne by the Trust and described in this
prospectus under the heading "Expense Information." Investors should contact
such intermediary for information concerning what, if any, additional fees may
be charged.
The Trust may, at its discretion, permit investors to purchase shares of a
Portfolio through an exchange of securities. Any securities exchanged must meet
the investment objectives, policies and limitations of the Portfolio involved,
must have a readily ascertainable market value, must be liquid and must not be
subject to restrictions on resale. The market value of any securities exchanged
plus any cash, must be at least $250,000. Shares acquired through any such
exchange will not be redeemed until the transfer of securities to the Trust has
settled -- usually within 15 days following the purchase by exchange. The Trust
may, at its discretion, pay any portion of the redemption amount in excess of
$250,000 by a distribution "in kind" of securities held in a Portfolio's
investment portfolio. Investors will incur brokerage charges on the sale of
these portfolio securities.
Shareholder Reports and Inquiries. Shareholders will receive semi-annual
- ---------------------------------
reports containing unaudited financial statements as well as annual reports
containing financial statements which have been audited by the Trust's
independent accountants. Each shareholder will be notified annually as to the
Federal tax status of distributions made by the Portfolios in which such
shareholder is invested. Shareholders may contact the Trust by calling the
telephone number, or by writing to the Trust at the address, shown on the first
page of this prospectus.
<PAGE>
<PAGE>
PORTFOLIO TRANSACTIONS AND VALUATION
Portfolio Transactions. Subject to the general supervision of the Board, each
- ----------------------
of the Investment Managers is responsible for placing orders for securities
transactions for the Portfolio they serve. Purchases and sales of equity
securities will normally be conducted through brokerage firms entitled to
receive commissions for effecting such transactions. In placing orders, it is
the policy of the Trust to ensure that the most favorable execution for its
transactions is obtained. Where such execution may be obtained from more than
one broker or dealer, securities transactions may be directed to those who
provide research, statistical and other information to the Trust or the
Investment Managers. Purchases and sales of debt securities are expected to
occur primarily with issuers, underwriters or major dealers acting as
principals. Such transactions are normally effected on a net basis and do not
involve payment of brokerage commissions. The Trust has no obligation to enter
into securities transactions with any particular dealer, issuer, underwriter or
other entity. In addition, the Board may, to the extent consistent with the
Investment Company Act and other applicable law, authorize Investment Managers
to direct transactions to service organizations retained by the Trust or their
affiliates; under appropriate circumstances, such transactions may be used for
the purpose of offsetting fees otherwise payable by the Trust for custody,
transfer agency or other services.
Valuation. The net asset value per share of the Portfolios is determined once
- ---------
on each Business Day as of the close of the New York Stock Exchange, which is
normally 4 P.M. Eastern Time. Each Portfolio's net asset value per share is
calculated by adding the value of all securities and other assets of the
Portfolio, subtracting its liabilities and dividing the result by the number of
its outstanding shares. Those assets that are traded on an exchange or in the
over-the-counter market are valued based upon market quotations. Short-term
obligations with maturities of 60 days or less are valued at amortized cost,
which constitutes fair value as determined by the Trust's Board. Other assets
for which market quotations are not readily available are valued at their fair
value as determined in good faith by the Trust's Directors. With the approval
of the Board, any of the Portfolios may use a pricing service, bank or broker-
dealer experienced in such matters to value the Portfolio's securities. A more
detailed discussion of net asset value and security valuation is contained in
the Statement of Additional Information.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividend and Capital Gain Distribution Options. It is anticipated that The
- ----------------------------------------------
Value Equity Portfolio, The Growth Equity Portfolio and The Small Capitalization
Equity Portfolio will declare and distribute dividends from net investment
income on a quarterly basis. The Limited Duration Municipal Bond Portfolio will
declare dividends from net investment income daily, with payments on a monthly
basis. The International Equity Portfolio will declare dividends from net
investment income semi-annually. Net realized capital gains, if any, will be
distributed at least annually for each Portfolio. Unless another distribution
option is elected, dividends and capital gain distributions will be credited to
shareholder accounts in additional shares of the Portfolio with respect to which
<PAGE>
<PAGE>
they are paid. Elections may be made by writing to the Trust c/o its Transfer
Agent. Elections must be received in writing by the Transfer Agent at least
five days prior to the payable date of the dividend in order for the election to
be effective for that dividend and on or before the record date of a
distribution in order to be effective for that distribution. In the event that
a shareholder redeems all shares in an account between the record date and the
payable date, the value of dividends or gain distributions declared and payable
will be paid in cash regardless of the existing election.
Dividends declared in October, November or December of any year payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders on December 31 of such year, provided
such dividends are paid during January of the following year. Investors should
also be careful to consider the tax implications of buying shares just prior to
a distribution. The price of shares purchased at that time may reflect the
amount of the forthcoming distribution. Those investors purchasing just prior
to a distribution may nevertheless be taxed on the entire amount of the
distribution received, although the distribution may have the effect of reducing
the market value of shares below the shareholder's cost.
The Trust will provide written notices to shareholders annually regarding the
tax status of distributions made by each Portfolio.
Federal Taxes. The following discussion is only a brief summary of some of the
- -------------
important Federal tax considerations generally affecting the Portfolios and
their shareholders and is not intended as a substitute for careful tax planning.
Dividends and distributions may also be taxable under state and local tax laws.
In addition, shareholders who are nonresident alien individuals, foreign trusts
or estates, foreign corporations or foreign partnerships may be subject to
different tax treatment under U.S. Federal income tax laws than shareholders who
are U.S. residents. Furthermore, future legislative or administrative changes
or court decisions may materially affect the tax consequences of investing in
one or more Portfolios of the Trust. Accordingly, shareholders are urged to
consult their tax advisers with specific reference to his or her particular tax
situation.
Each Portfolio intends to qualify annually to be treated as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended ("Code"). In order to do so, each Portfolio must distribute at least
90% of its taxable income annually, and must derive at least 90% of its gross
income from its investment activities, provided that not more than 30% of such
income is derived from the disposition of securities held for less than three
months. So long as a Portfolio qualifies for this tax treatment, that Portfolio
will be not be subject to Federal income tax on amounts distributed to
shareholders.
Shareholders, however, will be subject to income or capital gains taxes on
distributed amounts (except for dividends that are treated as tax-exempt
dividends such as those expected to be paid by The Limited Duration Municipal
Bond Portfolio), regardless of whether such dividends and/or distributions are
paid in cash or reinvested in additional shares. Distributions paid by a
Portfolio out of long term capital gains are taxable to those investors subject
to income tax as long-term capital gains, regardless of the length of time an
investor has owned shares in the Portfolio. All other distributions, to the
extent they are taxable, are taxed to shareholders as ordinary income. A
redemption of shares of any Portfolio may also result in a capital gain or loss
to the redeeming shareholder. A loss incurred upon redemption of shares of any
Portfolio of the Trust (other than The Limited Duration Municipal Bond
Portfolio) held for six months or less will be treated as long-term capital loss
to the extent of capital gain dividends received with respect to such shares.
<PAGE>
<PAGE>
Tax Matters Relating to The Limited Duration Municipal Bond Portfolio. As a
- ---------------------------------------------------------------------
matter of fundamental policy, The Limited Duration Municipal Bond Portfolio
intends to invest a sufficient portion of its assets in municipal bonds and
notes so that it will qualify to pay "exempt-interest dividends." Exempt-
interest dividends distributed to shareholders are excluded from a shareholder's
gross income for Federal tax purposes. Under certain circumstances, receipt of
exempt-interest dividends may be relevant to shareholders in determining their
tax liability. Dividends paid from gains realized by the Portfolio from the
disposition of a tax-exempt bond that was acquired after April 30, 1993 for a
price less than the principal amount of the bond is taxable to shareholders as
ordinary income to the extent of the accrued market discount. Exempt interest
dividends paid by The Limited Duration Municipal Bond Portfolio, although exempt
from regular income tax in the hands of a shareholder of the Portfolio, are
includable in the tax base for determining the extent to which a shareholder's
Social Security Benefits would be subject to Federal income tax. Shareholders
are required to disclose their receipt of tax-exempt interest on their Federal
income tax returns. In addition, a portion of The Limited Duration Municipal
Bond Portfolio's dividends may be derived from income on "private activity"
municipal bonds and therefore may be a preference item under Federal tax law and
subject to the Federal alternative minimum tax. A loss incurred upon the
redemption of shares of The Limited Duration Municipal Bond Portfolio held for
six months or less will be disallowed to the extent of exempt-interest dividends
paid with respect to such shares; any loss not so disallowed will be treated as
a long-term capital loss to the extent of capital gain dividends received with
respect to such shares.
Tax Matters Relating to International Investments. Foreign currency gains and
- -------------------------------------------------
losses realized by a Portfolio, including those from forward currency exchange
contracts and certain futures and options on foreign currencies, will increase
or decrease the Portfolio's investment company taxable income available to be
distributed to shareholders as ordinary income. If foreign currency losses
exceed other investment company taxable income during a taxable year, the
Portfolio would not be able to make any ordinary dividend distributions, and any
distributions made before the losses were realized but in the same taxable year
would be recharacterized as a return of capital to shareholders, thereby
reducing each shareholder's basis in shares of that Portfolio. A Portfolio may
be subject to foreign withholding taxes on income from certain foreign
securities, if any, held. If more than 50% of the total assets of this
Portfolio is invested in securities of foreign corporations, the Portfolio may
elect to pass-through to its shareholders their pro rata share of foreign taxes
paid by such Portfolio. If this election is made, shareholders will be (i)
required to include in their gross income their pro rata share of foreign source
income (including any foreign taxes paid by the Portfolio), and (ii) entitled
to either deduct (as an itemized deduction in the case of individuals) their
share of such foreign taxes in computing their taxable income or to claim a
credit for such taxes against their U.S. income tax, subject to certain
limitations under the Code.
<PAGE>
<PAGE>
Back-up Withholding; Dividends-Received Deduction. The Trust is required to
- --------------------------------------------------
withhold 31% of taxable dividends, capital gains distributions, and redemptions
paid to shareholders who have not provided the Trust with their certified
taxpayer identification number in compliance with regulations adopted by the
Internal Revenue Service. Dividends paid from net investment income by The
Value Equity, Growth Equity and Small Capitalization Equity Portfolios will
generally qualify in part for the corporate dividends-received deduction
available to corporate investors. The portion of the dividends so qualified,
however, depends on the aggregate qualifying dividend income received by each
such Portfolio from domestic (U.S.) sources.
Further information about tax matters relating to the Trust, including its
foreign investments, appears in the Statement of Additional Information under
the heading "Dividends, Distributions and Taxes."
PERFORMANCE INFORMATION
Yield and Effective Yield. From time to time, each of the Portfolios may quote
- -------------------------
its "yield" and/or its "total return" in sales literature and in presentations
to prospective investors. These figures are based on historical earnings and
are not intended to indicate future performance. To arrive at a Portfolio's
"yield," the net investment income generated by an investment in the Portfolio
during a 30 day (or one month) period, is determined and the resulting figure is
annualized, (i.e. assumed to be the amount of income generated each week over a
52-week period) and expressed as a percentage of the initial investment. The
"effective yield" of a Portfolio is calculated in a similar manner but, when
annualized, the income earned by an investment in the Portfolio is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment. The yield of
any investment is generally a function of prevailing interest rates, portfolio
quality and maturity, type of investment and operating expenses. The yield on
shares of the Portfolio will fluctuate and is not necessarily representative of
future results. The Limited Duration Municipal Bond Portfolio may also quote
its tax-equivalent yield; this figure is calculated by determining the pre-tax
yield which, after being taxed at a stated rate, would be equivalent to the
yield determined as described above.
Average Annual Total Return. This figure shows the average percentage change in
- ---------------------------
value of a particular investment from the beginning date of the measuring period
to the end of the measuring period. The calculations required to determine
average total return will reflect changes in net asset value per share and
assume that any income dividends and/or capital gains distributions made during
the period were reinvested. Figures will be given for recent one, five and ten
year periods (if applicable), and may be given for other periods as well (such
as from commencement of operations, or on a year-by-year basis). In addition,
each Portfolio may present its total return over different periods by means of
aggregate, average, year-by-year or other types of total return figures, or
compare the yield or total return of a Portfolio to those of other mutual funds
with similar investment objectives and to other relevant indices. For example,
the performance of any of the Portfolios may be compared to the data prepared by
Lipper Analytical Services, Inc., a widely-recognized independent service that
monitors the performance of mutual funds. The Portfolios may also compare their
individual performance records to those of relevant indices, such as the
Standard & Poor's 500 Stock Index, the Russell 5000 Small Cap Stock Index, and
the Morgan Stanley Capital International Europe, Australia, Far East Index
("EAFE").
<PAGE>
<PAGE> GENERAL
The Trust was organized as a Delaware business trust on December 15, 1994, and
is registered with the Securities and Exchange Commission as an open-end
diversified, series, management investment company. The Trust currently offers
shares of five investment portfolios, each with a different objective and
differing investment policies. The Trust may organize additional investment
portfolios in the future. The Trust is authorized to issue an unlimited number
of shares, each with a par value of $.001. Under the Trust's Amended and
Restated Declaration of Trust, the Board has the power to classify or reclassify
any unissued shares from time to time, and to increase the number of authorized
shares. Each share of the respective Portfolios represents an equal
proportionate interest in that Portfolio. Each share is entitled to one vote for
the election of Trustees and any other matter submitted to a shareholder vote.
Voting rights are not cumulative and, accordingly, the holders of more than 50%
of the aggregate shares of the Trust may elect all of the Trustees. Shares of
the Trust do not have preemptive or conversion rights and, when issued for
payment as described in this prospectus, shares of the Trust will be fully paid
and non-assessable.
As a Delaware business trust, the Trust is not required, and currently does not
intend, to hold annual meetings of shareholders except as required by the
Investment Company Act or other applicable law. The Investment Company Act
requires initial shareholder approval of each of the investment advisory
agreements, election of Trustees and, if the Trust holds an annual meeting,
ratification of the Board's selection of the Trust's independent public
accountants. Under certain circumstances, the law provides shareholders with
the right to call for a meeting of shareholders to consider the removal of one
or more Trustees. To the extent required by law, the Trust will assist in
shareholder communication in such matters.
<PAGE>
<PAGE>
THE HIRTLE CALLAGHAN TRUST
TABLE OF CONTENTS
INFORMATION ABOUT:
Expense Information
Financial Highlights
Investment Objectives and Policies
The Value Equity Portfolio
The Growth Equity Portfolio
The Small Capitalization Equity Portfolio
The International Equity Portfolio
The Limited Duration Municipal
Bond Portfolio
Investment Practices and Risk Considerations
About Equity Securities
About Debt Securities and Ratings
Organizations
About Foreign Securities
About Tax-Exempt Securities
About Temporary Investment Practices
About Illiquid Securities
About Hedging Strategies
About Other Permitted Instruments
Management of the Trust
Purchases and Redemptions
Portfolio Transactions and Valuation
Dividends, Distributions and Taxes
Performance Information
General
No person has been authorized to give any information or to make representations
not contained in this prospectus in connection with any offering made by this
prospectus and, if given or made, such information must not be relied upon as
having been authorized by the Trust or its distributor. This prospectus does
not constitute an offering by the Trust or by its distributor in any
jurisdiction in which such offering may not lawfully be made.
<PAGE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
The Hirtle Callaghan Trust
575 E. Swedesford Road
Wayne, PA 19087
This statement of additional information is designed to supplement information
contained in the prospectus relating to The Hirtle Callaghan Trust ("Trust"), an
open-end, diversified, series, management investment company registered under
the Investment Company Act of 1940 ("Investment Company Act"). This document,
although not a prospectus, is incorporated by reference in its entirety in the
Trust's prospectus and should be read in conjunction with the Trust's prospectus
dated January , 1997. A copy of that prospectus is available by contacting
the Trust at 610-254-9596.
<TABLE>
<CAPTION>
Statement of Additional Information Heading Corresponding Prospectus Heading
- ------------------------------------------- --------------------------------
Item Page
<S> <C> <C>
Management of the Trust Management of the Trust; General;
Expense Information
Further Information About the Trust's Investment Investment Objectives and Policies
Policies Investment Practices and Risk
Considerations
Hedging through the Use of Options Investment Practices and Risk
Considerations: About Hedging
Strategies
Hedging through the Use of Investment Practices and Risk
Futures Contracts and Related Instruments Considerations: About Hedging
Strategies
Hedging through the Use of Investment Practices and Risk
Currency-Related Instruments Considerations: About Hedging
Strategies
Investment Restrictions Investment Objectives and Policies
Investment Practices and Risk
Considerations
Additional Purchases and Redemption Information Purchases and Redemptions
Portfolio Transactions and Valuation Portfolio Transactions and Valuation
Dividends, Distributions and Taxes Dividends, Distributions and Taxes
Performance Information Performance Information
Financial Statements and Independent Accountants
Ratings Appendix
</TABLE>
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 under the Securities Act of 1933. Copies of the
registration statement may be obtained at a reasonable charge from the
Securities and Exchange Commission or may be examined, without charge, at its
offices in Washington, D.C.
The date of this Statement of Additional Information is January , 1997.
<PAGE>
<PAGE>
MANAGEMENT OF THE TRUST
Trustees and Officers. The Trust's Board of Trustees ("Board") is responsible
- ---------------------
for the overall supervision and management of the business and affairs of the
Trust, including (i) the selection and general supervision of those investment
advisory organizations ("Investment Managers") retained by the Trust to provide
portfolio management services to each of its separate investment portfolios
(each a "Portfolio"); and (ii) for Portfolios for which more than one Investment
Manager has been retained, allocation of that Portfolio's assets among such
Investment Managers. In particular, the Board may, from time to time, allocate
portions of a Portfolio's assets between or among several Investment Managers,
each of whom may have a different investment style and/or investment selection
discipline. The Board also may reallocate a Portfolio's assets among such
Investment Managers, or terminate particular Investment Managers, if the Board
deems it appropriate to do so in order to achieve the overall objectives of the
Portfolio involved. In addition, the Board may retain additional Investment
Managers on behalf of a Portfolio subject to the approval of the shareholders of
that Portfolio in accordance with the Investment Company Act. Day-to-day
operations of the Trust are the responsibility of the Trust's officers, who are
elected by, and serve at the pleasure of, the Board. The name and principal
occupation for the past five years of each of the Trust's current officers and
directors are set forth below; unless otherwise indicated, the business address
of each is 575 East Swedesford Road Wayne, PA 19087.
<TABLE>
<CAPTION>
Name, Business Address and Age Position with the Trust Principal Occupation for
the Last Five Years
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
*Donald E. Callaghan 50 Chairman of the Board of For more than the past five years,
Trustees and President Principal, Hirtle Callaghan & Co., Inc.
Ross H. Goodman 48 Trustee For more than the past five years,
Mr. Goodman has been Vice
President of American Industrial
Management & Sales, Inc.
*Jonathan J. Hirtle 43 Trustee For more than the past five years,
Principal, Hirtle Callaghan & Co., Inc.
Jarrett Burt Kling 52 Trustee For more than the past five years,
Mr. Kling has been associated with CRA
Real Estate Securities, L.P. and its
affiliate, Radnor Advisers, Inc. a
Mr. Kling is general partner of TDH II
and a special limited partner of TDH III
(venture capital limited partnerships) since 1983.
*David M. Spungen 34 Trustee For more than the past five years,
1926 Arch Street Mr. Spungen has been associated
Philadelphia, PA 19103-1484 with The CMS Companies (financial services). Mr.
Spungen currently serves as Director of CMS
Capital Management, (a division of CMS
Investment Resources, Inc.)
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Richard W. Wortham, III 57 Trustee For more than the past five years,
President, Video Rental of
Pennsylvania, Inc. and its parent,
Houston VMC, Inc. Mr.
Wortham is also a trustee of the
Wortham Foundation and
the Museum of Fine Arts, Houston.
Robert Zion 42 Vice President and Treasurer Mr. Zion is a Principal of Hirtle
Callaghan, and has been
employed by that firm
for more than the last
five years.
Laura Anne Corsell, Esq. 47 Secretary Ms. Corsell is an attorney in
237 Park Avenue private practice. From 1989
New York, N.Y. 10017 through 1994, Ms. Corsell was
associated with the law firm of
Ballard Spahr Andrews and
Ingersoll, as counsel.
John J. Pileggi 36 Assistant Vice President For more than the past five years,
230 Park Avenue Senior Managing Director of
New York, N.Y. 10169 Furman Selz LLC.
Donald E. Brostrom 37 Assistant Vice President and Since 1995, Managing Director
230 Park Avenue Assistant Treasurer Furman Selz LLC, 1995; ,
New York, N.Y. 10169 from 1989 to 1995Director--Mutual
Funds Division, Furman Selz LLC.
Theresa Donovan 46 Assistant Secretary Manager, Corporate Secretary,
125 West 55th Street BISYS Fund Servies, Inc. Prior to that,
New York, N.Y. 10019 Director, Corporate Secretary Services
Furman Selz LLC; from 1990 to 1995,
Assistant Directors, Corporate Secretary
Services, of Furman Selz LLC.
Alfred Miller 34 Assistant Treasurer Fund Accounting Manager, BISYS Fund
125 West 55th Street Services. Prior to that, Associate
New York, N.Y. 10019 Director of Fund Accounting, Furman Selz,
LLC. From 1993 to 1996, Supervisor,
Fund Accounting Services Furman Selz LLC.
From 1990 to 1993, Supervisor in fund
of National Securities, Inc.
Alaina Metz 28 Assistant Secretary Since 1995, Chief Administrative Officer
3435 Stelzer Road BISYS Fund Services. From 1989 to 1995,
Columbus, Ohio 43219 Superviser of Blue Sky Department at
Alliance Capital Management.
</TABLE>
*Indicates a Trustee who is an "interested person" of the Trust within the
meaning of the Investment Company Act.
<PAGE>
<PAGE>
Each of those members of the Board who are not "interested persons" of the Trust
within the meaning of the Investment Company Act ("Independent Trustees")
receive from the Trust a fee of $1,000.00 per meeting of the Board
attended and are reimbursed for expenses incurred in connection with each
such meeting. Those members of the Board who are "interested persons" of the
Trust and the Trust's officers receive no compensation from the Trust for
performing the duties of their respective offices. The table below, which is
required to be included in this Statement of Additional by the Securities and
Exchange Commission, shows the aggregate compensation received from the Trust
by each of the Independent Trustees during the fiscal year ending June 30, 1996
(excluding reimbursed expenses).
<TABLE>
<S> <C> <C> <C> <C>
Pension/ Estimated
Aggregate Retirement Benefits Upon
Name and Compensation Benefits Retirement From Total Compensation
Position From Trust From Trust From Trust From Trust
- ---------------------- ------------ ---------- --------------- ------------------
Ross H. Goodman $4000.00 $0.0 $0.0 $4000.00
Jarrett Burt Kling 3000.00 0.0 0.0 3000.00
Richard W. Wortham, III 3000.00 0.0 0.0 3000.00
</TABLE>
As permitted under the Trust's Amended and Restated Declaration and
Agreement of Trust and by-laws, the Board has established an executive committee
and has appointed Messrs. Callaghan, Hirtle and Spungen to serve on that
committee. Under the Trust's by-laws, the executive committee is authorized to
act for the full Board in all matters for which the affirmative vote of a
majority of the Board of the Trust's Independent Trustees is not required
under the Investment Company Act or other applicable law. All of the officers
and trustees of the Trust own in the aggregate, less than one percent of the
outstanding shares of The Value Equity, Growth Equity, Small Capitalization
Equity, Limited Duration Municipal Bond and International Equity Portfolios,
respectively. During the fiscal year ended June 30, 1996, Ms. Corsell received
fees for legal services rendered to the Trust of approximately $42,000.
Investment Advisory Arrangements. As described in the prospectus, Hirtle,
- ---------------------------------
Callaghan & Co., Inc. ("Hirtle Callaghan") has entered into a written consulting
agreement with the Trust ("HCCI Consulting Agreement"). The HCCI Consulting
Agreement was approved by the Trust's initial shareholder on July 21, 1995,
following the approval of the Trust's Board (including a majority of the Trust's
Independent Trustees) at a meeting of the Board held on July 20, 1995. The HCCI
Consulting Agreement will remain in effect until its second anniversary, unless
sooner terminated and will continue from year to year so long as such
continuation is approved, at a meeting called for the purpose of voting on such
continuance, at least annually (i) by vote of a majority of the Trust's Board or
the vote of the holders of a majority of the outstanding securities of the
Trust; and (ii) by a majority of the Independent Trustees, by vote cast in
person. The HCCI Consulting Agreement may be terminated at any time, without
penalty, either by the Trust or by Hirtle Callaghan, upon sixty days' written
notice and will automatically terminate in the event of its assignment as
defined in the Investment Company Act. The HCCI Consulting Agreement permits
<PAGE>
<PAGE>
the Trust to use the name "Hirtle Callaghan." In the event, however, the HCCI
Consulting Agreement is terminated, Hirtle Callaghan has the right to require
the Trust to discontinue any references to the name "Hirtle Callaghan" and to
change the name of the Trust as soon as is reasonably practicable. The HCCI
Consulting Agreement further provides that HCCI will not be liable to the Trust
for any error, mistake of judgment or of law, or loss suffered by the Trust in
connection with the matters to which the HCCI Consulting Agreement relates
(including any action of any Hirtle Callaghan officer or employee in connection
with the service of any such officer or employee as an officer of the Trust),
whether or not any such action was taken in reliance upon information provided
to the Trust by Hirtle Callaghan, except losses that may be sustained
as a result of willful misfeasance, reckless disregard of its duties, bad faith
or gross negligence on the part of Hirtle Callaghan.
The Trust has also entered into investment advisory contracts ("Portfolio
Management Contracts") on behalf of each of the Portfolios with one or more of
the Investment Managers. Other than the agreement between the Trust and
Hotchkis and Wiley ("Hotchkis") relating to The Value Equity Portfolio, each
of the Portfolio Management Contracts was approved by the Trust's initial
shareholder on July 21, 1995, following that approval of the Trust's Board
(including the Independent Trustees) at a meeting of the Board held on July 20,
1995. Each such contract will remain in effect until its second anniversary,
and will continue in effect thereafter from year to year so long as such
continuation is approved, at a meeting called for the purpose of voting on such
continuance, at least annually (i) by vote of a majority of the Trust's Board or
the vote of the holders of a majority of the outstanding securities of the
Trust; and (ii) by a majority of the Independent Trustees, by vote cast in
person. Each of the Portfolio Management Contracts may be terminated at any
time, without penalty, either by the Trust or by the respective Investment
Managers named in the contract, in each case upon sixty days' written notice,
and each will automatically terminate in the event of its assignment, as that
term is defined in the Investment Company Act.
Each of the Portfolio Management Contracts provides that the named Investment
Manager will, subject to the overall supervision of the Board, provide a
continuous investment program for the assets of the Portfolio to which such
contract relates, or that portion of such assets as may be, from time to time
allocated to such Investment Manager. The Portfolio Managers are responsible,
among other things, for the provision of investment research and management of
all investments and other instruments and the selection of brokers and dealers
through which securities transactions are executed. Each of the Portfolio
Management Contracts provides that the named Investment Manager will not be
liable to the Trust for any error of judgment or mistake of law on the part of
the Investment Manager, or for any loss sustained by the Trust in connection
with the purchase or sale of any instrument on behalf of the named Portfolio,
except losses that may be sustained as a result of willful misfeasance,
reckless disregard of its duties, misfeasance, bad faith or gross negligence on
the part of the named Investment Manager.
<PAGE>
<PAGE>
Hotchkis serves as an Investment Manager for The Value Equity Portfolio
pursuant to a contract ("Hotchkis Agreement") that was approved by the Board
(including the Independent Trustees) on July 19, 1996, and by the shareholders
of The Value Equity Portfolio on October 23, 1996. The Hotchkis contract
first became effective on November 12, 1996. The terms and conditions set
forth in the Hotchkis Agreement are identical to those contained in the
Portfolio Management Contracts except for the description of the portfolio
manager, the effective and termination dates, and the modification of certain
notice provisions relating to the obligation of Hotchkis to indemnify the
Trust under certain circumstances. Specifically, Section 5 of the Hotchkis
Agreement provides that the indemnification obligation of the portfolio manager
with respect to information provided to the Trust by Hotchkis L.P. in writing
for use in the Trust's registration statement and certain other documents shall
not apply unless the portfolio manager has had an opportunity to review such
documents for a specified period of time prior to the date on which they are
filed with the Securities and Exchange Commission and unless the portfolio
manager is notified in writing of any claim for indemnification within
specified periods. From July 29, 1996, until November 12, 1996, Hotchkis'
predecessor limited partnership served as a portfolio manager of The Value
Equity Portfolio pursuant to an agreement ("15a-4 Agreement") approved by the
Board at a meeting held on July 19, 1996. The 15a-4 Agreement became effective
on July 29, 1996, the date on which a similar contract("Prior Agreement") with
a former portfolio manager for the Portfolio was terminated, and was approved
by the shareholders of The Value Equity Portfolio on October 23, 1996, in the
manner contemplated under rule 15a-4 of the Investment Company Act. The 15a-4
Agreement is identical to the Hotchkis Agreement except for the name of the
advisory organization and the terms relating to effective dates. The Hotchkis
Agreement is identical to the Prior Agreement except for the name of the
advisory organization, effective dates and the modification of notice
provisions relating to the Trust's right of indemnification, as noted above.
The Hotchkis Agreement will remain in effect for two years from its effective
date, unless sooner terminated, and thereafter from year to year for so long as
its continuance is specifically approved, at least annually, by (i) a majority
of the Board or the vote of the holders of a majority of the Portfolio's
outstanding voting securities; and (ii) the affirmative vote, cast in person at
a meeting called for the purpose of voting on such continuance, of a majority
of the Trust's Independent Trustees. Prior to November 12, 1996, Hotchkis was
an independent California limited partnership. On November 11, 1996, all of
the interests in that partnership were acquired by Merrill Lynch & Co., ("ML")
and the limited partnership became a division of Merrill Lynch Asset Management
LP., a company controlled ML. In accordance with the Investment Company Act,
the consummation of that acquisition terminated the 15a-4 Agreement; at the
same time, and in accordance with the terms of the 15a-4 Agreement and the
Hotchkis Agreement, the Hotchkis Agreement became effective. ML is a public
company whose shares are traded on the New York Stock Exchange.
<PAGE>
<PAGE>
During the fiscal year ended June 30, 1996, Hirtle Callaghan received advisory
fees from each of the Portfolios, calculated at an annual rate of .05%, as
follows: The Value Equity Portfolio, $24,343; The Growth Equity Portfolio,
$34,071; The Small Capitalization Portfolio, $16,940; The International Equity,
Portfolio, $24,436; and The Limited Duration Municipal Bond Portfolio, $7,628.
The following table sets forth the investment advisory fee
received from the specified Portfolio by each of its respective Investment
Managers during the fiscal year ended June 30, 1996:
<TABLE>
<CAPTION>
Investment Manager Portfolio Advisory Fee Rate 1 Actual Fee Paid
- ----------------- --------- ----------------- ---------------
<S> <C> <C> <C>
Institutional Value Equity .30% of average $94,103
Capital Corporation net assets
Cowen Asset Value Equity .30% of average 51,954
Management 2 net assets
Jennison Associates Growth Equity .30% of average 102,397
Capital Corp. net assets
Westfield Capital Growth Equity .30% of average 102,030
Management Co. net assets
Clover Capital Small Cap .45% of average 86,448
Management, Inc. net assets
Frontier Capital Small Cap .45% of average 66,017
Management Co. net assets
Brinson Partners International .40% of average 95,488
net assets
Morgan Grenfell Limited .20% of average 30,513
Capital Management Duration net assets
Incorporated
- -------------------
1 Rate shown applies to that portion of the specified portfolio's assets
allocated to the specified Investment Manager.
2 Effective July 29, 1996, Hotchkis and Wiley replaced Cowen Asset Management.
</TABLE>
Other Matters. As noted in the prospectus, BISYS Fund
Services LP ("BISYS") serves as the Trust's principal underwriter
pursuant to an agreement approved by the Board on July 19, 1996.
BISYS does not receive any underwriting fees or other compensaton
for servicing as the distributor of the Trust's shares. Certain affiliates
of BISYS provides administrative, transfer agency and accounting services
for the Trust and receive fees for such services.
FURTHER INFORMATION ABOUT THE TRUST'S INVESTMENT POLICIES
The following discussion supplements the discussion of the investment policies
of each of the Portfolios as set forth in the prospectus and the types of
securities and other instruments in which the respective Portfolios may invest.
Repurchase Agreements. As noted in the prospectus, among the instruments that
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each of the Portfolios may use for temporary investment purposes are repurchase
agreements. Under the terms of a typical repurchase agreement, a Portfolio
would acquire an underlying debt security for a relatively short period (usually
not more than one week), subject to an obligation of the seller to repurchase
that security and the obligation of the Portfolio to resell that security at an
agreed-upon price and time. Repurchase agreements could involve certain risks
<PAGE>
<PAGE>
in the event of default or insolvency of the other party, including possible
delays or restrictions upon the Portfolio's ability to dispose of the underlying
securities. The Investment Manager for each Portfolio, in accordance with
guidelines adopted by the Board, monitors the creditworthiness of those banks
and non-bank dealers with which the respective Portfolios may enter into
repurchase agreements. The Trust also monitors the market value of the
securities underlying any repurchase agreement to ensure that the repurchase
obligation of the seller is adequately collateralized.
Repurchase agreements may be entered into with primary dealers in U.S.
Government Securities who meet credit guidelines established by the Board (each
a "repo counterparty"). Under each repurchase agreement, the repo counterparty
will be required to maintain, in an account with the Trust's custodian bank,
securities that equal or exceed the repurchase price of the securities subject
to the repurchase agreement. A Portfolio will generally enter into repurchase
agreements with short durations, from overnight to one week, although securities
subject to repurchase agreements generally have longer maturities. A Portfolio
may not enter into a repurchase agreement with more than seven days to maturity
if, as a result, more than 15% of the value of its net assets would be invested
in illiquid securities including such repurchase agreements.
For purposes of the Investment Company Act, a repurchase agreement may be deemed
a loan to the repo counterparty. It is not clear whether, in the context of a
bankruptcy proceeding involving a repo counterparty, a court would consider a
security acquired by a Portfolio subject to a repurchase agreement as being
owned by that Portfolio or as being collateral for such a "loan." If a court
were to characterize the transaction as a loan, and a Portfolio has not
perfected a security interest in the security acquired, that Portfolio could be
required to turn the security acquired over to the bankruptcy trustee and be
treated as an unsecured creditor of repo counterparty. As an unsecured creditor,
the Portfolio would be at the risk of losing some or all of the principal and
income involved in the transaction. In the event of any such bankruptcy or
insolvency proceeding involving a repo counterparty with whom a Portfolio has
outstanding repurchase agreements a Portfolio may encounter delays and incur
costs before being able to sell securities acquired subject to such repurchase
agreements. Any such delays may involve loss of interest or a decline in price
of the security so acquired.
Apart from the risk of bankruptcy or insolvency proceedings, there is also the
risk that the repo counterparty may fail to repurchase the security. However,
a Portfolio will always receive as collateral for any repurchase agreement to
which it is a party securities acceptable to it, the market value of which is
equal to at least 100% of the repurchase price, and the Portfolio will make
payment against such securities only upon physical delivery or evidence of book
entry transfer of such collateral to the account of its custodian bank. If the
market value of the security subject to the repurchase agreement falls below the
repurchase price the Trust will direct the repo counterparty to deliver to the
Trust's custodian additional securities so that the market value of all
securities subject to the repurchase agreement will equal or exceed the
repurchase price.
Variable and Floating Rate Instruments. As noted in the prospectus, among the
- --------------------------------------
instruments that each of the Portfolios may use for temporary investment
purposes are variable rate demand notes (including floating rate instruments)
from banks and other issuers. A "variable rate instrument" is one whose terms
provide for the adjustment of its interest rate on set dates and which, upon
such adjustment, can reasonably be expected to have a market value that
approximates its par value. A "floating rate instrument" is one whose terms
provide for the adjustment of its interest rate whenever a specified interest
rate changes and which, at any time, can reasonably be expected to have a
market
<PAGE>
<PAGE>
value that approximates its par value. The Portfolios will be able (at any time
or during specified periods generally not exceeding one year, depending upon the
instrument involved) to demand payment of the principal of a note. The notes are
not typically rated by credit rating agencies. If an issuer of a variable rate
demand note defaulted on its payment obligation, a Portfolio might be unable to
dispose of the note and a loss would be incurred to the extent of the default.
The continuing creditworthiness of issuers of variable rate instruments, if any,
held by a Portfolio will be monitored by its Investment Managers to determine
whether such notes should continue to be held.
When-Issued Securities. As noted in the prospectus, Tax-Exempt Securities may
- -----------------------
be purchased on a "when-issued" basis. The price of securities purchased on a
when-issued basis, which may be expressed in yield terms, is fixed at the time
the commitment to purchase is made, but delivery and payment for the when-
issued securities takes place at a later date. Normally, the settlement date
occurs within one month of the purchase. During the period between purchase and
settlement, no payment is made by the purchaser to the issuer and no interest
accrues to the purchaser. Thus, to the extent that assets are held in cash
pending the settlement of a purchase of securities, the purchaser would earn no
income. At the time a commitment to purchase a security on a when-issued basis
is made, the transaction is recorded and the value of the security will be
reflected in determining net asset value. The market value of the when-issued
securities may be more or less than the purchase price. The Trust does not
believe that net asset value or income will be adversely affected by the
purchase of securities on a when-issued basis.
HEDGING THROUGH THE USE OF OPTIONS.
As indicated in the prospectus, each of the Portfolios may, consistent with its
investment objectives and policies, use options on securities and securities
indexes to reduce the risks associated with the types of securities in which
each is authorized to invest and/or in anticipation of future purchases. A
Portfolio may use options only in a manner consistent with its investment
objective and policies and may not invest more than 10% of its total assets in
option purchases. Options may be used only for the purpose of reducing
investment risk and not for speculative purposes. The following discussion sets
forth certain information relating to the types of options that the Portfolios
may use, together with the risks that may be associated with their use.
About Options on Securities. A call option is a short-term contract pursuant to
- ---------------------------
which the purchaser of the option, in return for a premium, has the right to buy
the security underlying the option at a specified price at any time during the
term of the option. The writer of the call option, who receives the premium,
has the obligation, upon exercise of the option during the option period, to
deliver the underlying security against payment of the exercise price. A put
option is a similar contract that gives its purchaser, in return for a premium,
the right to sell the underlying security at a specified price during the term
of the option. The writer of the put option, who receives the premium, has the
obligation, upon exercise of the option during the option period, to buy the
underlying security at the exercise price.
<PAGE>
<PAGE>
Options may be based on a security, a securities index or a currency. Options on
securities are generally settled by delivery of the underlying security whereas
options on a securities index or currency are settled in cash. Options may be
traded on an exchange or in the over-the-counter markets.
Option Purchases. Call options on securities may be purchased in order to fix
- -----------------
the cost of a future purchase. In addition, call options may be used as a means
of participating in an anticipated advance of a security on a more limited risk
basis than would be possible if the security itself were purchased. In the
event of a decline in the price of the underlying security, use of this strategy
would serve to limit the amount of loss, if any, to the amount of the option
premium paid. Conversely, if the market price of the underlying security rises
and the call is exercised or sold at a profit, that profit will be reduced by
the amount initially paid for the call.
Put options may be purchased in order to hedge against a decline in market value
of a security held by the purchasing portfolio. The put effectively guarantees
that the underlying security can be sold at the predetermined exercise price,
even if that price is greater than the market value at the time of exercise. If
the market price of the underlying security increases, the profit realized on
the eventual sale of the security will be reduced by the premium paid for the
put option. Put options may also be purchased on a security that is not held by
the purchasing portfolio in anticipation of a price decline in the underlying
security. In the event the market value of such security declines below the
designated exercise price of the put, the purchasing portfolio would then be
able to acquire the underlying security at the market price and exercise its put
option, thus realizing a profit. In order for this strategy to be successful,
however, the market price of the underlying security must decline so that the
difference between the exercise price and the market price is greater than the
option premium paid.
Option Writing. Call options may be written (sold) by the Portfolios.
- ---------------
Generally, calls will be written only when, in the opinion of a Portfolio's
Investment Manager, the call premium received, plus anticipated appreciation in
the market price of the underlying security up to the exercise price of the
call, will be greater than the appreciation in the price of the underlying
security.
Put options may also be written. This strategy will generally be used when it
is anticipated that the market value of the underlying security will remain
higher than the exercise price of the put option or when a temporary decrease in
the market value of the underlying security is anticipated and, in the view of a
Portfolio's Investment Manager, it would not be appropriate to acquire the
underlying security. If the market price of the underlying security rises or
stays above the exercise price, it can be expected that the purchaser of the put
will not exercise the option and a profit, in the amount of the premium received
for the put, will be realized by the writer of the put. However, if the market
price of the underlying security declines or stays below the exercise price, the
put option may be exercised and the portfolio that sold the put will be
obligated to purchase the underlying security at a price that may be higher than
its current market value.
<PAGE>
<PAGE>
All option writing strategies will be employed only if the option is "covered."
For this purpose, "covered" means that, so long as the Portfolio that has
written (sold) the option is obligated as the writer of a call option, it will
(1) own the security underlying the option; or (2) hold on a share-for-share
basis a call on the same security, the exercise price of which is equal to or
less than the exercise price of the call written. In the case of a put option,
the Portfolio that has written (sold) the put option will (1) maintain cash or
cash equivalents in an amount equal to or greater than the exercise price; or
(2) hold on a share-for share basis, a put on the same security as the put
written provided that the exercise price of the put held is equal to or greater
than the exercise price of the put written.
Options on Securities Indices. Options on securities indices may by used in
- ------------------------------
much the same manner as options on securities. Index options may serve as a
hedge against overall fluctuations in the securities markets or market sectors,
rather than anticipated increases or decreases in the value of a particular
security. Thus, the effectiveness of techniques using stock index options will
depend on the extent to which price movements in the securities index selected
correlate with price movements of the portfolio to be hedged. Options on stock
indices are settled exclusively in cash.
Risk Factors Relating to the Use of Options Strategies. The premium paid or
- -------------------------------------------------------
received with respect to an option position will reflect, among other things,
the current market price of the underlying security, the relationship of the
exercise price to the market price, the historical price volatility of the
underlying security, the option period, supply and demand, and interest rates.
Moreover, the successful use of options as a hedging strategy depends upon the
ability to forecast the direction of market fluctuations in the underlying
securities, or in the case of index options, in the market sector represented by
the index selected.
Under normal circumstances, options traded on one or more of the several
recognized options exchanges may be closed by effecting a "closing purchase
transaction," i.e. by purchasing an identical option with respect to the
underlying security in the case of options written and by selling an identical
option on the underlying security in the case of options purchased. A closing
purchase transaction will effectively cancel an option position, thus permitting
profits to be realized on the position, to prevent an underlying security from
being called from, or put to, the writer of the option or, in the case of a call
option, to permit the sale of the underlying security. A profit or loss may be
realized from a closing purchase transaction, depending on whether the overall
cost of the closing transaction (including the price of the option and actual
transaction costs) is less or more than the premium received from the writing of
the option. It should be noted that, in the event a loss is incurred in a
closing purchase transaction, that loss may be partially or entirely offset by
the premium received from a simultaneous or subsequent sale of a different call
or put option. Also, because increases in the market price of an option will
generally reflect increases in the market price of the underlying security, any
loss resulting from a closing purchase transaction is likely to be offset in
whole or in part by appreciation of the underlying security held.
<PAGE>
<PAGE>
Options will normally have expiration dates between three and nine months from
the date written. The exercise price of the options may be below, equal to, or
above the current market values of the underlying securities at the time the
options are written. Options that expire unexercised have no value. Unless an
option purchased by a Portfolio is exercised or a closing purchase transaction
is effected with respect to that position, a loss will be realized in the amount
of the premium paid.
HEDGING THROUGH THE USE OF FUTURES CONTRACTS AND RELATED INSTRUMENTS.
As indicated in the prospectus, each of the Portfolios may, consistent with its
investment objectives and policies, use futures contracts and options on futures
contracts to reduce the risks associated with the types of securities in which
each is authorized to invest and/or in anticipation of future purchases. A
Portfolio may invest in futures-related instruments only for hedging purposes
and not for speculation and only in a manner consistent with its investment
objective and policies. In particular, a Portfolio may not commit more than 5%
of its net assets, in the aggregate, to margin deposits on futures contracts or
premiums for options on futures contracts. The following discussion sets forth
certain information relating to the types of futures contracts that the
Portfolios may use, together with the risks that may be associated with their
use.
About Futures Contracts and Options on Futures Contracts. A futures contract is
- --------------------------------------------------------
a bilateral agreement pursuant to which one party agrees to make, and the other
party agrees to accept, delivery of the specified type of security or currency
called for in the contract at a specified future time and at a specified price.
In practice, however, contracts relating to financial instruments or currencies
are closed out through the use of closing purchase transactions before the
settlement date and without delivery or the underlying security or currency. In
the case of futures contracts based on a securities index, the contract provides
for "delivery" of an amount of cash equal to the dollar amount specified
multiplied by the difference between the value of the underlying index on the
settlement date and the price at which the contract was originally fixed.
Stock Index Futures Contracts. A Portfolio may sell stock index futures
- ------------------------------
contracts in anticipation of a general market or market sector decline that may
adversely affect the market values of securities held. To the extent that
securities held correlate with the index underlying the contract, the sale of
futures contracts on that index could reduce the risk associated with a market
decline. Where a significant market or market sector advance is anticipated,
the purchase of a stock index futures contract may afford a hedge against not
participating in such advance at a time when a Portfolio is not fully invested.
This strategy would serve as a temporary substitute for the purchase of
individual stocks which may later be purchased in an orderly fashion.
Generally, as such purchases are made, positions in stock index futures
contracts representing an equivalent securities would be liquidated.
Futures Contracts on Debt Securities. Futures contracts on debt securities,
- -------------------------------------
often referred to as "interest rate futures," obligate the seller to deliver a
specific type of debt security called for in the contract, at a specified future
time. A public market now exists for futures contracts covering a number of
debt securities, including long-term U.S. Treasury bonds, ten-year U.S. Treasury
<PAGE>
<PAGE>
notes, and three-month U.S. Treasury bills, and additional futures contracts
based on other debt securities or indices of debt securities may be developed
in the future. Such contracts may be used to hedge against changes in the
general level of interest rates. For example, a Portfolio may purchase such
contracts when it wishes to defer a purchase of a longer-term bond because
short-term yields are higher than long-term yields. Income would thus be earned
on a short-term security and minimize the impact of all or part of an increase
in the market price of the long-term debt security to be purchased in the
future. A rise in the price of the long-term debt security prior to its
purchase either would be offset by an increase in the value of the contract
purchased by the Portfolio or avoided by taking delivery of the debt securities
underlying the futures contract. Conversely, such a contract might be sold in
order to continue to receive the income from a long-term debt security, while
at the same time endeavoring to avoid part or all of any decline in market value
of that security that would occur with an increase in interest rates. If
interest rates did rise, a decline in the value of the debt security would be
substantially offset by an increase in the value of the futures contract sold.
Options on Futures Contracts. An option on a futures contract gives the
- ----------------------------
purchaser the right, in return for the premium, to assume a position in a
futures contract (a long position if the option is a call and a short position
if the option is a put) at a specified price at any time during the period of
the option. The risk of loss associated with the purchase of an option on a
futures contract is limited to the premium paid for the option, plus transaction
cost. The seller of an option on a futures contract is obligated to a broker
for the payment of initial and variation margin in amounts that depend on the
nature of the underlying futures contract, the current market value of the
option, and other futures positions held by the Portfolio. Upon exercise of the
option, the option seller must deliver the underlying futures position to the
holder of the option, together with the accumulated balance in the seller's
futures margin account that represents the amount by which the market price of
the underlying futures contract exceeds, in the case of a call, or is less than,
in the case of a put, the exercise price of the option involved. If an option
is exercised on the last trading day prior to the expiration date of the option,
settlement will be made entirely in cash equal to the difference between the
exercise price of the option and the value at the close of trading on the
expiration date.
Risk Considerations Relating to Futures Contracts and Related Instruments.
- -------------------------------------------------------------------------
Participants in the futures markets are subject to certain risks. Positions in
futures contracts may be closed out only on the exchange on which they were
entered into (or through a linked exchange): no secondary market exists for
such contracts. In addition, there can be no assurance that a liquid market
will exist for the contracts at any particular time. Most futures exchanges and
boards of trade limit the amount of fluctuation permitted in futures contract
prices during a single trading day. Once the daily limit has been reached in a
particular contract, no trades may be made that day at a price beyond that
limit. It is possible that futures contract prices could move to the daily
limit for several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and subjecting some futures
traders to substantial losses. In such event, and in the event of adverse price
movements, a Portfolio would be required to make daily cash payments of
variation margin. In such circumstances, an increase in the value of that
portion of the securities being hedged, if any, may partially or completely
offset losses on the futures contract.
<PAGE>
<PAGE>
As noted above, there can be no assurance that price movements in the futures
markets will correlate with the prices of the underlying securities positions.
In particular, there may be an imperfect correlation between movements in the
prices of futures contracts and the market value of the underlying securities
positions being hedged. In addition, the market prices of futures contracts may
be affected by factors other than interest rate changes and, as a result, even a
correct forecast of interest rate trends might not result in a successful
hedging strategy. If participants in the futures market elect to close out
their contracts through offsetting transactions rather than by meeting margin
deposit requirements, distortions in the normal relationship between debt
securities and the futures markets could result. Price distortions could also
result if investors in the futures markets opt to make or take delivery of the
underlying securities rather than engage in closing transactions because such
trend might result in a reduction in the liquidity of the futures market. In
addition, an increase in the participation of speculators in the futures market
could cause temporary price distortions.
The risks associated with options on futures contracts are similar to those
applicable to all options and are summarized above under the heading "Hedging
Through the Use of Options: Risk Factors Relating to the Use of Options
Strategies." In addition, as is the case with futures contracts, there can be
no assurance that (1) there will be a correlation between price movements in the
options and those relating to the underlying securities; (2) a liquid market for
options held will exist at the time when a Portfolio may wish to effect a
closing transaction; or (3) predictions as to anticipated interest rate or other
market trends on behalf of a Portfolio will be correct.
Margin Requirements and Limitations Applicable to Futures Related Transactions.
- ------------------------------------------------------------------------------
When a purchase or sale of a futures contract is made by a Portfolio, that
Portfolio is required to deposit with its custodian (or broker, if legally
permitted) a specified amount of cash or U.S. Government securities ("initial
margin"). The margin required for a futures contract is set by the exchange on
which the contract is traded and may be modified during the term of the
contract. The initial margin is in the nature of a performance bond or good
faith deposit on the futures contract which is returned to the Portfolio upon
termination of the contract, assuming all contractual obligations have been
satisfied. The Portfolio expects to earn interest income on its initial margin
deposits. A futures contract held by a Portfolio is valued daily at the
official settlement price of the exchange on which it is traded. Each day
the Portfolio pays or receives cash, called "variation margin" equal to the
<PAGE>
<PAGE>
in daily change in value of the futures contract. This process is known as
"marking to market." Variation margin does not represent a borrowing
or loan by the Portfolio but is instead a settlement between the
Portfolio and the broker of the amount one would owe the other if
the futures contract expired. In computing daily net asset value,
the Portfolio will value its open futures positions at market.
A Portfolio will not enter into a futures contract or an option on a futures
contract if, immediately thereafter, the aggregate initial margin deposits
relating to such positions plus premiums paid by it for open futures option
positions, less the amount by which any such options are "in-the-money," would
exceed 5% of the Portfolio's total assets. A call option is "in-the-money" if
the value of the futures contract that is the subject of the option exceeds the
exercise price. A put option is "in-the-money" if the exercise price exceeds
the value of the futures contract that is the subject of the option.
Segregation Requirements.
- ------------------------
Futures Contracts. When purchasing a futures contract, a Portfolio will
- -----------------
maintain, either with its custodian bank or, if permitted, a broker, and will
mark-to-market on a daily basis, cash, U.S. Government securities, or other
highly liquid debt securities that, when added to the amounts deposited with a
futures commission merchant as margin, are equal to the market value of the
futures contract. Alternatively, a Portfolio may "cover" its position by
purchasing a put option on the same futures contract with a strike price as high
or higher than the price of the contract held by the Portfolio.
When selling a futures contract, a Portfolio will similarly maintain liquid
assets that, when added to the amount deposited with a futures commission
merchant as margin, are equal to the market value of the instruments underlying
the contract. Alternatively, a Portfolio may "cover" its position by owning the
instruments underlying the contract (or, in the case of an index futures
contract, a portfolio with a volatility substantially similar to that of the
index on which the futures contract is based), or by holding a call option
permitting a Portfolio to purchase the same futures contract at a price no
higher than the price of the contract written by that Portfolio (or at a higher
price if the difference is maintained in liquid assets with the Trust's
custodian).
Options on Futures Contracts. When selling a call option on a futures contract,
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a Portfolio will maintain, either with its custodian bank or, if permitted, a
broker, and will mark-to-market on a daily basis, cash, U. S. Government
securities, or other highly liquid debt securities that, when added to the
amounts deposited with a futures commission merchant as margin, equal the total
market value of the futures contract underlying the call option. Alternatively,
the Portfolio may cover its position by entering into a long position in the
same futures contract at a price no higher than the strike price of the call
option, by owning the instruments underlying the futures contract, or by holding
a separate call option permitting the Portfolio to purchase the same futures
contract at a price not higher than the strike price of the call option sold by
the Portfolio.
<PAGE>
<PAGE>
When selling a put option on a futures contract, the Portfolio will similarly
maintain cash, U.S. Government securities, or other highly liquid debt
securities that equal the purchase price of the futures contract, less any
margin on deposit. Alternatively, the Portfolio may cover the position either by
entering into a short position in the same futures contract, or by owning a
separate put option permitting it to sell the same futures contract so long as
the strike price of the purchased put option is the same or higher than the
strike price of the put option sold by the Portfolio.
HEDGING THROUGH THE USE OF CURRENCY RELATED INSTRUMENTS.
As indicated in the prospectus, The Growth Portfolio may use forward foreign
currency exchange contracts in connection with permitted purchases and sales of
securities of non-U.S. issuers. In addition, The International Equity Portfolio
may, consistent with its investment objectives and policies, use such contracts
as well as certain other currency related instruments to reduce the risks
associated with the types of securities in which it is authorized to invest and
to hedge against fluctuations in the relative value of the currencies in which
securities held by The International Equity Portfolio are denominated. The
following discussion sets forth certain information relating to forward currency
contracts and other currency related instruments, together with the risks that
may be associated with their use.
About Currency Transactions and Hedging. The International Equity Portfolio is
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authorized to purchase and sell options, futures contracts and options thereon
relating to foreign currencies and securities denominated in foreign currencies.
Such instruments may be traded on foreign exchanges, including foreign over-the-
counter markets. Transactions in such instruments may not be regulated as
effectively as similar transactions in the United States, may not involve a
clearing mechanism and related guarantees, and are subject to the risk of
governmental actions affecting trading in, or the prices of, foreign securities.
The value of such positions also could be adversely affected by: (i) foreign
political, legal and economic factors; (ii) lesser availability than in the
United States of data on which to make trading decisions; (iii) delays in a
Portfolio's ability to act upon economic events occurring in foreign markets
during non-business hours in the United States; and (iv) lesser trading volume.
Foreign currency exchange transactions may be entered into for the purpose of
hedging against foreign currency exchange risk arising from the Portfolio's
investment or anticipated investment in securities denominated in foreign
currencies. The International Equity Portfolio may also purchase and sell
options relating to foreign currencies to increase exposure to a foreign
currency or to shift foreign currency exposure from one country to another.
Foreign Currency Options and Related Risks. The International Equity Portfolio
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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
<PAGE>
<PAGE>
of a liquid secondary market. There can be no assurance that a liquid
secondary market will exist for a particular option at any specific time.
In addition, options on foreign currencies are affected by all of those
factors that influence foreign exchange rates and investments generally.
The quantities of currencies underlying option contracts represent odd
lots in a market dominated by transactions between banks, and as a result
extra transaction costs may be incurred upon exercise of an option.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations be firm or revised
on a timely basis. Quotation information is generally representative of
very large transactions in the interbank market and may not reflect smaller
transactions where rates may be less favorable. Option markets may be
closed while round-the-clock interbank currency markets are open,
and this can create price and rate discrepancies.
Forward Foreign Currency Exchange Contracts. The Growth Portfolio may use
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forward contracts to protect against uncertainty in the level of future exchange
rates in connection with specific transactions. For example, when the Portfolio
enters into a contract for the purchase or sale of a security denominated in a
foreign currency, or when the Portfolio anticipates the receipt in a foreign
currency of dividend or interest payments on a security that it holds, the
Portfolio may desire to "lock in" the U.S. dollar price of the security or the
U.S. dollar equivalent of the payment, by entering into a forward contract for
the purchase or sale of the foreign currency involved in the underlying
transaction in exchange for a fixed amount of U.S. dollars or foreign currency.
This may serve as a hedge against a possible loss resulting from an adverse
change in the relationship between the currency exchange rates during the period
between the date on which the security is purchased or sold, or on which the
payment is declared, and the date on which such payments are made or received.
The International Equity Portfolio may also use forward contracts in connection
with specific transactions. In addition, it may use such contracts to lock in
the U.S. dollar value of those positions, to increase the Portfolio's exposure
to foreign currencies that the Investment Manager believes may rise in value
relative to the U.S. dollar or to shift the Portfolio's exposure to foreign
currency fluctuations from one country to another. For example, when the
Investment Manager believes that the currency of a particular foreign country
may suffer a substantial decline relative to the U.S. dollar or another
currency, it may enter into a forward contract to sell the amount of the former
foreign currency approximating the value of some or all of the Portfolio's
portfolio securities denominated in such foreign currency. This investment
practice generally is referred to as "cross-hedging."
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward contract
is entered into and the date it matures. Accordingly, it may be necessary for a
Portfolio to purchase additional foreign currency on the spot (i.e., cash)
market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the Portfolio is obligated
to deliver and if a decision is made to sell the security and make delivery of
the foreign currency. Conversely, it may be necessary to sell on the spot
market some of the foreign currency received upon the sale of the portfolio
security if its market value exceeds the amount of foreign currency the
Portfolio is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward contracts involve the risk that
anticipated currency movements will not be accurately predicted, causing the
Portfolio to sustain losses on these contracts and transaction costs. A
<PAGE>
<PAGE>
Portfolio may enter into forward contracts or maintain a net exposure to such
contracts only if: (1) the consummation of the contracts would not obligate the
Portfolio to deliver an amount of foreign currency in excess of the value of the
Portfolio's securities and other assets denominated in that currency; or (2) the
Portfolio maintains cash, U.S. Government securities or other liquid securities
in a segregated account in an amount which, together with the value of all the
Portfolio's securities denominated in such currency, equals or exceeds the value
of such contracts.
At or before the maturity date of a forward contract that requires the Portfolio
to sell a currency, the Portfolio may either sell a portfolio security and use
the sale proceeds to make delivery of the currency or retain the security and
offset its contractual obligation to deliver the currency by purchasing a second
contract pursuant to which the Portfolio will obtain, on the same maturity date,
the same amount of the currency that it is obligated to deliver. Similarly, the
Portfolio may close out a forward contract requiring it to purchase a specified
currency by entering into another contract entitling it to sell the same amount
of the same currency on the maturity date of the first contract. As a result of
such an offsetting transaction, a Portfolio would realize a gain or a loss to
the extent of any change in the exchange rate between the currencies involved
between the execution dates of the first and second contracts.
The cost to a Portfolio of engaging in forward contracts varies with factors
such as the currencies involved, the length of the contract period and the
prevailing market conditions. Because forward contracts are usually entered
into on a principal basis, no fees or commissions are involved. The use of
forward contracts does not eliminate fluctuations in the prices of the
underlying securities the Portfolio owns or intends to acquire, but it does fix
a rate of exchange in advance. In addition, although forward contracts limit
the risk of loss due to a decline in the value of the hedged currencies, they
also limit any potential gain that might result should the value of the
currencies increase.
Although The International Equity Portfolio values its assets daily in terms of
U.S. dollars, it does not intend to convert its holdings of foreign currencies
into U.S. dollars on a daily basis. The Portfolio may convert foreign currency
from time to time, and investors should be aware of the costs of currency
conversion. Although foreign exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference between the prices
at which they are buying and selling various currencies. Thus, a dealer may
offer to sell a foreign currency to the Portfolio at one rate, while offering
a lesser rate of exchange should the Portfolio desire to resell that currency
to the dealer.
INVESTMENT RESTRICTIONS
In addition to the investment objectives and policies of the Portfolios, each
Portfolio is subject to certain investment restrictions both in accordance with
various provisions of the Investment Company Act and guidelines adopted by the
Trust's Board. These investment restrictions are summarized below.
<PAGE>
<PAGE>
The following investment restrictions (1 though 9) are fundamental and cannot be
changed with respect to any Portfolio without the affirmative vote of a majority
of the Portfolio's outstanding voting securities as defined in the Investment
Company Act.
A Portfolio may not:
1. Purchase the securities of any issuer, if as a result of such purchase,
more than 5% of the total assets of the Portfolio would be invested in the
securities of that issuer, or purchase any security if, as a result of such
purchase, a Portfolio would hold more than 10% of the outstanding voting
securities of an issuer, provided that up to 25% of the value of the
Trust's assets may be invested without regard to this limitation, and
provided further that this restriction shall not apply to investments in
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, repurchase agreements secured by such obligations, or
securities issued by other investment companies.
2. Borrow money, except that a Portfolio (i) may borrow amounts, taken in the
aggregate, equal to up to 5% of its total assets, from banks for temporary
purposes (but not for leveraging or investment) and (ii) may engage in
reverse repurchase agreements for any purpose, provided that (i) and (ii)
in combination do not exceed 33 1/3% of the value of the Portfolio's total
assets (including the amount borrowed) less liabilities (other than
borrowings).
3. Mortgage, pledge or hypothecate any of its assets except in connection with
any permitted borrowing, provided that this restriction does not prohibit
escrow, collateral or margin arrangements in connection with a Portfolio's
permitted use of options, futures contracts and similar derivative
financial instruments described in the Trust's prospectus.
4. Issue senior securities, as defined in the Investment Company Act, provided
that this restriction shall not be deemed to prohibit a Portfolio from
making any permitted borrowing, mortgage or pledge, and provided further
that the permitted use of options, futures contracts and similar derivative
financial instruments described in the Trust's prospectus shall not
constitute issuance of a senior security.
5. Underwrite securities issued by others, provided that this restriction
shall not be violated in the event that the Portfolio may be considered an
underwriter within the meaning of the Securities Act of 1933 in the
disposition of portfolio of securities.
6. Purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments, provided that this shall not prevent a
Portfolio from investing in securities or other instruments backed by real
estate or securities of companies engaged in the real estate business.
7. Purchase or sell commodities or commodity contracts, unless acquired as a
result of ownership of securities or other instruments, provided that a
Portfolio may purchase and sell futures contracts relating to financial
instruments and currencies and related options in the manner described in
the Trust's prospectus.
8. Make loans to others, provided that this restriction shall not be construed
to limit (a) purchases of debt securities or repurchase agreements in
accordance with a Portfolio's investment objectives and policies; and (b)
loans of portfolio securities in the manner described in the Trust's
prospectus.
<PAGE>
<PAGE>
9. Invest more than 25% of the market value of its assets in the securities of
companies engaged in any one industry provided that this restriction does
not apply to obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, repurchase agreements secured by such
obligations or securities issued by other investment companies.
The following investment restrictions (10 through 15) reflect policies that have
been adopted by the Trust, but they are not fundamental and may be changed by
the Trust's Board, without shareholder vote.
A Portfolio may not:
10. Invest in any issuer for purposes of exercising control or management.
11. Make short sales of securities or maintain a short position, or purchase
securities on margin, provided that this restriction shall not preclude
the Trust from obtaining such short-term credits as may be necessary for
the clearance of purchases and sales of its portfolio securities, and
provided further that this restriction will not be applied to limit the
use by a Portfolio of options, futures contracts and similar derivative
financial instruments in the manner described in the Trust's prospectus.
12. Invest in securities of other investment companies except as permitted
under the Investment Company Act.
13. Buy or sell interests in oil, gas or mineral exploration or development
programs or related leases, provided that this restriction shall not
preclude investments in marketable securities of issuers engaged in such
activities.
14. Purchase any security if, as a result, the Portfolio would have more than
5% of its total assets (taken at current value) invested in securities of
companies (including predecessors) less than three years old.
15. Invest more than 5% of the market value of a Portfolio's total assets in
warrants or invest more than 2% of such value in warrants that are not
listed on the New York or American Stock Exchange.
An investment restriction applicable to a particular Portfolio shall not be
deemed violated as a result of a change in the market value of an investment,
the net or total assets of that Portfolio, or any other later change provided
that the restriction was satisfied at the time the relevant action was taken.
In order to permit the sale of its shares in certain states, the Trust may make
commitments more restrictive than those described above. Should the Trust
determine that any such commitment may no longer be appropriate, the Board will
consider whether to revoke the commitment and terminate sales of its shares in
the state involved.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The Trust reserves the right in its sole discretion to suspend the continued
offering of the Trust's shares and to reject purchase orders in whole or in part
when in the judgment of the Board such action is in the best interest of the
Trust.
Payments to shareholders for shares of the Trust redeemed directly from the
Trust will be made as promptly as possible but no later than seven days after
receipt by the Trust's Transfer Agent of the written request in proper form,
with the appropriate documentation as stated in the prospectus, except that the
Trust may suspend the right of redemption or postpone the date of payment during
any period when (a) trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission or such Exchange is closed
for other than weekends and holidays; (b) an emergency exists as determined by
the Securities and Exchange Commission making disposal of portfolio securities
or valuation of net assets of the Trust not reasonably practicable; or for such
other period as the Securities and Exchange Commission may permit for the
protection of the Trust's shareholders.
<PAGE>
<PAGE>
Each of the Portfolios reserves the right, if conditions exist which make cash
payments undesirable, to honor any request for redemption or repurchase of the
Trust's shares by making payment in whole or in part in readily marketable
securities chosen by the Trust and valued in the same way as they would
be valued for purposes of computing each Portfolio's net asset value. If
such payment were made, an investor may incur brokerage costs in converting such
securities to cash. The value of shares on redemption or repurchase may be more
or less than the investor's cost, depending upon the market value of the Trust's
portfolio securities at the time of redemption or repurchase.
PORTFOLIO TRANSACTIONS AND VALUATION
Subject to the general supervision of the Board, the Investment Managers of the
respective Portfolios are responsible for placing orders for securities
transactions for each of the Portfolios. Securities transactions involving
stocks will normally be conducted through brokerage firms entitled to receive
commissions for effecting such transactions. In placing portfolio transactions,
an Investment Manager will use its best efforts to choose a broker or dealer
capable of providing the services necessary to obtain the most favorable price
and execution available. The full range and quality of services available will
be considered in making these determinations, such as the size of the order, the
difficulty of execution, the operational facilities of the firm involved, the
firm's risk in positioning a block of securities, and other factors. In placing
brokerage transactions, the respective Investment Managers may, however,
consistent with the interests of the Portfolios they serve, select brokerage
firms on the basis of the research, statistical and pricing services they
provide to the Investment Manager. In such cases, a Portfolio may pay a
commission that is higher than the commission that another qualified broker
might have charged for the same transaction, providing the Investment Manager
involved determines in good faith that such commission is reasonable in terms
either of that transaction or the overall responsibility of the Investment
Manager to the Portfolio and such manager's other investment advisory clients.
Transactions involving debt securities and similar instruments are expected to
occur primarily with issuers, underwriters or major dealers acting as
principals. Such transactions are normally effected on a net basis and do not
involve payment of brokerage commissions. The price of the security, however,
usually includes a profit to the dealer. Securities purchased in underwritten
offerings include a fixed amount of compensation to the underwriter, generally
referred to as the underwriter's concession or discount. When securities are
purchased directly from or sold directly to an issuer, no commissions or
discounts are paid.
<PAGE>
<PAGE>
During the fiscal year ended June 30, 1996, the respective portfolios of the
Trust paid the following aggregate brokerage commissions: The Value Equity
Portfolio, $137,963; The Growth Equity Portfolio, $238,948; The Small
Capitalization Portfolio, $147,928; and The International Equity Portfolio,
$144,359. The Limited Duraton Municipal Bond Portfolio paid no brokerage
commissions during the period.
The Trust has adopted procedures pursuant to which each portfolio is permitted
to allocate brokerage transactions to affiliates of the various Investment
Managers. Under such procedures, commissions paid to any such affiliate must
be fair and reasonable compared to the commission, fees or other remuneration
paid to other brokers in connection with comparable transactions. Several of
the Trust's Investment Managers are affiliated with brokerage firms to which
brokerage transactions may, from time to time, be allocated.
The table below reflects the aggregate dollar amount of commissions
paid to each such firm, as well as similar information about transactions
allocated to Furman Selz, LLC, the Trust's principal underwriter by The Value
Equity and Growth Equity Portfolios during the period. None of the other
portfolios of the Trust effected brokerage transactions through brokers
affiliated with the Trust. Information shown is expressed both as a
percentage of the total amount of commission dollars paid by each
portfolio and as a percentage of the total value of all brokerage
transactions effected on behalf of each portfolio.
<TABLE>
<CAPTION>
Portfolio1 Affiliated Broker2
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Cowen & Co.3 Prudential Furman Selz LLC5
Securities4
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<S> <C> <C> <C>
Value Equity
% of commissions .34% none none
% of transactions .94%
Growth Equity
% of commissions .02% 1.45% 4.20%
% of transactions .05% .70% 1.26%
</TABLE>
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1. The Trust's other portfolios did not direct brokerage transaction to any
affiliated broker during the period.
2. Other brokers that may be deemed to be affiliated with the Trust include
companies affiliated with Swiss Bank, of which Brinson Partners is a
wholly-owned subsidiary, and companies affiliated with Deutchebank
the parent company of Morgan Grenfell Capital Management Incorporated.
No brokerage transactions were affected through such companies
during the period.
3. Cowen Asset Management, formerly an Investment Manager of The Value
Equity Portfolio, is a division of Cowen & Co.
4. Both Prudential Securities and Jennison Associates Capital Management Corp.,
which serves as an Investment Manager of The Value Equity Portfolio,
are wholly-owned subsidiaries of Prudential Insurance
Company of America.
5. Furman Selz LLC currently serves as the Trust's principal underwriter.
In no instance will portfolio securities be purchased from or sold to Investment
Managers, Hirtle Callaghan or any affiliated person of the foregoing entities
except to the extent permitted by applicable law or an order of the Securities
and Exchange Commission. Investment decisions for the several Portfolios are
made independently from those of any other client accounts (which may include
mutual funds) managed or advised by an Investment Manager. Nevertheless, it is
possible that at times identical securities will be acceptable for both a
Portfolio of the Trust and one or more of such client accounts. In such cases,
simultaneous transactions are inevitable. Purchases and sales are then averaged
as to price and allocated as to amount according to a formula deemed equitable
to each such account. While in some cases this practice could have a
detrimental effect upon the price or value of the security as far as a Portfolio
is concerned, in other cases it is believed that the ability of a Portfolio to
participate in volume transactions may produce better executions for such
Portfolio.
<PAGE>
<PAGE>
Portfolio Turnover. Changes may be made in the holdings of any of the
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Portfolios consistent with their respective investment objectives and policies
whenever, in the judgment of the relevant Investment Manager, such changes are
believed to be in the best interests of the Portfolio involved. It is
anticipated that the annual portfolio turnover rate for a Portfolio will not
exceed 100% under normal circumstances. The portfolio turnover rate is
calculated by dividing the lesser of purchases or sales of portfolio securities
by the average monthly value of a Portfolio's securities. For purposes of this
calculation, portfolio securities exclude all securities having a maturity when
purchased of one year or less. The portfolio turnover rate for each of the
Portfolios that has more than one Investment Manager will be an aggregate of the
rates for each individually managed portion of that Portfolio. Rates for each
portion, however, may vary significantly. The portfolio turnover rate for each
of the Trust's Portfolios for the fiscal year ended June 30, 1996, is as
follows: The Value Equity Portfolio, 92%; The Growth Equity Portfolio,
80%; The Small Capitalization Portfolio, 38%; and The International
Equity Portfolio, 15%; and The Limited Duraton Municipal Bond Portfolio, 116%.
Valuation. The net asset value per share of the Portfolios is determined once
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on each Business Day as of the close of the New York Stock Exchange, which is
normally 4 P.M. New York City time, on each day the New York Stock Exchange is
open for trading. It is expected that such Exchange will be closed on Saturdays
and Sundays and on New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas. The Trust does not
expect to determine the net asset value of its shares on any day when the
Exchange is not open for trading even if there is sufficient trading in its
portfolio securities on such days to materially affect the net asset value per
share.
In valuing the Trust's assets for calculating net asset value, readily
marketable portfolio securities listed on a national securities exchange or on
NASDAQ are valued at the last sale price on the business day as of which such
value is being determined. If there has been no sale on such exchange or on
NASDAQ on such day, the security is valued at the closing bid price on such day.
Readily marketable securities traded only in the over-the-counter market and not
on NASDAQ are valued at the current or last bid price. If no bid is quoted on
such day, the security is valued by such method as the Board shall determine in
good faith to reflect the security's fair value. All other assets of each
Portfolio are valued in such manner as the Board in good faith deems
appropriate to reflect their fair value.
The net asset value per share of each of the Trust's Portfolios is calculated as
follows: All liabilities incurred or accrued are deducted from the valuation of
total assets which includes accrued but undistributed income; the resulting net
asset value is divided by the number of shares outstanding at the time of the
valuation and the result (adjusted to the nearest cent) is the net asset value
per share.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividends and Distributions. As noted in the prospectus, each Portfolio will
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distribute substantially all of its net investment income and net realized
capital gains, if any. It is anticipated that The Value Portfolio, The Growth
Portfolio and The Small Capitalization Equity Portfolio will declare and
distribute dividends from net investment income on a quarterly basis. The
Limited Duration Municipal Bond Portfolio will declare dividends daily, with
payments on a monthly basis. The International Equity Portfolio will declare
dividends semi-annually. The Trust expects to distribute any undistributed net
investment income and capital gains for the 12-month period ended each October
31, on or about December 31 of each year.
<PAGE>
<PAGE>
Tax Information. Each of the Trust's Portfolios is treated as a separate entity
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for federal income tax purposes. Each Portfolio intends to qualify and elect to
be treated as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code") for the fiscal year ending June
30, 1996 and intends to continue to so qualify. Accordingly, it is the policy
of each Portfolio to distribute to its shareholders by December 31 of each
calendar year (i) at least 98% of its ordinary income for such year; (ii) at
least 98% of the excess of its realized capital gains over its realized capital
losses for the 12-month period ending on October 31 during such year; and (iii)
any amounts from the prior calendar year that were not distributed.
The following discussion and related discussion in the prospectus do not purport
to be a complete description of all tax implications of an investment in the
Trust. In addition, such information relates solely to the application of that
law to U.S. citizens or residents and U.S. domestic corporations, partnerships,
trusts and estates. A shareholder should consult with his or her own tax
adviser for more information about Federal, state, local or foreign taxes. Each
shareholder who is not a U.S. person should consider the U.S. and foreign tax
consequences of ownership of shares of the Trust, including the possibility that
such a shareholder may be subject to a U.S. withholding tax on amounts
constituting ordinary income.
Distributions of net investment income and short-term capital gains are taxable
to shareholders as ordinary income. Distributions paid by a Portfolio out of
long-term capital gain are taxable to those investors who are subject to income
tax as long term capital gain. In the case of corporate shareholders,
a portion of the distributions may qualify for the dividends-received deduction
to the extent the Trust designates the amount distributed by any Portfolio as a
qualifying dividend. The aggregate amount so designated cannot, however, exceed
the aggregate amount of qualifying dividends received by that Portfolio for its
taxable year. It is expected that dividends from domestic corporations will be
part of the gross income for one or more of the Portfolios and, accordingly,
that part of the distributions by such Portfolios may be eligible for the
dividends-received deduction for corporate shareholders. However, the portion of
a particular Portfolio's gross income attributable to qualifying dividends is
largely dependent on that Portfolio's investment activities for a particular
year and therefore cannot be predicted with any certainty. The deduction may be
reduced or eliminated if shares of such Portfolio held by a corporate investor
are treated as debt-financed or are held for less than 46 days.
Distributions of net investment income and short-term capital gains are taxable
to shareholders as long-term capital gains, regardless of the length of time
they have held their shares. Capital gains distributions are not eligible for
the dividends-received deduction referred to in the previous paragraph.
Distributions of any net investment income and net realized capital gains will
be taxable as described above, whether received in shares or in cash.
Shareholders electing to receive distributions in the form of additional shares
will have a cost basis for federal income tax purposes in each share so received
equal to the net asset value of a share on the reinvestment date. Distributions
are generally taxable when received. However, distributions declared in
October, November or December to shareholders of record on a date in such a
month and paid the following January are taxable as if received on December 31.
Distributions are includable in alternative minimum taxable income in computing
a shareholder's liability for the alternative minimum tax.
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<PAGE>
A redemption of Trust shares may result in recognition of a taxable gain or
loss. Any loss realized upon a redemption of shares within six months from the
date of their purchase will be treated as a long-term capital loss to the
extent of any amounts treated as distributions of long-term capital gains
during such six-month period. Any loss realized upon a redemption may be
disallowed under certain wash sale rules to the extent shares of the same Trust
are purchased (through reinvestment of distributions or otherwise) within 30
days before or after the redemption or exchange.
The Trust is required to report to the Internal Revenue Service all
distributions of taxable income and capital gains as well as gross proceeds from
the redemption or exchange of Trust shares, except in the case of exempt
shareholders, which includes most corporations. Pursuant to the backup
withholding provisions of the Code, distributions of any taxable income and
capital gains and proceeds from the redemption of Trust shares may be subject to
withholding of federal income tax at the rate of 31 percent in the case of non-
exempt shareholders who fail to furnish the Trust with their taxpayer
identification numbers and with required certifications regarding their status
under the federal income tax law. If the withholding provisions are applicable,
any such distributions and proceeds, whether taken in cash or reinvested in
additional shares, will be reduced by the amounts required to be withheld.
Corporate and other exempt shareholders should provide the Trust with their
taxpayer identification numbers or certify their exempt status in order to
avoid possible erroneous application of backup withholding. The Trust reserves
the right to refuse to open an account for any person failing to provide a
certified taxpayer identification number.
Tax Matters Relating to the Use of Certain Hedging Instruments and Foreign
- --------------------------------------------------------------------------
Investments. Certain of the Portfolios may write, purchase or sell certain
- -----------
options, futures and foreign currency contracts. Such transactions are subject
to special tax rules that may affect the amount, timing and character of
distributions to shareholders. Unless a Portfolio is eligible to make, and
makes, a special election, any such contract that is a "Section 1256 contract"
will be "marked-to-market" for Federal income tax purposes at the end of each
taxable year, i.e., each contract will be treated for tax purposes as though it
<PAGE>
<PAGE>
had been sold for its fair market value on the last day of the taxable year. In
general, unless the special election referred to in the previous sentence is
made, gain or loss from transactions in Section 1256 contracts will be 60% long
term and 40% short term capital gain or loss. Additionally, Section 1092 of the
Code, which applies to certain "straddles," may affect the tax treatment of
income derived by a Portfolio from transactions in option, futures and foreign
currency contracts. In particular, under this provision, a Portfolio may, for
tax purposes, be required to postpone recognition of losses incurred in certain
closing transactions.
Section 988 of the Code contains special tax rules applicable to certain foreign
currency transactions that may affect the amount, timing, and character of
income, gain or loss recognized by the Trust. Under these rules, foreign
exchange gain or loss realized with respect to foreign currency-denominated debt
instruments, foreign currency forward contracts, foreign currency-denominated
payables and receivables, and foreign currency options and futures contracts
(other than options, futures, and foreign currency contracts that are governed
by the mark-to-market and 60%-40% rules of Section 1256 of the Code and for
which no election is made) is treated as ordinary income or loss. Under the
Code, dividends or gains derived by a Portfolio from any investment in a
"passive foreign investment company" ("PFIC")-- a foreign corporation 75 percent
or more of the gross income of which consists of interest, dividends, royalties,
rents, annuities or other "passive income" or 50 percent or more of the assets
of which produce "passive income" -- may subject a Portfolio to U.S. federal
income tax even with respect to income distributed by the Portfolio to its
shareholders. In addition, any such tax will not itself give rise to a
deduction or credit to the Portfolio or to any shareholder. In order to avoid
the tax consequences described above, those Portfolios authorized to invest
in foreign securities will attempt to avoid investments in PFICs.
PERFORMANCE INFORMATION
From time to time, a Portfolio may state its total return in sales literature
and investor presentations. Total return may be stated for any relevant period
specified. Any statements of total return will be accompanied by information on
that Portfolio's average annual compounded rate of return over the most recent
four calendar quarters and the period from the inception of that Portfolio's
operations. The Trust may also advertise aggregate and average total return
information over different periods of time for the various Portfolios.
The average annual compounded rate of return for a Portfolio is determined by
reference to a hypothetical $1,000 investment that includes capital appreciation
and depreciation for the stated period, according to the formula P(1+T)/n/ =
ERV. For purposes of this formula, the variables represent the following
values:
P = a hypothetical initial purchase of $1,000
T = average annual total return
n = number of years
ERV = redeemable value of hypothetical $1,000 initial purchase
at the end of the period.
Aggregate total return is calculated in a similar manner, except that the
results are not annualized. Each calculation assumes that all dividends and
distributions are reinvested at net asset value on the reinvestment dates during
the period and gives effect to the maximum applicable sales charge.
From time to time, evaluations of a Trust's performance by independent sources
may also be used in advertisements and in information furnished to present or
prospective investors in the Trusts. Investors should note that the investment
results of each of the Trust's Portfolios will fluctuate over time, and any
presentation of a Portfolio's total return for any period should not be
considered as a representation of what an investment may earn or what an
investor's total return may be in any future period.
<PAGE>
<PAGE>
The table below shows the name and address of each person known to the Trust
to hold, as of record or beneficially, 5% or more of shares of the Trust
as November 29, 1996. Hirtle Callaghan may be deemed to have, or share,
investment and/or voting power with respect to more than 50% of the shares
of the Trust's portfolios, with respect to which shares Hirtle Callaghan
disclaims beneficial ownership.
<TABLE>
<CAPTION> [table values to be supplied by amendment]
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Small
Name and Address of Value Growth Capitalization International Limited Duration
Shareholder Equity Equity Equity Equity Municipal Bond
- -----------------------------------------------------------------------------------------------------------------
Bankers Trust Company
1 Bankers Trust Plaza
New Yor, N.Y. 10006 (of record) (of record) (of record) (of record) (of record)
PNC Bank, N.A.
P.O. Box 7780-1888
Philadelphia, PA 19182 (of record) (of record) (of record) (of record) (of record)
Northern Trust Company
P.O. Box 92956
Chicago, IL 60675 (of record) (of record) (of record) (of record) (of record)
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS.
Coopers and Lybrand, L.L.P., serves as the Trust's independent accountants.
The Trust's financial statements as of June 30, 1996, have been audited by
Coopers and Lybrand, L.L.P, whose address is 2400 Eleven Penn Center,
Philadelphia, PA 19103. Such statement and accompanying report are set
forth in the Trust's Annual Report to Shareholders, which accompanies this
Statement of Additional Information and is incorporated herein by reference.
<PAGE>
<PAGE>
Ratings Appendix
Ratings for Corporate Debt Securities
<TABLE>
<CAPTION>
Moody's Investors Service, Inc. Standard & Poor's Corporation
<S> <C>
Aaa AAA
Judged to be of the best quality; smallest This is the highest rating assigned by S&P to a
degree of investment risk debt obligation and indicates an extremely strong
capacity to pay principal and interest.
Aa AA
Judged to be of high quality by all Also qualify as high-quality debt obligations.
standards; together with Aaa group, Capacity to pay principal and interest is very
comprise what are generally known as strong
"high grade bonds"
A A
Possess many favorable investment Strong capacity to pay principal and interest,
attributes and are to be considered as although securities in this category are somewhat
upper medium grade obligations more susceptible to the adverse effects of changes
in circumstances and economic conditions.
Baa BBB
Medium grade obligations, i.e. Bonds rated BBB are regarded as having an adequate
they are neither highly protected nor capacity to pay principal and interest. Although
poorly secured. Interest payments they normally exhibit adequate protection
and principal security appear parameters, adverse economic conditions or
adequate for present but certain changing circumstances are more likely to lead to
protective elements may be lacking or a weakened capacity to pay principal and interest
unreliable over time. Lacking in for bonds in this category than for bonds in the A
outstanding investment characteristics and category.
have speculative characteristics as well
Ba BB
Judged to have speculative elements: their Bonds rated BB are regarded, on balance, as
future cannot be considered as well predominantly speculative with respect to the
assured. Often the protection of issuer's capacity to pay interest and repay
interest and principal payments principal in accordance with the terms of the
may every moderate and thereby not well obligation. While such bonds will likely have some
safeguarded during both good and bad quality and protective characteristics, these are
times over the future. Uncertainty outweighed by large uncertainties or major risk
of position characterize bonds exposures to adverse conditions.
in this class
</TABLE>
<PAGE>
<PAGE>
RATINGS FOR MUNICIPAL SECURITIES
The following summarizes the two highest ratings used by Standard & Poor's
Corporation for short term notes:
SP-1 -- Loans bearing this designation evidence a very strong or strong
capacity to pay principal and interest. Those issues determined to possess
overwhelming safety characteristics will be given a (+) designation.
SP-2 -- Loans bearing this designation evidence a satisfactory capacity to
pay principal and interest.
The following summarizes the two highest ratings used by Moody's Investors
Service, Inc. for short term notes:
MIG-1/VIG-1 -- Obligations bearing these designations are of the best
quality, enjoying strong protection from established cash flows of funds
for their servicing or from established and broad-based access to the
market for refinancing, or both.
MIG-1/VIG-2 -- Obligations bearing these designations are of the high
quality, with margins of protection ample although not so large as in the
preceding group.
The following summarizes the two highest ratings used by Standard & Poor's
Corporation for commercial paper:
Commercial Paper rated A-1 by Standard & Poor's Corporation indicated that
the degree of safety regarding timely payment is either overwhelming or
very strong. Those issues determined to possess overwhelming safety
characteristics are denoted A-1+. Capacity for timely payment on
commercial paper rated A-2 is strong, but the relative degree of safety is
not as high as for issues designated A-1.
The following summarizes the two highest ratings used by Moody's Investors
Service, Inc. for commercial paper:
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Issuers rated Prime-1 (or related supporting institutions) are
considered to have a superior capacity for repayment of short-term
promissory obligations. Issuers rated Prime-2 (or related supporting
institutions) are considered to have a strong capacity for repayment of
short-term promissory obligations. This will normally be evidenced by many
of the characteristics of issuers rated Prime-1 but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternative liquidity is
maintained.
<PAGE>
<PAGE>
Part C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Included in Part A of the Registration Statement:
Expense Information
Condensed Financial Information
(b) Included in Part B of the Registration Statement:
Audited Balance Sheet
Financial Statement for the period ended June 30, 1996
(c) Auditors' Report
[To be supplied by amendment.]
(b) Exhibits:
1 (a) Certificate of Trust filed on December 15, 1994 with the
Secretary of State of Delaware
(Incorporated herein by reference to Items (b)(i) contained in
Registrant's Registration Statement (No. 33-87636) as filed with
the Securities and Exchange Commission on December 19, 1994.)
1 (b) Amended and Restated Declaration and Agreement of Trust (as
amended November 9, 1995) FILED HEREWITH
(2) Bylaws of the Trust (as amended November 9, 1995)
FILED HEREWITH
(3) /[voting trust agreement]/
Not Applicable.
(4) /[instruments defining right of securityholders]/
Not Applicable.
(5) (a) Portfolio Management Contracts with certain
Investment Managers for the several Portfolios of the Trust.
(Incorporated herein by reference to Items (b)(5) contained in
Registrant's Registration Statement (No. 33-87636) as filed
with the Securities and Exchange Commission on July 24, 1995.)
(b) Consulting Agreement between the Trust and Hirtle, Callaghan
& Co., Inc.
(Incorporated herein by reference to Items (b)(5) contained in
Registrant's Registration Statement (No. 33-87636) as filed with
the Securities and Exchange Commission on July 24, 1995.)
(c)Portfolio Management Contracts between the Trust and Hotchkis
and Wiley. (Incorporated herein by reference to Item
contained in Post-effective Amendment No. 3, filed
with the Securities and Exchange Commission on October
18, 1996.
<PAGE>
<PAGE>
(6)(a) Distribution Agreement between Furman, Selz LLC
(formerly, Furman Selz, Incorporated) and the Trust.
(Incorporated herein by reference to Items (b)(6) contained in
Registrant's Registration Statement (No. 33-87636) as filed with
the Securities and Exchange Commission on July 24, 1995.)
(b) Distribution Agreement between BISYS Fund Services
FILED HEREWITH
(7) [bonus, pension and profit-sharing plans]
Not Applicable.
(8) Custodian Agreement between Bankers Trust Company and the Trust.
(Incorporated herein by reference to Items (b)(8) contained in
Registrant's Registration Statement (No. 33-87636) as filed with
the Securities and Exchange Commission on July 24, 1995.)
(9) (a)(i) Administration Agreement between the Trust and Furman,
Selz LLC (formerly, Furman Selz, Incorporated).
(Incorporated herein by reference to Items (b)(9) contained in
Registrant's Registration Statement (No. 33-87636) as filed with
the Securities and Exchange Commission on July 24, 1995.)
(a)(ii) Transfer Agency and Service Agreement between the Trust
and Furman, Selz LLC (formerly, Furman Selz, Incorporated)
(Incorporated herein by reference to Items (b)(9) contained in
Registrant's Registration Statement (No. 33-87636) as filed with
the Securities and Exchange Commission on July 24, 1995.)
(a)(iii) Accounting Services Agreement between Furman Selz LLC
(formerly, Furman Selz, Incorporated) and the Trust.
(Incorporated herein by reference to Items (b)(5) contained in
Registrant's Registration Statement (No. 33-87636) as filed with
the Securities and Exchange Commission on July 24, 1995.)
(9)(b) Registrant's Agreements with BISYS Fund Services
(b)(i) Adminstration Agreement FILED HEREWITH
(b)(ii) Transfer Agency Agreement FILED HEREWITH
(b)(iii) Fund Accounting Agreement FILED HEREWITH
(10) Opinion of Stradley, Ronon, Stevens & Young.
(Incorporated herein by reference to Items (b)(5) contained in
Registrant's Registration Statement (No. 33-87636) as filed with
the Securities and Exchange Commission on July 24, 1995.)
(11) Consent of Accountants.
[To be filed by amendment.]
(12) [omitted financial statements] Not Applicable.
(13) [agreements regarding initial capital]
Not Applicable.
<PAGE>
<PAGE>
(14) [model retirement plans]
Not Applicable.
(15) [Rule 12b-1 plan]
Not Applicable.
(16) [computation for Item 22 performance]
Not Applicable.
(17) Financial Data Schedule [See Item 27, below]
(18) [plan pursuant to rule 18f-3]
Not Applicable.
(24) Powers of Attorney
FILED HEREWITH
(27) Financial Data Schedules (Rule 483 under the Securities
Act of 1933) (Incorporated herein by reference to Item
27 contained in Post-effective Amendment No. 3, filed
with the Securities and Exchange Commission on October
18, 1996.
Item 25. Persons Controlled by or Under Common Control with Registrant.
--------------------------------------------------------------
None.
Item 26. Number of Holders of Securities.
--------------------------------
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
as of ______, 1996
-------------- -----------------------------------------
<S> <C> <C>
Units of beneficial
interest, par value $.001 The Value Equity Portfolio To be filed by amendment.
The Growth Equity Portfolio To be filed by amendment.
The Small Capitalization Equity
Portfolio To be filed by amendment.
The International Equity Portfolio To be filed by amendment.
The Limited Duration Municipal
Bond Portfolio To be filed by amendment.
</TABLE>
<PAGE>
Item 27. Indemnification.
----------------
Reference is made to Article VII of the Trust's Amended and Restated
Agreement and Declaration of Trust and to Article VI of the Trust's By-Laws,
which are incorporated herein by reference. Pursuant to Rule 484 under the
Securities Act of 1933 (the "Act"), as amended, the Trust furnishes the
following undertaking:
<PAGE>
Insofar as indemnification for liabilities arising under the Act may be
permitted to trustees, officers and controlling persons of the Trust pursuant to
the foregoing provisions, or otherwise, the Trust has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Trust of expenses incurred or paid by a trustee, officer
or controlling person of the Trust in the successful defense of any action, suit
or proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Trust will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Advisers.
------------------------------------------------------
Information relating to the business and other connections of each of the
Trust's Investment Managers and each director, officer or partner of such
managers are hereby incorporated by reference from each such manager's Form ADV,
as filed with the Securities and Exchange Commission, as follows:
<TABLE>
<CAPTION>
Investment Manager SEC File No. 801- ADV Item No.
- ------------------------------------------------------------------------------
<S> <C> <C>
Brinson Partners, Inc. 34910 Part I (8, 10 & 12)
Part II (6 - 9, 13)
Frontier Capital Management Co. 15724 Part I (8, 10 & 12)
Part II (6 - 9, 13)
Jennison Associates Capital Corp. 5608 Part I (8, 10 & 12)
Part II (6 - 9, 13)
Institutional Capital Corporation 40779 Part I (8, 10 & 12)
Part II (6 - 9, 13)
Westfield Capital Management, Inc. 34350 Part I (8, 10 & 12)
Part II (6 - 9, 13)
Clover Capital Management Inc. 27041 Part I (8, 10 & 12)
Part II (6 - 9, 13)
Morgan Grenfell Capital Management Inc. 27291 Part I (8, 10 & 12)
Part II (6 - 9, 13)
Hotchkis and Wiley [to be filed by amendment]
Merrill Lynch Asset Management LP 11583 Part I (8, 10 & 12)
Part II (6 - 9, 13)
</TABLE>
Hirtle, Callaghan & Co., Inc. ("HCCI") has entered into a Consulting
Agreement with the Trust. Although HCCI is a registered investment adviser,
HCCI does not have investment discretion with regard to the assets of the Trust.
Information regarding the business and other connections of HCCI's officers and
directors is incorporated by reference to Part I (Items 8, 10 and 12) and Part
II (Items 6 - 9 and 13) of HCCI's Form ADV, File No. 801-32688 which has been
filed with the Securities and Exchange Commission.
<PAGE>
<PAGE>
Item 29. Principal Underwriters.
-----------------------
(a) BISYS Fund Services, Inc. ("BISYS") serves as the principal
underwriter for the Trust. BISYS also serves as a principal underwriter for the
the following investment companies:
The American Performance Funds, AmSouth Mutual funds, The ARCH Fund, Inc.,
The BB&T Mutual Funds Group, The Coventry Group, First Choice Funds,
Fountain Square Funds, HSBC Family of Funds, The HighMark Group,
The Infinity Mutual Fudns, Inc., The Kent Funds, Marketwatch Funds, MMA
Praxis Mutual Funds, M.S.C.&T. Funds, Pacific Capital Funds, Parkstone
Group of Funds, The Parkstone Riverfront Funds, Inc., Pegasus Funds, Qualivest
Funds, The Republic Funds The SBSF Funds, Inc. (dba Key Mutual Funds), The
Sessions Group, Summit Investment Trust, The Time Horizon Funds, and
The Victory Portfolios.
(b) The following table sets forth the indicated information with
respect to each director and officer of BISYS. Unless otherwise noted, the
business address for each such person is 3435 Stelzer Road, Columbus, Ohio
43219:
Name Positions and Offices with Positions with Trust
- ---- Underwriter --------------------
-----------
The BISYS Group, Inc. Sole shareholder None
150 Clove Road Sole Limited Partner
Little Falls, NJ 07424
BISYS Fund Services, Inc.
3435 Stlezer Road
Columbus Ohio 53219 Sole General Partner None
(c) Not Applicable.
Item 30. Location of Accounts and Records.
---------------------------------
(a) Bankers Trust Company, 130 Liberty Street, One Bankers Trust Plaza,
New York, New York 10006 (records relating to its function as custodian.)
(b) BISYS Fund Services, 125 West 55th Street, New York, New York 10119
(records relating to its function as administrator, accounting agent,
transfer and dividend disbursing agent and distributor.)
(c) BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio 43219.
<PAGE>
<PAGE>
(d) Records relating to the activities of each of the investment managers
on behalf of the indicated portfolio are maintained as follows:
Investment Manager Location of Accounts and
------------------ Records
------------------------
The International Equity Portfolio
- ----------------------------------
Brinson Partners, Inc. 209 South LaSalle Street
Chicago, IL 60604-1295
The Small Capitalization Equity Portfolio
- ------------------------------------------
Clover Capital Management, Inc. 11 Tobey Village Office Park
Pittsford, NY 14534
Frontier Capital Management 99 Summer Street
Company Boston, MA 02110
The Value Equity Portfolio
- --------------------------
Hotchkis and Wiley 800 West Sixth Street
Los Angeles, California 90017
Institutional Capital 225 West Wacker
Corporation Suite 2400
Chicago, IL 60606
The Growth Equity Portfolio:
- ---------------------------
Jennison Associates Capital Corp. 466 Lexington Ave.
New York, NY 10017
Westfield Capital Management One Financial Center
Company, Inc. Boston, MA 02111
The Limited Duration Municipal Bond Portfolio:
- ---------------------------------------------
Morgan Grenfell Capital 885 Third Avenue
Management Incorporated New York, NY 10022-4802
and 1435 Walnut Street
(4th Fl.) Philadelphia, PA
19102
Item 31. Management Services.
--------------------
None.
Item 32. Undertakings.
-------------
Not Applicable.
--------------
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Post-Effective
Amendment No. 4 to be signed on its behalf by the undersigned, thereto duly
authorized in the City of Wayne, and the Commonwealth of Pennsylvania on the
December 12, 1996.
THE HIRTLE CALLAGHAN TRUST
BY: /s/
---------------------------
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
<TABLE>
<S> <C> <C>
/s/ Treasurer and Vice-President December 12, 1996
------------------------- (Principal Financial Officer)
Robert Zion
/s/ Trustee December 12, 1996
-------------------------
Donald E. Callaghan
/s/ * Trustee December 12, 1996
-------------------------
Richard W. Wortham, III
/s/ * Trustee December 12, 1996
-------------------------
Ross H. Goodman
/s/ * Trustee December 12, 1996
-------------------------
Jarrett Burt Kling
/s/ * Trustee December 12, 1996
-------------------------
David M. Spungen
/s/ * Trustee December 12, 1996
-------------------------
Jonathan J. Hirtle
</TABLE>
* signed by Donald E. Callaghan, pursuant
to powers of attorney filed herewith.
<PAGE>
<PAGE> Exhibit Index
Exhibit 1 Amended and Restated Declaration of Trust
Exhibit 2 Amended By-Laws of the Trust
Exhibit 3 Distribution Agreement with BISYS Fund Services
Exhibit 4 Administration Agreement with BISYS Fund Services
Exhibit 5 Transfer Agency Agreement with BISYS Fund Services
Exhibit 6 Fund Accounting Agreement with BISYS Fund Services
Exhibit 7 Powers of Attorney
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST
of
The Hirtle Callaghan Trust
a Delaware Business Trust
Principal Place of Business:
575 East Swedesford Road, Suite 205,
Wayne, Pennsylvania 19087-1613.
<PAGE>
<PAGE>
TABLE OF CONTENTS
ARTICLE I Name and Definitions 1
Section 1. Name 1
Section 2. Definitions. 1
ARTICLE II Purpose of Trust 2
ARTICLE III Shares 2
Section 1. Division of Beneficial Interest. 2
Section 2. Ownership of Shares. 3
Section 3. Investments in the Trust. 3
Section 4. Status of Shares and Limitations of Personal Liability. 3
Section 5. Power of Board of Trustees to Change Provisions Relating to
Shares. 4
Section 6. Establishment and Designation of Shares. 4
ARTICLE IV The Board of Trustees 7
Section 1. Number, Election and Tenure. 7
Section 2. Effect of Death, Resignation, etc. of a Trustee. 7
Section 3. Powers. 8
Section 4. Payment of Expenses by the Trust. 11
Section 5. Payment of Expense by Shareholders. 11
Section 6. Ownership of Assets of the Trust. 11
Section 7. Service Contracts. 11
ARTICLE V Shareholders' Voting Powers and Meetings 13
Section 1. Voting Powers. 13
Section 2. Voting Power and Meetings. 13
Section 3. Quorum and Required Vote. 13
Section 4. Action by Written Consent. 14
Section 5. Record Dates. 14
Section 6. Additional Provisions. 14
ARTICLE VI Net Asset Value, Distributions, and Redemptions 15
Section 1. Determination of Net Asset Value, Net Income, and
Distributions. 15
Section 2. Redemptions and Repurchases. 15
Section 3. Redemptions at the Option of the Trust. 15
ARTICLE VII Compensation and Limitation of Liability of Trustees 16
Section 1. Compensation. 16
Section 2. Indemnification and Limitation of Liability. 16
Section 3. Trustee's Good Faith Action, Expert Advice, No Bond or
Surety. 16
Section 4. Insurance. 17
ARTICLE VIII Miscellaneous 17
Section 1. Liability of Third Persons Dealing with Trustees. 17
Section 2. Termination of Trust or Series. 17
Section 3. Merger and Consolidation. 17
Section 4. Amendments. 18
Section 5. Filing of Copies, References, Headings. 18
Section 6. Applicable Law. 18
Section 7. Provisions in Conflict with Law or Regulations. 19
Section 8. Business Trust Only. 19
<PAGE>
<PAGE>
AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF
The Hirtle Callaghan Trust
WHEREAS, THIS AGREEMENT AND DECLARATION OF TRUST is made and entered
into as of the date set forth below by the Trustees named hereunder for
the purpose of forming a Delaware business trust in accordance with the
provisions hereinafter set forth,
NOW, THEREFORE, the Trustees hereby direct that a Certificate of Trust
be filed with Office of the Secretary of State of the State of Delaware
and do hereby declare that the Trustees will hold IN TRUST all cash,
securities and other assets which the Trust now possesses or may
hereafter acquire from time to time in any manner and manage and
dispose of the same upon the following terms and conditions for the pro
rata benefit of the holders of Shares in this Trust.
ARTICLE I
Name and Definitions
Section 1. Name. This trust shall be known as The Hirtle Callaghan
Trust and the Trustees shall conduct the business of the Trust under
that name or any other name as they may from time to time determine.
Section 2. Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) The "Trust" refers to the Delaware business trust established by
this Declaration of Trust, as amended from time to time;
(b) The "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of
the Trust, including without limitation the rights referenced in
Article VIII, Section 9 hereof;
(c) "Trustee" refers to each person who has signed this Agreement and
Declaration of Trust, so long a each such person continues in office in
accordance with the terms hereof, and any other person who may from
time to time be duly elected or appointed to serve on the Board of
Trustees in accordance with the provisions hereof, and reference herein
to a Trustee or the Trustees shall refer to such person or persons in
their capacity as trustees hereunder;
(d) "Shares" means the shares of beneficial interest into which the
beneficial interest in the Trust shall be divided from time to time and
includes fractions of Shares as well as whole Shares;
(e) "Shareholder" means a record owner of outstanding Shares;
<PAGE>
<PAGE>
(f) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures, estates and other
entities, whether or not legal entities, and governments and agencies
and political subdivisions thereof, whether domestic or foreign;
(g) The "1940 Act" refers to the Investment Company Act of 1940 and
the Rules and Regulations thereunder, all as amended from time to time;
(h) The terms "Commission" and "Principal Underwriter" shall have the
meanings given them in the 1940 Act;
(i) "Declaration of Trust" shall mean this Agreement and Declaration
of Trust, as amended or restated from time to time;
(j) "By-Laws" shall mean the By-Laws of the Trust as amended from time
to time and incorporated herein by reference;
(k) The term "Interested Person" has the meaning given it in Section
2(a)(19) of the 1940 Act;
(l) "Investment Manager" or "Manager" means a party furnishing
services to the Trust pursuant to any contract described in Article IV,
Section 7(a) hereof;
(m) "Series" refers to each Series of Shares established and
designated under or in accordance with the provisions of Article III.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to conduct, operate and carry on the
business of a management investment company registered under the 1940
Act through one or more Series investing primarily in securities.
ARTICLE III
Shares
Section 1. Division of Beneficial Interest. The beneficial interests
in the Trust shall at all times be divided into an unlimited number of
Shares, with a par value of $ .001 per Share and Shares shall have the
rights and preferences provided for herein. The Trustees may authorize
the division of Shares into separate Series. The different Series
shall be established and designated, and the variations in the relative
rights and preferences as between the different Series shall be fixed
and determined, by the Trustees. If the context so requires, all
references to Series shall be construed to refer to the Trust.
Subject to the provisions of Section 6 of this Article III, each Share
shall have voting rights as provided in Article V hereof, and holders
of the Shares of any Series shall be entitled to receive dividends,
when, if and as declared with respect thereto in the manner provided in
Article VI, Section 1 hereof. No Shares shall have any priority or
preference over any other Share of the same Series with respect to
dividends or distributions upon termination of the Trust or of such
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Series made pursuant to Article VIII, Section 4 hereof. All dividends
and distributions shall be made ratably among all Shareholders of a
particular Series from the assets held with respect to such Series
according to the number of Shares of such Series held of record by such
Shareholder on the record date for any dividend or distribution or on
the date of termination, as the case may be. Shareholders shall have
no preemptive or other right to subscribe to any additional Shares or
other securities issued by the Trust or any Series. The Trustees may
from time to time divide or combine the Shares of any particular Series
into a greater or lesser number of Shares of that Series without
thereby materially changing the proportionate beneficial interest of
the Shares of that Series in the assets held with respect to that
Series or materially affecting the rights of Shares of any other
Series.
Section 2. Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or a transfer or similar agent for
the Trust, which books shall be maintained separately for the Shares of
each Series . No certificates certifying the ownership of Shares shall
be issued except as the Board of Trustees may otherwise determine from
time to time. The Trustees may make such rules as they consider
appropriate for the transfer of Shares of each Series and similar
matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent, as the case may be, shall be conclusive as
to who are the Shareholders of each Series and as to the number of
Shares of each Series held from time to time by each.
Section 3. Investments in the Trust. Investments may be accepted by
the Trust from such Persons, at such times, on such terms, and for such
considerations as the Trustees from time to time may authorize. The
Board of Trustees has the right to suspend sales of Shares of any
series or to decline to sell Shares to any investor, in its sole
discretion.
Section 4. Status of Shares and Limitations of Personal Liability.
Shares shall be deemed to be personal property giving only the rights
provided in this instrument. Every Shareholder by virtue of having
become a Shareholder shall be held to have expressly assented and
agreed to the terms hereof and to have become a party hereto. The
death of a Shareholder during the existence of the Trust shall not
operate to terminate the Trust, nor entitle the representative of any
deceased Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but entitles such
representative only to the rights of said deceased Shareholder under
this Trust. Ownership of Shares shall not entitle the Shareholder to
any title in or to the whole or any part of the Trust Property or right
to call for a partition or division of the same or for an accounting,
nor shall the ownership of Shares constitute the Shareholders as
partners. Neither the Trust nor the Trustees, nor any officer,
employee or agent of the Trust shall have any power to bind personally
any Shareholders nor, except as specifically provided herein, to call
upon any Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time
personally agree to pay.
Section 5. Power of Board of Trustees to Change Provisions Relating to
Shares. Notwithstanding any other provisions of this Declaration of
Trust and without limiting the power of the Board of Trustees to amend
the Declaration of Trust as provided elsewhere herein, the Board of
Trustees shall have the power to amend this Declaration of Trust, at
any time and from time to time, in such manner as the Board of Trustees
may determine in their sole discretion, without the need for
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Shareholder action, so as to add to, delete, replace or otherwise
modify any provisions relating to the Shares contained in this
Declaration of Trust including, without limitation, the power to
establish separate classes of shares within any Series and determine
the relative rights and preferences of any such class, provided that
the creation of separate classes within any Series comports with
applicable requirements of the 1940 Act and other applicable law. If
Shares have been issued, Shareholder approval shall be required to
adopt any amendments to this Declaration of Trust which would adversely
affect to a material degree the rights and preferences of the Shares of
any Series or to increase or decrease the par value of the Shares of
any Series. Subject to the foregoing Paragraph, the Board of Trustees
may amend the Declaration of Trust to amend any of the provisions
set forth in paragraphs (a) through (i) of Section 6 of this
Article III.
Section 6. Establishment and Designation of Shares. The establishment
and designation of any Series of Shares shall be effective upon the
resolution by a majority of the then Trustees, adopting a resolution
which sets forth such establishment and designation and the relative
rights and preferences of such Series . Each such resolution shall be
incorporated herein by reference upon adoption.
Shares of each Series established pursuant to this Section 6, unless
otherwise provided in the resolution establishing such Series, shall
have the following relative rights and preferences:
(a) Assets Held with Respect to a Particular Series. All
consideration received by the Trust for the issue or sale of Shares of
a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits,
and proceeds thereof from whatever source derived, including, without
limitation, any proceeds derived from the sale, exchange or liquidation
of such assets, and any funds or payments derived from any reinvestment
of such proceeds in whatever form the same may be, shall irrevocably be
held with respect to that Series for all purposes, subject only to the
rights of creditors, and shall be so recorded upon the books of account
of the Trust. Such consideration, assets, income, earnings, profits
and proceeds thereof, from whatever source derived, including, without
limitation, any proceeds derived from the sale, exchange or liquidation
of such assets, and any funds or payments derived from any reinvestment
of such proceeds, in whatever form the same may be, are herein referred
to as "assets held with respect to" that Series. In the event that
there are any assets, income, earnings, profits and proceeds thereof,
funds or payments which are not readily identifiable as assets held
with respect to any particular Series (collectively "General Assets"),
the Trustees shall allocate such General Assets to, between or among
any one or more of the Series in such manner and on such basis as the
Trustees, in their sole discretion, deem fair and equitable, and any
General Asset so allocated to a particular Series shall be held with
respect to that Series. Each such allocation by the Trustees shall be
conclusive and binding upon the Shareholders of all Series for all
purposes.
(b) Liabilities Held with Respect to a Particular Series. The assets
of the Trust held with respect to each particular Series shall be
charged against the liabilities of the Trust held with respect to that
Series and all expenses, costs, charges and reserves attributable to
that Series, and any general liabilities of the Trust which are not
readily identifiable as being held with respect to any particular
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Series shall be allocated and charged by the Trustees to and among any
one or more of the Series in such manner and on such basis as the
Trustees in their sole discretion deem fair and equitable. The
liabilities, expenses, costs, charges, and reserves so charged to a
Series are herein referred to as "liabilities held with respect to"
that Series. Each allocation of liabilities, expenses, costs, charges
and reserves by the Trustees shall be conclusive and binding upon the
holders of all Series for all purposes. All Persons who have extended
credit which has been allocated to a particular Series, or who have a
claim or contract which has been allocated to any particular Series,
shall look, and shall be required by contract to look exclusively, to
the assets of that particular Series for payment of such credit, claim,
or contract. In the absence of an express contractual agreement so
limiting the claims of such creditors, claimants and contract
providers, each creditor, claimant and contract provider will be deemed
nevertheless to have impliedly agreed to such limitation unless an
express provision to the contrary has been incorporated in the written
contract or other document establishing the claimant relationship.
(c) Dividends, Distributions, Redemptions, and Repurchases.
Notwithstanding any other provisions of this Declaration of Trust,
including, without limitation, Article VI, no dividend or distribution
including, without limitation, any distribution paid upon termination
of the Trust or of any Series with respect to, nor any redemption or
repurchase of, the Shares of any Series shall be effected by the Trust
other than from the assets held with respect to such Series, nor,
except as specifically provided in Section 7 of this Article III, shall
any Shareholder of any particular Series otherwise have any right or
claim against the assets held with respect to any other Series except
to the extent that such Shareholder has such a right or claim hereunder
as a Shareholder of such other Series. The Trustees shall have full
discretion, to the extent not inconsistent with the 1940 Act, to
determine which items shall be treated as income and which items as
capital; and each such determination and allocation shall be conclusive
and binding upon the Shareholders.
(d) Voting. All Shares of the Trust entitled to vote on a matter
shall vote separately by Series, that is, the Shareholders of each
Series shall have the right to approve or disapprove matters affecting
the Trust and each respective Series as if the Series were separate
companies. There are, however, two exceptions to voting by separate
Series. First, if the 1940 Act requires all Shares of the Trust to be
voted in the aggregate without differentiation between the separate
Series, then all the Trust's Shares shall be entitled to vote on a
one-vote-per-Share basis. Second, if any matter affects only the
interests of some but not all Series then only the Shareholders of such
affected Series shall be entitled to vote on the matter.
(e) Equality. All the Shares of each particular Series shall
represent an equal proportionate interest in the assets held with
respect to that Series, and each Share of any particular Series shall
be equal to each other Share of that Series.
(f) Fractions. Any fractional Share of a Series shall carry
proportionately all the rights and obligations of a whole share of that
Series, including rights with respect to voting, receipt of dividends
and distributions, redemption of Shares and termination of the Trust.
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(g) Exchange Privilege. The Trustees shall have the authority to
provide that the holders of Shares of any Series shall have the right
to exchange said Shares for Shares of one or more other Series of
Shares in accordance with such requirements and procedures as may be
established by the Trustees.
(h) Combination of Series. The Trustees shall have the authority,
without the approval of the Shareholders of any Series unless otherwise
required by applicable law, to combine the assets and liabilities held
with respect to any two or more Series into assets and liabilities held
with respect to a single Series.
(i) Elimination of Series. At any time that there are no Shares
outstanding of any particular Series previously established and
designated, the Trustees may by resolution abolish that Series and
rescind the establishment and designation thereof.
Section 7. Indemnification of Shareholders. If any Shareholder or
former Shareholder shall be exposed to liability by reason of a claim
or demand relating to his or her being or having been a Shareholder,
and not because of his or her acts or omissions, the Shareholder or
former Shareholder (or his or her heirs, executors, administrators, or
other legal representatives or in the case of a corporation or other
entity, its corporate or other general successor) shall be entitled to
be held harmless from and indemnified out of the assets of the Trust
against all loss and expense arising from such claim or demand.
ARTICLE IV
The Board of Trustees
Section 1. Number, Election and Tenure. The number of Trustees
constituting the Board of Trustees shall be fixed from time to time by
a written instrument signed, or by resolution approved at a duly
constituted meeting, by a majority of the Board of Trustees, provided,
however, that the number of Trustees shall in no event be less than one
(1) nor more than fifteen (15). The Board of Trustees, by action of a
majority of the then Trustees at a duly constituted meeting, may fill
vacancies in the Board of Trustees or remove Trustees with or without
cause. Each Trustee shall serve until the next meeting of Shareholders
called for the purpose of electing Trustees and until the election and
qualification of his or her successor, unless he or she sooner resigns,
is declared bankrupt or incompetent by a court of appropriate
jurisdiction, is removed or dies. Any Trustee may resign at any time
by written instrument signed by him and delivered to any officer of the
Trust or to a meeting of the Trustees. Such resignation shall be
effective upon receipt unless specified to be effective at some other
time. Except to the extent expressly provided in a written agreement
with the Trust, no Trustee resigning and no Trustee removed shall have
any right to any compensation for any period following his or her
resignation or removal, or any right to damages on account of such
removal. The Shareholders may elect Trustees at any meeting of
Shareholders called by the Trustees for that purpose. Any Trustee may
be removed at any meeting of Shareholders by a vote of two-thirds of
the outstanding Shares of the Trust. A meeting of Shareholders for the
purpose of electing or removing one or more Trustees may be called (i)
by the Trustees upon their own vote, or (ii) upon the demand of
Shareholders owning 10% or more of the Shares of the Trust in the
aggregate.
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Section 2. Effect of Death, Resignation, etc. of a Trustee. The
death, declination, resignation, retirement, removal, or incapacity of
one or more Trustees, or all of them, shall not operate to annul the
Trust or to revoke any existing agency created pursuant to the terms of
this Declaration of Trust. Whenever a vacancy in the Board of Trustees
shall occur, until such vacancy is filled as provided in Article IV,
Section 1, the Trustees in office, regardless of their number, shall
have all the powers granted to the Trustees and shall discharge all the
duties imposed upon the Trustees by this Declaration of Trust. As
conclusive evidence of such vacancy, a written instrument certifying
the existence of such vacancy may be executed by an officer of the
Trust or by a majority of the Board of Trustees. In the event of the
death, declination, resignation, retirement, removal, or incapacity of
all the then Trustees within a short period of time and without the
opportunity for at least one Trustee being able to appoint additional
Trustees to fill vacancies, the Trust's Investment Manager(s) are
empowered to appoint new Trustees subject to the provisions of Section
16(a) of the 1940 Act.
Section 3. Powers. Subject to the provisions of this Declaration of
Trust, the business of the Trust shall be managed by the Board of
Trustees, and such Board shall have all powers necessary or convenient
to carry out that responsibility including the power to engage in
securities transactions of all kinds on behalf of the Trust. Without
limiting the foregoing, the Trustees may: adopt By-Laws not
inconsistent with this Declaration of Trust providing for the
regulation and management of the affairs of the Trust and may amend and
repeal them to the extent that such By-Laws do not reserve that right
to the Shareholders; fill vacancies in or remove from their number, and
may elect and remove such officers and appoint and terminate such
agents as they consider appropriate; to contract for management,
administrative, advisory, and other services for the Trust or for any
Series, in accordance with Section 7 of the Article IV; establish, from
time to time, an executive committee and/or such other committee or
committees of the Board of Trustees consisting of two or more Trustees
(unless otherwise expressly provided by the By-Laws), which committee
may exercise such powers and authority as may be provided in the
By-Laws or as otherwise determined by the Board of Trustees; employ one
or more custodians of the assets of the Trust and authorize such
custodians to employ subcustodians and to deposit all or any part of
such assets in a system or systems for the central handling of
securities or with a Federal Reserve Bank, retain a transfer agent or a
shareholder servicing agent, or both; provide for the issuance and
distribution of Shares by the Trust directly or through one or more
Principal Underwriters or otherwise; redeem, repurchase and transfer
Shares pursuant to applicable law; set record dates for the
determination of Shareholders with respect to various matters; declare
and pay dividends and distributions to Shareholders of each Series from
the assets of such Series; and in general delegate such authority as
they consider desirable to any officer of the Trust, to any committee
of the Trustees and to any agent or employee of the Trust or to any
such custodian, transfer or shareholder servicing agent, or Principal
Underwriter. Any determination as to what is in the interests of the
Trust made by the Trustees in good faith shall be conclusive. In
construing the provisions of this Declaration of Trust, the presumption
shall be in favor of a grant of power to the Trustees. Any action by
the Board of Trustees shall be deemed effective if approved or taken by
a majority of the Trustees then in office unless this Declaration of
Trust, the By-Laws, the 1940 Act or other applicable law expressly
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provides otherwise, and provided that any such action may be taken by
any committee of the Board of Trustees duly constituted under this
Declaration of Trust and under the By-Laws and acting in accordance
with such By-Laws, and notwithstanding that such committee may consist
of fewer than a majority of the Trustees then in office.
Without limiting the foregoing, the Trust shall have power and
authority:
(a) To invest and reinvest cash, to hold cash uninvested, and to
subscribe for, invest in, reinvest in, purchase or otherwise acquire,
own, hold, pledge, sell, assign, transfer, exchange, distribute, write
options on, lend or otherwise deal in securities and contracts for the
future acquisition or delivery of fixed income securities or other
instruments (including, for this purpose, contracts relating to
currencies in which securities that the Trust may invest in are
denominated) of every nature and kind, including, without limitation,
all types of bonds, debentures, stocks, negotiable or non-negotiable
instruments, obligations, evidences of indebtedness, certificates of
deposit or indebtedness, commercial paper, repurchase agreements,
bankers' acceptances, and other securities of any kind, issued,
created, guaranteed, or sponsored by any and all Persons, including,
without limitation, states, territories, and possessions of the United
States and the District of Columbia and any political subdivision,
agency, or instrumentality thereof, any foreign government or any
political subdivision of the U.S. Government or any foreign government,
or any international instrumentality, or by any bank or savings
institution, or by any corporation or organization organized under the
laws of the United States or of any state, territory, or possession
thereof, or by any corporation or organization organized under any
foreign law, or in "when issued" contracts for any such securities, to
change the investments of the assets of the Trust; and to exercise any
and all rights, powers, and privileges of ownership or interest in
respect of any and all such investments of every kind and description,
including, without limitation, the right to consent and otherwise act
with respect thereto, with power to designate one or more Persons, to
exercise any of said rights, powers, and privileges in respect of any
of said instruments;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, lease, or
write options with respect to or otherwise deal in any property rights
relating to any or all of the assets of the Trust or any Series;
(c) To vote or give assent, or exercise any rights of ownership, with
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respect to stock or other securities or property; and to execute and
deliver proxies or powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such
power and discretion with relation to securities or property as the
Trustees shall deem proper;
(d) To exercise powers and right of subscription or otherwise which in
any manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form, or in
its own name or in the name of a custodian or subcustodian or a nominee
or nominees or otherwise;
(f) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer of any security
which is held in the Trust; to consent to any contract, lease,
mortgage, purchase or sale of property by such corporation or issuer;
and to pay calls or subscriptions with respect to any security held in
the Trust;
(g) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to
deposit any security with, or transfer any security to, any such
committee, depositary or trustee, and to delegate to them such power
and authority with relation to any security (whether or not so
deposited or transferred) as the Trustees shall deem proper, and to
agree to pay, and to pay, such portion of the expenses and compensation
of such committee, depositary or trustee as the Trustees shall deem
proper;
(h) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including but not
limited to claims for taxes;
(i) To enter into joint ventures, general or limited partnerships and
any other combinations or associations;
(j) To borrow funds or other property in the name of the Trust
exclusively for Trust purposes;
(k) To endorse or guarantee the payment of any notes or other
obligations of any Person; to make contracts of guaranty or suretyship,
or otherwise assume liability for payment thereof;
(l) To purchase and pay for entirely out of Trust Property such
insurance as the Trustees may deem necessary or appropriate for the
conduct of the business, including, without limitation, insurance
policies insuring the assets of the Trust or payment of distributions
and principal on its portfolio investments, and insurance policies
insuring the Shareholders, Trustees, officers, employees, agents,
investment advisers, Managers, principal underwriters, or independent
contractors of the Trust, individually against all claims and
liabilities of every nature arising by reason of holding Shares,
holding, being or having held any such office or position, or by reason
of any action alleged to have been taken or omitted by any such Person
as Trustee, officer, employee, agent, investment adviser, Manager,
principal underwriter, or independent contractor, including any action
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taken or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such Person
against liability; and
(m) To adopt, establish and carry out pension, profit-sharing, share
bonus, share purchase, savings, thrift and other retirement, incentive
and benefit plans, trusts and provisions, including the purchasing of
life insurance and annuity contracts as a means of providing such
retirement and other benefits, for any or all of the Trustees,
officers, employees and agents of the Trust.
The Trust shall not be limited to investing in obligations maturing
before the possible termination of the Trust or one or more of its
Series. The Trust shall not in any way be bound or limited by any
present or future law or custom in regard to investment by fiduciaries.
The Trust shall not be required to obtain any court order to deal with
any assets of the Trust or take any other action hereunder.
Section 4. Payment of Expenses by the Trust. The Trustees are
authorized to pay or cause to be paid out of the principal or income of
the Trust, or partly out of the principal and partly out of income, as
they deem fair, all expenses, fees, charges, taxes and liabilities
incurred or arising in connection with the Trust, or in connection with
the management thereof, including, but not limited to, the Trustees'
compensation and such expenses and charges for the services of the
Trust's officers, employees, investment adviser or Manager, principal
underwriter, auditors, counsel, custodian, transfer agent, Shareholder
servicing agent, and such other agents, consultants, or independent
contractors and such other expenses and charges as the Trustees may
deem necessary or proper to incur.
Section 5. Payment of Expense by Shareholders. The Trustees shall
have the power, as frequently as they may determine, to cause each
Shareholder, or each Shareholder of any particular Series, to pay
directly, in advance or arrears, for charges of the Trust's custodian
or transfer agent, Shareholder servicing or similar agent, an amount
fixed from time to time by the Trustees, by setting off such charges
due from such Shareholder from declared but unpaid dividends owed such
Shareholder and/or by reducing the number of shares in the account of
such Shareholder by that number of full and/or fractional Shares which
represents the outstanding amount of such charges due from such
Shareholder.
Section 6. Ownership of Assets of the Trust. Title to all of the
assets of the Trust shall at all times be considered as vested in the
Trust, except that the Trustees shall have power to cause legal title
to any Trust Property to be held by or in the name of one or more of
the Trustees, or in the name of the Trust, or in the name of any other
Person as nominee, on such terms as the Trustees may determine. The
right, title and interest of the Trustees in the Trust Property shall
vest automatically in each Person who may hereafter become a Trustee.
Upon the resignation, removal or death of a Trustee he or she shall
automatically cease to have any right, title or interest in any of the
Trust Property, and the right, title and interest of such Trustee in
the Trust Property shall vest automatically in the remaining Trustees.
Such vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered.
Section 7. Service Contracts.
(a) The Trustees may, at any time and from time to time, contract for
exclusive or nonexclusive advisory, management, consulting and/or
administrative services for the Trust or for any Series with any
corporation, trust, association or other organization; and any such
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contract may contain such other terms as the Trustees may determine,
including without limitation, authority for the Investment Manager(s)
or administrator to determine from time to time without prior
consultation with the Trustees what investments shall be purchased,
held, sold or exchanged and what portion, if any, of the assets of the
Trust shall be held uninvested and to make changes in the Trust's
investments, or such other activities as may specifically be delegated
to such party.
(b) The Trustees may also, at any time and from time to time, contract
with any corporation, trust, association or other organization,
appointing it exclusive or nonexclusive distributor or Principal
Underwriter for the Shares of one or more of the Series or other
securities to be issued by the Trust.
(c) The Trustees are also empowered, at any time and from time to
time, to contract with any corporations, trusts, associations or other
organizations, appointing it or them the custodian, transfer agent
and/or shareholder servicing agent for the Trust or one or more of its
Series.
(d) The Trustees are further empowered, at any time and from time to
time, to contract with any entity to provide such other services to the
Trust or one or more of the Series, as the Trustees determine to be in
the best interests of the Trust and the applicable Series.
(e) In the event that
(i) any Shareholder, Trustee, or officer of the Trust is a
shareholder, director, officer, partner, trustee, employee,
affiliate or agent of any Person (or of any affiliate or parent of
such Person) with which a service contract of any kind may have
been or may hereafter be made, or has any other interest in any
Service Provider (or in any affiliate or agent of such Service
Provider);
(ii) any Service Provider (or any affiliate or agent of any Service
Provider) is a Shareholder of or has any other interest in the
Trust; or
(iii) any Service Provider (or any affiliate or agent of any
Service Provider) has entered into, or may at any time enter into a
service contract with Persons other that the Trust;
such fact shall not affect the validity of any contract between a
Service Provider and the Trust, or disqualify any Shareholder, Trustee
or officer of the Trust from voting upon or executing any such
contract, nor shall any liability or accountability to the Trust or its
Shareholders arise solely as a result of any interest identified in
(i), (ii) or (iii) above on the part of any such Shareholder, Trustee
or officer to the Trust, provided that all applicable resuirements of
the 1940 are satisfied.
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers. Subject to the provisions of Article III,
Section 6(d), the Shareholders shall have power to vote only (i) for
the election or removal of Trustees as provided in Article IV, Section
1, and (ii) with respect to such additional matters relating to the
Trust as may be required by this Declaration of Trust, the By-Laws or
any registration of the Trust with the Commission (or any successor
agency) or any state, or as the Trustees may consider necessary or
desirable. Each whole Share shall be entitled to one vote as to any
matter on which it is entitled to vote and each fractional Share shall
be entitled to a proportionate fractional vote. There shall be no
cumulative voting in the election of Trustees. Shares may be voted in
person or by proxy. A proxy with respect to Shares held in the name of
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two or more persons shall be valid if executed by any one of them
unless at or prior to exercise of the proxy the Trust receives a
specific written notice to the contrary from any one of them. A proxy
purporting to be executed by or on behalf of a Shareholder shall be
deemed valid unless challenged at or prior to its exercise and the
burden of proving invalidity shall rest on the challenger.
Section 2. Voting Power and Meetings. Meetings of the Shareholders
may be called by the Trustees for the purpose of electing Trustees as
provided in Article IV, Section 1 and for such other purposes as may be
prescribed by law, by this Declaration of Trust or by the By-Laws.
Meetings of the Shareholders may also be called by the Trustees from
time to time for the purpose of taking action upon any other matter
deemed by the Trustees to be necessary or desirable. A meeting of
Shareholders may be held at any place designated by the Trustees.
Written notice of any meeting of Shareholders shall be given or caused
to be given by the Trustees by mailing such notice at least seven (7)
days before such meeting, postage prepaid, stating the time and place
of the meeting, to each Shareholder at the Shareholder's address as it
appears on the records of the Trust. Whenever notice of a meeting is
required to be given to a Shareholder under this Declaration of Trust
or the By-Laws, a written waiver thereof, executed before or after the
meeting by such Shareholder or his or her attorney thereunto authorized
and filed with the records of the meeting, shall be deemed equivalent
to such notice.
Section 3. Quorum and Required Vote. Except when a larger quorum is
required by applicable law, by the By-Laws or by this Declaration of
Trust, forty percent (40%) of the Shares "entitled to vote" (as that
term is defined in the By-Laws) shall constitute a quorum at a
Shareholders' meeting. When one or more Series is to vote on a
particular matter as a single Series separate from Shares of any other
Series , forty percent (40%) of the Shares of each such Series
entitled to vote shall constitute a quorum of the holders of such
Series . Any meeting of Shareholders may be adjourned from time to
time by a majority of the "votes properly cast" (as that term is
defined in the By-Laws) upon the question of adjourning a meeting to
another date and time, whether or not a quorum is present, and the
meeting may be held as adjourned within a reasonable time after the
date set for the original meeting without further notice. Subject to
the provisions of Article III, Section 6(d), when a quorum is present
at any meeting, a majority of the Shares "voted" (as that term is
defined in the By-Laws) shall decide any questions properly before the
meeting and a plurality shall elect a Trustee, except when a larger
vote is required by any provision of this Declaration of Trust, the
By-Laws, the 1940 Act or other applicable law.
Section 4. Action by Written Consent. Any action taken by
Shareholders may be taken without a meeting if Shareholders holding a
majority of the Shares entitled to vote on the matter (or such larger
proportion thereof as shall be required by any express provision of
this Declaration of Trust or by the By-Laws) and holding a majority (or
such larger proportion as aforesaid) of the Shares of any Series
entitled to vote separately on the matter consent to the action in
writing and such written consents are filed with the records of the
meetings of Shareholders. Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
Section 5. Record Dates. For the purpose of determining the
Shareholders of any Series who are entitled to vote or act at any
meeting or any adjournment thereof, the Trustees may from time to time
fix a time, which shall be not more than ninety (90) days before the
date of any meeting of Shareholders, as the record date for determining
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the Shareholders of such Series having the right to notice of and to
vote at such meeting and any adjournment thereof, and in such case only
Shareholders of record on such record date shall have such right,
notwithstanding any transfer of shares on the books of the Trust after
the record date. For the purpose of determining the Shareholders of
any Series who are entitled to receive payment of any dividend or of
any other distribution, the Trustees may from time to time fix a date,
which shall be before the date for the payment of such dividend or such
other payment, as the record date for determining the Shareholders of
such Series having the right to receive such dividend or distribution.
Without fixing a record date the Trustees may for voting and/or
distribution purposes close the register or transfer books for one or
more Series for all or any part of the period between a record date and
a meeting of Shareholders or the payment of a distribution. Nothing in
this Section shall be construed as precluding the Trustees from setting
different record dates for different Series .
Section 6. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VI
Net Asset Value, Distributions, and Redemptions
Section 1. Determination of Net Asset Value, Net Income, and
Distributions. Subject to Article III, Section 6 hereof, the Trustees,
in their absolute discretion, may prescribe and shall set forth in the
By-laws or in a duly adopted vote of the Trustees such bases and time
for determining the net asset value of the Shares of any Series or net
income attributable to the Shares of any Series , or the declaration
and payment of dividends and distributions on the Shares of any Series
, as they may deem necessary or desirable.
Section 2. Redemptions and Repurchases. The Trust shall honor
requests for redemption, upon the presentation of a proper instrument
of transfer together with a request directed to the Trust or a Person
designated by the Trust that the Trust purchase such Shares or in
accordance with such other procedures for redemption as the Trustees
may from time to time authorize; and the Trust will pay therefor the
net asset value thereof, in accordance with the By-Laws and applicable
law. Payment for said Shares shall be made by the Trust to the
Shareholder within seven days after the date on which the request is
made in proper form. The obligation set forth in this Section 2 is
subject to the provision that in the event that at any time the New
York Stock Exchange (the "Exchange") is closed for other than weekends
or holidays, or if permitted by the Rules of the Commission during
periods when trading on the Exchange is restricted or during any
emergency which makes it impracticable for the Trust to dispose of the
investments of the applicable Series or to determine fairly the value
of the net assets held with respect to such Series or during any other
period permitted by order of the Commission for the protection of
investors, such obligations may be suspended or postponed by the
Trustees.
The redemption price may in any case or cases be paid wholly or partly
in kind if the Trustees determine that such payment is advisable in the
interest of the remaining Shareholders of the Series for which the
shares are being redeemed. Subject to the foregoing, the fair value,
selection and quantity of securities or other property so paid or
delivered as all or part of the redemption price may be determined by
or under authority of the Trustees. In no case shall the Trust be
liable for any delay on the part of any corporation or other Person in
transferring securities selected for delivery as all or part of any
payment in kind.
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Section 3. Redemptions at the Option of the Trust. The Trust shall
have the right at its option and at any time to redeem Shares of any
Shareholder at the net asset value thereof as described in Section 1 of
this Article VI: (i) if at such time such Shareholder owns Shares of
any Series having an aggregate net asset value of less than an amount
determined from time to time by the Trustees prior to the acquisition
of said Shares; or (ii) to the extent that such Shareholder owns Shares
of a particular Series equal to or in excess of a percentage of the
outstanding Shares of that Series determined from time to time by the
Trustees; (iii) to the extent that such Shareholder owns Shares equal
to or in excess of a percentage, determined from time to time by the
Trustees, of the outstanding Shares of the Trust or of any Series; or,
(iv) in accordance with any agreement by and among all Shareholders of
record of the Trust, provided such agreement is consistent with the
1940 Act and other applicable law.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
Section 1. Compensation. The Trustees as such shall be entitled to
reasonable compensation from the Trust, and they may fix the amount of
such compensation. Nothing herein shall in any way prevent the
employment of any Trustee for advisory, management, legal, accounting,
investment banking or other services and payment for the same by the
Trust.
Section 2. Indemnification and Limitation of Liability. The Trustees
shall not be responsible or liable in any event for any neglect or
wrong-doing of any officer, agent, employee, Manager or Principal
Underwriter of the Trust, nor shall any Trustee be responsible for the
act or omission of any other Trustee, and the Trust out of its assets
shall indemnify and hold harmless each and every Trustee from and
against any and all claims and demands whatsoever arising out of or
related to each Trustee's performance of his or her duties as a Trustee
of the Trust; provided that nothing herein contained shall indemnify,
hold harmless or protect any Trustee from or against any liability to
the Trust or any Shareholder to which he or she would otherwise be
subject by reason of wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her
office.
Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever issued, executed or done by or on
behalf of the Trust or the Trustees or any of them in connection with
the Trust shall be conclusively deemed to have been issued, executed or
done only in or with respect to their or his or her capacity as
Trustees or Trustee, and such Trustees or Trustee shall not be
personally liable thereon.
Section 3. Trustee's Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees of their powers and discretion
hereunder shall be binding upon everyone interested. A Trustee shall
be liable to the Trust and to any Shareholder solely for his or her own
wilful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of the office of Trustee, and
shall not be liable for errors of judgment or mistakes of fact or law.
The Trustees may take advice of counsel or other experts with respect
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to the meaning and operation of this Declaration of Trust, and shall be
under no liability for any act or omission in accordance with such
advice nor for failing to follow such advice. The Trustees shall not
be required to give any bond as such, nor any surety if a bond is
required.
Section 4. Insurance. The Trustees shall be entitled and empowered to
the fullest extent permitted by law to purchase with Trust assets
insurance for liability and for all expenses reasonably incurred or
paid or expected to be paid by a Trustee or officer in connection with
any claim, action, suit or proceeding in which he or she becomes
involved by virtue of his or her capacity or former capacity with the
Trust.
ARTICLE VIII
Miscellaneous
Section 1. Liability of Third Persons Dealing with Trustees. No
Person dealing with the Trustees shall be bound to make any inquiry
concerning the validity of any transaction made or to be made by the
Trustees or to see to the application of any payments made or property
transferred to the Trust or upon its order.
Section 2. Termination of Trust or Series. Unless terminated as
provided herein, the Trust shall continue without limitation of time.
The Trust may be terminated at any time by vote of a majority of the
Shares of each Series entitled to vote, voting separately by Series, or
by the Trustees by written notice to the Shareholders. Any Series may
be terminated at any time by vote of a majority of the Shares of that
Series or by the Trustees by written notice to the Shareholders of that
Series.
Upon termination of the Trust (or any Series, as the case may be),
after paying or otherwise providing for all charges, taxes, expenses
and liabilities held, severally, with respect to each Series (or the
applicable Series, as the case may be), whether due or accrued or
anticipated as may be determined by the Trustees, the Trust shall, in
accordance with such procedures as the Trustees consider appropriate,
reduce the remaining assets held, severally, with respect to each
Series (or the applicable Series, as the case may be), to distributable
form in cash or shares or other securities, or any combination thereof,
and distribute the proceeds held with respect to each Series (or the
applicable Series, as the case may be), to the Shareholders of that
Series, as a Series, ratably according to the number of Shares of that
Series held by the several Shareholders on the date of termination.
Section 3. Merger and Consolidation. The Trustees may cause (i) the
Trust or one or more of its Series to the extent consistent with
applicable law to be merged into or consolidated with another Trust or
company, (ii) the Shares of the Trust or any Series to be converted
into beneficial interests in another business trust (or series thereof)
created pursuant to this Section 3 of Article VIII, or (iii) the Shares
to be exchanged under or pursuant to any state or federal statute to
the extent permitted by law. Such merger or consolidation, Share
conversion or Share exchange must be authorized by vote of a majority
of the outstanding Shares of the Trust, as a whole, or any affected
Series, as may be applicable; provided that in all respects not
governed by statute or applicable law, the Trustees shall have power to
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prescribe the procedure necessary or appropriate to accomplish a sale
of assets, merger or consolidation including the power to create one or
more separate business trusts to which all or any part of the assets,
liabilities, profits or losses of the Trust may be transferred and to
provide for the conversion of Shares of the Trust or any Series into
beneficial interests in such separate business trust or trusts (or
series thereof).
Section 4. Amendments. This Declaration of Trust may be restated
and/or amended at any time by an instrument in writing signed by a
majority of the then Trustees or by a majority of the then Trustees, by
resolution approved at a meeting of the Trust's Board of Trustees. The
approval of the Trust's Shareholders will not be required with respect
to any such restatement or amendment unless (i) such approval is
mandated by applicable state law or the 1940 Act; or (ii) such approval
is found by a majority of the Trustees, in their sole discretion and by
resolution, to be appropriate or desirable. Any such restatement
and/or amendment hereto shall be effective immediately upon execution
and approval. The Certificate of Trust of the Trust may be restated
and/or amended by a similar procedure, and any such restatement and/or
amendment shall be effective immediately upon filing with the Office of
the Secretary of State of the State of Delaware or upon such future
date as may be stated therein.
Section 5. Filing of Copies, References, Headings. The original or a
copy of this instrument and of each restatement and/or amendment hereto
shall be kept at the office of the Trust where it may be inspected by
any Shareholder. Anyone dealing with the Trust may rely on a
certificate by an officer of the Trust as to whether or not any such
restatements and/or amendments have been made and as to any matters in
connection with the Trust hereunder; and, with the same effect as if it
were the original, may rely on a copy certified by an officer of the
Trust to be a copy of this instrument or of any such restatements
and/or amendments. In this instrument and in any such restatements
and/or amendment, references to this instrument, and all expressions
like "herein", "hereof" and "hereunder", shall be deemed to refer to
this instrument as amended or affected by any such restatements and/or
amendments. Headings are placed herein for convenience of reference
only and shall not be taken as a part hereof or control or affect the
meaning, construction or effect of this instrument. Whenever the
singular number is used herein, the same shall include the plural; and
the neuter, masculine and feminine genders shall include each other, as
applicable. This instrument may be executed in any number of
counterparts each of which shall be deemed an original.
Section 6. Applicable Law. This Agreement and Declaration of Trust is
created under and is to be governed by construed and administered
according to the laws of the State of Delaware and the Delaware
Business Trust Act, as amended from time to time (the "Act"). The
Trust shall be a Delaware business trust pursuant to such Act, and
without limiting the provisions hereof, the Trust may exercise all
powers which are ordinarily exercised by such a business trust.
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Section 7. Provisions in Conflict with Law or Regulations.
(a) The provisions of the Declaration of Trust are severable, and if
the Trustees shall determine, with the advice of counsel, that any of
such provisions is in conflict with the 1940 Act, the regulated
investment company provisions of the Internal Revenue Code or with
other applicable laws and regulations, the conflicting provision shall
be deemed never to have constituted a part of the Declaration of Trust;
provided, however, that such determination shall not affect any of the
remaining provisions of the Declaration of Trust or render invalid or
improper any action taken or omitted prior to such determination.
(b) If any provision of the Declaration of Trust shall be held invalid
or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provision in any
other jurisdiction or any other provision of the Declaration of Trust
in any jurisdiction.
Section 8. Business Trust Only. It is the intention of the Trustees
to create a business trust pursuant to the Delaware Business Trust Act,
as amended from time to time (the "Act"), and thereby to create only
the relationship of trustee and beneficial owners within the meaning of
such Act between the Trustees and each Shareholder. It is not the
intention of the Trustees to create a general partnership, limited
partnership, joint stock association, corporation, bailment, or any
form of legal relationship other than a business trust pursuant to such
Act. Nothing in this Declaration of Trust shall be construed to make
the Shareholders, either by themselves or with the Trustees, partners
or members of a joint stock association.
By-Laws
of
The Hirtle Callaghan Trust
(a Delaware Business Trust)
(as last amended November 9, 1995)
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TABLE OF CONTENTS
BY-LAWS
The Hirtle Callaghan Trust
Page
ARTICLE I OFFICES 1
1. PRINCIPAL OFFICE 1
2. DELAWARE OFFICE 1
3. OTHER OFFICES 1
ARTICLE II MEETINGS OF SHAREHOLDERS 1
1. PLACE OF MEETINGS 1
2. CALL OF MEETING 1
3. NOTICE OF SHAREHOLDERS' MEETING 1
4. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE 1
5. ADJOURNED MEETING; NOTICE 2
6. VOTING 2
7. WAIVER OF NOTICE BY CONSENT OF ABSENT SHAREHOLDERS 2
8. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING 2
9. RECORD DATE FOR SHAREHOLDER NOTICE, VOTING AND GIVING
CONSENTS 3
10. PROXIES 3
11. INSPECTORS OF ELECTION 3
ARTICLE III TRUSTEES 4
1. POWERS 4
2. NUMBER OF TRUSTEES 4
3. VACANCIES 4
4. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE 4
5. REGULAR AND SPECIAL MEETINGS 4
6. NOTICE OF MEETINGS 4
7. QUORUM 5
8. WAIVER OF NOTICE 5
9. ADJOURNMENT 5
10. NOTICE OF ADJOURNMENT 5
11. ACTION WITHOUT A MEETING 5
12. FEES AND COMPENSATION OF TRUSTEES. 5
13. DELEGATION OF POWER TO OTHER TRUSTEES 5
ARTICLE IV COMMITTEES 6
1. COMMITTEES OF TRUSTEES 6
2. MEETINGS AND ACTION OF COMMITTEES 6
ARTICLE V OFFICERS 6
1. OFFICERS 6
2. ELECTION OF OFFICERS 7<PAGE>
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3. SUBORDINATE OFFICERS 7
4. REMOVAL AND RESIGNATION OF OFFICERS 7
5. VACANCIES IN OFFICES 7
6. CHAIRMAN OF THE BOARD 7
7. PRESIDENT 7
8. VICE PRESIDENTS 7
9. SECRETARY 7
10. TREASURER 8
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ARTICLE VI INDEMNIFICATION OF TRUSTEES, OFFICERS,EMPLOYEES AND
OTHER
AGENTS 8
1. AGENTS, PROCEEDINGS AND EXPENSES 8
2. ACTIONS OTHER THAN BY TRUST 8
3. ACTIONS BY THE TRUST 8
4. EXCLUSION OF INDEMNIFICATION 9
5. SUCCESSFUL DEFENSE BY AGENT 9
6. REQUIRED APPROVAL 9
7. ADVANCE OF EXPENSES 9
8. OTHER CONTRACTUAL RIGHTS 10
9. LIMITATIONS 10
10. INSURANCE 10
11. FIDUCIARIES OF EMPLOYEE BENEFIT PLAN 10
ARTICLE VII RECORDS AND REPORTS 10
1. MAINTENANCE AND INSPECTION OF SHARE REGISTER 10
2. MAINTENANCE AND INSPECTION OF BY-LAWS 10
3. MAINTENANCE AND INSPECTION OF OTHER RECORDS 10
4. INSPECTION BY TRUSTEES 11
ARTICLE VIII GENERAL MATTERS 11
1. CHECKS, DRAFTS, EVIDENCE OF INDEBTEDNESS 11
2. CONTRACTS AND INSTRUMENTS; HOW EXECUTED 11
3. CERTIFICATES FOR SHARES 11
4. REPRESENTATION OF SHARES OF OTHER ENTITIES HELD BY TRUST 11
5. FISCAL YEAR 11
ARTICLE IX AMENDMENTS 11
1. 11
AMENDMENT BY TRUSTEES 11
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BY-LAWS
OF
The Hirtle Callaghan Trust
A Delaware Business Trust
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal executive office of The Hirtle
Callaghan Trust (the "Trust") shall be 575 E. Swedesford Road, Wayne PA.
19087. The Board of Trustees may, from time to time, fix the location of the
principal executive office of the Trust, by resolution, to any place within or
outside the State of Delaware.
Section 2. DELAWARE OFFICE. The Board of Trustees shall establish a
registered office in the State of Delaware and shall appoint as the Trust's
registered agent for service of process in the State of Delaware an individual
resident of the State of Delaware or a Delaware corporation or a foreign
corporation authorized to transact business in the State of Delaware; in each
case the business office of such registered agent for service of process shall
be identical with the registered Delaware office of the Trust.
Section 3. OTHER OFFICES. The Board of Trustees may at any time establish
branch or subordinate offices at any place or places where the Trust intends to
do business.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. PLACE OF MEETINGS. Meetings of shareholders shall be held at any
place designated by the Board of Trustees. In the absence of any such
designation, shareholders' meetings shall be held at the principal executive
office of the Trust.
Section 2. CALL OF MEETING. A meeting of the shareholders may be called at
any time by the Board of Trustees or by the Chairman of the Board or by the
President.
Section 3. NOTICE OF SHAREHOLDERS' MEETING. All notices of meetings of
shareholders shall be sent or otherwise given in accordance with Section 4 of
this Article II not less than seven (7) nor more than seventy-five (75) days
before the date of the meeting. The notice shall specify (i) the place, date
and hour of the meeting, and (ii) the general nature of the business to be
transacted. The notice of any meeting at which Trustees are to be elected also
shall include the name of any nominee or nominees whom at the time of the
notice are intended to be presented for election. If action is proposed to be
taken at any meeting for approval of (i) a contract or transaction in which a
Trustee has a direct or indirect financial interest, (ii) an amendment of the
Agreement and Declaration of Trust of the Trust, (iii) a reorganization of the
Trust, or (iv) a voluntary dissolution of the Trust, the notice shall also
state the general nature of that proposal.
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Section 4. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE. Notice of any
meeting of shareholders shall be given either personally or by first-class mail
or telegraphic or other written communication, charges prepaid, addressed to
the shareholder at the address of that shareholder appearing on the books of
the Trust or its transfer agent or given by the shareholder to the Trust for
the purpose of notice. If no such address appears on the Trust's books or is
given, notice shall be deemed to have been given if sent to that shareholder by
first-class mail or telegraphic or other written communication to the Trust's
principal executive office, or if published at least once in a newspaper of
general circulation in the county where that office is located. Notice shall
be deemed to have been given at the time when delivered personally or deposited
in the mail or sent by telegram or other means of written communication.
If any notice addressed to a shareholder at the address of that shareholder
appearing on the books of the Trust is returned to the Trust by the United
States Postal Service marked to indicate that the Postal Service is unable to
deliver the notice to the shareholder at that address, all future notices or
reports shall be deemed to have been duly given without further mailing if
these shall be available to the shareholder on written demand of the
shareholder at the principal executive office of the Trust for a period of one
year from the date of the giving of the notice.
An affidavit of the mailing or other means of giving any notice of any
shareholder's meeting shall be executed by the Secretary, Assistant Secretary
or any transfer agent of the Trust giving the notice and shall be filed and
maintained in the minute book of the Trust.
Section 5. ADJOURNED MEETING; NOTICE. Any shareholder's meeting, whether or
not a quorum is present, may be adjourned from time to time by the vote of the
majority of the shares represented at that meeting, either in person or by
proxy. When any meeting of the shareholders is adjourned to another time or
place, notice need not be given of the adjourned meeting at which the
adjournment is taken, unless a new record date of the adjourned meeting is
fixed or unless the adjournment is for more than sixty (60) days from the date
set for the original meeting, in which case the Board of Trustees shall set a
new record date. Notice of any such adjourned meeting shall be given to each
shareholder of record entitled to vote at the adjourned meeting in accordance
with the provisions of Sections 3 and 4 of this Article II. At any adjourned
meeting, the Trust may transact any business which might have been transacted
at the original meeting.
Section 6. VOTING. The shareholders entitled to vote at any meeting of
shareholders shall be determined in accordance with the provisions of the
Agreement and Declaration of Trust of the Trust, as in effect at such time.
The shareholders' vote may be by voice vote or by ballot, provided, however,
that any election for Trustees must be by ballot if demanded by any shareholder
before the voting has begun. On any matter other than elections of Trustees,
any shareholder may vote part of the shares in favor of the proposal and
refrain from voting the remaining shares or vote them against the proposal, but
if the shareholder fails to specify the number of shares which the shareholder
is voting affirmatively, it will be conclusively presumed that the
shareholder's approving vote is with respect to the total shares that the
shareholder is entitled to vote on such proposal.
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Section 7. WAIVER OF NOTICE BY CONSENT OF ABSENT SHAREHOLDERS. The
transactions of the meeting of shareholders, however called and noticed and
wherever held, shall be as valid as though had at a meeting duly held after
regular call and notice if a quorum be present either in person or by proxy and
if either before or after the meeting, each person entitled to vote who was not
present in person or by proxy signs a written waiver of notice or a consent to
a holding of the meeting or an approval of the minutes. The waiver of notice
or consent need not specify either the business to be transacted or the purpose
of any meeting of shareholders.
Attendance by a person at a meeting shall also constitute a waiver of notice of
that meeting, except when the person objects at the beginning of the meeting to
the transaction of any business because the meeting is not lawfully called or
convened and except that attendance at a meeting is not a waiver of any right
to object to the consideration of matters not included in the notice of the
meeting if that objection is expressly made at the beginning of the meeting.
Section 8. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
Any
action which may be taken at any meeting of shareholders may be taken without a
meeting and without prior notice if a consent in writing setting forth the
action so taken is signed by the holders of outstanding shares having not less
than the minimum number of votes that would be necessary to authorize or take
that action at a meeting at which all shares entitled to vote on that action
were present and voted. All such consents shall be filed with the Secretary of
the Trust and shall be maintained in the Trust's records. Any shareholder
giving a written consent or the shareholder's proxy holders or a transferee of
the shares or a personal representative of the shareholder or their respective
proxy holders may revoke the consent by a writing received by the Secretary of
the Trust before written consents of the number of shares required to authorize
the proposed action have been filed with the Secretary.
If the consents of all shareholders entitled to vote have not been solicited in
writing and if the unanimous written consent of all such shareholders shall not
have been received, the Secretary shall give prompt notice of the action
approved by the shareholders without a meeting. This notice shall be given in
the manner specified in Section 4 of this Article II. In the case of approval
of (i) contracts or transactions in which a Trustee has a direct or indirect
financial interest, (ii) indemnification of agents of the Trust, and (iii) a
reorganization of the Trust, the notice shall be given at least ten (10) days
before the consummation of any action authorized by that approval.
Section 9. RECORD DATE FOR SHAREHOLDER NOTICE, VOTING AND GIVING
CONSENTS.
For purposes of determining the shareholders entitled to notice of any meeting
or to vote or entitled to give consent to action without a meeting, the Board
of Trustees may fix in advance a record date which shall not be more than
ninety (90) days nor less than seven (7) days before the date of any such
meeting as provided in the Agreement and Declaration of Trust of the Trust.
If the Board of Trustees does not so fix a record date:
(a) The record date for determining shareholders entitled to notice of or to
vote at a meeting of shareholders shall be at the close of business on the
business day next preceding the day on which notice is given or if notice is
waived, at the close of business on the business day next preceding the day on
which the meeting is held.
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(b) The record date for determining shareholders entitled to give consent to
action in writing without a meeting, (i) when no prior action by the Board of
Trustees has been taken, shall be the day on which the first written consent is
given, or (ii) when prior action of the Board of Trustees has been taken, shall
be at the close of business on the day on which the Board of Trustees adopt the
resolution relating to that action or the seventy-fifth day before the date of
such other action, whichever is later.
Section 10. PROXIES. Every person entitled to vote for Trustees or on any
other matter shall have the right to do so either in person or by one or more
agents authorized by a written proxy signed by the person and filed with the
Secretary of the Trust. A proxy shall be deemed signed if the shareholder's
name is placed on the proxy (whether by manual signature, typewriting,
telegraphic transmission or otherwise) by the shareholder or the shareholder's
attorney-in-fact. A validly executed proxy which does not state that it is
irrevocable shall continue in full force and effect unless (i) revoked by the
person executing it before the vote pursuant to that proxy by a writing
delivered to the Trust stating that the proxy is revoked or by a subsequent
proxy executed by or attendance at the meeting and voting in person by the
person executing that proxy; or (ii) written notice of the death or incapacity
of the maker of that proxy is received by the Trust before the vote pursuant to
that proxy is counted; provided however, that no proxy shall be valid after the
expiration of eleven (11) months from the date of the proxy unless otherwise
provided in the proxy.
Section 11. INSPECTORS OF ELECTION. Before any meeting of shareholders, the
Board of Trustees may appoint any persons other than nominees for office to act
as inspectors of election at the meeting or its adjournment. If no inspectors
of election are so appointed, the chairman of the meeting may and on the
request of any shareholder or a shareholder's proxy shall, appoint inspectors
of election at the meeting. The number of inspectors shall be either one (1)
or three (3). If inspectors are appointed at a meeting on the request of one
or more shareholders or proxies, the holders of a majority of shares or their
proxies present at the meeting shall determine whether one (1) or three (3)
inspectors are to be appointed. If any person appointed as inspector fails to
appear or fails or refuses to act, the chairman of the meeting may and on the
request of any shareholder or a shareholder's proxy, shall appoint a person to
fill the vacancy. In the event that inspectors of election are appointed, such
inspectors shall: (a) Determine the number of shares outstanding and the voting
power of each, the shares represented at the meeting, the existence of a quorum
and the authenticity, validity and effect of proxies; (b) Receive votes,
ballots or consents; (c) Hear and determine all challenges and questions in any
way arising in connection with the right to vote; (d) Count and tabulate all
votes or consents; (e)Determine when the polls shall close; (f) Determine the
result; and (g) Do any other acts that may be proper to conduct the election
or vote with fairness to all shareholders.
ARTICLE III
TRUSTEES
Section 1. POWERS. Subject to the applicable provisions of the Agreement and
Declaration of Trust of the Trust and these By-Laws relating to action required
to be approved by the shareholders or by the outstanding shares, the business
and affairs of the Trust shall be managed and all powers shall be exercised by
or under the direction of the Board of Trustees.
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Section 2. NUMBER OF TRUSTEES. The number of Trustees of the Trust shall be
six, provided, however, that the Board of Trustees may, within the limits
specified in the Agreement and Declaration of Trust of the Trust and by a
written instrument signed, or a resolution approved at a duly constituted
meeting, by a majority of the Board of Trustees, fix a greater or lesser number
of Trustees.
Section 3. VACANCIES. Vacancies on the Board of Trustees may be filled by a
majority of the remaining Trustees, though less than a quorum, or by a sole
remaining Trustee, unless the Board of Trustees calls a meeting of shareholders
for the purposes of electing Trustees. In the event that at any time less than
a majority of the Trustees holding office at that time were so elected by the
holders of the outstanding voting securities of the Trust, the Board of
Trustees shall forthwith cause to be held as promptly as possible, and in any
event within a time period that will satisfy applicable requirements of the
Investment Company Act of 1940 ("1940 Act"), a meeting of such holders for the
purpose of electing Trustees to fill any existing vacancies on the Board of
Trustees.
Section 4. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE. All meetings of the
Board of Trustees may be held at any place that has been designated from time
to time by resolution of the Board. In the absence of such a designation,
regular meetings shall be held at the principal executive office of the Trust.
Any meeting, regular or special, may be held by conference telephone or similar
communication equipment, so long as all Trustees participating in the meeting
can hear one another and all such Trustees shall be deemed to be present in
person at the meeting.
Section 5. REGULAR AND SPECIAL MEETINGS. Regular meetings of the Board of
Trustees shall be held without call at least four times during each fiscal
year, at such times as shall from time to time be fixed by the Board of
Trustees. Such regular meetings may be held without notice, except that a
notice of meeting shall be delivered in accordance with these By-laws with
respect to any regular meeting at which a matter that may be acted upon by the
Board of Trustees under the 1940 Act only at meeting called for the purposed of
acting upon such matter. Upon notice to each of the Trustee, special meetings
of the Board of Trustees for any purpose or purposes may be called at any time
by the Chairman of the Board or the President or any Vice President or the
Secretary or any two (2) Trustees.
Section 6. NOTICE OF MEETINGS.
Notices of special meetings or regular meetings (if such notice is required)
shall be in writing and shall include the date and time of the meeting, as
well as a description of the matters expected to be considered at any such
meeting. The notice need not specify the place that the meeting is to be held
if the meeting will take place at the principal executive office of the Trust.
Notwithstanding the foregoing, if a matter not indicated on the notice of any
such meeting properly comes before any such meeting, the Board may take action
on such matter provided that it is not a matter which, under the 1940 Act, may
be acted upon only at a meeting called for the purpose of acting on such
matter. Notices may be delivered to each Trustee in person, by facsimile or
other electronic means, by first-class mail, telegram or other recognized
delivery service addressed to each Trustee at that Trustee's business address
or residence as it is shown on the records of the Trust or such other address
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designated by the Trustee for such delivery, provided that, where written
notice of a meeting is required under these By-laws, such notice is delivered
by means reasonably likely to be received by each Trustees at least 48 hours
prior to the date of the meeting to which such notice relates is to be held.
Section 7. QUORUM. A majority of the total number of Trustees specified in
Section2 of this Article III shall constitute a quorum for the transaction of
business, except to adjourn as provided in Section 10 of this Article III.
Every act or decision done or made by a majority of the Trustees present at a
meeting duly held at which a quorum is present shall be regarded as the act of
the Board of Trustees, unless the Agreement and Declaration of Trust of the
Trust expressly provides otherwise with respect to any matter. A meeting at
which a quorum is initially present may continue to transact business
notwithstanding the withdrawal of Trustees if any action taken is approved by
at least a majority of the required quorum for that meeting.
Section 8. WAIVER OF NOTICE. Notice of any meeting need not be given to any
Trustee who either before or after the meeting signs a written waiver of
notice, a consent to holding the meeting, or an approval of the minutes. The
waiver of notice or consent must specify the purpose of the meeting only if a
matter that may be acted upon by the Board of Trustees under the 1940 Act only
at meeting called for the purposed of acting upon such matter is to be
considered at the meeting to which the waiver relates. All such waivers,
consents, and approvals shall be filed with the records of the Trust or made a
part of the minutes of the meeting. Notice of a meeting shall also be deemed
given to any Trustee who attends the meeting without protesting before or at
its commencement the lack of notice to that Trustee.
Section 9. ADJOURNMENT. A majority of the Trustees present, whether or not
constituting a quorum, may adjourn any meeting to another time and place.
Section 10. NOTICE OF ADJOURNMENT. Notice of the time and place of holding an
adjourned meeting need not be given unless the meeting is adjourned for more
than forty-eight (48) hours, in which case notice of the time and place shall
be given before the time of the adjourned meeting in the manner specified in
Section 6 of this Article III, both to the Trustees who were present at the
time of the adjournment and all other Trustees.
Section 11. ACTION WITHOUT A MEETING. Any action required or permitted to be
taken by the Board of Trustees may be taken without a meeting if a majority of
the members of the Board of Trustees shall individually or collectively consent
in writing to that action, unless the matter to be acted upon may be acted upon
requires, under the 1940 Act, the vote, cast in person, of a majority of those
Trustees who are not "interested persons" of the Trust as that term is defined
by the 1940 Act. Action by written consent shall have the same force and
effect as a majority vote of the Board of Trustees. Such written consent or
consents shall be filed with the minutes of the proceedings of the Board of
Trustees.
Section 12. FEES AND COMPENSATION OF TRUSTEES. Trustees and members of
committees may receive such compensation, if any, for their services and such
reimbursement of expenses as may be fixed or determined by resolution of the
Board of Trustees. This Section 12 shall not be construed to preclude any
Trustee from serving the Trust in any other capacity as an officer, agent,
employee, or otherwise and receiving compensation for those services.
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Section 13. DELEGATION OF POWER TO OTHER TRUSTEES. Any Trustee may, by power
of attorney, delegate his power for a period not exceeding six (6) months at
any one time to any other Trustee or Trustees; provided that in no case shall
fewer than two (2) Trustees personally exercise the powers granted to the
Trustees under the Agreement and Declaration of Trust of the Trust except as
otherwise expressly provided herein or by resolution of the Board of Trustees.
Except where applicable law may require a Trustee to be present in person, a
Trustee represented by another Trustee pursuant to such power of attorney shall
be deemed to be present for purposes of establishing a quorum and satisfying
the required majority vote.
ARTICLE IV
COMMITTEES
Section 1. COMMITTEES OF TRUSTEES.
(a) The Board of Trustees may by resolution adopted by a majority of the
authorized number of Trustees designate one or more committees, each
consisting of two (2) or more Trustees, to serve at the pleasure of the
Board. The Board may designate one or more Trustees as alternate members
of any committee who may replace any absent member at any meeting of the
committee. Any committee to the extent provided in the resolution of the
Board, shall have the authority of the Board, except with respect to: (i)
the approval of any action which the 1940 Act or other applicable law
requires be approved by a majority of those Trustees who are not
"interested persons" of the Trust as that term is defined by the 1940 Act
and/or the approval of a majority of the Board of Trustees; (ii) the
filling of vacancies on the Board of Trustees, the appointment of members
of any committee or the establishment of any new committee; (iii) the
fixing of compensation of the Trustees for serving on the Board of Trustees
or on any committee; or (iv) any proposal that would amend Agreement and
Declaration of Trust or the By-laws. Notwithstanding the foregoing, the
Board of Trustees may establish a Pricing committee consisting of one or
more Trustees and shall include, as ex-officio members, the Trust's
Vice-President or any assistant vice president and Treasurer or any
Assistant Treasurer. The Pricing Committee shall be authorized to act on
behalf of the Board of Trustees in connection with issues arising between
regular meetings of the Board of Trustees relating to the pricing of the
Trust's shares, provided that any action taken by the Pricing Committee is
reported to the full Board, and ratified by a majority of the Board of
Trustees not later than at the next regularly scheduled meeting of the
Board of Trustees.
(b) The Board of Trustees shall establish an Executive Committee,
consisting of three Trustees, all of whom may be persons who are
"interested persons" of the Trust, as that term is defined by the 1940 Act.
The Executive Committee shall have the authority to act with respect to any
matter in the stead of the full Board of Trustees, except as expressly
limited by the preceding paragraph. The Executive Committee is further
authorized to consider any matter with respect to which action by the full
Board of Trustees is necessary or appropriate, and to make recommendations,
either in written or oral form, with respect to any such matter to the full
Board of Trustees. The Executive Committee shall maintain written records
of its meetings and shall report, either in writing or orally, to the full
Board of Trustees at each regular meeting of the Board, on any meeting and
any action taken at any meeting of the Executive Committee, since the prior
regular meeting of the full Board.
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Section 2. MEETINGS AND ACTION OF COMMITTEES. Meetings and action of
committees shall be governed by and held and taken in accordance with the
provisions of Article III of these By-Laws, with such changes in the context
thereof as are necessary to substitute the committee and its members for the
Board of Trustees and its members, except that the time of regular meetings of
committees may be determined either by resolution of the Board of Trustees or
by resolution of the committee. Special meetings of committees may also be
called by resolution of the Board of Trustees. Alternate members shall be
given notice of meetings of committees and shall have the right to attend all
meetings of committees. The Board of Trustees may adopt rules for the
governance of any committee not inconsistent with the provisions of these
By-Laws.
ARTICLE V
OFFICERS
Section 1. OFFICERS. The officers of the Trust shall be a Chairman, a
President, a Secretary, and a Treasurer. The Trust may also have, at the
discretion of the Board of Trustees, a Chairman of the Board, one or more Vice
Presidents, one or more Assistant Secretaries, one or more Assistant
Treasurers, and such other officers as may be appointed in accordance with the
provisions of Section 3 of this Article V. Any number of offices may be held
by the same person.
Section 2. ELECTION OF OFFICERS. The officers of the Trust, except such
officers as may be appointed in accordance with the provisions of Section 3 or
Section 5 of this Article V, shall be chosen by the Board of Trustees, and each
shall serve at the pleasure of the Board of Trustees, subject to the rights, if
any, of an officer under any contract of employment.
Section 3. SUBORDINATE OFFICERS. The Board of Trustees may appoint and may
empower the President to appoint such other officers as the business of the
Trust may require, each of whom shall hold office for such period, have such
authority and perform such duties as are provided in these By-Laws or as the
Board of Trustees may from time to time determine.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS. Subject to the rights, if
any, of an officer under any contract of employment, any officer may be
removed, either with or without cause, by the Board of Trustees at any regular
or special meeting of the Board of Trustees or by the principal executive
officer or by such other officer upon whom such power of removal may be
conferred by the Board of Trustees.
Any officer may resign at any time by giving written notice to the Trust. Any
resignation shall take effect at the date of the receipt of that notice or at
any later time specified in that notice; and unless otherwise specified in that
notice, the acceptance of the resignation shall not be necessary to make it
effective. Any resignation is without prejudice to the rights, if any, of the
Trust under any contract to which the officer is a party.
Section 5. VACANCIES IN OFFICES. A vacancy in any office because of death,
resignation, removal, disqualification or other cause shall be filled in the
manner prescribed in these By-Laws for regular appointment to that office. The
President may make temporary appointments to a vacant office pending action by
the Board of Trustees.
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Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board shall if present
preside at meetings of the Board of Trustees and perform such other powers and
duties as may be from time to time assigned to him by the Board of Trustees or
prescribed by the By-Laws.
Section 7. PRESIDENT. The President shall be the chief executive officer of
the Trust and shall, subject to the control of the Board of Trustees, have
general supervision, direction and control of the business and the officers of
the Trust. He shall preside at all meetings of the shareholders and in the
absence of the Chairman of the Board or if there be none, at all meetings of
the Board of Trustees. He shall have the general powers and duties of
management usually vested in the office of President of a corporation and shall
have such other powers and duties as may be prescribed by the Board of Trustees
or these By-Laws.
Section 8. VICE PRESIDENTS. In the absence or disability of the President,
the Vice Presidents, if any, shall perform all the duties of the President and
when so acting shall have all powers of and be subject to all the restrictions
upon the President. The Vice Presidents shall have such other powers and
perform such other duties as from time to time may be prescribed for them
respectively by the Board of Trustees or the President or the Chairman of the
Board or by these By-Laws.
Section 9. SECRETARY. The Secretary shall keep or cause to be kept at the
principal executive office of the Trust or such other place as the Board of
Trustees may direct a book of minutes of all meetings and actions of Trustees,
committees of Trustees and shareholders with the time and place of holding,
whether regular or special, and if special, how authorized, the notice given,
the names of those present at Trustees' meetings or committee meetings, the
number of shares present or represented at shareholders' meetings, and the
proceedings. The Secretary shall give or cause to be given notice of all
meetings of the shareholders and of the Board of Trustees required to be given
by these By-Laws or by applicable law and shall have such other powers and
perform such other duties as may be prescribed by the Board of Trustees or by
these By-Laws.
Section 10. TREASURER. The Treasurer shall be the chief financial officer and
chief accounting officer of the Trust and shall keep and maintain or cause to
be kept and maintained adequate and correct books and records of accounts of
the properties and business transactions of the Trust, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings and shares. The books of account shall at all reasonable
times be open to inspection by any Trustee.
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The Treasurer shall deposit all monies and other valuables in the name and to
the credit of the Trust with such depositaries as may be designated by the
Board of Trustees. He shall disburse the funds of the Trust as may be ordered
by the Board of Trustees, shall render to the President and Trustees, whenever
they request it, an account of all of his transactions as chief financial
officer and of the financial condition of the Trust and shall have other powers
and perform such other duties as may be prescribed by the Board of Trustees or
these By-Laws.
ARTICLE VI
INDEMNIFICATION OF TRUSTEES, OFFICERS,
EMPLOYEES AND OTHER AGENTS
Section 1. AGENTS, PROCEEDINGS AND EXPENSES. For the purpose of this Article,
"agent" means any person who is or was a Trustee, officer, employee or other
agent of this Trust or is or was serving at the request of this Trust as a
Trustee, director, officer, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust or other enterprise or was a
Trustee, director, officer, employee or agent of a foreign or domestic
corporation which was a predecessor of another enterprise at the request of
such predecessor entity; "proceeding" means any threatened, pending or
completed action or proceeding, whether civil, criminal, administrative or
investigative; and "expenses" includes without limitation attorney's fees and
any expenses of establishing a right to indemnification under this Article.
Section 2. ACTIONS OTHER THAN BY TRUST. This Trust shall indemnify any person
who was or is a party or is threatened to be made a party to any proceeding
(other than an action by or in the right of this Trust) by reason of the fact
that such person is or was an agent of this Trust, against expenses, judgments,
fines, settlements and other amounts actually and reasonably incurred in
connection with such proceeding, if it is determined that person acted in good
faith and reasonably believed: (a) in the case of conduct in his official
capacity as a Trustee of the Trust, that his conduct was in the Trust's best
interests and (b) in all other cases, that his conduct was at least not opposed
to the Trust's best interests and (c) in the case of a criminal proceeding,
that he had no reasonable cause to believe the conduct of that person was
unlawful. The termination of any proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent shall not of
itself create a presumption that the person did not act in good faith and in a
manner which the person reasonably believed to be in the best interests of this
Trust or that the person had reasonable cause to believe that the person's
conduct was unlawful.
Section 3. ACTIONS BY THE TRUST. This Trust shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action by or in the right of this Trust to procure a
judgment in its favor by reason of the fact that the person is or was an agent
of this Trust, against expenses actually and reasonably incurred by that person
in connection with the defense or settlement of that action if that person
acted in good faith, in a manner that person believed to be in the best
interests of this Trust and with such care, including reasonable inquiry, as an
ordinarily prudent person in a like position would use under similar
circumstances.
Section 4. EXCLUSION OF INDEMNIFICATION. Notwithstanding any provision to the
contrary contained herein, there shall be no right to indemnification for any
liability arising by reason of willful misfeasance, bad faith, gross
negligence, or the reckless disregard of the duties involved in the conduct of
the agent's office with this Trust.
No indemnification shall be made under Sections 2 or 3 of this Article:
(a) In respect of any claim, issue, or matter as to which that person shall
have been adjudged to be liable on the basis that personal benefit was
improperly received by him, whether or not the benefit resulted from an action
taken in the person's official capacity; or
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(b) In respect of any claim, issue or matter as to which that person shall have
been adjudged to be liable in the performance of that person's duty to this
Trust, unless and only to the extent that the court in which that action was
brought shall determine upon application that in view of all the circumstances
of the case, that person was not liable by reason of the disabling conduct set
forth in the preceding paragraph and is fairly and reasonably entitled to
indemnity for the expenses which the court shall determine; or
(c) Of amounts paid in settling or otherwise disposing of a threatened or
pending action, with or without court approval, or of expenses incurred in
defending a threatened or pending action which is settled or otherwise disposed
of without court approval, unless the required approval set forth in Section 6
of this Article is obtained.
Section 5. SUCCESSFUL DEFENSE BY AGENT. To the extent that an agent of this
Trust has been successful on the merits in defense of any proceeding referred
to in Sections 2 or 3 of this Article or in defense of any claim, issue or
matter therein, before the court or other body before whom the proceeding was
brought, the agent shall be indemnified against expenses actually and
reasonably incurred by the agent in connection therewith, provided that the
Board of Trustees, including a majority who are disinterested, non-party
Trustees, also determines that based upon a review of the facts, the agent was
not liable by reason of the disabling conduct referred to in Section 4 of this
Article.
Section 6. REQUIRED APPROVAL. Except as provided in Section 5 of this
Article, any indemnification under this Article shall be made by this Trust
only if authorized in the specific case on a determination that indemnification
of the agent is proper in the circumstances because the agent has met the
applicable standard of conduct set forth in Sections 2 or 3 of this Article and
is not prohibited from indemnification because of the disabling conduct set
forth in Section 4 of this Article, by:
(a) A majority vote of a quorum consisting of Trustees who are not parties to
the proceeding and are not interested persons of the Trust (as defined in the
Investment Company Act of 1940); or
(b) A written opinion by an independent legal counsel.
Section 7. ADVANCE OF EXPENSES. Expenses incurred in defending any proceeding
may be advanced by this Trust before the final disposition of the proceeding
provided (a) receipt of a written affirmation by the Trustee of his good faith
belief that he has met the standard of conduct necessary for indemnification
under this Article and a written undertaking by or on behalf of the agent, such
undertaking being an unlimited general obligation to repay the amount of the
advance if it is ultimately determined that he has not met those requirements,
and (b) a determination that the facts then known to those making the
determination would not preclude indemnification under this Article.
Determinations and authorizations of payments under this Section must be made
in the manner specified in Section 6 of this Article for determining that the
indemnification is permissible.
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Section 8. OTHER CONTRACTUAL RIGHTS. Nothing contained in this Article shall
affect any right to indemnification to which persons other than Trustees and
officers of this Trust or any subsidiary hereof may be entitled by contract or
otherwise.
Section 9. LIMITATIONS. No indemnification or advance shall be made under
this Article, except as provided in Sections 5 or 6 in any circumstances where
it appears:
(a) That it would be inconsistent with a provision of the Agreement and
Declaration of Trust of the Trust, a resolution of the shareholders, or an
agreement in effect at the time of accrual of the alleged cause of action
asserted in the proceeding in which the expenses were incurred or other amounts
were paid which prohibits or otherwise limits indemnification; or
(b) That it would be inconsistent with any condition expressly imposed by a
court in approving a settlement.
Section 10. INSURANCE. Upon and in the event of a determination by the Board
of Trustees of this Trust to purchase such insurance, this Trust shall purchase
and maintain insurance on behalf of any agent of this Trust against any
liability asserted against or incurred by the agent in such capacity or arising
out of the agent's status as such, but only to the extent that this Trust would
have the power to indemnify the agent against that liability under the
provisions of this Article and the Agreement and Declaration of Trust of the
Trust.
Section 11. FIDUCIARIES OF EMPLOYEE BENEFIT PLAN. This Article does not apply
to any proceeding against any Trustee, investment manager or other fiduciary of
an employee benefit plan in that person's capacity as such, even though that
person may also be an agent of this Trust as defined in Section 1 of this
Article. Nothing contained in this article shall limit any right to
indemnification to which such a Trustee, investment manager, or other fiduciary
may be entitled by contract or otherwise which shall be enforceable to the
extent permitted by applicable law other than this Article.
ARTICLE VII
RECORDS AND REPORTS
Section 1. MAINTENANCE AND INSPECTION OF SHARE REGISTER. This Trust shall
keep at its principal executive office or at the office of its transfer agent
or registrar, if either be appointed and as determined by resolution of the
Board of Trustees, a record of its shareholders, giving the names and addresses
of all shareholders and the number and series of shares held by each
shareholder.
Section 2. MAINTENANCE AND INSPECTION OF BY-LAWS. The Trust shall keep at its
principal executive office the original or a copy of these By-Laws as amended
to date, which shall be open to inspection by the shareholders at all
reasonable times during office hours.
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Section 3. MAINTENANCE AND INSPECTION OF OTHER RECORDS. The accounting
books
and records of the Trust shall be kept by, and at the officers of the Trust's
administrator and accounting services agent. Minutes of proceedings of the
shareholders and the Board of Trustees and any committee or committees of the
Board of Trustees shall be kept such place or places designated by the Board of
Trustees or in the absence of such designation, at the principal executive
office of the Trust. The minutes shall be kept in written form and the
accounting books and records shall be kept either in written form or in any
other form capable of being converted into written form. The minutes and
accounting books and records shall be open to inspection upon the written
demand of any shareholder or holder of a voting trust certificate at any
reasonable time during usual business hours for a purpose reasonably related to
the holder's interests as a shareholder or as the holder of a voting trust
certificate. The inspection may be made in person or by an agent or attorney
and shall include the right to copy and make extracts.
Section 4. INSPECTION BY TRUSTEES. Every Trustee shall have the absolute
right at any reasonable time to inspect all books, records, and documents of
every kind and the physical properties of the Trust. This inspection by a
Trustee may be made in person or by an agent or attorney and the right of
inspection includes the right to copy and make extracts of documents.
ARTICLE VIII
GENERAL MATTERS
Section 1. CHECKS, DRAFTS, EVIDENCE OF INDEBTEDNESS. All checks, drafts, or
other orders for payment of money, notes or other evidences of indebtedness
issued in the name of or payable to the Trust shall be signed or endorsed in
such manner and by such person or persons as shall be designated from time to
time in accordance with the resolution of the Board of Trustees.
Section 2. CONTRACTS AND INSTRUMENTS; HOW EXECUTED. The Board of Trustees,
except as otherwise provided in these By-Laws, may authorize any officer or
officers, agent or agents, to enter into any contract or execute any instrument
in the name of and on behalf of the Trust and this authority may be general or
confined to specific instances; and unless so authorized or ratified by the
Board of Trustees or within the agency power of an officer, no officer, agent,
or employee shall have any power or authority to bind the Trust by any contract
or engagement or to pledge its credit or to render it liable for any purpose or
for any amount.
Section 3. CERTIFICATES FOR SHARES. All shares of the Trust shall be
uncertificated and shall be issued in accordance with such system of issuance,
recordation and transfer of its shares by electronic or other means as may be
from time to time used by its transfer agent or registrar..
Section 4. REPRESENTATION OF SHARES OF OTHER ENTITIES HELD BY TRUST. The
Chairman of the Board, the President or any Vice President or any other person
authorized by resolution of the Board of Trustees or by any of the foregoing
designated officers, is authorized to vote or represent on behalf of the Trust
any and all shares of any corporation, partnership, trusts, or other entities,
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foreign or domestic, standing in the name of the Trust. The authority granted
may be exercised in person or by a proxy duly executed by such designated
person.
Section 5. FISCAL YEAR. The fiscal year of the Trust and each Series of the
Trust shall be fixed as June 30 of each year, provided however, that the fiscal
year may be changed from time to time by resolution of the Trustees.
ARTICLE IX
AMENDMENTS
Section 1. AMENDMENT BY TRUSTEES. Subject to the right of shareholders as
provided in Section 1 of this Article to adopt, amend or repeal By-Laws, and
except as otherwise provided by applicable law or by the Agreement and
Declaration of Trust of the Trust, these By-Laws may be adopted, amended, or
repealed by the Board of Trustees.
DISTRIBUTION AGREEMENT
AGREEMENT made this 1st day of October, 1996, between THE HIRTLE
CALLAGHAN TRUST (the "Trust"), a Delaware business trust, and BISYS FUND
SERVICES LIMITED PARTNERSHIP d/b/a BISYS FUND SERVICES ("Distributor").
WHEREAS, the Trust is an open-end management investment company,
organized as a Delaware business trust and registered with the Securities and
Exchange Commission (the "Commission") under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, it is intended that Distributor act as the distributor of the
units of beneficial interest ("Shares") of each of the investment portfolios
of the Trust (such portfolios being referred to individually as a "Fund" and
collectively as the "Funds").
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. SERVICES AS DISTRIBUTOR; CONVERSION TO THE SERVICES.
1.1 Distributor (i) will act as agent for the distribution of the
Shares covered by the registration statement and prospectus of the Trust then
in effect under the Securities Act of 1933, as amended (the "Securities Act")
and (ii) will perform such additional services as are provided in this Section
1 (collectively, the "Services"). In connection therewith, the Trust agrees
to convert to the Distributor's data processing systems and software (the
"BISYS System"). The Trust shall cooperate with the Distributor to provide
the Distributor with all necessary information and assistance required to
successfully convert to the BISYS System. The Distributor shall provide the
Trust with a schedule relating to such conversion and the parties agree that
the conversion may progress in stages. The date upon which all Services shall
have been converted to the BISYS System shall be referred to herein as the
"Conversion Date." The parties hereby agree that the Conversion Date shall be
no later than January 1, 1997. The Distributor hereby accepts such engagement
and agrees to perform the Services commencing, with respect to each individual
Service, on the date that the conversion of such Service to the BISYS System
has been completed. The Distributor shall determine in accordance with its
normal acceptance procedures when the applicable Service has been successfully
converted. As used in this Agreement, the term "registration statement" shall
mean Parts A (the prospectus), B (the Statement of Additional Information) and
C of each registration statement that is filed on Form N-1A, or any successor
thereto, with the Commission, together with any amendments thereto. The term
"prospectus" shall mean each form of prospectus and Statement of Additional
Information used by the Funds for delivery to shareholders and prospective
shareholders after the effective dates of the above-referenced registration
statements, together with any amendments and supplements thereto.
1.2 Distributor agrees to use appropriate efforts to solicit
orders for the sale of the Shares and will undertake such advertising and
promotion as it believes reasonable in connection with such solicitation. The
Trust understands that Distributor is now and may in the future be the
distributor of the shares of several investment companies or series (together,
"Investment Companies") including Investment Companies having investment
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objectives similar to those of the Trust. The Trust further understands that
investors and potential investors in the Trust may invest in shares of such
other Investment Companies. The Trust agrees that Distributor's duties to
such Investment Companies shall not be deemed in conflict with its duties to
the Trust under this paragraph 1.2.
Distributor shall, at its own expense, finance appropriate
activities which it deems reasonable, which are primarily intended to result
in the sale of the Shares, including, but not limited to, advertising,
compensation of underwriters, dealers and sales personnel, the printing and
mailing of prospectuses to other than current Shareholders, and the printing
and mailing of sales literature.
1.3 In its capacity as distributor of the Shares, all activities
of Distributor and its partners, agents, and employees shall comply with all
applicable laws, rules and regulations, including, without limitation, the
1940 Act, all rules and regulations promulgated by the Commission thereunder
and all rules and regulations adopted by any securities association registered
under the Securities Exchange Act of 1934.
1.4 Distributor will provide one or more persons, during normal
business hours, to respond to telephone questions with respect to the Trust.
1.5 Distributor will transmit any orders received by it for
purchase or redemption of the Shares to the transfer agent and custodian for
the Funds.
1.6 Whenever in their judgment such action is warranted by unusual
market, economic or political conditions, or by abnormal circumstances of any
kind, the Trust's officers may decline to accept any orders for, or make any
sales of, the Shares until such time as those officers deem it advisable to
accept such orders and to make such sales.
1.7 Distributor will act only on its own behalf as principal if it
chooses to enter into selling agreements with selected dealers or others.
1.8 The Trust agrees at its own expense to execute any and all
documents and to furnish any and all information and otherwise to take all
actions that may be reasonably necessary in connection with the qualification
of the Shares for sale in such states as Distributor may designate.
1.9 The Trust shall furnish from time to time, for use in
connection with the sale of the Shares, such information with respect to the
Funds and the Shares as Distributor may reasonably request; and the Trust
warrants that the statements contained in any such information shall fairly
show or represent what they purport to show or represent. The Trust shall
also furnish Distributor upon request with: (a) unaudited semi-annual
statements of the Funds' books and accounts prepared by the Trust, (b) a
monthly itemized list of the securities in the Funds, (c) monthly balance
sheets as soon as practicable after the end of each month, and (d) from time
to time such additional information regarding the financial condition of the
Funds as Distributor may reasonably request.
1.10 The Trust represents to Distributor that, with respect to the
Shares, all registration statements and prospectuses filed by the Trust with
the Commission under the Securities Act have been carefully prepared in
conformity with requirements of said Act and rules and regulations of the
Commission thereunder. The registration statement and prospectus contain all
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statements required to be stated therein in conformity with said Act and the
rules and regulations of said Commission and all statements of fact contained
in any such registration statement and prospectus are true and correct.
Furthermore, neither any registration statement nor any prospectus includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading to a purchaser of the Shares. The foregoing representations shall
not be deemed to cover any statements or representations contained in
registration statements or prospectuses made based upon reasonable reliance
upon information provided to the Trust by Distributor or its affiliates. The
Trust may, but shall not be obligated to, propose from time to time such
amendment or amendments to any registration statement and such supplement or
supplements to any prospectus as, in the light of future developments, may, in
the opinion of the Trust's counsel, be necessary or advisable. If the Trust
shall not propose such amendment or amendments and/or supplement or
supplements within fifteen days after receipt by the Trust of a written
request from Distributor to do so, Distributor may, at its option, terminate
this Agreement. The Trust shall not file any amendment to any registration
statement or supplement to any prospectus without giving Distributor
reasonable notice thereof in advance; provided, however, that nothing
contained in this Agreement shall in any way limit the Trust's right to file
at any time such amendments to any registration statement and/or supplements
to any prospectus, of whatever character, as the Trust may deem advisable,
such right being in all respects absolute and unconditional.
1.11 The Trust authorizes Distributor and dealers to use any
prospectus in the form furnished from time to time in connection with the sale
of the Shares. The Trust agrees to indemnify, defend and hold Distributor,
its several partners and officers, and any person who controls Distributor
within the meaning of Section 15 of the Securities Act free and harmless from
and against any and all claims, demands, liabilities and expenses (including
the cost of investigating or defending such claims, demands or liabilities and
any counsel fees incurred in connection therewith) which Distributor, its
partners and officers, or any such controlling person, may incur under the
Securities Act or under common law or otherwise, arising out of or based upon
any untrue statement, or alleged untrue statement, of a material fact
contained in any registration statement or any prospectus or arising out of or
based upon any omission, or alleged omission, to state a material fact
required to be stated in either any registration statement or any prospectus
or necessary to make the statements in either thereof not misleading;
provided, however, that the Trust's agreement to indemnify Distributor, its
partners or officers, and any such controlling person shall not be deemed to
cover any claims, demands, liabilities or expenses arising out of any
statements or representations as are contained in any prospectus and in such
financial and other statements as are furnished in writing to the Trust by
Distributor or its affiliates and used in the answers to the registration
statement or in the corresponding statements made in the prospectus, or
arising out of or based upon any omission or alleged omission to state a
material fact in connection with the giving of such information required to be
stated in such answers or necessary to make the answers not misleading; and
further provided that the Trust's agreement to indemnify Distributor and the
Trust's representations and warranties hereinbefore set forth in paragraph
1.10 shall not be deemed to cover any liability to the Trust or its
Shareholders to which Distributor would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of Distributor's reckless disregard of its obligations
and duties under this Agreement. Except for actions, suits or claims brought
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or threatened against Distributor by (i) the Trust, or (ii) one or more
Shareholders of the Trust, the rights hereunder shall include the right to
reasonable advances of defense expenses in the event of any pending or
threatened litigation with respect to which indemnification hereunder may
ultimately be merited. In order that the indemnification provision contained
herein shall apply, however, it is understood that if in any case the Trust
may be asked to indemnify or hold Distributor harmless, the Trust shall be
fully and promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that Distributor will use all
reasonable care to identify and notify the Trust promptly concerning any
situation which presents or appears likely to present the probability of such
a claim for indemnification against the Trust, but failure to do so in good
faith shall not affect the rights hereunder.
The Trust shall be entitled to participate at its own expense or, if
it so elects, to assume the defense of any suit brought to enforce any claims
subject to this indemnity provision. If the Trust elects to assume the
defense of any such claim, the defense shall be conducted by counsel chosen by
the Trust and satisfactory to Distributor, whose approval shall not be
unreasonably withheld. In the event that the Trust elects to assume the
defense of any suit and retain counsel, Distributor shall bear the fees and
expenses of any additional counsel retained by it. If the Trust does not
elect to assume the defense of a suit, it will reimburse Distributor for the
reasonable fees and expenses of any counsel retained by Distributor.
Distributor may apply to the Trust at any time for instructions and
may, at Distributor's expense, consult counsel for the Trust or its own
counsel and with accountants and other experts with respect to any matter
arising in connection with Distributor's duties, and Distributor shall not be
liable or accountable for any action taken or omitted by it in good faith in
accordance with such instruction or with the opinion of such counsel,
accountants or other experts.
Also, Distributor shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or
presented by the proper person or persons. Distributor will not be held to
have notice of any change of authority of any officers, employees or agents of
the Trust until receipt of written notice thereof from the Trust.
1.12 Distributor agrees to indemnify, defend and hold the Trust,
its several officers and Trustees and any person who controls the Trust within
the meaning of Section 15 of the Securities Act free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
costs of investigating or defending such claims, demands, or liabilities and
any counsel fees incurred in connection therewith) which the Trust, its
officers or Trustees or any such controlling person, may incur under the
Securities Act or under common law or otherwise, but only to the extent that
such liability or expense incurred by the Trust, its officers or Trustees or
such controlling person resulting from such claims or demands, shall arise out
of or be based upon any untrue, or alleged untrue, statement of a material
fact contained in information furnished in writing by Distributor to the Trust
and used in the answers to any of the items of the registration statement or
in the corresponding statements made in the prospectus, or shall arise out of
or be based upon any omission, or alleged omission, to state a material fact
in connection with such information furnished in writing by Distributor to the
Trust required to be stated in such answers or necessary to make such
information not misleading. In order that the indemnification provision
contained herein shall apply, however, it is understood that if in any case
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Distributor may be asked to indemnify or hold the Trust harmless, Distributor
shall be fully and promptly advised of all pertinent facts concerning the
situation in question, and it is further understood that the Trust will use
all reasonable care to identify and notify Distributor promptly concerning
any situation which presents or appears likely to present the probability of
such a claim for indemnification against Distributor, but failure to do so in
good faith shall not affect the rights hereunder.
Distributor shall be entitled to participate at its own expense or,
if it so elects, to assume the defense of any suit brought to enforce any
claims subject to this indemnity provision. If Distributor elects to assume
the defense of any such claim, the defense shall be conducted by counsel
chosen by Distributor and satisfactory to the Trust, whose approval shall not
be unreasonably withheld. In the event that Distributor elects to assume the
defense of any suit and retain counsel, the Trust shall bear the fees and
expenses of any additional counsel retained by it. If Distributor does not
elect to assume the defense of a suit, it will reimburse the Trust for the
reasonable fees and expenses of any counsel retained by the Trust.
The Trust may apply to Distributor at any time for instructions and
may consult counsel for Distributor or its own counsel and with accountants
and other experts with respect to any matter arising in connection with the
Trust's duties, and the Trust shall not be liable or accountable for any
action taken or omitted by it in good faith in accordance with such
instructions or with the opinion of such counsel, accountants or other
experts.
Also, the Trust shall be protected in acting upon any document which
it reasonably believes to be genuine and to have been signed or presented by
the proper person or persons. The Trust will not be held to have notice of
any change of authority or any officers, employees or agents of Distributor
until receipt of written notice thereof from Distributor.
1.13 No Shares shall be offered by either Distributor or the Trust
under any of the provisions of this Agreement and no orders for the purchase
or sale of Shares hereunder shall be accepted by the Trust if and so long as
the effectiveness of the registration statement then in effect or any
necessary amendments thereto shall be suspended under any of the provisions of
the Securities Act or if and so long as a current prospectus as required by
Section 10(b)(2) of said Act is not on file with the Commission; provided,
however, that nothing contained in this paragraph 1.13 shall in any way
restrict or have an application to or bearing upon the Trust's obligation to
repurchase Shares from any Shareholder in accordance with the provisions of
the Trust's prospectus, Agreement and Declaration of Trust, or Bylaws.
1.14 The Trust agrees to advise Distributor as soon as reasonably
practical by a notice in writing delivered to Distributor or its counsel:
(a) of any request by the Commission for amendments to
the registration statement or prospectus then in effect
or for additional information;
(b) in the event of the issuance by the Commission of
any stop order suspending the effectiveness of the
registration statement or prospectus then in effect or
the initiation by service of process on the Trust of any
proceeding for that purpose;
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(c) of the happening of any event that makes untrue any
statement of a material fact made in the registration
statement or prospectus then in effect or which requires
the making of a change in such registration
statement or prospectus in order to make the statements
therein not misleading; and
(d) of all action of the Commission with respect to any
amendment to any registration statement or prospectus
which may from time to time be filed with the Commission.
For purposes of this section, informal requests by or acts of
the Staff of the Commission shall not be deemed actions of or requests by the
Commission.
1.15 Distributor agrees on behalf of itself and its partners and
employees to treat confidentially and as proprietary information of the Trust
all records and other information relative to the Trust and its prior, present
or potential Shareholders, and not to use such records and information for any
purpose other than performance of its responsibilities and duties hereunder.
In case of any request or demand for the inspection of such records by another
party, Distributor shall notify the Trust and follow the Trust's instructions
as to permitting or refusing such inspection; provided that, upon notice to
the Trust, Distributor may exhibit such records to any person in any case
where it is advised by its counsel that it may be held liable for failure to
do so, unless (in cases involving potential exposure only to civil liability)
the Trust has agreed to indemnify Distributor against such liability.
2. PUBLIC OFFERING PRICE.
The public offering price of the Trust's Shares shall be the net
asset value of such Shares. The net asset value of Shares shall be determined
in accordance with the provisions of the Agreement and Declaration of Trust
and Bylaws of the Trust and the then-current prospectus of the Trust.
3. TERM, DURATION AND TERMINATION.
The initial term of this Agreement (the "Initial Term") shall be for
a period commencing on the date this Agreement is executed by both parties and
ending on the date that is one year after the Conversion Date. Thereafter, if
not terminated, this Agreement shall continue with respect to a particular
Fund automatically for successive one-year terms, provided that such
continuance is specifically approved at least annually by the vote of the
Trust's Board of Trustees or the vote of a majority of the outstanding voting
securities of such Fund. This Agreement is terminable without penalty, on not
less than sixty days' prior written notice, by the Trust's Board of Trustees,
by vote of a majority of the outstanding voting securities of the Trust or by
the Distributor. This Agreement will also terminate automatically in the
event of its assignment. (As used in this Agreement, the terms "majority of
the outstanding voting securities," "interested persons" and "assignment"
shall have the same meanings as ascribed to such terms in the 1940 Act.)
4. GOVERNING LAW AND MATTERS RELATING TO THE TRUST. This Agreement
shall be governed by, and its provisions shall be construed in accordance
with, the laws of the State of Delaware. It is expressly agreed that the
obligations of the Trust hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees of the Trust
personally, but shall bind only the trust property of the Trust. The
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execution and delivery of this Agreement have been authorized by the Trustees,
and this Agreement has been signed and delivered by an authorized officer of
the Trust, acting as such, and neither such authorization by the Trustees nor
such execution and delivery by such officer shall be deemed to have been made
by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Trust as provided in
the Trust's Agreement and Declaration of Trust.
5. NOTICE. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by Federal Express or
similar delivery service, by facsimile or by registered or certified mail,
postage prepaid, addressed by the party giving notice to the other party at
the following address: if to Distributor, to it at 3435 Stelzer Road,
Columbus, Ohio 43219; if to the Trust, to it at 575 East Swedesford Road,
Wayne, Pennsylvania 19087-1613, Attn: Donald E. Callahan, or at such other
address as such party may from time to time specify in writing to the other
party pursuant to this Section.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first
written above.
THE HIRTLE CALLAGHAN TRUST BISYS FUND SERVICES
LIMITED PARTNERSHIP
BY: BISYS FUND SERVICES, INC.
GENERAL PARTNER
By:/s/ By: /s/
Title:____________________ Title:____________________
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this 1st day of October, 1996, by and
between THE HIRTLE CALLAGHAN TRUST, a Delaware business trust (the "Trust"),
and BISYS FUND SERVICES LIMITED PARTNERSHIP, d/b/a BISYS FUND SERVICES (the
"Administrator"), an Ohio limited partnership.
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of several series of shares of beneficial interest
("Shares"); and
WHEREAS, the Trust desires the Administrator to provide, and the
Administrator is willing to provide administrative services to such series of
the Trust as the Trust and the Administrator may agree on ("Portfolios") and
as listed on Schedule A attached hereto and made a part of this Agreement, on
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Administrator hereby agree as
follows:
ARTICLE 1. RETENTION OF THE ADMINISTRATOR; CONVERSION TO THE
SERVICES. The Trust hereby engages the Administrator to act as the
administrator of the Portfolios and to furnish the Portfolios with the
administrative services as set forth in Article 2 below (collectively, the
"Services"), and, in connection therewith, the Trust agrees to convert to the
Administrator's data processing systems and software (the "BISYS System") as
necessary in order to receive the Services. The Trust shall cooperate with
the Administrator to provide the Administrator with all necessary information
and assistance required to successfully convert to the BISYS System. The
Administrator shall provide the Trust with a schedule relating to such
conversion and the parties agree that the conversion may progress in stages.
The date upon which all Services shall have been converted to the BISYS System
shall be referred to herein as the "Conversion Date." The Administrator
hereby accepts such engagement and agrees to perform the Services commencing,
with respect to each individual Service, on the date that the conversion of
such Service to the BISYS System has been completed. The Administrator shall
determine in accordance with its normal acceptance procedures when the
applicable Service has been successfully converted. The parties hereby agree
that the Conversion Date shall be no later than January 1, 1997.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Trust in any way and shall
not be deemed an agent of the Trust.
ARTICLE 2. ADMINISTRATIVE SERVICES. The Administrator shall perform or
supervise the performance by others of other administrative services in
connection with the operations of the Portfolios, and, as requested by the
Trust, will investigate, assist in the selection of and conduct relations with
custodians, depositories, accountants, legal counsel, underwriters, brokers
and dealers, corporate fiduciaries, insurers, banks and persons in any other
capacity deemed by the Trust to be necessary or desirable for the Portfolios'
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operations. The Administrator shall provide the Trustees of the Trust with
such reports regarding investment performance as they may reasonably request
but shall have no responsibility for supervising the performance by any
investment adviser or sub-adviser of its responsibilities.
The Administrator shall provide the Trust with regulatory reporting, all
necessary office space, equipment, personnel, compensation and facilities
(including facilities for meetings of shareholders ("Shareholders") and
Trustees of the Trust) for handling the affairs of the Portfolios and such
other services as the Administrator shall, from time to time, determine to be
necessary to perform its obligations under this Agreement. In addition, at
the request of the Board of Trustees, the Administrator shall make reports to
the Trust's Trustees concerning the performance of its obligations hereunder.
Without limiting the generality of the foregoing, the Administrator shall
provide the following services unless instructed otherwise by the Trust:
(a) calculate contractual Trust expenses and provide necessary
instructions for all disbursements for the Trust, and as appropriate
compute the Trust's yields, total return, expense ratios, portfolio
turnover rate and, if required, portfolio average dollar-weighted
maturity;
(b) assist Trust counsel with the preparation of prospectuses,
statements of additional information, registration statements and proxy
materials;
(c) prepare such reports, applications and documents (including reports
regarding the sale and redemption of Shares as may be required in order
to comply with Federal and state securities law) as may be necessary or
desirable to register the Trust's Shares with state securities
authorities, monitor the sale of Trust Shares for compliance with state
securities laws, and file with the appropriate state securities
authorities the registration statements and reports for the Trust and the
Trust's Shares and all amendments thereto, as may be necessary or
convenient to register and keep effective the Trust and the Trust's
Shares with state securities authorities to enable the Trust to make a
continuous offering of its Shares;
(d) develop and prepare, with the assistance of the Trust's officers or
designees, communications to Shareholders, including the annual report to
Shareholders, coordinate the mailing of prospectuses, notices, proxy
statements, proxies and other reports to Trust Shareholders, and
supervise and facilitate the proxy solicitation process for all
shareholder meetings, including the tabulation of shareholder votes;
(e) administer contracts on behalf of the Trust with, among others, the
Trust's investment advisers, distributor, custodian, transfer agent and
fund accountant;
(f) supervise the Trust's transfer agent with respect to the payment of
dividends and other distributions to Shareholders;
(g) calculate performance data of the Trust and its Portfolios for
dissemination to information services covering the investment company
industry;
(h) coordinate and supervise the preparation and filing of the Trust's
tax returns;
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(i) examine and review the operations and performance of the various
organizations providing services to the Trust or any Portfolio of the
Trust, including, without limitation, the Trust's investment adviser,
distributor, custodian, fund accountant, transfer agent, outside legal
counsel and independent public accountants, and at the request of the
Board of Trustees, report to the Board on the performance of such
organizations;
(j) assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate layout, printing and filing
with the SEC of the Trust's semi-annual and annual reports to
Shareholders;
(k) assist with the design, development, and operation of the Trust
Portfolios, including new classes, investment objectives, policies and
structure;
(l) provide individuals reasonably acceptable to the Trust's Board of
Trustees to serve as officers of the Trust, who will be responsible for
overseeing certain of the Trust's affairs as determined by the Trust's
Board of Trustees;
(m) advise the Trust and its Board of Trustees on matters concerning the
Trust and its affairs;
(n) obtain and keep in effect fidelity bonds and trustees and
officers/errors and omissions insurance policies for the Trust in
accordance with the requirements of Rules 17g-1 and 17d-1(7) under the
1940 Act as such bonds and policies are approved by the Trust's Board of
Trustees;
(o) monitor and advise the Trust and its Portfolios on their registered
investment company status under the Internal Revenue Code of 1986, as
amended;
(p) prepare Board meeting materials, including Board agendas and BISYS
presentations, coordinate board book production and distribution and
maintain board minute books;
(q) monitor compliance by reviewing monthly compliance reports prepared
by the Trust's investment advisers and performing independent portfolio
compliance testing;
(r) maintain Trust files for Trust contracts and for filings with the
SEC and other regulators;
(s) furnish advice and recommendations with respect to other aspects of
the business and affairs of the Portfolios as the Trust and the
Administrator shall determine desirable; and
(t) prepare and file with the SEC the semi-annual report for the Trust
on Form N-SAR and all required notices pursuant to Rule 24f-2.
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The Administrator shall perform such other services for the Trust that
are mutually agreed upon by the parties from time to time. Such services
may include performing internal audit examinations; mailing the annual
reports of the Portfolios; preparing an annual list of Shareholders; and
mailing notices of Shareholders' meetings, proxies and proxy statements,
for all of which the Trust will pay the Administrator's out-of-pocket
expenses.
ARTICLE 3. ALLOCATION OF CHARGES AND EXPENSES.
(A) THE ADMINISTRATOR. The Administrator shall furnish at its own
expense the executive, supervisory and clerical personnel necessary to perform
its obligations under this Agreement. The Administrator shall also provide
the items which it is obligated to provide under this Agreement, and shall pay
all compensation, if any, of officers of the Trust as well as all Trustees of
the Trust who are affiliated persons of the Administrator or any affiliated
corporation of the Administrator; provided, however, that unless otherwise
specifically provided, the Administrator shall not be obligated to pay the
compensation of any employee of the Trust retained by the Trustees of the
Trust to perform services on behalf of the Trust.
(B) THE TRUST. The Trust assumes and shall pay or cause to be paid all
other expenses of the Trust not otherwise allocated herein, including, without
limitation, organization costs; taxes; expenses for legal and auditing
services; the expenses of preparing (including typesetting), printing and
mailing reports, prospectuses, statements of additional information, proxy
solicitation material and notices to existing Shareholders; all expenses
incurred in connection with issuing and redeeming Shares; the costs of
custodial services; the cost of initial and ongoing registration of the Shares
under Federal and state securities laws; fees and out-of-pocket expenses of
Trustees who are not interested persons of the Administrator, any investment
adviser to the Trust, the Trust or any affiliated corporation of the
Administrator or any investment adviser; insurance; interest; brokerage costs;
litigation and other extraordinary or nonrecurring expenses; and all fees and
charges of investment advisers to the Trust.
ARTICLE 4. COMPENSATION OF THE ADMINISTRATOR.
(A) ADMINISTRATION FEE. Commencing on the Conversion Date, for the
services rendered, the facilities furnished and the expenses assumed by the
Administrator pursuant to this Agreement, the Trust shall pay to the
Administrator compensation at an annual rate specified in Schedule A attached
hereto. Such compensation shall be calculated and accrued daily, and paid to
the Administrator monthly. The Trust shall also reimburse the Administrator
for its reasonable out-of-pocket expenses, including the travel and lodging
expenses incurred by officers and employees of the Administrator in connection
with attendance at Board meetings.
If the Conversion Date occurs subsequent to the first day of a month
or terminates before the last day of a month, the Administrator's compensation
for that part of the month in which this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees as set forth
above. Payment of the Administrator's compensation for the preceding month
shall be made promptly.
(B) SURVIVAL OF COMPENSATION RIGHTS. All rights of compensation under
this Agreement for services performed as of the termination date shall survive
the termination of this Agreement.
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ARTICLE 5. LIMITATION OF LIABILITY OF THE ADMINISTRATOR. The duties of
the Administrator shall be confined to those expressly set forth herein, and
no implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in carrying out its duties hereunder, except a loss resulting from
willful misfeasance, bad faith or negligence in the performance of its duties,
or by reason of reckless disregard of its obligations and duties hereunder,
except as may otherwise be provided under provisions of applicable law which
cannot be waived or modified hereby. (As used in this Article 5, the term
"Administrator" shall include directors and officers of, and persons who
control, the Administrator as well as the Administrator itself.)
So long as the Administrator acts in good faith and with due diligence
and without negligence, the Trust assumes full responsibility and shall
indemnify the Administrator and hold it harmless from and against any and all
actions, suits and claims, whether groundless or otherwise, and from and
against any and all losses, damages, costs, charges, reasonable counsel fees
and disbursements, payments, expenses and liabilities (including reasonable
investigation expenses) arising directly or indirectly out of any service
rendered to the Trust hereunder. The Administrator agrees to indemnify and
hold harmless the Company, its Trustees and officers from and against any and
all actions suits and claims, whether groundless or otherwise, and from and
against any and all judgement, liabilities, losses, damages, costs, charges,
reasonable counsel fees and other expenses of every nature and character
arising out of or in any way relating to the Administrator's bad faith willful
misfeasance, negligence or from reckless disregard by it of its obligations
and duties, with respect to the performance of services under this Agreement.
The indemnity and defense provisions set forth herein shall indefinitely
survive the termination of this Agreement.
Except for actions, suits or claims brought or threatened against the
Administrator by (i) the Trust, or (ii) one or more Shareholders of the Trust,
the rights hereunder shall include the right to reasonable advances of defense
expenses in the event of any pending or threatened litigation with respect to
which indemnification hereunder may ultimately be merited. In order that the
indemnification provisions contained herein shall apply, however, it is
understood that if in any case the indemnifying party may be asked to
indemnify or hold the other party harmless, the indemnifying party shall be
fully and promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that the indemnified party will use all
reasonable care to identify and notify the indemnifying party promptly
concerning any situation which presents or appears likely to present the
probability of such a claim for indemnification against the indemnifying
party, but failure to do so in good faith shall not affect the rights
hereunder.
The indemnifying party shall be entitled to participate at its own
expense or, if it so elects, to assume the defense of any suit brought to
enforce any claims subject to this indemnity provision. If the indemnifying
party elects to assume the defense of any such claim, the defense shall be
conducted by counsel chosen by the indemnifying party and satisfactory to the
other party, whose approval shall not be unreasonably withheld. In the event
that the indemnifying party elects to assume the defense of any suit and
retain counsel, the indemnified party shall bear the fees and expenses of any
additional counsel retained by it. If the indemnifying party does not elect
to assume the defense of a suit, it will reimburse the other party for the
reasonable fees and expenses of any counsel retained by the other party.
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The Administrator may apply to the Trust at any time for instructions and
may, at the Administrator's own expense, consult counsel for the Trust or its
own counsel and with accountants and other experts with respect to any matter
arising in connection with the Administrator's duties, and the Administrator
shall not be liable or accountable for any action taken or omitted by it in
good faith in accordance with such instruction or with the opinion of such
counsel, accountants or other experts.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or
presented by the proper person or persons. The Administrator will not be held
to have notice of any change of authority of any officers, employees or agents
of the Trust until receipt of written notice thereof from the Trust.
ARTICLE 6. ACTIVITIES OF THE ADMINISTRATOR. The services of the
Administrator rendered to the Trust are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that trustees, officers, employees
and Shareholders of the Trust are or may be or become interested in the
Administrator, as directors, officers, employees and shareholders or otherwise
and that partners, officers and employees of the Administrator and its counsel
are or may be or become similarly interested in the Trust, and that the
Administrator may be or become interested in the Trust as a Shareholder or
otherwise.
ARTICLE 7. DURATION OF THIS AGREEMENT. The Term of this Agreement shall
be as specified in Schedule A hereto.
ARTICLE 8. ASSIGNMENT. This Agreement shall not be assignable by either
party without the written consent of the other party; provided, however, that
the Administrator may, at its expense, subcontract with an affiliate of the
Administrator reasonably acceptable to the Trust concerning the provision of
the services contemplated hereunder and, provided further, that such
subcontractor shall be the agent of the Administrator and not the agent of the
Trust and that the Administrator shall be fully responsible for the acts of
such subcontractor and shall not be relieved of any of its responsibilities
hereunder by the appointment of such subcontractor. This Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and permitted assigns.
ARTICLE 9. AMENDMENTS. This Agreement may be amended if such amendment
is specifically approved in writing by the parties hereto.
ARTICLE 10. CERTAIN RECORDS. The Administrator shall maintain customary
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Administrator
on behalf of the Trust shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Trust and will be made
available to or surrendered promptly to the Trust on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Trust and follow the Trust's
instructions as to permitting or refusing such inspection; provided that, upon
notice to the Trust, the Administrator may exhibit such records to any person
in any case where it is advised by its counsel that it may be held liable for
failure to do so, unless (in cases involving potential exposure only to civil
liability) the Trust has agreed to indemnify the Administrator against such
liability.
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ARTICLE 11. DEFINITIONS OF CERTAIN TERMS. The terms "interested person"
and "affiliated person," when used in this Agreement, shall have the
respective meanings specified in the 1940 Act and the rules and regulations
thereunder, subject to such exemptions as may be granted by the Securities and
Exchange Commission.
ARTICLE 12. NOTICE. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by Federal
Express or similar delivery service, by facsimile or by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the following address: if to the Administrator, to it at 3435
Stelzer Road, Columbus, Ohio 43219; if to the Trust, to it at 575 East
Swedesford Road, Wayne, Pennsylvania, 19087-1613, Attn: Donald E. Callaghan,
or at such other address as such party may from time to time specify in
writing to the other party pursuant to this Section.
ARTICLE 13. GOVERNING LAW AND MATTERS RELATING TO THE TRUST. This
Agreement shall be governed by, and its provisions shall be construed in
accordance with, the laws of the State of Delaware. It is expressly agreed
that the obligations of the Trust hereunder shall not be binding upon any of
the Trustees, shareholders, nominees, officers, agents or employees of the
Trust personally, but shall bind only the trust property of the Trust. The
execution and delivery of this Agreement have been authorized by the Trustees,
and this Agreement has been signed and delivered by an authorized officer of
the Trust, acting as such, and neither such authorization by the Trustees nor
such execution and delivery by such officer shall be deemed to have been made
by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Trust as provided in
the Trust's Agreement and Declaration of Trust.
ARTICLE 14. MULTIPLE ORIGINALS. This Agreement may be executed in two
or more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
THE HIRTLE CALLAGHAN TRUST
By:/s/
Title:_____________________________________
BISYS FUND SERVICES LIMITED PARTNERSHIP
BY: BISYS FUND SERVICES, INC.
GENERAL PARTNER
By:/s/
Title:_____________________________________
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SCHEDULE A
TO THE ADMINISTRATION AGREEMENT
DATED AS OF OCTOBER 1, 1996
BETWEEN THE HIRTLE CALLAGHAN TRUST
AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
Portfolios: This Agreement shall apply to all Portfolios of the Hirtle
Callaghan Trust , either now or hereafter created (collectively,
the "Portfolios"). The current portfolios of the Trust are set
forth below:
The Value Equity Portfolio
The Growth Equity Portfolio
The Small Capitazliation Equity Portfolio
The International Equity Portfolio
The Limited Duration Municipal Bond Portfolio
Fees: Pursuant to Article 4, in consideration of services rendered and
expenses assumed pursuant to this Agreement, the Trust will pay
the Administrator on the first business day of each month, or at
such time(s) as the Administrator shall request and the parties
hereto shall agree, a fee computed daily at the annual rate of:
Ten one-hundredths of one percent (.10%) of the Company's
average daily net assets up to $1 billion.
Six one-hundredths of one percent (.06%) of the Company's
average daily net assets in excess of $1 billion.
The fee for the period from the day of the month this Agreement
is entered into until the end of that month shall be prorated
according to the proportion which such period bears to the full
monthly period. Upon any termination of this Agreement before
the end of any month, the fee for such part of a month shall be
prorated according to the proportion which such period bears to
the full monthly period and shall be payable upon the date of
termination of this Agreement.
For purposes of determining the fees payable to the
Administrator, the value of the net assets of a particular
Portfolio shall be computed in the manner described in the
registration statement respecting that Portfolio as from time to
time is in effect for the computation of the value of such net
assets in connection with the determination of the net asset
value per share of such Portfolio.
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DATED: OCTOBER 1, 1996
Term: The initial term of this Agreement (the "Initial Term") shall be
for a period commencing on the date this Agreement is executed
by both parties and ending on the date that is one year after
the Conversion Date. This Agreement shall be renewed
automatically for successive periods of one year after the
Initial Term, unless written notice of nonrenewal is provided by
either party not less than 60 days prior to the end of the then
current term. In the event of a material breach of this
Agreement by either party, the non breaching party shall notify
the breaching party in writing of such breach and upon receipt
of such notice, the breaching party shall have 45 days to remedy
the breach. In the event the breach is not remedied within such
time period, the nonbreaching party may immediately terminate
this Agreement.
Notwithstanding the foregoing, after such termination for so
long as the Administrator, with the written consent of the
Trust, in fact continues to perform any one or more of the
services contemplated by this Agreement or any schedule or
exhibit hereto, the provisions of this Agreement, including
without limitation the provisions dealing with indemnification,
shall continue in full force and effect. Compensation due the
Administrator and unpaid by the Trust upon such termination
shall be immediately due and payable upon and notwithstanding
such termination. The Administrator shall be entitled to
collect from the Trust, in addition to the compensation
described in this Schedule A, the amount of all of the
Administrator's cash disbursements for services in connection
with the Administrator's activities in effecting such
termination, including without limitation, the delivery to the
Trust and/or its designees of the Trust's property, records,
instruments and documents, or any copies thereof. Subsequent to
such termination, for a reasonable fee, the Administrator will
provide the Trust with reasonable access to any Trust documents
or records remaining in its possession.
DATED: OCTOBER 1, 1996
THE HIRTLE CALLAGHAN TRUST
By:/s/
BISYS FUND SERVICES LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc.
General Partner
By:/s/
Title:_____________________________________
FUND ACCOUNTING AGREEMENT
AGREEMENT made this 1st day of October, 1996, between THE HIRTLE
CALLAGHAN TRUST (the "Trust"), a Delaware business trust, and BISYS FUND
SERVICES, INC. ("Fund Accountant"), a corporation organized under the laws of
the State of Delaware.
WHEREAS, the Trust desires that Fund Accountant perform certain fund
accounting services for each investment portfolio of the Trust, all as now or
hereafter may be established from time to time (individually referred to
herein as the "Fund" and collectively as the "Funds"); and
WHEREAS, Fund Accountant is willing to perform such services on the terms
and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. SERVICES AS FUND ACCOUNTANT; CONVERSION TO SERVICES.
The Trust hereby engages Fund Accountant to perform fund accounting
services as set forth in this Section 1 (collectively, the "Services"), and,
in connection therewith, the Trust agrees to convert to Fund Accountant's data
processing systems and software (the "BISYS System") as necessary in order to
receive the Services. The Trust shall cooperate with Fund Accountant to
provide Fund Accountant with all necessary information and assistance required
to successfully convert to the BISYS System. Fund Accountant shall provide
the Trust with a schedule relating to such conversion and the parties agree
that the conversion may progress in stages. The date upon which all Services
shall have been converted to the BISYS System shall be referred to herein as
the "Conversion Date." The parties hereby agree that the Conversion Date
shall be no later than January 1, 1997. Fund Accountant hereby accepts such
engagement and agrees to perform the Services commencing, with respect to each
individual Service, on the date that the conversion of such Service to the
BISYS System has been completed. Fund Accountant shall determine in
accordance with its normal acceptance procedures when the applicable Service
has been successfully converted.
(a) MAINTENANCE OF BOOKS AND RECORDS. Fund Accountant will keep
and maintain the following books and records of each Fund
pursuant to Rule 31a-1 under the Investment Company Act of 1940
(the "Rule"):
(i) Journals containing an itemized daily record in
detail of all purchases and sales of securities, all
receipts and disbursements of cash and all other debits
and credits, as required by subsection (b)(1) of the Rule;
(ii) General and auxiliary ledgers reflecting all asset,
liability, reserve, capital, income and expense accounts,
including interest accrued and interest received, as
required by subsection (b)(2)(I) of the Rule;
(iii) Separate ledger accounts required by subsection
(b)(2)(ii) and (iii) of the Rule; and
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(iv) A monthly trial balance of all ledger accounts
(except shareholder accounts) as required by subsection
(b)(8) of the Rule.
(b) PERFORMANCE OF DAILY ACCOUNTING SERVICES. In addition to the
maintenance of the books and records specified above, Fund
Accountant shall perform the following accounting services
daily for each Fund:
(i) Calculate the net asset value per share utilizing
prices obtained from the sources described in subsection
1(b)(ii) below;
(ii) Obtain security prices from independent pricing
services, or if such quotes are unavailable, then obtain
such prices from each Fund's investment adviser or its
designee, as approved by the Trust's Board of Trustees;
(iii) Verify and reconcile with the Fund's custodian all
daily trade activity;
(iv) Compute, as appropriate, each Fund's net income and
capital gains, dividend payables, dividend factors, 7-day
yields, 7-day effective yields, 30-day yields, and
weighted average portfolio maturity;
(v) Review daily the net asset value calculation and
dividend factor (if any) for each Fund prior to release to
shareholders, check and confirm the net asset values and
dividend factors for reasonableness and deviations, and
distribute net asset values and yields to NASDAQ;
(vi) Report to the Trust the daily market pricing of
securities in any money market Funds, with the comparison
to the amortized cost basis;
(vii) Determine unrealized appreciation and depreciation
on securities held in variable net asset value Funds;
(viii) Amortize premiums and accrete discounts on
securities purchased at a price other than face value, if
requested by the Trust;
(ix) Update fund accounting system to reflect rate
changes, as received from a Fund's investment adviser, on
variable interest rate instruments;
(x) Post Fund transactions to appropriate categories;
(xi) Accrue expenses of each Fund according to
instructions received from the Trust's Administrator;
(xii) Determine the outstanding receivables and payables
for all (1) security trades, (2) Fund share transactions
and (3) income and expense accounts;
(xiii) Provide accounting reports in connection with the
Trust's regular annual audit and other audits and
examinations by regulatory agencies; and
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(xiv) Provide such periodic reports as the parties shall
agree upon, as set forth in a separate schedule.
(c) SPECIAL REPORTS AND SERVICES.
(i) Fund Accountant may provide additional special
reports upon the request of the Trust or a Fund's
investment adviser, which may result in an additional
charge, the amount of which shall be agreed upon between
the parties.
(ii) Fund Accountant may provide such other similar
services with respect to a Fund as may be reasonably
requested by the Trust, which may result in an additional
charge, the amount of which shall be agreed upon between
the parties.
(d) ADDITIONAL ACCOUNTING SERVICES. Fund Accountant shall also
perform the following additional accounting services for each
Fund:
(i) Provide monthly a download (and hard copy thereof)
of the financial statements described below, upon request
of the Trust. The download will include the following
items:
Statement of Assets and Liabilities,
Statement of Operations,
Statement of Changes in Net Assets, and
Condensed Financial Information;
(ii) Provide accounting information for the following:
(A) federal and state income tax returns and federal
excise tax returns;
(B) the Trust's semi-annual reports with the
Securities and Exchange Commission ("SEC") on
Form N-SAR;
(C) the Trust's annual, semi-annual and quarterly
(if any) shareholder reports;
(D) registration statements on Form N-1A and other
filings relating to the registration of Shares;
(E) the Administrator's monitoring of the Trust's
status as a regulated investment company under
Subchapter M of the Internal Revenue Code, as
amended;
(F) annual audit by the Trust's auditors; and
(G) examinations performed by the SEC.
2. SUBCONTRACTING.
Fund Accountant may, at its expense, subcontract with any entity or
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person concerning the provision of the services contemplated hereunder;
provided, however, that any such subcontractor shall be an affiliate of Fund
Accountant; provided further, that Fund Accountant shall not be relieved of
any of its obligations under this Agreement by the appointment of such
subcontractor and provided further, that Fund Accountant shall be responsible,
to the extent provided in Section 6 hereof, for all acts of such subcontractor
as if such acts were its own.
3. COMPENSATION.
Commencing on the Conversion Date, the Trust shall pay Fund Accountant
for the services to be provided by Fund Accountant under this Agreement in
accordance with, and in the manner set forth in, Schedule A hereto, as such
Schedule may be amended from time to time.
4. REIMBURSEMENT OF EXPENSES.
In addition to paying Fund Accountant the fees described in Section 3
hereof, the Trust agrees to reimburse Fund Accountant for its out-of-pocket
expenses in providing services hereunder, including without limitation the
following:
(a) All freight and other delivery and bonding charges incurred by
Fund Accountant in delivering materials to and from the Trust;
(b) All direct telephone, telephone transmission and telecopy or
other electronic transmission expenses incurred by Fund
Accountant in communication with the Trust, the Trust's
investment advisor or custodian, dealers or others as required
for Fund Accountant to perform the services to be provided
hereunder;
(c) The cost of obtaining security market quotes pursuant to
Section l(b)(ii) above;
(d) The cost of microfilm or microfiche of records or other
materials;
(e) Any expenses Fund Accountant shall incur at the written
direction of an officer of the Trust thereunto duly authorized;
and
(f) Any additional expenses reasonably incurred by Fund Accountant
in the performance of its duties and obligations under this
Agreement.
5. EFFECTIVE DATE.
This Agreement shall become effective with respect to a Fund as of the
date first written above.
6. TERM.
The initial term of this Agreement (the "Initial Term") shall be for one
year commencing on the date this Agreement is executed by both parties and
ending on the date that is one year after the Conversion Date. This
Agreement shall be renewed automatically for successive one-year terms unless
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written notice not to renew is given by the non-renewing party to the other
party at least 60 days prior to the expiration of the then-current term;
provided, however, that after such termination for so long as Fund Accountant,
with the written consent of the Trust, in fact continues to perform any one or
more of the services contemplated by this Agreement or any schedule or exhibit
hereto, the provisions of this Agreement, including without limitation the
provisions dealing with indemnification, shall continue in full force and
effect. Compensation due Fund Accountant and unpaid by the Trust upon such
termination shall be immediately due and payable upon and notwithstanding such
termination. Fund Accountant shall be entitled to collect from the Trust, in
addition to the compensation described under Section 3 hereof, the amount of
all of Fund Accountant's cash disbursements for services in connection with
Fund Accountant's activities in effecting such termination, including without
limitation, the delivery to the Trust and/or its designees of the Trust's
property, records, instruments and documents, or any copies thereof.
Subsequent to such termination, for a reasonable fee, Fund Accountant will
provide the Trust with reasonable access to any Trust documents or records
remaining in its possession.
In the event of a material breach of this Agreement by either party, the
non-breaching party shall notify the breaching party in writing of such breach
and, upon receipt of such notice, the breaching party shall have 45 days to
remedy the breach. In the event the breach is not remedied within such time
period, the nonbreaching party may immediately terminate this Agreement.
7. STANDARD OF CARE; RELIANCE ON RECORDS AND INSTRUCTIONS;
INDEMNIFICATION.
The duties of Fund Accountant shall be confined to those expressly set
forth herein, and no implied duties are assumed by or may be asserted against
Fund Accountant hereunder. The Fund Accountant shall not be liable for any
error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in carrying out its duties hereunder,
except a loss resulting from willful misfeasance, bad faith or negligence in
the performance of its duties, or by reason of reckless disregard of its
obligations and duties hereunder, except as may otherwise be provided under
provisions of applicable law which cannot be waived or modified hereby. (As
used in this Section 7, the term "Fund Accountant" shall include officers and
directors of, and persons who control, Fund Accountant as well as Fund
Accountant itself.)
So long as Fund Accountant acts in good faith and with due diligence and
without negligence, the Trust assumes full responsibility and shall indemnify
Fund Accountant and hold it harmless from and against any and all actions,
suits and claims, whether groundless or otherwise, and from and against any
and all losses, damages, costs, charges, reasonable counsel fees and
disbursements, payments, expenses and liabilities (including reasonable
investigation expenses) arising directly or indirectly out of administration,
transfer agency, and dividend disbursing relationships to the Trust or any
other service rendered to the Trust hereunder. Fund Accountant agrees to
indemnify and hold harmless the Company, its employees, agents, Trustees,
officers and nominees from and against any and all actions, suits and claims,
whether groundless or otherwise, and from and against any and all judgements,
liabilities, losses, damages, costs, charges, reasonable counsel fees and
other expenses of every nature and character arising out of or in any way
relating to the Fund Accountant's bad faith, willful misfeasance, negligence
or from reckless disregard by it of its obligations and duties, with respect
to the performance of services under this Agreement. The indemnity and
defense provisions set forth herein shall indefinitely survive the termination
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of this Agreement.
Except for actions, suits or claims brought or threatened against Fund
Accountant by (i) the Trust, or (ii) one or more Shareholders of the Trust,
the rights hereunder shall include the right to reasonable advances of defense
expenses in the event of any pending or threatened litigation with respect to
which indemnification hereunder may ultimately be merited. In order that the
indemnification provisions contained herein shall apply, however, it is
understood that if in any case the indemnifying party may be asked to
indemnify or hold the other party harmless, the indemnifying party shall be
fully and promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that the indemnified party will use all
reasonable care to identify and notify the indemnifying party promptly
concerning any situation which presents or appears likely to present the
probability of such a claim for indemnification against the indemnifying
party, but failure to do so in good faith shall not affect the rights
hereunder.
The indemnifying party shall be entitled to participate at its own
expense or, if it so elects, to assume the defense of any suit brought to
enforce any claims subject to this indemnity provision. If the indemnifying
party elects to assume the defense of any such claim, the defense shall be
conducted by counsel chosen by the indemnifying party and satisfactory to the
other party, whose approval shall not be unreasonably withheld. In the event
that the indemnifying party elects to assume the defense of any suit and
retain counsel, the indemnified party shall bear the fees and expenses of any
additional counsel retained by it. If the indemnifying party does not elect
to assume the defense of a suit, it will reimburse the other party for the
reasonable fees and expenses of any counsel retained by the other party.
The Fund Accountant may apply to the Trust at any time for instructions
and may, at its expense, consult counsel for the Trust or its own counsel and
with accountants and other experts with respect to any matter arising in
connection with Fund Accountant's duties, and Fund Accountant shall not be
liable or accountable for any action taken or omitted by it in good faith in
accordance with such instruction or with the opinion of such counsel,
accountants or other experts.
Also, Fund Accountant shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or
presented by the proper person or persons. The Fund Accountant will not be
held to have notice of any change of authority of any officers, employees or
agents of the Trust until receipt of written notice thereof from the Trust.
8. RECORD RETENTION AND CONFIDENTIALITY.
Fund Accountant shall keep and maintain on behalf of the Trust all books
and records which the Trust and Fund Accountant are, or may be, required to
keep and maintain pursuant to any applicable statutes, rules and regulations,
including without limitation Rules 31a-1 and 31a-2 under the Investment
Company Act of 1940, as amended (the "1940 Act"), relating to the maintenance
of books and records in connection with the services to be provided hereunder.
In case of any request or demand for the inspection of such records by another
party, Fund Accountant shall notify the Trust and follow the Trust's
instructions as to permitting or refusing such inspection; provided that, upon
notice to the Trust, Fund Accountant may exhibit such records to any person in
any case where it is advised by its counsel that it may be held liable for
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failure to do so, unless (in cases involving potential exposure only to civil
liability) the Trust has agreed to indemnify Fund Accountant against such
liability.
9. MAINTENANCE OF SYSTEM AND EQUIPMENT; UNCONTROLLABLE EVENTS.
Fund Accountant shall maintain adequate and reliable computer and other
equipment necessary or appropriate to carry out its obligations under this
Agreement. In the event of computer or other equipment failures beyond its
reasonable control, Fund Accountant shall use its best efforts to minimize
service interruptions. Fund Accountant represents and warrants that the
various procedures and systems which it has implemented with regard to
safekeeping from loss or damage attributable to fire, theft or any other cause
of the records, data, equipment, facilities and other property used in the
performance of its obligations hereunder are adequate and that it will make
such changes therein from time to time as are required for the secure
performance of its obligations hereunder. Notwithstanding the foregoing, Fund
Accountant assumes no responsibility hereunder, and shall not be liable for
any damage, loss of data, delay or any other loss whatsoever caused by events
beyond its reasonable control.
10. REPORTS.
Fund Accountant will furnish to the Trust and to its properly authorized
auditors, investment advisers, examiners, distributors, dealers, underwriters,
salesmen, insurance companies and others designated by the Trust in writing,
such reports and at such times as are prescribed pursuant to the terms and the
conditions of this Agreement to be provided or completed by Fund Accountant,
or as subsequently agreed upon by the parties pursuant to an amendment hereto.
The Trust agrees to examine each such report or copy promptly and will
promptly report or cause to be reported any errors or discrepancies therein.
11. RIGHTS OF OWNERSHIP.
All computer programs and procedures developed to perform services
required to be provided by Fund Accountant under this Agreement are the
property of Fund Accountant. All records and other data except such computer
programs and procedures are the exclusive property of the Trust and all such
other records and data will be furnished to the Trust in appropriate form as
soon as practicable after termination of this Agreement for any reason.
12. RETURN OF RECORDS.
Fund Accountant may at its option at any time, and shall promptly upon
the Trust's demand, turn over to the Trust and cease to retain Fund
Accountant's files, records and documents created and maintained by Fund
Accountant pursuant to this Agreement which are no longer needed by Fund
Accountant in the performance of its services or for its legal protection. If
not so turned over to the Trust, such documents and records will be retained
by Fund Accountant for six years from the year of creation. At the end of such
six-year period, such records and documents will be turned over to the Trust
unless the Trust authorizes in writing the destruction of such records and
documents.
13. REPRESENTATIONS OF THE TRUST.
The Trust certifies to Fund Accountant that: (1) as of the close of
business on each Conversion Date, each Fund that is in existence as of the
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Conversion Date has authorized unlimited shares, and (2) this Agreement has
been duly authorized by the Trust and, when executed and delivered by the
Trust, will constitute a legal, valid and binding obligation of the Trust,
enforceable against the Trust in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured
parties.
14. REPRESENTATIONS OF FUND ACCOUNTANT.
Fund Accountant represents and warrants that: (1) the various procedures
and systems which Fund Accountant has implemented with regard to safeguarding
from loss or damage attributable to fire, theft, or any other cause the
records, and other data of the Trust and Fund Accountant's records, data,
equipment facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as are required for the secure performance of its
obligations hereunder, and (2) this Agreement has been duly authorized by Fund
Accountant and, when executed and delivered by Fund Accountant, will
constitute a legal, valid and binding obligation of Fund Accountant,
enforceable against Fund Accountant in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured
parties.
15. INSURANCE.
Fund Accountant shall notify the Trust should any of its insurance
coverage be canceled or reduced. Such notification shall include the date of
change and the reasons therefor. Fund Accountant shall notify the Trust of
any material claims against it with respect to services performed under this
Agreement, whether or not they may be covered by insurance, and shall notify
the Trust from time to time as may be appropriate of the total outstanding
claims made by Fund Accountant under its insurance coverage.
16. INFORMATION TO BE FURNISHED BY THE TRUST AND FUNDS.
The Trust has furnished to Fund Accountant the following:
(a) Copies of the Declaration of Trust of the Trust and of any
amendments thereto, certified by the proper official of the
state in which such document has been filed.
(b) Copies of the following documents:
(i) The Trust's Bylaws and any amendments thereto; and
(ii) Certified copies of resolutions of the Board of
Trustees covering the approval of this Agreement,
authorization of a specified officer of the Trust to
execute and deliver this Agreement and authorization for
specified officers of the Trust to instruct Fund
Accountant thereunder.
(c) A list of all the officers of the Trust, together with specimen
signatures of those officers who are authorized to instruct
Fund Accountant in all matters.
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(d) Two copies of the Prospectuses and Statements of Additional
Information for each Fund.
17. INFORMATION FURNISHED BY FUND ACCOUNTANT.
(a) Fund Accountant has furnished to the Trust the following:
(i) Fund Accountant's Articles of Incorporation; and
(ii) Fund Accountant's Bylaws and any amendments
thereto.
(b) Fund Accountant shall, upon request, furnish certified copies
of corporate actions covering the following matters:
(i) Approval of this Agreement, and authorization of a
specified officer of Fund Accountant to execute and
deliver this Agreement; and
(ii) Authorization of Fund Accountant to act as fund
accountant for the Trust and to provide accounting
services for the Trust.
(c) Insurance coverage information and systems backup procedures.
18. AMENDMENTS TO DOCUMENTS.
The Trust shall furnish Fund Accountant written copies of any amendments
to, or changes in, any of the items referred to in Section 16 hereof forthwith
upon such amendments or changes becoming effective. In addition, the Trust
agrees that no amendments will be made to the Prospectuses or Statements of
Additional Information of the Trust which might have the effect of changing
the procedures employed by Fund Accountant in providing the services agreed to
hereunder or which amendment might affect the duties of Fund Accountant
hereunder unless the Trust first obtains Fund Accountant's approval of such
amendments or changes.
19. COMPLIANCE WITH LAW.
Except for the obligations of Fund Accountant set forth in Section 8
hereof, the Trust assumes full responsibility for the preparation, contents
and distribution of each prospectus of the Trust as to compliance with all
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), the 1940 Act and any other laws, rules and regulations of
governmental authorities having jurisdiction. Fund Accountant shall have no
obligation to take cognizance of any laws relating to the sale of the Trust's
Shares. The Trust represents and warrants that no Shares of the Trust will be
offered to the public until the Trust's registration statement under the
Securities Act and the 1940 Act has been declared or becomes effective.
20. NOTICES.
Any notice provided hereunder shall be sufficiently given when sent by
Federal Express or similar delivery service, by facsimile or by registered or
certified mail to the party required to be served with such notice, at the
following address: if to Fund Accountant, to it at 3435 Stelzer Road,
Columbus, Ohio 43219, if to the Trust, to it at 575 East Swedesford Road,
Wayne, Pennsylvania 19087-1613, Attn: Donald E. Callaghan, or at such other
address as such party may from time to time specify in writing to the other
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party pursuant to this Section.
21. HEADINGS.
Paragraph headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
22. ASSIGNMENT.
This Agreement and the rights and duties hereunder shall not be
assignable with respect to a Fund by either of the parties hereto except by
the specific written consent of the other party. This Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and permitted assigns.
23. GOVERNING LAW AND MATTERS RELATING TO THE TRUST.
This Agreement shall be governed by, and its provisions shall be
construed in accordance with, the laws of the State of Delaware. It is
expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Trust personally, but shall bind only the trust property of
the Trust. The execution and delivery of this Agreement have been authorized
by the Trustees, and this Agreement has been signed and delivered by an
authorized officer of the Trust, acting as such, and neither such
authorization by the Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Trust as provided in the Trust's Agreement and Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
THE HIRTLE CALLAGHAN TRUST
By:/s/
Title:______________________________
BISYS FUND SERVICES, INC.
By:/s/
Title:______________________________
<PAGE>
<PAGE>
Dated: October 1, 1996
SCHEDULE A
TO THE FUND ACCOUNTING AGREEMENT
BETWEEN
THE HIRTLE CALLAGHAN TRUST
AND
BISYS FUND SERVICES, INC..
FEES
Fund Accountant shall be entitled to receive a fee from each Fund in
accordance with the following schedule:
$30,000 per fund portfolio
THE HIRTLE CALLAGHAN TRUST BISYS FUND SERVICES, INC.
By:/s/ By:/s/
Title:_______________________________ Title:_______________________________
TRANSFER AGENCY AGREEMENT
AGREEMENT made this 1st day of October, 1996, between THE HIRTLE
CALLAGHAN TRUST (the "Trust"), a Delaware business trust, and BISYS FUND
SERVICES, INC. ("BISYS"), a Delaware corporation.
WHEREAS, the Trust desires that BISYS perform certain services for each
series of the Trust (individually referred to herein as a "Fund" and
collectively as the "Funds"); and
WHEREAS, BISYS is willing to perform such services on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. RETENTION OF BISYS; CONVERSION TO THE SERVICES.
The Trust hereby engages BISYS to act as the transfer agent for the
Funds to perform (i) the transfer agent services set forth in Schedule A
hereto (the "Initial Services"), (ii) such special services (the "Special
Services") incidental to the performance of such services as may be agreed to
by the parties from time to time (for such fees as the parties may agree as
aforesaid) and (iii) such additional services (collectively with the Initial
Services and the Special Services, the "Services"), as may be agreed to by the
parties from time to time and set forth in an amendment to said Schedule A
(for such fees as the parties may agree as aforesaid), and, in connection
therewith, the Trust agrees to convert to BISYS' data processing systems and
software (the "BISYS System") as necessary in order to receive the Services.
The Trust shall cooperate with BISYS to provide BISYS with all necessary
information and assistance required to successfully convert to the BISYS
System. BISYS shall provide the Trust with a schedule relating to such
conversion and the parties agree that the conversion may progress in stages.
The date upon which all Initial Services shall have been converted to the
BISYS System shall be referred to herein as the "Conversion Date." BISYS
hereby accepts such engagement and agrees to perform the Services commencing,
with respect to each individual Service, on the date that the conversion of
such Service to the BISYS System has been completed. BISYS shall determine in
accordance with its normal acceptance procedures when the applicable Service
has been successfully converted. The parties hereby agree that the Conversion
Date shall be no later than January 1, 1997.
BISYS may, in its discretion, appoint in writing other parties
qualified to perform transfer agency services reasonably acceptable to the
Trust (individually, a "Sub-transfer Agent") to carry out some or all of its
responsibilities under this Agreement with respect to a Fund; provided,
however, that the Sub-transfer Agent shall be the agent of BISYS and not the
agent of the Trust or such Fund, and that BISYS shall be fully responsible for
the acts of such Sub-transfer Agent and shall not be relieved of any of its
responsibilities hereunder by the appointment of such Sub-transfer Agent.
2. FEES.
Commencing on the Conversion Date, the Trust shall pay BISYS for the
services to be provided by BISYS under this Agreement in accordance with, and
in the manner set forth in, Schedule B hereto. Fees for any additional
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<PAGE>
services to be provided by BISYS pursuant to an amendment to Schedule A hereto
shall be subject to mutual agreement at the time such amendment to Schedule A
is proposed.
3. REIMBURSEMENT OF EXPENSES.
In addition to paying BISYS the fees described in Section 2 hereof,
the Trust agrees to reimburse BISYS for BISYS' out-of-pocket expenses in
providing services hereunder, including without limitation, the following:
(a) All freight and other delivery and bonding charges incurred by
BISYS in delivering materials to and from the Trust and in
delivering all materials to shareholders;
(b) All direct telephone, telephone transmission and telecopy or
other electronic transmission expenses incurred by BISYS in
communication with the Trust, the Trust's investment adviser or
custodian, dealers, shareholders or others as required for
BISYS to perform the services to be provided hereunder;
(c) Costs of postage, couriers, stock computer paper, statements,
labels, envelopes, checks, reports, letters, tax forms,
proxies, notices or other form of printed material which shall
be required by BISYS for the performance of the services to be
provided hereunder;
(d) The cost of microfilm or microfiche of records or other
materials; and
(e) Any expenses BISYS shall incur at the written direction of an
officer of the Trust thereunto duly authorized.
4. EFFECTIVE DATE.
This Agreement shall become effective as of the date first written
above (the "Effective Date").
5. TERM.
The initial term of this Agreement (the "Initial Term") shall be for
a period commencing on the date this Agreement is executed by both parties and
ending on the date that is one year after the Conversion Date. Thereafter, it
shall be renewed automatically for successive one-year terms unless written
notice not to renew is given by the non-renewing party to the other party at
least 60 days prior to the expiration of the then-current term; provided,
however, that after such termination, for so long as BISYS, with the written
consent of the Trust, in fact continues to perform any one or more of the
services contemplated by this Agreement or any Schedule or exhibit hereto, the
provisions of this Agreement, including without limitation the provisions
dealing with indemnification, shall continue in full force and effect. Fees
and out-of-pocket expenses incurred by BISYS but unpaid by the Trust upon such
termination shall be immediately due and payable upon and notwithstanding such
termination. BISYS shall be entitled to collect from the Trust, in addition
to the fees and disbursements provided by Sections 2 and 3 hereof, the amount
of all of BISYS' cash disbursements for services in connection with BISYS'
activities in effecting such termination, including without limitation, the
delivery to the Trust and/or its distributor or investment adviser and/or
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<PAGE>
other parties, of the Trust's property, records, instruments and documents, or
any copies thereof. To the extent that BISYS may retain in its possession
copies of any Trust documents or records subsequent to such termination which
copies had not been requested by or on behalf of the Trust in connection with
the termination process described above, BISYS, for a reasonable fee, will
provide the Trust with reasonable access to such copies.
In the event of a material breach of this Agreement by either party,
the non-breaching party shall notify the breaching party in writing of such
breach and, upon receipt of such notice, the breaching party shall have 45
days to remedy the breach. In the event the breach is not remedied within
such time period, the nonbreaching party may immediately terminate this
Agreement.
6. MAINTENANCE OF SYSTEMS AND EQUIPMENT; UNCONTROLLABLE EVENTS.
BISYS shall maintain adequate and reliable computer and other
equipment necessary or appropriate to carry out its obligations under this
Agreement. In the event of computer or other equipment failures beyond its
reasonable control, BISYS shall use its best efforts to minimize service
interruptions. BISYS represents and warrants that the various procedures and
systems which it has implemented with regard to safekeeping from loss or
damage attributable to fire, theft or any other cause of the records, data,
equipment, facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as are required for the secure performance of its
obligations hereunder. Notwithstanding the foregoing, BISYS assumes no
responsibility hereunder, and shall not be liable for any damage, loss of
data, delay or any other loss whatsoever caused by events beyond its
reasonable control.
7. LEGAL ADVICE.
BISYS shall notify the Trust at any time BISYS believes that it is
in need of the advice of counsel (other than counsel in the regular employ of
BISYS or any affiliated companies) with regard to BISYS' responsibilities and
duties pursuant to this Agreement; and after so notifying the Trust, BISYS, at
its discretion, shall be entitled to seek, receive and act upon advice of
legal counsel of its choosing, such advice to be at BISYS' own expense, and
BISYS shall in no event be liable to the Trust or any Fund or any shareholder
or beneficial owner of the Trust for any action reasonably taken pursuant to
such advice.
8. INSTRUCTIONS.
Whenever BISYS is requested or authorized to take action hereunder
pursuant to instructions from a shareholder, or a properly authorized agent of
a shareholder ("shareholder's agent"), concerning an account in a Fund, BISYS
shall be entitled to rely upon any certificate, letter or other instrument or
communication, believed by BISYS to be genuine and to have been properly made,
signed or authorized by an officer or other authorized agent of the Trust or
by the shareholder or shareholder's agent, as the case may be, and shall be
entitled to receive as conclusive proof of any fact or matter required to be
ascertained by it hereunder a certificate signed by an officer of the Trust or
any other person authorized by the Trust's Board of Trustees or by the
shareholder or shareholder's agent, as the case may be.
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<PAGE>
As to the services to be provided hereunder, BISYS may rely
conclusively upon the terms of the Prospectuses and Statement of Additional
Information of the Trust relating to the Funds to the extent that such
services are described therein unless BISYS receives written instructions to
the contrary in a timely manner from the Trust.
9. STANDARD OF CARE; RELIANCE ON RECORDS AND INSTRUCTIONS;
INDEMNIFICATION.
The duties of BISYS shall be confined to those expressly set forth
herein, and no implied duties are assumed by or may be asserted against BISYS
hereunder. BISYS shall not be liable for any error of judgment or mistake of
law or for any loss arising out of any investment or for any act or omission
in carrying out its duties hereunder, except a loss resulting from willful
misfeasance, bad faith or negligence in the performance of its duties, or by
reason of reckless disregard of its obligations and duties hereunder, except
as may otherwise be provided under provisions of applicable law which cannot
be waived or modified hereby. (As used in this Section 9, the term "BISYS"
shall include directors and officers of, and persons who control, BISYS as
well as BISYS itself.)
So long as BISYS acts in good faith and with due diligence and
without negligence, the Trust assumes full responsibility and shall indemnify
BISYS and hold it harmless from and against any and all actions, suits and
claims, whether groundless or otherwise, and from and against any and all
losses, damages, costs, charges, reasonable counsel fees and disbursements,
payments, expenses and liabilities (including reasonable investigation
expenses) arising directly or indirectly out of administration, transfer
agency, and dividend disbursing relationships to the Trust or any other
service rendered to the Trust hereunder. BISYS agrees to indemnify and hold
harmless the Company, its Trustees and officers and nominees from and against
any and all actions, suits and claims, whether groundless or otherwise, and
from and against any and all judgements, liabilities, losses, damages, costs,
charges, reasonable counsel fees and other expenses of every nature and
character arising out of or in any way relating to the Administrator's bad
faith willful misfeasance, negligence or from reckless disregard by it of its
obligations and duties, with respect to the performance of services under this
Agreement. The indemnity and defense provisions set forth herein shall
indefinitely survive the termination of this Agreement.
Except for actions, suits or claims brought or threatened against
BISYS by (i) the Trust, or (ii) one or more Shareholders of the Trust, the
rights hereunder shall include the right to reasonable advances of defense
expenses in the event of any pending or threatened litigation with respect to
which indemnification hereunder may ultimately be merited. In order that the
indemnification provisions contained herein shall apply, however, it is
understood that if in any case the indemnifying party may be asked to
indemnify or hold the other party harmless, the indemnifying party shall be
fully and promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that the indemnified party will use all
reasonable care to identify and notify the indemnifying party promptly
concerning any situation which presents or appears likely to present the
probability of such a claim for indemnification against the indemnifying
party, but failure to do so in good faith shall not affect the rights
hereunder.
<PAGE>
<PAGE>
The indemnifying party shall be entitled to participate at its own
expense or, if it so elects, to assume the defense of any suit brought to
enforce any claims subject to this indemnity provision. If the indemnifying
party elects to assume the defense of any such claim, the defense shall be
conducted by counsel chosen by the indemnifying party and satisfactory to the
other party, whose approval shall not be unreasonably withheld. In the event
that the indemnifying party elects to assume the defense of any suit and
retain counsel, the indemnified party shall bear the fees and expenses of any
additional counsel retained by it. If the indemnifying party does not elect
to assume the defense of a suit, it will reimburse the other party for the
reasonable fees and expenses of any counsel retained by the other party.
BISYS may apply to the Trust at any time for instructions and may
consult counsel for the Trust or its own counsel and with accountants and
other experts with respect to any matter arising in connection with BISYS'
duties, and BISYS shall not be liable or accountable for any action taken or
omitted by it in good faith in accordance with such instruction or with the
opinion of such counsel, accountants or other experts.
Also, BISYS shall be protected in acting upon any document which it
reasonably believes to be genuine and to have been signed or presented by the
proper person or persons. BISYS will not be held to have notice of any change
of authority of any officers, employees or agents of the Trust until receipt
of written notice thereof from the Trust.
10. RECORD RETENTION AND CONFIDENTIALITY.
BISYS shall keep and maintain on behalf of the Trust all books and
records which the Trust or BISYS is, or may be, required to keep and maintain
pursuant to any applicable statutes, rules and regulations, including without
limitation Rules 31a-1 and 31a-2 under the Investment Company Act of 1940, as
amended (the "1940 Act"), relating to the maintenance of books and records in
connection with the services to be provided hereunder. In case of any request
or demand for the inspection of such records by another party, BISYS shall
notify the Trust and follow the Trust's instructions as to permitting or
refusing such inspection; provided that BISYS may, upon notice to the Trust,
exhibit such records to any person in any case where it is advised by its
counsel that it may be held liable for failure to do so, unless (in cases
involving potential exposure only to civil liability) the Trust has agreed to
indemnify BISYS against such liability.
11. REPORTS.
BISYS will furnish to the Trust and to its properly-authorized
auditors, investment advisers, examiners, distributors, dealers, underwriters,
salesmen, insurance companies and others designated by the Trust in writing,
such reports at such times as are prescribed in Schedule C attached hereto, or
as subsequently agreed upon by the parties pursuant to an amendment to
Schedule C. The Trust agrees to examine each such report or copy promptly and
will promptly report or cause to be reported any errors or discrepancies
therein.
12. RIGHTS OF OWNERSHIP.
All computer programs and procedures developed to perform services
required to be provided by BISYS under this Agreement are the property of
BISYS. All records and other data except such computer programs and
procedures are the exclusive property of the Trust and all such other records
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<PAGE>
and data will be furnished to the Trust in appropriate form as soon as
practicable after termination of this Agreement for any reason.
13. RETURN OF RECORDS.
BISYS may at its option at any time, and shall promptly upon the
Trust's demand, turn over to the Trust and cease to retain BISYS' files,
records and documents created and maintained by BISYS pursuant to this
Agreement which are no longer needed by BISYS in the performance of its
services or for its legal protection. If not so turned over to the Trust,
such documents and records will be retained by BISYS for six years from the
year of creation. At the end of such six-year period, such records and
documents will be turned over to the Trust unless the Trust authorizes in
writing the destruction of such records and documents.
14. BANK ACCOUNTS.
The Trust and the Funds shall establish and maintain such bank
accounts with such bank or banks as are selected by the Trust, as are
necessary in order that BISYS may perform the services required to be
performed hereunder. To the extent that the performance of such services
shall require BISYS directly to disburse amounts for payment of dividends,
redemption proceeds or other purposes, the Trust and Funds shall provide such
bank or banks with all instructions and authorizations necessary for BISYS to
effect such disbursements.
15. REPRESENTATIONS OF THE TRUST.
The Trust certifies to BISYS that: (a) of the date hereof, each Fund
which is in existence as of the Effective Date has authorized unlimited
shares, and (b) this Agreement has been duly authorized by the Trust and, when
executed and delivered by the Trust, will constitute a legal, valid and
binding obligation of the Trust, enforceable against the Trust in accordance
with its terms, subject to bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting the rights and remedies of
creditors and secured parties.
16. REPRESENTATIONS OF BISYS.
BISYS represents and warrants that: (a) BISYS has been in, and shall
continue to be in, substantial compliance with all provisions of law,
including Section 17A(c) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), required in connection with the performance of its
duties under this Agreement; and (b) the various procedures and systems which
BISYS has implemented with regard to safekeeping from loss or damage
attributable to fire, theft or any other cause of the blank checks, records,
and other data of the Trust and BISYS' records, data, equipment, facilities
and other property used in the performance of its obligations hereunder are
adequate and that it will make such changes therein from time to time as are
required for the secure performance of its obligations hereunder.
17. INSURANCE.
BISYS shall notify the Trust should BISYS' insurance coverage with
respect to professional liability or errors and omissions coverage be canceled
or reduced. Such notification shall include the date of change and the
reasons therefor. BISYS shall notify the Trust of any material claims against
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it with respect to services performed under this Agreement, whether or not
they may be covered by insurance, and shall notify the Trust from time to time
as may be appropriate of the total outstanding claims made by BISYS under its
insurance coverage.
18. INFORMATION TO BE FURNISHED BY THE TRUST AND FUNDS.
The Trust has furnished to BISYS the following:
(a) Copies of the Declaration of Trust of the Trust and of any
amendments thereto, certified by the proper official of the
state in which such Declaration has been filed.
(b) Copies of the following documents:
1. The Trust's By-Laws and any amendments thereto.
2. Certified copies of resolutions of the Board of Trustees
covering the following matters:
A. Approval of this Agreement and authorization of a
specified officer of the Trust to execute and deliver
this Agreement and authorization for specified
officers of the Trust to instruct BISYS hereunder;
and
B. Authorization of BISYS to act as Transfer Agent for
the Trust on behalf of the Funds.
(c) A list of all officers of the Trust, together with specimen
signatures of those officers, who are authorized to instruct
BISYS in all matters.
(d) Two copies of the following (if such documents are employed by
the Trust):
1. Prospectuses and Statement of Additional Information;
2. Distribution Agreement; and
3. All other forms commonly used by the Trust or its
Distributor with regard to their relationships and
transactions with shareholders of the Funds.
(e) A certificate as to shares of beneficial interest of the Trust
authorized, issued, and outstanding as of the Effective Date of
BISYS' appointment as Transfer Agent (or as of the date on
which BISYS' services are commenced, whichever is the later
date) and as to receipt of full consideration by the Trust for
all shares outstanding, such statement to be certified by the
Treasurer of the Trust.
19. INFORMATION FURNISHED BY BISYS.
BISYS has furnished to the Trust the following:
(a) BISYS' Articles of Incorporation.
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(b) BISYS' By-Laws and any amendments thereto.
(c) Certified copies of actions of BISYS covering the following
matters:
1. Approval of this Agreement, and authorization of a
specified officer of BISYS to execute and deliver this
Agreement;
2. Authorization of BISYS to act as Transfer Agent for the
Trust.
(d) A copy of the most recent independent accountants' report
relating to internal accounting control systems as filed with
the Commission pursuant to Rule 17Ad-13 under the Exchange Act.
(e) Insurance coverage information and systems backup procedures.
20. AMENDMENTS TO DOCUMENTS.
The Trust shall furnish BISYS written copies of any amendments to,
or changes in, any of the items referred to in Section 18 hereof forthwith
upon such amendments or changes becoming effective. In addition, the Trust
agrees that no amendments will be made to the Prospectuses or Statement of
Additional Information of the Trust which might have the effect of changing
the procedures employed by BISYS in providing the services agreed to hereunder
or which amendment might affect the duties of BISYS hereunder unless the Trust
first obtains BISYS' approval of such amendments or changes.
21. RELIANCE ON AMENDMENTS.
BISYS may rely on any amendments to or changes in any of the
documents and other items to be provided by the Trust pursuant to Sections 18
and 20 of this Agreement and the Trust hereby indemnifies and holds harmless
BISYS from and against any and all claims, demands, actions, suits, judgments,
liabilities, losses, damages, costs, charges, counsel fees and other expenses
of every nature and character which may result from actions or omissions on
the part of BISYS in reasonable reliance upon such amendments and/or changes.
Although BISYS is authorized to rely on the above-mentioned amendments to and
changes in the documents and other items to be provided pursuant to Sections
18 and 20 hereof, BISYS shall be under no duty to comply with or take any
action as a result of any of such amendments or changes unless the Trust first
obtains BISYS' written consent to and approval of such amendments or changes.
22. COMPLIANCE WITH LAW.
Except for the obligations of BISYS set forth in Section 10 hereof,
the Trust assumes full responsibility for the preparation, contents, and
distribution of each prospectus of the Trust as to compliance with all
applicable requirements of the Securities Act of 1933, as amended (the "1933
Act"), the 1940 Act, and any other laws, rules and regulations of governmental
authorities having jurisdiction. BISYS shall have no obligation to take
cognizance of any laws relating to the sale of the Trust's shares. The Trust
represents and warrants that no shares of the Trust will be offered to the
public until the Trust's registration statement under the 1933 Act and the
1940 Act has been declared or becomes effective.
<PAGE>
<PAGE>
23. NOTICES.
Any notice provided hereunder shall be sufficiently given when sent
by Federal Express or similar delivery service, by facsimile or by registered
or certified mail to the party required to be served with such notice at the
following address: if to the Trust, to it at 575 East Swedesford Road, Wayne,
Pennsylvania 19087-1613, Attn: Donald E. Callaghan; if to BISYS, to it at 3435
Stelzer Road, Columbus, Ohio 43219, or at such other address as such party may
from time to time specify in writing to the other party pursuant to this
Section.
24. HEADINGS.
Paragraph headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
25. ASSIGNMENT.
This Agreement and the rights and duties hereunder shall not be
assignable by either of the parties hereto except by the specific written
consent of the other party. This Section 25 shall not limit or in any way
affect BISYS' right to appoint a Sub-transfer Agent pursuant to Section 1
hereof. This Agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto and their respective successors and permitted assigns.
26. GOVERNING LAW AND MATTERS RELATING TO THE TRUST.
This Agreement shall be governed by and provisions shall be
construed in accordance with the laws of the State of Delaware. It is
expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Trust personally, but shall bind only the trust property of
the Trust. The execution and delivery of this Agreement have been authorized
by the Trustees, and this Agreement has been signed and delivered by an
authorized officer of the Trust, acting as such, and neither such
authorization by the Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Trust as provided in the Trust's Agreement and Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
THE HIRTLE CALLAGHAN TRUST
By:/s/_____________________________
Title:_____________________________
BISYS FUND SERVICES, INC.
By:/s/_____________________________
Title:_____________________________
<PAGE>
<PAGE>
Dated: October 1, 1996
SCHEDULE A
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
THE HIRTLE CALLAGHAN TRUST
AND
BISYS FUND SERVICES, INC.
TRANSFER AGENCY SERVICES
1. SHAREHOLDER TRANSACTIONS
a. Process shareholder purchase and redemption orders.
b. Set up account information, including address, dividend option,
taxpayer identification numbers and wire instructions.
c. Issue confirmations in compliance with Rule 10 under the
Securities Exchange Act of 1934, as amended.
d. Issue periodic statements for shareholders.
e. Process transfers and exchanges.
f. Process dividend payments, including the purchase of new
shares, through dividend reimbursement.
2. SHAREHOLDER INFORMATION SERVICES
a. Make information available to shareholder servicing unit and
other remote access units regarding trade date, share price, current
holdings, yields, and dividend information.
b. Produce detailed history of transactions through duplicate or
special order statements upon request.
c. Provide mailing labels for distribution of financial reports,
prospectuses, proxy statements or marketing material to current
shareholders.
3. COMPLIANCE REPORTING
a. Provide reports to the Securities and Exchange Commission, the
National Association of Securities Dealers and the States in which
the Fund is registered.
b. Prepare and distribute appropriate Internal Revenue Service
forms for corresponding Fund and shareholder income and capital
gains.
c. Issue tax withholding reports to the Internal Revenue Service.
4. DEALER/LOAD PROCESSING (IF APPLICABLE)
a. Provide reports for tracking rights of accumulation and
purchases made under a Letter of Intent.
<PAGE>
<PAGE>
b. Account for separation of shareholder investments from
transaction sale charges for purchase of Fund shares.
c. Calculate fees due under 12b-1 plans for distribution and
marketing expenses.
d. Track sales and commission statistics by dealer and provide for
payment of commissions on direct shareholder purchases in a load
Fund.
5. SHAREHOLDER ACCOUNT MAINTENANCE
a. Maintain all shareholder records for each account in the Trust.
b. Issue customer statements on scheduled cycle, providing
duplicate second and third party copies if required.
c. Record shareholder account information changes.
d. Maintain account documentation files for each shareholder.
<PAGE>
<PAGE>
SCHEDULE B
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
THE HIRTLE CALLAGHAN TRUST
AND
BISYS FUND SERVICES, INC.
TRANSFER AGENT FEES
$15.00 per account
ADDITIONAL SERVICES:
Additional services such as IRA processing, development of interface
capabilities, servicing of 403(b) and 408(c) accounts, management of cash
sweeps between DDAs and mutual fund accounts and coordination of the printing
and distribution of prospectuses, annual reports and semi-annual reports are
subject to additional fees which will be quoted upon request. Programming
costs or database management fees for special reports or specialized
processing will be quoted upon request.
OUT-OF-POCKET EXPENSES:
BISYS shall be entitled to be reimbursed for all reasonable out-of-pocket
expenses including, but not limited to, the expenses set forth in Section 3 of
the Transfer Agency Agreement to which this Schedule B is attached.
THE HIRTLE CALLAGHAN TRUST BISYS FUND SERVICES, INC.
By:/s/_____________________________ By:/s/_____________________________
Title:_____________________________ Title:_____________________________
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<PAGE>
SCHEDULE C
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
THE HIRTLE CALLAGHAN TRUST
AND
BISYS FUND SERVICES, INC.
REPORTS
1. Daily Shareholder Activity Journal
2. Daily Fund Activity Summary Report
a. Beginning Balance
b. Dealer Transactions
c. Shareholder Transactions
d. Reinvested Dividends
e. Exchanges
f. Adjustments
g. Ending Balance
3. Daily Wire and Check Registers
4. Monthly Dealer Processing Reports
5. Monthly Dividend Reports
6. Sales Data Reports for Blue Sky Registration
7. Annual report by independent public accountants concerning BISYS'
shareholder system and internal accounting control systems to be filed
with the Securities and Exchange Commission pursuant to Rule 17Ad-13 of
the Securities Exchange Act of 1934, as amended.
The Hirtle Callaghan Trust
David M. Spungen, whose signature appears below, does hereby
constitute and appoint Donald E. Callaghan and Robert J. Zion, and
each of them, his true and lawful attorney and agent, with power of
substitution or resubstitution, to do any and all acts and things and
to execute any and all instruments which said attorney and agent may
deem necessary or advisable or which may be required to enable The
Hirtle Callaghan Trust ("Trust") to comply with the Investment
Company Act of 1940, as amended, and the Securities Act of 1933, as
amended, (collectively, "Acts"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect
thereof, in connection with the filing and effectiveness of any and
all amendments to the Registration Statement of the Trust on Form
N-1A pursuant to said Acts, including, without limitation, the power
and authority to sign in the name and on behalf of the undersigned as
a trustee and/or officer of the Trust and all such amendments filed
with the Securities and Exchange Commission under said Acts, and any
other instruments or documents related thereto, and the undersigned
does hereby ratify and confirm all that said attorney and agent shall
do or cause to be done by virtue hereof.
/s/
David M. Spungen
Dated: November 5, 1996
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<PAGE>
The Hirtle Callaghan Trust
Ross H. Goodman, whose signature appears below, does hereby
constitute and appoint Donald E. Callaghan and Robert J. Zion, and
each of them, his true and lawful attorney and agent, with power of
substitution or resubstitution, to do any and all acts and things and
to execute any and all instruments which said attorney and agent may
deem necessary or advisable or which may be required to enable The
Hirtle Callaghan Trust ("Trust") to comply with the Investment
Company Act of 1940, as amended, and the Securities Act of 1933, as
amended, (collectively, "Acts"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect
thereof, in connection with the filing and effectiveness of any and
all amendments to the Registration Statement of the Trust on Form
N-1A pursuant to said Acts, including, without limitation, the power
and authority to sign in the name and on behalf of the undersigned as
a trustee and/or officer of the Trust and all such amendments filed
with the Securities and Exchange Commission under said Acts, and any
other instruments or documents related thereto, and the undersigned
does hereby ratify and confirm all that said attorney and agent shall
do or cause to be done by virtue hereof.
/s/
Ross H. Goodman
Dated: November 5, 1996
<PAGE>
<PAGE>
The Hirtle Callaghan Trust
Donald E. Callaghan, whose signature appears below, does hereby
constitute and appoint Donald E. Callaghan and Robert J. Zion, and
each of them, his true and lawful attorney and agent, with power of
substitution or resubstitution, to do any and all acts and things and
to execute any and all instruments which said attorney and agent may
deem necessary or advisable or which may be required to enable The
Hirtle Callaghan Trust ("Trust") to comply with the Investment
Company Act of 1940, as amended, and the Securities Act of 1933, as
amended, (collectively, "Acts"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect
thereof, in connection with the filing and effectiveness of any and
all amendments to the Registration Statement of the Trust on Form
N-1A pursuant to said Acts, including, without limitation, the power
and authority to sign in the name and on behalf of the undersigned as
a trustee and/or officer of the Trust and all such amendments filed
with the Securities and Exchange Commission under said Acts, and any
other instruments or documents related thereto, and the undersigned
does hereby ratify and confirm all that said attorney and agent shall
do or cause to be done by virtue hereof.
/s/
Donald E. Callaghan
Dated: November 5, 1996<PAGE>
<PAGE>
The Hirtle Callaghan Trust
Jarrett Burt Kling, whose signature appears below, does hereby
constitute and appoint Donald E. Callaghan and Robert J. Zion, and
each of them, his true and lawful attorney and agent, with power of
substitution or resubstitution, to do any and all acts and things and
to execute any and all instruments which said attorney and agent may
deem necessary or advisable or which may be required to enable The
Hirtle Callaghan Trust ("Trust") to comply with the Investment
Company Act of 1940, as amended, and the Securities Act of 1933, as
amended, (collectively, "Acts"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect
thereof, in connection with the filing and effectiveness of any and
all amendments to the Registration Statement of the Trust on Form
N-1A pursuant to said Acts, including, without limitation, the power
and authority to sign in the name and on behalf of the undersigned as
a trustee and/or officer of the Trust and all such amendments filed
with the Securities and Exchange Commission under said Acts, and any
other instruments or documents related thereto, and the undersigned
does hereby ratify and confirm all that said attorney and agent shall
do or cause to be done by virtue hereof.
/s/
Jarrett Burt Kling
Dated: November 5, 1996
<PAGE>
<PAGE>
The Hirtle Callaghan Trust
Richard W. Worthham, III, whose signature appears below, does hereby
constitute and appoint Donald E. Callaghan and Robert J. Zion, and
each of them, his true and lawful attorney and agent, with power of
substitution or resubstitution, to do any and all acts and things and
to execute any and all instruments which said attorney and agent may
deem necessary or advisable or which may be required to enable The
Hirtle Callaghan Trust ("Trust") to comply with the Investment
Company Act of 1940, as amended, and the Securities Act of 1933, as
amended, (collectively, "Acts"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect
thereof, in connection with the filing and effectiveness of any and
all amendments to the Registration Statement of the Trust on Form
N-1A pursuant to said Acts, including, without limitation, the power
and authority to sign in the name and on behalf of the undersigned as
a trustee and/or officer of the Trust and all such amendments filed
with the Securities and Exchange Commission under said Acts, and any
other instruments or documents related thereto, and the undersigned
does hereby ratify and confirm all that said attorney and agent shall
do or cause to be done by virtue hereof.
/s/
Richard W. Worthham, III
Dated: November 5, 1996
<PAGE>
<PAGE>
The Hirtle Callaghan Trust
Jonathan J. Hirtle, whose signature appears below, does hereby
constitute and appoint Donald E. Callaghan and Robert J. Zion, and
each of them, his true and lawful attorney and agent, with power of
substitution or resubstitution, to do any and all acts and things and
to execute any and all instruments which said attorney and agent may
deem necessary or advisable or which may be required to enable The
Hirtle Callaghan Trust ("Trust") to comply with the Investment
Company Act of 1940, as amended, and the Securities Act of 1933, as
amended, (collectively, "Acts"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect
thereof, in connection with the filing and effectiveness of any and
all amendments to the Registration Statement of the Trust on Form
N-1A pursuant to said Acts, including, without limitation, the power
and authority to sign in the name and on behalf of the undersigned as
a trustee and/or officer of the Trust and all such amendments filed
with the Securities and Exchange Commission under said Acts, and any
other instruments or documents related thereto, and the undersigned
does hereby ratify and confirm all that said attorney and agent shall
do or cause to be done by virtue hereof.
/s/
Jonathan J. Hirtle
Dated: November 5, 1996
