<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION February ____, 1996
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._________ [x]
and/or
Registration Statement Under the Investment Company Act of 1940 [x]
Amendment No. 1
(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 Information Heading
----------------------------------- -------------------------------------------
of Additional Information
-------------------------
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>
<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 See Prospectus -- "General"
Item 19. Purchase, Redemption and Pricing of Additional Purchase and Redemption Information;
Securities Being Offered 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 Financial Statements and Independent Accountants
</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>
THE HIRTLE CALLAGHAN TRUST
575 E. Swedesford Road
Wayne, PA 19087
April , 1996
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
- ---------------------------------------------
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 April _____, 1996, 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.
1
<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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<TABLE>
<CAPTION>
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Small
Value Growth Capitalization International Limited Duration
Portfolio Equity Equity Equity Equity Municipal Bond
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<S> <C> <C> <C> <C> <C>
Management Fees 0.35% 0.35% 0.50% 0.45% 0.25%
Other Expenses** 0.28% 0.28% 0.28% 0.36% 0.28%
(after fee waivers)
Total Portfolio Operating Expenses 0.63% 0.63% 0.78% 0.81% 0.53%
(after fee waivers)
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</TABLE>
* Figures shown are based on estimated expenses for the current fiscal
year. The expense figures for "Management Fees" and "Other Expenses" in
Table 2 above are based upon estimated costs and estimated fees to be
charged to each Portfolio in the current fiscal year, taking into account
the projected size of each Portfolio. Actual expenses may be greater or
less than such estimates.
** The caption "Other Expenses" does not include extraordinary expenses as
determined by the use of generally accepted accounting principles. Amounts
shown reflect waivers of a portion of the fees payable for administrative
services. Without these waivers, the expenses that appear under the
caption "Other Expenses" would be .31% for The Value Equity, Growth Equity,
Small Capitalization Equity and The Limited Duration Municipal Bond
Portfolio and .39% for The International Equity Portfolio. Total Portfolio
Operating Expenses would be: The Value Equity Portfolio, .66%; The Growth
Equity Portfolio, .66%; The Small Capitalization Equity Portfolio, .81%;
The International Equity Portfolio, .84% and The Limited Duration Municipal
Bond Portfolio, .56%.
The preceding tables are designed to assist investors in understanding expenses
borne by investors as shareholders of the Trust, either directly or indirectly.
Example: An investor would pay the following expenses on a $1,000 investment,
- -------
assuming (1) 5% annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
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Small
Value Growth Capitalization International Limited Duration
Portfolio Equity Equity Equity Equity Municipal Bond
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<S> <C> <C> <C> <C> <C>
1 year $ 7 $ 7 $ 8 $ 9 $ 5
3 years $21 $21 $26 $27 $17
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</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.
2
<PAGE>
Financial Highlights
(Selected per share data and rations for a share outstanding throughtout each
period)
The following information, which is unaudited, should be read in conjunction
with the Trust's financial statements. The Trust's financial statements are
included in the Trust's Statement of Additional Information, which is
available upon request.
<TABLE>
<CAPTION>
GROWTH EQUITY INTERNATIONAL EQUITY VALUE EQUITY SMALL CAP MUNICIPAL BOND
AUGUST 8, 1995 AUGUST 17, 1995 AUGUST 25, 1995 SEPTEMBER 5, 1995 OCTOBER 10, 1995
(COMMENCEMENT (COMMENCEMENT (COMMENCEMENT (COMMENCEMENT (COMMENCEMENT
OF OPERATIONS) OF OPERATIONS) OF OPERATIONS) OF OPERATIONS) OF OPERATIONS)
THROUGH THROUGH THROUGH THROUGH THROUGH
DECEMBER 31, 1995 DECEMBER 31, 1995 DECEMBER 31, 1995 DECEMBER 31, 1995 DECEMBER 31, 1995
----------------- -------------------- ----------------- ----------------- -----------------
<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/(loss):............ 0.01 0.02 0.09 0.03 0.11
Net realized/unrealized
gain/(loss) on
investments:.............. 0.23 0.70 0.89 (0.05) 0.11
------- ------- ------- ------- -------
Total from Investment
Operations:................ 0.24 0.72 0.98 (0.02) 0.22
------- ------- ------- ------- -------
Less Distributions:
Dividends from capital
gains:.................... 0.00 (0.01) (0.03) 0.00 0.00
Dividends from net
investment income:........ (0.01) (0.13) (0.09) (0.04) (0.11)
------- ------- ------- ------- -------
Total Distributions:........ (0.01) (0.14) (0.12) (0.04) (0.11)
------- ------- ------- ------- -------
Net Asset Value, End of
Period..................... $ 10.23 $ 10.58 $ 10.86 $ 9.94 $ 10.11
======= ======= ======= ======= =======
Total Return................ 2.40% 7.15% 9.60% (0.19)% 2.17%
Net Assets End of Period (in
thousands):................ $62,116 $54,225 $56,401 $32,268 $17,081
Ratios to Average Net Assets
of:
Net investment income:*.... 0.26% 0.27% 2.47% 0.93% 4.84%
Expenses net of
waivers/reimbursements:*.. 0.63% 0.81% 0.63% 0.78% 0.53%
Expenses before
waivers/reimbursements:*.. 0.66% 0.86% 0.71% 1.02% 1.29%
Portfolio Turnover Rate..... 37% 8% 36% 13% 17%
</TABLE>
- ----------------
+ Per share amounts are based on the average number of shares outstanding
during the periods from commencement of operations through December 31, 1995.
* Annualized
3
<PAGE>
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."
Cowen Asset Management, (a division of Cowen & Co.) and Institutional Capital
Corporation currently serve as Investment Managers for The Value Equity
Portfolio.
The Growth Equity Portfolio. The investment objective of this Portfolio is to
- ---------------------------
provide capital appreciation, with income as a secondary consideration. The
Portfolio will seek to achieve this objective by investing primarily in a
diversified portfolio of equity securities traded on registered exchanges or in
the over-the-counter market in the U.S. In selecting securities for the
Portfolio, the Investment Managers will generally emphasize equity securities
with long-term earnings growth potential and relatively higher price-earnings
ratios than the average range for stocks included in the Standard & Poor's 500
Stock Index. Although dividend paying securities will be considered for
inclusion in the Portfolio, dividends paid by The Growth Equity Portfolio can
generally be expected to be lower than those paid by The Value Equity Portfolio.
Up to 10% of the Portfolio's 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.
4
<PAGE>
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.
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
5
<PAGE>
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
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
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
6
<PAGE>
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;
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
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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
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.
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
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"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
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
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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
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
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.
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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
committee and no person has primary responsibility for making recommendations to
the committee. Brinson had assets of approximately $52.9 billion under
management as of December 31, 1995, of which approximately $2.5 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 December 31, 1995, assets of approximately $1.5 billion under
management, of which approximately $86 million represented assets of mutual
funds.
Cowen Asset Management ("Cowen"), a division of Cowen & Company, serves as an
Investment Manager for The Value Equity Portfolio. For its services to the
Portfolio, Cowen 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%. Cowen, the principal offices of which are located at Financial Square,
New York, New York 10005, has provided investment management
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services since 1980. William Rechter is primarily responsible for making the
day-to-day investment decisions for that portion of the Portfolio's assets
assigned to Cowen. Mr. Rechter, who is a Managing Director of Cowen, has been an
investment professional with Cowen since 1985 and has served in investment
related positions since 1970. As of December 31, 1995, Cowen had assets of
approximately $5.1 billion under management, of which approximately $1.3
billion represented assets of mutual funds. Cowen & Co. is organized as a
limited partnership, the general partner of which is Cowen Incorporated.
Frontier Capital Management Company ("Frontier") serves as an Investment Manager
for The Small Capitalization Equity Portfolio. For its services to the
Portfolio, Frontier receives a fee based on the average daily net asset value of
that portion of the Portfolio's assets managed by it, at an annual rate of
0.45%. Frontier, the principal offices of which are located at 99 Summer
Street, Boston, Massachusetts 02110, was established in 1980. Michael
Cavarretta is responsible for making the day-to-day investment decisions for
that portion of the Portfolio's assets assigned to Frontier. Mr. Cavarretta has
been an investment professional with Frontier since 1988. Before joining
Frontier, Mr. Cavarretta was a financial analyst with General Electric Co. and
attended Harvard Business School (M.B.A. 1988). Frontier had, as of December 31,
1995, assets of approximately $2.2 billion under management, of which
approximately $16 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 $4.3 billion
under management as of December 31, 1995, of which approximately $84 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 December 31, 1995, Jennison had
approximately $28.9 billion under management, of which approximately $2.2
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
December 31, 1995, Morgan Grenfell had assets of approximately $7.5 billion of
which approximately $852 million 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
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
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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 December 31, 1995, assets of approximately $958.6 million under
management, of which approximately $75.4 million represented assets of mutual
funds.
Consulting Arrangement. Pursuant to an agreement with the Trust, ("HCCI
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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 December 31, 1995 had approximately $_____ 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. Furman, Selz LLC ("Furman
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Selz"), 230 Park Avenue, New York, New York 10169 has been retained, pursuant to
a separate Master Administrative Services Contract with the Trust, to serve as
the Trust's administrator. Services performed by Furman Selz 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, Furman Selz 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, Furman Selz also serves 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. Finally, Furman Selz,
which is a registered broker-dealer and member of the New York and American
Stock Exchanges as well as several regional exchanges, serves as the Trust's
distributor. Furman Selz performs similar services for mutual funds other than
the Trust. Bankers Trust Company has been retained by the Trust to serve as
custodian for the assets of each of the Portfolios.
Expenses. The Trust pays all expenses incurred in its operation, other than
- --------
those expenses expressly assumed by Hirtle Callaghan, the Investment Managers or
other service organizations. Those Trust expenses that can be readily identified
as belonging to a particular Portfolio will be paid by that Portfolio. General
expenses of the Trust that are not so identified will be allocated among the
Portfolios based on their relative net assets at the time those expenses are
accrued. The Trust's principal expenses are the fees payable to the Investment
Managers; 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
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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.
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. During the period prior to the time shares are redeemed, dividends on
such shares will accrue and be payable.
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.
14
<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
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.
15
<PAGE>
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.
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
16
<PAGE>
foreign taxes paid by the Portfolio), and (ii) entitled to either deduct (as an
itemized deduction in the case of individuals) their share of such foreign taxes
in computing their taxable income or to claim a credit for such taxes against
their U.S. income tax, subject to certain limitations under the Code.
Back-up Withholding; Dividends-Received Deduction. The Trust is required to
- --------------------------------------------------
withhold 31% of taxable dividends, capital gains distributions, and redemptions
paid to shareholders who have not provided the Trust with their certified
taxpayer identification number in compliance with regulations adopted by the
Internal Revenue Service. Dividends paid from net investment income by The
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").
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
17
<PAGE>
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.
18
<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.
19
<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 April, 1996. 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-April ____, 1996.
1
<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 49 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. Mr. Kling is a
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>
2
<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.
David E. Branigan 42 Vice President and Treasurer Chief operating officer of Hirtle
Callaghan since 1994. For more
than five years prior to that, he
was Assistant Treasurer of The
Pennsylvania State University.
Laura Anne Corsell, Esq. 46 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.
Gordon M. Forrester 34 Assistant Vice President and For more than the past five years,
230 Park Avenue Assistant Treasurer Director--Mutual Funds Division,
New York, N.Y. 10169 Furman Selz LLC.
Joan V. Fiore, Esq. 39 Assistant Secretary Since 1991, Managing Director
230 Park Avenue and Counsel--Mutual Funds
New York, N.Y. 10169 Division, Furman Selz LLC
from 1986 to 1991,
staff attorney with the
Securities and Exchange
Commission.
Sheryl Hirschfeld 35 Assistant Secretary Since 1994, Director of
230 Park Avenue Corporate Secretary Services--
New York, N.Y. 10169 Mutual Funds Division, Furman
Selz LLC; for more
than five years prior to that,
served as assistant to the
corporate secretary and to the
general counsel of Dreyfuss
Corporation.
</TABLE>
*Indicates a Trustee who is an "interested person" of the Trust within the
meaning of the Investment Company Act.
Each of those members of the Board who are not "interested persons" of the Trust
within the meaning of the Investment Company Act ("Independent Trustees")
receive from the Trust a fee of $1,000.00 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. As permitted under the Trust's Amended and Restated Declaration and
Agreement of Trust
3
<PAGE>
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, approximately ____%, ___%, ____%, ___ and _____ % of the outstanding
shares of The Value Equity, Growth Equity, Small Capitalization Equity, Limited
Duration Municipal Bond and International Equity Portfolios, respectively.
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
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. 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,
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reckless disregard of its duties, misfeasance, bad faith or gross negligence on
the part of the named Investment Manager.
Other Matters. As noted in the prospectus, Furman Selz LLC ("Furman Selz")
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serves as the principal underwriter of the Trust, pursuant to an agreement with
the Trust dated July 21, 1995, which agreement was approved by the Trust's Board
at its meeting held on July 20, 1995. Furman Selz does not receive any
underwriting fees or other compensation in connection with the distribution of
the Trust's shares. Furman Selz also serves as the Trust's administrator,
accounting agent and transfer agent pursuant to written agreements more fully
described in the Trust's prospectus and receives a fee for services provided
under those agreements. Bankers Trust Company, One Bankers Trust Plaza, New
York, N.Y. 10006, serves as the custodian for the assets of each of the Trust's
Portfolios. Cowen Asset Management, which currently serves as an Investment
Manager for The Value Equity Portfolio, is a division of Cowen & Co., a
registered broker dealer and investment adviser. Cowen & Co., is a limited
partnership whose general partner is Cowen Incorporated. Cowen Incorporated is
controlled by Joseph Cohen through a voting trust.
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
- ----------------------
each of the Portfolios may use for temporary investment purposes are repurchase
agreements. Under the terms of a typical repurchase agreement, a Portfolio
would acquire an underlying debt security for a relatively short period (usually
not more than one week), subject to an obligation of the seller to repurchase
that security and the obligation of the Portfolio to resell that security at an
agreed-upon price and time. Repurchase agreements could involve certain risks
in the event of default or insolvency of the other party, including possible
delays or restrictions upon the Portfolio's ability to dispose of the underlying
securities. The Investment Manager for each Portfolio, in accordance with
guidelines adopted by the Board, monitors the creditworthiness of those banks
and non-bank dealers with which the respective Portfolios may enter into
repurchase agreements. The Trust also monitors the market value of the
securities underlying any repurchase agreement to ensure that the repurchase
obligation of the seller is adequately collateralized.
Repurchase agreements may be entered into with primary dealers in U.S.
Government Securities who meet credit guidelines established by the Board (each
a "repo counterparty"). Under each repurchase agreement, the repo counterparty
will be required to maintain, in an account with the Trust's custodian bank,
securities that equal or exceed the repurchase price of the securities subject
to the repurchase agreement. A Portfolio will generally enter into repurchase
agreements with short durations, from overnight to one week, although securities
subject to repurchase agreements generally have longer maturities. A Portfolio
may not enter into a repurchase agreement with more than seven days to maturity
if, as a result, more than 15% of the value of its net assets would be invested
in illiquid securities including such repurchase agreements.
For purposes of the Investment Company Act, a repurchase agreement may be deemed
a loan to the repo counterparty. It is not clear whether, in the context of a
bankruptcy proceeding involving a repo counterparty, a court would consider a
security acquired by a Portfolio subject to a repurchase agreement as being
owned by that Portfolio or as being collateral for such a "loan." If a court
were to characterize the transaction as a loan, and a Portfolio has not
perfected a security interest in the security acquired, that Portfolio could be
required to turn the security acquired over to the bankruptcy trustee and be
treated as an unsecured creditor of 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.
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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
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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
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
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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.
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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
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the cost of a future purchase. In addition, call options may be used as a means
of participating in an anticipated advance of a security on a more limited risk
basis than would be possible if the security itself were purchased. In the
event of a decline in the price of the underlying security, use of this strategy
would serve to limit the amount of loss, if any, to the amount of the option
premium paid. Conversely, if the market price of the underlying security rises
and the call is exercised or sold at a profit, that profit will be reduced by
the amount initially paid for the call.
Put options may be purchased in order to hedge against a decline in market value
of a security held by the purchasing portfolio. The put effectively guarantees
that the underlying security can be sold at the predetermined exercise price,
even if that price is greater than the market value at the time of exercise. If
the market price of the underlying security increases, the profit realized on
the eventual sale of the security will be reduced by the premium paid for the
put option. Put options may also be purchased on a security that is not held by
the purchasing portfolio in anticipation of a price decline in the underlying
security. In the event the market value of such security declines below the
designated exercise price of the put, the purchasing portfolio would then be
able to acquire the underlying security at the market price and exercise its put
option, thus realizing a profit. In order for this strategy to be successful,
however, the market price of the underlying security must decline so that the
difference between the exercise price and the market price is greater than the
option premium paid.
Option Writing. Call options may be written (sold) by the Portfolios.
- ---------------
Generally, calls will be written only when, in the opinion of a Portfolio's
Investment Manager, the call premium received, plus anticipated appreciation in
the market price of the underlying security up to the exercise price of the
call, will be greater than the appreciation in the price of the underlying
security.
Put options may also be written. This strategy will generally be used when it
is anticipated that the market value of the underlying security will remain
higher than the exercise price of the put option or when a temporary decrease in
the market value of the underlying security is anticipated and, in the view of a
Portfolio's Investment Manager, it would not be appropriate to acquire the
underlying security. If the market price of the underlying security rises or
stays above the exercise price, it can be expected that the purchaser of the put
will not exercise the option and a profit, in the amount of the premium received
for the put, will be realized by the writer of the put. However, if the market
price of the underlying security declines or stays below the exercise price, the
put option may be exercised and the portfolio that sold the put will be
obligated to purchase the underlying security at a price that may be higher than
its current market value.
All option writing strategies will be employed only if the option is "covered."
For this purpose, "covered" means that, so long as the Portfolio that has
written (sold) the option is obligated as the writer of a call option, it will
(1) own the security underlying the option; or (2) hold on a share-for-share
basis a call on the same security, the exercise price of which is equal to or
less than the exercise price of the call written. In the case of a put option,
the Portfolio that has written (sold) the put option will (1) maintain cash or
cash equivalents in an amount equal to or greater than the exercise price; or
(2) hold on a share-for share basis, a put on the same security as the put
written provided that the exercise price of the put held is equal to or greater
than the exercise price of the put written.
Options on Securities Indices. Options on securities indices may by used in
- ------------------------------
much the same manner as options on securities. Index options may serve as a
hedge against overall fluctuations in the securities markets or market sectors,
rather than anticipated increases or decreases in the value of a particular
security. Thus, the effectiveness of techniques using stock index options will
depend on the extent to which price movements in the securities index selected
correlate with price movements of the portfolio to be hedged. Options on stock
indices are settled exclusively in cash.
Risk Factors Relating to the Use of Options Strategies. The premium paid or
- -------------------------------------------------------
received with respect to an option position will reflect, among other things,
the current market price of the underlying security, the relationship of the
exercise price to the market price, the historical price volatility of the
underlying security, the option period, supply and demand, and interest rates.
Moreover, the successful use of options as a hedging strategy depends upon the
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<PAGE>
ability to forecast the direction of market fluctuations in the underlying
securities, or in the case of index options, in the market sector represented by
the index selected.
Under normal circumstances, options traded on one or more of the several
recognized options exchanges may be closed by effecting a "closing purchase
transaction," i.e. by purchasing an identical option with respect to the
underlying security in the case of options written and by selling an identical
option on the underlying security in the case of options purchased. A closing
purchase transaction will effectively cancel an option position, thus permitting
profits to be realized on the position, to prevent an underlying security from
being called from, or put to, the writer of the option or, in the case of a call
option, to permit the sale of the underlying security. A profit or loss may be
realized from a closing purchase transaction, depending on whether the overall
cost of the closing transaction (including the price of the option and actual
transaction costs) is less or more than the premium received from the writing of
the option. It should be noted that, in the event a loss is incurred in a
closing purchase transaction, that loss may be partially or entirely offset by
the premium received from a simultaneous or subsequent sale of a different call
or put option. Also, because increases in the market price of an option will
generally reflect increases in the market price of the underlying security, any
loss resulting from a closing purchase transaction is likely to be offset in
whole or in part by appreciation of the underlying security held.
Options will normally have expiration dates between three and nine months from
the date written. The exercise price of the options may be below, equal to, or
above the current market values of the underlying securities at the time the
options are written. Options that expire unexercised have no value. Unless an
option purchased by a Portfolio is exercised or a closing purchase transaction
is effected with respect to that position, a loss will be realized in the amount
of the premium paid.
HEDGING THROUGH THE USE OF FUTURES CONTRACTS AND RELATED INSTRUMENTS.
As indicated in the prospectus, each of the Portfolios may, consistent with its
investment objectives and policies, use futures contracts and options on futures
contracts to reduce the risks associated with the types of securities in which
each is authorized to invest and/or in anticipation of future purchases. A
Portfolio may invest in futures-related instruments only for hedging purposes
and not for speculation and only in a manner consistent with its investment
objective and policies. In particular, a Portfolio may not commit more than 5%
of its net assets, in the aggregate, to margin deposits on futures contracts or
premiums for options on futures contracts. The following discussion sets forth
certain information relating to the types of futures contracts that the
Portfolios may use, together with the risks that may be associated with their
use.
About Futures Contracts and Options on Futures Contracts. A futures contract is
- --------------------------------------------------------
a bilateral agreement pursuant to which one party agrees to make, and the other
party agrees to accept, delivery of the specified type of security or currency
called for in the contract at a specified future time and at a specified price.
In practice, however, contracts relating to financial instruments or currencies
are closed out through the use of closing purchase transactions before the
settlement date and without delivery or the underlying security or currency. In
the case of futures contracts based on a securities index, the contract provides
for "delivery" of an amount of cash equal to the dollar amount specified
multiplied by the difference between the value of the underlying index on the
settlement date and the price at which the contract was originally fixed.
Stock Index Futures Contracts. A Portfolio may sell stock index futures
- ------------------------------
contracts in anticipation of a general market or market sector decline that may
adversely affect the market values of securities held. To the extent that
securities held correlate with the index underlying the contract, the sale of
futures contracts on that index could reduce the risk associated with a market
decline. Where a significant market or market sector advance is anticipated,
the purchase of a stock index futures contract may afford a hedge against not
participating in such advance at a time when a Portfolio is not fully invested.
This strategy would serve as a temporary substitute for the purchase of
individual stocks which may later be purchased in an orderly fashion.
Generally, as such purchases are made, positions in stock index futures
contracts representing an equivalent securities would be liquidated.
Futures Contracts on Debt Securities. Futures contracts on debt securities,
- -------------------------------------
often referred to as "interest rate futures," obligate the seller to deliver a
specific type of debt security called for in the contract, at a specified future
time. A public market now exists for futures contracts covering a number of
debt securities, including long-term
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U.S. Treasury bonds, ten-year U.S. Treasury notes, and three-month U.S. Treasury
bills, and additional futures contracts based on other debt securities or
indices of debt securities may be developed in the future. Such contracts may be
used to hedge against changes in the general level of interest rates. For
example, a Portfolio may purchase such contracts when it wishes to defer a
purchase of a longer-term bond because short-term yields are higher than long-
term yields. Income would thus be earned on a short-term security and minimize
the impact of all or part of an increase in the market price of the long-term
debt security to be purchased in the future. A rise in the price of the long-
term debt security prior to its purchase either would be offset by an increase
in the value of the contract purchased by the Portfolio or avoided by taking
delivery of the debt securities underlying the futures contract. Conversely,
such a contract might be sold in order to continue to receive the income from a
long-term debt security, while at the same time endeavoring to avoid part or all
of any decline in market value of that security that would occur with an
increase in interest rates. If interest rates did rise, a decline in the value
of the debt security would be substantially offset by an increase in the value
of the futures contract sold.
Options on Futures Contracts. An option on a futures contract gives the
- ----------------------------
purchaser the right, in return for the premium, to assume a position in a
futures contract (a long position if the option is a call and a short position
if the option is a put) at a specified price at any time during the period of
the option. The risk of loss associated with the purchase of an option on a
futures contract is limited to the premium paid for the option, plus transaction
cost. The seller of an option on a futures contract is obligated to a broker
for the payment of initial and variation margin in amounts that depend on the
nature of the underlying futures contract, the current market value of the
option, and other futures positions held by the Portfolio. Upon exercise of the
option, the option seller must deliver the underlying futures position to the
holder of the option, together with the accumulated balance in the seller's
futures margin account that represents the amount by which the market price of
the underlying futures contract exceeds, in the case of a call, or is less than,
in the case of a put, the exercise price of the option involved. If an option
is exercised on the last trading day prior to the expiration date of the option,
settlement will be made entirely in cash equal to the difference between the
exercise price of the option and the value at the close of trading on the
expiration date.
Risk Considerations Relating to Futures Contracts and Related Instruments.
- -------------------------------------------------------------------------
Participants in the futures markets are subject to certain risks. Positions in
futures contracts may be closed out only on the exchange on which they were
entered into (or through a linked exchange): no secondary market exists for
such contracts. In addition, there can be no assurance that a liquid market
will exist for the contracts at any particular time. Most futures exchanges and
boards of trade limit the amount of fluctuation permitted in futures contract
prices during a single trading day. Once the daily limit has been reached in a
particular contract, no trades may be made that day at a price beyond that
limit. It is possible that futures contract prices could move to the daily
limit for several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and subjecting some futures
traders to substantial losses. In such event, and in the event of adverse price
movements, a Portfolio would be required to make daily cash payments of
variation margin. In such circumstances, an increase in the value of that
portion of the securities being hedged, if any, may partially or completely
offset losses on the futures contract.
As noted above, there can be no assurance that price movements in the futures
markets will correlate with the prices of the underlying securities positions.
In particular, there may be an imperfect correlation between movements in the
prices of futures contracts and the market value of the underlying securities
positions being hedged. In addition, the market prices of futures contracts may
be affected by factors other than interest rate changes and, as a result, even a
correct forecast of interest rate trends might not result in a successful
hedging strategy. If participants in the futures market elect to close out
their contracts through offsetting transactions rather than by meeting margin
deposit requirements, distortions in the normal relationship between debt
securities and the futures markets could result. Price distortions could also
result if investors in the futures markets opt to make or take delivery of the
underlying securities rather than engage in closing transactions because such
trend might result in a reduction in the liquidity of the futures market. In
addition, an increase in the participation of speculators in the futures market
could cause temporary price distortions.
The risks associated with options on futures contracts are similar to those
applicable to all options and are summarized above under the heading "Hedging
Through the Use of Options: Risk Factors Relating to the Use of Options
Strategies." In addition, as is the case with futures contracts, there can be
no assurance that (1) there will be
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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 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.
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
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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
- ---------------------------------------
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
- ------------------------------------------
may take positions in options on foreign currencies to hedge against the risk of
foreign exchange rate fluctuations on foreign securities the Portfolio holds in
its portfolio or intends to purchase. For example, if the Portfolio were to
enter into a contract to purchase securities denominated in a foreign currency,
it could effectively fix the maximum U.S. dollar cost of the securities by
purchasing call options on that foreign currency. Similarly, if the Portfolio
held securities denominated in a foreign currency and anticipated a decline in
the value of that currency against the U.S. dollar, it could hedge against such
a decline by purchasing a put option on the currency involved. The markets in
foreign currency options are relatively new, and the Portfolio's ability to
establish and close out positions in such options is subject to the maintenance
of a liquid secondary market. There can be no assurance that a liquid secondary
market will exist for a particular option at any specific time. In addition,
options on foreign currencies are affected by all of those factors that
influence foreign exchange rates and investments generally. The quantities of
currencies underlying option contracts represent odd lots in a market dominated
by transactions between banks, and as a result extra transaction costs may be
incurred upon exercise of an option. There is no systematic reporting of last
sale information for foreign currencies or any regulatory requirement that
quotations be firm or revised on a timely basis. Quotation information is
generally representative of very large transactions in the interbank market and
may not reflect smaller transactions where rates may be less favorable. Option
markets may be closed while round-the-clock interbank currency markets are open,
and this can create price and rate discrepancies.
Forward Foreign Currency Exchange Contracts. The Growth Portfolio may use
- -------------------------------------------
forward contracts to protect against uncertainty in the level of future exchange
rates in connection with specific transactions. For example, when the Portfolio
enters into a contract for the purchase or sale of a security denominated in a
foreign currency, or when the Portfolio anticipates the receipt in a foreign
currency of dividend or interest payments on a security that it holds, the
Portfolio may desire to "lock in" the U.S. dollar price of the security or the
U.S. dollar equivalent of the payment, by entering into a forward contract for
the purchase or sale of the foreign currency involved in the underlying
11
<PAGE>
transaction in exchange for a fixed amount of U.S. dollars or foreign currency.
This may serve as a hedge against a possible loss resulting from an adverse
change in the relationship between the currency exchange rates during the period
between the date on which the security is purchased or sold, or on which the
payment is declared, and the date on which such payments are made or received.
The International Equity Portfolio may also use forward contracts in connection
with specific transactions. In addition, it may use such contracts to lock in
the U.S. dollar value of those positions, to increase the Portfolio's exposure
to foreign currencies that the Investment Manager believes may rise in value
relative to the U.S. dollar or to shift the Portfolio's exposure to foreign
currency fluctuations from one country to another. For example, when the
Investment Manager believes that the currency of a particular foreign country
may suffer a substantial decline relative to the U.S. dollar or another
currency, it may enter into a forward contract to sell the amount of the former
foreign currency approximating the value of some or all of the Portfolio's
portfolio securities denominated in such foreign currency. This investment
practice generally is referred to as "cross-hedging."
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward contract
is entered into and the date it matures. Accordingly, it may be necessary for a
Portfolio to purchase additional foreign currency on the spot (i.e., cash)
market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the Portfolio is obligated
to deliver and if a decision is made to sell the security and make delivery of
the foreign currency. Conversely, it may be necessary to sell on the spot
market some of the foreign currency received upon the sale of the portfolio
security if its market value exceeds the amount of foreign currency the
Portfolio is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward contracts involve the risk that
anticipated currency movements will not be accurately predicted, causing the
Portfolio to sustain losses on these contracts and transaction costs. A
Portfolio may enter into forward contracts or maintain a net exposure to such
contracts only if: (1) the consummation of the contracts would not obligate the
Portfolio to deliver an amount of foreign currency in excess of the value of the
Portfolio's securities and other assets denominated in that currency; or (2) the
Portfolio maintains cash, U.S. Government securities or other liquid securities
in a segregated account in an amount which, together with the value of all the
Portfolio's securities denominated in such currency, equals or exceeds the value
of such contracts.
At or before the maturity date of a forward contract that requires the Portfolio
to sell a currency, the Portfolio may either sell a portfolio security and use
the sale proceeds to make delivery of the currency or retain the security and
offset its contractual obligation to deliver the currency by purchasing a second
contract pursuant to which the Portfolio will obtain, on the same maturity date,
the same amount of the currency that it is obligated to deliver. Similarly, the
Portfolio may close out a forward contract requiring it to purchase a specified
currency by entering into another contract entitling it to sell the same amount
of the same currency on the maturity date of the first contract. As a result of
such an offsetting transaction, a Portfolio would realize a gain or a loss to
the extent of any change in the exchange rate between the currencies involved
between the execution dates of the first and second contracts.
The cost to a Portfolio of engaging in forward contracts varies with factors
such as the currencies involved, the length of the contract period and the
prevailing market conditions. Because forward contracts are usually entered
into on a principal basis, no fees or commissions are involved. The use of
forward contracts does not eliminate fluctuations in the prices of the
underlying securities the Portfolio owns or intends to acquire, but it does fix
a rate of exchange in advance. In addition, although forward contracts limit
the risk of loss due to a decline in the value of the hedged currencies, they
also limit any potential gain that might result should the value of the
currencies increase.
Although 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
12
<PAGE>
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.
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.
13
<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. At various times, the Trust may be
requested to redeem shares for which it has not yet received confirmation of
good payment; in this circumstance, the Trust may delay the redemption until
payment for the purchase of such shares has been collected and confirmed to the
Trust.
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
14
<PAGE>
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.
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.
Portfolio Turnover. Changes may be made in the holdings of any of the
- ------------------
Portfolios consistent with their respective investment objectives and policies
whenever, in the judgment of the relevant Investment Manager, such changes are
believed to be in the best interests of the Portfolio involved. It is
anticipated that the annual portfolio turnover rate for a Portfolio will not
exceed 100% under normal circumstances. The portfolio turnover rate is
calculated by dividing the lesser of purchases or sales of portfolio securities
by the average monthly value of a Portfolio's securities. For purposes of this
calculation, portfolio securities exclude all securities having a maturity when
purchased of one year or less. The portfolio turnover rate for each of the
Portfolios that has more than one Investment Manager will be an aggregate of the
rates for each individually managed portion of that Portfolio. Rates for each
portion, however, may vary significantly.
Valuation. The net asset value per share of the Portfolios is determined once
- -----------
on each Business Day as of the close of the New York Stock Exchange, which is
normally 4 P.M. New York City time, on each day the New York Stock Exchange is
open for trading. 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
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<PAGE>
Exchange is not open for trading even if there is sufficient trading in its
portfolio securities on such days to materially affect the net asset value per
share.
In valuing the Trust's assets for calculating net asset value, readily
marketable portfolio securities listed on a national securities exchange or on
NASDAQ are valued at the last sale price on the business day as of which such
value is being determined. If there has been no sale on such exchange or on
NASDAQ on such day, the security is valued at the closing bid price on such day.
Readily marketable securities traded only in the over-the-counter market and not
on NASDAQ are valued at the current or last bid price. If no bid is quoted on
such day, the security is valued by such method as the Board shall determine in
good faith to reflect the security's fair value. All other assets of each
Portfolio are valued in such manner as the Board in good faith deems
appropriate to reflect their fair value.
The net asset value per share of each of the Trust's Portfolios is calculated as
follows: All liabilities incurred or accrued are deducted from the valuation of
total assets which includes accrued but undistributed income; the resulting net
asset value is divided by the number of shares outstanding at the time of the
valuation and the result (adjusted to the nearest cent) is the net asset value
per share.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividends and Distributions. As noted in the prospectus, each Portfolio will
- ---------------------------
distribute substantially all of its net investment income and net realized
capital gains, if any. It is anticipated that The Value Portfolio, The Growth
Portfolio and The Small Capitalization Equity Portfolio will declare and
distribute dividends from net investment income on a quarterly basis. The
Limited Duration Municipal Bond Portfolio will declare dividends daily, with
payments on a monthly basis. The International Equity Portfolio will declare
dividends semi-annually. The Trust expects to distribute any undistributed net
investment income and capital gains for the 12-month period ended each October
31, on or about December 31 of each year.
Tax Information. Each of the Trust's Portfolios is treated as a separate entity
- ---------------
for federal income tax purposes. Each Portfolio intends to qualify and elect to
be treated as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code") for the fiscal year ending June
30, 1996 and intends to continue to so qualify. Accordingly, it is the policy
of each Portfolio to distribute to its shareholders by December 31 of each
calendar year (i) at least 98% of its ordinary income for such year; (ii) at
least 98% of the excess of its realized capital gains over its realized capital
losses for the 12-month period ending on October 31 during such year; and (iii)
any amounts from the prior calendar year that were not distributed.
The following discussion and related discussion in the prospectus do not purport
to be a complete description of all tax implications of an investment in the
Trust. In addition, such information relates solely to the application of that
law to U.S. citizens or residents and U.S. domestic corporations, partnerships,
trusts and estates. A shareholder should consult with his or her own tax
adviser for more information about Federal, state, local or foreign taxes. Each
shareholder who is not a U.S. person should consider the U.S. and foreign tax
consequences of ownership of shares of the Trust, including the possibility that
such a shareholder may be subject to a U.S. withholding tax on amounts
constituting ordinary income.
Distributions of net investment income and short-term capital gains are taxable
to shareholders as ordinary income. 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
16
<PAGE>
or eliminated if shares of such Portfolio held by a corporate investor are
treated as debt-financed or are held for less than 46 days.
Distributions of net investment income and short-term capital gains are taxable
to shareholders as long-term capital gains, regardless of the length of time
they have held their shares. Capital gains distributions are not eligible for
the dividends-received deduction referred to in the previous paragraph.
Distributions of any net investment income and net realized capital gains will
be taxable as described above, whether received in shares or in cash.
Shareholders electing to receive distributions in the form of additional shares
will have a cost basis for federal income tax purposes in each share so received
equal to the net asset value of a share on the reinvestment date. Distributions
are generally taxable when received. However, distributions declared in
October, November or December to shareholders of record on a date in such a
month and paid the following January are taxable as if received on December 31.
Distributions are includable in alternative minimum taxable income in computing
a shareholder's liability for the alternative minimum tax.
A redemption of Trust shares may result in recognition of a taxable gain or
loss. Any loss realized upon a redemption of shares within six months from the
date of their purchase will be treated as a long-term capital loss to the
extent of any amounts treated as distributions of long-term capital gains
during such six-month period. Any loss realized upon a redemption may be
disallowed under certain wash sale rules to the extent shares of the same Trust
are purchased (through reinvestment of distributions or otherwise) within 30
days before or after the redemption or exchange.
The Trust is required to report to the Internal Revenue Service all
distributions of taxable income and capital gains as well as gross proceeds from
the redemption or exchange of Trust shares, except in the case of exempt
shareholders, which includes most corporations. Pursuant to the backup
withholding provisions of the Code, distributions of any taxable income and
capital gains and proceeds from the redemption of Trust shares may be subject to
withholding of federal income tax at the rate of 31 percent in the case of non-
exempt shareholders who fail to furnish the Trust with their taxpayer
identification numbers and with required certifications regarding their status
under the federal income tax law. If the withholding provisions are applicable,
any such distributions and proceeds, whether taken in cash or reinvested in
additional shares, will be reduced by the amounts required to be withheld.
Corporate and other exempt shareholders should provide the Trust with their
taxpayer identification numbers or certify their exempt status in order to
avoid possible erroneous application of backup withholding. The Trust reserves
the right to refuse to open an account for any person failing to provide a
certified taxpayer identification number.
Tax Matters Relating to the Use of Certain Hedging Instruments and Foreign
- --------------------------------------------------------------------------
Investments. Certain of the Portfolios may write, purchase or sell certain
- -----------
options, futures and foreign currency contracts. Such transactions are subject
to special tax rules that may affect the amount, timing and character of
distributions to shareholders. Unless a Portfolio is eligible to make, and
makes, a special election, any such contract that is a "Section 1256 contract"
will be "marked-to-market" for Federal income tax purposes at the end of each
taxable year, i.e., each contract will be treated for tax purposes as though it
had been sold for its fair market value on the last day of the taxable year. In
general, unless the special election referred to in the previous sentence is
made, gain or loss from transactions in Section 1256 contracts will be 60% long
term and 40% short term capital gain or loss. Additionally, Section 1092 of the
Code, which applies to certain "straddles," may affect the tax treatment of
income derived by a Portfolio from transactions in option, futures and foreign
currency contracts. In particular, under this provision, a Portfolio may, for
tax purposes, be required to postpone recognition of losses incurred in certain
closing transactions.
Section 988 of the Code contains special tax rules applicable to certain foreign
currency transactions that may affect the amount, timing, and character of
income, gain or loss recognized by the Trust. Under these rules, foreign
exchange gain or loss realized with respect to foreign currency-denominated debt
instruments, foreign currency forward contracts, foreign currency-denominated
payables and receivables, and foreign currency options and futures contracts
(other than options, futures, and foreign currency contracts that are governed
by the mark-to-market and 60%-40% rules of Section 1256 of the Code and for
which no election is made) is treated as ordinary income or loss. Under the
Code, dividends or gains derived by a Portfolio from any investment in a
"passive foreign investment company" ("PFIC")-- a foreign corporation 75 percent
or more of the gross income of which consists of interest, dividends, royalties,
rents, annuities or other "passive income" or 50 percent or more of the assets
of which produce "passive income" -- may subject a Portfolio to U.S. federal
income tax even with respect to income
17
<PAGE>
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.
As __________, 1996, the following persons were held, as of record, 5% or more
of shares of the Trust, as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Small
Value Growth Capitalization International Limited Duration
Name and Address of Record Equity Equity Equity Equity Municipal Bond
Owner
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[INFORMATION TO BE SUPPLIED BY AMENDMENT]
FINANCIAL STATEMENTS AND INDEPENDENT ACCOUNTANTS.
Coopers and Lybrand, LLP., serves as the Trust's auditors. The Trust's statement
of assets and liabilities as of July 20, 1995, has been audited by Coopers and
Lybrand, LLP, whose address is 2400 Eleven Penn Center, Philadelphia, PA 19103
Such statement and accompanying report are set forth below. Also set forth below
are the Trust's financial statements for the period ended December 31, 1995,
which financial statements are unaudited.
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<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees
of The Hirtle Callaghan Trust
We have audited the accompanying Statements of Assets and Liabilities of The
Hirtle Callaghan Trust (comprised of the Value Equity, the Growth Equity, the
Small Capitalization Equity, International Equity, and Limited Duration
Municipal Bond Portfolios, collectively referred to as the "Trust") as of July
20, 1995. This financial statement is the responsibility of the Trust's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the financial position of The Hirtle Callaghan Trust as
of July 20, 1995 in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
July 20, 1995
<PAGE>
THE HIRTLE CALLAGHAN TRUST
STATEMENTS OF ASSETS AND LIABILITIES
as of July 20, 1995
<TABLE>
<CAPTION>
The Small
The Value The Growth Capitalization International Limited Duration
Equity Equity Equity Equity Municipal Bond
Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C>
ASSETS:
Cash........................... $20,000 $20,000 $20,000 $20,000 $20,000
Deferred Organizational
Expenses.................... 30,740 30,740 30,740 30,740 30,740
------- ------- ------- ------- -------
Total Assets................... 50,740 50,740 50,740 50,740 50,740
------- ------- ------- ------- -------
LIABILITIES:
Organizational Expense
Payable..................... 30,740 30,740 30,740 30,740 30,740
Commitments
(Notes 1 and 2)
------- ------- ------- ------- -------
Total Liabilities.............. 30,740 30,740 30,740 30,740 30,740
------- ------- ------- ------- -------
NET ASSETS: $20,000 $20,000 $20,000 $20,000 $20,000
======= ======= ======= ======= =======
Common Stock - $.001 par value; unlimited shares authorized.
Shares Outstanding 2,000 2,000 2,000 2,000 2,000
======= ======= ======= ======= =======
Net Asset
Value per Share $10.00 $10.00 $10.00 $10.00 $10.00
======= ======= ======= ======= =======
</TABLE>
See accompanying Notes to Financial Statement
<PAGE>
THE HIRTLE CALLAGHAN TRUST
NOTES TO FINANCIAL STATEMENT
NOTE 1
The Hirtle Callaghan Trust (The "Trust") was organized in Delaware on
December 15, 1994. The Trust has had no operations other than those relating to
organizational matters and the issuance to the IRA of Donald E. Callaghan, of
Common shares as shown in the Statement of Assets and Liabilities. The Trust,
which currently comprises five portfolios (the "Funds"), is registered under the
Investment Company Act of 1940, as amended (the "1940 Act") as an open-ended
management investment company. Each Fund operates as a diversified fund.
NOTE 2
The Trust has entered into an agreement (the "HCCI Consulting Agreement")
with Hirtle Callaghan & Co., Inc. ("HCCI"). The HCCI Consulting Agreement
provides that HCCI monitors the performance of various investment management
organizations, including the Investment Managers. HCCI 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. The HCCI Consulting Agreement
provides that HCCI be paid an annual fee of 0.05% of the Fund's average net
assets.
The Trust has entered into various investment advisory contracts relating
to individual Portfolios of the Trust. The International Equity Portfolio
entered into an Investment Advisory Agreement with Brinson Partners, Inc.
("Brinson") at an annual rate of 0.40% of the average daily net assets. The
Small Capitalization Equity Portfolio entered into separate Investment Advisory
Agreements with Clover Capital Management, Inc. ("Clover Capital") and Frontier
Capital Management Company ("Frontier') at an annual rate of 0.45% each, of the
average daily net assets. The Value Equity Portfolio entered into separate
Investment Advisory Agreements with Cowen Asset Management, a division of Cowen
& Company ("Cowen"), and Institutional Capital Management Corporation ("ICAP")
at an annual rate of 0.30% each, of the average daily net assets. The Limited
Duration Municipal Bond Portfolio entered into an Investment Advisory Agreement
with Morgan Grenfell Capital Management Incorporated ("Morgan Grenfell") at an
annual rate of 0.20% of the average daily net assets. The Growth Equity
Portfolio entered into separate Investment Advisory Agreements with Jennison
Associates Capital Corp. ("Jennison") and Westfield Capital Management Company,
Inc. ("Westfield") at an annual rate of 0.30% each, of the average daily net
assets.
Furman Selz will provide the Funds with administrative services pursuant to an
administration agreement (the "Master Administrative Services Contract"). The
services under the Master Administrative Services Contract include general
supervision of the operation of the Trust and coordination of services performed
by the various service organizations retained by the Trust; regulatory
compliance of reports furnished to the Securities and Exchange Commission and
state agencies; and preparation, filing, and maintenance of the Trust's
Registration Statement under federal and state laws. Pursuant to the Master
Administrative Services Contract, the Funds will pay Furman Selz a monthly fee
for its services as the Trust's administrator, an annual rate of 0.075% of the
average daily net assets, up to $1 billion and 0.060% of such assets in excess
of $1 billion. This fee will be allocated among the Funds on the basis of their
relative net assets. Furman Selz serves as the Trust's transfer and dividend
disbursing agent for which it receives a fee based on the number of shareholder
accounts maintained and the services required by each such account. Furman Selz
serves as the Trust's accounting agent for an annual fee of $30,000 per Fund.
Furman Selz, a registered broker-dealer and member of New York and American
Stock Exchanges, will also serve as the Trust's Distributor for which they will
receive no fees.
Bankers Trust Company is the custodian for the Funds.
<PAGE>
NOTES TO FINANCIAL STATEMENT Page 2 THE HIRTLE CALLAGHAN TRUST
NOTE 3
Costs incurred in connection with the organization and initial
registration of the Fund have been deferred and are being amortized on a
straight line basis over sixty months beginning with each Funds' commencement of
operations. In the event any of the initial shares of the Trust are redeemed
during the amortization period, the redemption proceeds will be reduced by a pro
rata portion of any unamortized organization expenses in the proportion as the
number of shares being redeemed bears to the number of initial shares
outstanding at the time of redemption.
<PAGE>
THE HIRTLE CALLAGHAN TRUST
GROWTH EQUITY FUND
Portfolio of Investments (unaudited) -- December 31, 1995
<TABLE>
<CAPTION>
SHARES COST VALUE
------ ---- -----
<C> <S> <C> <C>
COMMON STOCKS -- 93.10%
JENNISON ASSOCIATES CAPITAL
CORP. PORTFOLIO -- 39.32%
ADVERTISING -- .74%
12,400 Omnicom Group, Inc. .......................... $ 396,956 $ 461,900
----------- -----------
AEROSPACE/DEFENSE -- 1.21%
9,600 Boeing Co. ................................... 624,599 752,400
----------- -----------
BEVERAGES -- 1.28%
4,700 Coca-Cola Co. ................................ 305,844 348,975
8,000 Pepsico, Inc. ................................ 374,743 447,000
----------- -----------
680,587 795,975
----------- -----------
BROADCASTING -- .49%
8,200 Infinity Broadcasting*........................ 261,267 305,450
----------- -----------
CAPITAL GOODS -- .48%
9,000 Harnischfeger Industries, Inc.*............... 329,531 299,250
----------- -----------
COMMERCIAL SERVICES -- .58%
10,500 CUC International, Inc.*...................... 335,200 358,313
----------- -----------
COMPUTER EQUIPMENT -- 3.77%
5,600 Adobe Systems, Inc. .......................... 333,625 347,200
8,700 Autodesk, Inc. ............................... 401,311 297,975
8,500 Compaq Computer Corp.*........................ 444,864 408,000
8,200 Dell Computer Corp.*.......................... 337,648 283,925
5,100 Microsoft Corp.*.............................. 491,214 447,525
9,000 Silicon Graphics*............................. 306,867 247,500
7,800 Symbol Technologies, Inc.*.................... 288,853 308,100
----------- -----------
2,604,382 2,340,225
----------- -----------
COMPUTER SOFTWARE -- 3.64%
4,100 Broderbund Software*.......................... 274,539 249,075
8,200 Cisco Systems, Inc.*.......................... 508,924 611,925
8,100 3COM Corp.*................................... 347,624 377,663
11,600 Computer Associates International, Inc. ...... 560,182 659,750
5,500 First Data Corp. ............................. 320,237 367,812
----------- -----------
2,011,506 2,266,225
----------- -----------
CONSUMER NON-DURABLES -- .60%
7,200 Gillette Company.............................. 305,023 375,300
----------- -----------
ELECTRONIC COMPONENTS &
INSTRUMENTS -- 6.25%
7,600 Applied Materials, Inc.*...................... 403,300 299,250
7,900 Duracell International Inc. .................. 368,399 408,825
10,600 Hewlett Packard Co. .......................... $ 851,168 $ 887,750
13,400 Intel Corp. .................................. 877,806 760,450
17,600 International Rectifier Corp.*................ 354,503 440,000
13,700 LSI Logic Corp.*.............................. 663,953 448,675
5,700 Motorola, Inc. ............................... 431,681 324,900
8,100 Nokia Corp. - ADR+............................ 535,783 314,887
----------- -----------
4,486,593 3,884,737
----------- -----------
ENTERTAINMENT -- 1.24%
10,500 Harrah's Entertainment, Inc. ................. 296,393 254,625
8,700 The Walt Disney Co. .......................... 509,919 513,300
----------- -----------
806,312 767,925
----------- -----------
FINANCIAL SERVICES -- 2.05%
5,000 Federal National Mortgage Association......... 470,245 620,625
34,200 Hibernia Corp. Cl. A.......................... 333,935 367,650
3,500 Morgan Stanley Group, Inc. ................... 290,003 282,187
----------- -----------
1,094,183 1,270,462
----------- -----------
FOREST PRODUCTS & PAPER -- .35%
5,200 Champion International Corp. ................. 283,918 218,400
----------- -----------
HEALTH CARE -- 1.33%
2,900 Johnson & Johnson............................. 251,027 248,313
8,800 United Healthcare Corp. ...................... 405,891 576,400
----------- -----------
656,918 824,713
----------- -----------
INSURANCE -- 1.30%
1,900 Cigna Corp. .................................. 197,946 196,175
4,200 ITT Hartford Group*........................... 201,687 203,175
9,000 PMI Group..................................... 432,437 407,250
----------- -----------
832,070 806,600
----------- -----------
LODGING -- .85%
3,000 Hilton Hotels Corp. .......................... 205,047 184,500
15,400 Promus Hotels Corp.*.......................... 328,608 342,650
----------- -----------
533,655 527,150
----------- -----------
MANUFACTURING -- .48%
5,100 Luxottica Group
SPA - ADR+................................... 226,777 298,350
----------- -----------
MULTI-INDUSTRY -- .50%
5,800 ITT Corp.*.................................... 291,197 307,400
----------- -----------
</TABLE>
See accompanying notes to financial statements.
1
<PAGE>
THE HIRTLE CALLAGHAN TRUST
GROWTH EQUITY FUND
Portfolio of Investments (continued) -- December 31, 1995
<TABLE>
<CAPTION>
SHARES COST VALUE
------ ---- -----
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
JENNISON ASSOCIATES CAPITAL
CORP. PORTFOLIO (CONTINUED)
OFFICE EQUIPMENT -- .40%
1,800 Xerox Corp. .................................. $ 246,717 $ 248,175
----------- -----------
PERSONAL CARE -- .45%
7,900 Estee Lauder Co.*............................. 205,400 275,512
----------- -----------
PHARMACEUTICALS -- 4.44%
15,600 Astra A Fria - ADR+........................... 529,028 623,688
3,600 Chiron Corp. ................................. 318,793 397,800
9,000 Eli Lilly & Co. .............................. 345,825 506,250
4,700 Merck & Co. .................................. 237,924 309,025
4,400 Pfitzer Inc. ................................. 273,668 277,200
11,600 Smithkline Beecham
plc - ADR+................................... 533,253 643,800
----------- -----------
2,238,491 2,757,763
----------- -----------
PUBLISHING & PRINTING -- .78%
8,800 Reuters Holding plc - ADR+.................... 456,913 485,100
----------- -----------
RAW MATERIALS -- .39%
6,700 Minerals Technology, Inc. .................... 250,490 244,550
----------- -----------
RESTAURANT -- .55%
7,600 McDonalds Corp. .............................. 287,380 342,950
----------- -----------
RETAIL -- 2.04%
14,900 Autozone, Inc.*............................... 396,534 430,238
9,700 Dollar General Corp. ......................... 278,908 201,275
6,200 Home Depot, Inc. ............................. 262,701 296,825
6,400 Kohl's Corp.*................................. 339,426 336,000
----------- -----------
1,277,569 1,264,338
----------- -----------
TELECOMMUNICATIONS -- 2.03%
19,500 MCI Communications Corp. ..................... 466,848 509,437
9,900 Tellabs, Inc.*................................ 435,976 366,300
11,000 Vodafone Group plc - ADR+..................... 460,410 387,750
----------- -----------
1,363,234 1,263,487
----------- -----------
TEXTILES AND APPAREL -- .67%
10,700 Gucci Group*.................................. 235,400 415,963
----------- -----------
TRANSPORTATION -- .43%
1,500 UAL Corp.*.................................... 227,488 267,750
----------- -----------
TOTAL -- JENNISON ASSOCIATES CAPITAL CORP. ... 23,549,756 24,426,363
----------- -----------
WESTFIELD CAPITAL MANAGEMENT
PORTFOLIO -- 53.78%
BROADCASTING -- 1.25%
16,400 Viacom, Inc.*................................. $ 800,297 $ 776,950
----------- -----------
CAPITAL GOODS -- .94%
17,500 Harnischfeger Industries, Inc.*............... 638,032 581,875
----------- -----------
CHEMICALS -- .75%
17,000 Bush Boake Allen, Inc.*....................... 492,047 465,375
----------- -----------
COMMERCIAL SERVICES -- 1.42%
20,000 Service Corp. International................... 807,300 880,000
----------- -----------
COMPUTER EQUIPMENT -- 5.38%
17,400 Adobe Systems, Inc. .......................... 1,009,596 1,078,800
21,000 Ceridan Corp.*................................ 895,055 866,250
48,900 Computervision Corp.*......................... 541,404 751,837
7,000 International Business Machines Corp. ........ 770,195 642,250
----------- -----------
3,216,250 3,339,137
----------- -----------
COMPUTER SOFTWARE -- 8.04%
21,000 3COM Corp.*................................... 780,563 979,125
9,700 Cisco Systems, Inc.*.......................... 580,300 723,863
13,500 Computer Sciences Corp.*...................... 813,572 948,375
25,000 DST Systems*.................................. 621,200 712,500
10,625 First Data Corp. ............................. 593,315 710,582
11,000 Sterling Software Inc.*....................... 644,160 686,125
10,000 Net Manage Inc.*.............................. 261,750 232,500
----------- -----------
4,294,860 4,993,070
----------- -----------
ELECTRICAL AND ELECTRONICS -- .82%
35,800 Alpha Industries, Inc.*....................... 631,562 505,675
----------- -----------
ENTERTAINMENT -- 1.38%
14,500 The Walt Disney Co.*.......................... 846,233 855,500
----------- -----------
FINANCIAL SERVICES -- 2.64%
13,500 Chemical Banking Corp. ....................... 720,060 793,125
64,050 Mercury Finance Co. .......................... 852,637 848,663
----------- -----------
1,572,697 1,641,788
----------- -----------
FOOD PROCESSING -- 1.08%
8,700 Kellogg Co. .................................. 603,985 672,075
----------- -----------
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
THE HIRTLE CALLAGHAN TRUST
GROWTH EQUITY FUND
Portfolio of Investments (continued) -- December 31, 1995
<TABLE>
<CAPTION>
SHARES COST VALUE
------ ---- -----
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
WESTFIELD CAPITAL MANAGEMENT
PORTFOLIO (CONTINUED)
HOUSEHOLD PRODUCTS -- 2.61%
18,500 First Brands Corp. ........................... $ 795,182 $ 881,063
40,000 Williams-Sonoma, Inc.*........................ 874,499 740,000
----------- -----------
1,669,681 1,621,063
----------- -----------
INSURANCE -- 1.32%
8,900 American International
Group, Inc. ................................. 685,035 823,250
----------- -----------
MACHINERY & ENGINEERING -- .60%
20,500 Albany International Corp. ................... 521,080 371,563
----------- -----------
MANUFACTURING -- 1.07%
21,000 Danaher Corp. ................................ 679,489 666,750
----------- -----------
MEDICAL BIOTECHNOLOGY -- 1.21%
13,500 Medtronic Inc. ............................... 715,553 754,312
----------- -----------
MEDICAL MANAGEMENT &
SERVICES -- 6.45%
35,000 Apria Healthcare Group, Inc.*................. 1,147,375 988,750
66,400 Horizon/CMS Healthcare Corp.*................. 1,469,719 1,676,600
35,000 Quorum Health Group*.......................... 804,475 770,000
25,000 Summit Care Corp.*............................ 565,000 571,875
----------- -----------
3,986,569 4,007,225
----------- -----------
MEDICAL SUPPLIES -- 5.05%
30,000 De Rigo SPA - ADR+*........................... 676,138 682,500
25,000 Genesis Health Ventures, Inc.*................ 821,849 912,500
15,400 Idexx Laboratories, Inc.*..................... 508,176 723,800
14,100 Nellcor, Inc.*................................ 751,601 817,800
----------- -----------
2,757,764 3,136,600
----------- -----------
OIL & GAS -- 4.36%
17,800 Halliburton Co. .............................. 728,605 901,125
33,750 Weatherford International, Inc.*.............. 868,771 974,531
16,500 Western Atlas, Inc.*.......................... 722,690 833,250
----------- -----------
2,320,066 2,708,906
----------- -----------
PACKAGING -- 1.43%
23,700 Aptargroup, Inc. ............................. $ 780,471 $ 885,787
----------- -----------
REAL ESTATE -- 2.64%
40,400 Beacon Properties Corp.*...................... 866,803 929,200
31,200 Oasis Residential, Inc. ...................... 700,559 709,800
----------- -----------
1,567,362 1,639,000
----------- -----------
RESTAURANT -- .39%
10,000 Quality Dining Inc.*.......................... 237,500 242,500
----------- -----------
RETAIL -- .42%
10,000 Adidas AG-ADR+*............................... 241,066 266,250
----------- -----------
TELECOMMUNICATION
EQUIPMENT -- .54%
5,000 Eastman Kodak Co. ............................ 340,350 335,000
----------- -----------
TELECOMMUNICATIONS -- .59%
14,700 Transaction Network
Services, Inc.*.............................. 368,545 367,500
----------- -----------
TRANSPORTATION -- 1.40%
20,000 Continental Airlines CI. B ................... 876,110 870,000
----------- -----------
TOTAL -- WESTFIELD CAPITAL MANAGEMENT......... 31,649,904 33,407,151
----------- -----------
TOTAL -- COMMON STOCKS........................ 55,199,660 57,833,514
----------- -----------
TOTAL INVESTMENTS -- 93.10%................... $55,199,660++ 57,833,514
===========
Cash and Other Assets in Excess of
Liabilities -- 6.90%......................... 4,282,945
-----------
TOTAL NET ASSETS -- 100.00%................... $62,116,459
===========
</TABLE>
+ American Depository Receipts
++ The cost of securities for Federal income tax purposes is substantially the
same.
* Non-income producing security.
See accompanying notes to financial statements.
3
<PAGE>
THE HIRTLE CALLAGHAN TRUST
INTERNATIONAL EQUITY FUND
Portfolio of Investments (unaudited) -- December 31, 1995
<TABLE>
<CAPTION>
SHARES COST VALUE
------ ---- -----
<C> <S> <C> <C>
COMMON STOCKS -- 92.70%
AUSTRALIA -- 4.07%
21,000 Amcor Ltd. (Packaging).................... $ 158,476 $ 148,308
24,500 Australia New Zealand Bank Group
(Financial).............................. 101,384 114,926
39,500 Broken Hill Proprietary Co. Ltd.
(Metals - Diversified)................... 550,007 557,922
14,000 Cra Limited (Mining)...................... 217,461 205,446
45,000 David Jones Limited
(Retail Store)*.......................... 67,830 68,579
12,191 #Lend Lease Corp. Ltd. (Financial
Services)................................ 167,585 176,724
25,700 National Australia Bank Ltd. (Financial).. 214,980 231,175
25,000 News Corp.
(Publishing & Printing).................. 142,705 133,440
44,800 Pacific Dunlop Ltd.
(Holding Company)........................ 99,607 105,242
45,100 Qantas Airways Ltd. (Transportation)...... 71,897 75,101
29,200 Santos Ltd. (Oil & Gas)................... 75,866 85,310
48,200 Westpac Bank Corp. (Financial)*........... 189,666 213,558
14,000 WMC Limited
(Metals - Diversified)................... 92,918 89,922
----------- -----------
2,150,382 2,205,653
----------- -----------
BELGIUM -- 2.55%
2,000 Delhaize Freres NPV
(Retail - Grocery)....................... 82,411 82,993
1,260 Electrabel NPV (Utilities)................ 273,130 300,000
860 Fortis AG NPV (Insurance)................. 90,639 104,721
570 Groupe Bruxells Lambert NPV
(Financial Services)..................... 71,708 79,200
780 Kredietbank NPV (Financial Services)...... 181,928 213,572
610 Petrofina SA NPV
(Oil & Gas).............................. 181,240 186,942
BELGIUM (CONTINUED)
920 Societe Generale de Belique Paris
(Metals - Diversified)................... $ 68,081 $ 76,197
190 Solvay SA (Chemical)...................... 99,709 102,755
450 Tractebel NPV (Utilities)................. 162,871 185,969
770 Union Miniere NPV (Mining)*............... 50,330 51,595
----------- -----------
1,262,047 1,383,944
----------- -----------
CANADA -- 3.44%
5,200 Alcan Aluminum Ltd.
(Metals - Diversified)................... 176,557 161,547
11,200 Bank of Montreal (Financial Services)..... 244,097 254,545
4,100 Barrick Gold Corp. (Mining)............... 105,880 108,211
13,200 Canadian Pacific Ltd.
(Holding Company)........................ 225,300 240,726
5,300 Imperial Oil Ltd.
(Oil & Gas).............................. 189,994 191,853
4,200 Moore Corp. Ltd.
(Business Equipment)..................... 75,392 78,904
3,600 Noranda Inc.
(Metals - Diversified)................... 77,242 74,230
2,400 Norcen Energy
(Oil & Gas).............................. 35,746 36,070
1,900 Northern Telecom Ltd.
(Telecommunications)..................... 69,909 81,314
7,100 Nova Corp of Alberta (Chemical)........... 58,174 57,258
9,000 Royal Bank of Canada (Financial
Services)................................ 199,847 205,370
3,900 Seagram Co. Ltd.
(Wine & Spirits)......................... 141,799 134,385
11,700 Thompson Corp.
(Publishing & Printing).................. 155,778 162,977
5,500 Trans Canada Pipeline
(Oil & Gas).............................. 76,100 76,109
----------- -----------
1,831,815 1,863,499
----------- -----------
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
THE HIRTLE CALLAGHAN TRUST
INTERNATIONAL EQUITY FUND
Portfolio of Investments (continued) -- December 31, 1995
<TABLE>
<CAPTION>
SHARES COST VALUE
------ ---- -----
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
FRANCE -- 7.76%
1,300 Accor Ltd. (Lodging)...................... $ 166,446 $ 168,493
1,830 Alcatel Alsthom (Telecommunications)...... 179,208 157,950
5,710 Banque National de Paris
Cl A (Financial Services)................ 247,826 257,858
2,960 Carnaudmetalbox (Packaging)............... 124,990 135,547
1,460 Cie Bancaire SA
(Financial Services)..................... 157,669 163,562
2,040 Cie de Saint Gobain
(Building Materials)..................... 258,176 226,037
490 Colas
(Financial Services)..................... 89,405 82,141
3,160 Compagnie de Suez
(Financial Services)..................... 138,618 130,493
2,680 Credit Local de France (Financial
Services)................................ 227,598 214,768
720 Gan (Insurance)*.......................... 22,613 26,347
2,700 Generale des Eaux (Utilities)............. 290,887 269,856
680 Groupe de la Cite
(Publishing & Printing).................. 113,363 74,233
1,840 LVMH Moet Hennessey - Louis Vuitton
(Wine & Spirits)......................... 344,666 383,678
3,510 Michelin Cl B
(Tire & Rubber).......................... 151,621 140,139
2,480 Pechiney Cert D'Invest (Manufacturing).... 149,496 93,793
3,200 Peugeot SA (Auto Related)................. 425,448 422,602
2,405 Sanofi (Pharmaceuticals).................. 140,950 154,332
2,760 Societe Generale (Financial Services)..... 302,229 341,360
3,410 Societe Nationale Elf Acquitaine
(Oil & Gas).............................. 252,073 251,519
5,410 Total Co. Cl B
(Oil & Gas).............................. 329,689 365,526
5,600 UAP (Insurance)........................... 136,083 146,422
----------- -----------
4,249,054 4,206,656
----------- -----------
GERMANY -- 5.61%
174 #Allianz AG Holding (Insurance)........... $ 318,773 $ 339,785
7 #Allianz AG Holdings (Insurance).......... 12,322 12,697
607 BASF AG (Chemical)........................ 135,850 135,449
726 Bayer AG (Chemical)....................... 188,613 191,920
3,846 Bayer Vereinsbank (Financial Services).... 106,075 114,429
315 Bayerische Motoren Werke AG
(Auto Related)........................... 175,004 161,702
642 Commerzbank AG (Banking).................. 146,834 152,003
225 Daimler Benz AG (Auto Related)............ 109,966 113,459
9,093 Deutsche Bank AG (Financial Services)..... 416,768 431,660
672 Hoechst AG (Chemical)..................... 165,242 182,573
403 Kaufhof Holdings AG (Retail).............. 141,273 123,000
763 Mannesmann AG (Machinery & Engineering)... 246,965 243,373
114 Muenchener Rueckver AG (Insurance)........ 224,199 248,415
521 Preussag AG (Holding Company)............. 156,437 145,915
450 RWE AG (Oil & Gas)........................ 163,929 163,430
1,008 Schering AG (Pharmaceuticals)............. 72,500 66,902
5,022 Veba AG (Utilities)....................... 194,474 213,605
----------- -----------
2,975,224 3,040,317
----------- -----------
ITALY -- 2.58%
10,100 Assic Generali (Insurance)................ 245,682 245,028
7,100 Eni Ads - ADR+
(Oil & Gas)*............................. 233,450 243,175
75,000 Fiat Spa (Auto Related)................... 168,338 137,233
24,000 Instituto Mobiliare Italiano Spa
(Financial Services)..................... 146,278 151,429
27,000 Italgas (Utilities)....................... 77,747 82,283
7,000 #Mediobanca Spa (Financial Services)*..... 50,132 48,561
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
THE HIRTLE CALLAGHAN TRUST
INTERNATIONAL EQUITY FUND
Portfolio of Investments (continued) -- December 31, 1995
<TABLE>
<CAPTION>
SHARES COST VALUE
------ ---- -----
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
ITALY (CONTINUED)
101,000 Montedison Spa (Chemical)*............... $ 74,595 $ 67,805
11,000 Rinascente
(Retail - Department Store)............. 63,227 66,698
13,000 Rinascente Savings
(Retail - Department Store)............. 37,160 36,911
15,000 Sai Risp (Insurance)..................... 69,990 62,370
94,000 Telecom Italia Mobile de Risp
(Telecommunications)*................... 95,000 99,047
128,000 Telecom Italia de Risp
(Telecommunications).................... 166,624 156,840
----------- -----------
1,428,223 1,397,380
----------- -----------
JAPAN -- 37.00%
31,000 Amada
(Hand/Machine Tools) ................... 335,150 306,574
39,000 Asahi Glass Co. (Building Materials)..... 439,064 434,846
19,000 Bank of Tokyo (Financial Services)....... 299,747 333,430
25,000 Canon, Inc. (Business Equipment)......... 451,363 453,267
9,450 Canon Sales (Jewelry).................... 242,779 251,963
28,000 Citizen Watch Co. (Jewelry).............. 217,994 214,466
30,000 Dai Nippon Printing (Publishing &
Printing)............................... 487,634 509,017
13,000 Daiichi Pharmaceutical Co. Ltd.
(Pharmaceutical)........................ 185,676 185,282
30,000 Daikin Kogyo Co. (Machinery &
Engineering)............................ 270,921 293,775
15,000 Daiwa House Industries
(Manufacturing/Housing)................. 227,758 247,237
8,000 Fanuc Co.
(Electronic Components)................. 352,098 346,713
24,000 Fujitsu
(Computer Equipment).................... 271,666 267,597
JAPAN (CONTINUED)
63,000 Hitachi Ltd.
(Electrical & Electronics).............. $ 675,056 $ 635,253
19,000 Honda Motor Co. (Auto Related)........... 333,888 392,379
28,000 Inax (Industrial Components)............. 259,874 266,046
12,000 Isetan
(Retail - Department Store)............. 173,480 197,789
16,000 Ito-Yokado Co.
(Retail - Grocery)...................... 874,151 986,620
37,000 Keio Teito Electric Railway
(Transportation)........................ 217,518 215,600
34,000 Kintetsu
(Kinki Nippon Railway)
(Transportation)........................ 278,007 257,126
21,000 Kirin Brewery Co. Ltd (Brewery).......... 246,158 248,400
18,000 Kuraray Co. Ltd.
(Textiles & Apparel).................... 181,392 197,208
6,000 Maeda Road Construction (Engineering &
Construction)........................... 121,188 111,111
9,000 Marui Co.
(Retail - Department Store)............. 155,212 187,609
51,000 Matsushita Electric Co. (Electronic
Components)............................. 823,820 830,716
14,000 Mitsubishi Bank (Financial Services)..... 307,870 329,843
40,000 Mitsubishi Paper Mills (Forest Products &
Paper).................................. 239,202 240,838
47,000 NGK Insulators
(Industrial Components)................. 435,890 469,362
25,000 Nichii Co.
(Retail - Grocery)...................... 292,546 332,073
2,800 Nintendo (Toys).......................... 193,076 213,108
20,000 Nippon Denso Co. Ltd. (Electrical &
Electronics)............................ 368,076 374,249
20,000 Nippon Meat Packers (Food Processing).... 273,513 290,867
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
THE HIRTLE CALLAGHAN TRUST
INTERNATIONAL EQUITY FUND
Portfolio of Investments (continued) -- December 31, 1995
<TABLE>
<CAPTION>
SHARES COST VALUE
------ ---- -----
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
JAPAN (CONTINUED)
24,000 Nippon Steel Corp. (Steel)............... $ 79,448 $ 82,373
3,000 #Orix Corp.
(Financial Services).................... 107,415 123,618
137,000 Osaka Gas Corp. (Utilities).............. 462,741 474,200
15,000 Pioneer Electronics (Electrical &
Electronics)............................ 295,955 274,869
23,000 Sankyo Pharmaceutical (Pharmaceuticals).. 512,538 517,355
8,000 Secom Co.
(Electronic Components)................. 513,251 556,913
10,000 Seino Transport
(Trucking & Leasing).................... 163,984 167,733
63,000 Sekisui House (Manufacturing/Housing).... 782,743 806,283
18,000 Shinmaywa Industries
(Auto Related).......................... 152,901 148,691
9,700 Sony Corp. (Electrical & Electronics).... 526,615 582,150
27,000 Sumitomo Electric (Metal
Fabricate/Hardware)..................... 337,466 324,608
33,000 Sumitomo Trust & Banking (Financial
Services)............................... 623,675 700,698
35,000 Takeda Chemical Industries
(Pharmaceuticals)....................... 475,477 576,886
9,000 TDK Corp. (Electrical & Electronics)..... 453,805 459,860
27,000 Tokio Marine & Fire (Insurance).......... 310,410 353,403
12,795 Tokyo Electric Power (Utilities)......... 340,728 342,391
22,800 Tokyo Steel (Steel)...................... 449,104 420,012
16,000 Tonen Corp. (Oil & Gas).................. 239,236 234,245
123,000 Toray Industries Inc. (Chemical)......... 781,015 810,938
102,000 Toshiba Corp. (Electrical &
Electronics)............................ 748,126 800,058
22,000 Toyo Suisan Kaisha
(Food Processing)....................... 225,763 273,027
9,000 Toyota Motor Corp.
(Auto Related).......................... 177,274 191,100
12,000 Yamazaki Baking Co., Ltd. (Food
Processing)............................. 209,121 223,386
----------- -----------
19,200,558 20,065,161
----------- -----------
MALAYSIA -- 0.87%
3,000 Genting BHD (Entertainment).............. $ 27,309 $ 25,054
7,000 Hume Industries
(Building Materials).................... 33,350 33,641
14,000 Kuala Lumpur (Agriculture)............... 43,565 44,396
15,000 Land & General Holdings (Forest Products
& Paper)................................ 32,943 32,500
10,000 Malayan Banking (Financial Services)..... 84,048 84,302
4,000 Nestle Malaysia (Food Processing)........ 29,420 29,309
25,000 Sime Darby Berhad (Holding Company)...... 64,865 66,476
11,000 Telecom Malaysia (Telecommunications).... 82,361 85,799
18,000 Tenaga Nasional (Utilities).............. 70,085 70,908
----------- -----------
467,946 472,385
----------- -----------
NETHERLANDS -- 6.00%
8,961 ABN - Amro Holdings NV (Financial
Services)............................... 346,248 408,639
1,320 DSM NV (Chemical)........................ 108,468 108,696
7,746 International Nederlanden Group
(Financial Services).................... 428,575 518,011
5,357 Koninklijke NV (Commercial Services)..... 184,413 194,830
2,750 Philips Electronics (Electronic
Components)............................. 123,172 99,501
1,200 Royal Dutch
Petroleum - ADR+
(Oil & Gas)............................. 144,806 169,350
8,120 Royal Dutch Petroleum
(Oil & Gas)............................. 968,253 1,135,686
3,360 Unilever NV (Food Processing)............ 423,396 472,664
1,050 Verenigde Ned Uitgev Ver Bezit
(Publishing & Printing)................. 141,700 144,301
----------- -----------
2,869,031 3,251,678
----------- -----------
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
THE HIRTLE CALLAGHAN TRUST
INTERNATIONAL EQUITY FUND
Portfolio of Investments (continued) -- December 31, 1995
<TABLE>
<CAPTION>
SHARES COST VALUE
------ ---- -----
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
NEW ZEALAND -- 1.98%
267,400 Brierly Investment Co. (Investment
Company)................................ $ 197,229 $ 211,410
112,400 Carter Holt Harvey
(Forest Products & Paper)............... 260,006 242,360
104,800 Fletcher Challenge Ltd. (Forest Products
& Paper)................................ 271,324 241,721
7,917 Fletcher Forestry (Forest Products &
Paper).................................. 22,872 11,277
3,100 New Zealand
Telecom - ADR+ (Telecommunications)..... 192,345 215,063
35,800 Telecom Corp of New Zealand
(Telecommunications)*................... 150,776 154,385
----------- -----------
1,094,552 1,076,216
----------- -----------
SPAIN -- 2.68%
4,100 Banco Bilbao Vizcaya (Financial
Services)............................... 124,547 147,842
900 Banco Intercon (Financial Services)...... 78,695 110,752
600 Banco Popular Espanol (Financial
Services)............................... 91,388 110,554
2,200 Banco Santander SA (Financial Services).. 90,490 87,631
10,400 Compania Sevillana de Electricadad
(Utilities)............................. 67,915 80,838
3,000 Empresa Nac Electric (Utilities)......... 150,610 170,064
26,300 Iberdrola SA (Utilities)................. 203,830 240,886
2,300 Repsol SA - ADR+
(Oil & Gas)............................. 75,038 75,613
3,400 Repsol SA (Oil & Gas).................... 102,947 111,518
20,900 Telfonica de Espana
(Telecommunications).................... 278,445 289,727
2,300 Viscofan (Food Processing)............... 33,884 27,329
----------- -----------
1,297,789 1,452,754
----------- -----------
SWITZERLAND -- 2.13%
129 Ciba-Giegy AG (Pharmaceuticals)*......... $ 92,006 $ 113,679
1,214 CS Holding Co. (Financial Services)*..... 111,014 124,636
301 Nestle SA
(Food Processing)*...................... 306,768 333,457
31 Roche Holding
AS - Genusshein (Pharmaceuticals)....... 220,846 245,594
125 Schweiz Bankgesellschaft (Financial
Services)*.............................. 122,778 135,657
48 Societe Generale Surveillance (Commercial
Services)............................... 85,396 95,433
355 Zurich Versicherung (Insurance)*......... 88,290 106,333
----------- -----------
1,027,098 1,154,789
----------- -----------
UNITED KINGDOM -- 16.03%
62,800 Asda Group
(Retail - Grocery)...................... 102,895 107,665
24,900 Bass plc (Brewery)....................... 258,141 277,767
29,300 Bat Industries (Tobacco)................. 236,236 257,980
36,600 Bet (Commercial Services)................ 77,011 72,117
11,100 Booker plc
(Food Processing)....................... 70,927 59,931
101,500 British Gas plc (Utilities).............. 427,282 399,992
60,000 British Petroleum Co. plc (Oil & Gas).... 445,635 501,755
93,600 British Telecom plc
(Telecommunications).................... 570,082 514,080
12,930 Charter
(Machinery & Engineering)............... 178,486 173,125
41,400 Coats Viyella
(Textiles & Apparel).................... 136,062 112,406
48,000 FKI plc
(Machinery & Engineering)............... 125,159 122,879
131,100 General Electric plc (Electrical &
Electronics)............................ 639,562 722,076
11,800 Glaxo Wellcome plc (Pharmaceuticals)..... 146,823 167,515
66,900 Grand Metropolitan plc (Wine & Spirits).. 439,230 481,610
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
THE HIRTLE CALLAGHAN TRUST
INTERNATIONAL EQUITY FUND
Portfolio of Investments (continued) -- December 31, 1995
<TABLE>
<CAPTION>
SHARES COST VALUE
------ ---- -----
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
UNITED KINGDOM (CONTINUED)
37,700 Guinness (Wine & Spirits).............. $ 294,853 $ 277,250
60,400 Hanson plc (Holding Company)........... 199,284 180,393
41,100 Hillsdown Holdings (Food Processing)... 123,054 107,766
90,200 House of Fraser
(Retail - Department Store)........... 204,605 250,502
16,400 Legal & General Group plc (Insurance).. 150,034 170,479
18,600 Lloyds Abbey Life (Insurance).......... 120,903 129,860
135,200 Lloyds Bank (Financial Services)....... 559,533 720,535
26,200 Lucas Industries (Auto Parts).......... 78,156 73,575
30,100 Marks & Spencers plc
(Retail - Department Store............ 204,670 210,151
50,000 Mirror Group plc (Publishing &
Printing)............................. 119,535 133,429
25,500 National Power plc (Utilities)......... 197,644 177,837
27,700 National Westminster Bank (Financial
Services)............................. 254,690 278,918
20,700 Ocean Group (Transportation)........... 111,326 124,610
20,300 P & O Steam (Transportation)........... 167,861 149,918
16,800 Reckitt & Colman (Household Products).. 179,575 185,845
11,400 Redland (Building Materials)........... 68,360 68,803
UNITED KINGDOM (CONTINUED)
6,000 RJB Mining plc (Mining)................ $ 50,324 $ 51,013
69,500 Rolls Royce (Aerospace/Defense)........ 191,811 203,797
22,000 Royal Insurance (Insurance)............ 121,178 130,388
96,700 Sears (Retail - Department Store)...... 158,931 156,031
32,100 Sedgwick Group (Insurance)............. 58,002 60,262
16,500 Smithkline Beecham (Pharmaceuticals)... 161,480 179,710
64,600 Tesco (Retail - Grocery)............... 316,560 297,675
18,600 Thames Water (Utilities)............... 155,451 162,181
7,100 Unilever (Food Processing)............. 137,394 145,740
15,000 W.H. Smith
(Retail - Department Store)........... 87,810 98,675
----------- -----------
8,326,555 8,696,241
----------- -----------
TOTAL -- COMMON STOCKS................. 48,180,274 50,266,673
----------- -----------
TOTAL INVESTMENTS -- 92.70%............ $48,180,274++ 50,266,673
===========
Cash and Other Assets in Excess of
Liabilities -- 7.30%.................. 3,958,020
-----------
TOTAL NET
ASSETS -- 100.00%..................... $54,224,693
===========
</TABLE>
+ American Depository Receipts.
# Passive Foreign Investment Company.
++ The cost for Federal income tax purposes is substantially the same.
* Non-income producing security.
See accompanying notes to financial statements.
9
<PAGE>
THE HIRTLE CALLAGHAN TRUST
VALUE EQUITY FUND
Portfolio of Investments (unaudited) -- December 31, 1995
<TABLE>
<CAPTION>
SHARES COST VALUE
------ ---- -----
<C> <S> <C> <C>
COMMON STOCKS -- 96.51%
COWEN ASSET MANAGEMENT
PORTFOLIO -- 38.75%
ENERGY EQUIPMENT & SERVICES -- 2.84%
16,000 Chevron Corp. ............................. $ 782,797 $ 840,000
9,500 Exxon Corp. ............................... 675,233 761,188
----------- -----------
1,458,030 1,601,188
----------- -----------
FINANCIAL SERVICES -- 5.71%
14,000 First Union Corp. ......................... 707,640 778,750
22,000 Keycorp Ltd. .............................. 732,295 797,500
22,300 National City Corp. ....................... 679,025 738,687
28,000 PNC Bank Corp. ............................ 768,780 903,000
----------- -----------
2,887,740 3,217,937
----------- -----------
HOLDING COMPANIES -
DIVERSIFIED -- 1.49%
55,000 Hanson plc - ADR+.......................... 903,806 838,750
----------- -----------
INSURANCE -- 1.51%
22,000 Ohio Casualty Corp. ....................... 742,088 852,500
----------- -----------
OIL & GAS -- 2.90%
7,500 Atlantic Richfield Co. .................... 825,788 830,625
24,000 National Fuel Gas Co. ..................... 686,653 807,000
----------- -----------
1,512,441 1,637,625
----------- -----------
PERSONAL CARE -- 1.02%
12,000 Tambrands, Inc. ........................... 542,526 573,000
----------- -----------
PUBLISHING & PRINTING -- 1.38%
12,000 Dun & Bradstreet Corp. .................... 699,145 777,000
----------- -----------
REAL ESTATE -- 1.97%
37,000 New Plan Realty Trust...................... 817,783 809,375
8,000 Weingarten Realty*......................... 276,355 304,000
----------- -----------
1,094,138 1,113,375
----------- -----------
RETAIL -- 1.52%
18,000 Penney (J.C.) Co. ......................... 835,561 857,250
----------- -----------
TELECOMMUNICATIONS -- 5.44%
11,000 Bell Atlantic Corp. ....................... 660,373 735,625
17,600 GTE Corp. ................................. 660,531 774,400
15,000 NYNEX Corp. ............................... 698,788 810,000
22,300 Pacific Telesis Group...................... 649,463 749,838
----------- -----------
2,669,155 3,069,863
----------- -----------
TOBACCO -- 1.42%
18,000 American Brands Inc. ...................... 766,792 803,250
----------- -----------
UTILITIES -- 11.55%
27,000 Baltimore Gas & Electric Co. .............. $ 702,519 $ 769,500
29,000 Brooklyn Union Gas Co. .................... 733,765 848,250
26,600 Central & South West Corp. ................ 661,371 741,475
35,000 MCN Corp. ................................. 669,913 813,750
12,000 Piedmont Natural Gas Co. .................. 244,557 279,000
28,900 Scana Corp. ............................... 667,196 827,262
30,200 Southern Co. .............................. 661,925 743,675
16,000 Union Electric Co. ........................ 578,834 668,000
28,000 Utilcorp United Inc. ...................... 776,768 822,500
----------- -----------
5,696,848 6,513,412
----------- -----------
TOTAL -- COWEN ASSET MANAGEMENT............ 19,808,270 21,855,150
----------- -----------
INSTITUTIONAL CAPITAL MANAGEMENT
CORP PORTFOLIO -- 57.76%
AEROSPACE/DEFENSE -- 2.29%
7,100 McDonnell Douglas Corp. ................... 595,942 653,200
6,700 United Technologies Corp. ................. 572,984 635,662
----------- -----------
1,168,926 1,288,862
----------- -----------
BASIC INDUSTRY -- 1.32%
17,250 Weyerhaeuser Co. .......................... 788,538 746,063
----------- -----------
BANKING -- 3.07%
13,350 Bankamerica Corp. ......................... 795,213 864,413
12,850 Citicorp................................... 880,188 864,163
----------- -----------
1,675,401 1,728,576
----------- -----------
BEVERAGES -- 1.11%
11,200 Pepsico Inc. .............................. 563,595 625,800
----------- -----------
BROADCASTING -- 1.40%
20,000 E.W. Scripps Co. .......................... 802,961 787,500
----------- -----------
CHEMICALS -- 4.52%
8,000 Dow Chemical Co. .......................... 597,680 563,000
12,800 DuPont Ei DeNemours & Co. ................. 867,461 894,400
8,050 Hoechst AG - ADR+.......................... 998,681 1,094,317
----------- -----------
2,463,822 2,551,717
----------- -----------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
THE HIRTLE CALLAGHAN TRUST
VALUE EQUITY FUND
Portfolio of Investments (continued) -- December 31, 1995
<TABLE>
<CAPTION>
SHARES COST VALUE
------ ---- -----
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
COMPUTER EQUIPMENT -- 3.21%
10,050 Compaq Computer Corp.*..................... $ 484,514 $ 482,400
10,300 International Business Machines Corp. ..... 997,333 945,025
13,900 Silicon Graphics Inc.* .................... 427,800 382,250
----------- -----------
1,909,647 1,809,675
----------- -----------
CONSUMER CYCLICAL -- 0.55%
11,200 Circus Circus Entertainment................ 300,530 312,200
----------- -----------
ELECTRONIC COMPONENTS AND INSTRUMENTS -- 3.88%
8,050 Motorola, Inc. ............................ 610,473 458,850
31,500 Philips Electronics NV..................... 1,470,594 1,130,063
11,600 Texas Instruments.......................... 650,798 600,300
----------- -----------
2,731,865 2,189,213
----------- -----------
ENTERTAINMENT -- 4.10%
8,400 Capital Cities/ ABC Inc. .................. 986,862 1,036,350
13,500 Carnival Cruise Lines, Inc. ............... 309,801 329,063
25,000 Time Warner Inc. .......................... 933,451 946,875
----------- -----------
2,230,114 2,312,288
----------- -----------
FOOD PROCESSING -- 2.13%
8,550 Unilever NV - Cert......................... 1,158,006 1,203,412
----------- -----------
FINANCIAL SERVICES -- 2.84%
13,500 Key Corp. Ltd.............................. 466,132 489,375
17,700 Travelers Inc. ............................ 896,590 1,112,888
----------- -----------
1,362,722 1,602,263
----------- -----------
HEALTH CARE -- 1.58%
21,400 Abbott Laboratories Inc. .................. 879,190 893,450
----------- -----------
INSURANCE -- 1.52%
20,900 Allstate Insurance Corp. .................. 716,687 859,512
----------- -----------
MACHINERY & ENGINEERING -- 1.40%
7,500 American Standard Corp.*................... $ 213,767 $ 210,000
16,500 Deere & Co. ............................... 465,272 581,625
----------- -----------
679,039 791,625
----------- -----------
MEDICAL MANAGEMENT &
SERVICES -- 0.68%
18,600 Tenet Healthcare Corp. .................... 307,247 385,950
----------- -----------
MULTI-INDUSTRY -- 1.34%
10,100 ITT Corp.*................................. 518,236 535,300
9,200 ITT Industries*............................ 204,733 220,800
----------- -----------
722,969 756,100
----------- -----------
OIL & GAS -- 4.37%
12,400 Amoco Corp. ............................... 843,498 891,250
7,350 Atlantic Richfield Co. .................... 825,947 814,012
6,750 Mobil Corp. ............................... 675,804 756,000
----------- -----------
2,345,249 2,461,262
----------- -----------
PAPER PRODUCTS -- 1.61%
23,900 International Paper Co. ................... 972,184 905,212
----------- -----------
PHARMACEUTICALS -- 2.98%
6,600 American Home Products Corp. .............. 539,219 640,200
23,600 Ciba-Geigy AG - ADR+....................... 970,554 1,039,816
----------- -----------
1,509,773 1,680,016
----------- -----------
POLLUTION CONTROL -- 1.61%
30,400 WMX Technologies Inc. ..................... 866,914 908,200
----------- -----------
PUBLISHING & PRINTING -- 1.86%
400 Dun & Bradstreet Corp. .................... 25,148 25,900
53,100 News Corp. Ltd. -ADR+...................... 1,061,098 1,022,175
----------- -----------
1,086,246 1,048,075
----------- -----------
RETAIL -- 1.32%
5,400 Circuit City Stores........................ 167,725 149,175
21,600 Federated Department Stores*............... 604,426 594,000
----------- -----------
772,151 743,175
----------- -----------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
THE HIRTLE CALLAGHAN TRUST
VALUE EQUITY FUND
Portfolio of Investments (continued) -- December 31, 1995
<TABLE>
<CAPTION>
SHARES COST VALUE
------ ---- -----
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS -- .62%
12,600 Tele Denmark
A/S - ADR................................ $ 321,596 $ 348,075
----------- -----------
TOBACCO -- 1.97%
12,250 Philip Morris Cos. Inc. .................. 984,463 1,108,625
----------- -----------
TOYS -- 0.53%
9,800 Mattel Inc. .............................. 285,187 301,350
----------- -----------
TRANSPORTATION -- 3.95%
10,800 Burlington Northern Co. .................. 790,749 842,400
34,500 Canadian Pacific Ltd. .................... 566,003 625,312
11,500 Union Pacific Corp. ...................... 771,618 759,000
----------- -----------
2,128,370 2,226,712
----------- -----------
TOTAL -- INSTITUTIONAL CAPITAL MANAGEMENT
CORP. ................................... 31,733,392 32,574,908
----------- -----------
TOTAL -- COMMON STOCKS.................... 51,541,662 54,430,058
----------- -----------
SHORT-TERM INVESTMENTS -- 2.65%
COWEN ASSET MANAGEMENT
$1,500,000 U.S. T-Bill 01/04/96.................. $ 1,499,403 $ 1,499,403
----------- -----------
TOTAL -- COWEN ASSET MANAGEMENT....... 1,499,403 1,499,403
----------- -----------
TOTAL INVESTMENTS -- 99.16%........... $53,041,065++ 55,929,461
===========
Cash and Other Assets in Excess of
Liabilities -- 0.84%................. 471,384
-----------
TOTAL NET ASSETS -- 100.00%........... $56,400,845
===========
</TABLE>
+ American Depository Receipts.
++ The cost for Federal income tax purposes is substantially the same.
* Non-income producing securities.
See accompanying notes to financial statements.
12
<PAGE>
THE HIRTLE CALLAGHAN TRUST
SMALL CAPITALIZATION EQUITY FUND
Portfolio of Investments (unaudited) -- December 31, 1995
<TABLE>
<CAPTION>
SHARES COST VALUE
------ ---- -----
<C> <S> <C> <C>
COMMON STOCKS -- 90.82%
CLOVER CAPITAL MANAGEMENT, INC. -- 44.75%
ADVERTISING -- 1.85%
23,000 Advo, Inc............... $ 439,855 $ 598,000
----------- -----------
CHEMICALS -- 3.24%
4,000 Fuller (H B) Co......... 126,660 139,000
20,000 Hanna M A Co............ 555,150 560,000
9,500 Mallinckrodt Group,
Inc.................... 379,623 345,562
----------- -----------
1,061,433 1,044,562
----------- -----------
COMMERCIAL SERVICES -- 1.25%
40,000 Ideon Group, Inc........ 454,460 405,000
----------- -----------
COMPUTER SOFTWARE -- 2.77%
40,000 Marcam Corp.*........... 445,000 610,000
10,000 Sungard Data
System, Inc.*.......... 283,450 285,000
----------- -----------
728,450 895,000
----------- -----------
CONSUMER CYCLICAL -- 1.49%
20,000 Designs, Inc.*.......... 160,500 140,000
30,000 Pier 1 Imports, Inc..... 286,963 341,250
----------- -----------
447,463 481,250
----------- -----------
CONSUMER DURABLES -- 0.93%
60,000 Service Merchandise
Co.*................... 461,460 300,000
----------- -----------
ELECTRONIC COMPONENT -- 2.03%
27,000 Amphenol Corp. Cl A*.... 556,389 654,750
----------- -----------
ELECTRICAL AND ELECTRONICS -- 1.01%
19,000 Augat, Inc.............. 309,700 325,375
----------- -----------
ENTERTAINMENT -- 4.10%
21,000 G Tech Holdings Corp.*.. 604,047 546,000
20,000 King World
Productions, Inc.*..... 786,021 777,500
----------- -----------
1,390,068 1,323,500
----------- -----------
ENVIRONMENTAL -- 2.08%
40,000 Wheelabrator
Technologies, Inc.*.... 582,216 670,000
----------- -----------
FOOD - PROCESSING -- 2.89%
15,000 Interstate Bakeries,
Corp................... 285,900 335,625
150,000 United Biscuits
Holdings - ADR+........ 669,000 597,000
----------- -----------
954,900 932,625
----------- -----------
HEALTH CARE -- 2.36%
42,000 Caremark
International, Inc. ... $ 878,083 $ 761,250
----------- -----------
HOSPITAL MANAGEMENT & SERVICES -- 3.90%
32,000 Horizon/CMS Healthcare
Corp................... 732,045 808,000
12,000 Salick Healthcare,
Inc.*.................. 438,000 450,000
----------- -----------
1,170,045 1,258,000
----------- -----------
MANUFACTURING HOUSING -- 0.74%
25,000 Stimsonite Corp.*....... 229,375 237,500
----------- -----------
PUBLISHING & PRINTING -- 2.02%
20,000 American Greetings Corp.
Cl A................... 603,511 552,500
13,500 Steck-Vaughn Publishing
Corp.*................. 92,333 99,563
----------- -----------
695,844 652,063
----------- -----------
REAL ESTATE INVESTMENT TRUST --
4.27%
20,000 Manufactured Home
Communities, Inc. ..... 331,501 350,000
8,500 Meditrust Corp. ........ 287,476 296,438
7,500 Public Storage
Management, Inc. ...... 229,483 227,812
21,000 ROC Communities, Inc. .. 478,800 504,000
----------- -----------
1,327,260 1,378,250
----------- -----------
RETAIL -- 2.47%
50,000 Cash America
Investments, Inc. ..... 351,925 275,000
17,000 Melville Corp. ......... 589,208 522,750
----------- -----------
941,133 797,750
----------- -----------
STORAGE -- 0.98%
12,000 Sovran Self Storage,
Inc. .................. 287,845 316,500
----------- -----------
TELECOMMUNICATIONS -- 1.29%
25,000 California Microwave,
Inc.*.................. 699,938 415,625
----------- -----------
TRANSPORTATION - RAIL -- 1.63%
35,000 Canadian National
Railway Co.*........... 527,100 525,000
----------- -----------
UTILITIES - ELECTRICAL -- 1.45%
20,000 Sierra Pacific
Resources.............. 438,361 467,500
----------- -----------
TOTAL -- CLOVER CAPITAL
MANAGEMENT INC. ....... 14,581,378 14,439,500
----------- -----------
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
THE HIRTLE CALLAGHAN TRUST
SMALL CAPITALIZATION EQUITY FUND
Portfolio of Investments (continued) -- December 31, 1995
<TABLE>
<CAPTION>
SHARES COST VALUE
------ ---- -----
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
FRONTIER CAPITAL MANAGEMENT CO. -- 46.07%
ADVERTISING/COMMUNICATIONS -- 0.85%
10,100 Dimac Corp.*............................. $ 192,591 $ 275,225
----------- -----------
AEROSPACE/DEFENSE -- 2.12%
3,000 AAR Corp. ............................... 53,456 66,000
30,900 Banner Aerospace, Inc.*.................. 143,283 177,675
12,000 Be Aerospace, Inc.*...................... 100,500 127,500
2,200 Precision Castparts Corp. ............... 78,485 87,450
15,400 UNC, Inc.*............................... 100,729 92,400
3,000 Watkins-Johnson Co. ..................... 151,988 131,250
----------- -----------
628,441 682,275
----------- -----------
AUTO PARTS -- 0.87%
6,500 Strattec Security, Inc.*................. 97,705 117,000
8,100 Tower Automotive, Inc.*.................. 122,425 141,750
2,300 Wescast Industries, Inc.
Cl A.................................... 26,384 22,137
----------- -----------
246,514 280,887
----------- -----------
BASIC INDUSTRY -- 0.29%
2,000 York International Corp. ................ 87,913 94,000
----------- -----------
BUILDING MATERIALS &
COMPONENTS -- 0.99%
6,000 Drew Industries, Inc. ................... 81,035 84,000
15,100 Perini Corp.*............................ 181,366 124,575
2,100 Texas Industries, Inc. .................. 102,770 111,300
----------- -----------
365,171 319,875
----------- -----------
BROADCASTING -- 1.29%
4,600 Emmos Broadcasting Corp.*................ 124,067 142,600
3,900 Infinity Broadcasting Corp. Cl A*........ 135,334 145,275
4,600 TCA Cable TV, Inc. ...................... 139,250 127,075
----------- -----------
398,651 414,950
----------- -----------
CHEMICALS -- 0.68%
2,100 Georgia Gulf Corp. ...................... 74,307 64,575
13,700 Hexcel Corp.*............................ 146,057 154,125
----------- -----------
220,364 218,700
----------- -----------
COMMERCIAL SERVICES -- 0.46%
42,200 Childrens Comprehensive Services, Inc.*.. 143,065 147,700
----------- -----------
COMPUTER EQUIPMENT -- 2.72%
6,300 Conner Peripherals, Inc.*................ $ 112,990 $ 132,300
9,000 Datametrics Corp. ....................... 70,293 70,875
5,700 Hyperion Software Corp.*................. 143,912 121,125
5,400 Ikos Systems, Inc. ...................... 70,875 60,075
2,300 Network General Corp.*................... 77,395 76,762
12,900 State of The Art, Inc.*.................. 122,063 127,387
10,000 Technology Solutions Co.* 170,000 195,000
5,300 Western Digital Corp.*................... 94,070 94,738
----------- -----------
861,598 878,262
----------- -----------
COMPUTER SOFTWARE -- 1.68%
3,600 Computer Task Group...................... 56,437 71,100
8,800 Cornerstone Imaging, Inc.*............... 159,125 127,600
3,900 FTP Software, Inc. ...................... 105,112 113,100
3,300 Madge Networks N.V. ..................... 98,550 147,675
5,300 Marcam Corp.*............................ 66,013 80,825
----------- -----------
485,237 540,300
----------- -----------
ELECTRICAL AND ELECTRONICS -- 3.90%
9,600 Alpha Industries, Inc.*.................. 122,976 135,600
3,300 Analog Devises, Inc. .................... 107,481 116,737
2,500 Cirrus Logic, Inc.*...................... 138,125 49,375
20,600 Encore Wire Corp.*....................... 250,648 200,850
7,700 Rogers Corp.*............................ 179,793 167,475
18,600 Sheldahl, Inc.*.......................... 328,376 337,125
9,000 Trimble Navigation Ltd.*................. 154,867 167,625
6,100 Triquint Semiconduct, Inc.* 155,550 82,350
----------- -----------
1,437,816 1,257,137
----------- -----------
ELECTRONIC COMPONENTS AND INSTRUMENTS -- 2.33%
7,500 Actel Corp.*............................. 81,915 80,625
6,400 Allen Group, Inc. ....................... 176,359 143,200
5,100 Amphenol Corp. .......................... 131,449 123,675
4,900 Dovatron International, Inc.*............ 165,254 165,375
3,400 Maxim Integrated Products, Inc.*......... 124,181 130,900
6,000 VLSI Technology, Inc.*................... 143,753 108,750
----------- -----------
822,911 752,525
----------- -----------
ENERGY EQUIPMENT & SERVICES -- 0.72%
3,100 Microchip Technology, Inc.* 113,150 113,150
2,900 Murphy Oil, Corp. ....................... 119,466 120,350
----------- -----------
232,616 233,500
----------- -----------
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
THE HIRTLE CALLAGHAN TRUST
SMALL CAPITALIZATION EQUITY FUND
Portfolio of Investments (continued) -- December 31, 1995
<TABLE>
<CAPTION>
SHARES COST VALUE
------ ---- -----
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
FRONTIER CAPITAL MANAGEMENT CO. (CONTINUED)
ENGINEERING AND CONSTRUCTION -- 1.45%
21,220 Insituform Technologies CI A*.............. $ 274,947 $ 246,682
5,800 Jacobs Engineering Group, Inc.*............ 130,123 145,000
4,300 J Ray McDermott SA*........................ 94,763 76,862
----------- -----------
499,833 468,544
----------- -----------
FINANCIAL SERVICES -- 0.49%
6,000 Long Island Bancorp........................ 152,825 158,250
----------- -----------
HOUSEHOLD PRODUCTS -- 0.30%
4,300 Libbey, Inc. .............................. 100,663 96,750
----------- -----------
INSURANCE -- 2.24%
3,600 Allied Group, Inc. ........................ 118,530 129,600
2,800 Conseco, Inc. ............................. 143,917 175,350
8,200 John Alden Financial Corp. ................ 174,452 171,175
2,400 Mid Ocean Ltd.............................. 87,582 89,100
4,900 Nymagic, Inc. ............................. 86,325 83,300
3,600 Paul Revere Corp. ......................... 74,016 74,700
----------- -----------
684,822 723,225
----------- -----------
LEISURE AND TOURISM -- 0.25%
15,900 Topps Company, Inc.*....................... 105,338 81,488
----------- -----------
MACHINERY & ENGINEERING -- 0.37%
4,000 Applied Power, Inc. ....................... 135,737 120,000
----------- -----------
MANUFACTURING -- 0.04%
900 Safety Components International, Inc. ..... 17,100 14,175
----------- -----------
MEDICAL SUPPLIES -- 0.72%
6,400 Maxxim Medical, Inc.*...................... 101,111 107,200
4,400 Spacelabs Medical, Inc.*................... 113,111 126,500
----------- -----------
214,222 233,700
----------- -----------
MEDICAL BIOTECHNOLOGY -- 0.21%
2,900 Protein Design Labs, Inc.*................. 53,825 67,063
----------- -----------
HOSPITAL MANAGEMENT &
SERVICES -- 0.32%
4,700 United Wisconsin Services, Inc. ........... 102,281 103,400
----------- -----------
METAL FABRICATE/HARDWARE -- 0.16%
6,000 Easco, Inc. ............................... 75,000 51,750
----------- -----------
OIL & GAS -- 4.52%
2,800 Anadarko Petroleum Corp. .................. $ 136,902 $ 151,550
11,900 Aquila Gas Pipeline Corp. ................. 122,764 153,212
3,400 Coflexip................................... 45,254 64,175
5,000 Enron Global Power & Pipeline L.L.C. ...... 117,800 124,375
13,300 Falcon Drilling, Inc.*..................... 141,337 199,500
3,300 Louisiana Land & Exploration*.............. 129,606 141,488
6,100 Oryx Energy Co. ........................... 83,980 81,587
3,800 Pogo Producing Co. ........................ 94,297 107,350
2,100 Production Operators Corp. ................ 64,487 69,300
7,000 Ultramar Corp. ............................ 160,806 180,250
4,800 United Meridian Corp.*..................... 85,955 83,400
3,500 Weatherford International, Inc.*........... 98,152 101,063
----------- -----------
1,281,340 1,457,250
----------- -----------
PACKAGING/CONTAINER -- 0.98%
3,400 Ball Corp. ................................ 95,013 93,500
16,600 U.S. Can Corp.*............................ 216,555 224,100
----------- -----------
311,568 317,600
----------- -----------
PHARMACEUTICALS -- 0.93%
13,300 Alliance Pharmaceutical Corp.*............. 132,841 181,213
16,000 Capstone Pharmacy Service, Inc.*........... 101,101 120,000
----------- -----------
233,942 301,213
----------- -----------
PUBLISHING & PRINT -- 1.70%
2,100 Devon Group, Inc.*......................... 87,068 61,031
10,400 International Imaging Materials, Inc.*..... 244,403 262,600
12,900 Valassis Communications, Inc.*............. 199,908 225,750
----------- -----------
531,379 549,381
----------- -----------
REAL ESTATE INVESTMENT TRUST -- 0.97%
4,100 Equity Residential Properties, Inc. ....... 122,699 125,563
6,600 Highwoods Properties, Inc. ................ 176,381 186,450
----------- -----------
299,080 312,013
----------- -----------
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
THE HIRTLE CALLAGHAN TRUST
SMALL CAPITALIZATION EQUITY FUND
Portfolio of Investments (continued) -- December 31, 1995
<TABLE>
<CAPTION>
SHARES COST VALUE
------ ---- -----
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
FRONTIER CAPITAL MANAGEMENT CO. (CONTINUED)
RETAIL -- 0.36%
5,000 Moovies, Inc.*........................ $ 62,500 $ 67,500
2,200 Officemax, Inc. ...................... 54,900 49,225
----------- -----------
117,400 116,725
----------- -----------
RESTAURANT -- 0.14%
5,300 Bugaboo Creek Steakhouse, Inc.*....... 46,073 43,725
----------- -----------
STEEL -- 1.08%
4,000 Carpenter Technology Corp. ........... 161,949 164,500
11,000 Chaparral Steel Co. .................. 116,770 184,250
----------- -----------
278,719 348,750
----------- -----------
TELECOMMUNICATION EQUIPMENT -- 2.47%
12,400 Centiram Communication Corp.*......... 231,524 244,900
7,300 Comarco, Inc.*........................ 82,988 105,850
2,800 Davox Corp.*.......................... 29,723 33,250
5,700 Echostar Communications Corp. A....... 92,911 138,225
4,800 Intervoice, Inc.*..................... 88,413 91,200
4,500 Summa Four, Inc.*..................... 58,171 60,188
9,000 Symmetricon, Inc.*.................... 146,948 123,750
----------- -----------
730,678 797,363
----------- -----------
TELECOMMUNICATIONS -- 2.67%
12,500 Arch Communications Group*............ 333,117 300,000
17,600 Equalnet Holding Corp.*............... 144,100 127,600
5,600 Metrocall, Inc.*...................... 124,678 107,100
6,300 Natural Microsystems Corp.*........... 166,116 192,150
6,000 U.S. Order, Inc.*..................... 120,900 134,250
----------- -----------
888,911 861,100
----------- -----------
TEXTILES AND APPAREL -- 0.89%
3,000 Jones Apparel Group, Inc. ............ 108,392 118,125
17,400 Sport-Haley, Inc.*.................... 174,575 168,563
----------- -----------
282,967 286,688
----------- -----------
TOYS -- 0.47%
13,000 Galoob (Lewis) Toys, Inc.*............ $ 133,087 $ 152,750
----------- -----------
TRANSPORTATION -- 2.54%
13,300 America West Airlines CI. B*.......... 195,189 226,100
11,600 OMI Corp.*............................ 93,871 75,400
3,000 Overseas Shipholding Group............ 65,631 57,000
7,200 Teekay Shipping Corp. ................ 177,455 170,100
7,700 World Airways Inc.*................... 92,481 86,625
20,400 Worldcorp, Inc.*...................... 262,140 204,000
----------- -----------
886,767 819,225
----------- -----------
UTILITIES -- 0.44%
7,200 California Energy Company, Inc.*...... 147,132 140,400
----------- -----------
WHOLESALE SPECIAL LINE -- 0.46%
7,200 Sodak Gaming, Inc.*................... 143,558 148,500
----------- -----------
TOTAL -- FRONTIER CAPITAL MANAGEMENT
CO. ................................. 14,577,135 14,866,364
----------- -----------
TOTAL -- COMMON STOCKS................ 29,158,513 29,305,864
----------- -----------
CORPORATE BOND -- 1.63%
CLOVER CAPITAL MANAGEMENT, INC. -- 1.63%
$500,000 Meditrust Corp. 7.50%, 03/01/01....... 510,758 527,500
----------- -----------
TOTAL -- CORPORATE BONDS.............. 510,758 527,500
----------- -----------
TOTAL
INVESTMENTS -- 92.45%................ $29,669,271++ 29,833,364
===========
Cash and Other Assets in Excess of
Liabilities -- 7.55%................. 2,434,900
-----------
TOTAL NET ASSETS -- 100.00%........... $32,268,264
===========
</TABLE>
+ American Depository Receipts.
++ The cost of securities for Federal income tax purposes is the same.
* Non-income producing security.
See accompanying notes to financial statements.
16
<PAGE>
THE HIRTLE CALLAGHAN TRUST
LIMITED DURATION MUNICIPAL BOND FUND
Portfolio of Investments (unaudited) -- December 31, 1995
<TABLE>
<CAPTION>
CREDIT PRINCIPAL
RATINGS* AMOUNT COST VALUE
-------- --------- ---- -----
<C> <C> <S> <C> <C> <C>
MUNICIPAL OBLIGATIONS -- 98.27%
ALABAMA -- 1.08%
NR/NR $ 180,000 Pell City Alabama Industrial
Development, Shelby
Steel Fabricators,
7.70%, 09/01/01
(LOC - Southtrust Bank)+... $ 183,593 $ 183,676
----------- -----------
ALASKA -- 7.07%
AA 1,205,000 Anchorage Alaska,
Certificates of
Participation,
5.10%, 04/01/96
(Asset Guaranty)........... 1,207,791 1,207,952
----------- -----------
ARIZONA -- 2.11%
NR 350,000 La Paz County Industrial
Development, Morgan Trailer
MFG Co., 8.00%, 12/01/06
(Pre-Refunded
12/01/96 @ 100)+........... 361,757 360,696
----------- -----------
COLORADO -- .41%
Aa/AA+ 70,000 Colorado Housing Finance
Authority, Series A.,
5.00%, 11/01/96............ 70,555 70,661
----------- -----------
CONNECTICUT -- 4.60%
A2/NR 145,000 Connecticut State
Development Authority,
Health Care Project,
5.50%, 09/01/97
(Surety Bond -
Aetna/Cigna etc.).......... 146,304 146,269
AAA 605,000 Connecticut State Resource
Recovery Authority, Greater
Bridgeport System,
6.75%, 11/15/99............ 631,783 639,787
----------- -----------
778,087 786,056
----------- -----------
DELAWARE -- 4.10%
NR 600,000 Wilmington Delaware Hospital
Revenue, Osteopathic
Hospital Series A,
10.00%, 10/01/03
(Pre-Refunded
10/01/98 @ 102)............ 693,964 700,500
----------- -----------
GEORGIA -- 4.24%
Aa3/AA- 200,000 Cobb County Housing
Authority, Multi-Family
Housing Revenue,
7.50%, 01/01/97 (LOC - Sun
Trust)..................... 204,168 204,952
AAA 500,000 Fulton County Housing
Authority, Single
Family Revenue,
6.20%, 03/01/13
(GNMA Collateral)+......... 503,721 519,375
----------- -----------
707,889 724,327
----------- -----------
IDAHO -- 6.30%
Aa/AA 1,065,000 Idaho Housing Agency, Multi-
Family Housing,
6.00%, 01/01/07............ 1,067,774 1,075,362
----------- -----------
ILLINOIS -- 11.82%
NR 545,000 City of Fairfield Economic
Development Revenue, Waynes
County Center Project,
6.00%, 12/15/05............ 553,742 560,669
A1/AA- 100,000 Illinois State, General
Obligation Bonds,
4.75%, 08/01/99............ 99,700 100,506
AAA/AA- 225,000 Illinois State, General
Obligation Bonds
8.75%, 03/01/05 (Pre-
Refunded 03/01/96 @ 101)... 230,422 229,023
Aaa/AAA 500,000 St. Clair County Public
Building Revenue, General
Obligation Bonds,
8.00%, 12/01/05 (MBIA)..... 518,544 519,690
A/NR 580,000 Woodridge Mortgage Revenue,
Series 1992-1,
7.25%, 12/01/10............ 609,429 609,725
----------- -----------
2,011,837 2,019,613
----------- -----------
INDIANA -- 2.05%
A1/NR 350,000 Clarksville Indiana Economic
Development Revenue,
5.10%, 12/01/25 (LOC -
Comerica)
(Mandatory put
12/01/00 @ 100)............ 350,000 350,875
----------- -----------
LOUISIANA -- 8.11%
NR/AAA 435,000 Jefferson Parish Home
Mortgage Authority, Series
A, 4.85%, 12/01/01
(FNMA/GNMA Collateral)+.... 435,108 435,544
NR/AA 940,000 Louisiana Public Facility
Authority, Multi-Family
Revenue, 6.00%, 07/01/07
(Mandatory put 07/01/97 @
100) (Insured by Conn.
General Life Insurance
Co.)....................... 950,002 948,864
----------- -----------
1,385,110 1,384,408
----------- -----------
</TABLE>
See accompanying notes to financial statements.
17
<PAGE>
THE HIRTLE CALLAGHAN TRUST
LIMITED DURATION MUNICIPAL BOND FUND
Portfolio of Investments (continued) -- December 31, 1995
<TABLE>
<CAPTION>
CREDIT PRINCIPAL
RATINGS* AMOUNT COST VALUE
-------- --------- ---- -----
<C> <C> <S> <C> <C>
MUNICIPAL OBLIGATIONS (CONTINUED)
MARYLAND -- 2.19%
NR/A+ 375,000 Montgomery County Housing
Authority, Multi-Family Revenue,
6.00%, 02/01/07
(Mandatory put 02/01/97 @ 100)
(Insured by New England
Mutual)......................... $ 375,679 $ 375,259
----------- -----------
MASSACHUSETTS -- 3.04%
Aaa/AAA 400,000 Boston Mass Water & Sewer, Series
A, 7.875%, 11/01/13 (FGIC)
(Cross over refunding 11/01/96
@ 102)......................... 419,090 419,156
Baa1/NR 100,000 Lowell Mass, General Obligation
Bonds, 6.80%, 02/15/96.......... 100,123 100,230
----------- -----------
519,213 519,386
----------- -----------
MICHIGAN -- 3.46%
A/A 550,000 Michigan State Housing
Development Authority, Home
Improvement Series B,
7.65%, 12/01/12+................ 584,940 591,937
----------- -----------
NEBRASKA -- 3.23%
AAA 550,000 Nebraska Investment Financial
Authority, Multi-Family Mortgage
Revenue, 4.75%, 06/01/05
(Mandatory put 06/01/97 @ 100)
(LOC Occidental Federal
Savings)........................ 551,707 550,237
----------- -----------
NEW MEXICO -- 1.91%
Aaa/AAA 1,000,000 Albuquerque New Mexico Mortgage
Obligation, Cl. B - 2, 0%,
05/15/11 (FGIC)................. 327,309 327,500
----------- -----------
NEW YORK -- 3.03%
Aa/AA 500,000 New York State Dormitory
Authority Revenue, Cornell
University, 6.875%, 07/01/06.... 516,699 517,080
----------- -----------
PENNSYLVANIA -- 17.77%
A/NR 500,000 Cumberland Valley School
District, Series A, 5.90%,
09/01/98........................ 504,719 505,265
NR/A 100,000 Dauphin County Industrial
Development Authority, Brubaker
Tool Corp., 7.10%, 12/01/02
(LOC - Marine Bank)+............ 102,162 102,220
Aa3/A+ 475,000 Delaware County Industrial
Development Authority, Series A,
8.10%, 12/01/13
(LOC - Bank of America)......... 493,852 497,315
NR 100,000 Montgomery County Industrial
Development, Meadowood Corp.,
5.00%, 12/01/96................. 100,000 100,070
Aa/AA 550,000 Pennsylvania Housing Finance
Authority, Single Family Mtg.
Series 27, 8.10%, 10/01/10+..... 572,702 576,125
A/A- 150,000 Pennsylvania State Certificates
of Participation, Revenue Bonds,
6.20%, 06/01/96................. 151,061 151,625
Aaa/AAA 500,000 Philadelphia Hospital & Higher
Education Authority, Moss
Rehabilitation Hospital Revenue,
6.90%, 07/01/00 (AMBAC)......... 527,050 551,875
Aaa/AAA 135,000 Philadelphia Pennsylvania
Airport, Revenue Bonds, 5.90%,
06/15/96 (MBIA)................. 135,818 136,185
NR/A 400,000 Scranton-Lackawanna Health &
Welfare Authority, St. Josephs
Hospital, 7.75%, 12/15/15
(LOC - PNC Bank)................ 416,400 414,532
----------- -----------
3,003,764 3,035,212
----------- -----------
TENNESSEE -- 4.71%
Aaa/NR 580,000 Hamilton County Industrial
Development Authority, Multi-
Family Housing Revenue, 6.25%,
10/01/08 (LOC - Gardian Savings
& Loan) (Mandatory put 10/01/97
@ 100).......................... 583,391 580,000
NR/A+ 220,000 Hendersonville Industrial
Development Authority,
Multi-Family Housing Revenue,
5.375%, 02/01/06 (Surety Bond
Continental Casualty) (Mandatory
put 02/01/98 @ 100)............. 222,260 222,361
----------- -----------
805,651 802,361
----------- -----------
TEXAS -- 1.45%
Aa/AA 250,000 Texas State, General Obligation
Bonds, 3.75%, 08/01/97.......... 247,650 248,437
----------- -----------
</TABLE>
See accompanying notes to financial statements.
18
<PAGE>
THE HIRTLE CALLAGHAN TRUST
LIMITED DURATION MUNICIPAL BOND FUND
Portfolio of Investments (continued) -- December 31, 1995
<TABLE>
<CAPTION>
CREDIT PRINCIPAL
RATINGS* AMOUNT COST VALUE
-------- --------- ---- -----
<C> <C> <S> <C> <C>
MUNICIPAL OBLIGATIONS
(CONTINUED)
WISCONSIN -- 2.66%
Aa/AA $ 445,000 Wisconsin Housing & Economic
Development, Authority Series
B, 6.625%, 09/01/20
(GEMIC Pool Insured)+........ $ 446,963 $ 453,900
----------- -----------
VIRGINIA -- 2.93%
NR 500,000 King George County Industrial
Development Authority, King
County Elementary School,
4.875%, 08/01/98............. 497,755 500,245
----------- -----------
TOTAL NOTES AND BONDS --
98.27%...................... 16,695,687 16,785,680
----------- -----------
SHORT-TERM INVESTMENTS --
0.04%
6,930 Provident Institutional
Funds........................ 6,930 6,930
----------- -----------
TOTAL INVESTMENTS - 98.31%.... $16,702,617++ 16,792,610
===========
Cash and Other Assets
in Excess of Liabilities --
1.69%....................... 288,721
-----------
TOTAL NET ASSETS -- 100.00%... $17,081,331
===========
</TABLE>
* See page 20 for Credit Ratings Summary.
+ Subject to Alternative Minimum Tax.
++ The cost of securities for Federal income tax purposes is substantially the
same.
See accompanying notes to financial statements.
19
<PAGE>
THE HIRTLE CALLAGHAN TRUST
Portfolio of Investments (unaudited) (continued) -- December 31, 1995
CREDIT RATINGS (unaudited).
<TABLE>
<CAPTION>
MOODY'S STANDARD & POOR'S
------- -----------------
<C> <C> <S>
Aaa AAA Instrument judged to be of the highest quality
and carrying the smallest amount of investment
risk.
Aa AA Instrument judged to be of high quality by all
standards.
A A Instrument judged to be adequate by all
standards.
Baa BBB Instrument judged to be of moderate quality by
all standards.
Ba-B BB-B Instrument judged to have speculative elements,
and generally lack desirable characteristics.
Caa-C CCC-C Instrument judged to be predominately
speculative with respect to pay interest and
repay principal in accordance with terms of
obligation.
NR NR Not Rated. In the opinion of the Investment
Adviser, instrument judged to be of comparable
investment quality to rated securities which
may be purchased by the Fund.
</TABLE>
For items possessing the strongest investment attributes of their category,
Moody's gives that letter rating followed by a number. The Standard & Poor's
ratings may be modified by the addition of a plus or minus sign to show
relative standing within the major rating categories.
Abbreviations used in this statement:
AMBAC.. American Municipal Bond Assurance Corporation
FGIC... Financial Guaranty Insurance Corporation
MBIA... Municipal Bond Insurance Association
LOC.... Letter of Credit
GNMA... Government National Mortgage Association
FNMA... Federal National Mortgage Association
GEMIC.. General Electric Mortgage Insurance Corporation
20
<PAGE>
THE HIRTLE CALLAGHAN TRUST
Statements of Assets and Liabilities (unaudited)
December 31, 1995
<TABLE>
<CAPTION>
MUNICIPAL
GROWTH INTERNATIONAL VALUE SMALL CAP BOND
------ ------------- ----- --------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at value (cost
$55,199,660; $48,180,274;
$51,541,662; $29,669,271;
$16,695,687,
respectively)............ $57,833,514 $50,266,673 $54,430,058 $29,833,364 $16,785,680
Short-Term Investments
(cost $0; $0; $1,499,403;
$0; $6,930,
respectively)............ 0 0 1,499,403 0 6,930
Cash...................... 3,405,193 3,361,082 1,196,878 2,905,003 92,919
Foreign Cash (cost $0;
$416,981; $0; $0; $0,
respectively)............ 0 419,177 0 0 0
Dividends and interest
receivable............... 25,041 62,582 140,536 43,901 170,054
Receivable for investments
sold..................... 1,817,002 386,642 691,064 236,925 0
Receivable from Adviser... 453 3,967 8,911 19,864 20,707
Receivable from brokers
for forward contract
gain..................... 0 604,742 0 0 0
Withholding tax reclaim... 0 4,985 0 0 0
Unrealized appreciation on
forward currency
contracts................ 0 386,239 0 0 0
Unamortized organizational
expenses (Note 2e)....... 28,283 28,451 28,569 28,787 29,360
----------- ----------- ----------- ----------- -----------
Total Assets............ 63,109,486 55,524,540 57,995,419 33,067,844 17,105,650
----------- ----------- ----------- ----------- -----------
LIABILITIES
Payable for securities
purchased................ 937,461 1,184,485 1,545,283 752,527 0
Payable to brokers for
forward contract loss.... 0 59,515 0 0 0
Organizational expense
payable.................. 2,457 1,196 2,171 0 1,380
Advisory fee payable (Note
3)....................... 13,738 19,863 12,128 13,027 5,506
Administrative services
fee payable (Note 3)..... 14,587 4,338 10,961 2,744 1,703
Transfer agent fee payable
(Note 3)................. 1,000 0 700 0 274
Other accrued expenses.... 23,784 30,450 23,331 31,282 15,456
----------- ----------- ----------- ----------- -----------
Total Liabilities....... 993,027 1,299,847 1,594,574 799,580 24,319
----------- ----------- ----------- ----------- -----------
NET ASSETS................. $62,116,459 $54,224,693 $56,400,845 $32,268,264 $17,081,331
=========== =========== =========== =========== ===========
Net Assets Consist of
Capital stock............. 6,073 5,127 5,192 3,245 1,690
Additional paid-in
capital.................. 61,222,804 51,606,463 52,978,073 32,393,365 16,985,614
Accumulated undistributed
net investment
income/(loss) on
investments.............. 643 (524,218) 143 (48,369) 0
Accumulated undistributed
realized gain/(loss) on
investments and foreign
currency................. (1,746,915) 664,692 529,041 (244,070) 4,034
Net unrealized
appreciation/depreciation
on investments and
foreign currency
translations............. 2,633,854 2,472,629 2,888,396 164,093 89,993
----------- ----------- ----------- ----------- -----------
NET ASSETS................. $62,116,459 $54,224,693 $56,400,845 $32,268,264 $17,081,331
=========== =========== =========== =========== ===========
SHARES OF BENEFICIAL
INTEREST
Shares of beneficial
interest outstanding..... 6,072,699 5,126,930 5,191,827 3,245,284 1,689,764
=========== =========== =========== =========== ===========
Net asset value per share
outstanding.............. $10.23 $10.58 $10.86 $9.94 $10.11
====== ====== ====== ===== ======
</TABLE>
See accompanying notes to financial statements.
21
<PAGE>
THE HIRTLE CALLAGHAN TRUST
Statements of Operations (unaudited)
<TABLE>
<CAPTION>
GROWTH INTERNATIONAL VALUE SMALL CAP MUNICIPAL BOND
AUGUST 8, 1995 AUGUST 17, 1995 AUGUST 25, 1995 SEPTEMBER 5, 1995 OCTOBER 10, 1995
(COMMENCEMENT (COMMENCEMENT (COMMENCEMENT (COMMENCEMENT (COMMENCEMENT
OF OPERATIONS) OF OPERATIONS) OF OPERATIONS) OF OPERATIONS) OF OPERATIONS)
THROUGH THROUGH THROUGH THROUGH THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1995 1995 1995 1995
-------------- --------------- --------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
Investment Income
Interest............... $ 48,219 $ 12,247 $6,274 $ 48,374 $150,740
Dividends (net of
withholding tax of
$630, $34,358, $2,514,
$0, $0,
respectively)......... 151,321 242,998 480,022 105,157 0
----------- ---------- ---------- --------- --------
199,540 255,245 486,296 153,531 150,740
----------- ---------- ---------- --------- --------
Expenses:
Advisory (Note 3)...... 78,197 72,449 55,174 44,847 7,006
Fund Accounting (Note
3).................... 14,055 22,642 12,265 11,977 8,279
Legal.................. 4,415 3,640 4,415 3,532 2,370
Administrative services
(Note 3).............. 22,341 16,100 15,764 8,969 2,803
Reports to
shareholders.......... 2,650 2,175 2,650 2,120 1,425
Audit.................. 4,495 3,687 1,936 3,354 2,417
Registration........... 12,476 10,288 12,476 9,981 6,698
Trustee................ 1,000 1,000 1,000 1,000 1,000
Transfer agent fees and
expenses (Note 3)..... 956 624 700 451 274
Amortization of
organizational
expenses.............. 2,457 2,289 2,171 1,952 1,380
Miscellaneous.......... 3,750 3,500 3,615 3,885 2,610
----------- ---------- ---------- --------- --------
Total expenses before
waivers............... 146,792 138,394 112,166 92,068 36,262
Less expenses
waived/reimbursed by
Advisor, Administrator
and Transfer Agent.... (6,038) (7,992) (12,852) (22,106) (21,408)
----------- ---------- ---------- --------- --------
Net expenses........... 140,754 130,402 99,314 69,962 14,854
----------- ---------- ---------- --------- --------
Net investment income... 58,786 124,843 386,982 83,569 135,886
----------- ---------- ---------- --------- --------
Realized gain on
investments............ (1,746,915) 95,017 654,790 (244,070) 4,034
Net realized gain/(loss)
on foreign currency
transactions and assets
and liabilities
denominated in foreign
currencies............. 0 600,984 0 0 0
Change in unrealized
appreciation of
investments............ 2,633,854 2,086,399 2,888,396 164,093 89,993
Net unrealized gain on
foreign currency
translations........... 0 386,230 0 0 0
----------- ---------- ---------- --------- --------
Net realized/unrealized
gain/(loss) on
investments and foreign
currency translation... 886,939 3,168,630 3,543,186 (79,977) 94,027
----------- ---------- ---------- --------- --------
Net increase in net
assets resulting from
operations............. $ 945,725 $3,293,473 $3,930,168 $ 3,592 $229,913
=========== ========== ========== ========= ========
</TABLE>
See accompanying notes to financial statements.
22
<PAGE>
THE HIRTLE CALLAGHAN TRUST
Statements of Changes in Net Assets (unaudited)
<TABLE>
<CAPTION>
GROWTH INTERNATIONAL VALUE SMALL CAP MUNICIPAL BOND
AUGUST 8, 1995 AUGUST 17, 1995 AUGUST 25, 1995 SEPTEMBER 5, 1995 OCTOBER 10, 1995
(COMMENCEMENT (COMMENCEMENT (COMMENCEMENT (COMMENCEMENT (COMMENCEMENT
OF OPERATIONS) OF OPERATIONS) OF OPERATIONS) OF OPERATIONS) OF OPERATIONS)
THROUGH THROUGH THROUGH THROUGH THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1995 1995 1995 1995
-------------- --------------- --------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
Operations:
Net investment income....... $ 58,786 $ 124,843 $ 386,982 $ 83,569 $ 135,886
Net realized gain/(loss) on
investments................ (1,746,915) 696,001 654,790 (244,070) 4,034
Change in unrealized
appreciation/(depreciation)
of investments............. 2,633,854 2,472,629 2,888,396 164,093 89,993
----------- ----------- ----------- ----------- -----------
New increase in net assets
resulting from operations... 945,725 3,293,473 3,930,168 3,592 229,913
----------- ----------- ----------- ----------- -----------
Distributions to shareholders
from capital gains:......... 0 (31,309) (125,749) 0 0
Distributions to shareholders
from net investment income.. (58,143) (649,061) (386,839) (131,938) (135,886)
----------- ----------- ----------- ----------- -----------
Decrease in net assets
resulting from
distributions to
shareholders............... (58,143) (680,370) (512,588) (131,938) (135,886)
----------- ----------- ----------- ----------- -----------
Capital Share Transactions:
Proceeds from sales of
shares:.................... 70,277,908 52,286,176 55,461,950 35,551,737 17,987,167
Net asset value of shares
issued to shareholders in
reinvestment of dividends
and distributions:......... 56,154 657,172 502,652 124,023 133,869
Net asset value of shares
redeemed:.................. (9,125,185) (1,351,758) (3,001,337) (3,299,150) (1,153,732)
----------- ----------- ----------- ----------- -----------
Net increase in net assets
from capital share
transactions............. 61,208,877 51,591,590 52,963,265 32,376,610 16,967,304
----------- ----------- ----------- ----------- -----------
Total increase in net
assets...................... 62,096,459 54,204,693 56,380,845 32,248,264 17,061,331
Net Assets:
Beginning of period......... 20,000 20,000 20,000 20,000 20,000
----------- ----------- ----------- ----------- -----------
End of period............... $62,116,459 $54,224,693 $56,400,845 $32,268,264 $17,081,331
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
23
<PAGE>
THE HIRTLE CALLAGHAN TRUST
Notes to Financial Statements (unaudited) -- December 31, 1995
1. DESCRIPTION. The Hirtle Callaghan Trust (the "Trust") was incorporated in
Delaware on December 15, 1994. The Trust currently comprises five portfolios,
Growth Equity Portfolio ("Growth") (commencement date August 8, 1995),
International Equity Portfolio ("International") (commencement date August 17,
1995), Value Equity Portfolio ("Value") (commencement date August 25, 1995),
Small Capitalization Equity Portfolio ("Small Cap") (commencement date
September 5, 1995), Limited Duration Municipal Bond Portfolio ("Municipal
Bond") (commencement date October 10, 1995) (the "Funds"). The Trust is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end management investment company. Each Portfolio operates
as a diversified fund.
2. SIGNIFICANT ACCOUNTING POLICIES. The following is a summary of the
significant accounting policies followed by the Funds:
A. Portfolio 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 of Trustees. Other assets for which market
quotations are not readily available are valued at their fair value as
determined in good faith by the Trust's Trustees. With the approval of the
Board, any of the Portfolios may use a pricing service, bank or broker-
dealer experienced in such matters to value the Portfolio's securities.
B. Securities Transactions and Investment Income. Securities transactions
are recorded on a trade date basis. Realized gains and losses from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including
amortization of premium and accretion of discount on investments, is
accrued daily as earned.
C. Dividend and Capital Gain Distributions to Shareholders. The Limited
Duration Municipal Bond Portfolio declares dividends from net investment
income daily and distributes them on a monthly basis. The Growth Portfolio,
Value Portfolio and Small Cap Portfolio declare and distribute dividends
from net investment income on a quarterly basis. The International
Portfolio will declare and distribute dividends from net investment income
on a semi-annual basis. Net realized capital gains, if any, will be
distributed at least annually for each portfolio. Distributions to
shareholders are recorded on the ex-dividend date.
D. Federal Income Taxes. It is the policy of each of the Funds to qualify
as a "regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended. By so qualifying, the Funds will not be
subject to Federal income taxes to the extent that they distribute all of
their taxable and tax-exempt income for the fiscal year. The Funds also
intend to meet the distribution requirements to avoid the payment of an
excise tax. Accordingly, no provision for taxes is recorded.
E. Organizational Expenses. Costs incurred in connection with the
organization and initial registration of the Funds have been deferred and
are being amortized on a straightline basis over sixty months beginning
24
<PAGE>
THE HIRTLE CALLAGHAN TRUST
Notes to Financial Statements (continued) -- December 31, 1995
with each Fund's commencement of operations. In the event any of the
initial shares of the Funds are redeemed during the amortization period,
the redemption proceeds will be reduced by a pro rata portion of any
unamortized organization expenses in the proportion as the number of shares
being redeemed bears to the number of initial shares outstanding at the
time of redemption.
F. Determination of Net Asset Value and Calculation of Expenses. Expenses
directly attributable to a Fund are charged to that Fund. Other expenses
are allocated proportionately among each Fund in relation to the net assets
of each Fund or on another reasonable basis.
G. Foreign Exchange Transactions. The books and records of the Fund are
maintained in U.S. dollars, non-U.S. denominated amounts are translated
into U.S. dollars as follows, with the resultant exchange gains and losses
recorded in the Statement of Operations:
(i) market value of investment securities and other assets and
liabilities at the exchange rate on the valuation date,
(ii) purchases and sales of investment securities, income and
expenses at the exchange rate prevailing on the respective date of such
transactions.
H. Forward Foreign Exchange Contracts. A forward foreign exchange
contract is a commitment to sell a foreign currency at a future date at a
negotiated exchange rate. The Funds bear the market risk which arises from
possible changes in foreign exchange values. Risks may arise from the
potential inability of counterparties to meet the terms of their contracts
and from unanticipated movements in the value of the foreign currency
relative to the U.S. dollar. The gain or loss from the difference between
the cost of original contracts and the amount realized upon the closing of
such contracts is included in net realized gain on foreign exchange.
3. INVESTMENT ADVISORY AND ADMINISTRATION CONTRACTS. The Trust has entered
into investment advisory contracts ("Portfolio Management Contracts") on
behalf of each of the Portfolios with one or more Investment Managers. Each
Investment Manager 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. Each Investment Manager is to be paid a fee based on average net
assets, calculated and accrued daily and paid monthly at annual rates of 0.30%
for the Growth Portfolio, 0.40% for the International Portfolio, 0.30% for the
Value Portfolio, 0.45% for the Small Cap Portfolio, and 0.20% for the Limited
Duration Municipal Bond Portfolio. For the period ended December 31, 1995, the
Investment Managers earned fees of $67,026, $64,399, $47,292, $40,362, and
$5,605, for the Growth, International, Value, Small Cap, and Municipal Bond
Portfolios, respectively.
Pursuant to a consulting agreement between the Trust and Hirtle Callaghan &
Company, Inc. ("HCCI") ("HCCI Consulting Agreement"), HCCI is to be paid a fee
calculated and accrued daily and paid monthly at annual rates of 0.05% of
average net assets per Fund. HCCI will make its officers available to serve as
officers and/or Trustees of the Trust, provide office space sufficient for the
Trust's principal office, and monitor the performance of various investment
25
<PAGE>
THE HIRTLE CALLAGHAN TRUST
Notes to Financial Statements (continued) -- December 31, 1995
management organizations, including the Investment Managers. HCCI does not
have investment discretion. For the period ended December 31, 1995, HCCI
earned fees of $11,171, $8,050, $7,882, $4,485, and $1,401, for the Growth,
International, Value, Small Cap, and Municipal Bond Portfolios, respectively.
Furman Selz LLC ("Furman Selz") provides the Funds with administrative, fund
accounting, dividend and capital gain distribution disbursing and transfer
agency services pursuant to the administration agreement (the "Administration
Agreement"). The services under the Administration Agreement are subject to
the supervision of the Trust's Board of Trustees and officers and include day-
to-day administration of matters related to the corporate existence of the
Trust, maintenance of its records, preparation of reports, supervision of the
Funds' arrangement with their custodian and assistance in the preparation of
the Trust's Registration Statement under Federal and state laws. Pursuant to
the Administration Agreement, the Funds pay Furman Selz a monthly fee for its
services which, on an annualized basis, will not exceed .10% of the average
daily net assets of the Funds and is accrued daily. For Administrative
Services provided, Furman Selz was entitled to fees of $22,341, $16,100,
$15,764, $8,969 and $2,803 for the Growth, International, Value, Small Cap and
Municipal Bond Portfolios, respectively. Furman Selz waived fees of $5,585,
$4,025, $3,941, $2,242, $701 for the Growth, International, Value, Small Cap,
and Municipal Bond Portfolios, respectively.
Pursuant to a Services Agreement between the Funds and Furman Selz, Furman
Selz will provide the Funds with transfer and dividend and capital gain
disbursing agent services, for which it receives a fee of $15.00 per account
per year, plus out-of-pocket expenses. Pursuant to the Fund Accounting
Agreement between the Funds and Furman Selz, Furman Selz assists the Funds in
calculating net asset values and provides certain other account services for
each Fund for an annual fee of $30,000 per fund plus out-of-pocket expenses.
For the period ended December 31, 1995, Furman Selz was entitled to Transfer
Agent fees of $956, $624, $700, $451 and $274 for the Growth, International,
Value, Small Cap and Municipal Bond Portfolios, respectively. For Fund
Accounting Services, Furman Selz earned fees, including out of pocket
expenses, of $14,055, $22,642, $12,265, $11,977 and $8,279 for the Growth,
International, Value, Small Cap and Municipal Bond Portfolios, respectively.
The estimated expense ratios for the Funds are as follows: Growth -- 0.63%;
International -- 0.81%; Value -- 0.63%; Small Cap -- 0.78%; Municipal Bond --
0.53%. It is expected that HCCI will reimburse the Trust for expenses, if
necessary, to maintain these expense ratios at estimated levels. As of
December 31, 1995, the such reimbursements would have been as follows:
Growth -- $453; International -- $3,967; Value -- $8,911; Small Cap --
$19,864; and Municipal Bond -- $20,707.
4. SECURITIES TRANSACTIONS.
A. Purchase and sale transactions. The aggregate amount of purchases and
sales of investment securities, other than short-term securities, for the
period ended December 31, 1995 were as follows:
<TABLE>
<CAPTION>
COMMON STOCKS
AND CORPORATE BONDS
-----------------------
PURCHASES SALES
----------- -----------
<S> <C> <C>
Growth................... $74,716,606 $17,770,031
International............ 51,284,882 3,245,318
Value.................... 64,386,092 13,499,279
Small Cap................ 33,056,615 3,142,782
Municipal Bond........... 18,619,164 1,907,200
</TABLE>
26
<PAGE>
THE HIRTLE CALLAGHAN TRUST
Notes to Financial Statements (continued) -- December 31, 1995
B. Federal Income Tax basis. Cost for book and Federal income tax
purposes were substantially identical as of December 31, 1995. Gross
unrealized appreciation and depreciation on investment securities at
December 31, 1995, based on cost for Federal income tax purposes is as
follows:
<TABLE>
<CAPTION>
NET
GROSS GROSS UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
APPRECIATION (DEPRECIATION) (DEPRECIATION)
------------ -------------- --------------
<S> <C> <C> <C>
Growth.......................... $5,069,992 $(2,436,138) $2,633,854
International................... 3,001,727 (915,328) 2,086,399
Value........................... 3,876,316 (987,920) 2,888,396
Small Cap....................... 2,010,757 (1,846,664) 164,093
Municipal Bond.................. 100,775 (10,782) 89,993
</TABLE>
5. CAPITAL SHARE TRANSACTIONS. The Trust is authorized to issue unlimited
shares of capital stock with a par value of $0.001 each. Transactions in
shares of the Funds for the period ended December 31, 1995 were as follows:
<TABLE>
<CAPTION>
SMALL MUNICIPAL
GROWTH INTERNATIONAL VALUE CAP BOND
------ ------------- ----- ----- ---------
<S> <C> <C> <C> <C> <C>
Beginning Balance....... 2,000 2,000 2,000 2,000 2,000
--------- --------- --------- --------- ---------
Shares Sold............. 6,957,477 5,196,150 5,431,186 3,563,996 1,788,853
Shares issued in rein-
vestment of net invest-
ment income and capital
gain distributions..... 5,538 62,056 46,456 12,591 13,256
Shares redeemed......... (892,316) (133,276) (287,815) (333,303) (114,345)
--------- --------- --------- --------- ---------
Net increase in shares.. 6,070,699 5,124,930 5,189,827 3,243,284 1,687,764
--------- --------- --------- --------- ---------
Closing Balance......... 6,072,699 5,126,930 5,191,827 3,245,284 1,689,764
========= ========= ========= ========= =========
</TABLE>
6. MANAGEMENT OF THE TRUST. The Trust's Board is responsible for the overall
supervision and management of the business and affairs of the Trust, including
(i) the selection and general supervision of the Investment Managers that
provide day-to-day portfolio management services to the various 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.
As indicated above, day-to-day investment decisions for each of the
Portfolios are the responsibility of one or more Investment Managers retained
by the Trust. In accordance with the terms of individual investment advisory
contracts relating to the respective Portfolios, and subject to the general
supervision of the Trust's Board, each of the Investment Managers is
responsible for providing a continuous program of investment management to,
and placing all orders for, the purchase and sales of securities and other
instruments on behalf of the respective Portfolios they serve.
27
<PAGE>
THE HIRTLE CALLAGHAN TRUST
Notes to Financial Statements (continued) -- December 31, 1995
The Managers are as follows:
Growth Equity Portfolio -- Jennison Associates Capital Corp.; Westfield
Capital Management Company, Inc.
International Equity Portfolio -- Brinson Partners, Inc.
Value Equity Portfolio -- Cowen Asset Management; Institutional Capital
Corporation.
Small Capitalization Portfolio -- Clover Capital Management, Inc.;
Frontier Capital Management Company.
Limited Duration Municipal Bond Portfolio -- Morgan Grenfell Capital
Management Incorporated.
7. DERIVATIVE INSTRUMENTS. The International Equity Portfolio may invest in
various financial instruments including positions in forward currency
contracts, currency swaps and purchased foreign currency options. The Fund
enters into such contracts for the purpose of hedging exposure to changes in
foreign currency exchange rates on their portfolio holdings.
A forward foreign exchange contract is a commitment to sell or buy a foreign
currency at a future date at a negotiated exchange rate. The Fund bears the
market risk which arises from possible changes in foreign exchange values.
Risks may arise from the potential inability of counterparties to meet the
terms of their contracts and from unanticipated movements in the value of the
foreign currency relative to the U.S. dollar. Forward foreign exchange
contracts may involve market or credit risk in excess of the amounts reflected
on the Fund's statement of assets and liabilities.
The gain or loss from the difference between the cost of original contracts
and the amount realized upon the closing of such contracts is included in net
realized gain on foreign exchange. Fluctuations in the value of forward
contracts held at December 31, 1995 are recorded for financial reporting
purposes as unrealized gains and losses by the Funds.
28
<PAGE>
THE HIRTLE CALLAGHAN TRUST
Notes to Financial Statements (continued) -- December 31, 1995
The table below indicates the International Equity Portfolio's outstanding
forward positions at December 31, 1995:
<TABLE>
<CAPTION>
Value on Unrealized
Contract Maturity Value on December Appreciation/
Country Amount Date Origination Date 31, 1995 (Depreciation)
-------------- ------------- -------- ---------------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Buy Australia 3,900,000 02/16/96 2,869,620 2,912,231 $ 42,611
Sell Belgium 24,700,000 02/16/96 (830,713) (842,517) (11,804)
Buy Canada 2,100,000 02/16/96 1,541,341 1,539,636 (1,705)
Buy Canada 2,200,000 02/16/96 1,623,522 1,612,952 (10,570)
Sell France 1,200,000 02/16/96 (238,124) (245,568) (7,444)
Buy France 2,498,388 01/03/96 505,651 510,750 5,099
Sell France 7,900,000 02/16/96 (1,605,975) (1,616,655) (10,680)
Sell France 9,300,000 02/16/96 (1,839,399) (1,903,152) (63,753)
Sell Germany 1,600,000 02/16/96 (1,092,225) (1,120,528) (28,303)
Sell Germany 2,400,000 02/16/96 (1,683,563) (1,680,792) 2,771
Buy Italy 1,750,000,000 02/16/96 1,057,082 1,102,500 45,418
Buy Italy 4,440,000,000 02/16/96 2,760,761 2,797,200 36,439
Sell Japan 100,000,000 02/16/96 (1,052,532) (977,000) 75,532
Sell Japan 200,000,000 02/16/96 (2,099,627) (1,954,000) 145,627
Sell Japan 439,000,000 02/16/96 (4,395,685) (4,289,030) 106,655
Buy Malaysia 44,769 01/03/96 17,626 17,636 10
Sell Netherlands 300,000 02/16/96 (184,106) (187,947) (3,841)
Sell Netherlands 1,500,000 02/16/96 (949,221) (939,735) 9,486
Sell Netherlands 2,300,000 02/16/96 (1,404,237) (1,440,927) (36,690)
Buy Spain 128,000,000 02/16/96 1,035,448 1,056,000 20,552
Buy Sweden 3,000,000 02/16/96 401,875 450,660 48,785
Buy Sweden 3,900,000 02/16/96 574,815 585,858 11,043
Sell Switzerland 100,000 02/16/96 (82,843) (87,290) (4,447)
Sell Switzerland 950,000 02/16/96 (834,063) (829,255) 4,808
Sell United Kingdom 400,000 02/16/96 (630,360) (619,720) 10,640
--------
$386,239
========
</TABLE>
29
<PAGE>
THE HIRTLE CALLAGHAN TRUST
Financial Highlights+ (unaudited)
December 31, 1995
<TABLE>
<CAPTION>
GROWTH INTERNATIONAL VALUE SMALL CAP MUNICIPAL BOND
AUGUST 8, 1995 AUGUST 17, 1995 AUGUST 25, 1995 SEPTEMBER 5, 1995 OCTOBER 10, 1995
(COMMENCEMENT (COMMENCEMENT (COMMENCEMENT (COMMENCEMENT (COMMENCEMENT
OF OPERATIONS) OF OPERATIONS) OF OPERATIONS) OF OPERATIONS) OF OPERATIONS)
THROUGH THROUGH THROUGH THROUGH THROUGH
DECEMBER 31, 1995 DECEMBER 31, 1995 DECEMBER 31, 1995 DECEMBER 31, 1995 DECEMBER 31, 1995
----------------- ----------------- ----------------- ----------------- -----------------
<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/(loss):............ 0.01 0.02 0.09 0.03 0.11
Net realized/unrealized
gain/(loss) on
investments:.............. 0.23 0.70 0.89 (0.05) 0.11
------- ------- ------- ------- -------
Total from Investment
Operations:................ 0.24 0.72 0.98 (0.02) 0.22
------- ------- ------- ------- -------
Less Distributions:
Dividends from capital
gains:.................... 0.00 (0.01) (0.03) 0.00 0.00
Dividends from net
investment income:........ (0.01) (0.13) (0.09) (0.04) (0.11)
------- ------- ------- ------- -------
Total Distributions:........ (0.01) (0.14) (0.12) (0.04) (0.11)
------- ------- ------- ------- -------
Net Asset Value, End of
Period..................... $ 10.23 $ 10.58 $ 10.86 $ 9.94 $ 10.11
======= ======= ======= ======= =======
Total Return................ 2.40% 7.15% 9.60% (0.19)% 2.17%
Net Assets End of Period (in
thousands):................ $62,116 $54,225 $56,401 $32,268 $17,081
Ratios to Average Net Assets
of:
Net investment income:*.... 0.26% 0.78% 2.47% 0.93% 4.84%
Expenses net of
waivers/reimbursements:*.. 0.63% 0.81% 0.63% 0.78% 0.53%
Expenses before
waivers/reimbursements:*.. 0.66% 0.86% 0.71% 1.02% 1.29%
Portfolio Turnover Rate..... 37% 8% 36% 13% 17%
</TABLE>
- ----------------
+ Per share amounts are based on the average number of shares outstanding
during the periods from commencement of operations through December 31, 1995.
* Annualized
See accompanying notes to financial statements.
30
<PAGE>
APPENDIX A
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>
19
<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.
20
<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 December 31, 1995
FILED HEREWITH
Auditors' Report
FILED HEREWITH
(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 between the Trust and each
Investment Manager 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, 1996.)
(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, 1996.)
(6) 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, 1996.)
(7) /[bonus, pension and profit-sharing plans]/
Not Applicable.
(8) Custodian Agreement between Bankers Trust Company and the Trust.
1
<PAGE>
(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, 1996.)
(9) (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, 1996.)
(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, 1996.)
(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, 1996.)
(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, 1996.)
(11) Consent of Accountants.
FILED HEREWITH.
(12) /[financial statements omitted from Item 23]/
Not Applicable.
(13) /[agreements regarding initial capital]/
Not Applicable.
(14) /[model retirement plans]/
Not Applicable.
(15) /[Rule 12b-1 plan]/
Not Applicable.
(16) /[computation for Item 22 performance]/
Not Applicable.
(17) Financial Data Schedule [See Item 27, below]
(18) [plan pursuant to rule 18f-3]
Not Applicable.
(24) Powers of Attorney
2
<PAGE>
(27) Financial Data Schedules (Rule 483 under the Securities Act of
1933)
Item 25. Persons Controlled by or Under Common Control with Registrant.
--------------------------------------------------------------
[To be supplied by amendment.]
Item 26. Number of Holders of Securities.
--------------------------------
Title of Class Number of Record Holders as of , 1996
-------------- -----------------------------------------
Units of beneficial
interest, par value $.001 [To be supplied by amendment]
Item 27. Indemnification.
----------------
Reference is made to Article VII of the Trust's Amended and Restated
Agreement and Declaration of Trust and to Article VI of the Trust's By-Laws,
which are incorporated herein by reference. Pursuant to Rule 484 under the
Securities Act of 1933 (the "Act"), as amended, the Trust furnishes the
following undertaking:
Insofar as indemnification for liabilities arising under the Act may be
permitted to trustees, officers and controlling persons of the Trust pursuant to
the foregoing provisions, or otherwise, the Trust has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Trust of expenses incurred or paid by a trustee, officer
or controlling person of the Trust in the successful defense of any action, suit
or proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Trust will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
3
<PAGE>
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)
Cowen Asset Management (a division of 7380 Part I (8, 10 & 12)
Cowen & Co.) 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)
</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.
Item 29. Principal Underwriters.
-----------------------
(a) Furman, Selz LLC serves as the principal underwriter for the
Trust. Furman, Selz LLC also serves as a principal underwriter, for the Minerva
Funds, Inc., a registered open-end investment company.
(b) The following table sets forth the indicated information with
respect to each director and officer of Furman, Selz LLC. The business address
for each such individual 230 Park Avenue, New York, New York 10161:
<TABLE>
<CAPTION>
Name Positions and Offices with Positions with Trust
- ---- Underwriter --------------------
-----------
<S> <C> <C>
Steven D. Blecher Director; Executive Vice None
President; Secretary
Brian P. Friedman Executive Vice President None
Roy L. Furman President None
Edmund A. Hajim Chairman None
Michael C. Petrycki Executive Vice President None
Bernard T. Selz Chairman of Executive None
Committee
William L. Collins Executive Vice-President None
Michael Garin Senior Managing Director None
Leopold Swergold Senior Managing Director None
</TABLE>
4
<PAGE>
<TABLE>
<S> <C> <C>
William P. Whalen Senior Managing Director None
Roger H. Felberbaum Senior Managing Director None
Elizabeth Q. Solazzo Executive Vice President; None
Assistant Secretary
John P. Baker Senior Managing Director None
Frank Camelliti Senior Managing Director None
John J. Pileggi Senior Managing Director Assistant
Vice-President
Michael Weisberg Executive Vice President None
William Shutzer Executive Vice President None
John Steinhardt Executive Vice President None
Robert J. Miller Treasurer None
Thalia M. Cody Managing Director None
</TABLE>
(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) Furman, Selz LLC , 230 Park Avenue, New York, New York 10161 (records
relating to its function as administrator, accounting agent, transfer and
dividend disbursing agent and distributor.)
(c) Records relating to the activities of each of the investment managers
on behalf of the indicated portfolio are maintained as follows:
<TABLE>
<CAPTION>
Investment Manager Location of Accounts and
------------------ Records
------------------------
<S> <C>
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
- --------------------------
Cowen Asset Management Financial Square
31st Floor
New York, NY 10005
Institutional Capital Management 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
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
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
</TABLE>
Item 31. Management Services.
--------------------
None.
Item 32. Undertakings.
-------------
Not Applicable.
--------------
6
<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. 1 to be signed on its behalf by the undersigned, thereto duly
authorized in the City of Wayne, and the Commonwealth of Pennsylvania on the
February 8, 1996.
THE HIRTLE CALLAGHAN TRUST
BY: /s/ Donald E. Callaghan
---------------------------
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
<TABLE>
<S> <C> <C>
/s/ Treasurer and Vice-President February 8, 1996
------------------------- (Principal Financial Officer)
David E. Branigan
/s/ Trustee February 8, 1996
-------------------------
Donald E. Callaghan
/s/ * Trustee February 8, 1996
-------------------------
Richard W. Wortham, III
/s/ * Trustee February 8, 1996
-------------------------
Ross H. Goodman
/s/ * Trustee February 8, 1996
-------------------------
Jarrett Burt Kling
/s/ * Trustee February 8, 1996
-------------------------
David M. Spungen
/s/ * Trustee February 8, 1996
-------------------------
Jonathan J. Hirtle
</TABLE>
* signed by Donald E. Callaghan, pursuant to power of attorney (included as
Exhibit 24 to this Post-Effective Amendment No. 1)
7
<PAGE>
EXHIBIT LIST
(As required by Rule 483(a) under the Securities Act of 1933)
Exhibit 1 Amended and Restated Declaration of Trust
(as amended November 9, 1995)
Exhibit 2 By-Laws (as amended November 9, 1995)
Exhibit 11 Consent of Auditors
Exhibit 24 Powers of Attorney
Exhibit 27 Financial Data Schedule
<PAGE>
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>
<TABLE>
TABLE OF CONTENTS
<S> <C>
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
------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
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
-------------------
</TABLE>
ii
<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>
(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
2
<PAGE>
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 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
3
<PAGE>
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 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:
4
<PAGE>
(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 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,
5
<PAGE>
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.
(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.
6
<PAGE>
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.
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
7
<PAGE>
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 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.
8
<PAGE>
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
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;
9
<PAGE>
(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 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
10
<PAGE>
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.
11
<PAGE>
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 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
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<PAGE>
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 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%)
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<PAGE>
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 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.
14
<PAGE>
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.
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
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<PAGE>
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
16
<PAGE>
mistakes of fact or law. The Trustees may take advice of counsel or other
experts with respect 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
17
<PAGE>
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 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.
18
<PAGE>
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.
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.
19
<PAGE>
IN WITNESS WHEREOF, the Undersigned, being the sole Trustee of the
Trust as of the date hereof, does hereby make and enter into this Declaration of
Trust as of the 15th day of December, 1994.
/s/
---------------------------
Donald E. Callaghan,
Trustee
20
<PAGE>
BY-LAWS
-------
of
The Hirtle Callaghan Trust
(a Delaware Business Trust)
<PAGE>
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
--------------------
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
---------
<PAGE>
8. VICE PRESIDENTS.................................................... 7
---------------
9. SECRETARY.......................................................... 7
---------
10. TREASURER......................................................... 8
---------
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
---------------------
<PAGE>
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.
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.
<PAGE>
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.
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.
<PAGE>
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.
(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.
<PAGE>
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.
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
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.
<PAGE>
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.
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
----------
<PAGE>
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.
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.
<PAGE>
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.
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,
<PAGE>
disbursements, gains, losses, capital, retained earnings and shares. The books
of account shall at all reasonable times be open to inspection by any Trustee.
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:
<PAGE>
(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
(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.
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:
<PAGE>
(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.
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.
<PAGE>
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,
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.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Post-Effective Amendment No. 1 to the
Registration Statement on Form N-1A (File No. 33-87636) under the Securities Act
of 1933 of the Hirtle Callaghan Trust of our report dated July 20, 1995 on our
audit of the Statement of Assets and Liabilities as of July 20, 1995.
We also consent to the reference to our Firm under the caption "Financial
Statements and Independent Accountants" in the Statement of Additional
Information.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103
February 7, 1996
<PAGE>
EXHIBIT 24-1
------------
The Hirtle Callaghan Trust
--------------------------
David M. Spungen, whose signature appears below, does hereby constitute and
appoint Donald E. Callaghan and David E. Branigan, 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: July 20, 1995
<PAGE>
EXHIBIT 24-2
------------
The Hirtle Callaghan Trust
--------------------------
Ross H. Goodman, whose signature appears below, does hereby constitute and
appoint Donald E. Callaghan and David E. Branigan, 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: July 20, 1995
<PAGE>
EXHIBIT 24-3
------------
The Hirtle Callaghan Trust
--------------------------
Jarrett Burt Kling, whose signature appears below, does hereby constitute and
appoint Donald E. Callaghan and David E. Branigan, 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: July 20, 1995
<PAGE>
EXHIBIT 24-4
------------
The Hirtle Callaghan Trust
--------------------------
Richard W. Worthham, III, whose signature appears below, does hereby constitute
and appoint Donald E. Callaghan and David E. Branigan, 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: July 20, 1995
<PAGE>
EXHIBIT 24-5
------------
The Hirtle Callaghan Trust
--------------------------
Jonathan J. Hirtle, whose signature appears below, does hereby constitute
and appoint Donald E. Callaghan and David E. Branigan, 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: July 20, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 01
<NAME> HIRTLE CALLAGHAN GROWTH EQUITY PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 5-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> AUG-08-1995
<PERIOD-END> DEC-31-1995
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<INVESTMENTS-AT-VALUE> 57,834
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<TOTAL-ASSETS> 63,109
<PAYABLE-FOR-SECURITIES> 937
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 56
<TOTAL-LIABILITIES> 993
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 67,296
<SHARES-COMMON-STOCK> 6,073
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1
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<ACCUMULATED-NET-GAINS> (1,747)
<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 62,116
<DIVIDEND-INCOME> 152
<INTEREST-INCOME> 48
<OTHER-INCOME> 0
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<NET-INVESTMENT-INCOME> 59
<REALIZED-GAINS-CURRENT> (1,747)
<APPREC-INCREASE-CURRENT> 2,634
<NET-CHANGE-FROM-OPS> 946
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 58
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,957
<NUMBER-OF-SHARES-REDEEMED> 892
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 62,096
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<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 147
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<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.01
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<EXPENSE-RATIO> 0.63
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 02
<NAME> HIRTLE CALLAGHAN INTERNATIONAL EQUITY PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 5-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> AUG-17-1995
<PERIOD-END> DEC-31-1995
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<INVESTMENTS-AT-VALUE> 50,267
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 55,525
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<TOTAL-LIABILITIES> 1,300
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 51,612
<SHARES-COMMON-STOCK> 5,127
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (524)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 665
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,473
<NET-ASSETS> 54,225
<DIVIDEND-INCOME> 243
<INTEREST-INCOME> 12
<OTHER-INCOME> 0
<EXPENSES-NET> 130
<NET-INVESTMENT-INCOME> 125
<REALIZED-GAINS-CURRENT> 696
<APPREC-INCREASE-CURRENT> 2,473
<NET-CHANGE-FROM-OPS> 3,293
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 649
<DISTRIBUTIONS-OF-GAINS> 31
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,196
<NUMBER-OF-SHARES-REDEEMED> 133
<SHARES-REINVESTED> 62
<NET-CHANGE-IN-ASSETS> 54,205
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 72
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 138
<AVERAGE-NET-ASSETS> 43,328
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 0.70
<PER-SHARE-DIVIDEND> 0.13
<PER-SHARE-DISTRIBUTIONS> 0.01
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.58
<EXPENSE-RATIO> 0.81
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 03
<NAME> HIRTLE CALLAGHAN VALUE EQUITY PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 5-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> AUG-25-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 53,041
<INVESTMENTS-AT-VALUE> 55,929
<RECEIVABLES> 841
<ASSETS-OTHER> 1,225
<OTHER-ITEMS-ASSETS> 0
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<PAYABLE-FOR-SECURITIES> 1,545
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 50
<TOTAL-LIABILITIES> 1,595
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 58,170
<SHARES-COMMON-STOCK> 5,192
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 529
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,888
<NET-ASSETS> 56,401
<DIVIDEND-INCOME> 480
<INTEREST-INCOME> 6
<OTHER-INCOME> 0
<EXPENSES-NET> 99
<NET-INVESTMENT-INCOME> 387
<REALIZED-GAINS-CURRENT> 655
<APPREC-INCREASE-CURRENT> 2,888
<NET-CHANGE-FROM-OPS> 3,930
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 387
<DISTRIBUTIONS-OF-GAINS> 126
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,431
<NUMBER-OF-SHARES-REDEEMED> 288
<SHARES-REINVESTED> 46
<NET-CHANGE-IN-ASSETS> 56,381
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
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<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 112
<AVERAGE-NET-ASSETS> 44,723
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.09
<PER-SHARE-GAIN-APPREC> 0.89
<PER-SHARE-DIVIDEND> 0.09
<PER-SHARE-DISTRIBUTIONS> 0.03
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<PER-SHARE-NAV-END> 10.86
<EXPENSE-RATIO> 0.63
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 04
<NAME> HIRTLE CALLAGHAN SMALL CAPITALIZATION EQUITY PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> SEP-05-1995
<PERIOD-END> DEC-31-1995
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<INVESTMENTS-AT-VALUE> 29,833
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<TOTAL-LIABILITIES> 800
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 35,638
<SHARES-COMMON-STOCK> 3,245
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
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<ACCUMULATED-NET-GAINS> (244)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 164
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<DIVIDEND-INCOME> 105
<INTEREST-INCOME> 49
<OTHER-INCOME> 0
<EXPENSES-NET> 70
<NET-INVESTMENT-INCOME> 84
<REALIZED-GAINS-CURRENT> (244)
<APPREC-INCREASE-CURRENT> 164
<NET-CHANGE-FROM-OPS> 4
<EQUALIZATION> 0
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<NUMBER-OF-SHARES-SOLD> 3,564
<NUMBER-OF-SHARES-REDEEMED> 333
<SHARES-REINVESTED> 13
<NET-CHANGE-IN-ASSETS> 32,248
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
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<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 92
<AVERAGE-NET-ASSETS> 28,058
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> (0.05)
<PER-SHARE-DIVIDEND> 0.04
<PER-SHARE-DISTRIBUTIONS> 0
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<PER-SHARE-NAV-END> 9.94
<EXPENSE-RATIO> 0.78
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 05
<NAME> HIRTLE CALLAGHAN LIMITED DURATION MUNICIPAL BOND PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> OCT-10-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 16,703
<INVESTMENTS-AT-VALUE> 16,793
<RECEIVABLES> 191
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<TOTAL-LIABILITIES> 24
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<SHARES-COMMON-STOCK> 1,690
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
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<ACCUMULATED-NET-GAINS> 4
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 90
<NET-ASSETS> 17,081
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 151
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<EXPENSES-NET> 15
<NET-INVESTMENT-INCOME> 136
<REALIZED-GAINS-CURRENT> 4
<APPREC-INCREASE-CURRENT> 90
<NET-CHANGE-FROM-OPS> 230
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<NUMBER-OF-SHARES-SOLD> 1,789
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</TABLE>
