Filing pursuant to Rule 497(e)
for The Hirtle Callaghan Trust
1933 Act File No. 33-87762
1940 Act File No. 811-8918
Supplement to Prospectus
dated September 15, 1997, for
The Hirtle Callaghan Trust
The Growth Equity Portfolio: Investment Advisory Arrangements
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Pursuant to the terms of an Investment Management Agreement ("GSAM
Agreement") approved by the by the Board of Trustees ("Board") at its
meeting held on September 12, 1997, Goldman Sachs Asset Management
("GSAM") commenced serving as an Investment Manager for The Growth Equity
Portfolio on October 1, 1997. For its services under its agreement with
the Trust ("GSAM Agreement"), GSAM will receive 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%. The GSAM Agreement is subject
to approval by the shareholders of The Growth Equity Portfolio, which
approval must be obtained within 120 days of the effective date of the
GSAM Agreement.
At its meetings held on September 12, 1997, and on November 4, 1997,
the Board also conditionally approved an amendment to the GSAM Agreement
("Performance Fee Amendment"). Under the Performance Fee Amendment, GSAM
would be compensated based, in part, on the investment results achieved by
it. Under the amendment, Portfolio Manager will receive a fee, payable
quarterly, at the annual rate of .30% of the average daily net asset value
of the Account, ("Base Fee"). After an initial one year period, the Base
Fee would be increased or decreased at an annual rate of 25% of the net
value added by GSAM over the total return of the Russell 1000 Growth Index
during the 12 months immediately preceding the calculation date. GSAM's
total compensation under the Amended Agreement would not exceed 50 basis
points with respect to any 12 month period; the minimum annual fee that
would be payable to GSAM under the amended agreement is 10 basis points.
The Performance Fee Amendment will not become effective unless such
amendment is approved by the shareholders of The Growth Equity Portfolio.
In addition, the Performance Fee Amendment will not take effect unless and
until certain relief is obtained from the Securities and Exchange
Commission ("SEC") from certain rules adopted by the SEC. The relief
sought would permit the proposed performance compensation to be based on
the gross performance of that portion of the Portfolio's assets assigned
by the Board to GSAM. There can be no assurance that the SEC will grant
such relief.
As of August 31, 1997, GSAM, together with its affiliates, managed total
assets of in excess of $124.1 billion. Robert C. Jones, Victor Pinter and
Kent Clark will be responsible for making day-to-day investment decisions
for that portion of The Growth Equity Portfolio allocated to GSAM. Mr.
Jones, a chartered financial analyst and Managing Director of GSAM has
been a officer and investment professional with GSAM since 1989. Mr.
Pinter, Vice President joined GSAM in 1990. Mr. Clarke, a Vice President
of GSAM, joined the firm in 1992; prior to 1992, he was studying for a
Ph.D. in finance at the University of Chicago. GSAM, the principal
offices of which are located at One New York Plaza, New York, New York,
10004, is a separate operating division of Goldman, Sachs & Co.
The Growth Equity Portfolio: Investment Practices.
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The Growth Equity Portfolio may also invest in certain instruments known
as Standard & Poor's Depositary Receipts or "SPDRs" as part of its overall
hedging strategies. Such strategies are designed to reduce certain risks
that would otherwise be associated with with the investments in the types
of securities in which the Portfolio invests and/or in anticipation of
future purchases, including to achieve market exposure pending investment,
provided that the use of such strategies are not for speculative purposes
and are otherwise consistent with the investment policies and restrictions
adopted by the Portfolio.
SPDRs are interests in a unit investment trust ("UIT") that may be
obtained from the UIT or purchased in the secondary market (SPDRs are
listed on the American Stock Exchange). The UIT will issue SPDRs in
aggregations known as "Creation Units" in exchange for a "Portfolio
Deposit" consisting of (a) a portfolio of securities substantially similar
to the component securities ("Index Securities") of the Standard & Poor's
500 Composite Stock Price Index (the "S&P Index"), (b) a cash payment
equal to a pro rata portion of the dividends accrued on the UIT's
portfolio securities since the last dividend payment by the UIT, net of
expenses and liabilities, and (c) a cash payment or credit ("Balancing
Amount") designed to equalize the net asset value of the S&P Index and the
net asset value of a Portfolio Deposit.
SPDRs are not individually redeemable, except upon termination of the UIT.
To redeem, the Portfolio must accumulate enough SPDRs to reconstitute a
Creation Unit. The liquidity of small holdings of SPDRs, therefore, will
depend upon the existence of a secondary market. Upon redemption of a
Creation Unit, the Portfolio will receive Index Securities and cash
identical to the Portfolio Deposit required of an investor wishing to
purchase a Creation Unit that day.
The price of SPDRs is derived from and based upon the securities held by
the UIT. Accordingly, the level of risk involved in the purchase or sale
of a SPDR is similar to the risk involved in the purchase or sale of
traditional common stock, with the exception that the pricing mechanism
for SPDRs is based on a basket of stocks. Disruptions in the markets for
the securities underlying SPDRs purchased or sold by the Funds could
result in losses on SPDRs. Trading in SPDRs involves risks similar to
those risks involved in the writing of options on securities.
The Value Equity Portfolio: Investment Advisory Arrangements
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At a special meeting of the Board of Trustees held on on November 21,
1997, the Board conditionally approved an amendment to the Portfolio
Management Agreement between the Trust and Institutional Capital
Corporation ("ICAP"). Pursuant to the amendment, the fee payable to ICAP
by The Value Equity Portfolio would, if approved by shareholders of that
portfolio, be increased from .30% of the average net assets of that
portion of the Portfolio managed by ICAP to .35% of such assets. The
amendment will not be approved unless and until it is approved by the
shareholder of The Value Equity Portfolio. It is currently anticipated
that a meeting of the Portfolio's shareholders will be held for the
purpose of considering the amendment to the ICAP Agreement on or before
January 12, 1998.
Administration, Distribution and Related Services.
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At its meeting held on September 12, 1997, the Board also approved
amendments to those agreements pursuant to which BISYS Fund
Services, Inc. and certain of its affiliated companies ("BISYS")
provide administration, transfer agency, accounting and
distribution services to the Trust. At present, BISYS is compensated for
its services under those agreements based on separate fee schedules.
Effective October 1, 1997, the Trust will be provided with administration,
transfer agency and fund accounting services for an all-inclusive fee
payable. ("Omnibus Fee"). The Omnibus Fee is to be computed daily and
paid monthly in arrears, at an annual rate of .10% of the aggregate
average daily net assets of the Value Equity, Growth Equity, Small
Capitalization Equity and International Equity Portfolios and of any
additional portfolios that invest primarily in equity securities that may
be created by the Trust in the future, and .08% of the aggregate average
daily net assets of the Limited Duration Municipal Bond Portfolio and of
any additional portfolios that invest primarily in debt securities that
may be created in the future by the Trust.
The date of this Supplement is November 25, 1997
