<PAGE>
Filed with the Securities and Exchange Commission on November ___, 1997
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant X
Filed by a Party other than the Registrant
Check the appropriate box:
X Preliminary Proxy Statement Confidential, for Use of the
Commission Only
(as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
The Hirtle Callaghan Trust
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
X No fee required
Fee computed on a table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
<PAGE>
THE HIRTLE CALLAGHAN TRUST
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
of
THE GROWTH EQUITY PORTFOLIO AND THE VALUE EQUITY PORTFOLIO
to be held on January 12, 1998
TO THE SHAREHOLDERS:
A Special Meeting of shareholders of The Growth Equity Portfolio ("Growth
Portfolio") and shareholders of The Value Equity Portfolio ("Value
Portfolio") of The Hirtle Callaghan Trust (the "Trust") will be held on
January 12, 1998, at the Trust's principal office, located at 575 East
Swedesford Road, Wayne, PA 19087-1613 at 10: a.m.
At the Special Meeting, shareholders of the Growth Portfolio will be
asked:
(1) To approve the engagement of Goldman Sachs Asset Management ("GSAM")
to provide portfolio management services to the Growth Portfolio pursuant
to a portfolio management agreement between the Trust and GSAM ( "GSAM
Agreement");
(2) To approve an amendment of the GSAM engagement pursuant to which
GSAM would be compensated on a performance fee basis; and
At the Special Meeting, shareholders of the Value Portfolio will be
asked:
(3) To approve an amendment to the Portfolio Management Agreement between
the Trust and Institutional Capital Corporation ("ICAP") relating to The
Value Equity Portfolio, which amendment will increase the fee to which
ICAP is entitled for its services to The Value Equity Portfolio.
Shareholders of the Growth Portfolio and the Value Portfolio will also
transact such further business as may properly come before the meeting or
any adjournment thereof.
Shareholders of record of the Growth Portfolio or of the Value Portfolio
at the close of business on November 21, 1997 are entitled to notice of
the Special Meeting and any adjournments thereof. If you attend the
meeting, you may vote your shares in person. If you do not expect to
attend the meeting, please fill in, date, sign and return the proxy in the
enclosed envelope which requires no postage if mailed in the United
States.
It is important that you return your signed proxy promptly so that a
quorum may be assured.
BY ORDER OF THE BOARD OF TRUSTEES OF THE HIRTLE CALLAGHAN TRUST
<PAGE>
<PAGE>
THE HIRTLE CALLAGHAN TRUST
575 East Swedesford Road.
Wayne, PA 19087-1613
PROXY STATEMENT
The enclosed form(s) of Proxy is solicited by the Board of Trustees (the
"Board") of The Hirtle Callaghan Trust (the "Trust"), with respect to The
Growth Equity Portfolio (the "Growth Portfolio") and The Value Equity
Portfolio ("Value Portfolio"). Proxies so solicited are intended for use
at a special meeting of shareholders (the "Special Meeting")of the
Growth Portfolio and the Value Portfolio (collectively, the "Portfolios")
or any adjournment of that meeting , to be held on January 12, 1998, at 575
East Swedesford Road, Wayne, PA 19087-1613. The purpose of the Special
Meeting is to consider the approval of certain portfolio management
arrangements, as set forth in the Notice of Meeting accompanying this
proxy statement and more fully described below ("Proposals"). It is
anticipated that this Proxy Statement and form of proxy will first be
mailed to shareholders on or about ____________1997.
Only persons who were shareholders of record of at least one of the
Portfolios as of November 21, 1997 ("Record Date") are entitled to notice
of the Special Meeting.
Persons who were shareholders of record of the Growth Portfolio on the
Record Date are entitled to vote at the Special Meeting with regard to
Proposals 1 and 2, each relating to the investment advisory arrangements
with Goldman Sachs Asset Management ("GSAM") relating to the Growth
Portfolio. On the Record Date, the Growth Portfolio had outstanding
11,608,540.215 shares, each share being entitled to one vote. The presence
of the holders of 40% of the outstanding shares of the Growth Portfolio on
the Record Date, represented in person or by proxy, shall constitute a
quorum for the purpose of conducting the business at the Special Meeting.
Persons and groups known by management to own beneficially 5% or more of
the shares of the Growth Portfolio are listed in this Proxy Statement
under the heading "Information about the Trust."
Persons who were shareholders of record of the Value Portfolio on the
Record date are entitled to vote at the Special Meeting with respect to
Proposal 3, relating to investment advisory arrangements with
Institutional Capital Corporation ("ICAP") relating to the Value
Portfolio. On the Record Date, the Value Portfolio had outstanding
8,903,576.286 shares, each share being entitled to one vote. The presence
of the holders of 40% of the outstanding shares of the Value Portfolio on
the Record Date, represented in person or by proxy, shall constitute a
quorum for the purpose of conducting the business at the Special Meeting.
Persons and groups known by management to own beneficially 5% or more of
the shares of the Value Portfolio are listed in this Proxy Statement
under the heading "Information about the Trust."
<PAGE>
<PAGE>
The table below summarizes the several proposals to be presented at the
Meeting and the Portfolio to which each relates.
Proposal
Shareholders Entitled to Vote
Proposal No. 1:
Proposal to Approve the
GSAM engagement
Growth Portfolio shareholders
Proposal No. 2:
Proposal to Approve the
Performance Fee Amendment
Growth Portfolio shareholders
Proposal No. 3:
Proposal to Approve an Increase in the Advisory Fee Paid to ICAP
Value Portfolio shareholders
If the accompanying form of Proxy is executed properly and returned,
shares represented by such Proxy will be voted at the Special Meeting in
accordance with the instructions on the form of Proxy. If no instructions
are specified, shares will be voted FOR the approval of the Proposals. If
the votes required to approve Proposals are not received, the persons
named as proxies on the accompanying form of proxy may propose one or more
adjournments of the Special Meeting to permit further solicitation of
proxies. When voting on any proposed adjournment, the persons named as
proxies on the enclosed form of proxy will vote in favor of the proposed
adjournment unless otherwise directed. A shareholder can revoke the proxy
prior to its use by appearing at the Special Meeting and voting in person,
by giving written notice of such revocation to the Trust or by returning a
subsequently dated form of proxy to the Trust.
Copies of the Trust's most recent annual report, dated June 30, 1997
including financial statements, have previously been delivered to
shareholders of the Trust. Shareholders of the Trust may obtain without
charge additional copies of such reports by writing to the Trust at 575
East Swedesford Road, Wayne, PA 19087-1613.
<PAGE>
<PAGE>
INTRODUCTION
Summary of Proposals relating to the Growth Portfolio. Since The Growth
Equity Portfolio commenced operations on August 8, 1995, until September
29, 1997, Westfield Capital Management (hereinafter, "Westfield" or the
"Prior Manager") served, pursuant to the terms of a separate agreement
("Prior Agreement"), as one of two investment advisory organizations
retained by the Trust to provide portfolio management services for the
Growth Portfolio. As more fully described below, the Board determined
that it would be in the best interests of the Growth Portfolio to replace the
Prior Manager with another investment management organization.
Accordingly, at a meeting of the Board held on September 12, 1997, the
Board approved the termination of the Prior Agreement and the engagement
of GSAM ("GSAM"), a separate operating division of Goldman, Sachs & Co.,
("Goldman Sachs") under an agreement between GSAM and the Trust ("GSAM
Agreement"). Under the Investment Company Act of 1940 ("Investment
Company Act"), if shareholder approval of the GSAM Agreement is not
obtained within 120 days of the date on which the GSAM Agreement became
effective, the GSAM Agreement will terminate.
The GSAM Agreement became effective, and the Prior Agreement terminated,
on September 29, 1997. Under the GSAM Agreement, GSAM is compensated for
providing portfolio management services to the Growth Portfolio at the
same rate at which the Prior Manager was compensated for its services; all
other provisions of the GSAM Agreement are substantially the same as those
of the Prior Agreement. A copy of the GSAM Agreement appears as Exhibit A
to this Proxy Statement. The GSAM Agreement is discussed below, as
Proposal I.
The Board has also considered and approved an amendment ("Performance Fee
Amendment") to the GSAM Agreement that would permit GSAM to be compensated
on a performance fee basis. The Performance Fee Amendment in the form
described in this Proxy Statement was ultimately approved by the Board,
subject to the approval of the Growth Portfolio's shareholders. If the
Performance Fee Amendment is implemented, it could, under certain
circumstances, increase or decrease the fee paid to GSAM, when compared to
the current fixed fee arrangement. A copy of the form of Performance Fee
Amendment appears as Exhibit B to this Proxy Statement. The Performance
Fee Amendment is discussed below, as Proposal II.
<PAGE>
<PAGE>
If both the GSAM Agreement and the Performance Fee Amendment are approved
by the shareholders of the Growth Portfolio, the Performance Fee Amendment
will become effective on the first day of the month following the date of
the shareholder approval and, unless sooner terminated, the GSAM Agreement
will remain in force, as amended, until September 29, 1999. The GSAM
Agreement, as amended, will continue in effect from year to year
thereafter in accordance with its terms for so long as it is approved
annually by the Trust's Board of Trustees. If the GSAM Agreement
(Proposal I) is approved but the Performance Fee Amendment (Proposal II)
is not approved, the GSAM Agreement will continue in effect and GSAM will
be entitled to compensation for its services at the rate currently
specified in that agreement. Finally, shareholders should be aware that
Proposal II is contingent on the approval of Proposal I. Thus, if
Proposal II is approved but Proposal I is defeated, the GSAM Agreement
will terminate, as noted above. In the event of such termination, the
Board will meet to determine what action should be taken with respect to
the management of that portion of the Growth Portfolio's assets that are
currently managed by GSAM.
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR"
PROPOSALS I AND II.
Summary of Proposals relating to the Value Portfolio. Since the
commencement of its operations on August 25, 1995, Institutional Capital
Corporation ("ICAP") has provided portfolio management services for at
least one-half of the total assets of the Value Portfolio. Under the
terms of its portfolio management agreement with the Value Portfolio,
ICAP is currently entitled to receive as compensation for its services a
fee calculated at the annual rate of .30% of the average net assets of
that portion of the Value Portfolio ("ICAP Account") from time to time
allocated to ICAP by the Trust's Board. ICAP has
requested, and the Board has approved, subject to the approval
of the shareholders of the Value Portfolio, an increase of .05% (or 5
basis points) in the rate at which the advisory fee payable to ICAP is
calculated. Under the Investment Company Act, such fee increase may not
take effect unless and until it is approved by a majority of the
outstanding shares of the Value Portfolio. A copy of the proposed
amendment to the ICAP Agreement appears as Exhibit D to this Proxy
Statement. The proposal to increase ICAP's fee is discussed below, as
Proposal III.
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR"
PROPOSAL III
<PAGE>
<PAGE>
PROPOSAL I: Approval of the GSAM Agreement
Summary and Background. The investment objective of the Growth Portfolio
is to provide capital appreciation, with income as a secondary
consideration. The Growth Portfolio seeks 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 Growth Portfolio, the Growth Portfolio's
Investment Managers 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 ("S&P Index"), a widely followed, unmanaged index of common stocks.
When it commenced operations in August, 1995, the Growth Portfolio was
served by two separate investment management organizations: Westfield and
Jennison Associates Capital Corp. ("Jennison"). Although investment
managers are each required to adhere to the Growth Portfolio's investment
objective, policies and restrictions, it is the intention of the Board
that each will do so in the context of its own management style. As part
of its overall responsibility to supervise these managers, the Board
attempts to ensure that the respective portfolio management styles are
complementary. Hirtle Callaghan & Co., Inc. ("Hirtle Callaghan") is
responsible for monitoring the overall investment performance of each of
the Trust's several Portfolios, including The Growth Equity Portfolio, as
well as the performance of those investment advisory organizations
retained by the Trust to provide portfolio management services to the
portfolios.
For much of the period since the Growth Portfolio's inception, that
portion of the Growth Portfolio allocated to Westfield began to
underperform the S&P Index. Westfield's performance also lagged the
performance of the Russell 1000 Growth Stock Index (the "Russell 1000
Growth Index"), an unmanaged index of common stocks that includes a
broader range of common stock issues than the S&P Index. Although the
overall benchmark for the Growth Portfolio's performance is the S&P Index,
the Growth Portfolio's stated investment policy is to invest primarily in
equity securities with long-term earnings growth potential and relatively
higher price earning ratios than the average range for stocks included in
the S&P Index. This, in Hirtle Callaghan's view, means that the
performance of the Growth Portfolio, or of its individual managers,
relative to the Russell 1000 Growth Index is an appropriate factor to
consider in assessing whether the Growth Portfolio is positioned to
capture the asset class in which it is designed to focus. After
conducting an extensive manager search, Hirtle Callaghan recommended to
the Board that GSAM be retained to replace Westfield. This recommendation
was approved at a meeting of the Board held on September 12, 1997. At
that meeting, the Board, including a majority of those Trustees
<PAGE>
<PAGE>
("Independent Trustees") who are not "interested persons" of the Trust
within the meaning of the Investment Company Act, also approved the GSAM
Agreement.
Factors Considered by the Board of Trustees. During the course of its
deliberations, the Board considered the recommendations and investment
analysis of Hirtle Callaghan, as summarized above. The Board also
discussed information provided to it relating to the management style and
past performance record of GSAM, as well as information relating to the
nature and quality of the services to be provided by GSAM, the background
and experience of those individuals who would be responsible for making
day-to-day investment decisions with respect to assets of the Growth
Portfolio and fees paid to GSAM by other registered investment companies
to which GSAM provides investment advisory services. The Board also
considered the fact that the terms and conditions set forth in the GSAM
Agreement are substantially the same as those contained in the Prior
Agreement and, in particular, that the advisory fee to be paid to GSAM was
the same as the advisory fee paid by the Growth Portfolio to Westfield.
The Trustees also discussed the fact that Westfield had entered into an
agreement pursuant to which the firm would be acquired by a subsidiary of
Private Bancorp, Inc., a bank holding company whose shares are publicly
traded.
The Board was also advised by counsel regarding its responsibilities under
Section 15(c) of the Investment Company Act and the requirements of
Section 15(a) of that Act. In particular, it was noted that Section 15 of
the Investment Company Act normally would prohibit any person from serving
as an investment adviser to a registered investment company unless the
written contract has been approved by the shareholders of that company.
Counsel also discussed the exception to this requirement contained in rule
15a-4 under the Investment Company Act. Under that provision, an adviser
may provide advisory services to an investment company pursuant to a
written contract approved by the investment company's board of directors
(including those directors who are not "interested persons" of the company
or the adviser) in the event that a prior advisory contract is terminated
by action of such company's board. However, such contract must be
approved within 120 days of its effective date by the shareholders of the
affected company.
<PAGE>
<PAGE>
Comparison of the GSAM Agreement and Prior Agreements. The terms and
conditions set forth in the GSAM Agreement are, in all material respects,
the same as those contained in the Prior Agreement except for the
description of the portfolio manager, the effective and termination dates,
and the modification of certain indemnification provisions included in the
GSAM Agreement. Both agreements require the portfolio manager, subject
to the overall supervision of the Board, to provide a continuous
investment program for the assets of the Growth Portfolio, or that portion
of such assets as may be, from time to time, allocated to it. Under both
agreements, the named portfolio manager is responsible, among other
things, for the provision of investment research, management of all
investments and the selection of brokers and dealers through which
securities transactions are executed, as well as the maintenance of
certain records required under relevant provisions of the Investment
Company Act. The agreements each also provide that the portfolio manager
will not be liable to the Trust for any error of judgment or mistake of
law on the part of the portfolio manager for any loss sustained by the
Trust in connection with the purchase or sale of any instrument on behalf
of the Growth Portfolio, except losses that may be sustained as a result
of willful misfeasance, reckless disregard of its duties, bad faith or
gross negligence on the part of the portfolio manager. Each of the
agreements also provides for its termination, at any time and without
penalty, either by the Trust or by the portfolio manager, in each case
upon sixty days' written notice, and its termination in the event of an
"assignment" as defined in the Investment Company Act.
The GSAM Agreement was signed on September 18, 1997 and became effective
on September 29, 1997, the date on which the Prior Agreement was
terminated, in accord with rule 15a-4 of the Investment Company Act. It
will continue in effect for two years from its effective date, unless
sooner terminated, provided that the GSAM Agreement is approved by the
shareholders of the Growth Portfolio within 120 days of such effective
date. Thereafter, the GSAM Agreement shall continue in effect from year
to year for so long as its continuance is specifically approved, at least
annually, by (i) a majority of the Board or the vote of the holders of a
majority of the Growth Portfolio's outstanding voting securities; and (ii)
the affirmative vote, cast in person at a meeting called for the purpose
of voting on such continuance, of a majority of the Trust's Independent
Trustees. Section 5 of the GSAM Agreement provides that the
indemnification obligation of the portfolio manager with respect to
information provided to the Trust by GSAM shall not apply unless the
portfolio manager has had an opportunity to review such documents for a
specified period of time prior to the date on which they are filed with
the Securities and Exchange Commission ("SEC") and unless the portfolio manager
is notified in writing of any claim for indemnification within specified
periods. That section also provides that the Trust will indemnify the
Portfolio Manager with respect to information included in filings made
with the SEC by the Trust, other than information relating to, and
provided in writing by, the Portfolio Manager.
<PAGE>
<PAGE>
During the fiscal year ended June 30, 1997, Westfield received from the
Growth Portfolio investment advisory fees of $179,941 in accordance
with the Prior Agreement. The Prior Agreement was last approved by the
Board (including the Independent Trustees) at a meeting of the Board held
on May 6, 1997, and by the Trust's initial shareholder on July 21, 1995.
The Prior Agreement also provided for the indemnification of the Trust
under substantially the same conditions set forth in the GSAM Agreement,
but did not condition this obligation on the notice and review conditions
included in the GSAM Agreement. In addition, the Prior Agreement did not
include the limited indemnification of Westfield by the Trust that is
included in the GSAM Agreement.
Information about GSAM. As noted above, 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. As of August 31, 1997,
GSAM, together with its investment advisory affiliates, managed total
assets 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 Portfolio allocated to GSAM. Mr.
Jones, a chartered financial analyst and Managing Director of GSAM has
been an officer and investment professional with GSAM since 1989. Mr.
Pinter, 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.
The following table sets forth certain information about other registered
investment companies, the investment objectives and policies of which are
similar to those of The Growth Equity Portfolio, for which GSAM provides
portfolio management services.
<TABLE>
<S> <C> <C>
Fund Advisory Fee* Assets at October 31, 1997
Goldman Sachs .75 153.2 million
CORE US Equity Fund
Goldman Sachs .70 1.3 billion
Growth and Income Fund
Goldman Sachs .75% 247.6 million
Mid-Cap Equity Fund
Goldman Sachs CORE .75 43.4 million
Large Cap Growth Fund
* Figures shown do not taken into fee waivers, if any, for the companies
listed.
</TABLE>
<PAGE>
<PAGE>
Goldman Sachs is a worldwide investment banking firm and has its principal
business address at 85 Broad Street, New York, New York 10004. The
principal executive officers of Goldman Sachs are Jon S. Corzine and Henry
M. Paulson. The principal occupation of Messrs. Corzine and Paulson is
the management of Goldman Sachs. The general partners of Goldman Sachs
are The Goldman Sachs Group, L.P. (a Delaware Limited Partnership)
("GSGLP") and The Goldman, Sachs & Co. L.L.C. (a Delaware limited
liability company) ("GSCLLC"). The principal business address of the
executive officers and general partners is 85 Broad Street, New York, New
York 10004. The Goldman Sachs Corporation ("GSC") is the parent company
of both GSGLP and GSCLLC. GSGLP is also a parent of GSCLLC. GSC is the
sole general partner of GSGLP.
Vote Required for Approval of Proposal I. Approval of the GSAM Agreement
requires the approval of a "majority of the outstanding voting securities"
of the Growth Portfolio. Under the Investment Company Act, this term means
the lesser of (i) 67% of the outstanding shares represented at a meeting
at which more than 50% of the outstanding shares are present in person or
represented by proxy, or (ii) more than 50% of the Growth Portfolio's
outstanding voting securities. If the GSAM Agreement is not approved by
the Growth Portfolio's shareholders at the Special Meeting (including any
adjournments thereof), that agreement will terminate.
PROPOSAL II: APPROVAL OF THE PERFORMANCE FEE AMENDMENT
Summary and Background. During the course of the Board's deliberations
regarding the GSAM Agreement, the Board was apprised of GSAM's concern
regarding the level of the advisory fee paid to the Prior Manager.
Following a review of the existing fee structure under the GSAM and Prior
Agreements, and based on the recommendation of Hirtle Callaghan, the
Trustees approved a new fee structure, known as a "fulcrum fee"
arrangement. If Proposal II is approved by shareholders of the Growth
Portfolio, the fee schedule currently applicable under the GSAM Agreement
will be replaced with the fee schedule set forth in Exhibit B to this
proxy statement. Other than the fee schedule, all other provisions of the
GSAM Agreement would remain as described in Proposal I. The Trustees and
Hirtle Callaghan believe that the new fee structure could provide an
effective means to reward good relative performance for the Growth
Portfolio, while enabling the Growth Portfolio to realize the benefit of
lower fees when fund performance has not reached desired levels.
Description of the Performance Fee Amendment. Under the Performance Fee
Amendment, GSAM would be entitled to receive a base fee ("Base Fee")
calculated at the annual rate of .30% (or 30 basis points) of the average
net assets of that portion of the Growth Portfolio's assets assigned to
GSAM ("GSAM Account") plus or minus a specified adjustment designed to
reflect the performance of the GSAM Account relative to the performance of
the Russell 1000 Growth Index plus 30 basis points. This 30 basis point
"performance hurdle" is designed to assure that GSAM will earn a
performance adjustment only with respect to the value that its portfolio
management adds to the GSAM Account. A detailed description of the
various features of the Performance Fee Amendment, together with sample
calculations and examples, appear below.
<PAGE>
<PAGE>
Initial Period. Under the Performance Fee Amendment, GSAM's fee would be
adjusted to reflect the performance of the Account only after the
Performance Fee Amendment has been in effect for 12 months ("Initial
Period") following the date ("Effective Date") on which the Performance
Fee Amendment becomes effective. For the first three quarters of the
Initial Period, GSAM would be entitled to receive a Base Fee of .075% of
the average net assets of the GSAM Account (or 7.5 basis points). At the
end of the fourth quarter of the Initial Period, GSAM would be entitled
to receive a fee equal to .075% of the average net assets of the GSAM
Account plus or minus the applicable performance adjustment for the
Initial Period. This adjustment would be calculated by multiplying the
average net assets of the GSAM Account for the Initial Period by a factor
("Performance Component") equal to 25% of the difference between (i) the
total return of the GSAM Account, calculated without regard to expenses
incurred in the operation of the GSAM Account ("Gross Total Return")
during the Initial Period and (ii) the total return of the Russell 1000
Growth Index ("Index Return") during the Initial Period plus a performance
hurdle of 30 basis points.
Subsequent Quarterly Periods. For each quarter following the fourth
quarter of the Initial Period, GSAM would receive a quarterly fee of 7.5
basis points plus or minus 1/4 of the Performance Component multiplied by
the average net assets of the GSAM Account for the immediately preceding
12 month period, on a "rolling basis." This means that, at each quarterly
fee calculation, the Gross Total Return of the GSAM Account, the Index
Return and the average net assets of the GSAM Account for the most recent
quarter will be substituted for the corresponding values of the earliest
quarter included in the prior fee calculation.
Maximum Performance Adjusted Fee. Under the Performance Fee Amendment,
the Base Fee, as adjusted by application of the Performance Component
("Performance Adjusted Fee") is limited such that the annual advisory fee
received by GSAM will not exceed .50% of the average net assets (or 50
basis points) of the GSAM Account. Due to the performance hurdle noted
above, this maximum fee level would be attained only to the extent that
the GSAM Account outperforms the Russell 1000 Growth Index by a factor of
at least 110 basis points. The maximum payment to GSAM for any quarter
(other than the fourth quarter of the Initial Period) will be limited to
not more than .125% of the average net assets of the GSAM Account (or 12.5
basis points)
<PAGE>
<PAGE>
Minimum Contractual Fee. The minimum fee payable to GSAM with respect to
any annual period and with respect to any single quarter are also limited
under the Performance Fee Amendment. These minimum payments ("Minimum
Contractual Fee") are .10% of the average net assets of the GSAM Account
(or 10 basis points) with respect to the Initial Period and each
subsequent annual period, and .025% of such assets (or 2.5 basis points)
with respect to any single quarter. Due to the performance hurdle noted
above, this minimum fee level would be reached only in the event that
the GSAM Account underperforms the Russell 1000 Growth Index by a factor
of at least 50 basis points.
Recoupment Feature. The Performance Fee Amendment provides for a
"recoupment feature" with respect to the Initial Period. If the aggregate
of the payments to GSAM made with respect to the first four quarters
following the Effective Date exceed the Performance Adjusted Fee to which
GSAM would be entitled with respect to the Initial Period, advisory fees
payable to GSAM with respect to each succeeding quarter will be reduced
until the difference between the aggregate quarterly fees received by GSAM
with respect to the Initial Period and such Performance Adjusted Fee is
fully recouped by the GSAM Account. In accordance with the Minimum
Contractual Fee provision noted above, however, no quarterly payment to
GSAM will be less than 2.5 basis points.
Effect of the Performance Fee Amendment. As indicated above, the advisory
fee payable to GSAM at the end of each of the first three fiscal quarters
of the Initial Period would be paid at the Base Fee rate and would not be
increased or decreased to reflect the performance of the GSAM Account. At
the end of the fourth fiscal quarter following the Effective Date,
however, GSAM would be entitled to receive a Performance Adjusted Fee
based on the performance of the GSAM Account during the full twelve months
of the Initial Period. Hypothetical examples of how the Performance
Adjusted Fee would be calculated at the end of the Initial Period are set
forth in the tables below.
Hypothetical Performance Adjustment, assuming a Positive Performance
Adjustment. Table 1A below shows the manner in which the value added by
GSAM would be determined for purposes of calculating the advisory fee
payable to GSAM at the end of the Initial Period, under circumstances that
would result in a net increase in advisory fees payable to GSAM:
<PAGE>
<PAGE>
<TABLE>
Table 1A
<S> <C>
Gross Total Return of GSAM Account 11.00%
for the Initial Period
Index Return for the Initial Period 10.00%
plus performance hurdle of 30 basis point .30%
-------
10.30%
Value Added by GSAM with respect to .70%
the Initial Period
</TABLE>
Assuming the facts shown in the hypothetical example above, GSAM would
have received a quarterly base fee of .075% of the average net assets of
the GSAM Account (7.5 basis points) for each of the first three quarters
of the Initial Period. For the fourth quarter, GSAM would be entitled to
receive a Performance Adjusted Fee of 7.5 basis points of the average net
assets plus 25% of value added by GSAM during the Initial Period (25% x 70
basis points = 17.5 basis points). Thus, the payment to GSAM at the end
of the fourth quarter would be the Base Fee of .075% of the average net
assets of the GSAM Account plus a performance adjustment of .175% of such
assets, for a total payment of 25 basis points or .25% of the average net
assets of the GSAM Account. The total Performance Adjusted Fee paid to
GSAM for the Initial Period would be .475% of the average net assets of
the GSAM Account for the Initial Period.
Pro forma Expense Impact. Table 1B shows below the amount of the advisory
fee that would have been paid to GSAM had the GSAM Account outperformed
the Russell 1000 Growth Index to the extent shown in the hypothetical
example set forth in Table 1A during the fiscal year ended June 30, 1997.
Also shown is the fee that would have been payable under the flat fee
arrangement currently in effect, as well as the pro forma expense ratio of
the Growth Portfolio as a whole in both cases. Note that such pro forma
calculations assume that one-half of the Growth Portfolio's assets were
subject to the Performance Fee amendment.
<PAGE>
<PAGE>
<TABLE>
Table 1B
<S> <C>
Average net assets subject to $80,480,620
performance arrangement*
Performance Adjusted Fee to GSAM** $ 382,228
Resulting Pro forma Expense Ratio for .63%
the Total Portfolio***
Current GSAM Fee of .30% of average $241,441
net assets
Resulting Pro forma Expense Ratio for .55%
the Total Portfolio***
________________
Notes to Table
*The net assets of the Growth Portfolio as of June 30, 1997 were
$160,961,240.
** Effective annual rate of .475% of the subject assets, calculated as
shown in Table 1A.
***Figure shown includes all expenses, other than extraordinary expenses
and brokerage commissions.
</TABLE>
Hypothetical Performance Adjustment, assuming a negative Performance
Adjustment. The following table shows the manner in which the value
added by GSAM would be determined for purposes of calculating the advisory
fee payable to GSAM at the end of the Initial Period under circumstances
that would result in a net decrease in advisory fees payable to GSAM. In
this example, the hypothetical Gross Total Return of the GSAM Account is
the same as is shown in Table 1A, but the Index Return for the period is
higher than in the prior example.
<PAGE>
<PAGE>
<TABLE>
Table 2A
<S> <C>
Gross Total Return of GSAM Account 11.00%
for the Initial Period
Index Return 11.00%
plus performance hurdle of 30 basis point .30%
-------
11.30%
Total Return Added by GSAM with respect -.30%
to the Initial Period
</TABLE>
Assuming the facts shown in the hypothetical above, GSAM would have
received a quarterly payment under the Base Fee of .075% (7.5 basis
points) of the average net assets of the GSAM Account for each of the
first three quarters of the Initial Period. For the fourth quarter, GSAM
would be entitled to receive a Performance Adjusted Fee equal to .075% of
the average net assets of the GSAM Account less 25% of the shortfall in
the GSAM Account during the prior 12 month period -- in this case, 25% x
- -30 basis
points = -7.5 basis points. Thus, factoring in this downward adjustment,
the fourth quarter payment would be the Base Fee installment of .075% of
the average nets assets of the GSAM Account less the performance
adjustment of .075% of such assets, , for a total fourth quarter payment
of 0 and a Performance Adjusted Fee for the entire Initial Period of 22.5
basis points.
Giving effect to the Minimum Contractual Fee provision, however, GSAM
would actually receive a fourth quarter payment in the amount of the
Minimum Contractual Fee of .025% of the average net assets of the GSAM
Account, or 2.5 basis points. The resulting excess over the actual
Performance Adjusted Fee with respect to the Initial Period would be
recouped by the GSAM Account by reducing the fee payable to GSAM with
respect to the succeeding quarters, provided that no quarterly payment to
GSAM would be less than 2.5 basis points.
<PAGE>
<PAGE>
Pro forma Expense Impact. Table 2B below shows the amount of the advisory
fee that would have been paid to GSAM had the GSAM Account underperformed
the Russell 1000 Growth Index to the extent shown in the hypothetical
example set forth in Table 2A during the fiscal year ended June 30, 1997.
Also shown is the fee that would have been payable under the flat fee
arrangement currently in effect, as well as the pro forma expense ratio of
the Growth Portfolio as a whole in both cases. Note that such pro forma
calculations assume that one-half of the Portfolio's assets as of June 30,
1997, were subject to the Performance Fee Amendment.
<TABLE>
Table 2B
<S> <C>
Average net assets subject to $80,480,620
performance arrangement*
Performance Adjusted Fee to GSAM** $ 181,081
Resulting Pro forma Expense Ratio .48%
for the Total Portfolio
Current GSAM Fee of .30% of average $ 241,441
net assets
Resulting Pro forma Expense Ratio
for the Total Portfolio*** .55%
________________
Notes to Table
*The net assets of the Growth Portfolio as of June 30, 1997 were
$160,961,240.
** Effective annual rate of .225% of subject assets, calculated as shown
in Table 2A.
***Figure shown includes all expenses, other than extraordinary expenses
and brokerage commissions.
</TABLE>
<PAGE>
<PAGE>
Additional information regarding the expenses and fees associated with an
investment in The Growth Equity Portfolio is included in Exhibit C to
this Proxy Statement.
Factors Considered by The Board of Trustees. During the course of their
deliberations with respect to the Performance Fee Amendment, the Trustees
considered representations made by Hirtle Callaghan to the effect that, at
the Growth Portfolio's current asset levels, the fee to be paid by the
Growth Portfolio to GSAM was not competitive with fees received by GSAM
from other investment advisory clients similar to the Growth Portfolio,
the particular investment style to be followed by GSAM in managing that
portion of the Growth Portfolio's assets assigned to it, the nature and
quality of the services historically provided by that firm to its clients
and its depth and resources. The Board also considered that, as a result
of the 30 basis point performance hurdle, GSAM would earn a positive
performance adjustment only to the extent that its activities resulted in
sufficient value added to cover the scheduled Base Fee with respect to the
immediately preceding 12 month period.
The Board was also advised by counsel regarding the requirements of the
Investment Advisers Act of 1940 ("Investment Advisers Act") as they relate
to incentive compensation such as is contemplated by the Performance Fee
Amendment. The Board reviewed with counsel and management rules adopted
by the SEC under the Investment Advisers Act that contemplates that a
performance adjustment will be calculated based on the change in the net
asset value per share of the fund involved. The Board also considered the
fact that under the Performance Fee Amendment, GSAM's performance would be
measured against the gross performance achieved in that portion of the
Growth Portfolio allocated to GSAM and thus that performance compensation
calculated in the manner contemplated by the Performance Fee Amendment
might be viewed as inconsistent with the Investment Advisers Act. In
light of the foregoing, it was determined that, if approved by the
shareholders of the Growth Portfolio, the Performance Fee Amendment would
not become effective until the first calendar quarter following receipt of
assurances from the staff of the SEC that the method by which the
Performance Component is proposed to be computed will not be viewed by the
SEC staff as inconsistent with the requirements of the Investment Advisers
Act or corresponding exemptive relief.
Vote Required for Approval of Proposal II. Approval of the Performance
Fee Amendment requires the approval of a "majority of the outstanding
voting securities" of the Growth Portfolio. Under the Investment Company
Act, this term means the lesser of (i) 67% of the outstanding shares
represented at a meeting at which more than 50% of the outstanding shares
are present in person or represented by proxy, or (ii) more than 50% of
the Growth Portfolio's outstanding voting securities. If the Performance
Fee Amendment is not approved by the Growth Portfolio's shareholders at
the Special Meeting, and Proposal I is approved, the fulcrum fee
arrangement describe above will not take effect and the GSAM Agreement
will continue in effect in accordance with its terms, as described in
Proposal I.
<PAGE>
<PAGE>
PROPOSAL III: APPROVAL OF ADVISORY FEE INCREASE IN THE VALUE PORTFOLIO
Summary and Background. Since the commencement of its operations on
August 25, 1995, the Value Portfolio has retained Institutional Capital
Corporation ("ICAP") to provide portfolio management services to a
portion of the assets of the Value Portfolio. Under the terms of its
portfolio management agreement ("Agreement"), ICAP is currently entitled
to receive as compensation for its services a fee calculated at the annual
rate of .30% of the average net assets of that portion of the Value
Portfolio ("ICAP Account") from time to time allocated to ICAP by the
Board. ICAP has requested, and the Board of Trustees has approved,
subject to the approval of the shareholders of the Value Portfolio, an
increase of .05% (or 5 basis points) in the advisory fee payable to ICAP.
Under the Investment Company Act, such fee increase may not take effect
unless and until it is approved by a majority of the outstanding shares of
the Value Portfolio. A copy of the proposed amendment to the ICAP
Agreement appears as Exhibit D to this Proxy Statement. The proposal to
increase ICAP's fee is discussed below, as Proposal III.
Effect of the Proposed Fee Increase. The table below illustrates the
impact that the proposed fee increase would have had on the Value
Portfolio had it been in effect with respect to the fiscal year ended June
30, 1997.
<TABLE>
<S> <C> <C>
Net Assets of Actual Fee Paid to ICAP Pro forma Fee
ICAP Account as (calculated as .30% of (calculated as .35% of
of 6/30/97 average net assets of the average net assets of the
ICAP Account) ICAP Account)
- ------------------ -------------------------- ------------------------
$__________________ $_______________________ $______________________
</TABLE>
<PAGE>
<PAGE>
The following table provides data concerning the management fees and
expenses the would be experienced by the Value Portfolio the fiscal
year ended June 30, 1997, had the proposed increased fee been effect
during that period. Figures shown reflect expenses as currently in effect
and expenses that would be incurred if the Fee Amendment had been in
effect during that period
<TABLE>
<S> <C> <C>
Under the Current Fee If Proposed Increase is approved
Schedule
Management Fees .35% .38%
Other Expenses** .20% .20%
Total Portfolio .55% .58 %
Operating Expenses
</TABLE>
Example: The example below illustrates the expenses on a $1,000
investment, under the fees and expenses shown in the table above, assuming
(1) 5% annual return and (2) redemption at the end of each time period:
The example assumes that all dividends and distributions are reinvested
and that the percentage totals shown in Table 2: "Annual Operating
Expenses" remain the same in the years shown. The example should not be
considered a representation of future expenses and actual expenses may be
greater or less than those shown.
<TABLE>
<S> <C> <C>
Under Fee Schedule Under Increase
Currently in Effect Fee Arrangement
1 year $ 6 $ 6
3 years $ 18 $ 19
5 years $ 31 $ 32
10 years $ 69 $ 73
</TABLE>
<PAGE>
<PAGE>
Factors Considered by the Board.
At a special meeting of the Board held on November 21, 1997, the Board
considered and approved, subject to the approval of the shareholders of
the Value Portfolio, an amendment to the ICAP Agreement that would
increase from .30% of the average net assets of the ICAP Account to .35%
of the average net assets of the ICAP Account, the rate at which the
advisory fee payable to ICAP is calculated. During the course of its
deliberations, the Board reviewed the management style and performance
record of ICAP, information provided to it by ICAP regarding the
profitability of the ICAP Agreement to ICAP, as well as information
relating to the nature and quality of the services to be provided by ICAP
and the background and experience of those individuals responsible for
making day-to-day investment decisions with respect to the ICAP Account.
In particular, the Board was apprised that the rate at which the advisory fee
payable to ICAP by other registered investment companies are calculated at
a rate materially higher than that currently provided for in the ICAP
Agreement and that ICAP's performance had significantly exceeded the
benchmark S&P Index during the same period. The Board also considered the
representation of officers of Hirtle Callaghan to the effect that ICAP had
expressed the intention of terminating the ICAP Agreement if the fees
payable to it for its services to the ICAP Account were not adjusted in
the manner proposed. At its meeting, the Board was also advised by
counsel regarding its responsibilities under Section 15(c) of the
Investment Company Act and the requirements of Section 15(a) of that Act.
Information about ICAP. ICAP, the principal offices of which are located
at 225 West Wacker, Chicago, Illinois 60606, has provided investment
management services for equity assets since 1970. Investment decisions for
those assets of the Portfolio assigned to ICAP are made by a team of ICAP
investment professionals; investment decisions are made by committee and
no single individual has primary responsibility for making recommendations
to the committee. ICAP had assets of approximately $9.3 billion under
management as of August 31, 1997, of which approximately $1.7 billion
represented assets of mutual funds. For the fiscal year ended June 30,
1997, ICAP received advisory fees from the Value Portfolio in the amount
of $______.
ICAP provides investment advisory services to seven investment company
portfolios. Of these, five are managed by ICAP in a manner that is
sufficiently similar to the manner in which the ICAP Account is managed to
warrant a fee comparison. The following table sets forth certain
information about these portfolios.
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C>
Fund Assets at Advisory Fee*
October 31, 1997
[Scheduled fee on the equity
portion of assets only:]
Nuveen Growth and $ 735.4 million}
Income Stock Fund
Nuveen Balanced Stock $73.7 million } .35% on the first $500 million
and Bond Fund of average net assets;
.30% on next $500
million of such assets;and
.25% on assets over $1 billion
Nuveen Balanced Municipal $ 45.2 million}
and Stock Fund**
ICAP Discretionary $ 156.9 million} These funds are structured with
Equity Portfolio a single fee of .80% of
average net assets payable to
ICAP Equity Portfolio $ 328.8 million } ICAP,from which fee ICAP pays
all other fund expenses.
Effective advisory fee to ICAP
for the period ended December
31, 1996 was 48% of average net
assets
Notes to Table
* Figures shown do not taken into fee waivers, if any, in effect for the
companies listed.
** ICAP provides advisory services only with respect to the equity
portion of the investment portfolio of the listed company.
</TABLE>
<PAGE>
<PAGE>
Information About the ICAP Agreement. The terms and conditions set forth
in the ICAP Agreement are, in all material respects, the same as those
contained in the Prior Agreement except for the description of the
portfolio manager, the effective and termination dates, and the
modification of certain indemnification provisions included in the
ICAP Agreement. Both agreements require the portfolio manager, subject to
the overall supervision of the Board, to provide a continuous investment
program for the assets of the Value Portfolio, or that portion of such
assets as may be, from time to time, allocated to it. Under both
agreements, the named portfolio manager is responsible, among other
things, for the provision of investment research, management of all
investments and the selection of brokers and dealers through which
securities transactions are executed, as well as the maintenance of
certain records required under relevant provisions of the Investment
Company Act. The agreements each also provide that the portfolio manager
will not be liable to the Trust for any error of judgment or mistake of
law on the part of the portfolio manager for any loss sustained by the
Trust in connection with the purchase or sale of any instrument on behalf
of the Value Portfolio, except losses that may be sustained as a result
of willful misfeasance, reckless disregard of its duties, bad faith or
gross negligence on the part of the portfolio manager. Each of the
agreements also provides for its termination, at any time and without
penalty, either by the Trust or by the portfolio manager, in each case
upon sixty days' written notice, and its termination in the event of an
"assignment" as defined in the Investment Company Act. The ICAP Agreement
was approved by the Trust's initial shareholder on July 21, 1995, and was
last approved by the Trust's Board (including a majority of the Trust's
Independent Trustees) at a meeting of the Board held on May 6, 1997.
Vote Required for Approval of Proposal III. Approval of the Proposal III
requires the approval of a "majority of the outstanding voting securities"
of the Value Portfolio. Under the Investment Company Act, this term means
the lesser of (i) 67% of the outstanding shares represented at a meeting
at which more than 50% of the outstanding shares are present in person or
represented by proxy, or (ii) more than 50% of the Growth Portfolio's
outstanding voting securities. If Proposal III is not approved by the
Value Portfolio's shareholders at the Special Meeting (including any
adjournments thereof), the ICAP Agreement will continue in effect, and
ICAP will continue to be compensated at the current rate of .30% of the
average daily net assets of the ICAP Account.
<PAGE>
<PAGE>
MANAGEMENT OF THE TRUST
Information about Hirtle Callaghan. Pursuant to a written agreement
("HCCI Consulting Agreement") Hirtle Callaghan continuously monitors the
performance of various investment management organizations, including the
several portfolio managers retained by the Trust. 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. For the
fiscal year ended June 30, 1997, Hirtle Callaghan received advisory fees
from the Value Portfolio and the Growth Portfolio in the amount of
$44,605 and $ 65,417, respectively. Hirtle Callaghan's principal offices
are located at 575 East Swedesford Road, Wayne, Pennsylvania 19087. Hirtle
Callaghan was organized in 1988. A registered investment adviser under the
Investment Advisers Act, Hirtle Callaghan had, as of June 30, 1997 had
approximately $1.6 billion in assets under management. Hirtle Callaghan
is controlled by Jonathan Hirtle and Donald E. Callaghan, each of whom
also serves on the Trust's Board. Mr. Callaghan also serves as President
of the Trust. Robert J. Zion, a principal of Hirtle Callaghan, serves as
Treasurer and Vice President of the Trust. The HCCI Consulting Agreement
was approved by the Trust's initial shareholder on July 21, 1995, and was
last approved by the Trust's Board (including a majority of the Trust's
Independent Trustees) at a meeting of the Board held on May 6, 1997.
Administration, Distribution and Related Services. BISYS Fund Services,
Inc. and certain of its affiliated companies ("BISYS") currently provide
administration, transfer agency, distribution and accounting services to
the Trust pursuant to the terms of separate agreements between BISYS and
the Trust. For the administration, transfer agency and fund accounting
services it provides to the Trust, BISYS receives an omnibus fee, which
fee is computed daily and paid monthly in arrears, at an annual rate of
.10% of the aggregate average 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 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.
<PAGE>
<PAGE>
Other Matters. 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.
The table below shows the name and address of record of each person known
to the Trust to hold, as of record or beneficially, 5% or more of shares
of the Growth Portfolio as of the Record Date. Hirtle Callaghan may be
deemed to have, or share, investment and/or voting power with respect to
more than 50% of the shares of the Trust's portfolios, with respect to
which shares Hirtle Callaghan disclaims beneficial ownership.
<TABLE>
<S> <C> <C>
Name and Address of Record Holders Record Shares Record Shares
Growth Equity Value Equity
Portfolio Portfolio
Bankers Trust Company 8,906,097.093 5,753,967.748
1 Bankers Trust Plaza (76.72%) (64.63%)
New York, N.Y. 10006
PNC Bank, N.A. 757.657.023 1,079,842.742
P.O. Box 7780-1888 (6.53%) (12.13%)
Philadelphia, PA 19182
Northern Trust Company P.O. Box 92956 930,144.182 911,664.459
Chicago, IL 60675 (8.01) (10.24%)
</TABLE>
<PAGE>
<PAGE>
A properly executed and returned form of Proxy marked with an abstention
will be considered present at the Special Meeting for the purpose of
determining the existence of a quorum. If any form of proxy received by
the Trust that withholds authority to vote represents a "broker non-vote,"
shares represented by such form of proxy will not be counted for purposes
of determining whether or not a quorum is present at the Special Meeting
and will not be deemed "votes cast" with respect to any matter with
respect to which authority to vote is withheld. As used in this Proxy
Statement, "broker non-vote" means a form of proxy, executed by a broker
or other nominee, indicating that the nominee has not received
instructions from the beneficial owner or other person entitled to vote
shares on a particular matter with respect to which the broker or nominee
does not have discretionary power. Abstentions and broker non-votes will
thus not constitute a vote "for" or "against" any matter, but will have
the same effect as a negative vote with respect to matters which require
the approval of a requisite percentage of the outstanding shares of the
relevant Portfolio.
By Order of the Board of Trustees
<PAGE>
<PAGE>
Exhibit A
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 18th day of September, 1997, between Goldman Sachs
Asset Management, a separate operating division of Goldman, Sachs & Co., a
New York limited partnership, and THE HIRTLE CALLAGHAN TRUST, a Delaware
business trust ("Trust").
WHEREAS, the Trust is registered as an open-end, diversified, management
series investment company under the Investment Company Act of 1940, as
amended ("Investment Company Act"), which currently offers five series of
beneficial interests ("shares") representing interests in separate
investment portfolios, and may offer additional portfolios in the future
(each referred to hereinafter as a "Portfolio" and collectively, as the
"Portfolios"); and
WHEREAS, the Trust desires to retain the Portfolio Manager to provide a
continuous program of investment management for The Growth Equity
Portfolio of the Trust ("Portfolio") and Portfolio Manager is willing, in
accordance with the terms and conditions hereof, to provide such services
to the Trust;
NOW THEREFORE, in consideration of the promises and covenants set forth
herein and intending to be legally bound hereby, it is agreed between the
parties as follows:
1. Appointment of Portfolio Manager.
The Trust hereby retains Portfolio Manager to provide the investment
services set forth herein and Portfolio Manager agrees to accept such
appointment. In carrying out its responsibilities under this Agreement,
the Portfolio Manager shall at all times act in accordance with the
investment objectives, policies and restrictions applicable to the
Portfolio as set forth in the then current Registration Statement of the
Trust, applicable provisions of the Investment Company Act and the rules
and regulations promulgated under that Act and other applicable federal
securities laws.
<PAGE>
<PAGE>
2. Duties of Portfolio Manager.
(a) Portfolio Manager shall provide a continuous program of investment
management for that portion of the assets of the Portfolio ("Account")
that may, from time to time be allocated to it by the Trust's Board of
Trustees, in writing, by an authorized officer of the Trust. It is
understood that the Account may consist of all, a portion of or none of
the assets of the Portfolio, and that the Board of Trustees has the right
to allocate and reallocate such assets to the Account at any time, and
from time to time, upon such notice to the Portfolio Manager as may be
reasonably necessary to ensure orderly management of the Account or the
Portfolio.
(b) Subject to the general supervision of the Trust's Board of Trustees,
Portfolio Manager shall have sole investment discretion with respect to
the Account, including investment research, selection of the securities to
be purchased and sold and the portion of the Account, if any, that shall
be held uninvested, and the selection of brokers and dealers (including,
subject to Section 3 of this Agreement, Goldman Sachs & Co.,) through
which securities transactions in the Account shall be executed. The Trust
agrees that the Portfolio Manager shall manage the Account in accordance
with the objectives, policies, and limitations set forth in the Trust's
current prospectus and statement of additional information. Specifically,
and without limiting the generality of the foregoing, Portfolio Manager
agrees that it will:
(i) promptly advise the Portfolio's designated custodian bank and
administrator or accounting agent of each purchase and sale, as the case
may be, made on behalf of the Account, specifying the name and quantity of
the security purchased or sold, the unit and aggregate purchase or sale
price, commission paid, the market on which the transaction was effected,
the trade date, the settlement date, the identity of the effecting broker
or dealer and/or such other information, and in such manner, as may from
time to time be reasonably requested by the Trust;
(ii) maintain all applicable books and records with respect to the
securities transactions of the Account. Specifically, Portfolio Manager
agrees to maintain with respect to the Account those records required to
be maintained under Rule 31a-1(b)(1), (b)(5) and (b)(6) under the
Investment Company Act with respect to transactions in the Account
including, without limitation, records which reflect securities purchased
or sold in the Account, showing for each such transaction, the name and
quantity of securities, the unit and aggregate purchase or sale price,
commission paid, the market on which the transaction was effected, the
trade date, the settlement date, and the identity of the effecting broker
or dealer. Portfolio Manager will preserve such records in the manner and
for the periods prescribed by Rule 31a-2 under the Investment Company Act.
Portfolio Manager acknowledges and agrees that all such records it
maintains for the Trust are the property of the Trust and Portfolio
Manager will surrender promptly to the Trust any such records upon the
Trust's request;
<PAGE>
<PAGE>
(iii) provide, in a timely manner, such information as may be reasonably
requested by the Trust or its designated agents in connection with, among
other things, the daily computation of the Portfolio's net asset value and
net income, preparation of proxy statements or amendments to the Trust's
registration statement and monitoring investments made in the Account to
ensure compliance with the various limitations on investments applicable
to the Portfolio and to ensure that the Portfolio will continue to qualify
for the special tax treatment accorded to regulated investment companies
under Subchapter M of the Internal Revenue Code of 1986, as amended; and
(iv) render regular reports to the Trust concerning the performance by
Portfolio Manager of its responsibilities under this Agreement. In
particular, Portfolio Manager agrees that it will, at the reasonable
request of the Board of Trustees, attend meetings of the Board or its
validly constituted committees and will, in addition, make its officers
and employees available to meet with the officers and employees of the
Trust at least quarterly and at other times upon reasonable notice, to
review the investments and investment program of the Account.
3. Portfolio Transaction and Brokerage. (i) In placing orders for
portfolio securities with brokers and dealers, Portfolio Manager shall use
its best efforts to execute securities transactions on behalf of the
Account at the most favorable execution and net price available.
Portfolio Manager may, however, in its discretion, direct orders to
brokers that provide to Portfolio Manager research, analysis, advice and
similar services, and Portfolio Manager may cause the Account to pay to
those brokers a higher commission than may be charged by other brokers for
similar transactions, provided that Portfolio Manager determines in good
faith that such commission is reasonable in terms either of the particular
transaction or of the overall responsibility of the Portfolio Manager to
the Account and any other accounts with respect to which Portfolio Manager
exercises investment discretion, and provided further that the extent and
continuation of any such practice is subject to review by the Trust's
Board of Trustees. Portfolio Manager may execute any portfolio
transactions for the Trust with a broker or dealer which is an "affiliated
person" of the Trust or Portfolio Manager, including any other investment
advisory organization that may, from time to time act as a portfolio
manager for the Portfolio or any of the Trust's other Portfolios, subject
to the provisions of the Investment Company Act and the Trust=s approved
procedures. The Trust shall provide a list of such affiliated brokers and
dealers to Portfolio Manager and will immediately advise Portfolio Manager
of any changes in such list.
<PAGE>
<PAGE>
(ii) The Portfolio Manager may, on occasions when it deems the purchase
or sale of a security to be in the best interests of the Trust as well as
its other clients, aggregate, to the extent permitted by applicable laws
and rules, the securities to be sold or purchased in order to obtain the
most favorable execution and net price. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Portfolio Manager in the manner it
considers to be the most equitable and consistent with its obligations to
the Trust and to such other clients. The Portfolio Manager is not,
however, required to aggregate securities orders.
4. Expenses and Compensation.
For its services under this Agreement, Portfolio Manager shall be entitled
to receive a fee in accordance with the Schedule A of this Agreement.
5. Limitation of Liability and Indemnification.
(a) Neither the Portfolio Manager nor any person that is an "affiliated
person" of the Portfolio Manager or any of its affiliated companies
(collectively, "Associated Persons") shall be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust in
connection with the matters to which this Agreement relates including,
without limitation, losses that may be sustained in connection with the
purchase, holding, redemption or sale of any security or other investment
by the Trust except a loss resulting from willful misfeasance, bad faith
or gross negligence on the part of Portfolio Manager or such Associated
Persons in the performance of its duties or from reckless disregard by it
of its duties under this Agreement.
(b) Notwithstanding the foregoing, Portfolio Manager expressly agrees that
the Trust may rely upon written information provided by Portfolio Manager
to the Trust (including, without limitation, information contained in
Portfolio Manager's then current Form ADV) concerning the Portfolio
Manager and its Associated Persons in accordance with Section 9 of the
Agreement or otherwise in preparing the Trust's registration statement and
amendments thereto and certain periodic reports relating to the Trust and
its Portfolios that are required to be furnished to shareholders of the
Trust and/or filed with the Securities and Exchange Commission ("SEC
Filing"), provided that a copy of any such filing is provided to Portfolio
Manager at least 10 days prior to the date on which it will become
effective, in the case of a registration statement or, in the case of
proxy statements and/or shareholders report, at least 10 days prior to the
date on which such document is first distributed shareholders for the
purpose of obtaining Portfolio Manager's consent pursuant to Section (v).
<PAGE>
<PAGE>
Portfolio Manager agrees to indemnify and hold harmless the Trust and each
of its Trustees, officers and employees from any claims, liabilities and
expenses (including reasonable attorneys' fees), incurred: (i) as a result
of any untrue statement, or alleged untrue statement, of a material fact
made by Portfolio Manager in such written information; and/or (ii) as a
result of the omission, or the alleged omission, in such written
information of any material fact necessary in order to make the statements
made, in the light of the circumstances under which they are made, not
misleading ("Material Omission"), provided that the Trust has relied upon
such statement or Material Omission in preparing any SEC Filing.
Portfolio Manager shall not be required to indemnify any person under this
Section 5 to the extent that Portfolio Manager relied upon an untrue
statement or Material Omission made by an officer or Trustee of the Trust
or where such untrue statement or Material Omission was made in reliance
upon information furnished to the Portfolio Manager in writing by such
officer or Trustee, or by the Trust's custodian bank, administrator or
accounting agent.
(c) The Trust agrees to indemnify and hold harmless the Portfolio Manager
and its Associated Persons from any claims, liabilities and expenses,
including reasonable attorneys' fees, incurred as a result of any untrue
statement of a material fact which relates to information in any SEC
filing, or any omission to state in such written information a material
fact necessary to make such statements not misleading ("material
omission"), contained in any information in such SEC filings not supplied
by the Portfolio Manager pursuant to Section 5(b) hereof.
(d) The Portfolio Manager shall not be liable for (i) any acts of any
other portfolio manager to the Portfolio or the Trust with respect to the
portion of the assets of the Account not managed by the Portfolio Manager;
and (ii) acts of the Portfolio Manager which result from acts of the
Trust, including, but not limited to, a failure of the Trust to provide
accurate and current information with respect to any records maintained by
Trust or any other portfolio manager to the Portfolio. The Trust agrees
that the Portfolio Manager shall manage the Account as if it was a
separate operating series and shall comply with (a) the objectives,
policies, and limitations for the Account set forth in the Trust's current
prospectus and statement of additional information, and (b) applicable
laws and regulations (including, but not limited to, the investment
objectives, policies and restrictions applicable to the Account and
qualification of the Account as a regulated investment company under the
Internal Revenue Code of 1986, as amended) with respect to the portion of
the assets of the Account not allocated to the Portfolio Manager. In no
event shall the Portfolio Manager or its Associated Persons have any
liability arising from the conduct of the Trust and any other portfolio
manager with respect to the portion of the Portfolio's assets not
allocated to the Portfolio Manager.
<PAGE>
<PAGE>
6. Permissible Interest.
Subject to and in accordance with the Trust's Declaration of Trust and
Bylaws and corresponding governing documents of Portfolio Manager,
Trustees , officers, agents and shareholders of the Trust may have an
interest in the Portfolio Manager as officers, directors, agents and/or
shareholders or otherwise. Portfolio Manager may have similar interests
in the Trust. The effect of any such interrelationships shall be governed
by said governing documents and the provisions of the Investment Company
Act.
7. Duration, Termination and Amendments. This Agreement shall become
effective as of the date on which that certain agreement between Westfield
Capital Management Company and the Trust is terminated ("Effective Date")
and shall continue in effect thereafter, unless sooner terminated, for two
years provided that this Agreement is approved by the shareholders of the
Portfolio on or before the 120th day after such Effective Date.
Thereafter, this Agreement shall continue in effect, unless sooner
terminated, from year to year for so long as its continuance is
specifically approved, at least annually, by (i) a majority of the Board
of Trustees or the vote of the holders of a majority of the Portfolio's
outstanding voting securities; and (ii) the affirmative vote, cast in
person at a meeting called for the purpose of voting on such continuance,
of a majority of those members of the Board of Trustees ("Independent
Trustees ") who are not "interested persons" of the Trust or any
investment adviser to the Trust.
This Agreement may be terminated by the Trust or by Portfolio Manager at
any time and without penalty upon sixty days written notice to the other
party, which notice may be waived by the party entitled to it. This
Agreement may not be amended except by an instrument in writing and signed
by the party to be bound thereby provided that if the Investment Company
Act requires that such amendment be approved by the vote of the Board, the
Independent Trustees and/or the holders of the Trust's or the Portfolio's
outstanding shareholders, such approval must be obtained before any such
amendment may become effective. This Agreement shall terminate
automatically upon its assignment.
For purposes of this Agreement, the terms "majority of the outstanding
voting securities," "assignment, " "affiliated person" and "interested
person" shall have the meanings set forth in the Investment Company Act.
<PAGE>
<PAGE>
8. Confidentiality; Use of Name. (i) Portfolio Manager acknowledges and
agrees that during the course of its responsibilities hereunder, it may
have access to certain information that is proprietary to the Trust or to
one or more of the Trust's agents or service providers, and which
information has not been developed by Portfolio Manager. Portfolio
Manager agrees that Portfolio Manager, its officers and its employees
shall treat all such proprietary information as confidential and will not
use or disclose information contained in, or derived from such material
for any purpose other than in connection with the carrying out of
Portfolio Manager's responsibilities hereunder or as required by law. In
addition, Portfolio Manager shall use its best efforts to ensure that any
agent or affiliate of Portfolio Manager who may gain access to such
proprietary materials shall be made aware of the proprietary nature of
such materials and shall likewise treat such materials as confidential.
(ii) It is acknowledged and agreed that the names "Hirtle Callaghan,"
"Hirtle Callaghan Chief Investment Officers" (which is a registered
trademark of Hirtle Callaghan & Co., Inc. ("HCCI")), and derivative of
either, as well as any logo that is now or shall later become associated
with either name ("Marks") are valuable property of HCCI and that the use
of the Marks, or any one of them, by the Trust or its agents is subject to
the license granted to the Trust by HCCI. Portfolio Manager agrees that
it will not use any Mark (other than to indicate that it is acting as
Portfolio Manager to Account) without the prior written consent of the
Trust.
(iii) The Trust will not publish or distribute any information regarding
the provision of investment advisory services by the Portfolio Manager
pursuant to this Agreement. Notwithstanding the foregoing, the Trust may,
without the prior written consent of the Portfolio Manager, distribute
information regarding the provision of investment advisory services by the
Portfolio Manager (a) to the Trust's Board of Trustees, committees of the
Board and officers of the Trust; (b) to the Trust's administrator, fund
accounting agent, custodian banks, counsel and auditors; (c) to HCCI; and
(d) to persons to whom, and in documents in which, disclosure of such
information is required by law.
(iv) All information and advice by the Portfolio Manager for the Account
will be treated as confidential by the Trust and will not be disclosed
without the Portfolio Manager's prior written consent to third parties
except (a) to the Trust's Board of Trustees, committees of the Board and
officers of the Trust; (b) to the Trust's administrator, fund accounting
agent, custodian banks, counsel and auditors; (c) to HCCI; and (d) to
persons to whom, and in documents in which, disclosure of such information
is required by law.
<PAGE>
<PAGE>
(v) The Trust will not publish or use in advertising, publicity or
otherwise the name of the Portfolio Manager or any of its affiliates, or
any trade name, trademark, trade device, service mark, symbol or any
abbreviation, contraction or simulation thereof of the Portfolio Manager
or its affiliates, without the prior written consent of the Portfolio
Manager, provided, however, that this limitation does not include the
inclusion in the Trust?s registration statement of information provided to
the Trust in writing by Portfolio Manager.
(vi) The provisions of this Section 8 shall survive termination of this
Agreement.
9. Representation, Warranties and Agreements of Portfolio Manager.
Portfolio Manager represents and warrants that:
(a) It is registered as an investment adviser under the Investment
Advisers Act of 1940 ("Investment Advisers Act"), it will maintain such
registration in full force and effect and will promptly report to the
Trust the commencement of any formal proceeding that could render the
Portfolio Manager ineligible to serve as an investment adviser to a
registered investment company under Section 9 of the Investment Company
Act.
(b) It understands that, as a result of its services hereunder, certain of
its employees and officers may be deemed "access persons" with respect to
the Portfolio within the meaning of Rule 17j-1 under the Investment
Company Act and that each such access person is subject to the provisions
of the code of ethics ("Trust's Code") adopted by the Trust in compliance
with such rule. Portfolio Manager further represents that it is subject
to a written code of ethics ("Portfolio Manager's Code") complying with
the requirements of Rule 204-2(a)(12) under the Investment Advisers Act
and will provide the Trust with a copy of such code of ethics. During the
period that this Agreement is in effect, an officer or director of
Portfolio Manager shall certify to the Trust, on a quarterly basis, that
Portfolio Manager has complied with the requirements of the Portfolio
Manager's Code as it relates to the Account during the prior year; and
that either (i) that no violation of such code as it relates to the
Account occurred or (ii) if such a violation occurred, that appropriate
action was taken in response to such violation. Upon the written request
of the Trust, Portfolio Manager shall permit the Trust, or it designated
agents, to examine the reports required to be made by Portfolio Manager
under rule 17j-1(c)(1) under the Investment Company Act as it relates to
the Account. In addition, Portfolio Manager acknowledges that the Trust
may, in response to regulations or recommendations issued by the
Securities and Exchange Commission or other regulatory agencies, from time
to time, request additional information regarding the personal securities
trading of its directors, partners, officers and employees and the
policies of Portfolio Manager with regard to such trading. Portfolio
Manager agrees that it make reasonable efforts to respond to the Trust's
reasonable requests in this area.
<PAGE>
<PAGE>
(c) Upon request of the Trust, Portfolio Manager shall promptly supply the
Trust with any information concerning Portfolio Manager and its Associated
Persons that the Trust may reasonably require in connection with the
preparation of its registration statements, proxy materials, reports and
other documents required, under applicable state or Federal laws, to be
filed with state or Federal agencies or to be provided to shareholders of
the Trust.
10. Status of Portfolio Manager. The services of the Portfolio Manager
to the Trust are not to be deemed exclusive, and the Portfolio Manager is
free to render similar services to others so long as its services to the
Trust are not impaired thereby. The Portfolio Manager will be deemed to
be an independent contractor and will, unless otherwise expressly provided
or authorized, have no authority to act for or represent the Trust in any
way or otherwise be deemed an agent of the Trust.
Without limiting the foregoing, the Trust understands that the Portfolio
Manager now acts, will continue to act, or may act in the future, as
investment adviser or investment sub-adviser to fiduciary and other
managed accounts, including other investment companies and that the Trust
has no objection to the Portfolio Manager so acting, provided that the
Portfolio Manager duly performs all obligations under this Agreement. The
Trust also understands that the Portfolio Manager may give advice and take
action with respect to any of its other clients or for its own account
which may differ from the timing or nature of action taken by the
Portfolio Manager with respect to the Trust. Nothing in this Agreement
imposes upon the Portfolio Manager any obligation to purchase or sell or
to recommend for purchase or sale, with respect to the Account, any
security which the Portfolio Manager or its Associated Persons may
purchase or sell for its or their own account(s) or for the account of any
other client.
11. Delivery of Information and Reports. The Trust agrees to furnish to
the Portfolio Manager current prospectuses, statements of additional
information, proxy statements, reports of shareholders, certified copies
of financial statements, charter documents and such other information with
regard to the affairs of the Trust and Account as the Portfolio Manager
may reasonably request. The Portfolio Manager agrees to render to the
Trust such periodic and special reports regarding its activities under
this Agreement as the Trust may reasonably request. The Trust represents
that it has received Parts I and II of the Portfolio Manager's Form ADV.
<PAGE>
<PAGE>
12. Counterparts and Notice.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original. Any notice required to be given under
this Agreement shall be deemed given when received, in writing addressed
and delivered, by certified mail, by hand or via overnight delivery
service as follows:
If to the Trust:
Mr. Donald E. Callaghan, President
The Hirtle Callaghan Trust
575 East Swedesford Road
Wayne, PA 19087-1937
If to Portfolio Manager:
Goldman Sachs Asset Management
One New York Plaza
85 Broad Street,
New York, New York 10004
Attention: Howard B. Surloff, Esq.
13. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and shall be governed by the law of the state of Delaware
provided that nothing herein shall be construed as inconsistent with the
Investment Company Act or the Investment Advisers Act.
Portfolio Manager is hereby expressly put on notice of the limitations of
shareholder and Trustee liability set forth in the Declaration of Trust of
the Trust and agrees that obligations assumed by the Trust pursuant to
this Agreement shall be limited in all cases to the assets of The Growth
Equity Portfolio. Portfolio Manager further agrees that it will not seek
satisfaction of any such obligations from the shareholders or any
individual shareholder of the Trust, or from the Trustees of the Trust
or any individual Trustee of the Trust.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized as of the day and
year first written above.
ATTEST: ____________________
ATTEST: ____________________
Goldman, Sachs & Co., on behalf of Goldman Sachs Asset Management
/S___________________
By:
The Hirtle Callaghan Trust
/S____________________
By:
<PAGE>
<PAGE>
Schedule A
For its services under this Agreement, Portfolio Manager shall be entitled
to receive a fee at the annual rate of .30% of the average daily net asset
value of the Account, which fee shall be payable monthly. For the purpose
of accruing compensation, the net assets of the Account will be determined
in the manner provided in the then-current prospectus of the Trust.
Portfolio Manager shall pay all expenses incurred by GSAM in the
performance of its duties under this Agreement and shall not be required
to pay any other expenses of the Trust, including but not limited to
brokerage and transactions costs incurred by the Trust. In the event of
termination of this Agreement, all compensation due to the Portfolio
Manager through the date of termination will be calculated on a pro-rated
basis through the date of termination and paid within fifteen business
days of the date of termination.
Date: October 18, 1997
Date: October 18, 1997
Goldman, Sachs & Co., on behalf of Goldman Sachs Asset Management
/S___________________
By:
The Hirtle Callaghan Trust
/S____________________
By:
<PAGE>
<PAGE>
Exhibit B
AMENDMENT
AMENDMENT effective as of ____________, to that certain Portfolio
Management Agreement dated September 18, 1997, ("Agreement") between
Goldman Sachs Asset Management, a separate operating division of Goldman,
Sachs & Co., a New York limited partnership ("Portfolio Manager") and The
Hirtle Callaghan Trust, a Delaware business trust ("Trust").
WHEREAS, the Trust has retained the Portfolio Manager to provide to a
continuous program of investment management for a portion of the assets of
The Growth Equity Portfolio of the Trust ("Account") pursuant to the
Agreement; the Trust desires to compensate the Portfolio Manager for its
services based, in part, on the performance achieved by the Portfolio
Manager for the Account;
NOW THEREFORE, in consideration of the promises and covenants set forth
herein and intending to be legally bound hereby, it is agreed between the
parties to amend the Agreement by deleting Schedule A in its entirety and
replacing it with the following new Schedule A:
Schedule A: Performance Compensation Formula
Initial Period. Under the Performance Fee Amendment, GSAM's fee would be
adjusted to reflect the performance of the Account only after the
Performance Fee Amendment has been in effect for 12 months ("Initial
Period") following the date ("Effective Date") on which the Performance
Fee Amendment becomes effective.
For the first three quarters of the Initial Period, , GSAM shall receive a
Base Fee of .075% of the average net assets of the GSAM Account (or 7.5
basis points). For the fourth quarter of the Initial Period, GSAM shall
receive a fee equal to .075% of the average net assets of the GSAM Account
plus or minus a Performance Component multiplied by the average net assets
of the GSAM Account for the Initial Period. The Performance Component
shall be calculated by (a) computing the difference between (i) the total
return of the GSAM Account without regard to expenses incurred in the
operation of the GSAM Account ("Gross Total Return") during the Initial
Period, and (ii) the return of the Russell 1000 Growth Index ("Index
Return") during the Initial Period plus 30 basis points; and (b)
multiplying the resulting factor by 25%.
<PAGE>
<PAGE>
Subsequent Quarterly Periods. For each quarter following the fourth
quarter of the Initial Period, GSAM would receive a quarterly fee of 7.5
basis points plus or minus 1/4 of the Performance Component (calculated
in the same manner as set forth with respect to the Initial Period and set
forth above) multiplied by the average net assets of the GSAM Account for
the immediately preceding 12 month period,on a "rolling basis." This
means that, at each quarterly fee calculation, the Gross Total Return of
the GSAM Account, the Index Return and the average net assets of the GSAM
Account for the most recent quarter will be substituted for the
corresponding values of the earliest quarter included in the prior fee
calculation.
Maximum Performance Adjusted Fee. Notwithstanding the formula set forth
above, the maximum fee to which GSAM shall be entitled with respect to any
12 month period shall be .50% of the average net assets of the GSAM
Account (or 50 basis points). The maximum fee to which GSAM shall be
entitled with respect to any quarter (other than the fourth quarter of the
Initial Period) shall be .125% of the average net assets of the GSAM
Account (or 12.5 basis points). Due to the performance hurdle noted above,
this maximum fee level would be attained only to the extent that the GSAM
Account outperforms the Russell 1000 Growth Index by a factor of at least
110 basis points.
Minimum Contractual Fee. The minimum fee payable to GSAM with respect to
any annual period (including the Initial Period) shall be .10% of the
average net assets of the GSAM Account (or 10 basis points); the minimum
fee payable with respect to any single quarter shall be .025% of the
average net assets of the GSAM Accounts (or 2.5 basis points). Due to the
performance hurdle noted above, this minimum fee level would be reached
only in the event that the GSAM Account underperforms the Russell 1000
Growth Index by a factor of at least 50 basis points.
Recoupment Feature. If the aggregate of the payments to GSAM made with
respect to the first four quarters following the Effective Date exceed the
Performance Adjusted Fee to which GSAM would be entitled with respect to
the Initial Period, advisory fees payable to GSAM with respect to each
succeeding quarter will be reduced until the difference between the
aggregate quarterly fees received by GSAM with respect to the Initial
Period and such Performance Adjusted Fee is fully recouped by the GSAM
Account. In accord with the Minimum Contractual Fee provision noted
above, however, no quarterly payment to GSAM will be less than 2.5 basis
points.
<PAGE>
<PAGE>
Expenses; Effectiveness. Portfolio Manager shall pay all expenses
incurred by it in the performance of its duties under the Agreement and
shall not be required to pay any other expenses of the Trust, including
but not limited to brokerage and transactions costs incurred by the Trust.
In the event of termination of this Agreement, all compensation due to the
Portfolio Manager through the date of termination will be calculated on a
pro-rated basis through the date of termination and paid within fifteen
business days of the date of termination. This Amendment shall become
effective as of the first date written above.
Goldman, Sachs & Co., on behalf of
Goldman Sachs Asset Management
By: ______________________Date:__________
The Hirtle Callaghan Trust
on behalf of The Growth Equity Portfolio
By: ____________________Date:__________
<PAGE>
<PAGE>
Exhibit C
Comparative Annual Operating Expenses. The table and example shown below
are designed to assist investors in understanding the various costs and
expenses of investment in shares of The Growth Equity Portfolio, under the
circumstances described. Each is designed to correspond with the tables
that appear on page 2 of the prospectus for The Hirtle Callaghan Trust.
Neither should be considered a representation of past or future expenses
of performance and actual expenses may vary from year to year and may be
higher or lower than those shown.
The following table provides data concerning the Portfolio's management
fees and expenses as a percentage of average net assets for the fiscal
year ended June 30, 1997. Figures shown reflect expenses under the GSAM
Contract as currently in effect and expenses that would be incurred if the
Performance Fee Amendment had been in effect during that period, and
assuming that the Growth Portfolio outperformed the Russell 1000 Growth
Index by a factor of 1.0% (or 100 basis points) as show in Table 1B.
Figures shown reflect expenses incurred during the fiscal year ended June
30, 1997
<TABLE>
<S> <C> <C>
Under GSAM Agreement Under Performance Fee
Currently in Effect Amendment
Management Fees .35% .48%
Other Expenses** .20% .20%
Total Portfolio .55% .68%
Operating Expenses
</TABLE>
<PAGE>
<PAGE>
Example: The following illustrates the expenses on a $1,000 investment,
under the fees and expenses shown in the table above, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
<TABLE>
<S> <C> <C>
Under GSAM Agreement Under Performance
Currently in Effect Fee Amendment
1 year $ 6 $ 6
3 years $ 18 $ 20
5 years $ 31 $ 34
10 years $ 69 $ 76
</TABLE>
The preceding example assumes that all dividends and distributions are
reinvested and that the percentage totals shown in Table 2: "Annual
Operating Expenses" remain the same in the years shown. The example
should not be considered a representation of future expenses and actual
expenses may be greater or less than those shown.
Exhibit D
AMENDMENT
AMENDMENT effective as of ____________, to that certain Portfolio
Management Agreement dated August ____, 1995, ("Agreement") between
Institutional Capital Corporation ("Portfolio Manager") and The Hirtle
Callaghan Trust, a Delaware business trust ("Trust").
WHEREAS, the Trust has retained the Portfolio Manager to provide to a
continuous program of investment management for a portion of the assets of
The Value Equity Portfolio of the Trust ("Account") pursuant to the
Agreement and the parties have agreed to increase the rate at which the
advisory fee payable to the Portfolio Manager for its services is
calculated;
NOW THEREFORE, in consideration of the promises and covenants set forth
herein and intending to be legally bound hereby, it is agreed between the
parties as follows:
<PAGE>
<PAGE>
1. The Agreement shall be amended by deleting paragraph 4 of the
Agreement in its entirety and substituting there for the following:
Expenses and Compensation.
Portfolio Manager shall pay all of its expenses incurred in the
performance of its duties under this Agreement and shall not be required
to pay any other expenses of the Trust, including without limitation,
brokerage expenses. For its services under this Agreement, Portfolio
Manager shall be entitled to receive a fee at the annual rate of .35% of
the average daily net asset value of the Account, which fee shall be
payable monthly.
2. This Amendment shall become effective as of the first business day of
the month following the date on which the shareholders of The Value Equity
Portfolio this Amendment shall have been approved in accordance with the
provisions of the Investment Company Act of 1940 by the Board of Trustees
of the Trust and by the shareholders of The Value Equity Portfolio.
Institutional Capital Corporation
By: ______________________Date:__________
The Hirtle Callaghan Trust
on behalf of The Value Equity Portfolio
By: ____________________Date:__________
<PAGE>
PROXY
The Value Equity Portfolio
of
The Hirtle Callaghan Trust
Special Meeting of Shareholders
January 12, 1998
This Proxy is Solicited on Behalf of the Board of Trustees
The undersigned appoints, Donald E. Callaghan and Robert J. Zion, and
each of them, attorneys and proxies, with full power of substitution
in each, to vote and act on behalf of the undersigned at the special
meeting of shareholders of The Hirtle Callaghan Trust (the "Trust")
representing interests in the Trust's Growth Equity Portfolio at the
offices of Hirtle, Callaghan & Co., Inc., 575 East Swedesford Road.,
Wayne, PA 19087-1937 on January 12, 1998, as 10 a.m. and at all
adjournments, according to the number of shares of Common Stock which
the undersigned could vote if present, upon such subjects as may
properly come before the meeting, all as set forth in the notice of
the meeting and the proxy statement furnished therewith. Unless
otherwise marked below, this proxy is given WITH authority to vote
FOR each of the proposals noted below. The undersigned further
confers upon such attorneys and proxies discretionary authority to
vote for and in the name of the undersigned and with all of the
powers the undersigned would possess if personally present, all the
Portfolio shares of the undersigned in the Trust at said meeting.
The Board of Trustees recommends that you vote "FOR" each of the
proposals below.
(1) To approve the engagement of Goldman Sachs Asset Management
("GSAM")to provide portfolio management services to the Growth
Portfolio pursuant to a portfolio management agreement between the
Trust and GSAM ( "GSAM Agreement").
FOR AGAINST ABSTAIN
(2) To approve an amendment of the GSAM engagement pursuant to which
GSAM would be compensated on a performance fee basis
FOR AGAINST ABSTAIN
IMPORTANT: WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN.
WHEN SIGNING AS ATTORNEY OR AS EXECUTOR, ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER.
IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED
PERSON.
PLEASE SIGN, DATE, AND RETURN IN THE ADDRESSED ENVELOPE - NO POSTAGE
REQUIRED. PLEASE MAIL PROMPTLY TO SAVE THE TRUST FURTHER
SOLICITATION EXPENSE. THE RECEIPT OF THE NOTICE OF MEETING AND PROXY
STATEMENT IS ACKNOWLEDGED BY EXECUTION OF THIS PROXY.
Dated:________________, 199_
X_________________________________
Signature and Title
X_________________________________
Signature, if held jointly
Sign, Date and Return the Proxy Promptly Using the Enclosed Envelope
to:______________________
<PAGE>
PROXY
The Value Equity Portfolio
of
The Hirtle Callaghan Trust
Special Meeting of Shareholders
______________, 199_
This Proxy is Solicited on Behalf of the Board of Trustees
The undersigned appoints, Donald E. Callaghan and Robert J. Zion, and
each of them, attorneys and proxies, with full power of substitution
in each, to vote and act on behalf of the undersigned at the special
meeting of shareholders of The Hirtle Callaghan Trust (the "Trust")
representing interests in the Trust's Value Equity Portfolio at the
offices of Hirtle, Callaghan & Co., Inc., 575 East Swedesford Road.,
Wayne, PA 19087-1937 on January 12, 1998, at 10 a.m., and at all
adjournments, according to the number of shares of Common Stock which
the undersigned could vote if present, upon such subjects as may
properly come before the meeting, all as set forth in the notice of
the meeting and the proxy statement furnished therewith. Unless
otherwise marked below, this proxy is given WITH authority to vote
FOR the proposal indicated below. The undersigned further confers
upon such attorneys and proxies discretionary authority to vote for
and in the name of the undersigned and with all of the powers the
undersigned would possess if personally present, all the Portfolio
shares of the undersigned in the Trust at said meeting. The Board of
Trustees recommends that you vote "FOR" each of the proposals below.
(1) To approve an amendment to the Portfolio Management Agreement
between the Trust and Institutional Capital Corporation ("ICAP")
relating to The Value Equity Portfolio, which amendment will increase
the fee to which ICAP is entitled for its services to The Value
Equity Portfolio.
FOR AGAINST ABSTAIN
IMPORTANT: WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN.
WHEN SIGNING AS ATTORNEY OR AS EXECUTOR, ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER.
IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED
PERSON.
PLEASE SIGN, DATE, AND RETURN IN THE ADDRESSED ENVELOPE - NO POSTAGE
REQUIRED. PLEASE MAIL PROMPTLY TO SAVE THE TRUST FURTHER
SOLICITATION EXPENSE. THE RECEIPT OF THE NOTICE OF MEETING AND PROXY
STATEMENT IS ACKNOWLEDGED BY EXECUTION OF THIS PROXY.
Dated:________________, 199_
X_________________________________
Signature and Title
X_________________________________
Signature, if held jointly
Sign, Date and Return the Proxy Promptly Using the Enclosed Envelope
to:______________________
