Filing pursuant to Rule 497(d) for The Hirtle Callaghan Trust
1933 Act File No. 33-87762
1940 Act File No. 811-8918
Supplement of March 19, 1998
Supplementing the Prospectus of
The Hirtle Callaghan Trust
dated September 15, 1997
The Small Capitalization Equity Portfolio: Advisory Arrangements.
At a Special Meeting of the Board of Trustees ("Board") held on March 18,
1998, the Board approved the engagement of Geewax, Terker & Co. ("Geewax") to
serve as an Investment Manager for The Small Capitalizaton Equity Portfolio.
Geewax will replace Clover Capital Management, Inc. ("Prior Manager"). Geewax
will serve pursuant to the terms of a portfolio management agreement ("Geewax
Agreement"), which is substantially the same as the corresponding agreement
between the Trust and the Prior Manager except that the fee payable to Geewax
will be calculated at the rate of .30 of 1% of that portion ("Geewax
Account") of the assets of The Small Capitalization Equity Portfolio that may
be, from time to time, allocated to Geewax by the Board. The fee payable to
the Prior Manager is calculated at the rate of .45 of 1% of that portion of
the assets of The Small Capitalization Equity Portfolio allocated to it.
Geewax is expected to assume portfolio management responsibilities for the
Geewax Account on April 1, 1998.
Shareholders of The Small Capitalization Equity Portfolio will be asked to
approve the Geewax Agreement at a Special Meeting of Shareholders of that
Portfolio on or before June 15, 1998. Under the Investment Company Act of
1940 (AInvestment Company Act@), if shareholder approval of the Geewax
Agreement is not obtained within 120 days of the date on which the Geewax
Agreement becomes effective, the Geewax Agreement will terminate. If the
Geewax Agreement is approved by the shareholders of the Small Cap Portfolio,
however, the Geewax Agreement will remain in force until April 1, 2000. The
Geewax Agreement 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.
Geewax is a Pennsylvania general partnership whose general partners are John
J. Geewax and Bruce Terker. The firm=s the principal offices are located 99
Starr Street, Phoenixville, Pennsylvania 19460. As of February 28, 1998,
Geewax, managed total assets of approximately $ 2.8 billion, of which $288
million are assets of registered investment companies. Such investment
companies invest primarily in equity securities but have investment policies
and strategies that are different from those of the Small Cap Portfolio. John
Geewax will be primarily responsible for providing day-to-day investment
decisions for the Geewax Account. Mr. Geewax has been a general partner of
Geewax, Terker & Co., since its founding in 1982.
The Growth Equity Portfolio: Investment Advisory Arrangements.
Pursuant to the terms of an Investment Management Agreement ("GSAM Agreement")
approved by the by the Board at its meeting held on September 12, 1997,
Goldman Sachs Asset Management ("GSAM") commenced serving as an Investment
Manager for The Growth Equity Portfolio on October 1, 1997. For its services
under its agreement with the Trust ("GSAM Agreement"), GSAM will receive a
fee, based on the average daily net asset value of that portion of the
Portfolio's assets managed by it, at an annual rate of 0.30%. The GSAM
Agreement is subject to approval by the shareholders of The Growth Equity
Portfolio, which approval must be obtained within 120 days of the effective
date of the GSAM Agreement.
At its meetings held on September 12, 1997, and on November 4, 1997, the
Board also conditionally approved an amendment to the GSAM Agreement
("Performance Fee Amendment"). Under the Performance Fee Amendment, GSAM would
be compensated based, in part, on the investment results achieved by it.
Under the amendment, Portfolio Manager will receive a fee, payable quarterly,
at the annual rate of .30% of the average daily net asset value of the
Account, ("Base Fee"). After an initial one year period, the Base Fee would
be increased or decreased at an annual rate of 25% of the net value added by
GSAM over the total return of the Russell 1000 Growth Index during the 12
months immediately preceding the calculation date. GSAM's total compensation
under the Amended Agreement would not exceed 50 basis points with respect to
any 12 month period; the minimum annual fee that would be payable to GSAM
under the amended agreement is 10 basis points. The Performance Fee Amendment
will not become effective unless such amendment is approved by the
shareholders of The Growth Equity Portfolio. In addition, the Performance Fee
Amendment will not take effect unless and until certain relief is obtained
from the Securities and Exchange Commission ("SEC") from certain rules adopted
by the SEC. The relief sought would permit the proposed performance
compensation to be based on the gross performance of that portion of the
Portfolio's assets assigned by the Board to GSAM. There can be no assurance
that the SEC will grant such relief.
As of August 31, 1997, GSAM, together with its affiliates, managed total
assets of in excess of $124.1 billion. Robert C. Jones, Victor Pinter and
Kent Clark will be responsible for making day-to-day investment decisions for
that portion of The Growth Equity Portfolio allocated to GSAM. Mr. Jones, a
chartered financial analyst and Managing Director of GSAM has been a officer
and investment professional with GSAM since 1989. Mr. Pinter, Vice President
joined GSAM in 1990. Mr. Clark, a Vice President of GSAM, joined the firm in
1992; prior to 1992, he was studying for a Ph.D. in finance at the University
of Chicago. GSAM, the principal offices of which are located at One New York
Plaza, New York, New York, 10004, is a separate operating division of Goldman,
Sachs & Co.
The Growth Equity Portfolio: Investment Practices.
The Growth Equity Portfolio may also invest in certain instruments known as
Standard & Poor's Depositary Receipts or "SPDRs" as part of its overall
hedging strategies. Such strategies are designed to reduce certain risks that
would otherwise be associated with the investments in the types of securities
in which the Portfolio invests and/or in anticipation of future purchases,
including to achieve market exposure pending investment, provided that the use
of such strategies are not for speculative purposes and are otherwise
consistent with the investment policies and restrictions adopted by the
Portfolio.
SPDRs are interests in a unit investment trust ("UIT") that may be obtained
from the UIT or purchased in the secondary market (SPDRs are listed on the
American Stock Exchange). The UIT will issue SPDRs in aggregations known as
"Creation Units" in exchange for a "Portfolio Deposit" consisting of (a) a
portfolio of securities substantially similar to the component securities
("Index Securities") of the Standard & Poor's 500 Composite Stock Price Index
(the "S&P Index"), (b) a cash payment equal to a pro rata portion of the
dividends accrued on the UIT's portfolio securities since the last dividend
payment by the UIT, net of expenses and liabilities, and (c) a cash payment or
credit ("Balancing Amount") designed to equalize the net asset value of the
S&P Index and the net asset value of a Portfolio Deposit.
SPDRs are not individually redeemable, except upon termination of the UIT. To
redeem, the Portfolio must accumulate enough SPDRs to reconstitute a Creation
Unit. The liquidity of small holdings of SPDRs, therefore, will depend upon
the existence of a secondary market. Upon redemption of a Creation Unit, the
Portfolio will receive Index Securities and cash identical to the Portfolio
Deposit required of an investor wishing to purchase a Creation Unit that day.
The price of SPDRs is derived from and based upon the securities held by the
UIT. Accordingly, the level of risk involved in the purchase or sale of a
SPDR is similar to the risk involved in the purchase or sale of traditional
common stock, with the exception that the pricing mechanism for SPDRs is based
on a basket of stocks. Disruptions in the markets for the securities
underlying SPDRs purchased or sold by the Funds could result in losses on
SPDRs. Trading in SPDRs involves risks similar to those risks involved in the
writing of options on securities.
The Value Equity Portfolio: Investment Advisory Arrangements.
At a special meeting of the Board of Trustees held on November 21, 1997, the
Board conditionally approved an amendment to the Portfolio Management
Agreement between the Trust and Institutional Capital Corporation ("ICAP").
Pursuant to the amendment, the fee payable to ICAP by The Value Equity
Portfolio would, if approved by shareholders of that portfolio, be increased
from .30% of the average net assets of that portion of the Portfolio managed
by ICAP to .35% of such assets. The amendment will not be approved unless and
until it is approved by the shareholder of The Value Equity Portfolio. It is
currently anticipated that a meeting of the Portfolio's shareholders will be
held for the purpose of considering the amendment to the ICAP Agreement on or
before January 12, 1998.
Administration, Distribution and Related Services.
At its meeting held on September 12, 1997, the Board also approved amendments
to those agreements pursuant to which BISYS Fund Services, Inc. and certain
of its affiliated companies ("BISYS") provide administration, transfer
agency, accounting and distribution services to the Trust. At present, BISYS
is compensated for its services under those agreements based on separate fee
schedules. Effective October 1, 1997, the Trust will be provided with
administration, transfer agency and fund accounting services for an
all-inclusive fee payable. ("Omnibus Fee"). The Omnibus Fee is to be computed
daily and paid monthly in arrears, at an annual rate of .10% of the aggregate
average daily net assets of the Value Equity, Growth Equity, Small
Capitalization Equity and International Equity Portfolios and of any
additional portfolios that invest primarily in equity securities that may be
created by the Trust in the future, and .08% of the aggregate average daily
net assets of the Limited Duration Municipal Bond Portfolio and of any
additional portfolios that invest primarily in debt securities that may be
created in the future by the Trust.
The date of this Supplement is March 19, 1998
