Filed with the Securities and Exchange Commission on April 27, 1998
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:
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THE HIRTLE CALLAGHAN TRUST
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
of
THE SMALL CAPITALIZATION EQUITY PORTFOLIO
To be held on June 15, 1998
TO THE SHAREHOLDERS:
A Special Meeting of shareholders of The Small Capitalization Equity
Portfolio ("Small Cap Portfolio") of The Hirtle Callaghan Trust (the
"Trust") will be held on June 15, 1998, at the Trust's principal
office, located at 575 East Swedesford Road, Wayne, PA 19087-1613, at
10:00 a.m. At the Special Meeting, shareholders of the Small Cap
Portfolio will be asked:
(1) To approve the engagement of Geewax, Terker & Company
("Geewax") to provide portfolio management services to the
Small Cap Portfolio pursuant to a portfolio management
agreement between the Trust and Geewax ( "Geewax Agreement").
(2) To transact such further business as may properly come
before the meeting or any adjournment thereof.
Shareholders of record of the Small Cap Portfolio at the close of
business on March 31, 1998 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
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THE HIRTLE CALLAGHAN TRUST
575 East Swedesford Road.
Wayne, PA 19087-1613
PROXY STATEMENT
The enclosed form of Proxy is solicited by the Board of Trustees (the
"Board") of The Hirtle Callaghan Trust (the "Trust"), with respect to
The Small Capitalization Equity Portfolio (the "Small Cap
Portfolio"). Proxies so solicited are intended for use at a special
meeting of shareholders of the Small Cap Portfolio or any adjournment
of that meeting (the "Special Meeting"), to be held on June 15, 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
("Proposal"). It is anticipated that this Proxy Statement and form of
proxy will first be mailed to shareholders on or about May 5,1998.
Only persons who were shareholders of record of at least one of the
Portfolios as of March 31, 1998 ("Record Date") are entitled to
notice of the Special Meeting.
Persons who were shareholders of record of the Small Cap Portfolio on
the Record Date are entitled to vote at the Special Meeting with
regard to Proposal 1, relating to the investment advisory
arrangements with Geewax Terker & Company ("Geewax") relating to the
Small Cap Portfolio. On the Record Date, the Small Cap Portfolio had
outstanding 10,869,808 shares, each share being entitled to one vote.
The presence of the holders of 40% of the outstanding shares of the
Small Cap 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 with respect to the Small Cap
Portfolio. Persons and groups known by management to own
beneficially 5% or more of the shares of the Small Cap Portfolio are
listed in this Proxy Statement under the heading "Information about
the Trust."
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 Proposal. If the votes required to approve the Proposal 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 and Semi-Annual reports to
Shareholders, dated June 30, 1997 and December 31, 1997,
respectively, 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.
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INTRODUCTION
Summary of Proposals relating to the Small Cap Portfolio. Since the
Small Cap Portfolio commenced operations on September 5, 1995, until
March 30, 1998, Clover Capital Management, Inc. (hereinafter,
"Clover" or the "Prior Manager") served, pursuant to the terms of a
separate agreement ("Prior Agreement"), as the investment advisory
organization retained by the Trust to provide portfolio management
services for the Small Cap Portfolio. As more fully described below,
the Board determined that it would be in the best interests of the
Small Cap Portfolio to replace the Prior Manager with another
investment management organization. Accordingly, at a meeting of the
Board held on March 18, 1998, the Board approved the termination of
the Prior Agreement and the engagement of Geewax under an agreement
between Geewax and the Trust ("Geewax Agreement").
The provisions of the Geewax Agreement are substantially the same as
those of the Prior Agreement, except that Geewax is compensated for
providing portfolio management services to the Small Cap Portfolio at
the rate of .30 of 1% of the average net assets of that portion of
the Small Cap Portfolio as may, from time to time, be allocated to
Geewax by the Board. This rate is lower than the rate at which the
Prior Manager was compensated for its services. The Geewax Agreement
became effective on April 1, 1998, and the Prior Agreement
terminated, as of the close of business on March 31, 1998. A copy of
the Geewax Agreement appears as Exhibit A to this Proxy Statement.
Under the Investment Company Act of 1940 ("Investment Company Act"),
if shareholder approval of the Geewax Agreement is not obtained
within 120 days of the date on which the Geewax Agreement became
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.
Approval of the Geewax Agreement requires the approval of a "majority
of the outstanding voting securities" of the Small Cap 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 Small Cap
Portfolio's outstanding voting securities. If the Geewax Agreement
is not approved by the Small Cap Portfolio's shareholders at the
Special Meeting (including any adjournments thereof), that agreement
will terminate.
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL I.
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PROPOSAL I: Approval of the Geewax Agreement
Summary and Background. The investment objective of this Portfolio
is to provide long term capital appreciation by investing primarily
in equity securities of smaller companies. Companies in which the
Portfolio may invest are those which, in the view of one or more of
the Portfolio's Investment Managers, have demonstrated, or have the
potential for, strong capital appreciation potential due to their
relative market position, anticipated earnings, changes in management
or other factors. Under normal market conditions, at least 65% of
the Portfolio's total assets will be invested in equity securities of
companies with capitalizations of less than $1.0 billion at the time
of purchase; up to 35% of the Portfolio's assets may be invested in
the equity securities of companies with larger capitalizations. When
it commenced operations in September, 1995, the Small Cap Portfolio
was served by two separate investment management organizations:
Frontier Capital Management Company ("Frontier") and Clover Capital
Management Incorporated ("Clover"). Although investment managers are
each required to adhere to the Small Cap 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 Small Capitalization Equity Portfolio, as well as the
performance of those investment advisory organizations retained by
the Trust to provide portfolio management services to the
portfolios.
The investment results achieved by the Clover portion of the Small
Cap Portfolio allocated to have, since its retention by the Trust at
the commencement of the Trust's operations in 1995, lagged the
Russell 2000 Value Index. In addition, the average market
capitalization of the securities held in the Clover portion of the
Portfolio was consistently higher than desirable in Hirtle
Callaghan's judgment. After conducting an extensive manager search,
Hirtle Callaghan recommended to the Board that Geewax be retained to
replace Clover. This recommendation was approved at a meeting of the
Board held on March 18, 1998. At that meeting, the Board, including
a majority of those Trustees ("Independent Trustees") who are not
"interested persons" of the Trust within the meaning of the
Investment Company Act, also approved the Geewax Agreement.
Pro forma Expense Impact and Comparative Annual Operating Expenses.
Had the Geewax Agreement been in effect during the fiscal year ended
June 30, 1997, the advisory fee that would have been paid to Geewax
and the pro forma expense ratio of the Small Cap Portfolio overall
would have been as set forth in Table 1 below. Table 2, and the
example following it are designed to assist investors in
understanding the various costs and expenses of investment in shares
of the Small Cap Portfolio under the terms of the Geewax Agreement.
The table and accompanying example are 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.
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Table 1*
Advisory Fee Expense Ratio
_____________________________________________________________________
___
Fees Paid and Expenses Incurred
under Prior Agreement during the $ 414,110 .78%
Fiscal Year ended June 30, 1997
Pro Forma Fees (Expenses) that would
have been paid (or Accrued) had the $ 352,168 .66%
Geewax Agreement been in effect during
the Fiscal Year ended June 30, 1997
__________
*Assets of the Small Cap Portfolio as of June 30, 1997 were
$113,479,528.
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 Prior Agreement and expenses that would have been
incurred if the Geewax Agreement had been in effect during that
period. Figures shown reflect expenses incurred during the fiscal
year ended June 30, 1997
Table 2
Under Prior Agreement Under Geewax Agreement
Management Fees .50% .44%
Other Expenses* .28% .23%
Total Portfolio
Operating Expenses .78% .67%
_____________
* The caption "Other Expenses" does not include
extraordinary expenses as determined by the use of
generally accepted accounting principles.
Example: The following illustrates the expenses on a $1,000
investment, under the fees and expenses shown for the Geewax
Agreement in the table above, assuming (1) 5% annual return and (2)
redemption at the end of each time period:
Under Geewax Agreement Under Prior Agreement
1 Year $ 7 $ 8
3 Years $21 $25
5 Years $37 $43
10 Years $83 $97
The preceding example assumes that all dividends and distributions
are reinvested and that the percentage totals shown in Table 2: "
Total 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.
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Factors Considered by the Board of Trustees. During the course of
its deliberations, the Board considered the recommendations and
investment analysis of Hirtle Callaghan. The Board also discussed
information provided to it relating to the management style and past
performance record of Geewax, as well as information relating to the
nature and quality of the services to be provided by Geewax and the
background and experience of those individuals who would be
responsible for making day-to-day investment decisions with respect
to assets of the Small Cap Portfolio, as well as the experience of
the firm as a whole in rendering investment advisory services to
other registered investment companies. The Board also considered the
fact that the terms and conditions set forth in the Geewax Agreement
are substantially the same as those contained in the Prior Agreement
and, in particular, that the advisory fee to be paid to Geewax is
approximately 30% lower than the fee paid to Clover under the Prior
Agreement.
The Board was also advised 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.
Comparison of the Geewax Agreement and Prior Agreements. The terms
and conditions set forth in the Geewax 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 those provisions, noted below, relating to the
rate at which the advisory fee will be computed and indemnification
of the Trust.
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 Small Cap 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 Small Cap 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.
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The Geewax Agreement differs from the Prior Agreement as follows:
Under the Prior Agreement, the Prior Manager was compensated for its
services at the rate of .45 of 1% of the average net assets of that
portion of the Small Cap Portfolio allocated to it. Under the Geewax
Agreement, Geewax is compensated at the rate of .30 of 1% of the
average net assets of that portion of the Small Cap Portfolio
allocated to it. The Prior Agreement provides that the Prior Manager
will indemnify the Trust with respect to any information provided to
the Trust by the Prior Manager in writing and included in document
filed with the Securities and Exchange Commission ("SEC"). The
Geewax Agreement provides that the indemnification obligation of the
portfolio manager with respect to information provided to the Trust
by Geewax and included in such documents shall not apply unless
Geewax 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 SEC and unless the portfolio manager is notified in writing
of any claim for indemnification within specified periods.
The Geewax Agreement became effective on April 1, 1998, 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 Geewax Agreement is approved by the
shareholders of the Small Cap Portfolio within 120 days of such
effective date. Thereafter, the Geewax 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 Small Cap
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.
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. During the
six month period ended December 31, 1997 and the fiscal year ended
June 30, 1997, Clover received from the Small Cap Portfolio
investment advisory fees of $138,823 and $185,827, respectively, in
accordance with the Prior Agreement.
Information about Geewax. Geewax is a Pennsylvania general
partnership whose general partners are John J. Geewax and Bruce
Terker. The firm's 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.
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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 six month period ended
December 31, 1997 and the fiscal year ended June 30, 1997, Hirtle
Callaghan received advisory the Small Cap Portfolio in the amount of
$ 33,278 and $ 41,020, 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 March 31, 1998, had approximately $1.9 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.
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 Small Cap 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.
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Name and Address of Record Holders of
The Small Capitalization Equity Portfolio
Bankers Trust Company 8,913,569 (82.01%)
1 Bankers Trust Plaza
New York, N.Y. 10006
PNC Bank, N.A. -- 677,476 (6.24%)
P.O. Box 7780-1888
Philadelphia, PA 19182
Northern Trust Company 680,804 (6.27%)
P.O. Box 92956
Chicago, IL 60675
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
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Exhibit A
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 1st day of April, 1998, between Geewax, Terker &
Co., a Pennsylvania partnership ("Portfolio Manager") 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
seven series of beneficial interests ("shares") representing
interests in separate investment portfolios,
and may offer additional portfolios in the future; and
WHEREAS, the Trust desires to retain the Portfolio Manager to provide
a continuous program of investment management for The Small
Capitalization 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.
(a) 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.
(b) The Trust further agrees that it will provide to Portfolio
Manager a copy of the agreement between the Trust's custodian bank
and the Trust and will take such actions as may be necessary to
assure that such custodian bank will accept instruction from the
Portfolio Manager with respect to 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.
2. Duties of Portfolio Manager.
(a) Portfolio Manager shall provide a continuous program of
investment management for the Account. 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, in the view of the Trust, 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 through which securities transactions in the
Account shall be executed. Portfolio Manager shall also be
responsible for voting all proxies received on behalf of those
securities held in the Account. 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 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;
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(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
companiesunder Subchapter M of the Internal Revenue Code of 1986, as
amended; and
(iv) render regular reports to the Trust concerning the performance
of Porfolio 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. 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 in such a manner that the total cost or
proceeds in each transaction is the most favorable under the
circumstances. 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 shall not 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, without prior written approval of the Trust. The
Trust shall provide a list of such affiliated brokers and dealers to
Portfolio Manager and will promptly advise Portfolio Manager of any
changes in such list.
4. 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. 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.
5. Limitation of Liability and Indemnification.
(a) Portfolio Manager shall not 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 in the performance of its duties or from reckless disregard
by it of its duties under this Agreement.
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(b) Notwithstanding the foregoing, Portfolio Manager expressly agrees
that the Trust may rely upon information provided, in writing, by
Portfolio Manager to the Trust (including, without limitation,
information contained in Portfolio Manager's then current Form ADV)
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 Filings"),
provided that a copy of any such filing is provided to Portfolio
Manager (i) at least 10 business days prior to the date on which it
will become effective, in the case of a registration statement; (ii)
at least 10 business days prior to the date upon which it is filed
with the SEC in the case of the Trust's semi-annual report on Form
N-SAR or any shareholder report or proxy statement.
(c) 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,
(collectively, "Losses") to the extent that Losses are incurred as a
result of statements contained in an SEC Filing ("Disputed
Statements") that are misleading either because they are (i) untrue
statements of material fact; or (ii) omitted to state any material
fact necessary in order to make the statements made, in the light of
the circumstances under which they are made, not misleading. For
purposes of the indemnification obligation set forth in this Section
5(c), a Disputed Statement will be deemed misleading if so declared
by a decision of a court or administrative law judge or in an order
of settlement issued by any court or administrative body.
(d) Portfolio Manager further agrees to indemnify and hold harmless
the Trust and each of its Trustees, from any Losses to the extent
that such Losses are incurred as a result of Disputed Statements that
are alleged (i) to be untrue statements of material fact; or (ii) to
have omitted to state any material fact necessary in order to make
the statements made, in the light of the circumstances under which
they are made, provided that the indemnification obligation set forth
in this Section 5(d) is expressly limited to Losses arising from
Disputed Statements that accurately reflect information provided to
the Trust in writing by the Portfolio Manager and that cannot be
independently verified by the Trust. Further, the indemnification
set forth in this Section 5(d) will not require reimbursement of fees
or expenses other than those incurred by the Trust's regular counsel
in connection with such counsel's representation of the Trust or its
Trustees.
(e) The indemnification obligations set forth in Sections 5(c) and
(d) shall not apply unless (i) Disputed Statements accurately
reflect information provided to the Trust in writing by the Portfolio
Manager; (ii) Disputed Statements were included in an SEC Filing in
reliance upon written information provided to the Trust by the
Portfolio Manager; (iii) the Portfolio Manager was afforded the
opportunity to review Disputed Statements in connection with the 10
business day review requirement set forth in Section 5(b) above; an
(iv) upon receipt by the Trust of any notice of the commencement of
any action or the assertion of any claim to which the indemnification
obligations set forth in Section 5(c) and (d) may apply, the Trust
notifies the Portfoio Manager, within 30 days and in writing, of such
receipt and provides to Portfolio Manager the opportunity to
participate in the defense and/or settlement of any such action or
claim. Further, Portfolio Manager will not be required to indemnify
any person under this Section 5 to the extent that Portfolio Manager
relied upon statements or information furnished to the Portfolio
Manager, in writing, by any officer, employee or Trustee of the
Trust, or by the Trust's Custodian, Administrator or Accounting Agent
or any other agent of the Trust, in preparing written information
provided to the Trust and upon which the Trust relied in preparing
any Disputed Statement.
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6. Permissible Interest.
Subject to and in accordance with the Trust's Declaration of Trust
and By-laws 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 first written
above and shall continue in effect for two years, provided that this
Agreement shall terminate automatically if not approved by the
holders of a majority of the outstanding voting securities of the
Portfolio on or before the 120th day following such effective date.
Thereafter, this 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 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 upon its assignment.
For purposes of this Agreement, the terms "majority of the
outstanding voting securities, "assignment" and "interested person"
shall have the meanings set forth in the Investment Company Act.
8. Confidentiality; Use of Name.
Portfolio Manager and the Trust acknowledge and agree that during the
term of this Agreement the parties may have access to certain
information that is proprietary to the Trust or Portfolio Manager,
respectively (or to their affiliates and/or service providers). The
parties agree that their respective officers and 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 their responsibilities under this Agreement and the management
of the Trust's assets, provided, however, that this shall not apply
in the case of (i) information that is publicly available; and (ii)
disclosures required by law or requested by any regulatory authority
that may have jurisdiction over Portfolio Manager or the Trust, as
the case may be, in which case such party shall request such
confidential treatment of such information as may be reasonably
available. In addition, each party shall use its best efforts to
ensure that its agents or affiliates who may gain access to such
proprietary information shall be made aware of the proprietary nature
and shall likewise treat such materials as confidential.
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<PAGE>
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 without the
prior written consent of the Trust. Portfolio Manager consents to
use of its name, performance data, biographical data and other
pertinent data by the Trust for use in marketing and sales
literature, provided that any such marketing and sales literature
shall not be used by the Trust without the prior written consent of
Portfolio Manager, which consent shall not be unreasonably withheld.
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"
of the Trust 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
during the prior year; and that either (i) that no violation of such
code occurred or (ii) if such a violation occurred, that appropriate
action was taken in response to such violation. 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 every effort to respond to the Trust's reasonable
requests in this area.
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(c) Upon request of the Trust, Portfolio Manager shall promptly
supply the Trust with any information concerning Portfolio Manager
and its stockholders, employees and affiliates 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.
(d) The Portfolio Manager shall promptly notify the Trust, in
writing, of any material change in the senior management or the
identity of the Portfolio Manager' partners and of any change in the
identity of those individuals within the Portfolio Manager's
organization who are responsible for making investment decisions on
behalf of the Account. Portfolio Manager shall also promptly notify
the Trust of any material change in the nature of Portfolio Manager's
principal business activities.
10. Status of Portfolio Manager.
The Trust and Portfolio Manager acknowledge and agree that the
relationship between Portfolio Manager and the Trust is that of an
independent contractor and under no circumstances shall any employee
of Portfolio Manager be deemed an employee of the Trust or any other
organization that the Trust may, from time to time, engage to provide
services to the Trust, its Portfolios or its shareholders. The
parties also acknowledge and agree that nothing in this Agreement
shall be construed to restrict the right of Portfolio Manager or its
affiliates to perform investment management or other services to any
person or entity, including without limitation, other investment
companies and persons who may retain Portfolio Manager to provide
investment management services and the performance of such services
shall not be deemed to violate or give rise to any duty or
obligations to the Trust. It is further acknowledged and agreed that
Portfolio Manager may give advice, exercise investment discretion and
take other action with respect to the accounts of such persons or
entities which may differ from the advice given or the timing or
nature of action taken with respect to the Account, provided that
Portfolio Manager acts in a manner that is consistent with its
fiduciary duties under Section 206 of the Investment Advisers Act and
the standard set forth in Section 5(a) of this Agreement.
11. 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:
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If to the Trust:
Mr. Donald E. Callaghan, President
The Hirtle Callaghan Trust
575 East Swedesford Road
Wayne, PA 19087
If to Portfolio Manager:
John Geewax
Geewax Terker & Co.
99 Starr Street
Phoenixville, PA 19460
12. 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 Limited Duration Municipal Bond 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.
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.
/s
Geewax, Terker & Co.
s/
The Hirtle Callaghan Trust
(on behalf of The Small Capitalization Equity Portfolio)
<PAGE>
<PAGE>
Form of PROXY
The Small Capitalization Equity Portfolio of
The Hirtle Callaghan Trust
Special Meeting of Shareholders
June 15, 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 Small Capitalization
Equity Portfolio at the offices of Hirtle, Callaghan & Co., Inc.,
575 East Swedesford Road., Wayne, PA 19087-1937 on
June 15, 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 a Portfolio Management Agreement
between the Trust and Geewax, Terker & Co. relating to The
Small Capitalization 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:______________________
