be responsible only for theday-to-day investment decisions for that portion of the assets of the PortfolioAffected Portfolios allocated to them. Moreover, the Board was informed that neither Mellon Capital nor SeixCupps would not participate in the administration or distribution of shares of the any Trust portfolioPortfolio and would receive limited, if any, benefit from theirits association with the PortfolioAffected Portfolios or the Trust other than investment advisory fees received. The Board reviewed the portfolio management services expected to be provided by Mellon Capital and Seix, respectively,Cupps referencing the expected investment style, the experience of the personnel expected to be assigned to the PortfolioAffected Portfolios and the past performance of these organizationsorganization including, as applicable, peer group comparisons and comparisons with such advisers’Cupps’ other similarly-managed accounts.
The Board also determined that the compensation to which Mellon Capital and SeixCupps would be entitled under the Proposed Agreementsproposed agreements was reasonable. In reaching this conclusion, the Board had before it certain information with respect to the costs incurred, by each of these organizations, information relating to their projectedCupps profitability, and the fees charged by these organizationsCupps to other investment company and institutional clients with investment objectives similar to the Portfolio.Affected Portfolios. The Board did not specifically rely on such information, however, but instead gave substantial weight to information demonstrating that the fee rates established in the Proposed Agreementsproposed agreements had been determined as a result of arms-length negotiations conducted by officers of the Trust and the Adviser. In presenting the proposed agreements with Cupps, the Adviser recognized that the services of fundamental managers in the small capitalization asset class, such as Cupps, tend to be more expensive than those of managers in other equity asset classes and those using a quantitative style. The Board considered this, as well as the fact that implementing both of the proposed engagements would likely increase the overall advisory fees paid by the Affected Portfolios. The Board concluded, however, that the Adviser’s view that the potential benefits to the Affected Portfolios would likely outweigh any fee increase was reasonable. The Board also recognized that the overall levels of advisory fees experienced by the Portfolioany Affected Portfolios would depend upon the manner in which the assets of thean Affected Portfolio are allocated among its Specialist Managers.
Subject to the approval of the shareholders of the Affected Portfolio, the Board approved the Proposed Agreementsproposed agreements with Mellon Capital and Seix.Cupps. Each such new agreement will become effective as soon as reasonably practical following its approval by such shareholders at the Special Meeting. If one or more of the agreements is not approved at the Special Meeting, the Portfoliorelevant portfolio will continue to be managed by the Current Manager.its then current Specialist Managers. The fact that one of the Proposed Agreementsproposed agreements is not approved, however, will not affect the implementation of an agreement that is approved at the Special Meeting.
| PROPOSAL 1: | Approval of a portfolio management agreement between the Trust, on behalf of The |
Day-to-day investment decisions for theThe Small Capitalization Equity Portfolio are currently the responsibility of onefour separate investment advisory organization: BlackRock Financialorganizations: Ironbridge Capital Management LP (“Ironbridge”); Frontier Capital Management Company, LLC (“Frontier”); SSgA Funds Management, Inc. (“BlackRock”SSgA FM”); and Pzena Investment Management, LLC (“Pzena”). BlackRock currently managesEach follows a portfolio coveringdistinct investment style in managing the full rangeportion of fixed income securities.the assets of the Portfolio allocated to it, according to each organization’s unique investment approach. Prior to November 10, 2010 the Portfolios had five Specialist Managers. On that date, however, one of these managers (“Prior Manager”) was terminated by the Board on the recommendation of the Adviser.
The Proposed Agreement with Mellon CapitalCupps was approved, subject to the approval of the shareholders of Portfolio, by the Trust’s Board at a meeting of the Board held on October 21, 2010.May 2, 2011.
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It should be noted that if the Proposed Agreement with Mellon CapitalProposal 1 in this Proxy Statement is implemented,approved, the Portfolio’s overall investment advisory fees arewill likely to decrease with or without the other proposed addition to the Portfolio set forth in Proposal 2 of this Proxy Statement, althoughincrease; the extent of any such decreaseincrease will depend on the manner in which the Portfolio’s assets are allocated among the Specialist Managers. Under the Proposed Agreements, Cupps would receive an annual fee of 0.85% of the assets that may, from time to time, be allocated to it by the Adviser or the Board. This fee rate is 10 basis points higher than the fee that was payable to the Prior Manager. For this reason, it is expected that, depending on the level of assets allocated to Cupps, the overall level of advisory fees payable by each Portfolio may increase relative to advisory fees incurred during such Portfolio’s fiscal year ended June 30, 2010, a period during which the Prior Manager served the Portfolio.
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Additionally, because upon termination of the Prior Manager a larger percentage of the Portfolio’s assets were allocated to a Specialist Manager that provides “passive” management, SSgA Funds Management, Inc. (“SSgA FM”), the overall level of advisory fees payable to the Portfolio will increase relative the advisory fees incurred during the six month period ended December 31, 2010. This is the case because it is expected that assets reallocated to Cupps will reduce the level of assets allocated to SSgA FM, whose advisory fee is computed at a rate that is substantially lower than the rate at which fees payable to each Portfolio’s other Specialist Managers is computed.
If approved by shareholders, the Proposed Agreement will remain in effect in accordance with its termterms for two years, and will continue in effect from year to year thereafter so long as it is approved annually by the Trust’s Board. A copy of the Proposed Agreement with Mellon CapitalCupps appears in this Proxy Statement asExhibit A (Proposed Agreement between the Trust and Mellon CapitalCupps relating to The Core Fixed IncomeSmall Capitalization Equity Portfolio). Information about Mellon CapitalCupps is set forth in the Proposed Specialist Managers Guide atAppendix A to thein this Proxy Statement.
THE BOARD OF TRUSTEES RECOMMENDS SHAREHOLDERS OF THE CORE FIXED
INCOMESMALL CAPITALIZATION EQUITY PORTFOLIO VOTE “FOR” PROPOSAL 1
Factors Considered by the Board
The Board, including a majority of the Independent Trustees, has considered and approved, subject to the approval of the shareholders of the Portfolio, the Proposed Agreementproposed agreement with Mellon CapitalCupps relating to The Core Fixed IncomeSmall Capitalization Equity Portfolio. In connection with the Board’s deliberations, the Board considered several factors. In addition, the Board requested and received detailed information from Mellon CapitalCupps about its business and operations.
In concluding that approval of the Proposed Agreement was in the best interests of the Portfolio and consistent with the expectations of shareholders, the Board gave substantial weight to the Adviser’s assessment of the structure of the Portfolio, the role of each of the Current Managercurrent Specialist Managers of the Portfolio, and the potential benefits of engaging Mellon CapitalCupps to manage a portion of the Portfolio’s assets.
The Board also considered information provided to it by the Adviser and Mellon CapitalCupps with respect to the nature and quality of the services expected to be provided by Mellon Capital,Cupps, its performance record in managing investment accounts similar to the Portfolio, its commitment to maintaining a consistent investment strategy, the size and depth of the organization and other factors. The Board also considered the specific terms of the Proposed Agreement,proposed agreement, including fees payable to Mellon Capital.Cupps.
In summary, the Board concluded that the implementation of the Proposed Agreement with Mellon CapitalCupps would be in the best interests of the Trust and the shareholders of the Portfolio. During the course of its deliberations, and as indicated above, the Board considered recommendations made by the Adviser as well as information provided to it relating to Mellon Capital’sCupps’ management style and past performance record. Specifically, in considering the nature and quality (including performance) of the services expected to be provided by Mellon Capital,Cupps, the Board had before it information that it received from the Adviser and Mellon CapitalCupps with respect to Mellon Capital’sCupps’ commitment to implementing a consistent investment program, the performance achieved for other clients (including mutual funds) in the past, and information relating to its compliance programs and back office systems. The Board also considered a range of information with respect to the experience and professional backgrounds of the members of the proposed portfolio management team. In concluding that the services to be provided by Mellon CapitalCupps were reasonably likely to benefit the Portfolio, the Board did not rely upon any single factor, but gave substantial weight to the Adviser’s recommendations and its view with respect to the ability of Mellon CapitalCupps to carry out the investment policies it will be askedof the Portfolio and to implement.ensure continuity in its investment strategy.
The Board also determined that the rate at which Mellon CapitalCupps would be compensated for its services under the Proposed Agreement was reasonable. In reaching this conclusion, the Board was informed with respect to, among other relevant factors, comparative fee information, including information regarding both peer group fees and fees charged by Mellon CapitalCupps to its other clients. The Board did not specifically rely upon such comparisons, but gave substantial weight to the fact that the rate at which Mellon CapitalCupps was to be compensated was determined as a result of arms-length negotiations conducted by the officers of the Trust and the Adviser.
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Information About the Proposed Agreement with Mellon CapitalCupps Relating to The Core Fixed IncomeSmall Capitalization Equity Portfolio
The Proposed Agreement requires the named service provider to (i) provide a continuous investment program for that portion of the Portfolio’s assets that may be allocated to it; (ii) provide investment research; (iii) select brokers and dealers through which securities transactions are executed; and (iv) maintain certain records required under relevant provisions of the 1940 Act. The Proposed Agreementproposed agreement also provides: that the service provider will not be liable to the Trust for any loss sustained by the Trust unless such loss is caused by the service provider’s willful misfeasance, reckless disregard of duty, bad faith or gross negligence; for termination of the agreement by the Trust or by the service provider upon sixty days’ written notice; and termination in the event of an “assignment” as defined in the 1940 Act. Under the terms of the Proposed Agreement, Mellon CapitalCupps will be paid aan annual fee of 0.12%0.85% of the average daily net assets of the Portfolio allocated to it by the Adviser or the Board. For more information on the fees and expenses of the Portfolio, see the pro-forma fee and expense tables inAppendix B.
With respect to duration and termination, the Proposed Agreement provides that it shall continue in effect for a period of two years from the date on which it becomes effective. The Proposed Agreement will remain in effect thereafter 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 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.
If Proposal 1 is approved, the Proposed Agreement will become effective as soon as reasonably practical following the Special Meeting. In the event that the Proposed Agreement is not approved by the Portfolio’s shareholders, the Current Manager, and if Proposal 2 is approved, Seix,current Specialist Managers will continue to manage the Portfolio.
| PROPOSAL 2: | Approval of Proposed Portfolio Management Agreement between the Trust, on behalf of The |
Day-to-day investment decisions for The Core Fixed IncomeInstitutional Small Capitalization Equity Portfolio are currently the responsibility of onefour separate investment advisory organization: BlackRock. BlackRock currently managesorganizations: Ironbridge; Frontier; SSgA FM; and Pzena. Each follows a portfolio coveringdistinct investment style in managing its portion of the full rangeassets of fixed income securities.the Portfolio allocated to it, according to each organization’s unique investment approach. Prior to November 10, 2010 the Portfolios had five Specialist Managers. On that date, however, one of these managers was terminated by the Board on the recommendation of the Adviser.
The Proposed Agreement with SeixCupps was approved, subject to the approval of the shareholders of Portfolio, by the Trust’s Board at a meeting of the Board held on October 21, 2010.May 2, 2011.
It should be noted that if the Proposed Agreement with SeixProposal 2 in this Proxy Statement is implemented,approved, the Portfolio’s overall investment advisory fees arewill likely to decrease with the other proposed addition to the Portfolio set forth in Proposal 1 of this Proxy Statement, althoughincrease; the extent of any such decreaseincrease will depend on the manner in which the Portfolio’s assets are allocated among the Specialist Managers. In the event thatUnder the Proposed Agreement with SeixAgreements, Cupps would receive an annual fee of 0.85% of the assets that may, from time to time, be allocated to it by the Adviser or the Board. This fee rate is approved and10 basis points higher than the Proposed Agreement with Mellon Capitalfee that was payable to the Prior Manager. For this reason, it is not approved,expected that, depending on the level of assets allocated to Cupps, the overall level of advisory fees payable by each Portfolio may increase relative to advisory fees incurred during such Portfolio’s fiscal year ended June 30, 2010, a period during which the Prior Manager served the Portfolio.
Additionally, because upon termination of the Prior Manager a larger percentage of the Portfolio’s assets were allocated to a Specialist Manager that provides “passive” management, SSgA Funds Management, Inc. (“SSgA FM”), the overall level of advisory fees payable to the Portfolio will increase relative the advisory fees incurred during the six month period ended December 31, 2010. This is the case because it is expected that assets reallocated
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to Cupps will reduce the level of assets allocated to SSgA FM, whose advisory fee paid byis computed at a rate that is substantially lower than the Portfolio may increase.rate at which fees payable to each Portfolio’s other Specialist Managers is computed.
If approved by shareholders, the Proposed Agreement will remain in effect in accordance with its termterms for two years, and will continue in effect from year to year thereafter so long as it is approved annually by the Trust’s Board. A copy of the Proposed Agreement with SeixCupps appears in this Proxy Statement asExhibit B (Proposed Agreement between the Trust and SeixCupps relating to The Core Fixed IncomeInstitutional Small Capitalization Equity Portfolio). Information about SeixCupps is set forth in the Proposed Specialist Managers Guide atAppendix A toin the Proxy Statement.
THE BOARD OF TRUSTEES RECOMMENDS SHAREHOLDERS OF THE CORE FIXED INCOMEINSTITUTIONAL SMALL CAPITALIZATION EQUITY PORTFOLIO VOTE “FOR” PROPOSAL 2
Factors Considered by the Board
The Board, including a majority of the Independent Trustees, has considered and approved, subject to the approval of the shareholders of the Portfolio, the Proposed Agreement with SeixCupps relating to The Core Fixed Income
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Institutional Small Capitalization Equity Portfolio. In connection with the Board’s deliberations, the Board considered several factors. In addition, the Board requested and received detailed information from SeixCupps about its business and operations.
In concluding that approval of the Proposed Agreement was in the best interests of the Portfolio and consistent with the expectations of shareholders, the Board gave substantial weight to the Adviser’s assessment of the structure of the Portfolio, the role of each of the Current Managercurrent Specialist Managers of the Portfolio, and the potential benefits of engaging SeixCupps to manage a portion of the Portfolio’s assets.
The Board also considered information provided to it by the Adviser and SeixCupps with respect to the nature and quality of the services expected to be provided by Seix,Cupps, its performance record in managing investment accounts similar to the Portfolio, its commitment to maintaining a consistent investment strategy, the size and depth of the organization and other factors. The Board also considered the specific terms of the Proposed Agreement,proposed agreement, including fees payable to Seix.Cupps.
In summary, the Board concluded that the implementation of the Proposed Agreement with SeixCupps would be in the best interests of the Trust and the shareholders of the Portfolio. During the course of its deliberations, and as indicated above, the Board considered recommendations made by the Adviser as well as information provided to it relating to Seix’sCupps’ management style and past performance record. Specifically, in considering the nature and quality (including performance) of the services expected to be provided by Seix,Cupps, the Board had before it information that it received from the Adviser and SeixCupps with respect to Seix’sCupps’ commitment to implementing a consistent investment program, the performance achieved for other clients (including mutual funds) in the past, and information relating to its compliance programs and back office systems. The Board also considered a range of information with respect to the experience and professional backgrounds of the members of the proposed portfolio management team. In concluding that the services to be provided by SeixCupps were reasonably likely to benefit the Portfolio, the Board did not rely upon any single factor, but gave substantial weight to the Adviser’s recommendations and its view with respect to the ability of SeixCupps to carry out the investment policies it will be askedof the Portfolio and to implement.ensure continuity in its investment strategy.
The Board also determined that the rate at which SeixCupps would be compensated for its services under the Proposed Agreement was reasonable. In reaching this conclusion, the Board was informed with respect to, among other relevant factors, comparative fee information, including information regarding both peer group fees and fees charged by SeixCupps to its other clients. The Board did not specifically rely upon such comparisons, but gave substantial weight to the fact that the rate at which SeixCupps was to be compensated was determined as a result of arms-length negotiations conducted by the officers of the Trust and the Adviser.
Information About the Proposed Agreement with SeixCupps Relating to The Core Fixed IncomeInstitutional Small Capitalization Equity Portfolio
The Proposed Agreement requires the named service provider to (i) provide a continuous investment program for that portion of the Portfolio’s assets that may be allocated to it; (ii) provide investment research; (iii) select
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brokers and dealers through which securities transactions are executed; and (iv) maintain certain records required under relevant provisions of the 1940 Act. The Proposed Agreement also provides: that the service provider will not be liable to the Trust for any loss sustained by the Trust unless such loss is caused by the service provider’s willful misfeasance, reckless disregard of duty, bad faith or gross negligence; for termination of the agreement by the Trust upon sixty days’ written notice or by the service provider upon thirtysixty days’ written notice; and termination in the event of an “assignment” as defined in the 1940 Act. Under the terms of the Proposed Agreement, SeixCupps will be paid aan annual fee based on the consolidated total amountof 0.85% of the average daily net assets (“Seix Combined Assets”) managed by it in each of The Core Fixed Income Portfolio and The U.S. Corporate Fixed Income Securities Portfolio of the Trust, for which Seix serves as a Specialist Manager. Seix would be entitledPortfolio allocated to receive a fee at an annual rate of 0.25% ofit by the first $100 million ofAdviser or the Seix Combined Assets and 0.20% of the Seix Combined Assets exceeding $100 million.Board. For more information on the fees and expenses of the Portfolio, see the pro-forma fee and expense tables inAppendix B.C.
With respect to duration and termination, the Proposed Agreement provides that it shall continue in effect for a period of two years from the date on which it becomes effective. The Proposed Agreement will remain in effect thereafter 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 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.
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If Proposal 2 is approved, the Proposed Agreement will become effective as soon as reasonably practical following the Special Meeting. In the event that the Proposed Agreement is not approved by the Portfolio’s shareholders, the Current Manager, and if Proposal 1 is approved, Mellon Capital,current Specialist Managers will continue to manage the Portfolio.
Management of the Trust
Information about HC Capital Solutions. Under the terms of separate discretionary investment advisory agreements with the Trust relating to the Portfolios (“HC Agreements”), the AdviserHC Capital Solutions (the “Adviser”) continuously monitors the performance of various investment management organizations, including the several Specialist Managers retained by the Trust and generally oversees the services provided to the Trust by its administrator, custodian and other service providers. Each of the HC Agreements also authorizes HC Capital Solutionsthe Adviser to allocate and reallocate assets among Specialist Managers in multi-manager portfolios of the Trust from time to time without additional authorization of the Trust’s Board. In addition, the HC Agreements provide that HC Capital Solutionsthe Adviser will make its officers available to serve as officersand/or Trustees of the Trust, and maintain office space sufficient for the Trust’s principal office. For its services under the HC Agreements, HC Capital Solutionsthe Adviser is entitled to receive an annual fee of .05%0.05% of each Portfolio’s average net assets. For the fiscal year ended June 30, 2010, HC Capital Solutionsthe Adviser received advisory fees from The Core Fixed IncomeSmall Capitalization Equity Portfolio in the amount of $178,000.$113,000 and advisory fees from The Institutional Small Capitalization Equity Portfolio in the amount of $98,000.
The Adviser is a separate operating division of Hirtle, Callaghan & Co., LLC, (“and wholly owned by Hirtle Callaghan”)Callaghan Holdings, Inc., which is a registered investment adviser under the Investment Advisers Act. Itscontrolled by one of its founders, Jonathan J. Hirtle. The Adviser’s principal offices are located at Five Tower Bridge, 300 Barr Harbor Drive, Suite 500, West Conshohocken, PA 19428. As of August 31, 2010, the Adviser and its affiliates had assets under management of approximately $18.2 billion. The Adviser is controlled by Jonathan Hirtle. Robert J. Zion, a principal of Hirtle Callaghan,the Adviser, serves on the Trust’s Board and also serves as Vice President, Secretary and Treasurer of the Trust. The current HC Agreements were last approved by the Trust’s Board (including a majority of the Trust’s Independent Trustees) at a meetingmeetings of the Board held on March 10, 2010.15, 2011.
Information about the Current ManagerOther Specialist Managers. BlackRock FinancialThe Portfolios are each currently managed by four (4) Specialist Managers: Ironbridge Capital Management LP (“Ironbridge”); Frontier Capital Management Company, LLC (“Frontier”); SSgA Funds Management, Inc. currently serves as Specialist Manager for the Portfolio. BlackRock, which has managed fixed income assets since 1988(“SSgA FM”); and is a registered investment adviser, is headquarteredPzena Investment Management, LLC (“Pzena”). Ironbridge’s principal offices are located at 55 East 52ndOne Parkview Plaza, Suite 600, Oakbrook Terrace, IL 60181. Frontier’s principal offices are located at 99 Summer Street, Boston, Massachusetts 02110. SSgA FM’s principal offices are located at State Street Financial Center, One Lincoln Street, Boston, MA 02111. Pzena’s principal offices are located at 120 West 45th Street, 20th Floor, New York, NY 10055. For its services to the Portfolio, BlackRock currently receives a fee, based on the average daily net asset value of the Portfolio’s assets, at an annual rate of 0.25% for the first $100 million in such assets, 0.20% for those assets in excess of $100 million and below $200 million, and 0.175% for those assets in excess of $200 million. During the fiscal year ended June 30, 2010 BlackRock received a fee of 0.20% of the average daily net assets of that portion of the Portfolio allocated to it. If the Proposed Agreements with Mellon Capital and Seix are approved, and upon the effectiveness of those agreements, BlackRock’s fee for its services to the Portfolio will be reduced. BlackRock’s fee would be based on the consolidated total amount of the assets (“BlackRock Combined Assets”) managed by it in each of The Core Fixed Income Portfolio and The U.S. Mortgage/Asset Backed Fixed Income Securities Portfolio of the Trust, for which BlackRock also serves as a Specialist Manager. BlackRock would be entitled to receive a fee at an annual rate of 0.175% of the first $200 million of the BlackRock Combined Assets and 0.15% of the BlackRock Combined Assets exceeding $200 million. As of June 30, 2010, BlackRock, together with its asset management affiliates, managed total assets of approximately $3.151 trillion.
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Administration and Related Services. Citi Fund Services Ohio, Inc. and certain of its affiliated companies (collectively, “Citi”) currently provide administration, transfer agency and accounting services to the Trust pursuant to the terms of separate agreements between Citi and the Trust. Citi is located at 3435 Stelzer Road, Columbus, Ohio 43219.
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Distribution Services. Unified Financial Securities, Inc. (“Unified”) serves as the Trust’s principal underwriter pursuant to an agreement approved by the Board on March 10, 2009. Unified is a wholly-owned subsidiary of Huntington Bancshares, Inc. Because shares of the Trust’s Portfolios are available only to clients of the Adviser and financial intermediaries that have established a relationship with the Adviser, the services to be provided by Unified are limited. Unified will receive an annual fee of $10,000$50,000 for performing the services listed under its agreement. The offices of the principal underwriter are located at 2960 North Meridien St., Suite 300, Indianapolis, IN, 46208.
General Matters Under Delaware Law
As a Delaware Statutory Trust, the Trust is not required, and currently does not intend, to hold annual meetings of shareholders except as required by the 1940 Act or other applicable law. The 1940 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 registered independent public accounting firm. 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. Although the Trust does not anticipate that an annual meeting will be held, shareholders may submit proposals that will be considered for submission to shareholders at such meeting. In the event that an annual meeting is held, any such proposal must be received at least 120 days before proxy statements prepared in connection with such a meeting are forwarded to shareholders.
Additional Information
The Trust is not aware of any shareholders who hold beneficially 5% or more of shares of the PortfolioPortfolios as of the Record Date. The Adviser may be deemed to have, or share, investmentand/or voting power with respect to more than 50% of the shares of the Trust’s portfolios, with respect to which shares the Adviser disclaims beneficial ownership. The trustees and officers of the Trust, as a group, own less than 1% of the outstanding shares of each Portfolio.
Abstentions and Broker Non-Votes
A properly executed and returned proxy, or a proxy voted in accordance with the telephone or Internet voting procedures described in the proxy, marked with an abstention will be considered present at the Special Meeting of shareholders for the purpose of determining the existence of a quorum. If any proxy received by the Trust that withholds authority to vote represents a “broker non-vote,” shares represented by such proxy will not be counted for purposes of determining whether or not a quorum is present at the Special Meeting of shareholders and will not be deemed “votes cast” with respect to any matter with respect to which authority to vote is withheld. 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 that require the approval of a requisite percentage of the outstanding shares of the Portfolio. As used in this Proxy Statement, “broker non-vote” means a proxy, executed, or otherwise voted by telephone or Internet in accordance with the proxy, 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.
By Order of the Board of Trustees
Dated: November 1, 2010May 16, 2011
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APPENDIX A
Proposed Specialist Managers Guide
The following provides additional information aboutMellon Capital and Seix.Cupps.
The following provides additional information about
Information About Mellon CapitalCupps
If the Proposed Agreementproposed agreements with MellonCupps Capital Management, CorporationLLC (“Mellon Capital”Cupps”) isare approved by shareholders, Mellon CapitalCupps will become an additional investment management firm serving The Core Fixed IncomeSmall Capitalization Equity Portfolio and The Institutional Small Capitalization Equity Portfolio (the “Portfolio”“Portfolios”) (formerly The Fixed Income II Portfolio). Consistent with the investment objectives and policies of the Portfolio, Mellon Capital will manage a portfolio of U.S. government fixed income securities for the Portfolio.
The following individuals will be primarily responsible for theDay-to-dayday-to-day investment decisions formanagement of that portion of the PortfolioPortfolios’ assets allocated to Mellon Capital are expected to be the responsibility of David C. Kwan, CFA and Lisa M. O’Connor, CFA. Mr. KwanCupps.
Name | Title/Responsibilities | Years Experience | Years with Firm | |||
| Andrew S. Cupps | Chief Investment Officer | 19 years of experience | 11 years with the Firm (since Firm’s inception) | |||
| Kevin J. Leitner | Trader and Equity Analyst | 19 years of experience | 11 years with the Firm (since Firm’s inception) |
Cupps is a Managing Director, Fixed Income Management of Mellon Capital with 20 years of investment experience at the firm. He earned both a B.S. and an M.B.A. at the University of California at Berkeley. Ms. O’Connor is also a Managing Director, Fixed Income, of Mellon Capital with 11 years of investment experienceregistered with the firm. She earned her M.B.A. fromSecurities and Exchange Commission as an investment advisor under the UniversityInvestment Advisers Act of California at Berkeley1940. As of December 31, 2010, Cupps had over $584 million in 2002.assets under management.
Suite 1368, Chicago, Illinois 60604. The name and principal occupation of the principal executive officers and each director of Mellon Capital,Cupps, where applicable, are as follows:
Name | Principal Occupation | |
| President | ||
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| Director of | ||
The following table sets forth certain information about other registered investment companies managed by SeixCupps using the same or similar small capitalization growth strategies as will be used in the Portfolio.Affected Portfolios.
Name of Fund | Assets as of 6/30/2010 | Seix Advisory Fee | ||||||
RidgeWorth Corporate Bond Fund (STICX) | $ | 178,400,000 | 0.40 | % | ||||
Name of Fund | Assets as of 3/31/2011 | Cupps Advisory Fee | ||||||
Dreyfus Select Managers Small Cap Growth Fund | $ | 31.8 million | 0.40 | % | ||||
Dreyfus Select Managers Large Cap Growth Fund | $ | 3.3 million | 0.325 | % | ||||
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APPENDIX B
Pro Forma Fee and Expense Table: The Core Fixed IncomeSmall Capitalization Equity Portfolio
Pro Forma Allocations if Proposed Agreement withMellonCupps Capital Management, Corporation and Seix Investment Advisors, LLC is Approved
Pro Forma Allocations if Proposed Agreement with
The tables and examples shown below are designed to assist investors in understanding the various costs and expenses of an investment in shares of the Portfolio. Each is designed to correspond with the tables relating to the Portfolio that appear in the prospectus for the Trust. Neither should be considered a representation of past or future expenses or performance, and actual expenses may vary from year to year, and may be higher or lower than those shown.
As also indicated in the Proxy Statement, the rate at which Cupps will be compensated is 10 basis points higher than the fee that was payable to the Prior Manager. For this reason, it is expected that, depending on the level of average net assets for the period ended June 30, 2010, as well as fees and expenses that would have been incurred ifallocated to the Proposed Agreements had been in effectManger, the overall level of advisory fees payable by the Portfolio may increase relative to advisory fees incurred during the Portfolio’s fiscal year ended June 30, 2010, a period during which the Prior Manager served the Portfolio.
Additionally, because upon termination of the Prior Manager a larger percentage of the Portfolio’s assets were allocated to a Specialist Manager that provides “passive” management, SSgA Funds Management, Inc. (“SSgA FM”), the overall level of advisory fees payable to the Portfolio will increase relative to the advisory fees incurred during the six month period ended December 31, 2010. This is the case because it is expected that assets reallocated to Cupps will reduce the level of assets allocated to SSgA FM, whose advisory fee is computed at a rate that is substantially lower than the rates at which fees payable to the Portfolio’s other Specialist Managers are computed.
The following tables compare the management fees and expenses (expressed as a percentage of average net assets) actually incurred by the Portfolio during the Portfolio’s fiscal year ended June 30, 2010 and the six month period ended December 31, 2010 with the advisory fees that would have been incurred during such periods had Cupps served the Portfolio during such periods under the terms of the Proposed Agreement.
The pro forma information assumes that (i) the level of assets allocated to Cupps would have been the same as the level of assets allocated to the Prior Manager as shown in the Portfolio’s annual report to shareholders dated June 30, 2010; and (ii) the level of assets allocated to each of the other Specialist Mangers was, throughout the periods, the same as the allocation reflected in the Portfolio’s annual report and semi-annual report, respectively.
HC Strategic Shares
Pro Forma with respect to the FYE June 30, 2010
As of June 30, 2010, the allocations for each of the Specialist Managers then serving the Portfolio were: 24% to Ironbridge Capital Management LP (“Ironbridge”), 22% to Frontier Capital Management Company, LLC (“Frontier”), 20% to SSgA Funds Management, Inc. (“SSgA FM”), 17% to the Prior Manager and 17% to Pzena Investment Management, LLC (“Pzena”). The net assets of the Portfolio as of June 30, 2010 were approximately $356.06$114 million.
| Fees if | ||||||||
| Proposed Cupps | ||||||||
| Fees Under Current | Agreement is | |||||||
| Agreements as of | Approved as of | |||||||
| 6/30/2010 | 6/30/2010 | |||||||
| Management Fees* | 0.72 | % | 0.74 | % | ||||
| Other Expenses** | 0.12 | % | 0.12 | % | ||||
| Total Portfolio Operating Expenses | 0.84 | % | 0.86 | % | ||||
11
| Fees if | ||||||||||||||||
| Proposed | Fees if Only | |||||||||||||||
| Mellon Capital | Proposed | Fees if Only | ||||||||||||||
| and Seix | Mellon Capital | Proposed Seix | ||||||||||||||
| Fees Under Current | Agreements are | Agreement is | Agreement is | |||||||||||||
| Agreements | Both Approved1 | Approved2 | Approved3 | |||||||||||||
| Management Fees* | 0.25 | % | 0.22 | % | 0.24 | % | 0.29 | % | ||||||||
| Other Expenses** | 0.09 | % | 0.09 | % | 0.09 | % | 0.09 | % | ||||||||
| Total Portfolio Operating Expenses | 0.34 | % | 0.31 | % | 0.33 | % | 0.38 | % | ||||||||
As of December 31, 2010, the allocations for each of the Specialist Managers then serving the Portfolio were: 23% to Ironbridge, 23% to Frontier, 37% to SSgA FM, and 17% to Pzena. As of12/31/2010, the net assets of the Portfolio were $139 million.
| Fees if | ||||||||
| Proposed Cupps | ||||||||
| Fees Under Current | Agreement is | |||||||
| Agreement as of | Approved as of | |||||||
| 12/31/2010 | 12/31/2010 | |||||||
| Management Fees* | 0.61 | % | 0.74 | % | ||||
| Other Expenses** | 0.12 | % | 0.12 | % | ||||
| Total Portfolio Operating Expenses | 0.73 | % | 0.86 | % | ||||
| * | The figure shown includes all management fees paid by the Portfolio, including 0.05% which is paid to | |
| ** | Expenses attributable to the Portfolio’s investments in other investment companies, including closed-end funds and exchange-traded funds, if any, are currently estimated not to exceed 0.01% of net assets of the Portfolio. |
| Fees if | ||||||||||||||||
| Proposed | Fees if Only | |||||||||||||||
| Mellon Capital | Proposed | Fees if Only | ||||||||||||||
| and Seix | Mellon Capital | Proposed Seix | ||||||||||||||
| Fees Under Current | Agreements are | Agreement is | Agreement is | |||||||||||||
| Agreements | Both Approved1 | Approved2 | Approved3 | |||||||||||||
| Management Fees* | 0.25 | % | 0.22 | % | 0.24 | % | 0.29 | % | ||||||||
| Distribution and/or Service (12b-1) Fees** | 0.25 | % | 0.25 | % | 0.25 | % | 0.25 | % | ||||||||
| Other Expenses*** | 0.09 | % | 0.09 | % | 0.09 | % | 0.09 | % | ||||||||
| Total Portfolio Operating Expenses | 0.59 | % | 0.56 | % | 0.58 | % | 0.63 | % | ||||||||
12
| Expenses that would have been | Expenses that would have been | |||||||||||||||
| Expenses Under | Expenses Under | Incurred during the FYE | Incurred during the period ended | |||||||||||||
| Current | Current | 6/30/2010 if Cupps had been a | 12/31/2010 if Cupps had been a | |||||||||||||
| Agreements as of | Agreements as of | Specialist Manager | Specialist Manager | |||||||||||||
| 6/30/2010 | 12/31/2010 | during such period | during such period | |||||||||||||
| 1 year | $ | 86 | $ | 75 | $ | 88 | $ | 88 | ||||||||
| 3 years | $ | 268 | $ | 233 | $ | 274 | $ | 274 | ||||||||
| 5 years | $ | 466 | $ | 406 | $ | 477 | $ | 477 | ||||||||
| 10 years | $ | 1,037 | $ | 906 | $ | 1,061 | $ | 1,061 | ||||||||
HC Advisors Shares
Pro Forma with respect to the FYE June 30, 2010
As of June 30, 2010, the allocations for each of the Specialist Managers then serving the Portfolio were: 24% to Ironbridge, 22% to Frontier, 20% to SSgA FM, 17% to the Prior Manager and 17% to Pzena. The net assets of the Portfolio as of June 30, 2010 were approximately $114 million.
| Fees if | ||||||||
| Proposed Cupps | ||||||||
| Fees Under Current | Agreement is | |||||||
| Agreements as of | Approved as of | |||||||
| 6/30/2010 | 6/30/2010 | |||||||
| Management Fees* | 0.72 | % | 0.74 | % | ||||
| Distribution and/or Service (12b-1) Fees | 0.25 | % | 0.25 | % | ||||
| Other Expenses** | 0.12 | % | 0.12 | % | ||||
| Total Portfolio Operating Expenses | 1.09 | % | 1.11 | % | ||||
12
Pro Forma with respect to the Six Month Period ended December 31, 2010 (annualized)
As of December 31, 2010, the allocations for each of the Specialist Managers then serving the Portfolio were: 23% to Ironbridge, 23% to Frontier, 37% to SSgA FM, and 17% to Pzena. As of12/31/2010, the net assets of the Portfolio were $139 million.
| Fees if | ||||||||
| Proposed Cupps | ||||||||
| Fees Under Current | Agreement is | |||||||
| Agreement as of | Approved as of | |||||||
| 12/31/2010 | 12/31/2010 | |||||||
| Management Fees* | 0.61 | % | 0.74 | % | ||||
| Distribution and/or Service (12b-1) Fees | 0.25 | % | 0.25 | % | ||||
| Other Expenses** | 0.12 | % | 0.12 | % | ||||
| Total Portfolio Operating Expenses | 0.98 | % | 1.11 | % | ||||
| * | The figure shown includes all management fees paid by the Portfolio, including 0.05% which is paid to Hirtle Callaghan. The Portfolio is currently managed by five Specialist Managers, each of whom is compensated in accordance with a different fee schedule. Since the Portfolio is a “multi-manager” vehicle, asset allocations and fees payable to the Specialist Managers may vary. | |
| ** | Expenses attributable to the Portfolio’s investments in other investment companies, including closed-end funds and exchange-traded funds, if any, are currently estimated not to exceed 0.01% of net assets of the Portfolio. |
Examples. The following example illustrates the expenses on a $10,000 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 Portfolio’s operating expenses and assets remain as shown in the above table. The example should not be considered a representation of future expenses and actual expenses may be greater or less than those shown.
| Expenses that would have been | Expenses that would have been | |||||||||||||||
| Expenses Under | Expenses Under | Incurred during the FYE | Incurred during the period ended | |||||||||||||
| Current | Current | 6/30/2010 if Cupps had been a | 12/31/2010 if Cupps had been a | |||||||||||||
| Agreements as of | Agreements as of | Specialist Manager | Specialist Manager | |||||||||||||
| 6/30/2010 | 12/31/2010 | during such period | during such period | |||||||||||||
| 1 year | $ | 111 | $ | 100 | $ | 113 | $ | 113 | ||||||||
| 3 years | $ | 347 | $ | 312 | $ | 353 | $ | 353 | ||||||||
| 5 years | $ | 601 | $ | 542 | $ | 612 | $ | 612 | ||||||||
| 10 years | $ | 1,329 | $ | 1,201 | $ | 1,352 | $ | 1,352 | ||||||||
13
APPENDIX C
Pro Forma Fee and Expense Table: The Institutional Small Capitalization Equity Portfolio
Pro Forma Allocations if Proposed Agreement with Cupps Capital Management, LLC is Approved
Pro Forma Allocations if Proposed Agreement with Cupps Capital Management, LLC is Approved
The tables and examples shown below are designed to assist investors in understanding the various costs and expenses of an investment in shares of the Portfolio. Each is designed to correspond with the tables relating to the Portfolio that appear in the prospectus for the Trust. Neither should be considered a representation of past or future expenses or performance, and actual expenses may vary from year to year, and may be higher or lower than those shown.
As indicated in the Proxy Statement, prior to November 10, 2010 the Portfolio had five Specialist Managers, each responsible for implementing a different investment style within the universe of securities in which the Portfolio is designed to invest. On that date, however, one of these managers (“Prior Manager”) was terminated by the Board and on the recommendation of the Adviser. If the Proposed Agreement is approved by shareholders and implemented in accordance with its terms, Cupps will be available to manage a portion of the Portfolio’s assets in accordance with an investment style similar to the Prior Manager, effectively replacing the Prior Manager.
As also indicated in the Proxy Statement, the rate at which Cupps will be compensated is 10 basis points higher than the fee that was payable to the Prior Manager. For this reason, it is expected that, depending on the level of assets allocated to the Proposed Manger, the overall level of advisory fees payable by the Portfolio may increase relative to advisory fees incurred during the Portfolio’s fiscal year ended June 30, 2010, a period during which the Prior Manager served the Portfolio.
Additionally, because upon termination of the Prior Manager a larger percentage of the Portfolio’s assets were allocated to a Specialist Manager that provides “passive” management, SSgA Funds Management, Inc. (“SSgA FM”), the overall level of advisory fees payable to the Portfolio will increase relative to the advisory fees incurred during the six month period ended December 31, 2010. This is the case because it is expected that assets reallocated to Cupps will reduce the level of assets allocated to SSgA FM, whose advisory fee is computed at a rate that is substantially lower than the rates at which fees payable to the Portfolio’s other Specialist Managers are computed.
The following tables compare the management fees and expenses (expressed as a percentage of average net assets) actually incurred by the Portfolio during the Portfolio’s fiscal year ended June 30, 2010 and the six month period ended December 31, 2010 with the advisory fees that would have been incurred during such periods had Cupps served the Portfolio during such periods under the terms of the Proposed Agreement.
The pro forma information assumes that (i) the level of assets allocated to Cupps would have been the same as the level of assets allocated to the Prior Manager as shown in the Portfolio’s annual report to shareholders dated June 30, 2010; and (ii) the level of assets allocated to each of the other Specialist Mangers was, throughout the periods, the same as the allocation reflected in the Portfolio’s annual report and semi-annual report, respectively.
HC Strategic Shares:
| Expenses Under | Expenses if Proposed Mellon | Expenses if Only Proposed | ||||||||||||||
| Current | Capital and Seix Agreements | Mellon Capital Agreement is | Expenses if Only Proposed | |||||||||||||
| Agreements | are Both Approved | Approved | Seix Agreement is Approved | |||||||||||||
| 1 year | $ | 35 | $ | 32 | $ | 34 | $ | 39 | ||||||||
| 3 years | $ | 109 | $ | 100 | $ | 106 | $ | 122 | ||||||||
| 5 years | $ | 191 | $ | 174 | $ | 185 | $ | 213 | ||||||||
| 10 years | $ | 431 | $ | 393 | $ | 418 | $ | 480 | ||||||||
Pro Forma with respect to the FYE June 30, 2010
As of June 30, 2010, the allocations for each of the Specialist Managers then serving the Portfolio were: 24% to Ironbridge Capital Management LP (“Ironbridge”), 20% to Frontier Capital Management Company, LLC (“Frontier”), 19% to SSgA Funds Management, Inc. (“SSgA FM”), 18% to the Prior Manager and 19% to Pzena Investment Management, LLC (“Pzena”). The net assets of the Portfolio as of June 30, 2010 were approximately $162 million
| Fees if | ||||||||
| Proposed Cupps | ||||||||
| Fees Under Current | Agreement is | |||||||
| Agreements as of | Approved as of | |||||||
| 6/30/2010 | 6/30/2010 | |||||||
| Management Fees* | 0.72 | % | 0.74 | % | ||||
| Other Expenses** | 0.10 | % | 0.10 | % | ||||
| Total Portfolio Operating Expenses | 0.82 | % | 0.84 | % | ||||
14
Pro Forma with respect to the Six Month Period ended December 31, 2010 (annualized)
As of December 31, 2010, the allocations for each of the Specialist Managers then serving the Portfolio were: 23% to Ironbridge, 20% to Frontier, 38% to SSgA FM, and 19% to Pzena. As of12/31/2010, the net assets of the Portfolio were $207 million.
| Fees if | ||||||||
| Proposed Cupps | ||||||||
| Fees Under Current | Agreement is | |||||||
| Agreement as of | Approved as of | |||||||
| 12/31/2010 | 12/31/2010 | |||||||
| Management Fees* | 0.60 | % | 0.74 | % | ||||
| Other Expenses** | 0.10 | % | 0.10 | % | ||||
| Total Portfolio Operating Expenses | 0.70 | % | 0.84 | % | ||||
| * | The figure shown includes all management fees paid by the Portfolio, including 0.05% which is paid to Hirtle Callaghan. The Portfolio is currently managed by five Specialist Managers, each of whom is compensated in accordance with a different fee schedule. Since the Portfolio is a “multi-manager” vehicle, asset allocations and fees payable to the Specialist Managers may vary. | |
| ** | Expenses attributable to the Portfolio’s investments in other investment companies, including closed-end funds and exchange-traded funds, if any, are currently estimated not to exceed 0.01% of net assets of the Portfolio. |
Examples. The following example illustrates the expenses on a $10,000 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 Portfolio’s operating expenses and assets remain as shown in the above table. The example should not be considered a representation of future expenses and actual expenses may be greater or less than those shown.
| Expenses that would have been | Expenses that would have been | |||||||||||||||
| Expenses Under | Expenses Under | Incurred during the FYE | Incurred during the period ended | |||||||||||||
| Current | Current | 6/30/2010 if Cupps had been a | 12/31/2010 if Cupps had been a | |||||||||||||
| Agreements as of | Agreements as of | Specialist Manager | Specialist Manager | |||||||||||||
| 6/30/2010 | 12/31/2010 | during such period | during such period | |||||||||||||
| 1 year | $ | 84 | $ | 72 | $ | 86 | $ | 86 | ||||||||
| 3 years | $ | 262 | $ | 224 | $ | 268 | $ | 268 | ||||||||
| 5 years | $ | 455 | $ | 390 | $ | 466 | $ | 466 | ||||||||
| 10 years | $ | 1,014 | $ | 871 | $ | 1,037 | $ | 1,037 | ||||||||
HC Advisors Shares:
| Expenses Under | Expenses if Proposed Mellon | Expenses if Only Proposed | ||||||||||||||
| Current | Capital and Seix Agreements | Mellon Capital Agreement is | Expenses if Only Seix | |||||||||||||
| Agreements | are Both Approved | Approved | Agreement is Approved | |||||||||||||
| 1 year | $ | 60 | $ | 57 | $ | 59 | $ | 64 | ||||||||
| 3 years | $ | 189 | $ | 179 | $ | 186 | $ | 202 | ||||||||
| 5 years | $ | 329 | $ | 313 | $ | 324 | $ | 351 | ||||||||
| 10 years | $ | 738 | $ | 701 | $ | 726 | $ | 786 | ||||||||
Pro Forma with respect to the FYE June 30, 2010
As of June 30, 2010, the allocations for each of the Specialist Managers then serving the Portfolio were: 24% to Ironbridge, 20% to Frontier, 19% to SSgA FM, 18% to the Prior Manager and 19% to Pzena. The net assets of the Portfolio as of June 30, 2010 were approximately $162 million
| Fees if | ||||||||
| Proposed Cupps | ||||||||
| Fees Under Current | Agreement is | |||||||
| Agreements as of | Approved as of | |||||||
| 6/30/2010 | 6/30/2010 | |||||||
| Management Fees* | 0.72 | % | 0.74 | % | ||||
| Distribution and/or Service (12b-1) Fees | 0.25 | % | 0.25 | % | ||||
| Other Expenses** | 0.10 | % | 0.10 | % | ||||
| Total Portfolio Operating Expenses | 1.07 | % | 1.09 | % | ||||
1315
Pro Forma with respect to the Six Month Period ended December 31, 2010 (annualized)[Confirm]
As of December 31, 2010, the allocations for each of the Specialist Managers then serving the Portfolio were: 23% to Ironbridge, 20% to Frontier, 38% to SSgA FM, and 19% to Pzena. As of12/31/2010, the net assets of the Portfolio were $207 million.
| Fees if | ||||||||
| Proposed Cupps | ||||||||
| Fees Under Current | Agreement is | |||||||
| Agreement as of | Approved as of | |||||||
| 12/31/2010 | 12/31/2010 | |||||||
| Management Fees* | 0.60 | % | 0.74 | % | ||||
| Distribution and/or Service (12b-1) Fees | 0.25 | % | 0.25 | % | ||||
| Other Expenses** | 0.10 | % | 0.10 | % | ||||
| Total Portfolio Operating Expenses | 0.95 | % | 1.09 | % | ||||
| * | The figure shown includes all management fees paid by the Portfolio, including 0.05% which is paid to Hirtle Callaghan. The Portfolio is currently managed by five Specialist Managers, each of whom is compensated in accordance with a different fee schedule. Since the Portfolio is a “multi-manager” vehicle, asset allocations and fees payable to the Specialist Managers may vary. | |
| ** | Expenses attributable to the Portfolio’s investments in other investment companies, including closed-end funds and exchange-traded funds, if any, are currently estimated not to exceed 0.01% of net assets of the Portfolio. |
Examples. The following example illustrates the expenses on a $10,000 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 Portfolio’s operating expenses and assets remain as shown in the above table. The example should not be considered a representation of future expenses and actual expenses may be greater or less than those shown.
| Expenses that would have been | Expenses that would have been | |||||||||||||||
| Expenses Under | Expenses Under | Incurred during the FYE | Incurred during the period ended | |||||||||||||
| Current | Current | 6/30/2010 if Cupps had been a | 12/31/2010 if Cupps had been a | |||||||||||||
| Agreements as of | Agreements as of | Specialist Manager | Specialist Manager | |||||||||||||
| 6/30/2010 | 12/31/2010 | during such period | during such period | |||||||||||||
| 1 year | $ | 109 | $ | 97 | $ | 111 | $ | 111 | ||||||||
| 3 years | $ | 340 | $ | 303 | $ | 347 | $ | 347 | ||||||||
| 5 years | $ | 590 | $ | 525 | $ | 601 | $ | 601 | ||||||||
| 10 years | $ | 1,306 | $ | 1,166 | $ | 1,329 | $ | 1,329 | ||||||||
16
EXHIBIT A
PORTFOLIO MANAGEMENT AGREEMENT
For TheCore Fixed IncomeSmall Capitalization Equity Portfolio
For The
AGREEMENT made this day of , 2010,2011, between MellonCupps Capital Management, Corporation,LLC, a corporationlimited liability company organized under the laws of CaliforniaIllinois (“Portfolio Manager”), and the HC Capital Trust, a Delaware statutory trust (“Trust”).
WHEREAS, the Trust is registered as an open-end, diversified, management investment company under the Investment Company Act of 1940, as amended (“Investment Company Act”) which offers several series of shares of beneficial interests (“shares”) representing interests in separate investment portfolios; and
WHEREAS, the Trust desires to retain the Portfolio Manager to provide a continuous program of investment management to that portion of the assets of The Core Fixed IncomeSmall Capitalization Equity Portfolio of the Trust (“Portfolio”) that may, from time to time be allocated to it by, or under the supervision of, the Trust’s Board of Trustees, 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 Prospectus andRegistration Statement of Additional Information (“Registration Statement”) of the Trust delivered by the Trust to the Portfolio Manager, applicable provisions of the Investment Company Act and the rules and regulations promulgated under the Investment Company Act and other applicable federal securities laws.
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, or under the supervision of, the Trust’s Board of Trustees, as indicated 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 Trusteesand/or HC Capital Solutions,Hirtle Callaghan & Co., LLC, the Trust’s investment adviser, 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. The Portfolio Manager’s responsibility for providing portfolio management services to the Portfolio shall be limited to the Account.
(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. The Portfolio Manager shall not consult with any other portfolio manager of the Portfolio concerning transactions for the Portfolio in securities or other assets. Specifically, and without limiting the generality of the foregoing, Portfolio Manager agrees that it will:
(i) advise the Portfolio’s designated custodian bank and administrator or accounting agent on each business day 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 dealerand/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 underRule 31a-1(b)(1), (b)(5) and (b)(6) under the Investment Company Act
A-1
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 byRule 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. The Trust agrees, however, that Portfolio Manager may retain copies of those records that are required to be maintained by Portfolio Manager under federal or state regulations to which it may be subject or are reasonably necessary for purposes of conducting its business or comply with its internal recordkeeping policies;
A-2
A-3
A-4
A-5
A-6
B-1
(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 (“Code”); and
(iv) render regular reports to the Trust concerning the performance of 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. 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, except as permitted under the Investment Company Act and rules promulgated thereunder. 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. Except for expenses specifically assumed or agreed to be paid by the Portfolio Manager under this Agreement, the Portfolio Manager shall not be liable for any expenses of the Portfolio or the Trust, including, without limitation: (i) interest and taxes; (ii) brokerage commissions and other costs in connection with the purchase and sale of securities or other investment instruments with respect to the Portfolio; and (iii) custodian fees and expenses. For its services under this Agreement, Portfolio Manager shall be entitled to receive a fee, which fee shall be calculated daily and payable monthly in arrears at the annual rate of 0.25%0.85% of the first $100 million of the Combined Assets; and 0.20% on Combined Assets over $100 million.
B-2
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 Portfolio or 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 on behalf of the
A-2
Portfolio, 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.
(b) Notwithstanding the foregoing, Portfolio Manager expressly agrees that the Trust may rely upon: (i) the Portfolio Manager’s current Form ADV; and (ii) information provided, in writing, by Portfolio Manager to the Trust in accordance with Section 9 of this Agreement or otherwise to the extent such information was provided by Portfolio Manager for the purpose of inclusion in SEC Filings, as hereinafter defined provided that a copy of each SEC 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 onForm N-SAR or any shareholder report or proxy statement; or (iii) at least 10 business days prior to first use, in the case of any other SEC Filing. For purposes of this Section 5, “SEC Filings” means the Trust’s registration statement and amendments thereto and any periodic reports relating to the Trust and its Portfolios that are required by law to be furnished to shareholders of the Trustand/or filed with the Securities and Exchange Commission.
(c) Portfolio Manager agrees to indemnify and hold harmless the Trust and each of its Trustees, officers, employees and control persons from any claims, liabilities and reasonable expenses, including reasonable attorneys’ fees (collectively, “Losses”), to the extent that such Losses arise out of any untrue statement of a material fact contained in an SEC Filing or the omission to state therein a material fact necessary to make the statements therein, in light of the circumstances under which they are made, not materially misleading, if such statement or omission was made in reliance upon the Portfolio Manager’s current Form ADV or written information furnished by the Portfolio Manager for the purpose of inclusion in such SEC Filings or other appropriate SEC Filings; provided that a copy of each SEC Filing was 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 onForm N-SAR or any shareholder report or proxy statement; or (iii) at least 10 business days prior to first use, in the case of any other SEC Filing.
(d) In the event that a legal proceeding is commenced against the Trust on the basis of claims for which the Portfolio Manager would, if such claims were to prevail, be required to indemnify the Trust pursuant to Section 5(c) above, Portfolio Manager will, at its expense, provide such assistance as the Trust may reasonably request in preparing the defense of the such claims (including by way of example making Portfolio Manager’s personnel available for interview by counsel for the Trust, but specifically not includinginducing retention or payment of counsel to defend such claims on behalf of the Trust); provided that the Portfolio Manager will not be required to pay any Losses of the Trust except to the extent it may be required to do so under Section 5(c) above.
(e) The indemnification obligations set forth in Section 5 (c) shall not apply unless: (i) the statement or omission in question accurately reflects information provided to the Trust in writing by the Portfolio Manager; (ii) the statement or omission in question was made in an SEC Filing in reliance upon written information provided to the Trust by the Portfolio Manager specifically for use in such SEC Filing; (iii) the Portfolio Manager was afforded the opportunity to review the statement (or the omission was identified to it) in connection with the 10 business day review requirement set forth in Section 5(b) above; and (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) may apply, the Trust notifies the Portfolio Manager, within 30 days and in writing, of such receipt and provides to Portfolio Manager the opportunity to participate in the
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defenseand/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 them,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 the SEC Filing(s) in question.
(f) 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 Portfolio or the Trust 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 the investment
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objectives, policies, or restrictions applicable to the Portfolio, actions of the Trustees, or any records maintained by Trust or any other portfolio manager to the Portfolio. The Trust agrees that, to the extent the Portfolio Manager complies with the investment objectives, policies, and restrictions applicable to the Portfolio asprovided to the Portfolio Manager by the Trust, and with laws, rules, and regulations applicable to the Portfolio (including, without limitation, any requirements relating to the qualification of the Account as a regulated investment company under Subchapter M of the Code) in the management of the assets of the Portfolio specifically committed to management by the Portfolio Manager, without regard to any other assets or investments of the Portfolio, Portfolio Manager will be conclusively presumed for all purposes to have met its obligations under this Agreement to act in accordance with the investment objectives, policies,polices, and restrictions applicable to the Portfolio and with laws, rules, and regulations applicable to the Portfolio, it being the intention that for this purpose the assets committed to management by the Portfolio Manager shall be considered a separate and discrete investment portfolio from any other assets of the Portfolio; without limiting the generality of the foregoing, the Portfolio Manager will have no obligation to inquire into, or to take into account, any other investments of the Portfolio in making investment decisions under this Agreement. In no event shall the Portfolio Manager or any officer, director, employee, or agent or the Portfolio Manager have any liability arising from the conduct of the Trust (or any entity unaffiliated with Portfolio Manager and acting on the Trust’s behalf) and any other portfolio manager with respect to the portion of the Portfolio’s assets not allocated to the Portfolio Manager.
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, agentsand/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 thereafter for two years. This Agreement shall continue in effect from year to year thereafter 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 thirty days written notice to the other party, which notice may be waived by the party entitled to it. This Agreement may be terminated by the Trust 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 Trusteesand/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.
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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 affiliatesand/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 reasonable 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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It is acknowledged and agreed that the names “Hirtle Callaghan,” “Hirtle Callaghan Chief Investment Officers” (which is a registered trademark of Hirtle Callaghan & Co., LLC (“HCC”)), “HC Capital” and derivativesany derivative of each,any of them, as well as any logo that is now or shall later become associated with either namesuch names (“Marks”) are valuable property of HCC 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 HCC. 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, and the SeixCupps Marks (as defined below), 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 Trust shall have full responsibility for the compliance by any such marketing and sales literature with all applicable laws, rules, and regulations, and Portfolio Manager will have no responsibility or liability therefor. The provisions of this Section 8 shall survive termination of this Agreement.
It is acknowledged and agreed that the name “Seix”“Cupps Capital Management, LLC” and any portionsportion or derivativesderivative thereof, as well as any logo that is now or shall later become associated with suchthe name (“SeixCupps Marks”), are valuable property of Seixthe Portfolio Manager and that the use of the SeixCupps Marks by the Trust or its agents is permitted only so long as this Agreement is in place.
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, as amended (“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) Portfolio Manager understands that the Trust is subject to various regulations under the Investment Company Act which require that the Board review and approve various procedures adopted by portfolio managers and may also require disclosure regarding the Board’s consideration of these matters in various documents required to be filed with the SEC. Portfolio Manager represents that it will, upon reasonable request of the Trust, provide to the Trust information regarding all such matters including, but not limited to, codes of ethics required byRule 17j-1 under the Investment Company Act and compliance procedures required byRule 206(4)-7 under the Investment Advisers Act, as well as certifications that, as contemplated underRule 38a-1 under the Investment Company Act, Portfolio Manager has implemented a compliance program that is reasonably designed to prevent violations of the federal securities laws by the Portfolio with respect to those services provided pursuant to this Agreement. Portfolio Manager acknowledges that the Trust may, in response to regulations or recommendations issued by the SEC or other regulatory agencies, from time to time, request additional information regarding the personal securities trading of its directors, partners, officers and
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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.
(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 agenciesand/or provided to shareholders of the Trust.
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
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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.
11. Service to Other Clients. It is understood that Portfolio Manager may perform investment advisory services for various clients including related persons, related entities of the Portfolio Manager and various investment companies. The Trust agrees that Portfolio Manager may provide advice and take action with respect to any of its other clients, itself or affiliates that may compete with or differ from the advice given or the timing or nature of action taken with respect to the Account, so long as it is the Portfolio Manager’s policy, to the extent practical, to allocate investment opportunities to the Account over a period of time on a fair and equitable basis relative to other clients, itself and its affiliates. It is understood that Portfolio Manager shall not have any obligation to purchase or sell, or to recommend for purchase or sale, for the account any security or other investment which Portfolio Manager, its principals, affiliates, or employees may purchase or sell for its or their own accounts of for the account of any other client, if in the opinion of Portfolio Manager such transaction or investment appears unsuitable, impractical, or undesirable for the Account. Portfolio Manager may, but is not required to, enter into “batch” trades for multiple clients.
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given when received, in writing addressed and delivered, by certified mail, by hand or via overnight delivery service as follows:
If to the Trust:
HC Capital Trust
Five Tower Bridge, 300 Barr Harbor Drive, Suite
West Conshohocken, PA 19428
If to Seix:Portfolio Manager:
The Trust acknowledges receipt of Part II of Portfolio Manager’s Form ADV, copies of which have been provided to the Trust’s Board of Trustees.
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 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.
ATTEST: | ||
| By: | ||
ATTEST: | HC Capital Trust (on behalf of The | |
| By: |
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EXHIBIT B
PORTFOLIO MANAGEMENT AGREEMENT
For The Institutional Small Capitalization Equity Portfolio
For The Institutional Small Capitalization Equity Portfolio
AGREEMENT made this day of , 2011, between Cupps Capital Management, LLC, a limited liability company organized under the laws of Illinois (“Portfolio Manager”), and HC Capital Trust, a Delaware statutory trust (“Trust”).
WHEREAS, the Trust is registered as an open-end, diversified, management investment company under the Investment Company Act of 1940, as amended (“Investment Company Act”) which offers several series of shares of beneficial interests (“shares”) representing interests in separate investment portfolios; and
WHEREAS, the Trust desires to retain the Portfolio Manager to provide a continuous program of investment management to that portion of the assets of The Institutional Small Capitalization Equity Portfolio of the Trust (“Portfolio”) that may, from time to time be allocated to it by, or under the supervision of, the Trust’s Board of Trustees, 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 delivered by the Trust to the Portfolio Manager, applicable provisions of the Investment Company Act and the rules and regulations promulgated under the Investment Company Act and other applicable federal securities laws.
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, or under the supervision of, the Trust’s Board of Trustees, as indicated 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 Trusteesand/or Hirtle Callaghan & Co., LLC, the Trust’s investment adviser, 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. The Portfolio Manager’s responsibility for providing portfolio management services to the Portfolio shall be limited to the Account.
(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. The Portfolio Manager shall not consult with any other portfolio manager of the Portfolio concerning transactions for the Portfolio in securities or other assets. Specifically, and without limiting the generality of the foregoing, Portfolio Manager agrees that it will:
(i) advise the Portfolio’s designated custodian bank and administrator or accounting agent on each business day 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 dealerand/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
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required to be maintained underRule 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 byRule 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. The Trust agrees, however, that Portfolio Manager may retain copies of those records that are required to be maintained by Portfolio Manager under federal or state regulations to which it may be subject or are reasonably necessary for purposes of conducting its business;
(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 (“Code”); and
(iv) render regular reports to the Trust concerning the performance of 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. 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, except as permitted under the Investment Company Act and rules promulgated thereunder. 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. Except for expenses specifically assumed or agreed to be paid by the Portfolio Manager under this Agreement, the Portfolio Manager shall not be liable for any expenses of the Portfolio or the Trust, including, without limitation: (i) interest and taxes; (ii) brokerage commissions and other costs in connection with the purchase and sale of securities or other investment instruments with respect to the Portfolio; and (iii) custodian fees and expenses. For its services under this Agreement, Portfolio Manager shall be entitled to receive a fee, which fee shall be payable monthly in arrears at the annual rate of 0.85% of the average daily net assets of the Account.
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 Portfolio or the Trust in connection with the matters to which this Agreement relates including, without limitation, losses that may be sustained in connection with
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the purchase, holding, redemption or sale of any security or other investment by the Trust on behalf of the Portfolio, 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.
(b) Notwithstanding the foregoing, Portfolio Manager expressly agrees that the Trust may rely upon: (i) the Portfolio Manager’s current Form ADV; and (ii) information provided, in writing, by Portfolio Manager to the Trust in accordance with Section 9 of this Agreement or otherwise to the extent such information was provided by Portfolio Manager for the purpose of inclusion in SEC Filings, as hereinafter defined provided that a copy of each SEC 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 onForm N-SAR or any shareholder report or proxy statement; or (iii) at least 10 business days prior to first use, in the case of any other SEC Filing. For purposes of this Section 5, “SEC Filings” means the Trust’s registration statement and amendments thereto and any periodic reports relating to the Trust and its Portfolios that are required by law to be furnished to shareholders of the Trustand/or filed with the Securities and Exchange Commission.
(c) Portfolio Manager agrees to indemnify and hold harmless the Trust and each of its Trustees, officers, employees and control persons from any claims, liabilities and reasonable expenses, including reasonable attorneys’ fees (collectively, “Losses”), to the extent that such Losses arise out of any untrue statement of a material fact contained in an SEC Filing or the omission to state therein a material fact necessary to make the statements therein, in light of the circumstances under which they are made, not materially misleading, if such statement or omission was made in reliance upon the Portfolio Manager’s current Form ADV or written information furnished by the Portfolio Manager for the purpose of inclusion in such SEC Filings or other appropriate SEC Filings; provided that a copy of each SEC Filing was 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 onForm N-SAR or any shareholder report or proxy statement; or (iii) at least 10 business days prior to first use, in the case of any other SEC Filing.
(d) In the event that a legal proceeding is commenced against the Trust on the basis of claims for which the Portfolio Manager would, if such claims were to prevail, be required to indemnify the Trust pursuant to Section 5(c) above, Portfolio Manager will, at its expense, provide such assistance as the Trust may reasonably request in preparing the defense of the such claims (including by way of example making Portfolio Manager’s personnel available for interview by counsel for the Trust, but specifically not inducing retention or payment of counsel to defend such claims on behalf of the Trust); provided that the Portfolio Manager will not be required to pay any Losses of the Trust except to the extent it may be required to do so under Section 5(c) above.
(e) The indemnification obligations set forth in Section 5 (c) shall not apply unless: (i) the statement or omission in question accurately reflects information provided to the Trust in writing by the Portfolio Manager; (ii) the statement or omission in question was made in an SEC Filing in reliance upon written information provided to the Trust by the Portfolio Manager specifically for use in such SEC Filing; (iii) the Portfolio Manager was afforded the opportunity to review the statement (or the omission was identified to it) in connection with the 10 business day review requirement set forth in Section 5(b) above; and (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) may apply, the Trust notifies the Portfolio Manager, within 30 days and in writing, of such receipt and provides to Portfolio Manager the opportunity to participate in the defenseand/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 the SEC Filing(s) in question.
(f) 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 Portfolio or the Trust not managed by the Portfolio Manager; and (ii) acts of the Portfolio Manager which result from acts of the Trust, including, but not
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limited to, a failure of the Trust to provide accurate and current information with respect to the investment objectives, policies, or restrictions applicable to the Portfolio, actions of the Trustees, or any records maintained by Trust or any other portfolio manager to the Portfolio. The Trust agrees that, to the extent the Portfolio Manager complies with the investment objectives, policies, and restrictions applicable to the Portfolioas provided to the Portfolio Manager by the Trust, and with laws, rules, and regulations applicable to the Portfolio (including, without limitation, any requirements relating to the qualification of the Account as a regulated investment company under Subchapter M of the Code) in the management of the assets of the Portfolio specifically committed to management by the Portfolio Manager, without regard to any other assets or investments of the Portfolio, Portfolio Manager will be conclusively presumed for all purposes to have met its obligations under this Agreement to act in accordance with the investment objectives, polices, and restrictions applicable to the Portfolio and with laws, rules, and regulations applicable to the Portfolio, it being the intention that for this purpose the assets committed to management by the Portfolio Manager shall be considered a separate and discrete investment portfolio from any other assets of the Portfolio; without limiting the generality of the foregoing, the Portfolio Manager will have no obligation to inquire into, or to take into account, any other investments of the Portfolio in making investment decisions under this Agreement. In no event shall the Portfolio Manager or any officer, director, employee, or agent or the Portfolio Manager 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.
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, agentsand/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 thereafter for two years. This Agreement shall continue in effect from year to year thereafter 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 Trusteesand/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 affiliatesand/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 reasonable 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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It is acknowledged and agreed that the names “Hirtle Callaghan,” “Hirtle Callaghan Chief Investment Officers” (which is a registered trademark of Hirtle Callaghan & Co., LLC (“HCC”)), “HC Capital” and any derivative of any of them, as well as any logo that is now or shall later become associated with such names (“Marks”) are valuable property of HCC 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 HCC. 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, and the Cupps Marks (as defined below), 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 Trust shall have full responsibility for the compliance by any such marketing and sales literature with all applicable laws, rules, and regulations, and Portfolio Manager will have no responsibility or liability therefor.
It is acknowledged and agreed that the name “Cupps Capital Management, LLC” and any portion or derivative thereof, as well as any logo that is now or shall later become associated with the name (“Cupps Marks”), are valuable property of the Portfolio Manager and that the use of the Cupps Marks by the Trust or its agents is permitted only so long as this Agreement is in place.
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, as amended (“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) Portfolio Manager understands that the Trust is subject to various regulations under the Investment Company Act which require that the Board review and approve various procedures adopted by portfolio managers and may also require disclosure regarding the Board’s consideration of these matters in various documents required to be filed with the SEC. Portfolio Manager represents that it will, upon reasonable request of the Trust, provide to the Trust information regarding all such matters including, but not limited to, codes of ethics required byRule 17j-1 under the Investment Company Act and compliance procedures required byRule 206(4)-7 under the Investment Advisers Act, as well as certifications that, as contemplated underRule 38a-1 under the Investment Company Act, Portfolio Manager has implemented a compliance program that is reasonably designed to prevent violations of the federal securities laws by the Portfolio with respect to those services provided pursuant to this Agreement. Portfolio Manager acknowledges that the Trust may, in response to regulations or recommendations issued by the SEC 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.
(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 agenciesand/or provided to shareholders of the Trust.
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
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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.
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:
If to the Trust:
Robert J. Zion, Vice President
HC Capital Trust
Five Tower Bridge, 300 Barr Harbor Drive, Suite 300
West Conshohocken, PA 19428
HC Capital Trust
Five Tower Bridge, 300 Barr Harbor Drive, Suite 300
West Conshohocken, PA 19428
If to Portfolio Manager:
Cupps Capital Management, LLC
208 South LaSalle Street Suite 1368
Chicago, Illinois 60604
208 South LaSalle Street Suite 1368
Chicago, Illinois 60604
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.
The Trust acknowledges receipt of Part II of Portfolio Manager’s Form ADV, copies of which have been provided to the Trust’s Board of Trustees.
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 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.
ATTEST: | Cupps Capital Management, LLC | |
| By: | ||
ATTEST: | HC Capital Trust (on behalf of The Institutional Small Capitalization Equity Portfolio) | |
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| PROXY TABULATOR P.O. BOX 9112 FARMINGDALE, NY 11735 EVERY SHAREHOLDER’S VOTE IS IMPORTANT | ||
| PLEASE SIGN, DATE AND PROMPTLY RETURN YOUR | ||
| PROXY CARD IN THE ENCLOSED ENVELOPE TODAY | ||
| To vote by Internet | ||
| 1) | Read the Proxy Statement and have the proxy card below at hand. | |
| 2) | Go to website www.proxyvote.com | |
| 3) | Follow the instructions provided on the website. | |
| To vote by Telephone | ||
| 1) | Read the Proxy Statement and have the proxy card below at hand. | |
| 2) | Call | |
| 1-800-690-6903 3) | Follow the instructions. | |
| To vote by Mail | ||
| 1) | Read the Proxy Statement. | |
| 2) | Check the appropriate boxes on the proxy card below. | |
| 3) | Sign and date the proxy card. | |
| 4) | Return the proxy card in the envelope provided. | |
| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | ||
HC CAPITAL TRUST | ||
THE | ||
| The Board of Directors recommends you vote FOR the following | ||||||||
| proposal: 1. | Approval of a portfolio management agreement between the Trust, on behalf of The | |||||||
| LLC. 2. | ||||||||
| Shareholders of the Portfolio will also transact such further business as may properly come before the Special Meeting or any adjournment thereof. | ||||||||
| PLEASE SIGN, DATE, AND RETURN IN THE ADDRESSED ENVELOPE | ||||||||
| Your signature(s) on this Proxy should be exactly as your name(s) appear on this Proxy. If the shares are held jointly, each holder should sign this Proxy. Attorneys-in-fact, executors, administrators, trustees or guardians should indicate the full title and capacity in which they are signing. | ||||||||
