CLEARWATER INVESTMENT TRUST
(the Trust)
Clearwater Growth Fund
(the Fund)
332 Minnesota Street, Suite 2100
St. Paul, Minnesota 55101
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held August 22, 2001
A special meeting (meeting) of shareholders of the fund referred to
above will be held on Wednesday, August 22, 2001, at 8:30 a.m. (Central time) at
332 Minnesota Street, Suite 2100, St. Paul, Minnesota 55101 for the following
purposes:
(1) to approve a new subadvisory contract with Parametric Portfolio
Associates, Inc.; and
(2) to transact other business that may properly come before the meeting
or any adjournment of the meeting.
Your Trustees Have Unanimously Approved These Proposals and Recommend
That You Vote In Favor of These Proposals.
Shareholders of record of the fund at the close of business on June 30,
2001 are entitled to vote at the meeting or at any adjournment of the meeting.
This proxy statement and proxy card are being mailed to shareholders on or about
July 30, 2001.
It is important that you return your signed and dated proxy card
promptly, regardless of the size of your holdings, so that a quorum may be
assured.
- --------------------------------------------------------------------------------
Please complete, date and sign the proxy card for the shares held by you and
return the proxy card in the envelope provided so that your vote can be
recorded. No postage is required if the envelope is mailed in the United States.
Prompt return of your proxy or proxies may save the Trust the necessity and
expense of further solicitations. If you attend the meeting, you may vote your
shares in person.
- --------------------------------------------------------------------------------
By order of the board of trustees
Philip W. Pascoe, President
St. Paul, Minnesota
July 30, 2001
CLEARWATER INVESTMENT TRUST
Clearwater Growth Fund
332 Minnesota Street, Suite 2100
St. Paul, Minnesota 55101
PROXY STATEMENT
GENERAL
This proxy statement is furnished in connection with the solicitation
of proxies by and on behalf of the board of trustees of Clearwater Investment
Trust (the Trust) to be used at the special meeting of shareholders (meeting) of
the Clearwater Growth Fund (the fund) to be held at 332 Minnesota Street, Suite
2100, St. Paul, Minnesota 55101 on Wednesday, August 22, 2001, at 8:30 a.m.
(Central time) for the purpose set forth in the accompanying Notice of Meeting.
The trustees have fixed the close of business on June 30, 2001, as the
record date (record date) for determining the shareholders of the fund entitled
to notice of and to vote at the meeting. These shareholders will be entitled to
one vote per share at the meeting or any adjournment of the meeting. There were
5,787,564.130 shares of beneficial interest of the fund outstanding as of the
record date. Appendix A sets forth the persons who owned beneficially or of
record more than 5% of the fund's shares on the record date.
Proxies will be solicited by mail and also may be solicited in person
or by telephone by officers of the trust, Clearwater Management Company (CMC),
the fund's investment adviser, or the trustees.
The Trust will furnish, without charge, copies of the Trust's most
recent Annual and Semi-annual Reports to any shareholder upon request addressed
to Clearwater Investment Trust, 332 Minnesota Street, Suite 2100, St. Paul,
Minnesota 55101 or by telephone at (888) 228-0935.
This proxy statement and the proxy card are being mailed to
shareholders on or about July 30, 2001.
PROPOSAL
APPROVAL OF NEW INVESTMENT SUBADVISORY CONTRACT WITH PARAMETRIC
PORTFOLIO ASSOCIATES
General
CMC provides investment advisory services to the Fund pursuant to a
management contract that was approved by shareholders on February 24, 1998. CMC
is a Minnesota corporation, is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, (the Advisers Act) and is located
at 322 Minnesota Street, St. Paul, Minnesota 55101-1394. CMC and the Fund's
trustees have delegated responsibility to manage the Fund's investment portfolio
to Parametric pursuant to an interim subadvisory contract with Parametric that
was approved by the Board, including a majority of "non-interested" trustees
(the independent trustees), at a meeting held on May 6, 2001.
About Parametric
Parametric is a registered investment adviser under the Advisers Act,
with its principal executive office located at 1151 Fairview Avenue North
Seattle, Washington 98109. Parametric was founded in 1987 as a global equity
manager and prior to June 15, 2001 was a sub-partnership of PIMCO Advisors, L.P.
(PIMCO Advisors), a publicly traded investment management organization.
Parametric offers advice, investment management and related services to
institutional and individual clients.
Parametric has provided subadvisory services to the Fund since November
1, 1997 pursuant to a subadvisory contract with CMC. The Investment Company Act
of 1940, as amended, (the 1940 Act) requires an investment subadvisory contract
terminate automatically upon its "assignment." Under the 1940 Act, a direct or
indirect transfer of a controlling block of the voting securities of any person
controlling an investment subadviser is deemed to be an assignment. As described
further below, the ownership of a controlling interest in Parametric transferred
on June 15, 2001. As a result, the previous subadvisory contract approved by the
trustees on December 2, 1999 and by shareholders of the Fund on February 22,
2000 in connection with the acquisition of PIMCO Advisors by Allianz of America
(previous subadvisory contract) has terminated.
To ensure continuous subadvisory services to the Fund, the Board,
including a majority of independent trustees, approved an interim subadvisory
contract at a meeting held on May 6, 2001 in reliance on Rule 15a-4 under the
1940 Act. The terms of the interim subadvisory contract are substantially the
same as the previous subadvisory contract, except for certain provisions
required by Rule 15a-4 under the 1940 Act. The fee earned by Parametric under
the interim subadvisory contract is being held in an interest-bearing escrow
account with the Fund's custodian or a bank until a majority of the Fund's
outstanding shares approve a new subadvisory contract with Parametric. Upon the
shareholder approval of the new subadvisory contract with Parametric, the amount
in the escrow account (including interest earned) will be paid to Parametric. If
a majority of the outstanding shares of the Fund do not approve a new
2
subadvisory contract with Parametric, Parametric will be paid, out of the escrow
account, the lesser of (i) any costs incurred in performing the interim
subadvisory contract; or (ii) the total amount in the escrow account (plus
interest earned). The term of the interim subadvisory contract has a maximum of
150 days following the closing of the transaction described below unless
shareholders approve the proposed subadvisory contract.
The name, address and principal occupation, if any, of the principal
executive officers and each general partner of Parametric are in Appendix B.
Description of the Transaction. On June 15, 2001, PIMCO Advisors L.P.
(PIMCO) and Parametric Management Inc., the two general partners of Parametric,
entered into an Admission Agreement (the Admission Agreement) pursuant to which
PPA Acquisition LLC (PPA Acquisition) acquired all of the general partnership
interests in Parametric. Upon closing of the transaction, the general partners
of Parametric, in exchange for cash and promissory notes, each assigned its
respective general partnership interest such that PPA Acquisition obtained 100%
ownership interest in Parametric.
Post-Transaction Structure and Operations. Upon completion of the
transaction, PPA Acquisition Corp I and PPA Acquisition Corp II each has become
a general partner of Parametric. PPA Acquisition LLC is the sole stockholder of
PPA Acquisition Corp I, which in turn is the sole stockholder of PPA Acquisition
Corp II. PPA Acquisition LLC, a Delaware limited liability company is majority
owned by the Tahoma Fund, a Delaware limited liability company. The Tahoma Fund
is majority owned by Orca Bay Capital Corporation.
The names and addresses of persons controlling Parametric are in
Appendix C.
This purchase of Parametric by PPA Acquisition did not affect
Parametric's day-to-day business operations and the officers, portfolio managers
and portfolio analysts did not change as a result of the transaction. In
particular, the portfolio management and investment research related functions
for the Fund continue to be handled by Parametric's employees and were not
affected by this transition. Parametric continues to provide the same type and
quality of investment advisory services as it has been under the ownership of
PIMCO. Certain other non-investment related administrative services currently
provided by PIMCO such as human resources and accounting have been assumed by
Parametric upon closing of the transaction.
To provide for continuity of investment subadvisory services to the
Fund as a result of the change in control of Parametric, the trustees, including
the independent trustees, at a meeting held on May 6, 2001, voted to approve,
and recommended that the Fund's shareholders approve, the new subadvisory
contract with Parametric. Under the new subadvisory contract, Parametric will
continue to provide investment portfolio management services to the Fund.
Approval of the new subadvisory contract will not increase the subadvisory fee
rate paid by the Fund.
3
Material Terms of the New Subadvisory Contract
The material terms of the new subadvisory contract are substantially
identical to those of the current subadvisory contract. The stated subadvisory
fee rate to be paid by the Fund is identical under the new subadvisory contract
and the current subadvisory contract. The following discussion of the new
subadvisory contract is only a summary of the form of the contract attached to
the proxy statement as Appendix D. You should read the entire form of contract.
The new subadvisory contract provides that (i) Parametric will, subject
to the supervision of CMC and the board of trustees, regularly provide the Fund
with advice concerning the investment management of the Fund's portfolio as
appropriate to the achievement of the investment objectives and place orders for
the purchase and sale of portfolio securities of the Fund; (ii) the new
subadvisory contract will remain in full force and effect for two years from the
date it was signed and from year to year thereafter upon the approvals required
by the 1940 Act and will terminate automatically in the event of its assignment;
(iii) in the event that the new subadvisory contract terminates during any
portion of a year, the fee due to Parametric shall be prorated for that portion
of a calendar quarter during which the contract was in effect; and (iv)
Parametric is not liable to CMC, the Trust or any shareholder, except for
willful misfeasance, bad faith or gross negligence or for reckless disregard of
its obligations and duties under the contract.
For its services, Parametric is entitled to a subadvisory fee payable
by CMC of 0.15% of the Fund's average month end net assets under Parametric's
supervision. If the new subadvisory contract had been in effect for the fiscal
year ended December 31, 2000, the amount of subadvisory fees payable to
Parametric by CMC would have been identical to those payable under the current
subadvisory contract. The aggregate amount of subadvisory fees paid by CMC to
Parametric for the fiscal year ended December 31, 2000 were $260,657.
Trustees' Evaluation
The trustees have considered several factors relating to the new
subadvisory contract with Parametric. Specifically, the trustees have considered
the following:
o Parametric's qualification as an investment adviser. The trustees
reviewed the credentials and experience of the officers and employees
of Parametric who provide investment subadvisory services to the Fund,
and noted that the persons providing services to the Fund would not
change if the new subadvisory contract is approved by shareholders.
o Nature of the services provided to the Fund by Parametric. The trustees
reviewed the services to be provided by Parametric under the proposed
subadvisory agreement, and noted that no change in the level and type
of services by Parametric would occur post the transaction if the new
subadvisory agreement is approved by shareholders.
o Performance history of the Fund. The trustees considered the Fund's
investment performance since 1997, both against comparable mutual funds
and unmanaged indices, and noted that the change in ownership is not
expected to result in any changes in the
4
investment strategy and philosophy at Parametric, the management of
Parametric or the portfolio manager assigned to manage the Fund's
investments.
o Terms of the proposed subadvisory agreement. The trustees reviewed the
terms of the proposed subadvisory contract, and noted that there was no
material difference between the proposed subadvisory contract and the
previous subadvisory agreement which was approved by shareholders on
February 22, 2000. In particular, the trustees noted there was no
change to the subadvisory fee under the proposed subadvisory contract.
The trustees also considered that the fee and expense ratios of the
Fund are reasonable given the quality of services expected to be
provided and are comparable to the fee and expense ratios of similar
mutual funds.
After considering the above factors, the trustees believe the new
subadvisory contract and the proposed subadvisory fee to be reasonable and fair,
and the appointment of Parametric and approval of the new subadvisory contract
to be in the best interests of the Fund's shareholders.
Brokerage Policies
Parametric's securities trading on behalf of the Fund is executed
through brokers based upon their ability to provide best execution. Best
execution is determined considering commission rates, research and technology
skills, market experience and a variety of relevant issues. Credits based on
commissions paid to brokers are utilized for research, data, and other
analytical tools consistent with Securities and Exchange Commission
requirements. No securities trades are executed through affiliated brokers.
Section 15(f) of the 1940 Act
Section 15(f) of the 1940 Act permits, in the context of a change in
control of an investment adviser to a registered investment company, the receipt
by such investment adviser (or any of its affiliated persons) of any amount or
benefit in connection with such sale, as long as two conditions are satisfied.
First, there may not be imposed an "unfair burden" on the investment company as
a result of the sale of such interest, or any express or implied terms,
conditions or understandings applicable thereto. The term "unfair burden," as
defined in the 1940 Act, includes any arrangement during the two-year period
after the transaction whereby the investment adviser (or predecessor or
successor adviser), or any interested person of any such adviser, receives or is
entitled to receive any compensation, directly or indirectly, from the
investment company or its security holders (other than fees for bona fide
investment advisory or other services), or from any person in connection with
the purchase or sale of securities or other property to, from or on behalf of
the investment company (other than ordinary fees for bona fide principal
underwriting services).
The board of trustees has not been advised by either CMC or Parametric
of any circumstances arising from the change in control in Parametric that might
result in the imposition of an "unfair burden" being imposed on the Fund.
The second condition of Section 15(f) is that during the three-year
period after the transaction, at least 75% of each such investment company's
board of trustees must not be an
5
"interested person" of the investment adviser (or predecessor or successor
adviser). Currently, the Trust's board of trustees consists of only one trustee,
or 20% of the board, who would be considered an "interested person" of the
investment adviser.
Trustees' Recommendation
The Trustees Unanimously Recommend That You Vote To Approve The
Subadvisory Contract With Parametric.
Required Vote
Approval of the new subadvisory contract requires an affirmative vote
of a majority of the outstanding shares of the Fund (1940 Act Majority Vote)
which means the vote of the lesser of (i) 67% or more of the shares present at
the meeting, if the holders of more than 50% of the shares of the Fund are
present or represented by proxy, or (ii) more than 50% of the Fund's outstanding
shares. If the Fund's shareholders do not approve the new subadvisory contract,
the trustees will seek to obtain interim advisory services for the Fund from
another advisory organization. Thereafter, the trustees would either negotiate a
new subadvisory contract with an advisory organization selected by the trustees
or make other appropriate arrangements, subject to any required approval by the
Fund's shareholders.
ADDITIONAL INFORMATION
Other Business
As of the date of this proxy statement, the trustees are not aware of
any matters to be presented for action at the meeting other than those described
above. Should other business properly be brought before the meeting, it is
intended that the accompanying proxy will be voted in accordance with the
judgment of the persons named as proxies unless instructed to the contrary.
Proxies and Voting at the Meeting
The enclosed proxy is revocable by a shareholder at any time before it
is exercised by written notice to the trust (addressed to the secretary at the
trust's principal executive offices), by executing a superseding proxy or by
attending the meeting and voting in person. All valid proxies received prior to
the meeting (including any adjournment of the meeting) will be voted at the
meeting. Matters on which a choice has been provided will be voted as indicated
on the proxy card and, if no instruction is given, the persons named as proxies
will vote the shares represented by the proxy in favor of the proposals and will
use their best judgment in connection with the transaction of any other business
that may properly come before the meeting.
In the event that at the time the meeting is called to order a quorum
is not present in person or by proxy, the persons named as proxies may vote
those proxies which have been
6
received to adjourn the meeting to a later date. In the event that a quorum is
present but sufficient votes in favor of the proposal have not been received,
the persons named as proxies may propose one or more adjournments of the meeting
to permit further solicitation of proxies. Any adjournment will require the
affirmative vote of a majority of the shares of the fund present in person or by
proxy at the meeting. The persons named as proxies will vote those proxies which
they are entitled to vote in favor of the proposal in favor of an adjournment,
and will vote those proxies required to be voted against the proposal against an
adjournment.
A majority of the shares of the fund outstanding and entitled to vote
will be a quorum for the transaction of business at the meeting, but any lesser
number will be sufficient for adjournments. Abstentions will be treated as
shares that are present and entitled to vote with respect to the proposal, but
will not be counted as a vote in favor of the proposal. Accordingly, an
abstention from voting on the proposal has the same effect as a vote against the
proposal.
Manner and cost of proxy solicitation
In addition to the solicitation by use of the mails, certain officers
and employees of CMC, none of whom will receive compensation for their services
other than their regular salaries, may solicit the return of proxies personally
or by telephone or fax. CMC will bear all of the costs associated with the
meeting, including the cost of solicitation.
Shareholder proposals
The trust is not required and does not intend to hold a meeting of
shareholders each year. Instead, meetings will be held only when and if
required. Any shareholders desiring to present a proposal for consideration at
the next meeting of fund shareholders must submit the proposal in writing, so
that it is received by the fund within a reasonable time before any meeting. The
submission by a shareholder of a proposal for inclusion in a proxy statement
does not guarantee that it will be included. Shareholder proposals are subject
to certain regulations under the federal securities laws.
Household delivery of fund documents
With your consent, Clearwater may send a single copy of fund documents
to your residence for you and any other shareholder who is a member of your
household. If you wish to revoke your consent to this practice, you may do so by
notifying Clearwater by telephone or in writing. Clearwater will begin separate
mailings within 30 days after receiving your notice.
It is important that proxies be returned promptly.
July 30, 2001
APPENDIX A
As of June 30, 2001, the following persons or entities owned
beneficially or of record more than 5% of the outstanding shares of each Fund:
Clearwater Growth Fund
Ownership of Trustees, Officers and Other 5% Shareholders
Personal/ Sole Voting Shared Voting Sole Investment Shared Spouse
--------- ----------- ------------- --------------- ------
Revocable Trust Investment
--------------- ----------
FTW 58,618.908 245,686.734 539,027.231 245,686.734 539,027.231 20,326.170
1.01% 4.25% 9.31% 4.25% 9.31% 0.35%
PWP 0.000 0.000 0.000 0.000 11,314.013 0.000
0.20%
LRJ 0.000 107,551.398 0.000 0.000 107,551.398 0.000
1.86% 1.86%
LHK 0.000 0.000 0.000 0.000 0.000 15,288.099
0.26%
CWR 8,268.385 8,268.385 0.000 8,268.385 0.000 N/A
.014% .014% .014%
LER 0.000 0.000 0.000 0.000 0.000 16,752.513
0.29%
FWDII 1,245.979 1,245.979 262,851.799 1,245.979 303,603.938 0.000
0.02% 0.02% 4.54% 0.02% 5.25%
WJD 43,067.510 242,681.700 494,414.739 242,681.700 494,414.739 46,782.979
0.74% 4.19% 8.54% 4.19% 8.54% 0.81%
GHW 0.000 0.000 1,256,175.648 0.000 1,256,175.648 31,505.561
21.70% 21.70% 0.54%
WTW 32,286.053 42,974.891 1,494,832.222 42,974.891 1,494,832.222 12,766.613
0.56% 0.74% 25.83% 0.74% 25.83% 0.22%
DMW 27,989.978 0.000 571,901.616 0.000 571,901.616 0.000
0.48% 9.88% 9.88%
WSRIII 990.553. 21,316.490 436,042.496 21,316.490 436,042.496 0.000
0.02% 0.37% 7.53% 0.37% 7.53%
CAW 196,190.127 196,190.127 473,072.687 196,190.127 473,072.687 N/A
3.39% 3.39% 8.17% 3.39% 8.17%
WWW 31,505.561 31,505.561 571,486.683 31,505.561 571,486.683 0.000
0.54% 0.54% 9.87% 0.54% 9.87%
JWTJR 0.000 306,419.092 23,411.280 306,419.092 23,411.280 0.000
5.29% 0.40% 5.29% 0.40%
Key
Trustees and Officers Other 5% Holders
<FN>
PWP Philip W. Pascoe** FWDII Frederick W. Davis II* JWTJR John W. Titcomb, Jr.**
LRJ Lucy R. Jones* WJD W. John Driscoll* WWW Wendy W. Weyerhaeuser**
LHK Lawrence H. King* GHW George H. Weyerhaeuser** CAW Charles A. Weyerhaeuser*
CWR Charles W. Rasmussen* WTW William T. Weyerhaeuser**
LER Laura E. Rasmussen* DMW David M. Weyerhaeuser**
FTW Frederick T. Weyerhaeuser* WSRIII Walter S. Rosenberry, III*
*332 Minnesota Street, Suite 2100, St. Paul, MN 55101-1394.
**1145 Broadway, Suite 1500, P.O. Box 1278, Tacoma, WA 98402.
</FN>
APPENDIX B
The following provides the name, address and primary occupation of the principal
executive officers and general partners of Parametric Portfolio Associates
(Parametric).
The address for the following individuals and entities is 1151 Fairview Avenue
North, Seattle, Washington 98109.
Name Principal Occupation
- ---- --------------------
Brian Langstraat Chief Executive Officer and Treasurer
Ross Chapin President and Secretary
David Stein Chief Investment Officer
Andrew Abramsky Chief Operating Officer and Chief Compliance
Officer
PPA Acquisition Corp I General Partner
PPA Acquisition Corp II General Partner
APPENDIX C
The following provides the name and address of persons controlling Parametric
Portfolio Associates.
Name Address Basis of Control
- ----- ------- ----------------
PPA Acquisition, LLC 1151 Fairview Avenue North, Sole Shareholder of PPA Acquisition
Seattle, Washington 98109 Corp I
William Cornelius 1151 Fairview Avenue North, Chairman and Director of PPA
Seattle, Washington 98109 Acquisition, LLC
Furman Moseley 1151 Fairview Avenue North, Director of PPA Acquisition, LLC
Seattle, Washington 98109
Stanley McCammon P.O. Box 21749, Seattle, Washington Director of PPA Acquisition, LLC
98111
Timothy Carver P.O. Box 21749, Seattle, Washington Director of PPA Acquisition, LLC
98111
The Tahoma Fund P.O. Box 21749, Seattle, Washington Majority owner and member of PPA
98111 Acquisition LLC
Orca Bay Partners, LLC P.O. Box 21749, Seattle, Washington Manager of the Tahoma Fund
98111
Orca Bay Capital Corporation P.O. Box 21749, Seattle, Washington Majority owner and member of the Tahoma Fund
98111
John McCaw, Jr. P.O. Box 21749, Seattle, Washington Sole shareholder of Orca Bay Capital
98111 Corporation
APPENDIX D
SUBADVISORY CONTRACT AMONG THE TRUST, ON BEHALF
OF CLEARWATER GROWTH FUND, CMC AND PARAMETRIC
SUBADVISORY CONTRACT
AGREEMENT made as of the ___ day of __________, 2001, by and among
CLEARWATER INVESTMENT TRUST, a Massachusetts business trust (the "Trust"),
CLEARWATER MANAGEMENT CO., INC., a Minnesota corporation (the "Manager"), and
PARAMETRIC PORTFOLIO ASSOCIATES (the "Subadviser").
W I T N E S S E T H:
WHEREAS, the Manager desires to utilize the services of the Subadviser
as financial counsel with respect to the Clearwater Growth Fund (the "Fund"), a
separate series of the Trust; and
WHEREAS, the Subadviser is willing to perform such services on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and benefits
herein contained, it is agreed as follows:
1. _______ The Subadviser's Services. The Subadviser will serve the
Manager as financial counsel with respect to the Fund which is under the
management of the Manager pursuant to the Management Contract dated May 1, 1998
between the Manager and the Trust. Subject to the supervision of the Manager and
the Trust's Board of Trustees, the investment policies and restrictions
applicable to the Fund as set forth in the registration statement of the Trust
filed with the Securities and Exchange Commission and such resolutions as from
time to time may be adopted by the Trust's Trustees and furnished to the
Subadviser, the Subadviser is hereby authorized and directed and hereby agrees
to develop, recommend and implement such investment program and strategy for the
Fund as may from time to time in the circumstances appear most appropriate to
the achievement of the investment objectives of the Fund as stated in the
aforesaid registration statement, to provide research and analysis relative to
the investment program and investments of the Fund, to determine what securities
should be purchased and sold and what portion of the assets of the Fund should
be held in cash or cash equivalents or other assets and to monitor on a
continuing basis the performance of the portfolio securities of the Fund. In
addition, the Subadviser will place orders for the purchase and sale of
portfolio securities and will advise the Manager and the custodian for the Fund
on a prompt basis of each purchase and sale of a portfolio security specifying
the name of the issuer, the description and amount or number of shares of the
security purchased, the market price, commission and gross or net price, trade
date, settlement date and identity of the effecting broker or dealer. From time
to time as the Trustees of the Trust or the Manager may reasonably request, the
Subadviser will furnish to the Trust's officers and to each of its Trustees
reports on portfolio transactions and reports on issues of securities held by
the Fund, all in such detail as any such Trustee or the Manager may reasonably
request. The Subadviser also will inform the Trust's officers and Trustees on a
current basis of changes in investment strategy or tactics. The Subadviser will
make its officers and employees available to meet with the Trust's officers and
Trustees and the Manager's officers and Directors at least quarterly on due
notice to review the investments and investment program of the Fund in the light
of current and prospective economic and market conditions.
2. Avoidance of Inconsistent Position.
(a) ______ In connection with purchases and sales of portfolio
securities for the account of the Fund, the Subadviser will not act as a
principal or agent or receive any commission except as permitted by the
Investment Company Act of 1940, as amended (the "1940 Act"). The Subadviser
shall arrange for the placing of all orders for the purchase and sale of
portfolio securities for the Fund's account with brokers or dealers selected by
the Subadviser. In the selection of such brokers or dealers and the placing of
such orders, the Subadviser is directed at all times to seek for the Fund the
most favorable execution and net price available except as otherwise described
herein. It is understood that it is desirable for the Fund that the Subadviser
have access to supplemental investment and market research and security and
economic analyses provided by brokers who may execute brokerage transactions at
a higher cost to the Fund than may result when allocating brokerage to other
brokers on the basis of seeking the most favorable price and efficient
execution. Therefore, the Subadviser is authorized to place orders for the
purchase and sale of securities for the Fund with such brokers consistent with
the requirements of Section 28(e) of the Securities Exchange Act of 1934,
subject to review by the Trust's Trustees from time to time with respect to the
extent and continuation of this practice. It is understood that the services
provided by such brokers may be useful to the Subadviser in connection with its
services (and the services of the Subadviser's affiliates) to other clients.
(b) ______ On occasions when the Subadviser deems the purchase or sale
of a security to be in the best interest of the Fund as well as other clients,
the Subadviser, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be sold or purchased in order to obtain the best
execution and lower brokerage commissions, if any. In such event, allocation of
the securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Subadviser in the manner it considers to be the
most equitable and consistent with its fiduciary obligations to the Fund and to
such clients.
3. _______ Other Agreements, etc. It is understood that any of the
shareholders, Trustees, officers and employees of the Trust may be a
shareholder, director, officer or employee of, or be otherwise interested in,
the Subadviser, any interested person (as defined in the 1940 Act) of the
Subadviser, any organization in which the Subadviser may have an interest or any
organization which may have an interest in the Subadviser and that the
Subadviser, any such interested person or any such organization may have an
interest in the Trust. It is also understood that the Subadviser, the Manager
and the Trust may have advisory, management, service or other contracts with
other individuals or entities, and may have other interests and businesses. When
a security proposed to be purchased or sold for the Trust is also to be
purchased or sold for other accounts managed by the Subadviser at the same time,
the Subadviser shall make such purchases or sales on a pro rata, rotating or
other equitable basis so as to avoid any one account being preferred over any
other account.
4. _______ Subadviser's Compensation. The Manager shall pay to the
Subadviser for its services hereunder a fee at the annual rate of 0.15% of the
Fund's net assets under the Subadviser's management. Such fee shall be
calculated and accrued on a monthly basis as a percentage of the Fund's month
end net assets under the Subadviser's management, and shall be payable quarterly
after the end of each calendar quarter on or before the 15th day of January,
April, July and October of each year with respect to the preceding quarter. If
this Contract shall be effective for only a portion of a calendar quarter, the
aforesaid fee shall be prorated for that portion of such calendar quarter during
which this Contract is in effect.
5. _______ Assignment and Amendment. ___ This Contract shall
automatically terminate, without the payment of any penalty, in the event of its
assignment (as defined in the 1940 Act) or in the event of the termination of
the Management Contract between the Trust and the Manager insofar as it applies
to the Fund; provided, that such termination shall not relieve either party of
any liability incurred hereunder. The terms of this Contract shall not be
changed unless such change is approved in accordance with the requirements of
the 1940 Act, and as such requirements may be modified by rule, regulation or
order of the Securities and Exchange Commission (the "SEC").
6. Effective Period and Termination of this Contract.
(a) ______ This Contract shall become effective on the date hereof and
shall remain in full force and effect until two years from the date hereof and
from year to year thereafter, but only so long as its continuance is approved
annually in accordance with the requirements of the 1940 Act, and as such
requirements may be modified by rule, regulation or order of the SEC, subject to
the respective rights of the Trust, the Manager and the Subadviser to terminate
this Contract as provided in paragraphs (b) and (c) hereof.
(b) ______ The Trust or the Manager may at any time terminate this
Contract by not more than sixty (60) days' nor less than thirty (30) days'
written notice given to the Subadviser.
(c) ______ The Subadviser may at any time terminate this Contract by
not less than one hundred twenty (120) days' written notice given to the Trust
and the Manager.
7. _______ Complete Agreement. This Contract states the entire
agreement of the parties hereto, and is intended to be the complete and
exclusive statement of the terms hereof. It may not be added to or changed
orally, and may not be modified or rescinded except by a writing signed by the
parties hereto and in accordance with Section 5 hereof and the applicable
requirements of the 1940 Act.
8. _______ Nonliability of the Subadviser. ___ In the absence of
willful misfeasance, bad faith or gross negligence on the part of the
Subadviser, or of reckless disregard of its obligations and duties hereunder,
the Subadviser shall not be subject to any liability to the Manager or the
Trust, to any shareholder of the Fund, or to any person, firm or organization,
for any act or omission in the course of, or connected with, rendering services
hereunder. Nothing herein, however, shall derogate from the Subadviser's
obligations under applicable federal and state securities laws.
9. _______ Limitation of Liability of the Trustees, Officers and
Shareholders. A copy of the Declaration of Trust of the Trust is on file with
the Secretary of State of The Commonwealth of Massachusetts, and notice is
hereby given that this Contract is executed on behalf of the Trustees of the
Trust as Trustees and not individually and that the obligations under this
Contract are not binding upon any of the Trustees, officers or shareholders of
the Trust but are binding only upon the assets and property of the Fund.
10. ______ Notices. Any notice, instruction, request or other
communications required or contemplated by this Contract shall be in writing and
shall be duly given when deposited by first class mail, postage prepaid,
addressed to (or delivered by hand with confirmation to) the Trust, the Manager
or the Subadviser at the applicable address set forth below:
If to Subadviser:
Parametric Portfolio Associates
1151 Fairview Avenue North
Seattle, Washington 98109
If to Trust:
Clearwater Investment Trust
332 Minnesota Street, Suite 2100
St. Paul, Minnesota 55101-1394
If to Manager:
Clearwater Management Co., Inc.
332 Minnesota Street, Suite 2100
St. Paul, Minnesota 55101-1394
11. Disclosure Statement. The Manager and the Trust acknowledge receipt
of the Subadviser's written disclosure statement required by Rule 204-3 under
the Investment Advisers Act of 1940 not less than 48 hours prior to entering
into this Contract.
12. Governing Law. This Contract and all performance hereunder shall be
governed by, interpreted, construed and enforced in accordance with the laws of
the State of Minnesota.
13. ______ Any term or provision of this Contract which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms or provisions of this Contract or affecting
the validity or enforceability of any of the terms or provisions of this
Contract in any other jurisdiction.
14. ______ This Contract may be executed in one or more counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be
executed by their duly authorized officers and as of the day and year first
written above.
CLEARWATER INVESTMENT TRUST
By:
Name:
Title:
CLEARWATER MANAGEMENT CO., INC.
By:
Name:
Title:
PARAMETRIC PORTFOLIO ASSOCIATES
By:
Name:
Title:
CLEARWATER INVESTMENT TRUST
332 Minnesota Street, Suite 2100
St. Paul, Minnesota 55101
This proxy is solicited on behalf of the Board of Trustees of Clearwater
Investment Trust (the "Trust") for the Special Meeting of Shareholders (the
"Meeting"). The undersigned hereby appoints Frederick T. Weyerhaeuser and Lucy
R. Jones and each of them, attorneys and proxies for the undersigned, with full
power of substitution and revocation to represent the undersigned and to vote on
behalf of the undersigned all shares of Clearwater Investment Trust (the
"Trust") which the undersigned is entitled to vote at the Special Meeting of
Shareholders to be held at the offices of Clearwater Investment Trust, 332
Minnesota Street, Suite 2100, St. Paul, Minnesota 55101 on August 22, 2001, at
8:30 a.m., Central time, and at any adjournments thereof. The undersigned hereby
acknowledges receipt of the Notice of the Special Meeting of Shareholders and
the accompanying Proxy Statement and hereby instructs the attorneys and proxies
to vote the shares as indicated on this Proxy Card. In their discretion, the
proxies are authorized to vote upon such other business as may properly come
before the Meeting. The undersigned hereby revokes any proxy previously given.
PLEASE SIGN AND DATE THE PROXY CARD AND RETURN IT WITH YOUR VOTE IN THE ENCLOSED
ENVELOPE
Please indicate your vote by an "X" in the appropriate box, below. This proxy,
if properly executed, will be voted in the manner directed by the shareholder.
If no direction is made, this proxy will be voted FOR all Proposals. Please
refer to the Proxy Statement for a discussion of the Proposals.
PLEASE MARK VOTES
AS IN THIS EXAMPLE [X]
For Against Abstain
Approve Subadvisory Contract with Parametric
Portfolio Associates. Clearwater Growth Fund [ ] [ ] [ ]
Shareholders only.
-----------------------
Please be sure to sign and date this Date
Proxy. -----------------------
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Please sign your name in full. If joint
Shareholder sign here Co-owner sign here owners, EITHER may sign this proxy. When
signing as attorney, executor,
administrator, trustee, guardian or
corporate officer, please give your full
title.
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