File No. 33-12289
As filed with Securities and Exchange Commission on April 29, 1996
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Pre-Effective Amendment No. ___ / /
Post-Effective Amendment No. 10 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 / X /
AMENDMENT NO. 10 / X /
(Check appropriate box or boxes)
CLEARWATER INVESTMENT TRUST
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(Exact name of registrant as specified in charter)
W-2090 First National Bank Building, St. Paul, Minnesota 55101
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(Address of principal executive office) Zip Code
Registrant's Telephone Number, including Area Code: (612) 228-0935
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Joseph P. Barri, Hale and Dorr, 60 State Street, Boston, MA 02109
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(Name and address of agent for service)
It is proposed that this filing will become effective (check appropriate box)
/ X / on April 30, 1996, pursuant to paragraph (b)
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Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant
has registered an indefinite number of securities under the Securities Act of
1933. The Registrant filed the notice required by Rule 24f- 2 for its most
recent fiscal year on March 7, 1996.
CLEARWATER INVESTMENT TRUST
Cross-Reference Sheet Showing Location in Prospectus and Statement of Additional
Information of Information Required by Items of the Registration Form
Location in Prospectus
or Statement of
Form N-1A Item Number and Caption Additional Information
- --------------------------------- ----------------------
1. Cover Page............................Prospectus - Cover Page
2. Synopsis..............................Prospectus - Expense Information
3. Condensed Financial Information.......Prospectus - Financial Highlights
4. General Description of Registrant.....Prospectus - Cover Page; What Are
the Funds' Investment Objectives and
Important Policies?; Other
Information
5. Management of the Fund................Prospectus - How Are the Funds
Managed?
6. Capital Stock and Other Securities...Prospectus - What Are the Funds'
Investment Objectives and
Important Policies?; Dividends,
Distribution and Taxation; Other
Information
7. Purchase of Securities Being Offered..Prospectus - How Are Shares
Purchased?; Exchange of Shares
8. Redemption or Repurchase..............Prospectus - How Are Shares
Redeemed?; Exchange of Shares
9. Pending Legal Proceedings.............Not Applicable
10. Cover Page............................Statement of Additional
Information - Cover Page
(i)
Location in Prospectus
or Statement of
Form N-1A Item Number and Caption Additional Information
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11. Table of Contents.....................Statement of Additional
Information - Cover Page
12. General Information and History.......Statement of Additional
Information - Cover Page; The Trust
13. Investment Objectives and Policies....Statement of Additional
Information - Objectives, Investment
Policies and Restrictions
14. Management of the Fund................Statement of Additional
Information - Management, Advisory
and Other Services; Executive
Officers and Trustees
15. Control Persons and Principal Holders
of Securities.......................Statement of Additional
Information - Management, Advisory
and Other Services; Executive
Officers and Trustees
16. Investment Advisory and Other
Services............................Statement of Additional
Information - Management, Advisory
and Other Services; Independent
Public Accountants
17. Brokerage Allocation and Other
Practices...........................Statement of Additional
Information - Brokerage
18. Capital Stock and Other Securities....Statement of Additional
Information - The Trust
19. Purchase, Redemption and Pricing of
Securities Being Offered............Statement of Additional
Information - Determination of Net
Asset Value Per Share
(ii)
Location in Prospectus
or Statement of
Form N-1A Item Number and Caption Additional Information
- --------------------------------- ----------------------
20. Tax Status............................Statement of Additional
Information - Taxes
21. Underwriters..........................Statement of Additional
Information - None
22. Calculation of Performance Data.......Statement of Additional
Information - Calculation of
Performance Data
23. Financial Statements..................Statement of Additional
Information - Cover Page
(iii)
CLEARWATER INVESTMENT TRUST
Clearwater Growth Fund and Clearwater Small Cap Fund
Prospectus - April 30, 1996
Clearwater Growth Fund (the "Growth Fund") and Clearwater Small Cap Fund (the
"Small Cap Fund") (each, a "Fund") are each separate, diversified investment
portfolios of Clearwater Investment Trust (the "Trust"), an open-end, management
investment company organized under the laws of The Commonwealth of
Massachusetts.
The primary investment objective of both Funds is long-term growth of capital.
As a secondary objective, both Funds seek current investment income. Each Fund
seeks to achieve its objectives by investing in a broad list of carefully
selected, reasonably priced securities, consisting primarily of common stocks,
preferred stocks and convertible and non-convertible fixed income securities.
This Prospectus concisely sets forth information about the Growth Fund
and the Small Cap Fund that you should know before investing. You should retain
this Prospectus for future reference. More information about the Funds is
included in the Statement of Additional Information, dated May 1, 1996, which is
incorporated herein by reference in its entirety and a copy of which may be
obtained free of charge by calling the Trust's transfer agent, Fiduciary
Counselling, Inc. at (612) 228-0935 or by written request addressed to Fiduciary
Counselling, Inc., 332 Minnesota Street, Suite 2100, St. Paul, Minnesota
55101-1394 (attention: Clearwater Investment Trust). Other information about the
Funds has been filed with the Securities and Exchange Commission and is
available upon request and without charge.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
TABLE OF CONTENTS
Page
Expense Information................................................. 3
Financial Highlights................................................ 5
What Are the Funds' Investment Objectives and
Important Policies?.............................................. 7
How Are the Funds Managed?.......................................... 10
How Are Shares Purchased?........................................... 13
How Are Shares Redeemed?............................................ 14
Exchange of Shares.................................................. 15
Dividends, Distributions and Taxation............................... 16
Performance Data.................................................... 17
Other Information................................................... 18
Appendix--Description of Bond Ratings............................... A-1
Form of Purchase Order and Account Application...................... F-1
Form of Redemption Request.......................................... F-6
Form of Exchange Request............................................ F-8
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EXPENSE INFORMATION
The following table sets forth the annual operating expenses of each
Fund, expressed as a percentage of the average net assets of the Fund and based
on expenses for the fiscal year ended December 31, 1995. The example set forth
below shows the amount of operating expenses that would be incurred by an
investor purchasing $1,000 of shares of each Fund whether or not the investor
redeems his or her investment at the end of one, three, five and ten years.
GROWTH SMALL CAP
FUND FUND
Shareholder Transaction Expenses: None None
Annual Fund Operating Expenses (as % of average net assets):
Management Fees* (after adjustments)...... 1.08% 1.35%
Other Fees and Expenses................... 0.00% 0.00%
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Total Operating Expenses.................. 1.08% 1.35%
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* Applicable state securities laws do not permit
Clearwater Management Co., Inc. (the "Manager") to charge its management fee
with respect to certain types of assets held by the Funds. If these laws did not
apply, the management fee rates for the Growth Fund and the Small Cap Fund would
be 1.10% and 1.35%, respectively, of average net assets.
Example:
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return (with or without redemption at the end of each time period):
One Year $ 11 $ 14
Three Years $ 34 $ 43
Five Years $ 60 $ 74
Ten Years $132 $162
The purpose of the above table and example is to assist an investor in
understanding the various costs and expenses of each Fund that will be borne
directly or indirectly by an investor in such Fund. The costs and expenses
included in the table and example should not be considered representative of
past or future expenses. Actual returns and expenses of the Funds may vary
significantly from the returns and expenses assumed in the above table and
example. For more information regarding management fees
-3-
and other expenses of the Funds, including information regarding the basis upon
which management fees are paid, see "How Are The Funds Managed?" in the
Prospectus and "Management, Advisory and Other Services" in the Statement of
Additional Information.
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FINANCIAL HIGHLIGHTS
The following audited information is covered by the independent
auditor's report on the Funds' financial statements and selected per share data
and ratios and is included in the Funds' 1996 Annual Report to Shareholders,
which is incorporated by reference in the Statement of Additional Information.
The information presented below should be read in conjunction with the Annual
Report, which includes more information about each Fund's performance and is
available free of charge by calling the Trust's transfer agent at (612)228-0935.
Selected data for a Fund share outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
GROWTH FUND
Seven-
Month
Period
Ended
Year Ended December 31, Dec.31,
1995 1994 1993 1992 1991 1990 1989 1988 1987
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ............. $13.62 $14.49 $15.98 $15.42 $10.91 $11.55 $8.52 $8.32 $10.00
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Income from investment
operations:
Net investment
income ............. .01 .06 .09 .11 .14 .16 .13 .12 .08
Net gains or losses
on securities (both
realized and
unrealized) ........ 4.43 .11 .27 .56 4.51 (.64) 3.03 .20 (1.68)
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Total from
investment
operations .. 4.44 .17 .36 .67 4.65 (.48) 3.16 .32 (1.60)
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Less distributions:
Dividends (from net
investment income) ....... (.01) (.06) (.09) (.11) (.14) (.16) (.13) (.12) (.08)
Distributions (from
capital gains) ........... (1.04) (.98) (1.76) .00 .00 .00 .00 .00 .00
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Total
distributions (1.05) (1.04) (1.85) (.11) (.14) (.16) (.13) (.12) (.08)
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Net asset value, end
of period ..................... $17.01 $13.62 $14.49 $15.98 $15.42 $10.91 $11.55 $8.52 $8.32
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Total return* ..................... 32.6% 1.2% 2.2% 4.4% 42.8% (4.1)% 37.2% 3.8% (16.1)%
Ratios/Supplemental
Data
Net assets, end of
year (000s omitted) ...... $84,775 $65,999 $61,037 $67,554 $65,818 $42,407 $42,458 $30,200 $27,939
Ratio of expenses to
average net assets ....... 1.08% 1.07% 1.08% 1.10% 1.17% 1.23% 1.24% 1.38% 1.45%**
Ratio of net invest-
ment income to
average net assets ....... .06% .39% .55% .74% 1.05% 1.45% 1.22% 1.38% 3.26%**
Portfolio turnover
rate (excluding
short-term
securities) .............. 58.64% 70.69% 52.76% 32.08% 29.27% 36.19% 53.03% 70.20% 54.87%
Average Commission Rate Paid $0.055
<FN>
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* Total return figures are based on the change in net asset value of a share during the period and assumes
reinvestment of distributions at net asset value.
** Adjusted to annual basis.
</FN>
</TABLE>
-5-
<TABLE>
<CAPTION>
SMALL CAP FUND
Eleven-
Month
Period
Year Ended Ended
December 31, 1 Dec 31,
1995 1994 1993 1992 1991 1990 1989
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<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $9.89 12.26 $11.50 $11.30 $9.37 $10.16 $10.00
- ------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income .04 - .17 .17 .29 .37 .43 .36
Net gains or losses
on securities (both
realized and
unrealized) 2.56 (.99) 1.60 .25 1.93 (.79) .32
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Total from
investment
operations 2.60 (.82) 1.77 .54 2.30 (.36) .68
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Less Distributions:
Dividends (from net
investment income) (.04) (.17) (.17 (.29) (.37) (.43) (.36)
Distributions (from
capital gains) (.98) (1.38) (.84) (.05) .00 .00 (.16)
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Total distributions: (1.02) (1.59) (1.01) (.34) (.37) (.43) (.52)
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Net asset value, end of period $11.47 $9.89 $12.26 $11.50 $11.30 $9.37 $10.16
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2
Total Return 26.3% (6.7)% 15.4% 4.9% 24.9% (3.6)% 6.8%
Ratios/Supplemental Data
Net assets, end of period
(000s omitted) $26,826 $17,998 $13,972 $13,128 $12,537 $7,936 $7,650
Ratio of expenses to 3
average net assets 1.35% 1.40% 1.47% 1.49% 1.62% 1.91% 2.44%
Ratio of net investment
income to average net 3
assets .36% 1.61% 1.38% 2.54% 3.64% 4.37% 4.64%
Portfolio turnover
rate (excluding
short-term
securities) 77.76% 122.88% 58.49% 73.07% 67.42% 36.95% 42.63%
Average Commission Rate Paid $0.043
<FN>
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1 Effective January 1, 1994, Kennedy Capital Management became the Subadviser for the Fund.
2 Total return figures are based on the change in net asset value of a share during the period and
assumes reinvestment of distributions at net asset value.
3 Adjusted to an annual basis.
</FN>
</TABLE>
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WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES AND IMPORTANT POLICIES?
Growth Fund
The primary investment objective of the Growth Fund is long-term
capital growth. As a secondary objective, the Growth Fund seeks current
investment income. The Growth Fund pursues these objectives by investing in a
broad list of carefully selected securities which, in the opinion of the Growth
Fund's portfolio Subadviser, are reasonably priced and whose prices do not
reflect a premium based upon current market perception. In managing the
investment portfolio of the Growth Fund, the Growth Fund's portfolio Subadviser
focuses on long-term growth and avoids speculating on broad changes in market
levels. As a result, assets of the Growth Fund are usually substantially fully
invested in securities.
Under normal circumstances, at least 80% of the Growth Fund's assets
will be invested in securities which, in the opinion of the portfolio
Subadviser, offer the potential for capital growth. Such securities consist
principally of common stocks, but may also consist of preferred stocks and
convertible and non-convertible fixed income securities. The balance of the
Growth Fund's portfolio, up to 20% of the Growth Fund's assets, may be invested
in securities which are income-producing but which may not have significant
capital growth potential. Such securities consist principally of dividend-paying
common and preferred stocks, short-term notes and cash equivalents. Fixed income
securities purchased by the Growth Fund will consist of obligations of the
United States Government and its agencies and instrumentalities ("U.S.
Government Securities") and investment grade corporate bonds and commercial
paper.
Small Cap Fund
The primary investment objective of the Small Cap Fund is long-term
capital growth. As a secondary objective, the Small Cap Fund seeks current
investment income. Under normal market conditions, the Small Cap Fund pursues
these objectives by investing at least 65% of its total assets in equity and
fixed income securities of companies that have total equity market
capitalizations of $1 billion or lower. The proportions among the types of
securities in which the Small Cap Fund's assets are invested will vary from time
to time depending on the outlook for the economy and the securities markets, the
quality of available investments, the level of interest rates and other factors.
* * * * * *
The investment objectives of the Growth Fund and the Small Cap Fund and
certain investment restrictions described in the Statement of Additional
Information are fundamental and may not be changed without shareholder approval.
Each Fund has also adopted
-7-
fundamental investment policies relating to industry concentration and issuer
diversification that may not be changed without shareholder approval. See
"Objectives, Investment Policies and Restrictions" in the Statement of
Additional Information.
Since all investments are subject to inherent market risks and
fluctuations in value due to earnings, economic conditions and other factors,
neither the Growth Fund nor the Small Cap Fund can assure that its investment
objectives will be achieved.
Investment Policies and Investments Common To Both Funds
Equity Securities. Each Fund's portfolio of equity securities may
consist of common and preferred stocks that trade on national securities
exchanges or are quoted on the National Association of Securities Dealers'
Nasdaq National Market and either have the potential for capital appreciation or
pay dividends or both, as well as fixed income securities that are convertible
into such common or preferred stocks.
Fixed Income Securities. Each Fund may invest in long-term fixed income
securities (with maturities exceeding ten years), intermediate-term fixed income
securities (with maturities ranging from one to ten years) and short-term fixed
income securities (with maturities of less than one year). Because fixed income
securities tend to decrease in value when interest rates rise and increase in
value when interest rates fall, each Fund's performance may be affected by its
portfolio Subadviser's ability to anticipate and respond to fluctuations in
market interest rates.
In order to reduce the risk of nonpayment of principal or interest on
fixed income securities, each Fund will invest in such securities only if they
are rated, at the time of investment, BBB or better by Standard & Poor's Ratings
Group ("Standard & Poor's") or Baa or better by Moody's Investors Service, Inc.
("Moody's") or, if unrated, determined to be of equivalent quality by the Fund's
portfolio Subadviser (i.e., investment grade). Fixed income securities in the
lowest investment grade category (i.e., BBB or Baa) may have speculative
characteristics and changes in economic conditions or other circumstances are
more likely to lead to a weakened capacity to make principal and interest
payments than is the case with higher grade securities. Neither Fund is required
to dispose of securities whose ratings drop below investment grade, but each
Fund may do so if considered appropriate by its portfolio Subadviser. See the
Appendix to this Prospectus for a description of the corporate bond ratings
assigned by Moody's and Standard & Poor's.
A Fund's investments in zero coupon, stripped or certain other fixed
income securities with original issue discount or market discount could require
the Fund to sell certain of its portfolio securities in order to generate
sufficient cash to
-8-
satisfy certain income distribution requirements. See "Taxes" in the Statement
of Additional Information.
Foreign Securities. Each Fund may invest up to 25% of its total assets
in equity and fixed income securities of foreign issuers from developed and
developing countries throughout the world. Changes in foreign currency exchange
rates will affect the value of foreign securities that are denominated in
foreign currencies and investment in such securities may result in higher
expenses due to costs associated with converting U.S. dollars to foreign
currencies. In addition, investment in foreign securities generally may present
a greater degree of risk than investment in domestic securities because of the
possibility of less publicly-available financial and other information, more
volatile and less liquid securities markets, less securities regulation, higher
brokerage costs, imposition of foreign withholding and other taxes, war,
expropriation or other adverse governmental actions.
U.S. Government Securities. The U.S. Government Securities in which
each Fund may invest include (1) U.S. Treasury obligations, which differ only in
their interest rates, maturities and dates of issuance and include U.S. Treasury
bills (maturities of one year or less), U.S. Treasury notes (maturities of one
to ten years) and U.S. Treasury bonds (generally maturities of greater than ten
years); and (2) obligations of varying maturities issued or guaranteed by
agencies or instrumentalities of the U.S. Government, for which the U.S.
Treasury unconditionally guarantees payment of principal and interest. The
Funds' investments in U.S. Government Securities may include GNMA Certificates
of varying maturities guaranteed by the Government National Mortgage Association
("GNMA"). The GNMA guarantee is backed by the full faith and credit of the
United States Government. For more information on GNMA Certificates, see
"Objectives, Investment Policies and Restrictions" in the Statement of
Additional Information.
Although the payment when due of interest and principal on U.S.
Government Securities is backed by the full faith and credit of the United
States, such guarantee does not extend to the market value of such securities
and, accordingly, each Fund's investments in such securities will cause its net
asset value to fluctuate.
Temporary Defensive Investments. When in the judgment of its portfolio
subadviser adverse market conditions warrant, each Fund may adopt a temporary
defensive position by investing up to 100% of its assets in cash, repurchase
agreements and money market instruments, including short-term U.S. Government
Securities, bankers' acceptances, commercial paper rated at least A3 by Standard
& Poor's, Prime2 by Moody's or, if not rated, determined to be of equivalent
quality by the Fund's portfolio subadviser.
Portfolio Turnover. Each Fund pursues the policy of selling that
security in its portfolio which seems the least attractive
-9-
security owned whenever it is desired to obtain funds not otherwise available
for the purchase of a security that is considered more attractive. While the
resultin rate of portfolio turnover is not a consideration, it is not expected
that such rate will exceed 75% in most years. A high rate of portfolio turnover
(100% or more) involves correspondingly greater transaction costs which must be
borne by a Fund and its shareholders, and may, under certain circumstances, make
it more difficult for the Fund to qualify as a regulated investment company
under the Internal Revenue Code of 1986, as amended (the "Code"). Although
neither Fund purchases and sells securities for short-term profits, each Fund
will sell portfolio securities without regard to the time they have been held
whenever such action seems advisable.
As described in the Statement of Additional Information, each Fund may
also invest in GNMA Certificates, write (sell) covered call options with respect
to portfolio securities, make loans of portfolio securities and enter into
repurchase agreements. See "Objectives, Investment Policies and Restrictions" in
the Statement of Additional Information.
HOW ARE THE FUNDS MANAGED?
Trustees and Officers
The Trust's Board of Trustees has overall responsibility for management
and supervision of the Funds. By virtue of the functions performed by Clearwater
Management Co., Inc., the Trust's Manager (the "Manager"), the Trust requires no
employees other than its executive officers, all of whom receive their
compensation from the Manager or other sources.
The Manager and Portfolio Subadvisers
Clearwater Management Co., Inc. The Manager is a privately-owned
investment adviser registered under the Investment Advisers Act of 1940, and
advises the Trust in accordance with a management contract dated May 1, 1994
(the "Management Contract"). The Manager is organized as a Minnesota corporation
and the Manager's office is located at 332 Minnesota Street, Suite 2090, St.
Paul, Minnesota 55101. The Manager also performs advisory services for a private
investment company.
Under the Management Contract, the Manager, subject to the general
supervision of the Trust's Board of Trustees, supervises the Trust's business
operations and is responsible for administrative and other management functions
necessary for the conduct of the Funds' affairs. Under the Management Contract,
the Manager also is responsible for the payment or reimbursement of all of the
Funds' expenses, except brokerage, taxes, interest and extraordinary expenses.
As compensation for the services provided to the Funds and expenses assumed, the
Manager receives a
-10-
management fee at an annual rate of 1.10% and 1.35% of the net assets of the
Growth Fund and the Small Cap Fund, respectively. The Manager's fees are
calculated and accrued on a monthly basis as a percentage of each Fund's
month-end net assets. The Manager's fees are higher than those paid by most
investment companies. However, under the Management Contract, the Manager
assumes various Fund expenses that most other investment companies pay out of
their own assets. The Manager's fees with respect to the Growth Fund and the
Small Cap Fund for the year ended December 31, 1995 were 1.08% of the Growth
Fund's net assets and 1.35% of the Small Cap Fund's net assets, respectively.
SIT Investment Associates, Inc. In connection with the management of
the Growth Fund, the Trust, the Manager and SIT Investment Associates, Inc.
("SIT") entered into a Subadvisery contract dated May 1, 1994 (the "Growth
Subadvisery Contract"). SIT, which is incorporated in Minnesota and is
registered under the Investment Advisers Act of 1940, devotes full time to
investment counseling and provides advice, management and other services to
investors and accounts, including other mutual funds. SIT's address is 4600
Norwest Center, 90 South Seventh Street, Minneapolis, Minnesota 55402-4130.
Under the Growth Subadvisery Contract, SIT develops, recommends and
implements an investment program and strategy for the Growth Fund which is
consistent with the Growth Fund's investment objectives and policies. SIT is
also responsible for making all portfolio and brokerage decisions. As
compensation, SIT receives a fee that is based on the Growth Fund's net assets.
This fee is calculated and accrued on a monthly basis as a percentage of the
Growth Fund's month-end net assets. The compensation paid to SIT with respect to
the Growth Fund for the year ended December 31, 1995 was .59% of the Growth
Fund's net assets. For more information on SIT's Subadvisery fee, see
"Management, Advisory and Other Services" in the Statement of Additional
Information. Under the Growth Subadvisery Contract, the Manager, and not the
Growth Fund, is responsible for payment of Subadvisery fees to SIT. For more
information on SIT's Subadvisery fee, see "Management, Advisory and Other
Services" in the Statement of Additional Information.
Kennedy Capital Management. Kennedy Capital Management ("KCM"), a
Missouri corporation that is a registered investment adviser under the
Investment Advisers Act of 1940, has managed the Small Cap Fund's portfolio
since January 1, 1994. In connection with the management of the Small Cap Fund,
the Trust, the Manager and KCM have entered into a Subadvisery contract dated
May 1, 1994 (the "Small Cap Advisory Contract"). KCM devotes full time to
investment counseling and provides advice, management and other services to
investors and accounts. KCM's address is 425 North New Ballas Road, St. Louis,
Missouri 63141.
-11-
Under the Small Cap Subadvisery Contract, KCM develops, recommends and
implements an investment program and strategy for the Small Cap Fund which is
consistent with the Small Cap Fund's investment objectives and policies. KCM is
also responsible for making all portfolio and brokerage decisions. As
compensation, KCM receives a fee that is based on the Small Cap Fund's net
assets. This fee is calculated and accrued on a monthly basis as a percentage of
the Small Cap Fund's month-end net assets. The compensation paid to KCM with
respect to the Small Cap Fund for the year ended December 31, 1995 was 1.02% of
the Small Cap Fund's net assets. For more information on KCM's Subadvisery fee,
see "Management, Advisory and Other Services" in the Statement of Additional
Information. Under the Small Cap Subadvisery Contract, the Manager, and not the
Small Cap Fund, is responsible for payment of Subadvisery fees to KCM.
Portfolio Managers
Growth Fund. Peter Mitchelson, the President of SIT, is primarily
responsible for the day-to-day management of the Growth Fund's portfolio and has
been since the Growth Fund's inception in 1987.
Small Cap Fund. Richard Sinise, a Vice President and the Director of
Research of KCM, is primarily responsible for the day-to-day management of the
Small Cap Fund's portfolio and has been since January 1, 1994. As an officer of
KCM, Mr. Sinise has been responsible for developing investment strategies for
clients of KCM and KCM affiliates since 1979.
Transfer Agent and Custodian
Fiduciary Counselling, Inc. (the "Transfer Agent") is the transfer
agent for shares of the Funds. The Transfer Agent services the Funds'
shareholder accounts, and its duties include: (i) effecting sales, redemptions
and exchanges of shares; (ii) distributing income dividends and capital gain
dividends; and (iii) maintaining account records and responding to shareholder
inquiries. The Transfer Agent's offices are located at 332 Minnesota Street,
Suite 2100, St. Paul, Minnesota 55101-1394, and inquiries to the Transfer Agent
should be mailed to the Transfer Agent at that address.
Norwest Bank Minnesota, N.A. (the "Custodian") serves as the custodian
of the Funds' assets. The Custodian's responsibilities include determining the
Funds' net asset values, safekeeping and controlling the Funds' cash and
portfolio securities, handling the receipt and delivery of the Funds' portfolio
securities and determining income and collecting interest and dividends on the
Funds' investments. The Custodian does not determine the investment policies of
the Funds or decide which portfolio securities will be purchased or sold. The
Funds may, however, invest in securities, including repurchase agreements,
issued by
-12-
the Custodian and may deal with the Custodian as principal in securities
transactions. The principal business address of the Custodian is Norwest Center,
Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479-0065.
HOW ARE SHARES PURCHASED?
Shares may be purchased directly from each Fund. There is no sales
charge or underwriting commission on purchases of shares of the Funds. In order
to purchase shares of either Fund, an investor must either send a check or wire
funds to the Transfer Agent and deliver to the Transfer Agent a completed
Purchase Order and Account Application, in the form provided on page F-1 of this
Prospectus.
Pricing of Shares
Net asset value per share of each Fund is determined as of the close of
regular trading on the New York Stock Exchange (the "Closing Time") on each day
that the Exchange is open for trading if such determination is then required to
properly process a purchase order, redemption request or exchange request for
shares of such Fund. Net asset value per share is determined by dividing the
value of all of a Fund's assets, less its liabilities, divided by the number of
shares outstanding. Investments in securities are valued at the Closing Time at
the last available sale price on the principal exchange or market where they are
traded. Securities which have not traded on the date of valuation or securities
for which sales prices are not generally reported are valued at the mean between
the last bid and asked prices. Securities for which no market quotations are
readily available (including those for which trading has been suspended) will be
valued at fair value as determined in good faith by the Board of Trustees,
although the actual computations may be made by persons acting at the direction
of the Board of Trustees. The price at which a Purchase Order is filled is the
net asset value per share next computed after payment and a properly completed
application are received by the Transfer Agent, unless a later computation date
is specified by the investor on the Purchase Order.
Minimum Purchases
No initial or subsequent investment of less than $1,000 will be
accepted by the Funds. However, reinvestments of dividends and capital gain
distributions will be permitted, even if the amount of any such reinvestment is
less than $1,000.
If a shareholder holds shares of either Fund in an account which, as a
result of redemptions, has an aggregate net asset value of less than $1,000, the
Fund may redeem the shares held in such account at net asset value if the
shareholder has not increased the net asset value of such shares in the account
to at least $1,000 within three months of notice in writing by the Fund
-13-
to the shareholder of the Fund's intention to redeem such shareholder's shares.
During the three months following the mailing of such notice, each shareholder
so notified has the opportunity to increase the value of his or her account to
$1,000 and avoid redemption. An involuntary redemption consummated at a price
below the shareholder's cost would result in a loss to the shareholder.
The Trust reserves the right in its sole discretion to withdraw all or
any part of the offering of shares of the Funds when, in the judgment of the
Trustees or the Manager, such withdrawal is in the best interests of the Trust.
An order to purchase shares is not binding on, and may be rejected by, the Trust
until it has been confirmed in writing.
Fund Accounts
When a shareholder first purchases shares of either Fund, an account is
opened in his or her name on the records of that Fund. This account provides a
convenient means to make additional investments and provides for regular
transaction statements without the necessity of receiving and storing
certificates. When a shareholder purchases or sells shares of a Fund, an account
statement showing the details of such transaction will be sent to the
shareholder.
Certificates representing shares of a Fund ordinarily will not be
issued. However, the Board of Trustees may, in its sole discretion, authorize
the issuance of certificates for shares of a Fund to shareholders who make a
specific written request for share certificates.
HOW ARE SHARES REDEEMED?
Any shareholder of either Fund has the right to offer shares for
redemption by the Trust. Redemptions shall be effected at the net asset value
per share next determined after receipt by the Transfer Agent of all required
documents from the redeeming shareholder, unless a later redemption date is
specified by the investor on the Redemption Request. Payment will be made within
seven days after a redemption has been effected. However, if shares to be
redeemed were recently purchased by check, a Fund may delay transmittal of
redemption proceeds until it has assured itself that good funds have been
collected for the purchase of such shares. This may take up to 15 days. A Fund
may effect redemptions in kind (i.e., pay redemption proceeds consisting of
portfolio securities or other non-cash assets) for redemptions in excess of $1
million if the Manager determines, in its sole discretion, that any such
redemption would be in the best interests of the Fund.
-14-
In order to redeem shares of either Fund, a shareholder must deliver to
the Transfer Agent a Redemption Request, in the form provided on page F-6 of
this Prospectus, which has been endorsed by the recordholder(s) exactly as the
shares are registered with signature(s) guaranteed by any one of the following
institutions: (i) a bank; (ii) a securities broker or dealer, including a
government or municipal securities broker or dealer, that is a member of a
clearing corporation or has net capital of at least $100,000; (iii) a credit
union having authority to issue signature guarantees; (iv) a savings and loan
association, a building and loan association, a cooperative bank, a federal
savings bank or association; or (v) a national securities exchange, a registered
securities exchange or a clearing agency, provided that any such institution
satisfies the standards established by the Transfer Agent. If a share
certificate has been issued at the discretion of the Trustees, the shares
represented by such certificate may be redeemed only if the share certificate is
included with such Redemption Request and the certificate is properly endorsed
with signature(s) so guaranteed or is accompanied by a properly endorsed stock
power with signature(s) so guaranteed.
Net asset value per share for the purpose of redemption is determined
in the manner described above under "Pricing of Shares." The net asset value per
share received upon redemption may be more or less than the cost of shares to an
investor and redemption, therefore, may result in a taxable gain or loss to the
redeeming shareholder.
Redemptions may be suspended or payment postponed during any period in
which any of the following conditions exists: the New York Stock Exchange is
closed or trading on said Exchange is restricted; an emergency exists as a
result of which disposal by the Trust of securities owned by a Fund is not
reasonably practicable or it is not reasonably practicable for the Custodian
fairly to determine the value of the Fund's net assets; or the Securities and
Exchange Commission, by order, so permits.
EXCHANGE OF SHARES
Subject to the restrictions set forth below, some or all of the shares
of either Fund, including shares purchased with reinvested dividends and/or
capital gain distributions, may be exchanged for shares of the other Fund on the
basis of the net asset value per share of each Fund at the time of exchange. The
exchange privilege is available to shareholders residing in any state in which
shares of both Funds may legally be sold.
Instructions for exchanges are made by delivery to the Transfer Agent
of an Exchange Request, in the form provided on page F-8 of this Prospectus,
signed by the record owner(s) exactly as the shares being exchanged are
registered. New accounts must be established with the same registration
information as the account from which the exchange is to be made. The dollar
amount
-15-
exchanged must at least equal the $1,000 minimum investment required for each of
the Funds. However, exchanges of shares of one Fund for shares of the other Fund
in which the shareholder has an existing account will be permitted, even if the
value of the shares exchanged is less than $1,000.
A shareholder should consider the differences in investment objectives
and policies of the Funds, as described in this Prospectus, before making any
exchange. For federal and (generally) state income tax purposes, an exchange of
shares is treated as a sale of the shares exchanged and, therefore, could result
in a gain or loss to the shareholder making the exchange.
Currently, there is no charge for the exchange privilege or limitation
as to the frequency of exchanges. The Trust may terminate or suspend the right
to make Exchange Requests, or impose a limit on the number of exchanges that may
be effected by a shareholder within any calendar year, or impose a transaction
fee in connection with any exchange, at any time with notice to shareholders as
required by law.
DIVIDENDS, DISTRIBUTIONS AND TAXATION
Each Fund is treated as a separate entity for tax purposes, has elected
to be treated and has qualified as a "regulated investment company" under the
Code, and intends to continue to qualify for such treatment for each taxable
year. To qualify as a regulated investment company under the Code and be free
from any federal income tax on income and gains distributed to shareholders in
accordance with the Code, each Fund must satisfy certain requirements relating
to the sources of its income, diversification of its assets and distribution of
its income to shareholders.
Each Fund intends to distribute all of its net investment income, any
excess of net short-term capital gain over net long-term capital loss, and any
excess of net long-term capital gain over net short-term capital loss (after
taking into account any capital loss carryovers of the Fund), if any, at least
once each year. Distributions from net investment income, certain net foreign
currency gains and the excess of net short-term capital gain over net long-term
capital loss will be taxable to shareholders as ordinary income. Distributions
from the excess of net long-term capital gain over net short-term capital loss
(after taking into account any capital loss carryovers of the Fund) will be
taxable to shareholders as long-term capital gain, regardless of the
shareholder's holding period for the shares. Certain distributions paid by a
Fund in January of a given year will be taxable to shareholders as if received
on December 31 of the prior year.
-16-
Dividends and/or capital gain distributions, if any, may be taken in
cash or automatically reinvested in additional shares (at the net asset value
per share). All distributions are taxable as described above whether a
shareholder takes them in cash or reinvests them in additional shares of a Fund.
Shareholders who purchase shares immediately prior to a distribution will be
required to treat the distribution as ordinary income or long-term capital gain
as described above, even though economically it represents a return of a portion
of their investment. Information regarding the tax status of each year's
distributions will be provided to shareholders annually.
Each Fund may be subject to foreign withholding or other foreign taxes
on its income (possibly including, in some cases, capital gains) from certain of
its foreign investments, if any, and neither Fund will be eligible to elect to
pass such taxes and associated foreign tax credits or deductions through to its
shareholders.
Dividends, capital gain distributions and the proceeds of redemptions,
exchanges or repurchases of shares of a Fund paid to an individual or other
non-exempt payee will be subject to 31% backup withholding of federal income tax
if such shareholder does not provide the Fund with his or her correct taxpayer
identification number and certain certifications required by the Internal
Revenue Service ("IRS") or if the Trust is notified by the IRS or a broker that
the shareholder is subject to such withholding. Please refer to the Purchase
Order and Account Application for additional information.
Special tax rules, including a penalty on premature distributions,
apply to IRA accounts and to other special classes of investors, such as
tax-exempt organizations, banks and insurance companies.
The description above relates only to U.S. federal income tax
consequences for shareholders who are U.S. persons (i.e., U.S. citizens or
residents or U.S. corporations, partnerships, trusts, or estates) and who are
subject to federal income tax. In addition to federal taxes, a shareholder may
be subject to foreign, state and local taxes on distributions or on the value of
shares of a Fund, depending on the laws of the shareholder's place of residence.
For further information on the tax consequences of an investment in a Fund, see
"Taxes" in the Statement of Additional Information. Shareholders also may
inquire about these and other matters by calling the Transfer Agent at (612)
228-0935.
PERFORMANCE DATA
The Trust may furnish to existing or prospective shareholders
information concerning the average annual total return on an investment in the
Funds for a designated period of time. Average annual total return for a given
period is computed by determining
-17-
the average annual compounded rate of return that would cause a hypothetical
investment made on the first day of the designated period (assuming all
dividends and distributions are reinvested) to equal the resulting net asset
value of such hypothetical investment on the last day of the designated period.
Computations of average annual total return of a Fund will not take into account
any required payments of federal or state income taxes.
The average annual total return of each Fund will vary from time to
time depending on market conditions, the composition of the Fund's portfolio and
operating expenses of the Fund. These factors and possible differences in the
methods used in calculating returns should be considered when comparing
performance information regarding a Fund to information published for other
investment companies and other investment vehicles. Any return quotation should
also be considered relative to changes in the values of a Fund's shares and the
risks associated with that Fund's investment objectives and policies. At any
time in the future, any return quotation may be higher or lower than a past
return quotation and there can be no assurance that any historical return
quotation will continue in the future. For more information regarding the
computation of average annual total return, see the Statement of Additional
Information.
OTHER INFORMATION
Each Fund is a series of the Trust, which was established as a
Massachusetts business trust under the laws of Massachusetts by a Declaration of
Trust dated January 12, 1987 (the "Declaration of Trust"). Under the Declaration
of Trust, the Board of Trustees is authorized to issue an unlimited number of
shares of beneficial interest which may, without shareholder approval, be
divided into an unlimited number of series. The Growth Fund is the first such
series and the Small Cap Fund (formerly known as Clearwater Value Fund) is the
second such series. Shares of the Trust are freely transferable, are entitled to
dividends as declared by the Board of Trustees and, in liquidation, are entitled
to receive the net assets of their series, but not of any other series.
Shareholders are entitled to cast one vote per share (with proportional voting
for fractional shares) on any matter requiring a shareholder vote. Shareholders
of each series vote separately as a class on any matter submitted to
shareholders except when otherwise required by the Investment Company Act of
1940, in which case the shareholders of all series affected by the matter in
question will vote together as one class. If the Board of Trustees determines
that a matter does not affect the interests of a series, then the shareholders
of that series will not be entitled to vote on that matter.
-18-
Under Massachusetts law, there is a remote possibility that
shareholders of a Massachusetts business trust could, under certain
circumstances, be held personally liable as partners for the obligations of such
trust. For further information regarding potential shareholder liability, see
"The Trust" in the Statement of Additional Information.
-19-
APPENDIX
Description of Bond Ratings
Moody's Investors Service, Inc.
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuations of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
A-1
Standard & Poor's Ratings Group
AAA: Bonds rated AAA are the highest grade obligations. This rating indicates an
extremely strong capacity to pay principal and interest.
AA: Bonds rated AA also qualify as high-quality obligations. Capacity to pay
principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
A: Bonds rated A have a strong capacity to pay principal and interest, although
they are more susceptible to the adverse effects of changes in circumstances and
economic conditions.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
A-2
PURCHASE ORDER AND ACCOUNT APPLICATION
In accordance with the Account Provisions set forth below and the terms
of the current Prospectus which the undersigned acknowledges receiving,
the undersigned wishes to purchase shares and, if not previously done,
establish an account in accordance with the instructions on this
application. A PURCHASE ORDER AND ACCOUNT APPLICATION WHICH IS NOT
COMPLETED MAY BE REJECTED.
1. Selection [ ] Clearwater Growth Fund
of Fund
[ ] Clearwater Small Cap Fund
- --------------------------------------------------------------------------------
2. Initial or [ ] Initial investment of $_____________
Subsequent is enclosed. An initial investment must
Investment equal or exceed $1,000.
[ ] Subsequent investment of $__________ is
enclosed. Each subsequent investment must
equal or exceed $1,000.
Checks should be made payable to Clearwater
Growth Fund or Clearwater Small Cap Fund.
- --------------------------------------------------------------------------------
3. Date Purchase Order Please fill this purchase order based on
To Be Effective the net asset value of the applicable
Fund on_____________, 199_. If no date is
specified above or if the date specified is
not subsequent to the date on which payment
and a properly completed purchase order are
received by Fiduciary Counselling, Inc., the
Trust's transfer agent, the purchase order will
be filled based on the applicable Fund's net
asset value per share next computed after
payment and a properly completed purchase order
are received by the transfer agent.
- --------------------------------------------------------------------------------
F-1
4. Account NAME(S) SHOULD APPEAR EXACTLY AS THE
Registration ACCOUNT IS TO BE REGISTERED. For trusts,
(If two or more provide the name(s) of the Trustee(s).
names, account
held by joint --------------------------------------------
owners with right
of survivorship, --------------------------------------------
unless otherwise
noted)
- --------------------------------------------------------------------------------
5. Account --------------------------------------------
Mailing Street
Address --------------------------------------------
City State Zip
- --------------------------------------------------------------------------------
6. Country of Residence: [ ] U.S. [ ] Specify Other _______
Country of Citizenship:[ ] U.S. [ ] Other _______
- --------------------------------------------------------------------------------
7. Dividends
and Capital
Gain Paid in Reinvested
Distributions Cash in Fund Shares
100% of all dividends ___ ___
should be: |___| |___|
100% of all capital ___ ___
gains should be: |___| |___|
- --------------------------------------------------------------------------------
8. Taxpayer The taxpayer identification number (generally,
Identifica- the social security number for individuals
tion Number and the employer identification number for
entities) ("TIN") of the undersigned is
_______________________.
(This section must be completed. Write "Awaiting-TIN"
if you are applying for a TIN.)
- --------------------------------------------------------------------------------
9. Withholding (1) The number shown above is my correct Social
Security or other Taxpayer Identification Number
("TIN") (or I am waiting for a number to be issued
to me), AND
F-2
(2) I am not subject to backup withholding, because
(a) I have not been notified by the Internal Revenue
Service (IRS) that I am subject to such withholding
as a result of a failure to report all interest or
dividends, or (b) the IRS has notified me that I am
no longer subject to such withholding or (c) I am
exempt from backup withholding (See Instructions).
INSTRUCTIONS: You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding
because of underreporting of interest or dividends on your tax return.
Federal law requires that taxable distributions and proceeds of
redemptions and exchanges be reported to the IRS, and that 31% be
withheld if you fail to provide your correct TIN and the certifications
in Sections 8 and 9 or you are otherwise subject to backup withholding.
Amounts withheld and forwarded to the IRS can be credited as a payment
of tax when completing your federal income tax return.
For most individual taxpayers, the TIN is the social security number.
Special rules apply for certain accounts. For example, for an account
established under the Uniform Gift to Minors Act, the TIN of the minor
should be furnished. If you do not have a TIN, you may apply for one
using forms available at local offices of the Social Security
Administration or the IRS. In this event, withholding may apply to
payments made to your account before you give us your certified TIN.
Recipients exempt from backup withholding, including corporations and
certain other entities, should provide their TIN and underline 2(c) in
Section 9 to avoid possible erroneous withholding. Nonresident aliens
and foreign entities may be subject to nonresident alien withholding of
up to 30% on certain distributions received from a Fund and must provide
certifications on IRS Form W-8 to avoid backup withholding with respect
to other payments. For further information, see Sections 1441, 1442 and
3406 of the Internal Revenue Code and/or consult your tax adviser.
F-3
CERTIFICATION - Under penalties of perjury, the undersigned certifies
that the information provided in Sections 8 and 9 is true, correct and
complete.
------------------------------ ----------
------------------------------ ----------
Signature(s) of Investor(s) Date(s)
MAIL COMPLETED APPLICATION AND CHECK TO:
FIDUCIARY COUNSELLING, INC.
332 MINNESOTA STREET
SUITE 2100
ST. PAUL, MN 55101-1394
ATTENTION: CLEARWATER INVESTMENT TRUST
F-4
ACCOUNT PROVISIONS
1. AN ACCOUNT MAY BE OPENED by completing this Purchase Order and Account
Application and forwarding it, together with a check payable to the Fund in
which you are investing for the amount of your investment, to the Transfer
Agent. The Purchase Order and Account Application becomes effective only upon
its acceptance by the Fund in Minnesota and is to be construed under the laws of
Minnesota. Acceptance of this Purchase Order and Account Application does not
create an option, warrant or right to purchase shares of either Fund and no
penalty is incurred by any party if the intention declared is not fulfilled.
2. PURCHASE OF SHARES will be effected at the net asset value per share next
computed after the Transfer Agent has received this Purchase Order and Account
Application, together with payment of the purchase price for the investment
(unless the Investor specifies a later effective date for his or her purchase
order).
3. CERTIFICATES will not ordinarily be issued, but shares included under these
Accounts will be credited to the Investor on the stock record books of the
appropriate Fund and shall entitle the Investor to full shareholder rights. Upon
the written request of the Investor, the Board of Trustees may, in its sole
discretion, authorize the issuance of certificates for all or part of the full
shares owned without in any way affecting the continued operation of the
Investor's Account.
F-5
REDEMPTION REQUEST
Fiduciary Counselling, Inc.
332 Minnesota Street
Suite 2100
St. Paul, MN 55101-1394
Attention: Clearwater Investment Trust
Re: [ ] Clearwater Growth Fund
[ ] Clearwater Small Cap Fund
Dear Sir/Madam:
The undersigned shareholder of the Fund indicated above (the "Fund")
hereby requests that [____ shares of the Fund] OR [shares of the Fund with a net
asset value upon redemption of $______] be redeemed at the net asset value on
_________ __, 199_ (except that, if no date is specified or if the date
specified is not subsequent to the date on which you receive this request,
please fill this redemption request at the net asset value next computed after
your receipt of this request).
This request has been signed by the undersigned exactly as the shares to
be redeemed have been registered, with signature(s) guaranteed by any one of the
following institutions: (i) a bank; (ii) a securities broker or dealer,
including a government or municipal securities broker or dealer, that is a
member of a clearing corporation or has net capital of at least $100,000; (iii)
a credit union having authority to issue signature guarantees; (iv) a savings
and loan association, a building and loan association, a cooperative bank, a
federal savings bank or association; or (v) a national securities exchange, a
registered securities exchange or a clearing agency. (All fiduciaries and other
representatives must sign in their respective capacities and, in so signing,
individually represent and warrant their authority to do so.)
Date________________________ ___________________________
Print names of redeeming
shareholder(s)
- ---------------------------- ---------------------------
Signature guarantee*
F-6
- ---------------------------- ---------------------------
Signature guarantee* Signature(s) of redeeming
shareholder(s) or duly authorized
representative(s)
* If shares are represented by one or more share certificates, all such
certificates must be enclosed with this request and either they must be signed
with signatures guaranteed (as provided above) or they must be accompanied by
duly executed stock powers with signatures so guaranteed.
TO: Fiduciary Counselling, Inc. For assistance,
332 Minnesota Street call (612) 2280935
Suite 2100
St. Paul, MN 55101
Attention: Clearwater Investment Trust
F-7
EXCHANGE REQUEST
Clearwater Investment Trust
You are hereby authorized to exchange all shares; _________ (No. of shares)
shares; or $________ from my/our account in _______________________ (Fund Name),
Acct. No. ______________ for shares of ________________________ (Fund Name),
based on the Funds' respective net asset values on _________ __, 199_ (except
that, if no date is specified or if the date specified is not subsequent to the
date on which you receive this properly completed request, please fill this
exchange request at the net asset values next computed after your receipt of
this request). Certificate(s), if any, representing ______ shares are attached
and are to be used in processing this Exchange Request.
___
|___| I/We have an existing account in the Fund into which I/we
am/are exchanging.
Account Number: _______________
___
|___| I/We do not have an account in the Fund into which I/we am/are
exchanging. Please establish a new account with the
registration exactly as shown on the account from which the
exchange is being made.
- --------------------------------------------------------------------------------
Distribution Options: Note: Complete this section only if you wish to have a
different distribution option on your new account. Otherwise, the distribution
option on your existing account will not be changed.
Paid
in Reinvested in
Cash Fund Shares
100% of all Dividends ___ ___
should be: |___| |___|
___ ___
100% of all Capital |___| |___|
- --------------------------------------------------------------------------------
F-8
This form will be accepted as authorization to exchange shares provided that it
is signed exactly as the shares are registered. If the shareholder is a
corporation, partnership, agent or surviving joint owner, additional
documentation may be required. Call or write the Transfer Agent for details.
I/We have received and read a copy of the current prospectus of the Fund in
which I/we intend to invest. Under penalties of perjury, I/we certify that the
information provided above is true, correct and complete.
- --------------------- --------------------- ----------------
Signature Signature Date
_
|_| Check here if change of address
-------------------------------
Address
-------------------------------
F-9
AUTHORIZATION TO EXCHANGE SHARES
IMPORTANT EXCHANGE INFORMATION
1. The minimum amount required to open a new account is $1,000. The minimum
amount that can be exchanged from one fund account into another fund
account is $1,000, unless the other fund account already exists.
2. Under certain circumstances, an exchange may be delayed for up to seven
days. See the Funds' Prospectus for details.
3. Certificates will not be issued unless specifically requested by the
Investor and authorized by the Trust's Board of Trustees.
4. For federal income tax purposes, an exchange is a sale which could result
in recognition of a taxable gain or loss. Please consult your tax advisor
for additional information regarding the tax consequences of an exchange.
RETURN COMPLETED FORM TO:
FIDUCIARY COUNSELLING, INC.
332 MINNESOTA STREET
SUITE 2100
ST. PAUL, MN 55101-1394
ATTENTION: CLEARWATER INVESTMENT TRUST
CLEARWATER INVESTMENT TRUST
CLEARWATER GROWTH FUND
CLEARWATER SMALL CAP FUND
332 Minnesota Street, Suite 2090
St. Paul, MN 55101
EXECUTIVE OFFICERS: TRUSTEES:
Frederick T. Weyerhaeuser, Frederick T. Weyerhaeuser
Chairman of the Board and Samuel B. Carr, Jr.
Treasurer Stanley R. Day, Jr.
Robert J. Phares
INVESTMENT MANAGER: CLEARWATER GROWTH
FUND SUBADVISER:
Clearwater Management Co., Inc.
332 Minnesota Street SIT Investment Associates, Inc.
Suite 2090 4600 Norwest Center
St. Paul, MN 55101 90 South Seventh Street
Minneapolis, MN 55402-4130
CUSTODIAN: CLEARWATER SMALL CAP
FUND SUBADVISER:
Norwest Bank Minnesota, N.A.
Norwest Center, Sixth Street Kennedy Capital Management
and Marquette Avenue 425 No. New Ballas Road
Minneapolis, MN 554790065 St. Louis, MO 63141
COUNSEL FOR THE FUNDS: TRANSFER AGENT AND SHAREHOLDER
SERVICES:
Hale and Dorr
60 State Street Fiduciary Counselling, Inc.
Boston, MA 02109 332 Minnesota Street
Suite 2100
St. Paul, MN 55101-1394
(612) 228-0935
PROSPECTUS
April 30, 1996
File No. 33-12289
CLEARWATER INVESTMENT TRUST
Clearwater Growth Fund
Clearwater Small Cap Fund
STATEMENT OF ADDITIONAL INFORMATION
April 30, 1996
This Statement of Additional Information is not a Prospectus, but should be read
in conjunction with the Prospectus dated May 1, 1996 of Clearwater Growth Fund
(the "Growth Fund") and Clearwater Small Cap Fund, formerly named Clearwater
Value Fund (the "Small Cap Fund"). A copy of the Prospectus can be obtained free
of charge by calling Fiduciary Counselling, Inc. at 612-228-0935 or by written
request to Fiduciary Counselling, Inc. at 332 Minnesota Street, Suite 2100, St.
Paul, Minnesota 55101-1394 (Attention: Clearwater Investment Trust). The most
recent Annual Report to Shareholders of the Growth Fund and the Small Cap Fund
accompanies this Statement of Additional Information and is hereby incorporated
herein.
TABLE OF CONTENTS
Page
Objectives, Investment Policies and Restrictions........................ B-2
Management, Advisory and Other Services................................. B-7
Executive Officers and Trustees......................................... B-9
Determination of Net Asset Value Per Share.............................. B-11
Brokerage............................................................... B-11
Taxes ............................................................... B-12
Calculation of Performance Data......................................... B-14
The Trust............................................................... B-15
Independent Public Accountants.......................................... B-16
----------------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A
PROSPECTUS AND IS AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
OBJECTIVES, INVESTMENT POLICIES AND RESTRICTIONS
The Prospectus of the Growth Fund and the Small Cap Fund (each a
"Fund") dated May 1, 1996 identifies the investment objectives and the principal
investment policies of the Funds. Other investment policies of the Funds are set
forth below.
Covered Call Options. Each Fund may seek to augment its investment
income by writing (selling) covered call options on its portfolio securities.
When a Fund writes a covered call option on a security, it agrees to sell a
particular portfolio security (if the option is exercised) at a specified price
on or before a set date. A Fund may write (sell) covered call options in
standard contracts traded on national securities exchanges or those which may be
traded over-the-counter ("OTC") and quoted on a Nasdaq market, provided that the
Fund continues to own the securities covering each call until the call has been
exercised or has expired, or until the Fund has purchased a closing call to
offset its obligations to deliver securities pursuant to the call it has
written.
A Fund may not write covered call options on more than 25% of the
market value of any single portfolio security. In addition, neither Fund has a
present intention of writing covered call options on portfolio securities with
an aggregate market value exceeding 5% of the Fund's net assets. As the writer
of a call option, a Fund receives a premium less commission and, in exchange,
forgoes the opportunity to profit from increases in the market value of the
security covering the call above the sum of the premium and the exercise price
of the option during the life of the option. The purchaser of such a call has
the ability to purchase the security from the Fund's portfolio at the option
price at any time during the life of the option. Portfolio securities on which
options may be written are purchased solely on the basis of investment
considerations consistent with the Fund's investment objectives.
B-2
A Fund will purchase a call option only when entering into a "closing
purchase transaction," i.e., a purchase of a call option on the same security
with the same exercise price and expiration date as a covered call already
written by the Fund. There can be no assurance that a Fund will be able to
effect such a closing purchase transaction at a favorable price; if a Fund
cannot enter into such a transaction, it may be required to hold a security that
it might otherwise have sold. Each Fund's portfolio turnover may increase
through the exercise of options written by the Fund if the market prices of the
underlying securities go up and such Fund has not entered into a closing
purchase transaction. The commission on the purchase or sale of a call option is
higher in relation to the premium than the commission in relation to the price
on purchase or sale of the underlying security.
The staff of the Securities and Exchange Commission (the "SEC") has
taken the view that OTC options purchased by a Fund and the securities covering
OTC options written by a Fund are illiquid securities. Among the investment
restrictions adopted by each Fund is the restriction that such Fund may invest
no more than 15% of its net assets in illiquid securities, which include certain
restricted securities (i.e., securities that must be registered under the
Securities Act of 1933, as amended (the "1933 Act"), before they may be offered
or sold to the public), securities not readily marketable, repurchase agreements
maturing in more than seven days, OTC options purchased by such Fund and assets
covering OTC options written by such Fund.
GNMA Certificates. Each Fund currently intends to invest no more than
5% of its net assets in certificates of the Government National Mortgage
Association ("GNMA Certificates"). Each GNMA Certificate evidences an interest
in a specific pool of mortgages. Scheduled payments of principal and interest
are "passed through" to the registered holders of GNMA Certificates. Interest on
GNMA Certificates is paid monthly rather than semiannually as for traditional
bonds. The full faith and credit of the United States Government is pledged to
the timely payment of principal and interest due on GNMA Certificates.
The average life of pools of mortgages underlying GNMA Certificates
varies with the maturities of the underlying mortgage instruments. In addition,
a pool's term may be shortened by unscheduled or early payments of principal and
interest on the underlying mortgages. The occurrence of mortgage prepayments is
affected by factors including the level of market interest rates, general
economic conditions, the location and age of the mortgage and other social and
demographic conditions. Because prepayment rates vary widely, it is not possible
to accurately predict the average life of a particular pool. However, statistics
indicate that the average life of the type of mortgages backing the majority of
GNMA Certificates is approximately 12 years. For this reason, it is standard
practice to treat GNMA Certificates as 30 year mortgage-backed securities which
prepay fully in the twelfth year. Pools of mortgages with other maturities or
different characteristics will have varying assumptions for average life. The
assumed average life of pools of mortgages having terms of less than 30 years is
less than 12 years, but typically not less than 5 years.
Yields on mortgage pass-through securities, such as GNMA Certificates,
are typically quoted by investment dealers on the basis of the maturity of the
underlying mortgages and the associated average life assumption. The actual
yield of a GNMA Certificate is influenced by the prepayment experience of the
underlying mortgage pool. In periods of falling interest rates, the rate of
prepayment tends to increase, thereby shortening the actual average life of a
pool of mortgages. Conversely, in periods of rising interest rates, the rate of
prepayment tends to
B-3
decrease, thereby lengthening the actual average life of the pool. Reinvestment
by a Fund of prepayments may occur at higher or lower interest rates than the
original investment. Historically, actual average life has been consistent with
the 12-year assumption referred to above.
Repurchase Agreements. In order to earn income for periods as short as
overnight, each Fund may enter into repurchase agreements with commercial and
investment banks that furnish collateral at least equal in value or market price
to the amount of their repurchase obligations. However, each Fund currently does
not intend to enter into repurchase agreements with respect to more than 5% of
its net assets. Under a repurchase agreement, a Fund acquires a money market
instrument (generally a U.S. Government Security) which is subject to resale by
the Fund on a specified date (within one week) at a specified price (which price
reflects an agreed-upon interest rate effective for the period of time the Fund
holds the investment and is unrelated to the interest rate on the instrument).
If the other party or "seller" defaults on its repurchase obligation, a Fund
might suffer a loss to the extent that the proceeds from the sale of the
underlying securities and other collateral held by the Fund in connection with
the related repurchase agreement are less than the repurchase price. In
addition, in such event, a Fund could suffer a loss of interest on or principal
of the security and could incur costs associated with delay and enforcement of
the repurchase agreement. Repurchase agreements entered into by a Fund will be
fully collateralized by obligations with a market value, monitored daily by the
portfolio manager, of not less than 100% of the obligation plus accrued
interest. Collateral will be held in a segregated, safekeeping account for the
benefit of the Fund. The staff of the SEC has taken the position that repurchase
agreements of more than seven days' duration are illiquid securities.
Lending of Portfolio Securities. Each Fund may earn additional income
by lending portfolio securities to broker/dealers that are members of the New
York Stock Exchange and other financial institutions under agreements which
require that the loans be secured continuously by collateral in cash, cash
equivalents or United States Treasury Bills maintained on a current basis at an
amount at least equal to the market value of the securities loaned. However,
each Fund currently does not intend to make loans of portfolio securities that
represent more than 5% of its net assets. A Fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities
loaned and also will receive compensation based on investment of the collateral.
A Fund will not, however, have the right to vote any securities having voting
rights during the existence of the loan, but will attempt to call the loan in
anticipation of an important vote to be taken among holders of the securities or
of an opportunity to give or withhold consent on a material matter affecting the
investment.
B-4
Lending portfolio securities involves risk of delay in recovery of the
loaned securities and in some cases loss of rights in the collateral should the
borrower fail financially. Loans of portfolio securities will be made only to
borrowers which have been approved in advance by the Trust's Board of Trustees.
The Board of Trustees will monitor the creditworthiness of such firms on a
continuing basis. At no time will the value of securities loaned by the Growth
Fund or the Small Cap Fund exceed 10% of the value of such Fund's total assets.
Investment Restrictions.
Each Fund has adopted certain fundamental investment restrictions which
may not be changed without the affirmative vote of the holders of a majority of
that Fund's outstanding voting securities which, as used in the Prospectus and
the Statement of Additional Information, means approval of the lesser of (1) the
holders of 67% or more of the shares represented at a meeting if the holders of
more than 50% of the outstanding shares are present in person or by proxy or (2)
the holders of more than 50% of the outstanding shares.
A Fund may not:
(1) invest more than 5% of its assets in commodities or commodity
contracts, except that each Fund may invest without regard to the 5% limitation
in interest rate futures contracts, options on securities, securities indices,
currency and other financial instruments, futures contracts on securities,
securities indices, currency and other financial instruments, options on such
futures contracts, forward commitments, securities index put and call warrants
and repurchase agreements entered into in accordance with the Fund's investment
policies;
(2) underwrite any issue of securities;
(3) make loans in an aggregate amount in excess of 10% of the value of
the Fund's total assets, taken at the time any loan is made; provided, that (i)
the purchase of debt securities pursuant to such Fund's investment objectives
shall not be deemed loans for the purposes of this restriction, (ii) loans of
portfolio securities from time to time as described in the then effective
Prospectus and/or Statement of Additional Information of the Funds shall be made
only in accordance with the terms and conditions therein set forth and (iii) in
seeking a return on temporarily available cash, the Fund may engage in
repurchase transactions maturing in one week or less and involving obligations
of the U.S. Government, its agencies or instrumentalities (i.e., U.S. Government
Securities);
(4) sell securities short, except to the extent that the Fund
contemporaneously owns or has the right to acquire at no additional cost
securities identical to those sold short;
B-5
(5) purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions;
(6) borrow money, except that, as a temporary measure for extraordinary
or emergency purposes and not for investment purposes, the Fund may borrow up to
5% of the value of its total assets at the time of the borrowing; or
(7 mortgage, pledge, or hypothecate any of its assets.
Each Fund has also adopted fundamental investment policies relating to
industry concentration and issuer diversification, which may not be changed
without the affirmative vote of the holders of a majority of that Fund's
outstanding voting securities. Specifically, neither Fund may invest more than
25% of its total assets in securities of issuers in any one industry, except
that this limitation does not apply to obligations of the U.S. Government or any
of its agencies or instrumentalities (i.e., U.S. Government Securities). In
addition, in order to assure diversification, with respect to 75% of its total
assets, neither Fund may purchase any security (other than U.S. Government
Securities) if, immediately after and as a result of such purchase, (a) more
than 5% of the value of the Fund's total assets would be invested in securities
of the issuer or (b) the Fund would hold more than 10% of the voting securities
of the issuer.
The following investment restrictions are designated as nonfundamental
and may be changed by the Trust's Board of Trustees without shareholder
approval. A Fund may not:
(1) buy or sell real estate in the ordinary course of its business;
provided, however, that the Fund may (i) invest in readily marketable debt
securities secured by real estate or interests therein or issued by companies,
including real estate investment trusts, which invest in real estate or
interests therein and (ii) hold and sell real estate acquired as the result of
its ownership of securities;
(2) invest in companies for the purpose of exercising control or
management;
(3) purchase any security, including any repurchase agreement maturing
in more than seven days, which is not readily marketable, if more than 15% of
the net assets of the Fund, taken at market value, would be invested in such
securities. (The staff of the Securities and Exchange Commission considers
over-the-counter options to be illiquid securities subject to the 15% limit);
(4) purchase or retain the securities of any issuer, if an individual
officer, trustee or director of the Fund, the Manager or any of its Subadvisers,
owns beneficially more than one-half of
B-6
1% of the securities of such issuer, and such persons together own more than 5%
of the securities of such issuer; or
(5) invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years of
continuous operation.
In addition, in connection with the offering of their shares in various
states, the Funds have agreed not to invest in straddles or spreads or in oil,
gas or other mineral exploration or development programs. These restrictions may
not be changed without the approval of the regulatory agencies in such states.
MANAGEMENT, ADVISORY AND OTHER SERVICES
Clearwater Management Co., Inc.
Clearwater Investment Trust (the "Trust") has contracted with
Clearwater Management Co., Inc. (the "Manager"), W-2090 First National Bank
Building, St. Paul, Minnesota, to act as manager of the Trust. The current term
of the Management Contract between the Trust and the Manager (the "Management
Contract") ends on December 31, 1996, and it is renewable annually.
Under the terms of the Management Contract, the Manager supervises all
of the Trust's business operations and is responsible for formulating and
implementing investment strategies for the Funds. The Manager performs all
administrative and other management functions necessary to the supervision and
conduct of the affairs of the Funds.
Pursuant to the Management Contract, the Manager pays for office space
and equipment, clerical, secretarial and administrative services and executive
and other personnel as are necessary to fulfill its responsibilities and all
other ordinary operating expenses related to its services for the Trust,
including executive salaries of the Trust. Pursuant to the Management Contract,
the Manager also pays all of the Funds' other expenses, except brokerage, taxes,
interest and extraordinary expenses.
As compensation for its management services and expenses assumed, the
Manager receives a management fee at the annual rate of 1.10% and 1.35% of the
net assets of the Growth Fund and the Small Cap Fund, respectively. The
Manager's fees are calculated and accrued monthly as a percentage of each Fund's
month-end net assets, and are paid quarterly. During the three years ended
December 31, 1993, 1994 and 1995, the total dollar amounts paid to the Manager
by the Growth Fund were $632,338, $672,955 and $831,562, respectively. The net
assets of Growth Fund at December 31, 1995 were $84,774,665. During the three
years ended December 31, 1993, 1994 and 1995, the total dollar
B-7
amounts paid to the Manager by the Small Cap Fund were $135,815, $198,417 and
$312,702, respectively. The net assets of the Small Cap Fund at December 31,
1995 were $26,825,533.
Subadvisery Contracts. Under the terms of the Management Contract, the
Manager is authorized to enter into Subadvisery contracts with one or more
investment advisers which will have responsibility for rendering investment
advice to all or a portion of the Funds' portfolios.
As described in the Prospectus, the Trust, on behalf of the Growth
Fund, the Manager and SIT Investment Associates, Inc. ("SIT") have entered into
a Subadvisery Contract, whereby SIT develops, recommends and implements an
investment program and strategy for the Growth Fund. Fees payable to SIT are
calculated and accrued monthly on the basis of month-end net assets, and are
paid quarterly by the Manager according to the following schedule:
Percent Net Assets
0.75% Up to $10 million
0.70% More than $10 million, up to $20 million
0.65% More than $20 million, up to $30 million
0.60% More than $30 million, up to $40 million
0.55% More than $40 million, up to $50 million
0.50% More than $50 million, up to $60 million
0.45% More than $60 million, up to $70 million
0.40% More than $70 million, up to $80 million
0.35% More than $80 million
The Growth Fund is not responsible for payment of the Subadvisery fees
to SIT. During the three years ended December 31, 1993, 1994 and 1995, the
Manager paid Subadvisery fees of $407,011, $406,149 and $451,103, respectively,
to SIT.
The Trust, on behalf of the Small Cap Fund, the Manager and Kennedy
Capital Management ("KCM") have entered into a Subadvisery Contract, whereby KCM
develops, recommends and implements an investment program and strategy for the
Small Cap Fund. Fees payable to KCM are calculated and accrued monthly on the
basis of month-end net assets, and are paid quarterly by the Manager according
to the following schedule:
Percent Net Assets
1.00% Up to $30 million
0.90% More than $30 million, up to $50 million
0.80% More than $50 million
The Small Cap Fund is not responsible for payment of the Subadvisery
fees to KCM. During the years ended December 31,
B-8
1994 and 1995, the Manager paid Subadvisery fees of $155,498 and $235,243 to
KCM, respectively. During the year ended December 31, 1993, the Manager paid
Subadvisery fees of $102,530 to the Small Cap Fund's previous portfolio
subadviser, WEDGE Capital Management.
Other Provisions of the Contracts. Any amendment to the Management
Contract or either of the Subadvisery Contracts requires approval by vote of (a)
a majority of the outstanding voting securities of the affected Fund and (b) a
majority of the Trustees who are not interested persons of the Trust or of any
other party to such Contract. Each Contract terminates automatically in the
event of its assignment and the Subadvisery Contracts terminate automatically
upon termination of the Management Contract. Also, each Contract may be
terminated by not more than 60 days nor less than 30 days' written notice by
either the Trust or the Manager or upon not less than 120 days' notice by the
Subadviser. Each Contract provides that the Manager or the Subadviser shall not
be liable to the Trust, to any shareholder of the Trust, or to any other person,
except for loss resulting from willful misfeasance, bad faith, gross negligence
or reckless disregard of duty.
Subject to the above-described termination provisions, each Contract
will continue in effect until December 31, 1996, and will continue in effect
thereafter if such continuance is approved at least annually by (a) a majority
of the Trustees who are not interested persons of the Trust or of any other
party to such Contract and (b) either (i) a majority of all of the Trustees of
the Trust or (ii) by vote of a majority of the outstanding voting securities of
the affected Funds.
EXECUTIVE OFFICERS AND TRUSTEES
The Trustees and executive officers of the Trust are listed below,
together with their principal occupations during the past five years and their
ages and addresses.
B-9
Frederick T. Weyerhaeuser*, (64), Trustee
Chairman and Treasurer of the Trust
Chairman, Clearwater Management Co., Inc. (1987/present)
Director, Potlatch Corporation, a forest products company
(1960/present)
Trustee, The Minnesota Mutual Life Insurance Company (1968/present)
Director, Weeden Securities Corporation (1987/present)
W-2090 First National Bank Building
St. Paul, Minnesota 55101
Samuel B. Carr, Jr., (40), Trustee
President and Chief Investment Officer of
S.B. Carr Investments, Inc. (1990/present)
124 Auburn Street, Suite 200 North
Cambridge, Massachusetts 02138-5700
Stanley R. Day, Jr., (37), Trustee
President and Director, SRAM Corporation, a manufacturer of bicycle
components (1987/present)
361 West Chestnut Street
Chicago, Illinois 60611
Robert J. Phares, (32) Trustee
Chief Executive Officer, Battle Ridge Ranch Company
(1986/present)
Route One
Box 258
Wilsall, Montana 59086
The business address of all officers of the Trust is W2090 First
National Bank Building, St. Paul, Minnesota 55101.
As of April 1, 1996, all of the Trustees and officers of the Trust, as
a group, owned of record 2.46% of the outstanding shares of the Growth Fund and
7.69% of the outstanding shares of the Small Cap Fund.
- ------------------------
*Mr. Frederick T. Weyerhaeuser is an "interested person" (as defined in the
Investment Company Act of 1940, as amended) of the Trust and of the Manager.
B-10
Compensation of Trustees and Officers
The Trust pays no salaries or compensation to any of its officers.
Pursuant to the Management Contract, the Manager pays each of the Trustees an
annual fee of $2,000, plus $500 per meeting attended; expenses incurred by
Trustees in attending meetings are reimbursed. Such fees and expenses are
reimbursed by the Manager to the Trust under the Management Contract.
The following table sets forth the amounts of compensation received by
each Trustee from the Manager during the fiscal year ended December 31, 1995:
Compensation
With Respect to
Name of Trustees Trust/Complex
Frederick T. Weyerhaeuser $ 4,000
Samuel B. Carr, Jr. $ 1,000
Mary E. J. Coombs $ 3,000
Stanley R. Day, Jr. $ 3,000
Robert J. Phares $ 4,000
Total $15,000
DETERMINATION OF NET ASSET VALUE PER SHARE
The net asset value per share of each Fund is determined as of the
close of regular trading on the New York Stock Exchange on each day that the
Exchange is open for trading if such determination is then required to properly
process a purchase order, redemption request or exchange request for shares of
such Fund. The New York Stock Exchange is closed on the following holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day.
BROKERAGE
Decisions relating to the purchase and sale of portfolio securities for
each Fund, the allocation of portfolio transactions and, where applicable, the
negotiation of commission rates or transaction costs are made by the respective
portfolio Subadvisers. It is the primary consideration in all portfolio
transactions to seek the most favorable price and execution and to deal directly
with principal market makers in over-the-counter transactions except when, in
the opinion of such subadviser, an equal or better market exists elsewhere.
The determination of what may constitute best price and execution by a
broker-dealer in effecting a securities transaction involves a number of
considerations (some of which are
B-11
subjective), including, without limitation, the overall net economic result to
the portfolio (involving price paid or received, any commissions and other costs
paid) and the efficiency with which the transaction is effected, the ability to
effect the transaction at all where a large block is involved, availability of
the broker to stand ready to execute possibly difficult transactions in the
future and the financial strength and stability of the broker. Because of such
factors, a broker-dealer effecting a transaction may be paid a commission higher
than that charged by another broker-dealer. As permitted by Section 28(e) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and subject to
such policies as the Trustees may adopt, each Fund may pay an unaffiliated
broker or dealer that provides "brokerage and research services" (as defined in
the 1934 Act) an amount of commission for effecting a portfolio investment
transaction in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction if the applicable portfolio
subadviser determines in good faith that the amount of commissions charged by
the broker is reasonable in relation to the value of the brokerage and research
services provided by such broker. The Subadvisers of the Funds have advised the
Manager that neither of them has paid any such excess in connection with
brokerage transactions for the Funds. Nevertheless, the Subadvisers have
received brokerage and research services consisting of written research reports,
access to investment analysis and information services and related electronic
components, all of which may be used for any of their respective clients.
During the three years ended December 31, 1993, 1994 and 1995, the
Growth Fund paid brokerage commissions in the amounts of $93,096, $131,135 and
133,636, respectively. During the three years ended December 31, 1993, 1994 and
1995, the Small Cap Fund paid brokerage commissions in the amounts of $23,214,
$81,297 and $64,979, respectively.
During the three years ended December 31, 1993, 1994 and 1995, (i) the
Growth Fund paid brokerage commissions of $717.00 (0.77% of brokerage
commissions paid), $1,100.00 (0.84% of brokerage commissions paid) and $770.00
(0.58% of brokerage commissions paid), respectively, and (ii) the Small Cap Fund
paid no brokerage commissions to Weeden & Co, LP. One of the Funds' Trustees is
also a director of Weeden Securities Corporation, the general partner of Weeden
& Co, LP.
B-12
TAXES
Under the Internal Revenue Code of 1986, as amended (the "Tax Code"),
each Fund is treated as a separate taxpayer for federal income tax purposes. The
Funds do not expect to incur other than nominal state income tax liability in
1996.
For purposes of the 70% dividends-received deduction available to
corporations, dividends received by either Fund, if any, from U.S. domestic
corporations in respect of any share of stock with a tax holding period of at
least 46 days (91 days in the case of certain preferred stock) in an unleveraged
position and distributed and properly designated by the Fund may be treated as
qualifying dividends. Any corporate shareholder should consult its tax advisor
regarding the possibility that its tax basis in its shares may be reduced, for
Federal income tax purposes, by reason of "extraordinary dividends" received
with respect to the shares. Corporate shareholders must meet the minimum holding
period requirement stated above (46 or 91 days), taking into account any holding
period reductions from certain hedging or other positions that diminish risk of
loss, with respect to their Fund shares in order to qualify for the deduction
and, if they borrow to acquire Fund shares, may be denied a portion of the
dividends-received deduction. The entire qualifying dividend, including the
otherwise deductible amount, will be included in determining the excess (if any)
of a corporation's adjusted current earnings over its alternative minimum
taxable income, which may increase a corporation's alternative minimum tax
liability.
Under the Tax Code, each of the Funds will be subject to a
nondeductible 4% excise tax on all or a portion of its undistributed ordinary
income and capital gain if it fails to meet certain distribution requirements by
the end of each calendar year.
Foreign exchange gains and losses realized by a Fund in connection with
certain transactions involving foreign currency denominated debt securities,
forward foreign currency contracts (if any), foreign currencies, or payables or
receivables denominated in a foreign currency are subject to Section 988 of the
Code, which generally causes such gains and losses to be treated as ordinary
income and losses and may affect the amount, timing and character of
distributions to shareholders.
If either Fund acquires stock in certain non-U.S. corporations that
receive at least 75% of their annual gross income from passive sources (such as
interest, dividends, rents, royalties or capital gain) or hold at least 50% of
their assets in investments producing such passive income ("passive foreign
investment companies"), the Fund could be subject to Federal income tax and
additional interest charges on "excess distributions" received from such
companies or gain from the sale
B-13
of stock in such companies, even if all income or gain actually received by the
Fund is timely distributed to its shareholders. A Fund would not be able to pass
through to its shareholders any credit or deduction for such a tax. Certain
elections may, if available, ameliorate these adverse tax consequences, but any
such election would require the Fund to recognize taxable income or gain without
the concurrent receipt of cash.
Investment by a Fund in zero coupon, stripped or certain other
securities with original issue discount or market discount (if the Fund elects
to include market discount in income on a current basis) or in certain options
that are subject to mark-to-market rules could require the Fund to recognize
income or gain prior to the receipt of cash and hence require it to liquidate
investments in order to generate cash for distributions required by the Tax Code
with respect to such securities or options. Management of the Funds will
consider these potential adverse tax consequences in evaluating the
appropriateness of these investments.
A Fund's transactions involving options will be subject to special tax
rules, the effect of which may be to accelerate the Fund's recognition of
income, defer Fund losses, cause adjustments in the holding periods of
securities or otherwise affect the treatment as long-term or short-term of
certain capital gains or losses. These rules could therefore affect the amount,
timing and character of distributions to shareholders and could increase the
amount of gains realized from the disposition of securities and other
investments treated as held for less than three months, which must be less than
30% of a Fund's annual gross income in any taxable year in order for the Fund to
qualify as a regulated investment company for that year.
All or a portion of a loss realized on a redemption of shares may be
disallowed or recharacterized under tax rules relating to wash sales or
redemptions of shares held for six months or less.
Shareholders who are not U.S. persons, as defined in the Prospectus,
are subject to different tax rules, including a possible U.S. withholding tax at
rates up to 30% on certain dividends treated as ordinary income, and should
consult their tax advisers for information on the application of these rules to
their particular situations.
CALCULATION OF PERFORMANCE DATA
The Funds' average annual total return quotations, as they may appear
in the Prospectus, this Statement of Additional Information or in advertising
and sales material, are calculated by standard methods prescribed by the SEC.
B-14
Average annual total return quotations are computed by finding the
average annual compounded rates of return that would cause a hypothetical
investment made on the first day of a designated period (assuming all dividends
and distributions are reinvested) to equal the ending redeemable value of such
hypothetical investment on the last day of the designated period in accordance
with the following formula:
n
P(1 + T) = ERV
Where: P = a hypothetical initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1000
payment made at the beginning of a designated period at
the end of the designated period (or fractional portion
thereof)
For purposes of the above computation, it is assumed that all dividends and
distributions made by the Funds are reinvested at net asset value during the
designated period. The average annual total return quotation is determined to
the nearest 1/100 of 1%.
In determining the average annual total return (calculated as provided
above) of each Fund, recurring fees, if any, that are charged to all shareholder
accounts are taken into consideration. For any account fees that vary with the
size of the account, the account fees used for purposes of the above computation
are assumed to be the fees that would be charged to the mean account size of
such Fund.
The average annual total return of the Growth Fund for the year ended
December 31, 1995, for the five years ended December 31, 1995 and for the period
since the Growth Fund commenced operations on June 19, 1987 through December 31,
1995 were 32.6%, 15.4% and 10.5%, respectively. The average annual total return
for the Small Cap Fund for the year ended December 31, 1995, for the five years
ended December 31, 1995 and for the period since the Small Cap Fund commenced
operations on January 31, 1989 through December 31, 1995 were 26.3%, 12.2% and
9.2%, respectively. The foregoing average annual total return figures were
determined based on expenses in effect for the Funds during the covered periods.
B-15
THE TRUST
As a Massachusetts business trust, the Trust's operations are governed
by its Declaration of Trust dated January 12, 1987 (the "Declaration of Trust"),
a copy of which is on file with the office of the Secretary of State of The
Commonwealth of Massachusetts. Unless otherwise required by the Investment
Company Act of 1940, as amended, ordinarily it will not be necessary for the
Trust to hold annual meetings of shareholders. As a result, shareholders may not
consider the election of Trustees or the appointment of independent accountants
for the Trust on an annual basis. The Board of Trustees, however, will call a
special meeting of shareholders for the purpose of electing Trustees if, at any
time, less than a majority of Trustees holding office at the time were elected
by shareholders. Shareholders may remove a Trustee by the affirmative vote of at
least two-thirds of the Trust's outstanding shares and the Trustees must
promptly call a meeting for such purpose when requested to do so in writing by
the record holders of not less than 10% of the outstanding shares of the Trust.
Under certain circumstances, shareholders may communicate with other
shareholders in connection with requesting a special meeting of shareholders.
Under Massachusetts law, shareholders of a Massachusetts business trust
may, under certain circumstances, be held personally liable for the obligations
of such trust. However, the Declaration of Trust contains an express disclaimer
of shareholder liability for acts or obligations of the Trust and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Trust or its Trustees. Moreover, the Declaration
of Trust provides for the indemnification out of Trust property of any
shareholders held personally liable for any obligations of the Trust. The
Declaration of Trust also provides that the Trust shall, upon request, assume
the defense of any claim made against any shareholder for any act or obligation
of the Trust and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss beyond his or her investment because of shareholder
liability would be limited to circumstances in which the Trust itself would be
unable to meet its obligations. In light of the nature of the Trust's business
and the nature and amount of its assets, the possibility of the Trust's
liabilities exceeding its assets, and therefore a shareholder's risk of personal
liability, is extremely remote.
The Declaration of Trust further provides that the Trust shall
indemnify each of its Trustees and officers against liabilities and expenses
reasonably incurred by them, in connection with, or arising out of, any action,
suit or proceeding, threatened against or otherwise involving such Trustee or
officer, directly or indirectly, by reason of being or having been a Trustee or
officer of the Trust. The Declaration of Trust does not authorize the Trust to
indemnify any Trustee or officer against any
B-16
liability to which he or she would otherwise be subject by reason of or for
willful misfeasance, bad faith, gross negligence or reckless disregard of such
person's duties.
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP serves as independent public accountants to the
Trust. In this capacity, KPMG Peat Marwick LLP audits and renders an opinion on
the financial statements.
B-17
CLEARWATER INVESTMENT TRUST
CLEARWATER GROWTH FUND
AND
CLEARWATER SMALL CAP FUND
332 Minnesota Street, Suite 2090
St. Paul, MN 55101
EXECUTIVE OFFICERS: TRUSTEES:
Frederick T. Weyerhaeuser, Frederick T. Weyerhaeuser
Chairman of the Board and Samuel B. Carr, Jr.
Treasurer Stanley R. Day, Jr.
Robert J. Phares
INVESTMENT MANAGER: CLEARWATER GROWTH FUND
SUBADVISER:
Clearwater Management Co., Inc.
332 Minnesota Street, Suite 2090 SIT Investment Associates, Inc.
St. Paul, MN 55101 4600 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402-4130
CUSTODIAN: CLEARWATER SMALL CAP FUND
SUBADVISER:
Norwest Bank Minnesota, N.A.
Norwest Center, Sixth Street Kennedy Capital Management
and Marquette Avenue 425 No. New Ballas Road
Minneapolis, MN 55479-0065 St. Louis, MO 63141
COUNSEL FOR THE FUNDS: TRANSFER AGENT AND SHAREHOLDER
SERVICES:
Hale and Dorr
60 State Street Fiduciary Counselling, Inc.
Boston, MA 02109 332 Minnesota Street
Suite 2100
St. Paul, MN 55101-1394
(612) 228-0935
STATEMENT OF ADDITIONAL INFORMATION
April 30, 1996
B-18
File No. 33-12289
FORM N-1A
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The financial statements relating to Clearwater Growth Fund
and Clearwater Small Cap Fund (previously known as
Clearwater Value Fund) are incorporated by reference to the
1995 Annual Report to Shareholders, dated February 2, 1996,
which is incorporated by reference into Part B, the
Statement of Additional Information. See Exhibit 12.
(b) Exhibits:
1. Declaration of Trust dated January 12, 1987
1.1 Amendment to Declaration of Trust dated March 25, 1994
2. By-Laws
3. None
4. None
5.1 Management Contract dated May 1, 1994
5.2 Subadvisery Contract for Clearwater Growth Fund dated
May 1, 1994
5.3 Subadvisery Contract for Clearwater Small Cap Fund dated
May 1, 1994
6. None
7. None
8. Custodian Agreement dated March 31, 1987
C-1
8.1 Amendment to Custodian Agreement dated March 27, 1991
8.2 Amendment to Custodian Agreement dated November 4, 1992
9. Investment Company Service Agreement dated March 2, 1987
9.1 Amendment to Investment Company Service Agreement dated
May 1, 1995
9.2 Accounting Services Agreement dated April 3, 1995
11. Consent of Independent Accountants
12. 1995 Annual Report to Shareholders
13. Stock Purchase Agreement dated February 19, 1987
14. None
15. None
16.1 Computations of Average Annual Total Return of
Clearwater Growth Fund
16.2 Computations of Average Annual Total Return of
Clearwater Small Cap Fund
17.1 Financial Data Schedule for the Clearwater Growth Fund
17.1 Financial Data Schedule for the Clearwater Small Cap
Fund
18. None
19. Powers of Attorney
------------
*Previously filed and incorporated herein by reference to
the exhibits filed with the Registration Statement, as
amended (File No. 3312289), of the Registrant.
Item 25. Persons Controlled by or Under
Common Control with Registrant
The Registrant is not directly or indirectly controlled by or under
common control with any other person.
C-2
Item 26. Number of Holders of Securities
The following sets forth the approximate number of record holders of
each series of securities of the Registrant as of April 1, 1996:
Title of Class Number of Record Holders
Clearwater Growth Fund 287
Clearwater Small Cap Fund 159
Item 27. Indemnification
Except for the Declaration of Trust, dated January 12, 1987,
establishing the Registrant as a trust under Massachusetts law, there is no
contract, arrangement or statute under which any director, officer, underwriter
or affiliated person of the Registrant is insured or indemnified. The
Declaration of Trust provides that no Trustee or officer will be indemnified
against any liability to which the Registrant would otherwise be subject by
reason of or for willful misfeasance, bad faith, gross negligence or reckless
disregard of such person's duties. See the Registrant's undertaking with respect
to indemnification in Item 32 below.
Item 28. Business and Other Connections of Investment Adviser
All of the information required by this item is set forth in the
Forms ADV, as amended, of the Manager and the Subadvisers. The following
sections of such Forms ADV are incorporated herein by reference:
(a) Items 6 and 8 of Part II;
(b) Section 6, Business Background, of each Schedule D.
Item 29. Principal Underwriter
Not applicable
Item 30. Location of Accounts and Records
The accounts, books, and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the rules promulgated
thereunder are in the possession of Norwest
C-3
Bank Minnesota, National Association, Norwest Center, Sixth Street and Marquette
Avenue, Minneapolis, Minnesota 55479-0065.
Item 31. Management Services
The Registrant is a party to three contracts, described in the
Prospectus and Statement of Additional Information, under which it receives
management services from Clearwater Management Co., Inc. and advisory services
from SIT Investment Associates, Inc. and Kennedy Capital Management.
Item 32. Undertaking
The Registrant undertakes (i) to call special meetings of any series
upon the written request of shareholders owning at least one-fourth of the
outstanding shares entitled to vote thereat and (ii) to comply with the
provisions of Section 16(c) of the Investment Company Act of 1940 with respect
to providing its shareholders access to the list of shareholders of record of
the Registrant or the mailing of materials to such shareholders of record
whenever ten or more shareholders meeting the qualifications set forth in
Section 16(c) of the Investment Company Act of 1940 seek the opportunity of
furnishing materials to the other shareholders with a view to obtaining
signatures on a request for a special meeting.
The Registrant hereby undertakes to deliver or cause to be delivered
with the Statement of Additional Information, to each person to whom the
Statement of Additional Information is sent or given, a copy of the Registrant's
report to shareholders furnished pursuant to and meeting the requirements of
Rule 30d-1 from which the specified information is incorporated by reference,
unless such person currently holds securities of the Registrant and otherwise
has received a copy of such report, in which case the Registrant shall state in
the Statement of Additional Information that it will furnish, without charge, a
copy of such report on request, and the name, address and telephone number of
the person to whom such a request should be directed.
The Registrant further undertakes to limit indemnification of officers and
Trustees to the extent set forth in its Declaration of Trust.
C-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Post-Effective Amendment No. 10 to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment No. 10 to such Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of St. Paul and the State of Minnesota, on the 29th day
of April, 1996.
CLEARWATER INVESTMENT TRUST
By: /S/Frederick T. Weyerhaeuser
------------------------------
Frederick T. Weyerhaeuser
Chairman and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 10 to the Registration Statement of Clearwater
Investment Trust has been signed below by the following persons in the
capacities and on the dates indicated:
Signature Date
PRINCIPAL EXECUTIVE, FINANCIAL )
AND ACCOUNTING OFFICER: )
)
/s/Frederick T. Weyerhaeuser )
- -------------------------------)
Frederick T. Weyerhaeuser )
Chairman and Treasurer ) April 29, 1996
)
THE BOARD OF TRUSTEES: )
)
/s/Samuel B. Carr, Jr* )
- --------------------------------
Samuel B. Carr, Jr. )
)
/s/Stanley R. Day, Jr.* )
- -------------------------------)
Stanley R. Day, Jr. )
)
/s/Robert J. Phares* )
- -------------------------------)
Robert J. Phares )
C-5
)
)
/s/Frederick T. Weyerhaeuser )
- -------------------------------)
Frederick T. Weyerhaeuser )
*By: /s/Frederick T. Weyerhaeuser
-------------------------------
Frederick T. Weyerhaeuser
Power-of-Attorney
C-6
Exhibit Index
Sequential
Exhibit Page
Number Document Title Number
1. Declaration of Trust dated January 12, 1987
1.1 Amendment to Declaration of Trust dated March 25, 1994
2. By-laws
5.1 Management Contract dated May 1, 1994
5.2 Subadvisery Contract for Clearwater Growth Fund dated May 1,
1994
5.3 Subadvisery Contract for Clearwater Small Cap Fund dated May
1, 1994
8. Custodian Agreement dated March 31, 1987
8.1 Amendment to Custodian Agreement dated March 27, 1991
8.2 Amendment to Custodian Agreement dated November 4, 1992
9. Investment Company Service Agreement dated March 2, 1987
9.1 Amendment to Investment Company Service Agreement dated May
1, 1995
9.2 Accounting Services Agreement dated April 3, 1995
11. Consent of Independent Accountants
12. 1995 Annual Report to Shareholders
13. Stock Purchase Agreement dated February 19, 1987
16.1 Computations of Average Annual Total Return of Clearwater
Growth Fund
C-7
16.2 Computations of Average Annual Total Return of Clearwater
Small Cap Fund
17.1 Financial Data Schedule for the Clearwater Growth Fund
17.2 Financial Data Schedule for the Clearwater Small Cap Fund
19. Powers of Attorney
C-8
CLEARWATER INVESTMENT TRUST
DECLARATION OF TRUST
DATED January 12, 1987
DECLARATION OF TRUST, made January 12, 1987 by Frederick T.
Weyerhaeuser, William T. Weyerhaeuser and Mary E. J. Coombs (the "Trustees"),
and by the holders of shares of beneficial interest to be issued hereunder as
hereinafter provided (the "Shareholders").
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed in trust under
this Declaration of Trust as herein set forth below.
ARTICLE I
NAME AND DEFINITIONS
NAME AND PRINCIPAL PLACE OF BUSINESS
Section 1. This Trust shall be known as "Clearwater Investment Trust", and
the Trustees shall conduct the business of the Trust under that name or any
other name as they may from time to time determine. The principal place of
business of the Trust shall be 2100 First National Bank Building, St. Paul,
Minnesota 55101.
DEFINITIONS
Section 2. Wherever used herein, unless otherwise required by the context
or specifically provided:
(a) The Terms "Affiliated Person", "Assignment", "Commission", "Interested
Person", Majority Shareholder Vote" (the 67% or 50% requirement of the
third sentence of Section 2(a)(42) of the 1940 Act, whichever may be
applicable) and "Principal Underwriter" shall have the meanings given them
in the 1940 Act, as amended from time to time;
(b) The "Trust" refers to Clearwater Investment Trust and reference to the
Trust, when applicable to one or more Series of the Trust, shall refer to
any such Series;
(c) "Net Asset Value" means the net asset value of each Series of the Trust
determined in the manner provided in Article X, Section 3;
(d) "Shareholder means a record owner of Shares of the Trust;
(e) The "Trustees" refer to the individual Trustees in their capacity as
trustees hereunder of the Trust and their successor or successors for the
time being in office as such trustee or trustees;
(f) "Shares" means the equal proportionate transferable units of interest
into which the beneficial interest of each Series shall be divided from
time to time, and includes fractions of shares as well as whole shares
consistent with the requirements of Federal and/or other securities laws;
g) The "1940 Act" refers to the Investment Company Act of 1940, as amended
from time to time and "Regulations" refers to any rules, regulations and
interpretations promulgated thereunder or issued by the Securities and
Exchange Commission (the "Commission");
(h) "Series" refers to series of Shares, which may be established, of the
Trust established in accordance with the provisions of Article III; and
(i) "Bylaws" shall mean the Bylaws of the Trust as amended from time to
time
(j) "Blue Sky Laws" refers to any applicable state securities laws, as
amended from time to time.
ARTICLE II
PURPOSE OF TRUST
Section 1. The purpose of this Trust is to provide investors a continuous
source of managed investment in securities and debt instruments and all other
investments by mutual funds permitted under the 1940 Act, Regulations and Blue
Sky Laws, including investments in options, futures contracts and other mutual
funds selected by the Trustees or by an investment adviser under their direction
to carry out the investment policies and achieve the investment objectives of
the Trust or any Series thereof.
ARTICLE III
BENEFICIAL INTEREST
SHARES OF BENEFICIAL INTEREST
Section 1. The beneficial interest in the Trust shall be divided into such
transferable Shares, without par value, which may be of one or more separate and
distinct Series as the Trustees shall from time to time create and establish.
The number of Shares is unlimited and, when duly issued and paid for, in
accordance with the terms and conditions of the Trust and any authorized
offering Prospectus relating thereto, shall be fully paid and nonassessable. The
Trustees shall have full power and authority, in their sole discretion and
without obtaining any prior authorization or vote of the Shareholders of the
Trust, to create and establish (and to change hereafter in any manner not
materially adverse to the interests of the shareholders of the Trust) Shares
with such preferences, voting powers, rights and privileges as the Trustees may
from time to time determine, to divide or combine the Shares into a greater or
lesser number, to classify or reclassify any issued Shares into one or more
Series of Shares, to abolish any one or more Series of Shares, and to take such
other action consistent with the foregoing with respect to the Shares as the
Trustees may deem desirable
ESTABLISHMENT OF SERIES
Section 2. The establishment of any Series shall be effective upon the
adoption of a resolution by a majority of the then Trustees setting forth such
establishment and designation and the relative rights and preferences of the
Shares of such Series. At any time that there are no Shares outstanding of any
particular Series previously established and designated, the Trustees may by a
majority vote abolish that Series and the establishment and designation thereof.
OWNERSHIP OF SHARES
Section 3. The ownership of Shares shall be recorded in the books of the
Trust or a transfer or similar agent. The Trustees may make such rules as they
consider appropriate for the transfer of Shares and similar matters. The record
books of the Trust shall be conclusive as to who are the record holders of
Shares and as to the number of Shares held from time to time by each such
Shareholder.
INVESTMENT IN THE TRUST
Section 4. The Trustees shall accept investments in the Trust from such
persons and on such terms as they may from time to time authorize. Such
investments may be in the form of cash or securities in which the appropriate
Series is authorized to invest, valued as provided in Article X, Section 3.
After the date of the initial contribution of capital, the number of Shares to
represent the initial contribution may in the Trustees' discretion be considered
as outstanding and the amount received by the Trustees on account of the
contribution shall be treated as an asset of the Trust. Subsequent investments
in the Trust shall be credited to each Shareholder's account in the form of full
or fractional Shares at the Net Asset Value per Share next determined after the
investment is received; provided, however, that the Trustees may, in their sole
discretion impose a sales charge upon investments in the Trust. Anything herein
to the contrary notwithstanding, certificates for fractional Shares shall not be
issued at any time. The Trustees shall have the power to assess a redemption
fee, subject only to limitations under the 1940 Act, the Regulations and the
Blue Sky Laws.
ASSETS AND LIABILITIES OF SERIES
Section 5. All consideration received by the Trust for the issue or sale of
Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall be
referred to as "assets belonging to" that Series. In addition any assets,
income, earnings, profits, and proceeds thereof, funds, or payments which are
not readily identifiable as belonging to any particular Series shall be
allocated by the Trustees between and among one or more of the Series in such
manner as they, in their sole discretion, deem fair and equitable. Each such
allocation shall be conclusive and binding upon the Shareholders of all Series
for all purposes, and shall be referred to as assets belonging to that Series.
The assets belonging to a particular Series shall be so recorded upon the books
of the Trust, and shall be held by the Trustees in trust for the benefit of the
holders of Shares of that Series. The assets belonging to each particular Series
shall be charged with the liabilities of that Series and all expenses, costs,
charges and reserves attributable to that Series. Any general liabilities,
expenses, costs, charges or reserves of the Trust which are not readily
identifiable as belonging to any particular Series shall be allocated and
charged by the Trustees between or among any one or more of the Series in such
manner as the Trustees in their sole discretion deem fair and equitable, and
shall be referred to as "liabilities of" that Series. Each such allocation shall
be conclusive and binding upon the Shareholders of all Series for all purposes.
Any creditor of any Series may look only to the assets of that Series to satisfy
such creditor's debt.
NO PREEMPTIVE RIGHTS
Section 6 Shareholders shall have no preemptive or other right to subscribe
to any additional Shares or other securities issued by the Trust or the
Trustees.
STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY
Section 7. Shares shall be deemed to be personal property giving only the
rights provided in this instrument. Every Shareholder by virtue of having become
a Shareholder shall be held to have expressly assented and agreed to the terms
hereof and to have become a party hereof. The death of a Shareholder during the
continuance of the Trust shall not operate to terminate the same or entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to the
rights of said decedent under this Trust. Ownership of shares shall not entitle
the Shareholder to any title in or to the whole or any part of the Trust
property nor any right to call for a partition or division of the same or for an
accounting. The Trustees shall have no power to bind any Shareholder personally
or to call upon any Shareholder for the payment of any sum of money or
assessment whatsoever other than such as the Shareholder may at any time
personally agree to pay by way of subscription for any Shares or otherwise.
Every note, bond, contract or other undertaking issued by or on behalf of the
Trust or the Trustees relating to the Trust shall include a recitation limiting
the obligation represented thereby to the Trust and its assets (but the omission
of such a recitation shall not operate to bind any Shareholder).
ARTICLE IV
THE TRUSTEES
MANAGEMENT OF THE TRUST
Section 1. The business and affairs of the Trust shall be managed by the
Trustees, and they shall have all powers necessary and desirable to fully carry
out that responsibility.
ELECTION: INITIAL TRUSTEES
Section 2. On a date fixed by the Trustees, the Shareholders shall elect
not less than three nor more than eleven Trustees. A Trustee shall not be
required to be a Shareholder of the Trust. The initial Trustees shall be
Frederick T. Weyerhaeuser, William T. Weyerhaeuser and Mary E. J. Coombs and
such other individuals as the Board of Trustees shall appoint pursuant to
Section 4 of Article IV.
TERM OF OFFICE OF TRUSTEES
Section 3. The Trustees shall hold office during the lifetime of this
Trust, and until its termination as hereinafter provided; except (a) that any
Trustee may resign his trust by written instrument signed by him and delivered
to the other Trustees, which shall take effect upon such delivery or upon such
later date as is specified therein; (b) that any Trustee may be removed at any
time by written instrument, signed by at least two- thirds of the number of
Trustees prior to such removal, specifying the date when such removal shall
become effective; (c) that any Trustee who requests in writing to be retired or
who has become incapacitated by illness or injury may be retired by written
instrument signed by a majority of the other Trustees, specifying the date of
his retirement; and (d) a Trustee may be removed at any Special Meeting of the
Trust by a vote of two-thirds of the outstanding Shares.
RESIGNATION AND APPOINTMENT OF TRUSTEES
Section 4. In case of the declination, death, resignation, retirement,
removal, incapacity, or inability of any of the Trustees, or in case a vacancy
shall, by reason of an increase in number, or for any other reason, exist, the
remaining Trustees shall fill such vacancy by appointing such other person as
they in their discretion shall see fit consistent with the limitations under the
1940 Act and Regulations. Such appointment shall be evidenced by a written
instrument signed by a majority of the Trustees in office or by recording in the
records of the Trust, whereupon the appointment shall take effect. Within three
months of such appointment the Trustees shall cause notice of such appointment
to be mailed to each Shareholder at his address as recorded on the books of the
Trust. An appointment of a Trustee may be made by the Trustees then in office
and notice thereof mailed to Shareholders as aforesaid in anticipation of a
vacancy to occur by reason of retirement, resignation or increase in number of
Trustees effective at a later date, provided that said appointment shall become
effective only at or after the effective date of said retirement, resignation or
increase in number of Trustees. As soon as any Trustee so appointed shall have
accepted this trust, the trust estate shall vest in the new Trustee or Trustees,
together with the continuing Trustees, without any further act or conveyance,
and he shall be deemed a Trustee hereunder. The power of appointment is subject
to the provisions of Section 16(a) of the 1940 Act.
TEMPORARY ABSENCE OF TRUSTEE
Section 5. Any Trustee may, by power of attorney, delegate his powers
hereunder for a period not exceeding six months at any one time to any other
Trustee or Trustees, provided that in no case shall less than two Trustees
personally exercise the other powers hereunder except as herein otherwise
expressly provided.
NUMBER OF TRUSTEES
Section 6. The number of Trustees, not less than three (3) nor more than
eleven (11), serving hereunder at any time shall be determined by the Trustees
themselves.
Whenever a vacancy in the Board of Trustees shall occur, until such vacancy
is filled, or while any Trustee is absent from The State of Minnesota or, if not
a domiciliary of Minnesota, is absent from his state of domicile, or is
physically or mentally incapacitated by reason of disease or otherwise, the
other Trustees shall have all the powers hereunder and the certificate of the
other Trustees of such vacancy, absence or incapacity, shall be conclusive,
provided, however, that no vacancy shall remain unfilled for a period longer
than six calendar months.
EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE
Section 7. The death, declination, resignation, retirement, removal,
incapacity, or inability of the Trustees, or any one of them, shall not operate
to annul the Trust or to revoke any existing agency created pursuant to the
terms of this Declaration of Trust.
OWNERSHIP OF ASSETS OF THE TRUST
Section 8. The assets of the Trust shall be held separate and apart from
any assets now or hereafter held in any capacity other than as Trustee hereunder
by the Trustees or any successor Trustees. All of the assets of the Trust shall
at all times be considered as vested in the Trustees. No Shareholder shall be
deemed to have a severable ownership in any individual asset of the Trust or any
right of partition or possession thereof, but each Shareholder shall have a
proportionate undivided beneficial interest in the Trust.
ARTICLE V
POWERS OF THE TRUSTEES
POWERS
Section 1. The Trustees in all instances shall act as principals, and are
and shall be free from the control of the Shareholders. The Trustees shall have
full power and authority to do any and all acts and to make and execute any and
all contracts and instruments that they may consider necessary or appropriate in
connection with the management of the Trust. The Trustees shall not in any way
be bound or limited by present or future laws or customs in regard to trust
investments, but shall have full authority and power to make any and all
investments which they, in their uncontrolled discretion, shall deem proper to
accomplish the purpose of this Trust. Subject to any applicable limitation in
the Declaration of Trust or the Bylaws, the Trustees shall have power and
authority:
(a) To invest and reinvest cash and other property, and to hold cash or
other property uninvested, without in any event being bound or limited by
any present or future law or custom in regard to investments by Trustees,
and to sell, exchange, lend, pledge, mortgage, hypothecate, write options
on and lease any or all of the assets of the Trust.
(b) To adopt Bylaws not inconsistent with this Declaration of Trust
providing for the conduct of the business of the Trust and to amend and
repeal them to the extent that right is not reserved to the Shareholders.
(c) To elect and remove such officers and appoint and terminate such agents
as they consider appropriate
(d) To employ one or more banks or trust companies as custodian of any
assets of the Trust subject to any conditions set forth in the law, this
Declaration of Trust or in the Bylaws, if any.
(e) To retain a transfer agent and Shareholder servicing agent, or both.
(f) To provide for the issuance and distribution of Shares of the Trust or
Series thereof, either through a principal underwriter in the manner
hereinafter provided for or by the Trust itself, or both, or to temporarily
or permanently discontinue such issuance or distribution.
(g) To set record dates in the manner hereinafter provided for.
(h) To delegate such authority as they consider desirable to any officers
of the Trust and to any agent, custodian or underwriter.
(i) To sell or exchange any or all of the assets of the Trust, subject to
the provisions of Article XIII, Section 4(b) hereof.
(j) To vote or give assent or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver powers of attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power and discretion
with relation to securities or property as the Trustees shall deem proper.
(k) To exercise powers and rights of subscription or otherwise which in any
manner arise out of ownership of securities.
(l) To hold any security or property in a form not indicating any trust,
whether in bearer, bookkeeping entry, unregistered or other negotiable
form; or either in its own name or in the name of a custodian or a nominee
or nominees, subject in either case to proper safeguards according to the
usual practice of investment companies.
(m) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article III.
(n) To allocate assets, liabilities and expenses of the Trust to a
particular Series or to apportion the same between or among two or more
Series, provided that any liabilities or expenses incurred by a particular
Series shall be payable solely out of the assets belonging to that Series
as provided for in Article III.
(o) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation, partnership, or concern, any
security of which is held in the Trust; to consent to any contract, lease,
mortgage, purchase, or sale of property by such corporation, partnership,
or concern, and to pay calls or subscriptions with respect to any security
held in the Trust.
(p) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited
to, claims for taxes.
(q) To pay dividends and other distributions of income and of capital gains
to Shareholders in the manner hereinafter provided for.
(r) To borrow money from a bank to the extent permitted by the 1940 Act and
Regulations. The Trustees shall not pledge, mortgage or hypothecate the
assets of the Trust except that, to secure borrowings, the Trustees may
pledge securities.
(s) To adopt such form or forms of Share Certificates as the Trustees may,
from time to time, deem appropriate.
(t) To establish, from time to time, a minimum or maximum total investment
for Shareholders, and to require the redemption in whole or in part, of the
Shares of any Shareholders whose investment is less than or greater than
such minimum or maximum, as the case may be, upon giving notice to such
Shareholder.
No one dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see to the application
of any payments made or property transferred to the Trustees or upon their order
TRUSTEES AND OFFICERS AS SHAREHOLDERS
Section 2. Any Trustee, officer or other agent of the Trust may acquire,
own and dispose of Shares to the same extent as if he were not a Trustee,
officer or agent; and the Trustees may issue and sell or cause to be issued and
sold Shares to and buy such Shares from any such person or any firm or company
in which he is interested, subject only to the general limitations herein
contained as to the sale and purchase of such Shares; and all subject to any
restrictions which may be contained in the Bylaws.
ACTION BY THE TRUSTEES
Section 3. The Trustees shall act by majority vote at a meeting duly called
or by unanimous written consent without a meeting or by telephone consent
provided a quorum of Trustees participate in any such telephonic meeting, unless
the 1940 Act requires that a particular action be taken only at a meeting of the
Trustees. At any meeting of the Trustees, a majority of the Trustees shall
constitute a quorum. Meetings of the Trustees may be called orally or in writing
by the Chairman of the Trustees or at his order or direction or by any two other
Trustees. Notice of the time, date and place of all meetings of the Trustees
shall be given by the party calling the meeting to each Trustee by telephone or
telegram sent to his home or business address at least twenty-four hours in
advance of the meeting or by written notice mailed to his home or business
address at least seventy-two hours in advance of the meeting or by overnight
delivery of such notice to him at least twenty- four hours in advance of the
meeting. Notice need not be given to any Trustee who attends the meeting without
objecting to the lack of notice or who executes a written waiver of notice with
respect to the meeting. Subject to the requirements of the 1940 Act, the
Trustees by majority vote may delegate to any one of their number their
authority to approve particular matters or take particular actions on behalf of
the Trust.
CHAIRMAN OF THE TRUSTEES
Section 4. The Trustees may appoint one of their number to be Chairman of
the Board of Trustees. The Chairman shall preside at all meetings of the
Trustees, he shall be the chief executive officer and may be the chief operating
officer of the Trust.
ARTICLE VI
EXPENSES OF THE TRUST
TRUSTEE REQUIREMENT
Section 1. Subject to the provisions of Article III, Section 5, the
Trustees shall be reimbursed from the Trust estate or the assets belonging to
the appropriate Series for their expenses and disbursements, including, without
limitation, fees and expenses of Trustees who are not Interested Persons of the
Trust, interest expense, taxes, fees and commissions of every kind, expenses of
pricing Trust portfolio securities, expenses of issue, repurchase and redemption
of shares including expenses attributable to a program of periodic repurchases
or redemptions, expenses of registering and qualifying the Trust and its Shares
under Federal and State laws and regulations, charges of custodians, transfer
agents, and registrars, expenses of preparing and setting up in type
Prospectuses and Statements of Additional Information, expenses of printing and
distributing prospectuses sent to existing Shareholders, auditing and legal
expenses, reports to Shareholders, expenses of meetings of Shareholders and
proxy solicitations therefor, insurance expense, association membership dues and
for such non-recurring items as may arise, including litigation to which the
Trust is a party, and for all losses and liabilities by them incurred in
administering the Trust, and for the payment of such expenses, disbursements,
losses and liabilities the Trustees shall have a lien on the assets belonging to
the appropriate Series prior to any rights or interests of the Shareholders
thereto. This section shall not preclude the Trust from directly paying any of
the aforementioned fees and expenses.
ARTICLE VII
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER AND TRANSFER AGENT
INVESTMENT ADVISER
Section 1. Subject to a Majority Shareholder Vote, the Trustees may in
their discretion from time to time enter into an investment advisory or
management contract(s) with respect to the Trust or any Series thereof whereby
the other party(ies) to such contract(s) shall undertake to furnish the Trustees
such management, investment advisory, statistical and research facilities and
services and such other facilities and services, if any, and all upon such terms
and conditions, as the Trustees may in their discretion determine.
Notwithstanding any provisions of this Declaration of Trust, the Trustees may
authorize the investment adviser(s) (subject to such general or specific
instructions as the Trustees may from time to time adopt) to effect purchases,
sales or exchanges of portfolio securities and other investment instruments of
the Trust on behalf of the Trustees or may authorize any officer, agent, or
Trustee to effect such purchases, sales or exchanges pursuant to recommendations
of the investment adviser (and all without further action by the Trustees). Any
such purchases, sales and exchanges shall be deemed to have been authorized by
all 'of the Trustees.
The Trustees may, subject to applicable requirements of the 1940 Act,
including those relating to Shareholder approval, authorize the investment
adviser to employ one or more sub- advisers from time to time to perform such of
the acts and services of the investment adviser, and upon such terms and
conditions, as may be agreed upon between the investment adviser and sub-
adviser.
PRINCIPAL UNDERWRITER
Section 2. The Trustees may in their discretion from time to time enter
into (a) contract(s) providing for the sale of the Shares, whereby the Trust may
either agree to sell the Shares to the other party to the contract or appoint
such other party its sales agent for such Shares. In either case, the contract
shall be on such terms and conditions as may be prescribed in the Bylaws, if
any, and such further terms and conditions as the Trustees may in their
discretion determine not inconsistent with the provisions of this Article VII,
or of the Bylaws, if any; and such contract may also provide for the repurchase
or sale of Shares by such other party as principal or as agent of the Trust.
TRANSFER AGENT
Section 3. The Trustees may in their discretion from time to time enter
into a transfer agency and Shareholder service contract whereby the other party
shall undertake to furnish the Trustees with transfer agency and Shareholder
services. The contract shall be on such terms and conditions as the Trustees may
in their discretion determine not inconsistent with the provisions of this
Declaration of Trust or of the Bylaws, if any. Such services may be provided by
one or more entities.
PARTIES TO CONTRACT
Section 4. Any contract of the character described in Sections 1, 2 and 3
of this Article VII or in Article IX hereof may be entered into with any
corporation, firm, partnership, trust or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, trustee,
shareholder, partner or member of such other party to the contract, and no such
contract shall be invalidated or rendered voidable by reason of the existence of
any such relationship, nor shall any person holding such relationship be liable
merely by reason of such relationship for any loss or expense to the Trust under
or by reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was
reasonable and fair and not inconsistent with the provisions of this Article VII
or the Bylaws, if any. The same person (including a firm, corporation,
partnership, trust, or association) may be the other party to contracts entered
into pursuant to Sections 1, 2 and 3 above or Article IX, and any individual may
be financially interested or otherwise affiliated with persons who are parties
to any or all of the contracts mentioned in this Section 4.
PROVISIONS AND AMENDMENTS
Section 5. Any contract entered into pursuant to Sections 1 and 2 of this
Article VII shall be consistent with and subject to the requirements of Section
15 of the 1940 Act (including any amendments thereof or other applicable Act of
Congress hereafter enacted) with respect to its continuance in effect, its
termination, and the method of authorization and approval of such contract or
renewal thereof, and no amendment to any contract, entered into pursuant to
Section 1 shall be effective unless assented to by a Majority Shareholder Vote.
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
Section 1. The Shareholders shall have power to vote (i) for the election
of Trustees as provided in Article IV, Section 2, (ii) for the removal of
Trustees as provided in Article IV, Section 3(d), (iii) with respect to any
investment advisory or management contract as provided in Article VII, Section
1, (iv) with respect to the amendment of this Declaration of Trust as provided
in Article XIII, Section 7, (v) to the same extent as the shareholders of a
Massachusetts business corporation, as to whether or not a court action,
proceeding or claim should be brought or maintained derivatively or as a class
action on behalf of the Trust or the Shareholders, provided, however, that a
Shareholder of a particular Series shall not be entitled to bring any derivative
or class action on behalf of any other Series of the Trust, and (vi) with
respect to such additional matters relating to the Trust as may be required or
authorized by law, by this Declaration of Trust, or the Bylaws, if any, or any
registration of the Trust with the Securities and Exchange Commission (the
"Commission") or any State, as the Trustees may consider desirable. On any
matter submitted to a vote of the Shareholders, all shares shall be voted by
individual Series, except (i) when required by the 1940 Act or Regulations,
Shares shall be voted in the aggregate and not by individual Series; and (ii)
when the Trustees have determined that the matter affects only the interests of
one or more Series, then only the Shareholders of such Series shall be entitled
to vote thereon. Each whole Share shall be entitled to one vote as to any matter
on which it is entitled to vote, and each fractional Share shall be entitled to
a proportionate fractional vote. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy. Until Shares
are issued, the Trustees may exercise all rights of Shareholders and may take
any action required or permitted by law, this Declaration of Trust or any Bylaws
of the Trust to be taken by Shareholders.
MEETINGS
Section 2. The first Shareholders' meeting shall be held as specified in
Section 2 of Article IV at the principal office of the Trust or such other place
as the Trustees may designate. Special meetings of the Shareholders of any
Series may be called by the Trustees and shall be called by the Trustees upon
the written request of Shareholders owning at least one-fourth of the
outstanding Shares entitled to vote. Whenever ten or more Shareholders meeting
the qualifications set forth in Section 16(c) of the 1940 Act, as the same may
be amended from time to time, seek the opportunity of furnishing materials to
the other Shareholders with a view to obtaining signatures on such a request for
a meeting, the Trustees shall comply with the provisions of said Section 16(c)
with respect to providing such Shareholders access to the list of the
Shareholders of record of the Trust or the mailing of such materials to such
Shareholders of record. Shareholders shall be entitled to at least fifteen days'
notice of any meeting.
QUORUM AND REQUIRED VOTE
Section 3. A majority of Shares entitled to vote in person or by proxy
shall be a quorum for the transaction of business at a Shareholders' meeting,
except that where any provision of law or of this Declaration of Trust permits
or requires that holders of any Series shall vote as a Series, then a majority
of the aggregate number of Shares of that Series entitled to vote shall be
necessary to constitute a quorum for the transaction of business by that Series.
Any lesser number shall be sufficient for adjournments. Any adjourned session or
sessions may be held, within a reasonable time after the date set for the
original meeting, without the necessity of further notice. Except when a larger
vote is required by any provision of this Declaration of Trust or the Bylaws, a
majority of the Shares voted in person or by proxy shall decide any questions
and a plurality shall elect a Trustee, provided that where any provision of law
or of this Declaration of Trust permits or requires that the holders of any
Series shall vote as a Series, then a majority of the Shares of that Series
voted on the matter shall decide that matter insofar as that Series is
concerned.
ARTICLE IX
CUSTODIAN
APPOINTMENT AND DUTIES
Section 1. The Trustees shall at all times employ one or several banks or
trust companies, each having capital, surplus and undivided profits of at least
one million dollars ($1,000,000) as custodian with authority as its agent, but
subject to such restrictions, limitations and other requirements, if any, as may
be contained in the Bylaws:
(1) to hold the securities owned by the Trust and deliver the same upon
written order;
(2) to receive and receipt for any moneys due to the Trust and deposit the
same in its own banking department or elsewhere as the Trustees may direct;
and
(3) to disburse such funds upon orders or vouchers;
and the Trust may also employ such custodian or custodians as its agent:
(1) to keep the books and accounts of the Trust and furnish clerical and
accounting services; and
(2) to compute, if authorized to do so by the Trustees, the Net Asset Value
of any Series in accordance with the provisions hereof;
all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian(s). If so directed by a Majority Shareholder Vote, the
custodian(s) shall deliver and pay over all property of the Trust held by it as
specified in such vote.
The Trustees may also authorize the custodian(s) to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian(s), and upon such terms and conditions, as may be agreed upon between
the custodian(s) and such sub-custodian and approved by the Trustees, provided
that in every case such sub-custodian shall be a bank or trust company organized
under the laws of the United States or one of the states thereof and having
capital, surplus and undivided profits of at least one million dollars
($1,000,000) or such other person as may be permitted by the Commission, or
otherwise in accordance with the 1940 Act as from time to time amended.
CENTRAL CERTIFICATE SYSTEM
Section 2. Subject to such rules, regulations and orders as the Commission
may adopt, the Trustees may direct the custodian(s) to deposit all or any part
of the securities owned by the Trust in a system for the central handling of
securities established by a national securities exchange or a national
securities association registered with the Commission under the Securities
Exchange Act of 1934, or such other person as may be permitted by the
Commission, or otherwise in accordance with the 1940 Act as from time to time
amended, pursuant to which system all securities of any particular class or
series of any issuer deposited within the system are treated as fungible and may
be transferred or pledged by book entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust.
ARTICLE X
DISTRIBUTIONS AND REDEMPTIONS
DISTRIBUTIONS
Section 1.
(a) The Trustees may from time to time declare and pay dividends
and other distributions. The amount of such dividends and other
distributions and the payment of them shall be wholly in the discretion of
the Trustees.
(b) The Trustees shall have power, to the fullest extent permitted
by the laws of Massachusetts, at any time to declare and cause to be paid
dividends and other distributions on Shares of a particular Series, from
the assets belonging to that Series, which dividends or other
distributions, at the election of the Trustees, may be paid daily or
otherwise pursuant to a standing resolution or resolutions adopted only
once or with such frequency as the Trustees may determine, and may be
payable in Shares of that Series at the election of each Shareholder of
that Series.
(c) Anything in this instrument to the contrary notwithstanding,
the Trustees may at any time declare and distribute pro rata among the
Shareholders of a particular Series as of the record date of that Series
fixed as provided in Section 3 hereof a "stock dividend".
REDEMPTION OF SHARES
Section 2. In case any holder of record of Shares of a particular Series
desires to dispose of his Shares, he may deposit at the office of the transfer
agent or other authorized agent of that Series a written request or such other
form of request as the Trustees may from time to time authorize, requesting that
the Series redeem or purchase the Shares in accordance with this Section 2; and
the Shareholder so requesting shall be entitled to require the Series to redeem
or purchase, and the Series or the principal underwriter of the Series shall
redeem or purchase his said Shares, but only at the Net Asset Value thereof (as
described in Section 3 hereof) and on the last day of the month in which the
request is made (i.e., the date on which the request is effective). The Series
shall make payment for any such Shares to be redeemed or purchased, as
aforesaid, in cash from the assets of that Series and payment for such Shares
shall be made by the Series or the principal underwriter of the Series to the
Shareholder of record within five (5) business days or seven (7) days after the
date upon which the request is effective.
DETERMINATION OF NET ASSET VALUE AND
VALUATION OF PORTFOLIO ASSETS
Section 3. The term "Net Asset Value" of any Series shall mean that amount
by which the assets of that Series exceed its liabilities, all as determined by
or under the direction of the Trustees. Such value per Share shall be determined
separately for each Series of Shares and shall be determined on such days and at
such times as the Trustees may determine. Such determination shall be made with
respect to securities for which market quotations are readily available, at the
market value of such securities; and with respect to other securities and
assets, at the fair value as determined in good faith by the Trustees, provided,
however, that the Trustees, without Shareholder approval, may alter the method
of appraising portfolio securities insofar as permitted under the 1940 Act and
the Regulations or insofar as permitted by any Order of the Commission
applicable to the Series. The Trustees may delegate any of their powers and
duties under this Section 3 with respect to appraisal of assets and liabilities.
At any time the Trustees may cause the value per Share last determined to be
determined again in similar manner and may fix the time when such redetermined
value shall become effective.
SUSPENSION OF THE RIGHT OF REDEMPTION
Section 4. The Trustees may declare a suspension of the right of redemption
or postpone the date of payment as permitted under the 1940 Act. Such suspension
shall take effect at such time as the Trustees shall specify but not later than
the close of business on the business day next following the declaration of
suspension, and thereafter there shall be no right of redemption or payment
until the Trustees shall declare the suspension at an end. In the case of a
suspension of the right of redemption, a Shareholder may either withdraw his
request for redemption or receive payment based on the Net Asset Value per Share
existing after the termination of the suspension.
ARTICLE XI
COMPENSATION AND LIMITATION OF LIABILITY OF TRUSTEES
COMPENSATION
Section 1. The Trustees as such shall be entitled to reasonable
compensation from the Trust; they may fix the amount of their compensation.
Nothing herein shall in any way prevent the employment of any Trustee for
advisory, management, legal, accounting, investment banking or other services
and payment for the same by the Trust.
LIMITATION OF LIABILITY
Section 2. Provided they have exercised reasonable care and have acted
under the reasonable belief that their actions are in the best interest of the
Trust, the Trustees shall not be responsible for or liable in any event for
neglect or wrongdoing of them or any officer, agent, employee or investment
adviser of the Trust, but nothing contained herein shall protect any Trustee
against any liability to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office. Every note, bond, contract,
instrument, certificate or undertaking and every other act or obligation
whatsoever executed or performed by or on behalf of the Trust or the Trustees or
any of them in connection with the Trust shall be conclusively deemed to have
been executed or done only in or with respect to their or his capacity as
Trustees or Trustee, and such Trustees or Trustee shall not be personally liable
thereon.
ARTICLE XII
INDEMNIFICATION
COVERED PERSONS
Section 1.
(a) Subject to the exceptions and limitations contained in Section (b)
below:
(i) every person who is, or has been, a Trustee or officer
of the Trust (including persons who serve at the Trust's request
as directors, officers or trustees of another organization in
which the Trust has any interest as a shareholder, creditor or
otherwise) (hereinafter referred to as a "Covered Person") shall
be indemnified by the appropriate Series to the fullest extent
permitted by law against liability and against all expenses
reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party
or otherwise by virtue of his being or having been a Covered
Person and against amounts paid or incurred by him in the
settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened while
in office or thereafter, and the words "liability" and "expenses"
shall include, without limitation, attorneys' fees, costs,
judgments, amounts paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body
before which the proceeding was brought (A) to be liable to the
Trust or its Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office or (B) not to have acted in
good faith in the reasonable belief that his action was in the
best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office,
(A) by the court or other body approving the
settlement;
(B) by at least a majority of those Trustees who
are neither interested persons of the Trust (as
defined in Section 2(a)(19) of the 1940 Act) nor
are parties to the matter based upon a review of
readily available facts (as opposed to a full
trial-type inquiry); or
(C) by written opinion of independent legal
counsel based upon a review of readily available
facts (as opposed to a full trial- type inquiry);
provided, however, that any Shareholder may, by appropriate legal
proceedings, challenge any such determination by the Trustees, or by
independent counsel.
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now
or hereafter be entitled, shall continue as to a person who has ceased to
be such Trustee or officer and shall inure to the benefit of the heirs,
executors and administrators of such a person. Nothing contained herein
shall affect any rights to indemnification to which Trust personnel, other
than Trustees and officers, and other persons may be entitled by contract
or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described
in paragraph (a) of this Section 1 may be paid by the applicable Series
from time to time prior to final disposition thereof upon receipt of an
undertaking by or on behalf of such Covered Person that such amount will be
paid over by him to the applicable Series if it is ultimately determined
that he is not entitled to indemnification under this Section 1; provided,
however, that either (a) such Covered Person shall have provided
appropriate security for such undertaking, (b) the Trust is insured against
losses arising out of any such advance payments or (c) either a majority of
the Trustees who are neither interested persons of the Trust (as defined
above) nor parties to the matter, or independent legal counsel in a written
opinion, shall have determined, based upon a review of readily available
facts (as opposed to a trial-type inquiry or full investigation), that
there is reason to believe that such Covered Person will be found entitled
to indemnification under this Section 1.
SHAREHOLDERS
Section 2. In case any Shareholder or former Shareholder of any Series of
the Trust shall be held to be personally liable solely by reason of his being or
having been a Shareholder and not because of his acts or omissions or for some
other reason, the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or in the case of a corporation or
other entity, its corporate or other general Successor) shall be entitled out of
the assets belonging to the applicable Series to be held harmless from and
indemnified against all loss and expense arising from such liability. The Series
shall, upon request by the Shareholder, assume the defense of any claim made
against the Shareholder for any act or obligation of the Series and satisfy any
judgment thereon.
ARTICLE XIII
MISCELLANEOUS
TRUST NOT A PARTNERSHIP; TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE;
NOTICE
Section 1. It is hereby expressly declared that a trust and not a
partnership is created hereby. No Trustee hereunder shall have any power to bind
personally either the Trust's officers or any Shareholder. All persons extending
credit to, contracting with or having any claim against the Trust or the
Trustees shall look only to the assets of the appropriate Series for payment
under such credit, contract or claim; and neither the Shareholders nor the
Trustees, nor any of their agents, whether past, present or future, shall be
personally liable therefor. Nothing in this Declaration of Trust shall protect a
Trustee against any liability to which the Trustee would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of the office of Trustee hereunder. Every
note, bond, contract, instrument, certificate or undertaking made or issued by
the Trustees or by any officer or officers shall give notice that this
Declaration of Trust is on file with the Secretary of The Commonwealth of
Massachusetts and shall recite that the same was executed or made by or on
behalf of the Trust or by them as Trustee or Trustees or as officer or officers
and not individually and that the obligations of such instrument are not binding
upon any of them or the Shareholders individually but are binding only upon the
assets and property of the Trust, and may contain such further recital as he or
they may deem appropriate, but the omission thereof shall not operate to bind
any Trustee or Trustees or officer or officers or Shareholder or Shareholders
individually.
TRUSTEES' GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
Section 2. The exercise by the Trustees of their powers and discretions
hereunder in good faith and with reasonable care under the circumstances then
prevailing, shall be binding upon everyone interested. Subject to the provisions
of Section 1 of this Article XIII and to Article XII, the Trustees shall not be
liable for errors of judgment or mistakes of fact or law. The Trustees may take
advice of counsel or other experts with respect to the meaning and operation of
this Declaration of Trust, and subject to the provisions of Section 1 of this
Article XIII and to Article XII, shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice.
The Trustees shall not be required to give any bond as such, nor any surety if a
bond is obtained.
ESTABLISHMENT OF RECORD DATES
Section 3. The Trustees may close the stock transfer books of the Trust for
a period not exceeding sixty (60) days preceding the date of any meeting of
Shareholders, or the date for the payment of any dividends or other
distributions, or the date for the allotment of rights, or the date when any
change or conversion or exchange of Shares shall go into effect; or in lieu of
closing the stock transfer books as aforesaid, the Trustees may fix in advance a
date, not exceeding sixty (60) days preceding the date of any meeting of
Shareholders, or the date for payment of any dividend or other distribution, or
the date for the allotment of rights, or the date when any change or conversion
or exchange of Shares shall go into effect, as a record date for the
determination of the Shareholders entitled to notice of, and to vote at, any
such meeting, or entitled to receive payment of any such dividend or other
distribution, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of Shares, and in such case
such Shareholders and only such Shareholders as shall be Shareholders of record
on the date so fixed shall be entitled to such notice of, and to vote at, such
meeting, or to receive payment of such dividend or other distribution, or to
receive such allotment or rights, or to exercise such rights, as the case may
be, notwithstanding any transfer of any Shares on the books of the Trust after
any such record date fixed or aforesaid.
TERMINATION OF TRUST
Section 4
(a) This Trust shall continue without limitation of time but subject to the
provisions of sub-sections (b) or (c) of this Section 4.
(b) The Trust or any Series shall terminate upon a majority vote of the
Trustees.
(c) Subject to a Majority Shareholder Vote of each Series affected by the
matter or, if applicable, to a Majority Shareholder Vote of the Trust, the
Trustees may
(i) sell and convey the assets of the Trust or any affected Series to
another trust, partnership, association or corporation organized under
the laws of any state which is a diversified open-end management
investment company as defined in the 1940 Act, for adequate
consideration which may include the assumption of all outstanding
obligations, taxes and other liabilities, accrued or contingent, of
the Trust or any affected Series, and which may include shares of
beneficial interest or stock of such trust, partnership, association
or corporation; or
(ii) at any time sell and convert into money all of the assets of the
Trust or any affected Series.
(iii) terminate the Trust or any Series upon a majority vote of a
quorum of the Trustees.
Upon making provision for the payment of all such liabilities in either (i) or
(ii), by such assumption or otherwise, the Trustees shall distribute the
remaining proceeds or assets (as the case may be) ratably among the holders of
the Shares of the Trust or any affected Series then outstanding.
(d) Upon completion of the distribution of the remaining proceeds or the
remaining assets as provided in sub-section (c), the Trust or any affected
Series shall terminate and the Trustees shall be discharged of any and all
further liabilities and duties hereunder and the right, title and interest
of all parties shall be canceled and discharged.
FILING OF COPIES, REFERENCES, HEADINGS, GENDER, ETC.
Section 5. The original or a copy of this instrument and of each
declaration of trust supplemental hereto shall be kept at the office of the
Trust where it may be inspected by any Shareholder. A copy of this instrument
and of each supplemental declaration of trust shall be filed by the Trustees
with the Secretary of The Commonwealth of Massachusetts and the Boston City
Clerk, as well as any other governmental office where such filing may from time
to time be required. Anyone dealing with the Trust may rely on a certificate by
an officer or Trustee of the Trust as to whether or not any such supplemental
declarations of trust have been made and as to any matters in connection with
the Trust hereunder, and with the same effect as if it were the original, may
rely on a copy certified by an officer or Trustee of the Trust to be a copy of
this instrument or of any such supplemental declaration of trust. In this
instrument or in any such supplemental declaration of trust, references to this
instrument, and all expressions like "herein," "hereof" and "hereunder," shall
be deemed to refer to this instrument as amended or affected by any such
supplemental declaration of trust. Headings are placed herein for convenience of
reference only and in case of any conflict, the text of this instrument, rather
than the headings, shall control. This instrument may be executed in any number
of counterparts each of which shall be deemed an original. In the case of all
terms used in this instrument, the singular shall include the plural and the
masculine gender shall include the feminine and neuter, and vice versa, as the
context requires.
APPLICABLE LAW
Section 6. The trust set forth in this instrument is made in The
Commonwealth of Massachusetts, and it is created under and is to be governed by
and construed and administered according to the laws of said Commonwealth. The
Trust shall be of the type commonly called a Massachusetts business trust, and
without limiting the provisions hereof, the Trust may exercise all powers which
are ordinarily exercised by such a trust.
AMENDMENTS
Section 7. If authorized by votes of the Trustees and a Majority
Shareholder Vote, or by any larger vote which may be required by applicable law
or this Declaration of Trust in any particular case, the Trustees shall amend or
otherwise supplement this instrument, by making a declaration of trust
supplemental hereto, which thereafter shall form a part hereof, except that an
amendment which shall affect the Shareholders of one or more Series but not the
Shareholders of all outstanding Series shall be authorized by vote of the
Shareholders holding a majority of the Shares entitled to vote of each Series
affected and no vote of Shareholders of a Series not affected shall be required.
Amendments having the purpose of changing the name of the Trust or supplying any
omission, curing any ambiguity or curing, correcting or supplementing any
defective or inconsistent provision contained herein shall not require
authorization by Shareholder vote. Copies of the supplemental declaration of
trust shall be filed as specified in Section 5 of this Article XIII.
FISCAL YEAR
Section 8. The fiscal year of the Trust shall end on a specified date as
set forth in the Bylaws, provided, however, that the Trustees may, without
Shareholder approval, change the fiscal year of the Trust.
IN WITNESS WHEREOF, the undersigned, being all of the initial Trustees of
the Trust, have executed this instrument this 12th day of January, 1987.
/s/Frederick T. Weyerhaeuser
Frederick T. Weyerhaeuser
/s/William T. Weyerhaeuser
William T. Weyerhaeuser
/s/Mary E.J. Coombs
Mary E.J. Coombs
STATE OF MINNESOTA
County of Ramsey, ss St. Paul, January 12, 1987
Then personally appeared the above named Frederick T. Weyerhaeuser and
acknowledged the foregoing instrument to be his free act and deed, before me,
/s/J. S. Micallef
Notary Public
My Commission expires:
November 9, 1987
STATE OF MINNESOTA
County of Ramsey, ss St. Paul, January 12, 1987
Then personally appeared the above named William T. Weyerhaeuser and
acknowledged the foregoing instrument to be his free act and deed, before me,
/s/J. S. Micallef
Notary Public
My Commission expires:
November 9, 1987
STATE OF MINNESOTA
County of Ramsey, ss St. Paul, January 12, 1987
Then personally appeared the above named Mary E.J. Coombs and acknowledged
the foregoing instrument to be her free act and deed, before me,
/s/J. S. Micallef
Notary Public
My Commission expires:
November 9, 1987
CLEARWATER INVESTMENT TRUST
CERTIFICATE OF AMENDMENT
The following is the resolution duly adopted by a vote of the Trustees of
Clearwater Investment Trust (the "Trust") on March 25, 1994:
RESOLVED: That, subject to the approval of changes to the Value Fund's
investment objectives and policies by the shareholders of the Value Fund at
a Special Meeting of the Trust's shareholders to be held on April 20, 1994,
the name of the series of the Trust currently known as Clearwater Value
Fund be, and it hereby is, changed to "Clearwater Small Cap Fund"; and,
pursuant to Article III, Section 2 of the Trust's Declaration of Trust, the
Declaration of Trust be, and it hereby is, amended by adding the following
language at the end of Article III, Section 2:
"There currently are two Series of shares of the Trust -- Clearwater Growth
Fund and Clearwater Small Cap Fund --each of which has the relative rights
and preferences described in Article III, Section 5 hereof and elsewhere
herein. The Trustees established Clearwater Growth Fund as the first Series
of the Trust on January 31, 1987. The Series of the Trust currently known
as Clearwater Small Cap Fund was established by the Trustees on December 9,
1988 as "Clearwater Income Fund." The Trustees changed the name of such
Series from "Clearwater Income Fund" to "Clearwater Value Fund" on March
23, 1990 and changed the name of such Series from "Clearwater Value Fund"
to "Clearwater Small Cap Fund" on March 25, 1994."
TRUSTEE CERTIFICATE
I, Frederick T. Weyerhaeuser, Trustee of Clearwater Investment Trust (the
"Trust"), hereby certify that the attached Certificate of Amendment, setting
forth the amendment (the "Amendment") to the Trust's Declaration of Trust dated
January 12, 1987 (the "Declaration of Trust") pursuant to which Clearwater Value
Fund's name was changed to Clearwater Small Cap Fund, is a true copy of the
Amendment, and that all actions required to be taken in connection with such
Amendment were duly taken in the manner provided in the Declaration of Trust.
IN WITNESS WHEREOF, the undersigned has executed this certificate this 25th
day of April 1994.
/s/Frederick T. Weyerhaeuser
Frederick T. Weyerhaeuser,
as Trustee, not individually
610 Wentworth Ave.
Mendota Heights, MN 55118
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Amendment this 30th day of April 1994.
/s/Frederick T. Weyerhaeuser /s/Mary E.J. Coombs
Frederick T. Weyerhaeuser Mary E.J. Coombs
as Trustee, not individually as Trustee, not individually
610 Wentworth Avenue 528 East 14th Avenue
Mendota Heights, MN 55118 Spokane, WA 99202
/s/Stanley R. Day, Jr. /s/Robert J. Phares
Stanley R. Day, Jr. Robert J. Phares
as Trustee, not individually as Trustee, not individually
1835 North Halsted Ave. Apt. 2 1627 West Main, #330
Chicago, IL 60614 Bozeman, MT 59715
BY-LAWS
of
CLEARWATER INVESTMENT TRUST
ARTICLE I
Officers and Their Election
SECTION 1. Officers. The officers of the Trust shall be a Chairman, a Vice
President, a Treasurer, a Secretary, and such other officers with such other
titles as provided for herein or as the Trustees may from time to time elect. It
shall not be necessary for any Trustee or other officer to be a holder of shares
in the Trust.
SECTION 2. Election of Officers. The Treasurer and Secretary shall be chosen
annually by the Trustees. The Chairman and Vice President shall be chosen
annually by and from the Trustees.
Two or more offices may be held by a single person except the offices of
Chairman and Secretary. The officers shall hold office until their successors
are chosen and qualified.
SECTION 3. Resignations and Removals. Any officer of the Trust may resign by
filing a written resignation with the Chairman or with the Trustees or with the
Secretary, which shall take effect on being so filed unless it is specified to
be effective at some other time or upon the happening of some other event. Any
officer may be removed at any time, with or without cause, by vote of a majority
of the entire number of Trustees.
SECTION 4. Vacancies. The Trustees may fill any vacancy occurring in any office
for any reason and may, in its discretion, leave unfilled for such period as it
may determine any offices other than those of Chairman, Vice President,
Treasurer and Secretary. Each such successor shall hold office until his
successor is chosen and qualified.
ARTICLE II
Powers and Duties of Officers and Trustees
SECTION 1. Trustees. The business and affairs of the Trust shall be managed by
the Trustees, and they shall have all powers necessary and desirable to fully
carry out that responsibility.
SECTION 2. Executive and other Committees. The Trustees may elect from their own
number an Executive Committee to consist of not less than three nor more than
five members, which shall have the power and duty to conduct the current and
ordinary business of the Trust, and such other powers and duties as the Trustees
may from time to time delegate to such Committee. The Trustees may also elect
from their own number other Committees from time to time, the number composing
such Committees and the powers conferred upon the same to be determined by vote
of the Trustees.
SECTION 3. Chairman of the Trustees The Chairman shall preside at all meetings
to the Trustees, shall be the chief executive officer and may be the chief
operating officer of the Trust. The Chairman may also perform such other duties
as the Trustees may from time to time designate.
The Chairman, subject to the Trustees, shall have general supervision over
the business and policies of the Trust. The Chairman shall have full power and
authority to bind the Trust and in connection therewith may execute and deliver
in the name and on behalf of the Trust any and all agreements, instruments,
notes and writings of any nature that he may consider necessary or appropriate
in connection with the management of the Trust. The Chairman shall perform such
duties additional to all of the foregoing as the Trustees may from time to time
designate.
SECTION 4. Treasurer. Subject to Section 4 of Article V of the Declaration of
Trust, the Treasurer may be the principal financial and accounting officer of
the Trust. He shall deliver all funds and securities of the Trust which may come
into his hands to such bank(s) or trust compan(ies) as the Trustees shall employ
as Custodian(s) in accordance with Article IX of the Declaration of Trust and
these By-Laws. He shall have the custody of the seal of the Trust. He shall make
annual reports in writing of the business conditions of the Trust, which reports
shall be preserved upon its records, and he shall furnish such other reports
regarding its business and condition as the Trustees may from time to time
require. The Treasurer shall perform such duties additional to all of the
foregoing as the Trustees or the Chairman may from time to time designate.
SECTION 5. Secretary. The Secretary shall record in books kept for the purpose
all votes and proceedings of the Trustees and the shareholders at their
respective meetings.
The Secretary shall perform such duties and possess such powers additional
to the foregoing as the Trustees or the Chairman may from time to time
designate.
SECTION 6. Vice Presidents. Each Vice President of the Trust shall perform such
duties and possess such powers as the Trustees or the Chairman may from time to
time designate. In the event of the absence, inability or refusal to act of the
Chairman, the Vice President (or if there shall be more than one, the Vice
Presidents in the order determined by the Trustees) shall perform the duties of
the Chairman and when so performing shall have all the powers of and be subject
to all the restrictions upon the Chairman.
SECTION 7. Assistant Treasurer. The Assistant Treasurer of the Trust shall
perform such duties and possess such powers as the Trustees, the Chairman or the
Treasurer may from time to time designate.
SECTION 8. Assistant Secretary. The Assistant Secretary of the Trust shall
perform such duties and possess such powers as the Trustees, the Chairman or the
Secretary may from time to time designate.
ARTICLE III
Shareholders' Meetings
SECTION 1. Voting powers and meetings of Shareholders shall be governed by
applicable provisions of law, the Declaration of Trust and as hereinafter
provided by these By-Laws.
SECTION 2. Special Meetings. A special meeting of the Shareholders of any Series
shall be called by the Secretary whenever ordered by the Trustees or requested
in writing by the holder or holders of at least one-fourth of the outstanding
Shares of any such Series entitled to vote. If the Secretary, when so ordered or
requested, refuses or neglects for more than two days to call such special
meeting, the Trustees or the Shareholders so requesting may, in the name of the
Secretary, call the meeting by giving notice thereof in the manner required when
notice is given by the Secretary.
SECTION 3. Notices. Except as above provided, notices of any special meeting of
the Shareholders shall be given by the Secretary by delivering or mailing,
postage prepaid, to each Shareholder entitled to vote at said meeting, a written
or printed notification of such meeting, at least fifteen days before the
meeting, to such address as may be registered with the Trust by the Shareholder.
SECTION 4. Place of Meeting All special meetings of the Shareholders shall be
held at such place in the United States as the Trustees may designate.
ARTICLE IV
Trustees' Meetings
SECTION 1. Meetings. Meetings of the Trustees shall be called orally or in
writing by the Chairman or at his order or direction or by any two other
Trustees, and if the Secretary when so requested refuses or fails for more than
one day to call such meeting, the Chairman, or such two other Trustees, may in
the name of the Secretary call such meeting by giving due notice in the manner
required when notice is given by the Secretary.
SECTION 2. Quorum. A majority of the Trustees shall constitute a quorum for the
transaction of business.
SECTION 3. Notices. Except as otherwise provided, notice of any meeting of the
Trustees shall be given by the Secretary to each Trustee, by mailing to him,
postage prepaid, addressed to him at his address as registered on the books of
the Trust or, if not so registered, at his last known address, a written or
printed notification of such meeting at least three days before the meeting or
by overnight delivery of such notice to him at least one day before the meeting,
or by telephoning him or by sending to him at least one day before the meeting,
by prepaid telegram, addressed to him at his said registered address, if any, or
if he has no such registered address, at his last known address, notice of such
meeting.
SECTION 4. Place of Meeting All meetings of the Trustees shall be held at the
principal place of business of the Trust in St. Paul, Minnesota, or such other
place within or without the State as the person or persons requesting said
meeting to be called may designate, but any meeting may adjourn to any other
place.
SECTION 5. Special Action. When all the Trustees shall be present at any
meeting, however called, or wherever held, or shall assent to the holding of the
meeting without notice, or after the meeting shall sign a written assent thereto
on the record of such meeting, the acts of such meeting shall be valid as if
such meeting had been regularly held.
SECTION 6. Action by Consent. Any action by the Trustees may be taken without a
meeting if a written consent thereto is signed by all the Trustees and filed
with the records of the Trustees meetings, or by telephone consent provided a
quorum of Trustees participate in any such telephone meeting. Such consent shall
be treated as a vote of the Trustees for all purposes.
ARTICLE V
Shares of Beneficial Interest
SECTION 1. Beneficial Interest. The beneficial interest in the Trust and the
status of the owners thereof shall be defined, established and governed by
applicable provisions of law, the Declaration of Trust and as herein provided by
these By-Laws.
SECTION 2. Certificate of Shares of Beneficial Interest. The shares of the Trust
shall be registered with the Trust in "book entry" form. A certificate of shares
of beneficial interest of the Trust shall be issued to a shareholder only if the
Trustees, in their sole discretion after consideration of a written request from
such shareholder, determine that a certificate may be so issued. Any certificate
so issued shall be signed by the Chairman or a Vice President, and by the
Treasurer or an Assistant Treasurer, but when a certificate is countersigned by
a transfer agent or a registrar, other than a Trustee, officer or employee of
the Trust, such signature may be a facsimile. In case any officer who has signed
or whose facsimile signature has been placed upon such certificate shall have
ceased to be such officer before such certificate is issued, it may be issued by
the Trust with the same effect as if he were such officer at the time of its
issue.
Every certificate for shares of beneficial interest which are subject to
any restriction on transfer pursuant to the Declaration of Trust, the By-Laws,
applicable securities laws or any agreement to which the Trust is a party, shall
have conspicuously noted on the face or back of the certificate either the full
text of the restriction or a statement of the existence of such restrictions and
a statement that the Trust will furnish a copy of the restrictions to the holder
of such certificate upon written request and without charge. Every certificate
issued when the Trust is authorized to issue more than one class or series of
shares of beneficial interest shall set forth on its face or back either the
full text of the preferences, voting powers, qualifications and special and
relative rights of the shares of each class and series authorized to be issued
or a statement of the existence of such preferences, powers, qualifications and
rights and a statement that the Trust will furnish a copy thereof to the holder
of such certificate upon written request and without charge.
SECTION 3. Transfers. At the discretion of the Trustees and subject to the
restrictions, if any, stated or noted on any share certificates, shares may be
transferred on the books of the Trust by (a) a properly executed stock
assignment or (b) with respect to shares represented by a share certificate, the
surrender to the Trust or its transfer agent of such certificate representing
such shares properly endorsed or accompanied by a written assignment or power of
attorney properly executed; and with such proof of authority or the authenticity
of signature as the Trust or its transfer agent may reasonably require. Except
as may be otherwise required by law, by the Declaration of Trust or by these
By-Laws, the Trust shall be entitled to treat the record holder of shares of
beneficial interest as shown on its books as the owner of such shares for all
purposes, including the payment of dividends and the right to vote with respect
thereto, regardless of any transfer, pledge or other disposition of such shares
until the shares have been transferred on the books of the Trust in accordance
with the requirements of these By-Laws.
SECTION 4. Replacement of Certificates. In case of the alleged loss or
destruction or the mutilation of a certificate of shares of beneficial interest,
a duplicate certificate may be issued in place of the lost, destroyed or
mutilated certificate, upon such terms as the Trustees may prescribe, including
the presentation of reasonable evidence of such loss, destruction or mutilation
and the giving of such indemnity as the Trustees may require for the protection
of the Trust or any transfer agent or registrar.
ARTICLE VI
Inspection of Books
The Trustees shall from time to time determine whether and to what extent,
and at what times and places, and under what conditions and regulations the
accounts and books of the Trust or any of them shall be open to the inspection
of the shareholders; and no shareholder shall have any right to inspect any
account or book or document of the Trust except as conferred by law or otherwise
by the Trustees or by resolution of the shareholders.
ARTICLE VII
Custodian
The Custodian(s) employed by the Trust pursuant to Article IX of the
Declaration of Trust shall be required to enter into a contract with the Trust
which shall contain in substance the following provisions:
(a) The Trust will cause all securities and funds owned by the Trust to be
delivered or paid to the Custodian(s).
(b) The Custodian(s) will receive and receipt for any moneys due to the
Trust and deposit the same in its own banking department and in such
other banking institutions, if any, as the Custodian(s) and the
Trustees may approve. The Custodian(s) shall have the sole power to
draw upon any such account.
(c) The Custodian(s) shall release and deliver securities owned by the
Trust in the following cases only:
(1) Upon the sale of such securities for the account of the Trust and
receipt of payment therefor;
(2) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided
that in any such case, the cash is to be delivered to the
Custodian(s);
(3) To the issuer thereof or its agent for transfer in- to the name
of the Trust, the Custodian(s) or a nominee of either, or for
exchange for a different number of bonds or certificates
representing the same aggregate face amount or number of units;
provided that in any such case the new securities are to be
delivered to the Custodian(s);
(4) To the broker selling the same for examination, in accord with
the "street delivery" custom;
(5) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities or pursuant to
provisions to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian(s);
(6) In the case of warrants, rights, or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities;
(7) To any pledge by way of pledge or hypothecation to secure any
loan, but only within the limits permitted to the Trust by
Article V, Section 1(r) of the Declaration of Trust.
(8) For deposit in a system for the central handling of securities in
accordance with the provisions of Article IX, Section 2 of the
Declaration of Trust.
(d) The Custodian(s) shall pay out moneys of the Trust only upon the
purchase of securities for the account of the Trust and the delivery
in due course of such securities to the Custodian(s), or in connection
with the conversion, exchange or surrender of securities owned by the
Trust as set forth in (c), or for the redemption or repurchase of
shares issued by the Trust or for the making of any disbursements
authorized by the Trustees pursuant to the Declaration of Trust or
these By-laws, or for the payment of any expense or liability incurred
by the Trust; provided that, in every case where payment is made by
the Custodian(s) in advance of receipt of the securities purchased,
the Custodian(s) shall be absolutely liable to the Trust for such
securities to the same extent as if the securities had been received
by the Custodian(s).
(e) The Custodian(s) shall make deliveries of securities and payments of
cash only upon written instructions signed or initialed by such
officer or officers or other agent or agents of the Trust as may be
authorized to sign or initial such instructions by resolution of the
Trustees; it being understood that the Trustees may from time to time
authorize a different person or persons to sign or initial
instructions for different purposes.
The contract between the Trust and the Custodian(s) may contain any such
other provisions not inconsistent with the provisions of Article IX of the
Declaration of Trust or with these By-laws as the Trustees may approve.
Such contract shall be terminable by either party upon written notice to
the other within such time not exceeding sixty (60) days as may be specified in
the contract; provided, however, that upon termination of the contract or
inability of the Custodian(s) to continue to serve, the Custodian(s) shall, upon
written notice of appointment of another bank or trust company as custodian,
deliver and pay over to such successor custodian all securities and moneys held
by it for account of the Trust. In such case, the Trustees shall promptly
appoint a successor custodian, but in the event that no successor custodian can
be found having the required qualifications and willing to serve, it shall be
the duty of the Trustees to call as promptly as possible a special meeting of
the Shareholders to determine whether the Trust shall function without a
custodian or shall be liquidated. If so directed by vote of the holders of a
majority of the outstanding Shares, the Custodian(s) shall deliver and pay over
all property of the Trust held by it as specified in such vote.
Such contract shall also provide that, pending appointment of a successor
custodian or a vote of the shareholders specifying some other disposition of the
funds and property, the Custodian(s) shall not deliver funds and property of the
Trust to the Trust, but it may deliver them to a bank or trust company doing
business in Minnesota, of its own selection having aggregate capital, surplus
and undivided profits, as shown by its last published report, of not less than
$1,000,000 as the property of the Trust to be held under terms similar to those
on which they were held by the retiring custodian.
Any sub-custodian employed by the Custodian(s) pursuant to authorization to
do so granted by the Trust pursuant to Article IX of the Declaration of Trust
shall be required to enter into a contract with the Custodian containing in
substance the same provisions as those described in paragraphs (a) through (e)
above, except that any contract with a sub-custodian performing its duties
outside the United States and its territories and possessions, may omit or limit
any of such conditions, provided that, any such omission or limitation shall be
expressly approved by a majority of the Trustees of the Trust.
ARTICLE VIII
Miscellaneous Provisions
SECTION 1. Seal. The seal of the Trust shall be circular in
form bearing the inscription:
"CLEARWATER INVESTMENT TRUST"
"A MASSACHUSETTS BUSINESS TRUST 1987"
SECTION 2. Fiscal Year. The fiscal year of the Trust shall be the period of
twelve months ending on the 31st day of October in each calendar year.
SECTION 3. Reports to Shareholders. The Trustees shall at least semi-annually
submit to the shareholders a written financial report of the transactions of the
Trust including financial statements which shall at least annually be certified
by independent public accountants.
SECTION 4. Voting of Securities. Except as the Trustees may otherwise designate,
the Chairman or Treasurer may waive notice of, and act as, or appoint any person
or persons to act as, proxy or attorney-in-fact for the Trust (with or without
power of substitution) at, any meeting of stockholders or shareholders of any
corporation or other organization, the securities of which may be held by the
Trust.
SECTION 5. Evidence of Authority. A certificate by the Secretary or Assistant
Secretary, or a temporary Secretary, as to any action taken by the shareholders,
Trustees, any committee or any officer or representative of the Trust shall as
to all persons who rely on the certificate in good faith be conclusive evidence
of such action.
SECTION 6. Declaration of Trust. All references in these By-Laws to the
Declaration of Trust shall be deemed to refer to the Declaration of Trust of the
Trust dated January 12, 1987, as amended and in effect from time to time.
SECTION 7. Severability. Any determination that any provision of these By-Laws
is for any reason inapplicable, illegal or ineffective shall not affect or
invalidate any other provision of these By-Laws or the Declaration of Trust.
SECTION 8. Pronouns. All pronouns used in these By-Laws shall be deemed to refer
to the masculine, feminine or neuter, singular or plural, as the identity of the
person or persons may require.
MANAGEMENT CONTRACT
AGREEMENT made as of the 1st day of May, 1994, by and between CLEARWATER
INVESTMENT TRUST, a Massachusetts business trust (the "Trust"), and CLEARWATER
MANAGEMENT CO., INC., a Minnesota corporation (the "Manager").
WITNESSETH:
WHEREAS, the Trust desires to utilize the services of the Manager as the
manager for the Trust and of the existing series of the Trust, Clearwater Growth
Fund and Clearwater Small Cap Fund (each a "Fund") and any further series of the
Trust as may be set forth on Appendix A hereto; and
WHEREAS, the Manager is willing to perform such services on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and benefits set
forth herein, it is agreed as follows:
1. The Manager's Services.
(a) Subject always to the supervision of the Trustees of the Trust
and the investment policies and restrictions applicable to each Fund as set
forth in the registration statement of the Trust filed with the Securities and
Exchange Commission, the Manager is hereby authorized and directed and hereby
agrees to develop, recommend and implement such investment programs and
strategies for the Funds as may from time to time in the circumstances appear
most appropriate to the achievement of the respective investment objectives of
the Funds as stated in the aforesaid registration statement, to provide research
and analysis relative to the investment program and investments of each Fund, to
determine what securities should be purchased and sold and what portion of the
assets of each 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 Manager will place orders for the purchase and
sale of securities and will advise the custodian for each Fund on a prompt basis
of each purchase and sale of a portfolio security for such Fund 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 may reasonably request, the Manager will
furnish to the Trust's officers and to each of its Trustees reports on portfolio
transactions and reports on issues of securities held in each Fund, all in such
detail as any such Trustee may reasonably request. The Manager will also inform
the Trust's officers and Trustees on a current basis of changes in investment
strategy or tactics. The Manager will make its officers and employees available
to meet with the Trust's officers and Trustees at least quarterly on due notice
to review the investments and investment program of each Fund in the light of
current and prospective economic and market conditions. In the performance of
its duties hereunder, the Manager will comply with the provisions of the
Declaration of Trust and By-laws of the Trust, and will use its best efforts to
safeguard and promote the welfare of the Trust and to comply with other policies
which the Trustees may from time to time adopt and shall exercise the same care
and diligence expected of the Trustees.
(b) Except as otherwise provided herein, the Manager, at its own
expense, shall furnish the Trust with office space in the offices of the Manager
or in such other place as may be agreed upon from time to time, and all
necessary office facilities, equipment and personnel for managing the affairs
and investments of the Funds, and shall arrange, if desired by the Trust, for
members of the Manager's organization to serve as officers or agents of the
Trust.
(c) The Manager shall pay directly or reimburse the Trust for all
expenses not hereinafter specifically assumed by the Trust or a Fund. The Trust
on behalf of each Fund will pay commissions and other direct charges relating to
the purchase and sale of portfolio securities and other assets, taxes, interest
and extraordinary expenses, including without limitation litigation expenses.
(d) It shall be the duty of the Manager to furnish to the Trustees
of the Trust such information as may reasonably be necessary in order for the
Trustees to evaluate this Contract or any proposed amendments hereto for the
purposes of casting a vote pursuant to Sections 5 or 7 hereof.
(e) In the performance of its duties hereunder, the Manager is and
shall be an independent contractor and, unless otherwise expressly provided or
authorized, shall have no authority to act for or represent the Trust in any way
or otherwise be deemed to be an agent of the Trust.
2. Subadvisers. It is understood that the Manager may employ one or more
subinvestment advisers (each a "Subadviser") to provide investment advisory
services to the Funds by entering into a written agreement with each such
Subadviser; provided, that any such agreement first shall be approved by the
vote of a majority of the Trustees, including a majority of the Trustees who are
not interested persons (as defined in the Investment Company Act of 1940, as
amended (the "1940 Act")) of the Trust, the Manager or any such Subadviser, at a
meeting of Trustees called for the purpose of voting on such approval and by the
affirmative vote of a majority of the outstanding voting securities (as defined
in the 1940 Act) of the affected Fund(s). The authority given to the Manager in
Sections 1 through 7 hereof may be delegated by it under any such agreement;
provided, that any Subadviser shall be subject to the same restrictions and
limitations on investments and brokerage discretion as the Manager. The Trust
agrees that the Manager shall not be accountable to the Trust or either Fund or
either Fund's shareholders for any loss or other liability relating to specific
investments directed by any Subadviser, even though the Manager retains the
right to reverse any such investment, because, in the event a Subadviser is
retained, the Trust and the Manager will rely almost exclusively on the
expertise of such Subadviser for the selection and monitoring of specific
investments.
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 Manager, any
interested person (as defined in the 1940 Act) of the Manager, any organization
in which the Manager may have an interest or any organization which may have an
interest in the Manager, and that the Manager, any such interested person or any
such organization may have an interest in the Trust. It is also understood that
the Trust and the Manager may have advisory, management, service or other
contracts with other individuals or entities, and may have other interests and
business; provided, that the Manager shall not undertake any seriously
conflicting duties or loyalties which would affect its prior fiduciary duty to
the Trust.
4. Manager's Compensation.
(a) The Trust on behalf of Clearwater Growth Fund ("Growth Fund")
shall pay to the Manager, as compensation for the Manager's services to the
Growth Fund and as reimbursement to the Manager for the payment of the Growth
Fund's expenses, a fee at the annual rate of 1.10% of the Growth Fund's net
assets. The management fee payable by the Growth Fund hereunder shall be
calculated and accrued monthly as a percentage of such Fund's month end net
assets and shall be payable quarterly after the end of each calendar quarter on
or before the 15th day of January, April, July and October with respect to the
preceding quarter. In the event of termination of this Contract with respect to
the Growth Fund, the fee provided for in this paragraph shall be computed on the
basis of the period ending on the last business day on which this Contract is in
effect subject to a pro rata adjustment based on the number of days elapsed in
the current month as a percentage of the total number of days in such month.
(b) The Trust on behalf of Clearwater Small Cap Fund ("Small Cap
Fund") shall pay to the Manager, as compensation for the Manager's services to
the Small Cap Fund and as reimbursement to the Manager for the payment of the
Small Cap Fund's expenses, a fee at the annual rate of 1.35% of the Small Cap
Fund's net assets. The management fee payable by the Small Cap Fund hereunder
shall be calculated and accrued monthly as a percentage of such Fund's month end
net assets and shall be payable quarterly after the end of each calendar quarter
on or before the 15th day of January, April, July and October with respect to
the preceding quarter. In the event of termination of this Contract with respect
to the Small Cap Fund, the fee provided for in this paragraph shall be computed
on the basis of the period ending on the last business day on which this
Contract is in effect subject to a pro rata adjustment based on the number of
days elapsed in the current month as a percentage of the total number of days in
such month.
(c) The method of determining the net assets of each Fund for
purposes of calculating the fee payable to the Manager hereunder shall be the
same as the method of determining net assets for purposes of establishing the
offering and redemption price of shares of the Fund. If this Contract shall be
effective for only a portion of a calendar quarter with respect to a Fund, the
applicable fee shall be prorated for that portion of such calendar quarter
during which this Contract is in effect.
(d) If the operating expenses of a Fund, in any year exceed the
limits set by state securities laws or regulations in a state in which shares of
such Fund are sold, the amount payable to the Manager under subsection (a) or
(b) above as the case may be will be reduced (but not below $0), and the Manager
shall make other arrangements concerning expenses but, in each instance, only as
and to the extent required by such laws or regulations. If amounts have already
been advanced to the Manager under this Contract, the Manager will return such
amounts to such Fund to the extent required by the preceding sentence. In
addition, notwithstanding any provision to the contrary herein, the Manager
shall not charge either of its fees hereunder with respect to any type of Fund
assets if the charging of such fee with respect to such type of assets would
cause a violation of applicable state securities laws.
(e) In addition to the foregoing, the Manager may from time to
time agree not to impose all or a portion of its fee with respect to either Fund
otherwise payable hereunder (in advance of the time such fee or a portion
thereof would otherwise accrue) and/or undertake to pay or reimburse such Fund
for all or a portion of its expenses not otherwise required to be borne or
reimbursed by the Manager. Any such fee reduction or undertaking may be
discontinued or modified by the Manager at any time.
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); 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 at a meeting by the affirmative vote of a
majority of the outstanding voting securities (as defined in the 1940 Act) of
the affected Fund(s) and unless also approved by the affirmative vote of a
majority of Trustees who are not interested persons (as defined in the 1940 Act)
of the Trust or the Manager cast in person at a meeting called for the purpose
of voting on such change.
6. Avoidance of Inconsistent Position.
(a) In connection with purchases and sales of portfolio securities
for the account of each Fund, neither the Manager nor any of its Directors,
officers or employees will act as a principal or agent or receive any commission
except as permitted by the 1940 Act. The Manager shall arrange for the placing
of all orders for the purchase and sale of portfolio securities for each Fund's
account with brokers or dealers selected by the Manager. In the selection of
such brokers or dealers and the placing of such orders, the Manager is directed
at all times to seek for each Fund the most favorable execution and net price
available except as described herein. It is understood that it is desirable for
each Fund that the Manager 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 Manager is authorized to place
orders for the purchase and sale of securities for a Fund with such brokers,
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 Manager in connection with the
Manager's services (or its affiliates' services) to other clients.
(b) On occasions when the Manager deems the purchase or sale of a
security to be in the best interest of a Fund as well as other clients, the
Manager, 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 Manager in the manner it considers to be the
most equitable and consistent with its fiduciary obligations to the Fund and to
such clients.
7. 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 as to each Fund until December 31, 1995
and from year to year thereafter, but only so long as its continuance is
approved annually by a vote of the Trustees of the Trust voting in person,
including a majority of its Trustees who are not parties to this Agreement or
interested persons (as defined in the 1940 Act) of any such parties, at a
meeting of Trustees called for the purpose of voting on such approval or by the
affirmative vote of a majority of the outstanding voting securities (as defined
in the 1940 Act) of the Trust or the affected Fund, as the case may be, subject
to the respective rights of the Trust and the Manager to terminate this contract
as provided in paragraphs (b) and (c) hereof.
(b) The Trust may at any time and without penalty terminate this
Contract as to any Fund or as to the Trust as a whole by not more than sixty
(60) days' nor less than thirty (30) days' written notice given to the Manager;
or
(c) The Manager may at any time and without penalty terminate this
Contract as to any Fund or as to the Trust as a whole by not less than one
hundred twenty (120) days' written notice given to the Trust.
8. 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.
9. Nonliability of the Manager. In the absence of willful misfeasance, bad
faith or gross negligence on the part of the Manager, or of reckless disregard
of its obligations and duties hereunder, the Manager shall not be subject to any
liability to the Trust, to any shareholder of the Trust, 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
Manager's obligations under applicable federal and state securities laws.
10. 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
instrument is executed on behalf of the Trustees of the Trust as Trustees and
not individually and that the obligations of this instrument with respect to a
Fund or to the Trust in general are not binding upon any of the Trustees,
officers or shareholders of the Trust but are binding only upon the assets and
property of that Fund or of the Trust, as the case may be.
11. 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 or the Manager at the
applicable address set forth below:
If to Trust:
Clearwater Investment Trust
2090 First National Bank Building St.
Paul, Minnesota 55101
If to Manager:
Clearwater Management Co., Inc.
2090 First National Bank Building
St. Paul, Minnesota 55101
12. Disclosure Statement. The Trust acknowledges receipt of the Manager's
written disclosure statement required by Rule 2043 under the Investment Advisers
Act of 1940 not less than 48 hours prior to entering into this Contract.
13. 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.
14. 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.
15. Counterparts. This Contract may be executed in two 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 /s/Frederick T. Weyerhaeuser
Name: Frederick T. Weyerhaeuser
Title: Chairman
CLEARWATER MANAGEMENT CO., INC.
By /s/Frederick T. Weyerhaeuser
Name: Frederick T. Weyerhaeuser
Title: Chairman
SubadviserY CONTRACT
AGREEMENT made as of the 1st day of May, 1994, by and among CLEARWATER
INVESTMENT TRUST, a Massachusetts business trust (the "Trust"), CLEARWATER
MANAGEMENT CO., INC., a Minnesota corporation (the "Manager"), and SIT
INVESTMENT ASSOCIATES, INC., a Minnesota corporation (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 the date hereof between the
Manager and the Trust. Subject to the supervision of the Manager, 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 provided in the following
schedule based on the Fund's net assets under the Subadviser's management:
Percent Net Assets
0.75% Up to $10 million
0.70% More than $10 million, up to $20 million
0.65% More than $20 million, up to $30 million
0.60% More than $30 million, up to $40 million
0.55% More than $40 million, up to $50 million
0.50% More than $50 million, up to $60 million
0.45% More than $65 million, up to $70 million
0.40% More than $70 million, up to $80 million
0.35% More than $80 million
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 at a meeting by the affirmative vote of a majority of the outstanding
voting securities (as defined in the 1940 Act) of the Fund and unless also
approved by the affirmative vote of a majority of Trustees who are not
interested persons (as defined in the 1940 Act) of the Trust, the Manager or the
Subadviser cast in person at a meeting called for the purpose of voting on such
change.
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 December 31, 1995 and from year to year
thereafter, but only so long as its continuance is approved annually by a vote
of the Trustees of the Trust, including a majority of Trustees who are not
interested persons (as defined in the 1940 Act) of the Trust, the Manager or the
Subadviser, at a meeting of Trustees called for the purpose of voting on such
approval or by the affirmative vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Fund, 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:
SIT Investment Associates, Inc.
4600 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 554024130
If to Trust:
Clearwater Investment Trust
2090 First National Bank Building
St. Paul, Minnesota 55101
If to Manager:
Clearwater Management Co., Inc.
2090 First National Bank Building
St. Paul, Minnesota 55101
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: /s/Frederick T. Weyerhaeuser
Name: Frederick T. Weyerhaeuser
Title: Chairman
CLEARWATER MANAGEMENT CO., INC.
By: /s/Frederick T. Weyerhaeuser
Name: Frederick T. Weyerhaeuser
Title: Chairman
SIT INVESTMENT ASSOCIATES, INC.
By: /s/Peter Mitchelson
Name: Peter Mitchelson
Title: President
SubadviserY CONTRACT
AGREEMENT made as of the 1st day of May, 1994, by and among CLEARWATER
INVESTMENT TRUST, a Massachusetts business trust (the "Trust"), CLEARWATER
MANAGEMENT CO., INC., a Minnesota corporation (the "Manager"), and KENNEDY
CAPITAL MANAGEMENT, a Missouri corporation (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 Small Cap 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 the date hereof between the
Manager and the Trust. Subject to the supervision of the Manager, 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 provided in the following
schedule based on the Fund's net assets under the Subadviser's management:
Percent Net Assets
1.00% Up to $30 million
0.90% More than $30 million, up to $50 million
0.80% More than $50 million
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 at a meeting by the affirmative vote of a majority of the outstanding
voting securities (as defined in the 1940 Act) of the Fund and unless also
approved by the affirmative vote of a majority of Trustees who are not
interested persons (as defined in the 1940 Act) of the Trust, the Manager or the
Subadviser cast in person at a meeting called for the purpose of voting on such
change.
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 December 31, 1995 and from year to year
thereafter, but only so long as its continuance is approved annually by a vote
of the Trustees of the Trust, including a majority of Trustees who are not
interested persons (as defined in the 1940 Act) of the Trust, the Manager or the
Subadviser, at a meeting of Trustees called for the purpose of voting on such
approval or by the affirmative vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Fund, 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:
Kennedy Capital Management
425 No. New Ballas Road
St. Louis, Missouri 63141
If to Trust:
Clearwater Investment Trust
2090 First National Bank Building
St. Paul, Minnesota 55101
If to Manager:
Clearwater Management Co., Inc.
2090 First National Bank Building
St. Paul, Minnesota 55101
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: /s/Frederick T. Weyerhaeuser
Name: Frederick T. Weyerhaeuser
Title: Chairman
CLEARWATER MANAGEMENT CO., INC.
By: /s/Frederick T. Weyerhaeuser
Name: Frederick T. Weyerhaeuser
Title: Chairman
KENNEDY CAPITAL MANAGEMENT
By: /s/Richard Sinese
Name: Richard Sinese
Title: Research Dir. & V. President
CUSTODIAN AGREEMENT
CLEARWATER INVESTMENT TRUST
NORWEST BANK MINNEAPOLIS, N.A.
THIS AGREEMENT, made in duplicate this 31st day of March, 1987, by and
between Clearwater Investment Trust, a Massachusetts business trust (hereinafter
called the "Trust"), and Norwest Bank Minneapolis, N.A., a national banking
association organized and existing under the laws of the United States of
America with its principal place of business at Minneapolis, Minnesota
(hereinafter called the "Custodian").
W I T N E S S E T H:
WHEREAS, the Trust is a mutual fund that intends to offer its shares in one
or more portfolios, the investment objectives, policies and other aspects of
which are different in certain respects.
WHEREAS, the Trust desires that its securities and cash shall be hereafter
held and administered by the Custodian, pursuant to the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Trust and the Custodian agree as follows:
Article 1. Definitions
The word "Securities" as used herein shall be construed to include, without
being limited to, shares, stocks, treasury stocks, including any stocks of the
Trust, notes, bonds, debentures, evidences of indebtedness, certificates of
interest or participation in any profit sharing agreements, collateral trust
certificates, reorganization certificates or subscriptions, transferable shares,
investment contracts, voting trust certificates, certificates of deposit for a
security, fractional or undivided interests in oil, gas, or other mineral
rights, or any certificates of interest or participation in, temporary or
interim certificates for, receipts for, guarantees of, or warrants or rights to
subscribe to or purchase any of the foregoing, acceptances and other
obligations, and any evidence of any right or interest in or to any property or
assets, and any other interest or instrument commonly known as a Security.
The word "Portfolio" shall refer to the Clearwater Growth Fund Portfolio of
the Trust and any further portfolio of the Trust represented by a series of
shares of the Trust created hereafter by resolution of the Trust's Board of
Trustees, provided this Agreement is adopted by the Board for such Portfolio.
The words "Written Order from the Trust" shall mean a request or direction
or certification in writing directed to the Custodian and signed in the name of
the Trust by any two of the individuals designated in the current certified list
referred to in Article 2, provided that one of the individuals so signing shall
be an officer of the Trust designated in said current certified list.
Article 2. Names, Titles and Signatures of Trust's Officers
The Trust shall certify to the Custodian the names, titles, and signatures
of officers and other persons who are authorized to give Written Orders to the
Custodian on behalf of each individual Portfolio of the Trust. The Trust agrees
that, whenever any change in such authorization occurs, it will file with the
Custodian a new certified list of names, titles, and signatures which shall be
signed by at least one officer previously certified to the Custodian if any such
officer still holds an office in the Trust. The Custodian is authorized to rely
and act upon the names, titles, and signatures of the individuals as they appear
in the most recent such certified list which has been delivered to the Custodian
as hereinbefore provided.
Article 3. Receipt and Disbursing of Money
Section (1). The Trust shall from time to time cause cash owned by the
Trust to be delivered or paid to the Custodian for the account of any Portfolio,
but the Custodian shall not be under any obligation or duty to determine whether
all cash of the Trust is being so deposited, to which Portfolio account any such
cash is being deposited, or to take any action or to give any notice with
respect to cash not so deposited. The Custodian agrees to hold such cash,
together with any other sum collected or received by it or on behalf of the
Trust, for the account of the Trust Portfolio designated by the Trust, in the
name of "Clearwater Investment Trust Custodian Account, Clearwater Growth Fund
Portfolio" (or in the name of any Portfolio created hereafter and adopting this
Agreement) in conformity with the terms of this Agreement. The Custodian shall
make payments of cash for the account of the Trust only:
(a) upon receipt of and in accordance with Written Orders from the Trust
stating that such cash is being used for one or more of the following
purposes, and specifying such purpose or purposes, provided, however, that
a reference in such Written Order to the pertinent paragraph or paragraphs
of this Article shall be sufficient compliance with this provision:
(i) the payment of interest;
(ii) the payment of dividends;
(iii) the payment of taxes;
(iv) the payment of the fees or charges of any investment adviser of
the Trust or any Portfolio thereof;
(v) the payment of fees to a Custodian, stock registrar, transfer
agent, or dividend disbursing agent for any Portfolio of the
Trust;
(vi) the payment of distribution fees and commissions;
(vii)the payment of any operating expenses, which shall be deemed to
include legal and accounting fees and all other expenses not
specifically referred to in this paragraph (a);
(viii)payments to be made in connection with the conversion, exchange
or surrender of Securities owned by any Portfolio of the Trust;
(ix) payments on loans that may from time to time be due;
(x) payment to a recognized and reputable broker for Securities
purchased by the Trust through said broker (whether or not
including any regular brokerage fees, charges or commissions on
the transaction) upon receipt by the Custodian of such Securities
in proper form for transfer, after the receipt of a confirmation
from the broker or dealer with respect to the transaction;
(xi) payment to an issuer or its agent on a subscription for
Securities of such issuer upon the exercise of rights so to
subscribe, against a receipt from such issuer or agent for the
cash so paid;
(b) as provided in Article 4 hereof; and
(c) upon the termination of this Agreement.
Section (2). The Custodian is hereby appointed the attorney in fact of the
Trust to enforce and collect all checks, drafts, or other orders for the payment
of money received by the Custodian for the account of the Trust and drawn to or
to the order of the Trust and to deposit them in said Custodian Account of the
Trust.
Article 4. Receipt of Securities
The Trust agrees to place all of its Securities in the custody of the
Custodian for the account of any Portfolio, but the Custodian shall not be under
any obligation or duty to determine whether all Securities of the Trust are
being so deposited, to which Portfolio account any such Securities are being
deposited, or to require that they be so deposited, or to take any action or
give any notice with respect to the Securities not so deposited. The Custodian
agrees to hold such Securities for the account of the Portfolio of the Trust
designated by the Trust, in the name of the Trust or of bearer or of a nominee
of the Custodian, and in conformity with the terms of this Agreement. The
Custodian also agrees, upon Written Order from the Trust, to receive from
persons other than the Trust and to hold for the account of the Portfolio of the
Trust designated by the Trust Securities specified in said Written Order, and,
if the same are in proper form, to cause payment to be made therefor to the
persons from whom such Securities were received, from the funds of the Trust
held by it in said Custodian Account in the amounts provided and in the manner
directed by the Written Order from the Trust.
The Custodian agrees that all Securities of the Trust placed in its custody
shall be kept physically segregated at all times from those of any other person,
firm, or corporation, and shall be held by the Custodian with all reasonable
precautions for the safekeeping thereof, with safeguards substantially
equivalent to those maintained by the Custodian for its own Securities.
Subject to such rules, regulations, and orders as the Securities and
Exchange Commission may adopt, the Trust may direct the Custodian to deposit all
or any part of the Securities owned by the Trust in a system for the central
handling of Securities established by a national securities exchange or a
national securities association registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, or such other person as
may be permitted by the Commission, pursuant to which system all Securities of
any particular class or portfolio of any issuer deposited within the system are
treated as fungible and may be transferred or pledged by bookkeeping entry
without physical delivery of such Securities, provided that all such deposits
shall be subject to withdrawal only at the direction of the Trust.
Article 5. Transfer, Exchange, Redelivery, Etc. of Securities
The Custodian agrees to transfer, exchange, or deliver Securities as
provided in Article 6, or on receipt by it of, and in accordance with, a Written
Order from the Trust in which the Trust shall state specifically which of the
following cases is covered thereby, provided that it shall not be the
responsibility of the Custodian to determine the propriety or legality of any
Such order.
(a) In the case of deliveries of Securities sold by the Trust, against
receipt by the Custodian of the proceeds of sale and after receipt of a
confirmation from a broker or dealer with respect to the transaction;
(b) In the case of deliveries of Securities which may mature or be called,
redeemed, retired, or otherwise become payable, against receipt by the
Custodian of the sums payable thereon or against interim receipts or other
proper delivery receipts;
(c) In the case of deliveries of Securities which are to be transferred to
and registered in the name of the Trust or of a nominee of the Custodian
and delivered to the Custodian for the account of the Trust, against
receipt by the Custodian of interim receipts or other proper delivery
receipts;
(d) In the case of deliveries of Securities to the issuer thereof, its
transfer agent or other proper agent, or to any committee or other
organization for exchange for other Securities to be delivered to the
Custodian in connection with a reorganization or recapitalization of the
issuer or any split up or similar transaction involving such Securities,
against receipt by the Custodian of such other Securities or against
interim receipts or other proper delivery receipts;
(e) In the case of deliveries of temporary certificates in exchange for
permanent certificates, against receipt by the Custodian of such permanent
certificates or against interim receipts or other proper delivery receipts;
(f) In the case of deliveries of Securities upon conversion thereof into
other Securities, against receipt by the Custodian of such other Securities
or against interim receipts or other proper delivery receipts;
(g) In the case of deliveries of Securities in exchange for other
Securities (whether or not such transactions also involve the receipt or
payment of cash), against receipt by the Custodian of such other Securities
or against interim receipts or other proper delivery receipts;
(h) In a case not covered by the preceding paragraphs of this Article, upon
receipt of a resolution adopted by the Board of Trustees of the Trust,
signed by an officer of the Trust and certified to by the Secretary,
specifying the Securities and assets to be transferred, exchanged, or
delivered, the purposes for which such delivery is being made, declaring
such purposes to be proper corporate purposes, and naming a person or
persons (each of whom shall be a properly bonded officer or employee of the
Trust) to whom such transfer, exchange, or delivery is to be made; and
(i) In the case of deliveries pursuant to paragraphs (a), (b), (c), (d),
(e), (f), and (g) above, the Written Order from the Trust shall direct that
the proceeds of any Securities delivered, or Securities or other assets
exchanged for or in lieu of Securities so delivered, are to be delivered to
the Custodian.
Article 6. Custodian's Acts without Instructions
Unless and until the Custodian receives contrary Written Orders from the
Trust, the Custodian shall without order from the Trust:
(a) Present for payment all bills, notes, checks, drafts, and similar
items, and all coupons or other income items (except stock dividends), held
or received for the account of the Trust, and which require presentation in
the ordinary course of business, and credit such items to the aforesaid
Custodian Account of the Trust conditionally, subject to final payment;
(b) Present for payment all Securities which may mature or be called,
redeemed, retired, or otherwise become payable and credit such items to the
aforesaid Custodian Account of the Trust conditionally, subject to final
payment;
(c) Hold for and credit to the account of the Trust all shares of stock and
other Securities received as stock dividends or as the result of a stock
split or otherwise from or on account of Securities of the Trust, and
notify the Trust promptly of the receipt of such items;
(d) Deposit any cash received by it from, for or on behalf of the Trust to
the credit of the Trust in the aforesaid Custodian Account (in its own
deposit department without liability for interest);
(e) Charge against the aforesaid Custodian Account for the Trust
disbursements authorized to be made by the Custodian hereunder and actually
made by it, and notify the Trust of such charges at least once a month;
(f) Deliver Securities which are to be transferred to and reissued in the
name of the Trust, or of a nominee of the Custodian for the account of the
Trust, and temporary certificates which are to be exchanged for permanent
certificates, to a proper transfer agent for such purpose against interim
receipts or other proper delivery receipts; and
(g) Hold for disposition in accordance with Written Orders from the Trust
hereunder all options, rights, and similar Securities which may be received
by the Custodian and which are issued with respect to any securities held
by it hereunder, and notify the Trust promptly of the receipt of such
items.
Article 7. Delivery of Proxies
The Custodian shall deliver promptly to the Trust all proxies, notices, and
communications with relation to Securities held by it which it may receive from
sources other than the Trust.
Article 8. Transfer
The Trust shall furnish to the Custodian appropriate instruments to enable
the Custodian to hold or deliver in proper form for transfer any Securities
which it may hold for the Portfolio accounts of the Trust. For the purpose of
facilitating the handling of Securities, unless the Trust shall otherwise direct
by Written Order, the Custodian is authorized to hold Securities deposited with
it under this Agreement in the name of its registered nominee or nominees (as
defined in the Internal Revenue Code and any Regulations of the United States
Treasury Department issued thereunder or in any provision of any subsequent
federal tax law exempting such transaction from liability for stock transfer
taxes) and shall execute and deliver all such certificates in connection
therewith as may be required by such laws or regulations or under the laws of
any state. The Custodian shall advise the Trust of the certificate number of
each certificate so presented for transfer and that of the certificate received
in exchange therefor, and shall use its best efforts to the end that the
specific Securities held by it hereunder shall be at all times identifiable.
Article 9. Transfer Taxes and Other Disbursements
The Trust shall pay or reimburse the Custodian for any transfer taxes
payable upon transfers of Securities made hereunder, including transfers
incident to the termination of this Agreement, and for all other necessary and
proper disbursements and expenses made or incurred by the Custodian in the
performance or incident to the termination of this Agreement, and the Custodian
shall have a lien upon any cash or Securities held by it for the account of the
Trust for all such items, enforceable, after thirty days' Written Notice by
registered mail to the Trust, by the sale of sufficient Securities to satisfy
such lien. The Custodian may reimburse itself by deducting from the proceeds of
any sale of Securities an amount sufficient to pay any transfer taxes payable
upon the transfer of Securities sold. The Custodian shall execute such
certificates in connection with Securities delivered to it under this Agreement
as may be required, under the provisions of any federal revenue act and any
Regulations of the Treasury Department issued thereunder or any state laws, to
exempt from taxation any transfers and/or deliveries of any such Securities as
may qualify for such exemption.
Article 10. Custodian's Liability for
Proceeds of Securities Sold
If the mode of payment for Securities to be delivered by the Custodian is
not specified in the Written Order from the Trust directing such delivery, the
Custodian shall make delivery of such Securities against receipt by it of cash,
a postal money order or a check drawn by a bank, trust company, or other banking
institution, or by a broker named in such Written Order from the Trust, for the
amount the Custodian is directed to receive. The Custodian shall be liable for
the proceeds of any delivery of Securities made pursuant to this Article, but
provided that it has complied with the provisions of this Article, only to the
extent that such proceeds are actually received.
Article 11. Custodian's Report
The Custodian shall furnish the Trust, as of the close of business on the
last business day of each month, a statement showing all cash transactions and
entries for the accounts of the Portfolio of the Trust. The books and records of
the Custodian pertaining to its actions as Custodian under this Agreement shall
be open to inspection and audit, at reasonable times, by officers of, and
auditors employed by, the Trust. The Custodian shall furnish the Trust with a
list of the Securities held by it in custody for the account of the Trust as of
the close of business on the last business day of each quarter of the Trust's
fiscal year.
Article 12. Custodian's Compensation
The Custodian shall be paid compensation at such rates and at such times as
may from time to time be agreed on in writing by the parties hereto, and the
Custodian shall have a lien for unpaid compensation, to the date of termination
of this Agreement, upon any cash or Securities held by it for the Portfolio
accounts of the Trust, enforceable in the manner specified in Article 9 hereof.
Article 13. Duration, Termination and Amendment of Agreement
This Agreement shall remain in effect, as it may from time to time be
amended, until it shall have been terminated as hereinafter provided, but no
such alteration or termination shall affect or impair any rights or liabilities
arising out of any acts or omissions to act occurring prior to such amendment or
Termination.
The Custodian may terminate this Agreement by giving the Trust ninety days'
written notice of such termination by registered mail addressed to the Trust at
its principal place of business.
The Trust may terminate this Agreement by giving ninety days' written
notice thereof delivered, together with a copy of the resolution of the Board of
Trustees authorizing such termination and certified by the Secretary of the
Trust, by registered mail to the Custodian at its principal place of business.
Additionally, this Agreement may be terminated with respect to any Portfolio of
the Trust pursuant to the same procedures, in which case this Agreement shall
continue in full effect with respect to all other Portfolio of the Trust.
Upon termination of this Agreement, the assets of the Trust, or Portfolio
thereof, held by the Custodian shall be delivered by the Custodian to a
successor custodian upon receipt by the Custodian of a copy of the resolution of
the Board of Trustees of the Trust, certified by the Secretary, designating the
successor custodian; and if no successor custodian is designated the Custodian
shall, upon such termination, deliver all such assets to the Trust.
This Agreement may be amended at any time by the mutual agreement of the
Trust and the Custodian. Additionally, this Agreement may be amended with
respect to any Portfolio of the Trust at any time by the mutual agreement of the
Trust and the Custodian, in which case such amendment would apply to such
Portfolio amending this Agreement but not to the other Portfolio of the Trust.
This Agreement may not be assigned by the Custodian without the consent of
the Trust, authorized or approved by a resolution of its Board of Trustees.
Article 14. Successor Custodian
Any bank or trust company into which the Custodian or any successor
custodian may be merged or converted or with which it or any successor custodian
may be consolidated, or any bank or trust company resulting from any merger,
conversion or consolidation to which the Custodian or any successor custodian
shall be a party, or any bank or trust company succeeding to the business of the
Custodian, shall be and become the successor custodian without the execution of
any instrument or any further act on the part of the Trust or the Custodian or
any successor custodian.
Any successor custodian shall have all the power, duties, and obligations
of the preceding custodian under this Agreement and any amendments thereof and
shall succeed to all the exemptions and privileges of the preceding custodian
under this Agreement and any amendments thereof.
Article 15. General
Nothing expressed or mentioned in or to be implied from any provisions of
this Agreement is intended to give or shall be construed to give any person or
corporation other than the parties hereto any legal or equitable right, remedy
or claim under or in respect of this Agreement or any covenant, condition or
provision herein contained, this Agreement and all of the covenants, conditions
and provisions hereof being intended to be, and being, for the sole and
exclusive benefit of the parties hereto and their respective successors and
assigns.
It is the purpose and intention of the parties hereto that the Trust shall
retain all the power, rights and responsibilities of determining policy,
exercising discretion and making decisions with respect to the purchase, or
other acquisitions, and the sale, or other disposition, of all of its
Securities, and that the duties and responsibilities of the Custodian hereunder
shall be limited to receiving and safeguarding the assets and Securities of the
Trust and to delivering or disposing of them pursuant to the Written Order of
the Trust as aforesaid, and the Custodian shall have no authority, duty or
responsibility for the investment policy of the Trust or for any acts of the
Trust in buying or otherwise acquiring, or in selling or otherwise disposing of,
any Securities, except as hereinbefore specifically set forth.
The Custodian shall in no case or event permit the withdrawal of any money
or Securities of the Trust upon the mere receipt of any director, officer,
employee or agent of the Trust, but shall hold such money and Securities for
disposition under the procedures herein set forth.
Article 16. Instructions to Custodian
The Custodian may, when it deems it expedient, apply to the Trust, or to
counsel for the Trust, or to its own counsel, for instructions and advice; and
the Custodian shall not be liable for any action taken by it in accordance with
the written instructions or advice of the Trust or of counsel for the Trust.
Article 17. Effective Date
This agreement shall become effective when it shall have been approved by
the Board of Trustees of the Trust. The Trust shall transmit to the Custodian
promptly after such approval by said Board of Trustees a copy of its resolution
embodying such approval, certified by the Secretary of the Trust.
Article 18. Declaration of Trust
A copy of the Declaration of Trust of the Trust is on file with the
Secretary of The Commonwealth of Massachusetts, and notice is hereby given that
this instrument is executed on behalf of the Trustees of the Trust as Trustees
and not individually and that the obligations of this instrument 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 Trust.
Article 19. Governing Law
This agreement is executed and delivered in Minneapolis, Minnesota and the
laws of the State of Minnesota shall be controlling and shall govern the
construction, validity and effect of this contract.
IN WITNESS WHEREOF, the Trust and the Custodian have caused this Agreement
to be executed in duplicate as of the date first above written by their duly
authorized officers.
ATTEST: CLEARWATER INVESTMENT TRUST
/s/William T. Weyerhaeuser By /s/Frederick T. Weyerhaeuser
Secretary Its Chairman
ATTEST: NORWEST BANK MINNEAPOLIS, N.A.
/s/Keith Cummings By /s/Gale Friedrich
Trust Officer Its Asst. V.P.
AMENDMENT TO THE CUSTODIAN AGREEMENT DATED
MARCH 31, 1987 BETWEEN CLEARWATER INVESTMENT
TRUST AND NORWEST BANK MINNESOTA, N.A.
Whereas, from its inception it has been the intention of the parties that
this agreement in all applicable respects incorporate the requirements of the
Investment Company Act of 1940 and the current Registration Statement Form N-lA)
of the Clearwater Investment Trust filed thereunder, the following amendments
are hereby adopted.
Article 8. is amended to add the following paragraph:
It is the policy of the Trust to calculate profits or losses from the sale
of securities of all series on an identified security basis, selecting the
highest cost securities as the "first out" securities (the HIFO method). To this
end the Custodian shall use its best efforts to identity the highest cost
securities as the securities presented or caused to be presented for transfer.
Article 15. is amended to add the following paragraph
It is the purpose and intention of the parties that this agreement in all
applicable respects incorporate the requirements of the Investment Company Act
of 1940 and the current Registration Statement (Form N-lA) of the Trust filed
thereunder. To this end the Custodian shall use its best efforts in performing
its duties under this agreement to meet said requirements. The Trust shall
provide a copy of its most recent Prospectus and Statement of Additional
Information to the Custodian as soon as practicable after they become effective.
In all other respects the Custodianship Agreement dated March 31, 1987 as
amended hereby is ratified and reaffirmed.
In witness whereof, the Trust and the Custodian have caused this amendment
to be executed in duplicate retroactive to the date of the original agreement.
ATTEST: CLEARWATER INVESTMENT TRUST
/s/Stanley R. Day, Jr. By /s/Frederick T. Weyerhaeuser
Secretary Its Chairman
Date 3/2/91
ATTEST: NORWEST BANK MINNESOTA, N.A.
/s/Randy Henze By /s/Jane E. Zilch
Trust Officer Its Vice President
Date 3/27/91
AMENDMENT TO THE CUSTODIAN AGREEMENT DATED
MARCH 31, 1987 BETWEEN CLEARWATER INVESTMENT
TRUST AND NORWEST BANK MINNESOTA, N.A.
Whereas, the parties wish to increase the efficiency with which the Trust may
order the receipt and disbursement of money and securities, the following
amendments are hereby adopted.
Article 1. is amended so as to change the final paragraph, thereof, to read as
follows:
The words "Written Order from the Trust" shall mean a request or direction
or certification in writing directed to the Custodian and signed in the name of
the Trust by any one of the individuals designated in the current certified list
referred to in Article 2.
Article 3. Section (1). is amended to add a new subsection (d) as follows:
(d) upon receipt of and in accordance with Written Orders from the Trust,
to any bank account maintained in the name of the Trust Portfolio so
designated by the Order.
In all other respects the Custodian Agreement dated March 31, 1987, as amended,
is ratified and reaffirmed.
In witness whereof, the Trust and the Custodian have caused this amendment to be
executed in duplicate effective upon execution of this document.
ATTEST: CLEARWATER INVESTMENT TRUST
/s/Daniel C. Titcomb By /s/Frederick T. Weyerhaeuser
Secretary Its Chairman
Date 10/31/94
ATTEST: NORWEST BANK MINNESOTA, N.A.
/s/Tim K. Schull By /s/Brent Siegel
Trust Officer Its Asst. Vice President
Date 11/4/94
INVESTMENT COMPANY SERVICE AGREEMENT
March 2, 1987
CLEARWATER INVESTMENT TRUST, a Massachusetts business trust ("Customer"),
and FIDUCIARY COUNSELLING, INC., a Minnesota corporation ("FCI"), hereby agree
as follows:
1. SERVICES TO BE PROVIDED BY FCI. During the term of this Agreement, FCI
will provide Customer with the services described in Exhibits A, B, C and D (the
"Exhibits"), which are affixed hereto and incorporated herein by reference, in
connection with the operation by Customer of the Clearwater Growth Fund (the
"Fund"). In addition, FCI shall provide Customer and Clearwater Management Co.,
Inc., Trust's manager, with all of their respective requirements for space and
clerical assistance in connection with the operation by them of the Fund.
2. EFFECTIVE DATE. This Agreement shall become effective on March 2, 1987
(the "Effective Date") and shall continue in effect until it is terminated in
accordance with Section 11 below.
3. DELIVERY AND VERIFICATION OF DATA AND ASSETS. Customer shall from time
to time, while this Agreement is in effect deliver all such materials and data
as may be necessary or desirable to enable FCI to perform its services
hereunder, including without limitation, those described in Section 12 hereof.
4. REPORTS AND MAINTENANCE OF RECORDS BY FCI. FCI will furnish to Customer
and to parties designated by Customer in writing, including without limitation
auditors, examiners, distributors, dealers, underwriters, salesmen, insurance
companies, and investors, such books, records and reports at such times as are
prescribed for each service in the Exhibit attached hereto. Customer agrees to
examine or to ask any other recipient designated by Customer to examine each
such report or copy promptly and will report or cause to be reported any errors
or discrepancies therein of which Customer then has any knowledge. FCI may at
its option at any time, and shall forthwith upon Customer's demand, turn over to
Customer and cease to retain in FCI's files, records and documents created and
maintained by FCI pursuant to this Agreement which are no longer needed by FCI
in the performance of its services or for its protection.
If not so turned over to Customer, such documents and reports will be
retained by FCI for six years from the year of creation, during the first two of
which the same will be in readily accessible form. At the end of six years, such
records and documents, will be turned over to Customer by FCI unless Customer
authorizes their destruction.
5. FCI'S DUTY OF CARE. FCI shall at all times use reasonable care and act
in good faith, consistent with industry standards, in performing its duties
hereunder. FCI shall incur no liability to Customer in connection with its
performance of services hereunder except to the extent that it does not comply
with the foregoing standards.
FCI shall at all times adhere to various procedures and systems consistent
with industry standards in order to safeguard the Customer's checks, records and
other data from loss or damage attributable to fire or theft. FCI shall maintain
insurance adequate to protect against the costs of reconstructing checks,
records and other data in the event of such loss and shall notify the Customer
in the event of a material adverse change in such insurance coverage. In the
event of damage or loss occurring to the Customer's records or data such that
FCI is unable to meet the terms of this Agreement, FCI shall transfer all
records and data to a Transfer Agent of Customer's choosing upon Customer's
written direction to do so.
Without limiting the generality of the foregoing, FCI shall not be liable
or responsible for delays or errors occurring by reason of circumstances beyond
its control including acts of civil, military or banking authority, national
emergencies, labor difficulties, fire, flood or other catastrophes, acts of God,
insurrection, war, riots, failure of transportation, communication or power
supply.
6. CONFIDENTIALITY. FCI will keep confidential all records and information
provided by the Customer or by its shareholders to FCI, except to the extent
disclosures are required by the Agreement, are required by the Customer's
prospectus, or are required by a valid subpoena or warrant issued by a court of
competent jurisdiction or by a state or federal agency or governmental
authority.
7. CUSTOMER INSPECTION. Upon reasonable notice, in writing signed by the
Customer, FCI shall make available, during regular business hours, all records
and other data created and maintained pursuant to this Agreement for reasonable
audit and inspection by the Customer or Customer's agents, including reasonable
visitation by the Customer or Customer's agent, and including inspecting FCI's
operation facilities. FCI shall not be liable for injury to or responsible in
any way for the safety of any individual visiting FCI's facilities under the
authority of this section. The Customer will keep confidential and will cause to
keep confidential all confidential information obtained by its employees or
agents or any other individual representing the Customer while on FCI's
premises. Confidential information shall include (1) any information of whatever
nature regarding FCI's operations, security procedures, and data processing
capabilities; (2) financial information regarding FCI, its affiliates, or
subsidiaries, and (3) any information of whatever kind or description regarding
any customer of FCI, its affiliates or subsidiaries.
8. RELIANCE BY FCI ON INSTRUCTIONS AND ADVICE; INDEMNITY. FCI shall be
entitled to seek advice of Customer's legal counsel with respect to FCI's
responsibilities and duties hereunder, except to the extent that the Customer's
legal counsel determines in its sole discretion that the rendering of advice to
FCI would result in a conflict of interest. FCI shall in no event be liable to
Customer for any action taken pursuant to the advise of Customer's legal
counsel.
Whenever FCI is authorized to take action hereunder pursuant to
instructions from Customer, FCI shall be entitled to rely upon any certificate,
letter or other instrument or telephone call reasonably believed by FCI to be
genuine and to have been properly made or signed by an officer or other
authorized agent of Customer, and shall be entitled to receive as conclusive
proof of any fact or matter required to be ascertained by it hereunder a
certificate signed by an officer of Customer or any other person authorized by
Customer's Board of Trustees.
Subject to the provisions of Section 13 of this Agreement, Customer agrees
to indemnify, defend, and hold FCI, its employees, agents and nominees harmless
from and against any and all claims, demands, actions and suits, whether
groundless or otherwise, and from and against any and all judgments,
liabilities, losses, damages, costs, charges, counsel fees and other expenses of
every nature and character arising out of or in any way relating to FCI's action
or nonaction upon information, instructions or requests given or made to FCI by
the Customer.
Notwithstanding the above, whenever the Customer may be asked to indemnify
or hold FCI harmless, FCI shall advise Customer of all facts FCI deems to be
pertinent to the situation in question. Additionally, FCI will use reasonable
care to identify and notify the Customer promptly of any situation involving a
claim for indemnification against the Customer. The Customer shall defend FCI
against any claim for which FCI is entitled to indemnification from the Customer
under the terms hereof. FCI may in no event confess judgment to any claim or
make any compromise in any case in which the Customer will be asked to indemnify
FCI except with the Customer's prior written consent.
9. MAINTENANCE OF DEPOSIT ACCOUNTS. FCI shall administer on behalf of
Customer such deposit accounts as are necessary or desirable from time to time
to enable FCI to carry out the provisions of this Agreement. The parties
acknowledge that at present the only such accounts that they contemplate FCI
will have to administer are a subscription account, a redemption account, a
dividend account, and a general expense account.
10. COMPENSATION AND REIMBURSEMENT TO FCI. For the services rendered by FCI
under this Agreement, Customer agrees to pay an annual fee of $25,000, payable
in equal monthly installments, and a onetime startup fee of $28,000, to be paid
in five equal annual installments of $5,600.00, commencing on July 1, 1987, and
on July 1st of each of the four following years. In addition, Customer shall
reimburse FCI monthly for out of pocket expenses such as legal fees and other
costs and expenses covered under paragraph 8 hereof, postage, forms, envelopes,
checks, "outside" mailings, telephone lines, mailgrams, mail insurance on
certificates and data processing file recovery insurance.
11. TERMINATION. Either FCI or Customer may at any time terminate this
Agreement by giving 90 days written notice in advance to the other.
After the date of termination, for so long as FCI in fact continues to
perform any one or more of the services contemplated by this Agreement or any
exhibit hereto, the provisions of this Agreement, including without limitation
the provisions of Section 8 dealing with indemnification, shall where applicable
continue in full force and effect.
12. REQUIRED DOCUMENTS. Customer agrees to furnish to FCI prior to the
Effective Date the following:
A. Two (2) copies of the Declaration of Trust of Customer, and of any
amendments thereto.
B. Two (2) copies of the following documents, currently certified by the
Secretary of Customer.
a. Customer's Bylaws and any amendment thereto.
b. Certified copies of the resolutions of Customer's Board of
Trustees covering the following matters: Approval of this
Agreement, authorization for a specified officer to execute and
deliver this Agreement and authorization of specified officers to
instruct FCI hereunder.
C. List of all officers of Customer together with specimen signatures of
those officers who are authorized to sign share certificates and to
instruct FCI in all other matters.
D. Two (2) copies of the following:
a. Prospectus
b. Underwriting Agreement
c. Management Agreement
d. Registration Statement
E. Amendments to, and changes in, any of the foregoing forthwith upon
such amendments and changes becoming effective.
13. INDEMNIFICATION. The parties to this Agreement acknowledge and agree
that all liabilities arising, directly or indirectly under this Agreement, of
any and every nature whatsoever, including without limitation, liabilities
arising in connection with any agreement of the Trust or the Trustees set forth
herein to indemnify any party to this Agreement or any other person, shall be
satisfied out of the assets of the Trust and that no Trustee, officer or holder
of shares of beneficial interest of the Trust shall be personally liable for any
of the foregoing liabilities. The Trust's Declaration of Trust, as amended from
time to time, is on file in the Office of the Secretary of The Commonwealth of
Massachusetts. Such Declaration of Trust describes in detail the respective
responsibilities and limitations on liability of the Trustees, officers, and
holders of shares of beneficial interest.
14. MISCELLANEOUS. In connection with the operation of this Agreement FCI
and Customer may agree from time to time on such provisions interpretive of or
in addition to the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. Any such interpretive or
additional provisions are to be signed by both parties and annexed hereto, but
no such provision shall contravene any applicable Federal and state law or
regulation, and no such provision shall be deemed to be an amendment of this
Agreement. This Agreement shall be construed in accordance with the laws of the
State of Minnesota.
15. CONFLICTS OF INTEREST. FCI maintains agency and other business and
professional relationships with persons who may be shareholders of Customer.
Customer acknowledges that it is aware of FCI's relationships and that Customer
has no objection to these or other future business or professional relationships
between FCI and Customer's shareholders.
IN WITNESS WHEREOF, Customer and FCI have caused this Agreement to be
executed in their respective names by their respective officers thereunto duly
authorized as of the date first written above.
FIDUCIARY COUNSELLING, INC.
By: /s/J. S. Micallef
CLEARWATER INVESTMENT TRUST
By: /s/Frederick T. Weyerhaeuser
EXHIBIT A. TO INVESTMENT COMPANY SERVICE AGREEMENT
Shareholder Account Service
As servicing Agent for Customer in accordance with Customer's prospectus, FCI
will:
1. Open, maintain and close accounts with respect to shareholders of each
series.
2. Deposit the money received in payment for share sales in the subscription
account maintained by FCI, and transfer said funds from the subscription
account to the Fund on the next following Last Trading Date, as that term
is defined on page 5 of the Fund's Prospectus dated May 11, 1987.
3. Maintain records showing name, address, certificate numbers (if any) and
number of shares of each shareholder of each series.
4. Reinvest or disburse dividends and other distributions upon direction of
shareholder.
5. Establish the proper registration of ownership of shares of each series.
6. Pass upon the adequacy of documents submitted by a shareholder or his legal
representative to substantiate the transfer of ownership of shares from the
registered owner to transferees.
7. Make transfers from time to time upon the books of the Customer in
accordance with properly executed transfer instructions.
8. Upon receiving appropriate detailed instructions and written materials
prepared by Customer and proxy proofs checked by Customer, mail shareholder
reports, proxies and related materials, receive and tabulate executed
proxies, and furnish affidavits and/or reports as to the foregoing at
meetings of shareholders when required.
9. Respond to shareholder inquiries concerning the ownership of Shares, the
payment of dividends, and the redemption of shares in a timely manner.
10. Maintain and furnish to Customer such shareholder information as Customer
may reasonably request for the purpose of compliance by Customer with the
applicable tax and securities law of various jurisdictions.
11. Mail confirmations of transactions in a timely fashion.
12. Provide Customer with such information regarding correspondence as will
enable Customer to comply with related N-SAR requirements.
13. Maintain continuous proof of the outstanding shares of Customer.
14. Solicit taxpayer identification numbers.
15. Administer the deposit accounts referred to in paragraph 9 of the Agreement
and reconcile same on a monthly basis.
EXHIBIT B TO INVESTMENT COMPANY SERVICE AGREEMENT
Redemption Service
In accordance with the provisions of the Customer's Prospectus, as Servicing
Agent for the Redemption function, FCI will:
1. Receive for redemption either:
a. Written authorization (unless share certificates were issued); or
b. Share certificates supported by appropriate documentation (including
signature guaranty(ies)).
2. Verify there are sufficient shares in an account to cover redemption
requests.
3. Cancel the redeemed shares for retirement.
4. Pay from accounts administered by FCI on behalf of the Customer the
applicable redemption price to the shareholder in accordance with the
prospectus of the Customer and the Declaration of Trust on or before the
seventh calendar day following the applicable Last Trading Day (as defined
in Customer's Prospectus).
5. Notify the Customer of the total number of shares presented and covered by
such requests within a reasonable period of time following receipt.
6. Promptly notify the shareholder if any such certificate or request for
redemption is not in "good order" together with notice of the documents
required to comply with the good order standards. Upon receipt of the
necessary documents. FCI shall effect such redemption at the net asset
value applicable on the Last Trading Day after receipt of such documents.
7. Produce periodic reports of unsettled items, if any.
8. Adjust unsettled items, if any, relative to dividends and distributions.
9. Report to Customer any late redemptions which must be included in
Customer's NSAR.
EXHIBIT C TO INVESTMENT COMPANY SERVICE AGREEMENT
Income Accrual and Disbursing Service
1. Distribute from accounts administered by FCI on behalf of the Customer
income dividends and/or capital gain distributions either through
reinvestment or in cash, in accordance with shareholder instructions.
2. On the mailing date, Customer shall make available to FCI collected funds
to make such distribution.
3. Adjust unsettled items relative to dividends and distribution.
4. Reconcile dividends and/or distributions with the Customer.
5. Prepare and file annual Federal and State information returns of
distributions and in the case of Federal returns, mail information copies
to shareholders and report and pay Federal income taxes withheld from
distributions made to nonresident aliens.
EXHIBIT D. TO INVESTMENT COMPANY SERVICE AGREEMENT
Pricing Service.
FCI will value the net assets of each portfolio of the Customer in
accordance with the procedures set forth in the Customer's Prospectus on the
Last Trading Date (as defined in such Prospectus) of each calendar month. FCI
will utilize information provided by the Customer's custodian in order to double
check the accuracy of its pricing computation.
Bookkeeping Service.
FCI shall provide the Customer with all of its bookkeeping requirements,
including without limitation the preparation of financial statements for review
by independent auditors.
AMENDMENT TO INVESTMENT COMPANY SERVICE AGREEMENT
May 1, 1995
AGREEMENT between CLEARWATER INVESTMENT TRUST, a Massachusetts business
trust ("Customer") , and Fiduciary Counselling, Inc., a Minnesota corporation
("FCI") .
WHEREAS, Customer and FCI entered into an Investment Company Service
Agreement (the "Service Agreement" ) on March 2, 1987; and
WHEREAS, Customer and FCI now desire to amend the Service Agreement as set
forth below; NOW, THEREFORE, the parties hereto agree as follows:
1. To amend the Service Agreement by deleting Exhibit D to the Service
Agreement in its entirety, effective as of the date written above.
2. In all other respects the Service Agreement as amended hereby is
ratified and reaffirmed.
IN WITNESS WHEREOF, Customer and FCI have caused this Amendment to be
executed in their respective names by their respective officers thereunto duly
authorized as of the date written above.
FIDUCIARY COUNSELLING, INC.
By: /s/Richard T. Holm
CLEARWATER INVESTMENT TRUST
BY /s/Frederick T. Weyerhaeuser
MUTUAL FUND ACCOUNTING AGREEMENT
THIS MUTUAL FUND ACCOUNTING AGREEMENT is made by and among Clearwater
Investment Trust (the "Trust"), on behalf of Clearwater Growth Fund, Clearwater
Small Cap Fund and any future series of the Trust, Clearwater Management Co.,
Inc. (the "Manager") and Norwest Bank Minnesota, National Association
("Custodian") as of April 3, 1995.
WHEREAS, the Trust is engaged in the business of an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "1940 Act");
WHEREAS, the Trust desires to engage the services of the Custodian
regarding certain bookkeeping and accounting services in the manner and on the
terms and conditions set forth herein; and
WHEREAS, the Custodian is willing to act as Trust's mutual fund accountant
to provide these services for the Trust.
NOW, THEREFORE, in consideration of the promises contained herein the
parties hereto agree as follows:
1. Services to be Provided by Custodian as Mutual Fund Accountant. The
Custodian shall provide to each Fund such accounting and bookkeeping
services and functions as are necessary for the operation of each
Fund, including but not limited to, preparation and maintenance of the
following books, records and other documents:
a. journals containing daily itemized records of all purchase and
sales, and receipts and deliveries of securities and all receipts
and disbursements of cash and all other debits and credits, in
the form required by Rule 31a-(b)(1) under the 1940 Act;
b. general and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, in the form
required by Rules 31a-1(b)(2)(i)-(iii) under the 1940 Act;
c. a securities record or ledger reflecting separately for each
portfolio security as of trade date all "long" and "short"
positions carried by the Trust for the account of each Fund, if
any, and showing the location of all securities long and the
off-setting position to all securities short, in the form
required by Rule 31a-(b)(3) under the 1940 Act;
d. a record of all portfolio purchases or sales, in the form
required by Rule 31a-1(b)(6) under the 1940 Act;
e. a record of all puts, calls, spreads, straddles and all other
options, if any, in which a Fund has any direct or indirect
interest or which a Fund has granted or guaranteed, in the form
required by Rule 31a-(b)(7) under the 1940 Act;
f. a record of the proof of money balances in all ledger accounts
maintained pursuant to this Agreement, in the form required by
Rule 31a-1(b)(8) under the 1940 Act; and
g. price make-up sheets and such records as are necessary to reflect
the determination of each Fund's net asset value.
The foregoing books and records shall be maintained by the Custodian in
accordance with and for the time periods specified by applicable rules
and regulations, including Rule 31a-2 under the 1940 Act. All such
books and records shall be the property of the Trust and upon request
therefor, the Custodian shall surrender to the Trust such of the books
and records so requested.
2. Fees. Custodian shall receive compensation as set forth in Schedule A
attached to this Agreement as amended from time to time by the
parties. Custodian shall also be reimbursed by the Manager for its
out-of-pocket expenses during the reasonable performance of the
Custodian's duties herein.
3. Reports. The Custodian will furnish such reports as the Trust may
request, including reports to the Trust's independent accountants or
other examiners as may be necessary.
The Trust will furnish or otherwise make available to the Custodian
such reports or information relating to the business and affairs of
each Fund as the Custodian may reasonably require in order to discharge
its duties and obligations hereunder.
4. Inspection Privileges. The books, records, documents, accounting
procedures and practices of the Custodian relevant to this Agreement
are subject to examination by the Trust and the Trust's independent
accountants.
5. Amendment and Termination. This Agreement may be amended by written
agreement of the parties at any time. This Agreement shall continue in
effect unless or until terminated by either party upon 30 days written
notice to the other party. Upon termination, all appropriate books and
records of each Fund shall be delivered to the Trust or in accordance
with the Trust's written instruction.
6. Indemnification. The Trust hereby agrees to indemnify and hold
Custodian harmless from and against any and all claims, liabilities and
expenses (including attorney's fees) which Custodian may incur by
reason of its acting as Custodian under this Agreement. Notwithstanding
the foregoing, it is specifically understood and agreed that in the
event Custodian has committed negligence or malfeasance in the exercise
of its responsibilities hereunder, the indemnification provisions of
this Agreement shall not apply.
7. Notices. Notices to the Trust shall be directed and mailed as follows:
Clearwater Investment Trust
First National Bank Building, Suite 2100
332 Minnesota
Saint Paul, MN 55101-1394
Attn: Richard Holm
Notices to the Custodian shall be directed and mailed as follows:
Norwest Bank Minnesota, N.A.
Sixth Street and Marquette Avenue
Minneapolis, MN 55479-0065
Attn: Financial Institutions Service Group
8. Governing Law. This Agreement and all transactions hereunder shall be
governed by, interpreted, construed and enforced in accordance with the
laws of the State of Minnesota. To the extent the applicable laws of
the State of Minnesota or any provisions herein conflict with the 1940
Act, the latter shall control.
9. Limitation of Liability of the Trustees and Shareholders. A copy of the
Declaration of Trust of the Trust is on file the Secretary of The
Commonwealth of Massachusetts and notice is hereby given that this
Agreement is executed on behalf of the Trustees of the Trust as
Trustees and not individually and that the obligations of this
Agreement and not binding upon any of the Trustees, officers or
shareholders of the Trust but are binding only upon the assets and
property of the Trust.
10. Effective Date. This Agreement shall be effective as of the date first
set forth above.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
CLEARWATER INVESTMENT TRUST
(on behalf of Clearwater Growth
Fund and Clearwater Small Cap Fund)
By: /s/ Frederick T. Weyerhaeuser
Name: Frederick T. Weyerhaeuser
Its: Chairman
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
By: /s/Brent C. Siegel
Name: Brent C. Siegel
Its: Assistant Vice President
CLEARWATER MANAGEMENT CO., INC.
By: /s/ Frederick T .Weyerhaeuser
Name: Frederick T. Weyerhaeuser
Its: Chairman
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees
Clearwater Investment Trust:
We consent to the use of our report incorporated by reference herein and to the
reference to our Firm under the heading "INDEPENDENT PUBLIC ACCOUNTANTS" in Part
B of the Registration Statement.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
April 23, 1996
CLEARWATER INVESTMENT TRUST
February 2, 1996
TO: Our Unit Holders
On December 31, 1995, the net asset value of the Clearwater Growth Fund was
$17.01 per unit. The net asset value of the Clearwater Small Cap Fund was $11.47
per unit. On a total return basis for 1995, the Clearwater Growth Fund increased
by 32.6% and the Clearwater Small Cap Fund increased by 26.3%. For comparative
purposes, the S&P 500 increased by 37.5% and the Russell 2000 increased by
28.4%. For the fourth quarter, the Clearwater Growth Fund increased 0.8% and the
Clearwater Small Cap Fund decreased 0.1%. The S&P 500 increased 6.0% and the
Russell 2000 increased 2.2%.
At year-end, the Clearwater Growth Fund paid a dividend of $1.045 per unit and
the Clearwater Small Cap Fund paid a dividend of $1.020 per unit. Whenever it is
practical, an attempt is made to offset gains with losses to defer your tax
liabilities.
Sit Investment Associates, Inc., the Subadviser for the Clearwater Growth Fund,
made the following comments on the year and outlook for 1996:
"1995 was an outstanding year for U.S. financial assets as well as the
Clearwater Growth Fund. A major reason for the strong results was that
cash reserves were maintained at low levels, averaging slightly over
three percent during the year. This bullish posture reflected SIA's
optimistic outlook for equities, generally, and growth stocks, in
particular, at the end of 1994.
As was the case in 1994, large capitalization stocks outperformed small
cap issues in 1995, and the differential in results was even greater.
The S&P 500 Index advanced 37.5% in 1995 whereas most medium and
smaller company indices were up smaller amounts. The exception was the
NASDAQ OTC Composite Index, but its results were heavily influenced by
a small group of very large technology stocks (Intel, Microsoft, etc.)
that biased the final figures. Shown below is a sample of market
benchmarks:
Total Returns
-------------
Large Cap Indices 1994 1995
----------------- ---- ----
Russell 1000 Growth Index 0.4% 37.8%
S&P 500 Index ........... 1.3 37.5
Mid Cap Indices
---------------
Russell Mid Cap Index ... -2.1 34.5
S&P Midcap 400 Index .... -3.6 30.9
<PAGE>
Small Cap Indices
-----------------
Russell 2000 Index ...... -1.8 28.4
Other
-----
Lipper Growth Funds ..... -1.8 31.5
In May of 1994, the investment guidelines of the Clearwater Growth Fund
were changed to include the use of an increased allocation to smaller
and medium-sized companies and SIA has moved the portfolio in this
direction. The weighted average capitalization of the portfolio as of
June 1994 was equal to 85% of the S&P 500 Index capitalization and had
moved to 66% as of December 1995. This move toward smaller companies
has not benefited the portfolio over the near term, but should be
additive over the longer term based on historical experience. During
1995, the portfolio's most heavily weighted industry sectors were
technology, health care, and financial services. Within the S&P 500
Index, these were the three best-performing subcomponents.
Despite the robust financial asset rewards achieved in 1995, further
potential appears to remain, assuming the political arena does not
become totally disruptive. Many technical measures suggest that further
equity market gains are achievable and they are supported by valuation
measures that correlate stock returns with interest rates. However, the
returns obtainable in 1996 should not match the extraordinary results
of 1995. The outlook for growth stocks appears particularly attractive
on a relative basis because overall "market" earnings have been
decelerating sharply while growth stock earnings have held up well. As
of December 31, 1995, the portfolio's projected earnings growth rate
was +24.7% for calendar 1996 versus less than +5 for the S&P 500 Index.
The most heavily weighted equity sectors in portfolios continue to be
those emphasized in 1995: technology, health care and financial
services."
[GRAPHIC OMITTED]
One Year Five Year Inception 6/19/87
Clearwater Growth Fund 32.6% 15.4% 10.5%
S&P 500 37.5% 16.5% 11.9%
<PAGE>
Kennedy Capital Management, the Subadviser for the Small Cap Fund, made the
following comments:
"This past year was truly an outstanding one for U.S. stocks and
bonds. The S&P 500 Index returned 34.1 percent (prior to dividends) to
investors. This growth was fueled by surging profits and falling
interest rates. Bond yields reversed their 1994 course and fell all
along the curve but particularly at the long end where they shed 1.93
%. Coincidentally, the 30 year bond returned exactly 34.1% in 1995. In
contrast, during 1994 the S&P index rose just about one percent and an
investor in long bonds lost seven percent. A year ago January, most
market pundits were predicting a very mediocre 1995. This remarkable
double-barreled rally of 1995 provides some very important lessons.
First, it underscores the inability of most of us to forecast,
especially the future. Economists, is has been said, predict the future
by looking in their rear view mirror. That certainly seemed to be the
case a year ago, Second, 1995 clearly illustrates how hazardous it is
for investors to engage in market timing. A "cautious" investor who
moved to cash in January of 1994, would probably have been very
reluctant to plunge back into the market in April after the ten percent
rally in the first quarter of 1995. That hesitation could have caused
her, or him, to miss the rest of the 24 percent rise in 1995.
Small stocks did less well than large ones in 1995. The Russell 2000
returned 28.4 percent with dividends. Furthermore, the best performing
small stocks were in the technology sector. Because KCM buys stocks
that others are not, we tended to have only limited exposure to
technology. The Russell 2000 value index was up only 25.7 percent with
dividends.
What do we see for 1996? We think that the market is vulnerable to a
technical correction. Nevertheless, we do not believe that a serious
market downturn is probable. Inflation is in check and interest rates
should remain low. The most serious threat is the possibility of
earnings disappointments. Capital spending could slow after several
years of significant growth and this would dampen the economy. We do
not, however, expect a recession. In sum, we expect the market to rise
modestly in 1996. Such a prediction places us squarely, and probably
dangerously, in the "consensus camp" of market predictions.
Nevertheless, and without regard to the accuracy of the above market
forecast, we have seen a sharp increase in IPOs in 1995. While KCM
rarely buys IPOs, this fresh crop of newly minted stocks is fodder for
our investment approach. Many of these small companies are bound to
disappoint, given the high expectations set for them. Some of these
will be subsequently abandoned by analysts and institutional investors.
That is the time when KCM can find good values
<PAGE>
[GRAPHIC OMITTED]
One Year Five Year Inception 12/31/93
Clearwater Small Cap Fund 26.3% NA 8.6%
Russell 2000 28.4% NA 12.3%
Clearwater Investment Trust Clearwater Management Company
- --------------------------- -----------------------------
F. T. Weyerhaeuser, Chairman & Treasurer F. T. Weyerhaeuser, Chairman &
Samuel B. Carr, Jr. Treasurer
Stanley R. Day, Jr. W. T. Weyerhaeuser, V.P. &
Robert J. Phares Secretary
E. C. Driscoll
W. John Driscoll
D. C. Titcomb, V.P. & Secretary P. W. Pascoe
F. W. Piasecki
D. C. Titcomb
G. H. Weyerhaeuser, Jr.
<PAGE>
Independent Auditors' Report
The Board of Trustees and Shareholders
Clearwater Investment Trust:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments in securities, of Clearwater Small Cap and
Clearwater Growth Fund (funds within Clearwater Investment Trust) as of December
31, 1995 and the related statements of operations for the year then ended, and
the statements of changes in net assets for each of the years in the two-year
period then ended, and the financial highlights for each of the years in the
four-year period then ended. These financial statements and the financial
highlights are the responsibility of the funds' management. Our responsibility
is to express an opinion on these financial statements and the financial
highlights based on our audits. The financial highlights for the year ended
December 31, 1991 for the Clearwater Small Cap Fund and the Clearwater Growth
Fund were audited by other auditors, whose report dated January 21, 1992
expressed an unqualified opinion on the financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are confirmed to us by the
custodian. As to securities purchased and sold, but not received or delivered,
we request confirmations from brokers, and where replies are not received, we
carry out other appropriate auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
Clearwater Small Cap Fund and Clearwater Growth Fund at December 31, 1995, the
results of their operations for the year then ended, and the changes in their
net assets for each of the years in the two-year period then ended, and the
financial highlights for each of the years in the four-year period ended
December 31, 1995, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 2, 1996
<PAGE>
<TABLE>
CLEARWATER INVESTMENT TRUST
Statements of Assets and Liabilities
December 31, 1995
<CAPTION>
Clearwater Clearwater
Small Cap Fund Growth Fund
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investments in securities at market value (note 2),
(identified cost: $24,818,972 and $54,245,256,
respectively) $ 26,912,199 84,765,147
Cash in bank on demand deposit 4,443 26,484
Receivable for investment securities sold 0 1,077,726
Accrued dividend and interest receivable 18,889 81,240
Other receivables 41 1,013
- ---------------------------------------------------------------------------------------------------------------------------
Total assets 26,935,572 85,951,610
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities
- ---------------------------------------------------------------------------------------------------------------------------
Payable for investment securities purchased 0 952,214
Accrued management fee 88,334 224,731
Payable to Adviser (note 5) 20,000 0
Other payables 1,705 0
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 110,039 1,176,945
- ---------------------------------------------------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $ 26,825,533 84,774,665
===========================================================================================================================
Represented by:
Capital stock and additional paid-in capital--
authorized unlimited number of shares at no par
value for each Fund; outstanding 2,338,666 and
4,983,002 shares, respectively (note 2) 24,710,221 54,229,404
Undistributed net investment income 1,489 0
Accumulated net realized gains 20,596 25,370
Unrealized appreciation of investments 2,093,227 30,519,891
- ---------------------------------------------------------------------------------------------------------------------------
Total--representing net assets
applicable to outstanding capital stock 26,825,533 84,774,665
===========================================================================================================================
Net asset value per share of outstanding
capital stock $ 11.47 17.01
===========================================================================================================================
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CLEARWATER INVESTMENT TRUST
Statements of Operations
For the year ended December 31, 1995
<CAPTION>
Clearwater Clearwater
Small Cap Fund Growth Fund
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Income:
Dividends (net of foreign taxes withheld of
$0 and $1,521, respectively) $ 300,085 714,455
Interest 95,035 160,944
- ----------------------------------------------------------------------------------------------------------------------------
Total income 395,120 875,399
- ----------------------------------------------------------------------------------------------------------------------------
Expenses (note 5):
Management fee 312,702 831,562
- ----------------------------------------------------------------------------------------------------------------------------
Total expenses 312,702 831,562
- ----------------------------------------------------------------------------------------------------------------------------
Investment income--net 82,418 43,837
- ----------------------------------------------------------------------------------------------------------------------------
Realized and unrealized gains on investments:
Net realized gains on investments 2,170,720 5,008,130
Net change in unrealized appreciation or
depreciation of investments 3,282,565 16,347,374
- ----------------------------------------------------------------------------------------------------------------------------
Net gain on investments 5,453,285 21,355,504
- ----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations $ 5,535,703 21,399,341
============================================================================================================================
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CLEARWATER INVESTMENT TRUST
Statements of Changes in Net Assets
<CAPTION>
Clearwater Small Cap Fund Clearwater Growth Fund
Year ended December 31 Year ended December 31
----------------------------------------------------------------------------
1995 1994 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations:
Investment income, net $ 82,418 265,711 43,837 258,787
Net realized gain on investments 2,170,720 2,132,393 5,008,130 4,541,749
Net change in unrealized appreciation
or depreciation of investments 3,282,565 (3,606,956) 16,347,374 (4,079,200)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net assets resulting
from operations 5,535,703 (1,208,852) 21,399,341 721,336
- -----------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Investment income, net (80,929) (265,711) (43,837) (258,787)
Excess distribution of net investment
income 0 (572) (2,342) (141)
Net realized gains (2,150,083) (2,132,393) (4,980,550) (4,541,617)
Excess distribution of net realized gains 0 (41) 0 0
Tax return of capital 0 (2,017) 0 (196)
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions to
shareholders (2,231,012) (2,400,734) (5,026,729) (4,800,741)
- -----------------------------------------------------------------------------------------------------------------------------
Capital share transactions (note 4):
Proceeds from sales 3,891,971 4,570,373 50,000 122,000
Shares issued for reinvestment of
distributions 1,647,305 3,152,653 2,938,222 10,501,198
Payments for shares redeemed (16,824) (87,305) (585,274) (1,581,274)
- -----------------------------------------------------------------------------------------------------------------------------
Increase in net assets
from capital share
transactions 5,522,452 7,635,721 2,402,948 9,041,924
- -----------------------------------------------------------------------------------------------------------------------------
Total increase in net assets 8,827,143 4,026,135 18,775,560 4,962,519
Net assets at beginning of year 17,998,390 13,972,255 65,999,105 61,036,586
- -----------------------------------------------------------------------------------------------------------------------------
Net assets at end of year (including
undistributed net investment income of
$1,489 and $0 for Clearwater Small
Cap Fund) $ 26,825,533 17,998,390 84,774,665 65,999,105
=============================================================================================================================
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
CLEARWATER INVESTMENT TRUST
Notes to Financial Statements
(1) Organization
Clearwater Investment Trust (the Trust) was established on January 12,
1987 as a Massachusetts business trust and is registered under the
Investment Company Act of 1940 (as amended) as a diversified
open-end management investment company and presently includes two
series of funds: Clearwater Small Cap Fund and Clearwater Growth
Fund (the funds). The Trust's declaration of trust permits the
board of directors to create additional funds in the future. The
investment objective of the funds is long-term capital growth. The
Clearwater Small Cap Fund primarily invests in equity and fixed
income securities of companies that have total equity market
capitalizations of $1 billion or lower. The Clearwater Growth Fund
invests in a broad list of securities that offer the potential for
growth.
(2) Summary of Significant Accounting Policies
The significant accounting policies followed by the funds are as
follows:
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of increase and decrease in net assets from
operations during the period. Actual results could differ from
those estimates.
Investments in Securities
Investments in securities are valued at the last sales price on
the principal exchange or market where they are traded.
Securities which have not traded on the date of valuation or
securities for which sales prices are not generally reported
are valued at the mean between the last bid and asked prices.
Securities for which no market quotations are readily available
(including those the trading of which has been suspended) will
be valued at fair value as determined in good faith by the
board of trustees, although the actual computations may be made
by persons acting pursuant to the direction of the board.
Security transactions are accounted for on the date the securities
are purchased or sold. Realized gains and losses are calculated
on an identified cost basis. Dividend income is recognized on
the ex-dividend date and interest income, including
amortization of original issue discount and premium, is accrued
daily.
Federal Taxes
The Trust's policy is to comply with the requirements of the
Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable
income to shareholders. Therefore, no income tax provision is
required. Each fund is treated as a separate entity for federal
income tax purposes. In addition, on a calendar year basis,
each fund intends to distribute substantially all of its net
investment income and realized gains, if any, to avoid the
payment of any federal excise taxes.
(Continued)
<PAGE>
2
CLEARWATER INVESTMENT TRUST
Net investment income and net realized gains (losses) for the
funds may differ for financial statement and tax purposes. The
character of distributions made during the year from net
investment income or net realized gains may differ from their
ultimate characterization for federal income tax purposes.
Also, due to the timing of dividend distributions, the fiscal
year in which amounts are distributed may differ from the year
that the income or realized gains (losses) were recorded by the
funds.
On the statements of assets and liabilities, due to permanent
book-to-tax differences, undistributed net investment income
has been increased by $2,342 for Clearwater Growth Fund,
resulting in a net reclassification adjustment to decrease
accumulated net realized gains by $2,342.
Distributions to Shareholders
Distributions to shareholders from net investment income and net
realized gains, if any, are declared annually and paid in cash
or reinvested in additional shares.
(3) Investment Security Transactions
Cost of purchases and proceeds from sales of securities, other than
temporary investments in short-term securities, for the year ended
December 31, 1995, were as follows:
Sales
Purchases proceeds
-------------------------------------------------------------------
Clearwater Small Cap Fund $ 22,548,105 17,556,338
Clearwater Growth Fund 43,770,814 49,102,639
(4) Capital Share Transactions
Transactions in shares of each fund for the years ended December 31,
1995 and 1994, were as follows:
Clearwater Clearwater
Small Cap Fund Growth Fund
------------------- --------------------
1995 1994 1995 1994
-----------------------------------------------------------------
Sold 376,459 389,420 3,495 8,545
Issued for reinvested
distributions 143,619 298,474 172,735 737,890
Redeemed (1,503) (7,788) (38,758) (112,779)
-----------------------------------------------------------------
=================================================================
Increase 518,575 680,106 137,472 633,656
=================================================================
(Continued)
<PAGE>
3
CLEARWATER INVESTMENT TRUST
(5) Expenses and Related Party Transactions
The Trust has a contract for management services with Clearwater
Management Company, a management firm of which the Trust's
chairman is a shareholder. Under terms of the agreement,
Clearwater Small Cap Fund and Clearwater Growth Fund pay a monthly
fee equal to an annual rate of 1.35% and 1.10% of average net
assets, respectively. However, certain state securities laws do
not permit Clearwater Management Company to charge its management
fee with respect to investments in other investment companies held
by the funds, therefore, actual management fees may be less than
these contractual rates. Clearwater Management Company is
responsible for the payment or reimbursement of all of the Funds'
expenses, except brokerage, taxes, interest and extraordinary
expenses.
The management firm has entered into a sub-advisory contract with an
independent investment advisory firm for each fund to provide
daily investment management services. The sub-advisory fee for the
Clearwater Small Cap Fund, payable to Kennedy Capital Management,
is equal to an annual rate of 1.00% of the first $30 million in
net assets and then decreasing in reduced percentages to 0.80% of
net assets in excess of $50 million. The sub-advisory fee for the
Clearwater Growth Fund, payable to SIT Investment Associates,
Inc., is equal to an annual rate of .75% of the first $10 million
in net assets and then decreasing in reduced percentages to .35%
of net assets in excess of $80 million.
The Clearwater Small Cap Fund borrowed $20,000 from Clearwater
Management Company on December 29, 1995 in order to meet cash
distribution requirements. The fund subsequently paid back the
$20,000 on January 18, 1996.
(Continued)
<PAGE>
4
CLEARWATER INVESTMENT TRUST
(6) Financial Highlights
Per share data (rounded to the nearest cent) for a share of capital
stock outstanding throughout the period and selected information
for each period is as follows:
<TABLE>
Clearwater Small Cap Fund
<CAPTION>
-----------------------------------------------------------------------------------------------------
1995 1994** 1993 1992 1991
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $ 9.89 12.26 11.50 11.30 9.37
-----------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income .04 .17 .17 .29 .37
Net gains or losses on
securities (both realized
and unrealized) 2.56 (.99) 1.60 .25 1.93
-----------------------------------------------------------------------------------------------------
Total from
investment
operations 2.60 (.82) 1.77 .54 2.30
-----------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income (.04) (.17) (.17) (.29) (.37)
Distributions from net
realized gains (.98) (1.38) (.84) (.05) .00
-----------------------------------------------------------------------------------------------------
Total distributions (1.02) (1.55) (1.01) (.34) (.37)
-----------------------------------------------------------------------------------------------------
Net asset value, end of year $ 11.47 9.89 12.26 11.50 11.30
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
Total return* 26.3% (6.7%) 15.4% 4.9% 24.9%
-----------------------------------------------------------------------------------------------------
Net assets, end of year (000s
omitted) $ 26,826 17,998 13,972 13,128 12,537
Ratio of expenses to average
net assets 1.35% 1.40% 1.47% 1.49% 1.62%
Ratio of net investment income
to average net assets .36% 1.61% 1.38% 2.54% 3.64%
Portfolio turnover rate
(excluding short-term
securities) 77.46% 122.88% 58.49% 73.07% 67.42%
<FN>
*Total return figures are based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value.
**Effective May 1, 1994, a change was implemented in the fund's investment
policies whereby the fund must invest at least 65% of its total assets in
securities of companies that have total equity market capitalizations of $1
billion or lower. Prior to this change, the Fund was permitted to invest in
a broad list of equity and fixed income securities. Also, the fund's name
was changed from Clearwater Value Fund to Clearwater Small Cap Fund. Also
effective January 1, 1994, Kennedy Capital Management became the
sub-adviser for the Fund.
</FN>
</TABLE>
(Continued)
<PAGE>
5
<TABLE>
CLEARWATER INVESTMENT TRUST
Clearwater Growth Fund
Year ended December 31
-------------------------------------------------------------
<CAPTION>
1995 1994 1993 1992 1991
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $ 13.62 14.49 15.98 15.42 10.91
------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income .01 .06 .09 .11 .14
Net gains or losses on
securities (both realized
and unrealized) 4.43 .11 .27 .56 4.51
------------------------------------------------------------------------------------------------------
Total from
investment
operations 4.44 .17 .36 .67 4.65
------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income (.01) (.06) (.09) (.11) (.14)
Distributions from realized
gains (1.04) (.98) (1.76) .00 .00
------------------------------------------------------------------------------------------------------
Total distributions (1.05) (1.04) (1.85) (.11) (.14)
------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 17.01 13.62 14.49 15.98 15.42
------------------------------------------------------------------------------------------------------
Total return* 32.6% 1.2% 2.2% 4.4% 42.8%
Net assets, end of period
(000s omitted) $ 84,775 65,999 61,037 67,554 65,818
Ratio of expenses to average
net assets 1.08% 1.07% 1.08% 1.10% 1.17%
Ratio of net investment income
to average net assets .06% .39% .55% .74% 1.05%
Portfolio turnover rate
(excluding short-term
securities) 58.64% 70.69% 52.76% 32.08% 29.27%
<FN>
*Total return figures are based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value.
</FN>
</TABLE>
<PAGE>
<TABLE>
CLEARWATER INVESTMENT TRUST
CLEARWATER SMALL CAP FUND
Investments in Securities
December 31, 1995
<CAPTION>
Principal
amount or
number Market
Name of issuer of shares value (a)
- -----------------------------------------------------------------------------------------------------------------------
(Percentages of each investment category relate to total net assets.)
<S> <C> <C>
Corporate Bonds (.1%):
Park Ohio Industries Inc.
7.25%, 6/15/2004 250,000 $ 252,500
AGCO Corp. 6.5%, 06/01/2008 1,000 3,908
- -----------------------------------------------------------------------------------------------------------------------
Total investment in bonds (cost $251,634) 256,408
- -----------------------------------------------------------------------------------------------------------------------
Common and Preferred stocks (99.0%):
Aerospace (0.9%):
Aeroflex Inc. (b) 26,400 112,200
Sifco Industries (b) 9,540 51,278
Sparton Corp. (b) 21,200 92,750
- -----------------------------------------------------------------------------------------------------------------------
256,228
- -----------------------------------------------------------------------------------------------------------------------
Agriculture (.1%):
China Industrial Group Inc. (b) 24,600 33,056
- -----------------------------------------------------------------------------------------------------------------------
Automotive (2.6%):
Arrow Automotive Industries (b) 12,000 75,000
Bailey Corp. (b) 12,600 61,425
Defiance Inc. (b) 7,000 42,000
Margate Industries Inc. 21,000 19,687
Masland Corp. 10,750 150,500
Safety Components International Inc. (b) 19,500 307,125
Starcraft Corp. 10,000 45,000
- -----------------------------------------------------------------------------------------------------------------------
700,737
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to investments in securities.
(Continued
<PAGE>
2
<TABLE>
CLEARWATER INVESTMENT TRUST
CLEARWATER SMALL CAP FUND
Investments in Securities, Continued
<CAPTION>
Number Market
Name of issuer of shares value (a)
- -----------------------------------------------------------------------------------------------------------------------
Common and preferred stocks, continued:
<S> <C> <C>
Banks (5.7%):
Bankatlantic Bancorp. Inc. 18,125 $ 339,844
Fidelity Fed Savings 18,370 298,512
First Federal Bancshares of Eau Claire Inc. 11,350 173,087
Metropolitan Bancorp (b) 20,000 260,000
Poughkeepsie Savings Bank FSB 39,400 206,850
TF Financial Corp. 15,850 240,722
- -----------------------------------------------------------------------------------------------------------------------
1,519,015
- -----------------------------------------------------------------------------------------------------------------------
Business Services (1.0%):
Cerbco Inc. (b) 3,000 20,250
Ellett Brothers 12,100 96,800
Joule Inc. (b) 6,759 33,795
Medquist Inc. (b) 8,300 67,438
NSC Corp. 23,660 47,320
- -----------------------------------------------------------------------------------------------------------------------
265,603
- -----------------------------------------------------------------------------------------------------------------------
Chemicals (2.4%):
CPAC Inc. (b) 17,312 244,532
LSB Industries Inc. 28,500 124,688
Wedco Technology Inc. (b) 20,200 265,125
- -----------------------------------------------------------------------------------------------------------------------
634,345
- -----------------------------------------------------------------------------------------------------------------------
Computer Software (6.1%):
Citation Computer Systems (b) 36,500 205,313
Computer Outsourcing Services Inc. (b) 33,750 143,437
Find/SVP Inc. (b) 31,495 62,990
Henry (Jack) & Associates 14,000 346,500
Number Nine Visual Technology Corp. (b) 20,000 175,000
Prophet 21 Inc. (b) 70,000 319,375
SYMIX Systems (b) 31,500 315,000
Zycad Corp. (b) 8,000 67,000
- -----------------------------------------------------------------------------------------------------------------------
1,634,615
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to investments in securities.
(Continued)
<PAGE>
3
<TABLE>
CLEARWATER INVESTMENT TRUST
CLEARWATER SMALL CAP FUND
Investments in Securities, Continued
<CAPTION>
Number Market
Name of issuer of shares value (a)
- -----------------------------------------------------------------------------------------------------------------------
Common and preferred stocks, continued
<S> <C> <C>
Construction Materials (3.0%):
American Biltrite Inc. 13,000 $ 282,750
Ameron Inc. 6,000 225,750
Apogee Enterprises Inc. (b) 16,000 272,000
Utilx Corp. (b) 16,600 35,275
- -----------------------------------------------------------------------------------------------------------------------
815,775
- -----------------------------------------------------------------------------------------------------------------------
Consumer Services (1.50%):
Childrens Discovery Center 60,000 307,500
Nobel Education Dynamics (b) 6,250 106,250
- -----------------------------------------------------------------------------------------------------------------------
413,750
- -----------------------------------------------------------------------------------------------------------------------
Defense (.8%):
Intelect Communications Systems 41,050 228,341
- -----------------------------------------------------------------------------------------------------------------------
Electrical Equipment (1.2%):
IEC Electronics Corp.(b) 13,000 113,750
Luminart Inc. (b) 40,000 55,200
TSX Corp. (b) 4,000 86,000
Zycon Corp. (b) 6,200 69,750
- -----------------------------------------------------------------------------------------------------------------------
324,700
- -----------------------------------------------------------------------------------------------------------------------
Electronics, Instrument (15.3%):
All American Semiconductor (b) 34,000 78,625
Aura Systems Inc. (b) 60,000 337,500
COHU Inc. 16,500 420,750
DBA Systems Inc. (b) 24,000 105,000
Data Measurement Corp. (b) 14,200 261,812
Datamarine International Inc. (b) 34,500 388,125
Herley Industries Inc. (b) 17,100 119,700
LaBarge Inc. (b) 18,300 64,050
Liuski International Inc. (b) 58,050 192,291
MTI Technology Corp. (b) 135,900 322,762
Micro Component Technology (b) 26,800 177,550
Numerex Corp. Class A (b) 29,400 191,100
</TABLE>
See accompanying notes to investments in securities.
(Continued)
<PAGE>
4
<TABLE>
CLEARWATER INVESTMENT TRUST
CLEARWATER SMALL CAP FUND
Investments in Securities, Continued
<CAPTION>
Number Market
Name of issuer of shares value (a)
- -----------------------------------------------------------------------------------------------------------------------
Common and preferred stocks, continued:
<S> <C> <C>
Supertex Inc. (b) 8,300 $ 86,113
II-VI Inc. (b) 2,000 21,500
Ultrak Inc. (b) 12,700 81,756
Wegener Corp. (b) 76,600 928,775
Whitehall Corp. (b) 10,000 335,000
- -----------------------------------------------------------------------------------------------------------------------
4,112,409
- -----------------------------------------------------------------------------------------------------------------------
Entertainment (0.1%):
Spec's Music Inc. (b) 20,000 35,000
- -----------------------------------------------------------------------------------------------------------------------
Financial (4.8%):
D & N Financial Corp. (b) 16,900 204,912
Hallmark Captial Corp. (b) 10,000 157,500
Marion Capital Holdings Inc. 8,650 173,000
Mid Continent Bancshares Inc. 6,000 111,000
Pacific Crest Capital, Inc. (b) 39,900 289,275
Riggs National Preferred Series B 10.75% 12,250 346,063
- -----------------------------------------------------------------------------------------------------------------------
1,281,750
- -----------------------------------------------------------------------------------------------------------------------
Food and Beverage (3.9%):
Brothers Gourmet Coffees Inc. (b) 10,100 36,613
Erly Industries 7,877 53,170
Farmers Brothers Company 2,150 293,475
Unimark Group Inc. (b) 55,500 672,937
- -----------------------------------------------------------------------------------------------------------------------
1,056,195
- -----------------------------------------------------------------------------------------------------------------------
Furniture (0.9%):
Rowe Furniture Corp. 49,400 216,125
Stanley Furniture Company Inc. (b) 3,670 29,360
- -----------------------------------------------------------------------------------------------------------------------
245,485
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to investments in securities.
(Continued)
<PAGE>
5
<TABLE>
CLEARWATER SMALL CAP FUND
Investments in Securities, Continued
<CAPTION>
Number Market
Name of issuer of shares value (a)
- -----------------------------------------------------------------------------------------------------------------------
Common and preferred stocks, continued:
<S> <C> <C>
Health Care (2.7%):
Grancare Inc. (b) 8,370 $ 121,365
Health Fitness Physical Therapy Inc. ((b) 60,400 135,900
Integrated Health Services (b) 4,326 108,150
Medical Innovations Inc. (b) 10,000 15,000
Moore Medical Corp. (b) 8,400 90,300
Sterling HealthCare Group (b) 23,450 249,156
- -----------------------------------------------------------------------------------------------------------------------
719,871
- -----------------------------------------------------------------------------------------------------------------------
Home Builders (0.2%):
MDC Holdings Inc. 7,200 51,300
- -----------------------------------------------------------------------------------------------------------------------
Housewares (.9%):
Libbey Inc. 10,450 235,125
- -----------------------------------------------------------------------------------------------------------------------
Insurance (7.9%):
Acordia Inc. 10,850 324,144
American Physician Service Group (b) 49,000 471,625
Amvestors Financial Corp. 11,000 129,250
Health Risk Management Inc. (b) 500 5,125
Intercargo Corp. 20,100 201,000
Lawyers Title Corp. 18,400 351,900
Liberty Financial Companies 9,400 284,350
Motor Club of America (b) 6,200 40,300
Pioneer Financial Services Inc. 17,022 314,907
- -----------------------------------------------------------------------------------------------------------------------
2,122,601
- -----------------------------------------------------------------------------------------------------------------------
Lodging and Restaurant (0.1%):
Main Street & Main Inc. (b) 7,500 21,094
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to investments in securities.
(Continued)
<PAGE>
6
<TABLE>
CLEARWATER INVESTMENT TRUST
CLEARWATER SMALL CAP FUND
Investments in Securities, Continued
<CAPTION>
Number Market
Name of issuer of shares value (a)
- -----------------------------------------------------------------------------------------------------------------------
Common and preferred stocks, continued:
<S> <C> <C>
Machinery (4.1%):
AAON Inc. (b) 23,000 $ 132,250
Amistar Corp. (b) 17,618 162,967
Easco Inc. 27,000 232,875
Global Industrial Technologies Inc. (b) 1,800 33,975
Lincoln Electric 18,000 432,000
Speizman Industries Inc. (b) 12,500 35,937
Stevens International Series A (b) 14,000 61,250
- -----------------------------------------------------------------------------------------------------------------------
1,091,254
- -----------------------------------------------------------------------------------------------------------------------
Manufactured Housing (0.7%):
Champion Enterprises (b) 5,950 183,706
- -----------------------------------------------------------------------------------------------------------------------
Medical Technology (5.5%):
ADAC Laboratories 24,850 301,306
Aequitron Medical Inc. (b) 27,470 209,459
Alliance Imaging Inc. (b) 36,000 103,500
Biowhittaker Inc. (b) 14,800 112,850
GAMMA Biologicals Inc. 6,040 27,935
Health Management Inc. (b) 31,500 417,375
Laserscope (b) 47,738 92,492
Medical Graphics Corp. (b) 5,400 26,663
OEC Medical Systems Inc. (b) 19,232 187,512
- -----------------------------------------------------------------------------------------------------------------------
1,479,092
- -----------------------------------------------------------------------------------------------------------------------
Metal Fabrication (1.8%):
Cold Metal Products Inc. (b) 15,000 71,250
HMI Industries 9,000 108,000
Matthews International Corp. 16,000 312,000
- -----------------------------------------------------------------------------------------------------------------------
491,250
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to investments in securities.
(Continued)
<PAGE>
7
<TABLE>
CLEARWATER INVESTMENT TRUST
CLEARWATER SMALL CAP FUND
Investments in Securities, Continued
<CAPTION>
Number Market
Name of issuer of shares value (a)
- -----------------------------------------------------------------------------------------------------------------------
Common and preferred stocks, continued:
<S> <C> <C>
Office Equipment, Computers (2.7%):
Genicom Corp. (b) 15,000 $ 76,875
Inotek Technologies Corp. (b) 23,000 15,813
Miltope Group Inc. (b) 22,200 62,437
Summagraphics Corp. (b) 5,950 12,272
3D Systems Corp. (b) 17,783 422,346
Tridex Corp. (b) 15,000 105,000
Xscribe Corp. (b) 30,000 22,500
- -----------------------------------------------------------------------------------------------------------------------
717,243
- -----------------------------------------------------------------------------------------------------------------------
Oil and Gas (3.2%):
Bolt Technology Corp. (b) 197,500 357,969
CE Franklin Ltd. (b) 13,180 19,770
ICO Inc. 26,200 127,725
Industrial Holdings Inc. (b) 10,000 41,250
KCS Energy Inc. 10,600 159,000
Lufkin Industries Inc. 5,400 122,175
WRT Energy Corp. 9,550 7,610
WRT Energy Corp. Preferred 9.0% 7,600 34,200
- -----------------------------------------------------------------------------------------------------------------------
869,699
- -----------------------------------------------------------------------------------------------------------------------
Packaging (0.7%):
Mobile Mini Inc. (b) 50,000 187,500
- -----------------------------------------------------------------------------------------------------------------------
Paper (.7%):
Mercer International Inc. (b) 9,000 184,500
- -----------------------------------------------------------------------------------------------------------------------
Pharmaceuticals (1.1%):
ICN Pharmaceuticals Inc. 14,902 286,863
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to investments in securities.
(Continued)
<PAGE>
8
<TABLE>
CLEARWATER INVESTMENT TRUST
CLEARWATER SMALL CAP FUND
Investments in Securities, Continued
<CAPTION>
Number
of shares
or principal Market
Name of issuer amount value (a)
- -----------------------------------------------------------------------------------------------------------------------
Common and preferred stocks, continued:
<S> <C> <C>
Printing and Publishing (1.5%):
Central Newspapers 6,850 $ 214,919
Graphic Industries 15,250 186,812
- -----------------------------------------------------------------------------------------------------------------------
401,731
- -----------------------------------------------------------------------------------------------------------------------
Recreational Vehicles (0.8%):
Polaris Industries Inc. 7,350 215,906
- -----------------------------------------------------------------------------------------------------------------------
Retail Trade (8.2%):
Celebrity, Inc. (b) 4,200 24,150
Dairy Mart Convenience Stores, Inc. CL A (b) 24,000 135,000
Drug Emporium, Inc. (b) 43,300 178,612
Genovese Drug Stores Class A 36,542 411,097
Hills Stores Preferred 10/5/08 Series A (b) 4,605 43,172
National Media Corp. (b) 32,070 673,470
Strober Organization Inc. (b) 39,400 140,363
Trak Auto Corp. (b) 15,850 241,713
Universal Self Care Inc. (b) 25,200 47,250
Valuevision International Inc. Class A (b) 60,000 333,750
- -----------------------------------------------------------------------------------------------------------------------
2,228,577
- -----------------------------------------------------------------------------------------------------------------------
Telecommunications (3.3%):
Davox Corp. (b) 13,850 164,469
Interdigital Communications Corp. (b) 28,400 209,450
Mastec Inc. (b) 24,300 321,975
NII Norstat International Inc. (b) 40,000 112,500
Teledata Communications Ltd. (b) 12,000 75,000
- -----------------------------------------------------------------------------------------------------------------------
883,394
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to investments in securities.
(Continued)
<PAGE>
9
<TABLE>
CLEARWATER INVESTMENT TRUST
CLEARWATER SMALL CAP FUND
Investments in Securities, Continued
<CAPTION>
Number
of shares
or principal Market
Name of issuer amount value (a)
- -----------------------------------------------------------------------------------------------------------------------
Common and preferred stocks, continued:
<S> <C> <C>
Textile and Apparel (.7%):
Culp Inc. 17,500 $ 194,688
Orbit International Corp. (b) 8,000 7,000
- -----------------------------------------------------------------------------------------------------------------------
201,688
- -----------------------------------------------------------------------------------------------------------------------
Transportation (1.9%):
Greenwich Air Services Inc. 22,818 524,814
Pacific International Services Inc. 15,000 300
- -----------------------------------------------------------------------------------------------------------------------
525,114
- -----------------------------------------------------------------------------------------------------------------------
Total investment in common stocks
(cost: $24,566,059) 26,654,512
- -----------------------------------------------------------------------------------------------------------------------
Short-term securities (-%):
Federated Master Trust 5.29% 1,279 1,279
- -----------------------------------------------------------------------------------------------------------------------
Total investments in short-term
securities (cost: $1,279) 1,279
- -----------------------------------------------------------------------------------------------------------------------
Total investments in securities
(cost: $24,818,972) (c) $ 26,912,199
=======================================================================================================================
<FN>
Notes to Investments in Securities
(a) Securities are valued in accordance with procedures described in note 2 to
the financial statements.
(b) Currently non-income producing.
(c) At December 31, 1995, the cost for federal income tax purposes was
$24,818,972. The aggregate gross unrealized appreciation and depreciation
of investments in securities based on this cost was as follows:
</FN>
</TABLE>
<TABLE>
<S> <C>
Gross unrealized appreciation $ 4,956,564
Gross unrealized depreciation (2,863,337)
- -----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation $ 2,093,227
=======================================================================================================================
</TABLE>
<PAGE>
<TABLE>
CLEARWATER INVESTMENT TRUST
CLEARWATER GROWTH FUND
Investments in Securities
December 31, 1995
<CAPTION>
Number Market
Name of issuer of shares value (a)
- ----------------------------------------------------------------------------------------------------------------------------
(Percentages of each investment category relate to total net assets.)
Common stocks (96.5%):
<S> <C> <C>
Domestic (91.5%):
Aerospace (2.1%):
Boeing Company 22,500 $ 1,763,438
- ----------------------------------------------------------------------------------------------------------------------------
Agriculture (.2%):
Pioneer Hi-Bred International Inc. 2,500 139,063
- ----------------------------------------------------------------------------------------------------------------------------
Automotive (2.2%):
Harley Davidson Inc. 66,500 1,911,875
- ----------------------------------------------------------------------------------------------------------------------------
Banks (3.1%):
Citicorp 38,500 2,589,125
- ----------------------------------------------------------------------------------------------------------------------------
Chemicals (1.7%):
Monsanto Company 11,500 1,408,750
- ----------------------------------------------------------------------------------------------------------------------------
Computer software (12.6%):
Computer Associates International Inc. 16,500 938,438
First Data Corp. 51,425 3,439,047
HBO & Company 19,000 1,455,875
Microsoft Corp. (b) 20,000 1,755,000
Oracle Systems Corp. (b) 47,500 2,012,813
Parametric Technology Corp. (b) 16,000 1,064,000
- ----------------------------------------------------------------------------------------------------------------------------
10,665,173
- ----------------------------------------------------------------------------------------------------------------------------
Construction materials (1.1%):
Owens Corning Fiberglas (b) 20,000 897,500
- ----------------------------------------------------------------------------------------------------------------------------
Consumer non-Durable (4.2%):
Gillette Company 35,000 1,824,371
Procter & Gamble Company 21,000 1,743,000
- ----------------------------------------------------------------------------------------------------------------------------
3,567,371
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to investments in securities.
(Continued)
<PAGE>
2
<TABLE>
CLEARWATER INVESTMENT TRUST
CLEARWATER GROWTH FUND
Investments in Securities, Continued
<CAPTION>
Number Market
Name of issuer of shares value (a)
- ----------------------------------------------------------------------------------------------------------------------------
Common stocks, continued:
<S> <C> <C>
Electronics, instrument (9.2%):
Applied Materials Inc. (b) 17,000 $ 669,375
Intel Corp. 43,000 2,440,250
LSI Logic Corp. (b) 42,000 1,375,500
Motorola Inc. 14,500 826,500
Sensormatic Electronics Corp. 50,000 868,750
Sundstrand Corp. 9,500 668,563
Xilinx Inc. (b) 31,000 945,500
- ----------------------------------------------------------------------------------------------------------------------------
7,794,438
- ----------------------------------------------------------------------------------------------------------------------------
Entertainment (0.9%):
Viacom Class B (b) 16,500 781,688
- ----------------------------------------------------------------------------------------------------------------------------
Financial (6.1%):
American Express Company 20,500 848,187
CUC International Inc. (b) 52,500 1,791,563
Federal Home Loan Mortgage Corp. 21,000 1,753,500
Mercury Finance Company 60,000 795,000
- ----------------------------------------------------------------------------------------------------------------------------
5,188,250
- ----------------------------------------------------------------------------------------------------------------------------
Food and beverage (4.3%):
Coca Cola Company 18,000 1,336,500
Phillip Morris Companies, Inc. 24,500 2,217,250
Whitman Corp. 4,000 93,000
- ----------------------------------------------------------------------------------------------------------------------------
3,646,750
- ----------------------------------------------------------------------------------------------------------------------------
Health care (4.3%):
Healthsouth Rehabilitation (b) 38,000 1,106,750
Mid Atlantic Medical Services (b) 29,000 703,250
United Healthcare Corp. 28,000 1,834,000
- ----------------------------------------------------------------------------------------------------------------------------
3,644,000
- ----------------------------------------------------------------------------------------------------------------------------
Insurance (6.1%):
American International Group 24,000 2,220,000
MGIC Investment Corp. 30,000 1,627,500
Mercury General Corp. 28,500 1,360,875
- ----------------------------------------------------------------------------------------------------------------------------
5,208,375
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to investments in securities.
(Continued)
<PAGE>
3
<TABLE>
CLEARWATER INVESTMENT TRUST
CLEARWATER GROWTH FUND
Investments in Securities, Continued
<CAPTION>
Number Market
Name of issuer of shares value (a)
- ----------------------------------------------------------------------------------------------------------------------------
Common stocks, continued:
<S> <C> <C>
Lodging and restaurants (1.1%):
Marriott International, Inc. 24,000 $ 918,000
- ----------------------------------------------------------------------------------------------------------------------------
Medical Technology (3.9%):
Medtronic Inc. 41,500 2,318,813
Stryker Corp. 18,500 971,250
- ----------------------------------------------------------------------------------------------------------------------------
3,290,063
- ----------------------------------------------------------------------------------------------------------------------------
Office equipment, computers (6.1%):
Alco Standard Corp. (b) 5,000 228,125
Cisco Systems Inc. (b) 44,000 3,283,500
3Com Corporation (b) 22,000 1,025,750
Silicon Graphics Inc. (b) 23,500 646,250
- ----------------------------------------------------------------------------------------------------------------------------
5,183,625
- ----------------------------------------------------------------------------------------------------------------------------
Oil and gas (3.4%):
British Petroleum Company 3,000 306,375
Enron Corp. 30,000 1,143,750
McDermott International Inc. 28,000 616,000
Union Texas Petroleum Holdings Inc. 41,000 794,375
- ----------------------------------------------------------------------------------------------------------------------------
2,860,500
- ----------------------------------------------------------------------------------------------------------------------------
Pharmaceuticals (8.4%):
Amgen Inc. (b) 40,000 2,375,000
Johnson & Johnson 22,000 1,883,750
Pfizer Inc. 45,000 2,835,000
- ----------------------------------------------------------------------------------------------------------------------------
7,093,750
- ----------------------------------------------------------------------------------------------------------------------------
Retail Trade (3.1%):
Home Depot Inc. 42,500 2,034,688
Office Depot Inc. (b) 31,000 612,250
- ----------------------------------------------------------------------------------------------------------------------------
2,646,938
- ----------------------------------------------------------------------------------------------------------------------------
Services (3.4%):
Ceridian Corp. (b) 39,500 1,629,375
Paychex Inc. (b) 25,500 1,271,813
- ----------------------------------------------------------------------------------------------------------------------------
2,901,188
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to investments in securities.
(Continued)
<PAGE>
4
<TABLE>
CLEARWATER INVESTMENT TRUST
CLEARWATER GROWTH FUND
Investments in Securities, Continued
<CAPTION>
Number
of shares
or principal Market
Name of issuer amount value (a)
- ----------------------------------------------------------------------------------------------------------------------------
Common stocks, continued:
<S> <C> <C>
Telecommunications (4.0%):
Airtouch Communications Inc. 55,000 $ 1,553,750
DSC Communications Corp. (b) 35,000 1,290,625
MCI Communications (b) 10,000 261,250
Tellabs Inc. (b) 9,000 333,000
- ----------------------------------------------------------------------------------------------------------------------------
3,438,625
- ----------------------------------------------------------------------------------------------------------------------------
Foreign (5.0%):
SAP Ads 11,000 554,400
Exel Ltd. 23,000 1,403,000
Loewen Group Inc. 32,500 822,656
Nokia Corp. ADR A 8,000 311,000
Schlumberger Ltd. 17,000 1,177,250
- ----------------------------------------------------------------------------------------------------------------------------
4,268,306
- ----------------------------------------------------------------------------------------------------------------------------
Total investment in common stocks
(cost: $51,286,900) $ 81,806,791
- ----------------------------------------------------------------------------------------------------------------------------
Short-term securities (3.5%):
Norwest Advantage Cash Investment Fund 5.38% 2,958,356 $ 2,958,356
- ----------------------------------------------------------------------------------------------------------------------------
Total investment in short-term
securities (cost: $2,958,356) 2,958,356
- ----------------------------------------------------------------------------------------------------------------------------
Total investments in securities
(cost: $54,245,256) (c) $ 84,765,147
============================================================================================================================
</TABLE>
See accompanying notes to investments in securities.
(Continued)
<PAGE>
5
CLEARWATER INVESTMENT TRUST
CLEARWATER GROWTH FUND
Investments in Securities, Continued
Notes to Investments in Securities
(a) Securities are valued in accordance with procedures described in note 2 to
the financial statements.
(b) Currently non-income producing.
(c) At December 31, 1995, the cost for federal income tax purposes was
$54,245,256. The aggregate gross unrealized appreciation and depreciation
of investments in securities based on this cost was as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 31,597,797
Gross unrealized depreciation (1,077,906)
- ----------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation $ 30,519,891
============================================================================================================================
</TABLE>
STOCK PURCHASE AGREEMENT
This Agreement is made this 19th day of February, 1987 between Frederick T.
Weyerhaeuser ("Buyer") and Clearwater Investment Trust, a Massachusetts business
trust ("Clearwater").
WHEREAS, Clearwater wishes to sell and Buyer wishes to purchase 12,500
shares of beneficial interest of the Clearwater Growth Fund portfolio of
Clearwater for a purchase price of $10.00 per share (the "Shares"); and
WHEREAS, Buyer is purchasing the shares for the purpose of providing the
initial capitalization of Clearwater;
NOW, THEREFORE, the parties hereto agree as follows:
1. Simultaneously with the execution of this Agreement, Buyer is delivering
to Clearwater a check in the amount of $125,000 and Clearwater is delivering to
Buyer a stock certificate for the Shares.
2. Buyer agrees that it is purchasing the Shares for Investment and has no
present intention of redeeming or reselling the Shares.
EXECUTED as of the date first set forth above.
CLEARWATER INVESTMENT TRUST
By: /s/Frederick T. Weyerhaeuser
By: /s/Frederick T. Weyerhaeuser
Frederick T. Weyerhaeuser
Clearwater Growth Fund
Description of Average Annual Total Return
1/n
T = (ERV/P) -1
where: T = Average annual total return
n = Number of years
ERV = Ending redeemable value of a hypothetical
$1,000 payment made at the beginning of
n years
P = Hypothetical $1,000 initial payment
- --------------------------------------------------------------------------------
Average Annual Total Returns
1/1
One year T = (1326/1000) -1
T = 32.6%
1/5
Five Year T = (2047/1000) -1
T = 15.4%
1/8.53
Inception T = (2342/1000) -1
(6/19/87)
T = 10.5%
Clearwater Small Cap Fund
Description of Average Annual Total Return
1/n
T = (ERV/P) -1
where: T = Average annual total return
n = Number of years
ERV = Ending redeemable value of a hypothetical
$1,000 payment made at the beginning of
n years
P = Hypothetical $1,000 initial payment
- --------------------------------------------------------------------------------
Average Annual Total Returns
1/1
One year T = (1263/1000) -1
T = 26.3%
1/2
Inception* T = (1178/1000) -1
(1/1/94)
T = 8.6%
*Previous periods during which the Fund was advised by another investment
advisor are not shown.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE 1995 ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> CLEARWATER GROWTH FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 54,245,256
<INVESTMENTS-AT-VALUE> 84,765,147
<RECEIVABLES> 1,159,979
<ASSETS-OTHER> 26,484
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 85,951,610
<PAYABLE-FOR-SECURITIES> 952,214
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 224,731
<TOTAL-LIABILITIES> 1,176,945
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 54,229,404
<SHARES-COMMON-STOCK> 4,983,002
<SHARES-COMMON-PRIOR> 4,845,530
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 2,342
<ACCUMULATED-NET-GAINS> 27,712
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 30,519,981
<NET-ASSETS> 84,774,665
<DIVIDEND-INCOME> 714,455
<INTEREST-INCOME> 160,944
<OTHER-INCOME> 0
<EXPENSES-NET> 831,562
<NET-INVESTMENT-INCOME> 43,837
<REALIZED-GAINS-CURRENT> 5,000,130
<APPREC-INCREASE-CURRENT> 16,347,374
<NET-CHANGE-FROM-OPS> 21,399,341
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 43,837
<DISTRIBUTIONS-OF-GAINS> 4,980,550
<DISTRIBUTIONS-OTHER> 2,342
<NUMBER-OF-SHARES-SOLD> 3,495
<NUMBER-OF-SHARES-REDEEMED> 38,758
<SHARES-REINVESTED> 172,375
<NET-CHANGE-IN-ASSETS> 18,775,560
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 132
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 831,562
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 831,562
<AVERAGE-NET-ASSETS> 76,887,318
<PER-SHARE-NAV-BEGIN> 13.62
<PER-SHARE-NII> .01
<PER-SHARE-GAIN-APPREC> 4.43
<PER-SHARE-DIVIDEND> .01
<PER-SHARE-DISTRIBUTIONS> 1.04
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.01
<EXPENSE-RATIO> .011
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE 1995 ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> CLEARWATER SMALL CAP FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 24,818,972
<INVESTMENTS-AT-VALUE> 26,912,199
<RECEIVABLES> 18,889
<ASSETS-OTHER> 4484
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 26,935,572
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 110,039
<TOTAL-LIABILITIES> 110,039
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 24,710,221
<SHARES-COMMON-STOCK> 2,338,666
<SHARES-COMMON-PRIOR> 1,820,091
<ACCUMULATED-NII-CURRENT> 1,489
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 20,569
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,093,227
<NET-ASSETS> 26,825,533
<DIVIDEND-INCOME> 300,085
<INTEREST-INCOME> 95,035
<OTHER-INCOME> 0
<EXPENSES-NET> 312,702
<NET-INVESTMENT-INCOME> 82,418
<REALIZED-GAINS-CURRENT> 2,170,720
<APPREC-INCREASE-CURRENT> 3,282,565
<NET-CHANGE-FROM-OPS> 5,535,703
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 80,929
<DISTRIBUTIONS-OF-GAINS> 2,150,083
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 376,460
<NUMBER-OF-SHARES-REDEEMED> 1,503
<SHARES-REINVESTED> 143,619
<NET-CHANGE-IN-ASSETS> 8,827,143
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 41
<GROSS-ADVISORY-FEES> 312,702
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 312,702
<AVERAGE-NET-ASSETS> 22,953,503
<PER-SHARE-NAV-BEGIN> 9.89
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> 2.56
<PER-SHARE-DIVIDEND> .04
<PER-SHARE-DISTRIBUTIONS> .98
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.47
<EXPENSE-RATIO> .014
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
POWER OF ATTORNEY
I, the undersigned officer and trustee of Clearwater Investment Trust, a
Massachusetts business trust, do hereby severally constitute and appoint
Frederick T. Weyerhaeuser and Joseph P. Barri and each of them acting singly to
be my true, sufficient and lawful attorneys, with full power to each of them and
each of them acting singly to sign for me, in my name in the capacity indicated
below, the Amendment to the Registration Statement on Form N-1A to be filed by
Clearwater Investment Trust under the Investment Company Act of 1940 and under
the Securities Act of 1933 with respect to the offering of its shares of
beneficial interest, and any and all subsequent amendments to such Registration
Statement and any and all other documents and papers relating thereto, and
generally to do all such things in my name and on my behalf in the capacity
indicated, to enable Clearwater Investment Trust to comply with the Investment
Company Act of 1940 and the Securities Act of 1933 and all requirements of the
Securities and Exchange Commission thereunder, hereby ratifying and confirming
my signature as it may be signed by said attorneys or each of them to any and
all amendments of said Registration Statement.
IN WITNESS WHEREOF, I have hereunder set my hand on the date set opposite
my signature.
Signature Date
/s/Stanley R. Day, Jr. June 12, 1992
- ---------------------------------------------
Stanley R. Day, Jr., Trustee
POWER OF ATTORNEY
I, the undersigned trustee of Clearwater Investment Trust, a Massachusetts
business trust, do hereby severally constitute and appoint Frederick T.
Weyerhaeuser and Joseph P. Barri and each of them acting singly to be my true,
sufficient and lawful attorneys, with full power to each of them and each of
them acting singly to sign for me, in my name in the capacity indicated below,
the Amendment to the Registration Statement on Form N-1A to be filed by
Clearwater Investment Trust under the Investment Company Act of 1940 and under
the Securities Act of 1933 with respect to the offering of its shares of
beneficial interest, and any and all subsequent amendments to such Registration
Statement and any and all other documents and papers relating thereto, and
generally to do all such things in my name and on my behalf in the capacity
indicated, to enable Clearwater Investment Trust to comply with the Investment
Company Act of 1940 and the Securities Act of 1933 and all requirements of the
Securities and Exchange Commission thereunder, hereby ratifying and confirming
my signature as it may be signed by said attorneys or each of them to any and
all amendments of said Registration Statement.
IN WITNESS WHEREOF, I have hereunder set my hand on the date set opposite
my signature.
Signature Date
/s/Samuel B. Carr, Jr. April 25, 1996
- ---------------------------------------------
Samuel B. Carr, Jr., Trustee
POWER OF ATTORNEY
I, the undersigned trustee of Clearwater Investment Trust, a Massachusetts
business trust, do hereby severally constitute and appoint Frederick T.
Weyerhaeuser and Joseph P. Barri and each of them acting singly to be my true,
sufficient and lawful attorneys, with full power to each of them and each of
them acting singly to sign for me, in my name in the capacity indicated below,
the Amendment to the Registration Statement on Form N-1A to be filed by
Clearwater Investment Trust under the Investment Company Act of 1940 and under
the Securities Act of 1933 with respect to the offering of its shares of
beneficial interest, and any and all subsequent amendments to such Registration
Statement and any and all other documents and papers relating thereto, and
generally to do all such things in my name and on my behalf in the capacity
indicated, to enable Clearwater Investment Trust to comply with the Investment
Company Act of 1940 and the Securities Act of 1933 and all requirements of the
Securities and Exchange Commission thereunder, hereby ratifying and confirming
my signature as it may be signed by said attorneys or each of them to any and
all amendments of said Registration Statement.
IN WITNESS WHEREOF, I have hereunder set my hand on the date set opposite
my signature.
Signature Date
/s/Robert J. Phares April 25, 1996
- ---------------------------------------------
Robert J. Phares, Trustee
POWER OF ATTORNEY
I, the undersigned trustee of Clearwater Investment Trust, a Massachusetts
business trust, do hereby severally constitute and appoint Frederick T.
Weyerhaeuser and Joseph P. Barri and each of them acting singly to be my true,
sufficient and lawful attorneys, with full power to each of them and each of
them acting singly to sign for me, in my name in the capacity indicated below,
the Amendment to the Registration Statement on Form N-1A to be filed by
Clearwater Investment Trust under the Investment Company Act of 1940 and under
the Securities Act of 1933 with respect to the offering of its shares of
beneficial interest, and any and all subsequent amendments to such Registration
Statement and any and all other documents and papers relating thereto, and
generally to do all such things in my name and on my behalf in the capacity
indicated, to enable Clearwater Investment Trust to comply with the Investment
Company Act of 1940 and the Securities Act of 1933 and all requirements of the
Securities and Exchange Commission thereunder, hereby ratifying and confirming
my signature as it may be signed by said attorneys or each of them to any and
all amendments of said Registration Statement.
IN WITNESS WHEREOF, I have hereunder set my hand on the date set opposite
my signature.
Signature Date
/s/Frederick T. Weyerhaeuser April 25, 1996
- ---------------------------------------------
Frederick T. Weyerhaeuser, Trustee
