CLEARWATER INVESTMENT TRUST
(THE TRUST)
CLEARWATER GROWTH FUND
CLEARWATER SMALL CAP FUND
CLEARWATER TAX-EXEMPT BOND FUND
(EACH, A FUND)
332 Minnesota Street, Suite 2100
St. Paul, Minnesota 55101
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held February 22, 2000
A special meeting (meeting) of shareholders of each fund referred to
above (the funds) will be held on Tuesday, February 22, 2000, at 8:30 a.m.
(Central time) at 332 Minnesota Street, Suite 2100, St. Paul, Minnesota 55101
for the following purposes:
(1) WITH RESPECT TO THE TRUST, to elect four new trustees;
(2) WITH RESPECT TO THE TRUST, to ratify the selection of KPMG LLP as
independent public accountants of the Trust for the fiscal year ending
December 31, 2000;
(3) WITH RESPECT TO CLEARWATER GROWTH FUND ONLY, to approve a new
subadvisory contract with Parametric Portfolio Associates, Inc.;
(4) WITH RESPECT TO EACH FUND, to approve a policy allowing the Trust's
adviser and the Board of Trustees to add or delete subadvisers and to
approve amendments to subadvisory contracts without shareholder
approval; and
(5) To transact other business that may properly come before the meeting or
any adjournment of the meeting.
YOUR TRUSTEES HAVE UNANIMOUSLY APPROVED THESE PROPOSALS AND
RECOMMEND THAT YOU VOTE IN FAVOR OF THESE PROPOSALS.
Shareholders of record of each fund at the close of business on
December 31, 1999 will be entitled to vote at the meeting or at any adjournment
of the meeting. This proxy statement and proxy card are being mailed to
shareholders on or about January 21, 2000.
It is important that you return your signed and dated proxy card
promptly, regardless of the size of your holdings, so that a quorum may be
assured.
- --------------------------------------------------------------------------------
PLEASE COMPLETE, DATE AND SIGN THE PROXY CARD FOR THE SHARES HELD BY YOU AND
RETURN THE PROXY CARD IN THE ENVELOPE PROVIDED SO THAT YOUR VOTE CAN BE
RECORDED. NO POSTAGE IS REQUIRED IF THE ENVELOPE IS MAILED IN THE UNITED STATES.
PROMPT RETURN OF YOUR PROXY OR PROXIES MAY SAVE THE TRUST THE NECESSITY AND
EXPENSE OF FURTHER SOLICITATIONS. IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR
SHARES IN PERSON.
- --------------------------------------------------------------------------------
By order of the board of trustees
Philip W. Pascoe, Chairman
January 21, 2000
<PAGE>
CLEARWATER INVESTMENT TRUST
(THE TRUST)
CLEARWATER GROWTH FUND
CLEARWATER SMALL CAP FUND
CLEARWATER TAX-EXEMPT BOND FUND
(EACH, A FUND)
332 Minnesota Street, Suite 2100
St. Paul, Minnesota 55101
PROXY STATEMENT
GENERAL
This proxy statement is furnished in connection with the solicitation
of proxies by and on behalf of the board of trustees of Clearwater Investment
Trust (the Trust) to be used at the special meeting of shareholders (meeting) of
each series of the Trust (funds) to be held at 332 Minnesota Street, Suite 2100,
St. Paul, Minnesota 55101 on Tuesday, February 22, 2000, at 8:30 a.m.(Central
time) for the purpose set forth in the accompanying Notice of Meeting.
The trustees have fixed the close of business on December 31, 1999 as
the record date (record date) for determining the shareholders of each fund
entitled to notice of and to vote at the meeting. These shareholders will be
entitled to one vote per share at the meeting or any adjournment of the meeting.
Appendix A sets forth the number of shares of beneficial interest of each fund
outstanding as of the record date. Appendix B sets forth the persons who owned
beneficially or of record more than 5% of each fund's shares on the record date.
Proxies will be solicited by mail and also may be solicited in person
or by telephone by officers of the trust, Clearwater Management Company (CMC),
the fund's investment adviser, or the trustees.
The following table summarizes the proposals to be voted on at the
meeting and indicates those shareholders who are being solicited with respect to
each proposal.
- --------------------------------------------------------------------------------
SUMMARY OF VOTING ON PROPOSALS
- ---------- ---------------------------------- ----------------------------------
PROPOSAL SHAREHOLDERS SOLICITED
- ---------- ---------------------------------- ----------------------------------
1. Election of four trustees. All funds voting together.
- ---------- ---------------------------------- ----------------------------------
2. Ratification of the selection of All funds voting together.
KPMG LLP as independent
accountants for the fiscal year
ending December 31, 2000.
- ---------- ----------------------------------- ---------------------------------
3. Approval of a new subadvisory Clearwater Growth Fund
contract with Parametric shareholders only.
Portfolio Associates, Inc.
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY OF VOTING ON PROPOSALS
- ---------- ---------------------------------- ----------------------------------
PROPOSAL SHAREHOLDERS SOLICITED
- ---------- ----------------------------------- ---------------------------------
4. Approval of a policy allowing the Each fund voting separately.
Trust's adviser and the Board of
Trustees to add or delete
subadvisers and to approve
amendments to subadvisory contracts
without shareholder approval.
- ---------- ----------------------------------- ---------------------------------
THE TRUST WILL FURNISH, WITHOUT CHARGE, COPIES OF THE TRUST'S MOST
RECENT ANNUAL AND SEMI-ANNUAL REPORTS TO ANY SHAREHOLDER UPON REQUEST ADDRESSED
TO CLEARWATER INVESTMENT TRUST, 332 MINNESOTA STREET, SUITE 2100, ST. PAUL,
MINNESOTA 55101 OR BY TELEPHONE AT (888) 228-0935.
This proxy statement and the proxy card are being mailed to
shareholders on or about January 21, 2000.
2
<PAGE>
PROPOSAL 1
ELECTION OF FOUR NEW TRUSTEES
AT A MEETING ON DECEMBER 2, 1999 (BOARD OF TRUSTEES' MEETING), the
trustees, including the trustees who are not "interested persons" of the Trust
(as defined in the Investment Company Act of 1940, as amended (the 1940 Act))
(the independent trustees), voted to approve, and to recommend to the
shareholders that they approve, a proposal to elect Lucy R. Jones, Charles W.
Rasmussen, Lawrence H. King, and Laura R. Rasmussen (each, a nominee and
collectively, the nominees) to the Board of Trustees of the Trust. Information
concerning each nominee and other relevant factors is discussed below.
Using the enclosed proxy card, a shareholder may authorize the proxies
to vote his or her shares for each nominee or may withhold from the proxies
authority to vote for each nominee. If no contrary instructions are given, the
proxies will vote FOR each of the nominees. Each nominee has consented to his
nomination and has agreed to serve if elected. If, for any reason, any or all of
the nominees should not be available for election or able to serve as a trustee,
the proxies will exercise their voting power in favor of one or more substitute
nominees, if any, as the trustees may designate. The Trust has no reason to
believe that it will be necessary to designate substitute nominees.
INFORMATION CONCERNING THE NOMINEES AND THE TRUSTEES.
The following table sets forth certain information about the nominees
and the trustees, including each person's principal occupation or employment
during the past five years.
<TABLE>
<CAPTION>
<S> <C> <C>
- ---------------------------------------- ---------------------------------------------------------- ----------------
NAME, AGE AND POSITIONS WITH THE TRUST PRINCIPAL OCCUPATION OR EMPLOYMENT DURING THE LAST FIVE FIRST BECAME
YEARS TRUSTEE
- ---------------------------------------- ---------------------------------------------------------- ----------------
Philip W. Pascoe* Chairman, Clearwater Management Co., Inc. 1997
(53) (1996-Present); Managing Director, Investments of Piper
Chairman, Treasurer and Trustee Jaffray, Inc. (1996-Present); Senior Vice President
(1996), Associate Vice President (1982-1996), Dean
Witter Reynolds, Inc.
- ---------------------------------------- ---------------------------------------------------------- ----------------
Samuel B. Carr, Jr. Managing Director, Alpha Windward L.L.C. (1998-Present); 1995
(44) President and Chief Investment Officer, S. B. Carr
Trustee Investments, Inc. (1990-Present)
- ---------------------------------------- ---------------------------------------------------------- ----------------
Stanley R. Day, Jr. President and Director, SRAM Corporation (1987-Present) 1988
(41)
Trustee
- ---------------------------------------- ---------------------------------------------------------- ----------------
Robert J. Phares Chief Executive Officer, Battle Ridge Ranch Company 1990
(36) (1986-Present)
Trustee
- ---------------------------------------- ---------------------------------------------------------- ----------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
- ---------------------------------------- ---------------------------------------------------------- ----------------
NAME, AGE AND POSITIONS WITH THE TRUST PRINCIPAL OCCUPATION OR EMPLOYMENT DURING THE LAST FIVE FIRST BECAME
YEARS TRUSTEE
- ---------------------------------------- ---------------------------------------------------------- ----------------
Frederick T. Weyerhaeuser* Vice President and Secretary, Clearwater Investment 1987
(68) Trust (1999-Present); Chairman, Clearwater Management
Trustee Co., Inc. (1987-1996); Director, Potlatch Corporation
(1960-Present); Trustee, The Minnesota Mutual Life
Insurance Company (1968-Present); Director, Weeden
Securities Corporation (1987-Present)
- ---------------------------------------- ---------------------------------------------------------- ----------------
Lucy R. Jones Private Investor N/A
(58)
Nominee
- ---------------------------------------- ---------------------------------------------------------- ----------------
Lawrence H. King Present and Chief Executive Officer, Treessentials, Co. N/A
(43) (1989-Present)
Nominee
- ---------------------------------------- ---------------------------------------------------------- ----------------
Charles W. Rasmussen Financial Analyst, U.S. Bank N.A. (1998-Present); MBA N/A
(33) student (1997-1998); Production Forester (1989-1997)
Nominee
- ---------------------------------------- ---------------------------------------------------------- ----------------
Laura E. Rasmussen Private Investor N/A
(36)
Nominee
- ---------------------------------------- ---------------------------------------------------------- ----------------
<FN>
* Mr. Weyerhaeuser and Mr. Pascoe are deemed to be "interested persons" of the Trust for the purposes of the 1940 Act because
of their positions with either the Trust or CMC.
</FN>
</TABLE>
It is anticipated that when each of the nominees is elected by
shareholders, each of the current trustees, except Mr. Weyerhaeuser, will resign
from the board.
INFORMATION CONCERNING MEETINGS OF TRUSTEES AND COMMITTEES
The number of shares of beneficial interest of each Fund beneficially
owned by each trustee, directly or indirectly, as of December 31, 1999, is set
forth in Appendix B.
Four meetings of the trustees were held during the fiscal year ended
December 31, 1999. Each trustee attended at least seventy-five percent of all
meetings of the Board of Trustees during this year, with the exception of Mr.
Day who attended 25% of the meetings. The Board of Trustees has not delegated
any responsibilities of the Board to any committees.
REMUNERATION OF TRUSTEES
The following table sets forth certain information about the
compensation of each trustee for the Trust's most recent fiscal year.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ---------------------------------------- ----------------------- -------------------------- ------------------------
NAME OF TRUSTEE AGGREGATE PENSION OR RETIREMENT TOTAL COMPENSATION
COMPENSATION FROM THE BENEFITS ACCRUED AS PART FROM THE TRUST
TRUST OF TRUST EXPENSES
- ---------------------------------------- ----------------------- -------------------------- ------------------------
Frederick T. Weyerhaeuser $3,500 $0 $3,500
- ---------------------------------------- ----------------------- -------------------------- ------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ---------------------------------------- ----------------------- -------------------------- ------------------------
NAME OF TRUSTEE AGGREGATE PENSION OR RETIREMENT TOTAL COMPENSATION
COMPENSATION FROM THE BENEFITS ACCRUED AS PART FROM THE TRUST
TRUST OF TRUST EXPENSES
- ---------------------------------------- ----------------------- -------------------------- ------------------------
Samuel B. Carr, Jr. 4,000 0 4,000
- ---------------------------------------- ----------------------- -------------------------- ------------------------
Stanley R. Day, Jr. 2,500 0 2,500
- ---------------------------------------- ----------------------- -------------------------- ------------------------
Robert J. Phares 3,500 0 3,500
- ---------------------------------------- ----------------------- -------------------------- ------------------------
</TABLE>
On December 2, 1999, the trustees voted to decrease the amount of fees
paid to each trustee. For the fiscal year ending December 31, 2000, the
estimated trustee fees will be $500 per meeting per trustee or $2,000 per
trustee annually.
OFFICERS
The following table sets forth information with respect to the
principal executive officers of the Trust. Each officer is elected by the
trustees. Each of the Chairman, Treasurer and Secretary serves until the next
annual meeting of the trustees and until his successor is chosen and qualified
or until his death, resignation, removal or disqualification.
<TABLE>
<CAPTION>
<S> <C>
- ---------------------------------------- ---------------------------------------------------------------------------
NAME, POSITION AND AGE PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE YEARS
- ---------------------------------------- ---------------------------------------------------------------------------
Philip W. Pascoe Chairman, Clearwater Management Co., Inc. (1996-Present); Managing
(53) Director, Investments of Piper Jaffray, Inc. (1996-Present); Senior Vice
Chairman, Treasurer and Trustee President (1996), Associate Vice President (1982-1996), Dean Witter
Reynolds, Inc.
- ---------------------------------------- ---------------------------------------------------------------------------
Frederick T. Weyerhaeuser Chairman, Clearwater Management Co., Inc. (1987-1996); Director, Potlatch
(68) Corporation (1960-Present); Trustee, The Minnesota Mutual Life Insurance
Vice President and Secretary Company (1968-Present); Director, Weeden Securities Corporation
(1987-Present)
- ---------------------------------------- ---------------------------------------------------------------------------
</TABLE>
The Trust pays no salaries or compensation to any of its principal
executive officers in their capacity as principal executive officers of the
Trust.
TRUSTEES' RECOMMENDATION
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS VOTE IN FAVOR
OF THE NOMINEES LISTED ABOVE.
REQUIRED VOTE
Because your Fund is a series of the Trust, your vote will be counted
together with the votes of shareholders of the other series of the Trust voting
as a single class in the election of trustees. In accordance with the Trust's
Declaration of Trust, there will be no cumulative voting. Election of each
nominee requires a plurality of votes of the shareholders of the entire Trust
present at the meeting.
5
<PAGE>
PROPOSAL 2
RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
As directed by the trustees and required by the 1940 Act, the
ratification of the selection of the independent public accountants for the
Trust's fiscal year ending December 31, 2000 will be voted upon at the meeting.
It is intended that the persons named in the accompanying Proxy Card will vote
for KPMG LLP, unless contrary instructions are given. If the selection of the
Trust's independent public accountants is not ratified by the shareholders at
the meeting, the Board will reconsider such selection.
The Trust's financial statements for the fiscal year ended December 31,
1999 are currently being audited by KPMG LLP. When completed, audit services
during the fiscal year ended December 31, 1999 will consist of examinations of
the Trust's financial statements for this period and reviews of the Fund's
filings with the Securities and Exchange Commission ("SEC"). It is expected that
KPMG LLP will complete its audit of the Trust on or about February 15, 2000.
At the Board of Trustees' Meeting, the trustees unanimously selected
KPMG LLP as the Trust's independent accountants for the fiscal year ending
December 31, 2000. A representative of KPMG LLP is expected to be available at
the Meeting by telephone should any matter arise requiring consultation with the
accountants, and the accountants have been given the opportunity to make a
statement if they so desire.
TRUSTEES' RECOMMENDATION
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF KPMG LLP AS INDEPENDENT PUBLIC ACCOUNTANTS.
REQUIRED VOTE
Ratification of the independent public accountants of the Trust
requires the affirmative vote of a majority of the OUTSTANDING SHARES OF EACH
FUND VOTING SEPARATELY WHICH MEANS THE VOTE OF THE LESSER of (A) 67% or more of
the shares present at the meeting, if the holders of more than 50% of the shares
of that Fund are present or represented by proxy, or (B) more than 50% of that
Fund's outstanding shares (1940 Act Majority Vote).
6
<PAGE>
PROPOSAL 3
APPROVAL OF NEW INVESTMENT SUBADVISORY CONTRACT WITH PARAMETRIC
PORTFOLIO ASSOCIATES
GENERAL
CMC provides investment advisory services to the Clearwater Growth Fund
(the Growth Fund) pursuant to a management contract that was approved by
shareholders on February 24, 1998. CMC is a Minnesota corporation, is registered
as an investment adviser under the Investment Advisers Act of 1940 (Advisers
Act) and is located at 322 Minnesota Street, St. Paul, Minnesota 55101. CMC and
the Growth Fund's trustees have delegated responsibility to manage the Growth
Fund's investment portfolio to Parametric Portfolio Associates (Parametric)
pursuant to a subadvisory contract among CMC, the trust, on behalf of the Growth
Fund, and Parametric (existing subadvisory contract).
Parametric has been providing subadvisory services to the fund since
November 1, 1997. The existing subadvisory contract was approved by the trustees
on October 12, 1997 in reliance on a provision of the 1940 Act, and by
shareholders on February 24, 1998. Parametric is a registered investment adviser
under the Advisers Act and is located at 701 Fifth Avenue, Suite 7310, Seattle,
Washington 98104-7090.
The trust is registered and regulated as an investment company under
the 1940 Act. The 1940 Act provides that an investment company's investment
subadvisory contract terminates automatically upon its "assignment." Under the
1940 Act, a direct or indirect transfer of a controlling block of the voting
securities of any person controlling an investment subadviser is deemed to be an
assignment. As described further below, the ownership of Parametric has changed
and the existing subadvisory contract has terminated as a result of that change.
THE CHANGE OF CONTROL
Parametric was founded in 1987 as a global equity manager and is a
sub-partnership of PIMCO Advisors, L.P. (PIMCO Advisors), a publicly traded
investment management organization. Parametric offers advice, investment
management and related services to institutional and individual clients.
DESCRIPTION OF THE TRANSACTION. On October 31, 1999, PIMCO Advisors,
its two general partners, PIMCO Advisors Holdings L.P. (PAH) and PIMCO Partners
G.P. (Partners GP), certain of their affiliates, Allianz of America, Inc.
(Allianz of America) and certain other parties named therein entered into an
Implementation and Merger Agreement (the merger agreement) pursuant to which
Allianz of America will acquire majority ownership of PIMCO Advisors.
The merger agreement provides for the acquisition of PAH by Allianz of
America through a merger of a subsidiary of Allianz of America with and into
PAH. In the merger, all of the outstanding units of limited and general
partnership interest in PAH will be converted into the right to receive cash in
an amount per unit equal to $38.75, subject to downward adjustment if
7
<PAGE>
PIMCO Advisors' investment advisory revenue base, expressed as a "revenue run
rate," declines (excluding market-based changes) below a specified level (the
unit transaction price). As a result of the merger, PAH will become an indirect
wholly-owned subsidiary of Allianz of America.
Following the merger, subsidiaries of Allianz of America will, in a
series of transactions, acquire for cash at the unit transaction price
substantially all of the remaining interests in PIMCO Advisors (the PA units),
other than those interests beneficially owned by Pacific Life Insurance Company
(Pacific Life). As part of the transaction, a subsidiary of Allianz of America
will acquire Partners GP through an acquisition of the managing general partner
interest in Partners GP from PIMCO Partners LLC (the managing general partner of
Partners GP) for approximately $5.5 million. Pacific Life, which through
subsidiaries owns approximately a 31% interest in PIMCO Advisors, will maintain
an indirect interest in PIMCO Advisors following the closing. In connection with
the closing, Allianz of America will enter into at put/call arrangement for the
eventual disposition of Pacific Life's indirect investment in PIMCO Advisors.
As a result of the transactions contemplated by the Merger Agreement
(together, the transaction), Allianz of America will control PIMCO Advisors,
having acquired approximately 70% of the outstanding partnership interests in
PIMCO Advisors. The transaction is expected to be completed by the end of the
first quarter of 2000, although there is no assurance that the transaction will
be completed.
Parametric, a wholly-owned subsidiary of PIMCO Advisors, serves as
investment subadviser to Clearwater Growth Fund. PIMCO Advisors will undergo a
change of control as a result of the consummation of the transaction, resulting
in the automatic termination of Parametric's current subadvisory contract with
CMC and the Trust on behalf of the Growth Fund (the existing subadvisory
contract). Following completion of the transaction, it is expected that
Parametric will continue to serve as subadviser to Growth Fund. Therefore, in
connection with the transaction and as required by the 1940 Act, shareholders of
Growth Fund are being asked in Proposal 3 to approve a subadvisory contract
between the Trust on behalf of Growth Fund, CMC and Parametric which is
substantially identical to the existing subadvisory contract (the new
subadvisory contract). If the transaction is not completed for any reason, the
existing subadvisory contract will remain in effect.
Completion of the transaction is subject to a number of conditions
including, among others, (i) the approval of the public unitholders of PAH, (ii)
the receipt of certain regulatory approvals and (iii) PIMCO Advisors' revenue
run-rate for all accounts managed by PIMCO Advisors and its subsidiaries being
at least 75% of the September 30, 1999 amount. PIMCO Advisors has agreed to use
its reasonable best efforts to obtain, prior to completion of the transaction,
the approval of the new subadvisory contract by the shareholders of Growth Fund.
In the event the new subadvisory contract is not approved by Growth Fund's
shareholders and the transaction is completed, the Board of Trustees will
consider appropriate action.
Pursuant to the merger agreement, PIMCO Advisors and Pacific Investment
Management Company, a subsidiary partnership of PIMCO Advisors, will enter into
employment, retention and incentive arrangements with key employees of PIMCO
Advisors and Pacific Investment Management Company. These benefits include new
employment agreements, retention and incentive awards vesting over a term of
years and restricted stock
8
<PAGE>
grants. In addition, certain key employees of PIMCO Advisors' investment
advisory subsidiaries will receive payments in respect of previously existing
non-competition arrangements in connection with the acquisition by Allianz of
America of the PA Units on which such arrangements were based.
POST-TRANSACTION STRUCTURE AND OPERATIONS. Upon completion of the
transaction, PIMCO Advisors and its subsidiaries will be controlled by Allianz
of America. Allianz of America is a holding company that owns several insurance
and financial service companies and is a subsidiary of Allianz AG which,
together with its subsidiaries, comprise the world's second largest insurance
group as measured by premium income. Allianz of America will control PIMCO
Advisors through its Managing Member interest in PacPartners LLC, which will be
the sole general partner of PIMCO Advisors following the transaction. While
Allianz of America will control PacPartners LLC, Pacific Life will hold a
portion of its continuing interest in PIMCO Advisors through an interest in
PacPartners LLC.
Operationally, PIMCO Advisors is expected to become a unit of Allianz
Asset Management ("AAM"), the division of Allianz that coordinates global
Allianz asset management activities. PIMCO Advisors and its subsidiaries are
currently expected to continue to operate in the United States under their
existing names.
Both William S. Thompson Jr., the current Chief Executive Officer of
PIMCO Advisors, and William H. Gross, the current Chief Investment Officer of
PIMCO Advisors, will have roles on the Executive Committee of AAM, with Mr.
Thompson serving as the Executive Committee's Deputy Chairman. In the
Transaction, Messrs. Thompson and Gross will enter into employment contracts
with a term of seven years following the Transaction. Other key employees of
PIMCO Advisors have also contractually agreed to remain with PIMCO Advisors
following the transaction.
DESCRIPTION OF ALLIANZ AND ITS AFFILIATES. Allianz AG, the parent of
Allianz of America, is a publicly traded German AKTIENGESELLSCHAFT and which,
together with its subsidiaries, comprise the world's second largest insurance
group as measured by premium income. Allianz AG is a leading provider of
financial services, particularly in Europe, and is represented in 68 countries
world-wide through subsidiaries, branch and representative offices, and other
affiliated entities. The Allianz group currently has assets under management of
more than $390 billion, and in its last fiscal year wrote approximately $50
billion in gross insurance premiums. After completion of the transaction, PIMCO
Advisors and the Alliance group combined will have over $650 billion in assets
UNDER MANAGEMENT. ALLIANZ AG'S ADDRESS IS: ALLIANZ AKTIENGESELLSCHAFT,
Koniginstrasse 28, D-80802, Munich, Germany.
Affiliates of Allianz AG currently include Dresdner Bank AG, Deutsche
Bank AG, Munich Re, and HypoVereinsbank. These entities, as well as certain
broker-dealers controlled by or affiliated with these entities, such as Bankers
Trust Company, BT Alex. Brown Incorporated, Morgan Grenfell and Kleinwort Benson
may be considered as "Affiliated Brokers". Once the transaction is completed,
absent an SEC exemption or other relief, Growth Fund would generally be
precluded from effecting principal transactions with the affiliated brokers, and
its ability to purchase securities from underwriting syndicates including an
affiliated broker or to utilize the affiliated brokers for agency transactions
would be subject to
9
<PAGE>
restrictions. Parametric does not believe that applicable restrictions on
transactions with the affiliated brokers described above will materially
adversely affect its ability, post-closing, to provide services to Growth Fund,
Growth Fund's ability to take advantage of market opportunities, or Growth
Fund's overall performance. Other series of the Trust for which Parametric (or
an affiliate) does not serve as subadviser would not, in general, be subject to
these same restrictions post-closing.
Section 15(f) of the 1940 Act. Section 15(f) provides a non-exclusive
safe harbor for an investment adviser or any affiliated persons to receive any
amount or benefit in connection with the a change of control of the investment
adviser to an investment company as long as two conditions are satisfied. First,
an "unfair burden" must not be imposed on investment company clients of the
adviser as a result of the transaction, or any express or implied terms,
conditions or understandings applicable to the transaction. The term "unfair
burden" (as defined in the 1940 Act) includes any arrangement during the
two-year period after the transaction whereby the investment adviser (or
predecessor or successor adviser), or any "interested person" (as defined in the
1940 Act) (an Interested Person) of any such adviser, receives or is entitled to
receive any compensation, directly or indirectly, from such an investment
company or its security holders (other than fees for bona fide investment
advisory or other services) or from any other person in connection with the
purchase or sale of securities or other property to, from or on behalf of such
investment company. The Board of Trustees has been advised that PIMCO Advisors
is aware of no circumstances arising from the Transaction that might result in
an unfair burden being imposed on Growth Fund. Allianz and each of the other
parties to the Agreement have agreed to use their reasonable best efforts to
assure compliance with Section 15(f) as it applies to the Transaction during
such two-year period.
The second condition of Section 15(f) is that during the three-year
period after the transaction, at least 75% of each such investment company's
board of directors must not be Interested Persons of the investment adviser (or
predecessor or successor adviser). Pending election of the nominees in Proposal
1 and the anticipated resignation of the existing trustees with the exception of
Mr. Weyerhaueser, the Trust's board of trustees will consist of only one
trustee, or 20% of the board, who would be considered an Interested Person of
the investment adviser. Moreover, Allianz has agreed with PIMCO Advisors that it
will use its reasonable best efforts to comply with such 75% requirement during
such three-year period through one or more intermediaries.
To provide for continuity of investment subadvisory services to the
Growth Fund as a result of the change in control of Parametric, the trustees,
including the trustees who are not "interested" persons of the trust, CMC or
Parametric at a meeting held on December 2, 1999, voted to approve, and
recommended that the Growth Fund's shareholders approve, the new subadvisory
contract with Parametric. Under the new subadvisory contract, Parametric will
continue to provide investment portfolio management services to the FUND.
APPROVAL OF THE NEW SUBADVISORY CONTRACT WILL NOT INCREASE THE SUBADVISORY FEE
RATE PAID BY THE GROWTH FUND.
10
<PAGE>
MATERIAL TERMS OF THE NEW SUBADVISORY CONTRACT
The material terms of the new subadvisory contract are substantially
identical to those of the existing subadvisory contract. The following
discussion of the new subadvisory contract is only a summary of the form of the
contract attached to the proxy statement as EXHIBIT A. You should read the
entire form of contract.
The new subadvisory contract provides that (i) Parametric will, subject
to the supervision of CMC and the board of trustees, regularly provide the fund
with advice concerning the investment management of the fund's portfolio as
appropriate to the achievement of the investment objectives and place orders for
the purchase and sale of portfolio securities of the fund; (ii) the new
subadvisory contract will remain in full force and effect for two years from the
date it was signed and from year to year thereafter upon the approvals required
by the 1940 Act and will terminate automatically in the event of its assignment;
(iii) in the event that the new subadvisory contract terminates during any
portion of a year, the fee due to Parametric shall be prorated for that portion
of a calendar quarter during which the contract was in effect; and (iv)
Parametric is not liable to CMC, the trust or any shareholder, except for
willful misfeasance, bad faith or gross negligence or for reckless disregard of
its obligations and duties under the contract.
TRUSTEES' EVALUATION
The trustees have considered several factors relating to the new
subadvisory contract with Parametric and believe that it would be in the best
interests of the fund and its shareholders that the new subadvisory contract
with Parametric be approved to permit Parametric to continue to serve as the
fund's subadviser. In making this determination, the trustees considered
Parametric's qualifications as an investment adviser, the nature of the services
provided in the past and to be provided to the fund by Parametric, and
Parametric's investment strategy. The trustees also considered the fund's
performance history since Parametric assumed responsibility to manage the fund's
investment portfolio in 1997 and the fact that the change in ownership is not
expected to result in any changes to the investment philosophy at Parametric,
the management of Parametric or the portfolio manager assigned to manage the
fund's investments. The trustees approved the subadvisory fee to be paid by CMC
to Parametric based on its analysis of the factors described above. The trustees
believe the new subadvisory contract and the proposed subadvisory fee to be
reasonable and fair, and the appointment of Parametric to be in the best
interests of the fund's shareholders.
In evaluating the change to the approval and amendment provisions of
the new subadvisory contract, the trustees noted that although the text of the
contract was amended, the amendments would not alter the requirement that the
subadvisory contract be approved in accordance with the regulatory requirements
of the 1940 Act as in effect at the time of the approval. The trustees
determined that the amended provisions continue to provide the protection
afforded to the fund and the shareholders by the 1940 Act.
TRUSTEES' RECOMMENDATION
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT YOU VOTE TO APPROVE THE
SUBADVISORY
11
<PAGE>
CONTRACT WITH PARAMETRIC.
REQUIRED VOTE
Approval of the new subadvisory contract requires an affirmative vote
of a majority of the outstanding shares of the fund (1940 ACT MAJORITY VOTE)
WHICH MEANS THE VOTE OF THE LESSER of (i) 67% or more of the shares present at
the meeting, if the holders of more than 50% of the shares of the fund are
present or represented by proxy, or (ii) more than 50% of the fund's outstanding
shares. If the fund's shareholders do not approve the new subadvisory contract,
the trustees will seek to obtain interim advisory services for the fund either
from Parametric or from another advisory organization. Thereafter, the trustees
would either negotiate a new subadvisory contract with an advisory organization
selected by the trustees or make other appropriate arrangements, subject to any
required approval by the fund's shareholders.
12
<PAGE>
PROPOSAL 4
APPROVAL OF A POLICY TO PERMIT THE BOARD OF TRUSTEES AND CMC
TO SELECT SUBADVISERS OR TO AMEND SUBADVISORY CONTRACTS
WITHOUT OBTAINING FURTHER SHAREHOLDER APPROVAL
SUMMARY
At the Board of Trustees' meeting, the trustees, including the
independent trustees, approved, and recommended that shareholders of each Fund
approve, a policy to permit the Adviser, subject to the approval of the Board of
Trustees, to appoint subadvisers, to enter into subadvisory contracts and to
amend existing subadvisory contract without further shareholder approval. The
implementation of the Subadviser Approval Policy is subject to the receipt of an
exemptive order from the Securities and Exchange Commission (the SEC).
THE SECTION 15 EXEMPTIVE ORDER
On January 5, 2000, the Trust and CMC filed an exemptive application
with the SEC requesting an order of the SEC (the Exemptive Order) for relief
from the provisions of Section 15(a) of the 1940 Act and Rule 18f-2 under the
1940 Act. The provisions of the 1940 Act require that shareholders of a mutual
fund approve a subadvisory contract with the subadviser and material amendments
to an existing subadvisory contract. If the Exemptive Order is granted by the
SEC, and shareholders approve this proposal, the Adviser will be authorized,
subject to approval by the Board of Trustees, to evaluate, select and retain new
subadvisers for the respective Funds or modify a Fund's existing subadvisory
contract without obtaining further approval of the affected Fund's shareholders
whenever the Adviser and the Board of Trustees believe such actions will benefit
that Fund and its shareholders (the Subadviser Approval Policy). There can be no
assurance that the SEC will grant the relief requested in the exemptive
application.
THE ADVISER AND THE SUBADVISERS
CMC has served as the Adviser to the Trust since its inception in 1987
pursuant to separate investment advisory agreements between the Trust, on behalf
of each Fund, and the Adviser. Since 1987, the Adviser has selected subadvisers
and recommended that the Board of Trustees approve those subadvisers to make the
day-to-day investment decisions for the Funds. Since that time, the Adviser has
represented itself as an investment adviser whose strength, experience and
expertise lies in its ability to evaluate, select and supervise those
subadvisers who can add the most value to shareholders' investments in the
respective Funds.
CURRENT SUBADVISER APPROVAL PROCESS. The Trust, on behalf of each Fund,
enters into a separate subadvisory contract with the Adviser and the respective
subadviser selected by the Adviser. Under the terms of these subadvisory
contracts, the subadvisers have authority to provide the respective Funds with
advice concerning the investment management of that portion of the Fund's assets
allocated to the subadviser by the Adviser. The subadvisers determine what
securities shall be purchased, what securities shall be sold and what portion of
13
<PAGE>
a Fund's assets shall remain uninvested. For these subadvisory services to the
Funds, the Adviser pays each subadviser a monthly fee at an annual rate based on
the month end net assets of the Fund as specified in the specific subadvisory
contract. Each subadviser bears its own expenses of providing subadvisory
services to the respective Fund. Neither the Trust nor the Funds have any
responsibility to pay subadvisory fees to any subadviser. Each Fund's
subadvisory arrangements are subject to approval by the Board of Trustees,
including the independent trustees, and in the absence of exemptive relief from
the SEC, each subadvisory contract is subject to the approval of the affected
Fund's shareholders.
PROPOSED SUBADVISER APPROVAL POLICY. Approval of the Subadviser
Approval Policy will not affect any of the requirements under the federal
securities laws that govern the Trust, the Adviser, the subadvisers or the
subadvisory contracts other than the requirement to call a meeting of the
affected Fund's shareholders. The Board of Trustees of the Trust, including the
independent trustees, will continue to evaluate and approve all new subadvisory
contracts between the Adviser and the subadvisers as well as all changes to
existing subadvisory contracts. In addition, if the requested relief is granted
by the SEC, the Trust and Adviser will be subject to several conditions imposed
by the SEC to ensure that the interests of the Fund's shareholders are
adequately protected whenever the Adviser acts under the Subadviser Approval
Policy. Furthermore, within 90 days of a change to a Fund's subadvisory
arrangements, the Trust will provide the affected Fund's shareholders with an
information statement that contains substantially the same relevant information
about the subadviser, the subadvisory contract and the subadvisory fee that
would be required to be sent to the affected Fund's shareholders in a proxy
statement. This information will permit the affected Fund's shareholders to
determine if they are satisfied with the subadvisory arrangements. If not
satisfied, the shareholders would be able to exchange their shares for another
Fund or redeem their shares. Exchanges and redemptions are not subject to
transaction or distribution fees.
SHAREHOLDER APPROVAL OF THIS PROPOSAL WILL NOT RESULT IN AN INCREASE OR
DECREASE IN THE TOTAL AMOUNT OF INVESTMENT ADVISORY FEES PAID BY THE FUNDS TO
THE ADVISER. If the Trust implements this policy, the Adviser, pursuant to each
Fund's investment advisory agreement, will continue to provide the same level of
management and administrative services to the Funds as it has always provided.
If the exemptive order is granted, the relief would apply to at least
the following situations: (1) the subadviser is removed for substandard
performance; (2) the individual employee responsible for a Fund moves from
employment with one subadviser to another; (3) there is a change of control of
the subadviser; (4) CMC decides to diversify the Fund's management by adding
another subadviser; (5) there is a change in investment style of the Fund; and
(6) CMC negotiates a reduction (or the subadviser negotiates an increase) in the
subadvisory fee that CMC pays to the subadviser. Furthermore, where there is a
decrease in a subadviser's compensation paid by CMC, the concomitant increase in
the compensation available for retention by CMC would not be deemed to be an
increase in advisory compensation that requires shareholder meeting. The
Subadviser Approval Policy will not be used to approve any subadviser that is
affiliated with CMC as that term is used in the 1940 Act or to materially amend
any subadvisory contract with an affiliated subadviser.
14
<PAGE>
As of the date of this Proxy Statement, neither the Trust nor the
Adviser is aware of any reason why a Fund's subadviser will not continue to
serve in that capacity and under the terms of the existing subadvisory contract.
However, some events that affect a subadviser, for example, a change in control
of the subadviser, happen very quickly and without substantial advance notice to
all parties that might be affected.
REASONS FOR REQUESTING SECTION 15 EXEMPTIVE RELIEF
The trustees believe that providing the Adviser with maximum
flexibility to perform those duties that shareholders expect the Adviser to
perform - selecting, supervising and evaluating subadvisers - without incurring
the necessary delay or expense of obtaining further shareholder approval is in
the best interests of each Fund's shareholders because it will allow each Fund
to operate more efficiently. Currently, in order for the Adviser to appoint a
subadviser or materially modify a shareholder agreement, the Trust must call and
hold a shareholder meeting of the affected Fund, create and distribute proxy
materials, and solicit votes from the Fund's shareholders. This process is
time-intensive, costly and slow. Without the delay inherent in holding
shareholder meetings, each Fund would be able to act more quickly to appoint a
subadviser when the trustees and the Adviser feel that the appointment would
benefit the Fund.
Also, the trustees believe that it is appropriate to vest the
selection, supervision and evaluation of the subadvisers in the Adviser (subject
to review by the Board of Trustees) in light of the management structure of the
Trust, as well as the Adviser's significant experience and expertise in
selecting subadvisers and the shareholders' expectation that the Adviser will
utilize that expertise to select the most appropriate subadvisers. The Adviser
has demonstrated that it has the requisite expertise to evaluate, select and
supervise subadvisers. For the past twelve years, the Adviser has continually
evaluated and refined its subadviser selection process. The trustees believe
that many investors choose to invest in the Funds because of the Adviser's
experience and expertise in evaluating and choosing subadvisers who can add the
most value to a shareholder's investment in that Trust.
Finally, the trustees will provide sufficient oversight of the
subadviser selection process to ensure that shareholders' interests are
protected whenever the Adviser selects a subadviser or modifies a subadvisory
contract. The Board, including a majority of the independent trustees, will
continue to evaluate and approve all new subadvisory contracts as well as any
modification to existing subadvisory contracts. In their review, the trustees
will analyze all factors that they consider to be relevant to the determination,
including the nature, quality and scope of services provided by the subadvisers.
The trustees will compare the investment performance of the assets managed by
the subadviser with other accounts with similar investment objectives managed by
other advisers and will review the subadviser's compliance with federal
securities laws and regulations. The trustees believe that their comprehensive
review will ensure that the Adviser continues to act in the best interests of
each Fund and its shareholders. Each subadvisory contract will continue to be
subject to all provisions of the 1940 Act, except for the specific provisions of
the 1940 Act for which relief is granted by the SEC.
15
<PAGE>
REQUIRED VOTE
Approval of this proposal with respect to a Fund requires the
affirmative 1940 Act Majority Vote of that Fund's outstanding shares. If one or
more of the Funds does not approve this proposal, the Subadviser Approval Policy
will not be adopted with respect to that Fund. Adoption of the Policy is subject
to receipt of the requested exemptive relief which may take until then end of
2000. If the SEC declines to grant the exemptive relief requested by the Trust
and the Adviser, the Subadviser Approval Policy will not be adopted for any
Fund.
ADDITIONAL INFORMATION
OTHER BUSINESS
As of the date of this proxy statement, the trustees are not aware of
any matters to be presented for action at the meeting other than those described
above. Should other business properly be brought before the meeting, it is
intended that the accompanying proxy will be voted in accordance with the
judgment of the persons named as proxies.
PROXIES AND VOTING AT THE MEETING
The enclosed proxy is revocable by a shareholder at any time before it
is exercised by written notice to the trust (addressed to the secretary at the
trust's principal executive offices), by executing a superseding proxy or by
attending the meeting and voting in person. All valid proxies received prior to
the meeting (including any adjournment of the meeting) will be voted at the
meeting. Matters on which a choice has been provided will be voted as indicated
on the proxy card and, if no instruction is given, the persons named as proxies
will vote the shares represented by the proxy in favor of the proposals and will
use their best judgment in connection with the transaction of any other business
that may properly come before the meeting.
In the event that at the time the meeting is called to order a quorum
is not present in person or by proxy, the persons named as proxies may vote
those proxies which have been received to adjourn the meeting to a later date.
In the event that a quorum is present but sufficient votes in favor of the
proposal have not been received, the persons named as proxies may propose one or
more adjournments of the meeting to permit further solicitation of proxies. Any
adjournment will require the affirmative vote of a majority of the shares of the
fund present in person or by proxy at the meeting. The persons named as proxies
will vote those proxies which they are entitled to vote in favor of the proposal
in favor of an adjournment, and will vote those proxies required to be voted
against the proposal against an adjournment.
A majority of the shares of the fund outstanding and entitled to vote
will be a quorum for the transaction of business at the meeting, but any lesser
number will be sufficient for adjournments. Abstentions will be treated as
shares that are present and entitled to vote with respect to the proposal, but
will not be counted as a vote in favor of the proposal. Accordingly, an
abstention from voting on the proposal has the same effect as a vote against the
proposal.
16
<PAGE>
MANNER AND COST OF PROXY SOLICITATION
In addition to the solicitation by use of the mails, certain officers
and employees of CMC, none of whom will receive compensation for their services
other than their regular salaries, may solicit the return of proxies personally
or by telephone or fax. CMC will bear all of the costs associated with the
meeting, including the cost of solicitation.
SHAREHOLDER PROPOSALS
The trust is not required and does not intend to hold a meeting of
shareholders each year. Instead, meetings will be held only when and if
required. Any shareholders desiring to present a proposal for consideration at
the next meeting of fund shareholders must submit the proposal in writing, so
that it is received by the fund within a reasonable time before any meeting.
OTHER INFORMATION
The trust is an affiliated person of US Bank Piper Jaffray. During the
fiscal year ended December 31, 1999, Clearwater Small Cap Fund engaged in nine
trades on a principal basis with Piper Jaffray Inc., a broker-dealer subsidiary
of US Bank Piper Jaffray. Small Cap Fund paid no commission on these trades.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
January 21, 2000
17
<PAGE>
APPENDIX A
As of December 31, 1999, each Fund had the following number of shares
outstanding:
- --------------------------------------------- ----------------------------
FUND SHARES OUTSTANDING
- --------------------------------------------- ----------------------------
Clearwater Growth Fund 5,319,692.265
- --------------------------------------------- ----------------------------
Clearwater Small Cap Fund 3,912,145.062
- --------------------------------------------- ----------------------------
Clearwater Tax-Exempt Bond Fund 1.000
- --------------------------------------------- ----------------------------
<PAGE>
APPENDIX B
As of December 31, 1999, the following persons or entities owned
beneficially or of record more than 5% of the outstanding shares of each Fund:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ------------------------------ ---------------------------- --------------------------- ----------------------------
CLEARWATER GROWTH FUND CLEARWATER SMALL CAP FUND CLEARWATER TAX-EXEMPT BOND
NAME OF OWNER FUND
- ------------------------------ ---------------------------- --------------------------- ----------------------------
- ------------------------------ ---------------------------- --------------------------- ----------------------------
- ------------------------------ ---------------------------- --------------------------- ----------------------------
- ------------------------------ ---------------------------- --------------------------- ----------------------------
- ------------------------------ ---------------------------- --------------------------- ----------------------------
- ------------------------------ ---------------------------- --------------------------- ----------------------------
- ------------------------------ ---------------------------- --------------------------- ----------------------------
- ------------------------------ ---------------------------- --------------------------- ----------------------------
</TABLE>
<PAGE>
EXHIBIT A
SUBADVISORY CONTRACT
AGREEMENT made as of the ___ day of __________, 2000, by and among
CLEARWATER INVESTMENT TRUST, a Massachusetts business trust (the "Trust"),
CLEARWATER MANAGEMENT CO., INC., a Minnesota corporation (the "Manager"), and
PARAMETRIC PORTFOLIO ASSOCIATES (the "Subadviser").
W I T N E S S E T H:
WHEREAS, the Manager desires to utilize the services of the Subadviser
as financial counsel with respect to the Clearwater Growth Fund (the "Fund"), a
separate series of the Trust; and
WHEREAS, the Subadviser is willing to perform such services on the
terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual covenants and benefits
herein contained, it is agreed as follows:
1. The Subadviser's Services. The Subadviser will serve the Manager as
financial counsel with respect to the Fund which is under the management of the
Manager pursuant to the Management Contract dated May 1, 1998 between the
Manager and the Trust. Subject to the supervision of the Manager and the Trust's
Board of Trustees, the investment policies and restrictions applicable to the
Fund as set forth in the registration statement of the Trust filed with the
Securities and Exchange Commission and such resolutions as from time to time may
be adopted by the Trust's Trustees and furnished to the Subadviser, the
Subadviser is hereby authorized and directed and hereby agrees to develop,
recommend and implement such investment program and strategy for the Fund as may
from time to time in the circumstances appear most appropriate to the
achievement of the investment objectives of the Fund as stated in the aforesaid
registration statement, to provide research and analysis relative to the
investment program and investments of the Fund, to determine what securities
should be purchased and sold and what portion of the assets of the Fund should
be held in cash or cash equivalents or other assets and to monitor on a
continuing basis the performance of the portfolio securities of the Fund. In
addition, the Subadviser will place orders for the purchase and sale of
portfolio securities and will advise the Manager and the custodian for the Fund
on a prompt basis of each purchase and sale of a portfolio security specifying
the name of the issuer, the description and amount or number of shares of the
security purchased, the market price, commission and gross or net price, trade
date, settlement date and identity of the effecting broker or dealer. From time
to time as the Trustees of the Trust or the Manager may reasonably request, the
Subadviser will furnish to the Trust's officers and to each of its Trustees
reports on portfolio transactions and reports on issues of securities held by
the Fund, all in such detail as any such Trustee or the Manager may reasonably
request. The Subadviser also will inform the Trust's officers and Trustees on a
current basis of changes in investment strategy or tactics. The Subadviser will
make its officers and employees available to meet with the Trust's officers and
Trustees and the Manager's officers and Directors at least quarterly on due
notice to review the investments and investment program of the Fund in the light
of current and prospective economic and market conditions.
2. AVOIDANCE OF INCONSISTENT POSITION.
(a) In connection with purchases and sales of portfolio
securities for the account of the Fund, the Subadviser will not act as a
principal or agent or receive any commission except as permitted by the
Investment Company Act of 1940, as amended (the "1940 Act"). The Subadviser
shall arrange for the placing of all orders for the purchase and sale of
portfolio securities for the Fund's account with brokers or dealers selected by
the Subadviser. In the selection of such brokers or dealers and the placing of
such orders, the Subadviser is directed at all times to seek for the Fund the
most favorable execution and net price available except as otherwise described
herein. It is understood that it is desirable for the Fund that the Subadviser
have access to supplemental investment and market research and security and
economic analyses provided by brokers who may execute brokerage transactions at
a higher cost to the Fund than may result when allocating brokerage to other
brokers on the basis of seeking the most favorable price and efficient
execution. Therefore, the Subadviser is authorized to place orders for the
purchase and sale of securities for the Fund with such brokers consistent with
the requirements of Section 28(e) of the Securities Exchange Act of 1934,
subject to review by the Trust's Trustees from time to time with respect to the
extent and continuation of this practice. It is understood that the services
provided by such brokers may be useful to the Subadviser in connection with its
services (and the services of the Subadviser's affiliates) to other clients.
(b) On occasions when the Subadviser deems the purchase or
sale of a security to be in the best interest of the Fund as well as other
clients, the Subadviser, to the extent permitted by applicable laws and
regulations, may aggregate the securities to be sold or purchased in order to
obtain the best execution and lower brokerage commissions, if any. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Subadviser in the
manner it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such clients.
3. OTHER AGREEMENTS, ETC. It is understood that any of the
shareholders, Trustees, officers and employees of the Trust may be a
shareholder, director, officer or employee of, or be otherwise interested in,
the Subadviser, any interested person (as defined in the 1940 Act) of the
Subadviser, any organization in which the Subadviser may have an interest or any
organization which may have an interest in the Subadviser and that the
Subadviser, any such interested person or any such organization may have an
interest in the Trust. It is also understood that the Subadviser, the Manager
and the Trust may have advisory, management, service or other contracts with
other individuals or entities, and may have other interests and businesses. When
a security proposed to be purchased or sold for the Trust is also to be
purchased or sold for other accounts managed by the Subadviser at the same time,
the Subadviser shall make such purchases or sales on a pro rata, rotating or
other equitable basis so as to avoid any one account being preferred over any
other account.
4. SUBADVISER'S COMPENSATION. The Manager shall pay to the Subadviser
for its services hereunder a fee at the annual rate of 0.15% of the Fund's net
assets under the Subadviser's management. Such fee shall be calculated and
accrued on a monthly basis as a percentage of the Fund's month end net assets
under the Subadviser's management, and shall be payable quarterly after the end
of each calendar quarter on or before the 15th day of January, April, July and
October of each year with respect to the preceding quarter. If this Contract
shall be effective for only a portion of a calendar quarter, the aforesaid fee
shall be prorated for that portion of such calendar quarter during which this
Contract is in effect.
5. ASSIGNMENT AND AMENDMENT. This Contract shall automatically
terminate, without the payment of any penalty, in the event of its assignment
(as defined in the 1940 Act) or in the event of the termination of the
Management Contract between the Trust and the Manager insofar as it applies to
the Fund; provided, that such termination shall not relieve either party of any
liability incurred hereunder. The terms of this Contract shall not be changed
unless such change is approved in accordance with the requirements of the 1940
Act, and as such requirements may be modified by rule, regulation or order of
the Securities and Exchange Commission (the "SEC").
6. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
(a) This Contract shall become effective on the date hereof
and shall remain in full force and effect until two years from the date hereof
and from year to year thereafter, but only so long as its continuance is
approved annually in accordance with the requirements of the 1940 Act, and as
such requirements may be modified by rule, regulation or order of the SEC,
subject to the respective rights of the Trust, the Manager and the Subadviser to
terminate this Contract as provided in paragraphs (b) and (c) hereof.
(b) The Trust or the Manager may at any time terminate this
Contract by not more than sixty (60) days' nor less than thirty (30) days'
written notice given to the Subadviser.
(c) The Subadviser may at any time terminate this Contract by
not less than one hundred twenty (120) days' written notice given to the Trust
and the Manager.
7. COMPLETE AGREEMENT. This Contract states the entire agreement of the
parties hereto, and is intended to be the complete and exclusive statement of
the terms hereof. It may not be added to or changed orally, and may not be
modified or rescinded except by a writing signed by the parties hereto and in
accordance with Section 5 hereof and the applicable requirements of the 1940
Act.
8. NONLIABILITY OF THE SUBADVISER. In the absence of willful
misfeasance, bad faith or gross negligence on the part of the Subadviser, or of
reckless disregard of its obligations and duties hereunder, the Subadviser shall
not be subject to any liability to the Manager or the Trust, to any shareholder
of the Fund, or to any person, firm or organization, for any act or omission in
the course of, or connected with, rendering services hereunder. Nothing herein,
however, shall derogate from the Subadviser's obligations under applicable
federal and state securities laws.
9. LIMITATION OF LIABILITY OF THE TRUSTEES, OFFICERS AND SHAREHOLDERS.
A copy of the Declaration of Trust of the Trust is on file with the Secretary of
State of The Commonwealth of Massachusetts, and notice is hereby given that this
Contract is executed on behalf of the Trustees of the Trust as Trustees and not
individually and that the obligations under this Contract are not binding upon
any of the Trustees, officers or shareholders of the Trust but are binding only
upon the assets and property of the Fund.
10. NOTICES. Any notice, instruction, request or other communications
required or contemplated by this Contract shall be in writing and shall be duly
given when deposited by first class mail, postage prepaid, addressed to (or
delivered by hand with confirmation to) the Trust, the Manager or the Subadviser
at the applicable address set forth below:
If to Subadviser:
Parametric Portfolio Associates
701 Fifth Avenue
Suite 7310
Seattle, Washington 98104-7090
If to Trust:
Clearwater Investment Trust
2100 First National Bank Building
St. Paul, Minnesota 55101
If to Manager:
Clearwater Management Co., Inc.
2100 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/Philip W. Pascoe
Name: Philip W. Pascoe
Title: Chairman
CLEARWATER MANAGEMENT CO., INC.
By: /s/Philip W. Pascoe
Name: Philip W. Pascoe
Title: Chairman
PARAMETRIC PORTFOLIO ASSOCIATES
By: /s/David M. Stein
Name: David M. Stein
Title: Managing Director
<PAGE>
CLEARWATER INVESTMENT TRUST
332 Minnesota Street, Suite 2100
St. Paul, Minnesota 55101
This proxy is solicited on behalf of the Board of Trustees of Clearwater
Investment Trust (the "Trust") for the Special Meeting of Shareholders (the
"Meeting"). The undersigned hereby appoints Frederick T. Weyerhaeuser and Daniel
C. Titcomb and each of them, attorneys and proxies for the undersigned, with
full power of substitution and revocation to represent the undersigned and to
vote on behalf of the undersigned all shares of Clearwater Investment Trust (the
"Trust") which the undersigned is entitled to vote at the Special Meeting of
Shareholders to be held at the offices of Clearwater Investment Trust, 332
Minnesota Street, Suite 2100, St. Paul, Minnesota 55101 on February 22, 2000, at
8:30 a.m., Central time, and at any adjournments thereof. The undersigned hereby
acknowledges receipt of the Notice of the Special Meeting of Shareholders and
the accompanying Proxy Statement and hereby instructs the attorneys and proxies
to vote the shares as indicated on this Proxy Card. In their discretion, the
proxies are authorized to vote upon such other business as may properly come
before the Meeting.
The undersigned hereby revokes any proxy previously given.
PLEASE SIGN AND DATE THE PROXY CARD AND RETURN IT WITH YOUR VOTE IN THE ENCLOSED
ENVELOPE
Please indicate your vote by an "X" in the appropriate box, below. This proxy,
if properly executed, will be voted in the manner directed by the shareholder.
If no direction is made, this proxy will be voted FOR all Proposals. Please
refer to the Proxy Statement for a discussion of the Proposals.
PLEASE MARK VOTES For Withheld For All Except
AS IN THIS EXAMPLE [X] [ ] [ ]
1.Elect four Trustees.
INSTRUCTION: To withhold authority to vote for an
individual nominee, check the box to the right of
the persons name.
Lucy R. Jones [ ]
Lawrence H. King [ ]
Charles W. Rasmussen [ ]
Laura E. Rasmussen [ ]
For Against Abstain
2.Ratify the selection of
KPMG LLP as the independent [ ] [ ] [ ]
public accountants of the
Trust for the fiscal year
ending December 31, 2000.
3.Approve Subadvisory Contract
with Parametric Portfolio [ ] [ ] [ ]
Associates. CLEARWATER GROWTH
FUND SHAREHOLDERS ONLY.
4.Approve policy to permit the
Board of Trustees and Clearwater [ ] [ ] [ ]
Management Company to select
subadvisers or to amend
subadvisory contracts without
obtaining further shareholder
approval.
-----------------
Please be sure to sign Date
and date this Proxy.
-----------------
- ------------------------------------------
Please sign exactly as your name
Shareholder sign here Co-owner sign here appearson this proxy. If joint
owners, EITHER may sign this proxy.
When signing as attorney, executor,
administrator, trustee, guardian or
corporate officer, please give your
full title.
- ------------------------------------------
