[GRAPHIC OMITTED]
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CLEARWATER INVESTMENT TRUST
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August 8, 1996
TO: Our Unit Holders
On June 30, 1996, the net asset value of the Clearwater Growth Fund was $18.91
per unit. The net asset value of the Clearwater Small Cap Fund was $13.02 per
unit. On a total return basis for the first six months, the Clearwater Growth
Fund increased by 11.2% and the Clearwater Small Cap Fund increased by 13.5%.
For comparative purposes, the S&P 500 increased by 10.2% and the Russell 2000
increased by 10.4% . For the second quarter, the Clearwater Growth Fund
increased 5.6% and the Clearwater Small Cap Fund increased 10.3 %. The S&P 500
increased 4.5% and the Russell 2000 increased 5.0%.
Sit Investment Associates, Inc., the subadvisor for the Clearwater Growth Fund,
made the following comments on the first half and outlook for the balance of
1996:
"The portfolio outperformed the Standard & Poor's 500 Index in the
period of which the majority was attributed to stock selection and the
balance to sector weightings. Particularly strong individual stock
gains came from HBO & Company (+77%), Cisco Systems (+52%), Harley
Davidson (+43%), and Paychex (+45%).
The Investment Adviser has continued to implement a program of
increasing the overall portfolio weighting in smaller and medium-sized
companies. As of the end of June 1996, the weighted average
capitalization of the portfolio was $21.3 billion versus $34.9 billion
for the S&P 500 Index and the portfolio's median capitalization was
$4.4 billion, down from $7.3 billion at the end of 1995. Above-average
earnings growth is the primary financial characteristic of the
portfolio, which has been enhanced by the addition of the smaller
companies. To illustrate their impact, the portfolio's projected
average earnings gain for calendar 1996 has increased from +23.2% as of
December 31, 1995 to +27.3% as of June 30, 1996. Additionally, the
portfolio's 5-year projected earnings growth increased from +19.9% to
+21.7% as a result of the portfolio additions.
In early July, 1996, the stock market entered a correction phase that
the Adviser believes is a temporary phenomenon and not the beginning of
a major bear market. Several companies in the technology sector have
experienced price weakness that has brought them to attractive
valuations and they are being actively reviewed as purchase candidates.
Given moderate economic growth, on average, for 1996 and beyond,
coupled with inflation in the 3% range, financial assets should produce
satisfactory overall returns and the growth stock component of the
stock market seems likely to continue its record of relative
outperformance that began in the second half of 1994."
<PAGE>
Page 2
Kennedy Capital Management, the subadvisor for the Small Cap Fund, made the
following comments:
"An apparent significant market correction is underway. We emphasize
apparent because the market has a way of misleading those who are
overconfident in their prognostication abilities. This downturn may be
a "healthy correction," as optimists like to phrase it, or it may be
the start of a real bear market. We are in the optimist camp. There
does not appear to be anything fundamental to really undermine equity
investing. However, corporate earnings announcements will determine
whether the correction reached the bottom, or a near-bottom, on July 16
or whether further declines will follow. In mid-July the earnings news
has been mostly up-beat with several key corporations announcing record
earnings, among them, Intel, Ford and GE. I mention the large companies
because, individually the reports of these big firms have the most
effect on market confidence. (These large companies have achieved these
record earnings in spite of the strong dollar. Small companies, on the
other hand, earn most of their revenue domestically. Comparatively, the
earnings growth of small companies should be even stronger.) As
confidence returns to the market, investors will again begin to buy but
they will focus increasingly on fundamentals. Companies with strong
sales growth, cash flows, and earnings will be the beneficiaries. High
fliers that levitate on a promise and a prayer are not likely to do
well. At KCM, we welcome this "back-to-basics" approach to investing as
we continue to focus on finding strong fundamental companies that are
overlooked by the investment community."
Clearwater Investment Trust Clearwater Management Company
F. T. Weyerhaeuser, Chairman & P. W. Pascoe, Chairman &
Treasurer Treasurer
Samuel B. Carr, Jr. W. T. Weyerhaeuser, V.P. &
Stanley R. Day, Jr. Secretary
Robert J. Phares E. C. Driscoll
W. John Driscoll
D. C. Titcomb, V.P. & Secretary C. W. Morley
F. W. Piasecki
D. C. Titcomb
G. H. Weyerhaeuser,Jr.
<PAGE>
================================================================================
CLEARWATER INVESTMENT TRUST
================================================================================
SELECTED PER SHARE DATA AND RATIOS
Six-Month Period Ended June 30,1996
GROWTH SMALL CAP
FUND FUND
PER SHARE DATA*
Investment Income $ .09 $ .06
Expenses (.10) (.08)
----- -----
NET INVESTMENT INCOME (L0SS) (.01) (.02)
Distributions to shareholders from net investment income .00 .00
----- -----
ACCUMULATED NET INVESTMENT INCOME (LOSS) (.01) (.02)
Net realized and unrealized gain on securities 1.91 1.57
----- -----
NET INCREASE IN NET ASSET VALUE 1.90 1.55
Net asset value at beginning of period 17.01 11.47
----- -----
Net asset value at end of period $18.91 $13.02
====== ======
RATIOS**
Expenses to average net assets .54% .72%
Net investment income to average net assets (.03)% (.21)%
Portfolio turnover rate 52.37% 44.81%
NUMBER OF SHARES OUTSTANDING AT END OF PERIOD 4,914,956 2,439,334
*For a share of capital stock outstanding throughout the period.
**For the six-month period ended June 30, 1996 (not annualized).
STATEMENT OF ASSETS AND LIABILITIES
June 30,1996 GROWTH SMALL CAP
FUND FUND
ASSETS
Investments in securities, at market value
(identified cost: $64,244,299 Growth Fund;
$24,610,326 Small Cap Fund) $91,150,132 $30,624,123
Cash 1,188,440 1,191,936
Receivables 1,192,498 371,830
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TOTAL ASSETS $93,531,070 $32,187,889
=========== ===========
LIABILITIES
Payables $ 340,694 $ 317,664
Accrued expenses 244,404 102,289
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TOTAL LIABILITIES $ 585,098 $ 419,953
Net Assets (equivalent to: Growth Fund-$18.91 per share based on 4,914,956
shares of capital stock outstanding; Small Cap Fund-$13.02 per share based on
2,439,334 shares of
capital stock outstanding) 92,945,972 31,767,936
----------- -----------
$93,531,070 $32,187,889
=========== ===========
-1-
<PAGE>
================================================================================
CLEARWATER INVESTMENT TRUST
================================================================================
<TABLE>
STATEMENT OF OPERATIONS
Six-Month Period Ended June 30, 1996
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends $ 462,429 $ 137,212
Interest -0- 9,077
---------- ----------
TOTAL INCOME $ 462,429 $ 146,289
Expenses:
Investment advisory fee 475,365 190,811
Other fees and expenses 12,000 14,800
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TOTAL EXPENSES $ 487,365 $ 205,611
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NET INVESTMENT INCOME (LOSS) (24,936) (59,322)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain (loss) on security transactions 13,023,069 (212,327)
Unrealized appreciation (depreciation) during the period (3,614,058) 3,920,571
------------ ----------
NET GAIN ON INVESTMENTS $ 9,409,011 $ 3,708,244
----------- -----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 9,384,075 $ 3,648,922
=========== ===========
STATEMENT OF CHANGES IN NET ASSETS
Six-Month Period Ended June 30, 1996
GROWTH SMALL CAP
FUND FUND
OPERATIONS
Net investment income (loss) $ (24,936) $ (59,322)
Net realized gain (loss) on investments 13,023,069 (212,327)
Unrealized appreciation (depreciation) during the year (3,614,058) 3,920,571
------------ -----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 9,384,075 $ 3,648,922
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME -0- -0-
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold -0- 1,293,481
Reinvestment of distributions from net investment income -0- -0-
Cost of shares redeemed (1,212,767) -0-
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL
SHARES TRANSACTIONS ($1,212,767) $ 1,293,481
----------- -----------
TOTAL INCREASE IN NET ASSETS $8,171,308 $ 4,942,403
NET ASSETS
At January 1, 1996 84,774,664 26,825,533
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At June 30, 1996 $92,945,972 $31,767,936
=========== ===========
CHANGES IN CAPITAL SHARES
Shares sold -0- 100,668
Shares issued for reinvested distributions -0- -0-
Shares redeemed (68,047) -0-
----------- -----------
NET INCREASE (DECREASE) IN SHARES (68,047) 100,668
=========== ===========
</TABLE>
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<PAGE>
<TABLE>
CLEARWATER GROWTH FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996
<CAPTION>
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE NET ASSETS
COMMON STOCKS
<S> <C> <C> <C>
AEROSPACE
15,000 BOEING COMPANY 753,824.60 1,306,875.00 1.41
AUTOMOTIVE
6,500 AUTOZONE INCORPORATED 227,500.00 225,875.00 .24
23,500 HARLEY DAVIDSON INC. 550,819.10 966,437.50 1.04
------------ ------------
TOTAL AUTOMOTIVE 778,319.10 1,192,312.50 1.28
BANKS
10,500 CITICORP 441,829.55 867,562.50 .93
CHEMICALS
9,500 IMC GLOBAL INC 362,541.85 357,437.50 .38
22,500 MONSANTO CO 360,677.60 731,250.00 .79
7,500 POTASH CORPORATION OF SASKATCHEWAN 461,700.00 496,875.00 .53
------------ ------------
TOTAL CHEMICALS 1,184,919.45 1,585,562.50 1.71
COMPUTER SYSTEM/SOFTWARE
2,000 ASPEN TECHNOLOGY 100,000.00 110,000.00 .12
15,000 BAAN COMPANY 426,562.50 510,000.00 .55
24,500 CERNER CORPORATION 515,115.00 523,687.50 .56
12,000 COMPUTER ASSOC INTERNATIONAL INC 484,250.00 855,000.00 .92
5,000 COMPUTER SCIENCES CORPORATION 360,300.00 373,750.00 .40
15,500 ELECTRONIC DATA SYSTEMS CORP 870,140.50 833,125.00 .90
9,500 ELECTRONICS FOR IMAGING INC. 549,000.00 659,062.50 .71
18,500 FIRST DATA CORPORATION 451,021.35 1,473,062.50 1.58
20,000 FISERV INC 611,407.60 600,000.00 .65
21,000 HBO & COMPANY 528,925.50 1,422,750.00 1.53
16,000 INFORMIX CORPORATION 408,177.80 360,000.00 .39
5,000 INTUIT INC 256,137.50 236,250.00 .25
36,500 MADGE NETWORKS NV 1,007,129.90 529,250.00 .57
4,000 MEDIC COMPUTER SYSTEMS INC. 288,870.00 324,500.00 .35
16,500 MICROSOFT CORPORATION 244,694.20 1,982,062.50 2.13
8,500 NATIONAL DATA CORPORATION 306,260.00 291,125.00 .31
32,000 ORACLE SYSTEMS CORPORATION 152,872.66 1,262,000.00 1.36
44,500 PARAMETRIC TECHNOLOGY CORPORATION 897,465.15 1,930,187.50 2.08
10,500 PEOPLESOFT INC 572,112.50 748,125.00 .80
11,000 SAP ADS 401,720.00 514,250.00 .55
------------ ------------
TOTAL COMPUTER SYSTEM/SOFTWARE 9,432,162.16 15,538,187.50 16.72
DIVERSIFIED
15,000 CRANE COMPANY 614,025.00 615,000.00 .66
8,000 TYCO INTERNATIONAL LTD 308,605.00 326,000.00 .35
------------ ------------
TOTAL DIVERSIFIED 922,630.00 941,000.00 1.01
ELECTRICAL EQUIPMENT
14,000 GENERAL ELECTRIC COMPANY 1,107,034.20 1,211,000.00 1.30
ELECTRONICS, INSTRUMENT
37,000 ANALOG DEVICES INC 892,963.75 943,500.00 1.02
11,000 HEWLETT-PACKARD COMPANY 1,099,685.00 1,095,875.00 1.18
20,500 INTEL CORPORATION 330,908.00 1,505,468.75 1.62
19,000 KLA INSTRUMENTS CORPORATION 554,056.60 441,750.00 .48
25,000 LSI LOGIC CORPORATION 518,719.75 650,000.00 .70
16,000 SUNDSTRAND CORPORATION 519,777.50 586,000.00 .63
12,500 XILINX INC 360,289.53 396,875.00 .43
------------ ------------
TOTAL ELECTRONICS, INSTRUMENT 4,276,400.13 5,619,468.75 6.05
ENTERTAINMENT
20,500 VIACOM CLASS B 975,730.00 796,937.50 .86
FINANCIAL
40,000 CUC INTERNATIONAL INC. 475,226.75 1,420,000.00 1.53
11,500 FEDERAL HOME LOAN MORTGAGE CORP 163,258.10 983,250.00 1.06
7,000 FRANKLIN RESOURCES INCORPORATED 390,519.05 427,000.00 .46
12,500 GREEN TREE FINANCIAL CORPORATION 425,750.00 390,625.00 .42
34,500 T. ROWE PRICE ASSOCIATES 974,792.50 1,060,875.00 1.14
35,000 TCF FINANCIAL CORPORATION 1,230,850.00 1,163,750.00 1.25
------------ ------------
TOTAL FINANCIAL 3,660,396.40 5,445,500.00 5.86
</TABLE>
3
<PAGE>
<TABLE>
CLEARWATER GROWTH FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996
<CAPTION>
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE NET ASSETS
<S> <C> <C> <C>
FOOD AND BEVERAGE
36,000 COCA-COLA COMPANY 1,081,705.00 1,759,500.00 1.89
18,500 PHILLIP MORRIS COMPANIES INC. 941,126.10 1,924,000.00 2.07
17,000 WHITMAN CORPORATION 384,532.20 410,125.00 .44
------------ ------------
TOTAL FOOD AND BEVERAGE 2,407,363.30 4,093,625.00 4.40
HEALTH CARE
27,000 HEALTHSOUTH REHABILITATION 425,790.00 972,000.00 1.05
31,500 OXFORD HEALTH PLANS INC. 1,485,849.55 1,295,437.50 1.39
12,500 UNITED HEALTHCARE CORPORATION 293,089.50 631,250.00 .68
------------ ------------
TOTAL HEALTH CARE 2,204,729.05 2,898,687.50 3.12
INSURANCE
15,000 AMERICAN INTERNATIONAL GROUP INC 737,863.00 1,479,375.00 1.59
11,500 EXEL LTD 316,260.20 810,750.00 .87
28,500 MERCURY GENERAL CORPORATION 835,842.95 1,246,875.00 1.34
17,000 MGIC INVESTMENT CORPORATION 817,020.00 954,125.00 1.03
------------ ------------
TOTAL INSURANCE 2,706,986.15 4,491,125.00 4.83
LODGING & RESTAURANT
26,000 MARRIOTT INTERNATIONAL, INC. 933,381.40 1,397,500.00 1.50
25,000 PROMUS HOTEL CORPORATION 701,133.90 740,625.00 .80
------------ ------------
TOTAL LODGING AND RESTAURANT 1,634,515.30 2,138,125.00 2.30
MEDICAL TECHNOLOGY
19,500 CEPHALON INC 582,817.65 385,125.00 .41
19,500 MEDTRONIC INC. 291,364.50 1,092,000.00 1.17
6,000 SOFAMOR DANEK GROUP INC. 198,360.00 166,500.00 .18
23,000 STRYKER CORPORATION 362,617.94 523,250.00 .56
------------ ------------
TOTAL MEDICAL TECHNOLOGY 1,435,160.09 2,166,875.00 2.33
OFFICE EQUIPMENT,COMPUTERS
8,500 ALCO STANDARD CORPORATION 363,389.40 384,625.00 .41
56,700 CISCO SYSTEMS INC. 926,507.30 3,210,637.50 3.45
23,500 DANKA BUSINESS SYSTEMS ADR 988,198.00 687,375.00 .74
------------ ------------
TOTAL OFFICE EQUIPMENT, COMPUTERS 2,278,094.70 4,282,637.50 4.61
OIL & GAS
16,000 BAKER HUGHES INCORPORATED 473,729.40 526,000.00 .57
9,124 BRITISH PETROLEUM COMPANY 916,334.11 975,127.50 1.05
11,500 CAMCO INTERNATIONAL INC 407,180.00 389,562.50 .42
20,000 MCDERMOTT INTERNATIONAL INC 397,575.00 417,500.00 .45
25,000 PARKER & PARSLEY PETROLEUM COMPANY 612,437.50 693,750.00 .75
14,500 SCHLUMBERGER LTD 801,147.15 1,221,625.00 1.31
19,000 SONAT OFFSHORE DRILLING COMPANY 995,321.60 959,500.00 1.03
------------ ------------
TOTAL OIL AND GAS 4,603,724.76 5,183,065.00 5.58
PHARMACEUTICALS
28,000 AMGEN INC. 658,646.50 1,512,000.00 1.63
14,000 BIOGEN INC 814,500.40 768,250.00 .83
9,500 ELAN CORPORATION PLC - ADR 617,701.40 542,687.50 .58
32,000 JOHNSON & JOHNSON 719,415.80 1,584,000.00 1.70
25,000 PFIZER INC 500,598.00 1,784,375.00 1.92
------------ ------------
TOTAL PHARMACEUTICALS 3,310,862.10 6,191,312.50 6.66
RETAIL TRADE
32,500 FEDERATED DEPARTMENT STORES 863,325.00 1,109,062.50 1.19
17,000 GAP INC 493,383.45 546,125.00 .59
30,000 HOME DEPOT INC. 92,237.56 1,620,000.00 1.74
30,500 KOHLS CORPORATION 1,008,247.50 1,117,062.50 1.20
30,000 OFFICE DEPOT INC. 721,800.00 611,250.00 .66
10,000 PETSMART INC 418,125.00 477,500.00 .51
------------ ------------
TOTAL RETAIL TRADE 3,597,118.51 5,481,000.00 5.90
</TABLE>
4
<PAGE>
<TABLE>
CLEARWATER GROWTH FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996
<CAPTION>
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE NET ASSETS
<S> <C> <C> <C>
SERVICES
5,000 CAREER HORIZONS INC 201,161.60 175,000.00 .19
6,500 CDI CORPORATION 200,200.00 219,375.00 .24
22,000 CERIDIAN CORPORATION 548,909.80 1,111,000.00 1.20
2,500 CORESTAFF INC 109,375.00 111,875.00 .12
4,000 INTERIM SERVICES INC 186,056.00 172,000.00 .19
7,000 MANPOWER INC 269,781.20 274,750.00 .30
9,500 OLSTEN CORPORATION 282,502.50 279,062.50 .30
29,250 PAYCHEX INC. 564,587.50 1,407,656.25 1.51
27,750 STEWARD ENTERPRISES INC CL A 803,746.00 867,187.50 .93
------------ ------------
TOTAL SERVICES 3,166,319.60 4,617,906.25 4.97
TELECOMMUNICATIONS
8,500 ADC TELECOMMUNICATIONS INC 379,152.45 382,500.00 .41
26,000 AIRTOUCH COMMUNICATIONS INC. 607,086.15 734,500.00 .79
7,000 ASCEND COMMUNICATIONS 409,056.05 393,750.00 .42
18,000 LCI INTERNATIONAL INC 466,480.80 564,750.00 .61
29,000 MCI COMMUNICATIONS 756,524.27 743,125.00 .80
22,500 PAGING NETWORK INC. 554,137.85 540,000.00 .58
9,000 PICTURETEL CORPORATION 304,995.00 354,375.00 .38
6,000 PREMISYS COMMUNICATIONS INC 248,250.00 366,000.00 .39
9,000 TELLABS INC 380,791.35 601,875.00 .65
6,000 U.S. ROBOTICS CORPORATION 455,625.00 513,000.00 .55
------------ ------------
TOTAL TELECOMMUNICATIONS 4,562,098.92 5,193,875.00 5.59
CONSTRUCTION MATERIALS
13,000 OWENS CORNING 404,823.85 559,000.00 .60
CONSUMER GOODS - NON DURABLE
25,000 GILLETTE COMPANY 843,511.30 1,559,375.00 1.68
10,000 PROCTOR & GAMBLE COMPANY 679,867.05 906,250.00 .97
------------ ------------
TOTAL CONSUMER GOODS -
NON DURABLE 1,523,378.35 2,465,625.00 2.65
AGRICULTURE
7,500 PIONEER HI-BRED INTERNATIONAL INC 389,575.00 396,562.50 .43
------------ ------------
TOTAL COMMON STOCK 57,757,995.27 84,663,827.50 91.09
CASH EQUIVALENTS
MONEY MARKET
2,510,241 FEDERATED MASTER TRUST 2,510,241.00 2,510,241.00 2.70
3,976,063 NORWEST CASH INVESTMENT 3,976,063.00 3,976,063.00 4.28
------------ ------------
TOTAL MONEY MARKET 6,486,304.00 6,486,304.00 6.98
TOTAL CASH EQUIVALENTS 6,486,304.00 6,486,304.00 6.98
TOTAL ASSETS SECTION 64,244,299.27 91,150,131.50 98.06
============= ============= =====
</TABLE>
5
<PAGE>
<TABLE>
CLEARWATER SMALL CAP FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996
<CAPTION>
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE NET ASSETS
<S> <C> <C> <C>
COMMON STOCKS
AEROSPACE
21,200 SPARTON CORPORATION 81,310.00 90,100.00 .28
AUTOMOTIVE
17,100 STANDARD MOTOR PRODUCTS, INC. 283,931.06 305,662.50 .96
BANKS
22,656 BANKATLANTIC BANCORP INC. 222,028.80 317,184.00 1.00
18,370 FIDELITY FED SAVINGS 279,475.00 243,402.50 .77
11,350 FIRST FEDERAL BANCSHARES OF
EAU CLAIRE, INC. 170,086.56 174,506.25 .55
23,500 METROPOLITAN BANCORP 306,949.50 317,250.00 1.00
14,900 POUGHKEEPSIE SAVINGS BANK FSB 71,262.50 74,500.00 .23
------------ ------------
TOTAL BANKS 1,049,802.36 1,126,842.75 3.55
CHEMICALS
6,750 LILLY INDUSTRIES INC. CLASS A 89,775.00 114,750.00 .36
COMPUTER SOFTWARE
18,600 ALPHAREL INC. 107,801.25 112,762.50 .35
36,500 CITATION COMPUTER SYSTEMS 216,427.50 675,250.00 2.13
33,750 COMPUTER OUTSOURCING SERVICES INC 133,828.13 156,093.75 .49
31,495 FIND/SVP INC. 87,614.38 94,485.00 .30
14,000 HENRY (JACK) & ASSOCIATES 158,587.50 476,000.00 1.50
10,000 PRI AUTOMATION INCORPORATED 330,250.00 305,000.00 .96
70,000 PROPHET 21 INC. 298,750.00 437,500.00 1.38
31,500 SYMIX SYSTEMS 306,375.00 496,125.00 1.56
35,475 TIMBERLINE SOFTWARE CORPORATION 246,467.00 337,012.50 1.06
------------ ------------
TOTAL COMPUTER SOFTWARE 1,886,100.76 3,090,228.75 9.73
DIVERSIFIED
13,000 AMERICAN BILTRITE INC. 318,925.00 264,875.00 .83
11,050 BOSTON TECHNOLOGY INC. 195,314.16 186,468.75 .59
21,640 CPAC INC 137,749.45 221,810.00 .70
41,050 INTELECT COMMUNICATIONS SYSTEMS 235,377.50 477,206.25 1.50
16,000 MATTHEWS INTERNATIONAL CORPORATION 258,500.00 440,000.00 1.38
14,500 MERCER INTERNATIONAL INC SBI 200,282.24 195,750.00 .62
------------ ------------
TOTAL DIVERSIFIED 1,346,148.35 1,786,110.00 5.62
ELECTRICAL EQUIPMENT
13,300 ASTRO-MED INCORPORATED 112,887.50 119,700.00 .38
40,000 LUMINART INC 193,762.50 120,000.00 .38
12,100 TSX CORPORATION 195,981.25 335,775.00 1.06
20,200 ZYCON CORPORATION 229,648.00 189,375.00 .60
------------ ------------
TOTAL ELECTRICAL EQUIPMENT 732,279.25 764,850.00 2.41
ELECTRONICS, INSTRUMENT
10,500 COHU INC. 106,125.00 212,625.00 .67
34,500 DATAMARINE INTERNATIONAL INC. 270,448.75 414,000.00 1.30
24,000 DBA SYSTEMS INC. 166,250.00 123,000.00 .39
12,320 HERLEY INDUSTRIES INC. 68,653.68 120,120.00 .38
18,350 II-VI INC 182,875.00 295,893.75 .93
19,500 KEITHLEY INSTRUMENTS INC. 272,082.50 275,437.50 .87
58,050 LIUSKI INTERNATIONAL INC. 265,503.75 261,225.00 .82
26,800 MICRO COMPONENT TECHNOLOGY 188,186.96 97,150.00 .31
135,900 MTI TECHNOLOGY CORPORATION 354,019.50 305,775.00 .96
56,400 NUMEREX CORPORATION CLASS A 369,664.38 303,150.00 .95
14,600 PEN INTERCONNECT INC. 107,675.00 87,600.00 .28
19,700 ULTRAK INC. 149,920.00 337,362.50 1.06
69,600 WEGENER CORPORATION 223,137.50 652,500.00 2.05
30,250 WELLS-GARDNER ELECTRONICS 126,941.51 128,562.50 .40
10,000 WHITEHALL CORPORATION 248,230.00 320,000.00 1.01
------------ ------------
TOTAL ELECTRONICS, INSTRUMENT 3,099,713.53 3,934,401.25 12.38
</TABLE>
6
<PAGE>
<TABLE>
CLEARWATER SMALL CAP FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996
<CAPTION>
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE NET ASSETS
<S> <C> <C> <C>
FINANCIAL
16,900 D & N FINANCIAL CORPORATION 209,810.00 236,600.00 .74
54,900 PACIFIC CREST CAPITAL INC. 397,462.50 494,100.00 1.56
16,800 ROOSEVELT FINANCIAL GROUP INC. 320,371.00 323,400.00 1.02
19,600 UNION ACCEPTANCE CORPORATION CLASS A 279,161.50 303,800.00 .96
------------ ------------
1,206,805.00 1,357,900.00 4.27
FOOD AND BEVERAGE
5,000 DAKA INTERNATIONAL INC. 105,000.00 117,500.00 .37
7,877 ERLY INDUSTRIES 71,988.93 77,785.38 .24
2,150 FARMER BROTHERS COMPANY 270,375.00 296,700.00 .93
52,000 FERRARA FOOD COMPANY INC 55,250.00 19,240.00 .06
46,745 UNIMARK GROUP INC. 382,316.25 777,135.63 2.45
------------ ------------
TOTAL FOOD AND BEVERAGE 884,930.18 1,288,361.01 4.06
FOREST PRODUCTS
29,250 UNIVERSAL FOREST PRODUCTS 308,375.00 303,468.75 .96
HEALTH CARE
22,500 LASER VISION CENTERS INC. 307,343.75 258,750.00 .81
21,900 MOORE MEDICAL CORPORATION 284,993.00 268,275.00 .84
32,000 PACIFIC REHABILITATION & SPORTS
MEDICINE 155,904.00 144,000.00 .45
20,200 U.S. DIAGNOSTIC LABS INC. 207,289.75 247,450.00 .78
------------ ------------
TOTAL HEALTH CARE 955,530.50 918,475.00 2.89
INSURANCE
22,400 ACCEPTANCE INSURANCE COMPANIES INC 349,709.66 383,600.00 1.21
10,850 ACORDIA INC. 255,517.50 366,187.50 1.15
49,000 AMERICAN PHYSICIAN SERVICE GROUP 208,250.00 471,625.00 1.48
7,250 ARBATAX INTERNATIONAL INC. 60,777.26 36,703.13 .12
9,400 LIBERTY FINANCIAL COMPANIES 267,570.00 318,425.00 1.00
17,200 MOTOR CLUB OF AMERICA 101,878.75 126,850.00 .40
20,300 PENN TREATY AMERICAN CORPORATION 331,590.53 436,450.00 1.37
17,022 PIONEER FINANCIAL SERVICES, INC. 191,500.00 282,990.75 .89
------------ ------------
TOTAL INSURANCE 1,766,793.70 2,422,831.38 7.63
MACHINERY
9,118 AMISTAR CORPORATION 29,316.00 38,751.50 .12
23,550 AMPCO-PITTSBURGH CORPORATION 260,227.50 273,768.75 .86
10,200 DANIEL INDUSTRIES 133,010.04 147,900.00 .47
33,000 EASCO INC 239,050.00 272,250.00 .86
------------ ------------
TOTAL MACHINERY 661,603.54 732,670.25 2.31
MEDICAL TECHNOLOGY
16,650 ADAC LABORATORIES 227,296.50 378,787.50 1.19
27,470 AEQUITRON MEDICAL INC. 147,508.76 206,025.00 .65
36,000 ALLIANCE IMAGING INC. 97,656.25 180,000.00 .57
31,000 COLORADO MEDTECH INC. 90,093.75 93,000.00 .29
23,832 OEC MEDICAL SYSTEMS INC 212,014.42 324,711.00 1.02
------------ ------------
TOTAL MEDICAL TECHNOLOGY 774,569.68 1,182,523.50 3.72
OFFICE EQUIPMENT, COMPUTERS
8,000 KENTEK INFORMATION SYSTEMS 75,500.00 85,000.00 .27
14,500 TRIDEX CORPORATION 85,825.00 155,875.00 .49
14,083 3D SYSTEMS CORPORATION 118,345.09 309,826.00 .98
------------ ------------
TOTAL OFFICE EQUIPMENT, COMPUTERS 279,670.09 550,701.00 1.73
</TABLE>
7
<PAGE>
<TABLE>
CLEARWATER SMALL CAP FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996
<CAPTION>
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE NET ASSETS
<S> <C> <C> <C>
OIL & GAS
197,500 BOLT TECHNOLOGY CORP 367,989.38 506,093.75 1.59
20,400 DENBURY RESOURCES INC 104,244.00 104,550.00 .33
17,700 KCS ENERGY INC 355,445.60 508,875.00 1.60
15,800 LUFKIN INDUSTRIES INC 329,625.00 323,900.00 1.02
6,550 NUI CORPORATION 120,090.38 117,081.25 .37
14,600 PROVIDENCE ENERGY CORPORATION 267,608.60 251,850.00 .79
------------ ------------
TOTAL OIL AND GAS 1,545,002.96 1,812,350.00 5.70
PHARMACEUTICALS
14,902 ICN PHARMACEUTICALS INC. 218,956.76 346,471.50 1.09
PRINTING, PUBLISHING, AND BROADCASTING
6,850 CENTRAL NEWSPAPERS 190,367.50 256,875.00 .81
15,250 GRAPHIC INDUSTRIES 166,768.75 144,875.00 .46
8,800 MEDIA GENERAL INC CLASS A 321,151.80 327,800.00 1.03
------------ ------------
TOTAL PRINTING, PUBLISHING,
AND BROADCASTING 678,288.05 729,550.00 2.30
RETAIL TRADE
43,300 DRUG EMPORIUM INC 211,212.50 194,850.00 .61
9,000 DUCKWALL-ALCO STORES, INCORPORATED 129,375.00 132,750.00 .42
36,542 GENOVESE DRUG STORES CLASS A 361,035.60 310,607.00 .98
16,370 NATIONAL MEDIA CORPORATION 119,505.00 288,521.25 .91
43,475 STROBER ORGANIZATION INC. 188,231.13 180,692.97 .57
40,000 VALUEVISION INTERNATIONAL INC.
CLASS A 173,750.00 277,500.00 .87
------------ ------------
TOTAL RETAIL TRADE 1,183,109.23 1,384,921.22 4.36
SERVICES
50,000 CHILDRENS DISCOVERY CENTER 239,585.00 337,500.00 1.06
60,400 HEALTH FITNESS PHYSICAL THERAPY INC 178,450.00 181,200.00 .57
108,168 ICO INC 508,833.61 608,445.00 1.92
10,040 M/A/R/C INCORPORATED 176,099.49 218,370.00 .69
23,660 NSC CORPORATION 107,765.00 42,144.38 .13
25,950 PS GROUP HOLDINGS INC 278,210.00 356,812.50 1.12
------------ ------------
TOTAL SERVICES 1,488,943.10 1,744,471.88 5.49
TELECOMMUNICATIONS
2,500 DAVOX CORPORATION 26,977.05 73,750.00 .23
------------ ------------
28,400 INTERDIGITAL COMMUNICATIONS
CORPORATION 100,288.92 241,400.00 .76
12,600 SSE TELECOM INC. 137,812.50 133,875.00 .42
------------ ------------ -
TOTAL TELECOMMUNICATIONS 265,078.47 449,025.00 1.41
TRANSPORTATION
14,750 PITTSTON BURLINGTON GROUP 278,569.50 318,968.75 1.00
UTILITY - GAS, ELECTRIC
21,500 TRIGEN ENERGY CORPORATION 401,512.50 405,812.50 1.28
CONSTRUCTION MATERIALS
25,400 NORTHWEST PIPE COMPANY 418,187.50 431,800.00 1.36
MANUFACTURED HOUSING
7,850 AMERICAN HOMESTAR CORPORATION 184,328.75 204,100.00 .64
21,500 BELMONT HOMES INC 378,000.00 464,937.50 1.46
18,200 CHAMPION ENTERPRISES 236,214.99 379,925.00 1.20
------------ ------------
TOTAL MANUFACTURED HOUSING 798,543.74 1,048,962.50 3.30
</TABLE>
8
<PAGE>
<TABLE>
CLEARWATER SMALL CAP FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996
<CAPTION>
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE NET ASSETS
<S> <C> <C> <C>
FURNITURE
52,950 ROWE FURNITURE CORPORATION 222,222.35 290,950.00 .92
26,170 STANLEY FURNITURE COMPANY INC 267,528.50 281,327.50 .89
------------ ------------
TOTAL FURNITURE 489,750.85 572,277.50 1.81
RECREATIONAL VEHICLES
6,350 POLARIS INDUSTRIES INC. 199,652.17 216,693.75 .68
CONSUMER GOODS - NON DURABLE
31,000 ELECTRONIC HAIR STYLING INC. 241,812.50 162,750.00 .51
25,350 PARLUX FRAGRANCES INC. 235,113.75 256,668.75 .81
------------ ------------
TOTAL CONSUMER GOODS -
NON DURABLE 476,926.25 419,418.75 1.32
TOTAL COMMON STOCK 23,849,859.08 29,850,599.49 93.96
PREFERRED STOCK
NON-CONVERTIBLE
FINANCIAL
12,250 RIGGS NATIONAL PREFERRED SERIES B
10.75% 333,731.25 346,062.50 1.09
CORPORATE BONDS
CONVERTIBLE
DIVERSIFIED
250,000 PARK-OHIO INDUSTRIES 06/13/94 7.25% 06/15/2004
CONVERTIBLE TO 51.7598 SHRS PER 1000
NOT CALLABLE UNTIL 12/15/95 UNLESS COMMON STOCK
AT LEAST $26.08 FOR 20/30 TRADING DAYS
250,000.00 250,725.00 .79
CASH EQUIVALENTS
MONEY MARKET
176,736 FEDERATED MASTER TRUST 176,736.00 176,736.00 .56
------------ ------------
TOTAL ASSETS SECTION 24,610,326.33 30,624,122.99 96.40
============= ============= =====
</TABLE>
9
<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.
10
<PAGE>
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.
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 period ended
June 30, 1996, were as follows:
Purchases Sales proceeds
-----------------------------------------------------------------------
Clearwater Small Cap Fund $12,614,262 $12,786,039
Clearwater Growth Fund 44,475,654 51,027,628
11
<PAGE>
(4) Capital Share Transactions
Transactions in shares of each fund for the year ended December 31,
1995 and the period ended June 30, 1996 were as follows:
Clearwater Clearwater
Small Cap Fund Growth Fund
------------------- ---------------------
6/30/96 12/31/95 6/30/96 12/31/95
-----------------------------------------------------------------------
Sold 100,668 376,459 -0- 3,495
Issued for reinvested
distributions -0- 143,619 -0- 172,735
Redeemed -0- (1,503) (68,047) (38,758)
-----------------------------------------------------------------------
Increase(decrease) 100,668 518,575 (68,047) 137,472
-----------------------------------------------------------------------
(5) Expenses and Related Party Transactions
The Trust has a contract for investment advisory services with
Clearwater Management Company, a management firm of which the Trust's
chairman is a shareholder. Under terms of an 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.
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE 6/30/96 SEMI-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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 64244299
<INVESTMENTS-AT-VALUE> 91150132
<RECEIVABLES> 1192498
<ASSETS-OTHER> 1188440
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 93531070
<PAYABLE-FOR-SECURITIES> 340694
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 244404
<TOTAL-LIABILITIES> 585098
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 53087053
<SHARES-COMMON-STOCK> 4914956
<SHARES-COMMON-PRIOR> 4983002
<ACCUMULATED-NII-CURRENT> (24936)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 13023069
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 26905832
<NET-ASSETS> 92945972
<DIVIDEND-INCOME> 462429
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 487365
<NET-INVESTMENT-INCOME> (24936)
<REALIZED-GAINS-CURRENT> 13023069
<APPREC-INCREASE-CURRENT> (3614058)
<NET-CHANGE-FROM-OPS> 9384075
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 68047
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 8171308
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 27844
<OVERDISTRIB-NII-PRIOR> 2342
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 475365
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 487365
<AVERAGE-NET-ASSETS> 90087079
<PER-SHARE-NAV-BEGIN> 17.01
<PER-SHARE-NII> (.01)
<PER-SHARE-GAIN-APPREC> 1.91
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.91
<EXPENSE-RATIO> 0.54
<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 6/30/96 SEMI-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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 24610326
<INVESTMENTS-AT-VALUE> 30624123
<RECEIVABLES> 371830
<ASSETS-OTHER> 1191936
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32187889
<PAYABLE-FOR-SECURITIES> 317664
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 102289
<TOTAL-LIABILITIES> 419953
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 26028543
<SHARES-COMMON-STOCK> 2439334
<SHARES-COMMON-PRIOR> 2338666
<ACCUMULATED-NII-CURRENT> (59322)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6013797
<NET-ASSETS> 31767936
<DIVIDEND-INCOME> 137212
<INTEREST-INCOME> 9077
<OTHER-INCOME> 0
<EXPENSES-NET> 205611
<NET-INVESTMENT-INCOME> (59322)
<REALIZED-GAINS-CURRENT> (212327)
<APPREC-INCREASE-CURRENT> 3920571
<NET-CHANGE-FROM-OPS> 3648922
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 100668
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4942403
<ACCUMULATED-NII-PRIOR> 1489
<ACCUMULATED-GAINS-PRIOR> 20569
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 190811
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 205611
<AVERAGE-NET-ASSETS> 28470137
<PER-SHARE-NAV-BEGIN> 11.47
<PER-SHARE-NII> (.02)
<PER-SHARE-GAIN-APPREC> 1.57
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.02
<EXPENSE-RATIO> 0.72
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
