[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
CLEARWATER INVESTMENT TRUST
- --------------------------------------------------------------------------------
January 31, 1997
TO: Our Unit Holders
On December 31, 1996, the net asset value of the Clearwater Growth Fund was
$17.88 per unit. The net asset value of the Clearwater Small Cap Fund was $12.74
per unit. On a total return basis for 1996, the Clearwater Growth Fund increased
by 21.6% and the Clearwater Small Cap Fund increased by 15.0%. For comparative
purposes, the S&P 500 increased by 23.1% and the Russell 2000 increased by 16.5%
. For the fourth quarter, the Clearwater Growth Fund increased 3.1% and the
Clearwater Small Cap Fund increased 4.8%. The S&P 500 increased 8.4% and the
Russell 2000 increased 5.2%.
Sit Investment Associates, Inc., the subadvisor for the Clearwater Growth Fund,
made the following comments on the year and outlook for 1997:
U.S. equity performance was strong again in 1996. Continued moderate
growth and inflation created a positive environment for financial
assets generally. Larger capitalization growth stocks outperformed
their "value" counterparts, but the same was not true for smaller
capitalization issues. Given the overall environment, we believe your
portfolio performed very well.
The subadviser's outlook for 1997 is that moderate growth and moderate
inflation will continue. If achieved, it would mean that the U.S.
economy has registered annual real GDP growth of between +2.0 percent
and +3.5 percent for six years in a row. While it is quite certain that
the business cycle is not dead, the steady increases in personal income
that are foreseen should be able to sustain consumer spending, which is
the dominant driver of total GDP. In 1997, real GDP growth should
increase +2.5 percent to +3.0 percent and CPI inflation +3.2 percent
(assuming no revisions to the calculation methodology). These economic
conditions should result in the Federal Reserve maintaining, at least
in the early part of the year, the neutral policy stance that has been
in place for several months.
Compared to the well-above-average returns achieved from U.S. equities
in 1995 and 1996 the potential rewards from the broad stock market in
1997 are likely to be more modest, based on technical as well as
fundamental factors.
Despite the more limited potential for the stock market as a whole, the
subadvisor believes it is still possible to remain relatively positive
with respect to above-average earnings growth companies in an
environment of moderate economic growth combined with stable and low
inflation. As of year end 1996, the projected average earnings gain for
companies in the Growth Fund portfolio was +25.8% for 1997 versus +4.9%
for the S&P Index. The portfolio's
<PAGE>
Page 2
high earnings growth rate, particularly in relation to the broader
stock market, supports the case that growth stocks as a category should
exhibit favorable relative performance."
[GRAPHIC OMITTED]
Annualized Total Returns
One Year Five Year Inception 6/19/87
Growth Fund 21.6% 11.7% 11.6%
S&P 500 23.1% 15.2% 13.0%
Kennedy Capital Management, the subadvisor for the Small Cap Fund, made the
following comments:
"The Clearwater account lagged the Russell 2000 benchmark for the
year. Obviously, we would have preferred to have exceeded the benchmark
but, given the market's preference for large and better-known stocks,
we are reasonably satisfied. By way of contrast, the average earnings
growth (one year) for firms in the Clearwater portfolio is almost
triple that of the typical firm in the benchmark. The average weighted
market-cap of the Clearwater account, however, was $173 million while
the median market-cap of the Russell 2000 is $640 million.
For the past three years, large stocks have outperformed small stocks.
The larger the stock, the better it tended to perform. We expect that
sometime in the near future, small-cap stocks will once again assume
their historic position of providing higher returns than large stocks.
This may occur for any number of reasons. The most obvious trigger
would be a pick up in the economic activity that eases investor
concerns and broadens market participation. Or, large companies which
are selling at high multiples may choose to sustain their grown through
acquisition. Specifically, we may see a pick up in the purchase of
smaller faster growing companies by larger firms.
<PAGE>
Page 3
As we await the turn, KCM's process remains unchanged. We identify
small, fast-growing but misunderstood companies and assist them in
increasing their visibility to other institutional investors."
[GRAPHIC OMITTED]
Annualized Total Returns
One Year Five Year Inception 6/19/87
Small Cap Fund 15.0% NA 10.6%
Russell 2000 16.5% NA 13.7%
Previous periods during which the Fund was advised by another investment manager
are not shown.
Clearwater Investment Trust Clearwater Management Company
- --------------------------- -----------------------------
F. T. Weyerhaeuser, Chairman & Treasurer P. W. Pascoe, Chairman &
Samuel B. Carr, Jr. Treasurer
Stanley R. Day, Jr. W. T. Weyerhaeuser, V.P. &
Robert J. Phares Secretary
E. C. Driscoll
W. John Driscoll
D. C. Titcomb, V.P. & Secretary C. W. Morley
F. W. Piasecki
D. C. Titcomb
G. H. Weyerhaeuser, Jr.
<PAGE>
CLEARWATER INVESTMENT TRUST
Financial Statements
December 31, 1996
<PAGE>
Independent Auditors' Report
The Board of Trustees and Shareholders
Clearwater Investment Trust:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments in securities, of Clearwater Small Cap Fund and
Clearwater Growth Fund (funds within Clearwater Investment Trust) as of December
31, 1996, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the years in the two-year period
then ended and the financial highlights for each of the years in the five-year
period then ended. These financial statements and the financial highlights are
the responsibility of the funds' management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are confirmed to us by the
custodian. As to securities purchased and sold, but not received or delivered,
we request confirmations from brokers, and where replies are not received, we
carry out other appropriate auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
Clearwater Small Cap Fund and Clearwater Growth Fund at December 31, 1996, and
the results of their operations for the year then ended, the changes in their
net assets for each of the years in the two-year period then ended and the
financial highlights for each of the years in the five-year period then ended,
in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
January 31, 1997
<PAGE>
<TABLE>
CLEARWATER INVESTMENT TRUST
Statements of Assets and Liabilities
December 31, 1996
<CAPTION>
Clearwater Clearwater
Assets Small Cap Fund Growth Fund
<S> <C> <C>
Investments in securities at market value (note 2),
(identified cost: $27,601,784 and $59,084,186,
respectively) $ 32,755,534 94,082,376
Cash in bank on demand deposit 12,949 18,142
Receivable for investment securities sold 187,272 18,969
Accrued dividend and interest receivable 32,391 89,612
Other receivables 1,252 527
Total assets 32,989,398 94,209,626
Liabilities
Payable for investment securities purchased 112,476 25,842
Accrued management fee 103,390 261,636
Total liabilities 215,866 287,478
Net assets applicable to outstanding capital stock $ 32,773,532 93,922,148
Represented by:
Capital stock and additional paid-in capital-
authorized unlimited numberof shares at no par
value for each Fund; outstanding 2,571,795 and
5,252,780 shares, respectively (note 2) 27,619,782 58,866,357
Accumulated net realized gains 0 57,601
Unrealized appreciation of investments 5,153,750 34,998,190
Total--representing net assets
applicable to outstanding capital stock $ 32,773,532 93,922,148
Net asset value per share of outstanding
capital stock $ 12.74 17.88
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CLEARWATER INVESTMENT TRUST
Statements of Operations
For the year ended December 31, 1996
<CAPTION>
Clearwater Clearwater
Small Cap Fund Growth Fund
<S> <C> <C>
Income:
Dividends (net of foreign taxes withheld of $0
and $3,266, respectively) $ 343,155 688,403
Interest 63,759 232,931
Total income 406,914 921,334
Expenses (note 5):
Management fee 392,202 977,321
Federal and state taxes (note 2) 13,248 10,859
Total expenses 405,450 988,180
Investment income (loss)--net 1,464 (66,846)
Realized and unrealized gains on investments:
Net realized gains on investments 1,056,580 13,625,055
Net change in unrealized appreciation or
depreciation of investments 3,060,523 4,478,299
Net gain on investments 4,117,103 18,103,354
Net increase in net assets
resulting from operations $ 4,118,567 18,036,508
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CLEARWATER INVESTMENT TRUST
Statements of Changes in Net Assets
<CAPTION>
Clearwater Small Cap Fund Clearwater Growth Fund
Year ended December 31, Year ended December 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Operations:
Investment income (loss), net $ 1,464 82,418 (66,846) 43,837
Net realized gain on investments 1,056,580 2,170,720 13,625,055 5,008,130
Net change in unrealized appreciation
or depreciation of investments 3,060,523 3,282,565 4,478,299 16,347,374
Net increase in net assets
resulting from operations 4,118,567 5,535,703 18,036,508 21,399,341
Distributions to shareholders from:
Investment income, net (2,953) (80,929) 0 (43,837)
Excess distribution of net investment
income (18,195) 0 0 (2,342)
Net realized gains (1,059,022) (2,150,083) (13,567,454) (4,980,550)
Tax return of capital (36,781) 0 0 0
Total distributions to
shareholders (1,116,951) (2,231,012) (13,567,454) (5,026,729)
Capital share transactions (note 4):
Proceeds from sales 2,162,955 3,891,971 9,000 50,000
Shares issued for reinvestment of
distributions 812,971 1,647,305 7,281,829 2,938,222
Payments for shares redeemed (29,543) (16,824) (2,612,400) (585,274)
Increase in net assets
from capital share
transactions 2,946,383 5,522,452 4,678,429 2,402,948
Total increase in net assets 5,947,999 8,827,143 9,147,483 18,775,560
Net assets at beginning of year 26,825,533 17,998,390 84,774,665 65,999,105
Net assets at end of year (including
undistributed distributions in
excess of) net investment income of
$0 and $1,489 for Clearwater
Small Cap Fund $ 32,773,532 26,825,533 93,922,148 84,774,665
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
CLEARWATER INVESTMENT TRUST
Notes to Financial Statements
(1) Organization
Clearwater Investment Trust (the Trust) was established on January 12,
1987 as a Massachusetts business trust and is registered under the
Investment Company Act of 1940 (as amended) as a diversified open-end
management investment company and presently includes two series of
funds: Clearwater Small Cap Fund and Clearwater Growth Fund (the
funds). The Trust's declaration of trust permits the board of directors
to create additional funds in the future. The investment objective of
the funds is long-term capital growth. The Clearwater Small Cap Fund
primarily invests in equity and fixed income securities of companies
that have total equity market capitalizations of $1 billion or lower.
The Clearwater Growth Fund invests in a broad list of securities that
offer the potential for growth.
(2) Summary of Significant Accounting Policies
The significant accounting policies followed by the funds are as follows:
Investments in Securities
Investments in securities are valued at the last sales price on the
principal exchange or market where they are traded. Securities which
have not traded on the date of valuation or securities for which
sales prices are not generally reported are valued at the mean
between the last bid and asked prices. Securities for which no market
quotations are readily available (including those the trading of
which has been suspended) will be valued at fair value as determined
in good faith by the board of trustees, although the actual
computations may be made by persons acting pursuant to the direction
of the board.
Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are calculated on an
identified cost basis. Dividend income is recognized on the
ex-dividend date and interest income, including amortization of
original issue discount and premium, is accrued daily.
Federal Taxes
The Trust's policy is to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to shareholders.
Therefore, no income tax provision is generally required. However,
the funds incurred federal and state income taxes of $13,248, or
$0.005 per share, for Clearwater Small Cap Fund, and $10,859, or
$0.002 per share, for Clearwater Growth Fund, on a minor portion of
taxable income retained. Each fund is treated as a separate entity
for federal income tax purposes. In addition, on a calendar year
basis, each fund intends to distribute substantially all of its net
investment income and realized gains, if any, to avoid the payment of
any federal excise taxes.
(Continued)
<PAGE>
2
CLEARWATER INVESTMENT TRUST
Net investment income and net realized gains 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 were recorded
by the funds.
On the statements of assets and liabilities, due to permanent
book-to-tax differences, the following adjustments have been made:
Clearwater Clearwater
Small Cap Growth
Fund Fund
---------------------------------------------------------------
Undistributed net investment $ 18,195 66,846
income
Accumulated net realized gains (18,154) (25,370)
Additional paid-in capital (41) (41,476)
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.
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.
(3) Investment Security Transactions
Cost of purchases and proceeds from sales of securities, other than
temporary investments in short-term securities, for the year ended
December 31, 1996, were as follows:
Sales
Purchases proceeds
------------------------------------------------------------------
------------------------------------------------------------------
Clearwater Small Cap Fund $ 26,015,262 25,803,735
Clearwater Growth Fund 66,490,183 72,393,736
(Continued)
<PAGE>
3
CLEARWATER INVESTMENT TRUST
(4) Capital Share Transactions
Transactions in shares of each fund for the years ended December 31, 1996
and 1995, were as follows:
Clearwater Clearwater
Small Cap Fund Growth Fund
----------------- -------------------
1996 1995 1996 1995
------------------------------------------------------------------
Sold 171,784 376,459 500 3,495
Issued for reinvested
distributions 63,812 143,619 407,261 172,735
Redeemed (2,467) (1,503) (137,983) (38,758)
------------------------------------------------------------------
Increase 233,129 518,575 269,778 137,472
==================================================================
(5) Expenses and Related Party Transactions
The Trust has a contract for management services with Clearwater
Management Company, a management firm of which the Trust's chairman is
a shareholder. Under terms of the agreement, Clearwater Small Cap Fund
and Clearwater Growth Fund pay a monthly fee equal to an annual rate of
1.35% and 1.10% of average net assets, respectively. However, certain
state securities laws do not permit Clearwater Management Company to
charge its management fee with respect to investments in other
investment companies held by the funds, therefore, actual management
fees may be less than these contractual rates. Clearwater Management
Company is responsible for the payment or reimbursement of all of the
Funds' expenses, except brokerage, taxes, interest and extraordinary
expenses.
The management firm has entered into a sub-advisory contract with an
independent investment advisory firm for each fund to provide daily
investment management services. The sub-advisory fee for the Clearwater
Small Cap Fund, payable to Kennedy Capital Management, is equal to an
annual rate of 1.00% of the first $30 million in net assets and then
decreasing in reduced percentages to 0.80% of net assets in excess of
$50 million. The sub-advisory fee for the Clearwater Growth Fund,
payable to SIT Investment Associates, Inc., is equal to an annual rate
of .75% of the first $10 million in net assets and then decreasing in
reduced percentages to .35% of net assets in excess of $80 million.
(6) Restricted Securities
At December 31, 1996, nvestments in securities for each of the Funds
included securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. The Funds
currently limit investments in restricted securities to 15% of net
assets at the time of purchase. The aggregate value of such securities
at December 31, 1996 was $242,500 and $499,124 representing .7% and .5%
of net assets for the Clearwater Small Cap and Clearwater Growth Funds,
respectively.
(Continued)
<PAGE>
4
CLEARWATER INVESTMENT TRUST
(7) Financial Highlights
Per share data (rounded to the nearest cent) for a share of capital stock
outstanding throughout the period and selected information for each
period is as follows:
Clearwater Small Cap Fund
Year ended December 31
--------------------------------------------------------
1996 1995 1994(b) 1993 1992
- -------------------------------------------------------------------------------
Net asset value, $ 11.47 9.89 12.26 11.50 11.30
beginning of year
- -------------------------------------------------------------------------------
Income from
investment
operations:
Net investment income
(loss) .00 .04 .17 .17 .29
Net realized and
unrealized gains (losses)1.71 2.56 (.99) 1.60 .25
- -------------------------------------------------------------------------------
Total from
investment
operations 1.71 2.60 (.82) 1.77 .54
- -------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income .00 (.04) (.17) (.17) (.29)
Excess distributions from
net investment income (.01) .00 .00 .00 .00
Distributions from net
realized gains (.42) (.98) (1.38) (.84) (.05)
Tax return of capital (.01) .00 .00 .00 .00
- -------------------------------------------------------------------------------
Total distributions (.44) (1.02) (1.55) (1.01) (.34)
- -------------------------------------------------------------------------------
Net asset value, end of year $ 12.74 11.47 9.89 12.26 11.50
- -------------------------------------------------------------------------------
Total return(a) 15.0% 26.3% (6.7%) 15.4% 4.9%
Net assets, end of year (000s
omitted) $32,774 26,826 17,998 13,972 13,128
Ratio of expenses to average
net assets 1.37%(d) 1.35% 1.40% 1.47% 1.49%
Ratio of net investment income
to average net assets .00% .36% 1.61% 1.38% 2.54%
Average brokerage commission
rate(c) $ 0.0424 n/a n/a n/a n/a
Portfolio turnover rate
(excluding short-term 89.25% 77.46% 122.88% 58.49% 73.07%
securities)
(a) Total return figures are based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value.
(b) Effective May 1, 1994, a change was implemented in the fund's investment
policies whereby the fund must invest at least 65% of its total assets in
securities of companies that have total equity market capitalizations of $1
billion or lower. Prior to this change, the fund was permitted to invest in
a broad list of equity and fixed income securities. Also, the fund's name
was changed from Clearwater Value Fund to Clearwater Small Cap Fund. Also
effective January 1, 1994, Kennedy Capital Management became the
sub-adviser for the fund.
(c) Beginning in fiscal 1996, the fund is required to disclose an average
brokerage commission rate. The rate is calculated by dividing total
brokerage commissions paid on purchases and sales of portfolio securities
by the total number of related shares purchased and sold.
(d) Includes federal and state taxes of .04%.
(Continued)
<PAGE>
5
Clearwater Growth Fund
Year ended December 31
--------------------------------------------------------
1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------
Net asset value, $ 17.01 13.62 14.49 15.98 15.42
beginning of year
- -------------------------------------------------------------------------------
Income from
investment
operations:
Net investment income
(loss) (.01) .01 .06 .09 .11
Net realized and
unrealized gains 3.68 4.43 .11 .27 .56
- -------------------------------------------------------------------------------
Total from
investment
operations 3.67 4.44 .17 .36 .67
- -------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income .00 (.01) (.06) (.09) (.11)
Distributions from
realized gains (2.80) (1.04) (.98) (1.76) .000
- -------------------------------------------------------------------------------
Total distributions (2.80) (1.05) (1.04) (1.85) (.11)
- -------------------------------------------------------------------------------
Net asset value, end of year $ 17.88 17.01 13.62 14.49 15.98
- -------------------------------------------------------------------------------
Total return(a) 21.6% 32.6% 1.2% 2.2% 4.4%
Net assets, end of year (000s
omitted) $93,922 84,775 65,999 61,037 67,554
Ratio of expenses to average
net assets 1.08%(c) 1.08% 1.07% 1.08% 1.10%
Ratio of net investment income
to average net assets (.07)% .06% .39% .55% .74%
Average brokerage commission
rate(b) $ 0.0547 n/a n/a n/a n/a
Portfolio turnover rate
(excluding short-term 75.90% 58.64% 70.69% 52.76% 32.08%
securities)
(a) Total return figures are based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value.
(b) Beginning in fiscal 1996, the fund is required to disclose an average
brokerage commission rate. The rate is calculated by dividing total
brokerage commissions paid on purchases and sales of portfolio securities
by the number of related shares purchased and sold.
(c) Includes federal and state taxes of .01%.
<PAGE>
<TABLE>
CLEARWATER INVESTMENT TRUST
CLEARWATER SMALL CAP FUND
Investments in Securities
December 31, 1996
<CAPTION>
Principal
amount or
number Market
Name of issuer of shares value (a)
(Percentages of each investment category relate to total net
assets.)
<S> <C> <C>
Corporate Bonds (0.7%):
Park Ohio Industries Inc.
7.25%, 6/15/04 (c) 250,000 $ 242,500
Total investment in bonds (cost $250,000) 242,500
Common and Preferred Stock (94.6%):
Aerospace (1.1%):
Transtechnology Corp. 19,200 376,800
Automotive (0.9%):
Standard Motor Products Inc. 21,700 301,087
Banks (2.0%):
Fidelity Federal Savings Bank 18,370 326,068
Gold Banc Corp., Inc. (b) 20,000 172,500
Trenton Savings Bank 10,800 172,800
671,368
Chemicals (0.4%):
Lilly Industries Inc. Class A 6,750 123,187
Computer Software (7.2%):
Altris Software Inc. (b) 21,300 138,450
Citation Computer Systems (b) 36,500 237,250
Find/SVP Inc. (b) 31,495 57,085
Henry (Jack) & Associates 10,100 361,075
PRI Automation Inc. (b) 4,100 186,550
Prophet 21 Inc. (b) 70,000 411,250
SYMIX Systems Inc. (b) 63,000 507,938
Timberline Software Corp. 50,275 452,475
2,352,073
<FN>
See accompanying notes to investments in securities.
(Continued)
</FN>
</TABLE>
<PAGE>
2
<TABLE>
CLEARWATER INVESTMENT TRUST
CLEARWATER SMALL CAP FUND
Investments in Securities, Continued
<CAPTION>
Number Market
Name of issuer of shares value (a)
Common and Preferred Stock, continued:
<S> <C> <C>
Construction Materials (3.0%):
Cameron Ashley Building Products (b) 20,000 $ 280,000
Northwest Pipe Company (b) 43,100 700,375
980,375
Consumer Goods--Non Durable (1.2%):
Electronic Hair Styling Inc. (b) 70,500 290,813
Parlux Fragrances Inc. (b) 27,750 114,469
405,282
Diversified (3.2%)
American Biltrite Inc. 13,000 289,250
CPAC Inc. (b) 21,640 324,600
Matthews International Corp. Class A 16,000 452,000
1,065,850
Electrical Equipment (6.3%):
Align-Rite International Inc. (b) 9,000 99,000
American Precision Industries Inc. 11,400 228,000
Astro-Med, Inc. 40,000 340,000
Charter Power Systems Inc. 11,600 353,800
Gasonics International Corp. (b) 17,200 176,300
Luminart Inc. (b) 12,715 9,536
TSX Corp. (b) 54,000 479,250
Zycon Corp. (b) 21,000 375,375
2,061,261
<FN>
See accompanying notes to investments in securities.
(Continued)
</FN>
</TABLE>
<PAGE>
3
<TABLE>
CLEARWATER INVESTMENT TRUST
CLEARWATER SMALL CAP FUND
Investments in Securities, Continued
<CAPTION>
Number Market
Name of issuer of shares value (a)
Common and Preferred Stock, continued
<S> <C> <C>
Electronics, Instrument (10.7%):
Audiovox Corp. Class A (b) 100,000 $ 568,750
Datamarine International Inc. (b) 34,500 207,000
Electroglas Inc. (b) 4,000 64,500
Esco Electronics Corp. 13,000 130,000
Herley Industries Inc. (b) 26,470 271,318
Keithley Instruments Inc. 19,500 180,375
Liuski International Inc. (b) 16,000 28,000
MTI Technology Corp. (b) 135,900 450,169
Photronics Inc. (b) 3,300 89,925
II-VI Inc. (b) 10,000 262,500
Ultrak Inc. (b) 14,700 448,350
Wegener Corp. (b) 50,000 196,875
Wells-Gardner Electronics Corp. (b) 25,250 110,469
Whitehall Corp. (b) 11,250 483,750
3,491,981
Financial (6.4%):
Greater NY Savings Bank 44,400 604,950
Mechanics Savings Bank (b) 6,700 105,525
Pacific Crest Capital, Inc. (b) 56,400 648,600
Riggs National Preferred Series B 10.75% 11,050 319,069
Roosevelt Financial Group Inc. 19,500 409,500
2,087,644
Food and Beverage (3.5%):
Daka International Inc. (b) 33,550 322,919
Erly Industries Inc. 8,894 71,152
Farmer Brothers Company 2,150 326,800
Unimark Group Inc. (b) 53,965 418,229
1,139,100
<FN>
See accompanying notes to investments in securities.
(Continued)
</FN>
</TABLE>
<PAGE>
4
<TABLE>
CLEARWATER INVESTMENT TRUST
CLEARWATER SMALL CAP FUND
Investments in Securities, Continued
<CAPTION>
Number Market
Name of issuer of shares value (a)
Common and Preferred Stock, continued:
<S> <C> <C>
Forest Products (2.6%):
Pope & Talbot Inc. 28,500 $ 452,438
Universal Forest Products Inc. 29,250 387,562
840,000
Furniture (0.5%):
Winsloew Furniture Inc. (b) 15,950 155,512
Health Care (1.8%):
Laser Vision Centers Inc. (b) 17,500 94,063
Mariner Health Group Inc. (b) 45,000 376,875
U.S. Diagnostic Inc. (b) 13,000 120,250
591,188
Insurance (9.6%):
Acceptance Insurance Companies Inc. (b) 2,290 45,228
Acordia Inc. 10,850 314,650
American Physicians Service Group (b) 49,000 318,500
Arbatax International Inc. (b) 7,250 48,938
John Alden Financial Corp. 35,600 658,600
Liberty Financial Companies Inc. 12,200 474,275
Motor Club of America (b) 17,200 163,400
Penn Treaty American Corp. (b) 20,300 527,800
Pioneer Financial Services Inc. 17,022 425,550
Symons International Group Inc. (b) 10,550 176,713
3,153,654
Machinery (1.0%):
Easco Inc. 43,100 328,637
Manufactured Housing (3.1%):
American Homestar Corp. (b) 27,100 616,524
Belmont Homes Inc. (b) 40,100 385,962
1,002,486
<FN>
See accompanying notes to investments in securities.
(Continued)
</FN>
</TABLE>
<PAGE>
5
<TABLE>
CLEARWATER SMALL CAP FUND
Investments in Securities, Continued
<CAPTION>
Number Market
Name of issuer of shares value (a)
Common and Preferred Stock, continued:
<S> <C> <C>
Medical Technology (3.2%):
Alliance Imaging Inc. (b) 36,000 $ 207,000
Colorado Medtech Inc. (b) 80,650 241,950
OEC Medical Systems Inc. (b) 27,532 412,980
Star MultiCare Services Inc. (b) 30,500 183,000
1,044,930
Office Equipment, Computers (0.3%):
Gradco Systems Inc. (b) 26,900 100,875
Oil and Gas (8.6%):
Belden & Blake Corp. (b) 11,600 295,800
Bolt Technology Corp. (b) 197,500 864,063
Coho Energy Inc. (b) 47,100 335,588
Denbury Resources Inc. (b) 14,350 208,075
Lufkin Industries Inc. 16,250 406,250
NUI Corp. 18,650 421,956
Providence Energy Corp. 16,950 296,625
2,828,357
Pharmaceuticals (1.1%):
ICN Pharmaceuticals Inc. 17,702 347,400
Printing, Publishing and Broadcasting (0.3%):
Media General Inc. Class A 3,100 93,774
Retail Trade (3.6%):
Drug Emporium, Inc. (b) 54,800 232,900
Duckwall-Alco Stores, Inc. (b) 22,200 316,350
Genovese Drug Stores Inc. Class A 40,196 623,037
1,172,287
<FN>
See accompanying notes to investments in securities.
(Continued)
</FN>
</TABLE>
<PAGE>
6
<TABLE>
CLEARWATER INVESTMENT TRUST
CLEARWATER SMALL CAP FUND
Investments in Securities, Continued
<CAPTION>
Principal
amount or
number Market
Name of issuer of shares value (a)
Common and Preferred Stock, continued:
<S> <C> <C>
Services (8.6%):
Children's Discovery Centers Inc. (b) 56,900 $ 398,300
GNI Group Inc. (b) 41,800 276,925
Health Fitness Physical Therapy Inc. (b) 69,200 207,600
ICO Inc. 108,168 662,529
MARC Inc. 20,100 439,688
PS Group Holdings Inc. 25,950 350,325
Rowe Furniture Corp. 60,400 483,200
2,818,567
Telecommunications (0.4%):
SSE Telecom Inc. (b) 16,450 131,600
Tobacco (0.8%):
Dimon Inc. 12,000 277,500
Utility-Gas, Electric (3.2%):
El Paso Electric Company (b) 67,100 436,150
Trigen Energy Corp. 21,500 618,125
1,054,275
Total Common and Preferred Stock
(cost: $25,835,800) 30,997,050
Short-Term Securities (4.6%):
Federated Master Trust 4.95% 1,515,984 1,515,984
Total Short--Term Securities
(cost: $1,515,984) 1,515,984
Total Investments in Securities
(cost: $27,601,784) (d) $ 32,755,534
<FN>
See accompanying notes to investments in securities.
(Continued)
</FN>
</TABLE>
<PAGE>
7
CLEARWATER INVESTMENT TRUST
CLEARWATER SMALL CAP FUND
Investments in Securities, Continued
Notes to Investments in Securities
(a) Securities are valued in accordance with procedures described in note 2 to
the financial statements.
(b) Currently non-income producing.
(c) Security purchased on June 6, 1994 at a cost of $250,000 as part of a
private placement that has not been registered with the Securities and
Exchange Commission under the Securities Act of 1993. May be sold only to
dealers in that program or other accredited investors.
(d) At December 31, 1996, the cost for federal income tax purposes was
$27,601,784. The aggregate gross unrealized appreciation and depreciation
of investments in securities based on this cost were as follows:
Gross unrealized appreciation $ 6,366,557
Gross unrealized depreciation (1,212,807)
Net unrealized appreciation $ 5,153,750
<PAGE>
<TABLE>
CLEARWATER INVESTMENT TRUST
CLEARWATER GROWTH FUND
Investments in Securities
December 31, 1996
<CAPTION>
Number Market
Name of issuer of shares value (a)
(Percentages of each investment category relate to total net
assets.)
Common Stock (100.1%):
Domestic (90.2%):
<S> <C> <C>
Aerospace (1.7%):
Boeing Company 15,000 $ 1,595,625
Automotive (1.5%):
Harley Davidson Inc. 29,500 1,386,500
Banks (2.5%):
Citicorp 10,500 1,081,500
First American Corp.--Tenn. 2,000 115,250
Norwest Corp. 27,000 1,174,500
2,371,250
Chemicals (2.1%):
IMC Global Inc. 9,500 371,688
Monsanto Company 24,000 933,000
Potash Corp. of Saskatchewan 7,500 637,500
1,942,188
Computer Software (17.6%):
Aspen Technology Inc. (b) 2,000 160,500
Cerner Corp. (b) 14,500 224,750
Computer Associates International Inc. 9,500 472,624
Computer Sciences Corp. (b) 9,000 739,124
Dendrite International Inc. (b) 25,000 206,250
Electronics for Imaging Inc. (b) 9,000 740,250
First Data Corp. 37,000 1,350,500
Fiserv Inc. (b) 20,000 735,000
HBO & Company 34,500 2,048,436
Informix Corp. (b) 20,000 407,500
Legato Systems Inc. (b) 6,000 195,750
<FN>
See accompanying notes to investments in securities.
(Continued)
</FN>
</TABLE>
<PAGE>
2
<TABLE>
CLEARWATER INVESTMENT TRUST
CLEARWATER GROWTH FUND
Investments in Securities, Continued
<CAPTION>
Number Market
Name of issuer of shares value (a)
Common Stock, continued:
<S> <C> <C>
Medic Computer Systems Inc. (b) 18,000 $ 725,624
Microsoft Corp. (b) 24,000 1,983,000
National Data Corp. 8,500 369,750
Oracle Corp. (b) 27,500 1,148,124
Parametric Technology Corp. (b) 53,500 2,748,562
Peoplesoft Inc. (b) 27,000 1,294,312
15,550,056
Construction Materials (0.6%):
Owens Corning 13,000 554,125
Consumer Goods--Non Durable (3.1%):
Gillette Company 25,000 1,943,750
Procter & Gamble Company 9,000 967,500
2,911,250
Diversified (1.3%):
Crane Company 22,500 652,500
Tyco International Ltd. 11,000 581,625
1,234,125
Electrical Equipment (1.9%):
General Electric Company 18,000 1,779,750
Electronics, Instrument (6.9%):
Analog Devices Inc. (b) 34,500 1,168,688
Hewlett-Packard Company 10,000 502,500
Intel Corp. 20,500 2,684,219
Sundstrand Corp. 25,000 1,062,500
Xilinx Inc. (b) 28,000 1,030,750
6,448,657
<FN>
See accompanying notes to investments in securities.
(Continued)
</FN>
</TABLE>
<PAGE>
3
<TABLE>
CLEARWATER INVESTMENT TRUST
CLEARWATER GROWTH FUND
Investments in Securities, Continued
<CAPTION>
Number Market
Name of issuer of shares value (a)
Common Stock, continued:
<S> <C> <C>
Financial (6.8%):
CUC International Inc. (b) 60,000 $ 1,425,000
Federal Home Loan Mortgage Corp. 9,000 991,125
Franklin Resources Inc. 7,000 478,625
Green Tree Financial Corp. 12,500 482,813
T. Rowe Price & Associates 33,500 1,457,250
TCF Financial Corp. 35,000 1,522,500
6,357,313
Food and Beverage (4.2%):
Coca Cola Company 36,000 1,894,500
Phillip Morris Companies, Inc. 18,500 2,083,563
3,978,063
Health Care (4.3%):
Healthsouth Corp. (b) 47,500 1,834,688
Oxford Health Plans Inc. (b) 38,000 2,225,375
4,060,063
Insurance (6.7%):
American International Group 12,000 1,299,000
CMAC Investment Corp. 13,000 477,750
Mercury General Corp. 28,500 1,496,250
MGIC Investment Corp. 17,000 1,292,000
NAC Re Corp. 5,500 186,313
4,751,313
Lodging and Restaurants (2.1%):
Marriott International, Inc. 20,000 1,105,000
Promus Hotel Corp. (b) 28,000 829,500
1,934,500
Medical Technology (2.0%):
Medtronic Inc. 17,500 1,190,000
Stryker Corp. 23,000 687,125
1,877,125
<FN>
See accompanying notes to investments in securities.
(Continued)
</FN>
</TABLE>
<PAGE>
4
<TABLE>
CLEARWATER INVESTMENT TRUST
CLEARWATER GROWTH FUND
Investments in Securities, Continued
<CAPTION>
Number Market
Name of issuer of shares value (a)
Common Stock, continued:
<S> <C> <C>
Office Equipment, Computers (2.8%):
Cisco Systems Inc. (b) 38,000 $ 2,417,750
Oil and Gas (7.4%):
Baker Hughes Inc. 19,000 655,500
Camco International Inc. 11,500 530,438
Noble Affiliates Inc. 9,500 454,813
Parker & Parsley Petroleum Company 25,500 937,125
Transocean Offshore Inc. 18,500 1,158,563
3,736,439
Pharmaceuticals (9.1%):
Amgen Inc. (b) 26,500 1,440,938
Biogen Inc. (b) 24,000 930,000
Johnson & Johnson 35,000 1,741,250
Pfizer Inc. 25,000 2,071,875
6,184,063
Retail Trade (4.8%):
Federated Department Stores Inc. (b) 32,500 1,109,063
Gap Inc. 20,000 602,500
Home Depot Inc. 20,500 1,027,563
Kohls Corp. (b) 35,000 1,373,750
Petsmart Inc. (b) 20,000 437,500
4,550,376
Services (5.8%):
Ceridian Corp. (b) 44,500 1,802,250
Corestaff Inc. (b) 43,200 1,023,300
Paychex Inc. 13,500 694,406
Stewart Enterprises Inc. Class A 27,750 943,500
4,463,456
<FN>
See accompanying notes to investments in securities.
(Continued)
</FN>
</TABLE>
<PAGE>
5
<TABLE>
CLEARWATER INVESTMENT TRUST
CLEARWATER GROWTH FUND
Investments in Securities, Continued
<CAPTION>
Number
of shares
or principal Market
Name of issuer amount value (a)
Common Stock, continued:
<S> <C> <C>
Telecommunications (4.9%):
ADC Telecommunications Inc. (b) 17,000 $ 529,125
Ascend Communications Inc. (b) 7,000 434,875
LCI International Inc. (b) 30,000 645,000
MCI Communications 35,000 1,144,063
Picturetel Corp. (b) 18,000 468,000
Premisys Communications Inc. (b) 6,000 202,500
Tellabs Inc. (b) 18,000 677,250
U.S. Robotics Corp. (b) 7,500 540,000
4,640,813
Foreign (9.9%):
Ace Ltd. 11,000 661,375
Astra AB ADR 11,500 563,500
Baan Company (b) 15,000 521,250
British Petroleum Company ADR 9,285 1,312,667
Danka Business Systems ADR 5,500 194,563
Elan Corp. plc ADR (b) 28,500 947,625
Exel Ltd. 24,000 909,000
Loewen Group Inc. 14,000 547,750
Petroleum Geo Services ADR (b) 11,500 448,500
SAP ADR (c) 11,000 499,124
Schlumberger Ltd. 14,500 1,448,188
SmithKline Beecham ADR 12,000 816,000
Triton Energy Ltd. 8,500 412,250
9,281,792
Total Common Stock
(cost: $59,008,402) 94,006,592
<FN>
See accompanying notes to investments in securities.
(Continued)
</FN>
</TABLE>
<PAGE>
6
<TABLE>
CLEARWATER INVESTMENT TRUST
CLEARWATER GROWTH FUND
Investments in Securities, Continued
<CAPTION>
Number
of shares
or principal Market
Name of issuer amount value (a)
Short-Term Securities (0.1%):
<S> <C> <C>
Norwest Advantage Cash Investment Fund 5.00% 75,784 $ 75,784
Total Short-Term Securities
(cost: $75,784) 75,784
Total Investments in Securities
(cost: $59,084,186) (d) $ 94,082,376
</TABLE>
Notes to Investments in Securities
(a) Securities are valued in accordance with procedures described in note 2 to
the financial statements.
(b) Currently non-income producing.
(c) Security purchased on May 23, 1995 at a cost of $401,720 as part of a
private placement that has not been registered with the Securities and
Exchange Commission under the Securities Act of 1933. May be sold only to
dealers in that program or other accredited investors.
(d) At December 31, 1996, the cost for federal income tax purposes was
$59,084,186. The aggregate gross unrealized appreciation and depreciation
of investments in securities based on this cost were as follows:
Gross unrealized appreciation $ 35,942,500
Gross unrealized depreciation (944,310)
Net unrealized appreciation $ 34,998,190
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE 1996 ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> CLEARWATER GROWTH FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 59,084,186
<INVESTMENTS-AT-VALUE> 94,082,376
<RECEIVABLES> 19,496
<ASSETS-OTHER> 107,754
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 94,209,626
<PAYABLE-FOR-SECURITIES> 25,282
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 261,636
<TOTAL-LIABILITIES> 287,478
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 58,866,357
<SHARES-COMMON-STOCK> 5,252,780
<SHARES-COMMON-PRIOR> 4,983,002
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 57,601
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 34,998,190
<NET-ASSETS> 93,922,148
<DIVIDEND-INCOME> 688,403
<INTEREST-INCOME> 232,931
<OTHER-INCOME> 0
<EXPENSES-NET> 988,180
<NET-INVESTMENT-INCOME> (66,846)
<REALIZED-GAINS-CURRENT> 13,625,055
<APPREC-INCREASE-CURRENT> 4,478,299
<NET-CHANGE-FROM-OPS> 18,103,354
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 13,567,454
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 500
<NUMBER-OF-SHARES-REDEEMED> 137,983
<SHARES-REINVESTED> 407,261
<NET-CHANGE-IN-ASSETS> 9,147,483
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 27,712
<OVERDISTRIB-NII-PRIOR> 2,342
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 977,321
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 988,180
<AVERAGE-NET-ASSETS> 91,833,219
<PER-SHARE-NAV-BEGIN> 17.01
<PER-SHARE-NII> (.01)
<PER-SHARE-GAIN-APPREC> 3.68
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 2.80
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.88
<EXPENSE-RATIO> 1.077
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMANTION
EXTRACTED FROM THE 1996 ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> CLEARWATER SMALL CAP FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 27,601,784
<INVESTMENTS-AT-VALUE> 32,755,534
<RECEIVABLES> 188,524
<ASSETS-OTHER> 14,201
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32,989,398
<PAYABLE-FOR-SECURITIES> 112,476
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 103,390
<TOTAL-LIABILITIES> 215,866
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27,619,782
<SHARES-COMMON-STOCK> 2,571,795
<SHARES-COMMON-PRIOR> 2,338,666
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 18,195
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,153,750
<NET-ASSETS> 32,773,532
<DIVIDEND-INCOME> 343,155
<INTEREST-INCOME> 63,759
<OTHER-INCOME> 0
<EXPENSES-NET> 405,450
<NET-INVESTMENT-INCOME> 1,464
<REALIZED-GAINS-CURRENT> 1,056,580
<APPREC-INCREASE-CURRENT> 3,060,523
<NET-CHANGE-FROM-OPS> 4,118,567
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,953
<DISTRIBUTIONS-OF-GAINS> 1,059,022
<DISTRIBUTIONS-OTHER> 36,781
<NUMBER-OF-SHARES-SOLD> 171,783
<NUMBER-OF-SHARES-REDEEMED> 2,467
<SHARES-REINVESTED> 63,812
<NET-CHANGE-IN-ASSETS> 5,947,999
<ACCUMULATED-NII-PRIOR> 1,489
<ACCUMULATED-GAINS-PRIOR> 20,569
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 392,202
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 405,450
<AVERAGE-NET-ASSETS> 29,625,978
<PER-SHARE-NAV-BEGIN> 11.47
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 1.71
<PER-SHARE-DIVIDEND> .01
<PER-SHARE-DISTRIBUTIONS> .42
<RETURNS-OF-CAPITAL> .01
<PER-SHARE-NAV-END> 12.74
<EXPENSE-RATIO> 1.374
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
