[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
CLEARWATER INVESTMENT TRUST
- --------------------------------------------------------------------------------
August 25, 1997
TO: Our Unit Holders
On June 30, 1997, the net asset value of the Clearwater Growth Fund was $20.84
per unit. The net asset value of the Clearwater Small Cap Fund was $14.56 per
unit. On a total return basis for 1997, the Clearwater Growth Fund increased by
16.6% and the Clearwater Small Cap Fund increased by 14.3%. For comparative
purposes, the S&P 500 increased by 20.5% and the Russell 2000 increased by
10.2%. For the second quarter, the Clearwater Growth Fund increased 20.1% and
the Clearwater Small Cap Fund increased 15.2%. The S&P 500 increased 17.4% and
the Russell 2000 increased 16.2%.
Sit Investment Associates, Inc., the subadvisor for the Clearwater Growth Fund,
made the following comments on the first half and the outlook for balance of
1997:
"Domestic financial asset prices advanced strongly during the second quarter
of 1997, driven by lower-than-expected inflation, satisfactory overall profit
gains, strong cash flows into mutual funds, and record merger and acquisition
activity. The Clearwater Growth Fund participated well in the stock market
advance.
Large and mid cap stocks performed in roughly similar fashion during the
second quarter (advancing over 20 percent), but the first six months large
cap stocks clearly were the superior category. Both large and mid cap stocks
in the portfolio outperformed their index comparators in the second quarter
and in both instances stock selection was more important than group weighting
in producing the superior performance, by a ratio of approximately two to
one. Health Care stock selection was the largest single positive factor
contributing to results in both portfolio components. Health care companies
making strong contributions were Pfizer, Warner-Lambert, Medtronic, Lilly and
HBO & Company. The three most heavily weighted industry sectors in the
aggregate portfolio remain technology, health care and financial services.
The stock market is expensively priced on most valuation measures with the
important exception of interest rates. Since our near-term outlook for the
bond market is favorable, stocks could rally further, although the
possibility of negative surprise has increased. Growth stocks, in general,
including the important technology and health care sectors, are not
excessively priced in relation to prior peaks in valuation.
The most appealing opportunities in the spectrum of growth stocks are among
the medium sized firms, which have lagged in performance and provide a
favorable combination of high earnings growth and attractive valuation. At
the end of June, medium sized companies represented 36.9 percent of the
aggregate portfolio, down slightly from 37.5 percent at the end of March, but
nevertheless a major exposure. Cash reserves were a modest 4 percent of
assets at the end of the quarter."
<PAGE>
Page 2
Kennedy Capital Management, the subadvisor for the Clearwater Small Cap Fund,
made the following comments:
"Last quarter, we posited that a modest reversal would be healthy for US
stocks. Our reasoning was that such a reversal would help assuage investor
"guilt." After all, the US market has been in a broadly-based bull market
since 1982, and there has not seen a negative quarter since 1994. It would
seem, that after investors "paid" for their good fortune, the party could
resume again. There was, and is, no sufficient fundamental reason why the US
equity market should reverse. Valuations, while stretched a bit for the
largest stocks, are not at dangerous levels. But, as we noted last quarter,
"'everyone' knows that the market is overdue for a correction."
As we wrote that opinion in April, we were projecting a 10 percent decline
but rooting for 15 percent. It would seem that all US investors have read
Jeremy Siegel's Stocks for the Long Run and are well-versed in the Ibbotson
and Sinquefield data. They are buying stocks on the dips and the
February-March reversal stopped just short of ten percent. The market then
rebounded very strongly. Significantly, market strength broadened to include
small stocks as well as large ones -- particularly in May and June. During
the last two months of the quarter, the Russell 2000 added 15.9% compared
with the S&P's 10.8% gain.
And while market pundits don't make markets, investors do, a number of well
known commentators are singling out small stocks for investor attention.
These individuals include, Abby Cohen of Goldman Sachs, Charles Clough of
Merrill Lynch, and Byron Wien of Morgan Stanley. Frankly, we would have
preferred another five percentage points of decline -- to shake out investor
unease -- instead of commentator support.
We anticipate that small stocks will continue to add ground relative to large
stocks over the remaining quarters in 1997."
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
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
<CAPTION>
GROWTH SMALL CAP
FUND FUND
ASSETS
<S> <C> <C>
Investments in securities, at market value (note 2
(identified cost: $62,339,951 Growth Fund; $31,679,146 Small Cap Fund) $106,086,970 $38,568,117
Cash 4,371 82,406
Receivables 103,822 195,749
----------- -----------
TOTAL ASSETS $106,195,163 $38,846,272
LIABILITIES
Payables $ 25,815 $ 114,407
Accrued expenses 267,965 116,416
----------- -----------
TOTAL LIABILITIES $ 293,780 $ 230,823
NET ASSETS $105,901,383 $38,615,449
- ---------- =========== ==========
CAPITAL
Capital stock and additional paid-in capital
(authorized unlimited number of shares at no par
value for each Fund; outstanding 5,080,587 and
2,652,388 shares, respectively (note 2)) $ 55,728,050 $28,687,525
Accumulated net income(loss) (69,912) (15,733)
Accumulated net realized gain(loss) 6,496,225 3,054,685
Unrealized appreciation of investments 43,747,020 6,888,972
----------- ----------
$105,901,383 $38,615,449
Net asset value per share of outstanding capital stock $ 20.84 $ 14.56
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
-1-
<PAGE>
CLEARWATER INVESTMENT TRUST
<TABLE>
STATEMENT OF OPERATIONS
Six-Month Period Ended June 30, 1997
<CAPTION>
GROWTH SMALL CAP
FUND FUND
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends $ 349,046 $ 200,770
Interest 92,900 9,063
---------- ----------
TOTAL INCOME $ 441,946 $ 209,833
Expenses: (note 5)
Investment advisory fee $ 511,858 $ 225,566
Other fees and expenses -0- -0-
----------- ------------
TOTAL EXPENSES $ 511,858 $ 225,566
---------- ----------
NET INVESTMENT INCOME (LOSS) $ (69,912) $ (15,733)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain (loss) on security transactions $ 6,438,624 $ 3,054,685
Unrealized appreciation (depreciation) during the period 8,748,830 1,735,222
--------- ----------
NET GAIN ON INVESTMENTS $15,187,454 $ 4,789,907
---------- ----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $15,117,542 $ 4,774,174
========== ==========
</TABLE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
Six-Month Period Ended June 30, 1997 GROWTH FUND SMALL CAP FUND
6/30/97 12/31/96 6/30/97 12/31/96
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income(loss) $ (69,912) $ (66,846) $ (15,733) $ 1,464
Net realized gain(loss) on investments 6,438,624 13,625,055 3,054,685 1,056,580
Unrealized appreciation(depreciation)
during the period 8,748,830 4,478,299 1,735,222 3,060,523
--------- ---------- ---------- ---------
NET INCREASE IN NET ASSETS FROM OPERATIONS $15,117,542 $18,036,508 $4,774,174 $4,118,567
DISTRIBUTIONS TO SHAREHOLDERS -0- ($13,567,454) -0- ($1,116,951)
CAPITAL SHARE TRANSACTIONS (note 4)
Proceeds from shares sold $ 435,000 $ 9,000 $1,076,000 $2,162,955
Reinvestment of distributions from
net investment income -0- 7,281,829 -0- 812,971
Cost of shares redeemed (3,573,307) (2,612,400) (8,257) (29,543)
----------- ----------- ---------- ----------
INCREASE(DECREASE) IN NET ASSETS FROM
CAPITAL SHARES TRANSACTIONS $(3,138,307) $ 4,678,429 $1,067,743 $ 2,946,383
----------- --------- --------- ----------
TOTAL INCREASE IN NET ASSETS $11,979,235 $ 9,147,483 $5,841,917 $ 5,947,999
NET ASSETS
At the beginning of the period $93,922,148 $84,774,665 $32,773,532 $26,825,533
---------- ---------- ---------- -----------
At the end of the period $105,901,383 $93,922,148 $38,615,449 $32,773,532
=========== ========== ========== ==========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
-2-
<PAGE>
CLEARWATER GROWTH FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1997
<TABLE>
<CAPTION>
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE NET ASSETS
<S> <C> <C> <C>
COMMON STOCKS
AEROSPACE
24,000 BOEING COMPANY 568,970.00 1,273,500.00 1.20
AUTOMOTIVE
29,500 HARLEY DAVIDSON INC. 797,130.90 1,414,156.25 1.34
BANKS
5,000 CHASE MANHATTAN CORP 484,485.00 485,312.50 .46
10,500 CITICORP 441,829.55 1,265,906.25 1.19
4,000 FIRST AMERICAN CORP - TENN 107,205.00 153,500.00 .14
28,000 NORWEST CORP 1,246,175.20 1,575,000.00 1.48
4,000 REPUBLIC NY CORP 382,682.70 430,000.00 .41
------------ ------------
TOTAL BANKS 2,662,377.45 3,909,718.75 3.68
CHEMICALS
24,000 MONSANTO CO 408,455.10 1,033,500.00 .97
COMPUTER SOFTWARE
10,000 ASPEN TECHNOLOGY 287,212.45 376,250.00 .35
9,000 BAAN COMPANY 255,937.50 619,875.00 .58
20,500 BUSINESS OBJECTS SA ADR 190,445.00 199,875.00 .19
10,000 COMPUTER ASSOC INTERNATIONAL INC 514,842.00 556,875.00 .53
13,000 COMPUTER SCIENCES CORPORATION 920,898.55 937,625.00 .89
25,500 DENDRITE INTERNATIONAL INC. 308,373.75 420,750.00 .40
19,000 ELECTRONICS FOR IMAGING INC. 548,465.30 897,750.00 .85
29,500 FIRST DATA CORPORATION 320,768.57 1,296,156.25 1.22
20,000 FISERV INC 611,407.60 892,500.00 .84
34,500 HBO & COMPANY 1,271,007.80 2,376,187.50 2.24
7,000 HCIA INC 227,548.75 234,500.00 .22
9,500 LEGATO SYSTEMS INC 157,970.10 175,750.00 .17
21,000 MEDIC COMPUTER SYSTEMS INC 629,143.50 467,250.00 .44
13,000 MICROSOFT CORPORATION 83,073.61 1,642,875.00 1.55
9,000 NATIONAL DATA CORPORATION 326,727.50 389,812.50 .37
20,000 ORACLE SYSTEMS CORPORATION 95,164.10 1,007,500.00 .95
53,500 PARAMETRIC TECHNOLOGY CORPORATION 1,309,562.55 2,277,093.75 2.15
27,500 PEOPLESOFT INC 862,211.20 1,450,625.00 1.37
11,000 SAP ADS 401,720.00 760,650.00 .72
------------ -------------
TOTAL COMPUTER SOFTWARE 9,322,479.83 16,979,900.00 16.03
DIVERSIFIED
11,500 BMC INDUSTRIES INC. 373,002.50 393,875.00 .37
24,500 CRANE COMPANY 669,895.00 1,024,406.25 .97
11,000 TYCO INTERNATIONAL LTD 447,879.30 765,187.50 .72
------------ ------------
TOTAL DIVERSIFIED 1,490,776.80 2,183,468.75 2.06
ELECTRICAL EQUIPMENT
18,500 ATMEL CORP 526,889.90 518,000.00 .49
39,000 GENERAL ELECTRIC COMPANY 1,665,921.05 2,549,625.00 2.40
------------ ------------
TOTAL ELECTRICAL EQUIPMENT 2,192,810.95 3,067,625.00 2.89
ELECTRONICS, INSTRUMENT
38,000 ANALOG DEVICES INC 681,654.00 1,009,375.00 .95
14,000 INTEL CORPORATION 349,866.65 1,985,375.00 1.87
15,500 SUNDSTRAND CORPORATION 502,543.75 837,000.00 .79
31,500 XILINX INC 1,067,714.43 1,545,468.75 1.45
------------ ------------
TOTAL ELECTRONICS, INSTRUMENT 2,601,778.83 5,377,218.75 5.07
FINANCIAL
38,000 CUC INTERNATIONAL INC. 292,554.80 980,875.00 .92
32,500 FEDERAL HOME LOAN MORTGAGE CORP 106,234.10 1,117,187.50 1.05
9,000 FRANKLIN RESOURCES INCORPORATED 332,901.55 653,062.50 .62
12,500 GREEN TREE FINANCIAL CORPORATION 425,750.00 445,312.50 .42
24,000 T. ROWE PRICE ASSOCIATES 673,168.25 1,239,000.00 1.17
32,000 TCF FINANCIAL CORPORATION 1,124,545.00 `1,580,000.00 1.49
------------ ------------
TOTAL FINANCIAL 2,955,153.70 6,015,437.50 5.67
3
<PAGE>
CLEARWATER GROWTH FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1997
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE NET ASSETS
FOOD AND BEVERAGE
11,000 CAMPBELL SOUP COMPANY 538,757.00 550,000.00 .52
36,000 COCA-COLA COMPANY 1,081,705.00 2,430,000.00 2.29
48,000 PHILLIP MORRIS COMPANIES INC. 807,438.25 2,130,000.00 2.00
------------ ------------
TOTAL FOOD AND BEVERAGE 2,427,900.25 5,110,000.00 4.82
HEALTH CARE
60,500 HEALTHSOUTH REHABILITATION 533,235.00 1,508,718.75 1.42
26,000 OXFORD HEALTH PLANS INC. 1,169,105.30 1,865,500.00 1.76
------------ ------------
TOTAL HEALTH CARE 1,702,340.30 3,374,218.75 3.18
INSURANCE
11,000 ACE LTD 625,555.00 812,625.00 .76
9,000 ALLSTATE CORP 559,336.40 657,000.00 .62
9,000 AMERICAN INTERNATIONAL GROUP INC 466,630.50 1,344,375.00 1.27
13,000 CMAC INVESTMENT CORPORATION 374,952.50 620,750.00 .59
15,000 EXEL LTD 193,655.00 791,250.00 .75
38,500 MERCURY GENERAL CORPORATION 1,645,980.30 2,800,875.00 2.64
28,000 MGIC INVESTMENT CORPORATION 672,840.00 1,342,250.00 1.26
9,500 MUTUAL RISK MANAGEMENT LTD 352,996.55 435,812.50 .41
------------ ------------
TOTAL INSURANCE 4,891,946.25 8,804,937.50 8.30
LODGING & RESTAURANT
21,000 MARRIOTT INTERNATIONAL, INC. 759,064.80 1,288,875.00 1.22
20,000 PROMUS HOTEL CORPORATION 557,547.45 775,000.00 .73
------------ ------------
TOTAL LODGING AND RESTAURANT 1,316,612.25 2,063,875.00 1.95
MACHINERY
11,500 ASM LITHOGRAPHY HOLDING NV 445,941.70 672,750.00 .63
MEDICAL TECHNOLOGY
14,500 CEPHALON INC 183,068.75 166,750.00 .16
17,500 MEDTRONIC INC. 261,334.50 1,417,500.00 1.34
18,500 STRYKER CORPORATION 285,869.09 645,187.50 .60
10,500 VERTEX PHARMACEUTICALS 431,730.70 401,625.00 .38
------------ ------------
TOTAL MEDICAL TECHNOLOGY 1,162,003.04 2,631,062.50 2.48
OFFICE EQUIPMENT,COMPUTERS
19,000 CISCO SYSTEMS INC. 278,270.35 1,275,375.00 1.20
12,000 DANKA BUSINESS SYSTEMS ADR 418,117.70 490,500.00 .46
------------ ------------
TOTAL OFFICE EQUIPMENT, COMPUTERS 696,388.05 1,765,875.00 1.66
OIL & GAS
12,500 BAKER HUGHES INCORPORATED 366,360.40 483,593.75 .46
18,910 BRITISH PETROLEUM COMPANY 957,124.03 1,415,886.25 1.33
11,500 CAMCO INTERNATIONAL INC 407,180.00 629,625.00 .59
2,500 DRESS INDUSTRIES INC 86,722.70 93,125.00 .09
10,500 SCHLUMBERGER LTD 572,707.95 1,312,500.00 1.24
18,500 TRANSOCEAN OFFSHORE INC 976,009.95 1,343,562.50 1.27
8,500 TRITON ENERGY LTD 397,525.60 389,406.25 .37
11,000 UNITED MERIDIAN CORP 377,827.40 330,000.00 .31
------------ ------------
TOTAL OIL AND GAS 4,141,458.03 5,997,698.75 5.65
PHARMACEUTICALS
19,500 AMGEN INC. 531,756.90 1,133,437.50 1.07
21,500 BIOGEN INC 655,611.25 728,312.50 .69
20,500 ELAN CORPORATION PLC - ADR 625,284.55 927,625.00 .88
19,500 JOHNSON & JOHNSON 432,070.87 1,255,312.50 1.18
10,000 LILLY ELI & CO 838,517.40 1,093,125.00 1.03
18,500 PFIZER INC 369,688.00 2,210,750.00 2.08
11,500 SMITHKLINE-BEECHAM ADR 691,310.00 1,053,687.50 .99
5,500 WALGREEN CO 252,046.25 294,937.50 .28
17,500 WARNER-LAMBERT CO 1,543,939.95 2,174,375.00 2.05
------------ ------------
TOTAL PHARMACEUTICALS 5,940,225.17 10,871,562.50 10.25
RETAIL TRADE
22,500 FEDERATED DEPARTMENT STORES 591,975.00 781,875.00 .74
20,500 HOME DEPOT INC. 60,937.74 1,413,218.75 1.33
4
<PAGE>
CLEARWATER GROWTH FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1997
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE NET ASSETS
35,000 KOHLS CORPORATION 1,171,431.25 1,852,812.50 1.75
20,000 PETSMART INC 418,125.00 230,000.00 .21
------------ ------------
TOTAL RETAIL TRADE 2,242,468.99 4,277,906.25 4.03
SERVICES
18,000 ACCUSTAFF INC 332,705.00 426,375.00 .40
42,000 CERIDIAN CORPORATION 1,367,622.80 1,774,500.00 1.68
17,200 CORESTAFF INC 434,102.00 464,400.00 .44
27,000 LOEWEN GROUP INC 837,915.65 938,250.00 .88
23,250 PAYCHEX INC. 278,102.90 883,500.00 .83
30,750 STEWART ENTERPRISES INC CL A 912,871.00 1,291,500.00 1.22
------------ ------------
TOTAL SERVICES 4,163,319.35 5,778,525.00 5.45
TELECOMMUNICATIONS
27,000 ADC TELECOMMUNICATIONS INC 631,999.00 901,125.00 .85
20,000 AIRTOUCH COMMUNICATIONS INC. 504,592.00 547,500.00 .52
11,500 ASCEND COMMUNICATIONS 576,814.55 452,812.50 .42
35,000 MCI COMMUNICATIONS 910,274.27 1,339,843.75 1.26
12,500 PAGING NETWORK INC. 109,280.35 109,765.63 .10
5,000 PAIRGAIN TECHNOLOGIES INC. 112,149.45 77,500.00 .07
19,500 TELLABS INC 440,434.10 1,089,562.50 1.03
------------ ------------
TOTAL TELECOMMUNICATIONS 3,285,543.72 4,518,109.38 4.25
TRANSPORTATION
11,500 CALIBER SYSTEM INC 368,548.50 428,375.00 .40
CONSTRUCTION MATERIALS
8,000 OWENS CORNING 248,120.85 345,000.00 .32
CONSUMER GOODS - NON DURABLE
23,000 GILLETTE COMPANY 773,701.30 2,179,250.00 2.05
9,000 PROCTOR & GAMBLE COMPANY 728,181.20 1,271,250.00 1.20
------------ ------------
TOTAL CONSUMER GOODS -
NON DURABLE 1,501,882.50 3,450,500.00 3.25
------------- -------------
TOTAL COMMON STOCK 57,534,632.51 101,344,920.63 95.53
PREFERRED STOCK
NON-CONVERTIBLE
OIL & GAS
17,500 NOBLE AFFILIATES INC 740,300.20 677,031.25 .64
CASH EQUIVALENTS
65,018 FEDERATED MASTER TRUST 65,018.00 65,018.00 .06
4,000,000 NORWEST CASH INVESTMENT 4,000,000.00 4,000,000.00 3.77
------------- -------------
TOTAL CASH EQUIVALENTS 4,065,018.00 4,065,018.00 3.83
TOTAL ASSETS SECTION 62,339,950.71 106,086,969.88 100.00
============= ============= =====
</TABLE>
5
<PAGE>
CLEARWATER SMALL CAP FUND
<TABLE>
SCHEDULE OF INVESTMENTS AT JUNE 30, 1997
<CAPTION>
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE NET ASSETS
<S> <C> <C> <C>
COMMON STOCKS
AEROSPACE
19,200 TRANSTECHNOLOGY CORPORATION 312,000.00 436,800.00 1.13
AUTOMOTIVE
12,400 GLEASON CORP 432,870.02 576,600.00 1.50
21,700 STANDARD MOTOR PRODUCTS, INC. 356,387.06 298,375.00 .77
------------ -------------
TOTAL AUTOMOTIVE 789,257.08 874,975.00 2.27
BANKS
18,370 FIDELITY FED SAVINGS 279,475.00 362,807.50 .94
9,000 IRWIN FINANCIAL CORP PFD 225,000.00 230,625.00 .60
9,675 QUEENS COUNTY BANCORP INC 327,305.65 440,212.50 1.14
------------ ------------
TOTAL BANKS 831,780.65 1,033,645.00 2.68
CHEMICALS
24,000 SPARTECH CORP 275,762.79 312,000.00 .81
COMPUTER SOFTWARE
17,500 ALTRIS SOFTWARE INC 146,723.50 111,562.50 .29
37,500 ANALYTICAL SURVEYS INC. 466,637.50 515,625.00 1.34
6,600 APPLIED VOICE TECHNOLOGY INC. 84,761.59 122,100.00 .32
34,700 CITATION COMPUTER SYSTEMS 203,827.50 294,950.00 .76
16,750 HENRY (JACK) & ASSOCIATES 144,200.63 406,187.50 1.06
7,700 MTS SYSTEMS CORP 166,674.75 234,850.00 .61
14,000 ORCAD INC 102,855.90 154,000.00 .40
46,600 PROPHET 21 INC. 198,050.00 250,475.00 .65
64,500 SYMIX SYSTEMS 321,262.50 741,750.00 1.92
52,775 TIMBERLINE SOFTWARE CORPORATION 389,711.25 474,975.00 1.23
------------ ------------
TOTAL COMPUTER SOFTWARE 2,224,705.12 3,306,475.00 8.57
DIVERSIFIED
11,900 CARDINAL REALTY SERVICES INC 265,401.54 276,675.00 .72
16,000 MATTHEWS INTERNATIONAL CORPORATION 258,500.00 584,000.00 1.51
28,000 MERCER INTERNATIONAL INC SBI 279,255.84 266,000.00 .69
14,900 TEXAS INDUSTRIES INC 405,539.00 395,781.25 1.03
------------ ------------
TOTAL DIVERSIFIED 1,208,696.38 1,522,456.25 3.95
ELECTRICAL EQUIPMENT
24,000 ALIGN-RITE INTERNATIONAL 275,311.01 312,000.00 .81
57,200 ANTEC CORPORATION 651,164.60 672,100.00 1.74
40,000 ASTRO-MED INCORPORATED 337,295.00 352,500.00 .91
11,600 CHARTER POWER SYSTEMS INC 335,419.00 435,000.00 1.13
------------ ------------
TOTAL ELECTRICAL EQUIPMENT 1,599,189.61 1,771,600.00 4.59
ELECTRONICS, INSTRUMENT
15,200 CERPROBE CORP 197,467.40 197,600.00 .51
34,500 DATAMARINE INTERNATIONAL INC. 270,448.75 224,250.00 .58
12,000 ESS TECHNOLOGY 172,714.80 161,280.00 .42
38,950 FREQUENCY ELECTRONICS INC 374,406.88 523,488.00 1.36
27,870 HERLEY INDUSTRIES INC 208,169.08 358,826.25 .93
19,500 KEITHLEY INSTRUMENTS INC. 272,082.50 199,875.00 .52
33,800 MICROTEST INC 293,395.83 135,200.00 .35
135,900 MTI TECHNOLOGY CORPORATION 354,019.50 662,512.50 1.72
50,000 WEGENER CORPORATION 143,750.00 106,250.00 .28
21,000 WHITEHALL CORPORATION 264,005.00 391,125.00 1.02
------------ ------------
TOTAL ELECTRONICS, INSTRUMENT 2,550,459.74 2,960,406.75 7.68
6
<PAGE>
CLEARWATER SMALL CAP FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1997
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE NET ASSETS
FINANCIAL
26,800 AAMES FINANCIAL CORP 374,109.78 495,800.00 1.29
17,700 GREATER NY SAVINGS BANK 245,780.36 397,143.75 1.03
20,500 KINNARD INVESTMENTS INC 118,381.25 123,000.00 .32
60,110 PACIFIC CREST CAPITAL INC. 454,004.25 796,457.50 2.06
------------ ------------
TOTAL FINANCIAL 1,192,275.64 1,812,401.25 4.70
FOOD AND BEVERAGE
33,000 DAKA INTERNATIONAL INC. 290,977.01 445,500.00 1.16
37,809 ERLY INDUSTRIES 286,208.15 373,363.88 .97
13,600 FLEMING COMPANIES INC 217,238.44 244,800.00 .63
14,800 HERBALIFE INTERNATIONAL 248,777.42 240,500.00 .62
16,900 SCHULTZ SAV O STORES INC 277,962.50 299,975.00 .78
51,465 UNIMARK GROUP INC. 384,989.32 411,720.00 1.07
------------ ------------
TOTAL FOOD AND BEVERAGE 1,706,152.84 2,015,858.88 5.23
HEALTH CARE
24,500 HOME HEALTH CORP OF AMERICA 225,875.00 232,750.00 .61
28,800 RIGHTCHOICE MANAGED CARE - A 394,229.24 390,600.00 1.01
10,600 U. S. DIAGNOSTIC LABS INC 67,072.24 72,875.00 .19
------------ ------------
TOTAL HEALTH CARE 687,176.48 696,225.00 1.81
INSURANCE
49,000 AMERICAN PHYSICIAN SERVICE GROUP 208,250.00 300,125.00 .78
41,700 JOHN ALDEN FINANCIAL CORPORATION 786,865.38 873,093.75 2.26
12,200 LIBERTY FINANCIAL COMPANIES 352,777.00 608,475.00 1.58
20,300 PENN TREATY AMERICAN CORPORATION 331,590.53 621,687.50 1.61
50,700 SEIBELS BRUCE GROUP INC 354,900.00 399,262.50 1.03
28,150 WESTBRIDGE CAPITAL CORP 263,393.77 272,773.50 .71
------------ ------------
TOTAL INSURANCE 2,297,776.68 3,075,417.25 7.97
MACHINERY
19,100 AMPCO-PITTSBURGH CORPORATION 233,990.00 280,531.25 .73
43,900 EASCO INC 319,912.25 428,025.00 1.11
------------ ------------
TOTAL MACHINERY 553,902.25 708,556.25 1.84
MEDICAL TECHNOLOGY
21,300 COLLABORATIVE CLINICAL RESEARCH INC 157,087.50 149,100.00 .38
74,650 COLORADO MEDTECH INC. 220,250.48 438,568.75 1.14
53,700 STAR MULTI CARE SERVICES 308,666.40 268,500.00 .70
------------ ------------
TOTAL MEDICAL TECHNOLOGY 686,004.38 856,168.75 2.22
OFFICE EQUIPMENT, COMPUTERS
26,900 GRADCO SYSTEMS INC 92,784.50 137,862.50 .36
54,700 KENTEK INFORMATION SYSTEMS 350,483.35 423,925.00 1.10
------------ ------------
TOTAL OFFICE EQUIPMENT, COMPUTERS 443,267.85 561,787.50 1.46
OIL & GAS
21,900 ABRAXAS PETROLEUM CORP 237,300.70 281,278.13 .73
157,700 BOLT TECHNOLOGY CORP 291,220.38 788,500.00 2.05
89,000 DI INDUSTRIES INC 262,458.00 395,160.00 1.03
11,800 KCS ENERGY INC 208,092.41 240,425.00 .62
12,200 LUFKIN INDUSTRIES INC 252,595.13 320,250.00 .83
8,500 MARINE DRILLING CO 156,500.00 166,855.00 .43
15,700 NUI CORPORATION 281,799.73 352,268.75 .91
15,850 PROVIDENCE ENERGY CORPORATION 289,004.20 277,375.00 .72
9,800 UTI ENERGY CORP 295,304.25 447,076.00 1.16
------------ ------------
TOTAL OIL AND GAS 2,274,274.80 3,269,187.88 8.48
<PAGE>
7
CLEARWATER SMALL CAP FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1997
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE NET ASSETS
PHARMACEUTICALS
19,902 ICN PHARMACEUTICALS INC. 329,433.62 570,938.63 1.48
RETAIL TRADE
17,700 BURLINGTON COAT FACTORY WRHS 292,445.00 345,150.00 .90
18,000 DRUG EMPORIUM INC 77,687.50 92,250.00 .24
22,200 DUCKWALL-ALCO STORES, INCORPORATED 316,825.50 285,825.00 .74
------------ ------------
TOTAL RETAIL TRADE 686,958.00 723,225.00 1.88
SERVICES
58,700 CHILDRENS DISCOVERY CENTER 292,947.40 396,225.00 1.03
62,000 GNI GROUP INC 415,353.77 383,625.00 .99
79,000 HEALTH FITNESS PHYSICAL THERAPY INC 226,238.69 207,375.00 .54
118,700 ICO INC 562,558.29 615,756.25 1.59
31,250 M/A/R/C INCORPORATED 401,338.29 609,375.00 1.58
10,400 PS GROUP HOLDINGS INC 110,076.25 133,900.00 .35
38,900 ROWE FURNITURE CORPORATION 162,862.70 291,750.00 .76
------------ ------------
TOTAL SERVICES 2,171,375.39 2,638,006.25 6.84
TELECOMMUNICATIONS
18,500 SALIENT 3 COMMUNICATIONS 291,072.99 222,000.00 .57
16,450 SSE TELECOM INC. 178,276.00 98,700.00 .26
------------ -------------
TOTAL TELECOMMUNICATIONS 469,348.99 320,700.00 .83
TOBACCO
15,800 DIMON INC 316,615.00 418,700.00 1.09
TRANSPORTATION
12,500 HALTER MARINE GROUP INC 188,221.50 300,000.00 .78
13,200 HVIDE MARINE INC 244,362.72 291,984.00 .75
------------ ------------
TOTAL TRANSPORTATION 432,584.22 591,984.00 1.53
UTILITY - GAS, ELECTRIC
80,300 EL PASO ELECTRIC COMPANY 468,201.61 567,118.75 1.47
21,500 TRIGEN ENERGY CORPORATION 401,512.50 537,500.00 1.39
30,500 YORK RESEARCH CORP 263,214.48 236,375.00 .61
------------ ------------
TOTAL UTILITY - GAS, ELECTRIC 1,132,928.59 1,340,993.75 3.47
CONSTRUCTION MATERIALS
27,800 CAMERON ASHLEY BUILDING PRODUCTS 331,304.60 385,725.00 1.00
86,800 DOMINION BRIDGE CORP 119,784.00 141,484.00 .37
15,900 INSTEEL INDUSTRIES 145,095.00 129,187.50 .33
44,800 NORTHWEST PIPE COMPANY 722,700.63 823,200.00 2.13
17,200 SCHNITZER STEEL INDUSTRIES INC - A 401,326.25 511,700.00 1.33
24,000 SHAW GROUP INC 420,891.00 390,000.00 1.01
------------ ------------
TOTAL CONSTRUCTION MATERIALS 2,141,101.48 2,381,296.50 6.17
MANUFACTURED HOUSING
24,600 AMERICAN HOMESTAR CORPORATION 352,121.65 525,825.00 1.36
12,000 BELMONT HOMES INC 111,316.17 82,500.00 .21
40,000 CAVALIER HOMES INC. 395,107.56 400,000.00 1.04
------------- -------------
TOTAL MANUFACTURED HOUSING 858,545.38 1,008,325.00 2.61
HOME BUILDERS
17,800 MILLER BUILDING SYSTEMS INC 153,387.50 142,400.00 .37
FURNITURE
8,850 KIMBALL INTERNATIONAL - CL B 348,468.75 356,212.50 .92
14,100 WINSLOEW FURNITURE INC 112,377.00 154,218.75 .40
------------- -------------
TOTAL FURNITURE 460,845.75 510,431.25 1.32
8
<PAGE>
CLEARWATER SMALL CAP FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1997
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE NET ASSETS
CONSUMER GOODS - NON DURABLE
70,500 ELECTRONIC HAIR STYLING INC. 404,550.50 219,960.00 .57
------------- -------------
TOTAL COMMON STOCK 29,190,356.71 36,080,921.14 93.55
PREFERRED STOCK
NON-CONVERTIBLE
FINANCIAL
11,050 RIGGS NATL. PFD. SERIES B, 10.75% 300,731.25 306,637.50 .80
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
250,000.00 242,500.00 .63
CASH EQUIVALENTS
1,600,000 FEDERATED MASTER TRUST 1,600,000.00 1,600,000.00 4.14
338,058 NORWEST CASH INVESTMENT 338,058.00 338,058.00 .88
------------- -------------
TOTAL CASH EQUIVALENTS 1,938,058.00 1,938,058.00 5.02
TOTAL ASSETS SECTION 31,679,145.96 38,568,116.64 100.00
============= ============= ======
</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:
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
10
<PAGE>
CLEARWATER INVESTMENT TRUST
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, the following adjustments have been made:
Clearwater Clearwater
Clearwater
Growth Fund Small Cap Fund
-----------------------------------------------------------------------
Undistributed net investment income $ 66,846 $18,195
Accumulated net realized gains (25,370) (18,154)
Additional paid-in capital (41,476) (41)
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.
11
<PAGE>
CLEARWATER INVESTMENT TRUST
(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, 1997, were as follows:
Purchases Sales proceeds
-----------------------------------------------------------------------
Clearwater Growth Fund $15,700,962 $22,873,056
Clearwater Small Cap Fund 17,229,598 16,628,997
(4) Capital Share Transactions
Transactions in shares of each fund for the year ended December 31,
1996 and the period ended June 30, 1997 were as follows:
Clearwater Clearwater
Growth Fund Small Cap Fund
------------------- --------------------
6/30/97 12/31/96 6/30/97 12/31/96
----------------------------------------------------------------------
Sold 24,071 500 81,160 171,784
Issued for reinvested
distributions -0- 407,261 -0- 63,812
Redeemed (196,265) (137,983) (567) (2,467)
-----------------------------------------------------------------------
Increase (decrease) (172,194) 269,778 80,593 233,129
-----------------------------------------------------------------------
12
<PAGE>
CLEARWATER INVESTMENT TRUST
(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, prior to May 1, 1997, certain state securities laws and the
funds' prospectus did 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, investments 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 June 30, 1997 was $242,500 and $760,650 representing .6% and .7% of
net assets for the Clearwater Small Cap and Clearwater Growth Funds,
respectively.
13
<PAGE>
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:
<TABLE>
Clearwater Growth Fund
<CAPTION>
Year ended December 31,
<S> <C> <C> <C> <C> <C> <C>
June 30, ---------------------------------------
1997 1996 1995 1994 1993 1992
---------------------------------------------------------------------------------------
Net asset value, beginning of year $17.88 17.01 13.62 14.49 15.98 15.42
---------------------------------------------------------------------------------------
Income from invetment
operations:
Net investment income (loss) (.01) (.01) .01 .06 .09 .11
Net realized and unrealized
gains 2.97 3.68 4.43 .11 .27 .56
---------------------------------------------------------------------------------------
Total from investment
operations 2.96 3.67 4.44 .17 .36 .67
---------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment
income .00 .00 (.01) (.06) .09 (.11)
Distributions from net realized
gains .00 (2.80) (1.04) (.98) (1.76) .00
---------------------------------------------------------------------------------------
Total distributions .00 (2.80) (1.05) (1.04) (1.85) (.11)
---------------------------------------------------------------------------------------
Net asset value, end of year 20.84 17.88 17.01 13.62 14.49 15.98
---------------------------------------------------------------------------------------
Total return(a) 14.3% 21.6% 32.6% 1.2% 2.2% 4.4%
Net assets, end of year (000s
omitted) $105,901 93,922 84,775 65,999 61,037 67,554
Ratio of expenses to average
net assets .53% 1.08%(c) 1.08% 1.07% 1.08% 1.10%
Ratio of net investment income
to average net assets (.07%) (.07%) .06% .39% .55% .74%
Average brokerage commission
rate(b) $.0402 0.0547 n/a n/a n/a n/a
Portfolio turnover rate (excluding
short-term securities) 16.96% 75.90% 58.64% 70.69% 52.76% 32.08%
<FN>
(a)Total return figures are based on the change in net assets 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 total number of related shares purchased and sold.
(c ) Includes federal and state taxes of .01%.
</FN>
</TABLE>
14
<PAGE>
CLEARWATER INVESTMENT TRUST
<TABLE>
Clearwater Small Cap Fund
<CAPTION>
Year ended December 31,
<S> <C> <C> <C> <C> <C> <C>
June 30, ---------------------------------------
1997 1996 1995 1994(b) 1993 1992
---------------------------------------------------------------------------------------
Net asset value, beginning of year $12.74 11.47 9.89 12.26 11.50 11.30
---------------------------------------------------------------------------------------
Income from invetment
operations:
Net investment income .00 .00 .04 .17 .17 .29
Net realized and unrealized
gains (losses) 1.82 1.71 2.56 (.99) 1.60 .25
---------------------------------------------------------------------------------------
Total from investment
operations 1.82 1.71 2.60 (.82) 1.77 .54
---------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment
income .00 .00 (.04) (.17) (.17) (.29)
Excess distributions from net invest
income .00 (.01) .00 .00 .00 .00
Distributions from net realized
gains .00 (.42) (.98) (1.38) (.84) (.05)
Tax return of capital .00 (.01) .00 .00 .00 .00
---------------------------------------------------------------------------------------
Total distributions .00 (.44) (1.02) (1.55) (1.01) (.34)
---------------------------------------------------------------------------------------
Net asset value, end of year 14.56 12.74 11.47 9.89 12.26 11.50
---------------------------------------------------------------------------------------
Total return(a) 16.6% 15.0% 26.3% (6.7%) 15.4% 4.9%
Net assets, end of year (000s
omitted) $38,615 32,774 26,826 17,998 13,972 13,128
Ratio of expenses to average
net assets .65% 1.37%(d) 1.35% 1.40% 1.47% 1.49%
Ratio of net investment income
to average net assets (.05%) .00% .36% 1.61% 1.38% 2.54%
Average brokerage commission
rate(c) .0232 .0424 n/a n/a n/a n/a
Portfolio turnover rate (excluding
short-term securities) 50.47% 89.25% 77.46% 122.88% 58.49% 73.07%
<FN>
(a)Total return figures are based on the change in net assets 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
vapitalizations 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%.
</FN>
</TABLE>
5
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE 6/30/97 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-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 62339951
<INVESTMENTS-AT-VALUE> 106086970
<RECEIVABLES> 103294
<ASSETS-OTHER> 4371
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 106194635
<PAYABLE-FOR-SECURITIES> 25815
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 267965
<TOTAL-LIABILITIES> 293780
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 55728050
<SHARES-COMMON-STOCK> 5080587
<SHARES-COMMON-PRIOR> 5252780
<ACCUMULATED-NII-CURRENT> (69912)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6496225
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 43747020
<NET-ASSETS> 105901383
<DIVIDEND-INCOME> 349046
<INTEREST-INCOME> 92900
<OTHER-INCOME> 0
<EXPENSES-NET> 511858
<NET-INVESTMENT-INCOME> (69912)
<REALIZED-GAINS-CURRENT> 6438624
<APPREC-INCREASE-CURRENT> 8748830
<NET-CHANGE-FROM-OPS> 15117542
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 24071
<NUMBER-OF-SHARES-REDEEMED> 196265
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 11979235
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 57061
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 511858
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 511858
<AVERAGE-NET-ASSETS> 96018995
<PER-SHARE-NAV-BEGIN> 17.88
<PER-SHARE-NII> (.01)
<PER-SHARE-GAIN-APPREC> 2.97
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.84
<EXPENSE-RATIO> 0.53
<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 6/30/97 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-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 31679146
<INVESTMENTS-AT-VALUE> 38568117
<RECEIVABLES> 195749
<ASSETS-OTHER> 82406
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 38846272
<PAYABLE-FOR-SECURITIES> 114407
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 116416
<TOTAL-LIABILITIES> 230823
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 28687525
<SHARES-COMMON-STOCK> 2652388
<SHARES-COMMON-PRIOR> 2571795
<ACCUMULATED-NII-CURRENT> (15733)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3054685
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6888972
<NET-ASSETS> 38615449
<DIVIDEND-INCOME> 200770
<INTEREST-INCOME> 9063
<OTHER-INCOME> 0
<EXPENSES-NET> 225566
<NET-INVESTMENT-INCOME> (15733)
<REALIZED-GAINS-CURRENT> 3054685
<APPREC-INCREASE-CURRENT> 1735222
<NET-CHANGE-FROM-OPS> 4774174
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 81160
<NUMBER-OF-SHARES-REDEEMED> 567
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5841917
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 18195
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 225566
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 225566
<AVERAGE-NET-ASSETS> 34572688
<PER-SHARE-NAV-BEGIN> 12.74
<PER-SHARE-NII> (.00)
<PER-SHARE-GAIN-APPREC> 1.82
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.56
<EXPENSE-RATIO> 0.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
