[OBJECT OMITTED]
- --------------------------------------------------------------------------------
CLEARWATER INVESTMENT TRUST
- --------------------------------------------------------------------------------
August 25, 1998
TO: Our Unit Holders
On June 30, 1998, the net asset value of the Clearwater Growth Fund was $25.40
per unit. The net asset value of the Clearwater Small Cap Fund was $16.31 per
unit. On a total return basis for 1998, the Clearwater Growth Fund increased by
20.0% and the Clearwater Small Cap Fund increased by 7.0%. For comparative
purposes, the S&P 500 increased by 17.7% and the Russell 2000 increased by 4.9%.
For the second quarter, the Clearwater Growth Fund increased 3.6% and the
Clearwater Small Cap Fund decreased 0.9%. The S&P 500 increased 3.3% and the
Russell 2000 decreased 4.7%.
Parametric Portfolio Associates, the sub-advisor for the Clearwater Growth Fund,
made the following comments on the first half and the outlook for balance of
1998:
"As the U.S. equity market posted double digit returns in the first half of
1998, the Clearwater Growth Fund outperformed the Russell 1000 index and other
large capitalization market measures. In addition, the Fund outperformed while
realizing no net capital gains, providing a high after-tax return as well.
Parametric Portfolio Associates is managing the Fund with a continual focus on
diversifying the portfolio to more approximate the Russell 1000 Index while
creating minimal tax liability for shareholders. Since assuming responsibility
for managing the fund in November 1997, both performance and tax efficiency
objectives have been met, and we will continue to work systematically to these
ends.
The market environment during the first six months of 1998 disproportionately
rewarded large capitalization securities with growth, as opposed to value,
characteristics. The Clearwater Growth Fund benefited from its bias toward
growth securities but was hampered somewhat by its emphasis on
mid-capitalization securities. The net effect, as mentioned above, was a
return above most broad market indexes. The Fund's investments in health care
and technology securities were particularly instrumental in providing growth
in the year to date.
Looking forward, we will continue to seek broad diversification and maximum
tax efficiency. Our quantitative models suggest that the recent success of
growth stocks may begin to reverse, and we will, as directed, continue to
mitigate the residual biases in the portfolio remaining from the prior
manager."
<PAGE>
August 25, 1998
Page 2
Kennedy Capital Management, the sub-advisor for the Clearwater Small Cap Fund,
made the following comments:
"Small company stocks under-performed larger company stocks during the first
six months of 1998. The Russell 2000 index, the performance benchmark for the
Clearwater Small Cap Fund, rose 4.9% versus 17.7% for the S&P 500 during the
period. The Fund outperformed its benchmark index in the first half, returning
7.0% in a very difficult environment.
Six months ago we expected small cap stocks to gain against larger issues.
This expectation was based to a great extent on the relatively modest
valuations of small cap stocks, particularly those in the Clearwater Small Cap
Fund portfolio. We were, however, concerned about the ability of the entire
market to hold its level. Macro-economic factors, we noted, were solid and
supportive. We viewed the equity markets, however, as long overdue for a
correction as valuations, specifically those of large cap stocks, were at
extremes.
Contrary to our expectations, large stocks continued to outperform smaller
ones, and the broad market continued its advance. While valuations of large
companies continue to be stretched versus smaller firms, we at Kennedy Capital
Management continue to invest in small, rapidly growing firms which appear to
be undervalued by other institutional investors."
Clearwater Investment Trust Clearwater Management Company
P. W. Pascoe, Chairman and Treasurer P. W. Pascoe, Chairman and Treasurer
Samuel B. Carr, Jr. W. T. Weyerhaeuser, V. P. and Secretary
Stanley R. Day, Jr. E. C. Driscoll
Robert J. Phares W. John Driscoll
F. T. Weyerhaeuser C. W. Morley
F. W. Piasecki
D.C. Titcomb, V. P. and Secretary D. C. Titcomb
G. H. Weyerhaeuser, Jr.
J:\CMC\TLC\MAILINGS\98\CITSA_98.DOC
<PAGE>
CLEARWATER INVESTMENT TRUST
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1998 GROWTH SMALL CAP
FUND FUND
<S> <C> <C>
ASSETS
Investments in securities, at market value (note 2)
(identified cost: $58,674,561 Growth Fund; $38,886,301 Small Cap Fund) $133,303,862 $48,585,254
Cash 2,853 5,104
Receivable for investment securities sold 0 669,546
Accrued dividend and interest receivable 77,280 15,937
Other receivables 0 2,250
----------- ----------
TOTAL ASSETS 133,383,995 49,278,091
LIABILITIES
Payables for investment securities purchased 0 221,432
Accrued management fee 145,067 171,043
----------- ----------
TOTAL LIABILITIES 145,067 392,475
NET ASSETS $133,238,928 $48,885,616
=========== ===========
CAPITAL
Capital stock and additional paid-in capital
(authorized unlimited number of shares at no par
value for each Fund; outstanding 5,244,637 and
2,997,977 shares, respectively (note 2)) $ 59,059,962 $33,876,996
Accumulated net income(loss) 203,313 (75,201)
Accumulated net realized gain(loss) (653,648) 5,384,868
Unrealized appreciation of investments 74,629,301 9,698,953
---------- ---------
NET ASSETS $133,238,928 $48,885,616
- ---------- =========== ===========
Net asset value per share of outstanding capital stock $ 25.40 $ 16.31
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
-1-
<PAGE>
CLEARWATER INVESTMENT TRUST
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
For Period Ended June 30,
1998 GROWTH SMALL CAP
FUND FUND
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends (net of foreign taxes withheld of $4,551 and $688, respectively) $ 471,027 $ 217,757
Interest 13,904 44,328
-------- ----------
TOTAL INCOME 484,931 262,085
Expenses: (note 5)
Income tax expense 0 4,200
Investment advisory fee 281,618 333,086
-------- ----------
TOTAL EXPENSES 281,618 337,286
NET INVESTMENT INCOME (LOSS) 203,313 (75,201)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain (loss) on security transactions (653,648) 5,374,910
Unrealized appreciation (depreciation) during the period 22,709,052 (1,963,373)
----------- ----------
NET GAIN ON INVESTMENTS 22,055,404 3,411,537
----------- ----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $22,258,717 $3,336,336
=========== ==========
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For Period Ended June 30, 1998 GROWTH FUND SMALL CAP FUND
6/30/98 12/31/97 6/30/98 12/31/97
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income(loss) $ 203,313 $ (64,458) $ (75,201) $ (65,434)
Net realized gain(loss) on investments (653,648) 8,928,506 5,374,910 7,097,859
Unrealized appreciation(depreciation)
during the period 22,709,052 16,922,059 (1,963,373) 6,508,576
---------- ----------- ---------- ----------
NET INCREASE IN NET ASSETS FROM OPERATIONS 22,258,717 25,786,107 3,336,336 13,541,001
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net realized gain on investments 0 (8,987,082) 0 (7,022,467)
---------- ----------- ---------- ----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS 0 (8,987,082) 0 (7,022,467)
CAPITAL SHARE TRANSACTIONS (note 4)
Proceeds from shares sold 539,400 435,000 2,115,350 2,164,600
Reinvestment of distributions from
net investment income and gains 4,830,772 31,725 5,186,008 0
Payments for shares redeemed (1,249,216) (4,328,643) (2,590,487) (618,257)
---------- ----------- ---------- ----------
INCREASE(DECREASE) IN NET ASSETS FROM
CAPITAL SHARES TRANSACTIONS 4,120,956 (3,861,918) 4,710,871 1,546,343
---------- ----------- ---------- ----------
TOTAL INCREASE IN NET ASSETS 26,379,673 12,937,107 8,047,207 8,064,877
NET ASSETS
At the beginning of the period 106,859,255 93,922,148 40,838,409 32,773,532
------------ ------------ ----------- -----------
At the end of the period $133,238,928 $106,859,255 $48,885,616 $40,838,409
============ ============ =========== ===========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
-2-
<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 Growth Fund and Clearwater Small Cap 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 Growth Fund
invests in a broad list of equity securities that offer the potential
for 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.
(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.
1
<PAGE>
CLEARWATER INVESTMENT TRUST
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, the following adjustments have been made:
Clearwater Clearwater
Growth Fund Small Cap Fund
--------------------------------------------------------------------
Undistributed net investment income $64,458 $65,434
Accumulated net realized gains 0 (65,434)
Additional paid-in capital (64,458) 0
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.
2
<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, 1998, were as follows:
Purchases Sales proceeds
----------------------------------------------------------------
Clearwater Growth Fund $ 54,407 $ 1,170,054
Clearwater Small Cap Fund 17,443,965 18,576,435
(4) Capital Share Transactions
Transactions in shares of each fund for the year ended December 31,
1997 and the period ended June 30, 1998, were as follows:
Clearwater Clearwater
Growth Fund Small Cap Fund
----------------------------------------------
6/30/98 12/31/97 6/30/98 12/31/97
----------------------------------------------------------------------
Sold 22,672 24,071 133,944 144,088
Issued for reinvested
distributions 228,190 1,459 340,289 -0-
Redeemed (53,985) (230,550) (155,360) (36,779)
----------------------------------------------------------------------
Increase (decrease) 196,877 (205,020) 318,873 107,309
----------------------------------------------------------------------
3
<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
Growth Fund and Clearwater Small Cap Fund pay a monthly fee equal to an
annual rate of 0.45% and 1.35% of average net assets, respectively.
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
Growth Fund, payable to Parametric Portfolio Associates, Inc., is equal
to an annual rate of 0.15% of net assets. The sub-advisory fee for the
Clearwater Small Cap Fund, payable to Kennedy Capital Management, is
equal to an annual rate of 0.85% of the first $50 million in net assets
and then decreasing to 0.80% of net assets in excess of $50 million.
(6) Restricted Securities
At June 30, 1998, investments in securities for the Clearwater Growth
Fund includes a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. The Fund
currently limits investments in restricted securities to 15% of net
assets at the time of purchase. The aggregate value of such security at
June 30, 1998 was $2,475,000, representing 1.9% of net assets for the
Clearwater Growth Fund.
4
<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>
<CAPTION>
Clearwater Growth Fund
Year ended December 31,
<S> <C> <C> <C> <C> <C> <C>
June 30, -------------------------------------
1998 1997(d) 1996 1995 1994 1993
------------------------------------------------------------------------------------
Net asset value, beginning of year $21.17 17.88 17.01 13.62 14.49 15.98
------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income (loss) .03 (.01) (.01) .01 .06 .09
Net realized and unrealized
gains 4.20 5.08 3.68 4.43 .11 .27
------------------------------------------------------------------------------------
Total from investment
operations 4.23 5.07 3.67 4.44 .17 .36
------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment
income .00 .00 .00 (.01) (.06) (.09)
Distributions from net
realized gains .00 (1.78) (2.80) (1.04) (.98) (1.76)
------------------------------------------------------------------------------------
Total distributions .00 (1.78) (2.80) (1.05) (1.04) (1.85)
------------------------------------------------------------------------------------
Net asset value, end of year $25.40 21.17 17.88 17.01 13.62 14.49
------------------------------------------------------------------------------------
Total return(a) 20.0% 28.4% 21.6% 32.6% 1.2% 2.2%
Net assets, end of year (000s
omitted) $133,239 106,859 93,922 84,775 65,999 61,037
Ratio of expenses to average
net assets .23% .98% 1.08%(c)1.08% 1.07% 1.08%
Ratio of net investment income
(loss) to average net assets .17% (.06%) (.07%) .06% .39% .55%
Average brokerage commission
rate(b) $ .060 .0571 0.0547 n/a n/a n/a
Portfolio turnover rate (excluding
short-term securities) .044% 38.16% 75.90% 58.64% 70.69% 52.76%
<FN>
(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 total number of related shares purchased and sold.
(c ) Includes federal and state taxes of .01%.
(d) Effective November 1, 1997, Parametric Portfolio Associates, Inc.
became the subadvisor for the fund.
</FN>
</TABLE>
5
<PAGE>
CLEARWATER INVESTMENT TRUST
<TABLE>
<CAPTION>
Clearwater Small Cap Fund
Year ended December 31,
<S> <C> <C> <C> <C> <C> <C>
June 30, -------------------------------------
1998 1997(d) 1996 1995 1994 1993
------------------------------------------------------------------------------------
Net asset value, beginning of year $15.24 12.74 11.47 9.89 12.26 11.50
------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income (.03) (.02) .00 .04 .17 .17
Net realized and unrealized
gains (losses) 1.10 5.14 1.71 2.56 (.99) 1.60
------------------------------------------------------------------------------------
Total from investment
operations 1.07 5.12 1.71 2.60 (.82) 1.77
------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment
income .00 .00 .00 (.04) (.17) (.17)
Excess distributions from net
investment income .00 .00 (.01) .00 .00 .00
Distributions from net
realized gains .00 (2.62) (.42) (.98) (1.38) (.84)
Tax return of capital .00 .00 (.01) .00 .00 .00
------------------------------------------------------------------------------------
Total distributions .00 (2.62) (.44) (1.02) (1.55) (1.01)
------------------------------------------------------------------------------------
Net asset value, end of year $16.31 15.24 12.74 11.47 9.89 12.26
------------------------------------------------------------------------------------
Total return(a) 7.0% 40.2% 15.0% 26.3% (6.7%) 15.4%
Net assets, end of year (000s
omitted) $48,886 40,838 32,774 26,826 17,998 13,972
Ratio of expenses to average
net assets .71%(d) 1.35% 1.37%(d)1.35% 1.40% 1.47%
Ratio of net investment income (loss)
to average net assets (.16%) (.17%) .00% .36% 1.61% 1.38%
Average brokerage commission
rate(c) $ .048 .0503 .0424 n/a n/a n/a
Portfolio turnover rate (excluding
short-term securities) 37.24% 92.22% 89.25% 77.46% 122.88% 58.49%
<FN>
(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. 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% in 1996 and .01% in 1998.
</FN>
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
CLEARWATER GROWTH FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998
<S> <C> <C> <C> <C> <C>
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
COMMON STOCKS
AIR TRANSPORTATION
600 AMR CORP (b) 35,793.00 49,950.00
200 DELTA AIR LINES INC. 20,824.50 25,850.00
11,600 FEDERAL EXPRESS CORP (b) 523,042.27 727,900.00
---------------- ----------------
TOTAL AIR TRANSPORTATION 579,659.77 803,700.00 0.60%
AIRCRAFT
19,000 BOEING CO 449,445.00 846,687.50
800 UNITED TECHNOLOGIES CORP 57,473.04 74,000.00
---------------- ----------------
TOTAL AIRCRAFT 506,918.04 920,687.50 0.69%
ALUMINUM
500 ALUMINUM COMPANY OF AMERICA 36,655.00 32,968.75 0.02%
BANKS
2,090 BANC ONE CORP 100,164.01 116,648.13
1,000 BANK OF BOSTON CORP 41,430.00 55,625.00
1,300 BANK OF NEW YORK CO INC 62,790.52 78,893.75
2,300 BANKAMERICA CORP 168,819.31 198,806.25
300 BANKERS TRUST NEW YORK CORP 36,318.00 34,818.75
13,000 CHASE MANHATTEN CORP 654,888.75 981,500.00
8,500 CITICORP 357,041.25 1,268,625.00
450 COMERICA INC. 23,943.00 29,812.50
600 FIFTH THIRD BANCORP 26,025.00 37,800.00
4,000 FIRST AMERICAN CORP-TENN 107,205.00 192,500.00
1,000 FIRST CHICAGO NBD CORP 74,122.50 88,625.00
2,834 FIRST UNION CORP (N C ) 135,000.24 165,080.50
900 FLEET FINANCIAL GROUP INC. 58,272.75 75,150.00
600 J P MORGAN & COMPANY 69,092.28 70,275.00
1,400 KEYCORP 44,267.02 49,875.00
1,400 MBNA CORP 37,621.50 46,200.00
900 MELLON BANK CORP 46,904.04 62,662.50
700 NATIONAL CITY CORP 42,254.52 49,700.00
3,231 NATIONSBANK CORP 199,408.05 247,171.50
52,000 NORWEST CORP 1,155,560.00 1,943,500.00
1,100 PNC BANK CORPORATION 53,028.47 59,193.75
8,000 REPUBLIC NEW YORK CORP 382,682.70 503,500.00
500 STATE STREET CORP 28,217.50 34,750.00
700 SUNTRUST BANKS INC. 46,060.77 56,918.75
55,000 TCF FINANCIAL CORP 965,087.50 1,622,500.00
2,400 U S BANCORP 83,398.00 103,200.00
500 WACHOVIA CORP 37,580.00 42,250.00
1,200 WASHINGTON MUTUAL INC. 55,000.00 52,125.00
200 WELLS FARGO & CO 59,349.50 73,800.00
---------------- ----------------
TOTAL BANKS 5,151,532.18 8,341,506.38 6.26%
BEVERAGES
1,500 ANHEUSER-BUSCH COS INC 61,264.95 70,781.25
36,000 COCA-COLA CO 1,081,705.00 3,078,000.00
5,000 PEPSICO INC 186,237.50 205,937.50
---------------- ----------------
TOTAL BEVERAGES 1,329,207.45 3,354,718.75 2.52%
See accompanying notes to investment securities 1 (Continued)
<PAGE>
CLEARWATER GROWTH FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
COMMON STOCKS
BROADCASTING & CABLE
4,100 CBS CORPORATION 112,181.50 130,175.00
1,100 COMCAST CORP-SPECIAL CLASS A 30,662.50 44,653.13
2,000 MEDIAONE GROUP INC. (b) 50,636.41 87,875.00
1,700 TELE COMMUNICATIONS-CL A (b) 38,356.25 65,343.75
1,050 TELE COMM LIBERTY MEDIA GR-A (b) 23,012.50 40,753.13
1,400 TIME WARNER INC. 82,946.50 119,612.50
1,000 VIACOM INC. (b) 30,716.30 58,500.00
---------------- ----------------
TOTAL BROADCASTING & CABLE 368,511.96 546,912.51 0.41%
BUSINESS EQUIP & SERVICES
18,000 ACCUSTAFF INC (b) 332,705.00 562,500.00
1,000 AUTOMATIC DATA PROCESSING 52,653.80 72,875.00
700 BROWNING-FERRIS INDS 23,948.26 24,325.00
26,000 CERIDIAN CORP COM (b) 693,103.00 1,527,500.00
10,000 COMPUTER SCIENCES CORP (b) 341,043.55 640,000.00
26,000 DENDRITE INTERNATIONAL INC. (b) 317,216.10 978,250.00
1,100 ELECTRONIC DATA SYSTEMS CORP 43,097.23 44,000.00
27,000 FISERV INC (b) 549,868.20 1,146,656.25
22,000 FIRST DATA CORP 226,047.22 732,875.00
17,200 METAMOR WORLDWIDE INC. 434,102.00 605,225.00
34,875 PAYCHEX INC 278,102.90 1,418,976.56
1,000 PITNEY-BOWES INC. 41,455.00 48,125.00
900 REPUBLIC INDUSTRIES (b) 27,391.50 22,500.00
800 SERVICE CORP INTERNATIONAL 24,648.00 34,300.00
43,500 STEWART ENTERPRISES-CL A 629,245.99 1,158,187.50
5,500 XEROX CORP 426,875.15 558,937.50
1,500 WASTE MANAGEMENT INC. 37,402.50 52,500.00
---------------- ----------------
TOTAL BUSINESS EQUIP & SERVICES 4,478,905.40 9,627,732.81 7.23%
CAPITAL EQUIPMENT
1,200 CATERPILLAR INC 62,622.00 63,450.00
800 DEERE & CO 43,423.04 42,300.00
700 ILLINOIS TOOL WORKS, INC. 35,760.76 46,681.25
12,000 KENNAMETAL INC. 550,972.70 501,000.00
12,000 SUNDSTRAND CORP 381,907.50 687,000.00
---------------- ----------------
TOTAL CAPITAL EQUIPMENT 1,074,686.00 1,340,431.25 1.01%
CHEMICALS
800 DOW CHEMICAL 73,823.04 77,350.00
3,700 DUPONT, E I DE NEMOURS 213,165.88 276,112.50
22,500 MONSANTO CO 329,839.69 1,257,187.50
---------------- ----------------
TOTAL CHEMICALS 616,828.61 1,610,650.00 1.21%
CHEMICALS-SPECIALTY
600 AIR PRODUCTS & CHEMICALS INC 23,043.00 24,000.00
100 PRAXAIR INC 4,456.00 4,681.25
---------------- ----------------
TOTAL CHEMICALS-SPECIALTY 27,499.00 28,681.25 0.02%
See accompanying notes to investment securities 2 (Continued)
<PAGE>
CLEARWATER GROWTH FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
COMMON STOCKS
COMMUNICATIONS EQUIPMENT
23,500 ADC TELECOMMUNICATIONS INC. (b) 538,040.05 858,484.38
7,000 CIENA CORP (b) 342,767.05 487,375.00
4,200 LUCENT TECHNOLOGIES INC. 175,994.70 349,387.50
4,500 PAIRGAIN TECHNOLOGIES INC. (b) 94,432.20 78,468.75
14,500 TELLABS, INC. (b) 298,665.30 1,038,562.50
---------------- ----------------
TOTAL COMMUNICATIONS EQUIPMENT 1,449,899.30 2,812,278.13 2.11%
COMPUTERS & PERIPHERALS
28,500 CISCO SYSTEMS INC (b) 278,270.35 2,623,781.25
5,073 COMPAQ COMPUTER CORP 171,500.40 143,932.19
1,800 DELL COMPUTER CORP (b) 77,072.76 167,062.50
1,600 EMC CORP MASS (b) 47,098.00 71,700.00
2,800 HEWLETT-PACKARD CO 181,030.64 167,650.00
3,300 INTL BUSINESS MACHINES CORP 338,860.50 378,881.25
19,000 LEGATO SYSTEMS INC. (b) 157,970.10 741,000.00
1,100 3COM CORP (b) 48,087.49 33,756.25
---------------- ----------------
TOTAL COMPUTERS & PERIPHERALS 1,299,890.24 4,327,763.44 3.25%
COMPUTER SOFTWARE & SERVICES
600 AMERICA ONLINE INC (b) 23,905.50 63,600.00
11,000 ASPEN TECHNOLOGY INC. (b) 321,179.55 555,500.00
14,000 BAAN COMPANY NV (b) 199,062.50 500,500.00
15,000 COMPUTER ASSOCIATES INTL INC. 514,842.00 833,437.50
26,000 MICROSOFT CORP (b) 83,073.61 2,817,750.00
26,500 ORACLE CORPORATION (b) 83,951.14 650,906.25
64,000 PARAMETRIC TECH (b) 417,553.25 1,736,000.00
55,000 PEOPLESOFT INC. (b) 862,211.20 2,585,000.00
11,000 SAP ADS(c) 401,720.00 2,475,000.00
---------------- ----------------
TOTAL COMPUTER SOFTWARE & SERVICES 2,907,498.75 12,217,693.75 9.17%
CONSTRUCTION MATERIALS
19,000 CRANE CO 515,675.00 922,687.50
8,000 OWENS CORNING 248,120.85 326,500.00
600 PPG INDUSTRIES INC. 34,142.28 41,737.50
---------------- ----------------
TOTAL CONSTRUCTION MATERIALS 797,938.13 1,290,925.00 0.97%
COSMETICS & TOILETRIES
400 AVON PRODUCTS 26,011.52 31,000.00
33,000 GILLETTE COMPANY 550,137.35 1,870,687.50
---------------- ----------------
TOTAL COSMETICS & TOILETRIES 576,148.87 1,901,687.50 1.43%
CONSUMER SERVICES
8,250 SYLVAN LEARNING SYSTEMS (b) 207,480.00 270,187.50 0.20%
DEFENSE
600 LOCKHEED MARTIN CORPORATION 59,173.50 63,525.00
153 RAYTHEON CO CL-A 8,877.62 8,816.63
800 RAYTHEON CO CL-B 41,998.00 47,300.00
500 ROCKWELL INTERNATIONAL CORP 24,905.00 24,031.25
---------------- ----------------
TOTAL DEFENSE 134,954.12 143,672.88 0.11%
See accompanying notes to investment securities 3 (Continued)
<PAGE>
CLEARWATER GROWTH FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
COMMON STOCKS
ELECTRICAL EQUIPMENT
800 DOVER CORP 27,686.52 27,400.00
1,500 EMERSON ELECTRIC CO 83,733.75 90,562.50
38,600 GENERAL ELECTRIC CO 1,661,591.47 3,512,600.00
400 HONEYWELL INC 28,161.52 33,425.00
17,000 TYCO INTERNATIONAL LTD 329,885.00 1,071,000.00
---------------- ----------------
TOTAL ELECTRICAL EQUIPMENT 2,131,058.26 4,734,987.50 3.55%
ELECTRONIC COMPONENTS & EQUIPMENT
700 AMP INC 32,698.26 24,062.50
38,000 ANALOG DEVICES (b) 681,654.00 933,375.00
1,200 APPLIED MATERIALS INC. (b) 44,659.56 35,400.00
23,000 ASM LITHOGRAPHY HOLDING NV (b) 445,941.70 668,437.50
26,000 INTEL CORP 208,329.75 1,927,250.00
19,000 XILINX INC (b) 579,697.78 646,000.00
2,000 MOTOROLA INC 129,307.60 105,125.00
---------------- ----------------
TOTAL ELECTRONIC COMPONENTS 2,122,288.65 4,339,650.00 3.26%
FINANCE COMPANIES
1,022 ASSOCIATES FIRST CAPITAL 61,288.86 78,566.25 0.06%
1,200 HOUSEHOLD INTERNATIONAL INC. 45,811.52 59,700.00
---------------- ----------------
TOTAL FINANCE COMPANIES 107,100.38 138,266.25
FINANCIAL SERVICES
1,600 AMERICAN EXPRESS COMPANY 127,596.00 182,400.00
8,500 CMAC INVESTMENT CORPORATION 245,161.25 522,750.00
3,500 FANNIE MAE 178,928.75 212,625.00
21,500 FEDERAL HOME LOAN MORTGAGE CO 65,945.84 1,011,843.75
27,000 FRANKLIN RESOURCES INC. 683,519.05 1,458,000.00
750 MARSH & MCLENNAN COS 36,705.00 45,328.13
1,100 MERRILL LYNCH & CO 78,459.70 101,475.00
1,500 MORGAN ST DEAN WITTER DIS 82,039.95 137,062.50
19,000 MUTUAL RISK MANAGEMENT LTD 352,996.55 692,312.50
39,000 PRICE (T ROWE) ASSOCIATES 544,918.25 1,464,937.50
700 STUDENT LOAN MARKETING ASSN 28,837.00 34,300.00
3,828 TRAVELERS GROUP INC 184,962.47 232,072.50
---------------- ----------------
TOTAL FINANCIAL SERVICES 2,610,069.81 6,095,106.88 4.57%
FOOD & RELATED PRODUCTS
40 AGRIBRANDS INTERNATIONAL (b) 1,196.85 1,210.00
1,800 ARCHER DANIELS MIDLAND 40,720.50 34,875.00
1,000 BESTFOODS 47,226.68 58,062.50
6,500 CAMPBELL SOUP CO 298,047.61 345,312.50
1,600 CONAGRA INC COM 53,846.08 50,700.00
125 CORN PRODUCTS INTL INC. (b) 3,490.82 4,234.38
500 GENERAL MILLS INC 33,817.50 34,187.50
1,200 HEINZ (H J) CO 57,072.00 67,350.00
700 KELLOGG CO 30,710.75 26,293.75
900 PIONEER HI BRED INTL INC. 28,136.76 37,237.50
400 RALSTON PURINA CO 35,239.67 46,725.00
1,600 SARA LEE CORP 82,946.08 89,500.00
650 VLASIC INTL FOODS (b) 14,064.39 13,081.25
300 WRIGLEY (WM) JR CO 21,918.00 29,400.00
---------------- ----------------
TOTAL FOOD & RELATED PRODUCTS 748,433.69 838,169.38 0.63%
See accompanying notes to investment securities 4 (Continued)
<PAGE>
CLEARWATER GROWTH FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
COMMON STOCKS
FOREST & PAPER PRODUCTS
300 GEORGIA-PACIFIC (TIMBER GRP) 5,990.16 6,918.75
300 GEORGIA-PACIFIC CORP (b) 20,265.33 17,681.25
1,000 INTERNATIONAL PAPER CO 47,122.50 43,000.00
1,800 KIMBERLY-CLARK CORP 95,401.80 82,575.00
---------------- ----------------
TOTAL FOREST & PAPER PRODUCTS 168,779.79 150,175.00 0.11%
FURNITURE & FURNISHING
500 MASCO CORP 23,030.00 30,250.00 0.02%
HEALTH CARE-DRUGS
5,000 ABBOT LABORATORIES 157,381.25 204,375.00
14,000 AMGEN INC (b) 259,439.50 915,250.00
18,500 BIOGEN INC. (b) 551,691.65 906,500.00
400 CARDINAL HEALTH INC 29,424.00 37,500.00
500 DURA PHARMACEUTICALS INC (b) 17,500.00 11,187.50
20,500 ELAN CORP PLC-ADR (b) 625,284.55 1,318,406.25
19,000 LILLY (ELI) & CO 794,112.40 1,255,187.50
4,000 MERCK & CO INC. 357,490.00 535,000.00
1,700 PHARMACIA & UPJOHN INC. 55,345.71 78,412.50
35,500 PFIZER INC 354,583.00 3,858,406.25
2,400 SCHERING-PLOUGH 140,844.00 219,900.00
23,000 SMITHKLINE BEECHAM-SPONS ADR 691,310.00 1,391,500.00
---------------- ----------------
TOTAL HEALTH CARE-DRUGS 4,034,406.06 10,731,625.00 8.05%
HEALTH CARE-GENERAL
4,200 AMERICAN HOME PRODUCTS INC. 160,432.23 217,350.00
900 BAXTER INTERNATIONAL INC. 42,635.25 48,431.25
3,300 BRISTOL-MYERS SQUIBB CO 302,591.85 379,293.75
16,500 JOHNSON & JOHNSON 364,435.12 1,216,875.00
23,000 MEDTRONIC INC. 171,646.13 1,466,250.00
46,500 WARNER-LAMBERT CO 1,346,471.55 3,225,937.50
---------------- ----------------
TOTAL HEALTH CARE-GENERAL 2,388,212.13 6,554,137.50 4.92%
HOSPITAL SUPPLY & MANAGEMENT
500 AETNA INC 36,611.25 38,062.50
2,200 COLUMBIA/HCA HEALTHTRUST CORP 62,531.92 64,075.00
1,000 FPA MEDICAL MANAGEMENT INC (b) 23,750.00 1,156.25
500 GUIDANT CORP 29,436.25 35,656.25
138,000 HBO & CO 1,271,007.80 4,864,500.00
58,000 HEALTHSOUTH CORP (b) 491,910.00 1,547,875.00
17,500 STRYKER CORP 270,380.65 671,562.50
1,000 TENET HEALTH CARE (b) 30,153.80 31,250.00
600 UNITED HEALTHCARE CORP 29,267.28 38,100.00
---------------- ----------------
TOTAL HOSPITAL SUPPLY & MANAGEMENT 2,245,048.95 7,292,237.50 5.47%
HOTELS & GAMING
41,000 MARRIOTT INTERNATIONAL INC 352,253.59 1,327,375.00
18,500 PROMUS HOTEL CORP (b) 557,547.45 712,250.00
5,125 SODEXHO MARRIOTT 378,894.86 148,625.00
617 STARWOOD HOTELS & RESORTS 33,318.00 29,808.81
---------------- ----------------
TOTAL HOTELS & GAMING 1,322,013.90 2,218,058.81 1.66%
See accompanying notes to investment securities 5 (Continued)
<PAGE>
CLEARWATER GROWTH FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
COMMON STOCKS
HOUSEHOLD-GENERAL PRODUCTS
1,000 COLGATE-PALMOLIVE CO 63,903.80 88,000.00
18,000 PROCTOR & GAMBLE CO 728,181.20 1,639,125.00
---------------- ----------------
TOTAL HOUSEHOLD-GENERAL PRODUCTS 792,085.00 1,727,125.00 1.30%
INSURANCE-LIFE
800 AMERICAN GENERAL CORP 41,298.00 56,950.00
500 AON CORP 27,655.00 35,125.00
600 CONSECO INC 27,373.50 28,050.00
12,000 EQUITABLE COMPANIES INC 461,539.95 899,250.00
700 SUNAMERICA INC. 27,885.76 40,206.25
---------------- ----------------
TOTAL INSURANCE-LIFE 585,752.21 1,059,581.25 0.80%
INSURANCE-PROPERTY & CASUALTY
33,000 ACE LTD 625,555.00 1,287,000.00
9,000 ALLSTATE CORP 559,336.40 824,062.50
13,500 AMERICAN INTERNATIONAL GROUP 466,630.50 1,971,000.00
600 CHUBB CORP 40,817.28 48,225.00
600 CIGNA CORP 31,837.00 41,400.00
19,000 EXEL LIMITED 523,635.00 1,478,437.50
300 GENERAL RE CORP 59,399.25 76,050.00
400 HARTFORD FINANCIAL SVCS GRP 32,399.00 45,750.00
76,000 MERCURY GENERAL CORP 1,614,960.30 4,887,750.00
24,000 MGIC INVESTMENT CORP 576,720.00 1,369,500.00
---------------- ----------------
TOTAL INSURANCE-PROPERTY & CASUALTY 4,531,289.73 12,029,175.00 9.03%
LEISURE TIME INDUSTRY
39,201 CENDANT CORPORATION (b) 350,004.02 818,320.88
2,200 DISNEY WALT 189,400.86 231,137.50
1,000 MATTEL INC 39,278.80 42,312.50
---------------- ----------------
TOTAL LEISURE TIME INDUSTRY 578,683.68 1,091,770.88 0.82%
MOTOR VEHICLE PARTS
300 EATON CORP 29,199.24 23,325.00 0.02%
MOTOR VEHICLES
2,000 CHRYSLER CORP 72,120.00 112,750.00
3,900 FORD MOTOR COMPANY 120,162.03 230,100.00
2,400 GENERAL MOTORS CORP 152,288.71 160,350.00
54,000 HARLEY DAVIDSON, INC. 691,935.20 2,092,500.00
---------------- ----------------
TOTAL MOTOR VEHICLES 1,036,505.94 2,595,700.00 1.95%
MULTIPLE INDUSTRY
1,700 ALLIED SIGNAL INC 63,195.80 75,437.50
800 CORNING INC 36,773.04 27,800.00
200 LOEWS CORP 22,624.50 17,425.00
1,400 MINNESOTA MINING & MFG CO 128,884.00 115,062.50
400 TEXTRON INC. 23,724.00 28,675.00
100 TRW INC 5,868.50 5,462.50
---------------- ----------------
TOTAL MULTIPLE INDUSTRY 281,069.84 269,862.50 0.20%
See accompanying notes to investment securities 6 (Continued)
<PAGE>
CLEARWATER GROWTH FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
COMMON STOCKS
PETROLEUM-DOMESTIC
1,100 ATLANTIC RICHFIELD CO 90,572.24 85,937.50
600 BURLINGTON RESOURCES INC 29,454.78 25,837.50
1,100 OCCIDENTAL PETROLEUM CORP 31,347.25 29,700.00
700 PHILLIPS PETROLEUM CO 34,579.51 33,731.25
600 TENNECO INC. 27,411.00 22,837.50
800 UNOCAL CORP 33,123.04 28,600.00
900 USX-MARATHON GROUP INC 32,735.25 30,881.25
---------------- ----------------
TOTAL PETROLEUM-DOMESTIC 279,223.07 257,525.00 0.19%
PETROLEUM-INTERNATIONAL
3,200 AMOCO CORP 148,346.08 133,200.00
13,665 BRITISH PETROLEUM PLC-ADR 685,319.71 1,205,936.25
2,100 CHEVRON CORP 180,769.68 174,431.25
8,200 EXXON CORP 512,736.16 584,762.50
2,600 MOBIL CORP 193,368.50 199,225.00
1,700 TEXACO INC 98,739.57 101,468.75
---------------- ----------------
TOTAL PETROLEUM-INTERNATIONAL 1,819,279.70 2,399,023.75 1.80%
PETROLEUM-SERVICES & EQUIPMENT
500 BAKER HUGHES, INC. 23,780.00 17,281.25
11,500 CAMCO INTERNATIONAL INC 407,180.00 895,562.50
4,000 DRESSER INDUSTRIES INC 147,438.95 176,250.00
800 HALLIBURTON CO 50,123.04 35,650.00
21,000 SCHLUMBERGER LTD 572,707.95 1,434,562.50
30,500 TRANSOCEAN OFFSHORE INC 797,547.52 1,357,250.00
---------------- ----------------
TOTAL PETROLEUM-SERVICES 1,998,777.46 3,916,556.25 2.94%
PHOTOGRAPHIC EQUIPMENT
1,100 EASTMAN KODAK CO. 69,022.25 80,368.75 0.06%
PUBLISHING
900 GANNETT CO 48,672.72 63,956.25 0.05%
RAILROAD
500 BURLINGTON NORTHERN SANTA FE CORP 48,067.50 49,093.75
700 CSX CORP COM 38,429.51 31,850.00
1,200 NORFOLK SOUTHERN CORP 38,472.00 35,775.00
700 UNION PACIFIC CORP 41,779.50 30,887.50
---------------- ----------------
TOTAL RAILROAD 166,748.51 147,606.25 0.11%
RESTAURANTS
2,300 MCDONALD'S CORP 105,806.67 158,700.00 0.12%
RETAIL-FOOD STORES
700 ALBERTSON'S INC. 26,335.75 36,268.75
700 KROGER CO (b) 22,635.76 30,012.50
800 RITE AID CORP 24,336.52 30,050.00
1,600 SAFEWAY INC (b) 47,173.04 65,100.00
25,000 WALGREEN COMPANY 632,788.70 1,032,812.50
---------------- ----------------
TOTAL RETAIL-FOOD STORES 753,269.77 1,194,243.75 0.90%
See accompanying notes to investment securities 7 (Continued)
<PAGE>
CLEARWATER GROWTH FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
COMMON STOCKS
RETAIL - GENERAL MERCHANDISE
700 COSTCO COMPANIES INC (b) 27,518.75 44,143.75
1,400 DAYTON-HUDSON CORP 46,160.73 67,900.00
19,500 FEDERATED DEPARTMENT STORES (b) 513,045.00 1,049,343.75
70,000 KOHLS CORP (b) 1,171,431.25 3,631,250.00
800 MAY DEPARTMENT STORES CO 44,498.00 52,400.00
700 PENNEY J C INC 42,410.76 50,618.75
1,200 SEARS ROEBUCK & CO 55,159.56 73,275.00
4,600 WALMART STORES INC. 166,863.62 279,450.00
---------------- ----------------
TOTAL RETAIL - GENERAL MERCHANDISE 2,067,087.67 5,248,381.25 3.94%
RETAIL - SPECIALTY STORE
1,200 CVS CORP 37,761.00 46,725.00
1,050 GAP INC 39,067.00 64,706.25
25,750 HOME DEPOT INC. 50,381.91 2,138,859.38
900 TOYS R US INC. (b) 31,610.25 21,206.25
---------------- ----------------
TOTAL RETAIL-SPECIALTY STORE 158,820.16 2,271,496.88 1.70%
TIRES & RUBBER PRODUCTS
500 GOODYEAR TIRE & RUBBER CO 32,667.50 32,218.75 0.02%
TOBACCO
1,100 RJR NABISCO HOLDINGS CORP 36,022.25 26,125.00
31,500 PHILIP MORRIS COS INC. 520,988.30 1,240,312.50
---------------- ----------------
TOTAL TOBACCO 557,010.55 1,266,437.50 0.95%
UTILITIES - ELECTRIC
600 AMERICAN ELECTRIC POWER 28,667.28 27,225.00
800 CONSOLIDATED EDISON OF NY 27,723.04 36,850.00
1,200 DUKE POWER CO 58,309.56 71,100.00
1,300 EDISON INTERNATIONAL 33,715.50 38,431.25
500 FPL GROUP INC 26,336.25 31,500.00
1,400 P G & E CORPORATION 36,484.00 44,187.50
2,200 SOUTHERN CO 50,975.76 60,912.50
800 TEXAS UTILITY 28,673.04 33,300.00
---------------- ----------------
TOTAL UTILITIES - ELECTRIC 290,884.43 343,506.25 0.26%
UTILITIES - GAS & PIPELINE
1,000 ENRON CORP 38,497.50 54,062.50
1,000 WILLIAMS COMPANIES, INC. 25,623.75 33,750.00
---------------- ----------------
TOTAL UTILITIES - GAS & PIPELINE 64,121.25 87,812.50 0.07%
UTILITIES - TELEPHONE & CELLULAR
5,300 A T & T CORPORATION 261,336.64 302,762.50
35,000 AIRTOUCH COMMUNICATIONS INC. (b) 1,048,159.20 2,045,312.50
3,600 AMERITECH CORPORATION/DEL 117,220.50 161,550.00
5,200 BELL ATLANTIC CORP 210,187.38 237,250.00
3,300 BELLSOUTH CORP 157,460.49 221,512.50
See accompanying notes to investment securities 8 (Continued)
<PAGE>
CLEARWATER GROWTH FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
COMMON STOCKS
UTILITIES - TELEPHONE & CELLULAR (cont.)
3,100 GTE CORP 134,454.75 172,437.50
1,800 MCI COMMUNICATIONS 65,756.34 104,625.00
6,000 SOUTHWESTERN BELL CORP 194,805.00 240,000.00
1,400 SPRINT CORP 75,027.82 98,700.00
1,655 US WEST INC (b) 66,717.19 77,767.14
2,200 WORLDCOM INC GA (b) 76,656.36 106,562.50
---------------- ----------------
TOTAL UTILITIES - TELEPHONE & CELLULAR 2,407,781.67 3,768,479.64 2.83%
CASH EQUIVALENTS
REPURCHASE AGREEMENTS WITH STATE STREET
576,145.12 BANK, 5.3%, 7/1/98 (e) 576,148.12 576,148.12 0.43%
---------------- ---------------- ------------
TOTAL INVESTMENTS $58,674,561.58 133,303,861.74 100.05%
================ ================ ============
<FN>
Notes to Investments in Securities
(a) Securities are valued in accordance with procedures described in note 2 to the financial statements.
(b) Currently non-income producing.
(c) 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 institutional purchasers.
(d) At June 30, 1998, the cost for federal income tax purposes was $58,674,561. The aggregate gross
unrealized appreciation and depreciation of investments in securities based on this cost were as follows:
Gross unrealized appreciation 75,245,290.46
Gross unrealized depreciation (615,990.30)
-----------------------
Net unrealized appreciation $74,629,300.16
=======================
(e) Repurchase agreement acquired on 6/30/98 is collateralized by U.S. government agency securities
and interest due at maturity is $84.82.
</FN>
</TABLE>
See accompanying notes to investment securities 9
<PAGE>
<TABLE>
<CAPTION>
CLEARWATER SMALL CAP FUND
SCHEDULE OF INVESTMENTS AT JUNE 30 ,1998
<S> <C> <C> <C> <C> <C>
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
COMMON STOCKS
AIRCRAFT LEASING
25,200 INTERNATIONAL AIRCRAFT CO (b) 256,612.50 217,350.00 0.44%
ALUMINUM
39,400 EASCO INC 286,917.90 396,462.50 0.81%
BANKS
7,570 FIDELITY BANKSHARES INC. 111,829.55 216,691.25
21,500 INDEPENDENT BANK CORP - MASS (b) 350,718.75 416,562.50
14,512 QUEENS COUNTY BANCORP INC. 327,293.81 633,086.00
17,640 SUN BANCORP INC-NJ 240,800.00 467,460.00
---------------- ----------------
TOTAL BANKS 1,030,642.11 1,733,799.75 3.55%
BUSINESS EQUIPMENT & SERVICES
7,300 ANALYTICAL SURVEYS INC. (b) 189,334.75 267,362.50
34,450 CHECKPOINT SYS INC COM 522,920.45 486,606.25
11,900 CURTIS-WRIGHT CORP 441,160.00 466,331.25
12,900 FACTUAL DATA CORP 114,003.75 116,100.00
39,000 GRADCO SYSTEMS INC. (b) 185,534.45 263,250.00
54,600 HEADWAY CORPORATE RESOURCES (b) 316,607.55 648,375.00
16,750 HENRY (JACK) & ASSOCIATES 144,200.63 575,781.25
21,700 M/A/R/C, INC. 260,472.17 358,050.00
25,700 MATTHEWS INTL CORP 206,721.87 631,256.25
46,600 PROPHET 21 INC (b) 198,050.00 681,525.00
---------------- ----------------
TOTAL BUSINESS EQUIPMENT & SERVICES 2,579,005.62 4,494,637.50 9.19%
CAPITAL EQUIPMENT
10,300 AMPCO-PITTSBURGH 124,447.50 158,362.50
15,700 GLEASON CORP 268,623.77 441,562.50
6,000 GRAHAM CORP (b) 122,925.00 97,500.00
14,200 LUFKIN INDUSTRIES INC 313,595.13 468,600.00
17,500 MTS SYSTEMS CORP 250,137.50 281,093.75
19,600 PENN ENGINEERING & MFG CO 440,061.25 482,650.00
--------------- ------------------
TOTAL CAPITAL EQUIPMENT 1,519,790.15 1,929,768.75 3.95%
CHEMICALS
19,180 PIONEER COMPANIES INC. CL A 132,198.59 155,837.50 0.32%
CHEMICALS-SPECIALTY
61,600 GNI GROUP INC. (b) 410,141.27 396,550.00
24,500 VALLEY NATIONAL GASES INC. (b) 277,932.50 269,500.00
---------------- ----------------
TOTAL CHEMICALS SPECIALTY 688,073.77 666,050.00 1.36%
CLOTHING & SHOES
70,500 G-III APPAREL GROUP LTD (b) 403,069.09 317,250.00
19,500 R G BARRY CORPORATION (b) 264,448.86 321,750.00
---------------- ----------------
TOTAL CLOTHING & SHOES 667,517.95 639,000.00 1.31%
See accompanying notes to investment securities 1 (Continued)
<PAGE>
CLEARWATER SMALL CAP FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
COMMON STOCKS
COMMUNICATIONS EQUIPMENT
11,200 ABLE TELCOM HOLDING CORP (b) 101,690.40 201,600.00
45,000 INTERNATIONAL FIBERCOM (b) 403,065.21 392,343.75
19,000 NUMEREX CORP CL A (b) 114,000.00 85,500.00
---------------- ----------------
TOTAL COMMUNICATIONS EQUIPMENT 618,755.61 679,443.75 1.39%
COMPUTERS & PERIPHERALS
19,500 ASTRO-MED INC NEW 160,732.50 148,687.50
14,000 KENTEK INFORMATION SYSTEMS 85,019.98 120,750.00
63,900 MTI TECHNOLOGY CORP (b) 137,898.50 585,084.38
---------------- ----------------
TOTAL COMPUTERS & PERIPHERALS 383,650.98 854,521.88 1.75%
COMPUTER SOFTWARE & SERVICES
115,000 ENLIGHTEN SOFTWARE (b) 416,875.00 316,250.00
46,300 ORCAD INC (b) 452,221.63 451,425.00
123,700 ROCKY MOUNTAIN INTERNET INC. (b) 309,087.50 1,260,193.75
---------------- ----------------
TOTAL COMPUTER SOFTWARE & SERVICES 1,178,184.13 2,027,868.75 4.15%
CONSTRUCTION
27,400 SHAW GROUP INC. (b) 476,736.00 712,400.00 1.46%
CONSTRUCTION MATERIALS
28,300 CAMERON ASHLEY BUILDING PROD (b) 339,579.60 477,562.50
29,600 INSTEEL INDUSTRIES 247,755.00 186,850.00
32,800 INTERNATIONAL COMFORT PRODUCTS CORP (b) 233,323.27 397,700.00
1,400 MILLER BUILDING SYSTEMS INC (b) 11,987.50 12,600.00
38,800 NORTHWEST PIPE COMPANY (b) 614,565.63 911,800.00
13,000 TEXAS INDUSTRIES INC. 353,358.50 689,000.00
---------------- ----------------
TOTAL CONSTRUCTION MATERIALS 1,800,569.50 2,675,512.50 5.47%
COSMETICS & TOILETRIES
32,616 HERBALIFE INTERNATIONAL CL-B 661,454.35 672,705.00
70,500 LAMAUR CORPORATION (b) 404,550.50 46,265.63
---------------- ----------------
TOTAL COSMETICS & TOILETRIES 1,066,004.85 718,970.63 1.47%
DEFENSE
39,600 HERLEY INDUSTRIES INC. (b) 234,888.17 490,050.00 1.00%
ELECTRICAL EQUIPMENT
46,800 JPM COMPANY (b) 578,288.65 558,675.00 1.14%
ELECTRONIC COMPONENTS & EQUIPMENT
39,100 AEHR TEST SYSTEMS (b) 258,622.27 233,378.13
29,400 AEROFLEX INC (b) 346,015.41 305,025.00
55,400 ALIGN-RITE INTERNATIONAL (b) 759,155.27 824,075.00
8,100 BEL FUSE INC (b) 163,012.50 180,225.00
12,100 C & D TECHNOLOGIES INC 357,277.20 701,800.00
40,725 FREQUENCY ELECTRONICS INC 260,979.38 511,607.81
66,900 INTL MANUFACTURING SERVICES (b) 544,768.00 451,575.00
See accompanying notes to investment securities 2 (Continued)
<PAGE>
CLEARWATER SMALL CAP FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
COMMON STOCKS
ELECTRONIC COMPONENTS & EQUIPMENT (cont)
19,500 KEITHLEY INSTRUMENTS INC 263,907.88 145,031.25
13,600 OPTEK TECHNOLOGY INC (b) 305,991.25 260,100.00
50,000 PAC AEROSPACE & ELECTRONICS (b) 314,100.00 315,625.00
64,885 QC OPTICS (b) 236,355.10 158,157.19
---------------- ----------------
TOTAL ELECTRONIC COMPONENTS & EQUIP 3,810,184.26 4,086,599.38 8.36%
FINANCIAL SERVICES
27,600 AAMES FINANCIAL CORP 386,349.78 379,500.00
49,000 AMERICAN PHYSICIANS SERVICE GROUP (b) 208,250.00 350,656.25
36,800 KINNARD INVESTMENTS INC. (b) 214,731.25 236,900.00
18,300 LIBERTY FINANCIAL COMPANIES 352,777.00 631,350.00
34,400 LONDON PACIFIC GROUP 459,422.90 546,100.00
28,510 PACIFIC CREST CAPITAL INC. 199,153.12 502,488.75
---------------- ----------------
TOTAL FINANCIAL SERVICES 1,820,684.05 2,646,995.00 5.41%
FOREST & PAPER PRODUCTS
44,000 MERCER INTL INC-SBI 435,342.84 438,625.00
28,400 POPE & TALBOT INC 410,998.74 331,925.00
---------------- ----------------
TOTAL FOREST & PAPER PRODUCTS 846,341.58 770,550.00 1.58%
FURNITURE & FURNISHING
26,400 PULASKI FURNITURE CORP 608,425.50 660,000.00
28,900 WINSLOEW FURNITURE INC. (b) 315,064.50 780,300.00
---------------- ----------------
TOTAL FURNITURE & FURNISHING 923,490.00 1,440,300.00 2.95%
GROCERY-RETAIL & WHOLESALE
20,600 FLEMING COMPANIES, INC. 344,900.94 361,787.50
26,950 SCHULTZ SAV O STORES INC. 297,805.00 437,937.50
---------------- ----------------
TOTAL GROCERY-RETAIL & WHOLESALE 642,705.94 799,725.00 1.64%
HEALTHCARE-DRUGS
22,925 ICN PHARMACEUTICALS 227,269.81 1,047,385.94 2.14%
HEALTHCARE-GENERAL
6,900 INVIVO CORPORATION (b) 63,725.00 91,425.00
47,800 THORATEC LABS CORP (b) 403,312.50 394,350.00
72,900 UROCOR INC (b) 526,192.77 519,412.50
---------------- ----------------
TOTAL HEALTHCARE-GENERAL 993,230.27 1,005,187.50 2.06%
HOME BUILDING
7,250 AMERICAN HOMESTAR CORP (b) 62,198.54 173,546.88
27,700 AMREP CORP (b) 192,767.70 270,075.00
29,600 D R HORTON INC 571,430.33 617,900.00
58,000 SAXTON INC. (b) 439,600.00 391,500.00
--------------- ------------------
TOTAL HOME BUILDING 1,265,996.57 1,453,021.88 2.97%
INSURANCE-LIFE
16,339 AMERUS LIFE HOLDINGS INC-A 530,014.43 528,975.13
19,100 INTERCONTINENTAL LIFE CORP (b) 495,175.00 491,825.00
---------------- ----------------
TOTAL INSURANCE 1,025,189.43 1,020,800.13 2.09%
See accompanying notes to investment securities 3 (Continued)
<PAGE>
CLEARWATER SMALL CAP FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
COMMON STOCKS
INSURANCE-PROPERTY & CASUALTY
24,000 AMERICAN SAFETY INS GROUP (b) 269,687.50 282,000.00
26,600 CHARTWELL RE CORPORATION 815,680.70 783,037.50
39,000 PENN AMERICA GROUP INC CO 507,000.00 526,500.00
17,300 PENN TREATY AMERICAN CORP (b) 304,309.85 544,950.00
66,000 SEIBELS BRUCE GROUP INC. 479,712.50 486,750.00
---------------- ----------------
TOTAL INSURANCE 2,376,390.55 2,623,237.50 5.37%
LEISURE TIME INDUSTRY
59,300 BLUEGREEN CORP (b) 428,939.83 522,581.25
19,700 BOSTON ACOUSTICS INC COM 580,657.50 723,975.00
37,000 FEATHERLITE MANUFACTURING (b) 299,156.25 444,000.00
20,300 TODD AO CORP 204,800.00 208,075.00
---------------- ----------------
TOTAL LEISURE TIME INDUSTRY 1,513,553.58 1,898,631.25 3.88%
MOTOR VEHICLE PARTS
39,900 NOBLE INTERNATIONAL LTD (b) 426,577.50 433,912.50
11,000 TRANSTECHNOLOGY CORP 178,750.00 282,562.50
---------------- ----------------
TOTAL MOTOR VEHICLE PARTS 605,327.50 716,475.00 1.47%
PETROLEUM-DOMESTIC
42,000 CREDO PETROLEUM (b) 95,760.00 108,937.50 0.22%
PETROLEUM-SERVICES & EQUIPMENT
74,700 BOLT TECHNOLOGY CORP (b) 133,105.38 681,637.50
56,000 DAILEY PETROLEUM SERVICES (b) 623,677.10 336,000.00
80,000 ICO INC 358,695.74 345,000.00
18,100 MAVERICK TUBE CORP (b) 443,242.60 210,412.50
143,500 NORTON DRILLING SERVICES, INC (b) 217,449.45 125,562.50
28,500 SUPERIOR ENERGY SERVICES INC. (b) 261,494.10 144,281.25
---------------- ----------------
TOTAL PETROLEUM-SERVICES & EQUIPMENT 2,037,664.37 1,842,893.75 3.77%
PHOTOGRAPHIC EQUIPMENT
43,100 BALLANTYNE OF OMAHA INC (b) 343,512.50 360,962.50 0.74%
PLASTICS
27,000 SPARTECH CORP 323,814.09 578,812.50 1.18%
RETAIL-GENERAL MERCHANDISE
10,200 ELDER-BEERMAN STORES CORP (b) 274,125.00 272,212.50 0.56%
RETAIL-SPECIALTY
13,130 BURLINGTON COAT FACTORY WRHS 176,918.75 295,425.00
8,700 FINLAY ENTERPRISES INC. (b) 165,300.00 209,887.50
44,400 LECHTERS INC. (b) 260,003.85 217,837.50
---------------- ----------------
TOTAL RETAIL-SPECIALTY 602,222.60 723,150.00 1.48%
SAVINGS & LOAN
9,134 ASTORIA FINANCIAL 378,528.21 488,669.00 1.00%
STEEL
22,000 SCHNITZER STEEL INDUSTRIES INC-A 544,811.25 519,750.00 1.06%
See accompanying notes to investment securities 4 (Continued)
<PAGE>
CLEARWATER SMALL CAP FUND
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
COMMON STOCKS
TEXTILES
40,200 CONCORD FABRICS INC CL A (b) 353,060.00 371,850.00
24,400 ALPINE GROUP INC. (b) 445,965.00 506,300.00
---------------- ----------------
TOTAL TEXTILES 799,025.00 878,150.00 1.80%
UTILITIES-ELECTRIC
36,550 EL PASO ELECTRIC COMPANY (b) 201,865.25 335,803.13
21,500 TRIGEN ENERGY CORP 401,512.50 296,968.75
---------------- ----------------
TOTAL UTILITIES-ELECTRIC 603,377.75 632,771.88 1.29%
UTILITIES-GAS & PIPELINE
23,500 CTG RESOURCES 554,270.10 552,250.00
38,450 MIDCOAST ENERGY RESOURCES 707,285.75 893,962.50
16,300 NUI CORP 296,229.73 414,631.25
27,100 PROVIDENCE ENERGY CORP 504,050.75 570,793.75
---------------- ----------------
TOTAL UTILITIES-GAS & PIPELINE 2,061,836.33 2,431,637.50 4.97%
PREFERRED STOCK
BANKS
9,000 IRWIN FINANCIAL CORP 225,000.00 239,625.00 0.49%
CASH EQUIVALENTS
REPURCHASE AGREEMENTS WITH STATE STREET
1,048,424.36 BANK, 5.3%, 7/1/98 (d) 1,048,424.36 1,048,424.36 2.14%
---------------- ---------------- ----------
TOTAL INVESTMENTS 38,886,301.48 48,585,253.58 99.39%
================ ================ ==========
<FN>
Notes to Investments in Securities
(a) Securities are valued in accordance with procedures described in note 2 to the financial statements.
(b) Currently non-income producing.
(c) At June 30, 1998, the cost for federal income tax purposes was $38,886,301. The aggregate gross
unrealized appreciation and depreciation of investments in securities based on this cost were as follows:
Gross unrealized appreciation 12,007,487.09
Gross unrealized depreciation (2,308,534.99)
---------------------
Net unrealized appreciation $9,698,952.10
=====================
(d) Repurchase agreement acquired on 6/30/98 is collateralized by U.S. government agency securities
and interest due at maturity is $154.35.
</FN>
</TABLE>
See accompanying notes to investment securities 5
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE 6/30/98 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
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<NAME> CLEARWATER GROWTH FUND
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