[OBJECT OMITTED]
- --------------------------------------------------------------------------------
CLEARWATER INVESTMENT TRUST
- --------------------------------------------------------------------------------
February 12, 1999
TO: Our Unit Holders
On December 31, 1998, the net asset value of the Clearwater Growth Fund was
$25.92 per unit. The net asset value of the Clearwater Small Cap Fund was $13.08
per unit. On a total return basis for 1998, the Clearwater Growth Fund increased
by 22.7% and the Clearwater Small Cap Fund decreased by 7.1%. For comparative
purposes, the Russell 1000 increased by 27.0% and the Russell 2000 decreased by
2.5%. For the fourth quarter, the Clearwater Growth Fund increased 21.9% and the
Clearwater Small Cap Fund increased 15.9%. The Russell 1000 increased 30.1% and
the Russell 2000 increased 16.3%.
Beginning with this report the Growth Fund's benchmark is being changed from the
S&P 500 to the Russell 1000 index because the Fund's objective is now to track
the Russell 1000 to the extent consistent with the twin objective of realizing
minimal capital gains. Additionally, The Russell 1000 has proven to be an
equally good historical benchmark for the Fund as previously managed.
Parametric Portfolio Associates, the subadvisor for the Clearwater Growth Fund,
made the following comments:
"1998 was a tumultuous year for the U.S. stock markets. Solid first half
gains were erased in a later summer sell-off and replaced in a year-end
rally. Large cap growth securities dominated all alternatives as evidenced by
the 45% annual return posted by the Russell Top 200 Growth Index.
In late 1997 Clearwater directed Parametric to begin evolving the Clearwater
Growth Fund to passively track the Russell 1000 Index. Central to this
mandate was the desire to realize minimal capital gains and remain cognizant
of the tax consequences of all portfolio activities. Pursuant to these
instructions, Parametric slowly reduced tracking error (relative to the
Russell 1000 Index) from an initial 4.8% to a current 2.7% while realizing
little or no capital gains.
Clearwater Growth Fund 1998
------------------------------------- -----------------------------------
1998 Performance
------------------------------------- -----------------------------------
Russell 1000 (Large Cap) 27.0%
------------------------------------- -----------------------------------
Russell Mid Cap 10.0%
------------------------------------- -----------------------------------
Russell 2000 (Small Cap) -2.5%
------------------------------------- -----------------------------------
Clearwater Growth Fund 22.7%
------------------------------------- -----------------------------------
The story illustrated in the table above explains the Clearwater Growth
Fund's under-performance vs. the Russell 1000 Index throughout 1998.
Clearwater's return has been a mixture of both large and mid cap performance
reflecting the mid cap bias within the portfolio. In evaluating Clearwater's
performance in 1998, Parametric examined the effect of biases across many
measures including sector weights, beta, yield, P/E, and earnings growth. No
single factor or combination of factors comes close to the capitalization
bias in explaining the portfolio performance relative to the Russell 1000.
<PAGE>
Page 2
The Clearwater Growth Fund has a tracking error estimate of 2.7%. This is
below our goal of 3% by the end of January 1999. The current targets direct
us to reduce tracking error to 2.5% by the end of January 2000. We will
accelerate this process if we are presented with an opportunity to do so
without incurring substantial tax liabilities."
- --------------------------------------------------------------------------------
[GRAPHIC OMMITTED]
Annualized Total Return
One Year Five Year Ten Year
Growth Fund 22.7% 20.8% 17.8%
Russell 1000 27.0% 23.4% 19.0%
For comparative purposes the annualized total returns of the
S&P 500 index, the Growth Fund's former benchmark, over the
last one five and ten year periods were 28.8%, 24.1% and 19.2%
respectively.
- --------------------------------------------------------------------------------
Kennedy Capital Management, the subadviser for the Small Cap Fund, made the
following comments:
"Although U.S. stocks rebounded strongly in the fourth quarter of 1998, it
was not enough to totally undo the damage done in the third quarter. Your
account under-performed the Russell 2000 Index benchmark for the year by
4.5%. While your account's performance remains ahead of the benchmark for the
trailing three-year period and since inception, we are not satisfied, as it
is our goal to add value in almost all periods.
In large part, the current investment environment is a continuation of the
U.S. stock market's obsession with large and liquid stocks. The S&P 500
Index, for example, gained 28.8% in 1998 compared with the Russell 2000,
which lost 2.5%. But that crude statistic masks how "narrow" the market
advance was this past year. The top 20 stocks in the S&P 500 accounted for
virtually all of the gain in the large cap index. The top 20 stocks in the
Russell 2000 gained over 400% on average in 1998. The average stock in the
bottom half of the Russell 2000, where most of our stocks are located, lost
20% in 1998. Much of the fourth quarter rebound in the indices can be
attributed to the internet craze; 16 of the 20 top-performing stocks in the
Russell 2000 in 1998 were internet stocks. In aggregate the top performing 20
companies had operating losses of $73 million in the past year. Their
aggregate Price/Book ratio is 16! In fact, the top performing 70 stocks in
the Russell 2000 showed an aggregate operating loss.
<PAGE>
Page 3
We continue to believe that this market will return to its senses and bid up
the prices of fast growing small companies. While we further believe that the
explanation above is an accurate description of why we have under performed,
we are not prepared to just sit and wait. The Kennedy Capital Management
investment process is built on the premise that a proactive approach to
investing - working with companies to get accurate information in data bases
and encourage analysts to review the portfolio firms - can help
under-followed and misunderstood companies become more visible to the
investment community. However, in the current environment, where analysts can
simply tout internet stocks, past methods may not be sufficient.
Consequently, we intend to redouble our work in this regard in 1999. Each of
our portfolio managers will nominate a short list of the most misunderstood
and undervalued companies from his or her list of stocks. We will then create
formal documents outlining the reasons why we believe each company is
undervalued. These reports will be reviewed with the respective company
management - often with face-to-face meetings. Finally, we will distribute
these documents to potential analysts and discuss them in person. As we begin
this process, we are likely to increase our positions size in these companies
to provide the maximum positive impact for our clients."
- --------------------------------------------------------------------------------
[GRAPHIC OMMITTED]
Annualized Total Return
One Year Five Year Inception 12/31/93
Small cap Fund -7.1% 12.0% 12.0%
Russell 2000 -2.5% 11.9% 11.9%
Previous periods during which the Fund was advised
by another investment adviser are not show.
- --------------------------------------------------------------------------------
Clearwater Investment Trust Clearwater Management Company
P. W. Pascoe, Chairman & Treasurer P. W. Pascoe, Chairman & Treasurer
Samuel B. Carr, Jr. W. T. Weyerhaeuser, V. P. & 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. & Secretary D. C. Titcomb
G. H. Weyerhaeuser, Jr.
<PAGE>
Independent Auditors' Report
The Board of Trustees and Shareholders
Clearwater Investment Trust:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments in securities, of Clearwater Growth
Fund and Clearwater Small Cap Fund (funds within Clearwater Investment
Trust) as of December 31, 1998, and the related statements of operations
for the year then ended, the statements of changes in net assets for each
of the years in the two-year period then ended and the financial highlights
for each of the years in the five-year period then ended. These financial
statements and the financial highlights are the responsibility of the
funds' management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements and the
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Investment securities held in custody are
confirmed to us by the custodian. As to securities purchased and sold, but
not received or delivered, we request confirmations from brokers, and where
replies are not received, we carry out other appropriate auditing
procedures. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights
referred to above present fairly, in all material respects, the financial
position of Clearwater Growth Fund and Clearwater Small Cap Fund at
December 31, 1998, and the results of their operations for the year then
ended, the changes in their net assets for each of the years in the
two-year period then ended and the financial highlights for each of the
years in the five-year period then ended, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 12, 1999
<PAGE>
CLEARWATER INVESTMENT TRUST
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1998 GROWTH SMALL CAP
FUND FUND
ASSETS
<S> <C> <C>
Investments in securities, at market value (note 2)
(identified cost: $58,337,332 Growth Fund; $37,675,358 Small Cap Fund) $135,068,006 $43,091,677
Cash 1,211 11,693
Receivable for investment securities sold 16,988 398,775
Accrued dividend and interest receivable 101,385 15,615
Receivable for shares of beneficial interest sold 0 14,300
----------- ----------
TOTAL ASSETS 135,187,590 43,532,060
LIABILITIES
Payables for investment securities purchased 0 951,224
Dividend payable 278,171 0
Capital gain payable 0 3,235,811
Accrued management fee 136,855 128,391
----------- ----------
TOTAL LIABILITIES 415,026 4,315,426
NET ASSETS $134,772,564 $39,216,634
- ---------- =========== ============
CAPITAL
- ----------
Capital stock and additional paid-in capital
(authorized unlimited number of shares at no par
value for each Fund; outstanding 5,199,453 and
2,997,215 shares, respectively (note 2)) $ 58,051,284 $33,800,246
Undistributed net income 195,929 0
Accumulated net realized gain(loss) (205,323) 69
Unrealized appreciation of investments 76,730,674 5,416,319
---------- ---------
NET ASSETS $134,772,564 $39,216,634
- ---------- =========== ===========
Net asset value per share of outstanding capital stock $ 25.92 $ 13.08
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
-1-
<PAGE>
<TABLE>
<CAPTION>
CLEARWATER INVESTMENT TRUST
STATEMENTS OF OPERATIONS
For Year Ended December 31, 1998
GROWTH SMALL CAP
FUND FUND
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends (net of foreign taxes withheld of $9,123 and $688, respectively) $ 1,009,037 $ 394,546
Interest 23,594 100,804
----------- -----------
TOTAL INCOME 1,032,631 495,350
Expenses: (note 5)
Income tax expense 0 4,120
Investment advisory fee 558,531 606,738
----------- -----------
TOTAL EXPENSES 558,531 610,858
NET INVESTMENT INCOME (LOSS) 474,100 (115,508)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain (loss) on security transactions (205,323) 3,235,880
Unrealized appreciation (depreciation) during the period 24,810,426 (6,246,007)
NET GAIN(LOSS) ON INVESTMENTS 24,605,103 (3,010,127)
NET INCREASE(DECREASE) IN NET ASSETS FROM OPERATIONS $25,079,203 $(3,125,635)
=========== ============
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For Year Ended December 31, 1998 and 1997 GROWTH FUND SMALL CAP FUND
<S> <C> <C> <C> <C>
12/31/98 12/31/97 12/31/98 12/31/97
OPERATIONS
Net investment income(loss) $ 474,100 $ (64,458) $ (115,508) $ (65,434)
Net realized gain(loss) on investments (205,323) 8,928,506 3,235,880 7,097,859
Unrealized appreciation(depreciation)
during the period 24,810,426 16,922,059 (6,246,007) 6,508,576
---------- ----------- ------------ ----------
NET INCREASE(DECREASE) IN NET ASSETS FROM OPERATIONS 25,079,203 25,786,107 (3,125,635) 13,541,001
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income (278,171) 0 0 0
Net realized gain on investments 0 (8,987,082) (3,235,811) (7,022,467)
---------- ----------- ------------ ----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (278,171) (8,987,082) (3,235,811) (7,022,467)
CAPITAL SHARE TRANSACTIONS (note 4)
Proceeds from shares sold 619,900 435,000 2,994,150 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 (2,338,395) (4,328,643) (3,440,487) (618,257)
---------- ----------- ------------ ----------
INCREASE(DECREASE) IN NET ASSETS FROM
CAPITAL SHARES TRANSACTIONS 3,112,277 (3,861,918) 4,739,671 1,546,343
---------- ------------ ------------ ----------
TOTAL INCREASE(DECREASE) IN NET ASSETS 27,913,309 12,937,107 (1,621,775) 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 $134,772,564 $106,859,255 $39,216,634 $40,838,409
============ ============ =========== ===========
Undistributed Net Income $ 195,929 0 0 0
============ ============ =========== ===========
<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.
For federal income tax purposes, the Growth Fund had a capital loss
carryover of $205,323 at December 31, 1998, that will expire in 2006 if
not offset by capital gains. It is unlikely the board will authorize a
distribution of any net realized capital gains until the available
capital loss carryover has been offset or expires.
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 $ 0 $ 115,508
Accumulated net realized gains 975 (9,958)
Additional paid-in capital (975) (105,550)
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
December 31, 1998, were as follows:
Purchases Sales proceeds
-----------------------------------------------------------------------
Clearwater Growth Fund $ 4,444,918 $ 5,924,098
Clearwater Small Cap Fund 37,368,302 40,946,052
(4) Capital Share Transactions
Transactions in shares of each fund for the year ended December 31,
1998 and 1997, were as follows:
Clearwater Clearwater
Growth Fund Small Cap Fund
-----------------------------------------------
12/31/98 12/31/97 12/31/98 12/31/97
-----------------------------------------------------------------------
Sold 25,983 24,071 198,063 144,088
Issued for reinvested
distributions 228,190 1,459 340,289 -0-
Redeemed (102,479) (230,550) (220,241) (36,779)
-----------------------------------------------------------------------
Increase (decrease) 151,694 (205,020 318,111 107,309
-----------------------------------------------------------------------
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 December 31, 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 December 31, 1998 was $1,586,750, representing 1.2% 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
Years ended December 31,
-------------------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------
Net asset value, beginning of year $21.17 17.88 17.01 13.62 14.49
- -------------------------------------------------------------------------------------------
Income from investment operations
Net investment income (loss) 0.09 (0.01) (0.01) 0.01 0.06
Net realized and unrealized
gain (loss) 4.71 5.08 3.68 4.43 0.11
- -------------------------------------------------------------------------------------------
Total from investment operations 4.80 5.07 3.67 4.44 0.17
- -------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment
income (0.05) 0.00 0.00 (0.01) (0.06)
Distributions from realized gains 0.00 (1.78) (2.80) (1.04) (0.98)
- -------------------------------------------------------------------------------------------
Total Distributions (0.05) (1.78) (2.80) (1.05) (1.04)
- -------------------------------------------------------------------------------------------
Net asset value, end of year 25.92 21.17 17.88 17.01 13.62
- -------------------------------------------------------------------------------------------
Total Return (a) 22.7% 28.4% 21.6% 32.6% 1.2%
Net assets, end of period
(000's omitted) $134,773 106,859 93,922 84,775 65,999
Ratio of expenses to average
net assets (b) 0.45% 0.98% 1.08% 1.08% 1.07%
Ratio of net investment income
(loss) to average net assets 0.39% -0.06% -0.07% 0.06% 0.39%
Portfolio turnover rate (excluding
short-term securities) 3.65% 38.16% 75.90% 58.64% 70.69%
<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) The year 1996 includes federal and state taxes of 0.01%.
(c) Effective November 1, 1997, Parametric Portfolio Associates became the
subadviser to the Growth Fund.
</FN>
</TABLE>
5
<PAGE>
CLEARWATER INVESTMENT TRUST
<TABLE>
<CAPTION>
Clearwater Small Cap Fund
Years ended December 31,
-------------------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------
Net asset value, beginning of year $15.24 $12.74 11.47 9.89 12.26
- -------------------------------------------------------------------------------------------
Income from investment operations
Net investment Income (loss) (0.04) (0.02) 0.00 0.04 0.17
Net realized and unrealized
gain (loss) (1.04) 5.14 1.71 2.56 (0.99)
- -------------------------------------------------------------------------------------------
Total from investment operations (1.08) 5.12 1.71 2.60 (0.82)
- -------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment
income 0.00 0.00 0.00 (0.04) (0.17)
Excess distributions from net
investment income 0.00 0.00 (0.01) 0.00 0.00
Distributions from realized gains (1.08) (2.62) (0.42) (0.98) (1.38)
Tax return of capital 0.00 0.00 (0.01) 0.00 0.00
- -------------------------------------------------------------------------------------------
Total Distributions (1.08) (2.62) (0.44) (1.02) (1.55)
Net asset value, end of year $13.08 $15.24 12.74 11.47 9.89
- -------------------------------------------------------------------------------------------
Total Return (a) -7.1% 40.2% 15.0% 26.3% -6.7%
Net assets, end of period
(000's omitted) $39,217 40,838 32,774 26,826 17,998
Ratio of expenses to average
net assets (b) 1.36% 1.35% 1.37% 1.35% 1.40%
Ratio of net investment income
(loss) to average net assets 0.26% -0.17% 0.00% 0.36% 1.61%
Portfolio turnover rate (excluding
short-term securities) 88.27% 92.22% 89.25% 77.46% 122.88%
<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 a total equity market capitalizations of
$1 billion or lower. Also effective January 1, 1994, Kennedy Capital
Management became the sub-advisor for the fund.
(c) Includes federal and state taxes of .01% in 1998 and .04% in 1996.
</FN>
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
CLEARWATER GROWTH FUND
SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
COMMON STOCKS
<S> <C> <C> <C> <C> <C>
AEROSPACE
1,700 ALLIED SIGNAL INC 63,195.80 75,331.25
19,000 BOEING CO 449,445.00 619,875.00
10,000 COMPUTER SCIENCES CORP 341,043.55 644,375.00
800 LOCKHEED MARTIN CORP 79,241.76 67,800.00
12,000 SUNDSTRAND CORP 381,907.50 622,500.00
100 TRW INC 5,868.50 5,618.75
1,000 UNITED TECHNOLOGIES CORP 76,885.04 108,750.00
-------------- ---------------
TOTAL AEROSPACE 1,397,587.15 2,144,250.00 1.59%
AIR TRAVEL
800 AMR CORP DEL 50,430.00 47,500.00
600 DELTA AIR LINES INC DE 33,280.50 31,200.00
300 SOUTHWEST AIRLS CO 6,712.00 6,731.25
200 US AIRWAYS GROUP INC (b) 15,387.00 10,400.00
-------------- ---------------
TOTAL AIR TRAVEL 105,809.50 95,831.25 0.07%
AUTOMOBILES & AUTO PARTS
1,247 DAIMLER CHRYSLER AG STUTTGART 72,120.00 119,789.93
200 DANA CORP 10,187.00 8,175.00
4,500 FORD MTR CO DEL 154,848.03 264,093.75
2,800 GENERAL MTRS CORP 181,862.71 200,375.00
54,000 HARLEY DAVIDSON INC 691,935.20 2,558,250.00
-------------- ---------------
TOTAL AUTOMOBILES & AUTO PARTS 1,110,952.94 3,150,683.68 2.34%
BANKS
400 BB&T CORP (b) 14,162.00 16,125.00
2,600 BANK NEW YORK INC 62,790.52 104,650.00
4,434 BANK ONE CORP 211,922.51 226,411.12
6,786 BANKAMERICA CORP NEW 445,174.24 408,008.25
1,000 BANKBOSTON CORP 41,430.00 38,937.50
400 BANKERS TR NY CORP 47,686.50 34,175.00
13,000 CHASE MANHATTAN CORP NEW 654,888.75 884,812.50
650 COMERICA INC 37,530.00 44,321.87
200 CRESTAR FINL CORP 13,799.50 14,400.00
800 FIFTH THIRD BANCORP 38,237.50 57,050.00
4,000 FIRST AMERN CORP TENN 107,205.00 177,500.00
3,334 FIRST UN CORP 165,498.99 202,748.87
200 FIRSTAR CORP WIS 14,174.50 18,650.00
2,200 FLEET FINL GROUP INC 75,534.75 98,312.50
1,700 KEYCORP NEW 54,541.27 54,400.00
2,100 MBNA CORP 37,621.50 52,368.75
1,100 MELLON BK CORP 60,578.54 75,625.00
800 MORGAN J P & CO INC 94,391.78 84,050.00
1,000 NATIONAL CITY CORP 62,560.02 72,500.00
200 NORTHERN TRUST CORP 14,850.00 17,462.50
1,300 PNC BK CORP 63,852.97 70,362.50
300 PROVIDIAN FINL CORP 15,774.50 22,500.00
8,000 REPUBLIC NY CORP 382,682.70 364,500.00
700 STATE STREET CORPORATION 42,060.76 48,693.75
200 SUMMIT BANCORP 9,062.00 8,737.50
900 SUNTRUST BKS INC 60,860.27 68,850.00
See accompanying notes to investment securities 1 (continued)
<PAGE>
CLEARWATER GROWTH FUND
SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
BANKS (Cont'd)
55,000 TCF FINANCIAL CORP 965,087.50 1,330,312.50
2,400 US BANCORP DEL 83,398.00 85,200.00
700 WACHOVIA CORP NEW 54,867.00 61,206.25
1,836 WASHINGTON MUT INC 80,280.75 70,112.25
55,000 WELLS FARGO & CO NEW 1,250,765.50 2,196,562.50
-------------- ---------------
TOTAL BANKS 5,263,269.82 7,009,546.11 5.20%
BROADCASTING & CABLE
4,400 CBS CORP 122,493.25 144,100.00
200 CLEAR CHANNEL COMMUNICATIONS (b) 11,524.50 10,900.00
1,400 COMCAST CORP 44,837.50 82,162.50
2,400 MEDIAONE GROUP INC (b) 70,585.41 112,800.00
1,250 TELE COMM LIBERTY MEDIA GROUP (b) 30,925.00 57,578.12
2,300 TELE COMMUNICATIONS INC NEW (b) 56,937.50 117,693.75
1,300 VIACOM INC (b) 51,115.55 96,200.00
-------------- ---------------
TOTAL BROADCASTING & CABLE 388,418.71 621,434.37 0.46%
BUSINESS SERVICES
1,600 AMERICA ONLINE INC DEL 47,655.00 256,000.00
1,000 AUTOMATIC DATA PROCESSING INC 52,653.80 80,187.50
22,000 CERIDIAN CORP (b) 548,909.80 1,535,875.00
100 ELECTRONIC DATA SYS CORP NEW 3,917.93 5,025.00
11,600 FDX CORP (b) 523,042.27 1,032,400.00
22,000 FIRST DATA CORP 226,047.22 697,125.00
27,000 FISERV INC (b) 549,868.20 1,388,812.50
200 IMS HEALTH INC 12,562.00 15,087.50
200 INTERPUBLIC GROUP COS INC 12,024.50 15,950.00
19,000 LEGATO SYSTEMS INC (b) 157,970.10 1,252,812.50
8,500 MODIS PROFESSIONAL SVCS INC (b) 153,510.00 123,250.00
200 OMNICOM GROUP 10,562.00 11,600.00
34,875 PAYCHEX INC 278,102.90 1,793,882.81
1,000 SERVICE CORP INTL 32,297.50 38,062.50
43,500 STEWART ENTERPRISES INC 629,245.99 967,875.00
-------------- ---------------
TOTAL BUSINESS SERVICES 3,238,369.21 9,213,945.31 6.84%
CHEMICALS
600 AIR PRODS & CHEMS INC 23,043.00 24,000.00
1,000 DOW CHEM CO 92,122.54 90,937.50
4,300 DU PONT E I DE NEMOURS & CO 250,364.38 228,168.75
22,500 MONSANTO CO 329,839.69 1,068,750.00
800 PPG INDS INC 47,004.28 46,600.00
300 PRAXAIR INC 14,424.26 10,575.00
-------------- ---------------
TOTAL CHEMICALS 756,798.15 1,469,031.25 1.09%
COMPUTERS & BUSINESS EQUIPMENT
42,750 CISCO SYS INC (b) 278,270.35 3,967,734.37
5,872 COMPAQ COMPUTER CORP 197,881.21 246,257.00
4,200 DELL COMPUTER CORP (b) 110,222.76 307,387.50
1,600 E M C CORP MASS (b) 47,098.00 136,000.00
3,300 HEWLETT PACKARD CO 209,029.39 225,431.25
3,800 INTERNATIONAL BUSINESS MACHS 406,828.00 702,050.00
1,000 PITNEY BOWES INC 41,455.00 66,062.50
300 SUN MICROSYSTEMS INC (b) 14,325.00 25,687.50
300 UNISYS CORP (b) 8,118.00 10,331.25
5,500 XEROX CORP 426,875.15 649,000.00
-------------- ---------------
TOTAL COMPUTERS & BUSINESS EQUIPMENT 1,740,102.86 6,335,941.37 4.70%
See accompanying notes to investment securities 2 (continued)
<PAGE>
CLEARWATER GROWTH FUND
SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
CONSTRUCTION MATERIALS
1,300 MASCO CORP 31,635.50 37,375.00
8,000 OWENS CORNING 248,120.85 283,500.00
-------------- ---------------
TOTAL CONSTRUCTION MATERIALS 279,756.35 320,875.00 0.24%
CONSTRUCTION & MINING EQUIPMENT
1,500 CATERPILLAR INC 77,171.25 69,000.00
800 DOVER CORP 27,686.52 29,300.00
-------------- ---------------
TOTAL CONSTRUCTION & MINING EQUIPMENT 104,857.77 98,300.00 0.07%
DIVERSIFIED
37,000 CENDANT CORP (b) 284,605.76 705,312.50
400 MINNESOTA MNG & MFG CO 36,824.00 28,450.00
1,100 RAYTHEON CO 58,778.50 58,575.00
600 TEXTRON INC 38,736.00 45,562.50
17,000 TYCO INTL LTD NEW 329,885.00 1,282,437.50
-------------- ---------------
TOTAL DIVERSIFIED 748,829.26 2,120,337.50 1.57%
DRUGS & HEALTHCARE
5,800 ABBOTT LABS 191,129.25 284,200.00
4,900 AMERICAN HOME PRODUCTS CORP 196,436.73 275,931.25
14,000 AMGEN INC (b) 259,439.50 1,463,875.00
1,100 BAXTER INTL INC 54,547.25 70,743.75
400 BECTON DICKINSON & CO 16,424.50 17,075.00
15,500 BIOGEN INC (b) 450,884.15 1,286,500.00
3,800 BRISTOL MYERS SQUIBB CO 359,778.10 508,487.50
750 CARDINAL HEALTH INC 39,173.75 56,906.25
2,600 COLUMBIA / HCA HEALTHCARE CORP 74,030.92 64,350.00
20,500 ELAN PLC (b) 625,284.55 1,426,031.25
700 GUIDANT CORP 44,560.75 77,175.00
58,000 HEALTHSOUTH CORP (b) 491,910.00 895,375.00
16,500 JOHNSON & JOHNSON 364,435.12 1,383,937.50
19,000 LILLY ELI & CO 794,112.40 1,688,625.00
23,000 MEDTRONIC INC 171,646.13 1,707,750.00
4,600 MERCK & CO INC 431,401.00 679,362.50
2,000 PHARMACIA & UPJOHN INC 69,876.21 113,250.00
35,500 PFIZER INC 354,583.00 4,453,031.25
5,600 SCHERING PLOUGH CORP 179,068.00 309,400.00
12,000 SMITHKLINE BEECHAM P L C 345,855.00 834,000.00
17,500 STRYKER CORP 270,380.65 963,593.75
1,000 TENET HEALTHCARE CORP (b) 30,153.80 26,250.00
600 UNITED HEALTHCARE CORP 29,267.28 25,837.50
46,500 WARNER LAMBERT CO 1,346,471.55 3,496,218.75
-------------- ---------------
TOTAL DRUGS & HEALTHCARE 7,190,849.59 22,107,906.25 16.40%
See accompanying notes to investment securities 3 (continued)
<PAGE>
CLEARWATER GROWTH FUND
SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
ELECTRIC GAS & SANITARY UTILITIES
600 AMERICAN ELEC PWR INC 28,667.28 28,237.50
700 BROWNING FERRIS INDS INC 23,948.26 19,906.25
900 CONSOLIDATED EDISON INC 32,041.54 47,587.50
200 DOMINION RES INC VA 8,199.50 9,350.00
1,500 DUKE ENERGY CO 75,746.31 96,093.75
1,300 EDISON INTL 33,715.50 36,237.50
100 ENTERGY CORP 2,774.75 3,112.50
700 FPL GROUP INC 38,623.25 43,137.50
300 HOUSTON INDS INC 8,399.25 9,637.50
1,700 PG&E CORP 45,764.50 53,550.00
200 PUBLIC SVC ENTERPRISE GROUP 6,624.50 8,000.00
2,600 SOUTHERN CO 61,299.76 75,562.50
800 TEXAS UTILS CO 28,673.04 37,350.00
1,087 WASTE MGMT INC DEL 37,385.30 50,681.37
200 UNICOM CORP 6,949.50 7,712.50
1,300 WILLIAMS COS INC 35,204.25 40,543.75
-------------- ---------------
TOTAL ELECTRIC GAS & SANITARY UTILITIES 474,016.49 566,700.12 0.42%
ELECTRICAL & ELECTRONIC MACHINERY & EQUIP
23,500 ADC TELECOMMUNICATIONS INC (b) 538,040.05 816,625.00
22,000 ASM LITHOGRAPHY HLDG N V (b) 422,301.25 671,000.00
38,000 ANALOG DEVICES INC (b) 681,654.00 1,192,250.00
1,500 APPLIED MATERIALS INC (b) 54,672.06 64,031.25
4,000 ASPEN TECHNOLOGY INC (b) 100,000.00 58,000.00
400 BOSTON SCIENTIFIC CORP (b) 15,487.00 10,725.00
7,000 CIENA CORP (b) 342,767.05 102,375.00
1,800 EMERSON ELEC CO 101,620.50 108,900.00
19,000 EXEL LIMITED CLASS A 523,635.00 1,425,000.00
38,600 GENERAL ELEC CO 1,661,591.47 3,939,612.50
600 HONEYWELL INC 44,961.02 45,187.50
26,000 INTEL CORP 208,329.75 3,082,625.00
4,900 LUCENT TECHNOLOGIES INC 241,574.20 539,000.00
14,500 TELLABS INC (b) 298,665.30 994,156.25
400 TEXAS INSTRS INC 24,274.00 34,225.00
19,000 XILINX INC (b) 579,697.78 1,237,375.00
-------------- ---------------
TOTAL ELECTRICAL & ELECTRONIC MACH & EQUIP 5,839,270.43 14,321,087.50 10.63%
ENERGY
3,700 AMOCO CORP 169,563.58 223,387.50
1,300 ATLANTIC RICHFIELD CO 104,196.74 84,825.00
13,665 BP AMOCO PLC 685,319.71 1,224,725.62
2,500 CHEVRON CORP 214,043.68 207,343.75
1,200 ENRON CORP 49,022.00 68,475.00
9,300 EXXON CORP 589,802.16 680,062.50
4,000 HALLIBURTON CO 147,438.95 118,500.00
3,000 MOBIL CORP 221,392.50 261,375.00
900 PHILLIPS PETE CO 43,566.51 38,362.50
34,570 SCHLUMBERGER LTD 979,887.95 1,594,541.25
2,000 TEXACO INC 116,982.57 105,750.00
30,500 TRANSOCEAN OFFSHORE INC 797,547.52 817,781.25
1,100 USX MARATHON GROUP 39,609.75 33,137.50
-------------- ---------------
TOTAL ENERGY 4,158,373.62 5,458,266.87 4.05%
See accompanying notes to investment securities 4 (continued)
<PAGE>
CLEARWATER GROWTH FUND
SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
FINANCIAL SERVICES
1,900 AMERICAN EXPRESS CO 161,114.01 194,275.00
2,044 ASSOCIATES FIRST CAP CORP 61,288.86 86,614.50
8,500 CMAC INVT CORP 245,161.25 390,468.75
100 CAPITAL ONE FINL CORP 11,424.75 11,500.00
25,678 CITIGROUP INC 582,464.72 1,271,061.00
21,500 FEDERAL HOME LN MTG CORP 65,945.84 1,385,406.25
4,000 FEDERAL NATL MTG ASSN 210,333.75 296,000.00
27,000 FRANKLIN RES INC 683,519.05 864,000.00
1,200 HOUSEHOLD INTL INC 45,811.52 47,550.00
200 LEHMAN BROTHERS HLDGS INC 14,549.50 8,812.50
1,100 MERRILL LYNCH & CO INC 78,459.70 73,425.00
1,900 MORGAN STANLEY DEAN WITTER 117,313.95 134,900.00
39,000 PRICE T ROWE & ASSOC INC 544,918.25 1,335,750.00
700 SLM HLDG CORP 28,837.00 33,600.00
300 SCHWAB CHARLES CORP 7,612.00 16,856.25
-------------- ---------------
TOTAL FINANCIAL SERVICES 2,858,754.15 6,150,219.25 4.56%
FOOD & BEVERAGES
40 AGRIBRANDS INTL INC (b) 1,196.85 1,200.00
1,800 ANHEUSER BUSCH COS INC 76,807.95 118,125.00
1,000 BESTFOODS 47,226.67 53,250.00
6,500 CAMPBELL SOUP CO 298,047.61 357,500.00
36,000 COCA COLA CO 1,081,705.00 2,407,500.00
200 COCA COLA ENTERPRISES INC 6,637.00 7,150.00
125 CORN PRODUCTS INTL INC 3,490.83 3,796.87
700 GENERAL MLS INC 46,317.00 54,425.00
1,400 HEINZ H J CO 68,046.50 79,275.00
5,700 PEPSICO INC 213,667.00 233,343.75
900 PIONEER HI BRED INTL INC 28,136.76 24,300.00
200 QUAKER OATS CO 10,637.00 11,900.00
1,200 RALSTON PURINA CO 35,239.67 38,850.00
3,800 SARA LEE CORP 98,057.83 107,112.50
300 SYSCO CORP 7,199.25 8,231.25
650 VLASIC FOODS INTL INC (b) 14,064.39 15,478.12
300 WRIGLEY WM JR CO 21,918.00 26,868.75
-------------- ---------------
TOTAL FOOD & BEVERAGES 2,058,395.31 3,548,306.24 2.63%
HOTELS & RESTAURANTS
41,000 MARRIOTT INTL INC NEW 352,253.59 1,189,000.00
2,700 MCDONALDS CORP 132,805.67 206,887.50
18,500 PROMUS HOTEL CORP NEW (b) 557,547.45 598,937.50
3,375 SODEXHO MARRIOTT SVCS INC (b) 243,619.45 93,445.31
-------------- ---------------
TOTAL HOTELS & RESTAURANTS 1,286,226.16 2,088,270.31 1.55%
HOUSEHOLD APPLIANCES
200 NEWELL CO 10,362.00 8,250.00
-------------- ---------------
TOTAL HOUSEHOLD APPLIANCES 10,362.00 8,250.00 0.01%
HOUSEHOLD PRODUCTS & TOILETRIES
1,200 AVON PRODS INC 43,598.52 53,100.00
100 CLOROX CO 10,256.00 11,681.25
1,000 COLGATE PALMOLIVE CO 63,903.80 92,875.00
33,000 GILLETTE CO 550,137.35 1,594,312.50
18,000 PROCTER & GAMBLE CO 728,181.20 1,643,625.00
-------------- ---------------
TOTAL HOUSEHOLD PRODUCTS & TOILETRIES 1,396,076.87 3,395,593.75 2.52%
See accompanying notes to investment securities 5 (continued)
<PAGE>
CLEARWATER GROWTH FUND
SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
INDUSTRIAL MACHINERY & EQUIPMENT
28,500 CRANE CO 515,675.00 860,343.75
200 INGERSOLL RAND CO 8,874.50 9,387.50
900 ILLINOIS TOOL WKS INC 47,147.76 52,200.00
-------------- ---------------
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 571,697.26 921,931.25 0.68%
INSURANCE
33,000 ACE LTD 625,555.00 1,136,437.50
300 AFLAC INC 10,336.74 13,200.00
700 AETNA INC 50,510.75 55,037.50
18,000 ALLSTATE CORP 559,336.40 695,250.00
1,000 AMERICAN GEN CORP 55,185.00 78,000.00
20,250 AMERICAN INTL GROUP INC 466,630.50 1,956,656.25
700 AON CORP 41,404.50 38,762.50
800 CHUBB CORP 55,691.78 51,900.00
800 CIGNA CORP 45,024.00 61,850.00
900 CONSECO INC 40,441.50 27,506.25
12,000 EQUITABLE COMPANIES INC 461,539.95 694,500.00
400 GENERAL RE CORP 83,274.00 98,700.00
1,000 HARTFORD FINANCIAL SVCS GRP 42,998.50 54,875.00
200 LINCOLN NATL CORP IN 19,162.00 16,362.50
200 MBIA INC 13,524.50 13,112.50
24,000 MGIC INVT CORP WIS 576,720.00 955,500.00
950 MARSH & MCLENNAN COS INC 48,954.50 55,515.62
76,000 MERCURY GEN CORP NEW 1,614,960.30 3,329,750.00
19,000 MUTUAL RISK MGMT LTD 352,996.55 743,375.00
700 SUNAMERICA INC 27,885.76 56,787.50
100 TRANSAMERICA CORP 11,937.25 11,550.00
200 UNUM CORP 10,662.00 11,675.00
-------------- ---------------
TOTAL INSURANCE 5,214,731.48 10,156,303.12 7.54%
LEISURE TIME
7,600 DISNEY WALT CO 224,398.36 228,000.00
-------------- ---------------
TOTAL LEISURE TIME 224,398.36 228,000.00 0.17%
NEWSPAPERS
1,100 GANNETT INC 61,559.72 70,950.00
200 TRIBUNE CO NEW 13,712.00 13,200.00
-------------- ---------------
TOTAL NEWSPAPERS 75,271.72 84,150.00 0.06%
PAPER & FOREST PRODUCTS
200 FORT JAMES CORP 6,762.00 8,000.00
300 GEORGIA PAC CORP 5,990.16 7,143.75
1,200 INTERNATIONAL PAPER CO 56,047.00 53,775.00
2,100 KIMBERLY CLARK CORP 108,976.05 114,450.00
-------------- ---------------
TOTAL PAPER & FOREST PRODUCTS 177,775.21 183,368.75 0.14%
PHOTOGRAPHY
1,300 EASTMAN KODAK CO 85,909.25 93,600.00
-------------- ---------------
TOTAL PHOTOGRAPHY 85,909.25 93,600.00 0.07%
PRIMARY INDUSTRIES
700 ALCOA INC 50,629.50 52,193.75
-------------- ---------------
TOTAL PRIMARY INDUSTRIES 50,629.50 52,193.75 0.04%
PUBLISHING
200 MCGRAW HILL COS INC 16,537.00 20,375.00
3,400 TIME WARNER INC 110,170.75 211,012.50
-------------- ---------------
TOTAL PUBLISHING 126,707.75 231,387.50 0.17%
See accompanying notes to investment securities 6 (continued)
<PAGE>
CLEARWATER GROWTH FUND
SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
RAILROADS & EQUIPMENT
2,100 BURLINGTON NORTHN SANTA FE 68,679.50 70,875.00
1,500 NORFOLK SOUTHN CORP 47,452.50 47,531.25
-------------- ---------------
TOTAL RAILROADS & EQUIPMENT 116,132.00 118,406.25 0.09%
RETAIL
900 ALBERTSONS INC 35,960.25 57,318.75
1,200 CVS CORP 37,761.00 66,000.00
900 COSTCO COS INC (b) 39,156.25 64,968.75
1,700 DAYTON HUDSON CORP 60,597.48 92,225.00
19,500 FEDERATED DEPT STORES INC DEL 513,045.00 849,468.75
1,575 GAP INC 39,067.00 88,593.75
51,500 HOME DEPOT INC 50,381.91 3,151,156.25
400 K MART CORP (b) 6,624.00 6,125.00
70,000 KOHLS CORP (b) 1,171,431.25 4,300,625.00
900 KROGER CO (b) 32,335.26 54,450.00
300 LOWES COS INC 11,643.00 15,356.25
1,000 MAY DEPT STORES CO 57,297.50 60,375.00
900 PENNEY J C INC 54,160.26 42,187.50
1,000 RITE AID CORP 32,348.52 49,562.50
1,600 SAFEWAY INC (b) 47,173.04 97,500.00
1,500 SEARS ROEBUCK & CO 70,477.56 63,750.00
300 STAPLES INC (b) 9,993.75 13,106.25
300 TJX COS INC NEW 7,105.50 8,700.00
5,300 WAL MART STORES INC 211,618.12 431,618.75
25,000 WALGREEN CO 632,788.70 1,464,062.50
-------------- ---------------
TOTAL RETAIL 3,120,965.35 10,977,150.00 8.15%
SOFTWARE
14,000 BAAN CO NVF (b) 199,062.50 147,000.00
200 BMC SOFTWARE INC (b) 9,912.50 8,912.50
15,000 COMPUTER ASSOC INTL INC 514,842.00 639,375.00
200 COMPUWARE CORP (b) 11,187.50 15,625.00
52,000 DENDRITE INTL INC (b) 317,216.10 1,298,375.00
88,000 HBO & CO 580,874.25 2,524,500.00
26,000 MICROSOFT CORP (b) 83,073.61 3,605,875.00
26,500 ORACLE CORP (b) 83,951.14 1,142,812.50
64,000 PARAMETRIC TECHNOLOGY CORP (b) 417,553.25 1,048,000.00
55,000 PEOPLESOFT INC (b) 862,211.20 1,041,562.50
44,000 SAP AKTIENGESELLSCHAFT (c) 401,720.00 1,586,750.00
-------------- ---------------
TOTAL SOFTWARE 3,481,604.05 13,058,787.50 9.69%
TELECOMMUNICATIONS
16,200 AT & T CORP 915,741.14 1,219,050.00
35,000 AIRTOUCH COMMUNICATIONS INC (b) 1,048,159.20 2,524,375.00
300 ALLTEL CORP 12,561.75 17,943.75
4,200 AMERITECH CORP 146,881.50 266,175.00
200 ASCEND COMMUNICATIONS INC (b) 8,937.50 13,150.00
6,000 BELL ATLANTIC CORP 246,935.38 318,000.00
7,600 BELLSOUTH CORP 192,240.49 379,050.00
3,600 GTE CORP 161,666.00 234,000.00
400 LEVEL 3 COMMUNICATIONS INC (b) 16,475.00 17,250.00
5,536 MCI WORLDCOM INC (b) 201,068.92 397,208.00
120 NORTHERN TELECOM LTD 6,924.50 6,015.00
21,900 SBC COMMUNICATIONS INC 800,184.00 1,174,387.50
2,400 SPRINT CORP (b) 89,127.32 153,100.00
1,954 U S WEST INC NEW 82,733.27 126,277.25
-------------- ---------------
See accompanying notes to investment securities 7 (continued)
<PAGE>
CLEARWATER GROWTH FUND
SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
TOTAL TELECOMMUNICATIONS 3,929,635.97 6,845,981.50 5.08%
TIRES & RUBBER
500 GOODYEAR TIRE AND RUBBER 32,667.50 25,218.75
-------------- ---------------
TOTAL TIRES & RUBBER 32,667.50 25,218.75 0.02%
TOBACCO
31,500 PHILIP MORRIS COS INC 520,988.30 1,685,250.00
-------------- ---------------
TOTAL TOBACCO 520,988.30 1,685,250.00 1.25%
TOYS, AMUSEMENTS, SPORTING GOODS
1,200 MATTEL INC 47,015.80 27,375.00
-------------- ---------------
TOTAL TOYS, AMUSEMENTS, SPORTING GOODS 47,015.80 27,375.00 0.02%
CASH EQUIVALENTS
CASH OR CASH EQUIVALENT
154,126.02 SSGA MONEY MARKET 154,126.02 154,126.02 0.11%
-------------- --------------- ------------
Grand Total (d) 58,337,331.86 135,068,005.52 100.22%
============== =============== ============
<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 assets.
(c)Security purchased on May 23, 1995 at a cost of
$401,720 as part of a private placement that has not
been registered with the Securities and Exchange
Commission under the Securities Act of 1933. May be
sold only to dealers in that program or other
accredited investors.
(d)At December 31, 1998, the cost for Federal income tax
purposes was $58,337,332. The aggregate gross
unrealized appreciation and depreciation of investments
in securities based of this cost were as follows:
Gross unrealized appreciation 77,601,437.91
Gross unrealized depreciation (870,764.25)
--------------
==============
Net unrealized appreciation 76,730,673.66
==============
</FN>
See accompanying notes to investment securities 8 (continued)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CLEARWATER SMALL CAP FUND
SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
COMMON STOCKS
<S> <C> <C> <C>
APPAREL & ACCESSORIES
19,500 BARRY R G CORP OHIO (b) 264,448.86 214,500.00
---------------- -----------------
TOTAL APPAREL & ACCESSORIES 264,448.86 214,500.00 0.55%
BANKS
21,500 INDEPENDENT BK CORP MASS 350,718.75 373,562.50
22,500 OAK HILL FINL INC 444,250.00 416,250.00
33,910 PACIFIC CREST CAP INC 265,165.62 500,172.50
22,618 QUEENS CNTY BANCORP 352,286.98 672,885.50
36,700 REPUBLIC SEC FINL CORP 386,809.33 444,987.50
17,640 SUN BANCORP INC N J (b) 240,800.00 326,340.00
---------------- -----------------
TOTAL BANKS 2,040,030.68 2,734,198.00 6.97%
BUSINESS SERVICES
16,200 ANALYTICAL SURVEYS INC (b) 403,191.07 499,162.50
49,950 FACTUAL DATA CORP (b) 416,635.25 424,575.00
54,600 HEADWAY CORPORATE RES INC (b) 316,607.55 334,425.00
5,100 M A R C INC 58,321.47 54,187.50
65,600 ROCKY MTN INTERNET INC (b) 163,837.50 828,200.00
19,000 WANG LABS INC NEW (b) 381,471.14 527,250.00
---------------- -----------------
TOTAL BUSINESS SERVICES 1,740,063.98 2,667,800.00 6.80%
DRUGS & HEALTHCARE
47,400 COLORADO MED TECH INC (b) 302,175.00 628,050.00
42,000 ICN PHARMACEUTICALS INC 633,215.76 950,250.00
111,000 UROCOR INC (b) 766,264.74 707,625.00
---------------- -----------------
TOTAL DRUGS & HEALTHCARE 1,701,655.50 2,285,925.00 5.83%
ELECTRIC GAS & SANITARY UTILITIES
19,700 CTG RES INC 461,764.35 517,125.00
38,450 MIDCOAST ENERGY RES INC 707,285.75 817,062.50
12,600 NUI CORP 223,755.00 337,837.50
23,700 PROVIDENCE ENERGY CORP 438,154.75 497,700.00
---------------- -----------------
TOTAL ELECTRIC GAS & SANITARY UTILITIES 1,830,959.85 2,169,725.00 5.53%
See accompanying notes to investment securities 9 (continued)
<PAGE>
CLEARWATER SMALL CAP FUND
SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
ELECTRICAL & ELECTRONIC MACHINERY, EQUIP
58,000 ABLE TELCOM HLDG CORP (b) 510,110.33 333,500.00
26,000 AEROFLEX INC (b) 227,353.35 393,250.00
67,700 ALIGN RITE INTL INC (b) 870,302.41 787,012.50
31,300 ALPINE GROUP INC (b) 555,183.63 469,500.00
50,500 AMKOR TECHNOLOGY INC (b) 370,937.05 546,031.25
14,400 BOSTON ACOUSTICS INC 269,107.00 381,600.00
8,850 C&D TECHNOLOGIES 127,718.00 243,375.00
18,600 CFM TECHNOLOGIES INC (b) 158,663.59 158,100.00
17,100 FORE SYSTEMS (b) 244,931.47 313,143.75
4,200 FREQUENCY ELECTRS INC 26,915.00 42,000.00
23,700 GASONICS INTL CORP (b) 108,526.22 207,375.00
7,921 HENRY JACK & ASSOC INC 187,915.97 394,069.75
39,600 HERLEY INDUSTRIES INC (b) 234,888.17 475,200.00
122,900 INTERNATIONAL FIBERCOM INC (b) 980,366.30 898,706.25
46,800 INTERNATIONAL MFG SVCS INC (b) 369,282.60 450,450.00
72,500 JPM CO (b) 870,630.28 1,015,000.00
39,900 NOBLE INTL LTD (b) 426,577.50 364,087.50
14,800 OPTEK TECHNOLOGY INC (b) 327,141.25 279,350.00
11,950 OPTICAL COATING LAB INC 181,490.63 310,700.00
14,400 QC OPTICS INC (b) 34,230.00 22,500.00
---------------- -----------------
TOTAL ELECTRICAL & ELECTRONIC MACHINERY, EQ 7,082,270.75 8,084,951.00 20.62%
FINANCIAL SERVICES
43,800 KINNARD INVTS INC (b) 247,981.25 208,050.00
64,000 LONDON PAC GROUP LTD 853,034.68 824,000.00
---------------- -----------------
TOTAL FINANCIAL SERVICES 1,101,015.93 1,032,050.00 2.63%
FURNITURE AND FIXTURES
26,400 PULASKI FURNITURE CORP 608,425.50 633,600.00
28,000 ROWE FURNITURE CORP 302,780.25 308,000.00
19,600 WINSLOEW FURNITURE INC (b) 185,277.00 519,400.00
---------------- -----------------
TOTAL FURNITURE AND FIXTURES 1,096,482.75 1,461,000.00 3.73%
GENERAL BUILDING CONTRACTORS
33,650 D.R.HORTON INC 642,717.83 773,950.00
58,000 SAXTON INC (b) 439,600.00 377,000.00
---------------- -----------------
TOTAL GENERAL BUILDING CONTRACTORS 1,082,317.83 1,150,950.00 2.93%
INDUSTRIAL MACHINERY AND EQUIPMENT
78,600 BOLT TECHNOLOGY CORP (b) 155,725.38 520,725.00
41,500 CONCURRENT COMPUTER CORP (b) 120,320.90 145,250.00
5,000 DONALDSON INC 100,416.50 103,750.00
36,200 GRADCO SYSTEMS (b) 137,365.75 95,025.00
12,500 HUSSMANN INTL INC 193,593.75 242,187.50
32,800 INTERNATIONAL COMFORT PRODS (b) 233,323.27 262,400.00
20,600 PENN ENGR & MFG CORP 459,361.25 460,925.00
23,000 REGAL BELOIT CORP 524,259.89 529,000.00
31,600 REMEC INC (b) 275,140.00 568,800.00
---------------- -----------------
TOTAL INDUSTRIAL MACHINERY AND EQUIPMENT 2,199,506.69 2,928,062.50 7.47%
See accompanying notes to investment securities 10 (continued)
<PAGE>
CLEARWATER SMALL CAP FUND
SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
INSURANCE
24,000 AMERICAN SAFETY INSURANCE GRP (b) 269,687.50 231,000.00
22,939 AMERUS LIFE HLDGS INC 710,161.19 513,260.12
15,400 CHARTWELL RE CORP 448,188.79 365,750.00
21,000 INTERCONTINENTAL LIFE CORP (b) 542,675.00 420,000.00
13,925 LIBERTY FINL COS INC 269,751.25 375,975.00
71,900 PENN AMERICA GROUP INC (b) 776,891.19 651,593.75
21,800 PENN TREATY AMERN CORP 397,122.35 587,237.50
---------------- -----------------
TOTAL INSURANCE CARRIERS 3,414,477.27 3,144,816.37 8.02%
PERSONAL SERVICES
33,700 AMBASSADORS INTL INC (b) 486,837.50 497,075.00
52,200 GILMAN CIOCIA INC (b) 449,616.63 512,212.50
---------------- -----------------
TOTAL PERSONAL SERVICES 936,454.13 1,009,287.50 2.57%
PRIMARY INDUSTRIES
46,000 EASCO INC 354,067.90 356,500.00
20,700 GIANT CEM HLDG INC (b) 454,186.25 512,325.00
17,200 HELIX TECHNOLOGY CORP 189,037.44 223,600.00
14,400 MATHEWS INTL CORP 114,150.00 453,600.00
44,000 MERCER INTL INC 435,342.84 299,750.00
27,900 NANOMETRICS INC (b) 189,760.12 217,968.75
41,150 NORTHWEST PIPE CO (b) 652,535.01 663,543.75
27,000 SPARTECH CORP 323,814.09 594,000.00
21,400 TEXAS INDS INC 609,274.25 576,462.50
---------------- -----------------
TOTAL PRIMARY INDUSTRIES 3,322,167.90 3,897,750.00 9.94%
REAL ESTATE
64,800 BLUEGREEN CORP (b) 457,397.43 490,050.00
---------------- -----------------
TOTAL REAL ESTATE 457,397.43 490,050.00 1.25%
RETAIL
26,500 CAMERON ASHLEY BUILDING PROD (b) 312,314.85 346,156.25
29,900 DEB SHOPS INC 330,482.57 448,500.00
91,500 ELDER BEERMAN STORES CORP NEW (b) 1,156,886.83 1,057,968.75
44,300 MICROAGE INC (b) 755,329.14 681,112.50
26,950 SCHULTZ SAV O STORES INC 297,805.00 444,675.00
---------------- -----------------
TOTAL RETAIL 2,852,818.39 2,978,412.50 7.59%
SOFTWARE
115,000 ENLIGHTEN SOFTWARE SOLUTIONS (b) 416,875.00 265,937.50
67,300 ORCAD INC (b) 568,474.04 572,050.00
38,400 PROPHET 21 INC (b) 163,200.00 410,400.00
---------------- -----------------
TOTAL SOFTWARE 1,148,549.04 1,248,387.50 3.18%
WHOLESALE TRADE-DURABLE GOODS
54,200 BALLANTYNE OMAHA INC (b) 423,667.01 477,637.50
10,000 COMMERCIAL METALS CO 254,009.10 277,500.00
17,600 POMEROY COMPUTER RESOURCES (b) 284,391.24 396,000.00
---------------- -----------------
TOTAL WHOLESALE TRADE-DURABLE GOODS 962,067.35 1,151,137.50 2.94%
See accompanying notes to investment securities 11 (continued)
<PAGE>
CLEARWATER SMALL CAP FUND
SCHEDULE OF INVESTMENTS AT DECEMBER 31, 1998
FACE PERCENT
AMOUNT MARKET OF
OR SHARES SECURITY COST VALUE (a) NET ASSETS
CASH EQUIVALENTS
CASH OR CASH EQUIVALENT
4,442,674.08 SSGA MONEY MARKET 4,442,674.08 4,442,674.08 11.33%
---------------- ----------------- --------------
Grand Total (c) 37,675,358.41 43,091,676.95 109.88%
================ ================= ==============
<FN>
Notes to Investments in Securities
(a)Securities are valued in accordance with proceduresdescribed in note
2 to the financial statements.
(b)Currently non-income producing assets.
(c)At December 31, 1998, the cost for Federal income tax purposes was
$37,675,358. The aggregate gross unrealized appreciation and
depreciation investments in securities based of this cost were as
follows:
Gross unrealized appreciation 7,339,243.16
Gross unrealized depreciation (1,922,924.62)
----------------
Net unrealized appreciation $5,416,318.54
================
</FN>
See accompanying notes to investment securities 12 (continued)
</TABLE>
<PAGE>
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE 12/31/98 ANNUAL REPORT TO SHAREHOLDERS
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FINANCIAL STATEMENTS
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<NAME> CLEARWATER GROWTH FUND
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