OMB APPROVAL OMB Number: 3235-0570 Expires: Sep. 30, 2007 Estimated average burden hours per response: 19.4 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-5038 --------------------------------------------- Clearwater Investment Trust ------------------------------------------------------------------------ (Exact name of registrant as specified in charter) 2000 Wells Fargo Place, 30 East 7th Street, Saint Paul, Minnesota 55101-4930 ------------------------------------------------------------------------ (Address of principal executive offices) (Zip code) Richard T. Holm, Esq. Legal Counsel Fiduciary Counselling, Inc. 2000 Wells Fargo Place, 30 East 7th Street Saint Paul, Minnesota 55101-4930 (Name and address of agent for service) Copy to: Timothy Silva, Esq. Wilmer, Cutler, Pickering, Hale and Dorr, LLP 60 State Street Boston, Massachusetts 02109 ------------------------------------------------------------------------ (Name and address for agent for service) Registrant's telephone number, including area code: 651-228-0935 Date of fiscal year end: December 31, 2004 Date of reporting period: December 31, 2004 Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. Item 1. Reports to Stockholders. KPMG CLEARWATER INVESTMENT TRUST Financial Statements December 31, 2004 and 2003 (With Independent Auditors' Report Thereon) Clearwater Investment Trust February 2005 To: Our Unit Holders: On December 31, 2004 the net asset value of the Clearwater Growth Fund was $24.93 per unit. The net asset Value of the Clearwater Small Cap Fund was $19.14 per unit. On a total return basis for 2004, the Clearwater Growth Fund increased by 11.5% and the Clearwater Small Cap Fund increased by 20.9%. For comparative purposes, the Russell 1000 increased by 11.4% and the Russell 2000 increased by 18.3%. For the fourth quarter, the Clearwater Growth Fund increased by 9.5% and the Clearwater Small Cap Fund increased by 16.5%. The Russell 1000 increased by 9.8% and the Russell 2000 increased 14.1%. On December 31, 2004 the net asset value of the Clearwater Tax Exempt Bond Fund was $10.03 per unit. On a total return basis for 2004 the fund increased 4.1% with a fourth quarter return of 0.9%. For comparative purposes, the Lehman 5-Year Municipal Bond Index increased 2.7% for the year with a 0.8% increase in the fourth quarter. Parametric Portfolio Associates, the sub-advisor for the Clearwater Growth Fund, made the following comments: The US equity market rallied in the fourth quarter, with the S&P 500 Index up 9.2% for the final three months of the year. Small/Medium capitalization, low volatility, and above-average dividend paying stocks posted the strongest returns in the U.S equity markets. Weakening oil prices gave renewed confidence to consumers and business alike, as crude oil futures tumbled 22% from their October 27 peak. The fourth quarter surge in stocks transformed the US equity market from lackluster to respectable for 2004, with the S&P 500 Index finishing the year up 10.9%. International markets finished the year strong, significantly outperforming the U.S. Market. Similar to the United States, value outperformed growth overseas. Rising energy prices and a weakening U.S. dollar were the prime drivers in 2004. The dollar hit an all time low versus the Euro at year-end, closing at $1.36 per (euro)1.00. Instability in the Middle East and growing demand for oil in emerging Asian economies contributed to oil's rise. Clearwater Growth's 2004 Experience The Russell 1000 Index was up 11.4% in 2004. The Clearwater Growth Fund, which now has a current annualized predicted tracking error under 1.0% slightly out-performed the index and was up 11.5% during the same time frame. Since inception, the portfolio has performed well within its target and has returned an annualized pre-tax return of 6.0% against 5.8% for the Russell 1000 index. - ----------------------------------------- -------------------------------------- Year to date Pre-Tax Performance - ----------------------------------------- -------------------------------------- Russell 1000 (Large Cap) 11.4% - ----------------------------------------- -------------------------------------- Russell Mid Cap 20.2% - ----------------------------------------- -------------------------------------- Russell Mid Cap Growth 15.5% - ----------------------------------------- -------------------------------------- Russell 2000 (Small Cap) 18.3% - ----------------------------------------- -------------------------------------- Clearwater Growth Fund 11.5% - ----------------------------------------- -------------------------------------- Looking Forward The Clearwater Growth Fund is broadly diversified and continues to be sector neutral relative to the Russell 1000 index. Inflation is still a tame 3.5%, even with soaring fuel prices and an expanding US economy. The Federal Reserve is committed to increasing interest rates at a "measured" pace. It will be interesting to see to what extent interest rate increases by Federal reserve, Chinese economic growth and the weakening U.S. dollar become important drivers for investment returns in 2005. [GRAPHIC OMITTED] Comparison of the Change in Value of a $10,000 Investment in the Clearwater Growth Fund and the Russell 1000 Index Russell 1000 10,000 13,777 16,869 22,411 28,468 34,421 31,740 27,788 21,771 28,279 31,504 Growth Fund 10,000 13,258 16,116 20,687 25,381 31,544 30,902 26,829 20,849 27,003 30,120 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/2004 Annualized Total Returns One Year Five Year Ten Year Growth Fund 11.54% -0.92% 11.67% Russell 1000 11.40% -1.76% 12.16% Past Performance is not predictive of future performance. The graph and table do not reflect the deduction of taxes that you would pay on fund distributions or the redemption of fund shares Kennedy Capital Management, the sub-advisor for the Clearwater Small Cap Fund, made the following comments: The fourth quarter of 2004 was particularly rewarding for small cap investors with a total return for the Russell 2000 of 14.1%. This final quarter represented 77% of the return investors achieved for the entire year, and those investors who decided to raise liquidity before the election without quickly getting back paid dearly for their mistake. Kennedy Capital is thankful and pleased to say that despite the mood swings exhibited by the small cap markets this past year, your small cap investment substantially outperformed the Russell 2000 benchmark. In general, the quarter exhibited a positive reaction to lower oil prices and prospects for reasonable economic growth despite another increase in the Fed Funds Rate by the Federal Open Market Committee in December. It is quite evident that the Fed will remain on this track of sequential rate increases until it is satisfied rates no longer accommodate any potential rise in inflation. Overall, in the Russell 2000, there was wide participation among most sectors in the rally during the quarter; however, Autos and Transportation, Consumer Discretionary, Producer Durables and Technology were the clear leaders in terms of contribution to out-performance. Looking ahead, there are good reasons to believe the investment environment for equities should remain constructive. Nominal growth in GDP should be reasonable, yet constrained as the Fed maintains its course of rate increases. A benefit of low nominal growth is the implied pressure it places on corporations to maintain low unit labor costs and high productivity to safeguard profit margins. Nonetheless, productivity will recede slightly during the year, yet remain at levels that should keep profit margins at least near current levels. Industrial production levels indicate very good evidence of strong manufacturing activity, which should carry us into 2005. Contributing to healthy manufacturing levels is the low cost of capital, which has remained lower than many forecasters had predicted. A significant increase in interest rates at this point in the cycle is clearly one of the largest risks to the market in 2005. Rarely does the Fed get it "just right" with respect to maintaining a perfect balance between nominal growth and interest rates. Either growth overwhelms the constraining influence of rate increases, giving rise to inflation or conversely, high interest rates and high cost of capital make it difficult to invest without significantly reducing returns on invested capital. Both scenarios ultimately lead to lower equity returns. If the Fed is able to maintain a stable relationship between these two important factors, then we can expect U.S. corporations to deploy high corporate cash levels through merger and acquisition activities. Such an environment is a compelling reason to own small cap stocks. Now that we have reviewed the economic fundamentals for smaller companies, what do valuations look like for these companies relative to large caps? After six years of small cap out-performance, valuations have tightened significantly. On a P/E and P/E-to-growth basis, small caps are now trading at above historical relative valuation levels. On the other hand, Price to Book and Price to Sales ratios are at normal valuation points. Another important measure of valuation is the comparison of required rates of return or discount rates of stocks classified by market capitalization. This measure is similar to calculating a yield-to-maturity on a bond, and it has the added feature of including future consensus earnings forecasts for stocks in the benchmarks. Typically, small cap stocks have a larger discount rate than do large cap stocks; and to the extent that the spread between these two markets is historically wide, small cap stocks are relatively undervalued. Small cap stocks reached their highest levels of under-valuation on this measure in early 1999. Today, the spread between small caps and large caps has turned negative, indicating a possible period of small cap underperformance relative to large caps. Despite these possible valuation concerns, we believe the outlook remains positive for small cap stock ownership in the year ahead, however, we would not suggest than investors maintain overweighed long-term allocations in this area. We realize that given current valuation statistics, stock selection will remain the key to successful outperformance. [GRAPHIC OMITTED] Comparison of the Change in Value of a $10,000 Investment in the Clearwater Small Cap Fund and the Russell 2000 Index Russell 2000 10,000 12,844 14,963 18,309 17,843 21,635 20,982 21,503 17,099 25,178 29,793 Growth Fund 10,000 12,629 14,518 18,309 18,911 24,074 26,647 30,194 27,094 42,989 51,972 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/2004 Annualized Total Returns One Year Five Year Ten Year Small Cap Fund 20.89% 16.64% 15.430% Russell 2000 18.33% 6.61% 10.26% Past Performance is not predictive of future performance. The graph and table do not reflect the deduction of taxes that you would pay on fund distributions or the redemption of fund shares SIT Investment Associates: the sub-advisor for the Clearwater Tax Exempt Bond Fund, made the following comments: The fixed income markets completed a volatile (the second quarter was the worst for the bond market in 25 years) yet satisfactory year in 2004, with performance being especially strong in long municipals and corporates. Heavy issuance in the government, mortgage, corporate, and municipal markets continued, and while demand was not as strong as in 2003, it was more than able to absorb the supply. The Federal Reserve began its tightening cycle in June, raising the federal funds rate by 25 basis points at each of the final five FOMC meetings in 2004. The federal funds rate stands at 2.25% as of December 31, 2004. Improved performance in the equity markets, which began in the second quarter of 2003, and further short-term interest rate increases by the Fed should reduce demand for fixed income products in the coming year, however. With current intermediate and long-term yields at or near historic lows across the yield curves in both taxable and tax-exempt markets, investors have a strong expectation, which we share, that rates will rise during 2005, thereby reducing returns in the fixed income markets. Strong growth in the economy and a burgeoning federal budget deficit support this expectation, while moderate inflation and relatively weak employment statistics argue that long-term rates could remain low for some time. We expect the Fed to continue to raise the federal funds rate during 2005 to at least 3.00%, with the most likely level at the end of 2005 being in the 3.50% to 4.00% range. As we postulated in our semi-annual report, revenue bonds outperformed general obligation bonds during 2004, and lower quality issues outperformed those of higher credit quality, as investors sought yield aggressively. We expect revenue bonds to continue to be strong performers in 2005. General obligation bond performance should continue to improve on a relative basis, however, as many states, including California, have, with the help of the improving economy, adequately addressed their most urgent budget problems. The Fund's performance, with its heavy emphasis on revenue bonds, was respectable on an absolute basis due to the high current income it produces, and much stronger than that of its benchmark, despite its shorter duration, partly due to its use of non-rated revenue bonds, which help total return performance in a low interest rate environment. The economy has now produced thirteen consecutive quarters of solid growth. We expect growth to moderate somewhat in 2005, with the second half probably being the stronger of the two. With the Fed continuing its tightening cycle, interest rates are likely to rise. Short rates may continue to rise faster than intermediate and long rates, however, acknowledging the Fed's commitment to keep raising the federal funds rate well into 2005. Given this expectation, we shortened the Fund's average life duration, a measure of the Fund's sensitivity to changes in interest rates, from 3.4 to 3.0 years during the year, with only a small decrease in yield. For comparison, the Fund's benchmark, the Lehman 5-Year Index, had duration of 4.2 years at December 31, 2004. The Fund's shorter duration and its use of non-rated bonds have positioned it more defensively for the rise in interest rates that we expect 2005. The Fund's strong yield should continue to produce high tax-exempt income for its shareholders in the current and expected market environment. Investment of new cash flows will be focused on maturities in the 3-15 year range. [GRAPHIC OMITTED] Comparison of the Change in Value of a $10,000 Investment in the Clearwater Tax-Exempt Bond Fund and the Lehman Brothers 5 Year Municipal Bond Index Lehman 5 Year 10,000 10,772 11,441 12,502 13,017 13,406 Municipal Bond Index Tax-Exempt Bond Fund 10,000 10,890 11,549 12,370 12,882 13,372 01/14/00 12/31/00 12/31/01 12/31/02 12/31/03 12/31/2004 Annualized Total Returns One Year Inception 1/14/00 Tax-Exempt Bond Fund 4.06% 6.08% Lehman 5 Year 2.72% 6.03% Municipal Bond Index Past Performance is not predictive of future performance. The graph and table do not reflect the deduction of taxes that you would pay on fund distributions or the redemption of fund shares Clearwater Investment Trust Clearwater Management Company - --------------------------- ----------------------------- P.W. Pascoe, President and CEO P.W. Pascoe, Chairman and Treasurer L.R. Jones W.T. Weyerhaeuser, V.P. and Secretary L.H. King S.B. Carr, Jr. C.W. Rasmussen W. J. Driscoll L. Rasmussen E.D. Hlavka F.T. Weyerhaeuser C.W. Morley F.W. Piasecki D.C. Titcomb G.H. Weyerhaeuser, Jr. Shareholder Expense Example As a shareholder of the Fund, you incur costs, including management fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from July 1, 2004 to December 31, 2004. Actual Expenses The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses attributable to your investment during this period. Hypothetical Example for Comparison Purposes The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are provided to enable you to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the second section of the table are meant to highlight your ongoing costs only. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds that charge transaction costs, such as sales charges (loads) on purchase or redemption payments, with the Clearwater funds where you do not incur such charges. ------------------------- ----------------------- ---------------------- Beginning Account Value Ending Account Value Expenses Paid During July 1, 2004 December 31, 2004 the Period* Actual July 1, 2004 thru December 31, 2004 - ------------------------------------ ------------------------- ----------------------- ---------------------- Growth Fund $1,000.00 $1,076.59 $1.93 - ------------------------------------ ------------------------- ----------------------- ---------------------- Small Cap Fund $1,000.00 $1,127.81 $6.42 - ------------------------------------ ------------------------- ----------------------- ---------------------- Tax-Exempt Bond Fund $1,000.00 $1,027.44 $2.55 - ------------------------------------ ------------------------- ----------------------- ---------------------- Hypothetical (5% return before expenses) - ------------------------------------ ------------------------- ----------------------- ---------------------- Growth Fund $1,000.00 $1,022.89 $1.88 - ------------------------------------ ------------------------- ----------------------- ---------------------- Small Cap Fund $1,000.00 $1,018.82 $6.10 - ------------------------------------ ------------------------- ----------------------- ---------------------- Tax-Exempt Bond Fund $1,000.00 $1,022.25 $2.54 - ------------------------------------ ------------------------- ----------------------- ---------------------- *Expenses are equal to the Fund's annualized expense ratios, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period). The annualized expense ratios are as follows: Growth Fund 0.37% Small Cap Fund 1.20% Tax-Exempt Bond Fund 0.50% Quarterly Portfolio Schedule of Investments The Funds file a complete schedule of their portfolio holdings as of the close of the first and third quarters of their fiscal years with the SEC on Form N-Q. Shareholders may request copies of Form N-Q free of charge by calling the Transfer Agent toll free at 1-888-228-0935 or by sending a written request to: Fiduciary Counselling, Inc, 30 East 7th Street, Suite 2000, St. Paul, MN 55101 Attn: Clearwater Investment Trust Transfer Agent. These filings are also available on the SEC's Internet site at HTTP://WWW.SEC.GOV and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information about the public reference room may be obtained by calling 1-800-SEC-0330. Voting Proxies on Fund Portfolio Securities The funds have established Proxy Voting Policies and Procedure ("Policies") that the funds use to determine how to vote proxies relating to portfolio securities. They also report, on Form N-PX, how the Funds voted any such proxies during the most recent 12-month period ended June 30. Shareholders may request copies of the Policies or Form N-PX free of charge by calling the Transfer Agent toll free at 1-888-228-0935 or by sending a written request to: Fiduciary Counselling, Inc, 30 East 7th Street, Suite 2000, St. Paul, MN 55101 Attn: Clearwater Investment Trust Transfer Agent. Form N-PX is also available from the EDGAR database on the SEC's Internet site at HTTP://WWW.SEC.GOV. EXECUTIVE OFFICERS AND TRUSTEES Information About the Funds' Independent Trustees ======================== ================= ================== =================== ================== =============== Name, Address and Age Positions Held Term of Office Principal Number of Other with the Funds and Length of Occupation(s) Portfolios in Directorships Time Served During the Last 5 the Fund Complex Held by the Years Overseen by the Trustee Trustee ======================== ================= ================== =================== ================== =============== Lucy R. Jones (63) Trustee Tenure: 5 yrs Private Investor 30 East 7th Street, Term: Indefinite 3 None Saint Paul, Minnesota 55101 ------------------------ ----------------- ------------------ ------------------- ------------------ --------------- Lawrence H. King (49)1 Trustee Tenure: 5 yrs President and Term: Indefinite Chief Executive 3 None 30 East 7th Street, Officer, Saint Paul, Minnesota Treessentials, 55101 Co., (nursery supplies, 1989-Present) ------------------------ ----------------- ------------------ ------------------- ------------------ --------------- Charles W. Rasmussen Trustee Tenure: 5 yrs President and (38)1 Term: Indefinite Chief Executive 3 None Officer, P&G 30 East 7th Street, Manufacturing, Saint Paul, Minnesota Inc. (air 55101 filtration equipment, 2002-Present) ; Financial Analyst, U.S. Bank, N.A. (1998-2001); ------------------------ ----------------- ------------------ ------------------- ------------------ --------------- Laura E. Rasmussen Trustee Tenure: 5 yrs Private Investor (41)1 Term: Indefinite 3 None 30 East 7th Street, Saint Paul, Minnesota 55101 ------------------------ ----------------- ------------------ ------------------- ------------------ --------------- 1. Mr. King, Mr. Rasmussen and Ms. Rasmussen are spouses-in-law, and are all nieces or nephews of Mr. Weyerhaeuser (see below). Information about the Funds' Officers and Interested Trustee ==================== ================== ================== =================== ================== ================== Name, Address and Positions Held Term of Office Principal Number of Other Age with the Funds and Length of Occupation(s) Portfolios in Directorships Time Served During the Last 5 the Fund Complex Held by the Years Overseen by the Trustee Trustee ==================== ================== ================== =================== ================== ================== Philip W. Pascoe President and Tenure: 8 yrs Chairman and (59) Chief Executive Term Expires: Chief Executive N/A None Officer, December, 2005 Officer, 1145 Broadway Treasurer Treasurer, Plaza, P.O. Box Clearwater 1278, Tacoma, Management Washington 98402 Company (1996-Present); Managing Director, U.S. Bank-Piper Jaffray, Inc. (1996-Present) -------------------- ------------------ ------------------ ------------------- ------------------ ------------------ Frederick T. Trustee, Vice As Trustee; Private Investor Minnesota Mutual Weyerhaeuser (73)1 President and Tenure: 18yrs 3 Life Insurance Secretary Term: Indefinite Co. and 30 East 7th Subsidiaries Street, Saint As Officer; (1968-2001) Paul, Minnesota Tenure: 5 yrs 55101 Term Expires: Potlatch December, 2005 Corporation (1960-2003) -------------------- ------------------ ------------------ ------------------- ------------------ ------------------ 1. Mr. Weyerhaeuser is an interested trustee due to his daughter's position as a director of Clearwater Management Company, the Funds' adviser. KPMG KPMG LLP 4200 Wells Fargo Center 90 South Seveth Street Minneapolis, MN 55402 Report of Independent Registered Public Accounting Firm 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, Small Cap, and Tax-Exempt Bond Funds (funds within Clearwater Investment Trust) (the Funds) as of December 31, 2004, 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 the periods presented. 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 the standards of the Public Company Accounting Oversight Board (United States). 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. Our procedures included confirmation of securities owned as of December 31, 2004, by correspondence with the custodian and brokers. 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, Small Cap, and Tax-Exempt Bond Funds at December 31, 2004, and the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America. KPMG LLP February 18, 2005 CLEARWATER INVESTMENT TRUST Statements of Assets and Liabilities December 31, 2004 Growth Small Cap Tax-Exempt Assets Fund Fund Bond Fund ------------------ ------------------ ------------------ Investments in securities, at fair value (identified cost: $118,938,693 Growth Fund, $178,121,469 Small Cap Fund, $188,367,352 Tax-Exempt Bond Fund) $ 203,228,953 220,427,255 187,527,888 Accrued dividend and interest receivable 272,633 182,370 2,956,745 ------------------ ------------------ ------------------ Total assets 203,501,586 220,609,625 190,484,633 ------------------ ------------------ ------------------ Liabilities Payables for investment securities purchased -- -- 1,352,132 Payables for fund shares redeemed 747,246 6,743,217 234,230 Accrued investment advisory fee 174,520 593,757 221,079 ------------------ ------------------ ------------------ Total liabilities 921,766 7,336,974 1,807,441 ------------------ ------------------ ------------------ Net assets $ 202,579,820 213,272,651 188,677,192 ================== ================== ================== Capital Capital stock and additional paid-in capital (authorized unlimited number of shares at no par value for each Fund: outstanding 8,126,675, 11,141,122, and 18,818,257 shares, respectively) $ 124,632,951 170,668,616 189,893,746 Undistributed net investment income 8,330 -- 422 Accumulated net realized gain (loss) (6,351,721) 298,249 (377,512) Unrealized appreciation (depreciation) of investments 84,290,260 42,305,786 (839,464) ------------------ ------------------ ------------------ Net assets $ 202,579,820 213,272,651 188,677,192 ================== ================== ================== Net asset value per share of outstanding: Capital stock $ 24.93 19.14 10.03 See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Statements of Operations Year ended December 31, 2004 Growth Small Cap Tax-Exempt Fund Fund Bond Fund ------------------ ------------------ ------------------ Investment income: Income: Dividends (net of foreign taxes withheld of $4,691, $2,968, and $0, respectively) $ 3,394,123 1,236,646 60,211 Interest 15,720 95,623 8,284,752 ------------------ ------------------ ------------------ Total income 3,409,843 1,332,269 8,344,963 ------------------ ------------------ ------------------ Expenses: Investment advisory fee 763,268 2,289,850 928,905 Voluntary fee reduction (127,784) (205,166) (133,598) ------------------ ------------------ ------------------ Total expenses 635,484 2,084,684 795,307 ------------------ ------------------ ------------------ Net investment income (loss) 2,774,359 (752,415) 7,549,656 ------------------ ------------------ ------------------ Realized and unrealized gain (loss) on investments: Net realized gain (loss) on security transactions 621,018 31,067,069 (75,650) Unrealized appreciation (depreciation) during the period 16,565,669 5,546,030 (1,328,408) ------------------ ------------------ ------------------ Net gain (loss) on investments 17,186,687 36,613,099 (1,404,058) ------------------ ------------------ ------------------ Net increase in net assets from operations $ 19,961,046 35,860,684 6,145,598 ================== ================== ================== See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Statements of Changes in Net Assets Years ended December 31, 2004 and 2003 Growth Fund Small Cap Fund Tax-Exempt Bond Fund -------------------------- -------------------------- -------------------------- 2004 2003 2004 2003 2004 2003 -------------------------- -------------------------- ------------ ------------ Operations: Net investment income (loss) $ 2,774,359 1,740,932 (752,415) (127,931) 7,549,656 5,973,216 Net realized gain (loss) on investments 621,018 1,841,074 31,067,069 18,725,287 (75,650) (301,762) Unrealized appreciation (depreciation) during the period 16,565,669 30,290,564 5,546,030 31,770,408 (1,328,408) (1,045,651) ------------ ------------ ----------- ------------ ------------ ------------ Net increase in net assets from operations 19,961,046 33,872,570 35,860,684 50,367,764 6,145,598 4,625,803 ------------ ------------ ----------- ------------ ------------ ------------ Distributions to shareholders from: Net investment income (2,783,568) (1,737,588) -- -- (7,549,234) (5,973,216) Net realized gain on investments -- -- (30,186,395) (16,709,577) -- (1,988) ------------ ------------ ----------- ------------ ------------ ------------ Total distributions to shareholders (2,783,568) (1,737,588) (30,186,395) (16,709,577) (7,549,234) (5,975,204) ------------ ------------ ----------- ------------ ------------ ------------ Capital share transactions: Proceeds from shares sold 33,598,830 24,748,105 47,116,133 25,997,370 52,394,888 45,438,858 Reinvestment of distributions from net investment income and net realized gains 2,783,568 1,737,588 30,186,395 16,709,577 7,549,234 3,533,564 Payments for shares redeemed (1,440,546) (12,140,685) (7,793,470) (15,767,547) (4,344,198) (5,047,371 ------------ ------------ ----------- ------------ ------------ ------------ Increase in net assets from capital share transactions 34,941,852 14,345,008 69,509,058 26,939,400 55,599,924 43,925,051 ------------ ------------ ----------- ------------ ------------ ------------ Total increase in net assets 52,119,330 46,479,990 75,183,347 60,597,587 54,196,288 42,575,650 Net assets: At the beginning of the year 150,460,490 103,980,500 138,089,304 77,491,717 134,480,904 91,905,254 ------------ ------------ ----------- ------------ ------------ ------------ At the end of the year $ 202,579,820 150,460,490 213,272,651 138,089,304 188,677,192 134,480,904 ============ ============ =========== ============ ============ ============ Undistributed net income $ 8,330 17,539 -- -- 422 -- See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Notes to Financial Statements (unaudited) June 30, 2004 (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 three series of funds: Clearwater Growth Fund, Clearwater Small Cap Fund, and Clearwater Tax-Exempt Bond 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 Clearwater Growth and Small Cap Funds is long-term capital growth. The investment objective of the Clearwater Tax-Exempt Bond Fund is high current income that is exempt from federal income tax, consistent with preservation of capital. The Clearwater Growth Fund is passively managed to track but not replicate the Russell 1000 Index, an unmanaged, capitalization weighted index of the largest 1000 public companies in the United States. The fund is managed so that its holdings match the holdings of the Index as closely as possible while attempting to minimize the realization of taxable gains. This means that the fund will not buy and sell securities to match changes in the composition of securities in the Index. Instead, the fund's portfolio is adjusted periodically to reflect the holdings and weightings of the Index, but only after consideration of the fund's policy to minimize realization of taxable gains. The Clearwater Small Cap Fund invests primarily in equity securities of issuers with market capitalizations, at the time of investment, no greater than the range of capitalizations of the companies included in the Russell 2000 Index, an unmanaged, capitalization weighted index of the largest 3000 public companies in the United States less the largest 1000 tracked by the Russell 1000 Index. The Clearwater Tax-Exempt Bond Fund invests at least 80% of its assets in municipal securities, which are debt obligations issued by or for the U.S. states, territories and possessions, and the District of Columbia. The interest on these securities is generally exempt from regular federal income tax and may also be exempt from federal alternative minimum tax. However, the fund may invest up to 20% of its assets in securities that generate interest income subject to federal alternative minimum tax. (2) Summary of Significant Accounting Policies The significant accounting policies followed by the funds are as follows: Investments in Securities Investments in equity securities are valued at the last sales price on the principal exchange or market where they are traded. Equity 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. Debt securities maturing more than 60 days from the valuation date are valued at the market price supplied by an independent pricing vendor; those securities with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity, are valued at amortized cost, which approximates market value. 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. In instances in which pricing data is not available, securities have stopped trading, there are a wide price fluctuations which cannot be verified, or inaccurate pricing data is received, the Custodian (State Street, Kansas City) will notify the Manager, Accounting or the Manager, Legal Advisory Services of the Trust's transfer agent, or their designee (FCI). Thereafter, FCI and the Fund's subabviser will employ what they believe to be a reasonable approach in determining the true market value of the security. With respect to an extraordinary market event occurring between the time the last "current" market quotation was available for a security in a Fund's portfolio and the time the Fund's net asset value is determined, which event calls into doubt whether the earlier market quotation represents fair value at the time the Fund's net asset value is determined, FCI will immediately consult with the Fund's subadviser to determine what price for valuation would be prudent. As of the date of these financial statements one security held by the Clearwater Small cap Fund was being priced on a Fair Value basis. That security was the Del Global Technologies Corporation zero coupon bond maturing March 28, 2007. This security was received as part of a class action litigation settlement. CLEARWATER INVESTMENT TRUST Notes to Financial Statements (unaudited) June 30, 2004 Security transactions are accounted for on the date the securities are purchased or sold. Realized gains and losses are calculated on an identified cost basis. Dividend income is recognized on the ex-dividend date and interest income, including amortization of original issue discount and premium, is accrued daily. Federal Taxes The Trust's policy is to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies. On a calendar year basis the Funds intend to distribute substantially all of their net investment income and realized gains, if any, to avoid the payment of federal income and excise taxes. Therefore, no income tax provision is required. Each fund is treated as a separate entity for federal income tax purposes. 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. The tax character of distributions paid during the years ended December 31, 2003 and 2004 was as follows: Tax-exempt Ordinary income Long-term capital gain --------------------------- --------------------------- --------------------------- 2003 2004 2003 2004 2003 2004 ------------- ------------ ------------ ------------- ------------- ------------ Growth Fund $ -- -- 1,737,588 2,783,568 -- -- Small Cap Fund -- -- 5,740,295 6,075,318 10,969,282 24,111,077 Tax-Exempt Bond Fund 5,819,544 7,429,240 153,672 119,994 1,988 -- As of December 31, 2004, the components of distributable earnings on a tax basis were as follows: Clearwater Clearwater Clearwater Tax-Exempt Growth Fund Small Cap Fund Bond Fund ------------------ ------------------ ------------------- Undistributed ordinary income $ 8,330 54,693 422 Undistributed capital gain -- 243,556 -- Accumulated capital losses 6,351,721) -- (377,512) Unrealized appreciation (depreciation) 84,290,260 42,305,786 (839,464) ------------------ ------------------ ------------------- Total $ 77,946,869 42,604,035 (1,216,554) ================== ================== =================== CLEARWATER INVESTMENT TRUST Notes to Financial Statements (unaudited) June 30, 2004 On the statements of assets and liabilities, due to permanent book-to-tax differences, the following adjustments have been made: Clearwater Clearwater Clearwater Tax-Exempt Growth Fund Small Cap Fund Bond Fund ------------------ ------------------- ------------------ Undistributed net income $ -- 752,415 -- Accumulated net realized gains -- (752,415) -- Additional paid-in capital -- -- -- Distributions to Shareholders Distributions to shareholders from net investment income, if any, are declared annually for the Clearwater Growth and Small Cap Funds and declared daily, payable monthly, for the Clearwater Tax-Exempt Bond Fund. Distributions to shareholders from net realized gains, if any, are declared annually for all Funds. Distributions are paid in cash or reinvested in additional shares. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decrease in net assets from operations during the period. Actual results could differ from those estimates. (3) Investment Security Transactions Cost of purchases and proceeds from sales of securities, other than temporary investments in short-term securities, for the six months ended June 30, 2004 were as follows: Purchases Sales ------------------- ------------------- Clearwater Growth Fund $ 36,847,894 2,581,119 Clearwater Small Cap Fund 173,159,964 135,979,310 Clearwater Tax-Exempt Bond Fund 111,615,991 52,723,772 CLEARWATER INVESTMENT TRUST Notes to Financial Statements (unaudited) June 30, 2004 (4) Capital Share Transactions Transactions in shares of each fund for the six months ended June 30, 2004 and the year ended December 31, 2003 were as follows: Clearwater Growth Fund Clearwater Small Cap Fund ------------------------------------- ------------------------------------- 2004 2003 2004 2003 ----------------- ----------------- ----------------- ----------------- Sold 1,434,027 1,311,323 2,443,810 1,698,057 Issued for reinvested distributions 111,655 76,681 1,577,137 910,603 Redeemed (59,646) (622,550) (406,861) (993,290) ----------------- ----------------- ----------------- ----------------- Increase 1,486,036 765,454 3,614,086 1,615,370 ================= ================= ================= ================= Bond Fund ----------------------------------------- 2004 2003 ------------------- ------------------- Sold 5,260,674 4,469,913 Issued for reinvested distributions 750,244 348,195 Redeemed (487,731) (495,017) ------------------- ------------------- Increase 5,523,187 4,323,091 =================== =================== (5) Capital Loss Carry-Over For federal income tax purposes, the Clearwater Growth Fund and Clearwater Tax Exempt Bond Fund have capital loss carryovers of $6,972,739 and $301,862, respectively, at December 31, 2003, which, if not offset by subsequent capital gains, will expire as follows: Clearwater Clearwater Tax-Exempt Year of Growth Fund Bond Fund expiration ------------------- ------------------- ------------------- $ 6,351,721 -- 2010 -- 377,512 2011 ------------------- ------------------- Total $ 6,351,721 377,512 =================== =================== CLEARWATER INVESTMENT TRUST Notes to Financial Statements (unaudited) June 30, 2004 (6) 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 President and Treasurer is a shareholder. Under terms of an agreement, Clearwater Growth Fund, Clearwater Small Cap Fund and Clearwater Tax-Exempt Bond Fund pay a fee equal to an annual rate of 0.45%, 1.35%, and 0.60% of average net assets, respectively. Clearwater Management Company is responsible for the payment or reimbursement of all the Funds' expenses, except brokerage, taxes, interest, and extraordinary expenses. Effective July 1, 2002 Clearwater Management Company voluntarily reduced the fees paid by the funds to 0.39%, 1.33%, and 0.56%, respectively. Effective April 1, 2004 Clearwater Management Company voluntarily reduced the fees paid by the funds to 0.37%, 1.20%, and 0.50%, respectively. This voluntary fee reduction may be rescinded at any time. 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, 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, Inc., 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. The sub-advisory fee for the Clearwater Tax-Exempt Bond Fund, payable to Sit Fixed Income Advisers II, LLC, is equal to an annual rate of 0.40% on the first $20 million in net assets and then decreasing in reduced percentages to 0.20% of net assets in excess of $75 million. CLEARWATER INVESTMENT TRUST Notes to Financial Statements (unaudited) June 30, 2004 (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: Year ended December 31 ---------------------------------------------------------------------------------- Clearwater Growth Fund 2004 2003 2002 2001 2000 - --------------------------------- --------------- --------------- -------------- --------------- --------------- Net asset value, beginning of year $ 22.66 17.70 23.07 26.86 31.94 Income from investment operations: Net investment income 0.38 0.27 0.23 0.19 0.16 Net realized and unrealized gain (loss) 2.24 4.95 (5.37) (3.73) (0.87) --------------- --------------- -------------- --------------- --------------- Total from investment operations 2.62 5.22 (5.14) (3.54) (0.71) --------------- --------------- -------------- --------------- --------------- Less distributions: Dividends from net investment income (0.35) (0.26) (0.23) (0.20) (0.17) Distributions from net realized gains 0.00 0.00 0.00 (0.05) (4.20) --------------- --------------- -------------- --------------- --------------- Total distributions (0.35) (0.26) (0.23) (0.25) (4.37) --------------- --------------- -------------- --------------- --------------- Net asset value, end of year $ 24.93 22.66 17.70 23.07 26.86 =============== =============== ============== =============== =============== Total return (a) 11.5% 29.5% (22.3)% (13.2)% (2.0)% Net assets, end of year (000s omitted) $ 202,580 150,460 103,981 132,792 154,811 Ratio of expenses to average net assets (b) 0.37% 0.39% 0.43% 0.45% 0.45% Ratio of net investment income to average net assets (b) 1.62% 1.40% 1.14% 0.80% 0.52% Portfolio turnover rate (excluding short-term securities) 1.52% 13.64% 31.40% 43.20% 57.28% (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) Total fund expenses are contractually limited to 0.45% of average daily net assets. However, during the period ended June 30, 2004, the investment advisor voluntarily reduced management fees otherwise payable by the Fund. Had the fund incurred these expenses, the ratio of expenses to average daily net assets would have been 0.23% for the six months ended June 30, 2004 and 0.45% for the years ended December 31, 2003 and 2002, and the ratio of net investment income to average daily net assets would have been 0.60%, 1.34%, and 1.12%, respectively. CLEARWATER INVESTMENT TRUST Notes to Financial Statements (unaudited) June 30, 2004 Year ended December 31 ---------------------------------------------------------------------------------- Clearwater Small Cap Fund 2004 2003 2002 2001 2000 - --------------------------------- --------------- --------------- -------------- --------------- --------------- Net asset value, beginning of year $ 18.35 13.11 14.61 13.01 15.13 Income from investment operations: Net investment income (loss) (0.09) (0.02) (0.01) 0.11 (0.04) Net realized and unrealized gains (losses) 3.92 7.71 (1.49) 1.62 1.41 --------------- --------------- -------------- --------------- --------------- Total from investment operations 3.83 7.69 (1.50) 1.73 1.37 --------------- --------------- -------------- --------------- --------------- Less distributions: Distributions from net investment income 0.00 0.00 0.00 (0.11) 0.00 Distributions from net realized gains (3.04) (2.45) 0.00 (0.02) (3.49) --------------- --------------- -------------- --------------- --------------- Total distributions (3.04) (2.45) 0.00 (0.13) (3.49) --------------- --------------- -------------- --------------- --------------- Net asset value, end of year $ 19.14 18.35 13.11 14.61 13.01 =============== =============== ============== =============== =============== Total return (a) 20.9% 58.7% (10.3)% 13.3% 10.7% Net assets, end of year (000s omitted) $ 213,273 138,089 77,492 81,974 67,896 Ratio of expenses to average net assets (b) 1.24% 1.33% 1.34% 1.35% 1.35% Ratio of net investment income (loss) to average net assets (b) (0.45)% (0.12)% (0.02)% 0.80% (0.27)% Portfolio turnover rate (excluding short-term securities) 83.25% 100.82% 81.16% 117.75% 149.01% (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) Total fund expenses are contractually limited to 1.35% of average daily net assets. However, during the period ended June 30, 2004, the investment advisor voluntarily reduced management fees otherwise payable by the Fund. Had the fund incurred these expenses, the ratio of expenses to average daily net assets would have been 0.68% for the six months ended June 30, 2004 and 1.35% for the years ended December 31, 2003 and 2002, and the ratio of net investment income to average daily net assets would have been (0.32)%, (0.14)%, and (0.03)%, respectively. CLEARWATER INVESTMENT TRUST Notes to Financial Statements (unaudited) June 30, 2004 Year ended December 31 Clearwater Tax-Exempt --------------------------------------------------------------------------------- Bond Fund 2004 2003 2002 2001 2000(a) - ------------------------------ --------------- -------------- --------------- --------------- -------------- Net asset value, beginning of year $ 10.12 10.24 10.14 10.28 10.00 Income from investment operations: Net investment income 0.50 0.53 0.58 0.59 0.55 Net realized and unrealized gains (losses) (0.10) (0.12) 0.12 0.02 0.31 --------------- -------------- --------------- --------------- -------------- Total from investment operations 0.40 0.41 0.70 0.61 0.86 --------------- -------------- --------------- --------------- -------------- Less distributions: Distributions from net investment income (0.49) (0.53) (0.58) (0.59) (0.55) Distributions from net realized gains 0.00 0.00 (0.02) (0.16) (0.03) --------------- -------------- --------------- --------------- -------------- Total distributions (0.49) (0.53) (0.60) (0.75) (0.58) --------------- -------------- --------------- --------------- -------------- Net asset value, end of year $ 10.03 10.12 10.24 10.14 10.28 =============== ============== =============== =============== ============== Total return (b) 4.1% 4.1% 7.1% 6.1% 8.9% (d) Net assets, end of year (000s omitted) $ 188,677 134,481 91,905 81,687 74,094 Ratio of expenses to average net assets (e) 0.51% 0.56% 0.58% 0.60% 0.60% (c) Ratio of net investment income (loss) to average net assets (e) 4.84% 5.24% 5.69% 5.64% 5.72% (c) Portfolio turnover rate (excluding short-term securities) 35.25% 39.84% 39.79% 43.23% 23.86% (a) For the period from January 14, 2000 (commencement of operations) to December 31, 2000. (b) 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. (c) Annualized. (d) Not annualized. (e) Total fund expenses are contractually limited to 0.60% of average daily net assets. However, during the period ended June 30, 2004, the investment advisor voluntarily reduced management fees otherwise payable by the Fund. Had the fund incurred these expenses, the ratio of expenses to average daily net assets would have been 0.30% for the six months ended June 30, 2004 and 0.60% for the years ended December 31, 2003 and 2002, and the ratio of net investment income to average daily net assets would have been 2.45%, 5.20%, and 5.67%, respectively. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Growth Fund December 31, 2004 Face Percent amount Coupon Fair of or shares Security rate Cost value (a) net assets - ----------------------------------------------------------------- ----------- ------------- ------------ ------------- Common stocks: Consumer discretionary: 2,300 ABERCROMBIE AND FITCH CO $ 50,218 107,985 3,750 AMAZON COM INC (b) 108,172 166,088 3,650 AMERICAN EAGLE OUTFITTERS INC (b) 106,990 171,915 900 AMERICAN GREETINGS CORP 13,869 22,815 400 APPLEBEES INTL INC (b) 10,400 10,580 600 ARVINMERITOR INC 10,494 13,422 1,500 AUTOLIV 60,225 72,450 1,600 AUTONATION INC DEL (b) 30,080 30,736 900 AUTOZONE INC (b) 57,669 82,179 4,075 BED BATH & BEYOND INC (b) 151,099 162,307 1,250 BELO CORP 18,688 32,800 3,600 BEST BUY CO INC 106,450 213,912 1,400 BIG LOTS INC (b) 15,477 16,982 1,300 BLACK & DECKER CORPORATION 44,208 114,829 9,069 BLOCKBUSTER INC 86,259 86,518 5,569 BLOCKBUSTER INC CL B 40,222 49,063 1,100 BORG WARNER INC (b) 51,799 59,587 1,300 BRINKER INTL INC (b) 41,847 45,591 2,525 CABLEVISION NY GROUP CLASS A (b) 21,801 62,873 784 CARMAX INC (b) 11,031 24,343 165 CAVCO INDS INC DEL (b) 815 7,417 800 CDW CORP 44,354 53,080 6,600 CENTEX CORP 66,427 393,228 1,800 CHEESECAKE FACTORY (b) 58,968 58,446 1,500 CHICOS FAS INC (b) 28,000 68,295 8,900 CIRCUIT CITY STORES INC 104,507 139,196 7,375 CLEAR CHANNEL COMMUNICATIONS 271,971 246,989 4,600 COACH INC (b) 107,172 259,440 2,525 COMCAST CORP NEW (b) 60,521 82,921 33,745 COMCAST CORP NEW CL A (b) 907,000 1,123,033 7,800 COSTCO WHSL CORP NEW 237,671 377,598 1,450 CUMULUS MEDIA INC (b) 19,523 21,866 4,900 D R HORTON INC 137,882 197,519 2,100 DANA CORP 33,264 36,393 2,300 DARDEN RESTAURANTS INC 47,909 63,802 7,000 DELPHI CORP 58,703 63,140 8,363 DIRECTV GROUP INC (b) 118,534 139,997 32,300 DISNEY WALT CO 683,374 897,940 3,400 DOLLAR GEN CORP 67,631 70,618 1,700 DOLLAR TREE STORES INC (b) 50,070 48,756 3,200 DOW JONES & CO INC 142,912 137,792 3,900 EASTMAN KODAK CO 90,363 125,775 8,800 EBAY INC (b) 145,400 1,023,263 3,200 ECHOSTAR COMMUNICATIONS CORP N 119,633 106,368 2,425 EMMIS COMMUNICATIONS CORP (b) 48,403 46,536 1,125 ENTERCOM COMMUNICATIONS CORP (b) 49,321 40,376 2,000 FAMILY DLR STORES INC 61,336 62,460 3,100 FEDERATED DEPT STORES INC DEL 143,111 179,149 1,900 FOOT LOCKER INC 25,593 51,167 29,800 FORD MTR CO DEL 306,940 436,272 7,700 FORTUNE BRANDS INC 282,788 594,286 3,125 FOX ENTMT GROUP INC (b) 63,757 97,688 1,900 GAMESTOP CORP (b) 15,311 42,484 3,550 GANNETT INC 256,535 290,035 9,200 GAP INC 139,608 194,304 6,800 GENERAL MTRS CORP 269,795 272,408 1,700 GENTEX CORP 69,091 62,934 14,850 HARLEY DAVIDSON INC 87,002 902,138 300 HARMAN INTL INDS INC NEW (b) 37,554 38,100 See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Growth Fund December 31, 2004 Face Percent amount Coupon Fair of or shares Security rate Cost value (a) net assets - ----------------------------------------------------------------- ----------- ------------- ------------ ------------- 575 HEARST ARGYLE TELEVISION INC $ 12,880 15,169 1,400 HILTON HOTELS CORP 29,246 31,836 46,625 HOME DEPOT INC 30,408 1,992,752 4,900 INTERNATIONAL GAME TECHNOLOGY 170,811 168,462 5,400 INTERPUBLIC GROUP COS INC 75,276 72,360 2,850 JOHNSON CTLS INC 113,368 180,804 1,200 JONES APPAREL GROUP INC 45,192 43,884 600 KB HOME 39,516 62,640 900 KNIGHT RIDDER INC (b) 63,990 60,246 11,550 KOHLS CORP (b) 92,211 567,914 300 LAMAR ADVERTISING CO (b) 8,994 12,834 900 LEAR CORP 53,127 54,909 2,700 LEGGETT & PLATT INC 58,884 76,761 1,400 LENNAR CORP 58,905 79,352 37,950 LIBERTY MEDIA CORP (b) 292,772 416,691 1,762 LIBERTY MEDIA INTL INC (b) 55,061 81,457 10,290 LIMITED BRANDS INC 118,493 236,876 1,850 LIZ CLAIBORNE INC 62,867 78,089 11,700 LOWES COS INC 426,727 673,803 15,550 MARRIOTT INTL INC NEW 129,055 979,339 2,900 MATTEL INC 53,984 56,521 4,600 MAY DEPT STORES CO 124,522 135,240 1,600 MCCLATCHY CO (b) 95,367 114,896 18,600 MCDONALDS CORP 381,981 596,316 3,000 MCGRAW HILL COS INC 219,545 274,620 1,000 METRO GOLDWYN MAYER INC NEW 1,519 11,880 3,200 MICHAELS STORES INC 39,160 95,904 1,500 MOHAWK INDS INC (b) 119,605 136,875 5,500 NEW YORK TIMES CO 226,119 224,400 3,800 NEWELL RUBBERMAID INC 86,564 91,922 2,400 NIKE INC 143,772 217,656 2,500 NORDSTROM INC 52,596 116,825 4,500 OFFICE DEPOT INC (b) 65,209 78,120 3,300 OFFICEMAX INC DE 114,939 103,554 2,400 OMNICOM GROUP 160,580 202,368 1,100 OUTBACK STEAKHOUSE INC (b) 46,023 50,358 400 PACIFIC SUNWEAR OF CALIF (b) 9,204 8,904 2,000 PENNEY J C INC 59,806 82,800 1,000 PETSMART INC 24,902 35,530 1,500 POLO RALPH LAUREN CORP 31,320 63,900 1,100 PULTE HOMES INC 52,465 70,180 2,150 RADIO ONE INC (b) 28,969 34,658 1,500 RADIOSHACK CORP 36,117 49,320 1,100 READERS DIGEST ASSN INC 15,807 15,301 2,375 REEBOK INTL LTD 75,471 104,500 2,600 ROSS STORES INC (b) 42,760 75,062 400 RYLAND GROUP INC (b) 12,909 23,016 1,000 SCHOLASTIC CORP (b) 28,560 36,960 600 SCRIPPS E W CO OH 23,112 28,968 3,900 SEARS ROEBUCK & CO 124,784 199,017 300 SHERWIN WILLIAMS CO 9,570 13,389 30,800 SIRIUS SATELLITE RADIO INC (b) 116,116 235,620 900 STANLEY WORKS 27,855 44,091 6,300 STAPLES INC 119,696 212,373 5,375 STARBUCKS CORP (b) 131,883 335,185 1,050 STARWOOD HOTELS & RESORTS 34,194 61,320 13,800 TARGET CORP 436,859 716,634 3,000 TIFFANY & CO NEW 86,618 95,910 70,100 TIME WARNER INC NEW 910,478 1,362,743 7,600 TJX COS INC NEW 140,575 190,988 300 TOLL BROS INC (b) 10,347 20,583 See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Growth Fund December 31, 2004 Face Percent amount Coupon Fair of or shares Security rate Cost value (a) net assets - ----------------------------------------------------------------- ----------- ------------- ------------ ------------- 1,700 TOYS R US INC (b) $ 23,853 34,799 2,600 TRIBUNE CO NEW 116,790 109,564 3,500 UNITEDGLOBALCOM (b) 26,145 33,810 6,355 UNIVISION COMMUNICATIONS INC (b) 190,969 186,011 1,700 V F CORP 87,065 94,146 23,187 VIACOM INC 875,239 843,775 39,850 WAL MART STORES INC 1,938,990 2,104,876 700 WENDYS INTL INC 25,956 27,482 1,550 WESTWOOD ONE INC (b) 41,750 41,742 3,600 WHIRLPOOL CORP 155,817 249,156 500 WILEY JOHN & SON 15,320 17,420 1,000 WILLIAMS SONOMA INC (b) 32,379 35,040 1,400 XM SATELLITE RADIO HLDGS INC (b) 27,440 52,668 4,500 YUM BRANDS INC 78,407 212,310 2,400 ZALE CORP NEW (b) 39,515 71,688 ------------- ------------ 16,631,027 27,225,256 13.44% ------------- ------------ Consumer staples: 4,700 ALBERTSONS INC 93,906 112,236 34,500 ALTRIA GROUP INC 690,362 2,107,950 14,100 ANHEUSER BUSCH COS INC 688,864 715,293 9,200 ARCHER DANIELS MIDLAND CO 167,630 205,252 4,900 AVON PRODS INC 152,946 189,630 1,800 BROWN FORMAN CORP 70,069 87,624 6,200 CAMPBELL SOUP CO 168,826 185,318 35,600 COCA COLA CO 1,068,618 1,482,028 3,700 COCA COLA ENTERPRISES INC 78,806 77,145 7,200 COLGATE PALMOLIVE CO 360,616 368,352 8,000 CONAGRA INC 182,521 235,600 1,200 CONSTELLATION BRANDS INC 36,456 55,812 300 COORS ADOLPH CO 16,305 22,701 4,600 CVS CORP 114,996 207,322 2,900 DEAN FOODS CO NEW (b) 94,060 95,555 4,773 DEL MONTE FOODS CO (b) 47,273 52,598 6,200 GENERAL MLS INC 277,056 308,202 29,900 GILLETTE CO 497,941 1,338,922 5,575 HEINZ H J CO 190,266 217,369 2,100 HERSHEY FOODS CORP 106,008 116,634 1,300 HORMEL FOODS CORP 29,432 40,755 4,000 KELLOGG CO 175,241 178,640 4,350 KIMBERLY CLARK CORP 240,219 286,274 1,700 KRAFT FOODS INC 51,827 60,537 14,400 KROGER CO (b) 246,089 252,576 4,100 LOEWS CORP 107,638 118,695 1,100 MCCORMICK & CO INC 35,864 42,460 2,400 PEPSI BOTTLING GROUP INC 52,032 64,896 25,650 PEPSICO INC 924,004 1,338,930 38,100 PROCTER AND GAMBLE CO 987,231 2,098,548 6,100 RITE AID CORP (b) 36,356 22,326 6,400 SAFEWAY INC 124,922 126,336 9,950 SARA LEE CORP 203,451 240,193 600 SMITHFIELD FOODS INC (b) 15,984 17,754 1,400 SMUCKER J M CO 60,413 65,898 3,700 SUPERVALU INC 62,955 127,724 7,900 SYSCO CORP 121,025 301,543 5,927 TYSON FOODS INC (DEL) 52,174 109,057 2,900 UST INC 80,807 139,519 27,350 WALGREEN CO 324,378 1,049,420 1,200 WHOLE FOODS MKT INC 64,365 114,420 3,600 WRIGLEY WM JR CO 125,321 249,084 ------------- ------------ 9,225,253 15,227,128 7.52% ------------- ------------ See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Growth Fund December 31, 2004 Face Percent amount Coupon Fair of or shares Security rate Cost value (a) net assets - ----------------------------------------------------------------- ----------- ------------- ------------ ------------- Energy: 1,673 ANADARKO PETE CORP $ 58,107 108,427 3,348 APACHE CORP 61,600 169,308 1,700 BAKER HUGHES INC 58,817 72,539 300 BJ SVCS CO 9,951 13,962 11,488 BP PLC (d) 283,841 670,899 10,900 BURLINGTON RES INC 178,458 474,150 4,500 CHESAPEAKE ENERGY CORP 43,650 74,250 30,428 CHEVRONTEXACO CORP 1,291,980 1,597,774 8,119 CONOCOPHILLIPS 345,304 704,973 6,012 DEVON ENERGY CORPORATION NEW 171,506 233,987 1,100 ENSCO INTL INC 29,875 34,914 4,250 EOG RESOURCES INC 80,824 303,280 105,999 EXXON MOBIL CORP 4,312,474 5,433,508 4,200 HALLIBURTON CO 100,321 164,808 2,900 HELMERICH AND PAYNE INC 72,973 98,716 3,900 MARATHON OIL CORP (b) 154,479 146,679 1,200 MURPHY OIL CORP 32,055 96,540 1,700 NATIONAL OILWELL INC (b) 26,427 59,993 2,900 NOBLE ENERGY INC 74,136 178,814 16,450 OCCIDENTAL PETE CORP 308,653 960,022 3,200 PIONEER NAT RES CO 48,507 112,320 9,000 SCHLUMBERGER LTD 210,434 602,550 1,100 SMITH INTL INC (b) 38,951 59,851 4,850 SUNOCO INC 109,369 396,294 6,693 TRANSOCEAN INC (b) 107,342 283,716 4,850 UNOCAL CORP 134,714 209,714 3,730 VALERO ENERGY CORP 51,022 169,342 3,625 XTO ENERGY INC 37,767 128,253 ------------- ------------ 8,433,537 13,559,583 6.69% ------------- ------------ Financials: 8,550 AFLAC INC 255,752 340,632 9,000 ALLIED CAP CORP NEW 196,349 232,560 9,700 ALLSTATE CORP 422,942 501,684 8,000 AMB PPTY CORP 266,178 323,120 1,300 AMBAC FINL GROUP INC 91,536 106,769 14,775 AMERICAN EXPRESS CO 574,404 832,867 37,316 AMERICAN INTL GROUP INC 458,063 2,450,542 8,200 AMERICREDIT CORP (b) 141,934 200,490 3,200 AMERITRADE HLDG CORP NEW 44,925 45,504 9,700 AMSOUTH BANCORPORATION 229,185 251,230 4,300 AON CORP 84,502 102,598 1,200 APARTMENT INVT & MGMT CO 37,205 46,248 3,100 ASSOCIATED BANC CORP 105,586 102,951 6,600 ASTORIA FINL CORP 87,763 263,802 64,064 BANK AMER CORP 1,882,553 3,010,367 13,500 BANK NEW YORK INC 365,609 451,170 4,700 BANKNORTH GROUP INC NEW 86,563 172,020 8,658 BB&T CORP 244,238 364,069 1,100 BEAR STEARNS COS INC 56,969 112,541 3,300 CAPITAL ONE FINL CORP 130,755 277,893 1,198 CATELLUS DEV CORP NEW 24,931 36,659 2,100 CHUBB CORP 129,882 161,490 2,625 CINCINNATI FINL CORP 103,510 116,183 2,100 CIT GROUP INC NEW 52,794 96,222 83,315 CITIGROUP INC 1,659,574 4,014,117 1,550 COLONIAL BANCGROUPINC 20,381 32,907 3,200 COMERICA INC 171,938 195,264 5,150 COMMERCIAL FED CORP 78,156 153,007 5,200 CONSECO INC 97,448 103,740 See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Growth Fund December 31, 2004 Face Percent amount Coupon Fair of or shares Security rate Cost value (a) net assets - ----------------------------------------------------------------- ----------- ------------- ------------ ------------- 8,798 COUNTRYWIDE FINL CORP $ 134,491 325,614 2,300 CRESCENT REAL ESTATE EQUITIES (b) 38,846 41,998 2,900 DELUXE CORP 101,418 108,257 300 DORAL FINL CORP 9,892 14,775 12,000 E TRADE FINL CORP (b) 125,906 179,400 3,400 EQUITY OFFICE PPTYS TR 94,112 99,008 4,700 EQUITY RESIDENTIAL 149,331 170,046 400 ERIE INDTY CO 17,588 21,028 17,950 FEDERAL HOME LN MTG CORP 54,545 1,322,915 16,325 FEDERAL NATL MTG ASSN 1,100,233 1,162,502 3,800 FIDELITY NATL FINL INC 144,152 173,546 9,500 FIFTH THIRD BANCORP 467,680 449,160 27,401 FIRST DATA CORP 226,493 1,165,638 8,450 FIRST HORIZON NATL CORP 255,733 364,280 10,550 FISERV INC (b) 95,145 424,005 14,000 FRANKLIN RES INC 257,225 975,100 1,800 GALLAGHER ARTHUR J & CO (b) 55,152 58,500 23,800 GENERAL GROWTH PPTYS INC 295,095 860,608 1,300 GENWORTH FINL INC (b) 31,200 35,100 1,200 GOLDEN WEST FINL CORP DEL 67,042 73,704 4,500 GOLDMAN SACHS GROUP INC 387,377 468,180 3,800 HARTFORD FINANCIAL SVCS GRP 190,162 263,378 14,600 HEALTH CARE PPTY INVS INC 261,994 404,274 6,600 HIBERNIA CORP 176,484 194,766 3,400 HOST MARRIOTT CORP NEW 52,904 58,820 6,400 HRPT PPTYS TR 60,992 82,112 1,284 HSBC HLDGS PLC (d) 64,775 109,320 11,600 HUNTINGTON BANCSHARES INC 253,776 287,448 2,300 INVESTMENT TECHNOLOGY GROUP (b) 37,976 46,000 300 INVESTORS FINL SERVICES CORP 10,275 14,994 3,800 ISTAR FINL INC 75,215 171,988 3,700 JANUS CAP GROUP INC 53,556 62,197 3,700 JEFFERSON PILOT CORP 137,936 192,252 55,246 JPMORGAN CHASE & CO 1,484,585 2,155,145 12,100 KEYCORP NEW 225,332 410,190 200 KIMCO RLTY CORP 11,266 11,598 1,750 LA QUINTA CORP (b) 3,605 15,908 4,200 LEHMAN BROTHERS HLDGS INC 276,075 367,416 3,625 LINCOLN NATL CORP IN 113,502 169,215 2,100 LOEWS CORP 49,966 147,630 260 M & T BK CORP 10,976 28,038 5,400 MACK CA RLTY CORP 169,534 248,562 4,741 MANULIFE FINL CORP 135,056 219,034 8,700 MARSH & MCLENNAN COS INC 339,321 286,230 2,000 MARSHALL & ILSLEY CORP 51,520 88,400 1,850 MBIA INC 82,768 117,068 17,650 MBNA CORP 267,541 497,554 5,400 MELLON FINL CORP 171,240 167,994 11,600 MERRILL LYNCH & CO INC 455,586 693,332 4,200 METLIFE INC 140,107 170,142 6,800 MGIC INVT CORP WIS 163,404 468,588 700 MOODYS CORP (b) 44,009 60,795 12,975 MORGAN STANLEY 581,522 720,372 16,290 NATIONAL CITY CORP 298,674 611,690 800 NATIONWIDE FINL SVCS INC 25,928 30,584 6,782 NEW YORK CMNTY BANCORP INC 141,276 139,506 7,438 NORTH FORK BANCORPORATION INC 120,236 214,586 1,525 NORTHERN TRUST CORP 59,156 74,085 8,900 OLD REP INTL CORP (b) 221,092 225,170 450 PEOPLES BK BRIDGEPORT CONN 9,330 17,501 255 PIPER JAFFRAY COS (b) 7,794 12,227 See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Growth Fund December 31, 2004 Face Percent amount Coupon Fair of or shares Security rate Cost value (a) net assets - ----------------------------------------------------------------- ----------- ------------- ------------ ------------- 3,100 PLUM CREEK TIMBER CO INC $ 66,340 119,164 300 PMI GROUP INC 10,926 12,525 3,925 PNC FINL SVCS GROUP INC 179,373 225,452 2,200 POPULAR INC 44,065 63,426 14,675 PRICE T ROWE GROUP INC 198,287 912,785 2,550 PRINCIPAL FINANCIAL GROUP 69,037 104,397 2,600 PROGRESSIVE CORP OHIO 164,996 220,584 3,400 PROVIDIAN FINL CORP 34,136 55,998 6,100 PRUDENTIAL FINL INC 187,850 335,256 1,000 RADIAN GROUP INC 47,230 53,240 750 RAYMOND JAMES FINANCIAL INC 12,570 23,235 4,256 REGIONS FINL CORP NEW 97,525 151,471 300 REINSURANCE GROUP AMER INC 12,570 14,535 900 SAFECO CORP (b) 43,659 47,016 25,700 SCHWAB CHARLES CORP 229,436 307,372 1,300 SIMON PPTY GROUP INC NEW 32,716 84,071 4,500 SKY FINL GROUP INC 106,014 129,015 6,700 SLM CORP 239,070 357,713 4,200 SOVEREIGN BANCORP INC 32,181 94,710 500 ST JOE CO 16,215 32,100 2,650 STATE STREET CORPORATION 139,380 130,168 4,034 SUNTRUST BKS INC 257,247 298,032 4,200 SYNOVUS FINL CORP 112,014 120,036 24,000 TCF FINANCIAL CORP 207,735 771,360 8,832 THE ST PAUL TRAVELERS COS INC 262,417 327,402 3,700 THORNBURG MTG INC (b) 109,890 107,152 1,900 TORCHMARK INC 80,235 108,566 400 TRANSATLANTIC HLDGS INC (b) 23,500 24,732 4,000 UNITRIN INC 101,606 181,800 4,300 UNUMPROVIDENT CORP 60,750 77,142 25,598 US BANCORP DEL 552,508 801,729 1,377 VALLEY NATL BANCORP 29,061 38,074 23,009 WACHOVIA CORP 2ND NEW 737,616 1,210,273 18,088 WASHINGTON MUT INC 288,437 764,761 4,929 WELLPOINT INC (b) 360,413 566,835 32,641 WELLS FARGO & CO NEW 724,241 2,028,637 7,225 XL CAPITAL LTD 92,119 561,021 200 ZIONS BANCORP 8,261 13,606 ------------- ------------ 25,218,353 45,323,510 22.37% ------------- ------------ Healthcare: 23,950 ABBOTT LABS 900,880 1,117,267 4,700 AETNA INC 151,653 586,325 1,750 ALLERGAN INC 117,402 141,873 1,500 AMERISOURCEBERGEN CORP 85,575 88,020 25,150 AMGEN INC 102,792 1,613,372 600 ANDRX CORP DEL (b) 10,542 13,098 1,800 APPLERA CORP APPLIED BIOSYS 37,429 37,638 1,300 BARD C R INC (b) 78,455 83,174 900 BARR PHARMACEUTICALS INC (b) 43,980 40,986 11,000 BAXTER INTL INC 220,992 379,940 1,700 BECTON DICKINSON & CO 76,290 96,560 11,350 BIOGEN IDEC INC (b) 164,190 756,024 2,000 BIOMET INC 75,026 86,780 11,950 BOSTON SCIENTIFIC CORP (b) 318,571 424,823 31,275 BRISTOL MYERS SQUIBB CO 782,407 801,266 7,050 CARDINAL HEALTH INC 388,777 409,958 7,313 CAREMARK RX INC (b) 131,158 288,352 1,200 CELGENE CORP (b) 24,826 31,836 200 CEPHALON INC (b) 9,120 10,176 1,300 CHIRON CORP (b) 43,719 43,329 See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Growth Fund December 31, 2004 Face Percent amount Coupon Fair of or shares Security rate Cost value (a) net assets - ----------------------------------------------------------------- ----------- ------------- ------------ ------------- 2,200 CIGNA CORP $ 107,215 179,454 1,100 COVENTRY HEALTH CARE INC (b) 53,042 58,388 1,600 CYTYC CORP (b) 11,472 44,112 1,425 DAVITA INC (b) 21,812 56,330 180 EDWARDS LIFESCIENCES CORP (b) 1,872 7,427 800 EXPRESS SCRIPTS INC (b) 37,832 61,152 3,400 FISHER SCIENTIFIC INTL INC (b) 138,754 212,092 6,550 FOREST LABS INC (b) 305,519 293,833 6,200 GENENTECH INC (b) 269,163 337,528 3,000 GENZYME CORP (b) 153,806 174,210 5,600 GILEAD SCIENCES INC (b) 176,412 195,944 3,152 GLAXOSMITHKLINE PLC (d) 76,079 149,373 4,300 GUIDANT CORP 215,407 310,030 9,550 HCA INC 347,616 381,618 4,000 HEALTH MGMT ASSOC 76,501 90,880 2,450 HEALTH NET INC (b) 64,669 70,732 1,400 HILLENBRAND INDS INC 76,636 77,756 2,005 HOSPIRA INC (b) 50,661 67,168 1,800 HUMAN GENOME SCIENCES INC (b) 25,110 21,636 3,900 HUMANA INC (b) 39,107 115,791 1,000 IMCLONE SYS INC (b) 48,564 46,080 2,100 IMS HEALTH INC 52,215 48,741 2,500 INVITROGEN CORP (b) 164,832 167,825 4,906 IVAX CORP (b) 40,819 77,613 47,800 JOHNSON & JOHNSON 1,199,801 3,031,475 2,700 KING PHARMACEUTICALS INC (b) 40,871 33,480 2,600 LABORATORY CORP AMER HLDGS (b) 61,060 129,532 18,100 LILLY ELI & CO 754,435 1,027,174 1,950 LINCARE HLDGS INC (b) 58,492 83,168 1,300 MANOR CARE INC NEW 30,973 46,059 3,800 MCKESSON CORP 126,730 119,548 4,878 MEDCO HEALTH SOLUTIONS INC (b) 137,776 202,925 900 MEDICIS PHARMACEUTICAL CORP (b) 32,148 31,599 3,100 MEDIMMUNE INC (b) 76,227 84,041 27,050 MEDTRONIC INC 100,935 1,343,573 37,250 MERCK & CO INC 1,773,891 1,197,214 6,500 MILLENNIUM PHARMACEUTICALS (b) 89,027 78,780 3,600 MYLAN LABS INC 35,895 63,648 1,100 OMNICARE INC 29,495 38,082 500 OSI PHARMACEUTICALS INC (b) 36,490 37,425 1,200 PACIFICARE HEALTH SYSTEMS (b) 36,532 67,824 125,975 PFIZER INC 613,511 3,387,467 700 PROTEIN DESIGN LABS INC (b) 9,632 14,462 925 QUEST DIAGNOSTICS INC 52,430 88,384 21,800 SCHERING PLOUGH CORP 374,296 455,184 1,000 SEPRACOR INC (b) 26,600 59,370 12,600 SERVICE CORP INTL (b) 90,438 93,870 4,600 ST JUDE MED INC (b) 115,621 192,878 15,650 STRYKER CORP 60,399 755,113 6,400 TENET HEALTHCARE CORP (b) 100,160 70,272 1,000 TRIAD HOSPS INC (b) 25,517 37,210 10,791 UNITEDHEALTH GROUP INC 435,999 949,931 700 UNIVERSAL HEALTH SVCS INC 31,885 31,150 5,800 VARIAN MED SYS INC (b) 213,788 250,792 2,175 WATSON PHARMACEUTICALS INC (b) 50,706 71,362 1,300 WEB MD CORP (b) 10,296 10,608 21,450 WYETH 857,043 913,556 3,385 ZIMMER HOLDINGS INC (b) 212,854 271,206 ------------- ------------ 14,220,852 25,564,872 12.62% ------------- ------------ See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Growth Fund December 31, 2004 Face Percent amount Coupon Fair of or shares Security rate Cost value (a) net assets - ----------------------------------------------------------------- ----------- ------------- ------------ ------------- Industrials: 11,550 3M CO $ 813,863 947,908 925 ADESA INC 13,202 19,629 2,750 ALLIED WASTE INDUSTRIES INC (b) 16,321 25,520 2,800 AMERICAN PWR CONVERSION CORP 44,398 59,920 2,600 AMERICAN STD COS INC DEL (b) 101,212 107,432 2,157 APOLLO GROUP INC (b) 139,581 174,091 1,300 ARAMARK CORP 37,232 34,463 8,300 AUTOMATIC DATA PROCESSING INC 308,406 368,105 1,500 AVERY DENNISON CORP 79,950 89,955 900 BISYS GROUP INC (b) 12,294 14,805 3,100 BLOCK H & R INC 58,017 151,900 18,700 BOEING CO 442,349 968,099 5,400 BURLINGTON NORTHN SANTA FE 159,450 255,474 1,400 CAREER ED CORP (b) 63,824 56,000 300 CARLISLE COS INC 15,924 19,476 4,800 CATERPILLAR INC 280,664 468,048 29,948 CENDANT CORP 228,707 700,184 3,500 CERIDIAN CORP NEW (b) 66,780 63,980 2,900 CINTAS CORP (b) 94,801 127,194 2,100 CNF INC 49,896 105,210 2,300 CORINTHIAN COLLEGES INC (b) 39,767 43,344 12,775 CRANE CO 215,415 368,431 5,100 CSX CORP 107,400 204,408 550 CUMMINS INC 15,906 46,085 3,200 DANAHER CORP 122,770 183,712 2,750 DEERE & CO 142,281 204,600 600 DEVRY INC DEL (b) 10,230 10,416 300 DONALDSON CO INC (b) 10,200 9,774 1,400 DONNELLEY R R & SONS CO 36,666 49,406 3,325 DOVER CORP 122,574 139,451 9,600 DUN & BRADSTREET CORP DEL NEW (b) 239,197 572,640 3,000 EATON CORP 103,554 217,080 9,350 EMERSON ELEC CO 514,252 655,435 700 FASTENAL CO (b) 43,652 43,092 11,775 FEDEX CORP 234,260 1,159,719 3,675 FLUOR CORP NEW 96,907 200,324 1,400 GATX 24,276 41,384 3,000 GENERAL DYNAMICS CORP 249,324 313,800 173,100 GENERAL ELEC CO 3,521,237 6,318,149 5,050 GENUINE PARTS CO 153,969 222,503 3,700 GOODRICH CORP 111,298 120,768 1,700 GRAINGER W W INC 74,317 113,254 600 HARSCO CORP 17,510 33,444 12,700 HONEYWELL INTL INC 305,983 449,707 900 HUBBELL INC 29,499 47,070 2,500 ILLINOIS TOOL WKS INC 164,327 231,700 504 IMAGISTICS INTL INC (b) 5,084 16,965 1,100 ITT EDL SVCS INC 41,602 52,305 800 ITT INDS INC 52,360 67,560 1,300 JACOBS ENGR GROUP INC (b) 57,164 62,127 2,200 JETBLUE AWYS CORP (b) 47,278 51,084 1,300 L 3 COMMUNICATIONS HLDG CORP 61,878 95,212 5,200 LOCKHEED MARTIN CORP 142,953 288,860 1,475 MANPOWER INC WIS 66,373 71,243 6,600 MASCO CORP 122,515 241,098 1,900 NAVISTAR INTL CORP INC (b) 79,213 83,562 5,400 NORFOLK SOUTHN CORP 103,356 195,426 4,092 NORTHROP GRUMMAN CORP 184,731 222,441 3,562 PACCAR INC 81,607 286,670 1,700 PALL CORP 40,004 49,215 See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Growth Fund December 31, 2004 Face Percent amount Coupon Fair of or shares Security rate Cost value (a) net assets - ----------------------------------------------------------------- ----------- ------------- ------------ ------------- 1,100 PARKER HANNIFIN CORP $ 72,097 83,314 19,497 PAYCHEX INC 54,861 664,458 600 PENTAIR INC 17,889 26,136 10,200 PITNEY BOWES INC 328,150 472,056 2,000 PRECISION CASTPARTS CORP 45,286 131,360 5,700 RAYTHEON CO 160,192 221,331 4,650 REPUBLIC SVCS INC 125,531 155,961 2,200 REYNOLDS AMERN INC 123,818 172,920 900 ROBERT HALF INTL INC 22,894 26,487 7,250 ROCKWELL AUTOMATION INC 102,173 359,238 2,300 ROCKWELL COLLINS INC 55,545 90,712 8,200 SABRE HLDGS CORP 212,134 181,712 4,100 SERVICE MASTER COMPANY 44,239 56,539 2,400 SKYWEST INC 26,040 48,144 700 SNAP ON INC 17,991 24,052 13,875 SOUTHWEST AIRLS CO 193,334 225,885 1,000 SPX CORP 51,053 40,060 200 STERICYCLE INC (b) 8,456 9,190 500 TELEFLEX INC 22,515 25,970 1,475 TEXTRON INC 54,457 108,855 13,700 TYCO INTL LTD 132,068 489,638 1,800 UNION PAC CORP 92,126 121,050 7,300 UNITED PARCEL SVC INC 521,109 623,858 9,175 UNITED TECHNOLOGIES CORP 712,439 948,236 8,650 WASTE MGMT INC DEL 135,675 258,981 600 WEIGHT WATCHERS INTL INC NEW (b) 23,424 24,642 2,700 YORK INTL CORP 57,118 93,258 ------------- ------------ 14,232,374 24,224,900 11.96% ------------- ------------ Information technology: 1,575 ACTIVISION INC NEW (b) 9,966 31,784 2,500 ADOBE SYS INC 97,025 156,850 4,800 ADVANCED MICRO DEVICES INC (b) 68,016 105,696 500 AFFILIATED COMPUTER SVCS INC (b) 26,411 30,095 6,100 AGILENT TECHNOLOGIES INC (b) 133,333 147,010 5,300 ALTERA CORP (b) 99,804 109,710 11,100 ANALOG DEVICES INC 99,557 409,812 5,800 APPLE COMPUTER (b) 145,292 373,520 25,400 APPLIED MATERIALS INC (b) 366,550 434,340 600 ARROW ELECTRS INC (b) 15,192 14,580 7,500 ASML HOLDING N V (b) (d) 45,625 119,325 1,900 ATMEL CORP (b) 9,918 7,448 2,600 AUTODESK INCORPORATED 71,232 98,670 5,800 AVAYA INC (b) 77,082 99,760 4,500 BEA SYS INC (b) 37,395 39,870 3,350 BMC SOFTWARE INC (b) 58,044 62,310 3,675 BROADCOM CORP (b) 99,793 118,629 5,300 BROCADE COMMUNICATIONS SYS INC (b) 27,300 40,492 2,600 CADENCE DESIGN SYS INC (b) 47,728 35,906 111,650 CISCO SYS INC (b) 168,995 2,154,844 2,950 CITRIX SYS INC (b) 17,801 72,364 1,800 COGNIZANT TECHNOLOGY SOLUTIONS (b) 39,537 76,194 5,025 COMPUTER ASSOC INTL INC 71,791 156,077 2,500 COMPUTER SCIENCES CORP (b) 99,325 140,925 1,800 COMPUWARE CORP (b) 10,278 11,646 2,200 COMVERSE TECHNOLOGY INC (b) 37,400 53,790 18,400 CORNING INC (b) 115,584 216,568 400 CREE INC (b) 15,000 16,032 40,800 DELL INC (b) 1,171,331 1,719,311 14,700 DENDRITE INTL INC (b) 57,965 285,180 4,300 ELECTRONIC ARTS INC (b) 212,133 265,224 See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Growth Fund December 31, 2004 Face Percent amount Coupon Fair of or shares Security rate Cost value (a) net assets - ----------------------------------------------------------------- ----------- ------------- ------------ ------------- 7,400 ELECTRONIC DATA SYS CORP NEW $ 164,019 170,940 42,210 EMC CORP (b) 337,885 627,663 3,700 EMULEX CORP (b) 49,943 62,308 600 FAIR ISAAC CORPORATION 20,256 22,008 1,200 FOUNDRY NETWORKS INC (b) 16,164 15,792 4,030 FREESCALE SEMICONDUCTOR INC (b) 41,327 73,991 400 GOOGLE INC (b) 77,332 77,240 1,400 HARRIS CORP DEL 37,337 86,506 56,327 HEWLETT PACKARD CO 1,052,419 1,181,176 5,175 IAC / INTERACTIVECORP (b) 122,106 142,934 7,100 INTEGRATED CIRCUIT SYS INC (b) 171,521 148,532 106,500 INTEL CORP 267,105 2,491,034 900 INTERDIGITAL COMM CORP (b) 15,021 19,890 26,300 INTERNATIONAL BUSINESS MACHS 2,281,181 2,592,653 700 INTERNATIONAL RECTIFIER CORP (b) 29,995 31,199 7,800 INTERSIL CORP (b) 123,552 130,572 2,500 INTUIT (b) 103,285 110,025 5,600 JABIL CIRCUIT INC (b) 94,248 143,248 59,700 JDS UNIPHASE CORP (b) 197,010 189,249 14,100 JUNIPER NETWORKS INC (b) 291,516 383,379 2,600 KLA TENCOR CORP (b) 86,094 121,108 1,000 LAM RESH CORP (b) 24,618 28,910 1,800 LEXMARK INTL INC (b) 76,346 153,000 3,600 LINEAR TECHNOLOGY CORP 111,093 139,536 4,600 LSI LOGIC CORP (b) 43,516 25,208 71,100 LUCENT TECHNOLOGIES INC (b) 235,872 267,336 2,400 MACROMEDIA INC (b) 18,504 74,688 4,800 MAXIM INTEGRATED PRODS INC 221,109 203,472 900 MCAFEE INC (b) 14,148 26,037 950 MERCURY INTERACTIVE CORP (b) 22,932 43,273 4,200 MICROCHIP TECHNOLOGY INC 66,924 111,972 8,800 MICRON TECHNOLOGY INC (b) 68,191 108,680 149,350 MICROSOFT CORP 1,306,975 3,989,138 1,800 MOLEX INC 56,934 54,000 36,500 MOTOROLA INC 349,198 627,800 4,200 NATIONAL SEMICONDUCTOR CORP 74,558 75,390 4,200 NETWORK APPLIANCE INC (b) 94,994 139,524 1,700 NOVELL INC (b) 10,421 11,475 2,100 NOVELLUS SYS INC (b) 80,556 58,569 1,700 NVIDIA CORP (b) 29,070 40,052 74,300 ORACLE CORP (b) 38,767 1,019,396 4,625 PEOPLESOFT INC (b) 69,375 122,470 3,400 PMC SIERRA INC (b) 38,998 38,250 2,600 POLYCOM INC (b) 26,520 60,632 800 QLOGIC CORP (b) 21,624 29,384 25,650 QUALCOMM INC 500,566 1,087,560 800 RAMBUS INC DEL (b) 18,880 18,400 8,000 RED HAT INC (b) 157,488 106,800 2,500 SANDISK CORP (b) 61,884 62,425 7,000 SANMINA SCI CORP (b) 55,497 59,290 2,100 SCIENTIFIC ATLANTA INC 34,731 69,321 23,000 SIEBEL SYS INC (b) 192,951 241,500 300 SILICON LABORATORIES INC (b) 14,157 10,593 40,900 SOLECTRON CORP (b) 225,892 217,997 1,300 STORAGE TECHNOLOGY CORP (b) 16,853 41,093 46,525 SUN MICROSYSTEMS INC (b) 196,174 250,305 4,700 SUNGARD DATA SYS INC (b) 124,990 133,151 14,400 SYMANTEC CORP (b) 70,951 370,944 1,525 SYMBOL TECHNOLOGIES INC 18,821 26,383 1,600 SYNOPSYS INC (b) 26,568 31,392 1,100 TEKTRONIX INC 20,167 33,231 See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Growth Fund December 31, 2004 Face Percent amount Coupon Fair of or shares Security rate Cost value (a) net assets - ----------------------------------------------------------------- ----------- ------------- ------------ ------------- 5,150 TELLABS INC (b) $ 27,562 44,239 1,600 TERADYNE INC (b) 39,575 27,312 27,900 TEXAS INSTRS INC 579,371 686,898 2,400 UNISYS CORP (b) 22,263 24,432 1,300 UTSTARCOM INC (b) 39,599 28,795 10,900 VERISIGN INC (b) 60,947 365,368 7,100 VERITAS SOFTWARE CORP (b) 130,507 202,705 10,700 VISHAY INTERTECHNOLOGY INC (b) 182,269 160,714 2,600 WATERS CORP (b) 60,997 121,654 12,050 XEROX CORP (b) 112,157 204,971 13,050 XILINX INC 92,297 386,933 17,300 YAHOO INC (b) 282,368 651,864 200 ZEBRA TECHNOLOGIES CORP (b) 10,256 11,256 ------------- ------------ 15,609,700 29,551,127 14.59% ------------- ------------ Materials: 2,150 AIR PRODS & CHEMS INC 88,635 124,636 13,200 ALCOA INC 361,740 414,744 3,100 ARCH COAL INC 55,785 110,174 1,600 BALL CORP 12,499 70,368 4,200 BEMIS CO INC 93,645 122,178 1,300 BOWATER INC 52,068 57,161 11,650 DOW CHEM CO 361,413 576,792 13,425 DU PONT E I DE NEMOURS & CO 546,155 658,495 146 EAGLE MATLS INC 1,727 12,607 491 EAGLE MATLS INC 5,711 41,391 1,000 EASTMAN CHEM CO 32,854 57,730 1,200 ECOLAB INC 33,060 42,156 1,600 ENGELHARD CORP 27,734 49,072 450 FLORIDA ROCK INDS INC 16,401 26,789 3,100 FREEPORT MCMORAN COPPER & GOLD 100,843 118,513 3,300 GEORGIA PAC CORP 111,576 123,684 12,625 INTERNATIONAL FLAVOURS 271,595 540,855 8,531 INTERNATIONAL PAPER CO 312,681 358,302 500 LAFARGE NORTH AMERICA INC 18,050 25,660 300 LUBRIZOL CORP 9,393 11,058 8,050 LYONDELL CHEMICAL CO 102,700 232,806 700 MARTIN MARIETTA MATLS INC 27,965 37,562 3,875 MEADWESTVACO CORP 86,711 131,324 5,808 MONSANTO CO NEW 51,490 322,634 131 NEENAH PAPER INC (b) 4,149 4,271 7,400 NEWMONT MNG CORP 102,657 328,634 4,400 NUCOR CORP 154,139 230,296 12,800 OM GROUP INC (b) 64,857 414,976 1,500 OWENS ILL INC (b) 17,700 33,975 2,450 PACTIV CORP (b) 22,665 61,961 800 PEABODY ENERGY CORP (b) 64,712 64,728 2,100 PHELPS DODGE CORP 60,900 207,732 2,450 PPG INDS INC 99,173 166,992 4,150 PRAXAIR INC 119,436 183,223 3,431 RAYONIER INC 111,096 167,810 2,200 ROHM & HAAS CO 78,122 97,306 11,000 RPM INTL INC 113,012 216,260 1,200 SEALED AIR CORP NEW (b) 58,956 63,924 200 SIGMA ALDRICH 11,098 12,092 18,200 SMURFIT STONE CONTAINER CORP (b) 203,147 339,975 3,600 SONOCO PRODS CO (b) 74,519 106,740 400 TEMPLE INLAND INC 20,104 27,360 1,000 UNITED STS STL CORP NEW (b) 49,030 51,250 See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Growth Fund December 31, 2004 Face Percent amount Coupon Fair of or shares Security rate Cost value (a) net assets - ----------------------------------------------------------------- ----------- ------------- ------------ ------------- 1,300 VULCAN MATLS CO $ 56,979 70,993 500 WORTHINGTON INDS IN 10,755 9,790 ------------- ------------ 4,279,637 7,126,979 3.52% ------------- ------------ Telecommunication services: 3,700 AMERICAN TOWER CORP (b) 34,854 68,080 13,800 AT&T CORP 271,938 263,028 24,950 BELLSOUTH CORP 657,974 693,361 7,450 CENTURYTEL INC (b) 200,627 264,252 11,525 CITIZENS COMMUNICATIONS CO 88,166 158,930 600 CROWN CASTLE INTL CORP (b) 9,234 9,984 15,900 LEVEL 3 COMMUNICATIONS INC (b) 51,198 53,901 19,525 NEXTEL COMMUNICATIONS INC (b) 381,377 585,750 600 NTL INC DEL (b) 26,690 43,776 19,200 QWEST COMMUNICATIONS INTL INC (b) 69,610 85,248 48,637 SBC COMMUNICATIONS INC 1,179,123 1,253,375 35,112 SPRINT CORP 375,799 872,533 1,300 TELEPHONE & DATA SYS INC 53,404 100,035 1,225 UNITED STATES CELLULAR CORP (b) 29,157 54,831 40,900 VERIZON COMMUNICATIONS 1,527,871 1,656,858 14,700 VODAFONE GROUP PLC NEW (d) 148,350 402,486 ------------- ------------ 5,105,372 6,566,428 3.24% ------------- ------------ Utilities: 5,400 AES CORP (b) 45,256 73,818 800 AGL RES INC 22,424 26,592 308 ALLETE INC 8,794 11,319 5,400 AMEREN CORP 209,724 270,756 2,000 AMERICAN ELEC PWR INC 60,960 68,680 1,100 CENTERPOINT ENERGY INC 10,472 12,430 1,400 CONSOLIDATED EDISON INC 61,145 61,250 600 CONSTELLATION ENERGY GROUP INC 16,047 26,226 3,100 DOMINION RES INC VA NEW 192,790 209,994 2,300 DTE ENERGY CO 84,036 99,199 15,600 DUKE ENERGY CO 252,328 395,148 9,425 EDISON INTL 108,441 301,883 13,900 EL PASO CORP 103,337 144,560 9,400 ENTERGY CORP 184,383 635,346 6,500 EXELON CORP 245,607 286,455 3,200 FIRSTENERGY CORP 123,727 126,432 1,100 FPL GROUP INC 80,168 82,225 800 GREAT PLAINS ENERGY INC 19,079 24,224 2,200 KEYSPAN CORP 55,617 86,790 900 NATIONAL FUEL GAS CO N J (b) 20,790 25,506 6,900 NISOURCE INC 111,901 157,182 2,400 OGE ENERGY CORP (b) 43,344 63,624 8,200 PEOPLES ENERGY CORP 334,284 360,390 828 PEPCO HLDGS INC 16,557 17,653 9,800 PG&E CORP 131,785 326,144 2,400 PINNACLE WEST CAP CORP 71,637 106,584 425 PPL CORP 13,588 22,644 2,150 PROGRESS ENERGY INC 65,685 97,266 7,350 PUGET ENERGY INC 149,926 181,545 2,900 QUESTAR CORP 66,188 147,784 1,700 RELIANT ENERGY INC (b) 14,195 23,205 8,600 SOUTHERN CO 176,010 288,272 7,600 TECO ENERGY INC 90,842 116,584 15,700 TXU CORP 284,986 1,013,591 1,500 UGI CORP NEW 48,600 61,365 6,100 WILLIAMS COS INC 47,432 99,369 See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Growth Fund December 31, 2004 Face Percent amount Coupon Fair of or shares Security rate Cost value (a) net assets - ----------------------------------------------------------------- ------------ ------------- ------------- ------------- 19,275 WISCONSIN ENERGY CORP $ 371,659 649,760 12,125 XCEL ENERGY INC 108,917 220,675 ------------- ------------- 4,052,661 6,922,470 3.42% ------------- ------------- Rights/warrants: 4,286 LUCENT TECHNOLOGIES INC (b) -- 6,772 ------------- ------------- -- 6,772 0.00% ------------- ------------- Cash equivalents: 1,929,927 SSGA MONEY MARKET FUND 1.832 1,929,927 1,929,927 0.95% ------------- ------------- ------------- Grand total (c) $118,938,693 203,228,952 100.32% ============= ============= ============= Notes to schedule of investments: (a) Securities are valued in accordance with procedures described in note 2 to the financial statements. (b) Currently nonincome-producing assets. (c) At December 31, 2004, the cost for federal income tax purposes was $118,938,693. The aggregate gross unrealized appreciation and depreciation of investments in securities based of this cost were as follows: Gross unrealized appreciation 85,472,839 Gross unrealized depreciation (1,182,579) ------------- Net unrealized appreciation 84,290,260 ============= (d) Foreign security values are stated in U.S. dollars. As of December 31, 2004, the value of foreign securities represented 0.72% of net assets. See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Growth Fund December 31, 2004 Clearwater Growth Fund Portfolio Diversification (as a percemtage of Net assets) [GRAPHIC OMITTED] Consumer Discretionary 13% Consumer Staples 7% Energy 7% Financials 22% Healthcare 13% Industrials 12% Information Technology 15% Materials 4% Telecom 3% Utilities 3% Cash 1% See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Small Cap Fund December 31, 2004 Face Percent amount Coupon Fair of or shares Security rate Cost value (a) net assets - ----------------------------------------------------------------- ------------ ------------ ------------- ------------ Common stocks: Consumer discretionary: 120,850 AQUANTIVE INC (b) $ 1,224,153 1,080,399 40,000 ASHWORTH INC (b) 336,789 435,600 5,700 BANDAG INC 243,523 283,917 47,300 BOMBAY COMPANY INC (b) 245,590 261,569 185,800 CHARLOTTE RUSSE HLDG INC (b) 2,140,221 1,876,580 89,300 EMERSON RADIO CORP (b) 310,393 334,875 106,500 GAMESTOP CORP (b) 1,840,509 2,381,339 60,550 GENESCO INC (b) 1,136,872 1,885,527 50,000 HANCOCK FABRICS INC 498,418 518,500 249,450 HARTMARX CORP (b) 1,314,484 1,938,227 66,450 HELEN OF TROY LTD (b) 1,318,062 2,233,385 51,500 IMPCO TECHNOLOGIES INC (b) 278,666 388,825 32,500 K SWISS INC 641,241 946,400 156,750 LA QUINTA CORP (b) 821,316 1,424,858 25,450 NOBLE INTL LTD (b) 477,722 518,926 62,050 PEP BOYS MANNY MOE & JACK 960,705 1,059,194 56,000 PHOENIX FOOTWEAR GROUP INC (b) 578,558 435,680 64,978 RC2 CORP (b) 1,566,119 2,118,282 74,200 RUSH ENTERPRISES INC (b) 895,157 1,284,402 55,800 RUSH ENTERPRISES INC (b) 739,350 905,634 76,900 STAGE STORES INC (b) 2,059,071 3,192,887 46,550 TOO INC (b) 1,140,440 1,138,613 60,200 WEST MARINE INC (b) 1,079,343 1,489,950 ------------ ------------- 21,846,702 28,133,569 13.19% ------------ ------------- Consumer staples: 18,972 CCA INDS INC 154,439 217,040 206,550 CHIQUITA BRANDS INTL INC 3,730,766 4,556,493 55,900 NBTY INC (b) 1,330,784 1,342,159 38,250 SANFILIPPO JOHN B & SON INC (b) 817,121 986,085 75,000 SUNOPTA INC (b) 458,565 538,500 ------------ ------------- 6,491,675 7,640,277 3.58% ------------ ------------- Energy: 62,650 DENBURY RES INC (b) 1,011,943 1,719,743 40,000 EDGE PETE CORP DEL (b) 574,869 583,200 52,100 FOREST OIL CORP (b) 1,291,066 1,652,612 5,700 GIANT INDS INC (b) 104,973 151,107 6,000 LUFKIN INDS INC 212,994 239,448 109,400 OIL STATES INTL INC (b) 1,389,797 2,110,325 60,650 REMINGTON OIL GAS CORP (b) 1,137,562 1,652,713 160,350 SUPERIOR ENERGY SVCS INC (b) 1,581,317 2,470,994 64,300 TSAKOS ENERGY NAVIGATION LTD (d) 1,489,574 2,301,296 28,350 UNIVERSAL COMPRESSION HLDGS (b) 1,007,843 989,699 18,500 WILLBROS GROUP INC (b) 261,747 426,425 ------------ ------------- 10,063,685 14,297,562 6.70% ------------ ------------- Financials: 35,000 AMERICAN EQUITY INVT LIFE (b) 376,236 376,950 34,150 COMPUCREDIT CORP (b) 791,799 933,661 191,700 EAGLE HOSPITALITY PPTYS TR INC (b) 1,867,987 1,974,510 142,450 EDUCATION LENDING GROUP INC (b) 1,880,679 2,209,400 58,250 ENCORE CAP GROUP INC (b) 785,325 1,385,185 20,650 FEDERAL AGRIC MTG CORP 422,806 481,145 40,000 FIRST CMNTY BANCORP CALIF 1,361,551 1,708,000 14,500 GRAMERCY CAP CORP (b) 256,758 298,700 27,150 GREATER BAY BANCORP 505,622 756,942 36,350 IPC HOLDINGS LTD BERMUDA (d) 796,538 1,581,589 250,000 JAMESON INNS INC (b) 481,000 492,500 See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Small Cap Fund December 31, 2004 Face Percent amount Coupon Fair of or shares Security rate Cost value (a) net assets - ----------------------------------------------------------------- ------------ ------------ ------------- ------------ 171,080 MFA MTG INVTS INC $ 1,620,781 1,508,926 127,750 ONE LIBRTY PROPERTIES INC 2,156,215 2,646,979 30,750 PROVIDENT BANKSHARES CORP 924,622 1,118,378 37,900 QUINTON CARDIOLOGY SYS INC (b) 309,102 400,224 37,150 REINSURANCE GROUP AMER INC 1,097,672 1,799,918 59,050 SELECTIVE INS GROUP INC 1,444,843 2,612,371 45,000 SOUTHERN CT BANCORP INC (b) 382,861 369,000 6,000 SOUTHSIDE BANCSHARES INC 131,113 137,100 30,000 SUSSEX BANCORP (b) 427,500 470,700 114,016 W HLDG CO INC 1,529,401 2,615,517 30,000 WINDROSE MED PPTYS TR 328,500 432,300 ------------ ------------- 19,878,911 26,309,995 12.34% ------------ ------------- Healthcare: 19,700 AMERIGROUP CORP (b) 818,196 1,490,502 45,200 ANDRX CORP DEL (b) 905,945 986,716 54,200 ANGIOTECH PHARMACEUTICALS INC (b) 1,039,424 999,990 142,650 BIOSOURCE INTL INC (b) 886,263 984,285 15,000 CHOLESTECH CORP 120,300 122,115 169,800 CHRONIMED INC 1,263,852 1,108,794 52,000 COMPEX TECHNOLOGIES INC (b) 299,261 242,840 287,400 DRAXIS HEALTH INC (b) 1,253,869 1,425,504 75,000 HARVARD BIOSCIENCE INC (b) 335,001 347,250 67,000 HEALTHTRONICS INC (b) 500,483 712,210 85,850 K V PHARMACEUTICAL COMPANY (b) 1,347,307 1,892,993 49,000 KENDLE INTL INC (b) 343,814 431,200 27,500 LIFECORE BIOMEDICAL INC (b) 249,469 309,650 474,050 NORTH AMERN SCIENTIFIC INC (b) 3,180,274 2,555,129 21,000 OPTION CARE INC 280,268 360,990 95,939 ORTHOLOGIC CORP (b) 290,179 599,619 35,250 PAR PHARMACEUTICAL COS INC (b) 1,348,130 1,458,644 25,700 PERRIGO CO (b) 448,623 443,839 37,650 PHARMACEUTICAL PROD DEV INC (b) 1,092,401 1,554,569 77,200 PROVINCE HEALTHCARE CO (b) 923,062 1,725,420 122,850 QLT INC (b) 1,973,498 1,975,427 11,700 QUIGLEY CORP (b) 97,125 98,608 43,550 REHABCARE GROUP INC (b) 629,032 1,218,965 27,500 SCHICK TECHNOLOGIES INC (b) 324,688 433,125 26,900 STERIS CORP (b) 541,918 638,068 61,350 VITAL IMAGES INC (b) 630,388 1,027,613 ------------ ------------- 21,122,770 25,144,065 11.79% ------------ ------------- Industrials: 16,400 ALAMO GROUP INC 288,803 445,424 6,200 AMERICAN SCIENCE & ENGR INC (b) 118,025 255,502 56,000 ARMOR HLDGS INC (b) 2,191,395 2,633,120 95,250 BELDEN CDT INC 1,977,251 2,209,800 5,500 CASCADE CORP 156,031 219,725 131,800 COVENANT TRANS INC (b) 2,181,125 2,744,076 37,500 CPI AEROSTRUCTURES INC (b) 386,090 429,375 64,122 DONNELLEY R R & SONS CO 1,053,958 2,262,865 12,500 DREW INDS INC NEW (b) 407,923 452,125 25,400 DYNAMEX INC (b) 380,976 470,662 19,250 ELKCORP 512,881 658,735 32,500 ENCORE WIRE CORP (b) 395,981 433,225 20,000 ENNIS INC 387,664 385,000 31,000 EVCI CAREER COLLEGES INC (b) 290,851 296,360 268,900 FRONTIER AIRLS INC NEW (b) 2,604,242 3,068,149 11,250 GEHL CO (b) 223,664 262,688 30,000 GENERALE CABLE CORP DEL NEW (b) 373,507 415,500 12,500 GEO GROUP INC (b) 278,076 332,250 See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Small Cap Fund December 31, 2004 Face Percent amount Coupon Fair of or shares Security rate Cost value (a) net assets - ----------------------------------------------------------------- ------------ ------------ ------------- ------------ 40,000 GLOBAL PWR EQUIP GROUP INC (b) $ 353,156 393,600 100,650 GRIFFON CORP (b) 1,848,633 2,717,550 50,000 HARDINGE INC (b) 552,500 675,000 38,350 HARLAND JOHN H CO 1,083,384 1,384,435 52,400 ICT GROUP INC (b) 423,778 508,856 56,650 IMAGISTICS INTL INC (b) 1,843,759 1,906,839 207,600 INTL SHIPPING ENTERPRISES INC (b) 1,245,600 1,370,160 61,950 LABOR READY INC (b) 551,659 1,048,194 34,900 LYDALL INC (b) 337,500 413,914 55,000 MAGNETEK INC (b) 340,242 379,500 21,500 METROLOGIC INSTRS INC (b) 318,497 456,875 103,350 MNFRASOURCE SVCS INC (b) 1,118,759 1,343,550 19,950 NAVIGANT CONSULTING CO (b) 207,560 530,670 143,600 P A M TRANSN SVCS INC (b) 2,884,360 2,692,500 116,500 PACER INTL INC TN (b) 2,275,337 2,476,790 30,000 PERINI CORP (b) 412,500 500,700 31,700 PURE CYCLE CORP (b) 284,372 278,960 50,100 SPHERION CORP (b) 386,777 420,840 18,000 SUN HYDRAULICS INC (b) 232,801 287,460 41,800 TELEFLEX INC 1,886,158 2,171,092 ------------ ------------- 32,795,775 39,932,066 18.72% ------------ ------------- Information technology: 35,950 ANALOGIC CORP 1,595,460 1,610,201 37,650 ARBITRON INC (b) 1,426,447 1,475,127 207,750 ARRIS GROUP INC (b) 932,694 1,462,560 196,700 AUGUST TECHNOLOGY CORP (b) 2,550,744 2,071,251 17,700 AVID TECHNOLOGY INC (b) 800,413 1,092,975 166,700 BROOKTROUT INC (b) 1,211,062 2,002,067 47,100 CAPTIVA SOFTWARE CORP DEL (b) 420,882 480,420 195,750 CREDENCE SYSTEMS CORP (b) 2,080,567 1,791,113 36,500 DIGITAS INC (b) 268,056 348,575 146,800 ENTEGRIS INC (b) 1,549,013 1,460,660 98,700 FOUNDRY NETWORKS INC (b) 988,199 1,298,892 206,150 GENESIS MICROCHIP INC DEL (b) 2,916,212 3,343,753 33,000 HYPERCOM CORP (b) 240,419 195,360 134,150 INFOCUS CORP (b) 1,019,110 1,228,814 76,000 INNOVEX INC (b) 356,107 414,200 202,059 INTEGRATED DEVICE TECHNOLOGY (b) 2,528,965 2,335,802 42,125 INTERMAGNETICS GEN CORP (b) 692,021 1,070,396 64,600 INTEVAC INC (b) 294,732 488,376 27,500 MAPICS INC (b) 253,764 290,125 90,700 MERIX CORP (b) 994,260 1,044,864 56,000 MICROTUNE INC DEL (b) 184,194 342,160 52,500 MIND CTI (b) 240,887 305,550 165,850 MPS GROUP INC (b) 1,372,720 2,033,321 103,200 NETGEAR INC (b) 1,627,830 1,877,208 42,000 PC TEL INC (b) 411,875 333,060 27,800 PHOTRONICS INC (b) 367,973 458,700 219,100 QUOVADX INC (b) 360,049 523,649 50,300 RADISYS CORP (b) 626,801 983,365 375,503 REMEC INC (b) 2,377,479 2,707,377 9,500 ROFIN SINAR TECHNOLOGIES INC (b) 199,998 403,275 29,500 SBS TECHNOLOGIES INC (b) 331,673 411,820 77,000 SIMPLETECH INC (b) 375,799 354,200 156,600 SKYWORKS SOLUTIONS INC (b) 1,360,017 1,476,738 64,100 SYPRIS SOLUTIONS INC 821,571 981,371 118,350 TRIDENT MICROSYSTEMS INC (b) 1,241,974 1,978,812 181,800 TRIZETTO GROUP INC (b) 1,198,557 1,727,100 25,000 TSR INC 161,633 212,250 See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Small Cap Fund December 31, 2004 Face Percent amount Coupon Fair of or shares Security rate Cost value (a) net assets - ---------------------------------------------------------------------- ------------ ------------- ------------- ------------- 86,750 TTM TECHNOLOGIES (b) $ 886,100 1,023,650 48,350 VIASAT INC (b) 753,794 1,173,454 80,000 WATCHGUARD TECHNOLOGIES INC (b) 352,617 354,400 113,800 ZORAN CORP (b) 1,737,347 1,317,803 31,500 ZYGO CORP (b) 334,158 371,385 ------------- ------------- 40,444,173 46,856,179 21.97% ------------- ------------- Materials: 55,450 AIRGAS INC 1,183,576 1,469,980 8,500 BALCHEM CORP 242,505 294,865 36,650 CLEVELAND CLIFFS INC (b) 1,815,360 3,806,469 44,100 COMMERCIAL METALS CO 1,204,602 2,229,696 45,000 EAGLE MATLS INC 3,088,719 3,885,750 8,350 GEORGIA GULF CORP 221,113 415,830 62,350 GIBRALTAR INDS INC 1,011,458 1,472,707 13,800 NORTHWEST PIPE CO (b) 273,150 344,310 ------------- ------------- 9,040,483 13,919,607 6.53% ------------- ------------- Utilities: 39,700 CONNECTICUT WTR SVC INC 722,679 1,051,653 46,400 GREAT PLAINS ENERGY INC 1,158,407 1,404,992 70,775 MDU RES GROUP INC 1,374,254 1,888,277 73,750 ONEOK INC NEW 1,431,395 2,095,975 66,200 SEMCO ENERGY INC (b) 370,177 353,508 ------------- ------------- 5,056,912 6,794,405 3.19% ------------- ------------- Rights/Warrants: Healthcare: 18,541 DEL GLOBAL TECHNOLOGIES CORP (b) 4,635 19,468 0.01% ------------- ------------- 4,635 19,468 ------------- ------------- Corporate Bonds: Healthcare: 52,871 DEL GLOBAL TECHNOLOGIES CORP (b) MATURING MARCH 28, 2007, ZERO COUPON (e) 6.000 29,349 33,663 ------------- ------------- 29,349 33,663 0.02% ------------- ------------- Cash equivalents: 11,346,399 SSGA MONEY MARKET FUND 2.000 11,346,399 11,346,399 5.32% ------------- ------------- ------------- $ 178,121,469 220,427,255 103.35% ============= ============= ============= Notes to schedule of investments: (a) Securities are valued in accordance with procedures described in note 2 to the financial statements. (b) Currently nonincome-producing assets. (c) At December 31, 2004, the cost for federal income tax purposes was $178,121,469. The aggregate gross unrealized appreciation and depreciation of investments in securities based on this cost were as follows: Gross unrealized appreciation $ 45,714,671 Gross unrealized depreciation (3,408,885) ------------- $ 42,305,786 ============= (d) Foreign security values are stated in U.S. dollars. As of December 31, 2004, the value of foreign securities represented 1.82% of net assets. (e) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on the date of acquisition. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Small Cap Fund December 31, 2004 Clearwater Small Cap Fund Portfolio Diversification (as a percemtage of Net assets) [GRAPHIC OMITTED] Consumer Discretionary 13% Consumer Staples 3% Energy 6% Financials 12% Healthcare 11% Industrials 19% Information Technology 22% Materials 6% Telecom 3% Utilities 0% Cash 5% See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Tax-Exempt Bond Fund December 31, 2004 Face Percent amount Maturity Coupon Fair of or shares Security date rate Cost Value (a) net assets - ------------- ------------------------------------------ ----------- ----------- ------------- ------------- ------------ Closed-end funds: 30,000 BLACKROCK INSD MUN 2008 $ 425,080 489,300 ------------- ------------- 425,080 489,300 0.26% ------------- ------------- Municipal bonds: 950,000 ABILENE TX HLTH FACS DEV CORP 11/15/2028 5.250 950,049 950,922 220,000 AKRON OH CTFS PARTN 12/1/2016 6.900 201,753 235,981 190,000 AKRON OH CTFS PARTN 12/1/2007 6.500 202,749 206,144 200,000 ALABAMA SPL CARE FACS FING 11/1/2019 5.000 211,979 216,844 650,000 ALASKA ST HSG FIN CORP (c) 12/1/2027 6.254 158,342 155,935 995,000 ALASKA ST HSG FIN CORP (c) 12/1/2017 6.239 451,261 478,754 500,000 ALEXANDRIA VA REDEV & HSG AUTH 10/1/2029 6.125 530,675 530,510 400,000 ALLEGHENY CNTY PA HOSP DEV 4/1/2007 3.100 396,994 401,504 300,000 ALLEGHENY CNTY PA HOSP DEV 4/1/2008 3.300 295,908 299,715 340,000 ALLEGHENY CNTY PA HOSP DEV 4/1/2009 3.500 333,421 339,653 350,000 ALLEGHENY CNTY PA HOSP DEV 4/1/2010 3.875 341,473 352,352 225,000 ALLEGHENY CNTY PA HOSP DEV 4/1/2005 2.500 225,000 224,881 500,000 ALLEGHENY CNTY PA RSDTL MTG RE 10/1/2036 6.350 521,484 508,715 280,000 ALTAMONTE SPRINGS FL HLTH FACS 11/15/2018 5.125 286,516 283,388 800,000 ARIZONA HEALTH FACS AUTH REV 11/15/2009 6.500 800,000 826,688 500,000 AUSTIN TX CONV ENTERPRISES 1/1/2023 6.000 522,086 530,825 500,000 AUSTIN TX CONVENTION ENTERPRIS 1/1/2016 6.375 503,765 528,500 50,000 AUSTIN TX UTIL SYS REV 5/15/2018 5.250 50,183 50,115 350,000 BAY AREA GOVT ASSOC CA REV 12/15/2014 6.000 362,982 363,055 125,000 BEAUMONT TX HSG AUTH MLT FAM 11/1/2010 6.750 120,531 117,341 550,000 BEAVER CNTY PA POLLUTN CTL REV 5/1/2020 7.750 583,546 583,055 755,000 BELLEFONTAINE OH HOSP REV 12/1/2013 6.000 771,037 764,709 225,000 BENTON HARBOR MI CHARTER 5/1/2009 10.000 225,000 222,280 550,000 BEVERLY HILLS CA PUB FIN AUTH 6/1/2023 5.000 554,311 568,178 650,000 BEXAR CNTY TX HSG FIN CORP MF 8/1/2030 8.125 625,517 593,073 1,240,000 BEXAR CNTY TX HSG FIN CORP MF 6/1/2031 10.500 1,240,000 1,188,055 545,000 BEXAR CNTY TX HSG FIN CORP MF 9/15/2021 8.750 545,000 519,478 1,155,000 BEXAR CNTY TX HSG FIN CORP MF 12/1/2036 9.250 1,126,025 1,128,827 815,000 BEXAR CNTY TX HSG FIN CORP MF 4/1/2030 9.000 814,350 771,194 970,000 BEXAR CNTY TX REV 8/15/2022 5.750 1,045,403 1,046,406 750,000 BIRMINGHAM BAPTIST MED CTR AL 8/15/2023 5.500 763,939 752,303 700,000 BRISTOL CT RES RECOVERY FAC 7/1/2014 6.500 748,918 727,944 250,000 BROADVIEW IL TAX INCREMENT 7/1/2007 5.000 253,161 256,940 125,000 BROWNSVILLE TX (c) 2/15/2011 4.887 92,633 91,490 185,000 BULLHEAD CITY AZ SPL ASSMT 1/1/2010 6.100 187,837 189,486 65,000 CALCASIEU PARISH LA PUB TR AUT 11/1/2012 6.875 65,544 65,283 200,000 CALEXICO CA CMNTY REDEV AGY 8/1/2026 5.375 208,585 215,498 400,000 CALIFORNIA CMNTYS HSG FIN AGY 8/1/2011 5.000 398,089 408,272 650,000 CALIFORNIA CMNTYS HSG FIN AGY 12/1/2011 5.000 648,380 663,975 600,000 CALIFORNIA CMNTYS HSG FIN AGY 10/1/2011 5.000 598,533 612,672 225,000 CALIFORNIA CNTY 6/1/2023 5.625 214,212 218,021 1,325,000 CALIFORNIA CNTY CALIF TOB 6/1/2019 4.750 1,277,044 1,329,054 500,000 CALIFORNIA HEALTH FACS FING 8/1/2027 5.125 522,365 524,605 165,000 CALIFORNIA ST 10/1/2020 5.250 170,341 169,348 500,000 CALIFORNIA ST DEPT WTR RES 7/1/2022 5.250 505,878 500,650 580,000 CALIFORNIA ST DEPT WTR RES CEN 12/1/2022 5.000 584,798 597,313 350,000 CALIFORNIA ST DEPT WTR RES VY 12/1/2027 5.375 367,115 370,104 650,000 CALIFORNIA ST ECONOMIC REC 7/1/2017 5.000 668,911 692,816 375,000 CALIFORNIA ST PUB WKS LEASE 6/1/2021 5.500 383,370 378,304 1,000,000 CALIFORNIA ST PUB WKS LEASE 1/1/2017 5.500 1,062,801 1,050,949 1,250,000 CALIFORNIA STATEWIDE CMNTYS 1/1/2012 5.625 1,250,000 1,250,474 1,500,000 CALIFORNIA STATEWIDE CMNTYS 10/1/2020 11.000 1,500,000 1,519,199 500,000 CALIFORNIA STWDE CMNTYS DEV 1/1/2024 5.350 508,472 505,940 100,000 CAPITAL REGION CMNTY DEV DIST 5/1/2006 5.950 99,935 100,263 400,000 CAPITAL TR AGY FL REV 10/1/2007 8.500 400,000 420,492 500,000 CAPITAL TR AGY FL REV 10/1/2033 8.950 500,000 569,700 500,000 CAPITAL TR AGY FLA MULTIFAMILY 6/1/2013 4.750 500,000 481,005 1,000,000 CARVER CNTY MN HSG & REDEV 8/1/2027 5.875 945,675 1,031,059 630,000 CEDAR RAPIDS IA PLTN CTL REV 11/1/2023 5.500 647,006 637,711 400,000 CHARTIERS VALLEY PA INDL 8/15/2012 5.000 396,229 402,136 650,000 CHESAPEAKE VA HOSP AUTH HOSP 7/1/2016 4.250 638,365 640,699 450,000 CHESTERFIELD CNTY VA INDL DEV 7/1/2019 5.200 406,551 471,753 250,000 CHESTERFIELD CNTY VA INDL DEV 6/1/2017 5.875 258,433 275,255 250,000 CHESTERFIELD MO REV 4/15/2016 4.500 248,666 251,645 220,000 CHICAGO IL 1/1/2025 5.125 227,631 228,109 See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Tax-Exempt Bond Fund December 31, 2004 Face Percent amount Maturity Coupon Fair of or shares Security date rate Cost Value (a) net assets - ------------- ------------------------------------------ ----------- ----------- ------------- ------------- ------------ 1,500,000 CHICAGO IL GAS SUPPLY REV 6/1/2025 6.100 $ 1,592,864 1,551,629 1,000,000 CHICAGO IL GAS SUPPLY REV 6/1/2025 6.100 1,065,981 1,033,279 150,000 CHICAGO IL MET HSG DEV CORP 7/1/2022 6.850 155,268 151,256 150,000 CHICAGO IL OHARE INTL ARPT REV 1/1/2015 6.375 154,021 153,090 415,000 CHICAGO IL OHARE INTL ARPT REV 1/1/2018 5.000 429,095 419,934 100,000 CHICAGO IL OHARE INTL ARPT REV 1/1/2013 5.000 101,389 101,213 500,000 CHICAGO IL SKYWAY TOLL BRDG 1/1/2023 5.500 535,662 533,615 1,000,000 CHICAGO IL TAX INCREMENT 12/1/2008 6.500 978,938 1,079,419 500,000 CITIZEN POTAWATOMI NATION OK 9/1/2016 6.500 500,000 507,375 250,000 CITY OF DEARBORN HEIGHTS BUILD 10/1/2027 5.150 259,476 253,573 950,000 CLARK CNTY NV INDL DEV REV 10/1/2022 7.200 961,590 988,048 500,000 CLARK CNTY NV POLLUTN CTL REV 6/1/2019 6.600 521,581 501,870 745,000 CLAY CNTY IL HOSP REV 12/1/2018 5.700 745,000 738,824 500,000 CLEVELAND CUYAHOGA CNTY OH 5/15/2023 5.250 500,000 503,375 685,000 COLLIER CNTY FL CAP IMPT REV 10/1/2006 5.750 701,791 700,734 275,000 COLORADO EDL & CULTURAL FACS 6/15/2012 4.625 269,074 269,478 250,000 COLORADO HEALTH FACS AUTH REV 12/1/2007 6.200 260,033 259,953 295,000 COLORADO HEALTH FACS AUTH REV 12/1/2008 4.400 291,864 302,599 1,000,000 COLORADO HEALTH FACS AUTH REV 10/1/2027 5.900 1,015,498 1,065,349 330,000 COLORADO HEALTH FACS AUTH REV 9/1/2025 6.125 173,215 169,814 385,000 COLORADO HEALTH FACS AUTH REV 9/1/2025 6.125 404,168 402,718 575,000 COLORADO HEALTH FACS AUTH REV 12/1/2010 6.250 582,674 652,320 250,000 COLUMBUS IND SEW WKS REV 2/15/2009 7.125 261,378 256,490 150,000 COMANCHE CNTY OK HOSP AUTH REV 7/1/2023 5.375 153,744 152,735 500,000 CONCORDE ESTATES CMNTY DEV DIS 5/1/2011 5.000 497,299 501,175 505,000 CONNECTICUT ST HLTH & EDL FAC 11/1/2012 5.875 514,155 511,515 420,000 CONNECTICUT ST HLTH & EDL FACS 11/1/2012 5.875 426,566 424,889 230,000 CONNECTICUT ST HLTH & EDL FACS 7/1/2013 6.750 237,849 230,577 750,000 CONVERSE CNTY WY HOSP REV 12/1/2015 7.900 750,000 785,685 250,000 CORALVILLE IA 6/1/2018 5.000 247,576 252,310 275,000 COW CREEK BANK UMPQUA TRIBE 7/1/2012 5.100 262,240 281,119 1,070,000 CROW FIN AUTH MINN TRIBAL PUR 10/1/2017 5.650 1,007,082 1,119,123 100,000 CUYAHOGA CNTY OH HOSP REV 1/15/2016 5.500 105,905 105,038 400,000 DADE CNTY FL HLTH FAC HOSP REV 5/15/2021 5.250 405,964 402,672 200,000 DADE CNTY FL PUB FACS REV 6/1/2023 5.250 203,571 201,724 340,000 DADE CNTY FL WTR & SWR SYS REV 10/1/2025 5.500 357,296 353,229 270,000 DAKOTA CNTY MN HSG & REDEV 2/20/2032 6.875 281,264 291,049 50,000 DALLAS TX HSG CORP CAP PROGRAM 12/1/2009 7.750 50,481 51,121 70,000 DALLAS TX HSG CORP CAP PROGRAM 12/1/2009 7.875 70,000 72,147 502,000 DALLAS TX HSG FIN CORP 10/20/2032 6.750 518,915 548,254 350,000 DAYTON OH ARPT REV 12/1/2015 5.250 371,208 362,002 500,000 DAYTON OH SPL FACS REV 2/1/2018 5.625 536,709 538,285 300,000 DECATUR TX HOSP AUTH HOSP REV 9/1/2007 4.125 300,000 301,077 250,000 DECATUR TX HOSP AUTH HOSP REV 9/1/2013 5.625 245,797 248,035 250,000 DELAWARE CNTY PA AUTH HOSP REV 12/15/2020 6.000 252,408 252,218 215,000 DELAWARE CNTY PA AUTH HOSP REV 12/15/2020 5.300 222,150 217,511 500,000 DETROIT LAKES MN HSG & HEALTH 8/1/2034 1.000 500,000 501,940 1,250,000 DIRECTOR ST NV DEPT BUSINESS 11/15/2014 6.000 1,231,636 1,231,187 250,000 DISTRICT COLUMBIA REV 11/15/2026 5.750 266,373 264,780 560,000 DOUBLE BRANCH CMNTY DEV DIST 5/1/2008 5.125 558,554 566,726 17,383 DREW CNTY AR PUB FACS BRD 8/1/2011 7.750 17,382 17,397 930,000 EAGLE MOUNTAIN UT SPL ASSMT 2/1/2007 8.000 930,000 941,179 1,025,000 EAST CHERRY CREEK VY WTR & SAN 11/15/2034 1.690 1,025,000 1,025,000 800,000 EDEN PRAIRIE MN MLT FAM HSG 2/20/2043 6.200 876,471 867,952 400,000 EL PASO TX HEALTH FACS DEV 8/15/2012 7.000 400,000 430,420 500,000 ERIE CNTY OH HOSP FACS REV 8/15/2013 6.000 550,601 561,800 500,000 ESTHERVILLE IA HOSP REV 7/1/2020 6.300 513,235 546,035 800,000 FIDDLERS CREEK CMNTY DEV DIST 5/1/2013 5.750 793,436 815,456 365,000 FISHAWK CMNTY DEV DIST II 11/1/2007 5.000 364,030 370,712 700,000 FLORIDA HSG FIN CORP REV 10/1/2030 5.750 736,382 735,161 500,000 FONTANA CA TAX ALLOCATION REV 9/1/2024 5.625 515,887 509,225 200,000 FORT BEND VNTY TX MUN DIST NO 9/1/2015 5.900 205,813 204,372 250,000 FORT WORTH TX 3/1/2014 4.650 252,381 257,045 300,000 GA MUN ELEC RE R (c) 1/1/2012 5.495 205,166 210,321 500,000 GARDEN GROVE CA CTFS PARTN 8/1/2023 5.700 514,735 510,430 390,000 GATEWAY SVCS CMNTY DEV DIST FL 5/1/2010 5.500 387,322 395,647 500,000 GOLDEN ST TOB SECURIZATION COR 6/1/2016 5.250 508,483 504,655 585,000 GROVE CITY PA AREA HOSP AUTH 7/1/2012 5.250 584,216 593,015 500,000 HAWAII ST DEPT BUDGET & FIN 11/15/2009 6.750 500,000 517,000 500,000 HAWAII ST DEPT BUDGET & FIN SP 11/15/2009 6.250 500,000 502,860 See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Tax-Exempt Bond Fund December 31, 2004 Face Percent amount Maturity Coupon Fair of or shares Security date rate Cost Value (a) net assets - ------------- ------------------------------------------ ----------- ----------- ------------- ------------- ------------ 700,000 HERITAGE ISLE AT VIERA CMNTY 11/1/2009 5.000 $ 701,558 703,619 3,225,000 HIGHLAND CNTY FL HEALTH FACS 11/15/2034 1.930 3,224,391 3,225,000 150,000 HILLSBOROUGH CNTY FL 10/1/2005 2.500 150,054 150,020 250,000 HOUSTON TX 6/1/2027 6.400 274,959 273,723 350,000 HOUSTON TX HLTH FACS DEV CORP 2/15/2034 5.000 350,000 350,396 250,000 HOUSTON TX HLTH FACS DEV CORP 2/15/2034 4.750 250,000 250,155 850,000 HOUSTON TX HLTH FACS DEV CORP 2/15/2023 7.000 850,000 901,017 110,000 IDAHO HEALTH FACS AUTH HOSP 8/1/2010 6.000 110,980 112,501 120,000 IDAHO HEALTH FACS AUTH HOSP 8/1/2009 5.750 121,148 122,557 120,000 IDAHO HEALTH FACS AUTH REV 3/1/2007 5.000 120,603 122,248 105,000 IDAHO HEALTH FACS AUTH REV 3/1/2009 5.200 104,993 107,286 145,000 IDAHO HEALTH FACS AUTH REV 3/1/2011 5.400 144,298 147,661 155,000 IDAHO HEALTH FACS AUTH REV 3/1/2012 5.500 154,179 157,999 125,000 IDAHO HEALTH FACS AUTH REV 3/1/2010 5.300 124,434 128,023 125,000 IDAHO HEALTH FACS AUTH REV 3/1/2008 5.100 125,354 128,266 110,000 IDAHO HEALTH FACS AUTH REV 3/1/2005 4.800 110,096 110,201 1,000,000 ILLINOIS DEV FIN AUTH POLLUTN 8/15/2026 5.950 1,027,013 1,029,589 145,000 ILLINOIS DEV FIN AUTH POLLUTN 2/1/2024 5.700 149,162 148,271 1,300,000 ILLINOIS DEV FIN AUTH POLLUTN 3/1/2014 5.500 1,363,977 1,339,662 3,000,000 ILLINOIS DEV FIN AUTH REV 7/1/2019 6.050 3,086,495 3,132,659 250,000 ILLINOIS DEV FIN AUTH REV 7/1/2009 5.900 256,931 263,208 500,000 ILLINOIS FIN AUTH STUDENT HSG 6/1/2007 5.000 521,095 521,645 500,000 ILLINOIS HLTH FACS AUTH REV 11/15/2025 5.500 511,390 505,965 500,000 ILLINOIS HLTH FACS AUTH REV 2/15/2019 6.000 509,655 511,330 400,000 ILLINOIS HLTH FACS AUTH REV 12/1/2006 6.650 400,000 400,492 315,000 ILLINOIS HSG DEV AUTH ELDERLY 1/1/2007 6.625 315,009 315,671 250,000 ILLINOIS ST SALES TAX REV 6/15/2009 5.000 257,260 255,573 150,000 INDIANA HLTH FAC FING AUTH REV 8/15/2018 5.000 126,610 149,244 620,000 INDIANA HLTH FAC FING AUTH REV 8/15/2009 4.750 577,030 643,262 300,000 INDIANA HLTH FAC HOSP REV 1/1/2023 6.000 312,109 300,789 750,000 INDIANA HLTH FAC HOSP REV 8/1/2008 6.000 766,389 796,935 350,000 INDIANA HLTH FAC HOSP REV 2/15/2018 5.250 356,381 362,422 85,000 INDIANA HLTH FAC HOSP REV 2/15/2005 4.500 85,024 85,158 500,000 INDIANA TRANSN FIN ARPT LEASE 11/1/2016 6.250 536,695 501,475 300,000 INDIANA TRANSN FIN AUTH HWY 12/1/2025 5.375 316,200 324,651 300,000 INTERCOMMUNITY HOSP AUTH CA CT 11/1/2019 5.250 313,848 312,348 200,000 INTERLOCKEN MT CIST CO 12/15/2019 5.750 218,765 219,844 250,000 INTERMOUNTAIN PWR AGY UT REV 7/1/2017 5.250 253,982 253,153 200,000 IOWA FIN AUTH RETIREMENT CMNTY 11/15/2011 4.750 197,115 198,016 200,000 IOWA FIN AUTH RETIREMENT CMNTY 11/15/2009 4.250 197,830 198,654 250,000 JOHNSON CITY TN HEALTH & EDL 2/15/2009 4.500 247,668 247,985 290,000 JOPLIN MO INDL DEV AUTH HEALTH 2/15/2008 4.000 295,616 296,946 100,000 KANSAS CITY MO PORT AUTH FACS 10/1/2005 5.750 101,144 101,453 750,000 KING CNTY WASH HSG AUTH HSG 3/1/2026 7.200 789,796 770,610 100,000 LAMAR CNTY MS POLLUTN CTL REV 12/1/2006 4.850 102,151 101,952 250,000 LEHIGH CNTY PA GEN PURP AUTH 4/1/2017 6.650 265,816 262,503 250,000 LEHIGH CNTY PA INDL DEV AUTH 2/15/2027 5.500 256,237 255,520 200,000 LEHIGH CNTY PA INDL DEV AUTH 9/1/2029 6.400 207,806 204,392 300,000 LEWIS CNTY WA PUB HOSP DIST 12/1/2011 6.000 302,714 312,243 500,000 LEWISVILLE TX COMBINATION CONT 9/1/2012 5.750 515,556 557,360 150,000 LIMESTONE CNTY AL WTR AUTH 12/1/2020 5.250 153,170 151,772 185,000 LOMA LINDA CA HOSP REV 12/1/2022 5.375 190,396 188,929 800,000 LONG BEACH MISS URBAN RENEWAL 3/1/2026 8.000 800,000 440,000 100,000 LOS ANGELES CA CMNTY REDEV AGY 7/1/2007 4.875 101,790 101,220 400,000 LOUDOUN CNTY VA DEV INDL AUTH 8/1/2028 5.000 400,000 404,188 540,000 LOUISIANA LOC GOVT ENVIR FACS 6/20/2028 8.000 540,000 519,323 1,350,000 LOUISIANA PUB FACS AUTH REV 10/1/2011 6.250 1,196,430 1,342,885 250,000 LUBBOCK TX HLTH FACS DEV CORP 7/1/2023 5.000 252,363 254,873 250,000 LUBBOCK TX HLTH FACS DEV CORP 7/1/2019 5.250 253,799 263,715 170,000 LUBBOCK TX HLTH FACS DEV CORP 1/20/2010 5.000 170,000 177,302 265,000 LUBBOCK TX HLTH FACS DEV CORP 3/20/2012 5.000 265,000 283,431 350,000 LUCAS CNTY OH HEALTH CARE FAC 8/15/2015 6.375 338,501 377,440 550,000 LUCAS CNTY OH HEALTH CARE FAC 3/1/2027 4.100 550,000 551,518 565,000 MADISON CNTY AL BRD ED CAP 9/1/2016 5.200 590,956 586,594 500,000 MANCHESTER N H HSG & REDEV (c) 1/1/2020 5.248 229,519 226,810 750,000 MANCHESTER N H HSG & REDEV (c) 1/1/2021 6.000 290,014 305,633 250,000 MANCHESTER NH HSG & REDEV 1/1/2015 6.750 270,706 270,638 770,000 MARICOPA CNTY AZ INDL DEV 11/1/2010 9.000 770,000 774,143 500,000 MARICOPA CNTY AZ INDL DEV 7/1/2012 6.500 500,000 506,055 175,000 MARTIN CNTY FL SPL ASSMT REV 11/1/2015 6.100 184,130 178,185 See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Tax-Exempt Bond Fund December 31, 2004 Face Percent amount Maturity Coupon Fair of or shares Security date rate Cost Value (a) net assets - ------------- ------------------------------------------ ----------- ----------- ------------- ------------- ------------ 315,000 MARYLAND ST HLTH HIGH EDL FACS 7/1/2019 5.750 $ 328,347 324,258 150,000 MASHANTUCKET WESTERN PEQUOT (c) 9/1/2009 6.300 112,328 124,671 350,000 MASSACHUSETTS ST HLTH EDL FACS 11/15/2009 5.125 356,689 367,430 250,000 MASSACHUSETTS ST INDL FIN AGY 7/1/2026 5.125 252,745 252,343 1,000,000 MATTESON IL TAX INCREMENT REV 12/1/2009 4.250 1,000,000 999,090 250,000 MCKEAN CNTY PA HOSP AUTH REV 10/1/2013 6.000 255,571 255,243 115,000 MDAHO HEALTH FACS AUTH REV 3/1/2006 4.900 115,511 116,259 205,000 MECKLENBURG CNTY NC INDL FACS 12/1/2009 5.250 208,724 205,459 100,000 MEDITERRA NO CMNTY DEV DIST FL 5/1/2008 6.000 99,845 100,655 4,675,000 MENDOTA HEIGHTS MN HSG MTG REV 11/1/2031 0.800 4,675,000 4,675,000 855,000 MET GOVT NASHVILLE DAVIDSON TN (b) 6/20/2036 10.000 855,000 689,609 300,000 METROPOLITAN PIER & EXPO IL 6/15/2012 5.250 310,932 310,755 900,000 MIAMI BEACH FL HLTH FACS HOSP 11/15/2008 6.125 900,000 925,749 250,000 MICHIGAN ST HOSP FIN AUTH REV 10/15/2007 5.250 253,782 252,958 700,000 MICHIGAN ST STRATEGIC FD 6/1/2014 4.600 700,000 727,664 750,000 MISSOURI ST DEV FIN BRD FACS 4/1/2015 6.000 750,000 818,445 635,000 MONROE MCKEEN PLAZA HSG DEV LA 2/1/2012 6.800 640,094 648,665 500,000 MONTGOMERY AL MED CLINIC BRD 3/1/2015 7.000 506,999 501,220 95,000 MONTGOMERY AL MED CLINIC BRD 3/1/2006 7.375 95,105 95,247 500,000 MONTGOMERY AL SPL CARE FACS 9/1/2022 5.375 531,158 536,215 400,000 MORGAN CNTY COLO POLLUTN CTL 6/1/2012 5.500 403,272 401,112 200,000 MOUNT CARBON MET DIST CO REV 6/1/2043 1.000 -- -- 800,000 MOUNT CARBON MET DIST CO REV 6/1/2043 7.000 800,000 800,000 300,000 MOUNT DORA FL HEALTH FACS AUTH 8/15/2008 4.250 295,025 297,822 200,000 MOUNT DORA FLA HEALTH FACS 8/15/2007 3.750 198,761 199,568 520,000 MOUNTAIN REGL WTR SPL SVC DIST 12/1/2008 6.250 516,058 519,163 200,000 NEBRASKA INVT FIN AUTH REV 12/1/2011 5.125 212,217 213,254 140,000 NEW HAMPSHIRE HEALTH & ED 7/1/2011 5.000 141,308 145,386 480,000 NEW HAMPSHIRE HEALTH & ED 7/1/2016 5.000 477,483 483,514 60,000 NEW HAMPSHIRE ST HSG FIN AUTH (c) 1/1/2014 8.540 26,540 28,847 385,000 NEW JERSEY ECONOMIC DEV AUTH 7/1/2024 6.125 398,840 393,917 320,000 NEW JERSEY ECONOMIC DEV WTR 6/1/2023 5.350 327,162 323,158 250,000 NEW MEXICO HSG AUTH REGION 7/1/2017 6.000 250,000 249,890 115,000 NEW MEXICO MTG FIN AUTH 1/1/2026 6.950 121,574 119,739 500,000 NEW YORK NY 2/1/2017 5.750 531,875 522,115 320,000 NEW YORK ST DORM AUTH REVS 5/15/2017 6.000 323,687 328,096 120,000 NEW YORK ST DORM AUTH REVS 2/1/2012 4.000 120,000 120,460 1,500,000 NEW YORK ST DORM AUTH REVS 8/1/2024 5.750 1,587,954 1,579,634 15,000 NEW YORK ST ENVIRONMENTAL FACS 9/15/2011 7.100 15,155 15,061 750,000 NEW YORK ST MED CARE FACS FIN 11/1/2020 5.375 770,648 758,940 560,000 NORMAN OKLA REGL HOSP AUTH REV 9/1/2016 5.625 603,121 597,990 290,000 NORTH CAROLINA MUN PWR AGY 1/1/2017 5.125 304,463 308,247 250,000 NORTH FOREST INDPT SCH DIST 8/15/2012 6.125 267,617 258,435 500,000 NORTH FOREST INDPT SCH DIST 8/15/2016 6.250 538,771 516,910 670,000 NORTHERN TOB SECURITIZATION 6/1/2022 6.200 661,131 670,047 1,000,000 NORTHRN CA PWR AGY PUB PWR REV 7/1/2009 5.000 1,014,114 1,001,609 500,000 NORTHWEST TRAVIS CNTY RD DIST 9/1/2014 5.625 513,403 510,365 500,000 OCEANSIDE CA CTFS PARTN 8/1/2019 5.250 532,435 518,370 565,000 OHIO ST AIR QUALITY DEV AUTH 1/1/2024 5.450 579,664 571,853 400,000 OKLAHOMA DEV FIN AUTH HOSP 12/1/2023 5.125 392,149 407,048 1,250,000 ONTERIE CTR HSG FIN CORP IL 7/1/2027 7.050 1,300,644 1,261,537 1,500,000 ORANGE CNTY CA RECOVERY CTFS 7/1/2026 6.000 1,608,041 1,603,649 675,000 OREGON ST HEALTH HSG EDL AUTH 11/15/2026 8.000 706,042 707,886 180,000 OREGON ST HSG & CMNTY SVCS DEP 7/1/2022 5.700 185,242 184,219 300,000 ORLEANS LA LEVEE DIST 11/1/2014 5.950 319,489 318,867 330,000 ORLEANS PARISH LA SCH BRD (c) 2/1/2015 5.643 185,971 202,646 1,000,000 PALM BEACH CNTY FL HLTH FACS 11/15/2020 5.625 1,031,418 1,029,059 500,000 PALMER PLANTATION MUN UTIL DIS 9/1/2016 5.900 514,192 510,905 1,350,000 PARKLANDS LEE CMNTY DEV DIST 5/1/2011 5.125 1,348,097 1,349,176 35,000 PARKLANDS WEST CMNTY DEV DIST 5/1/2006 6.000 34,955 35,065 195,000 PATERSON NJ HSG FIN CORP 2/1/2024 7.250 205,963 214,605 250,000 PEARLAND TX DEV AUTH TAX INC 9/1/2006 3.250 250,000 250,658 250,000 PENNSYLVANIA INTRGVRNMNTL COOP 6/15/2021 5.000 258,563 265,768 500,000 PENNSYLVANIA ST HIGHER EDL 3/15/2030 5.750 517,121 538,215 250,000 PENNSYLVANIA ST HIGHER EDL 1/15/2031 6.000 261,034 268,185 600,000 PENNSYLVANIA ST HIGHER EDL 1/15/2022 6.000 623,644 657,534 325,000 PENNSYLVANIA ST HIGHER EDL FAC 11/15/2016 5.875 338,367 346,141 235,000 PENNSYLVANIA ST HIGHER EDL FAC 11/15/2021 5.875 257,060 250,287 75,000 PENNSYLVANIA ST HIGHER EDL FAC 11/15/2016 5.875 80,974 79,879 1,750,000 PENNSYLVANIA ST HIGHER EDL FAC 1/1/2017 5.750 1,824,784 1,821,924 See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Tax-Exempt Bond Fund December 31, 2004 Face Percent amount Maturity Coupon Fair of or shares Security date rate Cost Value (a) net assets - ------------- ------------------------------------------ ----------- ----------- ------------- ------------- ------------ 110,000 PENNSYLVANIA ST HIGHER EDL FAC 1/1/2015 5.875 $ 115,552 114,711 750,000 PHOENIX AZ INDL DEV AUTH MTG 1/1/2016 6.250 727,850 783,690 250,000 PHOENIX AZ STR & HWY USER REV 7/1/2011 6.250 259,725 254,798 500,000 PIERCE CNTY WA 8/1/2025 5.375 516,649 538,745 500,000 PIMA CNTY AZ INDL 2/1/2015 6.625 500,000 505,085 200,000 PIMA CNTY AZ INDL DEV 12/15/2016 5.250 197,366 199,818 350,000 PIMA CNTY AZ INDL DEV AUTH 8/1/2012 6.250 350,000 352,916 400,000 PIMA CNTY AZ INDL DEV AUTH ED 7/1/2019 6.875 400,000 407,248 150,000 PIMA CNTY AZ INDL DEV AUTH ED 7/1/2012 5.000 149,526 150,932 1,050,000 PIMA CNTY AZ INDL DEV AUTH ED 2/1/2015 7.250 1,045,719 1,015,759 200,000 PIMA CNTY AZ INDL DEV AUTH REV 2/1/2014 6.375 200,000 200,874 225,000 PITT CNTY NC REV 12/1/2010 5.375 241,225 239,623 1,250,000 PLEASANTS CNTY WV POLL CTL 5/1/2015 6.150 1,342,206 1,301,987 185,000 PLYMOUTH MN MULTIFAMILY HSG 6/20/2031 8.050 194,301 196,638 750,000 PORT AUTH NY & NJ 6/15/2030 5.750 775,034 768,045 2,000,000 PORT EVERGLADES AUTH FL IMPT 9/1/2016 5.000 2,034,289 2,004,240 250,000 PORTLAND ME HSG DEV CORP 8/1/2021 5.700 250,000 249,058 650,000 PORTLAND ME HSG DEV CORP 8/1/2015 4.875 650,000 648,115 200,000 PORTLAND OR HYDROELECTRIC PWR 10/1/2016 7.000 207,385 201,790 1,250,000 PRINCE GEORGES CNTY MD HSG REV (c) 11/1/2020 6.233 473,058 476,238 250,000 PRIVATE COLLEGES&UNIVS AUTH GA 10/1/2014 5.250 260,597 261,255 500,000 QUAKER HILL HSG CORP DE MLTFAM 8/1/2021 7.550 507,439 505,305 250,000 RED RIVER AUTH TX POLLUTN CTL 7/1/2011 5.200 257,341 255,618 750,000 REGIONAL WASTE SYS ME SLD WST 7/1/2006 6.250 782,728 779,535 120,000 REUNION EAST CMNTY DEV DIST 11/1/2007 5.900 119,684 122,395 565,000 RHODE ISLAND ST HLTH & ED BLDG 10/1/2012 5.600 579,839 572,113 250,000 RICHARDSON TX HOSP AUTH REV 12/1/2028 5.625 254,101 256,890 150,000 ROSELLE ILL MULTI FAM HSG REV 1/1/2025 7.000 153,002 153,209 1,750,000 SACRAMENTO CNTY CA SANTN DIST 12/1/2027 5.875 1,863,586 1,823,990 375,000 SAN DIEGO CA SWR REV 5/15/2007 4.800 381,068 378,563 225,000 SAN JOSE CA REDEV TAX ALLOCATN 8/1/2024 5.750 231,069 230,103 500,000 SANDOVAL CNTY NM PROJ DEV 7/1/2015 7.750 500,000 515,700 1,050,000 SHELBY CNTY TN HEALTH EDL HSG 12/1/2013 6.375 1,050,000 1,090,173 625,000 SHELBY CNTY TN HLTH EDL & HSG (b) 1/1/2029 5.550 556,863 312,413 130,000 SHELBY CNTY TN HLTH EDL & HSG (b) 1/1/2029 6.000 2,275 2,275 150,000 SHELBY CNTY TN HLTH EDL & HSG (b) 1/1/2019 5.350 134,966 74,954 80,000 SHELBY CNTY TN HLTH EDL & HSG (b) 1/1/2026 6.600 80,130 68,152 1,000,000 SKOWHEGAN ME POLLUTN 11/1/2013 5.900 1,008,356 1,013,080 100,000 SNOHOMISH CNTY WA SCH DIST 12/1/2005 5.000 101,182 100,242 400,000 SOUTH CAROLINA EDL FACS AUTH 10/1/2026 5.500 420,159 424,888 1,000,000 SOUTH CAROLINA JOBS ECON DEV 10/1/2005 6.750 999,001 1,002,100 3,000,000 SOUTH DAKOTA ST HEALTH 7/1/2030 2.140 3,000,000 3,000,000 1,000,000 SOUTH DAKTA ST HEATH & EDL FAC 7/1/2024 2.140 1,000,000 1,000,000 400,000 SOUTH LA PORT COMMN PORT REV 4/1/2017 5.850 424,153 421,472 305,000 SOUTH LAKE CNTY HOSP DIST FLA 10/1/2008 4.250 304,472 308,145 630,000 SOUTH LAKE CNTY HOSP FL 10/1/2013 5.500 629,566 655,906 290,000 SOUTH TAHOE CA JT PWRS FING 10/1/2028 6.000 306,458 301,449 190,000 SOUTHWESTERN ILL DEV AUTH REV 4/1/2010 6.000 186,281 186,924 800,000 ST LOUIS CNTY MO HSG AUTH (b) 11/1/2014 8.500 800,000 621,664 1,000,000 STERLING HILL CMNTY DEV DIST 11/1/2010 5.500 995,084 1,018,630 1,000,000 SUBURBAN MOBILITY AUTH REGL 2/15/2009 4.900 993,138 1,008,740 500,000 SULLIVAN IN POLLUTN CTL REV 4/1/2019 7.100 513,612 512,650 291,000 SUNDANCE CMNTY FACS DIST AZ 7/1/2008 5.000 291,000 292,528 500,000 SWEETWATER CNTY WY POLLUTN CTL 7/15/2026 6.050 534,941 526,760 475,000 TAMPA FL REV 12/1/2023 5.125 483,167 486,918 290,000 TANGIPAH0A PARISH LA HOSP SVC 2/1/2005 2.500 290,108 290,029 160,000 TAOS CNTY NM GROSS RCPTS TAX 10/1/2009 3.500 157,927 157,994 465,000 TARRANT CNTY TX HSG FIN CORP (b) 6/1/2031 10.500 465,000 58,125 260,000 TELLER CNTY CO CTFS PARTN 12/1/2009 5.500 272,329 275,811 350,000 TEXAS ST AFFORDABLE HSG CORP 10/1/2008 4.100 350,000 365,075 250,000 TEXAS ST DEPT HSG & CMNTY 7/1/2016 6.350 259,383 259,720 210,000 TEXAS ST DEPT HSG & CMNTY 7/1/2026 6.450 210,127 216,623 800,000 TEXAS STUDENT HSG AUTH REV (b) 1/1/2033 11.000 800,000 79,000 250,000 TEXAS WTR DEV BRD REV 7/15/2018 5.125 260,681 261,363 970,000 TOBACCO SETTLEMENT AUTH WA 6/1/2026 6.500 968,674 972,105 720,000 TOBACCO SETTLEMENT FING CORP 6/1/2019 4.375 659,901 718,452 500,000 TOBACCO SETTLEMENT FING CORP 6/1/2014 5.500 545,774 545,385 90,000 TOBACCO SETTLEMENT FING CORP 6/1/2009 5.000 91,754 90,204 750,000 TOBACCO SETTLEMENT FING CORP 6/1/2010 5.500 779,730 760,110 300,000 TOBACCO SETTLEMENT REV MGMT 5/15/2022 6.000 295,765 296,946 See accompanying notes to financial statements. CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Tax-Exempt Bond Fund December 31, 2004 Face Percent amount Maturity Coupon Fair of or shares Security date rate Cost Value (a) net assets - ------------- ------------------------------------------ ----------- ----------- ------------- ------------- ------------ 500,000 TODD CREEK FARMS MET DIST NO 1 12/1/2019 6.125 $ 493,962 494,200 1,000,000 TODD CREEK FARMS MET DIST NO 1 12/1/2009 4.750 989,186 989,390 1,500,000 TOMBALL TX HOSP AUTH REV 7/1/2023 6.125 1,515,863 1,516,140 840,000 TRAVIS CNTY TX HSG FIN CORP 6/1/2035 9.250 840,000 502,530 200,000 UNIVERSITY CITY MO INDL DEV AU 12/20/2030 6.000 211,836 205,674 310,000 VERMONT EDL & HLTH BLDGS AGY 6/15/2007 4.375 309,779 313,946 300,000 VERRADO CMNTY FACS DIST NO 1 7/15/2013 6.000 300,000 305,298 255,000 VISTA LAKES CMNTY DEV DIST FL 5/1/2008 5.800 254,412 256,933 500,000 WASHINGTON ST NONPROFIT HSG 7/1/2027 6.125 528,611 525,675 750,000 WAUKESHA WI REDEV AUTH REV 6/20/2043 8.000 750,000 758,513 300,000 WESTCHESTER CNTY NY INDL DEV 7/1/2006 5.500 302,248 303,786 500,000 WESTERN MONMOUTH UTILS AUTH NJ 2/1/2014 5.600 520,818 511,415 500,000 WI ST HEALTH EDL FACS 6/1/2028 5.700 521,742 518,040 460,000 WISCONSIN HEALTH & EDL FACS 8/15/2016 4.600 458,336 457,806 1,000,000 WISCONSIN HEALTH & EDL FACS 12/1/2034 4.750 1,000,000 1,000,100 795,000 WISCONSIN ST HEALTH & EDL FACS 12/1/2006 6.000 829,906 817,793 925,000 WISCONSIN ST HEALTH & EDL FACS 10/1/2021 1.670 925,000 925,000 350,000 WISCONSIN ST HEALTH & EDL FACS 7/1/2021 6.000 361,223 374,525 500,000 WISCONSIN ST HEALTH & EDL FACS 12/15/2020 5.500 534,372 541,430 450,000 WISCONSIN ST HEALTH & EDL FACS 7/1/2017 6.000 466,026 488,732 750,000 WISCONSIN ST HEALTH & EDL FACS 11/15/2028 6.250 780,988 798,548 140,000 WISCONSIN ST HEALTH & EDL FACS 2/15/2005 5.250 140,484 140,557 1,325,000 WOODHILL PUB FAC CORP TEX 12/1/2015 7.250 1,305,275 1,353,342 285,000 WYOMING CMNTY DEV AUTH 6/1/2013 5.700 288,883 288,181 250,000 YORK CNTY PA INDL DEV AUTH REV 10/1/2019 6.450 254,376 255,840 ------------- ------------- 187,716,369 186,812,685 99.01% ------------- ------------- Cash equivalents: 225,903 SSGA TAX-EXEMPT MONEY MARKET FUND 1.311 225,903 225,903 0.12% ------------- ------------- ------------ Grand Total (d) $ 188,367,352 187,527,888 99.39% ============= ============= ============ Notes to investments in schedule of investments: (a) Securities are valued in accordance with procedures described in note 2 to the financial statements. (b) Currently nonincome-producing assets. For long-term debt securities, item identified is in default as to payment of interest and/or principal. (c) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on the date of acquisition. (d) At December 31, 2004, the cost for federal income tax purposes was $188,367,352. The aggregate gross unrealized appreciation and depreciation of investments in securities based on this cost were as follows: Gross unrealized appreciation $ 2,712,217 Gross unrealized depreciation (3,551,681) ------------- Net unrealized depreciation $ (839,464) ============= Distribution of investments representing geographic diversification, as a percentage of total investments at value, is as follows (unaudited): Geographical Diversification Percent --------------------------------------- ------------- Texas 10.72% Florida 10.64 California 10.62 Illinois 9.38 Pennsylvania 5.20 Minnesota 4.03 Colorado 3.91 Wisconsin 3.64 Arizona 3.61 New York 3.09 Ohio 2.55 Other 32.61 ------------- 100.00% ============= CLEARWATER INVESTMENT TRUST Schedule of Investments - Clearwater Tax-Exempt Bond Fund December 31, 2004 Clearwater Tax-Exempt Bond Fund Portfolio Diversification (as a percentage of Net assets) [GRAPHIC OMITTED] Insured Bonds 24% Multi-Family Housing Bonds 19% Industrial Revenue Bonds 8% Education Bonds 3% Hospital Bonds 16% Public Utility Bonds 2% Other 20% Cash 8% See accompanying notes to financial statements. Item 2. Code of Ethics. (a) At the end of the period covered by this report the Trustees of the Clearwater Investment Trust have adopted a code of ethics that applies to the Trust's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the trust or a third party. (b) For purposes of this Item, the term "code of ethics" means written standards that are reasonably designed to deter wrongdoing and to promote: (1) Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (2) Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Commission and in other public communications made by the registrant; (3) Compliance with applicable governmental laws, rules, and regulations; (4) The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and (5) Accountability for adherence to the code (c) During the period covered by this report no amendment has been made to the Trust's code of ethics that applies to the Trust's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the trust or a third party. (d) During the period covered by this report the Trustees have granted no waivers, including implicit waivers, from any provision of the Trust's code of ethics that applies to the Trust's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the trust or a third party. (e) Not applicable. (f) See Item 12(a). Item 3. Audit Committee Financial Expert. The Board of Trustees of the Clearwater Investment Trust consists of five members, four of whom are Independent Trustees as defined by the Investment Company Act of 1940. The Independent Trustees perform the audit committee functions. The Board of Trustees does not include an "audit committee financial expert" as defined by Section 407 of the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder. Given the restrictive nature of the definition of an "audit committee financial expert", the Trustees have determined that the Trust's investor constituency is highly unlikely to include anyone meeting that definition. Furthermore, the Trustees have determined that given the nature of investment company financial statements in general and the investment policies of the Trust's fund offerings in particular that the independent trustees possess the necessary skills and experience to perform the functions of the audit committee. Item 4. Principal Accountant Fees and Services. F(a) Audit Fees - ------------------------ 2004 2003 - ---- ---- 47,500 43,500 (b) Audited-Related Fees - ------------------------ 2004 2003 - ---- ---- None None (c) Tax Fees - ------------------------ 2004 2003 - ---- ---- None None (d) All Other Fees - ------------------------ 2004 2003 - ---- ---- None None (e)(1) The Independent Trustees have not adopted pre-approval policies and procedures regarding the provision of audit or non-audit services to the trust, as described in paragraph (c)(7) of Rule 2-01 of Regulation S-X, as they require that all such proposed services be approved by them in advance. (2) No services were approved by the Independent Trustees pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. (f) Not applicable. (g) Non-Audit Related Fees Provided to the Registrant's Adviser - ---------------------------------------------------------------- 2004 2003 - ---- ---- 3,000 3,500 (h) Registrant's Principal Accountant provided the examination required by Rule 206(a)(3)(ii) under the Investment Advisors Act of 1940 to the Registrant's adviser related to non-investment company clients. Item 5. Audit Committee of Listed Registrants. Not applicable. Item 6. Schedulr of Investments. See Item 1. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not Applicable Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not Applicable Item 9. Purchases of Equity Securities by Closed-End Management Investment. Companies Not Applicable Item 10. Submission of Matters to a Vote of Security Holders. There have been no material changes to the procedures by which shareholders may recommend nominees to the egistrant's board of trustees. Item 11. Controls and Procedures. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document. (b) There were no significant changes in the registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Item 12. Exhibits. (a) The code of ethics that is the subject of the disclosure required by Item 2 is attached hereto. (b) The certifications required by Rule 30a-2 of the Investment Company Act of 1940, as amended, and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. SIGNATURES [See General Instruction F] Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) CLEARWATER INVESTMENT TRUST ----------------------------------------------------------- By: (Signature and Title)*/s/Philip W. Pascoe ------------------------------------------------------- Philip W. Pascoe President Date: March 8, 2005 ------------------------------------------------------------------ Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: (Signature and Title)*/s/Philip W. Pascoe ------------------------------------------------------- Philip W. Pascoe President Date: March 8, 2005 ------------------------------------------------------------------ Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: (Signature and Title)*/s/Philip W. Pascoe ------------------------------------------------------- Philip W. Pascoe Treasurer Date: March 8, 2005 ------------------------------------------------------------------ *Print the name and title of each signing officer under his or her signature