Capital Appreciation
Income
Tax-Exempt
ANNUAL REPORT
AUGUST 31, 1997
GROWTH/VALUE
FUND
AGGRESSIVE GROWTH
FUND
INTERMEDIATE BOND
FUND
MONEY MARKET
FUND
KENTUCKY TAX-FREE
FUND
COUNTRYWIDE INVESTMENTS
312 Walnut St., 21st Floor
Cincinnati, Ohio 45202-4094
Nationwide: (Toll Free) 800-543-8721
Cincinnati: 513-629-2000
SHAREHOLDER SERVICES
Nationwide: (Toll Free) 800-543-0407
Cincinnati: 629-2050
INVESTMENT ADVISER/MANAGER
Countrywide Investments, Inc.
312 Walnut St., 21st Floor
Cincinnati, Ohio 45202-4094
BOARD OF TRUSTEES
Angelo R. Mozilo, Chairman
Robert H. Leshner, President
Donald L. Bogdon, M.D.
John R. Delfino
H. Jerome Lerner
Oscar P. Robertson
John F. Seymour, Jr.
Sebastiano Sterpa
TRANSFER AGENT
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
INVESTMENT ADVISER/MANAGER
Countrywide Investments, Inc.
312 Walnut St., 21st Floor
Cincinnati, Ohio 45202-4094
This report is authorized for distribution only when it is
accompanied or preceded by a current prospectus.
<PAGE>
LETTER FROM THE CHAIRMAN
===============================================================================
Dear Shareholders:
Welcome to the Countrywide Family. The recent acquisition of Trans Adviser
Funds, Inc. by Countrywide Investments provides exciting opportunities for both
Countrywide and fund shareholders.
Countrywide Home Loans is the nation's leading independent residential mortgage
lender and servicer. Our loan servicing operation now serves more than 1.6
million homeowners. With over 400 offices, Countrywide employs over 6,500
individuals across the United States. In addition to first lien prime and
subprime mortgages and home equity loans, a variety of other financial products
and services augments our mortgage lending and servicing operations including
insurance products, credit cards and investments.
Countrywide Investments adds a critical component to Countrywide's strategic
business plan. While mortgage lending is Countrywide's core business, we believe
a broader diversification of financial products and services will provide
greater customer retention and enhanced customer service.
Countrywide Investments' experienced management team, reputation for excellence
and strong customer relationships significantly enhance Countrywide's long-term
commitment to being a leading provider of financial services.
In turn, Countrywide offers this excellent team an atmosphere of innovative
technology, industry leadership and dynamic organization. It is a blending of
talents and abilities that will position our expanded Countrywide Family for
leadership into the twenty-first century.
In addition to the quality and performance you'll come to expect in meeting your
investment needs, we think you will be pleased with the additional opportunities
Countrywide offers. Again, welcome to the Countrywide Family.
Sincerely,
/s/Angelo R. Mozilo
Angelo R. Mozilo
Chairman
<PAGE>
LETTER FROM THE PRESIDENT
===============================================================================
Dear Fellow Shareholders:
We are pleased to present the audited annual report for the year ended August
31, 1997.
After this report, financial results for the five funds will be included in
various Countrywide Trust semi-annual and annual reports. The two equity funds,
Growth/Value and Aggressive Growth, are now part of Countrywide Strategic Trust
and its next semi-annual report will be September 30, 1997. The Intermediate
Bond Fund and Money Market Fund are now part of Countrywide Investment Trust and
its next annual report will be September 30, 1997. The Kentucky Tax-Free Fund is
now part of the Countrywide Tax-Free Trust and its next semi-annual report will
be December 31, 1997.
An exciting development on the investment front was the August passage of the
federal budget agreement and sweeping tax legislation. This new legislation
reduces capital gains tax rates for investors and broadens the market for
Individual Retirement Accounts (IRAs). Many of these changes, including the
expansion of traditional tax deductible IRAs and the introduction of the Roth
IRA, will take effect January 1, 1998. Countrywide Investments is already moving
forward with its plans to introduce new IRA products to benefit its
shareholders.
U.S. financial markets performed very well in the past year primarily because
inflation remained in check and economic growth was steady to strong. This
favorable economic environment resulted in high employment levels and strong
corporate profits, pushing the stock market higher. The strong economy also
fueled a powerful flow of tax receipts, which dramatically cut federal
government borrowing and reduced pressure on long-term interest rates. Financial
markets also reacted favorably to the federal budget agreement.
Though inflation remained under control throughout most of the fiscal year,
interest rates fluctuated because of market nervousness that strong economic
growth would eventually result in higher inflation. The Federal Reserve Board
took action to cool the economy when it raised short-term interest rates in
March. The bond market viewed the Federal Reserve's action favorably as
long-term interest rates declined four straight months. Despite an increase in
August, rates ended the period at levels well below those of a year ago.
Wholesale inflation was negative for the twelve months ended August 31, 1997,
and consumer inflation was just over 2% in the same period. Further, the economy
appears to be moving on a more moderate track. We believe that economic growth
will continue and that inflation will remain under control through the early
part of 1998. A continuation of these trends would be favorable for both stocks
and bonds.
Countrywide Investments remains committed to providing products and services
that help investors meet their financial goals. Our success has been built on
the confidence investors have extended to us. We thank you for your support and
look forward to serving you in the future.
Sincerely,
/s/Robert H. LEshner
Robert H. Leshner
President
<PAGE>
GROWTH/VALUE FUND
AGGRESSIVE GROWTH FUND
MANAGEMENT DISCUSSION AND ANALYSIS
===============================================================================
The Growth/Value Fund seeks long-term capital appreciation primarily through
equity investments in companies whose valuations may not yet reflect the
prospects for accelerated earnings/cash flow growth. For the fiscal year ended
August 31, 1997, the Fund's total return (excluding the impact of applicable
sales loads) was 47.11%, as compared to 40.65% for the Standard & Poor's 500
(S&P 500) Index.
The Aggressive Growth Fund seeks long-term capital appreciation primarily
through equity investments. The Fund will seek growth opportunities among
companies of various sizes. For the fiscal year ended August 31, 1997, the
Fund's total return (excluding the impact of applicable sales loads) was 49.09%,
as compared to 39.54% for the NASDAQ Index.
The equity market was strong through the summer months with each Fund's primary
sector concentrations, namely, healthcare, technology, energy and financial
services, participating in the advance. In contrast to earlier in the year, the
broader market has performed better than the popular averages due to the shift
in focus away from larger capitalization stocks to the mid-to-small
capitalization stocks. Our performance stayed with or outperformed the market
averages because of our focus on investing in growth opportunities among
companies of various sizes which are selling at value prices.
Our concentrated sectors each have distinct characteristics driving growth.
Healthcare growth is bolstered by the aging population and productivity gains
stemming from enlightened government reforms. Technology continues to alter
fundamental production and service delivery systems that increase productivity
significantly. Energy demand continues to grow faster than new found reserves
and technology is making vast headway in finding and servicing new oil and gas
reserves at costs never imagined even four or five years ago. Financial services
continues to restructure itself with new technology-enabled systems and the
gradual unfolding of regulatory freedoms that allow more competition and greater
responsiveness to fulfilling consumer needs.
The above growth characteristics are compelling when viewed in the context of
closely allied defensive characteristics. Healthcare demand is largely
unaffected by economic cycles. Technology is a volatile sector, but a portion of
this systematic risk is alleviated by our investment style, which imposes a
discipline of buying three-to-five year anticipated growth at a risk-adjusted,
discounted price-to-earnings multiple. Energy has historically been a defensive
sector, especially during inflationary periods. Entrepreneurial financial
services companies are expanding beyond traditional, artificially-imposed
boundaries, and erecting growth and hedging elements that should dilute earnings
damage from an extended upturn in interest rates.
We attempt to position the Growth/Value Fund to participate in the bull market
and simultaneously limit the risk profile in such a way as to minimize relative
market losses during downturns. The Aggressive Growth Fund also emphasizes
buying growth at value, but the average capitalization size is much smaller than
that of the Growth/Value Fund. The smaller, and usually younger, aggressive
growth companies add somewhat to the risk/return profile of the Aggressive
Growth Fund.
Consistent with past October market behavior, the opening weeks of the fourth
quarter have been volatile, caused by near-term concerns over quarterly earnings
reports in the technology sector and currency problems in Asia. In addition,
energy has been clouded somewhat by the inventory buildup of home heating fuels
together with some forecasts of a relatively mild winter. In spite of these very
near-term observations, we continue to believe that our long-term holdings have
ample fundamental support to warrant continued optimism in their respective
sectors.
<PAGE>
<TABLE>
GROWTH/VALUE FUND
AGGRESSIVE GROWTH FUND
MANAGEMENT DISCUSSION AND ANALYSIS
===============================================================================
CHART:
<CAPTION>
COMPARISION OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
GROWTH/VALUE FUND AND THE STANDARD & POOR'S 500 INDEX
STANDARD & POOR'S 500 INDEX: GROWTH/VALUE FUND:
MONTHLY MONTHLY
DATE RETURN BALANCE DATE RETURN BALANCE
<S> <C> <C> <C> <C> <C>
09/29/95 10,000 09/29/95 9,600
10/31/95 -0.61% 9,939 10/31/95 -1.70% 9,437
11/30/95 4.39% 10,376 11/30/95 6.21% 10,022
12/31/95 1.93% 10,576 12/31/95 0.77% 10,099
01/31/96 3.40% 10,936 01/31/96 3.61% 10,464
02/29/96 0.93% 11,037 02/29/96 4.04% 10,886
03/31/96 0.96% 11,143 03/31/96 0.97% 10,992
04/30/96 1.47% 11,307 04/30/96 3.58% 11,386
05/31/96 2.58% 11,599 05/31/96 0.76% 11,472
06/30/96 0.38% 11,643 06/30/96 -3.26% 11,098
07/31/96 -4.42% 11,129 07/31/96 -7.44% 10,272
08/31/96 2.11% 11,364 08/31/96 4.49% 10,733
09/30/96 5.63% 12,003 09/30/96 5.19% 11,290
10/31/96 2.76% 12,334 10/31/96 2.47% 11,568
11/30/96 7.56% 13,267 11/30/96 6.80% 12,355
12/31/96 -1.98% 13,004 12/31/96 -1.38% 12,185
01/31/97 6.25% 13,816 01/31/97 8.06% 13,167
02/28/97 0.78% 13,925 02/28/97 -2.78% 12,801
03/31/97 -4.11% 13,352 03/31/97 -3.98% 12,291
04/30/97 5.97% 14,150 04/30/97 2.90% 12,647
05/31/97 6.09% 15,011 05/31/97 7.23% 13,561
06/30/97 4.48% 15,684 06/30/97 6.46% 14,437
07/31/97 7.96% 16,932 07/31/97 9.67% 15,833
08/31/97 -5.60% 15,983 08/31/97 -0.28% 15,789
</TABLE>
GROWTH/VALUE FUND
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR SINCE INCEPTION*
41.23% 26.95%
*Fund inception was September 29, 1995.
Past performance is not predictive of future performance.
<TABLE>
CHART:
<CAPTION>
COMPARISION OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
AGGRESSIVE GROWTH FUND AND THE NASDAQ INDEX
NASDAQ INDEX AGGRESSIVE GROWTH FUND:
MONTHLY MONTHLY
DATE RETURN BALANCE DATE RETURN BALANCE
<S> <C> <C> <C> <C> <C>
09/29/95 10,000 09/29/95 9,600
10/31/95 -1.03% 9,897 10/31/95 -5.30% 9,091
11/30/95 2.29% 10,124 11/30/95 5.91% 9,629
12/31/95 -0.59% 10,064 12/31/95 -0.80% 9,552
01/31/96 0.76% 10,141 01/31/96 -0.30% 9,523
02/29/96 3.86% 10,532 02/29/96 6.25% 10,118
03/31/96 0.12% 10,545 03/31/96 2.85% 10,406
04/30/96 8.12% 11,401 04/30/96 10.06% 11,453
05/31/96 4.46% 11,910 05/31/96 -0.25% 11,424
06/30/96 -4.68% 11,353 06/30/96 -5.80% 10,762
07/31/96 -8.80% 10,354 07/31/96 -8.39% 9,859
08/31/96 5.66% 10,940 08/31/96 6.62% 10,512
09/30/96 7.51% 11,761 09/30/96 4.47% 10,982
10/31/96 -0.43% 11,711 10/31/96 0.00% 10,982
11/30/96 5.84% 12,395 11/30/96 5.68% 11,606
12/31/96 -0.10% 12,382 12/31/96 2.12% 11,853
01/31/97 6.89% 13,236 01/31/97 6.74% 12,651
02/28/97 -5.12% 12,558 02/28/97 -5.17% 11,997
03/31/97 -6.65% 11,723 03/31/97 -5.05% 11,391
04/30/97 3.25% 12,104 04/30/97 1.18% 11,525
05/31/97 11.13% 13,452 05/31/97 8.93% 12,555
06/30/97 3.04% 13,860 06/30/97 7.05% 13,440
07/31/97 10.56% 15,323 07/31/97 9.23% 14,681
08/31/97 -0.38% 15,265 08/31/97 6.75% 15,672
</TABLE>
AGGRESSIVE GROWTH FUND
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR SINCE INCEPTION*
43.12% 26.46%
*Fund inception was September 29, 1995.
Past performance is not predictive of future performance.
<PAGE>
INTERMEDIATE BOND FUND
MANAGEMENT DISCUSSION AND ANALYSIS
===============================================================================
The Intermediate Bond Fund seeks to provide as high a level of current income as
is consistent with the preservation of capital. The Fund invests in marketable
corporate debt securities, U.S. Government securities, mortgage-related
securities, other asset-backed securities and cash or money market instruments.
For the fiscal year ended August 31, 1997, the Fund's total return (excluding
the impact of applicable sales loads) was 9.48%, as compared to 8.44% for the
Lehman Brothers Intermediate Government/Corporate Index.
The fixed-income market during the fiscal year was characterized by uncertainty.
The yield on the benchmark 30-year Treasury bond vacillated in a broad, but
well-defined, range between 6.35% and 7.20%. The Fund's strategy of purchasing
higher coupon, callable corporate bonds was well-suited for the volatile, but
essentially range-bound, interest rate environment. Performance was further
enhanced by a slightly longer-than-average duration.
The Fund remains well-diversified with approximately 40% of assets invested in
securities issued by government agencies, and 60% of assets invested among 34
different corporate issuers across a wide variety of industries. The Fund
continues to focus primarily on higher yielding investment-grade corporate bonds
with an overriding emphasis on the income component of total return.
<TABLE>
CHART:
<CAPTION>
COMPARISION OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
INTERMEDIATE BOND FUND AND THE LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT/CORPORATE INDEX
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE INDEX INTERMEDIATE BOND FUND:
MONTHLY MONTHLY
DATE RETURN BALANCE DATE RETURN BALANCE
<S> <C> <C> <C> <C> <C>
10/03/95 10,000 10/03/95 9,800
10/31/95 1.11% 10,111 10/31/95 0.51% 9,850
11/30/95 1.31% 10,243 11/30/95 1.07% 9,955
12/31/95 1.05% 10,351 12/31/95 0.83% 10,038
01/31/96 0.86% 10,440 01/31/96 0.93% 10,131
02/29/96 -1.17% 10,318 02/29/96 -0.95% 10,035
03/31/96 -0.51% 10,265 03/31/96 -0.24% 10,011
04/30/96 -0.35% 10,229 04/30/96 -0.48% 9,963
05/31/96 -0.08% 10,221 05/31/96 0.17% 9,979
06/30/96 1.06% 10,329 06/30/96 1.20% 10,099
07/31/96 0.30% 10,360 07/31/96 0.23% 10,122
08/31/96 0.08% 10,369 08/31/96 -0.05% 10,117
09/30/96 1.39% 10,513 09/30/96 0.89% 10,208
10/31/96 1.77% 10,699 10/31/96 1.96% 10,408
11/30/96 1.32% 10,840 11/30/96 1.53% 10,567
12/31/96 -0.64% 10,771 12/31/96 -0.57% 10,507
01/31/97 0.39% 10,813 01/31/97 0.25% 10,533
02/28/97 0.19% 10,833 02/28/97 0.18% 10,551
03/31/97 -0.69% 10,759 03/31/97 -0.92% 10,454
04/30/97 1.18% 10,886 04/30/97 1.66% 10,628
05/31/97 0.83% 10,976 05/31/97 0.84% 10,717
06/30/97 0.91% 11,076 06/30/97 1.41% 10,869
07/31/97 2.03% 11,301 07/31/97 2.95% 11,189
08/31/97 -0.50% 11,244 08/31/97 -1.01% 11,076
</TABLE>
INTERMEDIATE BOND FUND
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR SINCE INCEPTION*
7.29% 5.49%
*Fund inception was October 3, 1995.
Past performance is not predictive of future performance.
<PAGE>
KENTUCKY TAX-FREE FUND
MANAGEMENT DISCUSSION AND ANALYSIS
===============================================================================
The Kentucky Tax-Free Fund seeks the highest level of interest income exempt
from federal and Kentucky income taxes, consistent with protection of capital.
The Fund invests primarily in high and medium-quality Kentucky municipal
obligations. For the fiscal year ended August 31, 1997 the Fund's total return
(excluding the impact of applicable sales loads) was 7.36%, as compared to 9.25%
for the Lehman Brothers Municipal Index.
Municipal bonds generally tracked Treasury securities, underperforming early in
the fiscal year, then outperforming during the latter part of the fiscal year.
The Fund pursued an income-oriented strategy, purchasing premium bonds at
attractive yields. While the strategy was an effective one for a mostly
range-bound market, performance was hampered by a somewhat shorter-than-average
duration. Due to uncertain cash flows in the Fund, a higher degree of liquidity
was maintained which resulted in a lower duration.
Income will continue to be the primary focus of the Fund. The Fund's duration
will be extended on market weakness in an effort to maximize income and to take
advantage of the relative cheapness of municipals versus Treasuries.
<TABLE>
CHART:
<CAPTION>
COMPARISION OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
KENTUCKY TAX-FREE FUND AND THE LEHMAN BROTHERS MUNICIPAL INDEX
LEHMAN BROTHERS MUNICIPAL INDEX KENTUCKY TAX-FREE FUND:
MONTHLY MONTHLY
DATE RETURN BALANCE DATE RETURN BALANCE
<S> <C> <C> <C> <C> <C>
09/27/95 10,000 09/27/95 9,600
10/31/95 1.45% 10,145 10/31/95 2.42% 9,832
11/30/95 1.66% 10,313 11/30/95 1.90% 10,019
12/31/95 0.96% 10,412 12/31/95 1.23% 10,142
01/31/96 0.76% 10,492 01/31/96 0.65% 10,208
02/29/96 -0.68% 10,420 02/29/96 -0.73% 10,133
03/31/96 -1.28% 10,287 03/31/96 -1.20% 10,011
04/30/96 -0.28% 10,258 04/30/96 -0.17% 9,994
05/31/96 -0.04% 10,254 05/31/96 -0.01% 9,992
06/30/96 1.09% 10,366 06/30/96 -0.18% 9,974
07/31/96 0.91% 10,460 07/31/96 1.66% 10,140
08/31/96 -0.02% 10,458 08/31/96 0.17% 10,157
09/30/96 1.40% 10,604 09/30/96 1.00% 10,259
10/31/96 1.13% 10,724 10/31/96 0.94% 10,355
11/30/96 1.83% 10,920 11/30/96 1.53% 10,514
12/31/96 -0.42% 10,875 12/31/96 -0.34% 10,478
01/31/97 0.19% 10,895 01/31/97 0.26% 10,505
02/28/97 0.92% 10,995 02/28/97 0.89% 10,598
03/31/97 -1.33% 10,849 03/31/97 -0.75% 10,518
04/30/97 0.84% 10,940 04/30/97 0.53% 10,574
05/31/97 1.50% 11,104 05/31/97 1.03% 10,684
06/30/97 1.07% 11,223 06/30/97 0.72% 10,761
07/31/97 2.77% 11,534 07/31/97 1.90% 10,965
08/31/97 -0.94% 11,426 08/31/97 -0.55% 10,904
</TABLE>
KENTUCKY TAX-FREE FUND
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR SINCE INCEPTION*
3.06% 4.58%
*Fund inception was September 27, 1995.
Past performance is not predictive of future performance.
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
August 31, 1997
===================================================================================================================================
GROWTH/ AGGRESSIVE INTERMEDIATE MONEY KENTUCKY
VALUE GROWTH BOND MARKET TAX-FREE
FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in securities:
At acquisition cost.......................... $19,842,469 $9,516,442 $14,884,587 $87,944,917 $8,083,127
============ ========== =========== =========== ===========
At amortized cost............................ $19,842,469 $9,516,442 $14,884,587 $87,944,917 $7,981,883
=========== ========== =========== =========== ===========
At value (Note 2)............................ $27,516,945 $14,230,179 $14,972,202 $87,944,917 $8,073,983
Investments in repurchase agreements (Note 2)... -- -- 54,931 23,258,658 --
Cash ........................................... -- 1,634 5,076 -- 233,962
Interest and dividends receivable............... 16,876 3,510 208,558 1,550,396 96,611
Receivable from affiliate (Note 4).............. -- 1,680 13,019 5,215 2,857
Receivable for capital shares sold.............. -- 16,425 22,991 -- 41,000
Organization costs, net (Note 2)................ 19,584 19,584 19,584 19,584 19,584
----------- ---------- ----------- ----------- -----------
TOTAL ASSETS................................. 27,553,405 14,273,012 15,296,361 112,778,770 8,467,997
----------- ---------- ----------- ----------- -----------
LIABILITIES
Bank overdraft.................................. 2,192 -- -- 1,029,808 --
Dividends payable............................... -- -- 80,975 392,946 20,095
Payable for capital shares redeemed............. 14,751 -- -- -- --
Payable for securities purchased................ 744,040 278,750 89,439 16,762,000 --
Other accrued expenses and liabilities.......... 14,353 10,527 12,070 24,947 10,270
----------- ---------- ----------- ----------- -----------
TOTAL LIABILITIES ........................... 775,336 289,277 182,484 18,209,701 30,365
----------- ---------- ----------- ----------- -----------
NET ASSETS ..................................... $26,778,069 $13,983,735 $15,113,877 $94,569,069 $8,437,632
=========== ========== =========== =========== ===========
Net assets consist of:
Paid-in capital................................. $19,103,593 $9,626,476 $15,076,896 $94,571,137 $8,341,407
Undistributed net investment income............. -- -- -- 494 --
Accumulated net realized gains (losses)
from security transactions................. -- (356,478) (50,634) (2,562) 4,125
Net unrealized appreciation on investments...... 7,674,476 4,713,737 87,615 -- 92,100
----------- ---------- ----------- ----------- -----------
Net assets...................................... $26,778,069 $13,983,735 $15,113,877 $94,569,069 $8,437,632
=========== ========== =========== =========== ===========
Shares of beneficial interest outstanding
(unlimited number of shares authorized,
no par value) (Note 5)....................... 1,684,685 858,688 1,511,122 94,571,137 822,742
=========== ========== =========== =========== ===========
Net asset value and redemption
price per share (Note 2).................... $ 15.90 $ 16.29 $ 10.00 $ 1.00 $ 10.26
=========== ========== =========== =========== ===========
Maximum offering price per share (Note 2)....... $ 16.56 $ 16.97 $ 10.20 $ 1.00 $ 10.69
=========== ========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
For the Year Ended August 31, 1997
===================================================================================================================================
GROWTH/ AGGRESSIVE INTERMEDIATE MONEY KENTUCKY
VALUE GROWTH BOND MARKET TAX-FREE
FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest income.............................. $ 36,676 $ 19,827 $1,088,715 $5,391,779 $ 626,947
Dividend income............................. 153,095 14,849 -- -- --
---------- --------- ---------- --------- -----------
TOTAL INVESTMENT INCOME.................... 189,771 34,676 1,088,715 5,391,779 626,947
---------- --------- ---------- --------- -----------
EXPENSES
Investment advisory fees (Note 4)............ 206,612 94,159 60,906 188,896 47,946
Shareholder service fees (Note 4)............ 51,654 23,540 38,066 236,120 29,966
Administration fees (Note 4)................. 30,995 24,866 24,866 141,672 24,866
Accounting services fees (Note 4)............ 36,000 36,000 36,000 47,500 36,000
Professional fees............................ 25,081 24,383 23,729 40,144 25,286
Transfer agent fees (Note 4)................. 28,000 27,079 25,526 21,186 29,221
Custodian fees............................... 5,121 3,192 8,129 26,184 2,150
Amortization of organization costs (Note 2).. 6,351 6,351 6,351 6,351 6,351
Reports to shareholders...................... 2,885 1,282 2,323 13,943 2,199
Pricing expense.............................. 2,916 2,115 2,683 439 6,443
Insurance expense............................ 1,619 686 1,332 7,834 1,367
Trustees' fees and expenses.................. 1,646 734 1,271 7,663 1,193
Registration fees............................ 2,666 2,522 1,957 2,984 238
Other expenses............................... 2,849 723 1,500 6,771 1,623
---------- --------- ---------- --------- -----------
TOTAL EXPENSES............................. 404,395 247,632 234,639 747,687 214,849
Fees waived and/or expenses
reimbursed (Note 4)........................ -- ( 64,077) (104,530) ( 130,362) (112,585)
---------- --------- ---------- --------- -----------
NET EXPENSES............................... 404,395 183,555 130,109 617,325 102,264
---------- --------- ---------- --------- -----------
NET INVESTMENT INCOME (LOSS) ................... (214,624) ( 148,879) 958,606 4,774,454 524,683
---------- --------- ---------- --------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS
Net realized gains (losses) from security
transactions............................... 894,909 (356,478) 14,511 ( 2,536) 6,913
Net change in unrealized
appreciation/depreciation on investments.. 7,431,395 4,653,168 420,446 -- 351,842
---------- --------- ---------- --------- -----------
NET REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS .............................. 8,326,304 4,296,690 434,957 ( 2,536) 358,755
---------- --------- ---------- --------- -----------
NET INCREASE IN NET ASSETS FROM OPERATIONS ..... $8,111,680 $4,147,811 $1,393,563 $4,771,918 $883,438
========== ========= ========== ========= ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the Periods Ended August 31, 1997 and 1996
===================================================================================================================================
GROWTH/ AGGRESSIVE INTERMEDIATE MONEY KENTUCKY
VALUE GROWTH BOND MARKET TAX-FREE
FUND FUND FUND FUND END
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSETS: SEPTEMBER 1, 1995 (A) ............ $ -- $ -- $ -- $ -- $ --
---------- --------- ---------- ----------- -----------
FROM OPERATIONS:
Net investment income (loss)................. ( 50,747) ( 39,525) 601,786 2,473,468 714,832
Net realized gains (losses) from
security transactions...................... 89,352 43,284 ( 15,393) 2,494 ( 2,788)
Net change in unrealized
appreciation/depreciation on investments... 243,081 60,569 ( 332,831) -- ( 259,742)
---------- --------- ---------- ----------- -----------
Net increase in net assets from operations...... 281,686 64,328 253,562 2,475,962 452,302
---------- --------- ---------- ----------- -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income......... -- -- ( 601,786) (2,473,468) ( 828,883)
---------- --------- ---------- ----------- ------------
Decrease in net assets from distributions
to shareholders.............................. -- -- ( 601,786) (2,473,468) ( 828,883)
---------- --------- ---------- ----------- -----------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 5):
Proceeds from shares sold.................... 15,471,301 7,269,024 14,919,014 446,620,681 28,751,437
Net asset value of shares issued in
reinvestment of distributions to
shareholders............................... -- -- 13,886 84,304 559,139
Payments for shares redeemed................. (645,322) ( 783,438) (1,227,784) (370,344,632) (13,093,506)
---------- --------- ---------- ----------- -----------
Net increase in net assets from capital
share transactions.............................. 14,825,979 6,485,586 13,705,116 76,360,353 16,217,070
---------- --------- ---------- ----------- -----------
NET ASSETS: AUGUST 31, 1996 ................... 15,107,665 6,549,914 13,356,892 76,362,847 15,840,489
---------- --------- ---------- ----------- -----------
FROM OPERATIONS:
Net investment income (loss)................. (214,624) ( 148,879) 958,606 4,774,454 524,683
Net realized gains (losses) from
security transactions...................... 894,909 ( 356,478) 14,511 ( 2,536) 6,913
Net change in unrealized
appreciation/depreciation on investments... 7,431,395 4,653,168 420,446 -- 351,842
---------- --------- ---------- ----------- -----------
Net increase in net assets from operations...... 8,111,680 4,147,811 1,393,563 4,771,918 883,438
---------- --------- ---------- ----------- -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income......... -- -- ( 958,606) ( 4,773,960) ( 524,683)
Distributions in excess of net investment
income (Note 2)............................ -- -- -- -- ( 100,598)
Distributions from net realized gains........ (888,542) (16,180) ( 49,752) ( 2,520) --
---------- --------- ---------- ----------- -----------
Decrease in net assets from distributions
to shareholders.............................. ( 888,542) (16,180) (1,008,358) (4,776,480) ( 625,281)
---------- --------- ---------- ----------- -----------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 5):
Proceeds from shares sold.................... 9,367,824 5,211,479 5,244,400 570,122,610 1,302,552
Net asset value of shares issued in
reinvestment of distributions
to shareholders............................ 260,810 4,532 19,314 424,478 303,297
Payments for shares redeemed................. (5,181,368) (1,913,821) (3,891,934) (552,336,304) (9,266,863)
---------- --------- ---------- ----------- -----------
Net increase (decrease) in net assets from
capital share transaction................... 4,447,266 3,302,190 1,371,780 18,210,784 ( 7,661,014)
---------- --------- ---------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS ........ 11,670,404 7,433,821 1,756,985 18,206,222 ( 7,402,857)
---------- --------- ---------- ----------- -----------
NET ASSETS: AUGUST 31, 1997 ................... $26,778,069 $13,983,735 $15,113,877 $94,569,069 $8,437,632
========== ========= ========== =========== ===========
UNDISTRIBUTED NET INVESTMENT INCOME ............ $ -- $ -- $ -- $ 494 $ --
========== ========= ========== =========== ===========
(A) Date of commencement of operations......... Sept. 29, Sept. 29, Oct. 3, Sept. 29, Sept. 27,
1995 1995 1995 1995 1995
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROWTH/VALUE FUND
FINANCIAL HIGHLIGHTS
===================================================================================================================================
Per Share Data for a Share Outstanding Throughout Each Period
===================================================================================================================================
Year Period
Ended Ended
August 31, August 31,
1997 1996 (A)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value at beginning of period................................... $ 11.18 $ 10.00
-------------- ---------------
Income from investment operations:
Net investment loss................................................... ( 0.13 ) ( 0.06)(B)
Net realized and unrealized gains on investments...................... 5.39 1.24
-------------- ---------------
Total from investment operations......................................... 5.26 1.18
-------------- ---------------
Less distributions:
Distributions from net realized gains................................. ( 0.54 ) --
-------------- ---------------
Total distributions...................................................... ( 0.54 ) --
-------------- ---------------
Net asset value at end of period......................................... $ 15.90 $ 11.18
============== ===============
Total return (C) ........................................................ 47.11% 11.80%
============== ===============
Net assets at end of period (000's)...................................... $ 26,778 $ 15,108
============== ===============
Ratio of expenses to average net assets (D) ............................. 1.95% 1.95% (E)
Ratio of net investment loss to average net assets....................... ( 1.03% ) ( 0.62%)(E)
Portfolio turnover rate.................................................. 52% 21%
Average commission rate per share........................................ $ 0.0554 $ 0.0700
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(A) Represents the period from the commencement of operations (September 29,
1995) through August 31, 1996.
(B) Calculated using weighted average shares outstanding during the period.
(C) Total returns shown exclude the effect of applicable sales loads.
(D) Absent fee waivers and/or expense reimbursements, the ratio of expenses to
average net assts would have been 2.83%(E) for the period ended August 31, 1996.
(E) Annualized.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH FUND
FINANCIAL HIGHLIGHTS
===================================================================================================================================
Per Share Data for a Share Outstanding Throughout Each Period
===================================================================================================================================
Year Period
Ended Ended
August 31, August 31,
1997 1996 (A)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value at beginning of period................................... $ 10.95 $ 10.00
-------------- ---------------
Income from investment operations:
Net investment loss................................................... ( 0.17 ) ( 0.11)(B)
Net realized and unrealized gains on investments...................... 5.54 1.06
-------------- ---------------
Total from investment operations......................................... 5.37 0.95
-------------- ---------------
Less distributions:
Distributions from net realized gains................................. ( 0.03 ) --
-------------- ---------------
Total distributions...................................................... ( 0.03 ) --
-------------- ---------------
Net asset value at end of period......................................... $ 16.29 $ 10.95
============== ===============
Total return (C) ........................................................ 49.09% 9.50%
============== ===============
Net assets at end of period (000's)...................................... $ 13,984 $ 6,550
============== ===============
Ratio of expenses to average net assets (D) ............................. 1.94% 1.95% (E)
Ratio of net investment loss to average net assets....................... ( 1.57% ) ( 1.26%)(E)
Portfolio turnover rate.................................................. 51% 16%
Average commission rate per share........................................ $ 0.0534 $ 0.0800
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(A) Represents the period from the commencement of operations (September 29,
1995) through August 31, 1996.
(B) Calculated using weighted average shares outstanding during the period.
(C) Total returns shown exclude the effect of applicable sales loads.
(D) Absent fee waivers and/or expense reimbursements, the ratios of expenses to
average net assets would have been 2.62% and 5.05%(E) for the periods ended
August 31, 1997 and 1996, respectively (Note 4).
(E) Annualized.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
FINANCIAL HIGHLIGHTS
===================================================================================================================================
Per Share Data for a Share Outstanding Throughout Each Period
===================================================================================================================================
Year Period
Ended Ended
August 31, August 31,
1997 1996 (A)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value at beginning of period................................... $ 9.75 $ 10.00
-------------- ---------------
Income from investment operations:
Net investment income................................................. 0.62 0.57(B)
Net realized and unrealized gains (losses) on investments............. 0.28 ( 0.25)
-------------- ---------------
Total from investment operations......................................... 0.90 0.32
-------------- ---------------
Less distributions:
Dividends from net investment income.................................. ( 0.62 ) ( 0.57)
Distributions from net realized gains................................. ( 0.03 ) --
-------------- ---------------
Total distributions...................................................... ( 0.65 ) ( 0.57)
-------------- ---------------
Net asset value at end of period......................................... $ 10.00 $ 9.75
============== ===============
Total return (C) ........................................................ 9.48% 3.23%
============== ===============
Net assets at end of period (000's)...................................... $ 15,114 $ 13,357
============== ===============
Ratio of expenses to average net assets (D) ............................. 0.85% 0.68%(E)
Ratio of net investment income to average net assets..................... 6.26% 6.31%(E)
Portfolio turnover rate.................................................. 41% 12%
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(A) Represents the period from the commencement of operations (October 3, 1995)
through August 31, 1996.
(B) Calculated using weighted average shares outstanding during the period.
(C) Total returns shown exclude the effect of applicable sales loads.
(D) Absent fee waivers and/or expense reimbursements, the ratios of expenses to
average net assets would have been 1.53% and 2.04%(E) for the periods ended
August 31, 1997 and 1996, respectively (Note 4).
(E) Annualized.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
===================================================================================================================================
Per Share Data for a Share Outstanding Throughout Each Period
===================================================================================================================================
Year Period
Ended Ended
August 31, August 31,
1997 1996 (A)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value at beginning of period................................... $ 1.00 $ 1.00
-------------- ---------------
Income from investment operations:
Net investment income................................................. 0.050 0.046 (B)
-------------- ---------------
Total from investment operations......................................... 0.050 0.046
-------------- ---------------
Less distributions:
Dividends from net investment income.................................. ( 0.050 ) ( 0.046)
-------------- ---------------
Total distributions...................................................... ( 0.050 ) ( 0.046)
-------------- ---------------
Net asset value at end of period......................................... $ 1.00 $ 1.00
============== ===============
Total return............................................................. 5.14% 4.70%
============== ===============
Net assets at end of period (000's)...................................... $ 94,569 $ 76,363
============== ===============
Ratio of expenses to average net assets(C) .............................. 0.65% 0.65%(D)
Ratio of net investment income to average net assets..................... 5.03% 4.94%(D)
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(A) Represents the period from the commencement of operations (September 29,
1995) through August 31, 1996.
(B) Calculated using weighted average shares outstanding during the period.
(C) Absent fee waivers and/or expense reimbursements, the ratios of
expenses to average net assets would have been 0.79% and 0.99%(D) for the
periods ended August 31, 1997 and 1996, respectively (Note 4).
(D) Annualized.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
KENTUCKY TAX-FREE FUND
FINANCIAL HIGHLIGHTS
===================================================================================================================================
Per Share Data For a Share Outstanding Throughout Each Period
===================================================================================================================================
Year Period
Ended Ended
August 31, August 31,
1997 1996 (A)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value at beginning of period................................... $ 10.06 $ 10.00
-------------- ---------------
Income from investment operations:
Net investment income................................................. 0.44 0.51(B)
Net realized and unrealized gains on investments...................... 0.28 0.06
-------------- ---------------
Total from investment operations......................................... 0.72 0.57
-------------- ---------------
Less distributions:
Dividends from net investment income.................................. ( 0.44 ) ( 0.51)
Distributions in excess of net investment income...................... ( 0.08 ) --
-------------- ---------------
Total distributions...................................................... ( 0.52 ) ( 0.51)
-------------- ---------------
Net asset value at end of period......................................... $ 10.26 $ 10.06
============== ===============
Total return (C) ........................................................ 7.36% 5.80%
============== ===============
Net assets at end of period (000's)...................................... $ 8,438 $ 15,840
============== ===============
Ratio of expenses to average net assets (D) ............................. 0.85% 0.82%
Ratio of net investment income to average net assets..................... 4.35% 5.30%(E)
Portfolio turnover rate.................................................. 0% 145%
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(A) Represents the period from the commencement of operations (September 27,
1995) through August 31, 1996.
(B) Calculated using weighted average shares outstanding during the period.
(C) Total returns shown exclude the effect of applicable sales loads.
(D) Absent fee waivers and/or expense reimbursements, the ratios of expenses to
average net assets would have been 1.78% and 1.65%(E) for the periods ended
August 31, 1997 and 1996, respectively (Note 4).
(E) Annualized.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
August 31, 1997
===============================================================================
1. Organization
The Growth/Value Fund and Aggressive Growth Fund are each a non-diversified
series of Countrywide Strategic Trust. The Intermediate Bond Fund and Money
Market Fund are, respectively, a non-diversified and diversified series of
Countrywide Investment Trust. The Kentucky Tax-Free Fund is a non-diversified
series of Countrywide Tax-Free Trust. Each Trust was established as a
Massachusetts business trust registered under the Investment Company Act of
1940. Countrywide Strategic Trust was organized on November 18, 1982 and
currently offers five series of shares. Countrywide Investment Trust was
organized on December 7, 1980 and currently offers seven series of shares.
Countrywide Tax-Free Trust was organized on April 13, 1981 and currently offers
seven series of shares. The Growth/Value Fund, the Aggressive Growth Fund, the
Intermediate Bond Fund, the Money Market Fund and the Kentucky Tax-Free Fund
(individually, a Fund and, collectively, the Funds) were originally organized as
series of Trans Adviser Funds, Inc. (Note 7).
The Growth/Value Fund seeks long-term capital appreciation primarily through
equity investments in companies whose valuations may not reflect the prospect
for accelerating earnings/cash flow growth. The Fund seeks to achieve its
objective by investing primarily in common stocks but also in preferred stocks,
convertible bonds and warrants of companies which, in the opinion of the Fund's
investment adviser, are expected to achieve growth of investment principal over
time. Investments will largely be made in companies of greater than $750 million
capitalization. The Fund commenced investment operations on September 29, 1995.
The Aggressive Growth Fund seeks long-term capital appreciation primarily
through equity investments. The Fund will seek growth opportunities among
companies of various sizes. The Fund seeks to achieve its objective by investing
primarily in common stocks but also in preferred stocks, convertible bonds,
options and warrants of companies which, in the opinion of the Fund's investment
adviser, are expected to achieve growth of investment principal over time. Many
of these companies are in the small to medium-sized category (companies with
market capitalizations of less than $750 million at the time of purchase). The
Fund commenced investment operations on September 29, 1995.
The Intermediate Bond Fund seeks to provide as high a level of current income as
is consistent with the preservation of capital. The Fund invests in marketable
corporate debt securities, U.S. Government securities, mortgage-related
securities, other asset-backed securities and cash or money market instruments.
The Fund commenced investment operations on October 3, 1995.
The Money Market Fund seeks high current income, consistent with liquidity and
stability of principal. The Fund invests primarily in high-quality U.S.
dollar-denominated money market instruments. The Fund commenced investment
operations on September 29, 1995.
The Kentucky Tax-Free Fund seeks the highest level of interest income exempt
from federal and Kentucky income taxes, consistent with protection of capital.
The Fund invests primarily in high and medium-quality Kentucky municipal
obligations. The Fund commenced investment operations on September 27, 1995.
2. Significant Accounting Policies
The following is a summary of the Funds' significant accounting policies:
Security valuation -- Money Market Fund securities are valued on an amortized
cost basis which approximates market value, in accordance with Rule 2a-7 under
the Investment Company Act of 1940. This method of valuation is expected to
enable the Fund to maintain a constant net asset value per share. Securities
held by the Growth/Value Fund, Aggressive Growth Fund, Intermediate Bond Fund
and Kentucky Tax-Free Fund for which market quotations are readily available are
valued using the last reported sales price provided by independent pricing
services. If no sales are reported, the mean of the last bid and asked price is
used. In the absence of readily available market quotations, securities are
valued at fair value as determined by the Board of Directors.
<PAGE>
Repurchase agreements -- Repurchase agreements, which are collateralized by U.S.
Government obligations, are valued at cost which, together with accrued
interest, approximates market. At the time a Fund enters into a repurchase
agreement, the seller agrees that the value of the underlying securities,
including accrued interest, will at all times be equal to or exceed the face
amount of the repurchase agreement. In addition, each Fund actively monitors and
seeks additional collateral, as needed.
Share valuation -- The net asset value per share of each Fund is calculated
daily by dividing the total value of each Fund's assets, less liabilities, by
the number of shares outstanding. The current maximum offering price per share
of the Growth/Value Fund, Aggressive Growth Fund and Kentucky Tax-Free Fund is
equal to net asset value per share plus a sales load equal to 4.17% of net asset
value (or 4% of the offering price) while the current maximum offering price per
share of the Intermediate Bond Fund is equal to net asset value per share plus a
sales load equal to 2.04% of net asset value (or 2% of the offering price). The
offering price of the Money Market Fund is equal to the net asset value per
share. The redemption price per share of each Fund is equal to the net asset
value per share.
Prior to August 30, 1997, the maximum offering price per share of the
Growth/Value Fund, Aggressive Growth Fund, Intermediate Bond Fund and Kentucky
Tax-Free Fund was equal to net asset value per share plus a sales load equal to
4.71% of net asset value (or 4.5% of the offering price).
Investment income -- Interest income is accrued as earned. Dividend income is
recorded on the ex-dividend date. The Kentucky Tax-Free Fund amortizes premium
on fixed income investments to the maturity (or first call) date using the
yield-to-maturity method. In all other Funds, if a fixed income investment is
purchased at a premium, the premium is not amortized. If a fixed income
investment is purchased at a discount (other than original issue discount), the
discount is not accreted. Original issue discount on fixed income investments is
accreted daily using the yield-to-maturity method.
Distributions to shareholders -- Dividends arising from net investment income,
if any, are declared and paid annually to shareholders of the Growth/Value Fund
and Aggressive Growth Fund. Dividends arising from net investment income are
declared daily and paid monthly to shareholders of the Intermediate Bond Fund,
Money Market Fund and Kentucky Tax-Free Fund. With respect to each Fund, net
realized short-term capital gains, if any, may be distributed throughout the
year and net realized long-term capital gains, if any, are distributed at least
once each year. Income distributions and capital gain distributions are
determined in accordance with income tax regulations.
Security transactions -- Security transactions are accounted for on trade date.
Securities sold are valued on a specific identification basis.
Organization costs -- Costs incurred by the Funds in connection with their
organization and registration of shares, net of certain expenses paid by the
Adviser, have been capitalized and are being amortized on a straight-line basis
over a five year period beginning with each Fund's commencement of operations.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
Federal income tax -- It is each Fund's policy to comply with the special
provisions of the Internal Revenue Code available to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies
and distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also each Fund's intention to declare as dividends
in each calendar year at least 98% of its net investment income (earned during
the calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
<PAGE>
The following information is based upon the federal income tax cost of portfolio
investments (excluding repurchase agreements) as of August 31, 1997:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Growth/ Aggressive Intermediate Kentucky
Value Growth Bond Tax-Free
Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross unrealized appreciation.................. $ 7,854,770 $ 4,821,978 $ 144,820 $ 95,250
Gross unrealized depreciation.................. ( 180,294) ( 108,241) ( 104,962 ) ( 3,150)
------------ -------------- ------------- --------------
Net unrealized appreciation.................... $ 7,674,476 $ 4,713,737 $ 39,858 $ 92,100
============ ============== ============= ==============
Federal income tax cost........................ $ 19,842,469 $ 9,516,442 $14,932,344 $ 7,981,883
============ ============== ============= ==============
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
For the Intermediate Bond Fund, the difference between the federal income tax
cost of portfolio investments and the financial statement cost is due to certain
timing differences in the recognition of capital losses under generally accepted
accounting principles and income tax regulations.
As of August 31, 1997, the Aggressive Growth Fund and the Money Market Fund had
capital loss carryforwards for federal income tax purposes of $154,085 and
$1,955, respectively. In addition, the Aggressive Growth Fund, Intermediate Bond
Fund, Money Market Fund and Kentucky Tax-Free Fund elected to defer until each
Fund's subsequent tax year $202,393, $2,877, $607 and $39,798, respectively, of
capital losses incurred after October 31, 1996. These capital loss carryforwards
and "post-October" losses may be utilized in future years to offset net realized
capital gains prior to distribution to shareholders.
Reclassification of capital accounts -- For the year ended August 31, 1997, the
Growth/Value Fund and Aggressive Growth Fund had net investment losses of
$214,624 and $148,879, respectively. With respect to the Growth/Value Fund,
$50,796 of the net investment loss was used to offset net short-term capital
gains and has been reclassified to accumulated net realized gains (losses) from
security transactions on the Statements of Assets and Liabilities, and $163,828
has been reclassified to paid-in capital. With respect to the Aggressive Growth
Fund, the $148,879 net investment loss has been reclassified to paid-in capital
on the Statements of Assets and Liabilities. For the year ended August 31, 1997,
the Kentucky Tax-Free Fund had distributions in excess of net investment income
of $100,598 which have been reclassified to paid-in capital on the Statements of
Assets and Liabilities. Such reclassifications, the result of permanent
differences between financial statement and income tax reporting requirements,
have no effect on each Fund's net assets or net asset value per share.
3. Investment Transactions
Investment transactions (excluding short-term investments) were as follows for
the year ended August 31, 1997:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Growth/ Aggressive Intermediate Kentucky
Value Growth Bond Tax-Free
Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases of investment securities............. $ 14,977,055 $ 8,126,232 $ 8,677,924 $ --
============= ============== ============= ==============
Proceeds from sales and maturities of
investment securities....................... $ 10,393,908 $ 4,667,425 $ 5,738,950 $ 7,587,516
============= ============== ============= ==============
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4. Transactions with Affiliates
The Chairman and the President of Countrywide Strategic Trust, Countrywide
Investment Trust and Countrywide Tax-Free Trust are also officers of Countrywide
Financial Services, Inc., whose subsidiaries include Countrywide Investments,
Inc. (the Adviser), the Funds' investment adviser and principal underwriter, and
Countrywide Fund Services, Inc. (CFS), the Funds' transfer agent, shareholder
service agent and accounting services agent. Countrywide Financial Services,
Inc. is a wholly-owned subsidiary of Countrywide Credit Industries, Inc., a New
York Stock Exchange listed company principally engaged in the business of
residential mortgage lending.
<PAGE>
INVESTMENT ADVISER
Each Fund's investments are managed by the Adviser under the terms of a
Management Agreement. The Growth/Value Fund and Aggressive Growth Fund each pay
the Adviser a fee, which is computed and accrued daily and paid monthly, at an
annual rate of 1.00% of its respective average daily net assets up to $50
million; 0.90% of such net assets from $50 million to $100 million; 0.80% of
such net assets from $100 million to $200 million; and 0.75% of such net assets
in excess of $200 million. The Intermediate Bond Fund and Money Market Fund each
pay the Adviser a fee, which is computed and accrued daily and paid monthly, at
an annual rate of 0.50% of its respective average daily net assets up to $50
million; 0.45% of such net assets from $50 million to $150 million; 0.40% of
such net assets from $150 million to $250 million; and 0.375% of such net assets
in excess of $250 million. The Kentucky Tax-Free Fund pays the Adviser a fee,
which is computed and accrued daily and paid monthly, at an annual rate of 0.50%
of its respective average daily net assets up to $100 million; 0.45% of such net
assets from $100 million to $200 million; 0.40% of such net assets from $200
million to $300 million; and 0.375% of such net assets in excess of $300
million.
Mastrapasqua and Associates, Inc. (Mastrapasqua) has been retained by the
Adviser to manage the investments of the Growth/Value Fund and the Aggressive
Growth Fund. The Adviser (not the Funds) pays Mastrapasqua a fee, which is
computed and accrued daily and paid monthly, at an annual rate of 0.60% of each
Fund's respective average daily net assets up to $50 million; 0.50% of such net
assets from $50 million to $100 million; 0.40% of such net assets from $100
million to $200 million; and 0.35% of such net assets in excess of $200 million.
Prior to August 30, 1997, the investment adviser of the Funds was Trans
Financial Bank, N.A. (the Predecessor Adviser). The Predecessor Adviser received
a monthly advisory fee at an annual rate of 1.00% of average daily net assets
for each of the Growth/Value Fund and Aggressive Growth Fund, 0.40% of average
daily net assets for each of the Intermediate Bond Fund and the Kentucky
Tax-Free Fund and 0.20% of average daily net assets for the Money Market Fund.
Pursuant to a Sub-Advisory Agreement between the Predecessor Adviser and
Mastrapasqua, the Predecessor Adviser delegated certain of its advisory
responsibilities to Mastrapasqua. The Predecessor Adviser (not the Funds) paid
Mastrapasqua a fee, calculated daily and paid monthly, at the annual rate of
0.50% on the first $100 million of the combined average daily net assets of the
Growth/Value Fund and Aggressive Growth Fund plus 0.25% of such combined net
assets in excess of $100 million; and 0.03% of the average daily net assets of
each of the Intermediate Bond Fund, Money Market Fund and Kentucky Tax-Free
Fund. The Predecessor Adviser was a significant shareholder of record of each
Fund as of August 31, 1997.
In order to voluntarily reduce operating expenses during the year ended August
31, 1997, the Predecessor Adviser waived $64,077 of its investment advisory fees
for the Aggressive Growth Fund; waived its entire advisory fee of $60,906 and
reimbursed other operating expenses of $43,624 for the Intermediate Bond Fund;
waived $130,362 of its investment advisory fees for the Money Market Fund; and
waived its entire advisory fee of $47,946 and reimbursed other operating
expenses of $64,639 for the Kentucky Tax-Free Fund.
The Adviser has agreed, until at least August 31, 1999, to waive fees and
reimburse expenses to the extent necessary to limit total operating expenses of
the Growth/Value Fund, Aggressive Growth Fund, Intermediate Bond Fund, Money
Market Fund and Kentucky Tax-Free Fund to 1.95%, 1.95%, 0.95%, 0.80% and 0.82%,
respectively, of each Fund's average daily net assets.
TRANSFER AGENT AND SHAREHOLDER SERVICES
CFS serves as the transfer agent, dividend paying agent and shareholder service
agent for each Fund. CFS maintains the records of each shareholder's account,
answers shareholders' inquiries concerning their accounts, processes purchases
and redemptions of each Fund's shares, acts as dividend and distribution
disbursing agent and performs other shareholder service functions. For these
services, CFS receives a monthly fee at an annual rate of $17 per shareholder
account from each of the Growth/Value Fund and Aggressive Growth Fund, $21 per
shareholder account from each of the Intermediate Bond Fund and Kentucky
Tax-Free Fund and $25 per shareholder account from the Money Market Fund,
subject to a $1,000 minimum monthly fee for each Fund. In addition, each Fund
pays out-of-pocket expenses including, but not limited to, postage and supplies.
<PAGE>
Prior to August 30, 1997, Forum Financial Corp. (FFC) served as the Funds'
transfer agent and dividend disbursing agent and, for these services, received
an annual fee from each Fund of $12,000 plus $25 per shareholder account. In
addition, FFC was reimbursed by the Funds for out-of-pocket expenses incurred in
providing transfer agent services. Forum Financial Services, Inc. (Forum) acted
as distributor of each Fund's shares prior to August 30, 1997. Pursuant to a
shareholder servicing plan adopted by each Fund, Forum received a shareholder
servicing fee at an annual rate of 0.25% of the average daily net assets of each
Fund.
ADMINISTRATION
CFS provides non-investment related administrative and compliance services for
each Fund. CFS supervises the preparation of tax returns, reports to
shareholders, reports to and filings with the Securities and Exchange Commission
and state securities commissions, and materials for meetings of the Board of
Trustees. The Adviser (not the Funds) pays CFS for these services.
Prior to August 30, 1997, Forum Administrative Services, LLC supervised the
administration of all aspects of each Fund's operations and received a fee from
each Fund at an annual rate of 0.15% of the average daily net assets of such
Fund, subject to a $25,000 minimum annual fee.
ACCOUNTING SERVICES
CFS calculates the daily net asset value per share and maintains the financial
books and records of each Fund. For these services, CFS receives a monthly fee,
based on current asset levels, of $2,500 from each of the Growth/Value Fund and
Aggressive Growth Fund, $2,750 from the Intermediate Bond Fund, $3,000 from the
Money Market Fund and $3,250 from the Kentucky Tax-Free Fund. In addition, each
Fund pays certain out-of-pocket expenses incurred by CFS in obtaining valuations
of portfolio securities.
Prior to August 30, 1997, FFC performed portfolio accounting services for the
Funds and received an annual fee from each Fund of $36,000 plus certain
surcharges based on specified assets levels and the number and types of
portfolio transactions within each Fund.
5. Capital Share Transactions
Proceeds and payments on capital shares as shown in the Statements of Changes in
Net Assets are the result of the following capital share transactions for the
periods ended August 31, 1997 and 1996:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Growth/ Aggressive Intermediate Money Kentucky
Value Growth Bond Market Tax-Free
Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Shares outstanding: September 1, 1995 (1) ...... -- -- -- -- --
---------- --------- ---------- --------- -----------
Shares sold..................................... 1,408,416 668,440 1,491,710 446,620,681 2,814,888
Shares issued in reinvestment of distributions
to shareholders............................ -- -- 1,404 84,304 57,538
Shares redeemed................................. ( 57,598) ( 70,133) ( 122,796) (370,344,632) (1,297,814)
---------- --------- ---------- --------- -----------
Shares outstanding: August 31, 1996............. 1,350,818 598,307 1,370,318 76,360,353 1,574,612
---------- --------- ---------- --------- -----------
Shares sold..................................... 751,684 418,585 542,916 570,122,610 127,642
Shares issued in reinvestment of distributions
to shareholders............................ 16,584 376 1,951 424,478 29,744
Shares redeemed................................. ( 434,401) ( 158,580) ( 404,063) ( 552,336,304) ( 909,256)
---------- --------- ---------- --------- -----------
Net increase (decrease) in shares outstanding... 333,867 260,381 140,804 18,210,784 ( 751,870)
---------- --------- ---------- --------- -----------
Shares outstanding: August 31, 1997............. 1,684,685 858,688 1,511,122 94,571,137 822,742
========== ========= ========== ========= ===========
(1) Date of commencement of operations.......... Sept. 29, 1995 Sept. 29, 1995 Oct. 3, 1995 Sept. 29, 1995 Sept. 27, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
6. Concentrations of Credit Risk
As of August 31, 1997, the Kentucky Tax-Free Fund's investment securities were
invested exclusively in debt obligations of issuers for which the interest is
exempt from Kentucky income tax. The issuers' abilities to meet their
obligations may be affected by Kentucky economic or political developments.
Classified by revenue source, concentrations of investment securities
(representing 10% or more) for the Kentucky Tax-Free Fund as of August 31, 1997,
were 29.7% leases, 24.3% education, 19.8% industrial development/pollution
control and 18.4% transportation.
7. Agreement and Plan of Reorganization
Each Fund was originally organized as a series of Trans Adviser Funds, Inc., an
open-end management investment company incorporated under the laws of the State
of Maryland. Trans Adviser Funds, Inc. consisted of five investment portfolios,
the Growth/Value Fund, Aggressive Growth Fund, Intermediate Bond Fund, Money
Market Fund and Kentucky Tax-Free Fund (the Predecessor Funds). The Predecessor
Funds had investment objectives, policies and restrictions substantially
identical to the Funds.
As of the close of business on August 29, 1997, pursuant to an Agreement and
Plan of Reorganization dated May 31, 1997, all assets and liabilities of each
Predecessor Fund were transferred in exchange for capital shares of a
corresponding series of Countrywide Strategic Trust, with respect to the
Growth/Value Fund and Aggressive Growth Fund, Countrywide Investment Trust, with
respect to the Intermediate Bond Fund and Money Market Fund, and Countrywide
Tax-Free Trust, with respect to the Kentucky Tax-Free Fund. Each Predecessor
Fund then distributed to its shareholders as a liquidating dividend all capital
shares of the like Fund in exchange for and in cancellation of its capital
shares. When the reorganization was completed, shareholders of each Fund owned
the same proportional interest as they owned in the Predecessor Fund immediately
before the reorganization, and each Fund owned the same portfolio of assets as
the Predecessor Fund immediately before the reorganization.
The Agreement and Plan of Reorganization was approved at a special meeting of
the Predecessor Funds' shareholders on August 14, 1997. The total number of
shares of each Predecessor Fund voting in person or by proxy at the meeting
represented 70.6% of the Growth/Value Fund's outstanding shares, 72.9% of the
Aggressive Growth Fund's outstanding shares, 90.1% of the Intermediate Bond
Fund's outstanding shares, 54.0% of the Money Market Fund's outstanding shares
and 54.3% of the Kentucky Tax-Free Fund's outstanding shares. The results of the
voting for or against the reorganization by each Fund was as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Number of Shares
For Against Abstain
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth/Value Fund 1,166,197 209 1,215
Aggressive Growth Fund 615,269 194 66
Intermediate Bond Fund 1,454,117 -- --
Money Market Fund 57,549,931 236,463 423,542
Kentucky Tax-Free Fund 490,939 5,785 --
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
For federal income tax purposes, the reorganization qualifies as a tax-free
reorganization with no tax consequences to the Predecessor Funds, the Funds or
their shareholders.
In connection with the reorganization, the fiscal year-end of each Fund,
subsequent to August 31, 1997, has been changed to March 31 for the Growth/Value
Fund and Aggressive Growth Fund, September 30 for the Intermediate Bond Fund and
Money Market Fund, and June 30 for the Kentucky Tax-Free Fund.
<PAGE>
<TABLE>
GROWTH/VALUE FUND
PORTFOLIO OF INVESTMENTS
August 31, 1997
<CAPTION>
====================================================================================================================================
Market
COMMON STOCK -- 101.6% Shares Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY -- 30.1%
Avnet, Inc............................................................... 7,500 $ 518,906
Intel Corp............................................................... 4,000 368,500
International Business Machines Corp..................................... 14,000 1,412,250
Lam Research Corp.*...................................................... 13,000 734,500
Novell, Inc.*............................................................ 35,000 328,125
Novellus Systems, Inc.*.................................................. 6,000 687,750
Oracle Corp.*............................................................ 22,500 857,813
QLogic Corp.*............................................................ 12,500 490,625
SCB Computer Technology, Inc.*........................................... 10,000 265,000
Sun Microsystems, Inc.*.................................................. 20,000 960,000
Western Digital Corp.*................................................... 30,000 1,443,750
---------------
.................................................................... $ 8,067,219
---------------
HEALTH CARE -- 24.2%
American Home Products Corp.............................................. 8,000 $ 576,000
AmeriSource Health Corp. - Class A*...................................... 10,000 500,625
Bard (C.R.), Inc......................................................... 10,000 345,000
Baxter International, Inc................................................ 10,000 531,875
Beverly Enterprises, Inc.*............................................... 20,000 326,250
Bristol-Myers Squibb Co.................................................. 8,000 608,000
HEALTHSOUTH Corp.*....................................................... 9,690 241,644
Health Management Associates, Inc. - Class A*............................ 7,500 221,719
Manor Care, Inc.......................................................... 15,000 463,125
Quorum Health Group, Inc.*............................................... 7,500 255,469
Schering-Plough Corp..................................................... 20,000 960,000
Sybron International Corp.*.............................................. 15,000 599,062
Teva Pharmaceutical Industries, Ltd. - ADR............................... 10,000 523,750
Warner-Lambert Co........................................................ 2,500 317,656
---------------
.................................................................... $ 6,470,175
---------------
FINANCIAL SERVICES -- 18.0%
Ace, Ltd................................................................. 7,500 $ 623,438
American International Group, Inc........................................ 6,000 566,250
Capital One Financial Corp............................................... 20,000 770,000
Centura Banks, Inc....................................................... 10,000 568,750
Chase Manhattan Corp..................................................... 7,500 833,906
Chubb Corp............................................................... 5,000 334,375
MBNA Corp................................................................ 22,500 864,844
Penncorp Financial Group, Inc............................................ 8,000 256,500
---------------
.................................................................... $ 4,818,063
---------------
ENERGY -- 15.7%
Baker Hughes, Inc........................................................ 15,000 $ 635,625
McDermott International, Inc............................................. 10,000 322,500
Nuevo Energy Co.*........................................................ 12,000 609,750
Pride International, Inc.*............................................... 15,000 480,000
Schlumberger, Ltd........................................................ 12,000 914,250
Seagull Energy Corp.*.................................................... 10,000 244,375
Stone Energy Corp.*...................................................... 10,000 305,000
The Williams Companies, Inc.............................................. 15,000 698,438
---------------
.................................................................... $ 4,209,938
---------------
<PAGE>
<CAPTION>
GROWTH/VALUE FUND (continued)
===================================================================================================================================
Market
COMMON STOCK -- 101.6% Shares Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RETAIL -- 6.8%
Carnival Corp. - Class A................................................. 12,500 $ 547,656
Friedman's, Inc. - Class A*.............................................. 6,000 99,750
OfficeMax, Inc.*......................................................... 10,000 148,125
Safeway, Inc.*........................................................... 7,500 382,031
Walgreen Co.............................................................. 4,600 123,913
Wal-Mart Stores, Inc..................................................... 15,000 532,500
---------------
.................................................................... $ 1,833,975
---------------
LEISURE TIME -- 2.5%
Host Marriott Corp.*..................................................... 15,000 $ 292,500
Promus Hotel Corp.*...................................................... 10,000 388,125
---------------
.................................................................... $ 680,625
---------------
BEVERAGES -- 2.3%
PepsiCo, Inc............................................................. 17,000 $ 612,000
---------------
AEROSPACE -- 1.5%
United Technologies Corp................................................. 5,000 $ 390,312
---------------
TRANSPORTATION -- 0.5%
Heartland Express, Inc.*................................................. 5,000 $ 123,750
---------------
TOTAL COMMON STOCK (Cost $19,531,581).................................... $ 27,206,057
---------------
<CAPTION>
===================================================================================================================================
Face Market
CASH EQUIVALENTS -- 1.2% Amount Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Forum Daily Assets Treasury Fund ........................................ $ 310,888 $ 310,888
-------------- ---------------
TOTAL CASH EQUIVALENTS (Cost $310,888) ................................. $ 310,888 $ 310,888
============== ---------------
TOTAL INVESTMENTS AT VALUE-- 102.8% ..................................... $ 27,516,945
LIABILITIES IN EXCESS OF OTHER ASSETS-- (2.8)% .......................... ( 738,876)
---------------
NET ASSETS-- 100.0% ..................................................... $ 26,778,069
===============
<FN>
* Non-income producing security.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
AGGRESSIVE GROWTH FUND
PORTFOLIO OF INVESTMENTS
August 31, 1997
<CAPTION>
===================================================================================================================================
Market
COMMON STOCK -- 98.2% Shares Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY -- 41.4%
Lam Research Corp.*...................................................... 10,000 $ 565,000
Novell, Inc.*............................................................ 55,000 515,625
Novellus Systems, Inc.*.................................................. 4,000 458,500
Oracle Corp.*............................................................ 11,250 428,906
QLogic Corp.*............................................................ 12,500 490,625
SCB Computer Technology, Inc.*........................................... 11,000 291,500
Semtech Corp.*........................................................... 12,000 709,500
SMART Modular Technologies, Inc.*........................................ 15,000 885,000
Sun Microsystems, Inc.*.................................................. 10,000 480,000
Western Digital Corp.*................................................... 20,000 962,500
---------------
.................................................................... $ 5,787,156
---------------
HEALTH CARE -- 20.5%
Alternative Living Services, Inc.*....................................... 10,000 $ 226,250
AmeriSource Health Corp. - Class A*...................................... 7,500 375,469
Atria Communities, Inc.*................................................. 20,000 357,500
Bard (C.R.), Inc......................................................... 5,000 172,500
HealthCare COMPARE Corp.*................................................ 10,000 557,500
Health Management Associates, Inc. - Class A*............................ 10,000 295,625
Manor Care, Inc.......................................................... 10,000 308,750
Quorum Health Group, Inc.*............................................... 5,000 170,312
Sybron International Corp.*.............................................. 10,000 399,375
---------------
.................................................................... $ 2,863,281
---------------
ENERGY -- 15.3%
Hagler Bailly, Inc.*..................................................... 5,000 $ 108,125
McDermott International, Inc............................................. 7,000 225,750
Nuevo Energy Co.*........................................................ 9,000 457,313
Pride International, Inc.*............................................... 15,000 480,000
St. Mary Land & Exploration Co........................................... 5,000 178,750
Seagull Energy Corp.*.................................................... 7,500 183,281
Stone Energy Corp.*...................................................... 7,500 228,750
Tuboscope, Inc.*......................................................... 10,000 278,750
---------------
.................................................................... $ 2,140,719
---------------
FINANCIAL SERVICES -- 7.7%
Ace, Ltd................................................................. 6,000 $ 498,750
Capital One Financial Corp............................................... 10,000 385,000
Penncorp Financial Group, Inc............................................ 6,000 192,375
---------------
.................................................................... $ 1,076,125
---------------
RETAIL -- 6.2%
Carnival Corp. - Class A................................................. 5,000 $ 219,063
Central Newspapers, Inc. - Class A....................................... 4,000 272,250
Friedman's, Inc. - Class A*.............................................. 6,000 99,750
OfficeMax, Inc.*......................................................... 5,000 74,062
Walgreen Co.............................................................. 7,400 199,338
---------------
.................................................................... $ 864,463
---------------
<PAGE>
<CAPTION>
AGGRESSIVE GROWTH FUND (continued)
===================================================================================================================================
Market
COMMON STOCK -- 98.2% Shares Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LEISURE TIME -- 4.9%
Host Marriott Corp.*..................................................... 15,000 $ 292,500
Promus Hotel Corp.*...................................................... 10,000 388,125
---------------
.................................................................... $ 680,625
---------------
TRANSPORTATION -- 2.2%
Simon Transportation Services, Inc.*..................................... 14,000 $ 313,250
---------------
TOTAL COMMON STOCK (Cost $9,011,882) .................................... $ 13,725,619
---------------
<CAPTION>
===================================================================================================================================
Face Market
CASH EQUIVALENTS -- 3.6% Amount Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Forum Daily Assets Treasury Fund ........................................ $ 504,560 $ 504,560
-------------- ---------------
TOTAL CASH EQUIVALENTS (Cost $504,560) .................................. $ 504,560 $ 504,560
============== ---------------
TOTAL INVESTMENTS AT VALUE-- 101.8% ..................................... $ 14,230,179
LIABILITIES IN EXCESS OF OTHER ASSETS-- (1.8)% .......................... ( 246,444)
---------------
NET ASSETS-- 100.0% ..................................................... $ 13,983,735
===============
<FN>
* Non-income producing security.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
INTERMEDIATE BOND FUND
PORTFOLIO OF INVESTMENTS
August 31, 1997
<CAPTION>
===================================================================================================================================
Par Market
Value INVESTMENTS -- 99.1% Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS -- 26.7%
$ 4,000,000 U.S. Treasury Notes, 6.50%, 8/15/05 (Cost $3,996,328)...................... $ 4,031,252
- --------------- ---------------
U.S. GOVERNMENT AGENCY NOTES -- 6.5%
$ 500,000 Federal Home Loan Bank, 6.62%, 12/6/00..................................... $ 499,416
265,000 Tennessee Valley Authority, 6.875%, 1/15/02................................ 267,463
50,000 Tennessee Valley Authority, 6.875%, 8/1/02................................. 50,479
150,000 Federal National Mortgage Assoc., 6.17%, 12/2/03........................... 146,066
30,000 Tennessee Valley Authority, 8.05%, 7/15/24................................. 30,048
- --------------- ---------------
$ 995,000 TOTAL U.S. GOVERNMENT AGENCY NOTES (Cost $998,363)........................ $ 993,472
- --------------- ---------------
MORTGAGE-BACKED SECURITIES -- 7.0%
$ 231,442 Federal Home Loan Mortgage Corp. #1072-G, 7.00%, 5/15/06................... $ 233,916
800,000 Federal Home Loan Mortgage Corp. #1720-E, 7.50%, 12/15/09.................. 817,265
- --------------- ---------------
$ 1,031,442 TOTAL MORTGAGE-BACKED SECURITIES (Cost $1,059,117) ........................ $ 1,051,181
- --------------- ---------------
ASSET-BACKED SECURITIES -- 0.6%
$ 84,357 Small Business Administration #87-A, 8.45%, 1/1/07 (Cost $87,309).......... $ 87,303
- --------------- ---------------
CORPORATE BONDS -- 58.3%
$ 150,000 Consumers Energy Co., 6.875%, 5/1/98....................................... $ 149,994
278,000 Anheuser-Busch Cos., 8.75%, 12/1/99........................................ 291,659
250,000 British Petroleum America, Inc., 6.50%, 12/15/99........................... 250,241
169,000 Associates Corp. of North America, 6.00%, 3/15/00.......................... 167,546
175,000 Pacific Gas & Electric Co., 6.625%, 6/1/00................................. 174,442
172,000 Ford Motor Credit Co., 6.85%, 8/15/00...................................... 173,799
250,000 International Business Machines Credit Corp., 6.20%, 3/19/01............... 246,815
350,000 Florida Residential Property & Casualty Co., 7.25%, 7/1/02................. 353,481
160,000 Ford Motor Credit Co., 7.50%, 1/15/03...................................... 165,432
250,000 Greyhound Financial Corp., 7.82%, 1/27/03.................................. 259,529
68,000 U.S. Leasing International, 6.625%, 5/15/03................................ 67,389
200,000 Southern California Edison, 7.375%, 12/15/03............................... 202,616
200,000 V.F. Corp., 7.60%, 4/1/04.................................................. 206,247
215,000 Chase Manhattan Corp., 8.00%, 5/15/04...................................... 220,658
200,000 Michigan Bell Telephone Co., 6.375%, 2/1/05................................ 195,877
66,000 Kaiser Permanente, 9.55%, 7/15/05.......................................... 77,196
400,000 Anheuser-Busch Cos., 7.00%, 9/1/05......................................... 403,913
500,000 Union Oil of California Corp., 6.70%, 10/15/07............................. 489,286
50,000 Berkley (W.R.) Corp., 9.875%, 5/15/08...................................... 60,073
268,000 Super Value Store, 8.875%, 4/1/16.......................................... 271,964
35,000 Union Camp Corp., 8.625%, 4/15/16.......................................... 35,919
214,000 Anheuser-Busch Cos., 8.625%, 12/1/16....................................... 220,420
56,000 Kraft, Inc., 8.50%, 2/15/17................................................ 58,361
260,000 Dayton Hudson Co., 9.875%, 6/1/17.......................................... 274,227
110,000 GTE Corp., 10.75%, 9/15/17................................................. 116,048
<PAGE>
<CAPTION>
INTERMEDIATE BOND FUND (continued)
===================================================================================================================================
Par Market
Value INVESTMENTS -- 99.1% Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS -- 58.3%
$ 130,000 General Electric Capital Corp., 6.66%, 5/1/18.............................. $ 130,800
150,000 Deere & Co., 8.95%, 6/15/19................................................ 171,365
439,000 Pennsylvania Power & Light Co., 9.25%, 10/1/19............................. 487,506
115,000 Rohm & Haas Co., 9.80%, 4/15/20............................................ 142,484
165,000 Questar Pipeline, 9.375%, 6/1/21........................................... 183,691
120,000 Jersey Central Power & Light Co., 9.20%, 7/1/21............................ 133,318
675,000 Shopko Stores, 9.25%, 3/15/22.............................................. 772,308
300,000 Inco, Ltd., 9.60%, 6/15/22................................................. 333,132
765,000 Alabama Power Co., 8.30%, 7/1/22........................................... 795,396
160,000 Florida Power & Light Co., 8.00%, 8/25/22.................................. 164,634
85,000 Southwestern Public Service Co., 8.20%, 12/1/22............................ 90,584
130,000 Union Electric Co., 8.00%, 12/15/22........................................ 134,854
65,000 Wisconsin Electric Power, 7.75%, 1/15/23................................... 66,459
69,000 Georgia Power Co., 7.95%, 2/1/23........................................... 69,331
- --------------- ---------------
$ 8,414,000 TOTAL CORPORATE BONDS (Cost $8,743,470)................................... $ 8,808,994
- --------------- ---------------
$ 14,524,799 TOTAL INVESTMENTS AT VALUE (Cost $14,884,587).............................. $ 14,972,202
=============== ---------------
<CAPTION>
===================================================================================================================================
Face Market
Amount REPURCHASE AGREEMENTS(1)-- 0.3% Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
$ 54,931 The First Boston Corp., 5.63%, dated 8/29/97, due 9/2/97,
repurchase proceeds $54,965............................................... $ 54,931
- --------------- ---------------
$ 54,931 TOTAL REPURCHASE AGREEMENTS ............................................... $ 54,931
=============== ---------------
TOTAL INVESTMENTS AND REPURCHASE
AGREEMENTS AT VALUE-- 99.4% ............................................ $ 15,027,133
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.6% .............................. 86,744
---------------
NET ASSETS-- 100.0% ....................................................... $ 15,113,877
===============
<FN>
(1) Repurchase agreements are fully collateralized by U.S. Government obligations.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
August 31, 1997
===================================================================================================================================
Par Market
Value INVESTMENTS -- 93.0% Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT & AGENCY ISSUES -- 16.4%
$ 15,000,000 U.S. Treasury Bills, 9/4/97................................................ $ 14,996,250
500,000 Federal National Mortgage Assoc. Notes, 6.84%, 10/3/97..................... 500,492
- --------------- ---------------
$ 15,500,000 TOTAL U.S. GOVERNMENT & AGENCY ISSUES (Cost $15,496,742)................... $ 15,496,742
- --------------- ---------------
CORPORATE NOTES -- 76.6%
$ 1,400,000 General Motors Acceptance Corp., 6.25%, 9/12/97............................ $ 1,400,289
455,000 Dow Capital, 5.75%, 9/15/97................................................ 454,932
2,009,000 Wal-Mart Stores, Inc., 5.50%, 9/15/97...................................... 2,008,788
121,000 Carolina Power & Light Co., 6.375%, 10/1/97................................ 121,001
1,140,000 New York Telephone Co., 4.625%, 10/1/97.................................... 1,138,769
140,000 Ontario Province, 5.70%, 10/1/97........................................... 139,970
745,000 J.C. Penney & Co., 10.00%, 10/15/97........................................ 748,528
50,000 Interamerican Development Bank, 9.50%, 10/15/97............................ 50,205
1,000,000 Manitoba Province, 6.00%, 10/15/97......................................... 1,000,109
4,740,000 First USA Bank, 6.125%, 10/30/97........................................... 4,740,098
2,000,000 African Development Bank, 10.00%, 11/1/97.................................. 2,012,910
790,000 Associates Corp. of North America, 7.75%, 11/1/97.......................... 792,255
80,000 Campbell Soup Co., 9.00%, 11/1/97.......................................... 80,393
500,000 Conagra, Inc., 9.75%, 11/1/97.............................................. 503,156
1,993,000 International Business Machines Corp., 6.375%, 11/1/97..................... 1,994,071
4,505,000 Public Service Electric & Gas, 7.125%, 11/1/97............................. 4,513,516
190,000 U.S. Leasing International, 7.00%, 11/1/97................................. 190,347
1,825,000 American General Finance Corp., 7.70%, 11/15/97............................ 1,831,341
570,000 Associates Corp. of North America, 6.625%, 11/15/97........................ 570,666
484,000 Coca-Cola Enterprises, Inc., 6.50%, 11/15/97............................... 484,419
100,000 GTE South, Inc., 6.25%, 11/15/97........................................... 100,022
300,000 Norwest Corp., 7.70%, 11/15/97............................................. 301,069
1,330,000 Norwest Financial, Inc., 6.50%, 11/15/97................................... 1,331,509
340,000 Texaco Capital, 9.00%, 11/15/97............................................ 342,029
1,000,000 General Motors Acceptance Corp., 7.85%, 11/17/97........................... 1,004,436
800,000 BankAmerica Corp., 6.875%, 11/20/97........................................ 801,556
600,000 Beneficial Corp., 6.79%, 11/20/97.......................................... 601,392
30,000 Philip Morris Companies, Inc. Medium Term Notes, 9.35%, 11/21/97........... 30,224
110,000 Bell Atlantic Financial, 6.625%, 11/30/97.................................. 110,137
895,000 British Petroleum America, Inc., 8.875%, 12/1/97........................... 901,193
791,000 Dupont Corp., 8.65%, 12/1/97............................................... 796,189
474,000 Ford Motor Credit Co., 7.125%, 12/1/97..................................... 475,208
999,000 Ford Motor Credit Co., 8.00%, 12/1/97...................................... 1,003,676
2,721,000 Philip Morris Companies, Inc., 9.25%, 12/1/97.............................. 2,742,307
250,000 New England Telephone Co., 6.25%, 12/15/97................................. 250,236
5,050,000 Southern California Gas Co., 6.50%, 12/15/97............................... 5,059,008
240,000 General Electric Capital Corp., 6.44%, 12/16/97............................ 240,371
161,000 British Petroleum America, Inc., 9.50%, 1/1/98............................. 162,699
504,000 Ford Capital, 9.375%, 1/1/98............................................... 509,138
1,270,000 Caterpillar, Inc., 7.47%, 1/15/98.......................................... 1,277,301
470,000 Chase Manhattan Corp., 6.625%, 1/15/98..................................... 470,974
248,000 GTE California, 6.25%, 1/15/98............................................. 248,246
60,000 General Electric Capital Corp., 8.00%, 1/15/98............................. 60,424
750,000 NationsBank Corp., 6.625%, 1/15/98......................................... 751,502
<PAGE>
<CAPTION>
MONEY MARKET FUND (continued)
===================================================================================================================================
Par Market
Value INVESTMENTS -- 93.0% Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE NOTES -- 76.6%
$ 1,893,000 Philip Morris Companies, Inc., 6.375%, 1/15/98............................. $ 1,894,523
1,000,000 Texaco Capital, 8.65%, 1/30/98............................................. 1,010,328
1,250,000 Associates Corp. of North America, 6.125%, 2/1/98.......................... 1,250,260
50,000 Chubb Capital Corp., 6.00%, 2/1/98......................................... 49,947
535,000 Southern California Edison Co., 5.875%, 2/1/98............................. 534,477
110,000 WMX Technologies, Inc., 8.125%, 2/1/98..................................... 110,895
2,000,000 Ford Motor Credit Co., 9.30%, 2/10/98...................................... 2,029,210
310,000 Beneficial Corp., 9.125%, 2/15/98.......................................... 314,186
455,000 Commercial Credit Co., 8.50%, 2/15/98...................................... 460,096
3,065,000 Lehman Brothers Holdings, Inc., 5.75%, 2/15/98............................. 3,059,862
776,000 Ford Motor Credit Co., 6.25%, 2/26/98...................................... 777,147
210,000 Dean Witter, Discover & Co., 6.00%, 3/1/98................................. 209,973
50,000 GTE Corp., 8.85%, 3/1/98................................................... 50,684
125,000 Gannett Co., 5.25%, 3/1/98................................................. 124,500
455,000 Wal-Mart Stores, Inc., 5.50%, 3/1/98....................................... 453,982
4,116,000 Revlon Worldwide Corp. Discount Note, 3/15/98.............................. 3,989,520
400,000 Colonial Gas Co., 6.20%, 3/18/98........................................... 400,211
1,000,000 General Electric Capital Corp., 7.61%, 3/27/98............................. 1,008,994
500,000 General Electric Capital Corp., 7.08%, 3/30/98............................. 503,249
500,000 Ontario Hydro, 5.80%, 3/31/98.............................................. 499,214
735,000 Sears Roebuck & Co., 9.25%, 4/15/98........................................ 749,099
500,000 Chrysler Financial Corp., 7.05%, 4/29/98................................... 503,204
540,000 General Electric Capital Corp., 8.37%, 5/8/98.............................. 548,764
500,000 Transamerica Financial Corp., 7.17%, 6/29/98............................... 504,420
300,000 American General Finance Corp., 8.50%, 8/15/98............................. 306,690
1,000,000 General Motors Acceptance Corp. Medium Term Notes, 6.375%, 9/1/98.......... 1,003,571
4,500,000 Manitoba Province, 9.50%, 9/15/98.......................................... 4,658,897
1,105,000 NationsBank Corp., 5.125%, 9/15/98......................................... 1,095,663
- --------------- ---------------
$ 72,210,000 TOTAL CORPORATE NOTES (Cost $72,448,175)................................... $ 72,448,175
- --------------- ---------------
$ 87,710,000 TOTAL INVESTMENTS AT VALUE (Cost $87,944,917).............................. $ 87,944,917
=============== ---------------
<CAPTION>
===================================================================================================================================
Face Market
Amount REPURCHASE AGREEMENTS(1)-- 24.6% Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
$ 6,240,577 The First Boston Corp., 5.63%, dated 8/29/97, due 9/2/97,
repurchase proceeds $6,244,481......................................... $ 6,240,577
17,018,081 Lehman Brothers, Inc., 5.55%, dated 8/27/97, due 9/2/97,
repurchase proceeds $17,036,447......................................... 17,018,081
- --------------- ---------------
$ 23,258,658 TOTAL REPURCHASE AGREEMENTS ............................................... $ 23,258,658
=============== ---------------
TOTAL INVESTMENTS AND REPURCHASE
AGREEMENTS AT VALUE-- 117.6% ........................................... $ 111,203,575
LIABILITIES IN EXCESS OF OTHER ASSETS-- (17.6)% ........................... (16,634,506 )
---------------
NET ASSETS-- 100.0% ....................................................... $ 94,569,069
===============
<FN>
(1) Repurchase agreements are fully collateralized by U.S. Government obligations.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
KENTUCKY TAX-FREE FUND
PORTFOLIO OF INVESTMENTS
August 31, 1997
===================================================================================================================================
PAR COUPON MATURITY MARKET
VALUE FIXED RATE REVENUE BONDS-- 95.7% RATE DATE(1) VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 425,000 Kentucky St. Turnpike Auth. EDR, ETM........................ 7.000% 05/15/1999 $ 445,187
90,000 Jefferson Co., KY, Capital Projects Corp. Rev., Ser. A...... 0.000 08/15/1999 82,462
70,000 Kentucky St. Property & Buildings Commission Rev.,
Project # 32............................................. 6.500 12/01/1999 73,238
200,000 Owensboro, KY, Electric Light & Power Rev., Ser. A,
prerefunded at 102....................................... 10.250 01/01/2000 225,000
50,000 Louisville & Jefferson Co., KY, Metropolitan Sewer District,
Sewer & Drain System Rev., Ser. A........................... 6.500 05/15/2000 52,750
100,000 Kentucky St. Turnpike Auth. EDR, prerefunded at 101.5....... 7.250 05/15/2000 109,000
225,000 Kentucky Higher Education Student Loan Rev., Ser. B......... 6.400 06/01/2000 235,125
385,000 Trimble Co., KY, PCR, Ser. A, prerefunded at 102............ 7.625 11/01/2000 426,868
455,000 Kentucky St. Property & Buildings Commission Rev.,
Project # 51, ETM....................................... 6.300 08/01/2001 486,281
100,000 Kentucky St. Property & Buildings Commission Rev., Project # 52,
prerefunded at 102...................................... 6.500 08/01/2001 109,375
70,000 Lexington-Fayette Urban County Government, KY,
School Building Rev. ................................... 6.800 10/01/2001 76,037
120,000 Puerto Rico Public Buildings Auth. Guaranteed Rev.,
Ser. K, prerefunded at 101.5............................ 6.875 07/01/2002 134,850
100,000 Kentucky St. Pollution Abatement & Water Reserve Finance
Auth. Rev., Ser. A, ETM................................. 7.400 08/01/2002 112,875
490,000 Jefferson Co., KY, Capital Projects Corp. Rev. Ser. A....... 5.650 08/15/2003 519,400
200,000 Hopkins Co., KY, School District Finance Corp.,
School Building Rev. ................................... 5.700 06/01/2006 211,000
750,000 Jefferson Co., KY, School District Finance Corp.,
School Building Rev., Ser. A............................ 5.000 02/01/2007 757,500
615,000 Kentucky St. Turnpike Auth. Resource Recovery Road
Rev., ETM............................................... 6.125 07/01/2007 656,513
50,000 Lexington-Fayette Urban County Airport Corp., KY,
First Mtg. Rev. ........................................ 7.750 04/01/2008 52,850
450,000 Ashland, KY, PCR (Ashland Oil, Inc.)........................ 7.375 07/01/2009 483,750
275,000 Kentucky St. Turnpike Auth. Resource Recovery Road
Rev., Ser. A............................................ 6.000 07/01/2009 276,771
495,000 Jefferson Co., KY, School District Finance Corp. School
Building Rev., Ser. A................................... 4.875 01/01/2011 473,963
200,000 University of Louisville, KY, Rev., Ser. H.................. 5.875 05/01/2012 209,500
725,000 Boone Co., KY, Public Properties Corp. Sewer System Rev..... 5.150 12/01/2012 709,594
305,000 Fern Creek, KY, Fire Protection District Rev.,
Fire Station # 2....................................... 5.750 01/15/2014 303,856
235,000 Jefferson Co., KY, PCR (Louisville Gas & Electric Co.,
Project A)............................................. 7.450 06/15/2015 255,563
295,000 Ashland, KY, Solid Waste Rev. (Ashland Oil, Inc. Project)... 7.200 10/01/2020 318,600
270,000 Greater Kentucky Housing Assistance Corp. Mtg. Rev., Ser. A. 6.250 07/01/2022 276,075
- -------------- ------------
$ 7,745,000 TOTAL FIXED RATE REVENUE BONDS (Amortized Cost $7,981,883).. $ 8,073,983
============== ------------
OTHER ASSETS IN EXCESS OF LIABILITIES-- 4.3% ............... 363,649
------------
NET ASSETS-- 100.0% ........................................ $ 8,437,632
============
<FN>
ETM -- Escrowed to Maturity
EDR -- Economic Development Revenue
PCR -- Pollution Control Revenue
(1) Bonds denoted as prerefunded are anticipated to be redeemed prior to their
scheduled maturity. The maturity dates shown reflect the stipulated
prerefunded dates.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
===============================================================================
LOGO: ARTHUR ANDERSEN LLP
To the Shareholders and Boards of Trustees of the Growth/Value Fund and the
Aggressive Growth Fund of Countrywide Strategic Trust, the Intermediate Bond
Fund and the Money Market Fund of Countrywide Investment Trust and the Kentucky
Tax-Free Fund of Countrywide Tax-Free Trust:
We have audited the accompanying statements of assets and liabilities of the
Growth/Value Fund and Aggressive Growth Fund of Countrywide Strategic Trust (a
Massachusetts business trust), Intermediate Bond Fund and Money Market Fund of
Countrywide Investment Trust (a Massachusetts business trust) and Kentucky
Tax-Free Fund of Countrywide Tax-Free Trust (a Massachusetts business trust),
including the portfolios of investments, as of August 31, 1997, and the related
statements of operations, the statements of changes in net assets, and the
financial highlights for the year then ended. These financial statements and
financial highlights are the responsibility of the Trusts' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial statements as of August
31, 1996 and financial highlights for the period ended August 31, 1996 were
audited by other auditors whose report dated October 18, 1996, expressed an
unqualified opinion on those financial statements and financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and 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
August 31, 1997, 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 financial highlights referred to
above present fairly, in all material respects, the financial position of the
Growth/Value Fund and the Aggressive Growth Fund of Countrywide Strategic Trust,
the Intermediate Bond Fund and the Money Market Fund of Countrywide Investment
Trust and the Kentucky Tax-Free Fund of Countrywide Tax-Free Trust as of August
31, 1997, the results of their operations, the changes in their net assets, and
their financial highlights for the year then ended, in conformity with generally
accepted accounting principles.
/s/Arthur Andersen LLP
Cincinnati, Ohio,
October 17, 1997
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000352667
<NAME> COUNTRYWIDE TAX-FREE TRUST
<SERIES>
<NUMBER> 1
<NAME> KENTUCKY TAX-FREE FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> SEP-01-1996
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 7,981,883
<INVESTMENTS-AT-VALUE> 8,073,983
<RECEIVABLES> 140,468
<ASSETS-OTHER> 19,584
<OTHER-ITEMS-ASSETS> 233,962
<TOTAL-ASSETS> 8,467,997
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 30,365
<TOTAL-LIABILITIES> 30,365
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8,341,407
<SHARES-COMMON-STOCK> 822,742
<SHARES-COMMON-PRIOR> 1,574,612
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4,125
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 92,100
<NET-ASSETS> 8,437,632
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 626,947
<OTHER-INCOME> 0
<EXPENSES-NET> 102,264
<NET-INVESTMENT-INCOME> 524,683
<REALIZED-GAINS-CURRENT> 6,913
<APPREC-INCREASE-CURRENT> 351,842
<NET-CHANGE-FROM-OPS> 883,438
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 524,683
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 100,598
<NUMBER-OF-SHARES-SOLD> 127,642
<NUMBER-OF-SHARES-REDEEMED> 909,256
<SHARES-REINVESTED> 29,744
<NET-CHANGE-IN-ASSETS> (7,661,014)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (2,788)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 47,946
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 214,849
<AVERAGE-NET-ASSETS> 12,052,637
<PER-SHARE-NAV-BEGIN> 10.06
<PER-SHARE-NII> .44
<PER-SHARE-GAIN-APPREC> .28
<PER-SHARE-DIVIDEND> .44
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> .08
<PER-SHARE-NAV-END> 10.26
<EXPENSE-RATIO> .85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
