LETTER FROM THE CHAIRMAN
===============================================================================
Dear Shareholders:
Since David Loeb and I founded Countrywide in 1969, management has continually
endeavored to make Countrywide a leader in every venture it undertakes. As we
recently welcomed you to the Countrywide family, with the acquisition of Midwest
Group by Countrywide, our vision of evolving into a widely recognized, highly
skilled innovator of diversified financial products and services has become even
more of a reality.
Nineteen funds are now offered through the Countrywide Family of Funds. The
recent acquisition of five new funds is part of Countrywide's aggressive
strategy to expand its Financial Services Division through the purchase of
existing high-performance funds. As we continue to add new funds, fund
shareholders will be provided with an even broader spectrum of investment
choices. To follow through on our commitment to product expansion, Countrywide
Investments recently created a merger and acquisition team of key managers
dedicated to seeking out opportunities to grow our product line.
Countrywide proudly embraces and is committed to our new family members. We will
continue to search for and offer financial products and services that provide
the potential for profitable growth. We look forward to the future's endless
opportunities.
Sincerely,
/s/ Angelo R. Mozilo
Angelo R. Mozilo
Chairman
Photo of: Angelo R. Mozilo.
<PAGE>
LETTER FROM THE PRESIDENT
===============================================================================
Dear Fellow Shareholders:
We are pleased to present the audited annual report for Countrywide Investment
Trust. This report provides financial data and performance information for the
fiscal year ended September 30, 1997. Countrywide Investments' recent
acquisition of Trans Adviser Funds, Inc., a family of five mutual funds,
broadened our product offering. Two of the newly-acquired funds, the
Intermediate Bond Fund and Money Market Fund are now part of Countrywide
Investment Trust and their results are included herein.
An exciting development during the period covered by this report was the passage
of the federal budget agreement and sweeping tax legislation, which reduced tax
rates on capital gains and broadened 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 will have a full IRA product line
available to help our shareholders take advantage of these new investment
opportunities.
U.S. financial markets performed well during the fiscal year, primarily due to a
combination of low inflation and steady economic growth. This favorable economic
environment resulted in high employment levels and strong corporate profits,
which provided momentum for the stock market. The bond markets were encouraged
by the above-mentioned federal budget agreement and the powerful flow of federal
government tax receipts, both of which reduced pressure on long-term interest
rates. As a result, rates ended the period at levels well below those of a year
ago.
Recently, trouble in Asian markets spilled over into U.S. financial markets with
mixed results. U.S. stocks lost value on fears that the economic crisis in Asia
would hurt the performance of U.S. multinational corporations. Bonds, on the
other hand, rallied due in part to a "flight to quality" as investors sought
refuge in the relatively stable U.S. Treasury market. The turbulence in the
equity markets helped long-term interest rates drop to their lowest levels since
early 1996.
We believe that the economy will continue to grow at a healthy pace over the
next several months driven by high consumer confidence levels and low interest
rates, and that inflation will remain under control through the end of 1997 and
into 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 our investors meet their financial goals. Our success has been built
on the confidence our investors have extended to us. We thank you for your
support and look forward to continued service to you in the future.
Sincerely,
/s/ Robert H. Leshner
Robert H. Leshner
President
Photo of: Robert H. Leshner.
<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 twelve months ended September 30, 1997, the Fund's total return
(excluding the impact of applicable sales loads) was 10.04%, as compared to
8.19% for the Lehman Brothers Intermediate Government/Corporate Index.
The fixed-income market during the twelve months ended September 30, 1997 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 approximately 60% of assets
invested among 36 different corporate issuers across a wide variety of
industries. We will continue to focus primarily on higher yielding
investment-grade corporate bonds with an overriding emphasis on the income
component of total return. The recent increase in market volatility has created
investment opportunities among the various spread sectors. We will work to take
advantage of the change in relative values by selling those sectors that have
performed well and buying those which have lagged. The Fund's duration will be
maintained in the four year range.
COMPARISON 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
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 0.16% 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 0.90% 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 0.17% 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 1.42% 10,869
07/31/97 2.03% 11,301 07/31/97 2.94% 11,189
08/31/97 -0.50% 11,244 08/31/97 -1.01% 11,076
09/30/97 1.16% 11,375 09/30/97 1.41% 11,233
Past performance is not predictive of future performance.
*Fund inception was October 3, 1995.
Intermediate Bond Fund
Average Annual Total Returns
1 Year Since Inception
7.84% 6.01%
<PAGE>
INTERMEDIATE TERM GOVERNMENT INCOME FUND
MANAGEMENT DISCUSSION AND ANALYSIS
===============================================================================
The recurring theme in fiscal 1997 was strong economic growth, tight labor
markets, high consumer confidence and almost no inflation. The market's focus,
however, shifted several times from strong economic growth to the distinct lack
of inflation, and back again. The continuing shift in focus resulted in a fair
amount of volatility within a relatively well-defined trading range. Ultimately,
the focus on a favorable inflation outlook won the battle with intermediate and
long-term bond yields declining in excess of 0.40% over the course of the fiscal
year. For the fiscal year ended September 30, 1997, the Fund's total return
(excluding the impact of applicable sales loads) was 7.74%, as compared to 7.83%
for the Lehman Brothers Intermediate Government Bond Index.
During the first quarter of the fiscal year, the financial markets turned in
exceptional performances with equities reaching new highs and bond yields
declining roughly 0.50%. In early December, Federal Reserve Board Chairman Alan
Greenspan warned investors about their "irrational exuberance" regarding asset
valuations. The Chairman's unusually candid remarks rattled the markets through
year-end and set the stage for a rate hike in March 1997. The Federal Reserve
Board ultimately raised the fed funds rate to 5.50%, a 0.25% increase, as bond
prices reached their lows of the year. The defensive positioning of the Fund
allowed it to outperform its peer group average during this period.
The second half of the fiscal year saw long-term bond yields decline over 0.70%
from 7.15% to around 6.40% as investors began taking stock in the "new era" of
economics, where strong growth and tight labor markets are not necessarily
accompanied by inflation. Aided by gains in productivity and an increasingly
global economy, prices at the wholesale level remained basically flat while
retail prices were up just over 2.0%. The attractive inflation numbers made the
"new era" theory even more compelling. Bonds rallied strongly with most of the
performance in the fixed-income markets coming from the longer maturities. The
Fund's duration remained in a neutral to slightly defensive position for the
balance of the fiscal year resulting in a slight underperformance relative to
its peer group.
With long-term bond yields trading at the low-end of the recent trading range,
and nearly at a two year low, we will remain neutrally positioned in the Fund.
Economic growth remains strong while consumer confidence is high, and most
economists are looking for growth to continue in the 3.0% range for the next
several quarters. The Federal Reserve Board continues to maintain its bias
toward tighter monetary policy, even with the deteriorating conditions in the
Asian financial markets. With this in mind we will remain cautious, sacrificing
some upside potential so that we may better protect principal.
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE INTERMEDIATE
TERM GOVERNMENT INCOME FUND AND THE LEHMAN BROTHERS INTERMEDIATE GOVERNMENT
BOND INDEX
LEHMAN BROTHERS INTERMEDIATE GOVT BOND INDEX: INTERMED TERM GOVT INCOME FUND:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
09/30/86 10,000 09/30/87 9,800
12/31/87 4.60% 10,460 12/31/87 3.91% 10,183
03/31/88 3.13% 10,787 03/31/88 2.50% 10,438
06/30/88 0.97% 10,892 06/30/88 0.47% 10,487
09/30/88 1.56% 11,062 09/30/88 1.64% 10,660
12/31/88 0.60% 11,128 12/31/88 0.27% 10,688
03/31/89 1.04% 11,244 03/31/89 1.04% 10,800
06/30/89 6.64% 11,991 06/30/89 5.40% 11,383
09/30/89 1.13% 12,126 09/30/89 0.93% 11,490
12/31/89 3.41% 12,540 12/31/89 2.88% 11,821
03/31/90 -0.14% 12,522 03/31/90 -1.32% 11,665
06/30/90 3.14% 12,915 06/30/90 2.77% 11,989
09/30/90 1.94% 13,166 09/30/90 0.93% 12,100
12/31/90 4.34% 13,737 12/31/90 4.51% 12,646
03/31/91 2.20% 14,039 03/31/91 1.93% 12,890
06/30/91 1.69% 14,277 06/30/91 1.25% 13,051
09/30/91 4.75% 14,955 09/30/91 5.87% 13,817
12/31/91 4.82% 15,676 12/31/91 5.33% 14,554
03/31/92 -1.05% 15,511 03/31/92 -2.24% 14,228
06/30/92 3.88% 16,113 06/30/92 4.25% 14,833
09/30/92 4.38% 16,819 09/30/92 5.51% 15,651
12/31/92 -0.34% 16,762 12/31/92 -0.87% 15,514
03/31/93 3.74% 17,388 03/31/93 5.09% 16,304
06/30/93 1.96% 17,729 06/30/93 2.76% 16,753
09/30/93 2.11% 18,103 09/30/93 2.90% 17,240
12/31/93 0.15% 18,130 12/31/93 -0.71% 17,117
03/31/94 -1.85% 17,795 03/31/94 -4.07% 16,421
06/30/94 -0.56% 17,695 06/30/94 -1.88% 16,113
09/30/94 0.77% 17,832 09/30/94 -0.24% 16,074
12/31/94 -0.10% 17,814 12/31/94 -0.23% 16,038
03/31/95 4.16% 18,555 03/31/95 5.14% 16,862
06/30/95 4.67% 19,421 06/30/95 5.95% 17,866
09/30/95 1.55% 19,722 09/30/95 1.24% 18,087
12/31/95 3.34% 20,381 12/31/95 3.63% 18,742
03/31/96 -0.68% 20,243 03/31/96 -2.02% 18,363
06/30/96 0.67% 20,378 06/30/96 0.11% 18,383
09/30/96 1.72% 20,729 09/30/96 1.87% 18,728
12/31/96 2.31% 21,207 12/31/96 2.60% 19,216
03/31/97 -0.02% 21,203 03/31/97 -0.56% 19,107
06/30/97 2.79% 21,795 06/30/97 2.84% 19,649
09/30/97 2.56% 22,353 09/30/97 2.69% 20,178
Past performance is not predictive of future performance.
Intermediate Term Government Income Fund
Average Annual Total Returns
1 Year 5 Years 10 Years
5.59% 4.79% 7.27%
<PAGE>
ADJUSTABLE RATE U.S. GOVERNMENT SECURITIES FUND
MANAGEMENT DISCUSSION AND ANALYSIS
===============================================================================
The fiscal year ending September 30, 1997 can be roughly divided in half with
the first six months witnessing a general rise in rates and the last six months
an impressive decline in rates. However, the road in between was not a smooth
one as the fixed-income markets wrestled with the unusual combination of strong
economic growth, tight labor markets and amazingly low levels of inflation. For
the fiscal year, the Fund's total return (excluding the impact of applicable
sales loads) was 6.34%, as compared to 8.03% for the Lehman Brothers Adjustable
Rate Mortgage (ARM) Index.
The brief slowdown during the third quarter of 1996 gave the bond market
momentum through the first quarter of the Fund's fiscal year as long-term bond
yields declined from 6.85% to around 6.40%. However, the rally was short-lived
as Federal Reserve Board Chairman Alan Greenspan chided investors about their
"irrational exuberance", paving the way for tighter monetary policy and a rout
in bonds. The Federal Reserve Board raised the federal funds rate on March 25 to
5.50%, a 0.25% increase, sending the yield on the benchmark 30-year Treasury
bond to almost 7.20% by the middle of the fiscal year.
While the economy continued at a phenomenal pace, averaging 4.6% growth in the
first half of the fiscal year, inflation remained noticeably absent. Investors'
attention turned to the unlikely combination of above-trend economic growth and
extremely low inflation, dubbing it the "new era", one in which the economy can
grow at a rate in excess of the Federal Reserve Board's desired level of 2.0% to
2.5% without causing a ripple on the inflation front. As belief in this paradox
gained momentum, intermediate and long-term bond yields began tumbling. While
short-term yields did move lower, they did not participate in the rally to the
same degree. The short end of the Treasury curve was held back by an uncertain
Federal Reserve with a bias toward tighter monetary policy (i.e. higher
short-term interest rates).
The Fund's performance lagged its peers primarily as a result of the very
specific investment guidelines of the Fund. With the Fund's primary objective
being high income and low share price volatility, it is necessary for the Fund
to purchase those ARM securities with low durations which, by their very nature,
tend to outperform in a down market and underperform in an up market. As
interest rates declined during the year, the Fund's return lagged that of its
peer group average. The Fund's share price volatility, however, was less than
that of its peers.
Going forward, we will continue to pursue low duration, low volatility ARM
securities, focusing on the seasoned, 1-year CMT product which has performed so
well. With spreads on this sector near their all-time tightest levels, a flatter
yield curve (which has a tendency to boost prepayment speeds on ARM securities)
and Treasury market volatility on the rise, we will continue to be very
selective about the bonds we purchase.
<PAGE>
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE ADJUSTABLE RATE
U.S. GOVERNMENT SECURITIES FUND* AND THE LEHMAN BROTHERS ARM INDEX
LEHMAN BROTHERS ARM INDEX: ADJUSTABLE RATE U.S. GOVT SEC FUND:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
02/28/93 10,000 02/28/93 9,800
03/31/93 0.45% 10,045 03/31/93 0.63% 9,862
06/30/93 1.90% 10,236 06/30/93 1.19% 9,980
09/30/93 1.06% 10,345 09/30/93 1.04% 10,084
12/31/93 0.52% 10,398 12/31/93 0.95% 10,180
03/31/94 -0.44% 10,353 03/31/94 0.62% 10,242
06/30/94 -0.39% 10,312 06/30/94 0.32% 10,276
09/30/94 0.69% 10,383 09/30/94 0.19% 10,295
12/31/94 0.15% 10,399 12/31/94 -0.63% 10,230
03/31/95 4.20% 10,836 03/31/95 2.48% 10,484
06/30/95 3.12% 11,174 06/30/95 2.01% 10,695
09/30/95 1.69% 11,363 09/30/95 1.39% 10,844
12/31/95 2.25% 11,618 12/31/95 1.73% 11,032
03/31/96 1.10% 11,746 03/31/96 1.67% 11,216
06/30/96 1.13% 11,879 06/30/96 1.24% 11,355
09/30/96 1.87% 12,102 09/30/96 1.53% 11,529
12/31/96 2.44% 12,397 12/31/96 1.69% 11,724
03/31/97 1.34% 12,563 03/31/97 1.23% 11,868
06/30/97 2.07% 12,824 06/30/97 1.95% 12,099
09/30/97 1.95% 13,074 09/30/97 1.32% 12,259
Past performance is not predictive of future performance.
*Fund inception was February 10, 1993.
Adjustable Rate U.S. Government Securities Fund
Average Annual Total Returns
1 Year Since Inception
4.21% 4.49%
<PAGE>
GLOBAL BOND FUND
MANAGEMENT DISCUSSION AND ANALYSIS
===============================================================================
The Global Bond Fund seeks high total return, through both income and capital
appreciation. The Fund invests primarily in high-grade domestic and foreign
fixed-income securities geographically concentrated in Australia, Belgium,
Canada, Denmark, France, Germany, Italy, Japan, the Netherlands, Spain, Sweden,
the United Kingdom and the United States. The Fund may also invest up to ten
percent of its total assets in global bonds issued in emerging markets. For the
fiscal year ended September 30 1997, the Fund's total returns (excluding the
impact of applicable sales loads) were 4.39% and 3.68% for Class A shares and
Class C shares, respectively. The Salomon Brothers World Government Bond Index
returned 2.41% during this same period.
Management of the Fund uses an active country/currency allocation in liquid
markets, based on a process of relative value analysis across countries. Focus
is placed on financially healthy countries which management believes have the
potential to produce the highest bond and currency returns on a relative basis.
Careful analysis is made of each country's savings rate, monetary growth,
monetary authorities, fiscal policy and political climate. Optimal country
weightings are then assigned based upon twelve month expectations for interest
and exchange rates. The Fund also utilized various hedging techniques to reduce
short-term volatility resulting from currency exchange rate fluctuations.
During the past fiscal year, both country and currency selection have
contributed significantly allowing the Fund to outperform the Salomon Brothers
World Government Bond Index. Overweighted positions in the Dollar Bloc
countries, particularly Canada and the United States, performed well while an
underweighted allocation to core European markets was helpful as the dollar
continued to strengthen. An overweighted position in the United Kingdom, the
best performing market over the period, also added value. The Fund maintained a
long duration position throughout most of the period with the value added during
the first and fourth quarters of the fiscal year more than making up for the
negative impact of rising interest rates during the second quarter.
Looking forward, management continues to see opportunity in the global bond
markets. Inflation rates should remain low as stable money growth throughout
most countries removes the direct cause of inflation. In addition, tight fiscal
policies remain in place around the globe. In Europe, European Monetary Unit
countries have reduced their budget deficits in order to meet convergence
criteria. Meanwhile, the Dollar Bloc countries have made large strides toward
getting their fiscal houses in order. Japan remains the exception as fiscal
policy is likely to take a more expansionary turn in order to stimulate sluggish
domestic demand.
LINE CHART:
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GLOBAL BOND
FUND* AND THE SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX
SALOMON BROTHERS WORLD GLOBAL BOND FUND - CLASS A:
GOVERNMENT BOND INDEX:
MONTHLY MONTHLY
DATE RETURN BALANCE DATE RETURN BALANCE
02/01/95 10,000 02/01/95 9,600
02/28/95 2.56% 10,256 02/28/95 2.00% 9,792
03/31/95 5.94% 10,865 03/31/95 6.47% 10,426
04/30/95 1.85% 11,066 04/30/95 1.30% 10,562
05/31/95 2.81% 11,377 05/31/95 1.93% 10,765
06/30/95 0.59% 11,444 06/30/95 -0.09% 10,756
07/31/95 0.24% 11,472 07/31/95 0.00% 10,756
08/31/95 -3.44% 11,077 08/31/95 -3.41% 10,389
09/30/95 2.23% 11,324 09/30/95 1.53% 10,547
10/31/95 0.75% 11,409 10/31/95 0.94% 10,647
11/30/95 1.13% 11,538 11/30/95 1.12% 10,766
12/31/95 1.05% 11,658 12/31/95 1.91% 10,972
01/31/96 -1.24% 11,514 01/31/96 -0.73% 10,891
02/29/96 -0.51% 11,456 02/29/96 -1.66% 10,711
03/31/96 -0.14% 11,440 03/31/96 -1.03% 10,600
04/30/96 -0.40% 11,394 04/30/96 0.95% 10,701
05/31/96 0.02% 11,397 05/31/96 -0.47% 10,651
06/30/96 0.79% 11,486 06/30/96 0.66% 10,721
07/31/96 1.92% 11,706 07/31/96 1.96% 10,931
08/31/96 0.39% 11,752 08/31/96 0.09% 10,941
09/30/96 0.41% 11,800 09/30/96 1.10% 11,062
10/31/96 1.87% 12,020 10/31/96 2.45% 11,333
11/30/96 1.32% 12,179 11/30/96 1.86% 11,543
12/31/96 -0.81% 12,080 12/31/96 -1.50% 11,370
01/31/97 -2.67% 11,757 01/31/97 -3.12% 11,015
02/28/97 -0.75% 11,669 02/28/97 0.47% 11,067
03/31/97 -0.76% 11,581 03/31/97 -1.79% 10,868
04/30/97 -0.88% 11,479 04/30/97 -1.25% 10,733
05/31/97 2.72% 11,791 05/31/97 3.31% 11,088
06/30/97 1.19% 11,932 06/30/97 1.51% 11,255
07/31/97 -0.78% 11,839 07/31/97 0.19% 11,276
08/31/97 -0.06% 11,832 08/31/97 -1.67% 11,088
09/30/97 2.13% 12,084 09/30/97 4.14% 11,547
Past performance is not predictive of future performance.
*The chart above represents performance of Class A shares only, which will vary
from the performance of Class C shares based on the difference in loads and fees
paid by shareholders in the different classes. The initial public offering of
Class A shares and Class C shares each commenced on February 1, 1995.
Global Bond Fund
Average Annual Total Returns
1 Year Since Inception
Class A 0.21% 5.55%
Class C 3.68% 6.46%
<PAGE>
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
September 30, 1997
===================================================================================================================================
<CAPTION>
SHORT TERM INSTITUTIONAL MONEY
GOVERNMENT GOVERNMENT MARKET
INCOME FUND INCOME FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities:
At acquisition cost ............................................ $ 26,227,695 $ 23,353,663 $ 56,995,313
============ ============ ============
At amortized cost .............................................. $ 26,082,367 $ 23,402,545 $ 56,767,986
============ ============ ============
At value (Note 2) .............................................. $ 26,082,367 $ 23,402,545 $ 56,767,986
Investments in repurchase agreements (Note 2) ..................... 70,161,000 37,591,000 16,273,000
Cash .............................................................. 964 653 323
Interest receivable ............................................... 636,527 292,721 1,169,883
Organization costs, net (Note 2) .................................. -- -- 19,054
------------ ------------ ------------
TOTAL ASSETS ................................................... 96,880,858 61,286,919 74,230,246
------------ ------------ ------------
LIABILITIES
Dividends payable ................................................. 5,135 13,760 330,872
Payable to affiliates (Note 4) .................................... 67,472 18,122 46,484
Other accrued expenses and liabilities ............................ 11,569 7,151 31,891
------------ ------------ ------------
TOTAL LIABILITIES .............................................. 84,176 39,033 409,247
------------ ------------ ------------
NET ASSETS ........................................................ $ 96,796,682 $ 61,247,886 $ 73,820,999
============ ============ ============
Net assets consist of:
Paid-in capital ................................................... $ 96,796,682 $ 61,269,650 $ 73,824,759
Accumulated net realized losses from
security transactions .......................................... -- (21,764) (3,760)
------------ ------------ ------------
Net assets ........................................................ $ 96,796,682 $ 61,247,886 $ 73,820,999
============ ============ ============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value)
(Note 5) ....................................................... 96,796,682 61,269,650 73,824,759
============ ============ ============
Net asset value, offering price and redemption price
per share (Note 2) ............................................. $ 1.00 $ 1.00 $ 1.00
============ ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
September 30, 1997
===================================================================================================================================
<CAPTION>
ADJUSTABLE
INTERMEDIATE RATE U.S.
INTERMEDIATE TERM GOVERNMENT
BOND GOVERNMENT SECURITIES
FUND INCOME FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities:
At acquisition cost .............................................. $ 15,288,213 $ 52,154,446 $ 17,260,291
============ ============ ============
At amortized cost ................................................ $ 15,288,364 $ 51,940,025 $ 17,260,488
============ ============ ============
At value (Note 2) ................................................ $ 15,505,844 $ 53,094,474 $ 17,448,109
Cash ................................................................ 2,124 2,579 456
Interest receivable ................................................. 245,093 868,309 128,962
Receivable for capital shares sold .................................. 90 340,120 5,949,108
Receivable for principal paydowns ................................... -- -- 80,522
Organization costs, net (Note 2) .................................... 19,054 -- --
Other assets ........................................................ -- 1,142 7,410
------------ ------------ ------------
TOTAL ASSETS ..................................................... 15,772,205 54,306,624 23,614,567
------------ ------------ ------------
LIABILITIES
Dividends payable ................................................... 81,705 23,512 2,930
Payable for capital shares redeemed ................................. 137 1,203,475 394,444
Payable to affiliates (Note 4) ...................................... 4,332 34,022 6,666
Other accrued expenses and liabilities .............................. 15,200 12,825 8,800
------------ ------------ ------------
TOTAL LIABILITIES ................................................ 101,374 1,273,834 412,840
------------ ------------ ------------
NET ASSETS .......................................................... $ 15,670,831 $ 53,032,790 $ 23,201,727
============ ============ ============
Net assets consist of:
Paid-in capital ..................................................... $ 15,509,744 $ 54,779,926 $ 24,264,761
Accumulated net realized losses from security
transactions ..................................................... (56,393) (2,901,585) (1,250,655)
Net unrealized appreciation on investments .......................... 217,480 1,154,449 187,621
------------ ------------ ------------
Net assets .......................................................... $ 15,670,831 $ 53,032,790 $ 23,201,727
============ ============ ============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) (Note 5) .............. 1,553,652 4,969,960 2,355,670
============ ============ ============
Net asset value and redemption price per share
(Note 2) ......................................................... $ 10.09 $ 10.67 $ 9.85
============ ============ ============
Maximum offering price per share (Note 2) ........................... $ 10.30 $ 10.89 $ 10.05
============ ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1997
===========================================================================================================
<CAPTION>
GLOBAL BOND
FUND
- -----------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in securities:
At acquisition cost ....................................................................... $12,139,225
===========
At amortized cost ......................................................................... $12,139,225
===========
At value (Note 2) ......................................................................... $12,350,261
Cash ......................................................................................... 298,419
Cash denominated in foreign currencies (at cost $95,061) ..................................... 97,367
Interest receivable .......................................................................... 327,780
Receivable for capital shares sold ........................................................... 75
Other assets ................................................................................. 2,805
-----------
TOTAL ASSETS .............................................................................. 13,076,707
-----------
LIABILITIES
Payable for capital shares redeemed .......................................................... 4,809
Payable to affiliates (Note 4) ............................................................... 9,809
Net unrealized depreciation on forward foreign currency exchange contracts (Note 7) .......... 105,166
Other accrued expenses and liabilities ....................................................... 14,752
-----------
TOTAL LIABILITIES ......................................................................... 134,536
-----------
NET ASSETS ................................................................................... $12,942,171
===========
Net assets consist of:
Paid-in capital .............................................................................. $12,453,939
Undistributed net investment income .......................................................... 392,233
Accumulated net realized losses from security and foreign currency transactions .............. ( 13,469 )
Net unrealized appreciation on investments ................................................... 211,036
Net unrealized depreciation on translation of assets and liabilities in foreign currencies ... ( 101,568 )
-----------
Net assets ................................................................................... $12,942,171
===========
PRICING OF CLASS A SHARES
Net assets attributable to Class A shares .................................................... $ 7,140,717
===========
Shares of beneficial interest outstanding (unlimited number of shares authorized,
no par value) (Note 5) .................................................................... 645,612
===========
Net asset value and redemption price per share (Note 2) ...................................... $ 11.06
===========
Maximum offering price per share (Note 2) .................................................... $ 11.52
===========
PRICING OF CLASS C SHARES
Net assets attributable to Class C shares .................................................... $ 5,801,454
===========
Shares of beneficial interest outstanding (unlimited number of shares authorized,
no par value) (Note 5) .................................................................... 533,507
===========
Net asset value, offering price and redemption price per share (Note 2) ...................... $ 10.87
===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS
For the Year Ended September 30,1997
==================================================================================================================
<CAPTION>
SHORT TERM INSTITUTIONAL
GOVERNMENT GOVERNMENT
INCOME FUND INCOME FUND
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest income ............................................................. $5,428,235 $2,737,028
---------- ----------
EXPENSES
Investment advisory fees (Note 4) ........................................... 476,697 100,101
Transfer agent fees (Note 4) ................................................ 190,183 17,315
Distribution expenses (Note 4) .............................................. 127,253 3,392
Postage and supplies ........................................................ 63,653 21,116
Accounting services fees (Note 4) ........................................... 40,500 36,000
Custodian fees .............................................................. 19,732 16,746
Registration fees ........................................................... 15,856 5,952
Professional fees ........................................................... 11,250 7,250
Insurance expense ........................................................... 9,236 5,036
Trustees' fees and expenses ................................................. 5,553 5,553
Reports to shareholders ..................................................... 8,056 768
Pricing expense ............................................................. 1,066 1,357
Other expenses .............................................................. 4,882 2,587
---------- ----------
TOTAL EXPENSES ............................................................ 973,917 223,173
Fees waived by the Adviser (Note 4) ......................................... -- (22,972)
---------- ----------
NET EXPENSES .............................................................. 973,917 200,201
---------- ----------
NET INVESTMENT INCOME .......................................................... 4,454,318 2,536,827
---------- ----------
NET REALIZED GAINS FROM SECURITY TRANSACTIONS .................................. -- 3,138
---------- ----------
NET INCREASE IN NET ASSETS FROM OPERATIONS ..................................... $4,454,318 $2,539,965
========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS
For the Periods Ended September 30, 1997 and August 31, 1997
===================================================================================================================================
<CAPTION>
MONEY MARKET FUND INTERMEDIATE BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
One Month Year One Month Year
Ended Ended Ended Ended
Sept. 30, Aug. 31, Sept. 30, Aug. 31,
1997(A) 1997 1997(A) 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest income ..................................... $ 406,910 $ 5,391,779 $ 89,210 $ 1,088,715
----------- ----------- ----------- -----------
EXPENSES
Investment advisory fees (Note 4) ................... 32,484 188,896 6,043 60,906
Shareholder service fees (Note 4) ................... -- 236,120 -- 38,066
Distribution expenses (Note 4) ...................... 10,000 -- -- --
Transfer agent fees (Note 4) ........................ 1,000 21,186 1,000 25,526
Administration fees (Note 4) ........................ -- 141,672 -- 24,866
Accounting services fees (Note 4) ................... 3,000 47,500 2,750 36,000
Professional fees ................................... 5,000 40,144 3,000 23,729
Custodian fees ...................................... 3,000 26,184 300 8,129
Amortization of organization costs (Note 2) ........ 530 6,351 530 6,351
Reports to shareholders ............................. -- 13,943 -- 2,323
Pricing expense ..................................... -- 439 450 2,683
Insurance expense ................................... -- 7,834 -- 1,332
Trustees' fees and expenses ......................... -- 7,663 -- 1,271
Registration fees ................................... 891 2,984 3,220 1,957
Other expenses ...................................... -- 6,771 -- 1,500
----------- ----------- ----------- -----------
TOTAL EXPENSES .................................... 55,905 747,687 17,293 234,639
Fees waived and/or expenses reimbursed
by the Adviser (Note 4) .......................... -- (130,362) (5,460) (104,530)
----------- ----------- ----------- -----------
NET EXPENSES ...................................... 55,905 617,325 11,833 130,109
----------- ----------- ----------- -----------
NET INVESTMENT INCOME .................................. 351,005 4,774,454 77,377 958,606
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS
Net realized gains (losses) from security
transactions ..................................... (1,198) (2,536) (5,759) 14,511
Net change in unrealized appreciation/
depreciation on investments ....................... -- -- 129,865 420,446
----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED
GAINS (LOSSES) ON INVESTMENTS ....................... (1,198) (2,536) 124,106 434,957
----------- ----------- ----------- -----------
NET INCREASE IN NET ASSETS
FROM OPERATIONS ..................................... $ 349,807 $ 4,771,918 $ 201,483 $ 1,393,563
=========== =========== =========== ===========
<FN>
(A) Effective as of the close of business on August 29, 1997, the Money Market
Fund and Intermediate Bond Fund were reorganized and the fiscal year-end of each
Fund, subsequent to August 31, 1997, was changed to September 30 (Note 8).
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS
For the Year Ended September 30, 1997
================================================================================================================
ADJUSTABLE
INTERMEDIATE RATE U.S.
TERM GOVERNMENT
GOVERNMENT SECURITIES
INCOME FUND FUND
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest income .................................................................. $3,747,792 $1,032,076
---------- ----------
EXPENSES
Investment advisory fees (Note 4) ................................................ 274,084 79,473
Accounting services fees (Note 4) ................................................ 51,000 51,000
Distribution expenses, Class A (Note 4) .......................................... 85,546 12,507
Distribution expenses, Class C (Note 4) .......................................... 41 293
Transfer agent fees, Class A (Note 4) ............................................ 45,884 13,123
Transfer agent fees, Class C (Note 4) ............................................ 11,000 11,000
Postage and supplies ............................................................. 32,934 12,319
Registration fees, Common ........................................................ 3,890 6,937
Registration fees, Class A ....................................................... 8,550 4,825
Registration fees, Class C ....................................................... 4,715 2,337
Professional fees ................................................................ 13,250 8,750
Standard & Poor's rating expense ................................................. -- 21,500
Custodian fees ................................................................... 7,529 9,858
Trustees' fees and expenses ...................................................... 5,553 5,553
Insurance expense ................................................................ 6,583 2,176
Pricing expense .................................................................. 4,393 2,196
Reports to shareholders .......................................................... 2,730 859
Other expenses ................................................................... 2,940 940
---------- ----------
TOTAL EXPENSES ................................................................. 560,622 245,646
Fees waived and/or expenses reimbursed by the Adviser (Note 4) ................... (8,072) (121,805)
---------- ----------
NET EXPENSES ................................................................... 552,550 123,841
---------- ----------
NET INVESTMENT INCOME ............................................................... 3,195,242 908,235
---------- ----------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized losses from security transactions ................................... (2,293) (1,505)
Net change in unrealized appreciation/depreciation on investments ................ 943,745 63,020
---------- ----------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS .................................... 941,452 61,515
---------- ----------
NET INCREASE IN NET ASSETS FROM OPERATIONS .......................................... $4,136,694 $ 969,750
========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
For the Year Ended September 30, 1997
====================================================================================
<CAPTION>
GLOBAL BOND
FUND
- ------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Interest income ..................................................... $1,085,937
----------
EXPENSES
Investment advisory fees (Note 4) ................................... 116,997
Accounting services fees (Note 4) ................................... 57,000
Custodian fees ...................................................... 34,745
Distribution expenses, Class A (Note 4) ............................. 2,894
Distribution expenses, Class C (Note 4) ............................. 22,348
Transfer agent fees, Class A (Note 4) ............................... 12,000
Transfer agent fees, Class C (Note 4) ............................... 12,000
Registration fees, Common ........................................... 4,816
Registration fees, Class A .......................................... 3,115
Registration fees, Class C .......................................... 3,115
Professional fees ................................................... 9,650
Pricing expense ..................................................... 6,964
Postage and supplies ................................................ 6,392
Trustees' fees and expenses ......................................... 5,553
Insurance expense ................................................... 2,988
Reports to shareholders ............................................. 777
Other expenses ...................................................... 1,170
----------
TOTAL EXPENSES .................................................... 302,524
Fees waived and/or expenses reimbursed by the Adviser (Note 4) ...... (37,593)
----------
NET EXPENSES ...................................................... 264,931
----------
NET INVESTMENT INCOME .................................................. 821,006
----------
REALIZED AND UNREALIZED LOSSES ON INVESTMENTS
AND FOREIGN CURRENCY (NOTE 6)
Net realized losses from:
Security transactions ............................................. (88,424)
Foreign currency transactions ..................................... (33,324)
Net change in unrealized appreciation/depreciation on:
Investments ....................................................... (114,745)
Translation of assets and liabilities in foreign currencies ....... (91,696)
----------
NET REALIZED AND UNREALIZED LOSSES ON
INVESTMENTS AND FOREIGN CURRENCY .................................... (328,189)
----------
NET INCREASE IN NET ASSETS FROM OPERATIONS ............................. $ 492,817
==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET
ASSETS For the Years Ended September 30, 1997 and 1996
===================================================================================================================================
<CAPTION>
SHORT TERM INSTITUTIONAL
GOVERNMENT GOVERNMENT
INCOME FUND INCOME FUND
Year Year Year Year
Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1997 1996 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ........................... $ 4,454,318 $ 3,872,769 $ 2,536,827 $ 1,789,514
Net realized gains from security
transactions ................................. -- 2,970 3,138 3,538
------------- ------------- ------------- -------------
Net increase in net assets from operations ......... 4,454,318 3,875,739 2,539,965 1,793,052
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ...................... (4,454,318) (3,872,769) (2,536,827) (1,789,514)
From net realized gains from security
transactions ................................. (2,970) (2,227) -- --
------------- ------------- ------------- -------------
Decrease in net assets from
distributions to shareholders ................ (4,457,288) (3,874,996) (2,536,827) (1,789,514)
------------- ------------- ------------- -------------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 5):
Proceeds from shares sold ....................... 346,277,774 290,338,196 214,201,022 171,325,558
Net asset value of shares issued in
reinvestment of distributions to
shareholders .................................. 4,308,683 3,711,242 2,319,214 1,548,806
Payments for shares redeemed .................... (345,226,289) (289,751,833) (194,657,552) (169,504,468)
------------- ------------- ------------- -------------
Net increase in net assets from capital
share transactions ........................... 5,360,168 4,297,605 21,862,684 3,369,896
------------- ------------- ------------- -------------
TOTAL INCREASE IN NET ASSETS ....................... 5,357,198 4,298,348 21,865,822 3,373,434
NET ASSETS:
Beginning of year ............................... 91,439,484 87,141,136 39,382,064 36,008,630
------------- ------------- ------------- -------------
End of year ..................................... $ 96,796,682 $ 91,439,484 $ 61,247,886 $ 39,382,064
============= ============= ============= =============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
For the Periods Ended September 30, 1997 and August 31, 1997 and 1996
==================================================================================================================================
<CAPTION>
Money Market Fund Intermediate Bond Fund
- ----------------------------------------------------------------------------------------------------------------------------------
One Month Year Period One Month Year Period
Ended Ended Ended Ended Ended Ended
Sept. 30, Aug. 31, Aug. 31, Sept. 30, Aug. 31, Aug. 31,
1997(A) 1997 1996(B) 1997(A) 1997 1996(C)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ................ $ 351,005 $ 4,774,454 $ 2,473,468 $ 77,377 $ 958,606 $ 601,786
Net realized gains (losses) from
security transactions ............. (1,198) (2,536) 2,494 (5,759) 14,511 (15,393)
Net change in unrealized appreciation/
depreciation on investments ........ -- -- -- 129,865 420,446 (332,831)
------------ ------------- ------------- ------------ ------------- -------------
Net increase in net assets from
operations ........................... 349,807 4,771,918 2,475,962 201,483 1,393,563 253,562
------------ ------------- ------------- ------------ ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ........... (351,499) (4,773,960) (2,473,468) (77,377) (958,606) (601,786)
From net realized gains .............. -- (2,520) -- -- (49,752) --
------------ ------------- ------------- ------------ ------------- -------------
Decrease in net assets from
distributions to shareholders ........ (351,499) (4,776,480) (2,473,468) (77,377) (1,008,358) (601,786)
------------ ------------- ------------- ------------ ------------- -------------
FROM CAPITAL SHARE TRANSACTIONS (Note 5):
Proceeds from shares sold ............ 25,255,346 570,122,610 446,620,681 929,562 5,244,400 14,919,014
Net asset value of shares issued in
reinvestment of distributions
to shareholders .................... 46,897 424,478 84,304 919 19,314 13,886
Payments for shares redeemed ............ (46,048,621) (552,336,304) (370,344,632) (497,633) (3,891,934) (1,227,784)
------------ ------------- ------------- ------------ ------------- -------------
Net increase (decrease) in net assets
from capital share transactions ...... (20,746,378) 18,210,784 76,360,353 432,848 1,371,780 13,705,116
------------ ------------- ------------- ------------ ------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS . (20,748,070) 18,206,222 76,362,847 556,954 1,756,985 13,356,892
NET ASSETS:
Beginning of period .................. 94,569,069 76,362,847 -- 15,113,877 13,356,892 --
------------ ------------- ------------- ------------ ------------- -------------
End of period ........................ $ 73,820,999 $ 94,569,069 $ 76,362,847 $ 15,670,831 $ 15,113,877 $ 13,356,892
============ ============= ============= ============ ============= =============
UNDISTRIBUTED NET INVESTMENT INCOME ..... $ -- $ 494 -- $ -- $ -- $ --
============ ============= ============= ============ ============= =============
<FN>
(A) Effective as of the close of business on August 29, 1997, the Money Market
Fund and Intermediate Bond Fund were reorganized and the fiscal year-end of each
Fund, subsequent to August 31, 1997, was changed to September 30 (Note 8).
(B) Represents the period from the commencement of operations (September 29,
1995) through August 31, 1996.
(C) Represents the period from the commencement of operations (October 3, 1995)
through August 31, 1996.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET
ASSETS For the Years Ended September 30, 1997 and 1996
===============================================================================================================================
INTERMEDIATE TERM ADJUSTABLE RATE
GOVERNMENT U.S. GOVERNMENT
INCOME FUND SECURITIES FUND
Year Year Year Year
Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ........................... $ 3,195,242 $ 3,376,540 $ 908,235 $ 941,495
Net realized gains (losses) from
security transactions ........................ (2,293) 295,706 (1,505) 72,164
Net change in unrealized
appreciation/depreciation
on investments ................................ 943,745 (1,807,714) 63,020 (24,764)
------------ ------------ ------------ ------------
Net increase in net assets from operations ......... 4,136,694 1,864,532 969,750 988,895
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income, Class A ............. (3,155,630) (3,339,635) (868,844) (930,066)
From net investment income, Class C ............. (39,612) (36,905) (39,391) (11,429)
------------ ------------ ------------ ------------
Decrease in net assets from distributions
to shareholders ................................. (3,195,242) (3,376,540) (908,235) (941,495)
------------ ------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 5):
CLASS A
Proceeds from shares sold ....................... 9,148,045 19,564,015 28,836,779 12,919,191
Net asset value of shares issued in
reinvestment of distributions
to shareholders ............................... 2,829,303 2,911,115 822,109 816,771
Payments for shares redeemed .................... (15,967,680) (21,856,049) (18,246,926) (22,803,135)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
from Class A share transactions ................. (3,990,332) 619,081 11,411,962 (9,067,173)
------------ ------------ ------------ ------------
CLASS C
Proceeds from shares sold ....................... 138,577 384,845 760,526 617,534
Net asset value of shares issued in
reinvestment of distributions
to shareholders ............................... 38,348 35,459 30,868 8,075
Payments for shares redeemed .................... (961,198) (228,470) (1,423,589) (84,110)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
from Class C share transactions ................. (784,273) 191,834 (632,195) 541,499
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
from capital share transactions ................. (4,774,605) 810,915 10,779,767 (8,525,674)
------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ............ (3,833,153) (701,093) 10,841,282 (8,478,274)
NET ASSETS:
Beginning of year ............................... 56,865,943 57,567,036 12,360,445 20,838,719
------------ ------------ ------------ ------------
End of year ..................................... $ 53,032,790 $ 56,865,943 $ 23,201,727 $ 12,360,445
============ ============ ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended September 30, 1997 and 1996
<CAPTION>
==================================================================================================================
GLOBAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------
Year Year
Ended Ended
Sept. 30, Sept. 30,
1997 1996
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income ...................................................... $ 821,006 $ 937,874
Net realized losses from security transactions ............................. (88,424) (93,933)
Net realized losses from foreign currency transactions ..................... (33,324) (235,290)
Net change in unrealized appreciation/depreciation on investments .......... (114,745) 161,908
Net change in unrealized appreciation/depreciation on translation
of assets and liabilities in foreign currencies .......................... (91,696) 57,520
------------ ------------
Net increase in net assets from operations .................................... 492,817 828,079
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income, Class A ........................................ (191,206) (173,473)
From net investment income, Class C ........................................ (98,244) (51,783)
From net realized gains from security transactions, Class A ................ (313,221) --
From net realized gains from security transactions, Class C ................ (160,936) --
------------ ------------
Decrease in net assets from distributions to shareholders ..................... (763,607) (225,256)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 5):
CLASS A
Proceeds from shares sold .................................................. 1,712,146 2,196,018
Net asset value of shares issued in reinvestment of distributions
to shareholders ......................................................... 457,466 167,215
Payments for shares redeemed ............................................... (7,674,821) (3,249,417)
------------ ------------
Net decrease in net assets from Class A share transactions .................... (5,505,209) (886,184)
------------ ------------
CLASS C
Proceeds from shares sold .................................................. 885,481 2,001,544
Net asset value of shares issued in reinvestment of distributions
to shareholders ......................................................... 253,786 50,833
Payments for shares redeemed ............................................... (1,109,790) (895,367)
------------ ------------
Net increase in net assets from Class C share transactions .................... 29,477 1,157,010
------------ ------------
Net increase (decrease) in net assets from capital share transactions ......... (5,475,732) 270,826
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ....................................... (5,746,522) 873,649
NET ASSETS:
Beginning of year .......................................................... 18,688,693 17,815,044
------------ ------------
End of year ................................................................ $ 12,942,171 $ 18,688,693
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME ........................................... $ 392,233 $ 287,907
============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
SHORT TERM GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS
<CAPTION>
=============================================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
YEAR ENDED SEPTEMBER 30,
=============================================================================================================================
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ----------- ----------- -----------
Net investment income ........................ 0.044 0.044 0.046 0.027 0.022
----------- ----------- ----------- ----------- -----------
Dividends from net investment income ......... (0.044) (0.044) (0.046) (0.027) ( 0.022 )
----------- ----------- ----------- ----------- -----------
Net asset value at end of year ............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== =========== =========== =========== ===========
Total return ................................. 4.53% 4.51% 4.69% 2.72% 2.24%
=========== =========== =========== =========== ===========
Net assets at end of year (000's) ............ $ 96,797 $ 91,439 $ 87,141 $ 89,708 $ 96,962
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets ...... 0.97% 0.99% 0.99% 0.99% 0.99%
Ratio of net investment income to
average net assets ........................ 4.43% 4.42% 4.59% 2.69% 2.22%
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
INSTITUTIONAL GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS
===============================================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
YEAR ENDED SEPTEMBER 30,
==============================================================================================================================
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ----------- ----------- -----------
Net investment income ......................... 0.051 0.051 0.053 0.034 0.029
----------- ----------- ----------- ----------- -----------
Dividends from net investment income .......... (0.051) (0.051) (0.053) (0.034) ( 0.029 )
----------- ----------- ----------- ----------- -----------
Net asset value at end of year ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== =========== =========== =========== ===========
Total return .................................. 5.17% 5.18% 5.42% 3.43% 2.96%
=========== =========== =========== =========== ===========
Net assets at end of year (000's) ............. $ 61,248 $ 39,382 $ 36,009 $ 41,769 $ 34,610
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets(A) .... 0.40% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to
average net assets ........................ 5.07% 5.06% 5.30% 3.41% 2.92%
<FN>
(A) Absent fee waivers by the Adviser, the ratios of expenses to average net
assets would have been 0.45%, 0.49%, 0.42%, 0.42% and 0.48% for the years ended
September 30, 1997, 1996, 1995, 1994 and 1993, respectively (Note 4).
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
<CAPTION>
==============================================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
==============================================================================================================================
One Month Year Period
Ended Ended Ended
Sept. 30, August 31, August 31,
1997(A) 1997 1996(B)
<S> <C> <C> <C>
Net asset value at beginning of period ......................... $ 1.00 $ 1.00 $ 1.00
----------- ----------- -------------
Net investment income .......................................... 0.004 0.050 0.046 (C)
----------- ----------- -------------
Dividends from net investment income ........................... (0.004) (0.050) (0.046)
----------- ----------- -------------
Net asset value at end of period ............................... $ 1.00 $ 1.00 $ 1.00
=========== =========== =============
Total return ................................................... 4.99%(E) 5.14% 4.70%
=========== =========== =============
Net assets at end of period (000's) ............................ $ 73,821 $ 94,569 $ 76,363
=========== =========== =============
Ratio of expenses to average net assets(D) ..................... 0.80%(E) 0.65% 0.65%(E)
Ratio of net investment income to average net assets ........... 4.99%(E) 5.03% 4.94%(E)
<FN>
(A) Effective as of the close of business on August 29, 1997, the Fund was
reorganized and its fiscal year-end, subsequent to August 31, 1997, was changed
to September 30 (Note 8).
(B) Represents the period from the commencement of operations (September 29,
1995) through August 31, 1996.
(C) Calculated using weighted average shares outstanding during the period.
(D) Absent fee waivers and/or expense reimbursements, the ratios of expenses to
average net assets would have been 0.79% and 0.99%(E) for the periods ended
August 31, 1997 and 1996, respectively.
(E) Annualized.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
INTERMEDIATE BOND FUND
FINANCIAL HIGHLIGHTS
<CAPTION>
========================================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
========================================================================================================================
One Month Year Period
Ended Ended Ended
Sept. 30, August 31, August 31,
1997(A) 1997 1996(B)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value at beginning of period ....................... $ 10.00 $ 9.75 $ 10.00
---------- ---------- ----------
Income from investment operations:
Net investment income ..................................... 0.05 0.62 0.57 (C)
Net realized and unrealized gains (losses)
on investments ......................................... 0.09 0.28 (0.25)(C)
---------- ---------- ----------
Total from investment operations ............................. 0.14 0.90 0.32
---------- ---------- ----------
Less distributions:
Dividends from net investment income ...................... (0.05) (0.62) (0.57)
Distributions from net realized gains ..................... -- (0.03) --
---------- ---------- ----------
Total distributions .......................................... (0.05) (0.65) (0.57)
---------- ---------- ----------
Net asset value at end of period ............................. $ 10.09 $ 10.00 $ 9.75
========== ========== ==========
Total return(D) .............................................. 1.41% 9.48% 3.23%
========== ========== ==========
Net assets at end of period (000's) .......................... $ 15,671 $ 15,114 $ 13,357
========== ========== ==========
Ratio of expenses to average net assets(E) ................... 0.95%(F) 0.85% 0.68% (F)
Ratio of net investment income to average net assets ......... 6.18%(F) 6.26% 6.31% (F)
Portfolio turnover rate ...................................... 0% 41% 12%
<FN>
(A) Effective as of the close of business on August 29, 1997, the Fund was
reorganized and its fiscal year-end, subsequent to August 31, 1997, was changed
to September 30 (Note 8).
(B) Represents the period from the commencement of operations (October 3, 1995)
through August 31, 1996.
(C) Calculated using weighted average shares outstanding during the period.
(D) Total returns shown exclude the effect of applicable sales loads.
(E) Absent fee waivers and/or expense reimbursements, the ratios of expenses to
average net assets would have been 1.38%(F), 1.53% and 2.04%(F) for the periods
ended September 30, 1997, August 31, 1997 and August 31,1996, respectively
(Note 4).
(F) Annualized.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
INTERMEDIATE TERM GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS - CLASS A
==============================================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
==============================================================================================================================
Year Ended September 30,
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year .............. $ 10.49 $ 10.73 $ 10.14 $ 11.59 $ 11.10
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income .......................... 0.61 0.61 0.64 0.56 0.60
Net realized and unrealized gains (losses)
on investments ............................... 0.18 (0.24) 0.59 (1.32) 0.49
---------- ---------- ---------- ---------- ----------
Total from investment operations .................. 0.79 0.37 1.23 (0.76) 1.09
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income ........... (0.61) (0.61) (0.64) (0.56) (0.60)
Distributions from net realized gains .......... -- -- -- (0.13) --
---------- ---------- ---------- ---------- ----------
Total distributions ............................... (0.61) (0.61) (0.64) (0.69) (0.60)
---------- ---------- ---------- ---------- ----------
Net asset value at end of year .................... $ 10.67 $ 10.49 $ 10.73 $ 10.14 $ 11.59
========== ========== ========== ========== ==========
Total return(A) ................................... 7.74% 3.55% 12.52% (6.76%) 10.15%
========== ========== ========== ========== ==========
Net assets at end of year (000's) ................. $ 53,033 $ 56,095 $ 56,969 $ 64,395 $ 89,666
========== ========== ========== ========== ==========
Ratio of expenses to average net assets ........... 0.99% 0.99% 0.99% 0.99% 0.99%
Ratio of net investment income to average
net assets ..................................... 5.78% 5.75% 6.17% 5.17% 5.31%
Portfolio turnover rate ........................... 49% 70% 58% 236% 255%
<FN>
(A) Total returns shown exclude the effect of applicable sales loads.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
ADJUSTABLE RATE U.S. GOVERNMENT SECURITIES FUND
FINANCIAL HIGHLIGHTS - CLASS A
<CAPTION>
=======================================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
=======================================================================================================================
Year Year Year Year Period
Ended Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1997 1996 1995 1994 1993(A)
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period .......... $ 9.81 $ 9.78 $ 9.82 $ 10.01 $ 10.00
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income ........................ 0.57 0.57 0.55 0.39 0.28
Net realized and unrealized gains (losses)
on investments ............................. 0.04 0.03 (0.04) (0.18) 0.01
---------- ---------- ---------- ---------- ----------
Total from investment operations ................ 0.61 0.60 0.51 0.21 0.29
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income ......... (0.57) (0.57) (0.55) (0.39) (0.28)
Distributions from net realized gains ........ -- -- -- (0.01) --
---------- ---------- ---------- ---------- ----------
Total distributions ............................. (0.57) (0.57) (0.55) (0.40) (0.28)
---------- ---------- ---------- ---------- ----------
Net asset value at end of period ................ $ 9.85 $ 9.81 $ 9.78 $ 9.82 $ 10.01
========== ========== ========== ========== ==========
Total return(B) ................................. 6.34% 6.32% 5.33% 2.09% 4.56%(D)
========== ========== ========== ========== ==========
Net assets at end of period (000's) ............. $ 23,202 $ 11,732 $ 20,752 $ 37,572 $ 24,400
========== ========== ========== ========== ==========
Ratio of expenses to average net assets(C) ...... 0.75% 0.75% 0.75% 0.68% 0.22%(D)
Ratio of net investment income to
average net assets ........................... 5.73% 5.91% 5.57% 3.91% 4.17%(D)
Portfolio turnover rate ......................... 58% 44% 115% 81% 170%(D)
<FN>
(A) Represents the period from the initial public offering of shares (February
10, 1993) through September 30, 1993.
(B) Total returns shown exclude the effect of applicable sales loads.
(C) Absent fee waivers and/or expense reimbursements by the Adviser, the ratios
of expenses to average net assets would have been 1.47%, 1.46%, 1.21%, 0.78% and
1.18%(D) for the periods ended September 30, 1997, 1996, 1995, 1994 and 1993,
respectively (Note 4).
(D) Annualized.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
GLOBAL BOND FUND
FINANCIAL HIGHLIGHTS - CLASS A
<CAPTION>
===================================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
===================================================================================================================
Year Year Period
Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30,
1997 1996 1995(A)
<S> <C> <C> <C>
Net asset value at beginning of period .................... $ 11.03 $ 10.64 $ 10.00
--------- ---------- -------------
Income from investment operations:
Net investment income .................................. 0.61 0.57 0.35
Net realized and unrealized gains (losses)
on investments and foreign currency .................. (0.13) (0.05) 0.64
--------- ---------- -------------
Total from investment operations .......................... 0.48 0.52 0.99
--------- ---------- -------------
Less distributions:
Dividends from net investment income ................... (0.17) (0.13) (0.35)
Distributions from net realized gains .................. (0.28) -- --
--------- ---------- -------------
Total distributions ....................................... (0.45) (0.13) (0.35)
--------- ---------- -------------
Net asset value at end of period .......................... $ 11.06 $ 11.03 $ 10.64
========= ========== =============
Total return(B) ........................................... 4.39% 4.88% 14.89% (D)
========= ========== =============
Net assets at end of period (000's) ....................... $ 7,141 $ 12,841 $ 13,297
========= ========== =============
Ratio of expenses to average net assets(C) ................ 1.35% 1.35% 1.33% (D)
Ratio of net investment income to average net assets ...... 5.15% 4.97% 4.30% (D)
Portfolio turnover rate ................................... 214% 235% 130% (D)
<FN>
(A) Represents the period from initial public offering of Class A shares
(February 1, 1995) through September 30, 1995.
(B) Total returns shown exclude the effect of applicable sales loads.
(C) Absent fee waivers and/or expense reimbursements by the Adviser, the ratios
of expenses to average net assets would have been 1.64%, 1.50% and 2.47%(D) for
the periods ended September 30, 1997, 1996 and 1995, respectively (Note 4).
(D) Annualized.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
GLOBAL BOND FUND
FINANCIAL HIGHLIGHTS - CLASS C
<CAPTION>
====================================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
====================================================================================================================
Year Year Period
Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30,
1997 1996 1995(A)
<S> <C> <C> <C>
Net asset value at beginning of period ........................... $ 10.92 $ 10.59 $ 10.00
--------- --------- ---------
Income from investment operations:
Net investment income ......................................... 0.51 0.51 0.38
Net realized and unrealized gains (losses)
on investments and foreign currency ......................... (0.11) (0.08) 0.57
--------- --------- ---------
Total from investment operations ................................. 0.40 0.43 0.95
--------- --------- ---------
Less distributions:
Dividends from net investment income .......................... (0.17) (0.10) (0.36)
Distributions from net realized gains ......................... (0.28) -- --
--------- --------- ---------
Total distributions .............................................. (0.45) (0.10) (0.36)
--------- --------- ---------
Net asset value at end of period ................................. $ 10.87 $ 10.92 $ 10.59
========= ========= =========
Total return(B) .................................................. 3.68% 4.10% 14.25% (D)
========= ========= =========
Net assets at end of period (000's) .............................. $ 5,801 $ 5,847 $ 4,518
========= ========= =========
Ratio of expenses to average net assets(C) ....................... 2.00% 2.00% 1.98% (D)
Ratio of net investment income to average net assets ............. 4.51% 4.34% 3.70% (D)
Portfolio turnover rate .......................................... 214% 235% 130% (D)
<FN>
(A) Represents the period from initial public offering of Class C shares
(February 1, 1995) through September 30, 1995.
(B) Total returns shown exclude the effect of applicable sales loads.
(C) Absent fee waivers and/or expense reimbursements by the Adviser, the ratios
of expenses to average net assets would have been 2.11%, 2.03% and 3.45%(D) for
the periods ended September 30, 1997, 1996 and 1995, respectively (Note 4).
(D) Annualized.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
===============================================================================
1. ORGANIZATION
The Short Term Government Income Fund, Institutional Government Income Fund,
Money Market Fund, Intermediate Bond Fund, Intermediate Term Government Income
Fund, Adjustable Rate U.S. Government Securities Fund and Global Bond Fund
(collectively, the Funds) are each a series of Countrywide Investment Trust (the
Trust). The Trust is registered under the Investment Company Act of 1940 as an
open-end management investment company. The Trust was organized as a
Massachusetts business trust under a Declaration of Trust dated December 7,
1980. The Declaration of Trust, as amended, permits the Trustees to issue an
unlimited number of shares of each Fund. The Money Market Fund and Intermediate
Bond Fund were originally organized as series of Trans Adviser Funds, Inc. (Note
8).
The Short Term Government Income Fund invests primarily in short-term U.S.
Government obligations backed by the "full faith and credit" of the United
States and seeks high current income, consistent with protection of capital.
The Institutional Government Income Fund seeks high current income, consistent
with protection of capital, by investing primarily in short-term obligations
issued or guaranteed as to principal and interest by the United States
Government, its agencies or instrumentalities. The Fund is designed primarily
for institutions as an economical and convenient means for the investment of
short-term funds.
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 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 Intermediate Term Government Income Fund invests primarily in U.S.
Government obligations maturing within twenty years or less with a
dollar-weighted average portfolio maturity under normal market conditions of
between three and ten years and seeks high current income, consistent with
protection of capital. To the extent consistent with the Fund's primary
objective, capital appreciation is a secondary objective.
The Adjustable Rate U.S. Government Securities Fund seeks high current income,
consistent with lower volatility of principal, by investing primarily in
mortgage-backed securities created from pools of adjustable rate mortgages which
are issued or guaranteed by the United States Government, its agencies or
instrumentalities.
The Global Bond Fund seeks high total return, through both income and capital
appreciation. The Fund invests primarily in high-grade domestic and foreign
fixed-income securities.
The Global Bond Fund offers two classes of shares: Class A shares (sold subject
to a maximum front-end sales load of 4% and a distribution fee of up to 0.35% of
average daily net assets) and Class C shares (sold subject to a maximum
contingent deferred sales load of 1% if redeemed within a one-year period from
purchase and a distribution fee of up to 1% of average daily net assets). Each
Class A share and Class C share of the Fund represents identical interests in
the investment portfolio of the Fund and has the same rights, except that (i)
Class C shares bear the expenses of higher distribution fees, which is expected
to cause Class C shares to have a higher expense ratio and to pay lower
dividends than Class A shares; (ii) certain other class specific expenses will
be borne solely by the class to which such expenses are attributable; and (iii)
each class has exclusive voting rights with respect to matters relating to its
own distribution arrangements.
Prior to September 22, 1997, the Intermediate Term Government Income Fund and
Adjustable Rate U.S. Government Securities Fund also offered both Class A and
Class C shares. On September 22, 1997, all outstanding Class C shares were
redeemed pursuant to a mandatory redemption program authorized by the Board of
Trustees.
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES
The periods ended September 30 1997, referred to within the Notes to Financial
Statements, represent the year then ended, except for the Money Market Fund and
Intermediate Bond Fund which represent the one month then ended (Note 8). The
following is a summary of the Funds' significant accounting policies:
Securities valuation -- Short Term Government Income Fund securities,
Institutional Government Income Fund securities and Money Market Fund securities
are valued on the amortized cost basis, which approximates market value. This
involves initially valuing a security at its original cost and thereafter
assuming a constant amortization to maturity of any discount or premium. This
method of valuation is expected to enable these Funds to maintain a constant net
asset value per share. Intermediate Bond Fund securities, Intermediate Term
Government Income Fund securities, Adjustable Rate U.S. Government Securities
Fund securities and Global Bond Fund securities for which market quotations are
readily available are valued at their most recent bid prices as obtained from
one or more of the major market makers for such securities by an independent
pricing service. Securities for which market quotations are not readily
available are valued at their fair values as determined in good faith in
accordance with consistently applied procedures established by and under the
general supervision of the Board of Trustees. With respect to the Global Bond
Fund, the U.S. dollar value of foreign securities and forward foreign currency
exchange contracts is determined using spot and forward currency exchange rates,
respectively, supplied by a quotation service.
Repurchase agreements -- Repurchase agreements, which are collateralized by U.S.
Government obligations, are valued at cost which, together with accrued
interest, approximates market. Collateral for repurchase agreements is held in
safekeeping in the customer-only account of the Funds' custodian, at the Federal
Reserve Bank of Cleveland. At the time each 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.
Share valuation -- The net asset value per share of each Fund is calculated
daily by dividing the total value of a Fund's assets, less liabilities, by the
number of shares outstanding. With respect to the Global Bond Fund, the net
asset value per share of each class of shares is calculated daily by dividing
the total value of the Fund's assets attributable to that class, less
liabilities attributable to that class, by the number of shares of that class
outstanding.
The offering price per share of the Short Term Government Income Fund,
Institutional Government Income Fund and Money Market Fund is equal to the net
asset value per share. The maximum offering price per share of the Intermediate
Bond Fund, Intermediate Term Government Income Fund and Adjustable Rate U.S.
Government Securities Fund is equal to net asset value per share plus a sales
load equal to 2.04% of the net asset value (or 2% of the offering price). The
maximum offering price of Class A shares of the Global Bond Fund is equal to net
asset value per share plus a sales load equal to 4.17% of the net asset value
(or 4% of the offering price). The offering price of Class C shares of the
Global Bond Fund is equal to the net asset value per share.
The redemption price per share of each Fund, including each class of shares with
respect to the Global Bond Fund, is equal to the net asset value per share.
However, Class C shares of the Global Bond Fund are subject to a contingent
deferred sales load of 1% of the original purchase price if redeemed within a
one-year period from the date of purchase.
Investment income -- Interest income is accrued as earned. Discounts and
premiums on securities purchased are amortized in accordance with income tax
regulations which approximate generally accepted accounting principles.
Distributions to shareholders -- Dividends arising from net investment income
are declared daily and paid on the last business day of each month to
shareholders of the Short Term Government Income Fund, Institutional Government
Income Fund, Money Market Fund, Intermediate Bond Fund, Intermediate Term
Government Income Fund and Adjustable Rate U.S. Government Securities Fund.
Dividends arising from net investment income are declared and paid annually to
shareholders of the Global Bond 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.
<PAGE>
Allocations between classes -- Investment income earned by each Fund having two
classes of shares is allocated daily to each class of shares based on the
percentage of the net asset value of settled shares of such class to the total
of the net asset value of settled shares of both classes of shares. Realized
capital gains and losses and unrealized appreciation and depreciation are
allocated daily to each class of shares based upon its proportionate share of
total net assets of the Fund. Class specific expenses are charged directly to
the class incurring the expense. Common expenses which are not attributable to a
specific class are allocated daily to each class of shares based upon its
proportionate share of total net assets of the Fund.
Security transactions -- Security transactions are accounted for on the trade
date. Securities sold are valued on a specific identification basis.
Organization costs -- Costs incurred by the Money Market Fund and Intermediate
Bond Fund in connection with their organization and registration of shares, net
of certain expenses, 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 applicable 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.
The following information is based upon federal income tax cost of portfolio
investments (excluding repurchase agreements) as of September 30, 1997:
<TABLE>
<CAPTION>
ADJUSTABLE
INTERMEDIATE RATE U.S.
INTERMEDIATE TERM GOVERNMENT GLOBAL
BOND GOVERNMENT SECURITIES BOND
FUND INCOME FUND FUND FUND
<S> <C> <C> <C> <C>
Gross unrealized appreciation ........... $ 207,909 $ 1,210,236 $ 201,828 $ 286,237
Gross unrealized depreciation ........... (38,186) (55,787) (14,207) (75,201)
------------ ------------ ------------ ------------
Net unrealized appreciation ............. $ 169,723 $ 1,154,449 $ 187,621 $ 211,036
============ ============ ============ ============
Federal income tax cost ................. $ 15,240,607 $ 51,940,025 $ 17,260,488 $ 12,139,225
============ ============ ============ ============
</TABLE>
With respect to the Intermediate Bond Fund, the difference between the federal
income tax cost of portfolio investments and 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 September 30, 1997, the Institutional Government Income Fund, Money Market
Fund, Intermediate Bond Fund, Intermediate Term Government Income Fund,
Adjustable Rate U.S. Government Securities Fund and Global Bond Fund had capital
loss carryforwards for federal income tax purposes of $21,764, $3,760, $8,636,
$2,736,367, $1,250,655 and $13,469, respectively. In addition, the Intermediate
Term Government Income Fund elected to defer until its subsequent tax year
$165,218 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 distributing such gains to
shareholders.
Reclassification of capital accounts -- As of September 30, 1997, the Global
Bond Fund reclassified $427,230 from accumulated net realized losses on foreign
currency transactions to undistributed net investment income. This
reclassification, which has no impact on the net asset value of the Fund, is
primarily attributable to permanent differences between federal income tax
regulations and generally accepted accounting principles regarding the
classification of realized foreign currency gains and losses.
<PAGE>
3. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) were as follows for
the periods ended September 30, 1997:
<TABLE>
<CAPTION>
ADJUSTABLE
INTERMEDIATE RATE U.S.
INTERMEDIATE TERM GOVERNMENT GLOBAL
BOND GOVERNMENT SECURITIES BOND
FUND INCOME FUND FUND FUND
<S> <C> <C> <C> <C>
Purchases of investment securities............. $ -- $ 25,490,863 $ 11,551,886 $ 32,753,085
=========== ============ ============ =============
Proceeds from sales and maturities of
investment securities....................... $ 510,465 $ 29,999,506 $ 7,839,233 $ 38,312,743
=========== ============ ============ =============
</TABLE>
4. TRANSACTIONS WITH AFFILIATES
The Chairman and the President of the Trust are also officers of Countrywide
Financial Services, Inc., whose subsidiaries include Countrywide Investments,
Inc. (the Adviser), the Trust's investment adviser and principal underwriter,
and Countrywide Fund Services, Inc. (CFS), the Trust's 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.
MANAGEMENT AND SUBADVISORY AGREEMENTS
Each Fund's investments are supervised by the Adviser under the terms of a
Management Agreement. Under the Management Agreement, the Short Term Government
Income Fund, Money Market Fund, Intermediate Bond Fund, Intermediate Term
Government Income Fund and Adjustable Rate U.S. Government Securities 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 Institutional Government Income Fund pays the
Adviser a fee, which is computed and accrued daily and paid monthly, at an
annual rate of 0.20% of its average daily net assets. The Global Bond Fund pays
the Adviser a fee, which is computed and accrued daily and paid monthly, at an
annual rate of 0.70% of its average daily net assets up to $100 million and
0.60% of such net assets in excess of $100 million.
Rogge Global Partners, plc (Rogge) has been retained by the Adviser to manage
the investments of the Global Bond Fund. The Adviser (not the Fund) pays Rogge a
fee, which is computed and accrued daily and paid monthly, at an annual rate of
0.35% of the Fund's average daily net assets up to $100 million and 0.30% of
such net assets in excess of $100 million.
In order to voluntarily reduce operating expenses during the periods ended
September 30, 1997, the Adviser waived $22,972 of its advisory fees for the
Institutional Government Income Fund; waived $5,460 of its advisory fees for the
Intermediate Bond Fund; reimbursed $8,072 of Class C expenses for the
Intermediate Term Government Income Fund; waived its entire advisory fee of
$79,473 and reimbursed $35,391 of common expenses and $6,941 of Class C expenses
for the Adjustable Rate U.S. Government Securities Fund; and waived $16,782 of
its advisory fees and reimbursed $20,811 of Class A expenses for the Global Bond
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 Money Market Fund and Intermediate Bond Fund to 0.80% and 0.95%,
respectively, of each Fund's average daily net assets.
TRANSFER AGENT AND SHAREHOLDER SERVICE AGREEMENT
Under the terms of the Transfer, Dividend Disbursing, Shareholder Service and
Plan Agency Agreement between the Trust and CFS, 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 $25.00 per shareholder account from each of the Short Term Government
Income Fund, Institutional Government Income Fund and Money Market Fund and
$21.00 per shareholder account from each of the Intermediate Bond Fund,
Intermediate Term Government Income Fund, Adjustable Rate U.S. Government
Securities Fund and Global Bond Fund, subject to a $1,000 minimum monthly fee
for each Fund, or for each class of shares of a Fund, as applicable. In
addition, each Fund pays out-of-pocket expenses including, but not limited to,
postage and supplies.
<PAGE>
ACCOUNTING SERVICES AGREEMENT
Under the terms of the Accounting Services Agreement between the Trust and CFS,
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 $3,000 per month from each of the Short Term
Government Income Fund, Institutional Government Income Fund, and Money Market
Fund, $2,750 per month from the Intermediate Bond Fund, $3,250 per month from
each of the Intermediate Term Government Income Fund and Adjustable Rate U.S.
Government Securities Fund, and $4,750 per month from the Global Bond Fund. In
addition, each Fund pays certain out-of-pocket expenses incurred by CFS in
obtaining valuations of such Fund's portfolio securities.
UNDERWRITING AGREEMENT
The Adviser is the Funds' principal underwriter and, as such, acts as exclusive
agent for distribution of the Funds' shares. Under the terms of the Underwriting
Agreement between the Trust and the Adviser, the Adviser earned $188, $3,409,
$2,259 and $1,302 from underwriting and broker commissions on the sale of shares
of the Intermediate Bond Fund, Intermediate Term Government Income Fund,
Adjustable Rate U.S. Government Securities Fund and Global Bond Fund,
respectively, for the periods ended September 30, 1997. In addition, the Adviser
collected $457, $633 and $1,340 of contingent deferred sales loads on
redemptions of Class C shares of the Intermediate Term Government Income Fund,
Adjustable Rate U.S. Government Securities Fund and Global Bond Fund,
respectively.
PLANS OF DISTRIBUTION
The Trust has a Plan of Distribution (Class A Plan) under which shares of each
Fund having one class of shares and Class A shares of the Global Bond Fund may
directly incur or reimburse the Adviser for expenses related to the distribution
and promotion of shares. The annual limitation for payment of such expenses
under the Class A Plan is 0.10% of the Institutional Government Income Fund's
average daily net assets and 0.35% of each of the other Funds' average daily net
assets attributable to such shares.
The Trust also has a Plan of Distribution (Class C Plan) under which Class C
shares of the Global Bond Fund may directly incur or reimburse the Adviser for
expenses related to the distribution and promotion of shares. The annual
limitation for payment of such expenses under the Class C Plan is 1% of average
daily net assets attributable to Class C shares.
PRIOR AFFILIATE AGREEMENTS
Prior to August 30, 1997, the investment adviser of the Money Market Fund and
Intermediate Bond Fund was Trans Financial Bank, N.A.; Forum Financial Corp.
served as the transfer agent and dividend disbursing agent and performed
portfolio accounting services; Forum Financial Services, Inc. acted as
distributor of each Fund's shares; and Forum Administrative Services, LLC
supervised the administration of all aspects of each Fund's operations.
Contractual amounts paid by the Funds for the performance of these services are
reflected in each Fund's Statement of Operations for the year ended August 31,
1997. As of September 30, 1997, Trans Financial Bank, N.A. was a significant
shareholder of record of the Money Market Fund and the Intermediate Bond Fund.
5. CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold and payments for shares redeemed as shown in the
Statements of Changes in Net Assets are the result of the following capital
share transactions for the periods shown:
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
INTERMEDIATE BOND FUND
- ------------------------------------------------------------------------------------------------------------------
ONE MONTH YEAR PERIOD
ENDED ENDED ENDED
SEPT. 30, AUG. 31, AUG. 31,
1997 1997 1996
<S> <C> <C> <C>
Shares sold ............................................ 92,013 542,916 1,491,710
Shares issued in reinvestment of distributions
to shareholders ..................................... 91 1,951 1,404
Shares redeemed ........................................ (49,574) (404,063) (122,796)
---------- ---------- ----------
Net increase in shares outstanding ..................... 42,530 140,804 1,370,318
Shares outstanding, beginning of period ................ 1,511,122 1,370,318 --
---------- ---------- ----------
Shares outstanding, end of period ...................... 1,553,652 1,511,122 1,370,318
========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
INTERMEDIATE TERM ADJUSTABLE RATE GLOBAL
GOVERNMENT U.S. GOVERNMENT BOND
INCOME FUND SECURITIES FUND FUND
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Shares sold ......................... 864,111 1,824,629 2,931,702 1,317,967 158,243 202,237
Shares issued in reinvestment
of distributions to
shareholders ..................... 267,417 274,432 83,540 83,368 42,008 15,285
Shares redeemed ..................... (1,509,918) (2,059,645) (1,855,152) (2,327,350) (718,964) (302,506)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in
shares outstanding ............... (378,390) 39,416 1,160,090 (926,015) (518,713) (84,984)
Shares outstanding,
beginning of year ................ 5,348,350 5,308,934 1,195,580 2,121,595 1,164,325 1,249,309
---------- ---------- ---------- ---------- ---------- ----------
Shares outstanding, end of year ..... 4,969,960 5,348,350 2,355,670 1,195,580 645,612 1,164,325
========== ========== ========== ========== ========== ==========
CLASS C
Shares sold ......................... 13,106 36,099 77,399 63,042 79,602 187,748
Shares issued in reinvestment
of distributions to
shareholders ..................... 3,625 3,345 3,139 824 23,586 4,672
Shares redeemed ..................... (90,249) (21,699) (144,655) (8,583) (105,104) (83,836)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in
shares outstanding ............... (73,518) 17,745 (64,117) 55,283 (1,916) 108,584
Shares outstanding,
beginning of year ................ 73,518 55,773 64,117 8,834 535,423 426,839
---------- ---------- ---------- ---------- ---------- ----------
Shares outstanding, end of year ..... -- 73,518 -- 64,117 533,507 535,423
========== ========== ========== ========== ========== ==========
</TABLE>
Share transactions for the Short Term Government Income Fund, Institutional
Government Income Fund and Money Market Fund are identical to the dollar value
of those transactions as shown in the Statements of Changes in Net Assets.
6. FOREIGN CURRENCY TRANSLATION
With respect to the Global Bond Fund, amounts denominated in or expected to
settle in foreign currencies are translated into U.S. dollars based on exchange
rates on the following basis:
A. The market values of investment securities and other assets and liabilities
are translated at the closing rate of exchange each day.
B. Purchases and sales of investment securities and income and expenses are
translated at the rate of exchange prevailing on the respective dates of such
transactions.
C. The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from those resulting from
changes in market prices of securities held. Such fluctuations are included with
the net realized and unrealized gains or losses from investments. Reported net
realized foreign exchange gains or losses arise from 1) sales of foreign
currencies, 2) currency gains or losses realized between the trade and
settlement dates on securities transactions, and 3) the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books, and the U.S. dollar equivalent of the amounts actually received or
paid. Reported net unrealized foreign exchange gains or losses arise from
changes in the value of assets and liabilities, other than investments,
resulting from changes in exchange rates.
7. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Global Bond Fund enters into foreign currency exchange contracts as a way of
managing foreign exchange rate risk. The Fund may enter into these contracts for
the purchase or sale of a specific foreign currency at a fixed price on a future
date as a hedge or cross-hedge against either specific transactions or portfolio
positions. The objective of the Fund's foreign currency hedging transactions is
to reduce the risk that the U.S. dollar value of the Fund's securities
denominated in foreign currency will decline in value due to changes in foreign
currency exchange rates. All foreign currency exchange contracts are
"marked-to-market" daily at the applicable translation rates resulting in
unrealized gains or losses. Realized and unrealized gains or losses are included
in the Fund's Statement of Assets and Liabilities and Statement of Operations.
Risks may arise upon entering into these contracts from the potential inability
of counterparties to meet the terms of their contracts and from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar.
<PAGE>
As of September 30, 1997, the Global Bond Fund had forward foreign currency
exchange contracts outstanding as follows:
<TABLE>
<CAPTION>
NET
UNREALIZED
SETTLEMENT TO RECEIVE INITIAL MARKET APPRECIATION
DATE (TO DELIVER) VALUE VALUE (DEPRECIATION)
<S> <C> <C> <C> <C>
CONTRACTS TO SELL
10/20/97 ( 5,658,704) DEM $( 3,106,050) $( 3,213,002) $ ( 106,952)
10/20/97 ( 6,456,159) DKK ( 917,068) ( 962,691) ( 45,623)
10/20/97 ( 1,921,166) GBP ( 3,036,583) ( 3,101,255) ( 64,672)
10/20/97 ( 2,390,004,368) ITL ( 1,320,563) ( 1,386,516) ( 65,953)
------------- ------------- -----------
Total sell contracts ( 8,380,264) ( 8,663,464) ( 283,200)
------------- ------------- -----------
CONTRACTS TO BUY
10/20/97 10,984,141 DEM 6,054,049 6,236,777 182,728
10/20/97 6,478,003 DKK 933,482 965,948 32,466
10/20/97 411,738 GBP 652,604 664,650 12,046
10/20/97 314,406,692 JPY 2,712,744 2,615,649 ( 97,095)
10/20/97 4,607,702 NOK 604,124 652,013 47,889
------------- ------------- -----------
Total buy contracts 10,957,003 11,135,037 178,034
------------- ------------- -----------
NET CONTRACTS $ 2,576,739 $ 2,471,573 $ ( 105,166)
============= ============= ===========
</TABLE>
DEM-German Mark ITL-Italian Lira
DKK-Danish Krone JPY-Japanese Yen
GBP-British Pound Sterling NOK-Norwegian Krone
8. AGREEMENT AND PLAN OF REORGANIZATION
The Money Market Fund and Intermediate Bond Fund were originally organized as
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, including the Money Market Fund and
Intermediate Bond 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 Investment Trust. 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 investments as the
Predecessor Fund immediately before the reorganization.
For federal income tax purposes, the reorganization of the Money Market Fund and
Intermediate Bond Fund 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 has been
changed from August 31 to September 30.
<PAGE>
<TABLE>
SHORT TERM GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
September 30, 1997
<CAPTION>
============================================================================================================
Par Market
Value U.S. TREASURY OBLIGATIONS-- 26.9% Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
$ 5,000,000 U.S. Treasury Notes, 8.75%, 10/15/97....................................... $ 5,005,880
5,000,000 U.S. Treasury Notes, 7.375%, 11/15/97...................................... 5,009,203
5,000,000 U.S. Treasury Notes, 5.125%, 2/28/98....................................... 4,990,234
3,000,000 U.S. Treasury Notes, 5.875%, 4/30/98....................................... 3,005,268
5,000,000 U.S. Treasury Notes, 6.125%, 5/15/98....................................... 5,014,188
3,000,000 U.S. Treasury Notes, 8.25%, 7/15/98........................................ 3,057,594
- --------------- --------------
$ 26,000,000 TOTAL U.S. TREASURY OBLIGATIONS
===============
(Amortized Cost $26,082,367)............................................... $ 26,082,367
--------------
<CAPTION>
============================================================================================================
Face Market
Amount REPURCHASE AGREEMENTS(1)-- 72.5% Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
$ 22,500,000 Prudential Securities, Inc., 5.40%, dated 9/24/97, due 10/1/97,
repurchase proceeds $22,523,625......................................... $ 22,500,000
24,000,000 Nesbitt Burns Securities, Inc., 6.00%, dated 9/30/97, due 10/1/97,
repurchase proceeds $24,004,000......................................... 24,000,000
1,661,000 Dean Witter Reynolds, Inc., 5.50%, dated 9/30/97, due 10/1/97,
repurchase proceeds $1,661,254.......................................... 1,661,000
22,000,000 Merrill Lynch, Pierce, Fenner & Smith, Inc., 5.75%, dated 9/30/97,
due 10/1/97, repurchase proceeds $22,003,514............................ 22,000,000
- --------------- --------------
$ 70,161,000 TOTAL REPURCHASE AGREEMENTS ............................................... $ 70,161,000
=============== --------------
TOTAL INVESTMENTS AND REPURCHASE AGREEMENTS AT VALUE-- 99.4% .............. $ 96,243,367
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.6% .............................. 553,315
--------------
NET ASSETS -- 100.0% ...................................................... $ 96,796,682
==============
<FN>
(1) Repurchase agreements are fully collateralized by U.S. Government
obligations.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
INSTITUTIONAL GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
September 30, 1997
<CAPTION>
============================================================================================================
Par Market
Value INVESTMENTS -- 38.2% Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY ISSUES -- 29.9%
$ 2,000,000 Federal Farm Credit Bank Notes, 5.69%, 10/1/97............................. $ 2,000,000
2,000,000 Federal National Mortgage Assoc. Discount Notes, 10/2/97................... 1,999,688
1,210,000 Student Loan Marketing Assoc. Floating Rate Notes, 5.38%, 10/30/97......... 1,210,100
500,000 Private Export Funding Corp. Notes, 8.95%, 10/31/97........................ 501,269
1,500,000 Federal National Mortgage Assoc. Notes, 5.50%, 11/10/97.................... 1,499,375
100,000 Federal National Mortgage Assoc. Floating Rate Notes, 6.00%, 11/17/97...... 100,000
500,000 Federal National Mortgage Assoc. Notes, 7.68%, 12/1/97..................... 501,574
1,000,000 Federal Home Loan Bank Notes, 5.61%, 12/18/97.............................. 1,000,000
600,000 Federal National Mortgage Assoc. Notes, 5.375%, 1/13/98.................... 599,638
1,000,000 Federal National Mortgage Assoc. Notes, 8.03%, 1/28/98..................... 1,007,235
350,000 Federal Farm Credit Bank Notes, 5.36%, 1/29/98............................. 349,224
4,100,000 Federal Home Loan Bank Notes, 5.99%, 2/9/98................................ 4,103,780
400,000 Federal Home Loan Bank Notes, 5.11%, 2/23/98............................... 398,498
1,500,000 Federal National Mortgage Assoc. Notes, 8.20%, 3/10/98..................... 1,516,411
1,500,000 Federal National Mortgage Assoc. Notes, 6.00%, 4/17/98..................... 1,502,477
- --------------- --------------
$ 18,260,000 TOTAL U.S. GOVERNMENT AGENCY ISSUES
- ---------------
(Amortized Cost $18,289,269)............................................... $ 18,289,269
--------------
US GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES -- 5.0%
$ 373,785 Federal Home Loan Mortgage Corp. Series #M90145, 6.00%, 11/1/97............ 373,696
1,012,504 Federal Home Loan Mortgage Corp. Series #M90155, 5.50%, 11/1/97............ 1,012,187
108,132 Federal Home Loan Mortgage Corp. Series #M15799, 5.50%, 11/1/97............ 108,084
828,576 Federal Home Loan Mortgage Corp. Series #M90152, 6.50%, 12/1/97............ 828,978
199,001 Federal Home Loan Mortgage Corp. Series #M90162, 6.50%, 1/1/98............. 199,001
556,187 Federal Home Loan Mortgage Corp. Series #M17343, 6.00%, 2/1/98............. 555,572
- --------------- --------------
$ 3,078,185 TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES
- ---------------
(Amortized Cost $3,077,518)................................................ $ 3,077,518
--------------
COMMERCIAL PAPER -- 3.3%
$ 2,058,000 Kirksville College of Osteopathic Medicine, Inc., 12/11/97, Guarantor SLMA
- ---------------
(Amortized Cost $2,035,758) ............................................... $ 2,035,758
--------------
$ 23,396,185 TOTAL INVESTMENTS AT VALUE
===============
(Amortized Cost $23,402,545) ............................................. $ 23,402,545
--------------
<PAGE>
<CAPTION>
INSTITUTIONAL GOVERNMENT INCOME FUND (continued)
============================================================================================================
Face Market
Amount REPURCHASE AGREEMENTS(1)-- 61.4% Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
$ 14,500,000 Prudential Securities, Inc., 5.40%, dated 9/24/97, due 10/1/97,
repurchase proceeds $14,515,225......................................... $ 14,500,000
14,500,000 Nesbitt Burns Securities, Inc., 6.00%, dated 9/30/97, due 10/1/97,
repurchase proceeds $14,502,417......................................... 14,500,000
3,591,000 Dean Witter Reynolds, Inc., 5.50%, dated 9/30/97, due 10/1/97,
repurchase proceeds $3,591,549.......................................... 3,591,000
5,000,000 Merrill Lynch, Pierce, Fenner & Smith Inc., 5.75%, dated 9/30/97,
due 10/1/97, repurchase proceeds $5,000,799............................. 5,000,000
- --------------- --------------
$ 37,591,000 TOTAL REPURCHASE AGREEMENTS .............................................. $ 37,591,000
=============== --------------
TOTAL INVESTMENTS AND REPURCHASE AGREEMENTS AT VALUE-- 99.6%.............. $ 60,993,545
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.4% .............................. 254,341
--------------
NET ASSETS-- 100.0% ....................................................... $ 61,247,886
==============
<FN>
(1) Repurchase agreements are fully collateralized by U.S. Government
obligations.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
September 30, 1997
<CAPTION>
============================================================================================================
Par Market
Value INVESTMENTS -- 76.9% Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY ISSUES -- 0.7%
$ 500,000 Federal National Mortgage Assoc. Notes, 6.84%, 10/3/97
- ---------------
(Amortized Cost $500,031).................................................. $ 500,031
--------------
TAXABLE MUNICIPAL ISSUES -- 0.5%
$ 380,000 City of Aurora, IL, Variable Rate Demand Notes, Series 1997B, 10/2/97
- ---------------
(Amortized Cost $380,000).................................................. $ 380,000
--------------
CORPORATE NOTES -- 75.7%
$ 121,000 Carolina Power & Light Co., 6.375%, 10/1/97................................ $ 121,000
1,140,000 New York Telephone Co., 4.625%, 10/1/97.................................... 1,140,000
140,000 Ontario Province, 5.70%, 10/1/97........................................... 140,000
745,000 J.C. Penney & Co., 10.00%, 10/15/97........................................ 746,123
50,000 Interamerican Development Bank, 9.50%, 10/15/97............................ 50,065
1,000,000 Manitoba Province, 6.00%, 10/15/97......................................... 1,000,035
4,740,000 First USA Bank, 6.125%, 10/30/97........................................... 4,740,048
2,000,000 African Development Bank, 10.00%, 11/1/97.................................. 2,006,560
790,000 Associates Corp. of North America, 7.75%, 11/1/97.......................... 791,146
80,000 Campbell Soup Co., 9.00%, 11/1/97.......................................... 80,199
500,000 Conagra, Inc., 9.75%, 11/1/97.............................................. 501,604
1,993,000 International Business Machines Corp., 6.375%, 11/1/97..................... 1,993,544
40,000 Public Service Electric & Gas, 7.125%, 11/1/97............................. 40,036
190,000 U.S. Leasing International, 7.00%, 11/1/97................................. 190,176
1,825,000 American General Finance Corp., 7.70%, 11/15/97............................ 1,828,805
570,000 Associates Corp. of North America, 6.625%, 11/15/97........................ 570,400
484,000 Coca-Cola Enterprises, Inc., 6.50%, 11/15/97............................... 484,251
100,000 GTE South, Inc., 6.25%, 11/15/97........................................... 100,013
300,000 Norwest Corp., 7.70%, 11/15/97............................................. 300,641
1,330,000 Norwest Financial, Inc., 6.50%, 11/15/97................................... 1,330,906
340,000 Texaco Capital, 9.00%, 11/15/97............................................ 341,218
1,000,000 General Motors Acceptance Corp., 7.85%, 11/17/97........................... 1,002,708
800,000 BankAmerica Corp., 6.875%, 11/20/97........................................ 800,972
600,000 Beneficial Corp., 6.79%, 11/20/97.......................................... 600,870
30,000 Philip Morris Companies, Inc. Medium Term Notes, 9.35%, 11/21/97........... 30,141
110,000 Bell Atlantic Financial, 6.625%, 11/30/97.................................. 110,091
895,000 British Petroleum America, Inc., 8.875%, 12/1/97........................... 899,151
791,000 Dupont Corp., 8.65%, 12/1/97............................................... 794,478
474,000 Ford Motor Credit Co., 7.125%, 12/1/97..................................... 474,810
999,000 Ford Motor Credit Co., 8.00%, 12/1/97...................................... 1,002,134
2,721,000 Philip Morris Companies, Inc., 9.25%, 12/1/97.............................. 2,735,282
250,000 New England Telephone Co., 6.25%, 12/15/97................................. 250,169
5,050,000 Southern California Gas Co., 6.50%, 12/15/97............................... 5,056,434
240,000 General Electric Capital Corp., 6.44%, 12/16/97............................ 240,266
161,000 British Petroleum America, Inc., 9.50%, 1/1/98............................. 162,281
504,000 Ford Capital, 9.375%, 1/1/98............................................... 507,875
1,270,000 Caterpillar, Inc., 7.47%, 1/15/98.......................................... 1,275,691
470,000 Chase Manhattan Corp., 6.625%, 1/15/98..................................... 470,759
248,000 GTE California, 6.25%, 1/15/98............................................. 248,192
<PAGE>
<CAPTION>
MONEY MARKET FUND (continued)
============================================================================================================
Par Market
Value INVESTMENTS -- 76.9% Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
$ 60,000 General Electric Capital Corp., 8.00%, 1/15/98............................. $ 60,330
750,000 NationsBank Corp., 6.625%, 1/15/98......................................... 751,170
1,893,000 Philip Morris Companies, Inc., 6.375%, 1/15/98............................. 1,894,187
1,000,000 Texaco Capital, 8.65%, 1/30/98............................................. 1,008,276
1,250,000 Associates Corp. of North America, 6.125%, 2/1/98.......................... 1,250,209
50,000 Chubb Capital Corp., 6.00%, 2/1/98......................................... 49,958
776,000 Ford Motor Credit Co., 6.25%, 2/26/98...................................... 776,957
535,000 Southern California Edison Co., 5.875%, 2/1/98............................. 534,579
310,000 Beneficial Corp., 9.125%, 2/15/98.......................................... 313,434
455,000 Commercial Credit Co., 8.50%, 2/15/98...................................... 459,180
210,000 Dean Witter, Discover & Co., 6.00%, 3/1/98................................. 209,978
50,000 GTE Corp., 8.85%, 3/1/98................................................... 50,571
125,000 Gannett Co., 5.25%, 3/1/98................................................. 124,583
455,000 Wal-Mart Stores, Inc., 5.50%, 3/1/98....................................... 454,150
4,116,000 Revlon Worldwide Corp. Defeased Discount Note, 3/15/98..................... 4,008,979
1,000,000 General Electric Capital Corp., 7.61%, 3/27/98............................. 1,007,691
500,000 General Electric Capital Corp., 7.08%, 3/30/98............................. 502,785
500,000 Ontario Hydro, 5.80%, 3/31/98.............................................. 499,326
735,000 Sears Roebuck & Co., 9.25%, 4/15/98........................................ 747,228
500,000 Chrysler Financial Corp., 7.05%, 4/29/98................................... 502,804
540,000 General Electric Capital Corp., 8.37%, 5/8/98.............................. 547,708
500,000 Transamerica Financial Corp., 7.17%, 6/29/98............................... 503,980
300,000 American General Finance Corp., 8.50%, 8/15/98............................. 306,131
1,000,000 General Motors Acceptance Corp. Medium Term Notes, 6.375%, 9/1/98.......... 1,003,277
2,000,000 Manitoba Province, 9.50%, 9/15/98.......................................... 2,065,031
1,105,000 NationsBank Corp., 5.125%, 9/15/98......................................... 1,096,379
- --------------- --------------
$ 55,806,000 TOTAL CORPORATE NOTES
- ---------------
(Amortized Cost $55,887,955) .............................................. $ 55,887,955
--------------
$ 56,686,000 TOTAL INVESTMENTS AT VALUE
===============
(Amortized Cost $56,767,986) .............................................. $ 56,767,986
--------------
<CAPTION>
============================================================================================================
Face Market
Amount REPURCHASE AGREEMENTS(1)-- 22.0% Value
- ------------------------------------------------------------------------------------------------------------
$ 1,273,000 Bankers Trust Co., 5.25%, dated 9/30/97, due 10/1/97, repurchase
proceeds $1,273,186..................................................... $ 1,273,000
15,000,000 Zions Bank, 5.85%, dated 9/30/97, due 10/1/97, repurchase
proceeds $15,002,438.................................................... 15,000,000
- --------------- --------------
$ 16,273,000 TOTAL REPURCHASE AGREEMENTS ............................................... $ 16,273,000
=============== --------------
TOTAL INVESTMENTS AND REPURCHASE AGREEMENTS AT VALUE -- 98.9%.............. $ 73,040,986
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.1% .............................. 780,013
--------------
NET ASSETS -- 100.0% ....................................................... $ 73,820,999
==============
<FN>
(1) Repurchase agreements are fully collateralized by U.S. Government
obligations.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
INTERMEDIATE BOND FUND
PORTFOLIO OF INVESTMENTS
September 30, 1997
<CAPTION>
============================================================================================================
Par Market
Value INVESTMENTS -- 98.9% Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS -- 22.8%
$ 3,500,000 U.S. Treasury Notes, 6.50%, 8/15/05
- ---------------
(Amortized Cost $3,485,625) ............................................... $ 3,575,470
--------------
U.S. GOVERNMENT AGENCY ISSUES -- 12.2%
$ 920,000 Federal Home Loan Bank Discount Notes, 10/01/97............................ $ 920,000
500,000 Federal Home Loan Bank Notes, 6.62%, 12/6/00............................... 500,464
265,000 Tennessee Valley Authority Notes, 6.875%, 1/15/02.......................... 269,190
50,000 Tennessee Valley Authority Notes, 6.875%, 8/1/02........................... 50,808
150,000 Federal National Mortgage Assoc. Notes, 6.17%, 12/2/03..................... 147,200
30,000 Tennessee Valley Authority Notes, 8.05%, 7/15/24........................... 30,435
- --------------- --------------
$ 1,915,000 TOTAL U.S. GOVERNMENT AGENCY ISSUES
- ---------------
(Amortized Cost $1,918,363) ............................................... $ 1,918,097
--------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES -- 6.7%
$ 226,017 Federal Home Loan Mortgage Corp. #1072-G, 7.00%, 5/15/06................... $ 228,639
800,000 Federal Home Loan Mortgage Corp. #1720-E, 7.50%, 12/15/09.................. 819,827
- --------------- --------------
$ 1,026,017 TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES
- ---------------
(Amortized Cost $1,053,597)................................................ $ 1,048,466
--------------
U.S. GOVERNMENT AGENCY ASSET-BACKED SECURITIES -- 0.6%
$ 84,357 Small Business Administration #87-A, 8.45%, 1/1/07
- ---------------
(Amortized Cost $87,309)................................................... $ 88,569
--------------
CORPORATE BONDS -- 56.6%
$ 150,000 Consumers Energy Co., 6.875%, 5/1/98....................................... $ 150,024
278,000 Anheuser-Busch Cos., 8.75%, 12/1/99........................................ 292,158
250,000 British Petroleum America, Inc., 6.50%, 12/15/99........................... 251,112
169,000 Associates Corp. of North America, 6.00%, 3/15/00.......................... 168,274
175,000 Pacific Gas & Electric Co., 6.625%, 6/1/00................................. 175,041
172,000 Ford Motor Credit Co., 6.85%, 8/15/00...................................... 174,657
250,000 International Business Machines Credit Corp., 6.20%, 3/19/01............... 248,055
350,000 Florida Residential Property & Casualty Co., 7.25%, 7/1/02................. 356,527
160,000 Ford Motor Credit Co., 7.50%, 1/15/03...................................... 166,910
250,000 Greyhound Financial Corp., 7.82%, 1/27/03.................................. 262,089
68,000 U.S. Leasing International, 6.625%, 5/15/03................................ 68,101
200,000 Southern California Edison, 7.375%, 12/15/03............................... 204,293
200,000 V.F. Corp., 7.60%, 4/1/04.................................................. 206,584
215,000 Chase Manhattan Corp., 8.00%, 5/15/04...................................... 222,060
200,000 Michigan Bell Telephone Co., 6.375%, 2/1/05................................ 197,693
66,000 Kaiser Permanente, 9.55%, 7/15/05.......................................... 77,966
400,000 Anheuser-Busch Cos., 7.00%, 9/1/05......................................... 408,368
500,000 Union Oil of California Corp., 6.70%, 10/15/07............................. 497,078
50,000 Berkley (W.R.) Corp., 9.875%, 5/15/08...................................... 60,853
268,000 Super Value Store, 8.875%, 4/1/16.......................................... 270,683
35,000 Union Camp Corp., 8.625%, 4/15/16.......................................... 35,997
<PAGE>
<CAPTION>
INTERMEDIATE BOND FUND (continued)
============================================================================================================
Par Market
Value INVESTMENTS -- 98.9% Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
$ 214,000 Anheuser-Busch Cos., 8.625%, 12/1/16....................................... $ 223,069
56,000 Kraft, Inc., 8.50%, 2/15/17................................................ 58,268
260,000 Dayton Hudson Co., 9.875%, 6/1/17.......................................... 273,494
110,000 GTE Corp., 10.75%, 9/15/17................................................. 115,643
130,000 General Electric Capital Corp., 6.66%, 5/1/18.............................. 131,427
150,000 Deere & Co., 8.95%, 6/15/19................................................ 174,176
439,000 Pennsylvania Power & Light Co., 9.25%, 10/1/19............................. 485,994
115,000 Rohm & Haas Co., 9.80%, 4/15/20............................................ 144,821
165,000 Questar Pipeline, 9.375%, 6/1/21........................................... 184,422
120,000 Jersey Central Power & Light Co., 9.20%, 7/1/21............................ 134,635
675,000 Shopko Stores, 9.25%, 3/15/22.............................................. 785,273
300,000 Inco, Ltd., 9.60%, 6/15/22................................................. 336,964
765,000 Alabama Power Co., 8.30%, 7/1/22........................................... 801,057
160,000 Florida Power & Light Co., 8.00%, 8/25/22.................................. 165,817
85,000 Southwestern Public Service Co., 8.20%, 12/1/22............................ 91,983
130,000 Union Electric Co., 8.00%, 12/15/22........................................ 136,195
65,000 Wisconsin Electric Power, 7.75%, 1/15/23................................... 67,225
69,000 Georgia Power Co., 7.95%, 2/1/23........................................... 70,256
- --------------- --------------
$ 8,414,000 TOTAL CORPORATE BONDS
- --------------
(Amortized Cost $8,743,470)................................................ $ 8,875,242
--------------
$ 14,939,374 TOTAL INVESTMENTS AT VALUE
===============
(Amortized Cost $15,288,364) .............................................. $ 15,505,844
OTHER ASSETS IN EXCESS OF LIABILITIES-- 1.1% .............................. 164,987
--------------
NET ASSETS-- 100.0% ....................................................... $ 15,670,831
==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
INTERMEDIATE TERM GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
September 30, 1997
<CAPTION>
============================================================================================================
Par Market
Value INVESTMENTS -- 100.1% Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS -- 19.7%
$ 1,000,000 U.S. Treasury Notes, 7.75%, 2/15/01........................................ $ 1,055,000
1,000,000 U.S. Treasury Notes, 8.00%, 5/15/01........................................ 1,065,938
3,000,000 U.S. Treasury Notes, 7.875%, 8/15/01....................................... 3,194,064
2,000,000 U.S. Treasury Notes, 7.50%, 11/15/01....................................... 2,108,750
3,000,000 U.S. Treasury Notes, 6.25%, 6/30/02........................................ 3,028,125
- --------------- --------------
$ 10,000,000 TOTAL U.S. TREASURY OBLIGATIONS
- ---------------
(Amortized Cost $10,078,387)............................................... $ 10,451,877
--------------
U.S. GOVERNMENT AGENCY ISSUES -- 80.4%
$ 910,000 Federal Home Loan Bank Discount Notes, 10/1/97............................. $ 910,000
1,000,000 Federal National Mortgage Assoc. Notes, 7.89%, 2/23/00..................... 1,009,300
1,500,000 Federal National Mortgage Assoc. Notes, 6.35%, 10/19/00.................... 1,504,602
3,000,000 Federal National Mortgage Assoc. Notes, 6.74%, 5/7/01...................... 3,036,089
1,000,000 Student Loan Marketing Assoc. Medium Term Notes, 7.50%, 7/2/01............. 1,044,726
3,000,000 Federal Home Loan Bank Notes, 7.31%, 7/6/01................................ 3,120,138
1,750,000 Federal National Mortgage Assoc. Medium Term Notes, 7.25%, 7/17/01......... 1,771,974
2,000,000 Federal Home Loan Bank Medium Term Notes, 8.43%, 8/1/01.................... 2,156,876
2,400,000 Federal Home Loan Bank Notes, 6.25%, 9/27/01............................... 2,409,708
1,000,000 Student Loan Marketing Assoc. Medium Term Notes, 6.38%, 12/11/01........... 992,482
1,000,000 Federal National Mortgage Assoc. Notes, 6.50%, 12/27/01.................... 1,006,160
2,000,000 Federal National Mortgage Assoc. Notes, 7.55%, 4/22/02..................... 2,108,552
1,500,000 Federal National Mortgage Assoc. Notes, 7.03%, 6/4/02...................... 1,520,374
1,000,000 Federal Home Loan Mortgage Corp. Notes, 6.07%, 2/5/03...................... 985,867
2,000,000 Federal Home Loan Mortgage Corp. Notes, 6.80%, 7/9/04...................... 2,022,222
2,000,000 Federal Home Loan Mortgage Corp. Notes, 8.53%, 11/18/04.................... 2,074,714
2,000,000 Federal Home Loan Mortgage Corp. Notes, 7.65%, 5/10/05..................... 2,060,028
2,000,000 Federal National Mortgage Assoc. Medium Term Notes, 6.85%, 8/22/05......... 2,068,248
2,000,000 Federal National Mortgage Assoc. Notes, 6.77%, 9/1/05...................... 2,058,410
1,400,000 Federal National Mortgage Assoc. Notes, 6.26%, 1/24/06..................... 1,373,772
2,500,000 Federal National Mortgage Assoc. Notes, 6.21%, 1/26/06..................... 2,446,900
2,000,000 Federal National Mortgage Assoc. Notes, 6.06%, 2/3/06...................... 1,951,792
1,000,000 Federal Home Loan Mortgage Corp. Notes, 6.345%, 2/15/06.................... 989,121
2,000,000 Federal National Mortgage Assoc. Notes, 6.90%, 12/26/06.................... 2,020,542
- --------------- --------------
$ 41,960,000 TOTAL U.S. GOVERNMENT AGENCY ISSUES
- ---------------
(Amortized Cost $41,861,638) .............................................. $ 42,642,597
--------------
$ 51,960,000 TOTAL INVESTMENTS AT VALUE
===============
(Amortized Cost $51,940,025) .............................................. $ 53,094,474
LIABILITIES IN EXCESS OF OTHER ASSETS-- (0.1)% ............................ (61,684)
--------------
NET ASSETS-- 100.0% ....................................................... $ 53,032,790
==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
ADJUSTABLE RATE U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS
September 30, 1997
============================================================================================================
Par Market
Value INVESTMENTS -- 75.2% Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ADJUSTABLE RATE U.S. GOVERNMENT AGENCY
MORTGAGE-BACKED SECURITIES -- 65.6%
$ 456,750 Federal National Mortgage Assoc. #70373, 7.42%, 1/1/16..................... $ 473,399
1,158,710 Federal National Mortgage Assoc. #70119, 7.81%, 11/1/17.................... 1,213,470
667,923 Federal National Mortgage Assoc. #86885, 7.44%, 3/1/18..................... 692,149
1,265,463 Federal National Mortgage Assoc. #70907, 7.45%, 3/1/18..................... 1,318,941
1,205,462 Federal Home Loan Mortgage Corp. #605793, 7.48%, 5/1/18.................... 1,246,689
710,151 Federal National Mortgage Assoc. #70010, 7.42%, 6/1/18..................... 736,909
1,444,139 Federal National Mortgage Assoc. #70614, 7.37%, 10/1/18.................... 1,489,196
441,505 Federal Home Loan Mortgage Corp. #405958, 7.66%, 3/1/19.................... 459,638
1,382,271 Federal National Mortgage Assoc. #97285, 7.60%, 8/1/19..................... 1,443,256
404,451 Federal National Mortgage Assoc. #70635, 7.17%, 6/1/20..................... 419,622
948,863 Federal National Mortgage Assoc. #124211, 7.43%, 12/1/21................... 981,808
1,729,157 Federal Home Loan Mortgage Corp. #846013, 7.91%, 6/1/22.................... 1,815,460
1,035,096 Federal National Mortgage Assoc. #70176, 7.44%, 8/1/27..................... 1,075,030
1,801,649 Federal National Mortgage Assoc. #70243, 7.40%, 3/1/28..................... 1,869,896
- --------------- --------------
$ 14,651,590 TOTAL ADJUSTABLE RATE U.S. GOVERNMENT AGENCY
- --------------
MORTGAGE-BACKED SECURITIES
(Amortized Cost $15,046,101)............................................... $ 15,235,463
--------------
FIXED RATE U.S. GOVERNMENT AGENCY
MORTGAGE-BACKED SECURITIES -- 4.4%
$ 1,012,646 Federal Home Loan Mortgage Corp. #M90141, 6.50%, 10/1/97
- ---------------
(Amortized Cost $1,014,387)................................................ $ 1,012,646
--------------
U.S. GOVERNMENT AGENCY ISSUES -- 5.2%
$ 1,200,000 Federal Home Loan Bank Discount Notes, 10/1/97
- ---------------
(Amortized Cost $1,200,000) ............................................... $ 1,200,000
--------------
$ 16,864,236 TOTAL INVESTMENTS AT VALUE
===============
(Amortized Cost $17,260,488)............................................... $ 17,448,109
OTHER ASSETS IN EXCESS OF LIABILITIES-- 24.8% ............................ 5,753,618
--------------
NET ASSETS -- 100.0% ...................................................... $ 23,201,727
==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
GLOBAL BOND FUND
PORTFOLIO OF INVESTMENTS
September 30, 1997
============================================================================================================
Par Market
Value INVESTMENTS -- 95.4% Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. TREASURY OBLIGATIONS -- 26.6%
USD 400,000 U.S. Treasury Notes, 6.25%, 5/31/99................................... $ 402,875
USD 2,065,000 U.S. Treasury Notes, 6.375%, 5/15/00.................................. 2,090,168
USD 195,000 U.S. Treasury Notes, 6.50%, 5/31/01................................... 198,413
USD 405,000 U.S. Treasury Notes, 7.50%, 11/15/01.................................. 427,022
USD 321,000 U.S. Treasury Bonds, 6.50%, 11/15/26.................................. 323,006
--------------
TOTAL U.S. TREASURY OBLIGATIONS
(Amortized Cost $3,406,479)........................................... $ 3,441,484
--------------
CORPORATE BONDS -- 5.7%
USD 75,000 Bayerische Landesbank, 6.80%, 9/28/01................................. $ 76,416
USD 75,000 Toronto Dominion Bank, 6.50%, 1/15/07................................. 74,140
USD 80,000 Railcar Leasing LLC, 7.125%, 1/15/13.................................. 82,371
USD 100,000 African Development Bank, 6.875%, 10/15/15............................ 100,047
USD 100,000 Cajun Electric Power, 9.52%, 3/15/19.................................. 106,321
USD 100,000 Swiss Bank Corp., 7.50%, 7/15/25...................................... 103,580
USD 100,000 ABN AMRO Bank N.V., 7.125%, 10/15/93.................................. 96,479
USD 100,000 BellSouth Capital Funding Corp., 7.12%, 7/15/97....................... 100,748
--------------
TOTAL CORPORATE BONDS
(Amortized Cost $723,320)............................................. $ 740,102
--------------
FOREIGN GOVERNMENT ISSUES -- 63.1%
CAD 510,000 Government of Canada, 8.00%, 6/1/23................................... $ 447,021
CAD 480,000 Government of Canada, 8.00%, 6/1/27................................... 424,576
--------------
871,597
--------------
GBP 480,200 U.K. Gilt, 7.25%, 12/7/07............................................. 821,532
GBP 297,786 U.K. Gilt, 8.00%, 9/27/13............................................. 546,135
GBP 520,000 U.K. Gilt, 8.00%, 12/7/15............................................. 966,798
GBP 510,000 U.K. Gilt, 8.00%, 6/7/21.............................................. 966,227
--------------
3,300,692
--------------
ITL 590,000,000 Government of Italy, 9.50%, 2/1/99.................................... 358,346
ITL 125,000,000 Government of Italy, 10.50%, 4/1/05................................... 91,625
ITL 1,585,000,000 Government of Italy, 6.75%, 2/1/07.................................... 960,653
ITL 480,000,000 Government of Italy, 6.75%, 7/1/07.................................... 291,368
--------------
1,701,992
--------------
USD 500,000 United Mexican States, 6.25%, 12/31/19................................ 406,567
--------------
USD 250,000 Republic of Argentina, 5.50%, 3/31/23................................. 188,280
--------------
<PAGE>
<CAPTION>
GLOBAL BOND FUND (continued)
============================================================================================================
Par Market
Value INVESTMENTS -- 95.4% Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NOK 2,600,000 Government of Norway, 6.75%, 1/15/07.................................. $ 392,072
--------------
SEK 1,400,000 Government of Sweden, 6.00%, 2/9/05................................... 185,316
SEK 5,300,000 Government of Sweden, 6.50%, 10/25/06................................. 717,938
SEK 2,700,000 Government of Sweden, 8.00%, 8/15/07.................................. 404,221
--------------
1,307,475
--------------
TOTAL FOREIGN GOVERNMENT ISSUES
(Amortized Cost $8,009,426)........................................... $ 8,168,675
--------------
TOTAL INVESTMENTS AT VALUE
(Amortized Cost $12,139,225) ......................................... $ 12,350,261
OTHER ASSETS IN EXCESS OF LIABILITIES-- 4.6% ......................... 591,910
--------------
NET ASSETS-- 100.0% .................................................. $ 12,942,171
==============
CAD-Canadian Dollar NOK-Norwegian Krone
GBP-British Pound Sterling SEK-Swedish Krona
ITL-Italian Lira USD-United States Dollar
See accompanying notes to financial statements.
</TABLE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
===============================================================================
To the Shareholders and Board of Trustees of the Short Term Government Income
Fund, the Institutional Government Income Fund, the Intermediate Term Government
Income Fund, the Adjustable Rate U.S. Government Securities Fund, the Global
Bond Fund, the Intermediate Bond Fund and the Money Market Fund of Countrywide
Investment Trust:
We have audited the accompanying statements of assets and liabilities of the
Short Term Government Income Fund, the Institutional Government Income Fund, the
Intermediate Term Government Income Fund, the Adjustable Rate U.S. Government
Securities Fund, the Global Bond Fund, the Intermediate Bond Fund, and the Money
Market Fund of Countrywide Investment Trust (a Massachusetts business trust),
including the portfolios of investments, as of September 30, 1997, and (i) for
the Short Term Government Income Fund, the Institutional Government Income Fund,
the Intermediate Term Government Income Fund, the Adjustable Rate U.S.
Government Securities Fund, and the Global Bond Fund the related statements of
operations, statements of changes in net assets, and the financial highlights
for the periods indicated thereon and (ii) for the Intermediate Bond Fund and
the Money Market Fund the related statements of operations, statements of
changes in net assets, and the financial highlights for the one-month period
ended September 30, 1997 and the year ended August 31, 1997. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. The financial
statements and financial highlights of the Intermediate Bond Fund and the Money
Market Fund 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
September 30, 1997, by correspondence with the custodians and brokers or
alternate procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights audited by us
and referred to above present fairly, in all material respects, the financial
position of the Short Term Government Income Fund, the Institutional Government
Income Fund, the Intermediate Term Government Income Fund, the Adjustable Rate
U.S. Government Securities Fund, the Global Bond Fund, the Intermediate Bond
Fund, and the Money Market Fund of Countrywide Investment Trust as of September
30, 1997, the results of their operations, the changes in their net assets, and
their financial highlights for the periods referred to above, in conformity with
generally accepted accounting principles.
/s/ Arthur Andersen LLP
Cincinnati, Ohio,
October 31, 1997
<PAGE>
Countrywide Investments
COUNTRYWIDE INVESTMENT TRUST
312 Walnut St., 21st Floor
Cincinnati, Ohio 45202-4094
Nationwide: (Toll Free) 800-543-8721
Cincinnati: 629-2000
Rate Line: 579-0999
Shareholder Services
Nationwide: (Toll Free) 800-543-0407
Cincinnati: 629-2050
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
INVESTMENT ADVISER
Countrywide Investments, Inc.
312 Walnut St., 21st Floor
Cincinnati, Ohio 45202-4094
TRANSFER AGENT
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
This report is authorized for distribution only when it is accompanied or
preceded by a current prospectus of Countrywide Investment Trust.
<PAGE>
INCOME TOTAL
RETURN
ANNUAL REPORT
SEPTEMBER 30, 1997
SHORT TERM GOVERNMENT
INCOME FUND
INSTITUTIONAL GOVERNMENT
INCOME FUND
MONEY MARKET
FUND
INTERMEDIATE
BOND FUND
INTERMEDIATE TERM
GOVERNMENT
INCOME FUND
ADJUSTABLE RATE
U.S. GOVERNMENT
SECURITIES FUND
GLOBAL
BOND FUND
[LOGO]
Countrywide Investments
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000066117
<NAME> COUNTRYWIDE INVESTMENT TRUST
<SERIES>
<NUMBER> 1
<NAME> SHORT TERM GOVERNMENT INCOME FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-1-1996
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 96,243,367
<INVESTMENTS-AT-VALUE> 96,243,367
<RECEIVABLES> 636,527
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 964
<TOTAL-ASSETS> 96,880,858
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 84,176
<TOTAL-LIABILITIES> 84,176
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 96,796,682
<SHARES-COMMON-STOCK> 96,796,682
<SHARES-COMMON-PRIOR> 91,436,514
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 96,796,682
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,428,235
<OTHER-INCOME> 0
<EXPENSES-NET> 973,917
<NET-INVESTMENT-INCOME> 4,454,318
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 4,454,318
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,454,318
<DISTRIBUTIONS-OF-GAINS> 2,970
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 346,277,774
<NUMBER-OF-SHARES-REDEEMED> 345,226,289
<SHARES-REINVESTED> 4,308,683
<NET-CHANGE-IN-ASSETS> 5,357,198
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2,970
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 476,697
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 973,917
<AVERAGE-NET-ASSETS> 100,462,023
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .044
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .044
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .97
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<AVG-DEBT-PER-SHARE> 0
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<NAME> INTERMEDIATE TERM GOVERNMENT INCOME FUND CLASS A
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<CIK> 0000066117
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<NAME> INSTITUTIONAL GOVERNMENT INCOME FUND
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<CIK> 0000066117
<NAME> COUNTRYWIDE INVESTMENT TRUST
<SERIES>
<NUMBER> 6
<NAME> ADJUSTABLE RATE U.S. GOVERNMENT SECURITIES FUND CLASS A
<S> <C>
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<CIK> 0000066117
<NAME> COUNTRYWIDE INVESTMENT TRUST
<SERIES>
<NUMBER> 71
<NAME> GLOBAL BOND FUND CLASS A
<S> <C>
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<CIK> 0000066117
<NAME> COUNTRYWIDE INVESTMENT TRUST
<SERIES>
<NUMBER> 73
<NAME> GLOBAL BOND FUND CLASS C
<S> <C>
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<NET-ASSETS> 5,801,454
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<CIK> 0000066117
<NAME> COUNTRYWIDE INVESTMENT TRUST
<SERIES>
<NUMBER> 8
<NAME> MONEY MARKET FUND
<S> <C>
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<CIK> 0000066117
<NAME> COUNTRYWIDE INVESTMENT TRUST
<SERIES>
<NUMBER> 9
<NAME> INTERMEDIATE BOND FUND
<S> <C>
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