SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
--
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/
--
Pre-Effective Amendment No. -----
Post-Effective Amendment No. 67
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and/or
--
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
--
Amendment No. 61
-----
(Check appropriate box or boxes.)
COUNTRYWIDE INVESTMENT TRUST FILE NO. 2-52242 and 811-2538
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(Exact name of Registrant as Specified in Charter)
312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202
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(Address of Principal Executive Offices) Zip Code
Registrant's Telephone Number, including Area Code (513) 629-2000
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Robert H. Leshner, 312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box)
/ / immediately upon filing pursuant to paragraph(b)
/x/ on January 1, 1998 pursuant to paragraph (b)
/ / 75 days after filing pursuant to paragraph (a)
/ / on (date) pursuant to paragraph (a) of Rule 485
<PAGE>
CROSS REFERENCE SHEET
FORM N-1A
ITEM SECTION IN PROSPECTUS
1........................... Cover Page
2........................... Expense Information
3........................... Financial Highlights, Performance Information
4........................... Operation of the Fund; Investment
Objective and Policies
5........................... Operation of the Fund
6........................... Cover Page; Dividends and
Distributions; Taxes; Operation of
the Fund
7........................... How to Purchase Shares; Operation
of the Fund; Calculation of Share
Price and Public Offering Price;
Exchange Privilege; Shareholder
Services; Distribution Plan(s);
8........................... How to Redeem Shares; Shareholder
Services
9........................... None
SECTION IN STATEMENT OF
ITEM ADDITIONAL INFORMATION
10.......................... Cover Page
11.......................... Table of Contents
12.......................... The Trust
13.......................... Quality Ratings of Fixed-Income Obligations;
Definitions, Policies and Risk
Considerations; Investment
Limitations; Portfolio Turnover
14.......................... Trustees and Officers
15.......................... Principal Security Holders
16.......................... The Investment Adviser and
Underwriter; Distribution Plan(s);
Custodian; Auditors; Transfer
Agent
17.......................... Securities Transactions
18.......................... The Trust
19.......................... Calculation of Share Price and Public
Offering Price; Other Purchase
Information; Redemption in Kind
20.......................... Taxes
21.......................... The Investment Adviser and
Underwriter
22.......................... Historical Performance Information
23.......................... Annual Report
<PAGE>
PROSPECTUS
January 1, 1998
Countrywide Investment Trust
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
SHORT TERM GOVERNMENT INCOME FUND
The Short Term Government Income Fund (the "Fund"), a series of
Countrywide Investment Trust, seeks high current income consistent with
protection of capital, by investing primarily in short-term U.S. Government
obligations backed by the "full faith and credit" of the United States.
THE FUND'S PORTFOLIO SECURITIES ARE VALUED ON AN AMORTIZED COST BASIS.
FUND SHARES ARE NEITHER INSURED NOR GUARANTEED BY THE UNITED STATES GOVERNMENT
OR ANY OTHER ENTITY. IT IS ANTICIPATED, BUT THERE IS NO ASSURANCE, THAT THE FUND
WILL MAINTAIN A STABLE NET ASSET VALUE PER SHARE OF $1.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANKING OR DEPOSITORY INSTITUTION. SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER AGENCY.
Countrywide Investments, Inc. (the "Adviser") manages the Fund's
investments and its business affairs.
This Prospectus sets forth concisely the information about the Fund
that you should know before investing. Please retain this Prospectus for future
reference. A Statement of Additional Information dated January 1, 1998 has been
filed with the Securities and Exchange Commission and is hereby incorporated by
reference in its entirety. A copy of the Statement of Additional Information
can be obtained at no charge by calling one of the numbers listed below.
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For Information or Assistance in Opening An Account, Please Call:
Nationwide (Toll-Free)........................................800-543-0407
Cincinnati....................................................513-629-2050
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
EXPENSE INFORMATION
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Shareholder Transaction Expenses
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Exchange Fee None
Redemption Fee None*
Check Redemption Processing Fee (per check):
First six checks per month None
Additional checks per month $0.25
* A wire transfer fee is charged by the Fund's Custodian in the case
of redemptions made by wire. Such fee is subject to change and is
currently $8. See "How to Redeem Shares."
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees .48%
12b-1 Fees .05%(A)
Other Expenses .36%
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Total Fund Operating Expenses .89%
======
(A) The Fund may incur 12b-1 fees in an amount up to .35% of its average net
assets. Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales loads permitted by the National Association of
Securities Dealers.
The purpose of this table is to assist the investor in understanding
the various costs and expenses that an investor in the Fund will bear directly
or indirectly. The percentages expressing Annual Fund Operating Expenses are
based on amounts incurred during the most recent fiscal year, except that
12b-1 fees have been restated to reflect an anticipated decrease in such fees
to be incurred by the Fund during the current fiscal year. THE EXAMPLE BELOW
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
Example You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period:
1 Year $ 9
3 Years 28
5 Years 49
10 Years 110
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<PAGE>
FINANCIAL HIGHLIGHTS
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The following information, which has been audited by Arthur Andersen
LLP, is an integral part of the audited financial statements and should be read
in conjunction with the financial statements. The financial statements as of
September 30, 1997 and related auditors' report appear in the Statement of
Additional Information of the Fund, which can be obtained by shareholders at no
charge by calling Countrywide Fund Services, Inc. (Nationwide call toll-free
800-543-0407, in Cincinnati call 629-2050) or by writing to the Trust at the
address on the front of this Prospectus.
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR(A)
<TABLE>
Year Ended September 30,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ------ ------ ------ ------ ------ ------ ------ ------ -----
Net investment income 0.044 0.044 0.046 0.027 0.022 0.035 0.059 0.073 0.079 0.058
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Dividends from net
investment income (0.044) (0.044) (0.046) (0.027) (0.022) (0.035) (0.059) (0.073) (0.079) (0.058)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value at
end of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ======= ======= ======= ===== ====== ====== ====== ======
Total return 4.53% 4.51% 4.69% 2.72% 2.24% 3.55% 6.06% 7.50% 8.22% 6.08%
====== ====== ======= ======= ====== ===== ===== ====== ====== ======
Net assets at end
of year (000's) $96,797 $91,439 $87,141 $89,708 $96,962 $91,519 $101,535 $101,835 $104,956 $110,156
======= ====== ======= ======= ======= ======== ======== ======== ======== =======
Ratio of expenses to
average net assets 0.97% 0.99% 0.99% 0.99% 0.99% 0.99% 0.99% 0.99% 1.01% 1.00%
Ratio of net investment
income to average
net assets 4.43% 4.42% 4.59% 2.69% 2.22% 3.51% 5.90% 7.25% 7.91% 5.84%
(A)All per share data has been restated to reflect the effect of a 10 for 1 share split on February 28, 1990.
</TABLE>
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<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
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The Fund is a series of Countrywide Investment Trust (the "Trust"). The
investment objective of the Fund is to seek high current income, consistent with
protection of capital. The Fund seeks to achieve its investment objective by
investing primarily in obligations issued or guaranteed as to principal and
interest by the United States Government, its agencies or instrumentalities
("U.S. Government obligations" described below) and backed by the "full faith
and credit" of the United States, maturing within thirteen months or less with a
dollar-weighted average portfolio maturity of 90 days or less. In order to
achieve its investment objective, the Fund may also enter into repurchase
agreements collateralized by U.S. Government obligations backed by the "full
faith and credit" of the United States.
The Fund is not intended to be a complete investment program, and there is
no assurance that its investment objective can be achieved. The investment
objective of the Fund is fundamental and as such may not be changed without the
affirmative vote of a majority of the outstanding shares of the Fund. The term
"majority" of the outstanding shares means the lesser of (1) 67% or more of the
outstanding shares of the Fund present at a meeting, if the holders of more than
50% of the outstanding shares of the Fund are present or represented at such
meeting or (2) more than 50% of the outstanding shares of the Fund.
Notwithstanding the foregoing, the limitation of the Fund's permissible
investments to obligations backed by the "full faith and credit" of the United
States is a determination made by the Board of Trustees which may be changed by
the Board without shareholder approval, but only after notification has been
given to shareholders and after this Prospectus has been revised accordingly.
Unless otherwise indicated, all investment practices and limitations of the Fund
are nonfundamental policies which may be changed by the Board of Trustees
without shareholder approval.
U.S. GOVERNMENT OBLIGATIONS
----------------------------
The Fund invests in short-term U.S. Government obligations backed by
the "full faith and credit" of the United States. "U.S. Government obligations"
include securities which are issued or guaranteed by the United States Treasury,
by various agencies of the United States Government, and by various
instrumentalities which have been established or sponsored by the United States
Government. U.S. Treasury obligations are backed by the "full faith and credit"
of the United States Government. U.S. Treasury obligations include Treasury
bills, Treasury notes, and Treasury bonds. U.S. Treasury obligations also
include the separate principal and interest components of U.S. Treasury
obligations which are traded under the Separate Trading of Registered
Interest and Principal of Securities ("STRIPS") program.
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<PAGE>
Agencies or instrumentalities established by the United States Government
include the Federal Home Loan Banks, the Federal Land Bank, the Government
National Mortgage Association, the Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation, the Student Loan Marketing Association,
the Small Business Administration, the Bank for Cooperatives, the Federal
Intermediate Credit Bank, the Federal Financing Bank, the Federal Farm Credit
Banks, the Federal Agricultural Mortgage Corporation, the Resolution Funding
Corporation, the Financing Corporation of America and the Tennessee Valley
Authority. Some of these securities are supported by the full faith and credit
of the United States Government while others are supported only by the credit of
the agency or instrumentality, which may include the right of the issuer to
borrow from the United States Treasury. In the case of securities not backed by
the full faith and credit of the United States, the investor must look
principally to the agency issuing or guaranteeing the obligation for ultimate
repayment, and may not be able to assert a claim against the United States in
the event the agency or instrumentality does not meet its commitments. Shares of
the Fund are not guaranteed or backed by the United States Government.
The Fund may invest in securities issued or guaranteed by any of the
entities listed above or by any other agency or instrumentality established or
sponsored by the United States Government, provided that the securities are
otherwise permissible investments of the Fund. Certain U.S. Government
obligations which have a variable rate of interest readjusted no less frequently
than annually will be deemed to have a maturity equal to the period remaining
until the next readjustment of the interest rate.
The market value of investments available to the Fund, and therefore
the Fund's yield, will fluctuate due to changes in interest rates, economic
conditions, quality ratings and other factors beyond the control of the Adviser.
The portfolio securities held by the Fund are subject to price fluctuations
based upon changes in the level of interest rates, which will generally result
in all those securities changing in price in the same way, i.e., all those
securities experiencing appreciation when interest rates decline and
depreciation when interest rates rise. In addition, the prepayment experience of
the mortgages underlying mortgage-related U.S. Government obligations may affect
the value of, and the return on an investment in, such securities.
OTHER INVESTMENT TECHNIQUES
----------------------------
The Fund may also engage in the following investment techniques, each
of which may involve certain risks:
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements.
Repurchase agreements are transactions by which the
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<PAGE>
Fund purchases a security and simultaneously commits to resell that security to
the seller at an agreed upon time and price, thereby determining the yield
during the term of the agreement. In the event of a bankruptcy or other default
of the seller of a repurchase agreement, the Fund could experience both delays
in liquidating the underlying security and losses. To minimize these
possibilities, the Fund intends to enter into repurchase agreements only with
its Custodian, banks having assets in excess of $10 billion and the largest and,
in the Board of Trustees' judgment, most creditworthy primary U.S. Government
securities dealers. The Fund will enter into repurchase agreements which are
collateralized by U.S. Government obligations backed by the "full faith and
credit" of the United States. Collateral for repurchase agreements is held
in safekeeping in the customer-only account of the Fund's Custodian at the
Federal Reserve Bank. At the time the Fund enters into a repurchase agreement
the value of the collateral, including accrued interest, will equal or exceed
the value of the repurchase agreement and, in the case of a repurchase
agreement exceeding one day, the seller agrees to maintain sufficient
collateral so that the value of the underlying collateral, including
accrued interest, will at all times equal or exceed the value of the
repurchase agreement. The Fund will not enter into a repurchase agreement not
terminable within seven days if, as a result thereof, more than 10% of the
value of its net assets would be invested in such securities and other
illiquid securities.
BORROWING AND PLEDGING. As a temporary measure for extraordinary or
emergency purposes, the Fund may borrow money from banks or other persons in an
amount not exceeding 10% of its total assets. The Fund may pledge assets in
connection with borrowings but will not pledge more than 15% of its total
assets. The Fund will not make any additional purchases of portfolio securities
if outstanding borrowings exceed 5% of the value of its total assets. Borrowing
magnifies the potential for gain or loss on the portfolio securities of the Fund
and, therefore, if employed, increases the possibility of fluctuation in its net
asset value. This is the speculative factor known as leverage. To reduce the
risks of borrowing, the Fund will limit its borrowings as described above. The
Fund's policies on borrowing and pledging are fundamental policies which may not
be changed without the affirmative vote of a majority of its outstanding shares.
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<PAGE>
in order to maintain its status as a regulated investment company and to avoid
the imposition of federal income or excise taxes. See "Taxes."
HOW TO PURCHASE SHARES
- ----------------------
Your initial investment in the Fund ordinarily must be at least $1,000
($250 for tax-deferred retirement plans). However, the minimum initial
investment for employees, shareholders and customers of Countrywide Credit
Industries, Inc. or any affiliated company, including members of the immediate
family of such individuals, is $50. Shares of the Fund are sold on a continuous
basis at the net asset value next determined after receipt of a purchase order
by the Trust.
INITIAL INVESTMENTS BY MAIL. You may open an account and make an
initial investment in the Fund by sending a check and a completed account
application form to Countrywide Fund Services, Inc. (the "Transfer Agent"), P.O.
Box 5354, Cincinnati, Ohio 45201-5354. Checks should be made payable to the
"Short Term Government Income Fund." An account application is included in this
Prospectus.
You will be sent within five business days after the end of each month
a written statement disclosing each purchase or redemption effected and each
dividend or distribution credited to your account during the month. Certificates
representing shares of the Fund are not issued. The Trust and the Adviser
reserve the rights to limit the amount of investments and to refuse to sell to
any person.
Investors should be aware that the Fund's account application contains
provisions in favor of the Trust, the Transfer Agent and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating to
the various services (for example, telephone redemptions and exchanges and check
redemptions) made available to investors.
Should an order to purchase shares be canceled because your check does
not clear, you will be responsible for any resulting losses or fees incurred by
the Trust or the Transfer Agent in the transaction.
INITIAL INVESTMENTS BY WIRE. You may also purchase shares of the Fund
by wire. Please telephone the Transfer Agent (Nationwide call toll-free
800-543-0407; in Cincinnati call 629-2050) for instructions. You should be
prepared to give the name in which the account is to be established, the
address, telephone
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<PAGE>
number and taxpayer identification number for the account, and the name of the
bank which will wire the money.
You may receive a dividend on the day of your wire investment provided
you have given notice of your intention to make such investment to the Transfer
Agent by 12:30 p.m., Eastern time, on that day. Your investment will be made at
the net asset value next determined after your wire is received together with
the account information indicated above. If the Trust does not receive timely
and complete account information, there may be a delay in the investment of your
money and any accrual of dividends. To make your initial wire purchase, you are
required to mail a completed account application to the Transfer Agent. Your
bank may impose a charge for sending your wire. There is presently no fee for
receipt of wired funds, but the Transfer Agent reserves the right to charge
shareholders for this service upon thirty days' prior notice to shareholders.
ADDITIONAL INVESTMENTS. You may purchase and add shares to your account
by mail or by bank wire. Checks should be sent to Countrywide Fund Services,
Inc., P.O. Box 5354, Cincinnati, Ohio 45201-5354. Checks should be made payable
to the Fund. Bank wires should be sent as outlined above. You may also make
additional investments at the Trust's offices at 312 Walnut Street, 21st Floor,
Cincinnati, Ohio 45202. Each additional purchase request must contain the name
of your account and your account number to permit proper crediting to your
account. While there is no minimum amount required for subsequent investments,
the Trust reserves the right to impose such requirement.
CASH SWEEP PROGRAM. Cash accumulations in accounts with financial
institutions may be automatically invested in shares of the Fund at the next
determined net asset value on a day selected by the institution or its customer,
or when the account balance reaches a predetermined dollar amount (e.g.,
$5,000).
Participating institutions are responsible for prompt transmission of
orders relating to the program. Institutions participating in this program may
charge their customers fees for services relating to the program which would
reduce the customers' yield from an investment in the Fund. This Prospectus
should, therefore, be read together with any agreement between the customer and
the participating institution with regard to the services provided, the fees
charged for these services and any restrictions and limitations imposed.
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<PAGE>
SHAREHOLDER SERVICES
- ---------------------
Contact the Transfer Agent (Nationwide call toll-free 800-543-0407; in
Cincinnati call 629-2050) for additional information about the shareholder
services described below.
AUTOMATIC WITHDRAWAL PLAN
If the shares in your account have a value of at least $5,000, you may
elect to receive, or may designate another person to receive, monthly or
quarterly payments in a specified amount of not less than $50 each. There is no
charge for this service.
TAX-DEFERRED RETIREMENT PLANS
Shares of the Fund are available for purchase in connection with the
following tax-deferred retirement plans:
-- Keogh Plans for self-employed individuals
-- Individual retirement account (IRA) plans for
individuals and their non-employed spouses, including Roth
IRAs and Education IRAs
-- Qualified pension and profit-sharing plans for
employees, including those profit-sharing plans with a
401(k) provision
-- 403(b)(7) custodial accounts for employees of public school
systems, hospitals, colleges and other non-profit
organizations meeting certain requirements of the Internal
Revenue Code
DIRECT DEPOSIT PLANS
Shares of the Fund may be purchased through direct deposit plans
offered by certain employers and government agencies. These plans enable a
shareholder to have all or a portion of his or her payroll or social security
checks transferred automatically to purchase shares of the Fund.
AUTOMATIC INVESTMENT PLAN
You may make automatic monthly investments in the Fund from your bank,
savings and loan or other depository institution account. The minimum initial
and subsequent investments must be $50 under the plan. The Transfer Agent pays
the costs associated with these transfers, but reserves the right, upon thirty
days' written notice, to make reasonable charges for this service. Your
depository institution may impose its own charge for
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<PAGE>
debiting your account which would reduce your return from an investment in the
Fund.
HOW TO REDEEM SHARES
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You may redeem shares of the Fund on each day that the Trust is open
for business. You will receive the net asset value per share next determined
after receipt by the Transfer Agent of a proper redemption request in the form
described below. Payment is normally made within three business days after
tender in such form, provided that payment in redemption of shares purchased by
check will be effected only after the check has been collected, which may take
up to fifteen days from the purchase date. To eliminate this delay, you may
purchase shares of the Fund by certified check or wire.
A contingent deferred sales load may be imposed on a redemption of shares
of the Fund if such shares had previously been acquired in connection with an
exchange from another fund of Countrywide Investments which imposes a contingent
deferred sales load, as described in the Prospectus of such other fund.
BY TELEPHONE. You may redeem shares by telephone. The proceeds will be
sent by mail to the address designated on your account or wired directly to your
existing account in any commercial bank or brokerage firm in the United States
as designated on your application. To redeem by telephone, call the Transfer
Agent (Nationwide call toll-free 800-543-0407; in Cincinnati call 629-2050). The
redemption proceeds will normally be sent by mail or by wire within one business
day (but not later than three business days) after receipt of your telephone
instructions. Any redemption requests by telephone must be received in proper
form prior to 12:30 p.m., Eastern time, on any business day in order for payment
by wire to be made that day. IRA accounts are not redeemable by telephone.
The telephone redemption privilege is automatically available to all
shareholders. You may change the bank or brokerage account which you have
designated under this procedure at any time by writing to the Transfer Agent
with your signature guaranteed by any eligible guarantor institution (including
banks, brokers and dealers, municipal securities brokers and dealers, government
securities brokers and dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations)
or by completing a supplemental telephone redemption authorization form. Contact
the Transfer Agent to obtain this form. Further documentation will be required
to change the designated account if shares are held by a corporation, fiduciary
or other organization.
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<PAGE>
Neither the Trust, the Transfer Agent, nor their respective affiliates
will be liable for complying with telephone instructions they reasonably believe
to be genuine or for any loss, damage, cost or expense in acting on such
telephone instructions. The affected shareholders will bear the risk of any such
loss. The Trust or the Transfer Agent, or both, will employ reasonable
procedures to determine that telephone instructions are genuine. If the Trust
and/or the Transfer Agent do not employ such procedures, they may be liable for
losses due to unauthorized or fraudulent instructions. These procedures may
include, among others, requiring forms of personal identification prior to
acting upon telephone instructions, providing written confirmation of the
transactions and/or tape recording telephone instructions.
BY MAIL. You may redeem any number of shares from your account by
sending a written request to the Transfer Agent. The request must state the
number of shares or the dollar amount to be redeemed and your account number.
The request must be signed exactly as your name appears on the Trust's account
records. If the shares to be redeemed have a value of $25,000 or more, your
signature must be guaranteed by any of the eligible guarantor institutions
outlined above.
Written redemption requests may also direct that the proceeds be
deposited directly in the bank account or brokerage account designated on your
account application for telephone redemptions. Proceeds of redemptions requested
by mail are mailed within three business days following receipt of instructions
in proper form.
BY CHECK. You may establish a special checking account with the Fund
for the purpose of redeeming shares by check. Checks may be made payable to
anyone for any amount, but checks may not be certified.
When a check is presented to the Custodian for payment, the Transfer
Agent, as your agent, will cause the Fund to redeem a sufficient number of full
and fractional shares in your account to cover the amount of the check.
If the amount of a check is greater than the value of the shares held
in your account, the check will be returned. A check representing a redemption
request will take precedence over any other redemption instructions issued by a
shareholder.
As long as no more than six check redemptions are effected in your
account in any month, there will be no charge for the check redemption
privilege. After six check redemptions are effected in your account in a month,
the Transfer Agent will charge you $.25 for each additional check redemption
effected that month. However, there is no charge for any check redemptions
effected by employees, shareholders and customers of
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<PAGE>
Countrywide Credit Industries, Inc. or any affiliated company, including members
of the immediate family of such individuals. The Transfer Agent charges
shareholders its costs for each stop payment and each check returned for
insufficient funds. In addition, the Transfer Agent reserves the right to make
additional charges to recover the costs of providing the check redemption
service. All charges will be deducted from your account by redemption of shares
in your account. The check redemption procedure may be suspended or terminated
at any time upon written notice by the Trust or the Transfer Agent.
Shareholders who invest in the Fund through a cash sweep or similar
program with a financial institution are not eligible for the checkwriting
privilege.
ADDITIONAL REDEMPTION INFORMATION. If your instructions request a
redemption by wire, you will be charged an $8 processing fee by the Fund's
Custodian. The Trust reserves the right, upon thirty days' written notice, to
change the processing fee. All charges will be deducted from your account by
redemption of shares in your account. Your bank or brokerage firm may also
impose a charge for processing the wire. In the event that wire transfer of
funds is impossible or impractical, the redemption proceeds will be sent by mail
to the designated account.
Redemption requests may direct that the proceeds be deposited directly
in your account with a commercial bank or other depository institution via an
Automated Clearing House (ACH) transaction. There is currently no charge for ACH
transactions. Contact the Transfer Agent for more information about ACH
transactions.
At the discretion of the Trust or the Transfer Agent, corporate
investors and other associations may be required to furnish an appropriate
certification authorizing redemptions to ensure proper authorization. The Trust
reserves the right to require you to close your account if at any time the value
of your shares is less than the minimum amount required by the Trust for your
account (based on actual amounts invested, unaffected by market fluctuations),
or such other minimum amount as the Trust may determine from time to time.
After notification to you of the Trust's intention to close your account, you
will be given thirty days to increase the value of your account to the minimum
amount.
The Trust reserves the right to suspend the right of redemption or to
postpone the date of payment for more than three business days under unusual
circumstances as determined by the Securities and Exchange Commission.
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<PAGE>
EXCHANGE PRIVILEGE
- -------------------
Shares of the Fund and of any other fund of Countrywide Investments may
be exchanged for each other. A sales load will be imposed equal to the excess,
if any, of the sales load rate applicable to the shares being acquired over the
sales load rate, if any, previously paid on the shares being exchanged.
The following are the funds of Countrywide Investments currently
offered to the public. Funds which may be subject to a front-end or contingent
deferred sales load are indicated by an asterisk.
Countrywide Tax-Free Trust Countrywide Strategic Trust
Tax-Free Money Fund *Government Mortgage Fund
Ohio Tax-Free Money Fund *Equity Fund
California Tax-Free Money Fund *Utility Fund
Florida Tax-Free Money Fund *Growth/Value Fund
*Tax-Free Intermediate Term Fund *Aggressive Growth Fund
*Ohio Insured Tax-Free Fund *International Equity Fund
*Kentucky Tax-Free Fund
Countrywide Investment Trust
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
You may request an exchange by sending a written request to the
Transfer Agent. The request must be signed exactly as your name appears on the
Trust's account records. Exchanges may also be requested by telephone. If you
are unable to execute your transaction by telephone (for example during times of
unusual market activity) consider requesting your exchange by mail or by
visiting the Trust's offices at 312 Walnut Street, 21st Floor, Cincinnati, Ohio
45202. An exchange will be effected at the next determined net asset value (or
offering price, if sales load is applicable) after receipt of a request by the
Transfer Agent.
Exchanges may only be made for shares of funds then offered for sale in
your state of residence and are subject to the applicable minimum initial
investment requirements. The exchange privilege may be modified or terminated by
the Board of Trustees upon 60 days' prior notice to shareholders. An exchange
results in a sale of fund shares, which may cause you to recognize a capital
gain or loss. Before making an exchange, contact the Transfer Agent to obtain a
current prospectus for any of the
- 13 -
<PAGE>
other funds of Countrywide Investments and more information about exchanges
among Countrywide Investments.
DIVIDENDS AND DISTRIBUTIONS
- ---------------------------
All of the net investment income of the Fund is declared as a dividend
to shareholders of record on each business day of the Trust and paid monthly.
Management will determine the timing and frequency of the distributions of any
net realized short-term capital gains. Although the Fund does not expect to
realize any long-term capital gains, if the Fund does realize such gains it will
distribute them at least once each year.
Dividends are automatically reinvested in additional shares of the Fund
(the Share Option) unless cash payments are specified on your application or are
otherwise requested by contacting the Transfer Agent. If you elect to receive
dividends in cash and the U.S. Postal Service cannot deliver your checks or if
your checks remain uncashed for six months, your dividends may be reinvested in
your account at the then-current net asset value and your account will be
converted to the Share Option. No interest will accrue on amounts represented by
uncashed distribution checks.
TAXES
- ------
The Fund has qualified in all prior years and intends to continue to
qualify for the special tax treatment afforded a "regulated investment company"
under Subchapter M of the Internal Revenue Code so that it does not pay federal
taxes on income and capital gains distributed to shareholders. The Fund intends
to distribute substantially all of its net investment income and any net
realized capital gains to its shareholders. Distributions of net investment
income as well as from net realized short-term capital gains, if any, are
taxable as ordinary income. Since the Fund's investment income is derived from
interest rather than dividends, no portion of such distributions is eligible for
the dividends received deduction available to corporations.
The Fund will mail to each of its shareholders a statement indicating
the amount and federal income tax status of all distributions made during the
year. In addition to federal taxes, shareholders of the Fund may be subject to
state and local taxes on distributions. Shareholders should consult their tax
advisors about the tax effect of distributions and withdrawals from the Fund and
the use of the Automatic Withdrawal Plan and the Exchange Privilege. The tax
consequences described in this section apply whether distributions are taken in
cash or reinvested in additional shares.
- 14 -
<PAGE>
OPERATION OF THE FUND
- ---------------------
The Fund is a diversified series of Countrywide Investment Trust, an
open-end management investment company organized as a Massachusetts business
trust on December 7, 1980. The Board of Trustees supervises the business
activities of the Trust. Like other mutual funds, the Trust retains various
organizations to perform specialized services for the Fund.
The Trust retains Countrywide Investments, Inc., 312 Walnut Street,
Cincinnati, Ohio 45202 (the "Adviser"), to manage the Fund's investments and its
business affairs. The Adviser was organized in 1974 and is also the investment
adviser to six other series of the Trust, seven series of Countrywide Tax-Free
Trust and six series of Countrywide Strategic Trust. The Adviser is an indirect
wholly-owned subsidiary of Countrywide Credit Industries, Inc., a New York Stock
Exchange listed company principally engaged in the business of residential
mortgage lending. The Fund pays the Adviser a fee equal to the annual rate of
.5% of the average value of its daily net assets up to $50 million; .45% of such
assets from $50 million to $150 million; .4% of such assets from $150 million to
$250 million; and .375% of such assets in excess of $250 million.
The Adviser serves as principal underwriter for the Fund and, as such, is
the exclusive agent for the distribution of shares of the Fund. Angelo R.
Mozilo, Robert H. Leshner, Robert G. Dorsey and John F. Splain are officers of
both the Trust and the Adviser.
The Fund is responsible for the payment of all operating expenses,
including fees and expenses in connection with membership in investment company
organizations, brokerage fees and commissions, legal, auditing and accounting
expenses, expenses of registering shares under federal and state securities
laws, expenses related to the distribution of the Fund's shares (see
"Distribution Plan"), insurance expenses, taxes or governmental fees, fees and
expenses of the custodian, transfer agent and accounting and pricing agent of
the Fund, fees and expenses of members of the Board of Trustees who are not
interested persons of the Trust, the cost of preparing and distributing
prospectuses, statements, reports and other documents to shareholders, expenses
of shareholders' meetings and proxy solicitations, and such extraordinary or
non-recurring expenses as may arise, including litigation to which the Fund may
be a party and indemnification of the Trust's officers and Trustees with respect
thereto.
The Trust has retained Countrywide Fund Services, Inc., P.O. Box 5354,
Cincinnati, Ohio (the "Transfer Agent"), an indirect wholly-owned subsidiary of
Countrywide Credit Industries, Inc., to serve as the Fund's transfer agent,
- 15 -
<PAGE>
dividend paying agent and shareholder service agent.
The Transfer Agent also provides accounting and pricing services to the
Fund. The Transfer Agent receives a monthly fee from the Fund for calculating
daily net asset value per share and maintaining such books and records as are
necessary to enable it to perform its duties.
In addition, the Transfer Agent has been retained by the Adviser to
assist the Adviser in providing administrative services to the Fund. In this
capacity, the Transfer Agent supplies executive, administrative and regulatory
services, supervises the preparation of tax returns, and coordinates the
preparation of reports to shareholders and reports to and filings with the
Securities and Exchange Commission and state securities authorities. The Adviser
(not the Fund) pays the Transfer Agent a fee for these administrative services.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to its objective of seeking best execution
of portfolio transactions, the Adviser may give consideration to sales of shares
of the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions of the Fund. Subject to the requirements of the
Investment Company Act of 1940 and procedures adopted by the Board of Trustees,
the Fund may execute portfolio transactions through any broker or dealer and pay
brokerage commissions to a broker (i) which is an affiliated person of the
Trust, or (ii) which is an affiliated person of such person, or (iii) an
affiliated person of which is an affiliated person of the Trust or the Adviser.
Shares of the Fund have equal voting rights and liquidation rights. The
Fund shall vote separately on matters submitted to a vote of the shareholders
except in matters where a vote of all series of the Trust in the aggregate is
required by the Investment Company Act of 1940 or otherwise. When matters are
submitted to shareholders for a vote, each shareholder is entitled to one vote
for each full share owned and fractional votes for fractional shares owned. The
Trust does not normally hold annual meetings of shareholders. The Trustees shall
promptly call and give notice of a meeting of shareholders for the purpose of
voting upon the removal of any Trustee when requested to do so in writing by
shareholders holding 10% or more of the Trust's outstanding shares. The Trust
will comply with the provisions of Section 16(c) of the Investment Company Act
of 1940 in order to facilitate communications among shareholders.
- 16 -
<PAGE>
DISTRIBUTION PLAN
- ------------------
Pursuant to Rule 12b-1 under the Investment Company Act of 1940, the Fund
has adopted a plan of distribution (the "Plan") under which the Fund may
directly incur or reimburse the Adviser for certain distribution-related
expenses, including payments to securities dealers and others who are engaged in
the sale of shares of the Fund and who may be advising investors regarding the
purchase, sale or retention of Fund shares; expenses of maintaining personnel
who engage in or support distribution of shares or who render shareholder
support services not otherwise provided by the Transfer Agent; expenses of
formulating and implementing marketing and promotional activities, including
direct mail promotions and mass media advertising; expenses of preparing,
printing and distributing sales literature and prospectuses and statements of
additional information and reports for recipients other than existing
shareholders of the Fund; expenses of obtaining such information, analyses and
reports with respect to marketing and promotional activities as the Trust may,
from time to time, deem advisable; and any other expenses related to the
distribution of the Fund's shares.
Pursuant to the Plan, the Fund may make payments to dealers and other
persons, including the Adviser and its affiliates, who may be advising investors
regarding the purchase, sale or retention of shares of the Fund. For the fiscal
year ended September 30, 1997, the Fund paid $122,000 to the Adviser to
reimburse it for payments made to dealers and other persons who may be advising
shareholders in this regard.
The annual limitation for payment of expenses pursuant to the Plan is
.35% of the Fund's average daily net assets. Unreimbursed expenditures will not
be carried over from year to year. In the event the Plan is terminated by the
Fund in accordance with its terms, the Fund will not be required to make any
payments for expenses incurred by the Adviser after the date the Plan
terminates.
Pursuant to the Plan, the Fund may also make payments to banks or other
financial institutions that provide shareholder services and administer
shareholder accounts. The Glass-Steagall Act prohibits banks from engaging in
the business of underwriting, selling or distributing securities. Although the
scope of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, management of the
Trust believes that the Glass- Steagall Act should not preclude a bank from
providing such services. However, state securities laws on this issue may differ
from the interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law. If a
bank were prohibited from continuing to perform all or a part of such services,
management
- 17 -
<PAGE>
of the Trust believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
CALCULATION OF SHARE PRICE
- ---------------------------
On each day that the Trust is open for business, the share price (net
asset value) of the Fund's shares is determined as of 12:30 p.m. and 4:00 p.m.,
Eastern time. The Trust is open for business on each day the New York Stock
Exchange is open for business and on any other day when there is sufficient
trading in the Fund's investments that its net asset value might be materially
affected. The net asset value per share of the Fund is calculated by dividing
the sum of the value of the securities held by the Fund plus cash or other
assets minus all liabilities (including estimated accrued expenses) by the total
number of shares outstanding of the Fund, rounded to the nearest cent.
The Fund's portfolio securities are valued on an amortized cost basis.
In connection with the use of the amortized cost method of valuation, the Fund
maintains a dollar-weighted average portfolio maturity of 90 days or less,
purchases only United States dollar-denominated securities having remaining
maturities of thirteen months or less and invests only in securities determined
by the Board of Trustees to meet the Fund's quality standards and to present
minimal credit risks. Other assets of the Fund are valued at their fair value as
determined in good faith in accordance with consistently applied procedures
established by and under the general supervision of the Board of Trustees. It is
anticipated, but there is no assurance, that the use of the amortized cost
method of valuation will enable the Fund to maintain a stable net asset value
per share of $1.
PERFORMANCE INFORMATION
- -----------------------
From time to time, the Fund may advertise its "current yield" and
"effective yield." Both yield figures are based on historical earnings and are
not intended to indicate future performance. The "current yield" of the Fund
refers to the income generated by an investment in the Fund over a seven-day
period (which period will be stated in the advertisement). This income is then
"annualized." That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a
- 18 -
<PAGE>
percentage of the investment. The "effective yield" is calculated similarly but,
when annualized, the income earned by an investment in the Fund is assumed to be
reinvested. The "effective yield" will be slightly higher than the "current
yield" because of the compounding effect of this assumed reinvestment.
- 19 -
<PAGE>
<TABLE>
ACCOUNT NO. 0-_____________________
Account Application (For Fund Use Only)
<S> <C> <C> <C>
Short Term Government Income Fund FOR BROKER/DEALER USE ONLY
Firm Name:_____________________________
Home Office Address: ___________________
Branch Address: ________________________
Rep Name & No.: ________________________
Please mail account application to: Rep Signature: _________________________
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
========================================================================================================================
Initial Investment of $_______________________
[ ] Check or draft enclosed payable to the Fund.
[ ] Bank Wire From:
______________________________________________________________________________________________________________
[ ] Exchange From:
______________________________________________________________________________________________________________
(Fund Name) (Fund Account Number)
Account Name S.S. #/Tax I.D.#
________________________________________________________________________________________ _____________________________
Name of Individual, Corporation, Organization, or Minor, etc. (In case of custodial
account please list
minor's S.S.#)
___________________________________________________________________________________________________ Citizenship:[] U.S.
Name of Joint Tenant, Partner, Custodian []Other
Address Phone
___________________________________________________________________________________________________ ( )_______________
Street or P.O. Box Business Phone
___________________________________________________________________________________________________ ( )_______________
City State Zip Home Phone
Check Appropriate Box: [] Individual [] Joint Tenant (Right of survivorship presumed)
[] Partnership [] Corporation [] Trust [] Custodial [] Non-Profit [] Other
Occupation and Employer Name/Address____________________________________________________________________________________
Are you an associated person of an NASD member? [ ] Yes [ ] No
========================================================================================================================
TAXPAYER IDENTIFICATION NUMBER -- Under penalties of perjury I certify that the Taxpayer Identification Number listed
above is my correct number. The Internal Revenue Service does not require my consent to any provision of this document
other than the certifications required to avoid backup withholding. Check box if appropriate:
[ ] I am exempt from backup withholding under the provisions of section 3406(a)(1)(c) of the Internal Revenue Code; or I am not
subject to backup withholding because I have not been notified that I am subject to backup withholding as a result of a failure
to report all interest or dividends; or the Internal Revenue Service has notified me that I am no longer subject to backup
withholding.
[ ] I certify under penalties of perjury that a Taxpayer Identification Number has not been issued to me and I have mailed or
delivered an application to receive a Taxpayer Identification Number to the Internal Revenue Service Center or Social Security
Administration Office. I understand that if I do not provide a Taxpayer Identification Number within 60 days that 31% of all
reportable payments will be withheld until I provide a number.
=======================================================================================================================
DISTRIBUTIONS (Distributions are reinvested if no choice is indicated)
[ ] Reinvest all distributions
[ ] Pay all distributions in cash
[ ] By Check [ ] By ACH to my bank checking or savings account. PLEASE ATTACH A VOIDED CHECK.
====================================================================================================================
REDEMPTION OPTIONS
I (we) authorize the Trust or Countrywide Fund Services, Inc. to act upon instructions received by telephone, or upon
receipt of and in the amounts of checks as described below (if checkwriting is selected), to have amounts withdrawn from
my (our) account in any fund of Countrywide Investments (see prospectus for limitations on this option) and:
[ ] WIRED ($1,000 minimum OR MAILED to my (our) bank account designated below. I (we) further authorize the use of
automated cash transfers to and from the account designated below.
NOTE: For wire redemptions, the indicated bank should be a commercial bank.
Bank Account Number _____________________________________ Bank Routing Transit Number _______________________________
Name of Account Holder _______________________________________________________________________________________________
Bank Name _________________________________________________________ Bank Address ______________________________________
City State
[ ]CHECKWRITING (A signature card must be completed)
...to deposit the proceeds of such redemptions in the applicable Countrywide Pay Through Draft Account (PTDA)
or otherwise arrange for application of such proceeds to payment of said checks. I (we) authorize the persons
whose signatures appear on the PTDA signature card to draw checks on the PTDA and to cause the redemption of my (our)
shares of the Trust. I (we) agree to be bound by the Rules and Regulations for the Countrywide Pay Through Draft
Account as such Rules and Regulations may be amended from time to time.
===========================================================================================================================
SIGNATURES
By signature below each investor certifies that he has received a copy of the Fund's current Prospectus, that he is of legal
age, and that he has full authority and legal capacity for himself or the organization named below, to make this investment and
to use the options selected above. The investor appoints Countrywide Fund Services, Inc. as his agent to enter orders for shares
whether by direct purchase or exchange, to receive dividends and distributions for automatic reinvestment in additional shares of
the Fund for credit to the investor's account and to surrender for redemption shares held in the investor's account in accordance
with any of the procedures elected above or for payment of service charges incurred by the investor. The investor further agrees
that Countrywide Fund Services, Inc. can cease to act as such agent upon ten days' notice in writing to the investor at the address
contained in this Application. The investor hereby ratifies any instructions given pursuant to this Application and for himself and
his successors and assigns does hereby release Countrywide Fund Services, Inc., Countrywide Investment Trust, Countrywide Investment
Trust, Countrywide Investments, Inc., and their respective officers, employees, agents and affiliates from any and all liability in
the performance of the acts instructed herein. Neither the Trust, Countrywide Fund Services, Inc., nor their respective affiliates
will be liable for complying with telephone instructions they reasonably believe to be genuine or for any loss, damage, cost or
expense in acting on such telephone instructions. The investor(s) will bear the risk of any such loss. The Trust or Countrywide
Fund Services, Inc., or both will employ reasonable procedures to determine that telephone instructions are genuine. If the Trust
and/or Countrywide Fund Services, Inc. do not employ such procedures, they may be liable for losses due to unauthorized or
fraudulent instructions. These procedures may include, among others, requiring forms of personal identification prior to acting
upon telephone instructions, providing written confirmation of the transactions and/or tape recording telephone instructions.
are genuine.
___________________________________________________ ___________________________________________________
Signature of Individual Owner, Corporate Officer, Signature of Joint Owner, if Any
Trustee, etc.
________________________________________________ ____________________________________________________
Title of Corporate Officer, Trustee, etc. Date
NOTE: Corporations, trusts and other organizations must complete the resolution form on the reverse side.
Unless otherwise specified, each joint owner shall have full authority to act on behalf of the account.
========================================================================================
AUTOMATIC INVESTMENT PLAN (Complete for Investments Into the Fund)
The Automatic Investment Plan is available for all established accounts of Countrywide Investment Trust. There is no charge for
this service, and it offers the convenience of automatic investing on a regular basis. The minimum investment is $50.00 per month.
For an account that is opened by using this Plan, the minimum initial and subsequent investments must be $50.00. Though a
continuous program of 12 monthly investments is recommended, the Plan may be discontinued by the shareholder at any time.
Please invest $ _________________ per month in the Fund.
ABA Routing Number______________________________
FI Account Number________________________________
[ ] Checking Account [ ] Savings Account
_____________________________________________________________________
Name of Financial Institution (FI) Please make my automatic investment on:
[] the last business day of each month
______________________________________________________________________ [] the 15th day of each month
City State [] both the 15th and last business day
X_____________________________________________________________________ X_______________________________________
(Signature of Depositor EXACTLY as it appears on FI Records) (Signature of Joint Tenant - if any)
(Joint Signatures are required when bank account is in joint names. Please sign exactly as signature appears on your FI's
records.)
Please attach a voided check for from your checking account or a voided deposit/withdrawal slip from your savings
account for the Automatic Investment Plan.
Indemnification to Depositor's Bank
In consideration of your participation in a plan which Countrywide Fund Services, Inc. ("CFS") has put into effect, by which
amounts, determined by your depositor, payable to the Fund for purchase of shares of the Fund, are collected by CFS, CFS hereby
agrees:
CFS will indemnify and hold you harmless from any liability to any person or persons whatsoever arising out of the payment
by you of any amount drawn by the Fund to its own order on the account of your depositor or from any liability to any person
whatsoever arising out of the dishonor by you whether with or without cause or intentionally or inadvertently, of any such
checks. CFS will defend, at its own cost and expense, any action which might be brought against you by any person or persons
whatsoever because of your actions taken pursuant to the foregoing request or in any manner arising by reason of your
participation in this arrangement. CFS will refund to you any amount erroneously paid by you to the Fund on any such check if
the claim for the amount of such erroneous payment is made by you within six (6) months from the date of such erroneous
payment; your participation in this arrangement and that of the Fund may be terminated by thirty (30) days written notice from
either party to the other.
========================================================================================================================
AUTOMATIC WITHDRAWAL PLAN (Complete for Withdrawals from the Fund)
This is an authorization for you to withdraw $_________ from my mutual fund account beginning the last business day of the
month of __________________.
Please Indicate Withdrawal Schedule (Check One):
[] Monthly -- Withdrawals will be made on the last business day of each month.
[] Quarterly -- Withdrawals will be made on or about 3/31, 6/30, 9/30 and 12/31.
[] Annually -- Please make withdrawals on the last business day of the month of:_____________________.
Please Select Payment Method (Check One):
[] Exchange: Please exchange the withdrawal proceeds into another Countywide account number:_ _-- _ _ _ _--_
[] Check: Please mail a check for my withdrawal proceeds to the mailing address on this account.
[] ACH Transfer: Please send my withdrawal proceeds via ACH transfer to my bank checking or savings account as indicated below.
I understand that the transfer will be completed in two to three business days and that there is no charge.
[] Bank Wire: Please send my withdrawal proceeds via bank wire, to the account indicated below. I understand that the wire will
be completed in one business day and that there is an $8.00 fee.
Please attach a voided
check for ACH or bank wire____________________________________________________________________________________________________
Bank Name Bank Address
___________________________________________________________________________________________________________________________________
Bank ABA# Account # Account Name
[] Send to special payee (other than applicant): Please mail a check for my withdrawal proceeds to the mailing address below:
Name of payee________________________________________________________________________________________________________
Please send to:______________________________________________________________________________________________________
Street address City State Zip
========================================================================================================================
RESOLUTIONS
(This Section to be completed by Corporations, Trusts, and Other Organizations)
RESOLVED: That this corporation or organization become a shareholder of Countrywide Investment Trust (the Trust) and that
________________________________________________________________________________________________________________________
is (are) hereby authorized to complete and execute the Application on behalf of the corporation or organization and to take any
action for it as may be necessary or appropriate with respect to its shareholder account with the Trust, and it is
FURTHER RESOLVED: That any one of the above noted officers is authorized to sign any documents necessary or appropriate to
appoint Countrywide Fund Services, Inc. as redemption agent of the corporation or organization for shares of the applicable series
of the Trust, to establish or acknowledge terms and conditions governing the redemption of said shares and to otherwise implement
the privileges elected on the Application.
Certificate
I hereby certify that the foregoing resolutions are in conformity with the Charter and By-Laws or other empowering documents of
the _______________________________________________________________________________________________________________________
(Name of Organization)
incorporated or formed under the laws of__________________________________________________________________________________________
(State)
and were adopted at a meeting of the Board of Directors or Trustees of the organization or corporation duly called and held on
at which a quorum was present and acting throughout, and that the same are now in full force and effect. I further certify that
the following is (are) duly elected officer(s) of the corporation or organization, authorized to act in accordance with the
foregoing resolutions.
Name Title
___________________________________________________ _________________________________________________________
___________________________________________________ _________________________________________________________
___________________________________________________ _______________________________________________________
Witness my hand and seal of the corporation or organization this_______________________day
of_______________________________________, 19_______
___________________________________________________ _________________________________________________________
*Secretary-Clerk Other Authorized Officer (if required)
*If the Secretary or other recording officer is authorized to act by the above resolutions, this certificate must also be
signed by another officer.
</TABLE>
<PAGE>
COUNTRYWIDE INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
Nationwide: (Toll-Free) 800-543-8721
Cincinnati: 513-629-2000
BOARD OF TRUSTEES
Donald L. Bogdon, M.D.
John R. Delfino
H. Jerome Lerner
Robert H. Leshner
Angelo R. Mozilo
Oscar P. Robertson
John F. Seymour, Jr.
Sebastiano Sterpa
INVESTMENT ADVISER
COUNTRYWIDE INVESTMENTS, INC.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
TRANSFER AGENT
COUNTRYWIDE FUND SERVICES, INC.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
Shareholder Service
Nationwide: (Toll-Free) 800-543-0407
Cincinnati: 513-629-2050
Countrywide Always Line
Nationwide: (Toll-Free) 800-852-3809
Cincinnati: 513-579-0999
- 20 -
<PAGE>
TABLE OF CONTENTS
Expense Information. . . . . . . . . . . . . . . . . . . . .
Financial Highlights. . . . . .. . . . . . . . . . . . . . .
Investment Objective and Policies. . . . . . . . . . . . . .
How to Purchase Shares . . . . . . . . . . . . . . . . . . .
Shareholder Services . . . . . . . . . . . . . . . . . . . .
How to Redeem Shares . . . . . . . . . . . . . . . . . . . .
Exchange Privilege . . . . . . . . . . . . . . . . . . . . .
Dividends and Distributions. . . . . . . . . . . . . . . . .
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operation of the Fund . . . . . . . . . . . . . . . . . . .
Distribution Plan . . . . . . . . . . . . . . . . . . . . .
Calculation of Share Price . . . . . . . . . . . . . . . . .
Performance Information. . . . . . . . . . . . . . . . . . .
- -----------------------------------------------------------------
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Trust. This Prospectus does not constitute an offer by the Trust to sell
shares in any State to any person to whom it is unlawful for the Trust to make
such offer in such State.
- 21 -
<PAGE>
PROSPECTUS
January 1, 1998
Countrywide Investment Trust
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
INTERMEDIATE TERM GOVERNMENT INCOME FUND
The Intermediate Term Government Income Fund (the "Fund"), a series of
Countrywide Investment Trust, seeks high current income, consistent with
protection of capital, by investing 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. To the
extent consistent with the Fund's primary objective, capital appreciation is a
secondary objective.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANKING OR DEPOSITORY INSTITUTION. SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER AGENCY AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
Countrywide Investments, Inc. (the "Adviser") manages the Fund's
investments and its business affairs.
This Prospectus sets forth concisely the information about the Fund
that you should know before investing. Please retain this Prospectus for future
reference. A Statement of Additional Information dated January 1, 1998 has been
filed with the Securities and Exchange Commission and is hereby incorporated by
reference in its entirety. A copy of the Statement of Additional Information
can be obtained at no charge by calling one of the numbers listed below.
- ------------------------------------------------------------------------------
For Information or Assistance in Opening An Account, Please Call:
Nationwide (Toll-Free)............................................800-543-0407
Cincinnati........................................................513-629-2050
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
EXPENSE INFORMATION
- --------------------
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 2%
Maximum Contingent Deferred Sales Load
(as a percentage of original purchase price) None*
Sales Load Imposed on Reinvested Dividends None
Exchange Fee None
Redemption Fee None**
Check Redemption Processing Fee (per check):
First six checks per month None
Additional checks per month $0.25
* Purchases at net asset value of amounts totaling $1 million or more may
be subject to a contingent deferred sales load of .75% if a redemption
occurred within 12 months of purchase and a commission was paid by the
Adviser to a participating unaffiliated dealer.
** A wire transfer fee is charged by the Fund's Custodian in the case
of redemptions made by wire. Such fee is subject to change and is
currently $8. See "How to Redeem Shares."
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees .49%
12b-1 Fees(A) .16%
Other Expenses .34%
----
Total Fund Operating Expenses .99%
====
(A) The Fund may incur 12b-1 fees in an amount up to .35% of its average
net assets. Long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales loads permitted by the
National Association of Securities Dealers.
The purpose of these tables is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. The percentages expressing annual fund operating expenses are based
on amounts incurred during the most recent fiscal year. THE EXAMPLE BELOW SHOULD
NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
Example You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period:
1 Year 3 Years 5 Years 10 Years
$30 $51 $74 $139
- 2 -
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------
The following information, which has been audited by Arthur Andersen
LLP, is an integral part of the audited financial statements and should be read
in conjunction with the financial statements. The financial statements as of
September 30, 1997 and related auditors' report appear in the Statement of
Additional Information of the Fund, which can be obtained by shareholders at no
charge by calling Countrywide Fund Services, Inc. (Nationwide call toll-free
800-543-0407, in Cincinnati call 629-2050) or by writing to the Trust at the
address on the front of this Prospectus.
<TABLE>
<CAPTION>
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
YEAR ENDED SEPTEMBER 30,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of year $10.49 $10.73 $10.14 $11.59 $11.10 $10.45 $9.85 $10.09 $10.12 $10.02
------- ------- ------- ------- ------ ------ ------ ------- ------- -------
Income from investment
operations:
Net investment income 0.61 0.61 0.64 0.56 0.60 0.68 0.75 0.76 0.79 0.76
Net realized and
unrealized gains
(losses)on investments 0.18 (0.24) 0.59 (1.32) 0.49 0.65 0.60 (0.24) (0.03) 0.10
------- ----- ------- ------ ------ ------ ------ ------ ----- ------
Total from investment
operations 0.79 0.37 1.23 (0.76) 1.09 1.33 1.35 0.52 0.76 0.86
------- ------- ------- ------- ------- ------- ----- ----- ----- ------
Less distributions:
Dividends from net
investment income (0.61) (0.61) (0.64) (0.56) (0.60) (0.68) (0.75) (0.76) (0.79) (0.76)
Distributions from
net realized gains -- -- -- (0.13) -- -- -- -- -- --
------- ------- ------- ------- ------ ------- ------- ------- ------- ------
Total distributions (0.61) (0.61) (0.64) (0.69) (0.60) (0.68) (0.75) (0.76) (0.79) (0.76)
------- ------- ------- ------- ------- ------- ------- ----- ------- -------
Net asset value at
end of year $10.67 $10.49 $10.73 $10.14 $11.59 $11.10 $10.45 $9.85 $10.09 $10.12
======= ======= ====== ====== ====== ====== ===== ====== ====== ======
Total return(A) 7.74% 3.55% 12.52% (6.76%) 10.15% 13.27% 14.19% 5.31% 7.79% 8.77%
======= ======= ======== ======= ======== ======= ====== ===== ====== =====
Net assets at end
of year (000's) $53,033 $56,095 $56,969 $64,395 $89,666 $59,290 $40,896 $37,800 $40,391 $52,405
======== ======= ======= ======== ======= ======= ======= ======= ======= =======
Ratio of expenses to
average net assets 0.99% 0.99% 0.99% 0.99% 0.99% 1.00% 1.00% 1.02% 1.03% 1.04%
Ratio of net investment
income to average
net assets 5.78% 5.75% 6.17% 5.17% 5.31% 6.40% 7.39% 7.57% 7.83% 7.43%
Portfolio turnover rate 49% 70% 58% 236% 255% 76% 74% 92% 161% 88%
(A)The total returns shown do not include the effect of applicable sales loads.
</TABLE>
- 3 -
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
- -----------------------------------
The Fund is a series of Countrywide Investment Trust (the "Trust"). The
Fund seeks high current income, consistent with protection of capital, by
investing 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. To the extent consistent with the
Fund's primary objective, capital appreciation is a secondary objective. In
order to achieve its investment objectives, the Fund may also enter into
repurchase agreements collateralized by U.S. Government obligations. The Fund is
not intended to be a complete investment program, and there is no assurance that
its investment objectives can be achieved.
The investment objectives of the Fund may be changed by the Board of
Trustees without shareholder approval, but only after notification has been
given to shareholders and after this Prospectus has been revised accordingly. If
there is a change in the Fund's investment objectives, shareholders should
consider whether the Fund remains an appropriate investment in light of their
then current financial position and needs. Unless otherwise indicated, all
investment practices and limitations of the Fund are nonfundamental policies
which may be changed by the Board of Trustees without shareholder approval.
U.S. Government Obligations
----------------------------
The Fund invests in intermediate-term U.S. Government obligations.
"U.S. Government obligations" include securities which are issued or guaranteed
by the United States Treasury, by various agencies of the United States
Government, and by various instrumentalities which have been established or
sponsored by the United States Government. U.S. Treasury obligations are backed
by the "full faith and credit" of the United States Government. U.S. Treasury
obligations include Treasury bills, Treasury notes, and Treasury bonds. U.S.
Treasury obligations also include the separate principal and interest components
of U.S. Treasury obligations which are traded under the Separate Trading of
Registered Interest and Principal of Securities ("STRIPS") program. Agencies or
instrumentalities established by the United States Government include the
Federal Home Loan Banks, the Federal Land Bank, the Government National Mortgage
Association, the Federal National Mortgage Association, the Federal Home Loan
Mortgage Corporation, the Student Loan Marketing Association, the Small Business
Administration, the Bank for Cooperatives, the Federal Intermediate Credit Bank,
the Federal Financing Bank, the Federal Farm Credit Banks, the Federal
Agricultural Mortgage Corporation, the Resolution Funding Corporation, the
Financing Corporation of America and the Tennessee Valley Authority. Some of
these securities are supported by the full faith and credit of the United States
Government while others are supported only by
- 4 -
<PAGE>
the credit of the agency or instrumentality, which may include the right of the
issuer to borrow from the United States Treasury. In the case of securities not
backed by the full faith and credit of the United States, the investor must look
principally to the agency issuing or guaranteeing the obligation for ultimate
repayment, and may not be able to assert a claim against the United States in
the event the agency or instrumentality does not meet its commitments. Shares of
the Fund are not guaranteed or backed by the United States Government.
The Fund may invest in securities issued or guaranteed by any of the
entities listed above or by any other agency or instrumentality established or
sponsored by the United States Government, provided that the securities are
otherwise permissible investments of the Fund. Certain U.S. Government
obligations which have a variable rate of interest readjusted no less frequently
than annually will be deemed to have a maturity equal to the period remaining
until the next readjustment of the interest rate.
The market value of investments available to the Fund, and therefore
the Fund's yield, will fluctuate due to changes in interest rates, economic
conditions, quality ratings and other factors beyond the control of the Adviser.
The net asset value of the Fund also will fluctuate due to these changes. The
portfolio securities held by the Fund are subject to price fluctuations based
upon changes in the level of interest rates, which will generally result in all
those securities changing in price in the same way, i.e., all those securities
experiencing appreciation when interest rates decline and depreciation when
interest rates rise. In addition, the prepayment experience of the mortgages
underlying mortgage-related U.S. Government obligations may affect the value of,
and the return on an investment in, such securities.
Other Investment Techniques
---------------------------
The Fund may also engage in the following investment techniques, each
of which may involve certain risks:
MORTGAGE-RELATED U.S. GOVERNMENT OBLIGATIONS. The Fund may invest in
mortgage-related U.S. Government obligations, including GNMA Certificates, FHLMC
Certificates and FNMA Certificates.
GNMA Certificates are U.S. Government obligations guaranteed by the
Government National Mortgage Association (the GNMA) and are mortgage-backed
securities representing part ownership of a pool of mortgage loans. The pool of
mortgage loans underlying the GNMA Certificates is assembled by the issuer,
usually a
- 5 -
<PAGE>
private mortgage lender. The loans in the pool, issued by lenders such as
mortgage bankers, commercial banks and savings and loan associations, are either
insured by the Federal Housing Administration or the Farmers' Home
Administration or guaranteed by the Veterans Administration. If the pool is
approved by the GNMA, GNMA Certificates are issued and sold to investors such as
the Fund. The Fund will invest only in GNMA Certificates of the pass-through
type. This type of GNMA Certificate entitles the holder to receive all interest
and principal payments owed on the pool of mortgage loans, net of fees paid to
the issuer and the GNMA. In addition, the timely payment of interest and
principal on this type of GNMA Certificate is guaranteed by the GNMA, even in
the event of the foreclosure of underlying mortgage loans. The GNMA guarantee is
backed by the full faith and credit of the United States. However, shares of the
Fund are not guaranteed or backed by either the GNMA or the United States
Government.
FHLMC Certificates are U.S. Government obligations guaranteed by the
Federal Home Loan Mortgage Corporation (the FHLMC). As with GNMA Certificates,
FHLMC Certificates are pass-through mortgage-backed securities representing part
ownership of a pool of mortgage loans. The FHLMC generally purchases such
mortgage loans from those lenders insured by the Federal Deposit Insurance
Corporation, or Federal Housing Administration mortgagees approved by the
Department of Housing and Urban Development. The securities and guarantees of
the FHLMC are not backed, directly or indirectly, by the full faith and credit
of the United States.
FNMA Certificates are U.S. Government obligations guaranteed by the
Federal National Mortgage Association (the FNMA). The FNMA is a U.S. Government
sponsored corporation owned entirely by private stockholders. It is subject to
general regulation by the Secretary of Housing and Urban Development. The FNMA
purchases residential mortgages from a list of approved sellers, which include
state and federally-chartered savings and loan associations, mutual savings
banks, commercial banks, credit unions and mortgage banks. Pass-through
securities issued by the FNMA are not backed by the full faith and credit of the
United States, although the Secretary of the Treasury of the United States has
discretionary authority to lend the FNMA up to $2.25 billion outstanding at any
time.
Prepayments of and payments on foreclosures of mortgage loans
underlying a mortgage-related security are passed through to the registered
holder with the regular monthly payments of principal and interest, and have the
effect of reducing future payments. The mortgage loans underlying a
mortgage-related security may be prepaid at any time without penalty. If a
prepayment of a mortgage loan underlying a particular mortgage-
- 6 -
<PAGE>
related security occurs, the return to the Fund may be lower if the Fund
acquired the security at a premium over par or higher if the Fund acquired the
security at a discount from par. In addition, prepayments of mortgage loans
underlying a particular mortgage-related security held by the Fund will reduce
the market value of the security to the extent the market value of the security
at the time of prepayment exceeds its par value. In periods of declining
mortgage interest rates, prepayments may occur with increasing frequency
because, among other reasons, mortgagors may be able to refinance outstanding
mortgages at lower interest rates. In general, a decline in interest rates will
cause the net asset value of the Fund to increase to the extent that prepayments
do not occur, while a rise in interest rates will cause the net asset value of
the Fund to decrease.
Some of the pass-through mortgage securities in which the Fund invests
may be adjustable rate mortgage securities ("ARMS"). ARMS are collateralized by
adjustable rather than fixed-rate mortgages. The ARMS in which the Fund invests
are actively traded. Generally, adjustable rate mortgages have a specified
maturity date and amortize principal over their life. In periods of declining
interest rates there is a reasonable likelihood that ARMS will experience
increased rates of prepayment of principal. However, the major difference
between ARMS and fixed-rate mortgage securities is that the interest rate can
and does change in accordance with movements in a particular, pre-specified,
published interest rate index. There are two main categories of indices: those
based on U.S. Treasury obligations and those derived from a calculated measure,
such as a cost of funds index or a moving average of mortgage rates. The amount
of interest on an adjustable rate mortgage is calculated by adding a specified
amount to the applicable index, subject to limitations on the maximum and
minimum interest that is charged during the life of the mortgage or to maximum
and minimum changes to that interest rate during a given period. Because the
interest rate on ARMS generally moves in the same direction as market interest
rates, the market value of ARMS tends to be more stable than that of fixed-rate
mortgage securities and ARMS tend to experience lower rates of prepayment of
principal than fixed-rate mortgage securities. However, ARMS are also less
likely than fixed-rate mortgage securities of comparable quality and maturity to
increase significantly in value during periods of declining interest rates.
DELAYED SETTLEMENT TRANSACTIONS. The Fund may trade securities on a
"when-issued" or "to-be-announced" basis. Obligations issued on a when-issued
or to-be-announced basis are settled by delivery and payment after the date of
the transaction, usually within 15 to 45 days. In a to-be-announced
transaction, the Fund has committed to purchasing or selling
- 7 -
<PAGE>
securities for which all specific information is not yet known at the time of
the trade, particularly the face amount in transactions involving
mortgage-related securities. The Fund will only make commitments to purchase
obligations on a when- issued or to-be-announced basis with the intention of
actually acquiring the obligations, but the Fund may sell these securities
before the settlement date if it is deemed advisable as a matter of investment
strategy or in order to meet its obligations, although it would not normally
expect to do so. The Fund does not currently intend to invest more than 5% of
its net assets in securities purchased on this basis, and the Fund will not
enter into a delayed settlement transaction which settles in more than 120 days.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements.
Repurchase agreements are transactions by which the Fund purchases a security
and simultaneously commits to resell that security to the seller at an agreed
upon time and price, thereby determining the yield during the term of the
agreement. In the event of a bankruptcy or other default of the seller of a
repurchase agreement, the Fund could experience both delays in liquidating the
underlying security and losses. To minimize these possibilities, the Fund
intends to enter into repurchase agreements only with its Custodian, banks
having assets in excess of $10 billion and the largest and, in the Board of
Trustees' judgment, most creditworthy primary U.S. Government securities
dealers. The Fund will enter into repurchase agreements which are collateralized
by U.S. Government obligations. Collateral for repurchase agreements is held in
safekeeping in the customer- only account of the Fund's Custodian at the Federal
Reserve Bank. At the time the Fund enters into a repurchase agreement, the value
of the collateral, including accrued interest, will equal or exceed the value of
the repurchase agreement and, in the case of a repurchase agreement exceeding
one day, the seller agrees to maintain sufficient collateral so that the value
of the underlying collateral, including accrued interest, will at all times
equal or exceed the value of the repurchase agreement. The Fund will not enter
into a repurchase agreement not terminable within seven days if, as a result
thereof, more than 10% of the value of its net assets would be invested in such
securities and other illiquid securities.
BORROWING AND PLEDGING. As a temporary measure for extraordinary or
emergency purposes, the Fund may borrow money from banks or other persons in an
amount not exceeding 10% of its total assets. The Fund may pledge assets in
connection with borrowings but will not pledge more than 15% of its total
assets. The Fund will not make any additional purchases of portfolio securities
if outstanding borrowings exceed 5% of the value of its total assets. Borrowing
magnifies the potential for gain or
- 8 -
<PAGE>
loss on the portfolio securities of the Fund and, therefore, if employed,
increases the possibility of fluctuation in the Fund's net asset value. This is
the speculative factor known as leverage. To reduce the risks of borrowing, the
Fund will limit its borrowings as described above. The Fund's policies on
borrowing and pledging are fundamental policies which may not be changed without
the affirmative vote of a majority of its outstanding shares.
PORTFOLIO TURNOVER. The Fund does not intend to use short-term trading
as a primary means of achieving its investment objectives. However, the Fund's
rate of portfolio turnover will depend upon market and other conditions, and it
will not be a limiting factor when portfolio changes are deemed necessary or
appropriate by the Adviser. High turnover involves correspondingly greater
commission expenses and transaction costs and may result in the Fund recognizing
greater amounts of income and capital gains, which would increase the amount of
income and capital gains which the Fund must distribute to its shareholders in
order to maintain its status as a regulated investment company and to avoid the
imposition of federal income or excise taxes. See "Taxes."
HOW TO PURCHASE SHARES
- ----------------------
Your initial investment in the Fund ordinarily must be at least $1,000
($250 for tax-deferred retirement plans). However, the minimum initial
investment for employees, shareholders and customers of Countrywide Credit
Industries, Inc. or any affiliated company, including members of the immediate
family of such individuals, is $50. You may purchase additional shares through
the Open Account Program described below. You may open an account and make an
initial investment through securities dealers having a sales agreement with the
Trust's principal underwriter, Countrywide Investments, Inc. (the "Adviser").
You may also make a direct initial investment by sending a check and a completed
account application form to Countrywide Fund Services, Inc. (the "Transfer
Agent"), P.O. Box 5354, Cincinnati, Ohio 45201-5354. Checks should be made
payable to the "Intermediate Term Government Income Fund." An account
application is included in this Prospectus.
Shares of the Fund are sold on a continuous basis at the public
offering price next determined after receipt of a purchase order by the Trust.
Purchase orders received by dealers prior to 4:00 p.m., Eastern time, on any
business day and transmitted to the Adviser by 5:00 p.m., Eastern time, that day
are confirmed at the public offering price determined as of the close of the
regular session of trading on the New York Stock Exchange on that day. It is the
responsibility of dealers to transmit properly
- 9 -
<PAGE>
completed orders so that they will be received by the Adviser by 5:00 p.m.,
Eastern time. Dealers may charge a fee for effecting purchase orders. Direct
purchase orders received by the Transfer Agent by 4:00 p.m., Eastern time, are
confirmed at that day's public offering price. Direct investments received by
the Transfer Agent after 4:00 p.m., Eastern time, and orders received from
dealers after 5:00 p.m., Eastern time, are confirmed at the public offering
price next determined on the following business day.
The public offering price of shares applicable to investors whose
accounts are opened after January 31, 1995 is the next determined net asset
value per share plus a sales load as shown in the following table.
Dealer
Reallowance
Sales Load as % of: as % of
Public Net Public
Offering Amount Offering
Amount of Investment Price Invested Price
- -------------------- -------- --------- -------
Less than $100,000 2.00% 2.04% 1.80%
$100,000 but less than $250,000 1.50% 1.52% 1.35%
$250,000 but less than $500,000 1.00% 1.01% .90%
$500,000 but less than $1,000,000 .75% .76% .65%
$1,000,000 or more None* None*
Investors whose accounts were opened prior to February 1, 1995 are
subject to a different table of sales loads as follows:
Dealer
Reallowance
Sales Load as % of: as % of
Public Net Public
Offering Amount Offering
Amount of Investment Price Invested Price
- -------------------- ----- -------- ------
Less than $500,000 1.00% 1.01% 1.00%
$500,000 but less than $1,000,000 .75% .76% .75%
$1,000,000 or more None* None*
* There is no front-end sales load on purchases of $1 million or more but
a contingent deferred sales load of .75% may apply if a commission was
paid by the Adviser to a participating unaffiliated dealer and the
shares are redeemed within twelve months from the date of purchase.
Under certain circumstances, the Adviser may increase or decrease the
reallowance to dealers. Dealers engaged in the sale of shares of the Fund may be
deemed to be underwriters under the
- 10 -
<PAGE>
Securities Act of 1933. The Adviser retains the entire sales load on all direct
initial investments in the Fund and on all investments in accounts with no
designated dealer of record.
For initial purchases of shares of $1,000,000 or more made after
October 1, 1995 and subsequent purchases further increasing the size of the
account, a dealer's commission of .75% of the purchase amount may be paid by the
Adviser to participating unaffiliated dealers through whom such purchases are
effected. In determining a dealer's eligibility for such commission, purchases
of shares of the Fund may be aggregated with concurrent purchases of Class A
shares of other funds of Countrywide Investments. Dealers should contact the
Adviser concerning the applicability and calculation of the dealer's commission
in the case of combined purchases. An exchange from other funds of Countrywide
Investments will not qualify for payment of the dealer's commission, unless such
exchange is from a Countrywide fund with assets as to which a dealer's
commission or similar payment has not been previously paid. Redemptions of
shares may result in the imposition of a contingent deferred sales load if the
dealer's commission described in this paragraph was paid in connection with the
purchase of such shares. See "Contingent Deferred Sales Charge for Certain
Purchases of Shares" below.
In addition to the compensation otherwise paid to securities dealers,
the Adviser may from time to time pay from its own resources additional cash
bonuses or other incentives to selected dealers in connection with the sale of
shares of the Fund. On some occasions, such bonuses or incentives may be
conditioned upon the sale of a specified minimum dollar amount of the shares of
the Fund and/or other funds of Countrywide Investments during a specific period
of time. Such bonuses or incentives may include financial assistance to dealers
in connection with conferences, sales or training programs for their employees,
seminars for the public, advertising, sales campaigns and other dealer-sponsored
programs or events.
OPEN ACCOUNT PROGRAM. Please direct inquiries concerning the services
described in this section to the Transfer Agent at the address or numbers listed
below.
After an initial investment, all investors are considered participants
in the Open Account Program. The Open Account Program helps investors make
purchases of shares of the Fund over a period of years and permits the automatic
reinvestment of dividends and distributions of the Fund in additional shares
without a sales load.
Under the Open Account Program, you may purchase and add shares to your
account at any time either through your securities dealer or by sending a check
to the Transfer Agent, P.O. Box 5354, Cincinnati, Ohio 45201-5354. The check
should be made payable to the Fund.
- 11 -
<PAGE>
Under the Open Account Program, you may also purchase shares of the
Fund by bank wire. Please telephone the Transfer Agent (Nationwide call
toll-free 800-543-0407; in Cincinnati call 629- 2050) for instructions. Your
bank may impose a charge for sending your wire. There is presently no fee for
receipt of wired funds, but the Transfer Agent reserves the right to charge
shareholders for this service upon thirty days' prior notice to shareholders.
Each additional purchase request must contain the name of your account
and your account number to permit proper crediting to your account. While there
is no minimum amount required for subsequent investments, the Trust reserves the
right to impose such requirement. All purchases under the Open Account Program
are made at the public offering price next determined after receipt of a
purchase order by the Trust. If a broker-dealer received concessions for selling
shares of the Fund to a current shareholder, such broker-dealer will receive the
concessions described above with respect to additional investments by the
shareholder.
REDUCED SALES LOAD. A "purchaser" (defined below) may use the Right of
Accumulation to combine the cost or current net asset value (whichever is
higher) of his existing shares of the load funds distributed by the Adviser with
the amount of his current purchases in order to take advantage of the reduced
sales loads set forth in the tables above. Purchases made in any load fund
distributed by the Adviser pursuant to a Letter of Intent may also be eligible
for the reduced sales loads. The minimum initial investment under a Letter of
Intent is $10,000. The load funds currently distributed by the Adviser are
listed in the Exchange Privilege section of this Prospectus. Shareholders should
contact the Transfer Agent for information about the Right of Accumulation and
Letter of Intent.
PURCHASES AT NET ASSET VALUE. You may purchase shares of the Fund at
net asset value when the payment for your investment represents the proceeds
from the redemption of shares of any other mutual fund which has a front-end
sales load and is not distributed by the Adviser. Your investment will qualify
for this provision if the purchase price of the shares of the other fund
included a sales load and the redemption occurred within one year of the
purchase of such shares and no more than sixty days prior to your purchase of
shares of the Fund. To make a purchase at net asset value pursuant to this
provision, you must submit photocopies of the confirmations (or similar
evidence) showing the purchase and redemption of shares of the other fund. Your
payment may be made with the redemption check representing the proceeds of the
shares redeemed, endorsed to the order of the Fund. The redemption of shares of
the other fund is, for federal
- 12 -
<PAGE>
income tax purposes, a sale on which you may realize a gain or loss. These
provisions may be modified or terminated at any time. Contact your securities
dealer or the Trust for further information.
Banks, bank trust departments and savings and loan associations, in
their fiduciary capacity or for their own accounts, may also purchase shares of
the Fund at net asset value. To the extent permitted by regulatory authorities,
a bank trust department may charge fees to clients for whose account it
purchases shares at net asset value. Federal and state credit unions may also
purchase shares at net asset value.
In addition, shares of the Fund may be purchased at net asset value by
broker-dealers who have a sales agreement with the Adviser, and their registered
personnel and employees, including members of the immediate families of such
registered personnel and employees.
Clients of investment advisers and financial planners may also purchase
shares of the Fund at net asset value if their investment adviser or financial
planner has made arrangements to permit them to do so with the Trust and the
Adviser. The investment adviser or financial planner must notify the Transfer
Agent that an investment qualifies as a purchase at net asset value.
Employees, shareholders and customers of Countrywide Credit Industries,
Inc. or any affiliated company, including members of the immediate family of
such individuals and employee benefit plans established by such entities, may
also purchase shares of the Fund at net asset value.
CONTINGENT DEFERRED SALES LOAD FOR CERTAIN PURCHASES OF SHARES. A
contingent deferred sales load is imposed upon certain redemptions of shares of
the Fund (or shares into which such shares were exchanged) purchased at net
asset value in amounts totaling $1 million or more, if the dealer's commission
described above was paid by the Adviser and the shares are redeemed within
twelve months from the date of purchase. The contingent deferred sales load will
be paid to the Adviser and will be equal to .75% of the lesser of (1) the net
asset value at the time of purchase of the shares being redeemed or (2) the net
asset value of such shares at the time of redemption. In determining whether the
contingent deferred sales load is payable, it is assumed that shares not subject
to the contingent deferred sales load are the first redeemed followed by other
shares held for the longest period of time. The contingent deferred sales load
will not be imposed upon shares representing reinvested dividends or capital
gains distributions, or upon amounts representing share
- 13 -
<PAGE>
appreciation. If a purchase of shares is subject to the contingent deferred
sales load, the investor will be so notified on the confirmation for such
purchase.
Redemptions of such shares of the Fund held for at least 12 months will
not be subject to the contingent deferred sales load and an exchange of such
shares into another fund of Countrywide Investments is not treated as a
redemption and will not trigger the imposition of the contingent deferred sales
load at the time of such exchange. A fund will "tack" the period for which such
shares being exchanged were held onto the holding period of the acquired shares
for purposes of determining if a contingent deferred sales load is applicable in
the event that the acquired shares are redeemed following the exchange; however,
the period of time that the redemption proceeds of such shares are held in a
money market fund will not count toward the holding period for determining
whether a contingent deferred sales load is applicable. See "Exchange
Privilege."
The contingent deferred sales load is currently waived for any partial
or complete redemption following death or disability (as defined in the Internal
Revenue Code) of a shareholder (including one who owns the shares with his or
her spouse as a joint tenant with rights of survivorship) from an account in
which the deceased or disabled is named. The Adviser may require
documentation prior to waiver of the charge, including death certificates,
physicians' certificates, etc.
ADDITIONAL INFORMATION. For purposes of determining the initial
investment requirements and the applicable sales load and for purposes of the
Letter of Intent and Right of Accumulation privileges, a purchaser includes an
individual, his spouse and their children under the age of 21, purchasing shares
for his or their own account; or a trustee or other fiduciary purchasing shares
for a single fiduciary account although more than one beneficiary is involved;
or employees of a common employer, provided that economies of scale are realized
through remittances from a single source and quarterly confirmation of such
purchases; or an organized group, provided that the purchases are made through a
central administration, or a single dealer, or by other means which result in
economy of sales effort or expense. Contact the Transfer Agent for additional
information concerning purchases at net asset value or at reduced sales loads.
The Trust mails you confirmations of all purchases or redemptions of
shares of the Fund. Certificates representing shares are not issued. The Trust
and the Adviser reserve the rights to limit the amount of investments and to
refuse to sell to any person.
- 14 -
<PAGE>
Investors should be aware that the Fund's account application contains
provisions in favor of the Trust, the Transfer Agent and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating to
the various services (for example, telephone redemptions and exchanges and check
redemptions) made available to investors.
Should an order to purchase shares be canceled because your check does
not clear, you will be responsible for any resulting losses or fees incurred by
the Trust or the Transfer Agent in the transaction.
SHAREHOLDER SERVICES
- ---------------------
Contact the Transfer Agent (Nationwide call toll-free 800-543-0407; in
Cincinnati call 629-2050) for additional information about the shareholder
services described below.
Automatic Withdrawal Plan
--------------------------
If the shares in your account have a value of at least $5,000, you may
elect to receive, or may designate another person to receive, monthly or
quarterly payments in a specified amount of not less than $50 each. There is no
charge for this service. Purchases of additional shares of the Fund while the
plan is in effect are generally undesirable because a sales load is incurred
whenever purchases are made.
Tax-Deferred Retirement Plans
-----------------------------
Shares of the Fund are available for purchase in connection with the
following tax-deferred retirement plans:
-- Keogh Plans for self-employed individuals
-- Individual retirement account (IRA) plans for
individuals and their non-employed spouses, including
Roth IRAs and Education IRAs
-- Qualified pension and profit-sharing plans for
employees, including those profit-sharing plans with a
401(k) provision
-- 403(b)(7) custodial accounts for employees of public school
systems, hospitals, colleges and other non-profit
organizations meeting certain requirements of the Internal
Revenue Code
- 15 -
<PAGE>
Direct Deposit Plans
---------------------
Shares of the Fund may be purchased through direct deposit plans
offered by certain employers and government agencies. These plans enable a
shareholder to have all or a portion of his or her payroll or social security
checks transferred automatically to purchase shares of the Fund.
Automatic Investment Plan
-------------------------
You may make automatic monthly investments in the Fund from your bank,
savings and loan or other depository institution account. The minimum initial
and subsequent investments must be $50 under the plan. The Transfer Agent pays
the costs associated with these transfers, but reserves the right, upon thirty
days' written notice, to make reasonable charges for this service. Your
depository institution may impose its own charge for debiting your account which
would reduce your return from an investment in the Fund.
Reinvestment Privilege
----------------------
If you have redeemed shares of the Fund, you may reinvest all or part
of the proceeds without any additional sales load. This reinvestment must occur
within ninety days of the redemption and the privilege may only be exercised
once per year.
HOW TO REDEEM SHARES
- ---------------------
You may redeem shares of the Fund on each day that the Trust is open
for business. You will receive the net asset value per share next determined
after receipt by the Transfer Agent of a proper redemption request in the form
described below, less any applicable contingent deferred sales load. Payment is
normally made within three business days after tender in such form, provided
that payment in redemption of shares purchased by check will be effected only
after the check has been collected, which may take up to fifteen days from the
purchase date. To eliminate this delay, you may purchase shares of the Fund by
certified check or wire.
A contingent deferred sales load may apply to a redemption of certain
shares of the Fund purchased at net asset value. See "How to Purchase Shares."
BY TELEPHONE. You may redeem shares by telephone. The proceeds will
be sent by mail to the address designated on your account or wired directly to
your existing account in any commercial bank or brokerage firm in the United
States as designated on your application. To redeem by telephone, call the
- 16 -
<PAGE>
Transfer Agent (Nationwide call toll-free 800-543-0407; in Cincinnati call
629-2050). The redemption proceeds will normally be sent by mail or by wire
within one business day (but not later than three business days) after receipt
of your telephone instructions. Any redemption requests by telephone must be
received in proper form prior to 12:30 p.m., Eastern time, on any business day
in order for payment by wire to be made that day. IRA accounts are not
redeemable by telephone.
The telephone redemption privilege is automatically available to all
shareholders. You may change the bank or brokerage account which you have
designated under this procedure at any time by writing to the Transfer Agent
with your signature guaranteed by any eligible guarantor institution (including
banks, brokers and dealers, municipal securities brokers and dealers, government
securities brokers and dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations)
or by completing a supplemental telephone redemption authorization form. Contact
the Transfer Agent to obtain this form. Further documentation will be required
to change the designated account if shares are held by a corporation, fiduciary
or other organization.
Neither the Trust, the Transfer Agent, nor their respective affiliates
will be liable for complying with telephone instructions they reasonably believe
to be genuine or for any loss, damage, cost or expense in acting on such
telephone instructions. The affected shareholders will bear the risk of any such
loss. The Trust or the Transfer Agent, or both, will employ reasonable
procedures to determine that telephone instructions are genuine. If the Trust
and/or the Transfer Agent do not employ such procedures, they may be liable for
losses due to unauthorized or fraudulent instructions. These procedures may
include, among others, requiring forms of personal identification prior to
acting upon telephone instructions, providing written confirmation of the
transactions and/or tape recording telephone instructions.
BY MAIL. You may redeem any number of shares from your account by
sending a written request to the Transfer Agent. The request must state the
number of shares or the dollar amount to be redeemed and your account number.
The request must be signed exactly as your name appears on the Trust's account
records. If the shares to be redeemed have a value of $25,000 or more, your
signature must be guaranteed by any of the eligible guarantor institutions
outlined above.
- 17 -
<PAGE>
Written redemption requests may also direct that the proceeds be
deposited directly in the bank account or brokerage account designated on your
account application for telephone redemptions. Proceeds of redemptions requested
by mail are mailed within three business days following receipt of instructions
in proper form.
BY CHECK. You may establish a special checking account with the Fund
for the purpose of redeeming shares by check. Checks may be made payable to
anyone for any amount, but checks may not be certified.
When a check is presented to the Custodian for payment, the Transfer
Agent, as your agent, will cause the Fund to redeem a sufficient number of full
and fractional shares in your account to cover the amount of the check. Checks
will be processed at the net asset value on the day the check is presented to
the Custodian for payment.
If the amount of a check is greater than the value of the shares held
in your account, the check will be returned. Shareholders of the Fund should
consider potential fluctuations in the net asset value of the Fund's shares when
writing checks. A check representing a redemption request will take precedence
over any other redemption instructions issued by a shareholder.
As long as no more than six check redemptions are effected in your
account in any month, there will be no charge for the check redemption
privilege. After six check redemptions are effected in your account in a month,
the Transfer Agent will charge you $.25 for each additional check redemption
effected that month. However, there is no charge for any check redemptions
effected by employees, shareholders and customers of Countrywide Credit
Industries, Inc. or any affiliated company, including members of the immediate
family of such individuals. The Transfer Agent charges shareholders its costs
for each stop payment and each check returned for insufficient funds. In
addition, the Transfer Agent reserves the right to make additional charges to
recover the costs of providing the check redemption service. All charges will be
deducted from your account by redemption of shares in your account. The check
redemption procedure may be suspended or terminated at any time upon written
notice by the Trust or the Transfer Agent.
Shareholders of the Fund should be aware that writing a check (a
redemption of shares) is a taxable event. Shares of the Fund for which
certificates have been issued may not be redeemed by check.
- 18 -
<PAGE>
THROUGH BROKER-DEALERS. You may also redeem shares of the Fund by
placing a wire redemption request through a securities broker or dealer.
Unaffiliated broker-dealers may impose a fee on the shareholder for this
service. You will receive the net asset value per share next determined after
receipt by the Trust or its agent of your wire redemption request. It is the
responsibility of broker-dealers to properly transmit wire redemption orders.
ADDITIONAL REDEMPTION INFORMATION. If your instructions request a
redemption by wire, you will be charged an $8 processing fee by the Fund's
Custodian. The Trust reserves the right, upon thirty days' written notice, to
change the processing fee. All charges will be deducted from your account by
redemption of shares in your account. Your bank or brokerage firm may also
impose a charge for processing the wire. In the event that wire transfer of
funds is impossible or impractical, the redemption proceeds will be sent by mail
to the designated account.
Redemption requests may direct that the proceeds be deposited directly
in your account with a commercial bank or other depository institution via an
Automated Clearing House (ACH) transaction. There is currently no charge for ACH
transactions. Contact the Transfer Agent for more information about ACH
transactions.
If a certificate for shares of the Fund was issued to you, you will not
be permitted to redeem shares by check, to redeem or exchange shares by
telephone or to use the automatic withdrawal plan as to those shares. In order
to redeem such shares, the certificate must be delivered to the Transfer Agent,
or the dealer in the case of a wire redemption, duly endorsed or accompanied by
a duly endorsed stock power, with the signature guaranteed by any of the
eligible guarantor institutions outlined above.
At the discretion of the Trust or the Transfer Agent, corporate
investors and other associations may be required to furnish an appropriate
certification authorizing redemptions to ensure proper authorization. The Trust
reserves the right to require you to close your account if at any time the value
of your shares is less than the minimum amount required by the Trust for your
account (based on actual amounts invested including any sales load paid,
unaffected by market fluctuations), or such other minimum amount as the Trust
may determine from time to time. After notification to you of the Trust's
intention to close your account, you will be given thirty days to increase the
value of your account to the minimum amount.
- 19 -
<PAGE>
The Trust reserves the right to suspend the right of redemption or to
postpone the date of payment for more than three business days under unusual
circumstances as determined by the Securities and Exchange Commission.
EXCHANGE PRIVILEGE
- ------------------
Shares of the Fund and of any other fund of Countrywide Investments may
be exchanged for each other.
Shares of the Fund which are not subject to a contingent deferred sales
load may be exchanged for Class A shares of any other fund and for shares of any
other fund which offers only one class of shares (provided such shares are not
subject to a contingent deferred sales load). A sales load will be imposed equal
to the excess, if any, of the sales load rate applicable to the shares being
acquired over the sales load rate, if any, previously paid on the shares being
exchanged.
Shares of the Fund subject to a contingent deferred sales load may be
exchanged, on the basis of relative net asset value per share, for shares of any
other fund which imposes a contingent deferred sales load and for shares of any
fund which is a money market fund. A fund will "tack" the period for which the
shares being exchanged were held onto the holding period of the acquired shares
for purposes of determining if a contingent deferred sales load is applicable in
the event that the acquired shares are redeemed following the exchange. The
period of time that shares are held in a money market fund will not count toward
the holding period for determining whether a contingent deferred sales load is
applicable.
The following are the funds of Countrywide Investments currently
offered to the public. Funds which may be subject to a front-end or contingent
deferred sales load are indicated by an asterisk.
Countrywide Tax-Free Trust Countrywide Strategic Trust
Tax-Free Money Fund *Government Mortgage Fund
Ohio Tax-Free Money Fund *Equity Fund
California Tax-Free Money Fund *Utility Fund
Florida Tax-Free Money Fund *Growth/Value Fund
*Tax-Free Intermediate Term Fund *Aggressive Growth Fund
*Ohio Insured Tax-Free Fund *International Equity Fund
*Kentucky Tax-Free Fund
- 20 -
<PAGE>
Countrywide Investment Trust
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
You may request an exchange by sending a written request to the
Transfer Agent. The request must be signed exactly as your name appears on the
Trust's account records. Exchanges may also be requested by telephone. If you
are unable to execute your transaction by telephone (for example during times of
unusual market activity) consider requesting your exchange by mail or by
visiting the Trust's offices at 312 Walnut Street, 21st Floor, Cincinnati, Ohio
45202. An exchange will be effected at the next determined net asset value (or
offering price, if sales load is applicable) after receipt of a request by the
Transfer Agent.
Exchanges may only be made for shares of funds then offered for sale in
your state of residence and are subject to the applicable minimum initial
investment requirements. The exchange privilege may be modified or terminated by
the Board of Trustees upon 60 days' prior notice to shareholders. An exchange
results in a sale of fund shares, which may cause you to recognize a capital
gain or loss. Before making an exchange, contact the Transfer Agent to obtain a
current prospectus for any of the other funds of Countrywide Investments and
more information about exchanges among Countrywide Investments.
DIVIDENDS AND DISTRIBUTIONS
- ----------------------------
All of the net investment income of the Fund is declared as a dividend
to shareholders of record on each business day of the Trust and paid monthly.
The Fund expects to distribute any net realized long-term capital gains at least
once each year. Management will determine the timing and frequency of the
distributions of any net realized short-term capital gains.
Distributions are paid according to one of the following options:
Share Option - income distributions and capital gains
distributions reinvested in additional
shares.
- 21 -
<PAGE>
Income Option - income distributions and short-term capital
gains distributions paid in cash; long-term
capital gains distributions reinvested in
additional shares.
Cash Option - income distributions and capital
gains distributions paid in cash.
You should indicate your choice of option on your application. If no option is
specified on your application, distributions will automatically be reinvested in
additional shares. All distributions will be based on the net asset value in
effect on the payable date.
If you select the Income Option or the Cash Option and the U.S. Postal
Service cannot deliver your checks or if your checks remain uncashed for six
months, your dividends may be reinvested in your account at the then-current net
asset value and your account will be converted to the Share Option. No interest
will accrue on amounts represented by uncashed distribution checks.
An investor in the Fund who has received in cash any dividend or
capital gains distribution may return the distribution within thirty days of the
distribution date to the Transfer Agent for reinvestment at the net asset value
next determined after its return. The investor or his dealer must notify the
Transfer Agent that a distribution is being reinvested pursuant to this
provision.
TAXES
- -----
The Fund has qualified in all prior years and intends to continue to
qualify for the special tax treatment afforded a "regulated investment company"
under Subchapter M of the Internal Revenue Code so that it does not pay federal
taxes on income and capital gains distributed to shareholders.
The Fund intends to distribute substantially all of its net investment
income and any net realized capital gains to its shareholders. Distributions of
net investment income as well as from net realized short-term capital gains, if
any, are taxable as ordinary income. Since the Fund's investment income is
derived from interest rather than dividends, no portion of such distributions is
eligible for the dividends received deduction available to corporations.
Distributions of net capital gains (i.e., the excess of net long-term
capital gains over net short-term capital losses) by the Fund to its
shareholders are taxable to the recipient shareholders as capital gains, without
regard to the length of time a shareholder has held Fund shares. The maximum
capital gains rate for individuals is 28% with respect to assets held for
- 22 -
<PAGE>
more than 12 months, but not more than 18 months, and 20% with respect to assets
held more than 18 months. The maximum capital gains rate for corporate
shareholders is the same as the maximum tax rate for ordinary income.
Redemptions of shares of the Fund are taxable events on which a shareholder may
realize a gain or loss.
The Fund will mail to each of its shareholders a statement indicating
the amount and federal income tax status of all distributions made during the
year. In addition to federal taxes, shareholders of the Fund may be subject to
state and local taxes on distributions. Shareholders should consult their tax
advisors about the tax effect of distributions and withdrawals from the Fund and
the use of the Automatic Withdrawal Plan and the Exchange Privilege. The tax
consequences described in this section apply whether distributions are taken in
cash or reinvested in additional shares.
OPERATION OF THE FUND
- ----------------------
The Fund is a diversified series of Countrywide Investment Trust, an
open-end management investment company organized as a Massachusetts business
trust on December 7, 1980. The Board of Trustees supervises the business
activities of the Trust. Like other mutual funds, the Trust retains various
organizations to perform specialized services for the Fund.
The Trust retains Countrywide Investments, Inc., 312 Walnut Street,
Cincinnati, Ohio 45202 (the "Adviser"), to manage the Fund's investments and its
business affairs. The Adviser was organized in 1974 and is also the investment
adviser to five other series of the Trust, seven series of Countrywide Tax-Free
Trust and six series of Countrywide Strategic Trust. The Adviser is an indirect
wholly-owned subsidiary of Countrywide Credit Industries, Inc., a New York Stock
Exchange listed company principally engaged in the business of residential
mortgage lending. The Fund pays the Adviser a fee equal to the annual rate of
.5% of the average value of its daily net assets up to $50 million; .45% of such
assets from $50 million to $150 million; .4% of such assets from $150 million to
$250 million; and .375% of such assets in excess of $250 million.
Scott Weston, Assistant Vice President-Investments of the Adviser, is
primarily responsible for managing the portfolio of the Fund. Mr. Weston has
been employed by the Adviser since 1992 and has been managing the Fund's
portfolio since March 1996.
The Adviser serves as principal underwriter for the Fund and, as such,
is the exclusive agent for the distribution of shares of the Fund. Angelo R.
Mozilo, Robert H. Leshner, Robert G. Dorsey and John F. Splain are officers of
both the Trust and the Adviser.
- 23 -
<PAGE>
The Fund is responsible for the payment of all operating expenses,
including fees and expenses in connection with membership in investment company
organizations, brokerage fees and commissions, legal, auditing and accounting
expenses, expenses of registering shares under federal and state securities
laws, expenses related to the distribution of the Fund's shares (see
"Distribution Plan"), insurance expenses, taxes or governmental fees, fees and
expenses of the custodian, transfer agent and accounting and pricing agent of
the Fund, fees and expenses of members of the Board of Trustees who are not
interested persons of the Trust, the cost of preparing and distributing
prospectuses, statements, reports and other documents to shareholders, expenses
of shareholders' meetings and proxy solicitations, and such extraordinary or
non-recurring expenses as may arise, including litigation to which the Fund may
be a party and indemnification of the Trust's officers and Trustees with respect
thereto.
The Trust has retained Countrywide Fund Services, Inc., P.O. Box 5354,
Cincinnati, Ohio (the "Transfer Agent"), an indirect wholly-owned subsidiary of
Countrywide Credit Industries, Inc., to serve as the Fund's transfer agent,
dividend paying agent and shareholder service agent.
The Transfer Agent also provides accounting and pricing services to the
Fund. The Transfer Agent receives a monthly fee from the Fund for calculating
daily net asset value per share and maintaining such books and records as are
necessary to enable it to perform its duties.
In addition, the Transfer Agent has been retained by the Adviser to
assist the Adviser in providing administrative services to the Fund. In this
capacity, the Transfer Agent supplies executive, administrative and regulatory
services, supervises the preparation of tax returns, and coordinates the
preparation of reports to shareholders and reports to and filings with the
Securities and Exchange Commission and state securities authorities. The Adviser
(not the Fund) pays the Transfer Agent a fee for these administrative services.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its objective of seeking best
execution of portfolio transactions, the Adviser may give consideration to sales
of shares of the Fund as a factor in the selection of brokers and dealers to
execute portfolio transactions of the Fund. Subject to the requirements of the
Investment Company Act of 1940 and procedures adopted by the Board of Trustees,
the Fund may execute portfolio transactions through any broker or dealer and pay
brokerage commissions to a broker (i) which is an affiliated person of the
- 24 -
<PAGE>
Trust, or (ii) which is an affiliated person of such person, or (iii) an
affiliated person of which is an affiliated person of the Trust or the Adviser.
Shares of the Fund have equal voting rights and liquidation rights. The
Fund shall vote separately on matters submitted to a vote of the shareholders
except in matters where a vote of all series of the Trust in the aggregate is
required by the Investment Company Act of 1940 or otherwise. When matters are
submitted to shareholders for a vote, each shareholder is entitled to one vote
for each full share owned and fractional votes for fractional shares owned. The
Trust does not normally hold annual meetings of shareholders. The Trustees shall
promptly call and give notice of a meeting of shareholders for the purpose of
voting upon the removal of any Trustee when requested to do so in writing by
shareholders holding 10% or more of the Trust's outstanding shares. The Trust
will comply with the provisions of Section 16(c) of the Investment Company Act
of 1940 in order to facilitate communications among shareholders.
DISTRIBUTION PLAN
- ------------------
Pursuant to Rule 12b-1 under the Investment Company Act of 1940, the
Fund has adopted a plan of distribution (the "Plan") under which the Fund may
directly incur or reimburse the Adviser for certain distribution-related
expenses, including payments to securities dealers and others who are engaged in
the sale of shares of the Fund and who may be advising investors regarding the
purchase, sale or retention of Fund shares; expenses of maintaining personnel
who engage in or support distribution of shares or who render shareholder
support services not otherwise provided by the Transfer Agent; expenses of
formulating and implementing marketing and promotional activities, including
direct mail promotions and mass media advertising; expenses of preparing,
printing and distributing sales literature and prospectuses and statements of
additional information and reports for recipients other than existing
shareholders of the Fund; expenses of obtaining such information, analyses and
reports with respect to marketing and promotional activities as the Trust may,
from time to time, deem advisable; and any other expenses related to the
distribution of the Fund's shares.
Pursuant to the Plan, the Fund may make payments to dealers and other
persons, including the Adviser and its affiliates, who may be advising investors
regarding the purchase, sale or
- 25 -
<PAGE>
retention of shares of the Fund. For the fiscal year ended September 30, 1997,
the Fund paid $81,072 to the Adviser to reimburse it for payments made to
dealers and other persons who may be advising shareholders in this regard.
The annual limitation for payment of expenses pursuant to the Plan is
.35% of the Fund's average daily net assets. Unreimbursed expenditures will not
be carried over from year to year. In the event the Plan is terminated by the
Fund in accordance with its terms, the Fund will not be required to make any
payments for expenses incurred by the Adviser after the date the Plan
terminates.
Pursuant to the Plan, the Fund may also make payments to banks or other
financial institutions that provide shareholder services and administer
shareholder accounts. The Glass-Steagall Act prohibits banks from engaging in
the business of underwriting, selling or distributing securities. Although the
scope of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, management of the
Trust believes that the Glass- Steagall Act should not preclude a bank from
providing such services. However, state securities laws on this issue may differ
from the interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law. If a
bank were prohibited from continuing to perform all or a part of such services,
management of the Trust believes that there would be no material impact on the
Fund or its shareholders. Banks may charge their customers fees for offering
these services to the extent permitted by applicable regulatory authorities, and
the overall return to those shareholders availing themselves of the bank
services will be lower than to those shareholders who do not. The Fund may from
time to time purchase securities issued by banks which provide such services;
however, in selecting investments for the Fund, no preference will be shown for
such securities.
The National Association of Securities Dealers, in its Rules of Fair
Practice, places certain limitations on asset-based sales charges of mutual
funds. These Rules require fund-level accounting in which all sales charges -
front-end load, 12b-1 fees or contingent deferred load - terminate when a
percentage of gross sales is reached.
CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE
- ----------------------------------------------------
On each day that the Trust is open for business, the public offering
price (net asset value plus applicable sales load) of the shares of the Fund is
determined as of the close of the regular session of trading on the New York
Stock Exchange,
- 26 -
<PAGE>
currently 4:00 p.m., Eastern time. The Trust is open for business on each day
the New York Stock Exchange is open for business and on any other day when there
is sufficient trading in the Fund's investments that its net asset value might
be materially affected. The net asset value per share of the Fund is calculated
by dividing the sum of the value of the securities held by the Fund plus cash or
other assets minus all liabilities (including estimated accrued expenses) by the
total number of shares outstanding of the Fund, rounded to the nearest cent.
The Fund's portfolio 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. Securities (and other
assets) of the Fund for which market quotations are not readily available are
valued at their fair value as determined in good faith in accordance with
consistently applied procedures established by and under the general supervision
of the Board of Trustees. The net asset value per share of the Fund will
fluctuate with the value of the securities it holds.
PERFORMANCE INFORMATION
- -----------------------
From time to time, the Fund may advertise its "average annual total
return." The Fund may also advertise "yield." Both yield and average annual
total return figures are based on historical earnings and are not intended to
indicate future performance.
The "average annual total return" of the Fund refers to the average
annual compounded rates of return over the most recent 1, 5 and 10 year periods
(which periods will be stated in the advertisement) that would equate an initial
amount invested at the beginning of a stated period to the ending redeemable
value of the investment. The calculation of "average annual total return"
assumes the reinvestment of all dividends and distributions and the deduction of
the current maximum sales load from the initial investment. The Fund may also
advertise total return (a "nonstandardized quotation") which is calculated
differently from "average annual total return." A nonstandardized quotation of
total return may be a cumulative return which measures the percentage change in
the value of an account between the beginning and end of a period, assuming no
activity in the account other than reinvestment of dividends and capital gains
distributions. A nonstandardized quotation of total return may also indicate
average annual compounded rates of return over periods other than those
specified for "average annual total return." These nonstandardized returns do
not include the effect of the applicable sales load which, if included, would
reduce total return. A nonstandardized quotation
- 27 -
<PAGE>
of total return will always be accompanied by the Fund's "average annual total
return" as described above.
The "yield" of the Fund is computed by dividing the net investment
income per share earned during a thirty-day (or one month) period stated in the
advertisement by the maximum public offering price per share on the last day of
the period (using the average number of shares entitled to receive dividends).
The yield formula assumes that net investment income is earned and reinvested at
a constant rate and annualized at the end of a six-month period.
From time to time, the Fund may advertise its performance rankings as
published by recognized independent mutual fund statistical services such as
Lipper Analytical Services, Inc. ("Lipper"), or by publications of general
interest such as Forbes, Money, The Wall Street Journal, Business Week,
Barron's, Fortune or Morningstar Mutual Fund Values. The Fund may also compare
its performance to that of other selected mutual funds, averages of the other
mutual funds within its category as determined by Lipper, or recognized
indicators. In connection with a ranking, the Fund may provide additional
information, such as the particular category of funds to which the ranking
relates, the number of funds in the category, the criteria upon which the
ranking is based, and the effect of fee waivers and/or expense reimbursements,
if any. The Fund may also present its performance and other investment
characteristics, such as volatility or a temporary defense posture, in light of
the Adviser's view of current or past market conditions or historical trends.
Further information about the Fund's performance is contained in the
Trust's annual report which can be obtained by shareholders at no charge by
calling the Transfer Agent (Nationwide call toll-free 800-543-0407; in
Cincinnati call 629- 2050) or by writing to the Trust at the address on the
front of this Prospectus.
- 28 -
<PAGE>
<TABLE>
ACCOUNT NO. 3-_____________________
Account Application (For Fund Use Only)
<S> <C> <C> <C>
Intermediate Term Government Income Fund FOR BROKER/DEALER USE ONLY
Firm Name:_____________________________
Home Office Address: ___________________
Branch Address: ________________________
Rep Name & No.: ________________________
Please mail account application to: Rep Signature: _________________________
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
========================================================================================================================
Initial Investment of $_______________________
[] Check or draft enclosed payable to the Fund.
[] Bank Wire From:
______________________________________________________________________________________________________________
[] Exchange From:
______________________________________________________________________________________________________________
(Fund Name) (Fund Account Number)
Account Name S.S. #/Tax I.D.#
________________________________________________________________________________________ _____________________________
Name of Individual, Corporation, Organization, or Minor, etc. (In case of custodial
account please list
minor's S.S.#)
___________________________________________________________________________________________________ Citizenship:[] U.S.
Name of Joint Tenant, Partner, Custodian []Other
Address Phone
___________________________________________________________________________________________________ ( )_______________
Street or P.O. Box Business Phone
___________________________________________________________________________________________________ ( )_______________
City State Zip Home Phone
Check Appropriate Box: [] Individual [] Joint Tenant (Right of survivorship presumed)
[] Partnership [] Corporation [] Trust [] Custodial [] Non-Profit [] Other
Occupation and Employer
Name/Address______________________________________________________________________________________________
Are you an associated person of an NASD member? [] Yes [] No
========================================================================================================================
TAXPAYER IDENTIFICATION NUMBER -- Under penalties of perjury I certify that the Taxpayer Identification Number listed
above is my correct number. The Internal Revenue Service does not require my consent to any provision of this document
other than the certifications required to avoid backup withholding. Check box if appropriate:
[] I am exempt from backup withholding under the provisions of section 3406(a)(1)(c) of the Internal Revenue Code; or I am not
subject to backup withholding because I have not been notified that I am subject to backup withholding as a result of a failure
to report all interest or dividends; or the Internal Revenue Service has notified me that I am no longer subject to backup
withholding.
[] I certify under penalties of perjury that a Taxpayer Identification Number has not been issued to me and I have mailed or
delivered an application to receive a Taxpayer Identification Number to the Internal Revenue Service Center or Social Security
Administration Office. I understand that if I do not provide a Taxpayer Identification Number within 60 days that 31% of all
reportable payments will be withheld until I provide a number.
=======================================================================================================================
DISTRIBUTIONS (If no election is checked the SHARE OPTION will be assigned.)
[] Share Option -- Income distributions and capital gains distributions automatically reinvested in additional
shares.
[] Income Option -- Income distributions and short term capital gains distributions paid in cash, long term capital
gains distributions reinvested in additional shares.
[] Cash Option -- Income distributions and capital gains distributions paid in cash.
[ ] By Check [ ] By ACH to my bank checking or savings account. Please attach a voided check.
========================================================================================================================
REDEMPTION OPTIONS
I (we) authorize the Trust or Countrywide Fund Services, Inc. to act upon instructions received by telephone, or upon
receipt of and in the amounts of checks as described below (if checkwriting is selected), to have amounts withdrawn from
my (our) account in any fund of Countrywide Investments (see prospectus for limitations on this option) and:
[ ] WIRED ($1,000 minimum OR MAILED to my (our) bank account designated below. I (we) further authorize the use of
automated cash transfers to and from the account designated below.
NOTE: For wire redemptions, the indicated bank should be a commercial bank.
Bank Account Number _____________________________________ Bank Routing Transit Number _______________________________
Name of Account Holder _______________________________________________________________________________________________
Bank Name _________________________________________________________ Bank Address ______________________________________
City State
[ ]CHECKWRITING (A signature card must be completed)
...to deposit the proceeds of such redemptions in the applicable Countrywide Pay Through Draft Account (PTDA)
or otherwise arrange for application of such proceeds to payment of said checks. I (we) authorize the persons
whose signatures appear on the PTDA signature card to draw checks on the PTDA and to cause the redemption of my (our)
shares of the Trust. I (we) agree to be bound by the Rules and Regulations for the Countrywide Pay Through Draft
Account as such Rules and Regulations may be amended from time to time.
===========================================================================================================================
REDUCED SALES CHARGES
Right of Accumulation: I apply for Right of Accumulation subject to the Agent's confirmation of the following holdings of
eligible load funds of Countrywide Investments.
Account Number/Name Account Number/Name
_______________________________________________________ ______________________________________________________
_______________________________________________________ ______________________________________________________
Letter of Intent: (Complete the Right of Accumulation section if related accounts are being applied to your Letter of Intent.)
[] I agree to the Letter of Intent in the current Prospectus of Countrywide Investment Trust. Although I am not obligated to
purchase, and the Trust is not obligated to sell, I intend to invest over a 13 month period beginning ____________________ 19
(Purchase Date of not more than 90 days prior to this Letter) an aggregate amount in the load funds of Countrywide Investments
at least equal to (check appropriate box):
[] $100,000 [] $250,000 [] $500,000 [] $1,000,000
========================================================================================================================
SIGNATURES
By signature below each investor certifies that he has received a copy of the Fund's current Prospectus, that he is of legal
age, and that he has full authority and legal capacity for himself or the organization named below, to make this investment and
to use the options selected above. The investor appoints Countrywide Fund Services, Inc. as his agent to enter orders for shares
whether by direct purchase or exchange, to receive dividends and distributions for automatic reinvestment in additional shares of
the Fund for credit to the investor's account and to surrender for redemption shares held in the investor's account in accordance
with any of the procedures elected above or for payment of service charges incurred by the investor. The investor further agrees
that Countrywide Fund Services, Inc. can cease to act as such agent upon ten days' notice in writing to the investor at the address
contained in this Application. The investor hereby ratifies any instructions given pursuant to this Application and for himself and
his successors and assigns does hereby release Countrywide Fund Services, Inc., Countrywide Investment Trust, Countrywide Investment
Trust, Countrywide Investments, Inc., and their respective officers, employees, agents and affiliates from any and all liability in
the performance of the acts instructed herein. Neither the Trust, Countrywide Fund Services, Inc., nor their respective affiliates
will be liable for complying with telephone instructions they reasonably believe to be genuine or for any loss, damage, cost or
expense in acting on such telephone instructions. The investor(s) will bear the risk of any such loss. The Trust or Countrywide
Fund Services, Inc., or both will employ reasonable procedures to determine that telephone instructions are genuine. If the Trust
and/or Countrywide Fund Services, Inc. do not employ such procedures, they may be liable for losses due to unauthorized or
fraudulent instructions. These procedures may include, among others, requiring forms of personal identification prior to acting
upon telephone instructions, providing written confirmation of the transactions and/or tape recording telephone instructions.
are genuine.
___________________________________________________ ___________________________________________________
Signature of Individual Owner, Corporate Officer, Signature of Joint Owner, if Any
Trustee, etc.
________________________________________________ ____________________________________________________
Title of Corporate Officer, Trustee, etc. Date
NOTE: Corporations, trusts and other organizations must complete the resolution form on the reverse side.
Unless otherwise specified, each joint owner shall have full authority to act on behalf of the account.
========================================================================================
AUTOMATIC INVESTMENT PLAN (Complete for Investments Into the Fund)
The Automatic Investment Plan is available for all established accounts of Countrywide Investment Trust. There is no charge for
this service, and it offers the convenience of automatic investing on a regular basis. The minimum investment is $50.00 per month.
For an account that is opened by using this Plan, the minimum initial and subsequent investments must be $50.00. Though a
continuous program of 12 monthly investments is recommended, the Plan may be discontinued by the shareholder at any time.
Please invest $ _________________ per month in the Fund.
ABA Routing Number______________________________
FI Account Number________________________________
[] Checking Account [] Savings Account
- ----------------------------------------------------------------------
Name of Financial Institution (FI) Please make my automatic investment on:
[] the last business day of each month
______________________________________________________________________ [] the 15th day of each month
City State [] both the 15th and last business day
X_____________________________________________________________________ X_______________________________________
(Signature of Depositor EXACTLY as it appears on FI Records) (Signature of Joint Tenant - if any)
(Joint Signatures are required when bank account is in joint names. Please sign exactly as signature appears on your FI's
records.)
Please attach a voided check from your checking account or a voided deposit/
withdrawal slip from your savings account for the Automatic Investment Plan.
Indemnification to Depositor's Bank
In consideration of your participation in a plan which Countrywide Fund Services, Inc. ("CFS") has put into effect, by which
amounts, determined by your depositor, payable to the Fund for purchase of shares of the Fund, are collected by CFS, CFS hereby
agrees:
CFS will indemnify and hold you harmless from any liability to any person or persons whatsoever arising out of the payment
by you of any amount drawn by the Fund to its own order on the account of your depositor or from any liability to any person
whatsoever arising out of the dishonor by you whether with or without cause or intentionally or inadvertently, of any such
checks. CFS will defend, at its own cost and expense, any action which might be brought against you by any person or persons
whatsoever because of your actions taken pursuant to the foregoing request or in any manner arising by reason of your
participation in this arrangement. CFS will refund to you any amount erroneously paid by you to the Fund on any such check if
the claim for the amount of such erroneous payment is made by you within six (6) months from the date of such erroneous
payment; your participation in this arrangement and that of the Fund may be terminated by thirty (30) days written notice from
either party to the other.
========================================================================================================================
AUTOMATIC WITHDRAWAL PLAN (Complete for Withdrawals from the Fund)
This is an authorization for you to withdraw $_________ from my mutual fund account beginning the last business day of the
month of __________________.
Please Indicate Withdrawal Schedule (Check One):
[] Monthly -- Withdrawals will be made on the last business day of each month.
[] Quarterly -- Withdrawals will be made on or about 3/31, 6/30, 9/30 and 12/31.
[] Annually -- Please make withdrawals on the last business day of the month of:_____________________.
Please Select Payment Method (Check One):
[] Exchange: Please exchange the withdrawal proceeds into another Countywide account number:_ _-- _ _ _ _--_
[] Check: Please mail a check for my withdrawal proceeds to the mailing address on this account.
[] ACH Transfer: Please send my withdrawal proceeds via ACH transfer to my bank checking or savings account as indicated below.
I understand that the transfer will be completed in two to three business days and that there is no charge.
[] Bank Wire: Please send my withdrawal proceeds via bank wire, to the account indicated below. I understand that the wire will
be completed in one business day and that there is an $8.00 fee.
Please attach a voided
check for ACH or bank wire____________________________________________________________________________________________________
Bank Name Bank Address
___________________________________________________________________________________________________________________________________
Bank ABA# Account # Account Name
[] Send to special payee (other than applicant): Please mail a check for my withdrawal proceeds to the mailing address below:
Name of
payee___________________________________________________________________________________________________________________
Please send
to:____________________________________________________________________________________________________________________
Street address City State Zip
========================================================================================================================
RESOLUTIONS
(This Section to be completed by Corporations, Trusts, and Other Organizations)
RESOLVED: That this corporation or organization become a shareholder of Countrywide Investment Trust (the Trust) and that
________________________________________________________________________________________________________________________
is (are) hereby authorized to complete and execute the Application on behalf of the corporation or organization and to take any
action for it as may be necessary or appropriate with respect to its shareholder account with the Trust, and it is
FURTHER RESOLVED: That any one of the above noted officers is authorized to sign any documents necessary or appropriate to
appoint Countrywide Fund Services, Inc. as redemption agent of the corporation or organization for shares of the applicable series
of the Trust, to establish or acknowledge terms and conditions governing the redemption of said shares and to otherwise implement
the privileges elected on the Application.
Certificate
I hereby certify that the foregoing resolutions are in conformity with the Charter and By-Laws or other empowering documents of
the
_______________________________________________________________________________________________________________________
(Name of Organization)
incorporated or formed under the laws of__________________________________________________________________________________________
(State)
and were adopted at a meeting of the Board of Directors or Trustees of the organization or corporation duly called and held on
at which a quorum was present and acting throughout, and that the same are now in full force and effect. I further certify that
the following is (are) duly elected officer(s) of the corporation or organization, authorized to act in accordance with the
foregoing resolutions.
Name Title
___________________________________________________ _________________________________________________________
___________________________________________________ _________________________________________________________
___________________________________________________ _______________________________________________________
Witness my hand and seal of the corporation or organization this_______________________day
of_______________________________________, 19_______
___________________________________________________ _________________________________________________________
*Secretary-Clerk Other Authorized Officer (if required)
*If the Secretary or other recording officer is authorized to act by the above resolutions, this certificate must also be
signed by another officer.
</TABLE>
<PAGE>
COUNTRYWIDE INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
Nationwide: (Toll-Free) 800-543-8721
Cincinnati: 513-629-2000
BOARD OF TRUSTEES
Donald L. Bogdon, M.D.
John R. Delfino
H. Jerome Lerner
Robert H. Leshner
Angelo R. Mozilo
Oscar P. Robertson
John F. Seymour, Jr.
Sebastiano Sterpa
INVESTMENT ADVISER
COUNTRYWIDE INVESTMENTS, INC.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
TRANSFER AGENT
COUNTRYWIDE FUND SERVICES, INC.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
Shareholder Service
Nationwide: (Toll-Free) 800-543-0407
Cincinnati: 513-629-2050
Countrywide Always Line
Nationwide: (Toll-Free) 800-852-3809
Cincinnati: 513-579-0999
- 29 -
<PAGE>
TABLE OF CONTENTS
Expense Information. . . . . . . . . . . . . . . . . . . . .
Financial Highlights. . . . . .. . . . . . . . . . . . . . .
Investment Objectives and Policies . . . . . . . . . . . . .
How to Purchase Shares . . . . . . . . . . . . . . . . . . .
Shareholder Services . . . . . . . . . . . . . . . . . . . .
How to Redeem Shares . . . . . . . . . . . . . . . . . . . .
Exchange Privilege . . . . . . . . . . . . . . . . . . . . .
Dividends and Distributions. . . . . . . . . . . . . . . . .
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operation of the Fund. . . . . . . . . . . . . . . . . . . .
Distribution Plan. . . . . . . . . . . . . . . . . . . . . .
Calculation of Share Price and Public Offering Price . . . .
Performance Information. . . . . . . . . . . . . . . . . . .
- -----------------------------------------------------------------
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Trust. This Prospectus does not constitute an offer by the Trust to sell
shares in any State to any person to whom it is unlawful for the Trust to make
such offer in such State.
- 30 -
<PAGE>
PROSPECTUS
January 1, 1998
Countrywide Investment Trust
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
INSTITUTIONAL GOVERNMENT INCOME FUND
The Institutional Government Income Fund (the "Fund"), a separate
series of Countrywide Investment Trust, 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. Such institutions
include banks and trust companies, savings institutions, corporations,
investment bankers and brokers, insurance companies, pension funds, employee
benefit plans and educational, religious and charitable institutions. The
minimum initial purchase is $100,000 per investor.
The Fund's portfolio securities are valued on an amortized cost basis.
Fund shares are neither insured nor guaranteed by the United States Government
or any other entity. It is anticipated, but there is no assurance, that the Fund
will maintain a stable net asset value per share of $1.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANKING OR DEPOSITORY INSTITUTION. SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER AGENCY.
Countrywide Investments, Inc. (the "Adviser") manages the Fund's
investments and its business affairs.
This Prospectus sets forth concisely the information about the Fund
that you should know before investing. Please retain this Prospectus for future
reference. A Statement of Additional Information dated January 1, 1998 has been
filed with the Securities and Exchange Commission and is hereby incorporated by
reference in its entirety. A copy of the Statement of Additional Information can
be obtained at no charge by calling one of the numbers listed below.
- -----------------------------------------------------------------------
For Information or Assistance in Opening An Account, Please Call:
Nationwide (Toll-Free).........................................800-543-0407
Cincinnati.....................................................513-629-2050
- ---------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
EXPENSE INFORMATION
- --------------------
Shareholder Transaction Expenses
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Exchange Fee None
Redemption Fee None
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees After Waivers .15%(A)
12b-1 Fees .01%(B)
Other Expenses .24%
----
Total Fund Operating Expenses After Waivers .40%(C)
====
(A) Absent waivers of management fees, such fees would have been .20% for
the fiscal year ended September 30, 1997.
(B) The Fund may incur 12b-1 fees in an amount up to .10% of its average
net assets.
(C) Absent waivers of management fees, total Fund operating expenses would
have been .45% for the fiscal year ended September 30, 1997.
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. The percentages expressing annual fund operating expenses are based
on amounts incurred during the most recent fiscal year. THE EXAMPLE BELOW SHOULD
NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
Example
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of
each time period: 1 Year $ 4
3 Years $13
5 Years $22
10 Years $51
Institutions who utilize the transfer agent's subaccounting system
to minimize their internal recordkeeping requirements will be charged a
subaccounting fee based on the level of services. See "Subaccounting
Services."
- 2 -
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------
The following information, which has been audited by Arthur Andersen LLP,
is an integral part of the audited financial statements and should be read in
conjunction with the financial statements. The financial statements as of
September 30, 1997 and related auditors' report appear in the Statement of
Additional Information of the Fund, which can be obtained by shareholders at no
charge by calling Countrywide Fund Services, Inc. (Nationwide call toll-free
800-543-0407, in Cincinnati call 629-2050) or by writing to the Trust at the
address on the front of this Prospectus.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Data for a Share Outstanding Throughout Each Period
FROM DATE OF
PUBLIC
OFFERING
(MAY 23, 1988)
THROUGH
YEAR ENDED SEPTEMBER 30, SEPT.30,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
Net asset value at beginning $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
of period ----- ------- ------ ------ ------ ------ ------ ------ ------ -----
Net investment income 0.051 0.051 0.053 0.034 0.029 0.040 0.065 0.081 0.087 0.025
------ ------- ------ ------ ------ ------ ------ ------ ------ -----
Dividends from net investment (0.051) (0.051) (0.053) (0.034) (0.029) (0.040) (0.065) (0.081) (0.087) (0.025)
income ------- ------- ------ ------ ------ ------ ------ ------ ------ -----
Net asset value at end of $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
period ======= ======= ====== ======= ====== ====== ====== ====== ====== =====
Total return 5.17% 5.18% 5.42% 3.43% 2.96% 4.08% 6.61% 8.31% 9.07% 7.42%(B)
======= ====== ====== ====== ====== ===== ====== ======= ====== =======
Net assets at end of $61,248 $39,382 $36,009 $41,769 $34,610 $43,432 $62,313 $97,727 $121,826 $70,489
period (000's) ======= ======= ======= ======= ======= ======= ======= ======= ======== =======
Ratio of expenses to 0.40% 0.40% 0.40% 0.40% 0.40% 0.37% 0.35% 0.33% 0.32% 0.30%(B)
average net assets(A)
Ratio of net investment income 5.07% 5.06% 5.30% 3.41% 2.92% 4.04% 6.50% 8.04% 8.74% 7.39%(B)
to average net assets
(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%,
0.48%, 0.43%, 0.36% and 0.34% for the years ended September 30, 1997, 1996, 1995, 1994, 1993, 1992, 1991 and 1989,
respectively.
(B) Annualized.
</TABLE>
<PAGE>
- 3 -
INVESTMENT OBJECTIVE AND POLICIES
- ----------------------------------
The Fund is a series of Countrywide Investment Trust (the "Trust"). The
investment objective of the Fund is to seek high current income, consistent with
protection of capital. The Fund seeks to achieve its investment objective by
investing primarily in obligations issued or guaranteed as to principal and
interest by the United States Government, its agencies or instrumentalities
("U.S. Government obligations" described below), maturing within thirteen months
or less with a dollar-weighted average portfolio maturity of 90 days or less.
The Fund is not intended to be a complete investment program, and there
is no assurance that its investment objective can be achieved. The Fund's
investment objective may be changed by the Board of Trustees without shareholder
approval, but only after notification has been given to shareholders and after
this Prospectus has been revised accordingly. If there is a change in the Fund's
investment objective, shareholders should consider whether the Fund remains an
appropriate investment in light of their then current financial position and
needs. Unless otherwise indicated, all investment practices and limitations of
the Fund are nonfundamental policies which may be changed by the Board of
Trustees without shareholder approval.
The Fund invests in U.S. Government obligations. "U.S. Government
obligations" include securities which are issued or guaranteed by the United
States Treasury, by various agencies of the United States Government, and by
various instrumentalities which have been established or sponsored by the United
States Government. U.S. Treasury obligations are backed by the "full faith and
credit" of the United States Government. U.S. Treasury obligations include
Treasury bills, Treasury notes, and Treasury bonds. U.S. Treasury obligations
also include the separate principal and interest components of U.S. Treasury
obligations which are traded under the Separate Trading of Registered Interest
and Principal of Securities ("STRIPS") program. Agencies or instrumentalities
established by the United States Government include the Federal Home Loan Banks,
the Federal Land Bank, the Government National Mortgage Association, the Federal
National Mortgage Association, the Federal Home Loan Mortgage Corporation, the
Student Loan Marketing Association, the Small Business Administration, the Bank
for Cooperatives, the Federal Intermediate Credit Bank, the Federal Financing
Bank, the Federal Farm Credit Banks, the Federal Agricultural Mortgage
Corporation, the Resolution Funding Corporation, the Financing Corporation of
America and the Tennessee Valley Authority. Some of these securities are
supported by the full faith and credit of the United States Government while
others are supported only by the credit of the agency or instrumentality, which
may include the
- 4 -
<PAGE>
right of the issuer to borrow from the United States Treasury. In the case of
securities not backed by the full faith and credit of the United States, the
investor must look principally to the agency issuing or guaranteeing the
obligation for ultimate repayment, and may not be able to assert a claim against
the United States in the event the agency or instrumentality does not meet its
commitments. Shares of the Fund are not guaranteed or backed by the United
States Government.
The Fund may invest in securities issued or guaranteed by any of the
entities listed above or by any other agency or instrumentality established or
sponsored by the United States Government, provided that the securities are
otherwise permissible investments of the Fund. Certain U.S. Government
obligations which have a variable rate of interest readjusted no less frequently
than annually will be deemed to have a maturity equal to the period remaining
until the next readjustment of the interest rate.
The market value of investments available to the Fund and therefore the
Fund's yield, will fluctuate due to changes in interest rates, economic
conditions, quality ratings and other factors beyond the control of the Adviser.
The portfolio securities held by the Fund are subject to price fluctuations
based upon changes in the level of interest rates, which will generally result
in all those securities changing in price in the same way, i.e., all those
securities experiencing appreciation when interest rates decline and
depreciation when interest rates rise. In addition, the prepayment experience of
the mortgages underlying mortgage-related U.S. Government obligations, such as
obligations issued by the Government National Mortgage Association, the Federal
National Mortgage Association or the Federal Home Loan Mortgage Corporation, may
affect the value of, and the return on an investment in, such securities.
Other Investment Techniques
----------------------------
The Fund may also engage in the following investment techniques, each
of which may involve certain risks:
DELAYED SETTLEMENT TRANSACTIONS. Obligations issued on a when-issued or
to-be-announced basis are settled by delivery and payment after the date of the
transaction, usually within 15 to 45 days. In a to-be-announced transaction, the
Fund has committed to purchasing or selling securities for which all specific
information is not yet known at the time of the trade, particularly the face
amount in transactions involving mortgage-related securities. The Fund will only
make commitments to purchase obligations on a when-issued or to-be-announced
basis with the intention of actually acquiring the obligations, but the
- 5 -
<PAGE>
Fund may sell these securities before the settlement date if it is deemed
advisable as a matter of investment strategy or in order to meet its
obligations, although it would not normally expect to do so. The Fund does not
currently intend to invest more than 5% of its net assets in securities
purchased on this basis, and the Fund will not enter into a delayed settlement
transaction which settles in more than 120 days.
REPURCHASE AGREEMENTS. Repurchase agreements are transactions by which
the Fund purchases a security and simultaneously commits to resell that security
to the seller at an agreed upon time and price, thereby determining the yield
during the term of the agreement. In the event of a bankruptcy or other default
of the seller of a repurchase agreement, the Fund could experience both delays
in liquidating the underlying security and losses. To minimize these
possibilities, the Fund intends to enter into repurchase agreements only with
its Custodian, banks having assets in excess of $10 billion and the largest and,
in the Board of Trustees' judgment, most creditworthy primary U.S. Government
securities dealers. The Fund will enter into repurchase agreements which are
collateralized by U.S. Government obligations. Collateral for repurchase
agreements is held in safekeeping in the customer-only account of the Fund's
Custodian at the Federal Reserve Bank. At the time the Fund enters into a
repurchase agreement, the value of the collateral, including accrued interest,
will equal or exceed the value of the repurchase agreement and, in the case of a
repurchase agreement exceeding one day, the seller agrees to maintain sufficient
collateral so that the value of the underlying collateral, including accrued
interest, will at all times equal or exceed the value of the repurchase
agreement. The Fund will not enter into a repurchase agreement not terminable
within seven days if, as a result thereof, more than 10% of the value of the net
assets of the Fund would be invested in such securities and other illiquid
securities.
BORROWING AND PLEDGING. The Fund may borrow money from banks (provided
there is 300% asset coverage) or from banks or other persons for temporary
purposes (in an amount not exceeding 5% of its total assets). The Fund will not
make any borrowing which would cause its outstanding borrowings to exceed
one-third of the value of its total assets. The Fund may pledge assets in
connection with borrowings but will not pledge more than one-third of its total
assets. The Fund will not make any additional purchases of portfolio securities
if outstanding borrowings exceed 5% of the value of its total assets. Borrowing
magnifies the potential for gain or loss on the Fund's portfolio securities and,
therefore, if employed, increases the possibility of fluctuation in its net
asset value. This is the speculative factor known as leverage. The Fund's
policies on borrowing and
- 6 -
<PAGE>
pledging are fundamental policies which may not be changed without the
affirmative vote of a majority of its outstanding shares.
LENDING PORTFOLIO SECURITIES. The Fund may make short-term loans of its
portfolio securities to banks, brokers and dealers. Lending portfolio securities
exposes the Fund to the risk that the borrower may fail to return the loaned
securities or may not be able to provide additional collateral or that the Fund
may experience delays in recovery of the loaned securities or loss of rights in
the collateral if the borrower fails financially. To minimize these risks, the
borrower must agree to maintain collateral marked to market daily, in the form
of cash and/or liquid high-grade debt obligations, with the Fund's Custodian in
an amount at least equal to the market value of the loaned securities. The Fund
will limit the amount of its loans of portfolio securities to no more than 25%
of its net assets. This lending policy may not be changed by the Fund without
the affirmative vote of a majority of its outstanding shares.
HOW TO PURCHASE SHARES
- ----------------------
Your initial investment in the Fund ordinarily must be at least
$100,000. Shares of the Fund are sold on a continuous basis at the net asset
value next determined after receipt of a purchase order by the Trust.
INITIAL INVESTMENTS BY MAIL. You may open an account and make an
initial investment in the Fund by sending a check and a completed account
application form to Countrywide Fund Services, Inc. (the "Transfer Agent"), P.O.
Box 5354, Cincinnati, Ohio 45201-5354. Checks should be made payable to the
"Institutional Government Income Fund." An account application is included in
this Prospectus.
You will be sent within five business days after the end of each month
a written statement disclosing each purchase or redemption effected and each
dividend or distribution credited to your account during the month. Certificates
representing shares are not issued. The Trust and the Adviser reserve the rights
to limit the amount of investments and to refuse to sell to any person.
Investors should be aware that the Fund's account application contains
provisions in favor of the Trust, the Transfer Agent and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating to
the various services (for example, telephone redemptions and exchanges) made
available to investors.
- 7 -
<PAGE>
Should an order to purchase shares be canceled because your check does
not clear, you will be responsible for any resulting losses or fees incurred by
the Trust or the Transfer Agent in the transaction.
INITIAL INVESTMENTS BY WIRE. You may also purchase shares of the Fund
by wire. Please telephone the Transfer Agent (Nationwide call toll-free
800-543-0407; in Cincinnati call 629- 2050) for instructions. You should be
prepared to give the name in which the account is to be established, the
address, telephone number and taxpayer identification number for the account,
and the name of the bank which will wire the money.
You may receive a dividend on the day of your wire investment provided
you have given notice of your intention to make such investment to the Transfer
Agent by 12:30 p.m., Eastern time, on that day. Your investment will be made at
the net asset value next determined after your wire is received together with
the account information indicated above. If the Trust does not receive timely
and complete account information, there may be a delay in the investment of your
money and any accrual of dividends. To make your initial wire purchase, you are
required to mail a completed account application to the Transfer Agent. Your
bank may impose a charge for sending your wire. There is presently no fee for
receipt of wired funds, but the Transfer Agent reserves the right to charge
shareholders for this service upon thirty days' prior notice to shareholders.
ADDITIONAL INVESTMENTS. You may purchase and add shares to your account
by mail or by bank wire. Checks should be sent to Countrywide Fund Services,
Inc., P.O. Box 5354, Cincinnati, Ohio 45201-5354. Checks should be made
payable to the Fund. Bank wires should be sent as outlined above. You may
also make additional investments at the Trust's offices at 312 Walnut Street,
21st Floor, Cincinnati, Ohio 45202. Each additional purchase request must
contain the name of your account and your account number to permit proper
crediting to your account. While there is no minimum amount required for
subsequent investments, the Trust reserves the right to impose such
requirement.
CASH SWEEP PROGRAM. Cash accumulations in accounts with financial
institutions may be automatically invested in shares of the Fund at the next
determined net asset value on a day selected by the institution or its customer,
or when the account balance reaches a predetermined dollar amount (e.g.,
$5,000).
Participating institutions are responsible for prompt transmission of
orders relating to the program. Institutions participating in this program may
charge their customers fees for services relating to the program which would
reduce the
- 8 -
<PAGE>
customers' yield from an investment in the Fund. This Prospectus should,
therefore, be read together with any agreement between the customer and the
participating institution with regard to the services provided, the fees charged
for these services and any restrictions and limitations imposed.
HOW TO REDEEM SHARES
- --------------------
You may redeem shares of the Fund on each day that the Trust is open
for business. You will receive the net asset value per share next determined
after receipt by the Transfer Agent of a proper redemption request in the form
described below. Payment is normally made within three business days after
tender in such form, provided that payment in redemption of shares purchased by
check will be effected only after the check has been collected, which may take
up to fifteen days from the purchase date. To eliminate this delay, you may
purchase shares of the Fund by certified check or wire.
A contingent deferred sales load may be imposed on a redemption of
shares of the Fund if such shares had previously been acquired in connection
with an exchange from another fund of Countrywide Investments which imposes a
contingent deferred sales load, as described in the Prospectus of such other
fund.
BY TELEPHONE. You may redeem shares by telephone. The proceeds will be
sent by mail to the address designated on your account or wired directly to your
existing account in any commercial bank or brokerage firm in the United States
as designated on your application. To redeem by telephone, call the Transfer
Agent (Nationwide call toll-free 800-543-0407; in Cincinnati call 629-2050). The
redemption proceeds will normally be sent by mail or by wire within one business
day (but not later than three business days) after receipt of your telephone
instructions. Any redemption requests by telephone must be received in proper
form prior to 12:30 p.m., Eastern time, on any business day in order for payment
by wire to be made that day.
The telephone redemption privilege is automatically available to all
shareholders. You may change the bank or brokerage account which you have
designated under this procedure at any time by writing to the Transfer Agent
with your signature guaranteed by any eligible guarantor institution (including
banks, brokers and dealers, municipal securities brokers and dealers, government
securities brokers and dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations)
or by completing a supplemental telephone redemption authorization form. Contact
the Transfer Agent to obtain this form. Further documentation will be required
to change the designated account if shares are held by a corporation, fiduciary
or other organization.
- 9 -
<PAGE>
Neither the Trust, the Transfer Agent, nor their respective affiliates
will be liable for complying with telephone instructions they reasonably believe
to be genuine or for any loss, damage, cost or expense in acting on such
telephone instructions. The affected shareholders will bear the risk of any such
loss. The Trust or the Transfer Agent, or both, will employ reasonable
procedures to determine that telephone instructions are genuine. If the Trust
and/or the Transfer Agent do not employ such procedures, they may be liable for
losses due to unauthorized or fraudulent instructions. These procedures may
include, among others, requiring forms of personal identification prior to
acting upon telephone instructions, providing written confirmation of the
transactions and/or tape recording telephone instructions.
BY MAIL. You may redeem any number of shares from your account by
sending a written request to the Transfer Agent. The request must state the
number of shares to be redeemed and your account number. The request must be
signed exactly as your name appears on the Trust's account records. If the
shares to be redeemed have a value of $25,000 or more, your signature must be
guaranteed by any of the eligible guarantor institutions outlined above.
Written redemption requests may also direct that the proceeds be
deposited directly in the bank account or brokerage account designated on your
account application for telephone redemptions. Proceeds of redemptions requested
by mail are mailed within three business days following receipt of instructions
in proper form.
ADDITIONAL REDEMPTION INFORMATION. There is currently no charge for
processing wire redemptions. However, the Trust reserves the right, upon thirty
days' written notice, to make reasonable charges for wire redemptions. All
charges will be deducted from your account by redemption of shares in your
account. Your bank or brokerage firm may also impose a charge for processing the
wire. In the event that wire transfer of funds is impossible or impractical, the
redemption proceeds will be sent by mail to the designated account.
Redemption requests may direct that the proceeds be deposited directly
in your account with a commercial bank or other depository institution via an
Automated Clearing House (ACH) transaction. There is currently no charge for ACH
transactions. Contact the Transfer Agent for more information about ACH
transactions.
At the discretion of the Trust or the Transfer Agent, corporate
investors and other associations may be required to
- 10 -
<PAGE>
furnish an appropriate certification authorizing redemptions to ensure proper
authorization. The Trust reserves the right to require you to close your account
if at any time the value of your shares is less than $100,000 (based on actual
amounts invested, unaffected by market fluctuations) or such other minimum
amount as the Trust may determine from time to time. After notification to you
of the Trust's intention to close your account, you will be given thirty days to
increase the value of your account to the minimum amount.
The Trust reserves the right to suspend the right of redemption or to
postpone the date of payment for more than three business days under unusual
circumstances as determined by the Securities and Exchange Commission.
EXCHANGE PRIVILEGE
- ------------------
Shares of the Fund and of any other fund of Countrywide Investments may
be exchanged for each other. A sales load will be imposed equal to the excess,
if any, of the sales load rate applicable to the shares being acquired over the
sales load rate, if any, previously paid on the shares being exchanged.
The following are the funds of Countrywide Investments currently
offered to the public. Funds which may be subject to a front-end or contingent
deferred sales load are indicated by an asterisk.
Countrywide Tax-Free Trust Countrywide Strategic Trust
Tax-Free Money Fund *Government Mortgage Fund
Ohio Tax-Free Money Fund *Equity Fund
California Tax-Free Money Fund *Utility Fund
Florida Tax-Free Money Fund *Growth/Value Fund
*Tax-Free Intermediate Term Fund *Aggressive Growth Fund
*Ohio Insured Tax-Free Fund *International Equity Fund
*Kentucky Tax-Free Fund
Countrywide Investment Trust
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
You may request an exchange by sending a written request to the
Transfer Agent. The request must be signed exactly as your name appears on the
Trust's account records. Exchanges may also
- 11 -
<PAGE>
be requested by telephone. If you are unable to execute your transaction by
telephone (for example during times of unusual market activity) consider
requesting your exchange by mail or by visiting the Trust's offices at 312
Walnut Street, 21st Floor, Cincinnati, Ohio 45202. An exchange will be effected
at the next determined net asset value (or offering price, if sales load is
applicable) after receipt of a request by the Transfer Agent.
Exchanges may only be made for shares of funds then offered for sale in
your state of residence and are subject to the applicable minimum initial
investment requirements. The exchange privilege may be modified or terminated by
the Board of Trustees upon 60 days' prior notice to shareholders. An exchange
results in a sale of fund shares, which may cause you to recognize a capital
gain or loss. Before making an exchange, contact the Transfer Agent to obtain a
current prospectus for any of the other funds of Countrywide Investments and
more information about exchanges among Countrywide Investments.
SUBACCOUNTING SERVICES
- -----------------------
Institutions are encouraged to open single master accounts. However,
certain institutions may wish to use the transfer agent's subaccounting system
to minimize their internal recordkeeping requirements. The Transfer Agent may
charge a subaccounting fee based on the level of services rendered. Institutions
holding Fund shares in a fiduciary, agency, custodial or similar capacity may
charge or pass through subaccounting fees as part of or in addition to normal
trust or agency account fees. This Prospectus should, therefore, be read
together with any agreement between the customer and the institution with regard
to the services provided, the fee charged for those services and any
restrictions and limitations imposed.
DIVIDENDS AND DISTRIBUTIONS
- ---------------------------
All of the net investment income of the Fund is declared as a dividend
to shareholders of record on each business day of the Trust and paid monthly.
Management will determine the timing and frequency of the distributions of any
net realized short-term capital gains. Although the Fund does not expect to
realize any long-term capital gains, if the Fund does realize such gains it will
distribute them at least once each year.
Dividends are automatically reinvested in additional shares of the Fund
(the Share Option) unless cash payments are specified on your application or are
otherwise requested by contacting the Transfer Agent. If you elect to receive
dividends in cash and the U.S. Postal Service cannot deliver your checks or if
your checks remain uncashed for six months, your dividends may be
- 12 -
<PAGE>
reinvested in your account at the then-current net asset value and your account
will be converted to the Share Option. No interest will accrue on amounts
represented by uncashed distribution checks.
TAXES
- -----
The Fund has qualified in all prior years and intends to continue to
qualify for the special tax treatment afforded a "regulated investment company"
under Subchapter M of the Internal Revenue Code so that it does not pay federal
taxes on income and capital gains distributed to shareholders. The Fund intends
to distribute substantially all of its net investment income and any net
realized capital gains to its shareholders. Distributions of net investment
income as well as from net realized short-term capital gains, if any, are
taxable as ordinary income. Since the Fund's investment income is derived from
interest rather than dividends, no portion of such distributions is eligible for
the dividends received deduction available to corporations.
The Fund will mail to each of its shareholders a statement indicating
the amount and federal income tax status of all distributions made during the
year. In addition to federal taxes, shareholders of the Fund may be subject to
state and local taxes on distributions. The tax consequences described in this
section apply whether distributions are taken in cash or reinvested in
additional shares.
OPERATION OF THE FUND
- ----------------------
The Fund is a diversified series of Countrywide Investment Trust, an
open-end management investment company organized as a Massachusetts business
trust on December 7, 1980. The Board of Trustees supervises the business
activities of the Trust. Like other mutual funds, the Trust retains various
organizations to perform specialized services for the Fund.
The Trust retains Countrywide Investments, Inc., 312 Walnut Street,
Cincinnati, Ohio 45202 (the "Adviser"), to manage the Fund's investments and its
business affairs. The Adviser was organized in 1974 and is also the investment
adviser to six other series of the Trust, seven series of Countrywide Tax-Free
Trust and six series of Countrywide Strategic Trust. The Adviser is an indirect
wholly-owned subsidiary of Countrywide Credit Industries, Inc., a New York Stock
Exchange listed company principally engaged in the business of residential
mortgage lending. The Fund pays the Adviser a fee equal to the annual rate of
.2% of the average value of its daily net assets.
- 13 -
<PAGE>
The Adviser serves as principal underwriter for the Fund and, as such,
is the exclusive agent for the distribution of shares of the Fund. Angelo R.
Mozilo, Robert H. Leshner, Robert G. Dorsey and John F. Splain are officers of
both the Trust and the Adviser.
The Fund is responsible for the payment of all operating expenses,
including fees and expenses in connection with membership in investment company
organizations, brokerage fees and commissions, legal, auditing and accounting
expenses, expenses of registering shares under federal and state securities
laws, expenses related to the distribution of the Fund's shares (see
"Distribution Plan"), insurance expenses, taxes or governmental fees, fees and
expenses of the custodian, transfer agent and accounting and pricing agent of
the Fund, fees and expenses of members of the Board of Trustees who are not
interested persons of the Trust, the cost of preparing and distributing
prospectuses, statements, reports and other documents to shareholders, expenses
of shareholders' meetings and proxy solicitations, and such extraordinary or
non-recurring expenses as may arise, including litigation to which the Fund may
be a party and indemnification of the Trust's officers and Trustees with respect
thereto.
The Trust has retained Countrywide Fund Services, Inc., P.O. Box 5354,
Cincinnati, Ohio (the "Transfer Agent"), an indirect wholly-owned subsidiary of
Countrywide Credit Industries, Inc., to serve as the Fund's transfer agent,
dividend paying agent and shareholder service agent.
The Transfer Agent also provides accounting and pricing services to the
Fund. The Transfer Agent receives a monthly fee from the Fund for calculating
daily net asset value per share and maintaining such books and records as are
necessary to enable it to perform its duties.
In addition, the Transfer Agent has been retained by the Adviser to
assist the Adviser in providing administrative services to the Fund. In this
capacity, the Transfer Agent supplies executive, administrative and regulatory
services, supervises the preparation of tax returns, and coordinates the
preparation of reports to shareholders and reports to and filings with the
Securities and Exchange Commission and state securities authorities. The Adviser
(not the Fund) pays the Transfer Agent a fee for these administrative services.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its objective of seeking best
execution of portfolio transactions, the Adviser may give consideration to sales
of shares of the Fund as a factor in the selection of brokers and dealers to
execute
- 14 -
<PAGE>
portfolio transactions of the Fund. Subject to the requirements of the
Investment Company Act of 1940 and procedures adopted by the Board of Trustees,
the Fund may execute portfolio transactions through any broker or dealer and pay
brokerage commissions to a broker (i) which is an affiliated person of the
Trust, or (ii) which is an affiliated person of such person, or (iii) an
affiliated person of which is an affiliated person of the Trust or the Adviser.
Shares of the Fund have equal voting rights and liquidation rights. The
Fund shall vote separately on matters submitted to a vote of the shareholders
except in matters where a vote of all series of the Trust in the aggregate is
required by the Investment Company Act of 1940 or otherwise. When matters are
submitted to shareholders for a vote, each shareholder is entitled to one vote
for each full share owned and fractional votes for fractional shares owned. The
Trust does not normally hold annual meetings of shareholders. The Trustees shall
promptly call and give notice of a meeting of shareholders for the purpose of
voting upon the removal of any Trustee when requested to do so in writing by
shareholders holding 10% or more of the Trust's outstanding shares. The Trust
will comply with the provisions of Section 16(c) of the Investment Company Act
of 1940 in order to facilitate communications among shareholders.
DISTRIBUTION PLAN
- ------------------
Pursuant to Rule 12b-1 under the Investment Company Act of 1940, the
Fund has adopted a plan of distribution (the "Plan") under which the Fund may
directly incur or reimburse the Adviser for certain distribution-related
expenses, including payments to securities dealers and others who are engaged in
the sale of shares of the Fund and who may be advising investors regarding the
purchase, sale or retention of Fund shares; expenses of maintaining personnel
who engage in or support distribution of shares or who render shareholder
support services not otherwise provided by the Transfer Agent; expenses of
formulating and implementing marketing and promotional activities, including
direct mail promotions and mass media advertising; expenses of preparing,
printing and distributing sales literature and prospectuses and statements of
additional information and reports for recipients other than existing
shareholders of the Fund; expenses of obtaining such information, analyses and
reports with respect to marketing and promotional activities as the Trust may,
from time to time, deem advisable; and any other expenses related to the
distribution of the Fund's shares.
The annual limitation for payment of expenses pursuant to the Plan is
.1% of the Fund's average daily net assets. Unreimbursed expenditures will not
be carried over from year to year. In the event the Plan is terminated by the
Fund in
- 15 -
<PAGE>
accordance with its terms, the Fund will not be required to make any payments
for expenses incurred by the Adviser after the date the Plan terminates.
Pursuant to the Plan, the Fund may also make payments to banks or other
financial institutions that provide shareholder services and administer
shareholder accounts. The Glass-Steagall Act prohibits banks from engaging in
the business of underwriting, selling or distributing securities. Although the
scope of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, management of the
Trust believes that the Glass- Steagall Act should not preclude a bank from
providing such services. However, state securities laws on this issue may differ
from the interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law. If a
bank were prohibited from continuing to perform all or a part of such services,
management of the Trust believes that there would be no material impact on the
Fund or its shareholders. Banks may charge their customers fees for offering
these services to the extent permitted by applicable regulatory authorities, and
the overall return to those shareholders availing themselves of the bank
services will be lower than to those shareholders who do not. The Fund may from
time to time purchase securities issued by banks which provide such services;
however, in selecting investments for the Fund, no preference will be shown for
such securities.
CALCULATION OF SHARE PRICE
- --------------------------
On each day that the Trust is open for business, the share price (net
asset value) of the Fund's shares is determined as of 12:30 p.m. and 4:00 p.m.,
Eastern time. The Trust is open for business on each day the New York Stock
Exchange is open for business and on any other day when there is sufficient
trading in the Fund's investments that its net asset value might be materially
affected. The net asset value per share of the Fund is calculated by dividing
the sum of the value of the securities held by the Fund plus cash or other
assets minus all liabilities (including estimated accrued expenses) by the total
number of shares outstanding of the Fund, rounded to the nearest cent.
The Fund's portfolio securities are valued on an amortized cost basis.
In connection with the use of the amortized cost method of valuation, the Fund
maintains a dollar-weighted average portfolio maturity of 90 days or less,
purchases only United States dollar-denominated securities having remaining
maturities of thirteen months or less and invests only in securities determined
by the Board of Trustees to meet the Fund's quality standards and to present
minimal credit risks. Other assets of the Fund are valued at their fair value as
determined in good
- 16 -
<PAGE>
faith in accordance with consistently applied procedures established by and
under the general supervision of the Board of Trustees. It is anticipated, but
there is no assurance, that the use of the amortized cost method of valuation
will enable the Fund to maintain a stable net asset value per share of $1.
PERFORMANCE INFORMATION
- ------------------------
From time to time, the Fund may advertise its "current yield" and
"effective yield." Both yield figures are based on historical earnings and are
not intended to indicate future performance. The "current yield" of the Fund
refers to the income generated by an investment in the Fund over a seven-day
period (which period will be stated in the advertisement). This income is then
"annualized." That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in the Fund
is assumed to be reinvested. The "effective yield" will be slightly higher than
the "current yield" because of the compounding effect of this assumed
reinvestment.
- 17 -
<PAGE>
ACCOUNT APPLICATION
Please mail account application to:
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
INSTITUTIONAL GOVERNMENT
INCOME FUND
ACCOUNT NO. 23-______________________
(For Fund Use Only)
FOR BROKER/DEALER USE ONLY
Firm Name:________________________
Home Office Address:______________
Branch Address:___________________
Rep Name & No.:___________________
Initial Investment of $___________ ($100,000 Minimum)
o Check or draft enclosed payable to the Fund.
o Bank Wire From:_______________________________________________________
o Exchange From:________________________________________________________
(Fund Name) (Fund Account Number)
ACCOUNT NAME S.S. #/TAX I.D.#
Name of Individual, Corporation, (In case of custodial account
Organization, or Minor, etc. please list minor's S.S.#)
________________________________________ Citizenship: o U.S.
Name of Joint Tenant, Partner, Custodian o Other
ADDRESS PHONE
________________________________________ ( )_____________
Street or P.O. Box Business Phone
________________________________________ ( )_____________
City State Zip Home Phone
Check Appropriate Box: o Individual o Joint Tenant (Right of survivorship
presumed) o Partnership o Corporation o Trust o Custodial o Non-Profit o Other
- ------------------------------------------------------------------------------
TAXPAYER IDENTIFICATION NUMBER -- Under penalties of perjury I certify that
the Taxpayer Identification Number listed above is my correct number. The
Internal Revenue Service does not require my consent to any provision of this
document other than the certifications required to avoid backup withholding.
Check box if appropriate:
o I am exempt from backup withholding under the provisions of section
3406(a)(1)(c) of the Internal Revenue Code; or I am not subject to backup
withholding because I have not been notified that I am subject to backup
withholding as a result of a failure to report all interest or dividends; or
the Internal Revenue Service has notified me that I am no longer subject to
backup withholding.
o I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me and I have mailed or delivered an application to
receive a Taxpayer Identification Number to the Internal Revenue Service
Center or Social Security Administration Office. I understand that if I do not
provide a Taxpayer Identification Number within 60 days that 31% of all
reportable payments will be withheld until I provide a number.
<PAGE>
- ------------------------------------------------------------------------------
DISTRIBUTIONS (If no election is checked the SHARE OPTION will be assigned.)
o Share Option -- Income distributions and capital gains distributions
automatically reinvested in additional shares.
o Cash Option -- Income distributions and capital gains distributions paid in
cash.
- ------------------------------------------------------------------------------
REDEMPTION OPTIONS
I (we) authorize the Trust or Countrywide Fund Services, Inc. to act upon
instructions received by telephone, to have amounts withdrawn from my (our)
account in any fund in Countrywide Investments (see prospectus for limitations
on this option) and:
WIRED ($1,000 minimum OR MAILED to my (our) bank account designated below. I
(we) further authorize the used of automated cash transfers to and from the
account designated below.
NOTE: For wire redemptions, the indicated bank should be a commercial bank.
PLEASE ATTACH A VOIDED CHECK FOR THE ACCOUNT.
Bank Account Number______________Bank Routing Transit Number_______________
Name of Account Holder_____________________________________________________
Bank Name________________Bank Address______________________________________
City State
- ------------------------------------------------------------------------------
SIGNATURES
By signature below each investor certifies that he has received a copy of the
Fund's current Prospectus, that he is of legal age, and that he has full
authority and legal capacity for himself or the organization named below, to
make this investment and to use the options selected above. The investor
appoints Countrywide Fund Services, Inc. as his agent to enter orders for
shares whether by direct purchase or exchange, to receive dividends and
distributions for automatic reinvestment in additional shares of the Fund
for credit to the investor's account and to surrender for redemption shares
held in the investor's account in accordance with any of the procedures
elected above or for payment of service charges incurred by the investor.
The investor further agrees that Countrywide Fund Services, Inc. can cease to
act as such agent upon ten days' notice in writing to the investor at the
address contained in this Application. The investor hereby ratifies any
instructions given pursuant to this Application and for himself and his
successors and assigns does hereby release Countrywide Fund Services, Inc.,
Countrywide Investment Trust, Countrywide Investments, Inc.,
and their respective officers, employees, agents and affiliates from any
and all liability in the performance of the acts instructed herein. Neither
the Trust, Countrywide Fund Services, Inc., nor their respective affiliates
will be liable for complying with telephone instructions they reasonably
believe to be genuine or for any loss, damage, cost or expense in acting on
such telephone instructions. The investor(s) will bear the risk of any such
loss. The Trust or Countrywide Fund Services, Inc., or both, will employ
reasonable procedures to determine that telephone instructions are genuine.
If the Trust and/or Countrywide Fund Services, Inc. do not employ such
procedures, they may be liable for losses due to unauthorized or fraudulent
instructions. These procedures may include, among others, requiring forms
of personal identification prior to acting upon telephone instructions,
providing written confirmation of the transactions and/or tape recording
telephone instructions.
_____________________________________ _____________________________________
Signature of Individual Owner, Signature of Joint Owner, if Any
Corporate Officer, Trustee, etc.
_____________________________________ _____________________________________
Title of Corporate Officer, Date
Trustee, etc.
NOTE: CORPORATIONS, TRUSTS AND OTHER ORGANIZATIONS MUST COMPLETE THE
RESOLUTION FORM ON THE REVERSE SIDE. UNLESS OTHERWISE SPECIFIED, EACH JOINT
OWNER SHALL HAVE FULL AUTHORITY TO ACT ON BEHALF OF THE ACCOUNT.
<PAGE>
RESOLUTIONS
(This Section to be completed by Corporations, Trusts, and Other
Organizations)
RESOLVED: That this corporation or organization become a shareholder of
Countrywide Investment Trust (the Trust) and that ________________________ is
(are) hereby authorized to complete and execute the Application on behalf of the
corporation or organization and to take any action for it as may be necessary
or appropriate with respect to its shareholder account with the Trust, and it
is
FURTHER RESOLVED: That any one of the above noted officers is authorized to
sign any documents necessary or appropriate to appoint Countrywide Fund
Services, Inc. as redemption agent of the corporation or organization for
shares of the applicable series of the Trust, to establish or acknowledge terms
and conditions governing the redemption of said shares and to otherwise
implement the privileges elected on the Application.
CERTIFICATE
I hereby certify that the foregoing resolutions are in conformity with the
Charter and By-Laws or other empowering documents of the
____________________________________________________________________________
(Name of Organization)
incorporated or formed under the laws of ___________________________________
(State)
and were adopted at a meeting of the Board of Directors or Trustees of the
organization or corporation duly called and held on _____________ at which a
quorum was present and acting throughout, and that the same are now in full
force and effect.
I further certify that the following is (are) duly elected officer(s) of the
corporation or organization, authorized to act in accordance with the
foregoing resolutions.
NAME TITLE
_____________________________________ _____________________________________
_____________________________________ _____________________________________
_____________________________________ _____________________________________
Witness my hand and seal of the corporation or organization this_______________
day of________, 19_______
_____________________________________ _____________________________________
*Secretary-Clerk Other Authorized Officer (if required)
*If the Secretary or other recording officer is authorized to act by the above
resolutions, this certificate must also be signed by another officer.
<PAGE>
COUNTRYWIDE INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
Nationwide: (Toll-Free) 800-543-8721
Cincinnati: 513-629-2000
BOARD OF TRUSTEES
Donald L. Bogdon, M.D.
John R. Delfino
H. Jerome Lerner
Robert H. Leshner
Angelo R. Mozilo
Oscar P. Robertson
John F. Seymour, Jr.
Sebastiano Sterpa
INVESTMENT ADVISER
COUNTRYWIDE INVESTMENTS, INC.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
TRANSFER AGENT
COUNTRYWIDE FUND SERVICES, INC.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
Shareholder Service
Nationwide: (Toll-Free) 800-543-0407
Cincinnati: 513-629-2050
Countrywide Always Line
Nationwide: (Toll-Free) 800-852-3809
Cincinnati: 513-579-0999
- 18 -
<PAGE>
TABLE OF CONTENTS
Expense Information. . . . . . . . . . . . . . . . . . . . .
Financial Highlights . . . . . . . . . . . . . . . . . . . .
Investment Objective and Policies. . . . . . . . . . . . . .
How to Purchase Shares . . . . . . . . . . . . . . . . . . .
How to Redeem Shares . . . . . . . . . . . . . . . . . . . .
Exchange Privilege . . . . . . . . . . . . . . . . . . . . .
Subaccounting Services . . . . . . . . . . . . . . . . . . .
Dividends and Distributions. . . . . . . . . . . . . . . . .
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operation of the Fund. . . . . . . . . . . . . . . . . . . .
Distribution Plan. . . . . . . . . . . . . . . . . . . . . .
Calculation of Share Price . . . . . . . . . . . . . . . . .
Performance Information. . . . . . . . . . . . . . . . . . .
- -----------------------------------------------------------------
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Trust. This Prospectus does not constitute an offer by the Trust to sell
shares in any State to any person to whom it is unlawful for the Trust to make
such offer in such State.
- 19 -
<PAGE>
PROSPECTUS
January 1, 1998
Countrywide Investment Trust
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
ADJUSTABLE RATE U.S. GOVERNMENT SECURITIES FUND
The Adjustable Rate U.S. Government Securities Fund (the "Fund"), a
separate series of Countrywide Investment Trust, seeks high current income,
consistent with lower volatility of principal, by investing primarily in
mortgage-related securities created from pools of adjustable rate mortgages
which are issued or guaranteed by the United States Government, its agencies or
instrumentalities.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANKING OR DEPOSITORY INSTITUTION. SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER AGENCY AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
Countrywide Investments, Inc. (the "Adviser") manages the Fund's
investments and its business affairs.
This Prospectus sets forth concisely the information about the Fund
that you should know before investing. Please retain this Prospectus for future
reference. A Statement of Additional Information dated January 1, 1998 has been
filed with the Securities and Exchange Commission and is hereby incorporated by
reference in its entirety. A copy of the Statement of Additional Information can
be obtained at no charge by calling one of the numbers listed below.
- -------------------------------------------------------------------------------
For Information or Assistance in Opening an Account, Please Call:
Nationwide (Toll-Free) . . . . . . . . . . . . . . 800-543-0407
Cincinnati . . . . . . . . . . . . . . . . . . . 513-629-2050
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- 1 -
<PAGE>
EXPENSE INFORMATION
- --------------------
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price). . . . . . . . 2%
Maximum Contingent Deferred Sales Load
(as a percentage of original purchase price). . . . None*
Sales Load Imposed on Reinvested Dividends. . . . . None
Exchange Fee. . . . . . . . . . . . . . . . . . . . None
Redemption Fee. . . . . . . . . . . . . . . . . . . None**
Check Redemption Processing Fee (per check):
First Six Checks per Month . . . . . . . . . . . None
Additional Checks per Month. . . . . . . . . . . $0.25
* Purchases at net asset value of amounts totaling $1 million or more may
be subject to a contingent deferred sales load of .75% if a redemption
occurred within 12 months of purchase and a commission was paid by the
Adviser to a participating unaffiliated dealer.
** A wire transfer fee is charged by the Fund's Custodian in the case of
redemptions made by wire. Such fee is subject to change and is
currently $8. See "How to Redeem Shares."
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees After Waivers(A) .00%
12b-1 Fees(B) .08%
Other Expenses After Reimbursements(C) .67%
----
Total Fund Operating Expenses After Waivers .75%
and Expense Reimbursements(D) ====
(A) Absent waivers of management fees, such fees would have been .50% for
the fiscal year ended September 30, 1997.
(B) The Fund may incur 12b-1 fees in an amount up to .35% of average net
assets. Long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales loads permitted by the
National Association of Securities Dealers.
(C) Absent expense reimbursements by the Adviser, other expenses would have
been .89% for the fiscal year ended September 30, 1997.
(D) Absent waivers of management fees and expense reimbursements by the
Adviser, total Fund operating expenses would have been 1.47% for the
fiscal year ended September 30, 1997.
- 2 -
<PAGE>
The purpose of this table is to assist the investor in understanding
the various costs and expenses that an investor in the Fund will bear directly
or indirectly. The percentages expressing annual fund operating expenses are
based on amounts incurred during the most recent fiscal year. THE EXAMPLE BELOW
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
Example
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
1 Year $ 28
3 Years 43
5 Years 61
10 Years 111
- 3 -
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------
The following information, which has been audited by Arthur Andersen
LLP, is an integral part of the audited financial statements and should be read
in conjunction with the financial statements. The financial statements as of
September 30, 1997 and related auditors' report appear in the Statement of
Additional Information of the Fund, which can be obtained by shareholders at no
charge by calling Countrywide Fund Services, Inc. (Nationwide call toll-free
800-543-0407, in Cincinnati call 629-2050) or by writing to the Trust at the
address on the front of this Prospectus.
<TABLE>
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.
(D) Annualized.
</FN>
</TABLE>
- 4 -
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
- ---------------------------------
The Fund is a series of Countrywide Investment Trust (the "Trust"). The
Fund seeks high current income, consistent with lower volatility of principal.
The Fund seeks to achieve its investment objective by investing primarily in
mortgage-related securities created from pools of adjustable rate mortgages
which are guaranteed as to principal and interest by the United States
Government, its agencies or instrumentalities.
The Fund is not intended to be a complete investment program, and there
is no assurance that its investment objective can be achieved. The Fund's
investment objective is fundamental and as such may not be changed without the
affirmative vote of a majority of the outstanding shares of the Fund. The term
"majority" of the outstanding shares means the lesser of (1) 67% or more of the
outstanding shares of the Fund present at a meeting, if the holders of more than
50% of the outstanding shares of the Fund are present or represented at such
meeting or (2) more than 50% of the outstanding shares of the Fund. Unless
otherwise indicated, all investment practices and limitations of the Fund are
nonfundamental policies which may be changed by the Board of Trustees without
shareholder approval.
Under normal circumstances, at least 65% of the Fund's total assets
will be invested in adjustable rate mortgage securities which have interest
rates that are reset at periodic intervals and which are issued or guaranteed by
the U.S. Government or its agencies or instrumentalities. It is anticipated that
by investing primarily in mortgage-related securities which have variable rates
of interest, the Fund will achieve a less volatile net asset value than is
characteristic of mutual funds that invest primarily in mortgage-related
securities paying a fixed rate of interest. Mortgage-related securities eligible
for purchase by the Fund are described below.
The market value of investments available to the Fund, and therefore
the Fund's yield and net asset value, will fluctuate due to changes in interest
rates, economic conditions, quality ratings and other factors beyond the control
of the Adviser. Mortgage-related securities and other debt securities are
subject to price fluctuations based upon changes in the level of interest rates,
which will generally result in all those securities changing in price in the
same way, i.e., all those securities experiencing appreciation when interest
rates decline and depreciation when interest rates rise. In addition, the
prepayment experience of the mortgages underlying mortgage-related U.S.
Government obligations may affect the value of, and the return on an investment
in, such securities.
- 5 -
<PAGE>
In addition to mortgage-related securities, the Fund may invest in all
types of U.S. Government obligations (described below). For defensive or
liquidity purposes, the Fund may temporarily hold up to 10% of its assets in
short-term obligations such as bank debt instruments (certificates of deposit,
bankers' acceptances and time deposits) or repurchase agreements collateralized
by U.S. Government obligations.
It is the current policy of the Fund to limit its investments and
transactions to those investments and transactions permissible for Federal
credit unions pursuant to 12 U.S.C. Section 1757(7) and (8) and 12 CFR Part 703.
If this policy is changed as to permit the Fund to make portfolio investments
and engage in transactions not permissible for Federal credit unions, the Trust
will so notify all Federal credit union shareholders.
MORTGAGE-RELATED U.S. GOVERNMENT OBLIGATIONS. Mortgage-related U.S.
Government obligations include GNMA Certificates, FHLMC Certificates and FNMA
Certificates.
GNMA Certificates are U.S. Government obligations guaranteed by the
Government National Mortgage Association (the GNMA) and are mortgage-backed
securities representing part ownership of a pool of mortgage loans. The pool of
mortgage loans underlying the GNMA Certificates is assembled by the issuer,
usually a private mortgage lender. The loans in the pool, issued by lenders such
as mortgage bankers, commercial banks and savings and loan associations, are
either insured by the Federal Housing Administration or the Farmers' Home
Administration or guaranteed by the Veterans Administration. If the pool is
approved by the GNMA, GNMA Certificates are issued and sold to investors such as
the Fund. The Fund will invest only in GNMA Certificates of the pass-through
type. This type of GNMA Certificate entitles the holder to receive all interest
and principal payments owed on the pool of mortgage loans, net of fees paid to
the issuer and the GNMA. In addition, the timely payment of interest and
principal on this type of GNMA Certificate is guaranteed by the GNMA, even in
the event of the foreclosure of underlying mortgage loans. The GNMA guarantee is
backed by the full faith and credit of the United States. However, shares of the
Fund are not guaranteed or backed by either the GNMA or the United States
Government.
FHLMC Certificates are U.S. Government obligations guaranteed by the
Federal Home Loan Mortgage Corporation (the FHLMC). As with GNMA Certificates,
FHLMC Certificates are pass-through mortgage-backed securities representing part
ownership of a pool of mortgage loans. The FHLMC generally purchases such
mortgage loans from those lenders insured by the Federal Deposit
- 6 -
<PAGE>
Insurance Corporation, or Federal Housing Administration mortgagees approved by
the Department of Housing and Urban Development. The securities and guarantees
of the FHLMC are not backed, directly or indirectly, by the full faith and
credit of the United States.
FNMA Certificates are U.S. Government obligations guaranteed by the
Federal National Mortgage Association (the FNMA). The FNMA is a U.S. Government
sponsored corporation owned entirely by private stockholders. It is subject to
general regulation by the Secretary of Housing and Urban Development. The FNMA
purchases residential mortgages from a list of approved sellers, which include
state and federally-chartered savings and loan associations, mutual savings
banks, commercial banks, credit unions and mortgage banks. Pass-through
securities issued by the FNMA are not backed by the full faith and credit of the
United States, although the Secretary of the Treasury of the United States has
discretionary authority to lend the FNMA up to $2.25 billion outstanding at any
time.
Prepayments of and payments on foreclosures of mortgage loans
underlying a mortgage-related security are passed through to the registered
holder with the regular monthly payments of principal and interest, and have the
effect of reducing future payments. The mortgage loans underlying a
mortgage-related security may be prepaid at any time without penalty. If a
prepayment of a mortgage loan underlying a particular mortgage-related security
occurs, the return to the Fund may be lower if the Fund acquired the security at
a premium over par or higher if the Fund acquired the security at a discount
from par. In addition, prepayments of mortgage loans underlying a particular
mortgage-related security held by the Fund will reduce the market value of the
security to the extent the market value of the security at the time of
prepayment exceeds its par value. In periods of declining mortgage interest
rates, prepayments may occur with increasing frequency because, among other
reasons, mortgagors may be able to refinance outstanding mortgages at lower
interest rates. In general, a decline in interest rates will cause the net asset
value of the Fund to increase to the extent that prepayments do not occur, while
a rise in interest rates will cause the net asset value of the Fund to decrease.
Most of the pass-through mortgage securities in which the Fund invests
will be adjustable rate mortgage securities ("ARMS"). ARMS are collateralized by
adjustable rather than fixed-rate mortgages. The ARMS in which the Fund invests
are actively traded. Generally, adjustable rate mortgages have a specified
maturity date and amortize principal over their life. In periods of declining
interest rates there is a reasonable likelihood that ARMS will experience
increased rates of prepayment of principal. However, the major difference
between ARMS and fixed-rate mortgage securities is that the interest rate
- 7 -
<PAGE>
can and does change in accordance with movements in a particular, pre-specified,
published interest rate index. There are two main categories of indices: those
based on U.S. Treasury obligations and those derived from a calculated measure,
such as a cost of funds index or a moving average of mortgage rates. The amount
of interest on an adjustable rate mortgage is calculated by adding a specified
amount to the applicable index, subject to limitations on the maximum and
minimum interest that is charged during the life of the mortgage or to maximum
and minimum changes to that interest rate during a given period. Because the
interest rate on ARMS generally moves in the same direction as market interest
rates, the market value of ARMS tends to be more stable than that of fixed-rate
mortgage securities and ARMS tend to experience lower rates of prepayment of
principal than fixed-rate mortgage securities. However, ARMS are also less
likely than fixed-rate mortgage securities of comparable quality and maturity to
increase significantly in value during periods of declining interest rates.
The adjustable interest rate feature of the mortgages underlying ARMS
will generally act as a buffer to reduce sharp changes in the Fund's net asset
value in response to normal interest rate fluctuations. As the interest rates on
the mortgages underling ARMS are reset periodically, yields of portfolio
securities will gradually align themselves to reflect changes in market rates
and should cause the net asset value of the Fund to fluctuate less dramatically
than it would if the Fund invested in more traditional long-term, fixed-rate
debt securities. However, during the periods of rising interest rates, changes
in the coupon rate lag behind changes in the market rate resulting in possibly a
slightly lower net asset value until the coupon resets to market rates. Thus,
investors could suffer some principal loss if they sold their shares of the Fund
before the interest rates on the underlying mortgages are adjusted to reflect
current market rates.
The underlying mortgages which collateralize the ARMS in which the Fund
invests will frequently have caps and floors which limit the maximum amount by
which the loan rate to the residential borrower may change up or down (1) per
reset or adjustment interval and (2) over the life of the loan. Some residential
mortgage loans restrict periodic adjustments by limiting changes in the
borrower's monthly principal and interest payments rather than limiting interest
rate changes. These payment caps may result in negative amortization. The value
of mortgage-related securities in which the Fund invests may be affected if
market interest rates rise or fall faster and farther than the allowable caps or
floors on the underlying residential mortgage loans. Additionally, even though
the interest rates on the underlying residential mortgages are adjustable,
amortization
- 8 -
<PAGE>
and prepayments may occur, thereby causing the effective maturities of the
mortgage-related securities in which the Fund invests to be shorter than the
maturities stated in the underlying mortgages.
U.S. GOVERNMENT OBLIGATIONS. "U.S. Government obligations" include
securities which are issued or guaranteed by the United States Treasury, by
various agencies of the United States Government, and by various
instrumentalities which have been established or sponsored by the United States
Government. U.S. Treasury obligations are backed by the "full faith and credit"
of the United States Government. U.S. Treasury obligations include Treasury
bills, Treasury notes, and Treasury bonds. U.S. Treasury obligations also
include the separate principal and interest components of U.S. Treasury
obligations which are traded under the Separate Trading of Registered Interest
and Principal of Securities ("STRIPS") program. Agencies or instrumentalities
established by the United States Government include the Federal Home Loan Banks,
the Federal Land Bank, the GNMA, the FNMA, the FHLMC, the Student Loan Marketing
Association, the Small Business Administration, the Bank for Cooperatives, the
Federal Intermediate Credit Bank, the Federal Financing Bank, the Federal Farm
Credit Banks, the Federal Agricultural Mortgage Corporation, the Resolution
Funding Corporation, the Financing Corporation of America and the Tennessee
Valley Authority. Some of these securities are supported by the full faith and
credit of the United States Government while others are supported only by the
credit of the agency or instrumentality, which may include the right of the
issuer to borrow from the United States Treasury. In the case of securities not
backed by the full faith and credit of the United States, the investor must look
principally to the agency issuing or guaranteeing the obligation for ultimate
repayment, and may not be able to assert a claim against the United States in
the event the agency or instrumentality does not meet its commitments. Shares of
the Fund are not guaranteed or backed by the United States Government.
The Fund may invest in securities issued or guaranteed by any of the
entities listed above or by any other agency or instrumentality established or
sponsored by the United States Government, provided that the securities are
otherwise permissible investments of the Fund. Certain U.S. Government
obligations which have a variable rate of interest readjusted no less frequently
than annually will be deemed to have a maturity equal to the period remaining
until the next readjustment of the interest rate.
Other Investment Techniques
- ---------------------------
The Fund may also engage in the following investment techniques, each
of which may involve certain risks:
- 9 -
<PAGE>
DELAYED SETTLEMENT TRANSACTIONS. Obligations issued on a when-issued or
to-be-announced basis are settled by delivery and payment after the date of the
transaction, usually within 15 to 45 days. In a to-be-announced transaction, the
Fund has committed to purchasing or selling securities for which all specific
information is not yet known at the time of the trade, particularly the face
amount in transactions involving mortgage-related securities. The Fund will only
make commitments to purchase obligations on a when-issued or to-be-announced
basis with the intention of actually acquiring the obligations, but the Fund may
sell these securities before the settlement date if it is deemed advisable as a
matter of investment strategy or in order to meet its obligations, although it
would not normally expect to do so. The Fund will not enter into a delayed
settlement transaction which settles in more than 120 days.
Purchases of securities on a when-issued or to-be-announced basis are
subject to market fluctuations and their current value is determined in the same
manner as other portfolio securities. When effecting such purchases for the
Fund, a segregated account of cash or U.S. Government obligations of the Fund in
an amount sufficient to make payment for the portfolio securities to be
purchased will be maintained with the Fund's Custodian at the trade date and
valued daily at market for the purpose of determining the adequacy of the
securities in the account. If the market value of segregated securities
declines, additional cash or U.S. Government obligations will be segregated on a
daily basis so that the market value of the Fund's segregated assets will equal
the amount of the Fund's commitments to purchase when- issued obligations and
securities on a to-be-announced basis. The Fund's purchase of securities on a
when-issued or to-be- announced basis may increase its overall investment
exposure and involves a risk of loss if the value of the securities declines
prior to the settlement date or if the broker-dealer selling the securities
fails to deliver after the value of the securities has risen.
REPURCHASE AGREEMENTS. Repurchase agreements are transactions by which
the Fund purchases a security and simultaneously commits to resell that security
to the seller at an agreed upon time and price, thereby determining the yield
during the term of the agreement. In the event of a bankruptcy or other default
of the seller of a repurchase agreement, the Fund could experience both delays
in liquidating the underlying security and losses. To minimize these
possibilities, the Fund intends to enter into repurchase agreements only with
its Custodian, banks having assets in excess of $10 billion and the largest and,
in the Board of Trustees' judgment, most creditworthy primary U.S. Government
securities dealers. The Fund will enter into repurchase agreements which are
- 10 -
<PAGE>
collateralized by U.S. Government obligations. Collateral for repurchase
agreements is held in safekeeping in the customer-only account of the Fund's
Custodian at the Federal Reserve Bank. At the time the Fund enters into a
repurchase agreement, the value of the collateral, including accrued interest,
will equal or exceed the value of the repurchase agreement and, in the case of a
repurchase agreement exceeding one day, the seller agrees to maintain sufficient
collateral so that the value of the underlying collateral, including accrued
interest, will at all times equal or exceed the value of the repurchase
agreement. The Fund will not enter into a repurchase agreement not terminable
within seven days if, as a result thereof, more than 15% of the value of the net
assets of the Fund would be invested in such securities and other illiquid
securities.
BORROWING AND PLEDGING. As a temporary measure for extraordinary or
emergency purposes, the Fund may borrow money from banks or other persons in an
amount not exceeding 10% of its total assets. The Fund may pledge assets in
connection with borrowings but will not pledge more than 15% of its total
assets. The Fund will not make any additional purchases of portfolio securities
if outstanding borrowings exceed 5% of the value of its total assets. Borrowing
magnifies the potential for gain or loss on the Fund's portfolio securities and,
therefore, if employed, increases the possibility of fluctuation in its net
asset value. This is the speculative factor known as leverage. To reduce the
risks of borrowing, the Fund will limit its borrowings as described above. The
Fund's policies on borrowing and pledging are fundamental policies which may not
be changed without the affirmative vote of a majority of its outstanding shares.
LENDING PORTFOLIO SECURITIES. The Fund may make short-term loans of its
portfolio securities to banks, brokers and dealers. Lending portfolio securities
exposes the Fund to the risk that the borrower may fail to return the loaned
securities or may not be able to provide additional collateral or that the Fund
may experience delays in recovery of the loaned securities or loss of rights in
the collateral if the borrower fails financially. To minimize these risks, the
borrower must agree to maintain collateral marked to market daily, in the form
of cash and/or liquid securities, with the Fund's Custodian in an amount at
least equal to the market value of the loaned securities. The Fund will limit
the amount of its loans of portfolio securities to no more than 25% of its
net assets. This lending policy may not be changed by the Fund without the
affirmative vote of a majority of its outstanding shares.
PORTFOLIO TURNOVER. The Fund does not intend to use short-term trading
as a primary means of achieving its investment objective. However, the Fund's
rate of portfolio turnover will depend upon market and other conditions, and it
will not be a limiting factor when portfolio changes are deemed necessary or
- 11 -
<PAGE>
appropriate by the Adviser. High turnover involves correspondingly greater
commission expenses and transaction costs and may result in the Fund recognizing
greater amounts of income and capital gains, which would increase the amount of
income and capital gains which the Fund must distribute to its shareholders in
order to maintain its status as a regulated investment company and to avoid the
imposition of federal income or excise taxes (see "Taxes").
HOW TO PURCHASE SHARES
- -----------------------
Your initial investment in the Fund ordinarily must be at least $1,000
($250 for tax-deferred retirement plans). However, the minimum initial
investment for employees, shareholders and customers of Countrywide Credit
Industries, Inc. or any affiliated company, including members of the immediate
family of such individuals, is $50. You may purchase additional shares through
the Open Account Program described below. You may open an account and make an
initial investment through securities dealers having a sales agreement with the
Trust's principal underwriter, Countrywide Investments, Inc. (the "Adviser").
You may also make a direct initial investment by sending a check and a completed
account application form to Countrywide Fund Services, Inc. (the "Transfer
Agent"), P.O. Box 5354, Cincinnati, Ohio 45201-5354. Checks should be made
payable to the "Adjustable Rate U.S. Government Securities Fund." An account
application is included in this Prospectus.
Shares of the Fund are sold on a continuous basis at the public
offering price next determined after receipt of a purchase order by the Trust.
Purchase orders received by dealers prior to 4:00 p.m., Eastern time, on any
business day and transmitted to the Adviser by 5:00 p.m., Eastern time, that day
are confirmed at the public offering price determined as of the close of the
regular session of trading on the New York Stock Exchange on that day. It is the
responsibility of dealers to transmit properly completed orders so that they
will be received by the Adviser by 5:00 p.m., Eastern time. Dealers may charge a
fee for effecting purchase orders. Direct purchase orders received by the
Transfer Agent by 4:00 p.m., Eastern time, are confirmed at that day's public
offering price. Direct investments received by the Transfer Agent after 4:00
p.m., Eastern time, and orders received from dealers after 5:00 p.m., Eastern
time, are confirmed at the public offering price next determined on the
following business day.
- 12 -
<PAGE>
The public offering price of shares of the Fund applicable to investors
whose accounts are opened after January 31, 1995 is the next determined net
asset value per share plus a sales load as shown in the following table.
Dealer
Reallowance
Sales Load as % of: as % of
Public Net Public
Offering Amount Offering
Amount of Investment Price Invested Price
- -------------------- -------- --------- ----------
Less than $100,000 2.00% 2.04% 1.80%
$100,000 but less than $250,000 1.50% 1.52% 1.35%
$250,000 but less than $500,000 1.00% 1.01% .90%
$500,000 but less than $1,000,000 .75% .76% .65%
$1,000,000 or more None* None*
Investors whose accounts were opened prior to February 1, 1995 are subject to a
different table of sales loads as follows:
Dealer
Reallowance
Sales Load as % of: as % of
Public Net Public
Offering Amount Offering
Amount of Investment Price Invested Price
- --------------------- ------- -------- ----------
Less than $500,000 1.00% 1.01% 1.00%
$500,000 but less than $1,000,000 .75% .76% .75%
$1,000,000 or more None* None*
* There is no front-end sales load on purchases of $1 million or more but
a contingent deferred sales load of .75% may apply if a commission was
paid by the Adviser to a participating unaffiliated dealer and the
shares are redeemed within twelve months from the date of purchase.
Under certain circumstances, the Adviser may increase or decrease the
reallowance to dealers. Dealers engaged in the sale of shares of the Fund may be
deemed to be underwriters under the Securities Act of 1933. The Adviser retains
the entire sales load on all direct initial investments in the Fund and on all
investments in accounts with no designated dealer of record.
For initial purchases of $1,000,000 or more made after October 1, 1995
and subsequent purchases further increasing the size of the account, a dealer's
commission of .75% of the purchase amount may be paid by the Adviser to
participating unaffiliated dealers through whom such purchases are effected.
- 13 -
<PAGE>
In determining a dealer's eligibility for such commission, purchases of shares
of the Fund may be aggregated with concurrent purchases of Class A shares of
other funds of Countrywide Investments. Dealers should contact the Adviser
concerning the applicability and calculation of the dealer's commission in the
case of combined purchases. An exchange from other funds of Countrywide
Investments will not qualify for payment of the dealer's commission, unless such
exchange is from a Countrywide fund with assets as to which a dealer's
commission or similar payment has not been previously paid. Redemptions of
shares may result in the imposition of a contingent deferred sales load if the
dealer's commission described in this paragraph was paid in connection with the
purchase of such shares. See "Contingent Deferred Sales Charge for Certain
Purchases of Shares" below.
In addition to the compensation otherwise paid to securities dealers,
the Adviser may from time to time pay from its own resources additional cash
bonuses or other incentives to selected dealers in connection with the sale of
shares of the Fund. On some occasions, such bonuses or incentives may be
conditioned upon the sale of a specified minimum dollar amount of the shares of
the Fund and/or other funds of Countrywide Investments during a specific period
of time. Such bonuses or incentives may include financial assistance to dealers
in connection with conferences, sales or training programs for their employees,
seminars for the public, advertising, sales campaigns and other dealer-sponsored
programs or events.
OPEN ACCOUNT PROGRAM. Please direct inquiries concerning the services
described in this section to the Transfer Agent at the address or numbers
listed below.
After an initial investment, all investors are considered participants
in the Open Account Program. The Open Account Program helps investors make
purchases of shares of the Fund over a period of years and permits the automatic
reinvestment of dividends and distributions of the Fund in additional shares
without a sales load.
Under the Open Account Program, you may purchase and add shares to your
account at any time either through your securities dealer or by sending a check
to Countrywide Fund Services, Inc., P.O. Box 5354, Cincinnati, Ohio 45201-5354.
The check should be made payable to the Fund.
Under the Open Account Program, you may also purchase shares of the
Fund by bank wire. Please telephone the Transfer Agent (Nationwide call
toll-free 800-543-0407; in Cincinnati call 629- 2050) for instructions. Your
bank may impose a charge for sending your wire. There is presently no fee for
receipt of wired funds, but the Transfer Agent reserves the right to charge
shareholders for this service upon thirty days' prior notice to shareholders.
- 14 -
<PAGE>
Each additional purchase request must contain the name of your account
and your account number to permit proper crediting to your account. While there
is no minimum amount required for subsequent investments, the Trust reserves the
right to impose such requirement. All purchases under the Open Account Program
are made at the public offering price next determined after receipt of a
purchase order by the Trust. If a broker-dealer received concessions for selling
shares of the Fund to a current shareholder, such broker-dealer will receive the
concessions described above with respect to additional investments by the
shareholder.
REDUCED SALES LOAD. A "purchaser" (defined below) may use the Right of
Accumulation to combine the cost or current net asset value (whichever is
higher) of his existing shares of the load funds distributed by the Adviser with
the amount of his current purchases in order to take advantage of the reduced
sales loads set forth in the tables above. Purchases made in any load fund
distributed by the Adviser pursuant to a Letter of Intent may also be eligible
for the reduced sales loads. The minimum initial investment under a Letter of
Intent is $10,000. The load funds currently distributed by the Adviser are
listed in the Exchange Privilege section of this Prospectus. Shareholders should
contact the Transfer Agent for information about the Right of Accumulation and
Letter of Intent.
PURCHASES AT NET ASSET VALUE. You may purchase shares of the Fund at
net asset value when the payment for your investment represents the proceeds
from the redemption of shares of any other mutual fund which has a front-end
sales load and is not distributed by the Adviser. Your investment will qualify
for this provision if the purchase price of the shares of the other fund
included a sales load and the redemption occurred within one year of the
purchase of such shares and no more than sixty days prior to your purchase of
shares of the Fund. To make a purchase at net asset value pursuant to this
provision, you must submit photocopies of the confirmations (or similar
evidence) showing the purchase and redemption of shares of the other fund.
Your payment may be made with the redemption check representing the proceeds of
the shares redeemed, endorsed to the order of the Fund. The redemption of
shares of the other fund is, for federal income tax purposes, a sale on which
you may realize a gain or loss. These provisions may be modified or terminated
at any time. Contact your securities dealer or the Trust for further
information.
Banks, bank trust departments and savings and loan associations, in
their fiduciary capacity or for their own accounts, may also purchase shares of
the Fund at net asset value. To the extent permitted by regulatory authorities,
a bank trust department may charge fees to clients for whose account it
purchases shares at net asset value. Federal and state credit unions may also
purchase shares at net asset value.
- 15 -
<PAGE>
In addition, shares of the Fund may be purchased at net asset value by
broker-dealers who have a sales agreement with the Adviser, and their registered
personnel and employees, including members of the immediate families of such
registered personnel and employees.
Clients of municipal fund advisers, public finance investment
specialists, municipal reinvestment brokers, authorities and trustees may
purchase shares of the Fund at net asset value if the permitted investment
section of the trust indenture can be interpreted with an accompanying opinion
by the issuer or trustee counsel.
Clients of investment advisers and financial planners may also purchase
shares of the Fund at net asset value if their investment adviser or financial
planner has made arrangements to permit them to do so with the Trust and the
Adviser. The investment adviser or financial planner must notify the Transfer
Agent that an investment qualifies as a purchase at net asset value.
Employees, shareholders and customers of Countrywide Credit Industries,
Inc. or any affiliated company, including members of the immediate family of
such individuals and employee benefit plans established by such entities, may
also purchase shares of the Fund at net asset value.
CONTINGENT DEFERRED SALES LOAD FOR CERTAIN PURCHASES OF SHARES. A
contingent deferred sales load is imposed upon certain redemptions of shares of
the Fund (or shares into which such shares were exchanged) purchased at net
asset value in amounts totaling $1 million or more, if the dealer's commission
described above was paid by the Adviser and the shares are redeemed within
twelve months from the date of purchase. The contingent deferred sales load will
be paid to the Adviser and will be equal to .75% of the lesser of (1) the net
asset value at the time of purchase of the shares being redeemed or (2) the net
asset value of such shares at the time of redemption. In determining whether the
contingent deferred sales load is payable, it is assumed that shares not
subject to the contingent deferred sales load are the first redeemed followed
by other shares held for the longest period of time. The contingent deferred
sales load will not be imposed upon shares representing reinvested dividends
or capital gains distributions, or upon amounts representing share
appreciation. If a purchase of shares is subject to the contingent deferred
sales load, the investor will be so notified on the confirmation for such
purchase.
- 16 -
<PAGE>
Redemptions of such shares of the Fund held for at least 12 months will
not be subject to the contingent deferred sales load and an exchange of such
shares into another fund of Countrywide Investments is not treated as a
redemption and will not trigger the imposition of the contingent deferred sales
load at the time of such exchange. A fund will "tack" the period for which such
shares being exchanged were held onto the holding period of the acquired shares
for purposes of determining if a contingent deferred sales load is applicable in
the event that the acquired shares are redeemed following the exchange; however,
the period of time that the redemption proceeds of such shares are held in a
money market fund will not count toward the holding period for determining
whether a contingent deferred sales load is applicable. See "Exchange
Privilege."
The contingent deferred sales load is currently waived for any partial
or complete redemption following death or disability (as defined in the Internal
Revenue Code) of a shareholder (including one who owns the shares with
his or her spouse as a joint tenant with rights of survivorship) from an account
in which the deceased or disabled is named. The Adviser may require
documentation prior to waiver of the charge, including death certificates,
physicians' certificates, etc.
ADDITIONAL INFORMATION. For purposes of determining the initial
investment requirements and the applicable sales load and for purposes of the
Letter of Intent and Right of Accumulation privileges, a purchaser includes an
individual, his spouse and their children under the age of 21, purchasing shares
for his or their own account; or a trustee or other fiduciary purchasing shares
for a single fiduciary account although more than one beneficiary is involved;
or employees of a common employer, provided that economies of scale are realized
through remittances from a single source and quarterly confirmation of such
purchases; or an organized group, provided that the purchases are made through a
central administration, or a single dealer, or by other means which result in
economy of sales effort or expense. Contact the Transfer Agent for additional
information concerning purchases at net asset value or at reduced sales loads.
The Trust mails you confirmations of all purchases or redemptions of
Fund shares. Certificates representing shares of the Fund are not issued.
If a certificate has been issued to you, you will not be permitted to redeem
shares by check, to redeem or exchange shares by telephone or to use the
automatic withdrawal plan as to those shares. The Trust and the Adviser reserve
the rights to limit the amount of investments and to refuse to sell to any
person.
Investors should be aware that the Fund's account application contains
provisions in favor of the Trust, the Transfer Agent and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating to
the various services (for example, telephone redemptions and exchanges and check
redemptions) made available to investors.
Should an order to purchase shares be canceled because your check does
not clear, you will be responsible for any resulting losses or fees incurred by
the Trust or the Transfer Agent in the transaction.
- 17 -
<PAGE>
SHAREHOLDER SERVICES
- ----------------------
Contact the Transfer Agent (Nationwide call toll-free 800- 543-0407; in
Cincinnati call 629-2050) for additional information about the shareholder
services described below.
AUTOMATIC WITHDRAWAL PLAN
If the shares in your account have a value of at least $5,000, you may
elect to receive, or may designate another person to receive, monthly or
quarterly payments in a specified amount of not less than $50 each. There is no
charge for this service. Purchases of additional shares of the Fund while the
plan is in effect are generally undesirable because a sales load is incurred
whenever purchases are made.
TAX-DEFERRED RETIREMENT PLANS
Shares of the Fund are available for purchase in connection with the
following tax-deferred retirement plans:
-- Keogh Plans for self-employed individuals
-- Individual retirement account (IRA) plans for
individuals and their non-employed spouses, including Roth
IRAs and Education IRAs
-- Qualified pension and profit-sharing plans for
employees, including those profit-sharing plans with a
401(k) provision
-- 403(b)(7) custodial accounts for employees of public school
systems, hospitals, colleges and other non-profit
organizations meeting certain requirements of the Internal
Revenue Code
DIRECT DEPOSIT PLANS
Shares of the Fund may be purchased through direct deposit plans
offered by certain employers and government agencies. These plans enable a
shareholder to have all or a portion of his or her payroll or social security
checks transferred automatically to purchase shares of the Fund.
AUTOMATIC INVESTMENT PLAN
You may make automatic monthly investments in the Fund from your bank,
savings and loan or other depository institution account. The minimum initial
and subsequent investments must be $50 under the plan. The Transfer Agent pays
the costs associated with these transfers, but reserves the right, upon thirty
days'
- 18 -
<PAGE>
written notice, to make reasonable charges for this service. Your depository
institution may impose its own charge for debiting your account which would
reduce your return from an investment in the Fund.
REINVESTMENT PRIVILEGE
If you have redeemed shares of the Fund, you may reinvest all or part
of the proceeds without any additional sales load. This reinvestment must occur
within ninety days of the redemption and the privilege may only be exercised
once per year.
HOW TO REDEEM SHARES
- ---------------------
You may redeem shares of the Fund on each day that the Trust is open
for business. You will receive the net asset value per share next determined
after receipt by the Transfer Agent of a proper redemption request in the form
described below, less any applicable contingent deferred sales load. Payment is
normally made within three business days after tender in such form, provided
that payment in redemption of shares purchased by check will be effected only
after the check has been collected, which may take up to fifteen days from the
purchase date. To eliminate this delay, you may purchase shares of the Fund by
certified check or wire.
A contingent deferred sales load may apply to a redemption of certain
shares purchased at net asset value. See "How to Purchase Shares."
BY TELEPHONE. You may redeem shares by telephone. The proceeds will be
sent by mail to the address designated on your account or wired directly to your
existing account in any commercial bank or brokerage firm in the United States
as designated on your application. To redeem by telephone, call the Transfer
Agent (Nationwide call toll-free 800-543-0407; in Cincinnati call 629-2050). The
redemption proceeds from your account will be sent by mail or by wire within
three business days after receipt of your telephone instructions. IRA accounts
are not redeemable by telephone.
The telephone redemption privilege is automatically available to all
shareholders. You may change the bank or brokerage account which you have
designated under this procedure at any time by writing to the Transfer Agent
with your signature guaranteed by any eligible guarantor institution (including
banks, brokers and dealers, municipal securities brokers and dealers, government
securities brokers and dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations)
or by
- 19 -
<PAGE>
completing a supplemental telephone redemption authorization form. Contact the
Transfer Agent to obtain this form. Further documentation will be required to
change the designated account if shares are held by a corporation, fiduciary or
other organization.
Neither the Trust, the Transfer Agent, nor their respective affiliates
will be liable for complying with telephone instructions they reasonably believe
to be genuine or for any loss, damage, cost or expense in acting on such
telephone instructions. The affected shareholders will bear the risk of any such
loss. The Trust or the Transfer Agent, or both, will employ reasonable
procedures to determine that telephone instructions are genuine. If the Trust
and/or the Transfer Agent do not employ such procedures, they may be liable for
losses due to unauthorized or fraudulent instructions. These procedures may
include, among others, requiring forms of personal identification prior to
acting upon telephone instructions, providing written confirmation of the
transactions and/or tape recording telephone instructions.
BY MAIL. You may redeem any number of shares from your account by
sending a written request to the Transfer Agent The request must state the
number of shares or the dollar amount to be redeemed and your account number.
The request must be signed exactly as your name appears on the Trust's account
records. If the shares to be redeemed have a value of $25,000 or more, your
signature must be guaranteed by any of the eligible guarantor institutions
outlined above.
Written redemption requests may also direct that the proceeds be
deposited directly in the bank account or brokerage account designated on your
account application for telephone redemptions. Proceeds of redemptions requested
by mail are mailed within three business days following receipt of instructions
in proper form.
BY CHECK. You may establish a special checking account with the Fund
for the purpose of redeeming shares by check. Checks may be made payable to
anyone for any amount, but checks may not be certified.
When a check is presented to the Custodian for payment, the Transfer
Agent, as your agent, will cause the Fund to redeem a sufficient number of full
and fractional shares in your account to cover the amount of the check. Checks
will be processed at the net asset value on the day the check is presented to
the Custodian for payment.
If the amount of a check is greater than the value of the shares held
in your account, the check will be returned. Shareholders should consider
potential fluctuations in the net
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<PAGE>
asset value of the Fund's shares when writing checks. A check representing a
redemption request will take precedence over any other redemption instructions
issued by a shareholder.
As long as no more than six check redemptions are effected in your
account in any month, there will be no charge for the check redemption
privilege. After six check redemptions are effected in your account in a month,
the Transfer Agent will charge you $.25 for each additional check redemption
effected that month. However, there is no charge for any check redemptions
effected by employees, shareholders and customers of Countrywide Credit
Industries, Inc. or any affiliated company, including members of the immediate
family of such individuals. The Transfer Agent charges shareholders its costs
for each stop payment and each check returned for insufficient funds. In
addition, the Transfer Agent reserves the right to make additional charges to
recover the costs of providing the check redemption service. All charges will be
deducted from your account by redemption of shares in your account. The check
redemption procedure may be suspended or terminated at any time upon written
notice by the Trust or the Transfer Agent.
Shareholders should be aware that writing a check (a redemption of
shares) is a taxable event. Shares for which certificates have been issued may
not be redeemed by check.
THROUGH BROKER-DEALERS. You may also redeem shares by placing a wire
redemption request through a securities broker or dealer. Unaffiliated
broker-dealers may impose a fee on the shareholder for this service. You will
receive the net asset value per share next determined after receipt by the Trust
or its agent of your wire redemption request. It is the responsibility of
broker-dealers to properly transmit wire redemption orders.
ADDITIONAL REDEMPTION INFORMATION. If your instructions request a
redemption by wire, you will be charged an $8 processing fee by the Fund's
Custodian. The Trust reserves the right, upon thirty days' written notice, to
change the processing fee. All charges will be deducted from your account by
redemption of shares in your account. Your bank or brokerage firm may also
impose a charge for processing the wire. In the event that wire transfer of
funds is impossible or impractical, the redemption proceeds will be sent by mail
to the designated account.
Redemption requests may direct that the proceeds be deposited directly
in your account with a commercial bank or other depository institution via an
Automated Clearing House (ACH) transaction. There is currently no charge for ACH
transactions. Contact the Transfer Agent for more information about ACH
transactions.
- 21 -
<PAGE>
If a certificate for shares of the Fund was issued to you, you
will not be permitted to redeem shares by check, to redeem or exchange shares
by telephone or to use the automatic withdrawal plan as to those shares. In
order to redeem such shares, the certificate must be delivered to the Transfer
Agent, or the dealer in the case of a wire redemption, duly endorsed or
accompanied by a duly endorsed stock power, with the signature guaranteed by
any of the eligible guarantor institutions outlined above.
At the discretion of the Trust or the Transfer Agent, corporate
investors and other associations may be required to furnish an appropriate
certification authorizing redemptions to ensure proper authorization. The Trust
reserves the right to require you to close your account if at any time the value
of your shares is less than the minimum amount required by the Trust for your
account (based on actual amounts invested including any sales load paid,
unaffected by market fluctuations), or such other minimum amount as the Trust
may determine from time to time. After notification to you of the Trust's
intention to close your account, you will be given thirty days to increase the
value of your account to the minimum amount.
The Trust reserves the right to suspend the right of redemption or to
postpone the date of payment for more than three business days under unusual
circumstances as determined by the Securities and Exchange Commission.
EXCHANGE PRIVILEGE
- -------------------
Shares of the Fund and of any other fund of Countrywide Investments may
be exchanged for each other.
Shares of the Fund which are not subject to a contingent deferred sales
load may be exchanged for Class A shares of any other fund and for shares of any
other fund which offers only one class of shares (provided such shares are not
subject to a contingent deferred sales load). A sales load will be imposed equal
to the excess, if any, of the sales load rate applicable to the shares being
acquired over the sales load rate, if any, previously paid on the shares being
exchanged.
Shares of the Fund subject to a contingent deferred sales load may be
exchanged, on the basis of relative net asset value per share, for shares of any
other fund which imposes a contingent deferred sales load and for shares of any
fund which is a money market fund. A fund will "tack" the period for which the
shares being exchanged were held onto the holding period of the acquired shares
for purposes of determining if a contingent deferred sales load is applicable in
the event that the acquired shares are redeemed following the exchange. The
period of time that shares are held in a money market fund will not count toward
the holding period for determining whether a contingent deferred sales load is
applicable.
- 22 -
<PAGE>
The following are the funds of Countrywide Investments currently
offered to the public. Funds which may be subject to a front-end or contingent
deferred sales load are indicated by an asterisk.
Countrywide Tax-Free Trust Countrywide Strategic Trust
Tax-Free Money Fund *Government Mortgage Fund
Ohio Tax-Free Money Fund *Equity Fund
California Tax-Free Money Fund *Utility Fund
Florida Tax-Free Money Fund *Growth/Value Fund
*Tax-Free Intermediate Term Fund *Aggressive Growth Fund
*Ohio Insured Tax-Free Fund *International Equity Fund
*Kentucky Tax-Free Fund
Countrywide Investment Trust
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
You may request an exchange by sending a written request to the
Transfer Agent. The request must be signed exactly as your name appears on the
Trust's account records. Exchanges may also be requested by telephone. If you
are unable to execute your transaction by telephone (for example during times of
unusual market activity) consider requesting your exchange by mail or by
visiting the Trust's offices at 312 Walnut Street, 21st Floor, Cincinnati, Ohio
45202. An exchange will be effected at the next determined net asset value (or
offering price, if sales load is applicable) after receipt of a request by the
Transfer Agent.
Exchanges may only be made for shares of funds then offered for sale in
your state of residence and are subject to the applicable minimum initial
investment requirements. The exchange privilege may be modified or terminated by
the Board of Trustees upon 60 days' prior notice to shareholders. An exchange
results in a sale of fund shares, which may cause you to recognize a capital
gain or loss. Before making an exchange, contact the Transfer Agent to obtain a
current prospectus for any of the other funds of Countrywide Investments and
more information about exchanges among Countrywide Investments.
DIVIDENDS AND DISTRIBUTIONS
- ---------------------------
All of the net investment income of the Fund is declared as a dividend
to shareholders of record on each business day of the Trust and paid monthly.
The Fund expects to distribute any net realized long-term capital gains at least
once each year.
- 23 -
<PAGE>
Management will determine the timing and frequency of the distributions of any
net realized short-term capital gains.
Distributions are paid according to one of the following options:
Share Option - income distributions and capital gains
distributions reinvested in additional
shares.
Income Option - income distributions and short-term capital
gains distributions paid in cash; long-term
capital gains distributions reinvested in
additional shares.
Cash Option - income distributions and capital
gains distributions paid in cash.
You should indicate your choice of option on your application. If no option is
specified on your application, distributions will automatically be reinvested in
additional shares. All distributions will be based on the net asset value in
effect on the payable date.
If you select the Income Option or the Cash Option and the U.S. Postal
Service cannot deliver your checks or if your checks remain uncashed for six
months, your dividends may be reinvested in your account at the then-current net
asset value and your account will be converted to the Share Option. No interest
will accrue on amounts represented by uncashed distribution checks.
An investor who has received in cash any dividend or capital gains
distribution from the Fund may return the distribution within thirty days of the
distribution date to the Transfer Agent for reinvestment at the net asset value
next determined after its return. The investor or his dealer must notify the
Transfer Agent that a distribution is being reinvested pursuant to this
provision.
TAXES
- -----
The Fund has qualified in all prior years and intends to continue to
qualify for the special tax treatment afforded a "regulated investment company"
under Subchapter M of the Internal Revenue Code so that it does not pay federal
taxes on income and capital gains distributed to shareholders.
The Fund intends to distribute substantially all of its net investment
income and any net realized capital gains to its shareholders. Distributions of
net investment income as well as from net realized short-term capital gains, if
any, are taxable as ordinary income. Since the Fund's investment income is
derived from interest rather than dividends, no portion of such
- 24 -
<PAGE>
distributions is eligible for the dividends received deduction available to
corporations. Distributions of net capital gains (i.e., the
excess of net long-term capital gains over net short-term capital losses) by the
Fund to its shareholders are taxable to the recipient shareholders as capital
gains, without regard to the length of time a shareholder has held Fund shares.
The maximum capital gains rate for individuals is 28% with respect to assets
held for more than 12 months, but not more than 18 months, and 20% with respect
to assets held more than 18 months. The maximum capital gains rate for
corporate shareholders is the same as the maximum tax rate for ordinary
income. Redemptions of shares of the Fund are taxable events on which a
shareholder may realize a gain or loss.
The Fund will mail to each of its shareholders a statement indicating
the amount and federal income tax status of all distributions made during the
year. In addition to federal taxes, shareholders of the Fund may be subject to
state and local taxes on distributions. Shareholders should consult their tax
advisors about the tax effect of distributions and withdrawals from the Fund and
the use of the Automatic Withdrawal Plan and the Exchange Privilege. The tax
consequences described in this section apply whether distributions are taken in
cash or reinvested in additional shares.
OPERATION OF THE FUND
- ---------------------
The Fund is a diversified series of Countrywide Investment Trust, an
open-end management investment company organized as a Massachusetts business
trust on December 7, 1980. The Board of Trustees supervises the business
activities of the Trust. Like other mutual funds, the Trust retains various
organizations to perform specialized services for the Fund.
The Trust retains Countrywide Investments, Inc., 312 Walnut Street,
Cincinnati, Ohio 45202 (the "Adviser"), to manage the Fund's investments and its
business affairs. The Adviser was organized in 1974 and is also the investment
adviser to six other series of the Trust, seven series of Countrywide Tax-Free
Trust and six series of Countrywide Strategic Trust. The Adviser is an indirect
wholly-owned subsidiary of Countrywide Credit Industries, Inc., a New York Stock
Exchange listed company principally engaged in the business of residential
mortgage lending. The Fund pays the Adviser a fee equal to the annual rate of
.5% of the average value of its daily net assets up to $50 million; .45% of such
assets from $50 million to $150 million; .4% of such assets from $150 million to
$250 million; and .375% of such assets in excess of $250 million.
John J. Goetz, Chief Investment Officer of the Adviser, and Scott
Weston, Assistant Vice President-Investments of the Adviser, are primarily
responsible for managing the portfolio of the Fund. Mr. Goetz has been employed
by the Adviser in various capacities since 1981 and has been managing the Fund's
portfolio since March 1997. Mr. Weston has been employed by the Adviser since
1992 and has been managing the Fund's portfolio since March 1996.
The Adviser serves as principal underwriter for the Fund and, as such,
is the exclusive agent for the distribution of
- 25 -
<PAGE>
shares of the Fund. Angelo R. Mozilo, Robert H. Leshner, Robert G. Dorsey and
John F. Splain are officers of both the Trust and the Adviser.
The Fund is responsible for the payment of all operating expenses,
including fees and expenses in connection with membership in investment company
organizations, brokerage fees and commissions, legal, auditing and accounting
expenses, expenses of registering shares under federal and state securities
laws, expenses related to the distribution of the Fund's shares (see
"Distribution Plan"), insurance expenses, taxes or governmental fees, fees and
expenses of the custodian, transfer agent and accounting and pricing agent of
the Fund, fees and expenses of members of the Board of Trustees who are not
interested persons of the Trust, the cost of preparing and distributing
prospectuses, statements, reports and other documents to shareholders, expenses
of shareholders' meetings and proxy solicitations, and such extraordinary or
non-recurring expenses as may arise, including litigation to which the Fund may
be a party and indemnification of the Trust's officers and Trustees with respect
thereto.
The Trust has retained Countrywide Fund Services, Inc., P.O. Box 5354,
Cincinnati, Ohio (the "Transfer Agent"), an indirect wholly-owned subsidiary of
Countrywide Credit Industries, Inc., to serve as the Fund's transfer agent,
dividend paying agent and shareholder service agent.
The Transfer Agent also provides accounting and pricing services to the
Fund. The Transfer Agent receives a monthly fee from the Fund for calculating
daily net asset value per share and maintaining such books and records as are
necessary to enable it to perform its duties.
In addition, the Transfer Agent has been retained by the Adviser to
assist the Adviser in providing administrative services to the Fund. In this
capacity, the Transfer Agent supplies executive, administrative and regulatory
services, supervises the preparation of tax returns, and coordinates the
preparation of reports to shareholders and reports to and filings with the
Securities and Exchange Commission and state securities authorities. The Adviser
(not the Fund) pays the Transfer Agent a fee for these administrative services.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its objective of seeking best
execution of portfolio transactions, the Adviser may give consideration to sales
of shares of the Fund as a factor in the selection of brokers and dealers to
execute portfolio transactions of the Fund. Subject to the requirements
- 26 -
<PAGE>
of the Investment Company Act of 1940 and procedures adopted by the Board of
Trustees, the Fund may execute portfolio transactions through any broker or
dealer and pay brokerage commissions to a broker (i) which is an affiliated
person of the Trust, or (ii) which is an affiliated person of such person, or
(iii) an affiliated person of which is an affiliated person of the Trust or the
Adviser.
Shares of the Fund have equal voting rights and liquidation rights. The
Fund shall vote separately on matters submitted to a vote of the shareholders
except in matters where a vote of all series of the Trust in the aggregate is
required by the Investment Company Act of 1940 or otherwise. When matters are
submitted to shareholders for a vote, each shareholder is entitled to one vote
for each full share owned and fractional votes for fractional shares owned. The
Trust does not normally hold annual meetings of shareholders. The Trustees shall
promptly call and give notice of a meeting of shareholders for the purpose of
voting upon the removal of any Trustee when requested to do so in writing by
shareholders holding 10% or more of the Trust's outstanding shares. The Trust
will comply with the provisions of Section 16(c) of the Investment Company Act
of 1940 in order to facilitate communications among shareholders.
Amivest Corporation, P.O. Box 370, Cooper Station, New York, New York,
may be deemed to control the Fund by virtue of the fact that it owns of record
more than 25% of the Fund's shares as of the date of this Prospectus.
DISTRIBUTION PLAN
- ------------------
Pursuant to Rule 12b-1 under the Investment Company Act of 1940, the
Fund has adopted a plan of distribution (the "Plan") under which the Fund may
directly incur or reimburse the Adviser for certain distribution-related
expenses, including payments to securities dealers and others who are engaged in
the sale of shares of the Fund and who may be advising investors regarding the
purchase, sale or retention of Fund shares; expenses of maintaining personnel
who engage in or support distribution of shares or who render shareholder
support services not otherwise provided by the Transfer Agent; expenses of
formulating and implementing marketing and promotional activities, including
direct mail promotions and mass media advertising; expenses of preparing,
printing and distributing sales literature and prospectuses and statements of
additional information and reports for recipients other than existing
shareholders of the Fund; expenses of obtaining such information, analyses and
reports with respect to marketing and promotional activities as the Trust may,
from time to time, deem advisable; and any other expenses related to the
distribution of the Fund's shares.
- 27 -
<PAGE>
Pursuant to the Plan, the Fund may make payments to dealers and other
persons, including the Adviser and its affiliates, who may be advising investors
regarding the purchase, sale or retention of shares. For the fiscal year ended
September 30, 1997, the Fund paid $6,941 to the Adviser to reimburse it for
payments made to dealers and other persons who may be advising shareholders in
this regard.
The annual limitation for payment of expenses pursuant to the Plan is
.35% of the Fund's average daily net assets. Unreimbursed expenditures will not
be carried over from year to year. In the event the Plan is terminated by the
Fund in accordance with its terms, the Fund will not be required to make any
payments for expenses incurred by the Adviser after the date the Plan
terminates.
Pursuant to the Plan, the Fund may also make payments to banks or other
financial institutions that provide shareholder services and administer
shareholder accounts. The Glass-Steagall Act prohibits banks from engaging in
the business of underwriting, selling or distributing securities. Although the
scope of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, management of the
Trust believes that the Glass- Steagall Act should not preclude a bank from
providing such services. However, state securities laws on this issue may differ
from the interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law. If a
bank were prohibited from continuing to perform all or a part of such services,
management of the Trust believes that there would be no material impact on the
Fund or its shareholders. Banks may charge their customers fees for offering
these services to the extent permitted by applicable regulatory authorities, and
the overall return to those shareholders availing themselves of the bank
services will be lower than to those shareholders who do not. The Fund may from
time to time purchase securities issued by banks which provide such services;
however, in selecting investments for the Fund, no preference will be shown for
such securities.
The National Association of Securities Dealers, in its Rules of Fair
Practice, places certain limitations on asset-based sales charges of mutual
funds. These Rules require fund-level accounting in which all sales charges --
front-end load, 12b-1 fees or contingent deferred load -- terminate when a
percentage of gross sales is reached.
CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE
- -----------------------------------------------------
On each day that the Trust is open for business, the public
- 28 -
<PAGE>
offering price (net asset value plus applicable sales load) of the shares of the
Fund is determined as of the close of the regular session of trading on the New
York Stock Exchange, currently 4:00 p.m., Eastern time. The Trust is open for
business on each day the New York Stock Exchange is open for business and on any
other day when there is sufficient trading in the Fund's investments that its
net asset value might be materially affected. The net asset value per share of
the Fund is calculated by dividing the sum of the value of the securities held
by the Fund plus cash or other assets minus all liabilities (including estimated
accrued expenses) by the total number of shares outstanding of the Fund, rounded
to the nearest cent.
The Fund's portfolio 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. Securities (and other
assets) for which market quotations are not readily available are valued at
their fair value as determined in good faith in accordance with consistently
applied procedures established by and under the general supervision of the Board
of Trustees. The net asset value per share of the Fund will fluctuate with the
value of the securities it holds.
PERFORMANCE INFORMATION
- ------------------------
From time to time, the Fund may advertise its "average annual total
return." The Fund may also advertise "yield." Both yield and average annual
total return figures are based on historical earnings and are not intended to
indicate future performance.
The "average annual total return" of the Fund refers to the average
annual compounded rates of return over the most recent 1, 5 and 10 year periods
or, where the Fund has not been in operation for such period, over the life of
the Fund (which periods will be stated in the advertisement) that would equate
an initial amount invested at the beginning of a stated period to the ending
redeemable value of the investment. The calculation of "average annual total
return" assumes the reinvestment of all dividends and distributions and the
deduction of the current maximum sales load from the initial investment. The
Fund may also advertise total return (a "nonstandardized quotation") which is
calculated differently from "average annual total return." A nonstandardized
quotation of total return may be a cumulative return which measures the
percentage change in the value of an account between the beginning and end of a
period, assuming no activity in the account other than reinvestment of dividends
and capital gains distributions. A nonstandardized quotation of total return may
also indicate average annual compounded rates of
- 29 -
<PAGE>
return over periods other than those specified for "average annual total
return." These nonstandardized returns do not include the effect of the
applicable sales load which, if included, would reduce total return. A
nonstandardized quotation of total return will always be accompanied by the
Fund's "average annual total return" as described above.
The "yield" of the Fund is computed by dividing the net investment
income per share earned during a thirty-day (or one month) period stated in the
advertisement by the maximum public offering price per share on the last day of
the period (using the average number of shares entitled to receive dividends).
The yield formula assumes that net investment income is earned and reinvested at
a constant rate and annualized at the end of a six-month period.
From time to time, the Fund may advertise its performance rankings as
published by recognized independent mutual fund statistical services such as
Lipper Analytical Services, Inc. ("Lipper"), or by publications of general
interest such as Forbes, Money, The Wall Street Journal, Business Week,
Barron's, Fortune or Morningstar Mutual Fund Values. The Fund may also compare
its performance to that of other selected mutual funds, averages of the other
mutual funds within its category as determined by Lipper, or recognized
indicators. In connection with a ranking, the Fund may provide additional
information, such as the particular category of funds to which the ranking
relates, the number of funds in the category, the criteria upon which the
ranking is based, and the effect of fee waivers and/or expense reimbursements,
if any. The Fund may also present its performance and other investment
characteristics, such as volatility or a temporary defense posture, in light of
the Adviser's view of current or past market conditions or historical trends.
Further information about the Fund's performance is contained in the
Trust's annual report which can be obtained by shareholders at no charge by
calling the Transfer Agent (Nationwide call toll-free 800-543-0407; in
Cincinnati call 629-2050) or by writing to the Trust at the address on the front
of this Prospectus.
- 30 -
<PAGE>
<TABLE>
ACCOUNT NO. 27-_____________________
Account Application (For Fund Use Only)
<S> <C> <C> <C>
Adjustable Rate U.S. Government Securities Fund FOR BROKER/DEALER USE ONLY
Firm Name:_____________________________
Home Office Address: ___________________
Branch Address: ________________________
Rep Name & No.: ________________________
Please mail account application to: Rep Signature: _________________________
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
========================================================================================================================
Initial Investment of $_______________________
[ ] Check or draft enclosed payable to the Fund.
[ ] Bank Wire From:
______________________________________________________________________________________________________________
[ ] Exchange From:
______________________________________________________________________________________________________________
(Fund Name) (Fund Account Number)
Account Name S.S. #/Tax I.D.#
________________________________________________________________________________________ _____________________________
Name of Individual, Corporation, Organization, or Minor, etc. (In case of custodial
account please list
minor's S.S.#)
___________________________________________________________________________________________________ Citizenship:[] U.S.
Name of Joint Tenant, Partner, Custodian []Other
Address Phone
___________________________________________________________________________________________________ ( )_______________
Street or P.O. Box Business Phone
___________________________________________________________________________________________________ ( )_______________
City State Zip Home Phone
Check Appropriate Box: [] Individual [] Joint Tenant (Right of survivorship presumed)
[] Partnership [] Corporation [] Trust [] Custodial [] Non-Profit [] Other
Occupation and Employer Name/Address________________________________________________________________________________________
Are you an associated person of an NASD member? [] Yes [] No
========================================================================================================================
TAXPAYER IDENTIFICATION NUMBER -- Under penalties of perjury I certify that the Taxpayer Identification Number listed
above is my correct number. The Internal Revenue Service does not require my consent to any provision of this document
other than the certifications required to avoid backup withholding. Check box if appropriate:
[] I am exempt from backup withholding under the provisions of section 3406(a)(1)(c) of the Internal Revenue Code; or I am not
subject to backup withholding because I have not been notified that I am subject to backup withholding as a result of a failure
to report all interest or dividends; or the Internal Revenue Service has notified me that I am no longer subject to backup
withholding.
[] I certify under penalties of perjury that a Taxpayer Identification Number has not been issued to me and I have mailed or
delivered an application to receive a Taxpayer Identification Number to the Internal Revenue Service Center or Social Security
Administration Office. I understand that if I do not provide a Taxpayer Identification Number within 60 days that 31% of all
reportable payments will be withheld until I provide a number.
=======================================================================================================================
DISTRIBUTIONS (If no election is checked the SHARE OPTION will be assigned.)
[] Share Option -- Income distributions and capital gains distributions automatically reinvested in additional
shares.
[] Income Option -- Income distributions and short term capital gains distributions paid in cash, long term capital
gains distributions reinvested in additional shares.
[] Cash Option -- Income distributions and capital gains distributions paid in cash.
[ ] By Check [ ] By ACH to my bank checking or savings account. Please attach a voided check.
========================================================================================================================
REDEMPTION OPTIONS
I (we) authorize the Trust or Countrywide Fund Services, Inc. to act upon instructions received by telephone, or upon
receipt of and in the amounts of checks as described below (if checkwriting is selected), to have amounts withdrawn from
my (our) account in any fund of Countrywide Investments (see prospectus for limitations on this option) and:
[ ] WIRED ($1,000 minimum OR MAILED to my (our) bank account designated below. I (we) further authorize the use of
automated cash transfers to and from the account designated below.
NOTE: For wire redemptions, the indicated bank should be a commercial bank.
Bank Account Number _____________________________________ Bank Routing Transit Number _______________________________
Name of Account Holder _______________________________________________________________________________________________
Bank Name _________________________________________________________ Bank Address ______________________________________
City State
[ ]CHECKWRITING (A signature card must be completed)
...to deposit the proceeds of such redemptions in the applicable Countrywide Pay Through Draft Account (PTDA)
or otherwise arrange for application of such proceeds to payment of said checks. I (we) authorize the persons
whose signatures appear on the PTDA signature card to draw checks on the PTDA and to cause the redemption of my (our)
shares of the Trust. I (we) agree to be bound by the Rules and Regulations for the Countrywide Pay Through Draft
Account as such Rules and Regulations may be amended from time to time.
===========================================================================================================================
REDUCED SALES CHARGES
Right of Accumulation: I apply for Right of Accumulation subject to the Agent's confirmation of the following holdings of
eligible load funds of Countrywide Investments.
Account Number/Name Account Number/Name
_______________________________________________________ ______________________________________________________
_______________________________________________________ ______________________________________________________
Letter of Intent: (Complete the Right of Accumulation section if related accounts are being applied to your Letter of Intent.)
[] I agree to the Letter of Intent in the current Prospectus of Countrywide Investment Trust. Although I am not obligated to
purchase, and the Trust is not obligated to sell, I intend to invest over a 13 month period beginning ____________________ 19
(Purchase Date of not more than 90 days prior to this Letter) an aggregate amount in the load funds of Countrywide Investments
at least equal to (check appropriate box):
[] $100,000 [] $250,000 [] $500,000 [] $1,000,000
========================================================================================================================
SIGNATURES
By signature below each investor certifies that he has received a copy of the Fund's current Prospectus, that he is of legal
age, and that he has full authority and legal capacity for himself or the organization named below, to make this investment and
to use the options selected above. The investor appoints Countrywide Fund Services, Inc. as his agent to enter orders for shares
whether by direct purchase or exchange, to receive dividends and distributions for automatic reinvestment in additional shares of
the Fund for credit to the investor's account and to surrender for redemption shares held in the investor's account in accordance
with any of the procedures elected above or for payment of service charges incurred by the investor. The investor further agrees
that Countrywide Fund Services, Inc. can cease to act as such agent upon ten days' notice in writing to the investor at the address
contained in this Application. The investor hereby ratifies any instructions given pursuant to this Application and for himself and
his successors and assigns does hereby release Countrywide Fund Services, Inc., Countrywide Investment Trust, Countrywide Investment
Trust, Countrywide Investments, Inc., and their respective officers, employees, agents and affiliates from any and all liability in
the performance of the acts instructed herein. Neither the Trust, Countrywide Fund Services, Inc., nor their respective affiliates
will be liable for complying with telephone instructions they reasonably believe to be genuine or for any loss, damage, cost or
expense in acting on such telephone instructions. The investor(s) will bear the risk of any such loss. The Trust or Countrywide
Fund Services, Inc., or both will employ reasonable procedures to determine that telephone instructions are genuine. If the Trust
and/or Countrywide Fund Services, Inc. do not employ such procedures, they may be liable for losses due to unauthorized or
fraudulent instructions. These procedures may include, among others, requiring forms of personal identification prior to acting
upon telephone instructions, providing written confirmation of the transactions and/or tape recording telephone instructions.
are genuine.
___________________________________________________ ___________________________________________________
Signature of Individual Owner, Corporate Officer, Signature of Joint Owner, if Any
Trustee, etc.
________________________________________________ ____________________________________________________
Title of Corporate Officer, Trustee, etc. Date
NOTE: Corporations, trusts and other organizations must complete the resolution form on the reverse side.
Unless otherwise specified, each joint owner shall have full authority to act on behalf of the account.
=========================================================================================================================
AUTOMATIC INVESTMENT PLAN (Complete for Investments Into the Fund)
The Automatic Investment Plan is available for all established accounts of Countrywide Investment Trust. There is no charge for
this service, and it offers the convenience of automatic investing on a regular basis. The minimum investment is $50.00 per month.
For an account that is opened by using this Plan, the minimum initial and subsequent investments must be $50.00. Though a
continuous program of 12 monthly investments is recommended, the Plan may be discontinued by the shareholder at any time.
Please invest $ _________________ per month in the Fund.
ABA Routing Number______________________________
FI Account Number________________________________
[] Checking Account [] Savings Account
- ----------------------------------------------------------------------
Name of Financial Institution (FI) Please make my automatic investment on:
[] the last business day of each month
______________________________________________________________________ [] the 15th day of each month
City State [] both the 15th and last business day
X_____________________________________________________________________ X_______________________________________
(Signature of Depositor EXACTLY as it appears on FI Records) (Signature of Joint Tenant - if any)
(Joint Signatures are required when bank account is in joint names. Please sign exactly as signature appears on your FI's
records.)
Please attach a voided check from your checking account or a voided deposit/withdrawal slip from your savings account
for the Automatic Investment Plan.
Indemnification to Depositor's Bank
In consideration of your participation in a plan which Countrywide Fund Services, Inc. ("CFS") has put into effect, by which
amounts, determined by your depositor, payable to the Fund for purchase of shares of the Fund, are collected by CFS, CFS hereby
agrees:
CFS will indemnify and hold you harmless from any liability to any person or persons whatsoever arising out of the payment
by you of any amount drawn by the Fund to its own order on the account of your depositor or from any liability to any person
whatsoever arising out of the dishonor by you whether with or without cause or intentionally or inadvertently, of any such
checks. CFS will defend, at its own cost and expense, any action which might be brought against you by any person or persons
whatsoever because of your actions taken pursuant to the foregoing request or in any manner arising by reason of your
participation in this arrangement. CFS will refund to you any amount erroneously paid by you to the Fund on any such check if
the claim for the amount of such erroneous payment is made by you within six (6) months from the date of such erroneous
payment; your participation in this arrangement and that of the Fund may be terminated by thirty (30) days written notice from
either party to the other.
========================================================================================================================
AUTOMATIC WITHDRAWAL PLAN (Complete for Withdrawals from the Fund)
This is an authorization for you to withdraw $_________ from my mutual fund account beginning the last business day of the
month of __________________.
Please Indicate Withdrawal Schedule (Check One):
[] Monthly -- Withdrawals will be made on the last business day of each month.
[] Quarterly -- Withdrawals will be made on or about 3/31, 6/30, 9/30 and 12/31.
[] Annually -- Please make withdrawals on the last business day of the month of:_____________________.
Please Select Payment Method (Check One):
[] Exchange: Please exchange the withdrawal proceeds into another Countywide account number:_ _-- _ _ _ _--_
[] Check: Please mail a check for my withdrawal proceeds to the mailing address on this account.
[] ACH Transfer: Please send my withdrawal proceeds via ACH transfer to my bank checking or savings account as indicated below.
I understand that the transfer will be completed in two to three business days and that there is no charge.
[] Bank Wire: Please send my withdrawal proceeds via bank wire, to the account indicated below. I understand that the wire will
be completed in one business day and that there is an $8.00 fee.
Please attach a voided check for ACH or bank wire____________________________________________________________________________
Bank Name Bank Address
___________________________________________________________________________________________________________________________________
Bank ABA# Account # Account Name
[] Send to special payee (other than applicant): Please mail a check for my withdrawal proceeds to the mailing address below:
Name of payee___________________________________________________________________________________________________________________
Please send to:_________________________________________________________________________________________________________________
Street address City State Zip
==================================================================================================================================
RESOLUTIONS
(This Section to be completed by Corporations, Trusts, and Other Organizations)
RESOLVED: That this corporation or organization become a shareholder of Countrywide Investment Trust (the Trust) and that
________________________________________________________________________________________________________________________
is (are) hereby authorized to complete and execute the Application on behalf of the corporation or organization and to take any
action for it as may be necessary or appropriate with respect to its shareholder account with the Trust, and it is
FURTHER RESOLVED: That any one of the above noted officers is authorized to sign any documents necessary or appropriate to
appoint Countrywide Fund Services, Inc. as redemption agent of the corporation or organization for shares of the applicable series
of the Trust, to establish or acknowledge terms and conditions governing the redemption of said shares and to otherwise implement
the privileges elected on the Application.
Certificate
I hereby certify that the foregoing resolutions are in conformity with the Charter and By-Laws or other empowering documents of
the
_______________________________________________________________________________________________________________________
(Name of Organization)
incorporated or formed under the laws of__________________________________________________________________________________________
(State)
and were adopted at a meeting of the Board of Directors or Trustees of the organization or corporation duly called and held on
at which a quorum was present and acting throughout, and that the same are now in full force and effect. I further certify that
the following is (are) duly elected officer(s) of the corporation or organization, authorized to act in accordance with the
foregoing resolutions.
Name Title
___________________________________________________ _________________________________________________________
___________________________________________________ _________________________________________________________
___________________________________________________ _______________________________________________________
Witness my hand and seal of the corporation or organization this_______________________day of________________________, 19_______
___________________________________________________ _________________________________________________________
*Secretary-Clerk Other Authorized Officer (if required)
*If the Secretary or other recording officer is authorized to act by the above resolutions, this certificate must also be
signed by another officer.
</TABLE>
<PAGE>
COUNTRYWIDE INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
Nationwide: (Toll-Free) 800-543-8721
Cincinnati: 513-629-2000
BOARD OF TRUSTEES
Donald L. Bogdon, M.D.
John R. Delfino
H. Jerome Lerner
Robert H. Leshner
Angelo R. Mozilo
Oscar P. Robertson
John F. Seymour, Jr.
Sebastiano Sterpa
INVESTMENT ADVISER
COUNTRYWIDE INVESTMENTS, INC.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
TRANSFER AGENT
COUNTRYWIDE FUND SERVICES, INC.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
Shareholder Service
Nationwide: (Toll-Free) 800-543-0407
Cincinnati: 513-629-2050
Countrywide Always Line
Nationwide: (Toll-Free) 800-852-3809
Cincinnati: 513-579-0999
- 31 -
<PAGE>
TABLE OF CONTENTS
Expense Information . . . . . . . . . . . . . . . . . .
Financial Highlights. . . . . . . . . . . . . . . . . .
Investment Objective and Policies . . . . . . . . . . .
How to Purchase Shares. . . . . . . . . . . . . . . . .
Shareholder Services. . . . . . . . . . . . . . . . . .
How to Redeem Shares. . . . . . . . . . . . . . . . . .
Exchange Privilege. . . . . . . . . . . . . . . . . . .
Dividends and Distributions . . . . . . . . . . . . . .
Taxes . . . . . . . . . . . . . . . . . . . . . . . . .
Operation of the Fund . . . . . . . . . . . . . . . . .
Distribution Plan . . . . . . . . . . . . . . . . . . .
Calculation of Share Price and Public Offering Price. .
Performance Information . . . . . . . . . . . . . . . .
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Trust. This Prospectus does not constitute an offer by the Trust to sell
shares in any State to any person to whom it is unlawful for the Trust to make
such offer in such State.
- 32 -
<PAGE>
PROSPECTUS
January 1, 1998
Countrywide Investment Trust
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
GLOBAL BOND FUND
The Global Bond Fund (the "Fund"), a separate series of Countrywide
Investment Trust, seeks high total return, through both income and capital
appreciation. The Fund invests primarily in high-grade domestic and foreign
fixed-income securities.
THE FUND IS A NON-DIVERSIFIED SERIES AND MAY INVEST A SIGNIFICANT
PERCENTAGE OF ITS ASSETS IN A SINGLE ISSUER. THEREFORE, AN INVESTMENT IN THE
FUND MAY BE RISKIER THAN AN INVESTMENT IN OTHER TYPES OF MUTUAL FUNDS. SHARES OF
THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY
BANKING OR DEPOSITORY INSTITUTION. SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF THE
PRINCIPAL AMOUNT INVESTED.
The Fund offers two classes of shares: Class A shares (sold subject to a
maximum 4% front-end sales load and a 12b-1 fee of up to .35% of average daily
net assets) and Class C shares (sold subject to a 1% contingent deferred sales
load for a one-year period and a 12b-1 fee of up to 1% of average daily net
assets). Each Class A and Class C share of the Fund represents identical
interests in the Fund's investment portfolio and has the same rights, except
that (i) Class C shares bear the expenses of higher distribution fees, which
will cause Class C shares to have a higher expense ratio and to pay lower
dividends than those related to 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.
Rogge Global Partners plc (the "Adviser") manages the Fund's
investments under the supervision of Countrywide Investments, Inc. (the
"Manager"). See "Operation of the Fund."
This Prospectus sets forth concisely the information about the Fund
that you should know before investing. Please retain this Prospectus for future
reference. A Statement of Additional Information dated January 1, 1998 has been
filed with the Securities and Exchange Commission and is hereby incorporated by
reference in its entirety. A copy of the Statement of Additional Information can
be obtained at no charge by calling one of the numbers listed below.
- -------------------------------------------------------------------------------
For Information or Assistance in Opening an Account, Please Call:
Nationwide (Toll-Free) . . . . . . . . . . . . . . 800-543-0407
Cincinnati . . . . . . . . . . . . . . . . . . . 513-629-2050
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- 2 -
<PAGE>
EXPENSE INFORMATION
- -------------------
Class A Class C
Shares Shares
SHAREHOLDER TRANSACTION EXPENSES -------- --------
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price). . . . . . 4% None
Maximum Contingent Deferred Sales Load
(as a percentage of original purchase price). None* 1%
Sales Load Imposed on Reinvested Dividends. . None None
Exchange Fee. . . . . . . . . . . . . . . . . None None
Redemption Fee. . . . . . . . . . . . . . . . None** None**
* Purchases at net asset value of amounts totaling $1 million or more may
be subject to a contingent deferred sales load of .75% if a redemption
occurred within 12 months of purchase and a commission was paid by the
Manager to a participating unaffiliated dealer.
** A wire transfer fee is charged in the case of redemptions made by wire.
Such fee is subject to change and is currently $8. See "How to Redeem
Shares."
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Class A Class C
Shares Shares
-------- -------
Management Fees After Waivers(A) .59% .59%
12b-1 Fees(B) .03% .37%
Other Expenses After Reimbursements .73%(C) 1.03%
---- -----
Total Fund Operating Expenses After 1.35% 2.00%
Waivers and Expense Reimbursements(D) ===== ======
(A) Absent waivers of management fees, such fees would have been .70% for the
fiscal year ended September 30, 1997.
(B) Class A shares may incur 12b-1 fees in an amount up to .35% of average net
assets and Class C shares may incur 12b-1 fees in an amount up to 1.00% of
average net assets. Long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales loads permitted by the National
Association of Securities Dealers.
(C) Absent expense reimbursements by the Manager, other expenses would have
been .91% for Class A shares for the fiscal year ended September 30, 1997.
(D) Absent waivers of management fees and expense reimbursements by the
Manager, total Fund operating expenses would have been 1.64% and 2.11% for
Class A and Class C shares, respectively, for the fiscal year ended
September 30, 1997.
- 2 -
<PAGE>
The purpose of this table is to assist the investor in understanding
the various costs and expenses that an investor in the Fund will bear directly
or indirectly. The percentages expressing annual fund operating expenses are
based on amounts incurred during the most recent fiscal year. The Example below
should not be considered a representation of past or future expenses and actual
expenses may be greater or less than those shown.
Example
You would pay the following expenses on
a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the Class A Class C
end of each time period: Shares Shares
1 Year $ 53 $ 30
3 Years 81 63
5 Years 111 108
10 Years 196 233
- 3 -
<PAGE>
FINANCIAL HIGHLIGHTS
----------------------
The following information, which has been audited by Arthur Andersen LLP,
is an integral part of the audited financial statements and should be read in
conjunction with the financial statements. The financial statements as of
September 30, 1997 and related auditors' report appear in the Statement of
Additional Information of the Fund, which can be obtained by shareholders at no
charge by calling Countrywide Fund Services, Inc. (Nationwide call toll-free
800-543-0407, in Cincinnati call 629-2050) or by writing to the Trust at the
address on the front of this Prospectus.
<TABLE>
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
CLASS A
=====================================================================================================================
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 Manager, 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.
(D) Annualized.
</FN>
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
CLASS C
====================================================================================================================
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 Manager, 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.
(D) Annualized.
</FN>
</TABLE>
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<PAGE>
INVESTMENT OBJECTIVE, INVESTMENT POLICIES AND RISK CONSIDERATIONS
- -----------------------------------------------------------------
The Fund is a series of Countrywide Investment Trust (the "Trust"). The
Fund seeks high total return, through both income and capital appreciation. The
Fund seeks to achieve its investment objective by investing primarily in
high-grade domestic and foreign fixed-income securities. The Fund is not
intended to be a complete investment program, and there is no assurance that its
investment objective can be achieved. The Fund's investment objective may be
changed by the Board of Trustees without shareholder approval, but only after
notification has been given to shareholders and after this Prospectus has been
revised accordingly. If there is a change in the Fund's investment objective,
shareholders should consider whether the Fund remains an appropriate investment
in light of their then current financial position and needs. Unless otherwise
indicated, all investment practices and limitations of the Fund are
nonfundamental policies which may be changed by the Board of Trustees without
shareholder approval.
Under normal circumstances, at least 65% of the Fund's total assets
will be invested in domestic and foreign bonds issued by governments,
corporations and supranational organizations such as the World Bank, Asian
Development Bank, European Investment Bank and European Economic Community.
Bonds are viewed by the Fund to include fixed-income securities of any maturity.
Investments of the Fund will be geographically concentrated in the countries
included in the Salomon Brothers World Government Bond Index: Australia,
Belgium, Canada, Denmark, France, Germany, Italy, Japan, the Netherlands, Spain,
Sweden, the United Kingdom and the United States. Under normal market
conditions, investments will be made in a minimum of three countries, one of
which may be the United States. For temporary defensive purposes, the Fund may
invest in securities of only one country, including the United States. The Fund
may invest in non-U.S. dollar denominated securities. The Fund may utilize a
variety of currency hedging techniques in order to reduce volatility resulting
from currency exchange rate fluctuations.
The Fund may invest up to 10% of its total assets in global bonds
issued by emerging countries. The emerging countries in which the Fund may
invest currently include Argentina, Brazil, Chile, Columbia, Indonesia, India,
Malaysia, Mexico, the Philippines, Poland, Singapore, Thailand and Venezuela.
Such markets tend to be in the less economically developed regions of the world.
General characteristics of emerging countries also include lower degrees of
political stability, a high demand for capital investment, a high dependence on
export markets for their major industries, a need to develop basic economic
infrastructures and rapid economic growth. The Adviser believes
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<PAGE>
that investments in bonds issued in emerging countries offer the opportunity for
significant long-term investment returns; however, these investments involve
certain risks.
The Fund may engage in various hedging techniques to seek to hedge all
or a portion of its assets against market value changes resulting from changes
in security prices, interest rates, currency exchange rates or other factors
that affect the value of the Fund's portfolio. Hedging is a means of attempting
to offset, or neutralize, the price movement of an investment by making another
investment, the price of which should tend to move in the opposite direction
from the original investment. The hedging techniques which may be used by the
Fund include buying and selling put and call options, buying and selling futures
contracts and entering into forward currency exchange contracts.
It is anticipated that under normal circumstances the Fund's
dollar-weighted average maturity will be ten years or less, although the Fund
may invest in securities of any maturity, provided that such obligations meet
the Fund's quality standards. The Fund's quality standards limit its investments
to those rated within the three highest grades assigned by Moody's Investors
Services, Inc. (Aaa, Aa or A), Standard & Poor's Ratings Group (AAA, AA or A) or
Fitch Investors Services, Inc. (AAA, AA or A), or unrated securities determined
by the Adviser to be of comparable quality.
For defensive purposes, the Fund may temporarily hold all or a portion
of its assets in short-term obligations such as bank debt instruments
(certificates of deposit, bankers' acceptances and time deposits), commercial
paper, domestic and foreign Government obligations having a maturity of less
than one year or repurchase agreements. The Fund's quality standards limit its
investments in short-term obligations to those which are rated within the two
highest grades by Moody's (Prime-1 or Prime-2), Standard & Poor's (A-1 or A-2)
or Fitch (Fitch-1 or Fitch-2). The Statement of Additional Information contains
a description of Moody's, Standard & Poor's and Fitch ratings.
It is anticipated that by investing in a portfolio of foreign
fixed-income securities in markets that have historically had a low correlation
with the U.S. fixed-income market (when considering the aggregate impact of both
fluctuations in currencies and interest rates), the Fund will achieve a less
volatile net asset value than is characteristic of mutual funds that invest
primarily in fixed-income obligations of a single market denominated in a single
currency. The decision to invest in a given bond market is normally made in
tandem with the decision to invest in the related currency. Generally, the
factors used to determine the relative attractiveness of one
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<PAGE>
market (currency) versus another are long-term in nature and, therefore, the
core structure of the Fund's portfolio will remain relatively stable over time.
In order to reduce the volatility of short-term investment returns, short-term
currency risk is managed through currency hedging.
Hedging Techniques
- ------------------
Unless otherwise indicated, the Adviser may engage in the following
hedging techniques to seek to hedge all or a portion of the Fund's assets
against market value changes resulting from changes in securities prices,
interest rates and currency fluctuations. Hedging is a means of attempting to
offset, or neutralize, the price movement of an investment by making another
investment, the price of which should tend to move in the opposite direction
from the original investment. The imperfect correlation in price movement
between an option and the underlying financial instrument and/or the costs of
implementing such an option may limit the effectiveness of the hedging strategy.
PUT AND CALL OPTIONS. The Fund may write (sell) covered put and call
options as a means of enhancing its return and may buy put and call options
written by others covering securities, futures contracts and foreign currencies
to attempt to provide protection against the adverse effects of anticipated
changes in the prices of such instruments. The Fund may write covered call
options as a means of enhancing its return through the receipt of premiums when
the Adviser determines that the underlying securities, futures contracts or
foreign currencies have achieved their potential for appreciation. However, by
writing such options, the Fund forgoes the opportunity to profit from an
increase in the market price of the underlying security, futures contract or
foreign currency above the exercise price except insofar as the premium
represents such a profit. The Fund may also seek to earn additional income
through receipt of premiums by writing covered put options. The risk involved in
writing such options is that there could be a decrease in the market value of
the underlying security, futures contract or foreign currency. If this occurred,
the option could be exercised and the underlying instrument would then be sold
to the Fund at a higher price than its then current market value. The Fund may
purchase put and call options to attempt to provide protection against adverse
price effects from anticipated changes in prevailing prices of securities,
futures contracts or foreign currencies. The purchase of a put option protects
the value of portfolio holdings in a falling market, while the purchase of a
call option protects cash reserves from a failure to participate in a rising
market. In purchasing a call option, the Fund would be in a position to realize
a gain if, during the option period, the price of the security, futures contract
or foreign currency increased by an amount greater than the premium paid. It
would
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<PAGE>
realize a loss if the price of the security, futures contract or foreign
currency decreased or remained the same or did not increase during the period by
more than the amount of the premium. If a put or call option purchased by the
Fund were permitted to expire without being sold or exercised, its premium would
represent a realized loss to the Fund. When writing put options the Fund will be
required to segregate cash and/or liquid securities to meet its obligations.
When writing call options the Fund will be required to own the underlying
financial instrument or segregate with its Custodian cash and/or
short-term high quality securities to meet its obligations under written calls.
By so doing, the Fund's ability to meet current obligations, to honor
redemptions or to achieve its investment objective may be impaired. The staff of
the Securities and Exchange Commission has taken the position that
over-the-counter options and the assets used as "cover" for over-the-counter
options are illiquid securities.
FUTURES CONTRACTS. The Fund may buy and sell futures contracts as a
hedge to protect the value of the Fund's portfolio against anticipated changes
in interest rates, securities prices and foreign currencies. There are several
risks in using futures contracts. One risk is that futures prices could
correlate imperfectly with the behavior of cash market prices of the financial
instrument being hedged so that even a correct forecast of general price trends
may not result in a successful transaction. Another risk is that the Adviser may
be incorrect in its expectation of future prices of the underlying financial
instrument. There is also a risk that a secondary market in the obligations that
the Fund holds may not exist or may not be adequately liquid to permit the Fund
to close out positions when it desires to do so. When buying or selling futures
contracts the Fund will be required to segregate cash and/or liquid securities
to meet its obligations under these types of financial instruments. By
so doing, the Fund's ability to meet current obligations, to honor
redemptions or to operate in a manner consistent with its investment
objective may be impaired.
FORWARD CURRENCY EXCHANGE CONTRACTS. When the Adviser believes that the
currency of a particular foreign country may suffer a substantial decline
against the U.S. dollar, it may attempt to hedge some portion or all of this
anticipated risk by entering into a forward contract to sell an amount of
foreign currency approximating the value of some or all of the Fund's portfolio
obligations denominated in such foreign currency. It may also enter into such
contracts to protect against loss between trade and settlement dates resulting
from changes in foreign currency exchange rates. Such contracts will also have
the effect of limiting any gains to the Fund between trade and settlement dates
resulting from changes in such rates.
- 9 -
<PAGE>
Risk Factors
- ------------
The market value of investments available to the Fund, and therefore
the Fund's yield and net asset value, will fluctuate due to changes in interest
rates, economic conditions, foreign exchange conditions, quality ratings and
other factors beyond the control of the Adviser. The Fund's portfolio securities
are subject to price fluctuations based upon changes in the level of interest
rates, which will generally result in all those securities changing in price in
the same way, i.e., all those securities experiencing appreciation when interest
rates decline and depreciation when interest rates rise. In addition, the
financial condition of an issuer or adverse changes in general economic
conditions, or both, may impair the issuer's ability to make payments of
interest and principal.
The Fund may invest in securities which are rated at the time of
purchase within the three highest grades assigned by Moody's, Standard & Poor's
or Fitch. Subsequent to its purchase by the Fund, a security may cease to be
rated or its rating may be reduced below the minimum required for purchase by
the Fund. In the event a security's rating is reduced below the Fund's minimum
requirements, the Fund will sell the security, subject to market conditions and
the Adviser's assessment of the most opportune time for sale. Although lower
rated securities will generally provide higher yields than higher rated
securities of similar maturities, they are subject to a greater degree of market
fluctuation. The lower rating also reflects a greater possibility that changing
circumstances may impair the ability of the issuer to make timely payments of
interest and principal. In addition, securities with longer maturities generally
offer both higher yields and greater exposure to market fluctuation from changes
in interest rates. Consequently, investors in the Fund should be aware that
there is a possibility of greater fluctuation in the Fund's net asset value.
The Fund is a non-diversified fund under the Investment Company Act of
1940. Thus, its investments may be more concentrated in fewer issuers than those
of a diversified fund. This concentration may cause greater fluctuation in the
Fund's net asset value. As the Fund intends to comply with Subchapter M of the
Internal Revenue Code, it may invest up to 50% of its assets at the end of each
quarter of its fiscal year in as few as two issuers, provided that no more than
25% of the assets are invested in one issuer. With respect to the remaining 50%
of its assets at the end of each quarter, it may invest no more than 5% in one
issuer.
INVESTMENTS IN FOREIGN OBLIGATIONS. Where investments in foreign
obligations are made in currencies of foreign countries, the value of the Fund's
assets as measured in U.S. dollars may be affected favorably or unfavorably by
changes in currency exchange
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<PAGE>
rates, currency restrictions and in exchange control regulations. While the Fund
will attempt to hedge against fluctuations in exchange rates between the U.S.
dollar and other currencies in which the Fund invests, the Fund may nevertheless
incur losses from currency translation effects. Generally, an increase in the
value of a foreign currency versus the U.S. dollar will have a positive effect
on the Fund's return while a decline in the value of a foreign currency versus
the U.S. dollar will have a negative impact on the Fund. Foreign investments may
be subject to special risks, including future political and economic
developments and the possibility of seizure or nationalization of companies,
imposition of withholding taxes on income, establishment of exchange controls or
adoption of other restrictions, less governmental supervision of securities
markets, reduced publicly available information concerning issuers, and the lack
of uniform accounting, auditing and financial reporting standards that might
affect an investment adversely. Moreover, obligations issued by many foreign
companies may be less liquid and their prices more volatile than obligations
issued by U.S. companies. The settlement practices in foreign countries may
include delays and subject the Fund to risk of loss not customary in U.S.
markets. Investment in foreign obligations may also result in higher expenses
due to the cost of converting foreign currency into U.S. dollars, the payment of
fixed brokerage commissions on foreign exchanges, which generally are higher
than commissions on U.S. exchanges, and the expense of maintaining securities
with foreign custodians.
EMERGING MARKETS. The risks of foreign investing are of greater concern
in the case of investments in emerging markets which may exhibit greater price
volatility and have less liquidity. Furthermore, the economies of emerging
market countries generally are heavily dependent upon international trade and,
accordingly, have been and may continue to be adversely affected by trade
barriers, managed adjustments in relative currency values, and other
protectionist measures applied internally or imposed by the countries with which
they trade. These emerging market economies also have been and may continue to
be adversely affected by economic conditions in the countries with which they
trade.
CURRENCY EXPOSURE. Because of exchange rate movements, the net asset
value of the Fund is likely to be more volatile than funds which invest only in
U.S. dollar-denominated securities. As the U.S. dollar strengthens relative to
a given foreign currency, the value of a portfolio security denominated in that
currency will fall. Conversely, when the U.S. dollar weakens relative to a
currency, the value of a portfolio security in that currency will rise.
Therefore, the greater the level of a fund's currency exposure, the greater its
risk and return potential. By actively managing currency exposure, the Adviser
attempts to
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<PAGE>
insulate portfolios from the effect of currency fluctuations, or profit from
them. There is, of course, no guarantee the Adviser will be successful in this
regard.
HEDGING TECHNIQUES. The Fund's ability to establish and close out
positions in futures contracts and options will be subject to the existence of a
liquid secondary market. Although the Fund generally will purchase or sell only
those futures contracts and options for which there appears to be an active
secondary market, there is no assurance that a liquid secondary market on an
exchange will exist for any particular futures contract or option or at any
particular time.
Transactions in options involve special risks. The Fund may not be able
to enter into a closing transaction to cancel its obligations with respect to
the options it has written or purchased. If an option purchased by the Fund
expires unexercised, the Fund will lose the premium it paid. In addition, the
Fund could suffer a loss if the premium paid by the Fund in a closing
transaction exceeds the premium income it received. When the Fund writes a call
option, its ability to participate in the capital appreciation of the underlying
obligation is limited.
Other Investment Techniques
- ---------------------------
The Fund may also engage in the following investment techniques, each
of which may involve certain risks:
U.S. GOVERNMENT OBLIGATIONS. "U.S. Government obligations"
include securities which are issued or guaranteed by the United States Treasury,
by various agencies of the United States Government, and by various
instrumentalities which have been established or sponsored by the United States
Government. U.S. Treasury obligations are backed by the "full faith and credit"
of the United States Government. Other U.S. Government obligations may or may
not be backed by the full faith and credit of the United States. In the case
of securities not backed by the full faith and credit of the United States, the
investor must look principally to the agency issuing or guaranteeing the
obligation for ultimate repayment, and may not be able to assert a claim
against the United States in the event the agency or instrumentality does not
meet its commitments. Shares of the Fund are not guaranteed or backed by the
United States Government.
DELAYED SETTLEMENT TRANSACTIONS. Obligations issued on a when-issued or
to-be-announced basis are settled by delivery and payment after the date of the
transaction, usually within 15 to 45 days. In a to-be-announced transaction, the
Fund has committed to purchasing or selling securities for which all specific
information is not yet known at the time of the trade,
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<PAGE>
particularly the face amount in transactions involving mortgage-related
securities. The Fund will only make commitments to purchase obligations on a
when-issued or to-be-announced basis with the intention of actually acquiring
the obligations, but the Fund may sell these securities before the settlement
date if it is deemed advisable as a matter of investment strategy or in order to
meet its obligations, although it would not normally expect to do so. The Fund
will not enter into a delayed settlement transaction which settles in more than
120 days.
Purchases of securities on a when-issued or to-be-announced basis are
subject to market fluctuations and their current value is determined in the same
manner as other portfolio securities. When effecting such purchases for the
Fund, a segregated account of cash, U.S. Government obligations or other liquid
securities of the Fund in an amount sufficient to make payment for the
portfolio securities to be purchased will be maintained with the Fund's
Custodian at the trade date and valued daily at market for the purpose of
determining the adequacy of the securities in the account. If the market value
of segregated securities declines, additional cash or securities will be
segregated on a daily basis so that the market value of the Fund's segregated
assets will equal the amount of the Fund's commitments to purchase when-issued
obligations and securities on a to-be-announced basis. The Fund's purchase of
securities on a when-issued or to-be-announced basis may increase its overall
investment exposure and involves a risk of loss if the value of the securities
declines prior to the settlement date or if the broker-dealer selling the
securities fails to deliver after the value of the securities has risen.
REPURCHASE AGREEMENTS. Repurchase agreements are transactions by which
the Fund purchases a security and simultaneously commits to resell that security
to the seller at an agreed upon time and price, thereby determining the yield
during the term of the agreement. In the event of a bankruptcy or other default
of the seller of a repurchase agreement, the Fund could experience both delays
in liquidating the underlying security and losses. To minimize these
possibilities, the Fund intends to enter into repurchase agreements only with
its Custodian, banks having assets in excess of $10 billion and the largest and,
in the Board of Trustees' judgment, most creditworthy primary U.S. Government
securities dealers. The Fund will enter into repurchase agreements which are
collateralized by U.S. Government obligations or other liquid high-grade debt
obligations. Collateral for repurchase agreements is held in safekeeping in the
customer-only account of the Fund's Custodian at the Federal Reserve Bank. At
the time the Fund enters into a repurchase agreement, the value of the
collateral, including accrued interest, will equal or exceed the value of the
repurchase agreement and, in the case of a repurchase agreement exceeding one
day, the seller agrees to
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<PAGE>
maintain sufficient collateral so that the value of the underlying collateral,
including accrued interest, will at all times equal or exceed the value of the
repurchase agreement. The Fund will not enter into a repurchase agreement not
terminable within seven days if, as a result thereof, more than 15% of the value
of the net assets of the Fund would be invested in such securities and other
illiquid securities.
BORROWING AND PLEDGING. As a temporary measure for extraordinary or
emergency purposes, the Fund may borrow money from banks or other persons in an
amount not exceeding 10% of its total assets. The Fund may pledge assets in
connection with borrowings but will not pledge more than 10% of its total
assets. The Fund will not make any additional purchases of portfolio securities
if outstanding borrowings exceed 5% of the value of its total assets. These
policies do not preclude the Fund from entering into reverse repurchase
transactions (see below), provided that the Fund has asset coverage of 300% of
all its reverse repurchase commitments pursuant to such transactions and all
other outstanding borrowings of the Fund. Borrowings of the Fund, including its
current obligations under reverse repurchase agreements, will not exceed
one-third of the current market value of the Fund's total assets (less all its
liabilities other than obligations under reverse repurchase agreements and other
borrowings).
Borrowing magnifies the potential for gain or loss on the Fund's
portfolio securities and, therefore, if employed, increases the possibility of
fluctuation in its net asset value. This is the speculative factor known as
leverage. To reduce the risks of borrowing, the Fund will limit its borrowings
as described above. The Fund's policies on borrowing and pledging are
fundamental policies which may not be changed without the affirmative vote of a
majority of its outstanding shares.
REVERSE REPURCHASE TRANSACTIONS. The Fund may enter into reverse
repurchase transactions. A reverse repurchase transaction involves the sale of a
money market instrument held by the Fund coupled with an agreement by the Fund
to repurchase the instrument at a stated price, date and interest payment. The
Fund will use the proceeds of a reverse repurchase transaction to purchase other
money market instruments which either mature at a date simultaneous with or
prior to the expiration of the reverse repurchase agreement or which are held
under an agreement to resell maturing as of that time.
The Fund will enter into a reverse repurchase transaction only when the
interest income to be earned from the investment of the proceeds of the
transaction is greater than the interest expense of the transaction. Under the
Investment Company Act of 1940, reverse repurchase transactions may be
considered to be borrowings by the seller. The Fund may not enter into a reverse
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<PAGE>
repurchase transaction if, as a result, its current obligations under such
agreements and all of its other outstanding borrowings would exceed one-third of
the current market value of the Fund's total assets (less all its liabilities
other than obligations under such agreements and other borrowings). The Fund may
enter into reverse repurchase transactions with banks or broker-dealers. Entry
into such transactions requires the creation and maintenance of a segregated
account with the Fund's Custodian consisting of cash and/or liquid securities.
The Fund may also enter into reverse repurchase transactions in order
to hedge against a possible decline in the value of the foreign currency in
which a debt security is denominated. In these transactions, the Fund sells a
debt security denominated in a foreign currency for delivery in the current
month and simultaneously contracts to repurchase the same security on a
specified future date. The foreign currency cash proceeds from the sale of the
debt security are then converted into U.S. dollars. Thus, as a result of the
transaction, the Fund continues to be subject to fluctuations in the value of
the security, but not to fluctuations in the value of the currency in which the
security is denominated. Because these reverse repurchase transactions are
entered into to hedge foreign currency risk and not for leverage purposes, they
will not be treated as borrowing for purposes of the Fund's investment
restriction concerning borrowing.
LENDING PORTFOLIO SECURITIES. The Fund may make short-term loans of its
portfolio securities to banks, brokers and dealers. Lending portfolio securities
exposes the Fund to the risk that the borrower may fail to return the loaned
securities or may not be able to provide additional collateral or that the Fund
may experience delays in recovery of the loaned securities or loss of rights in
the collateral if the borrower fails financially. To minimize these risks, the
borrower must agree to maintain collateral marked to market daily, in the form
of cash and/or liquid high-grade debt obligations, with the Fund's Custodian in
an amount at least equal to the market value of the loaned securities. The Fund
will limit the amount of its loans of portfolio securities to no more than 25%
of its net assets. This lending policy may not be changed by the Fund without
the affirmative vote of a majority of its outstanding shares.
PORTFOLIO TURNOVER. The Fund does not intend to use short-term trading
as a primary means of achieving its investment objective. However, the Fund's
rate of portfolio turnover will depend upon market and other conditions, and it
will not be a limiting factor when portfolio changes are deemed necessary or
appropriate by the Adviser. The portfolio turnover of the Fund may be greater
than that of many other mutual funds. High turnover involves correspondingly
greater commission expenses and transaction costs and may result in the Fund
recognizing greater
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<PAGE>
amounts of income and capital gains, which would increase the amount of income
and capital gains which the Fund must distribute to its shareholders in order
to maintain its status as a regulated investment company and to avoid the
imposition of federal income or excise taxes. See "Taxes."
HOW TO PURCHASE SHARES
- ----------------------
Your initial investment in the Fund ordinarily must be at least $1,000
($250 for tax-deferred retirement plans). However, the minimum initial
investment in Class A shares for employees, shareholders and customers of
Countrywide Credit Industries, Inc. or any affiliated company, including members
of the immediate family of such individuals, is $50. You may purchase additional
shares through the Open Account Program described below. You may open an account
and make an initial investment through securities dealers having a sales
agreement with the Trust's principal underwriter, Countrywide Investments, Inc.
(the "Manager"). You may also make a direct initial investment by sending a
check and a completed account application form to Countrywide Fund Services,
Inc. (the "Transfer Agent"), P.O. Box 5354, Cincinnati, Ohio 45201-5354. Checks
should be made payable to the "Global Bond Fund." An account application is
included in this Prospectus.
The Trust mails you confirmations of all purchases or redemptions of
Fund shares. Certificates representing shares of the Fund are not issued.
The Trust and the Manager reserve the rights to limit the amount of investments
and to refuse to sell to any person.
Investors should be aware that the Fund's account application contains
provisions in favor of the Trust, the Transfer Agent and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating to
the various services (for example, telephone exchanges) made available to
investors.
Should an order to purchase shares be canceled because your check does
not clear, you will be responsible for any resulting losses or fees incurred by
the Trust or the Transfer Agent in the transaction.
OPEN ACCOUNT PROGRAM. Please direct inquiries concerning the services
described in this section to the Transfer Agent at the address or numbers listed
below.
After an initial investment, all investors are considered participants
in the Open Account Program. The Open Account
- 16 -
<PAGE>
Program helps investors make purchases of shares of the Fund over a period of
years and permits the automatic reinvestment of dividends and distributions of
the Fund in additional shares without a sales load.
Under the Open Account Program, you may purchase and add shares to your
account at any time either through your securities dealer or by sending a check
to the Transfer Agent, P.O. Box 5354, Cincinnati, Ohio 45201-5354. The check
should be made payable to the Fund.
Under the Open Account Program, you may also purchase shares of the
Fund by bank wire. Please telephone the Transfer Agent (Nationwide call
toll-free 800-543-0407; in Cincinnati call 629- 2050) for instructions. Your
bank may impose a charge for sending your wire. There is presently no fee for
receipt of wired funds, but the Transfer Agent reserves the right to charge
shareholders for this service upon thirty days' prior notice to shareholders.
Each additional purchase request must contain the name of your account
and your account number to permit proper crediting to your account. While there
is no minimum amount required for subsequent investments, the Trust reserves the
right to impose such requirement. All purchases under the Open Account Program
are made at the public offering price next determined after receipt of a
purchase order by the Trust. If a broker-dealer received concessions for selling
shares of the Fund to a current shareholder, such broker-dealer will receive the
concessions described above with respect to additional investments by the
shareholder.
SALES LOAD ALTERNATIVES
The Fund offers two classes of shares which may be purchased at the
election of the purchaser. The two classes of shares each represent interests in
the same portfolio of investments of the Fund, have the same rights and are
identical in all material respects except that (i) Class C shares bear the
expenses of higher distribution fees; (ii) certain other class specific expenses
will be borne solely by the class to which such expenses are attributable,
including transfer agent fees attributable to a specific class of shares,
printing and postage expenses related to preparing and distributing materials to
current shareholders of a specific class, registration fees incurred by a
specific class of shares, the expenses of administrative personnel and services
required to support the shareholders of a specific class, litigation or other
legal expenses relating to a class of shares, Trustees' fees or expenses
incurred as a result of issues relating to a specific class of shares and
accounting fees and expenses relating to a specific class of shares; and (iii)
each class has exclusive voting rights with respect to matters
- 17 -
<PAGE>
relating to its own distribution arrangements. The net income attributable to
Class C shares and the dividends payable on Class C shares will be reduced by
the amount of the incremental expenses associated with the distribution fee.
See "Distribution Plans."
The Fund's alternative sales arrangements permit investors to choose
the method of purchasing shares that is most beneficial given the amount of the
purchase, the length of time the investor expects to hold his shares and other
relevant circumstances. Investors should determine whether under their
particular circumstances it is more advantageous to incur a front-end sales load
and be subject to lower ongoing charges, as discussed below, or to have all of
the initial purchase price invested in the Fund with the investment thereafter
being subject to higher ongoing charges. A salesperson or any other person
entitled to receive any portion of a distribution fee may receive different
compensation for selling Class A or Class C shares.
As an illustration, investors who qualify for reduced sales loads as
described below, might elect the Class A sales load alternative because similar
sales load reductions are not available for purchases under the Class C sales
load alternative. Moreover, shares acquired under the Class A sales load
alternative would be subject to lower ongoing distribution fees as described
below. Investors not qualifying for reduced initial sales loads who expect to
maintain their investment for an extended period of time might also elect the
Class A sales load alternative because over time the accumulated continuing
distribution fees on Class C shares may exceed the difference in initial sales
loads between Class A and Class C shares. Again, however, such investors must
weigh this consideration against the fact that less of their funds will be
invested initially under the Class A sales load alternative. Furthermore, the
higher ongoing distribution fees will be offset to the extent any return is
realized on the additional funds initially invested under the Class C sales load
alternative.
Some investors might determine that it would be more advantageous to
utilize the Class C sales load alternative to have more of their funds invested
initially, although remaining subject to higher ongoing distribution fees and,
for a one-year period, being subject to a contingent deferred sales load. For
example, based on estimated fees and expenses, an investor subject to the
maximum 4% initial sales load on Class A shares who elects to reinvest dividends
in additional shares would have to hold the investment in Class A shares
approximately 5 years before the accumulated ongoing distribution fees on the
alternative Class C shares would exceed the initial sales load plus the
accumulated ongoing distribution fees on Class A shares. In this example and
assuming the investment was maintained for
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<PAGE>
more than 5 years, the investor might consider purchasing Class A shares. This
example does not take into account the time value of money which reduces the
impact of the higher ongoing Class C distribution fees, fluctuations in net
asset value or the effect of different performance assumptions.
In addition to the compensation otherwise paid to securities dealers,
the Manager may from time to time pay from its own resources additional cash
bonuses or other incentives to selected dealers in connection with the sale of
shares of the Fund. On some occasions, such bonuses or incentives may be
conditioned upon the sale of a specified minimum dollar amount of the shares of
the Fund and/or other funds of Countrywide Investments during a specific period
of time. Such bonuses or incentives may include financial assistance to dealers
in connection with conferences, sales or training programs for their employees,
seminars for the public, advertising, sales campaigns and other dealer-sponsored
programs or events.
CLASS A SHARES
Class A shares of the Fund are sold on a continuous basis at the public
offering price next determined after receipt of a purchase order by the Trust.
Purchase orders received by dealers prior to 4:00 p.m., Eastern time, on any
business day and transmitted to the Manager by 5:00 p.m., Eastern time, that day
are confirmed at the public offering price determined as of the close of the
regular session of trading on the New York Stock Exchange on that day. It is the
responsibility of dealers to transmit properly completed orders so that they
will be received by the Manager by 5:00 p.m., Eastern time. Dealers may charge a
fee for effecting purchase orders. Direct purchase orders received by the
Transfer Agent by 4:00 p.m., Eastern time, are confirmed at that day's public
offering price. Direct investments received by the Transfer Agent after 4:00
p.m., Eastern time, and orders received from dealers after 5:00 p.m., Eastern
time, are confirmed at the public offering price next determined on the
following business day.
The public offering price of Class A shares is the next determined net
asset value per share plus a sales load as shown in the following table.
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<PAGE>
Dealer
Reallowance
Sales Load as % of: as % of
Public Net Public
Offering Amount Offering
Amount of Investment Price Invested Price
- -------------------- ------- -------- --------
Less than $100,000 4.00% 4.17% 3.60%
$100,000 but less than $250,000 3.50 3.63 3.30
$250,000 but less than $500,000 2.50 2.56 2.30
$500,000 but less than $1,000,000 2.00 2.04 1.80
$1,000,000 or more None* None*
* There is no front-end sales load on purchases of $1 million or more but
a contingent deferred sales load of .75% may apply with respect to
Class A shares if a commission was paid by the Manager to a
participating unaffiliated dealer and the shares are redeemed within
twelve months from the date of purchase.
Under certain circumstances, the Manager may increase or decrease the
reallowance to dealers. Dealers engaged in the sale of shares of the Fund may be
deemed to be underwriters under the Securities Act of 1933. The Manager retains
the entire sales load on all direct initial investments in the Fund and on all
investments in accounts with no designated dealer of record.
For initial purchases of Class A shares of $1,000,000 or more made
after October 1, 1995 and subsequent purchases further increasing the size of
the account, a dealer's commission of .75% of the purchase amount may be paid by
the Manager to participating unaffiliated dealers through whom such purchases
are effected. In determining a dealer's eligibility for such commission,
purchases of Class A shares of the Fund may be aggregated with concurrent
purchases of Class A shares of other funds of Countrywide Investments. Dealers
should contact the Manager concerning the applicability and calculation of the
dealer's commission in the case of combined purchases. An exchange from other
funds of Countrywide Investments will not qualify for payment of the dealer's
commission, unless such exchange is from a Countrywide fund with assets as to
which a dealer's commission or similar payment has not been previously paid.
Redemptions of Class A shares may result in the imposition of a contingent
deferred sales load if the dealer's commission described in this paragraph was
paid in connection with the purchase of such shares. See "Contingent Deferred
Sales Charge for Certain Purchases of Class A Shares" below.
REDUCED SALES LOAD. A "purchaser" (defined below) may use
- 20 -
<PAGE>
the Right of Accumulation to combine the cost or current net asset value
(whichever is higher) of his existing Class A shares of the load funds
distributed by the Manager with the amount of his current purchases in order to
take advantage of the reduced sales loads set forth in the table above.
Purchases made in any load fund distributed by the Manager pursuant to a Letter
of Intent may also be eligible for the reduced sales loads. The minimum initial
investment under a Letter of Intent is $10,000. The load funds currently
distributed by the Manager are listed in the Exchange Privilege section of this
Prospectus. Shareholders should contact the Transfer Agent for information about
the Right of Accumulation and Letter of Intent.
PURCHASES AT NET ASSET VALUE. You may purchase Class A shares of the
Fund at net asset value when the payment for your investment represents the
proceeds from the redemption of shares of any other mutual fund which has a
front-end sales load and is not distributed by the Manager. Your investment will
qualify for this provision if the purchase price of the shares of the other fund
included a sales load and the redemption occurred within one year of the
purchase of such shares and no more than sixty days prior to your purchase of
Class A shares of the Fund. To make a purchase at net asset value pursuant to
this provision, you must submit photocopies of the confirmations (or similar
evidence) showing the purchase and redemption of shares of the other fund. Your
payment may be made with the redemption check representing the proceeds of the
shares redeemed, endorsed to the order of the Fund. The redemption of shares of
the other fund is, for federal income tax purposes, a sale on which you may
realize a gain or loss. These provisions may be modified or terminated at any
time. Contact your securities dealer or the Trust for further information.
Banks, bank trust departments and savings and loan associations, in
their fiduciary capacity or for their own accounts, may also purchase Class A
shares of the Fund at net asset value. To the extent permitted by regulatory
authorities, a bank trust department may charge fees to clients for whose
account it purchases shares at net asset value. Federal and state credit unions
may also purchase Class A shares at net asset value.
In addition, Class A shares of the Fund may be purchased at net asset
value by broker-dealers who have a sales agreement with the Manager, and their
registered personnel and employees, including members of the immediate families
of such registered personnel and employees.
Clients of investment advisers and financial planners may also purchase
Class A shares of the Fund at net asset value if
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<PAGE>
their investment adviser or financial planner has made arrangements to permit
them to do so with the Trust and the Manager. The investment adviser or
financial planner must notify the Transfer Agent that an investment qualifies as
a purchase at net asset value.
Employees, shareholders and customers of Countrywide Credit Industries,
Inc. or any affiliated company, including members of the immediate family of
such individuals and employee benefit plans established by such entities, may
also purchase Class A shares of the Fund at net asset value.
CONTINGENT DEFERRED SALES LOAD FOR CERTAIN PURCHASES OF CLASS A SHARES.
A contingent deferred sales load is imposed upon certain redemptions of Class A
shares of the Fund (or shares into which such Class A shares were exchanged)
purchased at net asset value in amounts totaling $1 million or more, if the
dealer's commission described above was paid by the Manager and the shares are
redeemed within twelve months from the date of purchase. The contingent deferred
sales load will be paid to the Manager and will be equal to .75% of the lesser
of (1) the net asset value at the time of purchase of the Class A shares being
redeemed or (2) the net asset value of such Class A shares at the time of
redemption. In determining whether the contingent deferred sales load is
payable, it is assumed that shares not subject to the contingent deferred sales
load are the first redeemed followed by other shares held for the longest period
of time. The contingent deferred sales load will not be imposed upon shares
representing reinvested dividends or capital gains distributions, or upon
amounts representing share appreciation. If a purchase of Class A shares is
subject to the contingent deferred sales load, the investor will be so notified
on the confirmation for such purchase.
Redemptions of such Class A shares of the Fund held for at least 12
months will not be subject to the contingent deferred sales load and an exchange
of such Class A shares into another fund of Countrywide Investments is not
treated as a redemption and will not trigger the imposition of the contingent
deferred sales load at the time of such exchange. A fund will "tack" the period
for which such Class A shares being exchanged were held onto the holding period
of the acquired shares for purposes of determining if a contingent deferred
sales load is applicable in the event that the acquired shares are redeemed
following the exchange; however, the period of time that the redemption proceeds
of such Class A shares are held in a money market fund will not count toward the
holding period for determining whether a contingent deferred sales load is
applicable. See "Exchange Privilege."
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<PAGE>
The contingent deferred sales load is currently waived for any partial
or complete redemption following death or disability (as defined in the Internal
Revenue Code) of a shareholder (including one who owns the shares with his or
her spouse as a joint tenant with rights of survivorship) from an account in
which the deceased or disabled is named. The Manager may require documentation
prior to waiver of the charge, including death certificates, physicians'
certificates, etc.
ADDITIONAL INFORMATION. For purposes of determining the initial
investment requirements and the applicable sales load and for purposes of the
Letter of Intent and Right of Accumulation privileges, a purchaser includes an
individual, his spouse and their children under the age of 21, purchasing shares
for his or their own account; or a trustee or other fiduciary purchasing shares
for a single fiduciary account although more than one beneficiary is involved;
or employees of a common employer, provided that economies of scale are realized
through remittances from a single source and quarterly confirmation of such
purchases; or an organized group, provided that the purchases are made through a
central administration, or a single dealer, or by other means which result in
economy of sales effort or expense. Contact the Transfer Agent for additional
information concerning purchases at net asset value or at reduced sales loads.
CLASS C SHARES
Class C shares of the Fund are sold on a continuous basis at the net
asset value next determined after receipt of a purchase order by the Trust.
Purchase orders received by dealers prior to 4:00 p.m., Eastern time, on any
business day and transmitted to the Manager by 5:00 p.m., Eastern time, that day
are confirmed at the net asset value determined as of the close of the regular
session of trading on the New York Stock Exchange on that day. It is the
responsibility of dealers to transmit properly completed orders so that they
will be received by the Manager by 5:00 p.m., Eastern time. Dealers may charge a
fee for effecting purchase orders. Direct purchase orders received by the
Transfer Agent by 4:00 p.m., Eastern time, are confirmed at that day's net asset
value. Direct investments received by the Transfer Agent after 4:00 p.m.,
Eastern time, and orders received from dealers after 5:00 p.m., Eastern time,
are confirmed at the net asset value next determined on the following business
day.
A contingent deferred sales load is imposed on Class C shares if an
investor redeems an amount which causes the current value of the investor's
account to fall below the total dollar amount of purchase payments subject to
the deferred sales load, except that no such charge is imposed if the shares
redeemed have been acquired through the reinvestment of dividends or capital
- 23 -
<PAGE>
gains distributions or to the extent the amount redeemed is derived from
increases in the value of the account above the amount of purchase payments
subject to the deferred sales load.
Whether a contingent deferred sales load is imposed will depend on the
amount of time since the investor made a purchase payment from which an amount
is being redeemed. Purchases are subject to the contingent deferred sales load
according to the following schedule:
Year Since Purchase Contingent Deferred
Payment was Made Sales Load
-------------------- --------------------
First Year 1%
Thereafter None
In determining whether a contingent deferred sales load is payable, it
is assumed that the purchase payment from which the redemption is made is the
earliest purchase payment (from which a redemption or exchange has not already
been effected). If the earliest purchase from which a redemption has not yet
been effected was made within one year before the redemption, then a deferred
sales load at the rate of 1% will be imposed.
The following example will illustrate the operation of the contingent
deferred sales load. Assume that an individual opens an account and purchases
1,000 shares at $10 per share and that six months later the net asset value per
share is $12 and, during such time, the investor has acquired 50 additional
shares through reinvestment of distributions. If at such time the investor
should redeem 450 shares (proceeds of $5,400), 50 shares will not be subject to
the load because of dividend reinvestment. With respect to the remaining 400
shares, the load is applied only to the original cost of $10 per share and not
to the increase in net asset value of $2 per share. Therefore, $4,000 of the
$5,400 redemption proceeds will be charged the load. At the rate of 1%, the
contingent deferred sales load would be $40. In determining whether an amount is
available for redemption without incurring a deferred sales load, the purchase
payments made for all Class C shares in the shareholder's account are
aggregated, and the current value of all such shares is aggregated.
All sales loads imposed on redemptions are paid to the Manager. The
Manager intends to pay a commission of 1% of the purchase amount to
participating brokers at the time the investor purchases Class C shares.
The contingent deferred sales load is currently waived for any partial
or complete redemption following death or disability (as defined in the Internal
Revenue Code) of a shareholder
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<PAGE>
(including one who owns the shares with his or her spouse as a joint tenant with
rights of survivorship) from an account in which the deceased or disabled is
named. The Manager may require documentation prior to waiver of the charge,
including death certificates, physicians' certificates, etc.
SHAREHOLDER SERVICES
- ---------------------
Contact the Transfer Agent (Nationwide call toll-free 800- 543-0407; in
Cincinnati call 629-2050) for additional information about the shareholder
services described below.
AUTOMATIC WITHDRAWAL PLAN
If the shares in your account have a value of at least $5,000, you may
elect to receive, or may designate another person to receive, monthly or
quarterly payments in a specified amount of not less than $50 each. There is no
charge for this service. Purchases of additional Class A shares of the Fund
while the plan is in effect are generally undesirable because a sales load is
incurred whenever purchases are made.
TAX-DEFERRED RETIREMENT PLANS
Shares of the Fund are available for purchase in connection with the
following tax-deferred retirement plans:
-- Keogh Plans for self-employed individuals
-- Individual retirement account (IRA) plans for
individuals and their non-employed spouses, including
Roth IRAs and Education IRAs
-- Qualified pension and profit-sharing plans for
employees, including those profit-sharing plans with a
401(k) provision
-- 403(b)(7) custodial accounts for employees of public school
systems, hospitals, colleges and other non-profit
organizations meeting certain requirements of the Internal
Revenue Code
DIRECT DEPOSIT PLANS
Shares of the Fund may be purchased through direct deposit plans
offered by certain employers and government agencies. These plans enable a
shareholder to have all or a portion of his or her payroll or social security
checks transferred automatically to purchase shares of the Fund.
AUTOMATIC INVESTMENT PLAN
- 25 -
<PAGE>
You may make automatic monthly investments in the Fund from your bank,
savings and loan or other depository institution account. The minimum initial
and subsequent investments must be $50 under the plan. The Transfer Agent pays
the costs associated with these transfers, but reserves the right, upon thirty
days' written notice, to make reasonable charges for this service. Your
depository institution may impose its own charge for debiting your account which
would reduce your return from an investment in the Fund.
REINVESTMENT PRIVILEGE
If you have redeemed shares of the Fund, you may reinvest all or part
of the proceeds without any additional sales load. This reinvestment must occur
within ninety days of the redemption and the privilege may only be exercised
once per year.
HOW TO REDEEM SHARES
- ---------------------
You may redeem shares of the Fund on each day that the Trust is open
for business by sending a written request to the Transfer Agent. The request
must state the number of shares or the dollar amount to be redeemed and your
account number. The request must be signed exactly as your name appears on the
Trust's account records. If the shares to be redeemed have a value of $25,000 or
more, your signature must be guaranteed by any eligible guarantor institution,
including banks, brokers and dealers, municipal securities brokers and dealers,
government securities brokers and dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations.
You may also redeem shares by placing a wire redemption request through
a securities broker or dealer. Unaffiliated broker-dealers may impose a fee on
the shareholder for this service. You will receive the net asset value per share
next determined after receipt by the Trust or its agent of your wire redemption
request. It is the responsibility of broker-dealers to properly transmit wire
redemption orders.
If your instructions request a redemption by wire, you will be charged
an $8 processing fee. The Trust reserves the right, upon thirty days' written
notice, to change the processing fee. All charges will be deducted from your
account by redemption of shares in your account. Your bank or brokerage firm may
also impose a charge for processing the wire. In the event that wire
transfer of funds is impossible or impractical, the redemption proceeds
will be sent by mail to the designated account.
Redemption requests may direct that the proceeds be
- 26 -
<PAGE>
deposited directly in your account with a commercial bank or other depository
institution via an Automated Clearing House (ACH) transaction. There is
currently no charge for ACH transactions. Contact the Transfer Agent for more
information about ACH transactions.
If a certificate for the shares of the Fund was issued to you, you will
not be permitted to exchange shares by telephone or to use the automatic
withdrawal plan as to those shares. In order to redeem such shares, the
certificate must be delivered to the Transfer Agent, or the dealer in the case
of a wire redemption, duly endorsed or accompanied by a duly endorsed stock
power, with the signature guaranteed by any of the eligible guarantor
institutions outlined above.
A contingent deferred sales load may apply to a redemption of Class C
shares or to a redemption of certain Class A shares purchased at net asset
value. See "How to Purchase Shares."
Shares are redeemed at their net asset value per share next determined
after receipt by the Transfer Agent of a proper redemption request in the form
described above, less any applicable contingent deferred sales load. Payment is
normally made within three business days after tender in such form, provided
that payment in redemption of shares purchased by check will be effected only
after the check has been collected, which may take up to fifteen days from the
purchase date. To eliminate this delay, you may purchase shares of the Fund by
certified check or wire.
The Trust and the Transfer Agent will consider all written and verbal
instructions as authentic and will not be responsible for the processing of
exchange instructions received by telephone which are reasonably believed to be
genuine or the delivery or transmittal of the redemption proceeds by wire. The
affected shareholders will bear the risk of any such loss. The privilege of
exchanging shares by telephone is automatically available to all shareholders.
The Trust or the Transfer Agent, or both, will employ reasonable procedures to
determine that telephone instructions are genuine. If the Trust and/or the
Transfer Agent do not employ such procedures, they may be liable for losses due
to unauthorized or fraudulent instructions. These procedures may include, among
others, requiring forms of personal identification prior to acting upon
telephone instructions, providing written confirmation of the transactions
and/or tape recording telephone instructions.
At the discretion of the Trust or the Transfer Agent, corporate
investors and other associations may be required to furnish an appropriate
certification authorizing redemptions to ensure proper authorization. The Trust
reserves the right to require you to close your account if at any time the value
of your shares is less than the minimum amount required by the Trust
- 27 -
<PAGE>
for your account (based on actual amounts invested including any sales load
paid, unaffected by market fluctuations), or such other minimum amount as the
Trust may determine from time to time. After notification to you of the Trust's
intention to close your account, you will be given thirty days to increase the
value of your account to the minimum amount.
The Trust reserves the right to suspend the right of redemption or to
postpone the date of payment for more than three business days under unusual
circumstances as determined by the Securities and Exchange Commission.
EXCHANGE PRIVILEGE
- ------------------
Shares of the Fund and of any other fund of Countrywide Investments may
be exchanged for each other.
Class A shares of the Fund which are not subject to a contingent
deferred sales load may be exchanged for Class A shares of any other fund and
for shares of any other fund which offers only one class of shares (provided
such shares are not subject to a contingent deferred sales load). A sales load
will be imposed equal to the excess, if any, of the sales load rate applicable
to the shares being acquired over the sales load rate, if any, previously paid
on the shares being exchanged.
Class C shares of the Fund, as well as Class A shares of the Fund
subject to a contingent deferred sales load, may be exchanged, on the basis of
relative net asset value per share, for shares of any other fund which imposes a
contingent deferred sales load and for shares of any fund which is a money
market fund. A fund will "tack" the period for which the shares being exchanged
were held onto the holding period of the acquired shares for purposes of
determining if a contingent deferred sales load is applicable in the event that
the acquired shares are redeemed following the exchange. The period of time that
shares are held in a money market fund will not count toward the holding period
for determining whether a contingent deferred sales load is applicable.
The following are the funds of Countrywide Investments currently
offered to the public. Funds which may be subject to a front-end or contingent
deferred sales load are indicated by an asterisk.
- 28 -
<PAGE>
Countrywide Tax-Free Trust Countrywide Strategic Trust
Tax-Free Money Fund *Government Mortgage Fund
Ohio Tax-Free Money Fund *Equity Fund
California Tax-Free Money Fund *Utility Fund
Florida Tax-Free Money Fund *Growth/Value Fund
*Tax-Free Intermediate Term Fund *Aggressive Growth Fund
*Ohio Insured Tax-Free Fund *International Equity Fund
*Kentucky Tax-Free Fund
Countrywide Investment Trust
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
You may request an exchange by sending a written request to the
Transfer Agent as your name appears on the Trust's account records. Exchanges
may also be requested by telephone. If you are unable to execute your
transaction by telephone (for example during times of unusual market activity)
consider requesting your exchange by mail or by visiting the Trust's offices at
312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202. An exchange will be
effected at the next determined net asset value (or offering price, if sales
load is applicable) after receipt of a request by the Transfer Agent.
Exchanges may only be made for shares of funds then offered for sale in
your state of residence and are subject to the applicable minimum initial
investment requirements. The exchange privilege may be modified or terminated by
the Board of Trustees upon 60 days' prior notice to shareholders. An exchange
results in a sale of fund shares, which may cause you to recognize a capital
gain or loss. Before making an exchange, contact the Transfer Agent to obtain a
current prospectus for any of the other funds of Countrywide Investments and
more information about exchanges among Countrywide Investments.
DIVIDENDS AND DISTRIBUTIONS
- ----------------------------
The Fund expects to distribute substantially all of its net investment
income and any net realized long-term capital gains at least once each year.
Management will determine the timing and frequency of the distributions of any
net realized short-term capital gains.
Distributions are paid according to one of the following
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<PAGE>
options:
Share Option - income distributions and capital gains
distributions reinvested in additional
shares.
Income Option - income distributions and short-term capital
gains distributions paid in cash; long-term
capital gains distributions reinvested in
additional shares.
Cash Option - income distributions and capital
gains distributions paid in cash.
You should indicate your choice of option on your application. If no option is
specified on your application, distributions will automatically be reinvested in
additional shares. All distributions will be based on the net asset value in
effect on the payable date.
If you select the Income Option or the Cash Option and the U.S. Postal
Service cannot deliver your checks or if your checks remain uncashed for six
months, your dividends may be reinvested in your account at the then-current net
asset value and your account will be converted to the Share Option. No interest
will accrue on amounts represented by uncashed dividend checks.
An investor who has received in cash any dividend or capital gains
distribution from the Fund may return the distribution within thirty days of the
distribution date to the Transfer Agent for reinvestment at the net asset value
next determined after its return. The investor or his dealer must notify the
Transfer Agent that a distribution is being reinvested pursuant to this
provision.
TAXES
- ------
The Fund has qualified in all prior years and intends to continue to
qualify for the special tax treatment afforded a "regulated investment company"
under Subchapter M of the Internal Revenue Code so that it does not pay federal
taxes on income and capital gains distributed to shareholders.
The Fund intends to distribute substantially all of its net investment
income and any net realized capital gains to its shareholders. Distributions of
net investment income as well as from net realized short-term capital gains, if
any, are taxable as ordinary income. Since the Fund's investment income is
derived from interest rather than dividends, no portion of such distributions is
eligible for the dividends received deduction
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<PAGE>
available to corporations. Distributions resulting from the sale of foreign
currencies and foreign obligations, to the extent of foreign exchange gains, are
taxed as ordinary income or loss. If these transactions result in reducing the
Fund's net income, a portion of the income may be classified as a return of
capital (which will lower your tax basis). If the Fund pays nonrefundable taxes
to foreign governments during the year, the taxes will reduce the Fund's net
investment income but still may be included in your taxable income. However, you
may be able to claim an offsetting tax credit or itemized deduction on your
return for your portion of foreign taxes paid by the Fund.
Distributions of net capital gains (i.e., the excess of net long-term
capital gains over net short-term capital losses) by the Fund to its
shareholders are taxable to the recipient shareholders as capital gains, without
regard to the length of time a shareholder has held Fund shares. The maximum
capital gains rate for individuals is 28% with respect to assets held for more
than 12 months, but not more than 18 months, and 20% with respect to assets
held more than 18 months. The maximum capital gains rate for corporate
shareholders is the same as the maximum tax rate for ordinary income.
Redemptions of shares of the Funds are taxable events on which a shareholder
may realize a gain or loss.
Hedging may result in the application of the mark-to-market and
straddle provisions of the Internal Revenue Code. These provisions could result
in an increase (or decrease) in the amount of taxable dividends paid by the Fund
as well as affect whether dividends paid by the Fund are classified as capital
gains or ordinary income.
The Fund will mail to each of its shareholders a statement indicating
the amount and federal income tax status of all distributions made during the
year. In addition to federal taxes, shareholders of the Fund may be subject to
state and local taxes on distributions. Shareholders should consult their tax
advisors about the tax effect of distributions and withdrawals from the Fund and
the use of the Automatic Withdrawal Plan and the Exchange Privilege. The tax
consequences described in this section apply whether distributions are taken in
cash or reinvested in additional shares.
OPERATION OF THE FUND
- ----------------------
The Fund is a non-diversified series of Countrywide Investment Trust,
an open-end management investment company organized as a Massachusetts business
trust on December 7, 1980. The Board of Trustees supervises the business
activities of the Trust. Like other mutual funds, the Trust retains various
organizations to perform specialized services for the Fund.
The Trust retains Countrywide Investments, Inc., 312 Walnut Street,
Cincinnati, Ohio 45202 (the "Manager"), to provide general investment
supervisory services to the Fund and to manage the Fund's business affairs. The
Manager was organized in 1974 and serves as investment adviser to six other
series of the Trust, seven series of Countrywide Tax-Free Trust and six series
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<PAGE>
of Countrywide Strategic Trust. The Manager is an indirect wholly-owned
subsidiary of Countrywide Credit Industries, Inc., a New York Stock Exchange
listed company principally engaged in the business of residential mortgage
lending. The Fund pays the Manager a fee equal to the annual rate of .7% of the
average value of its daily net assets up to $100 million and .6% of such assets
in excess of $100 million.
Rogge Global Partners plc (the "Adviser"), 5-6 St. Andrew's Hill,
London, England, has been retained by the Manager to manage the Fund's
investments. The Adviser was organized in 1984 and specializes in global
fixed-income management. The Adviser is a wholly-owned subsidiary of United
Asset Management Corporation, a New York Stock Exchange listed company
principally engaged, through affiliated firms in the United States and abroad,
in providing institutional investment management services and acquiring
institutional investment firms. The Manager (not the Fund) pays the Adviser a
fee equal to the annual rate of .35% of the average value of the Fund's daily
net assets up to $100 million and .3% of such assets in excess of $100 million.
Decisions regarding the investment of the Fund's portfolio are made by
the Adviser's Global Strategy Group, which is made up of the Adviser's
directors of portfolio management: Olaf Rogge, John Graham and Richard Bell.
Mr. Rogge is the founder of the Adviser and has been managing global investments
since 1974.
The Manager serves as principal underwriter for the Fund and, as such,
is the exclusive agent for the distribution of shares of the Fund. Angelo R.
Mozilo, Robert H. Leshner, Robert G. Dorsey and John F. Splain are officers of
both the Trust and the Manager.
The Fund is responsible for the payment of all operating expenses,
including fees and expenses in connection with membership in investment company
organizations, brokerage fees and commissions, legal, auditing and accounting
expenses, expenses of registering shares under federal and state securities
laws, expenses related to the distribution of the Fund's shares (see
"Distribution Plans"), insurance expenses, taxes or governmental fees, fees and
expenses of the custodian, transfer agent and accounting and pricing agent of
the Fund, fees and expenses of members of the Board of Trustees who are not
interested persons of the Trust, the cost of preparing and distributing
prospectuses, statements, reports and other documents to shareholders, expenses
of shareholders' meetings and proxy solicitations, and such extraordinary or
non-recurring expenses as may arise, including litigation to which the Fund may
be a party and indemnification of the Trust's officers and Trustees with respect
thereto.
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<PAGE>
The Trust has retained Countrywide Fund Services, Inc., P.O. Box 5354,
Cincinnati, Ohio (the "Transfer Agent"), an indirect wholly-owned subsidiary of
Countrywide Credit Industries, Inc. to serve as the Fund's transfer agent,
dividend paying agent and shareholder service agent.
The Transfer Agent also provides accounting and pricing services to the
Fund. The Transfer Agent receives a monthly fee from the Fund for calculating
daily net asset value per share and maintaining such books and records as are
necessary to enable it to perform its duties.
In addition, the Transfer Agent has been retained by the Manager to
assist the Manager in providing administrative services to the Fund. In this
capacity, the Transfer Agent supplies executive, administrative and regulatory
services, supervises the preparation of tax returns, and coordinates the
preparation of reports to shareholders and reports to and filings with the
Securities and Exchange Commission and state securities authorities. The Manager
(not the Fund) pays the Transfer Agent a fee for these administrative services.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its objective of seeking best
execution of portfolio transactions, the Adviser may give consideration to sales
of shares of the Fund as a factor in the selection of brokers and dealers to
execute portfolio transactions of the Fund. Subject to the requirements of the
Investment Company Act of 1940 and procedures adopted by the Board of Trustees,
the Fund may execute portfolio transactions through any broker or dealer and pay
brokerage commissions to a broker (i) which is an affiliated person of the
Trust, or (ii) which is an affiliated person of such person, or (iii) an
affiliated person of which is an affiliated person of the Trust, the Manager or
the Adviser.
Shares of the Fund have equal voting rights and liquidation rights. The
Fund shall vote separately on matters submitted to a vote of the shareholders
except in matters where a vote of all series of the Trust in the aggregate is
required by the Investment Company Act of 1940 or otherwise. Each class of
shares of the Fund shall vote separately on matters relating to its plan of
distribution pursuant to Rule 12b-1 (see "Distribution Plans"). When matters are
submitted to shareholders for a vote, each shareholder is entitled to one vote
for each full share owned and fractional votes for fractional shares owned. The
Trust does not normally hold annual meetings of shareholders. The Trustees shall
promptly call and give notice of a meeting of shareholders for the purpose of
voting upon the removal of any Trustee when requested to do so in writing by
shareholders holding 10% or more of the Trust's outstanding shares. The Trust
will comply with the provisions of
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<PAGE>
Section 16(c) of the Investment Company Act of 1940 in order to facilitate
communications among shareholders.
DISTRIBUTION PLANS
- ------------------
CLASS A SHARES. Pursuant to Rule 12b-1 under the Investment Company Act
of 1940, the Fund has adopted a plan of distribution (the "Class A Plan") under
which Class A shares may directly incur or reimburse the Manager for certain
distribution-related expenses, including payments to securities dealers and
others who are engaged in the sale of such shares and who may be advising
investors regarding the purchase, sale or retention of such shares; expenses of
maintaining personnel who engage in or support distribution of shares or who
render shareholder support services not otherwise provided by the Transfer
Agent; expenses of formulating and implementing marketing and promotional
activities, including direct mail promotions and mass media advertising;
expenses of preparing, printing and distributing sales literature and
prospectuses and statements of additional information and reports for recipients
other than existing shareholders of the Fund; expenses of obtaining such
information, analyses and reports with respect to marketing and promotional
activities as the Trust may, from time to time, deem advisable; and any other
expenses related to the distribution of such shares.
The annual limitation for payment of expenses pursuant to the Class A
Plan is .35% of the Fund's average daily net assets allocable to Class A shares.
Unreimbursed expenditures will not be carried over from year to year. In the
event the Class A Plan is terminated by the Fund in accordance with its terms,
the Fund will not be required to make any payments for expenses incurred by the
Manager after the date the Class A Plan terminates.
CLASS C SHARES. Pursuant to Rule 12b-1 under the Investment Company Act
of 1940, the Fund has adopted a plan of distribution (the "Class C Plan") which
provides for two categories of payments. First, the Class C Plan provides for
the payment to the Manager of an account maintenance fee, in an amount equal to
an annual rate of .25% of the Fund's average daily net assets allocable to Class
C shares, which may be paid to other dealers based on the average value of such
shares owned by clients of such dealers. In addition, the Class C shares may
directly incur or reimburse the Manager in an amount not to exceed .75% per
annum of the Fund's average daily net assets allocable to Class C shares for
expenses incurred in the distribution and promotion of the Fund's Class C
shares, including payments to securities dealers and others who are engaged in
the sale of such shares and who may be advising investors regarding the
purchase, sale or retention of such shares; expenses of maintaining personnel
who
- 34 -
<PAGE>
engage in or support distribution of shares or who render shareholder support
services not otherwise provided by the Transfer Agent; expenses of formulating
and implementing marketing and promotional activities, including direct mail
promotions and mass media advertising; expenses of preparing, printing and
distributing sales literature and prospectuses and statements of additional
information and reports for recipients other than existing shareholders of the
Fund; expenses of obtaining such information, analyses and reports with respect
to marketing and promotional activities as the Trust may, from time to time,
deem advisable; and any other expenses related to the distribution of such
shares.
Unreimbursed expenditures will not be carried over from year to year.
In the event the Class C Plan is terminated by the Fund in accordance with its
terms, the Fund will not be required to make any payments for expenses incurred
by the Manager after the date the Class C Plan terminates. The Manager may make
payments to dealers and other persons in an amount up to .75% per annum of the
average value of Class C shares owned by their clients, in addition to the .25%
account maintenance fee described above.
GENERAL. Pursuant to the Plans, the Fund may make payments to dealers
and other persons, including the Manager and its affiliates, who may be advising
investors regarding the purchase, sale or retention of Fund shares. For the
fiscal year ended September 30, 1997, Class C shares of the Fund paid $20,811 to
the Manager to reimburse it for payments made to dealers and other persons who
may be advising shareholders in this regard.
Pursuant to the Plans, the Fund may also make payments to banks or
other financial institutions that provide shareholder services and administer
shareholder accounts. The Glass-Steagall Act prohibits banks from engaging in
the business of underwriting, selling or distributing securities. Although the
scope of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, management of the
Trust believes that the Glass- Steagall Act should not preclude a bank from
providing such services. However, state securities laws on this issue may differ
from the interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law. If a
bank were prohibited from continuing to perform all or a part of such services,
management of the Trust believes that there would be no material impact on the
Fund or its shareholders. Banks may charge their customers fees for offering
these services to the extent permitted by applicable regulatory authorities, and
the overall return to those shareholders availing themselves of the bank
services will be lower than to those shareholders who do not. The Fund may from
time to time purchase securities issued by banks which
- 35 -
<PAGE>
provide such services; however, in selecting investments for the Fund, no
preference will be shown for such securities.
The National Association of Securities Dealers, in its Rules of Fair
Practice, places certain limitations on asset-based sales charges of mutual
funds. These Rules require fund-level accounting in which all sales charges -
front-end load, 12b-1 fees or contingent deferred load - terminate when a
percentage of gross sales is reached.
CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE
- ----------------------------------------------------
On each day that the Trust is open for business, the share price (net
asset value) of Class C shares and the public offering price (net asset value
plus applicable sales load) of Class A shares of the Fund are determined as of
the close of the regular session of trading on the New York Stock Exchange,
currently 4:00 p.m., Eastern time. The Trust is open for business on each day
the New York Stock Exchange is open for business. Obligations held by the Fund
may be primarily listed on foreign exchanges or traded in foreign markets which
are open on days (such as Saturdays and U.S. holidays) when the New York Stock
Exchange is not open for business. As a result, the net asset value per share of
the Fund may be significantly affected by trading on days when the Trust is not
open for business. The net asset value per share of the Fund is calculated by
dividing the sum of the value of the securities held by the Fund plus cash or
other assets minus all liabilities (including estimated accrued expenses) by the
total number of shares outstanding of the Fund, rounded to the nearest cent.
The Fund's portfolio 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. Foreign securities are
valued on the basis of quotations from the primary market in which they are
traded and are translated from the local currency into U.S. dollars using
currency exchange rates. Securities (and other assets) for which market
quotations are not readily available are valued at their fair value as
determined in good faith in accordance with consistently applied procedures
established by and under the general supervision of the Board of Trustees. The
net asset value per share of the Fund will fluctuate with the value of the
securities it holds.
PERFORMANCE INFORMATION
- ------------------------
From time to time, the Fund may advertise its "average annual total
return." The Fund may also advertise "yield." Both yield and average annual
total return figures are based on
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<PAGE>
historical earnings and are not intended to indicate future performance. Total
return and yield are computed separately for Class A and Class C shares. The
yield of Class A shares is expected to be higher than the yield of Class C
shares due to the higher distribution fees imposed on Class C shares.
The "average annual total return" of the Fund refers to the average
annual compounded rates of return over the most recent 1, 5 and 10 year periods
or, where the Fund has not been in operation for such period, over the life of
the Fund (which periods will be stated in the advertisement) that would equate
an initial amount invested at the beginning of a stated period to the ending
redeemable value of the investment. The calculation of "average annual total
return" assumes the reinvestment of all dividends and distributions and, for
Class A shares, the deduction of the current maximum sales load from the initial
investment. The Fund may also advertise total return (a "nonstandardized
quotation") which is calculated differently from "average annual total return."
A nonstandardized quotation of total return may be a cumulative return which
measures the percentage change in the value of an account between the beginning
and end of a period, assuming no activity in the account other than reinvestment
of dividends and capital gains distributions. A nonstandardized quotation of
total return may also indicate average annual compounded rates of return over
periods other than those specified for "average annual total return." These
nonstandardized returns do not include the effect of the applicable sales load
which, if included, would reduce total return. A nonstandardized quotation of
total return will always be accompanied by the Fund's "average annual total
return" as described above.
The "yield" of the Fund is computed by dividing the net investment
income per share earned during a thirty-day (or one month) period stated in the
advertisement by the maximum public offering price per share on the last day of
the period (using the average number of shares entitled to receive dividends).
The yield formula assumes that net investment income is earned and reinvested at
a constant rate and annualized at the end of a six-month period.
From time to time, the Fund may advertise its performance rankings as
published by recognized independent mutual fund statistical services such as
Lipper Analytical Services, Inc. ("Lipper"), or by publications of general
interest such as Forbes, Money, The Wall Street Journal, Business Week,
Barron's, Fortune or Morningstar Mutual Fund Values. The Fund may also compare
its performance to that of other selected mutual funds, averages of the other
mutual funds within its category as determined by Lipper, or recognized
indicators such as the Salomon Brothers World Government Bond Index. In
connection with a ranking, the Fund may provide additional information, such as
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<PAGE>
the particular category of funds to which the ranking relates, the number of
funds in the category, the criteria upon which the ranking is based, and the
effect of fee waivers and/or expense reimbursements, if any. The Fund may also
present its performance and other investment characteristics, such as volatility
or a temporary defense posture, in light of the Manager's view of current or
past market conditions or historical trends.
Further information about the Fund's performance is contained in the
Trust's annual report which can be obtained by shareholders at no charge by
calling the Transfer Agent (Nationwide call toll-free 800-543-0407; in
Cincinnati call 629- 2050) or by writing to the Trust at the address on the
front of this Prospectus.
- 38 -
<PAGE>
ACCOUNT APPLICATION
Please mail account application to:
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
GLOBAL BOND FUND
o A SHARES (12)
o C SHARES (13)
ACCOUNT NO._________________________
(For Fund Use Only)
FOR BROKER/DEALER USE ONLY
Firm Name:__________________________
Home Office Address:________________
Branch Address:_____________________
Rep Name & No.:_____________________
Rep Signature:______________________
Initial Investment of $__________________
o Check or draft enclosed payable to the Fund.
o Bank Wire From: _________________________________________________________
o Exchange From: __________________________________________________________
(Fund Name) (Fund Account Number)
ACCOUNT NAME S.S. #/TAX I.D.#
__________________________________________________ _____________________
Name of Individual, Corporation, Organization, (In case of custodial
or Minor, etc. account please list
minor's S.S.#)
__________________________________________________ Citizenship:
Name of Joint Tenant, Partner, Custodian o U.S.
o Other
ADDRESS PHONE
__________________________________________________ ( )______
Street or P.O. Box Business Phone
__________________________________________________ ( )______
City State Zip Home Phone
Check Appropriate Box: o Individual o Joint Tenant (Right of survivorship
presumed) o Partnership o Corporation o Trust o Custodial o Non-Profit o Other
Occupation and Employer Name/Address__________________________________________
Are you an associated person of an NASD member? o Yes o No
<PAGE>
TAXPAYER IDENTIFICATION NUMBER -- Under penalties of perjury I certify that
the Taxpayer Identification Number listed above is my correct number. The
Internal Revenue Service does not require my consent to any provision of
this document other than the certifications required to avoid backup
withholding. Check box if appropriate:
o I am exempt from backup withholding under the provisions of section
3406(a)(1)(c) of the Internal Revenue Code; or I am not subject to backup
withholding because I have not been notified that I am subject to backup
withholding as a result of a failure to report all interest or dividends; or
the Internal Revenue Service has notified me that I am no longer subject to
backup withholding.
o I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me and I have mailed or delivered an application to
receive a Taxpayer Identification Number to the Internal Revenue Service
Center or Social Security Administration Office. I understand that if I do not
provide a Taxpayer Identification Number within 60 days that 31% of all
reportable payments will be withheld until I provide a number.
DISTRIBUTIONS (If no election is checked the SHARE OPTION will be assigned.)
o Share Option -- Income distributions and capital gains distributions
automatically reinvested in additional shares.
o Income Option -- Income distributions and short term capital gains
distributions paid in cash, long term capital gains
distributions reinvested in additional shares.
o Cash Option -- Income distributions and capital gains distributions
paid in cash.
[ ] By Check [ ] By ACH to my bank checking or savings
account. Please attach a voided check.
________________________________________________________________________________
REDUCED SALES CHARGES (CLASS A SHARES ONLY)
RIGHT OF ACCUMULATION: I apply for Right of Accumulation subject to the
Agent's confirmation of the following holdings of eligible load funds of
Countrywide Investments.
ACCOUNT NUMBER/NAME ACCOUNT NUMBER/NAME
_____________________________________ _____________________________________
_____________________________________ _____________________________________
LETTER OF INTENT: (Complete the Right of Accumulation section if related
accounts are being applied to your Letter of Intent.)
o I agree to the Letter of Intent in the current Prospectus of Midwest Trust.
Although I am not obligated to purchase, and the Trust is not obligated to
sell, I intend to invest over a 13 month period beginning ___________________
19 _______ (Purchase Date of not more than 90 days prior to this Letter) an
aggregate amount in the load funds of Countrywide Investments at least
equal to (check appropriate box):
o $100,000 o $250,000 o $500,000 o $1,000,000
================================================================================
<PAGE>
SIGNATURES
By signature below each investor certifies that he has received a copy of the
Fund's current Prospectus, that he is of legal age, and that he has full
authority and legal capacity for himself or the organization named below, to
make this investment and to use the options selected above. The investor
appoints Countrywide Fund Services, Inc. as his agent to enter orders for
shares whether by direct purchase or exchange, to receive dividends and
distributions for automatic reinvestment in additional shares of the Fund
for credit to the investor's account and to surrender for redemption shares
held in the investor's account in accordance with any of the procedures
elected above or for payment of service charges incurred by the investor.
The investor further agrees that Countrywide Fund Services, Inc. can cease
to act as such agent upon ten days' notice in writing to the investor at the
address contained in this Application. The investor hereby ratifies any
instructions given pursuant to this Application and for himself and his
successors and assigns does hereby release Countrywide Fund Services, Inc.,
Countrywide Investment Trust, Countrywide Investments, Inc. and their
respective officers, employees, agents and affiliates from any and all
liability in the performance of the acts instructed herein provided
that such entities have exercised due care to determine that the instructions
are genuine.
_____________________________________ _____________________________________
Signature of Individual Owner, Signature of Joint Owner, if Any
Corporate Officer, Trustee, etc.
_____________________________________ _____________________________________
Title of Corporate Officer, Date
Trustee, etc.
NOTE: CORPORATIONS, TRUSTS AND OTHER ORGANIZATIONS MUST COMPLETE THE
RESOLUTION FORM ON THE REVERSE SIDE. UNLESS OTHERWISE SPECIFIED, EACH JOINT
OWNER SHALL HAVE FULL AUTHORITY TO ACT ON BEHALF OF THE ACCOUNT.
AUTOMATIC INVESTMENT PLAN (Complete for Investments into the Fund)
The Automatic Investment Plan is available for all established accounts of
Countrywide Investment Trust. There is no charge for this service, and it offers
the convenience of automatic investing on a regular basis. The minimum
investment is $50.00 per month. For an account that is opened by using this
Plan, the minimum initial and subsequent investments must be $50.00. Though a
continuous program of 12 monthly investments is recommended, the Plan may be
discontinued by the shareholder at any time.
Please invest $_________________ ABA Routing Number_________________________
per month in the Fund.
FI Account Number__________________________
o Checking Account o Savings Account
_________________________________
Name of Financial Institution (FI) Please make my automatic investment on:
o the last business day of each month
_________________________________ o the 15th day of each month
City State o both the 15th and last business day
X________________________________ X________________________________
(Signature of Depositor EXACTLY (Signature of Joint Tenant -
as it appears on FI Records) if any)
(Joint Signatures are required when bank account is in joint names. Please
sign exactly as signature appears on your FI's records.)
Please attach a voided check from your checking account or a voided deposit/
withdrawal slip from your savings account for the Automatic Investment Plan.
<PAGE>
INDEMNIFICATION TO DEPOSITOR'S BANK
In consideration of your participation in a plan which Countrywide Fund
Services, Inc. ("CFS") has put into effect, by which amounts, determined
by your depositor, payable to the Fund, for purchase of shares of the Fund,
are collected by CFS, CFS hereby agrees:
CFS will indemnify and hold you harmless from any liability to any person or
persons whatsoever arising out of the payment by you of any amount drawn by
the Fund to its own order on the account of your depositor or from any
liability to any person whatsoever arising out of the dishonor by you whether
with or without cause or intentionally or inadvertently, of any such amount.
CFS will defend, at its own cost and expense, any action which might be
brought against you by any person or persons whatsoever because of your
actions taken pursuant to the foregoing request or in any manner arising by
reason of your participation in this arrangement. CFS will refund to you any
amount erroneously paid by you to the Fund if the claim for the amount of such
erroneous payment is made by you within six (6) months from the date of such
erroneous payment; your participation in this arrangement and that of the Fund
may be terminated by thirty (30) days written notice from either party to the
other.
AUTOMATIC WITHDRAWAL PLAN (COMPLETE FOR WITHDRAWALS FROM THE FUND)
This is an authorization for you to withdraw $_________ from my mutual fund
account beginning the last business day of the month of ____________.
Please Indicate Withdrawal Schedule (Check One):
o MONTHLY -- Withdrawals will be made on the last business day of each month.
o QUARTERLY -- Withdrawals will be made on or about 3/31, 6/30, 9/30 and
12/31.
o ANNUALLY -- Please make withdrawals on the last business day of the month
of:_____________.
Please Select Payment Method (Check One):
o EXCHANGE: Please exchange the withdrawal proceeds into another Midwest
account number: ____ ____ -- ____ ____ ____ ____ ____ ____ -- ____
o CHECK: Please mail a check for my withdrawal proceeds to the mailing
address on this account.
o ACH TRANSFER: Please send my withdrawal proceeds via ACH transfer to my
bank checking or savings account as indicated below. I understand that the
transfer will be completed in two to three business days and that there
is no charge.
o BANK WIRE: Please send my withdrawal proceeds via bank wire, to the account
indicated below. I understand that the wire will be completed in one business
day and that there is an $8.00 fee.
PLEASE ATTACH A VOIDED CHECK FOR ACH OR BANK WIRE
_____________________________________________________________________________
Bank Name Bank Address
_____________________________________________________________________________
Bank ABA# Account # Account Name
o SEND TO SPECIAL PAYEE (OTHER THAN APPLICANT): Please mail a check for my
withdrawal proceeds to the mailing address below:
Name of payee_________________________________________________________________
Please send to:_______________________________________________________________
Street address City State Zip
<PAGE>
RESOLUTIONS
(This Section to be completed by Corporations, Trusts, and Other
Organizations)
RESOLVED: That this corporation or organization become a shareholder of
Countrywide Investment Trust (the Trust) and that ______________________________
is (are) hereby authorized to complete and execute the Application on behalf of
the corporation or organization and to take any action for it as may be
necessary or appropriate with respect to its shareholder account with the Trust,
and it is
FURTHER RESOLVED: That any one of the above noted officers is authorized to
sign any documents necessary or appropriate to appoint Countrywide Fund
Services, Inc. as
redemption agent of the corporation or organization for shares of the
applicable series of the Trust, to establish or acknowledge terms and
conditions governing the redemption of said shares and to otherwise implement
the privileges elected on the Application.
CERTIFICATE
I hereby certify that the foregoing resolutions are in conformity with the
Charter and By-Laws or other empowering documents of the
_____________________________________________________________________________
(Name of Organization)
incorporated or formed under the laws of_____________________________________
(State)
and were adopted at a meeting of the Board of Directors or Trustees of the
organization or corporation duly called and held on __________ at which a
quorum was present and acting throughout, and that the same are now in full
force and effect.
I further certify that the following is (are) duly elected officer(s) of the
corporation or organization, authorized to act in accordance with the
foregoing resolutions.
NAME TITLE
_____________________________________ _____________________________________
_____________________________________ _____________________________________
_____________________________________ _____________________________________
Witness my hand and seal of the corporation or organization
this____________________________day of____________________________, 19_______
_____________________________________ _____________________________________
*Secretary-Clerk Other Authorized Officer (if required)
*If the Secretary or other recording officer is authorized to act by the above
resolutions, this certificate must also be signed by another officer.
<PAGE>
COUNTRYWIDE INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
Nationwide: (Toll-Free) 800-543-8721
Cincinnati: 513-629-2000
BOARD OF TRUSTEES
Donald L. Bogdon, M.D.
John R. Delfino
H. Jerome Lerner
Robert H. Leshner
Angelo R. Mozilo
Oscar P. Robertson
John F. Seymour, Jr.
Sebastiano Sterpa
MANAGER/UNDERWRITER
COUNTRYWIDE INVESTMENTS, INC.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
INVESTMENT ADVISER
ROGGE GLOBAL PARTNERS plc
5-6 St. Andrew's Hill
London EC4V 5BY England
TRANSFER AGENT
COUNTRYWIDE FUND SERVICES, INC.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
Shareholder Service
Nationwide: (Toll-Free) 800-543-0407
Cincinnati: 513-629-2050
Countrywide Always Line
Nationwide: (Toll-Free) 800-852-3809
Cincinnati: 513-579-0999
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<PAGE>
TABLE OF CONTENTS PAGE
Expense Information . . . . . . . . . . . . . . .
Financial Highlights . . . . . . . . . . . . . .
Investment Objective, Investment
Policies and Risk Considerations. . . . . . . .
How to Purchase Shares. . . . . . . . . . . . . .
Shareholder Services. . . . . . . . . . . . . . .
How to Redeem Shares. . . . . . . . . . . . . . .
Exchange Privilege. . . . . . . . . . . . . . . .
Dividends and Distributions . . . . . . . . . . .
Taxes . . . . . . . . . . . . . . . . . . . . . .
Operation of the Fund . . . . . . . . . . . . . .
Distribution Plans. . . . . . . . . . . . . . . .
Calculation of Share Price and Public
Offering Price. . . . . . . . . . . . . . . . .
Performance Information . . . . . . . . . . . . .
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Trust. This Prospectus does not constitute an offer by the Trust to sell
shares in any State to any person to whom it is unlawful for the Trust to make
such offer in such State.
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<PAGE>
PROSPECTUS
January 1, 1998
Countrywide Investment Trust
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
MONEY MARKET FUND
The Money Market Fund (the "Fund"), a separate series of Countrywide
Investment Trust, seeks high current income, consistent with liquidity and
stability of principal. The Fund invests primarily in high-quality U.S.
dollar-denominated money market instruments.
THE FUND'S PORTFOLIO SECURITIES ARE VALUED ON AN AMORTIZED COST BASIS.
FUND SHARES ARE NEITHER INSURED NOR GUARANTEED BY THE UNITED STATES GOVERNMENT
OR ANY OTHER ENTITY. IT IS ANTICIPATED, BUT THERE IS NO ASSURANCE, THAT THE FUND
WILL MAINTAIN A STABLE NET ASSET VALUE PER SHARE OF $1.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANKING OR DEPOSITORY INSTITUTION. SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER AGENCY.
Pursuant to an Agreement and Plan of Reorganization dated May 31, 1997, the
Fund, on August 29, 1997, succeeded to the assets and liabilities of another
mutual fund of the same name (the "Predecessor Fund"), which was an investment
series of Trans Adviser Funds, Inc. The investment objective, policies and
restrictions of the Fund and the Predecessor Fund are substantially identical
and the financial data and information in this Prospectus for periods prior to
August 31, 1997 relates to the Predecessor Fund.
Countrywide Investments, Inc. (the "Adviser") manages the Fund's
investments and its business affairs.
This Prospectus sets forth concisely the information about the Fund that
you should know before investing. Please retain this Prospectus for future
reference. A Statement of Additional Information dated January 1, 1998 has been
filed with the Securities and Exchange Commission (the "Commission") and is
hereby incorporated by reference in its entirety. A copy of the Statement of
Additional Information can be obtained at no charge by calling one of the
numbers listed below.
- -------------------------------------------------------------------------------
For Information or Assistance in Opening An Account, Please Call:
Nationwide (Toll-Free)..................................800-543-0407
Cincinnati..............................................513-629-2050
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
EXPENSE INFORMATION
- --------------------
Shareholder Transaction Expenses
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Exchange Fee None
Redemption Fee None*
Check Redemption Processing Fee (per check):
First six checks per month None
Additional checks per month $0.25
* A wire transfer fee is charged by the Fund's Custodian in the
case of redemptions made by wire. Such fee is subject to change
and is currently $8. See "How to Redeem Shares."
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees After Waivers(A) .21%
12b-1 Fees(B) .25%
Other Expenses .34%
-----
Total Fund Operating Expenses After Waivers(C) .80%
======
(A) Absent waivers of management fees, such fees would be .48%.
(B) The Fund may incur 12b-1 fees in an amount up to .35% of its average
net assets. Long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales loads permitted by the
National Association of Securities Dealers.
(C) Absent waivers of management fees, total Fund operating expenses would
be 1.07%.
The purpose of these tables is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. The percentages expressing annual fund operating expenses are based
on amounts incurred by the Predecessor Fund during the most recent fiscal year,
except that they have been restated to reflect an increase in the level of
management fees payable by the Fund as well as a reduction in the amount of
management fee waivers anticipated for the current fiscal year. The Adviser
will, until at least August 31, 1999, waive fees and reimburse expenses to
the extent necessary to limit total operating expenses to .80% of the Fund's
average net assets. THE EXAMPLE BELOW SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE SHOWN.
Example
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
1 Year 3 Years 5 Years 10 Years
$8 $26 $44 $99
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<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------
The following audited financial information for the Predecessor Fund for
the fiscal year ended August 31, 1997 and for the Fund for the period ended
September 30, 1997 has been audited by Arthur Andersen LLP, independent
auditors, and should be read in conjunction with the financial statements. The
audited financial information for the period ended August 31, 1996 was audited
by other independent accountants. The financial statements as of September 30,
1997 and related auditors' report appear in the Statement of Additional
Information of the Fund, which can be obtained by shareholders at no charge
by calling Countrywide Fund Services, Inc. (Nationwide call toll-free
800-543-0407, in Cincinnati call 629-2050) or by writing to the Trust at the
address on the front of this Prospectus.
<TABLE>
<S> <C> <C> <C>
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.
(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>
</TABLE>
- 3 -
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
- ---------------------------------
The Fund is a series of Countrywide Investment Trust (the "Trust"). The
Fund seeks high current income, consistent with liquidity and stability of
principal. The Fund is not intended to be a complete investment program, and
there is no assurance that its investment objective can be achieved. The
investment objective of the Fund is fundamental and as such may not be changed
without the affirmative vote of a majority of the outstanding shares of the
Fund. The term "majority" of the outstanding shares means the lesser of (1) 67%
or more of the outstanding shares of the Fund present at a meeting, if the
holders of more than 50% of the outstanding shares of the Fund are present or
represented at such meeting or (2) more than 50% of the outstanding shares of
the Fund.
The Fund seeks to achieve its investment objective by investing in
securities determined by the Board of Trustees to be of high quality and to
present minimal credit risks, maturing within thirteen months or less with a
dollar-weighted average portfolio maturity of 90 days or less. Unless otherwise
indicated, all investment practices and limitations of the Fund are
nonfundamental policies which may be changed by the Board of Trustees without
shareholder approval. The Fund invests in the following securities:
o obligations of domestic financial institutions including certificates of
deposit, bankers' acceptances and time deposits.
o obligations of foreign branches of U.S. banks (Eurodollars) consisting of
certificates of deposit, bankers' acceptances and time deposits.
o obligations of the U.S. Government or any of its agencies or
instrumentalities which may be backed by the creditworthiness of the
issuing agency.
o short-term corporate obligations, consisting of commercial paper, notes,
and bonds, with remaining maturities of 397 days or less.
o repurchase agreements with member banks of the Federal Reserve System and
primary dealers in U.S. Government securities with respect to any security
in which the Fund is authorized to invest.
o other short-term debt obligations of domestic issuers discussed in this
Prospectus.
The Fund may invest in obligations of foreign branches of U.S. banks
(Eurodollars). Payment of interest and principal upon these obligations may
also be affected by governmental action in
- 4 -
<PAGE>
the country of domicile of the branch (generally referred to as sovereign risk).
In addition, evidences of ownership of portfolio securities may be held outside
of the U.S. and the Fund may be subject to the risks associated with the holding
of such property overseas. Various provisions of federal law governing the
establishment and operation of domestic branches do not apply to foreign
branches of domestic banks. The Adviser, subject to the overall supervision of
the Board of Trustees, carefully considers these factors when making
investments. The Fund does not limit the amount of its assets which can be
invested in any one type of instrument or in any foreign country in which a
branch of a U.S. bank or the parent of a U.S. branch is located. Investments in
obligations of foreign banks are subject to the overall limit of 25% of total
assets which may be invested in a single industry.
Available cash invested in the Fund earns income at current money
market rates while remaining conveniently liquid. In order to provide full
liquidity, the Fund will seek to maintain a stable $1.00 share price; limit
portfolio average maturity to 90 days or less; buy U.S. dollar-denominated
securities which mature in 397 days or less; and buy only high quality
securities with minimal credit risks. As required by Rule 2a-7 under the
Investment Company Act of 1940 ("Rule 2a-7"), the Board of Trustees will monitor
the quality of the Fund's investments.
Of course, a $1.00 share price cannot be guaranteed, but these
practices help to minimize any price fluctuations that might result from rising
or declining interest rates. Accordingly, while the Fund invests in high quality
securities, investors should be aware that an investment is not without risk
even if all securities are paid in full at maturity. All money market
instruments, including U.S. Government securities, can change in value when
interest rates change or an issuer's creditworthiness changes.
The Fund's yield will fluctuate due to changes in interest rates,
economic conditions, quality ratings and other factors beyond the control of the
Adviser. The portfolio securities held by the Fund are subject to price
fluctuations based upon changes in the level of interest rates, which will
generally result in all those securities changing in the same way, i.e., all
those securities experiencing appreciation when interest rates decline and
depreciation when interest rates rise. In addition, the financial condition of
an issuer or adverse changes in general economic conditions, or both, may impair
the issuer's ability to make payments of interest and principal.
LIMITING INVESTMENT RISKS. The Fund follows specific guidelines in buying
portfolio securities:
The Fund will only purchase obligations that (i) are rated high quality
by any two of the following four nationally
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<PAGE>
recognized rating services: Duff & Phelps Inc. ("Duff"), Fitch Investors
Service, Inc. ("Fitch"), Moody's Investors Service, Inc. ("Moody's"), and
Standard & Poor's Ratings Group ("S&P"), if rated by two or more of such
services; (ii) are rated high quality by any one rating service if rated by only
one rating service; or (iii) if unrated, are determined to be of equivalent
quality pursuant to procedures reviewed by the Board of Trustees. Obligations
that are not rated are not necessarily of lower quality than those which are
rated, but may be less marketable and therefore may provide higher yields.
Currently, only obligations in the top two categories are considered to
be rated high quality for commercial paper. The two highest rating categories of
Duff, Fitch, Moody's and S&P are Duff 1 and Duff 2, Fitch-1 and Fitch-2, Prime-1
and Prime-2, and A-1 and A-2, respectively. Under Rule 2a-7, the Fund is not
permitted to invest more than 5% of its total assets in securities that would be
considered to be in the second highest rating category, and, subject to this
limitation, the Fund may not invest more than the greater of 1% of its total
assets or $1 million in such securities of any one issuer. The Fund may purchase
an instrument rated below highest quality by a rating service if two other
services have given that instrument a highest quality rating ("split rated"
obligation), and if the Adviser considers that the instrument is of highest
quality and presents minimal credit risks.
For other corporate obligations, the two highest rating categories are
AAA and AA by Duff, AAA and AA by Fitch, Aaa and Aa by Moody's and AAA and AA by
S&P. For a more complete description of these ratings see the Statement of
Additional Information.
The Fund will commit no more than 10% of its net assets to illiquid
securities, including repurchase agreements maturing in more than seven days.
In addition, the Fund has certain other limitations. As a matter of
nonfundamental policy, the Fund will limit the percentage allocation of its
investments so as to comply with Rule 2a-7, which generally limits to 5% of
total assets the amount which may be invested in the securities of any one
issuer and to no more than 25% of total assets the amount which would be
invested in a particular industry, except that the Fund may invest more than 25%
of total assets in the securities of banks.
Currently, the Commission defines the term "bank" to include U.S. banks and
their foreign branches if, in the case of foreign branches, the parent U.S. bank
is unconditionally liable for such obligations. These limitations do not apply
to obligations of the U.S. Government or any of its agencies or
instrumentalities. The Fund does not consider utilities or companies engaged in
finance
- 6 -
<PAGE>
generally to be one industry. Finance companies will be considered a part of the
industry they finance (e.g., GMAC-auto; VISA-credit cards). Utilities will be
divided according to the types of services they provide; for example, gas, gas
transmission, electric and gas, electric and telephone will each be considered a
separate industry.
The Fund may borrow money from banks or from other lenders, but not in
an amount equal to or exceeding 33 1/3% of the current value of its total
assets.
As a matter of operating policy, the Fund does not intend to purchase
securities for investment during periods when the sum of temporary bank
borrowings entered into to facilitate redemptions exceeds 5% of its total
assets. This operating policy is not fundamental and may be changed without
shareholder notification.
OTHER INVESTMENT PRACTICES
--------------------------
SECURITIES LENDING. In order to generate additional income, the Fund may, from
time to time, lend its portfolio securities to broker-dealers, banks or
institutional borrowers of securities. While the lending of securities may
subject the Fund to certain risks, such as delays or the inability to regain the
securities in the event the borrower were to default on its lending agreement or
enter into bankruptcy, the Fund will receive at least 100% collateral in the
form of cash or U.S. Government securities. This collateral will be valued daily
by the Adviser and should the market value of the loaned securities increase,
the borrower will furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination by the Fund
or the borrower at any time. While the Fund does not have the right to vote
securities on loan, the Fund intends to terminate the loan and regain the right
to vote if that is considered important with respect to the investment. The Fund
will only enter into loan arrangements with broker-dealers, banks or other
institutions which the Adviser has determined are creditworthy under guidelines
established by the Board of Trustees.
BORROWING. The Fund may borrow money from banks (including its custodian bank)
or from other lenders to the extent permitted under applicable law, for
temporary or emergency purposes and to meet redemptions and may pledge its
assets to secure such borrowings. Borrowing for investment increases both
investment opportunity and investment risk. This is the speculative factor known
as leverage. Such borrowings in no way affect the federal tax status of the Fund
or its dividends.
The Investment Company Act of 1940 (the "1940 Act") requires the Fund
to maintain asset coverage of at least 300% for all such borrowings, and should
such asset coverage at any time fall below
- 7 -
<PAGE>
300%, the Fund would be required to reduce its borrowings within three days to
the extent necessary to meet the requirements of the 1940 Act. To reduce its
borrowings, the Fund might be required to sell securities at a time when it
would be disadvantageous to do so.
In addition, because interest on money borrowed is a Fund expense that
it would not otherwise incur, the Fund may have less net investment income
during periods when its borrowings are substantial. The interest paid by the
Fund on borrowings may be more or less than the yield on the securities
purchased with borrowed funds, depending on prevailing market conditions.
WHEN-ISSUED SECURITIES. The Fund may also purchase securities on a "when-issued"
basis. When-issued securities are securities purchased for delivery beyond the
normal settlement date at a stated price and yield and thereby involve a risk
that the yield obtained in the transaction will be less than that available in
the market when delivery takes place. The Fund will generally not pay for such
securities or start earning interest on them until they are received. When the
Fund agrees to purchase securities on a "when-issued" basis, its custodian will
set aside cash or liquid portfolio securities equal to the amount of the
commitment in a segregated account. Securities purchased on a "when-issued"
basis are recorded as an asset and are subject to changes in value based upon
changes in the general level of interest rates. The Fund expects that
commitments to purchase "when-issued" securities will not exceed 25% of the
value of its total assets under normal market conditions and that a commitment
to purchase "when-issued" securities will not exceed 60 days. In the event its
commitment to purchase "when-issued" securities ever exceeded 25% of the value
of its assets, the Fund's liquidity and the Adviser's ability to manage it might
be adversely affected. The Fund does not intend to purchase "when- issued"
securities for speculative purposes, but only for the purpose of acquiring
portfolio securities.
VARIABLE AND FLOATING RATE SECURITIES. The Fund may acquire variable and
floating rate securities, subject to the Fund's investment objective, policies
and restrictions. A variable rate security is one whose terms provide for the
readjustment of its interest rate on set dates and which, upon such
readjustment, can reasonably be expected to have a market value that
approximates its par value. A floating rate security is one whose terms provide
for the readjustment of its interest rate whenever a specified interest rate
changes and which, at any time, can reasonably be expected to have a market
value that approximates its par value.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements. Under a
repurchase agreement, the Fund acquires a debt instrument for a relatively
short period (usually not more than one week), subject to the obligation of
the seller to
- 8 -
<PAGE>
purchase and the Fund to resell such debt instrument at a fixed price. The
resale price is in excess of the purchase price in that it reflects an
agreed-upon market interest rate effective for the period of time during which
the Fund's money is invested. The Fund's repurchase agreements will at all times
be fully collateralized in an amount at least equal to 100% of the purchase
price including accrued interest earned on the underlying securities. The
instruments held as collateral are valued daily by the Adviser and as the value
of instruments declines, the Fund will require additional collateral. If the
seller defaults and the value of the collateral securing the repurchase
agreement declines, the Fund may incur a loss. If such a defaulting seller were
to become insolvent and subject to liquidation or reorganization under
applicable bankruptcy or other laws, disposition of the underlying securities
could involve certain costs or delays pending court action. Finally, it is not
certain whether the Fund would be entitled, as against a claim of the seller or
its receiver, trustee in bankruptcy or creditors, to retain the underlying
securities. Repurchase agreements are considered by the staff of the Commission
to be loans by the Fund.
INVESTMENT COMPANY SECURITIES. The Fund may invest in the securities of other
investment companies to the extent permissible under the applicable regulations
and interpretations of the 1940 Act or an exemptive order.
ILLIQUID INVESTMENTS AND RESTRICTED SECURITIES. The Fund may invest up to 10% of
its net assets in illiquid investments (investments that cannot be readily sold
within seven days), including restricted securities which do not meet the
criteria for liquidity established by the Board of Trustees. The Adviser, under
the supervision of the Board of Trustees, determines the liquidity of the Fund's
investments. The absence of a trading market can make it difficult to ascertain
a market value for illiquid investments. Disposing of illiquid investments may
involve time-consuming negotiation and legal expenses. Restricted Securities are
securities which cannot be sold to the public without registration under the
Securities Act of 1933. Unless registered for sale, these securities can only be
sold in privately negotiated transactions or pursuant to an exemption from
registration.
PRIVATE PLACEMENT INVESTMENTS. The Fund may invest in commercial paper issued in
reliance on the exemption from registration afforded by Section 4(2) of the
Securities Act of 1933. Section 4(2) commercial paper is restricted as to
disposition under federal securities laws and is generally sold to institutional
investors who agree that they are purchasing the paper for investment purposes
and not with a view to public distribution. Any resale by the purchaser must be
in an exempt transaction. Section 4(2) commercial paper is normally resold to
other institutional investors through or with the assistance of the
- 9 -
<PAGE>
issuer or investment dealers who make a market in Section 4(2) commercial paper,
thus providing liquidity. The Adviser believes that Section 4(2) commercial
paper and possibly certain other restricted securities which meet the criteria
for liquidity established by the Trustees are quite liquid. The Fund intends
therefore, to treat the restricted securities which meet the criteria for
liquidity established by the Trustees, including Section 4(2) commercial paper,
as determined by the Adviser, as liquid and not subject to the investment
limitation applicable to illiquid securities. In addition, because Section 4(2)
commercial paper is liquid, the Fund does not intend to subject such paper to
the limitation applicable to restricted securities.
The ability of the Board of Trustees to determine the liquidity of
certain restricted securities is permitted under a position of the staff of the
Commission set forth in the adopting release for Rule 144A under the Securities
Act of 1933 (the "Rule"). The Rule is a nonexclusive safe-harbor for certain
secondary market transactions involving securities subject to restrictions on
resale under federal securities laws. The Rule provides an exemption from
registration for resales of otherwise restricted securities to qualified
institutional buyers. The Rule was expected to further enhance the liquidity of
the secondary market for securities eligible for resale under Rule 144A. The
staff of the Commission has left the question of determining the liquidity of
all restricted securities to the Trustees. The Trustees consider the following
criteria in determining the liquidity of certain restricted securities
(including Section 4(2) commercial paper): the frequency of trades and quotes
for the security; the number of dealers willing to purchase or sell the security
and the number of other potential buyers; dealer undertakings to make a market
in the security; and the nature of the security and the nature of the
marketplace trades. The Trustees have delegated to the Adviser the daily
function of determining and monitoring the liquidity of restricted securities
pursuant to the above criteria and guidelines adopted by the Board of Trustees.
The Trustees will continue to monitor and periodically review the Adviser's
selection of Rule 144A and Section 4(2) commercial paper as well as any
determinations as to its liquidity.
HOW TO PURCHASE SHARES
- ----------------------
Your initial investment in the Fund ordinarily must be at least $1,000
($250 for tax-deferred retirement plans). However, the minimum initial
investment for employees, shareholders and customers of Countrywide Credit
Industries, Inc. or any affiliated company, including members of the immediate
family of such individuals is $50. Shares of the Fund are sold on a continuous
basis at the net asset value next determined after receipt of a purchase order
by the Trust.
- 10 -
<PAGE>
INITIAL INVESTMENTS BY MAIL. You may open an account and make an
initial investment in the Fund by sending a check and a completed account
application form to Countrywide Fund Services, Inc. (the "Transfer Agent"), P.O.
Box 5354, Cincinnati, Ohio 45201-5354. Checks should be made payable to the
"Money Market Fund." An account application is included in this Prospectus.
You will be sent within five business days after the end of each month
a written statement disclosing each purchase or redemption effected and each
dividend or distribution credited to your account during the month. Certificates
representing shares of the Fund are not issued. The Trust and the Adviser
reserve the rights to limit the amount of investments and to refuse to sell to
any person.
Investors should be aware that the Fund's account application contains
provisions in favor of the Trust, the Transfer Agent and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating to
the various services (for example, telephone redemptions and exchanges and check
redemptions) made available to investors.
Should an order to purchase shares be canceled because your check does
not clear, you will be responsible for any resulting losses or fees incurred by
the Trust or the Transfer Agent in the transaction.
INITIAL INVESTMENTS BY WIRE. You may also purchase shares of the Fund
by wire. Please telephone the Transfer Agent (Nationwide call toll-free
800-543-0407; in Cincinnati call 629- 2050) for instructions. You should be
prepared to give the name in which the account is to be established, the
address, telephone number and taxpayer identification number for the account,
and the name of the bank which will wire the money.
You may receive a dividend on the day of your wire investment provided
you have given notice of your intention to make such investment to the Transfer
Agent by 12:30 p.m., Eastern time, on that day. Your investment will be made at
the net asset value next determined after your wire is received together with
the account information indicated above. If the Trust does not receive timely
and complete account information, there may be a delay in the investment of your
money and any accrual of dividends. To make your initial wire purchase, you are
required to mail a completed account application to the Transfer Agent. Your
bank may impose a charge for sending your wire. There is presently no fee for
receipt of wired funds, but the Transfer Agent reserves the right to charge
shareholders for this service upon thirty days' prior notice to shareholders.
- 11 -
<PAGE>
ADDITIONAL INVESTMENTS. You may purchase and add shares to your account
by mail or by bank wire. Checks should be sent to Countrywide Fund Services,
Inc., P.O. Box 5354, Cincinnati, Ohio 45201-5354. Checks should be made payable
to the Fund. Bank wires should be sent as outlined above. You may also
make additional investments at the Trust's offices at 312 Walnut Street,
21st Floor, Cincinnati, Ohio 45202. Each additional purchase request must
contain the name of your account and your account number to permit proper
crediting to your account. While there is no minimum amount required for
subsequent investments, the Trust reserves the right to impose such requirement.
CASH SWEEP PROGRAM. Cash accumulations in accounts with financial
institutions may be automatically invested in shares of the Fund at the next
determined net asset value on a day selected by the institution or its customer,
or when the account balance reaches a predetermined dollar amount (e.g.,
$5,000).
Participating institutions are responsible for prompt transmission of
orders relating to the program. Institutions participating in this program may
charge their customers fees for services relating to the program which would
reduce the customers' yield from an investment in the Fund. This Prospectus
should, therefore, be read together with any agreement between the customer and
the participating institution with regard to the services provided, the fees
charged for these services and any restrictions and limitations imposed.
SHAREHOLDER SERVICES
- --------------------
Contact the Transfer Agent (Nationwide call toll-free 800-543-0407; in
Cincinnati call 629-2050) for additional information about the shareholder
services described below.
Automatic Withdrawal Plan
--------------------------
If the shares in your account have a value of at least $5,000, you may
elect to receive, or may designate another person to receive, monthly or
quarterly payments in a specified amount of not less than $50 each. There is no
charge for this service.
Tax-Deferred Retirement Plans
-----------------------------
Shares of the Fund are available for purchase in connection with the
following tax-deferred retirement plans:
-- Keogh Plans for self-employed individuals
- 12 -
<PAGE>
-- Individual retirement account (IRA) plans for
individuals and their non-employed spouses, including
Roth IRAs and Education IRAs
-- Qualified pension and profit-sharing plans for
employees, including those profit-sharing plans with a
401(k) provision
-- 403(b)(7) custodial accounts for employees of public school
systems, hospitals, colleges and other non-profit
organizations meeting certain requirements of the Internal
Revenue Code
Direct Deposit Plans
--------------------
Shares of the Fund may be purchased through direct deposit plans
offered by certain employers and government agencies. These plans enable a
shareholder to have all or a portion of his or her payroll or social security
checks transferred automatically to purchase shares of the Fund.
Automatic Investment Plan
--------------------------
You may make automatic monthly investments in the Fund from your bank,
savings and loan or other depository institution account. The minimum initial
and subsequent investments must be $50 under the plan. The Transfer Agent pays
the costs associated with these transfers, but reserves the right, upon thirty
days' written notice, to make reasonable charges for this service. Your
depository institution may impose its own charge for debiting your account which
would reduce your return from an investment in the Fund.
HOW TO REDEEM SHARES
- --------------------
You may redeem shares of the Fund on each day that the Trust is open
for business. You will receive the net asset value per share next determined
after receipt by the Transfer Agent of a proper redemption request in the form
described below. Payment is normally made within three business days after
tender in such form, provided that payment in redemption of shares purchased by
check will be effected only after the check has been collected, which may take
up to fifteen days from the purchase date. To eliminate this delay, you may
purchase shares of the Fund by certified check or wire.
A contingent deferred sales load may be imposed on a redemption of shares
of the Fund if such shares had previously been acquired in connection with an
exchange from another fund of Countrywide Investments which imposes a contingent
deferred sales load, as described in the Prospectus of such other fund.
- 13 -
<PAGE>
BY TELEPHONE. You may redeem shares by telephone. The proceeds will be
sent by mail to the address designated on your account or wired directly to your
existing account in any commercial bank or brokerage firm in the United States
as designated on your application. To redeem by telephone, call the Transfer
Agent (Nationwide call toll-free 800-543-0407; in Cincinnati call 629-2050). The
redemption proceeds will normally be sent by mail or by wire within one business
day (but not later than three business days) after receipt of your telephone
instructions. Any redemption requests by telephone must be received in proper
form prior to 12:30 p.m., Eastern time, on any business day in order for payment
by wire to be made that day. IRA accounts are not redeemable by telephone.
The telephone redemption privilege is automatically available to all
shareholders. You may change the bank or brokerage account which you have
designated under this procedure at any time by writing to the Transfer Agent
with your signature guaranteed by any eligible guarantor institution (including
banks, brokers and dealers, municipal securities brokers and dealers, government
securities brokers and dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations)
or by completing a supplemental telephone redemption authorization form. Contact
the Transfer Agent to obtain this form. Further documentation will be required
to change the designated account if shares are held by a corporation, fiduciary
or other organization.
Neither the Trust, the Transfer Agent, nor their respective affiliates
will be liable for complying with telephone instructions they reasonably believe
to be genuine or for any loss, damage, cost or expense in acting on such
telephone instructions. The affected shareholders will bear the risk of any such
loss. The Trust or the Transfer Agent, or both, will employ reasonable
procedures to determine that telephone instructions are genuine. If the Trust
and/or the Transfer Agent do not employ such procedures, they may be liable for
losses due to unauthorized or fraudulent instructions. These procedures may
include, among others, requiring forms of personal identification prior to
acting upon telephone instructions, providing written confirmation of the
transactions and/or tape recording telephone instructions.
BY MAIL. You may redeem any number of shares from your account by
sending a written request to the Transfer Agent. The request must state the
number of shares or the dollar amount to be redeemed and your account number.
The request must be signed exactly as your name appears on the Trust's account
records. If the shares to be redeemed have a value of $25,000 or more, your
- 14 -
<PAGE>
signature must be guaranteed by any of the eligible guarantor institutions
outlined above.
Written redemption requests may also direct that the proceeds be
deposited directly in the bank account or brokerage account designated on your
account application for telephone redemptions. Proceeds of redemptions requested
by mail are mailed within three business days following receipt of instructions
in proper form.
BY CHECK. You may establish a special checking account with the Fund
for the purpose of redeeming shares by check. Checks may be made payable to
anyone for any amount, but checks may not be certified.
When a check is presented to the Custodian for payment, the Transfer
Agent, as your agent, will cause the Fund to redeem a sufficient number of full
and fractional shares in your account to cover the amount of the check.
If the amount of a check is greater than the value of the shares held
in your account, the check will be returned. A check representing a redemption
request will take precedence over any other redemption instructions issued by a
shareholder.
As long as no more than six check redemptions are effected in your
account in any month, there will be no charge for the check redemption
privilege. After six check redemptions are effected in your account in
a month, the Transfer Agent will charge you $.25 for each additional check
redemption effected that month. However, there is no charge for any check
redemptions effected by employees, shareholders and customers of Countrywide
Credit Industries, Inc. or any affiliated company, including members of the
immediate family of such individuals. The Transfer Agent charges shareholders
its costs for each stop payment and each check returned for insufficient funds.
In addition, the Transfer Agent reserves the right to make additional charges to
recover the costs of providing the check redemption service. All charges will be
deducted from your account by redemption of shares in your account. The check
redemption procedure may be suspended or terminated at any time upon written
notice by the Trust or the Transfer Agent.
Shareholders who invest in the Fund through a cash sweep or similar
program with a financial institution are not eligible for the checkwriting
privilege.
ADDITIONAL REDEMPTION INFORMATION. If your instructions request a
redemption by wire, you will be charged an $8 processing fee by the Fund's
Custodian. The Trust reserves the right, upon thirty days' written notice, to
change the processing fee. All charges will be deducted from your account by
- 15 -
<PAGE>
redemption of shares in your account. Your bank or brokerage firm may also
impose a charge for processing the wire. In the event that wire transfer of
funds is impossible or impractical, the redemption proceeds will be sent by mail
to the designated account.
Redemption requests may direct that the proceeds be deposited directly
in your account with a commercial bank or other depository institution via an
Automated Clearing House (ACH) transaction. There is currently no charge for ACH
transactions. Contact the Transfer Agent for more information about ACH
transactions.
At the discretion of the Trust or the Transfer Agent, corporate
investors and other associations may be required to furnish an appropriate
certification authorizing redemptions to ensure proper authorization. The Trust
reserves the right to require you to close your account if at any time the value
of your shares is less than the minimum amount required by the Trust for your
account (based on actual amounts invested unaffected by market fluctuations),
or such other minimum amount as the Trust may determine from time to time.
After notification to you of the Trust's intention to close your account, you
will be given thirty days to increase the value of your account to the minimum
amount.
The Trust reserves the right to suspend the right of redemption or to
postpone the date of payment for more than three business days under unusual
circumstances as determined by the Commission.
EXCHANGE PRIVILEGE
- ------------------
Shares of the Fund and of any other fund of Countrywide Investments may
be exchanged for each other. A sales load will be imposed equal to the excess,
if any, of the sales load rate applicable to the shares being acquired over the
sales load rate, if any, previously paid on the shares being exchanged.
The following are the funds of Countrywide Investments currently
offered to the public. Funds which may be subject to a front-end or contingent
deferred sales load are indicated by an asterisk.
- 16 -
<PAGE>
Countrywide Tax-Free Trust Countrywide Strategic Trust
Tax-Free Money Fund *Government Mortgage Fund
Ohio Tax-Free Money Fund *Equity Fund
California Tax-Free Money Fund *Utility Fund
Florida Tax-Free Money Fund *Aggressive Growth Fund
*Tax-Free Intermediate Term *Growth/Value Fund
Fund *International Equity Fund
*Ohio Insured Tax-Free Fund
*Kentucky Tax-Free Fund Countrywide Investment Trust
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
You may request an exchange by sending a written request to the
Transfer Agent. The request must be signed exactly as your name appears on the
Trust's account records. Exchanges may also be requested by telephone. If you
are unable to execute your transaction by telephone (for example during times of
unusual market activity) consider requesting your exchange by mail or by
visiting the Trust's offices at 312 Walnut Street, 21st Floor, Cincinnati, Ohio
45202. An exchange will be effected at the next determined net asset value (or
offering price, if sales load is applicable) after receipt of a request by the
Transfer Agent.
Exchanges may only be made for shares of funds then offered for sale in
your state of residence and are subject to the applicable minimum initial
investment requirements. The exchange privilege may be modified or terminated by
the Board of Trustees upon 60 days' prior notice to shareholders. An exchange
results in a sale of fund shares, which may cause you to recognize a capital
gain or loss. Before making an exchange, contact the Transfer Agent to obtain a
current prospectus for any of the other funds of Countrywide Investments and
more information about exchanges among Countrywide Investments.
DIVIDENDS AND DISTRIBUTIONS
- ---------------------------
All of the net investment income of the Fund is declared as a dividend
to shareholders of record on each business day of the Trust and paid monthly.
Management will determine the timing and frequency of the distributions
of any net realized short-term capital gains. Although the Fund does not expect
to realize any long-term capital gains, if the Fund does realize such gains it
will distribute them at least once each year.
Dividends are automatically reinvested in additional shares of the
Fund (the Share Option) unless cash payments are specified on your application
or are otherwise requested by contacting the Transfer Agent. If you elect
- 17 -
<PAGE>
to receive dividends in cash and the U.S. Postal Service cannot deliver
your checks or if your checks remain uncashed for six months, your dividends
may be reinvested in your account at the then-current net asset value and
your account will be converted to the Share Option. No interest will accrue
on amounts represented by uncashed distribution checks.
TAXES
- -----
The Fund intends to qualify for the special tax treatment afforded a
"regulated investment company" under Subchapter M of the Internal Revenue Code
so that it does not pay federal taxes on income and capital gains distributed to
shareholders.
The Fund intends to distribute substantially all of its net investment
income and any net realized capital gains to its shareholders. Distributions of
net investment income as well as from net realized short-term capital gains, if
any, are taxable as ordinary income. Since the Fund's investment income is
derived from interest rather than dividends, no portion of such distributions is
eligible for the dividends received deduction available to corporations.
Distributions of net realized long-term capital gains are taxable as long-term
capital gains regardless of how long you have held your Fund shares.
The Fund will mail to its shareholders a statement indicating the
amount and federal income tax status of all distributions made during the year.
In addition to federal taxes, shareholders of the Fund may be subject to state
and local taxes on distributions. The tax consequences described in this section
apply whether distributions are taken in cash or reinvested in additional
shares.
- 18 -
<PAGE>
OPERATION OF THE FUND
- ---------------------
The Fund is a diversified series of Countrywide Investment Trust, an
open-end management investment company organized as a Massachusetts business
trust on December 7, 1980. The Board of Trustees supervises the business
activities of the Trust. Like other mutual funds, the Trust retains various
organizations to perform specialized services for the Fund.
The Trust retains Countrywide Investments, Inc., 312 Walnut Street,
Cincinnati, Ohio 45202 (the "Adviser"), to manage the Fund's investments and its
business affairs. The Adviser was organized in 1974 and is also the investment
adviser to six other series of the Trust, seven series of Countrywide Tax-Free
Trust and six series of Countrywide Strategic Trust. The Adviser is an indirect
wholly-owned subsidiary of Countrywide Credit Industries, Inc., a New York Stock
Exchange listed company principally engaged in the business of residential
mortgage lending. The Fund pays the Adviser a fee equal to the annual rate of
.5% of the average value of its daily net assets up to $50 million; .45% of such
assets from $50 million to $150 million; .4% of such assets from $150 million to
$250 million; and .375% of such assets in excess of $250 million.
The Adviser serves as principal underwriter for the Fund and, as such,
is the exclusive agent for the distribution of shares of the Fund. Angelo R.
Mozilo, Robert H. Leshner, Robert G. Dorsey and John F. Splain are officers of
both the Adviser and the Trust.
The Fund is responsible for the payment of all operating expenses,
including fees and expenses in connection with membership in investment company
organizations, brokerage fees and commissions, legal, auditing and accounting
expenses, expenses of registering shares under federal and state securities
laws, expenses related to the distribution of the Fund's shares (see
"Distribution Plan"), insurance expenses, taxes or governmental fees, fees and
expenses of the custodian, transfer agent and accounting and pricing agent of
the Fund, fees and expenses of members of the Board of Trustees who are not
interested persons of the Trust, the cost of preparing and distributing
prospectuses, statements, reports and other documents to shareholders, expenses
of shareholders' meetings and proxy solicitations, and such extraordinary or
non-recurring expenses as may arise, including litigation to which the Fund may
be a party and indemnification of the Trust's officers and Trustees with respect
thereto.
The Trust has retained Countrywide Fund Services, Inc., P.O. Box 5354,
Cincinnati, Ohio (the "Transfer Agent"), an indirect wholly-owned subsidiary of
Countrywide Credit Industries, Inc., to serve as the Fund's transfer agent,
dividend paying agent and shareholder service agent.
The Transfer Agent also provides accounting and pricing services to the
Fund. The Transfer Agent receives a monthly fee from the Fund for calculating
daily net asset value per share and
- 19 -
<PAGE>
maintaining such books and records as are necessary to enable it to perform its
duties.
In addition, the Transfer Agent has been retained by the Adviser to
assist the Adviser in providing administrative services to the Fund. In this
capacity, the Transfer Agent supplies executive, administrative and regulatory
services, supervises the preparation of tax returns, and coordinates the
preparation of reports to shareholders and reports to and filings with the
Commission and state securities authorities. The Adviser (not the Fund) pays the
Transfer Agent a fee for these administrative services.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its objective of seeking best
execution of portfolio transactions, the Adviser may give consideration to sales
of shares of the Fund as a factor in the selection of brokers and dealers to
execute portfolio transactions of the Fund. Subject to the requirements of the
1940 Act and procedures adopted by the Board of Trustees, the Fund may execute
portfolio transactions through any broker or dealer and pay brokerage
commissions to a broker (i) which is an affiliated person of the Trust, or (ii)
which is an affiliated person of such person, or (iii) an affiliated person of
which is an affiliated person of the Trust or the Adviser.
Shares of the Fund have equal voting rights and liquidation rights. The
Fund shall vote separately on matters submitted to a vote of the shareholders
except in matters where a vote of all series of the Trust in the aggregate is
required by the 1940 Act or otherwise. When matters are submitted to
shareholders for a vote, each shareholder is entitled to one vote for each
full share owned and fractional votes for fractional shares owned. The
Trust does not normally hold annual meetings of shareholders. The Trustees shall
promptly call and give notice of a meeting of shareholders for the purpose of
voting upon the removal of any Trustee when requested to do so in writing by
shareholders holding 10% or more of the Trust's outstanding shares. The Trust
will comply with the provisions of Section 16(c) of the 1940 Act in order to
facilitate communications among shareholders.
Trans Financial Bank, N.A., P.O. Box 90001, Bowling Green, Kentucky,
may be deemed to control the Fund by virtue of the fact that it owns of
record more than 25% of the Fund's shares as of the date of this Prospectus.
- 20 -
<PAGE>
DISTRIBUTION PLAN
- -----------------
Pursuant to Rule 12b-1 under the 1940 Act, the Fund has adopted a plan of
distribution (the "Plan") under which the Fund may directly incur or reimburse
the Adviser for certain distribution-related expenses, including payments to
securities dealers and others who are engaged in the sale of shares of the Fund
and who may be advising investors regarding the purchase, sale or retention of
Fund shares; expenses of maintaining personnel who engage in or support
distribution of shares or who render shareholder support services not otherwise
provided by the Transfer Agent; expenses of formulating and implementing
marketing and promotional activities, including direct mail promotions and
mass media advertising; expenses of preparing, printing and distributing sales
literature and prospectuses and statements of additional information and reports
for recipients other than existing shareholders of the Fund; expenses of
obtaining such information, analyses and reports with respect to marketing and
promotional activities as the Trust may, from time to time, deem advisable; and
any other expenses related to the distribution of the Fund's shares.
The annual limitation for payment of expenses pursuant to the Plan is
.35% of the Fund's average daily net assets. Unreimbursed expenditures will not
be carried over from year to year. In the event the Plan is terminated by the
Fund in accordance with its terms, the Fund will not be required to make any
payments for expenses incurred by the Adviser after the date the Plan
terminates.
Pursuant to the Plan, the Fund may also make payments to banks or other
financial institutions that provide shareholder services and administer
shareholder accounts. The Glass-Steagall Act prohibits banks from engaging in
the business of underwriting, selling or distributing securities. Although the
scope of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, management of the
Trust believes that the Glass- Steagall Act should not preclude a bank from
providing such services. However, state securities laws on this issue may differ
from the interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law. If a
bank were prohibited from continuing to perform all or a part of such services,
management of the Trust believes that there would be no material impact on the
Fund or its shareholders. Banks may charge their customers fees for offering
these services to the extent permitted by applicable regulatory authorities, and
the overall return to those shareholders availing themselves of the bank
services will be lower than to those shareholders who do not. The Fund may from
time to time purchase securities issued by banks which
- 21 -
<PAGE>
provide such services; however, in selecting investments for the Fund, no
preference will be shown for such securities.
CALCULATION OF SHARE PRICE
- --------------------------
On each day that the Trust is open for business, the share price (net
asset value) of the Fund's shares is determined as of 12:30 p.m. and 4:00 p.m.,
Eastern time. The Trust is open for business on each day the New York Stock
Exchange is open for business and on any other day when there is sufficient
trading in the Fund's investments that its net asset value might be materially
affected. The net asset value per share of the Fund is calculated by dividing
the sum of the value of the securities held by the Fund plus cash or other
assets minus all liabilities (including estimated accrued expenses) by the total
number of shares outstanding of the Fund, rounded to the nearest cent.
The Fund's portfolio securities are valued on an amortized cost basis.
In connection with the use of the amortized cost method of valuation, the Fund
maintains a dollar-weighted average portfolio maturity of 90 days or less,
purchases only United States dollar-denominated securities having remaining
maturities of thirteen months or less and invests only in securities determined
by the Board of Trustees to meet the Fund's quality standards and to present
minimal credit risks. Other assets of the Fund are valued at their fair value as
determined in good faith in accordance with consistently applied procedures
established by and under the general supervision of the Board of Trustees. It is
anticipated, but there is no assurance, that the use of the amortized cost
method of valuation will enable the Fund to maintain a stable net asset value
per share of $1.
PERFORMANCE INFORMATION
- -----------------------
From time to time, the Fund may advertise its "current yield" and
"effective yield." Both yield figures are based on historical earnings and are
not intended to indicate future performance. The "current yield" of the Fund
refers to the income generated by an investment in the Fund over a seven-day
period (which period will be stated in the advertisement). This income is then
"annualized." That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in the Fund
is assumed to be reinvested. The "effective yield" will be slightly higher than
the "current yield" because of the compounding effect of this assumed
reinvestment.
- 22 -
<PAGE>
From time to time, the Fund may advertise its performance rankings as
published by recognized independent mutual fund statistical services such as
Lipper Analytical Services, Inc. ("Lipper"), or by publications of general
interest such as Forbes, Money, The Wall Street Journal, Business Week,
Barron's, Fortune or Morningstar Mutual Fund Values. The Fund may also compare
its performance to that of other selected mutual funds, averages of the other
mutual funds within its category as determined by Lipper, or recognized
indicators. In connection with a ranking, the Fund may provide additional
information, such as the particular category of funds to which the ranking
relates, the number of funds in the category, the criteria upon which the
ranking is based, and the effect of fee waivers and/or expense reimbursements,
if any.
- 23 -
<PAGE>
<TABLE>
ACCOUNT NO. 96-_____________________
Account Application (For Fund Use Only)
<S> <C> <C> <C>
Money Market Fund FOR BROKER/DEALER USE ONLY
Firm Name:_____________________________
Home Office Address: ___________________
Branch Address: ________________________
Rep Name & No.: ________________________
Please mail account application to: Rep Signature: _________________________
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
========================================================================================================================
Initial Investment of $_______________________
[ ] Check or draft enclosed payable to the Fund.
[ ] Bank Wire From:
______________________________________________________________________________________________________________
[ ] Exchange From:
______________________________________________________________________________________________________________
(Fund Name) (Fund Account Number)
Account Name S.S. #/Tax I.D.#
________________________________________________________________________________________ _____________________________
Name of Individual, Corporation, Organization, or Minor, etc. (In case of custodial
account please list
minor's S.S.#)
___________________________________________________________________________________________________ Citizenship:[] U.S.
Name of Joint Tenant, Partner, Custodian []Other
Address Phone
___________________________________________________________________________________________________ ( )_______________
Street or P.O. Box Business Phone
___________________________________________________________________________________________________ ( )_______________
City State Zip Home Phone
Check Appropriate Box: [] Individual [] Joint Tenant (Right of survivorship presumed)
[] Partnership [] Corporation [] Trust [] Custodial [] Non-Profit [] Other
Occupation and Employer Name/Address______________________________________________________________________________________________
Are you an associated person of an NASD member? [] Yes [] No
========================================================================================================================
TAXPAYER IDENTIFICATION NUMBER -- Under penalties of perjury I certify that the Taxpayer Identification Number listed
above is my correct number. The Internal Revenue Service does not require my consent to any provision of this document
other than the certifications required to avoid backup withholding. Check box if appropriate:
[] I am exempt from backup withholding under the provisions of section 3406(a)(1)(c) of the Internal Revenue Code; or I am not
subject to backup withholding because I have not been notified that I am subject to backup withholding as a result of a failure
to report all interest or dividends; or the Internal Revenue Service has notified me that I am no longer subject to backup
withholding.
[] I certify under penalties of perjury that a Taxpayer Identification Number has not been issued to me and I have mailed or
delivered an application to receive a Taxpayer Identification Number to the Internal Revenue Service Center or Social Security
Administration Office. I understand that if I do not provide a Taxpayer Identification Number within 60 days that 31% of all
reportable payments will be withheld until I provide a number.
=======================================================================================================================
DISTRIBUTIONS (Distributions are reinvested if no choice is indicated)
[ ] Reinvest all distributions
[ ] Pay all distributions in cash
[ ] By Check [ ] By ACH to my bank checking or savings account. PLEASE ATTACH A VOIDED CHECK.
====================================================================================================================
REDEMPTION OPTIONS
I (we) authorize the Trust or Countrywide Fund Services, Inc. to act upon instructions received by telephone, or upon
receipt of and in the amounts of checks as described below (if checkwriting is selected), to have amounts withdrawn from
my (our) account in any fund of Countrywide Investments (see prospectus for limitations on this option) and:
[ ] WIRED ($1,000 minimum OR MAILED to my (our) bank account designated below. I (we) further authorize the use of
automated cash transfers to and from the account designated below.
NOTE: For wire redemptions, the indicated bank should be a commercial bank.
Bank Account Number _____________________________________ Bank Routing Transit Number _______________________________
Name of Account Holder _______________________________________________________________________________________________
Bank Name _________________________________________________________ Bank Address ______________________________________
City State
[ ]CHECKWRITING (A signature card must be completed)
...to deposit the proceeds of such redemptions in the applicable Countrywide Pay Through Draft Account (PTDA)
or otherwise arrange for application of such proceeds to payment of said checks. I (we) authorize the persons
whose signatures appear on the PTDA signature card to draw checks on the PTDA and to cause the redemption of my (our)
shares of the Trust. I (we) agree to be bound by the Rules and Regulations for the Countrywide Pay Through Draft
Account as such Rules and Regulations may be amended from time to time.
===========================================================================================================================
SIGNATURES
By signature below each investor certifies that he has received a copy of the Fund's current Prospectus, that he is of legal
age, and that he has full authority and legal capacity for himself or the organization named below, to make this investment and
to use the options selected above. The investor appoints Countrywide Fund Services, Inc. as his agent to enter orders for shares
whether by direct purchase or exchange, to receive dividends and distributions for automatic reinvestment in additional shares of
the Fund for credit to the investor's account and to surrender for redemption shares held in the investor's account in accordance
with any of the procedures elected above or for payment of service charges incurred by the investor. The investor further agrees
that Countrywide Fund Services, Inc. can cease to act as such agent upon ten days' notice in writing to the investor at the address
contained in this Application. The investor hereby ratifies any instructions given pursuant to this Application and for himself and
his successors and assigns does hereby release Countrywide Fund Services, Inc., Countrywide Investment Trust, Countrywide Investment
Trust, Countrywide Investments, Inc., and their respective officers, employees, agents and affiliates from any and all liability in
the performance of the acts instructed herein. Neither the Trust, Countrywide Fund Services, Inc., nor their respective affiliates
will be liable for complying with telephone instructions they reasonably believe to be genuine or for any loss, damage, cost or
expense in acting on such telephone instructions. The investor(s) will bear the risk of any such loss. The Trust or Countrywide
Fund Services, Inc., or both will employ reasonable procedures to determine that telephone instructions are genuine. If the Trust
and/or Countrywide Fund Services, Inc. do not employ such procedures, they may be liable for losses due to unauthorized or
fraudulent instructions. These procedures may include, among others, requiring forms of personal identification prior to acting
upon telephone instructions, providing written confirmation of the transactions and/or tape recording telephone instructions.
are genuine.
___________________________________________________ ___________________________________________________
Signature of Individual Owner, Corporate Officer, Signature of Joint Owner, if Any
Trustee, etc.
________________________________________________ ____________________________________________________
Title of Corporate Officer, Trustee, etc. Date
NOTE: Corporations, trusts and other organizations must complete the resolution form on the reverse side.
Unless otherwise specified, each joint owner shall have full authority to act on behalf of the account.
========================================================================================
AUTOMATIC INVESTMENT PLAN (Complete for Investments Into the Fund)
The Automatic Investment Plan is available for all established accounts of Countrywide Investment Trust. There is no charge for
this service, and it offers the convenience of automatic investing on a regular basis. The minimum investment is $50.00 per month.
For an account that is opened by using this Plan, the minimum initial and subsequent investments must be $50.00. Though a
continuous program of 12 monthly investments is recommended, the Plan may be discontinued by the shareholder at any time.
Please invest $ _________________ per month in the Fund.
ABA Routing Number______________________________
FI Account Number________________________________
[] Checking Account [] Savings Account
____________________________________________________________________
Name of Financial Institution (FI) Please make my automatic investment on:
[] the last business day of each month
______________________________________________________________________ [] the 15th day of each month
City State [] both the 15th and last business day
X_____________________________________________________________________ X_______________________________________
(Signature of Depositor EXACTLY as it appears on FI Records) (Signature of Joint Tenant - if any)
(Joint Signatures are required when bank account is in joint names. Please sign exactly as signature appears on your FI's
records.)
Please attach a voided check for from your checking account or a voided deposit/withdrawal slip from your savings
account for the Automatic Investment Plan.
Indemnification to Depositor's Bank
In consideration of your participation in a plan which Countrywide Fund Services, Inc. ("CFS") has put into effect, by which
amounts, determined by your depositor, payable to the Fund for purchase of shares of the Fund, are collected by CFS, CFS hereby
agrees:
CFS will indemnify and hold you harmless from any liability to any person or persons whatsoever arising out of the payment
by you of any amount drawn by the Fund to its own order on the account of your depositor or from any liability to any person
whatsoever arising out of the dishonor by you whether with or without cause or intentionally or inadvertently, of any such
checks. CFS will defend, at its own cost and expense, any action which might be brought against you by any person or persons
whatsoever because of your actions taken pursuant to the foregoing request or in any manner arising by reason of your
participation in this arrangement. CFS will refund to you any amount erroneously paid by you to the Fund on any such check if
the claim for the amount of such erroneous payment is made by you within six (6) months from the date of such erroneous
payment; your participation in this arrangement and that of the Fund may be terminated by thirty (30) days written notice from
either party to the other.
========================================================================================================================
AUTOMATIC WITHDRAWAL PLAN (Complete for Withdrawals from the Fund)
This is an authorization for you to withdraw $_________ from my mutual fund account beginning the last business day of the
month of __________________.
Please Indicate Withdrawal Schedule (Check One):
[ ] Monthly -- Withdrawals will be made on the last business day of each month.
[ ] Quarterly -- Withdrawals will be made on or about 3/31, 6/30, 9/30 and 12/31.
[ ] Annually -- Please make withdrawals on the last business day of the month of:_____________________.
Please Select Payment Method (Check One):
[ ] Exchange: Please exchange the withdrawal proceeds into another Countywide account number:_ _-- _ _ _ _--_
[ ] Check: Please mail a check for my withdrawal proceeds to the mailing address on this account.
[ ] ACH Transfer: Please send my withdrawal proceeds via ACH transfer to my bank checking or savings account as indicated below.
I understand that the transfer will be completed in two to three business days and that there is no charge.
[ ] Bank Wire: Please send my withdrawal proceeds via bank wire, to the account indicated below. I understand that the wire will
be completed in one business day and that there is an $8.00 fee.
Please attach a voided check for ACH or bank wire____________________________________________________________________________
Bank Name Bank Address
___________________________________________________________________________________________________________________________________
Bank ABA# Account # Account Name
[ ] Send to special payee (other than applicant): Please mail a check for my withdrawal proceeds to the mailing address below:
Name of payee___________________________________________________________________________________________________________________
Please send to:__________________________________________________________________________________________________________________
Street address City State Zip
===================================================================================================================================
RESOLUTIONS
(This Section to be completed by Corporations, Trusts, and Other Organizations)
RESOLVED: That this corporation or organization become a shareholder of Countrywide Investment Trust (the Trust) and that
________________________________________________________________________________________________________________________
is (are) hereby authorized to complete and execute the Application on behalf of the corporation or organization and to take any
action for it as may be necessary or appropriate with respect to its shareholder account with the Trust, and it is
FURTHER RESOLVED: That any one of the above noted officers is authorized to sign any documents necessary or appropriate to
appoint Countrywide Fund Services, Inc. as redemption agent of the corporation or organization for shares of the applicable series
of the Trust, to establish or acknowledge terms and conditions governing the redemption of said shares and to otherwise implement
the privileges elected on the Application.
Certificate
I hereby certify that the foregoing resolutions are in conformity with the Charter and By-Laws or other empowering documents of
the
_______________________________________________________________________________________________________________________
(Name of Organization)
incorporated or formed under the laws of__________________________________________________________________________________________
(State)
and were adopted at a meeting of the Board of Directors or Trustees of the organization or corporation duly called and held on
at which a quorum was present and acting throughout, and that the same are now in full force and effect. I further certify that
the following is (are) duly elected officer(s) of the corporation or organization, authorized to act in accordance with the
foregoing resolutions.
Name Title
___________________________________________________ _________________________________________________________
___________________________________________________ _________________________________________________________
___________________________________________________ _______________________________________________________
Witness my hand and seal of the corporation or organization this_______________________day of_________________________, 19_______
___________________________________________________ _________________________________________________________
*Secretary-Clerk Other Authorized Officer (if required)
*If the Secretary or other recording officer is authorized to act by the above resolutions, this certificate must also be
signed by another officer.
</TABLE>
<PAGE>
COUNTRYWIDE INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
Nationwide: (Toll-Free) 800-543-8721
Cincinnati: 513-629-2000
BOARD OF TRUSTEES
Donald L. Bogdon, M.D.
John R. Delfino
H. Jerome Lerner
Robert H. Leshner
Angelo R. Mozilo
Oscar P. Robertson
John F. Seymour, Jr.
Sebastiano Sterpa
INVESTMENT ADVISER
COUNTRYWIDE INVESTMENTS, INC.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
TRANSFER AGENT
COUNTRYWIDE FUND SERVICES, INC.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
Shareholder Service
Nationwide: (Toll-Free) 800-543-0407
Cincinnati: 513-629-2050
Countrywide Always Line
Nationwide: (Toll-Free) 800-852-3809
Cincinnati: 513-579-0999
- 24 -
<PAGE>
TABLE OF CONTENTS
Expense Information. . . . . . . . . . . . . . . . . . . . .
Financial Highlights . . . . . . . . . . . . . . . . . . . .
Investment Objective and Policies. . . . . . . . . . . . . .
How to Purchase Shares . . . . . . . . . . . . . . . . . . .
Shareholder Services . . . . . . . . . . . . . . . . . . . .
How to Redeem Shares . . . . . . . . . . . . . . . . . . . .
Exchange Privilege . . . . . . . . . . . . . . . . . . . . .
Dividends and Distributions. . . . . . . . . . . . . . . . .
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operation of the Fund . . . . . . . . . . . . . . . . . . .
Distribution Plan . . . . . . . . . . . . . . . . . . . . .
Calculation of Share Price . . . . . . . . . . . . . . . . .
Performance Information. . . . . . . . . . . . . . . . . . .
- -----------------------------------------------------------------
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Trust. This Prospectus does not constitute an offer by the Trust to sell
shares in any State to any person to whom it is unlawful for the Trust to make
such offer in such State.
- 25 -
<PAGE>
PROSPECTUS
January 1, 1998
Countrywide Investment Trust
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
INTERMEDIATE BOND FUND
The Intermediate Bond Fund (the "Fund"), a separate series of
Countrywide Investment Trust, seeks to provide as high a level of current income
as is consistent with the preservation of capital. The Fund invests in
marketable corporate debt securities, U.S. Government securities,
mortgage-related securities, other asset-backed securities and cash or money
market instruments.
THE FUND IS A NON-DIVERSIFIED SERIES AND MAY INVEST A SIGNIFICANT
PERCENTAGE OF ITS ASSETS IN A SINGLE ISSUER. THEREFORE, AN INVESTMENT IN THE
FUND MAY BE RISKIER THAN AN INVESTMENT IN OTHER TYPES OF MUTUAL FUNDS. SHARES OF
THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY
BANKING OR DEPOSITORY INSTITUTION. SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF THE
PRINCIPAL AMOUNT INVESTED.
Pursuant to an Agreement and Plan of Reorganization dated May 31, 1997, the
Fund, on August 29, 1997, succeeded to the assets and liabilities of another
mutual fund of the same name (the "Predecessor Fund"), which was an investment
series of Trans Adviser Funds, Inc. The investment objective, policies and
restrictions of the Fund and the Predecessor Fund are substantially identical
and the financial data and information in this Prospectus for periods prior to
August 31, 1997 relates to the Predecessor Fund.
Countrywide Investments, Inc. (the "Adviser") manages the Fund's
investments and its business affairs.
This Prospectus sets forth concisely the information about the Fund
that you should know before investing. Please retain this Prospectus for
future reference. A Statement of Additional Information dated
January 1, 1998 has been filed with the Securities and Exchange Commission
(the "Commission") and is hereby incorporated by reference in its entirety.
A copy of the Statement of Additional Information can be obtained at no charge
by calling one of the numbers listed below.
- -------------------------------------------------------------------------------
For Information or Assistance in Opening an Account, Please Call:
Nationwide (Toll-Free) . . . . . . . . . . . . . . 800-543-0407
Cincinnati . . . . . . . . . . . . . . . . . . . 513-629-2050
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
EXPENSE INFORMATION
- --------------------
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price). . . . . . . . 2%
Maximum Contingent Deferred Sales Load
(as a percentage of original purchase price). . . . None*
Sales Load Imposed on Reinvested Dividends. . . . . None
Exchange Fee. . . . . . . . . . . . . . . . . . . . None
Redemption Fee. . . . . . . . . . . . . . . . . . . None**
Check Redemption Processing Fee (per check):
First Six Checks per Month . . . . . . . . . . . None
Additional Checks per Month. . . . . . . . . . . $0.25
* Purchases at net asset value of amounts totaling $1 million or more may
be subject to a contingent deferred sales load of .75% if a redemption
occurred within 12 months of purchase and a commission was paid by the
Adviser to a participating unaffiliated dealer.
** A wire transfer fee is charged by the Fund's Custodian in the case of
redemptions made by wire. Such fee is subject to change and is
currently $8. See "How to Redeem Shares."
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees After Waivers .00%(A)
12b-1 Fees .25%(B)
Other Expenses After Reimbursements .70%(C)
----
Total Fund Operating Expenses After .95%(D)
Waivers and Expense Reinbursements ====
(A) Absent waivers of management fees, such fees would be .50%.
(B) The Fund may incur 12b-1 fees in an amount up to .35% of its average
net assets. Long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales loads permitted by the
National Association of Securities Dealers.
(C) Absent expense reimbursements, other expenses would have been .88% for
the fiscal year ended August 31, 1997.
(D) Absent waivers of management fees and expense reimbursements, total
operating expenses would be 1.63%.
- 2 -
<PAGE>
The purpose of this table is to assist the investor in understanding
the various costs and expenses that an investor in the Fund will bear directly
or indirectly. The percentages expressing annual fund operating expenses are
based on amounts incurred by the Predecessor Fund during the most recent fiscal
year, except that they have been restated to reflect an increase in the amount
of management fees payable by the Fund as well as an anticipated reduction in
the level of fee waivers and expense reimbursements during the current year. The
Adviser will, until at least August 31, 1999, waive fees and reimburse expenses
to the extent necessary to limit total operating expenses to .95% of the Fund's
average net assets. THE EXAMPLE BELOW SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
Example
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
1 Year $ 30
3 Years $ 50
5 Years $ 71
10 Years $134
- 3 -
<PAGE>
FINANCIAL HIGHLIGHTS
- ---------------------
The following audited financial information for the Predecessor Fund
for the fiscal year ended August 31, 1997 and for the Fund for the period ended
September 30, 1997 has been audited by Arthur Andersen LLP, independent
auditors, and should be read in conjunction with the financial statements. The
audited financial information for the fiscal period ended August 31, 1996 was
audited by other independent accountants. The financial statements as of
September 30, 1997 and related auditors' report appear in the Statement of
Additional Information of the Fund, which can be obtained by shareholders at no
charge by calling Countrywide Fund Services, Inc. (Nationwide call toll-free
800-543-0407, in Cincinnati call 629-2050) or by writing to the Trust at the
address on the front of this Prospectus.
<TABLE>
<CAPTION>
Per Share Data for a Share Outstanding Throughout Each Period
<S> <C> <C> <C>
One Month Year Period
Ended Ended Ended
Sept. 30, August 31, August 31,
1997(A) 1997 1996(B)
- ------------------------------------------------------------------------------------------------------------------------
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.
(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.
(F) Annualized.
</FN>
</TABLE>
- 4 -
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
- ---------------------------------
The Fund is a series of Countrywide Investment Trust (the "Trust"). The
Fund seeks to provide as high a level of current income as is consistent with
the preservation of capital. The Fund invests substantially all of its assets in
marketable corporate debt securities, U.S. Government securities,
mortgage-related securities, other asset-backed securities and cash or money
market instruments. Normally, at least 65% of the Fund's assets will be invested
in bonds (debt securities of the types listed below).
The Fund is not intended to be a complete investment program, and there
is no assurance that its investment objective can be achieved. The Fund's
investment objective is fundamental and as such may not be changed without the
affirmative vote of a majority of the outstanding shares of the Fund. The term
"majority" of the outstanding shares means the lesser of (1) 67% or more of the
outstanding shares of the Fund present at a meeting, if the holders of more than
50% of the outstanding shares of the Fund are present or represented at such
meeting or (2) more than 50% of the outstanding shares of the Fund. Unless
otherwise indicated, all investment practices and limitations of the Fund are
nonfundamental policies which may be changed by the Board of Trustees without
shareholder approval.
Under normal circumstances, at least 60% of the Fund's total assets
will be invested, measured at the time of any purchase, in the following
categories of securities:
o marketable corporate debt securities, such as bonds,
rated at the time of purchase within the three highest
investment grade ratings (A or better) assigned by
Moody's Investors Service, Inc. ("Moody's") or Standard
& Poor's Ratings Group ("S&P") (all ratings discussed
below refer to those assigned by these two rating
agencies) or, if not rated by either of these rating
agencies, determined by the Adviser as being of
investment quality equivalent to securities rated A or
better;
o U.S. Government securities including (1) direct
obligations of the U.S. Treasury (such as Treasury
bills, notes and bonds), (2) obligations guaranteed as
to principal and interest by the U.S. Treasury such as
Government National Mortgage Association certificates
(described below) and Federal Housing Administration
debentures, and (3) securities issued by U.S.
Government instrumentalities and certain federal
agencies that are neither direct obligations of, nor
guaranteed by, the U.S. Treasury;
o mortgage-related securities rated A or better, or unrated
securities that are determined to be of equivalent quality
of (1) governmental issuers, including Government National
Mortgage Association
- 5 -
<PAGE>
certificates, which are securities representing part
ownership of a pool of mortgage loans on which timely
payment of interest and principal is guaranteed by the
U.S. Government, and securities issued and guaranteed as
to the payment of interest and principal by the Federal
National Mortgage Association or the Federal Home Loan
Mortgage Corporation (but not backed by the U.S.
Government); (2) private issuers, including mortgage
pass-through certificates or mortgage-backed bonds; and
(3) the governmental issuers mentioned above or private
issuers, including collateralized mortgage obligations and
real estate mortgage investment conduits which are issued
in portions or tranches with varying maturities and
characteristics; some tranches may only receive the
interest paid on the underlying mortgages (IOs) and others
may only receive the principal payments (POs); the values
of IOs and POs are extremely sensitive to interest rate
fluctuations and prepayment rates, and IOs are also
subject to the risk of early prepayment of the underlying
mortgages which will substantially reduce or eliminate
interest payments (see the Statement of Additional
Information for more about these securities);
o other asset-backed securities rated A or better or unrated
securities that are determined by the Adviser to be of
equivalent quality (unrelated to mortgage loans) such as
securities whose assets consist of a pool of motor vehicle
retail installment sales contracts and security interests
in the vehicles securing the contracts or a pool of credit
card loan receivables (see the Statement of Additional
Information for more about these securities); and
o cash or money market instruments, including commercial
bank obligations (certificates of deposit, which are
are interest-bearing time deposits; bankers' acceptances,
which are time drafts on a commercial bank where the bank
accepts an irrevocable obligation to pay at maturity and
demand or time deposits) and commercial paper
(short-term notes with maturities of up to nine months
issued by corporations or government bodies).
- 6 -
<PAGE>
The remaining 40% of the Fund's assets, measured at the time of
purchase, may be invested in debt securities rated below A or unrated securities
that are determined to be of equivalent quality, including marketable corporate
debt securities, mortgage-related securities and other asset-backed securities.
Securities rated within the fourth highest category (BBB, Baa) may have
speculative characteristics and display a weakened ability to pay interest and
repay principal under adverse economic conditions or changing circumstances.
However, securities rated lower than BBB or Baa or unrated securities that are
determined to be of equivalent quality (commonly known as "junk" or "high-yield,
high-risk" bonds) will represent less than 20% of the Fund's net assets and are
subject to independent investment analysis by the Adviser before purchase. The
Fund may from time to time invest in fixed-income securities of corporations
outside the U.S. or governmental entities, and the Fund may purchase or sell
various currencies on either a spot or forward basis in connection with these
investments.
The maturity composition of the Fund's portfolio of fixed-income
securities will be adjusted in response to market conditions and expectations.
There are no restrictions on the maturity composition of the portfolio, although
it is anticipated that the Fund normally will be invested substantially in
intermediate-term (3 to 10 years to maturity) and long-term (over 10 years to
maturity) securities and have a dollar-weighted effective average portfolio
maturity of between 3 and 10 years.
The market value of investments available to the Fund, and therefore
the Fund's yield and net asset value, will fluctuate due to changes in interest
rates, economic conditions, quality ratings and other factors beyond the control
of the Adviser. Mortgage-related securities and other debt securities are
subject to price fluctuations based upon changes in the level of interest rates,
which will generally result in all those securities changing in price in the
same way, i.e., all those securities experiencing appreciation when interest
rates decline and depreciation when interest rates rise. In addition, the
prepayment experience of the mortgages underlying mortgage-related securities
and other asset-backed securities may affect the value of, and the return on an
investment in, such securities.
- 7 -
<PAGE>
OTHER INVESTMENT PRACTICES
- --------------------------
SECURITIES LENDING. In order to generate additional income, the Fund may, from
time to time, lend its portfolio securities to broker-dealers, banks or
institutional borrowers of securities. While the lending of securities may
subject the Fund to certain risks, such as delays or the inability to regain the
securities in the event the borrower were to default on its lending agreement or
enter into bankruptcy, the Fund will receive at least 100% collateral in the
form of cash or U.S. Government securities. This collateral will be valued daily
by the Adviser and should the market value of the loaned securities increase,
the borrower will furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination by the Fund
or the borrower at any time. While the Fund does not have the right to vote
securities on loan, the Fund intends to terminate the loan and regain the right
to vote if this is considered important with respect to the investment. The Fund
will only enter into loan arrangements with broker-dealers, banks or other
institutions which the Adviser has determined are creditworthy under guidelines
established by the Board of Trustees.
BORROWING. The Fund may borrow money from banks (including its custodian bank)
or from other lenders to the extent permitted under applicable law, for
temporary or emergency purposes and to meet redemptions and may pledge its
assets to secure such borrowings. Borrowing for investment increases both
investment opportunity and investment risk. This is the speculative factor known
as leverage. Such borrowings in no way affect the federal tax status of the Fund
or its dividends.
The Investment Company Act of 1940 (the "1940 Act") requires the Fund
to maintain asset coverage of at least 300% for all such borrowings, and should
such asset coverage at any time fall below 300%, the Fund would be required to
reduce its borrowings within three days to the extent necessary to meet the
requirements of the 1940 Act. To reduce its borrowings, the Fund might be
required to sell securities at a time when it would be disadvantageous to do so.
In addition, because interest on money borrowed is a Fund expense that
it would not otherwise incur, the Fund may have less net investment income
during periods when its borrowings are substantial. The interest paid by the
Fund on borrowings may be more or less than the yield on the securities
purchased with borrowed funds, depending on prevailing market conditions.
- 8 -
<PAGE>
WHEN-ISSUED SECURITIES. The Fund may also purchase securities on a "when-issued"
basis. When-issued securities are securities purchased for delivery beyond the
normal settlement date at a stated price and yield and thereby involve a risk
that the yield obtained in the transaction will be less than that available in
the market when delivery takes place. The Fund will generally not pay for such
securities or start earning interest on them until they are received. When the
Fund agrees to purchase securities on a "when-issued" basis, its custodian will
set aside, in a segregated account, cash or liquid portfolio securities equal to
the amount of the commitment. Securities purchased on a "when-issued" basis are
recorded as an asset and are subject to changes in value based upon changes in
the general level of interest rates. The Fund expects that commitments to
purchase "when-issued" securities will not exceed 25% of the value of its total
assets under normal market conditions and that a commitment to purchase
"when-issued" securities will not exceed 60 days. In the event its commitment to
purchase "when-issued" securities ever exceeded 25% of the value of its assets,
the Fund's liquidity and the Adviser's ability to manage it might be adversely
affected. The Fund does not intend to purchase "when- issued" securities for
speculative purposes, but only for the purpose of acquiring portfolio
securities.
LOAN PARTICIPATIONS. The Fund may invest, subject to an overall 10% limit on
loans, in loan participations, typically made by a syndicate of banks to U.S.
and non-U.S. corporate or governmental borrowers for a variety of purposes. The
underlying loans may be secured or unsecured, and will vary in term and legal
structure. When purchasing such instruments the Fund may assume the credit risks
associated with the original bank lender as well as the credit risks associated
with the borrower. Investments in loan participations present the possibility
that the Fund could be held liable as a co-lender under emerging legal theories
of lender liability. In addition, if the loan is foreclosed, the Fund could be
part owner of any collateral, and could bear the costs and liabilities of owning
and disposing of the collateral. Loan participations are generally not rated by
major rating agencies and may not be protected by securities laws. Also, loan
participations are generally considered to be illiquid and are therefore subject
to the Fund's overall 15% limitation on illiquid securities.
VARIABLE AND FLOATING RATE SECURITIES. The Fund may acquire variable and
floating rate securities, subject to the Fund's investment objective, policies
and restrictions. A variable rate security is one whose terms provide for the
readjustment of its interest rate on set dates and which, upon such
readjustment, can reasonably be expected to have a market value that
approximates its par value. A floating rate security is one whose terms
- 9 -
<PAGE>
provide for the readjustment of its interest rate whenever a specified interest
rate changes and which, at any time, can reasonably be expected to have a market
value that approximates its par value.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements. Under a
repurchase agreement, the Fund acquires a debt instrument for a relatively short
period (usually not more than one week), subject to the obligation of the seller
to purchase and the Fund to resell such debt instrument at a fixed price. The
resale price is in excess of the purchase price in that it reflects an
agreed-upon market interest rate effective for the period of time during which
the Fund's money is invested. The Fund's repurchase agreements will at all times
be fully collateralized in an amount at least equal to 100% of the purchase
price including accrued interest earned on the underlying securities. The
instruments held as collateral are valued daily by the Adviser and as the value
of instruments declines, the Fund will require additional collateral. If the
seller defaults and the value of the collateral securing the repurchase
agreement declines, the Fund may incur a loss. If such a defaulting seller were
to become insolvent and subject to liquidation or reorganization under
applicable bankruptcy or other laws, disposition of the underlying securities
could involve certain costs or delays pending court action. Finally, it is not
certain whether the Fund would be entitled, as against a claim of the seller or
its receiver, trustee in bankruptcy or creditors, to retain the underlying
securities. Repurchase agreements are considered by the staff of the Commission
to be loans by the Fund.
LOWER-RATED SECURITIES. The Fund may invest up to 20% of its assets in higher
yielding (and, therefore, higher risk), lower rated fixed-income securities,
including debt securities, convertible securities and preferred stocks and
unrated fixed-income securities. Lower rated fixed-income securities, commonly
referred to as "junk bonds", are considered speculative and involve greater risk
of default or price changes due to changes in the issuer's creditworthiness than
higher rated fixed-income securities. See "Risk Factors-Lower Rated Fixed-Income
Securities" below for a discussion of certain risks.
Differing yields on fixed-income securities of the same maturity are a
function of several factors, including the relative financial strength of the
issuers. Higher yields are generally available from securities in the lower
categories of recognized rating agencies, i.e. Ba or lower by Moody's or BB or
lower by S&P. The Fund may invest in any security which is rated by Moody's or
by S&P, or in any unrated security which the Adviser determines is of suitable
quality. Securities in the
- 10 -
<PAGE>
rating categories below Baa as determined by Moody's and BBB as determined by
S&P are considered to be of poor standing and predominantly speculative. The
rating agencies' descriptions of these rating categories, including the
speculative characteristics of the lower categories, are set forth in the
Statement of Additional Information.
Securities ratings are based largely on the issuer's historical financial
information and the rating agencies' investment analysis at the time of rating.
Consequently, the rating assigned to any particular security is not necessarily
a reflection of the issuer's current financial condition, which may be better or
worse than the rating would indicate. Although the Adviser will consider
security ratings when making investment decisions in the high yield market, it
will perform its own investment analysis and will not rely principally on the
ratings assigned by the rating agencies. The Adviser's analysis generally may
include, among other things, consideration of the issuer's experience and
managerial strength, changing financial conditions, borrowing requirements or
debt maturity schedules, and its responsiveness to changes in business
conditions and interest rates. It also considers relative values based on
anticipated cash flow, interest or dividend coverage, asset coverage and
earnings prospects.
SHORT-TERM OBLIGATIONS. There may be times when, in the opinion of the Adviser,
adverse market conditions exist, including any period during which it believes
that the return on certain money market type instruments would be more favorable
than that obtainable through the Fund's normal investment programs. Accordingly,
for temporary defensive purposes, the Fund may hold up to 100% of its total
assets in cash and/or short-term obligations. To the extent that the Fund's
assets are so invested, they will not be invested so as to meet its investment
objective. The instruments may include high-grade liquid debt securities such as
variable amount master demand notes, commercial paper, certificates of deposit,
bankers' acceptances, repurchase agreements which mature in less than seven days
and obligations issued or guaranteed by the U.S. Government, its agencies and
instrumentalities. Bankers' acceptances are instruments of United States banks
which are drafts or bills of exchange "accepted" by a bank or trust company as
an obligation to pay on maturity.
ZERO COUPON BONDS. The Fund is permitted to purchase zero coupon securities
("zero coupon bonds"). Zero coupon bonds are purchased at a discount from the
face amount because the buyer receives only the right to receive a fixed payment
on a certain date in the future and does not receive any periodic interest
payments. The effect of owning instruments which do not make
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<PAGE>
current interest payments is that a fixed yield is earned not only on the
original investment but also, in effect, on all discount accretion during the
life of the obligations. This implicit reinvestment of earnings at the same rate
eliminates the risk of being unable to reinvest distributions at a rate as high
as the implicit yields on the zero coupon bond, but at the same time eliminates
the holder's ability to reinvest at higher rates in the future. For this reason,
zero coupon bonds are subject to substantially greater price fluctuations during
periods of changing market interest rates than are comparable securities which
pay interest currently, which fluctuation increases the longer the period to
maturity. Although zero coupon bonds do not pay interest to holders prior to
maturity, federal income tax law requires the Fund to recognize as interest
income a portion of the bond's discount each year and this income must then be
distributed to shareholders along with other income earned by the Fund. To the
extent that any shareholders in the Fund elect to receive their dividends in
cash rather than reinvest such dividends in additional shares, cash to make
these distributions will have to be provided from the assets of the Fund or
other sources such as proceeds of sales of Fund shares and/or sale of portfolio
securities. In such cases, the Fund will not be able to purchase additional
income-producing securities with cash used to make such distributions and its
current income may ultimately be reduced as a result.
RECEIPTS. The Fund may also purchase separately traded interest and principal
component parts of such obligations that are transferable through the Federal
book entry system, known as Separately Traded Registered Interest and Principal
Securities ("STRIPS") and Coupon Under Book Entry Safekeeping ("CUBES"). These
instruments are issued by banks and brokerage firms and are created by
depositing Treasury notes and Treasury bonds into a special account at a
custodian bank; the custodian holds the interest and principal payments for the
benefit of the registered owner of the certificates or receipts. The custodian
arranges for the issuance of the certificates or receipts evidencing ownership
and maintains the register. Receipts include Treasury Receipts ("TRs"), Treasury
Investment Growth Receipts ("TIGRs") and Certificates of Accrual on Treasury
Securities ("CATS"). STRIPS, CUBES, TRs, TIGRs and CATS are sold as zero coupon
securities, which means that they are sold at a substantial discount and
redeemed at face value at their maturity date without interim cash payments of
interest or principal. This discount is amortized over the life of the security,
and such amortization will constitute the income earned on the security for both
accounting and tax purposes. Because of these features, these securities may be
subject to greater interest rate volatility than interest-paying U.S. Treasury
obligations. The Fund will limit its investment in such instruments to 20% of
its net assets.
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<PAGE>
INVESTMENT COMPANY SECURITIES. The Fund may invest in the securities of other
investment companies to the extent permissible under the applicable regulations
and interpretations of the 1940 Act or an exemptive order.
ILLIQUID INVESTMENTS AND RESTRICTED SECURITIES. The Fund may invest up to 15% of
its net assets in illiquid investments (investments that cannot be readily sold
within seven days), including restricted securities which do not meet the
criteria for liquidity established by the Board of Trustees. The Adviser, under
the supervision of the Board of Trustees, determines the liquidity of the Fund's
investments. The absence of a trading market can make it difficult to ascertain
a market value for illiquid investments. Disposing of illiquid investments may
involve time-consuming negotiation and legal expenses. Restricted securities are
securities which cannot be sold to the public without registration under the
Securities Act of 1933. Unless registered for sale, these securities can only be
sold in privately negotiated transactions or pursuant to an exemption from
registration.
Risk Factors of Lower Rated Fixed-Income Securities
- ---------------------------------------------------
Lower quality fixed-income securities generally produce a higher current
yield than do fixed-income securities of higher ratings. However, these
fixed-income securities are considered speculative because they involve greater
price volatility and risk than do higher rated fixed-income securities and
yields on these fixed-income securities will tend to fluctuate over time.
Although the market value of all fixed-income securities varies as a result of
changes in prevailing interest rates (e.g., when interest rates rise, the market
value of fixed-income securities can be expected to decline), values of lower
rated fixed-income securities tend to react differently than the values of
higher rated fixed-income securities. The prices of lower rated fixed-income
securities are less sensitive to changes in interest rates than higher rated
fixed-income securities. Conversely, lower rated fixed-income securities also
involve a greater risk of default by the issuer in the payment of principal and
income and are more sensitive to economic downturns and recessions than higher
rated fixed-income securities. The financial stress resulting from an economic
downturn could have a greater negative effect on the ability of issuers of lower
rated fixed-income securities to service their principal and interest payments,
to meet projected business goals and to obtain additional financing than on more
creditworthy issuers. In the event of an issuer's default in payment of
principal or interest on such securities, or any other fixed-income securities
in the Fund's portfolio, the net asset value of the Fund will be negatively
affected. Moreover, as the market for lower rated fixed-income securities
- 13 -
<PAGE>
is a relatively new one, a severe economic downturn might increase the number of
defaults, thereby adversely affecting the value of all outstanding lower rated
fixed-income securities and disrupting the market for such securities.
Fixed-income securities purchased by the Fund as part of an initial underwriting
present an additional risk due to their lack of market history. These risks are
exacerbated with respect to fixed-income securities rated Caa or lower by
Moody's or CCC or lower by S&P. Unrated fixed-income securities generally carry
the same risks as do lower rated fixed-income securities.
Lower rated fixed-income securities are typically traded among a smaller
number of broker-dealers rather than in a broad secondary market. Purchasers of
lower rated fixed-income securities tend to be institutions, rather than
individuals, a factor that further limits the secondary market. To the extent
that no established retail secondary market exists, many lower rated
fixed-income securities may not be as liquid as Treasury and investment grade
bonds. The ability of the Fund to sell lower rated fixed-income securities will
be adversely affected to the extent that such securities are thinly traded or
illiquid. Moreover, the ability of the Fund to value lower rated fixed-income
securities becomes more difficult, and judgment plays a greater role in
valuation, as there is less reliable, objective data available with respect to
such securities that are thinly traded or illiquid.
Because investors may perceive that there are greater risks associated with
the lower rated fixed-income securities of the type in which the Fund may
invest, the yields and prices of such securities may tend to fluctuate more than
those for fixed-income securities with a higher rating. Changes in perception of
issuer's creditworthiness tend to occur more frequently and in a more pronounced
manner in the lower quality segments of the fixed-income securities market than
do changes in higher quality segments of the fixed-income securities market,
resulting in greater yield and price volatility. The speculative characteristics
of lower rated fixed-income securities are set forth in the Statement of
Additional Information.
The Adviser believes that the risks of investing in such high yielding,
fixed-income securities may be minimized through careful analysis of prospective
issuers. Although the opinion of ratings services such as Moody's and S&P is
considered in selecting portfolio securities, they evaluate the safety of the
principal and the interest payments of the security, not their market value
risk. Additionally, credit rating agencies may experience slight delays in
updating ratings to reflect current events. The Adviser relies, primarily, on
its own credit analysis. This may suggest, however, that the achievement of the
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<PAGE>
Fund's investment objective is more dependent on the Adviser's proprietary
credit analysis, than is otherwise the case for a fund that invests exclusively
in higher quality fixed-income securities.
Once the rating of a portfolio security or the quality determination
ascribed by the Adviser to an unrated, fixed-income security has been
downgraded, the Adviser will consider all circumstances deemed relevant in
determining whether to continue to hold the security, but in no event will the
Fund retain such security if it would cause the Fund to have 20% or more of the
value of its net assets invested in fixed-income securities rated lower than Baa
by Moody's or BBB by S&P, or if unrated, are judged by the Adviser to be of
comparable quality.
The Fund may also invest in unrated fixed-income securities. Unrated
fixed-income securities are not necessarily of lower quality than rated
fixed-income securities, but they may not be attractive to as many buyers.
There is no minimum rating standard for the Fund's investments in the high
yield market; therefore, the Fund may at times invest in fixed-income securities
not currently paying interest or in default. The Fund will invest in such
fixed-income securities where the Adviser perceives a substantial opportunity to
realize the Fund's objective based on its analysis of the underlying financial
condition of the issuer. It is not, however, the current intention of the Fund
to make such investments.
These limitations and the policies discussed in this Prospectus are
considered and applied by the Adviser at the time of purchase of an investment;
the sale of securities by the Fund is not required in the event of a subsequent
change in circumstances.
- 15 -
<PAGE>
HOW TO PURCHASE SHARES
- ----------------------
Your initial investment in the Fund ordinarily must be at least $1,000
($250 for tax-deferred retirement plans). However, the minimum initial
investment for employees, shareholders and customers of Countrywide Credit
Industries, Inc. or any affiliated company, including members of the immediate
family of such individuals, is $50. You may purchase additional shares through
the Open Account Program described below. You may open an account and make an
initial investment through securities dealers having a sales agreement with the
Trust's principal underwriter, Countrywide Investments, Inc. (the "Adviser").
You may also make a direct initial investment by sending a check and a completed
account application form to Countrywide Fund Services, Inc. (the "Transfer
Agent"), P.O. Box 5354, Cincinnati, Ohio 45201-5354. Checks should be made
payable to the "Intermediate Bond Fund." An account application is included in
this Prospectus.
Shares of the Fund are sold on a continuous basis at the public
offering price next determined after receipt of a purchase order by the Trust.
Purchase orders received by dealers prior to 4:00 p.m., Eastern time, on any
business day and transmitted to the Adviser by 5:00 p.m., Eastern time, that day
are confirmed at the public offering price determined as of the close of the
regular session of trading on the New York Stock Exchange on that day. It is the
responsibility of dealers to transmit properly completed orders so that they
will be received by the Adviser by 5:00 p.m., Eastern time. Dealers may charge a
fee for effecting purchase orders. Direct purchase orders received by the
Transfer Agent by 4:00 p.m., Eastern time, are confirmed at that day's public
offering price. Direct investments received by the Transfer Agent after 4:00
p.m., Eastern time, and orders received from dealers after 5:00 p.m., Eastern
time, are confirmed at the public offering price next determined on the
following business day.
The public offering price of shares is the next determined net asset
value per share plus a sales load as shown in the following table.
Dealer
Reallowance
Sales Load as % of: as % of
Public Net Public
Offering Amount Offering
Amount of Investment Price Invested Price
- -------------------- ------ -------- -----
Less than $100,000 2.00% 2.04% 1.80%
$100,000 but less than $250,000 1.50 1.52 1.35
$250,000 but less than $500,000 1.00 1.01 .90
$500,000 but less than $1,000,000 .75 .75 .65
$1,000,000 or more None* None*
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<PAGE>
* There is no front-end sales load on purchases of $1 million or more but a
contingent deferred sales load of .75% may apply if a commission was paid
by the Adviser to a participating unaffiliated dealer and the shares are
redeemed within twelve months from the date of purchase.
Under certain circumstances, the Adviser may increase or decrease the
reallowance to dealers. Dealers engaged in the sale of shares of the Fund may be
deemed to be underwriters under the Securities Act of 1933. The Adviser retains
the entire sales load on all direct initial investments in the Fund and on all
investments in accounts with no designated dealer of record.
For initial purchases of $1,000,000 or more and subsequent purchases
further increasing the size of the account, a dealer's commission of .75% of the
purchase amount may be paid by the Adviser to participating unaffiliated dealers
through whom such purchases are effected. In determining a dealer's eligibility
for such commission, purchases of shares of the Fund may be aggregated with
concurrent purchases of shares of other funds of Countrywide Investments.
Dealers should contact the Adviser concerning the applicability and calculation
of the dealer's commission in the case of combined purchases. An exchange from
other funds of Countrywide Investments will not qualify for payment of the
dealer's commission, unless such exchange is from a Countrywide fund with assets
as to which a dealer's commission or similar payment has not been previously
paid. Redemptions of shares may result in the imposition of a contingent
deferred sales load if the dealer's commission described in this paragraph was
paid in connection with the purchase of such shares. See "Contingent Deferred
Sales Load for Certain Purchases of Shares" below.
OPEN ACCOUNT PROGRAM. Please direct inquiries concerning the services
described in this section to the Transfer Agent at the address or numbers listed
below.
After an initial investment, all investors are considered participants
in the Open Account Program. The Open Account Program helps investors make
purchases of shares of the Fund over a period of years and permits the automatic
reinvestment of dividends and distributions of the Fund in additional shares
without a sales load.
Under the Open Account Program, you may purchase and add shares to your
account at any time either through your securities dealer or by sending a check
to Countrywide Fund Services, Inc., P.O. Box 5354, Cincinnati, Ohio 45201-5354.
The check should be made payable to the "Intermediate Bond Fund."
Under the Open Account Program, you may also purchase shares of the
Fund by bank wire. Please telephone the Transfer Agent
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<PAGE>
(Nationwide call toll-free 800-543-0407; in Cincinnati call 629- 2050) for
instructions. Your bank may impose a charge for sending your wire. There is
presently no fee for receipt of wired funds, but the Transfer Agent reserves the
right to charge shareholders for this service upon thirty days' prior notice to
shareholders.
Each additional purchase request must contain the name of your account
and your account number to permit proper crediting to your account. While there
is no minimum amount required for subsequent investments, the Trust reserves the
right to impose such requirement. All purchases under the Open Account Program
are made at the public offering price next determined after receipt of a
purchase order by the Trust. If a broker-dealer received concessions for selling
shares of the Fund to a current shareholder, such broker-dealer will receive the
concessions described above with respect to additional investments by the
shareholder.
REDUCED SALES LOAD. A "purchaser" (defined below) may use the Right of
Accumulation to combine the cost or current net asset value (whichever is
higher) of his existing shares of the load funds distributed by the Adviser with
the amount of his current purchases in order to take advantage of the reduced
sales loads set forth in the table above. Purchases made in any load fund
distributed by the Adviser pursuant to a Letter of Intent may also be eligible
for the reduced sales loads. The minimum initial investment under a Letter of
Intent is $10,000. The load funds currently distributed by the Adviser are
listed in the Exchange Privilege section of this Prospectus. Shareholders should
contact the Transfer Agent for information about the Right of Accumulation and
Letter of Intent.
PURCHASES AT NET ASSET VALUE. You may purchase shares of the Fund at
net asset value when the payment for your investment represents the proceeds
from the redemption of shares of any other mutual fund which has a front-end
sales load and is not distributed by the Adviser. Your investment will qualify
for this provision if the purchase price of the shares of the other fund
included a sales load and the redemption occurred within one year of the
purchase of such shares and no more than sixty days prior to your purchase of
shares of the Fund. To make a purchase at net asset value pursuant to this
provision, you must submit photocopies of the confirmations (or similar
evidence) showing the purchase and redemption of shares of the other fund. Your
payment may be made with the redemption check representing the proceeds of the
shares redeemed, endorsed to the order of the Fund. The redemption of shares of
the other fund is, for federal income tax purposes, a sale on which you may
realize a gain or loss. These provisions may be modified or terminated at any
time. Contact your securities dealer or the Trust for further information.
- 18 -
<PAGE>
Banks, bank trust departments and savings and loan associations, in
their fiduciary capacity or for their own accounts, may also purchase shares of
the Fund at net asset value. To the extent permitted by regulatory authorities,
a bank trust department may charge fees to clients for whose account it
purchases shares at net asset value. Federal and state credit unions may also
purchase shares at net asset value.
In addition, shares of the Fund may be purchased at net asset value by
broker-dealers who have a sales agreement with the Adviser, and their registered
personnel and employees, including members of the immediate families of such
registered personnel and employees.
Clients of investment advisers and financial planners may also purchase
shares of the Fund at net asset value if their investment adviser or financial
planner has made arrangements to permit them to do so with the Trust and the
Adviser. The investment adviser or financial planner must notify the Transfer
Agent that an investment qualifies as a purchase at net asset value.
Employees, shareholders and customers of Countrywide Credit Industries,
Inc. or any affiliated company, including members of the immediate family of
such individuals and employee benefit plans established by such entities, may
also purchase shares of the Fund at net asset value.
CONTINGENT DEFERRED SALES LOAD FOR CERTAIN PURCHASES OF SHARES. A
contingent deferred sales load is imposed upon certain redemptions of shares of
the Fund (or shares into which such shares were exchanged) purchased at net
asset value in amounts totaling $1 million or more, if the dealer's commission
described above was paid by the Adviser and the shares are redeemed within
twelve months from the date of purchase. The contingent deferred sales load will
be paid to the Adviser and will be equal to .75% of the lesser of (1) the net
asset value at the time of purchase of the shares being redeemed or (2) the net
asset value of such shares at the time of redemption. In determining whether the
contingent deferred sales load is payable, it is assumed that shares not subject
to the contingent deferred sales load are the first redeemed followed by other
shares held for the longest period of time. The contingent deferred sales load
will not be imposed upon shares representing reinvested dividends or capital
gains distributions, or upon amounts representing share appreciation. If a
purchase of shares is subject to the contingent deferred sales load, the
investor will be so notified on the confirmation for such purchase.
- 19 -
<PAGE>
Redemptions of such shares of the Fund held for at least 12 months will
not be subject to the contingent deferred sales load and an exchange of such
shares into another fund of Countrywide Investments is not treated as a
redemption and will not trigger the imposition of the contingent deferred sales
load at the time of such exchange. A fund will "tack" the period for which such
shares being exchanged were held onto the holding period of the acquired shares
for purposes of determining if a contingent deferred sales load is applicable in
the event that the acquired shares are redeemed following the exchange; however,
the period of time that the redemption proceeds of such shares are held in a
money market fund will not count toward the holding period for determining
whether a contingent deferred sales load is applicable. See "Exchange
Privilege."
The contingent deferred sales load is currently waived for any partial
or complete redemption following death or disability (as defined in the Internal
Revenue Code) of a shareholder (including one who owns the shares with his
or her spouse as a joint tenant with rights of survivorship) from an account
in which the deceased or disabled is named. The Adviser may require
documentation prior to waiver of the charge, including death certificates,
physicians' certificates, etc.
ADDITIONAL INFORMATION. For purposes of determining the initial
investment requirements and the applicable sales load and for purposes of the
Letter of Intent and Right of Accumulation privileges, a purchaser includes an
individual, his spouse and their children under the age of 21, purchasing shares
for his or their own account; or a trustee or other fiduciary purchasing shares
for a single fiduciary account although more than one beneficiary is involved;
or employees of a common employer, provided that economies of scale are realized
through remittances from a single source and quarterly confirmation of such
purchases; or an organized group, provided that the purchases are made through a
central administration, or a single dealer, or by other means which result in
economy of sales effort or expense. Contact the Transfer Agent for additional
information concerning purchases at net asset value or at reduced sales loads.
The Trust mails you confirmations of all purchases or redemptions of
Fund shares. Certificates representing shares are not issued. The Trust and the
Adviser reserve the rights to limit the amount of investments and to refuse to
sell to any person.
Investors should be aware that the Fund's account application contains
provisions in favor of the Trust, the Transfer Agent and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others,
- 20 -
<PAGE>
losses resulting from unauthorized shareholder transactions) relating to the
various services (for example, telephone redemptions and exchanges and check
redemptions) made available to investors.
Should an order to purchase shares be canceled because your check does
not clear, you will be responsible for any resulting losses or fees incurred by
the Trust or the Transfer Agent in the transaction.
SHAREHOLDER SERVICES
- ---------------------
Contact the Transfer Agent (Nationwide call toll-free 800- 543-0407; in
Cincinnati call 629-2050) for additional information about the shareholder
services described below.
Automatic Withdrawal Plan
If the shares in your account have a value of at least $5,000, you may
elect to receive, or may designate another person to receive, monthly or
quarterly payments in a specified amount of not less than $50 each. There is no
charge for this service. Purchases of additional shares of the Fund while the
plan is in effect are generally undesirable because a sales load is incurred
whenever purchases are made.
Tax-Deferred Retirement Plans
Shares of the Fund are available for purchase in connection with the
following tax-deferred retirement plans:
-- Keogh Plans for self-employed individuals
-- Individual retirement account (IRA) plans for
individuals and their non-employed spouses, including
Roth IRAs and Education IRAs
-- Qualified pension and profit-sharing plans for
employees, including those profit-sharing plans with a
401(k) provision
-- 403(b)(7) custodial accounts for employees of public school
systems, hospitals, colleges and other non-profit
organizations meeting certain requirements of the Internal
Revenue Code
Direct Deposit Plans
Shares of the Fund may be purchased through direct deposit plans
offered by certain employers and government agencies.
- 21 -
<PAGE>
These plans enable a shareholder to have all or a portion of his or her payroll
or social security checks transferred automatically to purchase shares of the
Fund.
Automatic Investment Plan
You may make automatic monthly investments in the Fund from your bank,
savings and loan or other depository institution account. The minimum initial
and subsequent investments must be $50 under the plan. The Transfer Agent pays
the costs associated with these transfers, but reserves the right, upon thirty
days' written notice, to make reasonable charges for this service. Your
depository institution may impose its own charge for debiting your account which
would reduce your return from an investment in the Fund.
Reinvestment Privilege
If you have redeemed shares of the Fund, you may reinvest all or part
of the proceeds without any additional sales load. This reinvestment must occur
within ninety days of the redemption and the privilege may only be exercised
once per year.
HOW TO REDEEM SHARES
- ---------------------
You may redeem shares of the Fund on each day that the Trust is open
for business. You will receive the net asset value per share next determined
after receipt by the Transfer Agent of a proper redemption request in the form
described below, less any applicable contingent deferred sales load. Payment is
normally made within three business days after tender in such form, provided
that payment in redemption of shares purchased by check will be effected only
after the check has been collected, which may take up to fifteen days from the
purchase date. To eliminate this delay, you may purchase shares of the Fund by
certified check or wire.
A contingent deferred sales load may apply to a redemption of certain
shares of the Fund purchased at net asset value. See "How to Purchase Shares."
BY TELEPHONE. You may redeem shares by telephone. The proceeds will be
sent by mail to the address designated on your account or wired directly to your
existing account in any commercial bank or brokerage firm in the United States
as designated on your application. To redeem by telephone, call the Transfer
Agent (Nationwide call toll-free 800-543-0407; in Cincinnati call 629-2050). The
redemption proceeds from your account will be sent by mail or by wire within
three business days after receipt of your telephone instructions. IRA accounts
are not redeemable by telephone.
- 22 -
<PAGE>
The telephone redemption privilege is automatically available to all
shareholders. You may change the bank or brokerage account which you have
designated under this procedure at any time by writing to the Transfer Agent
with your signature guaranteed by any eligible guarantor institution (including
banks, brokers and dealers, municipal securities brokers and dealers, government
securities brokers and dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations)
or by completing a supplemental telephone redemption authorization form. Contact
the Transfer Agent to obtain this form. Further documentation will be required
to change the designated account if shares are held by a corporation, fiduciary
or other organization.
Neither the Trust, the Transfer Agent, nor their respective affiliates
will be liable for complying with telephone instructions they reasonably believe
to be genuine or for any loss, damage, cost or expense in acting on such
telephone instructions. The affected shareholders will bear the risk of any such
loss. The Trust or the Transfer Agent, or both, will employ reasonable
procedures to determine that telephone instructions are genuine. If the Trust
and/or the Transfer Agent do not employ such procedures, they may be liable for
losses due to unauthorized or fraudulent instructions. These procedures may
include, among others, requiring forms of personal identification prior to
acting upon telephone instructions, providing written confirmation of the
transactions and/or tape recording telephone instructions.
BY MAIL. You may redeem any number of shares from your account by
sending a written request to the Transfer Agent. The request must state the
number of shares or the dollar amount to be redeemed and your account number.
The request must be signed exactly as your name appears on the Trust's account
records. If the shares to be redeemed have a value of $25,000 or more, your
signature must be guaranteed by any of the eligible guarantor institutions
outlined above.
Written redemption requests may also direct that the proceeds be
deposited directly in the bank account or brokerage account designated on your
account application for telephone redemptions. Proceeds of redemptions requested
by mail are mailed within three business days following receipt of instructions
in proper form.
BY CHECK. You may establish a special checking account with
the Fund for the purpose of redeeming shares by check. Checks
may be made payable to anyone for any amount, but checks may not
be certified.
- 23 -
<PAGE>
When a check is presented to the Custodian for payment, the Transfer
Agent, as your agent, will cause the Fund to redeem a sufficient number of full
and fractional shares in your account to cover the amount of the check. Checks
will be processed at the net asset value on the day the check is presented to
the Custodian for payment.
If the amount of a check is greater than the value of the shares held
in your account, the check will be returned. Shareholders should consider
potential fluctuations in the net asset value of the Fund's shares when writing
checks. A check representing a redemption request will take precedence over any
other redemption instructions issued by a shareholder.
As long as no more than six check redemptions are effected in your
account in any month, there will be no charge for the check redemption
privilege. After six check redemptions are effected in your account in a month,
the Transfer Agent will charge you $.25 for each additional check redemption
effected that month. However, there is no charge for any check redemptions
effected by employees, shareholders and customers of Countrywide Credit
Industries, Inc. or any affiliated company, including members of the immediate
family of such individuals. The Transfer Agent charges shareholders its costs
for each stop payment and each check returned for insufficient funds. In
addition, the Transfer Agent reserves the right to make additional charges to
recover the costs of providing the check redemption service. All charges will be
deducted from your account by redemption of shares in your account. The check
redemption procedure may be suspended or terminated at any time upon written
notice by the Trust or the Transfer Agent.
Shareholders should be aware that writing a check (a redemption of
shares) is a taxable event.
THROUGH BROKER-DEALERS. You may also redeem shares by placing a wire
redemption request through a securities broker or dealer. Unaffiliated
broker-dealers may impose a fee on the shareholder for this service. You will
receive the net asset value per share next determined after receipt by the Trust
or its agent of your wire redemption request. It is the responsibility of
broker-dealers to properly transmit wire redemption orders.
ADDITIONAL REDEMPTION INFORMATION. If your instructions request a
redemption by wire, you will be charged an $8 processing fee by the Fund's
Custodian. The Trust reserves the right, upon thirty days' written notice, to
change the processing fee. All charges will be deducted from your account by
redemption of shares in your account. Your bank or brokerage firm may also
impose a charge for processing the wire. In the
- 24 -
<PAGE>
event that wire transfer of funds is impossible or impractical, the redemption
proceeds will be sent by mail to the designated account.
Redemption requests may direct that the proceeds be deposited directly
in your account with a commercial bank or other depository institution via an
Automated Clearing House (ACH) transaction. There is currently no charge for ACH
transactions. Contact the Transfer Agent for more information about ACH
transactions.
At the discretion of the Trust or the Transfer Agent, corporate
investors and other associations may be required to furnish an appropriate
certification authorizing redemptions to ensure proper authorization. The Trust
reserves the right to require you to close your account if at any time the value
of your shares is less than the minimum amount required by the Trust (based on
actual amounts invested including any sales load paid, unaffected by market
fluctuations), or such other minimum amount as the Trust may determine from time
to time. After notification to you of the Trust's intention to close your
account, you will be given thirty days to increase the value of your account to
the minimum amount.
The Trust reserves the right to suspend the right of redemption or to
postpone the date of payment for more than three business days under unusual
circumstances as determined by the Commission.
EXCHANGE PRIVILEGE
- ------------------
Shares of the Fund and of any other fund of Countrywide Investments may
be exchanged for each other.
Shares of the Fund which are not subject to a contingent deferred sales
load may be exchanged for Class A shares of any other fund and for shares of any
other fund which offers only one class of shares (provided such shares are not
subject to a contingent deferred sales load). A sales load will be imposed equal
to the excess, if any, of the sales load rate applicable to the shares being
acquired over the sales load rate, if any, previously paid on the shares being
exchanged.
Shares of the Fund subject to a contingent deferred sales load may be
exchanged, on the basis of relative net asset value per share, for shares of any
other fund which imposes a contingent deferred sales load and for shares of any
fund which is a money market fund. A fund will "tack" the period for which the
shares being exchanged were held onto the holding period of the acquired shares
for purposes of determining if a contingent
- 25 -
<PAGE>
deferred sales load is applicable in the event that the acquired shares are
redeemed following the exchange. The period of time that shares are held in a
money market fund will not count toward the holding period for determining
whether a contingent deferred sales load is applicable.
The following are the funds of Countrywide Investments currently
offered to the public. Funds which may be subject to a front-end or contingent
deferred sales load are indicated by an asterisk.
Countrywide Tax-Free Trust Countrywide Strategic Trust
Tax-Free Money Fund *Government Mortgage Fund
Ohio Tax-Free Money Fund *Equity Fund
California Tax-Free Money Fund *Utility Fund
Florida Tax-Free Money Fund *Aggressive Growth Fund
*Tax-Free Intermediate Term Fund *Growth/Value Fund
*Ohio Insured Tax-Free Fund *International Equity Fund
*Kentucky Tax-Free Fund
Countrywide Investment Trust
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
You may request an exchange by sending a written request to the
Transfer Agent. The request must be signed exactly as your name appears on the
Trust's account records. Exchanges may also be requested by telephone. If you
are unable to execute your transaction by telephone (for example during times of
unusual market activity) consider requesting your exchange by mail or by
visiting the Trust's offices at 312 Walnut Street, 21st Floor, Cincinnati, Ohio
45202. An exchange will be effected at the next determined net asset value (or
offering price, if sales load is applicable) after receipt of a request by the
Transfer Agent.
Exchanges may only be made for shares of funds then offered for sale in
your state of residence and are subject to the applicable minimum initial
investment requirements. The exchange privilege may be modified or terminated by
the Board of Trustees upon 60 days' prior notice to shareholders. An exchange
results in a sale of fund shares, which may cause you to recognize a capital
gain or loss. Before making an exchange, contact the Transfer Agent to obtain a
current prospectus for any of the other funds of Countrywide Investments and
more information about exchanges among Countrywide Investments.
- 26 -
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
- ----------------------------
All of the net investment income of the Fund is declared as a dividend
to shareholders of record on each business day of the Trust and paid monthly.
The Fund expects to distribute any net realized long-term capital gains at least
once each year. Management will determine the timing and frequency of the
distributions of any net realized short-term capital gains.
Distributions are paid according to one of the following options:
Share Option - income distributions and capital gains
distributions reinvested in additional
shares.
Income Option - income distributions and short-term
capital gains distributions paid in cash;
long-term capital gains distributions
reinvested in additional shares.
Cash Option - income distributions and capital
gains distributions paid in cash.
You should indicate your choice of option on your application. If no
option is specified on your application, distributions will automatically be
reinvested in additional shares. All distributions will be based on the net
asset value in effect on the payable date.
If you select the Income Option or the Cash Option and the U.S. Postal
Service cannot deliver your checks or if your checks remain uncashed for six
months, your dividends may be reinvested in your account at the then-current net
asset value and your account will be converted to the Share Option. No interest
will accrue on amounts represented by uncashed distribution checks.
An investor who has received in cash any dividend or capital gains
distribution from the Fund may return the distribution within thirty days of the
distribution date to the Transfer Agent for reinvestment at the net asset value
next determined after its return. The investor or his dealer must notify the
Transfer Agent that a distribution is being reinvested pursuant to this
provision.
- 27 -
<PAGE>
TAXES
- -----
The Fund has qualified in all prior years and intends to continue to
qualify for the special tax treatment afforded a "regulated investment company"
under Subchapter M of the Internal Revenue Code so that it does not pay federal
taxes on income and capital gains distributed to shareholders.
The Fund intends to distribute substantially all of its net investment
income and any net realized capital gains to its shareholders. Distributions of
net investment income as well as from net realized short-term capital gains, if
any, are taxable as ordinary income. Since the Fund's investment income is
derived from interest rather than dividends, no portion of such distributions is
eligible for the dividends received deduction available to corporations.
Distributions of net capital gains (i.e., the excess of net long-term
capital gains over net short-term capital losses) by the Fund to its
shareholders are taxable to the recipient shareholders as capital gains, without
regard to the length of time a shareholder has held Fund shares. The maximum
capital gains rate for individuals is 28% with respect to assets held for more
than 12 months, but not more than 18 months, and 20% with respect to assets held
more than 18 months. The maximum capital gains rate for corporate shareholders
is the same as the maximum tax rate for ordinary income. Redemptions of shares
of the Fund are taxable events on which a shareholder may realize a gain or
loss.
The Fund will mail to each of its shareholders a statement indicating
the amount and federal income tax status of all distributions made during the
year. In addition to federal taxes, shareholders of the Fund may be subject to
state and local taxes on distributions. Shareholders should consult their tax
advisors about the tax effect of distributions and withdrawals from the Fund and
the use of the Automatic Withdrawal Plan and the Exchange Privilege. The tax
consequences described in this section apply whether distributions are taken in
cash or reinvested in additional shares.
OPERATION OF THE FUND
- ----------------------
The Fund is a non-diversified series of Countrywide Investment Trust,
an open-end management investment company organized as a Massachusetts business
trust on December 7, 1980. The Board of Trustees supervises the business
activities of the Trust. Like other mutual funds, the Trust retains various
organizations to perform specialized services for the Fund.
- 28 -
<PAGE>
The Trust retains Countrywide Investments, Inc., 312 Walnut Street,
Cincinnati, Ohio 45202 (the "Adviser"), to manage the Fund's investments and its
business affairs. The Adviser was organized in 1974 and is also the investment
adviser to six other series of the Trust, seven series of Countrywide Investment
Trust and six series of Countrywide Strategic Trust. The Adviser is an indirect
wholly-owned subsidiary of Countrywide Credit Industries, Inc., a New York Stock
Exchange listed company principally engaged in the business of residential
mortgage lending. The Fund pays the Adviser a fee equal to the annual rate of
.5% of the average value of its daily net assets up to $50 million; .45% of such
assets from $50 million to $150 million; .4% of such assets from $150 million to
$250 million; and .375% of such assets in excess of $250 million.
Scott Weston, Assistant Vice President-Investments of the Adviser, is
primarily responsible for managing the portfolio of the Fund. Mr. Weston has
been employed by the Adviser since 1992 and has been managing the Fund's
portfolio since September 1997.
The Adviser serves as principal underwriter for the Fund and, as such,
is the exclusive agent for the distribution of shares of the Fund. Angelo R.
Mozilo, Robert H. Leshner, Robert G. Dorsey and John F. Splain are officers of
both the Trust and the Adviser.
The Fund is responsible for the payment of all operating expenses,
including fees and expenses in connection with membership in investment company
organizations, brokerage fees and commissions, legal, auditing and accounting
expenses, expenses of registering shares under federal and state securities
laws, expenses related to the distribution of the Fund's shares (see
"Distribution Plan"), insurance expenses, taxes or governmental fees, fees and
expenses of the custodian, transfer agent and accounting and pricing agent of
the Fund, fees and expenses of members of the Board of Trustees who are not
interested persons of the Trust, the cost of preparing and distributing
prospectuses, statements, reports and other documents to shareholders, expenses
of shareholders' meetings and proxy solicitations, and such extraordinary or
non-recurring expenses as may arise, including litigation to which the Fund may
be a party and indemnification of the Trust's officers and Trustees with respect
thereto.
The Trust has retained Countrywide Fund Services, Inc., P.O. Box 5354,
Cincinnati, Ohio (the "Transfer Agent"), an indirect wholly-owned subsidiary of
Countrywide Credit Industries, Inc., to serve as the Fund's transfer agent,
dividend paying agent and shareholder service agent.
- 29 -
<PAGE>
The Transfer Agent also provides accounting and pricing services to the
Fund. The Transfer Agent receives a monthly fee from the Fund for calculating
daily net asset value per share and maintaining such books and records as are
necessary to enable it to perform its duties.
In addition, the Transfer Agent has been retained by the Adviser to
assist the Adviser in providing administrative services to the Fund. In this
capacity, the Transfer Agent supplies executive, administrative and regulatory
services, supervises the preparation of tax returns, and coordinates the
preparation of reports to shareholders and reports to and filings with the
Commission and state securities authorities. The Adviser (not the Fund) pays the
Transfer Agent a fee for these administrative services.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its objective of seeking best
execution of portfolio transactions, the Adviser may give consideration to sales
of shares of the Fund as a factor in the selection of brokers and dealers to
execute portfolio transactions of the Fund. Subject to the requirements of the
1940 Act and procedures adopted by the Board of Trustees, the Fund may execute
portfolio transactions through any broker or dealer and pay brokerage
commissions to a broker (i) which is an affiliated person of the Trust, or (ii)
which is an affiliated person of such person, or (iii) an affiliated person of
which is an affiliated person of the Trust or the Adviser.
Shares of the Fund have equal voting rights and liquidation rights. The
Fund shall vote separately on matters submitted to a vote of the shareholders
except in matters where a vote of all series of the Trust in the aggregate is
required by the 1940 Act or otherwise. When matters are submitted to
shareholders for a vote, each shareholder is entitled to one vote for each full
share owned and fractional votes for fractional shares owned. The Trust does not
normally hold annual meetings of shareholders. The Trustees shall promptly call
and give notice of a meeting of shareholders for the purpose of voting upon the
removal of any Trustee when requested to do so in writing by shareholders
holding 10% or more of the Trust's outstanding shares. The Trust will comply
with the provisions of Section 16(c) of the 1940 Act in order to facilitate
communications among shareholders.
Trans Financial Bank, N.A., P.O. Box 90001, Bowling Green, Kentucky,
may be deemed to control the Fund by virtue of the fact that it owns of record
more than 25% of the Fund's shares as of the date of this Prospectus.
- 30 -
<PAGE>
DISTRIBUTION PLAN
- ------------------
Pursuant to Rule 12b-1 under the 1940 Act, the Fund has adopted a plan of
distribution (the "Plan") under which the Fund may directly incur or reimburse
the Adviser for certain distribution-related expenses, including payments to
securities dealers and others who are engaged in the sale of shares of the Fund
and who may be advising investors regarding the purchase, sale or retention of
Fund shares; expenses of maintaining personnel who engage in or support
distribution of shares or who render shareholder support services not otherwise
provided by the Transfer Agent; expenses of formulating and implementing
marketing and promotional activities, including direct mail promotions and mass
media advertising; expenses of preparing, printing and distributing sales
literature and prospectuses and statements of additional information and reports
for recipients other than existing shareholders of the Fund; expenses of
obtaining such information, analyses and reports with respect to marketing and
promotional activities as the Trust may, from time to time, deem advisable; and
any other expenses related to the distribution of the Fund's shares.
The annual limitation for payment of expenses pursuant to the Plan is
.35% of the Fund's average daily net assets. Unreimbursed expenditures will not
be carried over from year to year. In the event the Plan is terminated by the
Fund in accordance with its terms, the Fund will not be required to make any
payments for expenses incurred by the Adviser after the date the Plan
terminates.
Pursuant to the Plan, the Fund may also make payments to banks or other
financial institutions that provide shareholder services and administer
shareholder accounts. The Glass-Steagall Act prohibits banks from engaging in
the business of underwriting, selling or distributing securities. Although the
scope of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, management of the
Trust believes that the Glass- Steagall Act should not preclude a bank from
providing such services. However, state securities laws on this issue may differ
from the interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law. If a
bank were prohibited from continuing to perform all or a part of such services,
management of the Trust believes that there would be no material impact on the
Fund or its shareholders. Banks may charge their customers fees for offering
these services to the extent permitted by applicable regulatory authorities, and
the overall return to those shareholders availing themselves of the bank
services will be lower than to those shareholders who do not. The Fund may from
time to time purchase securities issued by banks which provide such services;
however, in selecting investments for the Fund, no preference will be shown for
such securities.
- 31 -
<PAGE>
The National Association of Securities Dealers, in its Rules of Fair
Practice, places certain limitations on asset-based sales charges of mutual
funds. These Rules require fund-level accounting in which all sales charges -
front-end load, 12b-1 fees or contingent deferred load - terminate when a
percentage of gross sales is reached.
CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE
- -----------------------------------------------------
On each day that the Trust is open for business, the public offering
price (net asset value plus applicable sales load) of the shares of the Fund is
determined as of the close of the regular session of trading on the New York
Stock Exchange, currently 4:00 p.m., Eastern time. The Trust is open for
business on each day the New York Stock Exchange is open for business and on any
other day when there is sufficient trading in the Fund's investments that its
net asset value might be materially affected. The net asset value per share of
the Fund is calculated by dividing the sum of the value of the securities held
by the Fund plus cash or other assets minus all liabilities (including estimated
accrued expenses) by the total number of shares outstanding of the Fund, rounded
to the nearest cent.
The Fund's portfolio 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. Securities (and other
assets) for which market quotations are not readily available are valued at
their fair value as determined in good faith in accordance with consistently
applied procedures established by and under the general supervision of the Board
of Trustees. The net asset value per share of the Fund will fluctuate with the
value of the securities it holds.
PERFORMANCE INFORMATION
- ------------------------
From time to time, the Fund may advertise its "average annual total
return." The Fund may also advertise "yield." Both yield and average annual
total return figures are based on historical earnings and are not intended to
indicate future performance.
The "average annual total return" of the Fund refers to the average
annual compounded rates of return over the most recent 1, 5 and 10 year periods
or, where the Fund has not been in operation for such period, over the life of
the Fund (which periods will be stated in the advertisement) that would equate
an initial amount invested at the beginning of a stated period to the ending
redeemable value of the investment. The calculation of "average annual total
return" assumes the reinvestment of all
- 32 -
<PAGE>
dividends and distributions and the deduction of the current maximum sales load
from the initial investment. The Fund may also advertise total return (a
"nonstandardized quotation") which is calculated differently from "average
annual total return." A nonstandardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
nonstandardized quotation of total return may also indicate average annual
compounded rates of return over periods other than those specified for "average
annual total return." These nonstandardized returns do not include the effect of
the applicable sales load which, if included, would reduce total return. A
nonstandardized quotation of total return will always be accompanied by the
Fund's "average annual total return" as described above.
The "yield" of the Fund is computed by dividing the net investment
income per share earned during a thirty-day (or one month) period stated in the
advertisement by the maximum public offering price per share on the last day of
the period (using the average number of shares entitled to receive dividends).
The yield formula assumes that net investment income is earned and reinvested at
a constant rate and annualized at the end of a six-month period.
From time to time, the Fund may advertise its performance rankings as
published by recognized independent mutual fund statistical services such as
Lipper Analytical Services, Inc. ("Lipper"), or by publications of general
interest such as Forbes, Money, The Wall Street Journal, Business Week,
Barron's, Fortune or Morningstar Mutual Fund Values. The Fund may also compare
its performance to that of other selected mutual funds, averages of the other
mutual funds within its category as determined by Lipper, or recognized
indicators. In connection with a ranking, the Fund may provide additional
information, such as the particular category of funds to which the ranking
relates, the number of funds in the category, the criteria upon which the
ranking is based, and the effect of fee waivers and/or expense reimbursements,
if any. The Fund may also present its performance and other investment
characteristics, such as volatility or a temporary defense posture, in light of
the Adviser's view of current or past market conditions or historical trends.
Further performance information is contained in the Trust's annual
report which can be obtained by shareholders at no charge by calling the
Transfer Agent (Nationwide call toll-free 800-543- 0407; in Cincinnati call
629-2050) or by writing to the Trust at the address on the front of this
Prospectus.
- 33 -
<PAGE>
<TABLE>
ACCOUNT NO. 93-_____________________
Account Application (For Fund Use Only)
<S> <C> <C> <C>
Intermediate Bond Fund FOR BROKER/DEALER USE ONLY
Firm Name:_____________________________
Home Office Address: ___________________
Branch Address: ________________________
Rep Name & No.: ________________________
Please mail account application to: Rep Signature: _________________________
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
========================================================================================================================
Initial Investment of $_______________________
[] Check or draft enclosed payable to the Fund.
[] Bank Wire From:
______________________________________________________________________________________________________________
[] Exchange From:
______________________________________________________________________________________________________________
(Fund Name) (Fund Account Number)
Account Name S.S. #/Tax I.D.#
________________________________________________________________________________________ _____________________________
Name of Individual, Corporation, Organization, or Minor, etc. (In case of custodial
account please list
minor's S.S.#)
___________________________________________________________________________________________________ Citizenship:[] U.S.
Name of Joint Tenant, Partner, Custodian []Other
Address Phone
___________________________________________________________________________________________________ ( )_______________
Street or P.O. Box Business Phone
___________________________________________________________________________________________________ ( )_______________
City State Zip Home Phone
Check Appropriate Box: [] Individual [] Joint Tenant (Right of survivorship presumed)
[] Partnership [] Corporation [] Trust [] Custodial [] Non-Profit [] Other
Occupation and Employer
Name/Address______________________________________________________________________________________________
Are you an associated person of an NASD member? [] Yes [] No
========================================================================================================================
TAXPAYER IDENTIFICATION NUMBER -- Under penalties of perjury I certify that the Taxpayer Identification Number listed
above is my correct number. The Internal Revenue Service does not require my consent to any provision of this document
other than the certifications required to avoid backup withholding. Check box if appropriate:
[] I am exempt from backup withholding under the provisions of section 3406(a)(1)(c) of the Internal Revenue Code; or I am not
subject to backup withholding because I have not been notified that I am subject to backup withholding as a result of a failure
to report all interest or dividends; or the Internal Revenue Service has notified me that I am no longer subject to backup
withholding.
[] I certify under penalties of perjury that a Taxpayer Identification Number has not been issued to me and I have mailed or
delivered an application to receive a Taxpayer Identification Number to the Internal Revenue Service Center or Social Security
Administration Office. I understand that if I do not provide a Taxpayer Identification Number within 60 days that 31% of all
reportable payments will be withheld until I provide a number.
=======================================================================================================================
DISTRIBUTIONS (If no election is checked the SHARE OPTION will be assigned.)
[] Share Option -- Income distributions and capital gains distributions automatically reinvested in additional
shares.
[] Income Option -- Income distributions and short term capital gains distributions paid in cash, long term capital
gains distributions reinvested in additional shares.
[] Cash Option -- Income distributions and capital gains distributions paid in cash.
[ ] By Check [ ] By ACH to my bank checking or savings account. Please attach a voided check.
========================================================================================================================
REDEMPTION OPTIONS
I (we) authorize the Trust or Countrywide Fund Services, Inc. to act upon instructions received by telephone, or upon
receipt of and in the amounts of checks as described below (if checkwriting is selected), to have amounts withdrawn from
my (our) account in any fund of Countrywide Investments (see prospectus for limitations on this option) and:
[ ] WIRED ($1,000 minimum OR MAILED to my (our) bank account designated below. I (we) further authorize the use of
automated cash transfers to and from the account designated below.
NOTE: For wire redemptions, the indicated bank should be a commercial bank.
Bank Account Number _____________________________________ Bank Routing Transit Number _______________________________
Name of Account Holder _______________________________________________________________________________________________
Bank Name _________________________________________________________ Bank Address ______________________________________
City State
[ ]CHECKWRITING (A signature card must be completed)
...to deposit the proceeds of such redemptions in the applicable Countrywide Pay Through Draft Account (PTDA)
or otherwise arrange for application of such proceeds to payment of said checks. I (we) authorize the persons
whose signatures appear on the PTDA signature card to draw checks on the PTDA and to cause the redemption of my (our)
shares of the Trust. I (we) agree to be bound by the Rules and Regulations for the Countrywide Pay Through Draft
Account as such Rules and Regulations may be amended from time to time.
===========================================================================================================================
REDUCED SALES CHARGES
Right of Accumulation: I apply for Right of Accumulation subject to the Agent's confirmation of the following holdings of
eligible load funds of Countrywide Investments.
Account Number/Name Account Number/Name
_______________________________________________________ ______________________________________________________
_______________________________________________________ ______________________________________________________
Letter of Intent: (Complete the Right of Accumulation section if related accounts are being applied to your Letter of Intent.)
[] I agree to the Letter of Intent in the current Prospectus of Countrywide Investment Trust. Although I am not obligated to
purchase, and the Trust is not obligated to sell, I intend to invest over a 13 month period beginning ____________________ 19
(Purchase Date of not more than 90 days prior to this Letter) an aggregate amount in the load funds of Countrywide Investments
at least equal to (check appropriate box):
[] $100,000 [] $250,000 [] $500,000 [] $1,000,000
========================================================================================================================
SIGNATURES
By signature below each investor certifies that he has received a copy of the Fund's current Prospectus, that he is of legal
age, and that he has full authority and legal capacity for himself or the organization named below, to make this investment and
to use the options selected above. The investor appoints Countrywide Fund Services, Inc. as his agent to enter orders for shares
whether by direct purchase or exchange, to receive dividends and distributions for automatic reinvestment in additional shares of
the Fund for credit to the investor's account and to surrender for redemption shares held in the investor's account in accordance
with any of the procedures elected above or for payment of service charges incurred by the investor. The investor further agrees
that Countrywide Fund Services, Inc. can cease to act as such agent upon ten days' notice in writing to the investor at the address
contained in this Application. The investor hereby ratifies any instructions given pursuant to this Application and for himself and
his successors and assigns does hereby release Countrywide Fund Services, Inc., Countrywide Investment Trust, Countrywide Investment
Trust, Countrywide Investments, Inc., and their respective officers, employees, agents and affiliates from any and all liability in
the performance of the acts instructed herein. Neither the Trust, Countrywide Fund Services, Inc., nor their respective affiliates
will be liable for complying with telephone instructions they reasonably believe to be genuine or for any loss, damage, cost or
expense in acting on such telephone instructions. The investor(s) will bear the risk of any such loss. The Trust or Countrywide
Fund Services, Inc., or both will employ reasonable procedures to determine that telephone instructions are genuine. If the Trust
and/or Countrywide Fund Services, Inc. do not employ such procedures, they may be liable for losses due to unauthorized or
fraudulent instructions. These procedures may include, among others, requiring forms of personal identification prior to acting
upon telephone instructions, providing written confirmation of the transactions and/or tape recording telephone instructions.
are genuine.
___________________________________________________ ___________________________________________________
Signature of Individual Owner, Corporate Officer, Signature of Joint Owner, if Any
Trustee, etc.
________________________________________________ ____________________________________________________
Title of Corporate Officer, Trustee, etc. Date
NOTE: Corporations, trusts and other organizations must complete the resolution form on the reverse side.
Unless otherwise specified, each joint owner shall have full authority to act on behalf of the account.
==========================================================================================================================
AUTOMATIC INVESTMENT PLAN (Complete for Investments Into the Fund)
The Automatic Investment Plan is available for all established accounts of Countrywide Investment Trust. There is no charge for
this service, and it offers the convenience of automatic investing on a regular basis. The minimum investment is $50.00 per month.
For an account that is opened by using this Plan, the minimum initial and subsequent investments must be $50.00. Though a
continuous program of 12 monthly investments is recommended, the Plan may be discontinued by the shareholder at any time.
Please invest $ _________________ per month in the Fund.
ABA Routing Number______________________________
FI Account Number________________________________
[] Checking Account [] Savings Account
__________________________________________________________________
Name of Financial Institution (FI) Please make my automatic investment on:
[] the last business day of each month
______________________________________________________________________ [] the 15th day of each month
City State [] both the 15th and last business day
X_____________________________________________________________________ X_______________________________________
(Signature of Depositor EXACTLY as it appears on FI Records) (Signature of Joint Tenant - if any)
(Joint Signatures are required when bank account is in joint names. Please sign exactly as signature appears on your FI's
records.)
Please attach a voided check from your checking account or a voided deposit/withdrawal slip from your savings account
for the Automatic Investment Plan.
Indemnification to Depositor's Bank
In consideration of your participation in a plan which Countrywide Fund Services, Inc. ("CFS") has put into effect, by which
amounts, determined by your depositor, payable to the Fund for purchase of shares of the Fund, are collected by CFS, CFS hereby
agrees:
CFS will indemnify and hold you harmless from any liability to any person or persons whatsoever arising out of the payment
by you of any amount drawn by the Fund to its own order on the account of your depositor or from any liability to any person
whatsoever arising out of the dishonor by you whether with or without cause or intentionally or inadvertently, of any such
checks. CFS will defend, at its own cost and expense, any action which might be brought against you by any person or persons
whatsoever because of your actions taken pursuant to the foregoing request or in any manner arising by reason of your
participation in this arrangement. CFS will refund to you any amount erroneously paid by you to the Fund on any such check if
the claim for the amount of such erroneous payment is made by you within six (6) months from the date of such erroneous
payment; your participation in this arrangement and that of the Fund may be terminated by thirty (30) days written notice from
either party to the other.
========================================================================================================================
AUTOMATIC WITHDRAWAL PLAN (Complete for Withdrawals from the Fund)
This is an authorization for you to withdraw $_________ from my mutual fund account beginning the last business day of the
month of __________________.
Please Indicate Withdrawal Schedule (Check One):
[] Monthly -- Withdrawals will be made on the last business day of each month.
[] Quarterly -- Withdrawals will be made on or about 3/31, 6/30, 9/30 and 12/31.
[] Annually -- Please make withdrawals on the last business day of the month of:_____________________.
Please Select Payment Method (Check One):
[] Exchange: Please exchange the withdrawal proceeds into another Countywide account number:_ _-- _ _ _ _--_
[] Check: Please mail a check for my withdrawal proceeds to the mailing address on this account.
[] ACH Transfer: Please send my withdrawal proceeds via ACH transfer to my bank checking or savings account as indicated below.
I understand that the transfer will be completed in two to three business days and that there is no charge.
[] Bank Wire: Please send my withdrawal proceeds via bank wire, to the account indicated below. I understand that the wire will
be completed in one business day and that there is an $8.00 fee.
Please attach a voided check for ACH or bank wire_________________________________________________________________________
Bank Name Bank Address
___________________________________________________________________________________________________________________________________
Bank ABA# Account # Account Name
[] Send to special payee (other than applicant): Please mail a check for my withdrawal proceeds to the mailing address below:
Name of payee___________________________________________________________________________________________________________________
Please send to:_________________________________________________________________________________________________________________
Street address City State Zip
========================================================================================================================
RESOLUTIONS
(This Section to be completed by Corporations, Trusts, and Other Organizations)
RESOLVED: That this corporation or organization become a shareholder of Countrywide Investment Trust (the Trust) and that
________________________________________________________________________________________________________________________
is (are) hereby authorized to complete and execute the Application on behalf of the corporation or organization and to take any
action for it as may be necessary or appropriate with respect to its shareholder account with the Trust, and it is
FURTHER RESOLVED: That any one of the above noted officers is authorized to sign any documents necessary or appropriate to
appoint Countrywide Fund Services, Inc. as redemption agent of the corporation or organization for shares of the applicable series
of the Trust, to establish or acknowledge terms and conditions governing the redemption of said shares and to otherwise implement
the privileges elected on the Application.
Certificate
I hereby certify that the foregoing resolutions are in conformity with the Charter and By-Laws or other empowering documents of
the
_______________________________________________________________________________________________________________________
(Name of Organization)
incorporated or formed under the laws of__________________________________________________________________________________________
(State)
and were adopted at a meeting of the Board of Directors or Trustees of the organization or corporation duly called and held on
at which a quorum was present and acting throughout, and that the same are now in full force and effect. I further certify that
the following is (are) duly elected officer(s) of the corporation or organization, authorized to act in accordance with the
foregoing resolutions.
Name Title
___________________________________________________ _________________________________________________________
___________________________________________________ _________________________________________________________
___________________________________________________ _______________________________________________________
Witness my hand and seal of the corporation or organization this_______________________day
of_______________________________________, 19_______
___________________________________________________ _________________________________________________________
*Secretary-Clerk Other Authorized Officer (if required)
*If the Secretary or other recording officer is authorized to act by the above resolutions, this certificate must also be
signed by another officer.
</TABLE>
<PAGE>
COUNTRYWIDE INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
Nationwide: (Toll-Free) 800-543-8721
Cincinnati: 513-629-2000
BOARD OF TRUSTEES
Donald L.Bogdon, M.D.
John R. Delfino
H. Jerome Lerner
Robert H. Leshner
Angelo R. Mozilo
Oscar P. Robertson
John F. Seymour, Jr.
Sebastiano Sterpa
INVESTMENT ADVISER
COUNTRYWIDE INVESTMENTS, INC.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
TRANSFER AGENT
COUNTRYWIDE FUND SERVICES, INC.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
Shareholder Service
Nationwide: (Toll-Free) 800-543-0407
Cincinnati: 513-629-2050
Countrywide Always Line
Nationwide: (Toll-Free) 800-852-3809
Cincinnati: 513-579-0999
- 34 -
<PAGE>
TABLE OF CONTENTS
Expense Information...............................................
Financial Highlights..............................................
Investment Objective and Policies.................................
How to Purchase Shares............................................
Shareholder Services..............................................
How to Redeem Shares..............................................
Exchange Privilege................................................
Dividends and Distributions.......................................
Taxes.............................................................
Operation of the Fund.............................................
Distribution Plan . . . ..........................................
Calculation of Share Price and Public Offering Price..............
Performance Information...........................................
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Trust. This Prospectus does not constitute an offer by the Trust to sell
shares in any State to any person to whom it is unlawful for the Trust to make
such offer in such State.
<PAGE>
COUNTRYWIDE INVESTMENT TRUST
STATEMENT OF ADDITIONAL INFORMATION
January 1, 1998
Short Term Government Income Fund
Intermediate Term Government Income Fund
Institutional Government Income Fund
Adjustable Rate U.S. Government Securities Fund
Global Bond Fund
Money Market Fund
Intermediate Bond Fund
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of the applicable Fund of Countrywide
Investment Trust dated January 1, 1998. A copy of a Fund's Prospectus can be
obtained by writing the Trust at 312 Walnut Street, 21st Floor, Cincinnati, Ohio
45202-4094, or by calling the Trust nationwide toll-free 800-543-0407, in
Cincinnati 629-2050.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Countrywide Investment Trust
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
TABLE OF CONTENTS
PAGE
THE TRUST................................................. 3
QUALITY RATINGS OF FIXED-INCOME OBLIGATIONS. . . . . . 5
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS . . . . . .10
INVESTMENT LIMITATIONS....................................25
TRUSTEES AND OFFICERS.....................................35
THE INVESTMENT ADVISER AND UNDERWRITER....................38
DISTRIBUTION PLANS . . . . . .............................41
SECURITIES TRANSACTIONS...................................44
PORTFOLIO TURNOVER........................................46
CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE......46
OTHER PURCHASE INFORMATION................................49
TAXES.....................................................50
REDEMPTION IN KIND........................................52
HISTORICAL PERFORMANCE INFORMATION........................53
PRINCIPAL SECURITY HOLDERS................................58
CUSTODIAN.................................................59
AUDITORS..................................................60
TRANSFER AGENT. ..........................................60
ANNUAL REPORT. . . . . . . . . . . . . ...................61
<PAGE>
THE TRUST
- ----------
Countrywide Investment Trust (the "Trust"), formerly Midwest Trust, was
organized as a Massachusetts business trust on December 7, 1980. The Trust
currently offers seven series of shares to investors: the Short Term Government
Income Fund (formerly the Short Term Government Fund), the Intermediate Term
Government Income Fund (formerly the Intermediate Term Government Fund), the
Institutional Government Income Fund (formerly the Institutional Government
Fund), the Adjustable Rate U.S. Government Securities Fund, the Global Bond
Fund, the Money Market Fund and the Intermediate Bond Fund (referred to
individually as a "Fund" and collectively as the "Funds"). Each Fund has its own
investment objective(s) and policies.
Pursuant to an Agreement and Plan of Reorganization dated May 31, 1997,
the Money Market Fund and the Intermediate Bond Fund, on August 29, 1997, each
succeeded to the assets and liabilities of another mutual fund of the same name
(referred to individually as a "Predecessor Fund", and collectively the
"Predecessor Funds"), each of which was an investment series of Trans Adviser
Funds, Inc. The investment objective, policies and restrictions of the Money
Market Fund and the Intermediate Bond Fund and its Predecessor Fund are
substantially identical and the financial data and information prior to August
31, 1997 in this Statement of Additional Information relates to the Predecessor
Funds.
Each share of a Fund represents an equal proportionate interest in the
assets and liabilities belonging to that Fund with each other share of that Fund
and is entitled to such dividends and distributions out of the income belonging
to the Fund as are declared by the Trustees. The shares do not have cumulative
voting rights or any preemptive or conversion rights, and the Trustees have the
authority from time to time to divide or combine the shares of any Fund into a
greater or lesser number of shares of that Fund so long as the proportionate
beneficial interest in the assets belonging to that Fund and the rights of
shares of any other Fund are in no way affected. In case of any liquidation of a
Fund, the holders of shares of the Fund being liquidated will be entitled to
receive as a class a distribution out of the assets, net of the liabilities,
belonging to that Fund. Expenses attributable to any Fund are borne by that
Fund. Any general expenses of the Trust not readily identifiable as belonging to
a particular Fund are allocated by or under the direction of the Trustees in
such manner as the Trustees determine to be fair and equitable. Generally, the
Trustees allocate such expenses on the basis of relative net assets or number of
shareholders. No shareholder is liable to further calls or to assessment by the
Trust without his express consent.
- 3 -
<PAGE>
Both Class A shares and Class C shares of the Global Bond Fund
represent an interest in the same assets of the Fund, have the same rights and
are identical in all material respects except that (i) Class C shares bear the
expenses of higher distribution fees; (ii) certain other class specific expenses
will be borne solely by the class to which such expenses are attributable,
including transfer agent fees attributable to a specific class of shares,
printing and postage expenses related to preparing and distributing materials to
current shareholders of a specific class, registration fees incurred by a
specific class of shares, the expenses of administrative personnel and services
required to support the shareholders of a specific class, litigation or other
legal expenses relating to a class of shares, Trustees' fees or expenses
incurred as a result of issues relating to a specific class of shares and
accounting fees and expenses relating to a specific class of shares; and (iii)
each class has exclusive voting rights with respect to matters relating to its
own distribution arrangements. The Board of Trustees may classify and reclassify
the shares of a Fund into additional classes of shares at a future date.
Under Massachusetts law, under certain circumstances, shareholders of a
Massachusetts business trust could be deemed to have the same type of personal
liability for the obligations of the Trust as does a partner of a partnership.
However, numerous investment companies registered under the Investment Company
Act of 1940 have been formed as Massachusetts business trusts and the Trust is
not aware of an instance where such result has occurred. In addition, the Trust
Agreement disclaims shareholder liability for acts or obligations of the Trust
and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Trust or the Trustees.
The Trust Agreement also provides for the indemnification out of the Trust
property for all losses and expenses of any shareholder held personally liable
for the obligations of the Trust. Moreover, it provides that the Trust will,
upon request, assume the defense of any claim made against any shareholder for
any act or obligation of the Trust and satisfy any judgment thereon. As a
result, and particularly because the Trust assets are readily marketable and
ordinarily substantially exceed liabilities, management believes that the risk
of shareholder liability is slight and limited to circumstances in which the
Trust itself would be unable to meet its obligations. Management believes that,
in view of the above, the risk of personal liability is remote.
- 4 -
<PAGE>
QUALITY RATINGS OF FIXED-INCOME OBLIGATIONS
- --------------------------------------------
CORPORATE BONDS.
Moody's Investors Service, Inc. provides the following descriptions of its
corporate bond ratings:
- -----------------------------------------------------------------------------
Aaa - "Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as 'gilt edge.' Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues."
Aa - "Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities."
A - "Bonds which are rated A possess many favorable investment
attributes and are considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future."
Baa - "Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well."
Ba - "Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterize bonds in this class."
B - "Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small."
- 5 -
<PAGE>
Caa - "Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest."
Ca - "Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings."
C - "Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing."
Standard & Poor's Ratings Group provides the following descriptions of its
corporate bond ratings:
- --------------------------------------------------------------------------------
AAA - "Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal is
extremely strong."
AA - "Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the highest rated issues only in small degree."
A - "Debt rated A has strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories."
BBB - "Debt rated BBB is regarded as having adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories."
BB - "Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB rating."
B - "Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
BB or BB- rating."
- 6 -
<PAGE>
CCC - "Debt rated CCC has a currently identifiable vulnerability to default
and is dependent upon favorable business, financial or economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have the
capacity to pay interest or repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating."
CC - "The rating CC is typically applied to debt subordinated to senior
debt that is assigned an actual or implied CCC rating."
C - "The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating may be
used to cover a situation where a bankruptcy has been filed but debt service
payments are continued."
CI - "The rating CI is reserved for income bonds on which no interest is
being paid."
D - "Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition and debt service payments are jeopardized.
Duff and Phelps Inc. provides the following descriptions of its corporate bond
ratings:
- -------------------------------------------------------------------------------
AAA - "Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt."
AA+, AA, AA- - "High credit quality. Protection factors are strong. Risk is
modest but may vary slightly from time to time because of economic conditions."
A+, A, A- - "Protection factors are average but adequate. However, risk
factors are more variable and greater in periods of economic stress."
BBB+, BBB, BBB- - "Below average protection factors but still considered
sufficient for prudent investment. Considerable variability in risk during
economic cycles."
- 7 -
<PAGE>
BB+, BB, BB- - "Below investment grade but deemed likely to meet
obligations when due. Present or prospective financial protection factors
fluctuate according to industry conditions or company fortunes. Overall quality
may move up or down frequently within this category."
B+, B, B- - "Below investment grade and possessing risk that obligations
will not be met when due. Financial protection factors will fluctuate widely
according to economic cycles, industry conditions and/or company fortunes.
Potential exists for frequent changes in the rating within this category or into
a higher or lower rating grade."
CCC - "Well below investment grade securities. Considerable uncertainty
exists as to timely payment of principal, interest or preferred dividends.
Protection factors are narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable company developments."
DD - "Defaulted debt obligations. Issuer failed to meet scheduled
principal and/or interest payments."
Fitch Investors Service, Inc. provides the following descriptions of its
corporate bond ratings:
- -------------------------------------------------------------------------------
AAA - "AAA ratings denote the lowest expectation of credit risk. They are
assigned only in cases of exceptionally strong capacity for timely payment of
financial commitments. This capacity is highly unlikely to be adversely affected
by foreseeable events."
AA - "AA ratings denote a very low expectation of credit risk. They
indicate strong capacity for timely payment of financial commitments. This
capacity is not significantly vulnerable to foreseeable events."
A - "A ratings denote a low expectation of credit risk. The capacity for
timely payment of financial commitments is considered strong. This capacity may,
nevertheless, be more vulnerable to changes in circumstances or in economic
conditions than is the case for higher ratings."
BBB - "BBB ratings indicate that there is currently a low expectation of
credit risk. Capacity for timely payment of financial commitments is considered
adequate, but adverse changes in circumstances and in economic conditions are
more likely to impair this capacity. This is the lowest investment grade
category."
BB - "BB ratings indicate that there is a possibility of credit risk
developing, particularly as the result of adverse economic change over time;
however, business or financial alternatives may be available to allow financial
commitments to be met. Securities rated in this category are not investment
grade."
- 8 -
<PAGE>
B - "B ratings indicate that significant credit risk is present, but a
limited margin of safety remains. Financial commitments are currently being met;
however, capacity for continued payment is contingent upon a sustained,
favorable business and economic environment."
CCC, CC, C - "Default is a real possibility. Capacity for meeting financial
commitments is solely reliant upon sustained, favorable business or economic
developments. A 'CC' rating indicates that default of some kind appears
probable. 'C' ratings signal imminent default."
DDD, DD and D - "Securities are not meeting current obligations and are
extremely speculative. 'DDD' designates the highest potential for recovery of
amounts outstanding on any securities involved. For U.S. corporates, for
example, 'DD' indicates expected recovery of 50%-90% of such outstanding, and
'D' the lowest recovery potential, i.e. below 50%."
CORPORATE NOTES.
Moody's Investors Service, Inc. provides the following descriptions of its
corporate note ratings:
- -------------------------------------------------------------------------------
MIG-1 "Notes which are rated MIG-1 are judged to be of the best
quality. There is present strong protection by established
cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing."
MIG-2 "Notes which are rated MIG-2 are judged to be of high
quality. Margins of protection are ample although not
so large as in the preceding group."
Standard & Poor's Ratings Group provides the following descriptions of its
corporate note ratings:
- -------------------------------------------------------------------------------
SP-1 "Debt rated SP-1 has very strong or strong capacity to pay
principal and interest. Those issues determined to possess
overwhelming safety characteristics will be given a plus (+)
designation."
SP-2 "Debt rated SP-2 has satisfactory capacity to pay
principal and interest."
COMMERCIAL PAPER.
Description of Commercial Paper Ratings of Moody's Investors Service, Inc.:
- ----------------------------------------------------------------------------
Prime-1 "Superior capacity for repayment of short-term
promissory obligations."
Prime-2 "Strong capacity for repayment of short-term promissory
obligations."
- 9 -
<PAGE>
Prime-3 "Acceptable ability for repayment of short-term
promissory obligations."
Description of Commercial Paper Ratings of Standard & Poor's Ratings Group:
- ---------------------------------------------------------------------------
A-1 "This designation indicates that the degree of safety
regarding timely payment is very strong."
A-2 "Capacity for timely payment on issues with this
designation is strong. However, the relative degree of
safety is not as overwhelming as for issues designated
A-1."
A-3 "Issues carrying this designation have adequate capacity for
timely payment. They are, however, more vulnerable to the
adverse effects of changes in circumstances than obligations
carrying the higher designations."
Description of Commercial Paper Ratings of Duff & Phelps, Inc.:
- ----------------------------------------------------------------
DUFF-1 - "Very high certainty of timely payment. Liquidity factors are
excellent and supported by strong fundamental protection factors. Risk factors
are minor."
DUFF-2 - "Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing internal funds needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small."
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS
- ---------------------------------------------
A more detailed discussion of some of the terms used and investment
policies described in the Prospectuses (see "Investment Objectives and
Policies") appears below:
WHEN-ISSUED SECURITIES AND SECURITIES PURCHASED ON A TO-BE- ANNOUNCED
BASIS. The Funds will only make commitments to purchase securities on a
when-issued or to-be-announced ("TBA") basis with the intention of actually
acquiring the securities. In addition, the Funds may purchase securities on a
when-issued or TBA basis only if delivery and payment for the securities takes
place within 120 days after the date of the transaction. In connection with
these investments, each Fund will direct its Custodian to place cash, U.S.
Government obligations or other liquid high-grade debt obligations in a
segregated account in an amount sufficient to make payment for the securities to
be purchased. When a segregated account is maintained because a Fund purchases
securities on a when-issued or TBA basis, the assets deposited in the segregated
account will be valued daily at market for the purpose of determining the
adequacy of the securities in the account. If the market value of such
securities declines, additional cash or securities will be placed
- 10 -
<PAGE>
in the account on a daily basis so that the market value of the account will
equal the amount of a Fund's commitments to purchase securities on a when-issued
or TBA basis. To the extent funds are in a segregated account, they will not be
available for new investment or to meet redemptions. Securities purchased on a
when-issued or TBA basis and the securities held in a Fund's portfolio are
subject to changes in market value based upon changes in the level of interest
rates (which will generally result in all of those securities changing in value
in the same way, i.e., all those securities experiencing appreciation when
interest rates decline and depreciation when interest rates rise). Therefore, if
in order to achieve higher returns, a Fund remains substantially fully invested
at the same time that it has purchased securities on a when-issued or TBA basis,
there will be a possibility that the market value of the Fund's assets will
experience greater fluctuation. The purchase of securities on a when-issued or
TBA basis may involve a risk of loss if the seller fails to deliver after the
value of the securities has risen.
When the time comes for a Fund to make payment for securities purchased
on a when-issued or TBA basis, the Fund will do so by using then available cash
flow, by sale of the securities held in the segregated account, by sale of other
securities or, although it would not normally expect to do so, by directing the
sale of the securities purchased on a when-issued or TBA basis themselves (which
may have a market value greater or less than the Fund's payment obligation).
Although a Fund will only make commitments to purchase securities on a
when-issued or TBA basis with the intention of actually acquiring the
securities, the Funds may sell these securities before the settlement date if it
is deemed advisable by the Adviser as a matter of investment strategy.
STRIPS. STRIPS are U.S. Treasury bills, notes, and bonds that have been
issued without interest coupons or stripped of their unmatured interest coupons,
interest coupons that have been stripped from such U.S. Treasury securities, and
receipts or certificates representing interests in such stripped U.S. Treasury
securities and coupons. A STRIPS security pays no interest in cash to its holder
during its life although interest is accrued for federal income tax purposes.
Its value to an investor consists of the difference between its face value at
the time of maturity and the price for which it was acquired, which is generally
an amount significantly less than its face value. Investing in STRIPS may help
to preserve capital during periods of declining interest rates. For example, if
interest rates decline, GNMA Certificates owned by a Fund which were purchased
at greater than par are more likely to be prepaid, which would cause a loss of
principal. In anticipation of this, a Fund might purchase STRIPS, the value of
which would be expected to increase when interest rates decline.
- 11 -
<PAGE>
STRIPS do not entitle the holder to any periodic payments of interest
prior to maturity. Accordingly, such securities usually trade at a deep discount
from their face or par value and will be subject to greater fluctuations of
market value in response to changing interest rates than debt obligations of
comparable maturities which make periodic distributions of interest. On the
other hand, because there are no periodic interest payments to be reinvested
prior to maturity, STRIPS eliminate the reinvestment risk and lock in a rate of
return to maturity. Current federal tax law requires that a holder of a STRIPS
security accrue a portion of the discount at which the security was purchased as
income each year even though the Fund received no interest payment in cash on
the security during the year.
As a matter of current policy that may be changed without shareholder
approval, the Adjustable Rate U.S. Government Securities Fund will not purchase
STRIPS with a maturity date that is more than 10 years from the settlement of
the purchase.
GNMA CERTIFICATES. The term "GNMA Certificates" refers to
mortgage-backed securities representing part ownership of a pool of mortgage
loans, which are guaranteed by the Government National Mortgage Association and
backed by the full faith and credit of the United States.
1. The Life of GNMA Certificates. The average life of GNMA Certificates
is likely to be substantially less than the original maturity of the mortgage
pools underlying the GNMA Certificates due to prepayments, refinancing and
payments from foreclosures. Thus, the greatest part of principal will usually be
paid well before the maturity of the mortgages in the pool. As prepayment rates
of individual mortgage pools will vary widely, it is not possible to accurately
predict the average life of a particular issue of GNMA Certificates. However,
statistics published by the FHA are normally used as an indicator of the
expected average life of GNMA Certificates. These statistics indicate that the
average life of single-family dwelling mortgages with 25-30 year maturities, the
type of mortgages backing the vast majority of GNMA Certificates, is
approximately 12 years. However, mortgages with high interest rates have
experienced accelerated prepayment rates which would indicate a shorter average
life.
2. Yield Characteristics of GNMA Certificates. The coupon rate of
interest of GNMA Certificates is lower than the interest rate paid on the
VA-guaranteed or FHA-insured mortgages underlying the GNMA Certificates, but
only by the amount of the fees paid to the GNMA and the issuer. For the most
common type of mortgage pool, containing single-family dwelling mortgages, the
GNMA receives an annual fee of 0.06 of 1% of the outstanding principal for
providing its guarantee, and the issuer is paid an annual fee of 0.44 of 1% for
assembling the mortgage pool and for
- 12 -
<PAGE>
passing through monthly payments of interest and principal to Certificate
holders.
The coupon rate by itself, however, does not indicate the yield which
will be earned on the GNMA Certificates for the following reasons:
(a) GNMA Certificates may be issued at a premium or
discount, rather than at par.
(b) After issuance, GNMA Certificates may trade in the
secondary market at a premium or discount.
(c) Interest is earned monthly, rather than semi-annually as
for traditional bonds. Monthly compounding has the effect of raising
the effective yield earned on GNMA Certificates.
(d) The actual yield of each GNMA Certificate is influenced by
the prepayment experience of the mortgage pool underlying the
Certificate. If mortgagors pay off their mortgages early, the principal
returned to Certificate holders may be reinvested at more or less
favorable rates.
3. Market for GNMA Certificates. Since the inception of the GNMA
mortgage-backed securities program in 1970, the amount of GNMA Certificates
outstanding has grown rapidly. The size of the market and the active
participation in the secondary market by securities dealers and many types of
investors make GNMA Certificates highly liquid instruments. Prices of GNMA
Certificates are readily available from securities dealers and depend on, among
other things, the level of market rates, the Certificate's coupon rate and the
prepayment experience of the pool of mortgages backing each Certificate.
FHLMC CERTIFICATES. The term "FHLMC Certificates" refers to
mortgage-backed securities representing part ownership of a pool of mortgage
loans, which are guaranteed by the Federal Home Loan Mortgage Corporation. The
Federal Home Loan Mortgage Corporation is the leading seller of conventional
mortgage securities in the United States. FHLMC Certificates are not guaranteed
by the United States or by any Federal Home Loan Bank and do not constitute
debts or obligations of the United States or any Federal Home Loan Bank.
Mortgage loans underlying FHLMC Certificates will consist of fixed rate
mortgages with original terms to maturity of between 10 and 30 years,
substantially all of which are secured by first liens on one-family or
two-to-four family residential properties. Mortgage interest rates may be mixed
in a pool. The seller/ servicer of each mortgage retains a minimum three-eighths
of 1% servicing fee, and any remaining excess of mortgage rate over coupon rate
is kept by the Federal Home Loan Mortgage
- 13 -
<PAGE>
Corporation. The coupon rate of a FHLMC Certificate does not by itself indicate
the yield which will be earned on the Certificate for the reasons discussed
above in connection with GNMA Certificates.
FNMA CERTIFICATES. The term "FNMA Certificates" refers to
mortgage-backed securities representing part ownership of a pool of mortgage
loans, which are guaranteed by the Federal National Mortgage Association.
The FNMA, despite having U.S. Government agency status, is also a
private, for-profit corporation organized to provide assistance in the housing
mortgage market. The only function of the FNMA is to provide a secondary market
for residential mortgages. Mortgage loans underlying FNMA Certificates reflect a
considerable diversity and are purchased from a variety of mortgage originators.
They are typically collateralized by conventional mortgages (not FHA-insured or
VA-guaranteed). FNMA Certificates are highly liquid and usually trade in the
secondary market at higher yields than GNMA Certificates. The coupon rate of a
FNMA Certificate does not by itself indicate the yield which will be earned on
the Certificate for the reasons discussed above in connection with GNMA
Certificates.
REPURCHASE AGREEMENTS. Repurchase agreements are transactions by which
a Fund purchases a security and simultaneously commits to resell that security
to the seller at an agreed upon time and price, thereby determining the yield
during the term of the agreement. In the event of a bankruptcy or other default
of the seller of a repurchase agreement, a Fund could experience both delays in
liquidating the underlying security and losses. To minimize these possibilities,
each Fund intends to enter into repurchase agreements only with its Custodian,
with banks having assets in excess of $10 billion and with broker-dealers who
are recognized as primary dealers in U.S. Government obligations by the Federal
Reserve Bank of New York. Collateral for repurchase agreements is held in
safekeeping in the customer-only account of the Funds' Custodian at the Federal
Reserve Bank. The Short Term Government Income Fund, the Intermediate Term
Government Income Fund, the Institutional Government Income Fund, the Adjustable
Rate U.S. Government Securities Fund and the Money Market Fund will not enter
into a repurchase agreement not terminable within seven days if, as result
thereof, more than 10% of the value of its net assets would be invested in such
securities and other illiquid securities. The Global Bond Fund and the
Intermediate Bond Fund will not enter into a repurchase agreement not terminable
within seven days if, as a result thereof, more than 15% of the value of its net
assets would be invested in such securities and other illiquid securities.
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Although the securities subject to a repurchase agreement might bear
maturities exceeding one year, settlement for the repurchase would never be more
than one year after the Fund's acquisition of the securities and normally would
be within a shorter period of time. The resale price will be in excess of the
purchase price, reflecting an agreed upon market rate effective for the period
of time the Fund's money will be invested in the securities, and will not be
related to the coupon rate of the purchased security. At the time a Fund enters
into a repurchase agreement, the value of the underlying security, including
accrued interest, will equal or exceed the value of the repurchase agreement,
and in the case of a repurchase agreement exceeding one day, the seller will
agree that the value of the underlying security, including accrued interest,
will at all times equal or exceed the value of the repurchase agreement. The
collateral securing the seller's obligation must be of a credit quality at least
equal to a Fund's investment criteria for portfolio securities and will be held
by the Custodian or in the Federal Reserve Book Entry System.
For purposes of the Investment Company Act of 1940, a repurchase
agreement is deemed to be a loan from a Fund to the seller subject to the
repurchase agreement and is therefore subject to that Fund's investment
restriction applicable to loans. It is not clear whether a court would consider
the securities purchased by a Fund subject to a repurchase agreement as being
owned by that Fund or as being collateral for a loan by the Fund to the seller.
In the event of the commencement of bankruptcy or insolvency proceedings with
respect to the seller of the securities before repurchase of the security under
a repurchase agreement, a Fund may encounter delay and incur costs before being
able to sell the security. Delays may involve loss of interest or decline in
price of the security. If a court characterized the transaction as a loan and a
Fund has not perfected a security interest in the security, that Fund may be
required to return the security to the seller's estate and be treated as an
unsecured creditor of the seller. As an unsecured creditor, a Fund would be at
the risk of losing some or all of the principal and income involved in the
transaction. As with any unsecured debt obligation purchased for a Fund, the
Adviser seeks to minimize the risk of loss through repurchase agreements by
analyzing the creditworthiness of the obligor, in this case, the seller. Apart
from the risk of bankruptcy or insolvency proceedings, there is also the risk
that the seller may fail to repurchase the security, in which case a Fund may
incur a loss if the proceeds to that Fund of the sale of the security to a third
party are less than the repurchase price. However, if the market value of the
securities subject to the repurchase agreement becomes less than the repurchase
price (including interest), the Fund involved will direct the seller of the
security to deliver additional securities so that the market value of all
securities subject to the repurchase agreement will equal or exceed the
repurchase price. It is possible that a Fund will be unsuccessful in seeking to
enforce the seller's contractual
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obligation to deliver additional securities.
LOANS OF PORTFOLIO SECURITIES. The Institutional Government Income
Fund, the Adjustable Rate U.S. Government Securities Fund, the Global Bond Fund,
the Money Market Fund and the Intermediate Bond Fund may each lend its portfolio
securities subject to the restrictions stated in its Prospectus. Under
applicable regulatory requirements (which are subject to change), the loan
collateral must, on each business day, at least equal the value of the loaned
securities. To be acceptable as collateral, letters of credit must obligate a
bank to pay amounts demanded by a Fund if the demand meets the terms of the
letter. Such terms and the issuing bank must be satisfactory to the Fund. The
Fund receives amounts equal to the interest on loaned securities and also
receives one or more of (a) negotiated loan fees, (b) interest on securities
used as collateral, or (c) interest on short-term debt securities purchased with
such collateral; either type of interest may be shared with the borrower. The
Funds may also pay fees to placing brokers as well as custodian and
administrative fees in connection with loans. Fees may only be paid to a placing
broker provided that the Trustees determine that the fee paid to the placing
broker is reasonable and based solely upon services rendered, that the Trustees
separately consider the propriety of any fee shared by the placing broker with
the borrower, and that the fees are not used to compensate the Adviser or any
affiliated person of the Trust or an affiliated person of the Adviser or other
affiliated person. The terms of the Funds' loans must meet applicable tests
under the Internal Revenue Code and permit the Fund to reacquire loaned
securities on five days' notice or in time to vote on any important matter.
BANK DEBT INSTRUMENTS. Bank debt instruments in which the Funds may
invest consist of certificates of deposit, bankers' acceptances and time
deposits issued by national banks and state banks, trust companies and mutual
savings banks, or of banks or institutions the accounts of which are insured by
the Federal Deposit Insurance Corporation or the Federal Savings and Loan
Insurance Corporation. Certificates of deposit are negotiable certificates
evidencing the indebtedness of a commercial bank to repay funds deposited with
it for a definite period of time (usually from fourteen days to one year) at a
stated or variable interest rate. Bankers' acceptances are credit instruments
evidencing the obligation of a bank to pay a draft which has been drawn on it by
a customer, which instruments reflect the obligation both of the bank and of the
drawer to pay the face amount of the instrument upon maturity. Time deposits are
non-negotiable deposits maintained in a banking institution for a specified
period of time at a stated interest rate. Investments in time deposits maturing
in more than seven days will be subject to each Fund's restrictions on illiquid
investments (see "Investment Limitations"). The Global Bond Fund, the Money
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Market Fund and the Intermediate Bond Fund may also invest in certificates of
deposit, bankers' acceptances and time deposits issued by foreign branches of
national banks. Eurodollar certificates of deposit are negotiable U.S. dollar
denominated certificates of deposit issued by foreign branches of major U.S.
commercial banks. Eurodollar bankers' acceptances are U.S. dollar denominated
bankers' acceptances "accepted" by foreign branches of major U.S. commercial
banks. Investments in the obligations of foreign branches of U.S. commercial
banks may be subject to special risks, including future political and economic
developments, imposition of withholding taxes on income, establishment of
exchange controls or other restrictions, less governmental supervision and the
lack of uniform accounting, auditing and financial reporting standards that
might affect an investment adversely.
COMMERCIAL PAPER. Commercial paper consists of short-term, (usually
from one to two hundred seventy days) unsecured promissory notes issued by U.S.
and foreign corporations in order to finance their current operations.
Eurodollar commercial paper refers to notes payable by European issuers in U.S.
dollars. Certain notes may have floating or variable rates. Variable and
floating rate notes with a demand notice period exceeding seven days will be
subject to a Fund's restrictions on illiquid investments (see "Investment
Limitations") unless, in the judgment of the Adviser or the Subadviser, subject
to the direction of the Board of Trustees, such note is liquid.
FOREIGN SECURITIES. The Global Bond Fund may invest in non- U.S. dollar
denominated debt securities principally traded in financial markets outside the
United States. Because the Fund invests in foreign securities, an investment in
the Fund involves risks that are different in some respects from an investment
in a fund which invests only in securities of U.S. domestic issuers. Foreign
investments may be affected favorably or unfavorably by changes in currency
rates and exchange control regulations. There may be less publicly available
information about a foreign company than about a U.S. company, and foreign
companies may not be subject to accounting, auditing and financial reporting
standards and requirements comparable to those applicable to U.S. companies.
There may be less governmental supervision of securities markets, brokers and
issuers of securities. Securities of some foreign companies are less liquid or
more volatile than securities of U.S. companies, and foreign brokerage
commissions and custodian fees are generally higher than in the United States.
Settlement practices may include delays and may differ from those customary in
United States markets. Investments in foreign securities may also be subject to
other risks different from those affecting U.S. investments, including local
political or economic developments, expropriation or nationalization of assets,
restrictions on foreign investment and repatriation of capital, imposition of
withholding taxes on
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dividend or interest payments, currency blockage (which would prevent cash from
being brought back to the United States), and difficulty in enforcing legal
rights outside the United States.
EUROPEAN CURRENCY UNIT BONDS. The European Currency Unit ("ECU") is a
basket of European currencies consisting of specified amounts of the currencies
of ten members of the European community. The ECU is used by members as their
budgetary currency to determine official claims and debts. It fluctuates with
the daily exchange rate changes of the constituent currencies. The ECU is now
defined by the following ten currencies: German Deutschmark, British Pound,
French Franc, Italian Lira, Dutch Guilder, Belgian Franc, Luxembourg Franc,
Finish Kroner, Irish Pound and Greek Drachma. ECU bonds are bonds or debentures
denominated in ECUs.
FORWARD CURRENCY EXCHANGE CONTRACTS. The value of the Global Bond
Fund's portfolio securities which are invested in non-U.S. dollar denominated
instruments as measured in U.S. dollars may be affected favorably or unfavorably
by changes in foreign currency exchange rates and exchange control regulations,
and the Fund may incur costs in connection with conversions between various
currencies. The Fund will conduct its foreign currency exchange transactions
either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign
currency exchange market, or through forward contracts to purchase or sell
foreign currencies. A forward currency exchange contract involves an obligation
to purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. These contracts are traded directly
between currency traders (usually large commercial banks) and their customers.
The Fund will not, however, hold foreign currency except in connection with
purchase and sale of foreign portfolio securities.
The Global Bond Fund will enter into forward currency exchange
contracts as described hereafter. When the Fund enters into a contract for the
purchase or sale of a security denominated in a foreign currency, it may desire
to establish the cost or proceeds relative to another currency. The forward
contract may be denominated in U.S. dollars or may be a "cross-currency"
contract where the forward contract is denominated in a currency other than U.S.
dollars. However, this tends to limit potential gains which might result from a
positive change in such currency relationships.
The forecasting of a short-term currency market movement is extremely
difficult and the successful execution of a short-term hedging strategy is
highly uncertain. The Fund may enter into such forward contracts if, as a
result, not more than 50% of the value of its total assets would be committed to
such contracts.
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Under normal circumstances, consideration of the prospect for currency parities
will be incorporated into the longer term investment decisions made with regard
to overall diversification strategies. However, the Trustees believe that it is
important to have the flexibility to enter into forward contracts when the
Subadviser determines it to be in the best interests of the Fund. The Fund's
Custodian will segregate cash, U.S. Government obligations or other liquid
high-grade debt obligations in an amount not less than the value of the Fund's
total assets committed to foreign currency exchange contracts entered into under
this type of transaction. If the value of the segregated securities declines,
additional cash or securities will be added on a daily basis, i.e., "marked to
market," so that the segregated amount will not be less than the amount of the
Fund's commitments with respect to such contracts.
Generally, the Fund will not enter into a forward currency exchange
contract with a term of greater than 90 days. At the maturity of the contract,
the Fund may either sell the portfolio security and make delivery of the foreign
currency, or may retain the security and terminate the obligation to deliver the
foreign currency by purchasing an "offsetting" forward contract with the same
currency trader obligating the Fund to purchase, on the same maturity date, the
same amount of the foreign currency.
It is impossible to forecast with absolute precision the market value
of portfolio securities at the expiration of the contract. Accordingly, it may
be necessary for the Fund to purchase additional foreign currency on the spot
market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the Fund is obligated to
deliver and if a decision is made to sell the security and make delivery of the
foreign currency. Conversely, it may be necessary to sell on the spot market
some of the foreign currency received upon the sale of the portfolio security if
its market value exceeds the amount of foreign currency the Fund is obligated to
deliver.
If the Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss (as described below) to the
extent that there has been movement in forward contract prices. If the Fund
engages in an offsetting transaction, it may subsequently enter into a new
forward contract to sell the foreign currency. Should forward prices decline
during the period between entering into a forward contract for the sale of a
foreign currency and the date the Fund enters into an offsetting contract for
the purchase of the foreign currency, the Fund will realize a gain to the extent
the price of the currency the Fund has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the Fund
will suffer a loss to the extent the price of the currency the Fund has agreed
to purchase exceeds the price of the currency the Fund has agreed to sell.
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The Fund's dealings in forward foreign currency exchange contracts will
be limited to the transactions described above. The Fund is not required to
enter into such transactions with regard to its foreign currency-denominated
securities and will not do so unless deemed appropriate by its Subadviser. It
should also be realized that this method of protecting the value of the Fund's
portfolio securities against a decline in the value of a currency does not
eliminate fluctuations in the underlying prices of the securities held by the
Fund. It simply establishes a rate of exchange which one can achieve at some
future point in time. Additionally, although such contracts tend to minimize the
risk of loss due to a decline in the value of the hedged currency, at the same
time, they tend to limit any potential gain which might result should the value
of such currency increase.
INTEREST RATE FUTURES CONTRACTS. The Global Bond Fund may enter into
contracts for the future delivery of fixed-income securities commonly referred
to as "interest rate futures contracts." In this context, a futures contract is
an agreement by the Fund to buy or sell fixed-income securities at a specified
date and price. No payment is made for securities when the Fund buys a futures
contract and no securities are delivered when the Fund sells a futures contract.
Instead, the Fund makes a deposit called an "initial margin" equal to a
percentage of the contract's value. Payment or delivery is made when the
contract expires. Futures contracts will be used only as a hedge against
anticipated interest rate changes and for other transactions permitted to
entities exempt from the definition of the term commodity pool operator. The
Fund will not enter into a futures contract if immediately thereafter the sum of
the then aggregate futures market prices of financial or other instruments
required to be delivered under open futures contract sales and the aggregate
futures market prices of financial instruments required to be delivered under
open futures contract purchases would exceed 50% of the value of its total
assets. The Fund will not enter into a futures contract if immediately
thereafter more than 5% of the fair market value of its assets would be
committed to initial margins.
WRITING COVERED CALL OPTIONS. The Global Bond Fund may write covered
call options on individual bonds and on interest rate futures contracts to earn
premium income, to assure a definite price for a security it has considered
selling, or to close out options previously purchased. A call option gives the
holder (buyer) the right to purchase a security or futures contract at a
specified price (the exercise price) at any time until a certain date (the
expiration date). A call option is "covered" if the Fund owns the underlying
security subject to the call option at all times during the option period. A
covered call writer is required to deposit in escrow the underlying security in
accordance with the rules of the exchanges on which the option is traded and the
appropriate clearing agency.
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The writing of covered call options is a conservative investment
technique which the Subadviser believes involves relatively little risk.
However, there is no assurance that a closing transaction can be effected at a
favorable price. During the option period, the covered call writer has, in
return for the premium received, given up the opportunity for capital
appreciation above the exercise price should the market price of the underlying
security increase, but has retained the risk of loss should the price of the
underlying security decline.
The Fund may write covered call options if, immediately thereafter, not
more than 30% of its net assets would be committed to such transactions. As long
as the Securities and Exchange Commission continues to take the position that
unlisted options are illiquid securities, the Fund will not commit more than 15%
of its net assets to unlisted covered call transactions and other illiquid
securities.
WRITING COVERED PUT OPTIONS. The Global Bond Fund may write covered put
options on bonds and on interest rate futures contracts to assure a definite
price for a security if it is considering acquiring the security at a lower
price than the current market price or to close out options previously
purchased. A put option gives the holder of the option the right to sell, and
the writer has the obligation to buy, the underlying security at the exercise
price at any time during the option period. The operation of put options in
other respects is substantially identical to that of call options. When the Fund
writes a covered put option, it maintains in a segregated account with its
Custodian cash or liquid debt obligations in an amount not less than the
exercise price at all times while the put option is outstanding.
The risks involved in writing put options include the risk that a
closing transaction cannot be effected at a favorable price and the possibility
that the price of the underlying security may fall below the exercise price, in
which case the Fund may be required to purchase the underlying security at a
higher price than the market price of the security at the time the option is
exercised. The Fund may not write a put option if, immediately thereafter, more
than 25% of its net assets would be committed to such transactions.
PURCHASING OPTIONS ON INTEREST RATE FUTURES CONTRACTS. The Global Bond
Fund may purchase put and call options on interest rate futures contracts. The
purchase of put options on interest rate futures contracts hedges the Fund's
portfolio against the risk of rising interest rates. The purchase of call
options on futures contracts is a means of obtaining temporary exposure to
market appreciation at limited risk and is a hedge against a market advance when
the Fund is not fully invested. Assuming that any decline in the securities
being hedged is accompanied by
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a rise in interest rates, the purchase of options on the futures contracts may
generate gains which can partially offset any decline in the value of the Fund's
portfolio securities which have been hedged. However, if after the Fund
purchases an option on a futures contract, the value of the securities being
hedged moves in the opposite direction from that contemplated, the Fund will
tend to experience losses in the form of premiums on such options which would
partially offset gains the Fund would have.
An interest rate futures contract is a contract to buy or sell
specified debt securities at a future time for a fixed price. The Fund may
purchase put and call options on interest rate futures contracts which are
traded on a national exchange or board of trade and sell such options to
terminate an existing position. Options on interest rate futures give the
purchaser the right, in return for the premium paid, to assume a position in an
interest rate futures contract (a long position if the option is a call and a
short position if the option is a put), rather than to purchase or sell a
security, at a specified exercise price at any time during the period of the
option.
The holder of an option on an interest rate futures contract may
terminate his position by selling an option of the same series. There is no
guarantee that such closing transactions can be effected. In addition to the
risks which apply to all options transactions, there are several special risks
relating to options on interest rate futures contracts. The ability to establish
and close out positions on such options is subject to the maintenance of a
liquid secondary market. Compared to the use of interest rate futures, the
purchase of options on interest rate futures involves less potential risk to the
Fund because the maximum amount at risk is the premium paid for the options,
plus transaction costs.
OPTIONS TRANSACTIONS GENERALLY. Option transactions in which the Global
Bond Fund may engage involve the specific risks described above as well as the
following risks: the writer of an option may be assigned an exercise at any time
during the option period; disruptions in the markets for underlying instruments
could result in losses for options investors; imperfect or no correlation
between the option and the securities being hedged; the insolvency of a broker
could present risks for the broker's customers; and market imposed restrictions
may prohibit the exercise of certain options. In addition, the option activities
of the Fund may affect its portfolio turnover rate and the amount of brokerage
commissions paid by the Fund. The success of the Fund in using the option
strategies described above depends, among other things, on the Subadviser's
ability to predict the direction and volatility of price movements in the
options, futures contracts and securities markets and the Subadviser's ability
to select the proper time, type and duration of the options.
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VARIABLE RATE DEMAND INSTRUMENTS. The Money Market Fund and the
Intermediate Bond Fund may purchase variable rate demand instruments. Variable
rate demand instruments that the Funds will purchase are variable amount master
demand notes that provide for a periodic adjustment in the interest rate paid on
the instrument and permit the holder to demand payment of the unpaid principal
balance plus accrued interest at specified intervals upon a specific number of
days' notice either from the issuer upon a specified number of days' notice
either from the issuer or by drawing on a bank letter of credit, a guarantee,
insurance or other credit facility issued with respect to such instrument.
The variable rate demand instruments in which the Funds may invest are
payable on not more than thirty calendar days' notice either on demand or at
specified intervals not exceeding thirteen months depending upon the terms of
the instrument. The terms of the instruments provide that interest rates are
adjustable at intervals ranging from daily to up to thirteen months and their
adjustments are based upon the prime rate of a bank or other appropriate
interest rate adjustment index as provided in the respective instruments. In
order to minimize credit risks, the Adviser will decide which variable rate
demand instruments it will purchase in accordance with procedures prescribed by
the Board of Trustees. Each Fund may only purchase variable rate demand
instruments which have received a short-term rating meeting that Fund's quality
standards from an NRSRO or unrated variable rate demand instruments determined
by the Adviser, under the direction of the Board of Trustees, to be of
comparable quality. If such an instrument does not have a demand feature
exercisable by a Fund in the event of default in the payment of principal or
interest on the underlying securities, then the Fund will also require that the
instrument have a rating as long-term debt in one of the top two categories by
any NRSRO. The Adviser may determine, under the direction of the Board of
Trustees, that an unrated variable rate demand instrument meets a Fund's quality
criteria if it is backed by a letter of credit or guarantee or insurance or
other credit facility that meets the quality criteria for the Fund or on the
basis of a credit evaluation of the underlying obligor. If an instrument is ever
deemed to not meet a Fund's quality standards, such Fund either will sell it in
the market or exercise the demand feature as soon as practicable.
The Money Market Fund will not invest more than 10% of its net assets and
the Intermediate Bond Fund will not invest more than 15% of its net assets in
variable rate demand instruments as to which it cannot exercise the demand
feature on not more than seven days' notice if the Board of Trustees determines
that there is no secondary market available for these obligations and all other
illiquid securities. The Funds intend to exercise the demand repurchase feature
only (1) upon a default under the terms
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of the bond documents, (2) as needed to provide liquidity to a Fund in order to
make redemptions of its shares, or (3) to maintain the quality standards of a
Fund's investment portfolio.
While the value of the underlying variable rate demand instruments may
change with changes in interest rates generally, the variable rate nature of the
underlying variable rate demand instruments should minimize changes in value of
the instruments. Accordingly, as interest rates decrease or increase, the
potential for capital depreciation is less than would be the case with a
portfolio of fixed income securities. Each Fund may hold variable rate demand
instruments on which stated minimum or maximum rates, or maximum rates set by
state law, limit the degree to which interest on such variable rate demand
instruments may fluctuate; to the extent it does, increases or decreases in
value may be somewhat greater than would be the case without such limits.
Because the adjustment of interest rates on the variable rate demand instruments
is made in relation to movements of the applicable banks' "prime rate," or other
interest rate adjustment index, the variable rate demand instruments are not
comparable to long-term fixed rate securities. Accordingly, interest rates on
the variable rate demand instruments may be higher or lower than current market
rates for fixed rate obligations or obligations of comparable quality with
similar maturities.
RESTRICTED SECURITIES. The Money Market Fund and the Intermediate Bond
Fund may invest in restricted securities. Restricted securities generally can be
sold in a privately negotiated transaction, pursuant to an exemption from
registration under the securities Act of 1933, or in a registered public
offering. Where registration is required, a Fund may be obligated to pay all or
part of the registration expense and a considerable period may elapse between
the time it decides to seek registration and the time the Fund may be permitted
to sell a security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, a Fund might obtain a less
favorable price than prevailed when it decided to seek registration of the
shares. However, in general, the Funds anticipate holding restricted securities
to maturity or selling them in an exempt transaction.
MAJORITY. As used in the Prospectuses and this Statement of Additional
Information, the term "majority" of the outstanding shares of the Trust (or of
any Fund) means the lesser of (1) 67% or more of the outstanding shares of the
Trust (or the applicable Fund) present at a meeting, if the holders of more than
50% of the outstanding shares of the Trust (or the applicable Fund) are present
or represented at such meeting or (2) more than 50% of the outstanding shares of
the Trust (or the applicable Fund).
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INVESTMENT LIMITATIONS
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The Trust has adopted certain fundamental investment limitations
designed to reduce the risk of an investment in the Funds. These limitations may
not be changed with respect to any Fund without the affirmative vote of a
majority of the outstanding shares of that Fund.
THE LIMITATIONS APPLICABLE TO THE SHORT TERM GOVERNMENT INCOME FUND AND
THE INTERMEDIATE TERM GOVERNMENT INCOME FUND ARE:
1. Borrowing Money. Each Fund will not borrow money, except (a) as a
temporary measure for extraordinary or emergency purposes and then only in
amounts not in excess of 10% of the value of the Fund's total assets or (b)
pursuant to Paragraph (15) of this section. Each Fund may pledge its assets to
the extent of up to 15% of the value of its total assets to secure such
borrowings.
2. Underwriting. Each Fund will not act as underwriter of securities
issued by other persons, either directly or through a majority owned subsidiary.
This limitation is not applicable to the extent that, in connection with the
disposition of its portfolio securities (including restricted securities), a
Fund may be deemed an underwriter under certain federal securities laws.
3. Illiquid Investments. Each Fund will not purchase securities for
which there are legal or contractual restrictions on resale or enter into a
repurchase agreement maturing in more than seven days if, as a result thereof,
more than 10% of the value of the Fund's total assets would be invested in such
securities.
4. Real Estate. Each Fund will not purchase, hold or deal in real
estate, including real estate limited partnership interests.
5. Commodities. Each Fund will not purchase, hold or deal in
commodities or commodities futures contracts.
6. Loans. Each Fund will not make loans to individuals, to any officer
or Trustee of the Trust or to its Adviser or to any officer or director of the
Adviser (each Fund, however, may purchase and simultaneously resell for later
delivery obligations issued or guaranteed as to principal and interest by the
United States Government or an agency or instrumentality thereof; provided that
each Fund will not enter into such repurchase agreements if, as a result
thereof, more than 10% of the value of the Fund's total assets at that time
would be subject to repurchase agreements maturing in more than seven days). The
making of a loan by either Fund does not include the purchase of
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a portion of an issue of publicly distributed bonds, debentures or other debt
securities, whether or not the purchase was made upon the original issuance of
the securities.
7. Securities of One Issuer. Each Fund will not purchase the securities
of any issuer if such purchase at the time thereof would cause more than 25% of
the value of the Fund's total assets to be invested in the securities of such
issuer (the foregoing limitation does not apply to investments in government
securities as defined in the Investment Company Act of 1940).
8. Securities of One Class. Each Fund will not purchase the securities
of any issuer if such purchase at the time thereof would cause 10% of any class
of securities of such issuer to be held by a Fund, or acquire more than 10% of
the outstanding voting securities of such issuer. (All outstanding bonds and
other evidences of indebtedness shall be deemed to be a single class of
securities of the issuer, and all kinds of stock of an issuer preferred over the
common stock as to dividends or liquidation shall be deemed to constitute a
single class regardless of relative priorities, series designations, conversion
rights and other differences).
9. Investing for Control. Each Fund will not invest in companies for
the purpose of exercising control or management.
10. Other Investment Companies. Each Fund will not purchase securities
issued by any other investment company or investment trust except (a) by
purchase in the open market where no commission or profit to a sponsor or dealer
results from such purchase other than customary brokers' commission or (b) where
such purchase, not made in the open market, is part of a plan of merger or
consolidation or acquisition of assets; provided that each Fund shall not
purchase the securities of any investment companies or investment trusts if such
purchase at the time thereof would cause more than 10% of the value of the
Fund's total assets to be invested in the securities of such issuers, and
provided further, that each Fund shall not purchase securities issued by any
other open-end investment company.
11. Margin Purchases. Each Fund will not purchase securities or
evidences of interest thereon on "margin," except that the Funds may obtain such
short-term credit as may be necessary for the clearance of purchases and sales
or redemption of securities.
12. Common Stocks. Each Fund will not invest in common stocks.
13. Options. Each Fund will not engage in the purchase or sale of put
or call options.
- 26 -
<PAGE>
14. Short Sales. Each Fund will not sell any securities short.
15. When-Issued Purchases. The Funds will not make any commitment to
purchase securities on a when-issued basis except that the Intermediate Term
Government Income Fund may make such commitments if no more than 20% of the
Fund's net assets would be so committed.
16. Concentration. Each Fund will not invest more than 25% of its total
assets in the securities of issuers in any particular industry; provided,
however, that there is no limitation with respect to investments in obligations
issued or guaranteed by the United States Government or its agencies or
instrumentalities or repurchase agreements with respect thereto.
17. Mineral Leases. The Funds will not purchase oil, gas or other
mineral leases or exploration or development programs.
THE LIMITATIONS APPLICABLE TO THE INSTITUTIONAL GOVERNMENT INCOME
FUND ARE:
1. Borrowing Money. The Fund will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is asset coverage of
300% for all borrowings of the Fund; or (b) from a bank for temporary purposes
only, provided that, when made, such temporary borrowings are in an amount not
exceeding 5% of the Fund's total assets. The Fund also will not make any
borrowing which would cause its outstanding borrowings to exceed one-third of
the value of its total assets.
2. Pledging. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any security owned or held by the
Fund except as may be necessary in connection with borrowings described in
limitation (1) above. The Fund will not mortgage, pledge or hypothecate more
than one-third of its assets in connection with borrowings.
3. Underwriting. The Fund will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the extent that,
in connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. Illiquid Investments. The Fund will not invest more than 10% of its
net assets in securities for which there are legal or contractual restrictions
on resale and other illiquid securities.
5. Real Estate. The Fund will not purchase, hold or deal in real
estate.
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<PAGE>
6. Commodities. The Fund will not purchase, hold or deal in commodities
or commodities futures contracts, or invest in oil, gas or other mineral
explorative or development programs. This limitation is not applicable to the
extent that the U.S. Government obligations in which the Fund may otherwise
invest would be considered to be such commodities, contracts or investments.
7. Loans. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, or (b) by engaging in repurchase agreements. For
purposes of this limitation, the term "loans" shall not include the purchase of
a portion of an issue of U.S. Government obligations.
8. Margin Purchases. The Fund will not purchase securities or evidences
of interest thereon on "margin." This limitation is not applicable to short-term
credit obtained by the Fund for the clearance of purchases and sales or
redemption of securities.
9. Short Sales and Options. The Fund will not sell any securities short
or sell put and call options. This limitation is not applicable to the extent
that sales by the Fund of securities in which the Fund may otherwise invest
would be considered to be sales of options.
10. Other Investment Companies. The Fund will not invest more than 5%
of its total assets in the securities of any investment company and will not
invest more than 10% of its total assets in securities of other investment
companies.
11. Concentration. The Fund will not invest more than 25% of its total
assets in a particular industry; this limitation is not applicable to
investments in obligations issued by the U.S. Government, its territories and
possessions, the District of Columbia and their respective agencies and
instrumentalities or repurchase agreements with respect thereto.
12. Mineral Leases. The Fund will not purchase oil, gas or other
mineral leases or exploration or development programs.
THE LIMITATIONS APPLICABLE TO THE ADJUSTABLE RATE U.S. GOVERNMENT
SECURITIES FUND ARE:
1. Borrowing Money. The Fund will not borrow money, except (a) as a
temporary measure for extraordinary or emergency purposes and then only in
amounts not in excess of 10% of the value of its total assets or (b) pursuant to
Paragraph (15) of this section. The Fund may pledge its assets to the extent of
up to 15% of the value of its total assets to secure such borrowings.
- 28 -
<PAGE>
2. Underwriting. The Fund will not act as underwriter of securities
issued by other persons, either directly or through a majority owned subsidiary.
This limitation is not applicable to the extent that, in connection with the
disposition of its portfolio securities (including restricted securities), the
Fund may be deemed an underwriter under certain federal securities laws.
3. Illiquid Investments. The Fund will not purchase securities for
which there are legal or contractual restrictions on resale or enter into a
repurchase agreement maturing in more than seven days if, as a result thereof,
more than 15% of the value of the Fund's net assets would be invested in such
securities.
4. Real Estate. The Fund will not purchase, hold or deal in real
estate, including real estate limited partnerships.
5. Commodities. The Fund will not purchase, hold or deal in commodities
or commodities futures contracts.
6. Loans. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities if the borrower agrees to maintain collateral
marked to market daily in an amount at least equal to the market value of the
loaned securities, or (b) by engaging in repurchase agreements. For purposes of
this limitation, the term "loans" shall not include the purchase of a portion of
an issue of U.S. Government obligations.
7. Securities of One Issuer. The Fund will not purchase the securities
of any issuer if such purchase at the time thereof would cause more than 5% of
the value of its total assets to be invested in the securities of such issuer
(the foregoing limitation does not apply to investments in government securities
as defined in the Investment Company Act of 1940).
8. Securities of One Class. The Fund will not purchase the securities
of any issuer if such purchase at the time thereof would cause 10% of any class
of securities of such issuer to be held by the Fund, or acquire more than 10% of
the outstanding voting securities of such issuer. (All outstanding bonds and
other evidences of indebtedness shall be deemed to be a single class of
securities of the issuer).
9. Investing for Control. The Fund will not invest in companies for the
purpose of exercising control or management.
10. Other Investment Companies. The Fund will not invest more than 5%
of its total assets in the securities of any investment company and will not
invest more than 10% of its total assets in securities of other investment
companies.
- 29 -
<PAGE>
11. Margin Purchases. The Fund will not purchase securities or
evidences of interest thereon on "margin," except that it may obtain such
short-term credit as may be necessary for the clearance of purchases and sales
or redemption of securities.
12. Common Stocks. The Fund will not invest in common stocks.
13. Options. The Fund will not engage in the purchase or sale of put or
call options.
14. Short Sales. The Fund will not sell any securities short.
15. When-Issued Purchases. The Fund will not make any commitment to
purchase securities on a when-issued or to-be- announced basis if more than 25%
of the Fund's net assets would be so committed.
16. Concentration. The Fund will not invest more than 25% of its total
assets in the securities of issuers in any particular industry; provided,
however, that there is no limitation with respect to investments in obligations
issued or guaranteed by the United States Government or its agencies or
instrumentalities or repurchase agreements with respect thereto.
17. Mineral Leases. The Fund will not purchase oil, gas or other
mineral leases or exploration or development programs.
18. Senior Securities. The Fund will not issue or sell any senior
security as defined by the Investment Company Act of 1940 except insofar as any
borrowing that the Fund may engage in may be deemed to be an issuance of a
senior security.
19. Unseasoned Issuers. The Fund will not purchase securities of
unseasoned issuers, including their predecessors, which have been in operation
for less than three years if more than 5% of the value of the Fund's total
assets would be so committed.
THE LIMITATIONS APPLICABLE TO THE GLOBAL BOND FUND ARE:
1. Borrowing Money. The Fund will not borrow money, except as a
temporary measure for extraordinary or emergency purposes and then only in
amounts not in excess of 10% of the value of its total assets. While the Fund's
borrowings are in excess of 5% of its total assets, the Fund will not purchase
any additional portfolio securities. This investment limitation does not
preclude the Fund from entering into reverse repurchase transactions, provided
that the Fund has asset coverage of 300% for all borrowings of the Fund and
reverse repurchase commitments of the Fund pursuant to such transactions. The
Fund will not
- 30 -
<PAGE>
pledge, mortgage or hypothecate its assets (collateral arrangements with respect
to writing options and initial margin on futures contracts are not deemed to be
a pledge, mortgage or hypothecation of assets for purposes of this investment
limitation) except in connection with borrowings described in this investment
limitation.
2. Underwriting. The Fund will not act as underwriter of securities
issued by other persons, either directly or through a majority owned subsidiary.
This limitation is not applicable to the extent that, in connection with the
disposition of its portfolio securities (including restricted securities), the
Fund may be deemed an underwriter under certain federal securities laws.
3. Illiquid Investments. The Fund will not purchase securities for
which there are legal or contractual restrictions on resale or enter into a
repurchase agreement maturing in more than seven days if, as a result thereof,
more than 15% of the value of the Fund's net assets would be invested in such
securities.
4. Real Estate. The Fund will not purchase, hold or deal in real
estate, including real estate limited partnerships.
5. Commodities. The Fund will not purchase, hold or deal in commodities
or commodities futures contracts.
6. Loans. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities if the borrower agrees to maintain collateral
marked to market daily in an amount at least equal to the market value of the
loaned securities, or (b) by engaging in repurchase agreements. For purposes of
this limitation, the term "loans" shall not include the purchase of marketable
bonds, debentures, commercial paper, corporate notes or similar marketable
evidences of indebtedness which are part of an issue for the public.
7. Investing for Control. The Fund will not invest in companies for the
purpose of exercising control or management.
8. Other Investment Companies. The Fund will not invest more than 5% of
its total assets in the securities of any single investment company and will not
invest more than 10% of its total assets in securities of other investment
companies.
9. Margin Purchases. The Fund will not purchase any securities or
evidences of interest thereon on "margin," except that it may obtain such
short-term credit as may be necessary for the clearance of purchases and sales
or redemption of securities.
- 31 -
<PAGE>
10. Common Stocks. The Fund will not invest in common stocks.
11. Options. The Fund will not purchase or sell puts, calls, options,
futures or straddles except as described in its Prospectus and this Statement of
Additional Information.
12. Short Sales. The Fund will not sell any securities short.
13. When-Issued Purchases. The Fund will not make any commitment to
purchase securities on a when-issued or to-be- announced basis if more than 25%
of the Fund's net assets would be so committed.
14. Concentration. The Fund will not invest more than 25% of its total
assets in the securities of issuers in any particular industry; provided,
however, that there is no limitation with respect to investments in obligations
issued or guaranteed by the United States Government, its agencies or
instrumentalities or repurchase agreements with respect thereto.
15. Mineral Leases. The Fund will not purchase oil, gas or other
mineral leases or exploration or development programs.
16. Senior Securities. The Fund will not issue or sell any senior
security as defined by the Investment Company Act of 1940 except insofar as any
borrowing that the Fund may engage in may be deemed to be an issuance of a
senior security. This limitation is not applicable to arrangements with respect
to transactions involving forward foreign currency exchange contracts, options,
futures contracts and other similar permitted investments and techniques.
17. Unseasoned Issuers. The Fund will not purchase securities of
unseasoned issuers, including their predecessors, which have been in operation
for less than three years if more than 5% of the value of the Fund's total
assets would be so committed.
THE LIMITATIONS APPLICABLE TO THE MONEY MARKET FUND AND THE
INTERMEDIATE BOND FUND ARE:
1. Borrowing Money. Each Fund will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is asset coverage of
300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that, when made, such temporary borrowings are
in an amount not exceeding 5% of the Fund's total assets. Each Fund also will
not make any borrowing which would cause outstanding borrowings to exceed
one-third of the value of its total assets.
- 32 -
<PAGE>
2. Underwriting. Each Fund will not act as underwriter of securities
issued by other persons, either directly or through a majority owned subsidiary.
This limitation is not applicable to the extent that, in connection with the
disposition of its portfolio securities (including restricted securities), a
Fund may be deemed an underwriter under certain federal securities laws.
3. Real Estate. Each Fund will not purchase, hold or deal in real
estate.
4. Concentration. Each Fund will not invest more than 25% of its total
assets in the securities of issuers in any particular industry; provided,
however, that there is no limitation with respect to investments in obligations
issued or guaranteed by the United States Government or its agencies or
instrumentalities or repurchase agreements with respect thereto.
5. Commodities. Each Fund will not purchase, hold or deal in
commodities and will not invest in oil, gas or other mineral explorative or
development programs.
6. Loans. Each Fund will not make loans to other persons if, as a
result, more than one-third of the value of the Fund's total assets would be
subject to such loans. This limitation does not apply to (a) the purchase of a
portion of an issue of debt securities in accordance with a Fund's investment
objective, policies and limitations or (b) engaging in repurchase transactions.
7. Options. Each Fund will not engage in the purchase or sale of put or
call options.
8. Senior Securities. Each Fund will not issue or sell any senior
security as defined by the Investment Company Act of 1940 except insofar as any
borrowing that the Funds may engage in may be deemed to be an issuance of a
senior security.
THE FOLLOWING INVESTMENT LIMITATIONS OF THE MONEY MARKET FUND AND THE
INTERMEDIATE BOND FUND ARE NONFUNDAMENTAL AND MAY BE CHANGED WITHOUT SHAREHOLDER
APPROVAL.
1. Illiquid Investments. Each Fund will not purchase securities for
which there are legal or contractual restrictions on resale or enter into a
repurchase agreement maturing in more than seven days if, as a result thereof,
more than 15% of the value of the Intermediate Bond Fund's net assets or 10% of
the value of the Money Market Fund's net assets would be invested in such
securities.
- 33 -
<PAGE>
2. Other Investment Companies. Each Fund will not invest more than 5%
of its total assets in the securities of any investment company and will not
invest more than 10% of the value of its total assets in securities of other
investment companies.
3. Margin Purchases. Each Fund will not purchase securities or
evidences of interest thereon on "margin." This limitation is not applicable to
short-term credit obtained by a Fund for the clearance of purchases and sales or
redemption of securities.
4. Short Sales. Each Fund will not make short sales of securities,
unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short.
The Money Market Fund has adopted the following additional investment
limitation, which may not be changed without the affirmative vote of a majority
of the outstanding shares of the Fund. The Fund will not purchase the securities
of any issuer if such purchase at the time thereof would cause more than 5% of
the value of its total assets to be invested in the securities of such issuer
(the foregoing limitation does not apply to investments in government securities
as defined in the Investment Company Act of 1940).
With respect to the percentages adopted by the Trust as maximum
limitations on a Fund's investment policies and restrictions, an excess above
the fixed percentage (except for the percentage limitations relative to the
borrowing of money) will not be a violation of the policy or restriction unless
the excess results immediately and directly from the acquisition of any security
or the action taken.
The Trust has never pledged, mortgaged or hypothecated the assets of
any Fund, and the Trust presently intends to continue this policy. The Trust has
never acquired, nor does it presently intend to acquire, securities issued by
any other investment company or investment trust. The Institutional Government
Income Fund does not intend to invest in obligations issued by territories and
possessions of the United States, the District of Columbia and their respective
agencies and instrumentalities or repurchase agreements with respect thereto.
The Short Term Government Income Fund and the Intermediate Term Government
Income Fund will not purchase securities for which there are legal or
contractual restrictions on resale or enter into a repurchase agreement maturing
in more than seven days if, as a result thereof, more than 10% of the value of a
Fund's net assets would be invested in such securities. The statements of
intention in this paragraph reflect nonfundamental policies which may be changed
by the Board of Trustees without shareholder approval.
Although not a fundamental policy of the Adjustable Rate U.S.
Government Securities Fund, portfolio investments and transactions of the Fund
will be limited to those investments and
- 34 -
<PAGE>
transactions permissible for Federal credit unions pursuant to 12 U.S.C. Section
1757(7) and (8) and 12 CFR Part 703. If this policy is changed as to allow the
Fund to make portfolio investments and engage in transactions not permissible
for Federal credit unions, the Fund will so notify all Federal credit union
shareholders.
TRUSTEES AND OFFICERS
- ---------------------
The following is a list of the Trustees and executive officers of the
Trust and their compensation from the Trust and their aggregate compensation
from the Countrywide Investments complex of mutual funds (consisting of the
Trust, Countrywide Tax-Free Trust and Countrywide Strategic Trust) for the
fiscal year ended September 30, 1997. Each Trustee who is an "interested person"
of the Trust, as defined by the Investment Company Act of 1940, is indicated by
an asterisk. Each of the Trustees is also a Trustee of Countrywide Tax-Free
Trust and Countrywide Strategic Trust.
AGGREGATE
COMPENSATION
COMPENSATION FROM
POSITION FROM COUNTRYWIDE
NAME AGE HELD TRUST COMPLEX
- ---- --- -------- ------------ ---------
Donald L. Bodgon, MD 67 Trustee $ 1,583 $ 4,750
John R. Delfino 64 Trustee 1,333 4,000
+H. Jerome Lerner 59 Trustee 3,333 10,000
*Robert H. Leshner 58 President/Trustee 0 0
*Angelo R. Mozilo 59 Chairman/Trustee 0 0
+Oscar P. Robertson 59 Trustee 3,583 10,750
John F. Seymour, Jr. 60 Trustee 1,083 3,250
+Sebastiano Sterpa 68 Trustee 1,583 4,750
Robert G. Dorsey 40 Vice President 0 0
John F. Splain 41 Secretary 0 0
Mark J. Seger 35 Treasurer 0 0
* Mr. Leshner and Mr. Mozilo, as officers and directors of
Countrywide Investments, Inc., are each an "interested
person" of the Trust within the meaning of Section 2(a)(19)
of the Investment Company Act of 1940.
+ Member of Audit Committee.
The principal occupations of the Trustees and executive officers of the Trust
during the past five years are set forth below:
DONALD L. BOGDON, M.D., 1505 Wilson Terrace, Glendale, California is a
physician with Hematology Oncology Consultants and a Director of Verdugo VNA (a
hospice facility). Until 1996 he was President of Western Hematology/Oncology
and until 1993 he was Chairman of the Board of Glendale Memorial Hospital.
- 35 -
<PAGE>
JOHN R. DELFINO, 2029 Century Park East, Los Angeles, California is
President of Concorde Capital Corporation (an investment firm). Until 1993 he
was a director of Cypress Financial and Chairman of Rancho Santa Margarita,
mortgage banking firms.
H. JEROME LERNER, 7149 Knoll Road, Cincinnati, Ohio is a principal of
HJL Enterprises and is Chairman of Crane Electronics, Inc., a manufacturer of
electronic connectors.
ROBERT H. LESHNER, 312 Walnut Street, Cincinnati, Ohio is President and
a director of Countrywide Investments, Inc. (the investment adviser and
principal underwriter of the Trust) and Countrywide Financial Services, Inc.
(a financial services company and parent of Countrywide Investments, Inc. and
Countrywide Fund Services, Inc.). He is Vice Chairman and a director of
Countrywide Fund Services, Inc. (a registered transfer agent) and President and
a Trustee of Countrywide Tax-Free Trust and Countrywide Strategic Trust,
registered investment companies.
ANGELO R. MOZILO, 4500 Park Granada Boulevard, Calabasas, California is
Vice Chairman/Director and Executive Vice President of Countrywide Credit
Industries, Inc. (a holding company). He is a director of Countrywide Home
Loans, Inc. (a residential mortgage lender), CTC Foreclosure Services
Corporation (a foreclosure trustee) and LandSafe, Inc. (the parent company of
fifteen LandSafe entities which provide property appraisals, credit reporting
services, title insurance and/or closing services for residential mortgages),
each a subsidiary of Countrywide Credit Industries, Inc. He is Chairman and a
director of Countrywide Financial Services, Inc., Countrywide Investments, Inc.,
Countrywide Fund Services, Inc., Countrywide Servicing Exchange (a loan
servicing broker), Countrywide Capital Markets, Inc., (parent company of
Countrywide Securities Corporation and Countrywide Servicing Exchange) and
various LandSafe subsidiaries and is Chairman and Chief Executive Officer of
Countrywide Securities Corporation (a registered broker-dealer), each a
subsidiary of Countrywide Credit Industries, Inc. He is Chairman and a Trustee
of Countrywide Tax-Free Trust and Countrywide Strategic Trust. He is also Vice
Chairman of CWM Mortgage Holdings, Inc. (a publicly-held real estate investment
trust).
OSCAR P. ROBERTSON, 4293 Muhlhauser Road, Fairfield, Ohio is President
of Orchem Corp., a chemical specialties distributor, and Orpack Stone
Corporation, a corrugated box manufacturer.
JOHN F. SEYMOUR, JR., 46-393 Blackhawk Drive, Indian Wells, California
is Chief Executive Officer of the Southern California Housing Development Agency
and a consultant for Orange Coast Title Co. (a title insurance company). He is
also a director of
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<PAGE>
Irvine Apartment Communities (a real estate investment trust) and Inco Homes (a
home builder).
SEBASTIANO STERPA, 200 West Glenoaks Boulevard, Glendale, California is
Chairman of Sterpa Realty, Inc. and Chairman and a director of the California
Housing Finance Agency. He is also a director of Real Estate Business Services
and a director of the SunAmerica Mutual Funds.
ROBERT G. DORSEY, 312 Walnut Street, Cincinnati, Ohio is President and
Treasurer of Countrywide Fund Services, Inc., First Vice President - Finance and
Treasurer of Countrywide Financial Services, Inc. and Treasurer of Countrywide
Investments, Inc. He is also Vice President of Countrywide Investment Trust,
Countrywide Strategic Trust, Brundage, Story and Rose Investment Trust, Markman
MultiFund Trust, PRAGMA Investment Trust, Maplewood Investment Trust, a series
company, The Thermo Opportunity Fund, Inc., The Dean Family of Funds and The New
York State Opportunity Funds and Assistant Vice President of Williamsburg
Investment Trust, Schwartz Investment Trust, The Tuscarora Investment Trust, The
Gannett Welsh & Kotler Funds and Interactive Investments, all of which are
registered investment companies.
JOHN F. SPLAIN, 312 Walnut Street, Cincinnati, Ohio is Secretary and
General Counsel of Countrywide Investments, Inc. and Countrywide Financial
Services, Inc. and Vice President, Secretary and General Counsel of Countrywide
Fund Services, Inc. He is also Secretary of Countrywide Tax-Free Trust,
Countrywide Strategic Trust, Brundage, Story and Rose Investment Trust,
Williamsburg Investment Trust, Markman MultiFund Trust, The Tuscarora Investment
Trust, PRAGMA Investment Trust, Maplewood Investment Trust, a series company,
and The Thermo Opportunity Fund, Inc. and Assistant Secretary of Schwartz
Investment Trust, The Gannett Welsh & Kotler Funds, Interactive Investments, the
New York State Opportunity Funds and the Dean Family of Funds.
MARK J. SEGER, C.P.A., 312 Walnut Street, Cincinnati, Ohio is Chief
Operating Officer of Countrywide Fund Services, Inc. He is also Treasurer of
Countrywide Tax-Free Trust, Countrywide Strategic Trust, Brundage, Story and
Rose Investment Trust, Williamsburg Investment Trust, Markman MultiFund Trust,
PRAGMA Investment Trust, Maplewood Investment Trust, a series company, The
Thermo Opportunity Fund, Inc., the New York State Opportunity Funds and the Dean
Family of Funds and Assistant Treasurer of Schwartz Investment Trust, The
Tuscarora Investment Trust, The Gannett Welsh & Kotler Funds and Interactive
Investments.
Each Trustee, except for Messrs. Leshner and Mozilo, receives a
quarterly retainer of $1,500 and a fee of $1,500 for each Board meeting
attended. Such fee is split equally among the Trust, Countrywide Tax-Free Trust
and Countrywide Strategic Trust.
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<PAGE>
THE INVESTMENT ADVISER AND UNDERWRITER
- ---------------------------------------
Countrywide Investments, Inc. (the "Adviser"), formerly Midwest Group
Financial Services, Inc., is the Funds' investment manager. The Adviser is a
subsidiary of Countrywide Financial Services, Inc., which 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. Messrs. Mozilo and Leshner are deemed to be affiliates of the Adviser
by reason of their position as Chairman and President, respectively, of the
Adviser. Messrs. Mozilo and Leshner, by reason of such affiliation, may
directly or indirectly receive benefits from the advisory fees paid to the
Adviser.
Under the terms of the investment advisory agreements between the Trust
and the Adviser, the Adviser is responsible for the management of the Funds'
investments. The Short Term Government Income Fund, the Intermediate Term
Government Income Fund, the Adjustable Rate U.S. Government Securities Fund, the
Money Market Fund and the Intermediate Bond Fund each pay the Adviser a fee
computed and accrued daily and paid monthly at an annual rate of .5% of its
average daily net assets up to $50,000,000, .45% of such assets from $50,000,000
to $150,000,000, .4% of such assets from $150,000,000 to $250,000,000 and .375%
of such assets in excess of $250,000,000. The Institutional Government Income
Fund pays the Adviser a fee computed and accrued daily and paid monthly at an
annual rate of .2% of its average daily net assets. The Global Bond Fund pays
the Adviser a fee computed and accrued daily and paid monthly at an annual rate
of .7% of its average daily net assets up to $100,000,000 and .6% of such assets
in excess of $100,000,000. The total fees paid by a Fund during the first and
second halves of each fiscal year of the Trust may not exceed the semiannual
total of the daily fee accruals requested by the Adviser during the applicable
six month period.
For the fiscal years ended September 30, 1997, 1996 and 1995, the Short
Term Government Income Fund paid advisory fees of $476,697, $419,926 and
$407,097, respectively. For the fiscal years ended September 30, 1997, 1996 and
1995, the Intermediate Term Government Income Fund paid advisory fees of
$274,084, $289,680 and $294,316, respectively. For the fiscal years ended
September 30, 1997, 1996 and 1995, the Institutional Government Income Fund
accrued advisory fees of $100,101, $70,752 and $86,367, respectively; however,
the Adviser voluntarily waived $22,972, $32,783 and $8,500 of such fees for the
fiscal years ended September 30, 1997, 1996 and 1995, respectively, in order to
reduce the operating expenses of the Fund. For the fiscal years ended September
30, 1997, 1996 and 1995, the Adjustable Rate U.S. Government Securities Fund
accrued advisory fees of $79,473, $79,927 and $112,333, respectively; however,
the Adviser
- 38 -
<PAGE>
voluntarily waived all of its fees for the fiscal years ended September 30, 1997
and September 30, 1996 and voluntarily waived $103,298 of its fees for the
fiscal year ended September 30, 1995 in order to reduce the operating expenses
of the Fund. For the fiscal years ended September 30, 1997, 1996 and 1995, the
Global Bond Fund accrued advisory fees of $116,997, $137,065 and $41,518,
respectively; however, the Adviser voluntarily waived $16,782 of its fees and
reimbursed $20,811 of Class A expenses for the fiscal year ended September 30,
1997, voluntarily waived $6,473 of its fees and reimbursed the Fund for $16,631
of Class A expenses for the fiscal year ended September 30, 1996, and
voluntarily waived its entire advisory fee and reimbursed the Fund for $22,707
of common expenses and $6,493 of Class C expenses for the period ended September
30, 1995 in order to reduce the operating expenses of the Fund.
Prior to August 29, 1997, the investment adviser of the Predecessor
Money Market Fund and the Predecessor Intermediate Bond Fund was Trans Financial
Bank, N.A. (the "Predecessor Adviser"). For the fiscal periods ended August 31,
1997 and 1996, the Predecessor Money Market Fund accrued advisory fees of
$188,896 and $99,711, respectively; however, the Predecessor Adviser voluntarily
waived $130,362 of such fees during the fiscal year ended August 31, 1997 and
voluntarily waived its entire advisory fee and reimbursed the Predecessor Fund
for $68,443 of expenses during the fiscal period ended August 31, 1996. For the
fiscal periods ended August 31, 1997 and 1996, the Predecessor Intermediate Bond
Fund accrued advisory fees of $60,906 and $38,478, respectively; however, the
Predecessor Adviser waived its entire advisory fee and reimbursed the
Predecessor Fund for $43,624 of expenses during the fiscal year ended August 31,
1997 and waived its entire advisory fee and reimbursed the Predecessor Fund for
$91,826 of expenses during the fiscal period ended August 31, 1996.
The Funds are responsible for the payment of all expenses incurred in
connection with the organization, registration of shares and operations of the
Funds, including such extraordinary or non-recurring expenses as may arise, such
as litigation to which the Trust may be a party. The Funds may have an
obligation to indemnify the Trust's officers and Trustees with respect to such
litigation, except in instances of willful misfeasance, bad faith, gross
negligence or reckless disregard by such officers and Trustees in the
performance of their duties. The Adviser bears promotional expenses in
connection with the distribution of the Funds' shares to the extent that such
expenses are not assumed by the Funds under their plans of distribution (see
below). The compensation and expenses of any officer, Trustee or employee of the
Trust who is an officer, director or employee of the Adviser are paid by the
Adviser.
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<PAGE>
By their terms, the Funds' investment advisory agreements remain in
force until February 28, 1999 and from year to year thereafter, subject to
annual approval by (a) the Board of Trustees or (b) a vote of the majority of a
Fund's outstanding voting securities; provided that in either event continuance
is also approved by a majority of the Trustees who are not interested persons of
the Trust, by a vote cast in person at a meeting called for the purpose of
voting such approval. The Funds' investment advisory agreements may be
terminated at any time, on sixty days' written notice, without the payment of
any penalty, by the Board of Trustees, by a vote of the majority of a Fund's
outstanding voting securities, or by the Adviser. The investment advisory
agreements automatically terminate in the event of their assignment, as defined
by the Investment Company Act of 1940 and the rules thereunder.
The Adviser is also the principal underwriter of the Funds and, as
such, the exclusive agent for distribution of shares of the Funds. The Adviser
is obligated to sell the shares on a best efforts basis only against purchase
orders for the shares. Shares of each Fund are offered to the public on a
continuous basis.
The Adviser currently allows concessions to dealers who sell shares of
the Intermediate Term Government Income Fund, the Adjustable Rate U.S.
Government Securities Fund, the Global Bond Fund and the Intermediate Bond Fund.
The Adviser retains the entire sales load on all direct initial investments in
the Funds and on all investments in accounts with no designated dealer of
record. For the fiscal year ended September 30, 1997, the aggregate commissions
on sales of the Trust's shares were $46,520, of which the Adviser paid $39,361
to unaffiliated broker-dealers in the selling network, earned $3,918 as a
broker-dealer in the selling network and retained $3,241 in underwriting
commissions. For the fiscal year ended September 30, 1996, the aggregate
commissions on sales of the Trust's shares were $72,287, of which the Adviser
paid $63,235 to unaffiliated broker-dealers in the selling network, earned
$3,313 as a broker-dealer in the selling network and retained $5,739 in
underwriting commissions. For the fiscal year ended September 30, 1995, the
aggregate commissions on sales of the Trust's shares were $141,293, of which the
Adviser paid $130,182 to unaffiliated broker-dealers in the selling network,
earned $5,053 as a broker-dealer in the selling network and retained $6,058 in
underwriting commissions.
The Adviser retains the contingent deferred sales load on redemptions
of shares of the Global Bond Fund which are subject to a contingent deferred
sales load. For the fiscal years ended September 30, 1997 and 1996, the Adviser
retained $1,340 and $5,973, respectively, of contingent deferred sales loads on
redemptions of Class C shares of the Global Bond Fund.
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<PAGE>
The Funds may compensate dealers, including the Adviser and its
affiliates, based on the average balance of all accounts in the Funds for which
the dealer is designated as the party responsible for the account. See
"Distribution Plans below."
ROGGE GLOBAL PARTNERS PLC. Rogge Global Partners plc ("Rogge") has been
retained by the Adviser to serve as the discretionary portfolio adviser of the
Global Bond Fund. Rogge selects the portfolio securities for investment by the
Fund, purchases and sells securities of the Fund and places orders for the
execution of such portfolio transactions, subject to the general supervision of
the Board of Trustees and the Adviser. Rogge receives a fee equal to the annual
rate of .35% of the Fund's average daily net assets up to and including
$100,000,000 and .3% of such assets in excess of $100,000,000. The services
provided by Rogge are paid for wholly by the Adviser. The compensation of any
officer, director or employee of Rogge who is rendering services to the Fund is
paid by Rogge. For the fiscal years ended September 30, 1997, 1996 and 1995, the
Adviser paid to Rogge advisory fees of $50,107, $68,532 and $18,413,
respectively.
DISTRIBUTION PLANS
- ------------------
CLASS A PLAN -- As stated in the Prospectus, the Funds have adopted a
plan of distribution (the "Class A Plan") pursuant to Rule 12b-1 under the
Investment Company Act of 1940 which permits each Fund to pay for expenses
incurred in the distribution and promotion of the Funds' shares, including but
not limited to, the printing of prospectuses, statements of additional
information and reports used for sales purposes, advertisements, expenses of
preparation and printing of sales literature, promotion, marketing and sales
expenses, and other distribution-related expenses, including any distribution
fees paid to securities dealers or other firms who have executed a distribution
or service agreement with the Adviser. The Class A Plan expressly limits payment
of the distribution expenses listed above in any fiscal year to a maximum of
.35% of the average daily net assets of the Short Term Government Income Fund,
the Intermediate Term Government Income Fund, the Adjustable Rate U.S.
Government Securities Fund, the Money Market Fund and the Intermediate Bond Fund
and .35% of the average daily net assets of the Class A shares of the Global
Bond Fund and .10% of the average daily net assets of the Institutional
Government Income Fund. Unreimbursed expenses will not be carried over from year
to year.
For the fiscal year ended September 30, 1997, the aggregate
distribution-related expenditures of the Short Term Government Income Fund
("STF"), the Intermediate Term Government Income Fund ("ITF"), the Institutional
Government Income Fund ("IGF"), the Adjustable Rate U.S. Government Securities
Fund ("ARM") and the Global Bond Fund ("GBF") under the Class A Plan were
$127,253,
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<PAGE>
$85,546, $3,392, $12,507 and $2,894, respectively. Amounts were spent as
follows:
STF ITF IGF ARM GBF
Printing and mailing
of prospectuses and
reports to prospective
shareholders......... $ 5,253 $ 2,847 $3,392 $ 5,566 $2,894
Payments to broker-
dealers and others
for the sale or
retention of assets... 122,000 81,072 -- 6,941 --
Advertising and
promotion............. -- 1,627 -- -- --
$127,253 $85,546 $3,392 $12,507 $2,894
======== ======= ====== ======= ======
CLASS C PLAN -- The Global Bond Fund has also adopted a plan of
distribution (the "Class C Plan") with respect to the Class C shares of such
Fund. The Class C Plan provides for two categories of payments. First, the Class
C Plan provides for the payment to the Adviser of an account maintenance fee, in
an amount equal to an annual rate of .25% of the average daily net assets of the
Class C shares, which may be paid to other dealers based on the average value of
Class C shares owned by clients of such dealers. In addition, the Fund may pay
up to an additional .75% per annum of the daily net assets of the Class C shares
for expenses incurred in the distribution and promotion of the shares, including
prospectus costs for prospective shareholders, costs of responding to
prospective shareholder inquiries, payments to brokers and dealers for selling
and assisting in the distribution of Class C shares, costs of advertising and
promotion and any other expenses related to the distribution of the Class C
shares. Unreimbursed expenditures will not be carried over from year to year.
The Fund may make payments to dealers and other persons in an amount up to .75%
per annum of the average value of Class C shares owned by their clients, in
addition to the .25% account maintenance fee described above.
For the fiscal year ended September 30, 1997, the aggregate
distribution-related expenditures of the Global Bond Fund under the Class C Plan
were $22,348, of which $20,811 was spent on payments to broker-dealers and
$1,537 was spent on printing and mailing of prospectuses and reports to
prospective shareholders.
GENERAL INFORMATION -- Agreements implementing the Plans (the
"Implementation Agreements"), including agreements with dealers wherein such
dealers agree for a fee to act as agents for the sale of the Funds' shares, are
in writing and have been approved by the Board of Trustees. All payments made
pursuant to the Plans are made in accordance with written agreements.
The continuance of the Plans and the Implementation Agreements must be
specifically approved at least annually by a
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<PAGE>
vote of the Trust's Board of Trustees and by a vote of the Trustees who are not
interested persons of the Trust and have no direct or indirect financial
interest in the Plans or any Implementation Agreement (the "Independent
Trustees") at a meeting called for the purpose of voting on such continuance. A
Plan may be terminated at any time by a vote of a majority of the Independent
Trustees or by a vote of the holders of a majority of the outstanding shares of
a Fund or the applicable class of a Fund. In the event a Plan is terminated in
accordance with its terms, the affected Fund (or class) will not be required to
make any payments for expenses incurred by the Adviser after the termination
date. Each Implementation Agreement terminates automatically in the event of its
assignment and may be terminated at any time by a vote of a majority of the
Independent Trustees or by a vote of the holders of a majority of the
outstanding shares of a Fund (or the applicable class) on not more than 60 days'
written notice to any other party to the Implementation Agreement. The Plans may
not be amended to increase materially the amount to be spent for distribution
without shareholder approval. All material amendments to the Plans must be
approved by a vote of the Trust's Board of Trustees and by a vote of the
Independent Trustees.
In approving the Plans, the Trustees determined, in the exercise of
their business judgment and in light of their fiduciary duties as Trustees, that
there is a reasonable likelihood that the Plans will benefit the Funds and their
shareholders. The Board of Trustees believes that expenditure of the Funds'
assets for distribution expenses under the Plans should assist in the growth of
the Funds which will benefit the Funds and their shareholders through increased
economies of scale, greater investment flexibility, greater portfolio
diversification and less chance of disruption of planned investment strategies.
The Plans will be renewed only if the Trustees make a similar determination for
each subsequent year of the Plans. There can be no assurance that the benefits
anticipated from the expenditure of the Funds' assets for distribution will be
realized. While the Plans are in effect, all amounts spent by the Funds pursuant
to the Plans and the purposes for which such expenditures were made must be
reported quarterly to the Board of Trustees for its review. Distribution
expenses attributable to the sale of more than one class of shares of a Fund
will be allocated at least annually to each class of shares based upon the ratio
in which the sales of each class of shares bears to the sales of all the shares
of such Fund. In addition, the selection and nomination of those Trustees who
are not interested persons of the Trust are committed to the discretion of the
Independent Trustees during such period.
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<PAGE>
Angelo R. Mozilo and Robert H. Leshner, as interested persons of the
Trust, may be deemed to have a financial interest in the operation of the Plans
and the Implementation Agreements.
SECURITIES TRANSACTIONS
- ------------------------
Decisions to buy and sell securities for the Funds and the placing of
the Funds' securities transactions and negotiation of commission rates where
applicable are made by the Adviser (or Rogge, with respect to the Global Bond
Fund) and are subject to review by the Board of Trustees of the Trust. In the
purchase and sale of portfolio securities, the Adviser (or Rogge) seeks best
execution for the Funds, taking into account such factors as price (including
the applicable brokerage commission or dealer spread), the execution capability,
financial responsibility and responsiveness of the broker or dealer and the
brokerage and research services provided by the broker or dealer. The Adviser
(or Rogge) generally seeks favorable prices and commission rates that are
reasonable in relation to the benefits received.
Generally, the Funds attempt to deal directly with the dealers who make
a market in the securities involved unless better prices and execution are
available elsewhere. Such dealers usually act as principals for their own
account. On occasion, portfolio securities for the Funds may be purchased
directly from the issuer. Because the portfolio securities of the Funds are
generally traded on a net basis and transactions in such securities do not
normally involve brokerage commissions, the cost of portfolio securities
transactions of the Funds will consist primarily of dealer or underwriter
spreads. No brokerage commissions were paid by the Funds during the last three
fiscal years.
The Adviser (or Rogge, with respect to the Global Bond Fund) is
specifically authorized to select brokers who also provide brokerage and
research services to the Funds and/or other accounts over which the Adviser (or
Rogge) exercises investment discretion and to pay such brokers a commission in
excess of the commission another broker would charge if it is determined in good
faith that the commission is reasonable in relation to the value of the
brokerage and research services provided. The determination may be viewed in
terms of a particular transaction or the Adviser's (or Rogge's) overall
responsibilities with respect to the Funds and to accounts over which it
exercises investment discretion.
Research services include securities and economic analyses, reports on
issuers' financial conditions and future business prospects, newsletters and
opinions relating to interest trends, general advice on the relative merits of
possible investment securities for the Funds and statistical services and
information with respect to the availability of securities or purchasers or
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<PAGE>
sellers of securities. Although this information is useful to the Funds, the
Adviser and Rogge, it is not possible to place a dollar value on it. Research
services furnished by brokers through whom the Funds effect securities
transactions may be used by the Adviser (or Rogge) in servicing all of its
accounts and not all such services may be used in connection with the Funds.
The Funds have no obligation to deal with any broker or dealer in the
execution of securities transactions. However, the Adviser and other affiliates
of the Trust or the Adviser may effect securities transactions which are
executed on a national securities exchange or transactions in the
over-the-counter market conducted on an agency basis. No Fund will effect any
brokerage transactions in its portfolio securities with the Adviser if such
transactions would be unfair or unreasonable to its shareholders.
Over-the-counter transactions will be placed either directly with principal
market makers or with broker-dealers. Although the Funds do not anticipate any
ongoing arrangements with other brokerage firms, brokerage business may be
transacted from time to time with other firms. Neither the Adviser nor
affiliates of the Trust or the Adviser will receive reciprocal brokerage
business as a result of the brokerage business transacted by the Funds with
other brokers.
During the fiscal year ended September 30, 1997, the Funds entered into
repurchase transactions with the following entities who may be deemed to be
regular broker-dealers of the Trust as defined under the Investment Company Act
of 1940: BT Alex. Brown Incorporated, Daiwa Securities America Inc., Dean Witter
Reynolds Inc., Fuji Securities Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Nesbitt-Burns Securities Inc., Prudential Securities Incorporated
and Zions First National Bank Capital Markets.
CODE OF ETHICS. The Trust and the Adviser have each adopted a Code of Ethics
under Rule 17j-1 of the Investment Company Act of 1940. The Code significantly
restricts the personal investing activities of all employees of the Adviser and,
as described below, imposes additional, more onerous, restrictions on investment
personnel of the Adviser. The Code requires that all employees of the Adviser
preclear any personal securities investment (with limited exceptions, such as
U.S. Government obligations). The preclearance requirement and associated
procedures are designed to identify any substantive prohibition or limitation
applicable to the proposed investment. In addition, no employee may purchase or
sell any security which at the time is being purchased or sold (as the case may
be), or to the knowledge of the employee is being considered for purchase or
sale, by any Fund. The substantive restrictions applicable to investment
personnel of the Adviser include a ban on acquiring any securities in an initial
public offering and a prohibition from profiting on short-term trading in
securities. Furthermore, the Code provides for trading "blackout periods" which
prohibit trading by investment personnel of the Adviser within periods of
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<PAGE>
trading by the Funds in the same (or equivalent) security.
PORTFOLIO TURNOVER
- ------------------
The Adviser intends to hold the portfolio securities of the Short Term
Government Income Fund, the Institutional Government Income Fund and the Money
Market Fund to maturity and to limit portfolio turnover to the extent possible.
Nevertheless, changes in a Fund's portfolio will be made promptly when
determined to be advisable by reason of developments not foreseen at the time of
the original investment decision, and usually without reference to the length of
time a security has been held.
The Intermediate Term Government Income Fund, the Adjustable Rate U.S.
Government Securities Fund, the Global Bond Fund and the Intermediate Bond Fund
do not intend to purchase securities for short term trading; however, a security
may be sold in anticipation of a market decline, or purchased in anticipation of
a market rise and later sold. Securities will be purchased and sold in response
to the Adviser's (or Rogge's) evaluation of an issuer's ability to meet its debt
obligations in the future. A security may be sold and another purchased when, in
the opinion of the Adviser (or Rogge), a favorable yield spread exists between
specific issues or different market sectors.
A Fund's portfolio turnover rate is calculated by dividing the lesser
of purchases or sales of portfolio securities for the fiscal year by the monthly
average of the value of the portfolio securities owned by the Fund during the
fiscal year. High portfolio turnover involves correspondingly greater brokerage
commissions and other transaction costs, which will be borne directly by the
Funds. A 100% turnover rate would occur if all of a Fund's portfolio securities
were replaced once within a one year period.
CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE
- -----------------------------------------------------
The share price (net asset value) of the shares of the Short Term
Government Income Fund, the Institutional Government Income Fund and the Money
Market Fund is determined as of 12:30 p.m. and 4:00 p.m., Eastern time, on each
day the Trust is open for business. The share price (net asset value) and the
public offering price (net asset value plus applicable sales load) of the shares
of the Intermediate Term Government Income Fund, the Adjustable Rate U.S.
Government Securities Fund, the Global Bond Fund and the Intermediate Bond Fund
are determined as of the close of the regular session of trading on the New York
Stock Exchange (currently 4:00 p.m., Eastern time), on each day the Trust is
open for business. The Trust is open for business on every day except Saturdays,
Sundays and the following holidays: New Year's Day, Martin Luther King Jr. Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving
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<PAGE>
and Christmas. The Trust may also be open for business on other days in which
there is sufficient trading in any Fund's portfolio securities that its net
asset value might be materially affected. The Global Bond Fund's net asset value
may be materially affected on a day when the Trust is not open for business
because trading in foreign exchanges may take place at times other than the
times trading occurs on the New York Stock Exchange. In addition, foreign
exchange trading may not take place on each day the Trust is open for business.
For a description of the methods used to determine the share price and the
public offering price, see "Calculation of Share Price and Public Offering
Price" in the Prospectus.
Pursuant to Rule 2a-7 promulgated under the Investment Company Act of
1940, the Short Term Government Income Fund, the Institutional Government Income
Fund and the Money Market Fund each value their portfolio securities on an
amortized cost basis. The use of the amortized cost method of valuation involves
valuing an instrument at its cost and, thereafter, assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. Under the
amortized cost method of valuation, neither the amount of daily income nor the
net asset value of the Short Term Government Income Fund, the Institutional
Government Income Fund or the Money Market Fund is affected by any unrealized
appreciation or depreciation of the portfolio. The Board of Trustees has
determined in good faith that utilization of amortized cost is appropriate and
represents the fair value of the portfolio securities of the Short Term
Government Income Fund, the Institutional Government Income Fund and the Money
Market Fund.
Pursuant to Rule 2a-7, the Short Term Government Income Fund, the
Institutional Government Income Fund and the Money Market Fund each maintain a
dollar-weighted average portfolio maturity of 90 days or less, purchase only
securities having remaining maturities of thirteen months or less and invest
only in United States dollar-denominated securities determined by the Board of
Trustees to be of high quality and to present minimal credit risks. If a
security ceases to be an eligible security, or if the Board of Trustees believes
such security no longer presents minimal credit risks, the Trustees will cause
the Fund to dispose of the security as soon as possible. The maturity of U.S.
Government obligations which have a variable rate of interest readjusted no less
frequently than annually will be deemed to be the period of time remaining until
the next readjustment of the interest rate.
The Board of Trustees has established procedures designed to stabilize,
to the extent reasonably possible, the price per share of the Short Term
Government Income Fund, the Institutional Government Income Fund and the Money
Market Fund as computed for
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<PAGE>
the purpose of sales and redemptions at $1 per share. The procedures include
review of each Fund's portfolio holdings by the Board of Trustees to determine
whether a Fund's net asset value calculated by using available market quotations
deviates more than one-half of one percent from $1 per share and, if so, whether
such deviation may result in material dilution or is otherwise unfair to
existing shareholders. In the event the Board of Trustees determines that such a
deviation exists, it will take corrective action as it regards necessary and
appropriate, including the sale of portfolio securities prior to maturity to
realize capital gains or losses or to shorten average portfolio maturities;
withholding dividends; redemptions of shares in kind; or establishing a net
asset value per share by using available market quotations. The Board of
Trustees has also established procedures designed to ensure that each Fund
complies with the quality requirements of Rule 2a-7.
While the amortized cost method provides certainty in valuation, it may
result in periods during which the value of an instrument, as determined by
amortized cost, is higher or lower than the price the Short Term Government
Income Fund, the Institutional Government Income Fund or the Money Market Fund
would receive if it sold the instrument. During periods of declining interest
rates, the daily yield on shares of each Fund may tend to be higher than a like
computation made by a fund with identical investments utilizing a method of
valuation based upon market prices and estimates of market prices for all of its
portfolio securities. Thus, if the use of amortized cost by a Fund resulted in a
lower aggregate portfolio value on a particular day, a prospective investor in
the Fund would be able to obtain a somewhat higher yield than would result from
investment in a fund utilizing solely market values and existing investors would
receive less investment income. The converse would apply in a period of rising
interest rates.
Portfolio securities held by the Intermediate Term Government Income
Fund, the Adjustable Rate U.S. Government Securities Fund, the Global Bond Fund
or the Intermediate Bond Fund for which market quotations are readily available
are generally valued at their most recent bid prices as obtained from one or
more of the major market makers for such securities. However, certain foreign
fixed-income securities are valued at the last quoted sale price. Securities
(and other assets) for which market quotations are not readily available are
valued at their fair value as determined in good faith in accordance with
consistently applied procedures established by and under the general supervision
of the Board of Trustees.
The value of non-dollar denominated portfolio instruments held by the
Global Bond Fund will be determined by converting all assets and liabilities
initially expressed in foreign currency values into U.S. dollar values at the
mean between the bid and offered quotations of such currencies against U.S.
dollars as
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<PAGE>
last quoted by any recognized dealer. If such quotations are not available, the
rate of exchange will be determined in accordance with policies established in
good faith by the Board of Trustees. Gains or losses between trade and
settlement dates resulting from changes in exchange rates between the U.S.
dollar and a foreign currency are borne by the Fund. To protect against such
losses, the Fund may enter into forward foreign currency exchange contracts,
which will also have the effect of limiting any such gains.
OTHER PURCHASE INFORMATION
- ---------------------------
The Prospectus describes generally how to purchase shares of the Funds.
Additional information with respect to certain types of purchases of shares of
the Intermediate Term Government Income Fund, the Adjustable Rate U.S.
Government Securities Fund and the Intermediate Bond Fund and Class A shares of
the Global Bond Fund is set forth below.
RIGHT OF ACCUMULATION. A "purchaser" (as defined in the Prospectus) of
shares of the Intermediate Term Government Income Fund, the Adjustable Rate U.S.
Government Securities Fund, the Intermediate Bond Fund and Class A shares of the
Global Bond Fund has the right to combine the cost or current net asset value
(whichever is higher) of his existing shares of the load funds distributed by
the Adviser with the amount of his current purchases in order to take advantage
of the reduced sales loads set forth in the tables in the Prospectus. The
purchaser or his dealer must notify the Transfer Agent that an investment
qualifies for a reduced sales load. The reduced load will be granted upon
confirmation of the purchaser's holdings by the Transfer Agent.
LETTER OF INTENT. The reduced sales loads set forth in the tables in
the Prospectus may also be available to any "purchaser" (as defined in the
Prospectus) of shares of the Intermediate Term Government Income Fund, the
Adjustable Rate U.S. Government Securities Fund, the Intermediate Bond Fund and
Class A shares of the Global Bond Fund who submits a Letter of Intent to the
Transfer Agent. The Letter must state an intention to invest within a thirteen
month period in any load fund distributed by the Adviser a specified amount
which, if made at one time, would qualify for a reduced sales load. A Letter of
Intent may be submitted with a purchase at the beginning of the thirteen month
period or within ninety days of the first purchase under the Letter of Intent.
Upon acceptance of this Letter, the purchaser becomes eligible for the reduced
sales load applicable to the level of investment covered by such Letter of
Intent as if the entire amount were invested in a single transaction.
The Letter of Intent is not a binding obligation on the purchaser to
purchase, or the Trust to sell, the full amount
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<PAGE>
indicated. During the term of a Letter of Intent, shares representing 5% of the
intended purchase will be held in escrow. These shares will be released upon the
completion of the intended investment. If the Letter of Intent is not completed
during the thirteen month period, the applicable sales load will be adjusted by
the redemption of sufficient shares held in escrow, depending upon the amount
actually purchased during the period. The minimum initial investment under a
Letter of Intent is $10,000.
A ninety-day backdating period can be used to include earlier purchases
at the purchaser's cost (without a retroactive downward adjustment of the sales
charge). The thirteen month period would then begin on the date of the first
purchase during the ninety-day period. No retroactive adjustment will be made if
purchases exceed the amount indicated in the Letter of Intent. The purchaser or
his dealer must notify the Transfer Agent that an investment is being made
pursuant to an executed Letter of Intent.
OTHER INFORMATION. The Trust does not impose a front-end sales load or
imposes a reduced sales load in connection with purchases of shares of the
Intermediate Term Government Income Fund, the Adjustable Rate U.S. Government
Securities Fund, the Intermediate Bond Fund and Class A shares of the Global
Bond Fund made under the reinvestment privilege or the purchases described in
the "Reduced Sales Load," "Purchases at Net Asset Value" or "Exchange Privilege"
sections in the Prospectus because such purchases require minimal sales effort
by the Adviser. Purchases described in the "Purchases at Net Asset Value"
section may be made for investment only, and the shares may not be resold except
through redemption by or on behalf of the Trust.
TAXES
- -----
The Prospectus describes generally the tax treatment of distributions
by the Funds. This section of the Statement of Additional Information includes
additional information concerning federal taxes.
Each Fund has qualified and intends to qualify annually for the special
tax treatment afforded a "regulated investment company" under Subchapter M of
the Internal Revenue Code so that it does not pay federal taxes on income and
capital gains distributed to shareholders. To so qualify a Fund must, among
other things, (i) derive at least 90% of its gross income in each taxable year
from dividends, interest, payments with respect to securities loans, gains from
the sale or other disposition of stock, securities or foreign currency, or
certain other income (including but not limited to gains from options, futures
and forward contracts) derived with respect to its business of investing in
stock, securities or currencies; and (ii) diversify its holdings so that at the
end of each quarter of its taxable year the following two conditions are met:
(a) at least 50% of the value of the Fund's total assets is represented by cash,
U.S. Government securities, securities of other regulated investment
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<PAGE>
companies and other securities (for this purpose such other securities will
qualify only if the Fund's investment is limited in respect to any issuer to an
amount not greater than 5% of the Fund's assets and 10% of the outstanding
voting securities of such issuer) and (b) not more than 25% of the value of the
Fund's assets is invested in securities of any one issuer (other than U.S.
Government securities or securities of other regulated investment companies).
A Fund's net realized capital gains from securities transactions will
be distributed only after reducing such gains by the amount of any available
capital loss carryforwards. As of September 30, 1997, the Intermediate Term
Government Income Fund, the Institutional Government Income Fund, the Adjustable
Rate U.S. Government Securities Fund, the Global Bond Fund, the Money Market
Fund and the Intermediate Bond Fund had capital loss carryforwards for federal
income tax purposes of $2,736,367, $21,764, $1,250,655, $13,469, $3,760 and
$8,636, respectively. In addition, the Intermediate Term Government Income Fund
elected to defer until its September 30, 1998 tax year $165,218 of capital
losses incurred after October 31, 1996. These capital loss carryforwards and
"post-October" losses may be carried forward to offset any capital gains for
eight years, after which any undeducted capital loss remaining is lost as a
deduction.
Investments by the Global Bond Fund in certain options, futures
contracts and options on futures contracts are "section 1256 contracts." Any
gains or losses on section 1256 contracts are generally considered 60% long-term
and 40% short-term capital gains or losses ("60/40"). Section 1256 contracts
held by the Fund at the end of each taxable year are treated for federal income
tax purposes as being sold on such date for their fair market value. The
resultant paper gains or losses are also treated as 60/40 gains or losses. When
the section 1256 contract is subsequently disposed of, the actual gain or loss
will be adjusted by the amount of any preceding year-end gain or loss.
Foreign currency gains or losses on non-U.S. dollar denominated bonds
and other similar debt instruments and on any non-U.S. dollar denominated
futures contracts, options and forward contracts that are not section 1256
contracts generally will be treated as ordinary income or loss.
Certain hedging transactions undertaken by the Global Bond Fund may
result in "straddles" for federal income tax purposes. The straddle rules may
affect the character of gains (or losses) realized by the Fund. In addition,
losses realized by the Fund on positions that are part of a straddle may be
deferred, rather than being taken into account in calculating taxable income for
the taxable year in which such losses are realized. Because only a few
regulations implementing the straddle rules have been promulgated, the tax
consequences of hedging transactions to the
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<PAGE>
Fund are not entirely clear. The hedging transactions may increase the amount of
short-term capital gains realized by the Fund which is taxed as ordinary income
when distributed to shareholders. The Fund may make one or more of the elections
available under the Internal Revenue Code of 1986, which are applicable to
straddles. If the Fund makes any of the elections, the amount, character and
timing of the recognition of gains or losses from the affected straddle
positions will be determined under rules that vary according to the elections
made. The rules applicable under certain of the elections operate to accelerate
the recognition of gains or losses from the affected straddle positions. Because
application of the straddle rules may affect the character of gains or losses,
defer losses and/or accelerate the recognition of gains or losses from the
affected straddle positions, the amount which must be distributed to
shareholders, and which will be taxed to shareholders as ordinary income or
long-term capital gains in any year, may be increased or decreased substantially
as compared to a fund that did not engage in such hedging transactions.
The Global Bond Fund may be subject to a tax on interest income
received from securities of a non-U.S. issuer withheld by a foreign country at
the source. The United States has entered into tax treaties with many foreign
countries which entitle the Fund to a reduced rate of tax or exemption from tax
on such income. It is impossible to determine the effective rate of foreign tax
in advance since the amount of the Fund's assets to be invested within various
countries is not known.
A federal excise tax at the rate of 4% will be imposed on the excess,
if any, of a Fund's "required distribution" over actual distributions in any
calendar year. Generally, the "required distribution" is 98% of a Fund's
ordinary income for the calendar year plus 98% of its net capital gains
recognized during the one year period ending on October 31 of the calendar year
plus undistributed amounts from prior years. The Funds intend to make
distributions sufficient to avoid imposition of the excise tax.
The Trust is required to withhold and remit to the U.S. Treasury a
portion (31%) of dividend income on any account unless the shareholder provides
a taxpayer identification number and certifies that such number is correct and
that the shareholder is not subject to backup withholding.
REDEMPTION IN KIND
- -------------------
Under unusual circumstances, when the Board of Trustees deems it in the
best interests of a Fund's shareholders, the Fund may make payment for shares
repurchased or redeemed in whole or in part in securities of the Fund taken at
current value. If any such redemption in kind is to be made, each Fund intends
to make
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<PAGE>
an election pursuant to Rule 18f-1 under the Investment Company Act of 1940.
This election will require the Funds to redeem shares solely in cash up to the
lesser of $250,000 or 1% of the net asset value of each Fund during any 90 day
period for any one shareholder. Should payment be made in securities, the
redeeming shareholder will generally incur brokerage costs in converting such
securities to cash. Portfolio securities which are issued in an in-kind
redemption will be readily marketable.
HISTORICAL PERFORMANCE INFORMATION
- ----------------------------------
Yield quotations on investments in the Short Term Government Income
Fund, the Institutional Government Income Fund and the Money Market Fund are
provided on both a current and an effective (compounded) basis. Current yields
are calculated by determining the net change in the value of a hypothetical
account for a seven calendar day period (base period) with a beginning balance
of one share, dividing by the value of the account at the beginning of the base
period to obtain the base period return, multiplying the result by (365/7) and
carrying the resulting yield figure to the nearest hundredth of one percent.
Effective yields reflect daily compounding and are calculated as follows:
Effective yield = (base period return + 1)365/7 -1. For purposes of these
calculations, no effect is given to realized or unrealized gains or losses (the
Short Term Government Income Fund, the Institutional Government Income Fund and
the Money Market Fund do not normally recognize unrealized gains and losses
under the amortized cost valuation method). The Short Term Government Income
Fund's current and effective yields for the seven days ended September 30, 1997
were 4.66% and 4.77%, respectively. The Institutional Government Income Fund's
current and effective yields for the seven days ended September 30, 1997 were
5.22% and 5.36%, respectively. The Money Market Fund's current and effective
yields for the seven days ended September 30, 1997 were 5.01% and 5.14%,
respectively.
From time to time, the Intermediate Term Government Income Fund, the
Adjustable Rate U.S. Government Securities Fund, the Global Bond Fund and the
Intermediate Bond Fund may advertise average annual total return. Average annual
total return quotations will be computed by finding the average annual
compounded rates of return over 1, 5 and 10 year periods that would equate the
initial amount invested to the ending redeemable value, according to the
following formula:
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<PAGE>
P (1 + T)n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV= ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the 1, 5 and 10 year periods at the end of the 1,
5 or 10 year periods (or fractional portion thereof)
The calculation of average annual total return assumes the reinvestment of all
dividends and distributions. The calculation also assumes the deduction of the
current maximum sales load from the initial $1,000 payment and the deduction of
the current maximum contingent deferred sales load, at the times, in the
amounts, and under the terms disclosed in the Prospectus. If a Fund (or class)
has been in existence less than one, five or ten years, the time period since
the date of the initial public offering of shares will be substituted for the
periods stated. The average annual total returns of the Intermediate Term
Government Income Fund, the Adjustable Rate U.S. Government Securities Fund, the
Global Bond Fund and the Intermediate Bond Fund for the periods ended September
30, 1997 are as follows:
Intermediate Term Government Income Fund
1 Year 5.59%
5 Years 4.79%
10 Years 7.27%
Adjustable Rate U.S. Government Securities Fund
1 Year 4.21%
Since Inception (February 10, 1993) 4.49%
Global Bond Fund (Class A)
1 Year 0.21%
Since Inception (February 1, 1995) 5.55%
Global Bond Fund (Class C)
1 Year 3.68%
Since Inception (February 1, 1995) 6.46%
Intermediate Bond Fund
1 Year 7.84%
Since Inception (October 3, 1995) 6.01%
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<PAGE>
The Intermediate Term Government Income Fund, the Adjustable Rate U.S.
Government Securities Fund, the Global Bond Fund and the Intermediate Bond Fund
may also advertise total return (a "nonstandardized quotation") which is
calculated differently from average annual total return. A nonstandardized
quotation of total return may be a cumulative return which measures the
percentage change in the value of an account between the beginning and end of a
period, assuming no activity in the account other than reinvestment of dividends
and capital gains distributions. This computation does not include the effect of
the applicable front-end or contingent deferred sales load which, if included,
would reduce total return. The total returns of the Intermediate Term Government
Income Fund ("ITF"), the Adjustable Rate U.S. Government Securities Fund ("ARM")
the Global Bond Fund ("GBF") and the Intermediate Bond Fund ("IBF") as
calculated in this manner for each of the last ten fiscal years (or since
inception) are as follows:
GBF GBF
ITF ARM Class A Class C IBF
Period Ended
September 30, 1988 8.77%
September 30, 1989 7.79%
September 30, 1990 5.31%
September 30, 1991 14.19%
September 30, 1992 13.27%
September 30, 1993 10.15% 2.90%(1)
September 30, 1994 -6.76% 2.09%
September 30, 1995 12.52% 5.33% 9.87%(2) 9.45%(2)
September 30, 1996 3.55% 6.32% 4.88% 4.10% 7.09%(3)
September 30, 1997 7.74% 6.34% 4.39% 3.68% 10.04%
(1) From date of initial public offering on February 10, 1993
(2) From date of initial public offering on February 1, 1995
(3) From date of initial public offering on October 3, 1995
A nonstandardized quotation may also indicate average annual compounded rates of
return without including the effect of the applicable front-end or contingent
deferred sales load or over periods other than those specified for average
annual total return. The average annual compounded rates of return for the
Intermediate Term Government Income Fund, the Adjustable Rate U.S. Government
Securities Fund, the Global Bond Fund and the Intermediate Bond Fund (excluding
sales loads) for the periods ended September 30, 1997 are as follows:
Intermediate Term Government Income Fund
1 Year 7.74%
3 Years 7.87%
5 Years 5.21%
10 Years 7.49%
Since Inception (February 6, 1981) 8.75%
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<PAGE>
Adjustable Rate U.S. Government Securities Fund
1 Year 6.34%
3 Years 5.99%
Since Inception (February 10, 1993) 4.95%
Global Bond Fund (Class A)
1 Year 4.39%
Since Inception (February 1, 1995) 7.18%
Global Bond Fund (Class C)
1 Year 3.68%
Since Inception (February 1, 1995) 6.46%
Intermediate Bond Fund
1 Year 10.04%
Since Inception (October 3, 1995) 7.09%
A nonstandardized quotation of total return will always be accompanied by the
Fund's average annual total return as described above.
From time to time, the Intermediate Term Government Income Fund, the
Adjustable Rate U.S. Government Securities Fund, the Global Bond Fund and the
Intermediate Bond Fund may advertise their yield. A yield quotation is based on
a 30-day (or one month) period and is computed by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period, according to the following formula:
Yield = 2[a-b/cd + 1)6 - 1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period
Generally, interest earned (for the purpose of "a" above) on debt obligations is
computed by reference to the yield to maturity of each obligation held based on
the market value of the obligation (including actual accrued interest) at the
close of business on the last business day prior to the start of the 30-day (or
one month) period for which yield is being calculated, or, with respect to
obligations purchased during the month, the purchase price (plus actual accrued
interest). With respect to the treatment of discount and premium on mortgage or
other receivables-backed obligations which are expected to be subject to monthly
paydowns of principal and interest, gain or loss attributable to actual monthly
paydowns is accounted for as an increase or decrease to interest income during
the period and
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<PAGE>
discount or premium on the remaining security is not amortized. The yield of the
Intermediate Term Government Income Fund for September 1997 was 5.41%. The yield
of the Adjustable Rate U.S. Government Securities Fund for September 1997 was
5.52%. The yields of Class A and Class C shares of the Global Bond Fund for
September 1997 were 4.68% and 4.26%, respectively. The yield of the Intermediate
Bond Fund for September 1997 was 6.03%.
The performance quotations described above are based on historical
earnings and are not intended to indicate future performance. Average annual
total return and yield are computed separately for Class A and Class C shares of
the Global Bond Fund. The yield of Class A shares is expected to be higher than
the yield of Class C shares due to the higher distribution fees imposed on Class
C shares.
To help investors better evaluate how an investment in a Fund might
satisfy their investment objective, advertisements regarding each Fund may
discuss various measures of Fund performance, including current performance
ratings and/or rankings appearing in financial magazines, newspapers and
publications which track mutual fund performance. Advertisements may also
compare performance (using the calculation methods set forth in the Prospectus)
to performance as reported by other investments, indices and averages. When
advertising current ratings or rankings, the Funds may use the following
publications or indices to discuss or compare Fund performance:
IBC Financial Data Inc.'s Money Fund Report provides a comparative
analysis of performance for various categories of money market funds. The Short
Term Government Income Fund may compare performance rankings with money market
funds appearing in the Taxable U.S. Treasury & Repo Funds category. The
Institutional Government Income Fund may compare performance rankings with money
market funds appearing in the Taxable Government-Only Institutional Funds
category. The Money Market Fund may compare performance rankings with money
market funds appearing in the First Tier Taxable category.
Lipper Fixed Income Fund Performance Analysis measures total return and
average current yield for the mutual fund industry and ranks individual mutual
fund performance over specified time periods assuming reinvestment of all
distributions, exclusive of sales loads. The Short Term Government Income Fund
may provide comparative performance information appearing in the U.S. Government
Money Market Funds category, the Intermediate Term Government Income Fund may
provide comparative performance information appearing in the Intermediate U.S.
Government Funds category, the Institutional Government Income Fund may provide
comparative performance information appearing in the Institutional U.S.
Government Money Market Funds category, the Adjustable Rate U.S. Government
Securities Fund may provide
- 57 -
<PAGE>
comparative performance information appearing in the Adjustable Rate Mortgage
Funds category, the Global Bond Fund pay provide comparative performance
information appearing in the Global Income Funds category, the Money Market Fund
may provide comparative performance information appearing in the Money Market
Funds category and the Intermediate Bond Fund may provide comparative
performance information appearing in the Intermediate Investment Grade Debt
Funds category.
In assessing such comparisons of performance an investor should keep in
mind that the composition of the investments in the reported indices and
averages is not identical to the Funds' portfolios, that the averages are
generally unmanaged and that the items included in the calculations of such
averages may not be identical to the formula used by the Funds to calculate
their performance. In addition, there can be no assurance that the Funds will
continue this performance as compared to such other averages.
PRINCIPAL SECURITY HOLDERS
- --------------------------
As of December 5, 1997, Amivest Corporation, P.O. Box 370 Cooper
Station, New York, New York owned of record 22.65% of the outstanding shares of
the Intermediate Term Government Income Fund and 51.0% of the outstanding shares
of the Adjustable Rate U.S. Government Securities Fund. Amivest Corporation may
be deemed to control the Adjustable Rate U.S. Government Securities Fund by
virtue of the fact that it owns of record more than 25% of the Fund's shares. As
of December 5, 1997, Trans Financial Bank, N.A. P.O. Box 90001, Bowling Green,
Kentucky owned of record 86.54% of the outstanding shares of the Money Market
Fund and 98.42% of the outstanding shares of the Intermediate Bond Fund. Trans
Financial Bank may be deemed to control the Money Market Fund and the
Intermediate Bond Fund by virtue of the fact that it owns of record more than
25% of each Fund's shares. For purposes of voting on matters submitted to
shareholders, any person who owns more than 50% of the outstanding shares of a
Fund generally would be able to cast the deciding vote.
On December 5, 1997, Star Bank, N.A., 425 Walnut Street Mail Location 6120,
Cincinnati, Ohio owned of record 12.15% of the outstanding shares of the
Institutional Government Income Fund; The Fechheimer Brothers Company, 4545
Malsbary Road, Cincinnati, Ohio owned of record 6.13% of the outstanding shares
of the Institutional Government Income Fund; Scudder Trust Company FBO
Countrywide Credit Industries Tax Deferred Savings and Supplemental Investment
Plan, 5375 Mira Sorrento, San Diego, California owned of record 14.23% of the
outstanding shares of the Institutional Government Income Fund; Genova
Investments Corp. c/o IMCC, 1201 Brickell Avenue, Miami, Florida owned of record
10.18% of the outstanding Class A shares of the Global Bond Fund; Bear, Stearns
Securities Corp., One Metrotech Center
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<PAGE>
North, Brooklyn, New York owned of record 13.00% of the outstanding Class A
shares of the Global Bond Fund; PaineWebber FBO Tempel Steel Employee Pension
Trust, 5215 Old Orchard Road, Skokie, Illinois owned of record 22.04% of the
outstanding Class A shares of the Global Bond Fund; Gooss & Co., c/o Chase
Manhattan Bank, 1211 Sixth Avenue, New York, New York owned of record 12.14% of
the outstanding Class C shares of the Global Bond Fund; PaineWebber FBO The
American Dietetic Association, 216 W. Jackson Boulevard, Chicago, Illinois owned
of record 8.23% of the outstanding Class C shares of the Global Bond Fund;
PaineWebber FBO The Florence & Co. Trust Account #2 Timothy Sheffield, Charles
J., P.O. Box 2429, Vancouver, Washington owned of record 10.65% of the
outstanding Class C shares of the Global Bond Fund; and National Financial
Services Corp. For the Exclusive Benefit of Its Customers, P.O. Box 3752 Church
Street Station, New York, New York owned of record 8.39% of the outstanding
shares of the Money Market Fund.
As of December 5, 1997, the Trustees and officers of the Trust as a
group owned of record and beneficially 1.47% of the outstanding Class A shares
of the Global Bond Fund and less than 1% of the outstanding shares of the Trust
and of each other Fund.
CUSTODIAN
- ---------
The Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati, Ohio, has
been retained to act as Custodian for the investments of the Short Term
Government Income Fund, the Intermediate Term Government Income Fund, the
Institutional Government Income Fund, the Adjustable Rate U.S. Government
Securities Fund, the Money Market Fund and the Intermediate Bond Fund. The Fifth
Third Bank acts as each Fund's depository, safekeeps its portfolio securities,
collects all income and other payments with respect thereto, disburses funds as
instructed and maintains records in connection with its duties. As compensation,
The Fifth Third Bank receives from each Fund a base fee at the annual rate of
.005% of average net assets (subject to a minimum annual fee of $1,500 per Fund
and a maximum fee of $5,000 per Fund) plus transaction charges for each security
transaction of the Funds.
The Northern Trust Company, 50 South LaSalle Street, Chicago, Illinois,
has been retained to act as Custodian for the Global Bond Fund's investments.
The Northern Trust Company acts as the Fund's depository, safekeeps its
portfolio securities, collects all income and other payments with respect
thereto, disburses funds as instructed and maintains records in connection with
its duties.
- 59 -
<PAGE>
AUDITORS
- --------
The firm of Arthur Andersen LLP has been selected as independent
auditors for the Trust for the fiscal year ending September 30, 1998. Arthur
Andersen LLP, 425 Walnut Street, Cincinnati, Ohio, performs an annual audit of
the Trust's financial statements and advises the Funds as to certain accounting
matters.
TRANSFER AGENT
- ---------------
The Trust's transfer agent, Countrywide Fund Services, Inc. ("CFS"),
maintains the records of each shareholder's account, answers shareholders'
inquiries concerning their accounts, processes purchases and redemptions of the
Funds' shares, acts as dividend and distribution disbursing agent and performs
other shareholder service functions. CFS is an affiliate of the Adviser by
reason of common ownership. CFS receives for its services as transfer agent a
fee payable monthly at an annual rate of $25 per account from each of the Short
Term Government Income Fund, the Institutional Government Income Fund and the
Money Market Fund and $21 per account from each of the Intermediate Term
Government Income Fund, the Adjustable Rate U.S. Government Securities Fund, the
Global Bond Fund and the Intermediate Bond Fund, provided, however, that the
minimum fee is $1,000 per month for each class of shares of a Fund. In addition,
the Funds pay out-of-pocket expenses, including but not limited to, postage,
envelopes, checks, drafts, forms, reports, record storage and communication
lines.
CFS also provides accounting and pricing services to the Trust. For
calculating daily net asset value per share and maintaining such books and
records as are necessary to enable CFS to perform its duties, the Short Term
Government Income Fund, the Institutional Government Income Fund, the
Intermediate Term Government Income Fund, the Money Market Fund and the
Intermediate Bond Fund each pay CFS a fee in accordance with the following
schedule:
Asset Size of Fund Monthly Fee
------------------ -----------
$ 0 - $ 50,000,000 $2,000
$500,000,000 - $100,000,000 $2,500
$100,000,000 - $200,000,000 $3,000
$200,000,000 - $300,000,000 $3,500
Over $300,000,000 $4,500*
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<PAGE>
The Adjustable Rate U.S. Government Securities Fund pays CFS a fee in accordance
with the following schedule:
Asset Size of Fund Monthly Fee
$ 0 - $ 50,000,000 $2,500
$ 50,000,000 - $100,000,000 $3,000
$100,000,000 - $200,000,000 $3,500
$200,000,000 - $300,000,000 $4,000
Over $300,000,000 $5,000*
The Global Bond Fund pays CFS a fee in accordance with the following schedule:
Asset Size of Fund Monthly Fee
$ 0 - $ 50,000,000 $4,000
$ 50,000,000 - $100,000,000 $4,500
$100,000,000 - $200,000,000 $5,000
$200,000,000 - $300,000,000 $5,500
Over $300,000,000 $6,500*
* Subject to an additional fee of .001% of average daily net assets.
In addition, each Fund pays all costs of external pricing services.
CFS is retained by the Adviser to assist the Adviser in providing
administrative services to the Funds. In this capacity, CFS supplies
non-investment related statistical and research data, internal regulatory
compliance services and executive and administrative services. CFS supervises
the preparation of tax returns, reports to shareholders of the Funds, reports to
and filings with the Securities and Exchange Commission and state securities
commissions, and materials for meetings of the Board of Trustees. For the
performance of these administrative services, CFS receives a fee from the
Adviser. The Adviser is solely responsible for the payment of these
administrative fees to CFS, and CFS has agreed to seek payment of such fees
solely from the Adviser.
ANNUAL REPORT
- -------------
The Funds' financial statements as of September 30, 1997 appear in the
Trust's annual report which is attached to this Statement of Additional
Information.
- 61 -
<PAGE>
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
<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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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 GOVERNMENT ADJUSTABLE RATE 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.
<PAGE>
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.
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.
<PAGE>
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>
<PAGE>
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.
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.
<PAGE>
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.
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.
<PAGE>
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.
<PAGE>
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 INVESTMENT TRUST
PART C. OTHER INFORMATION
-----------------
Item 24. Financial Statements and Exhibits
- ------- ---------------------------------
(a) (i) Financial Statements included in Part A:
Financial Highlights
(ii) Financial Statements included in Part B:
Statements of Assets and Liabilities,
September 30, 1997
Statements of Operations For the Year Ended
September 30, 1997
Statements of Operations For the Periods
Ended September 30, 1997 and August 31, 1997
Statements of Changes in Net Assets For the
Years Ended September 30, 1997 and 1996
Statements of Changes in Net Assets For the
Periods Ended September 30, 1997 and August
31, 1997 and 1996
Financial Highlights
Notes to Financial Statements
(b) Exhibits: Schedule of Investments
(1) (i) Registrant's Restated Agreement and
Declaration of Trust, which was filed as an
Exhibit to Registrant's Post-Effective
Amendment No. 58, is hereby incorporated by
reference.
(ii) Amendment No. 1, dated December 8, 1994, to
Registrant's Restated Agreement and
Declaration of Trust, which was filed as an
Exhibit to Registrant's Post-Effective
Amendment No. 60, is hereby incorporated by
reference.
(iii) Amendment No. 2, dated January 31, 1995, to
Registrant's Restated Agreement and
Declaration of Trust, which was filed as an
Exhibit to Registrant's Post-Effective
Amendment No. 61, is hereby incorporated by
reference.
<PAGE>
(iv) Amendment No. 3, dated February 28, 1997, to
Registrant's Restated Agreement and
Declaration of Trust, which was filed as an
Exhibit to Registrant's Post-Effective
Amendment No. 66, is hereby incorporated by
reference.
(2) (i) Registrant's Bylaws, which were filed as an
Exhibit to Registrant's Post-Effective
Amendment No. 26, are hereby incorporated by
reference.
(ii) Amendment to Registrant's Bylaws adopted on
January 10, 1984, which was filed as an
Exhibit to Registrant's Post-Effective
Amendment No. 35, is hereby incorporated by
reference.
(3) Voting Trust Agreements - None.
(4) Specimen of Share Certificate, which was filed as an
Exhibit to Registrant's Post-Effective Amendment No.
38, is hereby incorporated by
reference.
(5) (i) Registrant's Management Agreement with
Countrywide Investments, Inc. for the Short
Term Government Income Fund, which was filed
as an Exhibit to Registrant's Post-Effective
Amendment No. 66, is hereby incorporated by
reference.
(ii) Registrant's Management Agreement with
Countrywide Investments, Inc. for the
Intermediate Term Government Income Fund,
which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 66, is hereby
incorporated by reference.
(iii) Registrant's Management Agreement with
Countrywide Investments, Inc. for the
Institutional Government Income Fund, which
was filed as an Exhibit to Registrant's
Post- Effective Amendment No. 66, is hereby
incorporated by reference.
(iv) Registrant's Management Agreement with
Countrywide Investments, Inc. for the
Adjustable Rate U.S. Government Securities
Fund, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No.
66, is hereby incorporated by reference.
<PAGE>
(v) Registrant's Management Agreement with
Countrywide Investments, Inc. for the Global
Bond Fund, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No.
66, is hereby incorporated by reference.
(vi) Subadvisory Agreement between Countrywide
Investments, Inc. and Rogge Global Partners
plc for the Global Bond Fund, which was filed
as an Exhibit to Registrant's Post-Effective
Amendment No. 66, is hereby incorporated by
reference.
(vii) Registrant's Management Agreement with
Countrywide Investments, Inc. for the Money
Market Fund is filed herewith.
(viii) Registrant's Management Agreement with
Countrywide Investments, Inc. for the
Intermediate Bond Fund is filed herewith.
(6) (i) Registrant's Underwriting Agreement with
Countrywide Investments, Inc., which was
filed as an Exhibit to Registrant's Post-
Effective Amendment No. 66, is hereby
incorporated by reference.
(ii) Form of Underwriter's Dealer Agreement is
filed herewith.
(7) Bonus, Profit Sharing, Pension or Similar
Contracts for the benefit of Directors or Officers
- None.
(8) (i) Custody Agreement with The Fifth Third Bank,
the custodian for the Short Term Government
Income Fund, the Intermediate Term Government
Income Fund, the Institutional Government
Income Fund, the Adjustable Rate U.S.
Government Securities Fund, the Money Market
Fund and the Intermediate Bond Fund, which
was filed as an Exhibit to Registrant's Post-
Effective Amendment No. 49, is hereby
incorporated by reference.
(ii) Custody Agreement with The Northern Trust
Company, the custodian for the Global Bond
Fund, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No.
61, is hereby incorporated by reference.
(9) (i) Transfer Agency, Dividend Disbursing,
Shareholder Service and Plan Agency Agreement
with Countrywide Fund Services, Inc. is filed
herewith.
<PAGE>
(ii) Accounting and Pricing Services Agreement
with Countrywide Fund Services, Inc. is filed
herewith.
(iii) Administration Agreement between Countrywide
Investments, Inc. and Countrywide Fund
Services, Inc. is filed herewith.
(iv) License Agreement with Countrywide Credit
Industries, Inc., which was filed as an
Exhibit to Registrant's Post-Effective
Amendment No. 66, is hereby incorporated by
reference.
(10) Opinion and Consent of Counsel, which was filed as an
Exhibit to Registrant's Pre-Effective Amendment No.
1, is hereby incorporated by reference.
(11) Consent of Arthur Andersen LLP is filed herewith.
(12) Financial Statements Omitted from Item 23 - None.
(13) Agreements or understandings concerning initial
capital - None.
(14) (i) Copy of the Midwest Group Individual
Retirement Account Plan, including Schedule
of Fees, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No.
45, is hereby incorporated by reference.
(ii) Copy of the Midwest Group 403(b) Plan,
including Schedule of Fees, which was filed
as an Exhibit to Registrant's Post-Effective
Amendment No. 49, is hereby incorporated by
reference.
(iii) Copy of the Midwest Group Prototype Defined
Contribution Plan, which was filed as an
Exhibit to Post-Effective Amendment No. 4 of
Leeb Personal FinanceTM Investment Trust
(File No. 811-6374), is hereby incorporated
by reference.
(15)(i) Registrant's Plans of Distribution
Pursuant to Rule 12b-1, which were filed as
Exhibits to Registrant's Post-Effective
Amendment No. 66, are hereby incorporated by
reference.
(ii) Form of Sales Agreement for Money Market
Funds is filed herewith.
(iii) Form of Administration Agreement with respect
to the administration of shareholder accounts
is filed herewith.
<PAGE>
(16) Computations of each performance quotation provided
in response to Item 22, which were filed as an
Exhibit to Registrant's Post-Effective Amendment No.
43, are hereby incorporated by
reference.
(17) Financial Data Schedules
(i) Financial Data Schedule for Short Term
Government Income Fund is filed herewith.
(ii) Financial Data Schedule for Intermediate
Term Government Income Fund is filed
herewith.
(iii) Financial Data Schedule for Institutional
Government Income Fund is filed herewith.
(iv) Financial Data Schedule for Adjustable Rate
U.S. Government Securities Fund is filed
herewith
(v) Financial Data Schedule for Global Bond Fund
is filed herewith.
(vi) Financial Data Schedule for Money Market Fund
is filed herewith.
(vii) Financial Data Schedule for Intermediate Bond
Fund is filed herewith.
(18) Amended Rule 18f-3 Plan Adopted With Respect to the
Multiple Class Distribution System, which was filed
as an Exhibit to Registrant's Post-Effective
Amendment No. 65, is hereby incorporated by
reference.
(19) Power of Attorney for John R. Delfino is filed
herewith.
Item Persons Controlled by or Under Common Control with the Registrant
-----------------------------------------------------------------
None.
<PAGE>
Item Number of Holders of Securities (as of October 31, 1997)
- ----- -----------------------------------------------------------
Title of Class Number of
-------------- Record
Holders
----------
Short Term Government Income Fund 8,354
Intermediate Term Government Income Fund 2,232
Institutional Government Income Fund 896
Adjustable Rate U.S. Government Securities Fund 715
Global Bond Fund
Class A Shares 255
Class C Shares 123
Money Market Fund 301
Intermediate Bond Fund 108
Item Indemnification
- ----- ---------------
Article VI of Registrant's Restated Agreement and Declaration
of Trust provides for indemnification of officers and Trustees
as follows:
"Section 6.4 Indemnification of Trustees, Officers, etc.
The Trust shall indemnify each of its Trustees
and officers (including persons who serve at the Trust's
request as directors, officers or trustees of another organization in
which the Trust has any interest as a shareholder, creditor or
otherwise, and including persons who served as directors or officers of
Midwest Income Investment Company) (hereinafter referred to as a
"Covered Person") against all liabilities, including but not limited to
amounts paid in satisfaction of judgments, in compromise or as fines
and penalties, and expenses, including reasonable accountants' and
counsel fees, incurred by any Covered Person in connection with the
defense or disposition of any action, suit or other proceeding, whether
civil or criminal, before any court or administrative or legislative
body, in which such Covered Person may be or may have been involved as
a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having
been such a Trustee or officer, director or trustee, and except that no
Covered Person
<PAGE>
shall be indemnified against any liability to the Trust or its
Shareholders to which such Covered Person would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered
Person's office ("disabling conduct"). Anything herein contained to the
contrary notwithstanding, no Covered Person shall be indemnified for
any liability to the Trust or its Shareholders to which such Covered
Person would otherwise be subject unless (1) a final decision on the
merits is made by a court or other body before whom the proceeding was
brought that the Covered Person to be indemnified was not liable by
reason of disabling conduct or, (2) in the absence of such a decision,
a reasonable determination is made, based upon a review of the facts,
that the Covered Person was not liable by reason of disabling conduct,
by (a) the vote of a majority of a quorum of Trustees who are neither
"interested persons" of the Company as defined in the Investment
Company Act of 1940 nor parties to the proceeding ("disinterested,
non-party Trustees"), or (b) an independent legal counsel in a written
opinion.
Section 6.5 Advances of Expenses. The Trust shall advance
attorneys' fees or other expenses incurred by a Covered Person
in defending a proceeding, upon the undertaking by or on behalf
of the Covered Person to repay the advance unless it is ultimately
determined that such Covered Person is entitled to indemnification, so
long as one of the following conditions is met: (i) the Covered Person
shall provide security for his undertaking, (ii) the Trust shall be
insured against losses arising by reason of any lawful advances, or
(iii) a majority of a quorum of the disinterested non-party Trustees of
the Trust, or an independent legal counsel in a written opinion, shall
determine, based on a review of readily available facts (as opposed to
a full trial-type inquiry), that there is reason to believe that the
Covered Person ultimately will be found entitled to indemnification.
Section 6.6 Indemnification Not Exclusive, etc. The
right of indemnification provided by this Article VI shall not be
exclusive of or affect any other rights to which any such Covered
Person may be entitled. As used in this Article VI, "Trust" shall
include Midwest Income Investment Company, "Covered Person" shall
include such person's heirs, executors and administrators, an
"interested Covered Person" is one against whom the action, suit or
other proceeding in question or another action, suit or other
proceeding on the same or similar grounds is then or has been pending
<PAGE>
or threatened, and a "disinterested" person is a person against whom
none of such actions, suits or other proceedings or another action,
suit or other proceeding on the same or similar grounds is then or has
been pending or threatened. Nothing contained in this article shall
affect any rights to indemnification to which personnel of the Trust,
other than Trustees and officers, and other persons may be entitled by
contract or otherwise under law, nor the power of the Trust to purchase
and maintain liability insurance on behalf of any such person."
The Registrant maintains a standard mutual fund and investment advisory
professional and directors and officers liability policy. The policy
provides coverage to the Registrant, its Trustees and officers and
Countrywide Investments, Inc. (the "Adviser"), in its capacity as
investment adviser and principal underwriter, among others. Coverage
under the policy includes losses by reason of any act, error, omission,
misstatement, misleading statement, neglect or breach of duty. The
Registrant may not pay for insurance which protects the Trustees and
officers against liabilities rising from action involving willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of their offices.
The Advisory Agreements provide that each investment adviser shall not
be liable for any error of judgment or mistake of law or for any loss
suffered by the Registrant in connection with the matters to which the
Agreements relate, except a loss resulting from willful misfeasance,
bad faith or gross negligence of an investment adviser in the
performance of its duties or from the reckless disregard by the
investment adviser of its obligations under the Agreement. Registrant
will advance attorneys' fees or other expenses incurred by an
investment adviser in defending a proceeding, upon the undertaking by
or on behalf of the investment adviser to repay the advance unless it
is ultimately determined that the investment adviser is entitled to
indemnification.
The Underwriting Agreement with the Adviser provides that the Adviser,
its directors, officers, employees, shareholders and control persons
shall not be liable for any error of judgment or mistake of law or for
any loss suffered by Registrant in connection with the matters to which
the Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of any of such
persons in the performance of the Adviser's duties or from the reckless
disregard by any of such persons of the Adviser's obligations and
duties under the Agreement.
<PAGE>
Registrant will advance attorneys' fees or other expenses incurred by
any such person in defending a proceeding, upon the undertaking by or
on behalf of such person to repay the advance if it is ultimately
determined that such person is not entitled to indemnification.
Item 28. Business and Other Connections of the Investment Advisers
- ------- ---------------------------------------------------------
A. Countrywide Investments, Inc. (the "Adviser") is a
registered investment adviser providing investment
advisory services to the Short Term Government Income
Fund, the Intermediate Term Government Income Fund, the
Institutional Government Income Fund, the Adjustable
Rate U.S. Government Securities Fund, the Money Market
Fund and the Intermediate Bond Fund and investment
management supervisory services to the Global Bond
Fund. The Adviser acts as the investment adviser to
seven series of Countrywide Tax-Free Trust and to five
series of Countrywide Strategic Trust, both of which
are registered investment companies. The Adviser also
provides investment advisory services to individual and
institutional accounts and is a registered broker-
dealer.
The following list sets forth the business and other
connections of the directors and executive officers of the
Adviser. Unless otherwise noted(*), the address of the
corporations listed below is 312 Walnut Street, Cincinnati,
Ohio 45202.
*The address of each corporation is 4500 Park Granada Road,
Calabasas, California 91302.
(1) Angelo R. Mozilo - Chairman and a Director of the
Adviser.
(a) Chairman and a Trustee of Countrywide
Strategic Trust, Countrywide Investment Trust
and Countrywide Tax-Free Trust, registered
investment companies.
(b) Chairman and a Director of Countrywide
Financial Services, Inc., a financial
services company, Countrywide Fund Services,
Inc., a registered transfer agent,
Countrywide Servicing Exchange,* a loan
servicing broker and Countrywide Capital
Markets, Inc.,* a parent company.
<PAGE>
(c) Vice Chairman, Director and Executive Vice
President of Countrywide Credit Industries,
Inc.,* a holding company which provides
residential mortgages and ancillary
financial products and services.
(d) A Director of Countrywide Home Loans, Inc.,*
a residential mortgage lender and CTC
Foreclosure Services Corporation,* a
foreclosure trustee.
(e) A Director of LandSafe, Inc.* and Chairman
and a director of various Landsafe
subsidiaries which provide residential
mortgage title and closing services.
(f) Chairman and CEO of Countrywide Securities
Corporation,* a registered broker-dealer.
(g) Vice Chairman of CWM Mortgage Holdings,
Inc.,* a real estate investment trust.
(2) Robert H. Leshner - President and a Director of the
Adviser.
(a) President and a Trustee of Countrywide
Strategic Trust, Countrywide Investment Trust
and Countrywide Tax-Free Trust.
(b) President and a Director of Countrywide
Financial Services, Inc.
(c) Vice Chairman and a Director of Countrywide
Fund Services, Inc.
(3) Andrew S. Bielanski - A Director of the Adviser.
(a) A Director of Countrywide Financial Services,
Inc., Countrywide Fund Services, Inc. and
Countrywide Agency, Inc.,* an insurance
agency.
(b) Managing Director - Marketing of Countrywide
Credit Industries, Inc. and Countrywide Home
Loans, Inc.
(4) Thomas H. Boone - A Director of the Adviser.
(a) A Director of Countrywide Financial
Services, Inc., Countrywide Fund Services,
Inc., Countrywide Agency, Inc., Countrywide
Tax Services Corporation,* a residential
mortgage tax service provider and
Countrywide Lending Corporation,* a lending
institution.
<PAGE>
(b) Managing Director - Chief Loan Administration
Officer of Countrywide Credit Industries,
Inc. and Countrywide Home Loans, Inc.
(c) A Director and Executive Vice President of
CWABS, Inc.,* an asset-backed securities
issuer and CWMBS, Inc.,* a mortgage-backed
securities issuer.
(d) CEO and a Director of CTC Foreclosure
Services Corporation.
(5) Marshall M. Gates - A Director of the Adviser.
(a) A Director of Countrywide Financial Services,
Inc., Countrywide Fund Services, Inc. and
Countrywide Agency, Inc.
(b) Managing Director - Production of Countrywide
Credit Industries, Inc. and Countrywide Home
Loans, Inc.
(c) President and a Director of Second Charter
Reinsurance Corporation,* a mortgage,
property and casualty reinsurance agency and
Charter Reinsurance Corporation,* a mortgage
reinsurance agency.
(6) John J. Goetz - First Vice President and Chief
Investment Officer of the Adviser.
(a) Vice President of Countrywide Financial
Services, Inc. until February 1997.
(7) Maryellen Peretzky - First Vice President-
Administration, Human Resources and Operations of
the Adviser.
(a) Vice President-Administration, Human
Resources and Operations of Countrywide
Financial Services, Inc. and Countrywide Fund
Services, Inc.
(b) Assistant Secretary of The Tuscarora
Investment Trust, The Gannett Welsh & Kotler
Funds, Interactive Investments and the Dean
Family of Funds.
(8) Sharon L. Karp - First Vice President-Marketing of
the Adviser.
(a) Vice President of Countrywide Financial
Services, Inc. until February 1997.
<PAGE>
(9) John F. Splain - Secretary and General Counsel of the
Adviser.
(a) Vice President, Secretary and General Counsel
of Countrywide Fund Services, Inc.
(b) Secretary and General Counsel of Countrywide
Financial Services, Inc.
(c) Secretary of Countrywide Tax-Free Trust,
Countrywide Investment Trust, Countrywide
Strategic Trust, Brundage, Story and Rose
Investment Trust, Williamsburg Investment
Trust, Markman MultiFund Trust, The Tuscarora
Investment Trust, PRAGMA Investment Trust,
Maplewood Investment Trust, a series company,
and The Thermo Opportunity Fund, Inc.,
registered investment companies.
(d) Assistant Secretary of Schwartz Investment
Trust, The Gannett Welsh & Kotler Funds,
Interactive Investments, Dean Family of
Funds and The New York State Opportunity
Funds, registered investment companies.
(e) Assistant Secretary of Fremont Mutual Funds,
Inc. and Capitol Square Funds, registered
investment companies, until September 1997.
(f) Secretary of Leeb Personal Finance(TM)
Investment Trust, a registered investment
company, until November 1996.
(10) Robert G. Dorsey - Treasurer of the Adviser.
(a) President and Treasurer of Countrywide Fund
Services, Inc.
(b) Vice President-Finance and Treasurer of
Countrywide Financial Services, Inc.
(c) Vice President of Countrywide Tax-Free Trust,
Countrywide Investment Trust, Countrywide
Strategic Trust, Brundage, Story and Rose
Investment Trust, Markman MultiFund Trust,
PRAGMA Investment Trust, Maplewood Investment
Trust, a series company, The Thermo
Opportunity Fund, Inc., Dean Family of Funds
and The New York State Opportunity Funds.
(d) Assistant Vice President of Williamsburg
Investment Trust, Schwartz Investment Trust,
The Gannett Welsh & Kotler Funds, The
Tuscarora Investment Trust and Interactive
Investments.
<PAGE>
(e) Vice President of Capitol Square Funds and
Assistant Vice President of Fremont Mutual
Funds, Inc. until September 1997.
(f) Vice President of Leeb Personal Finance(TM)
Investment Trust until November 1996.
(11) Susan F. Flischel - First Vice President- Investments
of the Adviser.
(12) Terrie A. Wiedenheft - Vice President and Controller
of the Adviser.
(a) First Vice President and Chief Financial
Officer of Countrywide Financial Services,
Inc.
(b) Vice President and Controller of Countrywide
Fund Services, Inc.
(13) Scott Weston - Assistant Vice President-Investments of
the Adviser.
B. Rogge Global Partners plc ("Rogge") is a registered
investment adviser providing investment advisory
services to the Global Bond Fund. Rogge also acts as
the investment adviser to the Manager's Global Bond
Fund and the Pace Global Fixed Income Investments Fund,
registered investment companies, and other
institutional clients. The following are the directors
of Rogge. The address of Rogge is 5-6 St. Andrew's
Hill, London, England EC4V-5BY.
(1) Olaf Rogge
(2) John Graham
(3) Richard Bell
(4) Adrian James
(5) David Russell
(a) A Director and consultant to United Asset
Management Corporation, One International
Place, Boston, Massachusetts 02110, an
institutional investment management service
provider.
<PAGE>
Item 29. Principal Underwriters
- ------- ----------------------
(a) Countrywide Investments, Inc. also acts as
underwriter for Countrywide Strategic Trust,
Countrywide Tax-Free Trust, The Milestone Funds,
Brundage, Story and Rose Investment Trust and Profit
Funds Investment Trust. Unless otherwise
indicated(*), the address of the persons named below
is 312 Walnut Street, Cincinnati, Ohio 45202.
*The address is 4500 Park Granada Road, Calabasas,
California 91302.
Position Position
with with
(b) Name Underwriter Registrant
------ ----------- -----------
* Angelo R. Mozilo Chairman and Chairman
Director and Trustee
Robert H. Leshner President President
and Director and
Trustee
* Andrew S. Bielanski Director None
* Thomas H. Boone Director None
* Marshall M. Gates Director None
John J. Goetz First Vice None
President and
Chief
Investment
Officer
Maryellen Peretzky First Vice None
President-
Administration,
Human Resources
and Operations
Sharon L. Karp First Vice None
President-
Marketing
John F. Splain Secretary and Secretary
General Counsel
Robert G. Dorsey Treasurer Vice
President
<PAGE>
Susan F. Flischel First Vice None
President-
Investments
Terrie A. Wiedenheft First Vice None
President and
Controller
Scott Weston Assistant Vice None
President-
Investments
Item 30. Location of Accounts and Records
- ------- --------------------------------
Accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder will be maintained by the
Registrant.
Item 31. Management Services Not Discussed in Parts A or B
- ------- -------------------------------------------------
None.
Item 32. Undertakings
- ------- ------------
(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant undertakes that, if so requested, it
will furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual
report without charge.
(d) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
trustees, officers and controlling persons of
Countrywide Investment Trust pursuant to the provisions
of Massachusetts law and the Restated Agreement and
Declaration of Trust of Countrywide Investment Trust or
the Bylaws of Countrywide Investment Trust, or
otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the Registrant
of expenses incurred or paid by a trustee, officer or
controlling person of Countrywide Investment Trust in
the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or
controlling person in connection with the securities
being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
<PAGE>
jurisdiction the question whether such
indemnification by it is against public policy as
expressed in the Act and will be governed by the
final adjudication of such issue.
(e) The Registrant undertakes that, within five business
days after receipt of a written application by
shareholders holding in the aggregate at least 1% of
the shares then outstanding or shares then having a net
asset value of $25,000, whichever is less, each of whom
shall have been a shareholder for at least six months
prior to the date of application (hereinafter the
"Petitioning Shareholders"), requesting to communicate
with other shareholders with a view to obtaining
signatures to a request for a meeting for the purpose
of voting upon removal of any Trustee of the
Registrant, which application shall be accompanied by a
form of communication and request which such
Petitioning Shareholders wish to transmit, Registrant
will:
(i) provide such Petitioning Shareholders with access
to a list of the names and addresses of all
shareholders of the Registrant; or
(ii) inform such Petitioning Shareholders of the
approximate number of shareholders and the
estimated costs of mailing such
communication, and to undertake such mailing
promptly after tender by such Petitioning
Shareholders to the Registrant of the
material to be mailed and the reasonable
expenses of such mailing.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Cincinnati, State of Ohio, on the 31st day of
December, 1997.
COUNTRYWIDE INVESTMENT TRUST
By: /s/ John F. Splain
-------------------
John F. Splain,
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the 31st day of December, 1997.
*ANGELO R. MOZILO Chairman
and Trustee
/s/ Robert H. Leshner President
- ---------------------
ROBERT H. LESHNER and Trustee
/s/ Mark J. Seger Treasurer
- ---------------------
MARK J. SEGER
*DONALD L. BOGDON, M.D. Trustee
*JOHN R. DELFINO Trustee
*H. JEROME LERNER Trustee By: /s/ John F. Splain
JOHN F. SPLAIN
*OSCAR P. ROBERTSON Trustee Attorney-in-Fact*
December 31, 1997
*JOHN F. SEYMOUR, JR. Trustee
*SEBASTIANO STERPA Trustee
<PAGE>
EXHIBIT INDEX
1. Management Agreement with Countrywide Investments, Inc. for the
Money Market Fund
2. Management Agreement with Countrywide Investments, Inc. for the
Intermediate Bond Fund
3. Form of Underwriter's Dealer Agreement
4. Transfer Agency, Dividend Disbursing, Shareholder Service and
Plan Agency Agreement
5. Accounting and Pricing Services Agreement
6. Administration Agreement between Countrywide Investments, Inc.
and Countrywide Fund Services, Inc.
7. Consent of Arthur Andersen LLP
8. Form of Sales Agreement
9. Form of Administration Agreement for the Administration of
Shareholder Accounts
10. Financial Data Schedule for Short Term Government Income Fund
11. Financial Data Schedule for Intermediate Term Government Income
Fund
12. Financial Data Schedule for Institutional Government Income Fund
13. Financial Data Schedule for Adjustable Rate U.S. Government
Securities Fund
14. Financial Data Schedule for Global Bond Fund
15. Financial Data Schedule for Money Market Fund
16. Financial Data Schedule for Intermediate Bond Fund
17. Power of Attorney for John R. Delfino
MANAGEMENT AGREEMENT
TO: COUNTRYWIDE INVESTMENTS, INC.
312 Walnut Street
Cincinnati, Ohio 45202
Dear Sirs:
Countrywide Investment Trust (hereinafter referred to as the "Trust")
herewith confirms our agreement with you.
The Trust has been organized to engage in the business of an investment
company. The Money Market Fund (the "Fund") has been established as a series of
the Trust. You have been selected to act as the investment adviser of the Fund
and to provide certain other services, as more fully set forth below, and you
are willing to act as such investment adviser and to perform such services under
the terms and conditions hereinafter set forth. Accordingly, the Trust agrees
with you as follows upon the date of the execution of this Agreement.
1. ADVISORY SERVICES
You will regularly provide the Fund with such investment advice as you
in your discretion deem advisable and will furnish a continuous investment
program for the Fund consistent with its investment objectives and policies. You
will determine what securities shall be purchased for the Fund, what portfolio
securities shall be held or sold by the Fund, and what portion of the Fund's
assets shall be held uninvested, subject always to the Fund's investment
objectives, policies and restrictions, as each of the same shall be from time to
time in effect, and subject further, to such policies and instructions as the
Board of Trustees (the "Board") of the Trust may from time to time establish and
supply to you copies thereof. You will advise and assist the officers of the
Trust in taking such steps as are necessary or appropriate to carry out the
decisions of the Board and the appropriate committees of the Board regarding the
conduct of the business of the Fund.
2. ALLOCATION OF CHARGES AND EXPENSES
You will pay the compensation and expenses of any persons rendering any
services to the Fund who are officers, directors, stockholders or employees of
your corporation and will make available, without expense to the Fund, the
services of such of your employees as may duly be elected officers or trustees
of the Trust, subject to their individual consent to serve and to any
limitations imposed by law. The compensation and expenses of any officers,
trustees and employees of the Trust who are not officers, directors, employees
or stockholders of your corporation will be paid by the Trust.
- 1 -
<PAGE>
You will pay all advertising and promotion expenses incurred in
connection with the sale or distribution of the Fund's shares to the extent such
expenses are not assumed by the Fund under the Trust's Plans of Distribution
Pursuant to Rule 12b-1.
The Fund will also be responsible for the payment of all other
operating expenses of the Fund, including fees and expenses incurred by the Fund
in connection with membership in investment company organizations, brokerage
fees and commissions, legal, auditing and accounting expenses, expenses of
registering shares under federal and state securities laws, insurance expenses,
taxes or governmental fees, fees and expenses of the custodian, transfer,
shareholder service and dividend disbursing agent and accounting and pricing
agent of the Fund, expenses including clerical expenses of issue, sale,
redemption or repurchase of shares of the Fund, the fees and expenses of
trustees of the Trust who are not affiliated with you, the cost of preparing and
distributing reports and notices to shareholders, the cost of printing or
preparing prospectuses for delivery to the Fund's shareholders, the cost of
printing or preparing stock certificates or any other documents, statements or
reports to shareholders, expenses of shareholders' meetings and proxy
solicitations, such extraordinary or nonrecurring expenses as may arise,
including litigation to which the Fund may be a party and indemnification of the
Trust's officers and trustees with respect thereto, or any other expense not
specifically described above incurred in the performance of the Fund's
obligations. All other expenses not assumed by you herein incurred by the Fund
in connection with the organization, registration of shares and operations of
the Fund will be borne by the Fund.
3. COMPENSATION OF THE ADVISER
For all of the services to be rendered and payments made as provided in
this Agreement, the Fund will pay you as of the last day of each month, a fee
equal to the annual rate of .50% of the average value of the daily net assets of
the Fund up to $50,000,000; .45% of such assets from $50,000,000 to
$150,000,000; .40% of such assets from $150,000,000 to and including
$250,000,000; and .375% of such assets in excess of $250,000,000.
The total fees payable during each of the first and second halves of
each fiscal year of the Trust shall not exceed the semiannual total of the daily
fee accruals requested by you during the applicable six month period. The
average value of net assets shall be determined pursuant to the applicable
provisions of the Declaration of Trust of the Trust or a resolution of the
Board, if required. If, pursuant to such provisions, the determination of net
asset value of the Fund is suspended for any
- 2 -
<PAGE>
particular business day, then for the purposes of this paragraph, the value of
the net assets of the Fund as last determined shall be deemed to be the value of
the net assets as of the close of the business day, or as of such other time as
the value of the Fund's net assets may lawfully be determined, on that day. If
the determination of the net asset value of the Fund's shares has been suspended
for a period including such month, your compensation payable at the end of such
month shall be computed on the basis of the value of the net assets of the Fund
as last determined (whether during or prior to such month).
Your compensation with respect to each additional series of the Trust
effectively registered for sale in a public offering after the date of this
Agreement shall be determined by the Board, including a majority of the Trustees
who are not "interested persons" (as defined in the Investment Company Act of
1940) of you or of the Trust, and approved pursuant to the provisions of Section
15 of the Investment Company Act of 1940.
4. EXECUTION OF PURCHASE AND SALE ORDERS
In connection with purchases or sales of portfolio securities for the
account of the Fund, it is understood that you will arrange for the placing of
all orders for the purchase and sale of portfolio securities for the Fund's
accounts with brokers or dealers selected by you, subject to review of this
selection by the Board from time to time. You will be responsible for the
negotiation and the allocation of principal business and portfolio brokerage. In
the selection of such brokers or dealers and the placing of such orders, you are
directed at all times to seek for the Fund the best qualitative execution,
taking into account such factors as price (including the applicable brokerage
commission or dealer spread), the execution capability, financial responsibility
and responsiveness of the broker or dealer and the brokerage and research
services provided by the broker or dealer.
You should generally seek favorable prices and commission rates that
are reasonable in relation to the benefits received. In seeking best qualitative
execution, you are authorized to select brokers or dealers who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Fund and/or the other accounts over
which you exercise investment discretion. You are authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if
you determine in good faith that the amount of the commission is reasonable in
relation to the value of the brokerage and research services provided by the
executing broker or dealer. The determination may be viewed in terms of either a
- 3 -
<PAGE>
particular transaction or your overall responsibilities with respect to the Fund
and to accounts over which you exercise investment discretion. The Trust and you
understand that, although the information may be useful to the Fund and you, it
is not possible to place a dollar value on such information. The Board shall
periodically review the commissions paid by the Fund to determine if the
commissions paid over representative periods of time were reasonable in relation
to the benefits to the Fund.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to seeking best qualitative execution,
you may give consideration to sales of shares of the Fund as a factor in the
selection of brokers and dealers to execute Fund portfolio transactions.
If any occasion should arise in which you give any advice to clients of
yours concerning the shares of the Fund, you will act solely as investment
counsel for such client and not in any way on behalf of the Trust. Your services
to the Fund pursuant to this Agreement are not to be deemed to be exclusive and
it is understood that you may render investment advice, management and other
services to others.
5. LIMITATION OF LIABILITY OF ADVISER
You (including your directors, officers, shareholders, employees,
control persons and affiliates of any thereof) shall not be liable for any error
of judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on your part in the
performance of your duties or from the reckless disregard by you of your
obligations and duties under this Agreement ("disabling conduct"). However, you
will not be indemnified for any liability unless (1) a final decision is made on
the merits by a court or other body before whom the proceeding was brought that
you were not liable by reason of disabling conduct, or (2) in the absence of
such a decision, a reasonable determination is made, based upon a review of the
facts, that you were not liable by reason of disabling conduct, by (a) the vote
of a majority of a quorum of trustees who are neither "interested persons" of
the Trust as defined in the Investment Company Act of 1940 nor parties to the
proceeding ("disinterested, non-party trustees"), or (b) an independent legal
counsel in a written opinion. The Fund will advance attorneys' fees or other
expenses incurred by you in defending a proceeding, upon the undertaking by or
on behalf of you to repay the advance unless it is ultimately determined that
you are entitled to indemnification, so long as you meet at least one of the
following as a condition to the advance: (1) you shall provide a security for
your undertaking, (2) the Fund shall be insured against losses arising by reason
of
- 4 -
<PAGE>
any lawful advances, or (3) a majority of a quorum of the disinterested,
non-party trustees of the Trust, or an independent legal counsel in a written
opinion, shall determine, based on a review of readily available facts (as
opposed to a full trial- type inquiry), that there is reason to believe that you
ultimately will be found entitled to indemnification. Any person employed by you
who may also be or become an employee of the Trust shall be deemed, when acting
within the scope of his employment by the Trust, to be acting in such employment
solely for the Trust and not as your employee or agent.
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall be effective upon its execution, shall remain in
force until February 28, 1999 and from year to year thereafter, subject to
annual approval by (i) the Board of the Trust or (ii) a vote of a majority (as
defined in the Investment Company Act of 1940) of the outstanding voting
securities of the Fund, provided that in either event continuance is also
approved by a majority of the trustees who are not interested persons of you or
of the Trust, by a vote cast in person at a meeting called for the purpose of
voting such approval.
If the shareholders of the Fund fail to approve the Agreement in the
manner set forth above, upon approval of the Board, including a majority of the
trustees who are not interested persons of you or of the Trust, you may continue
to serve or act in such capacity for the Fund for the period of time (not
exceeding one hundred and twenty days after the termination of the Agreement)
pending required approval of the Agreement, of a new agreement with you or a
different adviser or other definitive action; provided that the compensation to
be paid by the Fund to you will be equal to the lesser of your actual costs
incurred in furnishing investment advisory services to the Fund or the amount
you would have received under this Agreement.
This Agreement may, on sixty days' written notice, be terminated at any
time without the payment of any penalty, by the Board, by a vote of a majority
of the outstanding voting securities of the Fund or by you. This Agreement shall
automatically terminate in the event of its assignment.
7. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived, discharged or
terminated orally, and no amendment of this Agreement shall be effective until
approved by vote of the holders of a majority of the outstanding voting
securities of the Fund and by the Board, including a majority of the trustees
who are not interested persons of you or of the Trust, cast in person at a
meeting called for the purpose of voting on such approval.
- 5 -
<PAGE>
8. LIMITATION OF LIABILITY
It is expressly agreed that the obligations of the Fund hereunder shall
not be binding upon any of the trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the trust property
of the Fund, as provided in the Declaration of Trust of the Trust. The execution
and delivery of this Agreement have been authorized by the trustees of the Trust
and the shareholders of the Fund and signed by the officers of the Trust, acting
as such, and neither such authorization by such trustees and shareholders nor
such execution and delivery by such officers shall be deemed to have been made
by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Fund as provided in
the Trust's Declaration of Trust.
9. MISCELLANEOUS
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same Agreement.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
upon the date thereof.
Yours very truly,
ATTEST: COUNTRYWIDE INVESTMENT TRUST
/s/ John F. Splain By: /s/ Robert H. Leshner
Dated: August 29, 1997
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST: COUNTRYWIDE INVESTMENTS, INC.
/s/ John F. Splain By: /s/ Robert H. Leshner
Dated: August 29, 1997
- 6 -
MANAGEMENT AGREEMENT
TO: COUNTRYWIDE INVESTMENTS, INC.
312 Walnut Street
Cincinnati, Ohio 45202
Dear Sirs:
Countrywide Investment Trust (hereinafter referred to as the "Trust")
herewith confirms our agreement with you.
The Trust has been organized to engage in the business of an investment
company. The Intermediate Bond Fund (the "Fund") has been established as a
series of the Trust. You have been selected to act as the investment adviser of
the Fund and to provide certain other services, as more fully set forth below,
and you are willing to act as such investment adviser and to perform such
services under the terms and conditions hereinafter set forth. Accordingly, the
Trust agrees with you as follows upon the date of the execution of this
Agreement.
1. ADVISORY SERVICES
You will regularly provide the Fund with such investment advice as you
in your discretion deem advisable and will furnish a continuous investment
program for the Fund consistent with its investment objectives and policies. You
will determine what securities shall be purchased for the Fund, what portfolio
securities shall be held or sold by the Fund, and what portion of the Fund's
assets shall be held uninvested, subject always to the Fund's investment
objectives, policies and restrictions, as each of the same shall be from time to
time in effect, and subject further, to such policies and instructions as the
Board of Trustees (the "Board") of the Trust may from time to time establish and
supply to you copies thereof. You will advise and assist the officers of the
Trust in taking such steps as are necessary or appropriate to carry out the
decisions of the Board and the appropriate committees of the Board regarding the
conduct of the business of the Fund.
2. ALLOCATION OF CHARGES AND EXPENSES
You will pay the compensation and expenses of any persons rendering any
services to the Fund who are officers, directors, stockholders or employees of
your corporation and will make available, without expense to the Fund, the
services of such of your employees as may duly be elected officers or trustees
of the Trust, subject to their individual consent to serve and to any
limitations imposed by law. The compensation and expenses of any officers,
trustees and employees of the Trust who are not officers, directors, employees
or stockholders of your corporation will be paid by the Trust.
- 1 -
<PAGE>
You will pay all advertising and promotion expenses incurred in
connection with the sale or distribution of the Fund's shares to the extent such
expenses are not assumed by the Fund under the Trust's Plans of Distribution
Pursuant to Rule 12b-1.
The Fund will also be responsible for the payment of all other
operating expenses of the Fund, including fees and expenses incurred by the Fund
in connection with membership in investment company organizations, brokerage
fees and commissions, legal, auditing and accounting expenses, expenses of
registering shares under federal and state securities laws, insurance expenses,
taxes or governmental fees, fees and expenses of the custodian, transfer,
shareholder service and dividend disbursing agent and accounting and pricing
agent of the Fund, expenses including clerical expenses of issue, sale,
redemption or repurchase of shares of the Fund, the fees and expenses of
trustees of the Trust who are not affiliated with you, the cost of preparing and
distributing reports and notices to shareholders, the cost of printing or
preparing prospectuses for delivery to the Fund's shareholders, the cost of
printing or preparing stock certificates or any other documents, statements or
reports to shareholders, expenses of shareholders' meetings and proxy
solicitations, such extraordinary or nonrecurring expenses as may arise,
including litigation to which the Fund may be a party and indemnification of the
Trust's officers and trustees with respect thereto, or any other expense not
specifically described above incurred in the performance of the Fund's
obligations. All other expenses not assumed by you herein incurred by the Fund
in connection with the organization, registration of shares and operations of
the Fund will be borne by the Fund.
3. COMPENSATION OF THE ADVISER
For all of the services to be rendered and payments made as provided in
this Agreement, the Fund will pay you as of the last day of each month, a fee
equal to the annual rate of .50% of the average value of the daily net assets of
the Fund up to $50,000,000; .45% of such assets from $50,000,000 to
$150,000,000; .40% of such assets from $150,000,000 to and including
$250,000,000; and .375% of such assets in excess of $250,000,000.
The total fees payable during each of the first and second halves of
each fiscal year of the Trust shall not exceed the semiannual total of the daily
fee accruals requested by you during the applicable six month period. The
average value of net assets shall be determined pursuant to the applicable
provisions of the Declaration of Trust of the Trust or a resolution of the
Board, if required. If, pursuant to such provisions, the determination of net
asset value of the Fund is suspended for any
- 2 -
<PAGE>
particular business day, then for the purposes of this paragraph, the value of
the net assets of the Fund as last determined shall be deemed to be the value of
the net assets as of the close of the business day, or as of such other time as
the value of the Fund's net assets may lawfully be determined, on that day. If
the determination of the net asset value of the Fund's shares has been suspended
for a period including such month, your compensation payable at the end of such
month shall be computed on the basis of the value of the net assets of the Fund
as last determined (whether during or prior to such month).
Your compensation with respect to each additional series of the Trust
effectively registered for sale in a public offering after the date of this
Agreement shall be determined by the Board, including a majority of the Trustees
who are not "interested persons" (as defined in the Investment Company Act of
1940) of you or of the Trust, and approved pursuant to the provisions of Section
15 of the Investment Company Act of 1940.
4. EXECUTION OF PURCHASE AND SALE ORDERS
In connection with purchases or sales of portfolio securities for the
account of the Fund, it is understood that you will arrange for the placing of
all orders for the purchase and sale of portfolio securities for the Fund's
accounts with brokers or dealers selected by you, subject to review of this
selection by the Board from time to time. You will be responsible for the
negotiation and the allocation of principal business and portfolio brokerage. In
the selection of such brokers or dealers and the placing of such orders, you are
directed at all times to seek for the Fund the best qualitative execution,
taking into account such factors as price (including the applicable brokerage
commission or dealer spread), the execution capability, financial responsibility
and responsiveness of the broker or dealer and the brokerage and research
services provided by the broker or dealer.
You should generally seek favorable prices and commission rates that
are reasonable in relation to the benefits received. In seeking best qualitative
execution, you are authorized to select brokers or dealers who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Fund and/or the other accounts over
which you exercise investment discretion. You are authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if
you determine in good faith that the amount of the commission is reasonable in
relation to the value of the brokerage and research services provided by the
executing broker or dealer. The determination may be viewed in terms of either a
- 3 -
<PAGE>
particular transaction or your overall responsibilities with respect to the Fund
and to accounts over which you exercise investment discretion. The Trust and you
understand that, although the information may be useful to the Fund and you, it
is not possible to place a dollar value on such information. The Board shall
periodically review the commissions paid by the Fund to determine if the
commissions paid over representative periods of time were reasonable in relation
to the benefits to the Fund.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to seeking best qualitative execution,
you may give consideration to sales of shares of the Fund as a factor in the
selection of brokers and dealers to execute Fund portfolio transactions.
If any occasion should arise in which you give any advice to clients of
yours concerning the shares of the Fund, you will act solely as investment
counsel for such client and not in any way on behalf of the Trust. Your services
to the Fund pursuant to this Agreement are not to be deemed to be exclusive and
it is understood that you may render investment advice, management and other
services to others.
5. LIMITATION OF LIABILITY OF ADVISER
You (including your directors, officers, shareholders, employees,
control persons and affiliates of any thereof) shall not be liable for any error
of judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on your part in the
performance of your duties or from the reckless disregard by you of your
obligations and duties under this Agreement ("disabling conduct"). However, you
will not be indemnified for any liability unless (1) a final decision is made on
the merits by a court or other body before whom the proceeding was brought that
you were not liable by reason of disabling conduct, or (2) in the absence of
such a decision, a reasonable determination is made, based upon a review of the
facts, that you were not liable by reason of disabling conduct, by (a) the vote
of a majority of a quorum of trustees who are neither "interested persons" of
the Trust as defined in the Investment Company Act of 1940 nor parties to the
proceeding ("disinterested, non-party trustees"), or (b) an independent legal
counsel in a written opinion. The Fund will advance attorneys' fees or other
expenses incurred by you in defending a proceeding, upon the undertaking by or
on behalf of you to repay the advance unless it is ultimately determined that
you are entitled to indemnification, so long as you meet at least one of the
following as a condition to the advance: (1) you shall provide a security for
your undertaking, (2) the Fund shall be insured against losses arising by reason
of
- 4 -
<PAGE>
any lawful advances, or (3) a majority of a quorum of the disinterested,
non-party trustees of the Trust, or an independent legal counsel in a written
opinion, shall determine, based on a review of readily available facts (as
opposed to a full trial- type inquiry), that there is reason to believe that you
ultimately will be found entitled to indemnification. Any person employed by you
who may also be or become an employee of the Trust shall be deemed, when acting
within the scope of his employment by the Trust, to be acting in such employment
solely for the Trust and not as your employee or agent.
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall be effective upon its execution, shall remain in
force until February 28, 1999 and from year to year thereafter, subject to
annual approval by (i) the Board of the Trust or (ii) a vote of a majority (as
defined in the Investment Company Act of 1940) of the outstanding voting
securities of the Fund, provided that in either event continuance is also
approved by a majority of the trustees who are not interested persons of you or
of the Trust, by a vote cast in person at a meeting called for the purpose of
voting such approval.
If the shareholders of the Fund fail to approve the Agreement in the
manner set forth above, upon approval of the Board, including a majority of the
trustees who are not interested persons of you or of the Trust, you may continue
to serve or act in such capacity for the Fund for the period of time (not
exceeding one hundred and twenty days after the termination of the Agreement)
pending required approval of the Agreement, of a new agreement with you or a
different adviser or other definitive action; provided that the compensation to
be paid by the Fund to you will be equal to the lesser of your actual costs
incurred in furnishing investment advisory services to the Fund or the amount
you would have received under this Agreement.
This Agreement may, on sixty days' written notice, be terminated at any
time without the payment of any penalty, by the Board, by a vote of a majority
of the outstanding voting securities of the Fund or by you. This Agreement shall
automatically terminate in the event of its assignment.
7. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived, discharged or
terminated orally, and no amendment of this Agreement shall be effective until
approved by vote of the holders of a majority of the outstanding voting
securities of the Fund and by the Board, including a majority of the trustees
who are not interested persons of you or of the Trust, cast in person at a
meeting called for the purpose of voting on such approval.
- 5 -
<PAGE>
8. LIMITATION OF LIABILITY
It is expressly agreed that the obligations of the Fund hereunder shall
not be binding upon any of the trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the trust property
of the Fund, as provided in the Declaration of Trust of the Trust. The execution
and delivery of this Agreement have been authorized by the trustees of the Trust
and the shareholders of the Fund and signed by the officers of the Trust, acting
as such, and neither such authorization by such trustees and shareholders nor
such execution and delivery by such officers shall be deemed to have been made
by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Fund as provided in
the Trust's Declaration of Trust.
9. MISCELLANEOUS
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same Agreement.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
upon the date thereof.
Yours very truly,
ATTEST: COUNTRYWIDE INVESTMENT TRUST
/s/ John F. Splain By: /s/ Robert H. Leshner
---------------------
Dated: August 29, 1997
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST: COUNTRYWIDE INVESTMENTS, INC.
/s/ John F. Splain
By: /s/ Robert H. Leshner
-----------------------
Dated: August 29, 1997
Dealer #________
COUNTRYWIDE INVESTMENTS, INC.
312 WALNUT STREET
CINCINNATI, OHIO 45202
800-543-8721
513-629-2000
DEALER'S AGREEMENT
Countrywide Investments, Inc. ("Underwriter") invites you, as a
selected dealer, to participate as principal in the distribution of shares (the
"Shares") of the mutual funds set forth on Schedule A to this Agreement (the
"Funds"), of which it is the exclusive underwriter. Underwriter agrees to sell
to you, subject to any limitations imposed by the Funds, Shares issued by the
Funds and to promptly confirm each sale to you. All sales will be made according
to the following terms:
1. All offerings of any of the Shares by you must be made at the public
offering prices, and shall be subject to the conditions of offering, set forth
in the then current Prospectus of the Funds and to the terms and conditions
herein set forth, and you agree to comply with all requirements applicable to
you of all applicable laws, including federal and state securities laws, the
rules and regulations of the Securities and Exchange Commission, and the Rules
of Fair Practice of the National Association of Securities Dealers, Inc. (the
"NASD"), including Section 24 of the Rules of Fair Practice of the NASD. You
will not offer the Shares for sale in any state or other jurisdiction where they
are not qualified for sale under the Blue Sky Laws and regulations of such state
or jurisdiction, or where you are not qualified to act as a dealer. Upon
application to Underwriter, Underwriter will inform you as to the states or
other jurisdictions in which Underwriter believes the Shares may legally be
sold.
2. (a) You will receive a discount from the public offering
price ("concession") on all Shares purchased by you from Underwriter as
indicated on Schedule A, as it may be amended by Underwriter from time to time.
(b) In all transactions in open accounts in which you are
designated as Dealer of Record, you will receive the concessions as set forth on
Schedule A. You hereby authorize Underwriter to act as your agent in connection
with all transactions in open accounts in which you are designated as Dealer of
Record. All designations as Dealer of Record, and all authorizations of
Underwriter to act as your Agent pursuant thereto, shall cease upon the
termination of this Agreement or upon the investor's instructions to transfer
his open account to another Dealer of Record. No dealer concessions will be
allowed on purchases generating less than $1.00 in dealer concessions.
(c) As the exclusive underwriter of the Shares, Underwriter
reserves the privilege of revising the discounts specified on Schedule A at any
time by written notice.
3. Concessions will be paid to you at the address of your
principal office, as indicated below in your acceptance of this Agreement.
<PAGE>
4. Underwriter reserves the right to cancel this Agreement at any time
without notice if any Shares shall be offered for sale by you at less than the
then current public offering prices determined by, or for, the Funds.
5. All orders are subject to acceptance or rejection by Underwriter in
its sole discretion. The Underwriter reserves the right, in its discretion,
without notice, to suspend sales or withdraw the offering of Shares entirely.
6. Payment shall be made to the Funds and shall be received by its
Transfer Agent within three (3) business days after the acceptance of your order
or such shorter time as may be required by law. With respect to all Shares
ordered by you for which payment has not been received, you hereby assign and
pledge to Underwriter all of your right, title and interest in such Shares to
secure payment therefor. You appoint Underwriter as your agent to execute and
deliver all documents necessary to effectuate any of the transactions described
in this paragraph. If such payment is not received within the required time
period, Underwriter reserves the right, without notice, and at its option,
forthwith (a) to cancel the sale, (b) to sell the Shares ordered by you back to
the Funds, or (c) to assign your payment obligation, accompanied by all pledged
Shares, to any person. You agree that Underwriter may hold you responsible for
any loss, including loss of profit, suffered by the Funds, its Transfer Agent or
Underwriter, resulting from your failure to make payment within the required
time period.
7. No person is authorized to make any representations concerning
Shares of the Funds except those contained in the current applicable Prospectus
and Statement of Additional Information and in sales literature issued and
furnished by Underwriter supplemental to such Prospectus. Underwriter will
furnish additional copies of the current Prospectus and Statement of Additional
Information and such sales literature and other releases and information issued
by Underwriter in reasonable quantities upon request.
8. Under this Agreement, you act as principal and are not employed by
Underwriter as broker, agent or employee. You are not authorized to act for
Underwriter nor to make any representation on its behalf; and in purchasing or
selling Shares hereunder, you rely only upon the current Prospectus and
Statement of Additional Information furnished to you by Underwriter from time to
time and upon such written representations as may hereafter be made by
Underwriter to you over its signature.
9. You appoint the transfer agent for the Funds as your agent to
execute the purchase transactions of Shares in accordance with the terms and
provisions of any account, program, plan or service established or used by your
customers and to confirm each purchase to your customers on your behalf, and you
guarantee the legal capacity of your customers purchasing such Shares and any
co-owners of such Shares.
<PAGE>
10. You will (a) maintain all records required by law relating to
transactions in the Shares, and upon the request of Underwriter, or the request
of the Funds, promptly make such records available to Underwriter or to the
Funds as are requested, and (b) promptly notify Underwriter if you experience
any difficulty in maintaining the records required in the foregoing clause in an
accurate and complete manner. In addition, you will establish appropriate
procedures and reporting forms and schedules, approved by Underwriter and by the
Funds, to enable the parties hereto and the Funds to identify all accounts
opened and maintained by your customers.
11. Underwriter has adopted compliance standards, attached hereto as
Schedule B, as to when Class A and Class C Shares of the Dual Pricing Funds may
appropriately be sold to particular investors. You agree that all persons
associated with you will conform to such standards when selling Shares.
12. Each party hereto represents that it is presently, and, at all
times during the term of this Agreement, will be, a member in good standing of
the NASD and agrees to abide by all its Rules of Fair Practice including, but
not limited to, the following provisions:
(a) You shall not withhold placing customers' orders for any Shares so
as to profit yourself as a result of such withholding. You shall not purchase
any Shares from Underwriter other than for investment, except for the purpose of
covering purchase orders already received.
(b) All conditional orders received by Underwriter must be at a
specified definite price.
(c) If any Shares purchased by you are repurchased by the Funds (or by
Underwriter for the account of the Funds) or are tendered for redemption within
seven business days after confirmation of the original sale of such Shares (1)
you agree to forthwith refund to Underwriter the full concession allowed to you
on the original sale, such refund to be paid by Underwriter to the Funds, and
(2) Underwriter shall forthwith pay to the Funds that part of the discount
retained by Underwriter on the original sale. Notice will be given to you of any
such repurchase or redemption within ten days of the date on which the
repurchase or redemption request is made.
(d) Neither Underwriter, as exclusive underwriter for the Funds, nor
you as principal, shall purchase any Shares from a record holder at a price
lower than the net asset value then quoted by, or for, the Funds. Nothing in
this sub-paragraph shall prevent you from selling Shares for the account of a
record holder to Underwriter or the Funds at the net asset value currently
quoted by, or for, the Funds and charging the investor a fair commission for
handling the transaction.
(e) You warrant on behalf of yourself and your registered
representatives and employees that any purchase of Shares at net asset value by
the same pursuant to the terms of the Prospectus of the applicable Fund is for
investment purposes only and not for purposes of resale. Shares so purchased may
be resold only to the Fund which issued them.
13. You agree that you will indemnify Underwriter, the Funds, the
Funds' transfer agent and the Funds' custodians and hold such persons harmless
from any claims or assertions relating to the lawfulness of your company's
participation in this Agreement and the transactions contemplated hereby or
relating to any activities of any persons or entities affiliated with your
company which are performed in connection with the discharge of your
responsibilities under this Agreement. If any such claims are asserted, the
indemnified parties shall have the right to engage in their own defense,
including the selection and engagement of legal counsel of their choosing, and
all costs of such defense shall be borne by you.
<PAGE>
14. This Agreement will automatically terminate in the event of its
assignment. Either party hereto may cancel this Agreement without penalty upon
ten days' written notice. This Agreement may also be terminated as to any Fund
at any time without penalty by the vote of a majority of the members of the
Board of Trustees of the terminating Fund who are not "interested persons" (as
such term is defined in the Investment Company Act of 1940) and who have no
direct or indirect financial interest in the applicable Fund's Distribution
Expense Plan pursuant to Rule 12b-1 under the Investment Company Act of 1940 or
any agreement relating to such Plan, including this Agreement, or by a vote of a
majority of the outstanding voting securities of the terminating Fund on ten
days' written notice.
15. All communications to Underwriter should be sent to Countrywide
Investments, Inc., 312 Walnut Street, Cincinnati, Ohio 45202, or at such other
address as Underwriter may designate in writing. Any notice to you shall be duly
given if mailed or telegraphed to you at the address of your principal office,
as indicated below in your acceptance of this Agreement.
16. This Agreement supersedes any other agreement with you relating
to the offer and sale of the Shares, and relating to any other matter discussed
herein.
17. This Agreement shall be binding (i) upon placing your first order
with Underwriter for the purchase of Shares, or (ii) upon receipt by Underwriter
in Cincinnati, Ohio of a counterpart of this Agreement duly accepted and signed
by you, whichever shall occur first. This Agreement shall be construed in
accordance with the laws of the State of Ohio.
18. The undersigned, executing this Agreement on behalf of Dealer,
hereby warrants and represents that he is duly authorized to so execute this
Agreement on behalf of Dealer.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return all copies of this Agreement to the
Underwriter.
<PAGE>
ACCEPTED BY DEALER
By:________________________________________
Authorized Signature
___________________________________________
Type or Print Name, Position
___________________________________________
Dealer Name
___________________________________________
Address
____________________________________________
Address
____________________________________________
Phone
_____________________________________________
Date
COUNTRYWIDE INVESTMENTS, INC.
By: __________________________________________________
_______________________________________________________
Date
<PAGE>
Schedule A
COUNTRYWIDE INVESTMENTS
COMMISSION SCHEDULE
Government Mortgage Fund
Intermediate Bond Fund
Tax-Free Intermediate Term Fund - Class A
Intermediate Term Government Income Fund
Adjustable Rate U.S. Government Securities Fund
Total
Dollar Amount of Purchase Sales Dealer
(At Offering Price) Charge* Concession
Less than $100,000 2.00% 1.80%
from $100,000 but under $250,000 1.50% 1.35%
from $250,000 but under $500,000 1.00% .90%
from $500,000 but under $1,000,000 .75% .65%
$1,000,000 and over** None None
25 basis points annual trailing commission effective immediately, paid
quarterly.
Equity Fund - Class A
Utility Fund - Class A
Growth/Value Fund
Aggressive Growth Fund
Global Bond Fund - Class A
Ohio Insured Tax-Free Fund - Class A
Kentucky Tax-Free Fund
Total
Dollar Amount of Purchase Sales Dealer
(At Offering Price) Charge* Concession
Less than $100,000 4.00% 3.60%
from $100,000 but under $250,000 3.50% 3.30%
from $250,000 but under $500,000 2.50% 2.30%
from $500,000 but under $1,000,000 2.00% 1.80%
$1,000,000 and over** None None
25 basis points annual trailing commission effective immediately, paid
quarterly.
* As a percentage of offering price.
** Broker/Dealers are entitled to a commission of 75 basis points at the time
the investor purchases Class A shares at NAV in amounts totaling $1 million or
more. However, the investor is subject to a contingent deferred sales load of
75 basis points if a redemption occurs within one year of purchase.
See specific Fund prospectus for details.
Equity Fund - Class C
Utility Fund - Class C
Global Bond Fund - Class C
Ohio Insured Tax-Free Fund - Class C
Tax-Free Intermediate Term Fund - Class C
The Funds will be offered to clients at net asset value. A commission of 1% of
the purchase amount of Class C shares will be paid to participating brokers at
the time of purchase. Purchases of Class C shares are subject to a contingent
deferred sales load, according to the following schedule:
Year Since Purchase Contingent Deferred
Payment Was Made Sales Load
First Year 1%
Thereafter None
100 basis points annual trailing commission will be paid quarterly beginning in
the thirteenth month.
Brokers may invest for their own account at NAV
No trailing commissions will be paid to a dealer for any calendar quarter in
which the average daily balance of all accounts in Countrywide Investments
funds (including no-load money market funds) is less than $1,000,000.
FOR BROKER/DEALER USE ONLY
<PAGE>
Schedule B
POLICIES AND PROCEDURES
WITH RESPECT TO SALES
OF DUAL PRICING FUND
As certain Funds within Countrywide Investments (the "Dual Pricing
Funds") offer two classes of Shares subject to different levels of front-end
sales charges, it is important for an investor not only to choose the Fund that
best suits his investment objectives, but also to choose the sales financing
method which best suits his particular situation. To assist investors in these
decisions, we are instituting the following policy:
1. Any purchase order for $1 million or more must be for Class A
Shares.
2. Any purchase order for $100,000 but less than $1 million is
subject to approval by a registered principal of the
Underwriter, who must approve the purchase order for either
Class A Shares or Class C Shares in light of the relevant
facts and circumstances, including:
(a) the specific purchase order dollar amount;
(b) the length of time the investor expects to hold the
Shares; and
(c) any other relevant circumstances, such as the
availability of purchases under a Letter of Intent.
3. Any order to exchange Class A Shares of a Dual Pricing Fund
(or Shares of another Fund having a maximum sales load equal
to or greater than Class A Shares of the Dual Pricing Funds)
for Shares of another Dual Pricing Fund will be for Class A
Shares only. Class C Shares of a Dual Pricing Fund may be
exchanged for either Class A or Class C Shares of another Dual
Pricing Fund, provided that an exchange of Class C Shares for
Class A Shares is subject to approval by a registered
principal of Underwriter, who must approve the exchange in
light of the relevant facts and circumstances.
There are instances when one financing method may be more appropriate
than the other. For example, investors who would qualify for a significant
discount from the maximum sales charge on Class A Shares may determine that
payment of such a reduced front-end sales charge is superior to payment of the
higher ongoing distribution fee applicable to Class C Shares. On the other hand,
an investor whose order would not qualify for such a discount may wish to pay a
lower sales charge and have more of his funds invested in Class C Shares. If
such an investor anticipates that he will redeem his Shares within a short
period of time, the investor may, depending on the amount of his purchase,
choose to bear higher distribution expenses than if he had purchased Class A
Shares.
In addition, investors who intend to hold their Shares for a
significantly long time may wish to purchase Class A Shares in order to avoid
the higher ongoing distribution expenses of Class C Shares.
The appropriate supervisor must ensure that all employees receiving
investor inquiries about the purchase of Shares of Dual Pricing Funds advise the
investor of the available financing methods offered by mutual funds, and the
impact of choosing one method over another. It may be appropriate for the
supervisor to discuss the purchase with the investor.
This policy is effective immediately with respect to any order for the
purchase of Shares of all Dual Pricing Funds. Questions relating to this policy
should be directed to Sharon Karp, Vice President of the Underwriter, at
513/629-2000.
TRANSFER, DIVIDEND DISBURSING, SHAREHOLDER SERVICE
AND PLAN AGENCY AGREEMENT
THIS AGREEMENT effective as of February 28, 1997 by and between
COUNTRYWIDE INVESTMENT TRUST, a Massachusetts business trust (the "Trust"), and
COUNTRYWIDE FUND SERVICES, INC., an Ohio corporation (the "T/A").
WITNESSETH THAT:
WHEREAS, the Trust desires to appoint the T/A as its transfer agent,
dividend disbursing agent, shareholder service agent, plan agent and shareholder
purchase and redemption agent, and the T/A is willing to act in such capacities
upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. APPOINTMENT OF TRANSFER AGENT.
The T/A is hereby appointed transfer agent for the shares of
the Trust and dividend disbursing agent for the Trust and shall also act as plan
agent, shareholder service agent and purchase and redemption agent for
shareholders of the Trust, and the T/A accepts such appointment and agrees to
act in such capacities under the terms and conditions set forth herein.
2. DOCUMENTATION.
The Trust will furnish from time to time the following documents:
A. Each resolution of the Board of Trustees of the
Trust authorizing the original issue of its
shares;
B. Each Registration Statement filed with the
Securities and Exchange Commission and amendments
thereof;
C. A certified copy of each amendment to the
Declaration of Trust and the By-Laws of the Trust;
D. Certified copies of each resolution of the Board
of Trustees authorizing officers to give
instructions to the T/A;
E. Specimens of all new forms of share certificates
accompanied by Board of Trustees' resolutions
approving such forms;
<PAGE>
F. Such other certificates, documents or opinions
which the T/A may, in its discretion, deem
necessary or appropriate in the proper performance
of its duties;
G. Copies of all Underwriting and Dealer Agreements
in effect;
H. Copies of all Administration Agreements and
Investment Advisory Agreements in effect;
I. Copies of all documents relating to special
investment or withdrawal plans which are offered
or may be offered in the future by the Trust and
for which the T/A is to act as plan agent.
3. T/A TO RECORD SHARES.
The T/A shall record issues of shares of the Trust and shall
notify the Trust in case any proposed issue of shares by the Trust shall result
in an over-issue as defined by Section 8- 104(2) of the Uniform Commercial Code,
as provided in Article 8 of the Uniform Commercial Code, Ohio Revised Code,
paragraph 1308.01 et. seq., and in case any issue of shares would result in such
an over-issue, shall refuse to credit said shares and shall not countersign and
issue certificates for such shares. Except as provided in Article 8 of said
Uniform Commercial Code and in Section 4 of this Agreement and as specifically
agreed in writing from time to time between the T/A and the Trust, the T/A shall
have no obligation, when countersigning and issuing and/or crediting shares, to
take cognizance of any other laws relating to issue and sale of such shares.
4. T/A TO VALIDATE TRANSFERS.
Upon receipt of a proper request for transfer and upon
surrender to the T/A of certificates, if any, in proper form for transfer, the
T/A shall approve such transfer and shall take all necessary steps to effectuate
the transfer as indicated in the transfer request. Upon approval of the
transfer, the T/A shall notify the Trust in writing of each such transaction and
shall make appropriate entries on the shareholder records maintained by the T/A.
5. SHARE CERTIFICATES.
If the Trust authorizes the issuance of share certificate, the
Trust shall supply the T/A with a sufficient supply of blank share certificates
and from time to time shall renew such supply upon request of the T/A. Such
blank share
- 2 -
<PAGE>
certificates shall be properly signed, manually or, if authorized by the Trust,
by facsimile; and notwithstanding the death, resignation or removal of any
officers of the Trust authorized to sign share certificates, the T/A may
continue to countersign certificates which bear the manual or facsimile
signature of such officer until otherwise directed by the Trust.
6. LOST OR DESTROYED CERTIFICATES.
In case of the alleged loss or destruction of any share
certificate, no new certificate shall be issued in lieu thereof, unless there
shall first be furnished an appropriate bond satisfactory to T/A and the Trust,
and issued by a surety company satisfactory to the T/A and the Trust.
7. RECEIPT OF FUNDS.
Upon receipt of any check or other instrument drawn or
endorsed to it as agent for, or identified as being for the account of, the
Trust or Countrywide Investments, Inc. as underwriter of the Trust (the
"Underwriter"), the T/A shall stamp the check or instrument with the date of
receipt, determine the amount thereof due the Trust and the Underwriter,
respectively, and shall forthwith process the same for collection. Upon receipt
of notification of receipt of funds eligible for share purchases and payment of
sales charges in accordance with the Trust's then current prospectus and
statement of additional information, the T/A shall notify the Trust, at the
close of each business day, in writing of the amounts of said funds credited to
the Trust and deposited in its account with the Custodian, and shall similarly
notify the Underwriter of the amounts of said funds credited to the Underwriter
and deposited in its account with its designated bank.
8. PURCHASE ORDERS.
Upon receipt of a check or other order for the purchase of
shares of the Trust, accompanied by sufficient information to enable the T/A to
establish a shareholder account, the T/A shall, as of the next determination of
net asset value after receipt of such order in accordance with the Trust's then
current prospectus and statement of additional information, compute the number
of shares due to the shareholder, credit the share account of the investor,
subject to collection of the funds, with the number of shares so purchased,
shall notify the Trust in writing or by computer report at the close of each
business day of such transactions and shall mail to the investor and/or dealer
of record a notice of such credit when requested to do so by the Trust.
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9. ISSUE OF SHARE CERTIFICATES.
If the Trust authorizes the issuance of share certificates and
an investor requests a share certificate, the T/A will countersign and mail, by
insured first class mail, a share certificate to the investor at his address as
set forth on the transfer books of the Trust, subject to any other instructions
for delivery of certificates representing newly purchased shares and subject to
the limitation that no certificates representing newly purchased share shall be
mailed to the investor until the cash purchase price of such shares has been
collected and credited to the account of the Trust maintained by the Custodian.
10. RETURNED CHECKS.
In the event that the T/A is notified by the Trust's Custodian
that any check or other order for the payment of money is returned unpaid for
any reason, the T/A will:
A. Give prompt notification to the Trust and the
Underwriter of the non-payment of said check;
B. In the absence of other instructions from the
Trust or the Underwriter, take such steps as may
be necessary to redeem any shares purchased on the
basis of such returned check and cause the
proceeds of such redemption plus any dividends
declared with respect to such shares to be
credited to the account of the Trust and to
request the Trust's Custodian to forward such
returned check to the person who originally
submitted the check;
C. Notify the Trust of such actions and correct the
Trust's records maintained by the T/A pursuant to
this Agreement.
11. SALES CHARGE.
In computing the number of shares to credit to the account of
a shareholder pursuant to Paragraph 8 hereof, the T/A will calculate the total
of the applicable Underwriter and dealer of record sales charges with respect to
each purchase as set forth in the Trust's current prospectus and statement of
additional information and in accordance with any notification filed with
respect to combined and accumulated purchases; the T/A will also determine the
portio of each sales charge payable by the Underwriter to the dealer of record
participating in the sale in accordance with such schedules as are from time to
time
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delivered by the Underwriter to the T/A; provided, however, the T/A shall have
no liability hereunder arising from the incorrect selection by the T/A of the
gross rate of sales charges except that this exculpation shall not apply in the
event the rate is specified by the Underwriter or the Trust and the T/A fails to
select the rate specified.
12. DIVIDENDS AND DISTRIBUTIONS.
The Trust shall furnish the T/A with appropriate evidence of
trustee action authorizing the declaration of dividends and other distributions.
The T/A shall establish procedures in accordance with the Trust's then current
prospectus and statement of additional information and with other authorized
actions of the Trust's Board of Trustees under which it will have available from
the Custodian of the Trust or the Trust any required information for each
dividend and other distribution. After deducting any amount required to be
withheld by any applicable laws, the T/A shall, as agent for each shareholder
who so requests, invest the dividends and other distributions in full and
fractional shares in accordance with the Trust's then current prospectus and
statement of additional information. If an investor has elected to receive
dividends or other distributions in cash, then the T/A shall prepare checks for
approval and verification by the Trust and signature by an authorized officer or
employee of the T/A in the appropriate amount and shall mail them to the
shareholders of record at their address of record or to such other address as
the shareholder may have designated. The T/A shall, on or before the mailing
date of such checks, notify the Trust and the Custodian of the estimated amount
of cash required to pay such dividend or distribution, and the Trust shall
instruct the Custodian to make available sufficient funds therefore in the
appropriate account of the Trust. The T/A shall mail to the shareholders
periodic statements, as requested by the Trust, showing the number of full and
fractional shares and the net asset value per share of shares so credited.
When requested by the Trust, the T/A shall assist the Trust
(i) with any withholding procedures, shareholder reports and payments, and (ii)
in the preparation and filing with the Internal Revenue Service, and when
required, with the addressing and mailing to shareholders, of such returns and
information relating to dividends and distributions paid by the Trust as are
required to be so prepared, filed and mailed by applicable laws.
13. UNCLAIMED DIVIDENDS AND UNCLAIMED REDEMPTION PROCEEDS.
The T/A shall, at least annually, furnish in writing to the
Trust the names and addresses, as shown in the shareholder accounts maintained
pursuant to Paragraph 8, of all investors for
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which there are, as of the end of the calendar year, dividends, distributions or
redemptions proceeds for which checks or share certificates mailed in payment of
distributions have been returned. The T/A shall use its best efforts to contact
the shareholders affected and to follow any other written instructions received
from the Trust concerning the disposition of any such unclaimed dividends,
distributions or redemption proceeds.
14. REDEMPTIONS AND EXCHANGES.
A. The T/A shall process, in accordance with the Trust's then
current prospectus and statement of additional information, each order for the
redemption of shares accepted by the T/A. Upon its approval of such redemption
transactions, the T/A, if requested by the Trust, shall mail to the investor
and/or dealer of record a confirmation showing trade date, number of full and
fractional shares redeemed, the price per share and the total redemption
proceeds. For such redemption, the T/A shall either: (a) prepare checks in the
appropriate amounts for approval and verification by the Trust and signature by
an authorized officer or employee of the T/A and mail the checks to the
appropriate person, or (b) in the event redemption proceeds are to be wired
through the Federal Reserve Wire system or by bank wire, cause such proceeds to
be wired in federal funds to the commercial bank account designated by the
investor, or (c) effectuate such other redemption procedures which are
authorized by the Trust's Board of Trustees or its then current prospectus and
statement of additional information. The requirements as to instruments of
transfer and other documentation, the applicable redemption price and the time
of payment shall be as provided in the then current prospectus and statement of
additional information, subject to such supplemental instructions as may be
furnished by the Trust and accepted by the T/A. If the T/A or the Trust
determines that a request for redemption does not comply with the requirements
for redemptions, the T/A shall promptly notify the investor and/or dealer of
record indicating the reason therefor.
B. If shares of the Trust are eligible for exchange with
shares of any other investment company, the T/A, in accordance with the then
current prospectus and statement of additional information and exchange rules of
the Trust and such other investment company, or such other investment company's
transfer agent, shall review and approve all exchange requests and shall, on
behalf of the Trust's shareholders, process such approved exchange requests.
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C. The T/A shall notify the Custodian, the Underwriter and the
Trust on each business day of the amount of cash required to meet payments made
pursuant to the provisions of this Paragraph 14, and, on the basis of such
notice, the Trust shall instruct the Custodian to make available from time to
time sufficient funds therefor in the appropriate account of the Trust.
D. Procedures for effecting redemption orders accepted from
investors or dealers of record by telephone or other methods shall be
established by mutual agreement between the T/A and the Trust consistent with
the then current prospectus and statement of additional information.
E. The authority of the T/A to perform its responsibilities
under Paragraph 8, Paragraph 12 and this Paragraph 14 shall be suspended upon
receipt of notification by it of the suspension of the determination of the
Trust's net asset value.
15. AUTOMATIC WITHDRAWAL PLANS.
The T/A will process automatic withdrawal orders pursuant to
the provisions of the withdrawal plans duly executed by shareholders and the
current prospectus and statement of additional information of the trust.
Payments upon such withdrawal order shall be made by the T/A from the
appropriate account maintained by the Trust with the Custodian approximately the
last business day of each month in which a payment has been requested, and the
T/A will withdraw from a shareholder's account and present for repurchase or
redemption as many shares as shall be sufficient to make such withdrawal payment
pursuant to the provisions of the shareholder's withdrawal plan and the current
prospectus and statement of additional information of the Trust. From time to
time on new automatic withdrawal plans a check for payment date already past may
be issued upon request by the shareholder.
16. LETTERS OF INTENT.
The T/A will process such letters of intent for investing in
shares of the Trust as are provided for in the Trust's current prospectus and
statement of additional information. The T/A will make appropriate deposits to
the account of the Underwriter for the adjustment of sales charges as therein
provided and will currently report the same to the Underwriter.
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17. WIRE-ORDER PURCHASES.
The T/A will send written confirmations to the dealers of
record containing all details of the wire-order purchases placed by each such
dealer by close of business on the business day following receipt of such orders
by the T/A or the Underwriter, with copies to the Underwriter. Upon receipt of
any check drawn or endorsed to the Trust (or the T/A, as agent) or otherwise
identified as being payment of an outstanding wire- order, the T/A will stamp
said check with the date of its receipt and deposit the amount represented by
such check to the T/A's deposit accounts maintained with the Custodian. The T/A
will compute the respective portions of such deposit which represent the sales
charge and the net asset value of the shares so purchased, will cause the
Custodian to transfer federal funds in an amount equal to the net asset value of
the shares so purchased to the Trust's account at the Custodian, and will notify
the Trust and the Underwriter before noon of each business day of the total
amount deposited in the Trust's deposit accounts, and in the event that payment
for a purchase order is not received by the T/A or the Custodian on the tenth
business day following receipt of the order, prepare an NASD "notice of failure
of dealer to make payment" and forward such notification to the Underwriter.
18. OTHER PLANS.
The T/A will process such accumulation plans, group programs
and other plans or programs for investing in shares of the Trust as are now
provided for in the Trust's current prospectus and statement of additional
information and will act as plan agent for shareholders pursuant to the terms of
such plans and programs duly executed by such shareholder.
19. BOOKS AND RECORDS.
The T/A shall maintain records for each investor's account
showing the following:
A. Names, addresses and tax identifying numbers;
B. Name of the dealer of record;
C. Number of shares held of each series, if
applicable;
D. Historical information regarding the account of
each shareholder, including dividends and
distributions distributed in cash or invested in
shares;
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E. Information with respect to the source of all
dividends and distributions allocated among
income, realized short-term gains and realized
long-term gains;
G. Information with respect to withholdings on
foreign accounts;
H. Any instructions from a shareholder including all
forms furnished by the Trust and executed by a
shareholder with respect to (i) dividend or
distribution elections and (ii) elections with
respect to payment options in connection with the
redemption of shares;
I. Any dividend address and correspondence relating
to the current maintenance of a shareholder's
account;
J. Certificate numbers and denominations for any
shareholder holding certificates;
K. Any information required in order for the T/A to
perform the calculations contemplated under this
Agreement;
L. The date and number of shares of the Trust purchased,
the date and number of shares of the Trust held, the
date and number of shares reinvested as dividends and
the date and number of shares redeemed.
All of the records prepared and maintained by the T/A pursuant
to this Paragraph 19 will be the property of the Trust. In the event this
Agreement is terminated, all records shall be delivered to the Trust or to any
person designated by the Trust at the Trust's expense, and the T/A shall be
relieved of responsibility for the preparation and maintenance of any such
records delivered to the Trust or any such person.
20. TAX RETURNS AND REPORTS.
The T/A will prepare, file with the Internal Revenue Service
and, if required, mail to shareholders such returns for reporting dividends and
distributions paid by the Trust as are required to be so prepared, filed and
mailed by applicable laws, rules and regulations; and the T/A will withhold such
sums as are required to be withheld under applicable federal and state tax law,
rules and regulations.
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21. OTHER INFORMATION TO THE TRUST.
Subject to such instructions, verification and approval of the
Custodian and the Trust as shall be required by any agreement or applicable law,
the T/A will also maintain such records as shall be necessary to furnish to the
Trust the following: annual shareholder meeting lists, proxy lists and mailing
materials, shareholder reports and confirmations, checks for disbursing
redemption proceeds, dividends and other distributions or expense disbursements,
portfolio printouts and general ledger printouts.
22. FORM N-SAR.
The T/A shall maintain such records within its control and as
shall be requested by the Trust to assist the Trust in fulfilling the
requirements of Form N-SAR.
23. COOPERATION WITH ACCOUNTANTS.
The T/A shall cooperate with the Trust's independent public
accountants and shall take all reasonable action in the performance of its
obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their unqualified
opinion where required for any document for the Trust.
24. SHAREHOLDER SERVICE AND CORRESPONDENCE.
The T/A will provide and maintain adequate personnel, records
and equipment to receive and answer all shareholder and dealer inquiries
relating to account status, share purchases, redemptions and exchanges and other
investment plans available to Trust shareholders.
The T/A will answer written correspondence from shareholders
relating to their share accounts and such other written or oral inquiries as may
from time to time be mutually agreed upon, and the T/A will notify the Trust of
any correspondence or inquiries which may require an answer from the Trust.
25. PROXIES.
The T/A shall assist the Trust in the mailing of proxy cards
and other material in connection with shareholder meetings of the Trust, shall
receive, examine and tabulate returned proxies and shall, if requested by the
Trust, provide at lest one inspector of election to attend and participate as
required by law in shareholder meetings of the Trust.
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26. FEES AND CHARGES.
For performing its services under this Agreement, the Trust
shall pay the T/A a fee in accordance with the schedule attached hereto as
Schedule A and shall promptly reimburse the T/A for any out of pocket expenses
and advances which are to be paid by the Trust in accordance with Paragraph
27(b).
27. EXPENSES.
The expenses connected with the performance of this Agreement
shall be allocated between the Trust and the T/A as follows:
(a) The T/A shall furnish, at its expense and without cost to
the Trust (i) the services of its personnel to the extent that such services are
required to carry out its obligations under this Agreement and (ii) use of data
processing equipment.
(b) All costs and expenses not expressly assumed by the T/A
under Paragraph 27(a) of this Agreement shall be paid by the Trust, including,
but not limited to costs and expenses for postage, envelopes, checks, drafts,
continuous forms, reports, communications, statements and other materials,
telephone, telegraph and remote transmission lines, use of outside mailing
firms, necessary outside record storage, media for storage or records (e.g.,
microfilm, microfiche, computer tapes), printing, confirmations and any other
shareholder correspondence and any and all assessments, taxes or levies assessed
on the T/A for services provided under this Agreement. Postage for mailings of
dividends, proxies, reports and other mailings to all shareholders shall be
advanced to the T/A three business days prior to the mailing date of such
materials.
28. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
Except as otherwise provided in this Agreement and except for
the accuracy of information furnished to it by the T/A, the Trust assumes full
responsibility for the preparation, contents and distribution of each prospectus
and statement of additional information of the Trust, for complying with all
applicable requirements of the Investment Company Act of 1940 (the "Act"), the
Securities Act of 1933, as amended, and any laws, rules and regulations of
governmental authorities having jurisdiction.
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29. CONFIDENTIALITY.
The T/A agrees to treat all records and other information
relative to the Trust and its prior, present or potential shareholders
confidentially and the T/A on behalf of itself and its employees agrees to keep
confidential all such information, except (after prior notification to and
approval in writing by the Trust, which approval shall not be unreasonably
withheld and may not be withheld where the T/A may be exposed to civil or
criminal contempt proceedings for failure to comply) when requested to divulge
such information by duly constituted authorities or when so requested by the
Trust.
30. REFERENCES TO THE T/A.
The Trust shall not circulate any printed matter which
contains any reference to the T/A without the prior written approval of the T/A,
excepting solely such printed matter as merely identifies the T/A as Transfer
Agent, Plan Agent, Dividend Disbursing Agent, Shareholder Service Agent and
Accounting and Pricing Services Agent. The Trust will submit printed matter
requiring approval to the T/A in draft form, allowing sufficient time for review
by the T/A and its counsel prior to any deadline for printing.
31. EQUIPMENT FAILURES.
In the event of equipment failures beyond the T/A's control,
the T/A shall take all steps necessary to minimize service interruptions but
shall have no liability with respect thereto. The T/A shall endeavor to enter
into one or more agreements making provision for emergency use of electronic
data processing equipment to the extent appropriate equipment is available.
32. INDEMNIFICATION OF THE T/A.
(a) The T/A may rely on information reasonably believed by it
to be accurate and reliable. Except as may otherwise be required by the Act or
the rules thereunder, neither the T/A nor its shareholders, officers, directors,
employees, agents, control persons or affiliates of any thereof shall be subject
to any liability for, or any damages, expenses or losses incurred by the Trust
in connection with, any error of judgment, mistake of law, any act or omission
connected with or arising out of any services rendered under or payments made
pursuant to this Agreement or any other matter to which this Agreement relates,
except by reason of willful misfeasance, bad faith or gross negligence on the
part of any such persons in the performance of the duties of the T/A under this
Agreement or by reason of reckless disregard by any of such persons of the
obligations and duties of the T/A under this Agreement.
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(b) Any person, even though also a director, officer,
employee, shareholder or agent of the T/A, who may be or become an officer,
trustee, employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the trust (other than
services or business in connection with the T/A's duties hereunder), to be
rendering such services to or acting solely for the Trust and not as a director,
officer, employee, shareholder or agent of, or one under the control or
direction of the T/A, even though paid by it.
(c) Notwithstanding any other provision of this Agreement, the
Trust shall indemnify and hold harmless the T/A, its directors, officers,
employees, shareholders and agents from and against any and all claims, demands,
expenses and liabilities (whether with or without basis in fact or law) of any
and every nature which the T/A may sustain or incur or which may be asserted
against the T/A by any person by reason of, or as a result of: (i) any action
taken or omitted to be taken by the T/A in good faith in reliance upon any
certificate, instrument, order or share certificate believed by it to be genuine
and to be signed, countersigned or executed by any duly authorized person, upon
the oral instructions or written instructions of an authorized person of the
Trust or its own counsel; or (ii) any action taken or omitted to be taken by the
T/A in connection with its appointment in good faith in reliance upon any law,
act, regulation or interpretation of the same even though the same may
thereafter have been altered, changed, amended or repealed. However,
indemnification under this subparagraph shall not apply to actions or omissions
of the T/A or its directors, officers, employees, shareholders or agents in
cases of its or their own gross negligence, willful misconduct, bad faith, or
reckless disregard of its or their own duties hereunder.
33. MAINTENANCE OF INSURANCE COVERAGE.
At all times during the term of this Agreement, the T/A shall
be a named insured party on the Trust's Errors & Omissions policy and the
Trust's Fidelity Bond, both of which shall include coverage of the T/A's
officers and employees. The T/A shall pay its allocable share of the cost of
such policies in accordance with the provisions of the Act. The scope of
coverage and amount of insurance limits applicable to the Trust on such policies
shall also be made applicable to the T/A.
34. FURTHER ACTIONS.
Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes hereof.
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35. TERMINATION.
(a) The provisions of this Agreement shall be effective upon
its execution, shall continue in effect for two years from that date and shall
continue in force from year to year thereafter, but only so long as such
continuance is approved (1) by the T/A, (2) by vote, cast in person at a meeting
called for the purpose, of a majority of the Trust's trustees who are not
parties to this Agreement or interested persons (as defined in the Act) of any
such party, and (3) by vote of a majority of the Trust's Board of Trustees or a
majority of the Trust's outstanding voting securities.
(b) Either party may terminate this Agreement on any date by
giving the other party at least sixty (60) days prior written notice of such
termination specifying the date fixed therefor.
(c) Upon termination of this Agreement, the Trust shall pay to
the T/A such compensation as may be due as of the date of such termination, and
shall likewise reimburse the T/A for any out-of-pocket expenses and
disbursements reasonably incurred by the T/A to such date, and for the T/A's
costs, expenses and disbursements reasonably incurred by the T/A to such date,
and for the T/A's costs, expenses and disbursements as contemplated by this
Agreement.
(d) In the event that in connection with termination of this
Agreement a successor to any of the T/A's duties or responsibilities under this
Agreement is designated by the Trust by written notice to the T/A, the T/A
shall, promptly upon such termination and at the expense of the Trust, transfer
to such successor a certified list of the shareholders of the Trust (with name,
address and tax identification or Social Security number), a record of the
accounts of such shareholders and the status thereof, and all other relevant
books, records and other data established or maintained by the T/A under this
Agreement and shall cooperate in the transfer of such duties and
responsibilities, including provision for assistance from the T/A's cognizant
personnel in the establishment of books, records and other data by such
successor.
36. SERVICES FOR OTHERS.
Nothing in this Agreement shall prevent the T/A or any
affiliated person (as defined in the Act) of the T/A from providing services for
any other person, firm or corporation (including other investment companies);
provided, however, that the T/A expressly represents that it will undertake no
activities
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which, in its judgment, will adversely affect the performance of its obligations
to the Trust under this Agreement.
37. MISCELLANEOUS.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
38. LIMITATION ON LIABILITY.
The term "Countrywide Investment Trust" means and refers to
the trustees from time to time serving under the Trust's Declaration of Trust as
the same may subsequently thereto have been, or subsequently hereto may be,
amended. It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the trust property
of the Trust. The execution and delivery of this Agreement have been authorized
by the trustees of the Trust and signed by an officer of the Trust, acting as
such, and neither such authorization by such trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust.
39. SEVERABILITY.
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
40. QUESTIONS OF INTERPRETATION.
(a) This Agreement shall be governed by the laws of
the State of Ohio.
(b) Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the Act shall be resolved by reference to such term or provision of
the Act and to interpretations thereof, if any, by the States Courts or in the
absence of any controlling decision of any such court, by rules, regulations or
orders of the Securities and Exchange Commission issued pursuant to said Act. In
addition, where the effect of a requirement of the Act, reflected in any
provision of this Agreement is revised by rule, regulation or order of the
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Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
41. NOTICES.
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust
and of the T/A for this purpose shall be 312 Walnut Street, Cincinnati, Ohio
45202.
42. BINDING EFFECT.
Each of the undersigned expressly warrants and represents that
he has the full power and authority to sign this Agreement on behalf of the
party indicated, and that his signature will operate to bind the party indicated
to the foregoing terms.
43. COUNTERPARTS.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
44. FORCE MAJEURE.
If the T/A shall be delayed in its performance of services or
prevented entirely or in part from performing services due to causes or events
beyond its control, including and without limitation, acts of God, interruption
of power or other utility, transportation or communication services, acts of
civil or military authority, sabotages, national emergencies, explosion, flood,
accident, earthquake or other catastrophe, fire, strike or other labor problems,
legal action, present or future law, governmental order, rule or regulation, or
shortages of suitable parts, materials, labor or transportation, such delay or
non-performance shall be excused and a reasonable time for performance in
connection with this Agreement shall be extended to include the period of such
delay or non-performance.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
COUNTRYWIDE INVESTMENT TRUST
By____________________________
COUNTRYWIDE FUND SERVICES, INC.
By____________________________
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Schedule A
Compensation
Services Fee
As Transfer Agent and Shareholder
Servicing Agent:
Short Term Government Income Fund payable monthly at
rate of $25.00 per
account per year
Intermediate Term payable monthly at
Government Income Fund rate of $21.00 per
account per year
Institutional Government payable monthly at
Income Fund rate of $25.00 per
account per year
Adjustable Rate U.S. payable monthly at
Government Securities Fund rate of $21.00 per
account per year
Global Bond Fund payable monthly at
rate of $21.00 per
account per year
Intermediate Bond Fund payable monthly at
rate of $21.00 per
account per year
Money Market Fund payable monthly at
rate of $25.00 per
account per year
Each Fund offering a single class of shares will be subject to a minimum charge
of $1,000 per month. Each class of shares of a Fund offering multiple classes
will be subject to a minimum charge per class of $1,000 per month.
ACCOUNTING AND PRICING SERVICES AGREEMENT
THIS AGREEMENT effective as of February 28, 1997 by and between
COUNTRYWIDE INVESTMENT TRUST, a Massachusetts business trust (the "Trust") and
COUNTRYWIDE FUND SERVICES, INC., an Ohio corporation ("Countrywide").
WITNESSETH THAT:
WHEREAS, the Trust desires to hire Countrywide to provide the Trust
with certain accounting and pricing services, and Countrywide is willing to
provide such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. APPOINTMENT.
Countrywide is hereby appointed to provide the Trust with
certain accounting and pricing services, and Countrywide accepts such
appointment and agrees to provide such services under the terms and conditions
set forth herein.
2. CALCULATION OF NET ASSET VALUE.
Countrywide will calculate the net asset value of each series
of the Trust and the per share net asset value of each series of the Trust, in
accordance with the Trust's effective Registration Statement on Form N-1A under
the Securities Act of 1933, as amended, including its current prospectus and
statement of additional information (the "Registration Statement"), once daily
as of the time selected by the Trust's Board of Trustees. Countrywide will
prepare and maintain a daily valuation of all securities and other assets of the
Trust in accordance with instructions from a designated officer of the Trust or
its investment adviser and in the manner set forth in the Registration
Statement. In valuing securities of the Trust, Countrywide may contract with,
and rely upon market quotations provided by, outside services, the cost of which
shall be borne by the Trust.
3. BOOKS AND RECORDS.
Countrywide will maintain such books and records as are
necessary to enable it to perform its duties under this Agreement, and, in
addition, will prepare and maintain complete, accurate and current all records
with respect to the Trust required to be maintained by the Trust under the
Internal Revenue Code, as amended (the "Code") and under the general rules and
<PAGE>
regulations of the Investment Company Act of 1940, as amended (the "Act"), and
will preserve said records in the manner and for the periods prescribed in the
Code and such rules and regulations. The retention of such records shall be at
the expense of the Trust.
All of the records prepared and maintained by Countrywide
pursuant to this Paragraph 3 which are required to be maintained by the Trust
under the Code and the Act ("Required Records") will be the property of the
Trust. In the event this Agreement is terminated, all Required Records shall be
delivered to the Trust or to any person designated by the Trust at the Trust's
expense, and Countrywide shall be relieved of responsibility for the preparation
and maintenance of any Required Records delivered to the Trust or any such
person.
4. COOPERATION WITH ACCOUNTANTS.
Countrywide shall cooperate with the Trust's independent
public accountants and shall take all reasonable action in the performance of
its obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their unqualified
opinion where required for any document for the Trust.
5. FEES AND CHARGES.
For performing its services under this Agreement, the Trust
shall pay Countrywide a fee in accordance with the schedule attached hereto as
Schedule A.
6. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
Except as otherwise provided in this Agreement and except for
the accuracy of information furnished to it by Countrywide, the Trust assumes
full responsibility for the preparation, contents and distribution of each
prospectus and statement of additional information of the Trust, for complying
with all applicable requirements of the Act, the Securities Act of 1933, as
amended, and any laws, rules and regulations of governmental authorities having
jurisdiction.
7. CONFIDENTIALITY.
Countrywide agrees to treat all records and other information
relative to the Trust and its prior, present or potential shareholders
confidentially and Countrywide on behalf of itself and its employees agrees to
keep confidential all such information, except (after prior notification to and
approval in writing by the Trust, which approval shall not be unreasonably
withheld and may not be withheld where Countrywide may be exposed to civil or
criminal contempt proceedings for failure to comply) when requested to divulge
such information by duly constituted authorities or when so requested by the
Trust.
- 2 -
<PAGE>
8. REFERENCES TO COUNTRYWIDE.
The Trust shall not circulate any printed matter which
contains any reference to Countrywide without the prior written approval of
Countrywide, excepting solely such printed matter as merely identifies
Countrywide as Transfer Agent, Plan Agent, Dividend Disbursing Agent,
Shareholder Service Agent and Accounting and Pricing Services Agent. The Trust
will submit printed matter requiring approval to Countrywide in draft form,
allowing sufficient time for review by Countrywide and its counsel prior to any
deadline for printing.
9. EQUIPMENT FAILURES.
In the event of equipment failures beyond Countrywide's
control, Countrywide shall take all steps necessary to minimize service
interruptions but shall have no liability with respect thereto. Countrywide
shall endeavor to enter into one or more agreements making provision for
emergency use of electronic data processing equipment to the extent appropriate
equipment is available.
10. INDEMNIFICATION OF COUNTRYWIDE.
(a) Countrywide may rely on information reasonably believed by
it to be accurate and reliable. Except as may otherwise be required by the Act
or the rules thereunder, neither Countrywide nor its shareholders, officers,
directors, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with, any error of judgment, mistake of law, any act or
omission connected with or arising out of any services rendered under or
payments made pursuant to this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of the duties of
Countrywide under this Agreement or by reason of reckless disregard by any of
such persons of the obligations and duties of Countrywide under this Agreement.
(b) Any person, even though also a director, officer,
employee, shareholder or agent of Countrywide, who may be or become an officer,
trustee, employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust (other than
services or business in connection with Countrywide's duties hereunder), to be
rendering such services to or acting solely for the Trust and not as a director,
officer, employee, shareholder or agent of, or one under the control or
direction of Countrywide, even though paid by it.
- 3 -
<PAGE>
(c) Notwithstanding any other provision of this Agreement, the
Trust shall indemnify and hold harmless Countrywide, its directors, officers,
employees, shareholders and agents from and against any and all claims, demands,
expenses and liabilities (whether with or without basis in fact or law) of any
and every nature which Countrywide may sustain or incur or which may be asserted
against Countrywide by any person by reason of, or as a result of: (i) any
action taken or omitted to be taken by Countrywide in good faith in reliance
upon any certificate, instrument, order or stock certificate believed by it to
be genuine and to be signed, countersigned or executed by any duly authorized
person, upon the oral instructions or written instructions of an authorized
person of the Trust or upon the opinion of legal counsel for the Trust or its
own counsel; or (ii) any action taken or omitted to be taken by Countrywide in
connection with its appointment in good faith in reliance upon any law, act,
regulation or interpretation of the same even though the same may thereafter
have been altered, changed, amended or repealed. However, indemnification under
this subparagraph shall not apply to actions or omissions of Countrywide or its
directors, officers, employees, shareholders or agents in cases of its or their
own gross negligence, willful misconduct, bad faith, or reckless disregard of
its or their own duties hereunder.
11. MAINTENANCE OF INSURANCE COVERAGE.
At all times during the term of this Agreement, Countrywide
shall be a named insured party on the Trust's Errors & Omissions policy and the
Trust's Fidelity Bond, both of which shall include coverage of Countrywide's
officers and employees. Countrywide shall pay its allocable share of the cost of
such policies in accordance with the provisions of the Act. The scope of
coverage and amount of insurance limits applicable to the Trust on such policies
shall also be made applicable to Countrywide.
12. FURTHER ACTIONS.
Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes hereof.
13. TERMINATION.
(a) The provisions of this Agreement shall be effective upon
its execution, shall continue in effect for two years from that date and shall
continue in force from year to year thereafter, but only so long as such
continuance is approved (1) by Countrywide, (2) by vote, cast in person at a
meeting called for the purpose, of a majority of the Trust's trustees who are
not parties to this Agreement or interested persons (as defined
- 4 -
<PAGE>
in the Act) of any such party, and (3) by vote of a majority of the Trust's
Board of Trustees or a majority of the Trust's outstanding voting securities.
(b) Either party may terminate this Agreement on any date by
giving the other party at least sixty (60) days' prior written notice of such
termination specifying the date fixed therefor.
(c) This Agreement shall automatically terminate in the
event of its assignment.
(d) In the event that in connection with the termination of
this Agreement a successor to any of Countrywide's duties or responsibilities
under this Agreement is designated by the Trust by written notice to
Countrywide, Countrywide shall, promptly upon such termination and at the
expense of the Trust, transfer all Required Records and shall cooperate in the
transfer of such duties and responsibilities, including provision for assistance
from Countrywide's cognizant personnel in the establishment of books, records
and other data by such successor.
14. SERVICES FOR OTHERS.
Nothing in this Agreement shall prevent Countrywide or any
affiliated person (as defined in the Act) of Countrywide from providing services
for any other person, firm or corporation (including other investment
companies); provided, however, that Countrywide expressly represents that it
will undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
15. MISCELLANEOUS.
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
16. LIMITATION OF LIABILITY.
The term "Countrywide Investment Trust" means and refers to
the trustees from time to time serving under the Trust's Declaration of Trust as
the same may subsequently thereto have been, or subsequently hereto may be,
amended. It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the trust property
of the Trust. This Agreement has been authorized by the trustees of the Trust
and signed by an officer of the Trust, acting as such, and neither such
authorization by such trustees nor such execution by such officer
- 5 -
<PAGE>
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Trust.
17. SEVERABILITY.
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
18. QUESTIONS OF INTERPRETATION.
(a) This Agreement shall be governed by the laws of the
State of Ohio.
(b) Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the Act shall be resolved by reference to such term or provision of
the Act and to interpretations thereof, if any, by the United States Courts or
in the absence of any controlling decision of any such court, by rules,
regulations or orders of the Securities and Exchange Commission issued pursuant
to said Act. In addition, where the effect of a requirement of the Act,
reflected in any provision of this Agreement is revised by rule, regulation or
order of the Securities and Exchange Commission, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
19. NOTICES.
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust
and of Countrywide for this purpose shall be 312 Walnut Street, Cincinnati, Ohio
45202.
20. BINDING EFFECT.
Each of the undersigned expressly warrants and represents that
he has the full power and authority to sign this Agreement on behalf of the
party indicated, and that his signature will operate to bind the party indicated
to the foregoing terms.
21. COUNTERPARTS.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
- 6 -
<PAGE>
22. FORCE MAJEURE.
If Countrywide shall be delayed in its performance of services
or prevented entirely or in part from performing services due to causes or
events beyond its control, including and without limitation, acts of God,
interruption of power or other utility, transportation or communication
services, acts of civil or military authority, sabotages, national emergencies,
explosion, flood, accident, earthquake or other catastrophe, fire, strike or
other labor problems, legal action, present or future law, governmental order,
rule or regulation, or shortages of suitable parts, materials, labor or
transportation, such delay or non-performance shall be excused and a reasonable
time for performance in connection with this Agreement shall be extended to
include the period of such delay or non-performance.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
COUNTRYWIDE INVESTMENT TRUST
By: /s/ Robert H. Leshner
----------------------------
COUNTRYWIDE FUND SERVICES, INC.
By: /s/ Robert G. Dorsey
-----------------------------
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<PAGE>
Effective December 1, 1997
Schedule A
COMPENSATION
FOR FUND ACCOUNTING AND PORTFOLIO PRICING:
Short Term Government Income Fund
Institutional Government Income Fund
Money Market Fund
Intermediate Term Government Income Fund
Intermediate Bond Fund
Asset Size Monthly Fee
---------------------------- -----------
$ 0 - $ 50,000,000 $2,000
$ 50,000,000 - $100,000,000 $2,500
$100,000,000 - $200,000,000 $3,000
$200,000,000 - $300,000,000 $3,500
Over $300,000,000 $4,500*
Adjustable Rate U.S. Government Securities Fund
Asset Size Monthly Fee
---------------------------- -----------
$ 0 - $ 50,000,000 $2,500
$ 50,000,000 - $100,000,000 $3,000
$100,000,000 - $200,000,000 $3,500
$200,000,000 - $300,000,000 $4,000
Over $300,000,000 $5,000*
Global Bond Fund
Asset Size Monthly Fee
---------------------------- -----------
$ 0 - $ 50,000,000 $4,000
$ 50,000,000 - $100,000,000 $4,500
$100,000,000 - $200,000,000 $5,000
$200,000,000 - $300,000,000 $5,500
Over $300,000,000 $6,500*
- 8 -
ADMINISTRATION AGREEMENT
AGREEMENT entered into as of September 1, 1997, between Countrywide
Investments, Inc. ("Adviser") and Countrywide Fund Services, Inc. ("CFS"),
both of which are Ohio corporations having their principal place of business
at 312 Walnut Street, Cincinnati, Ohio 45202.
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 and provides investment management services
under the terms of investment advisory agreements (the "Management Agreements")
with Countrywide Investment Trust, Countrywide Strategic Trust and Countrywide
Tax-Free Trust (referred to individually as a "Trust" and collectively as the
"Trusts"), with respect to the series of the Trusts; and
WHEREAS, the Trusts have been organized as Massachusetts business
trusts to operate as investment companies registered under the Investment
Company Act of 1940 (the "Act"); and
WHEREAS, the Adviser manages the business affairs of the series of the
Trusts pursuant to the Management Agreements; and
WHEREAS, the Adviser wishes to avail itself of the information, advice,
assistance and facilities of CFS to perform on behalf of the Trusts the services
as hereinafter described; and
WHEREAS, CFS wishes to provide such services to the Adviser under the
conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Adviser and CFS agree as follows:
1. EMPLOYMENT. The Adviser, being duly authorized, hereby employs CFS
to perform those services described in this Agreement. CFS shall perform the
obligations thereof upon the terms and conditions hereinafter set forth.
2. TRUST ADMINISTRATION. Subject to the direction and control of the
Adviser, CFS shall assist the Adviser in supervising the Trusts' business
affairs not otherwise supervised by other agents of the Trusts. To the extent
not otherwise the primary responsibility of, or provided by, other agents of the
Trusts, CFS shall supply (i) non-investment related statistical and research
data, (ii) internal regulatory compliance services, and (iii) executive and
administrative services. CFS shall supervise the preparation of (i) tax returns,
(ii) reports to shareholders of the Trusts, (iii) reports to and filings with
the Securities and Exchange Commission, state securities commissions and Blue
Sky authorities including preliminary and definitive
- 1 -
<PAGE>
proxy materials and post-effective amendments to the Trusts' registration
statements, and (iv) necessary materials for meetings of the Trusts' Board of
Trustees unless prepared by other parties under agreement.
3. RECORDKEEPING AND OTHER INFORMATION. CFS shall create and maintain
all necessary records in accordance with all applicable laws, rules and
regulations, including but not limited to records required by Section 31(a) of
the Act and the rules thereunder, as the same may be amended from time to time,
pertaining to the various functions performed by it and not otherwise created
and maintained by another party pursuant to contract with a Trust. Where
applicable, such records shall be maintained by CFS for the periods and in the
places required by Rule 31a-2 under the Act.
4. AUDIT, INSPECTION AND VISITATION. CFS shall make available to the
Adviser during regular business hours all records and other data created and
maintained pursuant to the foregoing provisions of this Agreement for reasonable
audit and inspection by the Trusts or any regulatory agency having authority
over the Trusts.
5. COMPENSATION. For the performance of its obligations under this
Agreement, the Adviser shall pay CFS, with respect to the Trusts, a fee equal to
$37,500 per month. The Adviser is solely responsible for the payment of fees to
CFS, and CFS agrees to seek payment of its fees solely from the Adviser.
6. LIMITATION OF LIABILITY. CFS shall not be liable for any action
taken, omitted or suffered to be taken by it in its reasonable judgment, in good
faith and believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement, or in accordance with instructions
from the Adviser, provided, however, that such acts or omissions shall not have
resulted from CFS's willful misfeasance, bad faith or gross negligence.
7. COMPLIANCE WITH THE INVESTMENT COMPANY ACT OF 1940. The parties
hereto acknowledge and agree that nothing contained herein shall be construed to
require CFS to perform any services for the Adviser which services could cause
CFS to be deemed an "investment adviser" of a Trust within the meaning of
Section 2(a)(20) of the Act or to supersede or contravene the Prospectus or
Statement of Additional Information of any Trust or any provisions of the Act
and the rules thereunder.
8. TERMINATION. The provisions of this Agreement shall be effective
upon its execution, shall continue in effect for two years from that date and
shall continue in force from year to year thereafter, but only so long as such
continuance is approved (1) by CFS, (2) by vote, cast in person at a meeting
called for the purpose, of a majority of each Trust's trustees who are not
- 2 -
<PAGE>
parties to this Agreement or interested persons (as defined in the Act) of any
such party, and (3) by vote of a majority of each Trust's Board of Trustees or a
majority of a Trust's outstanding voting securities. This Agreement may be
terminated by either party upon sixty (60) days' written notice to the other
party. This Agreement shall terminate automatically with respect to a series in
the event of termination of a Management Agreement for that series. Upon the
termination of this Agreement, the Adviser shall pay CFS such compensation as
may be payable for the period prior to the effective date of such termination.
9. NO TRUST LIABILITY. CFS is hereby expressly put on notice that the
Trusts are not contracting parties to this Agreement and assume no obligations
pursuant to this Agreement. CFS shall seek satisfaction of any obligations
arising out of this Agreement only from the Adviser, and not from any Trust nor
its Trustees, officers, employees or shareholders. CFS shall not act as agent
for or bind either the Adviser or any Trust in any matter.
10. MISCELLANEOUS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Ohio. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the 1st day of September, 1997.
COUNTRYWIDE INVESTMENTS, INC.
By:/s/ Robert H. Leshner
COUNTRYWIDE FUND SERVICES, INC.
By: /s/ Robert G. Dorsey
- 3 -
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our
report dated October 31, 1997 and to all references to our Firm included
in or made a part of this Post-Effective Amendment No. 67.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Cincinnati, Ohio,
December 30, 1997
Dealer #______
COUNTRYWIDE INVESTMENTS, INC.
312 WALNUT STREET
CINCINNATI, OHIO 45202
800-543-8721
513-629-2000
SALES AGREEMENT
MONEY MARKET FUNDS
Countrywide Investments is a group of investment companies, organized as Trusts,
registered under the Investment Company Act of 1940, as amended (the "Investment
Company Act"). All of the Trusts have agreed to the terms hereof. The Trusts are
presently offering, or intend to offer, shares of beneficial interest (the
"Shares") in money market funds (the "Funds") to the public in accordance with
the terms and conditions contained in the Prospectuses of the Trusts. The term
"Prospectuses" as used herein refers to the prospectuses on file with the
Securities and Exchange Commission which are part of the most recent
registration statements effective from time to time under the Securities Act of
1933, as amended (the "Securities Act"). We hereby offer to appoint you to act
as a sales agent of the Trusts in connection with the offering of Shares to the
public on the following terms and conditions:
1. In all sales of the Shares to the public, you shall act as agent for the
Trust, and in no transaction shall you act as dealer for your own account.
2. As agent for the Trusts, you are hereby authorized to (i) place orders
directly with the Trusts' Transfer Agent(s) for the purchases of the Shares and
(ii) tender the Trusts' Shares to the Trusts' Transfer Agent(s) for redemption,
in each case subject to the terms and conditions set forth in the applicable
Prospectus and the operating procedures and policies established by the
applicable Trust.
3. No person is authorized to make any representations concerning the Trusts,
or the Shares, except those contained in the Prospectuses and in such printed
information as the Trusts may subsequently prepare. You are specifically
authorized to distribute the Trusts' Prospectuses and sales material received
from the Trusts or the Trusts' Underwriter. No person is authorized to
distribute any other sales material relating to the Trusts or the Funds without
the prior approval of the Trusts.
4. As agent for the Trusts, and upon the request of the Trusts, you will
undertake from time to time distribution efforts to promote the sale of the
Shares. Also, as agent for the Trusts, you will undertake shareholder servicing
activities for customers of yours who have purchased the Shares and who use your
facilities to communicate with the Trusts or to effect redemptions or additional
purchases of the Shares. As compensation for such services, you will be paid by
the appropriate Trust, to the extent permitted by the Investment Company Act and
the rules promulgated thereunder, or by the applicable Trust's Underwriter, such
fees as are set forth in Schedule A hereto. All compensation paid for services
performed by you, pursuant to the terms of this Agreement, will be paid to you
at the address of your principal office, as indicated in your confirmation and
acceptance of this Agreement.
5. You agree to comply with the provisions contained in all applicable
securities laws governing the distribution of Prospectuses to persons to whom
you offer the Shares as agent for the Trusts. You further agree to deliver,
upon the request of a Trust, copies of any amended Prospectuses to purchasers
whose Shares you are holding as record owner and to deliver to such persons
materials of the appropriate Trust. The Trusts will conduct their businesses
in accordance with the procedures set forth in, and the requirements of, the
Prospectuses, including the prompt execution of orders for the purchase and
redemption of the Shares and the servicing of their shareholder accounts.
6. You represent that you are, and will be at all times relevant hereto, a
member in good standing of the National Association of Securities Dealers, Inc.
and you further represent and warrant that you are and will be at all times
relevant hereto a broker-dealer properly registered and qualified under all
applicable federal, state and local laws to engage in the business and
transactions described in this Agreement. You agree to comply with all
requirements applicable to you of all applicable laws, including federal and
state securities laws, the Rules and Regulations of the Securities and Exchange
Commission and the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. You agree that you will not offer the Shares to persons
in any jurisdiction in which the Shares are not registered for sale and in
which you may not lawfully make such offer due to the fact that you have not
registered under, or are not exempt from, the applicable registration or
licensing requirements of such jurisdiction. You further agree that you will
maintain all records required by applicable law relating to transactions
involving purchases or redemptions of the Shares by you or your customers.
<PAGE>
7.The Trusts have each registered an indefinite number of Shares under the
Securities Act. Upon application to us, the Trusts will inform you as to the
states or other jurisdictions in which they believe a Fund's Shares have been
qualified for sale under, or are exempt from, the requirements of the respective
securities laws of such state, but the Trusts assume no responsibility or
obligation as to your right to sell any of the Shares in any jurisdiction.
8.The Trusts shall have full authority to take such action as they may deem
advisable in respect to all matters pertaining to the offering of the Shares,
including the right in their discretion, without notice, to suspend sales or
withdraw the offering of the Shares entirely with regard to one or more of the
Funds. The Trusts will promptly notify you of any such actions.
9.You will (i) maintain all records required by law relating to transactions in
the Shares and, upon request by any of the Trusts, promptly make such records
available as the Trusts may reasonably request in connection with their
operations; and (ii) promptly notify the Trusts if you experience any difficulty
in maintaining the records described in the foregoing clause in an accurate and
complete manner. In addition, you and the Trusts will establish appropriate
procedures and reporting forms and schedules to enable the parties hereto to
identify all accounts opened and maintained by your customers. At all times
during reasonable hours of the Trusts, you will have the right, upon 48 hours
prior written notice to the Trusts, to conduct appropriate audits or reviews of
such records and to confirm the reports delivered by the Trusts to you or your
customers. The cost of such audits or reviews will be borne solely by you or
your customers.
10.The Trusts shall be under no liability to you and you shall be under no
liability to the Trusts except for lack of good faith, for negligence and for
obligations expressly assumed by either party hereunder. Nothing contained in
this Agreement is intended to operate as a waiver by the Trusts or by you of
compliance with any provision of the Securities Act, the Securities Exchange Act
of 1934, the Investment Company Act or the Rules and Regulations promulgated by
the Securities and Exchange Commission under these Acts.
11.This Agreement will automatically terminate in the event of its assignment.
This Agreement may be terminated as to any Trust or by that Trust's Underwriter
or by you, without penalty, upon ten (10) days' prior written notice to the
other parties. This Agreement may also be terminated as to any Trust at any time
without penalty by the vote of a majority of the members of the Board of
Trustees of the terminating Trust who are not "interested persons" (as such term
is defined in the Investment Company Act) and who have no direct or indirect
financial interest in the applicable Trust's Distribution Expense Plan pursuant
to Rule 12b-1 under the Investment Company Act or any agreement relating to such
Plan, including this Agreement, or by a vote of a majority of the outstanding
voting securities of each series of the terminating Trust on ten days' written
notice.
12.All communications to us should be sent to Countrywide Investments, Inc. 312
Walnut Street, Cincinnati, Ohio 45202, or at such other address as we may
designate in writing. Any notice to you shall be duly given if mailed or
telegraphed to you at the address of your principal office as specified by you
below in your confirmation and acceptance of this Agreement.
13.The obligations of the Trusts under this Agreement shall not be binding upon
any of the Trustees, shareholders, nominees, officers, agents or employees of
the Trusts personally, but shall bind only the property of the Trusts, as
provided in Trust's Agreement and Declaration of Trust. The execution and
delivery of this Agreement has been authorized by the Trustees and signed by a
duly authorized officer of the Trusts acting as such, and neither the
authorization by the Trustees nor the execution and delivery of this Agreement
by such officer of the Trusts shall be deemed to have been made by any of them
individually, but shall bind only the property of the Trusts as provided in
their Agreement and Declaration of Trust.
14."Trusts" as used herein shall refer to all Trusts offering series of shares
in the no-load mutual funds presently in existence and hereafter organized as
part of Countrywide Investments unless any such Trust is specifically excluded
by a separate writing signed by an authorized officer of such Trust electing not
to be covered by this Agreement.
15.You will indemnify the Trusts and the Underwriter, transfer agent and
custodian of each Trust and hold them harmless from any claims or assertions
relating to the lawfulness of your company's participation in this Agreement and
the transactions contemplated hereby or relating to any activities of any
persons or entities affiliated with your company which are performed in
connection with the discharge of your responsibilities under this Agreement. If
any such claims are asserted, the indemnified parties shall have the right to
engage in their own defense, including the selection and engagement of legal
counsel of their choosing and all costs of such defense shall be borne by you.
16.This Agreement supersedes any other agreement with you relating to the offer
and sale of any of the Trusts' Shares, and relating to any other matter
discussed herein.
17.This Agreement shall be binding upon receipt by the Trusts in Cincinnati,
Ohio of a counterpart hereof duly accepted and signed by you, and shall be
construed in accordance with the laws of the State of Ohio.
18.The undersigned executing this Agreement on behalf of Sales Agent, hereby
warrants and represents that he is duly authorized to so execute this Agreement
on behalf of Sales Agent.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return all copies of this Agreement to Countrywide Investments,
Inc.
ACCEPTED BY DEALER
By:_______________________________________
Authorized Signature
- -------------------------------------------
Type or Print Name, Position
- -------------------------------------------
Name
- -------------------------------------------
Address
- -------------------------------------------
Address
- -------------------------------------------
Phone
- -------------------------------------------
Date
ON BEHALF OF EACH TRUST OFFERING
SHARES IN THE MONEY MARKET FUNDS OF
COUNTRYWIDE INVESTMENTS
By:________________________________________
Authorized Officer of "Trusts"
- -------------------------------------------
Date
ON BEHALF OF THE UNDERWRITER TO THE
TRUSTS OFFERING SHARES OF MONEY
MARKET FUNDS OF COUNTRYWIDE
INVESTMENTS
By:________________________________________
Authorized Officer of Underwriter to the "Trusts"
- -------------------------------------------
Date
<PAGE>
Schedule A
12b-1 PAYMENT SCHEDULE
You will receive a trailing commission of .25% per annum (payable quarterly) of
the average balance during each calendar quarter of all accounts in the
following Countrywide Investments money market funds:
Short Term Government Income Fund
Tax-Free Money Fund
Ohio Tax-Free Money Fund
California Tax-Free Money Fund
Florida Tax-Free Money Fund
Money Market Fund
However, no trailing commission will be paid to a dealer for any calendar
quarter in which the average daily balance of all accounts in Countrywide
Investments Funds (including load funds) is less than $1,000,000.
COUNTRYWIDE INVESTMENTS, INC.
312 WALNUT STREET
CINCINNATI, OHIO 45202
800-543-8721
513-629-2000
Administration Agreement
This Agreement is made between _______________________________________
("Administrator") and Countrywide Investment Trust, Countrywide Tax-Free Trust
and Countrywide Strategic Trust (collectively the "Trusts" and individually the
"Trust"), the issuer of shares of beneficial interest ("Shares") of the mutual
funds set forth on Schedule A to this Agreement (collectively the "Funds" and
individually the "Fund"). In consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. The Trusts hereby appoint Administrator to render or cause to be
rendered administrative support services to each Fund and its shareholders,
which services may include, without limitation: aggregating and processing
purchase and redemption requests and placing net purchase and redemption orders
with the Fund's transfer agent; answering client inquiries about the Fund and
referring to the Trusts those inquiries which the Administrator is unable to
answer; assisting clients in changing dividend options, account designations and
addresses; performing sub-accounting; establishing, maintaining and closing
shareholder accounts and records; investing client account cash balances
automatically in Shares of the Fund; providing periodic statements showing a
client's account balance, integrating such statements with those of other
transactions and balances in the client's other accounts serviced by the
Administrator and performing such other recordkeeping as is necessary for the
Fund's transfer agent to comply with all the recordkeeping requirements of the
Investment Company Act of 1940 and the regulations promulgated thereunder;
arranging for bank wires; and providing such other information and services as
the Trusts reasonably may request, to the extent the Administrator is permitted
by applicable statute, rule or regulation to provide these services.
2. Administrator shall provide such office space and equipment,
telephone facilities and personnel (which may be all or any part of the space,
equipment and facilities currently used in Administrator's business, or all or
any personnel employed by Administrator) as is necessary or beneficial for
providing information and services to shareholders of each Fund, and to assist
each Trust in servicing accounts of clients. Administrator shall transmit
promptly to clients all communications sent to it for transmittal to clients by
or on behalf of a Trust, a Fund, or a Trust's investment adviser, custodian or
transfer agent or dividend disbursing agent.
3. For each account in certain Funds for which the Administrator is to
render administrative support services, Administrator will receive a fee, as set
forth on Schedule B, equal to the normal dealer's discount from the public
offering price on the Shares purchased by such accounts. During the term of this
Agreement, each Trust or the Trust's underwriter will also pay to the
Administrator quarterly one-fourth of the annual administration fees set forth
in Schedule B hereto. Administrator shall notify the Trust if Administrator
directly charges a fee to Fund shareholders for its administrative support
services as described in this Agreement.
4. Administrator agrees to comply with the requirements of all laws
applicable to it, including but not limited to, ERISA, federal and state
securities laws and the rules and regulations promulgated thereunder.
Administrator agrees to provide services to each Trust in compliance with the
then current Prospectus and Statement of Additional Information of the Trust and
the operating procedures and policies established by the Trust, including, but
not limited to, required minimum investment and minimum account size.
5. No person is authorized to make any representations concerning a
Fund or its Shares except those contained in the current Prospectus or Statement
of Additional Information of the applicable Fund and any such information as may
be officially designated as information supplemental to the Prospectus.
Additional copies of any Prospectus and any printed information officially
designated as supplemental to such Prospectus will be supplied by the Trusts to
Administrator in reasonable quantities on request.
6. Administrator agrees that it will provide administrative support
services only to those persons who reside in any jurisdiction in which a Fund's
Shares are registered for sale and in which the Administrator may lawfully
provide such services. Upon request, the Trusts shall provide the Administrator
with a list of the states in which each Fund's Shares are registered for sale
and shall keep such list updated.
<PAGE>
7. In no transaction shall Administrator have any authority whatsoever
to act as agent for any Trust, any Fund or any person affiliated with any Trust
or Fund.
8. The Administrator agrees not to solicit or cause to be solicited
directly, or indirectly at any time in the future, any proxies from the
shareholders of a Trust in opposition to proxies solicited by management of the
Trust, unless a court of competent jurisdiction shall have determined that the
conduct of a majority of the Board of Trustees of the Trust constitutes willful
misfeasance, bad faith, gross negligence or reckless disregard of their duties.
This paragraph 8 will survive the term of this Agreement.
9. The Administrator shall prepare such quarterly reports for each
Trust as shall reasonably be requested by the Trust. In addition, the
Administrator will furnish the Trust or its designees with such information as
the Trust or they may reasonably request (including, without limitation,
periodic certifications confirming the provision to clients of the services
described herein), and will otherwise cooperate with the Trust and its designees
(including and without limitation, any auditors designated by the Trust), in
connection with the preparation of reports to the Trust's Board of Trustees
concerning this Agreement and the monies paid or payable by the Trust or the
Trust's underwriter pursuant hereto, as well as any other reports or filings
that may be required by law.
10. The Administrator acknowledges that any Trust may enter into
similar agreements with others without the consent of the Administrator.
11. Each Trust reserves the right, at its discretion and without
notice, to suspend the sale of Shares or withdraw the sale of Shares of any
Fund.
12. The Trust's underwriter has adopted compliance standards, attached
hereto as Schedule C, as to when Class A and Class C Shares of the Dual Pricing
Funds may appropriately be sold to particular investors. The Administrator
agrees that all persons associated with it will conform to such standards.
13. With respect to each Fund, this Agreement shall continue in effect
for one year from the date of its execution, and thereafter for successive
periods of one year if the form of this Agreement is approved as to the Fund at
least annually by the Trustees of the applicable Trust, including a majority of
the members of the Board of Trustees of the Trust who are not interested persons
("Disinterested Trustees") of the Trust and have no direct or indirect financial
interest in the operations of the Trust's Rule 12b-1 Plan ("Plan") or in any
documents related to the Plan cast in person at a meeting for that purpose. In
the event this Agreement, or any part thereof, is found invalid or is ordered
terminated by any regulatory or judicial authority, or the Administrator shall
fail to perform the shareholder servicing and administrative functions
contemplated hereby, this Agreement is terminable effective upon receipt of
notice thereof by the Administrator.
14. Notwithstanding paragraph 13, this Agreement may be
terminated with respect to any Fund as follows:
(a) at any time, without the payment of any penalty, by the
vote of a majority of the Disinterested Trustees of the applicable
Trust or by a vote of a majority of the outstanding voting securities
of the Fund on not more than thirty (30) days written notice to the
parties to this Agreement;
(b) automatically in the event of the Agreement's assignment
as defined in the Investment Company Act of 1940; or
(c) by any party to the Agreement without cause by giving the
other parties at least thirty (30) days written notice of its intention
to terminate.
15. Any termination of this Agreement shall not affect the provisions
of paragraph 18, which shall survive the termination of this Agreement and
continue to be enforceable thereafter.
16. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors.
17. This Agreement is not intended to, and shall not, create any rights
against any party hereto by any third person solely on account of this
Agreement.
<PAGE>
18. The Administrator shall provide such security as is necessary to
prevent unauthorized use of any computer hardware or software provided to it by
or on behalf of the Trusts, if any. The Administrator agrees to release,
indemnify and hold harmless each Fund, each Trust, each Trust's transfer agent,
custodian and underwriter, and their respective principals, directors, trustees,
officers, employees and agents from any and all direct or indirect liabilities
or losses resulting from requests, directions, actions or inactions of or by the
Administrator, its officers, employees or agents regarding the purchase,
redemption, transfer or registration of Shares for accounts of the
Administrator, its clients and other shareholders. Such indemnity shall also
cover any losses and liabilities incurred by and resulting from the
Administrator's performance of or failure to perform its obligations or its
breach of any representations or warranties under this Agreement. Principals of
the Administrator will be available to consult from time to time with each Trust
concerning the administration and performance of the services contemplated by
this Agreement.
19. This Agreement may be amended only by an agreement in writing
signed by the Administrator and the Trusts.
20. The obligations of each Trust under this Agreement shall not be
binding upon any of the Trustees, shareholders, nominees, officers, agents or
employees of such Trust, personally, but shall bind only the property of such
Trust, as provided in such Trust's Agreement and Declaration of Trust. The
execution and delivery of this Agreement has been authorized by the Trustees and
signed by a duly authorized officer of the Trusts, acting as such, and neither
the authorization by the Trustees nor the execution and delivery by such officer
of the Trusts shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the
property of the Trusts as provided in their Agreement and Declaration of Trust.
21. This Agreement does not authorize the Administrator to participate
in any activities relating to the sale or distribution of the Shares, and the
Administrator agrees that it shall not participate in such activities.
22. If any provision of this Agreement, or any covenant, obligation or
agreement contained herein, is determined by a court to be invalid or
unenforceable, the parties agree that (a) such determination shall not affect
any other provision, covenant, obligation or agreement contained herein, each of
which shall be construed and enforced to the full extent permitted by law, and
(b) such invalid or unenforceable portion shall be deemed to be modified to the
extent necessary to permit its enforcement to the maximum extent permitted by
applicable law.
23. This Agreement shall be construed in accordance with the laws
of the State of Ohio.
THIS AGREEMENT WILL BECOME EFFECTIVE UPON THE CLOSING DATE OF THE
ACQUISITION OF LESHNER FINANCIAL, INC. BY COUNTRYWIDE CREDIT INDUSTRIES, INC.
PURUSANT TO THE AGREEMENT DATED 12/10/96 FOR THE EXCHANGE OF STOCK BETWEEN THE
PARTIES.
IN WITNESS WHEREOF, this Agreement has been executed for the Trusts and
the Administrator by their duly authorized officers, on this _____ day of
_________________, 1997.
ACCEPTED BY ADMINISTRATOR COUNTRYWIDE INVESTMENT TRUST
By: _________________________________ By: ____________________________
Authorized Signature
_____________________________________ COUNTRYWIDE TAX-FREE TRUST
Type or Print Name, Position
_____________________________________ By: ____________________________
Administrator Name
_____________________________________ COUNTRYWIDE STRATEGIC TRUST
Address
_____________________________________ By: ____________________________
Address
_____________________________________ Date: __________________________
Phone
<PAGE>
Schedule A
SCHEDULE OF MUTUAL FUNDS
Countrywide Investment Trust
* Short Term Government Income Fund
Adjustable Rate U.S. Government Securities Fund
** Global Bond Fund
Intermediate Term Government Income Fund
* Money Market Fund
Intermediate Bond Fund
Countrywide Tax-Free Trust
* Ohio Tax-Free Money Fund
* Tax-Free Money Fund
* California Tax-Free Money Fund
* Florida Tax-Free Money Fund
** Tax-Free Intermediate Term Fund
** Ohio Insured Tax-Free Fund
Kentucky Tax-Free Fund
Countrywide Strategic Trust
Government Mortgage Fund
** Equity Fund
** Utility Fund
Growth/Value Fund
Aggressive Growth Fund
* No-load Fund
** Dual Pricing Fund
<PAGE>
Schedule B
COUNTRYWIDE INVESTMENTS
COMMISSION SCHEDULE
Government Mortgage Fund
Intermediate Bond Fund
Tax-Free Intermediate Term Fund - Class A
Intermediate Term Government Income Fund
Adjustable Rate U.S. Government Securities Fund
Total
Dollar Amount of Purchase Sales Dealer
(At Offering Price) Charge* Concession
Less than $100,000 2.00% 1.80%
from $100,000 but under $250,000 1.50% 1.35%
from $250,000 but under $500,000 1.00% .90%
from $500,000 but under $1,000,000 .75% .65%
$1,000,000 and over** None None
25 basis points annual trailing commission effective immediately, paid
quarterly.
Equity Fund - Class A
Utility Fund - Class A
Growth/Value Fund
Aggressive Growth Fund
Global Bond Fund - Class A
Ohio Insured Tax-Free Fund - Class A
Kentucky Tax-Free Fund
Total
Dollar Amount of Purchase Sales Dealer
(At Offering Price) Charge* Concession
Less than $100,000 4.00% 3.60%
from $100,000 but under $250,000 3.50% 3.30%
from $250,000 but under $500,000 2.50% 2.30%
from $500,000 but under $1,000,000 2.00% 1.80%
$1,000,000 and over** None None
25 basis points annual trailing commission effective immediately, paid
quarterly.
* As a percentage of offering price.
** Broker/Dealers are entitled to a commission of 75 basis points at the time
the investor purchases Class A shares at NAV in amounts totaling $1 million or
more. However, the investor is subject to a contingent deferred sales load of
75 basis points if a redemption occurs within one year of purchase.
See specific Fund prospectus for details.
Equity Fund - Class C
Utility Fund - Class C
Global Bond Fund - Class C
Ohio Insured Tax-Free Fund - Class C
Tax-Free Intermediate Term Fund - Class C
The Funds will be offered to clients at net asset value. A commission of 1% of
the purchase amount of Class C shares will be paid to participating brokers at
the time of purchase. Purchases of Class C shares are subject to a contingent
deferred sales load, according to the following schedule:
Year Since Purchase Contingent Deferred
Payment Was Made Sales Load
First Year 1%
Thereafter None
100 basis points annual trailing commission will be paid quarterly beginning in
the thirteenth month.
Brokers may invest for their own account at NAV
No trailing commissions will be paid to a dealer for any calendar quarter in
which the average daily balance of all accounts in Countrywide Investments
funds (including no-load money market funds) is less than $1,000,000.
FOR BROKER/DEALER USE ONLY
<PAGE>
Schedule C
POLICIES AND PROCEDURES
WITH RESPECT TO SALES
OF DUAL PRICING FUND
As certain Funds within Countrywide Investments (the "Dual Pricing
Funds") offer two classes of Shares subject to different levels of front-end
sales charges, it is important for an investor not only to choose the Fund that
best suits his investment objectives, but also to choose the sales financing
method which best suits his particular situation. To assist investors in these
decisions, we are instituting the following policy:
1. Any purchase order for $1 million or more must be for Class A
Shares.
2. Any purchase order for $100,000 but less than $1 million is
subject to approval by a registered principal of the
Underwriter, who must approve the purchase order for either
Class A Shares or Class C Shares in light of the relevant
facts and circumstances, including:
(a) the specific purchase order dollar amount;
(b) the length of time the investor expects to hold the
Shares; and
(c) any other relevant circumstances, such as the
availability of purchases under a Letter of Intent.
3. Any order to exchange Class A Shares of a Dual Pricing Fund
(or Shares of another Fund having a maximum sales load equal
to or greater than Class A Shares of the Dual Pricing Funds)
for Shares of another Dual Pricing Fund will be for Class A
Shares only. Class C Shares of a Dual Pricing Fund may be
exchanged for either Class A or Class C Shares of another Dual
Pricing Fund, provided that an exchange of Class C Shares for
Class A Shares is subject to approval by a registered
principal of Underwriter, who must approve the exchange in
light of the relevant facts and circumstances.
There are instances when one financing method may be more appropriate
than the other. For example, investors who would qualify for a significant
discount from the maximum sales charge on Class A Shares may determine that
payment of such a reduced front-end sales charge is superior to payment of the
higher ongoing distribution fee applicable to Class C Shares. On the other hand,
an investor whose order would not qualify for such a discount may wish to pay a
lower sales charge and have more of his funds invested in Class C Shares. If
such an investor anticipates that he will redeem his Shares within a short
period of time, the investor may, depending on the amount of his purchase,
choose to bear higher distribution expenses than if he had purchased Class A
Shares.
In addition, investors who intend to hold their Shares for a
significantly long time may wish to purchase Class A Shares in order to avoid
the higher ongoing distribution expenses of Class C Shares.
The appropriate supervisor must ensure that all employees receiving
investor inquiries about the purchase of Shares of Dual Pricing Funds advise the
investor of the available financing methods offered by mutual funds, and the
impact of choosing one method over another. It may be appropriate for the
supervisor to discuss the purchase with the investor.
This policy is effective immediately with respect to any order for the
purchase of Shares of all Dual Pricing Funds. Questions relating to this policy
should be directed to Sharon Karp, Vice President of the Underwriter, at
513/629-2000.
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<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-1-1996
<PERIOD-END> SEP-30-1997
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<INVESTMENTS-AT-VALUE> 96,243,367
<RECEIVABLES> 636,527
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<OTHER-ITEMS-ASSETS> 964
<TOTAL-ASSETS> 96,880,858
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<OTHER-ITEMS-LIABILITIES> 84,176
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<PAID-IN-CAPITAL-COMMON> 96,796,682
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<SHARES-COMMON-PRIOR> 91,436,514
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<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
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<DISTRIBUTIONS-OF-INCOME> 4,454,318
<DISTRIBUTIONS-OF-GAINS> 2,970
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<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
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 51,940,025
<INVESTMENTS-AT-VALUE> 53,094,474
<RECEIVABLES> 1,208,429
<ASSETS-OTHER> 1,142
<OTHER-ITEMS-ASSETS> 2,579
<TOTAL-ASSETS> 54,306,624
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,273,834
<TOTAL-LIABILITIES> 1,273,834
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<PAID-IN-CAPITAL-COMMON> 54,779,926
<SHARES-COMMON-STOCK> 4,969,960
<SHARES-COMMON-PRIOR> 5,348,350
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,901,585)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,154,449
<NET-ASSETS> 53,032,790
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,747,792
<OTHER-INCOME> 0
<EXPENSES-NET> 552,550
<NET-INVESTMENT-INCOME> 3,195,242
<REALIZED-GAINS-CURRENT> (2,293)
<APPREC-INCREASE-CURRENT> 943,745
<NET-CHANGE-FROM-OPS> 4,136,694
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,155,630
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 864,111
<NUMBER-OF-SHARES-REDEEMED> 1,509,918
<SHARES-REINVESTED> 267,417
<NET-CHANGE-IN-ASSETS> (3,062,103)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (2,899,292)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 274,084
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 560,622
<AVERAGE-NET-ASSETS> 54,621,074
<PER-SHARE-NAV-BEGIN> 10.49
<PER-SHARE-NII> .61
<PER-SHARE-GAIN-APPREC> .18
<PER-SHARE-DIVIDEND> .61
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.67
<EXPENSE-RATIO> .99
<AVG-DEBT-OUTSTANDING> 0
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<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 60,993,545
<INVESTMENTS-AT-VALUE> 60,993,545
<RECEIVABLES> 292,721
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<OTHER-ITEMS-ASSETS> 653
<TOTAL-ASSETS> 61,286,919
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<OTHER-ITEMS-LIABILITIES> 39,033
<TOTAL-LIABILITIES> 39,033
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 61,269,650
<SHARES-COMMON-STOCK> 61,269,650
<SHARES-COMMON-PRIOR> 39,406,966
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (21,764)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 61,247,886
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,737,028
<OTHER-INCOME> 0
<EXPENSES-NET> 200,201
<NET-INVESTMENT-INCOME> 2,536,827
<REALIZED-GAINS-CURRENT> 3,138
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<NET-CHANGE-FROM-OPS> 2,539,965
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,536,827
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 214,201,022
<NUMBER-OF-SHARES-REDEEMED> 194,657,552
<SHARES-REINVESTED> 2,319,214
<NET-CHANGE-IN-ASSETS> 21,865,822
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (24,902)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 100,101
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 223,173
<AVERAGE-NET-ASSETS> 50,063,604
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .051
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .051
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
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<SERIES>
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 17,260,488
<INVESTMENTS-AT-VALUE> 17,448,109
<RECEIVABLES> 6,158,592
<ASSETS-OTHER> 7,410
<OTHER-ITEMS-ASSETS> 456
<TOTAL-ASSETS> 23,614,567
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 412,840
<TOTAL-LIABILITIES> 412,840
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 24,264,761
<SHARES-COMMON-STOCK> 2,355,670
<SHARES-COMMON-PRIOR> 1,195,580
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,250,655)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 187,621
<NET-ASSETS> 23,201,727
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,032,076
<OTHER-INCOME> 0
<EXPENSES-NET> 123,841
<NET-INVESTMENT-INCOME> 908,235
<REALIZED-GAINS-CURRENT> (1,505)
<APPREC-INCREASE-CURRENT> 63,020
<NET-CHANGE-FROM-OPS> 969,750
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 868,844
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,931,702
<NUMBER-OF-SHARES-REDEEMED> 1,855,152
<SHARES-REINVESTED> 83,540
<NET-CHANGE-IN-ASSETS> 11,470,145
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (1,249,150)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 79,473
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 245,646
<AVERAGE-NET-ASSETS> 15,165,307
<PER-SHARE-NAV-BEGIN> 9.81
<PER-SHARE-NII> .57
<PER-SHARE-GAIN-APPREC> .04
<PER-SHARE-DIVIDEND> .57
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.85
<EXPENSE-RATIO> .75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000066117
<NAME> COUNTRYWIDE INVESTMENT TRUST
<SERIES>
<NUMBER> 71
<NAME> GLOBAL BOND FUND CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 12,139,225
<INVESTMENTS-AT-VALUE> 12,350,261
<RECEIVABLES> 327,855
<ASSETS-OTHER> 2,805
<OTHER-ITEMS-ASSETS> 395,786
<TOTAL-ASSETS> 13,076,707
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 134,536
<TOTAL-LIABILITIES> 134,536
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,453,939
<SHARES-COMMON-STOCK> 645,612
<SHARES-COMMON-PRIOR> 1,164,325
<ACCUMULATED-NII-CURRENT> 143,912
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 234,852
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 109,468
<NET-ASSETS> 7,140,717
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,085,937
<OTHER-INCOME> 0
<EXPENSES-NET> 264,931
<NET-INVESTMENT-INCOME> 821,006
<REALIZED-GAINS-CURRENT> (121,748)
<APPREC-INCREASE-CURRENT> (206,441)
<NET-CHANGE-FROM-OPS> 492,817
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 191,206
<DISTRIBUTIONS-OF-GAINS> 313,221
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 158,243
<NUMBER-OF-SHARES-REDEEMED> 718,964
<SHARES-REINVESTED> 42,008
<NET-CHANGE-IN-ASSETS> (5,700,726)
<ACCUMULATED-NII-PRIOR> 287,907
<ACCUMULATED-GAINS-PRIOR> 155,206
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 116,997
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 302,524
<AVERAGE-NET-ASSETS> 10,653,599
<PER-SHARE-NAV-BEGIN> 11.03
<PER-SHARE-NII> .61
<PER-SHARE-GAIN-APPREC> (.13)
<PER-SHARE-DIVIDEND> .17
<PER-SHARE-DISTRIBUTIONS> .28
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.06
<EXPENSE-RATIO> 1.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000066117
<NAME> COUNTRYWIDE INVESTMENT TRUST
<SERIES>
<NUMBER> 8
<NAME> MONEY MARKET FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> AUG-29-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 73,040,986
<INVESTMENTS-AT-VALUE> 73,040,986
<RECEIVABLES> 1,169,883
<ASSETS-OTHER> 19,054
<OTHER-ITEMS-ASSETS> 323
<TOTAL-ASSETS> 74,230,246
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 409,247
<TOTAL-LIABILITIES> 409,247
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 73,824,759
<SHARES-COMMON-STOCK> 73,824,759
<SHARES-COMMON-PRIOR> 94,571,137
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3,760)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 73,820,999
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 406,910
<OTHER-INCOME> 0
<EXPENSES-NET> 55,905
<NET-INVESTMENT-INCOME> 351,005
<REALIZED-GAINS-CURRENT> (1,198)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 349,807
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 351,499
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 25,255,346
<NUMBER-OF-SHARES-REDEEMED> 46,048,621
<SHARES-REINVESTED> 46,897
<NET-CHANGE-IN-ASSETS> (20,748,070)
<ACCUMULATED-NII-PRIOR> 494
<ACCUMULATED-GAINS-PRIOR> (2,562)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 32,484
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 55,905
<AVERAGE-NET-ASSETS> 85,606,904
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .004
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .004
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000066117
<NAME> COUNTRYWIDE INVESTMENT TRUST
<SERIES>
<NUMBER> 9
<NAME> INTERMEDIATE BOND FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> AUG-29-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 15,288,364
<INVESTMENTS-AT-VALUE> 15,505,844
<RECEIVABLES> 245,183
<ASSETS-OTHER> 19,054
<OTHER-ITEMS-ASSETS> 2,124
<TOTAL-ASSETS> 15,772,205
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 101,374
<TOTAL-LIABILITIES> 101,374
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 15,509,744
<SHARES-COMMON-STOCK> 1,553,652
<SHARES-COMMON-PRIOR> 1,511,122
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (56,393)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 217,480
<NET-ASSETS> 15,670,831
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 89,210
<OTHER-INCOME> 0
<EXPENSES-NET> 11,833
<NET-INVESTMENT-INCOME> 77,377
<REALIZED-GAINS-CURRENT> (5,759)
<APPREC-INCREASE-CURRENT> 129,865
<NET-CHANGE-FROM-OPS> 201,483
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 77,377
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 92,013
<NUMBER-OF-SHARES-REDEEMED> 49,574
<SHARES-REINVESTED> 91
<NET-CHANGE-IN-ASSETS> 556,954
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (50,634)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,043
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 17,293
<AVERAGE-NET-ASSETS> 15,225,845
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> .09
<PER-SHARE-DIVIDEND> .05
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.09
<EXPENSE-RATIO> .95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, COUNTRYWIDE INVESTMENT TRUST, a business trust organized under the
laws of the Commonwealth of Massachusetts (hereinafter referred to as the
"Trust"), has filed with the Securities and Exchange Commission under the
provisions of the Securities Act of 1933 and the Investment Company Act of 1940,
as amended, a registration statement with respect to the issuance and sale of
the shares of the Trust; and
WHEREAS, the undersigned is a Trustee of the Trust, as indicated beside his
name;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JOHN F.
SPLAIN and SANDOR E. SAMUELS, and each of them, his attorneys for him and in
his name, place and stead, to execute and file any amended registration
statement or statements and amended prospectus or prospectuses or amendments or
supplements to any of the foregoing, hereby giving and granting to said
attorneys full power and authority to do and perform all and every act and
thing whatsoever requisite and necessary to be done in and about the
premises as fully to all intents and purposes as he might or could do
if personally present at the doing thereof, hereby ratifying and confirming all
that said attorneys may or shall lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
23rd day of July, 1997.
/s/ John R. Delfino
--------------------------------
JOHN R. DELFINO
Trustee
STATE OF CALIFORNIA )
) ss:
COUNTY OF LOS ANGELES )
On the 23rd day of July, 1997, personally appeared before me, JOHN R.
DELFINO, known to me to be the person described in and who executed the
foregoing instrument, and who acknowledged to me that he executed and delivered
the same for the purposes therein expressed.
WITNESS my hand and official seal this 23rd day of July, 1997.
/s/ C. Joy Estes
----------------------------
Notary Public
C. Joy Estes
Comm.#1011575
Notary Public-California
LOS ANGELES COUNTY
My Comm.Expires DEC 19, 1997
