Income
ANNUAL REPORT
SEPTEMBER 30, 1998
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
Countrywide Investments
COUNTRYWIDE INVESTMENT TRUST
312 Walnut St., 21st Floor
Cincinnati, Ohio 45202-4094
Nationwide: (Toll Free) 800-543-8721
Cincinnati: 629-2000
Rate Line: 579-0999
Shareholder Services
Nationwide: (Toll Free) 800-543-0407
Cincinnati: 629-2050
BOARD OF TRUSTEES
Angelo R. Mozilo, Chairman
Robert H. Leshner, President
Donald L. Bogdon, M.D.
H. Jerome Lerner
Howard J. Levine
Fred A. Rappoport
Oscar P. Robertson
John F. Seymour, Jr.
Sebastiano Sterpa
INVESTMENT ADVISER
Countrywide Investments, Inc.
312 Walnut St., 21st Floor
Cincinnati, Ohio 45202-4094
TRANSFER AGENT
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
This report is authorized for distribution only when it is accompanied or
preceded by a current prospectus of Countrywide Investment Trust.
<PAGE>
LETTER FROM THE CHAIRMAN
================================================================================
Dear Shareholders:
As we approach our 30th anniversary, it is imperative to reflect upon the dreams
that have been realized since David Loeb and I founded Countrywide Credit
Industries, Inc. Countrywide has far exceeded our vision of a full-service
mortgage company that would provide homeownership opportunities for millions of
people across the country. Since our inception in 1969, Countrywide has
strategically broadened its scope to offer a complete line of finance-related
products and services that augment company profits, capitalize core competencies
and enhance customer retention. Today, Countrywide is highly regarded as a
skilled provider of diversified products and services.
We are committed to creating value for our shareholders by offering a variety of
investment opportunities. The Countrywide Family of Funds is comprised of an
innovative financial product line designed to meet the diverse needs of our
investors. There are currently 17 funds offered through Countrywide Investments.
Each fund is designed to fulfill specific financial needs. As the merger and
acquisition team continues to add new funds, shareholders will be provided with
an even broader range of investment choices. Countrywide continues to build
shareholder value by capitalizing on opportunities and pioneering innovative
strategies based on stable, long-term performance. By anticipating the needs of
our investors, Countrywide Investments also works diligently to provide numerous
shareholder services.
As the nation's largest independent residential mortgage lender and servicer,
Countrywide now has more than 2 million customers which represents a servicing
portfolio of over $200 billion. With 500 offices nationwide and nearly 11,000
employees, Countrywide remains focused on steady growth. The diverse line of
Countrywide funds continues to be a critical part of our mortgage lending and
servicing operations.
Countrywide is committed to the needs of our investors. As we look to the
future, Countrywide will continue to search for and offer financial products and
services that will increase shareholder value.
Sincerely,
/s/ Angelo R. Mozilo
- --------------------
Angelo R. Mozilo
Chairman
Photo of Angelo R. Mozilo
<PAGE>
LETTER FROM THE PRESIDENT
================================================================================
Dear Fellow Shareholders:
We are pleased to present Countrywide Investment Trust's annual report for the
fiscal year ended September 30, 1998. This report provides financial data and
performance information for 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.
These Funds represent the six taxable money market and bond products currently
offered among the 17 mutual funds which comprise the Countrywide Family of
Funds.
A variety of forces converged to influence market volatility in recent months
including the scandal in the White House, the ongoing economic crisis in Asia
and Latin America and the devaluation of Russia's ruble. Markets suffered
significant losses during the quarter ended September 30, 1998, although a
rebound began at quarter end. Despite this volatility, statistics indicate that
the U.S. economy is healthy. Unemployment is low, consumer spending remains
healthy, and inflation, reflected in the Consumer Price Index, is well under
control.
The bond market continued to see a powerful "flight to quality." Treasuries rose
sharply driving the yield on the 30-year bond to a record low. The 10-year bond
did even better, dropping to a yield of 4.41% in September. Some economists
forecasted the onset of a deflationary period, and the U.S. government announced
a record $70 billion surplus. These factors worked to keep a lid on the issuance
of new Treasuries and provided an additional boost to the rally.
In the short term, we expect the economy will continue its slowdown, evidenced
by declining consumption, manufacturing and consumer confidence. This is likely
to put pressure on lower quality bond issues. We believe high-quality bonds will
be the fixed-income investment of choice.
Countrywide Investments remains committed to providing products and services
that help investors meet their financial goals. Our success has been built on
the confidence investors have extended to us. We thank you for your support and
look forward to continued service to you in the future.
Sincerely,
/s/ Robert H. Leshner
- ---------------------
Robert H. Leshner
President
Photo of Robert H. Leshner
<PAGE>
INTERMEDIATE BOND FUND
MANAGEMENT DISCUSSION AND ANALYSIS
================================================================================
Fiscal 1998 was a good year for the bond markets as the long-term trend toward
lower interest rates continued. The rally unfolded in two phases: a surge early
in the fiscal year driven primarily by domestic fundamentals, followed by a
dramatic "flight to quality" in the latter part of the fiscal year induced by
fear of a global financial crisis. For the fiscal year ended September 30, 1998,
the Fund's total return (excluding the impact of applicable sales loads) was
10.54%, as compared to 10.43% for the Lehman Brothers Intermediate
Government/Corporate Bond Index (the Index).
During the early part of the fiscal year, the strong domestic economy combined
with disinflation to produce an exceptional environment for the capital markets
(dubbed the "new era" by many economists). This, combined with projections for
the first balanced budget since 1969, allowed the benchmark 30-year Treasury
bond to push decisively through the 6.0% barrier for the first time since the
Treasury began regularly issuing the bonds in 1977. The Fund's duration at the
beginning of the fiscal year was substantially longer than that of the Index,
allowing the Fund to generate superior returns.
Early in 1998, the Fund's duration was reduced and an emphasis was placed on
liquidity as the global financial crisis began to unfold. The "Asian flu" which
surfaced in the fall of 1997 spread first to Russia where the ruble was
devalued, then to Latin America where many economies teetered on the verge of
recession. With the U.S. economy continuing to exhibit unparalleled performance
(positive growth in Gross Domestic Product, declining inflation and a $70
billion budget surplus), investors from around the world flocked to the U.S.
Treasury market as a safe haven.
This intense demand for U.S. Treasury securities left all other sectors of the
fixed-income market to dramatically underperform. For the second half of the
fiscal year, the Fund generated a total return slightly below that of the Index
which is comprised mostly of Treasury securities. The Fund did, however,
substantially outperform its peer group, the Lipper Intermediate Investment
Grade Debt average, which was more heavily weighted in corporate bonds.
As we move into fiscal 1999, the dislocations caused by the dramatic flight to
quality remain in place, creating exciting opportunities in many sectors of the
fixed-income market. We will look to capitalize on this unique opportunity by
pursuing securities in sectors with the highest relative valuations available in
over a decade. We remain constructive on U.S. economic fundamentals and look to
maintain the Fund's duration in the 4 to 5 year range.
Comparison of the Change In Value of a $10,000 Investment in the Intermediate
Bond Fund and the Lehman Brothers Intermediate Government/Corporate Bond Index
LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT/CORPORATE BOND INDEX: INTERMEDIATE BOND FUND:
(w/reinvested divds)
MONTHLY MONTHLY
DATE RETURN BALANCE DATE RETURN BALANCE
10/31/95 1.11% 10,111 10/31/95 0.51% 9,850
12/31/95 1.05% 10,351 12/31/95 0.83% 10,038
03/31/96 -0.51% 10,265 03/31/96 -0.24% 10,011
06/30/96 1.06% 10,329 06/30/96 1.20% 10,099
09/30/96 1.39% 10,513 09/30/96 0.90% 10,208
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
03/31/97 -0.69% 10,759 03/31/97 -0.92% 10,454
06/30/97 0.91% 11,076 06/30/97 1.42% 10,869
09/30/97 1.16% 11,375 09/30/97 1.41% 11,233
12/31/97 2.14% 11,618 12/31/97 2.54% 11,518
03/31/98 1.56% 11,799 03/31/98 1.40% 11,679
06/30/98 1.88% 12,021 06/30/98 2.13% 11,928
09/30/98 4.49% 12,561 09/30/98 4.10% 12,417
Past performance is not predictive of future performance.
Intermediate Bond Fund Average Annual Total Returns
1 Year Since Inception*
8.33% 7.50%
Fund inception was October 3, 1995.
<PAGE>
INTERMEDIATE TERM GOVERNMENT INCOME FUND
MANAGEMENT DISCUSSION AND ANALYSIS
================================================================================
The fixed-income markets turned in a remarkable performance for the fiscal year
with long-term interest rates declining almost 1.5%. The persistent rally in
bonds was spurred primarily by three forces: declining inflation, a balanced
budget and deteriorating economies in Asia, Russia and Latin America. For the
fiscal year ended September 30, 1998, the Fund's total return (excluding the
impact of applicable sales loads) was 10.54%, as compared to 10.61% for the
Lehman Brothers Intermediate Government Bond Index (the Index).
Bond market activity during the first half of the fiscal year was orderly with
virtually all sectors of the fixed-income markets benefiting from the long-term
trend toward lower interest rates. While the extent of the Asian financial
crisis was not wholly known, bond market participants continued to focus
primarily on the domestic economy and the favorable outlook for inflation. The
Fund's duration was positioned neutrally relative to the Index, allowing the
Fund to post comparable returns for the six-month period.
During the latter half of the year, devaluation of the Russian ruble and
economic instability in Latin America forced investors to focus keenly on the
global economy and its ramifications for the U.S. economy. Federal Reserve Board
Chairman Alan Greenspan noted in a recent speech that the U.S. economy "cannot
remain an oasis of prosperity." With economists discussing the possibility of a
global recession and the U.S. economy appearing to be the most stable on the
planet, the only oasis, in the eye of bond investors, was the U.S. Treasury
market. Late in the Fund's fiscal year, investors flocked to the Treasury market
in a true "flight to quality."
The Fund's heavy weighting in Treasuries and agency debentures toward fiscal
year-end aided performance tremendously as these sectors outpaced all others by
a wide margin. While the Fund performed comparably to the Index (which is also
heavily weighted in Treasuries), it substantially outperformed its peer group,
the Lipper Intermediate U.S. Government Fund average, which was more heavily
weighted in those sectors which did not fully participate in the Treasury rally.
The fixed-income markets, following several years of relative calm, have become
somewhat dislocated in recent months. This dislocation has created tremendous
opportunities among the various sectors of the marketplace. With a constructive
outlook for both our domestic economy and inflation, we believe there will
continue to be attractive total return opportunities within the fixed-income
markets. Our strategy is to position the Fund to capitalize on recent
dislocations, investing in those sectors which have the greatest relative value.
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 INTERMEDIATE TERM GOVERNMENT INCOME FUND:
GOVERNMENT BOND INDEX:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
09/30/88 10,000 09/30/88 9,800
12/31/88 0.60% 10,060 12/31/88 0.27% 9,826
03/31/89 1.04% 10,165 03/31/89 1.05% 9,929
06/30/89 6.64% 10,840 06/30/89 5.40% 10,466
09/30/89 1.13% 10,962 09/30/89 0.93% 10,563
12/31/89 3.41% 11,336 12/31/89 2.88% 10,868
03/31/90 -0.14% 11,320 03/31/90 -1.32% 10,724
06/30/90 3.14% 11,675 06/30/90 2.77% 11,022
09/30/90 1.94% 11,902 09/30/90 0.93% 11,124
12/31/90 4.34% 12,418 12/31/90 4.51% 11,626
03/31/91 2.20% 12,692 03/31/91 1.93% 11,851
06/30/91 1.69% 12,906 06/30/91 1.25% 11,998
09/30/91 4.75% 13,519 09/30/91 5.87% 12,703
12/31/91 4.82% 14,171 12/31/91 5.33% 13,380
03/31/92 -1.05% 14,022 03/31/92 -2.24% 13,081
06/30/92 3.88% 14,566 06/30/92 4.25% 13,637
09/30/92 4.38% 15,204 09/30/92 5.51% 14,389
12/31/92 -0.34% 15,152 12/31/92 -0.87% 14,263
03/31/93 3.74% 15,719 03/31/93 5.09% 14,989
06/30/93 1.96% 16,027 06/30/93 2.76% 15,402
09/30/93 2.11% 16,365 09/30/93 2.90% 15,850
12/31/93 0.15% 16,390 12/31/93 -0.71% 15,737
03/31/94 -1.85% 16,087 03/31/94 -4.07% 15,097
06/30/94 -0.56% 15,997 06/30/94 -1.88% 14,813
09/30/94 0.77% 16,120 09/30/94 -0.24% 14,778
12/31/94 -0.10% 16,104 12/31/94 -0.23% 14,745
03/31/95 4.16% 16,774 03/31/95 5.14% 15,502
06/30/95 4.67% 17,557 06/30/95 5.95% 16,425
09/30/95 1.55% 17,829 09/30/95 1.24% 16,628
12/31/95 3.34% 18,425 12/31/95 3.63% 17,231
03/31/96 -0.68% 18,299 03/31/96 -2.02% 16,882
06/30/96 0.67% 18,422 06/30/96 0.11% 16,901
09/30/96 1.72% 18,739 09/30/96 1.87% 17,218
12/31/96 2.31% 19,172 12/31/96 2.60% 17,666
03/31/97 -0.02% 19,168 03/31/97 -0.56% 17,566
06/30/97 2.79% 19,703 06/30/97 2.84% 18,065
09/30/97 2.56% 20,207 09/30/97 2.69% 18,551
12/31/97 2.21% 20,653 12/31/97 2.11% 18,942
03/31/98 1.51% 20,965 03/31/98 1.42% 19,212
06/30/98 1.85% 21,353 06/30/98 2.07% 19,609
09/30/98 4.67% 22,350 09/30/98 4.58% 20,507
Past performance is not predictive of future performance.
Intermediate Term Government Income Fund
Average Annual Total Returns
1 Year 5 Years 10 Years
8.33% 4.86% 7.45%
<PAGE>
ADJUSTABLE RATE U.S. GOVERNMENT SECURITIES FUND
MANAGEMENT DISCUSSION AND ANALYSIS
================================================================================
The Fund's fiscal year ended September 30, 1998 was generally a very
constructive one for the fixed-income markets. However, we witnessed dramatic
changes in the global economic landscape which ultimately cast doubt on the
future course of the domestic economy. This doubt manifested itself in many ways
across the capital markets, changing the shape of the yield curve and forcing
investors to carefully scrutinize every asset class. What began as a year of
relatively normal relationships between asset classes and orderly trading, ended
with serious dislocations and markets characterized by illiquidity. For the
fiscal year, the Fund's total return (excluding the impact of applicable sales
loads) was 3.88%, as compared to 6.19% for the Lehman Brothers Adjustable Rate
Mortgage (ARM) Index.
The Fund's primary objective of high current income consistent with lower
volatility of principal remains in place. With the nominal level of interest
rates declining to cyclical lows, prepayments on mortgage-backed securities
reaching all-time highs and the shape of the yield curve encouraging homeowners
with adjustable-rate mortgages to refinance into fixed-rate mortgages, the
performance of the ARM market lagged that of most other sectors of the
fixed-income markets. The emphasis on minimizing share price volatility has
traditionally focused our investment efforts in seasoned, conventional,
non-convertible ARMs which are indexed to the one-year constant maturity
Treasury (CMT). This sector of the ARM market, while still one of the most
stable sectors, turned in generally lackluster performance.
We recently broadened the Fund's investment guidelines to include short duration
collateralized mortgage obligations (CMO) and asset-backed securities (ABS).
These asset classes will enable the Fund to diversify its holdings and should
enhance performance going forward. Also, the Fund's portfolio and investment
guidelines will be more closely aligned with that of its peer group. Investment
in securities from these asset classes is consistent with the Fund's primary
objective of high current income and low share price volatility.
We remain constructive regarding the total return potential for the Fund over
the next fiscal year. With mortgage rates stabilizing and short-term interest
rates likely to move lower (the result of the Federal Reserve Board "easing"
monetary policy), prepayments on ARMs should stabilize and prices should
recover. Also, the ability to invest in CMOs and ABSs will enhance the Fund's
yield. With the technical factors in the ARM sector of the mortgage market
turning positive, we remain confident in our ability to generate yields
substantively better than money market funds, while limiting share price
volatility.
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. GOVERNMENT
SECURITIES 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 1.89% 10,235 06/30/93 1.19% 9,980
09/30/93 1.09% 10,346 09/30/93 1.04% 10,084
12/31/93 0.51% 10,399 12/31/93 0.95% 10,180
03/31/94 -0.44% 10,353 03/31/94 0.62% 10,242
06/30/94 -0.40% 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 0.16% 10,400 12/31/94 -0.63% 10,230
03/31/95 4.19% 10,836 03/31/95 2.48% 10,484
06/30/95 3.11% 11,173 06/30/95 2.01% 10,695
09/30/95 1.70% 11,362 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
12/31/97 1.65% 13,290 12/31/97 1.17% 12,402
03/31/98 1.52% 13,492 03/31/98 0.99% 12,526
06/30/98 1.42% 13,683 06/30/98 0.72% 12,615
09/30/98 1.47% 13,884 09/30/98 0.95% 12,735
Past performance is not predictive of future performance.
Adjustable Rate U.S. Government Securities Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
1.80% 4.36% 4.38%
*Fund inception was February 10, 1993.
<PAGE>
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
September 30, 1998
<CAPTION>
=============================================================================================================
Short Term Institutional Money
Government Government Market
Income Fund Income Fund Fund
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment securities:
At acquisition cost.................................. $ 13,998,161 $ 29,725,042 $ 19,020,827
============== ============= ==============
At amortized cost.................................... $ 14,010,501 $ 29,773,074 $ 19,018,268
============== ============= ===============
At market value (Note 2) ............................ $ 14,010,501 $ 29,773,074 $ 19,018,268
Repurchase agreements (Note 2).......................... 88,295,000 14,755,000 --
Cash ................................................... 974 4,204 2,634
Interest receivable..................................... 251,802 293,586 225,521
Organization costs, net (Note 2)........................ -- -- 12,699
Other assets............................................ 12,996 4,229 12,809
-------------- ------------- ---------------
TOTAL ASSETS......................................... 102,571,273 44,830,093 19,271,931
-------------- ------------- ---------------
LIABILITIES
Dividends payable....................................... 4,788 18,371 34,603
Payable for securities purchased........................ -- -- 723,656
Payable to affiliates (Note 4).......................... 71,681 4,649 8,158
Other accrued expenses and liabilities.................. 13,416 9,950 13,650
-------------- ------------- ---------------
TOTAL LIABILITIES ................................... 89,885 32,970 780,067
-------------- ------------- ---------------
NET ASSETS ............................................ $ 102,481,388 $ 44,797,123 $ 18,491,864
============== ============= ===============
Net assets consist of:
Paid-in capital......................................... $ 102,481,388 $ 44,818,865 $ 18,497,649
Accumulated net realized losses from security
transactions....................................... - (21,742) (5,785)
-------------- ------------- ---------------
Net assets ............................................. $ 102,481,388 $ 44,797,123 $ 18,491,864
============== ============= ===============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value)
(Note 5)............................................. 102,481,388 44,818,865 18,497,649
============== ============= ===============
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>
STATEMENTS OF ASSETS AND LIABILITIES
September 30, 1998
<TABLE>
<CAPTION>
============================================================================================================
Adjustable
Intermediate Rate U.S.
Intermediate Term Government
Bond Government Securities
Fund Income Fund Fund
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment securities:
At acquisition cost.................................. $ 22,356,616 $ 47,560,703 $ 10,513,682
============== =============== ==============
At amortized cost ................................... $ 22,356,673 $ 47,319,081 $ 10,513,791
============== =============== ==============
At market value (Note 2) ............................ $ 23,382,896 $ 50,529,107 $ 10,548,473
Cash ................................................... 970 511 821
Interest receivable .................................... 394,090 731,422 65,414
Receivable for capital shares sold...................... 1,764 6,940 2,531
Receivable for principal paydowns....................... -- -- 43,813
Organization costs, net (Note 2)........................ 12,699 -- --
Other assets............................................ 12,595 8,964 12,517
-------------- --------------- --------------
TOTAL ASSETS ........................................ 23,805,014 51,276,944 10,673,569
-------------- --------------- --------------
LIABILITIES
Dividends payable ...................................... 54,107 24,120 3,041
Payable for capital shares redeemed .................... 8,252 36,293 44,159
Payable to affiliates (Note 4) ......................... 13,639 34,138 1,388
Other accrued expenses and liabilities.................. 10,905 14,372 9,350
-------------- --------------- --------------
TOTAL LIABILITIES ................................... 86,903 108,923 57,938
-------------- --------------- --------------
NET ASSETS ............................................. $ 23,718,111 $ 51,168,021 $ 10,615,631
============== =============== ==============
Net assets consist of:
Paid-in capital ........................................ $ 22,756,902 $ 50,702,457 $ 11,890,505
Undistributed net investment income..................... 4,033 -- --
Accumulated net realized losses from
security transactions (69,047) (2,744,462) (1,309,556)
Net unrealized appreciation on investments.............. 1,026,223 3,210,026 34,682
-------------- --------------- --------------
Net assets.............................................. $ 23,718,111 $ 51,168,021 $ 10,615,631
============== =============== ==============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) (Note 5).. 2,258,294 4,588,497 1,095,327
============== =============== ==============
Net asset value and redemption price per share (Note 2). $ 10.50 $ 11.15 $ 9.69
============== =============== ==============
Maximum offering price per share (Note 2)............... $ 10.71 $ 11.38 $ 9.89
============== =============== ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
STATEMENTS OF OPERATIONS
For the Year Ended September 30, 1998
<TABLE>
<CAPTION>
=============================================================================================================
Short Term Institutional Money
Government Government Market
Income Fund Income Fund Fund
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income ..................................... $ 5,356,492 $ 2,799,172 $ 3,682,153
-------------- --------------- ---------------
EXPENSES
Investment advisory fees (Note 4) ................... 459,485 100,484 312,309
Transfer agent fees (Note 4) ........................ 181,433 19,631 14,098
Distribution expenses (Note 4)....................... 75,167 3,319 71,450
Postage and supplies................................. 65,469 14,709 16,015
Accounting services fees (Note 4).................... 32,500 28,500 30,500
Custodian fees ...................................... 18,668 16,363 13,477
Registration fees.................................... 18,990 5,511 11,798
Professional fees ................................... 12,575 10,575 11,579
Insurance expense.................................... 7,555 5,350 6,575
Standard & Poor's rating expense..................... 9,556 9,556 --
Trustees' fees and expenses ......................... 6,038 6,038 6,038
Reports to shareholders ............................. 10,317 1,139 812
Amortization of organization costs (Note 2).......... -- -- 6,355
Pricing expense...................................... 729 967 1,342
Other expenses ...................................... 4,445 2,265 3,784
-------------- --------------- --------------
TOTAL EXPENSES..................................... 902,927 224,407 506,132
Fees waived by the Adviser (Note 4) ................. ( 21,569) ( 23,440 ) --
-------------- --------------- --------------
NET EXPENSES....................................... 881,358 200,967 506,132
-------------- --------------- --------------
NET INVESTMENT INCOME .................................. 4,475,134 2,598,205 3,176,021
-------------- --------------- --------------
NET REALIZED GAINS (LOSSES) FROM SECURITY
TRANSACTIONS ....................................... -- 22 (2,025)
-------------- --------------- --------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ............ $ 4,475,134 $ 2,598,227 $ 3,173,996
============== =============== ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
STATEMENTS OF OPERATIONS
For the Year Ended September 30, 1998
<TABLE>
<CAPTION>
============================================================================================================
Adjustable
Intermediate Rate U.S.
Intermediate Term Government
Bond Government Securities
Fund Income Fund Fund
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest ............................................ $ 1,573,544 $ 3,342,596 $ 895,785
Dividends............................................ 12,974 -- --
-------------- --------------- --------------
TOTAL INVESTMENT INCOME............................ 1,586,518 3,342,596 895,785
-------------- --------------- --------------
EXPENSES
Investment advisory fees (Note 4).................... 112,811 251,601 72,130
Distribution expenses (Note 4)....................... 22,402 87,582 7,037
Accounting services fees (Note 4).................... 26,250 30,250 32,250
Transfer agent fees (Note 4)......................... 12,000 42,808 13,486
Postage and supplies................................. 4,891 31,006 12,943
Professional fees.................................... 11,579 16,575 11,375
Registration fees.................................... 3,768 9,789 9,467
Custodian fees....................................... 5,398 8,012 8,889
Trustees' fees and expenses.......................... 6,038 6,038 6,038
Pricing expense...................................... 7,348 3,664 4,440
Standard & Poor's rating expense..................... -- -- 14,889
Insurance expense.................................... 1,940 4,825 2,115
Amortization of organization costs (Note 2).......... 6,355 -- --
Reports to shareholders.............................. 351 3,508 1,168
Other expenses....................................... 418 3,196 785
-------------- --------------- --------------
TOTAL EXPENSES..................................... 221,549 498,854 197,012
Fees waived and/or expenses reimbursed by the
Adviser (Note 4)................................... (7,205) -- (88,817)
-------------- --------------- --------------
NET EXPENSES....................................... 214,344 498,854 108,195
-------------- --------------- --------------
NET INVESTMENT INCOME .................................. 1,372,174 2,843,742 787,590
-------------- --------------- --------------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS
Net realized gains (losses) from
security transactions.............................. (12,654) 157,123 (58,901)
Net change in unrealized appreciation/depreciation
on investments..................................... 808,743 2,055,577 (152,939)
-------------- --------------- --------------
NET REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS ..................................... 796,089 2,212,700 (211,840)
-------------- --------------- --------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ............ $ 2,168,263 $ 5,056,442 $ 575,750
============== =============== ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended September 30, 1998 and 1997
<TABLE>
<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,
1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income....................... $ 4,475,134 $ 4,454,318 $ 2,598,205 $ 2,536,827
Net realized gains from security
transactions.............................. -- -- 22 3,138
------------ -------------- ------------- ------------
Net increase in net assets from operations..... 4,475,134 4,454,318 2,598,227 2,539,965
------------ -------------- ------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ................. (4,475,134) (4,454,318) (2,598,205) (2,536,827)
From net realized gains from security
transactions.............................. -- (2,970) -- --
------------ -------------- ------------- ------------
Decrease in net assets from distributions
to shareholders ............................ (4,475,134) (4,457,288) (2,598,205) (2,536,827)
------------ -------------- ------------- ------------
FROM CAPITAL SHARE TRANSACTIONS (Note 5):
Proceeds from shares sold .................. 301,198,180 346,277,774 179,615,316 214,201,022
Net asset value of shares issued in
reinvestment of distributions to
shareholders.............................. 4,351,699 4,308,683 2,187,984 2,319,214
Payments for shares redeemed................ (299,865,173) (345,226,289) (198,254,085) (194,657,552)
------------ -------------- ------------- ------------
Net increase (decrease) in net assets
from capital share transactions............. 5,684,706 5,360,168 (16,450,785) 21,862,684
------------ -------------- ------------- ------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS ............................ 5,684,706 5,357,198 (16,450,763) 21,865,822
NET ASSETS:
Beginning of year........................... 96,796,682 91,439,484 61,247,886 39,382,064
------------ -------------- ------------- ------------
End of year................................. $102,481,388 $ 96,796,682 $44,797,123 $61,247,886
============ ============== ============= ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
For the Periods Ended September 30, 1998 and 1997 and August 31, 1997
<TABLE>
<CAPTION>
===============================================================================================================================
Money Market Fund Intermediate Bond Fund
- -------------------------------------------------------------------------------------------------------------------------------
Year One Month Year Year One Month Year
Ended Ended Ended Ended Ended Ended
Sept. 30, Sept. 30, Aug. 31, Sept. 30, Sept. 30, Aug. 31,
1998 1997(A) 1997 1998 1997(A) 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ................ $ 3,176,021 $ 351,005 $ 4,774,454 $ 1,372,174 $ 77,377 $ 958,606
Net realized gains (losses)
from security transactions (2,025) (1,198) (2,536) (12,654) (5,759) 14,511
Net change in unrealized
appreciation/depreciation on
investments......................... -- -- -- 808,743 129,865 420,446
------------- ------------ ------------ ------------ ------------ ------------
Net increase in net assets from
operations.......................... 3,173,996 349,807 4,771,918 2,168,263 201,483 1,393,563
------------- ------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ........... (3,176,021) (351,499) (4,773,960) (1,368,141) (77,377) (958,606)
From net realized gains .............. -- -- (2,520) -- -- (49,752)
------------- ------------ ------------ ------------ ------------ ------------
Decrease in net assets from
distributions to shareholders....... (3,176,021) (351,499) (4,776,480) (1,368,141) (77,377) (1,008,358)
------------- ------------ ------------ ------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS (Note 5):
Proceeds from shares sold ............ 317,725,801 25,255,346 570,122,610 19,932,790 929,562 5,244,400
Net asset value of shares issued in
reinvestment of distributions to
shareholders........................ 674,014 46,897 424,478 529,889 919 19,314
Payments for shares redeemed ............ (373,726,925) (46,048,621) (552,336,304) (13,215,521) (497,633) (3,891,934)
------------- ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets
from capital share transactions..... (55,327,110) (20,746,378) 18,210,784 7,247,158 432,848 1,371,780
------------- ------------ ------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN
NET ASSETS.......................... (55,329,135) (20,748,070) 18,206,222 8,047,280 556,954 1,756,985
NET ASSETS:
Beginning of period................... 73,820,999 94,569,069 76,362,847 15,670,831 15,113,877 13,356,892
------------- ------------ ------------ ------------ ------------ ------------
End of period......................... $ 18,491,864 $ 73,820,999 $ 94,569,069 $ 23,718,111 $ 15,670,831 $ 15,113,877
============= ============ ============ ============ ============ ============
UNDISTRIBUTED NET INVESTMENT INCOME ..... $ -- $ -- $ 494 $ 4,033 $ -- $ --
============= ============ ============ ============ ============ ============
(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 6).
See accompanying notes to financial statements.
</TABLE>
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended September 30, 1998 and 1997
<TABLE>
<CAPTION>
==============================================================================================================
Intermediate Term Adjustable Rate
Government U.S. Government
Income Fund Securities Fund
Year Year Year Year
Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ...................... $ 2,843,742 $ 3,195,242 $ 787,590 $ 908,235
Net realized gains (losses) from
security transactions..................... 157,123 (2,293) (58,901) (1,505)
Net change in unrealized appreciation/
depreciation on investments............... 2,055,577 943,745 (152,939) 63,020
------------ -------------- ------------- -------------
Net increase in net assets from operations .... 5,056,442 4,136,694 575,750 969,750
------------ -------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income, Class A ........ (2,843,742) (3,155,630) (787,590) (868,844)
From net investment income, Class C ........ -- ( 39,612) -- (39,391)
------------ -------------- ------------- -------------
Decrease in net assets from distributions
to shareholders ............................ (2,843,742) (3,195,242) (787,590) (908,235)
------------ -------------- ------------- -------------
FROM CAPITAL SHARE
TRANSACTIONS (Note 5):
CLASS A
Proceeds from shares sold .................. 14,138,086 9,148,045 8,356,993 28,836,779
Net asset value of shares issued in
reinvestment of distributions to
shareholders.............................. 2,507,687 2,829,303 716,956 822,109
Payments for shares redeemed ............... (20,723,242) (15,967,680) (21,448,205) (18,246,926)
------------ -------------- ------------- -------------
Net increase (decrease) in net assets
from Class A share transactions ............ (4,077,469) (3,990,332) (12,374,256) 11,411,962
------------ -------------- ------------- -------------
CLASS C
Proceeds from shares sold .................. -- 138,577 -- 760,526
Net asset value of shares issued in
reinvestment of distributions to
shareholders.............................. -- 38,348 -- 30,868
Payments for shares redeemed................ -- ( 961,198) -- (1,423,589)
------------ -------------- ------------- -------------
Net decrease in net assets
from Class C share transactions ............ -- (784,273) -- (632,195)
------------ -------------- ------------- -------------
Net increase (decrease) in net assets
from capital share transactions............. (4,077,469) (4,774,605) (12,374,256) 10,779,767
------------ -------------- ------------- -------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS ............................. (1,864,769) (3,833,153) (12,586,096) 10,841,282
NET ASSETS:
Beginning of year........................... 53,032,790 56,865,943 23,201,727 12,360,445
------------ -------------- ------------- -------------
End of year................................. $ 51,168,021 $ 53,032,790 $ 10,615,631 $23,201,727
============ ============== ============= =============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
SHORT TERM GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
==========================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
==========================================================================================================
Years Ended September 30,
==========================================================================================================
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------
Net asset value at beginning of year............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- --------- --------- -------- --------
Net investment income .......................... 0.046 0.044 0.044 0.046 0.027
---------- --------- --------- -------- --------
Dividends from net investment income............ (0.046) (0.044) (0.044) (0.046) (0.027)
---------- --------- --------- -------- --------
Net asset value at end of year.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========= ========= ======== ========
Total return ................................... 4.74% 4.53% 4.51% 4.69% 2.72%
========== ========= ========= ======== ========
Net assets at end of year (000's) .............. $ 102,481 $ 96,797 $ 91,439 $ 87,141 $ 89,708
========== ========= ========= ======== ========
Ratio of net expenses to average net
assets(A).................................. 0.91% 0.97% 0.99% 0.99% 0.99%
Ratio of net investment income to average
net assets................................. 4.63% 4.43% 4.42% 4.59% 2.69%
- ----------------------------------------------------------------------------------------------------------
(A) Absent fee waivers by the Adviser, the ratio of expenses to average net
assets would have been 0.94% for the year ended September 30, 1998 (Note 4).
See accompanying notes to financial statements.
</TABLE>
<PAGE>
INSTITUTIONAL GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
==========================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
==========================================================================================================
Years Ended September 30,
==========================================================================================================
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------
<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........................... 0.052 0.051 0.051 0.053 0.034
---------- --------- --------- -------- --------
Dividends from net investment income............ (0.052) (0.051) (0.051) (0.053) (0.034)
---------- --------- --------- -------- --------
Net asset value at end of year.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========= ========= ======== ========
Total return.................................... 5.30% 5.17% 5.18% 5.42% 3.43%
========== ========= ========= ======== ========
Net assets at end of year (000's)............... $ 44,797 $ 61,248 $ 39,382 $ 36,009 $ 41,769
========== ========= ========= ======== ========
Ratio of net 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................................. 5.17% 5.07% 5.06% 5.30% 3.41%
- ----------------------------------------------------------------------------------------------------------
(A) Absent fee waivers by the Adviser, the ratios of expenses to average net
assets would have been 0.45%, 0.45%, 0.49%, 0.42% and 0.42% for the years
ended September 30, 1998, 1997, 1996, 1995 and 1994, respectively (Note 4).
See accompanying notes to financial statements.
</TABLE>
<PAGE>
MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
=============================================================================================================
Per Share Data for a Share Outstanding Throughout Each Period
=============================================================================================================
Year One Month Year Period
Ended Ended Ended Ended
Sept. 30, Sept. 30 August 31, August 31,
1998 1997(A) 1997 1996(B)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- --------- --------- --------
Net investment income.......................... 0.050 0.004 0.050 0.046(C)
---------- --------- --------- --------
Dividends from net investment income........... (0.050) (0.004) (0.050) (0.046)
---------- --------- --------- --------
Net asset value at end of period............... $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========= ========= ========
Total return .................................. 5.07% 4.99%(E) 5.14% 4.70%
========== ========= ========= ========
Net assets at end of period (000's)............ $ 18,492 $ 73,821 $ 94,569 $ 76,363
========== ========= ========= ========
Ratio of net expenses to average net
assets(D)................................. 0.79% 0.80%(E) 0.65% 0.65%(E)
Ratio of net investment income to average
net assets................................ 4.95% 4.99%(E) 5.03% 4.94%(E)
- -----------------------------------------------------------------------------------------------------------------
(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 6).
(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.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
INTERMEDIATE BOND FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
=============================================================================================================
Per Share Data for a Share Outstanding Throughout Each Period
=============================================================================================================
Year One Month Year Period
Ended Ended Ended Ended
Sept. 30, Sept. 30 August 31, August 31,
1998 1997(A) 1997 1996(B)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period......... $ 10.09 $ 10.00 $ 9.75 $ 10.00
---------- --------- --------- --------
Income from investment operations:
Net investment income....................... 0.62 0.05 0.62 0.57(C)
Net realized and unrealized gains (losses)
on investments............................ 0.41 0.09 0.28 (0.25)(C)
---------- --------- --------- --------
Total from investment operations............... 1.03 0.14 0.90 0.32
---------- --------- --------- --------
Less distributions:
Dividends from net investment income........ (0.62) (0.05) (0.62) (0.57)
Distributions from net realized gains....... -- -- (0.03) --
---------- --------- --------- --------
Total distributions............................ (0.62) (0.05) (0.65) (0.57)
---------- --------- --------- --------
Net asset value at end of period............... $ 10.50 $ 10.09 $ 10.00 $ 9.75
========== ========= ========= ========
Total return(D) ............................... 10.54% 1.41% 9.48% 3.23%
========== ========= ========= ========
Net assets at end of period (000's)............ $ 23,718 $ 15,671 $ 15,114 $ 13,357
========== ========= ========= ========
Ratio of net expenses to average net
assets(E)................................. 0.95% 0.95%(F) 0.85% 0.68%(F)
Ratio of net investment income to average
net assets................................ 6.08% 6.18%(F) 6.26% 6.31%(F)
Portfolio turnover rate........................ 63% 0% 41% 12%
- --------------------------------------------------------------------------------------------------------------
(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 6).
(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 0.98%, 1.38%(F), 1.53% and 2.04%(F) for
the periods ended September 30, 1998, September 30, 1997, August 31, 1997
and August 31, 1996, respectively (Note 4).
(F) Annualized.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE TERM GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS
==========================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
==========================================================================================================
Years Ended September 30,
==========================================================================================================
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year............ $ 10.67 $ 10.49 $ 10.73 $ 10.14 $ 11.59
---------- --------- --------- -------- --------
Income from investment operations:
Net investment income........................ 0.61 0.61 0.61 0.64 0.56
Net realized and unrealized gains (losses)
on investments............................. 0.48 0.18 (0.24) 0.59 (1.32)
---------- --------- --------- -------- --------
Total from investment operations................ 1.09 0.79 0.37 1.23 (0.76)
---------- --------- --------- -------- --------
Less distributions:
Dividends from net investment income......... (0.61) (0.61) (0.61) (0.64) (0.56)
Distributions from net realized gains........ -- -- -- -- (0.13)
---------- --------- --------- -------- --------
Total distributions............................. (0.61) (0.61) (0.61) (0.64) (0.69)
---------- --------- --------- -------- --------
Net asset value at end of year.................. $ 11.15 $ 10.67 $ 10.49 $ 10.73 $ 10.14
========== ========= ========= ======== ========
Total return(A) ................................ 10.54% 7.74% 3.55% 12.52% (6.76%)
========== ========= ========= ======== ========
Net assets at end of year (000's)............... $ 51,168 $ 53,033 $ 56,095 $ 56,969 $ 64,395
========== ========= ========= ======== ========
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................................. 5.64% 5.78% 5.75% 6.17% 5.17%
Portfolio turnover rate......................... 29% 49% 70% 58% 236%
- ----------------------------------------------------------------------------------------------------------
(A) Total returns shown exclude the effect of applicable sales loads.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
ADJUSTABLE RATE U.S. GOVERNMENT SECURITIES FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
==========================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
==========================================================================================================
Years Ended September 30,
==========================================================================================================
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ........... $ 9.85 $ 9.81 $ 9.78 $ 9.82 $ 10.01
---------- --------- --------- -------- --------
Income from investment operations:
Net investment income ....................... 0.53 0.57 0.57 0.55 0.39
Net realized and unrealized gains (losses)
on investments ............................ (0.16) 0.04 0.03 (0.04) (0.18)
---------- --------- --------- -------- --------
Total from investment operations ............... 0.37 0.61 0.60 0.51 0.21
---------- --------- --------- -------- --------
Less distributions:
Dividends from net investment income......... (0.53) (0.57) (0.57) (0.55) (0.39)
Distributions from net realized gains........ -- -- -- -- (0.01)
---------- --------- --------- -------- --------
Total distributions ............................ (0.53) (0.57) (0.57) (0.55) (0.40)
---------- --------- --------- -------- --------
Net asset value at end of year ................. $ 9.69 $ 9.85 $ 9.81 $ 9.78 $ 9.82
========== ========= ========= ======== ========
Total return(A) ................................ 3.88% 6.34% 6.32% 5.33% 2.09%
========== ========= ========= ======== ========
Net assets at end of year (000's) .............. $ 10,616 $ 23,202 $ 11,732 $ 20,752 $ 37,572
========== ========= ========= ======== ========
Ratio of net expenses to average net
assets(B).................................. 0.75% 0.75% 0.75% 0.75% 0.68%
Ratio of net investment income to average
net assets................................. 5.47% 5.73% 5.91% 5.57% 3.91%
Portfolio turnover rate ........................ 45% 58% 44% 115% 81%
- ----------------------------------------------------------------------------------------------------------
(A) Total returns shown exclude the effect of applicable sales loads.
(B) Absent fee waivers and/or expense reimbursements by the Adviser, the ratios
of expenses to average net assets would have been 1.37%, 1.47%, 1.46%, 1.21%
and 0.78% for the years ended September 30, 1998, 1997, 1996, 1995 and 1994,
respectively (Note 4).
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
================================================================================
1. Organization
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 (individually, a Fund
and, 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 6).
The Short Term 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 U.S. Government, its agencies
or instrumentalities and backed by the "full faith and credit" of the United
States.
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 maturity composition of the Fund's portfolio of fixed-income securities is
adjusted in response to market conditions and expectations.
The Intermediate Term Government Income 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.
The Adjustable Rate U.S. Government Securities Fund 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. It is anticipated that by investing primarily in
mortgage-rated securities which have adjustable rates of interest, the Fund will
achieve a less volatile net asset value than is characteristic of investments in
mortgage-related securities paying fixed rates of interest.
Prior to September 22, 1997, the Intermediate Term Government Income Fund and
Adjustable Rate U.S. Government Securities Fund offered two classes of shares:
Class A shares (sold subject to a maximum front-end sales load of 2% 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). On September 22, 1997, all outstanding Class C shares
were redeemed pursuant to a mandatory redemption program authorized by the Board
of Trustees.
<PAGE>
2. Significant Accounting Policies
The following is a summary of the Funds' significant accounting policies:
Securities valuation -- Investment securities in the Short Term Government
Income Fund, Institutional Government Income Fund and Money Market Fund 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. Investment securities in the Intermediate Bond Fund,
Intermediate Term Government Income Fund and Adjustable Rate U.S. Government
Securities Fund 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 approved by and under the general supervision of the Board of
Trustees.
Repurchase agreements -- Repurchase agreements, which are collateralized by U.S.
Government obligations, are valued at cost which, together with accrued
interest, approximates market. Collateral for repurchase agreements is held in
safekeeping in the customer-only account of the Funds' custodian, at the Federal
Reserve Bank of Cleveland. At the time each Fund enters into a repurchase
agreement, the seller agrees that the value of the underlying securities,
including accrued interest, will at all times be equal to or exceed the face
amount of the repurchase agreement.
Share valuation -- The net asset value per share of each Fund is calculated
daily by dividing the total value of a Fund's assets, less liabilities, by the
number of shares outstanding.
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 the 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 redemption price per share of each Fund is equal to the net asset value per
share.
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 each 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
dividends and capital gain distributions are determined in accordance with
income tax regulations.
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.
<PAGE>
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 the federal income tax cost of portfolio
investments as of September 30, 1998:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Adjustable
Intermediate Rate U.S.
Intermediate Term Government
Bond Government Securities
Fund Income Fund Fund
<S> <C> <C> <C>
Gross unrealized appreciation........................... $ 1,074,225 $ 3,210,026 $ 51,346
Gross unrealized depreciation........................... ( 95,759) -- (16,664)
-------------- --------------- ---------------
Net unrealized appreciation ......................... $ 978,466 $ 3,210,026 $ 34,682
============== =============== ===============
Federal income tax cost................................. $ 22,404,430 $ 47,319,081 $ 10,513,791
============== =============== ===============
- --------------------------------------------------------------------------------------------------------------
</TABLE>
With respect to the Intermediate Bond Fund, the difference between the federal
income tax cost of portfolio investments and the amortized cost shown on the
Fund's Statement of Assets and Liabilities is due to certain timing differences
in the recognition of capital losses under income tax regulations and generally
accepted accounting principles.
As of September 30, 1998, the Institutional Government Income Fund, Money Market
Fund, Intermediate Bond Fund, Intermediate Term Government Income Fund and
Adjustable Rate U.S. Government Securities Fund had capital loss carryforwards
for federal income tax purposes of $21,742, $3,760, $21,290, $2,744,462 and
$1,252,395, respectively. In addition, the Money Market Fund and Adjustable Rate
U.S. Government Securities Fund elected to defer until its subsequent tax year
$2,025 and $57,161, respectively, of capital losses incurred after October 31,
1997. 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.
3. Investment Transactions
Investment transactions (excluding short-term investments) were as follows for
the year ended September 30, 1998:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Adjustable
Intermediate Rate U.S.
Intermediate Term Government
Bond Government Securities
Fund Income Fund Fund
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchases of investment securities...................... $ 20,423,784 $ 14,353,090 $ 5,680,667
============== =============== ===============
Proceeds from sales and maturities of
investment securities.............................. $ 12,789,778 $ 19,163,961 $ 11,862,394
============== =============== ===============
- --------------------------------------------------------------------------------------------------------------
</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.
<PAGE>
MANAGEMENT AGREEMENT
Each Fund's investments are managed 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.
In order to voluntarily reduce operating expenses during the year ended
September 30, 1998, the Adviser waived $21,569 of its advisory fees for the
Short Term Government Income Fund; waived $23,440 of its advisory fees for the
Institutional Government Income Fund; waived $7,205 of its advisory fees for the
Intermediate Bond Fund; and waived its advisory fees of $72,130 and reimbursed
$16,687 of other operating expenses for the Adjustable Rate U.S. Government
Securities 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 per shareholder account from each of the Short Term Government
Income Fund, Institutional Government Income Fund and Money Market Fund and $21
per shareholder account from each of the Intermediate Bond Fund, Intermediate
Term Government Income Fund and Adjustable Rate U.S. Government Securities Fund,
subject to a $1,000 minimum monthly fee for each Fund. In addition, each Fund
pays out-of-pocket expenses including, but not limited to, postage and supplies.
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 from the Short Term Government Income
Fund, $2,000 from each of the Institutional Government Income Fund, Money Market
Fund and Intermediate Bond Fund and $2,500 from each of the Intermediate Term
Government Income Fund and Adjustable Rate U.S. Government Securities 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 $1,429, $5,200
and $1,709 from underwriting and broker commissions on the sale of shares of the
Intermediate Bond Fund, Intermediate Term Government Income Fund and Adjustable
Rate U.S.
Government Securities Fund, respectively, for the year ended September 30, 1998.
PLANS OF DISTRIBUTION
The Trust has a Plan of Distribution under which shares of each 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 Plan is 0.35% of each Fund's average daily net assets, except for the
Institutional Government Income Fund for which the annual limitation is 0.10% of
its average daily net assets.
<PAGE>
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>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Intermediate Bond Fund
- ---------------------------------------------------------------------------------------------------------------
Year One Month Year
Ended Ended Ended
Sept. 30, Sept. 30, Aug. 31,
1998 1997 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shares sold............................................. 1,947,922 92,013 542,916
Shares issued in reinvestment of distributions to
shareholders....................................... 51,693 91 1,951
Shares redeemed......................................... (1,294,973) (49,574) (404,063)
-------------- --------------- ---------------
Net increase in shares outstanding...................... 704,642 42,530 140,804
Shares outstanding, beginning of period................. 1,553,652 1,511,122 1,370,318
-------------- --------------- ---------------
Shares outstanding, end of period....................... 2,258,294 1,553,652 1,511,122
============== =============== ===============
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Intermediate Term Adjustable Rate
Government U.S. Government
Income Fund Securities Fund
- ---------------------------------------------------------------------------------------------------------------
Year Year Year Year
Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------------------
CLASS A
<S> <C> <C> <C> <C>
Shares sold.................................... 1,312,955 864,111 852,470 2,931,702
Shares issued in reinvestment of distributions
to shareholders............................. 232,218 267,417 73,312 83,540
Shares redeemed................................ (1,926,636) (1,509,918) (2,186,125) (1,855,152)
------------ -------------- ------------- -------------
Net increase (decrease) in shares outstanding.. (381,463) (378,390) (1,260,343) 1,160,090
Shares outstanding, beginning of year.......... 4,969,960 5,348,350 2,355,670 1,195,580
------------ -------------- ------------- -------------
Shares outstanding, end of year................ 4,588,497 4,969,960 1,095,327 2,355,670
============ ============== ============= =============
CLASS C
Shares sold.................................... -- 13,106 -- 77,399
Shares issued in reinvestment of distributions
to shareholders............................. -- 3,625 -- 3,139
Shares redeemed................................ -- (90,249) -- (144,655)
------------ -------------- ------------- -------------
Net decrease in shares outstanding............. -- (73,518) -- (64,117)
Shares outstanding, beginning of year.......... -- 73,518 -- 64,117
------------ -------------- ------------- -------------
Shares outstanding, end of year................ -- -- -- --
============ ============== ============= =============
- ---------------------------------------------------------------------------------------------------------------
</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. Agreement and Plan of Reorganization
The Money Market Fund and Intermediate Bond Fund were originally organized as
series of Trans Adviser Funds, Inc. (Trans Adviser), an open-end management
investment company incorporated under the laws of the State of Maryland.
Pursuant to an Agreement and Plan of Reorganization dated May 31, 1997, each
Fund, on August 29, 1997, succeeded to the assets and liabilities of a series of
Trans Adviser with the same name (the Predecessor Fund). The investment
objective, policies and restrictions of each Fund and its Predecessor Fund are
substantially identical.
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 either Fund, its Predecessor Fund or their shareholders. In
connection with the reorganization, the fiscal year-end of each Fund, subsequent
to August 31, 1997, has been changed from August 31 to September 30.
<PAGE>
SHORT TERM GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
September 30, 1998
<TABLE>
<CAPTION>
=============================================================================================================
Par Market
Value U.S. TREASURY OBLIGATIONS-- 13.7% Value
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
$ 2,000,000 U.S. Treasury Notes, 4.75%, 10/31/98...................................... $ 1,998,531
5,000,000 U.S. Treasury Notes, 5.125%, 11/30/98..................................... 4,996,950
5,000,000 U.S. Treasury Notes, 5.875%, 2/28/99...................................... 5,006,396
2,000,000 U.S. Treasury Notes, 6.375%, 4/30/99...................................... 2,008,624
- --------------- ---------------
$ 14,000,000 TOTAL U.S. TREASURY OBLIGATIONS
=============== (Amortized Cost $14,010,501).............................................. $ 14,010,501
---------------
<CAPTION>
=============================================================================================================
Face Market
Amount REPURCHASE AGREEMENTS (Note A)-- 86.1% Value
- -------------------------------------------------------------------------------------------------------------
$ 25,000,000 Prudential Securities, Inc., 5.65%, dated 9/30/98, due 10/01/98,
repurchase proceeds $25,003,924......................................... $ 25,000,000
10,000,000 BT Alex Brown, Inc., 5.50%, dated 9/24/98, due 10/01/98,
repurchase proceeds $10,010,694......................................... 10,000,000
13,295,000 Nesbitt Burns Securities, Inc., 5.25%, dated 9/30/98, due 10/01/98,
repurchase proceeds $13,296,939......................................... 13,295,000
16,000,000 Morgan Stanley Dean Witter, Inc., 5.55%, dated 9/30/98, due 10/01/98,
repurchase proceeds $16,002,467......................................... 16,000,000
15,000,000 Bankers Trust Corp., 5.60%, dated 9/30/98, due 10/01/98,
repurchase proceeds $15,002,333......................................... 15,000,000
5,000,000 Morgan Stanley Dean Witter, Inc., 5.27%, dated 9/11/98, due 1/11/99,
repurchase proceeds $5,089,297.......................................... 5,000,000
4,000,000 Morgan Stanley Dean Witter, Inc., 5.14%, dated 9/11/98, due 3/10/99,
repurchase proceeds $4,102,800.......................................... 4,000,000
- --------------- ---------------
$ 88,295,000 TOTAL REPURCHASE AGREEMENTS .............................................. $ 88,295,000
=============== ---------------
TOTAL INVESTMENT SECURITIES AND REPURCHASE AGREEMENTS-- 99.8% ............ $ 102,305,501
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.2% ............................. 175,887
---------------
NET ASSETS-- 100.0% ...................................................... $ 102,481,388
===============
See accompanying notes to portfolios of investments and notes to financial
statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INSTITUTIONAL GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
September 30, 1998
============================================================================================================
Par Market
Value INVESTMENT SECURITIES-- 66.5% Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY ISSUES -- 57.1%
$ 1,500,000 FNMA, 5.55%, 10/05/98...................................................... $ 1,499,963
1,420,000 FHLMC Discount Notes, 10/06/98............................................. 1,418,915
119,000 FRMC Discount Notes, 10/08/98.............................................. 118,870
770,000 FRMC Discount Notes, 10/09/98.............................................. 769,064
300,000 FHLMC Discount Notes, 10/09/98............................................. 299,633
207,000 FNMA Discount Notes, 10/09/98.............................................. 206,747
1,900,000 FNMA, 6.20%, 10/14/98...................................................... 1,900,816
620,000 FHLMC Discount Notes, 10/14/98............................................. 618,769
400,000 FNMA, 4.875%, 10/15/98..................................................... 399,894
200,000 SLMA Floating Rate Notes, 4.943%, 10/15/98 (Note B)........................ 199,958
991,000 FHLB Discount Notes, 10/21/98.............................................. 987,972
300,000 FNMA Discount Notes, 10/21/98.............................................. 299,088
750,000 FHLB Floating Rate Notes, 5.013%, 10/23/98 (Note B)........................ 749,985
1,000,000 FNMA, 5.42%, 11/02/98...................................................... 999,597
270,000 FNMA Discount Notes, 11/04/98.............................................. 268,598
750,000 FFCB Discount Notes, 11/09/98.............................................. 745,694
450,000 FNMA, 5.05%, 11/10/98...................................................... 449,721
200,000 FFCB, 5.02%, 11/23/98...................................................... 199,798
1,165,000 FNMA, 7.05%, 12/10/98...................................................... 1,167,954
400,000 FNMA, 5.30%, 12/10/98...................................................... 399,801
250,000 FHLMC, 5.00%, 12/15/98..................................................... 249,684
1,000,000 FHLB, 5.735%, 12/23/98..................................................... 1,000,130
200,000 FHLMC, 5.34%, 1/25/99...................................................... 199,835
227,000 FNMA Discount Notes, 1/27/99............................................... 222,945
1,000,000 FHLB, 5.23%, 2/03/99....................................................... 998,653
210,000 FHLB Discount Notes, 2/10/99............................................... 206,035
550,000 FNMA, 5.55%, 2/12/99....................................................... 549,598
500,000 FNMA, 5.20%, 2/18/99....................................................... 499,373
375,000 FNMA, 4.95%, 2/22/99....................................................... 373,879
215,000 FNMA Discount Notes, 3/02/99............................................... 210,398
361,000 FHLMC Discount Notes, 3/08/99.............................................. 352,967
200,000 FNMA, 9.55%, 3/10/99....................................................... 203,418
3,000,000 FNMA Floating Rate Notes, 4.943%, 3/16/99 (Note B)......................... 2,999,303
500,000 FHLB, 5.57%, 4/07/99....................................................... 499,845
2,000,000 FHLB Floating Rate Notes, 5.013%, 4/09/99 (Note B)......................... 2,000,000
200,000 FHLB, 5.72%, 4/23/99....................................................... 200,029
300,000 FHLB, 5.805%, 5/19/99...................................................... 300,000
245,000 FFCB, 6.21%, 6/03/99....................................................... 245,741
200,000 FFCB, 5.835%, 6/14/99...................................................... 200,113
260,000 FNMA, 8.45%, 7/12/99....................................................... 265,444
105,000 FHLMC, 7.125%, 7/21/99..................................................... 105,918
- --------------- --------------
$ 25,610,000 TOTAL U.S. GOVERNMENT AGENCY ISSUES
- --------------- (Amortized Cost $25,584,145)............................................... $ 25,584,145
--------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INSTITUTIONAL GOVERNMENT INCOME FUND (continued)
============================================================================================================
Par Market
Value INVESTMENT SECURITIES-- 66.5% (continued) Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER -- 4.9%
$ 2,200,000 Kirksville College of Osteopathic Medicine, Inc., 11/03/98, Guarantor SLMA
- --------------- (Amortized Cost $2,188,929)................................................ $ 2,188,929
---------------
VARIABLE RATE DEMAND NOTES (Note C) -- 4.5%
$ 2,000,000 Harris Co., TX, HFC MFH Rev. (Sandalwood Apts.), 5.64%, 12/15/36, Guarantor FNMA
- --------------- (Amortized Cost $2,000,000)................................................ $ 2,000,000
---------------
$ 29,810,000 TOTAL INVESTMENT SECURITIES
=============== (Amortized Cost $29,773,074)............................................... $ 29,773,074
---------------
<CAPTION>
=============================================================================================================
Face Market
Amount REPURCHASE AGREEMENTS (Note A)-- 32.9% Value
- -------------------------------------------------------------------------------------------------------------
$ 11,000,000 Prudential Securities, Inc., 5.65%, dated 9/30/98, due 10/01/98,
repurchase proceeds $11,001,726......................................... $ 11,000,000
3,755,000 Nesbitt Burns Securities, Inc., 5.25%, dated 9/30/98, due 10/01/98,
repurchase proceeds $3,755,548.......................................... 3,755,000
- --------------- ---------------
$ 14,755,000 TOTAL REPURCHASE AGREEMENTS ............................................... $ 14,755,000
- --------------- ---------------
TOTAL INVESTMENT SECURITIES AND REPURCHASE AGREEMENTS -- 99.4% ............ $ 44,528,074
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.6% .............................. 269,049
---------------
NET ASSETS-- 100.0% ....................................................... $ 44,797,123
===============
See accompanying notes to portfolios of investments and notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
September 30, 1998
=============================================================================================================
Par Market
Value INVESTMENT SECURITIES-- 102.8% Value
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE NOTES -- 34.2%
$ 200,000 Consolidated Natural Gas Co., 5.875%, 10/01/98............................. $ 200,000
500,000 Key Bank, N.A., 6.00%, 10/07/98............................................ 500,023
500,000 Chrysler Financial Corp., 5.375%, 10/15/98................................. 499,932
502,000 Wal-Mart Stores, Inc., 5.125%, 10/22/98.................................... 501,791
500,000 Fleet Financial Group, 6.00%, 10/26/98..................................... 500,088
500,000 Beta Finance Corp., Inc. 6.00%, 10/27/98................................... 500,065
200,000 Caterpillar Financial Services, Inc. 5.47%, 12/15/98....................... 199,886
100,000 Southern California Edison, 5.60%, 12/15/98................................ 99,963
400,000 Chrysler Financial Corp., 5.88%, 12/21/98.................................. 400,065
100,000 Associates Corp., N.A., 5.57%, 12/31/98.................................... 99,944
525,000 General Motors Acceptance Corp., 7.75% 1/15/99............................. 527,825
110,000 Ford Motor Credit Co., 5.625%, 1/15/99..................................... 109,938
600,000 Associates Corp., N.A., 5.47%, 1/28/99..................................... 599,379
419,000 Merrill Lynch & Company, Inc., 7.75%, 3/01/99.............................. 422,895
292,000 Citicorp, 9.00%, 4/15/99................................................... 297,578
247,000 Chase Manhattan Corp., 10.00%, 6/15/99..................................... 254,416
320,000 Citicorp, 9.75%, 8/01/99................................................... 331,522
153,000 Ford Motor Credit Co., 6.375%, 9/15/99..................................... 154,059
130,000 American General Corp., 7.70%, 10/15/99.................................... 132,990
- --------------- --------------
$ 6,298,000 TOTAL CORPORATE NOTES
- --------------- (Amortized Cost $6,332,359)................................................ $ 6,332,359
--------------
MUNICIPAL NOTES -- 8.2%
$ 445,000 Bolingbrook, IL, MFH Rev., 5.70%, 10/01/98................................. $ 445,000
970,000 New York, NY, MFH Rev., Series B, 5.70%, 10/01/98.......................... 970,000
100,000 Emeryville, CA, PFA Rev., Series C (Emeryville Redevelopment),
5.75%, 9/01/99.......................................................... 99,909
- --------------- --------------
$ 1,515,000 TOTAL MUNICIPAL NOTES
- --------------- (Amortized Cost $1,514,909)................................................ $ 1,514,909
--------------
VARIABLE RATE DEMAND NOTES (Note C) -- 53.6%
$ 500,000 Brownsburg, IN, EDR, Ser. 1998B (Zanetis Enterprises), 5.70%, 6/01/03...... $ 500,000
601,000 Illinois Development Finance Auth. IDR (Landcomp Corp.), 5.80%, 7/01/05.... 601,000
825,000 Diamond Development Group, Inc., Ser. 1996, 5.72%, 9/01/08................. 825,000
850,000 Vista Funding Corp., 5.74%, 9/01/11........................................ 850,000
2,500,000 South Central Communications Corp., Ser. 1998, 5.95%, 9/01/16.............. 2,500,000
530,000 Ohio HFA Rev., Ser. 1998A-2, 5.70%, 7/01/18................................ 530,000
1,300,000 Fontana, CA, COP, 6.15%, 10/01/20.......................................... 1,300,000
1,500,000 Abag Finance Auth. for Nonprofit Corp., CA, COP, Ser. 1997D,
5.80%, 10/01/27......................................................... 1,500,000
1,300,000 Illinois HFA Rev., Ser. 1998B (Elmhurst Memorial), 5,75%, 1/01/28.......... 1,300,000
- --------------- --------------
$ 9,906,000 TOTAL VARIABLE RATE DEMAND NOTES
- --------------- (Amortized Cost $9,906,000)................................................ $ 9,906,000
--------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND (continued)
============================================================================================================
Par Market
Value INVESTMENT SECURITIES-- 102.8% (continued) Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER -- 6.8%
$ 900,000 Bank One Corp., 10/01/98................................................... $ 900,000
365,000 Merrill Lynch & Company, Inc., 10/01/98.................................... 365,000
- --------------- --------------
$ 1,265,000 TOTAL COMMERCIAL PAPER
- --------------- (Amortized Cost $1,265,000)................................................ $ 1,265,000
--------------
$ 18,984,000 TOTAL INVESTMENT SECURITIES
=============== (Amortized Cost $19,018,268)............................................... $ 19,018,268
LIABILITIES IN EXCESS OF OTHER ASSETS-- (2.8%) ............................ ( 526,404)
--------------
NET ASSETS-- 100.0% ....................................................... $ 18,491,864
==============
See accompanying notes to portfolios of investments and notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
PORTFOLIO OF INVESTMENTS
September 30, 1998
============================================================================================================
Par Market
Value FIXED RATE OBLIGATIONS-- 97.7% Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS -- 7.1%
$ 1,500,000 U.S. Treasury Notes, 6.50%, 8/15/05
- --------------- (Amortized Cost $1,464,297)................................................ $ 1,690,313
--------------
U.S. GOVERNMENT AGENCY ISSUES -- 14.7%
$ 1,000,000 FHLMC, 5.75%, 7/15/03...................................................... $ 1,041,837
2,000,000 FHLMC, 7.93%, 1/20/05...................................................... 2,332,220
69,960 SBA, 8.45%, 1/01/07........................................................ 78,352
30,000 TVA, 8.05%, 7/15/24........................................................ 30,738
- --------------- --------------
$ 3,099,960 TOTAL U.S. GOVERNMENT AGENCY ISSUES
- --------------- (Amortized Cost $3,294,728)................................................ $ 3,483,147
--------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES -- 6.4%
$ 800,000 FHLMC #1720-E, 7.50%, 12/15/09............................................. $ 808,507
681,574 FNMA #50811, 7.50%, 12/01/12............................................... 706,111
- --------------- --------------
$ 1,481,574 TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES
- --------------- (Amortized Cost $1,522,825)................................................ $ 1,514,618
--------------
CORPORATE BONDS-- 60.1% ...................................................
$ 250,000 British Petroleum America, Inc., 6.50%, 12/15/99........................... $ 252,924
175,000 Pacific Gas & Electric Co., 6.625%, 6/01/00................................ 175,385
415,000 Bear Stearns Co., Inc., 6.25%, 12/01/00.................................... 421,445
250,000 IBM Credit Corp. Medium Term Notes, 6.20%, 3/19/01......................... 250,862
350,000 Florida Residential Property & Casualty Co., 7.25%, 7/01/02................ 367,514
259,000 May Department Stores Co., 9.875%, 12/01/02................................ 304,243
660,000 Ford Motor Credit Co., 7.50%, 1/15/03...................................... 713,314
380,000 Bankers Trust Corp., 7.25%, 1/15/03........................................ 402,724
68,000 U.S. Leasing International, Inc., 6.625%, 5/15/03......................... 71,539
215,000 Chase Manhattan Corp., 8.00%, 5/15/04...................................... 217,675
250,000 Citicorp Medium Term Notes, 8.625%, 11/01/04............................... 257,876
200,000 Michigan Bell Telephone Co., 6.375%, 2/01/05............................... 201,408
66,000 Kaiser Permanente, 9.55%, 7/15/05.......................................... 81,138
400,000 Anheuser-Busch Co., Inc. 7.00%, 9/01/05.................................... 422,678
510,000 Honeywell, Inc. 8.625%, 4/15/06............................................ 611,485
1,000,000 Monsanto Co., 8.13%, 12/15/06.............................................. 1,142,700
500,000 Union Oil of California Corp. Medium Term Notes, 6.70%, 10/15/07........... 535,126
50,000 Berkley (W.R.) Corp., 9.875%, 5/15/08...................................... 64,555
575,000 General Electric Capital Corp. Medium Term Notes, 7.50%, 6/15/09........... 664,925
407,000 Lehman Brothers Holdings, Inc. Medium Term Notes, 7.40%, 11/24/10.......... 389,854
850,000 Merrill Lynch & Company, Inc. Medium Term Notes, 7.19%, 8/07/12............ 883,964
268,000 Super Value Stores, 8.875%, 4/01/16........................................ 274,089
20,000 Union Camp Corp., 8.625%, 4/15/16.......................................... 20,724
107,000 Anheuser-Busch Co., Inc., 8.625%, 12/01/16................................. 109,167
46,000 Kraft, Inc., 8.50%, 2/15/17................................................ 48,072
260,000 Dayton Hudson Corp., 9.875%, 6/01/17....................................... 266,900
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND (continued)
============================================================================================================
Par Market
Value FIXED RATE OBLIGATIONS-- 97.7% (continued) Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 150,000 Deere & Co., 8.95%, 6/15/19................................................ $ 188,257
439,000 Pennsylvania Power & Light Co., 9.25%, 10/01/19............................ 471,378
115,000 Rohm & Haas Co., 9.80%, 4/15/20............................................ 156,157
165,000 Questar Pipeline Co., 9.375%, 6/01/21...................................... 187,019
120,000 Jersey Central Power & Light Co., 9.20%, 7/01/21........................... 138,094
500,000 AT&T Corp., 8.125%, 1/15/22................................................ 554,996
675,000 Shopko Stores, Inc., 9.25%, 3/15/22........................................ 871,071
300,000 Inco, Ltd., 9.60%, 6/15/22................................................. 346,177
765,000 Alabama Power Co., 8.30%, 7/01/22.......................................... 802,074
85,000 Southwestern Public Service Co., 8.20%, 12/01/22........................... 97,124
130,000 Union Electric Co., 8.00%, 12/15/22........................................ 144,511
315,000 Wisconsin Electric Power Co., 7.75%, 1/15/23............................... 346,201
58,000 Georgia Power Co., 7.95%, 2/01/23.......................................... 60,870
711,000 Loews Corp., 7.00%, 10/15/23............................................... 728,278
- --------------- --------------
$ 13,059,000 TOTAL CORPORATE BONDS
- --------------- (Amortized Cost $13,740,813)............................................... $ 14,244,493
--------------
MUNICIPAL NOTES -- 7.9%
$ 1,500,000 Chula Vista, CA, Pension Obligation Rev., 8.125%, 8/01/11
- --------------- (Amortized Cost $1,724,010)................................................ $ 1,869,075
--------------
COMMERCIAL PAPER -- 1.5%
$ 360,000 Union Bank of Switzerland, 10/01/98
- --------------- (Amortized Cost $360,000).................................................. $ 360,000
--------------
$ 21,000,534 TOTAL FIXED RATE OBLIGATIONS
=============== (Amortized Cost $22,106,673)............................................... $ 23,161,646
--------------
============================================================================================================
Market
Shares PREFERRED STOCK -- 0.9% Value
- ------------------------------------------------------------------------------------------------------------
10,000 First Industrial Realty Trust, Inc., 7.95%
(Amortized Cost $250,000).................................................. $ 221,250
--------------
TOTAL INVESTMENT SECURITIES
(Amortized Cost $22,356,673)............................................... $ 23,382,896
OTHER ASSETS IN EXCESS OF LIABILITIES-- 1.4% .............................. 335,215
--------------
NET ASSETS-- 100.0% ....................................................... $ 23,718,111
==============
See accompanying notes to portfolios of investments and notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE TERM GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
September 30, 1998
============================================================================================================
Par Market
Value INVESTMENT SECURITIES-- 98.7% Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS -- 19.4%
$ 1,000,000 U.S. Treasury Notes, 7.75%, 2/15/01........................................ $ 1,075,000
1,000,000 U.S. Treasury Notes, 8.00%, 5/15/01........................................ 1,087,813
3,000,000 U.S. Treasury Notes, 7.875%, 8/15/01....................................... 3,277,500
2,000,000 U.S. Treasury Notes, 7.50%, 11/15/01....................................... 2,179,376
1,000,000 U.S. Treasury Notes, 5.50%, 3/31/03........................................ 1,048,750
1,000,000 U.S. Treasury Bonds, 7.50%, 11/15/16....................................... 1,275,000
- --------------- --------------
$ 9,000,000 TOTAL U.S. TREASURY OBLIGATIONS
- --------------- (Amortized Cost $9,189,883)................................................ $ 9,943,439
--------------
U.S. GOVERNMENT AGENCY ISSUES -- 79.3%
$ 954,000 FHLB Discount Notes, 10/01/98.............................................. $ 954,000
1,000,000 SLMA Medium Term Notes, 7.50%, 7/02/01..................................... 1,072,411
3,000,000 FHLB Notes, 7.31%, 7/06/01................................................. 3,203,766
2,000,000 FHLB Medium Term Notes, 8.43%, 8/01/01..................................... 2,197,452
1,400,000 FHLB Notes, 6.25%, 9/27/01................................................. 1,461,627
2,000,000 FNMA Notes, 7.55%, 4/22/02................................................. 2,187,008
1,000,000 FHLMC Notes, 6.07%, 2/05/03................................................ 1,003,812
2,000,000 FHLMC Notes, 6.80%, 7/09/04................................................ 2,112,424
2,000,000 FHLMC Notes, 8.53%, 11/18/04............................................... 2,081,576
2,000,000 FHLMC Notes, 7.65%, 5/10/05................................................ 2,074,050
2,000,000 FNMA Medium Term Notes, 6.85%, 8/22/05..................................... 2,219,426
2,000,000 FNMA Notes, 6.77%, 9/01/05................................................. 2,210,160
1,400,000 FNMA Notes, 6.26%, 1/24/06................................................. 1,447,603
2,500,000 FNMA Notes, 6.21%, 1/26/06................................................. 2,580,810
2,000,000 FNMA Notes, 6.06%, 2/03/06................................................. 2,091,220
1,000,000 FHLMC Notes, 6.345%, 2/15/06............................................... 1,033,213
2,000,000 FNMA Notes, 6.90%, 12/26/06................................................ 2,167,482
2,000,000 FNMA Notes, 6.64%, 7/02/07................................................. 2,231,470
2,500,000 FHLMC Notes, 5.75%, 4/15/08................................................ 2,638,322
2,203,000 RFCO STRIPS, 10/15/08...................................................... 1,356,012
2,000,000 FNMA Notes, 6.96%, 9/05/12................................................. 2,261,824
- --------------- --------------
$ 38,957,000 TOTAL U.S. GOVERNMENT AGENCY ISSUES
- --------------- (Amortized Cost $38,129,198)............................................... $ 40,585,668
--------------
$ 47,957,000 TOTAL INVESTMENT SECURITIES
=============== (Amortized Cost $47,319,081)............................................... $ 50,529,107
OTHER ASSETS IN EXCESS OF LIABILITIES-- 1.3% .............................. 638,914
--------------
NET ASSETS-- 100.0% ....................................................... $ 51,168,021
==============
See accompanying notes to portfolios of investments and notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ADJUSTABLE RATE U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS
September 30, 1998
============================================================================================================
Par Market
Value INVESTMENT SECURITIES -- 99.4% Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ADJUSTABLE RATE U.S. GOVERNMENT AGENCY
MORTGAGE-BACKED SECURITIES (Note D) -- 70.5%
$ 993,279 FNMA #70907, 7.344%, 3/01/18............................................... $ 1,015,498
974,621 FHLMC #605793, 7.231%, 5/01/18............................................. 994,210
1,011,107 FNMA #70614, 7.14%, 10/01/18............................................... 1,031,340
308,959 FNMA #70635, 7.028%, 6/01/20............................................... 313,303
1,383,881 FHLMC #846013, 7.578%, 6/01/22............................................. 1,423,695
1,168,797 FNMA #70176, 7.206%, 8/01/27............................................... 1,193,272
1,478,610 FNMA #70243, 7.235%, 3/01/28............................................... 1,511,155
- --------------- --------------
$ 7,319,254 TOTAL ADJUSTABLE RATE U.S. GOVERNMENT AGENCY
- ---------------
MORTGAGE-BACKED SECURITIES
(Amortized Cost $7,447,791)................................................ $ 7,482,473
--------------
VARIABLE RATE DEMAND NOTES (Note C) -- 21.7%
$ 2,300,000 Bexar Co., TX, HFC MFH Rev. (Shallow Creek Apts.), 5.64%, 10/15/26,
- --------------- Guarantor FNMA
(Amortized Cost $2,300,000)................................................ $ 2,300,000
--------------
U.S. GOVERNMENT AGENCY ISSUES-- 7.2%
$ 766,000 FHLB Discount Notes, 10/01/98
- --------------- (Amortized Cost $766,000).................................................. $ 766,000
--------------
$ 10,385,254 TOTAL INVESTMENT SECURITIES
=============== (Amortized Cost $10,513,791)............................................... $ 10,548,473
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.6% .............................. 67,158
--------------
NET ASSETS-- 100.0% ....................................................... $ 10,615,631
==============
See accompanying notes to portfolios of investments and notes to financial statements.
</TABLE>
<PAGE>
NOTES TO PORTFOLIOS OF INVESTMENTS
September 30, 1998
================================================================================
A. Repurchase Agreements
Repurchase agreements are fully collateralized by U.S. Government obligations.
B. Floating Rate Notes
A floating rate note is a security whose terms provide for the periodic
readjustment of its interest rate whenever a specified interest rate index
changes and which, at any time, can reasonably be expected to have a market
value that approximates its par value. The interest rates shown represent the
effective rates as of the report date. The dates shown represent the scheduled
maturity dates.
C. Variable Rate Demand Notes
A variable rate demand note is a security payable on demand at par whose terms
provide for the periodic readjustment of its interest rate on set dates and
which, at any time, can reasonably be expected to have a market value that
approximates its par value. The interest rates shown represent the effective
rates as of the report date. The dates shown represent the scheduled maturity
dates.
D. Adjustable Rate U.S. Government Agency Mortgage-Backed Securities
Adjustable rate U.S. Government agency mortgage-backed securities are
mortgage-related securities created from pools of adjustable rate mortgages
which are issued or guaranteed as to principal and interest by the U.S.
Government, its agencies or instrumentalities. Such adjustable rate mortgage
securities have interest rates that reset at periodic intervals based on a
specified interest rate index. The interest rates shown represent the effective
rates as of the report date. The dates shown represent the scheduled maturity
date.
Portfolio Abbreviations:
COP - Certificate of Participation
EDR - Economic Development Revenue
FFCB - Federal Farm Credit Bank
FHLB - Federal Home Loan Bank
FHLMC - Federal Home Loan Mortgage Corporation FNMA - Federal National Mortgage
Association FRMC - Federal Agricultural Mortgage Corporation HFA - Housing
Finance Authority HFC - Housing Finance Corporation IDR - Industrial Development
Revenue MFH - Multi-Family Housing PFA - Public Finance Authority RFCO -
Resolution Funding Corporation SBA - Small Business Administration SLMA -
Student Loan Marketing Association
STRIPS - Separate Trading of Registered Interest and Principal of Securities
TVA - Tennessee Valley Authority
<PAGE>
Report of Independent Public Accountants
================================================================================
Arthur Andersen LLP
(Arthur Andersen logo)
To the Shareholders and Board of Trustees of Countrywide Investment Trust:
We have audited the statements of assets and liabilities, including the
portfolios of investments, of Countrywide Investment Trust (a Massachusetts
business trust) (comprising, respectively, 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
Intermediate Bond Fund, and the Money Market Fund) as of September 30, 1998, and
(i) for the Short Term Government Income Fund, the Institutional Government
Income Fund, the Intermediate Term Government Income Fund, and the Adjustable
Rate U.S. Government Securities Fund, the related statements of operations, the
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 for the year ended September
30, 1998, the statements of changes in net assets and the financial highlights
for the year ended September 30, 1998, 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 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 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, 1998, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights audited by us
and referred to above present fairly, in all material respects, the financial
position of each of the respective portfolios constituting the Countrywide
Investment Trust as of September 30, 1998, 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 30, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000066117
<NAME> COUNTRYWIDE INVESTMENT TRUST
<SERIES>
<NUMBER> 1
<NAME> SHORT TERM GOVERNMENT INCOME FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 102,305,501
<INVESTMENTS-AT-VALUE> 102,305,501
<RECEIVABLES> 251,802
<ASSETS-OTHER> 974
<OTHER-ITEMS-ASSETS> 12,996
<TOTAL-ASSETS> 102,571,273
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 89,885
<TOTAL-LIABILITIES> 89,885
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 102,481,388
<SHARES-COMMON-STOCK> 102,481,388
<SHARES-COMMON-PRIOR> 96,796,682
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 102,481,388
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,356,492
<OTHER-INCOME> 0
<EXPENSES-NET> 881,358
<NET-INVESTMENT-INCOME> 4,475,134
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 4,475,134
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,475,134
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 301,198,180
<NUMBER-OF-SHARES-REDEEMED> 299,865,173
<SHARES-REINVESTED> 4,351,699
<NET-CHANGE-IN-ASSETS> 5,684,706
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 459,485
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 902,927
<AVERAGE-NET-ASSETS> 96,563,980
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .046
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .046
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .91
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000066117
<NAME> COUNTRYWIDE INVESTMENT TRUST
<SERIES>
<NUMBER> 3
<NAME> INTERMEDIATE TERM GOVERNMENT INCOME FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 47,319,081
<INVESTMENTS-AT-VALUE> 50,529,107
<RECEIVABLES> 738,362
<ASSETS-OTHER> 511
<OTHER-ITEMS-ASSETS> 8,964
<TOTAL-ASSETS> 51,276,944
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 108,923
<TOTAL-LIABILITIES> 108,923
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50,702,457
<SHARES-COMMON-STOCK> 4,588,497
<SHARES-COMMON-PRIOR> 4,969,960
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,744,462)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,210,026
<NET-ASSETS> 51,168,021
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,342,596
<OTHER-INCOME> 0
<EXPENSES-NET> 498,854
<NET-INVESTMENT-INCOME> 2,843,742
<REALIZED-GAINS-CURRENT> 157,123
<APPREC-INCREASE-CURRENT> 2,055,577
<NET-CHANGE-FROM-OPS> 5,056,442
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,843,742
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,312,955
<NUMBER-OF-SHARES-REDEEMED> 1,926,636
<SHARES-REINVESTED> 232,218
<NET-CHANGE-IN-ASSETS> (1,864,769)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (2,901,585)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 251,601
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 498,854
<AVERAGE-NET-ASSETS> 50,384,058
<PER-SHARE-NAV-BEGIN> 10.67
<PER-SHARE-NII> .61
<PER-SHARE-GAIN-APPREC> .48
<PER-SHARE-DIVIDEND> .61
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.15
<EXPENSE-RATIO> .99
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000066117
<NAME> COUNTRYWIDE INVESTMENT TRUST
<SERIES>
<NUMBER> 4
<NAME> INSTITUTIONAL GOVERNMENT INCOME FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 44,528,074
<INVESTMENTS-AT-VALUE> 44,528,074
<RECEIVABLES> 293,586
<ASSETS-OTHER> 4,204
<OTHER-ITEMS-ASSETS> 4,229
<TOTAL-ASSETS> 44,830,093
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 32,970
<TOTAL-LIABILITIES> 32,970
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 44,818,865
<SHARES-COMMON-STOCK> 44,818,865
<SHARES-COMMON-PRIOR> 61,269,650
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (21,742)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 44,797,123
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,799,172
<OTHER-INCOME> 0
<EXPENSES-NET> 200,967
<NET-INVESTMENT-INCOME> 2,598,205
<REALIZED-GAINS-CURRENT> 22
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2,598,227
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,598,205
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 179,615,316
<NUMBER-OF-SHARES-REDEEMED> 198,254,085
<SHARES-REINVESTED> 2,187,984
<NET-CHANGE-IN-ASSETS> (16,450,763)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (21,764)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 100,484
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 224,407
<AVERAGE-NET-ASSETS> 50,225,435
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .052
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .052
<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>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000066117
<NAME> COUNTRYWIDE INVESTMENT TRUST
<SERIES>
<NUMBER> 6
<NAME> ADJUSTABLE RATE U.S. GOVERNMENT SECURITIES FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 10,513,791
<INVESTMENTS-AT-VALUE> 10,548,473
<RECEIVABLES> 111,758
<ASSETS-OTHER> 821
<OTHER-ITEMS-ASSETS> 12,517
<TOTAL-ASSETS> 10,673,569
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 57,938
<TOTAL-LIABILITIES> 57,938
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11,890,505
<SHARES-COMMON-STOCK> 1,095,327
<SHARES-COMMON-PRIOR> 2,355,670
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,309,556)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 34,682
<NET-ASSETS> 10,615,631
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 895,785
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