To: All Employees
From: Robert H. Leshner
Date: October 1, 1999
Re: Fort Washington Investment Advisors, Inc. Acquisition
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Attached is a series of Questions and Answers designed to assist you in
responding to inquiries of shareholders, brokers and other interested persons in
connection with the Shareholders' Meeting to be held on Wednesday, October 27,
1999. FOR ANYONE COMMUNICATING WITH SHAREHOLDERS, PLEASE DON'T FAIL TO MENTION
THAT REGARDLESS OF THE NUMBER OF SHARES OWNED, IT IS IMPORTANT THAT THEY ARE
REPRESENTED AND VOTED.
PROXY MATERIALS ARE BEING MAILED TO SHAREHOLDERS TODAY.
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Proxy statements and additional proxy cards are available by contacting Chris
McGraw on 20, Kathy Leugers on 21 and Sharon Karp on 24. There are four separate
proxy statements (booklets):
o Countrywide Tax-Free Trust
o Countrywide Investment Trust
o Countrywide Strategic Trust - Equity Fund/Utility Fund (22 pages)
o Countrywide Strategic Trust - Growth/Value Fund/Aggressive Growth Fund
(44 pages)
Countrywide Strategic Trust has been separated into two different proxy
statements because shareholders of the Growth/Value Fund and Aggressive Growth
Fund also have to vote on a sub-advisory agreement which is included in the
statement.
SHAREHOLDERS ARE BEING ASKED TO CONSIDER AND VOTE ON THE FOLLOWING MATTERS:
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1. Approval of new management agreements with CII to become effective upon the
closing of the proposed acquisition of CFS by FWIA.
2. For the Countrywide Strategic Trust/Growth/Value and Aggressive Growth
Funds, approval of new subadvisory agreements with Mastrapasqua &
Associates, Inc., to become effective upon the closing of the proposed
acquisition of CFS by FWIA.
3. Election of nine trustees to serve until their successors are duly elected
and qualified.
4. Ratification of the selection of Arthur Andersen LLP as the Funds'
independent public accountants.
Please let me know if you have any further suggestions, revisions or additions
to this list of questions.
<PAGE>
COUNTRYWIDE TAX-FREE TRUST
COUNTRYWIDE STRATEGIC TRUST
COUNTRYWIDE INVESTMENT TRUST
SHAREHOLDERS' MEETING
OCTOBER 27, 1999
10:00 A.M.
WHY ARE YOU HAVING A SHAREHOLDERS' MEETING?
Federal securities laws provide that Countrywide's investment advisory
agreements with the Funds will terminate in the event there is a change in
control of Countrywide Investments. The acquisition by Fort Washington
Investment Advisors of Countrywide Financial Services, Inc. represents a
technical change in control of the Adviser. Therefore shareholders of each Fund
must approve a new investment advisory agreement with the Adviser to be
effective after the change of control.
EXPLAIN THE ISSUES TO BE VOTED ON.
Basically there are three matters to be voted on by shareholders. FIRST, new
investment advisory agreements with Countrywide Investments are required to be
approved because of the acquisition by Fort Washington Investment Advisors. The
new agreements will be under substantially identical terms and conditions; THERE
WILL BE NO INCREASE IN THE FEES PAID TO COUNTRYWIDE INVESTMENTS. (Shareholders
of the Growth/Value Fund and Aggressive Growth Fund also are voting on a new
Subadvisory Agreement with Mastrapasqua & Associates. There are no changes being
proposed to the Subadvisory Agreement.) SECOND, shareholders are being asked to
approve a new slate of Trustees for the Funds to serve upon completion of the
acquisition. Three members of the current Board will have been nominated to
remain on the Board: Robert Leshner, Oscar Robertson and Jerry Lerner. There are
six new Trustee nominees who were recommended by Fort Washington Investment
Advisors and approved by the current Board of Trustees. THIRD, shareholders are
voting to approve Arthur Andersen as the Trusts' independent public accountants.
WHY SHOULD I VOTE IN FAVOR?
We view the acquisition as very positive for a number of reasons. Located in
Cincinnati, Fort Washington Investment Advisors and its affiliates are well
acquainted with the business community in which we operate. Fort Washington
Investment Advisors and its affiliates will provide us with access to their
extensive resources. It is anticipated that there will be no material change in
the investment strategies employed or investment professionals assigned to the
Funds.
WHAT DIFFERENCES WILL I SEE AT COUNTRYWIDE?
Initially, you should see no visible change. Within a short period of time, we
think you will see significant increases in the variety of products and the
level of services we provide to shareholders. Another ancillary benefit is that
we expect the acquisition should result in an increase in assets of the Funds,
thereby potentially reducing advisory fees and other expenses.
WHO IS ENTITLED TO VOTE?
If you were a shareholder at the close of business on the record date (September
16, 1999), you are entitled to vote.
<PAGE>
WHO IS FORT WASHINGTON INVESTMENT ADVISORS, INC. ("FWIA")?
FWIA is part of The Western-Southern Enterprise, a dynamic group of financial
services companies owned by The Western and Southern Life Insurance Company. The
Western-Southern Enterprise provides life insurance, annuities, mutual funds,
business planning insurance, health insurance, asset management and other
related financial services for millions of customers nationwide. Founded in
1888, The Western and Southern Life Insurance Company is a strong organization
with solid values, a rich heritage and an exciting future. The Company holds the
highest rating for claims paying ability awarded by three top independent
insurance ratings agencies.
As a full-service registered investment advisory firm, FWIA offers professional
and comprehensive investment management services for foundations and endowments,
corporate pension funds, insurance companies, mutual funds, colleges and
universities, religious organizations and high net worth individuals. FWIA and
its advisory subsidiaries have assets under management exceeding $16 billion.
WHO CURRENTLY OWNS COUNTRYWIDE INVESTMENTS?
Countrywide Credit Industries, Inc. ("CCI") owns all of the stock of Countrywide
Financial Services, Inc. Countrywide Financial Services, Inc. has three
subsidiaries: Countrywide Investments, Inc., Countrywide Fund Services, Inc. and
CW Fund Distributors, Inc. CCI is a New York Stock Exchange listed company
(NYSE: CCR) principally engaged in residential mortgage lending and servicing
and based in California.
WHY IS FORT WASHINGTON INVESTMENT ADVISORS INTERESTED IN ACQUIRING COUNTRYWIDE
FINANCIAL SERVICES, INC?
Countrywide Financial Services, Inc. and its subsidiaries are an extraordinarily
good fit with the core competencies and strategic goals of The Western-Southern
Enterprise. The Western-Southern Enterprise will gain institutional and retail
assets of over $1.3 billion. They believe our family of 16 mutual funds with
more than 24,000 shareholders is an excellent strategic alignment.
WHAT HAPPENS IF SHAREHOLDERS DO NOT APPROVE THE NEW INVESTMENT ADVISORY
AGREEMENTS?
Either the acquisition will not occur, and we will continue as investment
advisor under the present advisory agreements or if the acquisition does occur,
the present advisory agreements will terminate and the Board of Trustees will
take the action it believes to be in the best interests of the shareholders of
any fund that did not approve a new advisory agreement.
WHEN WILL THE ACQUISITION OCCUR?
The acquisition will occur as soon as possible after the necessary shareholder
approvals are obtained.
<PAGE>
HOW DO THE NEW ADVISORY AGREEMENTS BEING VOTED ON DIFFER FROM THE CURRENT
ADVISORY AGREEMENTS?
The agreements are substantially identical in all material respects except for
their execution, effective and termination dates. Most importantly, the fees
paid to Countrywide Investments remain exactly the same as they are currently.
WHY IS THE COMPOSITION OF THE BOARD CHANGING?
It is commonplace in an acquisition such as this to have the acquirer recommend
a majority of the Trustees. The current Board wholeheartedly supports the new
composition of the Board and voted unanimously to nominate the new Trustees for
election by the shareholders.
WHY DO MOST OF THE NOMINEES FOR ELECTION BY THE BOARD NOT OWN SHARES OF THE
COUNTRYWIDE FUNDS?
We think it is a good policy for Trustees to own shares of the Funds for which
they serve. The three current Board members who are standing for election own
shares of the Countrywide Funds. The six individuals who will be new to the
Board do not currently own any shares but we anticipate that they will want to
do so after the election.
IS IT REALLY IMPORTANT FOR ME TO RETURN MY BALLOT?
Regardless of the number of shares you own, it is important that they are
represented and voted. If a quorum (50% of the shares of each Fund) cannot be
obtained for the meeting, it will cause us to have to incur additional costs in
soliciting votes. You can also vote by telephone. You can be transferred right
now if you wish. (1-888-221-0697). Please have the 14-digit Control Number found
on your proxy card ready.
IF I ATTEND THE MEETING IN PERSON, HOW LONG WILL IT LAST?
If you attend the meeting, we encourage you to come early as the meeting will
start promptly at 10:00 a.m. We do not expect the meeting to take longer than
thirty minutes. Even if you plan to attend, we encourage you to vote by proxy
prior to the meeting. You may always decide to change your vote at the meeting
or prior to the meeting.
<PAGE>
October 1, 1999
Dear Financial Professional:
We have previously informed you of a recent development involving Countrywide
Investments, Inc. ("CII") and its parent company, Countrywide Financial
Services, Inc. ("CFS"). On August 24, 1999, Fort Washington Investment Advisors,
Inc. ("FWIA") entered into an agreement to buy all of the stock of CFS from
Countrywide Credit Industries, Inc., its parent company.
Your clients who are shareholders of Countrywide Tax-Free Trust, Countrywide
Strategic Trust and/or Countrywide Investment Trust were mailed a Notice to
Shareholders of a Special Meeting and Proxy Statement and Card. We encourage
your clients to vote by signing and dating their proxy and returning it promptly
in the accompanying envelope whether or not they expect to be present at the
meeting. They also can vote by phone by following the instructions on the proxy.
If your clients attend the meeting, they may revoke their proxy and vote their
shares in person. Every vote is important.
The meeting will be held in the 10th Floor Conference Center at 312 Walnut
Street, Cincinnati, Ohio 45202 on Wednesday, October 27, 1999 at 10:00 a.m.
Eastern Time. Your clients are being asked to consider and vote on the following
matters:
1. Approval of new management agreements with CII to become effective upon the
closing of the proposed acquisition of CFS by FWIA.
2. For the Countrywide Strategic Trust/Growth/Value and Aggressive Growth
Funds, approval of new subadvisory agreements with Mastrapasqua &
Associates, Inc., to become effective upon the closing of the proposed
acquisition of CFS by FWIA.
3. Election of nine trustees to serve until their successors are duly elected
and qualified.
4. Ratification of the selection of Arthur Andersen LLP as the Funds'
independent public accountants.
We view this transaction as positive for a number of reasons. As a local
company, FWIA is well acquainted with the business community in which CFS
operates. FWIA and its affiliates will provide CFS with access to their
extensive resources. Moreover, it is anticipated that there will be no material
change in the investment strategies we employ or investment professionals
assigned to the Funds.
If you would like to receive a copy of the Proxy Statement, please call us at
1-800-613-3848.
Thank you for your continued confidence in Countrywide Investments, Inc.
Sincerely,
Robert H. Leshner
President
