Capital Appreciation
Income
SEMI-ANNUAL
REPORT
SEPTEMBER 30, 1997
(UNAUDITED)
UTILITY
FUND
EQUITY
FUND
GROWTH/VALUE
FUND
AGGRESSIVE GROWTH
FUND
GOVERNMENT MORTGAGE
FUND
LOGO: Countrywide Investments
<PAGE>
LETTER FROM THE CHAIRMAN
===============================================================================
PHOTO: Angelo R. Mozilo
Dear Shareholders:
Since David Loeb and I founded Countrywide in 1969, management has continually
endeavored to make Countrywide a leader in every venture it undertakes. As we
recently welcomed you to the Countrywide family, with the acquisition of Midwest
Group by Countrywide, our vision of evolving into a widely recognized, highly
skilled innovator of diversified financial products and services has become even
more of a reality.
Nineteen funds are now offered through the Countrywide Family of Funds. The
recent acquisition of five new funds is part of Countrywide's aggressive
strategy to expand its Financial Services Division through the purchase of
existing high-performance funds. As we continue to add new funds, fund
shareholders will be provided with an even broader spectrum of investment
choices. To follow through on our commitment to product expansion, Countrywide
Investments recently created a merger and acquisition team of key managers
dedicated to seeking out opportunities to grow our product line.
Countrywide proudly embraces and is committed to our new family members. We will
continue to search for and offer financial products and services that provide
the potential for profitable growth. We look forward to the future's endless
opportunities.
Sincerely,
/S/Angelo R. Mozilo
Angelo R. Mozilo
Chairman
<PAGE>
LETTER FROM THE PRESIDENT
===============================================================================
PHOTO: Robert H. Leshner
Dear Fellow Shareholders:
We are pleased to present the unaudited semi-annual report for Countrywide
Strategic Trust. This report provides financial data and performance information
for the six months ended September 30, 1997. Countrywide Investments'
acquisition of Trans Adviser Funds, Inc., a family of five mutual funds,
broadened our product offering. Two of the newly-acquired funds, the
Growth/Value Fund and Aggressive Growth Fund are now part of Countrywide
Strategic Trust and their results are included herein.
An exciting development during the period covered by this report was the passage
of the federal budget agreement and sweeping tax legislation, which reduced tax
rates on capital gains and broadened the market for Individual Retirement
Accounts (IRAs). Many of these changes, including the expansion of traditional
tax-deductible IRAs and the introduction of the Roth IRA, will take effect
January 1, 1998. Countrywide Investments will have a full IRA product line
available to help our shareholders take advantage of these new investment
opportunities.
U.S. financial markets performed well during the twelve months ended September
30, 1997, primarily due to a combination of low inflation and steady economic
growth. This favorable economic environment resulted in high employment levels
and strong corporate profits, which provided momentum for the stock market. The
bond markets were encouraged by the above-mentioned federal budget agreement and
the powerful flow of federal government tax receipts, both of which reduced
pressure on long-term interest rates.
Recently, the U.S. stock markets have become more volatile due to fears that
economic troubles in the Asian markets could potentially hurt the performance of
U.S. multinational corporations. Market volatility could continue, which means
investors need to be comfortable with their investment strategies and goals. It
is important to regularly review your investment objectives and recognize the
level of risk you are willing to accept.
We believe that the economy will continue to grow at a healthy pace over the
next several months driven by high consumer confidence levels and low interest
rates, and that inflation will remain under control through the end of 1997 and
into the early part of 1998. A continuation of these trends would be favorable
for both stocks and bonds.
Countrywide Strategic Trust offers four stock funds which are appropriate for
investors with long-term savings goals, each having a distinct investment
objective. The Utility Fund seeks high current income and capital appreciation
by investing in four key sectors of the utility industry: electric, gas, water
and telecommunications. The Equity Fund seeks capital appreciation by investing
in dividend-paying common stocks of well-established companies. Both the
Growth/Value Fund and the Aggressive Growth Fund seek capital appreciation
primarily through equity investments in companies whose valuations may not yet
reflect their earnings and cash flow potential. The Growth/Value Fund focuses on
companies with market capitalizations greater than $750 million, while the
Aggressive Growth Fund generally features companies with less than $750 million
capitalization at the time of purchase.
Total returns for the twelve months ended September 30, 1997, excluding the
impact of applicable sales loads, were 15.95% and 15.09%, respectively, for the
Utility Fund's Class A shares and Class C shares; 27.17% and 26.20%,
respectively, for the Equity Fund's Class A shares and Class C shares; 44.69%
for the Growth/Value Fund; and 52.42% for the Aggressive Growth Fund.
<PAGE>
LETTER FROM THE PRESIDENT (continued)
===============================================================================
The Government Mortgage Fund (formerly, the U.S. Government Securities Fund), is
a high-quality choice for investors seeking current income, consistent with the
protection of capital. The Fund's total return for the twelve months ended
September 30, 1997, excluding the impact of applicable sales loads, was 8.58%.
Countrywide Investments remains committed to providing products and services
that help investors meet their financial goals. Our success has been built on
the confidence our investors have extended to us. We thank you for your support
and look forward to continued service to you in the future.
Sincerely,
/s/Robert H. Leshner
Robert H. Leshner
President
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
September 30, 1997 (Unaudited)
===================================================================================================================================
UTILITY EQUITY
FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments in securities:
At acquisition cost................................................... $ 28,562,425 $ 25,565,995
=============== ===============
At amortized cost..................................................... $ 28,549,833 $ 25,566,891
=============== ===============
At value (Note 2)..................................................... $ 38,275,520 $ 32,284,318
Investments in repurchase agreements (Note 2)............................ 722,000 --
Cash .................................................................... 171 249
Receivable for capital shares sold ...................................... 9,317 7,655
Dividends and interest receivable........................................ 179,463 17,518
Other assets............................................................. 609 467
--------------- ---------------
TOTAL ASSETS.......................................................... 39,187,080 32,310,207
--------------- ---------------
LIABILITIES
Dividends payable........................................................ 38,304 1,109
Payable for capital shares redeemed...................................... 145,206 26,870
Payable for securities purchased......................................... -- 1,025,128
Payable to affiliates (Note 4)........................................... 31,523 29,313
Other accrued expenses and liabilities .................................. 7,424 4,116
--------------- ---------------
TOTAL LIABILITIES..................................................... 222,457 1,086,536
--------------- ---------------
NET ASSETS .............................................................. $ 38,964,623 $ 31,223,671
=============== ===============
Net assets consist of:
Paid-in capital.......................................................... $ 28,623,981 $ 24,322,422
Undistributed net investment income...................................... 25 65
Accumulated net realized gains from security transactions................ 614,930 183,757
Net unrealized appreciation on investments .............................. 9,725,687 6,717,427
--------------- ---------------
Net assets .............................................................. $ 38,964,623 $ 31,223,671
=============== ===============
PRICING OF CLASS A SHARES
Net assets attributable to Class A shares ............................... $ 36,096,257 $ 28,024,877
=============== ===============
Shares of beneficial interest outstanding (unlimited number
of shares authorized, no par value) (Note 5).......................... 2,655,090 1,678,999
=============== ===============
Net asset value and redemption price per share (Note 2).................. $ 13.60 $ 16.69
=============== ===============
Maximum offering price per share (Note 2)................................ $ 14.17 $ 17.39
=============== ===============
PRICING OF CLASS C SHARES
Net assets attributable to Class C shares ............................... $ 2,868,366 $ 3,198,794
=============== ===============
Shares of beneficial interest outstanding (unlimited number
of shares authorized, no par value) (Note 5).......................... 211,207 191,594
=============== ===============
Net asset value, offering price and redemption price per share (Note 2).. $ 13.58 $ 16.70
=============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
September 30, 1997 (Unaudited)
===================================================================================================================================
GROWTH/ AGGRESSIVE GOVERNMENT
VALUE GROWTH MORTGAGE
FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities:
At acquisition cost.................................. $ 19,809,253 $ 9,878,384 $ 20,677,491
============== =============== ===============
At amortized cost.................................... $ 19,809,332 $ 9,878,384 $ 20,687,560
============== =============== ===============
At value (Note 2).................................... $ 27,400,399 $ 15,625,797 $ 21,088,951
Cash ................................................... 1,167 -- 1,075
Receivable for capital shares sold...................... 29,487 29,812 744
Receivable for securities sold.......................... 369,738 -- --
Dividends and interest receivable....................... 12,563 1,521 166,611
Organization costs, net (Note 2)........................ 19,054 19,054 --
Other assets............................................ -- 24 118
-------------- --------------- ---------------
TOTAL ASSETS......................................... 27,832,408 15,676,208 21,257,499
-------------- -------------- ---------------
LIABILITIES
Bank overdraft.......................................... -- 34,141 --
Dividends payable....................................... -- -- 13,062
Payable for capital shares redeemed..................... -- 61,833 5,549,601
Payable to affiliates (Note 4).......................... 34,670 19,691 12,746
Other accrued expenses and liabilities.................. 14,488 11,751 5,570
-------------- --------------- ---------------
TOTAL LIABILITIES.................................... 49,158 127,416 5,580,979
-------------- --------------- ---------------
NET ASSETS ............................................. $ 27,783,250 $ 15,548,792 $ 15,676,520
============== =============== ===============
Net assets consist of:
Paid-in capital......................................... $ 19,169,261 $ 10,211,040 $ 19,734,356
Accumulated net investment loss......................... ( 25,822) ( 23,205) --
Accumulated net realized gains (losses) from
security transactions.............................. 1,048,744 ( 386,456) (4,459,227)
Net unrealized appreciation on investments.............. 7,591,067 5,747,413 401,391
-------------- --------------- ---------------
Net assets.............................................. $ 27,783,250 $ 15,548,792 15,676,520
============== =============== ===============
Shares of beneficial interest outstanding (unlimited number
of shares authorized, no par value) (Note 5)......... 1,688,679 893,785 1,650,108
============== =============== ===============
Net asset value and redemption price per share (Note 2). $ 16.45 $ 17.40 $ 9.50
============== =============== ===============
Maximum offering price per share (Note 2)............... $ 17.14 $ 18.13 $ 9.69
============== =============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
For the Six Months Ended September 30, 1997 (Unaudited)
===================================================================================================================================
UTILITY EQUITY
FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Dividends ............................................................ $ 813,359 $ 109,197
Interest ............................................................. 126,378 141,597
--------------- ---------------
TOTAL INVESTMENT INCOME ............................................ 939,737 250,794
--------------- ---------------
EXPENSES
Investment advisory fees (Note 4) .................................... 147,261 89,685
Accounting services fees (Note 4) .................................... 21,000 21,000
Transfer agent fees, Class A (Note 4)................................. 17,495 6,723
Transfer agent fees, Class C (Note 4)................................. 6,000 6,000
Distribution expenses, Class A (Note 4) .............................. 16,068 3,361
Distribution expenses, Class C (Note 4) ................................. 4,570 4,316
Registration fees, Common ............................................ 2,438 1,515
Registration fees, Class A ........................................... 4,692 5,209
Registration fees, Class C ........................................... 4,092 3,599
Postage and supplies.................................................. 11,372 5,029
Professional fees .................................................... 7,920 3,600
Trustees' fees and expenses .......................................... 4,504 4,504
Custodian fees ....................................................... 3,162 2,769
Reports to shareholders .............................................. 3,320 1,435
Insurance expense .................................................... 2,675 1,181
Other expenses ....................................................... 1,396 1,351
--------------- ---------------
TOTAL EXPENSES ..................................................... 257,965 161,277
Class A expenses reimbursed by the Adviser (Note 4)................... -- ( 187)
--------------- ---------------
NET EXPENSES ....................................................... 257,965 161,090
--------------- ---------------
NET INVESTMENT INCOME ................................................... 681,772 89,704
--------------- ---------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions ........................ 363,389 19,326
Net change in unrealized appreciation/depreciation on investments..... 3,090,986 4,030,686
--------------- ---------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS ........................ 3,454,375 4,050,012
--------------- ---------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ............................. $ 4,136,147 $ 4,139,716
=============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
For the Periods Ended September 30, 1997 and August 31, 1997
===================================================================================================================================
GROWTH/VALUE FUND AGGRESSIVE GROWTH FUND
- -----------------------------------------------------------------------------------------------------------------------------------
One Month One Month
Ended Year Ended Year
Sept. 30, Ended Sept. 30, Ended
1997(A) August 31, 1997(A) August 31,
(Unaudited) 1997 (Unaudited) 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends................................... $ 10,562 $ 153,095 $ 1,690 $ 14,849
Interest.................................... 1,766 36,676 626 19,827
------------- -------------- ------------- -------------
TOTAL INVESTMENT INCOME................... 12,328 189,771 2,316 34,676
------------- -------------- ------------- -------------
EXPENSES
Investment advisory fees (Note 4)........... 22,701 206,612 12,425 94,159
Shareholder service fees (Note 4)........... -- 51,654 -- 23,540
Distribution expenses (Note 4).............. 7,000 -- 3,000 --
Transfer agent fees (Note 4)................ 1,000 28,000 1,000 27,079
Administration fees (Note 4)................ -- 30,995 -- 24,866
Accounting services fees (Note 4)........... 2,500 36,000 2,500 36,000
Professional fees........................... 1,000 25,081 1,000 24,383
Custodian fees.............................. 500 5,121 500 3,192
Amortization of organization costs (Note 2). 530 6,351 530 6,351
Reports to shareholders..................... -- 2,885 -- 1,282
Insurance expense........................... -- 1,619 -- 686
Trustees' fees and expenses................. -- 1,646 -- 734
Registration fees........................... 2,919 2,666 3,992 2,522
Other expenses.............................. -- 5,765 574 2,838
------------- -------------- ------------- -------------
TOTAL EXPENSES............................ 38,150 404,395 25,521 247,632
Fees waived and/or expenses reimbursed by
the Adviser (Note 4)...................... -- -- -- ( 64,077)
------------- -------------- ------------- -------------
NET EXPENSES.............................. 38,150 404,395 25,521 183,555
------------- -------------- ------------- -------------
NET INVESTMENT LOSS ........................... ( 25,822) ( 214,624) ( 23,205) ( 148,879)
------------- -------------- ------------- -------------
REALIZED AND UNREALIZED
GAINS (LOSSES) ON INVESTMENTS
Net realized gains (losses) from
security transactions..................... 1,048,744 894,909 ( 29,978) ( 356,478)
Net change in unrealized appreciation/
depreciation on investments .............. ( 83,409) 7,431,395 1,033,676 4,653,168
------------- -------------- ------------- -------------
NET REALIZED AND UNREALIZED
GAINS ON INVESTMENTS ...................... 965,335 8,326,304 1,003,698 4,296,690
------------- -------------- ------------- -------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS ........................... $ 939,513 $ 8,111,680 $ 980,493 $ 4,147,811
============= ============== ============= =============
<FN>
(A) Effective as of the close of business on August 29, 1997, the Growth/Value
Fund and Aggressive Growth Fund were reorganized and the fiscal year-end of
each Fund, subsequent to August 31, 1997, was changed to March 31 (Note 6).
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
For the Six Months Ended September 30, 1997 (Unaudited)
===================================================================================================================================
GOVERNMENT
MORTGAGE
FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Interest................................................................................. $ 761,182
---------------
EXPENSES
Investment advisory fees (Note 4)........................................................ 80,687
Accounting services fees (Note 4)........................................................ 19,500
Transfer agent fees (Note 4)............................................................. 8,977
Registration fees........................................................................ 7,509
Postage and supplies..................................................................... 5,342
Professional fees........................................................................ 4,680
Trustees' fees and expenses.............................................................. 4,504
Custodian fees........................................................................... 3,922
Insurance expense........................................................................ 1,611
Distribution expenses (Note 4)........................................................... 1,475
Reports to shareholders.................................................................. 927
Other expenses........................................................................... 2,466
---------------
TOTAL EXPENSES......................................................................... 141,600
Fees waived by the Adviser (Note 4)...................................................... ( 12,500 )
---------------
NET EXPENSES........................................................................... 129,100
---------------
NET INVESTMENT INCOME ...................................................................... 632,082
---------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions............................................ 4,762
Net change in unrealized appreciation/depreciation on investments...................... 620,443
---------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS ........................................... 625,205
---------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ................................................. $ 1,257,287
---------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the Periods Ended September 30, 1997 and March 31, 1997
===================================================================================================================================
UTILITY EQUITY
FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months Six Months
Ended Year Ended Year
Sept. 30, Ended Sept. 30, Ended
1997 March 31, 1997 March 31,
(Unaudited) 1997 (Unaudited) 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income....................... $ 681,772 $ 1,528,551 $ 89,704 $ 116,042
Net realized gains from security
transactions.............................. 363,389 349,605 19,326 482,875
Net change in unrealized appreciation/
depreciation on investments............... 3,090,986 517,054 4,030,686 952,569
------------- -------------- ------------- -------------
Net increase in net assets from operations..... 4,136,147 2,395,210 4,139,716 1,551,486
------------- -------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income, Class A......... ( 640,048) ( 1,429,043) ( 89,646) ( 112,251)
From net investment income, Class C......... ( 41,941) ( 99,266) -- ( 3,811)
From net realized gains on security
transactions, Class A..................... -- ( 62,089) -- ( 43,452)
From net realized gains on security
transactions, Class C..................... -- ( 5,448) -- ( 9,121)
------------- -------------- ------------- -------------
Decrease in net assets from distributions
to shareholders.......................... ( 681,989) ( 1,595,846) ( 89,646) (168,635)
------------- -------------- ------------- -------------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 5):
CLASS A
Proceeds from shares sold................... 2,146,476 3,695,972 19,321,678 7,488,016
Net asset value of shares issued in
reinvestment of distributions to
shareholders.............................. 569,680 1,310,464 87,670 149,729
Payments for shares redeemed................ ( 5,890,370) ( 10,075,932) ( 9,832,409) ( 2,279,007)
------------- -------------- ------------- -------------
Net increase (decrease) in net assets from
Class A share transactions.................. ( 3,174,214) ( 5,069,496) 9,576,939 5,358,738
------------- -------------- ------------- -------------
CLASS C
Proceeds from shares sold................... 78,245 978,844 168,197 665,009
Net asset value of shares issued in
reinvestment of distributions to
shareholders.............................. 37,477 90,743 -- 12,637
Payments for shares redeemed................ ( 617,470) ( 1,723,275) ( 324,326) ( 604,567)
------------- -------------- ------------- -------------
Net increase (decrease) in net assets from
Class C share transactions.................. 501,748) ( 653,688) ( 156,129) 73,079
------------- -------------- ------------- -------------
Net increase (decrease) from capital share
transactions.............................. ( 3,675,962) ( 5,723,184) 9,420,810 5,431,817
------------- -------------- ------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ....... ( 221,804) ( 4,923,820) 13,470,880 6,814,668
NET ASSETS:
Beginning of period......................... 39,186,427 44,110,247 17,752,791 10,938,123
------------- -------------- ------------- -------------
End of period............................... $ 38,964,623 $ 39,186,427 $31,223,671 $17,752,791
============= ============== ============= =============
UNDISTRIBUTED NET INVESTMENT INCOME ......... $ 25 $ 242 $ 65 $ 7
============= ============== ============= =============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the Periods Ended September 30, 1997 and August 31, 1997 and 1996
===================================================================================================================================
Growth/Value Fund Aggressive Growth Fund
- -----------------------------------------------------------------------------------------------------------------------------------
One Month One Month
Ended Year Period Ended Year Period
Sept. 30, Ended Ended Sept. 30, Ended Ended
1997(A) August 31, August 31, 1997(A) August 31, August 31,
(Unaudited) 1997 1996(B) (Unaudited) 1997 1996(B)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment loss..................... $( 25,822) $( 214,624) $ ( 50,747) $( 23,205) $ ( 148,879) $ ( 39,525)
Net realized gains (losses) from
security transactions................. 1,048,744 894,909 89,352 ( 29,978) ( 356,478) 43,284
Net change in unrealized appreciation/
depreciation on investments........... ( 83,409) 7,431,395 243,081 1,033,676 4,653,168 60,569
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets from
operations............................ 939,513 8,111,680 281,686 980,493 4,147,811 64,328
----------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net realized gains on security
transactions.......................... -- ( 888,542) -- -- ( 16,180) --
----------- ----------- ----------- ----------- ----------- -----------
Decrease in net assets from distributions
to shareholders....................... -- ( 888,542) -- -- ( 16,180) --
----------- ----------- ----------- ----------- ----------- -----------
FROM CAPITAL SHARE TRANSACTIONS (Note 5):
Proceeds from shares sold .............. 1,146,387 9,367,824 15,471,301 1,157,394 5,211,479 7,269,024
Net asset value of shares issued in
reinvestment of distributions to
shareholders.......................... -- 260,810 -- -- 4,532 --
Payments for shares redeemed .............. 1,080,719) (5,181,368) ( 645,322) ( 572,830) ( 1,913,821) ( 783,438)
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets from capital
share transactions.................... 65,668 4,447,266 14,825,979 584,564 3,302,190 6,485,586
----------- ----------- ----------- ----------- ----------- -----------
TOTAL INCREASE IN NET ASSETS ............. 1,005,181 11,670,404 15,107,665 1,565,057 7,433,821 6,549,914
NET ASSETS:
Beginning of period..................... 26,778,069 15,107,665 -- 13,983,735 6,549,914 --
----------- ----------- ----------- ----------- ----------- -----------
End of period........................... $27,783,250 $26,778,069 $15,107,665 $15,548,792 $13,983,735 $6,549,914
=========== =========== =========== =========== =========== ===========
ACCUMULATED NET INVESTMENT LOSS ........... $( 25,822) $ -- $ -- $ ( 23,205) $ -- $ --
=========== =========== =========== =========== =========== ===========
<FN>
(A) Effective as of the close of business on August 29, 1997, the Growth/Value
Fund and Aggressive Growth Fund were reorganized and the fiscal year-end of
each Fund, subsequent to August 31, 1997, was changed to March 31 (Note 6).
(B) Represents the period from the commencement of operations (September 29,
1995) through August 31, 1996.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the Periods Ended September 30, 1997 and March 31, 1997
===================================================================================================================================
GOVERNMENT
MORTGAGE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year
Sept. 30, Ended
1997 March 31,
(Unaudited) 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income................................................. $ 632,082 $ 1,312,136
Net realized gains (losses) from security transactions................ 4,762 ( 386,798 )
Net change in unrealized appreciation/
depreciation on investments......................................... 620,443 ( 119,168 )
--------------- ---------------
Net increase in net assets from operations............................... 1,257,287 806,170
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income............................................ ( 632,082 ) ( 1,312,136 )
--------------- ---------------
Decrease in net assets from distributions to shareholders................ ( 632,082 ) ( 1,312,136 )
--------------- ---------------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 5):
Proceeds from shares sold............................................. 237,064 2,971,422
Net asset value of shares issued in
reinvestment of distributions to shareholders....................... 542,452 1,068,202
Payments for shares redeemed.......................................... ( 7,571,416 ) ( 6,606,868 )
--------------- ---------------
Net decrease in net assets from capital share transactions............... ( 6,791,900 ) ( 2,567,244 )
--------------- ---------------
TOTAL DECREASE IN NET ASSETS ............................................ ( 6,166,695 ) ( 3,073,210 )
NET ASSETS:
Beginning of period................................................... 21,843,215 24,916,425
--------------- ---------------
End of period......................................................... $ 15,676,520 $ 21,843,215
=============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UTILITY FUND
FINANCIAL HIGHLIGHTS - CLASS A
===================================================================================================================================
Per Share Data for a Share Outstanding Throughout Each Period
===================================================================================================================================
Six Months
Ended
Sept. 30, Year Ended March 31,
1997
(Unaudited) 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period..... $ 12.44 $ 12.24 $ 10.47 $ 10.52 $ 11.34 $ 10.58
---------- ---------- --------- --------- --------- ---------
Income from investment operations:
Net investment income................... 0.24 0.46 0.47 0.43 0.37 0.48
Net realized and unrealized
gains (losses) on investments......... 1.16 0.22 1.77 ( 0.05 ) ( 0.59 ) 1.62
---------- ---------- --------- --------- --------- ---------
Total from investment operations........... 1.40 0.68 2.24 0.38 ( 0.22 ) 2.10
---------- ---------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income.... ( 0.24) ( 0.46) ( 0.47 ) ( 0.43 ) ( 0.37 ) ( 0.48 )
Distributions from net realized gains... -- ( 0.02) -- -- ( 0.23 ) ( 0.86 )
---------- ---------- --------- --------- --------- ---------
Total distributions........................ ( 0.24) ( 0.48) ( 0.47 ) ( 0.43 ) ( 0.60 ) ( 1.34 )
---------- ---------- --------- --------- --------- ---------
Net asset value at end of period........... $ 13.60 $ 12.44 $ 12.24 $ 10.47 $ 10.52 $ 11.34
========== ========== ========= ========= ========= =========
Total return(A) ........................... 22.47%(C) 5.61% 21.65% 3.68% ( 2.11%) 20.64%
========== ========== ========= ========= ========= =========
Net assets at end of period (000's)........ $ 36,096 $ 36,087 $ 40,424 $ 40,012 $40,373 $42,051
========== ========== ========= ========= ========= =========
Ratio of expenses to average net assets.... 1.25%(C) 1.25% 1.25% 1.25% 1.25% 1.40%
Ratio of net investment income to average
net assets............................ 3.52%(C) 3.65% 3.97% 4.06% 3.32% 4.41%
Portfolio turnover rate ................... 0% 3% 11% 17% 91% 137%
Average commission rate per share(B) ...... $ 0.1200 $ 0.1200
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(A) The total returns shown do not include the effect of applicable sales loads.
(B) Beginning with the year ended March 31, 1997, the Fund is required to
disclose its average commission rate per share for security trades on which
commissions are charged.
(C) Annualized.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UTILITY FUND
FINANCIAL HIGHLIGHTS - CLASS C
===================================================================================================================================
Per Share Data for a Share Outstanding Throughout Each Period
===================================================================================================================================
Six Months
Ended Period
Sept. 30, Year Ended March 31, Ended
1997 March 31,
(Unaudited) 1997 1996 1995 1994(A)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period.......... $ 12.43 $ 12.23 $ 10.46 $ 10.51 $ 11.55
---------- --------- ---------- --------- ---------
Income from investment operations:
Net investment income........................ 0.17 0.35 0.37 0.35 0.23
Net realized and unrealized gains (losses)
on investments............................. 1.17 0.24 1.78 ( 0.04) ( 0.81)
---------- --------- ---------- --------- ---------
Total from investment operations................ 1.34 0.59 2.15 0.31 ( 0.58)
---------- --------- ---------- --------- ---------
Less distributions:
Dividends from net investment income......... ( 0.19) ( 0.37) ( 0.38) ( 0.36) ( 0.23)
Distributions from net realized gains........ -- ( 0.02) -- -- ( 0.23)
---------- --------- ---------- --------- ---------
Total distributions............................. ( 0.19) ( 0.39) ( 0.38) ( 0.36) ( 0.46)
---------- --------- ---------- --------- ---------
Net asset value at end of period................ $ 13.58 $ 12.43 $ 12.23 $ 10.46 $ 10.51
========== ========= ========== ========= =========
Total return(B) ................................ 21.49%(D) 4.82% 20.78% 3.00% ( 7.89%)(D)
========== ========= ========== ========= =========
Net assets at end of period (000's)............. $ 2,868 $ 3,099 $ 3,686 $ 3,599 $ 1,742
========== ========= ========== ========= =========
Ratio of expenses to average net assets ........ 2.00%(D) 2.00% 2.00% 2.00% 2.00% (D)
Ratio of net investment income to average
net assets................................. 2.76%(D) 2.89% 3.19% 3.41% 2.19% (D)
Portfolio turnover rate......................... 0% 3% 11% 17% 91% (D)
Average commission rate per share(C) .......... $ 0.1200 $ 0.1200
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(A) Represents the period from date of public offering (August 2, 1993) through
March 31, 1994.
(B) The total returns shown do not include the effect of applicable sales loads.
(C) Beginning with the year ended March 31, 1997, the Fund is required to
disclose its average commission rate per share for security trades on which
commissions are charged.
(D) Annualized.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUND
FINANCIAL HIGHLIGHTS - CLASS A
===================================================================================================================================
Per Share Data for a Share Outstanding Throughout Each Period
===================================================================================================================================
Six Months
Ended Period
Sept. 30, Year Ended March 31, Ended
1997 March 31,
(Unaudited) 1997 1996 1995 1994(A)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period.......... $ 13.76 $ 12.45 $ 9.84 $ 9.26 $ 10.02
---------- --------- ---------- --------- ---------
Income from investment operations:
Net investment income........................ 0.06 0.12 0.13 0.15 0.08
Net realized and unrealized gains (losses)
on investments............................. 2.93 1.35 2.60 0.59 ( 0.34)
---------- --------- ---------- --------- ---------
Total from investment operations................ 2.99 1.47 2.73 0.74 ( 0.26)
---------- --------- ---------- --------- ---------
Less distributions:
Dividends from net investment income......... ( 0.06) ( 0.12) ( 0.12) ( 0.16) ( 0.08)
Distributions from net realized gains........ -- ( 0.04) -- -- ( 0.42)
---------- --------- ---------- --------- ---------
Total distributions............................. ( 0.06) ( 0.16) ( 0.12) ( 0.16) ( 0.50)
---------- --------- ---------- --------- ---------
Net asset value at end of period................ $ 16.69 $ 13.76 $ 12.45 $ 9.84 $ 9.26
========== ========= ========== ========= =========
Total return(B) ................................ 43.38%(E) 11.82% 27.90% 8.07% ( 3.98%) (E)
========== ========= ========== ========= =========
Net assets at end of period (000's)............. $ 28,025 $ 14,983 $ 8,502 $ 4,300 $ 3,346
========== ========= ========== ========= =========
Ratio of expenses to average net assets(C) .... 1.25%(E) 1.25% 1.25% 1.25% 1.24% (E)
Ratio of net investment income to average
net assets................................. 0.85%(E) 0.91% 1.06% 1.57% 0.82% (E)
Portfolio turnover rate......................... 9%(E) 38% 38% 159% 109% (E)
Average commission rate per share(D) ........... $ 0.1080 $ 0.1199
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(A) Represents the period from date of public offering (August 2, 1993) through
March 31, 1994.
(B) The total returns shown do not include the effect of applicable sales loads.
(C) Absent fee waivers and/or expense reimbursements by the Adviser, the ratios
of expenses to average net assets would have been 1.43%, 2.02%, 1.94% and
2.04%(E) for the periods ended March 31, 1997, 1996, 1995 and 1994,
respectively.
(D) Beginning with the year ended March 31, 1997, the Fund is required to
disclose its average commission rate per share for security trades on which
commissions are charged.
(E) Annualized.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUND
FINANCIAL HIGHLIGHTS - CLASS C
===================================================================================================================================
Per Share Data for a Share Outstanding Throughout Each Period
===================================================================================================================================
Six Months
Ended Period
Sept. 30, Year Ended March 31, Ended
1997 March 31,
(Unaudited) 1997 1996 1995 1994(A)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period.......... $ 13.77 $ 12.46 $ 9.86 $ 9.26 $ 10.00
---------- --------- ---------- --------- ---------
Income from investment operations:
Net investment income........................ 0.01 0.02 0.05 0.10 0.03
Net realized and unrealized gains (losses)
on investments............................. 2.92 1.35 2.60 0.57 ( 0.32)
---------- --------- ---------- --------- ---------
Total from investment operations................ 2.93 1.37 2.65 0.67 ( 0.29)
---------- --------- ---------- --------- ---------
Less distributions:
Dividends from net investment income......... -- ( 0.02) ( 0.05) ( 0.07) ( 0.03)
Distributions from net realized gains........ -- ( 0.04) -- -- ( 0.42)
---------- --------- ---------- --------- ---------
Total distributions............................. -- ( 0.06) ( 0.05) ( 0.07) ( 0.45)
---------- --------- ---------- --------- ---------
Net asset value at end of period................ $ 16.70 $ 13.77 $ 12.46 $ 9.86 $ 9.26
========== ========= ========== ========= =========
Total return(B) ................................ 42.44%(E) 11.01% 26.90% 7.32% ( 3.58%) (E)
========== ========= ========== ========= =========
Net assets at end of period (000's)............. $ 3,199 $ 2,770 $ 2,436 $ 1,995 $ 5,857
========== ========= ========== ========= =========
Ratio of expenses to average net assets(C) .... 2.00%(E) 2.00% 2.00% 2.00% 1.94% (E)
Ratio of net investment income to average
net assets................................. 0.09%(E) 0.15% 0.38% 0.68% 0.58% (E)
Portfolio turnover rate......................... 9%(E) 38% 38% 159% 109% (E)
Average commission rate per share(D) ........... $ 0.1080 $ 0.1199
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(A) Represents the period from date of public offering (June 7, 1993) through
March 31, 1994.
(B) The total returns shown do not include the effect of applicable sales loads.
(C) Absent fee waivers and/or expense reimbursements by the Adviser, the ratios
of expenses to average net assets would have been 2.14%, 2.70%, 2.50% and
2.33%(E) for the periods ended March 31, 1997, 1996, 1995 and 1994,
respectively.
(D) Beginning with the year ended March 31, 1997, the Fund is required to
disclose its average commission rate per share for security trades on which
commissions are charged.
(E) Annualized.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROWTH/VALUE FUND
FINANCIAL HIGHLIGHTS
===================================================================================================================================
Per Share Data for a Share Outstanding Throughout Each Period
===================================================================================================================================
One Month
Ended Year Period
Sept. 30, Ended Ended
1997 (A) August 31, August 31,
(Unaudited) 1997 1996 (B)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value at beginning of period.................. $ 15.90 $ 11.18 $ 10.00
-------------- --------------- ---------------
Income from investment operations:
Net investment loss.................................. ( 0.02) ( 0.13 ) ( 0.06)(C)
Net realized and unrealized gains on investments..... 0.57 5.39 1.24
-------------- --------------- ---------------
Total from investment operations........................ 0.55 5.26 1.18
-------------- --------------- ---------------
Less distributions:
Distributions from net realized gains................ -- ( 0.54 ) --
-------------- --------------- ---------------
Total distributions..................................... -- ( 0.54 ) --
-------------- --------------- ---------------
Net asset value at end of period........................ $ 16.45 $ 15.90 $ 11.18
============== =============== ===============
Total return (D) ....................................... 3.46% 47.11% 11.80%
============== =============== ===============
Net assets at end of period (000's)..................... $ 27,783 $ 26,778 $ 15,108
============== =============== ===============
Ratio of expenses to average net assets (E) ............ 1.66% (F) 1.95% 1.95% (F)
Ratio of net investment loss to average net assets...... ( 1.12%)(F) ( 1.03%) ( 0.62%)(F)
Portfolio turnover rate................................. 10% 52% 21%
Average commission rate per share....................... $ 0.0600 $ 0.0554 $ 0.0700
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(A) Effective as of the close of business on August 29, 1997, the Fund was
reorganized and its fiscal year-end, subsequent to August 31, 1997, was
changed to March 31 (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) Total returns shown exclude the effect of applicable sales loads.
(E) Absent fee waivers and/or expense reimbursements, the ratio of expenses to
average net assts would have been 2.83%(F) for the period ended August 31,
1996.
(F) Annualized.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH FUND
FINANCIAL HIGHLIGHTS
===================================================================================================================================
Per Share Data for a Share Outstanding Throughout Each Period
===================================================================================================================================
One Month
Ended Year Period
Sept. 30, Ended Ended
1997 (A) August 31, August 31,
(Unaudited) 1997 1996 (B)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value at beginning of period.................. $ 16.29 $ 10.95 $ 10.00
-------------- --------------- ---------------
Income from investment operations:
Net investment loss.................................. ( 0.02) ( 0.17 ) ( 0.11)(C)
Net realized and unrealized gains on investments..... 1.13 5.54 1.06
-------------- --------------- ---------------
Total from investment operations........................ 1.11 5.37 0.95
-------------- --------------- ---------------
Less distributions:
Distributions from net realized gains................ -- ( 0.03 ) --
-------------- --------------- ---------------
Total distributions..................................... -- ( 0.03 ) --
-------------- --------------- ---------------
Net asset value at end of period........................ $ 17.40 $ 16.29 $ 10.95
============== =============== ===============
Total return (D) ....................................... 6.81% 49.09% 9.50%
============== =============== ===============
Net assets at end of period (000's)..................... $ 15,549 $ 13,984 $ 6,550
============== =============== ===============
Ratio of expenses to average net assets (E) ............ 1.95% (F) 1.94% 1.95% (F)
Ratio of net investment loss to average net assets...... ( 1.76%)(F) ( 1.57%) ( 1.26%)(F)
Portfolio turnover rate................................. 1% 51% 16%
Average commission rate per share....................... $ 0.0600 $ 0.0534 $ 0.0800
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(A) Effective as of the close of business on August 29, 1997, the Fund was
reorganized and its fiscal year-end, subsequent to August 31, 1997, was
changed to March 31 (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) 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 2.62% and 5.05%(F) for the periods ended
August 31, 1997 and 1996, respectively.
(F) Annualized.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GOVERNMENT MORTGAGE FUND
FINANCIAL HIGHLIGHTS
===================================================================================================================================
Per Share Data for a Share Outstanding Throughout Each Period
===================================================================================================================================
Six Months
Ended
Sept. 30, Year Ended March 31,
1997
(Unaudited) 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period..... $ 9.23 $ 9.43 $ 9.22 $ 9.85 $ 10.47 $ 10.18
---------- ---------- --------- --------- --------- ---------
Income from investment operations:
Net investment income................... 0.28 0.55 0.56 0.58 0.64 0.69
Net realized and unrealized
gains (losses) on investments......... 0.27 ( 0.20) 0.21 ( 0.59 ) ( 0.59 ) 0.47
---------- ---------- --------- --------- --------- ---------
Total from investment operations........... 0.55 0.35 0.77 ( 0.01 ) 0.05 1.16
---------- ---------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income.... ( 0.28) ( 0.55) ( 0.56 ) ( 0.58 ) ( 0.64 ) ( 0.69 )
Distributions from net realized gains... -- -- -- ( 0.04 ) ( 0.03 ) ( 0.18 )
---------- ---------- --------- --------- --------- ---------
Total distributions........................ ( 0.28) ( 0.55) ( 0.56 ) ( 0.62 ) ( 0.67 ) ( 0.87 )
---------- ---------- --------- --------- --------- ---------
Net asset value at end of period........... $ 9.50 $ 9.23 $ 9.43 $ 9.22 $ 9.85 $ 10.47
========== ========== ========= ========= ========= =========
Total return(A) ........................... 11.94%(C) 3.76% 8.39% 0.06% 0.30% 11.71%
========== ========== ========= ========= ========= =========
Net assets at end of period (000's) ....... $ 15,677 $ 21,843 $ 24,916 $ 26,174 $40,479 $31,633
---------- ---------- --------- --------- --------- ---------
Ratio of expenses to average net
assets(B)............................. 1.20%(C) 1.20% 1.20% 1.20% 1.20% 1.20%
Ratio of net investment income to average
net assets............................ 5.88%(C) 5.84% 5.82% 6.26% 6.14% 6.61%
Portfolio turnover rate.................... 15% (C) 76% 160% 205% 246% 188%
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(A) The total returns shown do not include the effect of applicable sales loads.
(B) Absent fee waivers by the Adviser, the ratios of expenses to average net
assets would have been 1.32%(C) for the six months ended September 30, 1997
and 1.28% and 1.24% for the years ended March 31, 1997 and 1996, respectively
(Note 4).
(C) Annualized.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
September 30, 1997 (Unaudited)
===============================================================================
1. ORGANIZATION
The Utility Fund, Equity Fund, Growth/Value Fund, Aggressive Growth Fund and
Government Mortgage Fund (formerly, U.S. Government Securities Fund)
(collectively, the Funds) are each a series of Countrywide Strategic Trust (the
Trust). The Trust is registered under the Investment Company Act of 1940 as an
open-end management investment company. The Trust was established as a
Massachusetts business trust under a Declaration of Trust dated November 18,
1982. The Declaration of Trust, as amended, permits the Trustees to issue an
unlimited number of shares of each Fund. The Growth/Value Fund and Aggressive
Growth Fund were originally organized as series of Trans Adviser Funds, Inc.
(Note 6).
The Utility Fund seeks a high level of current income by investing primarily in
securities of public utilities. Capital appreciation is a secondary objective.
The Equity Fund seeks long-term capital appreciation by investing primarily in
common stocks which are believed by the Adviser to offer growth potential.
The Growth/Value Fund seeks long-term capital appreciation primarily through
equity investments in companies whose valuations may not reflect the prospect
for accelerating earnings/cash flow growth. The Fund seeks to achieve its
objective by investing primarily in common stocks but also in preferred stocks,
convertible bonds and warrants of companies which, in the option of the Fund's
investment adviser, are expected to achieve growth of investment principal over
time. Investments will largely be made in companies of greater than $750 million
capitalization.
The Aggressive Growth Fund seeks long-term capital appreciation primarily
through equity investments. The Fund will seek growth opportunities among
companies of various sizes. The Fund seeks to achieve its objective by investing
primarily in common stocks but also in preferred stocks, convertible bonds,
options and warrants of companies which, in the option of the Fund's investment
adviser, are expected to achieve growth of investment principal over time. Many
of these companies are in the small to medium-sized category (companies with
market capitalizations of less than $750 million at the time of purchase).
The Government Mortgage Fund seeks high current income, consistent with the
protection of capital, by investing primarily in mortgage-related securities
issued or guaranteed as to principal and interest by the United States
Government, its agencies or instrumentalities.
The Utility Fund and Equity Fund each offer two classes of shares: Class A
shares (sold subject to a maximum front-end sales load of 4% and a distribution
fee of up to 0.25% of average daily net assets) and Class C shares (sold subject
to a maximum contingent deferred sales load of 1% if redeemed within a one-year
period from purchase and a distribution fee of up to 1% of average daily net
assets). Each Class A and Class C share of a Fund represents identical interests
in the investment portfolio of such Fund and has the same rights, except that
(i) Class C shares bear the expenses of higher distribution fees, which is
expected to cause Class C shares to have a higher expense ratio and to pay lower
dividends than Class A shares; (ii) certain other class specific expenses will
be borne solely by the class to which such expenses are attributable; and (iii)
each class has exclusive voting rights with respect to matters relating to its
own distribution arrangements.
2. SIGNIFICANT ACCOUNTING POLICIES
The periods ended September 30, 1997, referred to within the Notes to Financial
Statements, represent the six months then ended, except for the Growth/Value
Fund and Aggressive Growth Fund which represent the one month then ended. The
following is a summary of the Funds' significant accounting policies:
<PAGE>
Security valuation -- The Funds' portfolio securities are valued as of the close
of business of the regular session of the New York Stock Exchange (currently
4:00 p.m., Eastern time). U.S. Government obligations and mortgage-backed
securities are generally 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. Portfolio securities traded on stock exchanges and securities
traded in the over-the-counter market are valued at the last sales price as of
the close of business on the day the securities are being valued. Securities not
traded on a particular day, or for which the last sale price is not readily
available, are valued at the closing bid price quoted by brokers that make
markets in the securities. Securities for which market quotations are not
readily available are valued at their fair value as determined in good faith in
accordance with consistently applied procedures established by and under the
general supervision of the Board of Trustees.
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 class of shares of the
Utility Fund and Equity Fund is calculated daily by dividing the total value of
the Fund's assets attributable to that class, less liabilities attibutable to
that class, by the number of shares of that class outstanding. The maximum
offering price per share of Class A shares of each Fund is equal to net asset
value per share plus a sales load equal to 4.17% of net asset value (or 4% of
the offering price). The offering price of Class C shares of each Fund is equal
to net asset value per share.
The net asset value per share of the Growth/Value Fund, Aggressive Growth Fund
and Government Mortgage Fund is calculated daily by dividing the total value of
each Fund's assets, less liabilities, by the number of shares outstanding. The
maximum offering price per share of the Growth/Value Fund and Aggressive Growth
Fund is equal to net asset value per share plus a sales load equal to 4.17% of
net asset value (or 4% of the offering price). The maximum offering price per
share of the Government Mortgage Fund is equal to net asset value per share plus
a sales load equal to 2.04% of net asset value (or 2% of the offering price).
The redemption price per share of each Fund, including each class of shares with
respect to the Utility Fund and Equity Fund, is equal to the net asset value per
share. However, Class C shares of the Utility Fund and Equity Fund are subject
to a contingent deferred sales load of 1% of the original purchase price if
redeemed within a one-year period from the date of purchase.
Investment income -- Interest income is accrued as earned. Dividend income is
recorded on the ex-dividend date. 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,
if any, are declared and paid quarterly to shareholders of the Utility Fund and
Equity Fund and annually to shareholders of the Growth/Value Fund and Aggressive
Growth Fund. Dividends arising from net investment income are declared daily and
paid on the last business day of each month to shareholders of the Government
Mortgage Fund. With respect to each Fund, net realized short-term capital gains,
if any, may be distributed throughout the year and net realized long-term
capital gains, if any, are distributed at least once each year. Income
distributions and capital gain distributions are determined in accordance with
income tax regulations.
Allocations between classes -- Investment income earned, realized capital gains
and losses, and unrealized appreciation and depreciation for the Utility Fund
and Equity Fund are allocated daily to each class of shares based upon its
proportionate share of total net assets of the Fund. Class specific expenses are
charged directly to the class incurring the expense. Common expenses which are
not attributable to a specific class are allocated daily to each class of shares
based upon its proportionate share of total net assets of the Fund.
<PAGE>
Security transactions -- Security transactions are accounted for on the trade
date. Securities sold are valued on a specific identification basis.
Securities traded on a to-be-announced basis -- The Government Mortgage Fund
periodically trades portfolio securities on a "to-be-announced" (TBA) basis. In
a TBA transaction, the Fund has committed to purchase securities for which all
specific information is not yet known at the time of the trade, particularly the
face amount in mortgage-backed securities transactions. Securities purchased on
a TBA basis are not settled until they are delivered to the Fund, normally 15 to
45 days later. These transactions are subject to market fluctuations and their
current value is determined in the same manner as for other portfolio
securities. When effecting such transactions, assets of a dollar amount
sufficient to make payment for the portfolio securities to be purchased are
placed in a segregated account on the trade date.
Organization costs -- Costs incurred by the Growth/Value Fund and Aggressive
Growth 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 is made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also each Fund's intention to declare as dividends
in each calendar year at least 98% of its net investment income (earned during
the calendar year) and 98% of its net realized capital gains (earned during the
twelve months ending October 31) plus undistributed amounts from prior years.
The following information is based upon federal income tax cost of portfolio
investments (excluding repurchase agreements) as of September 30, 1997:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Growth/ Aggressive Government
Utility Equity Value Growth Mortgage
Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gross unrealized appreciation................... $9,942,792 $7,009,565 $7,782,654 $5,841,176 $401,391
Gross unrealized depreciation................... ( 217,105) ( 292,138) ( 191,587) ( 93,763) --
----------- ----------- ----------- ---------- -----------
Net unrealized appreciation..................... $9,725,687 $6,717,427 $7,591,067 $5,747,413 $401,391
=========== =========== =========== ========== ===========
Federal income tax cost......................... $28,549,833 $25,566,891 $19,809,332 $9,878,384 $20,687,560
=========== =========== =========== ========== ===========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
As of March 31, 1997, the Government Mortgage Fund had capital loss
carryforwards for federal income tax purposes of $4,463,989. As of August 31,
1997, the Aggressive Growth Fund had capital loss carryforwards for federal
income tax purposes of $154,085. In addition, the Aggressive Growth Fund elected
to defer until its subsequent tax year $202,393 of capital losses incurred after
October 31, 1996. These capital loss carryforwards and "post-October" losses may
be utilized in the current and future years to offset net realized capital gains
prior to distributing such gains to shareholders.
<PAGE>
3. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) were as follows for
the periods ended September 30, 1997:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Growth/ Aggressive Government
Utility Equity Value Growth Mortgage
Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Purchases of investment securities.............. $ -- $10,284,332 $2,724,015 $988,727 $1,505,775
========== =========== ========== ========= ==========
Proceeds from sales and maturities of investment
securities................................. $1,631,343 $856,096 $3,975,007 $95,997 $1,780,178
========== =========== ========== ========= ==========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4. TRANSACTIONS WITH AFFILIATES
The Chairman and the President of the Trust are also officers of Countrywide
Financial Services, Inc., whose subsidiaries include Countrywide Investments,
Inc. (the Adviser), the Trust's investment adviser and principal underwriter,
and Countrywide Fund Services, Inc. (CFS), the Trust's transfer agent,
shareholder service agent and accounting services agent. Countrywide Financial
Services, Inc. is a wholly-owned subsidiary of Countrywide Credit Industries,
Inc., a New York Stock Exchange listed company principally engaged in the
business of residential mortgage lending.
MANAGEMENT AGREEMENTS
Each Fund's investments are managed by the Adviser under the terms of a
Management Agreement. Under the Management Agreement, the Utility Fund, Equity
Fund and Government Mortgage Fund each pay the Adviser a fee, which is computed
and accrued daily and paid monthly, at an annual rate of 0.75% of its respective
average daily net assets up to $200 million, 0.70% of such net assets from $200
million to $500 million and 0.50% of such net assets in excess of $500 million.
The Growth/Value Fund and Aggressive Growth Fund each pay the Adviser a fee,
which is computed and accrued daily and paid monthly, at an annual rate of 1.00%
of its respective average daily net assets up to $50 million; 0.90% of such net
assets from $50 million to $100 million; 0.80% of such net assets from $100
million to $200 million; and 0.75% of such net assets in excess of $200 million.
Mastrapasqua and Associates, Inc. (Mastrapasqua) has been retained by the
Adviser to manage the investments of the Growth/Value Fund and Aggressive Growth
Fund. The Adviser (not the Funds) pays Mastrapasqua a fee, which is computed and
accrued daily and paid monthly, at an annual rate of 0.60% of each Fund's
respective average daily net assets up to $50 million; 0.50% of such net assets
from $50 million to $100 million; 0.40% of such net assets from $100 million to
$200 million; and 0.35% of such net assets in excess of $200 million.
In order to voluntarily reduce operating expenses for the six months ended
September 30, 1997, the Adviser reimbursed $187 of Class A expenses for the
Equity Fund and waived $12,500 of its advisory fees for the Government Mortgage
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 to
1.95% for each of the Growth/Value Fund and Aggressive Growth Fund.
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 $17.00 per shareholder account from each of the Utility Fund, Equity
Fund, Growth/Value Fund and Aggressive Growth Fund and $21.00 per shareholder
account from the Government Mortgage Fund, subject to a $1,000 minimum monthly
fee for each Fund, or for each class of shares of a Fund, as applicable. In
addition, each Fund pays out-of-pocket expenses including, but not limited to,
postage and supplies.
<PAGE>
ACCOUNTING SERVICES AGREEMENT
Under the terms of the Accounting Services Agreement between the Trust and CFS,
CFS calculates the daily net asset value per share and maintains the financial
books and records of each Fund. For these services, CFS receives a monthly fee,
based on current asset levels, of $3,500 from each of the Utility Fund and the
Equity Fund, $2,500 from each of the Growth/Value Fund and Aggressive Growth
Fund and $3,250 from the Government Mortgage 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 the
exclusive agent for distribution of the Funds' shares. Under the terms of the
Underwriting Agreement between the Trust and the Adviser, the Adviser earned
$1,359, $762, $6,040, $5,282 and $91 from underwriting and broker commissions on
the sale of shares of the Utility Fund, Equity Fund, Growth/Value Fund,
Aggressive Growth Fund and Government Mortgage Fund, respectively, for the
periods ended September 30, 1997. In addition, the Adviser collected $1,275 and
$944 of contingent deferred sales loads on the redemption of Class C shares of
the Utility Fund and the Equity Fund, respectively.
PLANS OF DISTRIBUTION
The Trust has a Plan of Distribution (Class A Plan) under which shares of each
Fund having one class of shares and Class A shares of each Fund having two
classes of shares may directly incur or reimburse the Adviser for expenses
related to the distribution and promotion of shares. The annual limitation for
payment of such expenses under the Class A Plan is 0.25% of average daily net
assets attributable to such shares.
The Trust also has a Plan of Distribution (Class C Plan) under which Class C
shares of each Fund having two classes of shares may directly incur or reimburse
the Adviser for expenses related to the distribution and promotion of shares.
The annual limitation for payment of such expenses under the Class C Plan is 1%
of average daily net assets attributable to Class C shares.
PRIOR AFFILIATE AGREEMENTS
Prior to August 30, 1997, the investment adviser of the Growth/Value Fund and
Aggressive Growth Fund was Trans Financial Bank, N.A.; Forum Financial Corp.
served as the transfer agent and dividend disbursing agent and performed
portfolio accounting services; Forum Financial Services, Inc. acted as
distributor of each Fund's shares; and Forum Administrative Services, LLC
supervised the administration of all aspects of each Fund's operations.
Contractual amounts paid by the Funds for the performance of these services are
reflected in each Fund's Statement of Operations for the year ended August 31,
1997. As of September 30, 1997, Trans Financial Bank, N.A. was a significant
shareholder of record of the Growth/Value Fund and Aggressive Growth Fund.
5. CAPITAL SHARE TRANSACTIONS
Proceeds and payments on capital shares as shown in the Statements of Changes in
Net Assets are the result of the following capital share transactions for the
periods shown:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Growth/Value Aggressive Growth Government
Fund Fund Mortgage Fund
- -----------------------------------------------------------------------------------------------------------------------------------
One Month One Month Six Months
Ended Year Period Ended Year Period Ended Year
Sept. 30, Ended Ended Sept. 30, Ended Ended Sept. 30, Ended
1997 Aug. 31, Aug. 31, 1997 Aug. 31, Aug. 31, 1997 Mar. 31,
(Unaudited) 1997 1996 (Unaudited) 1997 1996 (Unaudited) 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold........................... 69,583 751,684 1,408,416 68,552 418,585 668,440 25,308 317,801
Shares issued in reinvestment of
distributions to shareholders....... -- 16,584 -- -- 376 -- 57,605 114,706
Shares redeemed....................... ( 65,589) ( 434,401) ( 57,598) ( 33,455) ( 158,580) ( 70,133) ( 799,728) ( 707,804)
---------- --------- --------- -------- --------- -------- --------- ---------
Net increase (decrease) in shares
outstanding...................... 3,994 333,867 1,350,818 35,097 260,381 598,307 ( 716,815) ( 275,297)
Shares outstanding, beginning of
period........................... 1,684,685 1,350,818 -- 858,688 598,307 -- 2,366,923 2,642,220
---------- --------- --------- -------- --------- -------- --------- ---------
Shares outstanding, end of period..... 1,688,679 1,684,685 1,350,818 893,785 858,688 598,307 1,650,108 2,366,923
========== ========= ========= ======== ========= ======== ========= =========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Utility Equity
Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months Six Months
Ended Year Ended Year
Sept. 30, Ended Sept. 30, Ended
1997 March 31, 1997 March 31,
(Unaudited) 1997 (Unaudited) 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold.................................... 162,820 295,396 1,231,415 562,866
Shares issued in reinvestment of distributions
to shareholders............................. 42,526 104,692 5,382 11,085
Shares redeemed................................ ( 450,503) ( 802,704) ( 646,396) ( 168,288)
------------- -------------- ------------- -------------
Net increase (decrease) in shares outstanding.. ( 245,157) ( 402,616) 590,401 405,663
Shares outstanding, beginning of period........ 2,900,247 3,302,863 1,088,598 682,935
------------- -------------- ------------- -------------
Shares outstanding, end of period.............. 2,655,090 2,900,247 1,678,999 1,088,598
============= ============== ============= =============
CLASS C
Shares sold.................................... 6,068 79,210 10,712 50,018
Shares issued in reinvestment of distributions
to shareholders............................. 2,801 7,261 -- 930
Shares redeemed................................ ( 47,020) ( 138,592) ( 20,309) ( 45,330)
------------- -------------- ------------- -------------
Net increase (decrease) in shares outstanding.. ( 38,151) ( 52,121) ( 9,597) 5,618
Shares outstanding, beginning of period........ 249,358 301,479 201,191 195,573
------------- -------------- ------------- -------------
Shares outstanding, end of period.............. 211,207 249,358 191,594 201,191
============= ============== ============= =============
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6. AGREEMENT AND PLAN OF REORGANIZATION
The Growth/Value Fund and Aggressive Growth Fund were originally organized as
series of Trans Adviser Funds, Inc., an open-end management investment company
incorporated under the laws of the State of Maryland. Trans Adviser Funds, Inc.
consisted of five investment portfolios, including the Growth/Value Fund and
Aggressive Growth Fund (the Predecessor Funds). The Predecessor Funds had
investment objectives, policies and restrictions substantially identical to the
Funds.
As of the close of business on August 29, 1997, pursuant to an Agreement and
Plan of Reorganization dated May 31, 1997, all assets and liabilities of each
Predecessor Fund were transferred in exchange for capital shares of a
corresponding series of Countrywide Strategic Trust. Each Predecessor fund then
distributed to its shareholders as a liquidating dividend all capital shares of
the like Fund in exchange for and in cancellation of its capital shares. When
the reorganization was completed, shareholders of each Fund owned the same
proportional interest as they owned in the Predecessor Fund immediately before
the reorganization, and each Fund owned the same portfolio of investments as the
Predecessor Fund immediately before the reorganization.
For federal income tax purposes, the reorganization of the Growth/Value Fund and
Aggressive Growth Fund qualifies as a tax-free reorganization with no tax
consequences to the Predecessor Funds, the Funds or their shareholders. In
connection with the reorganizaiton, the fiscal year-end of each Fund has been
changed from August 31 to March 31.
<PAGE>
<TABLE>
<CAPTION>
UTILITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 1997 (Unaudited)
===================================================================================================================================
Market
COMMON STOCK -- 92.6% Shares Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ELECTRIC UTILITIES -- 46.9%
Baltimore Gas & Electric Co.............................................. 50,050 $ 1,388,887
CMS Energy Corp.......................................................... 60,000 2,220,000
Central Louisiana Electric............................................... 30,000 826,875
CINergy Corp............................................................. 50,000 1,671,875
DPL, Inc................................................................. 50,000 1,225,000
Dominion Resources, Inc.................................................. 30,000 1,136,250
Duke Power Co............................................................ 42,000 2,076,375
FPL Group, Inc........................................................... 45,000 2,306,250
Kansas City Power & Light Co............................................. 60,000 1,762,500
Northern States Power Co................................................. 38,000 1,890,500
Scana Corp............................................................... 70,000 1,754,375
---------------
$ 18,258,887
---------------
TELECOMMUNICATIONS -- 27.7%
Ameritech Corp........................................................... 35,000 $ 2,327,500
AT&T Corp................................................................ 30,000 1,329,375
Bell Atlantic Corp....................................................... 25,000 2,010,937
BellSouth Corp........................................................... 50,000 2,312,500
GTE Corp................................................................. 45,000 2,041,875
Lucent Technologies, Inc................................................. 9,722 791,128
---------------
$ 10,813,315
---------------
GAS COMPANIES -- 14.0%
Enron Corp............................................................... 15,000 $ 577,500
MCN Corp................................................................. 70,000 2,240,000
Nicor, Inc............................................................... 20,000 750,000
Oneok, Inc............................................................... 25,000 815,625
Wicor, Inc............................................................... 25,000 1,079,688
---------------
$ 5,462,813
---------------
WATER COMPANIES -- 4.0%
American Water Works, Inc................................................ 70,000 $ 1,548,750
---------------
TOTAL COMMON STOCK (Cost $26,460,634).................................... $ 36,083,765
---------------
<CAPTION>
===================================================================================================================================
Par Market
CORPORATE BONDS -- 5.6% Value Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Dayton Power & Light Co., 8.40%, 12/01/22................................ $ 1,000,000 $ 1,068,104
New York Telephone Co., 9.375%, 7/15/31.................................. 1,000,000 1,123,651
--------------- ---------------
TOTAL CORPORATE BONDS (Amortized Cost $2,089,199)........................ $ 2,000,000 $ 2,191,755
=============== ---------------
TOTAL INVESTMENTS AT VALUE-- 98.2% (Amortized Cost $28,549,833).......... $ 38,275,520
---------------
<PAGE>
<CAPTION>
UTILITY FUND (continued)
===================================================================================================================================
Face Market
REPURCHASE AGREEMENTS(1) -- 1.9% Value Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Dean Witter Reynolds, Inc., 5.50%, dated 9/30/97, due 10/01/97,
repurchase proceeds $722,110.......................................... $ 722,000 $ 722,000
--------------- ---------------
TOTAL REPURCHASE AGREEMENTS ............................................. $ 722,000 $ 722,000
=============== ---------------
TOTAL INVESTMENTS AND REPURCHASE
AGREEMENTS AT VALUE-- 100.1% ......................................... $ 38,997,520
LIABILITIES IN EXCESS OF OTHER ASSETS-- (0.1)% .......................... ( 32,897)
---------------
NET ASSETS-- 100.0% ..................................................... $ 38,964,623
===============
<FN>
(1) Repurchase agreements are fully collateralized by U.S. Government obligations.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 1997 (Unaudited)
===================================================================================================================================
Market
COMMON STOCK -- 85.9% Shares Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER, NON-CYCLICAL -- 22.9%
Albertson's, Inc......................................................... 15,000 $ 523,125
Newell Co................................................................ 25,000 1,000,000
PepsiCo, Inc............................................................. 25,000 1,014,062
Pfizer, Inc.............................................................. 20,000 1,201,250
Procter & Gamble Co...................................................... 16,000 1,105,000
Sara Lee Corp............................................................ 17,000 875,500
Schering-Plough Corp..................................................... 12,000 618,000
United Healthcare Corp................................................... 16,000 800,000
---------------
$ 7,136,937
---------------
FINANCIAL SERVICES -- 16.4%
AFLAC, Inc............................................................... 15,000 $ 813,750
American General Corp.................................................... 8,600 446,125
American International Group............................................. 11,000 1,135,063
Bank of New York Co., Inc................................................ 22,000 1,056,000
Freddie Mac.............................................................. 30,000 1,057,500
Norwest Corp............................................................. 10,000 612,500
---------------
$ 5,120,938
---------------
TECHNOLOGY -- 13.8%
Compaq Computer Corp. ................................................... 15,000 $ 1,121,250
Electronic Data Systems Corp............................................. 15,000 532,500
Hewlett-Packard Co....................................................... 10,000 695,625
Intel Corp............................................................... 10,000 923,125
Loral Space & Communications* ........................................... 11,000 226,875
Lucent Technologies, Inc................................................. 1,944 158,193
Motorola, Inc............................................................ 9,000 646,875
---------------
$ 4,304,443
---------------
CONSUMER, CYCLICAL -- 13.2%
Gap, Inc................................................................. 20,000 $ 1,001,250
Mattel, Inc.............................................................. 30,000 993,750
McDonald's Corp.......................................................... 23,000 1,095,375
The Walt Disney Co....................................................... 13,000 1,048,125
---------------
$ 4,138,500
---------------
INDUSTRIAL -- 9.3%
Deere & Co............................................................... 18,000 $ 967,500
Diebold, Inc............................................................. 13,500 639,563
Emerson Electric Co...................................................... 10,000 576,250
Millipore Corp........................................................... 15,000 736,875
---------------
$ 2,920,188
---------------
ENERGY -- 6.6%
Baker Hughes, Inc........................................................ 25,000 $ 1,093,750
Enron Corp............................................................... 25,000 962,500
---------------
$ 2,056,250
---------------
CONGLOMERATES -- 3.7%
General Electric Co...................................................... 17,000 $ 1,157,062
---------------
TOTAL COMMON STOCK (Cost $20,116,891).................................... $ 26,834,318
---------------
<PAGE>
<CAPTION>
EQUITY FUND (continued)
===================================================================================================================================
Par Market
U.S. GOVERNMENT AGENCY ISSUES-- 17.5% Value Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Federal Home Loan Bank Discount Note, 10/01/97 (Amortized Cost $5,450,000) $ 5,450,000 $ 5,450,000
=============== ---------------
TOTAL INVESTMENTS AT VALUE-- 103.4% (Amortized Cost $25,566,891)......... $ 32,284,318
LIABILITIES IN EXCESS OF OTHER ASSETS-- (3.4)% ......................... ( 1,060,647)
---------------
NET ASSETS-- 100.0% ..................................................... $ 31,223,671
===============
<FN>
* Non-income producing security.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROWTH/VALUE FUND
PORTFOLIO OF INVESTMENTS
September 30, 1997 (Unaudited)
===================================================================================================================================
Market
COMMON STOCK -- 96.9% Shares Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY -- 28.5%
EMC Corp.*............................................................... 4,000 $ 233,500
International Business Machines Corp..................................... 14,000 1,483,125
Lam Research Corp.*...................................................... 18,000 837,000
Novell, Inc.*............................................................ 50,000 448,437
Novellus Systems, Inc.*.................................................. 6,000 756,000
Oracle Corp.*............................................................ 22,500 819,844
QLogic Corp.*............................................................ 12,500 523,438
SCB Computer Technology, Inc.*........................................... 15,000 315,000
Sun Microsystems, Inc.*.................................................. 20,000 936,250
VERITAS Software Corp.*.................................................. 4,000 175,750
Western Digital Corp.*................................................... 35,000 1,402,187
---------------
$ 7,930,531
---------------
HEALTH CARE -- 22.0%
AmeriSource Health Corp. - Class A*...................................... 10,000 $ 584,375
Bard (C.R.), Inc......................................................... 10,000 339,375
Beverly Enterprises, Inc.*............................................... 20,000 347,500
Bristol-Myers Squibb Co.................................................. 8,000 662,000
HEALTHSOUTH Corp.*....................................................... 9,690 258,602
Health Management Associates, Inc. - Class A*............................ 7,500 237,188
Manor Care, Inc.......................................................... 15,000 498,750
PhyCor, Inc.*............................................................ 12,000 348,750
Quorum Health Group, Inc.*............................................... 11,250 274,922
Schering-Plough Corp..................................................... 20,000 1,030,000
Sybron International Corp.*.............................................. 15,000 644,063
Teva Pharmaceutical Industries, Ltd. - ADR............................... 10,000 557,500
Warner-Lambert Co........................................................ 2,500 337,344
---------------
$ 6,120,369
---------------
ENERGY -- 17.1%
Baker Hughes, Inc........................................................ 15,000 $ 656,250
Domain Energy Corp.*..................................................... 10,000 185,000
McDermott International, Inc............................................. 10,000 365,000
Nuevo Energy Co.*........................................................ 12,000 574,500
Pride International, Inc.*............................................... 20,000 680,000
Schlumberger, Ltd........................................................ 12,000 1,010,250
Seagull Energy Corp.*.................................................... 10,000 255,000
Stone Energy Corp.*...................................................... 10,000 336,250
The Williams Companies, Inc.............................................. 15,000 702,188
---------------
$ 4,764,438
---------------
FINANCIAL SERVICES -- 14.8%
Ace, Ltd................................................................. 10,000 $ 946,875
Capital One Financial Corp............................................... 24,500 1,120,875
Centura Banks, Inc....................................................... 10,000 550,625
Chase Manhattan Corp..................................................... 7,500 885,000
Chubb Corp............................................................... 5,000 355,312
Penncorp Financial Group, Inc............................................ 8,000 248,000
---------------
$ 4,106,687
---------------
<PAGE>
<CAPTION>
GROWTH/VALUE FUND (continued)
===================================================================================================================================
Market
COMMON STOCK -- 96.9% Shares Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RETAIL -- 6.5%
Carnival Corp. - Class A................................................. 12,500 $ 578,125
OfficeMax, Inc.*......................................................... 10,000 151,875
Safeway, Inc.*........................................................... 7,500 407,812
Walgreen Co.............................................................. 4,600 117,875
Wal-Mart Stores, Inc..................................................... 15,000 549,375
---------------
$ 1,805,062
---------------
LEISURE TIME -- 2.8%
Host Marriott Corp.*..................................................... 15,000 $ 341,250
Promus Hotel Corp.*...................................................... 10,000 448,125
---------------
$ 789,375
---------------
BEVERAGES -- 2.5%
PepsiCo, Inc............................................................. 17,000 $ 689,562
---------------
CAPTIAL GOODS -- 2.1%
Emerson Electric Co...................................................... 10,000 $ 576,250
---------------
TRANSPORTATION -- 0.6%
Heartland Express, Inc.*................................................. 5,000 $ 138,125
---------------
TOTAL COMMON STOCK (Cost $19,329,332).................................... $ 26,920,399
---------------
<CAPTION>
===================================================================================================================================
Par Market
U.S. GOVERNMENT AGENCY ISSUES-- 1.7% Value Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Federal Home Loan Bank Discount Note, 10/01/97 (Amortized Cost $480,000) $ 480,000 $ 480,000
--------------- ---------------
TOTAL INVESTMENTS AT VALUE-- 98.6% (Amortized Cost $19,809,332) ......... $ 27,400,399
OTHER ASSETS IN EXCESS OF LIABILITIES-- 1.4% ............................ 382,851
---------------
NET ASSETS-- 100.0% ..................................................... $ 27,783,250
===============
<FN>
* Non-income producing security.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH FUND
PORTFOLIO OF INVESTMENTS
September 30, 1997 (Unaudited)
===================================================================================================================================
Market
COMMON STOCK -- 100.5% Shares Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY -- 39.4%
Lam Research Corp.*...................................................... 10,000 $ 465,000
Novell, Inc.*............................................................ 55,000 493,281
Novellus Systems, Inc.*.................................................. 4,000 504,000
Oracle Corp.*............................................................ 11,250 409,922
QLogic Corp.*............................................................ 12,500 523,437
SCB Computer Technology, Inc.*........................................... 16,500 346,500
Semtech Corp.*........................................................... 12,000 829,500
SMART Modular Technologies, Inc.*........................................ 15,000 1,245,000
Sun Microsystems, Inc.*.................................................. 10,000 468,125
VERITAS Software Corp.*.................................................. 1,000 43,938
Western Digital Corp.*................................................... 20,000 801,250
---------------
$ 6,129,953
---------------
HEALTH CARE -- 20.3%
Alternative Living Services, Inc.*....................................... 10,000 $ 242,500
AmeriSource Health Corp. - Class A*...................................... 7,500 438,281
Atria Communities, Inc.*................................................. 20,000 360,000
Bard (C.R.), Inc......................................................... 5,000 169,688
HealthCare COMPARE Corp.*................................................ 10,000 638,750
Health Management Associates, Inc. - Class A*............................ 10,000 316,250
Manor Care, Inc.......................................................... 10,000 332,500
PhyCor, Inc.*............................................................ 1,500 43,594
Quorum Health Group, Inc.*............................................... 7,500 183,281
Sybron International Corp.*.............................................. 10,000 429,375
---------------
$ 3,154,219
---------------
ENERGY -- 19.1%
Domain Energy Corp.*..................................................... 10,000 $ 185,000
Hagler Bailly, Inc.*..................................................... 5,000 126,875
McDermott International, Inc............................................. 7,000 255,500
Nuevo Energy Co.*........................................................ 9,000 430,875
Pride International, Inc.*............................................... 15,000 510,000
St. Mary Land & Exploration Co........................................... 5,000 226,875
Seagull Energy Corp.*.................................................... 7,500 191,250
Stone Energy Corp.*...................................................... 7,500 252,188
Tuboscope, Inc.*......................................................... 10,000 313,750
Vintage Petroleum, Inc................................................... 5,000 246,250
The Williams Companies, Inc.............................................. 5,000 234,062
---------------
$ 2,972,625
---------------
FINANCIAL SERVICES -- 7.8%
Ace, Ltd................................................................. 6,000 $ 568,125
Capital One Financial Corp............................................... 10,000 457,500
Penncorp Financial Group, Inc............................................ 6,000 186,000
---------------
$ 1,211,625
---------------
RETAIL -- 5.6%
Carnival Corp. - Class A................................................. 5,000 $ 231,250
Central Newspapers, Inc. - Class A....................................... 4,000 297,000
OfficeMax, Inc.*......................................................... 10,000 151,875
Walgreen Co.............................................................. 7,400 189,625
---------------
$ 869,750
---------------
<PAGE>
<CAPTION>
AGGRESSIVE GROWTH FUND (continued)
===================================================================================================================================
Market
COMMON STOCK -- 100.5% Shares Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LEISURE TIME -- 5.1%
Host Marriott Corp.*..................................................... 15,000 $ 341,250
Promus Hotel Corp.*...................................................... 10,000 448,125
---------------
.................................................................... $ 789,375
---------------
TRANSPORTATION -- 3.2%
Eagle USA AirFreight, Inc.*.............................................. 5,000 $ 167,500
Simon Transportation Services, Inc.*..................................... 14,000 330,750
---------------
.................................................................... $ 498,250
---------------
TOTAL COMMON STOCK (Cost $9,878,384) .................................... $ 15,625,797
---------------
LIABILITIES IN EXCESS OF OTHER ASSETS-- (0.5)% .......................... ( 77,005)
---------------
NET ASSETS-- 100.0% ..................................................... $ 15,548,792
===============
<FN>
* Non-income producing security.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GOVERNMENT MORTGAGE FUND
PORTFOLIO OF INVESTMENTS
September 30, 1997 (Unaudited)
===================================================================================================================================
Par Market
INVESTMENTS -- 134.5% Value Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY ISSUES -- 28.7%
Federal Home Loan Bank Discount Note, 10/01/97........................... $ 950,000 $ 950,000
Federal Home Loan Mortgage Corp., 6.80%, 7/09/04......................... 1,500,000 1,516,666
Federal Home Loan Mortgage Corp., 7.05%, 6/08/05......................... 2,000,000 2,039,342
--------------- ---------------
TOTAL U.S. GOVERNMENT AGENCY ISSUES
(Amortized Cost $4,468,170).............................................. $ 4,450,000 $ 4,506,008
--------------- ---------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES -- 105.8%
Federal Home Loan Mortgage Corp. #E00228, 6.50%, 7/01/08................. $ 1,437,113 $ 1,432,816
Federal Home Loan Mortgage Corp. #G30054, 7.50%, 9/01/16................. 1,898,267 1,949,178
Federal National Mortgage Assoc. #250689, 7.50%, 9/01/03................. 1,769,874 1,807,059
Federal National Mortgage Assoc. #50811, 7.50%, 12/01/12................. 939,997 962,670
Federal National Mortgage Assoc. #190666, 7.00%, 3/01/14................. 1,502,908 1,517,952
Federal National Mortgage Assoc. #220114, 7.00%, 6/01/23................. 2,425,509 2,425,315
Federal National Mortgage Assoc. #317691, 7.00%, 8/01/25................. 2,772,115 2,764,270
Federal National Mortgage Assoc. #351694, 7.50%, 11/01/26................ 959,092 975,665
Federal National Mortgage Assoc. #358484, 7.50%, 11/01/26................ 962,688 979,323
Government National Mortgage Assoc. #319358, 8.00%, 4/15/22.............. 1,702,715 1,768,695
--------------- ---------------
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES
(Amortized Cost $16,219,390)............................................. $ 16,370,278 $ 16,582,943
--------------- ---------------
TOTAL INVESTMENTS AT VALUE
(Amortized Cost $20,687,560)............................................. $ 20,820,278 $ 21,088,951
===============
LIABILITIES IN EXCESS OF OTHER ASSETS-- (34.5)% ......................... ( 5,412,431 )
---------------
NET ASSETS-- 100.0% ..................................................... $ 15,676,520
===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
LOGO: Countrywide Investments
Countrywide Investments
COUNTRYWIDE STRATEGIC TRUST
312 Walnut St., 21st Floor
Cincinnati, Ohio 45202-4094
Nationwide: (Toll Free) 800-543-8721
Cincinnati: 629-2000
Rate Line: 579-0999
Shareholder Services
Nationwide: (Toll Free) 800-543-0407
Cincinnati: 629-2050
BOARD OF TRUSTEES
Angelo R. Mozilo, Chairman
Robert H. Leshner, President
Donald L. Bogdon, M.D.
John R. Delfino
H. Jerome Lerner
Oscar P. Robertson
John F. Seymour, Jr.
Sebastiano Sterpa
INVESTMENT ADVISER
Countrywide Investments, Inc.
312 Walnut St., 21st Floor
Cincinnati, Ohio 45202-4094
TRANSFER AGENT
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
This report is authorized for distribution only when it is accompanied or
preceded by a current prospectus of Countrywide Strategic Trust.
<PAGE>
<TABLE> <S> <C>
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<PERIOD-TYPE> 6-MOS
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<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 20,687,560
<INVESTMENTS-AT-VALUE> 21,088,951
<RECEIVABLES> 167,355
<ASSETS-OTHER> 118
<OTHER-ITEMS-ASSETS> 1,075
<TOTAL-ASSETS> 21,257,499
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,580,979
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<PAID-IN-CAPITAL-COMMON> 19,734,356
<SHARES-COMMON-STOCK> 1,650,108
<SHARES-COMMON-PRIOR> 2,366,923
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4,459,227)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 401,391
<NET-ASSETS> 15,676,520
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 761,182
<OTHER-INCOME> 0
<EXPENSES-NET> 129,100
<NET-INVESTMENT-INCOME> 632,082
<REALIZED-GAINS-CURRENT> 4,762
<APPREC-INCREASE-CURRENT> 620,443
<NET-CHANGE-FROM-OPS> 1,257,287
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 632,082
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 25,308
<NUMBER-OF-SHARES-REDEEMED> 799,728
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<NET-CHANGE-IN-ASSETS> (6,166,695)
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<PER-SHARE-NAV-BEGIN> 9.23
<PER-SHARE-NII> .28
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<PERIOD-START> APR-01-1997
<PERIOD-END> SEP-30-1997
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<INVESTMENTS-AT-VALUE> 32,284,318
<RECEIVABLES> 25,173
<ASSETS-OTHER> 467
<OTHER-ITEMS-ASSETS> 249
<TOTAL-ASSETS> 32,310,207
<PAYABLE-FOR-SECURITIES> 1,025,128
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<OTHER-ITEMS-LIABILITIES> 61,408
<TOTAL-LIABILITIES> 1,086,536
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<PAID-IN-CAPITAL-COMMON> 24,322,422
<SHARES-COMMON-STOCK> 1,678,999
<SHARES-COMMON-PRIOR> 1,088,598
<ACCUMULATED-NII-CURRENT> 65
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 183,757
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,717,427
<NET-ASSETS> 28,024,877
<DIVIDEND-INCOME> 109,197
<INTEREST-INCOME> 141,597
<OTHER-INCOME> 0
<EXPENSES-NET> 161,090
<NET-INVESTMENT-INCOME> 89,704
<REALIZED-GAINS-CURRENT> 19,326
<APPREC-INCREASE-CURRENT> 4,030,686
<NET-CHANGE-FROM-OPS> 4,139,716
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 89,646
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 1,231,415
<NUMBER-OF-SHARES-REDEEMED> 646,396
<SHARES-REINVESTED> 5,382
<NET-CHANGE-IN-ASSETS> 13,042,239
<ACCUMULATED-NII-PRIOR> 7
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<AVERAGE-NET-ASSETS> 20,832,821
<PER-SHARE-NAV-BEGIN> 13.76
<PER-SHARE-NII> .06
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<PER-SHARE-NAV-END> 16.69
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<SERIES>
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<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
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<INVESTMENTS-AT-VALUE> 32,284,318
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<OTHER-ITEMS-ASSETS> 249
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<PAYABLE-FOR-SECURITIES> 1,025,128
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<TOTAL-LIABILITIES> 1,086,536
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 24,322,422
<SHARES-COMMON-STOCK> 191,594
<SHARES-COMMON-PRIOR> 201,191
<ACCUMULATED-NII-CURRENT> 65
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 183,757
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,717,427
<NET-ASSETS> 3,198,794
<DIVIDEND-INCOME> 109,197
<INTEREST-INCOME> 141,597
<OTHER-INCOME> 0
<EXPENSES-NET> 161,090
<NET-INVESTMENT-INCOME> 89,704
<REALIZED-GAINS-CURRENT> 19,326
<APPREC-INCREASE-CURRENT> 4,030,686
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<ACCUMULATED-NII-PRIOR> 7
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<OVERDISTRIB-NII-PRIOR> 0
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<PER-SHARE-NII> .01
<PER-SHARE-GAIN-APPREC> 2.92
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<PER-SHARE-NAV-END> 16.70
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<SERIES>
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<NAME> UTILITY FUND CLASS A
<S> <C>
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<INVESTMENTS-AT-COST> 28,271,833
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<SERIES>
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</TABLE>
<TABLE> <S> <C>
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<SERIES>
<NUMBER> 8
<NAME> GROWTH/VALUE FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> AUG-29-1997
<PERIOD-END> SEP-30-1997
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<DIVIDEND-INCOME> 10,562
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<OTHER-INCOME> 0
<EXPENSES-NET> 38,150
<NET-INVESTMENT-INCOME> (25,822)
<REALIZED-GAINS-CURRENT> 1,048,744
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<ACCUMULATED-NII-PRIOR> 0
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<INTEREST-EXPENSE> 0
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<AVERAGE-NET-ASSETS> 27,653,564
<PER-SHARE-NAV-BEGIN> 15.90
<PER-SHARE-NII> (0.02)
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</TABLE>
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<CIK> 0000711080
<NAME> COUNTRYWIDE STRATEGIC TRUST
<SERIES>
<NUMBER> 9
<NAME> AGGRESSIVE GROWTH FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> AUG-29-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 9,878,384
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<SHARES-COMMON-STOCK> 893,785
<SHARES-COMMON-PRIOR> 858,688
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<ACCUMULATED-NET-GAINS> (386,456)
<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 15,548,792
<DIVIDEND-INCOME> 1,690
<INTEREST-INCOME> 626
<OTHER-INCOME> 0
<EXPENSES-NET> 25,521
<NET-INVESTMENT-INCOME> (23,205)
<REALIZED-GAINS-CURRENT> (29,978)
<APPREC-INCREASE-CURRENT> 1,033,676
<NET-CHANGE-FROM-OPS> 980,493
<EQUALIZATION> 0
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<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 68,552
<NUMBER-OF-SHARES-REDEEMED> 33,455
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,565,057
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (356,478)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 25,521
<AVERAGE-NET-ASSETS> 15,168,949
<PER-SHARE-NAV-BEGIN> 16.29
<PER-SHARE-NII> (0.02)
<PER-SHARE-GAIN-APPREC> 1.13
<PER-SHARE-DIVIDEND> 0
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