Total Return
Capital Appreciation
Income
ANNUAL REPORT
MARCH 31, 1997
U.S. GOVERNMENT
Securities Fund
TREASURY TOTAL
Return Fund
UTILITY
Fund
EQUITY
Fund
COUNTRYWIDE
INVESTMENTS
<PAGE>
Photo of Angelo R. Mozilo
LETTER FROM THE CHAIRMAN
===============================================================================
Dear Shareholders:
Welcome to the Countrywide Family. The recent acquisition of Midwest Group by
Countrywide is cause for celebration within both organizations.
Midwest Group's experienced management team, reputation for excellence, and
strong customer relationships significantly enhance Countrywide's long-term
commitment to being a leading provider of financial services.
In turn, Countrywide offers this excellent team an atmosphere of innovative
technology, industry leadership, and dynamic organization. It is a blending of
talents and abilities that will position our newly expanded Countrywide family
for leadership into the twenty-first century.
Countrywide Home Loans is the nation's leading independent residential mortgage
lender and servicer. Our loan servicing operation now serves more than 1.5
million homeowners. With nearly 400 offices, Countrywide employs over 6,000
individuals across the United States. In addition to first lien prime and
subprime mortgages and home equity loans, a variety of other financial products
and services augments our mortgage lending and servicing operations including
insurance products, credit cards, and now investments.
Countrywide Investments adds a critical component to Countrywide's strategic
business plan. While mortgage lending is Countrywide's core business, we believe
diversification of financial products and services will provide greater customer
retention and enhanced customer service.
In addition to the quality and performance you've come to expect in meeting your
investment needs, we think you will be pleased with the additional opportunities
Countrywide offers. Again, welcome to the Countrywide family.
Sincerely,
/s/ Angelo R. Mozilo
Angelo R. Mozilo
Chairman
<PAGE>
Photo of Robert H. Leshner
LETTER FROM THE PRESIDENT
===============================================================================
Dear Fellow Shareholders:
We are pleased to present the audited annual report for the Countrywide
Strategic Trust for the fiscal year ended March 31, 1997.
As you may already have noticed, our name and look have changed. We are
answering the phone as Countrywide Investments, and your statement bears the
Countrywide brand. Our Funds are now listed under the Countrywide name in local
and national newspapers, magazines and other publications.
Countrywide has a long-term commitment to be a leading provider of financial
services. It views the acquisition of Midwest Group as an opportunity to offer a
broader variety of financial products and services to complement its residential
lending and servicing operations. If we can be of assistance to you with your
home loan needs, please don't hesitate to call us at 800-586-9150, our hotline
number especially for Countrywide Investments shareholders.
As a result of these exciting changes, we now have access to Countrywide's broad
managerial, financial and technological resources. These tools will help us to
ensure that we continue to develop and deliver quality investment products and
services to help meet your financial goals.
What has not changed is the Funds' management team and the investment strategies
employed by the Funds. We remain committed to providing you with the same level
of quality service to which you are accustomed.
The economic expansion continues and inflation is nowhere to be found. Millions
of jobs have been added and the resulting unemployment rate is at its lowest
level since 1974. Spurred on by high employment and wages, consumer confidence
is near an all-time high.
We believe the economy will continue to enjoy moderate growth with few
inflationary threats. Though volatility in the equity markets is likely to
continue, relatively tame inflation and the sustainable level of economic growth
should provide a good foundation for stock prices. We expect large cap stocks to
continue to outperform their smaller cap peers, as investors will be more
inclined to own larger, well-known stocks.
The Countrywide Equity Fund and the Countrywide Utility Fund offer relatively
conservative ways to participate in the equity markets. The Equity Fund is
currently invested primarily in stocks comprising the S&P 500 Index. The Utility
Fund invests across the four utility sectors -- electric, gas, water and
telecommunications, providing investors with a degree of diversification within
this particular industry.
The Countrywide U.S. Government Securities Fund is a high-quality choice for
investors seeking current income, consistent with the protection of capital.
Countrywide Investments remains committed to providing conservative,
high-quality opportunities to help investors meet their financial goals. Our
success can be attributed to the support of shareholders like you. We thank you
for your continued confidence and look forward to serving your investment needs
in the years to come.
Sincerely,
/s/ Robert H. Leshner
Robert H. Leshner
President
<PAGE>
U.S. GOVERNMENT SECURITIES FUND
MANAGEMENT DISCUSSION AND ANALYSIS
===============================================================================
The U.S. Government Securities Fund seeks high current income, consistent with
the protection of capital, by investing primarily in mortgage-backed securities
which are issued or guaranteed as to principal and interest by the U.S.
Government, its agencies or instrumentalities. For the fiscal year ended March
31, 1997, the Fund's total return (excluding the impact of the maximum 2%
front-end sales load) was 3.76%, as compared to 5.95% for the Lehman Brothers
Mortgage-Backed Securities Index.
The economy gained momentum in fiscal 1997 with gross domestic product (GDP)
averaging over 4.0% growth, up dramatically from the 1.7% average in fiscal
1996. This momentum was confirmed early in the year by a series of payroll
reports showing phenomenal job growth and a declining unemployment rate. The
fear of wage inflation helped push the yield on the 30-year Treasury bond to
7.20%. Generally speaking, bonds traded in a historically tight range during
most of fiscal 1997. When reviewing the fiscal year in its entirety, the most
striking factor in the taxable, fixed-income markets was the decline in interest
rate volatility, which favored mortgage-backed securities and other callable
securities.
Exposure to Treasury and non-callable U.S. Government agency securities (which
tend to lag mortgage-backed securities in a rising interest rate environment)
contributed to the Fund's underperformance during the early portion of the
fiscal year. A fundamental repositioning of the Fund took place in October 1996
in an effort to take advantage of declining volatility in the fixed-income
markets. Treasury and agency securities were sold from the investment portfolio
with the proceeds invested in pass-through mortgage-backed securities.
Subsequent to this repositioning, the Fund performed well over the remainder of
the fiscal year, benefitting from the combination of declining interest rate
volatility and a 75% to 80% weighting in mortgage-backed securities.
The Fund is positioned rather defensively as we move into fiscal 1998. The
duration of the Fund is in line with the peer group average and its exposure to
the mortgage-backed sector remains close to 80%. With mortgage-backed securities
having performed exceptionally well versus Treasury issues, positive relative
performance going forward could be difficult. With that in mind, we will turn
our focus to other mortgage-backed issues and U.S. Government agency securities
which have better upside potential. Once it appears the economy is slowing, we
will look to extend the duration of the Fund.
<TABLE>
<CAPTION>
A REPRESENTATION OF THE GRAPHIC MATERIAL CONTAINED IN THE COUNTRYWIDE STRATEGIC
TRUST MARCH 31, 1997 ANNUAL REPORT IS SET FORTH BELOW:
Comparison of the Change in Value of a $10,000 Investment in the U.S. Government
Securities Fund* and the Lehman Brothers Mortgage-Backed Securities Index
LEHMAN BROTHERS MORTGAGE-BACKED U.S. GOVERNMENT SECURITIES FUND:
SECURITIES INDEX:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
<S> <C> <C> <C> <C> <C>
03/31/87 10,000 03/31/87 9,800
06/30/87 -1.37% 9,863 06/30/87 -2.63% 9,542
09/30/87 -2.08% 9,658 09/30/87 -4.12% 9,149
12/31/87 5.65% 10,204 12/31/87 6.63% 9,756
03/31/88 4.28% 10,640 03/31/88 3.42% 10,090
06/30/88 1.67% 10,818 06/30/88 1.44% 10,234
09/30/88 2.37% 11,074 09/30/88 2.16% 10,455
12/31/88 0.18% 11,094 12/31/88 0.63% 10,521
03/31/89 1.24% 11,232 03/31/89 0.66% 10,590
06/30/89 7.76% 12,103 06/30/89 5.05% 11,125
09/30/89 1.65% 12,303 09/30/89 0.85% 11,219
12/31/89 4.00% 12,795 12/31/89 3.47% 11,608
03/31/90 0.13% 12,812 03/31/90 -0.92% 11,501
06/30/90 3.79% 13,297 06/30/90 2.97% 11,842
09/30/90 1.48% 13,494 09/30/90 0.94% 11,954
12/31/90 4.98% 14,166 12/31/90 4.92% 12,543
03/31/91 3.07% 14,601 03/31/91 2.12% 12,808
06/30/91 1.90% 14,879 06/30/91 1.78% 13,037
09/30/91 5.48% 15,694 09/30/91 4.57% 13,632
12/31/91 4.45% 16,392 12/31/91 3.95% 14,171
03/31/92 -0.86% 16,251 03/31/92 -1.06% 14,020
06/30/92 4.02% 16,905 06/30/92 3.97% 14,576
09/30/92 2.98% 17,408 09/30/92 3.09% 15,026
12/31/92 0.72% 17,534 12/31/92 0.13% 15,045
03/31/93 2.96% 18,053 03/31/93 4.10% 15,662
06/30/93 1.86% 18,389 06/30/93 2.61% 16,071
09/30/93 0.96% 18,565 09/30/93 1.38% 16,292
12/31/93 0.90% 18,732 12/31/93 0.23% 16,330
03/31/94 -2.32% 18,298 03/31/94 -3.80% 15,709
06/30/94 -0.56% 18,195 06/30/94 -3.94% 15,090
09/30/94 0.87% 18,353 09/30/94 -0.13% 15,071
12/31/94 0.43% 18,432 12/31/94 -0.15% 15,047
03/31/95 5.24% 19,398 03/31/95 4.46% 15,719
06/30/95 5.22% 20,411 06/30/95 5.10% 16,521
09/30/95 2.10% 20,839 09/30/95 1.39% 16,750
12/31/95 3.32% 21,531 12/31/95 3.83% 17,392
03/31/96 -0.44% 21,436 03/31/96 -2.04% 17,037
06/30/96 0.80% 21,608 06/30/96 -0.28% 16,989
09/30/96 2.05% 22,051 09/30/96 1.57% 17,256
12/31/96 2.88% 22,686 12/31/96 2.60% 17,705
03/31/97 0.13% 22,715 03/31/97 -0.15% 17,679
Past performance is not predictive of future performance.
U.S. Government Securities Fund
Average Annual Total Returns
1 Year 5 Years 10 Years
1.69% 4.32% 5.86%
*The initial public offering of shares commenced on June 4, 1984.
</TABLE>
<PAGE>
TREASURY TOTAL RETURN FUND
MANAGEMENT DISCUSSION AND ANALYSIS
===============================================================================
The Treasury Total Return Fund seeks the highest level of total return over the
long term, consistent with the protection of capital, by investing primarily in
direct obligations of the United States Treasury. High current income is a
secondary objective. For the fiscal year ended March 31, 1997, the Fund's total
return (excluding the impact of the maximum 4% front-end sales load) was 1.73%,
as compared to 4.20% for the Merrill Lynch Treasuries (All Maturities) Index.
Fiscal year 1997 began on a dour note with the yield on the 30-year Treasury
bond completing its climb from 5.90% to 7.20%. The spike in interest rates was
due to accelerating economic growth and the fear of wage pressures. Inflation,
usually a by-product of strong economic growth, remained quiet. This odd
combination of a robust economy and nominal inflation allowed bonds to trade in
a well-defined range (6.80% to 7.20% on the 30-year Treasury bond) for much of
the fiscal year. The fixed income markets did stage an impressive rally in the
latter part of the year, only to be followed by an equally impressive sell-off,
returning interest rates to the trading range established earlier in the year.
Economic growth and inflation were uncharacteristically consistent throughout
the fiscal year, resulting in declining interest rate volatility and fewer
trading opportunities.
With the heightened uncertainty (and rising interest rates) at the beginning of
the fiscal year, management pursued an investment strategy whereby approximately
half of Fund assets were invested in the 5-year Treasury note, with the other
half invested in a combination of cash and Treasury bills. This strategy was
effective, producing superior results relative to the Fund's peer group
throughout most of the fiscal year. In February 1997, strategic modelling
dictated a repositioning of the investment portfolio with a concentration in
30-year Treasury bonds. The ensuing spike in interest rates generated sub-par
performance for the month and ultimately hindered performance for the year ended
March 31, 1997.
The Fund entered fiscal 1998 conservatively positioned in Treasury bills and
cash. On May 19, 1997, the Board of Trustees approved a mandatory redemption of
all shares of the Fund to occur on or about July 15, 1997. In light of this
mandatory redemption, management will maintain the short-term position of the
Fund's investment portfolio.
<TABLE>
<CAPTION>
Comparison of the Change in Value of a $10,000 Investment in the Treasury
Total Return Fund* and the Merrill Lynch Treasuries (All Maturities) Index
MERRILL LYNCH TREASURIES TREASURY TOTAL RETURN FUND:
(ALL MATURITIES) INDEX:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
<S> <C> <C> <C> <C> <C>
01/26/88 10,000 01/26/88 9,600
03/31/88 1.29% 10,129 03/31/88 -3.14% 9,299
06/30/88 0.89% 10,219 06/30/88 -1.80% 9,131
09/30/88 1.72% 10,394 09/30/88 1.38% 9,257
12/31/88 0.94% 10,492 12/31/88 -0.52% 9,209
03/31/89 1.06% 10,602 03/31/89 4.17% 9,593
06/30/89 8.21% 11,473 06/30/89 5.92% 10,161
09/30/89 0.79% 11,563 09/30/89 -0.69% 10,090
12/31/89 3.71% 11,992 12/31/89 4.46% 10,540
03/31/90 -1.24% 11,843 03/31/90 -4.70% 10,045
06/30/90 3.43% 12,250 06/30/90 3.90% 10,437
09/30/90 0.78% 12,345 09/30/90 -3.61% 10,059
12/31/90 5.55% 13,030 12/31/90 8.50% 10,914
03/31/91 2.03% 13,294 03/31/91 1.19% 11,044
06/30/91 1.39% 13,479 06/30/91 -0.73% 10,964
09/30/91 5.69% 14,245 09/30/91 8.21% 11,864
12/31/91 5.37% 15,010 12/31/91 6.35% 12,618
03/31/92 -1.77% 14,745 03/31/92 -4.61% 12,037
06/30/92 3.92% 15,323 06/30/92 3.06% 12,405
09/30/92 5.04% 16,095 09/30/92 5.20% 13,050
12/31/92 -0.01% 16,092 12/31/92 1.21% 13,207
03/31/93 4.55% 16,824 03/31/93 5.91% 13,988
06/30/93 2.88% 17,309 06/30/93 2.66% 14,360
09/30/93 3.29% 17,879 09/30/93 3.55% 14,870
12/31/93 -0.42% 17,803 12/31/93 -2.13% 14,554
03/31/94 -2.97% 17,274 03/31/94 -4.41% 13,913
06/30/94 -1.14% 17,077 06/30/94 -3.24% 13,463
09/30/94 0.40% 17,146 09/30/94 -0.95% 13,335
12/31/94 0.36% 17,207 12/31/94 1.41% 13,523
03/31/95 4.66% 18,009 03/31/95 1.08% 13,670
06/30/95 6.26% 19,136 06/30/95 1.36% 13,856
09/30/95 1.76% 19,473 09/30/95 1.18% 14,020
12/31/95 4.67% 20,381 12/31/95 1.26% 14,196
03/31/96 -2.32% 19,908 03/31/96 -0.87% 14,073
06/30/96 0.41% 19,990 06/30/96 0.32% 14,119
09/30/96 1.65% 20,319 09/30/96 1.29% 14,301
12/31/96 2.92% 20,913 12/31/96 1.76% 14,552
03/31/97 -0.80% 20,745 03/31/97 -1.62% 14,316
Past performance is not predictive of future performance.
Treasury Total Return Fund
Average Annual Total Returns
1 Year 5 Years Since Inception
(2.34%) 2.69% 3.98%
*The initial public offering of shares commenced on January 26, 1988.
</TABLE>
<PAGE>
UTILITY FUND
MANAGEMENT DISCUSSION AND ANALYSIS
===============================================================================
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 Fund's total returns for the fiscal year ended March 31, 1997 (excluding the
impact of the maximum 4% front-end sales load on Class A shares) were 5.61% and
4.82% for Class A shares and Class C shares, respectively.
Throughout most of fiscal 1997, the stock market continued its upward march,
while the bond market experienced lower bond prices and higher interest rates.
The Dow Jones Industrial Average (the Dow) gained in excess of 28% for the
calendar year, but one-third of its gain was attributed to just three stocks:
IBM, General Electric and United Technologies. The Dow and the S&P 500 Index
peaked in the first quarter of 1997, before retreating more than 5% from these
highs by March 31, 1997. Utility stocks were one of the worst performing sectors
of the Dow Jones Industry Groups for the year due to movement in interest rates
and the acceleration of deregulation. For the twelve months ended March 31,
1997, the S&P Utility Index returned 4.59%.
During the fiscal year 1997, there was a divergence among the four utility
sectors (electric, telecommunications, gas and water), with gas and water
utilities significantly outperforming the other two sectors. The Fund remained
diversified across all of these sectors with the heaviest concentration in the
electric area. While stock funds received record inflows of money, utility funds
had net outflows as investors chased after the higher returns in the growth
stock arena. Top performing stocks for the Fund included MCN Corp., Nicor, Inc.
and CINergy Corp. During the fiscal year, Bell Atlantic Corp., Enron Corp. and
CINergy Corp. were purchased into the Fund while Florida Progress Corp. and
Montana Power Co. were sold.
Looking forward, management expects volatility to continue in the utility sector
as long as the possibility for higher interest rates remains. Longer term, we
believe utilities are an attractive investment as the valuations and yields are
extremely compelling. As deregulation issues are resolved, quality utility
companies that are poised for competition and growth should thrive. The Fund
will continue to seek companies that are positioned favorably for the future and
have a strong potential for dividend increases, improving fundamentals,
financial stability and reasonable growth.
<TABLE>
<CAPTION>
Comparison of the Change in Value of a $10,000 Investment in the Utility Fund*
and the Standard & Poor's Utility Index
STANDARD & POOR'S UTILITY INDEX: UTILITY FUND (CLASS A):
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
<S> <C> <C> <C> <C> <C>
08/16/89 10,000 08/16/89 9,600
09/30/89 2.43% 10,243 09/30/89 0.73% 9,671
12/31/89 11.42% 11,412 12/31/89 6.72% 10,320
03/31/90 -7.45% 10,562 03/31/90 -1.99% 10,115
06/30/90 0.53% 10,618 06/30/90 0.28% 10,144
09/30/90 -4.50% 10,140 09/30/90 -2.86% 9,854
12/31/90 9.67% 11,120 12/31/90 7.19% 10,562
03/31/91 2.22% 11,367 03/31/91 4.61% 11,049
06/30/91 -4.20% 10,889 06/30/91 0.60% 11,115
09/30/91 7.90% 11,749 09/30/91 9.26% 12,144
12/31/91 8.49% 12,746 12/31/91 6.72% 12,960
03/31/92 -9.34% 11,556 03/31/92 -4.66% 12,356
06/30/92 7.79% 12,457 06/30/92 4.44% 12,905
09/30/92 7.88% 13,438 09/30/92 3.82% 13,398
12/31/92 2.53% 13,777 12/31/92 4.14% 13,953
03/31/93 10.79% 15,264 03/31/93 6.84% 14,906
06/30/93 1.86% 15,548 06/30/93 1.50% 15,130
09/30/93 6.70% 16,589 09/30/93 2.82% 15,556
12/31/93 -5.76% 15,634 12/31/93 -3.11% 15,073
03/31/94 -8.50% 14,305 03/31/94 -3.20% 14,591
06/30/94 -0.00% 14,304 06/30/94 -0.83% 14,469
09/30/94 0.45% 14,369 09/30/94 1.32% 14,660
12/31/94 -0.10% 14,355 12/31/94 0.74% 14,769
03/31/95 6.93% 15,349 03/31/95 2.43% 15,128
06/30/95 7.44% 16,491 06/30/95 5.03% 15,890
09/30/95 11.28% 18,350 09/30/95 6.90% 16,986
12/31/95 11.22% 20,409 12/31/95 9.96% 18,677
03/31/96 -4.78% 19,434 03/31/96 -1.46% 18,404
06/30/96 5.01% 20,408 06/30/96 4.77% 19,283
09/30/96 -3.31% 19,732 09/30/96 -3.27% 18,651
12/31/96 6.62% 21,038 12/31/96 5.92% 19,755
03/31/97 -3.38% 20,326 03/31/97 -1.61% 19,437
Past performance is not predictive of future performance.
Utility Fund
Average Annual Total Returns
1 Year 5 Years Since Inception
Class A 1.39% 8.59% 9.10%
Class C 4.82% --- 5.96%
*The chart above represents performance of Class A shares only, which will vary
from the performance of Class C shares based on the difference in loads and
fees paid by shareholders in the different classes. The initial public
offering of Class A shares commenced on August 15, 1989, and the initial
public offering of Class C shares commenced on August 2, 1993.
</TABLE>
<PAGE>
EQUITY FUND
MANAGEMENT DISCUSSION AND ANALYSIS
===============================================================================
The Equity Fund seeks long-term capital appreciation by investing primarily in
common stocks of companies that offer growth potential. The Fund's total returns
for the fiscal year ended March 31, 1997 (excluding the impact of the maximum 4%
front-end sales load for Class A shares) were 11.82% and 11.01% for Class A
shares and Class C shares, respectively.
Economic growth advanced at a greater than expected pace throughout the fiscal
year. Strong employment growth and high levels of consumer confidence translated
into increased spending and higher interest rates. Despite the strong economy,
inflation remained tame with some of the most-watched measures of inflation
flirting with their lowest levels in thirty years. Strong corporate earnings
provided a backdrop for higher stock prices. Yet most market gains were fairly
narrow as large capitalization stocks again outperformed in what could be
described as a "flight to quality" strategy. The Federal Reserve Board raised
short-term interest rates 0.25% in the first quarter of 1997, which led to a
brief market selloff. For the twelve months ended March 31, 1997, the S&P 500
Index returned 19.83%.
The Fund remained well-diversified during the fiscal year. Management continued
to emphasize quality, growth-oriented companies positioned to perform well in
their industries over the long term. Some of the Fund's holdings in the cyclical
and healthcare sectors of the equity market, however, adversely affected
performance as these sectors were subject to multiple selloffs throughout the
fiscal year. Holdings in financial services, technology and consumer staples
(non-cyclical) contributed positively to performance. Top performing stocks for
the Fund included Intel Corp., Bank of New York Co., Inc., General Electric Co.
and Bristol-Myers Squibb Co.
Despite the possibility of higher near-term interest rates, our outlook for
stock prices remains fairly positive. Management expects inflation to remain
under control, economic growth to moderate and corporate profits to continue
their upward climb, albeit at a slower pace. Companies will need to continue to
cut costs to remain competitive in the global economy as productivity and
efficiency become more important. Management anticipates continued investments
in the financial services, technology and healthcare sectors of the equity
market. The Fund will continue to seek opportunities in quality companies that
are leaders in their industries, with strong product lines and managements that
position their companies for future growth.
<TABLE>
<CAPTION>
Comparison of the Change in Value of a $10,000 Investment in the Equity Fund*
and the Standard & Poor's 500 Index
STANDARD & POOR'S 500 INDEX: EQUITY FUND (CLASS C):
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
<S> <C> <C> <C> <C> <C>
06/07/93 10,000 06/07/93 10,000
06/30/93 0.78% 10,078 06/30/93 0.10% 10,010
09/30/93 2.58% 10,338 09/30/93 1.20% 10,130
12/31/93 2.32% 10,578 12/31/93 -1.34% 9,994
03/31/94 -3.79% 10,177 03/31/94 -2.85% 9,709
06/30/94 0.42% 10,220 06/30/94 -4.04% 9,317
09/30/94 4.88% 10,718 09/30/94 5.05% 9,787
12/31/94 -0.02% 10,716 12/31/94 -0.37% 9,751
03/31/95 9.74% 11,760 03/31/95 6.86% 10,419
06/30/95 9.55% 12,883 06/30/95 6.48% 11,095
09/30/95 7.95% 13,907 09/30/95 7.19% 11,893
12/31/95 6.02% 14,744 12/31/95 7.43% 12,776
03/31/96 5.37% 15,535 03/31/96 3.49% 13,222
06/30/96 4.49% 16,232 06/30/96 4.35% 13,797
09/30/96 3.09% 16,734 09/30/96 2.23% 14,105
12/31/96 8.34% 18,129 12/31/96 2.74% 14,491
03/31/97 2.68% 18,615 03/31/97 1.29% 14,678
Past performance is not predictive of future performance.
Equity Fund
Average Annual Total Returns
1 Year Since Inception
Class A 7.35% 10.57%
Class C 11.01% 10.59%
*The chart above represents performance of Class C shares only, which will
vary from the performance of Class A shares based on the differences in loads
and fees paid by shareholders in the different classes. The initial public
offering of Class C shares commenced on June 7, 1993, and the initial public
offering of Class A shares commenced on August 2, 1993.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
March 31, 1997
===============================================================================
U.S. TREASURY
GOVERNMENT TOTAL
SECURITIES RETURN
FUND FUND
- -------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Investments in securities:
At acquisition cost...................... $ 19,990,769 $ 9,279,769
=============== ===============
At amortized cost........................ $ 20,000,988 $ 9,314,121
=============== ===============
At value (Note 2)........................ $ 19,781,936 $ 9,311,743
Investments in repurchase agreements (Note 2) 1,960,000 799,000
Cash ....................................... 2,994 433
Receivable for capital shares sold.......... 1,081 2,280
Receivable from Adviser (Note 4)............ -- 1,463
Interest receivable......................... 153,410 113
Other assets................................ 2,389 1,961
--------------- ---------------
TOTAL ASSETS............................. 21,901,810 10,116,993
--------------- --------------
LIABILITIES
Payable for capital shares redeemed......... 17,646 41,168
Dividends payable........................... 14,409 5,286
Payable to affiliates (Note 4).............. 16,690 4,600
Other accrued expenses and liabilities...... 9,850 6,567
--------------- ---------------
TOTAL LIABILITIES........................ 58,595 57,621
--------------- ---------------
NET ASSETS ................................. $ 21,843,215 $ 10,059,372
=============== ===============
Net assets consist of:
Paid-in capital............................. $ 26,526,256 $ 12,694,500
Accumulated net realized losses from
security transactions...................... (4,463,989) (2,632,750)
Net unrealized depreciation on
investments................................ (219,052) (2,378)
--------------- ---------------
Net assets.................................. $ 21,843,215 $ 10,059,372
=============== ===============
Shares of beneficial interest outstanding
(unlimited number
of shares authorized, no par value)(Note 5) 2,366,923 1,254,345
=============== ===============
Net asset value and redemption price
per share (Note 2)......................... $ 9.23 $ 8.02
=============== ===============
Maximum offering price per share (Note 2)... $ 9.42 $ 8.35
=============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
March 31, 1997
===============================================================================
UTILITY EQUITY
FUND FUND
- -------------------------------------------------------------------------------
ASSETS
Investments in securities:
<S> <C> <C>
At acquisition cost...................... $ 29,830,379 $ 10,669,330
=============== ===============
At amortized cost ....................... $ 29,819,096 $ 10,669,330
=============== ===============
At value (Note 2)........................ $ 36,453,797 $ 13,356,071
Investments in repurchase agreements (Note 2) 2,721,000 4,437,000
Cash ....................................... 574 --
Receivable for capital shares sold ......... 13,026 5,604
Receivable for securities sold.............. -- 355,038
Dividends and interest receivable........... 154,884 11,117
Other assets................................ 5,079 2,113
--------------- ---------------
TOTAL ASSETS............................. 39,348,360 18,166,943
--------------- ---------------
LIABILITIES
Bank overdraft.............................. -- 354,042
Payable for capital shares redeemed......... 82,008 39,013
Dividends payable........................... 35,727 733
Payable to affiliates (Note 4).............. 27,939 13,113
Other accrued expenses and liabilities...... 16,259 7,251
--------------- ---------------
TOTAL LIABILITIES........................ 161,933 414,152
--------------- ---------------
NET ASSETS ................................. $ 39,186,427 $ 17,752,791
=============== ===============
Net assets consist of:
Paid-in capital............................. $ 32,299,943 $ 14,901,612
Accumulated net realized gains from
security transactions...................... 251,541 164,431
Undistributed net investment income......... 242 7
Net unrealized appreciation on investments.. 6,634,701 2,686,741
--------------- ---------------
Net assets.................................. $ 39,186,427 $ 17,752,791
=============== ===============
PRICING OF CLASS A SHARES
Net assets attributable to Class A shares... $ 36,087,240 $ 14,982,638
=============== ===============
Shares of beneficial interest outstanding
(unlimited number f shares authorized,
no par value) (Note 5)..................... 2,900,247 1,088,598
=============== ===============
Net asset value and redemption price
per share (Note 2)......................... $ 12.44 $ 13.76
=============== ===============
Maximum offering price per share (Note 2)... $ 12.96 $ 14.33
=============== ===============
PRICING OF CLASS C SHARES
Net assets attributable to Class C shares .. $ 3,099,187 $ 2,770,153
=============== ===============
Shares of beneficial interest outstanding
(unlimited number of shares authorized,
no par value) (Note 5)..................... 249,358 201,191
=============== ===============
Net asset value, offering price and
redemption price per share (Note 2)........ $ 12.43 $ 13.77
=============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
For the Year Ended March 31, 1997
===============================================================================
U.S. TREASURY
GOVERNMENT TOTAL
SECURITIES RETURN
FUND FUND
- -------------------------------------------------------------------------------
INVESTMENT INCOME
<S> <C> <C>
Interest................................. $ 1,581,093 $ 673,624
--------------- ---------------
EXPENSES
Investment advisory fees (Note 4)........ 168,101 92,874
Accounting services fees (Note 4)........ 39,000 33,000
Transfer agent fees (Note 4)............. 20,620 29,782
Postage and supplies..................... 13,323 18,569
Professional fees........................ 11,623 8,623
Registration fees........................ 9,363 9,435
Custodian fees........................... 7,379 4,674
Trustees' fees and expenses.............. 5,948 5,948
Insurance expense........................ 3,536 2,678
Distribution expenses (Note 4)........... 1,934 1,098
Reports to shareholders.................. 1,304 1,648
Other expenses........................... 4,326 2,461
--------------- ---------------
TOTAL EXPENSES......................... 286,457 210,790
Fees waived by the Adviser (Note 4)........ (17,500) (56,000)
--------------- ---------------
NET EXPENSES........................... 268,957 154,790
--------------- ---------------
NET INVESTMENT INCOME....................... 1,312,136 518,834
--------------- ---------------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS
Net realized losses from security
transactions................................ (386,798) (561,549)
Net change in unrealized
appreciation/depreciation on investments.... (119,168) 286,795
--------------- ---------------
NET REALIZED AND UNREALIZED LOSSES
ON INVESTMENTS ....................... (505,966) (274,754)
--------------- ---------------
NET INCREASE IN NET ASSETS FROM OPERATIONS.. $ 806,170 $ 244,080
=============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
For the Year Ended March 31, 1997
===============================================================================
UTILITY EQUITY
FUND FUND
- -------------------------------------------------------------------------------
INVESTMENT INCOME
<S> <C> <C>
Dividends................................ $ 1,765,979 $ 165,852
Interest ................................ 320,037 157,477
--------------- ---------------
TOTAL INVESTMENT INCOME................ 2,086,016 323,329
--------------- ---------------
EXPENSES
Investment advisory fees (Note 4)......... 319,201 112,182
Accounting services fees (Note 4)......... 42,000 42,000
Transfer agent fees, Class A (Note 4)..... 37,542 12,000
Transfer agent fees, Class C (Note 4)..... 12,000 12,000
Distribution expenses, Class A (Note 4)... 48,663 791
Distribution expenses, Class C (Note 4)...... 15,492 6,027
Postage and supplies..................... 23,180 9,341
Registration fees, Common ............... 3,712 2,461
Registration fees, Class A............... 7,294 6,348
Registration fees, Class C............... 6,104 5,428
Professional fees........................ 18,123 9,123
Custodian fees .......................... 6,595 5,799
Trustees' fees and expenses.............. 5,948 5,948
Insurance expense ....................... 5,273 1,953
Reports to shareholders.................. 3,086 959
Other expenses........................... 3,252 1,761
--------------- ---------------
TOTAL EXPENSES......................... 557,465 234,121
Fees waived by the Adviser (Note 4)...... -- (21,000)
Class A expenses reimbursed by the
Adviser (Note 4)........................ -- (5,834)
--------------- ---------------
NET EXPENSES........................... 557,465 207,287
--------------- ---------------
NET INVESTMENT INCOME....................... 1,528,551 116,042
--------------- ---------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security
transactions............................ 349,605 482,875
Net change in unrealized
appreciation/depreciation on investments. 517,054 952,569
--------------- ---------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 866,659 1,435,444
--------------- ---------------
NET INCREASE IN NET ASSETS FROM OPERATIONS.. $ 2,395,210 $ 1,551,486
=============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended March 31, 1997 and 1996
=============================================================================================================
U.S. GOVERNMENT TREASURY TOTAL
SECURITIES FUND RETURN FUND
1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
<S> <C> <C> <C> <C>
Net investment income....................... $ 1,312,136 $ 1,542,510 $ 518,834 $ 998,195
Net realized gains (losses) from security
transactions.............................. (386,798) 1,132,774 (561,549) 19,746
Net change in unrealized appreciation/
depreciation on investments............... (119,168) (506,128) 286,795 (305,916)
------------ ------------- ----------- -----------
Net increase in net assets from operations..... 806,170 2,169,156 244,080 712,025
------------ ------------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income.................. (1,312,136) (1,542,510) (518,834) (998,195)
------------ ------------- ----------- -----------
Decrease in net assets from distributions
to shareholders........................... (1,312,136) (1,542,510) (518,834) (998,195)
------------ ------------- ----------- -----------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 5):
Proceeds from shares sold................... 2,971,422 3,262,088 131,548 541,010
Net asset value of shares issued in
reinvestment of distributions to shareholders 1,068,202 1,232,943 433,120 863,694
Payments for shares redeemed................. (6,606,868) (6,379,727) (5,574,811) (11,748,023)
------------ ------------- ----------- -----------
Net decrease in net assets from capital
share transactions.......................... (2,567,244) (1,884,696) (5,010,143) (10,343,319)
------------ ------------- ----------- ------------
TOTAL DECREASE IN NET ASSETS .................. (3,073,210) (1,258,050) (5,284,897) (10,629,489)
NET ASSETS:
Beginning of year........................... 24,916,425 26,174,475 15,344,269 25,973,758
------------ ------------- ------------- -------------
End of year................................. $ 21,843,215 $ 24,916,425 $10,059,372 $15,344,269
============ ============= ============= =============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended March 31, 1997 and 1996
==============================================================================================================
UTILITY EQUITY
FUND FUND
1997 1996 1997 1996
- --------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
<S> <C> <C> <C> <C>
Net investment income....................... $ 1,528,551 $ 1,706,915 $ 116,042 $ 68,491
Net realized gains from security transactions 349,605 338,447 482,875 292,780
Net change in unrealized appreciation/
depreciation on investments............... 517,054 6,353,364 952,569 1,472,570
------------ ------------ ----------- -----------
Net increase in net assets from operations..... 2,395,210 8,398,726 1,551,486 1,833,841
------------ ------------ ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income, Class A......... (1,429,043) (1,586,046) (112,251) (59,987)
From net investment income, Class C......... (99,266) (120,869) (3,811) (8,477)
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........................... (1,595,846) (1,706,915) (168,635) (68,464)
------------ ------------ ---------- ---------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 5):
CLASS A
Proceeds from shares sold................... 3,695,972 5,363,503 7,488,016 4,389,037
Net asset value of shares issued in
reinvestment of distributions to
shareholders.............................. 1,310,464 1,407,457 149,729 57,517
Payments for shares redeemed................ (10,075,932) (12,476,946) (2,279,007) (1,513,954)
------------ ------------ ----------- ----------
Net increase (decrease) in net assets from
Class A share transactions.................. (5,069,496) (5,705,986) 5,358,738 2,932,600
------------ ------------ ----------- ----------
CLASS C
Proceeds from shares sold................... 978,844 1,386,159 665,009 485,970
Net asset value of shares issued in
reinvestment of distributions to
shareholders.............................. 90,743 111,439 12,637 8,355
Payments for shares redeemed................ (1,723,275) (1,984,950) (604,567) (549,348)
------------ ------------- ----------- ----------
Net increase (decrease) in net assets from
Class C share transactions.................. (653,688) (487,352) 73,079 (55,023)
----------- ----------- ---------- ----------
Net increase (decrease) from capital
share transactions............................ (5,723,184) (6,193,338) 5,431,817 2,877,577
----------- ------------ ----------- ----------
TOTAL INCREASE (DECREASE) IN NET ASSETS ....... (4,923,820) 498,473 6,814,668 4,642,954
NET ASSETS:
Beginning of year........................... 44,110,247 43,611,774 10,938,123 6,295,169
------------ ------------ ----------- ----------
End of year................................. $ 39,186,427 $ 44,110,247 $17,752,791 $10,938,123
============ ============ ============ ===========
UNDISTRIBUTED NET INVESTMENT INCOME ......... $ 242 $ -- $ 7 $ 27
============ ============== ============ ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES FUND
FINANCIAL HIGHLIGHTS
===============================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
===============================================================================================================
Year Ended March 31,
===============================================================================================================
1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year............ $ 9.43 $ 9.22 $ 9.85 $ 10.47 $ 10.18
-------- -------- -------- --------- ----------
Income from investment operations:
Net investment income........................ 0.55 0.56 0.58 0.64 0.69
Net realized and unrealized
gains (losses) on investments.............. (0.20) 0.21 (0.59) (0.59) 0.47
-------- --------- -------- --------- ----------
Total from investment operations................ 0.35 0.77 (0.01) 0.05 1.16
---------- --------- -------- --------- ----------
Less distributions:
Dividends from net investment income......... (0.55) (0.56) (0.58) (0.64) (0.69)
Distributions from net realized gains........ -- -- (0.04) (0.03) (0.18)
---------- --------- -------- --------- ----------
Total distributions............................. (0.55) (0.56) (0.62) (0.67) (0.87)
---------- --------- -------- --------- ----------
Net asset value at end of year.................. $ 9.23 $ 9.43 $ 9.22 $ 9.85 $ 10.47
========== ========= ======== ======== ==========
Total return(A) ................................ 3.76% 8.39% 0.06% 0.30% 11.71%
========== ========= ======== ======== =========
Net assets at end of year (000's) .............. $ 21,843 $ 24,916 $ 26,174 $ 40,479 $31,633
========== ========= ======== ======== =========
Ratio of expenses to average net assets(B) ..... 1.20% 1.20% 1.20% 1.20% 1.20%
Ratio of net investment income to
average net assets......................... 5.84% 5.82% 6.26% 6.14% 6.61%
Portfolio turnover rate......................... 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 1.28% and 1.24% for the years ended March 31, 1997
and 1996, respectively (Note 4).
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TREASURY TOTAL RETURN FUND
FINANCIAL HIGHLIGHTS
=================================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
=================================================================================================================
Year Ended March 31,
=================================================================================================================
1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year............ $ 8.22 $ 8.36 $ 8.95 $ 9.70 $ 9.10
---------- --------- ---------- -------- ---------
Income from investment operations:
Net investment income........................ 0.34 0.38 0.43 0.37 0.55
Net realized and unrealized
gains (losses) on investments.............. (0.20) (0.14) (0.59) (0.39) 0.87
---------- --------- --------- --------- ---------
Total from investment operations................ 0.14 0.24 (0.16) (0.02) 1.42
---------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income ........ (0.34) (0.38) (0.43) (0.37) (0.55)
Distributions from net realized gains ....... -- -- -- (0.36) (0.27)
---------- --------- ---------- --------- ----------
Total distributions............................. (0.34) (0.38) (0.43) (0.73) (0.82)
---------- --------- ---------- --------- ----------
Net asset value at end of year.................. $ 8.02 $ 8.22 $ 8.36 $ 8.95 $ 9.70
========== ========= ========== ========= ==========
Total return(A) ................................ 1.73% 2.95% (1.75%) (0.54%) 16.21%
========== ========= ========== ========= ==========
Net assets at end of year (000's)............... $ 10,059 $ 15,344 $ 25,974 $ 32,190 $43,427
========== ========= ========= ========= ==========
Ratio of expenses to average net assets(B) ..... 1.25% 1.25% 1.25% 1.25% 1.25%
Ratio of net investment income to average net assets 4.19% 4.66% 5.06% 3.84% 5.82%
Portfolio turnover rate......................... 135% 0% 63% 526% 161%
<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 1.70%, 1.42% and 1.37% for the years ended March 31,
1997, 1996 and 1995, respectively (Note 4).
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UTILITY FUND - CLASS A
FINANCIAL HIGHLIGHTS
================================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
================================================================================================================
Year Ended March 31,
================================================================================================================
1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year............ $ 12.24 $ 10.47 $ 10.52 $ 11.34 $ 10.58
---------- --------- ---------- --------- ----------
Income from investment operations:
Net investment income........................ 0.46 0.47 0.43 0.37 0.48
Net realized and unrealized
gains (losses) on investments.............. 0.22 1.77 (0.05) (0.59) 1.62
---------- --------- ---------- --------- ----------
Total from investment operations................ 0.68 2.24 0.38 (0.22) 2.10
---------- --------- ---------- --------- ----------
Less distributions:
Dividends from net investment income......... (0.46) (0.47) (0.43) (0.37) (0.48)
Distributions from net realized gains........ (0.02) -- -- (0.23) (0.86)
---------- --------- ---------- --------- ----------
Total distributions............................. (0.48) (0.47) (0.43) (0.60) (1.34)
---------- --------- ---------- --------- ----------
Net asset value at end of year.................. $ 12.44 $ 12.24 $ 10.47 $ 10.52 $ 11.34
========== ========= ========== ========= ==========
Total return(A) ................................ 5.61% 21.65% 3.68% (2.11%) 20.64%
========== ========= ========== ========= ==========
Net assets at end of year (000's)............... $ 36,087 $ 40,424 $ 40,012 $ 40,373 $42,051
========== ========= ========== ========= ==========
Ratio of expenses to average net assets......... 1.25% 1.25% 1.25% 1.25% 1.40%
Ratio of net investment income to average net assets 3.65% 3.97% 4.06% 3.32% 4.41%
Portfolio turnover rate......................... 3% 11% 17% 91% 137%
Average commission rate per share(B)............ $ 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.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UTILITY FUND - CLASS C
FINANCIAL HIGHLIGHTS
=================================================================================================================
Per Share Data for a Share Outstanding Throughout Each Period
=================================================================================================================
Period Ended
Year Ended March 31, March 31,
1997 1996 1995 1994(A)
- -----------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
Net asset value at beginning of period......... $ 12.23 $ 10.46 $ 10.51 $ 11.55
------------ ------------ ----------- -----------
Income from investment operations:
Net investment income....................... 0.35 0.37 0.35 0.23
Net realized and unrealized gains
(losses) on investments..................... 0.24 1.78 (0.04) (0.81)
------------ ------------ ----------- -----------
Total from investment operations............... 0.59 2.15 0.31 (0.58)
------------ ------------ ----------- -----------
Less distributions:
Dividends from net investment income........ (0.37) (0.38) (0.36) (0.23)
Distributions from net realized gains....... (0.02) -- -- (0.23)
------------ ------------ ----------- -----------
Total distributions............................ (0.39) (0.38) (0.36) (0.46)
------------ ------------ ------------- -------------
Net asset value at end of period............... $ 12.43 $ 12.23 $ 10.46 $ 10.51
============ ============ =========== ===========
Total return(B) ............................... 4.82% 20.78% 3.00% 7.89%)(D)
============ ============= =========== ===========
Net assets at end of period (000's)............ $ 3,099 $ 3,686 $ 3,599 $ 1,742
============ ============= =========== ===========
Ratio of expenses to average net assets ....... 2.00% 2.00% 2.00% 2.00%(D)
Ratio of net investment income to
average net assets........................... 2.89% 3.19% 3.41% 2.19%(D)
Portfolio turnover rate........................ 3% 11% 17% 91%(D)
Average commission rate per share(C)........... $ 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 - CLASS A
FINANCIAL HIGHLIGHTS
===============================================================================================================
Per Share Data for a Share Outstanding Throughout Each Period
===============================================================================================================
Period Ended
Year Ended March 31, March 31,
1997 1996 1995 1994(A)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period......... $ 12.45 $ 9.84 $ 9.26 $ 10.02
------------ ------------- ----------- -----------
Income from investment operations:
Net investment income....................... 0.12 0.13 0.15 0.08
Net realized and unrealized gains (losses)
on investments............................. 1.35 2.60 0.59 (0.34)
------------ ------------- ----------- -----------
Total from investment operations............... 1.47 2.73 0.74 (0.26)
------------ ------------- ----------- -----------
Less distributions:
Dividends from net investment income........ (0.12) (0.12) (0.16) (0.08)
Distributions from net realized gains....... (0.04) -- -- (0.42)
------------ ------------- ----------- -----------
Total distributions............................ (0.16) (0.12) (0.16) (0.50)
------------ ------------- ----------- -----------
Net asset value at end of period............... $ 13.76 $ 12.45 $ 9.84 $ 9.26
============ ============= =========== ===========
Total return(B) ............................... 11.82% 27.90% 8.07% (3.98%)(E)
============ ============= =========== =============
Net assets at end of period (000's)............ $ 14,983 $ 8,502 $ 4,300 $ 3,346
============ ============= =========== =============
Ratio of expenses to average net assets(C) ... 1.25% 1.25% 1.25% 1.24%(E)
Ratio of net investment income to
average net assets............................ 0.91% 1.06% 1.57% 0.82%(E)
Portfolio turnover rate........................ 38% 38% 159% 109%(E)
Average commission rate per share(D)........... $ 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 (Note 4).
(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 - CLASS C
FINANCIAL HIGHLIGHTS
===============================================================================================================
Per Share Data for a Share Outstanding Throughout Each Period
===============================================================================================================
Period Ended
Year Ended March 31, March 31,
1997 1996 1995 1994(A)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period......... $ 12.46 $ 9.86 $ 9.26 $ 10.00
------------ ------------ ------------ -----------
Income from investment operations:
Net investment income....................... 0.02 0.05 0.10 0.03
Net realized and unrealized gains (losses)
on investments............................. 1.35 2.60 0.57 (0.32)
------------ ------------ ----------- -----------
Total from investment operations............... 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............... $ 13.77 $ 12.46 $ 9.86 $ 9.26
============ ============ =========== ===========
Total return(B) ............................... 11.01% 26.90% 7.32% (3.58%)(E)
============ ============ =========== ===========
Net assets at end of period (000's)............ $ 2,770 $ 2,436 $ 1,995 $ 5,857
============ ============ =========== ===========
Ratio of expenses to average net assets(C) ... 2.00% 2.00% 2.00% 1.94%(E)
Ratio of net investment income to average
net assets.................................... 0.15% 0.38% 0.68% 0.58%(E)
Portfolio turnover rate........................ 38% 38% 159% 109%(E)
Average commission rate per share(D)........... $ 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 (Note 4).
(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>
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
===============================================================================
1. ORGANIZATION
The U.S. Government Securities Fund, the Treasury Total Return Fund, the Utility
Fund and the Equity Fund (collectively, the Funds) are each a diversified series
of shares of Countrywide Strategic Trust (the Trust). The Trust (formerly
Midwest Strategic 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 U.S. Government Securities Fund seeks high current income, consistent with
the protection of capital, by investing primarily in obligations issued or
guaranteed as to principal and interest by the United States Government, its
agencies or instrumentalities (U.S. Government obligations). It is anticipated
that the Fund will invest primarily in mortgage-backed securities issued or
guaranteed by the Government National Mortgage Association, the Federal Home
Loan Mortgage Corporation or the Federal National Mortgage Association.
The Treasury Total Return Fund seeks the highest level of total return over the
long term, consistent with the protection of capital, by investing primarily in
direct obligations of the United States Treasury. High current income is a
secondary objective. The maturities of the U.S. Treasury obligations in which
the Fund invests will be allocated based upon interest rate trends projected by
the Adviser.
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 Utility Fund and the Equity Fund each offer two classes of shares: Class A
shares (sold subject to a maximum 4% front-end sales load 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 an identical
interest 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 following is a summary of the Funds' significant accounting policies:
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 price as obtained from
one or more of the major market makers for such securities or are valued based
on estimates of market values obtained from yield data relating to instruments
or securities with similar characteristics. 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.
<PAGE>
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 the U.S. Government
Securities Fund and the Treasury Total Return 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 U.S.
Government Securities 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
maximum offering price per share of the Treasury Total Return 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 redemption price per share of each Fund is
equal to the net asset value per share.
The net asset value per share of Class A shares and Class C shares of the
Utility Fund and the Equity Fund is calculated daily for each class 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 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 redemption price per share of Class A shares and Class C shares of the
Utility Fund and the Equity Fund is equal to the net asset value per share.
However, Class C shares of each 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
are declared daily and paid on the last business day of each month to
shareholders of the U.S. Government Securities Fund and the Treasury Total
Return Fund. Dividends arising from net investment income, if any, are declared
and paid quarterly to shareholders of the Utility Fund and the Equity 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 the Equity Fund is allocated daily to each class of shares based upon its
proportionate share of total net assets of the Fund. Class specific expenses are
charged directly to the class incurring the expense. Common expenses which are
not attributable to a specific class are allocated daily to each class of shares
based upon its proportionate share of total net assets of the Fund.
Security transactions -- Security transactions are accounted for on the trade
date. Securities sold are valued on a specific identification basis.
Securities traded on a to-be-announced basis -- The U.S. Government Securities
Fund frequently 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.
<PAGE>
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 revenues 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 the federal income tax cost of portfolio
investments (excluding repurchase agreements) as of March 31, 1997:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
U.S. Govt. Treasury Total
Securities Return Utility Equity
Fund Fund Fund Fund
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross unrealized appreciation.................. $ 21,426 $ -- $ 6,948,075 $ 2,805,286
Gross unrealized depreciation.................. (240,478) (2,378) (313,374) (118,545)
------------ ------------ ----------- -------------
Net unrealized appreciation (depreciation)..... $ (219,052) $ (2,378) $ 6,634,701 $ 2,686,741
============ ============ =========== ===========
Federal income tax cost........................ $ 20,000,988 $ 9,314,121 $29,819,096 $10,669,330
============ ============ =========== ===========
- --------------------------------------------------------------------------------------------------------------
</TABLE>
As of March 31, 1997, the U.S. Government Securities Fund and the Treasury Total
Return Fund, had capital loss carryforwards for federal income tax purposes of
$4,463,989 and $2,088,542, respectively, none of which expire prior to March 31,
2002. These capital loss carryforwards may be utilized in future years to offset
net realized capital gains prior to distributing such gains to shareholders. The
Treasury Total Return Fund also elected to defer until the Fund's tax year
ending March 31, 1998, $544,208 of net realized losses from security
transactions which were incurred after October 31, 1996.
3. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) were as follows for
the year ended March 31, 1997:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
U.S. Govt. Treasury Total
Securities Return Utility Equity
Fund Fund Fund Fund
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases of investment securities............. $ 16,094,659 $ 10,535,063 $ 1,250,475 $ 7,279,891
============ ============ =========== ===========
Proceeds from sales and maturities
of investment securities..................... $ 20,275,487 $ 19,483,499 $ 5,175,139 $ 4,515,821
============ ============ =========== ===========
- -------------------------------------------------------------------------------------------------------------
</TABLE>
4. TRANSACTIONS WITH AFFILIATES
The Chairman and the President of the Trust are also officers of Countrywide
Financial Services, Inc., whose subsidiaries include Countrywide Investments,
Inc. (the Adviser), the Trust's investment adviser and principal underwriter,
and Countrywide Fund Services, Inc. (CFS), the Trust's transfer agent,
shareholder service agent and accounting services agent. Countrywide Financial
Services, Inc. is a wholly-owned subsidiary of Countrywide Credit Industries,
Inc., a New York Stock Exchange listed company principally engaged in the
business of residential mortgage lending.
<PAGE>
MANAGEMENT AGREEMENTS
Each Fund's investments are managed by the Adviser under the terms of separate
Management Agreements. Under the terms of the Management Agreements, each Fund
pays the Adviser a fee, which is computed and accrued daily and paid monthly, at
an annual rate of 0.75% of its 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.
In order to reduce the operating expenses of the U.S. Government Securities Fund
and the Treasury Total Return Fund for the year ended March 31, 1997, the
Adviser voluntarily waived advisory fees of $17,500 and $56,000, respectively.
In order to reduce the operating expenses of the Equity Fund, the Adviser
voluntarily waived advisory fees of $21,000 and reimbursed the Fund for $5,834
of Class A expenses for the same period.
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 for
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 $21.00 per shareholder account from each of the U.S. Government
Securities Fund and the Treasury Total Return Fund and $17.00 per shareholder
account from each of the Utility Fund and Equity Fund, subject to a $1,000
minimum monthly fee for each Fund, or for each class of shares of a Fund, as
applicable. In addition, each Fund pays out-of-pocket expenses including, but
not limited to, postage and supplies.
ACCOUNTING SERVICES AGREEMENT
Under the terms of the Accounting Services Agreement between the Trust and CFS,
CFS calculates the daily net asset value per share and maintains the financial
books and records of each Fund. For these services, CFS receives a monthly fee,
based on current asset levels, of $3,250 from the U.S. Government Securities
Fund, $2,750 from the Treasury Total Return Fund, and $3,500 from each of the
Utility Fund and the Equity Fund. In addition, each Fund pays certain
out-of-pocket expenses incurred by CFS in obtaining valuations of such Fund's
portfollio 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
$504, $750, $5,717, and $3,367 from underwriting and broker commissions on the
sale of shares of the U.S. Government Securities Fund, the Treasury Total Return
Fund, the Utility Fund and the Equity Fund, respectively, for the year ended
March 31, 1997. In addition, the Adviser collected $1,141 and $505 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.
<PAGE>
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 years ended March 31, 1997 and 1996:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
U.S. Government Treasury Total
Securities Fund Return Fund
1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold.................................... 317,801 343,417 16,063 64,654
Shares issued in reinvestment of distributions
to shareholders............................. 114,706 129,033 53,010 103,352
Shares redeemed................... (707,804) (667,998) (681,539) (1,406,629)
----------- ----------- ----------- -----------
Net decrease in shares outstanding............. (275,297) (195,548) (612,466) (1,238,623)
Shares outstanding, beginning of year.......... 2,642,220 2,837,768 1,866,811 3,105,434
----------- ----------- ----------- -----------
Shares outstanding, end of year................ 2,366,923 2,642,220 1,254,345 1,866,811
=========== =========== =========== ===========
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Utility Equity
Fund Fund
1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold.................................... 295,396 454,436 562,866 376,432
Shares issued in reinvestment of distributions
to shareholders............................. 104,692 120,422 11,085 5,108
Shares redeemed................................ (802,704) (1,093,005) (168,288) (135,368)
---------- ---------- --------- ---------
Net increase (decrease) in shares outstanding.. (402,616) (518,147) 405,663 246,172
Shares outstanding, beginning of year.......... 3,302,863 3,821,010 682,935 436,763
---------- ---------- --------- ---------
Shares outstanding, end of year................ 2,900,247 3,302,863 1,088,598 682,935
========== ========== ========== ==========
CLASS C
Shares sold.................................... 79,210 120,511 50,018 42,510
Shares issued in reinvestment of distributions
to shareholders............................. 7,261 9,544 930 775
Shares redeemed................................ (138,592) (172,643) (45,330) (50,111)
---------- ---------- ---------- ---------
Net increase (decrease) in shares outstanding.. (52,121) (42,588) 5,618 (6,826)
Shares outstanding, beginning of year.......... 301,479 344,067 195,573 202,399
---------- ---------- ---------- ---------
Shares outstanding, end of year................ 249,358 301,479 201,191 195,573
============ ========== ========== ==========
- --------------------------------------------------------------------------------------------------------------
</TABLE>
6. MANDATORY REDEMPTION OF TREASURY TOTAL RETURN FUND (UNAUDITED)
On May 19, 1997, subsequent to the date of these financial statements and the
related auditors' report, the Board of Trustees determined to exercise its
authority pursuant to the Trust's Agreement and Declaration of Trust to require
the redemption of all outstanding shares of the Treasury Total Return Fund. This
mandatory redemption will occur on or about July 15, 1997.
<PAGE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS
March 31, 1997
===========================================================================================================
Par Market
===========================================================================================================
Value U.S. GOVERNMENT AGENCY ISSUES-- 90.6% Value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
$ 500,000 Federal Home Loan Bank, 7.00%, 8/28/02..................................... $ 493,357
400,000 Federal Home Loan Mortgage Corp., 6.56%, 3/12/03........................... 388,935
2,000,000 Federal Home Loan Mortgage Corp., 7.05%, 6/08/05........................... 1,959,816
1,558,238 Federal Home Loan Mortgage Corp. #E00228, 6.50%, 7/01/08................... 1,513,688
1,971,329 Federal Home Loan Mortgage Corp. #G30054, 7.50%, 9/01/16................... 1,957,550
1,908,859 Federal National Mortgage Assoc. #250689, 7.50%, 9/01/03................... 1,924,416
1,011,461 Federal National Mortgage Assoc. #50811, 7.50%, 12/01/12................... 1,005,261
1,589,694 Federal National Mortgage Assoc. #190666, 7.00%, 3/01/14................... 1,547,868
2,580,975 Federal National Mortgage Assoc. #220114, 7.00%, 6/01/23................... 2,483,930
2,788,540 Federal National Mortgage Assoc. #317691, 7.00%, 8/01/25................... 2,672,565
986,943 Federal National Mortgage Assoc. #351694, 7.50%, 11/01/26.................. 969,829
986,707 Federal National Mortgage Assoc. #358484, 7.50%, 11/01/26.................. 969,597
1,872,116 Government National Mortgage Assoc. #319358, 8.00%, 4/15/22................ 1,895,124
- --------------- ---------------
$ 20,154,862 TOTAL U.S. GOVERNMENT AGENCY ISSUES
===============
(Amortized Cost $20,000,988)............................................... $ 19,781,936
---------------
<CAPTION>
===============================================================================================================
Face Market
Amount REPURCHASE AGREEMENTS(1)-- 9.0% Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
$ 1,960,000 Dean Witter Reynolds, Inc., 6.25%, dated 3/31/97, due 4/01/97,
repurchase proceeds $1,960,340.......................................... $ 1,960,000
- --------------- ---------------
$ 1,960,000 TOTAL REPURCHASE AGREEMENTS ............................................... $ 1,960,000
=============== ---------------
TOTAL U.S. GOVERNMENT AGENCY ISSUES
AND REPURCHASE AGREEMENTS-- 99.6% ...................................... $ 21,741,936
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.4% .............................. 101,279
---------------
NET ASSETS-- 100.0% ....................................................... $ 21,843,215
===============
<FN>
(1) Repurchase agreements are fully collateralized by U.S. Government
obligations.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TREASURY TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
March 31, 1997
===============================================================================================================
Par Market
Value U.S. TREASURY OBLIGATIONS -- 92.6% Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
$ 9,400,000 U.S. Treasury Bills, 6/05/97............................................... $ 9,311,743
- --------------- ---------------
$ 9,400,000 TOTAL U.S. TREASURY OBLIGATIONS
===============
(Amortized Cost $9,314,121)................................................ $ 9,311,743
---------------
<CAPTION>
================================================================================================================
Face Market
Amount REPURCHASE AGREEMENTS(1)-- 7.9% Value
- ----------------------------------------------------------------------------------------------------------------
$ 799,000 Fifth Third Bank, 5.09%, dated 3/31/97, due 4/01/97,
repurchase proceeds $799,113............................................ $ 799,000
- ---------------
$ 799,000 TOTAL REPURCHASE AGREEMENTS ............................................... $ 799,000
=============== -------------
TOTAL U.S. TREASURY OBLIGATIONS AND
REPURCHASE AGREEMENTS -- 100.5% ........................................ $ 10,110,743
LIABILITIES IN EXCESS OF OTHER ASSETS-- (0.5)% ............................ (51,371)
-------------
NET ASSETS-- 100.0% ....................................................... $ 10,059,372
=============
<FN>
(1) Repurchase agreements are fully collateralized by U.S. Treasury obligations.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UTILITY FUND
PORTFOLIO OF INVESTMENTS
March 31, 1997
===============================================================================
Market
COMMON STOCK -- 87.6% Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C>
ELECTRIC UTILITIES -- 46.3%
Baltimore Gas & Electric Co ................ 50,050 $ 1,338,838
CMS Energy Corp............................. 60,000 1,972,500
Central Louisiana Electric.................. 30,000 787,500
CINergy Corp................................ 50,000 1,706,250
DPL, Inc.................................... 50,000 1,206,250
Dominion Resources, Inc..................... 30,000 1,091,250
Duke Power Co............................... 50,000 2,206,250
FPL Group, Inc.............................. 50,000 2,206,250
Kansas City Power & Light Co................ 60,000 1,680,000
Northern States Power Co.................... 46,000 2,179,250
Scana Corp.................................. 70,000 1,776,250
---------------
$ 18,150,588
---------------
TELECOMMUNICATIONS -- 24.7%
Ameritech Corp.............................. 35,000 $ 2,152,500
AT&T Corp................................... 30,000 1,042,500
Bell Atlantic Corp.......................... 25,000 1,521,875
BellSouth Corp.............................. 50,000 2,112,500
GTE Corp.................................... 50,000 2,331,250
Lucent Technologies, Inc.................... 9,722 512,835
---------------
$ 9,673,460
--------------
GAS COMPANIES -- 12.9%
Enron Corp.................................. 15,000 $ 570,000
Indiana Energy, Inc......................... 15,000 369,375
MCN Corp.................................... 70,000 1,968,750
Nicor, Inc.................................. 20,000 640,000
Oneok, Inc.................................. 25,000 650,000
Wicor, Inc.................................. 25,000 850,000
---------------
$ 5,048,125
---------------
WATER COMPANIES -- 3.7%
American Water Works, Inc................... 70,000 $ 1,470,000
---------------
TOTAL COMMON STOCK (Cost $27,728,589)....... $ 34,342,173
---------------
<CAPTION>
===============================================================================
Par Market
CORPORATE BONDS -- 5.4% Value Value
- -------------------------------------------------------------------------------
<S> <C> <C>
Dayton Power & Light Co., 8.40%, 12/01/22... $ 1,000,000 $ 1,024,734
New York Telephone Co., 9.375%, 7/15/31..... 1,000,000 1,086,890
--------------- ---------------
TOTAL CORPORATE BONDS
(Amortized Cost $2,090,507) .............. $ 2,000,000 $ 2,111,624
=============== ---------------
TOTAL INVESTMENTS AT VALUE-- 93.0%
(Amortized Cost $29,819,096)............... $ 36,453,797
---------------
<PAGE>
<CAPTION>
REPURCHASE AGREEMENTS(1) -- 7.0% Face Market
Value Value
- -------------------------------------------------------------------------------
<S> <C> <C>
Dean Witter Reynolds, Inc., 6.25%,
dated 3/31/97, due 4/01/97,
repurchase proceeds $2,721,472........... $ 2,721,000 $ 2,721,000
--------------- ---------------
TOTAL REPURCHASE AGREEMENTS ................ $ 2,721,000 $ 2,721,000
=============== ---------------
TOTAL INVESTMENTS AND REPURCHASE
AGREEMENTS AT VALUE-- 100.0%............. $ 39,174,797
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.0% 11,630
---------------
NET ASSETS-- 100.0%......................... $ 39,186,427
===============
<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
March 31, 1997
===============================================================================
Market
COMMON STOCK -- 75.2% Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER, NON-CYCLICAL -- 23.3%
Albertson's, Inc............................ 15,000 $ 510,000
Columbia/HCA Healthcare Corp................ 12,000 403,500
Newell Co................................... 10,000 335,000
PepsiCo, Inc................................ 14,700 479,588
Pfizer, Inc................................. 8,000 673,000
Procter & Gamble Co......................... 4,000 460,000
Sara Lee Corp............................... 10,000 405,000
Schering-Plough Corp........................ 6,000 436,500
United Healthcare Corp...................... 9,000 428,625
---------------
$ 4,131,213
---------------
TECHNOLOGY -- 14.2%
Compaq Computer Corp.(1).................... 4,000 306,500
Electronic Data Systems Corp................ 10,000 403,750
Hewlett-Packard Co.......................... 10,000 532,500
Intel Corp.................................. 3,500 486,937
Loral Space & Communications(1)............. 11,000 155,375
Lucent Technologies, Inc.................... 1,944 102,546
Motorola, Inc............................... 9,000 543,375
---------------
$ 2,530,983
---------------
FINANCIAL SERVICES -- 12.4%
AFLAC, Inc.................................. 12,000 $ 450,000
American General Corp....................... 8,600 350,450
American International Group................ 3,000 352,125
Bank of New York Co., Inc................... 16,000 588,000
Norwest Corp................................ 10,000 462,500
---------------
$ 2,203,075
---------------
CONSUMER, CYCLICAL -- 11.2%
Gap, Inc.................................... 16,000 $ 536,000
Lowe's Companies, Inc....................... 9,000 336,375
McDonald's Corp............................. 12,000 567,000
The Walt Disney Co.......................... 7,500 547,500
---------------
$ 1,986,875
---------------
INDUSTRIAL -- 8.4%
Deere & Co.................................. 11,000 $ 478,500
Diebold, Inc................................ 10,500 395,063
Emerson Electric Co......................... 4,800 216,000
Millipore Corp.............................. 9,500 402,562
---------------
$ 1,492,125
---------------
CONGLOMERATES -- 3.1%
General Electric Co......................... 5,600 $ 555,800
---------------
ENERGY -- 2.6%
Enron Corp.................................. 12,000 $ 456,000
---------------
TOTAL COMMON STOCK (Cost $10,669,330) ...... $ 13,356,071
---------------
<PAGE>
<CAPTION>
Face Market
REPURCHASE AGREEMENTS(2) -- 25.0% Value Value
- -------------------------------------------------------------------------------
<S> <C> <C>
Dean Witter Reynolds, Inc., 6.25%,
dated 3/31/97, due 4/01/97, repurchase
proceeds $4,437,770....................... $ 4,437,000 $ 4,437,000
--------------- ---------------
TOTAL REPURCHASE AGREEMENTS................. $ 4,437,000 $ 4,437,000
=============== ---------------
TOTAL COMMON STOCK AND
REPURCHASE AGREEMENTS AT VALUE-- 100.2%.. $ 17,793,071
LIABILITIES IN EXCESS OF OTHER ASSETS-- (0.2)% (40,280)
---------------
NET ASSETS-- 100.0%......................... $ 17,752,791
===============
<FN>
(1) Non-income producing security.
(2) Repurchase agreements are fully collateralized by U.S. Government
obligations.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
===============================================================================
ARTHUR ANDERSEN LLP
To the Shareholders and Board of Trustees of Countrywide Strategic Trust
(formerly, Midwest Strategic Trust):
We have audited the accompanying statements of assets and liabilities of the
U.S. Government Securities Fund, Treasury Total Return Fund, Utility Fund and
Equity Fund of the Countrywide Strategic Trust (a Massachusetts business trust),
including the portfolios of investments, as of March 31, 1997, and the related
statements of operations, the statements of changes in net assets, and the
financial highlights for the periods indicated thereon. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1997, by correspondence with custodians and brokers. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
U.S. Government Securities Fund, Treasury Total Return Fund, Utility Fund and
Equity Fund of Countrywide Strategic Trust as of March 31, 1997, the results of
their operations, the changes in their net assets, and their financial
highlights for the periods indicated thereon, in conformity with generally
accepted accounting principles.
/s/ Arthur Andersen LLP
Cincinnati, Ohio,
April 28, 1997
<PAGE>
<TABLE>
<CAPTION>
RESULTS OF SPECIAL MEETING OF SHAREHOLDERS
February 28, 1997 (Unaudited)
===============================================================================
On February 28, 1997, a Special Meeting of Shareholders of the Trust was held
(1) to approve or disapprove a new investment advisory agreement with
Countrywide Investments, Inc. (formerly Midwest Group Financial Services, Inc.),
(2) to elect eight trustees and (3) to ratify or reject the selection of Arthur
Andersen LLP as the Trust's independent public accountants for the current
fiscal year. The total number of shares of the Trust present by proxy
represented 65.4% of the shares entitled to vote at the meeting. Each of the
matters submitted to shareholders was approved.
The results of the voting for or against the approval of the new investment
advisory agreement by each Fund follows:
- ----------------------------------------------------------------------------------------------------------
Number of Shares
For Against Abstain
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Government Securities Fund 1,386,173.356 7,257.249 65,168.136
Treasury Total Return Fund 690,869.625 21,503.234 135,493.791
Utility Fund 2,079,766.689 20,329.944 109,212.611
Equity Fund 724,973.062 4,061.722 22,058.929
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
The results of the voting for the election of trustees follows:
- ----------------------------------------------------------------------------------------------------------
Withhold
Nominees For Election Authority Status
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Donald L. Bogdon, M.D. 5,199,438.647 67,429.701 New Trustee
John R. Delfino 5,198,698.666 68,169.682 New Trustee
H. Jerome Lerner 5,198,658.952 68,209.396 Incumbent
Robert H. Leshner 5,204,752.328 62,116.020 Incumbent
Angelo R. Mozilo 5,197,160.798 69,707.550 New Trustee
Oscar P. Robertson 5,206,830.117 60,038.231 Incumbent
John F. Seymour, Jr. 5,199,434.758 67,433.590 New Trustee
Sebastiano Sterpa 5,197,664.433 69,203.915 New Trustee
</TABLE>
- ------------------------------------------------------------------------------
The results of the voting for or against the ratification of Arthur Andersen LLP
as independent public accountants by each Fund follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Number of Shares
For Against Abstain
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Government Securities Fund 1,435,598.498 5,512.464 17,487.779
Treasury Total Return Fund 780,081.371 10,404.979 57,380.300
Utility Fund 2,122,637.785 8,418.304 78,253.155
Equity Fund 738,937.654 163.221 11,992.838
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
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.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000711080
<NAME> COUNTRYWIDE STRATEGIC TRUST
<SERIES>
<NUMBER> 3
<NAME> U.S. GOVERNMENT SECURITIES FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 21,960,988
<INVESTMENTS-AT-VALUE> 21,741,936
<RECEIVABLES> 154,491
<ASSETS-OTHER> 2,389
<OTHER-ITEMS-ASSETS> 2,994
<TOTAL-ASSETS> 21,901,810
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 58,595
<TOTAL-LIABILITIES> 58,595
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 26,526,256
<SHARES-COMMON-STOCK> 2,366,923
<SHARES-COMMON-PRIOR> 2,642,220
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4,463,989)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (219,052)
<NET-ASSETS> 21,843,215
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,581,093
<OTHER-INCOME> 0
<EXPENSES-NET> 268,957
<NET-INVESTMENT-INCOME> 1,312,136
<REALIZED-GAINS-CURRENT> (386,798)
<APPREC-INCREASE-CURRENT> (119,168)
<NET-CHANGE-FROM-OPS> 806,170
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,312,136
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 317,801
<NUMBER-OF-SHARES-REDEEMED> 707,804
<SHARES-REINVESTED> 114,706
<NET-CHANGE-IN-ASSETS> (3,073,210)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (4,077,191)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 168,101
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 286,457
<AVERAGE-NET-ASSETS> 22,451,672
<PER-SHARE-NAV-BEGIN> 9.43
<PER-SHARE-NII> .55
<PER-SHARE-GAIN-APPREC> (.20)
<PER-SHARE-DIVIDEND> .55
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.23
<EXPENSE-RATIO> 1.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000711080
<NAME> COUNTRYWIDE STRATEGIC TRUST
<SERIES>
<NUMBER> 4
<NAME> TREASURY TOTAL RETURN FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 10,113,121
<INVESTMENTS-AT-VALUE> 10,110,743
<RECEIVABLES> 3,856
<ASSETS-OTHER> 1,961
<OTHER-ITEMS-ASSETS> 433
<TOTAL-ASSETS> 10,116,993
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 57,621
<TOTAL-LIABILITIES> 57,621
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,694,500
<SHARES-COMMON-STOCK> 1,254,345
<SHARES-COMMON-PRIOR> 1,866,811
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,632,750)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2,378)
<NET-ASSETS> 10,059,372
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 673,624
<OTHER-INCOME> 0
<EXPENSES-NET> 154,790
<NET-INVESTMENT-INCOME> 518,834
<REALIZED-GAINS-CURRENT> (561,549)
<APPREC-INCREASE-CURRENT> 286,795
<NET-CHANGE-FROM-OPS> 244,080
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 518,834
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16,063
<NUMBER-OF-SHARES-REDEEMED> 681,539
<SHARES-REINVESTED> 53,010
<NET-CHANGE-IN-ASSETS> (5,284,897)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (2,071,201)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 92,874
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 210,790
<AVERAGE-NET-ASSETS> 12,395,420
<PER-SHARE-NAV-BEGIN> 8.22
<PER-SHARE-NII> .34
<PER-SHARE-GAIN-APPREC> (.20)
<PER-SHARE-DIVIDEND> .34
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.02
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000711080
<NAME> COUNTRYWIDE STRATEGIC TRUST
<SERIES>
<NUMBER> 51
<NAME> UTILITY FUND CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 32,540,096
<INVESTMENTS-AT-VALUE> 39,174,797
<RECEIVABLES> 167,910
<ASSETS-OTHER> 5,079
<OTHER-ITEMS-ASSETS> 574
<TOTAL-ASSETS> 39,348,360
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 161,933
<TOTAL-LIABILITIES> 161,933
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 32,299,943
<SHARES-COMMON-STOCK> 2,900,247
<SHARES-COMMON-PRIOR> 3,302,863
<ACCUMULATED-NII-CURRENT> 242
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 251,541
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,634,701
<NET-ASSETS> 36,087,240
<DIVIDEND-INCOME> 1,765,979
<INTEREST-INCOME> 320,037
<OTHER-INCOME> 0
<EXPENSES-NET> 557,465
<NET-INVESTMENT-INCOME> 1,528,551
<REALIZED-GAINS-CURRENT> 349,605
<APPREC-INCREASE-CURRENT> 517,054
<NET-CHANGE-FROM-OPS> 2,395,210
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,429,043
<DISTRIBUTIONS-OF-GAINS> 62,089
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 295,396
<NUMBER-OF-SHARES-REDEEMED> 802,704
<SHARES-REINVESTED> 104,692
<NET-CHANGE-IN-ASSETS> (4,337,248)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (30,527)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 319,201
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 557,465
<AVERAGE-NET-ASSETS> 39,232,666
<PER-SHARE-NAV-BEGIN> 12.24
<PER-SHARE-NII> .46
<PER-SHARE-GAIN-APPREC> .22
<PER-SHARE-DIVIDEND> .46
<PER-SHARE-DISTRIBUTIONS> .02
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.44
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000711080
<NAME> COUNTRYWIDE STRATEGIC TRUST
<SERIES>
<NUMBER> 53
<NAME> UTILITY FUND CLASS C
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 32,540,096
<INVESTMENTS-AT-VALUE> 39,174,797
<RECEIVABLES> 167,910
<ASSETS-OTHER> 5,079
<OTHER-ITEMS-ASSETS> 574
<TOTAL-ASSETS> 39,348,360
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 161,933
<TOTAL-LIABILITIES> 161,933
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 32,299,943
<SHARES-COMMON-STOCK> 249,358
<SHARES-COMMON-PRIOR> 301,479
<ACCUMULATED-NII-CURRENT> 242
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 251,541
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,634,701
<NET-ASSETS> 3,099,187
<DIVIDEND-INCOME> 1,765,979
<INTEREST-INCOME> 320,037
<OTHER-INCOME> 0
<EXPENSES-NET> 557,465
<NET-INVESTMENT-INCOME> 1,528,551
<REALIZED-GAINS-CURRENT> 349,605
<APPREC-INCREASE-CURRENT> 517,054
<NET-CHANGE-FROM-OPS> 2,395,210
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 99,266
<DISTRIBUTIONS-OF-GAINS> 5,448
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 79,210
<NUMBER-OF-SHARES-REDEEMED> 138,592
<SHARES-REINVESTED> 7,261
<NET-CHANGE-IN-ASSETS> (586,572)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (30,527)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 319,201
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 557,465
<AVERAGE-NET-ASSETS> 3,402,753
<PER-SHARE-NAV-BEGIN> 12.23
<PER-SHARE-NII> .35
<PER-SHARE-GAIN-APPREC> .24
<PER-SHARE-DIVIDEND> .37
<PER-SHARE-DISTRIBUTIONS> .02
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.43
<EXPENSE-RATIO> 2.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000711080
<NAME> COUNTRYWIDE STRATEGIC TRUST
<SERIES>
<NUMBER> 71
<NAME> EQUITY FUND CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 15,106,330
<INVESTMENTS-AT-VALUE> 17,793,071
<RECEIVABLES> 371,759
<ASSETS-OTHER> 2,113
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 18,166,943
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 414,152
<TOTAL-LIABILITIES> 414,152
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14,901,612
<SHARES-COMMON-STOCK> 1,088,598
<SHARES-COMMON-PRIOR> 682,935
<ACCUMULATED-NII-CURRENT> 7
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 164,431
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,686,741
<NET-ASSETS> 14,982,638
<DIVIDEND-INCOME> 165,852
<INTEREST-INCOME> 157,477
<OTHER-INCOME> 0
<EXPENSES-NET> 207,287
<NET-INVESTMENT-INCOME> 116,042
<REALIZED-GAINS-CURRENT> 482,875
<APPREC-INCREASE-CURRENT> 952,569
<NET-CHANGE-FROM-OPS> 1,551,486
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 112,251
<DISTRIBUTIONS-OF-GAINS> 43,452
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 562,866
<NUMBER-OF-SHARES-REDEEMED> 168,288
<SHARES-REINVESTED> 11,085
<NET-CHANGE-IN-ASSETS> 6,480,776
<ACCUMULATED-NII-PRIOR> 27
<ACCUMULATED-GAINS-PRIOR> (265,871)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 112,182
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 234,121
<AVERAGE-NET-ASSETS> 12,289,832
<PER-SHARE-NAV-BEGIN> 12.45
<PER-SHARE-NII> .12
<PER-SHARE-GAIN-APPREC> 1.35
<PER-SHARE-DIVIDEND> .12
<PER-SHARE-DISTRIBUTIONS> .04
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.76
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000711080
<NAME> COUNTRYWIDE STRATEGIC TRUST
<SERIES>
<NUMBER> 73
<NAME> EQUITY FUND CLASS C
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 15,106,330
<INVESTMENTS-AT-VALUE> 17,793,071
<RECEIVABLES> 371,759
<ASSETS-OTHER> 2,113
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 18,166,943
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 414,152
<TOTAL-LIABILITIES> 414,152
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14,901,612
<SHARES-COMMON-STOCK> 201,191
<SHARES-COMMON-PRIOR> 195,573
<ACCUMULATED-NII-CURRENT> 7
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 164,431
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,686,741
<NET-ASSETS> 2,770,153
<DIVIDEND-INCOME> 165,852
<INTEREST-INCOME> 157,477
<OTHER-INCOME> 0
<EXPENSES-NET> 207,287
<NET-INVESTMENT-INCOME> 116,042
<REALIZED-GAINS-CURRENT> 482,875
<APPREC-INCREASE-CURRENT> 952,569
<NET-CHANGE-FROM-OPS> 1,551,486
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,811
<DISTRIBUTIONS-OF-GAINS> 9,121
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 50,018
<NUMBER-OF-SHARES-REDEEMED> 45,330
<SHARES-REINVESTED> 930
<NET-CHANGE-IN-ASSETS> 333,892
<ACCUMULATED-NII-PRIOR> 27
<ACCUMULATED-GAINS-PRIOR> (265,871)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 112,182
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 234,121
<AVERAGE-NET-ASSETS> 2,715,402
<PER-SHARE-NAV-BEGIN> 12.46
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> 1.35
<PER-SHARE-DIVIDEND> .02
<PER-SHARE-DISTRIBUTIONS> .04
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.77
<EXPENSE-RATIO> 2.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>