SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ____)
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Countrywide Strategic Trust
---------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
______________________________________________________________________
2) Aggregate number of securities to which transaction applies:
______________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
______________________________________________________________________
4) Proposed maximum aggregate value of transaction:
______________________________________________________________________
5) Total fee paid:
______________________________________________________________________
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
______________________________________________________________________
2) Form, Schedule or Registration Statement No.:
______________________________________________________________________
3) Filing Party:
______________________________________________________________________
4) Date Filed:
______________________________________________________________________
<PAGE>
COUNTRYWIDE STRATEGIC TRUST
312 Walnut Street
21st Floor
Cincinnati, Ohio 45202
October 1, 1999
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of
Countrywide Strategic Trust to be held on Wednesday, October 27, 1999 at 10:00
a.m., Eastern Time, in the 10th Floor Conference Center at 312 Walnut Street,
Cincinnati, Ohio 45202.
We have previously informed you of a recent development involving
Countrywide Investments, Inc. (the "Adviser"), the Trust's investment adviser
and principal underwriter, and its parent company, Countrywide Financial
Services, Inc. ("CFS"). On August 24, 1999, Fort Washington Investment Advisors,
Inc. entered into an agreement to buy all of the stock of CFS from Countrywide
Credit Industries, Inc., its parent company.
Fort Washington Investment Advisors is part of The Western-Southern
Enterprise, a dynamic group of financial services companies owned by The Western
and Southern Life Insurance Company. The Western-Southern Enterprise provides
life insurance, annuities, mutual funds, business planning insurance, health
insurance, asset management and other related financial services for millions of
customers nationwide. Founded in 1888, The Western and Southern Life Insurance
Company is a strong organization with solid values, a rich heritage and an
exciting future and holds the highest ratings for claims paying ability awarded
by three independent insurance rating agencies.
As a full-service registered investment advisory firm, Fort Washington
Investment Advisors offers professional and comprehensive investment management
services for foundations and endowments, corporate pension funds, insurance
companies, mutual funds, colleges and universities, religious organizations and
high net worth individuals. Fort Washington Investment Advisors and its advisory
subsidiaries have assets under management exceeding $16 billion.
We view this transaction as very positive for a number of reasons. As a
local company, Fort Washington Investment Advisors is well acquainted with the
business community in which the Adviser operates. Fort Washington Investment
Advisors and its affiliates will provide the Adviser with access to their
extensive resources. Moreover, it is anticipated that there will be no material
change in the investment strategies we employ or investment professionals
assigned to the Trust.
Under the Investment Company Act, the purchase of CFS is considered an
assignment of the management agreement between the Adviser and the Trust, with
respect to each series of the Trust. The management agreements for each series
of the Trust require that we obtain approval from shareholders of a new
management agreement as a result of the transaction.
<PAGE>
You are also being asked to elect a substantially new group of trustees and
to ratify the selection of Arthur Andersen LLP as the Trust's independent public
accountants for the current fiscal year. No change of accountants is being
proposed.
The Board of Trustees has given full and careful consideration to each of
these matters and has concluded that the proposals are in the best interests of
the Trust and its shareholders. The Board of Trustees therefore recommends that
you vote to elect the proposed slate of Trustees and "FOR" each of the other
matters discussed in the proxy statement.
YOUR VOTE IS IMPORTANT. TO ASSURE YOUR REPRESENTATION AT THE MEETING,
PLEASE VOTE BY SIGNING AND DATING THE ENCLOSED PROXY AND RETURNING IT PROMPTLY
IN THE ACCOMPANYING ENVELOPE, WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE
MEETING. YOU CAN ALSO VOTE BY PHONE BY FOLLOWING THE INSTRUCTIONS ON THE
ENCLOSED PROXY. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE
YOUR SHARES IN PERSON.
Very truly yours,
Robert H. Leshner
President
<PAGE>
COUNTRYWIDE STRATEGIC TRUST
NOTICE TO UTILITY FUND AND EQUITY FUND SHAREHOLDERS OF SPECIAL
MEETING OF SHAREHOLDERS OF THE TRUST
To Be Held on October 27, 1999
NOTICE IS HEREBY GIVEN that a special meeting of the shareholders of
Countrywide Strategic Trust (the "Trust") will be held in the 10th Floor
Conference Center at 312 Walnut Street, Cincinnati, Ohio 45202, on Wednesday,
October 27, 1999 at 10:00 a.m., Eastern time, to consider and vote on the
following matters:
1. Approval of new management agreements with Countrywide Investments,
Inc., to become effective upon the closing of the proposed acquisition
of Countrywide Financial Services, Inc. by Fort Washington Investment
Advisors, Inc. NO FEE INCREASE IS PROPOSED.
2. Election of nine trustees to serve until their successors are duly
elected and qualified.
3. Ratification of the selection of Arthur Andersen LLP as the Trust's
independent public accountants for the fiscal year ending March 31,
2000. NO CHANGE IN ACCOUNTANTS IS PROPOSED.
4. Transaction of any other business, not currently contemplated, that
may properly come before the meeting or any adjournment thereof.
Shareholders of record at the close of business on September 16, 1999 are
entitled to notice of and to vote at this meeting and any adjournment thereof.
By order of the Board of Trustees,
Tina D. Hosking, Secretary
October 1, 1999
YOUR VOTE IS IMPORTANT
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE VOTE BY SIGNING AND DATING
THE ENCLOSED PROXY AND RETURNING IT PROMPTLY IN THE ACCOMPANYING ENVELOPE,
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING. YOU CAN ALSO VOTE BY
PHONE BY FOLLOWING THE INSTRUCTIONS ON THE ENCLOSED PROXY. IF YOU ATTEND THE
MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
<PAGE>
COUNTRYWIDE STRATEGIC TRUST
312 Walnut Street
21st Floor
Cincinnati, Ohio 45202
------------
SPECIAL MEETING OF SHAREHOLDERS
To Be Held on October 27, 1999
------------
PROXY STATEMENT
------------
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of Countrywide Strategic Trust (the "Trust")
for use at the special meeting of shareholders to be held at 10:00 a.m. on
Wednesday, October 27, 1999, and at any adjournment(s) thereof. The meeting will
be held in the 10th Floor Conference Center at 312 Walnut Street, Cincinnati,
Ohio 45202. This proxy statement and form of proxy were first mailed to
shareholders of the Utility Fund and the Equity Fund on or about October 1,
1999.
Fort Washington Investment Advisors, Inc. ("Fort Washington") has agreed to
buy all of the outstanding stock of Countrywide Financial Services, Inc.,
("CFS"), the parent company of Countrywide Investments, Inc. (the "Adviser"). If
the sale is completed, the Adviser will become a wholly-owned, indirect
subsidiary of Fort Washington. As a result, the shareholders are being asked to
consider the following proposals:
1. Approval of new management agreements for the Utility Fund and the Equity
Fund with the Adviser, to become effective upon the closing of the proposed
acquisition of CFS by Fort Washington.
2. Election of nine trustees to serve until their successors are duly elected
and qualified.
3. Ratification of the selection of Arthur Andersen LLP as the Trust's
independent public accountants for the Funds' fiscal year ending March 31,
2000.
4. Transaction of any other business, not currently contemplated, that may
properly come before the meeting or any adjournment thereof.
A COPY OF THE TRUST'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED MARCH 31,
1999, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES, IS AVAILABLE AT NO CHARGE BY
MAKING A WRITTEN REQUEST DIRECTED TO MS. TINA D. HOSKING, SECRETARY, COUNTRYWIDE
STRATEGIC TRUST, 312 WALNUT STREET, 21ST FLOOR, CINCINNATI, OHIO 45202-4094, OR
BY CALLING THE TRUST NATIONWIDE TOLL-FREE AT 800-543-0407 OR IN CINCINNATI AT
(513) 629-2050.
<PAGE>
PROPOSAL 1 - NEW MANAGEMENT
AGREEMENTS WITH COUNTRYWIDE INVESTMENTS, INC.
BACKGROUND
- ----------
CFS (the Adviser's parent company) is currently owned by Countrywide Credit
Industries, Inc. On August 24, 1999, Countrywide Credit Industries, Inc. entered
into an agreement to sell all of the stock of CFS to Fort Washington (the
"Acquisition"). Countrywide Fund Services, Inc., the Trust's administrator,
transfer agent and accounting and pricing agent, is a wholly-owned subsidiary of
CFS. As a result of the Acquisition, the Adviser and Countrywide Fund Services,
Inc. will become wholly-owned, indirect subsidiaries of Fort Washington. It is
anticipated that the closing will occur immediately following the shareholder
meeting. The Acquisition is subject to the satisfaction of various conditions,
including, but not limited to, the following:
1. The Board of Trustees of the Trust, Countrywide Investment Trust and
Countrywide Tax-Free Trust (collectively, the "Trusts") must approve
new management agreements with the Adviser for each mutual fund within
the three trusts (collectively, the "Countrywide Funds").
2. The shareholders of each Countrywide Fund must approve a new
management agreement with the Adviser.
3. A new Board of Trustees (the composition of which is satisfactory to
Fort Washington) must be elected by the shareholders of each
Countrywide Trust.
Under the Investment Company Act of 1940, as amended (the "Investment
Company Act"), a transaction which results in a change of control or management
of an investment adviser may be deemed an "assignment." The Investment Company
Act further provides that an investment advisory agreement will automatically
terminate in the event of its assignment. The Acquisition constitutes a "change
in control" of the Adviser for purposes of the Investment Company Act and will
cause the "assignment" and resulting termination of the present management
agreements.
Section 15(f) of the Investment Company Act provides that, when a change in
the control of an investment adviser occurs, the investment adviser or any of
its affiliated persons may receive any amount or benefit in connection therewith
if the following two conditions are satisfied:
(1) An "unfair burden" must not be imposed on the investment company as a
result of the transaction relating to the change of control, or any
express or implied terms, conditions or understandings applicable
thereto. The term "unfair burden" includes any arrangement during the
two-year period after the change in control whereby the investment
adviser (or predecessor or successor adviser), or any interested
person of any such adviser, receives or is entitled to receive any
compensation, directly or indirectly, from the investment company or
its security holders (other than fees for bona fide investment
advisory or other services) or from any person in connection with the
purchase or sale of securities or other property to, from, or on
behalf of the investment company (other than fees for bona fide
principal underwriting services). No such compensation arrangements
are contemplated as a result of the Acquisition.
(2) During the three-year period immediately following consummation of the
transaction, at least 75% of the Trust's Board of Trustees must not be
"interested persons" of the investment adviser or predecessor
investment adviser within the meaning of the Investment Company Act.
2
<PAGE>
THE PRESENT MANAGEMENT AGREEMENTS.
- ----------------------------------
The Adviser currently provides investment advisory services to each Fund of
the Trust pursuant to a separate management agreement for each Fund between the
Trust and the Adviser. The management agreements for the Utility Fund and the
Equity Fund are substantially identical to each other in all respects. The
agreements require the Adviser to furnish an investment program for the
applicable Fund and to determine which securities to purchase and sell and what
portion of a Fund's assets to keep uninvested. Each of the current management
agreements were last approved by shareholders of the applicable Fund and took
effect on February 28, 1997. The agreements were submitted to shareholders in
1997 because the Adviser was being acquired by Countrywide Credit Industries,
Inc. The present management agreements were last approved by the Board of
Trustees, including a majority of the Trustees who are not interested persons,
as defined in the Investment Company Act, of the Adviser or the Trust (the
"Independent Trustees"), on February 9, 1999.
THE NEW MANAGEMENT AGREEMENTS.
- ------------------------------
Each Fund will enter into a separate new management agreement with the
Adviser. The terms and conditions of the new management agreements are
substantially identical in all material respects to those of the present
management agreements with the exception of a change in the dates of their
execution, effectiveness and termination.
Under the new management agreements for the Equity Fund and the Utility
Fund, the Adviser will select portfolio securities for investment by the Funds,
purchase and sell securities of the Funds, and upon making any purchase or sale
decision, place orders for the execution of such portfolio transactions, all in
accordance with the Investment Company Act and any rules thereunder, the
supervision and control of the Board of Trustees of the Trust, such specific
instructions as the Board of Trustees may adopt and communicate to the Adviser
and the investment objectives, policies and restrictions of each Fund.
The Adviser will receive from each of the Equity Fund and the Utility Fund
a fee at an annual rate of 0.75% of the average daily net assets of the Fund up
to $200 million; 0.70% of the next $300 million of such assets; and 0.50% of
such assets in excess of $500 million. These are the same fees that the Adviser
currently receives from each Fund under its present management agreement. During
the fiscal year ended March 31, 1999, the Utility Fund and the Equity Fund paid
to the Adviser advisory fees of $326,575 and $375,212, respectively.
If a new management agreement is approved by shareholders of a Fund, the
new management agreement will become effective when the Acquisition is
completed. Each new management agreement provides that it will remain in force
for an initial term of two years, and from year to year thereafter, subject to
annual approval by (a) the Board of Trustees or (b) a vote of a majority (as
defined in the Investment Company Act) of the outstanding shares of the Fund;
provided that in either event continuance is also approved by a majority of the
Independent Trustees, by a vote cast in person at a meeting called for the
purpose of voting such approval. Each new management agreement may be terminated
at any time, on sixty days' written notice, without the payment of any penalty,
by the Board of Trustees, by a vote of the majority of the outstanding voting
securities of the applicable Fund, or by the Adviser. Each new management
agreement automatically terminates in the event of its assignment.
Each new management agreement provides that the Adviser shall not be liable
for any error of judgment or mistake of law or any loss suffered by a Fund,
except a loss resulting from the Adviser's willful misfeasance, bad faith or
gross negligence, or the Adviser's reckless disregard of its obligations.
3
<PAGE>
The form of the new management agreement for the Equity Fund and the
Utility Fund is attached as Exhibit A. You should read the agreement. The
description in this Proxy Statement of the new management agreements is only a
summary.
Approval of new management agreements by the shareholders of each Fund of
the Trust is a condition to the closing of the Acquisition. Fort Washington,
however, may elect to proceed with the closing of the Acquisition if the
shareholders of one or more Funds do not approve a new management agreement. If
this occurs and the Acquisition is completed, the present management agreements
will automatically terminate and, for those Funds whose shareholders have not
approved a new management agreement, the Board of Trustees will promptly take
such actions as they consider are in the best interests of the shareholders. If
the Acquisition is not completed for any reason, the Adviser will continue to
serve as the investment adviser of each Fund pursuant to the terms of the
present management agreements.
INFORMATION CONCERNING FORT WASHINGTON.
- ---------------------------------------
Fort Washington Investment Advisors, Inc., located at 420 East Fourth
Street, Cincinnati, Ohio 45202, is a wholly-owned subsidiary of The Western and
Southern Life Insurance Company, located at 400 Broadway, Cincinnati, Ohio
45202.
INFORMATION CONCERNING THE ADVISER.
- -----------------------------------
The Adviser is a wholly owned subsidiary of CFS. Both the Adviser and CFS
are located at 312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202. CFS is a
wholly-owned subsidiary of Countrywide Credit Industries, Inc., which is located
at 4500 Park Granada Boulevard, Calabasas, California 91302. The Adviser also
serves as the Trust's principal underwriter. If the Acquisition is completed,
the Adviser will continue to serve as the Trust's principal underwriter pursuant
to the terms of a new underwriting agreement which was approved by the Board of
Trustees, including a majority of the Independent Trustees, on September 8,
1999. The new underwriting agreement may be terminated by either party on sixty
days' written notice. During the fiscal year ended March 31, 1999, the
Aggressive Growth Fund, the Growth/Value Fund, the Utility Fund and the Equity
Fund paid to the Adviser underwriting fees of $7,588, $3,390, $5,789 and $4,158,
respectively.
The table below gives the name, address and principal occupation of each
current director and principal executive officer of the Adviser. If the
Acquisition is completed, different individuals may be elected to serve as
directors and officers of the Adviser.
4
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
NAME AND ADDRESS POSITION WITH ADVISER PRINCIPAL OCCUPATION
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Angelo R. Mozilo Chairman/Director Chairman and Chief Executive
4500 Park Granada Blvd. Officer of Countrywide Credit
Calabasas, CA 91302 Industries, Inc. and Chairman of
Countrywide Home Loans, Inc.
- --------------------------------------------------------------------------------------------------------
Robert H. Leshner President/Chief Executive President of Countrywide
312 Walnut Street Officer/Director Investments, Inc., Countrywide
21st Floor Financial Services, Inc.,
Cincinnati, OH 45202 Countrywide Fund Services, Inc.
and CW Fund Distributors, Inc.;
President of Countrywide Strategic
Trust, Countrywide Investment
Trust and Countrywide Tax-Free
Trust
- --------------------------------------------------------------------------------------------------------
Andrew S. Bielanski Director Managing Director, Marketing of
4500 Park Granada Blvd. Countrywide Credit Industries, Inc.
Calabasas, CA 91302 and Countrywide Home Loans, Inc.
- --------------------------------------------------------------------------------------------------------
Thomas H. Boone Director Managing Director, Global
4500 Park Granada Blvd. Mortgage Services of Countrywide
Calabasas, CA 91302 Credit Industries, Inc.; Managing
Director, Chief Loan
Administration Officer of
Countrywide Home Loans, Inc.
- --------------------------------------------------------------------------------------------------------
Marshall M. Gates Director Managing Director, Developing
4500 Park Granada Blvd. Markets of Countrywide Credit
Calabasas, CA 91302 Industries, Inc. and Countrywide
Home Loans, Inc.
- --------------------------------------------------------------------------------------------------------
William E. Hortz Executive Vice President and Executive Vice President and
312 Walnut Street Director of Sales Director of Sales of the Adviser
21st Floor
Cincinnati, OH 45202
- --------------------------------------------------------------------------------------------------------
Maryellen Peretzky Senior Vice President, Chief Senior Vice President, Chief
312 Walnut Street Operating Officer and Operating Officer and Secretary of
21st Floor Secretary the Adviser
Cincinnati, OH 45202
- --------------------------------------------------------------------------------------------------------
Terrie A. Wiedenheft First Vice President, Chief First Vice President, Chief
312 Walnut Street Financial Officer and Treasurer Financial Officer and Treasurer of
21st Floor the Adviser
Cincinnati, OH 45202
- --------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
The Adviser serves as investment adviser to the affiliated registered
investment companies listed below:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Name of Fund Net Assets as of Annual Advisory Fee
September 1, 1999 (as a percentage of assets)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Aggressive Growth Fund $10,348,207 1.00% of average daily net
- ------------------------------------------------------------- assets of each Fund up to $50
Growth/Value Fund $24,286,041 million; .90% of the next $50
million of such assets; .80% of
the next $100 million of such
assets; and .75% of such assets
over $200 million
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
Name of Fund Net Assets as of Annual Advisory Fee
September 1, 1999 (as a percentage of assets)
- -----------------------------------------------------------------------------------------------------
Countrywide Tax-Free Trust
- -----------------------------------------------------------------------------------------------------
Tax-Free Money Fund* $26,359,400 .50% of average daily net
- ------------------------------------------------------------- assets of each Fund up to $100
Ohio Insured Tax-Free Fund $64,059,676 million; .45% of such assets
- ------------------------------------------------------------- from $100 million to $200
California Tax-Free Money $55,142,888 million; .40% of such assets
Fund from $200 million to $300
- ------------------------------------------------------------- million; and .375% of such
Florida Tax-Free Money Fund* $32,677,016 assets over $300 million
- -------------------------------------------------------------
Tax-Free Intermediate Term $51,237,332
Fund
- -------------------------------------------------------------
Ohio Tax-Free Money Fund* $425,515,326
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
Name of Fund Net Assets as of Annual Advisory Fee
September 1, 1999 (as a percentage of assets)
- -----------------------------------------------------------------------------------------------------
Countrywide Investment Trust
- -----------------------------------------------------------------------------------------------------
Short Term Government $113,389,002 .50% of average daily net
Income Fund assets of each Fund up to $50
- ------------------------------------------------------------- million; .45% of such assets
Intermediate Term $41,319,917 from $50 million to $150
Government Income Fund million; .40% of such assets
- ------------------------------------------------------------- from $150 million to $250
Adjustable Rate U.S. $9,964,558 million; and .375% of such
Government Securities Fund* assets over $250 million
- ------------------------------------------------------------- .20% of average daily net
Money Market Fund* $22,804,630 assets
- -------------------------------------------------------------
Intermediate Bond Fund* $11,819,840
- -------------------------------------------------------------
Institutional Government $42,938,744
Income Fund*
- -----------------------------------------------------------------------------------------------------
</TABLE>
* During the 1999 fiscal year, the Adviser waived all or a portion of its
advisory fees for such Funds. There is no assurance that any fee waivers
will continue in the future.
6
<PAGE>
INFORMATION CONCERNING COUNTRYWIDE FUND SERVICES, INC.
- ------------------------------------------------------
Countrywide Fund Services, Inc., an affiliate of the Adviser, provides
transfer agency, shareholder servicing and accounting and pricing services to
the Funds. The address of Countrywide Fund Services, Inc. is 312 Walnut Street,
21st Floor, Cincinnati, Ohio 45202. During the fiscal year ended March 31, 1999,
it received fees from the Funds for its services as transfer and shareholder
servicing agent and accounting and pricing services agent as follows:
As Transfer and Shareholder As Accounting and Pricing
Servicing Agent Services Agent
--------------- --------------
Aggressive Growth Fund $12,250 $24,000
Growth/Value Fund $12,491 $24,000
Equity Fund $36,679 $39,000
Utility Fund $45,695 $36,000
Countrywide Fund Services, Inc. is retained by the Adviser to assist the
Adviser in providing administrative services to the Funds. In this capacity,
Countrywide Fund Services, Inc. supplies executive, administrative and
regulatory services, supervises the preparation of tax returns, and coordinates
the preparation of reports to shareholders and reports to and filings with the
Securities and Exchange Commission and state securities authorities. The Adviser
(not the Funds) pays Countrywide Fund Services, Inc. a fee of $37,500 per month
for these services, which is allocated among the Trust, Countrywide Tax-Free
Trust and Countrywide Investment Trust based upon the level of assets. The
Adviser does not presently anticipate any change to the administrative services
arrangements.
If the Acquisition is completed, Countrywide Fund Services, Inc. will
continue to provide transfer agent, shareholder servicing, accounting and
pricing and administrative services to the Trust at the same rates as are
currently in effect, pursuant to new service agreements which were approved by
the Board of Trustees, including a majority of the Independent Trustees, on
September 8, 1999. Either party may terminate the new service agreements on
sixty days' written notice.
EVALUATION BY THE BOARD OF TRUSTEES.
- ------------------------------------
On September 8, 1999, the Board of Trustees, including all of the
Independent Trustees, by vote cast in person, unanimously approved, subject to
the required shareholder approval described herein, the new management
agreements. Prior to such approval, the Independent Trustees met separately with
their counsel, who did not represent Countrywide Credit Industries, Inc. or Fort
Washington and/or their affiliates, to advise them with respect to their
responsibilities under state and federal law in reaching a determination with
respect to the new management agreements and related matters. In addition to
their attendance at the Board of Trustees' meetings held on August 25 and
September 8, 1999, the Independent Trustees met separately with their counsel on
August 24, August 25, September 7 and September 8, 1999 for the purpose of
assisting them in reaching a determination with respect to the new management
agreements. In conducting their evaluation, the Independent Trustees reviewed
and discussed various materials provided on behalf of Fort Washington by The
Western and Southern Life Insurance Company or its affiliates ("Western
Southern") at the request of the Independent Trustees and other relevant
information.
7
<PAGE>
Included among these materials were: (i) financial statements of Western
Southern; (ii) information concerning the personnel and operations of Western
Southern; (iii) biographical information concerning the directors and officers
of Western Southern, the proposed Trustees for the Trust, and the investment
management personnel of Western Southern; (iv) forms of proposed management
agreements, subadvisory agreements for the Aggressive Growth Fund and the
Growth/Value Fund, underwriting agreements, distribution plans (identical in all
material respects to the previous plans) and related agreements to be adopted by
the Funds and a comparison of such agreements and plans with those currently in
effect for the Funds; (v) information concerning the marketing capabilities of
Western Southern; (vi) incentives being offered to assure that key personnel
will be retained; (vii) information pertaining to the composition of the Funds'
investment portfolios and any proposed changes in investment practices or
techniques following consummation of the transaction; (viii) information
pertaining to proposed advisory fees, Fund expenses and proposed servicing
arrangements with the Funds' service providers; (ix) data concerning historical
performance of Western Southern's proprietary funds; (x) a description of the
brokerage allocation and soft dollar practices with respect to Western
Southern's proprietary funds; and (xi) information pertaining to Western
Southern's Year 2000 readiness.
On September 8, 1999, the Board of Trustees of the Trust, including all of
the Independent Trustees, approved the new management agreements, subject to
shareholder approval. In determining to recommend approval of the new management
agreements to shareholders, the Independent Trustees, separately, and the entire
Board of Trustees considered the following factors, among others:
(1) Countrywide Credit Industries, Inc.'s desire to provide its customers with
a wider variety of investment products through alliances with multiple
providers rather than continue operating a proprietary family of funds and
its intention to reduce the extent and scope of its investment company
service business;
(2) Western Southern's commitment to the development and expansion of its
investment advisory business;
(3) the intention of Western-Southern to employ substantially all of the
present management personnel of the Adviser and Countrywide Fund Services,
Inc. for some period of time after the closing of the Acquisition and its
expectation that these persons will continue to render substantially the
same services with regard to the Funds that they are currently rendering;
(4) the management fees and management services to be performed under the new
management agreements are the same as those under the existing management
agreements, and the other terms of the agreements are identical in all
material respects, except for the dates of their execution, effectiveness
and termination;
(5) there are no changes contemplated in the objectives and policies of the
Funds, and the proposed transaction will not materially affect the level or
quality of advisory services currently provided to the Funds;
(6) the possibility that sales of shares of the Funds will be enhanced by
Western Southern's reputation, distribution capabilities and financial
resources following consummation of the proposed transaction, and that such
growth may result in economies of scale that will benefit the shareholders
in the form of lower expense ratios;
(7) the fact that Western Southern has agreed that it will use its best efforts
to satisfy the provisions of Section 15(f) of the Investment Company Act;
(8) the performance of the Funds as compared to similar mutual funds and other
comparable indices; and
(9) the fact that the Funds will not bear the expenses of the transaction or
any of the costs of preparing and mailing proxy materials to shareholders.
8
<PAGE>
As a result of their considerations, the Board of Trustees, including all
of the Independent Trustees, determined that the new management agreements would
be in the best interests of the Funds and their shareholders. Accordingly, the
Board of Trustees, by separate vote of the Independent Trustees and the entire
Board of Trustees, unanimously approved the new management agreements and voted
to recommend them to shareholders for approval.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS APPROVE THE NEW MANAGEMENT
AGREEMENTS.
PROPOSAL 2 - ELECTION OF TRUSTEES TO SERVE
UPON CONSUMMATION OF THE ACQUISITION
On September 8, 1999, all of the Independent Trustees met to review
pertinent information on the nominees for election to the Board of Trustees. At
such meeting, the Independent Trustees, who were represented by their counsel
for the purpose of assisting them in reaching a determination with respect to
the nominees, determined that Mr. Lerner and Mr. Robertson would meet with
candidates proposed for election to the Board of Trustees by Fort Washington and
report thereon to all of the Independent Trustees. On September 16, 1999, the
Independent Trustees held a meeting at which the Independent Trustees reviewed
the backgrounds and qualifications of the proposed new nominees and Mr. Lerner's
report on his meeting with them. Following a full discussion, the Independent
Trustees selected the nine persons proposed for election at this meeting.
Thereafter, the full Board of Trustees, based upon the selection and
recommendation of the Independent Trustees, nominated such persons for election
as Trustees.
Nine individuals have been nominated to serve as Trustees effective upon
completion of the Acquisition, including three current Trustees (Robert H.
Leshner, H. Jerome Lerner and Oscar P. Robertson) and six individuals not
currently serving on the Board of Trustees. If elected by shareholders, these
individuals will serve together with three members of the present Board of
Trustees: Robert H. Leshner, H. Jerome Lerner and Oscar P. Robertson. If the
nine nominees are elected by the shareholders, Donald L. Bogdon, M.D., Howard J.
Levine, Angelo R. Mozilo, Fred A. Rappoport, John F. Seymour, Jr. and Sebastiano
Sterpa will no longer serve as Trustees when the Acquisition is completed. In
the event the Acquisition is not completed for any reason, the members of the
present Board of Trustees will continue to serve as Trustees.
Nine nominees are to be elected as Trustees, each to serve until his or her
successor is duly elected and qualified. The current Independent Trustees
reserve the right to substitute another person or persons of their choice as a
nominee or nominees if a nominee is unable to serve as a Trustee at the time of
the meeting for any reason. Nothing, however, indicates that such a situation
will arise. The following table sets forth certain information regarding each
nominee for election as a Trustee.
9
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Age Principal Occupation During the Past Five Years Trustee
Name and Directorships of Public Companies Since
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
William O. Coleman 70 Retired General Sales Manager and Vice President N/A
of Procter & Gamble; Trustee, Proctor & Gamble's
Profit Sharing and Employee Stock Ownership Plans;
Director, LCA-Vision; Trustee of Touchstone Series
Trust and Touchstone Variable Series Trust,
registered investment companies.
- ----------------------------------------------------------------------------------------------------
Phillip R. Cox 52 President and Chief Executive Officer, Cox N/A
Financial Corp. (since 1972); Director, Federal
Reserve Bank of Cleveland; Director, Cincinnati
Bell Inc.; Director, PNC Bank; Director, Cinergy
Corporation; Trustee of Touchstone Series Trust
and Touchstone Variable Series Trust, registered
investment companies.
- ----------------------------------------------------------------------------------------------------
H. Jerome Lerner 61 Principal of HJL Enterprises and Chairman of Crane 1989
Electronics, Inc. (a manufacturer of electronic
connectors); Trustee of Countrywide Tax-Free
Trust, Countrywide Strategic Trust and Countrywide
Investment Trust, registered investment companies.
- ----------------------------------------------------------------------------------------------------
Robert H. Leshner* 60 President and a Director of Countrywide 1982
Investments, Inc. (the Adviser of the Trust)
Countrywide Financial Services, Inc. (a financial
services company and parent of Countrywide
Investments, Inc., Countrywide Fund Services, Inc.
and CW Fund Distributors, Inc.), Countrywide Fund
Services, Inc. ( a registered transfer agent) and
CW Fund Distributors, Inc. (a registered
broker-dealer); President and a Trustee of
Countrywide Tax-Free Trust, Countrywide Strategic
Trust and Countrywide Investment Trust, registered
investment companies.
- ----------------------------------------------------------------------------------------------------
Jill T. McGruder** 44 President, Chief Executive Officer and a Director, N/A
Touchstone Advisors, Inc. and Touchstone
Securities, Inc. (since February, 1999); Senior
Vice President, Western- Southern Life Insurance
Company (since December, 1996); National Marketing
Director, Metropolitan Life Insurance Co.
(February, 1996-December, 1996); Executive Vice
President, Touchstone Advisors, Inc. and
Touchstone Securities, Inc. (1991-1996).
- ----------------------------------------------------------------------------------------------------
Oscar P. Robertson*** 60 President of Orchem Corp. (a chemical specialties 1995
distributor) and Orpack Stone Corporation (a
corrugated box manufacturer); Trustee of
Countrywide Investment Trust, Countrywide
Strategic Trust and Countrywide Tax-Free Trust,
registered investment companies.
- ----------------------------------------------------------------------------------------------------
Nelson Schwab, Jr. 81 Senior Counsel, Law Firm of Graydon, Head & N/A
Ritchey; Director, Rotex, Inc., The Ralph J.
Stolle Company and Security Rug Cleaning Company;
Trustee of Touchstone Series Trust and Touchstone
Variable Series Trust, registered investment
companies.
- ----------------------------------------------------------------------------------------------------
Robert E. Stautberg 65 Retired Partner and Director, KPMG Peat Marwick; N/A
Chairman of the Board of Trustees, Good Samaritan
Hospital; Trustee of Touchstone Series Trust and
Touchstone Variable Series Trust, registered
investment companies.
- ----------------------------------------------------------------------------------------------------
Joseph S. Stern, Jr. 81 Retired Professor Emeritus, College of Business, N/A
University of Cincinnati; Trustee of Touchstone
Series Trust and Touchstone Variable Series Trust,
registered investment companies.
- ----------------------------------------------------------------------------------------------------
</TABLE>
* Robert H. Leshner, as an affiliated person of Countrywide Investments,
Inc., the Trust's investment adviser and principal underwriter, is an
"interested person" of the Trust within the meaning of Section 2(a)(19) of
the Investment Company Act. Mr. Leshner may directly or indirectly receive
benefits from the new management agreements as a result of such
affiliation. Prior to the acquisition of CFS by Countrywide Credit
Industries, Inc. in 1997, Mr. Leshner was the controlling shareholder of
CFS and indirectly controlled the Adviser and Countrywide Fund Services,
Inc.
** Jill T. McGruder, as an affiliated person of Touchstone Securities, Inc. (a
registered broker-dealer), will be an "interested person" of the Trust
within the meaning of Section 2(a)(19) of the Investment Company Act. Ms.
McGruder may also be deemed to be an "interested person" because she is an
officer of certain affiliated companies of Fort Washington Investment
Advisors, Inc. Ms. McGruder may directly or indirectly receive benefits
from the new management agreements as a result of such affiliation.
*** On February 2, 1996, an involuntary petition under Chapter 7 of the U.S.
Bankruptcy Code was filed by creditors against Orchem, Inc., of which Mr.
Robertson was the chief executive officer. The case was subsequently
converted to a Chapter 11 bankruptcy and is still pending in the U.S.
Bankruptcy Court.
10
<PAGE>
All nominees have consented to being named in this proxy statement and
have agreed to serve if elected. Each nominee is also standing for election as a
trustee of Countrywide Tax-Free Trust and Countrywide Investment Trust.
Trustees on the Board who are not interested persons of the Trust
receive a quarterly retainer of $1,500, plus $1,500 for each Board meeting
attended. These fees are split equally among the Trust, Countrywide Tax-Free
Trust and Countrywide Investment Trust. The compensation paid to the Trustees
for the fiscal year ended March 31, 1999 is as follows:
COMPENSATION TABLE
------------------
- --------------------------------------------------------------------------------
Total Compensation from
Aggregate Compensation the Countrywide Funds
Name of Director from the Trust (3 trusts)
- ---------------- -------------- ----------
- --------------------------------------------------------------------------------
Donald L. Bodgon, M.D. $4,000 $12,000
- --------------------------------------------------------------------------------
H. Jerome Lerner $4,000 $12,000
- --------------------------------------------------------------------------------
Robert H. Leshner $0 $0
- --------------------------------------------------------------------------------
Howard J. Levine $3,000 $9,000
- --------------------------------------------------------------------------------
Angelo R. Mozilo $0 $0
- --------------------------------------------------------------------------------
Fred A. Rappoport $4,000 $12,000
- --------------------------------------------------------------------------------
Oscar P. Robertson $4,000 $12,000
- --------------------------------------------------------------------------------
John F. Seymour, Jr. $4,000 $12,000
- --------------------------------------------------------------------------------
Sebastiano Sterpa $4,000 $12,000
- --------------------------------------------------------------------------------
The Trust has an Audit Committee currently consisting of H. Jerome Lerner,
Oscar P. Robertson and Sebastiano Sterpa. If all of the nominees to serve on the
Board are elected by shareholders, it is anticipated that the Audit Committee
will consist of three trustees who are not interested persons of the Trust, the
Adviser or the Sub-Adviser. The Audit Committee makes recommendations to the
Board of Trustees concerning the selection of the Trust's independent public
accountants, reviews with such accountants the scope and results of the Trust's
annual audit, reviews the annual and semiannual financial reports of the Trust
and considers any comments which the accountants may have regarding the Trust's
financial statements or books of account. Audit Committee members receive no
additional compensation for attending an Audit Committee meeting. The Trust has
no standing nominating or compensation committee.
During the fiscal year ended March 31, 1999, the Board of Trustees and the
Audit Committee each held four meetings. During such fiscal year, each Trustee
attended at least 75% of the aggregate of (i) the total number of meetings of
the Board of Trustees (held during the period during which he has been a
trustee) and (ii) the total number of meetings held by any committee of the
Board of Trustees on which he served.
11
<PAGE>
EXECUTIVE OFFICERS.
- -------------------
The Trust's executive officers are set forth below. The business address of
each current officer except for Mr. Mozilo is 312 Walnut Street, 21st Floor,
Cincinnati, Ohio 45202. Mr. Mozilo's address is 4500 Park Granada Boulevard,
Calabasas, CA 91302. The executive officers receive no compensation from the
Trust. If the Acquisition is completed, different individuals may be elected to
serve as executive officers of the Trust.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS AGE OFFICER SINCE POSITION WITH
THE TRUST
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ANGELO R. MOZILO* 60 1997 Chairman and
Chairman, Director and Chief Executive Officer of Countrywide Credit Industries, Trustee
Inc. (a holding company). He is Chairman and a Director of Countrywide Home
Loans, Inc. (a residential mortgage lender), Countrywide Financial Services,
Inc., Countrywide Investments, Inc., Countrywide Fund Services, Inc., CW Fund
Distributors, Inc., Countrywide Servicing Exchange (a loan servicing broker),
Countrywide Lending Corporation and Countrywide Capital Markets, Inc. (parent
company). He is also a Director of CCM Municipal Services, Inc. (a tax lien
purchaser), CTC Real Estate Services Corporation ( a foreclosure trustee),
LandSafe, Inc. (parent company) and various LandSafe, Inc. subsidiaries which
provide property appraisals, credit reporting services, home inspection
services, flood zone determination services, title insurance and/or closing
services for residential mortgages. He is also a Trustee and Chairman of
Countrywide Tax-Free Trust, Countrywide Investment Trust and Countrywide
Strategic Trust, registered investment companies.
- -------------------------------------------------------------------------------------------------------------------------------
ROBERT H. LESHNER 60 1983 President
President and a Director of Countrywide Investments, Inc. (the investment and Trustee
adviser and principal underwriter of the Trust), Countrywide Financial Services,
Inc. (a financial services company and parent of Countrywide Investments, Inc.,
Countrywide Fund Services, Inc. and CW Fund Distributors, Inc.), Countrywide
Fund Services, Inc. (a registered transfer agent) and CW Fund Distributors, Inc.
(a registered broker-dealer). He is also President and a Trustee of Countrywide
Tax- Free Trust, Countrywide Strategic Trust and Countrywide Investment Trust,
registered investment companies.
- -------------------------------------------------------------------------------------------------------------------------------
MARYELLEN PERETZKY 47 1998 Vice
Senior Vice President, Chief Operating Officer and Secretary of Countrywide President
Investments, Inc. and Senior Vice President and Secretary of Countrywide
Financial Services, Inc., Countrywide Fund Services, Inc. and CW Fund
Distributors, Inc. She is also Vice President of Countrywide Investment Trust,
Countrywide Strategic Trust and Countrywide Tax-Free Trust.
- -------------------------------------------------------------------------------------------------------------------------------
WILLIAM E. HORTZ 41 1998 Vice
Executive Vice President and Director of Sales of Countrywide Investments, Inc. President
and Countrywide Financial Services, Inc. He is also Vice President of
Countrywide Tax-Free Trust, Countrywide Investment Trust and Countrywide
Strategic Trust. From 1996 until 1998, he was President of Peregrine Asset
Management (an investment adviser). From 1991 until 1996, he was Regional
Director of Neuberger & Berman Management (an investment adviser).
- -------------------------------------------------------------------------------------------------------------------------------
TINA D. HOSKING 31 1999 Secretary
Associate General Counsel and Assistant Vice President of Countrywide Fund
Services, Inc. and CW Fund Distributors, Inc. She is also Secretary of
Countrywide Investment Trust, Countrywide Strategic Trust and Countrywide Tax-
Free Trust.
- -------------------------------------------------------------------------------------------------------------------------------
THERESA M. SAMOCKI 29 1999 Treasurer
Assistant Vice President-Fund Accounting Manager of Countrywide Fund Services,
Inc. and CW Fund Distributors, Inc. She is also Treasurer of Countrywide
Investment Trust, Countrywide Strategic Trust and Countrywide Tax-Free Trust.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* As Chief Executive Officer, Chairman and a Director of Countrywide Credit
Industries, Inc. the Adviser, Mr. Mozilo may directly or indirectly benefit
if the new management agreements are approved and the Acquisition is
completed.
12
<PAGE>
PROPOSAL 3 - RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has been selected by vote of the Board of Trustees,
including a majority of the Independent Trustees, as the Trust's independent
public accountants for the current fiscal year ending March 31, 2000. The
employment of Arthur Andersen LLP is conditioned upon the right of the Trust, by
a vote of a majority of its outstanding shares, to terminate the employment
without any penalties.
Arthur Andersen LLP has acted as the Trust's independent public accountants
since 1983. If the Trust's shareholders do not ratify the selection of Arthur
Andersen LLP, other certified public accountants will be considered for
selection by the Board of Trustees. Ratification of the accountants is not a
condition precedent to the completion of the Acquisition.
Representatives of Arthur Andersen LLP are not expected to be present at
the meeting although they will have an opportunity to attend and to make a
statement, if they desire to do so. If representatives of Arthur Andersen LLP
are present, they will be available to respond to appropriate questions from
shareholders
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS RATIFY THE SELECTION OF
ARTHUR ANDERSEN LLP.
THE PROXY
The Board of Trustees solicits proxies so that each shareholder has the
opportunity to vote on each proposal to be considered at the meeting. A proxy
for voting your shares at the meeting is enclosed. Your proxy, if properly
executed, duly returned and not revoked or if properly voted by phone, will be
voted according to the instructions on the proxy. A proxy which is properly
executed that has no voting instructions with respect to a proposal will be
voted for that proposal. In addition, proxies will be voted in the discretion of
the proxy holders, in accordance with the recommendations of the Board of
Trustees, if any, on any matter to come before the meeting that the Trust did
not have notice of a reasonable time prior to the mailing of this Proxy
Statement. You may revoke your proxy at any time before it is exercised by (1)
filing a written notification of revocation with the Secretary of the Trust, (2)
submitting a proxy bearing a later date, or (3) attending and voting at the
meeting.
For your convenience, you can vote your proxy (1) by dating, signing and
mailing back the enclosed proxy, or (2) by calling and voting by telephone. For
specific instructions on how to vote by telephone, please see your proxy.
COST OF SOLICITATION
The Trust has retained Management Information Systems ("MIS") to solicit
proxies for the special meeting. MIS is responsible for printing proxies,
mailing proxy material to shareholders, soliciting brokers, custodians, nominees
and fiduciaries, tabulating the returned proxies and performing other proxy
solicitation services. The anticipated cost of such services is approximately
$12,597, and will be paid by the Adviser. The Adviser will also pay the
printing, postage and any other costs of the solicitation.
In addition to solicitation through the mail, proxies may be solicited by
officers, employees and agents of the Trust without cost to the Trust. Such
solicitation may be by telephone, facsimile or otherwise. The Adviser will
reimburse brokers, custodians, nominees and fiduciaries for the reasonable
expenses incurred by them in connection with forwarding solicitation material to
the beneficial owners of shares held of record by such persons.
13
<PAGE>
OUTSTANDING SHARES AND VOTING REQUIREMENTS
RECORD DATE
- -----------
The Board of Trustees has fixed the close of business on September 16, 1999
as the record date for determining the shareholders entitled to notice of and to
vote at the special meeting of shareholders or any adjournment thereof. The
Trust is composed of four separate funds, the Aggressive Growth Fund, the
Growth/Value Fund, the Utility Fund and the Equity Fund (individually a "Fund"
and collectively, the "Funds"), each of which is represented by a separate
series of the Trust's shares. The Growth/Value Fund, the Utility Fund and the
Equity Fund series each offer two classes of shares, Class A and Class C shares.
As of the record date there were 7,295,028.368 shares of beneficial interest, no
par value, of the Trust outstanding, comprised of 1,302,450.399 shares of the
Growth/Value Fund, 595,169.539 shares of the Aggressive Growth Fund,
2,626,028.481 shares of the Utility Fund and 2,771,379.949 shares of the Equity
Fund. All full shares of the Trust are entitled to one vote, with proportionate
voting for fractional shares.
QUORUM
- ------
For Proposal 2, the presence, in person or by proxy, of more than 50% of
the outstanding shares of the Trust is necessary to constitute a quorum at the
meeting. For the other Proposals, the presence, in person or by proxy, of more
than 50% of the outstanding shares of a Fund is necessary to constitute a quorum
for that Fund.
VOTING
- ------
The vote of a majority of the outstanding shares of a Fund is required for
approval of the new management agreement with respect to that Fund (Proposal 1
above). The vote of a majority of the outstanding shares for purposes of
Proposal 1 means the vote of the lesser of (1) 67% or more of the shares present
or represented by proxy at the meeting, if the holders of more than 50% of the
outstanding shares are present or represented by proxy, or (2) more than 50% of
the outstanding shares. The vote of a plurality of the Trust's shares
represented at the meeting is required for the election of Trustees (Proposal 2
above). The vote of a simple majority of the shares voted is required for the
ratification of the selection of Arthur Andersen LLP as the independent public
accountants for each Fund (Proposal 3 above).
If the meeting is called to order but a quorum is not represented at the
meeting, the persons named as proxies may vote the proxies which have been
received to adjourn the meeting to a later date. If a quorum is present at the
meeting but sufficient votes to approve the proposals described herein are not
received, the persons named as proxies may propose one or more adjournments of
the meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of a majority of those shares represented at the
meeting in person or by proxy. The proxy holders will vote those proxies
received which voted in favor of the proposal in favor of such an adjournment
and will vote those proxies received which voted against the proposal against
any such adjournment. A shareholder vote may be taken on one or more of the
proposals in this proxy statement prior to any such adjournment if sufficient
votes have been received and it is otherwise appropriate. Abstentions and
"broker non-votes" are counted for purposes of determining whether a quorum is
present but do not represent votes cast with respect to a proposal. "Broker
non-votes'" are shares held by a broker or nominee for which an executed proxy
is received by the Trust, but are not voted as to one or more proposals because
instructions have not been received from the beneficial owners or persons
entitled to vote and the broker or nominee does not have discretionary voting
power. Accordingly, "broker non-votes" and abstentions effectively will be a
vote against Proposal 1.
14
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
- -----------------------------------------------
On September 16, 1999, the following persons owned 5% or more of the
outstanding shares of the Trust (or any Fund):
<TABLE>
<CAPTION>
Name and Address of Amount Beneficially
Fund Beneficial Owner Owned % of Fund
---- ---------------- ----- ---------
<S> <C> <C> <C>
Equity Fund Martin S. Goldfarb M.D. 242,119.118 8.74%
919 N. Crescent
Beverly Hills, CA 90210
Citizens Business Bank Trustee 655,576.974 23.66%
FBO Countrywide Credit
Industries, Inc. Defined Benefit
Pension Plan*
225 E. Colorado Boulevard
P.O. Box 671
Pasadena, CA 91102
Growth/Value Fund Charles Schwab & Co. Inc. 506,616.846 38.90%
Mutual Funds
Special Custody Account for
Exclusive Benefit of Its
Customers
101 Montgomery Street
San Francisco, CA 94104
Scudder Trust Company 113,604.718 8.72%
FBO Countrywide Credit
Industries, Inc. Tax Deferred
Savings and Supplemental
Investment Plan Trust
P.O. Box 910208
San Diego, CA 92121
* Mr. Mozilo and Mr. Leshner serve on the Investment Committee of the
Countrywide Credit Industries, Inc. Defined Benefit Pension Plan and may
therefore be deemed to beneficially own the shares owned by the Plan.
15
<PAGE>
FirstCinco 283,049.936 21.73%
Attn: Trust Department
ML 6120
425 Walnut Street
Cincinnati, OH 45202
Aggressive Growth Fund Charles Schwab & Co. Inc. 213,860.045 35.9340%
Mutual Funds
Special Custody Account For
Exclusive Benefit of Its
Customers
101 Montgomery Street
San Francisco, CA 94104
Scudder Trust Company 113,874.988 19.1339%
FBO Countrywide Credit
Industries, Inc. Tax Deferred
Savings and Supplemental
Investment Plan Trust
P.O. Box 910208
San Diego, CA 92121
FirstCinco 87,306.395 14.6697%
Attn: Trust Department
ML 6120
425 Walnut Street
Cincinnati, OH 45202
</TABLE>
The following table sets forth the shares of each Fund beneficially owned,
as of September 16, 1999, by any executive officers, Trustees and Trustee
nominees of the Trust:
<TABLE>
<CAPTION>
TRUSTEE/OFFICERS SHARES BENEFICIALLY OWNED* % OF FUND
- ---------------- -------------------------- ---------
<S> <C> <C>
Robert H. Leshner, Trustee & President 2,793.96 shares of the Equity Fund **
Angelo R. Mozilo, Trustee & Chairman 23,235.535 shares of the Equity Fund **
3,209.398 shares of the Aggressive Growth Fund
14,850.673 shares of the Growth/Value Fund
Fred A. Rappoport, Trustee 267.474 shares of the Equity Fund **
Oscar P. Robertson, Trustee 4,825.252 shares of the Equity Fund **
John F. Seymour, Jr., Trustee 1,121.754 shares of the Growth/Value Fund **
Sebastiano Sterpa, Trustee 3,624.135 shares of the Equity Fund **
</TABLE>
* Has sole voting and sole investment power unless otherwise noted.
** Less than 1% of the outstanding shares of the Fund.
16
<PAGE>
The Trustees of the Trust intend to vote all of their shares to elect the
proposed slate of Trustees and in favor of all other proposals. On September 16,
1999, all nominees, Trustees and executive officers as a group owned of record
or beneficially less than 1% of the outstanding shares of each Fund.
No other person owned of record and, according to information available to
the Trust, no other person owned beneficially, 5% or more of the outstanding
shares of the Trust (or any Fund) on the record date.
SHAREHOLDER PROPOSALS
The Trust has not received any shareholder proposals to be considered for
presentation at the meeting. Under the proxy rules of the Securities and
Exchange Commission, shareholder proposals may, under certain conditions, be
included in the Trust's proxy statement and proxy for a particular meeting.
Under these rules, proposals submitted for inclusion in the Trust's proxy
material must be received by the Trust a reasonable time before the solicitation
is made. The fact that the Trust receives a shareholder proposal in a timely
manner does not insure its inclusion in its proxy material because there are
other requirements in the proxy rules relating to such inclusion. You should be
aware that annual meetings of shareholders are not required as long as there is
no particular requirement under the Investment Company Act which must be met by
convening such a shareholder meeting.
OTHER BUSINESS
The proxy holders have no present intention of bringing any matter before
the meeting other than those specifically referred to above or matters in
connection with or for the purpose of effecting the same. Neither the proxy
holders nor the Board of Trustees are aware of any matters which may be
presented by others. If any other business shall properly come before the
meeting, the proxy holders intend to vote thereon in accordance with their best
judgment.
By Order of the Board of Trustees,
Tina D. Hosking, Secretary
Date: October 1, 1999
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED REPLY ENVELOPE OR VOTE BY PHONE BY FOLLOWING THE INSTRUCTIONS ON THE
ENCLOSED PROXY.
17
<PAGE>
EXHIBIT A
---------
FORM OF
MANAGEMENT AGREEMENT:
TO: COUNTRYWIDE INVESTMENTS, INC.
312 Walnut Street
Cincinnati, Ohio 45202
Dear Sirs:
Countrywide Strategic Trust (hereinafter referred to as the "Trust")
herewith confirms our agreement with you.
The Trust has been organized to engage in the business of an investment
company. The ______ Fund (the "Fund") has been established as a series of the
Trust. You have been selected to act as the investment adviser of the Fund and
to provide certain other services, as more fully set forth below, and you are
willing to act as such investment adviser and to perform such services under the
terms and conditions hereinafter set forth. Accordingly, the Trust agrees with
you as follows upon the date of the execution of this Agreement.
1. ADVISORY SERVICES
-----------------
You will regularly provide the Fund with such investment advice as you in
your discretion deem advisable and will furnish a continuous investment program
for the Fund consistent with its investment objectives and policies. You will
determine what securities shall be purchased for the Fund, what portfolio
securities shall be held or sold by the Fund, and what portion of the Fund's
assets shall be held uninvested, subject always to the Fund's investment
objectives, policies and restrictions, as each of the same shall be from time to
time in effect, and subject further, to such policies and instructions as the
Board of Trustees (the "Board") of the Trust may from time to time establish and
supply to you copies thereof. You will advise and assist the officers of the
Trust in taking such steps as are necessary or appropriate to carry out the
decisions of the Board and the appropriate committees of the Board regarding the
conduct of the business of the Trust.
2. ALLOCATION OF CHARGES AND EXPENSES
----------------------------------
You will pay the compensation and expenses of any persons rendering any
services to the Fund who are officers, directors, stockholders or employees of
your corporation and will make available, without expense to the Fund, the
services of such of your employees as may duly be elected officers or trustees
of the Trust, subject to their individual consent to serve and to any
limitations imposed by law. The compensation and expenses of any officers,
trustees and employees of the Trust who are not officers, directors, employees
or stockholders of your corporation will be paid by the Trust.
18
<PAGE>
You will pay all advertising and promotion expenses incurred in connection
with the sale or distribution of the Fund's shares to the extent such expenses
are not assumed by the Fund under the Trust's Plans of Distribution Pursuant to
Rule 12b-1.
The Fund will also be responsible for the payment of all other operating
expenses of the Fund, including fees and expenses incurred by the Fund in
connection with membership in investment company organizations, brokerage fees
and commissions, legal, auditing and accounting expenses, expenses of
registering shares under Federal and State securities laws, insurance expenses,
taxes or governmental fees, fees and expenses of the custodian, transfer,
shareholder service and dividend disbursing agent and accounting and pricing
agent of the Fund, expenses including clerical expenses of issue, sale,
redemption or repurchase of shares of the Fund, the fees and expenses of
trustees of the Trust who are not affiliated with you, the cost of preparing and
distributing reports and notices to shareholders, the cost of printing or
preparing prospectuses for delivery to the Fund's shareholders, the cost of
printing or preparing stock certificates or any other documents, statements or
reports to shareholders, expenses of shareholders' meetings and proxy
solicitations, such extraordinary or non-recurring expenses as may arise,
including litigation to which the Fund may be a party and indemnification of the
Trust's officers and trustees with respect thereto, or any other expense not
specifically described above incurred in the performance of the Fund's
obligations. All other expenses not assumed by you herein incurred by the Fund
in connection with the organization, registration of shares and operations of
the Fund will be borne by the Fund.
3. COMPENSATION OF THE ADVISER
---------------------------
For all of the services to be rendered and payments made as provided in
this Agreement, the Fund will pay you as of the last day of each month, a fee
equal to the annual rate of:
.75% of the average value of the daily net assets of the Fund up to
$200,000,000; .7% of such assets from $200,000,000 to and including
$500,000,000; and .5% of such assets in excess of $500,000,000.
The total fees payable during each of the first and second halves of each
fiscal year of the Trust shall not exceed the semiannual total of the daily fee
accruals requested by you during the applicable six month period. The average
value of net assets shall be determined pursuant to the applicable provisions of
the Declaration of Trust of the Trust or a resolution of the Board, if required.
If, pursuant to such provisions, the determination of net asset value of the
Fund is suspended for any particular business day, then for the purposes of this
paragraph, the value of the net assets of the Fund as last determined shall be
deemed to be the value of the net assets as of the close of the business day, or
as of such other time as the value of the Fund's net assets may lawfully be
determined, on that day. If the determination of the net asset value of the
Fund's shares has been suspended for a period including such month, your
compensation payable at the end of such month shall be computed on the basis of
the value of the net assets of the Fund as last determined (whether during or
prior to such month).
4. EXECUTION OF PURCHASE AND SALE ORDERS
-------------------------------------
In connection with purchases or sales of portfolio securities for the
account of the Fund, it is understood that you will arrange for the placing of
all orders for the purchase and sale of portfolio securities for the Fund's
accounts with brokers or dealers selected by you, subject to review of this
19
<PAGE>
selection by the Board from time to time. You will be responsible for the
negotiation and the allocation of principal business and portfolio brokerage. In
the selection of such brokers or dealers and the placing of such orders, you are
directed at all times to seek for the Fund the best qualitative execution,
taking into account such factors as price (including the applicable brokerage
commission or dealer spread), the execution capability, financial responsibility
and responsiveness of the broker or dealer and the brokerage and research
services provided by the broker or dealer.
You should generally seek favorable prices and commission rates that are
reasonable in relation to the benefits received. In seeking best qualitative
execution, you are authorized to select brokers or dealers who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Fund and/or the other accounts over
which you exercise investment discretion. You are authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if
you determine in good faith that the amount of the commission is reasonable in
relation to the value of the brokerage and research services provided by the
executing broker or dealer. The determination may be viewed in terms of either a
particular transaction or your overall responsibilities with respect to the Fund
and to accounts over which you exercise investment discretion. The Trust and you
understand that, although the information may be useful to the Fund and you, it
is not possible to place a dollar value on such information. The Board shall
periodically review the commissions paid by the Fund to determine if the
commissions paid over representative periods of time were reasonable in relation
to the benefits to the Fund.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best qualitative execution, you
may give consideration to sales of shares of the Fund as a factor in the
selection of brokers and dealers to execute portfolio transactions of the Fund.
If any occasion should arise in which you give any advice to clients of
yours concerning the shares of the Fund, you will act solely as investment
counsel for such client and not in any way on behalf of the Trust. Your services
to the Fund pursuant to this Agreement are not to be deemed to be exclusive and
it is understood that you may render investment advice, management and other
services to others.
5. LIMITATION OF LIABILITY OF ADVISER
----------------------------------
You (including your directors, officers, shareholders, employees, control
persons and affiliates of any thereof) shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on your part in the
performance of your duties or from the reckless disregard by you of your
obligations and duties under this Agreement ("disabling conduct"). However, you
will not be indemnified for any liability unless (1) a final decision is made on
the merits by a court or other body before whom the proceeding was brought that
you were not liable by reason of disabling conduct, or (2) in the absence of
such a decision, a reasonable determination is made, based upon a review of the
facts, that you were not liable by reason of disabling conduct, by (a) the vote
of a majority of a quorum of trustees who are neither "interested persons" of
the Trust as defined in the Investment Company Act nor parties to the proceeding
("disinterested, non-party trustees"), or (b) an independent legal counsel in a
written opinion. The Fund will advance attorneys' fees or other expenses
incurred by you in defending a proceeding, upon the undertaking by or on behalf
of you to repay the
20
<PAGE>
advance unless it is ultimately determined that you are entitled to
indemnification, so long as you meet at least one of the following as a
condition to the advance: (1) you shall provide a security for your undertaking,
(2) the Fund shall be insured against losses arising by reason of any lawful
advances, or (3) a majority of a quorum of the disinterested, non-party trustees
of the Trust, or an independent legal counsel in a written opinion, shall
determine, based on a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that you ultimately will be
found entitled to indemnification. Any person employed by you who may also be or
become an employee of the Trust shall be deemed, when acting within the scope of
his employment by the Trust, to be acting in such employment solely for the
Trust and not as your employee or agent.
6. DURATION AND TERMINATION OF THIS AGREEMENT
------------------------------------------
This Agreement shall be effective upon its execution, shall remain in force
for a period of two (2) years from that date and remain in force from year to
year thereafter, subject to annual approval by (i) the Board of the Trust or
(ii) a vote of a majority (as defined in the Investment Company Act) of the
outstanding voting securities of the Fund, provided that in either event
continuance is also approved by a majority of the trustees who are not
"interested persons" (as defined in the Investment Company Act) of you or of the
Trust, by a vote cast in person at a meeting called for the purpose of voting
such approval.
If the shareholders of the Fund fail to approve the Agreement in the manner
set forth above, upon approval of the Board, including a majority of the
trustees who are not interested persons of you or of the Trust, you may continue
to serve or act in such capacity for the Fund for the period of time (not
exceeding one hundred and twenty days after the termination of the Agreement)
pending required approval of the Agreement, of a new agreement with you or a
different adviser or other definitive action; provided that the compensation to
be paid by the Fund to you will be equal to the lesser of your actual costs
incurred in furnishing investment advisory services to the Fund or the amount
you would have received under this Agreement.
This Agreement may, on sixty days' written notice, be terminated at any
time without the payment of any penalty, by the Board, by a vote of a majority
of the outstanding voting securities of the Fund or by you. This Agreement shall
automatically terminate in the event of its assignment.
7. AMENDMENT OF THIS AGREEMENT
---------------------------
No provision of this Agreement may be changed, waived, discharged or
terminated orally, and no amendment of this Agreement shall be effective until
approved by vote of the holders of a majority of the outstanding voting
securities of the Fund and by the Board, including a majority of the trustees
who are not interested persons of you or of the Trust, cast in person at a
meeting called for the purpose of voting on such approval.
8. LIMITATION OF LIABILITY
-----------------------
It is expressly agreed that the obligations of the Fund hereunder shall not
be binding upon any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust, personally, but bind only the trust property of the
Fund, as provided in the Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees of the Trust and
the shareholders of the
21
<PAGE>
Fund and signed by the officers of the Trust, acting as such, and neither such
authorization by such trustees and shareholders nor such execution and delivery
by such officers shall be deemed to have been made by any of them individually
or to impose any liability on any of them personally, but shall bind only the
trust property of the Fund as provided in the Trust's Declaration of Trust.
9. MISCELLANEOUS
-------------
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same Agreement.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
upon the date thereof.
Yours very truly,
ATTEST: COUNTRYWIDE STRATEGIC TRUST
____________________ By:_________________________________
Dated:
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST: COUNTRYWIDE INVESTMENTS, INC.
____________________ By:________________________________
Dated:
22
<PAGE>
TO VOTE BY TELEPHONE:
1. Read the Proxy Statement and have your Proxy Card at hand.
2. Call toll-free 1-888-221-0697
3. Enter the 14-digit Control Number found on your PROXY CARD.
4. Follow the simple instructions.
PROXY
COUNTRYWIDE STRATEGIC TRUST
UTILITY FUND AND EQUITY FUND
SPECIAL MEETING OF SHAREHOLDERS
October 27, 1999
The undersigned shareholder of Countrywide Strategic Trust (the "Trust")
hereby nominates, constitutes and appoints Robert H. Leshner and Maryellen
Peretzky, and each of them, the attorney, agent and proxy of the undersigned,
with full powers of substitution, to vote all the shares of the Trust which the
undersigned is entitled to vote at the Special Meeting of Shareholders of the
Trust to be held in the 10th Floor Conference Center, 312 Walnut Street,
Cincinnati, Ohio 45202, on Wednesday, October 27, 1999 at 10:00 a.m. and at any
and all adjournments thereof, as fully and with the same force and effect as the
undersigned might or could do if personally present as set forth herein.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY PROMPTLY.
DATED:_______________, 1999
___________________________________
(Please Print Your Name)
___________________________________
(Signature of Shareholder)
___________________________________
(Please Print Your Name)
___________________________________
(Signature of Shareholder)
(Please date this proxy and sign
your name as it appears on the
label. Executors, administrators,
trustees, etc. should give their
full titles. All joint owners
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUST'S BOARD OF TRUSTEES, AND MAY BE
REVOKED PRIOR TO ITS EXERCISE BY FILING WITH THE SECRETARY OF THE TRUST A
WRITTEN INSTRUMENT REVOKING THIS PROXY OR A DULY EXECUTED PROXY BEARING A LATER
DATE, OR BY APPEARING IN PERSON AND VOTING AT THE MEETING.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE OF "FOR" ON PROPOSALS 1 AND 3, AND
"AUTHORITY GIVEN" ON PROPOSAL 2. THE PROXY SHALL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF TRUSTEES UNLESS A CONTRARY INSTRUCTION IS
INDICATED, IN WHICH CASE THE PROXY SHALL BE VOTED IN ACCORDANCE WITH SUCH
INSTRUCTIONS. ON OTHER MATTERS, IF ANY, PRESENTED AT THE MEETING, THIS PROXY
SHALL BE VOTED IN THE DISCRETION OF THE PROXY HOLDERS, IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF TRUSTEES, IF ANY.
PLEASE VOTE BY FILLING IN THE BOXES BELOW.
1. APPROVAL OF NEW MANAGEMENT AGREEMENT WITH COUNTRYWIDE INVESTMENTS,
INC.
|_| FOR |_| AGAINST |_| ABSTAIN
2. ELECTION OF THE NINE PERSONS BELOW TO SERVE AS TRUSTEES UNTIL THEIR
SUCCESSORS ARE ELECTED AND QUALIFIED:
William O. Coleman, Phillip R. Cox, H. Jerome Lerner,
Robert H. Leshner, Jill T. McGruder, Oscar P. Robertson,
Nelson Schwab, Jr., Robert E. Stautberg, Joseph S. Stern, Jr.
|_| AUTHORITY GIVEN |_| AUTHORITY WITHHELD
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR SOME BUT NOT ALL OF THE NOMINEES
NAMED ABOVE, YOU SHOULD CHECK THE BOX MARKED "AUTHORITY GIVEN" AND YOU SHOULD
ENTER THE NAME(S) OF THE NOMINEE(S) WITH RESPECT TO WHOM YOU WISH TO WITHHOLD
AUTHORITY TO VOTE IN THE SPACE PROVIDED BELOW:
- --------------------------------------------------------------------------------
3. RATIFICATION OF APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING MARCH 31, 2000.
|_| FOR |_| AGAINST |_| ABSTAIN
PLEASE SIGN AND DATE ON THE REVERSE SIDE
