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. In addition, the Aggressive
Growth Fund and the Growth/Value Fund must obtain shareholder approval of new
subadvisory agreements with Mastrapasqua & Associates, Inc.
<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 AGGRESSIVE GROWTH FUND AND GROWTH/VALUE 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. Approval of new subadvisory agreements with Mastrapasqua & Associates,
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.
3. Election of nine trustees to serve until their successors are duly elected
and qualified.
4. Ratification of the selection of Arthur Andersen LLP as the Trust's
independent public accountants for the fiscal year ending March 31, 2000.
NO CHANGE IN ACCOUNTANTS IS PROPOSED.
5. 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 Aggressive Growth Fund and Growth/Value 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 with the Adviser, to become effective
upon the closing of the proposed acquisition of CFS by Fort Washington.
2. Approval of new subadvisory agreements with Mastrapasqua & Associates, Inc.
(the "Sub-Adviser"), to become effective upon the closing of the proposed
acquisition of CFS by Fort Washington.
3. Election of nine trustees to serve until their successors are duly elected
and qualified.
4. Ratification of the selection of Arthur Andersen LLP as the Trust's
independent public accountants for the Funds' fiscal year ending March 31,
2000.
5. 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 Aggressive Growth Fund
and the Growth/Value Fund are substantially identical to each other in all
respects. The agreements require the Adviser to supervise the general management
and investment of the assets of the applicable Fund and to provide overall
investment strategies for the Fund. These agreements permit the Adviser to
appoint a sub-adviser to make investment decisions. For additional information
about the subadvisory agreements, see Proposal 2 below. Each of the current
management agreements were last approved by shareholders of the applicable Fund
on August 14, 1997 and took effect on August 29, 1997. The agreements were
submitted to shareholders in 1997 because the Funds were reorganized as series
of the Trust. Prior to that time, the Funds were series of the Trans Adviser
Funds, 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, the Sub-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 Aggressive Growth Fund and the
Growth/Value Fund, the Adviser will provide overall investment strategies for
the Fund and will have overall supervisory responsibility for the general
management and investment of the assets of the Fund subject to and in accordance
with the investment objectives and policies of the Fund, and any directions
which the Trust's Board of Trustees may issue to the Adviser from time to time.
Under the new management agreements, the Adviser, at no expense to the Funds, is
permitted to appoint a sub-adviser to make investment decisions.
The Adviser will receive from each of the Aggressive Growth Fund and the
Growth/Value Fund a fee at an annual rate of 1.00% of the average daily net
assets of the Fund up to $50 million; 0.90% of the next $50 million of such
assets; 0.80% of the next $100 million of such assets and 0.75% of such assets
in excess of $200 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 Aggressive Growth Fund and the
Growth/Value Fund paid to the Adviser advisory fees of $125,575 and $254,571
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 Aggressive Growth Fund and
the Growth/Value 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
and subadvisory 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)
- -----------------------------------------------------------------------------------------------------
COUNTRYWIDE STRATEGIC TRUST
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Utility Fund $45,227,486 .75% of average daily net
- ------------------------------------------------------------- assets of each Fund up to $200
Equity Fund $62,541,132 million; .70% of the next $300
million of such assets; and
.50% of such assets over $500
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 - NEW SUBADVISORY AGREEMENTS WITH
MASTRAPASQUA & ASSOCIATES, INC.
The Acquisition will also result in the termination of the current
subadvisory agreements with Mastrapasqua & Associates, Inc. (the "Sub-Adviser")
for the Aggressive Growth Fund and the Growth/Value Fund. Accordingly, the Board
of Trustees recommends that shareholders of each of those Funds approve a new
subadvisory agreement among the Sub-Adviser, the Adviser and the Trust.
THE PRESENT SUBADVISORY AGREEMENTS.
- -----------------------------------
The Sub-Adviser currently provides investment advisory services to the
Aggressive Growth Fund and the Growth/Value Fund. Each of the current
subadvisory agreements was last approved by shareholders of the applicable Fund
on August 14, 1997 and took effect on August 29, 1997. The agreements were
submitted to shareholders in 1997 because the Aggressive Growth Fund and the
Growth/Value Fund were reorganized as series of the Trust. Prior to that time,
the Funds were series of the Trans Adviser Funds, Inc. The present subadvisory
agreements were last approved by the Board of Trustees, including the
Independent Trustees, on February 9, 1999.
THE NEW SUBADVISORY AGREEMENTS.
- -------------------------------
The terms and conditions of the new subadvisory agreements are
substantially identical in all material respects to those of the present
subadvisory agreements with the exception of a change in the effective date and
the termination date.
Under the terms of each subadvisory agreement, the Sub-Adviser selects the
portfolio securities for investment by the Fund, purchases and sells securities
of the Fund and places orders for the execution of such portfolio transactions,
subject to the general supervision of the Board of Trustees and the Adviser. The
Sub-Adviser receives a fee equal to the annual rate of 0.60% of each Fund's
average daily net assets up to $50 million; 0.50% of such assets from $50
million to $100 million; 0.40% of such assets from $100 million to $200 million
and 0.35% of such assets in excess of $200 million. The services provided by the
Sub-Adviser are paid by the Adviser. The compensation of any officer, director
or employee of the Sub-Adviser who is rendering services to the Fund is paid by
the Sub-Adviser. For the fiscal year ended March 31, 1999, the Adviser paid fees
of $154,940 and $77,608, respectively, to the Sub-Adviser for serving as
sub-adviser to the Growth/Value Fund and the Aggressive Growth Fund.
If a new subadvisory agreement is approved by shareholders of a Fund, the
new subadvisory agreement will become effective when the Acquisition is
completed. Each new subadvisory 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 subadvisory agreement may be
terminated at any time, on sixty
9
<PAGE>
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 or the Sub-Adviser. Each new sub-advisory
agreement automatically terminates in the event of its assignment.
The form of the new subadvisory agreement for the Aggressive Growth Fund
and the Growth/Value Fund is attached as Exhibit B. You should read the
agreement. The description in this Proxy Statement of the new subadvisory
agreements is only a summary.
Approval of the new subadvisory agreement by Fund shareholders is not a
condition to the closing of the Acquisition. The new subadvisory agreement for a
Fund (if approved by the Fund's shareholders) will only become effective upon
the Acquisition if the new management agreement for the Fund is also approved.
If the shareholders of either Fund do not approve a new subadvisory agreement,
the present subadvisory agreement will automatically terminate if the
Acquisition is completed, and 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 Sub-Adviser will continue to
serve as the sub-adviser pursuant to the terms of the present subadvisory
agreements.
INFORMATION CONCERNING THE SUB-ADVISER.
- ---------------------------------------
The Sub-Adviser, Mastrapasqua & Associates, is located at 814 Church
Street, Suite 600, Nashville, Tennessee 37203. Frank Mastrapasqua, Ph.D. and
Thomas A. Trantum, CFA founded the firm in 1993. Mastrapasqua & Associates is an
independent registered investment advisory firm currently managing approximately
$800 million in assets for high net worth individuals and institutions located
in 48 states and 8 countries. The firm's equity investment style is growth at
value (reasonable) prices with particular focus on independent fundamental
research, low turnover, sector focus, and all capitalization flexibility. The
firm has 18 employees.
The table below gives the name, address and principal occupation of each
director and principal executive officer of the Sub-Adviser.
- --------------------------------------------------------------------------------
NAME AND ADDRESS POSITION WITH SUB-ADVISER/ PRINCIPAL
OCCUPATION
- --------------------------------------------------------------------------------
Frank Mastrapasqua, Ph.D. Chairman, Chief Executive Officer and
814 Church Street Portfolio Manager, Mastrapasqua &
Nashville, Tennessee 37203 Associates
- --------------------------------------------------------------------------------
Thomas A. Trantum, CFA President, Chief Operating Officer and
814 Church Street Portfolio Manager, Mastrapasqua &
Nashville, Tennessee 37203 Associates
- --------------------------------------------------------------------------------
10
<PAGE>
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 subadvisory
agreements. In determining to recommend approval of the new subadvisory
agreements to shareholders of the Aggressive Growth Fund and Growth/Value Fund,
the Independent Trustees, separately, and the entire Board of Trustees relied
upon information regarding the operations of the Sub-Adviser and the background
and experience of its investment personnel, including the information provided
at the February 9, 1999 meeting of the Board of Trustees on which date the Board
of Trustees approved the continuance of the existing subadvisory agreements. The
Trustees considered the performance of the Aggressive Growth Fund and
Growth/Value Fund, comparing the performance of the Funds over various periods
of time to the performance of similar mutual funds and other comparable indices.
The Trustees also considered that the fees and subadvisory services to be
performed under the new subadvisory agreements are the same as those under the
existing subadvisory agreements, and the other terms of the agreements are
identical in all material respects, except for the dates of their execution,
effectiveness and termination. The Trustees further considered that retention of
the Sub-Adviser by Countrywide Investments, Inc. to provide subadvisory services
to the Aggressive Growth Fund and Growth/Value Fund will afford shareholders
continuity of investment management with respect to such portfolios and will not
materially affect the level or quality of subadvisory services currently
provided to the Funds.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS APPROVE THE NEW SUBADVISORY
AGREEMENTS.
PROPOSAL 3 - 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 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.
11
<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.
12
<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.
13
<PAGE>
EXECUTIVE OFFICERS.
- -------------------
The Trust's executive officers are set forth below. The business address of
each current officer except 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., Mr. Mozilo may directly or indirectly benefit if the new
management agreements are approved and the Acquisition is completed.
14
<PAGE>
PROPOSAL 4 - 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
15
<PAGE>
incurred by them in connection with forwarding solicitation material to the
beneficial owners of shares held of record by such persons.
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 3, 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 and the new subadvisory agreement with
respect to that Fund (Proposals 1 and 2 above). The vote of a majority of the
outstanding shares for purposes of Proposals 1 and 2 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 3 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 4
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 Proposals 1 and 2.
16
<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>
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
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
17
<PAGE>
FirstCinco 87,306.395 14.6697%
Attn: Trust Department
ML 6120
425 Walnut Street
Cincinnati, OH 45202
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
</TABLE>
* 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.
The following table sets forth the shares of each Fund beneficially owned,
as of September 16, 1999, by the 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.
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.
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<PAGE>
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.
19
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EXHIBIT A
FORM OF
MANAGEMENT AGREEMENT:
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is made this __ day of ________ ____, between
Countrywide Strategic Trust (the "Trust"), a business trust organized under the
laws of the Commonwealth of Massachusetts, and Countrywide Investments, Inc.
(the "Manager"), a corporation organized under the laws of the State of Ohio.
WHEREAS, the Trust has been organized to operate as an investment company
registered under the Investment Company Act of 1940, as amended (the "Act");
WHEREAS, the Trust's shares of beneficial interest are divided into
separate series and each such share of a series represents an undivided interest
in the assets, subject to the liabilities, located to that series, and each
series has separate investment objectives and policies; and
WHEREAS, the _________________ Fund (the "Fund"), a series of the Trust,
has been created for the purpose of investing and reinvesting its assets in
securities pursuant to the investment objectives and policies as set forth in
its registration statement under the Act and the Securities Act of 1933
("Registration Statement"), as heretofore amended and supplemented; and the
Trust desires to avail itself of the services, information, advice, assistance
and facilities of a manager and to have a manager provide or perform for it
various management, statistical, portfolio adviser selection and other services
for the Fund; and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act, as amended;
NOW, THEREFORE, the Trust and Manager agree as follows:
1. EMPLOYMENT OF THE MANAGER. The Trust hereby employs the Manager to
manage the investment and reinvestment of the assets of the Fund in the manner
set forth in subparagraph 2B of this Agreement, subject to the direction of the
Board of Trustees and the officers of the Trust, for the period, in the manner,
and on the terms hereinafter set forth. The Manager hereby accepts such
employment and agrees during such period to render the services and to assume
the obligations herein set forth. The Manager shall for all purposes herein be
deemed to be an independent contractor and shall, except as expressly provided
or authorized (whether herein or otherwise), have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the Fund.
2. OBLIGATION OF AND SERVICES TO BE PROVIDED BY THE MANAGER. The Manager
undertakes to provide the services hereinafter set forth and to assume the
following obligations:
20
<PAGE>
A. Corporate Management and Administrative Services.
The Manager shall furnish to the Fund, or retain another party or
parties to furnish, the following described services to the Fund: (i)
office space, which may be space within the offices of the Manager or
in such other place as may be agreed upon from time to time, and (ii)
office furnishings, facilities and equipment as may be reasonably
required for managing and administering the operations and conducting
the business of the Fund, including complying with the securities, tax
and other reporting requirements of the United States and the various
states in which the Fund does business, conducting correspondence and
other communications with the shareholders of the Fund, and
maintaining or supervising the maintenance of all records in
connection with the investment and business activities of the Fund.
B. Investment Management Services.
(a) The Manager shall have overall supervisory responsibility for the
general management and investment of the assets and portfolio
securities of the Fund subject to and in accordance with the
investment objectives and policies of the Fund, and any
directions which the Trust's Board of Trustees may issue to the
Manager from time to time.
(b) The Manager shall provide overall investment programs and
strategies for the Fund, shall revise such programs as necessary
and shall monitor and report periodically to the Board of
Trustees concerning the implementation of the programs.
(c) The Manager, with the approval of the Board of Trustees of the
Trust as to particular appointments, intends to (i) appoint one
or more persons or companies (the "Adviser") and, subject to the
terms and conditions of this Agreement, the Adviser shall have
full investment discretion and shall make all determinations with
respect to the investment of the Fund's assets and the purchase
and sale of portfolio securities with those assets, and (ii) take
such steps as may be necessary to implement such appointments.
The Manager shall be solely responsible for paying the fees and
expenses of the Adviser for its services to the Fund. The Manager
shall not be responsible or liable for the investment merits of
any decision by the Adviser to purchase, hold or sell a portfolio
security for the Fund.
(d) The Manager shall evaluate advisers and shall recommend to the
Board of Trustees the Adviser which the Manager believes is best
suited to invest the assets of the Fund; shall monitor and
evaluate the investment performance of the Adviser; shall
recommend changes in the Adviser when appropriate; shall
coordinate the investment activities of the Adviser to ensure
compliance with applicable restrictions and limitations
applicable to the Fund; and shall compensate the Adviser.
21
<PAGE>
(e) The Manager shall render regular reports to the Trust, at regular
meetings of the Board of Trustees, of, among other things, the
portfolio investments of the Fund and measurement and analysis of
the results achieved by the Fund.
(f) The Manager shall employ or provide and compensate the executive,
administrative, secretarial and clerical personnel necessary to
provide the services set forth in this subparagraph 2B, and shall
bear the expense thereof, except as may otherwise be provided in
Section 4 of this Agreement. The Manager shall also compensate
all officers and employees of the Trust who are officers or
employees of the Manager.
(g) The Manager shall 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 its Plan of Distribution.
C. Provision of Information Necessary for Preparation of Securities
Registration Statement, Amendments and Other Materials.
The Manager will make available and provide financial, accounting and
statistical information required by the Trust in the preparation of
the Registration Statement, reports and other documents required by
federal and state securities laws, and such information as the Trust
may reasonably request for use in the preparation of the Registration
Statement, reports and other documents required by federal and state
securities laws.
D. Other Obligations and Services.
The Manager shall make available its officers and employees to the
Board of Trustees and officers of the Trust for consultation and
discussions regarding the administration and management of the Fund
and its investment activities.
3. EXECUTION AND ALLOCATION OF PORTFOLIO BROKERAGE COMMISSIONS. The
Adviser, subject to the supervision of the Manager and the limitations contained
in this paragraph 3, shall place, on behalf of the Fund, orders for the
execution of portfolio transactions. The Adviser is not authorized by the Fund
to take any action, including the purchase or sale of securities for the Fund's
account, (a) in contravention of (i) any investment restrictions set forth in
the Act and the rules thereunder, (ii) specific instructions adopted by the
Board of Trustees and communicated to the Adviser, (iii) the investment
objectives, policies and restrictions of the Fund as set forth in the
Registration Statement, or (iv) instructions from the Manager communicated to
the Adviser, or (b) which would have the effect of causing the Fund to fail to
qualify or to cease to qualify as a regulated investment company under the
Internal Revenue Code of 1986, as amended, or any succeeding statute.
Subject to the foregoing, the Adviser shall determine the securities to be
purchased or sold by the Fund and will place orders pursuant to the
determination of the Manager with or through such persons, brokers or dealers in
conformity with the policy with respect to brokerage as set forth in the
Registration Statement or as the Board of Trustees may direct from time to time.
It is recognized that, in providing
22
<PAGE>
the Fund with investment supervision of the placing of orders for portfolio
transactions, the Manager will give primary consideration to securing 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. Consistent
with this policy, the Manager may 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 other accounts over which it
exercises investment discretion. It is understood that neither the Trust nor the
Manager have adopted a formula for allocation of the Fund's investment
transaction business. It is also understood that it is desirable for the Fund
that the Manager and/or the Adviser have access to supplemental investment and
market research and security and economic analyses provided by certain brokers
who may execute brokerage transactions at a higher commission to the Fund than
may result when allocating brokerage to other brokers on the basis of seeking
the lowest commission. Therefore, the Manager is authorized to place orders for
the purchase and sale of securities for the Fund with such certain brokers,
subject to review by the Trust's Board of Trustees from time to time with
respect to the extent and continuation of this practice, provided that the
Manager determines 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 the Manager's overall responsibilities with respect to
the Fund and to other accounts over which it exercises investment discretion. It
is understood that although the information may be useful to the Trust, the
Manager and the Adviser, it is not possible to place a dollar value on such
information. Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking best qualitative
execution, the Manager 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.
On occasions when the Manager deems the purchase or sale of a security to
be in the best interest of the Fund as well as other clients, the Manager, to
the extent permitted by applicable laws and regulations, may, but shall be under
no obligation to, aggregate the securities to be sold or purchased in order to
obtain the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or sold, as
well as expenses incurred in the transaction, will be made by the Manager in the
manner it considers to be the most equitable and consistent with its fiduciary
obligations to the Trust with respect to the Fund and to such other clients.
The Manager may delegate any of its responsibilities under this paragraph 3
to the Adviser. Notwithstanding the delegation of any such responsibilities, the
Adviser will not execute any portfolio transactions for the Fund's account with
a broker or dealer which is an "affiliated person" (as defined in the Act) of
the Trust, the Manager or the Adviser without the prior approval of the Manager.
The Manager agrees that it will provide the Adviser with a list of brokers and
dealers which are "affiliated persons" of the Trust, the Manager or the Adviser.
The Manager shall render regular reports to the Trust of the total
brokerage business placed by the Fund and the manner in which the allocation has
been accomplished.
4. EXPENSES OF THE FUND. It is understood that the Fund will pay, or that
the Fund will enter into arrangements that require third parties to pay, all its
expenses other than those expressly assumed by the Manager herein, which
expenses payable by the Fund shall include:
23
<PAGE>
A. Expenses of all audits by independent public accountants;
B. Expenses of transfer agent, dividend disbursing agent, accounting and
pricing agent and shareholder recordkeeping services;
C. Expenses of custodial services including recordkeeping services
provided by the custodian;
D. Expenses of obtaining security valuation quotations for calculating
the value of the Fund's net assets;
E. Salaries and other compensation of any of its executive officers and
employees, if any, who are not officers, directors, stockholders or
employees of the Manager or the Adviser;
F. Taxes or governmental fees levied against the Fund;
G. Brokerage fees and commissions in connection with the purchase and
sale of the Fund's portfolio securities;
H. Costs, including the interest expenses, of borrowing money;
I. Costs and/or fees incident to Board of Trustee and shareholder
meetings, the preparation and mailings of prospectuses, reports and
notices to the existing shareholders of the Fund, the filing of
reports with regulatory bodies, the maintenance of the Trust's
existence as a business trust, membership in investment company
organizations, and the registration of shares with federal and state
securities authorities;
J. Legal fees, including the legal fees related to the registration and
continued qualification of the Fund's shares for sale and legal fees
arising from litigation to which the Trust may be a party and
indemnification of the Trust's officers and Trustees with respect
thereto;
K. Costs of printing share certificates (in the event such certificates
are issued) representing shares of the Fund;
L. Trustees' fees and expenses of Trustees who are not directors,
officers, employees or stockholders of the Manager, the Adviser or any
of their affiliates; and
M. The Fund's pro rata portion of the fidelity bond required by Section
17(g) of the Act and other insurance premiums.
5. ACTIVITIES AND AFFILIATES OF THE MANAGER.
A. The services of the Manager hereunder are not to be deemed exclusive,
and the Manager and any of its affiliates shall be free to render
similar services to others. The Manager shall use the same skill and
care in the management of the Fund's assets as it uses in the
24
<PAGE>
administration of other accounts to which it provides asset
management, consulting and portfolio manager selection services, but
shall not be obligated to give the Fund more favorable or preferential
treatment vis-a-vis its other clients.
B. Subject to and in accordance with the Declaration of Trust and Bylaws
of the Trust and to Section 10(a) of the Act, it is understood that
Trustees, officers and agents of the Trust and shareholders of the
Fund are or may be interested in the Manager or its affiliates as
directors, officers, agents or stockholders of the Manager or its
affiliates; that directors, officers, agents and stockholders of the
Manager or its affiliates are or may be interested in the Trust as
Trustees, officers, agents, shareholders or otherwise; that the
Manager or its affiliates may be interested in the Trust as
shareholders or otherwise; and that the effect of any such interests
shall be governed by said Declaration of Trust, Bylaws and the Act.
6. COMPENSATION OF THE MANAGER. For all services to be rendered and
payments made as provided in this Agreement, the Fund will pay the Manager a
daily fee equal to the annual rate of 1% of the value of the daily net assets of
the Fund up to and including $50,000,000, 90/100 of 1% of the next $50 million
of such assets, 80/100 of 1% of the next $100 million of such assets, and 75/100
of 1% of such assets in excess of $200,000,000. Manager's fee shall be payable
monthly and shall be due with respect to any month as of the first business day
following the end of such month.
The value of the daily net assets of the Fund shall be determined pursuant
to the applicable provisions of the Declaration of Trust and to resolutions to
the Board of Trustees of the Trust. If, pursuant to such provisions, the
determination of net asset value is suspended for any particular business day,
then for the purposes of this paragraph 6, the value of the net assets of the
Fund as last determined shall be deemed to be the value of its net assets as of
the close of business on that 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, the Manager's compensation payable for 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).
7. LIABILITIES OF THE MANAGER. The Manager (including its 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 the part of the Manager in the performance of its duties
or from the reckless disregard by the Manager of its obligations and duties
under this Agreement ("disabling conduct"). However, the Manager 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 the Manager
was 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 the Manager was 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 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 the Manager
in defending a proceeding, upon the undertaking by or on behalf of the Manager
to repay the advance unless it is ultimately determined that the Manager is
entitled to indemnification, so long as the Manager meets at least one of the
following as a condition to the advance: (1) the Manager shall provide a
security for its
25
<PAGE>
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 the
Manager ultimately will be found entitled to indemnification. Any person
employed by the Manager 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 the Manager's employee
or agent.
8. RENEWAL AND TERMINATION.
A. This Agreement shall become effective upon its execution, shall remain
in force for a period of two (2) years from that date and from year to
year thereafter, but only so long as such continuance is specifically
approved at least annually by the vote of a majority of the Trustees
who are not interested persons of the Trust, the Manager or the
Adviser, cast in person at a meeting called for the purpose of voting
on such approval and by a vote of the Board of Trustees or of a
majority of the outstanding voting securities. The aforesaid provision
that this Agreement may be continued "annually" shall be construed in
a manner consistent with the Act and the rules and regulations
thereunder.
B. This Agreement:
(a) may at any time be terminated without the payment of any penalty
either by vote of the Board of Trustees of the Trust or by vote
of a majority of the outstanding voting securities of the Fund,
on sixty (60) days' written notice to the Manager;
(b) shall immediately terminate in the event of its assignment; and
(c) may be terminated by the Manager on sixty (60) days' written
notice to the Trust.
C. As used in this Section 8, the terms "assignment," "interested person"
and "vote of a majority of the outstanding voting securities" shall
have the meanings set forth in the Act and the rules and regulations
thereunder.
D. Any notice under this Agreement shall be given in writing addressed
and delivered or mailed postpaid, to the other party to this Agreement
at its principal place of business.
9. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
10. 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 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.
26
<PAGE>
11. 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 of Trustees,
including a majority of the Trustees who are not interested persons of the
Manager or of the Trust, cast in person at a meeting called for the purpose of
voting on such approval.
12. GOVERNING LAW. To the extent that state law has not been preempted by
the provisions of any law of the United States heretofore or hereafter enacted,
as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as of the day and year first written above.
COUNTRYWIDE STRATEGIC TRUST
ATTEST:__________________
By:_______________________________
Title: President
COUNTRYWIDE INVESTMENTS, INC.
ATTEST: __________________
By:_______________________________
Title: President
27
<PAGE>
EXHIBIT B
SUBADVISORY AGREEMENT
Mastrapasqua & Associates, Inc.
814 Church Street
Nashville, TN 37203
Gentlemen:
Countrywide Strategic Trust (the "Trust") is a diversified open-end
management investment company registered under the Investment Company Act of
1940, as amended (the "Act"), and subject to the rules and regulations
promulgated thereunder. The Trust's shares of beneficial interest are divided
into separate series or funds. Each such share of a fund represents an undivided
interest in the assets, subject to the liabilities, allocated to that fund. Each
fund has separate investment objectives and policies. The _______________ (the
"Fund") has been established as a series of the Trust.
Countrywide Investments, Inc. (the "Manager") acts as the investment
manager for the Fund pursuant to the terms of a Management Agreement. The
Manager is responsible for the coordination of investment of the Fund's assets
in portfolio securities. However, specific portfolio purchases and sales for the
investment portfolio of the Fund are to be made by advisory organizations
recommended by the Manager and approved by the Board of Trustees of the Trust.
1. APPOINTMENT AS AN ADVISER. The Trust being duly authorized hereby
appoints and employs Mastrapasqua & Associates, Inc. (the "Adviser") as the
discretionary portfolio manager of the Fund, on the terms and conditions set
forth herein.
2. ACCEPTANCE OF APPOINTMENT; STANDARD OF PERFORMANCE. The Adviser accepts
the appointment as the discretionary portfolio manager and agrees to use its
best professional judgment to make timely investment decisions for the Fund in
accordance with the provisions of this Agreement.
3. PORTFOLIO MANAGEMENT SERVICES OF ADVISER. The Adviser is hereby employed
and authorized to select portfolio securities for investment by the Fund, to
purchase and sell securities of the Fund, and upon making any purchase or sale
decision, to place orders for the execution of such portfolio transactions in
accordance with paragraphs 5 and 6 hereof. In providing portfolio management
services to the Fund, the Adviser shall be subject to such investment
restrictions as are set forth in the Act and the rules thereunder, the Internal
Revenue Code, applicable state securities laws, 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, the investment objectives,
policies and restrictions of the Fund furnished pursuant to paragraph 4, the
provisions of Schedule A hereto and instructions from the Manager. The Adviser
is not authorized by the Fund to take any action, including the purchase or sale
of securities for the Fund, in contravention of any restriction, limitation,
objective, policy or instruction described in the previous sentence. The Adviser
shall maintain on behalf of the Fund the records listed in Schedule A hereto (as
amended from time to time). At the Trust's reasonable request, the Adviser will
consult with the Manager with respect to any decision made by it with respect to
the investments of the Fund.
28
<PAGE>
4. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. The Trust will provide
the Adviser with the statement of investment objectives, policies and
restrictions applicable to the Fund as contained in the Trust's registration
statement under the Act and the Securities Act of 1933, and any instructions
adopted by the Board of Trustees supplemental thereto. The Trust will provide
the Adviser with such further information concerning the investment objectives,
policies and restrictions applicable thereto as the Adviser may from time to
time reasonably request. The Trust retains the right, on written notice to the
Adviser from the Trust or the Manager, to modify any such objectives, policies
or restrictions in any manner at any time.
5. TRANSACTION PROCEDURES. All transactions will be consummated by payment
to or delivery by Star Bank, N.A. or any successor custodian (the "Custodian"),
or such depositories or agents as may be designated by the Custodian in writing,
as custodian for the Fund, of all cash and/or securities due to or from the
Fund, and the Adviser shall not have possession or custody thereof. If the
Manager has authorized the Adviser to place orders for portfolio transactions of
the Fund, the Adviser shall advise the Custodian and confirm in writing to the
Trust and to the Manager all investment orders for the Fund placed by it with
brokers and dealers. The Adviser shall issue to the Custodian such instructions
as may be appropriate in connection with the settlement of any transaction
initiated by the Adviser. It shall be the responsibility of the Adviser to take
appropriate action if the Custodian fails to confirm in writing proper execution
of the instructions.
6. ALLOCATION OF BROKERAGE. When so authorized by the Manager, the Adviser
shall have the authority and discretion to select brokers and dealers to execute
portfolio transactions initiated by the Adviser, and for the selection of the
markets on or in which the transactions will be executed.
A. In doing so, the Adviser will give primary consideration to
securing 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. Consistent with this policy, the Adviser may 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 other accounts over
which it exercises investment discretion. It is understood that neither the
Trust, the Manager nor the Adviser have adopted a formula for allocation of the
Fund's investment transaction business. It is also understood that it is
desirable for the Fund that the Manager and/or the Adviser have access to
supplemental investment and market research and security and economic analyses
provided by certain brokers who may execute brokerage transactions at a higher
commission to the Fund than may result when allocating brokerage to other
brokers on the basis of seeking the lowest commission. Therefore, if so
authorized by the Manager, the Adviser is authorized to place orders for the
purchase and sale of securities for the Fund with such certain brokers, subject
to review by the Trust's Board of Trustees from time to time with respect to the
extent and continuation of this practice, provided that the Manager determines
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 the Manager's overall responsibilities with respect to the Fund
and to the other accounts over which it exercises investment discretion. It is
understood that although the information may be useful to the Trust, the Manager
and the Adviser, it is not possible to place a dollar value on such information.
29
<PAGE>
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best qualitative execution, the
Manager 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.
On occasions when the Adviser deems the purchase or sale of a security to
be in the best interest of the Fund as well as other clients, the Adviser, if so
authorized by the Manager and to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the securities
to be sold or purchased in order to obtain the most favorable price or lower
brokerage commissions and efficient execution. In such event, allocation of the
securities so purchased or sold, as well as expenses incurred in the
transaction, will be made by the Adviser in the manner it considers to be the
most equitable and consistent with its fiduciary obligations to the Fund with
respect to the Fund and to such other clients.
For each fiscal quarter of the Fund, the Adviser shall prepare and render
reports to the Manager and the Trust's Board of Trustees of the total brokerage
business placed by the Adviser and the manner in which the allocation has been
accomplished. Such reports shall set forth at a minimum the information required
to be maintained by Rule 31a-1(b)(9) under the Act.
B. Adviser agrees that it will not execute any portfolio transactions
for the Fund's account with a broker or dealer which is an "affiliated person"
(as defined in the Act) of the Trust, the Manager or the Adviser without the
prior approval of the Manager. The Manager agrees that it will provide the
Adviser with a list of brokers and dealers which are "affiliated persons" of the
Trust, the Manager or the Adviser.
7. PROXIES. The Trust will vote all proxies solicited by or with respect to
the issuers of securities in which assets of the Fund may be invested from time
to time. At the Fund's request, the Adviser shall provide the Trust with its
recommendations as to the voting of such proxies.
8. REPORTS TO THE ADVISER. The Trust will provide the Adviser with such
periodic reports concerning the status of the Fund as the Adviser may reasonably
request.
9. FEES FOR SERVICES. For the services provided to the Fund, the Manager
shall pay the Adviser a fee equal to the annual rate of 60/100 of 1% of the
average value of the daily net assets of the Fund up to and including
$50,000,000, 50/100 of 1% of the next $50 million of such assets, 40/100 of 1%
of the next $100 million of such assets, and 35/100 of 1% of such assets in
excess of $200,000,000.
The Adviser's fees shall be payable monthly within ten days following the
end of each month. Pursuant to the provisions of the Management Agreement
between the Trust and the Manager, the Manager is solely responsible for the
payment of fees to the Adviser, and the Adviser agrees to seek payment of the
Adviser's fees solely from the Manager.
10. OTHER INVESTMENT ACTIVITIES OF THE ADVISER. The Trust acknowledges that
the Adviser or one or more of its affiliates may have investment
responsibilities or render investment advice to or perform other investment
advisory services for other individuals or entities and that the Adviser, its
affiliates or any of its or their directors, officers, agents or employees may
buy, sell or trade in any securities for its or their respective accounts
("Affiliated Accounts"). Subject
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to the provisions of paragraph 2 hereof, the Trust agrees that the Adviser or
its affiliates may give advice or exercise investment responsibility and take
such other action with respect to other Affiliated Accounts which may differ
from the advice given or the timing or nature of action taken with respect to
the Fund, provided that the Adviser acts in good faith, and provided further,
that it is the Adviser's policy to allocate, within its reasonable discretion,
investment opportunities to the Fund over a period of time on a fair and
equitable basis relative to the Affiliated Accounts, taking into account the
investment objectives and policies of the Fund and any specific investment
restrictions applicable thereto. The Trust acknowledges that one or more of the
Affiliated Accounts may at any time hold, acquire, increase, decrease, dispose
of or otherwise deal with positions in investments in which the Fund may have an
interest from time to time, whether in transactions which involve the Fund or
otherwise. The Adviser shall have no obligation to acquire for the Fund a
position in any investment which any Affiliated Account may acquire, and the
Trust shall have no first refusal, co-investment or other rights in respect of
any such investment, either for the Fund or otherwise.
11. CERTIFICATE OF AUTHORITY. The Trust, the Manager and the Adviser shall
furnish to each other from time to time certified copies of the resolutions of
their Board of Trustees or Board of Directors or executive committees, as the
case may be, evidencing the authority of officers and employees who are
authorized to act on behalf of the Trust, the Fund, the Manager and/or the
Adviser.
12. LIMITATION OF LIABILITY. The Adviser (including its 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 the part of the Adviser in the performance of its duties
or from the reckless disregard by the Adviser of its obligations and duties
under this Agreement ("disabling conduct"). However, the Adviser 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 the Adviser
was 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 the Adviser was 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 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 the Adviser
in defending a proceeding, upon the undertaking by or on behalf of the Adviser
to repay the advance unless it is ultimately determined that the Adviser is
entitled to indemnification, so long as the Adviser meets at least one of the
following as a condition to the advance: (1) the Adviser shall provide a
security for its 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 the Adviser ultimately will be found entitled to indemnification. Any
person employed by the Adviser 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 the
Adviser's employee or agent.
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13. CONFIDENTIALITY. Subject to the duty of the Adviser and the Trust to
comply with applicable law, including any demand of any regulatory or taxing
authority having jurisdiction, the parties hereto shall treat as confidential
all information pertaining to the Fund and the actions of the Adviser and the
Trust in respect thereof.
14. ASSIGNMENT. No assignment of this Agreement shall be made by the
Adviser, and this Agreement shall terminate automatically in the event of such
assignment. The Adviser shall notify the Trust in writing sufficiently in
advance of any proposed change of control, as defined in Section 2(a)(9) of the
Act, as will enable the Trust to consider whether an assignment will occur, and
to take the steps necessary to enter into a new contract with the Adviser.
15. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE TRUST. The Trust
represents, warrants and agrees that:
A. The Adviser has been duly appointed by the Board of Trustees of the
Trust to provide investment services to the Fund as contemplated hereby.
B. The Trust will deliver to the Adviser a true and complete copy of
its then current prospectus and statement of additional information as effective
from time to time and such other documents or instruments governing the
investments of the Fund and such other information as is necessary for the
Adviser to carry out its obligations under this Agreement.
C. The Trust is currently in compliance and shall at all times comply
with the requirements imposed upon the Fund by applicable laws and regulations.
16. Representations, Warranties and Agreements of the Adviser. The Adviser
represents, warrants and agrees that:
A. The Adviser is registered as an "investment adviser" under the
Investment Advisers Act of 1940.
B. The Adviser will maintain, keep current and preserve on behalf of
the Fund, in the manner and for the time periods required or permitted by the
Act, the records identified in Schedule A. The Adviser agrees that such records
(unless otherwise indicated on Schedule A) are the property of the Trust, and
will be surrendered to the Trust promptly upon request.
C. The Adviser will complete such reports concerning purchases or
sales of securities on behalf of the Fund as the Manager or the Trust may from
time to time require to ensure compliance with the Act, the Internal Revenue
Code and applicable state securities laws.
D. The Adviser will adopt a written code of ethics complying with the
requirements of Rule 17j-1 under the Act and will provide the Trust with a copy
of the code of ethics and evidence of its adoption. Within forty-five (45) days
of the end of the last calendar quarter of each year while this Agreement is in
effect, the president or a vice president of the Adviser shall certify to the
Trust that the Adviser has complied with the requirements of Rule 17j-1 during
the previous year and that there have been no violations of the Adviser's code
of ethics or, if such a violation has occurred, that appropriate action was
taken in response to such violation.
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Upon the written request of the Trust, the Adviser shall submit to the Trust the
reports required to be made to the Adviser by Rule 17j-1(c)(1).
E. The Adviser will promptly after filing with the Securities and
Exchange Commission an amendment to its Form ADV furnish a copy of such
amendment to the Trust and to the Manager.
F. Upon request of the Trust, the Adviser will provide assistance to
the Custodian in the collection of income due or payable to the Fund. With
respect to income from foreign sources, the Adviser will undertake any
reasonable procedural steps required to reduce, eliminate or reclaim non-U.S.
withholding taxes under the terms of applicable United States income tax
treaties.
G. The Adviser will immediately notify the Trust and the Manager of
the occurrence of any event which would disqualify the Adviser from serving as
an investment adviser of an investment company pursuant to Section 9(a) of the
Act or otherwise.
17. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement between the Adviser and the Trust, which amendment, other than
amendments to Schedule A, is subject to the approval of the Board of Trustees
and the shareholders of the Fund in the manner required by the Act and the rules
thereunder, subject to any applicable exemptive order of the Securities and
Exchange Commission modifying the provisions of the Act with respect to approval
of amendments to this Agreement.
18. EFFECTIVE DATE; TERM. This Agreement shall become effective on the date
of its execution and shall remain in force until _____________, ________ and
from year to year thereafter but only so long as such continuance is
specifically approved at least annually by the vote of a majority of the
Trustees who are not interested persons of the Trust, the Manager or the
Adviser, cast in person at a meeting called for the purpose of voting on such
approval, and by a vote of the Board of Trustees or of a majority of the
outstanding voting securities of the Fund. The aforesaid requirement that this
Agreement may be continued "annually" shall be construed in a manner consistent
with the Act and the rules and regulations thereunder.
19. TERMINATION. This Agreement may be terminated by either party hereto,
without the payment of any penalty, immediately upon written notice to the other
in the event of a breach of any provision thereof by the party so notified, or
otherwise upon sixty (60) days' written notice to the other, but any such
termination shall not affect the status, obligations or liabilities of any party
hereto to the other.
20. SHAREHOLDER LIABILITY. The Adviser is hereby expressly put on notice of
the limitation of shareholder liability as set forth in the Declaration of Trust
of the Trust and agrees that obligations assumed by the Trust pursuant to this
Agreement shall be limited in all cases to the Fund and its assets. The Adviser
agrees that it shall not seek satisfaction of any such obligations from the
shareholders or any individual shareholder of the Fund, nor from the Trustees or
any individual Trustee of the Trust.
21. DEFINITIONS. As used in paragraphs 14 and 18 of this Agreement, the
terms "assignment," interested person" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the Act and
the rules and regulations thereunder.
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<PAGE>
22. APPLICABLE LAW. To the extent that state law is not preempted by the
provisions of any law of the United States heretofore or hereafter enacted, as
the same may be amended from time to time, this Agreement shall be administered,
construed and enforced according to the laws of the State of Ohio.
COUNTRYWIDE INVESTMENTS, INC. COUNTRYWIDE STRATEGIC TRUST
By:_______________________________ By:________________________________
Title: President Title: President
Date:______________, 1999 Date:______________, 1999
ACCEPTANCE
----------
The foregoing Agreement is hereby accepted.
MASTRAPASQUA & ASSOCIATES, INC.
By:__________________________________
Title: ________________________________
Date: ______________, 1999
34
<PAGE>
SCHEDULE A
RECORDS TO BE MAINTAINED BY THE ADVISER
1. (Rule 31a-1(b)(5) and (6)) A record of each brokerage order, and all other
portfolio purchases and sales, given by the Adviser on behalf of the Fund
for, or in connection with, the purchase or sale of securities, whether
executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any modification or
cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf of the Fund.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter, completed within ten
(10) days after the end of the quarter, showing specifically the basis or
bases upon which the allocation of orders for the purchase and sale of
portfolio securities to named brokers or dealers was effected, and the
division of brokerage commissions or other compensation on such purchase
and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Fund by brokers or dealers.
(ii) The supplying of services or benefits by brokers or dealers to:
(a) The Trust;
(b) the Manager;
(c) the Adviser;
(d) any other portfolio adviser of the Trust; and
(e) any person affiliated with the foregoing persons.
(iii) Any other consideration other than the technical qualifications
of the brokers and dealers as such.
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<PAGE>
B. Shall show the nature of the services or benefits made available.
C. Shall describe in detail the application of any general or specific
formula or other determinant used in arriving at such allocation of
purchase and sale orders and such division of brokerage commissions or
other compensation.
D. The name of the person responsible for making the determination of
such allocation and such division of brokerage commissions or other
compensation.
3. (Rule 31a-1(b)(10)) A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of portfolio securities. Where an authorization is made by
a committee or group, a record shall be kept of the names of its members
who participate in the authorization. There shall be retained as part of
this record: any memorandum, recommendation or instruction supporting or
authorizing the purchase or sale of portfolio securities and such other
information as is appropriate to support the authorization.*
4. (Rule 31a-1(f)) Such accounts, books and other documents as are required to
be maintained by registered investment advisers by rules adopted under
Section 204 of the Investment Advisers Act of 1940, to the extent such
records are necessary or appropriate to record the Adviser's transactions
with respect to the Fund.
*Such information might include: the current Form 10-K, annual and
quarterly reports, press releases, reports by analysts and from brokerage firms
(including their recommendation; i.e., buy, sell, hold) or any internal reports
or portfolio adviser reviews.
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<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
AGGRESSIVE GROWTH FUND AND GROWTH/VALUE 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, 2, AND 4,
AND "AUTHORITY GIVEN" ON PROPOSAL 3. 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. APPROVAL OF NEW SUBADVISORY AGREEMENT WITH MASTRAPASQUA & ASSOCIATES,
INC.
|_| FOR |_| AGAINST |_| ABSTAIN
3. 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:
- --------------------------------------------------------------------------------
4. 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
