CAPITAL APPRECIATION
INCOME
ANNUAL
REPORT
MARCH 31, 2000 Utility Fund
[GRAPHIC OMITTED] Equity Fund
[LOGO] Growth/Value Fund
COUNTRYWIDE
INVESTMENTS Aggressive Growth Fund
<PAGE>
TABLE OF CONTENTS
================================================================================
Letter from the President ................................................ 3
Management Discussion and Analysis ....................................... 4
Statements of Assets and Liabilities ..................................... 11-12
Statements of Operations ................................................. 13-14
Statements of Changes in Net Assets ...................................... 15-16
Financial Highlights ..................................................... 17-23
Notes to Financial Statements ............................................ 24-29
Portfolios of Investments:
Utility Fund .......................................................... 30-31
Equity Fund ........................................................... 32-33
Growth/Value Fund ..................................................... 34-35
Aggressive Growth Fund ................................................ 36-37
Results of Special Meeting of Shareholders ............................... 38
Report of Independent Auditors ........................................... 39
2 - Countrywide Investments
<PAGE>
LETTER FROM THE PRESIDENT
================================================================================
[PHOTO]
Dear Fellow Shareholders:
We are pleased to present Countrywide Strategic Trust's Annual Report for the
fiscal year ended March 31, 2000. This report provides financial data and
performance information for the Utility Fund, Equity Fund, Growth/Value Fund and
Aggressive Growth Fund. These Funds represent the four equity products offered
by the Countrywide Family of Funds.
The U.S. economy remains strong, despite numerous credit tightening steps by the
Federal Reserve since last summer. We attribute this to record employment,
modest inflation, increased industrial spending and unwavering consumer
confidence. Markets have been extremely volatile so far in 2000. The so-called
'New Economy' stocks stopped climbing, reminding investors that what goes up can
go down just as quickly. In spite of this volatility, the Equity Fund,
Growth/Value Fund and Aggressive Growth Fund received national recognition for
overall performance as of March 31, 2000.
In the bond market, short-term interest rates continued to move higher pressured
by actual and expected Federal Reserve actions, while the Treasury's decision to
retire certain long-term bonds caused a yield decline. The result, a rare
inversion of the yield curve, makes it difficult to discern investors'
inflationary expectations. Nevertheless, we see opportunities in such a market,
especially in mortgage-backed securities, select high yield issues and municipal
bonds.
While stock prices remain highly volatile, the long-term underpinnings
supporting the bull market remain firmly in place: economic growth, modest
inflation and demographic trends that support stock ownership. Growth may be a
little too brisk and inflation probably passed a cyclical low, but the long view
remains favorable. Shorter term, the profit outlook has improved in recent
months. Economic growth and productivity improvements should lead to consistent
earnings growth for the year.
On May 1, 2000 the Countrywide Family of Funds became part of the Touchstone
Family of Funds*, with the expanded fund family retaining the Touchstone name.
Touchstone shareholders can now meet their financial goals with a broader range
of choices. In addition to the funds mentioned above, Touchstone equity funds
include the Emerging Growth Fund, International Equity Fund, Value Plus Fund and
Enhanced 30 Fund. Touchstone also offers taxable and tax-free bond funds and
money market funds. Founded in 1994 and headquartered in Cincinnati, the
Touchstone Family of Funds is part of The Western-Southern Enterprise,(R) a
group of financial services companies whose heritage dates to 1888 and whose
assets owned or under management exceed $26 billion.
We remain committed to providing products and services that help investors meet
their financial goals. Our success has been built on the confidence investors
have extended to us. We thank you for your support and look forward to offering
continued service to you in the future.
Sincerely,
/s/ Robert H. Leshner
Robert H. Leshner
President
*The Touchstone Family of Funds is distributed by Touchstone Securities, Inc.#
#A registered broker-dealer and member of the NASD/SIPC.
Countrywide Investments - 3
<PAGE>
UTILITY FUND
MANAGEMENT DISCUSSION AND ANALYSIS
================================================================================
The Utility Fund seeks growth of capital and current income by investing
primarily in securities of public utilities. The Fund's total returns for the
fiscal year ended March 31, 2000 (excluding the impact of applicable sales
loads) were 18.07% and 17.16% for Class A and Class C shares respectively.
Market fundamentals for fiscal 2000 bore remarkable similarity to the previous
year. Inflation was remarkably tame given strong domestic growth. Record low
unemployment, high consumer confidence and gains in real wages contributed to
robust consumer spending. As witnessed in 1999, stock market gains were very
narrow. Much to the chagrin of value managers, investors gorged on the growth
stocks of the technology and telecommunications industries. As before, the
movement toward growth names came at the expense of traditional value sectors.
The market's strength was particularly surprising given the actions of the
Federal Reserve. Believing that wage pressures must be building, and expecting
high-powered stock market gains to fuel consumer spending, Alan Greenspan
forcefully acted. Reacting in part to five hikes in the Federal Funds rate
totaling 150 basis points, the yield on the 10-year Treasury bond (which
replaces the 30-year bond as the "Street" benchmark) rose 81 basis points to
6.00% during our fiscal year (6.48% as of this writing). Since many investors
consider utility stocks to be an alternative to bonds, share prices struggled.
The S&P Utility Index returned 4.8% for the fiscal year compared to and the
17.9% return of the S&P 500 Index.
Electric and gas utility stocks had a troubled year. A spring 1999 rally faded
despite warm weather and the group was down for the year. This utility fund held
nearly one-half of its assets in securities of electric and gas utilities. It
also held telecommunications stocks largely in the form of AT&T and several of
the "Baby Bells" which holdings performed reasonably well for the first two
fiscal quarters but collapsed over the winter. They did not enjoy the degree of
share price appreciation granted the "new economy" internet-related stocks and
fell with the technology stocks in March.
Our outlook for the utility sector remains optimistic. Business fundamentals for
the sector have likely never been better and we believe stocks are poised to
outperform. Various states are rapidly de-regulating which should lead to
productivity gains and better earnings. Electric generation capacity and gas
supplies are severely constrained leading to higher prices. Years of patient
investment in unregulated subsidiaries are beginning to bear fruit for industry
leaders. Stable, steady earnings growth should appear attractive to investors.
Utilities are becoming good investments in their own right and not just a haven
in times of market volatility. Earning growth rates for the better operators
should range from 8% to 15% representing levels at or above what the S&P 500
should generate over the next two years. Dividend yields are roughly five times
that of the S&P 500 suggesting attractive current income opportunities. At the
end of March, the electric sector's price/earnings multiple was at an
historically wide discount to the S&P 500. The stocks are cheap. With balance
sheets in great shape, we expect increased LBO activity and merger-related
consolidation to boost sector performance.
This fund acquired new portfolio managers in November 1999. Through the first
half of 2000, the portfolio will be restructured somewhat in an effort to
enhance results. Some faster growth, emerging telecommunications companies like
Alltel and Broadwing (formerly Cincinnati Bell) have been added. Undervalued
gas-oriented names like El Paso Energy and Williams have joined the list. We are
adding to some of the better managed electric holdings. All the new names
demonstrate improving fundamentals, own strategic assets, and are cheap on a
sum-of-the-parts basis. Possession of important strategic assets gives the Fund
a free call on a takeover and the merger related premiums that follow.
4 - Countrywide Investments
<PAGE>
UTILITY FUND
MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)
================================================================================
Comparison of the Change in Value of a $10,000 Investment in the Utility Fund -
Class A* and the Standard & Poor's Utility Index
--------------------------------------------------------
Utility Fund
Average Annual Total Returns
1 Year 5 Years 10 Years Since Inception*
Class A 11.28% 13.92% 11.12% --
Class C 15.70% 14.03% -- 9.96%
--------------------------------------------------------
[GRAPHIC OMITTED}
3/00
Utility Fund - Class A $30,791
Standard & Poor's Utility Index $29,665
Past performance is not predictive of future performance.
* The chart above represents performance of Class A shares only, which will vary
from the performance of Class C shares based on the difference in loads and fees
paid by shareholders in the different classes. The initial public offering of
Class A shares commenced on August 15, 1989, and the initial public offering of
Class C shares commenced on August 2, 1993.
Countrywide Investments - 5
<PAGE>
EQUITY FUND
MANAGEMENT DISCUSSION AND ANALYSIS
================================================================================
The Equity Fund seeks long-term appreciation by investing primarily in common
stocks of high quality companies that exhibit above-average growth in key
metrics such as earnings, cash flow and revenues and the consistency of these
variables. The Fund's total returns for the fiscal year ended March 31, 2000
(excluding the impact of applicable sales loads) were 20.60% and 19.24% for the
Class A and Class C shares, respectively.
The U.S. economy continued to generate robust growth throughout the year, with
GDP growing at better than a 5% rate in the past two quarters. In February, the
expansion that began in 1991 became the longest ever for the U.S. economy. Low
unemployment and high consumer confidence has led to strong consumer spending.
This has been joined by higher capital spending and rising exports to drive GDP.
Alas, growth has been too good for the Federal Reserve. The Fed has raised
interest rates significantly since last summer in an attempt to cool economic
growth and dampen any nascent inflationary pressures. While inflation has
probably passed a cyclical low, the Fed's tightening steps will eventually slow
the sizzling economy and keep inflation at a manageable level.
The stock market recorded another year of strong gains for the fiscal year ended
March 31 with the S&P 500 up 17.9%. Once again, the market averages were driven
by growth stocks. Large-cap technology stocks were the leading sector, rising
more than 75%. Small and mid-cap stocks, especially tech companies, performed
well during the second half of the year. Many technology companies exhibited
strong earnings growth, but their share prices were also driven higher by
surging optimism for all stocks that were Internet related.
Since late March, rising interest rates and fears of further Fed tightening have
caused a meaningful correction. Part of the correction can be attributed to the
need to consolidate the huge gains achieved since last autumn. Also, the extreme
optimism surrounding the `new economy' stocks and the excessive valuations
accorded to them have proven unsustainable.
Our investment philosophy is centered on the belief that high quality, well-run
companies that operate in high return businesses are good long-term investments.
After screening potential stock purchase candidates for superior growth
attributes and financial strength, we conduct detailed bottom-up research to
understand the key drivers of growth and their inherent competitive advantages.
We tend to own stocks that are or have the potential to become leaders in their
industries.
There have been a number of changes in the Fund in recent months as we seek to
implement our investment strategy in the context of the current environment.
Although well diversified, technology, healthcare and communications represent
areas of emphasis in the Fund. We believe these sectors offer superior past,
present and future growth attributes and should contribute to the Fund in a
meaningful way.
6 - Countrywide Investments
<PAGE>
EQUITY FUND
MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)
================================================================================
Comparison of the Change in Value of a $10,000 Investment in the Equity Fund -
Class C* and the Standard & Poor's 500 Index
----------------------------------------------
Equity Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
Class A 13.67% 21.54% 16.65%
Class C 17.75% 21.57% 16.10%
----------------------------------------------
[GRAPHIC OMITTED]
3/00
Equity Fund - Class C $28,018
Standard & Poor's 500 Index $38,491
Past performance is not predictive of future performance.
*The chart above represents performance of Class C shares only, which will vary
from the performance of Class A shares based on the differences in loads and
fees paid by shareholders in the different classes. The initial public offering
of Class C shares commenced on June 7, 1993, and the initial public offering of
Class A shares commenced on August 2, 1993.
Countrywide Investments - 7
<PAGE>
GROWTH/VALUE FUND
MANAGEMENT DISCUSSION AND ANALYSIS
================================================================================
The Countrywide Growth/Value Fund seeks long-term capital appreciation through
equity investments in companies whose valuations may not yet reflect their
prospects for accelerated earnings/cash flow growth. The Fund has returned
88.88% (excluding the impact of applicable sales loads) for the twelve months
ending March 31, 2000 compared to the S&P 500 Index, the Fund's benchmark, which
returned 17.94% for the same period.
Portfolio Manager Frank Mastrapasqua's investment style is to assess the nature,
duration and risk factors underlying the current economic, political, and market
cycles in determining sector and security selection. Individual security
selection focuses on companies believed to have the most attractive valuations
based on independently derived earnings and cash flow growth rates purchased at
favorable risk-adjusted price to earnings ratios.
After a very strong fourth quarter and year 1999 results, the Growth/Value Fund
posted a strong first quarter performance, as a continuation of the sector and
issue selections based on Mastrapasqua & Associates' long-term perspective of
where the extraordinary growth opportunities are in the U.S. equity markets.
Mastrapasqua continued to overweight the technology and telecommunication
sectors in the Fund. Within these sectors, Mastrapasqua focused on those
companies whose products are increasingly being used by telecommunication
providers to add capacity to their networks due to the insatiable demand for
bandwidth and by corporations, which are just beginning to transform themselves
into e-businesses.
Companies like PMC-Sierra, JDS Uniphase, Broadcom, Oracle, Cisco, and Sun
Microsystems are representative companies and contributed to the fund's first
quarter performance. These companies' technology is used by telecommunication
providers to add capacity to their networks in order to handle surging Internet
traffic and by companies, wanting an Internet presence. All these companies have
leading-edge products versus their competitors and enjoy pricing power in a low
inflation environment. As demand for networking equipment continues to surge and
as businesses across the globe begin to transform themselves into Internet
companies in order to stay competitive, Mastrapasqua & Associates believes the
aforementioned companies should be prime beneficiaries.
Led by strong stock appreciation in drug companies, Pharmacia & Upjohn (now
Pharmacia Corp.), and Elan, biotech companies, Amgen, IDEC Pharmaceuticals, and
Medimmune, and genomics companies, PE Biosystems and Waters Corp, the healthcare
sector rebounded and contributed to first quarter performance. Prospectively,
all these companies are very well-positioned to take advantage of favorable
demographics, the increased need to treat new kinds of diseases, and newer
technology available that allows scientists to understand disease more
thoroughly.
Those companies with quality management, a strong product pipeline, and which
reinvest a large percentage of their revenues into R&D should do well for
investors.
8 - Countrywide Investments
<PAGE>
GROWTH/VALUE FUND
MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)
================================================================================
Comparison of the Change in Value of a $10,000 Investment in the Growth/Value
Fund - Class A* and the Standard & Poor's 500 Index
-----------------------------------
Growth/Value Fund
Average Annual Total Returns
1 Year Since Inception*
Class A 78.02% 36.42%
Class C -- 74.32%**
-----------------------------------
[GRAPHIC OMITTED]
3/00
Growth/Value Fund - Class A $41,228
Standard & Poor's 500 Index $27,610
Past performance is not predictive of future performance.
*The chart above represents performance of Class A shares only, which will vary
from the performance of Class C shares based on the differences in loads and
fees paid by shareholders in the different classes. The initial public offering
of Class A shares commenced on September 29, 1995, and the initial public
offering of Class C shares commenced on August 2, 1999.
**Represents total return since August 2, 1999.
Countrywide Investments - 9
<PAGE>
AGGRESSIVE GROWTH FUND
MANAGEMENT DISCUSSION AND ANALYSIS
================================================================================
The Countrywide Aggressive Growth Fund invests in common stocks, targeting
growth companies of various sizes that are believed likely to benefit from new
or innovative products, services, or processes, and that have accelerating
earnings and cash flow growth. The fund returned 115.03% (excludes impact of
applicable sales loads) for the twelve months ending March 31, 2000 compared to
the NASDAQ Composite Index, the Fund's benchmark, which returned 86.24% for the
same period.
The Aggressive Growth Fund has the flexibility to invest throughout the entire
capitalization range but the average size is somewhat smaller than that of the
Growth/Value Fund. The Fund managers are continually looking for attractive
earnings growth that can be purchased at reasonable prices. This aggressive
investment style relies heavily on the independent research of the portfolio
managers. The Fund has comparatively low annual turnover. Investment decisions
are made within an investment time frame horizon of three to five years.
The Fund's strong fourth quarter performance continued into the first quarter as
certain sector and issue selections continued to perform well due to their
extraordinary long-term growth opportunities.
The Fund achieved its solid first quarter performance due to its heavy exposure
to the technology and telecommunication sectors. Representative companies
include Broadcom, JDS Uniphase, PMC-Sierra, Oracle, Sun Microsystems, Teradyne,
and Veritas. These companies' technology is used by telecommunication providers
to add capacity to their networks in order to handle surging Internet traffic
and by corporations, wanting to establish an Internet presence. All these
companies have leading-edge products versus their competitors and enjoy pricing
power in a low inflation environment. As demand for networking equipment
continues to surge and as businesses across the globe begin to transform
themselves into Internet companies in order to stay competitive, Mastrapasqua &
Associates believes the aforementioned companies should be prime beneficiaries.
Following a mixed performance in the fourth quarter, healthcare stocks enjoyed a
broad-based rally in the first quarter. Drug companies, which had experienced
weakness last quarter, rebounded strongly, led by Elan, Pharmacia & Upjohn (now
Pharmacia Corp.). Biotechnology companies continued their upward advance, led by
Genentech, Medimmune, IDEC Pharmaceuticals, and Amgen. Going forward, an aging
population combined with a strong product pipeline and new technology, which
allows scientists to better understand and treat disease, should keep demand for
drugs strong. Mastrapasqua & Associates believes those companies, which have a
strong pipeline, quality management, and reinvest a high percentage of their
revenues back into R&D, remain ideally positioned.
Comparison of the Change in Value of a $10,000 Investment in the Aggressive
Growth Fund and the NASDAQ Composite Index
----------------------------
Aggressive Growth Fund
Average Annual Total Returns
1 Year Since Inception*
102.67% 33.79%
----------------------------
[GRAPHIC OMITTED]
3/00
Aggressive Growth Fund $37,764
NASDAQ Composite Index $44,366
Past performance is not predictive of future performance.
*Fund inception was September 29, 1995.
10 - Countrywide Investments
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 2000
================================================================================
UTILITY EQUITY
(000's) FUND FUND
--------------------------------------------------------------------------------
ASSETS
Investment securities:
At acquisition cost ..................................... $24,913 $46,349
=================
At amortized cost ....................................... $24,913 $46,349
=================
At market value (Note 2) ................................ $39,478 $69,049
Cash ....................................................... -- 28
Dividends and interest receivable .......................... 71 43
Receivable for securities sold ............................. 221 --
Receivable for capital shares sold ......................... 26 27
Other assets ............................................... 24 24
-----------------
TOTAL ASSETS ............................................... 39,820 69,171
-----------------
LIABILITIES
Bank overdraft ............................................. 31 --
Dividends payable .......................................... 437 63
Payable for securities purchased ........................... 373 --
Payable for capital shares redeemed ........................ 141 129
Payable to affiliates (Note 4) ............................. 23 67
Other accrued expenses and liabilities ..................... 13 20
-----------------
TOTAL LIABILITIES .......................................... 1,018 279
-----------------
NET ASSETS ................................................. $38,802 $68,892
=================
NET ASSETS CONSIST OF:
Paid-in capital ............................................ $24,235 $46,192
Undistributed net investment income ........................ 2 --
Net unrealized appreciation on investments ................. 14,565 22,700
-----------------
NET ASSETS ................................................. $38,802 $68,892
=================
PRICING OF CLASS A SHARES
Net assets attributable to Class A shares .................. $35,915 $65,274
=================
Shares of beneficial interest outstanding (unlimited number
of shares authorized, no par value) (Note 5) ............ 2,419 2,846
=================
Net asset value and redemption price per share (Note 2) .... $ 14.85 $ 22.93
=================
Maximum offering price per share (Note 2) .................. $ 15.76 $ 24.33
=================
PRICING OF CLASS C SHARES
Net assets attributable to Class C shares .................. $ 2,887 $ 3,618
=================
Shares of beneficial interest outstanding (unlimited number
of shares authorized, no par value) (Note 5) ............ 194 162
=================
Net asset value and redemption price per share (Note 2) .... $ 14.86 $ 22.32
=================
Maximum offering price per share (Note 2) .................. $ 15.05 $ 22.60
=================
See accompanying notes to financial statements.
Countrywide Investments - 11
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 2000
================================================================================
GROWTH/ AGGRESSIVE
VALUE GROWTH
(000's) FUND FUND
--------------------------------------------------------------------------------
ASSETS
Investment securities:
At acquisition cost ..................................... $52,247 $22,276
=================
At amortized cost ....................................... $52,247 $22,276
=================
At market value (Note 2) ................................ $89,444 $40,154
Dividends receivable ....................................... 9 3
Receivable for capital shares sold ......................... 1,600 237
Receivable for securities sold ............................. 973 --
Organization costs, net (Note 2) ........................... 3 3
Other assets ............................................... 26 8
-----------------
TOTAL ASSETS ............................................... 92,055 40,405
-----------------
LIABILITIES
Bank overdraft ............................................. 14 1
Payable for securities purchased ........................... 1,788 126
Payable for capital shares redeemed ........................ 197 49
Payable to affiliates (Note 4) ............................. 82 39
Other accrued expenses and liabilities ..................... 114 19
-----------------
TOTAL LIABILITIES .......................................... 2,195 234
-----------------
NET ASSETS ................................................. $89,860 $40,171
=================
NET ASSETS CONSIST OF:
Paid-in capital ............................................ $51,897 $21,322
Undistributed net realized gains from security transactions 766 971
Net unrealized appreciation on investments ................. 37,197 17,878
-----------------
NET ASSETS ................................................. $89,860 $40,171
=================
PRICING OF CLASS A SHARES
Net assets attributable to Class A shares .................. $79,066 $40,171
=================
Shares of beneficial interest outstanding (unlimited number
of shares authorized, no par value) (Note 5) ............ 2,438 1,192
=================
Net asset value and redemption price per share (Note 2) .... $ 32.43 $ 33.71
=================
Maximum offering price per share (Note 2) .................. $ 34.41 $ 35.77
=================
PRICING OF CLASS C SHARES
Net assets attributable to Class C shares .................. $10,794
=======
Shares of beneficial interest outstanding (unlimited number
of shares authorized, no par value) (Note 5) ............ 334
=======
Net asset value and redemption price per share (Note 2) .... $ 32.30
=======
Maximum offering price per share (Note 2) .................. $ 32.71
=======
See accompanying notes to financial statements.
12 - Countrywide Investments
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 2000
================================================================================
UTILITY EQUITY
(000's) FUND FUND
--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends .................................................. $ 1,284 $ 495
Interest ................................................... 121 183
-----------------
TOTAL INVESTMENT INCOME .................................... 1,405 678
-----------------
EXPENSES
Investment advisory fees (Note 4) .......................... 331 490
Distribution expenses, Class A (Note 4) .................... 96 155
Distribution expenses, Class C (Note 4) .................... 31 34
Transfer agent fees, Class A (Note 4) ...................... 37 33
Transfer agent fees, Class C (Note 4) ...................... 12 12
Accounting services fees (Note 4) .......................... 36 42
Professional fees .......................................... 19 24
Registration fees, Common .................................. 5 5
Registration fees, Class A ................................. 9 9
Registration fees, Class C ................................. 9 9
Custodian fees ............................................. 14 15
Postage and supplies ....................................... 17 19
Trustees' fees and expenses ................................ 12 12
Reports to shareholders .................................... 9 8
Other expenses ............................................. 7 4
-----------------
TOTAL EXPENSES ............................................. 644 871
Fees waived by the Adviser (Note 4) ........................ (18) --
-----------------
NET EXPENSES ............................................... 626 871
-----------------
NET INVESTMENT INCOME (LOSS) ............................... 779 (193)
-----------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions .............. 5,713 9,634
Net change in unrealized appreciation/depreciation
on investments .......................................... 794 3,404
-----------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS ........... 6,507 13,038
-----------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ................. $ 7,286 $12,845
=================
See accompanying notes to financial statements.
Countrywide Investments - 13
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 2000(A)
================================================================================
GROWTH/ AGGRESSIVE
VALUE GROWTH
(000's) FUND FUND
--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends .................................................. $ 93 $ 15
Interest ................................................... 96 18
-----------------
TOTAL INVESTMENT INCOME .................................... 189 33
-----------------
EXPENSES
Investment advisory fees (Note 4) .......................... 394 177
Custodian fees ............................................. 18 22
Accounting services fees (Note 4) .......................... 34 24
Interest expense (Note 6) .................................. -- 32
Professional fees .......................................... 17 13
Registration fees, Common .................................. 17 --
Registration fees, Class A ................................. 2 15
Registration fees, Class C ................................. 2 --
Transfer agent fees, Class A (Note 4) ...................... 27 16
Transfer agent fees, Class C (Note 4) ...................... 8 --
Trustees' fees and expenses ................................ 12 12
Postage and supplies ....................................... 12 9
Distribution expenses, Class A (Note 4) .................... 49 44
Distribution expenses, Class C (Note 4) .................... 10 --
Amortization of organization costs (Note 2) ................ 6 6
Reports to shareholders .................................... 5 4
Other expenses ............................................. 4 3
-----------------
TOTAL EXPENSES ............................................. 617 377
Fees waived by the Adviser (Notes 4, 6) .................... -- (56)
-----------------
NET EXPENSES ............................................... 617 321
-----------------
NET INVESTMENT LOSS ........................................ (428) (288)
-----------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions .............. 2,013 1,040
Net change in unrealized appreciation/depreciation
on investments .......................................... 27,647 14,559
-----------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS ........... 29,660 15,599
-----------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ................. $29,232 $15,311
=================
(A) Except for the Growth/Value Fund Class C shares which represents the period
from the initial public offering (August 2, 1999) through March 31, 2000.
See accompanying notes to financial statements.
14 - Countrywide Investments
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
======================================================================================
UTILITY FUND EQUITY FUND
--------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
(000's) 2000 1999 2000 1999
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) ......... $ 779 $ 961 $ (193) $ 57
Net realized gains from
security transactions ............. 5,713 2,009 9,634 73
Net change in unrealized appreciation/
depreciation on investments ....... 794 (5,230) 3,404 6,891
--------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS FROM OPERATIONS ..... 7,286 (2,260) 12,845 7,021
--------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income, Class A .. (758) (923) -- (57)
From net investment income, Class C .. (19) (38) -- --
Return of capital, Class A ........... -- -- -- (8)
From net realized gains on security
transactions, Class A ............. (6,701) (441) (9,186) --
From net realized gains on security
transactions, Class C ............. (543) (37) (521) --
--------------------------------------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS ..... (8,021) (1,439) (9,707) (65)
--------------------------------------------
FROM CAPITAL SHARE
TRANSACTIONS (NOTE 5)
CLASS A
Proceeds from shares sold ............ 4,392 4,525 15,425 16,147
Reinvested distributions ............. 6,834 1,225 9,128 63
Payments for shares redeemed ......... (12,989) (6,425) (17,887) (5,648)
--------------------------------------------
NET INCREASE (DECREASE) IN
NET ASSETS FROM CLASS A SHARE
TRANSACTIONS ...................... (1,763) (675) 6,666 10,562
--------------------------------------------
CLASS C
Proceeds from shares sold ............ 400 424 534 567
Reinvested distributions ............. 533 70 515 --
Payments for shares redeemed ......... (1,239) (573) (667) (1,577)
--------------------------------------------
NET INCREASE (DECREASE) IN
NET ASSETS FROM CLASS C SHARE
TRANSACTIONS ...................... (306) (79) 382 (1,010)
--------------------------------------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS ..................... (2,804) (4,453) 10,186 16,508
--------------------------------------------
NET ASSETS
Beginning of year .................... 41,606 46,059 58,706 42,198
--------------------------------------------
End of year .......................... $ 38,802 $ 41,606 $ 68,892 $ 58,706
============================================
</TABLE>
See accompanying notes to financial statements.
Countrywide Investments - 15
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
======================================================================================
GROWTH/VALUE FUND AGGRESSIVE GROWTH FUND
--------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
(000's) 2000(A) 1999 2000 1999
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment loss .................. $ (428) $ (236) $ (288) $ (190)
Net realized gains from
security transactions ............. 2,013 3,988 1,040 1,735
Net change in unrealized appreciation/
depreciation on investments ....... 27,647 1,438 14,559 (937)
--------------------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS ................... 29,232 5,190 15,311 608
--------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
From net realized gains on security
transactions, Class A ............. (792) (4,391) (69) (1,620)
From net realized gains on security
transaction, Class C .............. (34) -- -- --
--------------------------------------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS ..... (826) (4,391) (69) (1,620)
--------------------------------------------
FROM CAPITAL SHARE
TRANSACTIONS (NOTE 5)
CLASS A
Proceeds from shares sold ............ 44,315 4,556 20,595 3,397
Reinvested distributions ............. 671 2,552 62 978
Payments for shares redeemed ......... (17,428) (11,892) (7,130) (7,456)
--------------------------------------------
NET INCREASE (DECREASE) IN
NET ASSETS FROM CLASS A SHARE
TRANSACTIONS ...................... 27,558 (4,784) 13,527 (3,081)
--------------------------------------------
CLASS C
Proceeds from shares sold ............ 9,477 --
Reinvested distributions ............. 33 --
Payments for shares redeemed ......... (278) --
--------------------
NET INCREASE IN NET ASSETS FROM
CLASS C SHARE TRANSACTIONS ........ 9,232 --
--------------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS ..................... 65,196 (3,985) 28,769 (4,093)
--------------------------------------------
NET ASSETS
Beginning of year .................... 24,664 28,649 11,402 15,495
--------------------------------------------
End of year .......................... $ 89,860 $ 24,664 $ 40,171 $ 11,402
============================================
</TABLE>
(A) Except for the Growth/Value Fund Class C shares which represents the period
from the initial public offering (August 2, 1999) through March 31, 2000.
See accompanying notes to financial statements.
16 - Countrywide Investments
<PAGE>
UTILITY FUND
FINANCIAL HIGHLIGHTS - CLASS A
<TABLE>
<CAPTION>
================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
------------------------------------------------------------------------------------------------
YEARS ENDED MARCH 31,
---------------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year $ 15.42 $ 16.76 $ 12.44 $ 12.24 $ 10.47
--------------------------------------------------------
Income (loss) from investment
operations:
Net investment income ........... 0.25 0.38 0.43 0.46 0.47
Net realized and unrealized gains
(losses) on investments ...... 2.50 (1.16) 4.56 0.22 1.77
--------------------------------------------------------
Total from investment operations ... 2.75 (0.78) 4.99 0.68 2.24
--------------------------------------------------------
Less distributions:
Dividends from net investment
income ....................... (0.25) (0.38) (0.43) (0.46) (0.47)
Distributions from net realized
gains ........................ (3.07) (0.18) (0.24) (0.02) --
--------------------------------------------------------
Total distributions ................ (3.32) (0.56) (0.67) (0.48) (0.47)
--------------------------------------------------------
Net asset value at end of year ..... $ 14.85 $ 15.42 $ 16.76 $ 12.44 $ 12.24
========================================================
Total return(A) .................... 18.07% (4.79%) 40.92% 5.61% 21.65%
========================================================
Net assets at end of year (000's) .. $ 35,915 $ 38,391 $ 42,463 $ 36,087 $ 40,424
========================================================
Ratio of net expenses
to average net assets(B) ........ 1.34% 1.33% 1.25% 1.25% 1.25%
Ratio of net investment income
to average net assets ........... 1.85% 2.30% 3.03% 3.65% 3.97%
Portfolio turnover rate ............ 22% 4% 0% 3% 11%
</TABLE>
(A) Total returns shown exclude the effect of applicable sales loads.
(B) Absent fee waivers by the Adviser, the ratio of expenses to average net
assets would have been 1.38% for the year ended March 31, 2000.
See accompanying notes to financial statements.
Countrywide Investments - 17
<PAGE>
UTILITY FUND
FINANCIAL HIGHLIGHTS - CLASS C
<TABLE>
<CAPTION>
================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
------------------------------------------------------------------------------------------------
YEARS ENDED MARCH 31,
---------------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year $ 15.40 $ 16.74 $ 12.43 $ 12.23 $ 10.46
--------------------------------------------------------
Income (loss) from investment
operations:
Net investment income ........... 0.13 0.18 0.31 0.35 0.37
Net realized and unrealized gains
(losses) on investments ...... 2.50 (1.16) 4.57 0.24 1.78
--------------------------------------------------------
Total from investment operations ... 2.63 (0.98) 4.88 0.59 2.15
--------------------------------------------------------
Less distributions:
Dividends from net investment
income ....................... (0.10) (0.18) (0.33) (0.37) (0.38)
Distributions from net realized
gains ........................ (3.07) (0.18) (0.24) (0.02) --
--------------------------------------------------------
Total distributions ................ (3.17) (0.36) (0.57) (0.39) (0.38)
--------------------------------------------------------
Net asset value at end of year ..... $ 14.86 $ 15.40 $ 16.74 $ 12.43 $ 12.23
========================================================
Total return(A) .................... 17.16% (5.92%) 39.91% 4.82% 20.78%
========================================================
Net assets at end of year (000's) .. $ 2,887 $ 3,215 $ 3,597 $ 3,099 $ 3,686
========================================================
Ratio of net expenses
to average net assets(B) ........ 2.46% 2.50% 2.00% 2.00% 2.00%
Ratio of net investment income
to average net assets ........... 0.73% 1.13% 2.28% 2.89% 3.19%
Portfolio turnover rate ............ 22% 4% 0% 3% 11%
</TABLE>
(A) Total returns shown exclude the effect of applicable sales loads.
(B) Absent fee waivers by the Adviser, the ratio of expenses to average net
assets would have been 2.50% for the year ended March 31, 2000.
See accompanying notes to financial statements.
18 - Countrywide Investments
<PAGE>
EQUITY FUND
FINANCIAL HIGHLIGHTS - CLASS A
<TABLE>
<CAPTION>
================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
------------------------------------------------------------------------------------------------
YEARS ENDED MARCH 31,
---------------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year $ 22.12 $ 19.38 $ 13.76 $ 12.45 $ 9.84
--------------------------------------------------------
Income from investment operations:
Net investment income (loss) ..... (0.05) 0.04 0.09 0.12 0.13
Net realized and unrealized gains
on investments ................ 4.60 2.73 5.76 1.35 2.60
--------------------------------------------------------
Total from investment operations .... 4.55 2.77 5.85 1.47 2.73
--------------------------------------------------------
Less distributions:
Dividends from net investment
income ........................ -- (0.03) (0.08) (0.12) (0.12)
Distributions from net realized
gains ......................... (3.74) -- (0.15) (0.04) --
--------------------------------------------------------
Total distributions ................. (3.74) (0.03) (0.23) (0.16) (0.12)
--------------------------------------------------------
Net asset value at end of year ...... $ 22.93 $ 22.12 $ 19.38 $ 13.76 $ 12.45
========================================================
Total return(A) ..................... 20.60% 14.30% 42.74% 11.82% 27.90%
========================================================
Net assets at end of year (000's) ... $ 65,274 $ 55,561 $ 38,336 $ 14,983 $ 8,502
========================================================
Ratio of net expenses
to average net assets(B) ......... 1.26% 1.31% 1.25% 1.25% 1.25%
Ratio of net investment income (loss)
to average net assets ............ (0.24%) 0.18% 0.53% 0.91% 1.06%
Portfolio turnover rate ............. 78% 10% 7% 38% 38%
</TABLE>
(A) Total returns shown exclude the effect of applicable sales loads.
(B) Absent fee waivers and/or expense reimbursements by the Adviser, the ratios
of expenses to average net assets would have been 1.43% and 2.02% for the
years ended March 31, 1997 and 1996, respectively.
See accompanying notes to financial statements.
Countrywide Investments - 19
<PAGE>
EQUITY FUND
FINANCIAL HIGHLIGHTS - CLASS C
<TABLE>
<CAPTION>
================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
------------------------------------------------------------------------------------------------
YEARS ENDED MARCH 31,
---------------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year $ 21.86 $ 19.34 $ 13.77 $ 12.46 $ 9.86
--------------------------------------------------------
Income from investment operations:
Net investment income (loss) ..... (0.28) (0.19) (0.03) 0.02 0.05
Net realized and unrealized gains
on investments ................ 4.48 2.71 5.75 1.35 2.60
--------------------------------------------------------
Total from investment operations .... 4.20 2.52 5.72 1.37 2.65
--------------------------------------------------------
Less distributions:
Dividends from net investment
income ........................ -- -- -- (0.02) (0.05)
Distributions from net realized
gains ......................... (3.74) -- (0.15) (0.04) --
--------------------------------------------------------
Total distributions ................. (3.74) -- (0.15) (0.06) (0.05)
--------------------------------------------------------
Net asset value at end of year ...... $ 22.32 $ 21.86 $ 19.34 $ 13.77 $ 12.46
========================================================
Total return(A) ..................... 19.24% 13.03% 41.63% 11.01% 26.90%
========================================================
Net assets at end of year (000's) ... $ 3,618 $ 3,146 $ 3,862 $ 2,770 $ 2,436
========================================================
Ratio of net expenses
to average net assets(B) ......... 2.68% 2.41% 2.00% 2.00% 2.00%
Ratio of net investment income (loss)
to average net assets ............ (1.34%) (0.92%) (0.18%) 0.15% 0.38%
Portfolio turnover rate ............. 78% 10% 7% 38% 38%
</TABLE>
(A) Total returns shown exclude the effect of applicable sales loads.
(B) Absent fee waivers and/or expense reimbursements by the Adviser, the ratios
of expenses to average net assets would have been 2.14% and 2.70% for the
years ended March 31, 1997 and 1996, respectively.
See accompanying notes to financial statements.
20 - Countrywide Investments
<PAGE>
GROWTH/VALUE FUND
FINANCIAL HIGHLIGHTS - CLASS A
<TABLE>
<CAPTION>
=====================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
-----------------------------------------------------------------------------------------------------
YEAR YEAR SEVEN MONTHS YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, AUGUST 31, AUGUST 31,
2000 1999 1998(A) 1997 1996(B)
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 17.50 $ 16.30 $ 15.90 $ 11.18 $ 10.00
---------------------------------------------------------
Income from investment operations:
Net investment loss ............... (0.16) (0.17) (0.08) (0.13) (0.06)(C)
Net realized and unrealized
gains on investments ........... 15.51 4.84 1.05 5.39 1.24
---------------------------------------------------------
Total from investment operations ..... 15.35 4.67 0.97 5.26 1.18
---------------------------------------------------------
Distributions from net realized gains (0.42) (3.47) (0.57) (0.54) --
---------------------------------------------------------
Net asset value at end of period ..... $ 32.43 $ 17.50 $ 16.30 $ 15.90 $ 11.18
=========================================================
Total return(D) ...................... 88.88% 29.89% 6.43% 47.11% 11.80%(G)
=========================================================
Net assets at end of period (000's) .. $ 79,066 $ 24,664 $ 28,649 $ 26,778 $ 15,108
=========================================================
Ratio of net expenses
to average net assets(E) .......... 1.52% 1.66% 1.66%(F) 1.95% 1.95%(F)
Ratio of net investment loss
to average net assets ............. (1.05%) (0.93%) (0.91%)(F) (1.03%) (0.62%)(F)
Portfolio turnover rate .............. 44% 59% 62%(F) 52% 21%
</TABLE>
(A) Effective as of the close of business on August 29, 1997, the Fund was
reorganized and its fiscal year-end, subsequent to August 31, 1997, was
changed to March 31.
(B) Represents the period from the commencement of operations (September 29,
1995) through August 31, 1996.
(C) Calculated using weighted average shares outstanding during the period.
(D) Total returns shown exclude the effect of applicable sales loads.
(E) Absent fee waivers and/or expense reimbursements, the ratio of expenses to
average net assets would have been 2.83%(F) for the period ended August 31,
1996.
(F) Annualized.
(G) Not annualized.
See accompanying notes to financial statements.
Countrywide Investments - 21
<PAGE>
GROWTH/VALUE FUND
FINANCIAL HIGHLIGHTS - CLASS C
================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
--------------------------------------------------------------------------------
PERIOD
ENDED
MARCH 31,
2000(A)
--------------------------------------------------------------------------------
Net asset value at beginning of period ........................ $ 18.65
---------
Income from investment operations:
Net investment loss ........................................ (0.11)
Net realized and unrealized gains on investments ........... 14.18
---------
Total from investment operations .............................. 14.07
---------
Distributions from net realized gains ......................... (0.42)
---------
Net asset value at end of period .............................. $ 32.30
=========
Total return(B) ............................................... 76.52%
=========
Net assets at end of period (000's) ........................... $ 10,794
=========
Ratio of net expenses to average net assets ................... 2.33%(C)
Ratio of net investment loss to average net assets ............ (1.77%)(C)
Portfolio turnover rate ....................................... 44%(C)
(A) Represents the period from the initial public offering(August 2, 1999)
through March 31, 2000.
(B) Total return shown excludes the effect of applicable sales loads and is not
annualized.
(C) Annualized.
See accompanying notes to financial statements.
22 - Countrywide Investments
<PAGE>
AGGRESSIVE GROWTH FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
=======================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
-------------------------------------------------------------------------------------------------------
YEAR YEAR SEVEN MONTHS YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, AUGUST 31, AUGUST 31,
2000 1999 1998(A) 1997 1996(B)
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 15.73 $ 15.81 $ 16.29 $ 10.95 $ 10.00
---------------------------------------------------------
Income (loss) from investment
operations:
Net investment loss ............... (0.24) (0.27) (0.15) (0.17) (0.11)(C)
Net realized and unrealized gains
(losses) on investments ........ 18.30 2.67 (0.33) 5.54 1.06
---------------------------------------------------------
Total from investment operations ..... 18.06 2.40 (0.48) 5.37 0.95
---------------------------------------------------------
Distributions from net realized gains (0.08) (2.48) -- (0.03) --
---------------------------------------------------------
Net asset value at end of period ..... $ 33.71 $ 15.73 $ 15.81 $ 16.29 $ 10.95
=========================================================
Total return(D) ...................... 115.03% 15.46% (2.95%)(G) 49.09% 9.50%(G)
=========================================================
Net assets at end of period (000's) .. $ 40,171 $ 11,402 $ 15,495 $ 13,984 $ 6,550
=========================================================
Ratio of net expenses
to average net assets(E) .......... 1.81% 1.95% 1.95%(F) 1.94% 1.95%(F)
Ratio of net investment loss
to average net assets ............. (1.62%) (1.52%) (1.66%)(F) (1.57%) (1.26%)(F)
Portfolio turnover rate .............. 40% 93% 40%(F) 51% 16%
Amount of debt outstanding at
end of period ..................... $ -- $ -- n/a n/a n/a
Average daily amount of debt
outstanding during the
period (000's) .................... $ 351 $ 80 n/a n/a n/a
Average daily number of capital shares
outstanding during the
period (000's) .................... 756 818 n/a n/a n/a
Average amount of debt per share
during the period ................. $ 0.46 $ 0.10 n/a n/a n/a
</TABLE>
(A) Effective as of the close of business on August 29, 1997, the Fund was
reorganized and its fiscal year-end, subsequent to August 31, 1997, was
changed to March 31.
(B) Represents the period from the commencement of operations (September 29,
1995) through August 31, 1996.
(C) Calculated using weighted average shares outstanding during the period.
(D) Total returns shown exclude the effect of applicable sales loads.
(E) Absent fee waivers and/or expense reimbursements, the ratios of expenses to
average net assets would have been 2.13%, 2.00%, 2.62% and 5.05%(F) for the
periods ended March 31, 2000 and 1999, August 31, 1997 and 1996,
respectively (Note 4).
(F) Annualized.
(G) Not annualized.
See accompanying notes to financial statements.
Countrywide Investments - 23
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
================================================================================
1. ORGANIZATION
The Utility Fund, Equity Fund, Growth/Value Fund and Aggressive Growth Fund
(individually, a Fund, and collectively, the Funds) are each a series of
Countrywide Strategic Trust (the Trust). The Trust is registered under the
Investment Company Act of 1940 as an open-end management investment company. The
Trust was established as a Massachusetts business trust under a Declaration of
Trust dated November 18, 1982. The Declaration of Trust, as amended, permits the
Trustees to issue an unlimited number of shares of each Fund.
The Utility Fund seeks growth of capital and current income by investing
primarily in securities of public utilities. The Fund invests primarily in a
diversified portfolio of common, preferred and convertible preferred stocks and
bonds of domestic public utilities. Public utilities are those companies that
are involved in the production, supply or distribution of electricity, natural
gas, telecommunications (including cable and wireless companies) and water.
The Equity Fund seeks long-term growth of capital by investing primarily in
growth-oriented stocks. The Fund invests primarily in a diversified portfolio of
common stocks which are believed to have growth attributes superior to the
general market.
The Growth/Value Fund seeks long-term capital appreciation primarily through
equity investments in companies whose valuations may not yet reflect the
prospects for accelerated earnings/cash flow growth. The Fund invests primarily
in domestic stocks of large-cap growth companies which are believed to have a
demonstrated record of achievement with excellent prospects for earnings and/or
cash flow growth over a three to five year period.
The Aggressive Growth Fund seeks long-term capital appreciation primarily
through equity investments. The Fund seeks growth opportunities among companies
of various sizes whose valuation may not yet reflect the prospects for
accelerated earnings/cash flow growth. The Fund invests primarily in common
stocks of domestic growth companies which are likely to benefit from new or
innovative products, services or processes.
The Utility Fund, Equity Fund and, effective August 1, 1999, Growth/Value Fund
each offer two classes of shares: Class A shares (currently sold subject to a
maximum front-end sales load of 5.75% and a distribution fee of up to 0.25% of
average daily net assets) and Class C shares (currently sold subject to a 1.25%
front-end sales load, a 1% contingent deferred sales load for a one-year period
and a distribution fee of up to 1% of average daily net assets). Each Class A
and Class C share of a Fund represents identical interests in the investment
portfolio of such Fund and has the same rights, except that (i) Class C shares
bear the expenses of higher distribution fees, which is expected to cause Class
C shares to have a higher expense ratio and to pay lower dividends than Class A
shares; (ii) certain other class specific expenses will be borne solely by the
class to which such expenses are attributable; and (iii) each class has
exclusive voting rights with respect to matters relating to its own distribution
arrangements.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the Funds' significant accounting policies:
Security valuation -- The Funds' portfolio securities are valued as of the close
of the regular session of trading on the New York Stock Exchange (currently 4:00
p.m., Eastern time). Portfolio securities traded on stock exchanges and
securities traded in the over-the-counter market are valued at their last sales
price as of the close of the regular session of trading on the day the
securities are being valued. Securities not traded on a particular day, or for
which the last sale price is not readily available, are valued at their last
broker-quoted bid prices as obtained from one or more of the major market makers
for such securities by an independent pricing service. Securities for which
market quotations are not readily available are valued at their fair value as
determined in good faith in accordance with consistently applied procedures
established by and under the general supervision of the Board of Trustees.
24 - Countrywide Investments
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
Repurchase agreements -- Repurchase agreements, which are collateralized by U.S.
Government obligations, are valued at cost which, together with accrued
interest, approximates market. Collateral for repurchase agreements is held in
safekeeping in the customer-only account of the Funds' custodian, at the Federal
Reserve Bank of Cleveland. At the time each Fund enters into a repurchase
agreement, the seller agrees that the value of the underlying securities,
including accrued interest, will at all times be equal to or exceed the face
amount of the repurchase agreement.
Share valuation -- The net asset value per share of each class of shares of the
Utility Fund, Equity Fund and Growth/Value Fund is calculated daily by dividing
the total value of a Fund's assets attributable to that class, less liabilities
attributable to that class, by the number of shares of that class outstanding.
The net asset value per share of the Aggressive Growth Fund is calculated daily
by dividing the total value of the Fund's assets, less liabilities, by the
number of shares outstanding.
Effective August 1, 1999, the maximum offering price per share of Class A shares
of the Utility Fund, Equity Fund and Growth/Value Fund and shares of the
Aggressive Growth Fund is equal to the net asset value per share plus a sales
load equal to 6.10% of the net asset value (or 5.75% of the offering price). The
maximum offering price per share of Class C shares of the Utility Fund, Equity
Fund and Growth/Value Fund is equal to the net asset value per share plus a
sales load equal to 1.27% of the net asset value (or 1.25% of the offering
price).
Prior to August 1, 1999, the maximum offering price per share of Class A shares
of the Utility Fund and Equity Fund and shares of the Growth/Value Fund and
Aggressive Growth Fund was equal to the net asset value per share plus a sales
load equal to 4.17% of the net asset value (or 4% of the offering price). The
offering price of Class C shares of the Utility Fund and Equity Fund was equal
to the net asset value per share.
The redemption price per share of a Fund, or of each class of shares of a Fund,
is equal to the net asset value per share. However, Class C shares of the
Utility Fund, Equity Fund and Growth/Value Fund are subject to a contingent
deferred sales load of 1% of the original purchase price if redeemed within a
one-year period from the date of purchase.
Investment income -- Interest income is accrued as earned. Dividend income is
recorded on the ex-dividend date. Discounts and premiums on securities purchased
are amortized in accordance with income tax regulations which approximate
generally accepted accounting principles.
Distributions to shareholders -- Dividends arising from net investment income,
if any, are declared and paid to shareholders quarterly for the Utility Fund and
Equity Fund and annually for the Growth/Value Fund and Aggressive Growth Fund.
With respect to each Fund, net realized short-term capital gains, if any, may be
distributed throughout the year and net realized long-term capital gains, if
any, are distributed at least once each year. Income dividends and capital gain
distributions are determined in accordance with income tax regulations.
Allocations between classes -- Investment income earned, realized capital gains
and losses, and unrealized appreciation and depreciation for the Utility Fund,
Equity Fund and Growth/Value Fund are allocated daily to each class of shares
based upon its proportionate share of total net assets of the Fund. Class
specific expenses are charged directly to the class incurring the expense.
Common expenses which are not attributable to a specific class are allocated
daily to each class of shares based upon its proportionate share of total net
assets of the Fund.
Security transactions -- Security transactions are accounted for on the trade
date. Securities sold are determined on a specific identification basis.
Organization costs -- Costs incurred by the Growth/Value Fund and Aggressive
Growth Fund in connection with their organization and registration of shares,
net of certain expenses, have been capitalized and are being amortized on a
straight-line basis over a five year period beginning with each Fund's
commencement of operations.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
Countrywide Investments - 25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
Federal income tax -- It is each Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies
and distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also each Fund's intention to declare as dividends
in each calendar year at least 98% of its net investment income (earned during
the calendar year) and 98% of its net realized capital gains (earned during the
twelve months ending October 31) plus undistributed amounts from prior years.
The following information is based upon the federal income tax cost of portfolio
investments as of March 31, 2000:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
GROWTH/ AGGRESSIVE
UTILITY EQUITY VALUE GROWTH
FUND FUND FUND FUND
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross unrealized appreciation .. $ 15,449,206 $ 23,756,186 $ 39,702,063 $ 19,364,744
Gross unrealized depreciation .. (884,449) (1,056,355) (2,504,401) (1,487,207)
------------------------------------------------------------
Net unrealized appreciation .... $ 14,564,757 $ 22,699,831 $ 37,197,662 $ 17,877,537
============================================================
Federal income tax cost ........ $ 24,913,402 $ 46,348,756 $ 52,246,683 $ 22,276,024
============================================================
-----------------------------------------------------------------------------------------------
</TABLE>
Reclassification of capital accounts -- For the year ended March 31, 2000, the
Equity Fund and Aggressive Growth Fund reclassified net investment losses of
$193,221 and $ 288,140, respectively, against paid-in capital on the Statements
of Assets and Liabilities. The Growth/Value Fund reclassified $427,945 net
investment losses, of which $6,355 was reclassed against paid-in capital and
$421,590 was reclassed against accumulated net realized gains from security
transactions on the Statements of Assets and Liabilities. Such reclassification,
the result of permanent differences between financial statement and income tax
reporting requirements, has no effect on the Fund's net assets or net asset
value per share.
3. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) were as follows for
the year ended March 31, 2000:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
GROWTH/ AGGRESSIVE
UTILITY EQUITY VALUE GROWTH
FUND FUND FUND FUND
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases of investment securities $ 9,405,757 $47,870,722 $49,745,866 $19,584,326
=====================================================
Proceeds from sales and maturities
of investment securities ...... $16,752,957 $47,628,869 $16,895,299 $ 7,106,009
=====================================================
------------------------------------------------------------------------------------------
</TABLE>
4. TRANSACTIONS WITH AFFILIATES
The President and certain other officers of the Trust are also officers of
Countrywide Financial Services, Inc., or its subsidiaries which include
Countrywide Investments, Inc. (CII), the Trust's investment adviser or manager
and principal underwriter, and Countrywide Fund Services, Inc. (CFS), the
Trust's administrator, transfer agent and accounting services agent. Countrywide
Financial Services, Inc. is a wholly-owned subsidiary of Fort Washington
Investment Advisors, Inc., which is a wholly-owned subsidiary of The Western and
Southern Life Insurance Company.
MANAGEMENT AGREEMENTS
CII manages the investments of the Utility Fund and Equity Fund and provides
general investment supervisory services for the Growth/Value Fund and Aggressive
Growth Fund under the terms of separate Management Agreements. Under the
Management Agreements, the Utility Fund and Equity Fund each pay CII a fee,
which is computed and accrued daily and paid monthly, at an annual rate of 0.75%
of its respective average daily net assets up to $200 million; 0.70% of such net
assets from $200 million to $500 million; and 0.50% of such net assets in excess
of $500 million. The Growth/Value Fund and Aggressive Growth Fund each pay CII a
fee, which is computed
26 - Countrywide Investments
<PAGE>
and accrued daily and paid monthly, at an annual rate of 1.00% of its respective
average daily net assets up to $50 million; 0.90% of such net assets from $50
million to $100 million; 0.80% of such net assets from $100 million to $200
million; and 0.75% of such net assets in excess of $200 million.
Mastrapasqua and Associates, Inc. (Mastrapasqua) has been retained by CII to
manage the investments of the Growth/Value Fund and Aggressive Growth Fund. CII
(not the Funds) pays Mastrapasqua a fee for these services.
In order to voluntarily reduce operating expenses of the Utility Fund and
Aggressive Growth Fund, CII waived $18,396 and $56,232, respectively, of its
investment advisory fees during the year ended March 31, 2000.
TRANSFER AGENT AND SHAREHOLDER SERVICE AGREEMENT
Under the terms of the Transfer, Dividend Disbursing, Shareholder Service and
Plan Agency Agreement between the Trust and CFS, CFS maintains the records of
each shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of each Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions. For these services, CFS receives a monthly fee at an annual
rate of $17 per shareholder account from each Fund, subject to a $1,000 minimum
monthly fee for each Fund, or for each class of shares of a Fund, as applicable.
In addition, each Fund pays CFS out-of-pocket expenses including, but not
limited to, postage and supplies.
ACCOUNTING SERVICES AGREEMENT
Under the terms of the Accounting Services Agreement between the Trust and CFS,
CFS calculates the daily net asset value per share and maintains the financial
books and records of each Fund. For these services, CFS receives a monthly fee,
based on current net asset levels, of $3,500 from each of the Equity Fund and
Growth/Value Fund, $3,000 from the Utility Fund and $2,000 from the Aggressive
Growth Fund. In addition, each Fund pays CFS certain out-of-pocket expenses
incurred by CFS in obtaining valuations of such Fund's portfolio securities.
UNDERWRITING AGREEMENT
CII is the Funds' principal underwriter and, as such, acts as the exclusive
agent for distribution of the Funds' shares. Under the terms of the Underwriting
Agreement between the Trust and CII, CII earned $8,185, $12,557, $55,449 and
$15,487 from underwriting and broker commissions on the sale of shares of the
Utility Fund, Equity Fund, Growth/Value Fund and Aggressive Growth Fund,
respectively, during the year ended March 31, 2000. In addition, CII collected
$1,493, $261 and $2,100 of contingent deferred sales loads on the redemption of
Class C shares of the Utility Fund, Equity Fund and Growth/Value Fund,
respectively.
PLANS OF DISTRIBUTION
The Trust has a Plan of Distribution (Class A Plan) under which shares of each
Fund having one class of shares and Class A shares of each Fund having two
classes of shares may directly incur or reimburse CII for expenses related to
the distribution and promotion of shares. The annual limitation for payment of
such expenses under the Class A Plan is 0.25% of average daily net assets
attributable to such shares.
The Trust also has a Plan of Distribution (Class C Plan) under which Class C
shares of each Fund having two classes of shares may directly incur or reimburse
CII for expenses related to the distribution and promotion of shares. The annual
limitation for payment of such expenses under the Class C Plan is 1% of average
daily net assets attributable to Class C shares.
CUSTODIAN AGREEMENTS
Firstar Bank, N.A., which serves as the custodian for the Growth/Value Fund and
Aggressive Growth Fund, was a significant shareholder of record of each Fund as
of March 31, 2000. Under the terms of its Custodian Agreements, Firstar Bank
receives from each Fund an asset-based fee plus certain transaction charges.
Countrywide Investments - 27
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
5. CAPITAL SHARE TRANSACTIONS
Proceeds and payments on capital shares as shown in the Statements of Changes in
Net Assets are the result of the following capital share transactions for the
years shown:
--------------------------------------------------------------------------------
UTILITY FUND EQUITY FUND
--------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
(000's) 2000 1999 2000 1999
--------------------------------------------------------------------------------
CLASS A
Shares sold ......................... 257 276 689 818
Shares reinvested ................... 442 75 398 3
Shares redeemed ..................... (769) (395) (752) (288)
-----------------------------------
Net increase (decrease) in shares
outstanding ...................... (70) (44) 335 533
Shares outstanding, beginning of year 2,489 2,533 2,511 1,978
-----------------------------------
Shares outstanding, end of year ..... 2,419 2,489 2,846 2,511
===================================
CLASS C
Shares sold ......................... 24 26 23 29
Shares reinvested ................... 34 4 23 --
Shares redeemed ..................... (73) (36) (28) (85)
-----------------------------------
Net increase (decrease) in shares
outstanding ...................... (15) (6) 18 (56)
Shares outstanding, beginning of year 209 215 144 200
-----------------------------------
Shares outstanding, end of year ..... 194 209 162 144
===================================
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
GROWTH/VALUE FUND AGGRESSIVE GROWTH FUND
--------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
(000's) 2000(A) 1999 2000 1999
--------------------------------------------------------------------------------
CLASS A
Shares sold ......................... 1,772 264 829 216
Shares reinvested ................... 30 150 3 64
Shares redeemed ..................... (774) (761) (365) (535)
-----------------------------------
Net increase (decrease) in shares
outstanding ...................... 1,028 (347) 467 (255)
Shares outstanding, beginning of year 1,410 1,757 725 980
-----------------------------------
Shares outstanding, end of year ..... 2,438 1,410 1,192 725
===================================
CLASS C
Shares sold ......................... 342 --
Shares reinvested ................... 1 --
Shares redeemed ..................... (9) --
---------------
Net increase in shares outstanding .. 334 --
Shares outstanding, beginning of year -- --
---------------
Shares outstanding, end of year ..... 334 --
===============
--------------------------------------------------------------------------------
(A) Except for the Growth/Value Fund Class C shares which represents the period
from the initial public offering (August 2, 1999) through March 31, 2000.
28 - Countrywide Investments
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
6. BORROWINGS
The Growth/Value Fund and Aggressive Growth Fund each have a Loan Agreement with
Firstar Bank, N.A., to be used for temporary or emergency purposes, including
the financing of capital share redemption requests that might otherwise require
the untimely disposition of securities. The Loan Agreements permit borrowings up
to a maximum principal amount outstanding not to exceed the lesser of $1,500,000
for the Growth/Value Fund and $3,000,000 for the Aggressive Growth Fund or
certain other amounts which are calculated based upon the amounts and
composition of assets in each Fund as defined in the Loan Agreement. Each Fund
agrees to pay interest on any unpaid principal balance at prevailing market
rates as defined in the Loan Agreement.
As of March 31, 2000, neither Fund had outstanding borrowings under the Loan
Agreement. The maximum amount outstanding during the year ended March 31, 2000
for the Aggressive Growth Fund was $1,400,000 at a weighted average interest
rate of 8.00%. For the year ended March 31, 2000, the Aggressive Growth Fund
incurred, and CII reimbursed, $32,078 of interest expense on such borrowings.
7. FEDERAL TAX INFORMATION FOR SHAREHOLDERS (UNAUDITED)
In accordance with federal tax requirements, the following provides shareholders
with information concerning distributions from net realized gains, if any, made
by the Funds during the year ended March 31, 2000. On November 30, 1999, the
Utility Fund, Equity Fund, Growth/Value Fund and Aggressive Fund declared and
paid a long-term capital gain distribution of $2,087,774, $73,436, $514,063 and
$69,191, respectively. As required by federal regulations, shareholders received
notification of their portion of a Fund's taxable gain distribution, if any,
paid during the 1999 calendar year early in 2000.
Additionally, on March 31, 2000, the Utility Fund and Equity Fund declared and
paid long-term capital gain distributions of $5,155,880 and $9,633,765,
respectively. As required by federal regulations, shareholders will receive
notification of their portion of a Fund's taxable capital gain distribution, if
any, paid during the 2000 calendar year early in 2001. All distributions from
long-term capital gains are taxable at the 20% tax rate.
8. RESTRICTED SECURITY
On December 20, 1999, the Aggressive Growth Fund purchased 83,333 shares of 21e
Web Network, Inc. at an original cost of $500,000. Throughout the holding period
and at March 31, 2000, this security was valued at original cost and represented
1.25% of net assets.
9. SUBSEQUENT EVENT
Effective May 1, 2000, the Countrywide Strategic Trust changed its name to
Touchstone Strategic Trust, Aggressive Growth Fund Class C shares were added and
the Enhanced 30 Fund Class A and C shares were opened. Countrywide Fund
Services, Inc. changed its name to Integrated Fund Services, Inc. Touchstone
Advisors, Inc., upon shareholder approval, became the new advisor for the Funds
in the Trust. Fort Washington Investment Advisors, Inc., upon shareholder
approval, became the sub-advisor to the Utility Fund and Equity Fund. Touchstone
Securities, Inc., upon shareholder approval, became the underwriter/distributor
for the Funds in the Trust.
Countrywide Investments - 29
<PAGE>
UTILITY FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 2000
================================================================================
PAR MARKET
VALUE VALUE
PREFERRED STOCK-- 1.0% (000's) (000's)
--------------------------------------------------------------------------------
ELECTRIC UTILITIES-- 0.9%
Carolina Power & Light Company, 8.55% ............ $ 2 $ 47
Columbus Southern Power, 8.375% .................. 4 80
IES Utilities, Inc., 7.875% ...................... 5 107
Ohio Power Co., 8.16% ............................ 5 109
----------
$ 343
----------
FINANCE - OTHER SERVICES-- 0.1%
PSO Capital I, Series A, 8% ...................... 2 $ 45
----------
TOTAL PREFERRED STOCK (Amortized Cost $392) ...... $ 388
----------
--------------------------------------------------------------------------------
MARKET
VALUE
COMMON STOCKS-- 100.2% SHARES (000's)
--------------------------------------------------------------------------------
ELECTRIC COMPANIES-- 32.8%
American Water Works Co., Inc. ................... 65,000 $ 1,544
Cinergy Corp. .................................... 40,000 860
CMS Energy Corp. ................................. 60,000 1,087
Constellation Energy Group ....................... 65,000 2,072
DPL, Inc. ........................................ 75,700 1,679
Duke Energy Corp. ................................ 40,000 2,100
FPL Group, Inc. .................................. 25,000 1,151
Kansas City Power & Light Co. .................... 50,000 1,450
SCANA Corp. ...................................... 31,551 775
----------
$ 12,718
----------
TELEPHONE-- 25.9%
ALLTEL Corp. ..................................... 14,000 $ 883
BellSouth Corp. .................................. 40,000 1,880
Broadwing, Inc.* ................................. 30,000 1,116
GTE Corp. ........................................ 45,000 3,195
Intermedia Communications, Inc.* ................. 20,000 966
SBC Communications, Inc. ......................... 42,000 1,764
WorldPages.com, Inc.* ............................ 25,000 241
----------
$ 10,045
----------
COMMUNICATION EQUIPMENT-- 16.2%
FLAG Telecom Holdings Limited* ................... 6,500 $ 147
Lucent Technologies, Inc. ........................ 38,888 2,362
Nortel Networks Corp. ............................ 30,000 3,780
----------
$ 6,289
----------
TELECOMMUNICATIONS - LONG DISTANCE-- 9.5%
AT&T Corp. ....................................... 30,700 $ 1,727
MCI WorldCom, Inc.* .............................. 26,500 1,201
RSL Communications, Ltd. - Class A* .............. 32,000 768
----------
$ 3,696
----------
30 - Countrywide Investments
<PAGE>
UTILITY FUND (CONTINUED)
================================================================================
MARKET
VALUE
COMMON STOCKS-- 100.2% (CONTINUED) SHARES (000's)
--------------------------------------------------------------------------------
POWER PRODUCERS-- 9.1%
AES Corp.* ....................................... 45,000 $ 3,544
----------
NATURAL GAS-- 6.7%
Coastal Corp. .................................... 5,000 $ 230
El Paso Energy Corp. ............................. 10,000 404
Enron Corp. ...................................... 13,000 973
MCN Energy Group, Inc. ........................... 9,000 225
Williams Cos., Inc. .............................. 17,500 769
----------
$ 2,601
----------
TOTAL COMMON STOCKS (COST $24,324) ............... $ 38,893
----------
--------------------------------------------------------------------------------
PAR MARKET
VALUE VALUE
COMMERCIAL PAPER-- 0.5% (000's) (000's)
--------------------------------------------------------------------------------
GMFC, Discount Note, due 4/03/00
(Amortized Cost $197) ......................... $ 197 $ 197
======== ----------
TOTAL INVESTMENTS AT VALUE-- 101.7%
(Amortized Cost $24,913) ...................... $ 39,478
LIABILITIES IN EXCESS OF OTHER ASSETS-- (1.7%) ... (676)
----------
NET ASSETS-- 100.0% .............................. $ 38,802
==========
* Non-income producing security.
See accompanying notes to financial statements.
Countrywide Investments - 31
<PAGE>
EQUITY FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 2000
================================================================================
MARKET
VALUE
COMMON STOCKS-- 97.4% SHARES (000's)
--------------------------------------------------------------------------------
TECHNOLOGY-- 45.1%
Broadcom Corp. - Class A* ........................ 1,500 $ 364
Cisco Systems, Inc.* ............................. 44,000 3,402
EMC Corp.* ....................................... 7,600 950
Intel Corp. ...................................... 26,000 3,430
International Business Machines Corp. (IBM) ...... 15,000 1,770
Juniper Networks, Inc.* .......................... 1,000 264
Lexmark International Group, Inc. - Class A* ..... 15,000 1,586
Microsoft Corp.* ................................. 13,000 1,381
Nokia Oyj - ADR .................................. 7,500 1,629
Nortel Networks Corp. ............................ 44,000 5,544
Oracle Corp.* .................................... 13,000 1,015
Sun Microsystems, Inc.* .......................... 50,000 4,685
Texas Instruments, Inc. .......................... 15,000 2,400
Xilinx, Inc.* .................................... 20,000 1,656
Yahoo!, Inc.* .................................... 5,400 925
----------
$ 31,001
----------
FINANCIAL SERVICES-- 11.6%
American International Group, Inc. ............... 20,625 $ 2,259
Bank of New York Co., Inc. ....................... 40,000 1,663
Citigroup, Inc. .................................. 27,000 1,602
Northern Trust Corp. ............................. 36,000 2,432
----------
$ 7,956
----------
HEALTH-- 11.0%
Elan Corp. plc - ADR* ............................ 30,000 $ 1,425
Johnson & Johnson ................................ 20,000 1,401
Medtronic, Inc. .................................. 50,000 2,572
Pfizer, Inc. ..................................... 60,000 2,194
----------
$ 7,592
----------
CONSUMER, CYCLICAL-- 9.8%
Costco Wholesale Corp.* .......................... 21,000 $ 1,104
Home Depot, Inc. ................................. 33,000 2,129
Omnicom Group, Inc. .............................. 16,000 1,495
Wal-Mart Stores, Inc. ............................ 37,000 2,054
----------
$ 6,782
----------
COMMUNICATION SERVICES-- 8.0%
AT&T Corp. ....................................... 25,000 $ 1,406
Global Crossing Ltd.* ............................ 20,000 819
MCI WorldCom, Inc.* .............................. 51,600 2,338
Telefonica S.A. - ADR ............................ 13,000 970
----------
$ 5,533
----------
CONSUMER STAPLES-- 5.9%
AT&T Corp. - Liberty Media Group - Class A* ...... 40,000 $ 2,370
Univision Communications, Inc. - Class A* ........ 15,000 1,695
----------
$ 4,065
----------
CAPITAL GOODS-- 3.8%
General Electric Co. ............................. 17,000 $ 2,638
----------
32 - Countrywide Investments
<PAGE>
EQUITY FUND (CONTINUED)
================================================================================
MARKET
VALUE
COMMON STOCKS-- 97.4% (CONTINUED) SHARES (000's)
--------------------------------------------------------------------------------
ENERGY-- 2.2%
Schlumberger Limited ............................. 20,000 $ 1,530
----------
TOTAL COMMON STOCKS (Cost $44,397) ............... $ 67,097
----------
--------------------------------------------------------------------------------
PAR MARKET
VALUE VALUE
COMMERCIAL PAPER-- 2.8% (000's) (000's)
--------------------------------------------------------------------------------
Sweetwater Capital Corp., 6.28%, 04/03/00
(Amortized Cost $1,952) ....................... $ 1,953 $ 1,952
======== ----------
TOTAL INVESTMENTS AT VALUE-- 100.2%
(Amortized Cost $46,349) ...................... $ 69,049
LIABILITIES IN EXCESS OF OTHER ASSETS-- (0.2%) ... (157)
----------
NET ASSETS-- 100.0% .............................. $ 68,892
==========
* Non-income producing security.
ADR - American Depository Receipt
See accompanying notes to financial statements.
Countrywide Investments - 33
<PAGE>
GROWTH/VALUE FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 2000
================================================================================
MARKET
VALUE
COMMON STOCKS-- 94.9% SHARES (000's)
--------------------------------------------------------------------------------
TECHNOLOGY-- 58.8%
Applied Materials, Inc.* ......................... 43,200 $ 4,072
Broadcom Corp. - Class A* ........................ 13,000 3,157
Cisco Systems, Inc.* ............................. 23,000 1,778
Compuware Corp.* ................................. 22,500 474
EMC Corp.* ....................................... 22,600 2,825
Intel Corp. ...................................... 12,300 1,623
JDS Uniphase Corp.* .............................. 28,000 3,376
Lucent Technologies, Inc. ........................ 7,000 425
Nortel Networks Corp. ............................ 14,000 1,764
Novell, Inc.* .................................... 91,300 2,613
Oracle Corp.* .................................... 118,500 9,250
PE Corp. - PE Biosystems Group ................... 23,600 2,277
PMC-Sierra, Inc.* ................................ 16,550 3,371
RealNetworks, Inc.* .............................. 20,000 1,139
Sun Microsystems, Inc.* .......................... 82,000 7,684
Teradyne, Inc.* .................................. 22,600 1,859
Texas Instruments, Inc. .......................... 11,360 1,818
VERITAS Software Corp.* .......................... 10,000 1,310
Waters Corp.* .................................... 21,000 2,000
----------
$ 52,815
----------
HEALTH-- 21.3%
Amgen, Inc.* ..................................... 23,200 $ 1,424
Baxter International, Inc. ....................... 20,000 1,254
Biogen, Inc.* .................................... 10,000 699
Biovail Corp.* ................................... 30,000 1,329
Bristol-Myers Squibb Co. ......................... 16,400 947
Celera Genomics* ................................. 11,000 1,007
Elan Corp. plc - ADR* ............................ 50,000 2,375
Forest Laboratories, Inc.* ....................... 23,000 1,944
Genentech, Inc.* ................................. 10,900 1,657
IDEC Pharmaceuticals Corp.* ...................... 17,740 1,743
MedImmune, Inc.* ................................. 10,000 1,741
Medtronic, Inc. .................................. 35,000 1,800
Pharmacia & Upjohn, Inc. ......................... 21,000 1,244
----------
$ 19,164
----------
FINANCIAL SERVICES-- 10.5%
Chase Manhattan Corp. ............................ 20,000 $ 1,744
Citigroup, Inc. .................................. 35,000 2,076
Merrill Lynch & Co., Inc. ........................ 20,000 2,100
Morgan Stanley Dean Witter & Co. ................. 21,000 1,713
Wells Fargo & Co. ................................ 45,000 1,842
----------
$ 9,475
----------
34 - Countrywide Investments
<PAGE>
GROWTH/VALUE FUND (CONTINUED)
================================================================================
MARKET
VALUE
COMMON STOCKS-- 94.9% (CONTINUED) SHARES (000's)
--------------------------------------------------------------------------------
CONSUMER STAPLES-- 4.3%
AT&T Corp. - Liberty Media Group - Class A* ...... 24,000 $ 1,422
USA Networks, Inc.* .............................. 51,600 1,164
Viacom, Inc. - Class B* .......................... 24,000 1,266
----------
$ 3,852
----------
TOTAL COMMON STOCKS (COST $48,110) ............... $ 85,306
----------
--------------------------------------------------------------------------------
PAR MARKET
VALUE VALUE
U.S. GOVERNMENT AGENCY ISSUES-- 4.6% (000's) (000's)
--------------------------------------------------------------------------------
FHLB, Discount Note, 04/03/00
(Amortized Cost $4,137) ....................... $ 4,138 $ 4,138
======== ----------
TOTAL INVESTMENTS AT VALUE-- 99.5%
(Amortized Cost $52,247) ...................... $ 89,444
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.5% ..... 416
----------
NET ASSETS-- 100.0% .............................. $ 89,860
==========
* Non-income producing security.
ADR - American Depository Receipt.
See accompanying notes to financial statements.
Countrywide Investments - 35
<PAGE>
AGGRESSIVE GROWTH FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 2000
================================================================================
MARKET
VALUE
COMMON STOCKS-- 97.6% SHARES (000's)
--------------------------------------------------------------------------------
TECHNOLOGY-- 68.0%
21 E Web Network*(A) ............................. 83,333 $ 500
Agilent Technologies, Inc.* ...................... 500 52
Applied Materials, Inc.* ......................... 11,200 1,056
Broadcom Corp. - Class A* ........................ 7,400 1,797
CIENA Corp.* ..................................... 2,000 252
Compuware Corp.* ................................. 31,000 653
Daleen Technologies, Inc.* ....................... 5,000 103
EMC Corp.* ....................................... 14,500 1,812
Exodus Communications, Inc.* ..................... 5,000 702
Intel Corp. ...................................... 11,200 1,478
JDS Uniphase Corp.* .............................. 28,800 3,472
Novell, Inc.* .................................... 62,000 1,775
Oracle Corp.* .................................... 41,750 3,259
PE Corp. - PE Biosystems Group ................... 13,600 1,312
PMC-Sierra, Inc.* ................................ 6,000 1,222
RealNetworks, Inc.* .............................. 8,100 461
SDL, Inc.* ....................................... 4,000 852
Sun Microsystems, Inc.* .......................... 25,000 2,343
Sycamore Networks, Inc.* ......................... 3,400 439
Teradyne, Inc.* .................................. 17,500 1,439
VERITAS Software Corp.* .......................... 11,025 1,444
Waters Corp.* .................................... 9,500 905
----------
$ 27,328
----------
HEALTH-- 22.0%
Affymetrix, Inc.* ................................ 2,000 $ 297
Amgen, Inc.* ..................................... 15,000 921
Biogen, Inc.* .................................... 10,000 699
Celera Genomics* ................................. 5,300 485
CV Therapeutics, Inc.* ........................... 5,000 251
Elan Corp. plc - ADR* ............................ 21,000 997
Forest Laboratories, Inc.* ....................... 10,000 845
Genentech, Inc.* ................................. 8,700 1,322
IDEC Pharmaceuticals Corp.* ...................... 8,800 865
MedImmune, Inc.* ................................. 5,000 871
MiniMed, Inc.* ................................... 4,800 622
Pharmacia & Upjohn, Inc. ......................... 11,000 652
----------
$ 8,827
----------
FINANCIAL SERVICES-- 7.2%
Merrill Lynch & Co., Inc. ........................ 9,500 $ 998
Morgan Stanley Dean Witter & Co. ................. 13,000 1,060
Wells Fargo & Co. ................................ 20,000 819
----------
$ 2,877
----------
CONSUMER, CYCLICAL-- 0.4%
Shop at Home, Inc.* .............................. 20,000 $ 172
----------
TOTAL COMMON STOCKS (Cost $21,326) ............... $ 39,204
----------
36 - Countrywide Investments
<PAGE>
AGGRESSIVE GROWTH FUND (CONTINUED)
================================================================================
PAR MARKET
VALUE VALUE
U.S. GOVERNMENT AGENCY ISSUES-- 2.4% (000's) (000's)
--------------------------------------------------------------------------------
FHLB, Discount Note, 04/03/00
(Amortized Cost $950) ......................... $ 950 $ 950
======== ----------
TOTAL INVESTMENTS AT VALUE-- 100.0%
(Amortized Cost $22,276) ...................... $ 40,154
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.0% ..... 17
----------
NET ASSETS-- 100.0% .............................. $ 40,171
==========
* Non-income producing security.
ADR American Depository Receipt.
(A) Restricted Security (Note 8).
See accompanying notes to financial statements.
Countrywide Investments - 37
<PAGE>
RESULTS OF SPECIAL MEETING OF SHAREHOLDERS
APRIL 19, 2000 (UNAUDITED)
================================================================================
On April 19, 2000, a Special Meeting of Shareholders of Countrywide Strategic
Trust (the Trust) was held (1) to approve or disapprove new investment advisory
agreements with Touchstone Advisers, Inc., (2) to approve or disapprove new
subadvisory agreements with Mastrapasqua & Associates, Inc. with respect to the
Growth/Value Fund and Aggressive Growth Fund, (3) to approve or disapprove new
subadvisory agreements with Fort Washington Investment Advisors, Inc. with
respect to the Utility Fund and Equity Fund and (4) to approve or disapprove the
termination of the Trust's current independent public accountants and the
selection of Ernst & Young LLP as independent public accountants for the fiscal
year ended March 31, 2000. The total number of shares of the Trust present by
proxy represented 57.9% of the shares entitled to vote at the meeting. Each of
the matters submitted to shareholders was approved.
The results of the voting for or against the approval of the new investment
advisory agreements by each Fund was as follows:
--------------------------------------------------------------------------------
NUMBER OF SHARES
------------------------------------------
FOR AGAINST ABSTAIN
--------------------------------------------------------------------------------
Utility Fund 1,158,081 28,998 43,070
Equity Fund 1,672,675 10,140 5,075
Growth/Value Fund 1,410,207 7,738 10,818
Aggressive Growth Fund 637,780 1,135 457
--------------------------------------------------------------------------------
The results of the voting for or against the approval of the new subadvisory
agreements by the Growth/Value Fund and Aggressive Growth Fund was as follows:
--------------------------------------------------------------------------------
NUMBER OF SHARES
------------------------------------------
FOR AGAINST ABSTAIN
--------------------------------------------------------------------------------
Growth/Value Fund 1,406,005 9,041 13,717
Aggressive Growth Fund 637,148 1,165 1,059
--------------------------------------------------------------------------------
The results of the voting for or against the approval of the new subadvisory
agreements by the Utility Fund and Equity Fund was as follows:
--------------------------------------------------------------------------------
NUMBER OF SHARES
------------------------------------------
FOR AGAINST ABSTAIN
--------------------------------------------------------------------------------
Utility Fund 1,150,828 32,553 46,768
Equity Fund 1,672,667 9,744 5,479
--------------------------------------------------------------------------------
The results of the voting for or against the termination of the Trust's current
independent public accountants and the selection of Ernst & Young LLP as
independent public accountants by each Fund was as follows:
--------------------------------------------------------------------------------
NUMBER OF SHARES
------------------------------------------
FOR AGAINST ABSTAIN
--------------------------------------------------------------------------------
Utility Fund 1,120,350 42,032 67,767
Equity Fund 1,669,563 6,210 12,117
Growth/Value Fund 1,392,359 10,070 26,334
Aggressive Growth Fund 636,820 1,478 1,073
--------------------------------------------------------------------------------
38 - Countrywide Investments
<PAGE>
REPORT OF INDEPENDENT AUDITORS
================================================================================
To the Shareholders and Trustees
Countrywide Strategic Trust
We have audited the accompanying statements of assets and liabilities, including
the schedules of portfolio investments, of Countrywide Strategic Trust
(consisting of Utility Fund, Equity Fund, Growth/Value Fund, and Aggressive
Growth Fund) (the Funds) as of March 31, 2000, the related statements of
operations and statements of changes in net assets for the year then ended and
the financial highlights for the period then ended. These financial statements
and financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The statements of changes in net
assets presented herein for the year ended March 31, 1999 and the financial
highlights presented herein for each of the respective years or periods ended
March 31, 1999 were audited by other auditors whose report dated April 30, 1999
expressed an unqualified opinion.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of March 31, 2000, by correspondence with the custodian and brokers. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Funds constituting the Countrywide Strategic Trust as of March
31, 2000, the results of their operations and the changes in their net assets
for the year then ended and the financial highlights for the period then ended,
in conformity with accounting principles generally accepted in the United
States.
/s/ Ernst & Young LLP
Cincinnati, Ohio
May 22, 2000
Countrywide Investments - 39
<PAGE>
COUNTRYWIDE STRATEGIC TRUST
---------------------------------------
312 Walnut St., 21st Floor
Cincinnati, Ohio 45202-4094
www.countrywideinvestments.com
Nationwide: (Toll Free) 800-543-8721
Cincinnati: 629-2000
SHAREHOLDER SERVICES
---------------------------------------
Nationwide: (Toll Free) 800-543-0407
Cincinnati: 629-2050
BOARD OF TRUSTEES
---------------------------------------
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.
INVESTMENT ADVISER/MANAGER
---------------------------------------
Countrywide Investments, Inc.
312 Walnut St., 21st Floor
Cincinnati, Ohio 45202-4094
TRANSFER AGENT
---------------------------------------
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
This report is authorized for distribution only when it is accompanied or
preceded by a current prospectus of Countrywide Strategic Trust.
[GRAPHIC OMITTED]
