<PAGE> 1
As filed with the Securities and
Exchange Commission on January 18, 1996
1933 Act Registration No. 2-67040
1940 Act File No. 811-3028
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 21 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT [ X ]
COMPANY ACT OF 1940
Amendment No. 22 [ X ]
CARDINAL GOVERNMENT SECURITIES TRUST
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(Exact Name of Registrant as Specified in Charter)
155 East Broad Street, Columbus, Ohio 43215
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number,
including Area Code (614) 464-5511
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Frank W. Siegel, 155 East Broad Street, Columbus, Ohio 43215
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(Name and Address of Agent for Service)
Copy to: Charles H. Hire, Esq.
Baker & Hostetler, 65 East State Street,
Columbus, Ohio 43215
Approximate Date of Proposed Public Offering: Immediately, upon effectiveness
It is proposed that this filing will become effective (check appropriate box)
_____ immediately upon filing pursuant to paragraph (b)
__X__ on January 19, 1996, pursuant to paragraph (b)
_____ 60 days after filing pursuant to paragraph (a)(1)
_____ on (date) pursuant to paragraph (a)(1)
_____ 75 days after filing pursuant to paragraph (a)(2)
_____ on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
_____ this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
<PAGE> 2
The Registrant has registered an indefinite number or amount of
securities under the Securities Act of 1933, pursuant to Rule 24f-2
under the Investment Company Act of 1940, and has filed its Rule 24f-2
Notice with respect to the fiscal year ended September 30, 1995, on
November 15, 1995.
<PAGE> 3
CARDINAL GOVERNMENT SECURITIES TRUST
Cross Reference Sheet Required By
Rule 481(a) under the Securities Act of 1933
<TABLE>
<CAPTION>
Part A of Form N-1A Item No. Caption(s) in Prospectus
---------------------------- ------------------------
<S> <C>
1.(a)(i) .............................. Cover Page
(ii) ............................ Cover Page
(iii) ............................ Cover Page
(iv) ............................ Cover Page
(v) ............................ Cover Page
(vi) ............................ Cover Page
(vii) ............................ *
(b) ................................. *
2.(a)(i)............................... "Fee Table"
(ii).............................. *
(b).................................. "Prospectus Highlights"
(c).................................. "Prospectus Highlights"
3.(a).................................. "Financial Highlights"
(b).................................. "Financial Highlights"
(c).................................. "Financial Highlights"
(d).................................. "Financial Highlights"
4.(a)(i)(A)............................ "What Is The Trust?"
(i)(B)............................ "What Is The Trust?"
(ii).............................. "What Are The Investment Objective And Policies Of The Trust?"
(ii)(A)........................... *
(ii)(B)(1)........................ "What Are The Investment Objective And Policies Of The Trust?"
(ii)(B)(2)........................ *
(ii)(C)........................... *
(ii)(D)........................... *
(b)(i)............................... *
(ii).............................. *
(c).................................. "What Are The Investment Objective and Policies Of The Trust?"
5.(a).................................. "Who Manages My Investment In The Trust?"
(b)(i)............................... "Who Manages My Investment In The Trust?"
(b)(ii).............................. "Who Manages My Investment In The Trust?"
(b)(iii)............................. "Who Manages My Investment In The Trust?"
(c).................................. "Who Manages My Investment In The Trust?"
(d).................................. "Who Manages My Investment In The Trust?"
(e).................................. "Who Manages My Investment In The Trust?"
- ------------------
<FN>
*Indicates items which are omitted or inapplicable or answer to which
is in the negative and omitted from Prospectus.
</TABLE>
- i -
<PAGE> 4
<TABLE>
<CAPTION>
Part A of Form N-1A Item No. Caption(s) in Prospectus
---------------------------- ------------------------
<S> <C>
(f)................................. "Financial Highlights"
(g)(i)(A)........................... *
(g)(i)(B)........................... *
(g)(i)(C)........................... *
(g)(ii)............................. *
5A.(a)........................... *
5A.(b)........................... *
5A.(c)........................... *
6.(a)................................. "What Are My Rights As A Shareholder?"
(b)................................. *
(c)................................. *
(d)................................. *
(e)................................. "What Shareholder Reports Will I Receive?"
(f)................................. "What Distributions Will I Receive?"
(g)................................. "Does The Trust Pay Federal Income Tax?"; "What About My Taxes?"
7.(a)................................. "How Do I Purchase Shares Of The Trust?"
(b)................................. "How Do I Purchase Shares Of The Trust?"; "How Is Net Asset Value Calculated?"
(c)................................. "May My Tax Sheltered Retirement Plan Invest In The Trust?";
"What Other Shareholder Programs Are Provided?";
"How May I Redeem My Shares?"; "What Distributions Will I Receive?"
(d)................................. "How Do I Purchase Shares Of The Trust?"
(e)................................. *
(f)................................. *
8.(a)................................. "How May I Redeem My Shares?"
(b)................................. "How May I Redeem My Shares?"
(c)................................. "How May I Redeem My Shares?"
(d)................................. "How May I Redeem My Shares?"
9. .................................. *
<FN>
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*Indicates items which are omitted or inapplicable or answer to which
is in the negative and omitted from Prospectus.
</TABLE>
- ii -
<PAGE> 5
PROSPECTUS____________________________________________________________________
[ LOGO ]
CARDINAL GOVERNMENT SECURITIES TRUST
Cardinal Government Securities Trust (the "Trust") is a no-load, diversified,
open-end management investment company with an investment objective of
maximizing current income while preserving capital and maintaining liquidity.
The Trust seeks to attain its objectives by investing in U.S. Treasury bills,
notes and bonds, other obligations issued or guaranteed by the United States,
its agencies or instrumentalities, and repurchase agreements relating to such
obligations. All obligations purchased by the Trust will mature in thirteen
months or less. There can be no assurance that the Trust's objective will be
achieved.
THE SHARES OF THE TRUST ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, NOR ARE SUCH SHARES FEDERALLY INSURED OR GUARANTEED BY THE
U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD OR ANY OTHER GOVERNMENTAL AGENCY. AN INVESTMENT IN THE TRUST INVOLVES
CERTAIN INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. THE TRUST
INTENDS TO MAINTAIN A CONSTANT NET ASSET VALUE OF $1.00 PER SHARE, BUT THERE CAN
BE NO ASSURANCE THAT NET ASSET VALUE WILL NOT VARY.
The Trust has entered into an Agreement and Plan of Reorganization and
Liquidation, dated as of December 1, 1995 (the "Plan"), with The Cardinal Group,
an Ohio business trust (the "Group"). Pursuant to the Plan, Cardinal Government
Securities Money Market Fund, a series of the Group (the "Acquiring Fund"),
would acquire all of the assets of the Trust in exchange for the assumption of
all of the Trust's liabilities and a number of full and fractional shares of the
Acquiring Fund having an aggregate net asset value equal to the Trust's net
assets (the "Reorganization"). The Trust would then be liquidated, and the
shares of the Acquiring Fund would be distributed to Trust shareholders.
The Reorganization is subject to certain regulatory approvals and to approval by
the shareholders of the Trust at the Annual Shareholders Meeting currently
expected to be held in March, 1996. If the shareholders approve the
Reorganization, it is expected that the Reorganization would be effected on or
about March 31, 1996; however, the Reorganization may be effected on such
earlier or later date as the Group and the Trust may determine. There can be no
assurance that the Reorganization will take place when or as currently proposed.
- --------------------------------------------------------------------------------
For further information regarding the Trust or for assistance
in opening an account or redeeming shares, please call (800) 282-9446 toll free.
Inquiries may also be made by mail addressed to the Trust
at its principal office:
155 East Broad Street
Columbus, Ohio 43215
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This Prospectus sets forth concisely the information about the Trust that a
prospective investor ought to know before investing in the Trust. This
Prospectus should be retained for future reference. A Statement of Additional
Information respecting the Trust, dated January 19, 1996, has been filed with
the Securities and Exchange Commission and is incorporated herein by reference.
Such Statement is available upon request without charge from the Trust at the
above address or by calling the phone number provided above.
Investors should read and retain this Prospectus for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
(The Ohio Company LOGO)
The date of this Prospectus is January 19, 1996
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<PAGE> 6
- --------------------------------------------------------------------------------
KEY FEATURES
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<TABLE>
<S> <C>
HIGH CURRENT YIELD............. The Trust seeks the maximum yield available through
investment in short-term U.S. Government securities. (See
pages 6 and 7.)
HIGH DEGREE OF SAFETY.......... The investor obtains a high degree of safety due to the
fact the Trust invests solely in obligations issued or
guaranteed by the U.S. Government and its agencies and
instrumentalities, including U.S. Government obligations
subject to repurchase agreements. (See pages 6 and 7.)
MONTHLY DISTRIBUTIONS.......... Monthly distributions are automatically reinvested in
additional shares of the Trust without charge or may be
received in cash. (See pages 4 and 10.)
INSTANT LIQUIDITY.............. Through the free check writing privilege or telephone
transfer of funds, all or part of an investor's shares may
be redeemed on any business day at the net asset value
without charge. (See pages 12 and 13.)
LOW INITIAL INVESTMENT......... An investor can acquire shares of a high quality portfolio
of government securities with a smaller investment than
would be needed to purchase a similar portfolio directly.
(See page 8.)
PROFESSIONAL MANAGERS.......... The Trust's portfolio is fully managed by professional
portfolio managers. (See page 14.)
FLEXIBILITY.................... You may switch once each calendar quarter from one mutual
fund to another within the Cardinal Group of Funds as your
personal circumstances or market conditions dictate. Under
certain circumstances, however, a sales charge may be im-
posed on exchanges for shares of The Cardinal Fund Inc.,
Cardinal Government Obligations Fund, Cardinal Balanced
Fund and Cardinal Aggressive Growth Fund. (See pages 15
and 16.)
MAXIMUM YIELD.................. As there is no sales charge to reduce the yield, investors
receive the maximum yield on their investment. Service
fees and charges have not been considered. (See pages 8
and 14.)
ACH PROCESSING................. Investors may use Automated Clearing House ("ACH")
processing for subsequent purchases of shares,
redemptions, and/or distributions paid. (See page 15.)
</TABLE>
2
<PAGE> 7
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PROSPECTUS HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SHARES OFFERED................. The Trust is authorized to issue an unlimited number of
full and fractional shares of beneficial interest, all of
one class, with a par value of $.01 per share (the
"Shares"). (See page 6.)
OFFERING PRICE................. The public offering price is equal to net asset value per
share next determined after order. The Trust intends to
use its best efforts, under normal circumstances, to
maintain a constant net asset value of $1.00 per share.
There can be no assurance that it will be able to maintain
such a net asset value. There is no sales charge. (See
pages 8 and 13.)
MINIMUM PURCHASE............... $1,000 minimum initial investment and $100 minimum subse-
quent investments, although such minimums may be waived
under certain circumstances. (See page 8.)
TYPE OF COMPANY................ No-load, diversified, open-end management investment com-
pany, commonly known as a mutual fund, established under
Pennsylvania law by a Declaration of Trust dated March 21,
1980. (See page 6.)
INVESTMENT OBJECTIVE........... To maximize current income while maintaining liquidity and
preserving capital. There is no assurance that such
objective will be achieved. (See page 6.)
INVESTMENT POLICIES............ The Trust invests in obligations issued or guaranteed by
the U.S. Government and its agencies and
instrumentalities, and repurchase agreements secured by
obligations of the U.S. Government or its agencies or
instrumentalities. These investments entail certain risks.
(See page 7.)
INVESTMENT ADVISER............. The Trust has entered into an Investment Advisory and Man-
agement Agreement with Cardinal Management Corp., a
wholly-owned subsidiary of The Ohio Company (the "Ad-
viser"). Cardinal Management Corp. also acts as investment
adviser for Cardinal Tax Exempt Money Trust and Cardinal
Government Obligations Fund, Cardinal Balanced Fund and
Cardinal Aggressive Growth Fund. (See page 14.)
MANAGEMENT FEE................. The annual rate is .5% of the average daily net assets of
the Trust. (See pages 14 and 15.)
DISTRIBUTIONS.................. Distributions from net investment income are credited to
the shareholder's account daily and are automatically
reinvested in additional Shares of the Trust monthly
unless a cash dividend option is selected. (See page 10.)
REDEMPTION..................... At net asset value per share, without charge, except that
broker-dealers may charge a service fee for assisting in a
redemption. The Trust may require a redemption of Shares
if the value of the account is less than $500. (See page
11.)
TRANSFER AGENT................. Cardinal Management Corp. (See page 15.)
</TABLE>
3
<PAGE> 8
- --------------------------------------------------------------------------------
FEE TABLE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).......................... 0%
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price).......................... 0%
Deferred Sales Load
(as a percentage of original purchase price or
redemption proceeds, as applicable).......................... 0%
Redemption Fees
(as a percentage of amount redeemed, if applicable).......... 0%
Exchange Fee................................................... $ 0
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees................................................ .50%
12b-1 Fees..................................................... .00
Other Expenses................................................. .31
-----
Total Fund Operating Expenses............................. .81%
======
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and
(2) redemption at the end of each time
period......................................... $8 $26 $45 $100
</TABLE>
The purpose of the above table is to assist a potential purchaser of the Trust's
Shares in understanding the various costs and expenses that an investor in the
Trust will bear directly or indirectly. See "WHO MANAGES MY INVESTMENT IN THE
TRUST?" for a more complete discussion of the shareholder transaction expenses
and annual operating expenses of the Trust. THE FOREGOING EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN.
4
<PAGE> 9
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following Financial Highlights with respect to each of the ten fiscal years
ended September 30, 1995, have been audited by KPMG Peat Marwick LLP,
independent auditors, whose report thereon, together with certain financial
statements, is contained in the Trust's Statement of Additional Information and
which may be obtained by shareholders and prospective investors.
FINANCIAL HIGHLIGHTS FOR EACH SHARE OF BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-----------------------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, Beginning of period................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income............................. .05 .03 .02 .04 .06
Net gains or losses on securities (both realized
and unrealized)................................. -- -- -- -- --
--------- --------- --------- --------- ---------
Total from investment operations.................. .05 .03 .02 .04 .06
--------- --------- --------- --------- ---------
Less Distributions:
Dividends (from net investment income)............ (.05) (.03) (.02) (.04) (.06)
Distributions (from capital gains)................ -- -- -- -- --
Returns of capital................................ -- -- -- -- --
--------- --------- --------- --------- ---------
Total Distributions............................... (.05) (.03) (.02) (.04) (.06)
Net asset value, End of period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Ratios/Supplemental Data:
Total Return........................................ 4.98% 2.84%(1) 2.41% 3.58% 6.20%
Net assets, End of period (000) omitted............. $ 445,374 $ 367,516 $ 402,758 $ 472,521 $ 567,841
Ratio of expenses to average net assets............. 0.81% 0.85% 0.79% 0.76% 0.72%
Ratio of net investment income to average net
assets............................................ 4.92% 2.94% 2.38% 3.52% 6.03%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-----------------------------------------------------------------
1990 1989 1988 1987 1986
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, Beginning of period................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income............................. .08 .09 .07 .06 .07
Net gains or losses on securities (both realized
and unrealized)................................. -- -- -- -- --
--------- --------- --------- --------- ---------
Total from investment operations.................. .08 .09 .07 .06 .07
--------- --------- --------- --------- ---------
Less Distributions:
Dividends (from net investment income)............ (.08) (.09) (.07) (.06) (.07)
Distributions (from capital gains)................ -- -- -- -- --
Returns of capital................................ -- -- -- -- --
--------- --------- --------- --------- ---------
Total Distributions............................... (.08) (.09) (.07) (.06) (.07)
Net asset value, End of period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Ratios/Supplemental Data:
Total Return........................................ 7.97% 8.88% 6.81% 5.99% 7.09%
Net assets, End of period (000) omitted............. $ 592,343 $ 533,266 $ 411,887 $ 422,595 $ 408,681
Ratio of expenses to average net assets............. 0.73% 0.72% 0.73% 0.72% 0.80%
Ratio of net investment income to average net
assets............................................ 7.69% 8.54% 6.61% 5.83% 6.87%
<FN>
- ---------------
(1) Without the $1,151,186 capital contribution as discussed in Note 2 to the
financial statements appearing in the Trust's Statement of Additional
Information, the 1994 total return would have been 2.55%.
</TABLE>
See notes to financial statements appearing in the Trust's Statement of
Additional Information.
____________________________________
Pursuant to a Revolving Credit Agreement between the Trust and The Fifth Third
Bank dated April 10, 1992 (the "Loan Agreement"), the Trust may borrow money
from The Fifth Third Bank for temporary or emergency non-investment purposes,
such as to accommodate abnormally heavy redemption requests,
5
<PAGE> 10
and only in an amount not exceeding 10% of the value of the Trust's total assets
at the time of borrowing. The table below sets forth certain information
concerning the Loan Agreement.
<TABLE>
<CAPTION>
AVERAGE AVERAGE NUMBER AVERAGE
AMOUNT OF DEBT AMOUNT OF DEBT OF TRUST'S SHARES AMOUNT OF
YEAR ENDED OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
SEPTEMBER 30, END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
- ---------------- ------------------ ----------------- ------------------ -----------------
<S> <C> <C> <C> <C>
1995 $0 $ 6,619 405,543,685 $ 0.0000163
1994 $0 $ 5,977 385,137,301 $ 0.0000155
1993 $0 $ 449 437,639,426 $ 0.0000010
</TABLE>
From time to time the Trust may advertise its "yield" or "annualized yield" and
its "effective yield". BOTH YIELD FIGURES ARE BASED ON HISTORICAL EARNINGS AND
ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. The "yield" or "annualized
yield" of the Trust refers to the income generated by an investment in the Trust
over a seven-day period (which period will be stated in the advertisement). This
income is then "annualized." That is, the amount of income generated by the
investment during that week is assumed to be generated each week over a 52-week
period and is shown as a percentage of the investment. The "effective yield" is
calculated similarly but, when annualized, the income earned by an investment in
the Trust is assumed to be reinvested. The "effective yield" will be slightly
higher than the "yield" or "annualized yield" because of the compounding effect
of this assumed reinvestment.
Investors may also judge the performance of the Trust by comparing its
performance to the performance of other mutual funds or mutual fund portfolios
with comparable investment objectives and policies through various mutual fund
or market indices such as those prepared by Dow Jones & Co., Inc. and Standard &
Poor's Corporation and to data prepared by Lipper Analytical Services, Inc. and
CDA Investment Technologies, Inc. Comparisons may also be made to indices or
data published in Donoghue's MONEY FUND REPORT of Holliston, Massachusetts, a
nationally recognized money market fund reporting service, Money Magazine,
Forbes, Barron's, The Wall Street Journal, The New York Times, The Columbus
Dispatch, Business Week, Consumer Reports and U.S.A. Today. In addition to
performance information, general information about the Trust that appears in a
publication such as those mentioned above may be included in advertisements and
in reports to shareholders.
- --------------------------------------------------------------------------------
WHAT IS THE TRUST?
- --------------------------------------------------------------------------------
The Trust is a diversified, open-end management investment company established
under Pennsylvania law by a Declaration of Trust dated March 21, 1980. The
Declaration of Trust, as amended to date, permits the Trustees to issue an
unlimited number of full and fractional shares of beneficial interest, all of
one class, with par value of $.01 per share, and authorizes the Trustees to
issue separate series of shares differing only in certain specified respects.
The Trustees have not currently authorized separate series of shares. Each Share
offered hereunder represents an equal pro rata interest in the Trust's common
portfolio. Upon liquidation, shareholders are entitled to share pro rata in the
net assets of the Trust available for distribution to shareholders. Shares are
freely transferable, have no preemptive or conversion rights and are redeemable
as set forth herein under "HOW MAY I REDEEM MY SHARES?" Shares are fully paid
and nonassessable, except as set forth under "SHAREHOLDER AND TRUSTEE LIABILITY"
in the Statement of Additional Information. Any additional series of shares must
be issued in compliance with the Investment Company Act of 1940 and must not
constitute a security that is senior to the Shares offered pursuant to this
Prospectus.
- --------------------------------------------------------------------------------
WHAT ARE THE INVESTMENT OBJECTIVE AND POLICIES OF THE TRUST?
- --------------------------------------------------------------------------------
The investment objective of the Trust is to maximize current income while
preserving capital and maintaining liquidity. There can be no assurance that the
objective of the Trust will be achieved. The investment objective with respect
to the Trust is a fundamental policy and as such may not be changed without a
vote of the holders of a majority of the outstanding Shares of the Trust.
6
<PAGE> 11
The Trust seeks to attain its investment objective by investing in U.S. Treasury
bills, notes and bonds, other obligations issued or guaranteed by the United
States, its agencies or instrumentalities and repurchase agreements relating to
such obligations. The Trust will not invest in contracts for forward delivery of
securities (so-called "futures"). The Trust will purchase only obligations
having maturities, from the date of purchase, of 13 months or less. Current
income earned on such securities may not be as great as current income that
could be earned on lower quality securities that have less liquidity and/or a
greater risk of non-payment or securities that have a longer term.
Notwithstanding any of the foregoing, the Trust, as a money market fund subject
to Rule 2a-7 of the Investment Company Act of 1940 (the "1940 Act"), must invest
exclusively in United States dollar-denominated instruments which the Trustees
of the Trust and the Trust's investment adviser determine present minimal credit
risks and which at the time of acquisition are rated by one or more appropriate
nationally recognized statistical rating organizations ("NRSRO") (e.g. Standard
& Poor's Corporation and Moody's Investors Service, Inc.) in one of the two
highest rating categories for short-term debt obligations or, if unrated, are
deemed to be of comparable quality. In addition, the dollar-weighted average
maturity of the obligations in the Trust may not exceed 90 days.
Subject to the foregoing limitations and in order to achieve its investment
objective, the Trust expects to invest in the following types of securities.
Direct obligations issued by the U.S. Treasury include bills, notes and bonds
which differ from each other only in interest rates, maturities and times of
issuance; Treasury bills have a maturity of one year or less; Treasury notes
have maturities of one to ten years and Treasury bonds generally have maturities
of greater than ten years.
Examples of obligations issued by agencies or instrumentalities of the U.S.
Government include, among others, securities issued by the General Services
Administration, Federal Housing Administration, Farmers Home Administration,
Government National Mortgage Association, Federal Home Loan Banks, Federal
Intermediate Credit Banks, Federal Land Banks, Federal Home Loan Mortgage
Corporation, Central Bank for Cooperatives, Maritime Administration, The
Tennessee Valley Authority, Washington, D.C. Armory Board, Export-Import Bank of
the United States, the International Bank for Reconstruction and Development,
Federal National Mortgage Association and Student Loan Marketing Association.
Certain of such U.S. Government obligations may have variable or floating rates
of interest. The Trust intends to invest in variable and floating rate
instruments whose market value, upon reset of the interest rate, will
approximate par value because their interest rates will be tied to short-term
market rates. Some obligations issued or guaranteed by U.S. Government agencies
or instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others by U.S. Treasury guarantees; and others, such as those issued
by Federal Home Loan Banks, by the right of the issuer to borrow from the
Treasury. In addition, some obligations of U.S. Government agencies or
instrumentalities, such as those issued by the Federal National Mortgage
Association, are supported by the discretionary authority of the U.S. Government
to purchase certain obligations of the agency or instrumentality and others,
such as those issued by the Student Loan Marketing Association, are supported
solely by the credit of the issuing agency or instrumentality itself. No
assurance can be given that the U.S. Government will provide financial support
to such U.S. Government sponsored agencies or instrumentalities in the future,
since it is not obligated to do so by law. The Trust will invest in such
securities only when it is satisfied that the credit risk with respect to the
issuer is minimal.
A repurchase agreement is an instrument under which the purchaser acquires
ownership of the obligation but the seller agrees, at the time of the sale, to
repurchase the obligation at a specified time and price. Although the securities
subject to a repurchase agreement might bear maturities of more than one year,
the settlement date for repurchase agreements entered into by the Trust cannot
be more than seven days after the date of purchase. The resale price reflects
the purchase price plus an agreed upon market rate of interest which is
unrelated to the coupon rate or maturity of the purchased security. Under the
1940 Act, repurchase agreements are considered to be loans by the Trust. The
Trust will only enter into a repurchase agreement where (i) the underlying
securities are of the type which the Trust's investment guidelines
7
<PAGE> 12
would allow it to purchase directly, (ii) the market value of the underlying
security, including interest accrued, will be at all times equal to or exceed
the value of the repurchase agreement, and (iii) payment for the underlying
securities is made only upon physical delivery or evidence of book-entry
transfer to the account of the custodian or a bank acting as agent. The Adviser
will be responsible for continuously monitoring such requirements. In the event
of a bankruptcy or other default of a seller of a repurchase agreement, the
Trust could experience both delays in liquidating the underlying securities and
losses, including: (a) possible decline in the value of the underlying security
during the period while the Trust seeks to enforce its rights thereto; (b)
possible subnormal levels of income and lack of access to income during this
period; and (c) expenses of enforcing its rights.
The Trust may also invest up to 10% of the value of its total assets in the
securities of other investment companies subject to the limitations set forth in
the 1940 Act. The Trust intends to invest for purposes of short-term cash
management in other money market mutual funds. The Trust's investment in such
other investment companies may result in the duplication of fees and expenses,
particularly investment advisory fees. For a further discussion of the
limitations on the Trust's investments in other investment companies, see
"INVESTMENT OBJECTIVES AND POLICIES -- Additional Information on Portfolio
Instruments --Securities of Other Investment Companies" in the Trust's Statement
of Additional Information.
The Trust cannot borrow money except from banks for temporary or emergency
non-investment purposes, such as to accommodate abnormally heavy redemption
requests, and then only in an amount not exceeding 10% of the value of the
Trust's total assets at the time of borrowing. The Trust cannot pledge, mortgage
or hypothecate its assets except to secure borrowing for temporary or emergency
non-investment purposes and then only in an amount not exceeding the lesser of
any applicable limitation under state law or 15% of its assets.
The Trust's investment objective and fundamental policies may not be changed
without approval of holders of a majority of the outstanding Shares of the
Trust.
- --------------------------------------------------------------------------------
HOW DO I PURCHASE SHARES OF THE TRUST?
- --------------------------------------------------------------------------------
Shares of the Trust are sold on a continuing basis without a sales charge at the
net asset value next determined after an order is received by The Ohio Company,
155 East Broad Street, Columbus, Ohio 43215, the Trust's principal underwriter,
and federal funds (monies credited to a member bank's account in a Federal
Reserve Bank) are received by The Ohio Company as hereinafter provided. The
minimum initial investment for individuals is $1,000 and subsequent investments
must be in amounts of at least $100. The Trust may, at its discretion, waive the
subsequent investment minimum for purchases effected through the automatic
reinvestment of distributions from unit investment trusts sponsored by The Ohio
Company, and may waive both the initial and subsequent investment minimums for
purchases effected with cash balances in brokerage accounts of customers of The
Ohio Company. Institutions may place orders for any number of individual
accounts with a minimum initial purchase of $1,000 for each individual account.
Subsequent purchases may be made in minimum amounts of $100 for each individual
account. Shares of the Trust may be purchased through a securities dealer,
investment adviser, agent or other fiduciary which may charge a fee for its
services in connection with the purchase. No sales charge is imposed by the
Trust or by The Ohio Company.
Each new investor must complete an Application Form and send it to the Trust at
the indicated address either prior to or concurrently with the transmittal of
funds by wire or mail.
All Shares purchased will be credited to shareholder accounts after receipt of
an order and federal funds by The Ohio Company, at the net asset value next
determined. The Trust currently determines net asset value and enters purchases
and redemptions of its shares as of 4:00 p.m. Eastern Time on each day that the
New York Stock Exchange is open for business ("Business Day"). If a properly
completed order and federal funds (or other immediately available funds) are
received at or prior to 12:00 noon Eastern Time on a Business Day, then the
purchase will be entered as of 4:00 p.m. Eastern Time on that day and dividends
will
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<PAGE> 13
commence on that day. If either federal funds (or other immediately available
funds) or the completed purchase order are received after 12:00 noon Eastern
Time (but prior to 4:00 p.m. Eastern Time) Shares will be credited to the
shareholder's account as of 4:00 p.m. Eastern Time on that day but will not earn
dividends until the following day.
The Trust reserves the right to reject any order to purchase its Shares.
Certificates representing Shares of the Trust will not be issued. All Shares
purchased are confirmed to the investor and credited to the investor's account
on the Trust's books maintained by Cardinal Management Corp. The investor will
have the same rights and ownership with respect to such Shares as if
certificates had been issued.
From time to time, The Ohio Company, from its own resources, may also provide
additional compensation to securities dealers in connection with sales of Shares
of the Trust. Such compensation will include financial assistance to securities
dealers in connection with conferences, sales or training programs for their
employees, seminars for the public, advertising, sales campaigns and/or
shareholder services and programs regarding the Trust and other dealer-sponsored
programs or events. In some instances, this compensation may be made available
only to certain securities dealers whose representatives have sold or are
expected to sell significant amounts of Shares of the Trust. Compensation will
include payment for travel expenses, including lodging, incurred in connection
with trips taken by invited registered representatives and members of their
families to locations within or outside of the United States for meetings or
seminars of a business nature. Securities dealers may not use sales of the
Trust's Shares to qualify for this compensation to the extent such may be
prohibited by the laws of any state or any self-regulatory agency, such as the
National Association of Securities Dealers, Inc. In addition, The Ohio Company
may make ongoing payments to brokerage firms, financial institutions (including
banks) and others to facilitate the administration and servicing of shareholder
accounts. None of the aforementioned additional compensation is paid for by the
Trust or its shareholders.
PURCHASE BY FEDERAL FUNDS WIRE
Investments in Shares of the Trust may be made by wire transfer of federal
funds, avoiding delays of the mail and the normal check clearance process
described below. An investor may telephone the Trust at (800) 282-9446, toll
free, prior to wire transfer of its investment to advise the Trust of the
investment and, if a new investor, to obtain an account number. If an investor
does not telephone the Trust for wire instructions and the investor's wire
transfer does not include sufficient information, such purchase will be delayed
until the proper information is received. An investor must instruct its bank to
"wire transfer" the investment immediately to:
The Huntington National Bank
Account Number 01891688407
Routing Number 044000024
17 South High Street
Columbus, Ohio 43215
Attn: Cardinal Government Securities Trust
[Include Trust Account Number and Name of Account
Holder]
Funds transmitted by wire will be invested in Shares of the Trust at the net
asset value next computed after receipt thereof as follows. Investment will
occur on the same day as the transfer of funds so long as federal funds are
received by The Ohio Company prior to 12:00 noon Eastern Time on any Business
Day. Federal funds received by The Ohio Company after 12:00 noon Eastern Time
will not be invested until the next Business Day. Dividends will accrue on the
day a purchase is effected only if federal funds are received by The Ohio
Company by 12:00 noon Eastern Time. A bank may charge for its services in
effecting wire transfers of funds.
Subsequent purchases of Shares of the Trust may be made by ACH processing as
described under "WHAT OTHER SHAREHOLDER PROGRAMS ARE PROVIDED? -- ACH
Processing" below.
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<PAGE> 14
PURCHASE BY MAIL
Investment in Shares of the Trust may be made by mail by sending a check or
other negotiable bank draft payable to the order of "Cardinal Government
Securities Trust" together with, in the case of an initial purchase, an
Application Form to:
Cardinal Government Securities Trust
155 East Broad Street
Columbus, Ohio 43215
Money transmitted by check drawn on a member of the Federal Reserve System will
normally be converted to federal funds and invested in Shares of the Trust
within one Business Day following receipt by The Ohio Company. Checks drawn on
non-member banks may take considerably longer. Cardinal Management Corp. or the
Trust will attempt to notify the investor upon receipt of the latter type of
check as to the possible delay and to arrange for a better means of transmittal
of funds. THE TRUST STRONGLY RECOMMENDS THAT INVESTORS OF SUBSTANTIAL AMOUNTS
USE FEDERAL FUNDS TO PURCHASE SHARES.
AUTOMATIC INVESTMENT PLAN
The Trust has made arrangements to enable you to make automatic monthly or
quarterly investments, in the minimum amount of $50 per transaction, from your
checking account. Assuming the cooperation of your financial institution, your
checking account therein will be debited to purchase Shares of the Trust on the
periodic basis you select. Confirmation of your purchase of Trust Shares will be
provided by the Trust. The debit of your checking account will be reflected in
the checking account statement you receive from your financial institution.
Please contact The Ohio Company for the appropriate form.
- --------------------------------------------------------------------------------
MAY MY TAX SHELTERED RETIREMENT PLAN INVEST IN THE TRUST?
- --------------------------------------------------------------------------------
Shares of the Trust qualify for purchase in connection with the following tax
sheltered retirement plans:
-- Individual retirement account ("IRAs") plans.
-- Simplified Employee Pension Plans.
-- 403(b)(7) Custodial Plans sponsored by certain tax-exempt employers.
-- Pension, profit-sharing and 401(k) plans qualifying under Section 401(a)
of the Internal Revenue Code.
- --------------------------------------------------------------------------------
WHAT DISTRIBUTIONS WILL I RECEIVE?
- --------------------------------------------------------------------------------
The Trust's net income is declared as a dividend and accrued on each Business
Day, immediately prior to the determination of the Trust's net asset value at
4:00 p.m. Eastern Time. Net interest income (from the time of the immediately
preceding declaration) consists of interest accrued on the portfolio of the
Trust (including accrued discount earned and premium amortized), plus realized
net short-term capital gains (losses) due to portfolio transactions (if any),
less the accrued expenses of the Trust applicable to that dividend period. The
Trust does not expect to realize any long-term capital gains due to its policy
of investing in securities maturing in 13 months or less.
All dividends of net income are credited to each shareholder's account daily and
automatically reinvested in additional Shares of the Trust at the net asset
value on the last Business Day of each month. Shareholders, however, may elect
to receive monthly the dividends of $10 or more declared on their Shares in cash
by checking the appropriate box on the Account Information Form or by otherwise
notifying Cardinal Management Corp. in writing. In addition, investors may
obtain cash at any time without charge by redeeming Shares at net asset value.
If the entire account of a shareholder is withdrawn, all dividends accrued to
the time of withdrawal will be paid at that time.
10
<PAGE> 15
Shareholders may elect to receive cash distributions by using ACH processing as
described under "WHAT OTHER SHAREHOLDER PROGRAMS ARE PROVIDED? -- ACH
Processing" below.
Should the Trust incur or anticipate any extraordinary expense or loss or
depreciation which would adversely affect its net asset value per share or
income for a particular period, the Trustees would at that time consider whether
to adhere to the present dividend policy described above or to revise it in
light of the then-prevailing circumstances. For example, if the Trust's net
asset value per share were reduced, or expected to be reduced, below $1.00, the
Trustees might suspend further dividend accruals until the net asset value
returned to $1.00. Thus, extraordinary expenses or losses or depreciation may
result in no dividends being accrued for the period during which an investor
holds Shares as well as a redemption price lower than the purchase price for
such Shares.
- --------------------------------------------------------------------------------
HOW MAY I REDEEM MY SHARES?
- --------------------------------------------------------------------------------
Investors may redeem Shares of the Trust on any Business Day at the net asset
value next determined following receipt by the Trust's transfer agent, Cardinal
Management Corp., 215 East Capital Street, Columbus, Ohio 43215, of a written or
telephonic notice to redeem, or by check, each as more fully described below.
See "HOW IS NET ASSET VALUE CALCULATED?" below, for a description of when net
asset value is determined.
As requested, The Ohio Company, on behalf of a shareholder, will forward the
foregoing notice to redeem to Cardinal Management Corp. without charge. Other
broker-dealers may assist a shareholder in redeeming his Shares and may charge a
fee for such services.
Proceeds of redemption requests received by Cardinal Management Corp. in proper
form before (1) 4:00 p.m. Eastern Time for shareholders who are customers of The
Ohio Company and who have submitted their redemption request through their
broker at The Ohio Company or (2) 12:00 noon Eastern Time for all other
redemption requests, will be sent by mail on the next Business Day or, if the
expedited redemption option is available, by federal funds wire on the next
Business Day for use on that day.
The Trust reserves the right to delay payment for the redemption of Shares where
such Shares were purchased with other than immediately available funds, but only
until the purchase payment has cleared (which may take fifteen or more days from
the date the purchase payment is received by the Trust). The purchase of Trust
Shares by wire transfer of federal funds would avoid any such delay.
The Trust may suspend the right of redemption or may delay payment during any
period the determination of net asset value is suspended. See "HOW IS NET ASSET
VALUE CALCULATED?".
Due to the high cost of maintaining accounts, the Trust reserves the right to
redeem involuntarily Shares in any account at the then current net asset value
if at any time redemptions have reduced a shareholder's total investment to a
net asset value below $500. A shareholder will be notified in writing that the
value of the account is less than $500 and allowed not less than 30 days to
increase the account to $500 before the redemption is processed. Proceeds of
redemptions so processed, including dividends declared to the date of
redemption, will be promptly paid to the shareholder.
REDEMPTION BY MAIL
Shareholders may elect to redeem Shares of the Trust by submitting a written
request therefor to Cardinal Management Corp., the Trust's transfer agent at 215
East Capital Street, Columbus, Ohio 43215. Cardinal Management Corp. will
request a signature guarantee by an eligible guarantor institution as described
below. However, a signature guarantee will not be required if (1) the redemption
check is payable to the Shareholder(s) of record, and (2) the redemption check
is mailed to the Shareholder(s) at the address of record, provided, however,
that the address of record has not been changed within the preceding 15 days.
For purposes of this policy, an "eligible guarantor institution" shall include
banks, brokers, dealers, credit unions, securities exchanges and associations,
clearing agencies and savings associations as those terms are
11
<PAGE> 16
defined in the Securities Exchange Act of 1934. Cardinal Management Corp.
reserves the right to reject any signature guarantee if (1) it has reason to
believe that the signature is not genuine or (2) it has reason to believe that
the transaction would otherwise be improper.
REDEMPTION BY TELEPHONE
Shareholders may elect to redeem Shares of the Trust by calling the Trust at the
telephone number set forth on the front of this Prospectus. The Shareholder may
direct that the redemption proceeds be mailed to the address of record or
another address.
Neither the Trust nor its service providers will be liable for any loss,
damages, expense or cost arising out of any telephone redemption effected in
accordance with the Trust's telephone redemption procedures, acting upon
instructions reasonably believed to be genuine. The Trust will employ procedures
designed to provide reasonable assurances that instructions by telephone are
genuine; if these procedures are not followed, the Trust or its service
providers may be liable for any losses due to unauthorized or fraudulent
instructions. These procedures may include recording all phone conversations,
sending confirmations to Shareholders within 72 hours of the telephone
transaction, and verification of account name and account number or tax
identification number. If, due to temporary adverse conditions, investors are
unable to effect telephone transactions, Shareholders may also redeem their
Shares by mail as described above.
EXPEDITED REDEMPTION
Any investor may elect to use the expedited redemption procedure by designating
on the Account Information Form submitted at the time of initial investment the
name of a commercial bank and account number to receive proceeds of redemption.
If this election is made, requests for redemption may be made by mail or by
telephone as described above.
An investor may elect to have redemption proceeds sent by federal funds wire to
the designated U.S. bank account if the proceeds are $1,000 or more. Otherwise,
proceeds will be sent by mail. No signature guarantee will be required of
investors electing this procedure. Requests to change bank or account
designations may only be made in writing to the Trust with the type of signature
guarantee and other documentation specified under "Redemption by Mail" above. To
participate in this procedure, an investor must complete the expedited
redemption portion of the Account Information Form or notify the Trust at any
time after making an initial investment.
An investor may also elect to have redemption proceeds sent by federal funds
wire to The Ohio Company, the Trust's distributor, if the proceeds are $500 or
more. If the investor elects to have federal funds so wired, the investor may
pick up a check at The Ohio Company's main office at 155 East Broad Street,
Columbus, Ohio or The Ohio Company will mail a check to the investor's address
of record. The Trust may, at its discretion, waive the minimum redemption
requirement for redemptions effected to cover debit balances in brokerage
accounts of customers of The Ohio Company.
AUTOMATIC WITHDRAWAL
Shareholders may elect to have the proceeds from redemptions of Shares
transmitted to an authorized bank account at a Federal Reserve member bank
through ACH processing as described under "WHAT OTHER SHAREHOLDER PROGRAMS ARE
PROVIDED? -- ACH Processing" below.
SYSTEMATIC WITHDRAWAL PLAN
As a shareholder, you may elect to redeem your Shares monthly or quarterly in
amounts of $50 or more, pursuant to the Trust's Systematic Withdrawal Plan.
Please contact The Ohio Company for the appropriate form.
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<PAGE> 17
CHECK-WRITING REDEMPTION PROCEDURE
Cardinal Management Corp., as Transfer Agent for the Trust, will provide any
shareholder who so requests with a supply of checks, imprinted with the
shareholder's name, which may be drawn against the Trust's account maintained by
The Fifth Third Bank (the "Bank"), for redemption of Trust Shares. These checks
may be made payable to the order of any person in any amount not less than $250.
To participate in this procedure, an investor must complete the Check-Writing
Redemption Form available from Cardinal Management Corp. When a check is
presented to the Bank for payment, Cardinal Management Corp. (as your agent)
will cause the Trust to redeem sufficient Shares in your account to cover the
amount of the check. Shares continue earning daily dividends until the day on
which the check is presented to the Bank for payment. Cancelled checks will be
returned to you. Due to the delay caused by the requirement that redemptions be
priced at the next computed net asset value, the Bank will only accept for
payment checks presented through normal bank clearing channels. Shareholders
should not attempt to withdraw the full amount of an account or to close out an
account by using this procedure.
No charge will be made to a shareholder for participation in the check-writing
redemption procedure or for the clearance of any checks. However, charges for
copies ($5 each), returned checks ($15 each) and returned items of deposit ($15
each) will be deducted from a shareholder's account.
In order to stop payment on a check, the shareholder must notify the Trust in
writing before the check has been presented to the Bank for payment. A charge of
$15 will be deducted from the shareholder's account for each stop payment order.
- --------------------------------------------------------------------------------
HOW IS NET ASSET VALUE CALCULATED?
- --------------------------------------------------------------------------------
The Trust's net asset value per share is currently determined as of 4:00 p.m.
Eastern Time on each Business Day, and on such other days on which there is a
sufficient degree of trading in the Trust's portfolio securities that the
Trust's net asset value might be materially affected by changes in the value of
the portfolio securities. Net asset value per share is computed by dividing the
total value of the assets of the Trust, less its liabilities, by the total
number of Shares outstanding. Expenses and fees of the Trust, including the
management fee, are accrued daily and taken into account for the purpose of
determining the net asset value.
The Board of Trustees has adopted a policy requiring the Trust to use its best
efforts, under normal circumstances, to maintain a constant net asset value of
$1.00 per share. The Trust values its portfolio securities by the amortized cost
method which involves valuing a security at its cost and thereafter accruing any
discount or premium at a constant rate to maturity. The Trust will normally
include any accrued discount or premium in its daily dividend and will thereby
keep constant the value of the Trust's assets and, consequently, its net asset
value per share. This method does not take into account unrealized capital gains
or losses or the effect of fluctuating interest rates.
- --------------------------------------------------------------------------------
DOES THE TRUST PAY FEDERAL INCOME TAX?
- --------------------------------------------------------------------------------
The Trust intends to qualify as a "regulated investment company" under the Code
for so long as such qualification is in the best interest of the Trust's
shareholders. Qualification as a regulated investment company under the Code
requires, among other things, that the regulated investment company distribute
to its shareholders at least 90% of its investment company taxable income. The
Trust contemplates declaring as dividends 100% of the Trust's investment company
taxable income (before deduction of dividends paid).
A non-deductible 4% excise tax is imposed on regulated investment companies that
do not distribute in each calendar year (regardless of whether they otherwise
have a non-calendar taxable year) an amount equal to 98% of their ordinary
income for the calendar year plus 98% of their capital gain net income for the
one-year period ending on October 31 of such calendar year. The balance of such
income must be
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<PAGE> 18
distributed during the next calendar year. If distributions during a calendar
year were less than the required amount, the Trust would be subject to a
nondeductible excise tax equal to 4% of the deficiency.
- --------------------------------------------------------------------------------
WHAT ABOUT MY TAXES?
- --------------------------------------------------------------------------------
It is expected that the Trust will distribute annually to shareholders all or
substantially all of the Trust's net ordinary income and net realized capital
gains and that such distributed net ordinary income and distributed net realized
capital gains will be taxable income to shareholders for federal income tax
purposes, even if paid in additional Shares of the Trust and not in cash. Since
all of the Trust's net investment income is expected to be derived from earned
interest and short-term capital gains, it is anticipated that no part of any
distribution will be eligible for the dividends received deduction for
corporations. The Trust does not expect to realize any long-term capital gains
and, therefore, does not foresee paying any "capital gains dividends" as
described in the Code. However, if the Trust were to realize any long-term
capital gains, distribution by the Trust of the excess of any such net long-term
capital gain over net short-term capital loss is taxable to shareholders as
long-term capital gain in the year in which it is received, regardless of how
long the shareholder has held the Shares. Such distributions are not eligible
for the dividends-received deduction.
Even though a substantial portion of distributions of net income will be
attributable to interest on U.S. Government obligations, which may be exempt
from state or local tax if received directly by a shareholder, shareholders of
the Trust may be subject to state and local taxes with respect to their
ownership of Trust Shares or distributions from the Trust.
The foregoing is intended only as a brief summary of some of the important tax
considerations generally affecting the Trust and its shareholders. Potential
investors in the Trust are urged to consult their tax advisers concerning the
application of federal, state and local taxes as such laws and regulations
affect their own tax situation.
Cardinal Management Corp. will inform shareholders at least annually of the
amount and nature of such income and capital gains.
- --------------------------------------------------------------------------------
WHO MANAGES MY INVESTMENT IN THE TRUST?
- --------------------------------------------------------------------------------
Pursuant to the laws of Pennsylvania and the Trust's Declaration of Trust, the
responsibility for the management of the Trust is vested in its Board of
Trustees which, among other things, is empowered by the Trust's Declaration of
Trust to elect officers of the Trust and contract with and provide for the
compensation of agents, consultants and other professionals to assist and advise
in such management.
INVESTMENT ADVISER AND MANAGER
The Adviser, located at 155 East Broad Street, Columbus, Ohio 43215, is a
wholly-owned subsidiary of The Ohio Company. The Adviser also acts as the
investment adviser to Cardinal Tax Exempt Money Trust ("CTEMT"), Cardinal
Government Obligations Fund ("CGOF"), Cardinal Balanced Fund ("CBF") and
Cardinal Aggressive Growth Fund ("CAGF") and as dividend and transfer agent for
The Cardinal Fund Inc., another open-end, diversified management investment
company ("CFI"), CTEMT, CGOF, CBF, CAGF and the Trust. The Ohio Company is a
member of the New York and Chicago Stock Exchanges, other regional exchanges and
the National Association of Securities Dealers, Inc. In addition to acting as
the principal underwriter for the Trust, CTEMT, CGOF, CBF and CAGF, The Ohio
Company acts as investment adviser and principal underwriter for CFI and as the
sponsor of various series of separate unit investment trusts.
Pursuant to the Investment Advisory Contract, the Adviser manages the investment
and reinvestment of the assets of the Trust in accordance with the Trust's
investment objective, policies and restrictions, subject to the general
supervision and control of the Trust's Board of Trustees. Since December 22,
1995, John R.
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<PAGE> 19
Carle has been primarily responsible for the day-to-day management of the
Trust's portfolio. Mr. Carle has been a portfolio manager with the Adviser
and/or The Ohio Company since 1971 and has more than 28 years of investment
management experience.
The Adviser performs and bears the cost of research, statistical analysis and
continuous supervision of the investment portfolio of the Trust and furnishes
office facilities and certain clerical and administrative services to the Trust.
In addition, the Adviser bears all promotional expenses, including the costs of
printing and distributing prospectuses utilized for promotional purposes. All
other expenses are borne by the Trust.
For the year ended September 30, 1995, the Adviser received as compensation for
its investment advisory services .5% of average daily net assets of the Trust.
The Adviser has, however, and may in the future periodically waive all or a
portion of its advisory fee with respect to the Trust to increase the net income
of the Trust available for distributions as dividends. The waiver of such fee
will cause the yield of the Trust to be higher than it would otherwise be in the
absence of such waiver.
DIVIDEND AND TRANSFER AGENT AND FUND ACCOUNTANT
Cardinal Management Corp., 215 East Capital Street, Columbus, Ohio 43215, has
been selected to act as the Trust's Dividend and Transfer Agent. In
consideration of such services, the Trust has agreed to pay Cardinal Management
Corp. an annual fee, paid monthly, equal to $21 per shareholder account, plus
out-of-pocket expenses. Cardinal Management Corp. also provides fund accounting
services to the Trust and receives a fee from the Trust for such services.
DISTRIBUTOR
The Trust has entered into a Distributor's Contract with The Ohio Company, 155
East Broad Street, Columbus, Ohio 43215, pursuant to which Shares of the Trust
continuously will be offered on a best efforts basis by The Ohio Company and
dealers selected by The Ohio Company. H. Keith Allen is an officer and
trustee/director of both the Trust and The Ohio Company. Frank W. Siegel is an
officer and trustee of the Trust and an officer of The Ohio Company. James M.
Schrack II is an officer of both the Trust and The Ohio Company.
[/R]
CUSTODIAN
The Trust has appointed The Fifth Third Bank ("Fifth Third") 38 Fountain Square
Plaza, Cincinnati, Ohio 45263, as the Trust's custodian. In such capacity Fifth
Third will hold or arrange for the holding of all portfolio securities and other
assets acquired and owned by the Trust.
- --------------------------------------------------------------------------------
WHAT OTHER SHAREHOLDER PROGRAMS ARE PROVIDED?
- --------------------------------------------------------------------------------
ACH PROCESSING
The Trust now offers ACH privileges. Investors may use ACH processing to make
subsequent purchases, redeem Shares and/or electronically transfer distributions
paid on Trust Shares, in addition to the other methods described in this
Prospectus. ACH provides a method by which funds may be automatically
transferred to or from an authorized bank account at a Federal Reserve member
bank that is an ACH member. Please contact your representative if you are
interested in ACH processing.
EXCHANGE PRIVILEGE
Investors may, provided the amount to be exchanged meets the applicable minimum
investment requirements and the exchange is made in states where it is legally
authorized, exchange Shares of the Trust for shares of:
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<PAGE> 20
Cardinal Tax Exempt Money Trust,
a tax-free money market fund
(without payment of any sales charge);
Cardinal Aggressive Growth Fund,
an equity fund seeking appreciation of capital (upon the payment of
the applicable sales charge);
Cardinal Balanced Fund,
a fund seeking current income and long-term growth of both capital
and income (upon the payment of the applicable sales charge);
The Cardinal Fund Inc.,
an equity fund (upon payment of applicable sales charge); or
Cardinal Government Obligations Fund,
a U.S. Government bond fund (upon payment of applicable sales charge).
Notwithstanding the foregoing and subject to the limitations contained in the
following paragraph, exchanges of Trust Shares for shares of CFI, CGOF, CBF or
CAGF (individually, a "Cardinal Load Fund") generally may be completed upon the
payment of a sales charge equal to the sales charge payable upon purchase of
shares of that Cardinal Load Fund. If, however, the Shares of Trust to be
exchanged were acquired as a result of an exchange of shares of the Cardinal
Load Fund, the sales charge to be paid on the present exchange may be reduced by
the sales charge previously paid.
The foregoing exchange privilege may be exercised only once in each calendar
quarter and must be made by written or telephonic authorization. A shareholder
should notify The Ohio Company of his desire to make an exchange, and The Ohio
Company will furnish, as necessary, a prospectus and an application form to open
the account. Cardinal Management Corp., as transfer agent, will require that any
written authorization of an exchange include a signature guarantee as described
above under "HOW MAY I REDEEM MY SHARES? -- Redemption by mail." However, a
signature guarantee will not be required if the exchange is requested to be made
within the same account or into an existing account of the shareholder held in
the same name or names and in the same capacity as the account from which the
exchange is to be made. Shareholders may also authorize an exchange of shares of
the Trust by telephone. Neither the Trust nor any of its service providers will
be liable of any loss, damages, expense or cost arising out of any telephone
exchange authorization to the extent and subject to the requirements set forth
under "HOW MAY I REDEEM MY SHARES? -- Redemption by telephone" above.
For tax purposes, an exchange is treated as a redemption and a new purchase.
The Trust may, at any time, modify or terminate the foregoing exchange
privilege. The Trust, however, will give shareholders of the Trust 60 days
advance written notice of any such modification or termination.
- --------------------------------------------------------------------------------
WHAT ARE MY RIGHTS AS A SHAREHOLDER?
- --------------------------------------------------------------------------------
Each Share is entitled to one vote (and fractional shares to proportionate
fractional votes) in the election of Trustees and on other matters submitted to
the vote of shareholders. Voting rights are not cumulative, so that the holders
of more than 50% of the Shares voting in the election of Trustees have the power
to elect all of the Trustees of the Trust. Whenever the approval of a majority
of the outstanding Shares of the Trust is required in connection with
shareholder approvals of the Investment Advisory Contract, the Distribution
Contract or changes in the investment objective and policies or the investment
restrictions of the Trust, a "majority" shall mean the vote of (i) 67% or more
of the Shares of the Trust present at a meeting, if the holders of more than 50%
of the outstanding Shares are present in person or by proxy, or (ii) more than
50% of the outstanding Shares of the Trust, whichever is less.
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<PAGE> 21
- --------------------------------------------------------------------------------
WHAT SHAREHOLDER REPORTS WILL I RECEIVE?
- --------------------------------------------------------------------------------
An account summary will be furnished to each shareholder monthly and will
include information as to all purchases, redemptions and income dividends paid
during the preceding month. Financial statements of the Trust will be furnished
to shareholders semiannually.
Holders of Shares should direct all inquiries concerning such matters to
Cardinal Management Corp., 155 East Broad Street, Columbus, Ohio 43215.
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<PAGE> 23
Investment Adviser and Manager
Cardinal Management Corp.
155 East Broad Street
Columbus, Ohio 43215
Distributor
The Ohio Company
155 East Broad Street
Columbus, Ohio 43215
Transfer Agent and Dividend Paying Agent
Cardinal Management Corp.
215 East Capital Street
Columbus, Ohio 43215
Custodian
The Fifth Third Bank
38 Fountain Square
Cincinnati, Ohio 45263
Legal Counsel
Baker & Hostetler
65 East State Street
Columbus, Ohio 43215
Independent Auditors
KPMG Peat Marwick LLP
Two Nationwide Plaza
Columbus, Ohio 43215
<PAGE> 24
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- ----------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Key Features................................ 2
Prospectus Highlights....................... 3
Fee Table................................... 4
Financial Highlights........................ 5
What is the Trust?.......................... 6
What Are the Investment Objective and
Policies of the Trust?.................... 6
How Do I Purchase Shares of the Trust?...... 8
May My Tax Sheltered Retirement Plan Invest
in the Trust?............................. 10
What Distributions Will I Receive?.......... 10
How May I Redeem My Shares?................. 11
How is Net Asset Value Calculated?.......... 13
Does the Trust Pay Federal Income Tax?...... 13
What About My Taxes?........................ 14
Who Manages My Investment in the Trust?..... 14
What Other Shareholder Programs Are
Provided?................................. 15
What Are My Rights as a Shareholder?........ 16
What Shareholder Reports Will I Receive?.... 17
</TABLE>
------------------------
THIS PROSPECTUS DOES NOT CONTAIN ALL OF THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENT AND EXHIBITS RELATING THERETO, FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION, WASHINGTON, D.C., UNDER THE SECURITIES ACT OF 1933, AND
TO WHICH REFERENCE IS MADE.
------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
NOT CONTAINED IN THIS PROSPECTUS OR INCORPORATED HEREIN BY REFERENCE TO THE
TRUST'S STATEMENT OF ADDITIONAL INFORMATION; AND ANY INFORMATION OR
REPRESENTATION NOT CONTAINED HEREIN OR THEREIN MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE TRUST. THE TRUST IS REGISTERED AS AN OPEN-END MANAGEMENT
INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940. SUCH REGISTRATION
DOES NOT IMPLY THAT THE TRUST OR ANY OF ITS SHARES HAVE BEEN GUARANTEED,
SPONSORED, RECOMMENDED OR APPROVED BY THE UNITED STATES OR ANY STATE OR ANY
AGENCY OR OFFICER THEREOF.
------------------------
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, SECURITIES IN ANY STATE TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO
MAKE SUCH OFFER IN SUCH STATE.
- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
----------------------
PROSPECTUS
----------------------
January 19, 1996
(The Ohio Company LOGO)
CARDINAL
GOVERNMENT
SECURITIES
TRUST
[ LOGO ]
CARDINAL FUNDS
- ----------------------------------------------------------
- ----------------------------------------------------------
<PAGE> 25
STATEMENT OF ADDITIONAL INFORMATION
CARDINAL GOVERNMENT SECURITIES TRUST
Cardinal Government Securities Trust (the "Trust") is a no-load,
diversified, open-end management investment company with an investment
objective of maximizing current income while preserving capital and maintaining
liquidity. The Trust seeks to attain its objective by investing in U.S.
Treasury bills, notes and bonds, other obligations issued or guaranteed by the
United States, its agencies or instrumentalities, and repurchase agreements
relating to such obligations. All obligations purchased by the Trust will
mature, or be deemed to mature, in thirteen months or less. There can be no
assurance that the Trust's objective will be achieved.
The Trust is designated for institutions and individuals who desire
current income that reflects prevailing interest rates for short- term
investments together with a high degree of liquidity and the security of a
portfolio investing in obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities, and repurchase agreements collateralized by
such obligations.
_____________________________________
For further information regarding the Trust or for
assistance in opening an account or redeeming shares,
please call (800) 282-9446 toll free.
Inquiries may also be made by mail addressed to the Trust
at its principal office:
155 East Broad Street
Columbus, Ohio 43215
______________________________________
This Statement of Additional Information is not a prospectus and
should be read in conjunction with the Prospectus of the Trust, dated January
19, 1996, which has been filed with the Securities and Exchange Commission.
This Statement of Additional Information is incorporated by reference in its
entirety into the Prospectus. The Prospectus is available upon request without
charge from the Trust at the above address or by calling the phone number
provided above.
JANUARY 19, 1996
<PAGE> 26
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . . . . . . . . . . B-1
General . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
Additional Information on Portfolio Instruments . . . . . . . B-2
Investment Restrictions . . . . . . . . . . . . . . . . . . . B-3
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . . B-4
MANAGEMENT OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . B-5
Compensation Table . . . . . . . . . . . . . . . . . . . . . . B-7
PRINCIPAL SHAREHOLDERS OF THE TRUST . . . . . . . . . . . . . . . . . . B-8
THE ADVISER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-8
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . B-10
ACCOUNTING SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . B-11
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT . . . . . . . . . . . . . B-11
DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-12
CUSTODIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-12
LEGAL COUNSEL AND INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . B-12
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION . . . . . . . . . . . . B-13
Determination of Net Asset Value . . . . . . . . . . . . . . . B-13
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-14
Federal Taxes . . . . . . . . . . . . . . . . . . . . . . . . B-14
State and Local Taxes . . . . . . . . . . . . . . . . . . . . B-16
General . . . . . . . . . . . . . . . . . . . . . . . . . . . B-17
YIELD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-17
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . B-18
Shareholder and Trustee Liability . . . . . . . . . . . . . . B-18
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . B-20
</TABLE>
- i -
<PAGE> 27
STATEMENT OF ADDITIONAL INFORMATION
CARDINAL GOVERNMENT SECURITIES TRUST
Cardinal Government Securities Trust (the "Trust") is an open-end
management investment company. Much of the information contained in this
Statement of Additional Information expands upon subjects discussed in the
Prospectus of the Trust. Capitalized terms not defined herein are defined in
the Prospectus. No investment in Shares of the Trust should be made without
first reading the Prospectus of the Trust.
INVESTMENT OBJECTIVE AND POLICIES
General
- -------
The Trustees have adopted a policy requiring that the Trust use its
best efforts to maintain a constant net asset value of $1.00 per share. The
Trust values its portfolio securities on the basis of the amortized cost
valuation method. The valuation of the Trust's portfolio securities based upon
their amortized cost and the maintenance of the Trust's per share net asset
value of $1.00 is permitted based on the Trust's adherence to certain
conditions. The Trust has agreed to maintain a dollar-weighted average
portfolio maturity of 90 days or less, in accordance with Rule 2a-7 of the 1940
Act, and purchase only obligations having, or deemed to have, maturities from
the date of purchase of thirteen months or less. In addition, the Trustees
have agreed to establish procedures designed to stabilize, to the extent
reasonably possible, the Trust's per share price, as computed for the purpose
of sales and redemptions, at $1.00. There is no assurance that the Trust will
at all times be able to maintain a constant net asset value of $1.00 per share.
(See "ADDITIONAL PURCHASE AND REDEMPTION INFORMATION -- Determination of Net
Asset Value.")
Changes in short-term interest rates may affect the value of the
portfolio of the Trust. An increase in interest rates will generally reduce
the value of the portfolio and a decline in interest rates will generally
increase the value of the portfolio. The impact of such changes in prevailing
interest rates is generally minimized due to the short average life of the
portfolio and, under the investment policies described above, such interest
rate changes should not cause, under normal circumstances, changes in net asset
value per share. If abnormally high redemption requests should require an
untimely sale of portfolio securities, the Trust intends to use its limited
borrowing powers to avoid such dispositions to the extent practicable. (See
"Investment Restrictions" below.)
B-1
<PAGE> 28
Additional Information on Portfolio Instruments
- -----------------------------------------------
REPURCHASE AGREEMENTS. Securities held by the Trust may be subject to
repurchase agreements. Under the terms of a repurchase agreement, the Trust
would acquire securities from member banks of the Federal Reserve System and
registered broker-dealers which the Adviser deems creditworthy under guidelines
approved by the Trust's Board of Trustees, subject to the seller's agreement to
repurchase such securities at a mutually agreed-upon date and price. The
repurchase price would generally equal the price paid by the Trust plus
interest negotiated on the basis of current short-term rates, which may be more
or less than the rate on the underlying portfolio securities. The seller under
a repurchase agreement will be required to maintain at all times the value of
collateral held pursuant to the agreement at not less than the repurchase price
(including accrued interest). If the seller were to default on its repurchase
obligation or become insolvent, the Trust would suffer a loss to the extent
that the proceeds from a sale of the underlying portfolio securities were less
than the repurchase price under the agreement, or to the extent that the
disposition of such securities by the Trust were delayed pending court action.
Additionally, there is no controlling legal precedent confirming that the Trust
would be entitled, as against a claim by such seller or its receiver or trustee
in bankruptcy, to retain the underlying securities, although the Board of
Trustees of the Trust believes that, under the regular procedures normally in
effect for custody of the Trust's securities subject to repurchase agreements
and under federal laws, a court of competent jurisdiction would rule in favor
of the Trust if presented with the question. Securities subject to repurchase
agreements will be held by the Trust's custodian or another qualified custodian
or in the Federal Reserve/Treasury book-entry system. Repurchase agreements
are considered to be loans by the Trust under the 1940 Act.
SECURITIES OF OTHER INVESTMENT COMPANIES. The Trust may invest in
securities issued by other investment companies. The Trust currently intends
to limit its investments so that, as determined immediately after a securities
purchase is made: (a) not more than 5% of the value of its total assets will
be invested in the securities of any one investment company; (b) not more than
10% of the value of its total assets will be invested in the aggregate in
securities of investment companies as a group; and (c) not more than 3% of the
outstanding voting stock of any one investment company will be owned by the
Trust. As a shareholder of another investment company, the Trust would bear,
along with other shareholders, its pro rata portion of that company's expenses,
including advisory and other expenses that the Trust bears directly in
connection with its own operations. Investment companies in which the Trust
may invest may also impose a distribution charge in connection with the
purchase or redemption of their shares and other types of commissions or
charges. Such charges will be
B-2
<PAGE> 29
payable by the Trust and, therefore, will be borne directly by shareholders.
Investment Restrictions
- -----------------------
The Trust has adopted certain restrictions upon its investment
objective and policies which provide that the Trust may not:
(1) Purchase securities or make any investments other than those
described under "Investment Objective and Policies" in the
Prospectus (there is no limit upon the amount of the Trust's
assets which may be invested in the securities of any one
issuer of permitted obligations);
(2) Borrow money except from banks for temporary or emergency
non-investment purposes, such as to accommodate abnormally
heavy redemption requests, and then only in an amount not
exceeding 10% of the value of the Trust's total assets at the
time of borrowing; provided that so long as any borrowings
exceed 5% of the value of the Trust's total assets, the Trust
shall not purchase portfolio securities;
(3) Pledge, mortgage or hypothecate its assets, except that to
secure borrowings permitted for temporary or emergency non-
investment purposes, the Trust may pledge securities having a
market value at the time of pledge not exceeding 15% of its
total assets (so long as certain state law restrictions are
applicable, the market value of securities subject to any such
pledge will not exceed 10% of the market value of the Trust's
total assets);
(4) Make loans, other than by entering into repurchase agreements
to the extent allowed herein and through the purchase of other
obligations in accordance with its investment objective and
policies;
(5) Effect short sales of securities;
(6) Act as an underwriter of securities;
(7) Enter into a repurchase agreement maturing in more than seven
days or knowingly purchase securities which are subject to
restrictions on resale or for which there is no readily
available market if, as a result, more than 10% of the value
of the Trust's total assets at the time would be invested in
such securities;
(8) Purchase or sell real estate, real estate mortgage loans,
commodities or commodities contracts or oil and gas interests;
or
B-3
<PAGE> 30
(9) Purchase the securities of issuers conducting their principal
business activity in the same industry if as a result of such
purchase more than 25% of its total assets would be invested
in the securities of issuers in that industry; provided that
such limitation shall not apply to the purchase of securities
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
The following additional investment restriction may be changed without
the majority vote of the outstanding Shares of the Trust. The Trust may not:
(1) Purchase securities of other investment companies, except (a)
in connection with a merger, consolidation, acquisition or
reorganization, and (b) to the extent permitted by the 1940
Act or pursuant to any exemptions therefrom.
The Trust has represented to the California Department of Corporations
that, in order to comply with applicable regulations, it will acquire or retain
securities of other open-end management investment companies if such
investments are made in open-end management investment companies sold with no
sales commission and the Trust's investment adviser waives its management fee
with respect to such investments. The Trust intends to comply with this
undertaking for so long as the Trust has its shares registered for sale in the
State of California or such representation is required by the California
Department of Corporations.
The Trust has represented to the Ohio Division of Securities that it
will not invest any of its assets in the securities of other investment
companies, except by purchase in the open market where no commission or profit
to a sponsor or dealer results from the purchase other than the customary
broker's commission, or except when the purchase is part of a plan of merger,
consolidation, reorganization, or acquisition.
If a percentage restriction is adhered to at the time the relevant
action is taken, a later increase or decrease in percentage resulting from a
change in market value of an investment or in total assets will not be deemed
to result in a violation of the restriction.
Portfolio Turnover
- ------------------
The portfolio turnover rate for the Trust is calculated by dividing
the lesser of the Trust's purchases or sales of portfolio securities for the
year by the monthly average value of the Trust's portfolio securities. The
Securities and Exchange Commission requires that the calculation exclude all
securities whose remaining maturities at the time of acquisition were one year
or less.
B-4
<PAGE> 31
Because the Trust intends to invest almost entirely in securities with
maturities of less than one year and because the Commission requires such
securities to be excluded from the calculation of portfolio turnover rate, the
portfolio turnover with respect to the Trust is expected to be zero percent for
regulatory purposes.
MANAGEMENT OF THE TRUST
The trustees and officers of the Trust, together with their addresses
and principal business occupations and other affiliations during the last five
years, are shown below. Each person named as a Trustee also serves as a
trustee of Cardinal Tax Exempt Money Trust, Cardinal Government Obligations
Fund and The Cardinal Group and as a director of The Cardinal Fund Inc. Each
trustee who is an "interested person" of the Trust, as that term is defined in
the 1940 Act, is indicated by an asterisk.
<TABLE>
<CAPTION>
Name, Age and Positions Held Principal Occupation
Business Address with Registrant During Past 5 Years
---------------- --------------- -------------------
<S> <C> <C>
*H. Keith Allen Chairman and Chief Operating Officer, Secretary,
155 East Broad Street Trustee, Member of Executive Treasurer and a Director of The Ohio
Columbus, Ohio 43215 and Nominating Committees Company (investment banking);
Age: 54 formerly Senior Executive Vice
President of The Ohio Company.
Gordon B. Carson Trustee, Member of Executive Principal, Whitfield Robert
5413 Gardenbrook Drive Committee Associates (construction consulting
Midland, Michigan 48642 firm).
Age: 84
John B. Gerlach, Jr. Trustee, Member of Audit Since 1994, President and a Director
37 West Broad Street Committee of Lancaster Colony Corporation
Columbus, Ohio 43215 (diversified consumer products);
Age: 41 prior thereto, Executive Vice
President, Secretary and a Director
of Lancaster Colony Corporation.
Michael J. Knilans Trustee, Member of Executive From November, 1989 to August, 1995,
1119 Kingsdale Terrace Committee Member of the Ohio Bureau of
Columbus, Ohio 43220 Workers' Compensation and Chairman
Age: 68 from 1992 through August, 1995.
James I. Luck Trustee President, The Columbus Foundation
1234 East Broad Street (philanthropic public foundation).
Columbus, Ohio 43205
Age: 50
</TABLE>
B-5
<PAGE> 32
<TABLE>
<S> <C> <C>
David L. Nelson Trustee, Member of Audit and Chairman of the Board of Directors
18 James Lane Nominating Committees of Herman Miller, Inc. (furniture
Stamford, CT 06903 manufacturer); former Vice
Age: 65 President, Customer Support,
Americas Region, and Vice President,
Customer Satisfaction, Industry
Segment, of Asea Brown Boveri, Inc.
(designer and manufacturer of
process automation systems for basic
industries).
*C. A. Peterson Trustee Chartered Financial Analyst; former
150 E. Wilson Bridge Rd. Senior Executive Vice President and
Worthington, Ohio 43085 Director of The Ohio Company
Age: 69 (investment banking).
Lawrence H. Rogers II Trustee Self-employed author; former Vice
4600 Drake Road Chairman of Motor Sports
Cincinnati, Ohio 45243 Enterprises, Inc.
Age: 74
*Frank W. Siegel President and Trustee, Chartered Financial Analyst and
155 East Broad Street Member of Senior Vice President, The Ohio
Columbus, Ohio 43215 Executive and Nominating Company (investment banking); former
Age: 43 Committees Vice President, Keystone Group
(mutual fund management/
administration); former Senior Vice
President, Trust Advisory Group
(mutual fund consulting).
Joseph H. Stegmayer Trustee, Member of Audit and President and a Director of Clayton
724 Hampton Roads Drive Nominating Committees Homes, Inc. (manufactured homes);
Knoxville, TN 37922-4071 former Vice President, Treasurer,
Age: 44 Chief Financial Officer and a
Director of Worthington Industries,
Inc. (specialty steel and plastics
manufacturer).
James M. Schrack II Treasurer Trust Officer and Vice President of
155 East Broad Street The Ohio Company (investment
Columbus, Ohio 43215 banking).
Bruce E. McKibben Assistant Treasurer Since April, 1991, Employee of The
155 East Broad Street Ohio Company (investment banking);
Columbus, Ohio 43215 prior thereto, student at The Ohio
State University.
Karen J. Hipsher Secretary Executive Secretary of The Ohio
155 East Broad Street Company (investment banking).
Columbus, Ohio 43215
</TABLE>
B-6
<PAGE> 33
As of January 11, 1996, all trustees and officers of the Trust as a
group owned fewer than one percent of the Shares of the Trust.
Subject to the ultimate authority and direction of the Board of
Trustees of the Trust, the Executive Committee will exercise the powers of the
Trustees during the intervals between meetings of the Trustees.
Messrs. Allen and Siegel are Chairman, President and a director and
Vice President and a director, respectively, of the Adviser. The compensation
of trustees and officers of the Trust who are employed by The Ohio Company is
paid by The Ohio Company. Trustees' fees (currently $500 per meeting attended,
$500 annual retainer and $500 per audit committee meeting attended) plus
expenses are paid by the Trust, except that Messrs. Allen and Siegel receive no
fees from the Trust.
The following table sets forth information regarding all compensation
paid by the Trust to its Trustees for their services as trustees during the
fiscal year ended September 30, 1995. The Trust has no pension or retirement
plans.
COMPENSATION TABLE
<TABLE>
<CAPTION>
Name and Position Aggregate Compensation Total Compensation From the
With the Trust* From the Trust Trust and the Fund Complex**
----------------- ---------------------- ----------------------------
<S> <C> <C>
H. Keith Allen $0 $0
Chairman, Trustee and Member of
Executive and
Nominating Committees
Gordon B. Carson $2,400 $12,000
Trustee and Member of Executive
Committee
John B. Gerlach $2,600 $13,000
Trustee and Member of Audit Committee
Michael J. Knilans $2,400 $12,000
Trustee and Member of Executive
Committee
James I. Luck $2,400 $12,000
Trustee
David L. Nelson $2,600 $13,000
Trustee and Member of Audit and
Nominating Committees
C.A. Peterson $2,400 $12,000
Trustee
Lawrence H. Rogers, II $2,400 $12,000
Trustee
</TABLE>
B-7
<PAGE> 34
<TABLE>
<CAPTION>
Name and Position Aggregate Compensation Total Compensation From the
With the Trust* From the Trust Trust and the Fund Complex**
----------------- ---------------------- ----------------------------
<S> <C> <C>
Frank W. Siegel $0 $0
Trustee, President and Member of
Nominating and Executive Committees
Joseph H. Stegmayer $2,000 $10,000
Trustee and Member of Audit and
Nominating Committees
<FN>
- ----------------------------------
*During the fiscal year ended September 30, 1995, Hannibal L. Godwin,
a former officer of the Trust, and John L. Schlater, each former officers of
The Ohio Company and the Adviser, had served as trustees of the Trust but no
longer do so as of the date hereof. Neither Mr. Godwin nor Mr. Schlater
received any compensation from the Trust or the Fund Complex.
**For purposes of this Table, Fund Complex means one or more mutual
funds, including the Trust, which have a common investment adviser or
affiliated investment advisers or which hold themselves out to the public as
being related.
</TABLE>
PRINCIPAL SHAREHOLDERS OF THE TRUST
As of January 11, 1996, the only person known to the Trust to be the
beneficial owners of more than 5% of the Trust's outstanding Shares was The
Ohio Company, which for its own account and as trustee for various pension
plans and trusts, owned beneficially 9.44% of the Trust's outstanding Shares.
THE ADVISER
The Trust has entered into an Investment Advisory Contract with
Cardinal Management Corp. (the "Adviser"). Pursuant to the Investment Advisory
Contract, the Adviser has agreed to provide investment advisory and management
services as described in the Prospectus. As compensation for such services to
the Trust, the Adviser receives monthly from the Trust a management fee at the
annual rate of 1/2 of 1% of the average daily net assets of the Trust. Such
fee accrues daily. The Adviser performs and bears the cost of research,
statistical analysis and continuous supervision of the investment portfolio of
the Trust and furnishes office facilities and certain clerical and
administrative services to the Trust. In addition, the Adviser provides
dividend, transfer agency and fund accounting services to the Trust.
B-8
<PAGE> 35
The aggregate amount of investment management fees earned by the
Adviser during the fiscal years ended September 30, 1995, 1994 and 1993, was
$2,031,367, $1,978,541 and $2,227,209, respectively. To offset capital losses
incurred by the Trust for the fiscal year ended September 30, 1994, the Adviser
contributed $1,151,168 to the Trust. This amount was equal to the investment
management, transfer agent and fund accounting fees for the period from May 1,
1994, through September 30, 1994.
The Adviser has agreed that if the aggregate expenses of the Trust
(including fees pursuant to the Investment Advisory Contract, but excluding
taxes, interest, brokerage fees and, where permitted under the expense
limitations imposed by state securities administrators, extraordinary expenses)
for any fiscal year exceed 2% of the first $10 million of the Trust's average
net assets, 1 1/2% of the next $30 million of the Trust's average net assets,
and 1% of the Trust's remaining average net assets, or 1 1/2% of average net
assets, whichever is less, the Adviser will refund to the Trust, or otherwise
bear, such excess. The Adviser was not obligated to refund or pay any expenses
of the Trust for the fiscal years ended September 30, 1995, 1994 and 1993 as a
result of such expense limitations.
The Adviser is a wholly owned subsidiary of The Ohio Company, an
investment banking firm organized in 1925. Descendants of H. P. and R. F.
Wolfe, deceased, and members of their families, through their possession of a
majority of the voting stock, may be considered controlling persons of The Ohio
Company. H. Keith Allen is an officer and director of The Ohio Company. Frank
W. Siegel, and James M. Schrack II are each an officer of The Ohio Company.
The Investment Advisory Contract was last approved by a majority of
both the trustees and those trustees who are not "interested persons" (as
defined in the 1940 Act) of either the Trust or the Adviser at a meeting held
for such purpose on November 13, 1995, and was last approved by the
shareholders of the Trust at the annual meeting of shareholders of the Trust
held on January 11, 1983.
The Investment Advisory Contract will continue in force from year to
year if specifically approved at least annually by the Board of Trustees of the
Trust or by the vote of a majority of the Trustees who are not "interested
persons" of any party to such Contract, cast in person at a meeting called for
such purpose. The Contract may be terminated by either party, at any time,
without penalty, upon sixty days' written notice, and will automatically
terminate in the event of its assignment. Termination will not affect the
right of the Adviser to receive payments on any unpaid balance of the
compensation earned prior to termination.
B-9
<PAGE> 36
PORTFOLIO TRANSACTIONS
Pursuant to the Investment Advisory Contract, the Adviser, subject to
the policies established by the Board of Trustees of the Trust and in
accordance with the Trust's investment restrictions and policies, is
responsible for the Trust's portfolio decisions and the placing of the Trust's
portfolio transactions. Purchases and sales of portfolio securities which are
debt securities usually are principal transactions in which such portfolio
securities are normally purchased directly from the issuer or from an
underwriter or market maker for the securities. Purchases from underwriters of
portfolio securities generally include a commission or concession paid by the
issuer to the underwriter, and purchases from dealers serving as market makers
may include the spread between the bid and asked price. Transactions in the
over-the-counter market are generally principal transactions with dealers.
With respect to the over-the-counter market, the Trust, where possible, will
deal directly with dealers who make a market in the securities involved except
in those circumstances where better price and execution are available
elsewhere.
In executing such transactions, the Adviser seeks to obtain the best
net results for the Trust taking into account such factors as price (including
the applicable brokerage commission or dealer spread), size of order,
difficulties of execution and operational facilities of the firm involved and
the firm's risk in positioning a block of securities. While the Adviser
generally seeks reasonably competitive commission rates, for the reasons stated
in the prior sentence, the Trust will not necessarily be paying the lowest
commission or spread available. For the past three fiscal years, the Trust has
paid no brokerage commissions.
The Adviser may consider provision of research, statistical and other
information to the Trust or the Adviser in the selection of qualified
broker-dealers who effect portfolio transactions for the Trust so long as the
Adviser's ability to obtain the best net results for portfolio transactions of
the Trust is not diminished. Such research services include supplemental
research, securities and economic analyses, and statistical services and
information with respect to the availability of securities or purchasers or
sellers of securities. Such research services may also be useful to the Adviser
in connection with its services to other clients. Similarly, research services
provided by brokers serving such other clients may be useful to the Adviser in
connection with its services to the Trust. Although this information is useful
to the Trust and the Adviser, it is not possible to place a dollar value on it.
It is the opinion of the Board of Trustees and the Adviser that the review and
study of this information will not reduce the overall cost to the Adviser of
performing its duties to the Trust under the Investment Advisory Contract. The
Trust is not authorized to pay brokerage commissions which are in excess of
those which another qualified broker would charge solely by reason of brokerage
and research services provided.
B-10
<PAGE> 37
Investment decisions for the Trust are made independently from those
for any other investment company or account managed by the Adviser. Any such
other investment company or account may also invest in the same securities as
the Trust. When a purchase or sale of the same security is made at
substantially the same time on behalf of the Trust and another investment
company or account, the transaction will be averaged as to price and available
investments will be allocated as to amount in a manner which the Adviser
believes to be equitable to the Trust and such other investment company or
account. In some instances, this investment procedure may adversely affect the
price paid or received by the Trust or the size of the position obtained by the
Trust. To the extent permitted by law, the Adviser may aggregate the
securities to be sold or purchased for the Trust with those to be sold or
purchased for other investment companies or accounts in order to obtain best
execution. As provided by the Investment Advisory Agreement, in making
investment recommendations for the Trust, the Adviser will not inquire or take
into consideration whether an issuer of securities proposed for purchase or
sale by the Trust is a customer of the Adviser, its parent or its subsidiaries
or affiliates and, in dealing with its customers, the Adviser, its parent,
subsidiaries and affiliates will not inquire or take into consideration whether
securities of such customers are held by the Trust.
The Trust did not during the fiscal year ended September 30, 1995,
hold any securities of its regular brokers or dealers, as defined in Rule 10b-1
under the 1940 Act, or their parent companies.
ACCOUNTING SERVICES
The Trust has entered into an Accounting Services Agreement with the
Adviser pursuant to which the Adviser has agreed to maintain and keep current
the books, accounts, records, journals and other records of original entry
relating to the business of the Trust and to calculate the Trust's net asset
value on a daily basis. In consideration of such services, the Trust has
agreed to pay monthly to the Adviser a fee based on the average monthly net
asset value of the Trust. For the last three fiscal years ended September 30,
1995, the Adviser received $53,283, $54,818, and $59,614, respectively, for its
services to the Trust pursuant to such Agreement. As described above under
"THE ADVISER," a portion of such fees for the fiscal year ended September 30,
1994 were contributed to the Trust by the Adviser.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
The Trust has entered into an Administration Agreement with the
Adviser pursuant to which the Adviser has agreed to act as the Trust's transfer
agent, dividend disbursing agent and administrator of plans for the Trust. In
consideration of such services, the Trust has agreed to pay the Adviser an
annual fee paid monthly,
B-11
<PAGE> 38
equal to $21 per shareholder account plus the Adviser's out-of-pocket expenses.
For the last three fiscal years ended September 30, 1995, the Adviser received
$842,187, $999,507, and $918,214, respectively, for its services to the Trust
pursuant to such Agreement. As described above under "THE ADVISER," a portion
of such fees were contributed to the Trust by the Adviser.
DISTRIBUTOR
The Ohio Company, with principal offices located at 155 East Broad
Street, Columbus, Ohio 43215, serves as the Trust's principal underwriter and,
in connection therewith, is available to receive purchase orders and redemption
requests relating to Shares of the Trust and to transmit such orders and
requests to the Trust's custodian. The Ohio Company does not receive any
compensation from the Trust or charge any fees to investors for its services
rendered as principal underwriter of the Trust's Shares.
The Distribution Contract was last approved by both the trustees and
those trustees who are not "interested persons" (as defined in the 1940 Act) of
either the Trust or The Ohio Company at a meeting held for such purpose on
November 13, 1995, and was last approved by the shareholders of the Trust at
the annual meeting of shareholders of the Trust held on January 11, 1983.
The Distribution Contract will continue in effect from year to year if
specifically approved at least annually by the Board of Trustees of the Trust
or by the vote of a majority of the outstanding Shares of the Trust. In either
event, the Distribution Contract must also be approved by vote of a majority of
the trustees who are not "interested persons" of any party to the Distribution
Contract, cast in person at a meeting called for such purpose. The
Distribution Contract will automatically terminate in the event of its
assignment.
CUSTODIAN
The Fifth Third Bank (the "Bank"), 38 Fountain Square, Cincinnati,
Ohio 45263, has been selected to act as Custodian of the portfolio securities
and cash of the Trust. The Bank has no part in determining the investment
policies of the Trust or in deciding which securities are to be purchased or
sold by the Trust. The Trust may enter into repurchase agreements with the
Bank and may purchase or sell securities from or to the Bank.
LEGAL COUNSEL AND INDEPENDENT AUDITORS
Certain legal matters as to the issuance of the Shares offered hereby
have been passed upon by Baker & Hostetler, 65 East State Street, Columbus,
Ohio 43215. The Trust has selected KPMG Peat Marwick LLP, Two Nationwide
Plaza, Columbus, Ohio 43215, as
B-12
<PAGE> 39
independent auditors for the Trust. The financial statements of the Trust
included in this Statement of Additional Information have been included herein
in reliance upon the report of KPMG Peat Marwick LLP, independent auditors,
given upon the authority of said firm as experts in accounting and auditing.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The Trust's Shares may be purchased at the public offering price and
are sold on a continuous basis through The Ohio Company, principal underwriter
of the Trust's Shares, at its address and number set forth on the cover page of
this Statement of Additional Information, and through other broker-dealers who
are members of the National Association of Securities Dealers, Inc. and have
sales agreements with The Ohio Company.
The Trust may suspend the right of redemption or postpone the date of
payment for Shares during any period when (a) trading on the New York Stock
Exchange (the "Exchange") is restricted by applicable rules and regulations of
the Securities and Exchange Commission, (b) the Exchange is closed for other
than customary weekend and holiday closings, (c) the Securities and Exchange
Commission has by order permitted such suspension, or (d) an emergency exists
as a result of which (i) disposal by the Trust of securities owned by it is not
reasonably practical or (ii) it is not reasonably practical for the Trust to
determine the fair value of its net assets.
Use of the check-writing redemption procedure will be subject to the
rules and regulations of The Fifth Third Bank (the "Bank") governing checking
accounts. Neither the Bank nor the Trust shall incur any liability to a
participating shareholder under this procedure for not honoring a check that
exceeds the value of Shares in a shareholder's account, for honoring checks
properly drafted, for effecting redemptions pursuant to payment thereof or for
returning checks not accepted for payment. This procedure may be terminated at
any time by the Trust, the Bank or the participating shareholder. A
shareholder participating in the check-writing redemption procedure has not
established a checking or other account with the Bank for the purpose of
Federal Deposit Insurance or otherwise.
Determination of Net Asset Value
- --------------------------------
The Trust values its portfolio securities on the basis of the
amortized cost valuation method, which involves valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument. While this method provides certainty in
valuation, it may result in periods during which the value of the Trust's
portfolio securities, as determined by the amortized cost method, is higher or
lower than the price the Trust would receive if it
B-13
<PAGE> 40
sold the securities. During periods of declining interest rates, the daily
yield on Shares of the Trust computed as described above may tend to be higher
than a like computation made by a fund with market prices and estimates of
market prices for all of its portfolio securities. Thus, if the use of the
amortized cost method by the Trust resulted in a lower aggregate portfolio
value on a particular day, a prospective investor in the Trust would be able to
obtain a somewhat higher yield than would result from investment in a fund
utilizing solely market values, and existing investors in the Trust would
receive less investment income. The converse would apply in a period of rising
interest rates.
The valuation of the Trust's portfolio securities based upon their
amortized cost and the maintenance of the Trust's per share net asset value of
$1.00 is permitted based on the Trust's adherence to certain conditions,
including maintaining a dollar-weighted average portfolio maturity of 90 days
or less and purchasing only portfolio securities having remaining maturities or
397 days or less. The Trustees have also established procedures designed to
stabilize, to the extent reasonably possible, the Trust's net asset value per
share, as computed for the purpose of sales and redemptions, at $1.00. Such
procedures include review of the Trust's portfolio holdings by the Trustees at
such intervals as they may deem appropriate to determine whether the Trust's
net asset value calculated by using available market quotations deviates from
$1.00 per share and, if so, whether such deviation is unfair to existing
shareholders. In the event the Trustees determine that such a deviation
exists, they have agreed to take such corrective action as they deem necessary
and appropriate, including selling portfolio securities prior to maturity to
realize capital gains or losses or to shorten average portfolio maturity,
withholding dividends or establishing a net asset value per share by using
available market quotations instead of using the amortized cost basis.
TAXES
Federal Taxes
- -------------
The Trust intends to qualify as a "regulated investment company" under
the Code for so long as such qualification is in the best interest of the
Trust's shareholders. In order to qualify as a regulated investment company,
the Trust must, among other things: derive at least 90% of its gross income
from dividends, interest, payments with respect to securities loans, and gains
from the sale or other disposition of securities or foreign currencies, or
other income derived with respect to its business of investing in such stock,
securities, or currencies; derive less than 30% of its gross income from the
sale or other disposition of stock, securities, options, future contracts or
foreign currencies held less than three months; and diversify its investments
within certain prescribed limits. In addition, to utilize the tax provisions
specially applicable to regulated investment companies, the Trust must
distribute to its shareholders at least 90% of its investment
B-14
<PAGE> 41
company taxable income for the year. In general, the Trust's investment
company taxable income will be its taxable income subject to certain
adjustments and excluding the excess of any net long-term capital gain for the
taxable year over the net short-term capital loss, if any, for such year.
A non-deductible 4% excise tax is imposed on regulated investment
companies that do not distribute in each calendar year (regardless of whether
they otherwise have a non-calendar taxable year) an amount equal to 98% of
their ordinary income for the calendar year plus 98% of their capital gain net
income for the one-year period ending on October 31 of such calendar year. The
balance of such income must be distributed during the next calendar year. If
distributions during a calendar year were less than the required amount, the
Trust would be subject to a non-deductible excise tax equal to 4% of the
deficiency.
Although the Trust expects to qualify as a "regulated investment
company" and to be relieved of all or substantially all federal income taxes,
depending upon the extent of its activities in states and localities in which
its offices are maintained, in which its agents or independent contractors are
located, or in which it is otherwise deemed to be conducting business, the
Trust may be subject to the tax laws of such states or localities. In
addition, if for any taxable year the Trust does not qualify for the special
tax treatment afforded regulated investment companies, all of its taxable
income will be subject to federal tax at regular corporate rates (without any
deduction for distributions to its shareholders). In such event, dividend
distributions would be taxable to shareholders to the extent of earnings and
profits, and would be eligible for the dividends received deduction for
corporations.
It is expected that the Trust will distribute annually to shareholders
all or substantially all of the Trust's net ordinary income and net realized
capital gains and that such distributed net ordinary income and distributed net
realized capital gains will be taxable income to shareholders for federal
income tax purposes, even if paid in additional Shares of the Trust and not in
cash. The Trust does not expect to realize any long-term capital gains and,
therefore, does not foresee paying any "capital gains dividends" as described
in the Code. However, if the Trust were to realize any long-term capital
gains, distribution by the Trust of the excess of any such net long-term
capital gain over net short-term capital loss is taxable to shareholders as
long-term capital gain in the year in which it is received, regardless of how
long the shareholder has held the Shares.
Federal taxable income of individuals is subject to graduated tax
rates of 15%, 28%, 31%, 36% and 39.6%. Further, the marginal tax rate may be
in excess of 39.6%, because adjustments reduce or eliminate the benefit of the
personal exemption and itemized
B-15
<PAGE> 42
deductions for individuals with gross income in excess of certain threshold
amounts.
Capital gains of individuals are subject to tax at the same rates
applicable to ordinary income; however, the tax rate on capital gains of
individuals cannot exceed 28%. Capital losses may be used to offset capital
gains. In addition, individuals may deduct up to $3,000 of net capital loss
each year to offset ordinary income. Excess capital loss may be carried
forward to future years.
Federal taxable income of corporations in excess of $75,000 up to $10
million is subject to a 34% tax rate; however, because the benefit of lower tax
rates on a corporation's taxable income of less than $75,000 is phased out for
corporations with income in excess of $100,000 but lower than $335,000, a
maximum marginal tax rate of 39% may result. Federal taxable income of
corporations in excess of $10 million is subject to a tax rate of 35%.
Further, a corporation's federal taxable income in excess of $15 million is
subject to an additional tax equal to 3% of taxable income over $15 million,
but not more than $100,000.
Capital gains of corporations are subject to tax at the same rates
applicable to ordinary income. Capital losses may be used only to offset
capital gains and excess capital losses may be carried back three years and
forward five years.
Certain corporations are entitled to a 70% dividends received
deduction for distributions from certain domestic corporations. Because all of
the Trust's net investment income is expected to be derived from interest and
short-term capital gains, it is anticipated that no distributions from the
Trust will qualify for the dividends received deduction. However, to the
extent the Trust would have any such distributions, the Trust will designate
the portion of any distributions which qualify for the 70% dividends received
deduction. The amount so designated may not exceed the amount received by the
Trust for its taxable year that qualifies for the dividends received deduction.
The Trust will be required in certain cases to withhold and remit to
the United States Treasury 31% of taxable dividends paid to any shareholder who
has provided either an incorrect tax identification number or no number at all,
or who is subject to withholding by the Internal Revenue Service for failure
properly to include on his return payments of interest or dividends.
State and Local Taxes
- ---------------------
Shareholders of the Trust may be subject to state and local taxes with
respect to their ownership of Trust Shares or distributions from the Trust.
Under the laws of some jurisdictions, distributions of net investment income
may be
B-16
<PAGE> 43
taxable to shareholders as dividend income even though a substantial portion of
such distributions may be attributable to interest on U.S. Government
obligations which, if received directly, may be exempt from such income taxes.
Each shareholder should consult its tax adviser about the tax status of
distributions from the Trust in the relevant state and locality.
General
- -------
Information set forth in the Prospectus and this Statement of
Additional Information which relates to federal taxation is only a summary of
some of the important federal tax considerations generally affecting purchasers
of Shares of the Trust. No attempt has been made to present a detailed
explanation of the federal income tax treatment of the Trust or its
Shareholders and this discussion is not intended as a substitute for careful
tax planning. Accordingly, potential purchasers of Shares of the Trust are
urged to consult their tax advisers with specific reference to their own tax
situation. In addition, the tax discussion in the Prospectus and this
Statement of Additional Information is based on tax laws and regulations which
are in effect on the date of the Prospectus and this Statement of Additional
Information; such laws and regulations may be changed by legislative or
administrative action.
Shareholders should consult their tax advisers to assess the general
state and local tax consequences of investing in the Trust and, in particular,
to determine whether dividends paid that represent interest derived from U.S.
government securities is exempt from applicable state and local income taxes.
YIELD
The current (average annualized) yield of the Trust for any seven-day
period is calculated by dividing the average daily net income per Share earned
by the Trust during the seven-day calendar period by the Trust's average price
per Share over the same period and annualizing this quotient on a 365-day
basis. For purposes of this calculation, the daily net income reflects
dividends declared on the original Share and dividends declared on any Shares
purchased with dividends on that Share. Capital changes that are excluded from
the calculation are realized gains and losses from the sale of securities as
well as unrealized appreciation and depreciation with respect to the Trust's
portfolio. The yield of the Trust for the seven-day period ended September 30,
1995, was 5.11%.
The effective or compounded yield of the Trust for any seven-day
period is computed by adding the number one to the daily net income per Share
earned by the Trust during the seven-day calendar period, raising the sum to a
power equal to 365 divided by seven,
B-17
<PAGE> 44
and subtracting the number one from the result. The effective or compounded
yield of the Trust for the seven-day period ended September 30, 1995, was
5.24%.
Investors may judge the performance of the Trust by comparing its
performance to the performance of other mutual funds or mutual fund portfolios
with comparable investment objectives and policies through various mutual fund
or market indices such as those prepared by Dow Jones & Co., Inc. and Standard
& Poor's Corporation, and to data prepared by Lipper Analytical Services, Inc.,
a widely recognized independent service which monitors the performance of
mutual funds, CDA Investment Technologies, Inc., and the Consumer Price Index.
Comparisons may also be made to indices or data published in Donoghue's MONEY
FUND REPORT of Holliston, Massachusetts, a nationally recognized money market
fund reporting service, Money Magazine, Forbes, Barron's, The Wall Street
Journal, The Columbus Dispatch, The New York Times, Business Week, Consumer
Reports and U.S.A. Today.
Current and effective yields will fluctuate from time to time and
should not be considered representative of future results. Yield is a function
of general economic and money market conditions, portfolio quality and
maturity, type of portfolio instruments and operating expenses. Yield
information may be useful in reviewing the Trust's performance and comparing an
investment in Shares of the Trust with other investment alternative. However,
yield on Shares of the Trust fluctuates unlike yields on bank deposits or other
instruments that pay a fixed yield for a stated period of time.
ADDITIONAL INFORMATION
Shareholder and Trustee Liability
- ---------------------------------
The Trust is an entity of the type commonly known as a "business
trust." Shareholders of such a trust may, under certain circumstances, be held
personally liable as partners for the obligations of the Trust. The
Declaration of Trust provides that shareholders shall not be subject to any
personal liability for the acts or obligations of the Trust and that every
agreement, obligations or instrument entered into or executed by the Trust
shall contain a provision to the effect that the shareholders are not
personally liable thereunder. The Trust has been advised by counsel that no
personal liability will attach to the shareholders when such a provision is
utilized, except possibly in a few jurisdictions. With respect to all types of
claims, contract claims where shareholder liability is not negated, claims for
taxes and certain statutory liabilities, a shareholder may be held personally
liable for obligations of the Trust. However, upon payment of any such
liability, the shareholder will be entitled to reimbursement from the general
assets of the Trust. The Trust is
B-18
<PAGE> 45
covered by insurance which the Trustees consider adequate to cover foreseeable
tort claims. The Declaration of Trust provides for indemnification out of
Trust property of any shareholder held personally liable solely by reason of
his being or having been a shareholder. The Declaration of Trust also provides
that the Trust shall, upon request, assume the defense of any claim made
against any shareholder for any act or obligation of the Trust and satisfy any
judgment thereon. Thus, the risk of financial loss to a shareholder on account
of shareholder liability is limited to circumstances in which the Trust itself
would be unable to meet its obligations.
The Declaration of Trust further provides that no Trustee, officer or
agent of the Trust shall be personally liable to any person for any action or
failure to act except for his own bad faith, willful misfeasance, gross
negligence or reckless disregard of his duties. It also provides that all
persons having any claim against the Trustees or the Trust shall look solely to
the Trust's property for payment. The Trust may enter into repurchase
agreements with the Bank and may purchase or sell securities from or to the
Bank.
The Trust is registered with the Securities and Exchange Commission as
a management investment company. Such registration does not involve
supervision by the Securities and Exchange Commission of the management or
policies of the Trust.
The Prospectus and this Statement of Additional Information omit
certain of the information contained in the Registration Statement filed with
the Securities and Exchange Commission. Copies of such information may be
obtained from the Securities and Exchange Commission upon payment of the
prescribed fee.
The Prospectus and this Statement of Additional Information are not an
offering of the securities herein described in any state in which such offering
may not lawfully be made. No salesman, dealer, or other person is authorized
to give any information or make any representation other than those contained
in the Prospectus and this Statement of Additional Information.
B-19
<PAGE> 46
FINANCIAL STATEMENTS
CARDINAL GOVERNMENT SECURITIES TRUST
SEPTEMBER 30, 1995
B-20
<PAGE> 47
CARDINAL GOVERNMENT SECURITIES TRUST
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
MATURITY PRINCIPAL VALUE
SECURITIES DATE AMOUNT (NOTE 1)
- ----------------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
DIRECT U.S. GOVERNMENT OBLIGATIONS 34.50%
U.S. Treasury Bills.................................................... 10/19/95 $ 40,000 $ 39,894
U.S. Treasury Bills.................................................... 11/02/95 20,000 19,904
U.S. Treasury Bills.................................................... 11/16/95 20,000 19,864
U.S. Treasury Bills.................................................... 12/07/95 35,000 34,660
U.S. Treasury Bills.................................................... 01/18/96 20,000 19,687
U.S. Treasury Bills.................................................... 02/08/96 20,000 19,625
--------- ---------
TOTAL DIRECT U.S. GOVERNMENT OBLIGATIONS......................... 155,000 153,634
--------- ---------
REPURCHASE AGREEMENTS, FULLY COLLATERALIZED BY U.S. GOVERNMENT AND
FEDERAL AGENCY OBLIGATIONS 65.90%
Smith Barney Shearson, 5.80%, dated 9/25/95............................ 10/02/95 80,000 80,000
Paine Webber Inc., 5.80%, dated 9/25/95................................ 10/02/95 93,000 93,000
Merrill Lynch Securities, 6.35%, dated 9/29/95......................... 10/02/95 39,000 39,000
Fifth Third Bank, 6.25%, dated 9/29/95................................. 10/02/95 6,500 6,500
Fifth Third Bank, 5.75%, dated 9/26/95................................. 10/03/95 75,000 75,000
--------- ---------
TOTAL REPURCHASE AGREEMENTS...................................... 293,500 293,500
--------- ---------
TOTAL INVESTMENTS AT AMORTIZED COST 100.40%...................... $ 448,500 $ 447,134
======== ========
</TABLE>
Cost also represents cost for Federal income tax purposes.
See accompanying notes to financial statements.
B-21
<PAGE> 48
CARDINAL GOVERNMENT SECURITIES TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS & LIABILITIES (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1995
<TABLE>
<S> <C>
ASSETS
Investments in securities at amortized cost...................................... $ 447,134
Cash............................................................................. 401
Interest receivable.............................................................. 291
Other assets..................................................................... 314
---------
Total assets......................................................... 448,140
---------
LIABILITIES
Payable for Trust shares redeemed................................................ 2,360
Payable for shareholder distributions............................................ 26
Accrued investment management, accounting and transfer agent fees (note 2)....... 274
Other accrued expenses........................................................... 106
---------
Total liabilities.................................................... 2,766
---------
COMMITMENTS AND CONTINGENCIES (NOTE 3)
NET ASSETS -- applicable to 445,373,567 outstanding $.01 par value shares of
beneficial interest (unlimited number of shares authorized).................... $ 445,374
=========
NET ASSET VALUE PER SHARE........................................................ $1.00
=========
</TABLE>
See accompanying notes to financial statements.
B-22
<PAGE> 49
CARDINAL GOVERNMENT SECURITIES TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest............................................................. $ 23,311
--------
EXPENSES:
Investment management fees (note 2).................................. 2,032
Transfer agent fees and expenses (note 2)............................ 842
Accounting fees (note 2)............................................. 53
--------
Total affiliated expenses.................................. 2,927
--------
Custodian fees....................................................... 34
Professional fees.................................................... 90
Reports to shareholders.............................................. 65
Trustees' fees....................................................... 25
Registration fees.................................................... 9
Other expenses....................................................... 151
--------
Total non-affiliated expenses.............................. 374
--------
Total expenses............................................. 3,301
--------
Net increase in net assets from operations................. $ 20,010
========
</TABLE>
See accompanying notes to financial statements.
B-23
<PAGE> 50
CARDINAL GOVERNMENT SECURITIES TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
YEARS ENDED SEPTEMBER 30, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
----------- ------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income........................................... $ 20,010 $ 11,615
Net realized loss from security transactions.................... 0 (1,463)
----------- ------------
Net increase in net assets from operations................. 20,010 10,152
----------- ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Total distributions to shareholders............................. (20,010) (11,303)
----------- ------------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 4):
Proceeds from sale of shares.................................... 1,052,266 987,709
Reinvestment of distributions to shareholders................... 19,567 11,027
Cost of shares redeemed......................................... (993,975) (1,033,978)
----------- ------------
Increase (decrease) in net assets derived from capital
share transactions....................................... 77,858 (35,242)
----------- ------------
FROM CAPITAL CONTRIBUTIONS (NOTE 2):
Capital contributed by Cardinal Management Corp................. 0 1,151
----------- ------------
Net increase (decrease) in net assets...................... 77,858 (35,242)
NET ASSETS -- beginning of period............................... 367,516 402,758
----------- ------------
NET ASSETS -- end of period..................................... $ 445,374 $ 367,516
========== ============
</TABLE>
See accompanying notes to financial statements.
B-24
<PAGE> 51
CARDINAL GOVERNMENT SECURITIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1995
(1) -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cardinal Government Securities Trust (the Trust) is a diversified, open-end
investment company created under the laws of Pennsylvania by a Declaration of
Trust dated March 21, 1980 and is registered under the Investment Company Act of
1940. According to the terms of the Declaration of Trust, Trust investments must
be obligations (or collateralized by obligations) of the U.S. Government or
agencies thereof. The following is a summary of significant accounting policies
followed by the Trust in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
Security Valuation -- Securities are valued at amortized cost which approximates
fair value (premiums and discounts are amortized on a straight-line basis). The
use of this method requires the Trust to maintain a dollar-weighted average
portfolio maturity of 90 days or less and purchase only securities having a
remaining maturity of thirteen months or less.
Security Transactions and Investment Income -- Security transactions are
recorded on the trade date. Interest income is recorded on the accrual basis. It
is the Trust's policy for its Custodian or a third-party bank to take possession
of all securities pledged as collateral for repurchase agreements and monitor
the market value of the collateral to ensure that it remains sufficient to cover
the repurchase agreements.
Federal Income Taxes -- No provision has been made for Federal taxes on the
Trust's income, since it is the policy of the Trust to comply with the
provisions of the Internal Revenue Code applicable to regulated investment
companies and to make sufficient distributions of taxable income and capital
gains within the required time to relieve it from all, or substantially all,
Federal income taxes.
Dividends to Shareholders -- Dividends are declared and accrued daily and (for
those shareholders not electing cash distribution of dividends) automatically
reinvested monthly in additional shares from the sum of net investment income
and net realized short-term gains.
(2) -- TRANSACTIONS WITH AFFILIATES
As investment manager for the Trust, Cardinal Management Corp. (CMC), an
affiliated company, is allowed an annual fee of 0.5% of the average daily net
assets of the Trust. CMC has agreed that if the aggregate expenses of the Trust,
as defined, for any fiscal year exceed the expense limitation of any state
having jurisdiction over the Trust, CMC will refund to the Trust, or otherwise
bear, such excess. This limitation did not affect the calculation of the
management fee during the year ended September 30, 1995.
CMC also serves the Trust as transfer agent and fund accountant. Transfer agent
service fees are based on a monthly charge per shareholder account plus
out-of-pocket expenses. Accounting service fees are based on the monthly average
net assets of the Trust. For the year ended September 30, 1995 the Trust paid or
accrued $842,187 and $53,283 for transfer agent and fund accounting services,
respectively.
To offset capital losses incurred by the Trust, CMC contributed $1,151,186 to
the Trust during the year ended September 30, 1994. The amount contributed was
equal to the investment management, transfer agent service and the fund
accounting fees for the period from May 1, 1994 through September 30, 1994.
(continued)
B-25
<PAGE> 52
CARDINAL GOVERNMENT SECURITIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1995
The Ohio Company, sole shareholder of CMC, serves as the Trust's distributor
and, in connection therewith receives purchase orders and redemption requests
relating to Trust shares. During the year ended September 30, 1995 the Trust
incurred no expenses related to the distribution of its shares.
(3) -- COMMITMENTS AND CONTINGENCIES
The Trust has an available $6,000,000 line of credit with its custodian, Fifth
Third Bank, which was unused at September 30, 1995. When used, borrowings under
this arrangement are secured by portfolio securities and can be used only for
short term needs of the Trust. No compensating balances are required and the
arrangement bears an interest rate of 106% of the custodian's prime lending
rate.
Fidelity Bond and Errors and Omissions insurance coverage for the Trust and its
officers and trustees has been obtained through ICI Mutual Insurance Company
(ICI Mutual), an industry-sponsored mutual insurance company. Included in other
assets of the Trust is a deposit of $87,459 for the initial capital of ICI
Mutual. The Trust is also committed to provide $262,377 should ICI Mutual
experience the need for additional capital contributions.
Included in other assets is a $175,000 certificate of deposit which
collateralizes a standby letter of credit in connection with the Trust's
participation in ICI Mutual. This amount is not available for investment.
(4) -- CAPITAL STOCK
At September 30, 1995, there were an unlimited number of $.01 par value shares
of capital stock and the capital amounts were as follows:
<TABLE>
<S> <C>
Paid in capital.................................................................. $446,524,753
Accumulated net realized loss on investments..................................... (1,463,438)
Undistributed net investment income.............................................. 312,252
------------
Net assets....................................................................... $445,373,567
=============
</TABLE>
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEARS ENDED
SEPTEMBER 30,
--------------------------------
1995 1994
------------- --------------
<S> <C> <C>
Shares sold..................................................... 1,052,265,662 987,708,658
Shares issued in connection with reinvestment of distributions
to shareholders............................................... 19,567,048 11,026,622
------------- --------------
1,071,832,710 998,735,280
Shares repurchased.............................................. (993,975,623) (1,033,976,922)
------------- --------------
Net increase (decrease)......................................... 77,857,087 (35,241,642)
Shares outstanding:
Beginning of period............................................. 367,516,480 402,758,122
------------- --------------
End of period................................................... 445,373,567 367,516,480
============= ==============
</TABLE>
B-26
<PAGE> 53
(5) -- SUBSEQUENT EVENT
On November 13, 1995 the Board of Trustees approved an Agreement and Plan of
Reorganization and Liquidation between the Trust and The Cardinal Group ("TCG").
The plan calls for the transfer of all assets and liabilities of the Trust to a
series of TCG with the same basic investment objectives and restrictions. The
Trustees have determined that this action is in the best interests of the
shareholders of the Trust and TCG. Shareholder approval will be sought and is
needed to ratify the transaction.
B-27
<PAGE> 54
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for each share of capital stock outstanding throughout each
period:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-----------------------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income................................ 0.05 0.03 0.02 0.04 0.06
Less distributions:
Dividends............................................ (0.05) (0.03) (0.02) (0.04) (0.06)
--------- --------- --------- --------- ---------
Net Asset Value, ending................................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Ratios/Supplemental Data:
Total return*.......................................... 4.98% 2.84% 2.41% 3.58% 6.20%
======== ======== ======== ======== ========
Net assets, ending (000)............................... $ 445,374 $ 367,516 $ 402,758 $ 472,521 $ 567,841
======== ======== ======== ======== ========
Ratio of expenses to average net assets................ 0.81% 0.85% 0.79% 0.76% 0.72%
======== ======== ======== ======== ========
Ratio of net investment income to average net assets... 4.92% 2.94% 2.38% 3.52% 6.03%
======== ======== ======== ======== ========
</TABLE>
* Without the capital contribution discussed in note 2, the 1994 total return
would have been 2.55%.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Shareholders and Board of Trustees
Cardinal Government Securities Trust:
We have audited the accompanying statement of assets and liabilities of Cardinal
Government Securities Trust (the Trust), including the statement of investments,
as of September 30, 1995, and the related statement of operations for the year
then ended, the statements of changes in net assets for each of the years in the
two-year period then ended and the financial highlights for each of the years in
the five-year period then ended. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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 verification of securities owned as of
September 30, 1995, by confirmation with the custodian and other appropriate
audit procedures. 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
Cardinal Government Securities Trust as of September 30, 1995, the results of
its operations for the year then ended, the changes in its net assets for each
of the years in the two-year period then ended, and the financial highlights for
each of the years in the five-year period then ended, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
November 17, 1995
B-28
<PAGE> 55
Registration Statement
of
CARDINAL GOVERNMENT SECURITIES TRUST
on
Form N-1A
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements
Included in Part A:
--Financial Highlights
Included in Part B:
--Statement of Investments
September 30, 1995
--Statement of Net Assets
September 30, 1995
--Statement of Operations
for the year ended September 30, 1995
--Statements of Changes in Net Assets
for the years ended September 30, 1995 and
1994
--Notes to Financial Statements
September 30, 1995
--Independent Auditors' Report
dated November 17, 1995
All required financial statements are included in
Part B hereof. All other financial statements and
schedules are inapplicable.
(b) Exhibits
(11) Consent of KPMG Peat Marwick LLP
(17) Financial Data Schedule
(19) (a) Powers of Attorney of Frank W.
Siegel, H. Keith Allen, Gordon B.
Carson, John B. Gerlach, Jr.,
Michael J. Knilans, James I. Luck,
David L. Nelson, C.A. Peterson,
Frank W. Siegel, Joseph H. Stegmayer,
Lawrence H. Rogers II and James M.
Schrack, II.
(b) Consent of Baker & Hostetler
Item 25. Persons Controlled or Under Common Control With Registrant
----------------------------------------------------------
None
<PAGE> 56
Item 26. Number of Holders of Securities
-------------------------------
The following table sets forth as of January 11, 1996, the number of
record holders of Shares of Registrant:
<TABLE>
<CAPTION>
Number of
Title of Class Record Holders
- ---------------------------------------- --------------
<S> <C>
Shares of Beneficial Interest, par value
$.01 per share, of Registrant............ 45,157
</TABLE>
Item 28. Business and Other Connections of Investment Adviser:
----------------------------------------------------
Information with respect to Cardinal Management Corp. and its officers
and directors as set forth under the captions "WHO MANAGES MY INVESTMENT IN THE
TRUST?" contained in Prospectus and "MANAGEMENT OF THE TRUST" and "THE ADVISER"
contained in the Statement of Additional Information which are a part of this
Registration Statement is hereby incorporated herein by reference.
To the knowledge of Registrant, none of the directors or officers of
Cardinal Management Corp., except those set forth below, is or has been at any
time during the past two fiscal years engaged in any other business,
profession, vocation or employment of a substantial nature. Set forth below
are the names, principal businesses and addresses of those businesses of the
directors and officers of Cardinal Management Corp. who are or have been
engaged in any other business, profession, vocation or employment of a
substantial nature during the past two fiscal years.
<TABLE>
<CAPTION>
Officer or Director
of Cardinal Name and Address Nature of
Management Corp. of Business Connection
- ------------------- ---------------- ----------
<S> <C> <C>
H. Keith Allen The Ohio Company Chief Operating Officer,
155 East Broad Street Secretary/
Columbus, Ohio 43215 Treasurer and
Director
Ad Management Corp. Secretary/Treasurer
155 East Broad Street and Director
Columbus, Ohio 43215
Cardinal Financial Secretary/Treasurer
Management Corp. and Director
155 East Broad Street
Columbus, Ohio 43215
Midwest Parking, Inc. Secretary/Treasurer
155 East Broad Street and Director
Columbus, Ohio 43215
InsuranceOhio Company Secretary/Treasurer
Agency and Director
155 East Broad Street
Columbus, Ohio 43215
</TABLE>
- 2C -
<PAGE> 57
<TABLE>
<S> <C> <C>
Ohio Equities Inc. Secretary/Treasurer
395 East Broad Street and Director
Columbus, Ohio 43215
and Director
The Cardinal Fund Inc. Chairman and
155 East Broad Street Director
Columbus, Ohio 43215
Cardinal Tax Exempt Chairman and Trustee
Money Trust
155 East Broad Street
Columbus, Ohio 43215
Cardinal Government Chairman and Trustee
Obligations Fund
155 East Broad Street
Columbus, Ohio 43215
Cardinal Government Secur- Chairman and Trustee
ities Trust
155 East Broad Street
Columbus, Ohio 43215
The Cardinal Group Chairman and Trustee
155 East Broad Street
Columbus, Ohio 43215
Frank W. Siegel The Ohio Company Senior Vice President
155 East Broad Street
Columbus, Ohio 43215
The Cardinal Fund Inc. President and
155 East Broad Street Director
Columbus, Ohio 43215
Cardinal Tax Exempt President and Trustee
Money Trust
155 East Broad Street
Columbus, Ohio 43215
Cardinal Government President and Trustee
Obligations Fund
155 East Broad Street
Columbus, Ohio 43215
Cardinal Government Secur- President and Trustee
ities Trust
155 East Broad Street
Columbus, Ohio 43215
The Cardinal Group President and Trustee
155 East Broad Street
Columbus, Ohio 43215
Keystone Group Vice President
200 Berkeley Street
Boston, Massachusetts 02116
Trust Advisory Group Senior Vice President
1 Morningstar Drive North
Westport, Connecticut 06880
</TABLE>
- 3C -
<PAGE> 58
Item 29. PRINCIPAL UNDERWRITERS
----------------------
(a) The Ohio Company acts as principal underwriter for Registrant.
The Ohio Company is also the principal underwriter of The Cardinal Fund Inc.,
Cardinal Government Obligations Fund, Cardinal Tax Exempt Money Trust, Cardinal
Balanced Fund and Cardinal Aggressive Growth Fund and is the investment adviser
of The Cardinal Fund Inc. Cardinal Management Corp., a wholly owned subsidiary
of The Ohio Company, is the investment adviser of Cardinal Tax Exempt Money
Trust, Cardinal Government Obligations Fund, Cardinal Balanced Fund and
Cardinal Aggressive Growth Fund. The Ohio Company also acts as Sponsor of
Cardinal Tax-Exempt Bond Trust, First through Thirty-Fifth Series (there is no
Thirteenth Series of this Trust) and as Sponsor of Cardinal GNMA Trust, First,
Second and Third Series. The Ohio Company participates as a member of various
underwriting and selling groups and as agent of other investment companies. It
executes orders for the purchase and sale of securities of investment companies
and, from time to time, sells securities to such companies in its capacity
as a broker-dealer in securities.
(b) The Officers and Directors of The Ohio Company and their
positions with Registrant are as follows:
<TABLE>
<CAPTION>
Name and Principal Position and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ------------------ -------------------- ---------------------
<S> <C> <C>
John F. Wolfe Chairman of the Board, President and
34 South Third Street President and Chief
Columbus, Ohio 43215 Executive Officer and
Director
William C. Wolfe Director
155 East Broad Street
Columbus, Ohio 43215
H. Keith Allen Chief Operating Officer, Chairman and Trus-
155 East Broad Street Secretary, Teeasurer and tee, member of Ex-
Columbus, Ohio 43215 Director ecutive and Nomi-
nating Committees
John P. Campbell Senior Executive Vice Pres-
155 East Broad Street ident and Director
Columbus, Ohio 43215
Daniel A. Fronk Senior Executive Vice
155 East Broad Street President and Director
Columbus, Ohio 43215
Curtis E. Stumpf Senior Executive Vice
155 East Broad Street President, Director and
Columbus, Ohio 43215 General Sales Manager
Martin H. Vogtsberger Senior Executive Vice
155 East Broad Street President and Director
Columbus, Ohio 43215
</TABLE>
- 4C -
<PAGE> 59
<TABLE>
<S> <C> <C>
Thomas A. Brownfield Senior Vice President
155 East Broad Street
Columbus, Ohio 43215
James A. Francis Senior Vice President/
155 East Broad Street Compliance
Columbus, Ohio 43215
Jerry L. Greene Senior Vice President/
155 East Broad Street Accounting
Columbus, Ohio 43215
Kenneth S. Koralewski Senior Vice President & Manager,
155 East Broad Street Municipal Syndicate & Trading
Columbus, Ohio 43215
Curtis D. Milner Senior Vice President
155 East Broad Street
Columbus, Ohio 43215
Frank W. Siegel Senior Vice President President and Trustee
155 East Broad Street
Columbus, Ohio 43215
Thomas G. Terry Senior Vice President/OTC
155 East Broad Street Trading
Columbus, Ohio 43215
George E. Tootle, Jr. Senior Vice President/
155 East Broad Street Operations
Columbus, Ohio 43215
G. Douglas Voelz Senior Vice President
155 East Broad Street
Columbus, Ohio 43215
John C. Adams Vice President/Public
155 East Broad Street Finance-Negotiated
Columbus, Ohio 43215
William N. Anderson Vice President/NYSE
155 East Broad Street Floor Broker
Columbus, Ohio 43215
Gary E. Baird Vice President/Sales
155 East Broad Street
Columbus, Ohio 43215
John Bevilacqua Vice President/ Asset
155 East Broad Street Management
Columbus, Ohio 43215
John R. Carle Vice President/Cardinal
155 East Broad Street Government Obligations Fund
Columbus, Ohio 43215
Mark R. Chambers Vice President/Public
155 East Broad Street Finance-Negotiated
Columbus, Ohio 43215
</TABLE>
- 5C -
<PAGE> 60
<TABLE>
<CAPTION>
Name and Principal Position and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ------------------ -------------------- ---------------------
<S> <C> <C>
G. John Cooper Vice President/Public
155 East Broad Street Finance-Negotiated
Columbus, Ohio 43215
Robert A. Corea Vice President/Corporate
155 East Broad Street Finance
Columbus, Ohio 43215
Albert W. Erickson, III Vice President/Public
155 East Broad Street Finance-Negotiated
Columbus, Ohio 43215
Michael Goodman Vice President/Muni-
155 East Broad Street cipal Trading
Columbus, Ohio 43215
Douglas W. Hindenlang Vice President/OTC Trading
155 East Broad Street
Columbus, Ohio 43215
Mark E. Koprucki Vice President/Research
155 East Broad Street
Columbus, Ohio 43215
Elwood W. Lewis Vice President/Asset
155 East Broad Street Management
Columbus, Ohio 43215
Barry G. McMahon Vice President/Asset
155 East Broad Street Management
Columbus, Ohio 43215
John R. Merrell Vice President/Sales
155 East Broad Street
Columbus, Ohio 43215
Thomas E. Murphy Vice President/Corporate
155 East Broad Street Finance
Columbus, Ohio 43215
C. Thomas Pfister Vice President/Public
155 East Broad Street Finance-Negotiated
Columbus, Ohio 43215
Larry J. Rapp Vice President/Manager,
155 East Broad Street Technical Services
Columbus, Ohio 43215
Kara L. Rider Vice President/Muni-
155 East Broad Street cipal Trading
Columbus, Ohio 43215
James M. Schrack II Vice President Treasurer
155 East Broad Street
Columbus, Ohio 43215
</TABLE>
- 6C -
<PAGE> 61
<TABLE>
<CAPTION>
Name and Principal Position and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ------------------ -------------------- ---------------------
<S> <C>
Richard H. Stillman Vice President/Public
155 East Broad Street Finance-Negotiated
Columbus, Ohio 43215
Michael S. Tedesco Vice President/Municipal
155 East Broad Street Trading
Columbus, Ohio 43215
James W. Trapp Vice President/Sales
155 East Broad Street
Columbus, Ohio 43215
William T. Weldon Vice President/Operations
155 East Broad Street
Columbus, Ohio 43215
David C. Will Vice President/Asset
155 East Broad Street Management
Columbus, Ohio 43215
Rodney A. Yeager Vice President/Tele-
155 East Broad Street communications
Columbus, Ohio 43215
Mark E. Backes Assistant Vice President/
Operations
155 East Broad Street
Columbus, Ohio 43215
Roger W. Butler Assistant Vice President/
155 East Broad Street Compliance
Columbus, Ohio 43215
James W. Carey Assistant Vice President/
155 East Broad Street Corporate Finance
Columbus, Ohio 43215
Scott E. Decker Assistant Vice President/
155 East Broad Street Trust-Internal Auditor
Columbus, Ohio 43215
William J. Denehy Assistant Vice President/
155 East Broad Street Corporate Bond Trading
Columbus, Ohio 43215
David G. Duncan Assistant Vice President/
155 East Broad Street Syndicate
Columbus, Ohio 43215
</TABLE>
- 7C -
<PAGE> 62
<TABLE>
<CAPTION>
Name and Principal Position and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ------------------ -------------------- ---------------------
<S> <C> <C>
Carolyn A. Garner Assistant Vice President
155 East Broad Street
Columbus, Ohio 43215
Charles H. Graves, Sr. Assistant Vice President/
155 East Broad Street Sales
Columbus, Ohio 43215
Ronald G. Hall Assistant Vice President/
155 East Broad Street Operations
Columbus, Ohio 43215
Helen J. Huntington Assistant Vice President/
155 East Broad Street Operations
Columbus, Ohio 43215
Jon P. Jones Assistant Vice President/
155 East Broad Street Municipal Trading
Columbus, Ohio 43215
Donna M. Knapp Assistant Vice President/
155 East Broad Street Operations
Columbus, Ohio 43215
Lawrence W. Landenberger Assistant Vice President/
155 East Broad Street Operations
Columbus, Ohio 43215
Matthew E. Lee Assistant Vice President/
155 East Broad Street Trading
Columbus, Ohio 43215
Virginia L. McCargish Assistant Vice President/
155 East Broad Street Operations
Columbus, Ohio 43215
Kevin P. Morrow Assistant Vice President/
155 East Broad Street Research
Columbus, Ohio 43215
Richard D. Oltean Assistant Vice President/
155 East Broad Street Trust-Qualified Plans
Columbus, Ohio 43215
Mark Ostroske Assistant Vice President/
155 East Broad Street Asset Management
Columbus, Ohio 43215
E. Eugene Robinson Assistant Vice President/
155 East Broad Street Research
Columbus, Ohio 43215
Michael C. Roney Assistant Vice President/
155 East Broad Street Asset Management
Columbus, Ohio 43215
David A. Seely, Jr. Assistant Vice President/
155 East Broad Street Operations
Columbus, Ohio 43215
</TABLE>
- 8C -
<PAGE> 63
<TABLE>
<CAPTION>
Name and Principal Position and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ------------------ -------------------- ---------------------
<S> <C> <C>
Susan H. Shaw Assistant Vice President/
155 East Broad Street National Syndicate
Columbus, Ohio 43215
Ronald J. Trubinsky Assistant Vice President/
155 East Broad Street Corporate Bond Trading
Columbus, Ohio 43215
Douglas J. Walouke Assistant Vice President/
155 East Broad Street Corporate Bond Trading
Columbus, Ohio 43215
Richard J. Wayman Assistant Vice President/
155 East Broad Street Research
Columbus, Ohio 43215
Lori A. Wells Assistant Vice President/
155 East Broad Street Technical Services
Columbus, Ohio 43215
</TABLE>
Item 30. LOCATION OF ACCOUNTS AND RECORDS
--------------------------------
(1) Cardinal Management Corp., 155 East Broad Street,
Columbus, Ohio 43215 (records relating to its functions as
investment adviser and manager, Declaration of Trust,
By-Laws and Minute Books).
(2) The Ohio Company, 155 East Broad Street, Columbus, Ohio
43215 (records relating to its function as distributor).
(3) Cardinal Management Corp., 215 East Capital Street,
Columbus, Ohio 43215 (records relating to its
functions as dividend and transfer agent and fund
accountant).
(4) The Fifth Third Bank, 38 Fountain Square Plaza,
Cincinnati, Ohio 45263 (records relating to its functions
as custodian).
Item 31. MANAGEMENT SERVICES
-------------------
None.
Item 32. UNDERTAKINGS
------------
None.
- 9C -
<PAGE> 64
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment
to Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, in the City of Columbus and State of Ohio on the
17th day of January, 1996. Registrant hereby certifies that this
Post-Effective Amendment to Registration Statement meets all of the
requirements for effectiveness pursuant to paragraph (b) of Rule 485 under the
Securities Act of 1933.
CARDINAL GOVERNMENT SECURITIES TRUST
By /s/ Frank W. Siegel
----------------------------------
Frank W. Siegel, President
- 10C -
<PAGE> 65
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to Registration Statement has been signed below by the following
persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/*H. Keith Allen Chairman and Trustee January 17, 1996
- --------------------------
H. Keith Allen
/s/*Gordon B. Carson Trustee January 17, 1996
- --------------------------
Gordon B. Carson
/s/*John B. Gerlach, Jr. Trustee January 17, 1996
- --------------------------
John B. Gerlach, Jr.
/s/*Michael J. Knilans Trustee January 17, 1996
- --------------------------
Michael J. Knilans
/s/*James I. Luck Trustee January 17, 1996
- --------------------------
James I. Luck
/s/*David L. Nelson Trustee January 17, 1996
- --------------------------
David L. Nelson
/s/*C. A. Peterson Trustee January 17, 1996
- --------------------------
C. A. Peterson
/s/*Lawrence H. Rogers II Trustee January 17, 1996
- --------------------------
Lawrence H. Rogers II
/s/*Joseph H. Stegmayer Trustee January 17, 1996
- --------------------------
Joseph H. Stegmayer
/s/ Frank W. Siegel President (Principal January 17, 1996
- -------------------------- Executive Officer)
Frank W. Siegel
/s/ James M. Schrack II Treasurer (Principal January 17, 1996
- -------------------------- Financial and Accounting
James M. Schrack II Officer)
*By/s/ James M. Schrack II January 17, 1996
-----------------------
James M. Schrack II
Attorney-in-Fact
</TABLE>
- 11C -
<PAGE> 66
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ---------------------------- ----
<S> <C> <C>
(11) Consent of KPMG Peat Marwick LLP
(17) Financial Data Schedule
(19)(a) Powers of Attorney of Frank W. Siegel, H. Keith Allen, Gordon B. Carson, John B.
Gerlach, Jr., Michael J. Knilans, James I. Luck, David L. Nelson, C.A. Peterson,
Frank W. Siegel, Joseph H. Stegmayer, Lawrence H. Rogers II and James M.
Schrack, II.
(b) Consent of Baker & Hostetler
</TABLE>
- 12C -
<PAGE> 67
As filed with the Securities and Exchange Commission January 18, 1996
1933 Act Registration No. 2-67040
1940 Act File No. 811-3028
EXHIBITS TO
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/
Post-Effective Amendment No. 21 /x/
and
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 /x/
Amendment No. 22 /x/
Cardinal Government Securities Trust
(Exact Name of Registrant as Specified in Charter)
155 East Broad Street
Columbus, Ohio 43215
(Address of Principal Executive Offices)
Registrant's Telephone Number:
(614) 464-5511
<PAGE> 1
Exhibit (11)
<PAGE> 2
CONSENT OF KPMG PEAT MARWICK LLP
To the Board of Trustees
Cardinal Government Securities Trust:
We consent to the use of our report dated November 17, 1995, included
herein and to the references to our firm under the heading "Financial
Highlights" in the Prospectus and under the heading "Legal Counsel and
Independent Auditors" in the Statement Of Additional Information.
Columbus, Ohio
January 17, 1996 KPMG PEAT MARWICK LLP
<PAGE> 1
Exhibit (17)
<PAGE> 2
[ARTICLE] 6
[RESTATED]
[CIK] 0000315779
[NAME] CARDINAL GOVERNMENT SECURITIES TRUST
[SERIES]
[NUMBER] 0
[NAME] 0
[MULTIPLIER] 1,000
[CURRENCY] U.S. DOLLARS
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] SEP-30-1995
[PERIOD-START] OCT-01-1994
[PERIOD-END] SEP-30-1995
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 447,134
[INVESTMENTS-AT-VALUE] 0
[RECEIVABLES] 291
[ASSETS-OTHER] 314
[OTHER-ITEMS-ASSETS] 401
[TOTAL-ASSETS] 448,140
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 2,766
[TOTAL-LIABILITIES] 2,766
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 446,525
[SHARES-COMMON-STOCK] 445,374
[SHARES-COMMON-PRIOR] 367,516
[ACCUMULATED-NII-CURRENT] 312
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (1,463)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 445,374
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 23,311
[OTHER-INCOME] 0
[EXPENSES-NET] 3,301
[NET-INVESTMENT-INCOME] 20,010
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 20,010
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 20,010
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 1,052,266
[NUMBER-OF-SHARES-REDEEMED] 993,975
[SHARES-REINVESTED] 19,567
[NET-CHANGE-IN-ASSETS] 77,858
[ACCUMULATED-NII-PRIOR] 312
[ACCUMULATED-GAINS-PRIOR] (1,463)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 2,032
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 3,301
[AVERAGE-NET-ASSETS] 405,544
[PER-SHARE-NAV-BEGIN] 1.00
[PER-SHARE-NII] 0.05
[PER-SHARE-GAIN-APPREC] 0
[PER-SHARE-DIVIDEND] 0.05
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 1.00
[EXPENSE-RATIO] 0.81%
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE> 1
Exhibit (19)(a)
<PAGE> 2
POWER OF ATTORNEY
Frank W. Siegel, whose signature appears below, does hereby constitute
and appoint H. Keith Allen, James M. Schrack II and Frank W. Seigel, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to
enable Cardinal Government Securities Trust (the "Fund") to comply with the
Investment Company Act of 1940, as amended, and the Securities Act of 1933, as
amended ("Acts"), and any rules, regulations or requirements of the Securities
and Exchange Commission in respect thereof, in connection with the filing and
effectiveness of the Fund's Registration Statements on Form N-1A and Form N-14
pursuant to said Acts and any and all amendments thereto (including pre- and
post-effective amendments), including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as trustee and/or officer of the Fund such
Registration Statement(s) and any and all such amendments filed with the
Securities and Exchange Commission under any Acts and any other instruments or
documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or any of them, shall do or cause to be
done by virtue thereof.
Dated: October 20, 1995 /s/ Frank W. Siegel
-------------------------
FRANK W. SIEGEL
<PAGE> 3
POWER OF ATTORNEY
H. Keith Allen, whose signature appears below, does hereby constitute
and appoint H. Keith Allen, James M. Schrack II and Frank W. Seigel, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to
enable Cardinal Government Securities Trust (the "Fund") to comply with the
Investment Company Act of 1940, as amended, and the Securities Act of 1933, as
amended ("Acts"), and any rules, regulations or requirements of the Securities
and Exchange Commission in respect thereof, in connection with the filing and
effectiveness of the Fund's Registration Statements on Form N-1A and Form N-14
pursuant to said Acts and any and all amendments thereto (including pre- and
post-effective amendments), including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as trustee and/or officer of the Fund such
Registration Statement(s) and any and all such amendments filed with the
Securities and Exchange Commission under any Acts and any other instruments or
documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or any of them, shall do or cause to be
done by virtue thereof.
Dated: October 20, 1995 /s/ Keith Allen
-------------------------
H. KEITH ALLEN
<PAGE> 4
POWER OF ATTORNEY
Gordon B. Carson, whose signature appears below, does hereby constitute
and appoint H. Keith Allen, James M. Schrack II and Frank W. Seigel, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to
enable Cardinal Government Securities Trust (the "Fund") to comply with the
Investment Company Act of 1940, as amended, and the Securities Act of 1933, as
amended ("Acts"), and any rules, regulations or requirements of the Securities
and Exchange Commission in respect thereof, in connection with the filing and
effectiveness of the Fund's Registration Statements on Form N-1A and Form N-14
pursuant to said Acts and any and all amendments thereto (including pre- and
post-effective amendments), including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as trustee and/or officer of the Fund such
Registration Statement(s) and any and all such amendments filed with the
Securities and Exchange Commission under any Acts and any other instruments or
documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or any of them, shall do or cause to be
done by virtue thereof.
Dated: October 20, 1995 /s/ Gordon B. Carson
--------------------------
GORDON B. CARSON
<PAGE> 5
POWER OF ATTORNEY
John B. Gerlach, Jr., whose signature appears below, does hereby
constitute and appoint H. Keith Allen, James M. Schrack II and Frank W.
Seigel, each individually, his true and lawful attorneys and agents, with power
of substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to
enable Cardinal Government Securities Trust (the "Fund") to comply with the
Investment Company Act of 1940, as amended, and the Securities Act of 1933, as
amended ("Acts"), and any rules, regulations or requirements of the Securities
and Exchange Commission in respect thereof, in connection with the filing and
effectiveness of the Fund's Registration Statements on Form N-1A and Form N-14
pursuant to said Acts and any and all amendments thereto (including pre- and
post-effective amendments), including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as trustee and/or officer of the Fund such
Registration Statement(s) and any and all such amendments filed with the
Securities and Exchange Commission under any Acts and any other instruments or
documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or any of them, shall do or cause to be
done by virtue thereof.
Dated: October 20, 1995 /s/ John B. Gerlach, Jr.
---------------------------
JOHN B. GERLACH, JR
<PAGE> 6
POWER OF ATTORNEY
Michael J. Knilans, whose signature appears below, does hereby
constitute and appoint H. Keith Allen, James M. Schrack II and Frank W.
Seigel, each individually, his true and lawful attorneys and agents, with power
of substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to
enable Cardinal Government Securities Trust (the "Fund") to comply with the
Investment Company Act of 1940, as amended, and the Securities Act of 1933, as
amended ("Acts"), and any rules, regulations or requirements of the Securities
and Exchange Commission in respect thereof, in connection with the filing and
effectiveness of the Fund's Registration Statements on Form N-1A and Form N-14
pursuant to said Acts and any and all amendments thereto (including pre- and
post-effective amendments), including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as trustee and/or officer of the Fund such
Registration Statement(s) and any and all such amendments filed with the
Securities and Exchange Commission under any Acts and any other instruments or
documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or any of them, shall do or cause to be
done by virtue thereof.
Dated: October 20, 1995 /s/ Michael J. Knilans
---------------------------
MICHAEL J. KNILANS
<PAGE> 7
POWER OF ATTORNEY
James I. Luck, whose signature appears below, does hereby constitute and
appoint H. Keith Allen, James M. Schrack II and Frank W. Seigel, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to
enable Cardinal Government Securities Trust (the "Fund") to comply with the
Investment Company Act of 1940, as amended, and the Securities Act of 1933, as
amended ("Acts"), and any rules, regulations or requirements of the Securities
and Exchange Commission in respect thereof, in connection with the filing and
effectiveness of the Fund's Registration Statements on Form N-1A and Form N-14
pursuant to said Acts and any and all amendments thereto (including pre- and
post-effective amendments), including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as trustee and/or officer of the Fund such
Registration Statement(s) and any and all such amendments filed with the
Securities and Exchange Commission under any Acts and any other instruments or
documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or any of them, shall do or cause to be
done by virtue thereof.
Dated: October 20, 1995 /s/ James I. Luck
----------------------------
JAMES I. LUCK
<PAGE> 8
POWER OF ATTORNEY
-----------------
David L. Nelson, whose signature appears below, does hereby constitute
and appoint H. Keith Allen, James M. Schrack II and Frank W. Seigel, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to
enable Cardinal Government Securities Trust (the "Fund") to comply with the
Investment Company Act of 1940, as amended, and the Securities Act of 1933, as
amended ("Acts"), and any rules, regulations or requirements of the Securities
and Exchange Commission in respect thereof, in connection with the filing and
effectiveness of the Fund's Registration Statements on Form N-1A and Form N-14
pursuant to said Acts and any and all amendments thereto (including pre- and
post-effective amendments), including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as trustee and/or officer of the Fund such
Registration Statement(s) and any and all such amendments filed with the
Securities and Exchange Commission under any Acts and any other instruments or
documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or any of them, shall do or cause to be
done by virtue thereof.
Dated: October 20, 1995 /s/ David L. Nelson
------------------------------
DAVID L. NELSON
<PAGE> 9
POWER OF ATTORNEY
-----------------
C. A. Peterson, whose signature appears below, does hereby constitute
and appoint H. Keith Allen, James M. Schrack II and Frank W. Seigel, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to
enable Cardinal Government Securities Trust (the "Fund") to comply with the
Investment Company Act of 1940, as amended, and the Securities Act of 1933, as
amended ("Acts"), and any rules, regulations or requirements of the Securities
and Exchange Commission in respect thereof, in connection with the filing and
effectiveness of the Fund's Registration Statements on Form N-1A and Form N-14
pursuant to said Acts and any and all amendments thereto (including pre- and
post-effective amendments), including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as trustee and/or officer of the Fund such
Registration Statement(s) and any and all such amendments filed with the
Securities and Exchange Commission under any Acts and any other instruments or
documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or any of them, shall do or cause to be
done by virtue thereof.
Dated: October 20, 1995 /s/ C.A. Peterson
------------------------
C. A. PETERSON
<PAGE> 10
POWER OF ATTORNEY
-----------------
Lawrence H. Rogers II, whose signature appears below, does hereby
constitute and appoint H. Keith Allen, James M. Schrack II and Frank W. Seigel,
each individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to
enable Cardinal Government Securities Trust (the "Fund") to comply with the
Investment Company Act of 1940, as amended, and the Securities Act of 1933, as
amended ("Acts"), and any rules, regulations or requirements of the Securities
and Exchange Commission in respect thereof, in connection with the filing and
effectiveness of the Fund's Registration Statements on Form N-1A and Form N-14
pursuant to said Acts and any and all amendments thereto (including pre- and
post-effective amendments), including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as trustee and/or officer of the Fund such
Registration Statement(s) and any and all such amendments filed with the
Securities and Exchange Commission under any Acts and any other instruments or
documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or any of them, shall do or cause to be
done by virtue thereof.
Dated: October 20, 1995 /s/ Lawrence H. Rogers
-----------------------------
LAWRENCE H. ROGERS II
<PAGE> 11
POWER OF ATTORNEY
-----------------
Joseph H. Stegmayer, whose signature appears below, does hereby
constitute and appoint H. Keith Allen, James M. Schrack II and Frank W.
Seigel, each individually, his true and lawful attorneys and agents, with power
of substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to
enable Cardinal Government Securities Trust (the "Fund") to comply with the
Investment Company Act of 1940, as amended, and the Securities Act of 1933, as
amended ("Acts"), and any rules, regulations or requirements of the Securities
and Exchange Commission in respect thereof, in connection with the filing and
effectiveness of the Fund's Registration Statements on Form N-1A and Form N-14
pursuant to said Acts and any and all amendments thereto (including pre- and
post-effective amendments), including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as trustee and/or officer of the Fund such
Registration Statement(s) and any and all such amendments filed with the
Securities and Exchange Commission under any Acts and any other instruments or
documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or any of them, shall do or cause to be
done by virtue thereof.
Dated: October 20, 1995 /s/ Joseph H. Stegmayer
-----------------------------
JOSEPH H. STEGMAYER
<PAGE> 12
POWER OF ATTORNEY
-----------------
James M. Schrack II, whose signature appears below, does hereby
constitute and appoint H. Keith Allen, James M. Schrack II and Frank W.
Seigel, each individually, his true and lawful attorneys and agents, with power
of substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to
enable Cardinal Government Securities Trust (the "Fund") to comply with the
Investment Company Act of 1940, as amended, and the Securities Act of 1933, as
amended ("Acts"), and any rules, regulations or requirements of the Securities
and Exchange Commission in respect thereof, in connection with the filing and
effectiveness of the Fund's Registration Statements on Form N-1A and Form N-14
pursuant to said Acts and any and all amendments thereto (including pre- and
post-effective amendments), including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as trustee and/or officer of the Fund such
Registration Statement(s) and any and all such amendments filed with the
Securities and Exchange Commission under any Acts and any other instruments or
documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or any of them, shall do or cause to be
done by virtue thereof.
Dated: October 20, 1995 /s/ James M. Schrack II
------------------------------
JAMES M. SCHRACK II
<PAGE> 1
Exhibit (19)(b)
<PAGE> 2
CONSENT OF BAKER & HOSTETLER
We hereby consent to the use of our name and to the references to our
firm under the caption "Legal Counsel and Independent Auditors" in or made a
part of the Registration Statement on Form N-1A, Registration No. 2-67040,
filed under the Securities Act of 1933, as amended, of Cardinal Government
Securities Trust.
Columbus, Ohio
January 17, 1996 BAKER & HOSTETLER
