<PAGE> 1
- ----------------------------------------------------------
- ---------------------------------------------------------
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 Plaza
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
------------------------
This report has been prepared for the information of shareholders of Cardinal
Balanced Fund and is not authorized for distribution to prospective investors
unless preceded or accompanied by an effective Prospectus.
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- ----------------------------------------------------------
- ----------------------------------------------------------
- ---------------------------------------------------------
CARDINAL
BALANCED
FUND
-------------------------
ANNUAL REPORT
-------------------------
SEPTEMBER 30, 1995
(LOGO)*()
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- ----------------------------------------------------------
<PAGE> 2
DEAR CARDINAL SHAREHOLDER:
- --------------------------------------------------------------------------------
Thank you for your confidence and investment in the Cardinal Family of Funds. We
appreciate your support and extend a special welcome to all new shareholders. We
are pleased to provide you with our Annual Report for the fiscal year ended
September 30, 1995.
Over the past decade, the mutual fund industry has experienced an unprecedented
level of growth. Between 1984 and 1995, the number of mutual fund shareholders
has increased from approximately 20 million to over 75 million. At The Ohio
Company, we believe that this phenomenal growth rate is attributable to the
special benefits that mutual funds provide, in particular professional
management. A team of professional managers gives every investor access to
full-time experts who evaluate economic trends, monitor the markets and select
individual securities.
What distinguishes our professional portfolio management team? Talent and
experience. The investment professionals responsible for managing the Cardinal
Family of Funds possess, on average, more than seventeen years of investment
experience. Collectively, our team of portfolio managers have guided assets
through bull markets, bear markets and uncertain markets. While each has a
specialized role, our team works together toward one primary goal: To attain
superior investment results according to each fund's investment objective.
We remain committed to providing you with outstanding investment performance and
top quality shareholder services. We look forward to meeting your investment
needs in the years to come and welcome your comments and suggestions.
Sincerely,
<TABLE>
<S> <C>
H. Keith Allen Frank W. Siegel, CFA
Chairman President
</TABLE>
1
<PAGE> 3
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On behalf of the Cardinal Balanced Fund Trustees and Officers, we are pleased to
present our September 30, 1995 Annual Report which contains financial
statements, including the portfolio of investments.
Despite a somewhat shaky start, the fiscal year ended September 30, 1995,
witnessed a stunning advance for both the stock and bond markets. This has
certainly been a positive environment for Cardinal Balanced Fund and we are
happy to report favorable results to you. Our rate of return on net asset value
for the year ended September 30, 1995 was 20.8% which compares favorably with
the 19% average returned by balanced funds tracked by Lipper Analytical
Services, Inc.
The rally in the bond market that began in December of 1994 has continued
throughout 1995, spurred on by the receding threat of inflation as the pace of
economic activity has slowed. The swiftness and magnitude of the decline in
interest rates has exceeded nearly everyone's expectations, but then so has the
degree to which the economy has slowed. Sensing that such a scenario might be
unfolding, we moved through the late spring and summer to enhance our income
generating capabilities and found some interesting opportunities in the
preferred stock sector. New positions complemented nicely our senior
fixed-income holdings and allowed us to continue to push our quarterly dividend
payout higher as the year progressed.
The decline in interest rates coupled with strong corporate earnings propelled
the stock market to new record highs. However, the slowing in economic activity
makes the earnings outlook going forward much less certain. As a result, we have
continued to lighten our exposure to cyclical and economically sensitive issues.
At September 30th, our equity holdings remain in something of a transitory state
as we try to sort out which way the economy is headed as we approach 1996. We
continue to look for interesting opportunities to capture attractive yields
which will allow us to increase our dividend.
As always, we appreciate the trust and confidence you have expressed in us by
your investment in Cardinal Balanced Fund and we will continue to work hard on
your behalf in the year ahead.
H. Keith Allen
Chairman
As portfolio manager for Cardinal Balanced Fund, Barry McMahon is primarily
responsible for the day-to-day management of the Fund's portfolio. Mr. McMahon
has 8 years of investment management experience and has been the portfolio
manager for Cardinal Balanced Fund since its inception in 1993.
Frank W. Siegel Barry McMahon
President Vice President
<PAGE> 4
CARDINAL BALANCED FUND
- --------------------------------------------------------------------------------
RETURN ON A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
The Balanced Index represents the sum of 30% of the S&P 500 Index, 50% of the
Lehman Bros. Government Bond Index and 20% of the U.S. Treasury Bill Return, all
of which are considered to be broad based market indices for the purpose of this
presentation. The value of the Cardinal Balanced Fund investment includes the
relevant fund expenses and sales load, whereas, the value of the investment in
the Balanced Index does not. Past performance is not predictive of future
performance.
<TABLE>
<CAPTION>
Measurement Period Balanced In- Cardinal Bal-
(Fiscal Year Covered) dex anced Fund
<S> <C> <C>
30-Jun-93 10000 9550
30-Sep-93 10207 9684
30-Sep-94 10313 9720
30-Sep-95 12073 11741
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN*
FOR THE PERIODS ENDING SEPTEMBER
30, 1995:
-----------------------------------
ONE YEAR SINCE
RETURN JUNE 24, 1993**
-------------- ---------------
<S> <C> <C>
Cardinal Balanced Fund............................. 15.36% 7.39%
=============== ===============
</TABLE>
* Return includes all relevant fund expenses and sales load.
** Commencement of operations.
3
<PAGE> 5
CARDINAL BALANCED FUND
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (MARKET VALUE IN THOUSANDS)
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
FACE/ MARKET
SHARES VALUE
--------- -----------
<S> <C> <C>
COMMON STOCK 44.23%
America West Airlines Class B*...................................................... 12,000 $ 186
American Express Company............................................................ 8,000 355
American Health Properties.......................................................... 10,000 216
Arco Chemical Company............................................................... 7,500 366
Banc One Corporation................................................................ 8,000 292
Cinergy Corporation................................................................. 10,000 279
Commerce Bancshares Incorporated.................................................... 5,250 207
Dow Chemical Company................................................................ 4,500 335
Excel Industries Incorporated....................................................... 15,000 210
Forest Laboratories*................................................................ 3,000 133
GTE Corporation..................................................................... 7,500 294
Glendale Federal Savings Bank*...................................................... 5,000 82
IntelCom Group Incorporated*........................................................ 15,000 191
Mellon Bank Corporation............................................................. 7,500 335
Monsanto Company.................................................................... 3,500 353
Mutual Risk Management.............................................................. 5,000 197
National Semiconductor Company*..................................................... 5,000 138
J.C. Penney Company Incorporated.................................................... 6,000 298
Progress Software Corporation*...................................................... 4,000 268
Reliastar Financial Corporation..................................................... 1,000 41
Southern Indiana Gas and Electric................................................... 6,000 202
Structural Dynamics Research*....................................................... 15,000 278
Tribune Company..................................................................... 5,000 332
Trinova Corporation................................................................. 6,000 202
Universal Foods Corporation......................................................... 4,000 139
U.S. Healthcare Incorporated........................................................ 5,000 177
Viewlogic Systems Incorporated*..................................................... 4,000 56
Willamette Industries Incorporated.................................................. 4,000 267
-----------
TOTAL COMMON STOCK (COST $4,982,002).............................................. 6,429
-----------
CONVERTIBLE PREFERRED STOCK 3.24%
California Federal Bank............................................................. 6,000 145
Ford Motor Company, 8.40%, Series A................................................. 1,500 154
Glendale Federal, 8.75%, Series E................................................... 4,000 172
-----------
TOTAL CONVERTIBLE PREFERRED STOCK (COST $471,349)................................. 471
-----------
PREFERRED STOCK 5.95%
American General Capital, 8.45%..................................................... 7,500 189
American Health Psychiatric Group Preferred......................................... 8,250 134
Chase Manhattan Corporation, 8.40%, Cumulative Series M............................. 7,500 193
Enron Capital Resources, 9.00%, Series A, LP........................................ 6,000 157
Utilicorp Capital, 8.875%........................................................... 7,500 192
-----------
TOTAL PREFERRED STOCK (COST $864,463)............................................. 865
-----------
*Non-income producing
(continued)
</TABLE>
4
<PAGE> 6
CARDINAL BALANCED FUND
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STATEMENT OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
FACE/ MARKET
SHARES VALUE
--------- -----------
<S> <C> <C>
CONVERTIBLE CORPORATE BONDS 6.02%
Ashland Oil, Inc., 6.75%, due 7-01-2014............................................. 150,000 $ 147
Beverly Enterprises, 7.625%, due 3-15-2003.......................................... 100,000 98
Cabot Medical Co., 7.50%, due 3-01-1999............................................. 100,000 101
Enserch Corporation, 6.375%, due 4-01-2002.......................................... 150,000 147
Federated Department Stores, 9.72%, due 2-15-2004................................... 150,000 151
Gran Care Incorporated, 6.50%, due 1-15-2003........................................ 100,000 95
Masco Corporation, 5.25%, due 2-15-2012............................................. 150,000 136
-----------
TOTAL CONVERTIBLE CORPORATE BONDS (COST $888,296)................................. 875
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS 8.41%
GNMA I # 368080, 7.00%, due 11-15-2008.............................................. 268,378 271
GNMA I # 251959, 7.50%, due 6-15-2023............................................... 260,649 263
GNMA II # 1213, 7.50%, due 6-20-2023................................................ 337,135 338
GNMA II # 1268, 8.00%, due 7-20-2023................................................ 343,197 351
-----------
TOTAL U.S. GOVERNMENT AGENCIES (COST $1,268,259).................................. 1,223
-----------
CORPORATE BONDS 14.90%
American Airlines, Series 91A, 10.18%, due 1-02-2013................................ 250,000 289
Consumers Power Co., 7.50%, due 6-01-2002........................................... 300,000 306
Dole Foods Inc., 7.00%, due 5-15-2003............................................... 200,000 198
First USA Bank, Wilmington, 5.75%, due 1-15-1999.................................... 300,000 293
General Motors Acceptance Corp., 7.00%, due 9-15-2002............................... 200,000 204
Kemper Corp., 6.875%, due 9-15-2003................................................. 250,000 246
Pulte Homes Corp., 7.00%, due 12-15-2003............................................ 150,000 143
Tele-Communications Inc., 7.25%, due 8-01-2005...................................... 250,000 244
Time Warner, 7.25%, due 9-01-2008................................................... 250,000 243
-----------
TOTAL CORPORATE BONDS (COST $2,129,904)........................................... 2,166
-----------
COMMERCIAL PAPER 13.76%
Ford Motor Credit Corporation, 5.75%, due 10-02-1995................................ 500,000 500
Sears Acceptance Corporation, 5.74%, due 10-03-1995................................. 500,000 500
General Motors Acceptance Corporation, 5.80%, due 10-04-1995........................ 500,000 500
Cigna Corporation, 5.88%, due 10-10-1995............................................ 500,000 500
-----------
TOTAL COMMERCIAL PAPER (COST $1,999,839).......................................... 2,000
-----------
REPURCHASE AGREEMENTS, FULLY COLLATERALIZED BY U.S. GOVERNMENT OBLIGATIONS 3.10%
The Fifth Third Bank, 5.95%, dated 9-29-95, due 10-04-95............................ 450,000 450
-----------
TOTAL REPURCHASE AGREEMENTS (COST $450,000)....................................... 450
-----------
TOTAL INVESTMENTS (COST $13,054,112) 99.61%....................................... $ 14,479
===========
</TABLE>
GNMA -- Government National Mortgage Association
Cost also represents cost for Federal income tax purposes.
See accompanying notes to financial statements.
5
<PAGE> 7
CARDINAL BALANCED FUND
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STATEMENT OF ASSETS & LIABILITIES (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1995
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $13,054)............................... $ 14,479
Cash............................................................................. 42
Receivable for Fund shares sold.................................................. 113
Interest receivable.............................................................. 56
Dividends receivable............................................................. 16
Prepaid expenses................................................................. 7
Deferred organizational cost..................................................... 27
--------
Total assets........................................................... 14,740
--------
LIABILITIES
Payable for investment securities purchased...................................... 125
Payable for Fund shares redeemed................................................. 47
Accrued investment management, shareholder service, accounting and transfer agent
fees (note 3).................................................................. 14
Other accrued expenses........................................................... 19
--------
Total liabilities...................................................... 205
--------
COMMITMENTS AND CONTINGENCIES (NOTE 4)
NET ASSETS -- applicable to 1,261,727 outstanding no par value shares of
beneficial interest (unlimited number of shares authorized).................... $ 14,535
========
NET ASSET VALUE PER SHARE........................................................ $ 11.52
========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE> 8
CARDINAL BALANCED FUND
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STATEMENT OF OPERATIONS (AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends........................................................................ $ 245
Interest......................................................................... 461
-------
Total income................................................................ 706
-------
EXPENSES:
Investment management fees (note 3).............................................. 102
Transfer agent fees and expenses (note 3)........................................ 26
Shareholder service fees (note 3)................................................ 32
Accounting fees (note 3)......................................................... 5
-------
Total affiliated expenses.............................................. 165
-------
Custodian fees................................................................... 13
Professional fees................................................................ 26
Reports to shareholders.......................................................... 21
Directors' fees.................................................................. 8
Registration fees................................................................ 13
Other expenses................................................................... 9
Amortization of organizational cost (note 1)..................................... 10
-------
Total non-affiliated expenses.......................................... 100
-------
Total expenses......................................................... 265
-------
Net investment income.................................................. 441
-------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 2):
Net realized gain from security transactions..................................... 307
Increase in unrealized gain on investments....................................... 1,810
-------
Net realized gain and increase in unrealized gain on investments............ 2,117
-------
Net increase in net assets from operations.................................. $ 2,558
======
</TABLE>
See accompanying notes to financial statements.
7
<PAGE> 9
CARDINAL BALANCED FUND
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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..................................................... $ 441 $ 335
Net realized gain from security transactions.............................. 307 158
Increase (decrease) in unrealized gain on investments..................... 1,810 (462)
-------- --------
Net increase in net assets from operations........................... 2,558 31
-------- --------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Distribution of net investment income ($.35 and $.23 per share,
respectively)........................................................... (453) (333)
Distribution of net realized gains from security transactions ($.04 and
$.03 per share, respectively)........................................... (49) (36)
-------- --------
Total distributions to shareholders.................................. (502) (369)
-------- --------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 5):
Proceeds from sales of Fund shares........................................ 1,485 5,251
Net asset value of Fund shares issued in connection with reinvestment of
distributions to shareholders........................................... 458 335
-------- --------
1,943 5,586
Cost of Fund shares redeemed.............................................. (3,437) (2,086)
-------- --------
Increase (decrease) in net assets derived from capital share
transactions........................................................ (1,494) 3,500
-------- --------
Net increase in net assets........................................... 562 3,162
NET ASSETS -- beginning of period......................................... 13,973 10,811
-------- --------
NET ASSETS -- end of period (undistributed net investment income of $3 and
$15, respectively)...................................................... $ 14,535 $ 13,973
======== ========
</TABLE>
See accompanying notes to financial statements.
8
<PAGE> 10
CARDINAL BALANCED FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1995
(1) -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cardinal Balanced Fund (the "Fund") is one of two portfolios of The Cardinal
Group (the "Group"), a diversified open-end management investment company
established as an Ohio Business Trust on March 23, 1993. The Group currently
consists of Cardinal Aggressive Growth Fund and Cardinal Balanced Fund. Before
June 24, 1993 the Fund had no operations other than those relating to
organizational matters, including the issuance of 5,000 shares of beneficial
interest for cash at $10.00 per share on June 4, 1993 to Cardinal Management
Corp. ("CMC"), the Group's investment adviser. The following is a summary of
significant accounting policies followed by the Fund in preparation of its
financial statements. The policies are in conformity with generally accepted
accounting principles for investment companies.
Security Valuation -- Investments listed or traded on a national securities
exchange are valued at the last sale price or, if there has been no recent sale,
at the last bid price. Investments traded in the over-the-counter market are
valued at either the mean between the bid and ask prices or the last sale price.
If no quotations are available, portfolio securities are valued in good faith by
the Board of Trustees to reflect their fair value.
Security Transactions and Investment Income -- Security transactions are
accounted for on the trade date and dividend income is recorded on the
ex-dividend date. Interest income is recorded on the accrual basis and includes,
when applicable, the pro rata amortization of premium or accretion of discount.
In determining the net realized gain or loss on securities sold, the cost of the
securities will be determined by the first-in, first-out (FIFO) basis. It is the
Group'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.
Deferred Organizational Cost -- Costs incurred with the organization and
registration of the Fund have been deferred and are being amortized on a
straight-line basis over a 60 month period from the commencement of public
offering of its shares. In the event that any of the initial shares of the Fund
are redeemed by the Fund's investment adviser or any subsequent holders thereof
during the 60 month amortization period, the Fund will reduce the redemption
proceeds otherwise payable by any unamortized organizational costs of the Fund
in the same proportion as the number of initial shares of the Fund being
redeemed bears to the number of initial shares of the Fund outstanding at the
time of redemption.
Distributions to Shareholders -- Distributions and dividends will be recorded on
the record date. The Fund intends to declare income dividends quarterly and any
capital gain distributions annually.
Federal Income Tax -- The Fund intends 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.
(continued)
9
<PAGE> 11
CARDINAL BALANCED FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1995
(2) -- PURCHASES AND SALES OF SECURITIES
The cost of purchases and proceeds from sales of investment securities
(excluding short-term obligations) during the period ended September 30, 1995
aggregated $4,318,959 and $6,447,176, respectively.
During the period ended September 30, 1995 the Fund realized on a FIFO cost
basis a net capital gain of $306,446 for both book and tax purposes.
As of September 30, 1995, for both book and tax purposes, gross unrealized gains
and gross unrealized losses on investment securities were $1,612,056 and
$186,699, respectively; resulting in a net unrealized gain of $1,425,357.
(3) -- TRANSACTIONS WITH AFFILIATES
As investment adviser for the Fund, CMC, an affiliated company, is allowed an
annual fee of 0.75% of the average daily net assets of the Fund. CMC has agreed
that if the aggregate expenses of the Fund, as defined, for any fiscal year
exceed the expense limitation of any state having jurisdiction over the Fund,
CMC will refund to the Fund, or otherwise bear, such excess. This limitation did
not affect the calculation of the management fee during the period ended
September 30, 1995. CMC also serves the Fund as transfer agent and fund
accountant. Under the terms of the Group's Transfer Agency and Fund Accounting
Agreement, the transfer agent is entitled to receive fees based on a monthly
charge per shareholder account plus out-of-pocket expenses and the fund
accountant is entitled to receive fees based on a percentage of the average net
assets of the Fund. For the period ended September 30, 1995 the Fund paid or
accrued $25,950 and $4,697 for transfer agent and fund accounting services,
respectively.
The Ohio Company ("TOC") serves the Group as distributor. TOC receives fees from
the Fund for providing services under the Distribution and Shareholder Service
Plan (the "Plan") pursuant to Rule 12b-1 of the Investment Company Act of 1940.
Under the Plan, the Fund pays TOC a fee not to exceed, on an accrual basis,
0.25% of the average daily net assets of the Fund for payments it makes to
banks, broker/dealers, including TOC, and other institutions for providing
shareholder services. The Fund paid or accrued shareholder service fees of
$32,534 for the period ended September 30, 1995. The Ohio Company reported to
the Fund that it had received commissions after discounts to dealers from the
sale of shares of the Fund of $66,772 for the period ended September 30, 1995.
(4) -- COMMITMENTS AND CONTINGENCIES
The Fund has an available $2,000,000 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 Fund. No compensating balances are required and the
arrangement bears an interest rate of 106% of the custodian's prime lending
rate.
(continued)
10
<PAGE> 12
CARDINAL BALANCED FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1995
(5) -- CAPITAL STOCK
At September 30, 1995, there were an unlimited number of no par value shares of
capital stock and the capital amounts were as follows:
<TABLE>
<S> <C>
Paid in capital............................................................... $12,716,361
Accumulated net realized gain on investments.................................. 390,571
Unrealized gain on investments................................................ 1,425,357
Undistributed net investment income........................................... 3,201
-----------
Net assets.................................................................... $14,535,490
============
</TABLE>
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEARS ENDED
SEPTEMBER 30,
----------------------------
1995 1994
----------- -----------
<S> <C> <C>
Shares sold.......................................................... 140,750 519,358
Shares issued in connection with reinvestment of distributions
to shareholders.................................................... 44,785 33,364
----------- -----------
185,535 552,722
Shares repurchased................................................... (335,102) (208,912)
----------- -----------
Net increase (decrease).............................................. (149,567) 343,810
Shares outstanding:
Beginning of period.................................................. 1,411,294 1,067,484
----------- -----------
End of period........................................................ 1,261,727 1,411,294
========== ==========
</TABLE>
(6) -- SUBSEQUENT EVENT
On November 13, 1995 the Board of Trustees approved an Agreement and Plan of
Reorganization and Liquidation between the Group and The Cardinal Fund Inc.,
Cardinal Government Securities Trust, Cardinal Tax Exempt Money Trust, and
Cardinal Government Obligations Fund (collectively the "Old Funds"). The plan
calls for the transfer of all assets and liabilities of each of the Old Funds to
newly created series of the Group 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 Old Funds and the Group. Shareholders of
the Old Funds must approve the transaction before any transfer can take place.
11
<PAGE> 13
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for each share of capital stock outstanding throughout each
period:
<TABLE>
<CAPTION>
PERIOD
FROM JUNE
YEARS ENDED 24, 1993*
SEPTEMBER 30, THROUGH
---------------------- SEPTEMBER
1995 1994 30, 1993
-------- -------- ---------
<S> <C> <C> <C>
Net Asset Value, beginning............................................ $ 9.90 $ 10.13 $ 10.00
-------- -------- ---------
Income from investment operations:
Net investment income............................................... 0.34 0.23 0.02
Net realized and unrealized gain (loss) on securities............... 1.67 (0.20) 0.12
-------- -------- ---------
Total from investment operations...................................... 2.01 0.03 0.14
-------- -------- ---------
Less distributions:
Dividends........................................................... (0.35) (0.23) (0.01)
Capital gain distribution........................................... (0.04) (0.03) 0
-------- -------- ---------
Total distributions................................................... (0.39) (0.26) (0.01)
-------- -------- ---------
Net Asset Value, ending............................................... $ 11.52 $ 9.90 $ 10.13
======= ======= ========
Ratios/Supplemental Data:
Total return (aggregate return for period)**.......................... 20.76% 0.37% 1.40%
======= ======= ========
Net assets, ending (000).............................................. $ 14,535 $ 13,973 $10,811
======= ======= ========
Ratio of expenses to average net assets**............................. 1.94% 2.07% 0.70%
======= ======= ========
Ratio of net investment income to average net assets**................ 3.24% 2.44% 0.35%
======= ======= ========
Portfolio turnover rate............................................... 37.62% 59.09% 60.67%
======= ======= ========
</TABLE>
*Commencement of operations
**Effective September 15, 1995, The Ohio Company began waiving payments under
the Distribution and Shareholder Service Plan. Had the payments been charged,
total return, the ratio of expenses to average net assets, and the ratio of
net investment income to average net assets would have been 20.75%, 1.95%, and
3.23%, respectively.
See accompanying notes to financial statements.
12
<PAGE> 14
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Shareholders and Board of Trustees
Cardinal Balanced Fund:
We have audited the accompanying statement of assets and liabilities of Cardinal
Balanced Fund (the Fund), 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 periods
indicated herein. These financial statements and financial highlights are the
responsibility of the Fund'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 Balanced Fund 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
periods indicated herein, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Columbus, Ohio
November 17, 1995
13
<PAGE> 15
THE CARDINAL FUND INC.
CARDINAL GOVERNMENT SECURITIES TRUST
CARDINAL TAX EXEMPT MONEY TRUST
CARDINAL GOVERNMENT OBLIGATIONS FUND
CARDINAL BALANCED FUND
CARDINAL AGGRESSIVE GROWTH FUND
155 E. Broad St. Columbus, Ohio 43215
<TABLE>
<S> <C>
New Accounts and Toll-free Lines
General Information: In Ohio 800-282-9446
(614) 464-5511 Outside Ohio 800-848-7734
</TABLE>
