<PAGE> 1
As filed with the Securities and
Exchange Commission on January 19, 1996
1933 Act Registration No. 33-1613
1940 Act File No. 811-4475
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. 12 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 13 / X /
CARDINAL GOVERNMENT OBLIGATIONS FUND
(Formerly, Cardinal Government Guaranteed Fund)
-----------------------------------------------
(Exact Name of Registrant as Specified in Charter)
155 East Broad Street, Columbus, Ohio 43215
------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (614) 464-5511
--------------
Frank W. Siegel, 155 East Broad Street, Columbus, Ohio 43215
------------------------------------------------------------
(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)
__X__ immediately upon filing pursuant to paragraph (b)
_____ on (date), 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
<TABLE>
CALCULATION OF FEE*
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Proposed Proposed
Title of Maximum Maximum
Securities Offering Aggregate Amount of
Being Amount Being Price Per Offering Registration
Registered Registered Unit** Price*** Fee
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of
Beneficial Interest
in Cardinal
Government
Obligations Fund 3,668,335 $8.62 $290,000 $100
<FN>
* The Registrant has also registered an indefinite number or amount of securities under the Securities Act of 1933 pursuant
to Rule 24f-2(a)(1) under the Investment Company Act of 1940. On November 21, 1995, the Registrant filed its Rule 24f-2
Notice with respect to the fiscal year ended September 30, 1995.
** Based on the offering price per share on January 15, 1996.
*** Calculated pursuant to Rule 24e-2 under the Investment Company Act of 1940. During the fiscal year ended September 30,
1995, the total amount of securities redeemed was $34,766,465; of the redeemed amount, $3,435,415 were used for reduction
pursuant to Rule 24f-2(c) under said Act in the current fiscal year and $31,331,050 are being used for reduction in this
Amendment under Rule 24e-2.
</TABLE>
-2-
<PAGE> 3
CARDINAL GOVERNMENT OBLIGATIONS FUND
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) ................................... *
(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 Fund?"
(i)(B).................................. "What Is The Fund?"
(ii) ................................ "What Are The Investment Objective And Policies Of The Fund?"
(ii)(A)................................. *
(ii)(B)(1).............................. "What Are The Investment Objective And Policies Of The Fund?"
(ii)(B)(2).............................. *
(ii)(C)................................. *
(ii)(D)................................. *
(b)(i)..................................... *
(ii) ................................... *
(c)........................................ "What Are The Investment Objective and Policies Of The Fund?"
5.(a)........................................ "Who Manages My Investment In The Fund?"
(b)(i)..................................... "Who Manages My Investment In The Fund?"
(b)(ii).................................... "Who Manages My Investment In The Fund?"
(b)(iii)................................... "Who Manages My Investment In The Fund?"
(c)........................................ "Who Manages My Investment In The Fund?"
(d)........................................ "Who Manages My Investment In The Fund?"
(e)........................................ "Who Manages My Investment In The Fund?"
(f)........................................ "Financial Highlights"
- ------------------
<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>
(g)(i)(A)............................... *
(g)(i)(B)............................... "What Are The Investment Objective And Policies Of The Fund?"
(g)(i)(C)............................... *
(g)(ii)................................. *
5A.(a).................................... *
5A.(b).................................... *
5A.(c).................................... *
6.(a)..................................... "What Are My Rights As A Shareholder?"
(b) .................................... *
(c) .................................... *
(d) .................................... *
(e) .................................... "Who Provides Shareholder Reports?"
(f) .................................... "What Distributions Will I Receive?"
(g) .................................... "Does The Fund Pay Federal Income Tax?"; "What About My Taxes?"
7.(a)..................................... "How Do I Purchase Shares Of The Fund? -- General"
(b)..................................... "How Do I Purchase Shares Of The Fund? -- Public Offering Price";
"How Is Net Asset Value Calculated?"
(c)..................................... "May My Tax Sheltered Retirement Plan Invest In The Fund?";
"How May I Qualify For Quantity Discounts?"; "What Other Shareholder
Programs Are Provided?"; "How May I Redeem My Shares?"; "Are There Any
Special Purchase Programs For Certain Retirement Plans?"
(d)..................................... "How Do I Purchase Shares Of The Fund? -- General"
(e)..................................... *
(f)..................................... *
8.(a)..................................... "How May I Redeem My Shares?"
(b) .................................... "How May I Redeem My Shares?"
(c) .................................... *
(d) .................................... "How May I Redeem My Shares?"
9. ...................................... *
__________________
<FN>
*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 OBLIGATIONS FUND
Cardinal Government Obligations Fund (the "Fund") is a diversified, open-end,
management investment company. The investment objective of the Fund is to
maximize safety of capital and, consistent with such objective, earn the highest
available current income obtainable from government securities. The current
income earned from such government securities may not be as great as the current
income earned on lower quality securities which have less liquidity and greater
risk of nonpayment. There can be no assurance that the Fund's objective will be
achieved.
The Fund 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
Obligations Fund, a series of the Group (the "Acquiring Fund"), would acquire
all of the assets of the Fund in exchange for the assumption of all of the
Fund's liabilities and a number of full and fractional shares of the Acquiring
Fund having an aggregate net asset value equal to the Fund's net assets (the
"Reorganization"). The Fund would then be liquidated, and the shares of the
Acquiring Fund would be distributed to Fund shareholders.
The Reorganization is subject to certain regulatory approvals and to approval by
the shareholders of the Fund 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 Fund may determine. There can be no
assurance that the Reorganization will take place when or as currently proposed.
THE SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, NOR ARE SUCH SHARES FEDERALLY INSURED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENTAL AGENCY. AN INVESTMENT IN THE FUND INVOLVES CERTAIN
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
FOR FURTHER INFORMATION REGARDING THE FUND 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 FUND
AT ITS PRINCIPAL OFFICE:
155 EAST BROAD STREET
COLUMBUS, OHIO 43215
- --------------------------------------------------------------------------------
This Prospectus sets forth concisely the information about the Fund that a
prospective investor ought to know before investing in the Fund. This Prospectus
should be retained for future reference. A Statement of Additional Information
respecting the Fund 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 Fund 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.
- --------------------------------------------------------------------------------
<PAGE> 6
- --------------------------------------------------------------------------------
KEY FEATURES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
HIGH CURRENT YIELDS............ The Fund seeks the highest available current income
attainable from government securities, consistent with
its policy of protecting principal.
MONTHLY DISTRIBUTIONS.......... Monthly distributions are automatically reinvested in
additional shares of the Fund without charge or may be
received in cash. (See pages 4 and 14.)
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 11.)
PROFESSIONAL MANAGERS.......... The Fund's portfolio is fully managed by professional
portfolio managers. (See page 17.)
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.
(See page 18.)
ACH PROCESSING................. Investors may use Automated Clearing House ("ACH")
processing for subsequent purchases of shares,
redemptions, and/or distributions paid. (See page 18.)
</TABLE>
2
<PAGE> 7
- --------------------------------------------------------------------------------
PROSPECTUS HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SHARES OFFERED................. Shares of beneficial interest of the Fund (the "Shares")
are of one class equal to all other shares and are
without par value. (See page 19.)
OFFERING PRICE AND
SALES CHARGE................. The public offering price is equal to net asset value per
share plus a sales charge equal to 4.50% of the public
offering price (4.71% of net amount invested), reduced on
investments of
$100,000 or more (see pages 11 and 12) and waived if
purchasers are Qualifying Plans for whom The Ohio Company
serves as a trustee or investment adviser. (See page 14.)
MINIMUM PURCHASE............... $1,000 minimum initial investment and $50 minimum subse-
quent investments. (See page 11.)
TYPE OF COMPANY................ Diversified, open-end, management investment company,
commonly known as a mutual fund. Organized as an Ohio
business trust on November 15, 1985. (See page 7.)
INVESTMENT OBJECTIVE........... To maximize safety of capital and, consistent with such
objective, earn the highest available current income
obtainable from government securities. (See page 7.)
INVESTMENT POLICIES............ The Fund invests in obligations issued or guaranteed by
the U.S. Government and repurchase agreements secured by
securities of the U.S. Government. Under present market
conditions, the Fund expects to invest a substantial
amount of its portfolio in Ginnie Mae certificates. These
investments entail certain risks. (See pages 7 through
11.)
RISK FACTORS AND SPECIAL An investment in a mutual fund such as the Fund involves
CONSIDERATIONS............... a certain amount of risk and may not be suitable for all
investors. Some investment policies of the Fund may
entail certain risks. (See "WHAT ARE THE INVESTMENT
OBJECTIVE AND POLICIES OF THE FUND?" on pages 7 through
11.)
INVESTMENT ADVISER............. The Fund has entered into an Investment Advisory and
Management Agreement with Cardinal Management Corp., a
wholly-owned subsidiary of The Ohio Company (the "Ad-
viser"). The Adviser currently provides investment
advisory services for Cardinal Government Securities
Trust, Cardinal Tax Exempt Money Trust, Cardinal Balanced
Fund and Cardinal Aggressive Growth Fund. (See page 17.)
MANAGEMENT FEE................. The annual rate is .5% of the average daily net assets of
the Fund. (See page 17.)
DISTRIBUTIONS.................. Dividends are declared daily and distributions are
generally made monthly as the Fund shall determine.
Long-term capital gains, if any, are distributed
annually. (See page 14.)
REDEMPTION..................... At net asset value per share, without charge, except that
broker-dealers may charge a service fee for assisting in
a redemption. (See page 14.)
TRANSFER AGENT................. Cardinal Management Corp. (See page 17.)
</TABLE>
3
<PAGE> 8
- --------------------------------------------------------------------------------
FEE TABLE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).......................... 4.50%
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................................................. .26
------
Total Fund Operating Expenses.................................. .76%
======
</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: ............... $ 52 $ 68 $ 85 $135
</TABLE>
The purpose of the above table is to assist a potential purchaser of the Fund's
Shares in understanding the various costs and expenses that an investor in the
Fund will bear directly or indirectly. See "WHO MANAGES MY INVESTMENT IN THE
FUND?" for a more complete discussion of the shareholder transaction expenses
and annual operating expenses of the Fund. 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 nine fiscal years
ended September 30, 1995, and the period from February 3, 1986, through
September 30, 1986, have been audited by KPMG Peat Marwick LLP, independent
auditors, whose report thereon together with certain financial statements, are
contained in the Fund'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>
PERIOD FROM
FEBRUARY 3,
1986 (DATE
OF
COMMENCEMENT
OF
OPERATIONS)
THROUGH
YEARS ENDED SEPTEMBER 30, SEPTEMBER
-------------------------------------------------------------------------------------------------- 30,
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986*
-------- -------- -------- -------- -------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
Beginning of
period....... $ 7.96 $ 8.63 $ 8.95 $ 8.99 $ 8.71 $ 8.71 $ 8.82 $ 8.60 $ 9.39 $ 9.53
Income from
investment operations:
Net investment
income...... .64 .66 .74 .80 .81 .84 .84 .86 .90 .59
Net gains or
losses on
securities
(both
realized and
unrealized).. .22 (.68) (.32) (.04) .28 -- (.11) .22 (.80) (.11)
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
Total from
investment
operations... .86 (.02) .42 .76 1.09 .84 .73 1.08 .10 .48
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
Less Distributions:
Dividends
(from net
investment
income)..... (.64) (.65) (.74) (.80) (.81) (.84) (.84) (.86) (.89) (.59)
Distributions
(from capital
gains)....... -- -- -- -- -- -- -- -- -- --
Returns of
capital...... -- -- -- -- -- -- -- -- -- (.03)
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
Total
Distributions (.64) (.65) (.74) (.80) (.81) (.84) (.84) (.86) (.89) (.62)
Net asset value,
End of period... $ 8.18 $ 7.96 $ 8.63 $ 8.95 $ 8.99 $ 8.71 $ 8.71 $ 8.82 $ 8.60 $ 9.39
======== ======== ======== ======== ======== ======== ======== ======== ======== =========
Total Return***.. 11.27% (0.27%) 4.83% 8.87% 13.07% 10.03% 8.81% 12.94% .82% 5.63%(a)
Ratios/Supplemental
Data:
Net assets,
End of period
(000) omitted.. $151,711 $169,529 $208,883 $172,139 $128,569 $114,890 $118,958 $146,745 $147,491 $129,629
Ratio of expenses
to average net
assets**....... 0.76% 0.75% 0.73% 0.76% 0.76% 0.76% 0.73% 0.74% 0.49% 0.87%
Ratio of net
investment income
to average net
assets**........ 7.93% 7.88% 8.32% 8.89% 9.20% 9.55% 9.73% 9.64% 10.03% 9.37%
Portfolio
Turnover Rate... 36.71% 21.95% 24.94% 17.15% 34.81% 30.90% .92% 5.76% 45.71% 0%
<FN>
- ---------------
*Fund operations commenced February 3, 1986. Through February 3, 1986, the
only transaction of the Fund was its initial capitalization through the sale
of 10,493 Shares for $100,000 to Cardinal Management Corp., the investment
adviser to the Fund.
**Percentages for less than twelve month periods are annualized.
***The total return figure does not reflect the imposition of the maximum
front-end sales load.
(a) This total return figure reflects aggregate total return instead of average
annual total return. Aggregate total return is calculated similarly to average
annual total return except that the return figure is aggregated over the
relevant period instead of annualized.
</TABLE>
See notes to financial statements appearing in the Fund's Statement Of
Additional Information.
------------------------
Pursuant to a Revolving Credit Agreement between the Fund and The Fifth Third
Bank dated April 10, 1992 (the "Loan Agreement"), the Fund may borrow money from
The Fifth Third Bank for temporary purposes, such as to accommodate abnormally
heavy redemption requests, and only in an amount not exceeding 5%
5
<PAGE> 10
of the value of the Fund'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 FUND'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 $ 5,553 19,594,413 $ 0.0002834
1994 $ 0 $16,422 22,745,526 $ 0.0007220
1993 $ 0 $20,118 21,714,427 $ 0.0009265
</TABLE>
From time to time the Fund advertises "yield," "average annual total return" and
"cumulative return." SUCH YIELD FIGURES AND TOTAL RETURN FIGURES ARE BASED UPON
HISTORICAL EARNINGS AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. The
"yield" of the Fund refers to the income generated by an investment in the Fund
over a 30-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 over a one-month period assuming reinvestment at a constant rate of
all income so generated is assumed to be generated for 12 consecutive one-month
periods. The "yield" of the Fund assumes the deduction of the maximum applicable
sales charge from the investment. If the sales charge were not deducted, the
yield of the Fund would be higher.
The average annual total return figures advertised by the Fund refer to the
return generated by an investment in the Fund over one- and five-year periods
and the period during which the Fund has been in operation (which periods will
be stated on the advertisement). The return over a period equates the amount of
an initial investment in the Fund to the amount redeemable at the end of that
period assuming that any dividends and distributions earned by an investment in
the Fund are reinvested. The return also assumes that the maximum applicable
sales charge is deducted from the initial investment at the time of investment.
The cumulative return advertised refers to the total return on a hypothetical
investment over the relevant period and equates the amount of an initial
investment in the Fund to the amount redeemable at the end of that period
assuming that any dividends and distributions are immediately reinvested and the
maximum sales charge is deducted from the initial investment at the time of
investment. If the sales charge were not deducted, the average annual total
return advertised would be higher.
In addition, from time to time the Fund may include in its sales literature and
shareholder reports a quote of the current "distribution" rate for the Fund. A
distribution rate is simply a measure of the level of dividends distributed for
a specified period and is computed by dividing the total amount of dividends per
share paid by the Fund during the past 12 months by a current maximum offering
price. It differs from yield, which is a measure of the income actually earned
by the Fund's investments, and from total return, which is a measure of the
income actually earned by, plus the effect of any realized and unrealized
appreciation or depreciation of, such investments during a stated period. A
distribution rate is, therefore, not intended to be a complete measure of
performance. A distribution rate may sometimes be greater than yield since, for
instance, it may include short-term and possibly long-term gains (which may be
non-recurring), may not include the effect of amortization of bond premiums and
does not reflect unrealized gains or losses.
Investors may also judge the performance of the Fund 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.,
Morningstar, Inc., and CDA Investment Technologies, Inc. Comparisons may also be
made to indices or data published in 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 Fund that appears in a publication such as those
mentioned above may be included in advertisements and in reports to
shareholders.
6
<PAGE> 11
Further information about the performance of the Fund is contained in the Fund's
Annual Report to Shareholders which may be obtained without charge by contacting
the Fund at the telephone numbers set forth on the cover page of this
Prospectus.
- --------------------------------------------------------------------------------
WHAT IS THE FUND?
- --------------------------------------------------------------------------------
The Fund was organized on November 15, 1985, as a business trust under the laws
of the State of Ohio and is registered and operates as a diversified, open-end,
management investment company as defined in the Investment Company Act of 1940
and as commonly known as a mutual fund. The Trustees of the Fund have divided
its beneficial ownership into an unlimited number of transferable units called
Shares, which will be offered and sold to the public through The Ohio Company,
principal underwriter of the Fund's Shares. The proceeds from such sale, net of
the applicable sales charge, will be invested by the Fund as set forth below.
The Fund is designed for individuals, corporations, fiduciaries, and
institutions who wish to invest for current income in a diversified,
professionally managed portfolio of securities issued by the U.S. Government and
securities directly guaranteed by the full faith and credit of the U.S.
Government -- without having to become involved in the detailed accounting and
safekeeping procedures normally associated with direct investment in these
securities.
- --------------------------------------------------------------------------------
WHAT ARE THE INVESTMENT OBJECTIVE AND POLICIES OF THE FUND?
- --------------------------------------------------------------------------------
The Fund's investment objective is to maximize safety of capital and, consistent
with such objective, earn the highest available current income obtainable from
government securities. The current income earned from such government securities
may not be as great as the current income earned on lower quality securities
which have less liquidity and greater risk of nonpayment.
The Fund's investment objective is a fundamental policy of the Fund, which means
that it may be changed only with the approval of a majority of the Fund's
Shares. A majority of the Fund's Shares means the favorable vote, at an annual
or special meeting, of shareholders holding the lesser of (a) 67% or more of the
Shares at such meeting, if holders of more than 50% of the outstanding Shares
are represented in person or by proxy, and (b) more than 50% of the outstanding
Shares. There can be no assurance that the investment objective can be met.
The value of the Fund's portfolio securities, and therefore the Fund's net asset
value per share, may increase or decrease due to various factors, principally
changes in prevailing interest rates. Generally, a rise in interest rates will
result in a decrease in the Fund's net asset value per share, while a drop in
interest rates will result in an increase in the Fund's net asset value per
share.
Under normal market conditions, the Fund will invest substantially all, but in
no event less than 65% of the value of its total assets, in obligations issued
or guaranteed by the U.S. Government or its agencies or instrumentalities ("U.S.
Government Securities"). The Fund may also invest, under normal market
conditions, in the fixed income instruments described below and in repurchase
agreements. It may also engage in the options transactions described below.
The Fund may, for daily cash management purposes, invest in high quality money
market securities and in repurchase agreements. In addition, the Fund may
invest, without limit, in any combination of U.S. Government Securities, money
market securities and repurchase agreements when, in the opinion of the Adviser,
it is determined that a temporary defensive position is warranted based upon
current market conditions. The Fund may also invest in securities of other
investment companies, as described more fully below.
7
<PAGE> 12
The types of U.S. Government Securities invested in by the Fund will include
obligations issued by or guaranteed as to payment of principal and interest by
the full faith and credit of the U.S. Treasury, such as Treasury bills, notes,
bonds and certificates of indebtedness, and obligations issued or guaranteed by
the agencies or instrumentalities of the U.S. Government, but not supported by
such full faith and credit. Obligations of certain agencies and
instrumentalities of the U.S. Government, such as the Government National
Mortgage Association and the Export-Import Bank of the United States, are
supported by the full faith and credit of the U.S. Treasury; others, such as
those of the Federal National Mortgage Association, are supported by the right
of the issuer to borrow from the Treasury; others are supported by the
discretionary authority of the U.S. Government to purchase the agency's
obligations; still others, such as those of the Federal Farm Credit Banks or the
Federal Home Loan Mortgage Corporation, are supported only by the credit of the
instrumentality. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government sponsored agencies or
instrumentalities if it is not obligated to do so by law. The Fund will invest
in the obligations of such agencies or instrumentalities only when the Adviser
believes that the credit risk with respect thereto is minimal.
Certain securities held by the Fund may have mortgage obligations backing such
securities, including among others, conventional thirty year fixed rate mortgage
obligations, graduated payment mortgage obligations, fifteen year mortgage
obligations and adjustable rate mortgage obligations. All of these mortgage
obligations can be used to create pass-through securities. A pass-through
security is created when mortgage obligations are pooled together and undivided
interests in the pool or pools are sold. The cash flow from the mortgage
obligations is passed through to the holders of the securities in the form of
periodic payments of interest, principal and prepayments (net of a service fee).
Prepayments occur when the holder of an individual mortgage obligation prepays
the remaining principal before the mortgage obligation's scheduled maturity
date. As a result of the pass-through of prepayments of principal on the
underlying securities, mortgage-backed securities are often subject to more
rapid prepayment of principal than their stated maturity would indicate. Because
the prepayment characteristics of the underlying mortgage obligations vary, it
is not possible to predict accurately the realized yield or average life of a
particular issue of pass-through certificates. Prepayment rates are important
because of their effect on the yield and price of the securities. Accelerated
prepayments have an adverse impact on yields for pass-through certificates
purchased at a premium (i.e., a price in excess of principal amount) and may
involve additional risk of loss of principal because the premium may not have
been fully amortized at the time the obligation is repaid. The opposite is true
for pass-through certificates purchased at a discount. The Fund may purchase
mortgage-related securities at a premium or at a discount. Reinvestment of
principal payments may occur at higher or lower rates than the original yield on
such securities. Due to the prepayment feature and the need to reinvest payments
and prepayments of principal at current rates, mortgage-related securities can
be less effective than typical bonds of similar maturities at maintaining yields
during periods of declining interest rates.
Certain debt securities such as, but not limited to, mortgage backed securities,
as well as securities subject to prepayment of principal prior to the stated
maturity date, are expected to be repaid prior to their stated maturity dates.
As a result, the effective maturity of these securities is expected to be
shorter than the stated maturity. For purposes of calculating the Fund's
weighted average portfolio maturity, the effective maturity of such securities
will be used.
Under present market conditions, the Fund expects to invest a substantial amount
of its portfolio in Ginnie Mae certificates, which are mortgage-backed
securities representing part ownership in a specific pool of mortgage loans
insured by the Federal Housing Administration or Farmers Home Administration or
guaranteed by the Veterans Administration. Should market or economic conditions
warrant, this practice may be changed in the discretion of the Fund's Adviser.
Ginnie Mae guarantees the timely payment of monthly installments of principal
and interest on its certificates, when due, whether or not payments are received
on the underlying mortgage loans, and the full faith and credit of the United
States is pledged to the timely payment by Ginnie Mae of such principal and
interest.
8
<PAGE> 13
Although the mortgage loans in the pool underlying a Ginnie Mae certificate will
have maturities of up to thirty years, the actual average life of the Ginnie Mae
certificates typically will be substantially less because the mortgage loans
will be subject to normal principal amortization and may be prepaid prior to
maturity. Prepayment rates vary widely and may be affected by changes in market
interest rates. In periods of falling interest rates, the rate of prepayment
tends to increase, thereby shortening the actual average life of the Ginnie Mae
certificates and shortening the period of time over which income at the higher
rate is received. Conversely, when interest rates are rising, the rate of
prepayment tends to decrease, thereby lengthening the actual average life of the
Ginnie Mae certificates and extending the period of time over which income at
the lower rates is received. Accordingly, it is not possible to accurately
predict the average life of a particular pool. Standard practice is to treat
Ginnie Mae certificates as having effective maturities of twelve years.
Reinvestment of principal payments may occur at higher or lower rates than the
original yield on the certificates. Due to the prepayment feature and the need
to reinvest payments and prepayments of principal at current rates, Ginnie Mae
certificates can be less effective than typical bonds of similar maturities at
maintaining yields during periods of declining interest rates.
The Fund may enter into repurchase agreements, which are transactions through
which an investor (such as the Fund) purchases a security (known as the
"underlying security") from a financial institution, such as a well-established
securities dealer or a bank which is a member of the Federal Reserve System
which the Fund's Adviser deems creditworthy under guidelines approved by the
Fund's Board of Trustees. At the time of purchase, the bank or securities dealer
agrees to repurchase the underlying securities at the same price, plus specified
interest. Repurchase agreements are generally for a short period of time, often
less than a week. The Fund will not enter into a repurchase agreement with a
maturity of more than seven days if, as a result, more than 10% of the value of
its total assets would then be invested in such repurchase agreements. The Fund
will only enter into a repurchase agreement where (i) the underlying securities
are of the type which the Fund's investment guidelines 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 Fund's Adviser will be responsible
for monitoring such requirements. In the event of a bankruptcy or other default
of a seller of a repurchase agreement, the Fund 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 Fund
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. Under the Investment Company Act of 1940, as amended (the "1940 Act"),
repurchase agreements are considered to be loans by the Fund.
The Fund may from time to time write covered call options on securities in its
portfolio. The Fund will realize a premium when it writes an option. The Fund
will write only covered call options, which means that in each instance the Fund
will continue to own the underlying security for as long as it remains obligated
as the writer of the option. The purchaser of the call option has the right to
purchase the underlying security at the agreed upon price, even though that
price may be less than the value of the security at the time the option is
exercised. The Fund would then suffer a loss equal to the excess, if any, of the
security's appreciation in value over the premium received for writing the
option. To facilitate closing purchase transactions (described below), the Fund
will ordinarily write only call options for which a secondary market exists on a
national securities exchange or in the over-the-counter market.
In order to realize a profit, to prevent an underlying security from being
called or to unfreeze an underlying security (thereby permitting its sale or the
writing of a new option on the security prior to the option's expiration), the
Fund may engage in a closing purchase transaction. The Fund will incur a loss if
the cost of the closing purchase transaction, plus transaction costs, exceeds
the premium received upon writing the original option. To effect a closing
purchase transaction, the Fund would purchase, prior to the exercise of an
option that it has written, an option of the same series as that on which it
desires to terminate its obligation. There can be no assurance that the Fund
will be able to effect a closing purchase transaction at a
9
<PAGE> 14
time when it wishes to do so. When the Fund cannot effect a closing purchase
transaction, it will not be able to sell the underlying security unless the
option expires without exercise. Upon expiration of the option, the Fund would
continue to bear market risk in that security. The obligation of the Fund to
deliver securities upon the exercise of a covered call option which it has
written terminates upon the effectuation of a closing purchase transaction.
The Fund may use covered call option strategies as a means of increasing the
total return on the portfolio and also as a means of providing limited
protection against decreases in market value. The Fund will engage in this
activity, if at all, only to the extent permitted by the most stringent
applicable state regulations governing the writing of covered call options in
states where the Fund is selling its Shares. The aggregate value of securities
underlying outstanding options will not exceed 25% of the net assets of the
Fund.
The Fund may purchase put and call options on interest rate futures contracts
which are traded on a United States exchange or board of trade as a hedge
against changes in interest rates, and may enter into closing transactions with
respect to such options to terminate existing positions. An interest rate
futures contract provides for the future sale by one party and purchase by the
other party of a certain amount of a specific financial instrument (debt
security) at a specified price, date, time and place. An option on an interest
rate futures contract, as contrasted with the direct investment in such a
contract, gives the purchaser the right, in return for the premium paid, to
assume a position in an interest rate futures contract at a specified exercise
price at any time prior to the expiration date of the option. The Fund may
purchase put options on interest rate futures contracts to hedge its portfolio
securities against the risk of rising interest rates, and may purchase call
options on interest rate futures contracts to hedge against a decline in
interest rates. The Fund will write put or call options on interest rate futures
contracts only as part of closing purchase transactions to terminate its option
positions, and there is no guarantee that such closing transactions can be
effected. There can be no assurance that there will be a correlation between
price movements in the options on interest rate futures, on the one hand, and
price movements in the Fund's portfolio securities which are the subject of the
hedge, on the other hand. In addition, the Fund's purchase of put or call
options will be based upon predictions as to anticipated interest rate trends,
which could prove to be inaccurate. The Fund will purchase put or call options
on interest rate futures contracts only as a hedge against changes in the value
of securities in the Fund's portfolio that may result from market conditions,
and not for speculative purposes. The potential loss related to the purchase of
an option on interest rate futures contracts is limited to the premium paid for
the option. Options are considered to be derivatives. A derivative is generally
defined as an instrument whose value is based upon, or derived from, some
underlying index, reference rate (e.g., interest rates), security, commodity or
other asset. The Fund will not invest more than 5% of its total assets at any
one time in premiums paid for call options and put options.
Although, except as set forth above, the Fund does not intend to engage in
short-term trading of portfolio securities as a means of achieving its
investment objective, it may sell portfolio securities without regard to the
length of time they have been held whenever such sale will, in the Adviser's
opinion, strengthen the Fund's position and contribute to its investment
objective. Brokerage commissions are not normally charged on the purchase or
sale of securities issued or guaranteed by the U.S. Government, but such
transactions may involve costs in the form of spreads between bid and asked
prices.
The Fund 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 Fund intends to invest in money market mutual funds for
purposes of short-term cash management. The Fund'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 Fund's investments in other investment companies, see
"INVESTMENT OBJECTIVES AND POLICIES -- Additional Information on Portfolio
Instruments -- Securities of Other Investment Companies" in the Statement of
Additional Information.
In addition to the Fund's investment objective, the Fund has established a
number of other fundamental policies, changeable only with the approval of a
majority of the Fund's Shares, all of which are described in the Fund's
Statement Of Additional Information, including policies prohibiting (i) the
investment of more
10
<PAGE> 15
than 10% of the value of the Fund's total assets in repurchase agreements
maturing in more than seven days, (ii) borrowing money, except from banks as a
temporary measure for extraordinary or emergency purposes, and then only in
amounts not exceeding 5% of the value of the Fund's total assets, (iii)
mortgaging, pledging or otherwise encumbering any portfolio security except as
may be necessary in connection with permissible borrowings, in which case the
mortgaging, pledging or encumbering cannot exceed 5% of the Funds's assets, (iv)
investing in covered call options where the aggregate value of the securities
underlying the options exceeds 25% of the net assets of the Fund, and (v)
investing more than 5% of the Fund's assets in premiums paid on put and call
options. Except for the investment objective and the matters described as
fundamental policies in the Statement Of Additional Information, all other
practices of the Fund are not fundamental policies.
- --------------------------------------------------------------------------------
HOW DO I PURCHASE SHARES OF THE FUND?
- --------------------------------------------------------------------------------
GENERAL
The Fund's Shares may be purchased at the public offering price, described
below, through The Ohio Company, principal distributor of the Fund's Shares, at
its address and telephone number set forth on the cover page of this Prospectus,
and through other broker-dealers who are members of the National Association of
Securities Dealers, Inc. and have sales agreements with The Ohio Company. A
purchase will become effective upon receipt by The Ohio Company of an order and
payment of the public offering price.
Subsequent purchases of Shares of the Fund may be made by ACH processing as
described under "WHAT OTHER SHAREHOLDER PROGRAMS ARE PROVIDED? -- ACH
Processing" below.
Certificates reflecting ownership of the Fund's Shares will not be issued unless
specifically requested by the purchaser. In order to facilitate redemptions, it
is expected that most shareholders will not elect to receive certificates.
The minimum initial investment is $1,000. Subsequent investments must be in
amounts of at least $50.
Due to the high cost of maintaining accounts, the Fund 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 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. Shares of the Fund may be redeemed through a
securities dealer, investment adviser, agent or other fiduciary which may charge
a fee for its services in connection with the redemption. No redemption charge
is imposed by the Fund or by The Ohio Company, the Fund's principal distributor.
PUBLIC OFFERING PRICE
The public offering price of Shares of the Fund is the net asset value per share
next determined after receipt by The Ohio Company of an order and payment, plus
a sales charge as follows:
11
<PAGE> 16
<TABLE>
<CAPTION>
SALES CHARGE
AS A AS A PERCENTAGE
PERCENTAGE OF OFFERING PRICE
OF THE NET -----------------------------
AMOUNT OF AMOUNT SALES DEALER'S
SINGLE TRANSACTION INVESTED CHARGE CONCESSION
- ------------------------------------------------------ ------------ ------------ ------------
<S> <C> <C> <C>
Less than $100,000.................................... 4.71% 4.50% 4.00%
$100,000 but less than $250,000....................... 3.63 3.50 3.00
$250,000 but less than $500,000....................... 2.56 2.50 2.00
$500,000 but less than $1,000,000..................... 1.52 1.50 1.00
$1,000,000 or more.................................... 0.50 0.50 0.40
</TABLE>
(See "HOW IS NET ASSET VALUE CALCULATED?" for a description of the computation
of net asset value per share.)
The above charges on investments of $100,000 or more are applicable to purchases
made at one time by an individual, or an individual, his spouse and their
children not of legal age, or a trustee, guardian or other like fiduciary of
certain single trust estates or certain single fiduciary accounts.
No sales charge is imposed on purchases of Shares by officers, trustees, and
employees of the Fund or by full-time employees of the Adviser or The Ohio
Company, who have been such for at least 90 days or by qualified retirement
plans for such persons.
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 Fund. 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 Fund 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 Fund. 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
Fund'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
Fund or its shareholders.
AUTOMATIC INVESTMENT PLAN
The Fund 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 Fund on the
periodic basis you select. Confirmation of your purchase of Fund Shares will be
provided by the Fund. 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 FUND?
- --------------------------------------------------------------------------------
Shares of the Fund qualify for purchase in connection with the following tax
sheltered retirement plans:
-- Individual Retirement Account ("IRAs") plans
12
<PAGE> 17
-- 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
- --------------------------------------------------------------------------------
HOW MAY I QUALIFY FOR QUANTITY DISCOUNTS?
- --------------------------------------------------------------------------------
LETTER OF INTENTION
If you (including your spouse and children not of legal age) intend to purchase
$100,000 or more of Shares of the Fund and of any other fund of the Cardinal
family of funds which is sold with a sales charge (collectively, the "Cardinal
Load Funds"), during any 13-month period you may sign a letter of intention to
that effect obtained from The Ohio Company and pay the reduced sales charge
applicable to the total amount of shares to be so purchased. The 13-month period
during which the Letter of Intention is in effect will begin on the date of the
earliest purchase to be included. In addition, trustees, guardians or other like
fiduciaries of single trust estates or certain single fiduciary accounts may
take advantage of the quantity discounts pursuant to a letter of intention.
A letter of intention is not a binding obligation upon you to purchase the full
amount indicated. Shares purchased with the first 5% of such amount will be held
in escrow (while remaining registered in your name) to secure payment of the
highest sales charge applicable to the shares actually purchased. If the full
amount indicated is not purchased, such escrowed shares will be involuntarily
redeemed to pay the additional sales charge, if necessary. Dividends on escrowed
shares, whether paid in cash or reinvested in additional shares of the
applicable Cardinal Load Fund, are not subject to escrow. The escrowed shares
will not be available for disposal by you until all purchases pursuant to the
letter of intention have been made or the higher sales charge has been paid.
When the full amount indicated has been purchased, the escrow will be released.
To the extent that you purchase more than the dollar amount indicated on the
Letter of Intention and qualify for a further reduced sales charge, the sales
charge will be adjusted for the entire amount purchased at the end of the
13-month period. The difference in sales charge will be, as you instruct, either
delivered to you in cash or used to purchase additional shares of the Cardinal
Load Fund designated by you subject to the rate of sales charge applicable to
the actual amount of the aggregate purchases. This program, however, may be
modified or eliminated at any time or from time to time by the Fund without
notice.
CONCURRENT PURCHASES
For purposes of qualifying for a lower sales charge, you have the privilege of
combining "concurrent purchases" of Shares of the Fund and of one or more of the
other Cardinal Load Funds. For example, if you concurrently purchase Shares of
the Fund at the total public offering price of $50,000 and shares of another
Cardinal Load Fund at the total public offering price of $50,000, the sales
charge would be that applicable to a $100,000 purchase as shown in the table
above. "Concurrent purchases," as described above, shall include the combined
purchases of you, your spouse and your children not of legal age. To receive the
applicable public offering price pursuant to this privilege, you must, at the
time of purchase, give The Ohio Company sufficient information to permit
confirmation of qualification. This privilege, however, may be modified or
eliminated at any time or from time to time by the Fund without notice thereof.
RIGHTS OF ACCUMULATION
After your initial purchase of Shares, you may also be eligible to pay a reduced
sales charge for your subsequent purchases of Shares where the total public
offering price of Shares then being purchased plus the then aggregate current
net asset value of Shares of the Fund and of shares of any Cardinal Load Fund
held in your account equals $100,000 or more. You would be able to purchase
Shares at the public offering
13
<PAGE> 18
price applicable to the total of (a) the total public offering price of the
Shares of the Fund then being purchased plus (b) the then current net asset
value of Shares of the Fund and of shares of any other Cardinal Load Fund held
in your account. For purposes of determining the aggregate current net asset
value of shares held in your account, you may include shares then owned by your
spouse and children not of legal age.
You may obtain additional information about the foregoing special purchase
method from The Ohio Company. You are responsible for notifying The Ohio Company
at the time of purchase when purchases may be accumulated to take advantage of
the reduced sales charge. This program, however, may be modified or eliminated
at any time or from time to time by the Fund without notice.
- --------------------------------------------------------------------------------
ARE THERE ANY SPECIAL PURCHASE PROGRAMS FOR CERTAIN RETIREMENT PLANS?
- --------------------------------------------------------------------------------
No sales charge is imposed on purchases of Shares of the Fund by trusts
qualifying under Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), and by deferred compensation plans of state and local governments
and tax-exempt organizations qualifying under Section 403(b) or Section 457 of
the Code (collectively, "Qualifying Plans"), so long as The Ohio Company serves
as either a trustee or investment adviser for the applicable Qualifying Plans.
- --------------------------------------------------------------------------------
WHAT DISTRIBUTIONS WILL I RECEIVE?
- --------------------------------------------------------------------------------
The net income of the Fund is declared daily as a dividend to Shareholders of
the Fund at the close of business on the day of declaration, and such dividends
are generally paid monthly. Dividends consisting of long-term capital gains
normally will be distributed only once annually. Dividends and distributions
will be paid only in additional Shares and not in cash; except, however, that
for dividends and distributions of $10 or more, a shareholder may specifically
request that such amounts be paid to him in cash. Dividends are expected to be
distributed on a monthly basis.
Shareholders may elect to receive cash distributions by using ACH processing as
described under "WHAT OTHER SHAREHOLDER PROGRAMS ARE PROVIDED? -- ACH
Processing" below.
- --------------------------------------------------------------------------------
HOW MAY I REDEEM MY SHARES?
- --------------------------------------------------------------------------------
Investors may redeem Shares of the Fund at the net asset value per share next
determined following the receipt by the Fund's transfer agent, Cardinal
Management Corp., 215 East Capital Street, Columbus, Ohio 43215, of the
following: (a) written or telephonic notice to redeem, as described more fully
below, and (b) for Shares represented by certificates, either the share
certificates, properly endorsed, or properly executed stock powers. 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 and any share certificates or stock powers 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.
REDEMPTION BY MAIL
Shareholders may elect to redeem Shares of the Fund by submitting a written
request therefor to Cardinal Management Corp., the Fund'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
14
<PAGE> 19
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 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 Fund by calling the Fund 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 Fund 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 Fund's telephone redemption procedures, acting upon instructions
reasonably believed to be genuine. The Fund will employ procedures designed to
provide reasonable assurances that instructions by telephone are genuine; if
these procedures are not followed, the Fund 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.
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.
The Fund will make payment for redeemed Shares as promptly as practicable but in
no event more than seven days after receipt by Cardinal Management Corp. of the
foregoing notice and any share certificates and powers. The Fund 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 Fund). The purchase of Fund Shares by
wire transfer of federal funds would avoid any such delay.
The Fund 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?".
SYSTEMATIC WITHDRAWAL PLAN
If you are the owner of Shares of the Fund having a total value of $25,000 or
more at the current offering price, you may elect to redeem your Shares monthly
or quarterly in amounts of $50 or more, pursuant to the Fund's Systematic
Withdrawal Plan. Please contact The Ohio Company for the appropriate form.
- --------------------------------------------------------------------------------
HOW IS NET ASSET VALUE CALCULATED?
- --------------------------------------------------------------------------------
The net asset value of the Fund is determined once daily as of 4:00 P.M.,
Columbus, Ohio time, on each business day the New York Stock Exchange is open
for business and on any other day (other than a day on which no Shares of the
Fund are tendered for redemption and no order to purchase any Shares of the Fund
is received) where there is sufficient trading in the Fund's portfolio
securities that the Fund's net asset value per share might be materially
affected by changes in the value of its portfolio securities. The net asset
value per share of the Fund is computed by dividing the sum of the value of the
Fund's portfolio securities plus
15
<PAGE> 20
any cash and other assets (including interest accrued but not received) minus
all liabilities (including estimated accrued expenses) by the total number of
Shares then outstanding.
Portfolio securities for which over-the-counter market quotations are readily
available are valued at the bid price. The Fund uses one or more pricing
services to provide such market quotations. Securities and other assets for
which market quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of Trustees of
the Fund.
Determination of the net asset value may be suspended at times when (a) trading
on the New York Stock Exchange is restricted or such Exchange is closed for
other than customary weekend and holiday closings, (b) an emergency as
determined by the Securities and Exchange Commission exists making disposal of
portfolio securities or valuation of net assets of the Fund not reasonably
practicable, or (c) the Securities and Exchange Commission has by order
permitted such suspension.
- --------------------------------------------------------------------------------
DOES THE FUND PAY FEDERAL INCOME TAX?
- --------------------------------------------------------------------------------
The Fund intends to qualify as a "regulated investment company" under the Code
for so long as such qualification is in the best interest of the Fund'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
Fund contemplates declaring as dividends 100% of the Fund'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 distributed during the next calendar year. If distributions
during a calendar year were less than the required amount, the Fund would be
subject to a nondeductible excise tax equal to 4% of the deficiency.
- --------------------------------------------------------------------------------
WHAT ABOUT MY TAXES?
- --------------------------------------------------------------------------------
It is expected that the Fund will distribute annually to shareholders all or
substantially all of the Fund'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 Fund and not in cash. The
dividends-received deduction for corporations will apply to the aggregate of
such ordinary income distributions in the same proportion as the aggregate
dividends eligible for the dividends received deduction, if any, received by the
Fund bear to its gross income.
Distribution by the Fund of the excess of 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.
If the net asset value of a Share is reduced below the shareholder's cost of
that Share by the distribution of income or gain realized on the sale of
securities, the distribution is a return of invested principal, although taxable
as described above.
Prior to purchasing Shares, the impact of dividends or capital gains
distributions which are expected to be declared or have been declared, but have
not been paid, should be carefully considered. Any such dividends or capital
gains distributions paid shortly after a purchase of Shares prior to the record
date will have the effect of reducing the per share net asset value of the
Shares by the amount of the dividends or
16
<PAGE> 21
distributions. All or a portion of such dividends or distributions, although in
effect a return of capital, is subject to tax.
The foregoing is intended only as a brief summary of some of the important tax
considerations generally affecting the Fund and its shareholders. Potential
investors in the Fund 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 FUND?
- --------------------------------------------------------------------------------
Pursuant to the laws of Ohio and the Fund's Declaration of Trust, the
responsibility for the management of the Fund is vested in its Board of Trustees
which, among other things, is empowered by the Fund's Declaration Of Trust to
elect officers of the Fund 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 Fund has entered into an Investment Advisory and Management Agreement
("Investment Advisory Agreement") with Cardinal Management Corp., an Ohio
corporation (the "Adviser"), 155 East Broad Street, Columbus, Ohio 43215, in
which the Adviser has agreed to serve as the Fund's investment adviser and
manager. In such capacity, and subject to the ultimate authority of the Fund's
Board of Trustees, the Adviser has agreed regularly to provide the Fund with
investment advice, including management of the Fund's portfolio securities, and
overall management of the Fund's affairs. Since the Fund's inception, John R.
Carle has been primarily responsible for the day-to-day management of the Fund's
portfolio. Mr. Carle has been a portfolio manager with the Adviser and/or The
Ohio Company since 1971.
The Adviser was organized in March, 1980, and currently provides investment
advisory services to Cardinal Government Securities Trust, Cardinal Tax Exempt
Money Trust, Cardinal Balanced Fund and Cardinal Aggressive Growth Fund. The
Adviser is a wholly-owned subsidiary of The Ohio Company, an Ohio corporation.
The Ohio Company is an investment banking firm organized in 1925 and serves as
the principal underwriter for each of the foregoing funds and as the investment
adviser and principal underwriter for The Cardinal Fund Inc. The Ohio Company is
a member of the New York and Chicago Stock Exchanges, other regional stock
exchanges and the National Association of Securities Dealers, Inc.
As compensation for the investment advice and overall management, the Fund will
pay the Adviser a monthly fee, accrued daily, based on an annual rate of .5% of
the average daily net asset value of the Fund. The Adviser may, however,
periodically waive all or a portion of its advisory fee with respect to the Fund
to increase the net income of the Fund available for distribution as dividends.
The waiver of such fee will cause the yield of the Fund to be higher than it
would otherwise be in the absence of such a waiver.
ACCOUNTING SERVICES AND TRANSFER AGENT
The Fund 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 Fund and to calculate the Fund's net asset value on a daily
basis. In consideration of such services, the Fund has agreed to pay the Adviser
a fee monthly based on the average monthly net asset value of the Fund.
The Fund has also entered into an Administration Agreement with the Adviser
pursuant to which the Adviser has agreed to act as the Fund's transfer agent and
dividend disbursing agent. In consideration of
17
<PAGE> 22
such services the Fund has agreed to pay the Adviser an annual fee, paid
monthly, equal to $21 per shareholder account, plus the Adviser's out-of-pocket
expenses.
DISTRIBUTOR
The Fund has entered into a Distributor's Contract with The Ohio Company, 155
East Broad Street, Columbus, Ohio 43215, pursuant to which Shares of the Fund
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 Fund and The Ohio Company. Frank W. Siegel is an
officer and trustee of the Fund and an officer of The Ohio Company. James M.
Schrack II is an officer of both the Fund and The Ohio Company.
CUSTODIAN
The Fund has appointed The Fifth Third Bank ("Fifth Third") 38 Fountain Square
Plaza, Cincinnati, Ohio 45263, as the Fund'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 Fund.
- --------------------------------------------------------------------------------
WHAT OTHER SHAREHOLDER PROGRAMS ARE PROVIDED?
- --------------------------------------------------------------------------------
ACH PROCESSING
The Fund now offers ACH privileges. Investors may use ACH processing to make
subsequent purchases, redeem Shares and/or electronically transfer distributions
paid on Fund 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
Shareholders of the Fund 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 Fund for shares of:
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 seeking long-term growth of capital and income (upon the
payment of the applicable sales charge);
Cardinal Government Securities Trust,
a U.S. Government securities money market fund (without payment of any
sales charge); or
Cardinal Tax Exempt Money Trust,
a tax-free money market fund (without payment of any sales charge).
Notwithstanding the foregoing and subject to the limitations contained in the
following paragraph, (i) exchanges by Qualifying Plans, for whom The Ohio
Company serves as either a trustee or an investment adviser, of Fund Shares for
shares of a Cardinal Load Fund may be completed without the payment of a
18
<PAGE> 23
sales charge, and (ii) exchanges of Fund Shares by all other shareholders for
shares of a Cardinal Load Fund may be completed upon the payment of a sales
charge equal to the difference, if any, between the sales charge payable upon
purchase of shares of such Cardinal Load Fund and the sales charge previously
paid on the Fund Shares to be exchanged.
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 Fund by telephone. Neither the Fund nor any of its service providers will be
liable for 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.
However, a shareholder may not include any sales charge on Shares of the Fund
for purposes of calculating the gain or loss realized upon an exchange of those
Shares within 90 days of their purchase.
The Fund may, at any time, modify or terminate the foregoing exchange privilege.
The Fund, however, will give shareholders of the Fund 60 days' advance written
notice of any such modification or termination.
- --------------------------------------------------------------------------------
WHAT ARE MY RIGHTS AS A SHAREHOLDER?
- --------------------------------------------------------------------------------
Shares of the Fund, upon their issuance, are fully paid and nonassessable, are
of one class equal to all other Shares and are without par value. Certificates
representing Shares will not be issued unless specifically requested in writing
upon subscription. Ownership records of Shares will be maintained by the Fund's
transfer agent, Cardinal Management Corp.
Shareholders have equal voting rights on all matters submitted for shareholder
vote. The Declaration of Trust limits the matters requiring a shareholder vote
to the election or removal of Trustees, approval of certain contracts of the
Fund such as the Investment Advisory and Management Agreement with the Adviser
and the Distributor's Contract with The Ohio Company, approval of the
termination or reorganization of the Fund, approval of certain amendments to the
Declaration Of Trust and certain other matters described in such Declaration.
Under certain circumstances where Trustees have failed upon written request to
give notice of a meeting to consider matters requiring a shareholder vote,
shareholders holding at least 25% of the Fund's outstanding Shares may call and
give notice of such a meeting and thereafter a shareholder meeting will be held
to consider such matters.
- --------------------------------------------------------------------------------
WHO PROVIDES SHAREHOLDER REPORTS?
- --------------------------------------------------------------------------------
The Fund will provide shareholders monthly a summary statement describing any
purchases and sales of Shares of the Fund and dividend and capital gain
distributions.
Holders of Shares should direct all inquiries concerning such matters to
Cardinal Management Corp., 155 East Broad Street, Columbus, Ohio 43215.
19
<PAGE> 24
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 25
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 26
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 27
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
<PAGE> 28
==================================================
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Key Features............................ 2
Prospectus Highlights................... 3
Fee Table............................... 4
Financial Highlights.................... 5
What is the Fund?....................... 7
What Are the Investment Objective and
Policies of the Fund?................. 7
How Do I Purchase Shares
of the Fund?.......................... 11
May My Tax Sheltered Retirement Plan
Invest in the Fund?................... 12
How May I Qualify for Quantity
Discounts?............................ 13
Are There Any Special Purchase Programs
for Certain Retirement Plans?......... 14
What Distributions Will I Receive?...... 14
How May I Redeem My Shares?............. 14
How is Net Asset Value Calculated?...... 15
Does the Fund Pay Federal Income Tax?... 16
What About My Taxes?.................... 16
Who Manages My Investment in the
Fund?................................. 17
What Other Shareholder Programs Are
Provided?............................. 18
What Are My Rights as a Shareholder?.... 19
Who Provides Shareholder Reports?....... 19
</TABLE>
------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE FUND, THE ADVISER, OR THE DISTRIBUTOR. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY THE FUND OR BY THE DISTRIBUTOR TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL FOR THE FUND TO MAKE
SUCH AN OFFER IN SUCH JURISDICTION.
==================================================
==================================================
----------------------
PROSPECTUS
----------------------
January 19, 1996
(The Ohio Company LOGO)
CARDINAL
GOVERNMENT
OBLIGATIONS
FUND
[LOGO]
CARDINAL FUNDS
==================================================
<PAGE> 29
STATEMENT OF ADDITIONAL INFORMATION
CARDINAL GOVERNMENT OBLIGATIONS FUND
Cardinal Government Obligations Fund, known as Cardinal Government
Guaranteed Fund prior to February 1, 1991, (the "Fund") is a diversified,
open-end, management investment company. The investment objective of the Fund
is to maximize safety of capital and, consistent with such objective, earn the
highest available current income obtainable from government securities. The
current income earned from such government securities may not be as great as
the current income earned on lower quality securities which have less liquidity
and greater risk of non-payment.
_____________________________________
For further information regarding the Fund 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 Fund 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 Fund, 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 Fund at the above address or by calling the phone number
provided above.
JANUARY 19, 1996
<PAGE> 30
<TABLE>
TABLE OF CONTENTS
----------------- Page
<CAPTION> ----
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
Additional Information on Portfolio Instruments . . . . . . . . . . . . . . . . . . . . . . . B-1
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-5
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-8
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-8
Compensation Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-11
PRINCIPAL SHAREHOLDERS OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-12
THE ADVISER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-12
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-13
ACCOUNTING SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-15
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-15
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-15
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-16
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-19
DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-21
CUSTODIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-21
LEGAL COUNSEL AND INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-21
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-21
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-23
</TABLE>
-i-
<PAGE> 31
STATEMENT OF ADDITIONAL INFORMATION
CARDINAL GOVERNMENT OBLIGATIONS FUND
Cardinal Government Obligations Fund (the "Fund") 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 Fund. Capitalized terms not defined herein are defined in
the Prospectus. No investment in Shares of the Fund should be made without
first reading the Prospectus of the Fund.
INVESTMENT OBJECTIVE AND POLICIES
Additional Information on Portfolio Instruments
- -----------------------------------------------
The following policies supplement the investment objectives and
policies of the Funds as set forth in their respective Prospectuses.
U.S. GOVERNMENT OBLIGATIONS. The Fund may invest in obligations
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. Obligations of certain agencies and instrumentalities of
the U.S. Government are supported by the full faith and credit of the U.S.
Treasury; others are supported by the right of the issuer to borrow from the
Treasury; others are supported by the discretionary authority of the U.S.
Government to purchase the agency's obligations; and still others are supported
only by the credit of the instrumentality. No assurance can be given that the
U.S. Government would provide financial support to U.S. Government-sponsored
agencies or instrumentalities if it is not obligated to do so by law.
SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
securities issued by other investment companies. The Fund 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
Fund. As a shareholder of another investment company, the Fund would bear,
along with other shareholders, its pro rata portion of that company's expenses,
including advisory fees. These expenses would be in addition to the advisory
and other expenses that the Fund bears directly in connection with its own
operations. Investment companies in which the Fund may invest may also impose
a sales or distribution charge in connection with the purchase or redemption of
their shares and
B-1
<PAGE> 32
other types of commissions or charges. Such charges will be payable by the
Fund and, therefore, will be borne directly by shareholders.
REPURCHASE AGREEMENTS. Securities held by the Fund may be subject to
repurchase agreements. Under the terms of a repurchase agreement, the Fund
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 Fund'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 Fund 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 Fund 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 Fund were delayed pending court action.
Additionally, there is no controlling legal precedent confirming that the Fund
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 Fund believes that, under the regular procedures normally in
effect for custody of the Fund's securities subject to repurchase agreements
and under federal laws, a court of competent jurisdiction would rule in favor
of the Fund if presented with the question. Securities subject to repurchase
agreements will be held by the Fund's custodian or another qualified custodian
or in the Federal Reserve/Treasury book-entry system. Repurchase agreements
are considered to be loans by the Fund under the 1940 Act.
OPTIONS. In order to maximize its total return, the Fund may from
time to time engage in the writing of call options on a national securities
exchange or in the over-the-counter market. A call option gives its holder the
right to buy, and obliges the writer to sell, a specified underlying security
at a stated exercise price at any time prior to the option's expiration date.
The Fund will write only covered call options -- that is, the Fund will own the
securities subject to option throughout the period of its obligation as option
writer -- and will ordinarily write only options for which a secondary trading
market exists. It will deposit the underlying security in escrow until the
exercise or expiration of the option (or such time as the Fund enters into a
closing purchase transaction).
Options written by the Fund will normally have expiration dates
between one and six months from the date written. The
B-2
<PAGE> 33
exercise price of the options may be below ("in-the-money"), equal to
("at-the-money"), or above ("out-of-the-money") the current market values of
the underlying securities at the times the options are written. The Fund may
engage in buy-and-write transactions, in which the Fund simultaneously
purchases a security and writes a call option thereon. When a call option is
written against a security subsequent to the purchase of that security, the
resulting combined position is also referred to as a buy-and-write.
Buy-and-write transactions using in-the- money call options may be utilized
when it is expected that the price of the underlying security will remain flat
or decline moderately during the option period. In such a transaction, the
Fund's maximum gain will be the premium received from writing the option
reduced by any excess of the price paid by the Fund for the underlying security
over the exercise price. Buy-and-write transactions using at-the-money call
options may be utilized when it is expected that the price of the underlying
security will remain flat or advance moderately during the option period. In
such a transaction, the Fund's gain will be limited to the premiums received
from writing the option. Buy-and-write transactions using out- of-money call
options may be utilized when it is expected that the premiums received from
writing the call option plus the appreciation in the market price of the
underlying security up to the exercise price will be greater than the
appreciation in the price of the underlying security alone. In any of the
foregoing situations, if the market price of the underlying security declines,
the amount of such decline will be offset wholly or in part by the premium
received and the Fund may or may not realize a loss.
The writing of a covered call option will result in the payment of a
premium to the Fund. If the value of the underlying security appreciates, it
is likely that the option holder will exercise its option and call the security
away from the Fund. The Fund would then suffer an economic loss equal to the
excess, if any, of the underlying security's appreciation in value over the
premium it received for writing the option.
When the Fund writes covered call options on GNMA Certificates, the
GNMA Certificates that it holds as cover may, because of scheduled amortization
or unscheduled prepayments, cease to be sufficient cover. The Fund will
compensate by purchasing an appropriate additional amount of GNMA Certificates.
The Fund may purchase put or call options on interest rate futures
contracts solely for the purpose of hedging against changes in the value of its
portfolio securities due to changes in interest rates.
Options on interest rate futures contracts are similar to options on
securities, except that an option on an interest rate futures contract gives
the purchaser the right, in return for the premium paid, to assume a position
in an interest rate futures
B-3
<PAGE> 34
contract (rather than to purchase securities) at a specified exercise price at
any time prior to the expiration date of the option. A call option gives the
purchaser of such option the right to buy, and obliges its writer to sell, a
specified underlying futures contract at a stated exercise price at any time
prior to the expiration date of the option. A purchaser of a put option has
the right to sell, and the writer has the obligation to buy, such contract at
the exercise price during the option period. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement
will be made entirely in cash equal to the difference between the exercise
price of the option and the closing price of the interest rate futures contract
on the expiration date. The potential loss related to the purchase of an
option on interest rate futures contracts is limited to the premium paid for
the option (plus transaction costs). Because the value of the option is fixed
at the point of sale, there are no daily cash payments to reflect changes in
the value of the underlying contract; however, the value of the option does
change daily and that change is reflected in the net asset value of the Fund.
The purchase of put options on interest rate futures contracts is
analogous to the purchase of protective puts on debt securities so as to hedge
a portfolio of debt securities against the risk of rising interest rates. The
Fund may purchase put options on interest rate futures contracts if Adviser
anticipates a rise in interest rates. Because of the inverse relationship
between trends in interest rates and the values of debt securities, a put
option on such a contract becomes more valuable as interest rates rise. By
purchasing put options on interest rate futures contracts at a time when
Adviser expects interest rates to rise, the Fund would seek to realize a profit
to offset the loss in value of its portfolio securities, without the need to
sell such securities.
The Fund may purchase call options on interest rate futures contracts
if Adviser anticipates a decline in interest rates. Historically, unscheduled
prepayments on mortgage-backed securities (such as GNMA Certificates) have
increased in periods of declining interest rates, as mortgagors have sought to
refinance at lower interest rates. As a result, were the Fund to purchase such
securities at a premium prior to a period of declining interest rates, the
subsequent prepayments at par would reduce the yield on such securities by
magnifying the effect of the premium in relationship to the principal amount of
securities, and might, under extreme circumstances, result in a loss to the
Fund. This effect might not be offset by any appreciation in value in a debt
security normally attributable to the interest rate decline. To protect itself
against the possible erosion of principal on securities purchased at a premium,
the Fund may purchase call options on interest rate futures. The option would
increase in value as interest rates declined, thereby tending to offset any
reductions of the yield on portfolio securities purchased at a
B-4
<PAGE> 35
premium resulting from the effect of prepayments on the amortization of such
premiums.
The Fund may sell put and call options on interest rate futures only
as part of closing sales transactions to terminate its options positions.
There is no guarantee that such closing transactions can be effected.
In addition to the risks that apply to all options transactions, there
are several special risks relating to options on interest rate futures
contracts. The Fund's purchase of put or call options will be based upon
predictions of interest rate trends and predictions of the prepayment
experience of mortgage-backed securities, and such predictions may prove to be
inaccurate. Even if such predictions are correct, there may be an imperfect
correlation between the change in the value of the options and of the Fund's
portfolio securities.
Investment Restrictions
- -----------------------
The Fund deems the matters listed in numbered paragraphs (1) through
(15) to be matters of fundamental policy and as such to be matters which the
Fund will not change unless the changed policy is otherwise lawful and is
approved by holders of the majority of the outstanding Shares of the Fund
(defined as the vote, at an annual or special meeting of shareholders of the
Fund, of the lesser of (a) 67% or more of the voting securities present at such
meeting, if the holders of more than 50% of the outstanding voting securities
are present or represented by proxy, or (b) more than 50% of the outstanding
voting securities of the Fund):
The Fund may not:
(1) Diversification. Purchase securities of any one issuer, other
than obligations issued or guaranteed by the U.S. Government
or its agencies or instrumentalities, if, immediately after
such purchase, more than 5% of the value of the Fund's total
assets would be invested in such issuer, or the Fund would
hold more than 10% of the outstanding voting securities of the
issuer, except that up to 25% of the value of the Fund's total
assets may be invested without regard to such limitations.
There is no limit to the percentage of assets that may be
invested in U.S. Treasury bills, notes, or other obligations
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities;
(2) Restricted or Illiquid Securities. (i) Purchase securities
with legal or contractual restrictions on resale (restricted
securities), (ii) purchase illiquid securities, (iii) purchase
securities without readily available market quotations, or
(iv) invest more than 10%
B-5
<PAGE> 36
of the value of its total assets in repurchase agreements
maturing in more than seven days;
(3) Real Estate. Purchase or sell real estate (although it may
purchase securities secured by real estate or interests
therein);
(4) Commodities. Purchase or sell commodities or commodity
contracts;
(5) Oil and Gas Programs. Purchase participation or other direct
interests in oil, gas, or other mineral exploration or
development programs;
(6) Purchases on Margin. Purchase securities on margin, except
for use of short-term credit necessary for clearance of
purchases of portfolio securities;
(7) Loans. Make loans, although the Fund may enter into
repurchase agreements;
(8) Senior Securities and Borrowing. Borrow money or issue senior
securities, except that the Fund may borrow from banks or
enter into reverse repurchase agreements or dollar roll
agreements for temporary purposes in amounts up to 10% of the
value of its total assets at the time of such borrowing and
except as permitted pursuant to an exemption from the 1940
Act. The Fund will not purchase securities while its
borrowings (including reverse repurchase agreements and dollar
roll agreements) exceed 5% of its total assets;
(9) Mortgaging. Mortgage, pledge, hypothecate or, in any other
manner, transfer as security for indebtedness any security
owned by a Fund, except as may be necessary in connection with
permissible borrowings, in which event such mortgaging,
pledging or hypothecating may not exceed 5% of a Fund's
assets, valued at cost and except that the deposit of assets
in escrow in connection with writing covered call options will
not be deemed to be the mortgage, pledge, hypothecation or
transfer of assets as security described above;
(10) Underwriting. Underwrite securities issued by other persons,
except: to the extent that a Fund may be deemed to be an
underwriter within the meaning of the Securities Act of 1933
in connection with the purchase of government securities
directly from the issuer in accordance with the Fund's
investment objective, program and restrictions;
B-6
<PAGE> 37
(11) Portfolio Securities by Officers and Directors. Purchase or
retain the securities of any issuer if, to the knowledge of
the Fund's management, those officers and trustees of the
Fund, and of its investment adviser, who each owns
beneficially more than .5% of the outstanding securities of
such issuer, together own beneficially more than 5% of such
securities;
(12) Puts, Calls, Etc. Invest in puts, calls, straddles, spreads,
or any combination thereof, except as follows: (a) the Fund
may write covered call options and enter into closing purchase
transactions with respect to such options so long as the
securities underlying outstanding options will not at any one
time exceed 25% of the assets of the Fund, and (b) the Fund
may purchase options in interest rate futures contracts so
long as not more than 5% of the Fund's assets are at any one
time invested in the premiums paid for such options;
(13) Concentration of Investments. Concentrate more than 25% of
the value of the assets of the Fund in investments in any
particular industry;
(14) Short Sales. Engage in any short sales; or
(15) Classification. Change its classification as a "management
company" under Section 4 of the Investment Company Act of 1940
or change its subclassifications as an "open-end company" or
as a "diversified company" under Section 5 of the Investment
Company Act of 1940.
The following additional investment restriction may be changed without
the majority vote of the outstanding Shares of the Fund.
The Fund may not:
(1) Purchase the 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 Fund 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 Fund's investment adviser waives its management fee
with respect to such investments. The Fund intends to comply with this
undertaking for so long as the Fund has its shares registered for sale in the
State of California or such representation is required by the California
Department of Corporations.
B-7
<PAGE> 38
The Fund has represented to the Ohio Division of Securities that it
will (1) not invest 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; and (2) limit its investments to
15% of its total assets in securities of any issuer (a) which, together with
any predecessors, have a record of less than three years continuous operation
or (b) which are restricted as to disposition, including securities eligible
for resale under Rule 144A of the Securities Act of 1933. The Fund intends to
comply with these representations for so long as its Shares are registered for
sale in the State of Ohio.
If a percentage restriction or requirement set forth above is met at
the time of investment, a later failure to comply with the restriction or
requirement resulting from a change in the value of securities held by the Fund
will not be considered a violation of the policy.
Portfolio Turnover
- ------------------
The portfolio turnover rate for the Fund is calculated by dividing the
lesser of the Fund's purchases or sales of portfolio securities for the year by
the monthly average value of the portfolio securities. The calculation
excludes all securities whose remaining maturities at the time of acquisition
were one year or less.
The portfolio turnover rate for the Fund for the two fiscal years
ended September 30, 1995, and 1994, were 36.71% and 21.95%, respectively. The
portfolio turnover rate for the Fund may vary greatly from year to year as well
as within a particular year, and may also be affected by cash requirements for
redemptions of Shares. Portfolio turnover will not be a limiting factor in
making investment decisions.
MANAGEMENT OF THE FUND
The trustees and officers of the Fund, 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
director or trustee of The Cardinal Fund Inc., Cardinal Government Securities
Trust, Cardinal Tax Exempt Money Trust and The Cardinal Group. Each trustee
who is an "interested person" of the Fund, as that term is defined in the 1940
Act, is indicated by an asterisk.
B-8
<PAGE> 39
<TABLE>
<CAPTION>
Name, Age and Position(s) Held Principal Occupation(s)
Business Address with Fund during Past 5 Years
---------------- ---------------- -----------------------
<S> <C> <C>
*H. Keith Allen Chairman and Trustee, Chief Operating Officer,
155 East Broad Street Member of Executive and Secretary, Treasurer and a Director
Columbus, Ohio 43215 Nominating Committees of The Ohio Company (investment
Age: 54 banking); formerly Senior Executive
Vice President of The Ohio Company.
Gordon B. Carson Trustee, Member of Principal, Whitfield Robert
5413 Gardenbrook Drive Executive Committee Associates (construction consulting
Midland, Michigan 48642 firm).
Age: 84
John B. Gerlach, Jr. Trustee, Member of Audit Since 1994, President and a
37 West Broad Street Committee Director of Lancaster Colony
Columbus, Ohio 43215 Corporation (diversified consumer
Age: 41 products); prior thereto, Executive
Vice President, Secretary and a
Director of Lancaster Colony
Corporation.
Michael J. Knilans Trustee, Member of From November, 1989 to
1119 Kingsdale Terrace Executive Committee August, 1995, Member of the Ohio
Columbus, Ohio 43220 Bureau of Workers' Compensation and
Age: 68 Chairman from 1992 through August,
1995.
James I. Luck Trustee President, The Columbus
1234 East Broad Street Foundation (philanthropic public
Columbus, Ohio 43205 foundation).
Age: 50
David L. Nelson Trustee, Member of Chairman of the Board of
18 James Lane Nominating and Audit Directors of Herman Miller, Inc.
Stamford, CT 06903 Committees (furniture manufacturer); former
Age: 65 Vice 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;
150 E. Wilson Bridge Rd. former Senior Executive Vice
Worthington, Ohio 43085 President and Director of The Ohio
Age: 69 Company (investment banking).
</TABLE>
B-9
<PAGE> 40
<TABLE>
<S> <C> <C>
Lawrence H. Rogers II Trustee Self-employed author; former
4600 Drake Road Vice Chairman, Motor Sports
Cincinnati, Ohio 45243 Enterprises, Inc.
Age: 74
*Frank W. Siegel President and Trustee, Chartered Financial Analyst
155 East Broad Street Member of Executive and and Senior Vice President, The Ohio
Columbus, Ohio 43215 Nominating Committees Company (investment banking);
Age: 43 former 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 President and a Director of
724 Hampton Roads Dr. and Nominating Committees Clayton Homes, Inc. (manufactured
Knoxville, TN 37922-4071 homes); former Vice President,
Age: 44 Treasurer, Chief Financial Officer
and a Director of Worthington
Industries, Inc. (specialty steel
and plastics manufacturer).
Karen J. Hipsher Secretary Executive Secretary of The
155 East Broad Street Ohio Company (investment banking).
Columbus, Ohio 43215
James M. Schrack II Treasurer Vice President and Trust
155 East Broad Street Officer of The Ohio Company
Columbus, Ohio 43215 (investment banking).
Bruce E. McKibben Assistant Since April, 1991, Employee
155 East Broad Street Treasurer of The Ohio Company (investment
Columbus, Ohio 43215 banking); prior thereto, student at
The Ohio State University.
</TABLE>
As of January 11, 1996, all trustees and officers of the Fund as a
group owned fewer than one percent of the Shares of the Fund then outstanding.
Subject to the ultimate authority of the Board of Trustees of the
Fund, the Executive Committee is responsible for the general management of the
affairs of the Fund.
Messrs. Allen and Siegel are Chairman, President and a director, and
Vice President and a director, respectively, of Cardinal Management Corp., the
Investment Adviser and Manager, transfer agent and provider of accounting
services of and for the Fund. The compensation of trustees and officers of the
Fund who are employed by The Ohio Company is paid by The Ohio Company.
B-10
<PAGE> 41
Trustees' fees (currently $500 per meeting attended) plus expenses are paid by
the Fund, except that Messrs. Allen and Siegel receive no fees from the Fund.
The following table sets forth information regarding all compensation
paid by the Fund to its Trustees for their services as trustees during the
fiscal year ended September 30, 1995. The Fund has no pension or retirement
plans.
COMPENSATION TABLE
<TABLE>
<CAPTION>
Name and Position Aggregate Compensation Total Compensation From the
With the Fund* From the Fund Fund 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
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
</TABLE>
B-11
<PAGE> 42
- --------------
*During the fiscal year, John L. Schlater, a former officer of The
Ohio Company and the Adviser, and John R. Carle, the portfolio manager of the
Fund, each had served as trustees of the Fund but no longer do so as of the
date hereof. Neither Mr. Schlater nor Mr. Carle received any compensation from
the Fund or the Fund Complex.
**For purposes of this Table, Fund Complex means one or more mutual
funds, including the Fund, which have a common investment adviser or affiliated
investment advisers or which hold themselves out to the public as being
related.
PRINCIPAL SHAREHOLDERS OF THE FUND
There were no persons known to the Fund to be the beneficial owners of
more than 5% of the Fund's outstanding Shares as of January 11, 1996.
THE ADVISER
The Fund has entered into an Investment Advisory and Management
Agreement (the "Investment Advisory Agreement") with Cardinal Management Corp.,
an Ohio corporation (the "Adviser"), 155 East Broad Street, Columbus, Ohio
43215, in which Adviser has agreed to serve as the Fund's investment adviser
and manager. In such capacity, and subject to the ultimate authority of the
Fund's Board of Trustees, the Adviser has agreed regularly to provide the Fund
with investment advice, including management of the Fund's portfolio
securities, and overall management of the Fund's affairs. The Adviser was
organized in March, 1980, and currently provides investment advisory services
to Cardinal Government Securities Trust, Cardinal Tax Exempt Money Trust,
Cardinal Balanced Fund and Cardinal Aggressive Growth Fund. The Adviser is a
wholly-owned subsidiary of The Ohio Company, an Ohio corporation. The Ohio
Company is an investment banking firm organized in 1925 and serves as the
principal underwriter for each of the foregoing funds and as the investment
adviser and principal underwriter for The Cardinal Fund Inc. The Ohio Company
is a member of the New York Stock Exchange, Midwest Stock Exchange, other
regional stock exchanges and the National Association of Securities Dealers.
The Adviser will be responsible for the payment of clerical and
shareholder service staff salary, office space and other office expenses, the
compensation and expenses of any persons rendering any services to the Fund who
are officers, directors, stockholders or employees of the Adviser or The Ohio
Company, and any advertising and promotion expenses.
As compensation for the investment advice and overall management, the
Fund will pay the Adviser a monthly fee, accrued daily,
B-12
<PAGE> 43
based on an annual rate of .5% of the daily net asset value of the Fund. For
the fiscal years ended September 30, 1995, 1994 and 1993, the Adviser earned
$783,803, $947,139 and $972,887, respectively, under the Investment Advisory
Agreement. In order to reduce the expenses of the Fund and to improve its
total return to shareholders, the Adviser, at its option may waive some part or
all of the fees to which it is entitled under its Investment Advisory Agreement
with the Fund.
The Adviser has agreed to reimburse the Fund (up to the amount of the
fees received by the Adviser) for the aggregate expenses of the Fund during any
fiscal year which exceed the limits prescribed by any state in which the shares
of the Fund are registered for sale. Currently, the most stringent limitation
provides that annual expenses of the Fund, including investment advisory and
management fees but excluding interest, taxes, brokerage commissions and
extraordinary expenses, shall not exceed two and one-half percent of the first
thirty million dollars of the Fund's average net assets, two percent of the
next seventy million dollars of the Fund's average net assets and one and
one-half percent of the Fund's remaining average net assets.
PORTFOLIO TRANSACTIONS
Pursuant to the Investment Advisory Agreement, the Adviser, subject to
the policies established by the Board of Trustees of the Fund and in accordance
with the Fund's investment restrictions and policies, is responsible for the
Fund's portfolio decisions and the placing of the Fund'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 Fund, 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. For the last three fiscal years ended September 30, 1995, the Fund
paid no brokerage commissions.
In executing such transactions, the Adviser seeks to obtain the best
net results for the Fund 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
B-13
<PAGE> 44
the prior sentence, the Fund will not necessarily be paying the lowest
commission or spread available.
The Adviser may consider provision of research, statistical and other
information to the Fund or the Adviser in the selection of qualified
broker-dealers who effect portfolio transactions for the Fund so long as the
Adviser's ability to obtain the best net results for portfolio transactions of
the Fund 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 Fund. Although this information
is useful to the Fund 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 Fund under the Investment Advisory
Agreement. The Fund 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.
Investment decisions for the Fund 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 Fund. When a purchase or sale of the same security is made at
substantially the same time on behalf of the Fund 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 Fund and such other investment company or
account. In some instances, this investment procedure may adversely affect the
price paid or received by the Fund or the size of the position obtained by the
Fund. To the extent permitted by law, the Adviser may aggregate the securities
to be sold or purchased for the Fund with those to be sold or purchased for
other investment companies or accounts in order to obtain best execution. In
making investment recommendations for the Fund, the Adviser will not inquire or
take into consideration whether an issuer of securities proposed for purchase
or sale by the Fund 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 Fund.
The Fund did not during the fiscal year ended September 30, 1995, hold
securities of its regular brokers or dealers, as defined in Rule 10b-1 under
the 1940 Act, or their parent companies.
B-14
<PAGE> 45
Although the Fund does not intend to engage in short-term trading of
portfolio securities as a means of achieving its investment objective, it may
sell portfolio securities without regard to the length of time they have been
held whenever such sale will in the Adviser's opinion strengthen the Fund's
position and contribute to its investment objective. Such could be the case
during periods of rapid fluctuations of interest rates in portfolio securities.
ACCOUNTING SERVICES
The Fund 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 Fund and to calculate the Fund's net asset
value on a daily basis. In consideration of such services, the Fund has agreed
to pay monthly to the Adviser a fee based on the average monthly net asset
value of the Fund. For the last three fiscal years ended September 30, 1995,
the Adviser received $40,879, $44,111 and $43,375, respectively, for services
to the Fund pursuant to such agreement.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
The Fund has entered into an Administration Agreement with the Adviser
pursuant to which the Adviser has agreed to act as the Fund's transfer agent,
dividend disbursing agent and administrator of plans for the Fund. In
consideration of such services, the Fund has agreed to pay the Adviser an
annual fee paid monthly, 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 $174,394, $211,560 and $209,799,
respectively, for services to the Fund pursuant to such agreement.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The Fund's Shares may be purchased at the public offering price
through The Ohio Company, principal underwriter of the Fund'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.
Based upon the value of the Fund's portfolio securities and other
assets and the number of outstanding Shares as of the fiscal year end September
30, 1995, the net asset value and redemption price per share was $8.18. The
total offering price per share was $8.57 per share (net asset value / .9550,
assuming the then current
B-15
<PAGE> 46
maximum sales charge of 4.50% of the offering price). The total offering price
is reduced on sales of $100,000 or more.
The net asset value of the Fund is determined once daily as of 4:00
P.M., Columbus, Ohio time, (a) on each business day the New York Stock Exchange
is open for business and on any other day there is sufficient trading in the
Fund's portfolio securities that the Fund's net asset value per share might be
materially affected by changes in the value of its portfolio securities. The
net asset value per share of the Fund is computed by dividing the sum of the
value of the Fund's portfolio securities plus any cash and other assets
(including interest and dividends accrued but not received) minus all
liabilities (including estimated accrued expenses) by the total number of
shares then outstanding.
Portfolio securities for which over-the-counter quotations are readily
available are valued at the bid price. The Fund uses one or more pricing
services to provide such market quotations. Securities and other assets for
which market quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of Trustees of
the Fund.
The Fund may suspend the determination of the net asset value, 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) an emergency exists as a result of which (i) disposal of
portfolio securities owned by the Fund is not reasonably practical or (ii) it
is not reasonably practical for the Fund to determine the fair value of its net
assets, or (d) the Securities and Exchange Commission has by order permitted
such suspension.
TAXES
The Fund intends to qualify as a "regulated investment company" under
the Code for so long as such qualification is in the best interest of the
Fund's shareholders. In order to qualify as a regulated investment company,
the Fund 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 Fund
B-16
<PAGE> 47
must distribute to its shareholders at least 90% of its investment company
taxable income for the year. In general, the Fund'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
Fund would be subject to a non-deductible excise tax equal to 4% of the
deficiency.
Although the Fund 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 Fund
may be subject to the tax laws of such states or localities. In addition, if
for any taxable year the Fund 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 Fund will distribute annually to shareholders
all or substantially all of the Fund'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 Fund and not in
cash.
Distribution by the Fund of the excess of 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.
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-17
<PAGE> 48
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. The Fund 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 Fund for its taxable year that qualifies for the dividends
received deduction.
The Fund 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.
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 Fund. No attempt has been made to present a detailed
explanation of the federal income tax treatment of the Fund or its shareholders
and this discussion is not intended as a substitute for careful tax planning.
Accordingly, potential purchasers of Shares of the Fund 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
B-18
<PAGE> 49
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 Fund 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.
PERFORMANCE INFORMATION
For the 30-day period ended September 30, 1995, the Fund's yield was
6.40%. Such yield is computed by dividing the net investment income per Share
earned during that period by the maximum offering price per Share on the last
day of the period, according to the following formula:
YIELD = 2[(a - b + 1)6 - 1]
-----
cd
Where: a = dividends and interest earned during the period; b =
expenses accrued for the period (net of reimbursements); c = the average daily
number of Shares outstanding during the period that were entitled to receive
dividends; and d = the maximum offering price per Share on the last day of the
period. Expenses accrued during the period include all recurring fees that are
charged to all Shareholder accounts in proportion to the length of the base
period and assuming the Fund's average account size. The yield computation
assumes the then applicable maximum initial sales charge is deducted from the
investment in the Fund.
For the one-year and five-year periods ended September 30, 1995, and
the period from the commencement of the Fund's operation (February 3, 1986) to
September 30, 1995, the average annual total returns for the Fund were 6.20%,
6.46%, and 7.27%, respectively. For the one- and five-periods ended September
30, 1995, and the period from commencement of the Fund's operations (February
3, 1986) to September 30, 1995, the cumulative return figures for the Fund were
6.20%, 36.75% and 96.91%, respectively. Each quotation of average annual total
return was computed by finding the average annual compounded rate of return
over that period which would equate the value of an initial amount of $1,000
invested in the Fund to the ending redeemable value, according to the following
formula:
P(T + 1)n = ERV
Where: P = a hypothetical initial payment of $1,000, T = average
annual total return, n = number of years over which total
B-19
<PAGE> 50
return is being calculated and ERV = ending redeemable value of the
hypothetical $1,000 initial payment at the end of the period for which average
annual total return is being calculated assuming a complete redemption. The
calculation of average annual total return assumes the deduction of the then
applicable maximum sales charge from the initial investment of $1,000, assumes
the reinvestment of all dividends and distributions at the price stated in the
then effective Prospectus on the reinvestment dates during the period and
includes all recurring fees that are charged to all Shareholder accounts
assuming the Fund's average account size. Cumulative return is computed by
using average annual return, as calculated above, for each year of the relevant
period to determine the total return on a hypothetical initial investment of
$1,000 over such period.
In addition, as described in the Fund's Prospectus, from time to time
the Fund may include in its sales literature and shareholder reports a quote of
a current "distribution" rate. For the 12-month period ended September 30,
1995, the Fund's distribution rate was 7.24%. The current distribution rate is
computed by dividing the total amount of dividends per share paid by the Fund
during the past twelve months by a current maximum offering price. Under
certain circumstances, such as when there has been a change in the amount of
dividend payout, or a fundamental change in investment policies, it might be
appropriate to annualize the dividends paid over the period such changed
policies were in effect, rather than using the dividends during the past twelve
months. The current distribution rate differs from the current yield
computation because it may include distributions to shareholders from sources
other than dividends and interest, such as premium income from option writing,
short-term capital gains and net equalization credits and is calculated over a
different period of time.
Investors may also judge the performance of the Fund 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.,
Morningstar, Inc., and CDA Investment Technologies, Inc. Comparisons may also
be made to indices or data published in 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 Fund that appears in a publication such as those
mentioned above may be included in advertisements and in reports to
shareholders.
B-20
<PAGE> 51
DISTRIBUTOR
The Ohio Company serves as the principal underwriter of Shares of the
Fund. In such capacity, and pursuant to a Distributor's Contract with the
Fund, shares of the Fund continuously are offered on a best efforts basis by
The Ohio Company and dealers selected by The Ohio Company. Pursuant to the
Distributor's Contract, expenses of printing prospectuses and other selling
literature are borne by The Ohio Company.
For the Fund's fiscal years ended September 30, 1995, 1994 and 1993,
The Ohio Company was paid $147,536, $424,187 and $2,310,657, respectively, in
commissions after discounts to dealers under the Distributor's Contract.
CUSTODIAN
The Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati, Ohio 45263
has been selected to serve as the Fund's custodian. In such capacity the
custodian will hold or arrange for the holding of all portfolio securities and
other assets of the Fund.
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 Fund has selected KPMG Peat Marwick LLP, Two Nationwide Plaza,
Columbus, Ohio 43215, as independent auditors for the Fund. The financial
statements of the Fund 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 INFORMATION
Shareholders have neither any preemptive rights to subscribe for
additional Shares nor any cumulative voting rights.
The Fund 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 Fund.
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.
B-21
<PAGE> 52
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 Prospectuses and this Statement of Additional Information.
B-22
<PAGE> 53
FINANCIAL STATEMENTS
CARDINAL GOVERNMENT OBLIGATIONS FUND
SEPTEMBER 30, 1995
B-23
<PAGE> 54
CARDINAL GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL VALUE
SECURITIES AMOUNT (NOTE 1)
- ---------------------------------------------------------------------------- -------- ---------
<S> <C> <C>
DIRECT U.S. GOVERNMENT OBLIGATIONS 1.35%
U.S. Treasury Notes, 6.50% maturing 8/15/05................................. $ 2,000 $ 2,050
-------- ---------
TOTAL DIRECT U.S. GOVERNMENT OBLIGATIONS.............................. 2,000 2,050
-------- ---------
U.S. GOVERNMENT AGENCY OBLIGATIONS 99.44%
GNMA I PL Notes, 8.00% maturing 9/15/23 through 8/15/35..................... 4,692 4,757
GNMA I PL Notes, 8.15% maturing 1/15/24..................................... 2,334 2,411
GNMA I PL Notes, 8.25% maturing 11/15/96 through 11/15/34................... 11,903 12,171
GNMA I PL Notes, 8.50% maturing 6/15/22 through 12/15/30.................... 8,868 9,223
GNMA I PL Notes, 8.75% maturing 8/15/24 through 4/15/25..................... 3,614 3,777
GNMA I PL Notes, 9.00% maturing 10/15/21 through 12/15/34................... 7,997 8,336
GNMA I PL Notes, 9.25% maturing 3/15/30 through 2/15/33..................... 1,658 1,746
GNMA I PL Notes, 9.50% maturing 1/15/19 through 8/15/22..................... 1,309 1,343
GNMA I PL Notes, 9.75% maturing 12/15/25.................................... 1,879 1,981
GNMA I PL Notes, 10.25% maturing 2/15/17 through 12/15/22................... 1,644 1,705
GNMA I PL Notes, 10.50% maturing 7/15/14.................................... 1,039 1,080
GNMA I Notes, 8.00% maturing 10/15/24 through 5/15/25....................... 3,880 3,992
GNMA I Notes, 8.50% maturing 5/15/16 through 8/15/17........................ 11,463 12,032
GNMA I Notes, 8.75% maturing 12/15/16 through 1/15/25....................... 1,916 2,021
GNMA I Notes, 9.00% maturing 5/15/16 through 4/15/21........................ 23,411 24,837
GNMA I Notes, 9.50% maturing 4/15/16 through 3/15/20........................ 2,106 2,259
GNMA I Notes, 11.00% maturing 1/15/10 through 6/15/20....................... 6,775 7,605
GNMA II Notes, 9.00% maturing 10/20/15 through 10/20/19..................... 10,629 11,170
GNMA II Notes, 9.50% maturing 1/20/16 through 12/20/22...................... 5,331 5,649
GNMA II Notes, 10.00% maturing 1/20/14 through 12/20/21..................... 11,416 12,401
GNMA II Notes, 10.50% maturing 9/20/13 through 9/20/19...................... 2,421 2,639
GNMA II Notes, 11.00% maturing 10/20/13 through 1/20/21..................... 2,806 3,074
Fed. Home Loan Mtg. Corp., 7.00% maturing 9/01/10........................... 3,055 3,067
Fed. Home Loan Mtg. Corp., 7.50% maturing 5/01/09 through 6/01/10........... 5,318 5,414
Fed. Home Loan Mtg. Corp., 8.00% maturing 11/01/09 through 7/01/10.......... 6,000 6,171
-------- ---------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS.............................. 143,464 150,861
-------- ---------
REPURCHASE AGREEMENTS, FULLY COLLATERALIZED BY U.S. GOVERNMENT OBLIGATIONS 0.66%
Fifth Third Bank, 6.25%, dated 9/29/95, due 10/02/95........................ 1,000 1,000
-------- ---------
TOTAL REPURCHASE AGREEMENTS........................................... 1,000 1,000
-------- ---------
TOTAL INVESTMENTS (COST $152,787) 101.45%............................. $146,464 $153,911
======== =========
</TABLE>
GNMA -- Government National Mortgage Association
PL -- Project Loan
Cost also represents cost for Federal income tax purposes.
See accompanying notes to financial statements.
B-24
<PAGE> 55
CARDINAL GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS & LIABILITIES (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1995
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $152,787)........................... $ 153,911
Cash.......................................................................... 338
Interest receivable........................................................... 1,101
Receivable for Fund shares sold............................................... 23
Other assets.................................................................. 112
---------
Total assets........................................................ 155,485
---------
LIABILITIES
Payable for investment securities purchased................................... 3,094
Dividends payable............................................................. 405
Payable for Fund shares redeemed.............................................. 152
Accrued investment management, accounting and transfer agent fees (note 3).... 83
Other accrued expenses........................................................ 40
---------
Total liabilities................................................... 3,774
---------
COMMITMENTS AND CONTINGENCIES (NOTE 4)
NET ASSETS--applicable to 18,543,620 outstanding no par value shares of
beneficial interest (unlimited number of shares authorized)................. $ 151,711
=========
NET ASSET VALUE PER SHARE..................................................... $ 8.18
=========
</TABLE>
See accompanying notes to financial statements.
B-25
<PAGE> 56
CARDINAL GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest......................................................................... $13,679
-------
EXPENSES:
Investment management fees (note 3).............................................. 784
Transfer agent fees and expenses (note 3)........................................ 174
Accounting fees (note 3)......................................................... 41
-------
Total affiliated expenses............................................ 999
-------
Custodian fees................................................................... 47
Professional fees................................................................ 51
Reports to shareholders.......................................................... 33
Directors' fees.................................................................. 19
Registration fees................................................................ 7
Other expenses................................................................... 50
-------
Total non-affiliated expenses........................................ 207
-------
Total expenses....................................................... 1,206
-------
Net investment income................................................ 12,473
-------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS (NOTE 2):
Net realized loss from security transactions..................................... (4,514)
Increase in unrealized gain on investments....................................... 8,934
-------
Net realized loss and increase in unrealized gain on investments..... 4,420
-------
Net increase in net assets from operations........................... $16,893
========
</TABLE>
See accompanying notes to financial statements.
B-26
<PAGE> 57
CARDINAL GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
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................................................ $ 12,473 $ 14,842
Net realized loss from security transactions......................... (4,514) (5,070)
Increase (decrease) in unrealized gain on investments................ 8,934 (10,125)
-------- --------
Net increase (decrease) in net assets from operations........... 16,893 (353)
-------- --------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Distributions of net investment income ($.64 and $.65 per share,
respectively)...................................................... (12,572) (14,708)
-------- --------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 5):
Proceeds from sale of Fund shares.................................... 5,355 12,690
Net asset value of Fund shares issued in connection with reinvestment
of distributions to shareholders................................... 7,272 8,662
-------- --------
12,627 21,352
Cost of Fund shares redeemed......................................... (34,766) (45,645)
-------- --------
Decrease in net assets derived from capital share
transactions................................................... (22,139) (24,293)
-------- --------
Net decrease in net assets...................................... (17,818) (39,354)
NET ASSETS--beginning of period...................................... 169,529 208,883
-------- --------
NET ASSETS--end of period (overdistributed net investment income of
$100 and $2, respectively)......................................... $151,711 $169,529
========= =========
</TABLE>
See accompanying notes to financial statements.
B-27
<PAGE> 58
CARDINAL GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1995
(1) -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cardinal Government Obligations Fund (the "Fund") is a diversified, open-end
investment company created under the laws of Ohio by a Declaration of Trust
dated November 15, 1985 and is registered under the Investment Company Act of
1940. The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles for investment
companies.
Security Valuation -- Portfolio securities for which over-the-counter market
quotations are readily available are valued at the bid price. If no quotations
are available, portfolio securities are valued in good faith by the Board of
Trustees of the Fund to reflect their fair value.
Security Transactions and Investment Income -- Security transactions are
recorded on the trade date. Interest income is recorded on the accrual basis.
Premiums and discounts are recognized as realized gains or losses from security
transactions as securities are sold or as principal reductions are received. In
determining the net realized gain or loss on securities sold, the cost of the
securities has been determined on first-in, first-out (FIFO) cost basis.
Federal Income Taxes -- No provision has been made for Federal taxes on the
Fund's income, since it is the policy of the Fund 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, at net asset value, in additional shares of the Fund.
(2) -- PURCHASES AND SALES OF SECURITIES
Purchases and sales of U.S. government agency obligations (excluding short-term
obligations) during the year ended September 30, 1995 aggregated $57,596,492 and
$60,730,057, respectively.
As of September 30, 1995, gross unrealized gains and gross unrealized losses on
investment securities were $2,136,800 and $1,012,380, respectively; resulting in
a net unrealized gain of $1,124,420 on investment securities with a cost basis
of $152,786,945.
(3) -- TRANSACTIONS WITH AFFILIATES
As investment manager for the Fund, Cardinal Management Corp. (CMC), an
affiliated company, is allowed an annual fee of 0.5% 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 year ended September 30, 1995.
(continued)
B-28
<PAGE> 59
CARDINAL GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1995
CMC also serves the Fund 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 Fund. For the year ended September 30, 1995 the Fund paid or
accrued $174,394 and $40,879 for transfer agent and fund accounting services,
respectively.
The Ohio Company, sole shareholder of CMC, acting as distributor for the Fund,
reported that it received commissions after discounts to dealers from the sale
of shares of the Fund of $147,536 for the year ended September 30, 1995.
(4) -- COMMITMENTS AND CONTINGENCIES
The Fund has an available $5,000,000 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.
Fidelity Bond and Errors and Omissions insurance coverage for the Fund 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 Fund is a deposit of $30,644, for the initial capital of ICI
Mutual. The Fund is also committed to provide $91,932 should ICI Mutual
experience the need for additional capital contributions.
Included in other assets is a $61,000 certificate of deposit which
collateralizes a standby letter of credit in connection with the Fund's
participation in ICI Mutual. This amount is not available for investment.
(5) -- CAPITAL STOCK
At September 30, 1995, there were an unlimited number of shares of no par value
capital stock authorized and the capital amounts were as follows:
<TABLE>
<S> <C>
Paid in capital.................................................................... $ 173,076,183
Accumulated net realized loss on investments....................................... (22,389,694)
Unrealized gain on investments..................................................... 1,124,420
Overdistributed net investment income.............................................. (100,238)
-------------
Net assets......................................................................... $ 151,710,671
=============
</TABLE>
For tax purposes, the accumulated net realized loss on investments (capital loss
carryforwards) of approximately $22,800,000 expire throughout the next eight
years. Approximately $3,800,000 of capital loss carryforwards expired during the
year ended September 30, 1995. The Fund will not declare any capital gain
distributions until the carryforwards have been offset or expired.
B-29
<PAGE> 60
CARDINAL GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1995
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEARS ENDED
SEPTEMBER 30,
---------------------------
1995 1994
----------- -----------
<S> <C> <C>
Shares sold.......................................................... 669,572 1,514,461
Shares issued in connection with reinvestment of distributions to
shareholders....................................................... 908,617 1,045,107
----------- -----------
1,578,189 2,559,568
Shares repurchased................................................... (4,320,495) (5,478,768)
----------- -----------
Net decrease......................................................... (2,742,306) (2,919,200)
Shares outstanding:
Beginning of period.................................................. 21,285,926 24,205,126
----------- -----------
End of period........................................................ 18,543,620 21,285,926
========== ==========
</TABLE>
(6) -- SUBSEQUENT EVENT
On November 13, 1995 the Board of Trustees approved an Agreement and Plan of
Reorganization and Liquidation between the Fund and The Cardinal Group ("TCG").
The plan calls for the transfer of all assets and liabilities of the Fund 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 Fund and TCG. Shareholder approval will be sought and is
needed to ratify the transaction.
B-30
<PAGE> 61
- --------------------------------------------------------------------------------
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.............. $ 7.96 $ 8.63 $ 8.95 $ 8.99 $ 8.71
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income................. 0.64 0.66 0.74 0.80 0.81
Net realized and unrealized gains
(losses) on securities............. 0.22 (0.68) (0.32) (0.04) 0.28
-------- -------- -------- -------- --------
Total from investment operations........ 0.86 (0.02) 0.42 0.76 1.09
-------- -------- -------- -------- --------
Less distributions:
Dividends............................. (0.64) (0.65) (0.74) (0.80) (0.81)
-------- -------- -------- -------- --------
Net Asset Value, ending................. $ 8.18 $ 7.96 $ 8.63 $ 8.95 $ 8.99
========= ========= ========= ========= =========
Ratios/Supplemental Data:
Total return............................ 11.27% (0.27%) 4.83% 8.87% 13.07%
========= ========= ========= ========= =========
Net assets, ending (000)................ $151,711 $169,529 $208,883 $172,139 $128,569
========= ========= ========= ========= =========
Ratio of expenses to average net
assets................................ 0.76% 0.75% 0.73% 0.76% 0.76%
========= ========= ========= ========= =========
Ratio of net investment income to
average net assets.................... 7.93% 7.88% 8.32% 8.89% 9.20%
========= ========= ========= ========= =========
Portfolio turnover rate................. 36.71% 21.95% 24.94% 17.15% 34.81%
========= ========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
B-31
<PAGE> 62
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Shareholders and Board of Trustees
Cardinal Government Obligations Fund:
We have audited the accompanying statement of assets and liabilities of Cardinal
Government Obligations 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 years in
the five-year period then ended. 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 Government Obligations 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 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-32
<PAGE> 63
Registration Statement
of
CARDINAL GOVERNMENT OBLIGATIONS FUND
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
(10) Opinion of Counsel with respect to
Shares of Registrant being registered
pursuant to Section 24(e)(1) of the
Investment Company Act of 1940.
(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
<PAGE> 64
Item 25. Persons Controlled or Under Common Control With Registrant
----------------------------------------------------------
None
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 6,448
</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
FUND?" contained in Prospectus and "MANAGEMENT OF THE FUND" 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 and
155 East Broad Street Director
Columbus, Ohio 43215
Cardinal Financial Secretary/Treasurer and
Management Corp. Director
155 East Broad Street
Columbus, Ohio 43215
</TABLE>
2-C
<PAGE> 65
<TABLE>
<S> <C> <C>
H. Keith Allen Midwest Parking, Inc. Secretary/Treasurer
(continued) 155 East Broad Street and Director
Columbus, Ohio 43215
Insurance Ohio Company Secretary/Treasurer and
Agency Director
55 East Broad Street
Columbus, Ohio 43215
Ohio Equities Inc. Secretary/Treasurer
395 East Broad Street and Director
Columbus, Ohio 43215
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 Securities Trust Chairman and Trustee
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 Securities Trust President and Trustee
155 East Broad Street
Columbus, Ohio 43215
The Cardinal Group President and Trustee
155 East Broad Street
Columbus, Ohio 43215
</TABLE>
3-C
<PAGE> 66
<TABLE>
<S> <C> <C>
Keystone Group Vice President
200 Berkeley Street
Boston, Massachusetts 02116
Trust Advisory Group Senior Vice President
1 Morningstar Drive North
Westport, Connecticut 06880
</TABLE>
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 Securities Trust, 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 Securities Trust, 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 Chief Executive Officer and Director
Columbus, Ohio 43215
William C. Wolfe Director
155 East Broad Street
Columbus, Ohio 43215
H. Keith Allen Chief Operating Officer, Secretary, Chairman and Trustee,
155 East Broad Street Treasurer and Director Member of Ex-ecutive and
Columbus, Ohio 43215 Nominating Committees
John P. Campbell Senior Executive Vice President and
155 East Broad Street 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 General Sales
Columbus, Ohio 43215 Manager
</TABLE>
4-C
<PAGE> 67
<TABLE>
<S> <C> <C>
Martin H. Vogtsberger Senior Executive Vice President and
155 East Broad Street Director
Columbus, Ohio 43215
Thomas A. Brownfield Senior Vice President
155 East Broad Street
Columbus, Ohio 43215
James A. Francis Senior Vice President/ Compliance
155 East Broad Street
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 Management
155 East Broad Street
Columbus, Ohio 43215
John R. Carle Vice President/Cardinal
155 East Broad Street Government Obligations Fund
Columbus, Ohio 43215
</TABLE>
5-C
<PAGE> 68
<TABLE>
<CAPTION>
Name and Principal Position and Offices Positions and Offices
Business Address with Underwriter with Registrant
------------------ -------------------- ---------------------
<S> <C> <C>
Mark R. Chambers Vice President/Public
155 East Broad Street Finance-Negotiated
Columbus, Ohio 43215
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 Management
155 East Broad Street
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
</TABLE>
6-C
<PAGE> 69
<TABLE>
<CAPTION>
Name and Principal Position and Offices Positions and Offices
Business Address with Underwriter with Registrant
------------------ -------------------- ---------------------
<S> <C> <C>
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
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/Telecommunications
155 East Broad Street
Columbus, Ohio 43215
Mark E. Backes Assistant Vice President/ Operations
155 East Broad Street
Columbus, Ohio 43215
Roger W. Butler Assistant Vice President/ Compliance
155 East Broad Street
Columbus, Ohio 43215
James W. Carey Assistant Vice President/ Corporate
155 East Broad Street Finance
Columbus, Ohio 43215
Scott E. Decker Assistant Vice President/ Trust-
155 East Broad Street Internal Auditor
Columbus, Ohio 43215
William J. Denehy Assistant Vice President/ Corporate
155 East Broad Street Bond Trading
Columbus, Ohio 43215
David G. Duncan Assistant Vice President/ Syndicate
155 East Broad Street
Columbus, Ohio 43215
</TABLE>
7-C
<PAGE> 70
<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/ Sales
155 East Broad Street
Columbus, Ohio 43215
Ronald G. Hall Assistant Vice President/ Operations
155 East Broad Street
Columbus, Ohio 43215
Helen J. Huntington Assistant Vice President/ Operations
155 East Broad Street
Columbus, Ohio 43215
Jon P. Jones Assistant Vice President/ Municipal
155 East Broad Street Trading
Columbus, Ohio 43215
Donna M. Knapp Assistant Vice President/ Operations
155 East Broad Street
Columbus, Ohio 43215
Lawrence W. Landenberger Assistant Vice President/ Operations
155 East Broad Street
Columbus, Ohio 43215
Matthew E. Lee Assistant Vice President/ Trading
155 East Broad Street
Columbus, Ohio 43215
Virginia L. McCargish Assistant Vice President/ Operations
155 East Broad Street
Columbus, Ohio 43215
Kevin P. Morrow Assistant Vice President/ Research
155 East Broad Street
Columbus, Ohio 43215
Richard D. Oltean Assistant Vice President/ Trust-
155 East Broad Street Qualified Plans
Columbus, Ohio 43215
Mark Ostroske Assistant Vice President/ Asset
155 East Broad Street Management
Columbus, Ohio 43215
</TABLE>
8-C
<PAGE> 71
<TABLE>
<CAPTION>
Name and Principal Position and Offices Positions and Offices
Business Address with Underwriter with Registrant
------------------ -------------------- ---------------------
<S> <C> <C>
E. Eugene Robinson Assistant Vice President/ Research
155 East Broad Street
Columbus, Ohio 43215
Michael C. Roney Assistant Vice President/ Asset
155 East Broad Street Management
Columbus, Ohio 43215
David A. Seely, Jr. Assistant Vice President/ Operations
155 East Broad Street
Columbus, Ohio 43215
Susan H. Shaw Assistant Vice President/ National
155 East Broad Street Syndicate
Columbus, Ohio 43215
Ronald J. Trubinsky Assistant Vice President/ Corporate
155 East Broad Street Bond Trading
Columbus, Ohio 43215
Douglas J. Walouke Assistant Vice President/ Corporate
155 East Broad Street Bond Trading
Columbus, Ohio 43215
Richard J. Wayman Assistant Vice President/ Research
155 East Broad Street
Columbus, Ohio 43215
Lori A. Wells Assistant Vice President/ Technical
155 East Broad Street 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).
9-C
<PAGE> 72
Item 31. Management Services
-------------------
None.
Item 32. Undertakings
------------
None.
10-C
<PAGE> 73
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 OBLIGATIONS FUND
By /s/ Frank W. Siegel
-------------------------------------
Frank W. Siegel, President
11-C
<PAGE> 74
<TABLE>
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.
<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>
12-C
<PAGE> 75
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
----------- ---------------------------- ----
<S> <C>
(10) Opinion of Counsel with respect to Shares
of Registrant being registered pursuant
to Section 24(e)(1) of the Investment
Act of 1940
(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>
13-C
<PAGE> 76
As filed with the Securities and Exchange Commission January 19, 1996
1933 Act Registration No. 33-1613
1940 Act File No. 811-4475
EXHIBITS TO
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / x /
Post-Effective Amendment No. 12 / x /
and
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 / x /
Amendment No. 13 / x /
Cardinal Government Obligations Fund
(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 (10)
<PAGE> 2
____________________
BAKER
&
HOSTETLER
____________________
COUNSELLORS AT LAW
- ------------------------------------------------------------------------------
Capitol Square, Suite 2100 . 65 East State Street . Columbus, Ohio 43215-4260 .
(614) 228-1541
January 17, 1996
Cardinal Government Obligations Fund
155 East Broad Street
Columbus, Ohio 43215
Subject: CARDINAL GOVERNMENT OBLIGATIONS FUND (THE "FUND") --
POST-EFFECTIVE AMENDMENT NO. 12 TO REGISTRATION
STATEMENT ON FORM N-1A, FILE NO. 33-1613, FILED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
AMENDMENT NO. 13 TO REGISTRATION STATEMENT ON FORM
N-1A, FILE NO. 811-4475, FILED UNDER THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED (THE "AMENDMENT")
Ladies and Gentlemen:
In connection with the filing of the Amendment, it is our opinion
that, upon the effectiveness of the Amendment, the 3,668,335 shares of
beneficial interest, without par value, of Cardinal Government Obligations
Fund, when issued as described in the Amendment and for the consideration
described in the Amendment, will be legally issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Amendment.
Very truly yours,
BAKER & HOSTETLER
<PAGE> 1
Exhibit (11)
<PAGE> 2
CONSENT OF KPMG PEAT MARWICK LLP
To the Board of Trustees
Cardinal Government Obligations Fund
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
[CIK] 0000783413
[NAME] CARDINAL GOVERNMENT OBLIGATIONS FUND
[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] 153,911
[INVESTMENTS-AT-VALUE] 0
[RECEIVABLES] 1,124
[ASSETS-OTHER] 112
[OTHER-ITEMS-ASSETS] 338
[TOTAL-ASSETS] 155,485
[PAYABLE-FOR-SECURITIES] 3,094
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 680
[TOTAL-LIABILITIES] 3,774
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 173,076
[SHARES-COMMON-STOCK] 18,544
[SHARES-COMMON-PRIOR] 21,286
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 100
[ACCUMULATED-NET-GAINS] (22,390)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 1,124
[NET-ASSETS] 151,711
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 13,679
[OTHER-INCOME] 0
[EXPENSES-NET] 1,206
[NET-INVESTMENT-INCOME] 12,473
[REALIZED-GAINS-CURRENT] (4,514)
[APPREC-INCREASE-CURRENT] 8,934
[NET-CHANGE-FROM-OPS] 16,893
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 12,572
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 5,355
[NUMBER-OF-SHARES-REDEEMED] 34,766
[SHARES-REINVESTED] 7,272
[NET-CHANGE-IN-ASSETS] (17,818)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (21,655)
[OVERDISTRIB-NII-PRIOR] 2
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 784
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1,206
[AVERAGE-NET-ASSETS] 157,936
[PER-SHARE-NAV-BEGIN] 7.96
[PER-SHARE-NII] 0.64
[PER-SHARE-GAIN-APPREC] 0.22
[PER-SHARE-DIVIDEND] 0.64
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 8.18
[EXPENSE-RATIO] 0.76%
[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 Obligations Fund (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 Obligations Fund (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/ H. 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 Obligations Fund (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 Obligations Fund (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 Obligations Fund (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 Obligations Fund (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 Obligations Fund (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 Obligations Fund (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 Obligations Fund (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 Obligations Fund (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 Obligations Fund (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
---------------------------------
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. 33-1613,
filed under the Securities Act of 1933, as amended, of Cardinal Government
Obligations Fund.
Columbus, Ohio
January 17, 1996 BAKER & HOSTETLER
