<PAGE> 1
'33 Act File No. 33-21951
'40 Act File No. 811-5559
As filed with the Securities and Exchange Commission
----------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 9
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 10
FINANCIAL HORIZONS INVESTMENT TRUST
(Exact Name or Registrant as Specified in Charter)
One Nationwide Plaza
Columbus, Ohio 43215
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (614) 249-7855
Ms. Rae I. Mercer Send Copies of Communication to:
One Nationwide Plaza Druen, Rath & Dietrich
Columbus, Ohio 43215 One Nationwide Plaza
(Name and Address of Agent for Columbus, Ohio 43215
Service)
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It is proposed that this filing will become effective on February 29, 1996,
pursuant to paragraph (b) of Rule 485.
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Pursuant to Rule 24f-2, the Registrant has declared an indefinite number of
its shares of beneficial interest registered. Registrant filed its Rule 24f-2
Notice for the fiscal year ended October 31, 1995, on December 19, 1995.
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FINANCIAL HORIZONS INVESTMENT TRUST
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CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
N-1A Item No. Location
- ------------- --------
<S> <C>
PART A
Item 1. Cover Page ..................................... Cover Page
Item 2. Synopsis ....................................... Summary of Trust Expenses
Item 3. Condensed Financial Information ................ Financial History of the Trust
Item 4. General Description of Registrant .............. Cover Page
Investment Objectives and Policies
Item 5. Management of the Fund ......................... Management of the Trust
Item 6. Capital Stock and Other Securities ............. Additional Information
Item 7. Purchase of Securities Being Offered ........... How To Invest
Item 8. Redemptions or Repurchase ...................... How to Redeem Shares
Item 9. Pending Legal Proceedings ...................... *
PART B
Item 10. Cover Page ..................................... Cover Page
Item 11. Table of Contents .............................. Table of Contents
Item 12. General Information and History ................ General Information and History
Item 13. Investment Objectives and Policies ............. Additional Information As To Investment
Objectives and Policies; Investment
Restrictions
Item 14. Management of the Registrant ................... Trustees and Officers of the Trust
Item 15. Control Persons and Principal Holders
of Securities ................................ Major Shareholders
Item 16. Investment Advisory and Other Services ......... Investment Manager and Other Services
Item 17. Brokerage Allocation ........................... Brokerage Allocation
Item 18. Capital Stock and Other Securities ............. Major Shareholders
Item 19. Purchase, Redemption and Pricing of
Securities Being Offered ..................... Purchases, Redemptions and Pricing of Shares
Item 20. Tax Status ..................................... Tax Status
Item 21. Underwriters ................................... *
Item 22. Calculation of Yield Quotations of
Money Market Funds ........................... Calculating Yield - Cash Reserve Fund
Item 23. Financial Statements ........................... Financial Statements
PART C
Information required to be included in Part C is set forth under the appropriate item, numbered, in Part C to this Registration
Statement.
<FN>
___________________________
* Not applicable or negative answer
</TABLE>
<PAGE> 3
PART A: PROSPECTUS
FEBRUARY 29, 1996
FINANCIAL HORIZONS INVESTMENT TRUST FINANCIAL HORIZONS INVESTMENT TRUST
- CASH RESERVE FUND P.O. Box 1492
- GOVERNMENT BOND FUND One Nationwide Plaza
- MUNICIPAL BOND FUND Columbus, Ohio 43216-1492
- GROWTH FUND For Information and Assistance, Call
1-800-848-0920
Financial Horizons Investment Trust ("Trust") is an open-end,
diversified investment company organized under the laws of Massachusetts, by a
Declaration of Trust, dated May 9, 1988. The Trust offers shares in four
separate series ("Funds"), each with its own investment objective.
The investment objective of the Cash Reserve Fund is to seek as high a
level of current income as is consistent with the preservation of capital and
maintenance of liquidity through investing in a diversified portfolio of high
quality money market instruments maturing in 397 days or less.
The investment objective of the Government Bond Fund is to provide as
high a level of income as is consistent with capital preservation from
securities issued or guaranteed as to principal and interest by the U.S.
Government, its agencies, authorities or instrumentalities.
The investment objective of the Municipal Bond Fund is to provide as
high a level of municipal income as is consistent with the preservation of
capital through investing in diversified portfolio of investment grade
municipal bonds.
The investment objective of the Growth Fund is to provide long-term
capital appreciation through investing in equity securities with above average,
long-term growth potential.
TABLE OF CONTENTS
SUMMARY OF TRUST EXPENSES........... 2 HOW TO REDEEM SHARES............... 11
FINANCIAL HIGHLIGHTS................ 3 ADDITIONAL INFORMATION............. 13
INVESTMENT OBJECTIVES AND POLICIES.. 4 NET INCOME AND DISTRIBUTIONS....... 14
MANAGEMENT OF THE TRUST............. 8 TAX STATUS......................... 14
HOW TO INVEST....................... 9 DESCRIPTION OF SECURITIES.......... 15
PRIVILEGES AND SERVICES............. 10 INVESTMENT TECHNIQUES.............. 17
This Prospectus provides you with the basic information you should
know before investing in shares of the Trust. You should read it and keep
it for future reference. A Statement of Additional Information, dated
February 29, 1996, has been filed with the Securities and Exchange Commission.
You can obtain a copy without charge by calling 1-800-848-0920 or writing
Nationwide Financial Services, Inc., P.O. Box 1492, One Nationwide Plaza,
Columbus, Ohio 43216-1492.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
AN INVESTMENT IN THE CASH RESERVE FUND IS NEITHER INSURED NOR GUARANTEED BY THE
U.S. GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE CASH RESERVE FUND WILL
BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
Unlike certificates of deposits and other traditional bank
products, shares of Financial Horizons Investment Trust are not
deposits or obligations of, or guaranteed or insured by, any bank or
financial institution, the Federal Deposit Insurance Corporation
(FDIC), the Federal Reserve Board or any other state or federal agency.
Shares of Financial Horizons Investment Trust are subject to risk,
including possible loss of principal, and may fluctuate in value.
Financial Horizons Investment Trust shares are offered by licensed
registered representatives of various broker-dealers and not by your
bank or other financial institution. Your bank or other financial
institution is not a broker-dealer.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED FEBRUARY 29, 1996,
IS INCORPORATED HEREIN BY REFERENCE.
1
<PAGE> 4
SUMMARY OF TRUST EXPENSES
The purpose of this summary is to assist an investor in understanding
the various costs and expenses that will be borne directly or indirectly by
investing in the Funds. For a more detailed explanation of these expenses, see
"Management of the Trust" and "How to Redeem Shares."
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
CASH GOVERNMENT MUNICIPAL
RESERVE BOND BOND GROWTH
------- ---- ---- ------
<S> <C> <C> <C> <C>
Maximum Sales Load
Imposed on Purchases None None None None
Maximum Sales Load Imposed
on Reinvested Dividends None None None None
Redemption or Exchange Fees None None None None
Deferred Sales Load (as a
percent of redemption
proceeds) None 5.00% 5.00% 5.00%
</TABLE>
A deferred sales load is imposed at the following declining rates for
applicable Funds. If you choose to have your redemption wired to your bank,
a $5 wire transfer fee will be deducted from the proceeds. (See "How to
Redeem Shares.")
<TABLE>
<CAPTION>
Months Since Purchase Percentage of
Payments Made Redemption Proceeds
------------- -------------------
<S> <C>
0-12 5.00%
13-24 5.00%
25-36 4.00%
37-48 3.00%
49-60 2.00%
61-72 1.00%
73 & thereafter 0.00%
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<CAPTION>
CASH GOVERNMENT MUNICIPAL
RESERVE BOND BOND GROWTH
------- ---- ---- ------
<S> <C> <C> <C> <C>
Management Fees 0.40% 0.65% 0.65% 0.65%
12b-1 Fees* 0.00% 0.50%* 0.50%* 0.50%*
Other Expenses 0.25% 0.18% 0.20% 0.32%
Gross Expenses 0.65% 1.33% 1.35% 1.47%
Expense Waiver** -- (0.44%)** -- --
Net Expenses 0.65% 0.89% 1.35% 1.47%
</TABLE>
The expenses and fees set forth in the above table and the following
example are for the fiscal year ended October 31, 1995.
*The Distributor will waive .25% of the total .75% 12b-1 fee on applicable
funds for at least through February 28, 1997.
**For the year ended October 31, 1995, the distributor waived an additional
.44% of 12b-1 fees pursuant to NASD guidelines which limit sales charges
and distribution fees. The amount of this waiver is dependent upon fund
share purchase activity, and therefore it may be higher or lower in the
1996 fiscal year.
Example:
The following table illustrates the expenses an investor would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual return
and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
CASH GOVERNMENT MUNICIPAL
RESERVE BOND BOND GROWTH
------- ---- ---- ------
<S> <C> <C> <C> <C>
1 Year $ 7 $ 59 $ 64 $ 65
3 Years $21 $ 68 $ 83 $ 86
5 Years $36 $ 69 $ 94 $100
10 Years $81 $110 $162 $176
</TABLE>
You would pay the following expenses on the same investment, assuming
no redemption:
<TABLE>
<CAPTION>
CASH GOVERNMENT MUNICIPAL
RESERVE BOND BOND GROWTH
------- ---- ---- ------
<S> <C> <C> <C> <C>
1 Year $ 7 $ 9 $ 14 $ 15
3 Years $21 $ 28 $ 43 $ 46
5 Years $36 $ 49 $ 74 $ 80
10 Years $81 $110 $162 $176
</TABLE>
The above example is based on data for the Funds' fiscal yeare ended
October 31, 1995.
The above example should not be considered a representation of future
expenses. Actual expenses may be greater or less than those shown.
2
<PAGE> 5
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Net
Realized Distributions
Gain from
Net (Loss) Dividends Net Net
Asset Net and Total from Realized Asset
Value- Investment Unrealized from Net Gain from Total Value-
Beginning Income Appreciation Investment Investment Investment Distribu- End of
of Period (Loss) (Depreciation) Operations Income Transactions tions Period
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
GROWTH FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$10.00 $.25 $ .34 $ .59 $(.11) $ -- $(.11) $10.48 1989**
10.48 .32 (1.90) (1.58) (.25) -- (.25) 8.65 1990
8.65 .17 3.72 3.89 (.30) (.25) (.55) 11.99 1991
11.99 .22 .43 .65 (.18) -- (.18) 12.46 1992
12.46 .08 1.73 1.81 (.10) -- (.10) 14.17 1993
14.17 .03 .95 .98 (.04) -- (.04) 15.11 1994
15.11 (.01) 3.23 3.22 (.01) (.15) (.16) 18.17 1995
MUNICIPAL BOND FUND
$10.00 $.51 $ .19 $ .70 $(.51) $ -- $(.51) $10.19 1989**
10.19 .68 (.15) .53 (.68) (.04) (.72) 10.00 1990
10.00 .65 .61 1.26 (.65) -- (.65) 10.61 1991
10.61 .61 .07 .68 (.61) (.04) (.65) 10.64 1992
10.64 .56 1.22 1.78 (.56) (.11) (.67) 11.75 1993
11.75 .49 (1.62) (1.13) (.49) (.27) (.76) 9.86 1994
9.86 .50 .90 1.40 (.50) -- (.50) 10.76 1995
GOVERNMENT BOND FUND
$10.00 $.73 $ .41 $1.14 $(.73) $ -- $(.73) $10.41 1989**
10.41 .96 (.28) .68 (.96) -- (.96) 10.13 1990
10.13 .90 .68 1.58 (.89) (.01) (.90) 10.81 1991
10.81 .89 .25 1.14 (.89) (.06) (.95) 11.00 1992
11.00 .63 .50 1.13 (.66) (.16) (.82) 11.31 1993
11.31 .58 (1.10) (.52) (.58) (.09) (.67) 10.12 1994
10.12 .68 .95 1.63 (.68) -- (.68) 11.07 1995
CASH RESERVE FUND
$ 1.00 $.06 $ -- $ .06 $(.06) $ -- $(.06) $ 1.00 1989**
1.00 .07 -- .07 (.07) -- (.07) 1.00 1990
1.00 .05 -- .05 (.05) -- (.05) 1.00 1991
1.00 .03 -- .03 (.03) -- (.03) 1.00 1992
1.00 .02 -- .02 (.02) -- (.02) 1.00 1993
1.00 .03 -- .03 (.03) -- (.03) 1.00 1994
1.00 .05 -- .05 (.05) -- (.05) 1.00 1995
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Net Net
Investment Investment
Income Income
Expenses (Loss) to Expenses (Loss) to Net Assets
to Average Average to Average Average at End of
Total Net Net Net Net Portfolio Period
Return Assets Assets Assets* Assets* Turnover (000's)
RATIOS/SUPPLEMENTAL DATA ASSETS
GROWTH FUND
<S> <C> <C> <C> <C> <C> <C> <C>
6.5% 1.48% 2.62% 2.17% 1.73% 22.4% $ 531 1989**
(15.5) 1.42 3.49 2.17 2.73 47.5 526 1990
46.7 1.20 2.01 1.95 1.26 5.7 1,175 1991
5.4 1.27 1.45 2.02 .70 12.1 3,095 1992
14.6 1.44 0.63 2.03 .05 13.0 5,165 1993
6.9 1.59 0.21 1.90 (.82) 14.1 6,787 1994
21.6 1.47 (.05) 1.72 (.30) 29.2 7,594 1995
MUNICIPAL BOND FUND
8.2% 1.43% 5.79% 2.12% 4.65% 34.5% $ 1,073 1989**
4.8 .69 6.63 2.10 5.25 16.1 1,709 1990
13.0 .30 6.28 1.69 4.85 45.1 5,632 1991
6.6 .65 5.65 1.62 4.68 58.0 14,641 1992
17.2 1.01 4.81 1.61 4.11 47.0 25,858 1993
(10.1) 1.27 4.58 1.57 4.28 69.7 26,412 1994
14.5 1.35 4.82 1.60 4.57 60.8 25,806 1995
GOVERNMENT BOND FUND
13.5% 1.42% 8.33% 2.11% 6.98% --% $ 1,119 1989**
6.9 -- 9.32 1.98 7.37 51.0 3,150 1990
16.3 -- 8.22 1.73 6.49 95.3 25,873 1991
10.9 .65 8.18 1.66 7.17 87.7 64,249 1992
10.8 1.00 5.55 1.61 4.93 143.6 84,602 1993
(4.8) 1.28 5.42 1.58 5.12 174.4 70,218 1994
16.7 .89 6.42 1.58 5.73 140.6 69,190 1995
CASH RESERVE FUND
7.5% 1.53% 7.39% 2.23% 6.17% --% $ 2,133 1989**
6.9 1.46 6.64 2.21 5.87 -- 2,413 1990
5.3 1.06 5.10 1.81 4.34 -- 2,416 1991
3.1 1.06 3.02 1.82 2.28 -- 2,538 1992
2.1 1.17 2.04 2.20 .79 -- 2,788 1993
3.1 .84 3.14 1.06 2.92 -- 3,950 1994
5.4 .65 5.29 -- -- -- 4,150 1995
<FN>
* Ratios calculatged as if no expenses were waived.
** Period from December 19, 1988 (commencement of operations) through October
31, 1989. Total return and ratios are annualized for periods of less than
twelve months.
The information in the above table has been audited by KPMG Peat Marwick LLP
Independent Auditors, whose report appears in the Statement of Additional
Information. The Statement of Additional Information and the Annual Report,
which contains further information about the Fund's performance may be obtained
free of charge by calling 1-800-848-0920.
</TABLE>
3
<PAGE> 6
WHAT IS A MUTUAL FUND?
A mutual fund is an investment company which makes investments on
behalf of many individuals who share common goals. The money from all of the
investors, whether a large or small amount, is pooled with that of others.
Professional money managers then invest that pooled money in stocks, bonds or
other securities, that, in the manager's judgment, will help the investors to
achieve their objectives. Each investor, or shareholder, has a beneficial
ownership of a share of the assets in the fund. This structure enables the
smallest investors to enjoy the same rates of return and benefits of
diversification that are generally reserved for only the most affluent
investors.
WHAT ARE SOME OF THE ADVANTAGES OF INVESTING IN A FUND?
DIVERSIFICATION
We all know it's not wise to place all of our investment dollars into
one basket. In a mutual fund, managers generally distribute the shareholders'
dollars among dozens of securities, thereby reducing the risk inherent in
owning a smaller number of securities.
PROFESSIONAL MANAGEMENT
Professional money managers make decisions regarding the purchase and
sale of securities within the funds. Their decisions are based on extensive
research and analysis. Very few individual investors have the time or the
expertise to duplicate their efforts.
LIQUIDITY
As a mutual fund investor, you can redeem all or part of your shares on
any business day. Since the value of your beneficial ownership of a share of
the fund may fluctuate from day to day, the amount you receive upon redemption
may be more or less than your original investment.
CONVENIENCE
As a shareholder, you can expect to receive confirmations and
statements involving the ownership of your shares, including information
relevant to dividends and capital gains (if any). In addition, you may make
purchases or sales of your shares on any business day that the financial
markets are open.
A VARIETY OF CHOICES
Many funds, such as the Financial Horizons Investment Trust funds,
offer a variety of funds, known as a "family." Each of the funds offers a
different investment objective, ranging from the more conservative to the more
aggressive. As your needs change, you may find it advantageous to transfer all
or a part of your money to another fund within the family.
INVESTMENT OBJECTIVES AND POLICIES
The Trust is designed to enable long-term investors to pursue a wide
range of financial goals and to shift assets among the different Funds in
response to changing personal objectives or economic conditions.
Investments in each of the Funds of the Trust are made in many different
securities which provide diversification to reduce risk. While there is careful
selection and constant supervision by a team of professional investment
managers, there can be no guarantee that the Funds' objectives will be achieved.
Shareholder approval is required to change each Fund's investment objective and
to change the investment restrictions of the Trust.
CASH RESERVE FUND
The Cash Reserve Fund is designed to seek as high a level of current
income as is considered consistent with the preservation of capital and
liquidity through investments in a portfolio of money market instruments with a
remaining maturity of 397 days or less. The Fund seeks to achieve its
objective by investing in instruments receiving a rating in one of the two
highest categories by the following six nationally recognized statistical
rating organizations (NRSROs): Duff and Phelps, Inc. (D&P); Fitch Investors
Services, Inc. (Fitch); Moody's Investors Service, Inc. (Moody's); Standard &
Poors Corp. (S&P); IBCA Limited and its affiliate, IBCA, Inc. (IBCA); and
Thomson Bank Watch (Thomson).
The types of instruments in which the Fund may invest are:
-Obligations issued or guaranteed as to interest and principal by the
U.S. government, its agencies or instrumentalities, or any federally chartered
corporation.
4
<PAGE> 7
-Repurchase Agreements may be entered into by the Fund in respect to
any of the securities described above. The agreement is to purchase
obligations, which the Fund is qualified to purchase, and at the same time the
Fund resells it to the vendor and is obligated to redeliver the security to the
vendor on an agreed date in the future and at an agreed price. The resale price
is in excess of the purchase price and unrelated to the rate on the purchased
security. These transactions afford the Fund an opportunity to earn, at no
market risk, a return on cash which is only temporarily available. However, no
more than 10% of its assets may be subject to repurchase agreements maturing in
more than seven days. Potential risks associated with investment in repurchase
agreements are twofold: 1) in the event of default of an issuer and a decrease
in the value of the underlying securities below the repurchase price, the Fund
could suffer a loss; and 2) in the event of an issuer's bankruptcy, a Fund's
ability to dispose of underlying securities could be delayed.
-Obligations of banks which, at the date of investment, are rated A2 or
better by IBCA and TBW1 by Thomson, and have total assets in excess of $500
million, and the obligations of the 50 largest foreign banks in terms of assets
with branches or agencies in the United States. Obligations of savings and loan
associations (including certificates of deposit and bankers' acceptances) which
at the date of investment have capital, surplus, and undivided profits (as of
the date of their most recently published financial statements) in excess of
$500 million; and obligations of other banks or savings and loan associations
if such obligations of other banks or savings and loan associations are insured
by the Federal Deposit Insurance Coporation, provided that not more than 10% of
the Fund's total assets shall be invested in such insured obligations.
-Taxable or partly taxable obligations issued by state, county, or
municipal governments.
-Commercial Paper which at the date of investment is rated Duff 1 or
Duff 2 by D&P, F-1 or F-2 by Fitch, P-1 or P-2 by Moody's, or A-1 or A-2 by
S&P; or if not rated, is issued or guaranteed as to payment of principal and
interest by companies which at the date of investment have an outstanding debt
issue rated AA or Better by D&P, AA or better by Fitch, Aa or better by
Moody's, or AA or better by S&P.
The Fund may also invest up to 5% of its total assets in commercial
paper which at the date of investment is rated F-2 by Fitch, Duff 2 by D&P, P-2
by Moody's, or A-2 by S&P. However, the Fund is limited as to the amount it may
invest in the commercial paper of a single issuer to the greater of 1% of the
Fund's total assets or $1 million.
-Short-term corporate obligations which, at the date of investment, are
rated AA or better by D&P, AA or better by Fitch, Aa or better by Moody's, or
AA or better by S&P.
-Bank loan participation agreements representing corporations and banks
having a short-term rating, at the date of investment, of F-1 or F-2 by Fitch,
Duff 1 or Duff 2 by D&P, P-1 or P-2 by Moody's, or A-1 or A-2 by S&P, under
which the fund will look to the creditworthiness of the lender bank, which is
obligated to make payments of principal and interest on the loan, as well as to
the creditworthiness of the borrower.
The Fund may invest in securities of foreign corporate issuers and in
the securities of foreign branches of U.S. banks, such as negotiable
certificates of deposit (Eurodollars) in U.S. dollar denominations which at the
date of investment are rated A1 or A2 by IBCA or TBW1 by Thomson. Because of
this, investment in the Fund involves risks that are different in some respects
from an investment in a fund which invests only in debt obligations of U.S.
domestic issuers. Such risks may include: future political and economic
developments; the possible imposition of foreign withholding taxes on interest
income payable on the securities held in the portfolio; possible seizure or
nationalization of foreign deposits, the possible establishment of exchange
controls, or the adoption of other foreign governmental restrictions which
might adversely affect the payment of principal and interest on securities in
the portfolio.
All the assets of the Fund will be invested in obligations with stated
remaining maturities of 397 days or less and which generally will be held to
maturity. The Fund will, to the extent feasible, make portfolio investments
primarily in anticipation of or in response to, changing business, economic and
financial conditions. The Fund will attempt to maximize the return on its
investments through careful analysis of a wide range of investments available
and the different yield relationships existing among various sectors of the
market. The dollar weighted average maturity of the Fund's investment may not
exceed 90 days. There can, however, be no assurance that the Fund's investment
objective will be achieved.
5
<PAGE> 8
The Cash Reserve Fund is designed for investors who are seeking a place
to temporarily invest funds while awaiting opportunities in other markets or
for those investors who are currently unsure in which of the other Funds to
invest.
A description of NRSRO ratings is found in the Appendix to the
Statement of Additional Information on page 10.
GOVERNMENT BOND FUND
The investment objective of the Government Bond Fund ("Government
Fund") is to provide as high a level of income as is consistent with the
preservation of capital.
The Government Fund will normally invest at least 65% of its assets in
bonds issued by the U.S. government, and its agencies and instrumentalities
(see Description of Securities, U.S. Government Securities, p. 15). These
bonds pay interest at regular intervals, usually semi-annually, and pay
principal at maturity.
The Government Fund may invest up to 35% of its assets in zero coupon
securities (see "Description of Securities, Zero Coupon Securities," p. 16) or
mortgage-related securities (see Description of Securities, Mortgage-Related
Securities, p. 16) and up to 20% of its assets in securities purchased on a
"when-issued" or on a "forward delivery" basis (see Investment Techniques,
When-Issued Securities, p. 17).
The Government Fund may also enter into repurchase agreements (see
Investment Techniques, Repurchase Agreements, p. 17) in any of the securities
described above.
The Government Fund will normally invest no more than 20% of its assets
in repurchase agreements or in U.S. Government Securities maturing in less than
one year (see Statement of Additional Information for a further discussion of
the risks associated with bond funds). For temporary defensive purposes,
however, the Fund may invest up to 100% of its assets in these securities.
There is minimal default risk involved in the purchase of U.S.
government or U.S. government guaranteed securities. Securities issued by U.S.
government agencies or instrumentalities, while perhaps having the implicit
backing of the U.S. government, may not have an explicit guarantee of the
payment of principal and interest (see Description of Securities, U.S.
Government Securities, p. 15).
The value of shares of the Government Fund will vary inversely with
changes in interest rates. As with any fixed income investment, interest rate
risk (when interest rates decline, the market value of a portfolio invested at
higher yields can be expected to rise; conversely, when interest rates rise,
the market value of a portfolio invested at lower yields can be expected to
fall) does exist. While the Government Fund will engage in portfolio trading
(shortening the average maturity of the portfolio in anticipation of a rise in
interest rates so as to minimize depreciation of principal or lengthening the
portfolio in anticipation of a decline in interest rates so as to maximize
appreciation of capital) to manage this risk, there is no assurance that
capital will be preserved. Thus, the Government Fund is designed for those
willing to accept market fluctuations to obtain income.
MUNICIPAL BOND FUND
The investment objective of the Municipal Bond Fund ("Municipal Fund")
is to provide as high a level of municipal income as is consistent with the
preservation of capital. Municipal income is used herein to mean income earned
on municipal obligations. The Municipal Fund will normally invest at least 65%
of the value of its total assets in debt securities generally called bonds.
A fundamental policy of the Municipal Fund is that it will normally
invest at least 80% of its assets in the following municipal obligations (see
Description of Securities, Municipal Obligations, p. 17): (a) municipal bonds
rated within the four highest credit categories Aaa, Aa, A or Baa by Moody's
and/or AAA, AA, A or BBB by S&P, (b) state and municipal notes rated MIG-1 and
MIG-2 by Moody's and/or SP-1 by S&P and (c) other types of short-term municipal
securities such as commercial paper, provided that such securities are rated at
least Prime-2 by Moody's or A-2 by S&P (see the appendix to the Statement of
Additional Information for an explanation of Moody's and S&P's ratings). The
categories Baa by Moody's and BBB by S&P are considered to lack outstanding
investment characteristics and do have some speculative characteristics. An
obligation, not rated by either Moody's or S&P, may be considered once an
equivalent rating has been assigned by the Investment Adviser.
The Municipal Fund may invest up to 40% of its assets in securities
purchased on a "when-issued" or on
6
<PAGE> 9
a "forward delivery" basis (see Investment Techniques, When-Issued Securities,
p. 18). It may also invest in securities affected by alternative minimum tax
to the extent that such investments would be advantageous.
The Municipal Fund will normally invest no more than 20% of its assets
in short-term debt securities. (See Description of Securities, Short Term Debt
Securities, p. 15.) For temporary defensive purposes, the Municipal Fund may
invest up to 100% of its assets in either municipal or taxable short-term debt
securities.
There are three types of risks: interest rate risk, credit risk and
diversification risk. The value of shares of the Municipal Fund will vary
inversely with changes in interest rates. It also can be affected by the
market's perception of changes in risk associated with specific credits. As
perceived credit risk increases, the value of a specific credit generally
decreases, and the converse is also true. Additionally, an increase in the
Fund's concentration in specific market segments or specific credits results in
less diversification and potentially an increase in the Fund's market risk.
Because of these risks, the Municipal Fund's net asset value per share will
fluctuate. Thus, the Municipal Fund is designated for those investors who are
willing to accept possible market fluctuations to obtain income.
Proposals to restrict or eliminate the federal income tax exemption for
interest on municipal securities may be enacted in the future. Before
investing in any fixed income security, you should determine whether your
after-tax return is likely to be higher with a taxable or with a municipal
security. (Refer to Tax Status, p. 14, for more information.)
GROWTH FUND
The investment objective of the Growth Fund is to provide long-term
capital appreciation. The Growth Fund will focus on investments that are seen
to unfold over the long term, and will avoid investing on the basis of cyclical
opportunity. Generally, long term would mean a period of between two and five
years.
The Growth Fund looks at a long term investment as one that will likely
provide total return greater than that of the market in general over the
relevant investment horizon. This total return would be composed of dividends
paid plus increased price valuation of the security compared to its purchase
price valuation.
In evaluating the prospects for the earnings or asset growth that
should provide increased price valuation, the Growth Fund normally considers:
a) the degree to which there are barriers to competition in the company's
business, with higher barriers tending to increase the company's opportunity to
achieve superior growth, b) quality of management and sufficient financial
wherewithal to successfully exploit the company's business opportunities, and
c) social, economic, demographic, and/or technological trends that present the
company with significant future business opportunities.
The above criteria, present in sufficient degree, will normally present
the Fund with numerous investment alternatives. However, the Fund will not
invest unless it believes it is buying at a price valuation considerably lower
than the future valuation over the relevant investment horizon.
Management anticipates that over the long term, sufficient investments
will be available under the criteria listed above to meet its objectives.
However, it is not restricted to those criteria should market conditions
dictate that its objective be met by adopting, in full or in part, other
investment criteria.
The Growth Fund maintains a policy of maximum flexibility in managing
its portfolio. While it is generally intended to invest in common stocks or in
issues convertible to common stock, there are no restrictive provisions
covering the portion of one or another class of securities that may be held
which in any way inhibit management in the selection of appropriate investments
to reach objectives.
While there is careful selection and constant supervision of the Growth
Fund, there can be no guarantee that its objectives will be achieved. In
seeking appreciation in price valuation, the Growth Fund may, for example,
invest in a developmental stage company. Such an investment may not pay a
dividend or produce the anticipated price valuation. It could even experience
a reduction in price valuation with no capital gain resulting from its sale. In
no event, however, may the Growth Fund invest more than 5% of its assets in
companies which have a record of less than three years continuous operation or
in securities for which market quotations are not readily available.
The Growth Fund is designed to serve investors who do not require
income, but are primarily interested in the growth of their capital.
More details on investment objectives, investment policies, and
investment restrictions are contained in the Statement of Additional
Information.
7
<PAGE> 10
MANAGEMENT OF THE TRUST
The business and affairs of the Trust are managed under the direction
of its Board of Trustees. The Board of Trustees sets and reviews policies
regarding the operation of the Trust whereas the officers perform the daily
functions of the Trust.
Under the terms of the Investment Advisory Agreement, Nationwide
Financial Services, Inc. ("NFS" or "Adviser"), One Nationwide Plaza, Columbus,
Ohio 43215, manages the investment of the assets and, subject to the
supervision of the Trustees, provides various administrative services and
supervises the daily business affairs of the Trust. NFS, an Ohio corporation,
is a wholly owned subsidiary of Nationwide Life Insurance Company, which in
turn is a wholly owned subsidiary of the Nationwide Corporation, a holding
company, which is wholly owned by the Nationwide Insurance Enterprise. NFS was
incorporated in 1960 and has served as a registered investment advisor for 36
years.
The Trust pays to the Adviser fees based on the average daily net
assets of the Funds at the rate of .65% per annum for the Growth Fund,
Municipal Bond Fund and Government Bond Fund, and .40% per annum for the Cash
Reserve Fund. NFS, as Distributor, markets the shares of the Funds of the
Trust. It also provides the accounting services, including daily valuation of
each Fund's shares, preparation of financial statements, taxes and regulatory
reports.
The individuals primarily responsible for the day to day management of
each fund's portfolio are as follows:
Growth Fund--Laura Klebe, Senior Investment Analyst. Laura received
Bachelor of Science and Masters of Business Administration Degrees from Case
Western Reserve University. Before joining Nationwide in June of 1994, Laura
was employed at Dow Chemical for two and one-half years as an Equity Securities
Analyst. She has managed the Growth Fund since January 1996.
Municipal Bond Fund--J. Randall Baney, Director - Municipal Securities.
Randy received a Bachelor of Science Degree in Economics from The Ohio State
University and an MBA from the University of Dayton. He has managed the
Municipal Bond Fund since its inception in 1988.
Government Bond Fund--Wayne T. Frisbee, Director - Investments. Wayne
received a Bachelor of Science Degree in Business Administration from The Ohio
State University. He has managed the Government Bond Fund since its inception
in 1988.
Cash Reserve Fund--Karen G. Mader, Securities Portfolio Manager. Karen
received a Bachelor of Arts degree in Political Science and a Masters degree in
International Business and Political Science, both from The Ohio State
University. She has managed the Cash Reserve Fund since its inception in 1988.
DISTRIBUTION
The Trust has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940. The Plan provides that the
Trust will pay NFS, as Distributor, compensation accrued daily and paid monthly
at the annual rate of .75% of average daily net assets of the Growth Fund,
Municipal Bond Fund and Government Bond Fund. No distribution fees will be
paid by the Cash Reserve Fund. On March 1, 1994, NFS began waiving .25% of the
total .75% annual 12b-1 fees for the Growth, Municipal Bond and Government Bond
Funds, and will continue to waive at least through February 28, 1997. The
Distributor also receives the proceeds of contingent deferred sales charges
imposed on certain redemptions of shares of the Growth Fund, Municipal Bond
Fund and Government Bond Fund.
The purpose of the payments to NFS under the Trust's Plan is to
compensate NFS for its distribution services to the Trust. Distribution
expenses paid by NFS may include costs of printing and mailing prospectuses and
sales literature to prospective investors and compensation to broker-dealers.
SHAREHOLDER SERVICES
--------------------
Nationwide Investors Services, Inc. ("NIS"), One Nationwide Plaza,
Columbus, Ohio 43215, serves as transfer agent and dividend disbursing agent
for the Trust. NIS is a wholly owned subsidiary of NFS.
NIS, in its capacity as transfer agent, shall maintain appropriate
shareholder account information, deposit and process all investments on a
timely basis, process and mail redemption checks, examine and process legal
changes in share registrations, respond to inquiries from investors, and
prepare and mail confirmation statements. In its capacity as dividend
disbursing agent, NIS shall calculate shareholder's dividends and capital gain
distributions, prepare and mail distribution
8
<PAGE> 11
checks or cause reinvestment of distributions where required and prepare and
mail dividend distribution confirmations. Additionally, NIS shall prepare,
mail and tabulate all proxies relating to shareholder meetings, address and
mail various reports including semiannual and annual reports, and solicit
taxpayer identification numbers.
EXPENSES
--------
In addition to the investment management fees and transfer agent fees
previously discussed, the Trust will be responsible for certain other expenses,
including custodian fees, printing and postage related to shareholders'
reports, auditing and legal fees and trustee fees and expenses.
By agreement with NFS, the Trust will not bear expenses in excess of
limits prescribed by any state in which the Trust's shares are being offered
for sale. Such limitations did not affect the Trust for the year ended
October 31, 1995.
MANAGEMENT'S DISCUSSIONS OF
FUND'S PERFORMANCE
The 1995 Annual Report contains management's discussion of each Fund's
performance including narrative discussions by the Funds' portfolio managers
and line graphs comparing the performance of each fund since their inception to
that of the S&P 500 Index, Lehman Brothers Municipal Bond Index, Merrill Lynch
Government Master Index, or Merrill Lynch Mortgage Master Index, as
appropriate, and the Consumers Price Index over the same periods. Copies of
the 1995 Annual Report can be obtained free of charge by writing the Funds or
calling the toll free number (1-800-848-0920).
HOW TO INVEST
A minimum investment of $1,000 is required and subsequent investments
of $100 or more may be made at any time. The Funds reserve the right to
reject any order. A confirmation statement will be mailed to you after each
purchase.
There are three ways to invest:
1. BY MAIL - Complete the application in this Prospectus
(additional payments to an existing account do not require the
submission of a new application) and mail with your check or other
negotiable bank draft payable to:
Financial Horizons Investment Trust
P.O. Box 1492
Columbus, Ohio 43216-1492
Orders for the purchase of shares accompanied by a check or other
negotiable bank draft received in good order will receive the net
asset value determined upon the date of receipt by the Transfer
Agent, NIS. The Funds reserve the right to refuse certain third
party checks.
BY CONFIRMED ORDER - Only a broker dealer firm may place a
confirmed order. Complete the application in this prospectus with
your Account Executive (additional payments to an existing account
do not require the submission of a new application) and deliver to
your Account Executive a check or other negotiable bank draft.
All confirmed orders for the purchase of shares of any of the funds
will receive the net asset value next determined after receipt of
the order by NIS.
2. BY WIRE - Request that your bank transmt immediately available
funds by wire to the Funds' custodian bank.
If you choose to establish your account or make subsequent
investments by wire directly from your bank to the Funds' custodian
bank, you must telephone our Customer Service Center
(1-800-848-0920) by 11 a.m. Eastern Time and the wire must be
received by the Funds' custodian bank by 2 p.m. Eastern Time in
order to obtain same day investment. The bank that wires your
money may charge a small fee for this service. If you are opening
a new account, you must then complete an application and mail it to
NIS.
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<PAGE> 12
PURCHASE OF SHARES
Shares are purchased at net asset value. The net asset value is
computed as of the close of the New York Stock Exchange (usually 4:00 p.m.
Eastern Time) on days when the New York Stock Exchange is open and on such
other days as the Board of Trustees determines and on days on which there is
sufficient trading in a Fund's portfolio to materially affect the net asset
value of that Fund. The Trust will not compute net asset value on customary
national business holidays, including Christmas, New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day and Thanksgiving.
The net asset value per share is computed by adding the value of all
securities and other assets in the portfolio, deducting any liabilities and
dividing by the number of shares outstanding. In determining the total net
assets, portfolio securities, except for the Cash Reserve Fund, are valued at
the quoted closing sale price or, if none, at their bid quotations obtained
from an independent pricing organization which employs a combination of
methods, including, among others, the obtaining of market valuations from
dealers who make markets and deal in such securities and by comparing
valuations with those of other comparable securities in a matrix of such
securities. The pricing service activities and results are reviewed by an
officer of the Trust. Securities for which market quotations are not readily
available are valued at fair value in accordance with procedures adopted by the
Board of Trustees. In addition, money market instruments are valued at
amortized cost. Expenses and fees are accrued daily. The net asset value per
share of the Cash Reserve Fund is ordinarily $1.00, calculated at amortized
cost in accordance with the rules of the Securities and Exchange Commission.
PRIVILEGES AND SERVICES
The Funds offer the following privileges and services to you.
Additional information about any of the services may be obtained by calling our
toll free telephone number listed on the cover page of this prospectus.
EXCHANGE PRIVILEGE--The Exchange Privilege allows you to exchange from
any one of the Trust's Funds to any other of the Trust's Funds. The Exchange
Privilege is a convenient way to take advantage of the different investment
objectives of the Trust's Funds in order to respond to changes in your
investment goals or in market conditions. An exchange is a sale and purchase
of shares and, for federal income tax purposes, may result in a capital gain or
loss. The registration of the account to which you are making an exchange must
be exactly the same as that of the Fund account from which the exchange is made
and the amount you exchange must meet the applicable minimum investment of the
Fund being purchased. Shares of the fund exchanged to must be registered in
the shareholder's state of residence. There is no limit to the number of
exchanges you may make. Amounts exchanged from the Growth, Municipal Bond, and
Government Bond Funds retain their original cost and purchase date for purposes
of the contingent deferred sales charge.
An exchange may be made in writing to Nationwide Investors Services,
Inc., P.O. Box 1492, One Nationwide Plaza, Columbus, Ohio 43216-1492. Please
be sure that your letter is signed by all owners of the account and that your
account number and the Fund you wish to exchange to are included.
You may use the Telephone Exchange Privilege if you have established
that privilege. You must telephone our toll free number listed on the cover
page of this prospectus by 4:00 p.m. Eastern Time to receive that day's closing
share price. You may not revoke your request once instructions have been
recorded and accepted.
The Trust reserves the right at any time without prior notice to
suspend, limit or terminate the Telephone Exchange Privilege or its use in any
manner by any person or class. Election of the privilege authorizes the Trust
and its transfer agent to voice-record all instructions to exchange. The Trust
will employ reasonable procedures for the protection of shareholders to confirm
that instructions communicated by telephone are genuine, such as, but not
limited to, recording the conversation, requiring some form of personal
identification and providing written confirmation of the transaction. If these
procedures are not followed, the Trust may be liable for any loss due to
unauthorized or fraudulent instructions.
AUTOMATED DOLLAR COST AVERAGING--This systematic investment plan is
designed especially for investors who want to invest large blocks of assets,
but not all at
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<PAGE> 13
one time. An initial investment of $5,000 or more is made in the Cash Reserve
Fund. Then a fixed amount that you predetermine (minimum of $100) is
transferred systematically monthly into one of the other FHIT Funds.
This strategy can provide investors with the benefits of Dollar Cost
Averaging through an opportunity to achieve a favorable average share cost over
time. With this plan, your fixed monthly transfer from the Cash Reserve Fund
to the FHIT Fund you select, buys more shares when share prices fall during low
markets, and fewer shares at inflated prices during market highs. Although no
formula can assure a profit or protect against loss in a declining market,
systematic investing has proven a valuable investment strategy in the past.
Those who have a more cautious outlook on investing can transfer
smaller sums monthly and spread the transfer of assets into another FHIT Fund
over a longer period of time, while those with a less cautious outlook can
transfer larger sums over a shorter period. Either way, you receive the added
benefits of current rates paid on the portion of your investment in the Cash
Reserve Fund, along with the stability offered by the Cash Reserve Fund's fixed
share price.
The holding period for amounts transferred from the Cash Reserve Fund
begins on the date of transfer for purposes of the contingent deferred sales
charge.
SYSTEMATIC INVESTMENT PLANS--Begin a systematic investment plan ($100
minimum) by authorizing monthly transfers directly from your personal bank
checking account. The withdrawals from your bank account will begin on the 5,
15, or 20th of the month which you indicate, unless your application is
received less than 20 days prior to this date. If your application is received
less than 20 days prior to the date that you have indicated as your first
withdrawal date, your first withdrawal will occur on the 5, 15, or 20th of the
following month. When the date falls on a weekend or holiday, the withdrawal
from your bank account will occur on the next business day. You pay no fee for
this service. You may terminate at any time.
TOLL-FREE INFORMATION AND ASSISTANCE--Available between the hours of
8:00 a.m.-5:00 p.m. Eastern Time through our service representatives. Call
1-800-848-0920.
RETIREMENT PLANS--Shares of the Cash Reserve Fund, Government Fund and
Growth Fund may be purchased for self-employed retirement plans, individual
retirement accounts (IRAs), simplified employee pension plans, corporate
retirement plans and other qualified plans. For a free information kit, call
our toll-free number.
SHAREHOLDER CONFIRMATION--You will receive a confirmation statement
within ten business days following all transactions. Growth Fund shareholders
receive a statement semi-annually following the June and December dividend
payments. Shareholders of the Cash Reserve, Government Bond and Municipal Bond
Funds receive a monthly statement.
SHAREHOLDER REPORTS--All shareholders will receive semi-annual and
annual reports detailing the financial operations of the Trust.
WITHDRAWAL PLANS ($50 or more)--You may have checks for any fixed
amount of $50 or more sent to you (or anyone you designate) automatically and
at regular intervals from your Fund account. If you have an account of $5,000
or more, you may receive such checks every quarter. If you have an account of
$10,000 or more, checks may be received every month. Withdrawal plan
redemptions occur five business days before the end of the calendar month.
Withdrawal plans, like other redemptions, are subject to the contingent
deferred sales charge.
AVERAGE COST REPORTING--Each calendar year, shareholders who had one or
more redemptions during the prior year will receive an Average Cost Statement.
This statement provides the gain or loss on the shares sold based upon the
single category average cost method. The Average Cost method is only one of
four cost basis methods available to shareholders. It is not available or
applicable to fiduciary or corporate accounts, nor to accounts opened by
transfers with different registrations.
HOW TO REDEEM SHARES
You may redeem all or part of your shares of any Fund at any time.
Shares are redeemed at net asset value at the closing of the New York Stock
Exchange on the day the properly completed request is received by NIS, the
transfer agent, at its office in Columbus, Ohio.
You can redeem shares in any of the following ways:
11
<PAGE> 14
1. By Mail (No Minimum)--Write to the Financial Horizons Investment Trust, Box
1492, Columbus, Ohio 43216-1492. The Trust will send a check to you. Please be
sure that the letter requesting a withdrawal is signed exactly as the account
is registered and that the account number and the Fund from which the
withdrawal is to be made are included. Signature guarantees may be required for
some redemptions.
Signature Guarantee--The funds reserve the right to require that your signature
be guaranteed by an authorized agent of an "eligible guarantor institution," to
include, but not be limited to, banks, credit unions, savings associations, and
member firms of national security exchanges. The requirement for a guaranteed
signature is for your protection by preventing an unauthorized person from
redeeming the shares and obtaining the proceeds. A notary public is not an
acceptable guarantor.
2. By Telephone ($1,000 or more)--The Trust will wire redemptions of $1,000
or more directly to your account at a commercial bank if NFS has an
authorization on file. Just telephone the Trust at its toll free telephone
number before 4:00 p.m. Normally, the money requested will be wired to your
bank the next business day after the withdrawal order has been received. A $5
fee will be deducted from the proceeds for this service. If redemptions are
mailed to a bank, no fee is charged.
Before NFS can accept instructions for telephone redemptions, you must
have authorized this procedure. This can be done when the Application is
completed. The authorization will remain in effect until written notice of its
termination is received by the transfer agent.
Payment for shares redeemed is made within three business days of
written request. The Funds may delay payment of redemption proceeds for up to
12 days from the purchase date until the purchase check has cleared. To avoid
this possible twelve day delay, you may make your investment by wire. You will
receive a confirmation from the Fund each time you liquidate shares.
Redemptions may be suspended or the date of payment postponed when the
New York Stock Exchange is closed (other than customary weekend and holiday
closings listed in the Statement of Additional Information) or if trading is
restricted or if any emergency exists.
The value of shares redeemed depends upon the market value of the
investments of each Fund at the time of redemption and may be more or less than
your cost.
A contingent deferred sales charge is imposed on any redemption in the
Growth Fund, Municipal Bond Fund or Government Bond Fund which causes the
current value of a shareholder's account to fall below the total purchase
payments made during the past six years. When a redemption is made, the charge
is applied against the lesser of the purchase amount or the current value. The
amount of the charge will depend on the number of months since the shareholder
made the purchase payment from which an amount is being redeemed, except for
shares acquired through an exchange from the Cash Reserve Fund in which case
the holding period begins on the date of the exchange, according to the
following table:
<TABLE>
<CAPTION>
Contingent
Deferred
Months Since Purchase/ Sales Charge
Exchange Was Made Percentage
----------------- ----------
<S> <C>
0-12 .......................... 5.00%
13-24 ......................... 5.00%
25-36 ......................... 4.00%
37-48 ......................... 3.00%
49-60 ......................... 2.00%
61-72 ......................... 1.00%
73 and following .............. 0.00%
</TABLE>
For purposes of the charge, it is assumed that the purchase payment
from which the redemption is made is the earliest purchase payment from which a
redemption has not already been effected. All payments during a month will be
aggregated and deemed to have been made on the last day of the preceding month.
There is no contingent deferred sales charge imposed on redemptions in
the Cash Reserve Fund except when shares redeemed were acquired through an
exchange from the Growth, Municipal or Government Bond Fund. The holding
period for purposes of determining the contingent deferred sales charge
percentage begins on the date the shares were originally purchased, not the
date shares were exchanged.
The contingent deferred sales charge does not apply to dividends
reinvested nor the appreciation on an original investment. The contingent
deferred sales charge is waived in the event of the shareholder's death or
permanent disability, as certified by a physician. If the account is owned
jointly by husband and wife, death
12
<PAGE> 15
or disability of either party will be considered sufficient to waive contingent
deferred sales charges; if ownership is other than spousal, all owners must be
deceased or disabled before contingent deferred sales charges will be waived.
The Contingent Deferred Sales Charge may be reduced or eliminated when sales of
the shares are made to Trustees of the Trust, directors, officers or employees
of the Advisor, its affiliates or broker dealers which execute selling
agreements with NFS where sales of the Fund's shares result in savings of sales
expenses. In addition, the Contingent Deferred Sales Charge may be reduced or
eliminated when shares are sold without commission expense to employees of
depository institutions through which the Funds are offered for sale to the
public.
If you redeem all or part of your shares, you have a one-time privilege
to reinvest all or part of the redemption proceeds in any of the Funds within
thirty days and receive credit for any contingent deferred sales charge
prorated according to the percentage of the reinvestment, e.g., 100% for a full
reinvestment, etc. Reinvestment will not alter any capital gains tax payable
on the redemptions and a loss may not be allowed for tax purposes.
If you are a shareholder of the Cash Reserve, Government Bond or
Municipal Bond funds and you redeem your shares, you will receive a check
representing the value of your account less any applicable contingent deferred
sales charges on the date of withdrawal, including all daily income dividends
credited to your account through the date of withdrawal. If you redeem your
shares of the Growth Fund after a dividend and/or capital gain has been
declared, you will receive a check shortly after the payable date which has
been declared by the Fund.
The Trust may close any account which has a value of less than $250 due
to redemptions. However, you will be notified if your account value is less
than $250 and will be allowed ninety days to make additional investments before
the account is liquidated.
ADDITIONAL INFORMATION
PERFORMANCE ADVERTISING FOR NON CASH RESERVE FUNDS
The non Cash Reserve Funds may use historical performance in advertisements,
sales literature and the Prospectus. Such figures will include quotations of
average annual total return for the most recent one, five and ten year periods
(or the life of the Funds if less). Average annual total return represents the
rate required each year for an initial investment to equal the redeemable value
at the end of the specified period. Historical performance should not be
considered a representation of performance of or shareholder experience in the
Funds in the future.
The Government Fund and Municipal Fund may advertise yield calculated
by dividing the net investment income per share earned during a thirty-day
period by the maximum offering price per share on the last day of the period.
Additionally, the Municipal Fund may advertise tax equivalent yield which is
calculated by dividing yield by one minus a standard income tax rate.
All performance advertising will reflect maximum sales charges and
assume reinvestment of all distributions.
VOTING RIGHTS--A Board of Trustees, elected by the shareholders at an annual
meeting or at a special meeting, conducts the business of the Trust. The
Declaration of Trust does not require an annual meeting of the shareholders and
the Trustees do not anticipate having annual meetings. Any Trustee may resign
or be removed with cause by vote of two-thirds of the remaining Trustees. Any
vacancy may be filled by an appointment of the remaining Trustees.
Each shareholder of the Trust has one vote for each share held. Voting
rights cover the investment management agreement, distribution agreement,
election and removal of Trustees, termination of the Trust, sale of assets as a
whole and change of investment objectives and restrictions. The Trust shall
comply with all of the requirements of Section 16(c) of the Investment Company
Act of 1940, as amended, if the number of shareholders, as provided for in
Section 16(c), wish to communicate with other shareholders for the purpose of
requesting a meeting.
SHAREHOLDER LIABILITY--No shareholder is subject to any personal liability
whatsoever in connection with any property owned by the Trust or the acts,
obligations or affairs of the Trust (see the Statement of Additional
Information for details).
SHAREHOLDER INQUIRIES--All inquiries regarding the Trust should be directed to
the Trust at the telephone number or address shown on the cover page of this
Prospectus.
13
<PAGE> 16
NET INCOME AND DISTRIBUTIONS
A shareholder may elect to receive dividends and, where applicable,
capital gains in cash by so indicating on the application, or, if the account
has already been opened, by written request signed by the shareholder. If the
account has already been opened and is NOT a retirement plan (including an
IRA), the election may also be changed by contacting the Customer Service
Center at 1-800-848-0920 between the hours of 8:00 a.m.-5:00 p.m. Eastern
Time on any business day.
CASH RESERVE FUND
The net income of the Cash Reserve Fund is determined once daily as of
the close of the New York Stock Exchange (usually 4:00 p.m. Eastern Time) on
each business day the New York Stock Exchange is open. All the net income of
the Cash Reserve Fund, so determined, is declared as a dividend to shareholders
of record at the time of such determination. (Shares purchased become entitled
to dividends declared as of the first day following the date of investment.)
Dividends are distributed in the form of additional shares of the Cash Reserve
Fund on the last business day of each month at the rate of one share (and
fraction thereof) of the Cash Reserve Fund for each $1 (and fraction thereof)
of dividend income.
For this purpose, the net income of the Cash Reserve Fund (from the
time of the immediately preceding determination thereof) shall consist of: (a)
all interest income accrued on the portfolio assets of the Cash Reserve Fund,
(b) less all actual and accrued expenses determined in accordance with
generally accepted accounting principles and (c) plus or minus net realized
gains and losses on the assets of the Fund. Interest income shall include
discount earned (including both original issue and market discount) on discount
paper accrued ratably to the date of maturity. Securities are valued at
amortized cost for the purposes of complying with the Investment Company Act of
1940, as amended.
GOVERNMENT FUND AND MUNICIPAL FUND
Each of these Funds declare as a dividend substantially all of their net
investment income each day the New York Stock Exchange is open. The dividend
is payable to everyone who was a shareholder at the close of business the
previous day. These income dividends, if any, are declared each day, and the
accumulated total is credited to investors' accounts in the form of additional
shares, or may be distributed in cash, on the last business day of each month.
Any accounts that are completely redeemed before the end of the month will
receive the month-to-date dividends through the day of redemption. The funds
will distribute net realized capital gains, if any, annually after the close of
the calendar year.
GROWTH FUND
The Growth Fund distributes to its shareholders semiannual dividends
substantially equal to all of its net investment income. The Growth Fund's net
investment income consists of the interest and dividend income it earns
(although such income is incidental to its investment objective) less expenses.
The Growth Fund will distribute net realized capital gains, if any, annually
after the close of the calendar year. Shareholders may elect to receive
dividends and capital gains distributions in either cash or additional shares.
The Trust will not mail checks for dividends of less than $5. Such
dividends will be reinvested, and you will receive a confirmation.
TAX STATUS
FEDERAL TAXES--Each of the Funds intends to qualify for treatment under
subchapter M of the Internal Revenue Code and, therefore, must distribute
substantially all of its net investment income and capital gains to
shareholders annually. In general, if the Funds distribute all of their net
investment income, they are not required to pay any federal income taxes. In
addition, in the event the Funds fail to distribute the required portion of its
investment income and capital gains in any year, they will be subject to a
non-deductible 4% excise tax on the amount which they have failed to
distribute. The Funds intend to make distributions in a sufficient amount to
avoid the imposition of such tax.
Dividends paid by each of the Funds, other than the Municipal Bond
Fund, are taxable to the shareholder for federal income tax purposes.
Dividends paid by the Municipal Bond Fund will be exempt from federal
income tax to the extent that the income of the Fund is derived from bonds
which qualify
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<PAGE> 17
for such exemption. It is possible that some portion of the income from this
Fund will be taxable annually. The taxable portion of each distribution shall
be based on the ratio, each year, between the Fund's taxable income and total
income. Such ratio shall be determined within 60 days following the close of
the taxable year. The annual ratio may differ significantly from the ratio for
the period actually covered by each distribution.
Under current tax law as of February 29, 1996, net long-term capital
gains, if any, realized by the Funds, are generally taxable to the shareholder
at the same rate as ordinary income, but in no event may the tax rate on such
capital gains exceed 28% for an individual or 35% for a corporation.
Shareholders not subject to tax on their income will not pay tax on
amounts distributed to them. The Trust will annually report to each
shareholder the shareholder's portion of the net amount of income and capital
gain for each fund, for inclusion in the shareholder's income.
Under current tax law as of February 29, 1996, individual and corporate
shareholders may be subject to the Alternative Minimum Tax ("AMT") if their
Alternative Minimum Taxable Income ("AMTI") exceeds the exemption amounts set
forth in Section 55 of the Code. The AMT, at a rate as high as 28 per cent for
individuals and 20 per cent for corporations, is reduced by the regular tax due
for the year. AMTI is the taxpayer's taxable income for the year for regular
tax purposes, increased by the tax preferences described in Section 57 of the
Code and adjusted as described in Section 56 of the Code. Preferences include
interest from Specified Private Activity Bonds, as defined in Section
57(a)(5)(C) of the Code. Bonds of this type may be held by one or more of the
Funds from time to time.
A shareholder may be subject to federal backup withholding at a rate of
31% of each distribution if the shareholder fails to certify that the taxpayer
identification number given is correct and that the shareholder is not subject
to such withholding because of underreporting of income (or if the Internal
Revenue Service gives notice that such certifications are not accurate).
STATE AND LOCAL TAXES--Distributions to shareholders of the Funds may
be subject to state and local taxes, even if not subject to federal income
taxes. These laws vary, and you are advised to consult a tax adviser regarding
such taxes.
DESCRIPTION OF SECURITIES
SHORT TERM DEBT SECURITIES
-Obligations of Commercial Banks and of Savings Associations include
certificates of deposit, bankers' acceptances (time drafts on a commercial bank
where the bank accepts an irrevocable obligation to pay at maturity), fixed
time deposits and documented discount notes (corporate promissory discount
notes accompanied by a commercial bank guarantee to pay at maturity) maturing
in one year or less;
-Commercial Paper is short-term unsecured promissory notes (up to 9
months) issued in bearer form by bank holding companies, corporations and
finance companies; and
-Short-Term Corporate Obligations include corporate debt securities
(other than commercial paper) with maximum maturities of one year.
U.S. GOVERNMENT SECURITIES
U.S. Government Securities include obligations issued ( 1) by the U.S.
Treasury and (2) by agencies and instrumentalities of the United States
government. (U.S. government agencies are government-sponsored organizations
acting under authority of Congress, such as Federal Land Banks, Central Banks
for Cooperatives, Federal Home Loan Banks, the Farmers Home Administration, and
the Federal Farm Credit System. U.S. government instrumentalities are
organized by Congress under a federal charter and supervised and regulated by
the U.S. government, such as the Federal National Mortgage Association and the
Student Loan Marketing Association.) A distinction must be made between these
obligations since some are supported by the full faith and credit of the U.S.
Treasury, others by the discretionary authority of the U.S. Government, and
still others only by the credit of the issuer.
Securities guaranteed by the U.S. Government include: (1) direct
obligations of the U.S. Treasury (such as Treasury bills, notes and bonds) and
(2) federal agency obligations guaranteed as to principal and interest by the
U.S. Treasury (such as securities issued by the Farmers Home Association, the
Federal Financing Bank, the
15
<PAGE> 18
Government National Mortgage Association, the Maritime Administration
Guaranteed Ship Financing Bonds issued after 1972 and the Small Business
Administration). In these securities, the payment of principal and interest is
unconditionally guaranteed by the U.S. government; thus they are of the highest
possible credit quality.
Securities issued by U.S. government instrumentalities and certain
federal agencies are neither direct obligations of, nor guaranteed by, the
Treasury. However, they involve federal sponsorship in one way or another:
some are backed by the issuer's right to borrow from the U.S. Treasury (such as
securities issued by the Farm Credit System and the Tennessee Valley
authority); some are supported by the authority of the U.S. Treasury to
purchase obligations issued by agencies or instrumentalities (such as the
Federal National Mortgage Association, Student Loan Marketing Association, and
the Tennessee Valley Authority). Some are supported only by the credit of the
issuing government agency or instrumentality (such as securities issued by the
Financing Corporation, FICO).
ZERO-COUPON SECURITIES
Zero-coupon securities are securities that make no periodic interest
payments but instead are sold at a deep discount from their face value. The
buyer of such a bond receives the rate of return by the gradual appreciation of
the security, which is redeemed at face value on a specified maturity date.
For tax purposes, the Internal Revenue Service maintains that the holder of a
zero-coupon bond owes income tax on the interest that has accrued each year,
even though the bondholder does not actually receive the cash until maturity.
The Government Fund will only invest in zero-coupon securities which
are direct obligations of the U.S. Treasury or agencies of the U.S. government.
No zero-coupon securities issued by brokerage firms will be purchased by the
Government Fund.
MORTGAGE-RELATED SECURITIES
Mortgage-related securities include GNMA certificates, FNMA and FHLMC
mortgage-based obligations.
GNMA certificates are mortgage-backed securities representing part
ownership of a pool of mortgage loans on which timely payment of interest and
principal is guaranteed by the full faith and credit of the U.S. government.
GNMA certificates differ from typical bonds because principal is repaid monthly
over the term of the loan rather than returned in a lump sum at maturity.
Because both interest and principal payments (including prepayments) on the
underlying mortgage loans are passed through to the holder of the certificate,
GNMA certificates are called "pass-through" securities.
The Federal National Mortgage Association ("FNMA"), a federally
chartered and privately-owned corporation, issues pass-through securities
representing interests in a pool of conventional mortgage loans. FNMA
guarantees the timely payment of principal and interest but this guarantee is
not backed by the full faith and credit of the U.S. government.
Although the mortgage loans in a GNMA pool will have maturities of up
to 30 years, the actual average life of the GNMA certificates typically will be
substantially less because the mortgages 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 GNMA certificates. Conversely, when
interest rates are rising, the rate of prepayment tends to decrease, thereby
lengthening the actual average life of the GNMA certificates. Accordingly, it
is not possible to accurately predict the average life of a particular pool.
Reinvestment of prepayments may occur at higher or lower rates than the
original yield on the certificates. Due to the prepayment feature and the need
to reinvest prepayments of principal at current rates, GNMA certificates can be
less effective than typical bonds of similar maturities at "locking in" yields
during periods of declining interest rates, although they may have comparable
risks of decline in value during periods of rising interest rates. Because
prepayments are made at par value, losses could be sustained on prepayments of
GNMA certificates which had been purchased at prices above their par values.
The Federal Home Loan Mortgage Corporation ("FHLMC"), a corporate
instrumentality of the U.S. government, issues participation certificates which
represent an interest in a pool of conventional mortgage loans. FHLMC
guarantees the timely payment of interest and the ultimate collection of
principal and maintains reserves to protect holders against losses due to
default, but the certificates are not backed by the full faith and credit of
the U.S. government. As is the case with GNMA certificates, the actual
maturity of and realized return on particular FNMA and FHLMC pass-through
securities
16
<PAGE> 19
will vary based on the prepayment experience of the underlying pool of
mortgages.
FNMA and FHLMC also issue collateralized mortgage obligations
("CMO's"). CMO's are obligations fully collateralized directly or indirectly
by a pool of mortgages on which payments of principal and interest are
dedicated to payment of principal and interest on the CMO's. Payments are
passed through to the holders although not necessarily on a pro rata basis on
the same schedule as they are received. Accordingly, a change in the rate of
prepayments on the pool of mortgages could change the effective maturity of a
CMO.
MUNICIPAL OBLIGATIONS
Municipal obligations are classified as long-term if they mature in
over one year, and as short-term if they mature in less than one year.
Long-term municipal obligations are municipal bonds. They include debt issued
to obtain funds for various purposes, including, but not limited to, funds for
the construction of a wide range of public facilities such as bridges,
highways, housing, hospitals, mass transportation, schools, streets and water
and sewer works. Other public purposes for which Municipal Bonds may be issued
include refunding outstanding obligations, obtaining funds for general
operating expenses, and obtaining funds to loan to other public institutions
and facilities. In addition, certain types of industrial development bonds are
issued by or on behalf of public authorities to obtain funds to provide
privately-operated housing facilities, airport, mass transit or port
facilities, sewage disposal, solid waste disposal or hazardous waste treatment
or disposal facilities and certain local facilities for water supply, gas or
electricity. Other types of industrial development bonds, the proceeds of
which are used for the construction, equipment, repair or improvement of
privately operated industrial or commercial facilities, may constitute
Municipal Bonds.
Short-term municipal obligations include municipal notes and commercial
paper. Municipal notes include debt obligations issued to smooth cash flows
caused by irregular flows of income into the treasuries of states and local
units of government. The credit of the issuer is generally the sole guarantee.
Among the most common such obligations are Bond Anticipation Notes (BANs),
Revenue Anticipation Notes (RANs) and Tax Anticipation Notes (TANs). BANs are
issued in anticipation of the sale of long-term bonds. RANs and TANs are
issued in anticipation of the collection of taxes and other expected revenues.
Municipal commercial paper is issued for interim finance or to provide working
capital during seasonal shortfalls in taxes or revenues.
Taxable or partly taxable issues in which the Cash Reserve Fund may
invest include, but are not limited to, municipal notes or bonds with one year
or less remaining until final maturity, issued to finance pollution control,
sports facilities, parking facilities, industrial parks, housing finance, tax
anticipation notes, bond anticipation notes, and revenue anticipation note
obligations.
All long-term, as well as short-term obligations, can be classified
either as general obligation or revenue issues. General obligation issues are
secured by the issuer's pledge of its faith, credit and taxing power for the
payment of principal and interest. The payment of such bonds may be dependent
upon an appropriation by the issuer's legislative body. The characteristics
and enforcement of general obligation bonds vary according to the law
applicable to the particular issuer. Revenue issues are payable only from the
revenues derived from a particular facility or class of facilities or, in some
cases, from the proceeds of a special excise or other specific revenue source.
Industrial development bonds which are Municipal Bonds are in most cases
revenue bonds and do not generally constitute the pledge of the credit of the
issuer of such bonds. There are, of course, variations in the security of
Municipal Bonds, both within a particular classification and between
classifications, depending on numerous factors.
INVESTMENT TECHNIQUES
REPURCHASE AGREEMENTS
The Cash Reserve Fund and Government Bond Fund may enter into
Repurchase Agreements with banks and securities dealers. Under Repurchase
Agreements, the Fund buys a security and obtains a simultaneous commitment from
the seller to repurchase the security at a specified time and price.
Repurchase agreements permit the Funds to maintain liquidity and earn income
over periods of time as short as overnight. The seller must maintain with the
Fund's custodian securities equal to at least 102% of the acquired security's
market value as monitored daily by the Investment Adviser (see "Management"
below) . Each Fund only will enter into repurchase agreements involving
securities in which it
17
<PAGE> 20
could otherwise invest and with selected banks and securities dealers whose
financial condition is monitored by the Investment Adviser, subject to review
by the Board of Trustees. If the seller under the repurchase agreement
defaults, the Fund may incur a loss if the value of the collateral securing the
repurchase agreement has declined, and may incur disposition costs in
connection with liquidating the collateral. If bankruptcy proceedings are
commenced with respect to the seller, realization of the collateral by the Fund
may be delayed or limited.
WHEN-ISSUED SECURITIES
In order to help ensure the availability of suitable securities for its
portfolio, the Government Fund and the Municipal Fund may purchase securities
on a "when-issued" or on a "forward delivery" basis which means that the
obligations will be delivered to the Fund making the purchase at a future date
beyond customary settlement time. It is expected that, under normal
circumstances, a Fund purchasing securities on a "when-issued" or "forward
delivery" basis will take delivery of such securities. In general, a Fund does
not pay for the securities or start earning interest on them until the
obligations are scheduled to be settled. While awaiting delivery of the
obligations purchased on such basis, a Fund will establish a segregated account
consisting of cash or high quality debt securities equal to the amount of the
commitments to purchase "when-issued" securities.
To the extent a Fund engages in "when-issued" or "forward delivery"
transactions, it will do so for the purpose of acquiring portfolio securities
consistent with the Fund's investment objectives and policies and not for the
purpose of investment leverage or to speculate in interest rate changes. The
Government Fund and the Municipal Fund will make commitments to purchase
securities on a "when-issued" or "forward delivery" basis only with the
intention of actually acquiring the securities, but the Funds reserve the right
to sell these securities before the settlement date if deemed advisable.
Because a Fund must set aside cash or liquid high grade securities to
satisfy its commitments to purchase "when-issued" or "forward delivery"
securities, management of a Fund's investments may be limited by commitments to
purchase "when-issued" or "forward delivery" securities.
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<PAGE> 21
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Nationwide Investors Services, Inc.
P.O. Box 1492
One Nationwide Plaza
Columbus, Ohio 43216-1492
CUSTODIAN
The Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
Two Nationwide Plaza
Columbus, Ohio 43215
LEGAL COUNSEL
Druen, Rath & Dietrich
One Nationwide Plaza
Columbus, Ohio 43215
DISTRIBUTOR AND INVESTMENT ADVISER
Nationwide Financial Services, Inc.
One Nationwide Plaza
Columbus, Ohio 43215
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<PAGE> 22
PART B. STATEMENT OF ADDITIONAL INFORMATION
February 29, 1996
FINANCIAL HORIZONS INVESTMENT TRUST
- CASH RESERVE FUND
- GOVERNMENT BOND FUND
- MUNICIPAL BOND FUND
- GROWTH FUND
This Statement of Additional Information is not a prospectus. It contains
information in addition to and more detailed than set forth in the Prospectus
and should be read in conjunction with the Trust's Prospectus, dated February
29, 1996. The Prospectus may be obtained from Nationwide Financial Services,
Inc., P.O. Box 1492, One Nationwide Plaza, Columbus, Ohio 43216, or by calling
1-800-848-0920.
TABLE OF CONTENTS
<TABLE>
<S> <C>
GENERAL INFORMATION AND HISTORY 1
ADDITIONALINFORMATION AS TO
INVESTMENT OBJECTIVES AND POLICIES 1
ADDITIONAL INFORMATION AS TO
INVESTMENT TECHNIQUES 2
INVESTMENT RESTRICTIONS 3
MAJOR SHAREHOLDERS 4
TRUSTEES AND OFFICERS OF THE TRUST 5
CALCULATING YIELD - CASH RESERVE FUND 6
CALCULATING YIELD AND TOTAL RETURN
- NON-CASH RESERVE FUNDS 6
INVESTMENT ADVISER AND OTHER SERVICES 7
DISTRIBUTION AGREEMENT 7
PURCHASES, REDEMPTIONS AND PRICING OF SHARES 8
SHAREHOLDERS' RIGHTS 9
CUSTODIAN 9
BROKERAGE ALLOCATION 10
APPENDIX 10-13
INDEPENDENT AUDITORS' REPORT 14
FINANCIAL STATEMENTS 15-22
</TABLE>
GENERAL INFORMATION AND HISTORY
Financial Horizons Investment Trust ("Trust") is an open-end, diversified
investment company organized under the laws of Massachusetts, by a Declaration
of Trust, dated May 9, 1988. The Trust offers shares in four separate series
("Funds"), each with its own investment objective.
ADDITIONAL INFORMATION AS TO INVESTMENT OBJECTIVES AND POLICIES
The following information supplements the discussion of the Funds' investment
objectives and policies discussed in the Prospectus.
The investment objectives and types of permitted investments described in the
Prospectus may be changed without prior approval by, or notice to, the
shareholders. There is no guarantee that the objectives will be realized. The
investment restrictions, set forth herein and in the prospectus, cannot be
changed without the approval of shareholders.
1
<PAGE> 23
- - RISKS AFFECTING FIXED INVESTMENTS
The net asset value of the shares of open-end investment companies such as the
Government Fund and the Municipal Fund, which invest in fixed income
securities, changes as the general levels of interest rates fluctuate. When
interest rates decline, the value of a portfolio invested at higher yields can
be expected to rise. Conversely, when interest rates rise, the value of a
portfolio invested at lower yields can be expected to decline. Although
changes in the value of securities subsequent to their acquisition are
reflected in the net asset value of shares of a Fund, such changes will not
affect the income received by that Fund from such securities. However, since
available yields and yield differentials vary over time, no specific level of
income or yield differential can ever be assured. Also, the dividends paid by
a Fund, if any, will increase or decrease in relation to the income received by
that Fund from its investments which would, in any case, be reduced by that
Fund's expenses before it is distributed to shareholders.
Although the mortgage loans in a GNMA pool will have maturities of up to 30
years, the actual average life of the GNMA certificates typically will be
substantially less because the mortgages 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 GNMA certificates. Conversely, when
interest rates are rising, the rate of prepayment tends to decrease, thereby
lengthening the actual average life of the GNMA certificates. Accordingly, it
is not possible to accurately predict the average life of a particular pool.
Reinvestment of prepayments may occur at higher or lower rates than the
original yield on the certificates. Due to the prepayment feature and the need
to reinvest prepayments of principal at current rates, GNMA certificates can be
less effective than typical bonds of similar maturities at "locking in" yields
during periods of declining interest rates, although they may have comparable
risks of decline in value during periods of rising interest rates. Because
prepayments are made at par value, losses could be sustained on prepayments of
GNMA certificates which had been purchased at prices above their par values.
ADDITIONAL INFORMATION AS TO INVESTMENT TECHNIQUES
- - REPURCHASE AGREEMENT
Repurchase agreements (Repos) are agreements between a seller and a buyer,
usually of U.S. Government securities, whereby the seller agrees to repurchase
the securities at an agreed upon price and, usually, at a stated time. Repos,
also called RPs or buybacks, are widely used both as a money market investment
vehicle and as an instrument of Federal Reserve Monetary Policy. Where a
repurchase agreement is used as a short-term investment, a government
securities dealer, usually a bank, borrows from an investor (for instance, a
mutual fund) with excess cash, to finance its inventory, using the securities
as collateral. Such RPs may have a fixed maturity date or be Open Repos,
callable at any time. Rates are negotiated directly by the parties involved,
but are generally lower than rates on collateralized loans made by New York
banks. The attraction of repos is the flexibility of maturities that makes
them an ideal place to invest excess funds on a temporary basis. The Trust
will only invest in repurchase agreements which are fully collateralized and
monitored on a continuous basis by the Investment Adviser and have been
affirmed by the Board of Trustees. The Trust will only enter into repos
involving securities in which it would otherwise invest and with selected banks
and securities dealers whose financial condition is evaluated regularly.
- - WHEN-ISSUED SECURITIES
The Government Fund and Municipal Fund may purchase securities on a
"when-issued" or on a "forward delivery basis. It is expected that under
normal circumstances a Fund purchasing securities on a "when-issued" basis will
take delivery of such securities. When a Fund commits to purchase a security
on a "when-issued" or on a "forward-delivery" basis, it will follow procedures
consistent with Securities and Exchange Commission policies. Since those
policies currently recommend that an amount of a Fund's assets equal to the
amount of the purchase be held aside or segregated to be used to pay for the
commitment, a Fund will always have cash or high quality debt securities
sufficient to cover any commitments or to limit any potential risk. However,
although none of the Funds intends to make such purchases for speculative
purposes and each Fund intends to adhere to the provisions of Securities and
Exchange Commission policies, purchases of securities on such bases may involve
more risk than other types of purchases. For example, a Fund may have to sell
assets which have been set aside in order to meet redemptions. Also, if a Fund
determines it is advisable as a matter of investment strategy to sell the
"when-issued" or "forward delivery" securities before delivery, that Fund may
incur a loss because of market fluctuations since the time the commitment to
purchase such securities was made and any gain or loss would not be tax-exempt.
When the time comes to pay for "when-issued" or "forward delivery" securities,
a Fund will meet its obligations from the then available cash flow or the sale
of securities, or, although it would not normally expect to do so, from the
sale of the "when-issued" or "forward delivery" securities themselves (which
may have a value greater or less than a Fund's payment obligation).
2
<PAGE> 24
INVESTMENT RESTRICTIONS
The Trust has adopted the following restrictions as fundamental policies which
cannot be changed without the approval of the holders of a majority of the
shares of the Fund for which the change is proposed and which apply to all four
Funds of the Trust, unless otherwise stated. All percentage limitations
expressed are measured immediately after the relevant transaction is made.
Each Fund may not:
1. Invest for the purpose of making short-term trading profits or for the
purpose of exercising control of management or deal with the Trustees
in the purchase and sale of securities.
2. Invest more than 5% of its total assets (excluding cash and cash items)
in the securities of any one issuer or own more than 10% of any class
of voting or non-voting securities of any issuer (except the U.S.
Government, its agencies and instrumentalities).
(a) For the Cash Reserve Fund, 25% of the Fund's total assets may
be invested in any class of voting or non-voting securities
of commercial banks.
(b) For the Cash Reserve Fund, up to 10% of its assets may be
invested in any one issuer in First Tier Securities, as
defined in the Investment Company Act of 1940, as amended,
for a period of up to three business days after the purchase,
provided the Fund may not make more than one such investment
at a time.
3. Make loans to others except for the purchase of the debt securities
listed above or the entering into repurchase agreements listed above.
4. Act as underwriter except to the extent that, in conjunction with the
disposition of portfolio securities, the Fund may be deemed as
underwriter under certain federal securities laws.
5. Pledge more than 10% of its assets and then only to secure temporary
borrowings from banks.
6. Invest in puts, calls, straddles, spreads or any combination thereof or
in oil, gas or other mineral leases, rights or royalty contracts.
7. Invest more than 5% of its total assets taken at cost in securities
whose issuers or guarantor of principal and interest, including any
predecessors, has been in operation for less than three years.
8. Issue any senior securities.
9. Purchase securities on margin, but a Fund may obtain such credits as
may be necessary for the clearance of purchases and sales of
securities.
10. Invest more than 5% of a Fund's assets in companies, including their
predecessors, which have a record of less than three years' continuous
operation or in securities for which market quotations are not readily
available.
11. Sell securities short or invest in securities, the disposition of which
is restricted under federal securities laws and which may not be
publicly sold without registration under the Securities Act of 1933,
if as a result, more than 5% of the net assets of a Fund would be
invested in such securities.
12. Invest 25% or more of each Fund's total assets in the securities
of issuers in the same industry, except each Fund may invest more than
25% of the value of its assets in municipal notes, bonds and
obligations issued, escrowed in or guaranteed by the U.S. Government,
its agencies or instrumentalities.
3
<PAGE> 25
(a) Electric, natural gas distribution, natural gas pipeline,
combined electric and natural gas and telephone utilities
are considered separate industries for this purpose.
(b) Captive borrowing conduit, equipment finance, premium finance,
leasing finance, consumer sales finance and other finance are
considered separate industries for this purpose.
(c) For the Cash Reserve Fund, more than 25% of its assets,
if deemed advisable, may be invested in obligations of
domestic branches of U.S. commercial banks.
13. Borrow money, except under the following circumstances:
(a) A Fund may borrow an amount not in excess of 33 1/3% of the
value of the Fund's total assets (calculated when the loan
is made) from banks for temporary purposes to facilitate the
orderly sale of portfolio securities to accomodate unusually
heavy redemption requests, if they should occur. This
borrowing provision is not intended for investment purposes,
nor will the Funds purchase portfolio securities during
periods of borrowings outstanding;
(b) A Fund may borrow an amount equal to no more than 5% of the
value of each of the Funds' total assets (calculated when
the loan is made) for temporary, emergency purposes, or for
the clearance of transactions, to provide the investment
manager additional flexibility in the execution of routine
daily transactions, and allow for more efficient cash
management. This borrowing provision will not be used to
leverage the funds or to borrow for extended periods of time.
14. Purchase or sell securities of other investment companies, as defined
in the Investment Company Act of 1940, as amended, (except in
connection with real estate, real estate mortgage loans, commodities
or futures contracts).
15. For the Government Fund, invest more than 35% of its total assets in
mortgage backed securities.
For purposes of the first restriction set forth in the heading "Investment
Restrictions," in the prospectus, the Municipal Fund will regard the entity
which has the ultimate responsibility for the payment of interest and
principal as the issuer.
The Trust has executed an undertaking to comply with the following
requirements of Section 123.2 of the regulations of the State Securities Board
of Texas, as long as shares of the Funds are offered for sale within the State
of Texas:
1. Section 123.2(3). Investments which are not readily marketable,
including illiquid assets, are limited to 15% of average net assets
of a Fund at the time of purchase.
2. Section 123.2(8). Investments in warrants, valued at the lower
of cost or market, may not exceed 5% of the value of the Fund's net
assets. Included within that amount, but not to exceed 2% of the value
of the Fund's net assets, may be warrants which are not listed on the
New York or American Stock Exchanges. Warrants acquired by a Fund in
units or attached to securities may be deemed to be without value.
3. Section 123.2(10). Investments in real estate limited partnerships,
oil, gas, and other mineral leases, or arbitrage transactions are not
permitted in the Funds.
MAJOR SHAREHOLDERS
As of February 1, 1996, Nationwide Life Insurance Company of Columbus,
Ohio, had sole voting and investment power over 2,776,790 shares of the Cash
Reserve Fund (66.8%), 154,007 shares of the Municipal Bond Fund (6.6%), and
63,165 shares of the Growth Fund (13.9%). The Trustees and Officers of the
Trust owned less than 1% of the outstanding shares.
4
<PAGE> 26
TRUSTEES AND OFFICERS OF THE TRUST
TRUSTEES AND OFFICERS
The principal occupations of the Trustees and Officers during the last five
years and their affiliations are:
PETER F. FRENZER, TRUSTEE.
Chairman*
One Nationwide Plaza, Columbus, Ohio 43216.
Mr. Frenzer is President and Chief Operating Officer of the Nationwide Life
Insurance Company, Nationwide Corporation, and Financial Horizons Life
Insurance, and Executive Vice President of the Nationwide Enterprise. He is a
Director of Nationwide Financial Services, Inc.
ROBERT M. DUNCAN, Trustee.
378 Bricker Hall, 190 North Oval Mall,
Columbus, Ohio.
Mr. Duncan is Vice President - General Counsel of the Ohio State University.
He was formerly a Partner in the law firm of Jones, Day, Reavis & Pogue in
Columbus. He was formerly U.S. District Court Judge, Southern District of
Ohio.
D. RICHARD MCFERSON, Trustee*
One Nationwide Plaza, Columbus, Ohio 43216
Mr. McFerson is President and Chief Executive Officer of the Nationwide
Enterprise. He was formerly President and General Manager of the Nationwide
Enterprise. He is a Director of Nationwide Financial Services, Inc.
DR. JOHN C. BRYANT, Trustee.
44 Faculty Place, Wilmington Ohio.
Dr. Bryant is Executive Director of the Cincinnati Youth Collaborative. He was
formerly Professor of Education, Wilmington College.
DR. THOMAS J. KERR, IV, Trustee.
1223-A Central Street, Evanston, Illinois 60201.
Dr. Kerr is President of Kendall College. He was formerly President of Grant
Hospital Development Foundation.
JAMES F. LAIRD, Jr., Treasurer
One Nationwide Plaza, Columbus, Ohio 43216.
Mr. Laird is General Manager of Nationwide Financial Services, Inc., the
Distributor and Investment Manager.
WILLIAM G. GOSLEE., Assistant Treasurer.
One Nationwide Plaza, Columbus, Ohio 43216.
Mr. Goslee is Treasurer of Nationwide Financial Services, Inc., the Distributor
and Investment Manager.
RAE I. MERCER, Secretary.
One Nationwide Plaza, Columbus, Ohio 43216.
Ms. Mercer is Corporate Secretary of Nationwide Financial Services, Inc.,
Nationwide Investing Foundation, Nationwide Separate Trust and Nationwide
Investing Foundation II.
* A Trustee who is an "interested person" of the Trust as defined in the
Investment Company Act of 1940.
Officers and interested Trustees will not be paid by the Trust in their
capacity as officers. All Trustees and Officers of the Trust own less than 1%
of the outstanding shares. The Trustees receive fees and reimbursement for
expenses of attending board meetings for the Trust. The Compensation Table on
the next page sets forth the total compensation to the Trustees from the Trust
and from all funds in the Nationwide Fund Complex during the fiscal year ended
October 31, 1995.
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<PAGE> 27
COMPENSATION TABLE
<TABLE>
<CAPTION>
Pension or
Aggregate Retirement Benefits Estimated Total Compensation
Compensation Accrued as Part Annual Benefits from the
Name of Person, Position from the Trust of Fund Expenses Upon Retirement Fund Complex
<S> <C> <C> <C> <C>
Peter F. Frenzer, Chairman -0- -0- -0- -0-
John C. Bryant, Trustee $5,000 -0- -0- $12,500
Robert M. Duncan, Trustee $5,000 -0- -0- $12,500
Thomas J. Kerr, IV, Trustee $5,000 -0- -0- $12,500
D. Richard McFerson, Trustee -0- -0- -0- -0-
</TABLE>
CALCULATING YIELD--CASH RESERVE FUND
Any current money market fund yield quotation, subject to Rule 482 under the
Securities Act of 1933, shall consist of seven calendar day historical yield,
carried at least to the nearest hundredth of a percent. The yield shall be
calculated by determining the net change, excluding realized and unrealized
gains and losses, in the value of a hypothetical pre-existing account having a
balance of one share at the beginning of the period, dividing the net change in
account value by the value of the account at the beginning of the base period
to obtain the base period return, and multiplying the base period return by
365/7. For purposes of this calculation, the net change in account value
reflects the value of additional shares purchased with dividends from the
original share, and dividends declared on both the original share and any such
additional shares. The Cash Reserve Fund's effective yield represents an
annualization of the current seven day return with all dividends reinvested.
As of October 31, 1995, the Fund's seven-day current yield was 5.19%. The
effective yield was 5.32%.
The Cash Reserve Fund's yield will fluctuate daily. Actual yields will depend
on factors such as the type of instruments in the Cash Reserve Fund's
portfolio, portfolio quality and average maturity, changes in interest rates,
and the Cash Reserve Fund's expenses. There is no assurance that the yield
quoted on any given occasion will remain in effect for any period of time and
there is no guarantee that the net asset value will remain constant. It should
be noted that a shareholder's investment in the Cash Reserve Fund is not
guaranteed or insured. Yields of other money market funds may not be
comparable if a different base period or another method of calculation is used.
CALCULATING YIELD AND TOTAL RETURN - NON CASH RESERVE FUNDS
The non Cash Reserve Funds may from time to time advertise historical
performance, subject to Rule 482 under the Securities Act of 1933. An investor
should keep in mind that any return or yield quoted represents past performance
and is not a guarantee of future results. The investment return and principal
value of investments will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
All performance advertisements shall include average annual total return
quotations for the most recent one, five and ten year periods (or life, if a
fund has been in operation less than one of the prescribed periods). Average
annual total return represents the rate required each year for an initial
investment to equal the redeemable value at the end of the quoted period. It
is calculated in a uniform manner by dividing the ending redeemable value of a
hypothetical initial payment of $1,000 for a specified period of time, by the
amount of the initial payment, assuming reinvestment of all dividends and
distributions. The one, five and ten year periods are calculated based on
periods that end on the last day of the calendar quarter preceding the date on
which an advertisement is submitted for publication.
The Government and Municipal Funds may also from time to time advertise a
uniformly calculated yield quotation. This yield is calculated by dividing the
net investment income per share earned during a thirty-day base period by the
maximum offering price per share on the last day of the period, assuming
reinvestment of all dividends and distributions. This yield formula uses the
average number of shares entitled to receive dividends, provides for
semi-annual compounding of interest and includes a modified market value method
for determining amortization. The yield will fluctuate and there is no
assurance that the yield quoted on any given occasion will remain in effect for
any period of time.
The Government and Municipal Bond Funds' yields for the 30-day period ended
October 31, 1995 were 6.28% and 4.72%, respectively.
The Government Bond, Municipal Bond and Growth Funds average annual total
returns for the year ended October 31, 1995, were 16.7%, 14.5%, and 21.6%,
respectively.
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<PAGE> 28
INVESTMENT ADVISER AND OTHER SERVICES
Investment Management Agreement
Under the terms of the Investment Management Agreement, Nationwide Financial
Services, Inc. ("NFS") manages the investment of the assets of the Trust in
accordance with the policies and procedures established by the Trustees,
administers and manages the affairs of the Trust and furnishes office
facilities, equipment and personnel to the Trust. The Agreement also provides
that NFS shall reimburse the Trust for the compensation of the Trustees who are
"interested persons" of NFS. By agreement with NFS, the Funds will not bear
expenses in excess of limits prescribed by any state in which the Funds' shares
are being offered for sale. To the best knowledge of NFS and the Trust,
currently only California has expense limitations, which are 2.5% of the first
$30 million of assets, 2.0% of the next $70 million of assets and 1.5% of
assets thereafter.
During the fiscal years ended October 31, 1995, 1994, and 1993, the Investment
Manager earned fees of $16,571, $15,926, and $16,963 for the Cash Reserve Fund;
$447,894, $507,403, and $503,582 for the Government Bond Fund; $171,005,
$182,759, and $130,192 for the Municipal Bond Fund; and $46,886, $38,858, and
$26,531 for the Growth Fund.
NFS is wholly owned by Nationwide Life Insurance Company, which is wholly owned
by the Nationwide Insurance Companies.
DISTRIBUTION AGREEMENT
NFS also acts as Distributor of the Trust's shares pursuant to the Distribution
Agreement with the Trust. The Distributor pays commissions to salespersons,
the cost of printing and mailing prospectuses to potential investors and any
sales promotional expenses incurred by them in connection with their
distribution of Trust shares.
The Distribution Agreement provides that it shall terminate automatically if
assigned and that it may be terminated without penalty by either party upon not
more than sixty days' nor less than thirty days' written notice.
To compensate the Distributor for the services it provides and for the expenses
it bears under the Distribution Agreement, the Trust has adopted a Plan of
Distribution (the "Plan") under Rule 12b-1 under the Investment Company Act.
Under the Plan, the Trust pays the Distributor compensation accrued daily and
paid monthly at the annual rate of .75% of the average daily net assets of the
Growth Fund, Municipal Bond Fund and Government Bond Fund. Prior to February
29, 1994, the distribution fee was also charged on the Cash Reserve Fund. The
Distributor also receives the proceeds of contingent deferred sales charges
imposed on certain redemptions of shares.
During the fiscal years ended October 31, 1995, 1994, and 1993, the Distributor
waived fees of $0, $7,279, and $18,433, for the Cash Reserve Fund; $476,865,
$236,601, and $425,509 for the Government Bond Fund; $65,771, $84,082, and
$107,497 for the Municipal Bond Fund; and $18,033, $17,616, and $22,059 for the
Growth Fund. The Distributor also receives the proceeds of contingent deferred
sales charges imposed on certain redemptions of shares (see "How to Redeem
Shares" in the Prospectus). In the fiscal year ended October 31, 1995, 1994,
and 1993, such charges were $10,596, $6,697, and $0 for the Cash Reserve Fund;
$75,240, $271,592, and $167,810 for the Government Bond Fund; $97,848, $79,727,
and $36,981 for the Municipal Bond Fund; and $28,961, $12,759, and $13,961 for
the Growth Fund.
Pursuant to the Plan, at least quarterly, the Distributor shall provide the
Trust a written report for review by the Trustees of the amounts expended under
the Plan and the purpose for which such expenditures were made.
The Plan shall remain in effect until the earlier of one year after the
respective date of execution or the first meeting of shareholders after the
effective date of the Trust's Prospectus. If approved at such meeting by a
vote of a majority of the outstanding voting securities of the Trust, the Plan
shall continue in effect thereafter, provided such continuance is approved
annually by a vote of the Trustees of the Trust, including a majority of the
Trustees who are not interested persons of the Trust and who have no direct or
indirect financial interest in the operation of the Plan, cast in person at a
meeting called for the purpose of voting on such Plan. The Plan may not be
amended to increase materially the amount to be spent for the services
described therein without approval of the shareholders and all material
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<PAGE> 29
amendments of the Plan must also be approved by the Trustees in the manner
described above. The Plan may be terminated at any time without payment of any
penalty by vote of a majority of the Trustees who are not interested persons of
the Trust and who have no direct or indirect financial interest in the
operations of the Plan or by a vote of a majority of the outstanding voting
securities of the Trust (as defined in the Investment Company Act) on not more
than thirty days' written notice to any other party to the Plan. The Plan will
automatically terminate in the event of its assignment (as defined in the
Investment Company Act). So long as the Plan is in effect, the election and
nomination of Trustees who are not interested persons of the Trust shall be
committed to the discretion of the Trustees who are not such interested
persons. The Trustees have determined that, in their judgment, there is a
reasonable likelihood that the Plan will benefit the Trust and its
shareholders. In the Trustees' review of the Plan, they will consider the
continued appropriateness and the level of compensation provided therein.
PURCHASES, REDEMPTIONS AND PRICING OF SHARES
All investments of the Trust are credited to the shareholders' accounts in the
form of full and fractional shares of the designated Fund (rounded to the
nearest 1/1,000 of a share). The Trust does not issue share certificates.
The net asset value per share of each Fund of the Trust is determined by NFS,
as agent appointed by the Trustees, once daily as of the close of the New York
Stock Exchange (usually 4:00 p.m. Eastern Time) on days when the New York Stock
Exchange ("Exchange") is open or on any other day during which there is a
sufficient degree of trading in a Fund's portfolio securities that the net
asset value of the Fund is materially affected by changes in the value of
portfolio securities. The Trust will not compute net asset value on customary
national business holidays, including the following: Christmas, New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day
and Thanksgiving. The net asset value per share of each Fund is calculated by
adding the value of all securities and other assets of a Fund, deducting its
liabilities and dividing by the number of shares outstanding.
The value of portfolio securities of the Cash Reserve Fund is determined on the
basis of the amortized cost valuation in accordance with Rule 2a-7 of the
Investment Company Act of 1940. This involves valuing a security at its cost
and thereafter assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. While this method provides certainty in valuation,
it may result in periods during which value as determined by amortized cost is
higher or lower than the price the Cash Reserve Fund would receive if it sold
the instrument. During periods of declining interest rates, the daily yield on
shares of the Cash Reserve Fund computed by dividing the annualized daily
income of the Cash Reserve Fund by the net asset value computed as described
above, may tend to be higher than a like computation by a fund with identical
investments utilizing a method of valuation based upon market prices and
estimates of market prices for all of its portfolio securities.
The Trustees have adopted procedures whereby the extent of deviation, if any,
of the current net asset value per share calculated using available market
quotations from the Cash Reserve Funds amortized cost price per share, will be
determined at such intervals as the Trustees deem appropriate and are
reasonable in light of current market conditions. In the event such deviation
from the Cash Reserve Funds' amortized cost price per share exceeds 1/2 of 1
percent, the Trustees will consider appropriate action which might include a
reevaluation of all or an appropriate portion of the Cash Reserve Fund's assets
based upon current market factors.
The Trustees, in supervising the Cash Reserve Fund's operations and delegating
special responsibilities involving portfolio management to the Cash Reserve
Fund's Investment Manager, have undertaken, as a particular responsibility
within their overall duty of care owed to the Cash Reserve Fund's shareholders,
to assure, to the extent reasonably practicable, taking into account current
market conditions affecting the Cash Reserve Fund's investment objectives, that
the Cash Reserve Fund's net asset value per share, rounded to the nearest 1
cent, will not deviate from $1.00. Pursuant to its objective of maintaining a
stable net asset value per above, the Cash Reserve Fund will not purchase
instruments with a remaining maturity of greater than 397 days and will
maintain a dollar weighted average portfolio maturity of 90 days or less.
For orders placed after 4:00 p.m. Eastern Time or on a day on which the
Exchange is not open for trading, the offering price is based upon net asset
value at 4:00 p.m. Eastern Time on the next day thereafter on which the
Exchange is open for trading. The net asset value of a share of a Fund on
which offering and redemption prices are based is the net asset value of a
Fund, divided by the number of shares outstanding, the result being adjusted to
the nearest cent.
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<PAGE> 30
The net income of the Cash Reserve Fund is determined once daily as of the time
and on the days referenced above. All the net income of the Cash Reserve Fund,
so determined, is declared in shares as a dividend to shareholders of record at
the time of such determination. (Shares purchased become entitled to dividends
declared as of the first day following the date of investment.) Dividends are
distributed in the form of additional shares of the Cash Reserve Fund on the
last business day of each month at the rate of one share (and fraction thereof)
of the Cash Reserve Fund for each $1 (and fraction thereof) of dividend income.
An investment in the Cash Reserve Fund is neither insured nor guaranteed by the
U.S. government and there can be no assurance that it will be able to maintain
a stable net asset value of $1.00 per share.
For this purpose, the net income of the Cash Reserve Fund (from the time of the
immediately preceding determination thereof) shall consist of: (a) all
interest income accrued on the portfolio assets of the Cash Reserve Fund, (b)
less all actual and accrued expenses determined in accordance with generally
accepted accounting principles and (c) plus or minus net realized gains and
losses on the assets of the Cash Reserve Fund. Interest income shall include
discount earned (including both original issue and market discount) on discount
paper accrued ratably to the date of maturity. Securities are valued at
amortized cost which the Trustees have determined in good faith constitutes
fair value for the purposes of complying with the Investment Company Act of
1940.
Because the net income of the Cash Reserve Fund is declared as a dividend each
time the net income is determined, the net asset value per share (i.e., the
value of the net assets of the Cash Reserve Fund divided by the number of
shares outstanding) remains at $1 per share immediately after each such
determination and dividend declaration. Any increase in the value of a
shareholder's investment in the Cash Reserve Fund, representing the
reinvestment of dividend income, is reflected by an increase in the number of
shares of the Cash Reserve Fund in its account.
The Trust may suspend the right of redemption only under the following unusual
circumstances: (a) when the New York Stock Exchange is closed (other than
weekends and holidays) or trading is restricted, (b) when an emergency exists,
making disposal of portfolio securities or the valuation of net assets not
reasonably practicable or (c) during any period when the Securities and
Exchange Commission has by order permitted a suspension of redemption for the
protection of shareholders.
SHAREHOLDERS' RIGHTS
No shareholder shall be subject to any personal liability whatsoever to any
person in connection with Trust property or the acts, obligations or affairs of
the Trust. No Trustee, officer, employee or agent of the Trust shall be
subject to any personal liability whatsoever to any person, other than the
Trust or its shareholders, in connection with Trust property or the affairs of
the Trust, save only that arising from bad faith, willful misfeasance, gross
negligence or reckless disregard for his duty to such person and all such
persons shall look solely to the Trust property for satisfaction of claims of
any nature arising in connection with the affairs of the Trust. If any
shareholder of the Trust is made a party to any suit or proceeding to enforce
any such liability, he shall not, on account thereof, be held to any personal
liability. The Trust shall indemnify and hold each shareholder harmless from
and against all claims and liabilities to which such shareholder may become
subject by reason of his being or having been a shareholder and shall reimburse
such shareholder for all legal and other expenses reasonably incurred by him in
connection with any such claim or liability. Such rights accruing to a
shareholder shall not exclude any other right to which such shareholder may be
lawfully entitled nor shall anything herein contained restrict the right of the
Trust to indemnify or reimburse a shareholder in any appropriate situation even
though not specifically provided herein.
CUSTODIAN
The Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati, Ohio 45263, is the
custodian for the Financial Horizons Investment Trust Funds.
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<PAGE> 31
BROKERAGE ALLOCATION
During the years ended October 31, 1995, 1994, and 1993, brokerage commissions
paid by the Growth Fund totaled $5,943, $2,757, and $2,893, respectively.
During the years ended October 31, 1995, 1994, and 1993, the Cash Reserve Fund,
Government Bond Fund, and Municipal Bond Fund paid no brokerage commissions.
There is no commitment to place orders with any particular broker/ dealer or
group of broker/dealers. Orders for the purchases and sales of portfolio
securities of each Fund are placed where, in the judgment of the Investment
Adviser, the best executions can be obtained. In allocating orders among
brokers for execution on an agency basis, in addition to price considerations,
the usefulness of the brokers' overall services is also considered. Services
to be provided by brokerage firms may include handling of orders, analyses of
corporations, industries and the economy, statistical reports and other related
services for which no charge is made by the broker over and above negotiated
brokerage commissions. The Trust and the Investment Adviser believe that these
services and information, which in many cases would be otherwise unavailable to
the Investment Adviser, will be of significant value to the Investment Adviser.
The Investment Adviser does not believe that the receipt of such services and
information will materially reduce the Investment Adviser's expense.
No formula, method or criteria other than as stated above is planned to be used
in the allocation of orders among any firms. In the case of securities traded
in the over-the-counter market, the Trust plans to deal with the marketmakers
for such securities unless better prices can be obtained through brokers.
In its capacity as investment manager for various portfolios, NFS regularly
evaluates all research service received and available to determine whether
services should be continued or eliminated. In the management of the Funds,
NFS does not intend to specifically search out or employ any new or additional
research services.
APPENDIX
DESCRIPTION OF NRSRO RATINGS
SHORT-TERM RATINGS (including commercial paper, senior short-term obligations
and deposit obligations). Issues rated Duff 2 by Duff & Phelps, Inc. (D&P)
have good certainty of timely payments, Liquidity factors and company
fundamentals are sound. Although ongoing internal funds needs may enlarge
total financing requirements, access to capital markets is good. Risk factors
are very small. Relative strengths or weaknesses of the above factors
determines whether the issuer's commercial paper is rated Duff 1+, Duff 1, or
Duff 1-.
Issues assigned F-2 by Fitch Investors Services, Inc. (Fitch) have a
satisfactory degree of assurance for timely payment, but the margin of safety
is not as great as for issues assigned F-1+ or F-1 ratings. Issues assigned
the rating of F-1+ are regarded as having the strongest degree of assurance for
timely payment and issues assigned F-1 reflect an assurance of timely payments
only slightly less in degree than issues rated F-1+.
Among the factors considered by Moody's Investors Service, Inc. (Moody's) in
assigning ratings are the following: (1) quality of management; (2) industry
strengths and risks; (3) vulnerability to business cycles; (4) competitive
position; (5) liquidity measurements; (6) debt structure; (7) operating trends;
and (8) access to capital markets. Relative strength or weakness of the above
factors determines whether the issuer's commercial paper is rated P-1 or P-1.
Issues rated by Standard & Poor's (S&P) as A-1, the highest category, indicates
that the degree of safety regarding timely payment is strong. Liquidity ratios
are adequate to meet cash requirements. Long-term senior debt is rated AA or
better. The issuer has access to at least two additional channels of
borrowing. Basic earning and cash flow have an upward trend with allowance
made for unusual circumstances. Typically the issuer's industry is well
established and the issuer has a strong position within the industry. The
reliability and quality of management are unquestioned. Relative strength or
weakness of the above factors determine whether the issuer's commercial paper
is rated A-1+, A-1 or A-2.
Issues rated TBW-2 by Thomson Bank Watch (Thomson) have a strong degree of
safety regarding timely repayment of principal and interest. The relative
degree of safety is not quite as high as an issues with a TBW-1 rating.
IBCA Limited and its affiliate, IBCA, Inc. (IBCA) issues ratings and reports on
the largest U.S. and International bank holding companies, as well as major
investment banks. IBCA's short-term rating system utilizes a dual
system--Individual Ratings and Legal Ratings. The individual Rating addresses
1) the current strength of consolidated banking companies and their principal
bank subsidiaries. A consolidated bank holding company/bank with an "A" rating
has a strong
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<PAGE> 32
balanced sheet, a favorable credit profile, and a consistent record of well
above average performance. A "B" rating indicates a sound credit profile
without significant problems. Performance is generally in line with or better
than that of its peers. The Legal Rating addresses the question of whether an
institution would receive support if it ran into difficulties. Issues rated A-1
are obligations supported by a very strong capacity for timely repayment.
Issues rated A-2 have a very strong capacity for timely repayment although such
capacity may be susceptible to adverse changes in business, economic, or
financial conditions.
Thomson issues ratings on bank holding companies, U.S. banks, international
banks, investment banks, and savings and loan associations. Issues rated TBW1
are obligations that indicate a very high degree of likelihood that principal
and interest will be paid on a timely basis. A TBW2 rating indicates that the
relative degree of safety is not quite as high as an issue with a TBW1 rating.
DESCRIPTION OF MUNICIPAL NOTE RATINGS
S&P'S RATINGS
A note rating by S&P reflects the liquidity concerns and market access risks
unique to notes. Notes due in three years or less will likely receive a note
rating. Notes maturing beyond three years will most likely receive a long-term
debt rating or bond. The following criteria will be used in making that
assessment.
- Amortization schedule (the larger the final maturity relative to
other maturities, the more likely it will be treated as a note).
- Source of Payment (the more dependent the issue is on the market
for its refinancing, the more likely it will be treated as a note).
S&P note rating symbols are as follows:
SP-1 Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will
be given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
MOODY'S RATINGS
MIG 1 This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support
or demonstrated broad-based access to the market for refinancing.
MIG 2 This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
MIG 3 This designation denotes favorable quality. All security elements
are accounted for, but there is lacking the undeniable strength of
the preceding grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to be less
well established.
DESCRIPTION OF BOND RATINGS
The ratings of S&P and Moody's represent their opinions as to the quality of
various debt instruments. It should be emphasized, however, that ratings are
not absolute standards of quality. Consequently, debt instruments with the
same maturity, coupon and rating may have different yields while debt
instruments of the same maturity and coupon with different ratings may have the
same yield.
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<PAGE> 33
S&P'S RATINGS
AAA Debt rated "AAA" has the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.
AA Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in
small degree.
A Debt rated "A" has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.
Note: The ratings from AA to BBB may be modified by the addition of a plus (+)
or minus (-) sign to show the relative standing within the major rating
categories.
MOODY'S RATINGS
Aaa Bonds which are rated "Aaa" are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa Bonds which are rated "Aa" are judged to be of high quality by all
standards. Together with the "Aaa" group, they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in
"Aaa" securities or fluctuations of protective elements may be of
greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in "Aaa" securities.
A Bonds which are rated "A" possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to
impairment sometime in the future.
Baa Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present, but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
Note: Those bonds in the Aa, A and Baa groups which Moody's believes possess
the strongest investment attributes are designated by the symbols Aa1, A1 and
Baa1.
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<PAGE> 34
BOND RATINGS
Bonds rated AA or AAA by D&P are deemed to be high quality. Protection factors
are strong. Risk is modest but may vary slightly from time to time because of
economic conditions.
Bonds rated AA or AAA by Fitch are considered to be investment grade and of
very high credit quality. The obligor's ability to pay interest and repay
principal is very strong.
Bonds rated AA or AAA by IBCA indicates a very strong capacity for timely
repayment of debt. Margins of protection may not be as large as for AAA
issues.
Bonds rated AA or AAA by Thomson indicates ability to repay principal and
interest on a timely basis. Bonds rated AA may have limited incremental risk
versus AAA issues.
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<PAGE> 35
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees of The Financial Horizons Investment
Trust:
We have audited the accompanying statements of assets and liabilities,
including the statements of investments, of The Financial Horizons Investment
Trust--Growth Fund, Municipal Bond Fund, Government Bond Fund, and Cash Reserve
Fund--as of October 31, 1995, and the related statements of operations,
statements of changes in net assets and financial highlights for each of the
periods indicated herein. These financial statements and financial highlights
are the responsibility of the Trust's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification of securities owned as of
October 31, 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 our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the aforementioned funds comprising The Financial Horizons Investment Trust
as of October 31, 1995, the results of their operations, the changes in their
net assets and the financial highlights for each of the periods indicated
herein, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
December 8, 1995
14
<PAGE> 36
FINANCIAL HORIZONS INVESTMENT TRUST
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
October 31, 1995 MUNICIPAL GOVERNMENT CASH
GROWTH BOND BOND RESERVE
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments in securities, at value (cost $5,916,116,
$25,203,813, $66,050,630, and $4,143,039, respectively) $7,609,291 25,638,318 69,093,935 4,143,039
Cash 18,482 - - 11,865
Accrued interest and dividends receivable 2,288 445,612 495,711 -
Receivable for Fund shares sold 166 - - -
Receivable for investment securities sold - 1,264,511 60,989 -
---------------------------------------------------------
Total Assets 7,630,227 27,348,441 69,650,635 4,154,904
---------------------------------------------------------
LIABILITIES
Payable for investment securities purchased - 975,843 - -
Net payable for Fund shares redeemed 21,066 28,235 191,458 716
Demand loan payable to bank (note 3) - 453,685 - -
Sales charge payable 3,785 8,888 34,188 -
Accrued management fees (note 2) 4,249 13,853 37,034 1,407
Accrued distribution fees (note 2) 3,271 10,656 - -
Accrued transfer agent fees (note 2) 957 1,275 (1,845) 83
Payable for dividends accrued - 40,163 167,485 1,527
Other accrued expenses 3,238 9,927 32,442 939
---------------------------------------------------------
Total Liabilities 36,566 1,542,525 460,762 4,672
---------------------------------------------------------
NET ASSETS $7,593,661 25,805,916 69,189,873 4,150,232
=========================================================
Represented by:
Capital Shares, $1 par value outstanding 417,898 2,397,968 6,248,879 4,150,235
Capital paid in excess of par value 4,668,069 24,179,670 61,946,129 -
Net unrealized appreciation 1,693,175 434,505 3,043,305 -
Accumulated undistributed net
realized gain (loss) 821,167 (1,200,475) (2,048,440) (3)
Accumulated (distributions in excess of)
undistributed net investment income (6,648) (5,752) - -
---------------------------------------------------------
NET ASSETS $7,593,661 25,805,916 69,189,873 4,150,232
=========================================================
Shares outstanding (unlimited number of
shares authorized) 417,898 2,397,968 6,248,879 4,150,235
=========================================================
Net assets per share $18.17 10.76 11.07 1.00
=========================================================
</TABLE>
See accompanying notes to financial statements.
15
<PAGE> 37
FINANCIAL HORIZONS INVESTMENT TRUST
STATEMENTS OF OPERATIONS
Year ended October 31, 1995
<TABLE>
<CAPTION>
October 31, 1995 MUNICIPAL GOVERNMENT CASH
GROWTH BOND BOND RESERVE
FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Income:
Dividends $ 78,212 - - -
Interest 24,107 1,622,251 4,856,159 245,688
Other income (note 2) - - 181,387 -
---------------------------------------------------------
102,319 1,622,251 5,037,546 245,688
---------------------------------------------------------
Expenses (note 2):
Distribution fees 54,102 197,313 516,795 -
Investment management fees 46,886 171,005 447,894 16,571
Transfer agent fees 12,323 16,662 51,384 1,104
Professional services 2,103 8,105 21,569 1,223
Registration fees 1,843 3,126 6,066 1,079
Shareholders' reports 2,858 4,932 17,477 370
Custodian fees 2,435 13,500 15,000 5,476
Trustes' fees and expenses 1,012 3,750 9,826 588
Other 436 1,724 3,798 317
---------------------------------------------------------
Total expenses before waived expenses 123,998 420,117 1,089,809 26,728
---------------------------------------------------------
Total waived expenses (18,033) (65,771) (476,865) -
---------------------------------------------------------
Net expenses 105,965 354,346 612,944 26,728
---------------------------------------------------------
Net investment income (loss) (3,646) 1,267,905 4,424,602 218,960
---------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments (note 3) 821,167 (809,772) 500,983 (3)
---------------------------------------------------------
Net change in unrealized appreciation (depreciation) 607,704 3,105,091 5,712,175 -
---------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1,428,871 2,295,319 6,213,158 (3)
---------------------------------------------------------
Net increase in net assets resulting from operations $1,425,225 3,563,224 10,637,760 218,957
=========================================================
</TABLE>
See accompanying notes to financial statements.
16
<PAGE> 38
FINANCIAL HORIZONS INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
Years ended October 31, 1995 and 1994
<TABLE>
<CAPTION>
GROWTH MUNICIPAL BOND
FUND FUND
1995 1994 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) $ (3,646) 12,740 1,267,905 1,286,380
Net realized gain (loss) on investments 821,167 112,756 (809,772) (390,703)
Net change in unrealized appreciation (depreciation)
of investments 607,704 305,197 3,105,091 (4,008,495)
---------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 1,425,225 430,693 3,563,224 (3,112,818)
---------------------------------------------------------
Distributions to shareholders from:
Net investment income - (14,818) (1,266,974) (1,280,971)
In excess of net investment income (5,505) - - -
Net realized gain from investment transactions (65,310) - - (636,382)
---------------------------------------------------------
Decrease in net assets from distributions to shareholders (70,815) (14,818) (1,266,974) (1,917,353)
---------------------------------------------------------
Capital share transactions:
Net proceeds from sale of shares 520,132 1,664,390 437,772 7,416,729
Net asset value of shares issued to shareholders from
reinvestment of dividends and distributions 69,603 14,530 827,461 1,268,408
Cost of shares redeemed (1,137,884) (471,909) (4,168,004) (3,070,429)
---------------------------------------------------------
Increase (decrease) in net assets derived
from capital share transactions (548,149) 1,207,011 (2,902,771) 5,614,708
---------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 806,261 1,622,886 (606,521) 584,537
NET ASSETS - BEGINNING OF YEAR 6,787,400 5,164,514 26,412,437 25,827,900
---------------------------------------------------------
NET ASSETS - END OF YEAR $7,593,661 6,787,400 25,805,916 26,412,437
=========================================================
Undistributed net realized gain (loss) on investments
included in net assets at end of period (note 1) $ 821,167 65,310 (1,200,475) (390,703)
=========================================================
Undistributed (distributions in excess of) net investment
income included in net assets at end of period (note 1) $ (6,648) 2,503 (5,752) (6,683)
=========================================================
Shares sold 32,495 116,704 42,427 660,497
Shares issued to shareholders from reinvestment
of dividends and distributions 4,761 1,038 80,208 115,125
Shares redeemed (68,472) (33,208) (403,632) (294,362)
---------------------------------------------------------
Net increase (decrease) in number of shares (31,216) 84,534 (280,997) 481,260
=========================================================
</TABLE>
See accompanying notes to financial statements.
17
<PAGE> 39
FINANCIAL HORIZONS INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
Years ended October 31, 1995 and 1994
<TABLE>
<CAPTION>
GOVERNMENT BOND CASH RESERVE
FUND FUND
1995 1994 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 4,424,602 4,233,446 218,960 105,988
Net realized gain (loss) on investments 500,983 (2,549,423) (3) 36
Net change in unrealized appreciation
or depreciation of investments 5,712,175 (5,537,920) - -
-----------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 10,637,760 (3,853,897) 218,957 106,024
-----------------------------------------------------------
Distributions to shareholders from:
Net investment income (4,454,858) (4,215,913) (218,917) (106,031)
Net realized gain from investment transactions - (675,985) (35) -
Paid in capital (14,227) - - -
-----------------------------------------------------------
Decrease in net assets from distributions to shareholders (4,469,085) (4,891,898) (218,952) (106,031)
-----------------------------------------------------------
Capital share transactions:
Net proceeds from sale of shares 1,055,320 3,986,976 890,988 1,829,645
Net asset value of shares issued to shareholders from
reinvestment of dividends and distributions 2,526,566 2,648,228 213,199 84,108
Cost of shares redeemed (10,778,823) (12,273,612) (903,863) (751,467)
-----------------------------------------------------------
Increase (decrease) in net assets derived
from capital share transactions (7,196,937) (5,638,408) 200,324 1,162,286
-----------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (1,028,262) (14,384,203) 200,329 1,162,279
NET ASSETS - BEGINNING OF YEAR 70,218,135 84,602,338 3,949,903 2,787,624
-----------------------------------------------------------
NET ASSETS - END OF YEAR $69,189,873 70,218,135 4,150,232 3,949,903
===========================================================
Undistributed net realized gain (loss) on investments
included in net assets at end of period (note 1) $(2,048,440) (2,549,423) (3) 35
===========================================================
Undistributed net investment income included in net
assets at end of period (note 1) $ - 30,256 - (43)
===========================================================
Shares sold 100,153 362,791 890,988 1,829,645
Shares issued to shareholders from reinvestment
of dividends and distributions 239,877 246,966 213,199 84,108
Shares redeemed (1,029,256) (1,155,210) (903,863) (751,467)
-----------------------------------------------------------
Net increase (decrease) in number of shares (689,226) (545,453) 200,324 1,162,286
===========================================================
</TABLE>
See accompanying notes to financial statements.
18
<PAGE> 40
FINANCIAL HORIZONS INVESTMENT TRUST
GROWTH FUND
Statement of Investments October 31, 1995
<TABLE>
<CAPTION>
COMMON STOCKS (92.0%)
- ---------------------
Shares Value (Note 1)
------ --------------
<S> <C> <C>
Airlines (1.3%)
Skywest Inc. 6,000 $ 102,750
==========
Business Service (6.4%)
American Business Information* 10,500 183,750
Healthcare Services Group, Inc. * 6,000 52,500
Olsten Corp. (The) 4,400 169,400
TRO Learning, Inc.* 10,000 78,750
----------
484,400
----------
Chemicals (1.9%)
Loctite Corp. 1,000 47,250
Sigma-Aldrich Corporation 2,000 95,000
----------
142,250
----------
Computer Equipment (0.9%)
American Power Conversion Corp.* 7,000 71,750
----------
Computer Services and Software (4.0%)
CFI Proservices, Inc.* 10,000 136,250
SPSS, Inc.* 10,000 168,750
----------
305,000
----------
Consumer Products (3.1%)
National Picture & Frame Co.* 16,000 136,000
Newell Co. 4,000 96,500
----------
232,500
----------
Contract Manufacturing (3.0%)
Dovatron International, Inc.* 4,000 123,000
Electronic Fab Tech Corporation* 5,000 22,813
Triple S Plastics, Inc.* 9,000 83,250
----------
229,063
----------
Dental (4.0%)
Dentsply International Inc. 2,000 69,000
National Dentex Corp.* 13,000 234,000
----------
303,000
----------
Distribution (1.3%)
Bergen Brunswig Corp., Class A 4,725 98,044
----------
Drugs (4.4%)
Allergan Inc. 4,000 117,500
Schering-Plough Corporation 4,000 214,500
----------
332,000
----------
Education (2.0%)
DeVry Incorporated* 7,000 155,750
----------
Electronics (5.8%)
Intel Corp. 4,000 279,500
Woodhead Industries, Inc. 11,100 158,175
----------
437,675
----------
Engineering & Construction (1.5%)
Fluor Corporation 2,000 113,000
----------
Financial Services (10.8%)
Bear Stearns Companies, Inc. 3,472 69,006
Gainsco, Inc. 18,231 157,242
Merrill Lynch & Co., Inc. 5,000 277,500
Morgan Stanley Group, Inc. 1,000 87,000
Silicon Valley Bancshares* 8,400 161,700
Standard Financial, Inc.* 5,000 68,750
----------
821,198
----------
Food & Beverages (1.1%)
Grand Metropolitan Plc ADR 1,500 41,250
Grand Metropolitan Plc 5,800 40,085
----------
81,335
----------
Food-Grain & Agriculture (2.8%)
Archer Daniels Midland Co. 13,387 215,865
----------
Healthcare Services (3.7%)
Columbia HCA/Healthcare Corp. 4,000 196,500
United American HealthCare Corp. * 7,500 82,500
----------
279,000
----------
Machinery & Capital Goods (5.6%)
Duriron, Inc. 3,000 $ 80,250
Emerson Electric Company 1,000 71,250
Kaman Corporation 9,200 98,900
Zebra Technologies Corporation* 3,000 178,500
----------
428,900
----------
Medical Products (1.1%)
Biomet, Inc.* 5,000 83,125
----------
Oil & Gas (2.6%)
Amoco Corporation 1,300 83,038
Royal Dutch Petroleum Company 500 61,436
Texaco, Inc. 800 54,500
----------
198,974
----------
Pollution Control (0.9%)
WMX Technologies, Inc. 2,500 70,313
----------
Printing & Publishing (5.2%)
Merrill Corporation 6,000 96,000
New England Business Service, Inc. 6,000 115,500
Reader's Digest Assoc., Inc., Class B 2,800 129,500
Varitronic Systems Inc.* 6,000 54,000
----------
395,000
----------
Restaurants (3.5%)
Bob Evans Farms Inc. 5,000 90,000
Wendy's International, Inc. 8,800 174,900
----------
264,900
----------
Retail (7.0%)
Advance Ross Corp.* 10,000 275,000
Cash America International, Inc. 6,000 30,750
Franklin Quest Co.* 3,000 71,625
Smart & Final Inc. 5,000 93,750
Tractor Supply Co.* 4,000 63,000
----------
534,125
----------
Telecommunications (7.1%)
AT & T Corporation 2,200 140,800
MCI Communications Corporation 9,800 244,388
Sprint Corporation 4,000 154,000
----------
539,188
----------
Tire & Rubber (1.0%)
Cooper Tire & Rubber Company 3,000 69,375
----------
Total common stocks (cost $5,295,305) 6,988,480
----------
U.S. GOVERNMENT OBLIGATIONS (7.2%)
U.S. Treasury Bills Principal
5.06% through 5.30%, due 11/16/95 ---------
through 03/7/96 (cost $548,811) $555,000 548,811
----------
REPURCHASE AGREEMENT (1.0%)
Merrill Lynch & Co., Inc.,
5.45%, due 11/06/95, Collateralized by
$589,677 FHLMC CMO, 6.7625%, due 07/15/23
and $190 FHLMC #309710, 10.50%, due
11/01/18, value $74,657
(cost $72,000) 72,000 72,000
----------
Total investments (cost $5,916,116) $7,609,291
==========
</TABLE>
* Denotes a non-income producing security.
Cost also represents cost for Federal income tax purposes.
Portfolio holding percentages represent market value as a percent of net assets.
See accompanying notes to financial statements.
19
<PAGE> 41
FINANCIAL HORIZONS INVESTMENT TRUST
MUNICIPAL BOND FUND
Statement of Investments October 31, 1995
<TABLE>
<CAPTION>
LONG-TERM MUNICIPAL SECURITIES - (99.4%)
- ----------------------------------------
Principal Value (Note 1)
--------- --------------
<S> <C> <C>
ALABAMA (4.4%)
Birmingham, Alabama General
Obligation Refunding Bonds,
Series 1992-B,
6.25%, 2016 $ 1,100,000 1,138,500
-----------
FLORIDA (7.3%)
Florida State Full Faith and Credit State
Board of Education Public Education
Capital Outlay Bonds, Series 1992-D,
5.20%, 2014 1,000,000 951,250
Orlando Florida Utilities Commission
Water and Electric Subordinated Revenue
Refunding Bonds, Series 1993-A,
5.25%, 2014 1,000,000 941,250
-----------
1,892,500
-----------
MASSACHUSETTS (8.3%)
Massachusetts State Housing Finance
Agency Residential Development
Bonds, Series 1992-D
6.80%, 2012 1,000,000 1,061,250
Massachusetts State General Obligation
Bonds Consolidated Loan of 1992,
Series-B, 6.50%, 2013 1,000,000 1,068,750
-----------
2,130,000
-----------
NEVADA (3.8%)
Nevada State General Obligation,
Nevada Municipal Bond Bank Project,
Numbers 49 & 50, 5.50%, 2016 1,000,000 970,000
-----------
NEW JERSEY (5.2%)
New Jersey Turnpike Authority Turnpike
Revenue Bonds, Series 1991-C,
6.50%, 2016 1,225,000 1,345,969
-----------
NEW YORK (4.0%)
New York Local Government Assistance
Corporation, Series 1993-E
Refunding Bonds, 6.00%, 2014 1,000,000 1,041,250
-----------
NORTH CAROLINA (13.6%)
Charlotte-Mecklenburg Hospital
Authority, North Carolina Health Care
System Revenue Bonds, Series 1992,
6.25%, 2020 1,250,000 1,278,125
North Carolina Eastern Municipal Power
Agency Power System Revenue Bonds,
Refunding, Series 1993-B,
6.25%, 2012 1,250,000 1,260,938
North Carolina Medical Care Commission
Hospital Revenue Refunding, Presbyterian
Health Services Project,
5.50%, 2020 1,000,000 961,250
-----------
3,500,313
-----------
PENNSYLVANIA (8.7%)
Pennsylvania Housing Finance Agency
Rental Housing Refunding Bonds,
Issue 1992, 6.40%, 2012 1,250,000 1,271,875
Pennsylvania Turnpike Commission
Turnpike Revenue Bonds, Series 1992-O,
5.50%, 2017 1,000,000 967,500
-----------
2,239,375
-----------
SOUTH CAROLINA (3.9%)
South Carolina State Housing Finance &
Development Authority Homeownership
Mortgage Purchase Bonds,
1994 Series -A, 6.375%, 2016 1,000,000 1,015,000
TENNESSEE (4.1%)
Nashville & Davidson County, Tennessee
General Obligation Multi-Purpose
Improvement Bonds, Series 1994,
6.125%, 2014 1,030,000 1,071,200
TEXAS (18.1%)
Harris County, Texas Tax and Revenue
Certificates of Obligation, Series 1994,
6.10%, 2013 1,000,000 1,036,250
Houston, Texas Water and Sewer System
Revenue Junior Lien Refunding Bonds,
Series 1991-C, 6.375%, 2017 1,160,000 1,212,200
University of Texas System Revenue
Financing System Refunding Bonds,
Series 1991-B, 6.75%, 2013 1,250,000 1,348,437
Weatherford, Texas Independent School District
Unlimited Tax School Building and
Refunding Bonds, Series 1994,
6.50%, 2015 1,000,000 1,065,000
-----------
4,661,887
-----------
UTAH (3.9%)
Utah Housing Finance Agency Multi-
Family Housing Revenue Refunding Bonds,
(Cottonwood Apartments Project),
Issue 1995, 6.30%, 2015 1,000,000 1,011,250
-----------
VIRGINIA (10.1%)
Richmond, Virginia General Obligation
Public Improvement Refunding Bonds,
Series 1991-B, 6.25%, 2018 1,000,000 1,017,500
Virginia Housing Development Authority
Commonwealth Mortgage Bonds, Series
1992-C, Subseries C-7, 6.30%, 2015 900,000 916,875
Virginia Housing Development Authority
Multi-Family Housing Bonds,
Series 1991-F, 7.10%, 2013 140,000 148,575
Virginia Housing Development Authority
Commonwealth Mortgage Bonds,
Series 1990-B, Subseries B-4,
6.85%, 2017 500,000 516,875
-----------
2,599,825
-----------
WASHINGTON (4.0%)
King County Washington Limited Tax
General Obligation Various Purpose and
Refunding Bonds, Series 1993-A
6.00%, 2012 1,000,000 1,021,249
-----------
Total long-term municipal securities
(cost $25,203,813) $25,638,318
-----------
</TABLE>
Cost also represents cost for Federal income tax purposes.
Portfolio holding percentages represent market value as a percentage of net
assets.
See accompanying notes to financial statements.
20
<PAGE> 42
FINANCIAL HORIZONS INVESTMENT TRUST
GOVERNMENT BOND FUND
Statement of Investments October 31, 1995
<TABLE>
<CAPTION>
MORTGAGE BACKED SECURITIES (34.9%)
- ----------------------------------
Principal Value (Note 1)
--------- --------------
<S> <C> <C>
FHLMC (REMIC) Series 1313-G,
7.25%, 2007 $ 2,000,000 2,043,878
FHLMC (REMIC) Series 1344-D,
6.00%, 2007 3,000,000 2,818,107
FHLMC (REMIC) Series 31-E,
7.55%, 2020 1,289,219 1,317,890
FHLMC (REMIC) Series 190-D,
9.20%, 2021 900,000 936,674
FHLMC (REMIC) Series 1143-Z,
7.50%, 2021 2,636,511 2,672,049
FNMA (REMIC) Series 1989-86,
8.75%, 2019 553,985 577,252
FNMA (REMIC) Series 1990-16D,
9.00%, 2020 4,000,000 4,226,836
FNMA (REMIC) Series 1990-7B,
8.50%, 2020 2,000,000 2,081,678
FNMA (REMIC) Series 1991-68E,
8.35%, 2003 1,000,000 1,019,919
FNMA (REMIC) Series 1991-73A,
8.00%, 2021 1,200,000 1,236,791
FNMA (REMIC) Series 1992-126VB,
8.00%, 2002 4,000,000 4,187,316
FNMA (REMIC) Series 1993-203PJ,
6.50%, 2023 1,000,000 994,369
-----------
Total mortgage backed securities
(cost $23,201,285) 24,112,759
-----------
U.S. GOVERNMENT AND AGENCY LONG-TERM OBLIGATIONS (62.7%)
Federal Home Loan Banks,
7.08%, 2000 4,000,000 4,024,584
Federal Home Loan Banks,
6.36%, 2001 8,560,000 8,652,388
Federal Home Loan Mortgage Corp.,
6.31%, 2004 4,000,000 3,908,760
Federal Home Loan Mortgage Corp.,
7.98%, 2004 5,890,000 6,059,756
Federal National Mortgage Association,
6.90%, 2004 5,000,000 5,011,965
Federal National Mortgage Association,
7.05%, 2000 1,520,000 1,536,201
Resolution Funding STRIPS,
0.00%, 2006 15,000,000 7,800,885
Resolution Funding STRIPS,
0.00%, 2008 3,000,000 1,357,257
Resolution Funding STRIPS,
0.00%, 2013 10,000,000 3,103,190
Resolution Funding STRIPS,
0.00%, 2020 10,000,000 1,912,190
Total U.S. government and
agency long-term obligations
(cost $ 41,235,345) 43,367,176
-----------
REPURCHASE AGREEMENT (2.3%)
Prudential Securities
5.75% due 11/1/95, Collateralized by
$1,765,000 U.S. Treasury Bond, due 10/17/96,
market value - $1,676,503
(cost $1,614,000) 1,614,000
-----------
Total investments
(cost $ 66,050,630) $69,093,935
-----------
</TABLE>
Cost also represents cost for Federal income tax purposes.
Portfolio holding percentages represent market value as a percentage of net
assets.
See accompanying notes to financial statements.
FINANCIAL HORIZONS INVESTMENT TRUST
CASH RESERVE FUND
Statement of Investments October 31, 1995
<TABLE>
<CAPTION>
CANADIAN GOVERNMENT OBLIGATIONS (7.5%)
- --------------------------------------
Principal Value (Note 1)
--------- --------------
<S> <C> <C>
Canadian Wheat Board
5.62%, due 12/08/95 $ 160,000 159,076
Export Development Corp.
5.65%, due 11/08/95 152,000 151,833
----------
Total Canadian government obligations
(cost $310,909) 310,909
----------
COMMERCIAL PAPER (89.1%)
AUTO/FINANCE (3.8%)
Ford Motor Credit Co.
5.70%, due 12/04/95 160,000 159,164
----------
BANKS (14.5%)
CoreStates Capital Corp.
5.67%, due 01/17/96 160,000 158,060
Morgan (J.P.) & Company, Inc.
5.70%, due 11/20/95 160,000 159,519
National City Credit Corp.
5.67%, due 12/19/95 150,000 148,866
Norwest Corp.
5.65%, due 11/17/95 135,000 134,661
----------
601,106
----------
BROKER/DEALERS (14.9%)
Bear Stearns Companies, Inc.
5.76%, due 11/16/95 143,000 142,657
Dean Witter Discover & Co.
5.68%, due 01/26/96 160,000 157,829
Merrill Lynch & Co., Inc.
5.72%, due 11/22/95 153,000 152,490
Smith Barney, Inc.
5.71%, due 11/28/95 165,000 164,293
----------
617,269
----------
CAPTIVE BORROWING CONDUIT (2.7%)
Prudential Funding Corp.
5.74%, due 11/20/95 114,000 113,655
----------
CONSUMER/SALES FINANCE (9.6%)
American Express Credit Corp.
5.67%, due 12/08/95 156,000 155,091
Associates Corp. of North America
5.60%, due 01/05/96 125,000 123,736
Beneficial Corp.
5.73%, due 11/08/95 118,000 117,868
----------
396,695
----------
CORPORATE CREDIT UNIONS (2.6%)
U.S. Central Credit Union
5.65%, due 01/19/96 108,000 106,661
----------
DIVERSIFIED FINANCE (7.6%)
General Electric Capital Corp.
5.57%, due 02/21/96 160,000 157,227
Transamerica Finance Group Inc.
5.67%, due 11/13/95 160,000 159,697
----------
316,924
----------
FINANCIAL SERVICE/UTILITY (3.6%)
National Rural Utilities Cooperative Finance Corp.
5.70%, due 11/09/95 150,000 149,810
----------
FOODS AND BEVERAGES (3.1%)
Campbell Soup Co.
5.67%, due 01/10/96 127,000 125,600
----------
INSURANCE (3.2%)
American General Corp.
5.66%, due 12/14/95 132,000 131,107
----------
INSURANCE-LIFE (3.7%)
MetLife Funding, Inc.
5.71%, due 11/17/95 155,000 154,607
----------
LEASE FINANCING (3.8%)
PHH Corporation
5.72%, due 12/04/95 160,000 159,161
----------
OFFICE EQUIPMENT AND SUPPLY (2.4%)
Pitney Bowes Credit Corp.
5.675%, due 12/01/95 100,000 99,527
----------
OIL & GAS (3.9%)
Chevron Oil Finance
5.75%, due 11/06/95 160,000 159,872
----------
PAPER AND FOREST PRODUCTS (3.8%)
Sonoco Products Co.
5.60%, due 12/15/95 160,000 158,905
----------
PHARMACEUTICALS/HEALTH CARE (2.3%)
Schering Corp.
5.57%, due 04/16/96 100,000 97,416
----------
RETAIL TRADE (3.6%)
Wal-Mart Stores Inc.
5.68%, due 11/14/95 150,000 149,692
----------
Total commercial paper
(cost $3,697,171) 3,697,171
----------
U.S. GOVERNMENT OBLIGATIONS (3.2%)
Federal National Mortgage Association
5.59%, due 11/03/95
(cost $134,959) 135,000 134,959
----------
Total investments
(cost $4,143,039) $4,143,039
----------
</TABLE>
21
<PAGE> 43
FINANCIAL HORIZONS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
Selected data for each share of capital stock outstanding throughout the years
ended October 31.
<TABLE>
<CAPTION>
GROWTH FUND MUNICIPAL BOND FUND
1995 1994 1993 1992 1991 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 15.11 14.17 12.46 11.99 8.65 9.86 11.75 10.64 10.61 10.00
Net investment income (loss) (.01) .03 .08 .22 .17 .50 .49 .56 .61 .65
Net realized gain (loss) and
unrealized appreciation
(depreciation) 3.23 .95 1.73 .43 3.72 .90 (1.62) 1.22 .07 .61
-------------------------------------------------------------------------------------------
Total From Investment
Operations 3.22 .98 1.81 .65 3.89 1.40 (1.13) 1.78 .68 1.26
-------------------------------------------------------------------------------------------
Dividends from net
investment income - (.04) (.10) (.18) (.30) (.50) (.49) (.56) (.61) (.65)
Distributions in excess of net
investment income (.01) - - - - - - - - -
Distributions from net
realized gain from
investment transactions (.15) - - - (.25) - (.27) (.11) (.04) -
-------------------------------------------------------------------------------------------
Total Distributions (.16) (.04) (.10) (.18) (.55) (.50) (.76) (.67) (.65) (.65)
-------------------------------------------------------------------------------------------
Net increase (decrease) in
net asset value 3.06 .94 1.71 .47 3.34 .90 (1.89) 1.11 .03 .61
NET ASSET VALUE-
END OF PERIOD $ 18.17 15.11 14.17 12.46 11.99 10.76 9.86 11.75 10.64 10.61
===========================================================================================
Total Return (1 Year) 21.57% 6.92% 14.59% 5.42% 46.67% 14.50% (10.11%) 17.18% 6.56% 13.01%
Net Assets, End of Period (000) $ 7,594 6,787 5,165 3,095 1,175 25,806 26,412 25,828 14,641 5,632
Ratio of expense to
average net assets 1.47% 1.59% 1.44% 1.27% 1.20% 1.35% 1.27% 1.01% .65% .30%
Ratio of net investment income (loss)
to average net assets (.05%) .21% 0.63% 1.45% 2.01% 4.82% 4.58% 4.81% 5.65% 6.28%
Ratio of expense to
average net assets * 1.72% 1.90% 2.03% 2.02% 1.95% 1.60% 1.57% 1.61% 1.62% 1.69%
Ratio of net investment income (loss)
to average net assets * (.30%) (.82%) 0.05% 0.70% 1.26% 4.57% 4.28% 4.11% 4.68% 4.85%
Portfolio turnover 29.19% 14.14% 12.98% 12.14% 5.68% 60.79% 69.67% 46.95% 57.98% 45.12%
</TABLE>
<TABLE>
<CAPTION>
GOV'T BOND FUND CASH RESERVE FUND
1995 1994 1993 1992 1991 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE-
BEGINNING OF PERIOD $ 10.12 11.31 11.00 10.81 10.13 1.00 1.00 1.00 1.00 1.00
Net investment income .68 .58 .63 .89 .90 .05 .03 .02 .03 .05
Net realized gain (loss) and
unrealized appreciation
(depreciation) .95 (1.10) .50 .25 .68 - - - - -
-------------------------------------------------------------------------------------------
Total From Investment
Operations 1.63 (.52) 1.13 1.14 1.58 .05 .03 .02 .03 .05
-------------------------------------------------------------------------------------------
Dividends from net
investment income (.68) (.58) (.66) (.89) (.89) (.05) (.03) (.02) (.03) (.05)
Distributions from net
realized gain from
investment transactions - (.09) (.16) (.06) (.01) - - - - -
-------------------------------------------------------------------------------------------
Total Distributions (.68) (.67) (.82) (.95) (.90) (.05) (.03) (.02) (.03) (.05)
-------------------------------------------------------------------------------------------
Net increase (decrease) in
net asset value .95 (1.19) .31 .19 .68 - - - - -
NET ASSET VALUE-
END OF PERIOD $ 11.07 10.12 11.31 11.00 10.81 1.00 1.00 1.00 1.00 1.00
===========================================================================================
Total Return (1 Year) 16.68% (4.75%) 10.76% 10.93% 16.25% 5.41% 3.08% 2.05% 3.07% 5.27%
Net Assets, End of Period (000) $69,190 70,218 84,602 64,249 25,873 4,150 3,950 2,788 2,538 2,416
Ratio of expense to
average net assets .89% 1.28% 1.00% .65% - .65% .84% 1.17% 1.06% 1.06%
Ratio of net investment income
to average net assets 6.42% 5.42% 5.55% 8.18% 8.22% 5.29% 3.14% 2.04% 3.02% 5.10%
Ratio of expense to
average net assets * 1.58% 1.58% 1.61% 1.66% 1.73% - 1.06% 2.20% 1.82% 1.81%
Ratio of net investment income
to average net assets * 5.73% 5.12% 4.93% 7.17% 6.49% - 2.92% .79% 2.28% 4.34%
Portfolio turnover 140.55% 174.40% 143.63% 87.67% 95.32% - - - - -
</TABLE>
*Ratios calculated as if no expenses were waived.
See accompanying notes to financial statements.
22
<PAGE> 44
FINANCIAL HORIZONS INVESTMENT TRUST
Notes to Financial Statements
October 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial Horizons Investment Trust (Trust) is a diversified, open-end
investment company organized under the laws of Massachusetts by a Declaration
of Trust dated May 9, 1988. The Trust offers shares in four separate mutual
funds which are registered under the Investment Company Act of 1940, as
amended. On December 19, 1988, the Trust was capitalized through the sale of
capital stock to Nationwide Life Insurance Company in the amounts of $500,000
in the Growth Fund, $1,000,000 in the Municipal Bond Fund, $1,000,000 in the
Government Bond Fund, and $2,000,000 in the Cash Reserve Fund, which
including the earnings thereon are still invested in the respective funds.
(a) Security Valuation
(1) Growth Fund, Municipal Bond Fund and Government Bond Fund:
Securities traded on a national securities exchange are valued at
closing prices. Listed securities for which no sale was reported on
the valuation date are valued at quoted bid prices. Short-term notes
and bank certificates of deposit are valued at amortized cost, which
approximates market.
(2) Cash Reserve Fund: Securities are valued at amortized cost, which
approximates market value, in accordance with Rule 2a-7 of the
Investment Company Act of 1940, as amended.
(b) Security Transactions and Investment Income
Security transactions are recorded on the trade date. Dividend income
is recorded on the ex-dividend date; interest income, including pro rata
and constant yield amortization of premium and discount where
applicable, is recorded on an accrual basis.
(c) Federal Income Taxes
The Trust's policy is to comply with the requirements of the Internal
Revenue Code that are applicable to regulated investment companies and
to distribute all its taxable income to shareholders.
As of October 31, 1995, the Municipal and Government Bond Funds had net
capital loss carry forwards of $1,200,475 and $2,048,440, respectively,
which will expire in 7 to 8 years.
(d) Dividends to Shareholders
(1) Growth Fund:
Dividends are recorded on the ex-dividend date.
(2) Municipal Bond Fund, Government Bond Fund, and Cash Reserve
Fund: Dividends are declared daily and paid monthly from net
investment income.
Distributable net realized capital gains are declared and distributed at
least annually for all funds.
Dividends and distributions to shareholders are determined in accordance with
federal income tax regulations which may differ from generally accepted
accounting principles. These "book/tax" differences are considered either
permanent or temporary in nature. In accordance with AICPA Statement of
Position 93-2, permanent differences are reclassified within the capital
accounts based on their nature for federal income tax purposes; temporary
differences do not require reclassification. Dividends and distributions that
exceed net investment income and net realized gains for financial reporting
purposes but not for tax purposes are reported as dividends in excess of net
investment income and net realized gains. To the extent distributions exceed
current and accumulated earnings and profits for federal income tax purposes,
they are reported as distributions of paid-in capital.
(e) Expenses
Direct expenses of a fund are allocated to that fund. General expenses of
the Trust are allocated to the funds based upon each fund's relative
average net assets.
2. TRANSACTIONS WITH AFFILIATES
As investment manager for the Funds, Nationwide Financial Services, Inc.
(NFS), an affiliated company, receives an annual fee of .65% based on the
average daily net assets of the Funds. Total annual expenses of each Fund
will not exceed the limits prescribed by any state in which the Fund's shares
are offered for sale. Such limitation did not affect management fees charged
during the periods covered by the financial statements.
NFS also receives fees for distribution pursuant to a Rule 12b-1 Distribution
Plan approved by the Board of Trustees. These fees are based on average daily
net assets of the Funds at an annual rate of .75%. NFS waived distribution
fees for the Growth, Municipal Bond, and Government Bond Funds of $18,033,
$65,771, and $476,865 respectively, representing $.049, $.026, and $.073 per
average share outstanding, during the year ended October 31, 1995.
NFS also receives fees as principal underwriter from contingent deferred
sales charges (CDSC) ranging from 5% to 1%, changed from 6% maximum on March
1, 1994, imposed on redemptions which cause the current value of an account
to fall below the total purchase payments made during the past six years.
During the year ended October 31, 1995, NFS received fees of $28,961,
$97,848, $75,240, and $10,596 on the Growth, Municipal Bond, Government Bond,
and Cash Reserve Funds, respectively. Additionally, the Government Bond Fund
retained fees (CDSC) of $181,387 pursuant to NASD guidelines which limit
sales charges payable to underwriters. These fees are reported as "other
income."
A subsidiary of NFS (Nationwide Investors Services, Inc.) acts as transfer
and dividend disbursing agent for the Funds.
3. BANK LOANS
The Trust has an unsecured bank line of credit of $1,250,000. Borrowings
under this arrangement bear interest at the Federal Funds rate plus .50%. As
of October 31, 1995, the Municipal Bond Fund was paying interest at 6.31% per
year on its outstanding borrowings. No compensating balances are required.
4. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term
securities), and purchases and sales of U.S. Government Obligations for the
year ended October 31, 1995 are summarized as follows:
<TABLE>
<CAPTION>
U.S. GOVT.
SECURITIES OBLIGATIONS
PURCHASES SALES PURCHASES SALES
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth Fund $1,968,808 2,318,346 1,496,301 1,601,432
Municipal Bond Fund 15,833,041 18,795,771 - -
Government Bond Fund - 1,232,576 93,339,389 97,442,768
Cash Reserve Fund - - 814,876 1,150,000
</TABLE>
Realized gains and losses have been computed on the first-in, first-out basis.
Included in net unrealized appreciation (depreciation) at October 31, 1995 are
the following components:
<TABLE>
<CAPTION>
UNREALIZED UNREALIZED UNREALIZED
GAINS LOSSES APPRECIATION
(DEPRECIATION)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth Fund $1,920,737 (227,562) 1,693,175
Municipal Bond Fund 544,781 (110,276) 434,505
Government Bond Fund 3,089,329 (46,024) 3,043,305
</TABLE>
23
<PAGE> 45
PART C. OTHER INFORMATION
FEBRUARY 29, 1996
FINANCIAL HORIZONS INVESTMENT TRUST
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements: Cash Reserve Fund
Government Bond Fund
Municipal Bond Fund
Growth Fund
<TABLE>
<CAPTION>
Page
----
<S> <C>
(1) Financial statements and schedules included in Prospectus (Part A):
Financial Highlights for the years ended October 31, 1995, 1994, 1993, 1992,
1991, 1990 and the period December 19, 1988, commencement of operations,
through October 31, 1989......................................................................3
(2) Financial statements and schedules included in Part B:
Those financial statements and schedules required by Item 23 to be included
in Part B have been incorporated therein by reference to the Prospectus (Part A)
Financial Highlights for the years ended October 31, 1995, 1994,1993, 1992,
1991, 1990 and the period December 19, 1988, commencement of operations,
through October 31, 1989.....................................................................22
Statements of Investments at October 31, 1995.............................................19-21
Statements of Assets and Liabilities at October 31, 1995.....................................15
Statements of operations for the year ended October 31, 1995.................................16
Statements of Changes in Net Assets for each of the years in the two-year
period ended October 31, 1995.............................................................17-18
Notes to Financial Statements................................................................23
Independent Auditors' Report relating to the above financial statements and the
Financial Highlights.........................................................................14
(b) Exhibits:
(1) Declaration of Trust (Charter), previously filed with registration statement and herein incorporated
by reference.
(2) By-Laws, previously filed with registration statement and herein incorporated by reference.
(3) Not applicable.
(4) Not applicable.
(5) Investment Management Agreement previously filed with registration statement and herein incorporated by reference.
(6) Underwriting Agreement previously filed with registration statement and herein incorporated by reference.
(7) Not applicable.
</TABLE>
<PAGE> 46
<TABLE>
<S> <C>
(8) Custodian Agreement previously filed with registration statement and herein incorporated by reference.
(9) Transfer and Dividend Disbursing Agent Agreement previously filed with registration statement and herein
incorporated by reference.
(10) Opinion and consent of counsel as to the legality of the securities being registered, indicating whether
they will, when sold, be legally issued, fully paid and nonassessable was filed with the Securities and
Exchange Commission on December 20, 1995, pursuant to Rule 24f-2 and herein incorporated by reference.
(11) Independent Auditors' Consent.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) Distribution Plan previously filed with registration statement and herein incorporated by reference.
(16) Performance Quotation Computation Schedule previously filed with Post-Effective Amendments and herein
incorporated by reference.
</TABLE>
Item 25. Persons Controlled by or Under Common Control with Registrant
-------------------------------------------------------------
No person is presently controlled by or under common control with
Registrant.
Item 26. Number of Holders of Securities
-------------------------------
<TABLE>
<CAPTION>
Number of Record
Holders as of
Title of Class December 31, 1995
-------------- -----------------
<S> <C>
Cash Reserve Fund 56
Government Bond Fund 2994
Municipal Bond Fund 842
Growth Fund 740
</TABLE>
Item 27. Indemnification
---------------
Limitation of Liability and Indemnification provisions for Trustees, officers,
employees and agents of Registrant are set forth in Article V, Sections 5.1
through 5.3 of the Declaration of Trust. No Trustee, officer, employee or
agent of the Trust shall be subject to any personal liability whatsoever to any
Person, other than the Trust or its Shareholders, in connection with Trust
Property or the affairs of the Trust, save only that arising from bad faith,
willful misfeasance, gross negligence or reckless disregard for his duty to
such Person; and all such Persons shall look solely to the Trust Property for
satisfaction of claims of any nature arising in connection with the affairs of
the Trust. If any Shareholder, Trustee, officer, employee or agent, as such,
of the Trust is made a party to any suit or proceeding to enforce any such
liability, he shall not, on account thereof, be held to any personal liability.
The Trust shall indemnify and hold each Shareholder harmless from and against
all claims and liabilities, to which such Shareholder may become subject by
reason of his being or having been a Shareholder, and shall reimburse such
Shareholder for all legal and other expenses reasonably incurred by him in
connection with any such claim or liability. The rights accruing to a
Shareholder under Section 5.1 of the Declaration of Trust shall not exclude any
other right to which such Shareholder may be lawfully entitled, nor shall
anything herein contained restrict the right of the Trust to indemnify or
reimburse a Shareholder in any appropriate situation even though not
specifically provided herein.
<PAGE> 47
No Trustee, officer, employee or agent of the Trust shall be liable to the
Trust, its Shareholders, or to any Shareholder, Trustee, officer, employee or
agent thereof for any action or failure to act (including without limitation
the failure to compel in any way any former or acting Trustee to redress any
breach of trust) except for his own bad faith, willful misfeasance, gross
negligence or reckless disregard of his duties.
(a) Subject to the exceptions and limitations contained in paragraph (b)
below:
(i) every person who is or has been a Trustee or officer of the Trust
shall be indemnified by the Trust against all liability and against all expenses
reasonably incurred or paid by him in connection with any claim, action, suit or
proceeding in which he becomes involved as a party or otherwise by virtue of his
being or having been a Trustee or officer and against amounts paid or incurred
by him in the settlement thereof;
(ii) the words "claim," "action," "suit" or "proceeding" shall apply to
all claims, actions, suits or proceedings (civil, criminal, or other, including
appeals), actual or threatened; and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or
officer:
(i) against any liability to the Trust or the Shareholders by reason of
a final adjudication by the court or other body before which the proceeding was
brought that he engaged in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that his
action was in the best interest of the Trust;
(iii) in the event of a settlement of other disposition not involving a
final adjudication as provided in paragraphs (b) (i) or (b) (ii) resulting in a
payment by a Trustee or officer, unless there has been either a determination
that such Trustee or officer did not engage in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office by the court or other body approving the settlement or other
disposition or a reasonable determination, based upon a review of readily
available facts (as opposed to a full trial-type inquiry) that he did not engage
in such conduct:
(A) by vote of a majority of the Disinterested Trustees acting
on the matter (provided that a majority of the Disinterested Trustees then in
office act on the matter); or
(B) by written opinion of independent legal counsel.
(c) The rights of indemnification herein provided may be insured against
by policies maintained by the Trust, shall be severable, shall not affect any
other rights to which any Trustee or officer may now or hereafter be entitled,
shall continue as to a Person who has ceased to be such Trustee or officer and
shall inure to the benefit of the heirs, executors and administrators of such
Person. Nothing contained herein shall affect any rights to indemnification to
which personnel other than Trustees and officers may be entitled by contract or
otherwise under law.
(d) Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in paragraph (a) of
Section 5.3 of the Declaration of Trust shall be advanced by the Trust prior to
final disposition thereof upon receipt of an undertaking by or on behalf of the
recipient to repay such amount if it is ultimately determined that he is not
entitled to indemnification under Section 5.3 of the Declaration of Trust,
provided that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses arising out of
any such advances; or
(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act on
the matter) or an independent legal counsel in a written opinion, shall
determine, based
<PAGE> 48
upon a review of readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the recipient ultimately will be
found entitled to indemnification.
As used in Section 5.3 of the Declaration of Trust, a "Disinterested
Trustee" is one (i) who is not an "Interested Person" by any rule, regulation or
order of the Commission), and (ii) against whom none of such actions, suits or
other proceedings or another action, suit or other proceeding on the same or
similar grounds is then or had been pending. See Item 24(b)(1) (Exhibit 1)
above, whose terms and conditions as summarized herein are hereby incorporated
by reference.
Limitation of Liability provisions for the Investment Manager are set
forth in paragraph 6 of the Investment Management Agreement. The Investment
Manager shall not be liable for any instructions, action or failure to act, or
for any loss sustained by reason of the adoption of any investment policy or the
purchase, sale or retention of any security on the recommendation of the
Investment Manager, whether or not such recommendation shall have been based
upon its own investigation and research made by any other individual, firm or
corporation, if such recommendation shall have been made and such other
individual, firm or corporation shall have been selected with due care and in
good faith; but nothing herein contained shall be construed to protect the
Manager against any liability to the Trust or its security holders by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
under this agreement. See item 24(b)(5) above (Exhibit 3), whose terms and
conditions as summarized herein are hereby incorporated by reference.
Registrant undertakes that it will comply with the indemnification
provisions of its Declaration of Trust, Investment Management Agreement,
Underwriting Agreement and any other agreement to which the Registrant is a
party containing indemnification provisions in accordance with the provisions of
Investment Company Act of 1940 Release No. 11330, as modified from time to time.
Item 28. Business and Other Connections of Investment Adviser
----------------------------------------------------
Nationwide Financial Services, Inc. (NFS), the investment adviser of
Financial Horizons Investment Trust, also serves as the investment adviser to
Nationwide Investing Foundation, Nationwide Investing Foundation II and
Nationwide Separate Account Trust, and serves as general distributor to the
Nationwide Multi-Flex, Nationwide Spectrum, Nationwide DC, and Nationwide
Variable and Variable II Accounts, separate accounts of Nationwide Life
Insurance Company, registered as unit investment trusts under the Investment
Company Act of 1940.
Directors and Officers of Investment Adviser
--------------------------------------------
Lewis J. Alphin Farm Owner and Operator, 519 Bethel Church
Road, Mount Olive, NC 28365
Director
--------
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide General, Nationwide Property and
Casualty, Nationwide Life and Nationwide Life and
Annuity Insurance Companies
Employers Insurance of Wausau A Mutual Company
Nationwide Communications Inc.
Nationwide Financial Services, Inc.
Wausau Service Corporation.
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Underwriters Insurance Company.
Willard J. Engel General Manager--Lyon County Cooperative Oil
Company, 1100 East Main Street, Marshall, MN
56258
Director
--------
Nationwide Mutual, Nationwide Mutual Fire,
<PAGE> 49
Nationwide General, Nationwide Property and
Casualty, Nationwide Life and Nationwide Life and
Annuity Insurance Companies
Employers Insurance of Wausau A Mutual Company
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
Nationwide Communications Inc.
Nationwide Financial Services, Inc.
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company.
Fred C. Finney Farm Owner and Operator-Melrose Fruit Farm; Operator-
Melrose Orchard, 1558 West Moreland Road,
Wooster, OH 44691
Director
--------
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide General, Nationwide Property and
Casualty, Nationwide Life and Nationwide Life and
Annuity Insurance Companies
Employers Insurance of Wausau A Mutual Company
Nationwide Communications Inc.
Nationwide Financial Services, Inc.
Wausau Service Corporation
Wausau Business Insurance Company
Wausau Underwriters Insurance Company
Wausau General Insurance Company.
Peter F. Frenzer President and Chief Operating Officer and Director
--------------------------------------------------
Nationwide Life Insurance Company
Nationwide Life and Annuity Insurance Company
President and Director
----------------------
California Cash Management Company
National Premium and Benefit Administration Company
Nationwide Cash Management Company
Nationwide Corporation
Nationwide Investors Services, Inc.
Nationwide Property Management, Inc.
Executive Vice President and Director
-------------------------------------
Employers Insurance of Wausau A Mutual Company
Employers Life Insurance Company of Wausau
Wausau Service Corporation
Wausau Preferred Health Insurance Company
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
Nationwide Indemnity Company
Executive Vice President
------------------------
Nationwide Mutual Insurance Company
Nationwide Mutual Fire Insurance Company
Nationwide General Insurance Company
Nationwide Property and Casualty Insurance
Company
The Beak and Wire Corporation
Executive Vice President-Investments
------------------------------------
Colonial Insurance Company of California
Lone Star General Agency, Inc.
<PAGE> 50
Colonial County Mutual Insurance Company
Trustee
-------
Nationwide Insurance Enterprise Foundation
Vice Chairman and Director
--------------------------
Nationwide Financial Institution Distributors Agency, Inc.
Nationwide Communications Inc.
Nationwide Development Company
NEA Valuebuilder Investor Services, Inc.
PEBSCO Securities Corp.
Public Employees Benefit Services Corporation
Director, Chairman and Chief Executive Officer
----------------------------------------------
Pension Associates of Wausau, Inc.
Director
--------
Affiliate Agency, Inc.
Affiliate Agency of Ohio, Inc.
Financial Horizons Distributors Agency of Alabama, Inc.
Financial Horizons Distributors Agency of Ohio, Inc.
Financial Horizons Distributors Agency of Oklahoma, Inc.
Financial Horizons Securities Corporation
InHealth Agency, Inc.
Nationwide HMO, Inc.
InHealth Management Systems, Inc.
Landmark Financial Services of New York, Inc.
MRM Investments, Inc.
National Casualty Company
National Premium & Benefit Administration Company
Nationwide Community Urban Redevelopment Corporation
Scottsdale Indemnity Company
Scottsdale Insurance Company
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Underwriters Insurance Company NWE, Inc.
Chairman of the Board and Director
----------------------------------
West Coast Life Insurance Company
Neckura Holding Company
Vice Chairman, President and Director
-------------------------------------
Nationwide Financial Services, Inc.
Chairman and Trustee
--------------------
Financial Horizons Investment Trust
Nationwide Investing Foundation
Nationwide Investing Foundation II
Nationwide Separate Account Trust.
Charles L. Fuellgraf, Jr.
Chief Executive Officer
-----------------------
Fuellgraf Electric Co., Electrical Construction and
Engineering Services, 600 S. Washington St.,
Butler, PA 16001
<PAGE> 51
Director
--------
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Life, Nationwide General, Nationwide
Property and Casualty and Nationwide Life and
Annuity Insurance Companies
Employers Insurance of Wausau A Mutual Company
Nationwide Financial Services, Inc.
Nationwide Property Management, Inc.
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Underwriters Insurance Company
Wausau Service Corporation
Chairman of the Board and Director
----------------------------------
Nationwide Communications Inc.
Nationwide Development Company
Trustee
-------
Nationwide Insurance Enterprise Foundation
Nationwide Investing Foundation.
Henry S. Holloway
Farm Owner and Operator, 1247 Stafford Road,
Darlington, MD 21034
Director
--------
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Property and Casualty, and Nationwide
General Insurance Companies
Chairman of the Board and Director
----------------------------------
Nationwide Life Insurance Company
Nationwide Life and Annuity Insurance Company
Nationwide Corporation
Director
--------
Colonial Insurance Company of California
Employers Insurance of Wausau A Mutual Company
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
Nationwide Communications Inc.
Nationwide Property Management, Inc.
Nationwide Development Company
Nationwide Financial Services, Inc.
Scottsdale Indemnity Company
Scottsdale Insurance Company
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Underwriters Insurance Company
Wausau Service Corporation
West Coast Life Insurance Company
Trustee
-------
Nationwide Insurance Enterprise Foundation.
Gordon E. McCutchan
Executive Vice President-Law and Corporate
------------------------------------------
Services and Secretary
----------------------
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Life, Nationwide General, Nationwide
Property and Casualty, and Nationwide Life and
Annuity Insurance Companies
NEA Valuebuilder Investor Services, Inc.
<PAGE> 52
Nationwide Financial Institution Distributors Agency, Inc.
Colonial County Mutual Insurance Company
Colonial Insurance Company of California
Lone Star General Agency, Inc.
Nationwide Communications Inc.
Employers Insurance of Wausau A Mutual Company
National Premium and Benefit Administration Company
Nationwide Community Urban Redevelopment Corporation
Nationwide Corporation
Nationwide Insurance Enterprise Foundation
Scottsdale Indemnity Company
Scottsdale Insurance Company
Wausau Underwriters Insurance Company
Wausau Service Corporation
Wausau Business Insurance Company
Wausau General Insurance Company
West Coast Life Insurance Company
Executive Vice President-Law and Corporate Services
---------------------------------------------------
Employers Life Insurance Company of Wausau
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
Pension Associates of Wausau, Inc.
PEBSCO Securities Corp.
Public Employees Benefit Services Corporation
Wausau Preferred Health Insurance Company
Companies Agency, Inc.
Companies Agency of Alabama, Inc.
Companies Agency Insurance Services of California
Companies Agency of Idaho, Inc.
Companies Agency of Illinois, Inc.
Companies Agency of Kentucky, Inc.
Companies Agency of Massachusetts, Inc.
Companies Agency of New York, Inc.
Companies Agency of Pennsylvania, Inc.
Companies Agency of Phoenix, Inc.
Countrywide Services Corporation
Nationwide Development Company
Nationwide Property Management, Inc.
Wausau International Underwriters
Executive Vice President-Law and Corporate
------------------------------------------
Services and Director
---------------------
Nationwide Financial Services, Inc.
Nationwide Investor Services, Inc.
Executive Vice President-Law and Corporate
------------------------------------------
Services and Secretary and Director
-----------------------------------
California Cash Management Company
National Casualty Company
Nationwide Cash Management Company
Nationwide Indemnity Company
Vice Chairman and Director
--------------------------
Neckura Insurance Company
Neckura Life Insurance Company
Secretary
---------
The Beak and Wire Corporation
Affiliate Agency, Inc.
<PAGE> 53
Affiliate Agency of Ohio, Inc.
Financial Horizons Distributors Agency of Alabama, Inc.
Financial Horizons Distributors Agency of Ohio, Inc.
Financial Horizons Distributors Agency of Oklahoma, Inc.
Financial Horizons Securities Corporation
Landmark Financial Services of New York, Inc.
NEA Valuebuilder Investor Services of Alabama, Inc.
NEA Valuebuilder Investor Services of Montana
NEA Valuebuilder Investor Services of Nevada
NEA Valuebuilder Investor Services of Ohio, Inc.
NEA Valuebuilder Investor Services of Oklahoma, Inc.
NEA Valuebuilder Investor Services of Wyoming
Vice Chairman, Secretary and Director
-------------------------------------
Gates, McDonald & Company
Chairman of the Board, Secretary and Director
---------------------------------------------
Gates, McDonald & Company of Nevada
Gates, McDonald & Company of New York, Inc.
Secretary and Director
----------------------
InHealth Agency, Inc.
Nationwide HMO, Inc.
InHealth Management Systems, Inc.
Director
--------
Leben Direkt Insurance Company
MRM Investments, Inc.
NWE, Inc.
Neckura Holding Company.
D. Richard McFerson
President and Chief Executive Officer-Nationwide
------------------------------------------------
Insurance Enterprise and Director
---------------------------------
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide General, and Nationwide Property and
Casualty, Nationwide Life and Nationwide Life and Annuity
Insurance Companies
Colonial Insurance Company of California
West Coast Life Insurance Company
Nationwide Communications Inc.
Nationwide Corporation
Nationwide Development Company
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
National Casualty Company
Nationwide Financial Services, Inc.
California Cash Management Company
Nationwide Cash Management Company
Employers Insurance of Wausau A Mutual Company
Wausau Service Corporation
Wausau Business Insurance Company
Wausau Underwriters Insurance Company
Chairman, President and Chief Executive Officer-
------------------------------------------------
Nationwide Insurance Enterprise and Director
--------------------------------------------
American Marine Underwriters, Inc.
<PAGE> 54
Companies Agency, Inc.
Companies Agency of Alabama, Inc.
Companies Agency Insurance Services of California
Companies Agency of Idaho, Inc.
Companies Agency of Illinois, Inc.
Companies Agency of Kentucky, Inc.
Companies Agency of Massachusetts, Inc.
Companies Agency of New York, Inc.
Companies Agency of Pennsylvania, Inc.
Companies Agency of Phoenix, Inc.
Countrywide Services Corporation
Employers Life Insurance Company of Wausau
Nationwide Financial Institution Distributors Agency, Inc.
Wausau International Underwriters
Wausau Preferred Health Insurance Company
Chairman and Director
---------------------
PEBSCO Securities Corp.
NEA Valuebuilder Investor Services, Inc.
President and Chief Executive Officer and Director
--------------------------------------------------
Nationwide Indemnity Company
Trustee
-------
Financial Horizons Investment Trust
Nationwide Investing Foundation
Nationwide Investing Foundation II
Nationwide Separate Account Trust
Vice Chairman and Chief Executive Officer and Director
------------------------------------------------------
Wausau General Insurance Company
Chairman of the Board
---------------------
Nationwide Insurance Golf Charities, Inc.
Chairman of the Board and Director
----------------------------------
Lone Star General Agency, Inc.
Nationwide Community Urban Redevelopment Corporation
Colonial County Mutual Insurance Company
Nationwide Property Management, Inc.
Vice Chairman, President and Chief Executive
--------------------------------------------
Officer-Nationwide Insurance Enterprise and Director
----------------------------------------------------
Scottsdale Indemnity Company
Scottsdale Insurance Company
Chairman of the Board, President and Chief
------------------------------------------
Executive Officer-Nationwide Insurance Enterprise
-------------------------------------------------
and Director
------------
Gates, McDonald & Company
Nationwide Investor Services, Inc.
Public Employees Benefit Services Corporation
Director
--------
Gates, McDonald & Company of Nevada
Gates, McDonald & Company of New York
Chairman of the Board, President and Chief
------------------------------------------
Executive Officer-Nationwide Insurance Enterprise
-------------------------------------------------
and Trustee
-----------
Nationwide Insurance Enterprise Foundation.
<PAGE> 55
David O. Miller President Owen Potato Farm, Inc. and Partner,
--------- -------
M&M Enterprises, 115 Sprague Drive,
Hebron, OH 43025
Director
--------
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Life, Nationwide General, Nationwide
Property and Casualty, and Nationwide Life and
Annuity Insurance Companies
Colonial Insurance Company of California
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
Nationwide Communications Inc.
Nationwide Corporation
Nationwide Development Company
Nationwide Financial Services, Inc.
Nationwide Property Management, Inc.
Scottsdale Indemnity Company
Scottsdale Insurance Company
West Coast Life Insurance Company
Chairman of the Board and Director
----------------------------------
Employers Insurance of Wausau A Mutual Company
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company
Trustee
-------
Nationwide Insurance Enterprise Foundation.
C. Ray Noecker Farm Owner and Operator, 2770 State Route 674
South, Ashville, Ohio 43203
Director
--------
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide General, Nationwide Property and
Casualty, Nationwide Life and Nationwide Life and
Annuity Insurance Companies
Employers Insurance of Wausau A Mutual Company
Nationwide Communications Inc.
Nationwide Financial Services, Inc.
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company.
James Ferry Patterson
President, Patterson Farms, Inc.; Vice President,
--------- --------------
Pattersons Inc. 8765 Mulberry Road, Chesterland, OH 44026
Director
--------
Nationwide Mutual, Nationwide Life, Nationwide
General, Nationwide Property and Casualty and
Nationwide Life and Annuity Insurance Companies
Colonial Insurance Company of California
Farmland Mutual Insurance Company
Nationwide Financial Services, Inc.
National Casualty Company
Nationwide Agribusiness Insurance Company
Nationwide Property Management, Inc.
<PAGE> 56
Scottsdale Indemnity Company
Scottsdale Insurance Company
Nationwide Communications Inc.
Nationwide Corporation
Nationwide Development Company
Employers Insurance of Wausau A Mutual Company
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company
West Coast Life Insurance Company
Chairman of the Board and Director
----------------------------------
Nationwide Mutual Fire Insurance Company
Trustee
-------
Nationwide Insurance Enterprise Foundation.
Robert H. Rickel Rancher, P.O. Box 319, Bayview, ID 83803
Director
--------
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Life, Nationwide Property and Casualty
and Nationwide Life and Annuity Insurance Companies
Colonial Insurance Company of California
Employers Insurance of Wausau A Mutual Company
Nationwide Communications Inc.
Nationwide Financial Services, Inc.
Scottsdale Insurance Company
Scottsdale Indemnity Company
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company
West Coast Life Insurance Company
Director and Chairman of the Board
----------------------------------
Nationwide General Insurance Company
Trustee
-------
Nationwide Investing Foundation.
Arden L. Shisler President and CEO, K&B Transport, Inc.; Farm Owner,
-----------------
1356 North Wenger Road, Dalton, OH 44618
Chairman of the Board and Director
----------------------------------
Nationwide Mutual Insurance Company
Director
--------
Nationwide Mutual Fire, Nationwide Life,
Nationwide General, Nationwide Property and
Casualty and Nationwide Life and Annuity Insurance
Companies
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
Nationwide Communications Inc.
Nationwide Corporation
Nationwide Development Company
Nationwide Property Management Inc.
Scottsdale Insurance Company
Scottsdale Indemnity Company
West Coast Life Insurance Company
Nationwide Financial Services, Inc.
<PAGE> 57
Colonial Insurance Company of California
Employers Insurance of Wausau A Mutual Company
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company
Trustee
-------
Nationwide Insurance Enterprise Foundation.
Robert Leonard Stewart
Farm Owner and Operator; Owner, Sunnydale Mining,
88740 Fairview Road, Jewett, OH 43986
Chairman of the Board and Director
----------------------------------
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
Director
--------
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Life, Nationwide General, Nationwide
Property and Casualty and Nationwide Life and
Annuity Insurance Company.
Nationwide Communications Inc.
Nationwide Financial Services, Inc.
Employers Insurance of Wausau A Mutual Company
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company.
Nancy C. Thomas Farm Owner and Operato, Da-Ma-Lor Farms,
10835 Georgetown Road, N.E., Louisville, Ohio 44641
Chairman of the Board and Director
----------------------------------
Nationwide Property and Casualty Insurance Company
Director
--------
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Life, Nationwide General and
Nationwide Life and Annuity Insurance Companies
Colonial Insurance Company of California
Employers Insurance of Wausau A Mutual Company
Farmland Mutual Insurance Company
Nationwide Communications Inc.
Nationwide Financial Services, Inc.
Scottsdale Indemnity Company
Scottsdale Insurance Company
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company
West Coast Life Insurance Company
Trustee
-------
Nationwide Investing Foundation.
Harold W. Weihl
Farm Owner and Operator, 14282 King Road,
Bowling Green, Ohio 43402
Chairman of the Board and Director
----------------------------------
<PAGE> 58
Nationwide Financial Services, Inc.
Director
--------
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Life, Nationwide General, Nationwide
Property and Casualty and Nationwide Life and
Annuity Insurance Companies
Employers Insurance of Wausau A Mutual Company
Nationwide Communications Inc.
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company
Trustee
-------
Nationwide Investing Foundation.
Robert A. Oakley Executive Vice President-Chief Financial Officer
------------------------------------------------
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Life, Nationwide General, Nationwide
Property and Casualty, and Nationwide Life and
Annuity Insurance Companies
American Marine Underwriters, Inc.
Companies Agency, Inc.
Companies Agency of Alabama, Inc.
Companies Agency of Idaho, Inc.
Companies Agency of Illinois, Inc.
Companies Agency of Kentucky, Inc.
Companies Agency of Massachusetts, Inc.
Companies Agency of New York, Inc.
Companies Agency of Pennsylvania, Inc.
Companies Agency of Phoenix, Inc.
Employers Life Insurance Company of Wausau
National Casualty Company
National Premium and Benefit Administration Company
The Beak and Wire Corporation
Colonial Insurance Company of California
Employers Insurance of Wausau A Mutual Company
Farmland Mutual Insurance Company
Nationwide Financial Institution Distributors Agency, Inc.
Lone Star General Agency, Inc.
MRM Investments, Inc.
Nationwide Agribusiness Insurance Company
Nationwide Communications Inc.
Nationwide Corporation
Nationwide Development Co.
Nationwide Financial Services, Inc.
Nationwide Investor Services, Inc.
Nationwide Insurance Enterprise Foundation
Nationwide Property Management, Inc.
NEA Valuebuilder Investor Services, Inc.
Colonial County Mutual Insurance Company
PEBSCO Securities Corp.
Pension Associates of Wausau, Inc.
Public Employees Benefit Services Corporation
Scottsdale Indemnity Company
Scottsdale Insurance Company
Wausau Business Insurance Company
<PAGE> 59
Wausau General Insurance Company
Wausau Preferred Health Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company
West Coast Life Insurance Company
Senior Vice President-Chief Financial Officer
---------------------------------------------
Countrywide Services Corporation
Executive Vice President-Chief Financial Officer
------------------------------------------------
and Director
------------
California Cash Management Company
Nationwide Cash Management Company
Nationwide Community Urban Redevelopment Corporation
Nationwide Indemnity Company
Executive Vice President
------------------------
Companies Agency Insurance Services of California
Wausau International Underwriters
Director
--------
Auto Direkt Insurance Company
Neckura Holding Company
Wausau Insurance Company (U.K.) Limited.
Robert J. Woodard, Jr.
Executive Vice President-Chief Investment Officer
-------------------------------------------------
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide General, Nationwide Property and Casualty,
Nationwide Life and Nationwide Life and Annuity Insurance
Companies
Colonial Country Mutual Insurance Company
Colonial Insurance Company of California
Employers Insurance of Wausau A Mutual Company
Employers Life Insurance Company of Wausau
Farmland Mutual Insurance Company
Gates, McDonald & Company
Lone Star General Agency, Inc.
National Casualty Company
Nationwide Agribusiness Insurance Company
Nationwide Communications Inc.
Nationwide Corporation
Nationwide Financial Services, Inc.
Nationwide Indemnity Company
Nationwide Insurance Enterprise Foundation
Scottsdale Indemnity Company
Scottsdale Insurance Company
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Preferred Health Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company
West Coast Life Insurance Company
Director and Senior Vice President
----------------------------------
Nationwide Property Management, Inc.
President
---------
Nationwide Development Company
Director and President
----------------------
Nationwide Community Urban Redevelopment Corporation
MRM Investments, Inc.
NWE, Inc.
<PAGE> 60
Senior Vice President
---------------------
California Cash Management Company
Nationwide Cash Management Company.
James F. Laird, Jr.
Vice President and General Manager
----------------------------------
Nationwide Financial Services, Inc.
Vice President and General Manager and Director
-----------------------------------------------
Nationwide Investors Services, Inc.
Treasurer
---------
Nationwide Investing Foundation
Nationwide Investing Foundation II
Nationwide Separate Account Trust
Assistant Treasurer
-------------------
Financial Horizons Investment Trust.
Harry A. Schermer
Vice President-Equity Securities
--------------------------------
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Life, Nationwide General, Nationwide
Property and Casualty and Nationwide Life and
Annuity Insurance Companies
Nationwide Indemnity Company
Vice President-Investments
--------------------------
Nationwide Financial Services, Inc.
Vice President
--------------
Nationwide Insurance Enterprise Foundation
Assistant Treasurer
-------------------
Financial Horizons Investment Trust
Nationwide Separate Account Trust
Nationwide Investing Foundation
Nationwide Investing Foundation II.
W. Sidney Druen Senior Vice President and General Counsel and
---------------------------------------------
Assistant Secretary
-------------------
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Life, Nationwide General, Nationwide
Property and Casualty, and Nationwide Life and
Annuity Insurance Companies
Nationwide Financial Services, Inc.
Employers Insurance of Wausau A Mutual Company
Employers Life Insurance Company of Wausau
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Underwriters Insurance Company
Wausau Preferred Health Insurance Company
Wausau Service Corporation
Senior Vice President and General Counsel
-----------------------------------------
Affiliate Agency, Inc.
Affiliate Agency of Ohio, Inc.
American Marine Underwriters, Inc.
The Beak and Wire Corporation
California Cash Management Company
Colonial County Mutual Insurance Company
Colonial Insurance Company of California
Farmland Mutual Insurance Company
<PAGE> 61
Nationwide Agribusiness Insurance Company
Nationwide Financial Institution Distributors Agency, Inc.
Financial Horizons Distributors Agency of Alabama, Inc.
Financial Horizons Distributors Agency of Ohio, Inc.
Financial Horizons Distributors Agency of Oklahoma, Inc.
Financial Horizons Securities Corporation
Gates, McDonald & Company
Gates, McDonald & Company of Nevada
Gates, McDonald & Company of New York
Landmark Financial Services of New York, Inc.
National Casualty Company
Nationwide Cash Management Company
Nationwide Communications Inc.
Nationwide Corporation
Companies Agency, Inc.
Companies Agency Insurance Services of California
Companies Agency of Alabama, Inc.
Companies Agency of Idaho, Inc.
Companies Agency of Illinois, Inc.
Companies Agency of Kentucky, Inc.
Companies Agency of Massachusetts, Inc.
Companies Agency of New York, Inc.
Companies Agency of Pennsylvania, Inc.
Companies Agency of Phoenix, Inc.
Countrywide Services Corporation
Lone Star General Agency Inc.
Nationwide Development Company
Nationwide Insurance Enterprise Foundation
Nationwide Indemnity Company
NEA Valuebuilder Investor Services, Inc.
NEA Valuebuilder Investor Services of Alabama, Inc.
NEA Valuebuilder Investor Services of Montana
NEA Valuebuilder Investor Services of Nevada
NEA Valuebuilder Investor Services of Ohio, Inc.
NEA Valuebuilder Investor Services of Oklahoma, Inc.
NEA Valuebuilder Investor Services of Wyoming
Nationwide Investor Services, Inc.
MRM Investments, Inc.
NWE, Inc.
Nationwide Property Management, Inc.
PEBSCO of Massachusetts Insurance Agency, Inc.
PEBSCO Securities Corp.
Pension Associates of Wausau, Inc.
Public Employees Benefit Services Corporation
Public Employees Benefit
Services Corporation of Alabama
Public Employees Benefit Services Corporation of Arkansas
Public Employees Benefit Services Corporation of Montana
Public Employees Benefit Services Corporation of New Mexico
<PAGE> 62
Scottsdale Indemnity Company
Scottsdale Insurance Company
West Coast Life Insurance Company
Senior Vice President and General Counsel and Director
------------------------------------------------------
Nationwide Community Urban Redevelopment Corporation
General Counsel
---------------
Nationwide Insurance Golf Charities, Inc.
William G. Goslee
Treasurer
---------
Nationwide Financial Services, Inc.
Nationwide Investors Services, Inc.
Assistant Treasurer
-------------------
Nationwide Investing Foundation
Nationwide Separate Account Trust
Nationwide Investing Foundation II
Financial Horizons Investment Trust.
Rae I. Mercer Secretary
---------
Nationwide Financial Services, Inc.
Nationwide Investors Services, Inc.
Nationwide Investing Foundation
Nationwide Separate Account Trust
Nationwide Investing Foundation II
Financial Horizons Investment Trust.
Peter J. Neckermann
Vice President - Economic and Investment Services
-------------------------------------------------
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide General, Nationwide Property and
Casualty, Nationwide Life and Nationwide Life and
Annuity Insurance Companies
Nationwide Indemnity Company
Vice President
--------------
Nationwide Financial Services, Inc.
Director
--------
Nationwide Investors Services, Inc.
Assistant Secretary
-------------------
West Coast Life Insurance Company
Assistant Treasurer
-------------------
Financial Horizons Investment Trust
National Casualty Company
National Premium and Benefit Administration Company
Nationwide Investing Foundation
Nationwide Investing Foundation II
Nationwide Separate Account Trust.
Except as otherwise noted, the principal business address of any company with
which any person specified above is connected in the capacity of director,
officer, employee, partner or trustee is One Nationwide Plaza, Columbus, Ohio
43215, except for the following companies:
<PAGE> 63
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
1963 Bell Avenue
Des Moines, Iowa 50315-1000
Colonial Insurance Company of California
2390 East Orangewood Avenue
P.O. Box 4347
Anaheim, California 92803-4347
Employers Insurance of Wausau A Mutual Company
2000 Westwood Drive
Wausau, Wisconsin 54401-7881
Scottsdale Insurance Company
8877 North Gainey Center Drive
P.O. Box 4110
Scottsdale, Arizona 85261-4110
West Coast Life Insurance Company
343 Sansome Street
San Francisco, California 94104-1303
National Casualty Company
8877 North Gainey Center Drive
P.O. Box 4110
Scottsdale, Arizona 85261-4110
Lone Star General Agency, Inc.
P.O. Box 14700
Austin, Texas 78761
Auto Direkt Insurance Company
Columbus Insurance Brokerage Service, GMBH
Neckura General Insurance Company
Neckura Holding Company
Neckura Insurance Company
Neckura Life Insurance Company
John E. Fisher Str. 1
61440 Oberursel/Ts.
Germany
Nationwide Development Company
One Nationwide Plaza
Columbus, Ohio 43215
Public Employees Benefit Services Corporation
Two Nationwide Plaza
Columbus, Ohio 43215
Item 29. Principal Underwriters
(a) See Item 28 above.
<PAGE> 64
(b) NATIONWIDE FINANCIAL SERVICES, INC.
DIRECTORS
<TABLE>
<CAPTION>
NAME BUSINESS ADDRESS TITLE POSITION WITH REGISTRANT
<S> <C> <C> <C>
Harold W. Weihl 14282 King Road Chairman of Board N/A
Bowling Green, OH 43402 of Directors
Lewis J. Alphin 519 Bethel Church Road Director N/A
Mt. Olive, NC 28365
Willard J. Engel 1100 E. Main Street Director N/A
Marshall, MN 56258
Frederick C. Finney 1558 W. Moreland Road Director N/A
Wooster, OH 44691
Peter F. Frenzer One Nationwide Plaza Director and Vice Chairman of
Columbus, OH 43215 Chairman Board of Trustees
Charles L. Fuellgraf, Jr. 600 S. Washington Street Director Trustee
Butler, PA 16001
Henry S. Holloway 1247 Stafford Road Director N/A
Darlington, MD 21034
Gordon E. McCutchan One Nationwide Plaza Director N/A
Columbus, OH 43215
D. Richard McFerson One Nationwide Plaza President and Director Trustee
Columbus, OH 43215 and Chief Executive
Officer-Nationwide
Insurance Enterprise
David O. Miller 115 Sprague Drive Director N/A
Hebron, OH 43025
C. Ray Noecker 2770 St. Rt. 674 Director N/A
Ashville, OH 43103
James F. Patterson 8765 Mulberry Road Director N/A
Chesterland, OH 44026
Robert H. Rickel P.O. Box 319 Director N/A
Bayview, ID 83803
Arden L. Shisler 2724 West Lebanon Road Director N/A
Dalton, OH 44618
Robert L. Stewart 88740 Fairview Road Director N/A
Jewett, OH 43986
Nancy C. Thomas 10835 Georgetown St. N.E. Director Trustee
Louisville, OH 44641
</TABLE>
<PAGE> 65
OFFICERS
<TABLE>
<CAPTION>
NAME BUSINESS ADDRESS TITLE POSITION WITH REGISTRANT
<S> <C> <C> <C>
Harold W. Weihl 14282 King Road Chairman of Board of N/A
Bowling Green, OH 43402 Directors
Peter F. Frenzer One Nationwide Plaza Vice Chairman and Chairman of Board
Columbus, OH 43215 President of Trustees
Robert J. Woodward, Jr. One Nationwide Plaza Executive Vice Presi- N/A
dent-Chief Investment
Officer
Gordon E. McCutchan One Nationwide Plaza Executive Vice N/A
Columbus, OH 43215 President-Law and
Corporate Services
Robert A. Oakley One Nationwide Plaza Executive Vice Presi- N/A
Columbus, OH 43215 dent, Chief Financial
Officer
W. Sidney Druen One Nationwide Plaza Senior Vice President, Counsel
Columbus, OH 43215 General Counsel
and Assistant Secretary
Peter J. Neckermann One Nationwide Plaza Vice President Assistant
Columbus, OH 43215 Treasurer
Harry A. Schermer One Nationwide Plaza Vice President- Assistant
Columbus, OH 43215 Investments Treasurer
James F. Laird, Jr. One Nationwide Plaza Vice President and Treasurer
Columbus, OH 43215 General Manager
William G. Goslee One Nationwide Plaza Treasurer Assistant
Columbus, OH 43215 Treasurer
Rae Mercer One Nationwide Plaza Secretary Secretary
Columbus, OH 43215
</TABLE>
Item 30. Location of Accounts and Records
--------------------------------
William G. Goslee
Nationwide Financial Services, Inc.
One Nationwide Plaza
Columbus, OH 43215
Item 31. Management Services
-------------------
Not applicable.
<PAGE> 66
Item 32. Undertakings
------------
The undersigned Registrant hereby undertakes:
(a) insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue;
(b) to seek shareholder approval of the Investment Management
Agreement (Exhibit 5), the Underwriting Agreement (Exhibit 6) and the
Distribution Plan (Exhibit 15) and ratification of the selection of independent
public accountants under the Investment Company Act of 1940 at the first annual
or special meeting of shareholders occurring after the effective date of
registrant's Registration Statement under the Securities Act of 1933; and
(c) (i) Registrant will call such a meeting when requested in
writing to do so by the holders of not less than 10 percent of its
outstanding shares; (ii) whenever ten or more shareholders of record of
registrant who have been such for at least six months preceding the date of
application, and who hold in the aggregate either shares having a net asset
value of at least $25,000 or at least 1 percent of the outstanding shares of
registrant, whichever is less, shall apply to the Trustees of registrant in
writing, stating that they wish to communicate with the other shareholders
with a view to obtaining signatures to a request for a meeting pursuant to
Section 16(c) of the Investment Company Act of 1940 and accompanied by a
form of communication and request which they wish to transmit, registrant
shall thereafter comply in all respects with the provisions of said
Section 16(c) insofar as they relate to such shareholder communications.
(iii) to furnish each person to whom a prospectus is delivered, a copy of the
Trust's Annual Report upon request and without charge.
<PAGE> 67
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Post-Effective Amendment No. 9 pursuant
to Rule 485(b) under the Securities Act of 1933 and has caused this
Post-Effective Amendment No. 10 to the Registration Statement to be signed on
it behalf by the undersigned, thereunto duly authorized, in the City of
Columbus, and State of Ohio, on the 29 day of February, 1996.
FINANCIAL HORIZONS INVESTMENT TRUST
JAMES F. LAIRD, JR.
-----------------------------------
James F. Laird, Jr., Treasurer
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Regulation Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature and Title Titles
------------------- ------
<S> <C> <C>
Principal Executive Officer
PETER F. FRENZER Trustee and Chairman
- -----------------------------
Peter F. Frenzer
Principal Accounting and
Financial Officer
JAMES F. LAIRD, JR. Treasurer
- -----------------------------
James F. Laird, Jr.
JOHN C. BRYANT Trustee
- -----------------------------
John C. Bryant
ROBERT M. DUNCAN Trustee
- -----------------------------
Robert M. Duncan
D. RICHARD McFERSON Trustee
- -----------------------------
D. Richard McFerson
THOMAS J. KERR, IV Trustee
- -----------------------------
Thomas J. Kerr, IV
JAMES F. LAIRD, JR.
-----------------------------
James F. Laird, Jr.
Attorney-in-Fact
February 29, 1996
</TABLE>
<PAGE> 1
INDEPENDENT AUDITORS' CONSENT
To the Trustees
Financial Horizons Investment Trust
We consent to the use of our report dated December 12, 1995 included in the
Statement of Additional Information and to the reference to our firm under the
heading "Financial Highlights" in the Prospectus.
KPMG Peat Marwick LLP
Columbus, Ohio
February 29, 1996
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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</TABLE>
